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As filed with the Securities and Exchange Commission on May 14, 1997
Registration No. 333-18517
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE
AMENDMENT NO. 1 TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
SELECT*LIFE VARIABLE ACCOUNT
(Exact Name of Registrant)
RELIASTAR LIFE INSURANCE COMPANY
20 Washington Avenue South
Minneapolis, MN 55440
(Name and Address of principal executive office of depositor)
_________________________________
Richard R. Crowl
Senior Vice President, General Counsel
ReliaStar Life Insurance Company
20 Washington Avenue South
Minneapolis, MN 55440
Copy to:
Robert B. Saginaw
Counsel
ReliaStar Life Insurance Company
20 Washington Avenue South
Minneapolis, MN 55440
It is proposed that this filing will become effective
_____ immediately upon filing pursuant to paragraph (b) of Rule 485
_____ on April 30, 1997 pursuant to paragraph (b) of Rule 485
__X__ 60 days after filing pursuant to paragraph (a) of Rule 485
_____ on (date) pursuant to paragraph (a) of Rule 485
Registrant has chosen to register an indefinite amount of securities in
accordance with Rule 24f-2. The Rule 24f-2 Notice of Registrant's most recent
fiscal year was filed on or about February 20, 1997.
___________________________________
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SELECT*LIFE VARIABLE ACCOUNT
CROSS REFERENCE SHEET
(Reconciliation and Tie Sheet)
Item Number of
Form N-8B-2 Heading in the Prospectus
- -------------- -------------------------
1 Cover Page
2 Cover Page
3 Not Applicable
4 Distribution of the Policies
5 ReliaStar Life Insurance Company and the Variable
Account
6 The Variable Account
7 Not Applicable
8 Not Applicable
9 Not Applicable
10 Summary; Death Benefit; Payment and Allocation of
Premiums; Death Benefit Guarantee; Accumulation
Value; Policy Lapse and Reinstatement; Surrender
Benefits; Investments of the Variable Account;
Transfers; Policy Loans; Free Look and Conversion
Rights; Voting Rights; General Provisions;
Appendix A; Appendix B
11 Deductions and Charges; Investments of the
Variable Account
12 Investments of the Variable Account
13 Deductions and Charges
14 The Policies; Definitions; Distribution of the
Policies
15 Payment and Allocation of Premiums; Investments of
the Variable Account
16 Payment and Allocation of Premiums; Surrender
Benefits; Investments of the Variable Account
17 Surrender Benefits; Policy Loans; Free Look and
Conversion Rights; General Provisions
18 The Variable Account; Investments of the Variable
Account; Payment and Allocation of Premiums
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Item Number of
Form N-8B-2 Heading in the Prospectus
- -------------- -------------------------
19 Voting Rights; General Provisions
20 Not Applicable
21 Policy Loans
22 Not Applicable
23 Bonding Arrangements
24 Definitions; General Provisions
25 ReliaStar Life Insurance Company
26 Not Applicable
27 ReliaStar Life Insurance Company; Other Contracts
Issued by Us
28 Management
29 ReliaStar Life Insurance Company
30 Not Applicable
31 Not Applicable
32 Not Applicable
33 Not Applicable
34 Not Applicable
35 Not Applicable
36 Not Applicable
37 Not Applicable
38 Distribution of the Policies
39 Distribution of the Policies
40 Distribution of the Policies
41 Distribution of the Policies
42 Not Applicable
43 Not Applicable
44 Investments of the Variable Account; Payment and
Allocation of Premiums; Deductions and Charges
45 Not Applicable
46 Investments of the Variable Account; Deductions
and Charges
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Item Number of
Form N-8B-2 Heading in the Prospectus
- -------------- -------------------------
47 Investments of the Variable Account
48 ReliaStar Life Insurance Company; State Regulation
49 Not Applicable
50 The Variable Account
51 Cover Page; The Policies; Death Benefit; Payment
and Allocation of Premiums; Deductions and
Charges; Policy Lapse and Reinstatement; General
Provisions; Free Look and Conversion Rights
52 Investments of the Variable Account
53 Federal Tax Matters
54 Not Applicable
55 Not Applicable
56 Not Applicable
57 Not Applicable
58 Not Applicable
