As filed with the Securities and Exchange Commission on December 6, 1999
Registration No. 33-49998
811-7042
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933|_|
Pre-Effective Amendment No. |_|
Post-Effective Amendment No. 13 |X|
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |_|
Amendment No. 15 |X|
SEPARATE ACCOUNT VA-2L
(Exact Name of Registrant)
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
(Name of Depositor)
1150 South Olive, Los Angeles, CA 90015
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, including Area Code: (213) 742-2111
Name and Address of Agent for Service: Copy to:
James W. Dederer, Esquire Frederick R. Bellamy, Esquire
Executive Vice President, General Counsel and Sutherland, Asbill & Brennan, LLP
Corporate Secretary 1275 Pennsylvania Avenue, N.W.
Transamerica Occidental Life Insurance Co. Washington, D.C. 20004-2404
1150 South Olive
Los Angeles, CA 90015
Approximate date of proposed sale to the
public: As soon as practicable after effectiveness of
the Registration Statement.
Title of Securities being registered:
Variable Annuity Contracts
It is proposed that this filing will become effective:
|_| immediately upon filing pursuant to paragraph (b)
|_| on pursuant to paragraph (b)
|X| 60 days after filing pursuant to paragraph (a)(i)
|_| on pursuant to paragraph (a)(i)
If appropriate, check the following box:
_____ This Post-Effective Amendment designates a new effective date for
a previously filed Post-Effective Amendment.
<PAGE>
CROSS REFERENCE SHEET
Pursuant to Rule 495
Showing Location in Part A (Prospectus),
Part B (Statement of Additional Information) and Part C
of Registration Statement Information Required by Form N-4
PART A
<TABLE>
<CAPTION>
Item of Form N-4 Prospectus Caption
<S> <C> <C>
1. Cover Page............................................... Cover Page
2. Definitions.............................................. Definitions
3. Synopsis................................................. Summary
4. Condensed Financial Information.............. Not Applicable
5. General
(a) Depositor Transamerica Occidental Life Insurance Company;
Additional Information about Transamerica Occidental Life Insurance Company;
(b) Registrant The Variable Account
(c) Portfolio Company The Funds
(d) Fund Prospectus The Funds
(e) Voting Rights Voting Rights
6. Deductions and Expenses..................................
(a) General Charges and Deductions
(b) Sales Load % Contingent Deferred Sales Load
(c) Special Purchase Plan Not Applicable
(d) Commissions Distribution of the Contracts
(e) Fund Expenses The Funds
(f) Operating Expenses Variable Account Fee Table
7. Contracts
(a) Persons with Rights The Contract; Cash
Withdrawals; Death Benefit;
Voting Rights
(b) (i) Allocation of Premium Payments.......... Allocation of Purchase Payments
(ii) Transfers.................................... Transfers
(iii) Exchanges.................................... Federal Tax Matters
(c) Changes Addition, Deletion, or Substitution
(d) Inquiries Summary; Available Information
8. Annuity Period........................................... Annuity Payments
9. Death Benefit............................................ Death Benefit
10. Purchase and Contract Balances
(a) Purchases Contract Application and Purchase Payments
(b) Valuation Participant Account Value
(c) Daily Calculation Variable Accumulated Value
(d) Underwriter Distribution of the Contracts
11. Redemptions
(a) By Contract Owners Withdrawals; Systematic
Withdrawal Option;
Automatic Payout Option
By Annuitant....................................... Not Applicable
(b) Texas ORP Not Applicable
(c) Check Delay Cash Withdrawals
(d) Lapse Not Applicable
(e) Free Look Definitions; Summary; Contract
Application and
................................................... Purchase Payments
12. Taxes.............................................. Federal Tax Matters
13. Legal Proceedings.................................. Legal Proceedings
14. Table of Contents for the
Statement of
Additional Information................................... Statement of Additional Information Table
of
Contents
PART B
Item of Form N-4 Statement of Additional
Information Caption
15. Cover Page......................................... Cover Page
16. Table of Contents.................................. Table of Contents
17. General Information
and History.............................................. (Prospectus) Transamerica Occidental Life
Insurance Company; (Prospectus)
Additional
Information About Transamerica
Occidental Life
Insurance Company
18. Services...........................................
(a) Fees and Expenses
of Registrant...................................... (Prospectus) Variable Account Fee Table;
(Prospectus) The Funds
(b) Management Contracts (Prospectus) Third Party
Administration
(c) Custodian Records and Reports;
Safekeeping of Account
Assets
Independent Auditors ............................. (Prospectus) Accountants
(d) Assets of Registrant Not Applicable
(e) Affiliated Person Not Applicable
(f) Principal Underwriter Not Applicable
19. Purchase of Securities
Being Offered............................................ (Prospectus) The Contract
Offering Sales Load...................................... (Prospectus) Contingent Deferred Sales
Load
20. Underwriters....................................... (Prospectus) Distribution of the Contracts
21. Calculation of Performance
Data..................................................... (Prospectus) Performance Data; Calculation of
Yields and Total Returns
22. Annuity Payments................................... (Prospectus) Annuity Payments; Annuity
Period
23. Financial Statements............................... Financial Statements
PART C -- OTHER INFORMATION
Item of Form N-4 Part C Caption
24. Financial Statements
and Exhibits............................................. Financial Statements and Exhibits
(a) Financial Statements Financial Statements
(b) Exhibits Exhibits
25. Directors and Officers of
the Depositor............................................ Directors and Officers of the Depositor
26. Persons Controlled By or Under Common Control
with the Depositor or Registrant Persons Controlled By or
Under Common Control
with the Depositor or Registrant
27. Number of Contract Owners.......................... Number of Contract Owners
28. Indemnification.................................... Indemnification
29. Principal Underwriters............................. Principal Underwriters
30. Location of Accounts
and Records.............................................. Location of Accounts and Records
31. Management Services................................ Management Services
32. Undertakings....................................... Undertakings
Signature Page........................................... Signature Page
</TABLE>
<PAGE>
1
.PROFILE OF THE
DREYFUS/TRANSAMERICATRIPLE ADVANTAGE(R)VARIABLE AND FIXED ANNUITY
ISSUED BY
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
JANUARY 1, 2000
THIS PROFILE IS A SUMMARY OF SOME OF THE MORE IMPORTANT POINTS THAT YOU SHOULD
KNOW AND CONSIDER BEFORE PURCHASING A CONTRACT. THE CONTRACT IS MORE FULLY
DESCRIBED IN THE FULL PROSPECTUS WHICH ACCOMPANIES THIS PROFILE. PLEASE READ THE
PROSPECTUS CAREFULLY.
1. THE ANNUITY CONTRACT. The Dreyfus/Transamerica Triple Advantage is a contract
between you and Transamerica Occidental Life Insurance Company with both
"variable" and "guaranteed" investment options. In the contract, you can invest
in your choice of 23 sub-accounts corresponding to 23 funds ("portfolios") in
the variable account or in the guaranteed periods of the fixed account from us.
You could gain or lose money you invest in the portfolios, but you could also
earn more than investing in the fixed account options. We guarantee the safety
of money invested in the fixed account options. The fixed account and some of
the portfolios may not be available in all states.
The contract is a deferred annuity, which means it has two phases: the
accumulation phase and the annuity phase. During the accumulation phase you can
make additional purchase payments to the contract, transfer your money among the
investment options, and withdraw some or all of your investment. During this
phase, earnings accumulate on a tax-deferred basis for individuals, but if you
withdraw money, some or all of it may be taxable.
Tax deferral is not available for corporations and some trusts.
During the annuity phase we will make periodic payments to you. The
dollar amount of the payments may depend on the amount of money invested and
earned during the accumulation phase (and other factors, such as age and sex).
2. THE ANNUITY PAYMENTS. You can generally decide when to end the accumulation
phase and begin receiving annuity payments from us. You can choose fixed annuity
payments, where the dollar amount of each payment generally stays the same, or
variable payments that go up or down in dollar amount based on the investment
performance of the portfolios you select. You can choose among payments for the
lifetime of an individual, or payments for the longer of one lifetime or a
guaranteed period of 10, 15, or 20 years, or payments for one lifetime and the
lifetime of another individual.
3. PURCHASING A CONTRACT. Generally, you must invest at least $5,000 to purchase
a contract, and then you can make more investments of at least $500 each ($100
each if made under the automatic payment plan and deducted from your bank
account). You may cancel your contract during the free look period explained in
item 10 on page 5 of this profile.
The Triple Advantage variable annuity is designed for long-term
tax-deferred accumulation of assets, generally for retirement or other long-term
goals. Individuals in high tax brackets get the most benefit from the tax
deferral feature. You should not make an investment in the contract for
short-term purposes or if you cannot take the risk of losing some of your
investment.
There are various additional fees and charges associated with variable
annuities. You should consider whether the features and benefits unique to
variable annuities, such as the opportunity for lifetime payments, a guaranteed
death benefit, and the guaranteed level of certain charges are appropriate for
your needs. Although variable annuities also provide tax-deferral, however, the
tax deferral features of variable annuities are unnecessary when purchased to
fund a qualified plan.
4. INVESTMENT OPTIONS - VARIABLE ACCOUNT: You can invest in any of the
sub-accounts corresponding to the following 23 Portfolios:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Money Market Capital Appreciation International Value Core Value
Special Value Stock Index Disciplined Stock MidCap Stock
Zero Coupon 2000 Socially Responsible Growth Small Company Stock Founders Growth
Quality Bond Growth and Income Balanced Founders Passport
Small Cap International Equity Limited Term High Income Founders International Equity
European Equity Technology Growth Transamerica Growth
</TABLE>
These Portfolios are described in their own prospectuses. You can earn or lose
money in any of these Portfolios. All Portfolios may not be available in all
states.
FIXED ACCOUNT: In most states, you can also invest in a fixed account option,
where we guarantee the principal invested plus at least 3% annual interest.
5. EXPENSES. The contract provides many benefits and features that you do not
get with a regular mutual fund. It costs us money to provide these benefits, so
there are charges in connection with the contract. If you withdraw your money
within seven years of investing it, there may be a withdrawal charge of up to 6%
of the amount invested. Once each contract year we deduct an account fee of no
more than $30 (there is no fee if your account value is over $50,000). Insurance
and administrative charges of 1.40% per year are charged against your average
daily value in the variable account and a $10 fee for transfers over 18 in one
year. If you elect the guaranteed minimum income benefit rider, then there is an
annual fee during the accumulation phase of 0.30% of the minimum annuitization
value. If you annuitize under the rider and choose the guaranteed minimum
payment option, then there is a guaranteed minimum payment fee at an annual rate
of 1.25% of the daily net asset value in the separate account. Advisory fees are
also deducted by the portfolios' managers, and the portfolios pay other expenses
which, in total, vary from 0. 26% to 4.67% per year of the amounts in the
portfolios. Finally, there might be premium taxes ranging from 0 to 3.5% of your
investment and/or on amounts you use to purchase annuity benefits (depending on
your state's law).
The following chart shows these charges (except for the optional
Guaranteed Minimum Income Benefit Rider fee, transfer fees and premium taxes).
The $30 annual account fee is not included in the first column because the fee
is waived for account values over $50,000 and the approximate average account
value is over $50,000. The third column is the sum of the first two. The
examples in the last two columns show the total amounts you would be charged, in
dollars, if you invested $1,000, the investment grew 5% each year, and you
withdrew your entire investment after one year or ten years. Year one includes
the withdrawal charge and year ten does not.
<TABLE>
<CAPTION>
EXAMPLES:
Annual Annual Total Annual Total Expenses Total Expenses
Portfolio/ Insurance Portfolio Charges at end of at end of
-------
Sub-Account Charges Charges One Year Ten Years
----------- ------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
Money Market 1.40% 0.56% 1.96% $71 $229
Special Value 1.40% 0.83% 2.23% $74 $256
Zero Coupon 2000 1.40% 0.59% 1.99% $71 $232
Quality Bond 1.40% 0.73% 2.13% $73 $246
Small Cap 1.40% 0.77% 2.17% $73 $250
Capital Appreciation 1.40% 0.81% 2.21% $73 $254
Stock Index 1.40% 0.26% 1.66% $68 $197
Socially Responsible 1.40% 0.80% 2.20% $73 $253
Growth and Income 1.40% 0.78% 2.18% $73 $251
International Equity 1.40% 0.99% 2.39% $75 $273
International Value 1.40% 1.29% 2.69% $78 $302
Disciplined Stock 1.40% 0.88% 2.28% $74 $262
Small Company 1.40% 0.98% 2.38% $75 $272
Balanced 1.40% 0.87% 2.27% $74 $261
Limited Term High Income 1.40% 1.09% 2.49% $76 $283
Transamerica Growth 1.40% 0.96% 2.36% $75 $270
CoreValue 1.40% 2.10% 3.50% $86 $377
MidCap Stock 1.40% 1.89% 3.29% $84 $359
Founders Growth 1.40% 2.20% 3.60% $87 $386
Founders Passport 1.40% 2.67% 4.07% $92 $426
European Equity 1.40% 1.25% 2.65% $78 $298
Technology Growth 1.40% 1.00% 2.40% $75 $274
Founders International Equity 1.40% 4.67% 6.07% $111 $575
</TABLE>
Expense information regarding the portfolios has been provided by the funds.
We have no reason to doubt the accuracy of the information, but have not
verified those figures. In preparing the table above, we have relied on the
figures provided by the funds. These figures are for the year ended December
31, 1998, except that the figures for the European Equity and Technology
Growth Portfolios are estimates for the 1999 fiscal year. Actual expenses in
future years may be higher or lower than the figures given above.
6. FEDERAL INCOME Taxes. Individuals generally are not taxed on increases in the
contract value until a distribution occurs (e.g., a withdrawal or annuity
payment) or is deemed to occur (e.g., a pledge, loan, or assignment of the
contract). If you withdraw money, earnings come out first and are taxed.
Generally, some portion (sometimes all) of any distribution or deemed
distribution is taxable as ordinary income. In some cases, income taxes will be
withheld from distributions. If you are under age 59 1/2 when you withdraw
money, an additional 10% federal tax penalty may apply on the withdrawn
earnings. Certain owners that are not individuals may be currently taxed on
increases in the contract, whether distributed or not.
7. ACCESS TO YOUR Money. You can generally take money out at any time during the
accumulation phase. A withdrawal charge of up to 6% of a purchase payment may be
assessed by us, but no withdrawal charge will be assessed on money that has been
in the contract for seven years. In certain cases, the withdrawal charge may be
waived if you are in a hospital or nursing home for a long period or, in some
states, if you are diagnosed with a terminal illness. After the first contract
year, you may withdraw the greater of accumulated earnings or 15% of purchase
payments received at least one but less than seven years ago. Additionally, at
any time you can withdraw accumulated earnings on your purchase payments not
previously withdrawn without a withdrawal charge.
You may have to pay income taxes on amounts you withdraw and there may also be a
10% tax penalty if you make withdrawals before you are 59 1/2 years old.
If you withdraw money from the fixed account option prematurely, you will
generally forfeit some of the interest that you earned, but you will always
receive the principal you invested plus 3% interest.
8. PAST INVESTMENT PERFORMANCE. The value of the money you allocate to the
sub-account(s) will go up or down, depending on the investment performance of
the portfolios you pick. The following chart shows the past investment
performance on a year by year basis for each sub-account. These figures have
already been reduced by the insurance charges, the account fee, the fund
manager's fee and all the expenses of the mutual fund portfolio, but these
figures do not include the withdrawal charge, which would reduce performance if
it applied. Remember, past performance is no guarantee of future performance or
earnings.
<PAGE>
<TABLE>
<CAPTION>
CALENDAR YEAR
PORTFOLIO/
SUB-ACCOUNT 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ----------- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market(1) 3.59% 3.66% 3.53% 4.21% 3.00% 1.86% 2.71% 4.54% N/A
Special Value(1) 14.02% 21.36% (5.67%) (0.48%) (3.48%) 26.74% (0.41%) 8.99% N/A
Zero Coupon 2000(1) 5.71% 5.45% 1.10% 16.35% (5.41%) 13.52% 7.29% 17.14% 6.28%
Quality Bond(1) 3.96% 7.83% 1.63% 18.91% (6.17%) 13.66% 10.45% 12.47% N/A
Small Cap(1) (4.86%) 15.06% 15.06% 28.84% 4.95% 65.77% 68.98% 156.07% N/A
Capital Appreciation(2) 28.34% 26.21% 22.71% 32.82% 1.45% N/A N/A N/A N/A
Stock Index(1) 26.37% 31.05% 19.80% 35.92% (0.60%) 7.75% 5.55% 27.98% (6.52%)
Socially Responsible(3) 27.52% 26.59% 19.00% 33.67% (0.08%) N/A N/A N/A N/A
Growth and Income(4) 10.19% 14.53% 18.63% 59.58% N/A N/A N/A N/A N/A
International Equity(4) 2.97% 8.02% 9.82% 6.62% N/A N/A N/A N/A N/A
International Value(5) 7.16% 7.13% N/A N/A N/A N/A N/A N/A N/A
Disciplined Stock(5) 24.90% 29.62% N/A N/A N/A N/A N/A N/A N/A
Small Company Stock(5) (7.35%) 20.01% N/A N/A N/A N/A N/A N/A N/A
Balanced(6) 20.57% N/A N/A N/A N/A N/A N/A N/A N/A
Limited Term High (1.17%) N/A N/A N/A N/A N/A N/A N/A N/A
Income(6)
Transamerica Growth(7) N/A N/A N/A N/A N/A N/A N/A N/A N/A
Core Value(7) N/A N/A N/A N/A N/A N/A N/A N/A N/A
MidCap Stock(7) N/A N/A N/A N/A N/A N/A N/A N/A N/A
Founders Passport(8) N/A N/A N/A N/A N/A N/A N/A N/A N/A
Founders Growth(8) N/A N/A N/A N/A N/A N/A N/A N/A N/A
(1) Sub-Account Inception 1-4-93 (4) Sub-Account Inception 12-15-94 (7) Sub-Account Inception 5-1-98
(2) Sub-Account Inception 4-5-93 (5) Sub-Account Inception 5-1-96 (8) Sub-Account Inception 5-1-99
(3) Sub-Account Inception 10-7-93 (6) Sub-Account Inception 5-1-97
</TABLE>
Data is for full years only. The Transamerica Growth, Core Value and MidCap
Stock sub-accounts were not in operation for all of 1998, and the Technology
Growth, European Equity, Founders Growth, Founders Passport and Founders
International Equity sub-accounts began operations in 1999, therefore no
performance is reported for these sub-accounts.
9. DEATH BENEFIT. If you or the annuitant die during the accumulation phase, the
beneficiary is guaranteed by us to receive a death benefit of at least the
amount you invested (less any amounts you have already withdrawn), even if your
investment has lost money because of the investment performance of the
portfolios you picked.
The death benefit will be the greatest of: (1) the account value; (2)
an annual step-up death benefit, which is the highest account value on the date
you purchase your policy or any anniversary prior to the date you, your joint
owner, or the annuitant reaches age 86 (adjusted for additional investments and
any adjusted partial withdrawals since that anniversary less premium taxes
applicable to those withdrawals); or (3) your investments, less adjusted partial
withdrawals and any premium taxes applicable to those withdrawals, compounded at
5% annual effective interest (the 5% interest stops on the contract anniversary
prior to the date that you, your joint owner, or the annuitant reaches age 86,
or when it has doubled the amount of your investment, whichever is earlier or,
at the death of any owner or annuitant).
10. OTHER INFORMATION. The contract offers other features you might be
interested in. These features may not be available in all states and may not be
suitable for your particular situation. Some of these features include:
FREE LOOK. After you get your contract, you have ten days to look it
over and decide if it is really right for you (this period may be longer in
certain states). If you decide not to keep the contract, you can cancel it
during this period, and you will get back your account value (without any
withdrawal charges). Certain laws may require that if you cancel during this
period, you are entitled to get back the greater of your full investment or the
account value.
TELEPHONE TRANSFERS. You can generally arrange to transfer money between
the investments in your contract by telephone.
DOLLAR COST AVERAGING. You can instruct us to automatically transfer
amounts from the purchase payments you allocated to the Money Market, Limited
Term High Income or Quality Bond sub-accounts, or possibly from another
sub-account or a guarantee period of the fixed account, to any of the other
sub-accounts each month. Dollar Cost Averaging is intended to give you a lower
average cost per share or unit than a single, one time investment, but it does
not assure a profit or protect against loss and is intended to continue for some
time.
AUTOMATIC ASSET REBALANCING. The performance of each sub-account may
cause the allocation of value among the sub-accounts to change. You may instruct
us to periodically automatically rebalance the amounts in the sub-accounts by
reallocating amounts among them.
SYSTEMATIC WITHDRAWAL OPTION. You can arrange to have us send you money
automatically each month out of your contract during the accumulation phase.
There are limits on the amounts, but the withdrawal charge will not apply (the
payments may be taxable and subject to the penalty tax if you are under age 59
1/2).
AUTOMATIC PAYOUT OPTION. If you have certain qualified contracts (for
example: a non-Roth IRA), you can arrange to have the minimum distributions
required by the IRS to be automatically paid to you.
GUARANTEED MINIMUM INCOME BENEFIT RIDER. If you elect this optional rider, you
will be guaranteed a minimum annuitization value and the option of electing
guaranteed minimum annuity payments (if you annuitize with the minimum
annuitization value and the payment options in the rider).
11. INQUIRIES. You can get more information and have your questions
answered by writing or calling:
Transamerica Annuity Service Center
P.O. Box 31848
Charlotte, North Carolina 28231-1848
800-258-4260
<PAGE>
1
Prospectus for the
Dreyfus/Transamerica Triple Advantage(R) Variable Annuity
A Flexible Purchase Payment Deferred Variable Annuity
Issued By
Transamerica Occidental Life Insurance Company
Offering 23 Sub-Accounts within the Variable Account
Designated as Separate Account VA-2L
In Addition to:
A Fixed Account
<TABLE>
<CAPTION>
<S> <C> <C>
Variable Account Options
o This prospectus contains
information you should Money Market
know before investing. Special Value
Zero Coupon 2000
Quality Bond
o Please keep this prospectus Small Cap
for future reference. Capital Appreciation
Stock Index
o You can obtain more information about the Growth and Income
contract by requesting a copy of the International Equity
Statement of Additional Information or SAI International Value
dated January 1, 2000. The SAI is available Disciplined Stock
free by writing to Transamerica Small Company Stock
Occidental Life Insurance Company, Annuity Balanced
Service Center, P.O. Box 31848, Limited Term High Income
Charlotte, NC 28231-1848 or Core Value
by calling 800-258-4260. MidCap Stock
Founders Growth
The current SAI has been filed with the Founders Passport
Securities and Exchange Commission and is Portfolios of Dreyfus Variable Investment Fund
incorporated by reference into this Dreyfus Stock Index Fund
prospectus. The table of contents of the SAI The Dreyfus Socially Responsible Growth Fund, Inc.
is included on page 52 of this prospectus. European Equity
Technology Growth
Founders International Equity
Growth Portfolio of Transamerica Variable Insurance
Fund, Inc.
</TABLE>
o The SEC's web site is
http://www.sec.gov
o Transamerica's web site is
http://www.transamerica.com
Neither the SEC nor any state securities commission has approved this investment
offering or determined that this prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
January 1, 2000
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS Page
SUMMARY 4
<S> <C>
PERFORMANCE DATA..........................................................................................13
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
AND THE VARIABLE ACCOUNT.................................................................................15
Transamerica Occidental Life Insurance Company...................................................15
Published Ratings................................................................................15
Insurance Marketplace Standards Association......................................................15
The Variable Account.............................................................................15
THE FUNDS.................................................................................................16
Addition, Deletion or Substitution...............................................................21
THE FIXED ACCOUNT.........................................................................................21
THE GUARANTEED MINIMUM INCOME BENEFIT.....................................................................22
THE CONTRACT..............................................................................................23
CONTRACT APPLICATION AND PREMIUMS.........................................................................24
Purchase Payments................................................................................24
Allocation of Purchase Payments..................................................................25
Investment Option Limit..........................................................................25
ACCOUNT VALUE.............................................................................................25
TRANSFERS.................................................................................................27
Before the Annuity Date..........................................................................27
Possible Restrictions............................................................................28
Dollar Cost Averaging............................................................................28
Special Dollar Cost Averaging Option.............................................................29
Automatic Asset Rebalancing......................................................................29
After the Annuity Date...........................................................................29
CASH WITHDRAWALS..........................................................................................29
Withdrawals......................................................................................29
Systematic Withdrawal Option.....................................................................31
Automatic Payout Option..........................................................................32
DEATH BENEFIT.............................................................................................32
Guaranteed Minimum Death Benefit.................................................................32
Adjusted Partial Withdrawals.....................................................................32
Payment of Death Benefit.........................................................................32
Designation of Beneficiaries.....................................................................33
Death of Annuitant Before the Annuity Date.......................................................33
Death of Owner Before the Annuity Date...........................................................33
Death of Annuitant or Owner After the Annuity Date...............................................33
CHARGES AND DEDUCTIONS....................................................................................33
Contingent Deferred Sales Load/Surrender Charge..................................................34
Administrative Charges...........................................................................35
Mortality and Expense Risk Charge................................................................36
Premium Taxes....................................................................................37
Transfer Fee.....................................................................................37
Systematic Withdrawal Option.....................................................................37
Automatic Asset Rebalancing Option...............................................................37
Taxes............................................................................................37
Portfolio Expenses...............................................................................37
Guaranteed Minimum Income Benefit Rider..........................................................37
Sales in Special Situations......................................................................37
DISTRIBUTION OF THE CONTRACT..............................................................................38
ANNUITY PAYMENT...........................................................................................38
Annuity Date.....................................................................................38
Annuity Payment..................................................................................39
Election of Annuity Forms and Payment Options....................................................39
Annuity Payment Options..........................................................................39
Fixed Annuity Payment Option.....................................................................40
Variable Annuity Payment Option..................................................................40
Annuity Forms....................................................................................40
Alternate Fixed Annuity Rates....................................................................42
QUALIFIED CONTRACTS.......................................................................................42
Automatic Payout Option..........................................................................42
Restrictions under 403(b) Programs...............................................................43
FEDERAL TAX MATTERS.......................................................................................43
Introduction.....................................................................................43
Purchase Payments................................................................................44
Taxation of Annuities............................................................................44
Qualified Contracts..............................................................................47
Possible Change in Taxation......................................................................49
Other Tax Consequences...........................................................................49
YEAR 2000 ISSUE...........................................................................................50
LEGAL PROCEEDINGS.........................................................................................50
LEGAL MATTERS.............................................................................................50
ACCOUNTANT AND FINANCIAL STATEMENTS.......................................................................50
VOTING RIGHTS.............................................................................................50
AVAILABLE INFORMATION.....................................................................................51
STATEMENT OF ADDITIONAL INFORMATION - Table of Contents...................................................52
APPENDIX A................................................................................................53
Example of Variable Accumulation Unit Value Calculations.........................................53
Example of Variable Annuity Unit Value Calculations..............................................53
Example of Variable Annuity Payment Calculations.................................................53
APPENDIX B................................................................................................54
Condensed Financial Information..................................................................57
APPENDIX C................................................................................................58
Definitions......................................................................................58
APPENDIX D................................................................................................61
Disclosure Statement for Individual Retirement Annuities.........................................61
</TABLE>
<PAGE>
SUMMARY
You will find a list of definitions of the terms used in this prospectus in
Appendix B on page 54.
The Contract
We designed the flexible premium deferred variable annuity, the contract
described in this prospectus, to aid individuals in long-term financial planning
for retirement or other purposes. You may use the contract:
o with non-qualified plans;
o as an individual retirement annuity that qualifies for special tax
treatment under Code Section 408 and whose initial purchase payment is a
rollover or transfer from a qualified retirement plan receiving special tax
treatment under Code Sections 401(a), 403(b) and 408, a rollover IRA; or
o as an individual retirement annuity that qualifies for special tax
treatment under Code Section 408A and whose initial purchase payment is a
rollover, transfer or conversion from other individual retirement plans
issued under Sections 408 or 408A of the Code, a rollover Roth IRA.
Additionally, with Transamerica's prior approval, you may use the contract:
o as an IRA or Roth IRA whose initial purchase payment is limited to the
contribution limitations of the Code with respect to contributory IRAs or
contributory Roth IRAs under Code Sections 408 or 408A;
o as an annuity under Code Section 403(b); and
o with various types of qualified pension and profit-sharing plans under Code
Section 401(a).
Variable Account Fee Table
The purpose of the following table is to help you understand the various costs
and expenses that you, as the owner will bear directly and indirectly. The table
reflects expenses of the variable account as well as of the portfolios. The
table assumes that the entire account value is in the variable account and that
the contract is owned during the accumulation period. Different fees may apply
after the annuity date including the guaranteed minimum payment option fee
applicable after annuitization under the payment options in the Guaranteed
Minimum Income Benefit Rider. The information set forth should be considered
together with the narrative provided under the heading Charges and Deductions on
page 33 of this prospectus, and with the funds' prospectuses. In addition to the
expenses listed below, premium taxes may be applicable.
<PAGE>
Contract Transaction Expenses(1)
Sales Charge Imposed on Purchase Payments 0
Maximum Contingent Deferred Sales Load(2) 6%
Range of Contingent Deferred Sales Load Over Time
Contract Years Since Contingent Deferred
Premiums Receipt Sales Load
Less than 2 years 6%
2 years but less than 4 years 5%
4 years but less than 6 years 4%
6 years but less than 7 years 2%
7 or more 0%
Other Contract Expenses
Transfer Fee (first 18 per Contract Year)(3) 0
Systematic Withdrawal Fee 0
Contract Fee(4) $30
Guaranteed Minimum Income Benefit Rider Fee (optional) (5)0.30%
Variable Account Annual Expenses(1)
Mortality and Expense Risk Charges 1.25%
Administrative Expense Charge(6) 0.15%
Other Fees and Expenses of the Variable Account 0.00%
Total Variable Account Annual Expenses 1.40%
Portfolio Annual Expenses
(as a percentage of assets after fee waiver and/or expense reimbursement)(7)
<TABLE>
<CAPTION>
- ------------------------------------------ -------------- ---------------- --------------------
Management Other Total Portfolio
Portfolios Fee Expenses Annual Expense
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
<S> <C> <C> <C>
Money Market 0.50% 0.06% 0.56%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Special Value 0.75% 0.08% 0.83%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Zero Coupon 2000 0.45% 0.14% 0.59%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Quality Bond 0.65% 0.08% 0.73%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Small Cap 0.75% 0.02% 0.77%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Capital Appreciation 0.75% 0.06% 0.81%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Stock Index Fund 0.25% 0.01% 0.26%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Socially Responsible Growth Fund 0.75% 0.05% 0.80%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Growth and Income 0.75% 0.03% 0.78%
- ------------------------------------------ -------------- ---------------- --------------------
International Equity 0.75% 0.24% 0.99%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
International Value 1.00% 0.29% 1.29%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Disciplined Stock 0.75% 0.13% 0.88%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Small Company Stock 0.75% 0.23% 0.98%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Balanced 0.75% 0.12% 0.87%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Limited Term High Income 0.65% 0.44% 1.09%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Transamerica Growth 0.64% 0.21% 0.85%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Core Value 0.75% 0.25% 1.00%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
MidCap Stock 0.75% 0.25% 1.00%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Founders Growth 0.75% 0.25% 1.00%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Founders Passport 1.00% 0.50% 1.50%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
European Equity 1.00% 0.25% 1.25%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Technology Growth 0.75% 0.25% 1.00%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Founders International Equity 1.00% 0.50% 1.50%
- ------------------------------------------ -------------- ---------------- --------------------
</TABLE>
Expense information regarding the portfolios has been provided by the funds. We
have no reason to doubt the accuracy of the information, but have not verified
those figures. In preparing the table above and the examples that follow, we
have relied on the figures provided by the funds. These figures are for the year
ended December 31, 1998. Actual expenses in future years may be higher or lower
than the figures given above.
Notes to Fee Table:
1. The contract transaction expenses apply to each contract, regardless of how
the contract value is allocated between the variable account and the fixed
account. The variable account annual expenses do not apply to the fixed
account.
2. You may withdraw a portion of the purchase payments each year after the
first contract year without any contingent deferred sales load, or CDSL.
After we have held a premium for seven contract years, you may withdraw the
remaining premium payments without any contingent deferred sales load. You
may always withdraw accumulated earnings without a CDSL.
3. We may charge a transfer fee equal to the lesser of $10 or 2% of the amount
transferred for each transfer in excess of 18 in a contract year. We may
also charge a fee of up to $25 per year if you elect the systematic
withdrawal option.
4. The current annual certificate fee per contract year is the lesser of $30
or 2% of the contract value. We may change the fee annually, but it will
not exceed the lesser of $60, or 2% of the contract value.
5. The annual fee for the optional Guaranteed Minimum Income Benefit Rider is
currently 0.30% of the minimum annuitization value on each rider anniversary and
is deducted on the rider anniversary. A proportional amount of this rider fee is
also deducted upon a complete withdrawal. We may change the rate of this fee in
the future at our discretion, but the rate will never be greater than 0.50% per
year. If you annuitize under the Guaranteed Minimum Income Benefit Rider and
select the guaranteed minimum payment option at the time of annuitization, a
guaranteed minimum payment option fee will be charged. This fee is reflected in
the amount of the variable payments payable under this option. The guaranteed
minimum payment option fee is currently 1.25% of the daily net asset value in
the variable investment options. We may at our discretion change the rate in the
future, but the rate will never be greater than 2.25%. Once the Guaranteed
Minimum Income Benefit Rider is added to your policy, neither the rider fee nor
the guaranteed minimum payment option fee that is in effect at that time will
change during the life of that Guaranteed Minimum Income Benefit Rider.
6. The current annual administrative expense charge is 0.15%. We may increase it
to 0.25%.
7Fromtime to time, each portfolio's investment adviser, in its sole discretion,
may waive all or part of its fees and/or voluntarily assume certain
portfolio expenses. The expenses shown in the above portfolio annual
expenses table reflect the portfolio's adviser's waiver of fees or
reimbursement of expenses, if applicable, for calendar year 1998. Without
such waivers or reimbursements, the management fee, other expenses and
total portfolio annual expenses for 1998 would have been, as a percentage
of assets, 0.75%, 0.21% and 0.96% for Transamerica Growth Fund; 0.75%,
1.35% and 2.10% for Core Value; 0.75%, 1.14% and 1.89% for MidCap Stock;
0.75%, 1.45% and 2.20% for Founders Growth; 1.00%, 1.67% and 2.67% for
Founders Passport and 1.00%, 3.67% and 4.67% for Founders International
Equity Portfolios. The figures in the table for the European Equity and
Technology Growth Portfolios are estimates for the 1999 fiscal year.
Examples*
The following tables show the total expenses an owner would incur in various
situations. These examples assume an average account value of $50,000 and,
therefore, no deduction has been made to reflect the $30 account fee. The
examples assume that the entire account value is allocated to the variable
account.
These examples all assume that no transfer fees, systematic withdrawal fee or
premium tax have been assessed. Premium taxes may be applicable. See Premium
Taxes on page 37.
These examples show expenses without reflecting fee waivers and reimbursements
for 1998.
These examples do not reflect the fee for the optional Guaranteed Minimum Income
Benefit Rider.
<TABLE>
<CAPTION>
Example 1
If you surrender the certificate at the end of the applicable time period, you
would pay the following expenses on a $1,000 initial premium assuming a 5%
annual return on assets:
Variable Sub-Accounts 1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Money Market $71 $104 $140 $229
Special Value $74 $112 $153 $256
Zero Coupon 2000 $71 $105 $141 $232
Quality Bond $73 $109 $148 $246
Small Capital $73 $110 $150 $250
Capital Appreciation $73 $112 $152 $254
Stock Index $68 $95 $124 $197
Socially Responsible Growth $73 $111 $152 $253
Growth and Income $73 $111 $151 $251
International Equity $75 $117 $162 $273
International Value $78 $126 $176 $302
Disciplined Stock $74 $114 $156 $262
Small Company Stock $75 $117 $161 $272
Balanced Fund $74 $113 $156 $261
Limited Term High Income $76 $120 $167 $283
Transamerica Growth Fund $75 $116 $160 $270
Core Value $86 $150 $216 $377
MidCap Stock $84 $144 $206 $359
Founders Growth $87 $153 $220 $386
Founders Passport $92 $166 $242 $426
European Equity $78 $125 $175 $298
Technology Growth $75 $117 $162 $274
Founders International Equity $111 $222 $329 $575
<PAGE>
Example 2
If you do not surrender and you do not annuitize the certificate, you would pay
the following expenses on a $1,000 initial premium assuming a 5% annual return
on assets:
Variable Sub-Accounts 1 Year 3 Years 5 Years 10 Years
Money Market $20 $62 $106 $229
Special Value $23 $70 $119 $256
Zero Coupon 2000 $20 $62 $107 $232
Quality Bond $22 $67 $114 $246
Small Capital $22 $68 $116 $250
Capital Appreciation $22 $69 $118 $254
Stock Index $17 $52 $90 $197
Socially Responsible Growth $22 $69 $118 $253
Growth and Income $22 $68 $117 $251
International Equity $24 $75 $128 $273
International Value $27 $84 $142 $302
Disciplined Stock $23 $71 $122 $262
Small Company Stock $24 $74 $127 $272
Balanced Fund $23 $71 $122 $261
Limited Term High Income $25 $78 $133 $283
Transamerica Growth Fund $24 $74 $126 $270
Core Value $35 $107 $182 $377
MidCap Stock $33 $101 $172 $359
Founders Growth $36 $110 $186 $386
Founders Passport $41 $124 $208 $426
European Equity $27 $82 $141 $298
Technology Growth $24 $75 $128 $274
Founders International Equity $60 $179 $295 $575
Example 3
If you elect to annuitize at the end of the applicable period under an annuity
form with life contingencies,** you would pay the following expenses on a $1,000
initial premium assuming a 5% annual return on assets:
Variable Sub-Accounts 1 Year 3 Years 5 Years 10 Years
Money Market $71 $62 $106 $229
Special Value $74 $70 $119 $256
Zero Coupon 2000 $71 $62 $107 $232
Quality Bond $73 $67 $114 $246
Small Capital $73 $68 $116 $250
Capital Appreciation $73 $69 $118 $254
Stock Index $68 $52 $90 $197
Socially Responsible. Growth $73 $69 $118 $253
Growth and Income $73 $68 $117 $251
International Equity $75 $75 $128 $273
International Value $78 $84 $142 $302
Disciplined Stock $74 $71 $122 $262
Small Company Stock $75 $74 $127 $272
Balanced Fund $74 $71 $122 $261
Limited Term High Income $76 $78 $133 $283
Transamerica Growth Fund $75 $74 $126 $270
Core Value $86 $107 $182 $377
MidCap Stock $84 $101 $172 $359
Founders Growth $87 $110 $186 $386
Founders Passport $92 $124 $208 $426
European Equity $78 $82 $141 $298
Technology Growth $75 $75 $128 $274
Founders International Equity $111 $179 $295 $575
</TABLE>
*In preparing the examples above, we have relied on the data provided by the
funds. We have no reason to doubt the accuracy of that information. However,
we have not verified those figures.
**For annuitization under a form that does not include life contingencies, a
contingent deferred sales load may apply.
You should not consider these examples to represent past or future expenses.
Actual expenses paid may be greater or less than those shown, subject to the
guarantees in the certificate. The assumed 5% annual return is only
hypothetical. It is not a representation of past or future returns. Actual
returns could be greater or less than this assumed rate.Condensed Financial
Information
You will find condensed financial information on each sub-account in Appendix C
on page 58. You will find the full financial statements and reports of
independent auditors for the variable account in the Statement of Additional
Information.
The Issuer
The contract is issued by Transamerica Occidental Life Insurance Company,
Transamerica, a stock life insurance company incorporate under the Laws of
California on June 30, 1906. Transamerica is a wholly-owned subsidiary of
Transamerica Insurance Corporation of California, which in turn is a direct
subsidiary of Transamerica Corporation. Our principal office is at 1150 South
Olive Street, Los Angeles, California 90015, telephone 213-742-2111.
On July 21, 1999, Transamerica Corporation merged with AEGON N.V., one of the
world's leading international insurance groups.
We will issue the contract as a certificate under a group annuity contract in
some states and as an individual annuity contract in other states. This contract
is not available in all states.
This prospectus does not offer the sub-accounts or the fixed account in any
jurisdiction where they are not allowed to be sold. We do not authorize any
dealer, salesperson or other person to give information or make representations
not contained in this prospectus. You should not rely on any information or
representation that is not in this prospectus.
Account Value
We will establish and maintain an account for each individual annuity contract
and for each certificate issued under a group contract. You, as owner, will
receive either an individual annuity contract, or a certificate evidencing your
coverage under a group annuity contract.
Before the annuity date, the account value will depend on the investment
experience of each sub-account of the variable account you select. This does not
apply to the fixed account. All payments and values provided under the contract
when based on the investment experience of the variable account are variable and
are not guaranteed as to dollar amount. Therefore, before the annuity date you,
as the owner, bear the entire investment risk for amounts you allocate to the
variable account.
There is no guaranteed or minimum cash surrender value, so the proceeds of a
surrender could be less than the total purchase payments.
Initial Purchase Payment
The initial purchase payment for each contract must generally be at least
$5,000. We will waive this minimum if the contract is sold as a qualified
contract to certain retirement plans. Generally, each additional purchase
payment must be at least $500. We will waive this minimum if you select an
automatic payment plan. In no event, however, may the total of all purchase
payments under a contract exceed $1,000,000 without our prior approval. The
minimum net purchase payment that you may allocate to a sub-account with no
current allocations is $500. The minimum amount that you can allocate to a new
guarantee period is $1,000. See Contract Application and Purchase Payments on
page 24.
The Variable Account
The variable account is a separate account, designated as Separate Account
VA-2L, divided into sub-accounts. Assets of each sub-account are invested in a
specified mutual fund portfolio. Each sub-account uses its assets to purchase,
at their net asset value, shares of a specific series or portfolio of the
following funds:
o Dreyfus Variable Investment Fund;
o Dreyfus Investment Portfolios;
o Growth Portfolio of Transamerica Variable Insurance Fund, Inc.;
o Dreyfus Stock Index Fund; or
o The Dreyfus Socially Responsible Growth Fund, Inc.
The Sub-Accounts
The following 23 sub-accounts are currently available for investment in the
variable account:
o Money Market
o Special Value
o Zero Coupon 2000
o Quality Bond
o Small Cap
o Capital Appreciation
o Stock Index
o Socially Responsible Growth
o Growth and Income
o International Equity
o International Value
o Disciplined Stock
o Small Company Stock
o Balanced
o Limited Term High Income
o Transamerica Growth
o Core Value
o MidCap Stock
o Founders Growth
o Founders Passport
o European Equity
o Technology Growth
o Founders International Equity
Each portfolio has distinct investment objectives and policies. These
are described in the accompanying prospectuses for the funds. The funds pay
their investment adviser and administrators certain fees charged against the
assets of each portfolio. The account value, if any, and the amount of any
variable annuity payments will vary to reflect the investment performance of all
of the sub-accounts you select and the deduction of the charges. See Charges and
Deductions on 33.
Each portfolio has distinct investment objectives and policies, which are
described in the accompanying prospectuses for the funds. See Charges and
Deductions on page 33. For more information about the funds see The Funds on
page 16 and the accompanying funds' prospectuses.
The Fixed Account
Each amount you initially allocate or transfer to the fixed account
will establish a new guarantee period. Each guarantee period will have its own
guaranteed interest rate with its own expiration date. The minimum interest rate
will be 3% per year. You must allocate at least $1,000 to a new guarantee
period. If you withdraw or transfer amounts from a guarantee period before its
expiration date, you will generally be subject to an interest adjustment. This
will reduce the interest credited to the amount withdrawn to 3%, which is the
minimum annual rate.
Investment Option Limit
Currently, you may not elect more than a total of eighteen investment
options over the life of the contract. Investment options include each
sub-account of the variable account and each guaranteed period of the fixed
account.
Transfers Before the Annuity Date
Before the annuity date, you may make transfers among the sub-accounts
and the guarantee periods of the fixed account. A "transfer" is the reallocation
of amounts between the guaranteed periods of the fixed account and the
sub-accounts, among the guarantee periods of the fixed account, and among
sub-accounts.
We charge a fee equal to the lesser of $10 or 2% of the transfer amount for each
transfer in excess of 18 per contract year. Transfers under certain programs,
such as Dollar Cost Averaging, will not count towards the 18 free transfers per
contract year. If you transfer amounts from a guarantee period before its
expiration date, it will generally be subject to an interest adjustment. This
will reduce the interest credited to 3%, the minimum annual rate.
Withdrawals
You may withdraw all or part of the cash surrender value on or before the
annuity date. However, amounts you withdraw may be subject to a contingent
deferred sales load, depending on how long the withdrawn purchase payments have
been held under the contract. Amounts you withdraw may be subject to a premium
tax or similar tax, depending upon the state in which the you live. Withdrawals
may further be subject to any federal, state or local income tax, and a penalty
tax. Withdrawals from qualified contracts may be subject to severe restrictions.
Except for IRAs and Roth IRAs, qualified contracts are sold only with our prior
approval. We will generally deduct the annual account fee on a full surrender of
a contract. We will allow only one, and in some states no, partial withdrawal
while the systematic withdrawal option is in effect. If you transfer amounts
from a guarantee period before its expiration date, it will generally be subject
to an interest adjustment. This will reduce the interest credited to 3%, the
minimum annual rate. See Cash Withdrawals on page 29.
The Contingent Deferred Sales Load/
Surrender Charge
We do not deduct a sales charge from purchase payments, although we may deduct
premium taxes.
However, if any part of the account value is withdrawn, we may assess a
contingent deferred sales load/surrender charge of up to 6% of purchase payments
withdrawn to cover certain expenses relating to the sale of the contracts,
including commissions to registered representatives and other promotional
expenses. We guarantee that the total contingent deferred sales load will never
exceed 6% of the purchase payments.
After we have held a purchase payment for seven contract years, you, as the
owner, may withdraw the remaining purchase payment without a contingent deferred
sales load/surrender charge. You may make withdrawals each contract year before
the annuity date up to the allowed amount described below without incurring a
contingent deferred sales load.
The allowed amount is equal to:
o during the first certificate year, the accumulated earnings not previously
withdrawn;
o after you have held your certificate for at least one full certificate
year, and only for the first withdrawal in a certificate year, the sum of:
1. 100% of purchase payments not previously withdrawn and received at least
seven contract years before the date of withdrawal; plus,
2. the greater of:
a) the accumulated earnings not previously withdrawn; or,
b) 15% of purchase payments received at least one but less than seven complete
contract years before the date of withdrawal not reduced to take into
account any withdrawals deemed to be made from such purchase payments.
o after the first contract year and after the first withdrawal in a contract
year, the sum of:
1. 100% of purchase payments not previously withdrawn and received at least
seven complete contract years before the date of withdrawal; plus,
2. accumulated earnings not previously withdrawn.
Withdrawals will always be made first from accumulated earnings, and then from
purchase payments on a first-in, first-out basis. So, accumulated earnings could
be withdrawn as part of the first withdrawal in a contract year and, therefore,
not be available for withdrawals made later that contract year. The accumulated
earnings, if any, in your account value are always available as the allowed
amount. You cannot withdraw any purchase payment deposited by check until that
check clears.
We will waive the contingent deferred sales load/surrender charge on a
withdrawal if the owner is confined to a hospital or nursing care facility for
45 days (30 days in Pennsylvania) out of a continuous 60 day period, and if
other conditions are met. We will also waive the contingent deferred sales load
in some states if the owner is diagnosed with a terminal illness after the first
contract year. The illness must reasonably be expected to result in death within
twelve months. See Contingent Deferred Sales Load/Surrender Charge on page 34
and Cash Withdrawals on page 29.
Other Charges and Deductions
We deduct a daily charge referred to as the Mortality and Expense Risk Charge.
This charge is equal to a percentage of the value of the net assets in the
variable account for the mortality and expense risks assumed. The effective
annual rate of this charge is 1.25% of the value of the net assets in the
variable account attributable to your contract. See Mortality and Expense Risk
Charge on page 36. We guarantee that this mortality and expense risk charge will
not be increased.
We also deduct a daily charge referred to as the Administrative Expense Charge
equal to a percentage of the value of the net assets in the variable account
corresponding to an effective annual rate of 0.15% to help cover some of the
costs of administering the contract and the variable account. This charge may
change, but it is guaranteed not to exceed a maximum effective annual rate of
0.25%. See Administrative Charges on page 35.
There is also an administrative charge each year for contract maintenance,
referred to as the Account Fee. This fee is currently $30, or 2% of the account
value, if less. It will not be assessed for contract years in which the account
value exceeds $50,000 on the last business day of the contract year or as of the
date the contract is surrendered. We will deduct the account fee at the end of
the contract year or when you surrender the contract, if earlier. We may change
the account fee for any contract year. But we guarantee it will not exceed the
lesser of $60 or 2% of the account value.
After the annuity date this fee is referred to as the annuity fee. The annuity
fee is $30 and will not change.
Currently we impose no fee for the systematic withdrawal option. But we reserve
the right to charge for this option in the future.
A fee or $10 or 2% of the transfer amount, whichever is less, is imposed for
each transfer in excess of eighteen during a contract year. See Transfer Fee on
page 37.
If you elect the Guaranteed Minimum Income Benefit Rider, there is an annual fee
during the accumulation phase (before the annuity date) of 0.30% of the minimum
annuitization value. If you annuitize under the rider and elect the guaranteed
minimum payment option, there is a guaranteed minimum payment fee at an
effective annual rate of 1.25% of the daily net asset value in the separate
account.
Charges for state premium taxes, including retaliatory premium taxes, will be
imposed in some states. Depending on the applicability ofsuch state taxes, we
could deduct the charges from premiums, from amounts withdrawn, and/or from the
annuity purchase amount upon annuitization. See Premium Taxes on page 37.
In addition, if you withdraw or transfer amounts out of a guarantee period of
the fixed account before its expiration date, it will generally be subject to an
interest adjustment. This will reduce the interest earned on that amount to 3%,
the minimum annual rate.
Annuity Payments
We will make annuity payments either on a fixed basis or a variable
basis, or a combination of a fixed and variable basis, as you select. You have
flexibility in choosing the annuity date. In no event may the annuity date be
later than the first day of the month immediately preceding the month of your
85th birthday or the first day of the month coinciding with or next following
the tenth contract anniversary, whichever occurs last. This extension of the
annuity date to the tenth contract anniversary may not be available in all
states. The annuity date cannot be earlier than the first day of the month
coinciding with or immediately following the third contract anniversary, except
for qualified contracts. We will begin annuity payments on the first day of the
calendar month following the annuity date.
You have a choice of four annuity forms:
(1) Life Annuity;
(2) Life and Contingent Annuity;
(3) Life Annuity with Period Certain; and
(4) Joint and Survivor Annuity.
Payments on Death Before the Annuity Date
The death benefit will be equal to the greater of:
1. the account value;
2. the Guaranteed Minimum Death Benefit
The Guaranteed Minimum Death Benefit is the greater of:
1) the largest account value on any contract anniversary prior to any owner's
or annuitant's 86 birthday, adjusted for any subsequent purchase payments
and adjusted withdrawals; or
2) the sum of purchase payments less adjusted withdrawals plus interest at a
5% annual effective rate up to:
a) the contract anniversary prior to any owner's or annuitant's 86th birthday;
or
b) when this sum has grown to two times the amount of the payments less
adjusted withdrawals; or
c) the death of any owner or annuitant.
We will generally pay the death benefit within seven days of receipt of the
required proof of death of the owner or the annuitant. We must have sufficient
information about the beneficiary to make the payment. We must receive the
beneficiary's election of the method of settlement. If we receive no election of
the settlement method, we will pay the death benefit no later than one year from
the date of death. We do not charge a contingent deferred sales load or interest
adjustment. The beneficiary may elect to receive the death benefit as either a
lump sum or as an annuity.
Federal Income Tax Consequences
An owner who is a natural person, meaning an individual, rather than a
corporation or trust, generally should not be taxed on increases in the account
value until a distribution under the contract occurs. A withdrawal or annuity
payment, for example, would qualify as a distribution, thereby triggering a
taxable event. A deemed distribution would also trigger a taxable event. Deemed
distributions occur when owners pledge, loan, or assign a contract as
collateral.
Generally, a portion, up to 100%, of any distribution or deemed distribution is
taxable as ordinary income. The taxable portion of distributions is generally
subject to income tax withholding unless the recipient elects otherwise.
Mandatory withholding may apply for certain qualified contracts. In addition, a
federal penalty tax may apply to certain distributions or deemed distributions.
Right to Cancel
You have the right to examine the contract for a limited period, known as a free
look period. You can cancel the contract by delivering or mailing a written
notice of cancellation, or sending a telegram to our service center. You must do
this before midnight of the tenth day (or longer if required by state law) after
you receive the contract. If you give us notice and return the contract by mail,
notice will be effective on the date we receive the notice. The amount of the
refund may depend on the state of issuance. In most cases, we will refund the
account value as of the date we receive the written notice and the contract. In
some states, you may receive more (or less) than the account value. You should
consult your registered representative for the applicable provision. See
Purchase Payments page 24 and Account Value page 25.
You may request more information by writing:
Transamerica Annuity Service Center
P.O. Box 31848
Charlotte, North Carolina
28231-1848
or
Call 1-800-258-4260
with any questions concerning your contract.
You should provide the contract number and the owner's and annuitant's names
when requesting information regarding a specific contract.
NOTE: The foregoing summary is qualified in its entirety by the detailed
information in the remainder of this prospectus and in the prospectuses for the
funds. They should be referred to for more detailed information.
For qualified contracts, limits or restrictions may be imposed on purchase
payments, withdrawals, distributions, benefits or other contract provisions due
to:
o the requirements of a particular retirement plan;
o an endorsement to the contract; or
o limitations or penalties imposed by the Code or the Employee Retirement
Income Security Act of 1974, as amended.
This prospectus does not describe such limitations or restrictions.
PERFORMANCE DATA
Advertising of Yields
From time to time, we may advertise yields and average annual total returns for
the sub-accounts of the variable account. In addition, we may advertise the
effective yield of the Money Market Sub-Account.
These figures will be based on historical information and are not intended to
indicate future performance.
Yield Calculations
The yield of the Money Market Sub-Account refers to the annualized income
generated by an investment in that sub-account over a specified seven-day
period.
The yield is calculated by assuming:
o the income generated for that seven-day period is generated each seven-day
period over a 52-week period; and
o it is shown as a percentage of the investment.
The effective yield is calculated similarly but, when annualized, the income
earned by an investment in that sub-account is assumed to be reinvested. The
effective yield will be slightly higher than the yield because of the
com-pounding effect of this assumed reinvestment.
The yield of a sub-account, other than that of the Money Market Sub-Account,
refers to the annualized income generated by an investment in the sub-account
over a specified thirty-day period. The yield is calculated by assuming that the
income generated by the investment during that thirty-day period is generated
each thirty-day period over a twelve-month period and is shown as a percentage
of the investment.
The yield calculations do not reflect the effect of any contingent deferred
sales load or premium taxes that may apply to a particular contract. When the
contingent deferred sales load is applied to a particular contract, the yield of
that contract will be reduced. For additional information about how yields and
total returns are calculated, please refer to the Statement of Additional
Information.
Total Returns
Average annual total returns for each sub-account are based on performance data
compiled since the sub-account commenced operations. Performance results are
also measured over 1, 5 and 10 year time periods. When average annual total
returns for these periods are available, you will be provided with this
information. Each return will represent the average annual compounded rates of
return that would equate an initial investment of $1,000 to the redemption value
of that investment. This will include the deduction of any applicable contingent
deferred sales load, but exclude the deduction of any premium taxes. These
returns will represent the periods for which total return quotations are
provided up to the last day of the period.
Performance Information
Performance information for any sub-account reflects only the performance of a
hypothetical contract under which account value is allocated to a sub-account
during a particular time period on which the calculations are based.
It should be considered in light of:
o the investment objectives;
o investment contracts;
o characteristics of the portfolios in which the sub-account invests; and
o the market conditions during the given time period.
You should not consider it as a representation of what may be achieved in the
future. For a description of the methods used to determine yield and total
returns, see the Statement of Additional Information.
Reports and promotional literature may also contain other information including:
1. the ranking of any sub-account derived from rankings of variable annuity
separate accounts or their investment products tracked by: o Lipper Analytical
Services, Inc., o VARDS, o IBC/Donoghue's Money Fund Report, o Financial
Planning Magazine, o Money Magazine, o Bank Rate Monitor, o Standard and Poor's
Indices, and o The Dow Jones Industrial Average. It may also include other
rating services, companies, publications, or other persons who rank separate
accounts or other investment products on overall performance or other criteria;
and
2. the effect of tax deferred compounding on sub-account investment returns,
or returns in general, which may be illustrated by graphs, charts, or
otherwise.
These may include a comparison, at various points in time, of the return from an
investment, or returns in general, on a tax-deferred basis, assuming one or more
tax rates, with the return on a currently taxable basis.
We may also use other ranking services and indices.
In our advertisements and sales literature, we may use charts and graphs to
discuss and illustrate:
o the implications of longer life expectancy for retirement planning;
o the tax and other consequences of long-term investments;
o the effects of the lifetime payout option;
o the operation of certain special investment features in the policy - such
as the dollar cost averaging option;
o the effects of certain investment strategies, such as allocating purchase
payments between the fixed account and an equity sub-account; and
o the Social Security system and its projected payout levels and retirement
plans generally.
We may, from time to time, disclose average annual total returns and cumulative
total returns for the sub-accounts in non-standard formats. We will assume that
no contingent deferred sales load is applicable to these returns. Whenever we
show non-standard performance, we will also show standardized performance. You
will find additional information about the calculation of performance data in
the Statement of Additional Information.
We may also advertise performance figures for the sub-accounts based on their
performance before the time the variable account started.
TRANSAMERICA OCCIDENTAL LIFE
INSURANCE COMPANY AND THE
VARIABLE ACCOUNT
Transamerica Occidental Life Insurance Company
Transamerica Occidental Life Insurance Company, Transamerica, is a stock life
insurance company incorporated under the laws of the State of California on June
30, 1906. It is mainly engaged in the sale of life insurance and annuity
contracts. The address for Transamerica Occidental Life Insurance Company is
1150 South Olive Street, Los Angeles, California 90015.
Transamerica Occidental Life Insurance Company is indirectly owned by
Transamerica Corporation. On July 21, 1999, Transamerica Corporation merged with
AEGON N.V., one of the world's leading international insurance groups
Published Ratings
Transamerica may from time to time publish in advertisements, sales literature
and reports to owners, the ratings and other information assigned to it by one
or more independent rating organizations such as A.M. Best Company, Standard &
Poor's, Moody's and Duff & Phelps. The purpose of the ratings is to reflect the
financial strength and/or claims-paying ability of Transamerica. These ratings
should not be considered as bearing on the safety or investment performance of
assets held in the variable account. Each year the A.M. Best Company reviews the
financial status of thousands of insurers. Once it has completed its analysis of
each insurer's financial strength, A.M. Best assigns the insurer a Best Rating.
