<PAGE>
As filed with the Securities and Exchange Commission on November 3, 1999
Registration Nos. 333-
and 811-6459
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- --------------------------------------------------------------------------------
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. __ / /
Post-Effective Amendment No. __ / /
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY / /
ACT OF 1940
Amendment No. 17 /X/
MERRILL LYNCH LIFE VARIABLE ANNUITY SEPARATE
--------------------------------------------
ACCOUNT A
---------
(Exact Name of Registrant)
MERRILL LYNCH LIFE INSURANCE COMPANY
------------------------------------
(Name of Depositor)
800 Scudders Mill Road, Plainsboro, New Jersey 08536
-----------------------------------------------------
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, including Area Code:
(609) 282-1429
Name and Address of Agent for Service: Copy to:
Barry G. Skolnick, Esq. Stephen E. Roth, Esq.
Senior Vice President and General Counsel Kimberly J. Smith, Esq.
Merrill Lynch Life Insurance Company Sutherland Asbill & Brennan LLP
800 Scudders Mill Road 1275 Pennsylvania Avenue, N.W.
Plainsboro, New Jersey 08536 Washington, D.C. 20004-2415
Approximate date of proposed public offering:
<PAGE>
As soon as practicable after effectiveness of the Registration Statement.
-------------------
Title of securities being registered:
Units of interest in a separate account under flexible premium individual
deferred variable annuity contracts.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
shall determine.
<PAGE>
PROSPECTUS
November __, 1999
Merrill Lynch Life Variable Annuity Separate Account A (the "Account")
FLEXIBLE PREMIUM INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACT
issued by
MERRILL LYNCH LIFE INSURANCE COMPANY
HOME OFFICE: Little Rock, Arkansas 72201
SERVICE CENTER: P.O. Box 44222
Jacksonville, Florida 32231-4222
4804 Deer Lake Drive East
Jacksonville, Florida 32246
PHONE: (800) 535-5549
offered through
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
This prospectus gives you information you need to know before you invest. Keep
it for future reference. Address all communications concerning the Contract to
our Service Center at the address above.
The variable annuity contract described here provides a variety of investment
features. It also provides options for income protection later in life. It is
important that you understand how the contract works, and its benefits, costs,
and risks. First, some basics.
WHAT IS AN ANNUITY?
An annuity provides for the systematic liquidation of a sum of money at the
annuity date through a variety of annuity options. Each annuity option has
different protection features intended to cover different kinds of income needs.
Many of these annuity options provide income streams that can't be outlived.
WHAT IS A VARIABLE ANNUITY?
A variable annuity bases its benefits on the performance of underlying
investments. These investments may typically include stocks, bonds, and money
market instruments. The annuity described here is a variable annuity.
WHAT ARE THE RISKS IN OWNING A VARIABLE ANNUITY?
A variable annuity does not guarantee the performance of the underlying
investments. The performance can go up or down. It can even decrease the value
of money you've put in. You bear all of this risk. You could lose all or part of
the money you've put in.
HOW DOES THIS ANNUITY WORK?
We put your premium payments as you direct into one or more subaccounts of the
Account. In turn, we invest each subaccount's assets in corresponding portfolios
of the following:
<PAGE>
- MERRILL LYNCH VARIABLE - ALLIANCE VARIABLE PRODUCTS
SERIES FUNDS, INC. SERIES FUND, INC.
- Basic Value Focus Fund - Premier Growth Portfolio
- Domestic Money Market Fund - MFS-Registered Trademark-
- Government Bond Fund VARIABLE INSURANCE TRUST-SM-
- Index 500 Fund - Emerging Growth Series
- Special Value Focus Fund - HOTCHKIS AND WILEY VARIABLE TRUST
- AIM VARIABLE INSURANCE FUNDS, INC. - International VIP Portfolio
- AIM V.I. Capital Appreciation Fund - MERCURY ASSET MANAGEMENT V.I.
- AIM V.I. Value Fund FUNDS, INC.
- Mercury V.I. U.S. Large Cap Fund
The value of your Contract at any point in time up to the annuity date is called
your contract value. Before the annuity date, you are generally free to direct
your contract value among the subaccounts as you wish. You may also withdraw all
or part of your contract value. If you die before the annuity date, we pay a
death benefit to your beneficiary.
We've designed this annuity as a long-term investment. Any money you take out of
the Contract is subject to tax, and if taken before age 59 1/2 may also be
subject to a 10% federal penalty tax. FOR THESE REASONS, YOU NEED TO CONSIDER
YOUR CURRENT AND SHORT-TERM INCOME NEEDS CAREFULLY BEFORE YOU DECIDE TO BUY THE
CONTRACT.
WHAT DOES THIS ANNUITY COST?
THIS ANNUITY DOES NOT IMPOSE ANY SALES CHARGES -- ON EITHER PURCHASES OR
WITHDRAWALS. However, we impose a number of other charges, including an
asset-based insurance charge. We provide more details on this charge, as well as
a description of all other charges, later in the prospectus.
*****************************************************
This prospectus contains information about the Contract and the Account that
you should know before you invest. A Statement of Additional Information
contains more information about the Contract and the Account. We have filed
this Statement of Additional Information, dated November __, 1999, with the
Securities and Exchange Commission. We incorporate this Statement of
Additional Information by reference. If you want to obtain this Statement of
Additional Information, simply call or write us at the phone number or
address noted above. There is no charge to obtain it. The table of contents
for this Statement of Additional Information is found on page __ of this
prospectus.
The Securities and Exchange Commission ("SEC") maintains a web site that
contains the Statement of Additional Information, material incorporated by
reference, and other information regarding registrants that file electronically
with the SEC. The address of the site is http://www.sec.gov.
CURRENT PROSPECTUSES FOR THE MERRILL LYNCH VARIABLE SERIES FUNDS, INC., THE AIM
VARIABLE INSURANCE FUNDS, INC., THE ALLIANCE VARIABLE PRODUCTS SERIES FUND,
INC., THE MFS-Registered Trademark- VARIABLE INSURANCE TRUST-SM-, THE HOTCHKIS
AND WILEY VARIABLE TRUST, AND THE MERCURY ASSET MANAGEMENT V.I. FUNDS, INC. 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.
<PAGE>
TABLE OF CONTENTS
Page
DEFINITIONS....................................................................6
CAPSULE SUMMARY OF THE CONTRACT................................................7
Premiums .............................................................7
The Account...........................................................7
The Funds Available For Investment....................................7
Fees and Charges......................................................8
Asset-Based Insurance Charge.................................8
Contract Fee.................................................8
Premium Taxes................................................8
Transfers Among Subaccounts...........................................8
Withdrawals...........................................................9
Death Benefit.........................................................9
Annuity Payments......................................................9
Ten Day Review........................................................9
FEE TABLE.....................................................................10
YIELDS AND TOTAL RETURNS......................................................13
MERRILL LYNCH LIFE INSURANCE COMPANY..........................................14
THE ACCOUNT...................................................................14
Segregation of Account Assets........................................14
Number of Subaccounts; Subaccount Investments........................15
INVESTMENTS OF THE ACCOUNT....................................................15
General Information and Investment Risks.............................15
Merrill Lynch Variable Series Funds, Inc.............................15
Basic Value Focus Fund......................................16
Domestic Money Market Fund..................................16
Government Bond Fund........................................16
Index 500 Fund..............................................16
Special Value Focus Fund....................................16
AIM Variable Insurance Funds, Inc....................................16
AIM V.I. Capital Appreciation Fund..........................17
AIM V.I. Value Fund.........................................17
Alliance Variable Products Series Fund, Inc..........................17
Alliance Premier Growth Portfolio...........................17
MFS-Registered Trademark- Variable Insurance Trust-SM-...............17
MFS Emerging Growth Series..................................18
Hotchkis and Wiley Variable Trust....................................18
Hotchkis and Wiley International VIP Portfolio..............18
Mercury Asset Management V.I. Funds, Inc.............................18
Mercury V.I. U.S. Large Cap Fund............................19
Purchases and Redemptions of Fund Shares; Reinvestment...............19
Material Conflicts, Substitution of Investments and Changes to
the Account........................................................19
<PAGE>
CHARGES AND DEDUCTIONS........................................................20
Asset-Based Insurance Charge.........................................20
Contract Fee.........................................................20
Other Charges........................................................21
Transfer Charges............................................21
Tax Charges.................................................21
Fund Expenses...............................................21
Premium Taxes........................................................21
FEATURES AND BENEFITS OF THE CONTRACT.........................................21
Ownership of The Contract............................................21
Issuing the Contract.................................................22
Issue Age...................................................22
Information We Need to Issue The Contract...................22
Ten Day Right to Review.....................................22
Premiums ............................................................22
Minimum and Maximum Premiums................................23
How to Make Payments........................................23
Automatic Investment Feature................................23
Premium Investments.........................................23
Accumulation Units...................................................23
How Are My Contract Transactions Priced?.............................24
How Do We Determine The Number of Units?.............................24
ADDITIONAL PROVISIONS APPLICABLE TO ALL CONTRACTS.............................25
Death of Annuitant Prior to Annuity Date.............................25
Transfers Among Subaccounts..........................................25
Dollar Cost Averaging................................................25
What Is It?.................................................25
Minimum Amounts.............................................26
When Do We Make DCA Transfers?..............................26
Asset Allocation Program.............................................26
Rebalancing Program..................................................27
Withdrawals and Surrenders...........................................28
When and How Withdrawals are Made...........................28
Systematic Withdrawal Program...............................28
Minimum Amounts.............................................28
Surrenders..................................................28
Payments to Contract Owners..........................................28
Contract Changes.....................................................29
Death Benefit........................................................29
General.....................................................29
Spousal Continuation........................................29
Calculation of Death Benefit................................30
Maximum Anniversary Value...................................30
Annuity Payments.....................................................31
Annuity Options......................................................31
How We Determine Present Value of Future Guaranteed
Annuity Payments..........................................32
Payments of a Fixed Amount..................................32
Payments for a Fixed Period.................................32
Life Annuity................................................32
4
<PAGE>
Life Annuity With Payments Guaranteed
for 5, 10, 15, or 20 Years................................33
Life Annuity With Guaranteed Return of Contract Value.......33
Joint and Survivor Life Annuity.............................33
Joint and Survivor Life Annuity with Payments Guaranteed
for 5, 10, 15, or 20 Years................................33
Individual Retirement Account Annuity.......................33
Gender-Based Annuity Purchase Rates..................................34
FEDERAL INCOME TAXES..........................................................34
Federal Income Taxes.................................................34
Tax Status of the Contract...........................................34
Diversification Requirements................................34
Owner Control...............................................34
Required Distributions......................................35
Taxation of Annuities................................................35
In General..................................................35
Withdrawals and Surrenders..................................35
Annuity Payments............................................35
Taxation of Death Benefit Proceeds..........................36
Penalty Tax on Some Withdrawals......................................36
Transfers, Assignments, or Exchanges of a Contract...................36
Withholding..........................................................36
Multiple Contracts...................................................36
Possible Changes In Taxation.........................................36
Possible Charge For Our Taxes........................................37
Individual Retirement Annuities......................................37
Traditional IRAs............................................37
Roth IRAs...................................................37
Tax Sheltered Annuities.....................................37
Other Tax Issues For IRAs and Roth IRAs.....................38
OTHER INFORMATION............................................................ 38
Notices and Elections................................................38
Voting Rights........................................................38
Reports to Contract Owners...........................................39
Selling the Contract.................................................39
State Regulation.....................................................40
Year 2000............................................................40
Legal Proceedings....................................................40
Experts..............................................................40
Legal Matters........................................................40
Registration Statements..............................................40
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION..................42
APPENDIX A....................................................................43
5
<PAGE>
DEFINITIONS
ACCUMULATION UNIT: A unit of measure used to compute the value of your interest
in a subaccount prior to the annuity date.
ANNUITANT: Annuity payments may depend upon the continuation of a person's life.
That person is called the annuitant.
ANNUITY DATE: The date on which annuity payments are scheduled to begin.
ATTAINED AGE: The age of a person on the contract date plus the number of full
contract years since the contract date.
BENEFICIARY(S): The person(s) designated by you to receive payment upon the
death of an owner prior to the annuity date.
CONTRACT ANNIVERSARY: The yearly anniversary of the contract date.
CONTRACT DATE: The effective date of the Contract. This is usually the business
day we receive your initial premium at our Service Center.
CONTRACT VALUE: The value of your interest in the Account.
CONTRACT YEAR: The period from the contract date to the first contract
anniversary, and thereafter, the period from one contract anniversary to the
next contract anniversary.
INDIVIDUAL RETIREMENT ACCOUNT OR ANNUITY ("IRA"): A retirement arrangement
meeting the requirements of Section 408 of the Internal Revenue Code ("IRC").
NET INVESTMENT FACTOR: An index used to measure the investment performance of a
subaccount from one valuation period to the next.
NONQUALIFIED CONTRACT: A Contract issued in connection with a retirement
arrangement other than a qualified plan described under Section 401, 403, 408,
457 or any similar provisions of the IRC.
TAX SHELTERED ANNUITY: A Contract issued in connection with a retirement
arrangement that receives favorable tax status under Section 403(b) of the IRC.
VALUATION PERIOD: The interval from one determination of the net asset value of
a subaccount to the next. Net asset values are determined as of the close of
business on each day the New York Stock Exchange is open.
6
<PAGE>
CAPSULE SUMMARY OF THE CONTRACT
This capsule summary provides a brief overview of the Contract. More detailed
information about the Contract can be found in the sections of this Prospectus
that follow, all of which should be read in their entirety.
PREMIUMS
Generally, before the annuity date you can pay premiums as often as you like.
The minimum initial premium is $25,000. Subsequent premiums generally must be
$100 or more. The maximum premium that will be accepted without Company approval
is $1,000,000. Under an automatic investment feature, you can make subsequent
premium payments systematically from your Merrill Lynch brokerage account. For
more information, see "Automatic Investment Feature".
The Contract is available as a non-qualified contract or may be issued as an IRA
or purchased through an established IRA or Roth IRA custodial account with
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"). Federal law
limits maximum annual contributions to IRAs and Roth IRAs. Transfer amounts from
tax sheltered annuity plans that are not subject to the Employee Retirement
Income Security Act of 1974, as amended, will be accepted as premium payments,
as permitted by law. Other premium payments will not be accepted under a
Contract used as a tax sheltered annuity.
Tax favored arrangements, including IRAs and Roth IRAs, should carefully
consider the costs and benefits of the Contracts (including annuity income
benefits) before purchasing the Contract, since the tax arrangement itself
provides for tax-sheltered growth.
We offer another variable annuity contract that has a different death
benefit, contract features, fund selections, and optional programs. However,
this other contract also has different charges that would affect your
subaccount performance and contract values. To obtain more information about
this other contract, contact our Service Center or your Financial Consultant.
THE ACCOUNT
As you direct, we will put premiums into the subaccounts corresponding to the
Funds in which we invest your contract value. For the first 14 days following
the contract date, we put all premiums into the Domestic Money Market
Subaccount. After the 14 days, we'll put the money into the subaccounts you've
selected. In Pennsylvania, however, we won't wait 14 days. Instead, we'll invest
your premium immediately in the subaccounts you've selected. Currently, you may
allocate premiums or contract value among 10 of the available subaccounts.
Generally, within certain limits you may transfer contract value periodically
among subaccounts.
THE FUNDS AVAILABLE FOR INVESTMENT
- - FUNDS OF MERRILL LYNCH VARIABLE - FUNDS OF ALLIANCE VARIABLE PRODUCTS
SERIES FUNDS, INC. SERIES FUND, INC.
- Basic Value Focus Fund - Premier Growth Portfolio
- Domestic Money Market Fund - FUNDS OF MFS-Registered Trademark-
- Government Bond Fund VARIABLE INSURANCE TRUST-SM-
- Index 500 Fund - Emerging Growth Series
- Special Value Focus Fund - FUNDS OF HOTCHKIS AND WILEY VARIABLE
- - FUNDS OF AIM VARIABLE INSURANCE TRUST
FUNDS, INC. - International VIP Portfolio
- AIM V.I. Capital - MERCURY ASSET MANAGEMENT V.I. FUNDS,
Appreciation Fund INC.
- AIM V.I. Value Fund - Mercury V.I. U.S. Large
Cap Fund
If you want detailed information about the investment objectives of the Funds,
see "Investments of the Account" and the attached prospectuses for the Funds.
7
<PAGE>
FEES AND CHARGES
ASSET-BASED INSURANCE CHARGE
We currently impose an asset-based insurance charge of 1.59% annually to
cover certain risks. It will never exceed 1.59% annually.
The asset-based insurance charge compensates us for:
- costs associated with the establishment and administration of
the Contract;
- mortality risks we assume for the annuity payment and death
benefit guarantees made under the Contract; and
- expense risks we assume to cover Contract maintenance
expenses.
We deduct the asset-based insurance charge daily from the net asset value
of the Account. This charge ends on the annuity date.
CONTRACT FEE
We impose a $40 contract fee each year to reimburse us for expenses
related to maintenance of the Contract only if the greater of contract
value, or premiums less withdrawals, is less than $25,000. Accordingly, if
your withdrawals have not decreased your investment in the Contract below
$25,000, we will not impose this annual fee. We may also waive this fee in
certain circumstances where you own at least three Contracts. This fee
ends after the annuity date.
PREMIUM TAXES
On the annuity date, we deduct a charge for any premium taxes imposed by a
state or local government. Premium tax rates vary from jurisdiction to
jurisdiction. They currently range from 0% to 5%.
You can find detailed information about all fees and charges imposed on the
Contract under "Charges and Deductions".
TRANSFERS AMONG SUBACCOUNTS
Before the annuity date, you may transfer all or part of your contract value
among the subaccounts up to twelve times per contract year without charge. You
may make more than twelve transfers among available subaccounts, but we may
charge $25 per extra transfer. (See "Transfers".)
Several specialized transfer programs are available under the Contract. You
cannot use more than one such program at a time. First, we offer a Dollar Cost
Averaging Program where money you've put in a designated subaccount is
systematically transferred monthly into other subaccounts you select without
charge. The main objective of this program is to minimize the impact of
short-term price fluctuations to allow you to take advantage of market
fluctuations. (See "Dollar Cost Averaging Program".) (There is no guarantee that
Dollar Cost Averaging will result in lower average prices or protect against
market loss.)
8
<PAGE>
Second, through participation in the Asset Allocation Program, you may have your
contract value invested under one of five asset allocation models. Your contract
value is then rebalanced quarterly based on the asset allocation model selected.
(See "Asset Allocation Program".)
Third, you may also choose to participate in a Rebalancing Program where we
automatically reallocate your contract value quarterly in order to maintain a
particular percentage allocation among the subaccounts that you select. (See
"Rebalancing Program".)
WITHDRAWALS
You can withdraw money from the Contract six times each contract year.
Additionally, under a Systematic Withdrawal Program, you may have automatic
withdrawals of a specified dollar amount made monthly, quarterly, semi-annually,
or annually. These systematic withdrawals are in addition to the annual six
withdrawals permitted under the Contract. For more information, see "Systematic
Withdrawal Program".
A withdrawal may have adverse tax consequences, including the imposition of a
penalty tax on withdrawals prior to age 59 1/2 (see "Federal Income Taxes").
DEATH BENEFIT
Regardless of investment experience, the Contract provides a guaranteed minimum
death benefit if you die before the annuity date.
If you are age 80 or over when the Contract is issued, the death benefit equals
the greater of premiums less adjusted withdrawals or the contract value. If you
are under age 80 when the Contract is issued, the death benefit equals the
greatest of premiums less adjusted withdrawals, the contract value, or the
Maximum Anniversary Value. Maximum Anniversary Value equals the greatest
anniversary value for the Contract.
You can find more detailed information about the death benefit and how it is
calculated, including age limitations that apply, under "Death Benefit".
ANNUITY PAYMENTS
Annuity payments begin on the annuity date and are made under the annuity option
you select. You may select an annuity date that cannot be later than the
annuitant's 90th birthday. If you do not select an annuity date, the annuity
date for nonqualified Contracts is the annuitant's 90th birthday. The annuity
date for IRA or tax sheltered annuity Contracts is when the owner/annuitant
reaches age 70 1/2.
Details about the annuity options available under the Contract can be found
under "Annuity Options".
TEN DAY REVIEW
When you receive the Contract, read it carefully to make sure it's what you
want. Generally, within 10 days after you receive the Contract, you may return
it for a refund. Some states allow a longer period of time to return the
Contract. To get a refund, return the Contract to the Service Center or to the
Financial Consultant who sold it. We will then refund the greater of all
premiums paid into the Contract or the contract value as of the date you return
the Contract. For contracts issued in Pennsylvania, we'll refund the contract
value as of the date you return the Contract.
9
<PAGE>
FEE TABLE
A. Contract Owner Transaction Expenses
1. Sales Load Imposed on Premium ................................ None
2. Contingent Deferred Sales Charge ............................. None
3. Transfer Fee ..................................................$25
The first 12 transfers among subaccounts in a contract year are
free. We currently do not, but may in the future, charge a $25 fee
on all subsequent transfers.
The Fee Table and Examples do not include charges to contract owners for
premium taxes. Premium taxes may be applicable. Refer to the "Premium
Taxes" section in this Prospectus for further details.
B. Annual Contract Fee ..................................................$40
The Contract Fee will be assessed annually on each contract anniversary
only if the greater of contract value, or premiums less withdrawals, is
less than $25,000.
C. Separate Account Annual Expenses (as a percentage of contract value)
Current and Maximum Asset-Based Insurance Charge.................... 1.59%
D. Fund Expenses for the Year Ended December 31, 1998 (see "Notes to Fee
Table") (as a percentage of each Fund's average net assets)
MERRILL LYNCH VARIABLE SERIES FUNDS, INC. (CLASS A SHARES)
<TABLE>
<CAPTION>
Domestic Special
Basic Value Money Government Value
Annual Expenses Focus Market Bond Index 500 Focus
- --------------- ----- ------ ---- --------- -----
<S> <C> <C> <C> <C> <C>
Investment Advisory Fees ........... .60% .50% .50% .30% .75%
Other Expenses ..................... .06% .06% .06% .06% .06%
--- --- --- --- ---
Total Annual Operating Expenses..... .66% .56% .56% .36% .81%
Expense Reimbursements ............. 0% 0% 0% 0% 0%
--- --- --- --- ---
Net Expenses ....................... .66% .56% .56% .36% .81%
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
MERCURY
MFS-REGISTERED ASSET
ALLIANCE TRADEMARK- HOTCHKIS MANAGEMENT
VARIABLE VARIABLE AND WILEY V.I. FUNDS,
AIM VARIABLE INSURANCE PRODUCTS SERIES INSURANCE VARIABLE INC. (CLASS A)
FUNDS, INC. FUND, INC. TRUST-SM- TRUST SHARES
---------------------------------------------------------------------------------------
Hotchkis
AIM V.I. Alliance MFS and Wiley Mercury V.I.
Capital AIM V.I. Premier Emerging International U.S. Large
Annual Expenses Appreciation Value Growth(c) Growth VIP Cap(b)
- ------ -------- ------------ ----- --------- ------ --- ------
<S> <C> <C> <C> <C> <C> <C>
Investment Advisory Fees .62% .61% 1.00% .75% .75% .65%
Other Expenses ......... .05% .05% .09% .10% .30%* 1.58%
--- --- ---- --- ---- ----
Total Operating Expenses .67% .66% 1.09% .85% 1.05% 2.23%
Expense Reimbursements 0% 0% 0% 0% 0% .98%
--- --- ---- --- ---- ----
Net Expenses ........... .67% .66% 1.09% .85% 1.05% 1.25%
</TABLE>
- --------
* Annualized.
EXAMPLES OF CHARGES
If you surrender or annuitize your Contract at the end of the applicable time
period, you would pay the following cumulative expenses on each $1,000 invested,
assuming 5% annual return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
SUBACCOUNT INVESTING IN:
Basic Value Focus Fund+.............................
Domestic Money Market Fund+.........................
Government Bond Fund+...............................
Index 500 Fund+.....................................
Special Value Focus Fund+...........................
AIM V.I. Capital Appreciation Fund..................
AIM V.I. Value Fund.................................
Alliance Premier Growth Portfolio...................
MFS Emerging Growth Series..........................
Hotchkis and Wiley International VIP Portfolio......
Mercury V.I. U.S. Large Cap Fund+...................
</TABLE>
- -------
+ Class A Shares.
Because there is no contingent deferred sales charge, you would pay the same
expenses whether you surrender your Contract at the end of the applicable time
period or not, based on the same assumptions.
------------------------------------------------------
The preceding Fee Table and Examples help you understand the costs and expenses
you will bear, directly or indirectly. The Fee Table and Examples include
expenses and charges of the Account as well as the Funds. The Examples do not
reflect the $40 contract fee because, based on our estimates of average contract
size and withdrawals, its effect on the examples shown would be negligible.
Premium taxes may also be applicable. See the CHARGES AND DEDUCTIONS section in
this Prospectus and the Fund prospectuses for a further discussion of fees and
charges.
11
<PAGE>
THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR ANNUAL RATES OF RETURN OF ANY FUND. ACTUAL EXPENSES AND ANNUAL RATES
OF RETURN MAY BE MORE OR LESS THAN THOSE ASSUMED FOR THE PURPOSE OF THE
EXAMPLES.
The subaccounts available under the Contract have not yet commenced
operations. Therefore, there is no history of accumulation unit values for
these subaccounts.
NOTES TO FEE TABLE
(a) Merrill Lynch Asset Management, L.P. ("MLAM") and Merrill Lynch Life
Agency, Inc. have entered into a Reimbursement Agreement that limits the
operating expenses, exclusive of any distribution fees imposed on Class B
shares, paid by each Fund of the Merrill Lynch Variable Series Funds, Inc.
in a given year to 1.25% of its average net assets. This Reimbursement
Agreement is expected to remain in effect for the current year.
(b) "Other Expenses" and "Total Annual Operating Expenses" shown for the
Mercury V.I. U.S. Large Cap Fund are based on expenses estimated for the
current fiscal year. Mercury Asset Management International Ltd. has
agreed to limit for one year the operating expenses paid by the Mercury
V.I. U.S. Large Cap Fund to 1.25% of its average net assets.
(c) The Fee Table does not reflect fees waived or expenses assumed by Alliance
Capital Management L.P. ("Alliance") for the Alliance Premier Growth
Portfolio during the year ended December 31, 1998. Such waivers and
assumption of expenses were made on a voluntary basis. Alliance may
discontinue or reduce any such waiver or assumption of expenses at any
time without notice. During the fiscal year ended December 31, 1998,
Alliance waived management fees totaling 0.03% for the Alliance Premier
Growth Portfolio. Considering such reimbursements, "Investment Advisory
Fees" would have been 0.97% and "Total Annual Operating Expenses" would
have been 1.06%.
12
<PAGE>
YIELDS AND TOTAL RETURNS
From time to time, we may advertise yields, effective yields, and total returns
for the subaccounts. THESE FIGURES ARE BASED ON HISTORICAL EARNINGS AND DO NOT
INDICATE OR PROJECT FUTURE PERFORMANCE. We may also advertise performance of the
subaccounts in comparison to certain performance rankings and indices. More
detailed information on the calculation of performance information, as well as
comparisons with unmanaged market indices, appears in the Statement of
Additional Information.
Effective yields and total returns for a subaccount are based on the investment
performance of the corresponding Fund. Fund expenses influence Fund performance.
The yield of the Domestic Money Market Subaccount refers to the annualized
income generated by an investment in the subaccount over a specified 7-day
period. The yield is calculated by assuming that the income generated for that
7-day period is generated each 7-day period over a 52-week period and is shown
as a percentage of the investment. The effective yield is calculated similarly
but, when annualized, the income earned by an investment is assumed to be
reinvested. The effective yield will be slightly higher than the yield because
of the compounding effect of this assumed reinvestment.