59 Not Applicable
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20 Washington Avenue South
Minneapolis, Minnesota 55401
-------------------------------
SURVIVORSHIP FLEXIBLE PREMIUM VARIABLE
LIFE INSURANCE POLICIES
ISSUED BY
SELECT*LIFE VARIABLE ACCOUNT
OF
RELIASTAR LIFE INSURANCE COMPANY
This Prospectus describes a survivorship flexible premium variable life
insurance policy (the "Policy") offered by ReliaStar Life Insurance Company
("we", "us", "our" or the "Company"). This Policy is designed to provide
lifetime insurance protection, if the Policy's Cash Surrender Value (that is,
the amount that would be paid to you upon surrender of the Policy) is sufficient
to pay certain monthly charges imposed under the Policy (including the cost of
insurance and certain administrative charges). It also is designed to provide
flexibility in connection with premium payments and death benefits. The Policy
owner ("you", "your") may allocate net premiums among investment alternatives
with different investment objectives. A Policy owner may, subject to certain
restrictions, including limitations on premium payments, vary the frequency and
amount of premium payments and increase or decrease the level of death benefits
payable under the Policy. This flexibility allows a Policy owner to provide for
changing insurance needs under a single insurance contract.
The Policy provides for a Death Benefit payable at the Surviving Joint
Insured's death. As long as the Policy remains in force, the Death Benefit up to
age 100 of the younger Joint Insured will never be less than the current Face
Amount less any Policy loans and unpaid charges. After age 100 of the younger
Joint Insured the Death Benefit is equal to the Accumulation Value. The Minimum
Face Amount of the Policy is currently $250,000. The Face Amount may be
increased, subject to certain limitations, provided that the increase is not
less than $5,000. Generally, the Policy will remain in force as long as the
Policy's Cash Surrender Value (that is, the amount that would be paid to you
upon surrender of the Policy) is sufficient to pay certain monthly charges
imposed in connection with the Policy (including the cost of insurance and
certain administrative charges). In addition, the Policy will remain in force
during the Death Benefit Guarantee Period specified in your Policy, without
regard to the Cash Surrender Value, if on each Monthly Anniversary the total
premiums paid on the Policy, less any partial withdrawals and Policy loans,
equals or exceeds the total required Minimum Monthly Premium payments specified
in your Policy (which is a feature of the Policy called the "Death Benefit
Guarantee").
Net premiums paid under the Policy are allocated, according to your
instructions, either to the Select*Life Variable Account (the "Variable
Account"), which is one of our separate accounts or to our General Account (the
"Fixed Account"). Any amounts allocated to the Variable Account will be
allocated to one or more Sub-Accounts of the Variable Account. The assets of
each Sub-Account will be invested solely in the shares of one of the four
portfolios of the Variable Insurance Products Fund ("VIP"), in one of the three
portfolios of the Variable Insurance Products Fund II ("VIP II"), in one of the
two funds available through the Northstar Variable Trust or in one of the three
funds available
(Continued on next page)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SHARES OF THE INVESTMENT FUNDS AND INTERESTS IN THE POLICIES ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY A BANK, AND THE SHARES AND
INTERESTS ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
THIS PROSPECTUS SHOULD BE READ CAREFULLY AND RETAINED FOR FUTURE REFERENCE. A
CURRENT PROSPECTUS FOR EACH OF THE FUNDS MUST ACCOMPANY THIS PROSPECTUS AND
SHOULD BE READ IN CONJUNCTION WITH THIS PROSPECTUS.
THE DATE OF THIS PROSPECTUS IS JULY , 1997.
46203
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through Putnam Variable Trust (the "Funds"). The accompanying prospectus for
each of the Funds describes the investment objectives and attendant risks of
each of the Funds and portfolios.
