<PAGE>
Registration Nos. 333-
811-2441
As filed with the Commission on June 28, 1999
____________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. _____ [ ]
Post-Effective Amendment No. _____ [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 77 [X]
------
AMERICAN GENERAL LIFE INSURANCE COMPANY
SEPARATE ACCOUNT D
(Exact Name of Registrant)
AMERICAN GENERAL LIFE INSURANCE COMPANY
(Name of Depositor)
2727-A Allen Parkway
Houston, Texas 77019
(Address of Depositor's Principal Executive Offices) (Zip Code)
(713) 831-8471
(Depositor's Telephone Number, including Area Code)
Pauletta P. Cohn, Esq.
Associate General Counsel and Secretary
American General Life Companies
2929 Allen Parkway
Houston, TX 77019
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.
Title of Securities Being Registered:
Units of interest in American General Life Insurance Company Separate Account
D under variable annuity contracts.
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until Registrant shall file another
amendment which specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until the Registration Statement shall become effective on such
date as the Commission, acting pursuant to said Section 8(a), may determine.
<PAGE>
GENERATIONS(TM) ASSET BUILDER
INDIVIDUAL FLEXIBLE PAYMENT VARIABLE AND FIXED
DEFERRED ANNUITY CONTRACTS
OFFERED BY
AMERICAN GENERAL LIFE INSURANCE COMPANY
ANNUITY ADMINISTRATION DEPARTMENT
P.O. Box 1401, Houston, Texas 77251-1401
1-800-200-3883; 1-713-831-3505
American General Life Insurance Company ("AGL") is offering the individual
flexible payment variable and fixed deferred annuity contracts (the "Contracts")
described in this Prospectus.
You may use American General Life Insurance Company Separate Account D (the
"Separate Account") for a variable investment return under the Contracts based
on one or more of the following mutual fund series of the Van Kampen Life
Investment Trust (the "Trust") and the Morgan Stanley Dean Witter Universal
Funds, Inc. (the "Fund"):
<TABLE>
<S> <C>
. Van Kampen Life Investment Trust . Morgan Stanley Dean Witter Universal Funds, Inc.
. Comstock Portfolio . Global Equity Portfolio
. Domestic Income Portfolio . International Magnum Portfolio
. Emerging Growth Portfolio . High Yield Portfolio
. Enterprise Portfolio . Mid Cap Value Portfolio
. Government Portfolio
. Growth and Income Portfolio
. Money Market Portfolio
. Morgan Stanley Real Estate Securities Portfolio
. Strategic Stock Portfolio
</TABLE>
You may also use AGL's guaranteed interest option. This option currently has one
Guarantee Period, with a guaranteed interest rate.
We have designed this Prospectus to provide you with information that you should
have before investing in the Contracts. Please read the Prospectus carefully and
keep it for future reference.
For additional information about the Contracts, you may request a copy of the
Statement of Additional Information (the "Statement") dated [ ].
We have filed the Statement with the Securities and Exchange Commission ("SEC")
and have incorporated it by reference into this Prospectus. The "Contents" of
the Statement appears at page [ ] of this Prospectus. You may obtain a free
copy of the Statement if you write or call AGL's Annuity Administration
Department, which is located at 2727-A Allen Parkway, Houston, Texas 77019-2191.
The telephone number is 1-800-200-3883. You may also obtain the Statement
through the SEC's Web site at http://www.sec.gov.
You should rely only on the information contained in this document or that we
have referred you to. We have not authorized anyone to provide you with
information that is different.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of the Prospectus. Any representation to the contrary is a
criminal offense. The Contracts are not available in all states.
This Prospectus is valid only if you also receive current fund prospectuses of
the Van Kampen Life Investment Trust and the Morgan Stanley Dean Witter
Universal Funds, Inc.
This Prospectus is dated [ ], 1999.
<PAGE>
CONTENTS
<TABLE>
<S> <C>
Definitions............................................................................... 4
Fee Table................................................................................. 7
Synopsis of Contract Provisions........................................................... 10
Minimum Investment Requirements........................................................ 10
Purchase Payment Charge................................................................ 10
Purchase Payment Accumulation.......................................................... 10
Fixed and Variable Annuity Payments.................................................... 11
Changes in Allocations Among Divisions and Guarantee Periods........................... 12
Surrenders and Withdrawals............................................................. 12
Cancellation Rights.................................................................... 12
Death Proceeds......................................................................... 12
Limitations Imposed by Retirement Plans and Employers.................................. 13
Communications to Us................................................................... 13
Financial and Performance Information.................................................. 13
Other Information...................................................................... 15
Financial Information..................................................................... 15
AGL....................................................................................... 15
Separate Account D........................................................................ 15
The Series................................................................................ 16
Voting Privileges...................................................................... 18
The Fixed Account......................................................................... 19
Guarantee Periods...................................................................... 19
Crediting Interest..................................................................... 19
New Guarantee Periods.................................................................. 20
Contract Issuance and Purchase Payments................................................... 20
Minimum Requirements................................................................... 21
Payments............................................................................... 21
Owner Account Value....................................................................... 22
Variable Account Value................................................................. 22
Fixed Account Value.................................................................... 22
Transfer, Automatic Rebalancing, Surrender and Partial Withdrawal of Owner Account Value.. 23
Transfers.............................................................................. 23
Automatic Rebalancing.................................................................. 25
Surrenders............................................................................. 25
Partial Withdrawals.................................................................... 26
Annuity Period and Annuity Payment Options................................................ 27
Annuity Commencement Date.............................................................. 27
Application of Owner Account Value..................................................... 27
Fixed and Variable Annuity Payments.................................................... 27
Annuity Payment Options................................................................ 28
Election of Annuity Payment Option..................................................... 29
Available Annuity Payment Options...................................................... 29
Transfers.............................................................................. 31
Death Proceeds............................................................................ 31
Death Proceeds Before the Annuity Commencement Date.................................... 31
Death Benefit Options.................................................................. 32
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
Enhanced Death Benefit Charge.......................................................... 32
Base Death Benefit..................................................................... 32
Enhanced Death Benefit................................................................. 33
Death Proceeds on or After the Annuity Commencement Date............................... 34
Proof of Death......................................................................... 34
Charges Under the Contracts............................................................... 35
Premium Taxes.......................................................................... 35
Transfer Charges....................................................................... 35
Charge to the Separate Account......................................................... 36
Miscellaneous.......................................................................... 36
Systematic Withdrawal Plan............................................................. 36
Reduction in Administrative Charges.................................................... 37
Other Aspects of the Contracts............................................................ 37
Owners, Annuitants and Beneficiaries; Assignments...................................... 37
Reports................................................................................ 38
Rights Reserved by Us.................................................................. 38
Payment and Deferment.................................................................. 38
Federal Income Tax Matters................................................................ 39
General................................................................................ 39
Non-Qualified Contracts................................................................ 40
Individual Retirement Annuities ("IRAs")............................................... 42
Roth IRAs.............................................................................. 43
Simplified Employee Pension Plans...................................................... 44
Simple Retirement Accounts............................................................. 44
Other Qualified Plans.................................................................. 44
Private Employer Unfunded Deferred Compensation Plans.................................. 46
Federal Income Tax Withholding and Reporting........................................... 46
Taxes Payable by AGL and the Separate Account.......................................... 46
Distribution Arrangements................................................................. 47
Services Agreements....................................................................... 47
Legal Matters............................................................................. 48
Year 2000 Considerations.................................................................. 48
Other Information on File................................................................. 49
Contents of Statement of Additional Information........................................... 50
Request Form.............................................................................. 51
</TABLE>
3
<PAGE>
DEFINITIONS
We, our and us - American General Life Insurance Company ("AGL").
You and your - a reader of this Prospectus who is contemplating making purchase
payments or taking any other action in connection with a Contract. This is
generally the Owner of a Contract.
Account Value - the sum of your Fixed Account Value and your Variable Account
Value after deduction of any fees. We may subtract certain other charges from
your Account Value in the case of transfers or distribution of your Account
Value.
Accumulation Unit - a measuring unit used in calculating your interest in a
Division of Separate Account D before the Annuity Commencement Date.
Annuitant - the person named as Annuitant in the application for a Contract and
on whose life annuity payments may be based.
Annuity Administration Department - our annuity service center in our Home
Office to which you should direct all purchase payments, requests, instructions
and other communications. Our Annuity Administration Department is located at
2727-A Allen Parkway, Houston, Texas 77019-2191. The mailing address is P.O. Box
1401, Houston, Texas 77251-1401.
Annuity Commencement Date - the date on which we begin making payments under an
Annuity Payment Option, unless you elect a single sum payment instead.
Annuity Payment Option - one of the ways in which you can request us to make
annuity payments to you. An Annuity Payment Option will control the amount of
each payment, how often we make payments, and for how long we make payments.
Annuity Period - the period of time during which we make annuity payments under
an Annuity Payment Option.
Annuity Unit - a measuring unit used to calculate the amount of Variable Annuity
Payments.
Base Death Benefit Option - one of the two death benefit options from which you
select when you apply for your Contract.
Beneficiary - the person who will receive any proceeds due under a Contract
following the death of an Owner or an Annuitant.
Code - the Internal Revenue Code of 1986, as amended.
Contingent Annuitant - a person whom you designate under a Non-Qualified
Contract to become the Annuitant if (1) the Annuitant dies before the Annuity
Commencement Date; and (2) the Contingent Annuitant is alive when the Annuitant
dies.
Contingent Beneficiary - a person whom you designate to receive any proceeds due
under a Contract following the death of an Owner or an Annuitant, if the
Beneficiary has died but the Contingent Beneficiary is alive when the proceeds
become payable.
Contract - an individual annuity Contract offered by this Prospectus.
4
<PAGE>
Contract Anniversary - each anniversary of the date of issue of the Contract.
Contract Year - each year beginning with the date of issue of the Contract.
Division - one of the several different investment options into which Separate
Account D is divided. Each Division invests in shares of a Series.
Enhanced Death Benefit Option - one of the two death benefit options from which
you select when you apply for your Contract. We charge you .13% of your Account
Value for each year this option is in effect.
Fixed Account - the name of the investment option that allows you to allocate
purchase payments to AGL's General Account.
Fixed Account Value - the sum of your net purchase payments and transfers in the
Fixed Account, plus accumulated interest, less any partial withdrawals and
transfers you make out of the Fixed Account.
Fixed Annuity Payments - annuity payments that are fixed in amount and do not
vary with the investment experience of any Division of Separate Account D.
General Account - all assets of AGL other than those in Separate Account D or
any other legally segregated separate account established by AGL.
Guaranteed Interest Rate - the rate of interest we credit during any Guarantee
Period, on an effective annual basis.
Guarantee Period - the period for which we credit a Guaranteed Interest Rate.
Home Office - our office at the following address and telephone number: American
General Life Insurance Company, Annuity Administration Department, 2727-A Allen
Parkway, Houston, Texas 77019-2191; Mailing address - P.O. Box 1401, Houston,
Texas 77251-1401; 1-800-200-3883 or 713-831-3505.
Investment Company Act of 1940 ("1940 Act") - a federal law governing the
operations of investment companies such as the Series and the Separate Account.
Non-Qualified - not eligible for the kind of federal income tax treatment that
occurs with retirement plans allowed by Sections 401, 403, 408 or 408A of the
Code.
Owner - the person or persons entitled to exercise all rights and privileges
under this Contract. In connection with a retirement plan, the employer of the
Annuitant or trustee of the Plan may be the Owner of the Contract
Purchase Payment Charge - a front-end sales charge we assess upon each purchase
payment.
Purchase Payment Charge Percentage - the percent of each purchase payment (after
we deduct any state premium tax) assessed as a Purchase Payment Charge. The
Purchase Payment Charge Percentage reduces as cumulative purchase payments
increase.
5
<PAGE>
Qualified - eligible for the kind of federal income tax treatment that occurs
with retirement plans allowed by sections 401, 403, 408 or 408A of the Code.
Separate Account - the segregated asset account of AGL named Separate Account D,
which receives and invests purchase payments under the Contracts.
Series - an individual portfolio of a mutual fund that you may choose for
investment under the Contracts. Currently, the Series are part of either the Van
Kampen Life Investment Trust or the Morgan Stanley Dean Witter Universal Funds,
Inc.
Valuation Date - a day when the New York Stock Exchange is open for business.
However, a day is not a Valuation Date, if the Series in which a Division
invests does not calculate the value of its shares on that day.
Valuation Period - the period that starts at the close of regular trading on the
New York Stock Exchange on a Valuation Date and ends at the close of regular
trading on the Exchange on the next Valuation Date.
Variable Account Value - the sum of your account values in the Divisions. Your
account value in a Division equals the value of a Division's Accumulation Unit
multiplied by the number of Accumulation Units you have in that Division.
Variable Annuity Payments - annuity payments that vary in amount based on the
investment earnings and losses of one or more of the Divisions.
Written - signed, dated, and in a form satisfactory to us and received at our
Home Office. (See "Synopsis of Contract Provisions - Communications to Us.") You
must use special forms your sales representative or we provide to elect an
Annuity Payment Option.
6
<PAGE>
FEE TABLE
The purpose of this Fee Table is to assist you in understanding the various
costs and expenses that you will bear directly or indirectly under a Contract.
The table reflects expenses of the Separate Account and the Series. We may also
deduct amounts for state premium taxes or similar assessments, where applicable.
Transaction Charges
- -------------------
Maximum Purchase Payment Charges Imposed on Purchases.. 5.75%
(as a percentage of the sum of all purchase payments
before we deduct any Purchase Payment Charges)
Range of Purchase Payment Charges Imposed on Purchases (as a percentage of
the sum of all purchase payments before we deduct any Purchase Payment
Charges)
Sum of Purchase Payments To Date Purchase Payment
(Before We Deduct any Purchase Payment Charges) Charge Percentage
----------------------------------------------- -----------------
Up to $49,999.99....................................... 5.75%
$50,000 - $99,999.99................................... 4.75%
$100,000 - $249,999.99................................. 3.75%
$250,000 - $499,999.99................................. 2.75%
$500,000 - $999,999.99................................. 2.00%
$1,000,000 and over.................................... 1.00%
Maximum Surrender Charge 0%
(as a percentage of purchase payments surrendered)
Transfer Fee $0/1/
Annual Contract Fee......................................... $0
- -------------------
Enhanced Death Benefit Charge/2/ (as a percentage of Account
- -----------------------------
Value at the end of the Contract Year)................. 0.13%
Separate Account Annual Expenses (as a percentage of average Variable Account
- --------------------------------
Value)
Mortality and Expense Risk Charge...................... 0.44%
Administrative Expense Charge ........................ 0.15%
-----
Total Separate Account Annual Expenses.................... 0.59%
=====
____________________
/1/ This charge is $25 after the 12/th/ transfer during each Contract Year
before the Annuity Commencement Date.
/2/ This charge applies only if you have elected the Enhanced Death Benefit. See
"Enhanced Death Benefit."
7
<PAGE>
The Series' Annual Expenses/1,3/ (as a percentage of average net assets)
- --------------------------------
<TABLE>
<CAPTION>
Series Management Other Annual
- ------
Fees After Expenses Expenses
Expense After Expense After Expense
Reimbursement Reimbursement Reimbursement
------------- -------------- --------------
<S> <C> <C> <C>
Comstock/2/ 0.00% 0.95% 0.95%
Domestic Income 0.01% 0.59% 0.60%
Emerging Growth 0.32% 0.53% 0.85%
Enterprise 0.46% 0.14% 0.60%
Government 0.37% 0.23% 0.60%
Growth and Income 0.26% 0.49% 0.75%
Money Market 0.11% 0.49% 0.60%
Morgan Stanley Real Estate Securities 1.00% 0.08% 1.08%
Strategic Stock 0.00% 0.65% 0.65%
Global Equity 0.32% 0.83% 1.15%
International Magnum 0.15% 1.00% 1.15%
High Yield 0.15% 0.65% 0.80%
Mid Cap Value 0.23% 0.82% 1.05%
</TABLE>
/1/ The Series' advisers have entered into administrative services agreements
with AGL. The advisers pay fees to AGL for these services. The fees do not have
a direct relationship to the Series' Annual Expenses. (See "Services
Agreements.")
/2/ The annual expenses are estimated for the current fiscal year for the
Comstock Portfolio because it does not have financial statements covering a
period of at least 10 months.
/3/ Management fees and other expenses would have been the percentages shown in
the following table without certain voluntary expense reimbursements from the
investment advisers.
<TABLE>
<CAPTION>
Management Other Total Annual
Fees Expenses Expenses
------------- -------------- --------------
<S> <C> <C> <C>
Comstock 0.60% 1.45% 2.05%
Domestic Income 0.50% 0.59% 1.09%
Emerging Growth 0.70% 0.53% 1.23%
Enterprise 0.50% 0.14% 0.64%
Government 0.50% 0.23% 0.73%
Growth and Income 0.60% 0.49% 1.09%
Money Market 0.50% 0.49% 0.99%
Morgan Stanley Real Estate Securities 1.00% 0.08% 1.08%
Strategic Stock 0.50% 0.75% 1.25%
Global Equity 0.80% 0.83% 1.63%
International Magnum 0.80% 1.00% 1.80%
High Yield 0.50% 0.65% 1.15%
Mid Cap Value 0.75% 0.82% 1.57%
</TABLE>
Example/4/ Whether or not you surrender or annuitize at the end of the
- ----------
applicable time period, the following expenses will apply to a $1,000 investment
if you assume a 5% annual return on assets and do not choose the Enhanced Death
Benefit:
8
<PAGE>
<TABLE>
<CAPTION>
If all amounts are invested 1 year 3 years 5 years/4/ 10 years/4/
------ ------- -------- -----------
in one of the following Series
- ------------------------------
<S> <C> <C> <C> <C>
Comstock $72 $46 N/A N/A
Domestic Income $69 $36 $62 $136
Emerging Growth $71 $43 $74 $162
Enterprise $69 $36 $62 $136
Government $69 $36 $62 $136
Growth and Income $70 $40 $69 $152
Money Market $69 $36 $62 $136
Morgan Stanley Real Estate Securities $74 $50 $86 $186
Strategic Stock $69 $37 $64 $141
Global Equity $74 $52 $89 $193
International Magnum $74 $52 $89 $193
High Yield $71 $41 $72 $157
Mid Cap Value $73 $49 $84 $183
</TABLE>
Example/4/ Whether or not you surrender or annuitize at the end of the
- -------
applicable time period, the following expenses will apply to a $1,000 investment
if you assume a 5% annual return on assets, and choose the Enhanced Death
Benefit:
<TABLE>
<CAPTION>
If all amounts are invested 1 year 3 years 5 years/4/ 10 years/4/
------ ------- -------- -----------
in one of the following Series
- ---------------------------------------
<S> <C> <C> <C> <C>
Comstock $74 $50 N/A N/A
Domestic Income $70 $39 $68 $150
Emerging Growth $73 $47 $81 $176
Enterprise $70 $39 $68 $150
Government $70 $39 $68 $150
Growth and Income $72 $44 $76 $166
Money Market $70 $39 $68 $150
Morgan Stanley Real Estate Securities $75 $53 $92 $199
Strategic Stock $71 $41 $71 $155
Global Equity $75 $55 $95 $206
International Magnum $75 $55 $95 $206
High Yield $72 $45 $78 $171
Mid Cap Value $74 $53 $90 $196
</TABLE>
/4/ In these Examples, "N/A" indicates that SEC rules require that the Comstock
Portfolio complete the Examples for only the one and three-year periods.
The examples are not a representation of past or future expenses. Actual
expenses may be greater or less than those shown. The assumed 5% annual rate of
return is not an estimate or a guarantee of future investment performance. The
examples assume an estimated average Account Value of $40,000 for each of the
Divisions.
9
<PAGE>
SYNOPSIS OF CONTRACT PROVISIONS
You should read this synopsis together with the other information in this
Prospectus. The purpose of the Contracts is to provide retirement benefits
through
. the accumulation of purchase payments on a fixed or variable
basis; and
. the application of such accumulations to provide Fixed or
Variable Annuity Payments.
Minimum Investment Requirements
Your initial purchase payment must be at least $2,000, if you are buying a
Qualified Contract, and $5,000 if you are buying a Non-Qualified Contract. (See
"Federal Income Tax Matters" for a discussion of the various tax aspects
involved in purchasing Qualified and Non-Qualified Contracts.) The amount of any
subsequent purchase payment that you make must be at least $100. If your Account
Value falls below $500, we may cancel your Contract with 60 days' notice and
treat it as a full surrender. We also may transfer funds, without charge, from a
Division (other than the Money Market Division) or Guarantee Period under your
Contract to the Money Market Division, if the Account Value of that Division or
Guarantee Period falls below $500. (See "Contract Issuance and Purchase
Payments.")
Purchase Payment Charge
You pay a Purchase Payment Charge when you purchase your Contract and when you
make additional purchase payments to your Contract. The percent of each purchase
payment we assess as a sales charge depends on the amount of your cumulative
purchase payments to date. The following chart shows this relationship:
Purchase Payment Charge
The Sum of Purchase Payments To Date Percentage (as a Percent of
(Before We Deduct any Purchase Payment Charges) Each Purchase Payment)
----------------------------------------------- ----------------------
Up to $49,999.99.......................................... 5.75%
$50,000 up to $99,999.99.................................. 4.75%
$100,000 up to $249,999.99................................ 3.75%
$250,000 up to $499,999.99................................ 2.75%
$500,000 up to $999,999.99................................ 2.00%
$1,000,000 and over....................................... 1.00%
For example, your initial purchase payment of $25,000 is assessed a 5.75%
Purchase Payment Charge. Your second purchase payment of $50,000 is assessed a
4.75% Purchase Payment Charge, because the sum of your purchase payments to date
is $75,000.
Purchase Payment Accumulation
We accumulate purchase payments on a variable or fixed basis until the Annuity
Commencement Date.
10
<PAGE>
For variable accumulation, you may allocate part or all of your Account Value to
one or more of the 13 available Divisions of the Separate Account. Each Division
invests solely in shares of one of 13 corresponding Series. (See "The Series.")
The value of accumulated purchase payments allocated to a Division increases or
decreases, as the value of the investments in a Series' shares increases or
decreases, subject to reduction by charges and deductions. (See "Variable
Account Value.")
For fixed accumulation, you may allocate part or all of your Account Value to
one or more of the Guarantee Periods available in our Fixed Account at the time
you make your allocation. Each Guarantee Period is for a different period of
time and has a different Guaranteed Interest Rate. The value of accumulated
purchase payments increases at the Guaranteed Interest Rate applicable to that
Guarantee Period. (See "The Fixed Account.")
Over the lifetime of your Contract, you may allocate part or all of your Account
Value to no more than 18 Divisions and Guarantee Periods. This limit is
important because we may offer additional Divisions and Guarantee Periods in the
future. This limit includes those Divisions and Guarantee Periods from which you
have either transferred or withdrawn all of your Account Value previously
allocated to such Divisions or Guarantee Periods. For example, if you allocate
100% of your initial purchase payment to the Money Market Division, you have
selected the Money Market Division as one of the 18 Divisions and Guarantee
Periods available to you. When you transfer all of your Account Value from the
Money Market Division, it remains as one of the 18 Divisions and Guarantee
Periods available to you, even if you never again allocate any of your Account
Value or a new purchase payment to the Money Market Division.
Fixed and Variable Annuity Payments
You may elect to receive Fixed or Variable Annuity Payments or a combination of
Payments beginning on the Annuity Commencement Date. Fixed Annuity Payments are
periodic payments from AGL in a fixed amount guaranteed by AGL. The amount of
the Payments will depend on the Annuity Payment Option chosen, the age and, in
some cases, the gender of the Annuitant, and the total amount of Account Value
applied to the fixed Annuity Payment Option.
Variable Annuity Payments are similar to Fixed Annuity Payments, except that the
amount of each periodic payment from AGL will vary reflecting the net investment
return of the Division or Divisions you selected under your variable Annuity
Payment Option. The payment for a given month will exceed the previous month's
payment, if the net investment return for a given month exceeds the assumed
interest rate used in the Contract's annuity tables. The monthly payment will be
less than the previous payment, if the net investment return for a month is less
than the assumed interest rate. The assumed interest rate used in the Contract's
annuity tables is 3.5%. AGL may offer other forms of the Contract with a lower
assumed interest rate and reserves the right to discontinue offering the higher
interest rate form of Contract. (See "Annuity Period and Annuity Payment
Options.")
11
<PAGE>
Changes in Allocations Among Divisions and Guarantee Periods
Before the Annuity Commencement Date, you may change your allocation of future
purchase payments to the various Divisions and Guarantee Periods, without
charge.
In addition, you may reallocate your Account Value among the Divisions and
Guarantee Periods before the Annuity Commencement Date. However, you are limited
in the amount that you may transfer out of a Guarantee Period. See "Transfer,
Automatic Rebalancing, Surrender and Partial Withdrawal of Owner Account Value -
Transfers," for these and other conditions of transfer.
After the Annuity Commencement Date, you may make transfers from a Division to
another Division or to a fixed Annuity Payment Option. However, you may not
make transfers from a fixed Annuity Payment Option. (See "Annuity Period and
Annuity Payment Options - Transfers.")
Surrenders and Withdrawals
You may make a total surrender of or partial withdrawal from your Contract at
any time before the Annuity Commencement Date by Written request to us. Some
surrenders and partial withdrawals may require you to pay tax penalties. (See
"Surrenders and Partial Withdrawals.")
Cancellation Rights
You may cancel your Contract by delivering it or mailing it with a Written
cancellation request to our Home Office or to your sales representative, before
the close of business on the 10th day after you receive the Contract. In some
states the Contract provides for a 20 or 30 day period. If you send the items
by mail, properly addressed and postage prepaid, we will consider them received
at our Home Office on the date we actually receive them.
We will refund to you, in most states, the sum of:
. your Account Value;
. the Purchase Payment Charge you paid; and
. any premium taxes or other tax charges that have been deducted.
Some states require us to refund the sum of your purchase payments if it is
larger than the amount just described. Other states allow us to refund only the
sum of your purchase payments.
Death Proceeds
If the Annuitant or Owner dies before the Annuity Commencement Date, we will
pay a benefit to the Beneficiary. (See "Death Proceeds Before the Annuity
Commencement Date.")
12
<PAGE>
Limitations Imposed by Retirement Plans and Employers
An employer or trustee who is the Owner under a retirement plan may limit
certain rights you would otherwise have under a Contract. These limitations may
restrict total and partial withdrawals, the amount or timing of purchase
payments, the start of annuity payments, and the type of Annuity Payment Options
that you may select. You should familiarize yourself with the provisions of any
retirement plan in which a Contract is used. We are not responsible for
monitoring or assuring compliance with the provisions of any retirement plan.
Communications to Us
You should include, in communications to us, your Contract number, your name,
and, if different, the Annuitant's name. You may direct communications to the
addresses and telephone numbers on the first page of this Prospectus.
Unless the Prospectus states differently, we will consider purchase payments or
other communications to be received at our Home Office on the date we actually
receive them, if they are in proper form. However, we will consider purchase
payments to be received on the next Valuation Date if we receive them (1) after
the close of regular trading on the New York Stock Exchange or (2) on a date
that is not a Valuation Date.
Financial and Performance Information
We include financial statements of AGL and Separate Account D in the Statement
of Additional Information (see "Contents of Statement of Additional Information.
") The Separate Account financial statements include information about the
Divisions that invest in the Trust and the Fund.
From time to time, the Separate Account may include in advertisements and other
sales materials several types of performance information for the Divisions.
This information may include "average annual total return," "total return," and
"cumulative total return." The Domestic Income Division, the Government
Division, and the Growth and Income Division may also advertise "yield." The
Money Market Division may advertise "yield" and "effective yield."
The performance information that we may present is not an estimate or guarantee
of future investment performance and does not represent the actual investment
experience of amounts invested by a particular Owner. Additional information
concerning a Division's performance appears in the Statement.
Total Return and Yield Quotations. Average annual total return, total return,
and cumulative total return figures measure the net income of a Division and any
realized or unrealized gains or losses of the underlying investments in the
Division, over the period stated. Average annual total return figures are
annualized and represent the average annual percentage change in the value of an
investment in a Division over the period stated. Total return figures are also
annualized. Cumulative total return figures represent the cumulative change in
the value of an investment in a Division for various periods stated.
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Yield is a measure of the net dividend and interest income earned over a
specific one-month or 30-day period (seven-day period for the Money Market
Division), expressed as a percentage of the value of the Division's Accumulation
Units. Yield is an annualized figure, which means that we assume that the
Division generates the same level of net income over a one-year period and
compound that income on a semi-annual basis. We calculate the effective yield
for the Money Market Division similarly, but include the increase due to assumed
compounding. The Money Market Division's effective yield will be slightly
higher than its yield due to this compounding effect.