These ratings reflect their current opinion of the relative financial strength
and operating performance of an insurance company in comparison to the norms of
the life/health insurance industry. In addition, other rating companies, such as
by Standard & Poor's Insurance Ratings Services, Moody's or Duff & Phelps assess
our claims-paying ability. They also may be referred to in advertisements or
sales literature or in reports to owners. These ratings are opinions of an
operating insurance company's financial capacity to meet the obligations of its
insurance and annuity contracts in accordance with their terms, including its
obligations under the fixed account provisions of this contract. Such ratings do
not reflect the investment performance of the variable account or the degree of
risk associated with an investment in the variable account.
Insurance Marketplace Standards
Association
In recent years, the insurance industry has recognized the need to develop
specific principles and practices to help maintain the highest standards of
marketplace behavior and enhance credibility with consumers. As a result, the
industry established the Insurance Marketplace Standards Association (IMSA).
As an IMSA member, we agree to follow a set of standards in our advertising,
sales and service for individual life insurance and annuity products. The IMSA
logo, which you will see on our advertising and promotional materials,
demonstrates that we take our commitment to ethical conduct seriously.
The Variable Account
On May 22, 1992, Transamerica's Board of Directors passed resolutions to
establish the Separate Account VA-2L of Transamerica, also referred to as the
Variable Account, under the laws of the State of California. The variable
account is registered with the Securities and Exchange Commission under the
Investment Company Act of 1940 as a unit investment trust. It meets the
definition of a separate account under the federal securities laws. However, the
Commission does not supervise the management or the investment practices or
contracts of the variable account.
The assets of the variable account are owned by Transamerica but they are held
separately from the other assets of Transamerica. Section 10506 of the
California Insurance Law provides that the assets of a separate account are not
chargeable with liabilities incurred in any other business operation of the
insurance company, except to the extent that assets in the separate account
exceed the reserves and other liabilities of the separate account. Income, gains
and losses incurred on the assets in the variable account, whether or not
realized, are credited to or charged against the variable account without regard
to other income, gains or losses of Transamerica. Therefore, the investment
performance of the variable account is entirely independent of the investment
performance of Transamerica's general account assets or any other separate
account maintained by Transamerica.
The variable account has 23 sub-accounts, each of which invests solely in a
specific corresponding portfolio. Changes to the sub-accounts may be made at the
discretion of Transamerica.
THE FUNDS
The variable account invests exclusively in the:
o Portfolios of Dreyfus Variable Investment Fund
o Dreyfus Stock Index Fund
o The Dreyfus Socially Responsible Growth Fund, Inc.
o Portfolios of Dreyfus Investment Portfolios
o The Growth Portfolio of Transamerica Variable Insurance Fund, Inc.
Dreyfus Variable Investment Fund was organized as an unincorporated business
trust under Massachusetts law pursuant to an Agreement and Declaration of Trust
dated October 29, 1986. It commenced operations on August 31, 1990, and is
registered with the Commission as an open-end management investment company
under the 1940 Act. Currently, thirteen series, or portfolios, of the Variable
Fund are available for the contracts. Each portfolio has separate investment
objectives and policies. As a result, each portfolio operates as a separate
investment portfolio and the investment performance of one portfolio has no
effect on the investment performance of any other portfolio.
The Dreyfus Stock Index Fund was incorporated under Maryland law on January 24,
1989, and commenced operations on September 29, 1989. It is registered with the
Commission as an open-end, non-diversified, management investment company.
The Dreyfus Socially Responsible Growth Fund, Inc. was incorporated under
Maryland law on July 20, 1992, and commenced operations on October 7, 1993. It
is registered with the Commission as an open-end, diversified, management
investment company.
Dreyfus Investment Portfolios was organized as an unincorporated business trust
under Massachusetts law pursuant to an Agreement and Declaration of Trust dated
May 14, 1993. It is registered with the Commission as an open-end management
company under the 1940 Act and commenced operations May 1, 1998. Currently, four
portfolios of Dreyfus Investment Portfolios are available for the contract.
Transamerica Variable Insurance Fund, Inc., was incorporated under Maryland law
on June 23, 1995. It commenced operations on November 1, 1996. It is registered
with the SEC as a management investment company. One of its portfolios is the
Growth Portfolio.
The Commission does not supervise the management or the investment practices and
policies of any of the portfolios. The assets of the portfolios are each
separate from the assets of the other portfolios.
Service Providers to The Funds
o The Dreyfus Corporation provides investment advisory and administrative
services to the Dreyfus Variable Investment Fund, the Dreyfus Investment
Portfolios and the Socially Responsible Fund.
o Mellon Equity Associates provides index fund management services to the
Stock Index Fund, with The Dreyfus Corporation serving as the manager, in
accordance with applicable agreements with the fund.
o Fayez Sarofim & Co. provides sub-investment advisory services for the
Capital Appreciation Portfolio of the Variable Fund.
o NCM Capital Management Group, Inc., provides sub-investment advisory
services for the Socially Responsible Fund.
o Founders Asset Management LLC provides sub-investment advisory services for
the Founders Growth, Founders Passport and Founders International Equity
Portfolios of the Dreyfus Investment Portfolios.
o Transamerica provides investment advisory services to Transamerica VIF,
with Transamerica Investment Services, Inc. providing sub-investment
advisory services.
o Newton Capital Management Limited provides sub-investment advisory services
for the European Equity Portfolio of the Dreyfus Investment Portfolios.
Transamerica receives fees from The Dreyfus Corporation and its affiliates for
providing certain administrative and or other services.
The portfolios are described below. Please see the Variable Fund, the Stock
Index Fund, the Socially Responsible Fund, Dreyfus Investment Portfolios and
Transamerica VIF prospectuses for more information.
Money Market Portfolio
The Money Market Portfolio's investment objective is to provide a high level of
current income while preserving invested capital and maintaining liquidity. It
seeks to achieve this objective by investing in short-term money market
instruments. The investment advisory fee is payable monthly at the annual rate
of 0.50 of 1% of the value of the portfolio's average daily net assets. An
investment in this portfolio is not insured or guaranteed by the FDIC or any
other government agency. Although this portfolio seeks to preserve the value of
your investment at $1.00 per share, it is possible to lose money by investing in
this portfolio.
Special Value Portfolio
The Special Value Portfolio's investment objective is to maximize total return
on your investment capital. Total return consists of capital appreciation and
current income. It seeks to achieve its objective by following a "contrary
value" strategy, investing in a wide range of equity and debt securities and
money market instruments. An investment advisory fee is payable monthly at the
annual rate of 0.75 of 1% of the value of the portfolio's average daily net
assets.
Zero Coupon 2000 Portfolio
The Zero Coupon 2000 Portfolio's investment objective is to provide as high an
investment return as is consistent with preserving capital. It seeks to achieve
its objective by investing primarily in: o debt obligations of the U.S. Treasury
that have been stripped of their unmatured interest coupons;
o interest coupons that have been stripped from debt obligations issued by
the U.S. Treasury;
o receipts and certificates for stripped debt obligations and stripped
coupons, including U.S. Government trust certificates.
Collectively, we refer to these as Stripped Treasury Securities. The portfolio
also may purchase certain other types of stripped government or corporate
securities. The portfolio's assets will consist primarily of portfolio
securities which will mature on or about December 31, 2000. The investment
advisory fee is payable monthly at the annual rate of 0.45 of 1% of the value of
the portfolio's average daily net assets.
Quality Bond Portfolio
The Quality Bond Portfolio's investment objective is to provide the maximum
amount of current income while preserving capital and maintaining liquidity. It
seeks to achieve its objective by investing mainly in: debt obligations of
corporations, the U.S. Government, its agencies and instrumentalities, and major
U.S. banking institutions. The investment advisory fee is payable monthly at the
annual rate of 0.65 of 1% of the value of the portfolio's average daily net
assets.
Small Cap Portfolio
The Small Cap Portfolio's investment objective is to maximize capital
appreciation. It seeks to achieve its objective by investing mainly in common
stocks of domestic and foreign issuers. Under normal market conditions, the
portfolio will invest at least 65% of its total assets in companies with market
capitalizations of less than $1.5 billion at the time of purchase. The Dreyfus
Corporation will invest in companies it believes to be characterized by new or
innovative products, services or processes which should enhance prospects for
growth in future earnings. The investment advisory fee is payable monthly at the
annual rate of 0.75 of 1% of the value of the portfolio's average daily net
assets.
Capital Appreciation Portfolio
The Capital Appreciation Portfolio's primary investment objective is to provide
long-term capital growth while preserving capital. Current income is a secondary
goal. It seeks to achieve its goals by investing in common stocks of domestic
and foreign issuers. An investment advisory fee is payable monthly to The
Dreyfus Corporation and a sub-investment advisory fee is payable monthly to
Fayez Sarofim & Co. at the total annual rate of 0.75 of 1% of the value of the
portfolio's average daily net assets.
Growth and Income Portfolio
The Growth and Income Portfolio's investment objective is to provide long-term
capital growth, current income and growth of income, consistent with reasonable
investment risk. This portfolio invests primarily in equity and debt securities
and money market instruments of domestic and foreign issuers. The proportion of
the portfolio's assets invested in each type of security will vary from time to
time in accordance with the Dreyfus Corporation's assessment of economic
conditions and investment opportunities. An investment advisory fee is payable
monthly at the annual rate of 0.75 of 1% of the value of the portfolio's average
daily net assets.
International Equity Portfolio
The International Equity Portfolio's investment objective is to maximize capital
growth. This portfolio's invests primarily in the equity securities of foreign
issuers located throughout the world. An investment advisory fee is payable
monthly at an annual rate of 0.75 of 1% of the value of the portfolio's average
daily net assets.
International Value Portfolio
The International Value Portfolio's investment objective is long-term capital
growth. This portfolio invests primarily in equity securities of foreign issuers
which are characterized as value companies according to criteria established by
the portfolio's investment adviser. An investment advisory fee is payable
monthly at the annual rate of 1.00% of the value of the portfolio's average
daily net assets.
Disciplined Stock Portfolio
The Disciplined Stock Portfolio's investment objective is to provide investment
results that are greater than the total return performance of publicly traded
common stocks as a group, as represented by the Standard & Poor's 500 Composite
Stock Price Index. This portfolio will use quantitative statistical modeling
techniques to build a portfolio similar to the S & P 500 in its sector
weightings and risk characteristics. An investment advisory fee is payable
monthly at the annual rate of 0.75 of 1% of the value of the Portfolio's average
daily net assets.
Small Company Stock Portfolio
The Small Company Stock Portfolio's investment objective is to provide
investment results that are greater than the total return performance of
publicly traded common stocks as a group, as represented by the Russell 2500
Index. This portfolio invests primarily in a portfolio of equity securities of
small to medium sized domestic companies. While investing in these companies,
the portfolio will attempt to maintain volatility and diversification similar to
that of the Russell 2500 Index. An investment advisory fee is payable monthly at
the annual rate of 0.75 of 1% of the value of the portfolio's average daily net
assets.
Balanced Portfolio
The Balanced Portfolio's investment objective is to provide investment results
that are greater than the total return performance of common stocks and bonds as
a group, as represented by a hybrid index. 60% of the index is composed of the
common stocks in the S & P 500 Composite Stock Price Index. 40% of the index is
composed of the bonds in the Lehman Brothers Intermediate Government/ Corporate
Bond Index. This portfolio invests primarily in common stocks and bonds in
proportions selected by The Dreyfus Corporation based on their expected returns
and risks. An investment advisory fee is payable monthly at the annual rate of
0.75 of 1% of the value of the portfolio's average daily net assets.
Limited Term High Income Portfolio
The Limited Term High Income Portfolio's investment objective is to maximize
total return, consisting of capital appreciation and current income. This
portfolio seeks to achieve its objective by investing up to all of its assets in
a portfolio of lower rated fixed-income securities, commonly known as junk
bonds. Investments of this type are subject to a greater risk of loss of
principal and non-payment of interest. Under normal market conditions, these
bonds will have an effective average duration of three and one-half years or
less. Investors should carefully assess the risks associated with an investment
in the portfolio. Those risks are described in the portfolio's prospectus. An
investment advisory fee is payable monthly at the annual rate of 0.65 of 1% of
the value of the portfolio's average daily net assets.
Stock Index Fund
The Stock Index Fund's investment objective is to provide investment results
that correspond to the price and yield performance of publicly traded common
stocks as a group, as represented by the Standard & Poor's 500 Composite Stock
Price Index. The Fund is not sponsored by or affiliated with Standard & Poor's
Corporation in any way. A management fee is payable monthly to The Dreyfus
Corporation at the annual rate of 0.24 of 1% of the value of the Fund's average
daily net assets. Dreyfus pays Mellon Equity Associates to provide the
day-to-day management of the Fund's investments.
Socially Responsible Fund
The Socially Responsible Fund's primary goal is to provide capital growth.
Current income is a secondary goal. It seeks to achieve these objectives by
investing principally in common stocks, or securities convertible into common
stock. Stocks selected for this fund will be issued by companies which, in the
opinion of the fund's management, not only meet traditional investment
standards, but also show evidence that they conduct their business in a manner
that contributes to the enhancement of the quality of life in America. A
management fee is payable monthly to The Dreyfus Corporation at the annual rate
of 0.75 of 1% of the value of the Socially Responsible Fund's average daily net
assets. Dreyfus pays NCM Capital Management Group, Inc. as sub-adviser to
provide day-to-day management of the Fund's investments.
Core Value Portfolio
The Core Value Portfolio's primary investment objective is to provide long-term
growth of capital. Current income is a secondary investment objective. The
portfolio invests primarily in equity securities, such as common stocks,
preferred stock and securities convertible into common stocks. All of these
would be issued by "value" companies according to criteria established by The
Dreyfus Corporation. A management fee is payable monthly at the annual rate of
0.75 of 1% of the portfolio's average daily net assets.
MidCap Stock Portfolio
The MidCap Stock Portfolio's investment objective is to provide investment
results that are greater than the total return performance of publicly-traded
common stocks as a group, as represented by the Standard & Poor's MidCap 400
Index. The portfolio invests primarily in equity securities of medium-sized
domestic issurers, while attempting to maintain volatility and diversification
similar to that of the S & P Mid Cap 400 Index. The portfolio is not an index
fund and its investments are not limited to securities of issuers included in
the S&P Mid Cap 400 Index. A management fee is payable monthly at the annual
rate of 0.75 of 1% of the portfolio's average daily net assets.
Founders Growth
The Founders Growth Portfolio's investment objective is to provide long-term
growth of capital. It invests primarily in equity securities of
well-established, high quality "growth" companies, as determined by the
Portfolio's sub-investment adviser. These companies tend to have strong
performance records, solid market positions and reasonable financial strength,
and have continuous operating records of three years or more. An investment
advisory fee is payable monthly to The Dreyfus Corporation at an annual rate of
0.75% of the value of the portfolio's average daily net assets. Dreyfus pays
Founders Asset Management LLC to provide the day-to-day management of the
Portfolio's investments.
Founders Passport Portfolio
The Founders Passport Portfolio's investment objective is to provide capital
appreciation. It invests primarily in equity securities of foreign issuers with
market capitalizations or annual revenues of $1 billion or less and which are
characterized as "growth" companies, as determined by the Portfolio's
sub-investment adviser. It ordinarily invests in foreign issuers from at least
three foreign countries with established or emerging economies. The portfolio
may invest in securities of larger foreign issuers or in U.S. issuers if
management believes these securities offer attractive opportunities for capital
appreciation. An investment advisory fee is payable monthly to The Dreyfus
Corporation at an annual rate of 1.00% of the value of the portfolio's average
daily net assets. Dreyfus pays Founders Asset Management LLC to provide the
day-to-day management of the Portfolio's investments.
European Equity Portfolio
The European Equity Portfolio seeks long-term capital growth. It generally
invests at least 80% of its total assets in stocks included within the universe
of the 300 largest European companies. It may invest up to 10% of its total
assets in the stocks of non-European companies. The Portfolio's stock
investments may include common stocks, preferred stocks and convertible
securities. In choosing stocks, the Portfolio Manager identifies and forecasts:
key trends in economic variables, such as gross domestic product, inflation and
interest rates; investment themes, such as the impact of new technologies and
the globalization of industries and brands; relative values of equity
securities, bonds and cash; and long-term trends in currency movements. Within
markets and sectors determined to be relatively attractive, the Portfolio
Manager seeks what she believes to be attractively priced companies that possess
a sustainable competitive advantage in their market or sector. The investment
advisory fee is payable monthly at the annual rate of 1.00% of the value of the
Portfolio's average daily net assets. The Dreyfus Corporation pays Newton
Capital Management Limited to provide the day-to-day management of the
Portfolio's investments.
Technology Growth Portfolio
The Technology Growth Portfolio seeks capital appreciation. To pursue this goal,
it invests primarily in the stocks of growth companies of any size that The
Dreyfus Corporation believes to be leading producers or beneficiaries of
technological innovation. Up to 25% of the Portfolio's assets may be invested in
foreign securities. In choosing stocks, the Portfolio looks for sectors in
technology that are expected to outperform on a relative scale. Although the
Portfolio looks for companies with the potential for strong earnings growth
rates, some of its investments may currently be experiencing losses. It may also
invest in small-, mid- and large-cap securities in all available trading
markets, including initial public offerings and the aftermarket. The investment
advisory fee is payable monthly at the annual rate of 0.75% of the value of the
Portfolio's average daily net assets.
Founders International Equity Portfolio
The Founders International Equity Portfolio seeks long-term growth of capital.
To pursue this goal, it invests primarily in the stocks of foreign issuers which
are characterized as "growth" companies. The Portfolio Manager will seek
investment opportunities for the Portfolio, generally, in companies which he
believes have fundamental strengths that indicate the potential for growth in
earnings per share. The Portfolio Manager focuses on individual stock selection
(a "bottom-up" approach) rather than on forecasting stock market trends (a
"top-down" approach). The Portfolio will invest primarily in foreign issuers
from at least three foreign countries with established or emerging economies,
but will not invest more than 50% of its assets in issuers in any one foreign
country. The Portfolio's stock investments may include common stocks, preferred
stocks and convertible securities. An investment advisory fee is payable monthly
to The Dreyfus Corporation at an annual rate of 1.00% of the value of the
Portfolio's average daily net assets. The Dreyfus Corporation pays Founders
Asset Management LLC to provide the day-to-day management of the Portfolio's
investments.
Growth Portfolio of the Transamerica Variable Insurance Fund, Inc. seeks
long-term capital growth. Common stock (listed and unlisted) is the basic form
of investment. The Growth Portfolio invests primarily in common stocks of growth
companies that are considered by the manager to be premier companies. In the
manager's view, characteristics of premier companies include one or more of the
following:
o dominant market share;
o leading brand recognition;
o proprietary products or technology;
o low-cost production capability; and/or
o excellent management with shareholder orientation.
The manager of the portfolio believes in long-term investing and places great
emphasis on each company's ability to sustain the above competitive advantages.
Unless market conditions indicate otherwise, the manager also tries to keep the
portfolio fully invested in equity-type securities. It also does not try to
invest or divest based on stock market movements. When, in the judgment of the
manager, and market conditions warrant, the portfolio may, for temporary
defensive purposes, hold part or all of its assets in cash, debt or money market
instruments. The portfolio may invest up to 10% of its assets in debt securities
having a call on common stocks that are rated below investment grade.
A management fee of 0.75 of 1% of the average daily net assets is payable
monthly to Transamerica Occidental Life Insurance Company, as adviser. The
adviser pays Transamerica Investment Services, Inc.as sub-adviser, a monthly fee
at the annual rate of 0.30 of 1% of the first $50 million, .25 of 1% of the next
$150 million and .20 of 1% of the assets in excess of $200 million.
Variable Account Objectives
Meeting objectives depends on various factors, including, but not limited to,
how well the portfolio managers anticipate changing economic and market
conditions. You should be aware of the following risks:
o There is no assurance that any of these portfolios will achieve their
stated objectives.
o An investment in the contract is not insured or guaranteed by the FDIC or
any other government agency.
o Investing in the contract involves certain investment risks, including
possible loss of principal.
Portfolios Not Publicly Available
The portfolios are open-end management investment companies, or portfolios or
series of, open-end management companies registered with the SEC under the 1940
Act, that are often referred to as mutual funds. This SEC registration does not
involve SEC supervision of the investments or investment policies of the
portfolios. Shares of the portfolios are not offered to the public but solely to
the insurance company separate accounts and other qualified purchasers as
limited by federal tax laws. These portfolios are not the same as mutual funds
that may have very similar names that are sold directly to the public, and the
performance of such publicly available funds, which have different portfolios
and expenses, should not be considered as an indication of the performance of
the portfolios. The assets of each portfolio are held separate from the assets
of the other portfolios. Each portfolio operates as a separate investment
vehicle. The income or losses of one portfolio have no effect on the investment
performance of another portfolio. The sub-accounts reinvest dividends and/or
capital gains distributions received from a portfolio in more shares of that
portfolio as retained assets.
Resolution of Possible Conflicts
Since variable insurance products from other companies as well as Transamerica
can invest in all of the portfolios, there is a possibility that a material
conflict may arise between the interests of the variable account and other
companies. If conflict occurs, the affected insurance companies will take the
needed steps to resolve the matter. This may include stopping their separate
account from investing in the portfolios.
Sources of Additional Information
You will find additional information in the current prospectuses for the
portfolios, which accompany this prospectus, including:
o the investment objectives;
o the investment policies;
o the investment advisory services;
o the administrative services; and
o charges
You should read the portfolios' prospectuses carefully before you make any
decision concerning the allocation of purchase payments to, or transfers among,
the sub-accounts.
Addition, Deletion or Substitution
Transamerica does not control the portfolios. We therefore cannot guarantee that
any of the sub-accounts of the variable account or any of the portfolios will
always be available to investors for allocation of purchase payments or
transfers. We retain the right to make changes in the variable account and in
its investments.
We reserve the right to:
o eliminate the shares of any portfolio held by a sub-account; or
o substitute shares of another portfolio or of another investment company for
the shares of any portfolio.
If the shares of a portfolio are no longer available for investment or if, in
our judgement, a portfolio is not fulfilling its intended purpose within the
variable account, we reserve the right to remove it. To the extent required by
the 1940 Act, we will inform shareholders in advance of any substitutions. We
will also seek the Commission's advance approval before making substitutions.
These potentially necessary substitutions should not be construed in any way as
preventing or limiting the variable account from purchasing other securities for
other series or classes of variable annuity contracts, or from effecting an
exchange between series or classes of variable contracts on the basis of
requests made by owners.
The Establishment of New Sub-Accounts
At our discretion, based on marketing, tax, investment or other conditions, we
can elect to establish new sub-accounts. We will make these new sub-accounts
available to our existing contract owners on a basis which we will determine at
that time. Each additional sub-account will purchase shares in a portfolio or in
another mutual fund or investment vehicle. we may also eliminate one or more
sub-accounts if, in our sole discretion, marketing, tax, investment or other
conditions so warrant. In the event any sub-account is eliminated, we will
notify owners and request a re-allocation of the amounts invested in the
eliminated sub-account.
In the event of any substitution or change, we may change the contracts in a way
that appropriately reflects substitutions or changes. Furthermore, if we believe
it to be in the best interests of persons having voting rights under the
contracts, the variable account may be operated as a management company under
the 1940 Act or any other form permitted by law. It may also be deregistered
under this act in the event such registration is no longer required, or may be
combined with one or more other separate accounts.
THE FIXED ACCOUNT
This prospectus is generally intended to serve owners as a disclosure document
only for the contract and the variable account. For complete details regarding
the fixed account, see the contract itself. The fixed account is not available
in all states.
Purchase payments allocated to and amounts transferred to the fixed account
become part of Transamerica's general account, which supports insurance and
annuity obligations. Because of exemptive and exclusionary provisions, interests
in the general account have not been registered under the Securities Act of
1933, hereafter referred to simply as the 1933 Act. Nor is the general account
registered as an investment company under the 1940 Act. Accordingly, neither the
general account nor any interests therein are generally subject to the
provisions of the 1933 Act or the 1940 Act. Therefore the Securities and
Exchange Commission has not reviewed the disclosures in this prospectus which
relate to the fixed account.
The guarantee periods of the fixed account are part of Transamerica's general
account. The general account consists of all the general assets of Transamerica,
other than those in the variable account, or assets in any other segregated
asset account. Instead of the owner bearing the investment risk as with the
variable account, we bear the full investment risk for all values in the fixed
account. We have the sole right to determine how we will invest the assets of
our general account while adhering to applicable laws.
The Interest Rate of the Fixed Account
As owner, you bear the risk that, after the initial guarantee period, we will
not credit interest in excess of 3% per year to amounts you allocate to the
fixed account.
The allocation or transfer of funds to the fixed account does not entitle you to
share in the overall investment returns of Transamerica's general account.
Instead, we guarantee that the funds you allocate or transfer to the fixed
account will accrue a specified annual rate of interest for a specific duration.
The rate of interest we credit will always be at least 3% per year.
Consequently, if you allocate all net purchase payments only to the fixed
account and make no transfers or withdrawals, the minimum amount of the account
value will be determinable and guaranteed.
We will establish a new guarantee period of a duration you select from
those we are offering on net purchase payments you allocate to the fixed
account. Every guarantee period we offer will have a duration of at least one
year. The minimum amount you may allocate or transfer to a guarantee period is
$1,000. We will credit net purchase payments you allocate to the fixed account
on the date we receive the payment at our service center. We will establish a
new guarantee period as of the effective date of the transfer for any amount you
transfer from another guarantee period, or from a sub-account of the variable
account to the fixed account.
We may delay payment of any withdrawal from the fixed account for up to six
months after we receive the request. If we delay payment for more than 30 days,
we will pay interest on the withdrawal amount up to the date of payment.
Guarantee Periods
Each guarantee period will have its own guaranteed interest rate and
expiration date. The guaranteed interest rate applicable to a guarantee period
will depend on the date it is established and the duration you choose. The
guarantee period you choose may not extend beyond the annuity date.
We reserve the right to change the maximum number of guarantee periods
that may be in effect at any one time.
We will establish effective annual rates of interest for each guarantee
period. The effective annual rate of interest we establish for a guarantee
period will remain in effect for the duration of the guarantee period. We will
credit interest to a guarantee period based on its daily balance at a daily rate
which is equivalent to the guaranteed interest rate applicable to that guarantee
period for amounts held during the entire guarantee period. Amounts withdrawn or
transferred from a guarantee period before its expiration date will be subject
to an interest adjustment as described below. In no event will the effective
annual rate of interest applicable to a guarantee period be less than 3% per
year.
Interest Adjustment
Except in certain circumstances, an interest adjustment will be made to
any amount withdrawn or transferred from a guarantee period before its
expiration date. Any such amount withdrawn or transferred from a guarantee
period will be credited with interest at a rate of only 3% per year from the
date the guarantee period was established to the date of payment or transfer,
regardless of the guaranteed interest rate. This means that any interest in
excess of 3% will be forfeited on the amount withdrawn or transferred.
Exceptions to the interest adjustment include:
1. amounts withdrawn within 30 days before the expiration date of the
guarantee period;
2. amounts withdrawn from a guarantee period serving as the source account, if
available, for dollar cost averaging transfers; and
3. amounts paid as part of a death benefit.
A contingent deferred sales load may apply to withdrawals made at the end of a
guarantee period even if there is no interest adjustment made.
Expiration of Guarantee Period
At least 45 days, but not more than 60 days, before the expiration date
of a guarantee period, we will notify you of the options available when a
guarantee period expires. You may elect one of the following options:
1. transfer the guarantee amount of that guarantee period to a new guarantee
period from among those being offered by us. The new guarantee period will
be established on the later of:
a) the date you select; or
b) the date the notice, in a form and manner acceptable to us, is received
at our service center, but in no event later than the day immediately
following the expiration date of the previous guarantee period; or
2. transfer the guarantee amount of that guarantee period to one or more
sub-accounts of the variable account.
We must receive your notice electing one of these options at our
service center by the expiration date of the guarantee period. If such election
has not been received by us at our service center, the guarantee amount of that
guarantee period will remain in the fixed account. A new guarantee period of the
same duration as the expiring guarantee period, if offered, will automatically
be established by us with a new guaranteed interest rate. The new guarantee
period will start on the day following the expiration date of the previous
guarantee period.
If we are not currently offering guarantee periods having the same
duration as the expiring guarantee period, the new guarantee period will be the
next longer duration. If we are not offering guarantee periods longer than the
duration of the expiring guarantee period, the new guarantee period will be the
next shorter duration.
If the guarantee amount of an expiring guarantee period is less than
$1,000, we reserve the right to transfer such amount to the Money Market
Sub-Account of the variable account.
If you make a transfer from a guarantee period within the 30-day period ending
on its expiration date, it will not be counted for the purpose of
determining the eighteen free transfers per contract year. This transfer
will not be subject to any interest adjustment.
THE GUARANTEED MINIMUM INCOME
BENEFIT (GMIB) RIDER
The Guaranteed Minimum Income Benefit (GMIB) Rider assures you of a minimum
level of income in the future by guaranteeing a minimum annuitization value
(discussed below) after 7 rider years. If you want to purchase this optional
rider, you must do so within 30 days after the contract date or within 30 days
after an contract anniversary. Once elected, the GMIB Rider can not be
terminated.
The GMIB Rider guarantees:
1) the amount you will have to apply to a GMIB payment option, and
2) if you elect the guaranteed minimum payment option, that the amounts of
those payments will be guaranteed once you begin to receive them.
By electing this benefit, you can participate in the gains of the underlying
variable investment options you select while knowing that you are guaranteed a
minimum level of income in the future, regardless of the performance of the
underlying variable investment options.
Minimum Annuitization Value
The minimum annuitization value on the rider date is equal to the account value.
Afterwards, the minimum annuitization value is equal to the greater of the
following:
1) the largest account value on the rider date or on any rider anniversary
prior to the earlier of any owner's or annuitant's 86th birthday, adjusted
for any subsequent purchase payments (less the sum of all subsequent
withdrawals adjusted as below and any premium taxes); or
2) the minimum annuitization value on the rider date plus the sum of all
purchase payments received after the rider date, less withdrawals (adjusted
as below) and premium taxes, plus interest thereon equal to the annual
effective interest rate specified on page one of the rider up to:
a) the rider anniversary prior to the earlier of any owner's or annuitant's
86th birthday; or
b) the date the sum of all purchase payments, (less the sum of all
adjusted withdrawals and premium taxes), together with credited
interest, has grown to two times the amount of all purchase payments
(less all adjusted withdrawals and premium taxes) as a result of such
interest accumulation, if earlier.
If you choose to annuitize under the GMIB Rider, the minimum annuitization value
may be adjusted on the date you annuitize. This adjustment will take place only
if the account value is greater than the minimum annuitization value on the date
you annuitize. If the account value is greater, the minimum annuitization value
will be increased to be equal to the account value. We will not decrease the
minimum annuitization value if the account value is smaller than the minimum
annuitization value on the date you annuitize.
The annual effective interest rate is currently 5% per year; we may, at our
discretion, change the rate in the future, but the rate will never be less than
3% per year, and once the rider is added to your contract, the annual rate will
not vary during the life of that rider. Withdrawals may reduce the minimum
annuitization value on a basis greater than dollar-for-dollar. See the Statement
of Additional Information for more information.
The minimum annuitization value may only be used to annuitize using the GMIB
payment options provided by the GMIB Rider and may not be used with any of the
annuity payment options listed in the Annuity Payment section. The GMIB payment
options are:
o Life Income--An election may be made for "No Period Certain" or "10 Years
Certain." In the event of the death of the annuitant prior to the end of
the chosen period certain, the remaining period certain payments will be
continued to the beneficiary.
o Joint and Full Survivor--An election may be made for "No Period Certain" or
"10 Years Certain." Payments will be made as long as either the annuitant
or joint annuitant is living. In the event of the death of both the
annuitant and joint annuitant prior to the end of the chosen period
certain, the remaining period certain payments will be continued to the
beneficiary.
The minimum annuitization value is used to calculate the GMIB payment and does
not establish or guarantee an account value or guarantee performance of any
investment option. Other benefits and fees under the rider (the rider fee, the
guaranteed payment fee, and the waiting period before the GMIB can be exercised,
as well as the annual growth rate) are also guaranteed not to change after the
rider is added. However, all of these benefit specifications may change if you
elect to upgrade the minimum annuitization value.
Minimum Annuitization Value Upgrade
You can upgrade your minimum annuitization value to the account value within 30
days after any rider anniversary before your 88th birthday (earlier if required
by state law). For your convenience, we will put the last date to upgrade on
page one of the rider.
If you upgrade, the current rider will terminate and a new one will be issued
with its own specified guaranteed benefits and fees. Please note that the
benefits and fees under the new rider may differ from your benefits and fees
prior to upgrading.
Conditions of Exercise of the GMIB
You can only annuitize using the GMIB within 30 days after the seventh or later
rider anniversary after the GMIB is elected or, in the case of an upgrade of the
minimum annuitization value, the seventh or later rider anniversary following
the upgrade; we may, at our discretion, change the waiting period before the
GMIB can be exercised in the future. You cannot, however, annuitize using the
GMIB after the rider anniversary after your 94th birthday (earlier if required
by state law). For you convenience, we will put the first and last date to
annuitize using the GMIB on page one of the rider.
Note Carefully--If you annuitize at any time other than indicated above, you
cannot use the GMIB.
Guaranteed Minimum Payment Option
If you elect the guaranteed minimum payment option, annuity payments under the
GMIB are guaranteed to never be less than the initial payment. See the Statement
of Additional Information for information concerning the calculation of the
initial payment. Under this option, the payments will also be "stabilized" or
held constant during each year after annuitization
Under the guaranteed minimum payment option, each annuity payment will be the
greater of the stabilized payment or the payment calculated without regard to
the stabilized payments. During the first year after annuitizing using the GMIB,
each stabilized payment will equal the initial payment. On each anniversary of
annuitization thereafter, the stabilized payment will increase or decrease
depending on the performance of the investment options you selected, and then be
held constant at that amount for that year. The stabilized payment on each
annuitization anniversary will equal the greater of the initial payment or the
payment supportable by the annuity units in the selected investment options.
If you elect not to receive guaranteed minimum payments, your payments:
o are not guaranteed and may be less than the initial payment;
o will vary according to the investment performance of the investment
options you select; and
o will not be stabilized.
See the Statement of Additional Information for additional information
concerning stabilized payments.
GMIB Rider Fee
A rider fee, currently 0.30% of the minimum annuitization value on the each
rider anniversary, is charged annually on the rider anniversary prior to
annuitization. We will also charge this fee proportionally if you take a
complete withdrawal. We may change the rider fee percentage in the future, but
it will never be greater than 0.50%. The rider fee is deducted from each
variable sub-account in proportion to the amount of account value in each
sub-account.
Guaranteed Minimum Payment Fee
If you elect the guaranteed minimum payment option, a guaranteed minimum payment
fee, currently equal to an effective annual rate of 1.25% of the daily net asset
value in the variable investment options, is reflected in the amount of the
variable payments you receive if you annuitize under the GMIB rider. We may
change the guaranteed minimum payment fee in the future, but it will never be
greater than 2.25%. The guaranteed minimum payment fee is included on page one
of the rider.
Termination of the GMIB Rider
The GMIB Rider is irrevocable. You have the option not to use the benefit of the
rider but you will not receive a refund of any fees you have paid. The GMIB
Rider will terminate upon the earliest of the following:
o annuitization (you can get guaranteed minimum payments if you so elect if you
annuitize using the GMIB), o upgrade of the minimum annuitization value
(although a new rider will be issued), o termination of your contract, and o 30
days after the last date to annuitize under the rider as specified on the first
page of your rider.
The GMIB Rider does not establish or guarantee account value or guarantee
performance of any investment option. Because this benefit is based on
conservative actuarial factors, the level of lifetime income that it guarantees
may be less than the level that would be provided by application of the account
value at otherwise applicable annuity factors. Therefore, the GMIB Rider should
be regarded as a safety net.
THE CONTRACT
The contract is a flexible purchase payment multi-funded individual deferred
annuity contract. The rights and benefits under the contract, or in the
certificate and group contract, are described below and in the contract. We
reserve the right to modify the individual contract, and the group contract and
its certificates, so that it conforms to any federal or state statute, rule or
regulation. Such modifications will give contract owners the benefits of these
changes. We are responsible for the obligations stated in the contract.
The contracts may be used for IRAs and Roth IRAs that qualify for special
federal income tax treatment. With our prior approval, the contracts may also be
available as as Section 403(b) annuities and for use in Section 401(a) qualified
pension and profit sharing plans established by corporate employers. Generally,
qualified contracts contain restrictive provisions limiting the timing and
amount of payments and distributions from the qualified contract.
The owner designates the annuitant. The annuitant can be the same person as the
owner and must be the same person in the case of certain qualified contracts.
Annuity payments will be made to the annuitant after the annuity date
unless, in the case of a non-qualified contract, the owner changes the payee
after the annuity date.
For each contract, a different account will be established and values,
benefits and charges will be calculated separately. The various administrative
rules described below will apply separately to each contract, unless otherwise
noted.
CONTRACT APPLICATION AND
PURCHASE PAYMENTS
Purchase Payments
Please send all of your purchase payment payments to our service center. We will
send you a confirmation letter to acknowledge the acceptance of each purchase
payment.
The initial purchase payment for each contract must generally be at least
$5,000. We may, at our discretion, accept lower initial purchase payments for
certain qualified contracts.
We will ordinarily issue the contract and derive the net purchase payment from
the initial purchase payment within two days of receipt of a properly completed
application and the purchase payment. At this time, the contract is accepted and
funded with your purchase payment. A net purchase payment is defined as a
purchase payment minus any applicable premium taxes. These taxes may include
retaliatory premium taxes, which may be imposed in the future in any state in
which you live. Acceptance of the application is subject to it being received in
good order. We reserve the right to reject any application or purchase payment.
Contracts normally will not be issued if an owner or annuitant is more than 90
years old, although we, in our discretion, may waive this restriction in certain
cases.
If the initial purchase payment allocated to the variable sub-account(s) cannot
be credited within two days of receipt because the information is incomplete, or
for any other reason, we will contact you. We will explain the reason for the
delay and will refund the initial purchase payment within five business days. If
you consent to our retaining the initial purchase payment, we will credit it to
the variable sub-account of your choice as soon as the requirements are
fulfilled.
Ten Day Cancellation Option
Each contract provides for a free look period of 10 days (or longer if required
by state law) after receipt of the contract during which you may cancel the
contract. To cancel, the contract must be returned to us with a written notice
of cancellation. In most states, including for some ages of owners in some
states, and in all states for IRAs, we will refund the greater of the purchase
payments or account value of the date the written notice and the contract are
received by us. In some states you may receive a refund of more (or less) than
the account value. You should consult your registered representative or
investment adviser (or see your contract) for the applicable provision.
Additional purchase payments may be paid into the contract at any time before
the annuity date, as long as the annuitant or contingent annuitant is living.
Additional purchase payments must be at least $500, or at least $100 if paid to
an automatic payment plan. Using an automatic payment plan, the additional
purchase payments are automatically deducted from a bank account. In addition,
minimum allocation amounts apply. Additional net purchase payments are credited
to the contract as of the date the payment is received. Currently, additional
purchase payments after the initial purchase payment may not be made to Section
401(a) and Section 403(b) annuity contracts.
Total purchase payments for any contract may not exceed $1,000,000 without our
prior approval. In no event may the sum of all purchase payments for a contract
during any taxable year exceed the limits imposed by any applicable federal or
state laws, rules, or regulations.
Choosing One or More Investment Options
You specify how purchase payments will be allocated under the contract.
You may allocate the net purchase payments between and among one or more of the
sub-accounts of the variable account and the guarantee periods of the fixed
account. Portions must be whole number percentages and any allocation percentage
for a sub-account must be at least 10%. In addition, the initial allocation to
any inactive sub-account must be at least $500. The initial allocation to a new
guarantee period must be at least $1,000. You may choose to allocate nothing to
a particular sub-account or guarantee period.
Each net purchase payment will be subject to the allocation percentages
in effect at the time of receipt of such purchase payment. You may change the
allocation percentages for new purchase payments among the sub-accounts and the
guarantee period may be at any time by submitting a request for such change, in
a form acceptable to us, to our service center. Any changes to the allocation
percentages are subject to the limitations above. Any change will take effect
with the first purchase payment received with or after receipt by our service
center of the request for such change and will continue in effect until
subsequently changed.
If an allocation of an additional net purchase payment is directed to
an inactive sub-account, then the amount allocated must be at least $500. If an
allocation of an additional net purchase payment is directed to a new guaranteed
period of the fixed account, then the amount allocated must be at least $1000.
Investment Option Limit
Currently, you may not allocate purchase payment dollars to more than eighteen
investment options over the life of the contract. Investment options include
sub-accounts of the variable account and guarantee periods of the fixed account.
Each sub-account and each duration of a guarantee period of the fixed account
that ever received a transfer or purchase payment allocation count as one
towards this total of eighteen limit. We may waive this limit in the future.
For example, if you make an allocation to the Money Market Sub-Account and later
transfer all amounts out of this Money Market Sub-Account, it would still count
as one for the purposes of the limitation even if it held no value. If you
transfer from a sub-account to another sub-account and later back to the first,
the count towards the limitation would be two, not three. If you select a
guarantee period and renew for the same term, the count will be one. If you
renew to a guarantee period with a different term, the count will be two.
ACCOUNT VALUE
Before the annuity date, the account value is the sum of:
o the fixed accumulated value; plus
o the variable accumulated value.
The fixed accumulated value is the total dollar amount of all guarantee amounts
held under the fixed account for the contract before the annuity date. The fixed
accumulated value is determined without any interest adjustment. The variable
accumulated value is the total dollar amount of all variable accumulation units
under each sub-account of the variable account held for the contract before the
annuity date. The variable accumulated value before the annuity date is equal
to:
a) net purchase payments allocated to the sub-accounts; plus or minus
a) any increase or decrease in the value of the assets of the sub-accounts
due to investment results; less
b) the daily mortality and expense risk charge; less
c) the daily administrative expense charge; less
d) any reductions for the annual account fee; plus or minus
e) amounts transferred from or to the fixed account; less
f) any applicable transfer fees and systematic withdrawal option fees;
and less
g) any withdrawals from the sub-accounts less any premium tax applicable to
those withdrawals.
A valuation period is the period between successive valuation days. It begins at
the close of the New York Stock Exchange, generally 4:00 p.m. ET, on each
valuation day. It ends at the close of the New York Stock Exchange on the next
succeeding valuation day. A valuation day is each day that the New York Stock
Exchange is open for regular business. The value of the variable account assets
is determined at the end of each valuation day. To determine the value of an
asset on a day that is not a valuation day, the value of that asset as of the
end of the next valuation day will be used. Days that are not considered to be
valuation days are those during which the New York Stock Exchange is closed for
regular business.
The variable accumulated value is expected to change from valuation period to
valuation period. The changes reflect how the investment performed of all of the
selected portfolios, and also reflect the deductions for charges.
How Your Variable Accumulation Units Are Created
When you pay purchase payments into your contract, those payments are used to
purchase variable accumulation units in the sub-accounts in which you have
chosen to invest. At the end of each valuation period during which we received
purchase payments, you will be credited with variable accumulation units. The
number of units you receive is determined by dividing:
o the portion of each net purchase payment allocated to the sub-accounts, by
o the variable accumulation unit value, at the end of the valuation period.
When you pay your first purchase payment, which is defined as the initial net
purchase payment, variable accumulation units for that payment are credited to
the account value. The variable accumulation units credited to your contract as
the result of your initial net purchase payment are credited to your contract's
value within two valuation days of:
1. the date upon which our service center receives an acceptable and properly
completed application; or
2. the date upon which our service center receives the initial purchase payment.
The variable accumulation units credited to your contract as the result of
subsequent purchase payments will be credited to your contract's value at the
end of the valuation period during which we received your payment.
How Variable Accumulation Unit Values Are Calculated
The value of a variable accumulation unit for each sub-account for a valuation
period is established at the end of each valuation period. It is calculated by
multiplying the value of that unit at the end of the prior valuation period by
the sub-account's net investment factor for the valuation period. The value of a
variable accumulation unit may go up or down.
The net investment factor is used to determine the value of accumulation and
annuity unit values for the end of a valuation period. The applicable formula
can be found in the Statement of Additional Information.
Transferring Among Sub-Accounts
When you transfer purchase payment dollars among the sub-accounts, those
transfers will result in the purchase and/or cancellation of variable
accumulation units. The value of these units will equal the total dollar amount
you are transferring to or from a sub-account. These transactions are valued at
the end of the valuation day on which you performed your transaction.
TRANSFERS
Transfers Before the Annuity Date
Before the annuity date, you may transfer any portion of the account value among
the sub-accounts and the guarantee periods then offered by us. You can make
transfers by giving a written request to our service center subject to the
following conditions:
o the minimum amount that may be transferred is $500; and
o the minimum transfer to an inactive sub-account is $500; and
o the minimum transfer required to establish a new guarantee period is
$1,000.
Transfers are also subject to terms and conditions that may be imposed by the
portfolios.
Your transfer request must specify:
o the sub-account or guarantee period from which the transfer is to be made;
o the amounts you wish to transfer, subject to the minimum transfer amount;
and
o the sub-account or guarantee period you wish to receive the transfer.
We impose a transfer fee equal to the lesser of $10 or 2% of the amount of the
transfer for each transfer over 18 in a contract year. We also reserve the right
to:
o waive the transfer fee;
o vary the number of transfers without charge, but not fewer than 12; or
o not count transfers under certain options or services.
The transfer will generally be effective on the date your request is received at
our service center. If the transfer is made from a guarantee period before its
expiration date, it will be subject to an interest adjustment.
If a transfer from a guarantee period is made within the 30-day period ending on
its expiration date, we will not count it for purposes of the 18 allowable
transfers. It will also not be subject to any interest adjustment.
If a transfer reduces the value in a sub-account to less than $500, then we
reserve the right to transfer the remaining amount along with the amount you
requested to be transferred according to your transfer instructions. Under
current law, there will not be any tax liability to you as the owner if you make
a transfer.
Telephone Transfers
We will allow telephone transfers if you have provided proper
authorization for such transfers in a form and manner acceptable to us. We will
provide you with limitations and rules for these transfers. We reserve the right
to suspend telephone transfer privileges at any time, for some or all contracts,
for any reason.
Withdrawals are not permitted by telephone.
We will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. If we follow such procedures we will not
be liable for any losses due to unauthorized or fraudulent instructions.
However, we may be liable for such losses if we do not follow those reasonable
procedures. The procedures we will follow for telephone transfers may include:
a) requiring some form of personal identification before acting on
instructions received by telephone;
b) providing written confirmation of the transaction; and/or
c) tape recording the instructions given by telephone.
Possible Restrictions
We reserve the right without prior notice, to modify, restrict, suspend or
eliminate the transfer privileges, including telephone transfers, at any time
and for any reason. For example, restrictions may be necessary to protect owners
from adverse impacts on portfolio management of large and/or numerous transfers
by market timers or others. We have determined that the movement of significant
sub-account values from one sub-account to another may prevent the portfolio
impacted by these transfers from taking advantage of investment opportunities.
This occurs because the portfolio must maintain a significant cash position in
order to handle redemptions.
Such large and sudden movement of assets in any one portfolio may also cause a
substantial increase in portfolio transaction costs. These costs must be
indirectly borne by owners. Therefore, we reserve the right to require that all
transfer requests be made by you, the owner and not by a third party holding a
power of attorney. We also require that each transfer request be made by a
separate communication to us. We also reserve the right to request that each
transfer request be submitted in writing and be manually signed by the owner or
owners; facsimile transfer requests may not be allowed. Dollar Cost Averaging
Before the annuity date, you, as the owner, may request that a designated amount
of money be automatically transferred from one, and only one, of the
sub-accounts which invests in:
o the Money Market Portfolio;
o the Quality Bond Portfolio;
o the Limited Term High Income
Portfolio.
Or you can have it transferred from the fixed account. This money may be
transferred to any of the sub-accounts on a monthly basis by submitting a
request to our service center. The request must be in a form and manner
acceptable to us. You may be able to transfer amounts from the source accounts
in addition to the Money Market, Quality Bond and Limited Term High Income
Sub-Accounts, and can include the shortest guarantee period. Call our service
center for the availability of source accounts options. Your transfers will
begin the month following, but no sooner than one week following, receipt of
such request, provided that dollar cost averaging transfers will not begin until
30 days after the contract date.
Transfers will continue for the duration you selected unless terminated:
1. by you;
2. automatically by us because there are insufficient funds in the source
account, or
3. for other reasons as set forth in the contract.
You may request that monthly transfers be continued. You can accomplish this by
giving notice to our service center in a form and manner acceptable to us within
30 days before the last monthly transfer. If no request to continue the monthly
transfers is made by you, this option will terminate automatically with the last
transfer.
In order to be eligible for dollar cost averaging, the owner must meet the
following conditions:
1. the value of the source account must be at least $5,000;
2. the minimum amount that you may transfer out of the source account is $250
per month; and
3. the minimum amount transferred into any other sub-account is the greater of
$250 or 10% of the amount being transferred.
Please note that dollar cost averaging transfers can not be made from a source
account from which you are receiving systematic withdrawals or automatic
payouts.
You will not be charged for the dollar cost averaging service. Transfers that
result from dollar cost averaging practices will not count toward 18 transfers
allowed to the sub-accounts and/or general account options without charge. We
will make no interest adjustments on dollar cost averaging transfers from the
fixed account if we allow it as a source account.
Dollar Cost Averaging
Before the annuity date, you, as the owner, may request that a designated amount
of money be automatically transferred from one, and only one, of the
sub-accounts which invests in:
o the Money Market Portfolio;
o the Quality Bond Portfolio;
o the Limited Term High Income
Portfolio.
Or you can have it transferred from the fixed account. This money may be
transferred to any of the sub-accounts on a monthly basis by submitting a
request to our service center. The request must be in a form and manner
acceptable to us. You may be able to transfer amounts from the source accounts
in addition to the Money Market, Quality Bond and Limited Term High Income
Sub-Accounts, and can include the shortest guarantee period. Call our service
center for the availability of source accounts options. Your transfers will
begin the month following, but no sooner than one week following, receipt of
such request, provided that dollar cost averaging transfers will not begin until
30 days after the contract date.
Transfers will continue for the duration you selected unless terminated:
1. by you;
2. automatically by us because there are insufficient funds in the source
account, or
3. for other reasons as set forth in the contract.
You may request that monthly transfers be continued. You can accomplish this by
giving notice to our service center in a form and manner acceptable to us within
30 days before the last monthly transfer. If no request to continue the monthly
transfers is made by you, this option will terminate automatically with the last
transfer.
In order to be eligible for dollar cost averaging, the owner must meet the
following conditions:
1. the value of the source account must be at least $5,000;
2. the minimum amount that you may transfer out of the source account is $250
per month; and
3. the minimum amount transferred into any other sub-account is the greater of
$250 or 10% of the amount being transferred.
Please note that dollar cost averaging transfers can not be made from a source
account from which you are receiving systematic withdrawals or automatic
payouts.
You will not be charged for the dollar cost averaging service. Transfers that
result from dollar cost averaging practices will not count toward 18 transfers
allowed to the sub-accounts and/or general account options without charge. We
will make no interest adjustments on dollar cost averaging transfers from the
fixed account if we allow it as a source account.
Special Dollar Cost Averaging Option
(May not be available in all states. See contract for availability of the fixed
account options.)
When you make a purchase payment to the contract, you may elect to allocate the
entire purchase payment to either the six or twelve month special Dollar Cost
Averaging account of the fixed account. The purchase payment will be credited
with interest at a guaranteed fixed rate. Amounts will then be transferred from
the special Dollar Cost Averaging account to the variable sub-accounts pro rata
on a monthly basis for six or twelve months (depending on the option you
select) in the allocations you specified when you applied for the contract. The
four transfers per year limit does not apply to the special Dollar Cost
Averaging option.
Amounts from the sub-accounts and/or fixed account options may not be
transferred into the special Dollar Cost Averaging accounts. In addition, if
you request a transfer (other than a Dollar Cost Averaging transfer) or a
withdrawal from a special Dollar Cost Averaging account, any amounts remaining
in the special account will be transferred to the variable sub-accounts
according to your original allocation instructions. The special Dollar Cost
Averaging option will end and cannot be reelected. The special Dollar Cost
Averaging Option cannot be in effect at the same time the regular Dollar Cost
Averaging is in effect.
Automatic Asset Rebalancing
When you allocate purchase payments to certain portfolios in certain
percentages, you define how you want your investments to perform. Changing
market conditions affect each portfolio's performance, and can throw your
allocations out of balance. You may instruct us to automatically rebalance the
amounts by reallocating them among the variable sub-accounts, at the time and in
the percentages that you specify. You must specify automatic asset rebalancing
in your instructions to us. As the owner, you may elect to have the rebalancing
done on an annual, semi-annual or quarterly basis. You may also elect to have
amounts allocated among the sub-accounts using whole percentages, with a minimum
of 10% allocated to each sub-account.
You may elect to establish, change or terminate the automatic asset rebalancing
by submitting a request to our service center in a form and manner acceptable to
us. Automatic asset rebalancing will not count towards the limit of 18 free
transfers in a contract year. There is currently no charge for the automatic
asset rebalancing. However, we reserve the right to charge a nominal amount for
this feature. We also reserve the right to discontinue offering automatic asset
rebalancing any time for any reason.
After the Annuity Date
If you elect a variable annuity payout option, you may make transfers among
sub-accounts after the annuity date by submitting a request in a form acceptable
to us to our service center. Your request will be subject to the following
provisions:
1. transfers after the annuity date may be made no more than four times during
any annuity year; and
2. the minimum amount transferred from one sub-account to another is the
amount supporting a current $75 monthly payment.
Your transfers among sub-accounts during the annuity period will be processed
based on the formula outlined in the Statement of Additional Information.
CASH WITHDRAWALS
Withdrawals
You may withdraw all or part of the cash surrender value for a contract at any
time during the life of the annuitant and before the annuity date. You can do
this by giving a written request to our service center. Your request will be
subject to the rules below. Federal or state laws, rules or regulations may also
apply. You cannot make withdrawals after the annuity date.
The amount payable to you if the contract is surrendered on or before the
annuity date is the cash surrender value. The cash surrender value is equal to
the account value, minus any account fee, minus any interest adjustment, minus
any applicable contingent deferred sales load and minus any applicable premium
taxes. If the account value exceeds $50,000 on the date the contract is
surrendered, and where permitted by law, we will waive the account fee.
A full surrender of your contract will result in a cash withdrawal payment equal
to the contract's cash surrender value at the end of the valuation period during
which your request is received along with all of your completed forms
Only one partial withdrawal will be allowed while the systematic withdrawal
option is in effect. Partial withdrawals must be at least $500.
In the case of a partial withdrawal, you may instruct our service center as to
the amounts to be withdrawn from each sub-account or fixed account. If you do
not specify from where the withdrawal is to be made, the withdrawal will be
taken pro rata from all sub-accounts with current values. If the requested
withdrawal reduces the value of the sub-account from which the withdrawal was
made to less than $500, we reserve the right to transfer the remaining value of
that sub-account pro rata. If no such sub-accounts exist, such transfer will be
made to the Money Market Sub-Account. You will be notified in writing of any
such transfer.
A partial withdrawal will not be processed if it would reduce the account value
to less than $2,000. In that case, you will be notified that you will have 10
days from the date notice is mailed to:
a. withdraw a lesser amount, subject to the $500 minimum, leaving an account
value of at least $2,000; or
b. surrender the contract for its cash surrender value.
Amounts payable will be determined as of the end of the valuation period during
which the subsequent instructions are received. If, after the expiration of the
10-day period, no written election is received from you, your withdrawal request
will be considered null and void, and no withdrawal will be processed.
Fees and Taxes Relating to Withdrawals or Surrenders
The account fee, unless waived, will be deducted from a full surrender before
the application of any contingent deferred sales load. Your withdrawals may be
taxable transactions. The Code requires us to withhold federal income tax from
withdrawals. However, as an owner, you generally will be entitled to elect, in
writing, not to have tax withholding apply.
This is true except for distributions from certain qualified contracts that may
be subject to mandatory 20% withholding. Withholding applies to the portion of
the withdrawal which is includible in income and subject to federal income tax.
The federal income tax withholding rate for partial withdrawals and full
surrenders is currently 10%, or 20% for certain qualified contracts, of the
taxable amount of the withdrawal. Withholding applies only if the taxable amount
of the withdrawal is at least $200. Some states also require withholding for
state income taxes. Moreover, the Code provides that a 10% penalty tax may be
imposed on the taxable portions of distributions for certain early withdrawals.
Withdrawals, including surrender requests, generally will be processed as of the
end of the valuation period during which the request, including all completed
forms, is received. Payment of any cash withdrawal or lump sum death benefit due
from the variable account will occur within seven days from the date on which
your request is received, except that we may postpone such payment if:
1. the New York Stock Exchange is closed for other than usual weekends or
holidays, or trading on the Exchange is otherwise restricted;
2. an emergency exists as defined by the Commission, or the Commission
requires that trading be restricted; or
3. the Commission permits a delay for the protection of owners.
The withdrawal request will be effective when all appropriate forms are
received. Payments of any amounts derived from purchase payments paid by check
may be delayed until the check has cleared your bank. When a withdrawal is made
from a guarantee period before its expiration date, the amount withdrawn will
generally be subject to an interest adjustment. The payment of a withdrawal from
the fixed account may be delayed for up to six months. If delayed for more than
30 days, interest will be paid on the withdrawal amount up to the date of
payment.
You, as the owner, assume the investment risk for amounts allocated to the
variable account. Certain withdrawals are subject to a contingent deferred sales
load. The total amount paid upon surrender of the contract, taking into account
any prior withdrawals, may be more or less than the total purchase payments
paid.
Additional Withdrawal and Surrender Provisions
After a withdrawal of the total cash surrender value, or at any time that the
account value is zero, all of your rights as the owner will terminate.
Except IRA's and Roth IRAs, qualified contracts offered by the prospectus are
only offered with our prior approval. They will be issued in connection with
retirement plans which meet the requirements of the Code. You should refer to
the terms of the particular retirement plans for any additional limitations or
restrictions on your cash withdrawals, as these limitations or restrictions may
supercede those of the contract issued by us.
You may elect, under the systematic withdrawal option or automatic payout option
(but not both), to withdraw certain amounts on a periodic basis from the
sub-accounts before the annuity date.
Systematic Withdrawal Option
Before to the annuity date, you may elect to have withdrawals automatically made
from one or more sub-account(s) on a monthly basis. You can do this by giving
written notice to our service center. Other distribution modes may be allowed.
The withdrawals will begin the month following, but no sooner than one week
following, receipt of your written notice. Please note, however, payments will
not begin sooner than the later of:
a. 30 days after the contract date; or
b. the end of the free look period, allowing for 5 days for delivery of the
contract by mail.