The yield of a subaccount (besides the Domestic Money Market Subaccount) refers
to the annualized income generated by an investment in the subaccount over a
specified 30-day or one month period. The yield is calculated by assuming the
income generated by the investment during that 30-day or one-month period is
generated each period over 12 months and is shown as a percentage of the
investment.
The average annual total return of a subaccount refers to return quotations
assuming an investment has been held in each subaccount for 1, 5 and 10 years,
or for a shorter period, if applicable. The average annual total returns
represent the average compounded rates of return that would cause an initial
investment of $1,000 to equal the value of that investment at the end of each
period. These percentages exclude any deductions for premium taxes.
We may also advertise or present yield or total return performance information
computed on different bases, but this information will always be accompanied by
average annual total returns for the corresponding subaccounts. We may also
advertise total return performance information for the Funds. We may also
present total return performance information for a subaccount for periods before
the date the subaccount commenced operations. If we do, we'll base performance
of the corresponding Fund as if the subaccount existed for the same periods as
those indicated for the corresponding Fund, with a level of fees and charges
equal to those currently imposed under the Contracts. We may also present total
performance information for a hypothetical Contract assuming allocation of the
initial premium to more than one subaccount or assuming monthly transfers from
one subaccount to designated other subaccounts under a Dollar Cost Averaging
Program. We may also present total performance information for a hypothetical
Contract assuming participation in the Asset Allocation Program or the
Rebalancing Program. This information will reflect the performance of the
affected subaccounts for the duration of the allocation under the hypothetical
Contract. It will also reflect the deduction of charges described above. This
information may also be compared to various indices.
Advertising and sales literature for the Contracts may also compare the
performance of the subaccounts and Funds to the performance of other variable
annuity issuers in general or to the performance of particular types of variable
annuities investing in mutual funds, with investment objectives similar to each
of the Funds corresponding to the subaccounts.
Performance information may also be based on rankings by services which monitor
and rank the performance of variable annuity issuers in each of the major
categories of investment objectives on an
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industry-wide basis. Ranking services we may use as sources of performance
comparison are Lipper, VARDS, CDA/Weisenberger, Morningstar, MICROPAL, and
Investment Company Data, Inc.
Advertising and sales literature for the Contracts may also compare the
performance of the subaccounts to the Standard & Poor's Index of 500 Common
Stocks, the Morgan Stanley EAFE Index, the Russell 2000 Index and the Dow Jones
Indices, all widely used measures of stock market performance. These unmanaged
indices assume the reinvestment of dividends, but do not reflect any "deduction"
for the expense of operating or managing an investment portfolio. Other sources
of performance comparison that we may use are Chase Investment Performance
Digest, Money, Forbes, Fortune, Business Week, Financial Services Weekly,
Kiplinger Personal Finance, Wall Street Journal, USA Today, Barrons, U.S. News &
World Report, Strategic Insight, Donaghues, Investors Business Daily, and
Ibbotson Associates.
Advertising and sales literature for the Contracts may also contain information
on the effect of tax deferred compounding on subaccount investment returns, or
returns in general. The tax deferral may be illustrated by graphs and charts and
may include a comparison at various points in time of the return from an
investment in a Contract (or returns in general) on a tax-deferred basis
(assuming one or more tax rates) with the return on a currently taxable basis.
MERRILL LYNCH LIFE INSURANCE COMPANY
We are a stock life insurance company organized under the laws of the State of
Washington on January 27, 1986. We changed our corporate location to Arkansas on
August 31, 1991. We are an indirect wholly owned subsidiary of Merrill Lynch &
Co., Inc., a corporation whose common stock is traded on the New York Stock
Exchange.
Our financial statements can be found in the Statement of Additional
Information. You should consider them only in the context of our ability to meet
any Contract obligation.
THE ACCOUNT
The Merrill Lynch Life Variable Annuity Separate Account A (the "Account")
offers through its subaccounts a variety of investment options. Each option has
a different investment objective.
We established the Account on August 6, 1991. It is governed by Arkansas law,
our state of domicile. The Account is registered with the Securities and
Exchange Commission as a unit investment trust under the Investment Company
Act of 1940. The Account meets the definition of a separate account under the
federal securities laws. The Account's assets are SEGREGATED from all of our
other assets.
SEGREGATION OF ACCOUNT ASSETS
Obligations to contract owners and beneficiaries that arise under the Contract
are our obligations. We own all of the assets in the Account. The Account's
income, gains, and losses, whether or not realized, derived from Account assets
are credited to or charged against the Account without regard to our other
income, gains or losses. The assets in each Account will always be at least
equal to the reserves and other liabilities of the Account. If the Account's
assets exceed the required reserves and other Contract liabilities, we may
transfer the excess to our general account. Under Arkansas insurance law the
assets in the Account, to the extent of its reserves and liabilities, may not be
charged with liabilities arising out of any other business we conduct nor may
the assets of the Account be charged with any liabilities of other separate
accounts.
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NUMBER OF SUBACCOUNTS; SUBACCOUNT INVESTMENTS
There are 11 subaccounts currently available through the Account. All
subaccounts invest in a corresponding portfolio of the Merrill Lynch Variable
Series Funds, Inc. (the "Variable Series Funds"); the AIM Variable Insurance
Funds, Inc. (the "AIM V.I. Funds"); the Alliance Variable Products Series Fund,
Inc. (the "Alliance Fund"); the MFS-Registered Trademark- Variable Insurance
Trust-SM- (the "MFS Trust"); the Hotchkis and Wiley Variable Trust (the
"Hotchkis and Wiley Trust"); or the Mercury Asset Management V.I. Funds, Inc.
(the "Mercury V.I. Funds"). Additional subaccounts may be added or closed in
the future.
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 a fund not available through
the Contract does not indicate performance of the similarly named fund available
through the Contract.
INVESTMENTS OF THE ACCOUNT
GENERAL INFORMATION AND INVESTMENT RISKS
Information about investment objectives, management, policies, restrictions,
expenses, risks, and all other aspects of fund operations can be found in the
Funds' prospectuses and Statements of Additional Information. Read these
carefully before investing. Fund shares are currently sold to our separate
accounts as well as separate accounts of ML Life Insurance Company of New York
(an indirect wholly owned subsidiary of Merrill Lynch & Co., Inc.), and
insurance companies not affiliated with us, to fund benefits under certain
variable annuity and variable life insurance contracts. Shares of these funds
may be offered in the future to certain pension or retirement plans.
Generally, you should consider the funds as long-term investments and vehicles
for diversification, but not as a balanced investment program. Many of these
funds may not be appropriate as the exclusive investment to fund a Contract for
all contract owners. The Fund prospectuses also describe certain additional
risks, including investing on an international basis or in foreign securities
and investing in lower rated or unrated fixed income securities. There is no
guarantee that any fund will be able to meet its investment objectives. Meeting
these objectives depends upon future economic conditions and upon how well Fund
management anticipates changes in economic conditions.
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
The Merrill Lynch Variable Series Funds, Inc. ("Variable Series Funds") is
registered with the Securities and Exchange Commission as an open-end management
investment company. It currently offers the Account Class A shares of 5 of its
separate investment mutual fund portfolios.
Merrill Lynch Asset Management, L.P. ("MLAM") is the investment adviser to the
Variable Series Funds. MLAM, together with its affiliates, Fund Asset
Management, L.P., Mercury Asset Management International Ltd., and Hotchkis and
Wiley, is a worldwide mutual fund leader, and has a total of $501.68 billion in
investment company and other portfolio assets under management as of the end of
February 1999. It is registered as an investment adviser under the Investment
Advisers Act of 1940. MLAM is an indirect subsidiary of Merrill Lynch & Co.,
Inc. MLAM's principal business address is 800 Scudders Mill Road,
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Plainsboro, New Jersey 08536. As the investment adviser, it is paid fees by
these Funds for its services. The fees charged to each of these Funds are set
forth in the summary below.
MLAM has entered into an agreement with Merrill Lynch Insurance Group, Inc.
("MLIG"), an affiliate of ours, under which MLIG provides administration
services for the Funds of Variable Series Funds used with the Contracts and
other variable life insurance and variable annuity contracts we issue. Under
this agreement, MLAM compensates MLIG in an amount equal to a portion of the
annual gross investment advisory fees paid by these Funds to MLAM attributable
to contracts we issue. MLAM and Merrill Lynch Life Agency, Inc. have entered
into a Reimbursement Agreement that limits the operating expenses paid by each
Fund of the Variable Series Funds in a given year to 1.25% of its average net
assets (see "Selling the Contract").
BASIC VALUE FOCUS FUND. This 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.
MLAM receives an advisory fee from the Fund at the annual rate of 0.60% of the
average daily net assets of the Fund.
DOMESTIC MONEY MARKET FUND. This Fund seeks to preserve capital, maintain
liquidity, and achieve the highest possible current income consistent with the
foregoing objectives by investing in short-term domestic money market
securities. MLAM receives an advisory fee from the Fund at the annual rate of
0.50% of the average daily net assets of the Fund.
GOVERNMENT BOND FUND. This Fund seeks the highest possible current income
consistent with the protection of capital afforded by investing in debt
securities issued or guaranteed by the United States Government, its agencies or
instrumentalities. MLAM receives an advisory fee from the Fund at an annual rate
of 0.50% of the average daily net assets of the Fund.
INDEX 500 FUND. This Fund seeks 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"). MLAM receives an advisory
fee from the Fund at an annual rate of 0.30% of the Fund's average daily net
assets.
SPECIAL VALUE FOCUS FUND. This 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. MLAM receives an advisory fee from the Fund at the annual rate of 0.75% of
the average daily net assets of the Fund. This is a higher fee than that of many
other mutual funds, but management of the Fund believes it is justified by the
high degree of care that must be given to the initial selection and continuous
supervision of the types of portfolio securities in which the Fund invests.
AIM VARIABLE INSURANCE FUNDS, INC.
AIM Variable Insurance Funds, Inc. ("AIM V.I. Funds") is registered with the
Securities and Exchange Commission as an open-end, series, management investment
company. It currently offers the Account two of its separate investment
portfolios.
AIM Advisors, Inc. ("AIM"), 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173, serves as the investment adviser to each of the Funds of AIM V.I.
Funds. AIM has acted as an investment adviser since its organization in 1976.
Today AIM, together with its subsidiaries, advises or manages over 110
investment portfolios, including the Funds, encompassing a broad range of
investment objectives. As the investment
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adviser, AIM is paid fees by these Funds for its services. The fees charged to
each of these Funds are set forth in the summary of investment objectives below.
AIM has entered into an agreement with us with respect to administrative
services for these Funds in connection with the Contracts. Under this agreement,
AIM pays us compensation in an amount equal to a percentage of the average net
assets of these Funds attributable to the Contracts.
AIM V.I. CAPITAL APPRECIATION FUND. This Fund seeks growth of capital through
investment in common stocks, with emphasis on medium and small-sized growth
companies. AIM receives an advisory fee from the Fund at an annual rate of 0.65%
of the first $250 million of the Fund's average daily net assets and 0.60% of
the Fund's average daily net assets in excess of $250 million.
AIM V.I. VALUE FUND. This Fund seeks to achieve long-term growth of capital by
investing primarily in equity securities judged by AIM to be undervalued
relative to AIM's appraisal of 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 market
generally. Income is a secondary objective. AIM receives an advisory fee from
the Fund at an annual rate of 0.65% of the first $250 million of the Fund's
average daily net assets and 0.60% of the Fund's average daily net assets in
excess of $250 million.
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
Alliance Variable Products Series Fund, Inc. ("Alliance Fund") is registered
with the Securities and Exchange Commission as an open-end management investment
company. It currently offers the Account one of its separate investment
portfolios. Alliance Capital Management L.P. ("Alliance"), a Delaware limited
partnership with principal offices at 1345 Avenue of the Americas, New York, New
York 10105 serves as the investment adviser to each Fund of the Alliance Fund.
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. As the investment adviser, Alliance is paid
fees by the Fund for its services. The fees charged to the Fund are set forth in
the summary of investment objective below.
Alliance Fund Distributors, Inc. ("AFD"), an affiliate of Alliance, has entered
into an agreement with us with respect to administrative services for the Fund
in connection with the Contracts. Under this agreement, AFD pays us compensation
in an amount equal to a percentage of the average net assets of the Fund
attributable to the Contracts.
ALLIANCE PREMIER GROWTH PORTFOLIO. This Fund seeks growth of capital by pursuing
aggressive investment policies. Since investments will be made based upon their
potential for capital appreciation, current income is incidental to the
objective of capital growth. Alliance receives an advisory fee from the Fund at
an annual rate of 1.00% of the Fund's average daily net assets. (See "Notes to
Fee Table" for a discussion of a reimbursement arrangement applicable to this
Fund.)
MFS-Registered Trademark- VARIABLE INSURANCE TRUST-SM-
MFS-Registered Trademark- Variable Insurance Trust-SM- ("MFS Trust") is
registered with the Securities and Exchange Commission as an open-end management
investment company. It currently offers the Account one of its separate
investment portfolios.
Massachusetts Financial Services Company ("MFS"), a Delaware corporation, 500
Boylston Street, Boston, Massachusetts 02116, serves as the investment adviser
to each Fund of MFS Trust. MFS is a subsidiary of
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Sun Life of Canada (U.S.) Financial Services Holdings, Inc., which, in turn, is
a indirect wholly owned subsidiary of Sun Life Assurance Company of Canada. As
the investment adviser, MFS is paid fees by the Fund for its services. The fees
charged to the Fund are set forth in the summary of investment objective below.
MFS has entered into an agreement with MLIG with respect to administrative
services for the Fund 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 Fund attributable to such contracts.
MFS EMERGING GROWTH SERIES. This series will seek long-term growth of capital.
The series invests, under normal market conditions, at least 65% of its total
assets in common stocks and related securities of emerging growth companies.
These companies are companies that the series' adviser believes are either early
in their life cycle but have the potential to become major enterprises or are
major enterprises whose rates of earnings growth are expected to accelerate.
HOTCHKIS AND WILEY VARIABLE TRUST
Hotchkis and Wiley Variable Trust ("Hotchkis and Wiley Trust"), a Massachusetts
business trust, is registered with the Securities and Exchange Commission as an
open-end management investment company. The Hotchkis and Wiley Trust is intended
to serve as the investment medium for variable annuity contracts and variable
life insurance policies to be offered by the separate accounts of certain
insurance companies.
Hotchkis and Wiley, 725 S. Figueroa Street, Suite 4000, Los Angeles, California
90017-5400, serves as the investment adviser to the Hotchkis and Wiley
International VIP Portfolio and generally administers the affairs of the
Hotchkis and Wiley Trust. Hotchkis and Wiley is a division of MLAM. As the
investment adviser, Hotchkis and Wiley is paid fees by the Fund for its
services. The fees charged to the Fund for advisory services are set forth in
the summary of investment objective below.
Hotchkis and Wiley has entered into an agreement with MLIG with respect to
administrative services for the Hotchkis and Wiley Trust in connection with the
Contracts and certain Contracts issued by ML Life Insurance Company of New York.
Under this agreement, Hotchkis and Wiley pays compensation to MLIG in an amount
equal to a portion of the annual gross investment advisory fees paid by the
Hotchkis and Wiley International VIP Portfolio to Hotchkis and Wiley
attributable to such contracts.
HOTCHKIS AND WILEY INTERNATIONAL VIP PORTFOLIO. The Fund's investment objective
is to provide current income and long-term growth of income, accompanied by
growth of capital. The Fund invests at least 65% of its total assets in stocks
in at least ten foreign markets. In investing the Fund, Hotchkis and Wiley
follows a VALUE style. This means that it buys stocks that it believes are
currently undervalued by the market and thus have a lower price than their true
worth. Hotchkis and Wiley receives from the Fund an advisory fee at an annual
rate of 0.75% of the Fund's average daily net assets.
MERCURY ASSET MANAGEMENT V.I. FUNDS, INC.
Mercury Asset Management V.I. Funds, Inc. ("Mercury V.I. Funds") is registered
with the Securities and Exchange Commission as an open-end management investment
company, and its adviser is Mercury Asset Management International Ltd. Class A
shares of one of its mutual fund portfolios, the Mercury V.I. U.S. Large Cap
Fund, is available through the Account. The investment objective of the Mercury
V.I. U.S. Large Cap Fund is described below.
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Mercury Asset Management International Ltd. is located at 33 King William
Street, London EC4R 9AS, England. Its immediate parent is Mercury Asset
Management Group Ltd. a London-based holding company. The ultimate parent of
Mercury Asset Management Group Ltd. is Merrill Lynch & Co., Inc. The Mercury
V.I. U.S. Large Cap Fund, as part of its operating expenses, pays an investment
advisory fee to Mercury Asset Management International Ltd. set forth in the
summary of investment objective below.
Mercury Asset Management International Ltd. has entered into an agreement with
MLIG with respect to administrative services for the Mercury V.I. Funds in
connection with the Contracts and certain Contracts issued by ML Life Insurance
Company of New York. Under this agreement, Mercury Asset Management
International Ltd. pays compensation to MLIG in an amount equal to a portion of
the annual gross investment advisory fees paid by the Mercury V.I. U.S. Large
Cap Fund to Mercury Asset Management International Ltd. attributable to such
contracts.
MERCURY V.I. U.S. LARGE CAP FUND. This Fund's main goal is long-term capital
growth. The Fund invests primarily in a diversified portfolio of equity
securities of large cap companies (which are companies whose market
capitalization is at least $5 billion) located in the U.S. that Fund management
believes are undervalued or have good prospects for earnings growth. The Mercury
V.I. Funds incurs operating expenses and pays a monthly advisory fee to Mercury
Asset Management International Ltd. at an annual rate of .65% of the average
daily net assets of the Mercury V.I. U.S. Large Cap Fund.
PURCHASES AND REDEMPTIONS OF FUND SHARES; REINVESTMENT
The Account will purchase and redeem shares of the Funds at net asset value to
provide benefits under the Contract. Fund distributions to the Account are
automatically reinvested at net asset value in additional shares of the Funds.
MATERIAL CONFLICTS, SUBSTITUTION OF INVESTMENTS AND CHANGES TO THE ACCOUNT
It is conceivable that material conflicts could arise as a result of both
variable annuity and variable life insurance separate accounts investing in the
Funds. Although no material conflicts are foreseen, the participating insurance
companies will monitor events in order to identify any material conflicts
between variable annuity and variable life insurance contract owners to
determine what action, if any, should be taken. Material conflicts could result
from such things as (1) changes in state insurance law, (2) changes in federal
income tax law or (3) differences between voting instructions given by variable
annuity and variable life insurance contract owners. If a conflict occurs, we
may be required to eliminate one or more subaccounts of the Account or
substitute a new subaccount. In responding to any conflict, we will take the
action we believe necessary to protect our contract owners.
We may substitute a different investment option for any of the current Funds. We
can do this for both existing investments and the investment of future premiums.
However, before any such substitution, we would need the approval of the
Securities and Exchange Commission and applicable state insurance departments.
We will notify you of any substitutions.
We may also add new subaccounts to the Account, eliminate subaccounts in the
Account, deregister the Account under the Investment Company Act of 1940 (the
"1940 Act"), make any changes required by the 1940 Act, operate the Account as a
managed investment company under the 1940 Act or any other form permitted by
law, transfer all or a portion of the assets of a subaccount or separate account
to another subaccount or separate account pursuant to a combination or
otherwise, and create new separate accounts. Before we make certain changes we
need approval of the Securities and Exchange Commission and applicable state
insurance departments. We will notify you of any changes.
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CHARGES AND DEDUCTIONS
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.
ASSET-BASED INSURANCE CHARGE
We currently impose an asset-based insurance charge on the Account that equals
1.59% annually. It will never exceed 1.59%.
We deduct this charge daily from the net asset value of the subaccounts. This
amount compensates us for mortality risks we assume for the annuity payment and
death benefit guarantees made under the Contract. These guarantees include
making annuity payments which won't change based on our actual mortality
experience, and providing a guaranteed minimum death benefit under the Contract.
The charge also compensates us for expense risks we assume to cover Contract
maintenance expenses. These expenses may include issuing Contracts, maintaining
records, and performing accounting, regulatory compliance, and reporting
functions. Finally, this charge compensates us for costs associated with the
establishment and administration of the Contract, including programs like
transfers and Dollar Cost Averaging.
If the asset-based insurance charge is inadequate to cover the actual expenses
of mortality, maintenance, and administration, we will bear the loss. If the
charge exceeds the actual expenses, we will add the excess to our profit and it
may be used to finance distribution expenses.
CONTRACT FEE
We may charge a $40 contract fee each year. We will only impose this fee if the
greater of contract value, or premiums less withdrawals, is less than $25,000.
Accordingly, if you have not made any withdrawals from your Contract (or your
withdrawals have not decreased your investment in the Contract below $25,000),
we will not impose this annual fee.
The contract fee reimburses us for additional expenses related to maintenance of
certain Contracts with lower contract values. We do not deduct the contract fee
after the annuity date. The contract fee will never increase.
If the contract fee applies, we will deduct it as follows:
- We deduct this fee from your contract value on each contract
anniversary that occurs on or before the annuity date.
- We deduct this fee from your contract value if you surrender the
contract on any date other than a contract anniversary.
- We deduct this fee on a pro rata basis from among all
subaccounts in which your contract value is invested.
Currently, a contract owner of three or more Contracts will be assessed no more
than $120 in contract fees annually. We reserve the right to change this limit
on contract fees at any time.
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OTHER CHARGES
TRANSFER CHARGES
You may make up to twelve transfers among subaccounts per contract year without
charge. If you make more than twelve, we may, but currently do not, charge you
$25 for each extra transfer. We deduct this charge pro rata from the subaccounts
from which you are transferring contract value. Currently, transfers made by us
under the Dollar Cost Averaging Program, the Asset Allocation Program, and the
Rebalancing Program will not count toward the twelve transfers permitted among
subaccounts per contract year without charge. (See "Dollar Cost Averaging
Program", "Asset Allocation Program", "Rebalancing Program", and "Transfers".)
TAX CHARGES
We reserve the right, subject to any necessary regulatory approval, to charge
for assessments or federal premium taxes or federal, state or local excise,
profits or income taxes measured by or attributable to the receipt of premiums.
We also reserve the right to deduct from the Account any taxes imposed on the
Account's investment earnings. (See "Tax Status of the Contract".)
FUND EXPENSES
In calculating net asset value, the Funds deduct advisory fees and operating
expenses from assets. Information about those fees and expenses can be found in
the attached prospectuses for the Funds, and in the Statement of Additional
Information for each Fund.
PREMIUM TAXES
Various states and municipalities impose a premium tax on annuity premiums when
they are received by an insurance company. In other jurisdictions, a premium tax
is paid on the contract value on the annuity date.
Premium tax rates vary from jurisdiction to jurisdiction and currently range
from 0% to 5%. Although we pay these taxes when due, we won't deduct them from
your contract value until the annuity date. In those jurisdictions that do not
allow an insurance company to reduce its current taxable premium income by the
amount of any withdrawal, surrender or death benefit paid, we will also deduct a
charge for these taxes on any withdrawal, surrender or death benefit paid under
the Contract.
Premium tax rates are subject to change by law, administrative interpretations,
or court decisions. Premium tax amounts will depend on, among other things, the
contract owner's state of residence, our status within that state, and the
premium tax laws of that state.
FEATURES AND BENEFITS OF THE CONTRACT
As we describe the contract, we will often use the word "you". In this context
"you" means "contract owner".
OWNERSHIP OF THE CONTRACT
The contract owner is entitled to exercise all rights under the Contract. Unless
otherwise specified, the purchaser of the Contract will be the contract owner.
The Contract can be owned by a trust or a corporation. However, special tax
rules apply to Contracts owned by "non-natural persons" such as corporations or
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trusts. If you are a human being, you are considered a "natural person." You may
designate a beneficiary. If you die, the beneficiary will receive a death
benefit. You may also designate an annuitant. You may change the annuitant at
any time prior to the annuity date. If you don't select an annuitant, you are
the annuitant.
If a non-natural person owns the Contract and changes the annuitant, the
Internal Revenue Code (IRC) requires us to treat the change as the death of a
contract owner. We will then pay the beneficiary the death benefit.
Only spouses may be co-owners of the Contract. When co-owners are established,
they exercise all rights under the Contract jointly unless they elect otherwise.
Co-owner spouses must each be designated as beneficiary for the other. Co-owners
may also designate a beneficiary to receive benefits on the surviving co-owner's
death. IRA Contracts may not have co-owners.
You may assign the Contract to someone else by giving notice to our Service
Center. Only complete ownership of the Contract may be assigned to someone else.
You can't do it in part. An assignment to a new owner cancels all prior
beneficiary designations except a prior irrevocable beneficiary designation.
Assignment of the Contract may have tax consequences or may be prohibited on
certain IRA Contracts, so you should consult with a qualified tax adviser before
assigning the Contract. (See "Federal Income Taxes".)
ISSUING THE CONTRACT
ISSUE AGE
You can buy a nonqualified Contract if you (and any co-owner) are less than 90
years old. Annuitants on nonqualified Contracts must also be less than 90 years
old when we issue the Contract. For qualified Contracts owned by natural
persons, the contract owner and annuitant must be the same person. Contract
owners and annuitants on qualified Contracts must be less than 70 1/2 years old
when we issue the Contract.
INFORMATION WE NEED TO ISSUE THE CONTRACT
Before we issue the Contract, we need certain information from you. We may
require you to complete and return a written application in certain
circumstances, such as when the Contract is being issued to replace, or in
exchange for, another annuity or life insurance contract. Once we review and
approve that information or application, and you pay the initial premium, we'll
issue a Contract. Generally, we'll issue the Contract and invest the premium
within two business days of our receiving your premium. If we haven't received
necessary information within five business days, however, we will offer to
return the premium and no Contract will be issued. You can consent to our
holding the premium until we get all necessary information, and then we will
invest the premium within two business days after we get the information.
TEN DAY RIGHT TO REVIEW
When you get the Contract, review it carefully to make sure it is what you
intended to purchase. Generally, within ten days after you receive the Contract,
you may return it for a refund. The Contract will then be deemed void. Some
states allow a longer period of time to return the Contract. To get a refund,
return the Contract to our Service Center or to the Financial Consultant who
sold it. We will then refund the greater of all premiums paid into the Contract
or the contract value as of the date the Contract is returned. For contracts
issued in Pennsylvania, we'll refund the contract value as of the date the
Contract is returned.
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PREMIUMS
MINIMUM AND MAXIMUM PREMIUMS
Initial premium payments must be $25,000 or more. Subsequent premium payments
generally must be $100 or more. You can make subsequent premium payments at any
time before the annuity date. The maximum premium that will be accepted without
Company approval is $1,000,000. We also reserve the right to reject subsequent
premium payments.
The Contract is available as a non-qualified contract or may be issued as an IRA
or purchased through an established IRA or Roth IRA custodial account with
MLPF&S. Federal law limits maximum annual contributions to IRAs and Roth IRAs.
Transfer amounts from tax-sheltered annuity plans that are not subject to the
Employee Retirement Income Security Act of 1974, as amended, will be accepted as
premium payments, as permitted by law. Other premium payments will not be
accepted under a Contract used as a tax sheltered annuity. We may waive the $100
minimum for premiums paid under IRA Contracts held in custodial accounts with
MLPF&S where you're transferring the complete cash balance of such account into
a Contract.
HOW TO MAKE PAYMENTS
You can pay premiums directly to our Service Center at the address printed on
the cover of this Prospectus or have money debited from your MLPF&S brokerage
account.