Average annual total return figures reflect deduction of the maximum Purchase
Payment Charge and all recurring charges and fees applicable under the Contract
to all Owner accounts, including the following:
. a 5.75% Purchase Payment Charge,
. the Mortality and Expense Risk Charge, and
. the Administrative Expense Charge.
Division Performance. The investment performance for each Division that invests
in a corresponding Series will reflect the investment performance of that Series
for the periods stated. This information appears in the Statement. For periods
before the date the Contracts became available, we calculate the performance
information for a Division on a hypothetical basis. In so doing, we reflect
deductions of current Separate Account fees and charges under the Contract from
the historical performance of the corresponding Series. We may waive or
reimburse certain fees or charges applicable to the Contract. Such waivers or
reimbursements will affect each Division's performance results.
Information about the investment experience of the Series appears in the
prospectuses of the Fund and the Trust.
AGL may also advertise or report to Owners its ratings as an insurance company
by the A. M. Best Company. Each year, A. M. Best reviews the financial status of
thousands of insurers, culminating in the assignment of Best's Ratings. These
ratings reflect A.M. Best's current opinion of the relative financial strength
and operating performance of an insurance company in comparison to the norms of
the life/health industry. Best's Ratings range from A++ to F.
AGL may also advertise or report to Owners its ratings as to claims-paying
ability by the Standard & Poor's Corporation. A Standard & Poor's insurance
claims-paying ability rating is an assessment of an operating insurance
company's financial capacity to meet the obligations of its insurance policies
in accordance with their terms. Standard & Poor's ratings range from AAA to D.
AGL may additionally advertise its ratings as to claims-paying ability by the
Duff & Phelps Credit Rating Co. A Duff & Phelps claims-paying ability rating is
an assessment of a company's insurance claims-paying ability. Duff & Phelps'
ratings range from AAA to CCC.
Current ratings from A.M. Best, Standard & Poor's, and Duff & Phelps may be used
from time to time in any advertising about the Contracts, as well as in any
reports that publish the ratings.
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The ratings from A.M. Best, Standard & Poor's, and Duff & Phelps reflect the
claims-paying ability and financial strength of AGL. They are not a rating of
investment performance that purchasers of insurance products funded through
separate accounts, such as the Separate Account, have experienced or are likely
to experience in the future.
Other Information
AGL may also advertise endorsements from organizations, individuals or other
parties that recommend AGL or the Contracts. AGL may occasionally include in
advertisements (1) comparisons of currently taxable and tax-deferred investment
programs, based on selected tax brackets, or (2) discussions of alternative
investment vehicles and general economic conditions.
FINANCIAL INFORMATION
The financial statements of AGL appear in the Statement. Please see the first
page of this Prospectus for information on how to obtain a copy of the
Statement. You should consider the financial statements of AGL only as bearing
on the ability of AGL to meet its contractual obligations under the Contracts.
The financial statements do not bear on the investment performance of the
Separate Account. (See "Contents of Statement of Additional Information.")
AGL
AGL is a stock life insurance company which was organized under the laws of the
State of Texas, which is a successor in interest to a company originally
organized under the laws of Delaware in 1917. AGL is an indirect, wholly-owned
subsidiary of American General Corporation, a diversified financial services
holding company engaged primarily in the insurance business. The commitments
under the Contracts are AGL's, and American General Corporation has no legal
obligation to back those commitments.
AGL is a member of the Insurance Marketplace Standards Association ("IMSA").
IMSA is a voluntary membership organization created by the life insurance
industry to promote ethical market conduct for individual life insurance and
annuity products. AGL's membership in IMSA applies only to AGL and not its
products.
SEPARATE ACCOUNT D
AGL established Separate Account D on November 19, 1973. The Separate Account
has 70 Divisions, 13 of which are available under the Contracts offered by the
Prospectus. The Separate Account is registered with the SEC as a unit
investment trust under the 1940 Act.
Each Division of the Separate Account is part of AGL's general business, and the
assets of the Separate Account belong to AGL. Under Texas law and the terms of
the Contracts, the assets of the Separate Account will not be chargeable with
liabilities arising out of any other business that AGL may conduct. These assets
will be held exclusively to meet AGL's obligations under variable annuity
Contracts. Furthermore, AGL credits or charges the Separate Account with the
income, gains, and losses from the Separate Account's assets, whether or not
realized, without regard to other income, gains, or losses of AGL.
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THE SERIES
The Separate Account has 13 Divisions funding the variable benefits under the
Contracts. These Divisions invest in shares of nine separate investment Series
of the Trust and four separate Series of the Fund.
The Trust and the Fund offer shares of these Series, without sales charges,
exclusively to insurance company variable annuity and variable life insurance
separate accounts and not directly to the public. The Trust and the Fund also
offer shares to variable annuity and variable life insurance separate accounts
of insurers that are not affiliated with AGL.
We do not foresee any disadvantage to you arising out of these arrangements.
Nevertheless, differences in treatment under tax and other laws, as well as
other considerations, could cause the interests of various owners to conflict.
For example, violation of the federal tax laws by one separate account investing
in the Trust or the Fund could cause the Contracts or contracts funded through
another separate account to lose their tax deferred status. Such a result might
require us to take remedial action. A separate account may have to withdraw its
participation in the Trust or the Fund, if a material irreconcilable conflict
arises between separate accounts. In such event, the Trust or the Fund may have
to liquidate portfolio securities at a loss to pay for a separate account's
redemption of Trust or Fund shares. At the same time, the Trust's Board of
Trustees, the Fund's Board of Directors and we will monitor events for any
material irreconcilable conflicts that may possibly arise and determine what
action, if any, to take to remedy or eliminate the conflict.
We automatically reinvest any dividends or capital gain distributions that we
receive on shares of the Series held under Contracts. We reinvest at the
Series' net asset value on the date payable. Dividends and distributions will
reduce the net asset value of each share of the corresponding Series and
increase the number of shares outstanding of the Series by an equivalent value.
However, these dividends and distributions do not change your Account Value.
The names of the Series of the Trust in which the available Divisions invest are
as follows:
Van Kampen Life Investment Trust
--------------------------------
Comstock Portfolio
Domestic Income Portfolio
Emerging Growth Portfolio
Enterprise Portfolio
Government Portfolio
Growth and Income Portfolio
Money Market Portfolio
Morgan Stanley Real Estate Securities Portfolio
Strategic Stock Portfolio
Van Kampen Asset Management Inc. is the investment adviser of each Series of the
Trust. Van Kampen Funds Inc. is the distributor of shares of each Series of the
Trust.
The names of the Series of the Fund in which the available Divisions invest are
as follows:
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Morgan Stanley Dean Witter Universal Funds, Inc.
------------------------------------------------
Global Equity Portfolio
International Magnum Portfolio
High Yield Portfolio
Mid Cap Value Portfolio
Morgan Stanley Dean Witter Investment Management Inc. is the investment adviser
of the Global Equity and International Magnum Portfolios. (On December 1, 1998,
Morgan Stanley Asset Management Inc. changed its name to Morgan Stanley Dean
Witter Investment Management Inc. The investment adviser continues to use the
name Morgan Stanley Asset Management, in some instances.) Miller Anderson &
Sherrerd, LLP is the investment adviser of the High Yield and Mid Cap Value
Portfolios. Morgan Stanley & Co. Incorporated is the distributor of shares of
each Series of the Fund.
The investment advisers and the distributors are all wholly-owned subsidiaries
of Morgan Stanley Dean Witter & Co. Morgan Stanley Dean Witter & Co. is a
preeminent global financial services firm that maintains leading market
positions in each of its three primary businesses -- securities, asset
management and credit services.
Before selecting any Division, you should carefully read the prospectus. The
prospectus provides more complete information about the Series in which that
Division invests, including investment objectives and policies, charges and
expenses.
You can find information about the investment performance of the Series of the
Trust in the Statement. You can find information about the experience of the
investment advisers to the Series of the Fund in the prospectus for the Fund.
You may obtain additional copies of a prospectus by contacting AGL's Home Office
at the addresses and telephone numbers on the first page of this Prospectus.
When making your request, please indicate the names of the Series in which you
are interested.
High yielding fixed-income securities, such as those in which the Domestic
Income Portfolio and the High Yield Portfolio invest, are subject to greater
market fluctuations and risk of loss of income and principal than investments in
lower yielding fixed-income securities. You should carefully read about these
Series in the Trust and Fund prospectuses and related statements of additional
information and consider your ability to assume the risks of making an
investment in the Divisions that invest in them.
The name of each Series of the Trust and the Fund describes its type (e.g.,
money market fund, growth and income fund, government fund, etc.), except for
the Comstock Portfolio, the Enterprise Portfolio, the Strategic Stock Portfolio,
and the International Magnum Portfolio. The following are their fund types:
. The Comstock Portfolio invests primarily in equity securities of
undervalued companies believed to possess the potential for capital growth
and income.
. The Enterprise Portfolio invests primarily in growth common stocks that are
believed to have above average potential for capital appreciation.
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. The Strategic Stock Portfolio invests primarily in dividend-paying equity
securities with the potential for above average total return through a
combination of potential capital appreciation and dividend income,
consistent with the preservation of invested capital.
. The International Magnum Portfolio invests primarily in equity securities
of issuers domiciled in Australia, Japan, New Zealand, Western Europe, and
certain developed countries in Asia, with the objective of long-term
capital appreciation.
Voting Privileges
The following people may give us voting instructions for Series shares held in
the Separate Account Divisions attributable to their Contract:
. You, as the Owner, before the Annuity Commencement Date; and
. The Annuitant or other payee, during the Annuity Period.
We will vote according to such instructions at meetings of shareholders of the
Series.
We will determine who is entitled to give voting instructions and the number of
votes for which they may give directions as of the record date for a meeting.
We will calculate the number of votes in fractions. We will calculate the
number of votes for any Series as follows:
. For each Owner before the Annuity Commencement Date, we will divide (1) the
Owner's Variable Account Value invested in the corresponding Division by
(2) the net asset value of one share of that Series.
. For each Annuitant or payee during the Annuity Period, we will divide (1)
our liability for future Variable Annuity Payments to the Annuitant or
payee by (2) the value of an Annuity Unit. We will calculate our liability
for future Variable Annuity Payments based on the mortality assumptions and
the assumed interest rate that we use in determining the number of Annuity
Units under a Contract and the value of an Annuity Unit.
We will vote all shares of each Series owned by the Separate Account as follows:
. Shares for which we receive instructions, in accordance with those
instructions; and
. Shares for which we receive no instructions, in the same proportion as the
shares for which we receive instructions.
Shares of each Series may be owned by separate accounts of insurance companies
other than us. We understand that each Series will see that all insurance
companies vote shares uniformly.
We believe that our voting instruction procedures comply with current federal
securities law requirements. However, we reserve the right to modify these
procedures to conform with legal requirements and interpretations that are put
in effect or modified from time to time.
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THE FIXED ACCOUNT
Amounts in the Fixed Account or supporting Fixed Annuity Payments become part of
our General Account. We have not registered interests in the General Account
under the Securities Act of 1933, and we have not registered the General Account
as an investment company under the 1940 Act, based on federal law exclusion and
exemption. The staff of the SEC has advised us that it has not reviewed the
disclosures in this Prospectus that relate to the Fixed Account or Fixed Annuity
Payments. At the same time, we have legal responsibility for the accuracy and
completeness of this Prospectus.
Our obligations for the Fixed Account are legal obligations of AGL. Our General
Account assets support these obligations. These General Account assets also
support our obligations under other insurance and annuity contracts.
Investments purchased with amounts allocated to the Fixed Account are the
property of AGL. Owners have no legal rights in such investments.
Guarantee Periods
Account Value that the Owner allocates to the Fixed Account earns a Guaranteed
Interest Rate beginning with the date of the allocation. This Guaranteed
Interest Rate continues for the number of months or years that the Owner selects
from among the Guarantee Periods that we offer at the time.
At the end of a Guarantee Period, we will allocate your Account Value in that
Guarantee Period, including interest you have earned, to a new Guarantee Period
of the same length. In the alternative, the Owner may submit a Written request
to us to allocate this amount to a different Guarantee Period or Periods or to
one or more of the Divisions of the Separate Account. We must receive this
Written request at least three Valuation Dates before the end of the Guarantee
Period.
We will contact the Owner regarding the scheduled Annuity Commencement Date, if
the Owner has not provided the necessary Written request and the renewed
Guarantee Period extends beyond the scheduled Annuity Commencement Date.
The first day of the new Guarantee Period (or other reallocation) will be the
day after the end of the prior Guarantee Period. We will notify the Owner in
writing at least 15 days and not more than 45 days before the end of any
Guarantee Period.
If the Owner's Account Value in a Guarantee Period is less than $500, we reserve
the right to transfer, without charge, the balance to the Money Market Division
at the end of that Guarantee Period. However, we will transfer such balance to
another Division selected by the Owner, if we have received Written instructions
to transfer such balance to that Division.
Crediting Interest
We declare the Guaranteed Interest Rates from time to time as market conditions
dictate. We tell an Owner the Guaranteed Interest Rate for a chosen Guarantee
Period at the time we receive a purchase payment, make a transfer, or renew a
Guarantee Period. We may credit a different interest rate to one Guarantee
Period than to another Guarantee Period that is the same length but that began
on a different date. The minimum Guaranteed Interest Rate is an effective
annual rate of 3%.
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Proceeds from an exchange, rollover or transfer accrue interest, if you allocate
them to the Fixed Account within 60 days following the date of application for a
Contract. We credit interest to such proceeds during the Guarantee Period
chosen. We calculate interest at a rate that is the higher of: (1) the current
interest rate we use on the date of application for the Guarantee Period
selected; or (2) the current interest rate we use on the date we receive the
proceeds. Proceeds that we receive more than 60 days after the date the
application is signed will receive interest at the rate in effect on the date we
receive the proceeds. The interest rate we use remains in effect for the
duration of the applicable Guarantee Period.
AGL's management makes the final determination of the Guaranteed Interest Rates
to be declared. AGL cannot predict or assure the level of any future Guaranteed
Interest Rates in excess of the minimum Guaranteed Interest Rate stated in your
Contract.
You may obtain information concerning the Guaranteed Interest Rates applicable
to the various Guarantee Periods at any time from your sales representative or
from the addresses or telephone numbers on the first page of this Prospectus.
New Guarantee Periods
Each allocation or transfer of an amount to a Guarantee Period starts the
running of a new Guarantee Period for that amount. That new Guarantee Period
will earn a Guaranteed Interest Rate that will continue unchanged until the end
of that Period. The Guaranteed Interest Rate will never be less than the minimum
Guaranteed Interest Rate stated in your Contract.
Each Guarantee Period has its own Guaranteed Interest Rate. Guarantee Periods
can have different Guaranteed Interest Rates. We have the right to change the
Guaranteed Interest Rate for future Guarantee Periods of various lengths. These
changes will not affect the Guaranteed Interest Rates being paid on Guarantee
Periods that have already started. Each allocation or transfer of an amount to
a Guarantee Period starts the running of a new Guarantee Period for the amount
allocated or transferred. That amount earns a Guaranteed Interest Rate that
will continue unchanged until the end of that Period. We may offer one or more
Guarantee Periods with a required dollar cost averaging feature. (See
" Transfers.") Currently we make available a one-year Guarantee Period, and no
others. However, we reserve the right to change the Guarantee Periods that we
make available at any time.
CONTRACT ISSUANCE AND PURCHASE PAYMENTS
The minimum initial purchase payment is $2,000 for a Qualified Contract and
$5,000 for a Non-Qualified Contract. We reserve the right to modify these
minimums at our discretion.
Your application to purchase a Contract must be on a Written application that we
provide and that you sign. AGL and Van Kampen Funds Inc., as distributor of the
Contracts, may agree on a different medium or format for the application. When
a purchase payment accompanies an application to purchase a Contract and you
have properly completed the application, we will either:
. process the application, credit the purchance payment, and issue the
contract; or
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. reject the application and return the purchase payment within two
Valuation Dates after receipt of the application at our Home Office.
If you have not completed the application or have not completed it correctly, we
will request additional documents or information within five Valuation Dates
after receipt of the application at our Home Office.
If we have not received a correctly completed application within five Valuation
Dates after receipt of the purchase payment at our Home Office, we will return
the purchase payment immediately. However, you may specifically consent to our
retaining the purchase payment until you complete the application. In that case,
we will credit the initial purchase payment as of the end of the Valuation
Period in which we receive, at our Home Office, the last information required to
process the application.
We will credit subsequent purchase payments as of the end of the Valuation
Period in which we receive them and any required Written information at our Home
Office.
We reserve the right to reject any application or purchase payment for any
reason.
Minimum Requirements
If your Account Value in any Division falls below $500 because of a partial
withdrawal from the Contract, we reserve the right to transfer, without charge,
the remaining balance to the Money Market Division.
If your Account Value in any Division falls below $500 because of a transfer to
another Division or to the Fixed Account, we reserve the right to transfer the
remaining balance in that Division, without charge and pro rata, to the
investment option or options to which the transfer was made.
We will waive these minimum requirements for transfers under the automatic
rebalancing program. (See "Automatic Rebalancing.")
If your total Account Value falls below $500, we may cancel the Contract. We
consider such a cancellation a full surrender of the Contract. We will provide
you with 60 days' advance notice of any such cancellation.
So long as the Account Value does not fall below $500, you do not have to make
further purchase payments. You may, however, elect to make subsequent purchase
payments at any time before the Annuity Commencement Date, if the Owner and
Annuitant are still living.
Payments
You should make checks for subsequent purchase payments payable to American
General Life Insurance Company and forward them directly to our Home Office. We
also accept purchase payments by wire or by exchange from another insurance
company. You may obtain further information about how to make purchase payments
by either of these methods from your sales representative or from us at the
addresses and telephone numbers on the first page of this Prospectus.
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You may make purchase payments pursuant to employer-sponsored plans only with
our agreement.
Your purchase payments are allocated to the Divisions of the Separate Account or
the Guarantee Periods of the Fixed Account as of the date we credit the purchase
payments to your Contract. In your application form, you select (in whole
percentages) the amount of each purchase payment that you are allocating to each
Division and Guarantee Period. You can change these allocation percentages at
any time by Written notice to us.
OWNER ACCOUNT VALUE
Before the Annuity Commencement Date, your Account Value under a Contract is the
sum of your Variable Account Value and Fixed Account Value, as discussed below.
Variable Account Value
As of any Valuation Date before the Annuity Commencement Date:
. Your Variable Account Value is the sum of your Variable Account Values
in each Division of the Separate Account.
. Your Variable Account Value in a Division is the product of the number
of your Accumulation Units in that Division multiplied by the value of
one such Accumulation Unit as of that Valuation Date.
There is no guaranteed minimum Variable Account Value. To the extent that your
Account Value is allocated to the Separate Account, you bear the entire
investment risk.
We credit Accumulation Units in a Division to you when you allocate purchase
payments or transfer amounts to that Division. Similarly, we redeem Accumulation
Units when you transfer or withdraw amounts from a Division or when we pay
certain charges under the Contract. We determine the value of these Accumulation
Units at the end of the Valuation Date on which we make the credit or charge.
The value of an Accumulation Unit for a Division on any Valuation Date is equal
to the previous value of that Division's Accumulation Unit multiplied by that
Division's net investment factor for the Valuation Period ending on that
Valuation Date.
The net investment factor for a Division is determined by dividing (1) the net
asset value per share of the Series shares held by the Division, determined at
the end of the current Valuation Period, plus the per share amount of any
dividend or capital gains distribution made for the Series shares held by the
Division during the current Valuation Period, by (2) the net asset value per
share of the Series shares held in the Division determined at the end of the
previous Valuation Period. We then subtract from that result a factor
representing the mortality risk, expense risk and administrative expense charge.
Fixed Account Value
As of any Valuation Date before the Annuity Commencement Date:
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. Your Fixed Account Value is the sum of your Fixed Account Value in
each Guarantee Period.
. Your Fixed Account Value in any Guarantee Period is equal to the
following amounts, in each case increased by accrued interest at the
applicable Guaranteed Interest Rate: (1) the amount of net purchase
payments, renewals and transferred amounts allocated to the Guarantee
Period, less (2) the amount of any transfers or withdrawals out of the
Guarantee Period, including withdrawals to pay applicable charges.
AGL guarantees the Fixed Account Value. AGL bears the investment risk for
amounts allocated to the Fixed Account, except to the extent that AGL may vary
the Guaranteed Interest Rate for future Guarantee Periods (subject to the
minimum Guaranteed Interest Rate stated in your Contract).
TRANSFER, AUTOMATIC REBALANCING, SURRENDER AND PARTIAL
WITHDRAWAL OF OWNER ACCOUNT VALUE
Transfers
You can transfer your Account Value beginning 30 days after we issue your
Contract and before the Annuity Commencement Date. The following rules apply:
. You may transfer your Account Value at any time among the available
Divisions of the Separate Account and Guarantee Periods. Transfers
will be effective at the end of the Valuation Period in which we
receive your Written or telephone transfer request.
. If a transfer causes your Account Value in any Division or Guarantee
Period to fall below $500, we reserve the right to transfer the
remaining balance in that Division or Guarantee Period in the same
proportion as the transfer request.
. You may make up to 12 transfers each Contract Year without charge. We
will charge uo $25 for each additional transfer.
. You may transfer no more than 25% of the Account Value you allocated
to a Guarantee Period at its inception during any Contract Year. This
25% limitation does not apply to transfers (1) within 15 days before
or after the end of the Guarantee Period in which you held the
transferred amounts, or (2) a renewal at the end of the Guarantee
Period to the same Guarantee Period.
You may establish an automatic transfer plan. We also refer to this plan as a
dollar cost averaging plan. Under this plan, we will automatically transfer
amounts from any one of the Divisions or the one-year Guarantee Period (or any
other Guarantee Period that is available at that time) to one or more of the
other Divisions. You cannot make dollar cost averaging transfers on the 29th,
30th or 31st of any month. By transferring a set amount on a regular schedule
instead of transferring the total amount at one particular time, you may reduce
the risk of investing in the corresponding Division only when the price is high.
An automatic transfer plan does not guarantee a profit and it doesn't protect
against a loss if market prices decline. You will select:
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. the amount we are to transfer under the plan,
. the frequency of the transfers--either monthly, quarterly, semi-
annually, or annually; and
. the duration of the plan.
We may also offer certain "alternate dollar cost averaging options" to Owners
who:
. allocate $5,000 ($2,000 for Qualified Contracts) or more of a new
purchase payment to the alternate dollar cost averaging option, and
. who do not transfer the new purchase payment from another annuity
contract which AGL, or any AGL affiliate, issued.
We will ask you to select either a six-month or 12-month duration. Under such
plans, we will make equal monthly transfers over the period of time you select.
We may offer a higher Guaranteed Interest Rate under an alternate dollar cost
averaging option than we would offer for another Guarantee Period of the same
duration that is not offered under such a plan. Any such higher interest rate
will reflect differences in costs or services and will not be unfairly
discriminatory as to any person.
Differences in costs or services will result from such factors as reduced sales
expenses or administrative efficiencies related to transferring amounts to other
Divisions on an automatic, rather than a discretionary, basis.
Transfers under any dollar cost averaging plan or alternate dollar cost
averaging option will:
. not count toward the 12 free transfers each Contract Year,
. not incur a $25 charge,
. not be subject to the 25% limitation on transfers from a Guarantee
Period; and
. not be subject to the minimum Account Value requirement described
above.
You may obtain additional information about how to establish an automatic
transfer plan from your sales representative or from us at the telephone numbers
and addresses on the first page of this Prospectus. You cannot have an automatic
transfer plan in effect at the same time you have Automatic Rebalancing,
described below, in effect.
You can make transfers by telephone if you have completed a Telephone Transfer
Privilege form and given it to us. The form provides certain rules about
telephone transfers that you will have to follow. We will honor telephone
transfer instructions from any person who provides the correct information. So
there is a risk of possible loss to you if an unauthorized person uses this
service in your name. Currently we try to limit the availability of telephone
transfers only to the Owner of the Contract. We are not liable for any acts or
omissions based upon telephone instructions that we reasonably believe to
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be genuine. We are not responsible for losses arising from errors in the
communication of transfer instructions.
We have established procedures for accepting telephone transfer instructions,
which include:
. verification of the Contract number,
. verification of the identity of the caller,
. verification of both the Annuitant's and Owner's names; and
. a form of personal identification from the caller.
We will mail to the Owner a written confirmation of the transaction. We might
receive telephone transfer instructions from more than one person on the same
day, or our recording equipment might malfunction. It may be impossible for you
to make a telephone transfer at the time you wish. If this occurs, you should
submit a Written transfer request. Also, we will not process the transaction if,
due to malfunction or other circumstances, the recording of your telephone
request is incomplete or not fully comprehensible. The telephone number for
telephone exchanges is 1-800-200-3883.
We have not designed the Contracts for professional market timing organizations
or other entities using programmed and frequent transfers. We may not
unilaterally terminate or discontinue transfer privileges. However, we reserve
the right to suspend such privileges for a reasonable period.
Automatic Rebalancing
You may arrange for Automatic Rebalancing among the Divisions, if your Contract
has an Account Value of $25,000 or more at the time we receive the application
for Automatic Rebalancing. You may apply for Automatic Rebalancing either at
issue or after issue, and you may subsequently discontinue it.
Under Automatic Rebalancing, we transfer funds among the Divisions to maintain
the percentage allocation you have selected for each Division. At your election,
we will make these transfers on a quarterly, semi-annual or annual basis,
measured from the Contract Anniversary date. A Contract Anniversary date that
falls on the 29th, 30th, or 31st of the month will result in Automatic
Rebalancing starting with the 1st of the next month.
Automatic Rebalancing does not permit transfers to or from any Guarantee Period.
Transfers under Automatic Rebalancing will not count toward the 12 free
transfers each Contract Year and will not incur a $25 charge. You cannot have
Automatic Rebalancing in effect at the same time you have an automatic transfer
plan, described above, in effect.
Surrenders
At any time before the Annuity Commencement Date and while the Annuitant is
still living, the Owner may make a full surrender of a Contract.
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We will pay you the following upon full surrender:
. your Account Value at the end of the Valuation Period in which we
receive a Written surrender request,
. minus charges for the Enhanced Death Benefit, if applicable,
. minus any applicable premium tax or other tax charges.
Our current practice is to require that you return the Contract to our Home
Office with any request for a full surrender.
After a full surrender, or if the Owner's Account Value falls to zero, all
rights of the Owner, Annuitant or any other person under the Contract will
terminate.
All collateral assignees of record must consent to any full surrender.
Partial Withdrawals
Your Written request for a partial withdrawal should specify the Divisions of
the Separate Account, or the Guarantee Periods of the Fixed Account, from which
you wish to make the partial withdrawal. We will take the withdrawal pro rata
from the Divisions and Guarantee Periods, if (1) you do not tell us how to make
the withdrawal, or (2) we cannot make the withdrawal as you requested.
Partial withdrawal requests must be for at least $100 or, if less, all of your
Account Value. If your remaining Account Value in a Division or Guarantee Period
would be less than $500 as a result of the withdrawal (except for the Money
Market Division), we reserve the right to transfer the remaining balance to the
Money Market Division. We will do this without charge.
We will always pay you the amount of your partial withdrawal request, unless it
exceeds the surrender value of your Contract. In that case, we pay the surrender
value of your Contract. The value of your Accumulation Units and Fixed Account
interests that we redeem will equal the amount of the withdrawal request, plus
any applicable premium tax or other tax. You can also tell us to take income tax
from the amount you want withdrawn.
We also make available a systematic withdrawal plan. Under this plan, you may
make automatic partial withdrawals in amounts and at periodic intervals that you
specify. The terms and conditions that apply to other partial withdrawals will
also apply to this plan. You may obtain additional information about how to
establish a systematic withdrawal plan from your sales representative or from us
at the addresses and telephone numbers on the first page of this Prospectus. We
reserve the right to modify or terminate the systematic withdrawal plan at any
time.
The Code imposes a penalty tax on certain premature surrenders or withdrawals.
See the "Federal Income Tax Matters" section for a discussion of this and other
tax implications of total surrenders and systematic and other partial
withdrawals. The Section also discusses tax withholding requirements.
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All collateral assignees of record must consent to any partial withdrawal.
ANNUITY PERIOD AND ANNUITY PAYMENT OPTIONS
Annuity Commencement Date
The Annuity Commencement Date may be any day of any month up to the Annuitant's
100th birthday. (Pennsylvania has special limitations that require the Annuity
Commencement Date to be no later than age 90, and as early as age 85. Oregon
requires the Annuity Commencement Date to be no later than age 95.) You may
select the Annuity Commencement Date in the Contract application. You may also
change a previously selected date any time before that date by submitting a
Written request, subject to our approval.
See "Federal Income Tax Matters" for a discussion of the penalties that may
result from distributions before the Annuitant's reaching age 59 1/2 under any
Contract or after April 1 of the year following the calendar year in which the
Annuitant reaches age 70 1/2 under certain Qualified Contracts.