If net premiums are allocated to the Variable Account, the amount of the
Policy's Death Benefit may, and the Policy's Accumulation Value (that is, the
total amount that a Policy provides for investment at any time) will, reflect
the investment performance of the Sub-Accounts of the Variable Account that you
select. You bear the entire investment risk for any amounts allocated to the
Variable Account; no minimum Accumulation Value in the Variable Account is
guaranteed. Regardless of how net premiums are allocated, the Policy's Death
Benefit may, and the Policy's Accumulation Value will, also depend upon the
frequency and amount of premiums paid, any partial withdrawals, loans, and the
charges and deductions assessed in connection with the Policy.
The Policy provides for two types of "free look" periods, one after the
issuance of the Policy and the other after any requested increase in the Face
Amount. See "Free Look and Conversion Rights -- Free Look Rights".
THE CHARGES IMPOSED UPON EARLY SURRENDER OR LAPSE WILL BE SIGNIFICANT. FOR
EXAMPLE, IF YOU MAKE PREMIUM PAYMENTS NO GREATER THAN THE MINIMUM MONTHLY
PREMIUM PAYMENTS SPECIFIED IN YOUR POLICY, YOU CAN EXPECT THAT DURING AT LEAST
THE EARLY POLICY YEARS, A SUBSTANTIAL PORTION OF YOUR PREMIUM PAYMENTS MAY BE
REQUIRED TO PAY THE SURRENDER CHARGE AND OTHER CHARGES ASSOCIATED WITH THE
POLICY. AS A RESULT, YOU SHOULD PURCHASE A POLICY ONLY IF YOU HAVE THE FINANCIAL
CAPABILITY TO KEEP IT IN FORCE FOR A SUBSTANTIAL PERIOD. ALSO, CHARGES IMPOSED
UPON SURRENDER OR THE LAPSE OF THE POLICY WILL BE ALL OR A SUBSTANTIAL PORTION
OF THE ACCUMULATION VALUE OF THE POLICY DURING THE EARLY POLICY YEARS, WHICH
MEANS THAT PAYMENTS SUFFICIENT TO MAINTAIN THE DEATH BENEFIT GUARANTEE MAY BE
REQUIRED TO AVOID LAPSE DURING THIS PERIOD OF TIME. THESE SAME CONSIDERATIONS
APPLY AFTER A REQUESTED INCREASE IN FACE AMOUNT, WHICH CREATES THE POSSIBILITY
OF ADDITIONAL CHARGES UPON SURRENDER OR LAPSE OF THE POLICY. SEE "PAYMENT AND
ALLOCATION OF PREMIUMS -- AMOUNT AND TIMING OF PREMIUMS", "DEATH BENEFIT
GUARANTEE", AND "DEDUCTIONS AND CHARGES -- SURRENDER CHARGE".
REPLACING EXISTING INSURANCE WITH A POLICY DESCRIBED IN THIS PROSPECTUS MAY
NOT BE TO YOUR ADVANTAGE. IN ADDITION, IT MAY NOT BE TO YOUR ADVANTAGE TO
PURCHASE THIS POLICY TO OBTAIN ADDITIONAL INSURANCE PROTECTION IF YOU ALREADY
OWN ANOTHER SURVIVORSHIP FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING OR SOLICITATION IN ANY
JURISDICTION IN WHICH SUCH OFFERING OR SOLICITATION MAY NOT LAWFULLY BE MADE. NO
PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN
CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR
THE ACCOMPANYING FUND PROSPECTUSES AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
THIS ENTIRE PROSPECTUS SHOULD BE READ TO COMPLETELY UNDERSTAND THE POLICY
BEING OFFERED.
THE PRIMARY PURPOSE OF THE POLICY IS TO PROVIDE INSURANCE PROTECTION FOR THE
BENEFICIARY NAMED IN THE POLICY. NO CLAIM IS MADE THAT THE POLICY IS IN ANY WAY
SIMILAR OR COMPARABLE TO A SYSTEMATIC INVESTMENT PLAN OF A MUTUAL FUND.