AUTOMATIC INVESTMENT FEATURE
You may make systematic premium payments on a monthly, quarterly, semi-annual
or annual basis. Each payment must be for at least $100. Premiums paid under
this feature must be deducted from an MLPF&S brokerage account specified by
you and acceptable to us. You must specify how premiums paid under this
feature will be allocated among the subaccounts. If you select the Asset
Allocation Program or the Rebalancing Program, premiums will be allocated
based on the model or the specified subaccounts and percentages you have
selected. You may change the specified premium amount, the premium
allocation, or cancel the Automatic Investment Feature at any time upon
notice to us. We reserve the right to make changes to this program at any
time.
PREMIUM INVESTMENTS
For the first 14 days following the contract date, we'll hold all premiums in
the Domestic Money Market Subaccount. After the 14 days, we'll reallocate the
contract value to the subaccounts you selected. (In Pennsylvania, we'll invest
all premiums as of the contract date in the subaccounts you selected.)
Currently, you may allocate your premium among 10 of the subaccounts.
Allocations must be made in whole numbers. For example, 12% of a premium
received may be allocated to the Basic Value Focus Subaccount, 58% allocated to
the Government Bond Subaccount, and 30% allocated to the Index 500 Subaccount.
However, you may not allocate 33 1/3% to the Basic Value Focus Subaccount and
66 2/3% to the Government Bond Subaccount. If we don't get allocation
instructions when we receive subsequent premiums, we will allocate those
premiums according to the allocation instructions you last gave us. We reserve
the right to modify the limit on the number of subaccounts to which future
allocations may be made.
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ACCUMULATION UNITS
Each subaccount has a distinct value, called the accumulation unit value. The
accumulation unit value for a subaccount varies daily with the performance and
expenses of the corresponding fund. We use this value to determine the number of
subaccount accumulation units represented by your investment in a subaccount.
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HOW ARE MY CONTRACT TRANSACTIONS PRICED?
We calculate an accumulation unit value for each subaccount
at the close of business on each day that the New York Stock
Exchange is open. Transactions are priced, which means that
accumulation units in your Contract are purchased (added to
your Contract) or redeemed (taken out of your contract), at
the unit value next calculated after our Service Center
receives notice of the transaction. For premium payments and
transfers into a subaccount, units are purchased. For payment
of Contract proceeds (i.e., withdrawals, surrenders,
annuitization, and death benefits), transfers out of a
subaccount, and deductions for any contract fee, any transfer
charge, and any premium taxes due, units are redeemed.
--------------------------------------------------------------
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HOW DO WE DETERMINE THE NUMBER OF UNITS?
We determine the number of units by dividing the dollar value
of the amount of the purchase or transfer allocated to the
subaccount by the value of one accumulation unit for that
subaccount for the valuation period in which the purchase or
transfer is made. The number of accumulation units in each
subaccount credited to a Contract will therefore increase or
decrease as these transactions are made. The number of
subaccount accumulation units credited to a Contract will not
change as a result of investment experience or the deduction
of asset-based insurance charges. Instead, this charge and
investment experience are reflected in the accumulation unit
value.
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When we first established each subaccount, we arbitrarily set the value of an
accumulation unit at $10. Accumulation unit values increase, decrease, or stay
the same from one valuation period to the next. An accumulation unit value for
any valuation period is determined by multiplying the accumulation unit value
for the prior valuation period by the net investment factor for the subaccount
for the current valuation period.
The net investment factor is an index used to measure the investment performance
of a subaccount from one valuation period to the next. For any subaccount, we
determine the net investment factor by dividing the value of the assets of the
subaccount for that valuation period by the value of the assets of the
subaccount for the preceding valuation period. We subtract from that result the
daily equivalent of the asset-based insurance charge for the valuation period.
We also take reinvestment of dividends and capital gains into account when we
determine the net investment factor.
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We may adjust the net investment factor to make provisions for any change in tax
law that requires us to pay tax on earnings in the Account or any charge that
may be assessed against the Account for assessments or federal premium taxes or
federal, state or local excise, profits or income taxes measured by or
attributable to the receipt of premiums. (See "Other Charges".)
ADDITIONAL PROVISIONS APPLICABLE TO ALL CONTRACTS
DEATH OF ANNUITANT PRIOR TO ANNUITY DATE
If the annuitant dies before the annuity date, and the annuitant is not a
contract owner, the owner may designate a new annuitant. If a new annuitant is
not designated, the contract owner will become the annuitant unless any owner is
not a natural person. If any contract owner is not a natural person, no new
annuitant may be named and the death benefit will be paid to the beneficiary.
TRANSFERS AMONG SUBACCOUNTS
Before the annuity date, you may transfer all or part of your contract value
among the subaccounts up to twelve times per contract year without charge. You
can make additional transfers among subaccounts, but we may charge you $25 for
each extra transfer. We will deduct the transfer charge pro rata from among the
subaccounts you're transferring from. Currently, transfers made by us under the
Dollar Cost Averaging Program, the Asset Allocation Program, and the Rebalancing
Program will not count toward the twelve transfers permitted among subaccounts
per contract year without charge. (See "Dollar Cost Averaging Program", "Asset
Allocation Program", and "Rebalancing Program".) We reserve the right to change
the number of additional transfers permitted each contract year.
Transfers among subaccounts may be made in specific dollar amounts or as a
percentage of contract value. You must transfer at least $100 or the total value
of a subaccount, if less.
You may request transfers in writing or by telephone, once we get proper
telephone transfer authorization. Transfer requests may also be made through
your Merrill Lynch Financial Consultant, or another person you designate, once
we receive proper authorization. Transfers will take effect as of the end of the
valuation period on the date the Service Center receives the request. We will
consider telephone transfer requests received after 4:00 p.m. (ET) to be
received the following business day.
An excessive number of transfers, including short-term "market timing"
transfers, may adversely affect the performance of the underlying fund in which
a subaccount invests. If, in our sole opinion, a pattern of excessive transfers
develops, we reserve the right not to process a transfer request. We also
reserve the right not to process a transfer request when the sale or purchase of
shares of a Fund is not reasonably practicable due to actions taken or
limitations imposed by the Fund.
DOLLAR COST AVERAGING PROGRAM
WHAT IS IT?
The Contract offers an optional transfer program called Dollar Cost Averaging
("DCA"). This program allows you to reallocate money at monthly intervals from a
designated subaccount to one or more other subaccounts. The DCA Program is
intended to reduce the effect of short term price fluctuations on investment
cost. Since we transfer the same dollar amount to selected subaccounts monthly,
the DCA Program allows you to purchase more accumulation units when prices are
low and fewer accumulation units when prices are high. Therefore, you may
achieve a lower average cost per accumulation unit over the long-term. However,
it is important to understand that a DCA Program does not assure a profit or
protect
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against loss in a declining market. If you choose to participate in the DCA
Program you should have the financial ability to continue making investments
through periods of low price levels.
If you choose to participate in the DCA Program, each month we will transfer
amounts from the subaccount that you designate and allocate them, in accordance
with your allocation instructions, to the subaccounts that you select.
If you choose the Asset Allocation Program or the Rebalancing Program, you
cannot use the DCA Program. We reserve the right to make changes to this program
at any time.
PARTICIPATING IN THE DCA PROGRAM
You can choose the DCA Program any time before the annuity date. To choose the
DCA Program, we must receive a written request from you. Once you start using
the DCA Program, you must continue it for at least three months. After three
months, you may cancel the DCA Program at any time by notifying us in writing.
Once you reach the annuity date, you may no longer use this program.
MINIMUM AMOUNTS
To elect the DCA Program , you need to have a minimum amount of money in the
designated subaccount. We determine the amount required by multiplying the
specified length of your DCA Program in months by your specified monthly
transfer amount. Amounts of $100 or more must be allotted for transfer each
month in the DCA Program. We reserve the right to change these minimums.
Allocations must be designated in whole percentage increments. No specific
dollar amount designations may be made. Should the amount in your selected
subaccount drop below the selected monthly transfer amount, we'll notify you
that you need to put more money in to continue the program.
WHEN DO WE MAKE DCA TRANSFERS?
You select the date for DCA transfers. We will make the first DCA transfer on
the selected date following the later of 14 days after the contract date or the
date we receive notice of your DCA election at our Service Center. We'll make
subsequent DCA transfers on the same day of each succeeding month. Currently, we
don't charge for DCA transfers; they are in addition to the twelve annual
transfers permitted without charge under the Contract.
ASSET ALLOCATION PROGRAM
Under the Asset Allocation Program, we will allocate your premiums and contract
value according to an asset allocation model you select based on your investment
goals and risk tolerance. There are currently five asset allocation models to
choose from:
- Capital Preservation
- Current Income
- Income and Growth
- Long-Term Growth
- Aggressive Growth
Each model identifies specific subaccounts and the percentage of premium or
contract value which should be allocated to each of those subaccounts. We may
periodically adjust the composition of each model. Any adjustments become
effective at the end of the calendar quarter.
The asset allocation models are not recommendations, have not been designed
with your specific financial circumstances in mind, and may not be
appropriate for any particular individual. There may be other allocations
that would be more appropriate to satisy your needs and goals.
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When you elect the Asset Allocation Program, we allocate your premium or
contract value in accordance with your selected model. On the last business day
of each calendar quarter, we automatically reallocate your contract value to
maintain the subaccounts and percentages for your selected model.
We perform this periodic rebalancing to take account of:
- increases and decreases in contract value in each subaccount due to
subaccount performance,
- increases and decreases in contract value in each subaccount due to
withdrawals, transfers, and premiums, and
- any adjustments we make to your selected model.
Asset allocation can be elected at issue or at any time subsequent. To elect the
Asset Allocation Program, we must receive a written request from you. If you
elect the Asset Allocation Program, you must include all contract value in the
program. Unless you instruct us otherwise, we allocate premiums in accordance
with your selected model. The asset allocation model that you select under the
program will override any prior percentage allocations that you have chosen and
we will allocate all future premiums accordingly. You may change your selected
model at any time. Once elected, you may instruct us, in a written form
satisfactory to us, at any time to terminate the program. Currently, we don't
charge for transfers under this program; they are in addition to the twelve
annual transfers permitted without charge under the Contract.
We reserve the right to make changes to this program at any time. If you choose
the Rebalancing Program or the DCA Program, you cannot use the Asset Allocation
Program.
REBALANCING PROGRAM
You may choose the Rebalancing Program, where you select the percentage of
premiums and contract value which are to be allocated to the subaccounts you
select based on your investment goals and risk tolerance.
When you elect the Rebalancing Program, we allocate your premiums or contract
value in accordance with the subaccounts and percentages you have selected.
On the last business day of each calendar quarter, we automatically
reallocate your contract value to maintain the particular percentage
allocation among the subaccounts that you have selected.
We perform this periodic rebalancing to take account of:
- increases and decreases in contract value in each subaccount due to
subaccount performance, and
- increases and decreases in contract value in each subaccount due to
withdrawals, transfers, and premiums.
To elect the Rebalancing Program, we must receive a written request from you. If
you elect the Rebalancing Program, you must include all contract value in the
automatic reallocation. Unless you instruct us otherwise, we allocate premiums
in accordance with the particular percentage allocation among the subaccounts
that you have selected. The percentages that you select under the Rebalancing
Program will override any prior percentage allocations that you have chosen and
we will allocate all future premiums accordingly. Once elected, you may instruct
us, in a written form satisfactory to us, at any time to terminate the program.
Currently, we don't charge for transfers under this program; they are in
addition to the twelve annual transfers permitted without charge under the
Contract.
We reserve the right to make changes to this program at any time. If you choose
the Asset Allocation Program or the DCA Program, you cannot use the Rebalancing
Program.
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WITHDRAWALS AND SURRENDERS
WHEN AND HOW WITHDRAWALS ARE MADE
Before the annuity date, you may withdraw money from the Contract up to six
times per contract year. Withdrawals are subject to tax and prior to age 59 1/2
may also be subject to a 10% federal penalty tax. (See "Federal Income Taxes".)
Unless you direct us otherwise, we will make withdrawals from subaccounts in the
same proportion as the subaccounts bear to your contract value. You may make a
withdrawal request in writing to our Service Center. You may withdraw money by
telephone, once you've submitted a proper telephone authorization form to our
Service Center, but only if the amount withdrawn is to be paid into a Merrill
Lynch brokerage account. We will consider telephone withdrawal requests received
after 4:00 p.m. (ET) to be received the following business day.
MINIMUM AMOUNTS
The minimum amount that may be withdrawn is $100. At least $5,000 must remain in
the Contract after you make a withdrawal. We reserve the right to change these
minimums.
SYSTEMATIC WITHDRAWAL PROGRAM
Subject to state availability, you may have automatic withdrawals of a specified
dollar amount made monthly, quarterly, semi-annually or annually. Each
withdrawal must be for at least $100 and the remaining contract value must be at
least $5,000. You may change the specified dollar amount or frequency of
withdrawals or stop the Systematic Withdrawal Program at any time upon notice to
us. We will make systematic withdrawals from subaccounts in the same proportion
as the subaccounts bear to your contract value. These systematic withdrawals are
in addition to the annual six withdrawals permitted under the Contract. We
reserve the right to restrict the maximum amount that may be withdrawn each year
under the Systematic Withdrawal Program and to make any other changes to this
program at any time.
SURRENDERS
At any time before the annuity date you may surrender the Contract through a
full withdrawal. The Contract must be delivered to our Service Center. We will
pay you an amount equal to the contract value as of the end of the valuation
period when we process the surrender, minus the contract fee, if applicable, and
minus any applicable charge for premium taxes. (See "Charges and Deductions".)
PAYMENTS TO CONTRACT OWNERS
We'll make any payments to you usually within seven days of our Service Center
receiving your proper request. However, we may delay any payment, or delay
processing any annuity payment or transfer request if:
(a) the New York Stock Exchange is closed;
(b) trading on the New York Stock Exchange is restricted by the
Securities and Exchange Commission;
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(c) the Securities and Exchange Commission declares that an emergency
exists making it not reasonably practicable to dispose of
securities held in the Account or to determine the value of the
Account's assets;
(d) the Securities and Exchange Commission by order so permits for
the protection of security holders; or
(e) payment is derived from a check used to make a premium payment
which has not cleared through the banking system.
CONTRACT CHANGES
Requests to change the owner, beneficiary, annuitant, or annuity date of a
Contract will take effect as of the date you sign such a request, unless we have
already acted in reliance on the prior status. We are not responsible for the
validity of such a request.
If you change the owner or annuitant on a nonqualified Contract, the new owner
or annuitant must be less than 90 years old. For qualified Contracts, if you
change the owner or annuitant, the new owner or annuitant must be less than
70 1/2 years old.
DEATH BENEFIT
GENERAL
Regardless of investment experience, the Contract provides a guaranteed minimum
death benefit to the beneficiary if you die before the annuity date. (If an
owner is a non-natural person, then the death of the annuitant will be treated
as the death of the owner.)
We will pay the death benefit in a lump sum unless the beneficiary chooses an
annuity payment option available under the Contract. (See "Annuity Options".)
However, if you die before the annuity date, federal tax law generally requires
us to distribute the entire contract value within five years of the date of
death. Special rules may apply to a surviving spouse. (See "Federal Income
Taxes".)
We determine the death benefit as of the date we receive certain information at
our Service Center. We call this information due proof of death. It consists of
the Beneficiary Statement, a certified copy of the death certificate, and any
additional documentation we may need to process the death claim. If we haven't
received the other documents within 60 days following our receipt of a certified
death certificate, we will consider due proof of death to have been received and
we will pay the death benefit in a lump sum.
Unless you irrevocably designated a beneficiary, you may change the beneficiary
at any time before the annuity date.
SPOUSAL CONTINUATION
If your beneficiary is your surviving spouse, your spouse may elect to continue
the Contract if you die before the annuity date. Your spouse becomes the
contract owner and the beneficiary until your spouse names a new beneficiary. If
the death benefit which would have been paid to the surviving spouse is greater
than the contract value as of the date we determine the death benefit, we will
increase the contract value of the continued Contract to equal the death benefit
we would have paid to the surviving spouse. Your interest in each subaccount
will be increased by the ratio of your contract value in each subaccount to your
contract value.
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CALCULATION OF DEATH BENEFIT
If you (or the older owner, if the Contract has co-owners, or the annuitant, if
the owner is a non-natural person) are age 80 or over on the contract date, the
death benefit is the greater of:
(i) the premiums paid into the Contract less "adjusted" withdrawals
from the Contract; or
(ii) the contract value.
- --------------------------------------------------------------------------------
For this formula, each "adjusted" withdrawal equals the amount withdrawn
multiplied by (a) DIVIDED BY (b) where:
a = premiums paid into the Contract less previous "adjusted" withdrawals;
and
b = the contract value.
Both (a) and (b) are calculated immediately prior to the withdrawal.
- --------------------------------------------------------------------------------
If you (or the older owner, if the Contract has co-owners, or the annuitant, if
the owner is a non-natural person) are under age 80 on the contract date, the
death benefit is the greatest of:
(i) the premiums paid into the Contract less "adjusted" withdrawals
from the Contract;
(ii) the contract value; or
(iii) the Maximum Anniversary Value.
- --------------------------------------------------------------------------------
For this formula, each "adjusted" withdrawal equals the amount withdrawn
multiplied by the greater of (a) or (b) DIVIDED BY (c) where:
a = premiums paid into the Contract less previous "adjusted" withdrawals;
b = the Maximum Anniversary Value; and
c = the contract value.
Values for (a), (b), and (c) are calculated immediately prior to the
withdrawal.
- --------------------------------------------------------------------------------
MAXIMUM ANNIVERSARY VALUE
The Maximum Anniversary Value is equal to the greatest anniversary value for the
Contract. An anniversary value is equal to the contract value on a contract
anniversary increased by premium payments and decreased by "adjusted"
withdrawals since that anniversary. "Adjusted" withdrawals are calculated
according to the formula that appears immediately above this section.
To determine the Maximum Anniversary Value, we will calculate an anniversary
value for each contract anniversary through the earlier of your attained age 80
or the anniversary on or prior to your date of death. If the contract has
co-owners, we will calculate the anniversary value through the earlier of the
older owner's attained age 80 or the anniversary on or prior to any owner's date
of death if a death benefit is payable. If an owner is a non-natural person,
then the annuitant's age, rather than the owner's, will be used.
We will calculate the Maximum Anniversary Value based on your age (or the age
of the older owner, if the Contract has co-owners, or the annuitant, if the
owner is a non-natural person) on the contract date. Subsequent changes in
owner will not increase the period of time used to determine the Maximum
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Anniversary Value. If a new owner has not reached attained age 80 and is
older than the owner whose age is being used to determine the Maximum
Anniversary Value at the time of the ownership change, the period of time
used in the calculation of the Maximum Anniversary Value will be based on the
age of the new owner at the time of the ownership change. If at the time of
an ownership change the new owner is attained age 80 or over, we will use the
Maximum Anniversary Value as of the anniversary on or prior to the ownership
change, increased by premium payments and decreased by "adjusted" withdrawals
since that anniversary.
FOR AN EXAMPLE OF THE CALCULATION OF DEATH BENEFIT, SEE APPENDIX A.
ANNUITY PAYMENTS
We'll make the first annuity payment on the annuity date, and payments will
continue according to the annuity option selected. When you first buy the
Contract, the annuity date for non-qualified Contracts is the annuitant's 90th
birthday. The annuity date for IRA or tax sheltered annuity Contracts is when
the owner/annuitant reaches age 70 1/2. However, you may specify an earlier
annuity date. You may change the annuity date at any time before the annuity
date.
Contract owners may select from a variety of fixed annuity payment options, as
outlined below in "Annuity Options." If you don't choose an annuity option,
we'll use the Life Annuity with Payments Guaranteed for 10 Years annuity option
when the contract owner reaches age 90 (age 70 1/2 for an IRA Contract or
tax-sheltered annuity). You may change the annuity option before the annuity
date. We reserve the right to limit annuity options available to IRA contract
owners to comply with the Internal Revenue Code or regulations under it.
We determine the dollar amount of annuity payments by applying your contract
value on the annuity date to our then current annuity purchase rates less any
applicable premium tax. Purchase rates show the amount of periodic payment that
a $1000 value buys. These rates are based on the annuitant's age and sex (where
permitted) at the time payments begin, and will assume interest of not less than
3% per year. The rates will never be less than those shown in the Contract.
If the age and/or sex of the annuitant was misstated to us, resulting in an
incorrect calculation of annuity payments, we will adjust future annuity
payments to reflect the correct age and/or sex. We will deduct any amount we
overpaid as the result of a misstatement from future payments with 6% annual
interest charges. Likewise, if we underpaid any amount as the result of a
misstatement, we correct it with the next payment made with 6% annual interest
credited.
If the contract value on the annuity date after the deduction of any applicable
premium taxes is less than $5,000, we may cash out your Contract in a lump sum.
If any annuity payment would be less than $50 (or a different minimum amount, if
required by state law), we may change the frequency of payments so that all
payments will be at least $50 (or the minimum amount required by state law).
Unless you tell us differently, we'll make annuity payments directly to your
Merrill Lynch brokerage account.
ANNUITY OPTIONS
We currently provide the following fixed annuity payment options. After the
annuity date, your contract value does not vary with the performance of the
Account. We may in the future offer more options. If you or the annuitant dies
while guaranteed payments remain unpaid, several options provide the ability to
take the present value of future guaranteed payments in a lump sum.
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HOW WE DETERMINE PRESENT VALUE OF FUTURE
GUARANTEED ANNUITY PAYMENTS
Present value refers to the amount of money needed today to
fund the remaining guaranteed payments under the annuity
payment option you select. The primary factor in determining
present value is the interest rate assumption we use. If you
are receiving annuity payments under an option that gives you
the ability to take the present value of future payments in a
lump sum and you elect to take the lump sum, we will use the
same interest rate assumption in calculating the present
value that we used to determine your payment stream at the
time your annuity payments commenced.
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PAYMENTS OF A FIXED AMOUNT
We will make equal payments in an amount you choose until the sum of all
payments equals the contract value applied, increased for interest credited of
at least 3%. The amount you choose must provide at least five years of payments.
These payments don't depend on the annuitant's life. If the annuitant dies
before the guaranteed amount has been paid, you may elect to have payments
continued for the amount guaranteed or to receive the present value of the
remaining guaranteed payments in a lump sum. If the contract owner dies while
guaranteed amounts remain unpaid, the beneficiary may elect to receive the
present value of the remaining guaranteed payments in a lump sum.
PAYMENTS FOR A FIXED PERIOD
We will make equal payments for a period you select of at least five years.
These payments don't depend on the annuitant's life. If the annuitant dies
before the end of the period, you may elect to have payments continued for the
period guaranteed or to receive the present value of the remaining guaranteed
payments in a lump sum. If the contract owner dies while guaranteed amounts
remain unpaid, the beneficiary may elect to receive the present value of the
remaining guaranteed payments in a lump sum.
*LIFE ANNUITY
We make payments for as long as the annuitant lives. Payments will cease with
the last payment made before the annuitant's death.
- -----------------------------
* These options are "pure" life annuities. Therefore, it is possible
for the payee to receive only one annuity payment if the person (or persons) on
whose life (lives) payment is based dies after only one payment or to receive
only two annuity payments if that person (those persons) dies after only two
payments, etc.
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LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 5, 10, 15, OR 20 YEARS
We make payments for as long as the annuitant lives. In addition, even if the
annuitant dies before the period ends, we guarantee payments for either 5, 10,
15, or 20 years as you selected. If the annuitant dies before the guaranteed
period ends, you may elect to have payments continued for the period guaranteed
or to receive the present value of the remaining guaranteed payments in a lump
sum. If the contract owner dies while guaranteed amounts remain unpaid, the
beneficiary may elect to receive the present value of the remaining guaranteed
payments in a lump sum.
LIFE ANNUITY WITH GUARANTEED RETURN OF CONTRACT VALUE
We make payments for as long as the annuitant lives. In addition, even if the
annuitant dies, we guarantee payments until the sum of all annuity payments
equals the contract value applied. If the annuitant dies while guaranteed
amounts remain unpaid, you may elect to have payments continued for the amount
guaranteed or to receive the present value of the remaining guaranteed amount in
a lump sum. If the contract owner dies while guaranteed amounts remain unpaid,
the beneficiary may elect to receive the present value of the remaining
guaranteed amount in a lump sum.
*JOINT AND SURVIVOR LIFE ANNUITY
We make payments for the lives of the annuitant and a designated second person.
Payments will continue as long as either one is living.
JOINT AND SURVIVOR LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 5, 10, 15, OR
20 YEARS
We make payments during the lives of the annuitant and a designated second
person. Payments will continue as long as either one is living. In addition,
even if the annuitant and the designated second person die before the guaranteed
period ends, we guarantee payments for either 5, 10, 15, or 20 years as you
selected. If the annuitant and the designated second person die before the end
of the period, you may elect to have payments continued for the period
guaranteed or to receive the present value of the remaining guaranteed payments
in a lump sum. If the contract owner dies while guaranteed amounts remain
unpaid, the beneficiary may elect to receive the present value of the remaining
guaranteed payments in a lump sum.
INDIVIDUAL RETIREMENT ACCOUNT ANNUITY
This annuity option is available only to IRA contract owners. Payments will be
made annually based on either (a) the life expectancy of the annuitant; (b) the
joint life expectancy of the annuitant and his or her spouse; (c) the life
expectancy of the surviving spouse if the annuitant dies before the annuity
date. Each annual payment will be equal to the remaining contract value on
January 1, divided by the applicable current life expectancy, as defined by
Internal Revenue Service regulations. Each subsequent payment will be made on
the anniversary of the annuity date. Interest will be credited at our current
rate for this option, but will not be less than 3%. On the death of the
measuring life or lives prior to full distribution of the remaining value, we
will pay that value to the beneficiary in a lump sum.
- -----------------------------
* These options are "pure" life annuities. Therefore, it is possible
for the payee to receive only one annuity payment if the person (or persons) on
whose life (lives) payment is based dies after only one payment or to receive
only two annuity payments if that person (those persons) dies after only two
payments, etc.
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GENDER-BASED ANNUITY PURCHASE RATES
Generally, the Contract provides for gender-based annuity purchase rates when
life annuity options are chosen. However, in states that have adopted
regulations prohibiting gender-based rates, blended unisex annuity purchase
rates will be applied to both male and female annuitants. Unisex annuity
purchase rates will provide the same annuity payments for male or female
annuitants that are the same age on their annuity dates.
Employers and employee organizations considering purchase of the Contract should
consult with their legal advisor to determine whether purchasing a Contract
containing gender-based annuity purchase rates is consistent with Title VII of
the Civil Rights Act of 1964 or other applicable law. We may offer such contract
owners Contracts containing unisex annuity purchase rates.
FEDERAL INCOME TAXES
FEDERAL INCOME TAXES
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 CONTRACT
DIVERSIFICATION REQUIREMENTS
Section 817(h) of the Internal Revenue Code (IRC) and the regulations under it
provide that separate account investments underlying a contract must be
"adequately diversified" for it to qualify as an annuity contract under IRC
section 72. The Account, through the subaccounts, intends to comply with the
diversification requirements of the regulations under Section 817(h). This will
affect how we make investments.
OWNER CONTROL
In certain circumstances, owners of variable annuity contracts have been
considered for Federal income tax purposes to be the owners of the assets of the
separate account supporting their Contracts due to their ability to exercise
investment control over those assets. When this is the case, the contract 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 contract
accumulation values, have not been explicitly addressed in IRS published
rulings. While we believe that the Contracts do not give owners investment
control over Account assets, we reserve the right to modify the Contracts as
necessary to prevent an owner from being treated as the owner of the Account
assets supporting the Contract.