Application of Owner Account Value
We will automatically apply your Variable Account Value in any Division to
provide Variable Annuity Payments based on that Division and your Fixed Account
Value to provide Fixed Annuity Payments. However, we will apply your Account
Value in different proportions, if you give us Written instructions at least 30
days before the Annuity Commencement Date.
We deduct any applicable state and local premium taxes from the amount of
Account Value that we apply to an Annuity Payment Option. Subject to any such
adjustments, we apply your Variable and Fixed Account Values to an Annuity
Payment Option, as discussed below, as of the end of the Valuation Period that
contains the 10th day before the Annuity Commencement Date.
Fixed and Variable Annuity Payments
We will determine your first monthly Fixed or Variable Annuity Payment using the
annuity tables in the Contract and the amount of your Account Value that is
applied to provide the Fixed or Variable Annuity Payments.
We determine the amount of each monthly Fixed Annuity Payment thereafter based
on the terms of the Annuity Payment Option selected.
We determine the amount of each monthly Variable Annuity Payment thereafter as
follows:
. We convert the Account Value that we apply to provide Variable Annuity
Payments to a number of Annuity Units. We do this by dividing the
amount of the first Variable Annuity Payment by the value of an
Annuity Unit of a Division as of the end of the Valuation Period that
includes the 10th day before the Annuity Commencement Date. This
number of Annuity Units remains constant for any Annuitant.
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. We determine the amount of each subsequent Variable Annuity Payment by
multiplying the number of Annuity Units by the value of an Annuity
Unit as of the end of the Valuation Period that contains the 10th day
before the date of each payment.
. If we base the Variable Annuity Payments on more than one Division, we
perform these calculations separately for each Division.
. The value of an Annuity Unit at the end of a Valuation Period is the
value of the Annuity Unit at the end of the previous Valuation Period,
multiplied by the net investment factor (see "Variable Account Value")
for the Valuation Period, with an offset for the 3.5% assumed interest
rate used in the Contract's annuity tables.
The Contract's annuity tables use a 3.5% assumed interest rate. A Variable
Annuity Payment based on a Division will be greater than the previous month, if
the Division's investment return for the month is at an annual rate greater than
3.5%. Conversely, a Variable Annuity Payment will be less than the previous
month if the Division's investment return is at an annual rate less than 3.5%.
Annuity Payment Options
Sixty to ninety days before the Scheduled Annuity Commencement Date, we will (1)
notify you that the Contract is scheduled to mature, and (2) request that you
select an Annuity Payment Option.
If you have not selected an Annuity Payment Option ten days before the Annuity
Commencement Date, we will proceed as follows:
. We will extend the Annuity Commencement Date to the Annuitant's 100th
birthday, if the scheduled Annuity Commencement Date is any date
before the Annuitant's 100th birthday; or
. We will pay the Account Value, less any applicable charges and premium
taxes, in one sum to you, if the scheduled Annuity Commencement Date
is the Annuitant's 100th birthday.
The procedure just described is different in Pennsylvania and Oregon because the
Annuity Commencement Date cannot exceed age 90 in Pennsylvania and age 95 in
Oregon.
In Texas, we will proceed differently if you have not selected an Annuity
Payment Option within 10 days before the Annuity Commencement Date. We will pay
you as if you had elected to receive 120 guaranteed payments under Annuity
Payment Option 2. (See "Option 2.")
The Code imposes minimum distribution requirements on the Annuity Payment Option
you choose in connection with Qualified Contracts. (See "Federal Income Tax
Matters. ") We are not responsible for monitoring or advising Owners whether
they are meeting the minimum distribution requirements, unless we have received
a specific Written request to do so.
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Election of Annuity Payment Option
You may elect an Annuity Payment Option only if the initial annuity payment
meets the following minimum requirements:
. where you elect only Fixed or Variable Annuity Payments, the initial
payment must be at least $100; or
. where you elect a combination of Variable and Fixed Annuity Payments,
the initial payment must be at least $50 on each basis.
If the initial annuity payment falls below these amounts, we will reduce the
frequency of annuity payments. If the initial payment still falls below these
amounts, we will make a single payment to the Annuitant or other properly-
designated payee equal to your Account Value. We will deduct any applicable
premium tax or other charges.
You may elect the annuity option that will apply for payments to a Beneficiary,
if you or the Annuitant dies. If you have not made this election, the
Beneficiary may do so within 60 days after your or the Annuitant's death. (See
"Death Proceeds.") Thereafter, the Beneficiary will have all the remaining
rights and powers under the Contract and be subject to all of its terms and
conditions. We will make the first annuity payment at the beginning of the
second month following the month in which we approve the settlement request. We
will credit Annuity Units based on Annuity Unit Values at the end of the
Valuation Period that contains the 10th day before the beginning of that second
month.
When an Annuity Payment Option becomes effective, you must deliver the Contract
to our Home Office, in exchange for a payment contract providing for the option
elected.
We provide information about the relationship between the Annuitant's gender and
the amount of annuity payments, including any requirements for gender-neutral
annuity rates and in connection with certain employee benefit plans under
"Gender of Annuitant" in the Statement. (See "Contents of Statement of
Additional Information.")
Available Annuity Payment Options
Each Annuity Payment Option, except Option 5, is available on both a fixed and
variable basis. Option 5 is available on a fixed basis only.
Option 1 - Life Annuity - We make annuity payments monthly during the lifetime
of the Annuitant. These payments stop with the last payment due before the death
of the Annuitant. We do not guarantee a minimum number of payments under this
arrangement. For example, the Annuitant or other payee might receive only one
annuity payment, if the Annuitant dies before the second annuity payment.
Option 2 - Life Annuity with 120, 180, or 240 Monthly Payments Certain - We make
annuity payments monthly during the lifetime of an Annuitant. In addition, we
guarantee that the Beneficiary will receive monthly payments for the remainder
of the period certain, if the Annuitant dies during that period.
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Option 3 - Joint and Last Survivor Life Annuity - We make annuity payments
monthly during the lifetime of the Annuitant and another payee and during the
lifetime of the survivor of the two. We stop making payments with the last
payment before the death of the survivor. We do not guarantee a minimum number
of payments under this arrangement. For example, the Annuitant or other payee
might receive only one annuity payment if both die before the second annuity
payment. The election of this option is ineffective if either one dies before
the Annuity Commencement Date. In that case, the survivor becomes the sole
Annuitant, and we do not pay death proceeds because of the death of the other
Annuitant.
Option 4 - Payments for a Designated Period - We make annuity payments monthly
to an Annuitant or other properly-designated payee, or at his or her death, to
the Beneficiary, for a selected number of years ranging from five to 40. If this
option is selected on a variable basis, the designated period may not exceed the
life expectancy of the Annuitant or other properly-designated payee.
A payee who receives Variable Annuity Payments under Option 4 can elect at any
time to withdraw all or a portion of the value of the remaining Variable Annuity
Payments. This right does not apply to Fixed Annuity Payments. You (if you are
the payee) will receive one payment for the withdrawal. We calculate the value
of any remaining Variable Annuity Payments under Option 4 by assuming that each
payment is equal and by discounting each payment to the present at an annual
rate of 3.5% (the "assumed amount"). We calculate the "assumed amount" of each
remaining payment as of the end of the Valuation Period in which we receive your
Written request for a withdrawal.
Under Option 4, each time you withdraw a portion of the value of your Variable
Annuity Payments, the remaining Variable Annuity Payments will all be reduced
proportionately. If you elect to withdraw all of the value of your Variable
Annuity Payments, such payments cease. The Contract terminates at that time
unless we still owe you Fixed Annuity Payments.
Option 5 - Payments of a Specific Dollar Amount - We pay the amount due in equal
monthly installments of a designated dollar amount until the remaining balance
is less than the amount of one installment. The amount of each installment may
not be less than $125 or more than $200 each year per $1,000 of the original
amount due. If the person receiving these payments dies, we continue to make the
remaining payments to the Beneficiary. Payments under this option are available
on a fixed basis only. To determine the remaining balance at the end of any
month, we decrease the balance at the end of the previous month by the amount of
any installment paid during the month. We then apply, to the remainder, interest
at a rate not less than 3.5% compounded annually. If the remaining balance at
any time is less than the amount of one installment, we will pay the balance as
the final payment under the option.
We reduce Variable Annuity Payments as a result of a charge to the Separate
Account that is partially for mortality risks. (See "Charge to the Separate
Account.")
The Code may treat the election of Option 4 (including the election to withdraw
all or a portion of the remaining payments) or Option 5 in the same manner as a
surrender of the total Account Value. For tax consequences of such treatment,
see "Federal Income Tax Matters." In addition, the Code may not give tax-
deferred treatment to subsequent earnings. You should ask your own tax adviser
about these two Options before you select either of them.
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Alternative Amount Under Fixed Life Annuity Options - In the case of Fixed
Annuity Payments under one of the first three Annuity Payment Options described
above, we make a special election available. In that case, the Owner (or the
Beneficiary, if the Owner has not elected a payment option) may elect monthly
payments based on single payment immediate fixed annuity rates we offer at that
time. This provision allows the Annuitant or other properly-designated payee to
receive the fixed annuity purchase rate in effect for new single payment
immediate annuity Contracts, if it is more favorable.
In place of monthly payments, you may elect payments on a quarterly, semi-annual
or annual basis. In that case, we determine the amount of each annuity payment
on a basis consistent with that described above for monthly payments.
Transfers
After the Annuity Commencement Date, the Annuitant or other properly-designated
payee may make one transfer every 180 days among the available Divisions of the
Separate Account or from the Divisions to a Fixed Annuity Payment Option. We
will assess no charge for the transfer. We do not permit transfers from a Fixed
to a Variable Annuity Payment Option. If a transfer causes the value in any
Division to fall below $500, we reserve the right to transfer the remaining
balance in that Division in the same proportion as the transfer request. We
make transfers effective at the end of the Valuation Period in which we receive
the Written transfer request at our Home Office. We reserve the right to
terminate or restrict transfers at any time.
DEATH PROCEEDS
Death Proceeds Before the Annuity Commencement Date
The death proceeds described below are payable to the Beneficiary under the
Contract if any of the following events occur before the Annuity Commencement
Date:
. the Annuitant dies, and no Contingent Annuitant has been named under a
Non-Qualified Contract;
. the Annuitant dies, and we also receive proof of death of any named
Contingent Annuitant; or
. the Owner (including the first to die in the case of joint Owners) of a
Non-Qualified Contract dies, regardless of whether the deceased Owner was
also the Annuitant. (However, if the Beneficiary is the Owner's surviving
spouse, or the Owner's surviving spouse is a joint Owner, the surviving
spouse may elect to continue the Contract as described later in this
Section).
If the deceased Owner was a joint Owner, we will pay the death proceeds to the
surviving joint Owner. In this case, we will treat the surviving joint Owner as
the Beneficiary, and we will not recognize any other designation of Beneficiary.
However, joint Owners may provide written instructions to pay death proceeds in
a different manner.
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Death Benefit Options
If the Annuitant and the Owner (if the Owner is not the Annuitant) are age 79 or
less when we issue your Contract, you can choose from two death benefit options:
. the Base Death Benefit, and
. the Enhanced Death Benefit.
We will pay the death proceeds based on which option is in effect at the time
the death proceeds become payable.
If you do not choose the Enhanced Death Benefit, we will automatically provide
the Base Death Benefit. You can only choose the Enhanced Death Benefit at the
time you buy your Contract. Also, you can drop the Enhanced Death Benefit at
any time. However, you cannot add the Enhanced Death Benefit after we issue
your Contract or after you drop the option.
Enhanced Death Benefit Charge
We charge you if you choose the Enhanced Death Benefit. The charge is:
. 0.13% of your Account Value, assessed at the end of each Contract Year,
. over and above the Separate Account deductions of a maximum of 0.59% of
Separate Account assets (See "Charge to the Separate Account."),
. collected each year or part of a year that the Enhanced Death Benefit is in
effect, including the year when the Contract is surrendered or the death
proceeds are paid,
. collected pro rata only from each Division in which you have any of your
Variable Account Value, even if you have any Fixed Account Value at the
time we collect the charge, and
. assessed after age 81 as long as the Enhanced Death Benefit continues in
force.
Base Death Benefit
The Base Death Benefit is different for Annuitants and Owners, both of whom are
age 85 or less, and 86 or older, when the Contract is issued. If the Annuitant
or the Owner is age 85 or less, the Base Death Benefit is equal to the greater
of:
. the sum of all purchase payments, including all Purchase Payment Charges,
minus any applicable premium tax or other taxes, and minus any partial
withdrawals; or
. the Owner's Account Value as of the end of the Valuation Period in which we
receive, at our Home Office, proof of death and the Written request as to
the manner of payment.
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For age 86 and older, the Base Death Benefit is always the second amount
described above. Keep in mind that these ages are the Annuitant's and the
Owner's ages at the time the Contract is issued: The Base Death Benefit is the
second amount if either the Annuitant or the Owner is age 86 or older at the
time the Contract is issued.
Enhanced Death Benefit
The Enhanced Death Benefit is equal to the greater of:
. The amount payable under the Base Death Benefit, minus any uncollected
Enhanced Death Benefit charge; or
. the highest anniversary value before the date of death, as defined below.
The highest anniversary value before the date of death will be determined
as follows:
(a) First, we will calculate the Account Values at the end of each of the
past Contract Anniversaries that occurs before the deceased's 81st
birthday (We will thereafter use only the highest of the Contract
Anniversary Account Values that occurred before the deceased's 81st
birthday.);
(b) Second, we will increase each of the Account Values by the amount of
net purchase payments the Owner has made since the end of such
Contract Years; and
(c) Third, we will reduce the result by the amount of any withdrawals the
Owner has made since the end of such Contract Years.
The highest anniversary value will be an amount equal to the highest of
such values. Net purchase payments are purchase payments less
applicable taxes deducted at the time the purchase payment is made.
The death proceeds become payable to the Beneficiary when we receive:
. proof of the Owner's or Annuitant's death, and
. a Written request from the Beneficiary specifying the manner of payment.
If the Owner has not already done so, the Beneficiary may, within 60 days after
the date the death proceeds become payable, elect to receive the death proceeds
as (1) a single sum or (2) in the form of one of the Annuity Payment Options
provided in the Contract. (See "Annuity Payment Options.") If we do not
receive a request specifying the manner of payment, we will make a single sum
payment, based on values we determine at that time.
If the Owner under a Non-Qualified Contract dies before the Annuity Commencement
Date, we will distribute all amounts payable under the Contract in accordance
with the following rules:
. We will distribute all amounts:
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(a) within five years of the date of death, or
(b) if the Beneficiary elects, as annuity payments, beginning within one
year of the date of death and continuing over a period not extending
beyond the life or life expectancy of the Beneficiary.
. If the Beneficiary is the Owner's surviving spouse, the spouse may elect to
continue the Contract as the new Owner. If the original Owner was the
Annuitant, the surviving spouse may also elect to become the new Annuitant.
This election is also available to the surviving spouse who is a joint Owner,
even if the surviving spouse is not the Beneficiary. In this case, we will
treat the surviving spouse as the Beneficiary, and we will not recognize any
other designation of beneficiary.
. If the Owner is not a natural person, these distribution requirements apply at
the death of the primary Annuitant, within the meaning of the Code. Under a
parallel section of the Code, similar requirements apply to retirement plans
for which we issue Qualified Contracts.
Failure to satisfy the requirements described in this Section may result in
serious adverse tax consequences.
Death Proceeds on or After the Annuity Commencement Date
If the Annuitant dies on or after the Annuity Commencement Date, the amounts
payable to the Beneficiary or other properly-designated payee are any continuing
payments under the Annuity Payment Option in effect. (See "Annuity Payment
Options.") In such case, the payee will:
. have all the remaining rights and powers under a Contract, and
. be subject to all the terms and conditions of the Contract.
Also, if the Annuitant dies on or after the Annuity Commencement Date, no
previously named Contingent Annuitant can become the Annuitant.
If the payee under a Non-Qualified Contract dies after the Annuity Commencement
Date, we will distribute any remaining amounts payable under the terms of the
Annuity Payment Option at least as rapidly as under the method of distribution
in effect when the payee dies. If the payee is not a natural person, this
requirement applies upon the death of the primary Annuitant, within the meaning
of the Code.
Under a parallel section of the Code, similar requirements apply to retirement
plans for which we issue Qualified Contracts.
Failure to satisfy requirements described in this Section may result in serious
adverse tax consequences.
Proof of Death
We accept the following as proof of any person's death:
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. a certified death certificate;
. a certified decree of a court of competent jurisdiction as to the finding of
death;
. a written statement by a medical doctor who attended the deceased at the
time of death; or
. any other proof satisfactory to us.
Once we have paid the death proceeds, the Contract terminates, and our
obligations are complete.
CHARGES UNDER THE CONTRACTS
Premium Taxes
When applicable, we will deduct premium taxes imposed by certain states. We may
deduct such amount either at the time the tax is imposed or later. We may
deduct the amount as follows:
. from purchase payment(s) when received;
. from the Owner's Account Value at the time annuity payments begin;
. from the amount of any partial withdrawal; or
. from proceeds payable upon termination of the Contract for any other reason,
including death of the Owner or Annuitant, or surrender of the Contract.
If premium tax is paid, AGL may reimburse itself for the tax when making the
deduction under the second, third, and fourth items on the list immediately
above, by multiplying the sum of Purchase Payments being withdrawn by the
applicable premium tax percentage.
Applicable premium tax rates depend upon the Owner's then-current place of
residence. Applicable rates currently range from 0% to 3.5%. The rates are
subject to change by legislation, administrative interpretations, or judicial
acts. We will not make a profit on this charge.
Transfer Charges
We describe the charges to pay the expense of making transfers under "Transfer,
Automatic Rebalancing, Surrender and Partial Withdrawal of Owner Account Value -
Transfers" and "Annuity Period and Annuity Payment Options - Transfers." These
charges are not designed to yield a profit.
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Charge to the Separate Account
We deduct from Separate Account assets a daily charge at an annualized rate of
0.59% of the average daily net asset value of the Separate Account attributable
to the Contracts. The Contract calls this charge the "Maximum Asset Charge
Factor." This charge (1) offsets administrative expenses and (2) compensates us
for assuming mortality and expense risks under the Contracts. The 0.59% charge
divides into .15% for administrative expenses and 0.44% for the assumption of
mortality and expense risks.
We do not expect to earn a profit on that portion of the charge that is for
administrative expenses. However, we do expect to derive a profit from the
portion that is for the assumption of mortality and expense risks. There is no
necessary relationship between the amount of administrative charges deducted for
a given Contract and the amount of expenses actually attributable to that
Contract.
In assuming the mortality risk, we incur the risks that
. our actuarial estimate of mortality rates may prove erroneous,
. Annuitants will live longer than expected, and
. more Owners or Annuitants than expected will die at a time when the death
benefit we guarantee is higher than the net surrender value of their
interests in the Contracts.
In assuming the expense risk, we incur the risk that the revenues from the
expense charges under the Contracts (charges that we guarantee will not
increase) will not cover our expense of administering the Contracts.
Miscellaneous
Each Series pays charges and expenses out of its assets. The prospectus for
each Series describes the charges and expenses.
We reserve the right to impose charges or establish reserves for any federal or
local taxes that we incur today or may incur in the future and that we deem
attributable to the Contracts.
Systematic Withdrawal Plan
You may make automatic partial withdrawals, at periodic intervals, through a
systematic withdrawal program. Minimum payments are $100. You may choose from
payment schedules of monthly, quarterly, semi-annual, or annual payments. You
may start, stop, increase, or decrease payments. You may elect to (1) start
withdrawals as early as 30 days after the issue date of the Contract and (2)
take withdrawals from the Fixed Account or any Division. Systematic withdrawals
are subject to the terms and conditions applicable to other partial withdrawals.
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Reduction in Administrative Charges
We may reduce the administrative charges imposed under certain Qualified
Contracts for employer sponsored plans. Any such reductions will reflect
differences in costs or services and will not be unfairly discriminatory as to
any person. Differences in costs and services result from factors such as
reduced sales expenses or administrative efficiencies relating to serving a
large number of employees of a single employer and functions assumed by the
employer that we otherwise would have to perform.
OTHER ASPECTS OF THE CONTRACTS
Only an officer of AGL can agree to change or waive the provisions of any
Contract. The Contracts are non-participating, which means they are not
entitled to share in any dividends, profits or surplus of AGL.
Owners, Annuitants, and Beneficiaries; Assignments
You, as the Owner of a Contract, will be the same as the Annuitant, unless you
choose a different Annuitant when you purchase a Contract. In the case of joint
ownership, both Owners must join in the exercise of any rights or privileges
under the Contract. You choose the Annuitant and any Contingent Annuitant in the
application for a Contract and may not change that choice.
You choose the Beneficiary and any Contingent Beneficiary when you purchase a
Contract. You may change a Beneficiary or Contingent Beneficiary before the
Annuity Commencement Date, while the Annuitant is still alive. The payee may
make this change after the Annuity Commencement Date.
We will make any designation of a new Beneficiary or Contingent Beneficiary
effective as of the date it is signed. However, the change in designation will
not affect any payments we make or action we take before we receive the Written
request. We also need the Written consent of any irrevocably-named Beneficiary
or Contingent Beneficiary before we make a change. Under certain retirement
programs, the law may require spousal consent to name or change a Beneficiary to
a person other than the spouse. We are not responsible for the validity of any
designation of a Beneficiary or Contingent Beneficiary.
If the Beneficiary or Contingent Beneficiary is not living at the time we are to
make any payment, you as the Owner will be the Beneficiary. If you are not then
living, your estate will be the Beneficiary.
Owners and other payees may assign their rights under Qualified Contracts only
in certain narrow circumstances referred to in the Contracts. Owners and other
payees may assign their rights under Non-Qualified Contracts, including their
ownership rights. We take no responsibility for the validity of any assignment.
Owners must make a change in ownership rights in Writing and send a copy to our
Home Office. We will make the change effective on the date it was made. However,
we are not bound by a change until the date we record it. The rights under a
Contract are subject to any assignment of record at our Home Office. An
assignment or pledge of a Contract may have adverse tax consequences. (See
"Federal Income Tax Matters.")
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Reports
We will mail to Owners (or anyone receiving payments following the Annuity
Commencement Date), any reports and communications required by applicable law.
We will mail to the last known address of record. You should give us prompt
written notice of any address change.
Rights Reserved by Us
Upon notice to the Owner, we may modify a Contract to the extent necessary to:
. reflect a change in the Separate Account or any Division;
. create new separate accounts;
. operate the Separate Account in any form permitted under the 1940 Act or in
any other form permitted by law;
. transfer any assets in any Division to another Division, to one or more
separate accounts, or to the Fixed Account;
. add, combine or remove Divisions in the Separate Account, or combine the
Separate Account with another separate account;
. add, restrict or remove Guarantee Periods of the Fixed Account;
. make any new Division available to you on a basis we determine;
. substitute, for the shares held in any Division, the shares of another
Series or the shares of another investment company or any other investment
permitted by law;
. make any changes required by the Code or by any other law, regulation or
interpretation to continue treatment of the Contract as an annuity;
. commence deducting premium taxes or adjust the amount of premium taxes
deducted in accordance with state law that applies; or
. make any changes required to comply with the rules of any Series.
When required by law, we will obtain (1) your approval of changes and (2) the
approval of any appropriate regulatory authority.
Payment and Deferment
We will normally pay amounts surrendered or withdrawn from a Contract within
seven calendar days after the end of the Valuation Period in which we receive
the Written surrender or withdrawal request at our Home Office. A Beneficiary
may request the manner of payment of death proceeds within 60
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days after the death proceeds become payable. If we do not receive a Written
request specifying the manner of payment, we will pay the death benefit as a
single sum, normally within seven calendar days after the end of the Valuation
Period that contains the last day of the 60 day period. We reserve the right,
however, to defer payments or transfers out of the Fixed Account for up to six
months. Also, we reserve the right to defer payment of that portion of your
Account Value that is attributable to a purchase payment made by check for a
reasonable period of time (not to exceed 15 days) to allow the check to clear
the banking system.
Finally, we reserve the right to defer payment of any surrender, annuity
payment, or death proceeds out of the Variable Account Value if:
. the New York Stock Exchange is closed other than customary weekend and
holiday closings, or trading on the New York Stock Exchange is restricted
as determined by the SEC;
. the SEC determines that an emergency exists, as a result of which disposal
of securities held in a Division is not reasonably practicable or it is not
reasonably practicable to fairly determine the Variable Account Value; or
. the SEC by order permits the delay for the protection of Owners.
We may also postpone transfers and allocations of Account Value among the
Divisions and the Fixed Account under these circumstances.
FEDERAL INCOME TAX MATTERS
General
We cannot comment on all of the federal income tax consequences associated with
the Contracts. Federal income tax law is complex. Its application to a
particular person may vary according to facts peculiar to the person.
Consequently, we do not intend for you to take this discussion as tax advice.
You should consult with a competent tax adviser before purchasing a Contract.
We base this discussion on our understanding of the law, regulations and
interpretations existing on the date of this Prospectus. Congress, in the past,
has enacted legislation changing the tax treatment of annuities in both the
Qualified and the Non-Qualified markets and may do so again in the future. The
Treasury Department may issue new or amended regulations or other
interpretations of existing tax law. The courts may also interpret the tax law
in ways that affect the tax treatment of annuities. Any such change could have
a retroactive effect. We suggest that you consult your legal or tax adviser on
these issues.
The discussion does not address federal estate and gift tax, social security
tax, or any state or local tax consequences associated with the Contracts.
39
<PAGE>
Non-Qualified Contracts
Purchase Payments. Purchasers of a Contract that does not qualify for special
- -----------------
tax treatment and is "Non-Qualified" may not deduct from their gross income the
amount of purchase payments made.
Tax Deferral Before Annuity Commencement Date. Owners who are natural persons
- ---------------------------------------------
are not taxed currently on (1) increases in their Account Value resulting from
interest earned in the Fixed Account, or (2) the investment experience of the
Separate Account so long as the Separate Account complies with certain
diversification requirements. These requirements mean that the Separate Account
must invest in Series that are "adequately diversified" in accordance with
Treasury Department regulations. We do not control the Series, but we have
received commitments from the investment advisers to the Series to use their
best efforts to operate the Series in compliance with these diversification
requirements. A Contract investing in a Series that failed to meet the
diversification requirements would subject Owners to current taxation of income
in the Contract for the period of such diversification failure (and any
subsequent period). Income means the excess of the Account Value over the
Owner's investment in the Contract (discussed below).
Control over allocation of values among different investment alternatives may
cause Owners or persons receiving annuity payments to be treated as the owners
of the Separate Account's assets for tax purposes. However, current regulations
do not provide guidance as to how to avoid this result. We reserve the right to
amend the Contracts in any way necessary to avoid this result. The Treasury
Department has stated that it may establish standards through regulations or
rulings. These standards may apply only prospectively, although they could apply
retroactively if the Treasury Department considers the standards not to reflect
a new position.
Owners that are not natural persons -- that is, Owners such as corporations --
are taxed currently on annual increases in their Account Value, unless an
exception applies. Exceptions apply for, among other things, Owners that are
not natural persons but that hold a Contract as an agent for a natural person.
Taxation of Annuity Payments. Part of each annuity payment received after the
- ----------------------------
Annuity Commencement Date is excludible from gross income.
In the case of Fixed Annuity Payments, the excludible portion is found by
multiplying:
. the amount paid by,
. the ratio of the investment in the Contract (discussed below) to the
expected return under the Fixed Annuity Payment Option.
In the case of Variable Annuity Payments, the excludible portion is the
investment in the Contract divided by the number of expected payments.
In both cases, the remaining portion of each annuity payment, and all payments
made after the investment in the Contract has been reduced to zero, are included
in the payee's income. Should annuity payments stop on account of the death of
the Annuitant before the investment in the Contract has been fully paid out, the
payee is allowed a deduction for the unpaid amount. If the payee is the
Annuitant, the deduction is taken on the final tax return. If the payee is a
Beneficiary, that Beneficiary
40
<PAGE>
may receive the balance of the total investment as payments are made or on the
Beneficiary's final tax return. An Owner's "investment in the Contract" is the
amount equal to the portions of purchase payments made by or on behalf of the
Owner that have not been excluded or deducted from the individual's gross
income, less amounts previously received under the Contract that were not
included in income.
Taxation of Partial Withdrawals and Total Surrenders. Partial withdrawals from
- ----------------------------------------------------
a Contract are includible in income to the extent that the Owner's Account Value
exceeds the investment in the Contract. In the event you surrender a Contract in
its entirety, the amount of your investment in the Contract is excludible from
income, and any amount you receive in excess of your investment in the Contract
is includible in income. All annuity Contracts or Contracts we issue to the same
Owner during any calendar year are aggregated for purposes of determining the
amount of any distribution that is includible in gross income.