Upon written notice to you, we may change the day of the month on which
withdrawals are made under this option. Withdrawals will be from the
sub-account, or sub-accounts, and in the percentage allocations specified by
you. If no specifications are made, withdrawals will be pro rata from all
sub-accounts the fixed account with value. Systematic withdrawals can not be
made from a sub-account from which dollar cost averaging transfers are being
made.
Eligibility and Rules of the Systematic Withdrawal Option
To be eligible for the systematic withdrawal option:
o the account value must be at least $12,000 at the time you elect to use
this option;
o the minimum monthly amount that can be withdrawn is $100; and
o the maximum monthly amount that can be withdrawn on an annual basis is
equal to the sum, as of the date of the first withdrawal, of:
a. 10% of purchase payments that are less than seven contract years old; and
b. 10% of remaining purchase payments that are at least seven contract years
old.
Systematic withdrawals are not subject to the contingent deferred sales load but
can be reduced by any applicable premium tax. Systematic withdrawals may be
taxable, subject to withholding, and subject to the 10% penalty tax.
Systematic withdrawals will continue unless you terminate them or they are
automatically terminated by us as described in the contract. If this option is
terminated it may not be used again until the next contract anniversary. In some
states, no partial withdrawal may be made while the systematic withdrawal option
is in effect. Any partial withdrawal will automatically terminate the systematic
withdrawal option. Any portion of such partial withdrawal which exceeds the
allowed amount for withdrawals will be subject to a contingent deferred sales
load. In other states, only one partial withdrawal can be made while the
systematic withdrawal option is in effect. Making more than one partial
withdrawal while this option is in effect will automatically terminate the
systematic withdrawal option. Amounts that exceed the allowed amount for
withdrawals will be subject to a contingent deferred sales load.
We reserve the right to impose an annual fee of an amount not to exceed $25 per
contract year for administrative expenses associated with processing the
systematic withdrawals. This fee, which is currently waived, will be deducted
from each systematic withdrawal in equal installments during a contract year.
The systematic withdrawal option is not available with the fixed account.
Consult your tax adviser and, if applicable, the particular retirement plan,
before requesting withdrawals from a qualified contract. There may be severe
restrictions on withdrawals from qualified contracts.
Automatic Payout Option, or APO
Before the annuity date, you may elect the automatic payout option, referred to
as the APO, to satisfy minimum distribution requirements under the Code for
certain qualified contracts.
DEATH BENEFIT
If an owner or annuitant dies before the annuity date, a death benefit is
payable. The death benefit will be equal to the greatest of:
1) the account value on the date we receive the required information (see below)
2) the Guaranteed Minimum Death Benefit, plus an additional Purchase Payments
received, less any partial withdrawals and any applicable premium taxes from the
date of death to the date of payment of death proceeds.
Guaranteed Minimum Death Benefit
The Guaranteed Minimum Death Benefit is equal to the greater of:
1)the largest account value on the contract date or on any contract anniversary
prior to the earlier of the date of death or any owner's or annuitant's 86th
birthday, adjusted for any subsequent purchase payments paid by the owner (less
the sum of all subsequent adjusted partial withdrawals and any premium taxes
applicable to those withdrawals); or
2)the sum of all purchase payments, less adjusted partial withdrawals and any
premium taxes applicable to those withdrawals, plus interest thereon equal to a
5% annual effective rate, credited on a daily basis up to:
a) the contract anniversary prior to the earlier of any owner's or annuitant's
86th birthday;
b) the date the sum of all purchase payments, (less the sum of all adjusted
partial withdrawals and any premium taxes), together with credited
interest, has grown to two times the amount of all purchase payments (less
all adjusted partial withdrawals and any premium taxes) as a result of such
interest accumulation, if earlier; or
a) the date of death of any owner or annuitant.
For contracts purchased by any owner or with an annuitant age 85 or older, the
death benefit available will be the sum of all purchase payments, less adjusted
partial withdrawals and any premium taxes applicable to these withdrawals.
The death benefit will be determined as of the valuation period during which the
later of:
a) proof of death of the owner or annuitant is received by our service center;
or
b) written notice of the method of settlement elected by the beneficiary is
received at our service center.
If no settlement method is elected, the death benefit will be calculated and
paid as of a date no later than one year after the date of death. No contingent
deferred sales load will apply. Until the death benefit is paid, the account
value allocated to the variable account will remain in the sub-accounts as
previously specified by the owner, or in the sub-accounts as reallocated
according to instructions received by us from all beneficiaries. Therefore, the
account value will fluctuate with investment performance of the applicable
sub-accounts. As a result, the amount of the death benefit will depend on the
account value at the time the death benefit is paid. There is no extra charge
for the death benefit, and it applies automatically, i.e., no election by the
owner is necessary.
Adjusted Partial Withdrawals
When you request a partial withdrawal, your guaranteed minimum death benefit may
be reduced by an amount called the adjusted partial withdrawal. Under certain
circumstances, the adjusted partial withdrawal may be more than the amount of
your withdrawal request. It is also possible that if a death benefit is paid
after you have made a partial withdrawal, then the total amount paid could be
less than the total purchase payments. We have included a detailed explanation
of this adjustment in the Statement of Additional Information.
Payment of Death Benefit
The death benefit is generally payable upon receipt of proof of death of the
annuitant or owner. Where the owner is not an individual, the death benefit is
generally payable upon receipt of proof of death of the annuitant. Once our
service center receives this proof and the beneficiary's choice of a method of
settlement, the death benefit generally will be paid within seven days, or as
soon thereafter as we have sufficient information to make the payment. The death
benefit may be paid in a lump sum cash benefit. Or, subject to any limitations
under any state or federal law, rule, or regulation, it may be paid under one of
the annuity forms, unless a settlement agreement effective under the contract
prevents this choice. If no settlement method is elected within one year of the
date of death, the death benefit will be paid in a lump sum. The payment of the
death benefit may be subject to certain distribution requirements under the
federal income tax laws.
Designation of Beneficiaries
You, as the owner, may select one or more beneficiaries and name them in a form
and manner acceptable to us. If you select more than one beneficiary, unless you
indicate otherwise, they will each share equally in any death benefits payable
in the event of the annuitant's death before the annuity date if there is no
contingent annuitant, or the owner's death if there is no joint owner, and the
owner is an individual other than the annuitant. Different beneficiaries may be
named with respect to the annuitant's death and the owner's death. Respectively,
these individuals are referred to as the annuitant's beneficiary and the owner's
beneficiary. Before the annuitant's death, you may change the beneficiary by
notice to our service center in a form and manner acceptable to us. You may also
make the designation of beneficiary irrevocable by sending notice to and
obtaining approval from our service center. Irrevocable beneficiaries may only
be changed with the written consent of the designated irrevocable beneficiaries,
except to the extent required by law.
The interest of any beneficiary who dies before the owner or annuitant will
terminate at the death of the beneficiary. The interest of any beneficiary who
dies at the time of, or within 30 days after, the death of the owner or
annuitant will also terminate if no benefits have been paid, unless the contract
has been endorsed to provide otherwise. The benefits will then be paid as though
the beneficiary had died before the owner or annuitant. If the interests of all
designated beneficiaries have terminated, any benefits payable will be paid to
the owner's estate.
We may rely on an affidavit by any responsible person in determining the
identity or non-existence of any beneficiary not identified by name.
Death of Annuitant Before the Annuity Date
If the annuitant dies before the annuity date and the annuitant is not the owner
and there is no contingent annuitant, a death benefit under the contract
relating to that annuitant will be paid to the annuitant's beneficiary. If there
is a contingent annuitant, then upon the death of the annuitant the contingent
annuitant will become the annuitant and no death benefit will be paid at that
time.
Death of Owner Before the Annuity Date
If an owner dies before the annuity date, a death benefit will be paid to that
owner's beneficiary. If the contract has joint owners, the surviving joint owner
will be the owner's beneficiary. If the owner's beneficiary is the deceased
owner's spouse, then the spouse may elect to treat the contract as his or her
own or receive payment of the death benefit. If the spouse elects to continue
the contract, an amount equal to the excess, if any, of the Death Benefit over
the account value will then be added to the account value. This amount will be
added only once, at the time of such election. Furthermore, all future
contingent deferred sales loads will be waived. The payment of the death benefit
may be subject to certain distribution requirements under the federal income tax
laws.
Death of Annuitant or Owner After the Annuity Date
If the annuitant or an owner dies after the annuity starts, the remaining
undistributed portion, if any, of the contract will be distributed at least as
rapidly as under the method of distribution being used as of the date of such
death. Under some annuity forms, there will be no death benefit. If the owner is
not the annuitant, upon an owner's death, any remaining ownership rights will
pass to the owner's beneficiary.
CHARGES AND DEDUCTIONS
No deductions are made from purchase payments except for any applicable premium
taxes. Therefore, the full amount, less any premium taxes, of the purchase
payments are invested in one or more of the sub-accounts of the variable account
or the fixed account.
As more fully described below, charges under the contract are assessed in three
ways:
1. as deductions for the contract or annuity fees, any transfer fees,
systematic withdrawal option or asset rebalancing fees, (if any), any
interest adjustment (for withdrawals from the fixed account) and, if
applicable, for premium taxes;
2. as charges against the assets of the variable account for the assumption of
mortality and expense risks and administrative expenses; and
3. as contingent deferred sales loads.
In addition, certain deductions are made from the assets of the funds for
investment management fees and expenses. These fees and expenses are described
in the funds' prospectuses and their statements of additional information.
Contingent Deferred Sales Load/
Surrender Charge
No deduction for sales charges is made from your purchase payments, although
premium taxes may be deducted. However, a contingent deferred sales load, or
surrender charge, of up to 6% of purchase payments paid may be imposed on
certain withdrawals or surrenders from the acount value to partially cover
certain expenses incurred by us relating to the sale of the contracts, including
commissions paid to salespersons, the costs of preparation of sales literature
and other promotional costs and acquisition expenses.
The contingent deferred sales load/surrender chatrge percentage varies according
to the number of contract years between the contract year in which a net
purchase payment was credited to the contract and the contract year in which the
withdrawal is made. The amount of this charge is determined by multiplying the
amount withdrawn subject to the contingent deferred sales load by the contingent
deferred sales load percentage according to the following table.
Number of Contract Years Contingent Years Since Receipt of Deferred Each
Purchase Payment Sales Load Less than one year 6% 1 year but less than 2 years
6% 2 years but less than 3 years 5% 3 years but less than 4 years 5% 4 years but
less than 5 years 4% 5 years but less than 6 years 4% 6 years but less than 7
years 2% 7 or more years 0%
In no event will the total contingent deferred sales load/surrender charge
assessed against the contract exceed 6% of the aggregate purchase payments paid
to a contract.
Certain amounts may be withdrawn free of any contingent deferred sales load. You
may make withdrawals up to the allowed amount without incurring a contingent
deferred sales load/surrender charge each contract year before the annuity date.
During the first contract year, the allowed amount is equal to accumulated
earnings not previously withdrawn.
For the first withdrawal, and only the first withdrawal in a contract year after
the first contract year, the available allowed amount you may withdraw is equal
to the sum of:
1. 100% of purchase payments not previously withdrawn and received at least
seven contract years before the date of withdrawal; plus
2. the greater of:
a. accumulated earnings not previously withdrawn; or
b. 15% of purchase payments received at least one but less than seven
complete contract years before the date of withdrawal not reduced to
take into account any withdrawals deemed to be made from such purchase
payments.
After the first withdrawal in a contract year after the first contract year, the
available allowed amount is equal to the sum of:
1. 100% of purchase payments not previously withdrawn and received at least
seven contract years before the date of withdrawal; plus
2. accumulated earnings not previously withdrawn.
Withdrawals will always be made first from your accumulated earnings, and then
from your premiums on a first-in first-out basis. This is done so that
accumulated earnings may be depleted with the first withdrawal and the 15% of
premiums discussed above is not used in the calculation of the allowed amount.
If an allowed amount is not withdrawn during a certificate year, it does not
carry over to the next certificate year. However, accumulated earnings, if any,
in your certificate value are always available as the allowed amount. No
withdrawals are allowed from premiums made by a check which has not cleared.
Some contract owners may hold contracts issued before 1995 which, when
originally issued, provided for an allowed amount which was equal to the sum of:
1. all purchase payments, not previously withdrawn and held more than seven
contract years; plus
Under these contracts, withdrawals were made first from purchase payments on a
first-in, first-out basis, then from earnings. The allowed amount that applies
to these owners will be determined by whichever formula provides them with the
larger amount available, for full surrenders only, without a contingent deferred
sales load.
No contingent deferred sales load will be charged on the allowed amount if a
contract is surrendered and you were eligible to withdraw the amount without
charge but had not made such a withdrawal during the contract year. In addition,
no contingent deferred sales load is charged:
2. 10% of purchase payments held between one and seven contract years not
reduced by any withdrawals made by the owner from such purchase payments.
Under these contracts, withdrawals were made first from purchase payments
on a first-in, first-out basis, then from earnings. The allowed amount that
applies to these owners will be determined by whichever formula provides
them with the larger amount available, for full surrenders only, without a
contingent deferred sales load.
No contingent deferred sales load will be charged on the allowed amount if a
contract is surrendered and you were eligible to withdraw the amount without
charge but had not made such a withdrawal during the contract year. In addition,
no contingent deferred sales load is charged:
1. upon annuitization after the first three contract years to an option
involving life contingencies;
2. upon payment of the death benefit;
3. upon transfers of account value among the sub-accounts and the guarantee
periods;
4. under the systematic withdrawal option; or,
5. in some circumstances, under the automatic payout option.
Any applicable contingent deferred sales load will be deducted from the amount
requested for both partial withdrawals and full surrenders. The contingent
deferred sales load and any premium tax applicable to a withdrawal from the
fixed account will be deducted from the amount withdrawn after the interest
adjustment, if any, is applied and before payment is made to you.
The contingent deferred sales load arising from a withdrawal or surrender of the
contract will be waived if you receive extended medical care in a licensed
hospital or nursing care facility for a least 45 days (30 days for contracts
issued in Pennsylvania) during any continuous 60 day period beginning on or
after the first contract anniversary and the request for the withdrawal or
surrender, together with proof of such extended care, is received at our service
center during the term of such care or within 90 days after the last day upon
which you received such extended care. This waiver of the contingent deferred
sales load may not be available in all states and does not apply if you are
receiving extended medical care in a licensed hospital or nursing care facility
at the time you applied for the contract or at the contract date.
Additionally, in some states, the contingent deferred sales load arising from a
withdrawal or surrender of the contract will be waived if you are diagnosed,
after the first contract year, with a terminal illness reasonably expected to
result in death within twelve months. Proof of the terminal illness must be
received by our service center at the time the withdrawal or surrender request
is received.
Administrative Charges
At the end of each contract year before the annuity date, we deduct an annual
account fee as partial compensation for expenses relating to the issue and
maintenance of the contract and the variable account. The annual account fee is
equal to the lesser of $30 or 2% of the account value. No account fee will be
deducted for a contract year if your account value exceeds $50,000 on the last
business day of the contract year or as of the date the contract is surrendered.
The account fee may be changed upon 30 days advance written notice to you. In no
event may this fee exceed the lesser of $60 or 2% of the account value.
Such increases in the account fee will apply only to future deductions after the
effective date of the change. If you surrender your contract on other than the
end of a contract year, we will deduct the account fee in full at the time of
the surrender. The account fee will be deducted on a pro rata basis from each
sub-account in which the contract is invested at the time of such deduction or
from the fixed account if there are insufficient funds in the sub-accounts. If
the entire amount is in the fixed account, then the annual account fee will be
deducted on a pro rata basis from all guarantee periods
After the annuity date, we deduct an annual annuity fee of $30 in equal amounts
from each variable annuity payment made during the year. If monthly payments,
the amount paid per month will be $2.50. This fee will not be changed. No
annuity fee will be deducted from fixed annuity payments.
We also deduct the administrative expense charge from the variable account at
the end of each valuation period both before and after the annuity date at an
effective current annual rate of 0.15% of assets held in each sub-account. This
deduction is for administrative expenses attributable to the contracts and the
variable account which exceed the revenues received from the account fee, any
transfer fee, and any fee imposed for systematic withdrawals.
We have the ability to increase or decrease this charge, but the charge is
guaranteed not to exceed 0.25%. We will provide 30 days written notice of any
change in fees. The administrative charges do not bear any relationship to the
actual administrative costs of a particular contract. The administrative expense
charge is reflected in the variable accumulation or variable annuity unit values
for each sub-account.
Mortality and Expense Risk Charge
We impose a charge called the mortality and expense risk charge to compensate it
for bearing certain mortality and expense risks under the contracts. For
assuming these risks, we make a daily charge equal to 0.003403% corresponding to
an effective annual rate of 1.25% of the value of the net assets in the variable
account. This charge is imposed before the annuity date and if an annuity
purchase amount is applied to a variable payment option, also after the annuity
date. We guarantee that this charge of 1.25% will never increase.
The mortality and expense risk charge is reflected in the variable accumulation
or variable annuity unit values for each sub-account.
Variable accumulated values and variable annuity payments are not affected by
changes in actual mortality experience incurred by us. The mortality risks
assumed by us arise from our contractual obligations to make annuity payments
and to pay death benefits before the annuity date. The annuity payments are
determined in accordance with the annuity tables and other provisions contained
in the contract. Thus, as owner, you are assured that neither the annuitant's
own longevity nor an unanticipated improvement in general life expectancy will
adversely affect the annuity payments under the contract.
We also bear substantial risk in connection with the death benefit before the
annuity date, since it will pay a death benefit that may be greater than the
account value. In this way, we bear the risk of unfavorable experience in the
sub-accounts. The expense risk assumed by us is the risk that our actual
expenses in administering the contract and the variable account will exceed the
amount recovered through the administrative expense charge, account fees,
transfer fees and any fees imposed for systematic withdrawals.
If the mortality and expense risk charge is insufficient to cover actual costs
and risks assumed, the loss will fall on us. Conversely, if this charge is more
than sufficient, any excess will be profit to us. Currently, we expect a profit
from this charge. We anticipate that the contingent deferred sales load will not
generate sufficient funds to pay the cost of distributing the contracts. To the
extent that the contingent deferred sales load is insufficient to cover the
actual cost of contract distribution, the deficiency will be met from our
general corporate assets which may include amounts, if any, derived from the
mortality and expense risk charge.
Premium Taxes
We may be required to pay premium or retaliatory taxes currently ranging from 0%
to 3,5% in connection with purchase payments or values under the contracts.
Depending upon applicable state law, we may deduct the premium taxes which are
payable with respect to a particular contract from the purchase payments, from
amounts withdrawn, or from amounts applied on the annuity date. In some states,
charges for both direct premium taxes and retaliatory premium taxes may be
imposed at the same or different times with respect to the same purchase
payment, depending upon applicable state law.
In certain limited circumstances, a broker-dealer or other entity distributing
the contracts may elect to pay to us an amount equal to the premium taxes that
would otherwise be attributable to that entity's customers. In such cases, we
will not impose a premium tax charge on those contracts.
Transfer Fee
We charge a fee equal to the lesser of $10 or 2% of the amount of transfer for
each transfer in excess of 18 in a contract year. We reserve the right to:
a) waive the transfer fee;
b) vary the number of transfers without charge, but not fewer than 12; or
c) not count transfers under certain options or services for purposes of the
allowed number without charge.
Currently, we do not charge a fee for automatic asset rebalancing. However, we
reserve the right to impose a nominal fee.
Systematic Withdrawal Option
We reserve the right to impose an annual fee of an amount not to exceed $25 for
administrative expenses associated with processing systematic withdrawals. This
fee, which is currently waived, will be deducted in equal installments from each
systematic withdrawal you take during a contract year.
Automatic Asset Rebalancing Option
We currently do not charge for automatic asset rebalancing, but we reserve the
right to impose a nominal fee for this feature in the future.
Taxes
Under present laws, we will incur state or local taxes, in addition to the
premium taxes described above, in several states. No charges are currently made
for taxes other than state premium taxes. However, we reserve the right to
deduct charges in the future for federal, state and local taxes or the economic
burden resulting from the application of any tax laws that we determine to be
attributable to the contracts.
Portfolio Expenses
The value of the assets in the variable account reflects the value of portfolio
shares and therefore the fees and expenses paid by each portfolio. You can find
a complete description of the fees, expenses, and deductions from the portfolios
in the portfolios' prospectuses.
Guaranteed Minimum Income Benefit Rider
If you elect the optional Guaranteed Minimum Income Benefit Rider, there is an
annual rider fee during the accumulation phase (before the annuity date) of
0.30% of the minimum annuitization value. This fee is deducted on each rider
anniversary from each variable sub-account in proportion to the amount of
account value in each sub-account. A proportional amount of this rider fee will
also be decuted upon a complete withdrawal. We may change the rate in the future
at our discretion, but the rate will never be greater than 0.50% per year.
If you annuitize under the Guaranteed Minimum Income Benefit Rider and select
the guaranteed minimum payment option at the time of annuitization a guaranteed
minimum payment option fee will be charged. This fee is reflected in the amount
of the variable payments payable under this option. The guaranteed minimum
payment option fee is currently 1.25% of the daily net asset value in the
variable investment options. We may at our discretion change the rate in the
future, but the rate will never be greater than 2.25% per year.
Once the Guaranteed Minimum Income Benefit Rider is added to your policy,
neither the rider fee nor the guaranteed minimum payment option fee that is in
effect at that time will change during the life of that Guaranteed Minimum
Income Benefit Rider.
Interest Adjustment
For a description of the interest adjustment applicable to early withdrawals and
transfers from the guarantee
periods of the fixed account, see The Fixed Account on page 21.
Sales in Special Situations
We may sell the contracts in special situations that are expected to involve
reduced expenses for us. These instances may include:
1. sales in certain group arrangements, such as employee savings plans;
2. sales to current or former officers, directors, employees and their
families, of Transamerica and its affiliates;
3. sales to officers, directors, employees and their families, of the
portfolios' investment advisers and their affiliates; or
4. sales to officers, directors, employees and sales agents, including
registered representatives and their families, or broker-dealers and other
financial institutions that have sales agreements with us to sell the
contracts.
In such situations:
1. the contingent deferred sales load may be reduced or waived;
2. the mortality and expense risk charge or administration charges may be
reduced or waived; or
3. certain amounts may be credited to the contract account value, for example,
amounts related to commissions or sales compensation otherwise payable to a
broker-dealer may be credited to the contract account value.
These reductions in fees or charges or credits to the account value will not
unfairly discriminate against any contract owner. These reductions in fees or
charges or credits to the account value are generally taxable and treated as
purchase payments for purposes of income tax and any possible premium tax c
DISTRIBUTION OF THE CONTRACT
Transamerica Securities Sales Corporation, also referred to as TSSC, is the
principal underwriter of the contracts under a Distribution Agreement with
Transamerica. TSSC may also serve as an underwriter and distributor of other
contracts issued through the variable account and certain other separate
accounts of Transamerica and any affiliates of Transamerica. TSSC is an indirect
wholly-owned subsidiary of Transamerica Insurance Corporation. TSSC is
registered with the Commission as a broker/dealer and is a member of the
National Association of Securities Dealers, Inc., also known as the NASD. Its
principal offices are located at 1150 South Olive, Los Angeles, California
90015. Transamerica pays TSSC for acting as the principal underwriter under a
distribution agreement.
TSSC has entered into sales agreements with other broker/dealers to solicit
applications for the contracts through registered representatives who are
licensed to sell securities and variable insurance products. These agreements
provide that applications for the contracts may be solicited by registered
representatives of the broker/dealers appointed by Transamerica to sell its
variable life insurance and variable annuities. These broker/dealers are
registered with the Commission and are members of the NASD. The registered
representatives are authorized under applicable state regulations to sell
variable life insurance and variable annuities.
Under the agreements, contracts will be sold by broker/dealers which will
generally receive compensation of up to 6.25% of any initial and additional
purchase payments paid, although higher amounts may be paid in certain
circumstances. Additional amounts may be paid in certain circumstances (such as
upon certain annuitizations, when an additional commission of 2.5% of the
account value annuitized may be paid). Additional amounts, including asset based
trail commissions, may be paid in certain circumstances.
Transamerica Financial Resources, Inc., referred to as TFR, also is an
underwriter and distributor of the contracts. TFR is a wholly-owned subsidiary
of Transamerica Insurance Corporation of California and is registered with the
Commission and the NASD as a broker/dealer.
ANNUITY PAYMENTS
Annuity Date
Initially, you select the annuity date at the time you pay the initial purchase
payment. After that, you may change the annuity date from time to time by giving
notice to our service center in a form and manner acceptable to us. Our service
center must receive notice of each change at least 30 days before to the
then-current annuity date. The annuity date must not be earlier than the third
contract anniversary, except for certain qualified contracts.
The annuity date is the date that the annuity purchase amount is applied to
provide the annuity payments under the contract. The annuity date will be used
together with the annuity form and payment option you have selected. The annuity
date will remain effective unless the entire account value has been withdrawn or
the death benefit has been paid to the beneficiary before that date.
The latest annuity date which may be elected is the later of:
a) the first day of the calendar month immediately preceding the month of the
annuitant's 85th birthday; or
b) the first day of the month coinciding with or next following the tenth
contract anniversary.
This annuity date extension to the tenth contract anniversary may not be
available in all states. The annuity date must be the first day of a calendar
month. The first annuity payment will be on the first day of the month
immediately following the annuity date.
Annuity Payment
The annuity purchase amount is the account value, minus any interest adjustment,
minus any applicable contingent deferred sales load and minus any applicable
premium taxes. Any contingent deferred sales load will be waived if the annuity
form involves life contingencies and begins on or after the third contract
anniversary.
If the amount of the monthly annuity payment from of the payment options which
you select results in a monthly annuity payment of less than $150, or if the
annuity purchase amount is less than $5,000, we reserve the right to offer a
less frequent mode of payment or pay the account value in a cash payment.
Monthly annuity payments from the variable annuity payment option will further
be subject to a minimum monthly annuity amount of $75 from each sub-account of
the variable account from which such payments are made. You may choose from the
annuity forms below. We may consent to other plans of payment before the annuity
date. For annuity forms involving life income, the actual age and/or sex of the
annuitant, or a joint or contingent annuitant will affect the amount of each
payment. Sex-distinct rates generally are not allowed under certain qualified
contracts and in some jurisdictions. We reserve the right to ask for
satisfactory proof of the annuitant's, or the joint or contingent annuitant's
age. We may delay annuity payments until satisfactory proof is received. Since
payments to older annuitants are expected to be fewer in number, the amount of
each annuity payment will be greater for older annuitants than for younger
annuitants.
You may choose from the two annuity payment options described below. The annuity
date and annuity forms available for qualified contracts may also be controlled
by endorsements, the plan or applicable law.
A portion or the entire amount of the annuity payments may be taxable as
ordinary income. If, at the time the annuity payments begin, we have not
received a proper written election not to have federal income taxes withheld, we
must by law withhold such taxes from the taxable portion of such annuity
payments and remit that amount to the federal government. Federal income tax
withholding is mandatory for certain distributions from Section 401 retirement
plans and 403(b) annuities. State income tax withholding may also apply.
Election of Annuity Forms and Payment Options
Before the annuity date and while the annuitant is living, you may, by written
request, change the annuity form or annuity payment option or may request
payment of the cash surrender value of the contract. The request for change of
the annuity date or annuity payment option must be received by our service
center at least 30 days before the annuity date.
If you do not select an annuity form and payment option within at least 30 days
before the annuity date, we will make variable annuity payments according to the
120 month period certain and life annuity form and the applicable provisions of
the contract.
Annuity Payment Options
The annuity forms may be paid under fixed or variable annuity payment options.
Under the fixed annuity payment option, the amount of each payment will be
determined on the annuity date and will not subsequently be affected by the
investment performance of the sub-accounts.
Under the variable annuity payment option, the annuity payments after the first,
will reflect the investment experience of the sub-account or sub-accounts chosen
by the owner.
You may elect a fixed annuity, a variable annuity, or a combination of both, in
25% increments of the annuity purchase amount. If you elect a combination, you
must specify what part of the annuity purchase amount is to be applied to the
fixed and variable payment options.
Unless you specify otherwise, the applied annuity purchase amount will be used
to provide a variable annuity. The initial allocation of variable annuity units
for the variable sub-accounts will be in proportion to the contract's value in
the sub-accounts on the annuity date.
Fixed Annuity Payment Option
A fixed annuity provides for annuity payments that remain constant according to
the terms of the annuity form elected. If a fixed annuity is selected, the
portion of the annuity purchase amount used to provide the fixed annuity will be
transferred to the general account assets. The amount of annuity payments will
be established by the fixed annuity provisions selected and the age and sex, (if
sex-distinct rates are allowed by law), of the annuitant and will not reflect
investment performance after the annuity date.
The fixed annuity payment amounts are determined by applying the annuity
purchase rate specified in the contract to the portion of the annuity purchase
amount you applied to the fixed annuity option. Payments may vary after the
death of the annuitant under some annuity options; the amounts of these
variances are fixed on the annuity date.
Variable Annuity Payment Option
A variable annuity provides for payments that vary in dollar amount, based on
the investment performance of the selected sub-accounts of the variable account.
The variable annuity purchase rate tables in the contract reflect an assumed,
but not guaranteed, annual interest rate of 4%, so if the actual net investment
performance of the sub-accounts is less than this rate, then the dollar amount
of the actual annuity payments will decrease. If the actual net investment
performance of the sub-accounts is higher than this rate, then the dollar amount
of the actual annuity payments will increase. If the net investment performance
exactly equals the 4% rate, then the dollar amount of the actual annuity
payments will remain constant.
Variable annuity payments will be based on the sub-accounts you select, and on
the allocations you make among the sub-accounts. For further details as to the
determination of variable annuity payments, see the Statement of Additional
Information.
Annuity Forms
You may choose any of the annuity forms described below. Subject to our
approval, you may also select any other annuity form then being offered by us.
You may select among any of the following contract choices:
1. Life Annuity. Payments start on the first day of the month immediately
following the annuity date, if the annuitant is living. Payments end with
the payment due just before the annuitant's death. There is no death
benefit under this form. It is possible that only one payment will be made
under this form if the annuitant dies before the second payment is due;
only two payments will be made if the annuitant dies before the third
payment is due, and so forth.
2. Life and Contingent Annuity. Payments start on the first day of the month
immediately following the annuity date, if the annuitant is living.
Payments will continue for as long as the annuitant lives. After the
annuitant dies, payments will be made to the contingent annuitant, if
living, for as long as the contingent annuitant lives. The continued
payments can be in the same amount as the original payments, or in an
amount equal to one-half or two-thirds thereof. Payments will end with the
payment due just before the death of the contingent annuitant. There is no
death benefit after both the annuitant and the contingent annuitant die. If
the contingent annuitant does not survive the annuitant, payments will end
with the payment due just before the death of the annuitant. It is possible
that only one payment or very few payments will be made under this form, if
the annuitant and contingent annuitant die shortly after payments begin.
The written request for this form must:
a) name the contingent annuitant; and
b) state the percentage of payments for the contingent annuitant.
Once annuity payments start under this annuity form, the person named as
contingent annuitant for purposes of being the measuring life, may not be
changed. we will need proof of age for the annuitant and the contingent
annuitant before payments start.
3. Life Annuity With Period Certain. Payments start on the first day of the
month immediately following the annuity date, if the annuitant is living.
Payments will be made for the longer of:
a) the annuitant's life; or,
b) the period certain.
The period certain may be 120 or 180 or 240 months, but in no event may it
exceed the life expectancy of the annuitant. If the annuitant dies after all
payments have been made for the period certain, payments will cease with the
payment due just before the annuitant's death. No benefit will then be payable
to the annuitant's beneficiary.
If the annuitant dies during the period certain, the rest of the period certain
payments will be made to the annuitant's beneficiary. You may elect to have the
commuted value of these payments paid in a single sum. The commuted value is the
remaining amount of the period certain payments discounted at the then current
rate of interest used for such values.
If you do not elect to have the commuted value paid in a single sum after the
annuitant's death, you may designate a payee to receive any remaining payments
payable if the annuitant's beneficiary dies before all of the payments under the
period certain have been made.
If the annuitant's beneficiary dies before receiving all of the remaining period
certain payments and a designated payee does not survive the annuitant's
beneficiary for at least 30 days, then the remaining payments will be paid to
the owner, if living, otherwise in a single sum to the owner's estate.
The written request for this form must:
a) state the length of the period certain; and
b) name the annuitant's beneficiary.
4. Joint and Survivor Annuity Payments will be made, starting on the first day
of the month immediately following the annuity date, if and for as long as
the annuitant and joint annuitant are living. After the annuitant or joint
annuitant dies, payments will continue as long as the survivor lives. The
continued payments can be in the same amount as the original payments, or
in an amount equal to one-half or two-thirds thereof. It is possible that
only one payment or very few payments will be made under this form if the
annuitant and joint annuitant both die shortly after payments begin.
The written request for this form must:
a) name the joint annuitant; and
b) state the percentage of continued payments for the survivor.
Once payments start under this annuity form, the person named as joint
annuitant, for the purpose of being the measuring life, may not be changed. We
will need proof of age for the joint annuitants before payments start.
5. Other Forms of Payment. Benefits can be provided under any other annuity
form not described in this section subject to our agreement and any
applicable state or federal law or regulation. Requests for any other
annuity form must be made in writing to our service center at least 30 days
before the annuity date.
Once payments start under the annuity form and payment option you selected:
a) no changes can be made in the annuity form and payment option;
b) no additional purchase payments will be accepted under the contract; and c)
no further withdrawals will be allowed.
You may, at any time after the annuity date by written notice to us at our
service center, change the payee of annuity benefits being provided under the
contract.
The effective date of change in payee will be the later of:
a) the date we receive the written request for such change; or
b) the date you specify.
If the contract is issued as a qualified contract, you may not change the payee
on or after the annuity date.
Alternate Fixed Annuity Rates
The amount of any fixed annuity payments will be determined on the annuity date
by using either the guaranteed fixed annuity rates or our current single premium
fixed annuity rates at the time, whichever would result in a higher amount of
monthly fixed annuity payments.
QUALIFIED CONTRACTS
The qualified contracts may be used to fund contributory and rollover IRAs and
Roth IRAs. With our prior approval, the qualified contracts may also be used for
various types of qualified pension and profit sharing plans under Code Section
401, which permits corporate employers to establish various types of retirement
plans for employees, and as Section 403(b) annuities. Currently, additional
premiums after the initial premium may not be made to certificates used as
Section 401(a) or Section 403(b) annuities. The tax rules applicable to
distribution from qualified retirement plans, including restrictions on
contributions and benefits, taxation of distributions, and any tax penalties,
vary according to the type of plan and the terms and the conditions of the plan
itself.
Various tax penalties may apply to:
a) contributions in excess of specified limits;
b) distributions before age 591/2, subject to certain exceptions;
c) distributions that do not satisfy specified requirements; and
d) certain other transactions subject to qualified plans.
If you are purchasing a contract for use in a qualified plan, you should seek
competent advice regarding the suitability of the proposed plan documents and
the contracts to their specific needs. We reserve the right to decline to sell
the contract to certain qualified plans or terminate the contract if, in our
judgment, the contract is not appropriate for the plan.
If a contract is purchased to fund an IRA or Roth IRA, you must also be the
annuitant. In addition, under current tax law, minimum distributions are
required from certain qualified contracts. You should consult your tax adviser
concerning these matters.
The Automatic Payout Option, or APO
Before to the annuity date, for qualified contract other than Roth IRAs, you may
elect the automatic payout option, or APO, to satisfy minimum distribution
requirements under Code Sections 401(a)(9), 403(b), and 408(b)(3).
For IRAs and SEP/IRAs, this may be elected no earlier than six months before the
calendar year in which you attain age 701/2, but payments may not begin earlier
than January of such calendar year. For other qualified contracts, APO can be
elected no earlier than six months before the later of when you:
a) attain age 701/2; and
b) retire from employment.
Additionally, APO withdrawals may not begin before the later of:
a) 30 days after the contract date; or
b) the end of the free look period.
You may elect APO in any calendar month, but no later than the month in which
you attain age 84. APO withdrawals will be from the sub-accounts and in the
percentage allocations which you specify. If no specifications are made,
withdrawals will be pro rata from all sub-accounts with value. Withdrawals can
not be made from a sub-account from which dollar cost averaging transfers are
being made.
Payments will be made annually, and will continue unless terminated by you or
automatically terminated by us as set forth in the contract. Once terminated,
APO may not be elected again.
If only APO withdrawals are made, no contingent deferred sales load will apply,
regardless of the allowed amount. However, if a partial withdrawal is taken,
that partial withdrawal and any subsequent withdrawals in that contract year
will be subject to a contingent deferred sales load to the extent they exceed
the allowed amount.
To be eligible for this option, the following conditions must be met:
1. the account value must be at least $12,000 at the time of election; and
2. the annual withdrawal amount is the larger of the required minimum
distribution under Code Sections 401(a)(9) or 408(b)(3), or $500.
APO allows the required minimum distribution to be paid from the sub-accounts of
the variable account. If there are insufficient funds in the variable account to
make a withdrawal, or for other reasons as set forth in the contract, this
option will terminate. In which case, if there are amounts in a contract's
account value remaining in the fixed account, the minimum distribution
requirements with regard to the account value may not be met. If amounts are
transferred to sub-accounts from a guaranteed period before its expiration date,
an interest adjustment will be made to such amounts.
If you have more than one qualified plan subject to the Code's minimum
distribution requirements, you must consider all such plans in the calculation
of your minimum distribution requirement, but we will make calculations and
distributions from this contract only.
Restrictions under Section 403(b) Programs
Certain restrictions apply to annuity contracts used in connection Section
403(b) retirement plans. Code Section 403(b) provides for tax-deferred
retirement savings plans for employees of certain non-profit and educational
organizations.
According to the requirements of the Code, Section 403(b) annuities generally
may not permit distribution of:
a) elective contributions made in years beginning after December 31, 1988;
b) earnings on those contributions; or
c) earnings on amounts attributable to elective contributions held as of the end
of the last year beginning before January 1, 1989.
Distributions of such amounts will be allowed only upon death of the employee,
on or after attainment of age 591/2, separation from service, disability, or
financial hardship, except that income attributable to elective contributions
may not be distributed in the case of hardship.
FEDERAL TAX MATTERS
Introduction
The following discussion is a general description of federal tax considerations
relating to the contract and is not intended as tax advice. This discussion is
not intended to address the tax consequences resulting from all of the
situations in which a person may be entitled to or may receive a distribution
under the contract. If you are concerned about these tax implications, you
should consult a competent tax adviser before initiating any transaction. This
discussion is based upon our understanding of the present federal income tax
laws as they are currently interpreted by the Internal Revenue Service, or
simply, the IRS. No representation is made as to the likelihood of the
continuation of the present federal income tax laws or of the current
interpretation by the IRS. Moreover, no attempt has been made to consider any
applicable state or other tax laws.
The contract may be purchased:
a) on a non-tax qualified basis for use as a non-qualified contract; or
b) purchased and used in connection with plans qualifying for special tax
treatment as a qualified contract.
Qualified contracts are designed for use by individuals solely as plans entitled
to special income tax treatment under Code Sections 401, 403(b), 408 and 408A.
The ultimate effect of federal income taxes on the amounts held under a
contract, on annuity payments, and on the economic benefit to the owner, the
annuitant, or the beneficiary may depend on:
a) the type of retirement plan or arrangement for which the contract is
purchased;
b) the tax status of the individual concerned; or
c) our tax status.
In addition, certain requirements must be satisfied in purchasing a qualified
contract with proceeds from a tax qualified retirement plan or other
arrangement. Certain requirements must also be met when receiving distributions
from a qualified contract in order to continue receiving special tax treatment.
Therefore, if you are considering the purchase of a qualified contract, you
should seek competent legal and tax advice regarding the suitability of the
contract for your situation. You will also need to be aware of the applicable
requirements, and the tax treatment of the rights and benefits of the contract.
The following discussion assumes that a qualified contract is purchased with
proceeds from and/or contributions under retirement plans that qualify for the
intended special federal income tax treatment. The following discussion is also
based on the assumption that the contract qualifies as an annuity contract for
federal income tax purposes. The Statement of Additional Information discusses
the requirements for qualifying as an annuity.
Purchase Payments
At the time the initial purchase payment is paid, as a prospective purchaser,
you must specify whether you are purchasing a non-qualified contract or a
qualified contract. If the initial purchase payment is derived from an exchange
or surrender of another annuity contract, we may require that you provide
information with regard to the federal income tax status of the previous annuity
contract. We will require you purchase separate contracts if you desire to
invest monies qualifying for different annuity tax treatment under the Code.
Each such separate contract would require the minimum initial purchase payment
previously described. Additional purchase payments under a contract must qualify
for the same federal income tax treatment as the initial purchase payment under
the contract. We will not accept an additional purchase payment under a contract
if the federal income tax treatment of such purchase payment would be different
from that of the initial purchase payment.
Taxation of Annuities In General
Code Section 72 governs taxation of annuities in general. We believe that the
owner who is a natural person generally is not taxed on increases in the value
of a contract until distribution occurs by withdrawing all or part of the
account value, for example, through withdrawals or annuity payments under the
annuity option elected. For this purpose, the assignment, pledge, or agreement
to assign or pledge any portion of the account value, and in the case of a
qualified contract, any portion of an interest in the plan, generally will be
treated as a distribution. The taxable portion of a distribution, in the form of
a single sum payment or an annuity, is taxable as ordinary income.
The owner of any non-qualified contract who is not a natural person generally
must include in income any increase in the excess of the account value 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, for example, a
trust, may wish to discuss these with a competent tax adviser.
The following discussion generally applies to contracts owned by natural
persons.
Withdrawals
In the case of a withdrawal under a qualified contract, including withdrawals
under the systematic withdrawal option or the automatic payout option, a ratable
portion of the amount received is taxable. This portion is generally based on
the ratio of the investment in the contract to the individual's total accrued
benefit under the retirement plan.
The investment in the contract generally equals the amount of any non-deductible
purchase payments paid by or on behalf of any individual. For a qualified
contract, the investment in the contract can be zero. Special tax rules may
apply to certain distributions from a qualified contract.
With respect to non-qualified contracts, partial withdrawals, including
withdrawals under the systematic withdrawal option, are generally treated as
taxable income to the extent that the account value immediately before the
withdrawal exceeds the investment in the contract at that time. The investment
in the contract is generally equal to the amount of non-deductible purchase
payments made. If a partial withdrawal from the fixed account is subject to an
interest adjustment, the account value immediately before the withdrawal will
not be altered to take into account the interest adjustment. As a result, for
purposes of determining the taxable portion of the partial withdrawal, the
account value will be treated as including the amount deducted from the fixed
account due to the interest adjustment. Full surrenders are treated as taxable
income to the extent that the amount received exceeds the investment in the
contract.
Annuity Payments
Although the tax consequences may vary depending on the annuity payment elected
under the contract. In general, only the portion of the annuity payment that
represents the amount by which the account value exceeds the investment in the
contract will be taxed. After the investment in the contract is recovered, the
full amount of any additional annuity payments is taxable. For variable annuity
payments, the taxable portion is generally determined by an equation that
establishes a specific dollar amount of each payment that is not taxed. The
dollar amount is determined by dividing the investment in the contract by the
total number of expected periodic payments. However, the entire distribution
will be taxable once the recipient has recovered the dollar amount of his or her
investment in the contract.
For fixed annuity payments, in general, there is no tax on the portion of each
payment which represents the same ratio that the investment in the contract
bears to the total expected value of the annuity payments for the term of the
payments. However, the remainder of each annuity payment is taxable. Once the
investment in the contract has been fully recovered, the full amount of any
additional annuity payments is taxable. If annuity payments cease as a result of
an annuitant's death before full recovery of the investment in the contract,
consult a competent tax adviser regarding deductibility of the unrecovered
amount.
Withholding
The Code requires us to withhold federal income tax from distributions under the
contracts. However, except for distributions from certain qualified contracts,
an owner will be entitled to elect, in writing, not to have tax withheld.
Withholding applies to the portion of a distribution which is includible in
income and subject to federal income tax, where the taxable amount is at least
$200. Some states also require withholding for state income taxes.
The withholding varies according to the type of distribution and the owner's tax
status. "Eligible rollover distributions" from Section 401(a) plans and Section
403(b) tax sheltered annuities are subject to mandatory federal income tax
withholding at the rate of 20%. An eligible rollover distribution is the taxable
portion of any distribution from such a plan, except for certain distributions,
such as minimum required distributions or settlement option payments made in a
specified form. The 20% mandatory withholding does not apply, however, if the
owner chooses a "direct rollover" from the plan to another tax-qualified plan or
to an IRA, other than a Roth IRA. The federal income tax withholding rate for a
distribution that is not an eligible rollover distribution is 10% of the taxable
amount of the distribution.
Penalty Tax
A federal income tax penalty equal to 10% of the amount treated as taxable
income may be imposed. In general, however, there is no penalty tax on
distributions:
1. made on or after the date on which the owner attains age 591/2;
2. made as a result of death or disability of the owner; or
3. received in substantially equal periodic payments as a life annuity or a
joint and survivor annuity for the lives or life expectancies of the owner and a
designated beneficiary.
Other tax penalties may apply to certain distributions under a qualified
contract.
Taxation of Death Benefit Proceeds
Amounts may be distributed from the contract because of the death of an owner or
the annuitant. Generally such amounts are includible in income as follows:
1. if distributed in a lump sum, they are taxed in the same manner as a full
surrender, as described above; or
2. if distributed under an annuity option, they are taxed in the same manner as
annuity payments, as described above.
For these purposes, the investment in the contract is not affected by the
owner's or annuitant's death. That is, the investment in the contract remains
the amount of any purchase payments paid which were not excluded from gross
income. Other rules relating to distributions at death apply to qualified
contracts. You should consult your legal counsel and tax adviser regarding these
rules and their impact on qualified contracts.
Required Distributions upon Owner's Death
Notwithstanding any provision of the contract or this prospectus to the
contrary, no payment of benefits provided under the contract will be allowed
that does not satisfy the requirements of Code Section 72(s). If the owner dies
before the annuity date, the death benefit payable to the owner's beneficiary
will be distributed as follows:
a) the death benefit must be completely distributed within five years of the
owner's date of death; or
b) the owner's beneficiary may elect, within the one year period after the
owner's date of death, to receive the death benefit in the form of an
annuity from us.
Please note that Item b) is based on the following provisions:
1. the annuity must be distributed in substantially equal installments over the
life of the owner's beneficiary or over a period not extending beyond the life
expectancy of the owner's beneficiary; and
2. the distributions must not begin later than one year after the owner's date
of death.
Notwithstanding Items a) and b) above, if the sole owner's beneficiary is the
deceased owner's surviving spouse, then the surviving spouse may elect, within
the one year period after the owner's date of death, to continue the contract
under the same terms as before the owner's death. If the spouse elects to
continue the contract, an amount equal to the excess, if any, of the Death
Benefit over the account value will then be added to the account value. This
amount will be added only once, at the time of such election. Furthermore, all
future contingent deferred sales loads will be waived.
Upon receipt of such election from the spouse, in a form and manner acceptable
to us, at our service office:
1. all rights of the spouse as owner's beneficiary under the contract in
effect before such election will cease;
2. the spouse will become the owner of the contract and will also be treated as
the contingent annuitant, if none has been named and only if the deceased owner
was the annuitant; and
3. all rights and privileges granted by the contract or allowed by us will
belong to the spouse as owner of the contract.
This election will be deemed to have been made by the spouse if such spouse
makes a purchase payment to the contract or fails to make a timely election as
described in this paragraph. If the owner's beneficiary is a nonspouse, the
distribution provisions described in subparagraphs a) and b) above, will apply
even if the annuitant and/or contingent annuitant are alive at the time of the
owner's death. If the nonspouse owner's beneficiary is not an individual, then
only a cash payment will be paid.
If no election is received by us from a nonspouse owner's beneficiary within the
one year period after the owner's date of death, then we will pay the death
benefit to the owner's beneficiary in a cash payment. The death benefit will be
determined as of the date we make the cash payment. Such cash payment will be in
full settlement of all our liability under the contract.
If Annuitant Dies After Annuity Starts - If the annuitant dies after the annuity
starts, any benefit payable will be distributed at least as rapidly as under the
annuity form then in effect.
If Owner Dies After Annuity Starts - If the owner dies after the annuity starts,
any benefit payable will continue to be distributed at least as rapidly as under
the annuity form then in effect. All of the owner's rights granted under the
contract or allowed by us will pass to the owner's beneficiary.
Joint Ownership - For purposes of this section, if the contract has joint owners
we will consider the date of death of the first joint owner as the death of the
owner and the surviving joint owner will become the owner of the contract,
subject to the provisions described above.
Transfers, Assignments, or Exchanges of the Contract
A transfer of ownership of a non-qualified contract, the designation of an
annuitant, payee, or beneficiary who is not also the owner, or the exchange of a
contract may result in certain tax consequences to the owner that are not
discussed herein.
If you are contemplating any such designation, transfer, assignment, or
exchange, you should contact a competent tax adviser with respect to the
potential tax effects of such a transaction. Certain qualified contracts cannot
be transferred or assigned, except as permitted by the Code or the Employee
Retirement Income Security Act of 1974, or simply ERISA.
Multiple Policies
All deferred non-qualified annuity contracts that are issued by Transamerica, or
its affiliates, to the same owner during any calendar year are treated as one
annuity contract for purposes of determining the amount includible in gross
income under Code Section 72(e). In addition, the Treasury Department has
specific authority to issue regulations that prevent the avoidance of Section
72(e) through the serial purchase of annuity contracts or otherwise.
Congress has also indicated that the Treasury Department may have authority to
treat the combination purchase of an immediate annuity contract and separate
deferred annuity contracts as a single annuity contract under its general
authority to prescribe rules as may be necessary to enforce the income tax laws.
QUALIFIED CONTRACTS
In General
The qualified contract is designed for use as an IRA or Roth IRA. With our prior
approval, the contract may also be used as a Section 403(b) annuity, and for use
in qualified pension and profit sharing plans established by corporate
employers.
The tax rules applicable to participants and beneficiaries in retirement plans
vary according to the type of plan and the terms and conditions of the plan.
Special favorable tax treatment may be available for certain types of
contributions and distributions.
Adverse tax consequences may result from:
* contributions in excess of specified limits;
* distributions before age 591/2, subject to certain exceptions;
* distributions that do not conform to specified commencement and minimum
distribution rules; and
* other specified circumstances.
We make no attempt to provide more than general information about use of the
contracts with the various types of retirement plans. Owners and participants
under retirement plans as well as annuitants and beneficiaries are cautioned
that the rights of any person to any benefits under qualified contracts may be
subject to the terms and conditions of the plans themselves, regardless of the
terms and conditions of the contract issued in connection with such a plan.
Some retirement plans are subject to distribution and other requirements that
are not incorporated in the administration of the contracts. Owners are
responsible for determining that contributions, distributions and other
transactions with respect to the contracts satisfy applicable law. Purchasers of
contracts for use with any retirement plan should consult their legal counsel
and tax adviser regarding the suitability of the contract.
For qualified plans under Section 401(a), 403(a) and 403(b), the Code requires
that distributions generally must commence no later than the later of April 1 of
the calendar year following the calendar year in which the owner or plan
participant:
1. reaches age 701/2; or
2. retires and distribution must be made in a specified manner.
If the plan participant is a "5 percent owner" as defined in the Code,
distributions generally must begin no later than April 1 of the calendar year
following the calendar year in which the owner, or plan participant reaches, age
701/2.
For IRAs described in Section 408, distributions generally must commence no
later than the later of April 1 of the calendar year following the calendar year
in which the owner, or plan participant, reaches age 701/2. Roth IRAs under
Section 408A do not require distributions at any time before the owner's death.
Qualified Pension and Profit Sharing Plans
Code Section 401(a) permits employers to establish various types of retirement
plans for employees. Such retirement plans may permit the purchase of the
contract in order to provide retirement savings under the plans. The
Self-Employed Individuals' Tax Retirement Act of 1962, as amended, commonly
referred to as H.R. 10, also permits self-employed individuals to establish
qualified plans for themselves and their employees.
Adverse tax consequences to the plan, to the participant, or to both, may result
if this contract is assigned or transferred to any individual as a means to
provide benefits payments. If you are buying a contract for use with such plans
should seek competent advice regarding the suitability of the proposed plan
documents and the contract to their specific needs. The contract is designed to
invest retirement savings and not to distribute retirement benefits.
Individual Retirement Annuities,
Simplified Employee Plans and Roth
IRAs
The contract is designed for use with contributory and rollover IRAs and Roth
IRAs.
A contributory IRA is a contract in which initial and subsequent purchase
payments are subject to limitations imposed by the Code. Code Section 408
permits eligible individuals to contribute to an individual retirement program
known as an individual retirement annuity or individual retirement account, each
hereinafter referred to as an IRA. Also, distributions from certain other
qualified plans may be rolled over, or transferred on a tax-deferred basis into
an IRA described in Code Section 408.
A Section 408 IRA is an IRA described in Sections 408(a) or 408(b), other than a
Roth IRA.
Earnings in an IRA are not taxed until distributed. IRA contributions are
limited each year to the lesser of $2,000 or 100% of the owner's compensation.
This includes earned income as defined in Code Section 401(c)(2) and may be
deductible in whole or in part depending on the individual's adjusted gross
income and whether or not the individual is considered an active participant in
a qualified plan. The limit on the amount contributed to an IRA does not apply
to distributions from certain other types of qualified plans that are rolled
over or transferred on a tax-deferred basis into an IRA.
Other than nondeductible contributions, amounts in the IRA are taxed when
distributed from the IRA. Distributions before age 591/2 are subject to a 10%
penalty tax, unless certain exceptions apply. Purchasers should seek competent
advice as to the suitability of the contract for use with IRAs.
Eligible employers that meet specified criteria under Code Section 408(k) could
establish simplified employee pension plans, also referred to as SEP-IRAs, for
their employees using IRAs. Employer contributions that may be made to such
plans are larger than the amounts that may be contributed to regular IRAs, and
may be deductible to the employer. SEP-IRAs are subject to certain Code
requirements regarding participation and amounts of contributions.
The contract may also be used with rollover Roth IRAs and contributory Roth
IRAs. A contributory Roth IRA is a contract to which initial and subsequent
purchase payments are subject to limitations imposed by the Code. Code Section
408A permits eligible individuals to contribute to an individual retirement
program known as a Roth IRA on a non-deductible basis. In addition,
distributions from a Section 408 IRA may be converted to a Roth IRA.
Distributions from a Roth IRA generally are not taxed, except that, once total
distributions exceed contributions to the Roth IRA, income tax and a 10% penalty
tax may apply to distributions made:
1. before age 591/2, subject to certain exceptions; or
2. during the five taxable years starting with the year in which the first
contribution is made to the Roth IRA.
Purchasers should seek competent advice as to the suitability of the contract
for use with Roth IRAs. The sale of a contract for use with an IRA, SEP-IRA or
Roth IRA may be subject to special disclosure requirements of the Internal
Revenue Service. Purchasers of these contracts will be provided with
supplemental information required by the Internal Revenue Service or other
appropriate agency. Such purchasers will have the right to revoke their purchase
within 7 days of the earlier of the establishment of the IRA, SEP-IRA or Roth
IRA or their purchase.
Tax Sheltered Annuities
Under Code Section 403(b), payments made by public school systems and certain
tax exempt organizations to purchase annuity contracts for their employees are
excludable from the gross income of the employee, subject to certain
limitations. However, these payments may be subject to Social Security and
Medicare (FICA) taxes.
Code Section 403(b)(11) restricts the distribution under Code Section 403(b)
annuity contracts of:
* elective contributions made in years beginning after December 31, 1988;
* earnings on those contributions; or
* earnings in such years on amounts held as of the last year beginning before
January 1, 1989.
Distribution of those amounts may only occur upon death of the employee,
attainment of age 591/2, separation from service, disability, or financial
hardship. In addition, income attributable to elective contributions may not be
distributed in the case of hardship.
Pre-1989 contributions and earnings through December 31, 1989 are not subject to
the restrictions described above. However, funds transferred to a qualified
contract from a Section 403(b)(7) custodial account will be subject to the
restrictions.
Restrictions under Qualified Policies
Other restrictions may apply to the election, commencement, or distribution of
benefits may apply under qualified contracts or under the terms of the plans in
respect of which qualified contracts are issued. A qualified contract will be
amended as necessary to conform to the requirements of the Code.
Possible Changes in Taxation
Legislation has been proposed the in the past that, if enacted, would adversely
modify the federal taxation of certain insurance and annuity contracts. For
example, one proposal would tax transfers among investment options and tax
exchanges involving variable contracts. A second proposal would reduce the
investment in the contract under cash value life insurance and certain annuity
contracts by certain amounts, thereby increasing the amount of income for
purposes of computing gain. Although the likelihood of there being any changes
is uncertain, there is always the possibility that the tax treatment of the
contracts could be changed by legislation or other means. Moreover, it is also
possible that any change could be retroactive, that is, effective before the
date of the change. You should consult a tax adviser with respect to legislative
developments and their effect on the contract.
Other Tax Consequences
As noted above, the foregoing discussion of the federal income tax consequences
is not exhaustive and special rules are provided with respect to other tax
situations not discussed in this prospectus. Further, the federal income tax
consequences discussed herein reflect our understanding of current law and the
law may change. Federal gift and estate tax consequences and state and local
estate, inheritance, and other tax consequences of ownership or receipt of
distributions under the contract depend on the individual circumstances of each
owner or recipient of the distribution. A competent tax adviser should be
consulted for further information.
YEAR 2000 ISSUE
Many computer software systems in use today cannot distinguish the year 2000
from the year 1900 because dates are encoded using the standard six-place format
that allows entry of only the last two digits of the year. This is commonly
known as the "Year 2000 Problem".
Regarding our systems and software that administer the contracts, we believe
that our own internal systems will be Year 2000 ready. Additionally, we require
third party vendors that supply software or administrative services to us in
connection with the contract administration, to certify that such software
and/or services will be Year 2000 ready.
The "Year 2000 Problem" could adversely impact the portfolios if the computer
systems used by the portfolios' investment adviser, sub-adviser, custodian and
transfer agent (including service providers' systems) do not accurately process
date information on or after January 1, 2000. The investment advisers are
addressing this issue by testing the computer systems they use to ensure that
those systems will operate properly on or after January 1, 2000, and seeking
assurances from other service providers they use that their computer systems
will be adapted to address the "Year 2000 Problem" in time to prevent adverse
consequences on or after January 1, 2000. However, especially when taking into
account interaction with other systems, it is difficult to predict with
precision that there will be no disruption of services in connection with the
year 2000.
We continue to believe that we will achieve Year 2000 readiness. However, the
size and complexity of our systems and the need for them to interface with other
systems internally and with those of our customers, vendors, partners,
governmental agencies and other outside parties, creates the possibility that
some systems may experience Year 2000 problems. Although we believe we will be
properly prepared for the date change, we are also developing contingency plans
to minimize any potential disruptions to operations, especially from externally
interfaced systems over which we have limited or no control.