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REQUIRED DISTRIBUTIONS
To qualify as an annuity contract under Section 72(s) of the IRC, a
non-qualified annuity contract must provide that: (a) if any owner dies on or
after the annuity starting date but before all amounts under the Contract have
been distributed, the remaining amounts will be distributed at least as quickly
as under the method being used when the owner died; and (b) if any owner dies
before the annuity starting date, all amounts under the Contract will be
distributed within five years of the date of death. So long as the distributions
begin within a year of the owner's death, the IRS will consider these
requirements satisfied for any part of the owner's interest payable to or for
the benefit of a "designated beneficiary" and distributed over the beneficiary's
life or over a period that cannot exceed the beneficiary's life expectancy. A
designated beneficiary is the person the owner names as beneficiary and who
assumes ownership when the owner dies. A designated beneficiary must be a
natural person. If the deceased owner's spouse is the designated beneficiary, he
or she can continue the Contract when such contract owner dies.
The Contract is designed to comply with Section 72(s). We will review the
Contract and amend it if necessary to make sure that it continues to comply with
the section's requirements.
Other rules regarding required distributions apply to Individual Retirement
Annuities.
TAXATION OF ANNUITIES
IN GENERAL
IRC Section 72 governs annuity taxation generally. We believe an owner who is a
natural person usually won't be taxed on increases in the value of a contract
until there is a distribution (i.e., the owner withdraws all or part of the
accumulation or takes annuity payments). Assigning, pledging, or agreeing to
assign or pledge any part of the accumulation usually will be considered a
distribution. Distributions of accumulated investment earnings are taxable as
ordinary income.
The owner of any annuity contract who is not a natural person (e.g., a
corporation or a trust) generally must include in income any increase in the
excess of the accumulation over the "investment in the contract" during the
taxable year. There are some exceptions to this rule and a prospective owner
that is not a natural person may wish to discuss them with a competent tax
advisor.
The following discussion applies generally to Contracts owned by a natural
person:
WITHDRAWALS AND SURRENDERS
When you take a withdrawal from a Contract, the amount received generally will
be treated as ordinary income subject to tax up to an amount equal to the excess
(if any) of the contract value immediately before the distribution over the
investment in the Contract (generally, the premiums or other consideration paid
for the Contract, reduced by any amount previously distributed from the Contract
that was not subject to tax) at that time. Other rules apply to Individual
Retirement Annuities.
If you withdraw your entire contract value, you will be taxed only on the part
that exceeds your investment in the Contract.
ANNUITY PAYMENTS
Although tax consequences may vary depending on the annuity option selected
under an annuity contract, a portion of each annuity payment is generally not
taxed and the remainder is taxed as ordinary income. The
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non-taxable portion of an annuity payment is generally determined in a manner
that is designed to allow you to recover your investment in the Contract ratably
on a tax-free basis over the expected stream of annuity payments, as determined
when annuity payments start. Once your investment in the Contract has been fully
recovered, however, the full amount of each annuity payment is subject to tax as
ordinary income.
TAXATION OF DEATH BENEFIT PROCEEDS
Amounts may be paid from a Contract because an owner or annuitant (if an owner
is not a natural person) has died. If the payments are made in a single sum,
they're taxed the same way a full withdrawal from the Contract is taxed. If they
are distributed as annuity payments, they're taxed as annuity payments.
PENALTY TAX ON SOME WITHDRAWALS
You may have to pay a penalty tax (10 percent of the amount treated as taxable
income) on some withdrawals. However, there is usually no penalty on
distributions:
(1) on or after you reach age 59 1/2;
(2) after you die (or after the annuitant dies, if an owner isn't an
individual);
(3) after you become disabled; or
(4) that are part of a series of substantially equal periodic (at least
annual) payments for your life (or life expectancy) or the joint
lives (or life expectancies) of you and your beneficiary.
Other exceptions may be applicable under certain circumstances and special rules
may apply in connection with the exceptions listed above. Also, additional
exceptions apply to distributions from an Individual Retirement Annuity. You
should consult a tax adviser with regard to exceptions from the penalty tax.
TRANSFERS, ASSIGNMENTS, OR EXCHANGES OF A CONTRACT
Transferring or assigning ownership of the Contract, designating a payee or
beneficiary who is not also the owner, or exchanging a Contract can have other
tax consequences that we don't discuss here. If you're thinking about any of
those transactions, contact a tax advisor.
WITHHOLDING
Annuity distributions usually are subject to withholding for the recipient's
federal income tax liability at rates that vary according to the type of
distribution and the recipient's tax status. However, recipients can usually
choose not to have tax withheld from distributions.
MULTIPLE CONTRACTS
All non-qualified deferred annuity Contracts that we (or our affiliates) issue
to the same owner during any calendar year are generally treated as one annuity
Contract for purposes of determining the amount includible in such owner's
income when a taxable distribution occurs. This could affect when income is
taxable and how much is subject to the ten percent penalty tax discussed above.
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POSSIBLE CHANGES IN TAXATION
Although the likelihood of legislative change is uncertain, there is always the
possibility that the tax treatment of the Contracts could change by legislation
or other means. It is also possible that any change could be retroactive (that
is, effective prior to the date of the change). A tax adviser should be
consulted with respect to legislative developments and their effect on the
Contract.
POSSIBLE CHARGE FOR OUR TAXES
Currently we don't charge the Account for any federal, state, or local taxes on
them or the Contracts (other than premium taxes), but we reserve the right to
charge the Account or the Contracts for any tax or other cost resulting from the
tax laws that we believe should be attributed to them.
INDIVIDUAL RETIREMENT ANNUITIES
TRADITIONAL IRAs
Section 408 of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity" or
"IRA." This Contract is available for purchase either as an IRA or through an
established IRA custodial account with MLPF&S. An individual may make annual
contributions of up to the lesser of $2,000 or 100% of adjusted gross income to
an IRA. The contributions may be deductible in whole or in part, depending on
the individual's income. Distributions from certain pension plans may be "rolled
over" into an IRA on a tax-deferred basis without regard to these limits.
Amounts in the IRA (other than nondeductible contributions) are taxed when
distributed from the IRA. A 10% penalty tax generally applies to distributions
made before age 59 1/2, unless certain exceptions apply. IRAs have minimum
distribution rules that govern the timing and amount of distributions. You
should refer to your adoption agreement or consult a tax advisor for more
information about these distribution rules. Adverse tax consequences may result
if you do not ensure that contributions, distributions and other transactions
with respect to the Contract comply with the law. The IRS has not reviewed the
Contract for qualification as an IRA, and has not addressed in a ruling of
general applicability whether a death benefit provision such as the enhanced
death benefit provision in the Contract comports with IRA qualification
requirements.
ROTH IRAs
A Contract is available for purchase by an individual who has separately
established a Roth IRA custodial account with MLPF&S. Roth IRAs, as described
in section 408(a) of the IRC, permit certain eligible individuals to contribute
to make non-deductible contributions to a Roth IRA in cash or as a rollover
or transfer from another Roth IRA or other IRA. An individual may make annual
contributions to a Roth IRA of up to the lesser of $2,000 or 100% of adjusted
gross income. A rollover from or conversion of an IRA to a Roth IRA is
generally subject to tax and other special rules apply. You may wish to
consult a tax adviser before combining any converted amounts with any other
Roth IRA contributions, including any other conversion amounts from other tax
years. Distributions from a Roth IRA generally are not taxed, except that,
once aggregate distributions exceed contributions to the Roth IRA, income tax
and a 10% penalty tax may apply to distributions made (1) before age 59 1/2
(subject to certain exceptions) or (2) during the five taxable years starting
with the year in which the first contribution is made to any Roth IRA. A 10%
penalty tax may apply to amounts attributable to a conversion from an IRA if
they are distributed during the five taxable years beginning with the year in
which the conversion was made.
TAX SHELTERED ANNUITIES
Section 403(b) of the IRC allow employees of certain Section 501(c)(3)
organizations and public schools to exclude from their gross income the premium
payments made, within certain limits, on a contract that will
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provide an annuity for the employee's retirement. In the future, it is intended
that rollover and transfer amounts from tax sheltered annuity plans that are not
subject to the Employee Retirement Income Security Act of 1974, as amended, will
be accepted as premium payments, as permitted by law, under a Contract. Other
premium payments, including premium payments subject to IRC Section 402(g), will
not be accepted. Distributions of (1) salary reduction contributions made in
years beginning after December 31, 1988; (2) earnings on those contributions;
and (3) earnings on amounts held as of the last year beginning before January 1,
1989, are not allowed prior to age 59 1/2, separation from service, death or
disability. Salary reduction contributions may also be distributed upon
hardship, but would generally be subject to penalties.
OTHER TAX ISSUES FOR IRAs AND ROTH IRAs
Total annual contributions to all of an individual's IRAs and Roth IRAs may not
exceed $2,000 or 100% of the individual's adjusted gross income. Distributions
from an IRA or Roth IRA generally are subject to withholding for the
participant's federal income tax liability. The withholding rate varies
according to the type of distribution and the owner's tax status. The owner will
be provided the opportunity to elect not have tax withheld from distributions.
OTHER INFORMATION
NOTICES AND ELECTIONS
You must send any changes, notices, and/or choices for your Contract to our
Service Center. These requests must be in writing and signed unless you have
submitted a telephone authorization form. If you have submitted an authorization
form, you may make the following choices via telephone:
1. Transfers
2. Premium allocations
3. Withdrawals, other than full surrenders
4. Requests to change the annuity date
5. Requests to change the annuity option
6. Requests to change the owner, beneficiary, or annuitant
We will use reasonable procedures to confirm that a telephone request is proper.
These procedures may include possible tape recording of telephone calls and
obtaining appropriate identification before effecting any telephone
transactions. We do not have any liability if we act on a request that we
reasonably believe is proper.
VOTING RIGHTS
We own all Fund shares and Trust Units held in the Account. As the owner, we
have the right to vote on any matter put to vote at any Funds' shareholder
meetings. However, we will vote all Fund shares attributable to Contracts by
following instructions we receive from you. If we don't receive voting
instructions, we'll vote those shares in the same proportion as shares for which
we receive instructions. We determine the number of
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shares you may give voting instructions on by dividing your interest in a
subaccount by the net asset value per share of the corresponding Fund. We'll
determine the number of shares you may give voting instructions on as of a
record date we choose. We may vote Fund shares in our own right if laws change
to permit us to do so.
You have voting rights until the annuity date. You may give voting instructions
concerning:
(1) the election of a Fund's Board of Directors;
(2) ratification of a Fund's independent accountant;
(3) approval of the investment advisory agreement for a Fund
corresponding to your selected subaccounts;
(4) any change in a fundamental investment policy of a Fund
corresponding to your selected subaccounts; and
(5) any other matter requiring a vote of the Fund's shareholders.
REPORTS TO CONTRACT OWNERS
At least once each contract year before the annuity date, we will send you
information about your Contract. It will outline all your Contract transactions
during the year, your Contract's current number of accumulation units in each
subaccount, the value of each accumulation unit of each subaccount, and the
contract value.
You will also receive an annual and a semi-annual report containing financial
statements and a list of portfolio securities of the Funds.
SELLING THE CONTRACT
MLPF&S is the principal underwriter of the Contract. Its principal business
address is World Financial Center, 250 Vesey Street, New York, New York 10281.
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. MLPF&S is an
indirect wholly owned subsidiary of Merrill Lynch & Co., Inc.
Registered representatives (Financial Consultants) of MLPF&S sell the Contract.
These Financial Consultants are also licensed through various Merrill Lynch Life
Agencies as our insurance agents. Through a distribution agreement we have with
MLPF&S and companion sales agreements we have with the Merrill Lynch Life
Agencies, Merrill Lynch Life Agencies and/or MLPF&S compensate the Financial
Consultants. The maximum commission paid to a Financial Consultant is 0.51% of
each premium. In addition, on the annuity date, the Financial Consultant will
receive compensation of up to 1.5% of contract value. Financial Consultants may
also be paid additional annual compensation of up to 0.51% of contract value.
Reduced compensation may be paid on Contracts purchased by our employees or
their spouses or dependents. Compensation may be paid in the form of non-cash
compensation, subject to applicable regulatory requirements.
The maximum commission we will pay to the applicable insurance agency to be used
to pay commissions to Financial Consultants is 1.00% of each premium and up to
1.00% of contract value.
MLPF&S may arrange for sales of the Contract by other broker-dealers. Registered
representatives of these other broker-dealers may be compensated on a different
basis than MLPF&S Financial Consultants.
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STATE REGULATION
We are subject to the laws of the State of Arkansas and to the regulations of
the Arkansas Insurance Department. We are also subject to the insurance laws and
regulations of all jurisdictions in which we're licensed to do business.
We file an annual statement with the insurance departments of jurisdictions
where we do business. The statement discloses our operations for the preceding
year and our financial condition as of the end of that year. Our books and
accounts are subject to insurance department review at all times. The Arkansas
Insurance Department, in conjunction with the National Association of Insurance
Commissions, conducts a full examination of our operations periodically.
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 Account could be adversely affected if
the computer systems we use or the other service providers we 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 devoted to this effort. 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 Contract 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 can't
give assurance that the other service providers have anticipated every step
necessary to avoid any adverse effect on the Account attributable to the Year
2000 Problem.
LEGAL PROCEEDINGS
There are no legal proceedings involving the Account. We and MLPF&S are engaged
in various kinds of routine litigation that, in our judgment, are not material
to our total assets.
EXPERTS
Deloitte & Touche LLP, independent auditors, have audited our financial
statements as of December 31, 1998 and 1997 and for each of the three years
in the period ended December 31, 1998. They've also audited the financial
statements of the Account as of December 31, 1998 and for the periods
presented in the Statement of Additional Information. We include these
financial statements in reliance upon the reports of Deloitte & Touche LLP
given upon their authority as experts in accounting and auditing. Their
principal business address is Two World Financial Center, New York, New York
10281-1420.
LEGAL MATTERS
Our organization, our authority to issue the Contract, and the validity of the
form of the Contract have been passed upon by Barry G. Skolnick, our 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 that relate to the Contract and its investment options
have been filed with the Securities and Exchange Commission under the Securities
Act of 1933 and the Investment Company Act of 1940. This Prospectus does not
contain all of the information in the registration statements. You can obtain
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the omitted information from the Securities and Exchange Commission's principal
office in Washington, D.C., upon payment of a prescribed fee.
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TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
The contents of the Statement of Additional Information for the Contract include
the following:
OTHER INFORMATION
Principal Underwriter
Financial Statements
Administrative Services Arrangements
CALCULATION OF YIELDS AND TOTAL RETURNS
FINANCIAL STATEMENTS OF MERRILL LYNCH LIFE VARIABLE ANNUITY SEPARATE ACCOUNT A
FINANCIAL STATEMENTS OF MERRILL LYNCH LIFE INSURANCE COMPANY
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APPENDIX A
EXAMPLE: Assume that you are under age 80 at issue. You pay an initial premium
of $100,000 on June 1, 2000 and a subsequent premium of $10,000 on December 1,
2001. You also make a withdrawal of $50,000 on January 1, 2002. Your death
benefit, based on hypothetical values of the Account* and these Contract
transactions, are illustrated below:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
CONTRACT TRANSACTION HISTORY RESULTING ANNIVERSARY CONTRACT VALUES AND BENEFITS
VALUES, AS OF
- ------------------------------------------------------------------------------------------------------------------------------------
Date Premiums Withdrawals Adjusted June 1, June 1, June 1, Maximum Contract Premiums Less Death
Withdrawals 2001 2002 2003 Anniversary Value Adjusted Benefit
Value Withdrawals
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
June 1, 2000 100,000 0 100,000 100,000 100,000
June 1, 2001 110,000 110,000 110,000 100,000 110,000
December 1, 2001 10,000 120,000 120,000 114,000 110,000 120,000
January 1, 2002 50,000 60,000 60,000 60,000 50,000 50,000 60,000
June 1, 2002 60,000 55,000 60,000 55,000 50,000 60,000
June 1, 2003 60,000 55,000 65,000 65,000 65,000 50,000 65,000
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- -----------------------
* Account Anniversary values reflect hypothetical positive and negative
investment performance to demonstrate the calculation of the death benefit
value. There is, of course, no assurance that the Account will experience
positive investment performance.
FOR A DETAILED EXPLANATION OF HOW WE CALCULATE THE DEATH BENEFIT, SEE "DEATH
BENEFIT."
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STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER __, 1999
MERRILL LYNCH LIFE VARIABLE ANNUITY SEPARATE ACCOUNT A
FLEXIBLE PREMIUM INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACT
ISSUED BY
MERRILL LYNCH LIFE INSURANCE COMPANY
HOME OFFICE: LITTLE ROCK, ARKANSAS 72201
SERVICE CENTER: P.O. BOX 44222,
JACKSONVILLE, FLORIDA 32231-4222
4804 DEER LAKE DRIVE EAST,
JACKSONVILLE, FLORIDA 32246
PHONE: (800) 535-5549
OFFERED THROUGH
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
This individual deferred variable annuity contract (the "Contract") is designed
to provide comprehensive and flexible ways to invest and to create a source of
income protection for later in life through the payment of annuity benefits. An
annuity is intended to be a long term investment. Contract owners should
consider their need for deferred income before purchasing the Contract. The
Contract is issued by Merrill Lynch Life Insurance Company ("Merrill Lynch
Life") both on a nonqualified basis, and as an Individual Retirement Annuity
("IRA") that is given qualified tax status. The Contract may also be purchased
through an established IRA or Roth IRA custodial account with Merrill Lynch,
Pierce, Fenner & Smith Incorporated. Transfer amounts from tax sheltered annuity
plans that are not subject to the Employee Retirement Income Security Act of
1974, as amended, will be accepted as premium payments, as permitted by law.
Other premium payments will not be accepted under a Contract used as a tax
sheltered annuity.
This Statement of Additional Information is not a Prospectus and should be read
together with the Contract's Prospectus dated _________ ____, 1999, which is
available on request and without charge by writing to or calling Merrill Lynch
Life at the Service Center address or phone number set forth above.
<PAGE>
TABLE OF CONTENTS
Page
OTHER INFORMATION.............................................................3
Principal Underwriter................................................3
Financial Statements.................................................3
Administrative Services Arrangements.................................3
CALCULATION OF YIELDS AND TOTAL RETURNS.......................................3
Money Market Yields..................................................3
Other Subaccount Yields..............................................4
Total Returns........................................................5
FINANCIAL STATEMENTS OF MERRILL LYNCH
LIFE VARIABLE ANNUITY SEPARATE ACCOUNT A...........................S-1
FINANCIAL STATEMENTS OF MERRILL LYNCH
LIFE INSURANCE COMPANY ............................................G-1
2
<PAGE>
OTHER INFORMATION
PRINCIPAL UNDERWRITER
Merrill Lynch, Pierce, Fenner & Smith Incorporated, an affiliate of Merrill
Lynch Life, performs all sales and distribution functions regarding the
Contracts and may be deemed the principal underwriter of Merrill Lynch Life
Variable Annuity Separate Account A (the "Account") under the Investment Company
Act of 1940. The offering is continuous. MLPF&S has not received any
payments or commissions in connection with the sale of the Contracts in the
past three years.
FINANCIAL STATEMENTS
The financial statements of Merrill Lynch Life included in this Statement of
Additional Information should be distinguished from the financial statements of
the Account and should be considered only as bearing upon the ability of Merrill
Lynch Life to meet any obligations it may have under the Contract.
The financial statements of the Account are not fully representative of the
subaccounts available under the Contracts because the subaccounts have not
yet commenced operations.
ADMINISTRATIVE SERVICES ARRANGEMENTS
Merrill Lynch Life has entered into a Service Agreement with its parent, Merrill
Lynch Insurance Group, Inc. ("MLIG") pursuant to which Merrill Lynch Life can
arrange for MLIG to provide directly or through affiliates certain services.
Pursuant to this agreement, Merrill Lynch Life has arranged for MLIG to provide
administrative services for the Account and the Contracts, and MLIG, in turn,
has arranged for a subsidiary, Merrill Lynch Insurance Group Services, Inc.
("MLIG Services"), to provide these services. Compensation for these services,
which will be paid by Merrill Lynch Life, will be based on the charges and
expenses incurred by MLIG Services, and will reflect MLIG Services' actual
costs. No amounts paid pursuant to this agreement in the past three years
were attributable to the Contracts.
CALCULATION OF YIELDS AND TOTAL RETURNS
MONEY MARKET YIELD
From time to time, Merrill Lynch Life may quote in advertisements and sales
literature the current annualized yield for the Domestic Money Market Subaccount
for a 7-day period in a manner that does not take into consideration any
realized or unrealized gains or losses on shares of the underlying Funds or on
their respective portfolio securities. The current annualized yield is computed
by: (a) determining the net change (exclusive of realized gains and losses on
the sales of securities and unrealized appreciation and depreciation) at the end
of the 7-day period in the value of a hypothetical account under a Contract
having a balance of 1 unit at the beginning of the period, (b) dividing such net
change in account value by the value of the account at the beginning of the
period to determine the base period return; and (c) annualizing this quotient on
a 365-day basis. The net change in account value reflects: (1) net income from
the Fund attributable to the hypothetical account; and (2) charges and
deductions imposed under the Contract which are attributable to the hypothetical
account. The charges and deductions include the per unit charges for the
hypothetical account for: (1) the asset-based insurance charge; and (2) the
annual contract fee. For purposes of calculating current yield for a Contract,
an average per unit contract fee is used, as described below. Current yield will
be calculated according to the following formula:
Current Yield = ((NCF - ES/UV) x (365/7)
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<PAGE>
Where:
NCF = the net change in the value of the Fund (exclusive of
realized gains and losses on the sale of securities and
unrealized appreciation and depreciation) for the 7-day period
attributable to a hypothetical account having a balance of 1
unit.
ES = per unit expenses for the hypothetical account for the 7-day
period.
UV = the unit value on the first day of the 7-day period.
Merrill Lynch Life also may quote the effective yield of the Domestic Money
Market Subaccount for the same 7-day period, determined on a compounded basis.
The effective yield is calculated by compounding the unannualized base period
return according to the following formula:
365/7
Effective Yield = (1 + ((NCF - ES)/UV)) -1
Where:
NCF = the net change in the value of the Fund (exclusive of
realized gains and losses on the sale of securities and
unrealized appreciation and depreciation) for the 7-day period
attributable to a hypothetical account having a balance of 1
unit.
ES = per unit expenses of the hypothetical account for the 7-day
period.
UV = the unit value for the first day of the 7-day period.
Because of the charges and deductions imposed under the Contract, the yield for
the Domestic Money Market Subaccount will be lower than the yield for the
corresponding underlying Fund.
The yields on amounts held in the Domestic Money Market Subaccount normally will
fluctuate on a daily basis. Therefore, the disclosed yield for any given past
period is not an indication or representation of future yields or rates of
return. The actual yield for the subaccount is affected by changes in interest
rates on money market securities, average portfolio maturity of the underlying
Fund, the types and qualities of portfolio securities held by the Fund and the
Fund's operating expenses. Yields on amounts held in the Domestic Money Market
Subaccount may also be presented for periods other than a 7-day period.
OTHER SUBACCOUNT YIELDS
From time to time, Merrill Lynch Life may quote in sales literature or
advertisements the current annualized yield of one or more of the subaccounts
(other than the Domestic Money Market Subaccount) for a Contract for 30-day or
one-month period. The annualized yield of a subaccount refers to income
generated by the subaccount over a specified 30-day or one-month period. Because
the yield is annualized, the yield generated by the subaccount during the 30-day
or one-month period is assumed to be generated each period over a 12-month
period. The yield is computed by: (1) dividing the net investment income of the
Fund attributable to the subaccount units less subaccount expenses for the
period; by (2) the maximum offering price per unit on the last day of the period
times the daily average number of units outstanding for the period; then (3)
compounding that yield for a 6-month period; and then (4) multiplying that
result by 2. Expenses attributable to the subaccount include the asset-based
4
<PAGE>
insurance charge and the annual contract fee. For purposes of calculating the
30-day or one-month yield, an average contract fee per dollar of contract value
in the subaccount is used to determine the amount of the charge attributable to
the subaccount for the 30-day or one-month period, as described below. The
30-day or one-month yield is calculated according to the following formula:
6
Yield = 2 ((((NI - ES)/(U x UV)) + 1) - 1)
Where:
NI = net investment income of the Fund for the 30-day or
one-month period attributable to the subaccount's units.
ES = expenses of the subaccount for the 30-day or one-month period.
U = the average number of units outstanding.
UV = the unit value at the close of the last day in the 30-day or
one-month
Currently, Merrill Lynch Life may quote yields on bond subaccounts. Because of
the charges and deductions imposed under the Contracts, the yield for a
subaccount will be lower than the yield for the corresponding Fund.
The yield on the amounts held in the subaccounts normally will fluctuate over
time. Therefore, the disclosed yield for any given past period is not an
indication or representation of future yields or rates of return. A subaccount's
actual yield is affected by the types and quality of portfolio securities held
by the corresponding Fund, and its operating expenses.
TOTAL RETURNS
From time to time, Merrill Lynch Life also may quote in sales literature or
advertisements, total returns, including average annual total returns for one or
more of the subaccounts for various periods of time. Average annual total
returns will be provided for a subaccount for 1, 5 and 10 years, or for a
shorter period, if applicable.
Total returns assume the Contract was surrendered at the end of the period
shown, and are not indicative of performance if the Contract was continued for a
longer period. The Contract does not impose any surrender charge.
5
<PAGE>
Average annual total returns for other periods of time may also be disclosed
from time to time. For example, average annual total returns may be provided
based on the assumption that a subaccount had been in existence and had invested
in the corresponding underlying Fund for the same period as the corresponding
Fund had been in operation. The Funds commenced operations as indicated below:
FUND COMMENCED OPERATIONS
---- --------------------
Domestic Money Market February 21, 1992
Special Value Focus April 29, 1982
Basic Value Focus July 1, 1993
Index 500 Fund December 18, 1996
AIM V.I. Capital Appreciation May 5, 1993
AIM V.I. Value May 5, 1993
Alliance Premier Growth March 12, 1992
MFS Emerging Growth Series July 24, 1995
Hotchkis and Wiley International VIP Portfolio June 10, 1998
Government Bond May 16, 1994
Mercury Asset Management V.I. April 19, 1999
Average annual total returns represent the average annual compounded rates of
return that would equate an initial investment of $1,000 under a Contract to the
redemption value or that investment as of the last day of each of the periods.
The ending date for each period for which total return quotations are provided
will generally be as of the most recent calendar quarter-end.
Average annual total returns are calculated using subaccount unit values
calculated on each valuation day based on the performance of the corresponding
underlying Fund, the deductions for the asset-based insurance charge and the
contract fee, and assume a surrender of the Contract at the end of the period
for the return quotation (although the Contract does not impose a surrender
charge). For purposes of calculating total return, an average per dollar
contract fee attributable to the hypothetical account for the period is used, as
described below. The total return is then calculated according to the following
formula:
1/N
TR = ((ERV/P) ) + 1
6
<PAGE>
Where:
TR = the average annual total return net of subaccount recurring
charges (such as the asset-based insurance charge and contract
fee).
ERV = the ending redeemable value at the end of the period of the
hypothetical account with an initial payment of $1,000.
P = a hypothetical initial payment of $1,000.
N = the number of years in the period.
From time to time, Merrill Lynch Life also may quote in sales literature or
advertisements total returns for other periods.