Penalty Tax on Premature Distributions. In the case of such a distribution,
- --------------------------------------
there may be imposed a federal tax penalty equal to 10% of the amount treated as
taxable income. The penalty tax will not apply, however, to distributions:
. made on or after the recipient reaches age 59 1/2,
. made on account of the recipient's becoming disabled,
. that are made after the death of the Owner before the Annuity
Commencement Date or of the payee after the Annuity Commencement Date
(or if such person is not a natural person, that are made after the
death of the primary Annuitant, as defined in the Code); or
. that are part of a series of substantially equal periodic payments made
at least annually over the life (or life expectancy) of the Annuitant or
the joint life (or joint life expectancies) of the Annuitant and the
Beneficiary, provided such payments are made for a minimum of 5 years
and the distribution method is not changed before the recipient reaches
age 59 1/2 (except in the case of death or disability).
Premature distributions may result from an early Annuity Commencement Date, an
early surrender, partial withdrawal from or assignment of a Contract, or the
early death of an Annuitant, unless the third clause listed above applies.
Payment of Death Proceeds. Special rules apply to the distribution of any death
- -------------------------
proceeds payable under the Contract. (See "Death Proceeds.")
Assignments and Loans. An assignment, loan, or pledge under a Non-Qualified
- ---------------------
Contract is taxed in the same manner as a partial withdrawal, as described
above. Repayment of a loan or release of an assignment or pledge is treated as a
new purchase payment.
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<PAGE>
Individual Retirement Annuities ("IRAs")
Purchase Payments. Individuals who are not active participants in a tax
- -----------------
qualified retirement plan may, in any year, deduct from their taxable income
purchase payments for an IRA equal to the lesser of $2,000 or 100% of the
individual's earned income. In the case of married individuals filing a joint
return, the deduction will, in general, be the lesser of $4,000 or 100% of the
combined earned income of both spouses, reduced by any deduction for an IRA
purchase payment allowed to the spouse. Single persons who participate in a
tax-qualified retirement plan and who have adjusted gross income not in excess
of $31,000 may fully deduct their IRA purchase payments. Those who have
adjusted gross income in excess of $41,000 will not be able to deduct purchase
payments. For those with adjusted gross income in the range between $31,000 and
$41,000, the deduction decreases to zero, based on the amount of income.
Beginning in 2000, that income range will increase, as follows:
<TABLE>
<S> <C> <C> <C> <C> <C>
2000 2001 2002 2003 2004 2005 and
thereafter
- ------------------------------------------------------------------------------------------------------------------------
$32,000 $33,000 $34,000 $40,000 $45,000 $50,000
to to to to to to
$42,000 $43,000 $44,000 $50,000 $55,000 $60,000
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
Similarly, the otherwise deductible portion of an IRA purchase payment will be
phased out, in the case of married individuals filing joint tax returns, with
adjusted gross income between $51,000 and $61,000, and in the case of married
individuals filing separately, with adjusted gross income between $0 and
$10,000. (A husband and wife who file separate returns and live apart at all
times during the taxable year are not treated as married individuals.)
Beginning in 2000, the income range over which the otherwise deductible portion
of an IRA purchase payment will be phased out for married individuals filing
joint tax returns will increase as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
2000 2001 2002 2003 2004 2005 2006 2007 and
thereafter
- ------------------------------------------------------------------------------------------------------------------------
$52,000 $53,000 $54,000 $60,000 $65,000 $70,000 $75,000 $ 80,000
to to to to to to to to
$62,00 $63,000 $64,000 $70,000 $75,000 $80,000 $85,000 $100,000
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
A married individual filing a joint tax return, who is not an active participant
in a tax-qualified retirement plan, but whose spouse is an active participant in
such a plan, may, in any year, deduct from his or her taxable income purchase
payments for an IRA equal to the lesser of $2,000 or 100% of the individual's
earned income. For the individual, the adjusted gross income range over which
the otherwise deductible portion of an IRA purchase payment will be phased out
is $150,000 to $160,000.
Tax Free Rollovers. Amounts may be transferred, in a tax-free rollover, from
- ------------------
(1) a tax-qualified plan to an IRA or (2) from one IRA to another IRA if, the
transfer meets certain conditions. All taxable distributions ("eligible
rollover distributions") from tax qualified plans are eligible to be rolled over
with the exception of:
. annuities paid over a life or life expectancy,
. installments for a period of ten years or more; and
42
<PAGE>
. required minimum distributions under section 401(a)(9) of the Code.
Rollovers may be accomplished in two ways. First, we may pay an eligible
rollover distribution directly to an IRA (a "direct rollover"). Second, we may
pay the distribution directly to the Annuitant and then, within 60 days of
receipt, the Annuitant may roll the amount over to an IRA. However, any amount
that was not distributed as a direct rollover will be subject to 20% income tax
withholding.
Distributions from an IRA. Amounts received under an IRA as annuity payments,
- -------------------------
upon partial withdrawal or total surrender, or on the death of the Annuitant,
are included in the Annuitant's or other recipients' income. If nondeductible
purchase payments have been made, a pro rata portion of such distributions may
not be includible in income. A 10% penalty tax is imposed on the amount
includible in gross income from distributions that occur before the Annuitant
reaches age 59 1/2 and that are not made on account of death or disability, with
certain exceptions. These exceptions include:
. distributions that are part of a series of substantially equal
periodic payments made at least annually over the life (or life
expectancy) of the Annuitant or the joint lives (or joint life
expectancies) of the Annuitant and the Beneficiary; provided such
payments are made for a minimum of 5 years and the distribution method
is not changed before the recipient reaches age 59 1/2 (except in the
case of death or disability),
. distributions for medical expenses in excess of 7.5% of the
Annuitant's adjusted gross income and withdrawals for medical
insurance (without regard to the 7.5% AGI floor) if the individual has
received unemployment compensation under federal or state law for at
least 12 consecutive weeks under certain conditions,
. distributions for qualified first-time home purchases for the
individual, a spouse, children, grandchildren, or ancestor of the
individual or the individual's spouse, subject to a $10,000 lifetime
maximum; and
. distributions for higher education expenses for the individual, a
spouse, children, or grandchildren.
Distributions of minimum amounts required by the Code must commence by April 1
of the calendar year following the calendar year in which the Annuitant reaches
age 70 1/2 or retires (whichever is later). Additional distribution rules apply
after the death of the Annuitant. These rules are similar to those governing
distributions on the death of an Owner (or other payee during the Annuity
Period) under a Non-Qualified Contract. (See "Death Proceeds.") Failure to
comply with the minimum distribution rules will result in a penalty tax of 50%
of the amount by which the minimum distribution required exceeds the actual
distribution.
Roth IRAs
Beginning in 1998, individuals may purchase a new type of non-deductible IRA,
known as a Roth IRA. Purchase payments for a Roth IRA are limited to $2,000 per
year. This permitted contribution is phased out for adjusted gross income
between $95,000 and $110,000 in the case of single taxpayers,
43
<PAGE>
between $150,000 and $160,000 in the case of married taxpayers filing joint
returns, and between $0 and $10,000 in the case of married taxpayers filing
separately. An overall $2,000 annual limitation continues to apply to all of a
taxpayer's IRA contributions, including Roth IRAs and non-Roth IRAs.
An individual may make a rollover contribution from a non-Roth IRA to a Roth
IRA, unless the individual has adjusted gross income over $100,000 or the
individual is a married taxpayer filing a separate return. The individual must
pay tax on any portion of the IRA being rolled over that represents income or a
previously deductible IRA contribution. There are no similar limitations on
rollovers from a Roth IRA to another Roth IRA.
Qualified distributions from Roth IRAs are entirely tax-free. A qualified
distribution requires that (1) the individual has held the Roth IRA for at least
five years, and (2) the distribution is made either after the individual reaches
age 59 1/2, on the individual's death or disability, or as qualified first-time
home purchase. Qualified Distributions for a qualified first-time home
purchase, are subject to a $10,000 lifetime maximum for the individual, a
spouse, child, grandchild, or ancestor of such individual or the individual's
spouse.
Simplified Employee Pension Plans
Eligible employers may establish an IRA plan known as a simplified employee
pension plan ("SEP"), if certain requirements are met. An employee may make
contributions to a SEP in accordance with the rules applicable to IRAs discussed
above. Employer contributions to an employee's SEP are deductible by the
employer and are not currently includible in the taxable income of the employee,
provided that total employer contributions do not exceed the lesser of 15% of an
employee's compensation or $30,000.
Simple Retirement Accounts
Eligible employers may establish an IRA plan known as a simple retirement
account ("SRA"), if they meet certain requirements. Under an SRA, the employer
contributes elective employee compensation deferrals up to a maximum of $6,000 a
year to the employee's SRA. The employer must, in general, make a fully vested
matching contribution for employee deferrals up to a maximum of 3% of
compensation.
Other Qualified Plans
Purchase Payments. Purchase payments made by an employer under a pension,
- -----------------
profit sharing, or annuity plan qualified under section 401 or 403(a) of the
Code, not in excess of certain limits, are deductible by the employer. The
purchase payments are also excluded from the current income of the employee.
Distributions Before the Annuity Commencement Date. Purchase payments
- --------------------------------------------------
includible in an employee's taxable income (less any amounts previously received
that were not includible in the employee's taxable income) represent the
employee's "investment in the Contract." Amounts received before the Annuity
Commencement Date under a Contract in connection with a section 401 or 403(a)
plan are generally allocated on a pro-rata basis between the employee's
investment in the Contract, and other amounts. A lump-sum distribution will not
be includible in income in the year of distribution if
44
<PAGE>
the employee transfers, within 60 days of receipt, all amounts received (less
the employee's investment in the Contract), to another tax-qualified plan, to an
individual retirement account or an IRA in accordance with the rollover rules
under the Code.
However, any amount that is not distributed as a direct rollover will be subject
to 20% income tax withholding. (See "Tax Free Rollovers.") Special tax
treatment may be available, for tax years beginning before December 31, 1999, in
the case of certain lump-sum distributions that are not rolled over to another
plan or IRA.
A 10% penalty tax is imposed on the amount includible in gross income from
distributions that occur before the employee reaches age 59 1/2 and that are not
made on account of death or disability, with certain exceptions. These
exceptions include distributions that are:
. part of a series of substantially equal periodic payments made at
least annually beginning after the employee separates from service and
made over the life (or life expectancy) of the employee or the joint
lives (or joint life expectancies) of the employee and the
Beneficiary, provided such payments are made for at least 5 years and
the distribution method is not changed before the recipient reaches
age 59 1/2 (except in the case of death or disability),
. made after the employee's separation from service on account of early
retirement after attaining age 55,
. made to pay for qualified higher education or first-time home buyer
expenses,
. made to an alternate payee pursuant to a qualified domestic relations
order, if the alternate payee is the spouse or former spouse of the
employee; or
. distributions for medical expenses in excess of 7.5% of the
Annuitant's adjusted gross income and withdrawals for medical
insurance (without regard to the 7.5% AGI floor) if the individual has
received unemployment compensation under federal or state law for at
least 12 consecutive weeks under certain conditions.
Annuity Payments. A portion of annuity payments received under Contracts for
- ----------------
section 401 and 403(a) plans after the Annuity Commencement Date may be
excludible from the employee's income, in the manner discussed above, in
connection with Variable Annuity Payments, under "Non-Qualified Contracts -
Taxation of Annuity Payments." The difference is that, here, the number of
expected payments is determined under a provision in the Code. Distributions of
minimum amounts required by the Code generally must commence by April 1 of the
calendar year following the calendar year in which the employee reaches age 70
1/2 (or retires, if later). Failure to comply with the minimum distribution
rules will result in a penalty tax of 50% of the amount by which the minimum
distribution required exceeds the actual distribution.
Self-Employed Individuals. Various special rules apply to tax-qualified plans
- -------------------------
established by self-employed individuals.
45
<PAGE>
Private Employer Unfunded Deferred Compensation Plans
Purchase Payments. Private taxable employers may establish unfunded, Non-
- -----------------
Qualified deferred compensation plans for a select group of management or highly
compensated employees and/or for independent contractors. To avoid current
taxation these benefits must be subject to a substantial risk of forfeiture.
These types of programs allow individuals to defer (1) receipt of up to 100% of
compensation that would otherwise be includible in income, and (2) payment of
federal income taxes on the amounts.
Deferred compensation plans represent a contractual promise on the part of the
employer to pay current compensation at some future time. The Contract is owned
by the employer and is subject to the claims of the employer's creditors. The
individual has no right or interest in the Contract and is entitled only to
payment from the employer's general assets in accordance with plan provisions.
Purchase payments are not currently deductible by the employer until benefits
are included in the taxable income of the employee.
Taxation of Distributions. Amounts that an individual receives from a private
- -------------------------
employer deferred compensation plan are includible in gross income for the
taxable year in which such amounts are paid or otherwise made available.
Federal Income Tax Withholding and Reporting
Amounts distributed from a Contract, to the extent includible in taxable income,
are subject to federal income tax withholding.
In some cases, if you own more than one Qualified annuity Contract, the
Contracts may be considered together to determine whether the federal tax law
requirement for minimum distributions after age 70 1/2, or retirement in
appropriate circumstances, has been satisfied. You may rely on distributions
from another annuity contract or Contract to satisfy the minimum distribution
requirement under a Qualified Contract we issued. However, you must sign a
waiver releasing us from any liability to you for not calculating and reporting
the amount of taxes and penalties payable for failure to make required minimum
distributions under the Contract.
Taxes Payable by AGL and the Separate Account
AGL is taxed as a life insurance company under the Code. The operations of the
Separate Account are part of the total operations of AGL and are not taxed
separately. Under existing federal income tax laws, AGL is not taxed on
investment income derived by the Separate Account (including realized and
unrealized capital gains) with respect to the Contracts. AGL reserves the right
to allocate to the Contracts any federal, state or other tax liability that may
result in the future from maintenance of the Separate Account or the Contracts.
46
<PAGE>
Certain Series may elect to pass through to AGL any taxes withheld by foreign
taxing jurisdictions on foreign source income. Such an election will result in
additional taxable income and income tax to AGL. The amount of additional income
tax, however, may be more than offset by credits for the foreign taxes withheld
that the Series will also pass through. These credits may provide a benefit to
AGL.
DISTRIBUTION ARRANGEMENTS
Individuals who sell the Contracts will be licensed by state insurance
authorities as agents of AGL. The individuals will also be registered
representatives of (1) American General Securities Incorporated ("AGSI"), the
principal underwriter of the Contracts, (2) Van Kampen Funds Inc. ("VK Funds"),
or (3) other broker-dealer firms. However, some individuals may be
representatives of firms that are exempt from broker-dealer regulation. AGSI, VK
Funds and any non-exempt broker-dealer firms are registered with the SEC under
the Securities Exchange Act of 1934 as broker-dealers and are members of the
National Association of Securities Dealers, Inc.
AGSI is a wholly-owned subsidiary of AGL. AGSI's principal business address is
2727 Allen Parkway, Houston, Texas 77019-2191.
AGL offers the Contracts on a continuous basis. AGL and VK Funds have entered
into certain revenue and cost-sharing arrangements in connection with marketing
the Contracts.
AGL compensates VK Funds and other broker-dealers that sell the Contracts
according to one or more compensation schedules. The schedules provide for
commissions of up to 5.5% of purchase payments that Owners make. AGL may also
pay continuing "trail" commissions of up to 0.25% of Owner Account Value.
AGL also has agreed to pay VK Funds for its promotional activities, such as
solicitation of selling group agreements between broker-dealers and AGL, agent
appointments with AGL, printing and development of sales literature to be used
by AGL appointed agents and related marketing support, and related special
promotional campaigns. From time to time, VK Funds may engage in special
promotions where VK Funds pays additional compensation to one or more of the
broker-dealers that sell the Contracts. None of these distribution expenses
results in any additional charges under the Contracts that are not described
under "Charges under the Contracts."
SERVICES AGREEMENTS
American General Life Companies ("AGLC") is party to a general services
agreement with AGL. AGLC, an affiliate of AGL, is a corporation incorporated in
Delaware on November 24, 1997. Its address is 2727-A Allen Parkway, Houston,
Texas 77019-2191. Under this agreement, AGLC provides services to AGL,
including most of the administrative, data processing, systems, customer
services, product development, actuarial, auditing, accounting and legal
services for AGL and the Contracts.
47
<PAGE>
AGL has entered into administrative services agreements with the advisers for
the mutual funds that offer shares to the Divisions. AGL receives fees for the
administrative services it performs. These fees do not result in any additional
charges under the Contracts that are not described under "Charges under the
Contracts. "
LEGAL MATTERS
We are not involved in any legal matter about the Separate Account that would be
considered material to the interests of Owners. Pauletta P. Cohn, Associate
General Counsel of AGLC has passed upon the legality of the Contracts described
in this Prospectus.
YEAR 2000 CONSIDERATIONS
Internal Systems. AGL's ultimate parent, American General Corporation (AGC), has
numerous technology systems that are managed on a decentralized basis. AGC's
Year 2000 readiness efforts are being undertaken by its key business units with
centralized oversight. Each business unit, including AGL, has developed and is
implementing a plan to minimize the risk of a significant negative impact on its
operations.
While the specifics of the plans vary, the plans include the following
activities: (1) perform an inventory of our information technology and non-
information technology systems; (2) assess which items in the inventory may
expose us to business interruptions due to Year 2000 issues; (3) reprogram or
replace systems that are not Year 2000 ready; (4) test systems to prove that
they will function into the next century as they do currently; and (5) return
the systems to operations. As of December 31, 1998, substantially all of our
critical systems are Year 2000 ready and have been returned to operations.
However, activities (3) through (5) for certain systems are ongoing, with vendor
upgrades expected to be received during the first half of 1999.
Third Party Relationships. We have relationships with various third parties who
must also be Year 2000 ready. These third parties provide (or receive)
resources and services to (or from) AGL and include organizations with which we
exchange information. Third parties include vendors of hardware, software, and
information services; providers of infrastructure services such as voice and
data communications and utilities for office facilities; investors; customers;
distribution channels; and joint venture partners. Third parties differ from
internal systems in that we exercise less, or no, control over Year 2000
readiness. We developed a plan to assess and attempt to reduce the risks
associated with the potential failure of third parties to achieve Year 2000
readiness. The plan includes the following activities: (1) identify and
classify third party dependencies; (2) research, analyze, and document Year 2000
readiness for critical third parties; and (3) test critical hardware and
software products and electronic interfaces. As of December 31, 1998, AGC has
identified and assessed approximately 700 critical third party dependencies,
including those relating to AGL. A more detailed evaluation will be completed
during first quarter 1999 as part of our contingency planning efforts. Due to
the various stages of third parties' Year 2000 readiness, our testing activities
will extend through 1999.
Contingency Plans. AGL and its affiliates have commenced contingency planning
to reduce the risk of Year 2000-related business failures. The contingency
plans, which address both internal systems
48
<PAGE>
and third party relationships, include the following activities: (1) evaluate
the consequences of failure of business processes with significant exposure to
Year 2000 risk; (2) determine the probability of a Year 2000-related failure for
those processes that have a high consequence of failure; (3) develop an action
plan to complete contingency plans for those processes that rank high in
consequence and probability of failure; and (4) complete the applicable action
plans. We are currently developing contingency plans and expect to substantially
complete all contingency planning activities during the second quarter of 1999.
Risks and Uncertainties. Based on our plans to make internal systems ready for
Year 2000, to deal with third party relationships, and to develop contingency
actions, we believe that we will experience at most isolated and minor
disruptions of business processes following the turn of the century. Such
disruptions are not expected to have a material effect on AGL's future results
of operations, liquidity, or financial condition. However, due to the size and
complexity of this project, risks and uncertainties exist, and we cannot predict
a most reasonably likely worst case scenario. If conversion of our internal
systems is not completed on a timely basis (due to non-performance by
significant third-party vendors, lack of qualified personnel to perform the Year
2000 work, or other unforeseen circumstances in completing our plans), or if
critical third parties fail to achieve Year 2000 readiness on a timely basis,
the Year 2000 issues could have a material adverse impact on our operations
following the turn of the century.
Costs. Through December 31, 1998, AGL has incurred, and anticipates that it
will continue to incur, costs for internal staff, third-party vendors, and other
expenses to achieve Year 2000 readiness. The cost of activities related to Year
2000 readiness has not had a material adverse effect on our results of
operations or financial condition. In addition, we have elected to accelerate
the planned replacement of certain systems as part of the Year 2000 plans.
Costs of the replacement systems are not passed to Divisions of the Separate
Account.
OTHER INFORMATION ON FILE
We have filed a Registration Statement with the Securities and Exchange
Commission under the Securities Act of 1933 for the Contracts discussed in this
Prospectus. We have not included all of the information in the Registration
Statement and its exhibits. Statements contained in this Prospectus concerning
the Contracts and other legal instruments are intended to be summaries. For a
complete statement of terms, you should refer to the documents that we filed
with the Securities and Exchange Commission.
We will send you a Statement on request without charge. Its contents are as
follows:
49
<PAGE>
CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
General Information................................................ 2
Regulation and Reserves............................................ 2
Independent Auditors............................................... 3
Services........................................................... 3
Principal Underwriter.............................................. 3
Annuity Payments................................................... 4
Gender of Annuitant........................................... 4
Misstatement of Age or Gender and Other Errors............... 4
Change of Investment Adviser or Investment Policy.................. 4
Performance Data for the Divisions................................. 5
Average Annual Total Return Calculations...................... 5
Cumulative Total Return Calculations.......................... 5
Hypothetical Performance...................................... 6
Yield Calculations............................................ 8
Money Market Division Yield and Effective Yield Calculations.. 8
Performance Comparisons....................................... 9
Effect of Tax-Deferred Accumulation................................ 10
Financial Statements............................................... 11
Index to Financial Statements...................................... 11
50
<PAGE>
AMERICAN GENERAL LIFE INSURANCE COMPANY
Annuity Administration, Houston, TX
To obtain a Statement of Additional Information, please complete the form below
and mail to:
American General Life Insurance Company
Attention: Annuity Administration
P.O. Box 1401
Houston, TX 77251-1401
Please send a Statement of Additional Information for the Generations Asset
Builder Variable Annuity to me at the following address:
________________________________________
Name
________________________________________
Address
________________________________________
City/State Zip Code
51
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AMERICAN GENERAL LIFE INSURANCE COMPANY
SEPARATE ACCOUNT D
INDIVIDUAL FLEXIBLE PAYMENT VARIABLE AND FIXED
DEFERRED ANNUITY CONTRACTS
OFFERED BY
AMERICAN GENERAL LIFE INSURANCE COMPANY
ANNUITY ADMINISTRATION DEPARTMENT
P.O. BOX 1401, HOUSTON, TEXAS 77251-1401
1-(800)-200-3883 AND (713)-831-3505
STATEMENT OF ADDITIONAL INFORMATION
Dated [ ]
This Statement of Additional Information ("Statement") is not a prospectus. You
should read it with the Prospectus for American General Life Insurance Company
Separate Account D (the "Separate Account"), dated [ ], 1999, concerning
individual flexible payment variable and fixed deferred annuity Generations(TM)
Asset Builder Contracts ("Contracts") investing in certain Series of the Van
Kampen Life Investment Trust and the Morgan Stanley Dean Witter Universal Funds,
Inc. You can obtain a copy of the Prospectus for the Contracts, and any
Prospectus supplements, by contacting American General Life Insurance Company
("AGL") at the address or telephone numbers given above. You have the option of
receiving benefits on a fixed basis through AGL's Fixed Account or on a variable
basis through the Separate Account. Terms have the same meaning in this
Statement that they do in the Prospectus under the heading "Definitions."
TABLE OF CONTENTS
General Information................................................. 2
Regulation and Reserves............................................. 2
Independent Auditors................................................ 3
Services............................................................ 3
Principal Underwriter............................................... 3
Annuity Payments.................................................... 4
Gender of Annuitant............................................. 4
Misstatement of Age or Gender and Other Errors................... 4
Change of Investment Adviser or Investment Policy............... 4
Performance Data for the Divisions.................................. 5
Average Annual Total Return Calculations........................ 5
Cumulative Total Return Calculations............................ 5
Hypothetical Performance........................................ 6
Yield Calculations.............................................. 8
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Money Market Division Yield and Effective Yield Calculations.... 8
Performance Comparisons......................................... 9
Effect of Tax-Deferred Accumulation................................. 10
Financial Statements................................................ 11
Index to Financial Statements....................................... 11
GENERAL INFORMATION
AGL (formerly American General Life Insurance Company of Delaware) is a
successor in interest to a company previously organized as a Delaware
corporation in 1917. AGL redomesticated as a Texas insurer effective December
31, 1991 and changed its name to American General Life Insurance Company. AGL
is a wholly-owned subsidiary of AGC Life Insurance Company, a Missouri
corporation ("AG Missouri"). It is engaged primarily in the life insurance
business and annuity business. AG Missouri, in turn, is a wholly-owned
subsidiary of American General Corporation, a Texas holding corporation engaged
primarily in the insurance business.
REGULATION AND RESERVES
AGL is subject to regulation and supervision by the insurance departments of the
states where it is licensed to do business. This regulation covers a variety of
areas, including:
. benefit reserve requirements,
. adequacy of insurance company capital and surplus,
. various operational standards; and
. accounting and financial reporting procedures.
AGL's operations and accounts are subject to periodic examination by insurance
regulatory authorities.
Under most insurance guaranty fund laws, a state can assess insurers doing
business in the state for covered insurance contract losses incurred by
insolvent companies. State laws set limits for these assessments. However, AGL
cannot reasonably estimate the amount of any future assessments of AGL under
these laws. Most states have the authority to excuse or defer an assessment, if
it would threaten an insurer's own financial strength. The Account Value held
in the Separate Account may not be covered by insurance guaranty fund laws. The
Account Value held in the Fixed Account is covered by the insurance guaranty
fund laws.
The federal government generally has not directly regulated the business of
insurance. However, federal initiatives often have an impact on the business in
a variety of ways. Federal measures that may adversely affect the insurance
business include:
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. employee benefit regulation,
. tax law changes affecting the taxation of insurance companies or of
insurance products,
. changes in the relative desirability of various personal investment
vehicles; and
. removal of impediments on the entry of banking institutions into the
business of insurance.
Also, both the executive and legislative branches of the federal government are
considering various insurance regulatory matters. This could ultimately result
in direct federal regulation of some aspects of the insurance business. AGL
cannot predict whether this will occur or, if it does, what the effect on AGL
would be.
State insurance law requires AGL to carry reserves on its books, as liabilities,
to meet its obligations under outstanding insurance contracts. AGL bases these
reserves on assumptions about future claims experience and investment returns,
among other things.
Neither the reserve requirements nor the other aspects of state insurance
regulation provide absolute protection to holders of insurance contracts,
including the Contracts, if AGL were to incur claims or expenses at rates
significantly higher than expected. This might happen, for example, due to a
spread of acquired immune deficiency syndrome or other infectious diseases or
catastrophes, or significant unexpected losses on its investments.
INDEPENDENT AUDITORS
The 1998 consolidated financial statements of AGL included in this Statement
were audited by Ernst & Young LLP, independent auditors, as set forth in their
report. We include these financial statements in this Statement in reliance
upon the report of Ernst & Young LLP that appears later on in this Statement.
Ernst & Young LLP gives its report upon their authority as experts in accounting
and auditing. Ernst & Young LLP is located at One Houston Center, 1221 McKinney,
Suite 2400, Houston, TX 77010-2007.
SERVICES
AGL and American General Life Companies ("AGLC") are parties to a services
agreement. Most of the affiliated companies within the American General
Corporation holding company system, including certain life insurance companies,
are also parties to the agreement. AGLC is a corporation incorporated in
Delaware on November 24, 1997, with its home office located at 2727-A Allen
Parkway, Houston, Texas 77019. AGLC provides shared services to AGL and certain
other life insurance companies at cost. These services include data processing,
systems, customer services, product development, actuarial, auditing,
accounting, and legal. AGL did not pay any fees to AGLC in 1997, because AGLC
performed no services under the agreement. AGL paid AGLC $70,431,229 in 1998.
PRINCIPAL UNDERWRITER
American General Securities Incorporated ("AGSI") is the principal underwriter
for the Contracts. AGSI also serves as principal underwriter to AGL's Separate
Account A and Separate Account VL-R,
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to Separate Account E of American General Life Insurance Company of New York,
and to Separate Account USL VA-R of The United States Life Insurance Company in
the City of New York. All of these other separate accounts are unit investment
trusts registered under the Investment Company Act of 1940. AGSI, a Texas
corporation, is a wholly-owned subsidiary of AGL and a member of the National
Association of Securities Dealers, Inc.
As principal underwriter for the Separate Account, AGSI has not received any
compensation from AGL for any of the past three years.
AGL offers the securities under the Contracts on a continuous basis.