This issue could also adversely impact the value of the securities that the
portfolios invest in if the issuing companies' systems do not operate properly
on or after January 1, 2000, and this risk could be heightened for portfolios
that invest internationally. Refer to the prospectuses for the portfolios for
more information.
The above information is subject to the Year 2000 Readiness Disclosure Act. This
act may limit your legal rights in the event of a dispute.
LEGAL PROCEEDINGS
There is no pending material legal proceeding affecting the variable account.
Transamerica is involved in various kinds of routine litigation which, in
management's judgment, are not of material importance to Transamerica's assets
or to the variable account.
LEGAL MATTERS
The organization of Transamerica, its authority to issue the contracts and the
validity of the form of the contracts have been passed upon by James W. Dederer,
general counsel of Transamerica.
ACCOUNTANTS AND FINANCIAL
STATEMENTS
The consolidated financial statements of Transamerica at December 31, 1998 and
1997, and for each of the three years in the period ended December 31, 1998, and
and the financial statements of Separate Account VA-2L at December 31, 1998 and
for each of the three years in the period then ended appearing in the Statement
of Additional Information have been audited by Ernst & Young LLP, Independent
Auditors, as set forth in their reports appearing in the Statement of Additional
Information. The financial statements audited by Ernst & Young LLP have been
included in reliance upon such reports given upon the authority of such firm
experts in accounting and auditing.
VOTING RIGHTS
To the extent required by applicable law, all portfolio shares held in the
variable account will be voted by Transamerica at regular and special
shareholder meetings of the respective funds in accordance with instructions
received from persons having voting interests in the corresponding sub-account.
If, however, the 1940 Act or any regulation thereunder should be amended, or if
the present interpretation thereof should change, or if Transamerica determines
that it is allowed to vote all portfolio shares in its own right, Transamerica
may elect to do so.
The person with the voting interest is the owner. The number of votes which are
available to an owner will be calculated separately for each sub-account of the
variable account. Before the annuity date, that number will be determined by
applying his or her percentage interest, if any, in a particular sub-account to
the total number of votes attributable to that sub-account. The owner holds a
voting interest in each sub-account to which the account value is allocated.
After the annuity date, the number of votes decreases as annuity payments are
made and as the reserves for the contract decrease.
The number of votes of a portfolio will be determined as of the date coincident
with the date established by that portfolio for determining shareholders
eligible to vote at the meeting of the funds. Voting instructions will be
solicited by written communication before such meeting in accordance with
procedures established by the respective funds.
Shares as to which no timely instructions are received and shares held by
Transamerica as to which owners have no beneficial interest will be voted in
proportion to the voting instructions which are received with respect to all
contracts participating in the sub-account. Voting instructions to abstain on
any item to be voted upon will be applied on a pro rata basis to reduce the
votes eligible to be cast.
Each person or entity having a voting interest in a sub-account will receive
proxy material, reports and other material relating to the appropriate
portfolio. It should be noted that the funds are not required to, and do not
intend to, hold annual or other regular meetings of shareholders.
AVAILABLE INFORMATION
Transamerica has filed a registration statement with the Securities and Exchange
Commission under the Securities Act of 1933 relating to the contract offered by
this prospectus. This prospectus has been filed as a part of the registration
statement and does not contain all of the information set forth in the
registration statement and exhibits thereto. Reference is hereby made to such
Registration Statement and exhibits for further information relating to
Transamerica and the contract.
Statements contained in this prospectus, as to the content of the contract and
other legal instruments, are summaries. For a complete statement of the terms
thereof, reference is made to the instruments filed as exhibits to the
registration statement. The registration statement and the exhibits thereto may
be inspected and copied at the office of the Commission, located at 450 Fifth
Street, N.W., Washington, D.C.
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
A Statement of Additional Information is available which contains more details
concerning the subjects discussed in this prospectus. The following is the table
of contents for that statement:
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
The Contract (page 23) 3
Dollar Cost Averaging (page 28) 3
Special Dollar Cost Averaging Option 3
Net Investment Factor 3
Annuity Period (page 29) 4
Variable Annuity Units and Payments 4
Variable Annuity Unit Value 4
Transfers After the Annuity Date 4
Guaranteed Minimum Income Benefit- Hypothetical Illustration 4
General Provisions 4
Adjusted Partial Withdrawals 5
IRS Required Distributions 5
Non-Participating 5
Misstatement of Age or Sex 5
Proof of Existence and Age 5
Assignment 5
Annuity Data 5
Annual Report 5
Incontestability 5
Ownership 5
Entire Contract 6
Changes In the Contract 6
Protection of Benefits 6
Delay of Payments 6
Notices and Directions 7
Calculations of Yields and Total Returns (page 16) 7
Money Market Sub-Account Yield Calculations 7
Other Sub-Account Yield Calculations 7
Average Total Return Calculations 7
Adjusted Historical Performance Data 8
Other Performance Data 9
Historical Performance Data 9
General Limitations 9
Money Market Sub-Account Yields 10
Sub-Account Performance Figures Including
Adjusted Historical Performance 10
Since Commencement of Sub-Account 10
Since Commencement of Portfolio 12
Federal Tax Matters (page 43) 14
Taxation of Transamerica 14
Tax Status of the Policies 14
Distribution of the Contract (page 38) 15
Safekeeping of Variable Account Assets (page 15) 16
Transamerica (page 15) 16
General Information and History 16
State Regulation 16
Records and Reports 16
Financial Statements 17
Appendix 18
Accumulation Transfer Formula 18
</TABLE>
<PAGE>
Appendix A
Example of Variable Accumulation Unit Value Calculations
Suppose the net asset value per share of a portfolio at the end of the current
valuation period is $20.15; at the end of the immediately preceding valuation
period it was $20.10; the valuation period is one day; and no dividends or
distributions caused the portfolio to go ex-dividend during the current
valuation period. $20.15 divided by $20.10 is 1.002488. Subtracting the one day
risk factor for mortality and expense risk charge and the administrative expense
charge of .003814% (the daily equivalent of the current charge of 1.40% on an
annual basis) gives a net investment factor of 1.002449. If the value of the
variable accumulation unit for the immediately preceding valuation period had
been 15.500000, the value for the current valuation period would be 15.537966
(15.5 x 1.002449).
Example of Variable Annuity Unit Value Calculations
Suppose the circumstances of the first example exist, and the value of a
variable annuity unit for the immediately preceding valuation period had been
13.500000. If the first variable annuity payment is determined by using an
annuity payment based on an assumed interest rate of 4% per year, the value of
the variable annuity unit for the current valuation period would be 13.531613
(13.5 x 1.002449, which is the Net Investment Factor x 0.999893). 0.999893 is
the factor, for a one day valuation period, that neutralizes the assumed rate of
four percent (4%) per year used to establish the variable annuity rates found in
the contract.
Example of Variable Annuity Payment Calculations
Suppose that the account is currently credited with 3,200.000000 variable
accumulation units of a particular sub-account. Also suppose that the variable
accumulation unit value and the variable annuity unit value for the particular
sub-account for the valuation period which ends immediately preceding the first
day of the month is 15.500000 and 13.500000 respectively, and that the variable
annuity rate for the age and option elected is $5.73 per $1,000.
Then the first variable annuity payment would be:
3.200 x 15.5 x 5.73 divided by 1,000 = $284.21,
and the number of variable annuity units credited for future payments would
be:
284.21 divided by 13.5 = 21.052444.
For the second monthly payment, suppose that the variable annuity unit value on
the 10th day of the second month is 13.565712. Then the second variable annuity
payment would be $285.59 (21.052444 x 13.565712).
<PAGE>
Appendix B
<PAGE>
CONDENSED FINANCIAL INFORMATION
The following condensed financial information is derived from the financial
statements of the variable account. The data should be read in conjunction with
the financial statements, related notes, and other financial information
included in the Statement of Additional Information.
The following table sets forth certain information regarding the sub-accounts
for the period from commencement of business operations of the sub-account
through December 31, 1998. The variable accumulation unit values and the number
of variable accumulation units outstanding for each sub-account for the periods
shown are as follows:
<PAGE>
<TABLE>
<CAPTION>
Year Ending December 31,1993
_________________________________________________________________________________________________________
Money Special Zero Coupon Quality
Market Value 2000 Bond Small Cap
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
(Inception 1/4/93)(Inception 1/4/93)(Inception 1/4/93)(Inception 1/4/93) (Inception 1/4/93)
Accumulation Unit Value
<S> <C> <C> <C> <C> <C>
at Beginning of Period $1.021 $12.797 $13.225 $12.310 $39.620
Accumulation Unit Value
at End of Period $1.018 $12.861 $13.373 $12.445 $37.702
Number of Accumulation
Units Outstanding
at End of Period 2,678,280.492 167,686.797 137,252.898 86,752.856 138,557.449
Capital Appreciation Stock IndexSocially Responsible
Sub-Account Sub-Account Sub-Account
(Inception- (Inception (Inception-
4/5/93) 1/4/93) 10/7/93)
Accumulation Unit Value at
Beginning of Period $12.500 $15.310 $12.490
Accumulation Unit Value at
End of Period $13.160 $16.521 $13.364
Number of Accumulation Units
Outstanding at End of Period 237,733.021 93,536.733 26,089.826
Year Ending December 31,
1994_________________________________________________________________________________________________________
Money Special Zero Coupon Quality
Market Value 2000 Bond Small Cap
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
at Beginning of Period $1.018 $12.861 $13.373 $12.445 $37.702
Accumulation Unit Value
at End of Period $1.048 $12.496 $12.672 $11.710 $40.064
Number of Accumulation
Units Outstanding
at End of Period 23,559,789.7951,486,438.137 476,355.738 931,527.691 1.250,237.625
Growth and Income International Equity
Sub-Account Sub-Account
Capital Appreciation Stock Index Socially Responsible (Inception (Inception
Sub-Account Sub-Account Sub-Account 12/15/94) 12/15/94)
Accumulation Unit Value
at Beginning of Period $13.160 $16.521 $13.364 $12.177
$12.247
Accumulation Unit Value
at End of Period $13.373 $16.437 $13.377 $12.167
$12.240
Number of Accumulation
Units Outstanding
at End of Period 919,622.615 348,937.285 135,018.350 4,300.380 8,552.073
Year Ending December 31, 1995
- ------------------------------------------------------------------------------------------------------------
Money Special Zero Coupon Quality
Market Value 2000 Bond Small Cap
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
at Beginning of Period $1.048 $12.496 $12.672 $11.710 $40.064
Accumulation Unit Value
at End of Period $1.093 $12.292 $14.740 $13.908 $51.121
Number of Accumulation
Units Outstanding
at End of Period 31,807,563.947 1,288,429.555 903,799.152 2,052,313.888 2,155,879.198
Growth and Income International Equity
Sub-Account Sub-Account
Capital Appreciation Stock Index Socially Responsible (Inception (Inception
Sub-Account Sub-Account Sub-Account 1/5/95) 1/5/95)
Accumulation Unit Value
at Beginning of Period $13.373 $16.437 $13.377 $12.167 $12.240
Accumulation Unit Value
at End of Period $17.610 $22.172 $17.752 $19.426 $12.964
Number of Accumulation
Units Outstanding
at End of Period 2,077,029.504 977,271.816 295,077.936 2,565,038.589 530,374.642
Year Ending December 31, 1996
- ---------------------------------------------------------------------------------------------------------
Money Special Zero Coupon Quality
Market Value 2000 Bond Small Cap
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
at Beginning of Period $1.093 $12.292 $14.740 $13.908 $51.121
Accumulation Unit Value
at End of Period $1.132 $11.682 $14.911 $14.142 $58.773
Number of Accumulation
Units Outstanding
at End of Period 38,983,053.941 1,232, 530.711 1,320,168.687 3,072,774.847 2,736,720.675
International
Capital Appreciation Stock Index Socially Responsible Growth and Income Equity
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
at Beginning of Period $17.610 $22.172 $17.752 $19.426 $12.964
Accumulation Unit Value
at End of Period $21.802 $26.791 $21.221 $23.131 $14.267
Number of Accumulation
Units Outstanding
at End of Period 3,665,146.389 2,030,280.057 708,680.320 6,332,649.215 1,480,395.223
International Value Disciplined Stock Small Company Stock
Sub-Account Sub-Account Sub-Account
(Inception 5/1/96) (Inception 5/1/96) (Inception 5/1/96)
Accumulation Unit Value
at Beginning of Period $10.00 $10.00 $10.00
Accumulation Unit Value
at End of Period $10.244 $11.776 $10.772
Number of Accumulation
Units Outstanding
at End of Period 230,868.491 618,809.191 543,949.419
Year Ending December 31,
1997_________________________________________________________________________________________________________
Money Special Zero Coupon Quality
Market Value 2000 Bond Small Cap
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
at Beginning of Period $1.132 $11.682 $14.911 $14.142 $58.773
Accumulation Unit Value
at End of Period $1.175 $14.185 $15.736 $15.260 $67.668
Number of Accumulation
Units Outstanding
at End of Period 42,660,950.364 2,649,561.005 1,350,865.031 4,020,220.452 2,954,842.907
International
Capital Appreciation Stock Index Socially Responsible Growth and Income Equity
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
at Beginning of Period $21.802 $26.791 $21.221 $23.131 $14.267
Accumulation Unit Value
at End of Period $27.532 $35.128 $26.879 $26.509 $15.422
Number of Accumulation
Units Outstanding
at End of Period 6,447,159.634 3,357,236.245 1,335,814.063 7,480,387.355 2,176,230.247
Limited Term
High Income Balanced
International Value Disciplined Stock Small Company Stock Sub-Account Sub-Account
Sub-Account Sub-Account Sub-Account (Inception 5/1/97)(Inception 5/1/97)
Accumulation Unit Value
at Beginning of Period $10.244 $11.776 $10.772 $10.000 $10.000
Accumulation Unit Value
at End of Period $10.982 $15.272 $12.935 $10.852 $11.738
Number of Accumulation
Units Outstanding
at End of Period 1,047,389.002 2,278,146.352 1,604,089.554 2,424,231.798 647,855.304
Year Ending December 31,
1998_________________________________________________________________________________________________________
Money Special Zero Coupon Quality
Market Value 2000 Bond Small Cap
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
at Beginning of Period $1.175 $14.185 $15.736 $15.260 $67.668
Accumulation Unit Value
at End of Period $1.22 $16.19 $16.65 $15.88 $64.44
Number of Accumulation
Units Outstanding
at End of Period 53,939,642.1962,764,173.241 1,263,163.357 5,030,446.431 2,615,765.058
International
Capital Appreciation Stock Index Socially Responsible Growth and Income Equity
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
at Beginning of Period $27.532 $35.128 $26.879 $26.509 $15.422
Accumulation Unit Value
at End of Period $35.36 $44.42 $34.30 $29.23 $15.89
Number of Accumulation
Units Outstanding
at End of Period 8,121,246.029 4,443,711.383 1,744,708.001 7,270,897.3962,456,885.911
Limited Term
High Income Balanced
International Value Disciplined Stock Small Company Stock Sub-Account Sub-Account
Sub-Account Sub-Account Sub-Account (Inception 5/1/97)(Inception 5/1/97)
Accumulation Unit Value
at Beginning of Period $10.982 $15.272 $12.935 $10.852 $11.738
Accumulation Unit Value
at End of Period $11.78 $19.09 $11.99 $10.73 $14.16
Number of Accumulation
Units Outstanding
at End of Period 1,380,692.935 4,753,022.290 2,111,028.689 6,458,312.119 2,280,501.753
Transamerica Growth Cash Value MidCap Stock
Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
at Beginning of Period N/A N/A N/A
Accumulation Unit Value
at End of Period $11.35 $9.29 $9.63
Number of Accumulation
Units Outstanding
at End of Period 1,634,054.907 95,759.521 467,292.833
</TABLE>
Financial Statements for the Variable Account and Transamerica
The financial statements and reports of independent auditors for the
variable account and Transamerica are contained in the Statement of Additional
Information.
<PAGE>
Appendix C
DEFINITIONS
Account: The account established and maintained under the contract to which your
net purchase payments are credited.
Account Value: The account value is equal to the sum of: a) the fixed
accumulated value, plus b) the variable accumulated value.
Active Sub-Account: A sub-account of the variable account in which the contract
has current value.
Annuitant: The person: (a) whose life is used to determine the amount of monthly
annuity payments on the annuity date; and (b) who is the payee designated to
receive monthly annuity payments, unless such payee is changed by the owner. The
annuitant cannot be changed after the contract has been issued, except upon the
annuitant's death before the annuity date if a contingent annuitant has
previously been named. In the case of a qualified contract used to fund an IRA
or a 403(b) annuity, the owner must be the annuitant.
Annuitant's Beneficiary: The person or persons named by the owner who may
receive the death benefit under the contract, if: (a) the annuitant is not the
owner, there is no named contingent annuitant and the annuitant dies before the
annuity date and before the death of the owner or owners; or (b) the annuitant
dies after the annuity date under an annuity form containing a period certain
option.
Annuity Date: The date on which the annuity purchase amount will be applied to
provide an annuity under the annuity form and payment option selected by the
owner. Monthly annuity payments will start the first day of the month
immediately following the annuity date. Unless the annuity date is changed as
allowed by the contract, the annuity date will be as shown in the contract.
Annuity Payment: An amount paid by Transamerica at regular intervals to the
annuitant and/or any other payee specified by the owner. It may be on a variable
or fixed basis.
Annuity Purchase Amount: The amount applied as a single purchase payment to
provide an annuity under the annuity form and payment options available under
the contract. The annuity purchase amount is equal to the account value, less
any applicable contingent deferred sales load, and less any applicable premium
taxes. In determining the annuity purchase amount, Transamerica will waive the
contingent deferred sales load if the annuity form involves life contingencies
and the annuity date occurs on or after the third contract anniversary.
Annuity Year: A one-year period starting on the annuity date and, after that,
each succeeding one-year period.
Cash Surrender Value: The amount payable to the owner if the contract is
surrendered on or before the annuity date. The cash surrender value is equal to
the account value, less the account fee, less any applicable contingent deferred
sales load, and less applicable premium taxes.
Code: The U.S. Internal Revenue Code of 1986, as amended, and the rules and
regulations issued thereunder.
Contingent Annuitant: The person who: (a) becomes the annuitant if the annuitant
dies before the annuity date; or (b) may receive benefits under the contract if
the annuitant dies after the annuity date under an annuity form containing a
contingent annuity option. A contingent annuitant may be designated only if the
owner is not also the annuitant. The contingent annuitant may be changed at any
time by the owner while the annuitant is living and before the annuity date.
Contingent Deferred Sales Load: A charge equal to a percentage of premiums
withdrawn from the certificate that are less than seven years old. See
Contingent Deferred Sales Load/Surrender Charge on page 34 for the specific
percentages.
Contract Anniversary: The same month and day as the contract date in each
calendar year after the calendar year in which the contract date occurs.
Contract Date: The effective date of the contract as shown on the contract.
Contract Year: The 12-month period from the contract date and ending with the
day before the first contract anniversary and each twelve month period
thereafter. The first contract year for any particular net purchase payment is
the contract year in which the purchase payment is received by the service
center.
Expiration Date: The last day of a guarantee period.
Fixed Account: The fixed account contains one or more guarantee periods to which
all or portions of net purchase payments and transfers may be allocated. The
fixed account assets are general assets of the company and are distinguishable
from those allocated to a separate account of the company.
Fixed Accumulated Value: The total dollar amount of all guarantee amounts held
under the fixed account for the contract before the annuity date. The fixed
accumulated value is determined without regard to any interest adjustment.
Fixed Annuity: An annuity with predetermined payment amounts.
Free Look Period: The period of time, beginning on the date the owner receives
the contract, during which the owner has the right to cancel the contract. The
length of this period depends upon the state of issuance.
Funds: Dreyfus Variable Investment Fund, Dreyfus Stock Index Fund, The Dreyfus
Socially Responsible Growth Fund, Inc., Dreyfus Investment Portfolios and
Transamerica Variable Insurance Fund, Inc., in which the variable account
currently invests.
Guarantee Amount: An amount equal to: a) the amount of the net purchase payment
or transfer allocated to a particular guarantee period with a particular
expiration date; less b) any withdrawals or transfers made from that guarantee
period; less c) any applicable transfer fee; less d) any reductions for the
annual account fee; and plus e) interest credited.
Guarantee Period: The period for which a guaranteed interest rate is credited
which shall not be less than one year.
Inactive Sub-Account: A sub-account of the variable account in which the
contract has a zero balance.
Net Investment Factor: An index that measures the investment performance of a
sub-account from one valuation period to the next.
Net Purchase Payment: A purchase payment reduced by any applicable premium tax,
including retaliatory premium taxes.
Non-Qualified Contract: A contract that does not receive favorable tax treatment
under the Code.
Owner or Joint Owners: The person or persons who, while living, control all
rights and benefits under the contract. Joint owners own the contract equally
with the right of survivorship. The right of survivorship means that if a joint
owner dies, his or her interest in the contract will pass to the surviving joint
owner in accordance with the death benefit provision. Joint owners must be
husband and wife as of the contract date (except in Pennsylvania). Qualified
contracts may not have joint owners.
Owner's Beneficiary: If the owner is an individual, the owner's beneficiary is
the person(s) who may receive the death benefit if the owner dies before the
annuity date and before the death of the annuitant. If the contract has joint
owners, the surviving joint owner will be the owner's beneficiary.
Payee: The person who receives the annuity payments after the annuity date. The
payee will be the annuitant, unless otherwise changed by the owner.
Portfolio: Dreyfus Stock Index Fund, The Dreyfus Socially Responsible Growth
Fund, Inc., or any one of the series of Dreyfus Variable Investment Fund or any
one of the portfolios of Dreyfus Investment Portfolios or the Growth Portfolio
of Transamerica Variable Insurance Fund, Inc., underlying a sub-account of the
variable account.
Proof of Death: May be: (a) a copy of a certified death certificate; (b) a copy
of a certified decree of a court of competent jurisdiction as to the finding of
death; (c) a written statement by a medical doctor who attended the deceased; or
(d) any other proof satisfactory to us. Qualified Contract: A contract issued in
connection with a retirement plan or program.
Receipt: Receipt and acceptance by us at our service center.
Series: Any of the portfolios of Dreyfus Variable Investment Fund available for
investment by a sub-account under the contract.
Service Center: Transamerica's Annuity Service Center, at P.O. Box 31728,
Charlotte, North Carolina 28231-1728 and at telephone (800) 258-4261.
Source Account: A sub-account of the variable account or the fixed account, as
permitted, from which dollar cost averaging transfers are being made.
Sub-Account: A subdivision of the variable account investing solely in shares of
one of the portfolios.
Surrender Charge: See Contingent Deferred Sales Load.
Valuation Day: Any day the New York Stock Exchange is open for trading.
Valuation Period: The time interval between the closing of the New York Stock
Exchange on consecutive valuation days.
Variable Account: Separate Account VA-2L, a separate account established and
maintained by Transamerica for the investment of a portion of its assets
pursuant to Section 10506 of the California Insurance Code. The variable account
contains several sub-accounts to which all or portions of net purchase payments
and transfers may be allocated.
Variable Accumulated Value: The total dollar amount of all variable accumulation
units under each sub-account of the variable account held for the contract
before the annuity date. The variable accumulated value before the annuity date
is equal to: (a) net purchase payments allocated to the sub-accounts; plus or
minus (b) any increase or decrease in the value of assets of the sub-accounts
due to investment results; less (c) the daily mortality and expense risk charge;
less (d) the daily administrative expense charge; less (e) reductions for the
annual account fee deducted on the last business day of each contract year; plus
or minus (f) amounts transferred to or from the fixed account; less (g) any
applicable transfer fees; and less (h) withdrawals from the sub-accounts.
Variable Accumulation Unit: A unit of measure used to determine the account
value before the annuity date. The value of a variable accumulation unit varies
with each sub-account.
Variable Annuity: An annuity with payments which vary as to dollar amount in
relation to the investment performance of specified sub-accounts of the variable
account.
Variable Annuity Unit: A unit of measure used to determine the amount of the
second and each subsequent payment under a variable annuity payment option. The
value of a variable annuity unit varies with each sub-account.
Withdrawals: Refers to partial withdrawals, full surrenders, and systematic
withdrawals that are paid in cash to the owner, person or persons specified by
the owner.
Written Notice or Written Request: A notice or request in writing by the owner
to our service center. Such a request must contain original signatures; no
carbons or photocopies will be accepted. We reserve the right to accept a
facsimile copy.
<PAGE>
Appendix D
Transamerica Life Insurance and Annuity Company
DISCLOSURE STATEMENT
for Individual Retirement Annuities
The following information is being provided to you, the owner, in accordance
with the requirements of the Internal Revenue Service (IRS). This Disclosure
Statement contains information about opening and maintaining an Individual
Retirement Account or Annuity (IRA), and summarizes some of the financial and
tax consequences of establishing an IRA.
Part I of this Disclosure Statement discusses Traditional IRAs, while Part II
addresses Roth IRAs. Because the tax consequences of the two categories of IRAs
differ significantly, it is important that you review the correct part of this
Disclosure Statement to learn about your particular IRA. This Disclosure
Statement does not discuss Education IRAs or SIMPLE-IRAs, except as necessary in
the context of discussing other types of IRAs.
Your Transamerica Life Insurance and Annuity Company's Individual Retirement
Annuity, also referred to as a Transamerica Life IRA Contract has been approved
as to form by the IRS. In addition, we are using an IRA and a Roth IRA
Endorsement based on the IRS-approved text. Please note that IRS approval
applies only to the form of the contract and does not represent a determination
of the merits of such IRA contract.
It may be necessary for us to amend your Transamerica Life IRA or Roth IRA
Contract in order for us to obtain or maintain IRS approval of its tax
qualification. In addition, laws and regulations adopted in the future may
require changes to your contract in order to preserve its status as an IRA. We
will send you a copy of any such amendment.
No contribution to a Transamerica Life IRA will be accepted under a SIMPLE plan
established by any employer pursuant to Internal Revenue Code Section 408(p). No
transfer or rollover of funds attributable to contributions made by an employer
to your SIMPLE IRA under the employer's SIMPLE plan may be transferred or rolled
over to your Transamerica Life IRA before the expiration of the two year period
beginning on the date you first participated in the employer's SIMPLE plan. In
addition, depending on the annuity contract you purchased, contributory IRAs may
or may not be available.
This Disclosure Statement includes the non-technical explanation of some of the
changes made by the Tax Reform Act of 1986 applicable to IRAs and more recent
changes made by the Small Business Job Protection Act of 1996, the Health
Insurance Portability and Accountability Act of 1996, the Tax Relief Act of 1997
and the IRS Restructuring and Reform Act of 1998.
The information provided applies to contributions made and distributions
received after December 31, 1986, and reflects the relevant provisions of the
Code as in effect on January 1, 1999. This Disclosure Statement is not intended
to constitute tax advice, and you should consult a tax professional if you have
questions about your own circumstances.
Revocation of Your IRA or Roth IRA
You have the right to revoke your Traditional IRA or Roth IRA issued by us
during the seven calendar day period following its establishment. The
establishment of your Traditional IRA or Roth IRA contract will be the contract
effective date. This seven day calendar period may or may not coincide with the
free look period of your contract.
In order to revoke your Traditional IRA or Roth IRA, you must notify us in
writing and you must mail or deliver your revocation to us postage prepaid, at:
401 North Tryon Street, Charlotte, NC 28202. The date of the postmark, or the
date of certification or registration if sent by certified or registered mail,
will be considered your revocation date. If you revoke your Traditional IRA or
Roth IRA during the seven day period, an amount equal to your premium will be
returned to you without any adjustment.
Definitions
Code - Internal Revenue Code of 1986, as amended, and regulations issued
thereunder.
Contributions - Purchase payments paid to your contract.
Contract - The annuity policy, certificate or contract which you purchased.
Compensation - For purposes of determining allowable contributions, the term
compensation includes all earned income, including net earnings from
self-employment and alimony or separate maintenance payments received under a
decree of divorce or separate maintenance and includable in your gross income,
but does not include deferred compensation or any amount received as a pension
or annuity.
Regular Contributions - In General
As is more fully discussed below, for 1998 and later years, the maximum total
amount that you may contribute for any tax year to your regular IRAs and your
regular Roth IRAs combined is $2,000, or if less, your compensation for that
year. Once you attain age 70 1/2, this limit is reduced to zero only for your
regular IRAs, not for your Roth IRAs, but the separate limit on Roth IRA
contributions can be reduced to zero for taxpayers with adjusted gross income,
also referred to as AGI, above certain levels, as described below in Part II,
Section 1. While your Roth IRA contributions are never deductible, your regular
IRA contributions are fully deductible, unless you, or your spouse, is an active
participant in some form of tax-qualified retirement plan for the tax year. In
the latter case, any deductible portion of your regular IRA contributions for
each year is subject to the limits that are described below in Part I, Section
2, and any remaining regular IRA contributions for that year must be reported to
the IRS as nondeductible IRA contributions, along with your Roth IRA
contributions.
IRA PART I: TRADITIONAL IRAs
The rules that apply to a Traditional Individual Retirement Account or Annuity,
which is referred to in this Disclosure Statement simply as an "IRA" or as a
"Traditional IRA" and which includes a regular or Spousal IRA and a rollover
IRA, generally also apply to IRAs under Simplified Employee Pension plans or
SEP-IRAs, unless specific rules for SEP-IRAs are stated.
1. Contributions
(a) Regular IRA. Regular IRA contributions must be in cash and are subject to
the limits described above. Such contributions are also subject to the minimum
amount under the Transamerica IRA contract. In addition, any of your regular
contributions to an IRA for a tax year must be made by the due date, not
including extensions, for your federal tax return for that tax year. See also
Part II, Section 4 below about recharacterizing IRA and Roth IRA contributions
by such date.
(b) Spousal IRA. If you and your spouse file a joint federal income tax return
for the taxable year and if your spouse's compensation, if any, includable in
gross income for the year is less than the compensation includable in your gross
income for the year, you and your spouse may each establish your own separate
regular IRA, and Roth IRA, and may make contributions to such IRAs for your
spouse that are not limited by your spouse's lower amount of compensation.
Instead, the limit for the total contribution to spousal IRAs that can be made
by you or your spouse for the tax year is:
1. $2,000; or
2. if less, the total combined compensation for both you and your spouse
reduced by any deductible IRA contributions and any Roth IRA contributions
for such year.
As with any regular IRA contributions, those for your spouse cannot be made for
any tax year in which your spouse has attained age 70 1/2, must be in cash, and
must be made by the due date, not including extensions, for your federal income
tax return for that tax year.
(c) Rollover IRA. Rollover contributions to a Traditional IRA are unlimited in
dollar amount. These can include rollover contributions of eligible
distributions received by you from another Traditional IRA or tax-qualified
retirement plan. Generally, any distribution from a tax-qualified retirement
plans, such as a pension or profit sharing plan, Code Section 401(k) plan, H.R.
10 or Keogh plan, or a Traditional IRA can be rolled over to a Traditional IRA
unless it is a required minimum distribution as discussed below in Part I,
Section 4(a) or it is part of a series of payments to be paid to you over your
life, life expectancy or a period of at least 10 years. In addition,
distributions of "after-tax" plan contributions, i.e., amounts which are not
subject to federal income tax when distributed from a tax-qualified retirement
plan, are not eligible to be rolled over to an IRA. If a distribution from a
tax-qualified plan or a Traditional IRA is paid to you and you want to roll over
all or part of the eligible distributed amount to a Transamerica Life
Traditional IRA, the rollover must be accomplished within 60 days of the date
you receive the amount to be rolled over. However, you may roll over any amount
from one Traditional IRA into another Traditional IRA only once in any 365-day
period.
A timely rollover of an eligible distributed amount that has been paid to you
directly will prevent its being taxable to you at the time of distribution; that
is, none of it will be includable in your gross income until you withdraw some
amount from your rollover IRA. However, any such distribution directly to you
from a tax-qualified retirement plan is generally subject to a mandatory 20%
withholding tax.
By contrast, a direct transfer from a tax-qualified retirement plan to a
Traditional IRA is considered a "direct" rollover and is not subject to any
mandatory withholding tax, or other federal income tax, upon the direct
transfer. If you elect to make such a "direct" rollover from a tax-qualified
plan to a Transamerica Life Traditional IRA, the transferred amount will be
deposited directly into your rollover IRA.
Strict limitations apply to rollovers, and you should seek competent tax advice
in order to comply with all the rules governing rollovers.
(d) Direct Transfers from another Traditional IRA. You may make an initial or
subsequent contribution to your Transamerica Life Traditional IRA by directing
the fiduciary or issuer of any of your existing IRAs to make a direct transfer
of all or part of such IRAs in cash to your Transamerica Life Traditional IRA.
Such a direct transfer between Traditional IRAs is not considered a rollover ,
e.g., for purposes of the 1-year waiting period or withholding.
(e) Simplified Employee Pension Plan, or SEP-IRA. If an IRA is established that
meets the requirements of a SEP-IRA, generally your employer may contribute an
amount not to exceed the lesser of 15% of your includable compensation ($160,000
for 1999, adjusted for inflation thereafter) or $30,000, even after you attain
age 70 1/2. The amount of such contribution is not includable in your income for
federal income tax purposes. In the case of a SEP-IRA that has a grandfathered
qualifying form of salary reduction, referred to as a SARSEP, that was
established by an employer before 1997, generally any employee, including a
self-employed individual, who:
1. has worked for the employer for 3 of the last 5 preceding tax years;
2. is at least age 21; and
3. has received from the employer compensation of at least $400 for the
current tax year, adjusted for inflation after 1999.
is eligible to make a before tax salary reduction contribution to the SARSEP for
the current tax year of up to $10,000, adjusted for inflation after 1998,
subject to the overall limits for SEP-IRA contributions.
Your employer is not required to make a SEP-IRA contribution in any year nor
make the same percentage contribution each year. But if contributions are made,
they must be made to the SEP-IRA for all eligible employees and must not
discriminate in favor of highly compensated employees. If these rules are not
met, any SEP-IRA contributions by the employer could be treated as taxable to
the employees and could result in adverse tax consequences to the participating
employee. For further details about SARSEPs and SEP-IRAs, e.g., for computing
contribution limits for self-employed individuals, see IRS Publication 590, as
indicated below.
(f) Responsibility of the Owner. Contributions, rollovers, or transfers to any
IRA must be made in accordance with the appropriate sections of the Code. It is
your full and sole responsibility to determine the tax deductibility of any
contribution to your Traditional IRA, and to make such contributions in
accordance with the Code. Transamerica does not provide tax advice, and assumes
no liability for the tax consequences of any contribution to your Transamerica
Life Traditional IRA.
<PAGE>
2. Deductibility of Contributions for a Regular IRA
(a) General Rules. The deductible portion of the contributions made to the
regular IRAs for you, or your spouse, for a tax year depends on whether you, or
your spouse, is an "active participant" in some type of a tax-qualified
retirement plan for such year, as described in Section 2(b) immediately below.
If you and your spouse file a joint return for a tax year and neither of you is
an active participant for such year, then the permissible contributions to the
regular IRAs for each of you are fully deductible up to $2,000 each, i.e., your
combined deductible IRA contribution limit for the tax year could be $4,000.
Similarly, if you are not married, or treated as such, for the tax year and you
are not an active participant for such year, the permissible contributions to
your regular IRAs for the tax year are fully deductible up to $2,000. For
instance, if you and your spouse file separate returns for the tax year and you
did not live together at any time during such tax year, then you are treated as
unmarried for such year, and if you were not an active participant for the tax
year, then your deductible limit for your regular IRA contribution is $2,000,
even if your spouse was an active participant for such year.
If you are an active participant for the tax year, then your $2,000 limit is
subject to a phase-out rule if your AGI for such year exceeds a Threshold Level,
depending on your tax filing status and the calendar year. If, however, you are
not an active participant for the tax year but your spouse is, then your $2,000
limit is subject to the phase-out rule only if your AGI exceeds a higher
Threshold Level. See Part I, Section 2(c), below.
(b) Active Participant. You are an "active participant" for a year if you
participate in some type of tax-qualified retirement plan. For example, if you
participate in a qualified pension or profit sharing plan, a Code Section 401(k)
plan, certain government plans, a tax-sheltered arrangement under Code Section
403, a SIMPLE plan or a SEP-IRA plan, you are considered to be an active
participant. Your Form W-2 for the year should indicate your participation
status.
(c) Adjusted Gross Income, also referred to as AGI. If you are an active
participant, you must look at your AGI for the year, or if you and your spouse
file a joint tax return, you use your combined AGI, to determine whether you can
make a deductible IRA contribution for that taxable year. The instructions for
your tax return will show you how to calculate your AGI for this purpose. If you
are at or below a certain AGI level, called the Threshold Level, you are treated
as if you were not an active participant and you can make a deductible
contribution under the same rules as a person who is not an active participant.
If you are an active participant for the tax year, then your Threshold Level
depends upon whether you are a married taxpayer filing a joint tax return, an
unmarried taxpayer, or a married taxpayer filing a separate tax return. If you
are a married taxpayer but file a separate tax return, the Threshold Level is
$0. If you are a married taxpayer filing a joint tax return, or an unmarried
taxpayer, your Threshold Level depends upon the taxable year, and can be
determined using the appropriate table below:
<PAGE>
<TABLE>
<CAPTION>
Married Filing Jointly Unmarried
Taxable Threshold Taxable Threshold
Year Level Year Level
<S> <C> <C> <C> <C>
1998 $50,000 1998 $30,000
1999 $51,000 1999 $31,000
2000 $52,000 2000 $32,000
2001 $53,000 2001 $33,000
2002 $54,000 2002 $34,000
2003 $60,000 2003 $40,000
2004 $65,000 2004 $45,000
2005 $70,000 2005 and
2006 $75,000 thereafter $50,000
2007 and
thereafter $80,000
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Beginning in 1998, if you are not an active participant for the tax year but
your spouse is, and you are not treated as unmarried for filing purposes, then
your Threshold Level is $150,000.
If your AGI is less than $10,000 above your Threshold Level, or $20,000 for
married taxpayers filing jointly for the taxable year beginning on or after
January 1, 2007, you will still be able to make a deductible contribution, but
it will be limited in amount. The amount by which your AGI exceeds your
Threshold Level is called your Excess AGI. The Maximum Allowable Deduction is
$2,000, even for Spousal IRAs. You can calculate your Deduction Limit as
follows:
10,000 - Excess AGI x Maximum Allowable Deduction = Deduction Limit 10,000
For taxable years beginning on or after January 1, 2007, married taxpayers
filing jointly should substitute 20,000 for 10,000 in the numerator and
denominator of the above equation.
You must round up any computation of the Deduction Limit to the next highest $10
level, that is, to the next highest number which ends in zero. For example, if
the result is $1,525, you must round it up to $1,530. If the final result is
below $200 but above zero, your Deduction Limit is $200. Your Deduction Limit
cannot in any event exceed 100% of your compensation.
3. Nondeductible Contributions to Regular IRAs
The amounts of your regular IRA contributions which are not deductible will be
nondeductible contributions to such IRAs. You may also choose to make a
nondeductible contribution to your regular IRA, even if you could have deducted
part or all of the contribution. Interest or other earnings on your regular IRA
contributions, whether from deductible or nondeductible contributions, will not
be taxed until taken out of your IRA and distributed to you.
If you make a nondeductible contribution to an IRA, you must report the amount
of the nondeductible contribution to the IRS as a part of your tax return for
the year, e.g., on Form 8606.
4. Distributions
(a) Required Minimum Distributions, or simply, RMD. Distributions from your
Traditional IRAs must be made or begin no later than April 1 of the calendar
year following the calendar year in which you attain age 70 1/2, the required
beginning date. You may take RMDs from any Traditional IRA you maintain, but not
from any Roth IRA, as long as:
a) distributions begin when required;
b) distributions are made at least once a year; and
c) the amount to be distributed is not less than the minimum required under
current federal tax law.
If you own more than one Traditional IRA, you can choose whether to take your
RMD from one Traditional IRA or a combination of your Traditional IRAs. A
distribution may be made at once in a lump sum, as qualifying partial
withdrawals or as qualifying settlement option payments. Qualifying partial
withdrawals and settlement option payments must be made in equal or
substantially equal amounts over:
a) your life or the joint lives of you and your beneficiary; or
b) a period not exceeding your life expectancy, as redetermined annually under
IRS tables in the income tax regulations, or the joint life expectancy of
you and your beneficiary, as redetermined annually, if that beneficiary is
your spouse.
Also, special rules may apply if your designated beneficiary, other than your
spouse, is more than ten years younger than you.
If qualifying settlement option payments start before the April 1 following the
year you turn age 70 1/2, then the annuity date of such settlement option
payments will be treated as the required beginning date for purposes of the RMD
provisions, above, and the death benefit provisions, below.
If you die before the entire interest in your Traditional IRAs is distributed to
you, but after your required beginning date, the entire interest in your
Traditional IRAs must be distributed to your beneficiaries at least as rapidly
as under the method in effect at your death. If you die before your required
beginning date and if you have a designated beneficiary, distributions to your
designated beneficiary can be made in substantially equal installments over the
life or life expectancy of the designated beneficiary, beginning by December 31
of the calendar year that is one year after the year of your death. Otherwise,
if you die before your required beginning date and your surviving spouse is not
your designated beneficiary, distributions must be completed by December 31 of
the calendar year that is five years after the year of your death.
If your designated beneficiary is your surviving spouse, and you die before your
required beginning date, your surviving spouse can become the new
owner/annuitant and can continue the Transamerica Life Traditional IRA on the
same basis as before your death. If your spouse elects to continue the contract,
an amount equal to the excess, if any, of the Death Benefit over the account
value will then be added to the account value. This amount will be added only
once, at the time of such election. Furthermore, all future contingent deferred
sales loads will be waived. If your surviving spouse does not wish to continue
the contract as his or her IRA, he or she may elect to receive the death benefit
in the form of qualifying settlement option payments in order to avoid the
5-year rule. Such payments must be made in substantially equal amounts over your
spouse's life or a period not extending beyond his or her life expectancy. Your
surviving spouse must elect this option and begin receiving payments no later
than the later of the following dates:
a) December 31 of the year following the year you died; or
b) December 31 of the year in which you would have reached the required
beginning date if you had not died.
Either you or, if applicable, your beneficiary, is responsible for assuring that
the RMD is taken in a timely manner and that the correct amount is distributed.
(b) Taxation of IRA Distributions. Because nondeductible Traditional IRA
contributions are made using income which has already been taxed, that is, they
are not deductible contributions, the portion of the Traditional IRA
distributions consisting of nondeductible contributions will not be taxed again
when received by you. If you make any nondeductible contributions to your
Traditional IRAs, each distribution from any of your Traditional IRAs will
consist of a nontaxable portion, return of nondeductible contributions, and a
taxable portion, return of deductible contributions, if any, and earnings.
Thus, if you receive a distribution from any of your Traditional IRAs and you
previously made deductible and nondeductible contributions to such IRAs, you may
not take a Traditional IRA distribution which is entirely tax-free. The
following formula is used to determine the nontaxable portion of your
distributions for a taxable year.
Remaining nondeductible contributions
Divided by
Year-end total adjusted Traditional IRA balances
Multiplied by
Total distributions
for the year
Equals:
Nontaxable distributions
for the year
To figure the year-end total adjusted Traditional IRA balance, you must treat
all of your Traditional IRAs as a single Traditional IRA. This includes all
regular IRAs, as well as SEP-IRAs, SIMPLE IRAs and Rollover IRAs, but not Roth
IRAs. You also add back to your year-end total Traditional IRA balances,
specifically the distributions taken during the year from your Traditional IRAs.
Please refer to IRS Publication 590, Individual Retirement Arrangements for
instructions, including worksheets, that can assist you in these calculations.
Transamerica Life Insurance and Annuity Company will report all distributions
from your Transamerica Traditional IRA to the IRS as fully taxable income to
you.
Even if you withdraw all of the assets in your Traditional IRAs in a lump sum,
you will not be entitled to use any form of lump sum treatment or income
averaging to reduce the federal income tax on your distribution. Also, no
portion of your distribution qualifies as a capital gain. Moreover, any
distribution made before you reach age 59 1/2, may be subject to a 10% penalty
tax on early distributions, as indicated below.
(c) Withholding. Unless you elect not to have withholding apply, federal income
tax will be withheld from your Traditional IRA distributions. If you receive
distributions under a settlement option, tax will be withheld in the same manner
as taxes withheld on wages, calculated as if you were married and claim three
withholding allowances. If you are receiving any other type of distribution, tax
will be withheld in the amount of 10% of the distribution. If payments are
delivered to foreign countries, federal income tax will generally be withheld at
a 10% rate unless you certify to Transamerica that you are not a U. S. citizen
residing abroad or a tax avoidance expatriate as defined in Code Section 877.
Such certification may result in mandatory withholding of federal income taxes
at a different rate.
5. Penalty Taxes
(a) Excess Contributions. If at the end of any taxable year the total regular
IRA contributions you made to your Traditional IRAs and your Roth IRAs, other
than rollovers or transfers, exceed the maximum allowable deductible and
nondeductible contributions for that year, the excess contribution amount will
be subject to a nondeductible 6% excise penalty tax. Such penalty tax cannot
exceed 6% of the value of your IRAs at the end of such year.
However, if you withdraw the excess contribution, plus any earnings on it,
before the due date for filing your federal income tax return, including
extensions, for the taxable year in which you made the excess contribution, the
excess contribution will not be subject to the 6% penalty tax. The amount of the
excess contribution withdrawn will not be considered an early distribution, nor
otherwise be includible in your gross income if you have not taken a deduction
for the excess amount. However, the earnings withdrawn will be taxable income to
you and may be subject to the 10% penalty tax on early distributions.
Alternatively, excess contributions for one year may be withdrawn in a later
year or may be carried forward as regular IRA contributions in the following
year to the extent that the excess, when aggregated with your regular IRA
contributions, if any, for the subsequent year, does not exceed the maximum
allowable deductible and nondeductible amount for that year. The 6% excise tax
will be imposed on excess contributions in each subsequent year they are neither
returned to you nor applied as permissible regular IRA contributions for such
year.
(b) Early Distributions. Since the purpose of an IRA is to accumulate funds for
retirement, your receipt or use of any portion of your IRA before you attain age
59 1/2 constitutes an early distribution subject to a 10% penalty tax unless the
distribution occurs as a result of your death or disability or is part of a
series of substantially equal payments made over your life expectancy or the
joint life expectancies of you and your beneficiary, as determined from IRS
tables in the income tax regulations.
Also, the 10% penalty tax will not apply if distributions are used to pay for
medical expenses in excess of 7.5% of your AGI or if distributions are used to
pay for health insurance premiums for you, your spouse and/or your dependents if
you are an unemployed individual who is receiving unemployment compensation
under federal or state programs for at least 12 consecutive weeks. Effective for
distributions made in 1998 or later, the 10% penalty tax also will not apply to
an early distribution made to pay for certain qualifying first-time homebuyer
expenses of you or certain family members, or for certain qualifying higher
education expenses for you or certain family members.
First-time homebuyer expenses must be paid within 120 days of the distribution
from the IRA and include up to $10,000 of the costs of acquiring, constructing,
or reconstructing a principal residence, including any usual or reasonable
settlement, financing or other closing costs. Higher education expenses include
tuition, fees, books, supplies, and equipment required for enrollment,
attendance, and room and board at a post-secondary educational institution. The
amount of an early distribution, excluding any nondeductible contribution
included therein, is includable in your gross income and may be subject to the
10% penalty tax unless you transfer it to another IRA as a qualifying rollover
contribution.
(c) Failure To Satisfy RMD. If the RMD rules described above in Part I, Section
4(a) apply to you and if the amount distributed during a calendar year is less
than the minimum amount required to be distributed, you will be subject to a
penalty tax equal to 50% of the excess of the amount required to be distributed
over the amount actually distributed.
(d) Policy Loans and Prohibited Transactions. If you or any beneficiary engage
in any prohibited transaction, such as any sale, exchange or leasing of any
property between you and the Traditional IRA, or any interference with the
independent status of such IRA, the Traditional IRA will lose its tax exemption
and be treated as having been distributed to you. The value of the entire
Traditional IRA, excluding any nondeductible contributions included therein,
will be includable in your gross income; and, if at the time of the prohibited
transaction you are under age 59 1/2, you may also be subject to the 10% penalty
tax on early distributions, as described above in Part I, Section 5(b).
If you borrow from or pledge your Traditional IRA, or your benefits under the
contract, as security for a loan, the portion borrowed or pledged as security
will cease to be tax-qualified, the value of that portion will be treated as
distributed to you, and you will have to include the value of the portion
borrowed or pledged as security in your income that year for federal tax
purposes. You may also be subject to the 10% penalty tax on early distributions.
(e) Overstatement or Understatement of Nondeductible Contributions. If you
overstate your nondeductible Traditional IRA contributions on your federal
income tax return, without reasonable cause, you may be subject to a reporting
penalty. Such a penalty also applies for failure to file any form required by
the IRS to report nondeductible contributions. These penalties are in addition
to any ordinary income or penalty taxes, interest, and penalties for which you
may be liable if you underreport income upon receiving a distribution from your
Traditional IRA. See Part I, Section 4(b) above for the tax treatment of such
distributions. IRA PART II: ROTH IRAs
1. Contributions
(a) Regular Roth IRA. You may make contributions to a regular Roth IRA in any
amount up to the contribution limits described in Part II, Section 3, below.
Such contributions are also subject to the minimum amount under the Transamerica
Life Roth IRA contract. Such contribution must be in cash. Your contribution for
a tax year must be made by the due date, not including extensions, for your
federal income tax return for that tax year. Unlike Traditional IRAs, you may
continue making Roth IRA contributions after reaching age 70 1/2 to the extent
that your AGI does not exceed the levels described below.
(b) Spousal Roth IRA. If you and your spouse file a joint federal income tax
return for the taxable year and if your spouse's compensation, if any,
includable in gross income for the year is less than the compensation includable
in your gross income for the year, you and your spouse may each establish your
own individual Roth IRA and may make contributions to those Roth IRAs in
accordance with the rules and limits for contributions contained in the Code,
which are described in Part II, Section 3, below. Such contributions must be in
cash. Your contribution to a Spousal Roth IRA for a tax year must be made by the
due date, not including extensions, for your federal income tax return for that
tax year.
(c) Rollover Roth IRA. You may make contributions to a Rollover Roth IRA within
60 days after receiving a distribution from an existing Roth IRA, subject to
certain limitations discussed in Part II, Section 3, below.
(d) Transfer Roth IRA. You may make an initial or subsequent contribution to
your Transamerica Life Roth IRA by directing a fiduciary or issuer of any of
your existing Roth IRAs to make a direct transfer of all or a portion of the
assets from such Roth IRAs to your Transamerica Life Roth IRA.
(e) Conversion Roth IRA. You may make contributions to a Conversion Roth IRA
within 60 days of receiving a distribution from an existing Traditional IRA or
by instructing the fiduciary or issuer of any of your existing Traditional IRAs
to make a direct transfer of all or a portion of the assets from such a
Traditional IRA to your Transamerica Life Roth IRA, subject to certain
restrictions and subject to income tax on some or all of the converted amounts.
If your AGI, not including the conversion amount, is greater than $100,000 for
the tax year, or if you are married and you and your spouse file separate tax
returns, you may not convert or transfer any amount from a Traditional IRA to a
Roth IRA.
(f) Responsibility of the Owner. Contributions, rollovers, transfers or
conversions to a Roth IRA must be made in accordance with the appropriate
sections of the Code. It is your full and sole responsibility to make
contributions to your Roth IRA in accordance with the Code. Transamerica Life
Insurance and Annuity Company does not provide tax advice, and assumes no
liability for the tax consequences of any contribution to your Roth IRA.
2. Deductibility of Contributions
Your Roth IRA permits only nondeductible after-tax contributions. However,
distributions from your Roth IRA are generally not subject to federal income
tax. See Part II, 4(b) below. This is unlike a Traditional IRA, which permits
deductible and nondeductible contributions, but which provides that most
distributions are subject to federal income tax.
3. Contribution Limits
Contributions for each taxable year to all Traditional and Roth IRAs may not
exceed the lesser of 100% of your compensation or $2,000 for any calendar year,
subject to AGI phase-out rules described below in Section 3(a). Rollover,
transfer and conversion contributions, if properly made, do not count towards
your maximum annual contribution limit, nor do employer contributions to a
SEP-IRA or SIMPLE IRA.
(a) Regular Roth IRAs. The maximum amount you may contribute to a regular Roth
IRA will depend on the amount of your AGI for the calendar year. Your maximum
$2,000 contribution limit begins to phase out when your AGI reaches $95,000 as
unmarried or $150,000 when married filing jointly. Under this phase out, your
maximum regular Roth IRA contributions generally will not be less than $200;
however, no contribution is allowed if your AGI exceeds $110,000 as unmarried or
$160,000 when married filing jointly. If you are married and you and your spouse
file separate tax returns, your maximum regular Roth IRA contribution phases out
between $0 and $10,000. If you are married but you and your spouse lived apart
for the entire taxable year and file separate federal income tax returns, your
maximum contribution is calculated as if you were not married. You should
consult your tax adviser to determine your maximum contribution.
You may make contributions to a regular Roth IRA after age 70 1/2, subject to
the phase-out rules. Regular Roth IRA contributions for a tax year should be
reported on your tax return for that year, specifically, on Form 8606.
(b) Spousal Roth IRAs. Contributions to your lower-earning spouse's Spousal Roth
IRA may not exceed the lesser of:
1. 100% of both spouses' combined compensation minus any Roth IRA or
deductible Traditional IRA contribution for the spouse with the higher
compensation for the year; or
2. $2,000, as reduced by the phase-out rules described above for regular Roth
IRAs.
A maximum of $4,000 may be contributed to both spouses' Roth IRAs. Contributions
can be divided between the spouses' Roth IRAs as you and your spouse wish, but
no more than $2,000 in regular Roth IRA contributions can be contributed to
either individual's Roth IRA each year.
(c) Rollover Roth IRAs. There is no limit on the amounts that you may rollover
from one Roth IRA into another Roth IRA, including your Transamerica Life Roth
IRA. You may roll over a distribution from any single Roth IRA to another Roth
IRA only once in any 365-day period.
(d) Transfer Roth IRAs. There is no limit on amounts that you may transfer
directly from one Roth IRA into another Roth IRA, including your Transamerica
Life Roth IRA. Such a direct transfer does not constitute a rollover for
purposes of the 1-year waiting period.
(e) Conversion Roth IRAs. There is no limit on amounts that you may convert from
your Traditional IRA into your Transamerica Life Roth IRA if you are eligible to
open a Conversion Roth IRA as described in Part II, Section 1(e), above. In the
case of a conversion from a SIMPLE-IRA, the conversion may only be done after
the expiration of your 2-year participation period described in Code Section
72(t)(6). However, the distribution proceeds from your Traditional IRA are
includable in your taxable income to the extent that they represent a return of
deductible contributions and earnings on any contributions. The distribution
proceeds from your Traditional IRA are not subject to the 10% early distribution
penalty tax, described below, if the distribution proceeds are deposited to your
Roth IRA within 60 days.
You can also make contributions to a Roth IRA by instructing the fiduciary or
issuer, custodian or trustee of your existing Traditional IRAs to transfer the
assets in your Traditional IRAs to the Roth IRA, which can be a successor to
your existing Traditional IRAs. The transfer will be treated as a distribution
from your Traditional IRAs, and that amount will be includable in your taxable
income to the extent that it represents a return of deductible contributions and
earnings on any contributions, but will not be subject to the 10% early
distribution penalty tax.
If you converted from a Traditional IRA to a Roth IRA during 1998, the income
reportable upon distribution from the Traditional IRA may be reportable entirely
for 1998 or reportable ratably over four years beginning in 1998.
4. Recharacterization of IRA
Contributions
(a) Eligibility. By making a timely transfer and election, you generally can
treat a contribution made to one type of IRA as made to a different type of IRA
for a taxable year. For example, if you make contributions to a Roth IRA and
later discover that you are not eligible to make Roth IRA contributions, you may
recharacterize all or a portion of the contribution as a Traditional IRA
contribution by the filing due date, including extensions, for the applicable
tax year.
You may not recharacterize amounts paid into a Traditional IRA that represented
tax-free rollovers or transfers, or employer contributions.
(b) Election. You may elect to recharacterize a contribution amount made to one
type of IRA by simply making a trustee-to-trustee transfer of such amount, plus
net income attributable to it, to a second type of IRA on or before the federal
income tax due date, including extensions, for the tax year for which the
contribution was initially made. After the recharacterization has been made, you
may not revoke or modify the election.
(c) Taxation of a Recharacterization. For federal income tax purposes, a
recharacterized contribution will be treated as having been contributed to the
transferee IRA, rather than to the transferor IRA, on the same date and for the
same tax year that the contribution was initially made to the transferor IRA. A
recharacterized transfer is not considered a rollover for purposes of the 1-year
waiting period.
The transfer of the contribution amount being recharacterized must include the
net income attributable to such amount. If such amount has experienced net
losses as of the time of the recharacterization transfer, the amount
transferred, the original contribution amount less any losses, will generally
constitute a transfer of the entire contribution amount. You must treat the
contribution amount as made to the transferee IRA on your federal income tax
return for the year to which the original contribution amount related.
For reconversions following a recharacterization, see Publication 590 and
Treasury Regulation Section 1.408A-5.
5. Distributions
(a) Required Minimum Distribution, or simply, RMD. Unlike a Traditional IRA,
there are no rules that require that any distribution be made to you from your
Roth IRA during your lifetime.
If you die before the entire value of your Roth IRA is distributed to you, the
balance of your Roth IRA must be distributed by December 31 of the calendar year
that is five years after your death. However, if you die and you have a
designated beneficiary, your beneficiary may elect to take distributions in the
form of qualifying settlement option payments in substantially equal
installments over the life or life expectancy of the designated beneficiary,
beginning by December 31 of the calendar year that is one year after your death.
If your beneficiary is your surviving spouse, he or she can become the new
owner/annuitant and can continue the Transamerica Life Roth IRA on the same
basis as before your death. If your surviving spouse does not wish to continue
the Transamerica Life Roth IRA as his or her Roth IRA, he or she may elect to
receive the death benefit in the form of qualifying settlement option payments
in order to avoid the 5-year distribution requirement. Such payments must be
made in substantially equal amounts over your spouse's life or a period not
extending beyond his or her life expectancy. Your surviving spouse must elect
this option and begin receiving payments no later than the later of the
following dates:
a) December 31 of the year following the year you died; or
b) December 31 of the year in which you would have reached age 701/2.
Your beneficiary is responsible for assuring that the RMD following your death
is taken in a timely manner and that the correct amount is distributed.
(b) Taxation of Roth IRA Distributions. The amounts that you withdraw from your
Roth IRA are generally tax-free. For federal income tax purposes, all of your
Roth IRAs are aggregated and Roth IRA distributions are treated as made first
from Roth IRA contributions and second from earnings. Distributions that are
treated as made from Roth IRA contributions are treated as made first from
regular Roth IRA contributions, which are always tax-free, and second from
conversion or rollover Roth IRA contributions on a first-in, first-out basis. A
distribution allocable to a particular conversion or rollover Roth IRA
contribution is treated as consisting first of the portion, if any, of the
conversion contribution that was previously includible in gross income by reason
of the conversion.