From time to time, Merrill Lynch Life also may quote in sales literature or
advertisements total returns or other performance information for a hypothetical
Contract assuming the initial premium is allocated to more than one subaccount
or assuming monthly transfers from a specified subaccount to one or more
designated subaccounts under a dollar cost averaging program. Merrill Lynch Life
also may quote in sales literature or advertisements total returns or other
performance information for a hypothetical Contract assuming participation in an
asset allocation or rebalancing program. These returns will reflect the
performance of the affected subaccount(s) for the amount and duration of the
allocation to each subaccount for the hypothetical Contract. They also will
reflect the deduction of charges described above. For example, total return
information for a Contract with a dollar cost averaging program for a 12-month
period will assume commencement of the program at the beginning of the most
recent 12-month period for which average annual total return information is
available. This information will assume an initial lump-sum investment in a
specified subaccount (the "DCA subaccount") at the beginning of that period and
monthly transfers of a portion of the contract value from the DCA subaccount to
designated other subaccount(s) during the 12-month period. The total return for
the Contract for this 12-month period therefore will reflect the return on the
portion of the contract value that remains invested in the DCA subaccount for
the period it is assumed to be so invested, as affected by monthly transfers,
and the return on amounts transferred to the designated other subaccounts for
the period during which those amounts are assumed to be invested in those
subaccounts. The return for an amount invested in a subaccount will be based on
the performance of that subaccount for the duration of the investment, and will
reflect the charges described above. Performance information for a dollar
cost-averaging program also may show the returns for various periods for a
designated subaccount assuming monthly transfers to the subaccount, and may
compare those returns to returns assuming an initial lump-sum investment in that
subaccount. This information also may be compared to various indices, such as
the Merrill Lynch 91-day Treasury Bills index or the U.S. Treasury Bills index
and may be illustrated by graphs, charts, or otherwise.
7
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS
(1) Financial Statements of Merrill Lynch Life Variable Annuity
Separate Account A as of December 31, 1998 and for the two
years ended December 31, 1998 and the Notes relating thereto
appear in the Statement of Additional Information. (To be filed
by amendment.)
(2) Financial Statements of Merrill Lynch Life Insurance Company
for the three years ended December 31, 1998 and the Notes
relating thereto appear in the Statement of Additional
Information. (To be filed by amendment.)
(B) EXHIBITS
(1) Resolution of the Board of Directors of Merrill Lynch Life
Insurance Company establishing the Merrill Lynch Life Variable
Annuity Separate Account A. (Incorporated by Reference to
Registrant's Post-Effective Amendment No. 10 to Form N-4,
Registration No. 33-43773 Filed December 10, 1996.)
(2) Not Applicable.
(3) Underwriting Agreement Between Merrill Lynch Life Insurance
Company and Merrill Lynch, Pierce, Fenner & Smith Incorporated.
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 10 to Form N-4, Registration No. 33-43773 Filed
December 10, 1996.)
(4) (a) Form of Contract for the Flexible Premium Individual Deferred
Variable Annuity. (Filed herewith.)
(b) Individual Retirement Annuity Endorsement. (Filed herewith.)
(c) Tax-Sheltered Annuity Endorsement. (Filed herewith.)
(5) Form of Application for the Flexible Premium Individual Deferred
Variable Annuity. (Filed herewith.)
(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. 10 to Form N-4, Registration No. 33-43773 Filed
December 10, 1996.)
(b) Amended and Restated By-Laws of Merrill Lynch Life Insurance
Company. (Incorporated by Reference to Registrant's
Post-Effective Amendment No. 10 to Form N-4, Registration
No. 33-43773 Filed December 10, 1996).
(7) Not Applicable.
(8) (a) Amended General Agency Agreement (Incorporated by Reference to
Registrant's Post-Effective Amendment No. 5 to Form N-4,
Registration No. 33-43773 Filed April 28, 1994).
(b) Indemnity Agreement Between Merrill Lynch Life Insurance Company
and Merrill Lynch Life Agency, Inc. (Incorporated by Reference to
Registrant's Post-Effective Amendment No. 10
C-1
<PAGE>
to Form N-4, Registration No. 33-43773 Filed December 10, 1996).
(c) Management Agreement Between Merrill Lynch Life Insurance Company
and Merrill Lynch Asset Management, Inc. (Incorporated by
Reference to Registrant's Post-Effective Amendment No. 10 to
Form N-4, Registration No. 33-43773 Filed December 10, 1996).
(d) Agreement Between Merrill Lynch Life Insurance Company and Merrill
Lynch Variable Series Funds, Inc. Relating to Maintaining Constant
Net Asset Value for the Domestic Money Market Fund. (Incorporated
by Reference to Registrant's Post-Effective Amendment No.10 to
Form N-4, Registration No. 33-43773 File December 10, 1996).
(e) Agreement Between Merrill Lynch Life Insurance Company and Merrill
Lynch Variable Series Funds, Inc. Relating to Valuation and
Purchase Procedures. (Incorporated by Reference to Registrant's
Post-Effective Amendment No. 10 to Form N-4, Registration
No. 33-43773 Filed December 10, 1996).
(f) Amended Service Agreement Between Merrill Lynch Life Insurance
Company and Merrill Lynch Insurance Group, Inc. (Incorporated by
Reference to Registrant's Post-Effective Amendment No. 5 to
Form N-4, Registration No. 33-43773 Filed April 28, 1994).
(g) Reimbursement Agreement Between Merrill Lynch Asset Management,
L.P. and Merrill Lynch Life Agency, Inc. (Incorporated by
Reference to Registrant's Post-Effective Amendment No. 10 to
Form N-4, Registration No. 33-43773 Filed December 10, 1996).
(h) Amendment to the Reimbursement Agreement Between Merrill Lynch
Asset Management, L.P. and Merrill Lynch Life Agency, Inc. (Filed
herewith.)
(i) Form of Participation Agreement Between Merrill Lynch Variable
Series Funds, Inc. and Merrill Lynch Life Insurance Company.
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 10 to Form N-4, Registration No. 33-43773 Filed
December 10, 1996).
(j) Amendment to Participation Agreement Between Merrill Lynch
Variable Series Funds, Inc. and Merrill Lynch Life Insurance
Company. (Filed herewith.)
(k) Participation Agreement By And Among AIM Variable Insurance Funds,
Inc., AIM Distributors, Inc., and Merrill Lynch Life Insurance
Company. (Incorporated by Reference to Registrant's Post-Effective
Amendment No. 11 to Form N-4, Registration No. 33-43773 Filed
April 23, 1997).
(l) Amendment to the Participation Agreement By And Among AIM Variable
Insurance Funds, Inc., AIM Distributors, Inc., and Merrill Lynch
Life Insurance Company. (Filed herewith.)
(m) Form of Participation Agreement Among Merrill Lynch Life Insurance
Company, Alliance Capital Management L.P., and Alliance Fund
Distributors, Inc. (Incorporated by Reference to Registrant's
C-2
<PAGE>
Post-Effective Amendment No. 10 to Form N-4, Registration
No. 33-43773 Filed December 10, 1996).
(n) Amendment to Participation Agreement Among Merrill Lynch Life
Insurance Company, Alliance Capital Management L.P., and Alliance
Fund Distributors, Inc. dated May 1, 1997. (Filed herewith.)
(o) Amendment to the Participation Agreement Among Merrill Lynch Life
Insurance Company, Alliance Capital Management L.P., and Alliance
Fund Distributors, Inc. dated June 5, 1998. (Filed herewith.)
(p) Amendment to Participation Agreement Among Merrill Lynch Life
Insurance Company, Alliance Capital Management L.P., and Alliance
Fund Distributors, Inc. dated July 22, 1999. (Filed herewith.)
(q) Form of Participation Agreement Among MFS-Registered Trademark-
Variable Insurance Trust-SM-, Merrill Lynch Life Insurance
Company, and Massachusetts Financial Services Company.
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 10 to Form N-4, Registration No. 33-43773 Filed
December 10, 1996).
(r) Amendment to Participation Agreement Among MFS-Registered
Trademark- Variable Insurance Trust-SM-, Merrill Lynch Life
Insurance Company, and Massachusetts Financial Services Company
dated May 1, 1997. (Filed herewith.)
(s) Form of Participation Agreement Among Merrill Lynch Life Insurance
Company and Hotchkis and Wiley Variable Trust. (Incorporated by
Reference to Registrant's Post-Effective Amendment No. 12 to
Form N-4, Registration No. 33-43773 Filed May 1, 1998).
(t) Amendment to the Participation Agreement Among Merrill Lynch Life
Insurance Company and Hotchkis and Wiley Variable Trust. (Filed
herewith.)
(u) Form of Participation Agreement Between Mercury Asset Management
V.I. Funds, Inc. and Merrill Lynch Life Insurance Company.
(Incorporated by Reference to Registrant's Post-Effective
Amendment No. 15 to Form N-4, Filed April 13, 1999).
(v) Amendment to the Participation Agreement Between Mercury Asset
Management V.I. Funds, Inc. and Merrill Lynch Life Insurance
Company. (Filed herewith.)
(9) Opinion of Barry G. Skolnick, Esq. and Consent to its use as to
the legality of the securities being registered. (To be filed by
amendment.)
(10) (a) Written Consent of Sutherland Asbill & Brennan LLP. (To be filed
by amendment.)
(b) Written Consent of Deloitte & Touche LLP, independent auditors.
(To be filed by amendment.)
(c) Written Consent of Barry G. Skolnick, Esq. (To be filed by
amendment.)
(11) Not Applicable.
(12) Not Applicable.
(13) Schedule of Performance Computations. (To be filed by amendment.)
C-3
<PAGE>
(14) (a) Power of Attorney from Joseph E. Crowne, Jr. (Incorporated by
Reference to Registrant's Post-Effective Amendment No. 4 to
Form N-4, Registration No. 33-43773 Filed March 2, 1994.
(b) Power of Attorney from David M. Dunford (Incorporated by Reference
to Registrant's Post-Effective Amendment No. 4 to Form N-4,
Registration No. 33-43773 Filed March 2, 1994).
(c) Power of Attorney from Barry G. Skolnick (Incorporated by
Reference to Registrant's Post-Effective Amendment No. 4 to
Form N-4, Registration No. 33-43773 Filed March 2, 1994).
(d) Power of Attorney from Anthony J. Vespa (Incorporated by Reference
to Registrant's Post-Effective Amendment No. 4 to Form N-4,
Registration No. 33-43773 Filed March 2, 1994).
(e) Power of Attorney from Gail R. Farkas (Incorporated by Reference
to Registrant's Post-Effective Amendment No. 8 to Form N-4,
Registration No. 33-43773 Filed April 25, 1996).
ITEM 25. DIRECTORS AND OFFICERS OF MERRILL LYNCH LIFE INSURANCE COMPANY
<TABLE>
<CAPTION>
Name Principal Business Address Position with Depositor*
- ---- -------------------------- ------------------------
<S> <C> <C>
Joseph E.Crowne, Jr. 800 Scudders Mill Road Director, Senior Vice President,
Plainsboro, NJ 08536 Chief Financial Officer, Chief
Actuary and Treasurer.
David M. Dunford 800 Scudders Mill Road Director, Senior Vice President and
Plainsboro, NJ 08536 Chief Investment Officer.
Gail R. Farkas 800 Scudders Mill Road Director and Senior Vice President.
Plainsboro, NJ 08536
Barry G. Skolnick 800 Scudders Mill Road Director, Senior Vice President.
Plainsboro, NJ 08536 General Counsel and Secretary
Anthony J. Vespa 800 Scudders Mill Road Director, Chairman of the Board,
Plainsboro, NJ 08536 Chief Executive Officer and
President.
Deborah J. Adler 800 Scudders Mill Road Vice President and Actuary.
Plainsboro, NJ 08536
Robert J. Boucher 1414 Main Street Senior Vice President, Variable Life
Springfield, MA 01102 Administration.
C-4
<PAGE>
<CAPTION>
Name Principal Business Address Position with Depositor*
- ---- -------------------------- ------------------------
Michael P. Cogswell 800 Scudders Mill Road Vice President and Senior Counsel.
Plainsboro, NJ 08536
Edward W. Diffin, Jr. 800 Scudders Mill Road Vice President and Senior Counsel.
Plainsboro, NJ 08536
Linda Gillis 4804 Deer Lake Drive East Vice President and Assistant
Jacksonville, FL 32246 Secretary.
Diana Joyner 1414 Main Street Vice President.
Springfield, MA 01102
Robin A. Maston 800 Scudder Mill Road Vice President and Senior
Plainsboro, NJ 08536 Compliance Officer.
Kelly A. O'Dea 800 Scudders Mill Road Vice President and Senior
Plainsboro, NJ 08536 Compliance Officer.
Robert Ostrander 800 Scudders Mill Road Vice President and Controller.
Plainsboro, NJ 08536
Julia Raven 800 Scudders Mill Road Vice President.
Plainsboro, NJ 08536
Lori M. Salvo 800 Scudders Mill Road Vice President and Senior Counsel.
Plainsboro, NJ 08536
John A. Shea 800 Scudders Mill Road Vice President.
Plainsboro, NJ 08536
Frederick H. Steele 800 Scudders Mill Road Vice President.
Plainsboro, NJ 08536
Tracy A. Bartoy 4804 Deer Lake Drive East Vice President and Assistant
Jacksonville, FL 32247 Secretary.
Robert J. Viamari 1414 Main Street Vice President and Assistant
Springfield, MA 01102 Secretary.
Chester Westergard 2200 Rodney Parham Road Vice President.
Suite 300
Little Rock, AR 72212
Denis G. Wuestman 800 Scudders Mill Road Vice President.
Plainsboro, NJ 08536
C-5
<PAGE>
<CAPTION>
Name Principal Business Address Position with Depositor*
- ---- -------------------------- ------------------------
<S> <C> <C>
Matthew J. Rider 800 Scudders Mill Road Vice President.
Plainsboro, NJ 08536
Donald C. Stevens, III 800 Scudders Mill Road Vice President and Controller.
Plainsboro, NJ 08536
Jeanne Markey 800 Scudder Mill Road Vice President.
Plainsboro, NJ 08536
Shelley K. Parker 1414 Main Street Vice President and Assistant
Springfield, MA 01102 Secretary.
Amy S. Winston 800 Scudders Mill Road Vice President and Director of
Plainsboro, NJ 08536 Compliance.
</TABLE>
* Each director is elected to serve until the next annual shareholder meeting
or until his or her successor is elected and shall have qualified.
C-6
<PAGE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
Merrill Lynch Life Insurance Company is an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."). A list of subsidiaries of
ML & Co. appears below.
SUBSIDIARIES OF THE REGISTRANT
The following are subsidiaries of ML & Co. as of February 24, 1999 and
the states or jurisdictions in which they are organized. Indentation indicates
the principal parent of each subsidiary. Except as otherwise specified, in each
case ML & Co. owns, directly or indirectly, at least 99% of the voting
securities of each subsidiary. The names of particular subsidiaries have been
omitted because, considered in the aggregate as a single subsidiary, they would
not constitute, as of the end of the year covered by this report, a "significant
subsidiary" as that term is defined in Rule 1.02(w) of Regulation S-X under the
Securities Exchange Act of 1934.
<TABLE>
<CAPTION>
Name State of Jurisdiction of Entity
- ---- -------------------------------
<S> <C>
Merrill Lynch & Co., Inc..........................................................................Delaware
Merrill Lynch, Pierce, Fenner & Smith Incorporated(1) .......................................Delaware
Broadcort Capital Corp.................................................................Delaware
Merrill Lynch Life Agency Inc.(2) ...................................................Washington
Merrill Lynch Professional Clearing Corp.(3)...........................................Delaware
Merrill Lynch Bank & Trust Co...................................................................New Jersey
Merrill Lynch Capital Services, Inc...............................................................Delaware
Merrill Lynch Government Securities Inc...........................................................Delaware
Merrill Lynch Money Markets Inc..............................................................Delaware
Merrill Lynch Group, Inc..........................................................................Delaware
Merrill Lynch & Co., Canada Ltd...............................................................Ontario
Merrill Lynch Canada Inc............................................................Nova Scotia
Mercury Asset Management Group Holdings PLC(4)................................................England
Mercury Asset Management Holdings Ltd...................................................England
Merrill Lynch Asset Management L.P.(5).......................................................Delaware
Merrill Lynch Capital Partners, Inc..........................................................Delaware
Merrill Lynch Futures Inc....................................................................Delaware
Merrill Lynch Group Holdings Limited..........................................................Ireland
Merrill Lynch Capital Markets Bank Limited..............................................Ireland
Merrill Lynch Insurance Group, Inc...........................................................Delaware
Merrill Lynch Life Insurance Company...................................................Arkansas
ML Life Insurance Company of New York .................................................New York
Merrill Lynch International Finance Corporation..............................................New York
Merrill Lynch International Bank Limited................................................England
Merrill Lynch Bank (Suisse) S.A..................................................Switzerland
C-7
<PAGE>
Merrill Lynch Mortgage Capital Inc...........................................................Delaware
Merrill Lynch Bank USA...........................................................................Utah
Merrill Lynch Trust Company(6).............................................................New Jersey
Merrill Lynch Business Financial Services Inc......................................... Delaware
Merrill Lynch Credit Corporation.......................................................Delaware
Merrill Lynch Investment Partners Inc........................................................Delaware
MLDP Holdings, Inc.(7).......................................................................Delaware
Merrill Lynch Derivative Products AG................................................Switzerland
ML IBK Positions Inc.........................................................................Delaware
Merrill Lynch Capital Corporation......................................................Delaware
ML Leasing Equipment Corp.(8)................................................................Delaware
Merrill Lynch International Incorporated..........................................................Delaware
Merrill Lynch (Australasia) Pty Limited...............................................New South Wales
Merrill Lynch International (Australia) Limited.................................New South Wales
Merrill Lynch International Bank........................................................United States
Merrill Lynch International Holdings Inc.....................................................Delaware
Merrill Lynch Bank (Austria) Aktiengesellschaft A.G.....................................Austria
Merrill Lynch Bank and Trust Company (Cayman) Limited............................Cayman Islands
British West Indies
Merrill Lynch Capital Markets A.G...................................................Switzerland
Merrill Lynch Europe PLC................................................................England
Merrill Lynch Europe Holdings Limited................................................England
Merrill Lynch International......................................................England
Merrill Lynch, Pierce, Fenner & Smith (Brokers & Dealers)
Limited ................................................................................England
Merrill Lynch Europe Ltd..........................................Cayman Islands, British West Indies
Merrill Lynch France...........................................................................France
Merrill Lynch Capital Markets (France) S.A...............................................France
Merrill Lynch (Asia Pacific) Limited........................................................Hong Kong
Merrill Lynch Far East Limited........................................................Hong Kong
Merrill Lynch Japan Incorporated..................................Cayman Islands, British West Indies
</TABLE>
- --------------------
(1) MLPF&S also conducts business as "Merrill Lynch & Co."
(2) Similarly named affiliates and subsidiaries that engage in the sale of life
insurance and annuity products are incorporated in various other
jurisdictions.
(3) The preferred stock of the corporation is owned by an unaffiliated group of
investors.
(4) Held through several intermediate holding companies.
(5) Merrill Lynch Asset Management L.P. is a limited partnership whose general
partner is Princeton Services, Inc. and whose limited partner is ML & Co.
(6) Similarly named affiliates and subsidiaries that provide trust and
custodial services are incorporated in various other jurisdictions.
(7) Merrill Lynch Group, Inc. owns 100% of this corporation's outstanding
common voting
C-8
<PAGE>
stock. 100% of the outstanding preferred voting stock is held by outside
parties.
(8) This corporation has more than 45 direct or indirect subsidiaries operating
in the United States and serving as either general partners or associate
general partners of limited partnerships.
ITEM 27. NUMBER OF CONTRACTOWNERS
As of the date hereof, there are no owners of the Contracts.
ITEM 28. INDEMNIFICATION
The following provisions regarding the Indemnification of Directors and
Officers of the Registrant are applicable:
AMENDED AND RESTATED BY-LAWS OF MERRILL LYNCH LIFE INSURANCE COMPANY, ARTICLE VI
SECTIONS 1, 2, 3 AND 4--INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES
AND INCORPORATORS
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 judgment 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
C-9
<PAGE>
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 or
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 attorneys' 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.
BY-LAWS OF MERRILL LYNCH & CO., INC.,
SECTION 2--INDEMNIFICATION BY CORPORATION
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 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.
OTHER INDEMNIFICATION
There is no indemnification of the principal underwriter, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, with respect to the Contract.
The indemnity agreement between Merrill Lynch Life Insurance Company
("Merrill Lynch Life") and its affiliate Merrill Lynch Life Agency, Inc.
("MLLA"), with respect to MLLA's general agency responsibilities on behalf of
Merrill Lynch Life and the Contract, provides:
Merrill Lynch Life will indemnify and hold harmless MLLA and all persons
C-10
<PAGE>
associated with MLLA as such term is defined in Section 3(a) (21) of the
Securities Exchange Act of 1934 against all claims, losses, liabilities
and expenses, to include reasonable attorneys' fees, arising out of the
sale by MLLA of insurance products under the above-referenced Agreement,
provided that Merrill Lynch Life shall not be bound to indemnify or hold
harmless MLLA or its associated persons for claims, losses, liabilities
and expenses arising directly out of the willful misconduct or
negligence of MLLA or its associated persons.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registration 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.
ITEM 29. PRINCIPAL UNDERWRITER
(a) Merrill Lynch, Pierce, Fenner & Smith Incorporated also acts as
principal underwriter for the following additional funds: CBA Money Fund; CMA
Government Securities Fund; CMA Money Fund; CMA Tax-Exempt Fund; The Corporate
Fund Accumulation Program, Inc.; CMA Treasury Fund; CMA Multi-State Municipal
Series Trust; Corporate Income Fund; Defined Asset Funds--Municipal Insured
Series; Equity Investor Fund; The Fund of Stripped ("Zero") U.S. Treasury
Securities; The GNMA Investment Accumulation Program; Government Securities
Income Fund; International Bond Fund; The Merrill Lynch Fund of Stripped
("Zero") U.S. Treasury Securities; Merrill Lynch Trust for Government
Securities; Municipal Income Fund; Municipal Investment Trust Fund; and The
Municipal Fund Accumulation Program, Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated also acts as
principal underwriter for the following additional accounts: Merrill Lynch Life
Variable Annuity Separate Account A; Merrill Lynch Life Variable Annuity
Separate Account B; Merrill Lynch Life Variable Life Separate Account; Merrill
Lynch Life Variable Life Separate Account II; Merrill Lynch Life Variable
Annuity Separate Account; ML of New York Variable Life Separate Account; ML of
New York Variable Life Separate Account II; ML of New York Variable Annuity
Separate Account; ML of New York Variable Annuity Separate Account A; and ML of
New York Variable Annuity Separate Account B.
C-11
<PAGE>
(b) The directors, president, treasurer and executive vice presidents
of Merrill Lynch, Pierce, Fenner & Smith Incorporated are as follows:
NAME AND PRINCIPAL
BUSINESS ADDRESS POSITIONS AND OFFICES WITH UNDERWRITER
----------------------------------------------------------------------
John L. Steffens* Director, Chairman of the Board and Chief
Executive Officer
Thomas W. Davis Executive Vice President
Barry S. Friedberg* Executive Vice President
Edward L. Goldberg* Executive Vice President
Jerome P. Kenney* Executive Vice President
E. Stanley O'Neal Executive Vice President and Director
Thomas H. Patrick* Executive Vice President
George A. Schieren Director, General Counsel and Senior Vice
President
Winthrop H. Smith, Jr.* Executive Vice President
Roger M. Vasey* Executive Vice President
John C. Stomber* Senior Vice President and Treasurer
- ----------------------------------
* World Financial Center, 250 Vesey Street, New York, NY 10281
(c) Not Applicable
ITEM 30. LOCATION OF BOOKS AND RECORDS
All accounts, books, and records required to be maintained by Section
31(a) of the 1940 Act and the rules promulgated thereunder are maintained by the
depositor at the principal executive offices at 800 Scudders Mill Road,
Plainsboro, New Jersey 08536 and the Service Center at 4804 Deer Lake Drive
East, Jacksonville, Florida 32246.
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
ITEM 32. UNDERTAKINGS AND REPRESENTATIONS.
(a) Registrant undertakes to file a post-effective amendment to the
Registration Statement as frequently as is necessary to ensure that the audited
financial statements in the Registration Statement are never more than 16 months
old for so long as payments under the variable annuity contracts may be
accepted.
C-12
<PAGE>
(b) Registrant undertakes to include either (1) as part of any
application to purchase a contract offered by the prospectus, a space that an
applicant can check to request a statement of additional information, or (2) a
postcard or similar written communications affixed to or included in the
prospectus that the applicant can remove to send for a statement of additional
information.
(c) Registrant undertakes to deliver any statement of additional
information and any financial statements required to be made available under
this Form promptly upon written or oral request.
(d) 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.
(e) Registrant hereby represents that it is relying on the American
Council of Life Insurance (avail. Nov. 28, 1988) no-action letter with respect
to Contracts used in connection with retirement plans meeting the requirements
of Section 403(b) of the Internal Revenue Code, and represents further that it
will comply with the provisions of paragraphs (1) through (4) set forth in that
no-action letter.
C-13
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrant, Merrill Lynch Life Variable Annuity Separate
Account A, has caused this registration statement to be signed on its behalf,
in the City of Plainsboro, and the State of New Jersey, on this 1st day of
November, 1999.
MERRILL LYNCH LIFE VARIABLE ANNUITY
SEPARATE ACCOUNT A
(Registrant)
Attest: /s/ Edward W. Diffin, Jr. By: /s/ Barry G. Skolnick
--------------------------- -----------------------
Edward W. Diffin, Jr. Barry G. Skolnick
Vice President and Senior Counsel Senior Vice President of
Merrill Lynch Life
Insurance Company
MERRILL LYNCH LIFE
INSURANCE COMPANY
(Depositor)
Attest: /s/ Edward W. Diffin, Jr. By: /s/ Barry G. Skolnick
--------------------------------- ------------------------
Edward W. Diffin, Jr. Barry G. Skolnick
Vice President and Senior Counsel Senior Vice President
As required by the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities
indicated on November 1, 1999.
Signature Title
--------- -----
* 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
C-14
<PAGE>
* 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, and Secretary
Barry G. Skolnick and as Attorney-in-Fact
C-15
<PAGE>
EXHIBIT LIST
Exhibit 4(a) Form of Contract for the Flexible Premium Individual Deferred
Variable Annuity
Exhibit 4(b) Individual Retirement Annuity Endorsement
Exhibit 4(c) Tax-Sheltered Annuity Endorsement
Exhibit 5 Form of Application for the Flexible Premium Individual Deferred
Variable Annuity
Exhibit 8(h) Amendment to the Reimbursement Agreement Between Merrill Lynch
Asset Management, L.P. and Merrill Lynch Life Agency, Inc.
Exhibit 8(j) Amendment to Participation Agreement Between Merrill Lynch
Variable Series Funds, Inc. and Merrill Lynch Life Insurance
Company
Exhibit 8(l) Amendment to the Participation Agreement By and Among AIM
Variable Insurance Funds, Inc., AIM Distributors, Inc., and
Merrill Lynch Life Insurance Company
Exhibit 8(n) Amendment to Participation Agreement Among Merill Lynch Life
Insurance Company, Alliance Capital Management L.P., and Alliance
Fund Distributors, Inc. dated May 1, 1997
Exhibit 8(o) Amendment to Participation Agreement Among Merrill Lynch Life
Insurance Company, Alliance Capital Management, L.P., and
Alliance Fund Distributors, Inc. dated June 5, 1998
Exhibit 8(p) Amendment to Participation Agreement Among Merrill Lynch Life
Insurance Company, Alliance Capital Management, L.P., and
Alliance Fund Distributors, Inc. dated July 22, 1999
Exhibit 8(r) Amendment to Participation Agreement Among MFS-Registered
Trademark- Variable Insurance Trust-SM-, Merrill Lynch Life
Insurance Company, and Massachusetts Financial Services Company
dated May 1, 1997
C-16
<PAGE>
Exhibit 8(t) Amendment to the Participation Agreement Among Merrill Lynch Life
Insurance Company and Hotchkis and Wiley Variable Trust
Exhibit 8(v) Amendment to the Participation Agreement Between Mercury Asset
Management V.I. Funds, Inc. And Merrill Lynch Life Insurance
Company
C-17
<PAGE>
MERRILL LYNCH LIFE INSURANCE COMPANY
Home Office: Little Rock, Arkansas
Service Center: P.O. Box 44222
Jacksonville, Florida 32231-4222
MERRILL LYNCH LIFE INSURANCE COMPANY will make periodic annuity payments for the
life of the Annuitant or as otherwise provided in this Contract. Payments will
be made to the Owner starting on the Annuity Date.