ANNUITY PAYMENTS
GENDER OF ANNUITANT
When annuity payments are based on life expectancy, the amount of each annuity
payment ordinarily will be higher if the Annuitant or other measuring life is a
male, as compared with a female, under an otherwise identical Contract. This is
because, statistically, females tend to have longer life expectancies than
males.
However, Montana, and certain other jurisdictions, do not permit differences in
annuity payment rates between males and females.
In addition, employers should be aware that, under most employer-sponsored
plans, the law prohibits Contracts that make distinctions based on gender.
Under these plans, AGL will make available Contracts with no such differences.
MISSTATEMENT OF AGE OR GENDER AND OTHER ERRORS
If the age or gender of an Annuitant has been misstated to us, any amount
payable will be the amount that the purchase payments paid would have purchased
at the correct age and gender. If we made any overpayments because of incorrect
information about age or gender or any error or miscalculation, we will deduct
the overpayment from the next payment or payments due. We will add any
underpayments to the next payment. We will credit or charge the amount of any
adjustment with interest at the assumed interest rate used in the Contract's
annuity tables.
CHANGE OF INVESTMENT ADVISER OR INVESTMENT POLICY
Unless otherwise permitted by law or regulation, no Series may change the
investment adviser to any Series or any investment policy without the consent of
the shareholders. If required, we will file approval of or change of any
investment objective with the insurance department of each state where a
Contract has been delivered. We will notify you (or, after annuity payments
start, the payee) of any material investment policy change we have approved. We
will also notify you of any investment policy change before its implementation
by the Separate Account, if the change requires your comment or vote.
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PERFORMANCE DATA FOR THE DIVISIONS
We may quote investment results for the available Divisions of the Separate
Account from time to time. These results will not be an estimate or guarantee
of future investment performance. Nor will they represent the actual experience
of amounts invested by a particular Owner. We will carry performance figures to
the nearest one-hundredth of one percent. We may include in the figures the
effect of voluntary fee waivers and expense reimbursements to the Funds from
their investment adviser and administrator.
AVERAGE ANNUAL TOTAL RETURN CALCULATIONS
Each Division may advertise its average annual total return. We calculate each
Division's average annual total return quotation under the following standard
method that the Securities and Exchange Commission ("SEC") prescribes:
. We take a hypothetical $1,000 investment in the Division's Accumulation
Units on the first day of the period at the maximum offering price. This
figure is the Accumulation Unit Value per unit ("initial investment").
. We calculate the ending redeemable value ("redeemable value") of that
investment at the end of the period. The redeemable value reflects the
effect of (1) any applicable Purchase Payment Charge at the beginning of the
period and (2) all other recurring charges and fees applicable under the
Contract to all Owner accounts. Other charges and fees include the Mortality
and Expense Risk Charge and the Administrative Expense Charge. We do not
reflect any premium taxes in the calculation.
. We divide the redeemable value by the initial investment.
. We take this quotient to the Nth root (N representing the number of years in
the period), subtract 1 from the result, and express the result as a
percentage.
CUMULATIVE TOTAL RETURN CALCULATIONS
Each Division may also advertise cumulative total return performance.
Cumulative total return performance is the compound rate of return on a
hypothetical initial investment of $1,000 in each Division's Accumulation Units
on the first day of the period at the maximum offering price. This figure is
the Accumulation Unit value per unit ("initial investment"). Cumulative total
return figures (and the related "Growth of a $1,000 Investment" figures set
forth below) do not include the effect of any premium taxes, but do reflect any
applicable Purchase Payment Charge. Cumulative total return figures reflect
changes in Accumulation Unit value. We calculate these quotations by finding
the cumulative rates of return of the hypothetical initial investment over
various periods, according to the following formula, and then expressing those
rates as a percentage:
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C = (ERV/P) - 1
Where:
C = cumulative total return
P = a hypothetical initial investment of $1,000
ERV = ending redeemable value at the end of the applicable period
of a hypothetical $1,000 investment made at the beginning of the
applicable period.
Hypothetical Performance
Each Division may advertise hypothetical performance, based on the calculations
described above, where all or a portion of the actual historical performance of
the corresponding Series in which the Division invests pre-dates the effective
date of the Division.
The tables below provide hypothetical performance information for the available
Divisions of the Separate Account based on the actual historical performance of
the corresponding Series in which each of these Divisions invests. This
information reflects all actual charges and deductions of these Series and the
Separate Account that hypothetically would have been made if the Separate
Account invested assets under the Contracts in these Series for the periods
indicated.
All of the actual historical performance of the corresponding Series, as of the
date of this Statement, predates the effective date of the Division investing in
that series. The tables below will be revised, in future Statements, to show
actual annual historical performance that occurs after the effective date of a
Division.
Hypothetical Historical Average Annual Total Returns
(Through December 31, 1998)
<TABLE>
<CAPTION>
LESSOR OF
10 YEARS OR
SINCE SERIES
INVESTMENT ONE YEAR FIVE YEARS/2/ INCEPTION/3/
- ---------- -------- ----------- ------------
<S> <C> <C> <C>
Comstock/1/ N/A N/A N/A
Domestic Income 0.20% 6.29% 6.24%
Emerging Growth 28.89% N/A 23.44%
Enterprise 17.12% 19.62% 16.86%
Government 1.75% 4.44% 7.07%
Growth and Income 12.07% N/A 17.11%
Money Market (2.39)% 2.66% 3.87%
Morgan Stanley Real Estate Securities (17.19)% N/A 12.49%
Strategic Stock 9.17% N/A 10.10%
Global Equity 6.31% N/A 12.65%
International Magnum 2.09% N/A 4.34%
High Yield (1.81)% N/A 5.29%
Mid Cap Value 8.59% N/A 23.42%
</TABLE>
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Hypothetical Historical Cumulative Total Returns
(Through December 31, 1998)
<TABLE>
<CAPTION>
SINCE
SERIES
INVESTMENT DIVISION ONE YEAR FIVE YEARS/2/ INCEPTION/3/
- ---------------------------------------- --------- ------------ -----------
<S> <C> <C> <C>
Comstock/1/ N/A N/A N/A
Domestic Income .20% 35.66% 83.29%
Emerging Growth 28.89% N/A 108.91%
Enterprise 17.12% 145.07% 375.35%
Government 1.75% 24.29% 98.06%
Growth and Income 12.07% N/A 37.61%
Money Market (2.39)% 14.06% 46.18%
Morgan Stanley Real Estate Securities (17.19)% N/A 50.93%
Strategic Stock 9.17% N/A 11.80%
Global Equity 6.31% N/A 26.83%
International Magnum 2.09% N/A 8.85%
High Yield (1.81)% N/A 10.82%
Mid Cap Value 8.59% N/A 52.14%
</TABLE>
Hypothetical Historical Growth of a $1,000 Investment in the Division
(Through December 31, 1998)
<TABLE>
<CAPTION>
LESSOR OF
10 YEARS OR
SINCE SERIES
INVESTMENT DIVISION ONE YEAR FIVE YEARS/2/ INCEPTION/3/
- ---------------------------------------- -------- ----------- ------------
<S> <C> <C> <C>
Comstock/1/ N/A N/A N/A
Domestic Income $1,002 $1,357 $1,833
Emerging Growth $1,289 N/A $2,089
Enterprise $1,171 $2,451 $4,753
Government $1,017 $1,243 $1,981
Growth and Income $1,121 N/A $1,376
Money Market $ 976 $1,141 $1,462
Morgan Stanley Real Estate Securities $ 828 N/A $1,509
Strategic Stock $1,092 N/A $1,118
Global Equity $1,063 N/A $1,268
International Magnum $1,021 N/A $1,089
High Yield $ 982 N/A $1,108
Mid Cap Value $1,086 N/A $1,521
</TABLE>
/1/ The Comstock Series had not commenced operations as of December 31, 1998.
Therefore, there is no information to report.
/2/ If "N/A" appears in the "5 Years" column, the Series is less than 5 years
old.
/3/ The information shown in this column is for only 10 years if the Series is
older than 10 years. The inception dates for each Series funding the Divisions
are: April 7, 1986 for the Money Market, Enterprise, and Government Series;
November 4, 1987 for the Domestic Income Series; July 3, 1995 for the Emerging
Growth and Morgan Stanley Real Estate Securities Series; December 23, 1996 for
the Growth and Income Series; January 2, 1997 for the Global Equity,
International Magnum, High Yield and Mid Cap Value Series; November 3, 1997 for
the Strategic Stock Series; April 30, 1999 for the Comstock Series.
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Yield Calculations
We calculate the yields for the Domestic Income, Government, and Growth and
Income Divisions by a standard method that the SEC prescribes. The hypothetical
yields for the Domestic Income, Government, and Growth and Income Divisions,
based upon the one month period ended December 31, 1998, were (.32%), .37% and
(.44)%, respectively. We calculate the yield quotation by dividing
. the net investment income per Accumulation Unit earned during the specified
one month or 30-day period by the Accumulation Unit values on the last day of
the period, according to the following formula that assumes a semi-annual
reinvestment of income:
YIELD = 2[((a-b)/cd + 1)/6/ - 1]
a = net dividends and interest earned during the period by the Series
attributable to the Division
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of Accumulation Units outstanding during the period
d = the Accumulation Unit value per unit on the last day of the period
The yield of each Division reflects the deduction of all recurring fees and
charges that apply to each Division. These fees and charges include the
Mortality and Expense Risk Charge and the Administrative Expense Charge. They
do not reflect the deduction of Surrender Charges or premium taxes.
MONEY MARKET DIVISION YIELD AND EFFECTIVE YIELD CALCULATIONS
We calculate the Money Market Division's yield for which we use a standard
method that the SEC prescribes. Under that method, we base the current yield
quotation on a seven-day period and calculate that yield as follows:
. We take the net change in the Accumulation Unit value during the period.
. We divide that net change by the Accumulation Unit value at the beginning of
the period to obtain the base period return.
. We multiply the base period return by the fraction 365/7 to obtain the
current yield figure.
. We carry the current yield figure to the nearest one-hundredth of one
percent.
We do not include realized capital gains or losses and unrealized appreciation
or depreciation of the Division's Portfolio in the calculation. The Money
Market Division's hypothetical historical yield for the seven-day period ended
December 31, 1998 was 3.08%.
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We determine the Money Market Division's effective yield by taking the base
period return (computed as described above) and calculating the effect of
assumed compounding. The formula for the effective yield is: (base period return
+1)/365/7/-1. The Money Market Division's hypothetical historical effective
yield for the seven day period ended December 31, 1998 was 3.13%.
Yield and effective yield do not reflect the deduction of premium taxes that may
be imposed upon the redemption of Accumulation Units.
PERFORMANCE COMPARISONS
In our advertising and sales literature, we may compare the performance of each
or all of the available Divisions of the Separate Account to the performance of
(1) other variable annuities in general or (2) particular types of variable
annuities that invest in mutual funds, or series of mutual funds, with
investment objectives similar to each of the Divisions of the Separate Account.
Lipper Inc. ("Lipper") and the Variable Annuity Research and Data Service
("VARDS(R)") are independent services that monitor and rank the performance of
variable annuity issuers in each of the major categories of investment
objectives on an industry-wide basis. Lipper's rankings include variable life
insurance issuers as well as variable annuity issuers. VARDS(R) rankings
compare only variable annuity issuers. The performance analyses prepared by
Lipper and VARDS(R) rank such issuers on the basis of total return. Total
return assumes the reinvestment of dividends and distributions, but does not
take into consideration sales charges, redemption fees or certain expense
deductions at the separate account level. In addition, VARDS(R) prepares risk-
adjusted rankings, which consider the effects of market risk on total return
performance.
In addition, we may compare each Division's performance in advertisements and
sales literature to the following benchmarks:
. the Standard & Poor's 500 Composite Stock Price Index, an unmanaged weighted
index of 500 leading domestic companies that represents approximately 80% of
the market capitalization of the United States equity market,
. the Dow Jones Industrial Average, an unmanaged unweighted average of 30 blue
chip industrial corporations listed on the New York Stock Exchange and
generally considered representative of the United States stock market,
. the Consumer Price Index, published by the U.S. Bureau of Labor Statistics, a
statistical measure of change, over time, in the prices of goods and services
in major spending groups and generally is considered to be a measure of
inflation,
. the Lehman Brothers Government and Domestic Strategic Income Index, the
Salomon Brothers High Grade Domestic Strategic Income Index, and the Merrill
Lynch Government/Corporate Master Index, unmanaged indices that are generally
considered to represent the performance of intermediate and long term bonds
during various market cycles; and
. the Morgan Stanley Capital International Europe Australasia Far East Index, an
unmanaged index that is considered to be generally representative of major
non-United States stock markets.
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EFFECT OF TAX-DEFERRED ACCUMULATION
The Contracts qualify for tax-deferred treatment on earnings. This tax-deferred
treatment increases the amount available for accumulation by deferring taxes on
any earnings until the earnings are withdrawn. The longer the taxes are
deferred, the more the potential you have for the assets under your Contract to
grow over the term of the Contracts.
The hypothetical tables set out below illustrate this potential. The tables
compare accumulations based on a single initial purchase payment of $100,000
compounded annually under:
. a Contract, under which earnings are not taxed until withdrawn in connection
with a full surrender, partial withdrawal, or annuitization, or termination
due to insufficient Account Value ("withdrawal of earnings"); and
. an investment under which earnings are taxed on a current basis ("Taxable
Investment"), based on an assumed tax rate of 28%, and the assumed earning
rates specified.
5 Years 10 Years 20 Years
-------- -------- --------
(7.50% earnings rate)
Contract $143,563 $206,103 $424,785
Contract (after Taxes) $131,365 $176,394 $333,845
Taxable Investment $130,078 $169,202 $286,294
(10.00% earnings rate)
Contract $161,051 $259,374 $672,750
Contract (after Taxes) $143,957 $214,749 $512,380
Taxable Investment $141,571 $200,423 $401,694
The Contracts qualify for tax-deferred treatment on earnings. This tax-deferred
treatment increases the amount available for accumulation by deferring taxes on
any earnings until the earnings are withdrawn. The longer the taxes are
deferred, the more the potential you have for the assets under your Contract to
grow over the term of the Contracts.
The hypothetical tables set out below illustrate this potential. The tables
compare accumulations based on a single initial purchase payment of $100,000
compounded annually under:
. a Contract, whose earnings are not taxed until withdrawn in connection with
a full surrender, partial withdrawal, or annuitization, or termination due
to insufficient Account Value ("withdrawal of earnings"); and
. an investment whose earnings are taxed on a current basis ("Taxable
Investment"), based on an assumed tax rate of 28%, and the assumed earning
rates specified.
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FINANCIAL STATEMENTS
Separate Account D has a total of 70 Divisions as of the date of this Statement.
Thirteen Divisions (the "Generations Asset Builder Divisions") are available
under the Contracts that are the subject of this Statement. Twelve of these 13
Divisions are available under other AGL contracts. One of the Generations Asset
Builder Divisions and 11 additional Divisions of Separate Account D had no
operations as of December 31, 1998. The Financial Statements of Separate
Account D are not included in the Statement because none of the 13 Divisions
were available under the Contracts as of December 31, 1998.
You should consider the financial statements of AGL that we include in this
Statement primarily as bearing on the ability of AGL to meet its obligations
under the Contracts.
INDEX TO
FINANCIAL STATEMENTS
Page No.
--------
I. AGL Consolidated Financial Statements
Report of Ernst & Young LLP, Independent Auditors.................. F-1
Consolidated Balance Sheets........................................ F-2
Consolidated Statements of Income.................................. F-3
Consolidated Statements of Comprehensive Income.................... F-4
Consolidated Statements of Shareholder's Equity.................... F-5
Consolidated Statements of Cash Flows.............................. F-6
Notes to Consolidated Financial Statements......................... F-7
(The Financial Statements will be filed by Amendment.)
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PART C
OTHER INFORMATION
-----------------
Item 24. Financial Statements and Exhibits
(a) Financial Statements
PART A: None
PART B:
(1) Consolidated Financial Statements of American General Life
Insurance Company:
Report of Ernst & Young LLP, Independent Auditors
Consolidated Balance Sheets as of December 31, 1998 and 1997
Consolidated Statements for the years ended
December 31, 1998, 1997 and 1996
Consolidated Statements of Comprehensive Income
for the years ended December 31, 1998, 1997 and 1996
Consolidated Statements of Shareholder's Equity for the
years ended December 31, 1998, 1997 and 1996
Consolidated Statements of Cash Flows for the years
ended December 31, 1998, 1997 and 1996
Notes to Consolidated Financial Statements
(to be filed by Amendment)
PART C: None
(b) Exhibits
1(a) American General Life Insurance Company of Delaware Board of Directors
resolution authorizing the establishment of Separate Account D,
incorporated herein by reference to the initial filing of Registrant's
Form N-4 Registration Statement (File No. 2 - 49805), filed on
December 6, 1973.
(b) Resolution of the Board of Directors of American General Life Insurance
Company of Delaware authorizing, among other things, the
redomestication of that company in Texas and the renaming of that
company as American General Life Insurance Company, incorporated herein
by reference to Registrant's Form N-4 Registration Statement (File No.
33-43390), filed on October 16, 1996.
(c) Resolution of the Board of Directors of American General Life Insurance
Company of Delaware providing, inter alia, for Registered Separate
----- ----
Accounts' Standards of Conduct, incorporated herein by reference to
Pre-Effective Amendment No. 1 to Registrant's Form N-4 Registration
Statement (File No. 33-43390), filed on December 31, 1991.
C-1
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2 None
3(a) Master Marketing and Distribution Agreement by and among American
General Life Insurance Company, American General Securities
Incorporated, and Van Kampen American Capital Distributors, Inc,
incorporated herein by reference to Post-Effective Amendment No. 12 to
Registrant's Form N-4 Registration Statement (File No. 33-43390), filed
on April 30, 1997.
(b) Form of Selling Group Agreement by and among American General Life
Insurance Company, American General Securities Incorporated, and Van
Kampen American Capital Distributors, Inc, incorporated herein by
reference to Post-Effective Amendment No. 9 to Registrant's Form N-4
Registration Statement (File No. 33-43390), filed on August 16, 1996.
(c)(i) Participation Agreement by and among American General Life Insurance
Company, American General Securities Incorporated, Van Kampen American
Capital Life Investment Trust, Van Kampen American Capital Asset
Management, Inc., and Van Kampen American Capital Distributors, Inc,
incorporated herein by reference to Post-Effective Amendment No. 12 to
Registrant's Form N-4 Registration Statement (File No. 33-43390), filed
on April 30, 1997.
(ii) Participation Agreement by and among American General Life Insurance
Company, Morgan Stanley Universal Funds, Inc., Morgan Stanley Asset
Management, Inc. and Miller Anderson & Sherrerd LLP, incorporated
herein by reference to Post-Effective Amendment No. 12 to Registrant's
Form N-4 Registration Statement (File No. 33-43390), filed on April 30,
1997.
(d) Form of Agreement between American General Life Insurance Company and
Dealer regarding exchange and allocation transaction requests,
incorporated herein by reference to Post-Effective Amendment No. 1 to
Registrant's Form N-4 Registration Statement (File No. 33-43390), filed
on April 30, 1992.
4(a) Form of Combination Fixed and Variable Annuity Contract (Form No.
99020). (Filed herewith)
(b) Form of Qualified Contract Endorsement, incorporated herein by
reference to the initial filing of Registrant's Form N-4 Registration
Statement (File No. 33-43390), filed on October 16, 1991.
(c)(i) Specimen form of Individual Retirement Annuity Disclosure Statement
available under Contract Form No. 99020. (To be filed by Amendment)
(ii) Specimen form of Individual Retirement Annuity Endorsement,
incorporated herein by reference to Post-Effective Amendment No. 6 to
Registrant's Form N-4 Registration Statement (File No. (33-43390),
filed on April 28, 1995.
C-2
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(iii) Specimen form of IRA Instruction Form, incorporated herein by
reference to Post-effective Amendment No.1 to Registrant's Form N-4
Registration Statement (File No. 33-43390), filed on April 30, 1992.
5(a) Form of Application for Contract Form No. 99020. (Filed herewith)
(b) Specimen form of Absolute Assignment to Effect Section 1035(a) Exchange
and Rollover of a Life Insurance Policy or Annuity Contract,
incorporated herein by reference to Post-Effective Amendment No. 1 to
Registrant's Form N-4 Registration Statement (File No. 33-43390), filed
on April 30, 1992.
(c)(i) Specimen form of Generations Asset Builder Variable Annuity Service
Request, including telephone transfer authorization. (To be filed by
Amendment)
(ii) Specimen form of Generations Asset Builder Variable Annuity Ticket
Order under Contract No. 99020. (To be filed by Amendment)
(iii) Specimen form of confirmation of initial purchase payment under
Contract No. 99020. (To be filed by Amendment)
(iv) Specimen form for Special Dollar Cost Averaging Plans under Contract
No. 99020. (To be filed by Amendment)
6(a) Amended and Restated Articles of Incorporation of American General Life
Insurance Company, effective December 31, 1991, incorporated herein by
reference to the initial filing of Registrant's Form N-4 Registration
Statement (File No. 33-43390), filed on October 16, 1991.
(b) Bylaws of American General Life Insurance Company, adopted January 22,
1992, incorporated herein by reference to Post-Effective Amendment No.
1 to Registrant's Form N-4 Registration Statement (Form No. 33-43390),
filed on April 30, 1992.
7 None
8(a) Form of services agreement dated July 31, 1975, (limited to
introduction and first two recitals, and sections 1-3) among various
affiliates of American General Corporation, including American General
Life Insurance Company and American General Life Companies,
incorporated herein by reference to Post-Effective Amendment No. 23 to
AGL's Form N-4 Registration Statement for Separate Account A (File No.
33-44745), filed on April 24, 1998.
(b) Administrative Services Agreement between American General Life
Insurance Company and Van Kampen Asset Management, Inc. dated as of
December 1, 1998, previously filed in Post-Effective Amendment No. 17,
incorporated herein by reference to Registrant's Form N-4 Registration
Statement (No. 33-43390), filed on April 20, 1999.
C-3
<PAGE>
(c) Administrative Services Agreement by and among American General
Life Insurance Company, Morgan Stanley Asset Management Inc., and
Miller Anderson & Sherrerd, LLP dated as of January 24, 1997,
incorporated herein by reference to Post-Effective Amendment No. 17
to Registrant's Form N-4 Registration Statement (No. 33-43390),
filed on April 20, 1999.
9 Opinion and consent of Counsel. (To be filed by Amendment)
10 Consent of Independent Auditors. (To be filed by Amendment)
11 None
12 None
13(a)(i) Computations of hypothetical historical average annual total
returns for the Separate Account Divisions available under Contract
Form No. 99020 for the one and five year periods ended December 31,
1998, and since inception. (To be filed by Amendment)
(ii) Computations of hypothetical historical total returns for the
Separate Account Divisions under Contract Form No. 99020 for the
one and five year periods ended December 31, 1998, and since
inception. (To be filed by Amendment)
(iii) Computations of hypothetical historical cumulative total returns
for the Separate Account Divisions under Contract Form No. 99020
for the one and five year periods ended December 31, 1998, and
since inception. (To be filed by Amendment)
(iv) Computations of hypothetical historical 30-day yield for the
Domestic Income Division, the Government Division, and the Money
Market Division, available under Contract Form No. 99020 for the
one month period ended December 31, 1998. (To be filed by
Amendment)
(v) Computations of hypothetical historical seven day yield and
effective yield for the Money Market Division, available under
Contract Form No. 99020 for the seven day period ended December 31,
1998. (To be filed by Amendment)
14 Financial Data Schedule (See Exhibit 27 below).
27 (Inapplicable because, notwithstanding item 24(b) as to Exhibits,
the Commission Staff has advised that no such Schedule is
required.)
C-4
<PAGE>
Item 25. Directors and Officers of the Depositor
The directors, executive officers, and, to the extent responsible for
variable annuity operations, other officers of the depositor are listed below.
Name and Principal Positions and Offices
Business Address with the Depositor
------------------- ------------------
Donald W. Britton Director and Vice Chairman
2929 Allen Parkway
Houston, TX 77019
David A. Fravel Director and
2929 Allen Parkway Executive Vice President
Houston, Texas 77019
Robert F. Herbert, Jr. Director and
2727-A Allen Parkway Senior Vice President,
Houston, TX 77019 Treasurer and Controller
Royce G. Imhoff, II Director and Senior
2727-A Allen Parkway Vice President and
Houston, TX 77019 Chief Marketing Officer
John V. LaGrasse Director and
2929 Allen Parkway Executive Vice President-
Houston, TX 77019 Chief Systems Officer
Rodney O. Martin, Jr. Director and
2929 Allen Parkway Senior Chairman
Houston, TX 77019
Jon P. Newton Director and
2929 Allen Parkway Vice Chairman
Houston, TX 77019
Gary D. Reddick Director and
2929 Allen Parkway Executive Vice President
Houston, TX 77019
Ronald H. Ridlehuber Director, President and
2727-A Allen Parkway Chief Executive Officer
Houston, TX 77019
C-5
<PAGE>
Thomas M. Zurek Director, Executive Vice President
2929 Allen Parkway and General Counsel
Houston, TX 77019
Wayne A. Barnard Senior Vice President
2727-A Allen Parkway and Chief Actuary
Houston, TX 77019
Ross D. Friend Senior Vice President
2727 Allen Parkway and Chief Compliance Officer
Houston, TX 77019
F. Paul Kovach, Jr. Senior Vice President-
2727 Allen Parkway Broker Dealers and FIMG
Houston, TX 77019
Simon J. Leech Senior Vice President-
2727-A Allen Parkway Houston Service Center
Houston, TX 77019
Don M. Ward Senior Vice President-
2727 Allen Parkway Variable Products-Marketing
Houston, TX 77019
Farideh Farrokhi Vice President-Variable Products
2727-A Allen Parkway Accounting
Houston, TX 77019
Rosalia S. Nolan Vice President-
2727-A Allen Parkway Policy Administration
Houston, TX 77019
Larry M. Robinson Vice President-
2727-A Allen Parkway Variable Products-Marketing
Houston, TX 77019
Pauletta P. Cohn Secretary
2727 Allen Parkway
Houston, TX 77019
Joyce R. Bilski Administrative Officer
2727-A Allen Parkway
Houston, TX 77019
C-6
<PAGE>
Timothy M. Donovan Administrative Officer
2727-A Allen Parkway
Houston, TX 77019
Karen Harper Administrative Officer
2727-A Allen Parkway
Houston, TX 77019
Laura Milazzo Administrative Officer
2727-A Allen Parkway
Houston, TX 77019
Patricia L. Myles Administrative Officer
2727-A Allen Parkway
Houston, TX 77019
Linda Price Administrative Officer
2727-A Allen Parkway
Houston, TX 77019
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant
The following is a list of American General Corporation's subsidiaries as of May
31, 1999. 1,2,3,4,5 All subsidiaries listed are corporations, unless otherwise
indicated. Subsidiaries of subsidiaries are indicated by indentations and
unless otherwise indicated, all subsidiaries are wholly owned. Inactive
subsidiaries are denoted by an asterisk (*).