In any event, since the purpose of a Roth IRA is to accumulate funds for
retirement, your receipt or use of Roth IRA earnings before you attain age 59
1/2, or within 5 years of your first contribution to the Roth IRA, including a
contribution rolled over, transferred or converted from a Traditional IRA, will
generally be treated as an early distribution subject to regular income tax and
to the 10% penalty tax described below in Section 6(b). No income tax will apply
to earnings that are withdrawn before you attain age 59 1/2, but which are
withdrawn five or more years after the first contribution to the Roth IRA,
including a rollover or transfer contribution or conversion from a Traditional
IRA, where the withdrawal is made:
a) upon your death or disability; or
b) to pay qualified first-time homebuyer expenses of you or certain family
members.
No portion of your Roth IRA distribution qualifies as a capital gain. There is
also a separate 5-year rule for the recapture of the 10% penalty tax that is
described below in Section 6(b) and that applies to any Roth IRA distribution
made before age 59 1/2 if any conversion or rollover contribution has been made
to any Roth IRA owned by the individual within the 5 most recent taxable years,
even if this current distribution from the Roth IRA is otherwise tax-free under
the rules described in this Subsection 5(b).
(c) Withholding. If the distribution from your Roth IRA is subject to federal
income tax, unless you elect not to have withholding apply, federal income tax
will be withheld from your Roth IRA distributions. If you receive distributions
under a settlement option, tax will be withheld in the same manner as taxes
withheld on wages, calculated as if you were married and claim three withholding
allowances. If you are receiving any other type of distribution, tax will be
withheld in the amount of 10% of the amount of the distribution. If payments are
delivered to foreign countries, federal income tax will generally be withheld at
a 10% rate unless you certify to Transamerica Life Insurance and Annuity Company
that you are not a U. S. citizen residing abroad or a "tax avoidance expatriate"
as defined in Code Section 877. Such certification may result in mandatory
withholding of federal income taxes at a different rate.
6. Penalty Taxes
(a) Excess Contributions. If at the end of any taxable year your total regular
Roth IRA contributions, other than rollovers, transfers or conversions, exceed
the maximum allowable contributions for that year, taking into account
Traditional IRA contributions, the excess contribution amount will be subject to
a nondeductible 6% excise penalty tax. Such penalty tax cannot exceed 6% of the
value of your Roth IRAs at the end of such year. However, if you withdraw the
excess contribution, plus any earnings on it, before the due date for filing
your federal income tax return, including extensions, for the taxable year in
which you made the excess contribution, the excess contribution will not be
subject to the 6% penalty tax.
The amount of the excess contribution withdrawn will not be considered an early
distribution, but the earnings withdrawn will be taxable income to you and may
be subject to the 10% penalty tax on early distributions. Alternatively, excess
contributions for one year may be withdrawn in a later year or may be carried
forward as Roth IRA contributions in a later year to the extent that the excess,
when aggregated with your regular Roth IRA contributions, if any, for the
subsequent year, does not exceed the maximum allowable contribution for that
year. The 6% excise tax will be imposed on excess contributions in each
subsequent year they are neither returned to you nor applied as permissible
regular Roth IRA contributions for such year.
(a) Early Distributions. Since the purpose of a Roth IRA is to accumulate funds
for retirement, your receipt or use of any portion of your Roth IRA before you
attain age 59 1/2 constitutes an early distribution subject to the 10% penalty
tax on the earnings in your Roth IRA. This penalty tax will not apply if the
distribution occurs as a result of your death or disability or is part of a
series of substantially equal payments made over your life expectancy or the
joint life expectancies of you and your beneficiary, as determined from IRS
tables in the income tax regulations. Also, the 10% penalty tax will not apply
if distributions are used to pay for medical expenses in excess of 7.5% of your
AGI; or if distributions are used to pay for health insurance premiums for you,
your spouse and/or your dependents if you are an unemployed individual who is
receiving unemployment compensation under federal or state programs for at least
12 consecutive weeks.
The 10% penalty tax also will not apply to an early distribution made to pay for
certain qualifying first-time homebuyer expenses for you or certain family
members, or for certain qualifying higher education expenses for you or certain
family members. First-time homebuyer expenses must be paid within 120 days of
the distribution from the Roth IRA and include up to $10,000 of the costs of
acquiring, constructing, or reconstructing a principle residence, including any
usual or reasonable settlement, financing or other closing costs. Higher
education expenses include tuition, fees, books, supplies, and equipment
required for enrollment, attendance, and room and board at a post-secondary
educational institution.
There is also a separate 5-year recapture rule for the 10% penalty tax in the
case of a Roth IRA distribution made before age 59 1/2 that is made within 5
years after a conversion or rollover contribution from a Traditional IRA. This
recapture rule exists because such a prior Roth IRA contribution avoided the 10%
penalty tax when it was rolled over or converted from the Traditional IRA. Under
this 5-year recapture rule, any Roth IRA distribution made before age 59 1/2
that is attributable to any conversion or rollover contribution from a
Traditional IRA made within the previous 5 years to any of the individual's Roth
IRAs is generally subject to the 10% penalty tax, and its exceptions, to the
extent that such prior Roth IRA contribution was subject to ordinary tax upon
the conversion or rollover, even if the Roth IRA distribution is otherwise
tax-free.
Under the distribution ordering rules for a Roth IRA, all of an individual's
Roth IRAs and distributions therefrom are treated as made: first from regular
Roth IRA contributions; then from conversion or rollover Roth IRA contributions
on a first-in, first-out basis; and last from earnings. However, whenever any
Roth IRA distribution amount is attributable to any conversion or rollover
contribution made within the 5 most recent tax years, this distributed amount is
attributed first to the taxable portion of such prior contribution, for purposes
of determining the amount of this Roth IRA distribution that is subject to the
recapture of the 10% penalty tax, unless some exception to the penalty tax
applies to the current Roth IRA distribution, such as age 59 1/2, disability or
certain health, education or homebuyer expenses, as described above in this
Subsection 6(b).
(c) Failure to Satisfy RMDs Upon Death. If the RMD rules described above in Part
II, Section 4(a) apply to the beneficiary of your Roth IRA after your death and
if the amount distributed during a calendar year is less than the minimum amount
required to be distributed, your beneficiary will be subject to a penalty tax
equal to 50% of the excess of the amount required to be distributed over the
amount actually distributed.
(d) Policy Loans and Prohibited Transactions. If you or any beneficiary engage
in any prohibited transaction, such as any sale, exchange or leasing of any
property between you and the Roth IRA, or any interference with the independent
status of the Roth IRA, the Roth IRA will lose its tax exemption and be treated
as having been distributed to you. The value of any earnings on your Roth IRA
contributions will be includable in your gross income; and if at the time of the
prohibited transaction, you are under age 591/2 you may also be subject to the
10% penalty tax on early distributions, as described above in Part II, Section
5(b). If you borrow from or pledge your Roth IRA, or your benefits under the
contract, as a security for a loan, the portion borrowed or pledged as security
will cease to be tax-qualified, the value of that portion will be treated as
distributed to you, and you may be subject to the 10% penalty tax on early
distributions from a Roth IRA.
IRA PART III: OTHER INFORMATION
(1) Federal Estate and Gift Taxes
Any amount in or distributed from your Traditional and/or Roth IRAs upon your
death may be subject to federal estate tax, although certain credits and
deductions may be available. The exercise or non-exercise of an option that
would pay a survivor an annuity at or after your death should not be considered
a transfer for federal gift tax purposes.
(2) Tax Reporting
You must report contributions to, and distributions from, your Traditional IRA
and Roth IRA, including the year-end aggregate account balance of all
Traditional IRAs and Roth IRAs, on your federal income tax return for the year
specifically on IRS Form 8606. For Traditional IRAs, you must designate on the
return how much of your annual contribution is deductible and how much is
nondeductible. You need not file IRS Form 5329 with your income tax return for a
particular year unless for that year you are subject to a penalty tax because
there has been an excess contribution to, an early distribution from, or
insufficient RMDs from your Traditional IRA or Roth IRA, as applicable.
(3) Vesting
Your interest in your Traditional IRA or Roth IRA is nonforfeitable at all
times.
(4) Exclusive Benefit
Your interest in your Traditional IRA or Roth IRA is for the exclusive benefit
of you and your beneficiaries.
(5) IRS Publication 590
Additional information about your Traditional IRA or Roth IRA or about SEP-IRAs
and SIMPLE-IRAs can be obtained from any district office of the IRS or by
calling 1-800-TAX-FORM for a free copy of IRS Publication 590, Individual
Retirement Arrangements.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION FOR
DREYFUS/TRANSAMERICA TRIPLE ADVANTAGE
VARIABLE ANNUITY
SEPARATE ACCOUNT VA-2L
ISSUED BY
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
The Statement of Additional Information expands upon subjects discussed
in the May 1, 1999, prospectus for the Dreyfus/Transamerica Triple Advantage
Variable Annuity ("contract") issued by Transamerica Occidental Life Insurance
Company. The owner may obtain a copy of the prospectus by writing to:
Transamerica Occidental Life Insurance Company, Annuity Service Center, P.O. Box
31848 Charlotte, North Carolina 28231 or calling 800-258-4260. Terms used in the
current prospectus for the contract are incorporated in this statement.
The contract will be issued as a certificate under a group annuity
contract in some states and as an individual annuity contract in other states.
The term "contract" as used herein refers to both the individual contract and
the certificates issued under the group contract.
This Statement of Additional Information is not a prospectus and should be read
only in conjunction with the prospectus for the contract.
Dated January 1, 2000
<PAGE>
5
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
THE CONTRACT......................................................................................................3
DOLLAR COST AVERAGING.............................................................................................3
SPECIAL DOLLAR COST AVERAGING OPTION..............................................................................3
NET INVESTMENT FACTOR.............................................................................................3
ANNUITY PERIOD....................................................................................................4
Variable Annuity Units and Payments......................................................................4
Variable Annuity Unit Value..............................................................................4
Transfers After the Annuity Date.........................................................................4
Guaranteed Minimum Income Benefit--Hypothetical Illustration..............................................4
GENERAL PROVISIONS................................................................................................5
Adjusted Partial Withdrawals.............................................................................5
IRS Required Distributions...............................................................................5
Non-Participating........................................................................................5
Misstatement of Age or Sex...............................................................................5
Proof of Existence and Age...............................................................................5
Assignment...............................................................................................5
Annuity Data.............................................................................................5
Annual Report............................................................................................5
Incontestability.........................................................................................5
Ownership................................................................................................6
Entire Contract..........................................................................................6
Changes in the Contract..................................................................................6
Protection of Benefits...................................................................................6
Delay of Payments........................................................................................6
Notices and Directions...................................................................................7
CALCULATION OF YIELDS AND TOTAL RETURNS...........................................................................7
Money Market Sub-Account Yield Calculation...............................................................7
Other Sub-Account Yield Calculations.....................................................................7
Average Total Return Calculations........................................................................8
Adjusted Historical Performance Data.....................................................................9
Other Performance Data...................................................................................9
HISTORICAL PERFORMANCE DATA.......................................................................................9
General Limitations......................................................................................9
Money Market Sub-Account Yields..........................................................................9
Sub-Account Performance Figures Including Adjusted Historical Performance...............................10
Since Commencment of the Sub-Accounts...................................................................10
Since Commencement of the Portfolios....................................................................12
FEDERAL TAX MATTERS..............................................................................................14
Taxation of Transamerica................................................................................14
Tax Status of the Contract..............................................................................14
DISTRIBUTION OF THE CONTRACT.....................................................................................15
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS...........................................................................16
TRANSAMERICA.....................................................................................................16
General Information and History.........................................................................16
STATE REGULATION.................................................................................................16
RECORDS AND REPORTS..............................................................................................16
FINANCIAL STATEMENTS.............................................................................................17
APPENDIX.........................................................................................................18
Accumulation Transfer Formula...........................................................................18
</TABLE>
THE CONTRACT
As a supplement to the description in prospectus, the following provides
additional information about the contract which may be of interest to some
owners.
DOLLAR COST AVERAGING
We reserve the right to send written notification to you, as the owner,
as to the options available if termination of dollar cost averaging, either by
you or by us, results in the value of the receiving sub-account(s) to which
monthly transfers were made to be less than $500. You will have 10 days from the
date our notice is mailed to:
(a) transfer the value of the sub-account(s) to another sub-account with a
value equal to or greater than $500; or
(b) transfer funds from another sub-account into the receiving
sub-account(s) to bring the value of that sub-account to at least
$500; or
(c) submit an additional purchase payment to make the value of the
sub-account equal to or greater than $500; or
(d) transfer the entire value of the receiving sub-account(s) back
into the source account from which the automatic transfers were
made.
If no election, in a form and manner acceptable to us, is made by you
before the end of the 10 day period, we reserve the right to transfer the value
of the receiving sub-account(s) back into the source account from which the
automatic transfers were made. Transfers made as a result of (a), (b), or (d)
above will not be counted for purposes of the eighteen free transfers per
contract year limitation.
SPECIAL DOLLAR COST AVERAGING OPTION
(May not be available in all states. See contract for availability of the fixed
account options.)
When you apply for the contract, you may elect to allocate the entire initial
purchase payment to either the six or twelve month special Dollar Cost Averaging
account of the Fixed Acount. The initial purchase payment will be credited with
interest at a guaranteed fixed rate. Amounts will then be transferred from the
special Dollar Cost Averaging account to the sub-accounts and/or general account
options pro rata on a monthly basis for six or twelve months (depending on the
option you select) in the allocations you specified when you applied for the
contract.
Amounts from the sub-accounts and/or general account options may not be
transferred into the special Dollar Cost Averaging accounts. In addition, if you
request a transfer (other than a Dollar Cost Averaging transfer) or a withdrawal
from a special Dollar Cost Averaging account, any amounts remaining in the
special account will be transferred to the sub-account and/or general account
option according to your original allocation instructions.
The special Dollar Cost Averaging option will end and cannot be reelected.
NET INVESTMENT FACTOR
For any sub-account of the variable account, the net investment factor
for a valuation period, before the annuity date, is (a) divided by (b), minus
(c) minus (d).
Where (a) is
The net asset value per share held in the sub-account, as of the
end of the valuation period, PLUS OR MINUS the per-share amount of
any dividend or capital gain distributions if the "ex-dividend"
date occurs in the valuation period, PLUS OR MINUS a per-share
charge or credit as we may determine, as of the end of the
valuation period, for taxes.
Where (b) is
The net asset value per share held in the sub-account as of the end
of the last prior valuation period.
Where (c) is
The daily charge of 0.003403% (1.25% annually) for the mortality
and expense risk charge under the contract times the number of
calendar days in the current valuation period.
Where (d) is
The daily administrative expense charge, currently 0.000411% (0.15%
annually) times the number of calendar days in the current
valuation period. This charge may be increased, but will not exceed
0.000684% (0.25% annually).
A valuation day is defined as any day that the New York Stock Exchange is open.
ANNUITY PERIOD
The variable annuity options provide for payments that fluctuate or
vary in dollar amount, based on the investment performance of the elected
variable account sub-account(s).
VARIABLE ANNUITY UNITS AND PAYMENTS
For the first monthly payment, the number of variable annuity units
credited in each sub-account will be determined by dividing: (a) the product of
the portion of the value to be applied to the sub-account and the variable
annuity purchase rate specified in the contract; by (b) the value of one
variable annuity unit in that sub-account on the annuity date.
The amount of each subsequent variable annuity payment equals the
product of the number of variable annuity units in each sub-account and the
sub-account's variable annuity unit value as of the tenth day of the month
before the payment due date. The amount of each payment may vary as may the date
of determination.
VARIABLE ANNUITY UNIT VALUE
The value of a variable annuity unit in a sub-account on any valuation
day is determined as described below.
The net investment factor for the valuation period (for the appropriate
annuity payment frequency) just ended is multiplied by the value of the variable
annuity unit for the sub-account on the preceding valuation day. The net
investment factor after the annuity date is calculated in the same manner as
before the annuity date and then multiplied by an interest factor. The interest
factor equals (.999893)n where n is the number of days since the preceding
valuation day. This compensates for the 4% interest assumption built into the
variable annuity purchase rates.
TRANSFERS AFTER THE ANNUITY DATE
After the annuity date, you may transfer variable annuity units from
one sub-account to another, subject to certain limitations. (See "Transfers"
page 27 of the prospectus.) The dollar amount of each subsequent monthly
variable annuity payment after the transfer must be determined using the new
number of variable annuity units multiplied by the sub-account's variable
annuity unit value.
The formula used to determine a transfer after the annuity date can be
found in the Appendix to this Statement of Additional Information.
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)--HYPOTHETICAL ILLUSTRATION
The amounts shown below are hypothetical guaranteed minimum monthly payment
amounts under the guaranteed minimum income benefit rider for a $100,000 premium
when annuity payments do not begin until the rider anniversary indicated in the
left-hand column. These figures assume the following:
o there were no subsequent purchase payments or withdrawals; o there were no
premium taxes; o the $100,000 purchase payment is subject to the GMIB; o
the annuitant is (or both annuitants are) 60 years old when the rider is
issued;
o the annual growth rate is 5.0% (once established an annual growth rate will
not change during the life of the GMIB rider); and
o there was no upgrade of the minimum annuitization value.
Six different annuity payment options are illustrated; a male annuitant, a
female annuitant and a joint and survivor annuity, each on a Life Only and a
Life with 10-Year Certain basis. The figures below, which are the amount of the
guaranteed fixed monthly payment, are based on an assumed investment return of
3%. Subsequent payments are calculated using a 5% assumed investment return. If
you choose the guaranteed minimum payment option, subsequent payments will never
be less than the amount of the first payment. If you do not choose the
guaranteed minimum payment option, subsequent payments may be less than the
amount of the first payment.
<TABLE>
<CAPTION>
Life Only = Life Annuity with No Period Certain Life 10 = Life Annuity with 10 Years Certain
- ------------------------------ -------------------------- ------------------------- -------------------------
Rider Anniversary at Male Female Joint & Survivor
Exercise Date
- ------------------------------ -------------------------- ------------------------- -------------------------
- ------------------------------ ------------ ------------- ------------ ------------ ------------ ------------
Life Only Life 10 Life Only Life 10 Life Only Life 10
- ------------------------------ ------------ ------------- ------------ ------------ ------------ ------------
- ------------------------------ ------------ ------------- ------------ ------------ ------------ ------------
<S><C> <C> <C> <C> <C> <C> <C> <C>
7 (age 67) $808 $774 $702 $688 $622 $621
- ------------------------------ ------------ ------------- ------------ ------------ ------------ ------------
- ------------------------------ ------------ ------------- ------------ ------------ ------------ ------------
15 $1,590 $1,418 $1,355 $1,274 $1,156 $1,143
- ------------------------------ ------------ ------------- ------------ ------------ ------------ ------------
- ------------------------------ ------------ ------------- ------------ ------------ ------------ ------------
20 (age 80) $2,523 $2,051 $2,149 $1,892 $1,775 $1,719
- ------------------------------ ------------ ------------- ------------ ------------ ------------ ------------
- ------------------------------ ------------ ------------- ------------ ------------ ------------ ------------
- ------------------------------ ------------ ------------- ------------ ------------ ------------ ------------
</TABLE>
This hypothetical illustration should not be deemed representative of past or
future performance of any underlying variable investment option.
Withdrawals will affect the minimum annuitization value as follows: Withdrawals
will reduce the minimum annuitization value on a pro-rata basis by an amount
equal to the minimum annuitization value multiplied by the percentage reduction
in the account value resulting from the withdrawal.
The amount of the first payment provided by the GMIB will be determined by
multiplying each $1,000 of minimum annuitization value (or account value if
greater) by the applicable annuity factor shown in Schedule I of the GMIB rider.
The applicable annuity factor depends upon the annuitant's (and joint
annuitant's if any) sex (or without regard to gender if required by law), age,
and the GMIB payment option selected and is based on a guaranteed interest rate
of 3% and the "1983 Table a" mortality table improved to the year 2000 with
projection Scale G. Subsequent payments will be calculated as described in the
GMIB rider using a 5% assumed investment return. Subsequent payments may
fluctuate annually in accordance with the investment performance of the annuity
sub-accounts. However, if you choose the guaranteed minimum payment option
detailed in the GMIB rider, subsequent payments are guaranteed to never be less
than the initial payment. If you do not choose the guaranteed minimum payment
option, subsequent payments may be less than the initial payment.
Furthermore, if you elect the guaranteed minimum payment option, payments
throughout each policy year will be stabilized to remain level. The stabilized
payment on each subsequent contract anniversary after annuitization using the
GMIB will equal the greater of the initial payment or the payment supportable by
the annuity units in the selected sub-accounts. If you do not elect the
guaranteed minimum payment option, subsequent payments will be equal to the
supportable payment and could fluctuate throughout each policy year. The
supportable payment is equal to the number of variable annuity units in the
selected sub-accounts multiplied by the variable annuity unit values in those
sub-accounts on the date the payment is made. The variable annuity unit values
used to calculate the supportable payment will assume a 5% assumed investment
return. Under the guaranteed minimum payment option, if the supportable payment
at any payment date during a contract year is greater than the stabilized
payment for that contract year, the excess will be used to purchase additional
annuity units. Conversely, if the supportable payment at any payment date during
a contract year is less than the stabilized payment for the contract year, there
will be a reduction in the number of annuity units credited to the policy to
fund the deficiency. In the case of a reduction, you will not participate as
fully in the future investment performance of the sub-accounts you selected
since fewer annuity units are credited to your policy. Purchases and reductions
will be allocated to each sub-account on a proportionate basis. If you do not
elect the guaranteed minimum payment option, no annuity units will be purchased
or redeemed.
Under the guaranteed minimum payment option, we bear the risk that we will need
to make payments if all annuity units have been used in an attempt to maintain
the stabilized payment at the initial payment level. In such event, we will make
all future payments equal to the initial payment. Once all the annuity units
have been used, the amount of your payment will not increase or decrease and
will not depend upon the performance of any sub-accounts. To compensate us for
this risk, a guaranteed minimum payment fee will be deducted.
<PAGE>
GENERAL PROVISIONS
ADJUSTED PARTIAL WITHDRAWALS
The amount of your Guaranteed Minimum Death Benefit is reduced due to a
partial withdrawal by an amount called the adjusted partial withdrawal. The
reduction amount depends on the relationship between your Guaranteed Minimum
Death Benefit and policy value. The adjusted partial withdrawal is equal to (1)
multiplied by (2), where
(1) is the Gross Partial Withdrawals, where
gross partial withdrawal = requested withdrawal + interest
adjustement + any premium taxes+ contingent deferred sales loads on
(excess partial withdrawal + interest adjustment + any premium
taxes); and
(2) is the adjustment factor = current death benefit prior to the
withdrawal divided by the current account value prior to the
withdrawal.
The following examples describe the effect of a withdrawal on the Guaranteed
Minimum Death Benefit and account value.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Example 1
(Assumed Facts for Example)
- ----------------------------------------------------------------------------------------------------------------------
- ---------------- -----------------------------------------------------------------------------------------------------
<S> <C>
$75,000 Current Guaranteed Minimum Death Benefit (GMDB) before withdrawal
- ---------------- -----------------------------------------------------------------------------------------------------
- ---------------- -----------------------------------------------------------------------------------------------------
$50,000 Current account value before withdrawal
- ---------------- -----------------------------------------------------------------------------------------------------
- ---------------- -----------------------------------------------------------------------------------------------------
$75,000 Current death benefit (larger of policy value and GMDB)
- ---------------- -----------------------------------------------------------------------------------------------------
- ---------------- -----------------------------------------------------------------------------------------------------
6% Current contingent deferred sales load percentage
- ---------------- -----------------------------------------------------------------------------------------------------
- ---------------- -----------------------------------------------------------------------------------------------------
$15,000 Requested withdrawal
- ---------------- -----------------------------------------------------------------------------------------------------
- ---------------- -----------------------------------------------------------------------------------------------------
$7,500 Withdrawal amount free of contingent deferred sales loads (assumes 15% penalty free withdrawals)
- ---------------- -----------------------------------------------------------------------------------------------------
- ---------------- -----------------------------------------------------------------------------------------------------
$7,500 Excess partial withdrawal (EPW): amount subject to contingent deferred sales loads
- ---------------- -----------------------------------------------------------------------------------------------------
- ---------------- -----------------------------------------------------------------------------------------------------
$100 Interest adjustment
- ---------------- -----------------------------------------------------------------------------------------------------
- ---------------- -----------------------------------------------------------------------------------------------------
$0 Premium taxes
- ---------------- -----------------------------------------------------------------------------------------------------
- ---------------- -----------------------------------------------------------------------------------------------------
$456 Contingent deferred sales load on (EPW plus EIA plus premium taxes)= 0.06*(7,500 + 100 + 0)
- ---------------- -----------------------------------------------------------------------------------------------------
- ---------------- -----------------------------------------------------------------------------------------------------
$8,056 Reduction in account value due to excess partial withdrawal = 7,500 + 100 + 0 + 456
- ---------------- -----------------------------------------------------------------------------------------------------
- ---------------- -----------------------------------------------------------------------------------------------------
$23,334 Adjusted partial withdrawal = (7,500 + 8,056)*75,000/50,000
- ---------------- -----------------------------------------------------------------------------------------------------
- ---------------- -----------------------------------------------------------------------------------------------------
$51,666 New GMDB (after withdrawal) = 75,000 - 23,334
- ---------------- -----------------------------------------------------------------------------------------------------
- ---------------- -----------------------------------------------------------------------------------------------------
$34,444 New account value (after withdrawal) = 50.000 - 15,556
- ---------------- -----------------------------------------------------------------------------------------------------
SUMMARY:
Reduction in guaranteed minimum death benefit = $23,334
Reduction in account value = $15,556
Note, guaranteed minimum death benefit is reduced more than the account value
since the guaranteed minimum death benefit was greater than the account value
just prior to withdrawal.
- ----------------------------------------------------------------------------------------------------------------------
Example 1
(Assumed Facts for Example)
- ----------------------------------------------------------------------------------------------------------------------
- ---------------- -----------------------------------------------------------------------------------------------------
$50,000 Current Guaranteed Minimum Death Benefit (GMDB) before withdrawal
- ---------------- -----------------------------------------------------------------------------------------------------
- ---------------- -----------------------------------------------------------------------------------------------------
$75,000 Current account value before withdrawal
- ---------------- -----------------------------------------------------------------------------------------------------
- ---------------- -----------------------------------------------------------------------------------------------------
$75,000 Current death benefit (larger of policy value and GMDB)
- ---------------- -----------------------------------------------------------------------------------------------------
- ---------------- -----------------------------------------------------------------------------------------------------
6% Current contingent deferred sales load percentage
- ---------------- -----------------------------------------------------------------------------------------------------
- ---------------- -----------------------------------------------------------------------------------------------------
$15,000 Requested withdrawal
- ---------------- -----------------------------------------------------------------------------------------------------
- ---------------- -----------------------------------------------------------------------------------------------------
$11,125 Withdrawal amount free of contingent deferred sales loads (assumes 15% penalty free withdrawals)
- ---------------- -----------------------------------------------------------------------------------------------------
- ---------------- -----------------------------------------------------------------------------------------------------
$3,750 Excess partial withdrawal (EPW): amount subject to contingent deferred sales loads
- ---------------- -----------------------------------------------------------------------------------------------------
- ---------------- -----------------------------------------------------------------------------------------------------
$100 Interest adjustment
- ---------------- -----------------------------------------------------------------------------------------------------
- ---------------- -----------------------------------------------------------------------------------------------------
$0 Premium taxes
- ---------------- -----------------------------------------------------------------------------------------------------
- ---------------- -----------------------------------------------------------------------------------------------------
$231 Contingent deferred sales load on (EPW plus EIA plus premium taxes) = 0.06*(3,750 + 100 + 0)
- ---------------- -----------------------------------------------------------------------------------------------------
- ---------------- -----------------------------------------------------------------------------------------------------
$4,081 Reduction in account value due to excess partial withdrawal = 3,750 + 100 + 0 + 231
- ---------------- -----------------------------------------------------------------------------------------------------
- ---------------- -----------------------------------------------------------------------------------------------------
$15,331 Adjusted partial withdrawal = (11,250 + 4,081)*75,000/75,000
- ---------------- -----------------------------------------------------------------------------------------------------
- ---------------- -----------------------------------------------------------------------------------------------------
$34,669 New GMDB (after withdrawal) = 50,000 - 15,331
- ---------------- -----------------------------------------------------------------------------------------------------
- ---------------- -----------------------------------------------------------------------------------------------------
$59,669 New account value (after withdrawal) = 75.000 - 15,331
- ---------------- -----------------------------------------------------------------------------------------------------
</TABLE>
SUMMARY:
Reduction in guaranteed minimum death benefit = $15,331
Reduction in account value = $15,331
Note, guaranteed minimum death benefit and account value are reduced by the same
amount since the policy value was higher than the guaranteed minimum death
benefit just prior to withdrawal.
IRS REQUIRED DISTRIBUTIONS
The contract is intended to qualify as an annuity contract for federal
income tax purposes. All provisions in the contract will be interpreted to
maintain such tax qualification. We may make changes in order to maintain this
qualification or to conform the contract to any applicable changes in the tax
qualification requirements. We will provide you with a copy of any changes made
to the contract. If any owner under a non-qualified contract dies before the
entire interest in the contract is distributed, the value generally must be
distributed to the designated beneficiary so that the contract qualifies as an
annuity under the Code. (See "Federal Tax Matters" page 43.)
NON-PARTICIPATING
The contract is non-participating. No dividends are payable and the
contract will not share in the profits or surplus earnings of Transamerica.
MISSTATEMENT OF AGE OR SEX
If the age or sex of the annuitant or any other measuring life has been
misstated in the application, or other form relied upon to determine annuity
payment, the annuity payments under the contract will be whatever the annuity
purchase amount applied on the annuity date would purchase on the basis of the
correct age or sex of the annuitant and/or other measuring life. Any
overpayments or underpayments by us as a result of any such misstatement may be
respectively charged against or credited to the annuity payment or payments to
be made after the correction so as to adjust for such overpayment or
underpayment.
PROOF OF EXISTENCE AND AGE
Before making any payment under the contract, we may require proof of
the existence and/or proof of the age of the annuitant or any other measuring
life, or any other information deemed necessary in order to provide benefits
under the contract.
ASSIGNMENT
No assignment of a contract will be binding on us unless made in
writing and given to us at our service center. We are not responsible for the
adequacy of any assignment. Your rights and the interest of any annuitant or
non-irrevocable beneficiary will be subject to the rights of any assignee of
record.
ANNUITY DATA
We will not be liable for obligations which depend on receiving
information from a payee or measuring life until such information is received in
a satisfactory form.
ANNUAL REPORT
At least once each contract year prior to the annuity date, you will be
given a report of the current account value. This report will also include any
other information required by law or regulation. After the annuity date, a
confirmation will be provided with every variable annuity payment.
INCONTESTABILITY
Each contract is incontestable from the contract date.
OWNERSHIP
Only you, as the owner(s) will be entitled to the rights granted by the
contract, or allowed by us under the contract. If an owner dies, the rights of
the owner belong to the estate of the owner unless the owner has previously
named an owner's beneficiary. A surviving joint owner automatically becomes the
owner's beneficiary.
ENTIRE CONTRACT
We have issued the contract in consideration and acceptance of the
payment of the initial purchase payment and, where state law requires, the
application. In those states that require a written application, a copy of the
application is attached to and is part of the contract and, along with the
contract, constitutes the entire contract. All statements made by you are
considered representations and not warranties. We will not use any statement in
defense of a claim unless it is made in the application and a copy of the
application is attached to the contract when issued.
The group annuity contract has been issued to a trust organized under
Missouri law. However, the sole purpose of the trust is to hold the group
annuity contract. You have all rights and benefits under the individual
certificate issued under the group contract.
CHANGES IN THE CONTRACT
Only two of our authorized officers, acting together, have the
authority to bind Transamerica or to make any change in the individual contract
or the group contract or individual certificates thereunder and then only in
writing. We will not be bound by any promise or representation made by any other
persons.
We may not change or amend the individual contract or the group
contract or individual certificates thereunder, except as expressly provided
therein, without your consent. However, we may change or amend the individual
contract or the group contract or individual certificates thereunder if such
change or amendment is necessary for the individual contract or the group
contract or individual certificates thereunder to comply with any state or
federal law, rule or regulation.
PROTECTION OF BENEFITS
To the extent permitted by law, no benefit (including death benefits)
under the contract will be subject to any claim or process of law by any
creditor.
DELAY OF PAYMENTS
Payment of any cash withdrawal or lump sum death benefit due from the
variable account will occur within seven days from the date the election becomes
effective, except that we may be permitted to postpone such payment or transfers
if: (1) the New York Stock Exchange is closed for other than usual weekends or
holidays, or trading on the Exchange is otherwise restricted; or (2) an
emergency exists as defined by the Securities and Exchange Commission
(Commission), or the Commission requires that trading be restricted; or (3) the
Commission permits a delay for the protection of owners.
In addition, while it is our intention to process all transfers from
the sub-accounts immediately upon receipt of a transfer request, the contract
gives us the right to delay effecting a transfer from a sub-account for up to
seven days, but only in certain limited circumstances. However, the staff of the
Commission currently interprets the Investment Company Act of 1940 to require
the immediate processing of all transfers, and in compliance with that
interpretation we will process all transfers immediately unless and until the
Commission or its staff changes its interpretation or otherwise permits us to
exercise this right. Subject to such approval, we may delay effecting such a
transfer only if there is a delay of payment from an affected portfolio. If this
happens, and if the prior approval of the Commission or its staff is obtained,
then we will calculate the dollar value or number of units involved in the
transfer from a sub-account on or as of the date we receive a written transfer
request, but will not process the transfer to the transferee sub-account until a
later date during the seven-day delay period when the portfolio underlying the
transferring sub-account obtains liquidity to fund the transfer request through
sales of portfolio securities, new purchase payments, transfers by investors or
otherwise. During this period, the amount transferred would not be invested in a
sub-account.
We may delay payment of any withdrawal from the fixed account for a
period of not more than six months after we receive the request for such
withdrawal. If we delay payment for more than 30 days, we will pay interest on
the withdrawal amount up to the date of payment. (See "Cash Withdrawals" page 29
of the prospectus.)
NOTICES AND DIRECTIONS
We will not be bound by any authorization, direction, election or
notice which is not in writing, in a form and manner acceptable to us, and
received at our service center.
Any written notice requirement by us to you will be satisfied by our
mailing of any such required written notice, by first-class mail, to your last
known address as shown on our records.
CALCULATION OF YIELDS AND TOTAL RETURNS
MONEY MARKET SUB-ACCOUNT YIELD CALCULATION
In accordance with regulations adopted by the Commission, we are
required to compute the Money Market Sub-Account's current annualized yield for
a seven-day period in a manner which does not take into consideration any
realized or unrealized gains or losses on shares of the Money Market Series or
on its portfolio securities. This current annualized yield is computed by
determining the net change (exclusive of realized gains and losses on the sale
of securities and unrealized appreciation and depreciation) in the value of a
hypothetical account having a balance of one unit of the Money Market
Sub-Account and income other than investment income at the beginning of such
seven-day period, 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
annualizing this quotient on a 365-day basis. The net change in account value
reflects the deductions for the annual account fee, the mortality and expense
risk charge and administrative expense charges and income and expenses accrued
during the period. Because of these deductions, the yield for the Money Market
Sub-Account of the variable account will be lower than the yield for the Money
Market Portfolio or any comparable substitute funding vehicle.
The Commission also permits us to disclose the effective yield of the
Money Market Sub-Account for the same seven-day period, determined on a
compounded basis. The effective yield is calculated by compounding the
unannualized base period return by adding one to the base period return, raising
the sum to a power equal to 365 divided by 7, and subtracting one from the
result.
The yield on amounts held in the Money Market Sub-Account 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 Money Market Sub-Account's actual yield is affected by changes in
interest rates on money market securities, average portfolio maturity of the
Money Market Portfolio or substitute funding vehicle, the types and quality of
portfolio securities held by the Money Market Portfolio or substitute funding
vehicle, and operating expenses. IN ADDITION, THE YIELD FIGURES DO NOT REFLECT
THE EFFECT OF ANY CONTINGENT DEFERRED SALES LOAD (OF UP TO 6% OF PURCHASE
PAYMENTS) THAT MAY BE APPLICABLE TO A CONTRACT.
OTHER SUB-ACCOUNT YIELD CALCULATIONS
We may from time to time disclose the current annualized yield of one
or more of the sub-accounts (except the Money Market Sub-Account) for 30-day
periods. The annualized yield of a sub-account refers to the income generated by
the sub-account over a specified 30-day period. Because this yield is
annualized, the yield generated by a sub-account during the 30-day period is
assumed to be generated each 30-day period. The yield is computed by dividing
the net investment income per variable accumulation unit earned during the
period by the price per unit on the last day of the period, according to the
following formula:
YIELD = 2[{a-b + 1}6 - 1]
cd
Where:
a = net investment income earned during the period by the
portfolio attributable to the shares owned by the sub-account.
b = expenses for the sub-account accrued for the period (net of
reimbursements).
c = the average daily number of variable accumulation units outstanding
during the period.
d = the maximum offering price per variable accumulation anit on the
last day of the period.
Net investment income will be determined in accordance with rules
established by the Commission. Accrued expenses will include all recurring fees
that are charged to all contracts. The yield calculations do not reflect the
effect of any contingent deferred sales load that may be applicable to a
particular contract. The contingent deferred sales load ranges from 6% to 0% of
the amount of account value withdrawn depending on the elapsed time since the
receipt of each purchase payment attributable to the portion of the account
value withdrawn.
Because of the charges and deductions imposed by the variable account,
the yield for the sub-account will be lower than the yield for the corresponding
portfolio. The yield on amounts held in the sub-accounts normally will fluctuate
over time. Therefore, the disclosed yield for any given period is not an
indication or representation of future yields or rates of return. The
sub-account's actual yield will be affected by the types and quality of
portfolio securities held by the portfolio, and its operating expenses.
AVERAGE TOTAL RETURN CALCULATIONS
We may from time to time also disclose average annual total returns for
one or more of the sub-accounts for various periods of time. Average annual
total return quotations are computed by finding the average annual compounded
rates of return over one, five and ten year periods that would equate the
initial amount invested to the ending redeemable value, according to the
following formula:
P{1 + T}n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the one, five or ten-year period at
the end of the one, five, or ten-year period (or fractional
portion thereof).
All recurring fees are recognized in the ending redeemable value. The
standard average annual total return calculations will reflect the effect of any
contingent deferred sales load that may be applicable to a particular period.
ADJUSTED HISTORICAL PERFORMANCE DATA
We may also disclose adjusted historical performance data for a
sub-account, for periods before the sub-account commenced operations. Such
performance information for the sub-account will be calculated based on the
performance of the corresponding portfolio and the assumption that the
sub-account was in existence for the same periods as those indicated for the
portfolio, with a level of contract charges currently in effect. The portfolio
used for these calculations will be the actual portfolio that the sub-account
will invest in.
This type of adjusted historical performance data may be disclosed on
both an average annual total return and a cumulative total return basis.
Moreover, it may be disclosed assuming that the contract is not surrendered
(i.e., with no deduction for the contingent deferred sales load) and assuming
that the contract is surrendered at the end of the applicable period (i.e.,
reflecting a deduction for any applicable contingent deferred sales load).
OTHER PERFORMANCE DATA
We may from time to time also disclose average annual total returns in
a non-standard format in conjunction with the standard described above. The
non-standard format will be identical to the standard format except that the
contingent deferred sales load percentage will be assumed to be 0%.
We may from time to time also disclose cumulative total returns in
conjunction with the standard format described above. The cumulative returns
will be calculated using the following formula assuming that the contingent
deferred sales load percentage will be 0%.
CTR = {ERV/P} - 1
Where:
CTR = the cumulative total return net of sub-account recurring charges
for the period.
ERV = ending redeemable value of a hypothetical $1,000 payment at
the beginning of the one, five, or ten-year period at the end
of the one, five, or ten-year period (or fractional portion
thereof).
P = a hypothetical initial payment of $1,000.
All non-standard performance data will be advertised only if the
standard performance data is also disclosed.
HISTORICAL PERFORMANCE DATA
GENERAL LIMITATIONS
THE FIGURES BELOW REPRESENT THE PAST PERFORMANCE OF THE SUB-ACCOUNTS
AND ARE NOT INDICATIVE OF FUTURE PERFORMANCE. The figures may reflect the waiver
of advisory fees and reimbursement of other expenses.
Except for Transamerica Growth, the funds have provided the performance
data for the sub-accounts. Except for Transamerica Growth, none of the funds or
their investment advisers are affiliated with Transamerica. In preparing the
tables below, we have relied on the data provided by the funds. While we have no
reason to doubt the accuracy of the figures provided by the funds, we have not
verified those figures.
MONEY MARKET SUB-ACCOUNT YIELDS
The annualized yield for the Money Market Sub-Account for the seven-day period
ending December 31, 1998 was 3.21%. The effective yield for the Money Market
Sub-Account for the seven-day period ending December 31, 1998 was 3.25%.
SUB-ACCOUNT PERFORMANCE FIGURES INCLUDING ADJUSTED HISTORICAL PERFORMANCE
The charts below show historical performance data for the sub-accounts.
Charts 1 through 3 show performance since the commencement of the sub-accounts.
Charts 4 through 6 include, for certain sub-accounts, adjusted historical
performance for the periods prior to the inception of the sub-accounts, based on
the performance of the corresponding portfolios since their inception date, with
a level of charges equal to those currently assessed under the certificates.
THESE FIGURES ARE NOT AN INDICATION OF THE FUTURE PERFORMANCE OF THE
SUB-ACCOUNTS. Some of the figures reflect the waiver of advisory fees and
reimbursement of other expenses for part or all of the periods indicated.
SINCE COMMENCEMENT OF THE SUB-ACCOUNTS
The dates to the right of the sub-account names indicate the date of
commencement of operation of the sub-accounts.
<TABLE>
<CAPTION>
1. Average annual total returns for periods since inception of the
sub-account are as follows. These figures include mortality and expenses charges
deducted at 1.25%, the administrative expenses charge of 0.15% per annum, the
administration charge of $30 per annum adjusted for average account size and the
maximum contingent deferred sales load of 6%.
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
For the period
from
commencement of
SUB-ACCOUNT (date of For the 1-year For the 3-year For the 5-year sub-account
commencement of operation of period ending period ending period ending operations to
sub-account) 12/31/98 12/31/98 12/31/98 12/31/98
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
<S> <C> <C> <C> <C> <C>
Money Market (1/4/93) -2.02% 2.02% N/A 2.99%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Special Value (1/4/93) 8.02% 7.88% N/A 7.81%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Zero Coupon 2000 (1/4/93) -0.03% 2.51% N/A 5.63%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Quality Bond (1/4/93) -1.86% 2.88% N/A 6.09%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Small Cap (1/4/93) -10.26% 6.58% N/A 18.78%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Capital Appreciation (4/5/93) 22.34% 24.68% 21.43% 19.54%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Stock Index (1/4/93) 20.37% 24.60% N/A 19.21%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Socially Responsible (10/7/93) 21.52% 23.32% 20.37% 20.86%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Growth and Income (12/15/94) 4.19% 13.12% N/A 23.68%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
International Equity (12/15/94) -2.61% 5.42% N/A 6.02%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
International Value (5/1/96) 1.33% N/A N/A 4.52%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Disciplined Stock (5/1/96) 18.90% N/A N/A 26.06%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Small Company Stock (5/1/96) -12.75% N/A N/A 5.28%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Balanced (5/1/97) 14.57% N/A N/A 19.92%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Limited Term High Income(5/1/97) -6.57% N/A N/A 0.81%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Transamerica Growth (5/1/98)* N/A N/A N/A 18.14%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Core Value (5/1/98) N/A N/A N/A N/A
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
MidCap Stock (5/1/98) N/A N/A N/A N/A
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Founder's Growth (5/1/99) N/A N/A N/A N/A
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Founder's Passport (5/1/99) N/A N/A N/A N/A
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
2. Average annual total returns for period since inception of the
sub-account are as follows. These figures include mortality and expenses charges
deducted at 1.25%, the administrative expenses charge of 0.15% per annum, the
administration charge of $30 per annum adjusted for average account size BUT DO
NOT REFLECT THE MAXIMUM CONTINGENT DEFERRED SALES LOAD OF 6% which if reflected
would reduce the figures. Performance data with no contingent deferred sales
load deduction will only be disclosed if the performance data for the required
periods with the contingent deferred sales load deduction is also disclosed.
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
For the period
from
commencement of
SUB-ACCOUNT (date of For the 1-year For the 3-year For the 5-year sub-account
commencement of operation of period ending period ending period ending operations to
sub-account) 12/31/98 12/31/98 12/31/98 12/31/98
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Money Market (1/4/93) 3.59% 3.59% N/A 3.27%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Special Value (1/4/93) 14.02% 9.29% N/A 8.04%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Zero Coupon 2000 (1/4/93) -5.71% 4.07% N/A 5.88%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Quality Bond (1/4/93) 3.96% 4.44% N/A 6.34%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Small Cap (1/4/93) 4.86% 8.01% N/A 18.92%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Capital Appreciation (4/5/93) 28.34% 25.75% 21.80% 19.84%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Stock Index (1/4/93) 26.37% 25.66% N/A 19.35%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Socially Responsible (10/7/93) 27.52% 24.32% 20.75% 21.20%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Growth and Income (12/15/94) 10.19% 14.41% N/A 24.19%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
International Equity (12/15/94) 2.97% 6.90% N/A 6.83%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
International Value (5/1/96) 7.16% N/A N/A 6.27%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Disciplined Stock (5/1/96) 24.90% N/A N/A 27.34%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Small Company Stock (5/1/96) -7.35% N/A N/A 7.00%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Balanced (5/1/97) 20.57% N/A N/A 28.12%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Limited Term High Income(5/1/97) -1.17% N/A N/A 4.29%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Transamerica Growth (5/1/98)* N/A N/A N/A 23.45%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Core Value (5/1/98) N/A N/A N/A N/A
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
MidCap Stock (5/1/98) N/A N/A N/A N/A
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Founder's Growth (5/1/99) N/A N/A N/A N/A
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Founder's Passport (5/1/99) N/A N/A N/A N/A
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
3. Cumulative total returns for periods since inception of the
sub-accounts are as follows. These figures include mortality and expenses
charges deducted at 1.25%, the administrative expenses charge of 0.15% per
annum, the administration charge of $30 per annum adjusted for average account
size BUT DO NOT REFLECT THE MAXIMUM CONTINGENT DEFERRED SALES LOAD OF 6%, which
if reflected would reduce the figures. Performance data with no contingent
deferred sales load deduction will only be disclosed if performance data for the
required periods with the contingent deferred sales load deduction is also
disclosed.
- ----------------------------------------- ------------------- -------------------
For the period
from commencement
of sub-account
SUB-ACCOUNT (date of For the 1-year operations to
commencement of operation of period ending 12/31/98
sub-account) 12/31/98
- ----------------------------------------- ------------------- -------------------
- ----------------------------------------- ------------------- -------------------
Money Market (1/4/93) 3.59% 21.31%
- ----------------------------------------- ------------------- -------------------
- ----------------------------------------- ------------------- -------------------
Special Value (1/4/93) 14.02% 59.04%
- ----------------------------------------- ------------------- -------------------
- ----------------------------------------- ------------------- -------------------
Zero Coupon 2000 (1/4/93) -5.71% 40.89%
- ----------------------------------------- ------------------- -------------------
- ----------------------------------------- ------------------- -------------------
Quality Bond (1/4/93) -3.96% 44.57%
- ----------------------------------------- ------------------- -------------------
- ----------------------------------------- ------------------- -------------------
Small Cap (1/4/93) -4.86% 182.86%
- ----------------------------------------- ------------------- -------------------
- ----------------------------------------- ------------------- -------------------
Capital Appreciation (4/5/93) 28.34% 183.09%
- ----------------------------------------- ------------------- -------------------
- ----------------------------------------- ------------------- -------------------
Stock Index (1/4/93) 26.87% 189.03%
- ----------------------------------------- ------------------- -------------------
- ----------------------------------------- ------------------- -------------------
Socially Responsible (10/7/93) 27.52% 173.93%
- ----------------------------------------- ------------------- -------------------
- ----------------------------------------- ------------------- -------------------
Growth and Income (12/15/94) 10.19% 110.47%
- ----------------------------------------- ------------------- -------------------
- ----------------------------------------- ------------------- -------------------
International Equity (12/15/94) 2.97% 30.70%
- ----------------------------------------- ------------------- -------------------
- ----------------------------------------- ------------------- -------------------
International Value (5/1/96) 7.16% 17.62%
- ----------------------------------------- ------------------- -------------------
- ----------------------------------------- ------------------- -------------------
Disciplined Stock (5/1/96) 24.90% 90.67%
- ----------------------------------------- ------------------- -------------------
- ----------------------------------------- ------------------- -------------------
Small Company Stock (5/1/96) -7.95% 19.60%
- ----------------------------------------- ------------------- -------------------
- ----------------------------------------- ------------------- -------------------
Balanced (5/1/97) 20.57% 41.53%
- ----------------------------------------- ------------------- -------------------
- ----------------------------------------- ------------------- -------------------
Limited Term High Income(5/1/97) -1.17% 7.26%
- ----------------------------------------- ------------------- -------------------
- ----------------------------------------- ------------------- -------------------
Transamerica Growth (5/1/98)* N/A 23.54%
- ----------------------------------------- ------------------- -------------------
- ----------------------------------------- ------------------- -------------------
Core Value (5/1/98) N/A -7.12%
- ----------------------------------------- ------------------- -------------------
- ----------------------------------------- ------------------- -------------------
MidCap Stock (5/1/98) N/A -3.66%
- ----------------------------------------- ------------------- -------------------
- ----------------------------------------- ------------------- -------------------
Founder's Growth (5/1/99) N/A N/A
- ----------------------------------------- ------------------- -------------------
- ----------------------------------------- ------------------- -------------------
Founder's Passport (5/1/99) N/A N/A
- ----------------------------------------- ------------------- -------------------
SINCE COMMENCEMENT OF THE PORTFOLIOS
The dates to the right of the sub-account names indicate the date of
commencement of operation of the Portfolios.
4. Average annual total returns for periods since inception of the
portfolio, including adjusted historical performance are as follows. These
figures include mortality and expenses charges deducted at 1.25%, the
administrative expenses charge of 0.15% per annum, the administration charge of
$30 per annum adjusted for average account size and the maximum contingent
deferred sales load of 6%.
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
For the period
from
PORTFOLIO (date of For the 1-year For the 3-year For the 5-year commencement of
commencement of operation of period ending period ending period ending portfolio to
portfolio) 12/31/98 12/31/98 12/31/98 12/31/98
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Money Market (8/31/90) -2.02% 2.02% 2.87% 3.44%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Special Value (8/31/90) 8.02% 7.88% 3.95% 6.94%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Zero Coupon 2000 (8/31/90) -0.03% 2.51% 3.72% 7.88%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Quality Bond (8/31/90) -1.88% 2.88% 4.25% 7.52%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Small Cap (8/31/90) -10.26% 6.58% 10.73% 35.32%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Capital Appreciation (4/5/93) 22.34% 24.68% 21.43% 19.54%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Stock Index (9/29/89) 20.37% 24.60% 21.45% 15.45%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Socially Responsible (10/7/93) 21.52% 23.23% 20.37% 20.86%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Growth and Income (12/15/94) 4.19% 13.12% N/A 23.68%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
International Equity (12/15/94) -2.61% 5.42% N/A 6.02%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
International Value (5/1/96) 1.33% N/A N/A 4.52%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Disciplined Stock (5/1/96) 18.90% N/A N/A 26.06%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Small Company Stock (5/1/96) -12.75% N/A N/A 5.28%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Balanced (5/1/97) 14.57% N/A N/A 19.92%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Limited Term High Income(5/1/97) -6.57% N/A N/A 0.81%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Transamerica Growth(2/26/69)* 35.81% 36.13% 32.50% 24.63%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Core Value (5/1/98) N/A N/A N/A N/A
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
MidCap Stock (5/1/98) N/A N/A N/A N/A
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Founder's Growth (11/30/98) N/A N/A N/A N/A
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Founder's Passport (11/30/98) N/A N/A N/A N/A
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
5. Average annual total returns for period since inception of the
portfolio including adjusted historical performance are as follows. These
figures include mortality and expenses charges deducted at 1.25%, the
administrative expenses charge of 0.15% per annum, the administration charge of
$30 per annum adjusted for average account size BUT DO NOT REFLECT THE MAXIMUM
CONTINGENT DEFERRED SALES LOAD OF 6% which if reflected would reduce the
figures. Performance data with no contingent deferred sales load deduction will
only be disclosed if the performance data for the required periods with no
contingent deferred sales load deduction is also disclosed.
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
For the period
from
PORTFOLIO (date of For the 1-year For the 3-year For the 5-year commencement of
commencement of operation of period ending period ending period ending portfolio to
portfolio) 12/31/98 12/31/98 12/31/98 12/31/98
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Money Market (8/31/90) 3.59% 3.59% 3.57% 3.45%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Special Value (8/31/90) 14.02% 9.29% 4.63% 6.94%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Zero Coupon 2000 (8/31/90) 5.71% 4.07% 4.41% 7.89%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Quality Bond (8/31/90) -3.96% 4.44% 4.92% 7.53%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Small Cap (8/31/90) -4.86% 8.01% 11.28% 35.32%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Capital Appreciation (4/5/93) 28.34% 25.75% 21.83% 19.84%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Stock Index (9/29/89) 26.37% 25.86% 21.81% 15.45%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Socially Responsible (10/7/93) 21.52% 24.32% 20.75% 20.86%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Growth and Income (5/2/94) 10.19% 14.41% N/A 24.19%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
International Equity (5/2/94) 2.97% 6.90% N/A 6.83%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
International Value (4/30/96) 7.16% N/A% N/A 6.27%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Disciplined Stock (4/30/96) 24.90% N/A N/A 27.34%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Small Company Stock (4/30/96) -7.35% N/A N/A 7.00%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Balanced (5/1/97) 20.57% N/A N/A 28.12%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Limited Term High Income (4/30/97) -1.17% N/A N/A 4.21%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Transamerica Growth (2/26/69)* 41.21% 36.13% 32.50% 24.63%
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Core Value (5/1/98) N/A N/A N/A N/A
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
MidCap Stock (5/1/98) N/A N/A N/A N/A
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Founder's Growth (9/30/98) N/A N/A N/A N/A
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
Founder's Passport (9/30/98) N/A N/A N/A N/A
- ----------------------------------------- ------------------- ------------------- ----------------- ------------------
6. Cumulative total returns for periods since inception of the portfolio,
including hypothetical performance are as follows. These figures include
mortality and expenses charges deducted at 1.25%, the administrative expenses
charge of 0.15% per annum, the administration charge of $30 per annum adjusted
for average account size BUT DO NOT REFLECT THE MAXIMUM CONTINGENT DEFERRED
SALES LOAD OF 6%, which if reflected would reduce the figures. Performance data
with no contingent deferred sales load deduction will only be disclosed if
performance data for the required periods with no contingent deferred sales load
deduction is also disclosed.
- --------------------------------------------- -------------------------- -------------------------
PORTFOLIO (date of For the period from
commencement of operation of For the 1-year period commencement of
portfolio) ending 12/31/98 portfolio to 12/31/98
- --------------------------------------------- -------------------------- -------------------------
- --------------------------------------------- -------------------------- -------------------------
Money Market (8/31/90) 3.59% 32.70%
- --------------------------------------------- -------------------------- -------------------------
- --------------------------------------------- -------------------------- -------------------------
Special Value (8/31/90) 14.02% 75.06%
- --------------------------------------------- -------------------------- -------------------------
- --------------------------------------------- -------------------------- -------------------------
Zero Coupon 2000 (8/31/90) 5.71% 88.37%
- --------------------------------------------- -------------------------- -------------------------
- --------------------------------------------- -------------------------- -------------------------
Quality Bond (8/31/90) 3.96% 83.19%
- --------------------------------------------- -------------------------- -------------------------
- --------------------------------------------- -------------------------- -------------------------
Small Cap (8/31/90) -4.86% 1145.95%
- --------------------------------------------- -------------------------- -------------------------
- --------------------------------------------- -------------------------- -------------------------
Capital Appreciation (4/5/93) 28.34% 183.09%
- --------------------------------------------- -------------------------- -------------------------
- --------------------------------------------- -------------------------- -------------------------
Stock Index (9/29/89) 26.37% 278.20%
- --------------------------------------------- -------------------------- -------------------------
- --------------------------------------------- -------------------------- -------------------------
Socially Responsible (10/7/93) 27.52% 173.93%
- --------------------------------------------- -------------------------- -------------------------
- --------------------------------------------- -------------------------- -------------------------
Growth and Income (5/2/94) 10.19% 140.47%
- --------------------------------------------- -------------------------- -------------------------
- --------------------------------------------- -------------------------- -------------------------
International Equity (5/2/94) 2.97% 30.70%
- --------------------------------------------- -------------------------- -------------------------
- --------------------------------------------- -------------------------- -------------------------
International Value (4/30/96) 7.16% 17.62%
- --------------------------------------------- -------------------------- -------------------------
- --------------------------------------------- -------------------------- -------------------------
Disciplined Stock (4/30/96) 24.90% 90.67%
- --------------------------------------------- -------------------------- -------------------------
- --------------------------------------------- -------------------------- -------------------------
Small Company Stock (4/30/96) -7.35% 19.80%
- --------------------------------------------- -------------------------- -------------------------
- --------------------------------------------- -------------------------- -------------------------
Balanced (5/1/97) 20.57% 41.53%
- --------------------------------------------- -------------------------- -------------------------
- --------------------------------------------- -------------------------- -------------------------
Limited Term High Income (4/30/97) -1.17% 7.26%
- --------------------------------------------- -------------------------- -------------------------
- --------------------------------------------- -------------------------- -------------------------
Transamerica Growth (2/26/69)* 41.21% 809.17%
- --------------------------------------------- -------------------------- -------------------------
- --------------------------------------------- -------------------------- -------------------------
Core Value (5/1/98) N/A -7.12%
- --------------------------------------------- -------------------------- -------------------------
- --------------------------------------------- -------------------------- -------------------------
MidCap Stock (5/1/98) N/A -3.66%
- --------------------------------------------- -------------------------- -------------------------
- --------------------------------------------- -------------------------- -------------------------
Founder's Growth (9/30/98) N/A N/A
- --------------------------------------------- -------------------------- -------------------------
- --------------------------------------------- -------------------------- -------------------------
Founder's Passport (9/30/98) N/A N/A
- --------------------------------------------- -------------------------- -------------------------
</TABLE>
*The Growth Portfolio of the Transamerica Variable Insurance Fund, Inc.,
is the successor to Separate Account Fund C of Transamerica Occidental Life
Insurance Company, a management investment company funding variable annuities,
through a reorganization on November 1, 1996. Accordingly, the performance data
for the Transamerica VIF Growth Portfolio include performance of its
predecessor. The performance shown in the "since inception" box for the
Transamerica Growth Sub-Account is 10-year performance, not performance since
1969.