This is a legal Contract between you and US. PLEASE READ THE CONTRACT CAREFULLY.
EXCEPT FOR FIXED ANNUITY PAYMENTS, VALUES PROVIDED BY THIS CONTRACT ARE BASED ON
THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO FIXED-DOLLAR AMOUNT.
TEN DAY RIGHT TO REVIEW CONTRACT: You may cancel this Contract within ten days
after you receive it. Simply return or mail it to us or your Financial
Consultant. We will refund the greater of the Contract Value or all of your
Premiums.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C>
Definitions................................................................ 2
Contract Schedule.......................................................... 3
1. General Provisions..................................................... 4
2. Premiums............................................................... 6
3. The Separate Account................................................... 6
4. Charges and Deductions................................................. 7
5. Transfers.............................................................. 8
6. Withdrawals............................................................ 8
7. Payment at Death....................................................... 9
8. Annuity Provisions..................................................... 10
9. Annuity Options........................................................ 11
10. Annuity Option Tables.................................................. 12
- --------------------------------------------------------------------------------
</TABLE>
Merrill Lynch Life Insurance Company is a stock life insurance company.
President Secretary
Individual Variable Annuity Contract
Flexible Premiums -- Nonparticipating
<PAGE>
DEFINITIONS
1. ACCUMULATION UNIT: A unit of measure used to compute the value of your
interest in a subaccount of the Separate Account prior to the Annuity Date.
2. ANNUITANT: Annuity payments may depend upon the continuation of a person's
life. That person is called the Annuitant.
3. ANNUITY DATE: The date on which annuity payments are scheduled to begin.
4. ATTAINED AGE: The age of a person on the Contract Date plus the number of
full contract years since the Contract Date.
5. BENEFICIARY: The person(s) designated by you to receive payment upon the
death of an Owner prior to the Annuity Date.
6. COMPANY: Merrill Lynch Life Insurance Company. Also referred to as "we" or
"us."
7. CONTRACT ANNIVERSARY: The yearly anniversary of the Contract Date.
8. CONTRACT DATE: The effective date of the Contract as shown on the Contract
Schedule. This is usually the business day we receive your initial premium
at our Service Center.
9. CONTRACT VALUE: The value of your interest in the Separate Account.
10. CONTRACT YEAR: The period from the Contract Date to the first Contract
Anniversary, and thereafter, the period from one Contract Anniversary to
the next Contract Anniversary.
11. DUE PROOF OF DEATH: A certified copy of the death certificate, Beneficiary
Statement and any additional paperwork necessary to process a death claim.
12. FUND: An investment portfolio of an open-end management investment company
or unit investment trust in which a subaccount invests.
13. INDIVIDUAL RETIREMENT ACCOUNT OR ANNUITY ("IRA"): A retirement arrangement
meeting the requirements of Section 408 of the Internal Revenue Code.
14. NONQUALIFIED CONTRACT: A retirement arrangement plan other than a qualified
plan described under Section 401, 403, 408, 457 or any similar provisions
of the Internal Revenue Code.
15. OWNER: The person or persons entitled to exercise all rights under the
Contract. In this Contract, "you" means Owner.
16. PREMIUMS: The money you pay into this Contract.
17. SEPARATE ACCOUNT: This Contract is funded by a separate account of the
Company. The separate account has multiple subaccounts, which invest
in shares or units of an underlying Fund. The separate account and the
subaccounts currently available with this Contract are identified in
the Contract Schedule.
2
<PAGE>
CONTRACT SCHEDULE
Merrill Lynch Life Insurance Company Contract Number: [J001234567]
Service Center: Contract Date: [April 1, 2000]
P.O. Box 44222 Issue Date: [April 5, 2000]
Jacksonville, FL 32231-4222 Financial Consultant:
1-800-535-5549 [ROBERT W. AGENT]
- --------------------------------------------------------------------------------
OWNER INFORMATION ANNUITANT INFORMATION
- --------------------------------------------------------------------------------
Name: [JOHN T. DOE] Name: [JOHN T. DOE]
Age: [55] Age: [55] Sex: [M]
Co-Owner: [JANE A. DOE] Co-Annuitant: [JANE A. DOE]
Co-Owner Age: [55] Age: [55] Sex: [F]
Address: [123 ANY STREET] Annuity Date: [APRIL 1, 2035]
[ANYTOWN, US 01234-0033]
Maximum Owner Age: [90] Maximum Annuitant Age: [90]
Beneficiary: [WILLIAM M. DOE]
Line 2
Line 3
Line 4
Line 5
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONTRACT INFORMATION
- --------------------------------------------------------------------------------
Contract Type: FLEXIBLE PREMIUM INDIVIDUAL VARIABLE ANNUITY
ASSET-BASED INSURANCE CHARGE: [1.59% maximum]
CONTRACT FEE: [$40 at the end of each Contract Year (and on full withdrawal) if
the greater of premiums less withdrawals or Contract Value is
less than $25,000.]
TRANSFER CHARGE: We reserve the right to charge [$25] for each transfer during
a Contract Year in excess of [12.]
INITIAL PREMIUM: [$70,000.] For the first 14 days following the Contract Date
all premiums will be allocated to the [Domestic Money
Market Subaccount.]
MINIMUM ADDITIONAL PREMIUM: [$100]
SEPARATE ACCOUNT: [The Merrill Lynch Life Variable Annuity Separate Account A]
(the "Separate Account")
SUBACCOUNTS AND ALLOCATION AFTER 14 DAYS FOLLOWING THE CONTRACT DATE:
[50% Fund #1] [% Fund #10]
[25% Fund #2] [% Fund #11]
[% Fund #3] [% Fund #12]
[% Fund #4] [% Fund #13]
[25% Fund #5] [% Fund #14]
[% Fund #6] [% Fund #15]
[% Fund #7] [% Fund #16]
[% Fund #8] [% Fund #17]
[% Fund #9] 100% Total
MAXIMUM NUMBER OF SUBACCOUNTS: [10]
MINIMUM TRANSFER AMOUNT: [$100]
MAXIMUM NUMBER OF WITHDRAWALS DURING CONTRACT YEAR: [6]
MINIMUM WITHDRAWAL AMOUNT: [$100]
MINIMUM REMAINING CONTRACT VALUE AFTER WITHDRAWAL: [$5,000]
- --------------------------------------------------------------------------------
3
<PAGE>
GENERAL PROVISIONS
1.1. BENEFICIARY: The beneficiary is shown in the Contract Schedule. You may
change the beneficiary while you are alive.
You may name a beneficiary irrevocably. If you do so, you can later change
the beneficiary only with the beneficiary's written consent.
If a beneficiary does not survive you, the estate or heirs of such
beneficiary have no rights under this Contract. However, if a beneficiary
survives you but dies before the Contract Value is distributed, the estate
or heirs of such beneficiary are entitled to the death benefit that would
otherwise have been paid to such beneficiary. If no beneficiary survives
you, payment of the death benefit will be made to your estate.
1.2 OWNERSHIP OF CONTRACT: Unless another Owner is named by the purchaser, the
purchaser is the Owner. Upon notice to us you may assign the Contract to a
new Owner. The assignment terminates all prior beneficiary designations.
When the Contract is issued or the Owner is changed, the maximum age of the
Owner (or older co-owner, if applicable) must be less than the Maximum
Owner Age shown in the Contract Schedule.
Only spouses may be co-owners. The beneficiary of the co-owner spouses must
be the surviving spouse. Ownership rights must be exercised by the
co-owners jointly. Co-owners are deemed to be joint tenants with right of
survivorship unless they indicate otherwise.
1.3 ANNUITANT: When an annuity option is elected, the amount payable as of the
Annuity Date is based on the age (and sex, where permissible) of the
Annuitant, the annuity option selected, and the Contract Value.
The Annuitant may be changed at any time prior to the Annuity Date. A
change of Annuitant by a non-natural owner will be treated as the death of
an Owner (see Section 7.1). When the Contract is issued or a new Annuitant
is named, the maximum age of the Annuitant (or the older Co-annuitant, if
applicable) must be less than the Maximum Annuitant Age shown in the
Contract Schedule.
1.4 NOTICES, CHANGES AND CHOICES: To be effective, all notices, changes and
choices you may make under this Contract must be in writing, signed and
received by us at our Service Center, except that transfers and premium
allocations may be made by telephone by you or your representative if
authorized by you in writing. If acceptable to us, notices, changes, and
choices relating to beneficiaries, ownership, Annuitants, and Annuity Date
will take effect as of the date signed unless we have already acted in
reliance on the prior status. We are not responsible for their validity.
1.5 RESTRICTIONS ON IRAS: If this Contract is issued as or as part of an IRA,
it may not be assigned, pledged, or transferred unless permitted by law.
1.6 MISSTATEMENT OF AGE OR SEX: If the age of the Owner (or co-owner, if
applicable) is misstated, any death benefit payable under this Contract
will be adjusted to reflect the correct age.
If the age or sex of the Annuitant (or co-annuitant, if applicable) is
misstated, annuity payments will be adjusted to reflect the correct age
and sex. Any amount we have overpaid as the result of such misstatement
will be deducted from the next payments made by us under this Contract.
Interest on the overpayment will be charged at the rate of 6% per year.
Any amount we have underpaid will be paid in full with the next payment
made by us under this Contract. We will pay interest on the underpayment
at the rate of 6% per year.
1.7 PROOF OF AGE, SEX, OR SURVIVAL: We may require satisfactory proof of age,
sex, or survival of any person on whose continued life any payment under
this Contract depends.
1.8 INCONTESTABILITY: We will not contest this Contract.
4
<PAGE>
1.9 THE CONTRACT: This Contract, and any endorsements or riders are the entire
Contract. It is issued in consideration of the payment of the initial
Premium.
Only our President, a Vice President, Secretary, or Assistant Secretary may
change the Contract. Any change must be in writing.
At any time we may make such changes in this Contract as are required to
make it conform with any law, regulation, or ruling issued by a government
agency.
1.10 NONPARTICIPATING: This Contract is nonparticipating. It does not share in
our surplus.
1.11 DATES: Contract years and anniversaries are measured from the Contract
Date.
1.12 CONTRACT PAYMENTS: All sums payable to or by us are payable at our Service
Center. We may require return of this Contract prior to making payment.
Paid-up annuity benefits, Contract withdrawal values and death benefits
will not be less than the minimum required by the laws of the state in
which the Contract is delivered.
1.13 PROTECTION OF PROCEEDS: Payments under this Contract may not be assigned by
the payee prior to their due dates. To the extent allowed by law, payments
are not subject to legal process for debts of a payee.
1.14 PERIODIC REPORTS: At least once a year prior to the Annuity Date we will
furnish you with a report for your Contract. It will show the current
number of Accumulation Units, the value per Accumulation Unit and the
Contract Value.
1.15 PAYMENTS UNDER THE CONTRACT: Payment generally will be made within seven
days of our receipt of a completed request, but we may defer payment if:
(a) The New York Stock Exchange is closed;
(b) Trading on the New York Stock Exchange is restricted;
(c) An emergency exists such that it is not reasonably practical to
dispose of securities in the Separate Account or to determine the
value of its assets;
(d) The Securities and Exchange Commission by order so permits for the
protection of security holders; or
(e) Payment is derived from a check used to pay a Premium which has not
cleared through the banking system.
Conditions (b), (c) and (d) will be decided by or in accordance with rules
of the Securities and Exchange Commission. Transfers also may be deferred
upon the occurrence of any of the events described above.
1.16 TAX QUALIFICATION: This Contract is intended to qualify as an annuity
contract for federal income tax purposes. To that end, the provisions of
this Contract are to be interpreted to ensure or maintain such tax
qualification, notwithstanding any other provision to the contrary.
Distributions under this Contract shall be made in a time and manner
necessary to maintain such qualification under the applicable provisions of
the Internal Revenue Code including, in the case of an owner who is a
non-natural person, the requirement to distribute the entire interest in
the Contract upon any change of the Annuitant. For this purpose, the entire
interest in the Contract is the Contract Value less any Contract Fee under
Section 4.1. We reserve the right to amend this Contract to reflect any
clarifications that may be needed or are appropriate to maintain such
qualification or to conform this Contract to any applicable changes in the
tax qualification requirements.
5
<PAGE>
2. PREMIUMS
2.1 ADDITIONAL PREMIUMS: The minimum additional Premium is shown on the
Contract Schedule. Premiums may be paid at any time prior to the Annuity
Date without prior notice to us. We reserve the right to refuse to accept a
Premium.
2.2 PREMIUM ALLOCATION: Your Premiums will be allocated to the subaccounts of
the Separate Account as you direct, as shown in the Contract Schedule.
However, for the first 14 days following the Contract Date, all Premiums
will be allocated to the subaccount shown under Initial Premium in the
Contract Schedule. If you do not give us allocation instructions with
subsequent Premiums, we will allocate those Premiums according to the
allocation instructions last received from you.
3. THE SEPARATE ACCOUNT
3.1 THE SEPARATE ACCOUNT: The Separate Account is identified in the
Contract Schedule. It is a separate investment account of Merrill
Lynch Life Insurance Company. With respect to the Separate Account, income,
gains, and losses, whether or not realized, from assets allocated to the
Separate Account are credited to or charged against the Separate Account
without regard to other income, gains, or losses of the Company. Assets
allocated to the Separate Account remain our property but are separate from
our general account and any other separate accounts we may have. Separate
Account assets, to the extent equal to the Separate Account's reserves and
other liabilities, may not be charged with liabilities from any other
business we conduct. We reserve the right to transfer any excess to our
general account.
3.2 SUBACCOUNTS: Current subaccounts are shown in the Contract Schedule. We
reserve the right to limit the number of subaccounts in which you may
invest to the number shown in the Contract Schedule.
3.3 CHANGES TO THE SEPARATE ACCOUNT: We may make additional subaccounts
available. We reserve the right, subject to obtaining any necessary
regulatory approvals, to eliminate subaccounts; to substitute a new
portfolio for the portfolio in which a subaccount invests; to deregister
the Separate Account under the Investment Company Act of 1940 (the "1940
Act"); to make any changes required by the 1940 Act; to operate the
Separate Account as a managed investment company under the 1940 Act or any
other form permitted by law; to transfer all or a portion of the assets of
a subaccount or Separate Account to another subaccount or Separate Account
pursuant to a combination or otherwise; and to create a new Separate
Account.
3.4 NUMBER OF ACCUMULATION UNITS: For each subaccount the number of your
Accumulation Units is the sum of:
Each Premium or transfer allocated to the subaccount
Divided by
The value of an Accumulation Unit for that subaccount for the
valuation period in which we received the Premium or transfer.
The number will be adjusted for transfers from each subaccount, withdrawals
and charges. Adjustments will be made as of the valuation period in which
the transaction is effective.
3.5 VALUE OF EACH ACCUMULATION UNIT: For each subaccount, the value of an
Accumulation Unit was arbitrarily set at $10 when the subaccount was
established. The value may increase or decrease from one valuation period
to the next. For any valuation period the value is:
The value of an Accumulation Unit for the last prior valuation period
Multiplied by
The Net Investment Factor for that subaccount for the current
valuation period.
6
<PAGE>
3.6 NET INVESTMENT FACTOR: This is an index used to measure the investment
performance of a subaccount from one valuation period to the next. For any
subaccount, we determine the Net Investment Factor by dividing the value of
the assets of the subaccount for that valuation period by the value of the
assets of the subaccount for the preceding valuation period. We subtract
from that result the daily equivalent of the asset-based insurance charge
for the valuation period. We also take reinvestment of dividends and
capital gains into account when we determine the Net Investment Factor.
We may adjust the Net Investment Factor to make provision for any change in
tax law that requires us to pay tax on earnings in the Separate Account and
any charge that may be assessed against the Separate Account for
assessments or federal premium taxes or federal, state or local excise,
profits or income taxes measured by or attributable to the receipt of
Premiums.
3.7 VALUATION PERIOD: This is the interval from one determination of the net
asset value of a subaccount to the next. Net asset values are determined as
of the close of business on each day the New York Stock Exchange is open.
4. CHARGES AND DEDUCTIONS
4.1 CONTRACT FEE: A Contract Fee may be deducted from the Contract Value on
each Contract anniversary that occurs on or prior to the Annuity Date. It
may also be deducted upon a full withdrawal of the Contract Value if it is
not withdrawn on a Contract anniversary. The amount of the Contract Fee and
circumstances under which it will be imposed are shown in the Contract
Schedule. This charge will never increase.
4.2 ASSET-BASED INSURANCE CHARGE: This charge is made to compensate us for our
expenses for administration of the Separate Account, for issue and
administration of the Contract, for providing a guaranteed minimum death
benefit, and our risks. The maximum charge equals, on an annual basis, the
percentage shown in the Contract Schedule. The asset-based insurance charge
is deducted daily from the net asset value of the subaccount.
4.3 TAXES, FEES AND ASSESSMENTS: Any charges made by us attributable to premium
taxes imposed by a state or other government will be deducted at the
Annuity Date, except in those jurisdictions that do not allow us to reduce
our current taxable premium income by the amount of any withdrawal or death
benefit. In those jurisdictions, we will also deduct a charge for those
taxes on any withdrawal or death benefit paid under the Contract. We may
also deduct a charge for assessments or federal premium taxes or federal,
state, or local excise, profits, or income taxes measured by or
attributable to the receipt of Premiums. We also reserve the right to
deduct from the Separate Account any taxes imposed on the Separate Account.
4.4 PAYMENT OF DEDUCTIONS: The asset-based insurance charge will be computed
and deducted from each subaccount for each day the Contract is in force.
The transfer charge described in Section 5.1 will be deducted pro rata from
the subaccounts from which Contract Value is being transferred. Other
applicable charges will be deducted from each subaccount of the Separate
Account in the ratio of your interest in each subaccount to your Contract
Value.
7
<PAGE>
5. TRANSFERS
5.1 TRANSFERS AMONG SUBACCOUNTS: You may transfer all or part of your Contract
Value among the subaccounts. The number of transfers allowed each contract
year without charge is shown in the Contract Schedule. We reserve the right
to charge for each additional transfer as shown in the Contract Schedule.
The minimum amount which may be transferred from any subaccount in any
transaction is shown in the Contract Schedule.
An excessive number of transfers, including short-term "market timing"
transfers, may adversely affect the performance of the underlying portfolio
in which a subaccount invests. If, in our sole opinion, a pattern of an
excessive number of transfers develops for a Contract, we reserve the right
not to process a transfer request. We also reserve the right not to process
a transfer request when the sale or purchase of shares or units of an
underlying portfolio is not reasonably practicable due to actions taken or
limitations imposed by the underlying fund.
6. WITHDRAWALS
6.1 WITHDRAWALS: You may withdraw all or part of your Contract Value. Notice
must be received by us prior to the Annuity Date. The maximum number of
withdrawals permitted each contract year is shown in the Contract Schedule.
The minimum amount of each withdrawal, and the Contract Value that must be
remaining after a withdrawal, are shown in the Contract Schedule. For a
full withdrawal, this contract must be surrendered to our Service Center.
6.2 PAYMENT OF WITHDRAWALS: Unless you notify us otherwise, partial withdrawals
will be deducted from each subaccount in the ratio of your Contract Value
in each subaccount to the Contract Value. Withdrawals will be based on
values for the valuation period in which the notice (and Contract if
required) is received at our Service Center.
7. PAYMENT AT DEATH
7.1 DEATH OF OWNER
(including an Annuitant who is also an Owner)
7.1.1 DEATH PRIOR TO ANNUITY DATE: If an Owner dies prior to the Annuity Date,
we will pay the beneficiary the death benefit specified below, in a lump
sum, or if requested, under an annuity option under Section 7.1.4. If the
Owner is a non-natural person, then the Annuitant, rather than the Owner
will be used to determine the death benefit. The death benefit is
determined as of the date we receive due proof of the Owner's death at our
Service Center.
(a) If the Owner is age 80 or over on the Contract Date, the death benefit
is the greater of:
(i) the premiums paid into the Contract less "adjusted" withdrawals
from the Contract; or
(ii) the Contract Value.
Each "adjusted" withdrawal equals the amount withdrawn multiplied by
(i) divided by (ii) (both determined immediately prior to the
withdrawal).
(b) If the Owner is under age 80 on the Contract Date, the death benefit
is the greatest of:
(i) the premiums paid into the Contract less "adjusted" withdrawals
from the Contract;
8
<PAGE>
(ii) the Contract Value; or
(iii) the Maximum Anniversary Value.
Each "adjusted" withdrawal equals the amount withdrawn multiplied by
the greater of (i) and (iii) divided by (ii) (all of which are
determined immediately prior to the withdrawal).
7.1.2 MAXIMUM ANNIVERSARY VALUE: The Maximum Anniversary Value is equal to the
greatest anniversary value for the Contract. An anniversary value is
equal to the Contract Value on a Contract Anniversary increased by
premium payments and decreased by "adjusted" withdrawals, as defined in
Section 7.1.1(b), since that anniversary.
To determine the Maximum Anniversary Value, we will calculate an
anniversary value for each Contract Anniversary through the earlier of
your attained age 80 or the anniversary on or prior to your date of
death. If the Contract has co-owners, we will calculate the anniversary
value through the earlier of the older Owner's attained age 80 or the
anniversary on or prior to any Owner's date of death if a death benefit
is payable.
We will calculate the Maximum Anniversary Value based on your age (or the
age of the older Owner, if the Contract has co-owners) on the Contract
Date. Subsequent changes in Owner will not increase the period of time
used to determine the Maximum Anniversary Value. If a new Owner has not
reached attained age 80 and is older than the Owner whose age is being
used to determine the Maximum Anniversary Value at the time of the
ownership change, the period of time used in the calculation of the
Maximum Anniversary Value will be based on the age of the new Owner at
the time of the ownership change. If at the time of an ownership change
the new Owner is attained age 80 or over, we will use the Maximum
Anniversary Value as of the anniversary on or prior to the ownership
change, increased by premium payments and decreased by "adjusted"
withdrawals as defined in Section 7.1.1(b), since that anniversary.
If we have not received the beneficiary's instructions for making payment
within 60 days following our receipt of the Owner's certified death
certificate, due proof of death will be deemed to have been received by
us on the 60th day, and payment will be made in a lump sum.
7.1.3 CONTRACT CONTINUATION OPTION: If the surviving spouse of the deceased
Owner is the beneficiary, such spouse may choose to continue this
Contract. The spouse shall become the "new" owner and the beneficiary
until a new beneficiary is named. If the death benefit which would have
been paid to the surviving spouse is greater than the Contract Value as
of the date we determine the death benefit, we will increase the Contract
Value of the continued Contract to equal the death benefit we would have
paid to the surviving spouse. Your interest in each subaccount will be
increased by the ratio of your Contract Value in each subaccount to your
Contract Value.
7.1.4 ANNUITY OPTION: If the beneficiary is the surviving spouse of the
deceased Owner, he or she may choose to receive payments under any of the
annuity options of this Contract. For any other beneficiary, only those
options are available that provide for full payment of such Owner's
interest in the Contract:
(a) Within five years of the date of such Owner's death;
(b) Over the lifetime of such beneficiary of this Contract; or
(c) Over a period that does not exceed the life expectancy, as defined
by Internal Revenue Service regulations, of such beneficiary of
this Contract.
Subparagraphs (b) and (c) apply only to individuals, and such payments
must start within one year of the date of such Owner's death. For IRAs,
any annuity option chosen must meet the requirements of the Internal
Revenue Code.
9
<PAGE>
7.1.5 DEATH AFTER ANNUITY DATE: See Section 9.
7.2 DEATH OF ANNUITANT WHO IS NOT AN OWNER
7.2.1 If the Annuitant dies prior to the Annuity Date and the Annuitant is not
the Owner, the Owner, provided the Owner is a natural person, may
designate a new Annuitant. If one is not designated, the Owner will
become the Annuitant. If the Owner is a non-natural person, the death of
the Annuitant shall be treated as the death of the Owner.
8. ANNUITY PROVISIONS
8.1 ANNUITY DATE: The Annuity Date may not be later than the date the
Annuitant would reach the Maximum Annuitant Age shown in the Contract
Schedule. If you have not chosen an Annuity Date, it will be the date the
Annuitant would reach the Maximum Annuitant Age shown in the Contract
Schedule. For an IRA, if you have not chosen an Annuity Date, it will be
the date the Annuitant reaches age 70 1/2. You may change the Annuity
Date prior to the Annuity Date.
8.2 AMOUNT OF ANNUITY PAYMENTS: Charges made by us for premium taxes will be
deducted from your Contract Value at the Annuity Date. The remaining
value will be transferred to our general account and applied to the
annuity option you selected, at our then current annuity purchase rates,
which will be furnished on request. The annuity purchase rates will
assume interest of not less than 3%. They will not be less favorable than
those shown in the annuity tables in this Contract. The tables show the
minimum guaranteed amount of each monthly payment for each $1,000 so
applied, according to the sex (where permissible) and age at the Annuity
Date of the Annuitant. The tables are based on the 1983 Table "a" with
interest at 3%.
8.3 ANNUITY OPTIONS: If you have not chosen an annuity option described in
Section 9, Option 4 will apply with a 10-year guarantee period. You may
change options prior to the Annuity Date. An option not set forth in the
Contract may be chosen if acceptable to us.
8.4 MINIMUM ANNUITY PAYMENT: If the Contract Value to be applied at the
Annuity Date is less than $5,000, we may pay such amount in a lump sum.
If any payment would be less than $50, we may change the frequency so
payments are at least $50 each.
9. ANNUITY OPTIONS
9.1 OPTION 1--PAYMENTS OF A FIXED AMOUNT: Equal payments in the amount chosen
will be made until the amount of your Contract Value transferred to our
general account adjusted for interest credited of at least 3% is
exhausted. The term over which such payments are made must be at least
five years.
9.2 OPTION 2--PAYMENTS FOR A FIXED PERIOD: Payments will be made for the
period chosen. The period must be at least 5 years.
9.3 OPTION 3--LIFE ANNUITY: Payments will be made for the life of the
Annuitant. Payments will cease with the last payment due prior to the
Annuitant's death.
9.4 OPTION 4--LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 5, 10, 15 OR 20
YEARS: Payments will be made for the guaranteed period chosen (5, 10, 15
or 20 years) and as long thereafter as the Annuitant lives.
9.5 OPTION 5--LIFE ANNUITY WITH GUARANTEED RETURN OF CONTRACT VALUE: Payments
will be made until the sum of the annuity payments equals the amount of
your Contract Value transferred to our general account at the Annuity
Date, and as long thereafter as the Annuitant lives.
10
<PAGE>
9.6 OPTION 6--JOINT AND SURVIVOR LIFE ANNUITY: Payments will be made during
the lifetimes of the Annuitant and a designated second person. The amount
of such payments will not change by reason of the death of the first
joint Annuitant to die.
9.7 OPTION 7--JOINT AND SURVIVOR LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 5,
10, 15 OR 20 YEARS: Payments will be made for the guaranteed period
chosen (5, 10, 15 or 20 years) and as long thereafter as either of the
Annuitants lives.
9.8 OPTION 8--IRA: This option is available only for IRAs. Annuity payments
may be based on (a) the life expectancy of the Annuitant, (b) the joint
life expectancy of the Annuitant and his or her spouse, or (c) the life
expectancy of the surviving spouse if the Annuitant dies before the
Annuity Date. Payments will be made annually. Each annual payment will be
equal to the remaining value on that January 1, divided by the applicable
current life expectancy, as defined by Internal Revenue Service
regulations. Each subsequent payment will be made on the anniversary of
the Annuity Date. Interest will be credited at our current rate for this
option. The rate will not be less than 3%. On the death of the measuring
life or lives prior to full distribution of the remaining value, the
remaining value will be paid to the beneficiary in a lump sum.