<TABLE>
<CAPTION>
Jurisdiction of
Name Incorporation
- ------------------------------------------------------------------------------- ---------------
<S> <C>
AGC Life Insurance Company..................................................... Missouri
American General Property Insurance Company/16/.............................. Tennessee
American General Property Insurance Company of Florida..................... Florida
American General Life and Accident Insurance Company/6/...................... Tennessee
Stylistic Distribution Corporation......................................... Delaware
Millennium Distribution Corporation........................................ Delaware
New Age Distribution Corporation........................................... Delaware
Good-To-Great Distribution Corporation..................................... Delaware
Next Generation Distribution Corporation................................... Delaware
New Technology Distribution Corporation.................................... Delaware
Life Application Distribution Corporation.................................. Delaware
American General Exchange, Inc............................................. Tennessee
American General Life Insurance Company/7/................................... Texas
American General Annuity Service Corporation............................... Texas
American General Life Companies............................................ Delaware
American General Life Insurance Company of New York........................ New York
The Winchester Agency Ltd................................................ New York
</TABLE>
C-7
<PAGE>
<TABLE>
<S> <C>
The Variable Annuity Life Insurance Company................................... Texas
Parkway 1999 Trust/17/...................................................... Maryland
PESCO Plus, Inc/14/......................................................... Delaware
American General Gateway Services, L.L.C/15/................................ Delaware
The Variable Annuity Marketing Company...................................... Texas
VALIC Investment Services Company........................................... Texas
VALIC Retirement Services Company........................................... Texas
VALIC Trust Company......................................................... Texas
The Franklin Life Insurance Company............................................. Illinois
The American Franklin Life Insurance Company.................................. Illinois
Franklin Financial Services Corporation....................................... Delaware
HBC Development Corporation..................................................... Virginia
Templeton American General Life of Bermuda, Ltd/13/............................. Bermuda
Western National Corporation.................................................... Delaware
WNL Holding Corp.............................................................. Delaware
American General Annuity Insurance Company.................................. Texas
American General Assignment Corporation..................................... Texas
A.G. Distributors, Inc.......................................................... Delaware
A.G. Investment Advisory Services, Inc...................................... Delaware
American General Financial Institution Group, Inc........................... Delaware
WNL Insurance Services, Inc................................................. Delaware
American General Corporation*.................................................... Delaware
American General Delaware Management Corporation/1/.............................. Delaware
American General Finance, Inc.................................................... Indiana
HSA Residential Mortgage Services of Texas, Inc................................. Delaware
AGF Investment Corp............................................................. Indiana
American General Auto Finance, Inc.............................................. Delaware
American General Finance Corporation/8/......................................... Indiana
American General Finance Group, Inc........................................... Delaware
American General Financial Services, Inc./9/................................ Delaware
The National Life and Accident Insurance Company.......................... Texas
Merit Life Insurance Co....................................................... Indiana
Yosemite Insurance Company.................................................... Indiana
American General Finance, Inc................................................... Alabama
American General Financial Center............................................... Utah
American General Bank, FSB...................................................... Utah
American General Financial Center, Inc.*........................................ Indiana
American General Financial Center, Incorporated*................................ Indiana
American General Financial Center Thrift Company*............................... California
Thrift, Incorporated*........................................................... Indiana
American General Investment Advisory Services, Inc.*............................. Texas
American General Investment Holding Corporation/10/.............................. Delaware
American General Investment Management Corporation/10/........................... Delaware
American General Realty Advisors, Inc............................................ Delaware
American General Realty Investment Corporation................................... Texas
AGLL Corporation/11/............................................................ Delaware
American General Land Holding Company........................................... Delaware
AG Land Associates, LLC/11/................................................... California
GDI Holding, Inc.*/12/.......................................................... California
Pebble Creek Service Corporation................................................ Florida
SR/HP/CM Corporation............................................................ Texas
Green Hills Corporation.......................................................... Delaware
Knickerbocker Corporation........................................................ Texas
American Athletic Club, Inc..................................................... Texas
Pavilions Corporation............................................................ Delaware
USLIFE Corporation............................................................... Delaware
</TABLE>
C-8
<PAGE>
<TABLE>
<S> <C>
All American Life Insurance Company............................................. Illinois
American General Assurance Company.............................................. Illinois
American General Indemnity Company............................................ Nebraska
USLIFE Credit Life Insurance Company of Arizona............................... Arizona
American General Life Insurance Company of Pennsylvania......................... Pennsylvania
I.C. Cal*....................................................................... California
The Old Line Life Insurance Company of America.................................. Wisconsin
The United States Life Insurance Company in the City of New York................ New York
USLIFE Agency Services, Inc..................................................... Illinois
USMRP, Ltd.................................................................... Turks & Caicos
USLIFE Financial Institution Marketing Group, Inc............................... California
USLIFE Insurance Services Corporation........................................... Texas
USLIFE Realty Corporation....................................................... Texas
USLIFE Real Estate Services Corporation..................................... Texas
USLIFE Systems Corporation...................................................... Delaware
</TABLE>
American General Finance Foundation, Inc. is not included on this list. It is a
non-profit corporation.
NOTES
/1/ The following limited liability companies were formed in the State of
Delaware on March 28, 1995. The limited liability interests of each are
jointly owned by AGC and AGDMC and the business and affairs of each are
managed by AGDMC:
American General Capital, L.L.C.
American General Delaware, L.L.C.
/2/ On November 26, 1996, American General Institutional Capital A ("AG Cap
Trust A"), a Delaware business trust, was created. On March 10, 1997,
American General Institutional Capital B ("AG Cap Trust B"), also a
Delaware business trust, was created. Both AG Cap Trust A's and AG Cap
Trust B's business and affairs are conducted through their trustees:
Bankers Trust Company and Bankers Trust (Delaware). Capital securities of
each are held by non-affiliated third party investors and common securities
of AG Cap Trust A and AG Cap Trust B are held by AGC.
/3/ On November 14, 1997, American General Capital I, American General Capital
II, American General Capital III, and American General Capital IV
(collectively, the "Trusts"), all Delaware business trusts, were created.
Each of the Trusts' business and affairs are conducted through its
trustees: Bankers Trust (Delaware) and James L. Gleaves (not in his
individual capacity but solely as Trustee).
/4/ On July 10, 1997, the following insurance subsidiaries of AGC became the
direct owners of the indicated percentages of membership units of SBIL B,
L.L.C. ("SBIL B"), a U.S. limited liability company: VALIC (22.6%), FL
(8.1%), AGLA (4.8%) and AGL (4.8%).
Through their aggregate 40.3% interest in SBIL B, VALIC, FL, AGLA and AGL
indirectly own approximately 28% of the securities of SBI, an English
company, and 14% of the securities of ESBL, an English company, SBP, an
English company, and SBFL, a Cayman Islands company. These interests are
held for investment purposes only.
/5/ Effective December 5, 1997, AGC and Grupo Nacional Provincial, S.A. ("GNP")
completed the purchase by AGC of a 40% interest in Grupo Nacional
Provincial Pensions S.A. de C.V., a new holding company formed by GNP, one
of Mexico's largest financial services companies.
/6/ AGLA owns approximately 12% of Whirlpool Financial Corp. ("Whirlpool")
preferred stock. AGLA's holdings in Whirlpool represents approximately 3%
of the voting power of the capital stock of Whirlpool. The interests in
Whirlpool (which is a corporation that is not associated with AGC) are held
for investment purposes only.
/7/ AGL owns 100% of the common stock of American General Securities
Incorporated ("AGSI"), a full-service NASD broker-dealer. AGSI, in turn,
owns 100% of the stock of the following insurance agencies:
C-9
<PAGE>
American General Insurance Agency, Inc. (Missouri)
American General Insurance Agency of Hawaii, Inc. (Hawaii)
American General Insurance Agency of Massachusetts, Inc. (Massachusetts)
In addition, the following agencies are indirectly related to AGSI, but not
owned or controlled by AGSI:
American General Insurance Agency of Ohio, Inc. (Ohio)
American General Insurance Agency of Texas, Inc. (Texas)
American General Insurance Agency of Oklahoma, Inc. (Oklahoma)
Insurance Masters Agency, Inc. (Texas)
AGSI and the foregoing agencies are not affiliates or subsidiaries of AGL under
applicable holding company laws, but they are part of the AGC group of
companies under other laws.
/8/ American General Finance Corporation is the parent of an additional 48
wholly-owned subsidiaries incorporated in 30 states and Puerto Rico for the
purpose of conducting its consumer finance operations, including those
noted in footnote 10 below.
/9/ American General Financial Services, Inc. is the parent of an additional 7
wholly-owned subsidiaries incorporated in 4 states and Puerto Rico for the
purpose of conducting its consumer finance operations.
/10/ American General Investment Management, L.P., a Delaware limited
partnership, is jointly owned by AGIHC and AGIMC. AGIHC holds a 99% limited
partnership interest, and AGIMC owns a 1% general partnership interest.
/11/ AG Land Associates, LLC is jointly owned by AGLH and AGLL. AGLH holds a
98.75% managing interest and AGLL owns a 1.25% managing interest.
/12/ AGRI owns a 75% interest in GDI Holding, Inc.
/13/ AGCL owns 50% of the common stock of TAG Life. Templeton International,
Inc., a Delaware corporation, owns the remaining 50% of TAG Life. Templeton
International, Inc. is not affiliated with AGC.
/14/ VALIC holds 900 (90%) of the outstanding common shares. The Florida
Education Association/United, a Florida teachers union and unaffiliated
third party, holds the remaining 100 (10%) of the outstanding common
shares.
/15/ VALIC holds (90%) of the outstanding common shares. Gateway Investment
Services, Inc., a California corporation and an unaffiliated third party,
holds the remaining 10% of the outstanding common shares.
/16/ AGPIC is jointly owned by AGCL and AGLA. AGCL owns 51.85% and AGLA owns
48.15% of the issued and outstanding shares of AGPIC.
/17/ Parkway 1999 Trust was formed as a Maryland business trust. VALIC owns 100%
of the REIT's common equity.
Company abbreviations as used in item 26:
<TABLE>
<CAPTION>
State/Jur.
Abb. Company of Domicile
- ------------ ------------------------------------------------------- -----------
<S> <C> <C>
AAL All American Life Insurance Company.................... IL
AAth American Athletic Club, Inc............................ TX
AFLI The American Franklin Life Insurance Company........... IL
AGA American General Annuity Insurance Company............. TX
AGAC American General Assurance Company..................... IL
AGAS American General Annuity Service Corporation........... TX
AGBS A.G. Distributors, Inc................................. DE
AGB American General Bank, FSB............................. UT
AGC American General Corporation........................... TX
AGCL AGC Life Insurance Company............................. MO
AGDMC American General Delaware Management Corporation....... DE
</TABLE>
C-10
<PAGE>
<TABLE>
<S> <C> <C>
AGF American General Finance, Inc.......................... IN
AGFC American General Finance Corporation................... IN
AGFCI American General Financial Center, Incorporated........ IN
AGFCT American General Financial Center Thrift Company....... CA
AGFG American General Finance Group, Inc.................... DE
AGF Inv AGF Investment Corp.................................... IN
AGFn American General Financial Center...................... UT
AGFnC American General Financial Center, Inc................. IN
AGFS American General Financial Services, Inc............... DE
AGGS American General Gateway Services, L.L.C............... DE
AGIA American General Insurance Agency, Inc................. MO
AGIAH American General Insurance Agency of Hawaii, Inc....... HI
AGIAM American General Insurance Agency of
Massachusetts, Inc................................... MA
AGIAO American General Insurance Agency of Ohio, Inc......... OH
AGIAOK American General Insurance Agency of Oklahoma, Inc..... OK
AGIAS A.G. Investment Advisory Services, Inc................. DE
AGIAT American General Insurance Agency of Texas, Inc........ TX
AGIHC American General Investment Holding Corporation........ DE
AGIM American General Investment Management, L.P............ DE
AGIMC American General Investment Management Corporation..... DE
AGIND American General Indemnity Company..................... NE
AGFIG American General Financial Institution Group, Inc...... DE
AGL American General Life Insurance Company................ TX
AGLC American General Life Companies ....................... DE
AGLA American General Life and Accident Insurance Company... TN
AGLH American General Land Holding Company.................. DE
AGLL AGLL Corporation....................................... DE
AGNY American General Life Insurance Company of New York.... NY
AGPA American General Life Insurance Company of Pennsylvania PA
AGPIC American General Property Insurance Company............ TN
AGRA American General Realty Advisors, Inc.................. DE
AGRI American General Realty Investment Corporation......... TX
AGSI American General Securities Incorporated............... TX
AGX American General Exchange, Inc......................... TN
ASGN American General Assignment Corporation................ TX
FFSC Franklin Financial Services Corporation................ DE
FL The Franklin Life Insurance Company.................... IL
GHC Green Hills Corporation................................ DE
GGDC Good-To-Great Distribution Corporation................. DE
HBDC HBC Development Corporation............................ VA
KC Knickerbocker Corporation.............................. TX
LADC Life Application Distribution Corporation.............. DE
MDC Millennium Distribution Corporation.................... DE
ML Merit Life Insurance Co................................ IN
NADC New Age Distribution Corporation....................... DE
NGDC Next Generation Distribution Corporation............... DE
NLA The National Life and Accident Insurance Company....... TX
NTDC New Technology Distribution Corporation................ DE
OLL The Old Line Life Insurance Company of America......... WI
PKWY Parkway 1999 Trust..................................... MD
PAV Pavilions Corporation.................................. DE
PCSC Pebble Creek Service Corporation....................... FL
PIFLA American General Property Insurance Company of Florida. FL
PPI PESCO Plus, Inc........................................ DE
RMST HSA Residential Mortgage Services of Texas, Inc........ DE
SDC Stylistic Distribution Corporation..................... DE
SRHP SR/HP/CM Corporation................................... TX
TAG Life Templeton American General Life of Bermuda, Ltd........ BA
TI Thrift, Incorporated................................... IN
UAS USLIFE Agency Services, Inc............................ IL
UC USLIFE Corporation..................................... DE
UCLA USLIFE Credit Life Insurance Company of Arizona........ AZ
UFI USLIFE Financial Institution Marketing Group, Inc...... CA
UIS USLIFE Insurance Services Corporation.................. TX
URC USLIFE Realty Corporation.............................. TX
</TABLE>
C-11
<PAGE>
<TABLE>
<S> <C> <C>
USC USLIFE Systems Corporation.......................................... DE
USL The United States Life Insurance Company in the City of
New York............................................................ NY
USMRP USMRP, Ltd.......................................................... T&C
VALIC The Variable Annuity Life Insurance Company......................... TX
VAMCO The Variable Annuity Marketing Company.............................. TX
VISCO VALIC Investment Services Company................................... TX
VRSCO VALIC Retirement Services Company................................... TX
VTC VALIC Trust Company................................................. TX
WA The Winchester Agency Ltd........................................... NY
WIS WNL Insurance Services, Inc......................................... DE
WNC Western National Corporation........................................ DE
WNLH WNL Holding Corp.................................................... DE
YIC Yosemite Insurance Company.......................................... IN
</TABLE>
Item 27. Number of Contract Owners
As of May 31, 1999, there were no owners of Contracts of the class presently
offered by this Registration Statement, because the Contract has not yet been
offered.
Item 28. Indemnification
Article VII, section 1, of the Company's By-Laws provides, in part, that the
Company shall have power to indemnify any person who was or is a party or is
threatened to be made a party to any proceeding (other than an action by or in
the right of the Company) by reason of the fact that such person is or was
serving at the request of the Company, against expenses, judgments, fines,
settlements, and other amounts actually and reasonably incurred in connection
with such proceeding if such person acted in good faith and in a manner such
person reasonably believed to be in the best interest of the Company and, in the
case of a criminal proceeding, had no reasonable cause to believe the conduct of
such person was unlawful.
Article VII, section 1 (in part), section 2, and section 3, provide that the
Company shall have power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action by
or in the right of the Company to procure a judgment in its favor by reason of
the fact that such person is or was acting in behalf of the Company, against
expenses actually and reasonably incurred by such person in connection with the
defense or settlement of such action if such person acted in good faith, in a
manner such person believed to be in the best interests of the Company, and with
such care, including reasonable inquiry, as an ordinarily prudent person in a
like position would use under similar circumstances. No indemnification shall
be made under section 1: (a) in respect of any claim, issue, or matter as to
which such person shall have been adjudged to be liable to the Company, unless
and only to the extent that the court in which such action was brought shall
determine upon application that, in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for the expenses
which such court shall determine; (b) of amounts paid in settling or otherwise
disposing of a threatened or pending action with or without court approval; or
(c) of expense incurred in defending a threatened or pending action which is
settled or otherwise disposed of without court approval.
Article VII, section 3, provides that, with certain exceptions, any
indemnification under Article VII shall be made by the Company only if
authorized in the specific case, upon a determination that
C-12
<PAGE>
indemnification of the person is proper in the circumstances because the person
has met the applicable standard of conduct set forth in section 1 of Article VII
by (a) a majority vote of a quorum consisting of directors who are not parties
to such proceeding; (b) approval of the shareholders, with the shares owned by
the person to be indemnified not being entitled to vote thereon; or (c) the
court in which such proceeding is or was pending upon application made by the
Company or the indemnified person or the attorney or other persons rendering
services in connection with the defense, whether or not such application by the
attorney or indemnified person is opposed by the Company.
Article VII, section 7, provides that for purposes of Article VII, those persons
subject to indemnification include any person who is or was a director, officer,
or employee of the Company, or is or was serving at the request of the Company
as a director, officer, or employee of another foreign or domestic corporation
which was a predecessor corporation of the Company or of another enterprise at
the request of such predecessor corporation.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Item 29. Principal Underwriters
(a) Registrant's principal underwriter, American General Securities
Incorporated, also acts as principal underwriter for American
General Life Insurance Company of New York Separate Account E,
American General Life Insurance Company Separate Account A and
American General Life Insurance Company Separate Account VL-R.
(b) The directors and principal officers of the principal underwriter
are:
<TABLE>
<CAPTION>
Position and Offices
with Underwriter,
Name and Principal American General
Business Address Securities Incorporated
----------------- -----------------------
<S> <C>
F. Paul Kovach, Jr. Director and Chairman,
American General Securities President and Chief Executive Officer
Incorporated
2727 Allen Parkway
Houston, TX 77019
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Royce G. Imhoff, II Director
American General Life
Companies
2727-A Allen Parkway
Houston, Texas 77019
Rodney O. Martin, Jr. Director and Vice Chairman
American General Life
Companies
2929 Allen Parkway
Houston, TX 77019
John A. Kalbaugh Vice President - Chief Marketing
American General Life Officer
Companies
2727 Allen Parkway
Houston, TX 77019
Robert M. Roth Vice President -
American General Securities Administration and Compliance,
Incorporated Treasurer and Secretary
2727 Allen Parkway
Houston, TX 77019
Don M. Ward Vice President
American General Life
Companies
2727 Allen Parkway
Houston, TX 77019
Pauletta P. Cohn Assistant Secretary
American General Life
Companies
2929 Allen Parkway
Houston, TX 77019
Robert F. Herbert Assistant Treasurer
American General Life
Companies
2727-A Allen Parkway
Houston, Texas 77019
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
K. David Nunley Assistant Associate Tax Officer
American General Life
Companies
2727-A Allen Parkway
Houston, Texas 77019
(c) Not Applicable.
</TABLE>
Item 30. Location of Records
All records referenced under Section 31(a) of the 1940 Act, and Rules 31a-1
through 31a-3 thereunder, are maintained and in the custody of American General
Life Companies at its principal executive office located at 2727-A Allen
Parkway, Houston, TX 77019.
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
The Registrant undertakes: A) to file a post-effective amendment to this
Registration Statement as frequently as is necessary to ensure that the audited
financial statements in the Registration Statement are never more than 16 months
old for so long as payments under the Contracts may be accepted; B) to include
either (1) as part of any application to purchase a Contract offered by a
prospectus, a space that an applicant can check to request a Statement of
Additional Information, or (2) a toll-free number or a post card or similar
written communication affixed to or included in the applicable prospectus that
the applicant can use to send for a Statement of Additional Information; C) 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.
Representation Regarding the Reasonableness of Aggregate Fees and Charges
Deducted Under the Contracts Pursuant to Section 26(e)(A) of the Investment
Company Act of 1940
AGL represents that the fees and 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 AGL.
C-15
<PAGE>
POWERS OF ATTORNEY
Each person whose signature appears below hereby appoints Thomas M. Zurek,
Robert F. Herbert, Jr. and Pauletta P. Cohn and each of them, any one of whom
may act without the joinder of the others, as his/her attorney-in-fact to sign
on his/her behalf and in the capacity stated below and to file all amendments to
this Registration Statement, which amendment or amendments may make such changes
and additions to this Registration Statement as such attorney-in-fact may deem
necessary or appropriate.
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant, American General Life Insurance Company Separate Account
D, has duly caused this Registration Statement to be signed on its behalf, in
the City of Houston, and State of Texas on this 28th day of June, 1999.
AMERICAN GENERAL LIFE INSURANCE
COMPANY
SEPARATE ACCOUNT D
(Registrant)
BY: AMERICAN GENERAL LIFE INSURANCE
COMPANY
(On behalf of the Registrant and itself)
BY: /s/ ROBERT F. HERBERT, JR.
------------------------------------
Robert F. Herbert, Jr.
Senior Vice President,
Treasurer and Controller
[SEAL]
ATTEST: BY /s/ PAULETTA P. COHN
---------------------
Pauletta P. Cohn
Secretary
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ RONALD H. RIDLEHUBER Principal Executive Officer and June 28, 1999
- ------------------------
Ronald H. Ridlehuber Director
/s/ ROBERT F. HERBERT, JR Principal Financial and Accounting June 28, 1999
- -------------------------
Robert F. Herbert, Jr. Officer and Director
/s/ DONALD W. BRITTON Director June 28, 1999
- ---------------------
Donald W. Britton
/s/ DAVID A. FRAVEL Director June 28, 1999
- -- ---------------
David A. Fravel
/s/ ROYCE G. IMHOFF, II Director June 28, 1999
- -----------------------
Royce G. Imhoff, II
/s/ JOHN V. LAGRASSE Director June 28, 1999
- --------------------
John V. LaGrasse
/s/ RODNEY O. MARTIN, JR Director June 28, 1999
- ------------------------
Rodney O. Martin, Jr.
/s/ JON P. NEWTON Director June 28, 1999
- -----------------
Jon P. Newton
/s/ GARY D. REDDICK Director June 28, 1999
- -------------------
Gary D. Reddick
/s/ THOMAS M. ZUREK Director June 28, 1999
- -------------------
Thomas M. Zurek
<PAGE>
EXHIBIT INDEX
Exhibit No.
- -----------
4(a) Form of Combination Fixed and Variable Annuity Contract (Form No.
99020).
5(a) Form of Application for Contract Form No. 99020.
E-1
<PAGE>
Exhibit 4(a)
E-2
<PAGE>
American General Life
Insurance Company
Unless otherwise directed by the Owner, We will pay a monthly income to the
Annuitant if living on the Annuity Commencement Date. The dollar amounts of such
payments will be determined on the basis of the provisions of this Contract. The
first payment will be payable on the Annuity Commencement Date. Subsequent
payments will be payable on the corresponding day of each month thereafter in
accordance with the provisions of this Contract.
All payments and values provided by this Contract, when based on the investment
experience of a separate account are variable, may increase or decrease and are
not guaranteed as to amount. See the "Separate Account" and "Variable Annuity
Payments" provisions in this Contract.
CANCELLATION RIGHT. You may return this Contract for cancellation to Us or to
the sales representative through whom it was purchased, within 10 days after
delivery. Upon surrender of this Contract within the 10 day period, we will
refund the sum of Your Account Value at the end of the Valuation Period in which
Your request is received, plus any Purchase Payment Charge, Premium Taxes or
other applicable tax charges that have been deducted.
This is an INDIVIDUAL FLEXIBLE PAYMENT VARIABLE and FIXED DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING - NOT ELIGIBLE FOR DIVIDENDS.
SIGNED AT THE HOME OFFICE ON THE DATE OF ISSUE.
Secretary President
READ YOUR CONTRACT CAREFULLY
A STOCK COMPANY
A Subsidiary of American General Corporation
Home Office: Houston, Texas
2727-A Allen Parkway P.O. Box 1401 Houston, TX 77251-1401 (713) 831-3505
<PAGE>
<TABLE>
<CAPTION>
INDEX
Page
<S> <C>
Account Value 4
Accumulation Units 13
Allocation of Purchase Payments 9
Annuity Options 23
Annuity Tables 24
Annuity Units 23
Automatic Rebalancing 17
Beneficiary 11
Change of Investments or Investment Objective 8
Contingent Annuitant 5
Death Proceeds 18
Definitions 4
Divisions 13
Dollar Cost Averaging 16
Fixed Account Value 12
Fixed Annuity Payments 23
General Provisions 8
Guaranteed Interest Rates 13
Guarantee Periods 12
Net Investment Factor 14
Ownership Provisions 10
Payment and Deferment 17
Payment of Benefits 22
Premium Taxes 10
Purchase Payments 9
Schedule Page 3
Separate Account 13
Surrenders 18
Full Surrender 18
Partial Withdrawals 18
Tax Charge 19
Transfers 14
Variable Annuity Payments 23
</TABLE>
Page 2
<PAGE>
[Generations Asset Builder]
American General Life Insurance Company
SCHEDULE PAGE
<TABLE>
<S> <C>
Initial Purchase Payment: $5,000
Minimum Additional Purchase Payments: $ 100
Additional Benefits: The charge for this benefit, 0.13% of the Account Enhanced Death
Value at the end of each Contract Year, is in addition to the Benefit
Maximum Asset Charge Factors
Maximum Asset Charge Factors (Separate Account Only) Annual Rate: 0.59%
Maximum Transfer Charge (After first 12 in a Contract Year) $ 25
Issue Age: 35
Annuity Commencement Date: April 1, 2029
</TABLE>
Purchase Payment Charge (Each entire purchase is based on the sum of Purchase
Payments Paid to Date):
Sum of Purchase Payments to Date Purchase Payment Charge Percentage
$ Up to - 49,999.99 5.75%
$ 50,000 - 99,999.99 4.75%
$ 100,000 - 249,999.99 3.75%
$ 250,000 - 499,999.99 2.75%
$ 500,000 - 999,999.99 2.00%
$ 1,000,000 and above 1.00%
Contract Number: 123456
Annuitant: John Doe
Contract Owner: John Doe
Date of Issue: April 1, 1999
Contract Jurisdiction: (State Name)
This is a (Sex Distinct) Contract
Page 3
<PAGE>
SCHEDULE PAGE (CONTINUED)
SEPARATE ACCOUNT DIVISIONS:
PERCENTAGE
[MONEY MARKET 0%
COMSTOCK 100%
DOMESTIC INCOME 0%
EMERGING GROWTH 0%
ENTERPRISE 0%
GLOBAL EQUITY 0%
GOVERNMENT 0%
GROWTH AND INCOME 0%
HIGH YIELD 0%
INTERNATIONAL MAGNUM 0%
MID CAP VALUE 0%
MORGAN STANLEY REAL ESTATE SECURITIES 0%
STRATEGIC STOCK 0%
FIXED ACCOUNT - 1 YEAR GUARANTEE PERIOD 0%
--
TOTAL ALLOCATIONS 100%]
Page 3A
<PAGE>
DEFINITIONS
We, Our, Us, or Company. American General Life Insurance Company.
You, Your, Owner. The Owner of this Contract. The Owner is the person, persons,
or entity entitled to the ownership rights stated in this Contract. The Owner
may designate a trustee or custodian of a retirement plan which meets the
requirements of Section 401, Section 408(c), or Section 408(k) of the Internal
Revenue Code to serve as legal owner of assets of a retirement plan, but the
term Owner as used herein, shall refer to the person or organization entering
into this Contract.
Account. Any of the Divisions or the Fixed Account.
Account Value. The sum of the Fixed Account Value and the Separate Account Value
after deduction of any fees. The Fixed Account Value is the sum of Net Purchase
Payments and transfers into the Fixed Account, plus accumulated interest, less
any partial withdrawals and transfers out of the Fixed Account. The Separate
Account Value is the sum of the values of the Divisions. The value of a Division
is the value of a Division's Accumulation Unit multiplied by the number of
Accumulation Units in that Division.
Accumulation Period. The period during which Net Purchase Payments are applied
under this Contract.
Accumulation Unit. A measuring unit used in calculating Your interest in a
Division of Separate Account D before the Annuity Commencement Date.
Age. The age of the Annuitant on the Annuitant's last birthday unless otherwise
stated.
Annuitant. The person on whose life annuity payments are based. The Annuitant's
name is shown on the Schedule Page.
Annuity Commencement Date. The date on which We begin making annuity payments
under an Annuity Payment Option, unless You or a Beneficiary elect a single sum
payment instead.
Annuity Payment Options (or Annuity Options). One of the ways in which You or a
Beneficiary can request Us to make annuity payments. An Annuity Payment Option
will control the amount of each payment, how often We make payments, and for how
long We make payments.
Annuity Unit. A measuring unit used to calculate the amount of Variable Annuity
Payments.
Beneficiary. The person who will receive any proceeds due under the Contract
following the death of the Owner or the Annuitant. If no named Beneficiary is
living at the time any payment is to be made, the Owner shall be the
Beneficiary, or if the Owner is not living, the Owner's estate shall be the
Beneficiary.
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<PAGE>
Business Day. A Business Day is each day that the New York Stock Exchange is
open for business. For the purpose of collecting daily charges, a Business Day
immediately preceded by one or more non-business calendar days will include
those non-business days as a part of that Business Day. For example, a Business
Day which falls on a Monday will consist of a Monday and the immediately
preceding Saturday and Sunday.
Code. The Internal Revenue Code of 1986, as amended.
Contingent Annuitant. A person whom You designate under a Non-Qualified Contract
to become the Annuitant if: (1) the Annuitant dies before the Annuity
Commencement Date; and (2) the Contingent Annuitant is alive when the Annuitant
dies.
A Contingent Annuitant may not be named except at the time of application. Once
named, the choice may not be revoked or replaced. If a Contingent Annuitant
dies, a new Contingent Annuitant may not be named. After Annuity Payments start,
a Contingent Annuitant may not become the Annuitant.
Contingent Beneficiary. A person whom You designate to receive any proceeds due
under this Contract following the death of an Owner or an Annuitant, if the
Beneficiary has died but the Contingent Beneficiary is alive when the proceeds
become payable.
Contract. An individual annuity Contract offered by the Prospectus.
Contract Anniversary. Each anniversary of the Date of Issue of this Contract.
Contract Year. A period of 12 consecutive months beginning on the Date of Issue
or any anniversary thereof.