FEDERAL TAX MATTERS
The Dreyfus/Transamerica Triple Advantage Variable Annuity may be
purchased on a non-tax qualified basis (non-qualified contract") or purchased
and used in connection with plans qualifying for special tax treatment
("qualified contract"). Qualified contracts are designed for use by retirement
plans qualified for special tax treatment under Sections 401, 403(b), 408 or
408A of the Internal Revenue Code of 1986, as amended (the "Code"). The ultimate
effect of federal income taxes on the account value, on annuity payments, and on
the economic benefit to the owner, the annuitant or the beneficiary may depend
on the type of retirement plan for which the contract is purchased, on the tax
and employment status of the individual concerned and on our tax status. THE
FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE. Any person
concerned about these tax implications should consult a competent tax adviser.
This discussion is based upon our understanding of the present federal income
tax laws as they are currently interpreted by the Internal Revenue Service
("IRS"). No representation is made as to the likelihood of continuation of these
present federal income tax laws or of the current interpretations by the IRS.
Moreover, no attempt has been made to consider any applicable state or other tax
laws.
TAXATION OF TRANSAMERICA
We are taxed as a life insurance company under Part I of Subchapter L
of the Code. Since the variable account is not an entity separate from
Transamerica, and its operations form a part of Transamerica, it will not be
taxed separately as a "regulated investment company" under Subchapter M of the
Code. Investment income and realized capital gains are automatically applied to
increase reserves under the contracts. Under existing federal income tax law, we
believe that the variable account investment income and realized net capital
gains will not be taxed to the extent that such income and gains are applied to
increase the reserves under the contracts.
Accordingly, we do not anticipate that we will incur any federal income
tax liability attributable to the variable account and, therefore, we do not
intend to make provisions for any such taxes. However, if changes in the federal
tax laws or interpretations thereof result in our being taxed on income or gains
attributable to the variable account, then we may impose a charge against the
variable account (with respect to some or all contracts) in order to set aside
provisions to pay such taxes.
TAX STATUS OF THE CONTRACT
Code Section 817(h) requires that with respect to non-qualified
contracts, the investments of the funds be "adequately diversified" in
accordance with Treasury regulations in order for the contracts to qualify as
annuity contracts under federal tax law. The variable account, through the
funds, intends to comply with the diversification requirements prescribed by the
Treasury in Reg. Sec. 1.817-5, which affect how the Funds' assets may be
invested.
In certain circumstances, owners of variable annuity contracts may be
considered the owners, for federal income tax purposes, of the assets of the
separate accounts used to support their contracts. In those circumstances,
income and gains from the separate account assets would be includible in the
variable contract owner's gross income. The IRS has stated in published rulings
that a variable contract owner will be considered the owner of separate account
assets if the contract owner possesses incidents of ownership in those assets,
such as the ability to exercise investment control over the assets. The Treasury
Department has also announced, in connection with the issuance of regulations
concerning diversification, that those regulations "do not provide guidance
concerning the circumstances in which investor control for the investments of a
segregated asset account may cause the investor (i.e., the owner), rather than
the insurance company, to be treated as the owner of the assets in the account."
This announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which policyholders may direct their
investments to particular sub-accounts without being treated as owners of the
underlying assets."
The ownership rights under the contract are similar to, but different
in certain respects from, those described by the IRS in rulings in which it was
determined that contract owners were not owners of separate account assets. For
example, the owner has additional flexibility in allocating premium payments and
account values. These differences could result in an owner being treated as the
owner of a pro rata portion of the assets of the variable account. In addition,
we do not know what standards will be set forth, if any, in the regulations or
rulings which the Treasury Department has stated it expects to issue. We
therefore reserve the right to modify the contract as necessary to attempt to
prevent an owner from being considered the owner of a pro rata share of the
assets of the variable account.
In order to be treated as an annuity contract for federal income tax
purposes, Code Section 72(s) requires any non-qualified contract to provide that
(a) if any owner dies on or after the annuity date but prior to the time the
entire interest in the contract has been distributed, the remaining portion of
such interest will be distributed at least as rapidly as under the method of
distribution being used as of the date of that owner's death; and (b) if any
owner dies prior to the annuity date, the entire interest in the contract will
be distributed within five years after the date of the owner's death. These
requirements will be considered satisfied as to any portion of the owner's
interest which is payable to or for the benefit of a "designated beneficiary"
and which is distributed over the life of such "designated beneficiary" or over
a period not extending beyond the life expectancy of that beneficiary, provided
that such distributions begin within one year of the owner's death. The owner's
"designated beneficiary" refers to a natural person designated by such owner as
a beneficiary and to whom ownership of the contract passes by reason of death.
However, if the owner's "designated beneficiary" is the surviving spouse of the
deceased owner, the contract may be continued with the surviving spouse as the
new owner.
The non-qualified contracts contain provisions which are intended to
comply with the requirements of Code Section 72(s), although no regulations
interpreting these requirements have yet been issued. We intend to review such
provisions and modify them if necessary to assure that they comply with the
requirements of Code Section 72(s) when clarified by regulation or otherwise.
Other rules may apply to qualified contracts.
DISTRIBUTION OF THE CONTRACT
Transamerica Securities Sales Corporation ("TSSC") is principal
underwriter of the contracts under a Distribution Agreement with Transamerica.
TSSC may also serve as principal underwriter and distributor of other contracts
issued through the variable account and certain other separate accounts of
Transamerica and any affiliates of Transamerica. TSSC is an indirect wholly
owned subsidiary of Transamerica Insurance Corporation. TSSC is registered with
the Commission as a broker/dealer and is a member of the National Association of
Securities Dealers, Inc. ("NASD"). Transamerica pays TSSC for acting as the
principal underwriter under a distribution agreement.
TSSC has entered into sales agreements with other broker/dealers to
solicit applications for the contracts through registered representatives who
are licensed to sell securities and variable insurance products. These
agreements provide that applications for the contracts may be solicited by
registered representatives of the broker/dealers appointed by Transamerica to
sell its variable life insurance and variable annuities. These broker/dealers
are registered with the Commission and are members of the NASD. The registered
representatives are authorized under applicable state regulations to sell
variable life insurance and variable annuities.
Transamerica Financial Resources, Inc. ("TFR") is an underwriter and
distributor of the contracts. TFR is a wholly-owned subsidiary of Transamerica
Insurance Corporation of California and is registered with the Commission and
the NASD as a broker/dealer.
Under the agreements, applications for the contracts will be sold by
broker/dealers which will receive compensation as described in the prospectus.
The offering of the contracts is expected to be continuous and neither
TSSC nor TFR anticipate discontinuing the offering of the contracts. However,
TSSC and TFR reserve the right to discontinue the offering of the contracts.
During fiscal year 1998, $22,999,381 in commissions were paid to TSSC
as underwriter of the contracts; no amounts were retained by TSSC. During fiscal
year 1998, $1,737,090.86 in commissions were paid to TFR as underwriter of the
contracts; no amounts were retained by TFR.
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS
Title to assets of the variable account is held by Transamerica. The
assets of the variable account are kept separate and apart from Transamerica
general account assets. Records are maintained of all purchases and redemptions
of portfolio shares held by each of the sub-accounts.
TRANSAMERICA
GENERAL INFORMATION AND HISTORY
Transamerica Occidental Life Insurance Company was formerly known as
Occidental Life Insurance Company of California. The name change occurred
September 1, 1981.
Transamerica is wholly-owned by Transamerica Insurance Corporation of
California, which is in turn, wholly-owned by Transamerica Corporation.
Transamerica Corporation is a financial services organization which engages
through its subsidiaries in two primary businesses: finance and insurance.
Finance consists of consumer lending, commercial lending, leasing and real
estate services. Insurance comprises life insurance, asset management, and
insurance brokerage.
STATE REGULATION
We are subject to the insurance laws and regulations of all the states
where we are licensed to operate. The availability of certain contract rights
and provisions depends on state approval and/or filing and review processes.
Where required by state law or regulation, the contract will be modified
accordingly.
RECORDS AND REPORTS
All records and accounts relating to the variable account will be
maintained by us or by our service office. As presently required by the
provisions of the 1940 Act and regulations promulgated thereunder which pertain
to the variable account, reports containing such information as may be required
under the 1940 Act or by other applicable law or regulation will be sent to
owners semi-annually at their last known address of record.
<PAGE>
FINANCIAL STATEMENTS
This Statement of Additional Information contains the financial
statements of the variable account as of and for ther period ended December 31,
1998.
The consolidated financial statements of Transamerica included in this
Statement of Additional Information should be considered only as bearing on the
ability of Transamerica to meet its obligations under the contract. They should
not be considered as bearing on the investment performance of the assets held in
the variable account.
<PAGE>
APPENDIX
ACCUMULATION TRANSFER FORMULA
Transfers after the annuity date are implemented according to the
following formulas:
(1) Determine the number of units to be transferred from the variable
sub-account as follows: = AT/AUV1
(2) Determine the number of variable accumulation units remaining in
such variable sub-account (after the transfer):
= UNIT1 AT/AUV1
(3) Determine the number of variable accumulation units in the
transferee variable sub-account (after the transfer):
= UNIT2 + AT/AUV2
(4) Subsequent variable accumulation payments will reflect the changes
in variable accumulation units in each variable sub-account as of
the next variable accumulation payment's due date.
Where:
(AUV1) is the variable accumulation unit value of the variable
sub-account that the transfer is being made from as of the end of the
valuation period in which the transfer request was received.
(AUV2) is the variable accumulation unit value of the variable
sub-account that the transfer is being made to as of the end of the
valuation period in which the transfer request was received.
(UNIT1) is the number of variable accumulation units in the variable
sub-account that the transfer is being made from, before the transfer.
(UNIT2) is the number of variable accumulation units in the variable
sub-account that the transfer is being made to, before the transfer.
(AT) is the dollar amount being transferred from the variable
sub-account.
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
Audited Financial Statements
Separate Account VA-2L of
Transamerica Occidental
Life Insurance Company
Year ended December 31, 1998
with Report of Independent Auditors
<PAGE>
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Audited Financial Statements
Year ended December 31, 1998
Contents
Report of Independent Auditors........................1
Statement of Assets and Liabilities...................2
Statement of Operations...............................6
Statements of Changes in Net Assets...................10
Notes to Financial Statements.........................18
<PAGE>
1
Report of Independent Auditors
Unitholders of Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Board of Directors, Transamerica Occidental Life Insurance Company
We have audited the accompanying statement of assets and liabilities of Separate
Account VA-2L of Transamerica Occidental Life Insurance Company (comprised of
the Money Market, Managed Assets, Zero Coupon 2000, Quality Bond, Small Cap,
Capital Appreciation, Stock Index Fund, Socially Responsible Fund, Growth and
Income, International Equity, International Value, Disciplined Stock, Small
Company Stock, Limited Term High Income, Balanced, Core Value, MidCap, and TA
VIF Growth Sub-accounts) as of December 31, 1998, the related statement of
operations for the year then ended, and the statements of changes in net assets
for each of the two years in the period then ended. These financial statements
are the responsibility of Separate Account VA-2L's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1998, by correspondence with
the fund managers. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the respective
sub-accounts comprising Separate Account VA-2L of Transamerica Occidental Life
Insurance Company at December 31, 1998, the results of their operations for the
year then ended, and the changes in their net assets for each of the two years
in the period then ended in conformity with generally accepted accounting
principles.
Charlotte, North Carolina
April 21, 1999
<PAGE>
2
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Statement of Assets and Liabilities
December 31, 1998
<TABLE>
<CAPTION>
Zero
Money Managed Coupon
Market Assets 2000
Sub-account Sub-account Sub-account
------------------- ------------------- -------------------
Assets
<S> <C> <C> <C>
Investments, at fair value $ 65,851,739 $ 44,752,200 $ 21,021,531
Receivable for units sold - - 5,561
Due from Transamerica Life - 1,579
------------------- ------------------- -------------------
Total assets 65,851,739 44,753,779 21,027,092
Liabilities
Payable for units redeemed 150,446 15,284 -
Due to Transamerica Life 10,668 - 175
------------------- ------------------- -------------------
Total liabilities 161,114 15,284 175
------------------- ------------------- -------------------
Net assets $ 65,690,625 $ 44,738,495 $ 21,026,917
=================== =================== ===================
Accumulation units outstanding 53,939,642.196 2,764,173.241 1,263,163.357
=================== =================== ===================
Net asset value and redemption price per unit $ 1.217854 $ 16.185127 $ 16.646237
=================== =================== ===================
Investment sub-account information:
Number of mutual fund shares 65,851,738.790 2,997,468.168 1,681,722.491
Net asset value per share $ 1.00 $ 14.93 $ 12.50
Investment cost $ 65,851,739 $ 39,339,123 $ 20,800,569
<PAGE>
</TABLE>
3
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Statement of Assets and Liabilities
December 31, 1998
<TABLE>
<CAPTION>
Socially
Quality Small Capital Stock Responsible Growth and
Bond Cap Appreciation Index Fund Fund Income
Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account
- -------------------- ------------------- ------------------- ------------------ ----------------- --------------------
<S> <C> <C> <C> <C> <C>
$ 79,898,551 $ 168,743,070 $ 287,044,866 $ 197,434,730 $59,834,180 $ 212,404,040
- - 111,513 - 1,845 113,149
4,025 - - 3,687 9 18,842
- -------------------- ------------------- ------------------ ------------------- ----------------- --------------------
79,902,576 168,743,070 287,156,379 $ 197,438,417 59,836,034 212,536,031
43,291 192,358 - 64,661 - -
13 2,763 17,211 - - -
- -------------------- ------------------- ------------------ ------------------- ----------------- --------------------
43,304 195,121 17,211 64,661 - -
- -------------------- ------------------- ------------------ ------------------- ----------------- --------------------
$ 79,859,272 $ 168,547,949 $ 287,139,168 $ 197,373,756 $ 59,836,034 $ 212,536,031
==================== =================== ================== =================== ================= ====================
5,030,446.431 2,615,765.058 8,121,246.029 4,443,711.383 1,744,708.001 7,270,897.396
==================== =================== ================== =================== ================= ====================
$ 15.875186 $ 64.435431 $ 35.356541 $ 44.416421 $ 34.295730 $ 29.231059
==================== =================== ================== =================== ================= ====================
6,947,700.054 3,130,088.482 7,949,179.338 6,071,178.651 1,925,166.667 9,385,949.603
$ 11.50 $ 53.91 $ 36.11 $ 32.52 $ 31.08 $ 22.63
$ 80,905,708 $ 162,028,989 $ 214,899,540 $ 151,673,995 $ 47,938,545 $ 195,878,650
</TABLE>
See accompanying notes.
<PAGE>
4
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Statement of Assets and Liabilities (continued)
December 31, 1998
<TABLE>
<CAPTION>
International International Disciplined
Equity Value Stock
Sub-account Sub-account Sub-account
------------------ ------------------- --------------------
Assets
<S> <C> <C> <C>
Investments, at fair value $ 39,038,393 $ 16,277,248 $ 90,680,312
Receivable for units sold 3,382 - 32,727
Due from Transamerica Life 292 1,739 5,660
------------------ ------------------- --------------------
Total assets 39,042,067 16,278,987 90,718,699
Liabilities
Payable for units redeemed - 17,722 -
Due to Transamerica Life - - -
------------------ ------------------- --------------------
Total liabilities - 17,722 -
------------------ ------------------- --------------------
Net assets $ 39,042,067 $ 16,261,265 $ 90,718,699
================== =================== ====================
Accumulation units outstanding 2,456,885.911 1,380,692.935 4,753,022.290
================== =================== ====================
Net asset value and redemption price per unit $ 15.890875 $ 11.777610 $ 19.086529
================== =================== ====================
Investment sub-account information:
Number of mutual fund shares 2,692,302.998 1,210,204.297 3,951,211.834
Net asset value per share $ 14.50 $ 13.45 $ 22.95
Investment cost $ 39,657,248 $ 17,093,262 $ 77,290,738
</TABLE>
<PAGE>
5
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Statement of Assets and Liabilities (continued)
December 31, 1998
<TABLE>
<CAPTION>
Small
Company Limited Term Core Mid TA VIF
Stock High Income Balanced Value Cap Growth
Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account
- ------------------- ------------------- ----------------- -------------------- ------------------- ------------------
<S> <C> <C> <C> <C> <C>
$ 25,333,481 $ 69,402,039 $ 32,299,326 $ 889,245 $ 4,553,781 $ 18,595,198
- - - 143 - -
- 6,541 962 1 24 1,305
- ------------------- ------------------- ----------------- -------------------- ------------------- ------------------
25,333,481 69,408,580 32,300,288 889,389 4,553,805 18,596,503
11,984 91,778 5,144 - 51,769 50,699
163 63 - - - -
- -------------------
------------------- ----------------- -------------------- ------------------- ------------------
12,147 91,841 5,144 - 51,769 50,699
- ------------------- ------------------- ----------------- -------------------- ------------------- ------------------
$ 25,321,334 $ 69,316,739 $ 32,295,144 $ 889,389 $ 4,502,036 $ 18,545,804
=================== =================== ================= ==================== =================== ==================
2,111,028.689 6,458,312.119 2,280,501.753 95,759.521 467,292.833 1,634,054.907
=================== =================== ================= ==================== =================== ==================
$ 11.994784 $ 10.732950 $ 14.161420 $ 9.287734 $ 9.634293 $ 11.349560
=================== =================== ================= ==================== =================== ==================
1,678,825.758 5,881,528.697 2,027,578.542 75,874.168 374,488.594 960,495.778
$ 15.09 $ 11.80 $ 15.93 $ 11.72 $ 12.16 $ 19.36
$ 26,602,800 $ 75,035,473 $ 30,364,320 $ 845,991 $ 4,196,871 $ 17,510,857
</TABLE>
See accompanying
notes.
<PAGE>
6
Separate Account
VA-2L of
Transamerica
Occidental Life
Insurance Company
Statement of
Operations
Year ended
December 31, 1998
<TABLE>
<CAPTION>
Zero
Money Managed Coupon
Market Assets 2000
Sub-account Sub-account Sub-account
----------------- ------------------ ------------------
<S> <C> <C> <C>
Investment income $ 3,030,988 $ 291,880 $1,124,788
Expenses
Mortality and expense risk charge 781,026 591,970 290,938
----------------- ------------------ ------------------
Net investment income (loss) 2,249,962 (300,090) 833,850
Net realized and unrealized gain (loss) on investments:
Realized gain (loss) on investment transactions - 1,450,849 12,744
Unrealized appreciation (depreciation) of investments - 4,182,696 329,560
----------------- ------------------ ------------------
Net gain (loss) on investments - 5,633,545 342,304
----------------- ------------------ ------------------
Increase in net assets resulting from operations $ 2,249,962 $ 5,333,455 $1,176,154
================= ================== ==================
</TABLE>
<PAGE>
7
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Statement of Operations (continued)
Year ended December 31, 1998
<TABLE>
<CAPTION>
Socially
Quality Small Capital Stock Responsible Growth and
Bond Cap Appreciation Index Fund Fund Income
Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account
- -------------------- ------------------- ------------------- ------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
$ 5,246,883 $ 3,397,330 $ 1,633,806 $ 4,684,124 $ 2,259,173 $ 5,733,339
972,185 2,549,950 3,191,383 2,193,307 649,856 2,883,979
- -------------------- ------------------- ------------------- ------------------ ------------------ ------------------
4,274,698 847,380 (1,557,577) 2,490,817 1,609,317 2,849,360
525,863 11,570,695 19,922,208 11,278,570 2,813,333 4,834,113
(1,966,478) (23,355,836) 37,801,962 25,219,458 7,040,819 11,336,135
- -------------------- ------------------- ------------------- ------------------ ------------------ ------------------
(1,440,615) (11,785,141) 57,724,170 36,498,028 9,854,152 16,170,248
- -------------------- ------------------- ------------------- ------------------ ------------------ ------------------
$ 2,834,083 $ (10,937,761) $ 56,166,593 $38,988,845 $ 11,463,469 $ 19,019,608
==================== =================== =================== ================== ================== ==================
</TABLE>
See accompanying notes.
<PAGE>
8
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Statement of Operations (continued)
Year ended December 31, 1998
<TABLE>
<CAPTION>
Small
International International Disciplined Company
Equity Value Stock Stock
Sub-account Sub-account Sub-account Sub-account
---------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Investment income $ 393,497 $1,235,765 $ 717,446 $ 131,182717,446
Expenses
Mortality and expense risk charge 544,368 204,904 860,825 342,118
---------------- -------------- --------------- --------------
Net investment income (loss) (150,871) 1,030,861 (143,379) (210,936)
Net realized and unrealized gain (loss) on investments:
Realized gain (loss) on investment transactions 685,545 607,912 3,146,901 854,546
Unrealized appreciation (depreciation) of investments 177,915 (673,621) 10,667,924 (2,793,046)
---------------- -------------- --------------- --------------
Net gain (loss) on investments 863,460 (65,709) 13,814,825 (1,938,500)
---------------- -------------- --------------- --------------
Increase (decrease) in net assets resulting from operations $ 712,589 $ 965,152 $ 13,671,446 $(2,149,436)
================ ============== =============== ==============
</TABLE>
<PAGE>
9
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Statement of Operations (continued)
Year ended December 31, 1998
Limited Term
High Core TA VIF
Income Balanced Value Mid-Cap Growth
Sub-account Sub-account Sub-account Sub-account Sub-account
- ------------------ ---------------- ---------------- ---------------------------
$5,109,433 $2,311,321 $ 4,669 $ 7,851 $1,541,511
714,682 246,227 3,991 22,127 81,215
- ------------------ ---------------- ---------------- ---------------------------
4,394,751 2,065,094 678 (14,276) 1,460,296
(960,194) 224,759 (4,095) (80,941) (322,061)
(5,156,021) 2,034,493 43,255 356,911 1,084,341
- ------------------ ---------------- ---------------- ---------------------------
(6,116,215) 2,259,252 39,160 275,970 762,280
- ------------------ ---------------- ---------------- ---------------------------
$(1,721,464) $4,324,346 $39,838 $261,694 $2,222,576
================== ================ ================ ===========================
See accompanying notes.
<PAGE>
10
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Statements of Changes in Net Assets
Year ended December 31, 1998
<TABLE>
<CAPTION>
Zero
Money Managed Coupon
Market Assets 2000
Sub-account Sub-account Sub-account
----------------- ------------------ ------------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C>
Net investment income (loss) $ 2,249,962 $ (300,090) $ 833,850
Realized gain (loss) on investment transactions - 1,450,849 12,744
Unrealized appreciation (depreciation) of investments - 4,182,696 329,560
----------------- ------------------ ------------------
Increase (decrease) in net assets resulting from operations 2,249,962 5,333,455 1,176,154
Changes from accumulation unit transactions 13,329,404 1,819,817 (1,406,450)
----------------- ------------------ ------------------
Total increase (decrease) in net assets 15,579,366 7,153,272 (230,296)
Net assets at beginning of year 50,111,259 37,585,223 21,257,213
----------------- ------------------ ------------------
Net assets at end of year $ 65,690,625 $44,738,495 $21,026,917
================= ================== ==================
</TABLE>
<PAGE>
11
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Statements of Changes in Net Assets (continued)
Year ended December 31, 1998
<TABLE>
<CAPTION>
Socially
Quality Small Capital Stock Responsible Growth and
Bond Cap Appreciation Index Fund Fund Income
Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account
- ------------------- ------------------ ----------------- ------------------ ------------------ -----------------
<S> <C> <C> <C> <C> <C>
$ 4,274,698 $ 847,380 $ (1,557,577) $ 2,490,817 $ 1,609,317 $ 2,849,360
525,863 11,570,695 19,922,208 11,278,570 2,813,333 4,834,113
(1,966,478) (23,355,836) 37,801,962 25,219,458 7,040,819 11,336,135
- ------------------- ------------------ ----------------- ------------------ ------------------ -----------------
2,834,083 (10,937,761) 56,166,593 38,988,845 11,463,469 19,019,608
15,677,722 (20,461,935) 53,467,371 40,451,181 12,467,511 (4,781,367)
- ------------------- ------------------ ----------------- ------------------ ------------------ -----------------
18,511,805 (31,399,696) 109,633,964 79,440,026 23,930,980 14,238,241
61,347,467 199,947,645 177,505,204 117,933,730 35,905,054 198,297,790
- ------------------- ------------------ ----------------- ------------------ ------------------ -----------------
$79,859,272 $ 168,547,949 $287,139,168287,139,$68197,373,756 $ 59,836,034 $212,536,031
=================== ================== ================= ================== ================== =================
</TABLE>
See accompanying notes.
<PAGE>
12
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Statements of Changes in Net Assets (continued)
Year ended December 31, 1998
<TABLE>
<CAPTION>
International InternationalInternatDisciplined
Equity Value Stock
Sub-account Sub-account Sub-account
----------------- ------------------ ----------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C> <C>
Net investment income $ (150,871) $ 1,030,861 $(143,379)
Realized gain on investment transactions 685,545 607,912 3,146,901
Unrealized appreciation (depreciation) of investments 177,915 (673,621) 10,667,924
----------------- ------------------ ----------------
Increase (decrease) in net assets resulting from operations 712,589 965,152 13,671,446
Increase (decrease) in net assets resulting from operations
Changes from accumulation unit transactions 4,768,717 3,793,037 42,254,185
----------------- ------------------ ----------------
Total increase (decrease) in net assets 5,481,306 4,758,189 55,925,631
Net assets at beginning of year 33,560,761 11,503,076 34,793,068
----------------- ------------------ ----------------
Net assets at end of year $ 39,042,067 $ 16,261,265 $90,718,699
================= ================== ================
</TABLE>
<PAGE>
13
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Statements of Changes in Net Assets (continued)
Year ended December 31, 1998
<TABLE>
<CAPTION>
Small Limited Term
Company High Core TA VIF
Stock Income Balanced Value Mid-Cap Growth
Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account
- ------------------- ------------------ --------------- ---------------- ---------------- -----------------
<S><C> <C> <C> <C> <C> <C>
$ (210,936) $ 4,394,751 $ 2,065,094 $ 678 $ (14,276) $ 1,460,296
854,546 (960,194) 224,759 (4,095) (80,941) (322,061)
(2,793,046) (5,156,021) 2,034,493 43,255 356,911 1,084,341
- ------------------- ------------------ --------------- ---------------- ---------------- -----------------
(2,149,436) (1,721,464) 4,324,346 39,838 261,694 2,222,576
6,721,573 44,730,747 20,366,431 849,551 4,240,342 16,323,228
- ------------------- ------------------ --------------- ---------------- ---------------- -----------------
4,572,137 43,009,283 24,690,777 889,389 4,502,036 18,545,804
20,749,197 26,307,456 7,604,367 - - -
- ------------------- ------------------ --------------- ---------------- ---------------- -----------------
$ 25,321,334 $ 69,316,739 $ 32,295,144 $ 889,389 $ 4,502,036 $ 18,545,804
=================== ================== =============== ================ ================ =================
</TABLE>
See accompanying notes.
<PAGE>
14
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Statement of Changes in Net Assets
Year ended December 31, 1997
<TABLE>
<CAPTION>
Zero
Money Managed Coupon
Market Assets 2000
Sub-account Sub-account Sub-account
----------------- ------------------ ------------------
Increase in net assets:
Operations:
<S> <C> <C> <C>
Net investment income (loss) $ 1,741,713 $ (155,809) $ 1,082,603
Realized gain (loss) on investment transactions - (202,908) 35,106
Unrealized appreciation (depreciation) of investments - 3,388,026 (6,228)
----------------- ------------------ ------------------
Increase in net assets resulting from operations 1,741,713 3,029,309 1,111,481
Changes from accumulation unit transactions 4,225,058 20,158,011 460,083
----------------- ------------------ ------------------
Total increase in net assets 5,966,771 23,187,320 1,571,564
Net assets at beginning of year 44,144,488 14,397,903 19,685,649
----------------- ------------------ ------------------
Net assets at end of year $ 50,111,259 $37,585,223 $ 21,257,213
================= ================== ==================
</TABLE>
<PAGE>
15
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Statement of Changes in Net Assets (continued)
Year ended December 31, 1997
<TABLE>
<CAPTION>
Quality Small Capital Growth and International Stock
Bond Cap Appreciation Income Equity Index Fund
Sub-account Sub-account Sub-account Sub-account Sub-account Sub-account
- ------------------- ----------------- ----------------- ------------------- ------------------ ------------------
<S> <C> <C> <C> <C> <C>
$ 2,920,535 $ 9,003,792 $ (360,327) $ 13,620,352 $ 1,920,795 $ 3,431,181
126,456 7,851,059 7,299,736 5,008,940 851,741 4,486,732
957,869 7,514,049 20,112,491 4,751,784 (1,206,438) 13,124,422
- ------------------- ----------------- ----------------- ------------------- ------------------ ------------------
4,004,860 24,368,900 27,051,900 23,381,076 1,566,098 21,042,335
13,886,928 14,733,974 70,544,573 28,437,984 10,873,817 42,498,940
- ------------------- ----------------- ----------------- ------------------- ------------------ ------------------
17,891,788 39,102,874 97,596,473 51,819,060 12,439,915 63,541,275
43,455,679 160,844,771 79,908,731 146,478,730 21,120,846 54,392,455
- ------------------- ----------------- ----------------- ------------------- ------------------ ------------------
$ 61,347,467 $ 199,947,645 $ 177,505,204 $ 198,297,790 $33,560,761 $117,933,730
=================== ================= ================= =================== ================== ==================
</TABLE>
See accompanying notes.
<PAGE>
16
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Statement of Changes in Net Assets (continued)
Year ended December 31, 1997
<TABLE>
<CAPTION>
Socially
Responsible International Disciplined
Fund Value Stock
Sub-account Sub-account Sub-account
-------------------- ------------------- --------------------
Increase in net assets:
Operations:
<S> <C> <C> <C>
Net investment income $ 787,776 $ 255,214 $ 1,580,849
Realized gain on investment transactions 746,963 155,929 641,361
Unrealized appreciation (depreciation) of investments 3,880,151 (210,301) 2,140,092
-------------------- ------------------- --------------------
Increase in net assets resulting from operations 5,414,890 200,842 4,362,302
Increase (decrease) in net assets resulting from operations
Changes from accumulation unit transactions 15,451,216 8,937,137 23,143,704
-------------------- ------------------- --------------------
Total increase in net assets 20,866,106 9,137,979 27,506,006
Net assets at beginning of year 15,038,948 2,365,097 7,287,062
-------------------- ------------------- --------------------
Net assets at end of year $35,905,054 $ 11,503,076 $ 34,793,068
==================== =================== ====================
</TABLE>
<PAGE>
17
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Statement of Changes in Net Assets (continued)
Year ended December 31, 1997
Small Limited Term
Company High
Stock Income Balanced
Sub-account Sub-account Sub-account
- --------------------- ----------------- -----------------
$ 241,711 $ 821,650 $ 317,787
316,013 33,817 16,765
1,191,352 (477,413) (99,488)
- --------------------- ----------------- -----------------
1,749,076 378,054 235,064
13,140,876 25,929,402 7,369,303
- --------------------- ----------------- -----------------
14,889,952 26,307,456 7,604,367
5,859,245 - -
- --------------------- ----------------- -----------------
$ 20,749,197 $ 26,307,456 $ 7,604,367
===================== ================= =================
See accompanying notes.
<PAGE>
26
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Notes to Financial Statements
December 31, 1998
1. Organization
Separate Account VA-2L of Transamerica Occidental Life Insurance Company
("Separate Account") was established by Transamerica Occidental Life Insurance
Company ("Transamerica Life") as a separate account under the laws of the State
of California on May 22, 1992. The Separate Account is registered with the
Securities and Exchange Commission (the Commission) under the Investment Company
Act of 1940 as a unit investment trust and is designed to provide annuity
benefits pursuant to deferred annuity contracts ("Contract") issued by
Transamerica Life. The Separate Account commenced operations when initial
deposits were received on March 31, 1993.
In accordance with the terms of the Contract, all payments allocated to the
Separate Account by contract owners must be allocated to purchase units of any
or all of the Separate Account's eighteen sub-accounts, each of which invests
exclusively in a specific corresponding mutual fund portfolio. The mutual fund
portfolios consist of: sixteen Series in the Dreyfus Variable Investment Fund
(Variable Fund), The Dreyfus Stock Index Fund (Stock Index Fund) and The Dreyfus
Socially Responsible Growth Fund (Socially Responsible Fund) (together "the
Funds"). The Variable Fund's sixteen series are: Money Market, Managed Assets,
Zero Coupon 2000, Quality Bond, Small Cap, Capital Appreciation, Growth and
Income, International Equity, International Value, Disciplined Stock, Small
Company Stock, Limited Term High Income, Balanced, Core Value, MidCap, and TA
VIF Growth. The Funds are open-end management investment companies registered
under the Investment Company Act of 1940.
2. Significant Accounting Policies
The accompanying financial statements of the Separate Account have been prepared
in accordance with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions that
affect amounts reported in the financial statements and accompanying notes. Such
estimates and assumptions could change in the future as more information becomes
known which could impact the amounts reported and disclosed herein. The
accounting principles followed and the methods of applying those principles are
presented below:
<PAGE>
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Notes to Financial Statements (continued)
2. Significant Accounting Policies (continued)
Investment Valuation--Investments in the Funds' shares are carried at fair (net
asset) value. Realized investment gains or losses on investments are determined
on a specific identification basis which approximates average cost. Investment
transactions are accounted for on the date the order to buy or sell is executed
(trade date).
Investment Income--Investment income consists of dividend income (both ordinary
and capital gains) and is recognized on the ex-dividend date. All distributions
received are reinvested in the respective sub-accounts.
Federal Income Taxes--Operations of the Separate Account are part of, and will
be taxed with, those of Transamerica Life, which is taxed as a "life insurance
company" under the Internal Revenue Code. Under current federal income tax law,
income from assets maintained in the Separate Account for the exclusive benefit
of participants is generally not subject to federal income tax.
3. Expenses and Charges
Mortality and expense risk charges are deducted from each sub-account of the
Separate Account on a daily basis which is equal, on an annual basis, to 1.25%
of the daily net asset value of the sub-account. This amount can never increase
and is paid to Transamerica Life. An administrative expense charge is also
deducted by Transamerica Life from each sub-account on a daily basis which is
equal, on an annual basis, to .15% of the daily net asset value of the
sub-account. This amount may change, but it is guaranteed not to exceed a
maximum effective annual rate of .25%.
The following charges are deducted from a contract holder's account by
Transamerica Life and not directly from the Separate Account. An annual contract
fee is deducted at the end of each contract year prior to the annuity date.
Currently, this charge is $30 (or 2% of the account value, if less). This charge
may change but is guaranteed not to exceed $60 (or 2% of the account value, if
less). After the annuity date this charge is referred to as the Annuity Fee. The
Annuity Fee is $30. In the event that a contract holder withdraws all or a
portion of the contract holder's account, a contingent deferred sales load
(CDSL) not exceeding 6% of premiums may be applied to the amount of the contract
value withdrawn to cover certain expenses relating to the sale of contracts. The
amount of the CDSL is based upon elapsed time since the premium was received and
disappears after the seventh year. During 1998, CDSL amounted to $1,768,625.
<PAGE>
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Notes to Financial Statements (continued)
4. Remuneration
The Separate Account pays no remuneration to directors, advisory boards or
officers or such other persons who may from time to time perform services for
the Separate Account.
5. Accumulation Units
<TABLE>
<CAPTION>
The changes in accumulation units and amounts are as follows:
Zero
Money Managed Coupon Quality Small
Market Assets 2000 Bond Cap
Sub-account Sub-account Sub-account Sub-account Sub-account
------------------- ----------------- ----------------- ----------------- ----------------
Year ended December 31, 1998
Accumulation Units:
<S> <C> <C> <C> <C> <C>
Units sold 70,696,490.525 431,512.064 91,321.144 1,019,962.867 234,681.638
Units redeemed (9,761,252.122) (155,113.771) (158,857.779) (416,437.579) (213,727.639)
Units transferred (49,656,546.571) (161,786.057) (20,165.039) 406,700.691 (360,031.848)
--------------------------------------------------------------------------------------------
Net increase (decrease) 11,278,691.832 114,612.236 (87,701.674) 1,010,225.979 (339,077.849)
============================================================================================
Socially
Capital Stock Responsible Growth International
Appreciation Index Fund Fund and Income Equity
Sub-account Sub-account Sub-account Sub-account Sub-account
------------------ ----------------- ---------------- -------------------- -----------------
Accumulation Units:
Units sold 1,308,881.635 819,174.264 342,022.489 1,425,664.086 267,800.374
Units redeemed (391,074.330) (227,663.429) (104,201.019) (864,288.213) (119,005.108)
Units transferred 756,279.090 494,964.303 171,072.468 (770,865.832) 131,860.398
------------------ ----------------- ---------------- -------------------- -----------------
Net increase (decrease) 1,674,086.395 1,086,475.138 408,893.938 (209,489.959) 280,655.664
================== ================= ================ ==================== =================
Small Limited
International Disciplined Company Term High
Value Stock Stock Income Balanced
Sub-account Sub-account Sub-account Sub-account Sub-account
------------------- ------------------ --------------- ----------------- -----------------
Accumulation Units:
Units sold 236,093.978 1,684,646.132 519,717.268 3,892,661.610 940,995.080
Units redeemed (74,812.187) (157,107.679) (90,325.699) (259,363.171) (59,307.949)
Units transferred 172,022.142 947,337.485 77,547.566 400,781.882 750,959.318
------------------- ----------------- ---------------- ----------------- ------------------
Net increase (decrease) 333,303.933 2,474,875.938 506,939.135 4,034,080.321 1,632,646.449
=================== ================= ================ ================= ==================
</TABLE>
<PAGE>
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Notes to Financial Statements (continued)
<TABLE>
<CAPTION>
5. Accumulation Units (continued)
Core TA VIF
Value Mid-Cap Growth
Sub-account Sub-account Sub-account
----------------- ----------------- ----------------
Accumulation Units:
<S> <C> <C> <C>
Units sold 57,442.774 226,642.705 352,213.661
Units redeemed (370.559) (9,084.899) (8,530.642)
Units transferred 38,687.306 249,735.027 1,290,371.888
----------------- ----------------- ----------------
Net increase (decrease) 95,759.521 467,292.833 1,634,054.907
================= ================= ================
</TABLE>
<TABLE>
<CAPTION>
Zero
Money Managed Coupon Quality Small
Market Assets 2000 Bond Cap
Sub-account Sub-account Sub-account Sub-account Sub-account
-------------- --------------- --------------- ---------------- ----------------
Year ended December 31, 1998 Amounts:
<S> <C> <C> <C> <C> <C>
Sales $ 83,519,319 $ 6,824,210 $ 1,464,615 $ 15,852,712 $ 14,214,475
Redemptions (11,532,099) (2,452,375) (2,548,032) (6,471,182) (12,937,358)
Transfers (58,657,816) (2,552,018) (323,033) 6,296,192 (21,739,052)
-------------- --------------- --------------- ---------------- ----------------
Net increase (decrease) $13,329,404 $ 1,819,817 $ (1,406,450) $ 15,677,722 $(20,461,935)
============== =============== =============== ================ ================
Socially
Capital Stock Responsible Growth International
Appreciation Index Fund Fund and Income Equity
Sub-account Sub-account Sub-account Sub-account Sub-account
--------------- --------------- --------------- --------------- ----------------
Amounts:
Sales $ 41,792,181 $ 30,494,466 $10,419,964 $ 32,732,420 $ 4,556,299
Redemptions (12,471,416) (8,481,089) (3,166,246) (19,858,704) (2,025,079)
Transfers 24,146,606 18,437,804 5,213,793 (17,655,083) 2,237,497
--------------- --------------- --------------- --------------- ---------------
Net increase (decrease) $ 53,467,371 $ 40,451,181 $12,467,511 $ (4,781,367) $ 4,768,717
=============== =============== =============== =============== ===============
</TABLE>
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Notes to Financial Statements (continued)
<TABLE>
<CAPTION>
5. Accumulation Units (continued)
Small Limited Term
International Disciplined Company High
Value Stock Stock Income Balanced
Sub-Account Sub-Account Sub-Account Sub-account Sub-account
--------------- --------------- -------------- ---------------- ---------------
Amounts:
<S> <C> <C> <C> <C> <C>
Sales $ 2,692,071 $ 28,776,566 $ 6,890,558 $ 43,168,005 $ 11,737,905
Redemptions (851,803) (2,690,995) (1,196,161) (2,876,293) (740,519)
Transfers 1,952,769 16,168,614 1,027,176 4,439,035 9,369,045
--------------- --------------- -------------- ---------------- ---------------
Net increase (decrease) $ 3,793,037 $ 42,254,185 $ 6,721,573 $ 44,730,747 $ 20,366,431
=============== =============== ============== ================ ===============
Core TA VIF
Value Mid-Cap Growth
Sub-account Sub-account Sub-account
--------------- --------------- ---------------
Amounts:
Sales $ 509,397 $2,058,199 $ 3,518,372
Redemptions (3,286) (82,426) (85,132)
Transfers 343,440 2,264,569 12,889,988
--------------- --------------- ---------------
Net increase (decrease) $ $4,240,342 $16,323,228
849,551
=============== =============== ===============
</TABLE>
<PAGE>
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Notes to Financial Statements (continued)
<TABLE>
<CAPTION>
5. Accumulation Units (continued)
Zero
Money Managed Coupon Quality Small
Market Assets 2000 Bond Cap
Sub-account Sub-account Sub-account Sub-account Sub-account
----------------- ----------------- ---------------- ---------------- -----------------
Year ended December 31, 1997
Accumulation Units:
<S> <C> <C> <C> <C> <C>
Units sold 83,712,800.356 896,854.738 134,531.514 1,149,685.619 407,361.656
Units redeemed (5,029,007.362) (72,572.707) (86,744.492) (249,610.219) (154,203.877)
Units transferred (75,005,896.573) 592,748.263 (17,090.696) 47,370.205 (35,035.547)
-----------------------------------------------------------------------------------------
Net increase (decrease) 3,677,896.421 1,417,030.294 30,696.326 947,445.605 218,122.232
=========================================================================================
Socially
Capital Growth International Stock Responsible
Appreciation and Income Equity Index Fund Fund
Sub-account Sub-account Sub-account Sub-account Sub-account
----------------- ----------------- ---------------- ---------------- -----------------
Accumulation Units:
Units sold 1,874,404.220 1,583,834.677 601,318.310 922,018.336 411,050.080
Units redeemed (226,001.847) (407,307.100) (98,874.112) (137,084.298) (38,596.704)
Units transferred 1,133,610.872 (28,789.437) 193,390.826 542,022.150 254,680.367
----------------- ----------------- ---------------- ---------------- -----------------
Net increase (decrease) 2,782,013.245 1,147,738.140 695,835.024 1,326,956.188 627,133.743
================= ================= ================ ================ =================
Small Limited
International Disciplined Company Term High
Value Stock Stock Income Balanced
Sub-account Sub-account Sub-account Sub-account Sub-account
----------------- ------------------ --------------- --------------- ------------------
Accumulation Units:
Units sold 554,443.908 981,075.667 659,601.527 1,631,738.279 413,663.428
Units redeemed (25,039.540) (22,227.511) (25,277.506) (15,858.442) (2,376.140)
Units transferred 287,116.143 700,489.005 425,816.114 808,351.961 236,568.016
----------------- ----------------- --------------- ----------------- -----------------
Net increase (decrease) 816,520.511 1,659,337.161 1,060,140.135 2,424,231.798 647,855.304
================= ================= =============== ================= =================
</TABLE>
<PAGE>
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Notes to Financial Statements (continued)
<TABLE>
<CAPTION>
5. Accumulation Units (continued)
Zero
Money Managed Coupon Quality Small
Market Assets 2000 Bond Cap
Sub-account Sub-account Sub-account Sub-account Sub-account
--------------- --------------- -------------- --------------- ---------------
Year ended December 31, 1997 Amounts:
<S> <C> <C> <C> <C> <C>
Sales $ 96,675,164 $ 12,637,211 $ 2,035,469 $ 16,782,687 $25,822,848
Redemptions (5,788,809) (1,007,675) (1,320,324) (3,635,760) (9,754,503)
Transfers (86,661,297) 8,528,475 (255,062) 740,001 (1,334,371)
--------------- --------------- -------------- --------------- ---------------
Net increase (decrease) $ 4,225,058 $ 20,158,011 $ 460,083 $ 13,886,928 $14,733,974
=============== =============== ============== =============== ===============
Socially
Capital Growth International Stock Responsible
Appreciation and Income Equity Index Fund Fund
Sub-account Sub-account Sub-account Sub-account Sub-account
--------------- --------------- -------------- --------------- ---------------
Amounts:
Sales $ 48,079,038 $ 39,388,244 $ 9,381,825 $29,585,638 $10,234,085
Redemptions (5,778,453) (10,151,169) (1,519,126) (4,390,571) (950,360)
Transfers 28,243,988 (799,091) 3,011,118 17,303,873 6,167,491
--------------- --------------- -------------- --------------- ---------------
Net increase (decrease) $ 70,544,573 $ 28,437,984 $ 10,873,817 $42,498,940 $15,451,216
=============== =============== ============== =============== ===============
Small Limited Term
International Disciplined Company High
Value Stock Stock Income Balanced
Sub-Account Sub-Account Sub-Account Sub-account Sub-account
---------------- -------------- -------------- ---------------- --------------
Amounts:
Sales $6,090,814 $ 13,710,492 $ 8,054,531 $17,489,564 $4,717,587
Redemptions (278,170) (316,317) (300,972) (167,003) (27,523)
Transfers 3,124,493 9,749,529 5,387,317 8,606,841 2,679,239
---------------- -------------- -------------- ---------------- --------------
Net increase (decrease) $8,937,137 $ 23,143,704 $ 13,140,876 $25,929,402 $7,369,303
================ ============== ============== ================ ==============
</TABLE>
<PAGE>
Separate Account VA-2L of
Transamerica Occidental Life Insurance Company
Notes to Financial Statements (continued)
6. Investment Transactions
The aggregate cost of purchases and the aggregate proceeds from the sales of
investments for the year ended December 31, 1998 were:
<TABLE>
<CAPTION>
Zero
Money Managed Coupon Quality Small
Market Assets 2000 Bond Cap
Sub-account Sub-account Sub-account Sub-account Sub-account
---------------- ----------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
Aggregate purchases $177,685,348 $15,390,257 $6,651,326 $41,294,689 $46,473,117
================ ================= ================ ================= ================
Aggregate proceeds from sales $162,325,478 $12,996,107 $7,122,364 $20,158,544 $54,024,721
================ ================= ================ ================= ================
Socially
Capital Stock Responsible Growth International
Appreciation Index Fund Fund and Income Equity
Sub-account Sub-account Sub-account Sub-account Sub-account
---------------- ----------------- ---------------- ----------------- ----------------
Aggregate purchases $96,442,222 $75,653,007 $24,125,647 $44,287,561 $14,539,760
================ ================= ================ ================= ================
Aggregate proceeds from sales $42,316,920 $28,685,881 $ 8,589,762 $45,495,261 $ 7,278,476
================ ================= ================ ================= ================
International Disciplined Small Company Limited Term High
Value Stock Stock Income Sub-account Balanced
Sub-account Sub-account Sub-account Sub-account
---------------- ----------------- ---------------- ----------------- ----------------
Aggregate purchases $15,010,722 $57,027,868 $14,077,790 $72,292,531 $26,133,996
================ ================= ================ ================= ================
Aggregate proceeds from sales $ 9,555,716 $11,883,854 $ 7,204,706 $20,525,525 $ 2,805,680
================ ================= ================ ================= ================
Core TA VIF
Value Mid-Cap Growth
Sub-account Sub-account Sub-account
---------------- ----------------- ----------------
Aggregate purchases $902,112 $4,652,971 $21,373,249
================ ================= ================
Aggregate proceeds from sales $ 52,026 $ 375,160 $ 3,540,331
================ ================= ================
</TABLE>
<PAGE>
Audited Consolidated Financial Statements
Transamerica Occidental Life Insurance Company and Subsidiaries
December 31, 1998
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
Audited Consolidated Financial Statements
December 31, 1998
Audited Consolidated Financial Statements
Report of Independent Auditors.................................. 1
Consolidated Balance Sheet...................................... 2
Consolidated Statement of Income................................ 3
Consolidated Statement of Shareholder's Equity.................. 4
Consolidated Statement of Cash Flows............................ 5
Notes to Consolidated Financial Statements...................... 6
<PAGE>
-28-
04/21/99 3:12 PM
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Transamerica Occidental Life Insurance Company
We have audited the accompanying consolidated balance sheets of Transamerica
Occidental Life Insurance Company and subsidiaries as of December 31, 1998 and
1997, and the related consolidated statements of income, shareholder's equity,
and cash flows for each of the three years in the period ended December 31,
1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Transamerica
Occidental Life Insurance Company and subsidiaries at December 31, 1998 and
1997, and the consolidated results of their operations and their cash flows for
each of the three years in the period ended December 31, 1998, in conformity
with generally accepted accounting principles.
January 22, 1999
<PAGE>
<TABLE>
<CAPTION>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31
1998 1997
--------------------- -------------
(In thousands, except
for share data)
ASSETS
Investments:
<S> <C> <C>
Fixed maturities available for sale $ 28,997,454 $ 29,231,998
Equity securities available for sale 880,141 791,221
Mortgage loans on real estate 789,959 706,939
Policy loans 455,481 451,023
Other long-term investments 121,107 89,426
Short-term investments 1,186,166 324,672
--------------------- ---------------------
32,430,308 31,595,279
Cash 87,125 36,656
Accrued investment income 449,289 481,913
Other receivables 292,694 294,542
Reinsurance recoverable on paid and unpaid losses 1,172,022 920,847
Deferred policy acquisitions costs 2,082,506 2,102,588
Other assets 342,129 299,500
Separate account assets 9,101,014 5,494,703
--------------------- ---------------------
$ 45,957,087 $ 41,226,028
===================== =====================
LIABILITIES AND SHAREHOLDER'S EQUITY
Policy and contract liabilities:
Policyholder contract deposits $ 24,077,627 $ 24,061,811
Reserves for future policy benefits 5,689,577 5,468,611
Policy claims and other 452,534 557,822
--------------------- ---------------------
30,219,738 30,088,244
Income tax liabilities 992,667 814,088
Accounts payable and other liabilities 843,988 482,716
Separate account liabilities 9,101,014 5,494,703
--------------------- ---------------------
41,157,407 36,879,751
Shareholder's equity:
Common stock ($12.50 par value):
Authorized--4,000,000 shares
Issued and outstanding--2,206,933 shares 27,587 27,587
Additional paid-in capital 374,968 422,342
Retained earnings 3,175,020 2,738,151
Foreign currency translation adjustments (49,168) (33,440)
Net unrealized investment gains 1,271,273 1,191,637
--------------------- ---------------------
4,799,680 4,346,277
--------------------- ---------------------
$ 45,957,087 $ 41,226,028
===================== =====================
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
Year Ended December 31
1998 1997 1996
--------------- --------------- ----------
(In thousands)
Revenues:
<S> <C> <C> <C>
Premiums and other considerations $ 1,804,896 $ 1,777,371 $ 1,641,985
Net investment income 2,243,321 2,165,565 2,077,232
Net realized investment gains 277,654 40,263 17,471
--------------- --------------- ---------------
TOTAL REVENUES 4,325,871 3,983,199 3,736,688
Benefits:
Benefits paid or provided 2,782,127 2,727,064 2,558,792
Increase in policy reserves and liabilities 70,221 59,246 57,968
--------------- --------------- ---------------
2,852,348 2,786,310 2,616,760
Expenses:
Amortization of deferred policy acquisition costs 269,261 265,264 235,180
Salaries and salary related expenses 166,832 165,768 158,699
Other expenses 264,198 284,220 224,084
--------------- --------------- ---------------
700,291 715,252 617,963
--------------- --------------- ---------------
TOTAL BENEFITS AND EXPENSES 3,552,639 3,501,562 3,234,723
--------------- --------------- ---------------
INCOME BEFORE INCOME TAXES 773,232 481,637 501,965
Provision for income taxes 256,363 149,581 164,685
--------------- --------------- ---------------
NET INCOME $ 516,869 $ 332,056 $ 337,280
=============== =============== ===============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY
Net
Foreign Unrealized
Additional Currency Investment
Common Stock Paid-in Comprehensive Retained Translation Gains
Shares Amount Capital Income Earnings Adjustments (Losses)
(In thousands, except for share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996 2,206,933 $ 27,587 $ 333,578 $ 2,171,412 $ (23,618) $ 938,932
Comprehensive income
Net income $ 337,280 337,280
Other comprehensive income,
net of tax:
Unrealized losses from
investments marked to
fair value (377,804) (377,804)
Reclassification adjustment
for (gains) included in
net income (11,356) (11,356)
Foreign currency
translation adjustment (854) (854)
-------------
Comprehensive loss $ (52,734)
=============
Capital contributions from
parent 2,041
Dividends declared (41,286)
Balance at December 31,
1996 2,206,933 27,587 335,619 2,467,406 (24,472) 549,772
Comprehensive income
Net income $ 332,056 332,056
Other comprehensive income,
net of tax:
Unrealized gains from
investments marked
to fair value 668,036 668,036
Reclassification adjustment
for (gains) included in
net income (26,171) (26,171)
Foreign currency
translation adjustment (8,968) (8,968)
-------------
Comprehensive income $ 964,953
=============
Capital transactions with
parent 86,723
Dividends declared (61,311)
Balance at December 31,
1997 2,206,933 27,587 422,342 2,738,151 (33,440) 1,191,637
Comprehensive income
Net income $ 516,869 516,869
Other comprehensive income,
net of tax:
Unrealized gains (losses)
from investments
marked to fair value (47,374) 260,111 260,111
Reclassification adjustment
for (gains) included in
net income (180,475) (180,475)
Foreign currency
translation adjustment (15,728) (15,728)
------------- -----------
Comprehensive income $ 580,777
=============
Dividends declared (80,000)
Balance at December 31,
1998 2,206,933 $ 27,587 $ 374,968 $ 3,175,020 $ (49,168) $1,271,273
============ ========== =========== ============= ============ ==========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended December 31
1998 1997 1996
--------------- ---------------- ----------
(In thousands)
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income $ 516,869 $ 332,056 $ 337,280
Adjustments to reconcile net income to net cash
provided by operating activities:
Changes in:
Reinsurance recoverable (251,175) (91,194) (73,328)
Accounts receivable 130,229 (15,983) (159,309)
Policy liabilities 989,989 1,102,246 949,108
Other assets, accounts payable and other
liabilities, and income taxes 530,661 (89,954) (32,662)
Policy acquisition costs deferred (512,599) (467,730) (388,003)
Amortization of deferred policy acquisition costs 427,203 256,303 268,770
Net realized gains on investment transactions (435,596) (31,302) (51,061)
Other (73,788) (64,651) (15,758)
---------------- ---------------- ---------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 1,321,793 929,791 835,037
INVESTMENT ACTIVITIES
Purchases of fixed and equity securities (6,040,371) (9,825,763) (7,362,635)
Purchases of other investments (244,907) (127,437) (334,895)
Sales of fixed and equity securities 6,317,188 8,193,409 5,064,780
Sales of other investments 128,315 129,671 175,001
Maturities of securities 489,280 559,361 506,941
Net change in short-term investments (861,494) (188,946) 75,774
Other (40,665) (53,478) (21,358)
---------------- ---------------- ---------------
NET CASH USED IN
INVESTING ACTIVITIES (252,654) (1,313,183) (1,896,392)
FINANCING ACTIVITIES
Additions to policyholder contract deposits 9,538,924 6,851,644 6,260,653
Withdrawals from policyholder contract deposits (10,477,594) (6,411,213) (5,173,419)
Capital contributions from parent - 3,800 -
Dividends paid to parent (80,000) (60,000) (40,000)
---------------- ---------------- ----------------
NET CASH PROVIDED BY
(USED IN) FINANCING ACTIVITIES (1,018,670) 384,231 1,047,234
---------------- --------------- ---------------
INCREASE (DECREASE) IN CASH 50,469 839 (14,121)
Cash at beginning of year 36,656 35,817 49,938
--------------- --------------- ---------------
CASH AT END OF YEAR $ 87,125 $ 36,656 $ 35,817
=============== =============== ===============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998
NOTE A--SIGNIFICANT ACCOUNTING POLICIES
Business: Transamerica Occidental Life Insurance Company ("TOLIC") and its
subsidiaries (collectively, the "Company"), engage in providing life insurance,
pension and annuity products, reinsurance, structured settlements and
investments, which are distributed through a network of independent and
company-affiliated agents and independent brokers. The Company's customers are
primarily in the United States and Canada. TOLIC is a wholly owned subsidiary of
Transamerica Insurance Corporation of California, which is a wholly owned
subsidiary of Transamerica Corporation.
Basis of Presentation: The accompanying consolidated financial statements have
been prepared in accordance with generally accepted accounting principles which
differ from statutory accounting practices prescribed or permitted by regulatory
authorities.
Reclassification: Certain prior year amounts have been reclassified to conform
with current year presentation.
Use of Estimates: Certain amounts reported in the accompanying consolidated
financial statements are based on management's best estimates and judgment.
Actual results could differ from those estimates.
New Accounting Standards: In 1997, the Financial Accounting Standards Board
issued a new standard on reporting comprehensive income, which establishes
standards for reporting and displaying comprehensive income and its components
in the financial statements. This standard is effective for 1998; 1997 and 1996
have been reclassified to reflect the 1998 presentation. Application of this
statement did not change recognition or measurement of net income and,
therefore, did not impact the Company's consolidated results of operations or
financial position.
In 1998, the Financial Accounting Standards Board issued a new standard on
accounting for derivative instruments and hedging activities. This standard is
effective for all quarters of fiscal years beginning after June 15, 1999
(effective for year 2000 for the Company). Application of the statement is not
expected to have a material impact on TOLIC's combined financial position or
results of operations.
Principles of Consolidation: The consolidated financial statements of the
Company include the accounts of TOLIC and its subsidiaries, all of which operate
primarily in the life insurance industry. TOLIC is a wholly owned subsidiary of
Transamerica Insurance Corporation of California, which is a wholly owned
subsidiary of Transamerica Corporation. All significant intercompany balances
and transactions have been eliminated in consolidation.
<PAGE>
NOTE A--SIGNIFICANT ACCOUNTING POLICIES (Continued)
Investments: Investments are reported on the following bases:
Fixed maturities--All debt securities, including redeemable preferred
stocks, are classified as available for sale and carried at fair value.
The Company does not carry any debt securities principally for the
purpose of trading. Prepayments are considered in establishing
amortization periods for premiums and discounts and amortized cost is
further adjusted for other-than-temporary fair value declines. Derivative
instruments are also reported as a component of fixed maturities and are
carried at fair value if designated as hedges of securities available for
sale or at amortized cost if designated as hedges of liabilities. See
Note L - Financial Instruments.