9.9 DEATH OF ANNUITANT: On the death of the Annuitant while guaranteed
amounts remain unpaid under Option 1, 2, 4, 5 or 7, the Owner may choose
either:
(a) To have payments continue for the amount or period guaranteed; or
(b) To receive the present value of the remaining guaranteed payments
in a lump sum.
If an Owner dies while guaranteed amounts remain unpaid, the present
value may be paid in a lump sum to the beneficiary, if the beneficiary so
elects.
Present values will be computed at the interest rate that was used to
compute the amount of the initial annuity payment.
9.10 PAYMENT: Except for Option 8, monthly payments will be made beginning on
the Annuity Date, but prior to the Annuity Date you may choose a less
frequent payment interval. The amount of each payment on an annual,
semiannual, or quarterly basis will be not less than the monthly payment
computed from the annuity tables in this Contract multiplied by the
appropriate factor.
<TABLE>
<CAPTION>
Annual Semiannual Quarterly
------ ---------- ---------
<S> <C> <C>
11.839 5.963 2.993
</TABLE>
11
<PAGE>
10. ANNUITY OPTION TABLES
MINIMUM GUARANTEED MONTHLY ANNUITY PAYMENT FOR EACH $1,000 APPLIED UNDER
OPTION
OPTION 2 (Payments for a Fixed Period)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Years Each Years Each Years Each Years Each
Payable Payment Payable Payment Payable Payment Payable Payment
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
5 17.91 9 10.53 13 7.71 17 6.23
6 15.14 10 9.61 14 7.26 18 5.96
7 13.16 11 8.86 15 6.87 19 5.73
8 11.68 12 8.24 16 6.53 20 5.51
- ----------------------------------------------------------------------------------------------------
</TABLE>
OPTION 3 (Life Annuity), OPTION 4 (Life Annuity with 10
or 20 Years Guaranteed) and OPTION 5 (Return of
Contract Value Guaranteed)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
*Adjusted Life 10 Years 20 Years Return of *Adjusted Life 10 Years 20 Years Return of
Male Age Annuity Guaranteed Guaranteed Contract Value Female Age Annuity Guaranteed Guaranteed Contract Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
56 4.42 4.37 4.20 4.21 56 4.12 4.10 4.01 4.00
57 4.51 4.45 4.27 4.28 57 4.20 4.17 4.07 4.06
58 4.60 4.54 4.33 4.35 58 4.28 4.25 4.13 4.13
59 4.70 4.63 4.39 4.43 59 4.36 4.33 4.19 4.20
60 4.80 4.73 4.46 4.51 60 4.45 4.41 4.26 4.27
61 4.92 4.83 4.52 4.60 61 4.55 4.50 4.33 4.35
62 5.04 4.93 4.59 4.68 62 4.65 4.59 4.40 4.43
63 5.17 5.05 4.65 4.78 63 4.76 4.69 4.47 4.52
64 5.30 5.16 4.72 4.88 64 4.87 4.80 4.54 4.61
65 5.45 5.29 4.78 4.98 65 5.00 4.91 4.61 4.70
66 5.61 5.42 4.85 5.09 66 5.13 5.03 4.68 4.80
67 5.77 5.55 4.91 5.20 67 5.27 5.15 4.76 4.91
68 5.95 5.69 4.97 5.32 68 5.42 5.29 4.83 5.02
69 6.14 5.84 5.03 5.45 69 5.58 5.42 4.90 5.14
70 6.34 5.99 5.08 5.58 70 5.75 5.57 4.97 5.27
71 6.55 6.14 5.13 5.72 71 5.94 5.73 5.03 5.40
72 6.78 6.30 5.18 5.86 72 6.14 5.89 5.09 5.54
73 7.02 6.46 5.23 6.02 73 6.36 6.06 5.15 5.69
74 7.28 6.63 5.27 6.18 74 6.60 6.23 5.21 5.85
75 7.55 6.80 5.31 6.34 75 6.86 6.42 5.25 6.02
76 7.84 6.97 5.34 6.52 76 7.13 6.61 5.30 6.20
77 8.16 7.15 5.37 6.71 77 7.43 6.80 5.34 6.39
78 8.49 7.32 5.40 6.90 78 7.75 7.00 5.37 6.59
79 8.85 7.50 5.42 7.11 79 8.10 7.20 5.40 6.80
80 9.24 7.67 5.44 7.32 80 8.47 7.40 5.43 7.02
81 9.65 7.84 5.46 7.55 81 8.87 7.60 5.45 7.26
82 10.09 8.01 5.47 7.79 82 9.31 7.79 5.47 7.51
83 10.55 8.17 5.49 8.04 83 9.79 7.99 5.48 7.77
84 11.05 8.32 5.49 8.31 84 10.31 8.17 5.49 8.05
85 11.58 8.47 5.50 8.59 85 10.87 8.35 5.50 8.36
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
OPTION 6 (JOINT AND SURVIVOR LIFE ANNUITY)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
*Adjusted *Adjusted Male Age *Adjusted
Female ------------------------------------------------------------------------------------------- Female
Age 50 55 60 65 70 75 80 85 Age
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 3.46 3.54 3.60 3.65 3.69 3.71 3.72 3.73 50
55 3.58 3.70 3.80 3.88 3.94 3.98 4.01 4.03 55
60 3.68 3.85 4.00 4.13 4.24 4.32 4.37 4.40 60
65 3.77 3.98 4.20 4.40 4.59 4.73 4.83 4.90 65
70 3.84 4.09 4.38 4.67 4.96 5.21 5.41 5.55 70
75 3.89 4.18 4.52 4.92 5.34 5.74 6.10 6.38 75
80 3.92 4.24 4.63 5.11 5.67 6.26 6.85 7.37 80
85 3.95 4.28 4.71 5.25 5.93 6.72 7.58 8.45 85
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Information for ages or Annuity Options not shown will be furnished on request.
*"Adjusted age" is the actual age on the Annuity Date reduced by one year for
each 10 full years between January 1, 2000 and the Annuity Date. For example:
ANNUITY DATE ADJUSTED AGE
----------------------------------------------------
Before 2010 Actual age
2010 to 2019 Subtract 1 year from actual age
2020 to 2029 Subtract 2 years from actual age
2030 to 2039 Subtract 3 years from actual age
2040 to 2049 Subtract 4 years from actual age
----------------------------------------------------
12
<PAGE>
MERRILL LYNCH LIFE INSURANCE COMPANY
INDIVIDUAL RETIREMENT ANNUITY ENDORSEMENT
This endorsement is part of the Contract. The Contract, as amended, is intended
to qualify as an individual retirement annuity under Section 408(b) of the
Internal Revenue Code of 1986 (the "Code"). The following provisions replace any
contrary provisions of the Contract:
1. The Owner shall be the Annuitant. Any provision of the Contract that would
allow joint ownership, or that would allow more than one person to share
distributions, is deleted.
2. The Contract is not transferable or asssignable (other than pursuant to a
divorce decree in accordance with applicable law) and is established for
the exclusive benefit of the Owner and his or her beneficiaries. It may
not be sold, assigned, alienated or pledged as security for a loan or
other obligation.
3. The Owner's entire interest in the Contract shall be nonforfeitable.
4. Premium payments shall be in cash. The following purchase payments shall
be accepted under this Contract:
a. Rollover contributions described in Code Sections 402(c), 403(a)(4),
403(b)(8) and 408(d)(3),
b. Amounts transferred from another individual retirement account or
annuity, and
c. Contributions made pursuant to a Simplified Employee Pension as
provided in Code Section 408(k).
The Owner must determine whether any premium payment qualifies as a
permissible contribution subject to favorable tax treatment under the
Code. The Owner must also determine whether such amount qualifies as a
permissible rollover contribution for income tax purposes.
5. This Contract does not require fixed premium payments. Any refund of
premiums (other than excess contributions) will be applied before the
close of the calendar year following the year of the refund toward the
payment of additional premiums or the purchase of additional benefits.
6. If this Contract is used in conjunction with a SEP-IRA plan under section
408(k) of the Code, the annuity option tables attached to this endorsement
shall be substituted for the tables set forth in the Contract.
7. The Annuity Date is the date the Owner's entire Contract Value will be
distributed or commence to be distributed. The Annuity Date shall be no
later than April 1 of the calendar year following the calendar year in
which the Owner attains age 70 1/2.
8. Any amounts payable during the Owner's lifetime shall commence on or
before the Annuity Date and shall be payable in substantially equal
amounts, at least annually. Payment shall be made as follows:
a. in a lump sum, or
b. over the Owner's life, or
c. over the lives of the Owner and his or her designated Beneficiary, or
d. over a period certain not exceeding the Owner's life expectancy, or
e. over a period certain not exceeding the joint and last survivor life
expectancy of the Owner and his or her designated Beneficiary.
-1-
<PAGE>
If the Owner's entire interest is to be distributed in other than a lump
sum, then the minimum amount to be distributed each year (commencing with
the calendar year following the calendar year in which the Owner attains
age 70 1/2 and each year thereafter) shall be determined in accordance
with Code Section 408(b)(3) and the regulations thereunder, including the
incidental death benefit requirement of Code Section 401(a)(9)(G), the
regulations thereunder, and the minimum distribution incidental death
benefit requirement of Proposed Income Tax Regulation Section
1.401(a)(9)-2. Payments must be either nonincreasing or may increase only
as provided in Proposed Income Tax Regulation Section 1.401(a)(9)-1, Q&A
F-3.
9. If the Owner dies after distribution of his or her interest has commenced,
the remaining portion of such interest will continue to be distributed at
least as rapidly as under the method of distribution being used prior to
his or her death.
If the Owner dies before distribution has begun, the entire interest must
be distributed no later than December 31 of the calendar year in which the
fifth anniversary of the Owner's death occurs. However, proceeds which are
payable to a named Beneficiary who is a natural person may be distributed
in substantially equal installments over the lifetime of the Beneficiary
or a period certain not exceeding the life expectancy of the Beneficiary
provided such distribution begins not later than December 31 of the
calendar year in which the Owner's death occurred. If the Beneficiary is
the Owner's surviving spouse, the Beneficiary may elect not later than
December 31 of the calendar year in which the fifth anniversary of the
Owner's death to receive equal payments over the life or life expectancy
of the surviving spouse commencing at any date prior to the date on which
the Owner would have attained age 70 1/2. Minimum payments will be
calculated in accordance with Code Section 408(b)(3).
Any amount paid to any of the Owner's children will be treated as if it
had been paid to the surviving spouse if the remainder of the interest
becomes payable to the surviving spouse when the child reaches the age of
majority.
If the Owner dies before his or her entire interest has been distributed,
no additional premiums will be accepted under this policy after his or her
death unless the Beneficiary is the Owner's surviving spouse.
10. If the Owner's spouse is not the named Beneficiary, the method of
distribution selected will assure that at least 50% of the present value
of the amount available for distribution is paid within the Owner's life
expectancy and that such method of distribution complies with Code Section
408(b)(3).
11. Life expectancy and joint and last survivor expectancy shall be determined
by use of the expected return multiples in Tables V and VI of Treasury
Regulation Section 1.72-9 in accordance with Code 408(b)(3). In the case
of distributions under paragraph (8) of this endorsement, the life
expectancy of the Owner and his or her Beneficiary will be initially
determined on the basis of his or her attained age in the year the Owner
reaches 70 1/2. In the case of a distribution under paragraph (9) of this
endorsement, life expectancy will be initially determined on the basis of
the Beneficiary's attained age in the year distributions begin. If the
Owner (or his or her spouse) so elects prior to the time distributions
begin, the Owner's life expectancy and, if applicable, his or her spouse's
life expectancy will be recalculated annually based on the Owner's
attained age(s) in the year for which the required distribution is being
determined. The life expectancy of a nonspouse Beneficiary will not be
recalculated.
-2-
<PAGE>
The annual distribution required to be made by the Annuity Date is for the
calendar year in which the Owner reaches age 70 1/2. Annual payments for
subsequent years, including the year in which the Annuity Date occurs,
must be made by December 31 of that year. The amount distributed for each
year shall equal or exceed the Contract Value as of the close of business
on December 31 of the preceding year, divided by the applicable life
expectancy or joint and last survivor life expectancy.
12. This endorsement is effective as the Contract Date.
MERRILL LYNCH LIFE INSURANCE COMPANY
BY: /s/ BARRY G. SKOLNICK
-----------------------------
SECRETARY
-3-
<PAGE>
MERRILL LYNCH LIFE INSURANCE COMPANY
TAX-SHELTERED ANNUITY ENDORSEMENT
This endorsement is part of the Contract. The Contract, as amended, is intended
to qualify as a tax-sheltered annuity under Section 403(b) of the Internal
Revenue Code of 1986 (the "Code"). The following provisions replace any contrary
provisions of the Contract:
1. The Annuitant is the sole Owner. The Contract is not transferable and may
not be sold, assigned, discounted or pledged as security for a loan or as
a security for any other obligation, other than to Merrill Lynch Life
Insurance Company ("we," "us" or "our"). Annuity payments under the
Contract cannot be surrendered, commuted, assigned, encumbered or
anticipated in any way. Your interest in the Contract is nonforfeitable.
Only your spouse may be designated as a Contingent Owner.
2. Rollover and transfer amounts from plans that are not subject to the
Employee Retirement Income Security Act of 1974, as amended, will be
accepted as premium payments, as permitted by law. Other premium payments,
including premium payments subject to Internal Revenue Code ("IRC")
Section 402(g), will not be accepted.
3. Distributions under the Contract must satisfy the minimum distribution
rules in IRC Section 403(b)(10), and the regulations thereunder. The
Annuity Date may not be later than the Required Beginning Date.
Required Beginning Date means April 1 of the calendar year following the
later of (i) the calendar year you attain age 70 1/2, or (ii) the calendar
year you retire. Except in the case of a governmental plan or a church
plan (as defined in IRC Section 401(a)(9)(C), if you are a 5% owner (as
defined in IRC Section 418), Required Beginning Date means April 1 of the
calendar year following the calendar year you attain age 70 1/2.
4. Any amount which becomes payable to you during your lifetime must begin on
or before the Annuity Date and will be payable to you in substantially
equal amounts, no less frequently than annually. Your entire interest in
the Contract must be distributed under an Option described in paragraphs 5
to 9 of this endorsement.
5. Under "OPTION 1 - PAYMENTS OF A FIXED AMOUNT," the term over which annuity
payments are made may not exceed your life expectancy, or the joint life
expectancy of you and your designated Beneficiary, at the Annuity Date. If
you die before the Annuity Date, the term may not exceed the life
expectancy of your designated Beneficiary.
6. Under "OPTION 2 - PAYMENTS FOR A FIXED PERIOD," the period may not exceed
your life expectancy, or the joint life expectancy of you and your
designated beneficiary, at the Annuity Date. If you die before the Annuity
Date, the period may not exceed the life expectancy of your designated
Beneficiary.
7. Under "OPTION 4 - LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10 OR 20
YEARS," the guaranteed period selected may not exceed your life
expectancy, or the joint life expectancy of you and your designated
Beneficiary, at the Annuity Date. If you die before the Annuity Date, the
guaranteed period selected may not exceed the life expectancy of your
designated Beneficiary.
8. Under "OPTION 5 - LIFE ANNUITY WITH GUARANTEED RETURN OF CONTRACT VALUE,"
the period required for distribution of the Contract Value applied under
this option may not exceed your life expectancy, or the joint life
expectancy of you and your designated Beneficiary, at the Annuity Date. If
you die before the Annuity Date, the period required for distribution of
such Contract Value may not exceed the life expectancy of your designated
Beneficiary.
-1-
<PAGE>
9. If "OPTION 6 - JOINT AND SURVIVOR LIFE ANNUITY" is chosen, the second
person must be your spouse, if you have a spouse. If you die before the
Annuity Date, Option 6 is not available to your Beneficiary.
10. If you die after distribution of your interest has begun, the remaining
portion of such interest will continue to be distributed at least as
rapidly as under the method of distribution being used immediately
preceding your death.
If you die before distribution has begun, the entire interest will be
distributed no later than December 31 of the calendar year in which the
fifth anniversary of your death occurs. However, proceeds which are
payable to a named Beneficiary who is a natural person may be distributed
in substantially equal installments over the lifetime of the Beneficiary
or over a period certain not exceeding the life expectancy of the
Beneficiary, provided such distribution commences not later than December
31 of the calendar year following the calendar year in which your death
occurred.
If you die before distribution of your interest has begun and your
Beneficiary is your surviving spouse, your surviving spouse may elect not
later than December 31 of the calendar year in which the fifth anniversary
of your death occurs to receive equal or substantially equal payments over
his or her life or life expectancy commencing at any date prior to the
date on which you would have attained age 70 1/2. Payments will be
calculated in accordance with Code Section 403(b)(10) and the regulations
thereunder. For the purposes of this requirement, any amount paid to your
child shall be treated as if it had been paid to your surviving spouse if
the remainder of the interest becomes payable to your surviving spouse
when the child reaches the age of majority.
11. For purposes of the foregoing provisions, life expectancy and joint and
last survivor expectancy shall be determined by use of the expected return
multiples in Tables V and VI of Treasury Regulation Section 1.72-9 in
accordance with Code Section 403(b)(10) and the regulations thereunder. In
the case of distributions under paragraphs 5 to 9 of this endorsement,
your life expectancy or, if applicable, the joint and last survivor
expectancy of you and your beneficiary, will be initially determined on
the basis of attained ages in the year you reach 70 1/2. In the case of
distributions under paragraph 10 of this endorsement, life expectancy
shall be initially determined on the basis of the beneficiary's attained
age in the year distributions are required to commence. Unless you (or
your spouse) elects otherwise prior to the date distributions are required
to commence, your life expectancy and, if applicable, your spouse's life
expectancy shall be recalculated annually based on attained ages in the
year for which the required distribution is being determined. The life
expectancy of a nonspouse beneficiary shall not be recalculated.
In the case of a distribution other than in the form of life income or
joint life income, the annual distribution required to be made by the
Required Beginning Date is for the calendar year in which the Owner
reaches age 70 1/2. Annual payments for subsequent years, including the
year in which the Required Beginning Date occurs, must be made by December
31 of the year. The amount distributed for each year shall equal or exceed
the Contract Value as of the close of business on December 31 of the
preceding year, divided by the applicable life expectancy or joint and
last survivor expectancy.
12. Distributions from the Contract attributable to contributions made
pursuant to a salary reduction agreement may be made only (1) after you
attain age 59 1/2; (2) upon separation from service; (3) upon death or
disability; or, (4) for an amount not greater than the total of such
contributions in the case of hardship. Any withdrawal from the Contract
shall effect a surrender of the Contract to the extent of such withdrawal.
Any premium payments thereafter may be made only with our consent.
-2-
<PAGE>
13. You, your spouse, or your former spouse who is the alternate payee under a
Qualified Domestic Relations Order ("Distributee"), may elect to have any
portion of an eligible rollover distribution paid directly to an eligible
retirement plan. This is called a direct rollover. An eligible rollover
distribution ("Distribution") is any distribution unless it is:
(a) One of a series of substantially equal periodic payments (made at
least annually) for the life (or life expectancy) of the Distributee
or the joint lives (or joint life expectancies) of the Distributee
and the Distributee's designated Beneficiary, or for a specified
period of ten years or more; or
(b) Any required distribution under IRC Section 403(b)(10); or
(c) Any part of a distribution that is not includible in income.
An eligible retirement plan is an IRC Section 403(b) annuity or an
individual retirement plan as defined in Internal Revenue Code Section
7701(a)(37) ("IRA") that accepts Distributions. However, in the case of a
Distribution to the surviving spouse, an eligible retirement plan is an
IRA.
14. We reserve the right to amend or modify the Contract or this endorsement
to the extent necessary to comply with any law, regulations, ruling or
other requirement necessary to establish or maintain the tax advantages,
protections or benefits available to a tax-sheltered annuity under Code
Section 403(b) and any other applicable law. You are responsible for
determining that premiums, distributions and other transactions under the
Contract comply with applicable law.
This endorsement controls over any contrary provisions of the Contract.
MERRILL LYNCH LIFE INSURANCE COMPANY
BY: /s/ BARRY G. SKOLNICK
--------------------------------
SECRETARY
-3-
<PAGE>
<TABLE>
<S><C>
Annuities MERRILL LYNCH
[PRODUCT MARKETING NAME] APPLICATION FOR
VARIABLE ANNUITY
In this form, the terms YOU and YOUR refer to the owner and the co-owner if there is one. The terms WE, OUR and US refer to Merrill
Lynch Life Insurance Company.
/1/ CONTRACT INFORMATION
-----------------------------------------------------------------------------------------------------------------------------
Merrill Lynch account number State of purchase What type of contract / / Non-Qualified / / IRA
are you applying for? / / 403(b) Transfer (Non-ERISA Assets)*
* Note: Please complete a 403(b)
transfer form.
------------------------------------------------------------------------------------------------------------------------------
/2/ OWNER INFORMATION
------------------------------------------------------------------------------------------------------------------------------
Full name (first, middle initial, last) / / Male Birthdate (must be under age 90)
/ / Female (m/d/yyyy)
------------------------------------------------------------------------------------------------------------------------------
Address City State Zip code Social Security or Tax ID Number
------------------------------------------------------------------------------------------------------------------------------
/3/ CO-OWNER INFORMATION - Not available for IRA or 403(b) contracts.
------------------------------------------------------------------------------------------------------------------------------
Full name (first, middle initial, last) / / Male Birthdate (must be under age 90)
/ / Female (m/d/yyyy)
------------------------------------------------------------------------------------------------------------------------------
Address City State Zip code Social Security or Tax ID Number
------------------------------------------------------------------------------------------------------------------------------
/4/ ANNUITANT INFORMATION - Complete only if annuitant is different from the owner in Section 2.
------------------------------------------------------------------------------------------------------------------------------
Full name (first, middle initial, last) / / Male Birthdate (must be under age 90)
/ / Female (m/d/yyyy)
------------------------------------------------------------------------------------------------------------------------------
Address City State Zip code Social Security or Tax ID Number
------------------------------------------------------------------------------------------------------------------------------
/5/ BENEFICIARY INFORMATION - Do not complete if the contract will be held in a Merrill Lynch Retirement Plan Account.
------------------------------------------------------------------------------------------------------------------------------
Full name (first, middle initial, last) Relationship Birthdate (m/d/yyyy) Social Security or Tax ID Number
------------------------------------------------------------------------------------------------------------------------------
Full name (first, middle initial, last) Relationship Birthdate (m/d/yyyy) Social Security or Tax ID Number
------------------------------------------------------------------------------------------------------------------------------
Full name (first, middle initial, last) Relationship Birthdate (m/d/yyyy) Social Security or Tax ID Number
------------------------------------------------------------------------------------------------------------------------------
SPECIAL INSTRUCTIONS - Please list any additional primary beneficiaries or
contingent beneficiaries and the distribution of funds between two or more
beneficiaries.
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
/6/ INITIAL PREMIUM
----------------------------------------------------
(Minimum $25,000)
$
----------------------------------------------------
/7/ CONTRIBUTIONS FOR IRAS - Complete this section ONLY if you are purchasing an IRA contract which will not be held in a
Merrill Lynch Retirement Plan Account. Please specify premium amount by the tax year and type of contribution.
------------------------------------------------------------------------------------------------------------------------------
Current Tax Year Prior Tax Year Rollover Amount Transfer Amount
$ $ $ $
------------------------------------------------------------------------------------------------------------------------------
/8/ CONTRACT REPLACEMENT INFORMATION - Is any existing annuity or life insurance contract being (or has any such contract been)
surrendered, lapsed, converted, borrowed against or otherwise reduced in value or replaced in connection with the purchase of
this variable annuity? Is any such action likely to occur?
/ / YES - Please provide details below. State replacement regulations apply. / / NO
------------------------------------------------------------------------------------------------------------------------------
Company Contract number Issue date (m/d/y) Original premium
$
------------------------------------------------------------------------------------------------------------------------------
[LOGO] MERRILL LYNCH
Merrill Lynch Life Insurance Company Page 1 of 3
ML036 (New 9/99)
<PAGE>
/9/ TELEPHONE AUTHORIZATION - You may elect, change or cancel telephone authorization at any time. If you elect telephone
authorization, you authorize us to accept telephone instructions from the person or persons you designate below to allocate
premiums, make transfers among investment options, and to direct withdrawals to the Merrill Lynch account on record. (If the
contract is a 403(b) annuity, withdrawal requests must be made in writing.)
------------------------------------------------------------------------------------------------------------------------------
/ / YES - You elect telephone authorization giving us permission to accept telephone instructions / / NO - You do not
from: (check all that apply) / / You / / Merrill Lynch Financial Consultant on record elect telephone
/ / Other authorized person you designate below authorization.
------------------------------------------------------------------------------------------------------------------------------
Full name (first, middle initial, last) Social Security or Tax ID Number
------------------------------------------------------------------------------------------------------------------------------
Address City State Zip code
------------------------------------------------------------------------------------------------------------------------------
/10/ ASSET ALLOCATION PROGRAM - Under the Asset Allocation Program, we allocate premiums and rebalance your contract value
quarterly based on the investment options and percentages for your selected Asset Allocation Model. Would you like to select
the Asset Allocation Program?
/ / YES - Please select one of the following models. (Do not complete Section 12) / / NO
------------------------------------------------------------------------------------------------------------------------------
/ / Capital / / Current / / Income / / Long-Term / / Aggressive
Preservation Income and Growth Growth Growth
------------------------------------------------------------------------------------------------------------------------------
/11/ REBALANCING PROGRAM - Under the Rebalancing Program, we allocate premiums and rebalance your contract value quarterly
based on the investment options and percentages you have selected. Would you like to select the Rebalancing Program?
/ / Yes - Please provide allocations in the Initial Premium column in Section 12. / / No
/12/ PREMIUM ALLOCATION - Choose up to 10 investment options.
DOLLAR COST AUTOMATIC DOLLAR COST AUTOMATIC
INITIAL AVERAGING INVESTMENT INITIAL AVERAGING INVESTMENT
INVESTMENT OPTIONS PREMIUM PROGRAM FEATURE INVESTMENT OPTIONS PREMIUM PROGRAM FEATURE
- ------------------------------------------------------------------------------------------------------------------------------------
[Investment Option 1] % / / From % % [Investment Option 12] % / / From % %
/ / To / / To
- ------------------------------------------------------------------------------------------------------------------------------------
[Investment Option 2] % / / From % % [Investment Option 13] % / / From % %
/ / To / / To
- ------------------------------------------------------------------------------------------------------------------------------------
[Investment Option 3] % / / From % % [Investment Option 14] % / / From % %
/ / To / / To
- ------------------------------------------------------------------------------------------------------------------------------------
[Investment Option 4] % / / From % % [Investment Option 15] % / / From % %
/ / To / / To
- ------------------------------------------------------------------------------------------------------------------------------------
[Investment Option 5] % / / From % % [Investment Option 16] % / / From % %
/ / To / / To
- ------------------------------------------------------------------------------------------------------------------------------------
[Investment Option 6] % / / From % % [Investment Option 17] % / / From % %
/ / To / / To
- ------------------------------------------------------------------------------------------------------------------------------------
[Investment Option 7] % / / From % % [Investment Option 18] % / / From % %
/ / To / / To
- ------------------------------------------------------------------------------------------------------------------------------------
[Investment Option 8] % / / From % % [Investment Option 19] % / / From % %
/ / To / / To
- ------------------------------------------------------------------------------------------------------------------------------------
[Investment Option 9] % / / From % % [Investment Option 20] % / / From % %
/ / To / / To
- ------------------------------------------------------------------------------------------------------------------------------------
[Investment Option 10] % / / From % % [Investment Option 21] % / / From % %
/ / To / / To
- ------------------------------------------------------------------------------------------------------------------------------------
[Investment Option 11] % / / From % %
/ / To
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 100% 100% 100%
/13/ SYSTEMATIC WITHDRAWAL PROGRAM - The Systematic Withdrawal Program allows you to take withdrawals from the contract
automatically on a periodic basis. Would you like to make systematic withdrawals?