Date of Issue. The date on which this Contract becomes effective as shown on the
Schedule Page.
Division. A separate and distinct division of the Separate Account, to which
specific underlying shares of a Variable Fund are allocated and for which
Accumulation Units and Annuity Units are separately maintained.
Fixed Account. An account under this Contract that is a part of the general
account of the Company. It is not part of the assets of the Separate Account.
The assets of the general account are subject to the claims of general creditors
of the Company.
Fixed Annuity Option. An Annuity Option with payments that are fixed in amount
and do not vary with the investment experience of any division of Separate
Account D.
Guarantee Period. The period for which we credit a Guaranteed Interest Rate.
Guaranteed Interest Rate. The rate of interest We credit during any Guarantee
Period, on an effective annual basis.
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<PAGE>
Home Office. Our office at the following address and telephone number: American
General Life Insurance Company, Annuity Administration Department, 2727-A Allen
Parkway, Houston, Texas 77019-2115; Mailing Address - P.O, Box 1401, Houston,
Texas 77251-1401; 1-800-200-3883 or 713-831-3505.
Issue Age. As of the Date of Issue, the age of the Annuitant on the Annuitant's
last birthday. (If the Date of Issue occurs on the Annuitant's birthday, "last
birthday" will mean the birthday occurring on the Date of Issue).
Net Asset Value Per Share. The net assets of a Variable Fund divided by the
number of shares in the Variable Fund.
Net Purchase Payment. The gross amount of a Purchase Payment less the Purchase
Payment Charge, and less any Premium Taxes or other applicable tax charges
deducted at the time a Purchase Payment is made.
Non-Qualified Contract. A Contract that does not qualify for federal income tax
treatment that occurs with retirement plans allowed by Sections 401, 403, 408 or
408A of the Code.
Owner. The person or persons entitled to exercise all rights and privileges
under this Contract. The term "Owner" means either one person or joint ownership
by two or more persons. In connection with a retirement plan, the employer of
the Annuitant or the trustee of the retirement plan may be designated as Owner.
Owner's Account. An account to which each Purchase Payment is credited by the
Company on behalf of an Owner.
Payee. A person who is to receive annuity payments, surrender proceeds or death
proceeds under this Contract.
Payout Period. The period, starting with the Annuity Commencement Date, during
which Annuity Payments are made by the Company.
Premium Tax. The amount of tax, if any, charged by a state or municipality on
Purchase Payments or Contract values.
Prospectus. A separate document which provides information regarding the
provisions of this Contract, and the variable and fixed investments offered
under this Contract.
Purchase Payment. An amount paid to the Company as consideration for the
benefits described herein.
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<PAGE>
Purchase Payment Charge. The Purchase Payment Charge is calculated by
multiplying the Purchase Payment paid (after deduction of any state Premium Tax)
by the Purchase Payment Charge Percentage shown on the Schedule Page.
Qualified Contract. A Contract that is eligible for the kind of federal income
tax treatment that occurs with retirement plans allowed by sections 401, 403,
408 or 408A of the Code.
Separate Account. A segregated investment account named "Separate Account D"
established by the Company to separate the assets funding the variable benefits
for the class of contracts to which this Contract belongs from the other assets
of the Company. That portion of the assets of the Separate Account equal to the
reserves and other Contract liabilities with respect to the Separate Account
shall not be chargeable with liabilities arising out of any other business We
may conduct. Income, gains and losses, whether or not realized, from assets
allocable to the Separate Account, are credited to or charged against such
Account without regard to Our other income, gains or losses.
Unit Value. The value of: (1) an Accumulation Unit as described in the
Accumulation Units provision; or (2) an Annuity Unit as described in the
"Annuity Units" provision.
Valuation Date. Valuation of the various Divisions will occur on each Business
Day during each month. If the underlying investment option is unable to value or
determine the Division's investment in an investment option due to any of the
reasons stated in the Payment and Deferment section, the Valuation Date for the
Division with respect to the unvalued portion shall be the first Business Day
that the assets can be valued or determined.
Valuation Period. The period that starts at the close of regular trading on the
New York Stock Exchange on a Valuation Date and ends at the close of regular
trading on the Exchange on the next Valuation Date.
Variable Annuity Option. An Annuity Option with annuity payments that vary in
amount based on the investment earnings and losses of one or more of the
Divisions.
Variable Fund. An individual investment fund or a series of an individual
investment fund in which a Division invests.
Written, In Writing. A written request or notice in acceptable form and content,
which is signed and dated, and received at Our Home Office.
Page 7
<PAGE>
GENERAL PROVISIONS
Entire Contract. This Contract, endorsements if any, and a copy of the
Application, if attached, is the entire Contract. All statements made by the
Contract Owner or Annuitant will be deemed representations and not warranties.
No statement will be used to reduce a claim under this Contract unless it is in
writing and made a part of this Contract.
Not Contestable. This Contract is not contestable.
Guarantees. Subject to the terms of the Net Investment Factor provision of this
Contract, We guarantee that the dollar amount of variable annuity payments made
during the lifetime of the Payee(s) will not be adversely affected by Our actual
mortality experience or by the actual expenses We incur in excess of the expense
deductions provided for in this Contract.
Settlement. All benefits under this Contract are payable from Our Home Office.
Nonparticipating. This Contract is nonparticipating and does not share in Our
divisible surplus or earnings.
Change of Investments or Investment Objective. Unless otherwise required by law
or regulation, the investment advisor or any investment objective may not be
changed without Our consent. If required, approval of or change of any
investment objective will be filed with the Insurance Department of the state
where this Contract is delivered. You will be notified of any material change in
investment objective which has been approved. Notification of a change in
investment objective will be given in advance to those Owners who have the right
to comment on or vote on such change.
Any substitution of the underlying investments of any Division will comply with
all applicable requirements of the Investment Company Act of 1940 and rules
thereunder.
Rights Reserved by Us. Upon notice to You, this Contract may be modified by Us,
but only if such modification is necessary to:
1. Reflect a change in the Separate Account or any Division of the Separate
Account;
2. Create new separate accounts;
3. Operate the Separate Account in any form permitted under the Investment
Company Act of 1940 or in any other form permitted by law;
4. Transfer any assets in any Division to another Division, or to one or more
other separate accounts, or to the Fixed Account;
Page 8
<PAGE>
5. Add, combine or remove Divisions in the Separate Account, or combine the
Separate Account with another separate account;
6. Add, restrict or remove Guarantee Periods of the Fixed Account;
7. Make any new Division available to You on a basis to be determined by Us;
8. Substitute for the shares held in any Division, the shares of another
Variable Fund or the shares of another investment company or any other
investment permitted by law;
9. Make any changes as required by the Code or by any other applicable law,
regulation or interpretation in order to continue treatment of this Contract
as an annuity;
10. Commence deducting Premium Taxes or adjust the amount of Premium Taxes
deducted in accordance with state law that applies; or
11. Make any changes required to comply with rules of any Variable Fund.
When required by law, We will obtain Your approval of changes and We will also
obtain approval from any appropriate regulatory authority.
Changing the Terms of Your Contract. Any change in Your Contract must be
approved by one of Our officers. No other person has the authority to make any
changes or waive any of the terms of Your Contract.
Termination. This Contract will remain in force until surrendered, or until all
annuity payments have been made, or upon the payment of the death proceeds,
except as follows:
If the Owner's Account Value is less than $500, We may, at Our discretion,
cancel this Contract upon 60 days' Written notice to the Owner. Such
cancellation would be considered a full surrender of this Contract.
PURCHASE PAYMENTS
Minimum Payments. The minimum amounts acceptable as Additional Purchase
Payments are shown on the Schedule Page. We reserve the right to modify these
minimums or to refuse an Additional Purchase Payment for any reason.
Allocation of Purchase Payments. The initial allocation for Net Purchase
Payments will remain in effect until changed by Written notice. The percentage
allocation for future Net Purchase Payments may be changed at any time by
Written notice provided by the Owner or by use of the Telephone Transfer and
Allocation Privilege.
Page 9
<PAGE>
Changes in the allocation will be effective as of the Valuation Date immediately
following Our receipt of notice of such change. Each allocation to a Division
or Guarantee Period must be a whole percentage of the Net Purchase Payment and
all allocations must equal 100% of such Payment.
Up to 100% of a Net Purchase Payment may be allocated to any available Division
or Guarantee Period. The initial Purchase Payment will be credited to the
Owner's Account not more than two Valuation Periods after We receive it,
together with all other required documentation, in good order at the office
designated by the Company for the processing of initial Purchase Payments.
Subsequent Purchase Payments will be credited as of the end of the Valuation
Period in which they are so received. We reserve the right to limit the number
of Guarantee Periods and Divisions that may be chosen during the life of this
Contract.
Premium Taxes. When applicable, We will deduct an amount to cover Premium
Taxes. Such deductions will be made:
1. From Purchase Payment(s) when received; or
2. From the Account Value at the time annuity payments are to commence; or
3. From the amount of any partial withdrawal; or
4. From proceeds payable upon termination of this Contract for any other
reason, including death of the Annuitant or Owner, or surrender of this
Contract.
If Premium Tax is paid, the Company may reimburse itself for such tax when the
deduction is being made under paragraphs 2, 3, or 4 above. The calculation will
be made by multiplying the sum of Purchase Payments being withdrawn by the
applicable premium tax percentage. Purchase Payments are withdrawn before
earnings.
OWNERSHIP PROVISIONS
Exercise of Contract Rights. This Contract belongs to the Owner, who is
entitled to exercise all rights and privileges in connection with this Contract.
When a Contract is jointly owned, both Owners must join in any request to
exercise the rights or privileges of an Owner.
In any case, such rights and privileges can be exercised without the consent of
the Beneficiary (other than an irrevocably designated Beneficiary) or any other
person. Such rights and privileges may be exercised only during the lifetime of
the Annuitant and prior to the Annuity Commencement Date, except as otherwise
provided in this Contract.
Unless the Owner specifies otherwise, the Annuitant will become the Payee on the
Annuity Commencement Date. If the Owner (other than a joint Owner) or the
Annuitant dies prior to the
Page 10
<PAGE>
Annuity Commencement Date, the Beneficiary will become the Payee. If a joint
Owner dies prior to the Annuity Commencement Date, death proceeds will be paid
to the surviving joint Owner, if any; otherwise the Beneficiary will become the
Payee. Such Payees may thereafter exercise such rights and privileges of
ownership which continue.
Beneficiary. The Owner named the Beneficiary and any Contingent Beneficiary
when applying for this Contract. By Written notice to Us, a revocable
Beneficiary or Contingent Beneficiary may be changed by the Owner prior to the
Annuity Commencement Date or by the Annuitant or other properly-designated Payee
after the Annuity Commencement Date.
Change of Ownership. Ownership of a Qualified Contract may not be transferred
except to: (1) the Annuitant; (2) a trustee or successor trustee of a pension or
profit sharing trust which is qualified under Section 401 of the Code; (3) the
employer of the Annuitant, provided that the Qualified Contract after transfer
is maintained under the terms of a retirement plan qualified under Section
403(a) of the Code for the benefit of the Annuitant; (4) the trustee of an
individual retirement account plan qualified under Section 408 of the Code; or
(5) as otherwise permitted from time to time by laws and regulations governing
the retirement or deferred compensation plans for which a Qualified Contract may
be issued. In no other case may a Qualified Contract be sold, assigned,
transferred, discounted or pledged as collateral.
During the lifetime of the Annuitant and prior to the Annuity Commencement Date,
the Owner may change the ownership of a Non-Qualified Contract.
A change of ownership will not be binding upon Us until We receive Written
notification at Our Home Office. When such notification is so received, the
change will be effective as of the date of the signed request for change, but
the change will be without prejudice to Us on account of any payment made, or
any action taken by Us prior to receiving the change, or on account of any tax
consequence.
Distribution of Death Proceeds under Non-Qualified Contracts. If an Owner
(including the first to die in the case of joint Owners) under a Non-Qualified
Contract dies prior to the Annuitant and before the Annuity Commencement Date,
the death proceeds must be distributed to either the surviving joint Owner or,
if none, to the Beneficiary either: (1) within five years after the date of
death of the Owner; or (2) over the life of or a period not greater than the
life or expected life of the surviving joint Owner or the Beneficiary, with
annuity payments beginning within one year after the date of death of the Owner.
The surviving joint Owner or the Beneficiary shall be considered the designated
Beneficiary for the purposes of Section 72(s) of the Code. In all cases, any
such designated Beneficiary will not be entitled to exercise any rights
prohibited by applicable federal income tax law.
These mandatory distribution requirements will not apply when the surviving
joint Owner or the Beneficiary is the spouse of the deceased Owner, if the
spouse elects to continue this Contract in the spouse's own name, as Owner.
When the deceased Owner was also the Annuitant, the surviving spouse (if the
surviving spouse is the designated surviving joint Owner or the Beneficiary) may
elect to be named as both Owner and Annuitant and continue this Contract.
Page 11
<PAGE>
If the Payee under a Non-Qualified Contract dies after the Annuity Commencement
Date and before all of the payments under the Annuity Option have been
distributed, the remaining amount payable, if any, must be distributed at least
as rapidly as under the method of distribution in effect when the Payee died.
Prior to the Annuity Commencement Date if the Owner or the Payee is not a
natural person, then the foregoing distribution requirements shall apply upon
the death of the primary Annuitant within the meaning of the Code.
Periodic Reports. We will send to each Owner, at least once during each
Contract Year, a statement showing the Owner's Account Value as of a date not
more than two months prior to the date of mailing. We will also send such
statements as may be required by applicable state and federal laws, rules and
regulations.
Owner's Account. We will establish an Owner's Account for the Owner under this
Contract and will maintain such Account during the Accumulation Period. The
Owner's Account Value for any Valuation Period will be equal to the Owner's
Separate Account Value, if any, plus the Owner's Fixed Account Value, if any,
for that Valuation Period.
FIXED ACCOUNT
Fixed Account Value. That portion of a Net Purchase Payment, which is allocated
to the Fixed
Account, will be credited to the Owner's Account and allocated to the Guarantee
Period(s) selected. The Fixed Account Value of an Owner's Account for any
Valuation Period is equal to the sum of the values in each of the Guarantee
Periods credited to the Owner's Account for such Valuation Period.
The value in any one Guarantee Period on a Valuation Date is the accumulated
value of the Net Purchase Payments, renewals or transfers allocated to the
Guarantee Period at the Guaranteed Interest Rate, minus the accumulated value of
surrenders and transfers out of that Guarantee Period, at the Guaranteed
Interest Rate.
Guarantee Periods. The Owner may select one or more Guarantee Periods. The
Guarantee Period(s) selected will determine the Guaranteed Interest Rate(s) that
apply to the Account Value allocated to that Guarantee Period. The Net Purchase
Payment or the portion thereof (or amount transferred in accordance with the
terms of the "Transfers" section described below) allocated to a particular
Guarantee Period will earn interest at the Guaranteed Interest Rate during the
Guarantee Period. Guarantee Periods begin on the date as of which We credit the
Owner's Account Value to that Guarantee Period or, in the case of a transfer, on
the effective date of the transfer. The Guarantee Period is the number of
months or years We credit the Guaranteed Interest Rate. The expiration date of
any Guarantee Period is the last day of the Guarantee Period. Subsequent
Guarantee Periods begin on the first day following the expiration date.
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<PAGE>
As a result of Guarantee Period renewals, additional Purchase Payments and
transfers of portions of the Owner's Account Value, Guarantee Periods of the
same duration may have different expiration dates and Guaranteed Interest Rates.
We will notify the Owner in writing at least 30 and no more than 60 days prior
to the expiration date of any Guarantee Period. A new Guarantee Period of the
same duration as the previous Guarantee Period will begin automatically unless
We receive Written notice to the contrary from the Owner at least 3 Valuation
Dates prior to the end of such Guarantee Period.
The Owner may elect to change to another Guarantee Period or Division which We
offer at such time.
If the amount of an Owner's Account Value in a Guarantee Period is less than
$500 at the end of such Guarantee Period, We reserve the right to transfer such
Account Value, without charge, to the Money Market Division of the Separate
Account. However, We will transfer such amount to another available Division at
the Owner's request.
Guaranteed Interest Rates. We will periodically establish an applicable
Guaranteed Interest Rate for each Guarantee Period We offer. These rates will
be guaranteed for the duration of the respective Guarantee Periods. The
Guarantee Periods that We make available at any time will be determined at Our
discretion. No Guaranteed Interest Rate shall be less than an effective annual
rate of 3.0% per year.
SEPARATE ACCOUNT
Divisions. The Separate Account is comprised of several Divisions, each
investing in a corresponding Variable Fund. We will use the Net Purchase
Payments and any transferred amounts to purchase Variable Fund shares applicable
to the Divisions at their net asset value. We will be the owner of all Variable
Fund shares purchased with the Net Purchase Payments or transferred amounts.
Accumulation Units. Net Purchase Payments and transferred amounts allocated to
the Separate Account will be credited to the Owner's Account in the form of
Accumulation Units. The number of Accumulation Units will be determined by
dividing the amount allocated to a Division by the Accumulation Unit value for
that Division as of the end of the Valuation Period as of which the transaction
is credited. The value of each Accumulation Unit was arbitrarily set as of the
date the Division first purchased Variable Fund shares. Subsequent values on
any Valuation Date are equal to the previous Accumulation Unit value for a
Division times the applicable Net Investment Factor for the Valuation Period
ending on that Valuation Date.
Net Investment Factor. The Net Investment Factor is an index applied to measure
the investment performance of a Division from one Valuation Period to the next.
The Net Investment Factor may be greater or less than or equal to one;
therefore, the value of an Accumulation Unit may increase, decrease or remain
the same.
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<PAGE>
The Net Investment Factor for a Division is determined by dividing (1) by (2),
and then subtracting (3) from the result, where:
1. Is the sum of:
a) The Net Asset Value Per Share of the Variable Fund shares held in the
Division, determined at the end of the current Valuation Period; plus
b) The per share amount of any dividend or capital gain distributions made
on the Variable Fund shares held in the Division during the current
Valuation Period;
2. Is the Net Asset Value Per Share of the Variable Fund shares held in the
Division, determined at the beginning of the current Valuation Period; and
3. Is the daily asset charge factor representing the mortality risk, expense
risk, and administrative expense charge. We may change the daily asset
charge factor, but in no event may it exceed on an annual basis the Maximum
Asset Charge Factor shown on the Schedule Page.
Separate Account Value. The Separate Account Value for any Valuation Period is
the total of the values in each Division credited to the Owner's Account for
such Valuation Period. The value for each Division will be equal to:
1. The number of Accumulation Units for the Division; multiplied by
2. The Accumulation Unit value for the Valuation Period.
The Separate Account Value will vary from Valuation Date to Valuation Date
reflecting the total value in the Divisions. If the value in any Division
(except the Money Market Division) falls below $500, We reserve the right to
transfer the remaining balance, without charge, to the Money Market Division.
TRANSFERS
Transfers. Transfers may be made at any time during the Accumulation Period
after the first 30 days following the Date of Issue. A transfer will be
effective at the end of the Valuation Period in which We receive the Owner's
Written request for a transfer. Transfers will be subject to the following
restrictions:
1. Prior to the Annuity Commencement Date, the Owner may make up to 12
transfers each Contract Year without charge.
2. There will be a charge of $25 for each transfer in excess of 12 in a
Contract Year.
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3. Transfers under the Dollar Cost Averaging and Automatic Rebalancing programs
will not count toward the 12 free transfers each Contract Year. The $25
charge will not apply to transfers made through Automatic Rebalancing or
Dollar Cost Averaging. Transfers under any other asset management
arrangement approved by the Company may be subject to the $25 charge and may
count toward the 12 free transfers.
4. No more than 25% of the Owner's Account Value allocated to a Guarantee
Period at its inception may be transferred to the Variable Account during
any Contract Year. Transfers from a Guarantee Period are made on a first in,
first out basis. This means We treat the Account Value that has been
allocated to a Guarantee Period for the longest period of time as the first
amount transferred. The 25% limit does not apply to:
a) Funds transferred from a Guarantee Period as a result of Dollar Cost
Averaging; or
b) Transfers within 15 days before or after the end of the applicable
Guarantee Period; or
c) A renewal at the end of a Guarantee Period to the same Guarantee Period.
5. If a transfer would cause the Account Value in any Division or Guarantee
Period to fall below $500, We reserve the right to also transfer the
remaining balance in that Division or Guarantee Period in the same
proportions as the transfer request.
6. We reserve the right to defer any transfer from the Fixed Account to the
Variable Divisions for up to 6 months.
We reserve the right to restrict or terminate transfers.
After the Annuity Commencement Date, the Owner may make one transfer during any
180 day period among the Divisions or from one of the Divisions to the Fixed
Account without charge. The Owner may not make transfers from the Fixed Account.
Telephone Transfer and Allocation Privilege. If We have on file a Written
authorization for the Telephone Transfer and Allocation Privilege (Telephone
Transfers), We will allow transfers and changes in Purchase Payment allocations
to be made by telephone. We will honor instructions for Telephone Transfers from
any person who provides the correct information. Therefore, there is a risk of
possible loss to You if unauthorized persons use this service in Your name.
Under Telephone Transfers, We are not liable for any acts or omissions based
upon instructions that We reasonably believe to be genuine, including losses
arising from errors in the communication of transfer instructions.
Dollar Cost Averaging. Dollar Cost Averaging is an automatic transfer of funds
made periodically prior to the Annuity Commencement Date in accordance with the
Transfers provision, except as provided below, and instructions from the Owner.
Dollar Cost Averaging (DCA) is subject to the following guidelines:
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1. DCA transfers may be made:
a) On any day of the month except the 29th, 30th or 31st;
b) On a monthly, quarterly, semi-annual or annual basis; and
c) From one Guarantee Period or any one of the Divisions to one or more of
the other Divisions.
2. There is no minimum amount for each DCA transfer.
3. DCA will end when there is no longer any value in the Account from which the
automatic transfer of funds is being made. You may have only one DCA in
effect at one time.
4. There is no charge for DCA.
5. DCA is not available if Automatic Rebalancing is active.
Alternate Dollar Cost Averaging Options. Subject to Our right to discontinue
offering Alternate DCA Options, funds may be transferred under the following
Dollar Cost Averaging Options in lieu of those described above. The Dollar Cost
Averaging guidelines outlined in the preceding provision apply to Alternate
Dollar Cost Averaging Options except as follows:
1. DCA may be funded only with new Purchase Payments;
2. Funds may only be allocated to the Fixed Account with a DCA period of 6 or
12 months;
3. The minimum amount (before any deduction for Purchase Payment Charges) that
may be allocated to the 6 or 12 month Alternate DCA Option is $5,000 ($2,000
for Qualified Contracts);
4. The dollar amount transferred from either the 6 or 12 month Alternate DCA
Option will be determined by dividing the total Net Purchase Payments
allocated to the Option by the number of transfers remaining in the
Guarantee Period;
5. If the Owner makes a partial withdrawal from the Account Value available for
6 or 12 month DCA transfers, the DCA transfer amount will not be adjusted;
6. If the Owner elects to discontinue DCA transfers prior to the end of a DCA
period, any remaining value will be transferred according to the Owner's
instructions. If the Owner does not provide transfer instructions, the
remaining value will be transferred according to the DCA transfer allocation
instructions currently active.
7. We may offer additional Alternate DCA Option durations at any time.
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Automatic Rebalancing. Automatic Rebalancing occurs when funds are transferred
by the Company among the Divisions so that the values in each Division following
the transfers match the premium allocation percentages then in effect. You may
choose Automatic Rebalancing on a quarterly, semi-annual or annual basis if Your
Account Value is $25,000 or more. The date Automatic Rebalancing occurs will be
based on the Date of Issue of Your Contract. For example, if Your Contract is
dated January 17, and You have requested Automatic Rebalancing on a quarterly
basis, Automatic Rebalancing will start on April 17, and will occur quarterly
thereafter. After Automatic Rebalancing is elected, it will continue until We
are notified In Writing that it is to be discontinued. There is no charge for
Automatic Rebalancing. Automatic Rebalancing is not available if Dollar Cost
Averaging is active.
PAYMENT AND DEFERMENT
General Surrender Provisions. The amount surrendered will normally be paid to
the Owner within five (5) Valuation Dates following Our receipt of:
1. The Owner's Written request on a form acceptable to Us: and
2. This Contract, if required.
We reserve the right to defer payment of surrenders from the Fixed Account for
up to 6 months from the date We receive the request in good order.
Account Value Based on Purchase Payments Made by Check. We reserve the right to
defer payment of that portion of Your Account Value that is based on a Purchase
Payment made by check for a period not to exceed 15 calendar days after the end
of the Valuation Period in which We receive the check.
Other. We may suspend payment of any portion of the Separate Account Value if:
1. The New York Stock Exchange is closed other than customary weekend and
holiday closings, or trading on the New York Stock Exchange is restricted as
determined by the Securities and Exchange Commission (SEC);
2. The SEC determines that an emergency exists, as a result of which disposal
of securities held in the Division is not reasonably practicable or is not
reasonably practicable to fairly determine the Separate Account Value; or
3. The SEC permits by an order the postponement of trading for the protection
of Owners.
Transfers and allocations of Account Value among the Divisions and the Fixed
Account may also be suspended under these circumstances. We will give Owners,
assignees of record and any irrevocable Beneficiaries Written notice of both the
imposition and termination of any such suspension.
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SURRENDERS
Full Surrender. At any time prior to the Annuity Commencement Date and during
the lifetime of the Annuitant, the Owner may surrender this Contract by sending
Us a Written request. The amount payable on surrender is:
1. The Owner's Account Value at the end of the Valuation Period in which We
receive the Owner's Written request;
2. Minus any applicable Premium Tax or other tax charges;
3. Minus charges for the Enhanced Death Benefit, if applicable.
The amount payable upon surrender will not be less than the amount required by
state law.
Upon payment of the surrender amount, this Contract will be terminated and the
Company will have no further obligation to the Owner.
All collateral assignees must consent to any surrender or partial withdrawal.
We may require that this Contract be returned to Our Home Office prior to making
payment.
Partial Withdrawals. A portion of the Owner's Account Value may be withdrawn at
any time prior to the Annuity Commencement Date. The Owner must send Us a
Written request specifying the Divisions or Guarantee Periods from which the
Partial Withdrawal is to be made. However, in cases where the Owner does not so
specify, or the withdrawal cannot be made in accordance with the Owner's
specification, We reserve the right to implement the withdrawal pro rata from
each Division and Guarantee Period based on the Owner's Account Value in each.
Partial Withdrawals will be made effective at the end of the Valuation Period in
which We receive the Written request. Partial Withdrawals will be subject to the
following guidelines:
1. The Partial Withdrawal amount must be at least $100 or, if less, the
Owner's entire Account Value;
2. We will surrender Accumulation Units from the Separate Account or interests
in a Guarantee Period so that the total amount withdrawn will be the sum
of:
a) The amount payable to the Owner; plus
b) Any applicable Premium Tax or other tax charges;
3. If a Partial Withdrawal would cause the Owner's Account Value in any
Division or Guarantee Period (except the Money Market Division) to fall
below $500, We reserve the right to transfer the remaining balance without
charge to the Money Market Division;
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4. If the Owner's Account Value is less than $500, We may cancel this Contract
upon 60 days' notice to the Owner. Such cancellation would be considered a
full surrender of this Contract.
TAX CHARGE
Right to Impose. We reserve the right to impose additional charges or establish
reserves for any federal or local taxes incurred or that We may be incur, and
that may be deemed attributable to the Contracts.
DEATH PROCEEDS
Death Proceeds Before the Annuity Commencement Date. If the Annuitant dies
before the Annuity Commencement Date, and is survived by a Contingent Annuitant,
this Contract will be continued with the Contingent Annuitant being named the
Annuitant. This Contract may qualify for continuation under the "Distribution of
Death Proceeds under Non-Qualified Contracts" provision. Otherwise, death
proceeds will be paid as follows (unless the Owner has specified In Writing that
death proceeds are to be paid in a different manner):
1. If the Annuitant dies, and no Contingent Annuitant survives, death proceeds
will be paid to the Beneficiary designated by the Owner to receive
proceeds;
2. If an Owner (other than a joint Owner) dies, and this Contract is not being
continued under the "Distribution of Death Proceeds under Non-Qualified
Contracts" provision, death proceeds will be paid to the Beneficiary
designated by the Owner to receive proceeds;
3. If a joint Owner dies, We will treat the surviving joint Owner as the
Beneficiary, and We will not recognize any other designation of
Beneficiary, unless:
a) This Contract is being continued under the "Distribution of Death
Proceeds under Non-Qualified Contracts" provision; and
b) Joint Owners have specified In Writing: "Death proceeds are not to be
paid to the surviving joint Owner", and have specified how death
proceeds are to be paid.
4. If a joint Owner dies, and there is no surviving joint Owner, proceeds will
be paid as outlined in paragraph 2 above.