Equity securities available for sale (common and nonredeemable preferred
stocks)--at fair value. The Company does not carry any equity securities
principally for the purpose of trading.
Mortgage loans on real estate--at unpaid balances, adjusted for
amortization of premium or discount, less allowance for possible
impairment.
Policy loans--at unpaid balances.
Other long-term investments--at cost, less allowance for possible
impairment.
Short-term investments--at cost, which approximates fair value.
Realized gains and losses on disposal of investments are determined generally on
a specific identification basis. The Company reports realized gains and losses
on investment transactions in the accompanying consolidated statement of income,
net of the amortization of deferred policy acquisition costs when such
amortization results from the realization of gains or losses other than as
originally anticipated on the sale of investments associated with
interest-sensitive products. Changes in fair values of fixed maturities
available for sale and equity securities available for sale are included in net
unrealized investment gains or losses after adjustment of deferred policy
acquisition costs and reserves for future policy benefits, net of deferred
income taxes, as a separate component of shareholder's equity and, accordingly,
have no effect on net income.
<PAGE>
NOTE A--SIGNIFICANT ACCOUNTING POLICIES (Continued)
Deferred Policy Acquisition Costs (DPAC): Certain costs of acquiring new and
renewal insurance contracts, principally commissions, medical examination and
inspection report fees, and certain variable underwriting, issue and field
office expenses, all of which vary with and are primarily related to the
production of such business, have been deferred. DPAC for non-traditional life
and investment-type products are amortized over the life of the related policies
in relation to estimated future gross profits. DPAC for traditional life
insurance products are amortized over the premium-paying period of the related
policies in proportion to premium revenue recognized, using principally the same
assumptions used for computing future policy benefit reserves. DPAC related to
non-traditional and investment type products is adjusted as if unrealized gains
or losses on securities available for sale were realized. Changes in such
adjustments are included in net unrealized investment gains or losses on an
after tax basis as a separate component of shareholder's equity and,
accordingly, have no effect on net income.
Separate Accounts: The Company administers segregated asset accounts for certain
holders of universal life policies, variable annuity contracts, and other
pension deposit contracts. The assets held in these Separate Accounts are
invested primarily in fixed maturities, equity securities, other marketable
securities, and short-term investments. The Separate Account assets are stated
at fair value and are not subject to liabilities arising out of any other
business the Company may conduct. Substantially all investment risks associated
with fair value changes are borne by the contract holders. Accordingly,
investment income and realized gains and losses attributable to Separate
Accounts are not reported in the Company's results of operations.
Policyholder Contract Deposits: Non-traditional life insurance products include
universal life and other interest-sensitive life insurance policies.
Investment-type products include single and flexible premium deferred annuities,
single premium immediate annuities, guaranteed investment contracts, funding
agreements, and other deposit contracts that do not have mortality or morbidity
risk. Policyholder contract deposits on non-traditional life insurance and
investment-type products represent premiums received plus accumulated interest,
less mortality charges on universal life products and other administration
charges as applicable under the contract. Interest credited to these policies
ranged from 2.8% to 13.5% in 1998, 3.0% to 9.7% in 1997 and 2.6% to 9.8% in
1996.
<PAGE>
NOTE A--SIGNIFICANT ACCOUNTING POLICIES (Continued)
Reserves for Future Policy Benefits: Traditional life insurance products
primarily include those contracts with fixed and guaranteed premiums and
benefits and consist principally of whole life and term insurance policies,
limited-payment life insurance policies and certain annuities with life
contingencies. The reserve for future policy benefits for traditional life
insurance products has been provided on a net-level premium method based upon
estimated investment yields, withdrawals, mortality, and other assumptions which
were appropriate at the time the policies were issued. Such estimates are based
upon past experience with a margin for adverse deviation. Interest assumptions
range from 2.25% to 12.0%. Reserves for future policy benefits are evaluated as
if unrealized gains or losses on securities available for sale were realized and
adjusted for any resultant premium deficiencies. Changes in such adjustments are
included in net unrealized investment gains or losses on an after tax basis as a
separate component of shareholder's equity and, accordingly, have no effect on
net income.
Foreign Currency Translation: The effect of changes in exchange rates in
translating the foreign subsidiary's financial statements is accumulated as a
separate component of shareholder's equity, net of applicable income taxes.
Aggregate transaction adjustments included in income were not significant for
1998, 1997 or 1996.
Recognition of Revenue and Costs: Traditional life insurance contract premiums
are recognized as revenue over the premium-paying period, with reserves for
future policy benefits established from such premiums.
Revenues for universal life and investment products consist of policy charges
for the cost of insurance, policy administration charges, amortization of policy
initiation fees, and surrender charges assessed against policyholder account
balances during the period. Expenses related to these products consist of
interest credited to policyholder account balances and benefit claims incurred
in excess of policyholder account balances.
Claim reserves include provisions for reported claims and claims incurred but
not reported.
Reinsurance: Coinsurance premiums, commissions, expense reimbursements, and
reserves related to reinsured business are accounted for on bases consistent
with those used in accounting for the original policies and the terms of the
reinsurance contracts. Yearly renewable term reinsurance is accounted for the
same as direct business. The revenue as well as the receivables and payables
under certain modified coinsurance arrangements are presented on a net basis to
the extent that such receivables and payables are with the same ceding company.
Premiums ceded and recoverable losses have been reported as a reduction of
premium income and benefits, respectively. The ceded amounts related to policy
liabilities have been reported as an asset.
<PAGE>
NOTE A--SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes: TOLIC and its domestic subsidiaries are included in the
consolidated federal income tax returns filed by Transamerica Corporation, which
by the terms of a tax sharing agreement generally requires TOLIC to accrue and
settle income tax obligations in amounts that would result if TOLIC filed
separate tax returns with federal taxing authorities.
Deferred income taxes arise from temporary differences between the bases of
assets and liabilities for financial reporting purposes and income tax purposes,
based on enacted tax rates in effect for the years in which the temporary
differences are expected to reverse.
Fair Values of Financial Instruments: Fair values for debt securities are based
on quoted market prices, where available. For debt securities not actively
traded and private placements, fair values are estimated using values obtained
from independent pricing services. Fair values for derivative instruments,
including off-balance-sheet instruments, are estimated using values obtained
from independent pricing services.
Fair values for equity securities are based on quoted market prices.
Fair values for mortgage loans on real estate and policy loans are estimated
using discounted cash flow calculations, based on interest rates currently being
offered for similar loans to borrowers with similar credit ratings. Loans with
similar characteristics are aggregated for calculation purposes.
The carrying amounts of short-term investments, cash, and accrued investment
income approximate their fair value.
Fair values for liabilities under investment-type contracts are estimated using
discounted cash flow calculations, based on interest rates currently being
offered by similar contracts with maturates consistent with those remaining for
the contracts being valued. The liabilities under investment-type contracts are
included in policyholder contract deposits in the accompanying consolidated
balance sheet.
<PAGE>
NOTE B--INVESTMENTS
The cost and fair value of fixed maturities available for sale and equity
securities are as follows (in thousands):
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized Fair
Cost Gain Loss Value
December 31, 1998
U.S. Treasury securities and
obligations of U.S. government
<S> <C> <C> <C> <C>
corporations and agencies $ 297,609 $ 112,717 $ 34 $ 410,292
Obligations of states and political
subdivisions 235,529 23,292 - 258,821
Foreign governments 62,000 7,417 - 69,417
Corporate securities 18,901,026 1,692,527 153,029 20,440,524
Public utilities 3,949,600 426,218 2,255 4,373,563
Mortgage-backed securities 2,988,703 304,073 3,238 3,289,538
Redeemable preferred stocks 148,783 15,519 9,003 155,299
---------------- ---------------- ---------------- ----------------
Total fixed maturities $ 26,583,250 $ 2,581,763 $ 167,559 $ 28,997,454
================ ================ ================ ================
Equity securities $ 313,490 $ 578,708 $ 12,057 $ 880,141
================ ================ ================ ================
December 31, 1997
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $ 273,949 $ 78,390 $ - $ 352,339
Obligations of states and political
subdivisions 219,391 16,765 31 236,125
Foreign governments 81,425 6,996 2 88,419
Corporate securities 18,596,027 1,438,385 57,729 19,976,683
Public utilities 4,017,154 340,580 811 4,356,923
Mortgage-backed securities 3,795,464 342,805 1,977 4,136,292
Redeemable preferred stocks 69,773 24,326 8,882 85,217
---------------- ---------------- ---------------- ----------------
Total fixed maturities $ 27,053,183 $ 2,248,247 $ 69,432 $ 29,231,998
================ ================ ================ ================
Equity securities $ 309,637 $ 488,322 $ 6,738 $ 791,221
================ ================ ================ ================
</TABLE>
The cost and fair value of fixed maturities available for sale at December 31,
1998, by contractual maturity, are shown below. Expected maturities will differ
from contractual
<PAGE>
NOTE B--INVESTMENTS (Continued)
<TABLE>
<CAPTION>
maturities because borrowers may have the right to call or prepay obligations
with or without call or prepayment penalties (in thousands):
Fair
Cost Value
Maturity
<S> <C> <C> <C>
Due in 1999 $ 736,903 $ 776,522
Due in 2000-2003 3,440,803 3,602,491
Due in 2004-2008 5,852,742 6,235,162
Due after 2008 13,415,316 14,938,442
---------------- ----------------
23,445,764 25,552,617
Mortgage-backed securities 2,988,703 3,289,538
Redeemable preferred stock 148,783 155,299
---------------- ----------------
$ 26,583,250 $ 28,997,454
================ ================
</TABLE>
As of December 31, 1997, the Company held a total investment in one issuer,
other than the United States Government or a United States Government agency or
authority, which exceeded 10% of total shareholder's equity as follows (in
thousands):
Name of Issuer Carrying Value
Hill Street Funding LP $ 989,283
The carrying value of those assets that were on deposit with public officials in
compliance with regulatory requirements was $21.4 million and $21.7 million at
December 31, 1998 and 1997, respectively.
<PAGE>
NOTE B--INVESTMENTS (Continued)
<TABLE>
<CAPTION>
Net investment income by major investment category is summarized as follows (in
thousands):
1998 1997 1996
---------------- ---------------- ----------
<S> <C> <C> <C>
Fixed maturities $ 2,138,442 $ 2,096,543 $ 2,005,764
Equity securities 11,153 5,339 5,458
Mortgage loans on real estate 65,350 62,877 58,165
Real estate 9,344 10,886 12,821
Policy loans 27,408 28,080 27,012
Other long-term investments 16,365 511 978
Short-term investments 25,401 12,770 10,616
---------------- ---------------- ----------------
2,293,463 2,217,006 2,120,814
Investment expenses (50,142) (51,441) (43,582)
----------------- ----------------- ----------------
$ 2,243,321 $ 2,165,565 $ 2,077,232
================ ================ ================
Significant components of net realized investment gains (losses) are as follows
(in thousands):
1998 1997 1996
---------------- ---------------- ----------
Net gains (losses) on disposition of investments in:
Fixed maturities $ 74,887 $ (14,482) $ 40,967
Equity securities 402,542 59,834 15,750
Other 5,958 3,459 3,424
---------------- ---------------- ----------------
483,387 48,811 60,141
Provision for impairment (47,791) (17,509) (9,080)
Accelerated amortization of DPAC (157,942) 8,961 (33,590)
----------------- ---------------- ----------------
$ 277,654 $ 40,263 $ 17,471
================ ================ ================
The components of net gains (losses) on disposition of investment in fixed maturities are as follows (in thousands):
1998 1997 1996
Gross gains $ 89,655 $ 82,452 $ 74,817
Gross losses (14,768) (96,934) (33,850)
----------------- ---------------- ----------------
$ 74,887 $ (14,482) $ 40,967
================ ================= ================
</TABLE>
Proceeds from disposition of investment in fixed maturities available for sale
were $5,702.4 million in 1998, $7,896.5 million in 1997 and $4,969.2 million in
1996.
<PAGE>
NOTE B--INVESTMENTS (Continued)
<TABLE>
<CAPTION>
The costs of certain investments have been reduced by the following allowances
for impairment in value (in thousands):
December 31
1998 1997
---------------- -----------
<S> <C> <C>
Fixed maturities $ 70,123 $ 64,168
Mortgage loans on real estate 24,697 24,508
Real estate 665 5,854
Other long-term investments 5,737 5,900
---------------- ----------------
$ 101,222 $ 100,430
================ ================
</TABLE>
<TABLE>
<CAPTION>
The components of net unrealized investment gains in the accompanying
consolidated balance sheet are as follows (in thousands):
December 31
1998 1997
---------------- ----------
Unrealized gains on investment in:
<S> <C> <C>
Fixed maturities $ 2,414,204 $ 2,178,815
Equity securities 566,651 481,584
---------------- ----------------
2,980,855 2,660,399
Fair value adjustments to:
DPAC (633,795) (546,111)
Reserves for future policy benefits (377,000) (281,000)
Reserves for guaranteed index fund (14,255) -
----------------- ----------------
(1,025,050) (827,111)
Related deferred taxes (684,532) (641,651)
----------------- ----------------
$ 1,271,273 $ 1,191,637
================ ================
</TABLE>
<PAGE>
NOTE C--DEFERRED POLICY ACQUISITION COSTS (DPAC)
<TABLE>
<CAPTION>
Significant components of changes in DPAC are as follows (in thousands):
1998 1997 1996
----------------- ---------------- -----------
<S> <C> <C> <C>
Balance at beginning of year $ 2,102,588 $ 2,138,203 $ 1,974,211
Amounts deferred:
Commissions 398,578 352,300 290,512
Other 114,021 115,431 97,491
Amortization attributed to:
Net gain on disposition of investments (157,942) 8,961 (33,590)
Operating income (269,261) (265,264) (235,180)
Fair value adjustment (87,684) (239,509) 48,969
Foreign currency translation adjustment (17,794) (7,534) (4,210)
----------------- ----------------- ----------------
Balance at end of year $ 2,082,506 $ 2,102,588 $ 2,138,203
================ ================ ================
</TABLE>
NOTE D--POLICY AND CONTRACT LIABILITIES
<TABLE>
<CAPTION>
Components of policyholder contract deposits are as follows (in thousands):
December 31
1998 1997
---------------- -----------
Liabilities for investment-type products:
Guaranteed investment contracts and
<S> <C> <C>
funding agreements $ 7,444,192 $ 7,766,601
Annuity contracts 11,034,394 11,531,365
Liabilities for non-traditional life insurance
products 5,599,041 4,763,845
--------------- ---------------
$ 24,077,627 $ 24,061,811
=============== ===============
</TABLE>
Obligations under guaranteed investment contracts and funding agreements are
recorded as liabilities at the face value of the agreement, adjusted for draws
paid and interest credited to the account.
<PAGE>
NOTE D-- POLICY AND CONTRACT LIABILITIES (Continued)
Reserves for future policy benefits were evaluated as if the unrealized gains on
securities available for sale had been realized and adjusted for resultant
premium deficiencies by $377 million as of December 31, 1998, $281 million as of
December 31, 1997, and $195 million as of December 31, 1996.
NOTE E--COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
The components of comprehensive income in the statement of shareholder's equity
are shown net of the following tax provision (benefit) (in thousands):
December 31
1998 1997 1996
---------------- ---------------- -----------
<S> <C> <C> <C>
Unrealized investment gains (losses) $ 140,060 $ 359,712 $ (203,433)
Reclassification adjustment for (gains) included in
net income (97,179) (14,092) (6,115)
Foreign currency transaction adjustments (8,469) (4,829) (460)
----------------- ----------------- -----------------
Income tax effect on comprehensive income $ 34,412 $ 340,791 $ (210,008)
================ ================ =================
</TABLE>
NOTE F--INCOME TAXES
<TABLE>
<CAPTION>
Components of income tax liabilities are as follows (in thousands):
December 31
1998 1997
---------------- -----------
<S> <C> <C>
Current tax liabilities $ 64,412 $ 44,510
Deferred tax liabilities 928,255 769,578
---------------- ----------------
$ 992,667 $ 814,088
================ ================
<PAGE>
NOTE F--INCOME TAXES (Continued)
Significant components of deferred tax liabilities (assets) are as follows (in
thousands):
December 31
1998 1997
---------------- -----------
Deferred policy acquisition costs $ 802,953 $ 783,624
Unrealized investment gains 684,532 641,651
---------------- --------------
Total deferred tax liabilities 1,487,485 1,425,275
Life insurance policy liabilities (517,130) (613,874)
Provision for impairment of investments (35,428) (35,151)
Other-net (6,672) (6,672)
---------------- --------------
Total deferred tax assets (559,230) (655,697)
---------------- --------------
$ 928,255 $ 769,578
================ ==============
</TABLE>
<TABLE>
<CAPTION>
The Company offsets all deferred tax assets and liabilities and presents them in
a single amount in the consolidated balance sheet.
Components of provision for income taxes are as follows (in thousands):
1998 1997 1996
----------------- ---------------- -----------
<S> <C> <C> <C>
Current tax expense $ 132,398 $ 122,201 $ 99,692
Deferred tax expense:
Domestic 112,139 14,731 55,261
Foreign 11,826 12,649 9,732
---------------- ---------------- ---------------
$ 256,363 $ 149,581 $ 164,685
================ ================ ===============
<PAGE>
NOTE F--INCOME TAXES (Continued)
The differences between federal income taxes computed at the statutory rate and
the provision for income taxes as reported are as follows (in thousands):
1998 1997 1996
---------------- ---------------- -----------
Income before income taxes:
Income from U.S. operations $ 724,702 $ 430,449 $ 474,160
Income from foreign operations 48,530 51,189 27,805
--------------- --------------- ---------------
773,232 481,638 501,965
Tax rate 35% 35% 35%
---------------- --------------- ---------------
Federal income taxes at statutory rate 270,631 168,573 175,688
Income not subject to tax (1,949) (3,284) (2,262)
Low income housing credits (17,604) (10,156) (8,175)
Other, net 5,285 (5,552) (566)
--------------- --------------- ---------------
$ 256,363 $ 149,581 $ 164,685
=============== =============== ===============
</TABLE>
Income not subject to tax represents permanent differences between financial
statements and tax income and is composed principally of dividends on common
stock for which a dividend received deduction is taken for federal income tax
purposes. Low income housing credits are recognized over the productive life of
acquired assets. In 1998, the Company recognized a $3.3 million tax expense,
included in other differences, related to an unfavorable settlement of prior
year tax matters.
Under the Life Insurance Company Income Tax Act of 1959, a portion of "gain from
operations" was not subject to current income taxation but was accumulated, for
tax purposes, in a memorandum account designated as "policyholders' surplus
account." The balance in this account was frozen at December 31, 1983 pursuant
to the Deficit Reduction Act of 1984. This amount becomes subject to tax when it
exceeds a certain maximum or when cash dividends are paid therefrom. The
policyholders' surplus account balance at December 31, 1998 was $138 million. At
December 31, 1998, $2,305 million was available for payment of dividends without
such tax consequences. No income taxes have been provided on the policyholders'
surplus account since the conditions that would cause such taxes are remote.
Income taxes of $107.3 million, $58.5 million and $149.1 million were paid
principally to the Company's parent in 1998, 1997 and 1996, respectively.
NOTE G--REINSURANCE
The Company is involved in both the cession and assumption of reinsurance with
other companies. Risks are reinsured with other companies to permit the recovery
of a portion of the direct losses; however, the Company remains liable to the
extent the reinsuring companies do not meet their obligations under these
reinsurance agreements.
<PAGE>
NOTE G--REINSURANCE (Continued)
<TABLE>
<CAPTION>
The components of the Company's life insurance in force and premiums and other
considerations are summarized as follows (in thousands):
Ceded to Assumed
Direct Other from Other Net
Amount Companies Companies Amount
1998
Life insurance in force,
<S> <C> <C> <C> <C>
at end of year $ 232,996,314 $ 315,629,686 $ 307,192,042 $ 224,558,670
==================== =================== =================== ===================
Premiums and other
considerations $ 1,465,483 $ 1,196,972 $ 1,536,385 $ 1,804,896
==================== =================== =================== ===================
Benefits paid or
provided $ 2,392,139 $ 1,243,706 $ 1,633,694 $ 2,782,127
==================== =================== =================== ===================
1997
Life insurance in force,
at end of year $ 241,379,957 $ 207,533,095 $ 225,685,653 $ 259,532,515
==================== =================== =================== ===================
Premiums and other
considerations $ 1,854,918 $ 1,116,613 $ 1,039,066 $ 1,777,371
==================== =================== =================== ===================
Benefits paid or
provided $ 2,287,025 $ 940,461 $ 1,380,500 $ 2,727,064
==================== =================== =================== ===================
1996
Life insurance in force,
at end of year $ 220,162,932 $ 195,158,214 $ 201,560,322 $ 226,565,040
==================== =================== =================== ===================
Premiums and other
considerations $ 1,702,975 $ 1,033,201 $ 972,211 $ 1,641,985
==================== =================== =================== ===================
Benefits paid or
provided $ 2,292,822 $ 1,344,790 $ 1,610,760 $ 2,558,792
==================== =================== =================== ===================
</TABLE>
<PAGE>
NOTE H--PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS
Substantially all employees of the Company are covered by noncontributory
defined pension benefit plans sponsored by the Company and the Retirement Plan
for Salaried Employees of Transamerica Corporation and Affiliates. Pension
benefits are based on the employee's compensation during the highest paid 60
consecutive months during the 120 months before retirement. Annual contributions
to the plans generally include a provision for current service costs plus
amortization of prior service costs over periods ranging from 10 to 30 years.
Assets of the plans are invested principally in publicly traded stocks and
bonds.
The Company's total pension benefits recognized for all plans were $9.1 million
in 1998, $5.4 million in 1997 and $3.1 million in 1996, of which $9.1 million in
1998, $6.1 million in 1997 and $3.7 million in 1996, respectively, related to
the plan sponsored by Transamerica Corporation. The plans sponsored by the
Company are not material to the consolidated financial position of the Company.
The Company also participates in various contributory defined benefit programs
sponsored by Transamerica Corporation that provide medical and certain other
benefits to eligible retirees. Postretirement benefit costs charged to income
were not significant in 1998, 1997 and 1996.
NOTE I--RELATED PARTY TRANSACTIONS
The Company has various transactions with Transamerica Corporation and certain
of its other subsidiaries in the normal course of operations. These transactions
include loans and advances, a fixed maturity investment in a special purpose
subsidiary of Transamerica, investments in a money market fund managed by an
affiliated company, rental of space, and other specialized services, including
administration of pension funds. At December 31, 1998, pension funds
administered for these related companies aggregated $1,969.0 million, the
investment in the special purpose subsidiary was $413.9 million and the
investment in an affiliated money market fund, included in short-term
investments, was $29.5 million. In December 1998, the Company reinsured certain
life insurance obligations totaling $59.0 million with a subsidiary of
Transamerica Corporation.
During 1997, equity securities with a fair value of $177.2 million were received
from Transamerica Corporation. $50 million was used as a partial paydown on a
$200 million note due from Transamerica Corporation. The excess of fair value
over cost less the amount applied to the note was recorded as additional paid-in
capital. During 1998, the Company refined its accounting for this transaction
and decreased the cost of the equity securities obtained and charged paid-in
capital in the amount of $47.4 million. The remaining balance on the note, which
is due in 2013 and bears interest at 7% is $150 million.
In addition, during 1997 the Company received a capital contribution of $15
million from Transamerica corporation.
<PAGE>
NOTE J--REGULATORY MATTERS
TOLIC and its insurance subsidiaries are subject to state insurance laws and
regulations, principally those of TOLIC and each subsidiary's state of
incorporation. Such regulations include the risk-based capital requirement and
the restriction on the payment of dividends. Generally, dividends during any
year may not be paid, without prior regulatory approval, in excess of the
greater of 10% of the Company's statutory capital and surplus as of the
preceding year end or the Company's statutory net income from operations for the
preceding year. The insurance department of the domiciliary state recognizes
these amounts as determined in conformity with statutory accounting practices
prescribed or permitted by the insurance department, which vary in some respects
from generally accepted accounting principles. The Company's statutory net
income and statutory capital and surplus which are represented by TOLIC's net
income and capital and surplus are summarized as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
------------------- ------------------- ------------
<S> <C> <C> <C>
Statutory net income $ 200,482 $ 96,472 $ 112,296
Statutory capital and surplus, at
end of year 1,844,161 1,556,228 1,249,045
</TABLE>
NOTE K-COMMITMENTS AND CONTINGENCIES
The Company issues synthetic guaranteed investment contracts which guarantee, in
exchange for a fee, the liquidity of pension plans to pay certain qualified
benefits if other sources of plan liquidity are exhausted. Unlike traditional
guaranteed investment contracts, the plan sponsor retains the credit risk in a
synthetic contract while the Company assumes some limited degree of interest
rate risk. To minimize the risk of loss, the Company underwrites these contracts
based on plan sponsor agreement, at the inception of the contract, on investment
guidelines to be followed, including overall portfolio credit and maturity
requirements. Adherence to these investment requirements is monitored regularly
by the Company. At December 31, 1998, commitments to maintain liquidity for
benefit payments on notional amounts of $5.2 billion were outstanding ($3.3
billion at December 31, 1997).
The Company is subject to mandatory assessments by state guaranty funds to cover
losses to policyholders of those insurance companies that are under regulatory
supervision. Certain states allow such assessments to be used to reduce future
premium taxes. The Company estimates and recognizes its obligation for guaranty
fund assessments, net of premium tax deductions, based on the survey data
provided by the National Organization of Life and Health Insurance Guaranty
Associations. At December 31, 1998 and 1997, the estimated exposures and the
resultant accruals recorded were not material to the consolidated financial
position or results of operations of the Company.
<PAGE>
NOTE K-COMMITMENTS AND CONTINGENCIES (Continued)
Substantially all leases of the Company are operating leases principally for the
rental of real estate. Rental expenses for equipment and properties were $31.0
million in 1998, $28.7 million in 1997 and $20.6 million in 1996. The following
is a schedule by years of future minimum rental payments required under
operating leases that have initial or remaining noncancelable lease terms in
excess of one year as of December 31, 1998 (in thousands):
Year ending December 31:
1999 $ 17,731
2000 14,913
2001 12,452
2002 11,450
2003 11,499
Later years 56,549
$ 124,594
==================
The Company is a defendant in various legal actions arising from its operations.
These include legal actions similar to those faced by many other major life
insurers which allege damages related to sales practices for universal life
policies sold between January 1981 and June 1996. In one such action, the
Company and plaintiffs' counsel entered into a settlement which was approved on
June 26, 1997. The settlement required prompt notification to affected
policyholders. Administrative and policy benefit costs associated with the
settlement of $31 million pre-tax were accrued in 1997 and $12 million of
additional costs were incurred in 1998. Additional costs related to the
settlement, which are not currently determinable, are not expected to be
material and will be incurred over a period of years. In the opinion of the
Company, any ultimate liability which might result from other litigation would
not have a materially adverse effect on the combined financial position of the
Company or the results of its operations.
<PAGE>
NOTE L--FINANCIAL INSTRUMENTS
<TABLE>
<CAPTION>
The carrying values and estimated fair values of financial instruments are as
follows (in thousands):
December 31
-----------------------------------------
1998 1997
----------------------------------- -----------------
Carrying Fair Carrying Fair
Value Value Value Value
Financial Assets:
<S> <C> <C> <C> <C>
Fixed maturities available for sale $ 28,997,454 $ 28,997,454 $ 29,231,998 $ 29,231,998
Equity securities available for sale 880,141 880,141 791,221 791,221
Mortgage loans on real estate 789,959 870,173 706,939 774,556
Policy loans 455,481 432,929 451,023 427,924
Short-term investments 1,186,166 1,186,166 324,672 324,672
Cash 87,125 87,125 36,656 36,656
Accrued investment income 449,289 449,289 481,913 481,913
Financial Liabilities:
Liabilities for investment-type contracts:
Single and flexible premium
deferred annuities 6,180,292 5,828,950 6,779,951 6,261,707
Single premium immediate annuities 4,382,389 5,305,667 4,361,311 5,122,562
Guaranteed investment contracts 3,112,929 3,183,266 3,211,834 3,265,384
Funding agreements and other 4,616,150 4,624,033 4,944,870 4,992,906
Off-balance-sheet assets (liabilities):
Interest rate swap agreements designated
as hedges of liabilities in a:
Receivable position - 20,435 - 8,189
Payable position - (3,507) - (5,247)
</TABLE>
The Company enters into various interest rate agreements in the normal course of
business, primarily as a means of managing its interest rate exposure in
connection with asset and liability management.
Interest rate swap agreements generally involve the periodic exchange of fixed
rate interest and floating rate interest payments by applying a specified market
index to the underlying contract or notional amount, without exchanging the
underlying notional amounts. The differential to be paid or received on those
interest rate swap agreements that are designated as hedges of financial assets
is recorded on an accrual basis as a component of net investment income. The
differential to be paid or
<PAGE>
NOTE L--FINANCIAL INSTRUMENTS (Continued)
received on those interest rate swap agreements that are designated as hedges of
financial liabilities is recorded on an accrual basis as a component of benefits
paid or provided. While the Company is not exposed to credit risk with respect
to the notional amounts of the interest rate swap agreements, the Company is
subject to credit risk from potential nonperformance of counterparties
throughout the contract periods. The amounts potentially subject to such credit
risk are much smaller than the notional amounts. The Company controls this
credit risk by entering into transactions with only a selected number of high
quality institutions, establishing credit limits and maintaining collateral when
appropriate.
Interest rate floor and cap agreements generally provide for the receipt of
payments in the event the average interest rates during a settlement period fall
below specified levels under interest rate floor agreements or rise above
specified levels under interest rate cap agreements. A swaption generally
provides for an option to enter into an interest rate swap agreement in the
event of unfavorable interest rate movements. These agreements generally require
upfront premium payments. The costs of swaptions and interest rate floor and cap
agreements are amortized over the contractual periods and resulting amortization
expenses are included in net investment income. Any conditional receipts under
these agreements are recorded on an accrual basis as a component of net
investment income if designated as hedges of financial assets or as a component
of benefits paid or provided if designated as hedges of financial liabilities.
Gains or losses on terminated interest rate agreements are deferred and
amortized over the remaining life of the underlying assets or liabilities being
hedged.
<PAGE>
NOTE L--FINANCIAL INSTRUMENTS (Continued)
<TABLE>
<CAPTION>
The information on derivative instruments is summarized as follows (in
thousands):
Aggregate Weighted
Notional Average
Amount Fixed Rate Fair Value
December 31, 1998
Interest rate swap agreements designated as hedges of securities available
for sale, where TLC pays:
<S> <C> <C> <C>
Fixed rate interest $ 577,973 5.37% $ (16,484)
Floating rate interest 325,000 4.75% 22,279
Floating rate interest based on one index and
receives floating rate interest based on
another index 147,562 - 1,096
Interest rate swap agreements designated as
hedges of financial liabilities, where TLC pays:
Fixed rate interest 28,600 5.54% 177
Floating rate interest 2,718,089 5.41% 18,891
Floating rate interest based on one index and
receives floating rate interest based on
another index 262,666 - (2,140)
Interest rate floor agreements 560,500 6.45% 38,380
Swaptions 8,270,000 5.27% 140,482
Others 35,576 .55% 28,536
December 31, 1997
Interest rate swap agreements designated as hedges of securities available
for sale, where TLC pays:
Fixed rate interest $ 419,715 6.81% $ 1,820
Floating rate interest 280,905 6.48% 3,000
Floating rate interest based on one index and
receives floating rate interest based on
another index 337,371 - (320)
Interest rate swap agreements designated as
hedges of financial liabilities, where TLC pays:
Fixed rate interest - - -
Floating rate interest 2,252,089 6.17% 4,507
Floating rate interest based on one index and
receives floating rate interest based on
another index 304,820 - (1,565)
Interest rate floor agreements 560,500 6.46% 25,254
Swaptions 8,326,030 4.50% 103,018
Others 29,117 - 15,314
</TABLE>
<PAGE>
NOTE L--FINANCIAL INSTRUMENTS (Continued)
Generally, notional amounts indicate the volume of transactions and estimated
fair values indicate the amounts subject to credit risk.
<TABLE>
<CAPTION>
Activities with respect to the notional amounts are summarized as follows (in
thousands):
Beginning End
of Year Additions Maturities Terminations of Year
1998:
Interest rate swap agreements
designated as hedges of
<S> <C> <C> <C> <C> <C>
securities available for sale $ 1,037,991 $ 469,126 $ 268,364 $ 188,218 $ 1,050,535
Interest rate swap agreements
designated as hedges of
financial liabilities 2,556,909 3,748,545 207,345 3,088,754 3,009,355
Interest rate floor agreements 560,500 - - - 560,500
Swaptions 8,326,030 - 56,030 - 8,270,000
Others 7,359 - 900 35,576
------------------------------- -------------- ------------ ----------------
29,117
$ 12,510,547 $ 4,225,030 $ 531,739 $ 3,277,872 $ 12,925,966
============== ============== ============== ============ ================
1997:
Interest rate swap agreements
designated as hedges of
securities available for sale $ 847,584 $ 322,165 $ 91,858 $ 39,900 $ 1,037,991
Interest rate swap agreements
designated as hedges of
financial liabilities 1,829,301 2,297,133 1,554,525 15,000 2,556,909
Interest rate floor agreements 560,500 - - - 560,500
Swaptions 8,327,570 - - 1,540 8,326,030
Others 20,572 100,200 - 29,117
------------------------------- -------------- ------------ ----------------
108,745
$ 11,673,700 $ 2,639,870 $ 1,746,583 $ 56,440 $ 12,510,547
============== ============== ============== ============ ================
1996:
Interest rate swap agreements
designated as hedges of
securities available for sale $ 440,173 $ 566,023 $ 143,554 $ 15,058 $ 847,584
Interest rate swap agreements
designated as hedges of
financial liabilities 1,146,678 1,887,348 1,103,525 101,200 1,829,301
Interest rate floor agreements 560,500 - - - 560,500
Interest rate cap agreements 250,000 - 250,000 - -
Swaptions 1,267,140 7,170,000 109,570 - 8,327,570
Others 8,745 - - 108,745
------------------------------- -------------- ------------ ----------------
100,000
$ 3,764,491 $ 9,632,116 $ 1,606,649 $ 116,258 $11,673,700
============== ============== ============== ============ ===========
</TABLE>
<PAGE>
NOTE L--FINANCIAL INSTRUMENTS (Continued)
Financial instruments which potentially subject the Company to concentrations of
credit risk consist principally of temporary cash investments, derivatives,
fixed maturities and mortgage loans on real estate. The Company places its
temporary cash investments and enters into derivative transactions with high
credit quality financial institutions. Concentrations of credit risk with
respect to investments in fixed maturities and mortgage loans on real estate are
limited due to the large number of such investments and their dispersion across
many different industries and geographic areas. At December 31, 1998, the
Company had no significant concentration of credit risk.
NOTE M--SUBSEQUENT EVENT(Unaudited)
On February 18, 1999, Transamerica Corporation announced that it had signed an
agreement with AEGON N.V. (AEGON) providing for AEGON's acquisition of
Transamerica Corporation for cash and stock worth $9.7 billion. In addition,
AEGON N.V. will assume on a consolidated basis approximately $1.1 billion of
Transamerica Corporation's debt. Transamerica Corporation's corporate and
insurance operations will merge with AEGON USA's operations immediately after
closing, which is expected to occur during the summer of 1999.
NOTE N--YEAR 2000 (Unaudited)
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs or hardware that have date-sensitive software or embedded
chips may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in a system failure or miscalculations, causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar business
activities.
Based upon recent assessments, the Company has determined that it will be
required to modify or replace significant portions of its software and certain
hardware so that those systems will properly utilize dates beyond December 31,
1999. The Company presently believes that with modifications and replacements of
existing software and certain hardware, disruptions to business activities
caused by the Year 2000 Issue can be mitigated. However, if such modifications
and replacements are not made, or are not completed on time, the Year 2000 Issue
could have an impact on the operations of the Company.
The Company's plan to address the Year 2000 Issue involves the following four
phases: (1) problem determination, (2) planning and resource acquisition, (3)
remediation, and (4) testing and acceptance. The Company has completed phase one
and phase two. A significant portion of the remediation phase was completed as
of December 31, 1998, and remediation is expected to be substantially complete
by March 1999. As of December 31, 1998, Year 2000 readiness testing was well
underway and is expected to be substantially complete by June 1999.
The Company's Year 2000 project also addresses issues related to non-information
technology, embedded software and equipment, the readiness of key business
partners and updating business continuity plans.
<PAGE>
8
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
All required financial statements are included in Parts A or B of this
Registration Statement.
(b) Exhibits
(1)Resolution of the Board of Directors of Transamerica
Occidental Life Insurance Company ("Transamerica") authorizing
establishment of the Variable Account.(1)
(2) Not Applicable.
(3) (a)Master Agreement among Transamerica Occidental Life
Insurance Company, First Transamerica Life Insurance,
Transamerica Financial Resources, Inc., Dreyfus Service
Corporation, and Dreyfus Service Organization, Inc. (4)
(b) Principal Agency Agreement between Transamerica
Occidental Life Insurance
Company and Dreyfus Service Organization, Inc. (4)
(c) Distribution Agreement between Transamerica Occidental
Life Insurance
Company and Dreyfus Service Corporation.(4)
(d) Form of Sales Agreement among Dreyfus Service
Corporation, Dreyfus Service Organization, Inc.,
and Broker-Dealers. (4)
(e) Amendment Dated as of August 31, 1993, to Master
Agreement among Transamerica Occidental Life Insurance
Company, First Transamerica Life Insurance Company,
Transamerica Financial Resources, Inc., Dreyfus Service
Corporation and Dreyfus Service Organization, Inc. (6)
(f) Amendment Dated as of August 31, 1993 to Principal
Agency Agreement between Transamerica Occidental Life
Insurance Company and Dreyfus Service Organization, Inc.
(6)
(g) Amendment Dated as of August 31, 1993 to Distribution
Agreement between Transamerica Occidental Life Insurance
Company and Dreyfus Service Corporation. (6)
(h) Distribution Agreement between Transamerica Occidental
Life Insurance Company and Transamerica
Insurance Securities Sales Corporation, dated as of
August 24, 1994. (8)
(i) Sales Agreement among Transamerica Insurance Securities
Sales Corporation, Transamerica Occidental Life
Insurance Company, First Transamerica Life Insurance
Company, Dreyfus Service Corporation, and Dreyfus
Service Organization, Inc., dated as of August 24, 1994.
(8)
(j) Services Agreement among Transamerica Occidental Life
Insurance Company, First Transamerica Life Insurance
Company, Transamerica Insurance Securities Sales
Corporation, Dreyfus Service Corporation, and Dreyfus
Service Organization, Inc., dated as of August 24, 1994.
(8)
(k) Sales Agreement among Transamerica Insurance Securities
Sales Corporation, Transamerica
Occidental Life Insurance Company, First Transamerica
Life Insurance Company and
Broker/Dealers, dated August 24, 1994.(10)
(l) Form of Sales Agreement between Transamerica Occidental
Life Insurance Company, Transamerica
Life Insurance and Annuity Company, First Transamerica
Life Insurance Company and Transamerica
Securities Sales Corporation.(10)
(4) Group Contract Form, Certificate Form, Individual Contract Form and
Endorsements.
(a) Contract Form and Endorsements. (5)
(i) Form of Flexible Purchase Payment Multi-Funded
Deferred Master Group Annuity Contract.
(ii) Form of Automatic Payout Option Endorsement to Group Contract.
(iii) Form of Dollar Cost Averaging Option Endorsement to Group Contract.
(iv) Form of Systematic Withdrawal Option Endorsement to Group Contract.
(v) Form of Guaranteed Minimum Death Benefit Endorsement to Group Contract.
Form of Fixed Account Rider to Group Contract. (7)
(b) Certificate of Participation Form and Endorsements. (5)
(i) Form of Certificate of Participation.
(ii) Form of IRA Endorsement to Certificate.
(iii)Form of Dollar Cost Averaging Option Endorsement to Certificate.
(iv) Form of Systematic Withdrawal Option Endorsement to Certificate.
(v) Form of Automatic Payout Option Endorsement to Certificate.
Form of Benefit Distribution Endorsement to Certificate.
(vii) Form of Death Benefit Endorsement to Group Contract (14)
(viii) Form of Initial Purchase Payment Endorsement (14)
(ix) Form of Guaranteed Minimum Income Benefit Rider (14)
(c) Individual Contract Form and Endorsements (6)
(i) Form of Flexible Purchase Payment Multi-Funded Deferred Individual
Annuity Contract.
(ii) Form of IRA Endorsement to Individual Contract.
(iii) Form of Benefit Distribution Endorsement.
(iv) Form of Dollar Cost Averaging Option Endorsement to Individual
Contract.
(v) Form of Systematic Withdrawal Option Endorsement to Individual
Contract.
(vi) Form of Automatic Payout Option Endorsement to Individual Contract.
(vii) Form of Guaranteed Minimum Death Benefit Endorsement to Individual
Contract.
(viii) Form of Fixed Account Rider to Individual Contract. (7)
(x) Form of Death Benefit Endorsement (14)
(xi) Form of Initial Purchase Payment Endorsement (14)
(xii) Form of Guaranteed Minimum Income Benefit Rider (14)
(5) (a)Form of Application for and Acceptance of Group
Annuity Contract.(5) (b) Form of Application for Enrollment
under Group Annuity Contract.(5)
(c) Form of Application for Individual Annuity Contract. (6)
(6) (a) Restated Articles of Incorporation of Transamerica.
(1) (b) Restated By-Laws of Transamerica. (1)
(7) Not applicable.
(8) (a) Participation Agreement between Transamerica Occidental Life Insurance
Company and Dreyfus Variable Investment Fund. (4) (b) Participation Agreement
between Transamerica Occidental Life Insurance Company and Dreyfus Life and
Annuity Index Fund, Inc. (4) (c) Participation Agreement between Transamerica
Occidental Life Insurance Company and The Dreyfus Socially Responsible Growth
Fund, Inc. (6) (d) Administrative Services Agreement between Transamerica
Occidental Life Insurance Company and Vantage Computer Systems, Inc. (4) (e)
Amendment Dated as of August 31, 1993 to Participation Agreement between
Transamerica Occidental Life Insurance Company and Dreyfus Variable Investment
Fund. (6) (f) Amendment Dated as of August 31, 1993 to Participation Agreement
between Transamerica Occidental Life Insurance Company and Dreyfus Life and
Annuity Index Fund, Inc. (6) (g) Amendment Dated as of August 24, 1994 to
Participation Agreement Dated as of March 3, 1993, As Amended, between
Transamerica Occidental Life Insurance Company and Dreyfus Variable Investment
Fund. (8) (h) Amendment Dated as of August 24, 1994 to Participation Agreement
Dated as of August 31, 1993 between Transamerica Occidental Life Insurance
Company and Dreyfus Socially Responsible Growth Fund, Inc. (8) (i) Amendment
Dated as of August 24, 1994 to Participation Agreement Dated as of March 3,
1993, As Amended, between Transamerica Occidental Life Insurance Company and
Dreyfus Stock Index Fund. (8)
(9) (a) Opinion and Consent of Counsel. (9)
(10) (a) Consent of Counsel. (10) (11) (b) Consent of Independent Auditors. (10)
(11) (13)(11) No financial statements are omitted from item 23.(12) Not
applicable.(13) Performance Data Calculations. (6)
(14) Not applicable.
(15) Powers of Attorney.
Frank Beardsley (12) Richard N. Latzer (2)(11)
Thomas J. Cusack (6)(11) Karen MacDonald (9)(11)
James W. Dederer (2)(11) Gary U. Rolle' (2)(11)
Paul E. Rutledge III(11) T. Desmond Sugrue(10)(11)
George A. Foegele (11)
David E. Gooding (2)(11) Nooruddin S. Veerjee (4)(11)
Edgar H. Grubb (2)(11) Robert A. Watson(9)(11)
Frank C. Herringer (2)(11)
(1) Filed with initial filing of this Form N-4 Registration Statement, File No.
33-49998 (July 24, 1992).
(2) Incorporated by reference to Exhibit 7(c) of Post-Effective Amendment
No.1 to the Registration Statement of Transamerica Occidental Life
Insurance Company's Separate Account VL on Form S-6, File No. 33-28107
(April 30, 1990).
(3) Incorporated by reference to Exhibit 7(d) of Post-Effective Amendment No. 2
to the Registration Statement of Transamerica Occidental Life Insurance
Company's Separate Account VL on Form S-6, File No. 33-28107 (April 30, 1991).
(4) Filed with Post-Effective Amendment No. 1 to this Form N-4 Registration
Statement, File No. 33-49998 (April 30, 1993).
(5) Filed with Post-Effective Amendment No. 3 to this Form N-4 Registration
Statement, File No. 33-49998 (March 8, 1994).
(6) Filed with Post-Effective Amendment No. 4 to this Form N-4 Registration
Statement, File No. 33-49998 (April 29, 1994).
(7) Filed with Post-Effective Amendment No. 5 to this Form N-4 Registration
Statement, File No. 33-49998 (March 1, 1995).
(8) Filed with Post-Effective Amendment No. 6 to this Form N-4 Registration
Statement File No. 33-499988 (April 28, 1995).
(9) Filed with Post-Effective Amendment No. 7 to this Form N-4 Registration
Statement File No. 33-49998 (April 26, 1996).
(10) Filed with Post-Effective Amendment No. 8 to this Form N-4 Registration
Statement File No. 33-49998 (April 28, 1997)
(11) Filed with Post-Effective Amendment No. 9 to this Form N-4 Registration
Statement file No. 333-49998 (April 28, 1998).
(12) Filed with Post-Effective Amendment No. 10 to this Form N-4 Registration
Statement file No. 333-49998
(February 26, 1999).
(13)Filed with Post-Effective Amendment No. 11 to this Form N-4 Registration
Statement file No. 333-49998 (April 28, 1999)
(14) Filed herewith.
ITEM 25. LIST OF DIRECTORS OF TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
Patrick S. Baird Douglas C. Kolsrud
Brenda K. Clancy Thomas J. Cusack
Richard N. Latzer James W. Dederer
Karen MacDonald
Gary U. Rolle'
George A. Foegele Paul E. Rutledge III
David E. Gooding
T. Desmond Sugrue
Nooruddin S. Veerjee Craig D. Vermie
<TABLE>
<CAPTION>
LIST OF OFFICERS FOR TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
<S> <C>
Thomas J. Cusack Chairman, President and Chief Executive Officer
Paul E. Rutledge III President - Reinsurance Division
Nooruddin S. Veerjee President - Insurance Products Division
Darrel K.S. Yuen President-Asian Operations
James W. Dederer, CLU Executive Vice President, General Counsel and Corporate Secretary
William R. Gernert Executive Vice President, Diversified Financial Products Division
David E. Gooding Executive Vice President
Larry N. Norman Executive Vice President, Financial Markets Division
T. Desmond Sugrue Executive Vice President
Nicki Bair FSA Senior Vice President
Roy Chong-Kit Senior Vice President and Actuary
Brenda Clancy Senior Vice President, Corporate
George A. Foegele Senior Vice President
Daniel E. Jund, FLMI Senior Vice President
Douglas C. Kolsrud Senior Vice President, Investment Division
Karen MacDonald Senior Vice President and Corporate Actuary
Thomas P. O'Neill Senior Vice President
William N. Scott, CLU, FLMI Senior Vice President
Claude W. Thau, FSA Senior Vice President
Ron F. Wagley CLU Senior Vice President and Chief Agency Officer
William R. Wellnitz, FSA Senior Vice President and Actuary
Richard N. Latzer Chief Investment Officer
Gary U. Rolle', CFA Chief Investment Officer
Stephen J. Ahearn Investment Officer
John M. Casparian Investment Officer
Heather E. Creeden Investment Officer
Colin Funai Investment Officer
William L. Griffin Investment Officer
Heidi Y. Hu Investment Officer
Matthew W. Kuhns Investment Officer
Michael F. Luongo Investment Officer
Dennis J. McNamara Investment Officer
Matthew Palmer Investment Officer
Thomas C. Pokorski Investment Officer
Susan A. Silbert Investment Officer
Jeffrey S. Van Harte Investment Officer
Paul Wintermute Investment Officer
Olisa Abaelu Vice President
William D. Adams Vice President
Lynn Allen Vice President, Diversified Financial Products Division
Clifford Angstman Vice President and Chief Reinsurance Actuary
Michael G. Ayers Vice President, Diversified Financial Products Division
John Bailey Vice President, Investment Division
Sandra Bailey-Whichard Vice President
Michael Barnhart Regional Vice President
Dennis Barry Vice President
Laurie Bayless Vice President
James A. Beardsworth Vice President-Accounting, Corporate
Cal Birkey Vice President, Financial Markets Division
David L. Blankenship Vice President, Investment Division
Nancy Blozis Vice President and Controller
Benjamin Bock FSA Vice President
Jim Bowman Vice President
Thomas Briggle Vice President
Thomas Brimacombe Vice President
Sandy Brown Vice President
Arturo Bueno Vice President
Kirk Buese Vice President, Investment Division
Gary Busack Vice President
John Byrnes Vice President
Kent Callahan Vice President
Frank A. Camp Vice President & Division General Counsel, Financial Markets
Division
Dave Carney Vice President, Investment Division
Steven C. Chamberlin Vice President
Cindy L. Chanley Vice President, Financial Markets Division
Wonjoon Cho Vice President
Matthew Cicero Vice President
Matt Coben Vice President
Ken Cochrane Vice President
Art Cohen Vice President
Catherine Collinson Vice President
Bill Cook Vice President, Investment Division
Jane A. Coyne Vice President, Financial Markets Division
Alan T. Cunningham Vice President and Deputy General Counsel
Glenn Cunningham Vice President
Robert DeMarco Vice President
Maureen DeWald Vice President & Assistant Secretary, Investment Division
Peter DeWolf Vice President
Mitch Dimler Vice President
Randy Dobo Vice President and Actuary
John V. Dohmen Vice President
Gail DuBois Vice President and Actuary
Mark E. Dunn Vice President, Investment Division
Ken Ellis Vice President
Reid A. Evers Vice President and Associate General Counsel
Roger Freeman Vice President, Financial Markets Division
Jerry Gable, FSA Vice President
George Garcia Vice President and Chief Medicare Officer
David M. Goldstein Vice President and Deputy General Counsel
Eric B. Goodman Vice President, Investment Division
Linda Goodwin, M.D. Vice President and Reinsurance Medical Director
Richard R. Greer Vice President, Financial Markets Division
Roger Hagopian FLMI Vice President
David R. Halfpap Vice President, Investment Division
Paul Hankwitz, MD Vice President and Chief Medical Director
Robert L. Hansen Vice President, Investment Division
Thomas Hauptli Vice President
Joy Heckendorf Vice President
Paul Henry Vice President
Marsha Hicks Vice President & Assistant Secretary, Investment Division
Yang Ho Vice President
Aruna Hobbs Vice President, Diversified Financial Products Division
Randall C. Hoiby Vice President and Associate General Counsel
John W. Holowasko Vice President
Frederick B. Howard Vice President, Investment Division
Suzette Stover-Hoyt Vice President and Assistant Secretary
William M. Hurst Vice President and Associate General Counsel
Zahid Hussain Vice President and Associate Actuary
James M. Jackson Vice President and Deputy General Counsel
Allan H. Johnson, FSA Vice President and Actuary
Marvin A. Johnson Vice President
Ahmad Kamil, FIA, MAAA Vice President and Associate Actuary
Michael Kappos Vice President
Patrick Kelleher Vice President and Reinsurance Financial Officer
Jon D. Kettering Vice President, Investment Administration, Investment Division
Ken Kilbane Vice President
Larry M. Kirkland Vice President & Managing Actuary, Equity Group
Bill Kling Vice President, Financial Markets Division
Roger Korte Vice President
Michael Lane Vice President, Financial Markets Division
Frank J. LaRusso Vice President and Chief Underwriting Officer
Lisa Layman Vice President, Diversified Financial Products Division
Carl Macero Vice President and Chief Reinsurance Underwriter
Susan Mack Vice President and Associate General Counsel
James MacKinnon Vice President, Investment Division
Mark Madden Vice President
Maureen McCarthy Vice President
Philip E. McHale, FLMI Vice President
Marilyn McCullough Vice President
Diane Meiners Vice President-Accounting, Corporate
Vic Modugno Vice President and Associate Actuary
Kate Modzelewski Vice President-Tax, Corporate
Daniel C. Mohwinkel Vice President, Financial Markets Division
Jodie Moore Vice President
Clay Moye Vice President
Wayne Nakano, CPA Vice President
Maureen E. Nielsen Vice President, Financial Markets Division
Thomas L. Nordstrom Vice President, Investment Division
Paul Norris FSA Vice President and Actuary
Ralph M. O'Brien Vice President, Investment Division
Susan O'Brien Vice President
John Oliver Vice President
Michael Palace, ASA Vice President and Actuary
Jerry Paul Vice President
Mary T. Pech Vice President, Investment Division
Thomas E. Pierpan Vice President, Equity Group
Stephen W. Pinkham Vice President
Kristy M. Pipes Vice President
Ray Robinson Vice President
Brian Rolland Vice President, Investment Division
John J. Romer Vice President
Jeffrey L. Rosen Vice President, Diversified Financial Products Division
Michael Sanders Vice President
Lorne W. Schinbein Vice President & Managing Actuary, Equity Group
Lindsay Schmuacher Vice President, Investment Division
Gary H. Scott Vice President, Financial Markets Division
Gary L. Seagraves Vice President
Joel D. Seigle Vice President
Clifford Sheets Vice President, Investment Division
Michael Simpson Vice President, Investment Division
Jon L. Skaggs Vice President, Investment Division
R. Michael Slaven Vice President & Assistant Secretary, Diversified Financial
Products Division
Robert A. Smedley Vice President, Investment Division
Michael S. Smith Vice President, Investment Division
Anne M. Spaes Vice President, Financial Markets Division
Donna Spalding Vice President, Financial Markets Division
Mary Spence Vice President
Christina Stiver Vice President
Bradley L. Stofferahn Vice President, Investment Division
Karen Stout Vice President
James O. Strand Vice President
Alice Su Vice President
Lee Tang Vice President
Bill Tate Vice President
Gregory Theobald Vice President & Assistant Secretary, Investment Division
Colleen Tobiason Vice President, Financial Markets Division
Barry Tobin Vice President
Kim A. Tursky Vice President and Assistant Secretary
Colleen Vandermark Vice President
Craig D. Vermie Vice President & Counsel, Corporate
John Vieren Vice President
William A. Waldie Vice President, Financial Markets Division
Marsha Wallace Vice President
Richard Weinstein Vice President
Timothy Weis Vice President
James Wilson Vice President
Michael B. Wolfe Vice President
Ronald R. Wolfe Regional Vice President
Sally Yamada Vice President and Treasurer
Ronald L. Ziegler Vice President & Actuary, Financial Markets Division
Daniel J. Bohmfalk Second Vice President and Associate Actuary
Barry Buner Second Vice President
Dave Costanza Second Vice President
David Fairhall Second Vice President and Associate Actuary
Toni A. Forge Second Vice President
Selma Fox Second Vice President
Evangeline Hidalgo Second Vice President
Michael Hoag Second Vice President
Andrew G. Kanelos Second Vice President
Ronald G. Keller Second Vice President
Joan Klubnik Second Vice President
Lynette Lawson Second Vice President
Dean LeCesne Second Vice President
Liwen Lien Second Vice President
Richard MacKenzie Second Vice President
Danny Mahoney Second Vice President
Daniel A. Norwick Second Vice President
Susan O'Brien Second Vice President
John O'Bryan Second Vice President - Corporate Tax
Stephanie Quincey Second Vice President
Paul Reisz Second Vice President
Beverly Rochecharlie Second Vice President
Stacy Schultz Second Vice President
Laura Scully Second Vice President
Frederick Seto Second Vice President
Jack Shalley, MD Second Vice President and Medical Director
Steven R. Shepard Second Vice President and Assistant General Counsel
Frank Snyder Second Vice President
Jean Stefaniak Second Vice President
David Stone Second Vice President
John Tillotson Second Vice President
K. Y. To Second Vice President
Boning Tong Second Vice President and Associate Actuary
Janet Unruh Second Vice President and Assistant General Counsel
Tonya J. Vessels Second Vice President
Joan Ward Second Vice President
James B. Watson Second Vice President and Assistant General Counsel
Sheila Wickens, MD Second Vice President and Medical Director
Richard Woodward Second Vice President
Kimberly A. Bivins Assistant Vice President, Diversified Financial Products Division
Erik Furnish Assistant Vice President, Diversified Financial Products Division
Jacqueline D. Griffin Assistant Vice President, Diversified Financial Products Division
Thomas J. Hartlage Assistant Vice President, Diversified Financial Products Division
Priscilla I. Hechler Assistant Vice President & Assistant Secretary, Equity Group
JoAnn Herndon Assistant Vice President, Financial Markets Division
Michael G. Herp Assistant Vice President, Diversified Financial Products Division
Richard C. Hicks Assistant Vice President & Assistant Secretary, Equity Group
Melanie Mabe Assistant Vice President, Diversified Financial Products Division
William R. Maurer Assistant Vice President, Financial Markets Division
Lisa L. Patterson Assistant Vice President, Diversified Financial Products Division
Robert E. Payne Assistant Vice President, Financial Markets Division
Rhonda L. Pritchett Assistant Vice President, Diversified Financial Products Division
Darin Smith Assistant Vice President & Assistant Secretary, Financial Markets
Division
Teresa L. Stolba Assistant Vice President, Financial Markets Division
Thomas E. Walsh Assistant Vice President, Diversified Financial Products Division
Harvey E. Willis Assistant Vice President, Diversified Financial Products Division
Kamran Haghighi Tax Officer
John Donner Assistant Secretary, Investment Division
Gregory E. Miller-Breetz Assistant Secretary, Financial Markets Division
Mary Schaefer Assistant Secretary, Financial Markets Division
Susan Vivino Assistant Secretary
Clifton W. Flenniken III Assistant Treasurer, Investment Division
James Wolfenden Statement Officer
Jill A.H. Andersen Counsel, Corporate
Mary J. Clark Counsel, Corporate
Katherine A. Schulze Counsel, Corporate
Emarie S. Payne Counsel, Corporate
</TABLE>
Item 26. Person Controlled by or Under Common Control With the Depositor or
Registrant. The Depositor, Transamerica Occidental Life Insurance Company
(Transamerica), is wholly owned by Transamerica Insurance Corporation of
California. The Registrant is a segregated asset account of Transamerica.
The following chart indicates the persons controlled by or under common
control with Transamerica.
<PAGE>
- -
ARC Reinsurance Corporation
Transamerica Management, Inc. -- DE
BWAC Seventeen, Inc.
Transamerica Commercial Finance Canada, Limited -- ON Transamerica Commercial
Finance Corporation, Canada -- Can.
BWAC Twelve, Inc.
TIFCO Lending Corporation -- IL
Transamerica Insurance Finance Corporation -- MD
BWAC Twenty-One, Inc.
Transamerica Commercial Holdings Limited -- U.K.