/ / YES - Please provide details below. / / NO
------------------------------------------------------------------------------------------------------------------------------
Withdrawal amount (minimum $100) Frequency / / Monthly / / Semi-annually Start date (m/d/yyyy)
$ / / Quarterly / / Annually
------------------------------------------------------------------------------------------------------------------------------
Withdrawals may be taxable and if you are under age 59 1/2 may also be subject to a 10% federal penalty tax. If the contract
is a 403(b) annuity and you wish to take withdrawals, you must complete a 403(b) Withdrawal Request Form.
/14/ DOLLAR COST AVERAGING PROGRAM - Would you like to use this program to reallocate a fixed amount each month from a designated
investment option to other selected investment options? (Not available if the Asset Allocation or Rebalancing Program has been
selected.)
/ / YES - Please provide details below and in the Dollar Cost Averaging Program column in Section 12. / / NO
------------------------------------------------------------------------------------------------------------------------------
Amount to be transferred monthly (minimum $100) Start date (m/d/yyyy) Number of transfers (minimum 3 months)
$
------------------------------------------------------------------------------------------------------------------------------
Page 2 of 3
ML036 (New 9/99)
<PAGE>
/15/ AUTOMATIC INVESTMENT FEATURE - The Automatic Investment Feature allows you to make additional premium payments to this
contract by systematically debiting the Merrill Lynch account on record. Would you like to use the Automatic Investment
Feature?
/ / YES - Please provide details below and in the Automatic Investment Feature column Section 12. (Do not include allocations
for this program in Section 12 if the Asset Allocation or Rebalancing Program has been selected.) / / NO
------------------------------------------------------------------------------------------------------------------------------
Amount of periodic premium Frequency / / Monthly / / Semi-annually Start date (m/d/yyyy) Optional end date (m/d/yyyy)
(minimum $100) / / Quarterly / / Annually
------------------------------------------------------------------------------------------------------------------------------
/16/ TAX EQUITY AND FISCAL RESPONSIBILITY ACT NOTICE - Withdrawals are subject to federal income tax withholding unless you choose
not to have tax withheld. Withholding applies only to the taxable portion of your withdrawal. If you choose not to have tax
withheld, or you do not have enough tax withheld, you may have to pay estimated tax. You may incur penalties under the
estimated tax rules if your withholding and estimated tax payments are not sufficient. In addition, some states require state
taxes to be withheld when federal taxes are withheld. If you live in one of these states, we will withhold state taxes as
required by your state.
IF YOU DO NOT CHECK A BOX, WE WILL WITHHOLD TAX / / No income tax to be withheld
FROM YOUR WITHDRAWALS AT THE RATE OF 10%. / / Income tax to be withheld _____ % (use whole percentages)
If the contract is a 403(b) annuity, we are required to apply federal tax withholding of 20% on payments which are not
directly transferred to an IRA or other 403(b) plan.
/17/ OWNER SIGNATURE(S) VERIFIES:
- YOU HAVE READ THE ABOVE STATEMENTS AND REPRESENT THAT THEY ARE COMPLETE AND TRUE TO THE BEST OF YOUR KNOWLEDGE.
- YOU HAVE RECEIVED A COPY OF THE CURRENT PROSPECTUS BEFORE YOU PURCHASED THIS CONTRACT AND DETERMINED THE VARIABLE ANNUITY
APPLIED FOR MEETS YOUR INVESTMENT OBJECTIVES, FINANCIAL SITUATION AND NEEDS. YOU UNDERSTAND THAT IT IS A LONG TERM
INVESTMENT TO HELP MEET YOUR RETIREMENT NEEDS AND FINANCIAL GOALS.
- YOU UNDERSTAND THAT THE CONTRACT VALUE AND DEATH BENEFIT MAY INCREASE OR DECREASE DEPENDING ON THE PERFORMANCE OF THE
VARIOUS INVESTMENT OPTIONS YOU SELECT. ACCORDINGLY, YOUR CONTRACT VALUE COULD BE WORTH LESS THAN THE PREMIUMS YOU PAY,
EVEN IF YOU MAKE NO WITHDRAWALS. THERE IS NO GUARANTEED MINIMUM CONTRACT VALUE.
------------------------------------------------------------------------------------------------------------------------------
UNDER PENALTY OF PERJURY YOU CERTIFY THAT:
1. YOUR SOCIAL SECURITY OR TAX ID NUMBER OR NUMBERS INDICATED ON PAGE 1 ARE CORRECT.
2. YOU ARE NOT SUBJECT TO BACKUP WITHHOLDING. (YOU ARE REQUIRED TO CROSS OUT THIS STATEMENT IF YOU HAVE BEEN NOTIFIED BY
THE IRS THAT YOU ARE SUBJECT TO BACKUP WITHHOLDING.)
THE IRS DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP
WITHHOLDING.
------------------------------------------------------------------------------------------------------------------------------
Owner's signature Date (m/d/yyyy) Co-owner's signature Date (m/d/yyyy)
------------------------------------------------------------------------------------------------------------------------------
/18/ FINANCIAL CONSULTANT'S VERIFICATION - The Financial Consultant selling this annuity must complete and sign.
1. Has a current prospectus been given to the client? / / YES / / NO
2. Is any existing annuity or life insurance contract being (or has any such contract been) surrendered, lapsed,
converted, borrowed against or otherwise reduced in value or replaced in connection with this application? Is any such
action likely to occur? / / YES / / NO
------------------------------------------------------------------------------------------------------------------------------
Financial Consultant's signature Date (m/d/yyyy) FC number or Pool authorizing FC Telephone number
Number
------------------------------------------------------------------------------------------------------------------------------
AT YOUR SERVICE MERRILL LYNCH LIFE INSURANCE COMPANY:
ANNUITY SERVICE CENTER
Our business hours are
8:30 a.m. to 6:00 p.m. Eastern OUR MAILING ADDRESS: OUR ADDRESS FOR OVERNIGHT MAIL:
Time, Monday through Friday. P. O. Box 44222 4804 Deer Lake Drive East
Jacksonville, FL 32231-4222 Jacksonville, FL 32246
Our automated voice response
system is available 24 hours a OUR TELEPHONE NUMBER: 1-800-535-5549 OUR FAX NUMBER: 1-888-329-6544
day, 7 days a week.
</TABLE>
Page 3 of 3
ML036 (New 9/99)
<PAGE>
SECOND AMENDMENT TO REIMBURSEMENT AGREEMENT
THIS AMENDMENT is made as of the 9th day of October, 1997, pursuant to
Paragraph 2 of the Reimbursement Agreement, dated as of April 23, 1985 and
amended as of February 11, 1992 (as so amended, the "Existing Agreement"),
between MERRILL LYNCH ASSET MANAGEMENT, L.P. ("MLAM") and MERRILL LYNCH LIFE
AGENCY, INC. ("MLLA").
MLAM and MLLA hereby amend the Existing Agreement to any extent necessary
to clarify the parties' intent and agreement that the aggregate operating
expenses for which reimbursement is provided pursuant to Paragraph 1 of the
Existing Agreement do not include any distribution or other separate fees that
may be imposed solely on shares other than Class A shares of any Portfolio of
the Fund.
Capitalized terms used herein without definition and defined in the
Existing Agreement shall have the same meaning herein as therein.
MERRILL LYNCH LIFE AGENCY, INC.
By: /s/ Mary Beth Donovan
---------------------
Name: Mary Beth Donovan
Title: Vice President
MERRILL LYNCH ASSET MANAGEMENT, L.P.
By: /s/ Philip L. Kirstein
----------------------
Name: Philip L. Kirstein
Title: Senior Vice President
<PAGE>
AMENDMENT TO FUND PARTICIPATION AGREEMENT
Reference is made to the Fund Participation Agreement dated as of October
3rd, 1995, between MERRILL LYNCH VARIABLE SERIES FUNDS, INC., an open-end
management investment company organized as a Maryland corporation (the "Fund"),
and MERRILL LYNCH LIFE INSURANCE COMPANY, a life insurance company organized
under the laws of the state of Arkansas (the "Company"), on its own behalf and
on behalf of each segregated asset account of the Company set forth on Schedule
A as attached thereto (the "Existing Agreement"). This amendment to the Existing
Agreement is made as of April 15, 1998.
WHEREAS, the several series of shares of the Fund offered by the Fund to
the Company and the Accounts are set forth on Schedule B attached to the
Existing Agreement.
The Fund and the Company hereby amend and restate said Schedule B to the
Existing Agreement as attached hereto, and all references in the Existing
Agreement to the Portfolios shall be deemed to refer to the series of shares of
the Fund as set forth on Schedule B as attached hereto.
Capitalized terms used herein without definition and defined in the
Existing Agreement shall have the same meaning herein as therein.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Amendment to Fund Participation Agreement as of the date and
year first above written.
MERRILL LYNCH LIFE INSURANCE COMPANY
By: /s/ Barry G. Skolnick
---------------------
Name: Barry G. Skolnick
Title: Senior Vice President and General
Counsel & Secretary
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
By: /s/ Arthur Zeikel
-----------------
Name: Arthur Zeikel
Title: President
<PAGE>
SCHEDULE B
Portfolios of Merrill Lynch Variable Series Funds, Inc.
Offered to Segregated Accounts of
MERRILL LYNCH LIFE INSURANCE COMPAN
CLASS A SHARES OF EACH OF THE FOLLOWING:
American Balanced Fund
Basic Value Focus Fund
Capital Focus Fund
Developing Capital Markets Focus Fund
Domestic Money Market Fund
Global Bond Focus Fund
Global Growth Focus Fund
Global Strategy Focus Fund
Global Utility Focus Fund
Government Bond Fund
High Current Income Fund
Index 500 Fund
International Equity Focus Fund
National Resources Focus Fund
Prime Bond Fund
Quality Equity Fund
Reserve Assets Fund
Special Value Focus Fund
<PAGE>
AMENDMENT NO. 1
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated December 18, 1996, by
and among AIM Variable Insurance Funds, Inc., a Maryland corporation, A I M
Distributors, Inc., a Delaware corporation, and Merrill Lynch Life Insurance
Company, an Arkansas life insurance company, is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced
with the following:
"SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
- -----------------------------------
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Capital Appreciation Fund
AIM V.I. Value Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
- -------------------------------------
Merrill Lynch Life Variable Annuity Separate Account A
Merrill Lynch Variable Life Separate Account
Merrill Lynch Life Variable Life Separate Account II
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
- -----------------------------------------
Merrill Lynch Funds Retirement Plus
Merrill Lynch Funds Investor Life
Merrill Lynch Funds Investor Life Plus
Merrill Lynch Funds Estate Investor I
Merrill Lynch Funds Estate Investor II
Prime Plan V, Vl, 7
Prime Plan Investor"
All other terms and provisions of the Agreement not amended herein shall
remain in full force and effect.
Effective Date: May 1, 1997
<PAGE>
AIM VARIABLE INSURANCE FUNDS, INC.
Attest: /s/ Nancy L. Martin By: /s/ Robert H. Graham
-------------------- --------------------
Assistant Secretary
President
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: /s/ Michael J. Cemo
------------------- -------------------
Assistant Secretary
President
(SEAL)
MERRILL LYNCH LIFE INSURANCE
COMPANY
Attest: /s/ Lizette Pena By: /s/ Anthony J. Vespa
---------------- --------------------
Assistant Secretary
President
(SEAL)
<PAGE>
AMENDMENT TO
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of May, 1997
("Agreement"), by and among Merrill Lynch Life Insurance Company, an Arkansas
life insurance company ("Insurer"); Alliance Capital Management L.P., a Delaware
limited partnership ("Adviser"), the investment adviser of the Fund referred to
below; and Alliance Fund Distributors, Inc., a Delaware corporation
("Distributor"), the Fund's principal underwriter (collectively, the "Parties").
WITNESSETH THAT:
WHEREAS Insurer, the Distributor, and the Adviser have entered into a
Participation Agreement, dated as of December 12, 1996, whereby shares of
investment portfolios of Alliance Variable Products Series Fund, Inc. (the
"Fund") are made available to serve as the underlying investment medium for
variable annuity contracts of Insurer (the "Contracts"); and
WHEREAS the Parties now desire to amend Schedule A of that Participation
Agreement to provide for the contribution to the Fund of amounts attributable to
variable life insurance policies of Insurer;
<PAGE>
NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, Parties hereby amend said Schedule A as reflected in the
attached schedule to this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized officers
signing below.
MERRILL LYNCH LIFE INSURANCE COMPANY
By /s/ Edward W. Diffin, Jr.
-------------------------
Name: Edward W. Diffin, Jr.
Title: Vice President and Senior Counsel
ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital ManagementCorporation,
its General Partner
By /s/ Edmund P. Bergan, Jr.
-------------------------
Name: Edmund P. Bergan, Jr.
Title: Vice President, Assistant General
Counsel and Assistant Secretary
ALLIANCE FUND DISTRIBUTORS, INC.
By /s/ Richard A. Winge
--------------------
Name: Richard A. Winge
Title: Senior Vice President
<PAGE>
As of May 1, 1997
SCHEDULE A
ACCOUNTS, POLICIES AND PORTFOLIOS
SUBJECT TO THE PARTICIPATION AGREEMENT
--------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
NAME OF SEPARATE
ACCOUNT AND DATE POLICIES FUNDED PORTFOLIOS
ESTABLISHED BY BOARD OF DIRECTORS BY SEPARATE ACCOUNT APPLICABLE TO POLICIES
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MERRILL LYNCH LIFE VARIABLE MERRILL LYNCH FUNDS PREMIER GROWTH PORTFOLIO
ANNUITY SEPARATE RETIREMENT PLUS
ACCOUNT A
(8/6/91)
- -------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE MERRILL LYNCH FUNDS PREMIER GROWTH PORTFOLIO
LIFE SEPARATE ACCOUNT INVESTOR LIFE
(11/19/90)
MERRILL LYNCH FUNDS
INVESTOR LIFE PLUS
MERRILL LYNCH FUNDS
ESTATE INVESTOR I
MERRILL LYNCH FUNDS
ESTATE INVESTOR II
- -------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH LIFE PRIME PLAN V, VI, 7 PREMIER GROWTH PORTFOLIO
VARIABLE LIFE
SEPARATE ACCOUNT II PRIME PLAN INVESTOR
(11/19/90)
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
AMENDMENT TO
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of JUNE 5, 1998 ("Agreement"), by
and among Merrill Lynch Life Insurance Company, an Arkansas life insurance
company ("Insurer"); Alliance Capital Management L.P., a Delaware limited
partnership ("Adviser"), the investment adviser of the Fund referred to below;
and Alliance Fund Distributors, Inc., a Delaware corporation ("Distributor"),
the Fund's principal underwriter (collectively, the "Parties"),
WITNESSETH THAT:
WHEREAS Insurer, the Distributor, and the Adviser have entered into a
Participation Agreement, (the "Participation Agreement") dated as of December
12, 1996, whereby shares of investment portfolios of Alliance Variable Products
Series Fund, Inc. (the "Fund") are made available to serve as the underlying
investment medium for variable annuity contracts of Insurer (the "Contracts");
and
WHEREAS, as of May 1, 1997 Schedule A of the Participation Agreement was
amended to provide for the contribution to the Fund of amounts attributable to
variable life insurance policies (the "Policies") of Insurer; and
<PAGE>
WHEREAS, the parties now desire to amend Schedule A of the Participation
Agreement to make shares of an additional investment portfolio of the Fund
available to serve as the underlying investment medium for the Contracts.
NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Parties hereby amend Schedule A of the Participation
Agreement as reflected in the attached schedule to this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in
their names and on their behalf by and through their duly authorized officers
signing below.
MERRILL LYNCH LIFE INSURANCECOMPANY
By /s/ Edward W. Diffin, Jr.
-------------------------
Name: Edward W. Diffin, Jr.
Title: Vice President and Senior Counsel
ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital ManagementCorporation,
its General Partner
By /s/ John D. Carifa
------------------
Name: John D. Carifa
Title: President and Chief Operating Officer
ALLIANCE FUND DISTRIBUTORS, INC.
By /s/ Richard A. Winge
--------------------
Name: Richard A. Winge
Title: Senior Vice President
<PAGE>
As of May 1, 1998
SCHEDULE A
ACCOUNTS, POLICIES AND PORTFOLIOS
SUBJECT TO THE PARTICIPATION AGREEMENT
--------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
NAME OF SEPARATE
ACCOUNT AND DATE CONTRACTS/POLICIES FUNDED PORTFOLIOS
ESTABLISHED BY BOARD OF DIRECTORS BY SEPARATE ACCOUNT APPLICABLE TO POLICIES
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MERRILL LYNCH LIFE VARIABLE MERRILL LYNCH FUNDS PREMIER GROWTH PORTFOLIO
ANNUITY SEPARATE RETIREMENT PLUS
ACCOUNT A QUASAR PORTFOLIO
(8/6/91)
- -------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE MERRILL LYNCH FUNDS PREMIER GROWTH PORTFOLIO
LIFE SEPARATE ACCOUNT INVESTOR LIFE
(11/19/90)
MERRILL LYNCH FUNDS
INVESTOR LIFE PLUS
MERRILL LYNCH FUNDS
ESTATE INVESTOR I
MERRILL LYNCH FUNDS
ESTATE INVESTOR II
- -------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH LIFE
VARIABLE LIFE PRIME PLAN V, VI, 7 PREMIER GROWTH PORTFOLIO
SEPARATE ACCOUNT II
(11/19/90) PRIME PLAN INVESTOR
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
AMENDMENT TO
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of July 22, 1999 ("Agreement"),
by and among Merrill Lynch Life Insurance Company, an Arkansas life insurance
company ("Insurer"); Alliance Capital Management L.P., a Delaware limited
partnership ("Adviser"), the investment adviser of the Fund referred to below;
and Alliance Fund Distributors, Inc., a Delaware corporation ("Distributor"),
the Fund's principal underwriter (collectively, the "Parties"),
WITNESSETH THAT:
WHEREAS Insurer, the Distributor, and the Adviser have entered into a
Participation Agreement, (the "Participation Agreement") dated as of December
12, 1996, whereby shares of investment portfolios of Alliance Variable Products
Series Fund, Inc. (the "Fund") are made available to serve as the underlying
investment medium for variable annuity contracts of Insurer (the "Contracts");
and
WHEREAS, as of May 1, 1997 Schedule A of the Participation Agreement was
amended to provide for the contribution to the Fund of amounts attributable to
variable life insurance policies (the "Policies") of Insurer; and
WHEREAS, as of June 5, 1998 Schedule A of the Participation Agreement was
amended to make shares of an additional investment portfolio of the fund
available to serve as the underlying investment medium for the Contracts; and
<PAGE>
WHEREAS, the Parties now desire to amend Schedule A of the Participation
Agreement to make shares of an additional investment portfolio of the Fund
available to serve as the underlying investment medium for the Policies.
NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Parties hereby amend Schedule A of the Participation
Agreement as reflected in the attached schedule to this Agreement.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed in
their names and on their behalf by and through their duly authorized officers
signing below.
MERRILL LYNCH LIFE INSURANCE COMPANY
By /s/ Barry G. Skolnick
---------------------
Name: Barry G. Skolnick
Title: Senior Vice President, General Counsel &
Secretary
ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital ManagementCorporation,
its General Partner
By /s/ John D. Carifa
------------------
Name: John D. Carifa
Title: President and Chief Operating Officer
ALLIANCE FUND DISTRIBUTORS, INC.
By /s/ Edmund P. Bergan, Jr.
-------------------------
Name: Edmund P. Bergan, Jr.
Title: Senior Vice President & General Counsel
<PAGE>
As of July 22, 1999
SCHEDULE A
ACCOUNTS, POLICIES AND PORTFOLIOS
SUBJECT TO THE PARTICIPATION AGREEMENT
--------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
NAME OF SEPARATE
ACCOUNT AND DATE CONTRACTS/POLICIES FUNDED PORTFOLIOS
ESTABLISHED BY BOARD OF DIRECTORS BY SEPARATE ACCOUNT APPLICABLE TO POLICIES
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MERRILL LYNCH LIFE VARIABLE
ANNUITY SEPARATE MERRILL LYNCH PREMIER GROWTH PORTFOLIO
ACCOUNT A RETIREMENT PLUS
(8/6/91) QUASAR PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE MERRILL LYNCH PREMIER GROWTH PORTFOLIO
LIFE SEPARATE ACCOUNT INVESTOR LIFE
(11/19/90) QUASAR PORTFOLIO
MERRILL LYNCH
INVESTOR LIFE PLUS
MERRILL LYNCH
ESTATE INVESTOR I
MERRILL LYNCH
ESTATE INVESTOR II
- -------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH LIFE PRIME PLAN V, VI, 7 PREMIER GROWTH PORTFOLIO
VARIABLE LIFE
SEPARATE ACCOUNT II PRIME PLAN INVESTOR QUASAR PORTFOLIO
(11/19/90)
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
AMENDMENT TO PARTICIPATION AGREEMENT
Pursuant to the Participation Agreement, made and entered into as of the
29th day of November 1996, by and among MFS-Registered Trademark- Variable
Insurance Trust-SM-, Merrill Lynch Life Insurance Company, and Massachusetts
Financial Services Company, the parties hereby agree to an amended Schedule A
as attached hereto.
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment
to the Participation Agreement to be executed in its name and on its behalf by
its duly authorized representative. The Amendment shall take effect on May 1,
1997.
MERRILL LYNCH LIFE INSURANCE
COMPANY
By its authorized officer
By: /s/ Edward W. Diffin, Jr.
-------------------------
Title: Vice President and Senior Counsel
---------------------------------
Date: May 1, 1997
-----------
MFS-Registered Trademark- VARIABLE INSURANCE TRUST-SM-
By its authorized officer
By: /s/ Stephen E. Cavan
--------------------
Stephen E. Cavan
Secretary
Date: 30 April 1997
-------------
<PAGE>
MASSACHUSETTS FINANCIAL
SERVICES COMPANY
By its authorized officer,
By: /s/ Arnold D. Scott
-------------------
Arnold D. Scott
Senior Executive Vice President
Date: 30 April 1997
-------------
<PAGE>
As of May 1, 1997
SCHEDULE A
ACCOUNTS, POLICIES AND PORTFOLIOS
SUBJECT TO THE PARTICIPATION AGREEMENT
--------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
NAME OF SEPARATE
ACCOUNT AND DATE POLICIES FUNDED PORTFOLIOS
ESTABLISHED BY BOARD OF DIRECTORS BY SEPARATE ACCOUNT APPLICABLE TO POLICIES
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MERRILL LYNCH LIFE VARIABLE MERRILL LYNCH FUNDS MFS EMERGING GROWTH SERIES
ANNUITY SEPARATE RETIREMENT PLUS MFS RESEARCH SERIES
ACCOUNT A
(8/6/91)
- ----------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE MERRILL LYNCH FUNDS MFS EMERGING GROWTH SERIES
LIFE SEPARATE ACCOUNT - INVESTOR LIFE MFS RESEARCH SERIES
(11/19/90) - INVESTOR LIFE PLUS
- ESTATE INVESTOR I
- ESTATE INVESTOR II
- ----------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH LIFE PRIME PLAN V, VI, 7 MFS EMERGING GROWTH SERIES
VARIABLE LIFE SEPARATE PRIME PLAN INVESTOR MFS RESEARCH SERIES
ACCOUNT II
(11/19/90)
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
AMENDMENT TO PARTICIPATION AGREEMENT
Reference is made to the Fund Participation Agreement (the "Participation
Agreement") dated as of June 5, 1998, between HOTCHKIS AND WILEY VARIABLE TRUST,
a Massachusetts business trust (the "Trust"), and MERRILL LYNCH LIFE INSURANCE
COMPANY, a life insurance company organized under the laws of the state of
Arkansas (the "Company"), on its own behalf and on behalf of each segregated
asset account of the Company set forth on Schedule A. This amendment to the
Participation Agreement is made as of July 22, 1999.
WHEREAS, segregated accounts of the Company participating in the Trust are
set forth on Schedule A attached to the Participation Agreement; and
WHEREAS, the Trust and the Company now desire to amend Schedule A to offer
shares of the Trust to additional segregated accounts of the Company.
NOW THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Trust and the Company hereby amend and restate Schedule A
to the Participation Agreement, and all references in the Participation
Agreement to the segregated accounts of the Company shall be deemed to refer to
the segregated accounts of the Company set forth on Schedule A as attached
hereto.
Capitalized terms used herein without definition and defined in the
Participation Agreement shall have the same meaning herein as therein.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Amendment to Participation Agreement as of July 22, 1999.
MERRILL LYNCH LIFE INSURANCE COMPANY
By: /s/ Barry G. Skolnick
---------------------
Name: Barry G. Skolnick
-----------------
Title: Senior V.P. & General Counsel
-----------------------------
HOTCHKIS AND WILEY VARIABLE TRUST
/s/ Nancy D. Celick
Nancy D. Celick
President
<PAGE>
SCHEDULE A
Segregated Accounts of Merrill Lynch Life Insurance Company
Participating in Portfolios of Hotchkis and Wiley Variable Trust
NAME OF SEPARATE ACCOUNT DATE ESTABLISHED
Merrill Lynch Life Variable Annuity Separate Account A August 6, 1991
Merrill Lynch Variable Life Separate Account November 19, 1990
Merrill Lynch Life Variable Life Separate Account II November 19, 1990
<PAGE>
AMENDMENT TO PARTICIPATION AGREEMENT
Reference is made to the Fund Participation Agreement dated as of June 17,
1999, between MERCURY ASSET MANAGEMENT V.I. FUNDS, INC., an open-end management
investment company organized as a Maryland corporation (the "Fund"), and MERRILL
LYNCH LIFE INSURANCE COMPANY, a life insurance company organized under the laws
of the state of Arkansas (the "Company"), on its own behalf and on behalf of
each segregated asset account of the Company set forth on Schedule A as attached
thereto (the "Existing Agreement"). This amendment to the Existing Agreement is
made as of July 22, 1999.
WHEREAS, the segregated accounts of the Company participating in the Fund
are set forth on Schedule A attached to the Existing Agreement.
The Fund and the Company hereby amend and restate said Schedule A to the
Existing Agreement as attached hereto, and all references in the Existing
Agreement to the Accounts shall be deemed to refer to the segregated accounts as
set forth on Schedule A attached hereto.
Capitalized terms used herein without definition and defined in the
Existing Agreement shall have the same meaning herein as therein.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Amendment to the Fund Participation Agreement as of July 22,
1999.
MERCURY ASSET MANAGEMENT V.I. FUNDS, INC.
By: /s/ Terry K. Glenn
------------------
Name: Terry K. Glenn
--------------
Title: Executive Vice President
------------------------
MERRILL LYNCH LIFE INSURANCE COMPANY
By: /s/ Barry G. Skolnick
---------------------
Name: Barry G. Skolnick
-----------------
Title: Senior V.P. & General Counsel
-----------------------------
<PAGE>
As of July 22, 1999
SCHEDULE A
Segregated Accounts of Merrill Lynch Life Insurance Company
Participating in the
Mercury Asset Management V.I. Funds, Inc.
NAME OF SEPARATE ACCOUNT DATE ESTABLISHED
Merrill Lynch Life Variable Annuity Separate Account A August 6, 1991
Merrill Lynch Variable Life Separate Account November 19, 1990
Merrill Lynch Life Variable Life Separate Account II November 19, 1990