Death Benefit Options. If the Annuitant or an Owner dies, the amount of death
proceeds payable will depend upon the Death Benefit Option in effect: (1) the
Base Death Benefit; or (2) the Enhanced Death Benefit.
If You did not apply for the Enhanced Death Benefit when applying for this
Contract, The Base Death Benefit will be in effect. The Enhanced Death Benefit
may not be requested after the Date of Issue. If requested, it may be dropped at
any time. However, if it is dropped, it may not be added at a later date.
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The Death Benefit chosen will be payable upon the death of the Annuitant
(provided the Annuitant is not survived by a Contingent Annuitant), or upon the
death of the Owner (provided the Contract is not being continued by a surviving
spouse). The Death Benefit will only be payable while the Contract is in force
and prior to annuitization.
Base Death Benefit (ages of Annuitant and Oldest Owner must be 85 or Less on the
Date of Issue). The Base Death Benefit will be equal to the greater of:
1. The sum of all Purchase Payments (before any deduction for Purchase Payment
Charges) less any applicable Premium Tax or other tax charges, and less any
Partial Withdrawals; or
2. The Account Value at the end of the Valuation Period on the date of receipt
of proof of death and election of the manner of payment, less applicable
Premium Taxes or other tax charges.
Base Death Benefit (age of Annuitant or Oldest Owner is 86 or above on the Date
of Issue). The Death Benefit will always be equal to the Account Value at the
end of the Valuation Period on the date of receipt of proof of death and
election of the manner of payment, less applicable Premium Taxes or other tax
charges.
Enhanced Death Benefit (Available only on the Date of Issue if Oldest Owner and
Annuitant are age 79 or Less). If the Enhanced Death Benefit is chosen there
will be a charge of 0.13% of the Account Value assessed at the end of each
Contract Year. While the charge is based on the entire Account Value, the entire
charge will be deducted pro rata from the Divisions of the Separate Account in
which there is any value. This charge, which is in addition to the Maximum Asset
Charge Factor of 0.59%, will be applied if the benefit was in effect for the
entire Contract Year or for any part of the Contract Year. The charge is also
applied to full surrenders and deaths occurring during the Contract Year. The
charge does not apply to Partial Withdrawals.
The Enhanced Death Benefit will be equal to the greater of:
1. The amount payable under the Base Death Benefit (including a deduction for
any Enhanced Death Benefit charge); or
2. The highest anniversary value prior to the date of death determined as
follows:
a) We will calculate the Account Values at the end of each of the past
Contract Anniversaries that occurred prior to the deceased's 81st
birthday;
b) We will increase each of the Account Values by the amount of Net
Purchase Payments made since the end of such Contract Anniversaries;
and
c) The result will be reduced by the amount of any withdrawals made since
the end of such Contract Anniversaries.
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The death proceeds will become payable when We receive:
1. Proof of the Owner's or Annuitant's Death; and
2. A Written request from the Beneficiary for either a single sum or payment
under an Annuity Option.
If the Annuitant dies, and a Contingent Annuitant was named but predeceased the
Annuitant, We will require proof of the Contingent Annuitant's death in addition
to proof of the death of the Annuitant. We will pay a single sum to the
Beneficiary unless an Annuity Option is chosen.
Death Proceeds on or After the Annuity Commencement Date. If the Annuitant dies
on or after the Annuity Commencement Date, the Beneficiary will receive the
death proceeds, if any, as provided by the Annuity Option in effect.
Proof of Death. We accept any of the following as Proof of the Annuitant's or
Owner's death:
1. A certified death certificate;
2. A certified decree of a court of competent jurisdiction as to the finding
of death;
3. A Written statement by a medical doctor who attended the deceased at the
time of death; or
4. Any other proof satisfactory to Us.
PAYMENT OF BENEFITS
Application of Account Value. Unless directed otherwise, We will apply the
Account Value in the Fixed Account to provide fixed annuity payments, and the
Account Value in the Separate Account to provide variable annuity payments. The
Owner must tell Us in Writing at least 30 days prior to the Annuity Commencement
Date if Account Values are to be applied in different proportions. Transfers and
Partial Withdrawals will be permitted within the 30-day period.
Annuity Commencement Date. The Annuity Commencement Date is shown on the
Schedule Page. The Owner of a Qualified Contract may be required to receive
distributions after the Annuitant's 70th birthday to comply with certain federal
tax requirements. The Annuity Commencement Date may be changed by Written notice
from the Owner, subject to Our approval.
Options Available to an Owner. The Owner may elect to have payments made
beginning on the Annuity Commencement Date under any one of the Annuity Options
described in this Contract. We will notify the Owner 60 to 90 days prior to the
scheduled Annuity Commencement Date that this Contract is scheduled to mature,
and request that an Annuity Option be selected. If the Owner has not selected an
Annuity Option ten days prior to the Annuity Commencement Date, We will proceed
as follows:
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If the scheduled Annuity Commencement Date is any date prior to the Annuitant's
100th birthday, We will extend the Annuity Commencement Date to the Annuitant's
100th birthday.
If the scheduled Annuity Commencement Date is the Annuitant's 100th birthday,
the Account Value less any applicable charges and taxes will be paid in one sum
to the Owner.
In either event, the Annuity Commencement Date may be changed by Written notice
from the Owner, subject to Our approval.
Options Available to Beneficiary. In lieu of payment in one sum, the Owner may
elect, that any amount or part thereof due under this Contract be applied under
any of the options described below. Within 60 days after the death of the
Annuitant or Owner, the Beneficiary may make such election if the Owner has not
done so. In such case, the Beneficiary thereafter shall have all the rights and
options of the Owner.
The first annuity payment under any option shall be made on the first day of the
second month after approval of the claim for settlement. Subsequent payments
shall be made periodically in accordance with the manner of payment elected.
Payment Contract. At such time as one of these options becomes effective, this
Contract shall be surrendered to the Company in exchange for a payment contract
providing for the option elected.
FIXED ANNUITY PAYMENTS
Fixed annuity payments start on the Annuity Commencement Date. The amount of the
first monthly payment for the annuity selected will be at least as favorable as
that produced by the applicable annuity tables of this Contract for each $1,000
applied as of the end of the Valuation Period that contains the tenth day prior
to the Annuity Commencement Date.
The dollar amount of any payments after the first payment is specified during
the entire period of annuity payments, according to the provisions of the
Annuity Payment Option selected.
VARIABLE ANNUITY PAYMENTS
Annuity Units. We convert the Accumulation Units into Annuity Units at the
values determined at the end of the Valuation Period which contains the tenth
day prior to the Annuity Commencement Date. For each Division, the number of
Annuity Units is obtained by dividing the first monthly payment by the Annuity
Unit Value determined at the end of the above Valuation Period (see following
paragraph). The first monthly payment is determined by applying the dollar value
of the Accumulation Units to the applicable Annuity Table. The number of Annuity
Units remains constant as long as an annuity remains in force and the allocation
among the Divisions does not change.
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The Annuity Unit Value for each Division was arbitrarily set when the Division
first converted Accumulation Units into Annuity Units. Subsequent values on any
Valuation Date are equal to the revious Annuity Unit Value times the Net
Investment Factor for that Division for the Valuation Period ending on that
Valuation Date, with an offset for the 3.5% assumed interest rate used in the
annuity tables of this Contract.
Variable Annuity Payments start on the Annuity Commencement Date. Payments will
vary in amount and are determined at the end of the Valuation Period that
contains the tenth day prior to each payment. If the monthly payment under the
Annuity Payment Option selected is based on a single Division, the monthly
payment is found by multiplying the Annuity Unit Value for that Division on said
date by the number of Annuity Units.
If the monthly payment under the Annuity Option selected is based upon more than
one Division, the above procedure is repeated for each applicable Division. The
sum of these payments is the Variable Annuity Payment.
We guarantee that the amount of each payment will not be affected by variations
in Our expense or mortality experience.
ANNUITY OPTIONS
First Option - Life Annuity - An annuity payable monthly during the lifetime of
the Annuitant.
Second Option - Life Annuity with 120, 180 or 240 Monthly Payments Guaranteed -
An annuity payable monthly during the lifetime of the Annuitant, including the
guarantee that if, at the death of the Annuitant, payments have been made for
less then 120 months, 180 months or 240 months (as selected), payments shall be
continued during the remainder of the selected period.
Third Option - Joint and Last Survivor Life Annuity - An annuity payable monthly
during the joint lifetime of the Annuitant, and a secondary Annuitant, and
thereafter during the remaining lifetime of the survivor, ceasing with the last
payment prior to the death of the survivor.
Fourth Option - Payments for a Designated Period - We make annuity payments
monthly to an Annuitant or other properly-designated Payee, or at his or her
death, to the Beneficiary, for a selected number of years ranging from five to
40. If this option is selected on a variable basis, the designated period may
not exceed the life expectancy of the Annuitant or other properly-designated
Payee.
A Payee who receives Variable Annuity Payments under Option 4 can elect at any
time to withdraw all or a portion of the value of the remaining Variable Annuity
Payments. It does not apply to Fixed Annuity Payments. The Payee will receive
one payment for the withdrawal. We calculate the value of any remaining Variable
Annuity Payments under Option 4 by assuming that each payment is equal and by
discounting each payment to the present at an annual rate of 3.5% (the "assumed
amount"). We calculate the "assumed amount" of each remaining payment as of the
end of the Valuation Period in which We receive a Written request for
withdrawal.
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Under Option 4 each time the Payee withdraws a portion of the value of the
Variable Annuity Payments, the remaining Variable Annuity Payments will all be
reduced proportionately. If the Payee elects to withdraw all of the value of the
Variable Annuity Payments, such payments cease. The Contract terminates at that
time unless We still owe Fixed Annuity Payments.
Fifth Option - Payments of a Specific Dollar Amount - The amount due may be paid
in equal monthly installments of a designated dollar amount (not less than $125
nor more than $200 per annum per $1,000 of the original amount due) until the
remaining balance is less than the amount of one installment. Payments under
this option are available on a fixed basis only. To determine the remaining
balance at the end of any month, such balance at the end of the previous month
is decreased by the amount of any installment paid during the month and the
result will be accumulated at an interest rate not less than 3.5% compounded
annually. If the remaining balance at any time is less than the amount of one
installment such balance will be paid and will be the final payment under the
option.
In lieu of monthly payments, payments may be elected on a quarterly, semi-annual
or annual basis, in which case the amount of each annuity payment will be
determined on a basis consistent with that described in this Contract for
monthly payments.
No election of any Annuity Payment Option may be made in the case where fixed or
variable annuity payments are elected, unless a minimum initial annuity payment
of $100 will be provided. No election of any Annuity Option may be made in the
case where a combination of a fixed and a variable annuity payment is elected,
unless a minimum initial annuity payment of $50 on each basis will be provided.
If the initial annuity payment does not meet the minimum amount required for the
Annuity Option elected, the Company will provide a less frequent payment
schedule. If the minimum is still not met, the Company will make a lump-sum
payment of the Account Value (less any uncollected Enhanced Death Benefit
charge, applicable Premium Tax or other tax charge) as of the date of this
determination to the Annuitant or other properly-designated Payee.
Misstatement of Age or Gender (Misstatement of Age if Issued on a Gender Neutral
Basis). If the: (1) Age or gender of the Annuitant (if this Contract was issued
on a Sex Distinct basis); or (2) Age of the Annuitant (if this Contract was
issued on a Gender Neutral basis) has been misstated to Us, any amount payable
will be that which would have been payable had the misstatement not occurred. We
will deduct any overpayment from the next payment or payments due and add any
underpayments to the next payment due. Interest at an effective annual rate of
3.5% will be added to any such adjustment.
Annuity Tables. The tables that follow show the dollar amount of the first
monthly payment for each $1,000 applied under the options. If issued on a Sex
Distinct basis, tables are based on the 1983a Male or Female Tables adjusted by
projection scale G for nine years, with interest at the rate of 3.5% per year.
Under the First or Second Options, the amount of each payment will depend upon
the gender of the Annuitant and the Annuitant's adjusted age at the time the
first payment is due. Under the Third Option, the amount of each payment will
depend upon the gender of both Annuitants and their adjusted ages at the time
the first payment is due. If issued on a Gender
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Neutral basis, tables are based on the 1983a Male or Female Tables, adjusted by
projection scale G for nine years, with unisex rates based on 60% female and 40%
male, and interest at the rate of 3.5% per year. Under the First or Second
Options, the amount of each payment will depend upon the adjusted age at the
time the first payment is due. Under the Third Option, the amount of each
payment will depend upon both Annuitant's adjusted ages at the time the first
payment is due.
Adjusted Age. In using the table of annuity payment rates, the ages of the
Annuitants must be reduced by one year for Annuity Commencement Dates occurring
during the decade 2000-2009, reduced two years for Annuity Commencement Dates
occurring during the decade 2010-2019, and reduced an additional year for each
decade that follows. The Age 70 rate is also used for ages above 70.
Alternate Amount of Installments Under Fixed Life Income Options. If a fixed
life income option is elected, the Owner (or, if the Owner has not elected a
payment option, the Beneficiary) may elect life income payments equal to those
provided by those fixed single premium immediate annuity option rates in use by
the Company when annuity payments begin.
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SEX DISTINCT ANNUITY TABLES
AMOUNT OF MONTHLY PAYMENT
FOR EACH $1,OOO OF ANNUITY VALUE
Options 1 and 2 - Life Annuities
Adjusted Age --------------Monthly Payments Guaranteed---------
of Male Option 1 Option 2 Option 2 Option 2
None 120 180 240
50 4.37 4.33 4.28 4.21
51 4.44 4.40 4.34 4.26
52 4.52 4.47 4.40 4.32
53 4.59 4.54 4.47 4.37
54 4.68 4.62 4.54 4.43
55 4.77 4.70 4.61 4.49
56 4.86 4.78 4.69 4.55
57 4.96 4.87 4.76 4.61
58 5.06 4.97 4.84 4.67
59 5.18 5.07 4.93 4.73
60 5.30 5.17 5.01 4.79
61 5.42 5.28 5.10 4.86
62 5.56 5.40 5.20 4.92
63 5.71 5.52 5.29 4.98
64 5.87 5.65 5.38 5.04
65 6.04 5.79 5.48 5.10
66 6.22 5.92 5.58 5.15
67 6.41 6.07 5.68 5.21
68 6.62 6.22 5.77 5.26
69 6.84 6.37 5.87 5.30
70and above 7.07 6.53 5.96 5.35
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Adjusted Age -------------Monthly Payments Guaranteed--------------
of Female Option 1 Option 2 Option 2 Option 2
None 120 180 240
50 4.05 4.03 4.01 3.97
51 4.10 4.09 4.06 4.02
52 4.17 4.14 4.12 4.07
53 4.23 4.21 4.17 4.12
54 4.30 4.27 4.23 4.18
55 4.37 4.34 4.30 4.23
56 4.44 4.41 4.36 4.29
57 4.52 4.48 4.43 4.35
58 4.61 4.56 4.50 4.41
59 4.70 4.65 4.58 4.48
60 4.79 4.74 4.66 4.54
61 4.89 4.83 4.74 4.61
62 5.00 4.93 4.83 4.67
63 5.12 5.03 4.92 4.74
64 5.24 5.14 5.01 4.81
65 5.38 5.26 5.11 4.88
66 5.52 5.38 5.20 4.95
67 5.67 5.51 5.3l 5.01
68 5.83 5.65 5.41 5.08
69 6.01 5.79 5.52 5.14
70 and above 6.20 5.94 5.62 5.20
Option 3 - Joint and Last Survivor Life Annuity
Adjusted Age -------------Adjusted Age of Secondary Annuitant------------
of Annuitant Female
Male F50 F55 F60 F65 F70
50 3.76 3.89 4.01 4.11 4.19
55 3.84 4.01 4.18 4.33 4.46
60 3.90 4.11 4.33 4.56 4.77
65 3.95 4.19 4.47 4.78 5.09
70 3.99 4.25 4.58 4.96 5.39
Adjusted Age -------------Adjusted Age of Secondary Annuitant
of Annuitant Male
Female F50 F55 F60 F65 F70
50 3.76 3.84 3.90 3.95 3.99
55 3.89 4.01 4.11 4.19 4.25
60 4.01 4.18 4.33 4.47 4.58
65 4.11 4.33 4.56 4.78 4.96
70 4.19 4.46 4.77 5.09 5.39
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Option 4 - Payments for a Designated Period
Years of Amount of Monthly Years of Amount of Monthly
Payment Payment Payment Payment
5 $18.12 23 $5.24
6 15.35 24 5.09
7 13.38 25 4.96
8 11.90 26 4.84
9 10.75 27 4.73
10 9.83 28 4.63
11 9.09 29 4.53
12 8.46 30 4.45
13 7.94 31 4.37
14 7.49 32 4.29
15 7.10 33 4.22
16 6.76 34 4.15
17 6.47 35 4.09
18 6.20 36 4.03
19 5.97 37 3.98
20 5.75 38 3.92
21 5.56 39 3.88
22 5.39 40 3.83
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GENDER NEUTRAL ANNUITY TABLES
AMOUNT OF MONTHLY PAYMENT
FOR EACH $1,OOO OF ANNUITY VALUE
Options 1 and 2 - Life Annuities
Adjusted Age ---------Monthly Payments Guaranteed--------
Option 1 Option 2 Option 2 Option 2
None 120 180 240
50 4.18 4.15 4.12 4.07
51 4.24 4.21 4.18 4.12
52 4.31 4.28 4.24 4.17
53 4.38 4.34 4.30 4.23
54 4.45 4.41 4.36 4.28
55 4.53 4.48 4.43 4.34
56 4.61 4.56 4.50 4.40
57 4.70 4.64 4.57 4.46
58 4.79 4.73 4.65 4.52
59 4.89 4.82 4.72 4.59
60 5.00 4.91 4.81 4.65
61 5.11 5.02 4.89 4.71
62 5.23 5.12 4.98 4.78
63 5.36 5.23 5.07 4.85
64 5.49 5.35 5.17 4.91
65 5.64 5.48 5.26 4.98
66 5.80 5.61 5.36 5.04
67 5.96 5.74 5.46 5.10
68 6.14 5.88 5.57 5.16
69 6.34 6.03 5.67 5.21
70and above 6.54 6.19 5.77 5.27
Page 29
<PAGE>
Option 3 - Joint and Last Survivor Life Annuity
Adjusted Age --------Adjusted Age of Secondary Annuitant--------
of Annuitant
Gender 50 55 60 65 70
Neutral
50 3.75 3.85 3.94 4.01 4.07
55 3.85 4.00 4.13 4.24 4.33
60 3.94 4.13 4.32 4.49 4.65
65 4.01 4.24 4.49 4.75 5.00
70 4.07 4.33 4.65 5.00 5.36
Option 4 - Payments for a Designated Period
Years of Amount of Monthly Years of Amount of Monthly
Payment Payment Payment Payment
5 $18.12 23 $5.24
6 15.35 24 5.09
7 13.38 25 4.96
8 11.90 26 4.84
9 10.75 27 4.73
10 9.83 28 4.63
11 9.09 29 4.53
12 8.46 30 4.45
13 7.94 31 4.37
14 7.49 32 4.29
15 7.10 33 4.22
16 6.76 34 4.15
17 6.47 35 4.09
18 6.20 36 4.03
19 5.97 37 3.98
20 5.75 38 3.92
21 5.56 39 3.88
22 5.39 40 3.83
Page 30
<PAGE>
American General Life
Insurance Company
This is an INDIVIDUAL FLEXIBLE PAYMENT VARIABLE and FIXED DEFERRED ANNUITY
CONTRACT. NONPARTICIPATING - NOT ELIGIBLE FOR DIVIDENDS
All payments and values provided by this Contract, when based on the investment
experience of a separate account are variable, may increase or decrease and are
not guaranteed as to amount. See the "Separate Account" and "Variable Annuity
Payments" provisions in this Contract.
For Information, Service or to make a Complaint
Contact Your Registered Representative,
or the Annuity Administration Department
American General Life
Insurance Company
2727-A Allen Parkway
P.O, Box 1401
Houston, Texas 77251-1401
(800) 200-3883
A STOCK COMPANY
A Subsidiary of American General Corporation
<PAGE>
Exhibit 5(a)
E-3
<PAGE>
AMERICAN GENERAL LIFE INSURANCE COMPANY
P.O. BOX 1401, HOUSTON, TEXAS 77251-1401
VARIABLE ANNUITY APPLICATION
GENERATIONS(TM)
....ASSET BUILDER....
INSTRUCTIONS: Please type or print in permanent black ink.
<TABLE>
<S> <C>
1. ANNUITANT 2. CONTINGENT ANNUITANT (optional)
Name: ___________________________________________ Name: ___________________________________________
Address:_________________________________________ Address:_________________________________________
_________________________________________________ _________________________________________________
Phone:_____________DOB:______________(Max Age 90) Phone:_____________DOB:_______________(Max Age 90)
Sex: [ ] M [ ] F SS #:_______________________ Sex: [ ] M [ ] F SS #:_______________________
- -----------------------------------------------------------------------------------------------------------------------
3. OWNER (Complete only if different from Annuitant) JOINT OWNER (optional)
Name: ___________________________________________ Name: ___________________________________________
Address:_________________________________________ Address:_________________________________________
_________________________________________________ _________________________________________________
Phone:_____________DOB:______________(Max Age 90) Phone:_____________DOB_______________(Max Age 90)
Sex: [ ] M [ ] F SS #:_______________________ Sex: [ ] M [ ] F SS #:_______________________
- -----------------------------------------------------------------------------------------------------------------------
4. BENEFICIARY DESTINATION (If more space is needed, use Section 12):
----------------------
Primary (If more than one, indicate percentages) Contingent (If more than one, indicate percentages)
Name/Social Security No. or Tax ID Name/Social Security No. or Tax ID
- -----------------------------------------------------------------------------------------------------------------------
5. PAYMENT INFORMATION
Initial Purchase Payment $_____________
(Check either Non-Qualified or Qualified)
[ ] Non-qualified (minimum $5,000) (if applicable, check apropriate box below)
IF [ ] 1035X or [ ] Non Qualified Transfer expected amount $______________
[ ] Qualified (minimum $2,000) (check appropriate boxes in sections A and B)
A. [ ] Rollover or [ ] Transfer expected amount $_______________
B. Type of Qualified Plan: [ ] IRA [ ] ROTH IRA [ ] 401(k) [ ] 401(a) [ ] Other________ [ ] Contribution Year________
- -----------------------------------------------------------------------------------------------------------------------------------
6. DEATH BENEFIT OPTION (Base is automatic if neither is chosen) [ ] Base [ ] Enhanced
- -----------------------------------------------------------------------------------------------------------------------------------
7. INVESTMENT OPTIONS (Total allocation must equal 100%; no fractional percentages.)
Dollar Cost Averaging (Complete Section 9) ______________________%
Comstock (39) __________% Government (44) __________% Money Market (49) __________%
Domestic Income (40) __________% Growth and Income (45) __________% Morgan Stanley __________%
Emerging Growth (41) __________% High Yield (46) __________% Real Estate Securities (50) __________%
Enterprise (42) __________% International Magnum (47) __________% Strategic Stock (51) __________%
Global Equity (43) __________% Mid Cap Value (48) __________% One Year Guarantee Period (53) __________%
- -----------------------------------------------------------------------------------------------------------------------------------
8. AUTOMATIC REBALANCING ($25,000 minimum)
[ ] Check here for Automatic Rebalancing of investments, based on contract anniversary, to the VARIABLE ALLOCATIONS ONLY
(39-51)
Indicated in section 7 or then in effect Frequency: [ ] Quarterly [ ] Semiannually [ ] Annually
- -----------------------------------------------------------------------------------------------------------------------------------
9. DOLLAR COST AVERAGING
From: [ ] Money Market (49) OR [ ] One-Year Guarantee Period (53) OR [ ] Other ________________________________________
(Specify Fund Name and Number)
Frequency: [ ] Monthly [ ] Quarterly [ ] Semiannually [ ] Annually
Duration: [ ] 12 months [ ] 24 months [ ] 36 months [ ] 48 months [ ] 60 months to be allocated to the following
fund(s) as indicated
--OR--
From: Alternate Dollar Cost Averaging
Frequency: [ ] 12-Month Dollar Cost Averaging (54) OR [ ] 6-Month Dollar Cost Averaging (55)
TO: When furnishing the Dollar Cost Averaging allocations below, indicate EITHER dollars OR percentages.
Comstock (39) ___________ Government (44) ___________ Money Market (49) ___________
Domestic Income (40) ___________ Growth and Income (45) ___________ Morgan Stanley
Emerging Growth (41) ___________ High Yield (46) ___________ Real Estate Securities (50) ___________
Enterprise (42) ___________ International Magnum (47) ___________ Strategic Stock (51) ___________
Global Equity (43) ___________ Mid Cap Value (48) ___________
</TABLE>
<PAGE>
10. TELEPHONE TRANSFER PRIVILEGE
I (or if joint owners, either of us acting independently) hereby authorize
American General Life Insurance Company ("AGL") to act on telephone
instructions to transfer value among the Variable Divisions and Fixed
Accounts and to change allocations for future purchase payments given by:
[ ] Contract Owner(s)
[ ] Agent/Registered Representative who is both appointed to represent AGL and
with the firm authorized to service my contract.
AGL and any person designated by this authorization will not be
responsible for any claim, loss, or expense based upon telephone transfer
instructions received and acted on in good faith, including loses due to
telephone instruction communication errors. AGL's liability for erroneous
transfers, unless clearly contrary to instructions received, will be
limited to correction of the allocations on a current basis. If an error,
objection, or other claim arises due to a telephone transfer transaction,
I will notify AGL in writing within five working days from receipt of
confirmation of the transaction from AGL. I understand that this
authorization is subject to the terms and provisions of my GENERATIONS
Asset Builder contract and its related prospectus. This authorization will
remain in effect until my written notice of its revocation is received by
AGL at its main office.
[ ] CHECK HERE TO DECLINE TELEPHONE TRANSFER PRIVILEGE.
- --------------------------------------------------------------------------------
11. REPLACEMENT Will the proposed contract replace any existing annuity or
insurance contract? [ ] No [ ] Yes
(If yes, list company name, plan, year of issue and complete appropriate
replacement documents.)
- --------------------------------------------------------------------------------
12. SPECIAL INSTRUCTIONS
- --------------------------------------------------------------------------------
13. SIGNATURES
All statements made in this application are true to the best of our
knowledge and belief, and we agree to all terms and conditions as shown.
We further agree that this application, if attached, shall be a part of the
annuity contract, and verify our understanding that ALL PAYMENTS AND VALUES
PROVIDED BY THE CONTRACT, WHEN BASED ON INVESTMENT EXPERIENCE OF A SEPARATE
ACCOUNT, ARE VARIABLE, MAY INCREASE OR DECREASE, AND ARE NOT GUARANTEED AS
TO THE DOLLAR AMOUNT.
We acknowledge receipt of the current prospectuses for the American General
Life Insurance Company Separate Account D, Van Kampen Life Investment Trust
and Morgan Stanley Dean Witter Universal Funds, Inc. If this application
is for an IRA, ROTH IRA, or a Simplified Employee Pension, we acknowledge
receipt of the applicable individual Retirement Annuity Disclosure
Statement provided to us in conjunction with the current prospectuses.
- --------------------------------------------------------------------------------
Under penalties of perjury, I certify (1) that the Social Security (or
taxpayer identification) number is correct as it appears in this
application and (2) that I am not subject to backup withholding under
Section 3406 (a)(1)(c) of the Internal Revenue Code.
The Internal Revenue Service does not require your consent to any provision
of this document other than the certifications required to avoid backup
withholding.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Signed at ___________________________________________ Date: _____________________
CITY STATE
_________________________________________________ ________________________________________________
SIGNATURE OF ANNUITANT SIGNATURE OF OWNER (if different from Annuitant)
_________________________________________________ ________________________________________________
SIGNATURE OF CONTINGENT ANNUITANT (if applicable) SIGNATURE OF JOINT OWNER (if applicable)
</TABLE>
- --------------------------------------------------------------------------------
14. DEALER/LICENSED AGENT INFORMATION AND SIGNATURES
<TABLE>
<S> <C>
Licensed Agent: __________________________________ _______________________________________
PRINT NAME AGENT NUMBER/LOCATION
__________________________________ _______________________________________
TELEPHONE STATE LICENSE NUMBER
</TABLE>
Will the proposed contract replace any existing annuity or insurance
contract? [ ] No [ ] Yes The agent hereby certifies he/she witnessed the
signature(s) contained in this application and that all information
contained in this application is true to the best of his/her knowledge and
belief.
Signature of Licensed Agent: ____________________________________________
Broker Dealer: __________________________________________________________
PRINT NAME
Branch Office: _________________________________________________________________
STREET ADDRESS CITY STATE ZIP
Signature of Licensed Principal of Broker Dealer: ______________________________