First Florida Appraisal Services, Inc.
First Georgia Appraisal Services, Inc. -- GA
Greybox L.L.C.
Transamerica Trailer Leasing S.N.C. -- Fra.
Intermodal Equipment, Inc.
Transamerica Leasing N.V. -- Belg.
Transamerica Leasing SRL -- Itl.
Inventory Funding Trust
Inventory Funding Company, LLC -- DE
Metropolitan Mortgage Company
Easy Yes Mortgage, Inc. -- FL
Easy Yes Mortgage, Inc. -- GA
First Florida Appraisal Services, Inc. -- FL
Freedom Tax Services, Inc. -- FL
J.J. & W. Advertising, Inc. -- FL
J.J. & W. Realty Services, Inc. -- FL
Liberty Mortgage Company of Ft. Myers, Inc. -- FL
Metropolis Mortgage Company -- FL
Perfect Mortgage Company -- FL
Pyramid Insurance Company, Ltd.
Pacific Cable Ltd. -- Bmda.
TA Leasing Holding Co., Inc.
Trans Ocean Ltd. -- DE
Transamerica Leasing Inc. -- DE
Trans Ocean Container Corp.
SpaceWise Inc. -- DE
Trans Ocean Container Finance Corp. -- DE
Trans Ocean Leasing Deutschland GmbH -- Ger.
Trans Ocean Leasing PTY Limited -- Aust.
Trans Ocean Management S.A. -- SWTZ
Trans Ocean Regional Corporate Holdings -- CA
Trans Ocean Tank Services Corporation -- DE
Trans Ocean Ltd.
Trans Ocean Container Corp. -- DE
Transamerica Accounts Holding Corporation
ARS Funding Corporation -- DE
Transamerica Acquisition Corporation
Camtrex Group, Inc. --
Transamerica Business Credit Corporation
Bay Capital Corporation -- DE
Coast Funding Corporation -- DE
Direct Capital Equity Investment, Inc. -- DE
Gulf Capital Corporation -- DE
TA Air East, Corp. --
TA Air III, Corp. -- DE
TA Air IV, Corp. -- DE
TA Air IX, Corp. -- DE
TA Air I, Corp. -- DE
TA Air VIII, Corp. --
TA Air VII, Corp. --
TA Air VI, Corp. --
TA Air V, Corp. --
TA Air X Corp. -- DE
TA Marine I Corp. -- DE
TA Marine II Corp. -- DE
TBC III, Inc. -- DE
TBC II, Inc. -- DE
TBC IV, Inc. -- DE
TBC I, Inc. -- DE
TBC Tax III, Inc. -- DE
TBC Tax II, Inc. -- DE
TBC Tax IV, Inc. -- DE
TBC TAX IX, Inc. -- DE
TBC Tax I, Inc. -- DE
TBC Tax VIII, Inc. -- DE
TBC Tax VII, Inc. -- DE
TBC Tax VI, Inc. -- DE
TBC Tax V, Inc. -- DE
TBC V, Inc. -- DE
TBCC Funding Trust I --
TBCC Funding Trust II --
The Plain Company -- DE
Transamerica Mezzanine Financing, Inc. --
Transamerica Small Business Services, Inc. --
Transamerica Business Credit Corporation - DE
TA Air II, Corp. -- DE
Transamerica Commercial Finance Canada, Limited
Transamerica Acquisition Corporation -- Can.
Transamerica Commercial Finance Corporation
Inventory Funding Trust -- DE
TCF Asset Management Corporation -- CO
Transamerica Distribution Finance Corporation de Mexico --
Transamerica Joint Ventures, Inc. -- DE
Transamerica Commercial Finance Corporation, I
BWAC Credit Corporation -- DE
BWAC International Corporation -- DE
BWAC Twelve, Inc. -- DE
Transamerica Business Credit Corporation -- DE
Transamerica Distribution Finance Corporation -- DE
Transamerica Equipment Financial Services Corporation --
Transamerica Commercial Finance Limited
WFC Polska Sp. Zo.o --
Transamerica Commercial Holdings Limited
Transamerica Commercial Finance Limited -- U.K.
Transamerica Trailer Leasing Limited -- NY
Transamerica Trailer Leasing Limited -- U.K.
Transamerica Consumer Finance Holding Company
Metropolitan Mortgage Company -- FL
Pacific Agency, Inc. -- IN
Transamerica Consumer Mortgage Receivables Corporation -- DE
Transamerica Mortgage Company -- DE
Transamerica Corporation
ARC Reinsurance Corporation -- HI
Inter-America Corporation -- CA
Pyramid Insurance Company, Ltd. -- HI
RTI Holdings, Inc. -- DE
Transamerica Airlines, Inc. -- DE
Transamerica Business Technologies Corporation -- DE
Transamerica CBO I, Inc. -- DE
Transamerica Corporation (Oregon) -- OR
Transamerica Delaware, L.P. -- DE
Transamerica Finance Corporation -- DE
Transamerica Financial Products, Inc. -- CA
Transamerica Foundation -- CA
Transamerica Insurance Corporation of California -- CA
Transamerica Intellitech, Inc. -- DE
Transamerica International Holdings, Inc. -- DE
Transamerica Investment Services, Inc. -- DE
Transamerica LP Holdings Corp. -- DE
Transamerica Pacific Insurance Company, Ltd. -- HI
Transamerica Real Estate Tax Service (A Division of Transamerica Corporation)
-- N/A
Transamerica Realty Services, Inc. -- DE
Transamerica Senior Properties, Inc. -- DE
TREIC Enterprises, Inc. -- DE
Transamerica Distribution Finance Corporation Transamerica Accounts Holding
Corporation -- DE Transamerica Commercial Finance Corporation -- DE
Transamerica Inventory Finance Corporation -- DE Transamerica Retail Financial
Services Corporation -- DE Transamerica Vendor Financial Services Corporation
-- DE
Transamerica Distribution Finance Corporation de Mexico
TDF de Mexico --
Transamerica Distribution Finance Corporation de Mexico and TDF de Mexico
Transamerica Corporate Services de Mexico --
Transamerica Finance Corporation
TA Leasing Holding Co., Inc. -- DE
Transamerica Commercial Finance Corporation, I -- DE
Transamerica Home Loan -- CA
Transamerica HomeFirst, Inc. -- CA
Transamerica Lending Company -- DE
Transamerica Financial Resources, Inc.
Financial Resources Insurance Agency of Texas -- TX
TBK Insurance Agency of Ohio, Inc. -- OH
Transamerica Financial Resources Insurance Agency of Alabama Inc. -- AL
Transamerica Financial Resources Insurance Agency of Massachusetts Inc. -- MA
Transamerica GmbH Inc.
Transamerica Financieringsmaatschappij B.V. -- Neth.
Transamerica GmbH - Germany -- Ger.
Transamerica Insurance Corporation of California
Arbor Life Insurance Company -- AZ
Bulkrich Trading --
Gemini Investments, Inc. --
Plaza Insurance Sales, Inc. -- CA
Transamerica Advisors, Inc. -- CA
Transamerica Annuity Service Corporation -- NM
Transamerica Financial Resources, Inc. -- DE
Transamerica International Insurance Services, Inc. -- DE
Transamerica Occidental Life Insurance Company -- CA
Transamerica Products, Inc. -- CA
Transamerica Securities Sales Corporation -- MD
Transamerica Service Company -- DE
Transamerica Insurance Finance Corporation
Transamerica Insurance Finance Company (Europe) -- MD
Transamerica Insurance Finance Corporation
Transamerica Insurance Finance Corporation, California -- CA
Transamerica Insurance Finance Corporation - MD
Transamerica Insurance Finance Corporation, Canada -- ON
Transamerica Intellitech, Inc.
Information Service Corp. --
Transamerica International Insurance Services, Inc.
Home Loans and Finance Ltd. -- U.K.
Transamerica Inventory Finance Corporation
BWAC Seventeen, Inc. -- DE
BWAC Twenty-One, Inc. -- DE
Transamerica Commercial Finance France S.A. -- Fra.
Transamerica GmbH Inc. -- DE
Transamerica Investment Services, Inc.
Transamerica Income Shares, Inc. (managed by TA Investment Services) -- MD
Transamerica Leasing Holdings Inc.
Greybox Logistics Services Inc. -- DE
Greybox L.L.C. -- DE
Greybox Services Limited -- U.K.
Intermodal Equipment, Inc. -- DE
Transamerica Distribution Services Inc. -- DE
Transamerica Leasing Coordination Center -- Belg.
Transamerica Leasing do Brasil Ltda. -- Braz.
Transamerica Leasing GmbH -- Ger.
Transamerica Leasing Limited -- U.K.
Transamerica Leasing Pty. Ltd. -- Aust.
Transamerica Leasing (Canada) Inc. -- Can.
Transamerica Leasing (HK) Ltd. -- H.K.
Transamerica Leasing (Proprietary) Limited -- S.Afr.
Transamerica Tank Container Leasing Pty. Limited -- Aust.
Transamerica Trailer Holdings I Inc. -- DE
Transamerica Trailer Holdings II Inc. -- DE
Transamerica Trailer Holdings III Inc. -- DE
Transamerica Trailer Leasing AB -- Swed.
Transamerica Trailer Leasing AG -- SWTZ
Transamerica Trailer Leasing A/S -- Denmk.
Transamerica Trailer Leasing GmbH -- Ger.
Transamerica Trailer Leasing (Belgium) N.V. -- Belg.
Transamerica Trailer Leasing (Netherlands) B.V. -- Neth.
Transamerica Trailer Spain S.A. -- Spn.
Transamerica Transport Inc. -- NJ
Transamerica Leasing Inc.
Better Asset Management Company LLC -- DE
Transamerica Leasing Holdings Inc. -- DE
Transamerica Leasing Limited
ICS Terminals (UK) Limited -- U.K.
Transamerica Life Insurance and Annuity Company
Transamerica Assurance Company -- MO
Transamerica Management, Inc.
Criterion Investment Management Company -- TX
Transamerica Occidental Life Insurance Company
NEF Investment Company -- CA
Transamerica China Investments Holdings Limited -- H.K.
Transamerica International RE (Bermuda) Ltd. -- Bmda.
Transamerica Life Insurance and Annuity Company -- NC
Transamerica Life Insurance Company of Canada -- Can.
Transamerica Life Insurance Company of New York -- NY
Transamerica South Park Resources, Inc. -- DE
Transamerica Variable Insurance Fund, Inc. -- MD
USA Administration Services, Inc. -- KS
Transamerica Products, Inc.
Transamerica Products II, Inc. -- CA
Transamerica Products IV, Inc. -- CA
Transamerica Products I, Inc. -- CA
Transamerica Real Estate Tax Service
Transamerica Flood Hazard Certification (A Division of TA Real Estate Tax
Service) -- N/A Transamerica Realty Services, Inc.
Bankers Mortgage Company of California -- CA
Pyramid Investment Corporation -- DE
The Gilwell Company -- CA
Transamerica Affordable Housing, Inc. -- CA
Transamerica Minerals Company -- CA
Transamerica Oakmont Corporation -- CA
Ventana Inn, Inc. -- CA
Transamerica Retail Financial Services Corporation
Transamerica Consumer Finance Holding Company -- DE
Whirlpool Financial National Bank -- DE
Transamerica Senior Properties, Inc.
Transamerica Senior Living, Inc. -- DE
Transamerica Small Business Services, Inc.
Emergent Business Capital Holdings, Inc. --
*Designates INACTIVE COMPANIES
A Division of Transamerica Corporation
ss.Limited Partner; Transamerica Corporation is General Partner
ITEM 27. NUMBER OF CERTIFICATE OWNERS
As of October 31, 1999 there were 4689 Owners of Non-Qualified Individual
Contracts and 2760 Owners of Qualified Individual Contracts.
ITEM 28. INDEMNIFICATION
Transamerica's Bylaws provide in Article V as follows:
Section 1. Right to Indemnification.
Each person who was or is a party or is threatened to be made a party to or is
involved, even as a witness, in any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or investigative
(hereafter a "Proceeding"), by reason of the fact that he, or a person of whom
he is the legal representative, is or was a director, officer, employee, or
agent of the corporation or is or was serving at the request of the corporation
as a director, officer, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust, or other enterprise, or was a
director, officer, employee, or agent of a foreign or domestic corporation that
was predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation, including service with respect to
employee benefit plans, whether the basis of the Proceeding is alleged action in
an official capacity as a director, officer, employee, or agent or in any other
capacity while serving as a director, officer, employee, or agent (hereafter an
"Agent"), shall be indemnified and held harmless by the corporation to the
fullest extent authorized by statutory and decisional law, as the same exists or
may hereafter be interpreted or amended (but, in the case of any such amendment
or interpretation, only to the extent that such amendment or interpretation
permits the corporation to provide broader indemnification rights than were
permitted prior thereto) against all expense, liability, and loss (including
attorneys' fees, judgements, fines, ERISA excise taxes and penalties, amounts
paid or to be paid in settlement, any interest, assessments, or other charges
imposed thereon, and any federal, state, local or foreign taxes imposed on any
Agent as a result of the actual or deemed receipt of any payments under this
Article) incurred or suffered by such person in connection with investigating,
defending, being a witness in, or participating in (including on appeal), or
preparing for any of the foregoing, in any Proceeding (hereafter "Expenses");
provided however, that except as to actions to enforce indemnification rights
pursuant to Section 3 of this Article, the corporation shall indemnify any Agent
seeking indemnification in connection with a Proceeding (or part thereof)
initiated by such person only if the Proceeding (or part thereof) was authorized
by the Board of Directors of the corporation. The right to indemnification
conferred in this Article shall be a contract right. [It is the Corporation's
intent that the bylaws provide indemnification in excess of that expressly
permitted by Section 317 of the California General Corporation Law, as
authorized by the Corporation's Articles of Incorporation.]
Section 2. Authority to Advance Expenses.
Expenses incurred by an officer or director (acting in his capacity as such) in
defending a Proceeding shall be paid by the corporation in advance of the final
disposition of such Proceeding, provided, however, that if required by the
California General Corporation Law, as amended, such Expenses shall be advanced
only upon delivery to the corporation of an undertaking by or on behalf of such
director or officer to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the corporation as authorized in
this Article or otherwise. Expenses incurred by other Agents of the corporation
(or by the directors or officers not acting in their capacity as such, including
service with respect to employee benefit plans) may be advanced upon the receipt
of a similar undertaking, if required by law, and upon such other terms and
conditions as the Board of Directors deems appropriate. Any obligation to
reimburse the corporation for Expense advances shall be unsecured and no
interest shall be charged thereon.
Section 3. Right of Claimant to Bring Suit.
If a claim under Section 1 or 2 of this Article is not paid in full by the
corporation within 30 days after a written claim has been received by the
corporation, the claimant may at any time thereafter bring suit against the
corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense
(including attorneys' fees) of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending a Proceeding in advance of its final disposition where the
required undertaking has been tendered to the corporation) that the claimant has
not met the standards of conduct that make it permissible under the California
General Corporation Law for the corporation to indemnify the claimant for the
amount claimed. The burden of proving such a defense shall be on the
corporation. Neither the failure of the corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper under the circumstances because he has met the applicable
standard of conduct set forth in the California General Corporation Law, nor an
actual determination by the corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the claimant had not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that claimant has not met the applicable standard of conduct.
Section 4. Provisions Nonexclusive.
The rights conferred on any person by this Article shall not be exclusive of any
other rights that such person may have or hereafter acquire under any statute,
provision of the Articles of Incorporation, bylaw, agreement, vote of
stockholders or disinterested directors, or otherwise, both as to action in an
official capacity and as to action in another capacity while holding such
office. To the extent that any provision of the Articles, agreement, or vote of
the stockholders or disinterested directors is inconsistent with these bylaws,
the provision, agreement, or vote shall take precedence.
Section 5. Authority to Insure.
The corporation may purchase and maintain insurance to protect itself and any
Agent against any Expense asserted against or incurred by such person, whether
or not the corporation would have the power to indemnify the Agent against such
Expense under applicable law or the provisions of this Article [provided that,
in cases where the corporation owns all or a portion of the shares of the
company issuing the insurance policy, the company and/or the policy must meet
one of the two sets of conditions set forth in Section 317 of the California
General Corporation Law, as amended].
Section 6. Survival of Rights.
The rights provided by this Article shall continue as to a person who has ceased
to be an Agent and shall inure to the benefit of the heirs, executors, and
administrators of such person.
Section 7. Settlement of Claims.
The corporation shall not be liable to indemnify any Agent under this Article
(a) for any amounts paid in settlement of any action or claim effected without
the corporation's written consent, which consent shall not be unreasonably
withheld; or (b) for any judicial award, if the corporation was not given a
reasonable and timely opportunity, at its expense, to participate in the defense
of such action.
Section 8. Effect of Amendment
Any amendment, repeal, or modification of this Article shall not adversely
affect any right or protection of any Agent existing at the time of such
amendment, repeal, or modification.
Section 9. Subrogation.
In the event of payment under this Article, the corporation shall be subrogated
to the extent of such payment to all of the rights of recovery of the Agent, who
shall execute all papers required and shall do everything that may be necessary
to secure such rights, including the execution of such documents necessary to
enable the corporation effectively to bring suit to enforce such rights.
Section 10. No Duplication of Payments.
The corporation shall not be liable under this Article to make any payment in
connection with any claim made against the Agent to the extent the Agent has
otherwise actually received payment (under any insurance policy, agreement,
vote, or otherwise) of the amounts otherwise indemnifiable hereunder.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling person of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the 1933 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 the 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 1933 Act and will be governed by the final
adjudication of such issue.
The directors and officers of Transamerica Occidental Life Insurance
Company are covered under a Directors and Officers liability program which
includes direct coverage to directors and officers (Coverage A) and corporate
reimbursement (Coverage B) to reimburse the Company for indemnification of its
directors and officers. Such directors and officers are indemnified for loss
arising from any covered claim by reason of any Wrongful Act in their capacities
as directors or officers. In general, the term "loss" means any amount which the
insureds are legally obligated to pay for a claim for Wrongful Acts. In general,
the term "Wrongful Acts" means any breach of duty, neglect, error, misstatement,
misleading statement or omission caused, committed or attempted by a director or
officer while acting individually or collectively in their capacity as such,
claimed against them solely by reason of their being directors and officers. The
limit of liability under the program is $95,000,000 for Coverage A and
$80,000,000 for Coverage B for the period 11/15/98 to 11/15/2000. Coverage B is
subject to a self insured retention of $15,000,000. The primary policy under the
program is with CNA Lloyds, Gulf, Chubb and Travelers.
ITEM 29. PRINCIPAL UNDERWRITER
Transamerica Securities Sales Corporation (TSSC) and Transamerica
Financial Resources (TFR) are the co-underwriters of the Certificates and the
Individual Contracts as defined in the Investment Company Act of 1940.
TSSC became Principal Underwriter effective 8-24-94.
NAME AND PRINCIPAL POSITION AND OFFICES WITH
BUSINESS ADDRESS* TRANSAMERICA SECURITIES SALES CORPORATION
Nooruddin Veerjee Chairman and Director
Nicki Bair President and Director
Sandy Brown Senior Vice President, Treasurer and Director
Roy Chong-Kit Director
George Chuang Vice President and Chief Financial Officer
Chris Shaw Vice President and Chief Compliance Officer
Jay Gould Vice President
Milan Konkol Compliance Officer
Regina Fink Secretary
*The Principal business address for each officer and director is 1150 South
Olive, Los Angeles, CA 90015.
NAME AND PRINCIPAL POSITION AND OFFICES WITH
BUSINESS ADDRESS* TRANSAMERICA FINANCIAL RESOURCES
Nooruddin S. Veerjee Chairman of the Board and Director
Regina M. Fink Secretary and Counsel
Sandra C. Brown Director, President and Chief Operating Officer
Monica Suryapranata Acting Treasurer
Gilbert F. Cronin Director
James W. Dederer Director
Dan Trivers Treasurer
Ronald F. Wagley Director
Kerry Rider Vice President and Director of
Compliance and Assistant Secretary
Susan Vivino Assistant Secretary
*The Principal business address for each officer and director is 1150 South
Olive, Los Angeles, CA 90015.
THE FOLLOWING TABLE LISTS THE AMOUNTS OF COMMISSIONS PAID TO THE
CO-UNDERWRITERS DURING THE LAST FISCAL YEAR.
<TABLE>
<CAPTION>
Name of
Principal Net Underwriting Compensation on Brokerage
UnderwriterDiscounts & Commission Redemption Commissions Compensation
<S> <C> <C> <C> <C>
TSSC -0- -0- $22,148,150.59 -0-
TFR -0- -0- $1,212,254.91 -0-
</TABLE>
ITEM 30. LOCATION AND ACCOUNTS AND RECORDS
All accounts and records required to be maintained by Section 31(a) of
the 1940 Act and the rules under it are maintained by Transamerica or the
Service Office at their administrative offices.
ITEM 31. MANAGEMENT SERVICES
All management contracts are discussed in Parts A or B.
ITEMS 32. UNDERTAKINGS
(a) Registrant undertakes that it will file a post-effective amendment to
this registration statement as frequently as 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.
(b) Registrant undertakes that it will include either (1) as part of any
application to purchase a Certificate or an Individual Contract offered
by the Prospectus, a space that an applicant can check to request a
Statement of Additional Information, or (2) a post card or similar
written communication affixed to or included in the Prospectus that the
applicant can remove to send for a Statement of Additional Information.
(c) Registrant 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 to Transamerica
at the address or phone number listed in the Prospectus.
(d) Registrant represents that it is relying on a no-action letter dated
November 28, 1988, to the American Council of Life Insurance (Ref. No.
IP-6-88) regarding Sections 22(e), 27(c)(i) and 27(d) of the Investment
Company Act of 1940, in connection with redeemability restrictions on
Section 403(b) policies, and that paragraphs numbered (1) through (4)
of that letter will be complied with.
(e) Transamerica hereby represents that the fees and the charges deducted
under the Contracts, in the aggregate, are reasonable in relation to
the services rendered, the expenses expected to be incurred, and the
risks assumed by Transamerica.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Transamerica
Occidental Life Insurance Company certifies that this Post-Effective Amendment
No. 13 to the Registration Statement meets all of the requirements for
effectiveness pursuant to Rule 485(a) under the Securities Act of 1933 and has
duly caused this Post-Effective Amendment No. 13 to the Registration Statement
to be signed on its behalf by the undersigned in the City of Los Angeles, State
of California on this 6th day of December, 1999.
SEPARATE ACCOUNT VA-2L TRANSAMERICA OCCIDENTAL
OF TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
LIFE INSURANCE COMPANY (DEPOSITOR)
(REGISTRANT)
--------------------------
David M. Goldstein
Vice President
As Required by the Securities Act of 1933, this Post-Effective Amendment No. 13
to the Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signatures Titles Date
<S> <C> <C>
_____________________* Director December 6,1999
Patrick S. Baird
______________________* Director and Acting Chief Financial Officer December 6,1999
Karen MacDonald
______________________* Director, and President - Insurance December 6,1999
Nooruddin S. Veerjee Products Division
______________________* Director, and Chairman December 6,1999
Thomas J. Cusack and Chief Executive Officer
______________________* Director December 6,1999
Brenda K. Clancy
______________________* Director, Executive Vice President December 6,1999
James W. Dederer General Counsel and Corporate Secretary
______________________* Director December 6,1999
George A. Foegele
______________________* Director December 6,1999
David E. Gooding
______________________* Director December 6,1999
Douglas C. Kolsrud
______________________* Director December 6,1999
Richard N. Latzer
______________________* Director December 6,1999
Gary U. Rolle'
______________________* Director December 6,1999
Paul E. Rutledge III
______________________* Director December 6,1999
T. Desmond Sugrue
April ___1999
______________________* Director December 6,1999
Nooruddin S. Veerjee
______________________* Director December 6,1999
Craig d. Vermie
______________________ On December 6,1999 as Attorney-in-Fact pursuant to
*By:David M. Goldstein powers of attorney previously filed and filed herewith,
and in his own capacity as Vice President.
</TABLE>
<PAGE>
DEATH BENEFIT ENDORSEMENT
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY has issued this Endorsement as a
part of the Certificate to which it is attached.
The terms defined in the Certificate and in any other Endorsement attached to
the Certificate will have the same meaning when used in this Endorsement.
DEATH BENEFIT - Subject to the provisions of the Certificate and in lieu of the
Death Benefit amount payable under the terms of the Certificate, the Death
Benefit payable will be the greater of (a) and (b) where: (a) is theAccount
Value on the date we receive due proof of death and an election method of
settlement; (b) is the Guaranteed Minimum Death Benefit (GMDB), PLUS any
additional Purchase Payments received, LESS any
Partial Withdrawals and any applicable premium taxes from the date
of death to the date of payment of death proceeds.
GUARANTEED MINIMUM DEATH BENEFIT--The GMDB is a Double Enhanced Death Benefit
equal to the greater of (1) and (2) where:
(1) is a Step-Up Death Benefit, equal to:
a) The largest Account Value on the Certificate Date or any
Certificate Anniversary prior to the earlier of two dates:
i) the date of death of the Owner or Annuitant (whichever occurs first);
ii) the Owner's or Annuitant's 86th birthday (whichever occurs first);
PLUS
b) any Purchase Payments subsequent to the date of the
Certificate Anniversary with the largest Account Value; LESS
c) any Adjusted Partial Withdrawals (as described below) and any
applicable premium taxes, subsequent to the date of the
Certificate Anniversary with the largest Account Value.
(2) is a 5% Annually Compounding Death Benefit, equal to:
a) the total Purchase Payments; LESS
b) Adjusted Partial Withdrawals (as described below) and any applicable premium
taxes; PLUS c) interest accumulated at 5% per annum from the payment or
withdrawal date to the earlier of three dates:
i) the date of death of the Owner or Annuitant (whichever occurs first);
ii) the Owner's or Annuitant's 86th birthday (whichever occurs first).
iii) the date the sum of all Purchase Payments, LESS the sum of
all Adjusted Partial Withdrawals and any applicable
premium taxes, has grown to two times its original amount
as a result of such interest accumulation.
The ADJUSTED PARTIAL WITHDRAWAL is equal to the Gross Partial Withdrawal
multiplied by an adjustment factor equal to the amount of the Death Benefit
prior to the Partial Withdrawal divided by the Account Value prior to the
Partial Withdrawal. The Gross Partial Withdrawal is equal to the Partial
Withdrawal requested, plus any applicable Contingent Deferred Sales Loads or
Interest Adjustments.
Upon death of the Owner, if the Owner's Beneficiary or a Joint Owner, if
applicable, is the surviving spouse, the surviving spouse may elect to continue
the Certificate rather than receiving the Death Benefit. If the Certificate is
continued, an amount equal to the excess, if any, of any Guaranteed Minimum
Death Benefit over the Account Value will then be added to the Account Value.
This amount will be added only once, at the time of such election. Furthermore,
all future Contingent Deferred Sales Loads will then be waived.
Signed for the Company at Los Angeles, California, to be effective as of the
Certificate Date.
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
James W. Dederer Thomas J. Cusack
Executive Vice President, General Counsel
And Corporate Secretary President and Chief Executive Officer
AE 1132 1099
<PAGE>
DEATH BENEFIT ENDORSEMENT
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY has issued this Endorsement as a
part of the Contract to which it is attached.
The terms defined in the Contract and in any other Endorsement attached to the
Contract will have the same meaning when used in this Endorsement.
DEATH BENEFIT - Subject to the provisions of the Contract and in lieu of the
Death Benefit amount payable under the terms of the Contract, the Death Benefit
payable will be the greater of (a) and (b) where: (a) is theAccount Value on the
date we receive due proof of death and an election method of settlement; (b) is
the Guaranteed Minimum Death Benefit (GMDB), PLUS any additional Purchase
Payments received, LESS any
Partial Withdrawals and any applicable premium taxes from the date
of death to the date of payment of death proceeds.
GUARANTEED MINIMUM DEATH BENEFIT--The GMDB is a Double Enhanced Death Benefit
equal to the greater of (1) and (2) where:
(1) is a Step-Up Death Benefit, equal to:
a) The largest Account Value on the Contract Date or any Contract
Anniversary prior to the earlier of two dates:
i) the date of death of the Owner or Annuitant (whichever occurs first);
ii) the Owner's or Annuitant's 86th birthday (whichever occurs first);
PLUS
b) any Purchase Payments subsequent to the date of the Contract Anniversary with
the largest Account Value; LESS c) any Adjusted Partial Withdrawals (as
described below) and any applicable premium taxes, subsequent to the date of the
Contract Anniversary with the largest Account Value.
(2) is a 5% Annually Compounding Death Benefit, equal to: a) the total Purchase
Payments; LESS b) Adjusted Partial Withdrawals (as described below) and any
applicable premium taxes; PLUS
c) interest accumulated at 5% per annum from the payment or withdrawal date to
the earlier of three dates:
i) the date of death of the Owner or Annuitant (whichever occurs first);
ii) the Owner's or Annuitant's 86th birthday (whichever occurs first).
iii) the date the sum of all Purchase Payments, LESS the sum of all Adjusted
Partial Withdrawals and any applicable premium taxes, has grown to two times its
original amount as a result of such interest accumulation.
The ADJUSTED PARTIAL WITHDRAWAL is equal to the Gross Partial Withdrawal
multiplied by an adjustment factor equal to the amount of the Death Benefit
prior to the Partial Withdrawal divided by the Account Value prior to the
Partial Withdrawal. The Gross Partial Withdrawal is equal to the Partial
Withdrawal requested, plus any applicable Contingent Deferred Sales Loads or
Interest Adjustments.
Upon death of the Owner, if the Owner's Beneficiary or a Joint Owner, if
applicable, is the surviving spouse, the surviving spouse may elect to continue
the Contract rather than receiving the Death Benefit. If the Contract is
continued, an amount equal to the excess, if any, of any Guaranteed Minimum
Death Benefit over the Account Value will then be added to the Account Value.
This amount will be added only once, at the time of such election. Furthermore,
all future Contingent Deferred Sales Loads will then be waived.
Signed for the Company at Los Angeles, California, to be effective as of the
Contract Date.
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
James W. Dederer Thomas J. Cusack
Executive Vice President, General Counsel
And Corporate Secretary President and Chief Executive Officer
AE 1132 1099
ENDORSEMENT
As of the Certificate Date, the INITIAL PURCHASE PAYMENT provision of this
Certificate is deleted and replaced by the following:
INITIAL PURCHASE PAYMENT - The Initial Purchase Payment will be credited within
two business days of the later of: (a) the date we receive sufficient
information, in a form and manner acceptable to us, to issue this
Certificate; or
(b) the date our Service Center receives the Initial Purchase Payment
The allocation of the Initial Purchase Payment to the Sub-accounts must be in
whole number percentages and must provide a minimum allocation of at least 10%
of the Initial Purchase Payment to each Sub-account of the Variable Account
selected by the Owner. The allocation percentages will be further subject to a
minimum dollar amount of $500 to each Sub-account chosen.
Signed for the Company at Los Angeles, California, to be effective as of the
Certificate Date.
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
James W. Dederer Thomas J. Cusack
Executive Vice President, General Counsel
And Corporate Secretary President and Chief Executive Officer
<PAGE>
ENDORSEMENT
As of the Contract Date, the INITIAL PURCHASE PAYMENT provision of this Contract
is deleted and replaced by the following:
INITIAL PURCHASE PAYMENT - The Initial Purchase Payment will be credited within
two business days of the later of: (a) the date we receive sufficient
information, in a form and manner acceptable to us, to issue this Contract; or
(b) the date our Service Center receives the Initial Purchase Payment
The allocation of the Initial Purchase Payment to the Sub-accounts must be in
whole number percentages and must provide a minimum allocation of at least 10%
of the Initial Purchase Payment to each Sub-account of the Variable Account
selected by the Owner. The allocation percentages will be further subject to a
minimum dollar amount of $500 to each Sub-account chosen.
Signed for the Company at Los Angeles, California, to be effective as of the
Contract Date.
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
James W. Dederer Thomas J. Cusack
Executive Vice President, General Counsel
And Corporate Secretary President and Chief Executive Officer
RGMI 7 1099
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
(HEREAFTER CALLED THE COMPANY, WE, OUR OR US.)
GUARANTEED MINIMUM INCOME BENEFIT RIDER
This rider provides your variable annuity with a Minimum Annuitization Value,
which can only be used with the Annuity Factors shown in Schedule I of this
rider. The Minimum Annuitization Value is guaranteed by us, regardless of the
performance of the variable annuity's investments.
This rider is attached to and made part of your variable annuity Certificate as
of the Rider Date. This rider may only be terminated as provided herein. This
rider is subject to all of the provisions in the Certificate that do not
conflict with the provisions of this rider. The Rider Payment Options provide
for variable annuity payments. Subsequent payments may fluctuate with the
investment performance of your Subaccounts. If you elect the Guaranteed Minimum
Payment Option on the Election Date, subsequent payments will never be less than
the initial payment. However, if you do not elect the Guaranteed Minimum Payment
Option, subsequent payments may be less than your initial payment.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Certificate Number: 123456 Last Date to Upgrade: 12-15-2041
Rider Date: 12-15-1999
Annual Growth Rate: 3.00% Guaranteed Minimum Income Benefit:
Rider Fee Percentage: 0.50% First Date to Elect Benefit: 12-15-2006
Guaranteed Minimum Payment Fee: 2.25% Last Date to Elect Benefit: 12-31-2048
</TABLE>
Mortality and Expense Risk Charge and Administrative Expense Charge after the
Election Date:
If the Guaranteed Minimum Payment Option is elected (includes Guaranteed Minimum
Payment Fee listed above) 3.50% If the Guaranteed Minimum Payment Option is NOT
elected 1.25%
<TABLE>
<CAPTION>
- ------------------ -------------------- --------------------------------------- --------------------------------------
Rider Date Age Minimum Annuitization Value* Guaranteed Minimum Monthly Payment**
- ------------------ -------------------- --------------------------------------- --------------------------------------
- ------------------ -------------------- --------------------------------------- --------------------------------------
<S> <C> <C> <C>
12/15/1999 35 $100,000.00 N/A
- ------------------ -------------------- --------------------------------------- --------------------------------------
- ------------------ -------------------- --------------------------------------- --------------------------------------
Election Date
- ------------------ -------------------- --------------------------------------- --------------------------------------
- ------------------ -------------------- --------------------------------------- --------------------------------------
12/15/2006 42 $ 122,987.39 $ 423.08
- ------------------ -------------------- --------------------------------------- --------------------------------------
- ------------------ -------------------- --------------------------------------- --------------------------------------
12/15/2007 43 $ 126,677.01 $ 440.84
- ------------------ -------------------- --------------------------------------- --------------------------------------
- ------------------ -------------------- --------------------------------------- --------------------------------------
12/15/2008 44 $ 130,477.32 $ 460.58
- ------------------ -------------------- --------------------------------------- --------------------------------------
- ------------------ -------------------- --------------------------------------- --------------------------------------
12/15/2009 45 $ 134,391.64 $ 479.78
- ------------------ -------------------- --------------------------------------- --------------------------------------
- ------------------ -------------------- --------------------------------------- --------------------------------------
12/15/2010 46 $ 138,423.39 $ 501.09
- ------------------ -------------------- --------------------------------------- --------------------------------------
- ------------------ -------------------- --------------------------------------- --------------------------------------
12/15/2011 47 $ 142,576.09 $ 523.25
- ------------------ -------------------- --------------------------------------- --------------------------------------
- ------------------ -------------------- --------------------------------------- --------------------------------------
12/15/2012 48 $ 146,853.37 $ 547.76
- ------------------ -------------------- --------------------------------------- --------------------------------------
- ------------------ -------------------- --------------------------------------- --------------------------------------
12/15/2013 49 $ 151,258.97 $ 571.76
- ------------------ -------------------- --------------------------------------- --------------------------------------
- ------------------ -------------------- --------------------------------------- --------------------------------------
12/15/2014 50 $ 155,796.74 $ 598.26
- ------------------ -------------------- --------------------------------------- --------------------------------------
- ------------------ -------------------- --------------------------------------- --------------------------------------
12/15/2015 51 $ 160,470.64 $ 625.84
- ------------------ -------------------- --------------------------------------- --------------------------------------
</TABLE>
*Assumes payment of one premium on the Rider Date (and no withdrawals or
additional premiums thereafter), no premium tax, and no growth in your Account
Value. This amount may only be used for annuitization with the Rider Payment
Options provided in this rider.
**Assumes the Minimum Annuitization Value shown is applied to a life with 10
year certain Rider Payment Option with monthly payments and that the Guaranteed
Minimum Payment Option is elected.
<PAGE>
DEFINITIONS
ANNUITANT:
The Annuitant is designated on the Certificate Specifications Page. The
variable annuity payments are paid to the Annuitant (or surviving Joint
Annuitant).
ANNUITY FACTOR:
A factor for the applicable Annuitant age, sex and Rider Payment Option
shown in Schedule I of this rider. For the Rider Payment Option chosen,
the Annuity Factor from Schedule I and the Minimum Annuitization Value
will be used to determine the applicable annuity payments. Factors not
shown are available from us upon request. Schedule I and Schedule II
are based on the "1983 Table a" mortality table, improved with
projection scale G, assuming annuitization in the year 2000.
ELECTION DATE:
A date that You elect to begin Guaranteed Minimum Income Benefit
payments. The Election Date must be within 30 days following a Rider
Anniversary. The first and last dates to elect a Rider Payment Option
are shown on page one of this rider.
GUARANTEED MINIMUM PAYMENT OPTION:
An elective option on the Election Date which, for a higher Mortality
and Expense Risk Charge and Administrative Expense Charge will
guarantee that subsequent variable annuity payments will never be less
than the initial payment.
MINIMUM ANNUITIZATION VALUE:
The amount we will use to determine the Guaranteed Minimum Income
Benefit payments.
Rider Anniversary: The same month and day as the Rider Date in each Calendar
Year after the Calendar Year in which the Rider Date occurs.
RIDER DATE:
The date that this rider is added to the Certificate or the date you
most recently elected to upgrade the Minimum Annuitization Value, if
applicable. This date must be within 30 days following the issue date
of the Certificate or a Rider Anniversary.
SUPPORTABLE PAYMENT
The Supportable Payment is equal to the number of variable annuity
units in the selected Subaccounts multiplied by the variable annuity
unit values in those Subaccounts on the date the payment is made.
GUARANTEED MINIMUM INCOME BENEFIT
On the Election Date, you may use the Minimum Annuitization Value and the
applicable Annuity Factor to provide variable payments to the Annuitant. The
first variable payment is guaranteed and is determined by multiplying each
$1,000 of Minimum Annuitization Value by the Annuity Factor on Schedule I. Each
subsequent payment will be calculated as described in the Certificate.
For subsequent payments, an annual Mortality and Expense Risk Charge and
Administrative Expense Charge will be charged. This fee may be different than
the Mortality and Expense Risk Charge and Administrative Expense Charge in
effect prior to the Election Date. It may also be different than the Mortality
and Expense Risk Charge and Administrative Expense Charge for the settlement
options shown in the Certificate. This Mortality and Expense Risk Charge and
Administrative Expense Charge will vary based on whether or not you elect the
Guaranteed Minimum Payment Option on the Election Date.
The subsequent payments may fluctuate in accordance with the investment
performance of your annuity Subaccounts. If you elect the Guaranteed Minimum
Payment Option, such payments will never be less than the initial payment.
However, if you choose not to elect the Guaranteed Minimum Payment Option, such
payments may be less than the initial payment.
MINIMUM ANNUITIZATION VALUE
The Minimum Annuitization Value is used to determine your Guaranteed Minimum
Income Benefit payments.
If the Rider is added in the first Certificate Year, the Minimum Annuitization
Value on the Rider Date is equal to the total Purchase Payments paid as of the
Rider Date. If the Rider is added after the first Certificate Year, the Minimum
Annuitization Value on the Rider Date is equal to the Account Value on the Rider
Date. After the Rider Date, the Minimum Annuitization Value will equal the
greater of (1) and (2) where:
(1) is equal to the greater of the Minimum Annuitization Value on
the Rider Date and the largest Account Value on any Rider
Anniversary, plus any Purchase Payments made since this date,
minus withdrawals (adjusted as described below) made since
this date, minus any premium taxes; and
(2) is the Minimum Annuitization Value on the Rider Date, plus the
sum of all Purchase Payments made after the Rider Date, minus
withdrawals (adjusted as below) and any premium taxes, plus
interest thereon equal to the annual effective rate shown on
the first page of this rider, credited on a daily basis up to
the earlier of two dates:
(i) The Rider Anniversary prior to the earlier of the Rider Owner's or
Annuitant's 86th birthday, or (ii) the date this sum has grown to two times its
original amount as a result of such interest accumulation.
Furthermore, on the Election Date, if the Account Value is greater than the
Minimum Annuitization Value, we will increase Your Minimum Annuitization Value
to be equal to the Account Value at that time.
WITHDRAWALS:
In any Certificate Year, withdrawals will reduce the Minimum Annuitization Value
by an amount equal to (A) divided by (B) multiplied by (C) where:
(A) is the amount of the withdrawal;
(B) is the Account Value immediately prior to the withdrawal; and (C)
is the Minimum Annuitization Value immediately prior to the withdrawal.
RIDER FEE
We will deduct a fee from the Account Value on each Rider Anniversary and on the
termination date of this rider. The Rider Fee is the Minimum Annuitization Value
at the time the fee is deducted, multiplied by the Rider Fee Percentage shown on
the first page of this rider. The fee will be deducted from each Subaccount in
proportion to the amount of Account Value in each account. This fee will not be
deducted after the Election Date.
MINIMUM ANNUITIZATION VALUE UPGRADE
The Owner may elect, in writing, to upgrade the Minimum Annuitization Value to
the Account Value. This may only be done within 30 days immediately following
any Rider Anniversary prior to the Last Date to Upgrade shown on page one of
this rider.
If an upgrade is elected, this rider will terminate and a new rider will be
issued with a new Rider Date, Election Date and its own guaranteed benefits. The
new annual Rider Fee Percentage may be different than this rider's, but it will
never be greater than 0.50%.
RIDER PAYMENT OPTIONS
The Minimum Annuitization Value and applicable Annuity Factors from Schedule I
may be applied to the following payment options:
LIFE INCOME - An election may be made for "No Period Certain" or "10
Years Certain". In the event of the death of the person receiving
payments prior to the end of the chosen period certain, the remaining
period certain payments will be continued to the beneficiary.
JOINT AND FULL SURVIVOR - An election may be made for "No Period
Certain" or "10 Years Certain". Payments will be made as long as either
the Annuitant or Joint Annuitant is living. In the event of the death
of both the Annuitant and the Joint Annuitant prior to the end of the
chosen period certain, the remaining period certain payments will be
continued to the beneficiary.
GUARANTEED MINIMUM PAYMENT OPTION
On the Election Date, the owner has the option of electing the Guaranteed
Minimum Payment Option. This option stabilizes payments to remain level
throughout each 12 month period following the Election Date and guarantees that
subsequent payments will never be less than the initial payment. The annual
Mortality and Expense Risk Charge and Administrative Expense Charge with the
Guaranteed Minimum Payment Option is higher than without the option and is shown
on page 1 of the rider. The determination of subsequent payments under the
Guaranteed Minimum Payment Option is described as follows.
During the first 12 month period following the Election Date, each payment will
be stabilized to equal the initial payment. On each anniversary of the Election
Date, the stabilized payment will be increased or decreased (but never below the
initial payment) and held level for the next 12 month period. This new
stabilized payment will equal the greater of the initial payment or the
Supportable payment at that time.
If the Supportable Payment (at any payment date) is greater than the stabilized
payment for that year, the excess will be used to purchase additional annuity
units as described below. If the Supportable Payment (at any payment date) is
less than the stabilized payment for that year, annuity units will be redeemed
as described below to fund the deficiency.
Purchase/Redemption of Annuity Units:
The number of annuity units purchased or redeemed is equal to the
annuity income purchased or redeemed, respectively, divided by the
annuity unit value for each respective Subaccount. Purchases and
redemptions of annuity income will be allocated to each Subaccount on a
proportionate basis. The amount of annuity income purchased or redeemed
is the difference between the Supportable Payment and the stabilized
payment, times the attained age nearest birthday annuity factors shown
in Schedule II, divided by $1000.
The Company bears the risk that it will need to make payments if all annuity
units have been redeemed in an attempt to maintain the stabilized payment at the
initial payment level. In such an event, the Company will make all future
payments equal to the initial payment.
If the Guaranteed Minimum Payment Option is not elected on the Election Date,
subsequent payments will be calculated as described in your Certificate.
Payments will not be stabilized throughout each 12 month period following the
Election Date and may be less than your initial payment. The Mortality and
Expense Risk Charge and Administrative Expense Charge if you do not choose the
Guaranteed Minimum Payment Option is shown on page 1 of the rider.
ASSIGNMENT
Payments made under this rider may not be pledged or assigned. Payments will
only be made to the Annuitant or Joint Annuitant named in the Certificate.
TERMINATION
This rider will be terminated upon the earliest of:
a. the Election Date;
b. 30 days after the Last Date to Elect Benefit shown on the first page
of this rider;
c. the date the Certificate terminates;
d. the date you elect to apply the Account Value of the Certificate
to annuitize this Certificate using the payment options in the
Certificate; and
e. the date you elect to upgrade your Minimum Annuitization Value.
This rider cannot be terminated prior to the earliest of the above dates.
Signed for the Company at Los Angeles, California, to be effective as of the
Certificate Date.
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
James W. Dederer Thomas J. Cusack
Executive Vice President, General Counsel
And Corporate Secretary President and Chief Executive Officer
<PAGE>
RGMI 7 1099
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
(HEREAFTER CALLED THE COMPANY, WE, OUR OR US.)
GUARANTEED MINIMUM INCOME BENEFIT RIDER
This rider provides your variable annuity with a Minimum Annuitization Value,
which can only be used with the Annuity Factors shown in Schedule I of this
rider. The Minimum Annuitization Value is guaranteed by us, regardless of the
performance of the variable annuity's investments.
This rider is attached to and made part of your variable annuity Contract as of
the Rider Date. This rider may only be terminated as provided herein. This rider
is subject to all of the provisions in the Contract that do not conflict with
the provisions of this rider. The Rider Payment Options provide for variable
annuity payments. Subsequent payments may fluctuate with the investment
performance of your Subaccounts. If you elect the Guaranteed Minimum Payment
Option on the Election Date, subsequent payments will never be less than the
initial payment. However, if you do not elect the Guaranteed Minimum Payment
Option, subsequent payments may be less than your initial payment.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Contract Number: 123456 Last Date to Upgrade: 12-15-2041
Rider Date: 12-15-1999
Annual Growth Rate: 3.00% Guaranteed Minimum Income Benefit:
Rider Fee Percentage: 0.50% First Date to Elect Benefit: 12-15-2006
Guaranteed Minimum Payment Fee: 2.25% Last Date to Elect Benefit: 12-31-2048
</TABLE>
Mortality and Expense Risk Charge and Administrative Expense Charge after the
Election Date: If the Guaranteed Minimum Payment Option is elected (includes
Guaranteed Minimum Payment Fee listed above) 3.50% If the Guaranteed Minimum
Payment Option is NOT elected 1.25%
<TABLE>
<CAPTION>
- ------------------ -------------------- --------------------------------------- --------------------------------------
Rider Date Age Minimum Annuitization Value* Guaranteed Minimum Monthly Payment**
- ------------------ -------------------- --------------------------------------- --------------------------------------
- ------------------ -------------------- --------------------------------------- --------------------------------------
<S> <C> <C> <C>
12/15/1999 35 $100,000.00 N/A
- ------------------ -------------------- --------------------------------------- --------------------------------------
- ------------------ -------------------- --------------------------------------- --------------------------------------
Election Date
- ------------------ -------------------- --------------------------------------- --------------------------------------
- ------------------ -------------------- --------------------------------------- --------------------------------------
12/15/2006 42 $ 122,987.39 $ 423.08
- ------------------ -------------------- --------------------------------------- --------------------------------------
- ------------------ -------------------- --------------------------------------- --------------------------------------
12/15/2007 43 $ 126,677.01 $ 440.84
- ------------------ -------------------- --------------------------------------- --------------------------------------
- ------------------ -------------------- --------------------------------------- --------------------------------------
12/15/2008 44 $ 130,477.32 $ 460.58
- ------------------ -------------------- --------------------------------------- --------------------------------------
- ------------------ -------------------- --------------------------------------- --------------------------------------
12/15/2009 45 $ 134,391.64 $ 479.78
- ------------------ -------------------- --------------------------------------- --------------------------------------
- ------------------ -------------------- --------------------------------------- --------------------------------------
12/15/2010 46 $ 138,423.39 $ 501.09
- ------------------ -------------------- --------------------------------------- --------------------------------------
- ------------------ -------------------- --------------------------------------- --------------------------------------
12/15/2011 47 $ 142,576.09 $ 523.25
- ------------------ -------------------- --------------------------------------- --------------------------------------
- ------------------ -------------------- --------------------------------------- --------------------------------------
12/15/2012 48 $ 146,853.37 $ 547.76
- ------------------ -------------------- --------------------------------------- --------------------------------------
- ------------------ -------------------- --------------------------------------- --------------------------------------
12/15/2013 49 $ 151,258.97 $ 571.76
- ------------------ -------------------- --------------------------------------- --------------------------------------
- ------------------ -------------------- --------------------------------------- --------------------------------------
12/15/2014 50 $ 155,796.74 $ 598.26
- ------------------ -------------------- --------------------------------------- --------------------------------------
- ------------------ -------------------- --------------------------------------- --------------------------------------
12/15/2015 51 $ 160,470.64 $ 625.84
- ------------------ -------------------- --------------------------------------- --------------------------------------
</TABLE>
*Assumes payment of one premium on the Rider Date (and no withdrawals or
additional premiums thereafter), no premium tax, and no growth in your Account
Value. This amount may only be used for annuitization with the Rider Payment
Options provided in this rider.
**Assumes the Minimum Annuitization Value shown is applied to a life with 10
year certain Rider Payment Option with monthly payments and that the Guaranteed
Minimum Payment Option is elected.
<PAGE>
DEFINITIONS
ANNUITANT:
The Annuitant is designated on the Contract Specifications Page. The
variable annuity payments are paid to the Annuitant (or surviving Joint
Annuitant).
ANNUITY FACTOR:
A factor for the applicable Annuitant age, sex and Rider Payment Option
shown in Schedule I of this rider. For the Rider Payment Option chosen,
the Annuity Factor from Schedule I and the Minimum Annuitization Value
will be used to determine the applicable annuity payments. Factors not
shown are available from us upon request. Schedule I and Schedule II
are based on the "1983 Table a" mortality table, improved with
projection scale G, assuming annuitization in the year 2000.
ELECTION DATE:
A date that You elect to begin Guaranteed Minimum Income Benefit
payments. The Election Date must be within 30 days following a Rider
Anniversary. The first and last dates to elect a Rider Payment Option
are shown on page one of this rider.
GUARANTEED MINIMUM PAYMENT OPTION:
An elective option on the Election Date which, for a higher Mortality
and Expense Risk Charge and Administrative Expense Charge will
guarantee that subsequent variable annuity payments will never be less
than the initial payment.
MINIMUM ANNUITIZATION VALUE:
The amount we will use to determine the Guaranteed Minimum Income
Benefit payments.
Rider Anniversary: The same month and day as the Rider Date in each Calendar
Year after the Calendar Year in which the Rider Date occurs.
RIDER DATE:
The date that this rider is added to the Contract or the date you most
recently elected to upgrade the Minimum Annuitization Value, if
applicable. This date must be within 30 days following the issue date
of the Contract or a Rider Anniversary.
SUPPORTABLE PAYMENT
The Supportable Payment is equal to the number of variable annuity
units in the selected Subaccounts multiplied by the variable annuity
unit values in those Subaccounts on the date the payment is made.
GUARANTEED MINIMUM INCOME BENEFIT
On the Election Date, you may use the Minimum Annuitization Value and the
applicable Annuity Factor to provide variable payments to the Annuitant. The
first variable payment is guaranteed and is determined by multiplying each
$1,000 of Minimum Annuitization Value by the Annuity Factor on Schedule I. Each
subsequent payment will be calculated as described in the Contract.
For subsequent payments, an annual Mortality and Expense Risk Charge and
Administrative Expense Charge will be charged. This fee may be different than
the Mortality and Expense Risk Charge and Administrative Expense Charge in
effect prior to the Election Date. It may also be different than the Mortality
and Expense Risk Charge and Administrative Expense Charge for the settlement
options shown in the Contract. This Mortality and Expense Risk Charge and
Administrative Expense Charge will vary based on whether or not you elect the
Guaranteed Minimum Payment Option on the Election Date.
The subsequent payments may fluctuate in accordance with the investment
performance of your annuity Subaccounts. If you elect the Guaranteed Minimum
Payment Option, such payments will never be less than the initial payment.
However, if you choose not to elect the Guaranteed Minimum Payment Option, such
payments may be less than the initial payment.
MINIMUM ANNUITIZATION VALUE
The Minimum Annuitization Value is used to determine your Guaranteed Minimum
Income Benefit payments.
If the Rider is added in the first Contract Year, the Minimum Annuitization
Value on the Rider Date is equal to the total Purchase Payments paid as of the
Rider Date. If the Rider is added after the first Contract Year, the Minimum
Annuitization Value on the Rider Date is equal to the Account Value on the Rider
Date. After the Rider Date, the Minimum Annuitization Value will equal the
greater of (1) and (2) where:
(1) is equal to the greater of the Minimum Annuitization Value on
the Rider Date and the largest Account Value on any Rider
Anniversary, plus any Purchase Payments made since this date,
minus withdrawals (adjusted as described below) made since
this date, minus any premium taxes; and
(2) is the Minimum Annuitization Value on the Rider Date, plus the
sum of all Purchase Payments made after the Rider Date, minus
withdrawals (adjusted as below) and any premium taxes, plus
interest thereon equal to the annual effective rate shown on
the first page of this rider, credited on a daily basis up to
the earlier of two dates:
(i) The Rider Anniversary prior to the earlier of the Rider Owner's or
Annuitant's 86th birthday, or (ii) the date this sum has grown to two times its
original amount as a result of such interest accumulation.
Furthermore, on the Election Date, if the Account Value is greater than the
Minimum Annuitization Value, we will increase Your Minimum Annuitization Value
to be equal to the Account Value at that time.
WITHDRAWALS:
In any Contract Year, withdrawals will reduce the Minimum Annuitization Value by
an amount equal to (A) divided by (B) multiplied by (C) where:
(A) is the amount of the withdrawal;
(B) is the Account Value immediately prior to the withdrawal; and (C)
is the Minimum Annuitization Value immediately prior to the withdrawal.
RIDER FEE
We will deduct a fee from the Account Value on each Rider Anniversary and on the
termination date of this rider. The Rider Fee is the Minimum Annuitization Value
at the time the fee is deducted, multiplied by the Rider Fee Percentage shown on
the first page of this rider. The fee will be deducted from each Subaccount in
proportion to the amount of Account Value in each account. This fee will not be
deducted after the Election Date.
MINIMUM ANNUITIZATION VALUE UPGRADE
The Owner may elect, in writing, to upgrade the Minimum Annuitization Value to
the Account Value. This may only be done within 30 days immediately following
any Rider Anniversary prior to the Last Date to Upgrade shown on page one of
this rider.
If an upgrade is elected, this rider will terminate and a new rider will be
issued with a new Rider Date, Election Date and its own guaranteed benefits. The
new annual Rider Fee Percentage may be different than this rider's, but it will
never be greater than 0.50%.
RIDER PAYMENT OPTIONS
The Minimum Annuitization Value and applicable Annuity Factors from Schedule I
may be applied to the following payment options:
LIFE INCOME - An election may be made for "No Period Certain" or "10
Years Certain". In the event of the death of the person receiving
payments prior to the end of the chosen period certain, the remaining
period certain payments will be continued to the beneficiary.
JOINT AND FULL SURVIVOR - An election may be made for "No Period
Certain" or "10 Years Certain". Payments will be made as long as either
the Annuitant or Joint Annuitant is living. In the event of the death
of both the Annuitant and the Joint Annuitant prior to the end of the
chosen period certain, the remaining period certain payments will be
continued to the beneficiary.
GUARANTEED MINIMUM PAYMENT OPTION
On the Election Date, the owner has the option of electing the Guaranteed
Minimum Payment Option. This option stabilizes payments to remain level
throughout each 12 month period following the Election Date and guarantees that
subsequent payments will never be less than the initial payment. The annual
Mortality and Expense Risk Charge and Administrative Expense Charge with the
Guaranteed Minimum Payment Option is higher than without the option and is shown
on page 1 of the rider. The determination of subsequent payments under the
Guaranteed Minimum Payment Option is described as follows.
During the first 12 month period following the Election Date, each payment will
be stabilized to equal the initial payment. On each anniversary of the Election
Date, the stabilized payment will be increased or decreased (but never below the
initial payment) and held level for the next 12 month period. This new
stabilized payment will equal the greater of the initial payment or the
Supportable payment at that time.
If the Supportable Payment (at any payment date) is greater than the stabilized
payment for that year, the excess will be used to purchase additional annuity
units as described below. If the Supportable Payment (at any payment date) is
less than the stabilized payment for that year, annuity units will be redeemed
as described below to fund the deficiency.
Purchase/Redemption of Annuity Units:
The number of annuity units purchased or redeemed is equal to the
annuity income purchased or redeemed, respectively, divided by the
annuity unit value for each respective Subaccount. Purchases and
redemptions of annuity income will be allocated to each Subaccount on a
proportionate basis. The amount of annuity income purchased or redeemed
is the difference between the Supportable Payment and the stabilized
payment, times the attained age nearest birthday annuity factors shown
in Schedule II, divided by $1000.
The Company bears the risk that it will need to make payments if all annuity
units have been redeemed in an attempt to maintain the stabilized payment at the
initial payment level. In such an event, the Company will make all future
payments equal to the initial payment.
If the Guaranteed Minimum Payment Option is not elected on the Election Date,
subsequent payments will be calculated as described in your Contract. Payments
will not be stabilized throughout each 12 month period following the Election
Date and may be less than your initial payment. The Mortality and Expense Risk
Charge and Administrative Expense Charge if you do not choose the Guaranteed
Minimum Payment Option is shown on page 1 of the rider.
ASSIGNMENT
Payments made under this rider may not be pledged or assigned. Payments will
only be made to the Annuitant or Joint Annuitant named in the Contract.
TERMINATION
This rider will be terminated upon the earliest of:
a. the Election Date;
b. 30 days after the Last Date to Elect Benefit shown on the first page
of this rider;
c. the date the Contract terminates;
d. the date you elect to apply the Account Value of the Contract
to annuitize this Contract using the payment
options in the Contract; and
e. the date you elect to upgrade your Minimum Annuitization Value.
This rider cannot be terminated prior to the earliest of the above dates.
Signed for the Company at Los Angeles, California, to be effective as of the
Contract Date.
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
James W. Dederer Thomas J. Cusack
Executive Vice President, General Counsel
And Corporate Secretary President and Chief Executive Officer
<PAGE>