2
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DEFINITIONS...............................................................6
PART 1. SUMMARY
How does the Policy compare to traditional life insurance?................9
What is the Death Benefit?................................................9
What flexibility do you have to adjust the amount of the Death Benefit?...9
What is the Death Benefit Guarantee?......................................9
If the Death Benefit Guarantee is not in effect, what will cause the Policy
to lapse?................................................................9
What is the Fixed Account?...............................................10
What is the Variable Account?............................................10
What are the minimum and maximum premium payments allowed?...............10
How are premiums allocated to the investment options?....................10
Who are the investment advisers of the Funds?............................10
What are the charges against the Variable Account?.......................10
What are the investment advisory fees and other fund expenses after
reimbursement?..........................................................10
What charges do we make against each premium payment?....................11
What charges do we make against the Accumulation Value?..................11
What charges do we make upon lapse or total surrender of the Policy?.....12
What is the value of the Policy if you surrender it?.....................12
Can you make partial withdrawals?........................................12
What are the free look and conversion rights?............................12
Can you transfer between the Sub-Accounts and/or the Fixed Account?......12
Can you borrow against the value of the Policy?..........................12
Are Death Benefit proceeds taxable income to the beneficiary?............13
Are Accumulation Value increases included in your taxable income?........13
Will exercising certain Policy rights have tax consequences?.............13
Who sells the Policies?..................................................13
PART 2. DETAILED INFORMATION
ReliaStar Life Insurance Company.........................................13
The Variable Account.....................................................13
Performance Information..................................................14
The Policies.............................................................14
Death Benefit............................................................15
Death Benefit Options..................................................15
Which Death Benefit Option to Choose...................................17
Requested Changes in Face Amount.......................................17
Insurance Protection...................................................18
Change in Death Benefit Option.........................................19
Payment and Allocation of Premiums.......................................20
Issuing the Policy.....................................................20
Allocation of Premiums.................................................21
Amount and Timing of Premiums..........................................21
Planned Periodic Premiums..............................................21
Unscheduled Additional Premiums........................................22
Paying Premiums by Mail................................................22
Death Benefit Guarantee..................................................22
Requirements...........................................................22
Accumulation Value.......................................................23
Deductions and Charges...................................................24
Premium Expense Charge.................................................24
Monthly Deduction......................................................24
Surrender Charge.......................................................25
Partial Withdrawal and Transfer Charges................................26
Reduction of Charges...................................................26
Policy Lapse and Reinstatement...........................................26
Surrender Benefits.......................................................27
Total Surrender........................................................27
Partial Withdrawal.....................................................27
</TABLE>
3
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Transfers................................................................28
Policy Loans.............................................................30
Free Look and Conversion Rights..........................................32
Free Look Rights.......................................................32
Conversion Rights......................................................32
Investments of the Variable Account......................................32
Fidelity's Variable Insurance Products Fund (VIP):.....................33
Fidelity's Variable Insurance Products Fund II (VIP II):...............34
Northstar Variable Trust (Northstar):..................................34
Putnam Variable Trust..................................................34
Addition, Deletion, or Substitution of Investments.....................35
Voting Rights............................................................35
General Provisions.......................................................36
Benefits After Age 100.................................................36
Ownership..............................................................36
Proceeds...............................................................36
Beneficiary............................................................36
Postponement of Payments...............................................36
Settlement Options.....................................................37
Incontestability.......................................................37
Misstatement of Age and Sex............................................38
Suicide................................................................38
Termination............................................................38
Amendment..............................................................38
Reports................................................................38
Dividends..............................................................38
Collateral Assignment..................................................39
Optional Insurance Benefits............................................39
Federal Tax Matters......................................................39
Policy Proceeds........................................................39
Taxation of Distributions..............................................41
Taxation of Policies Held by Pension and Certain Deferred Compensation
Plans.................................................................41
Taxation of ReliaStar Life Insurance Company...........................41
Other Considerations...................................................42
Distribution of the Policies...........................................42
Management...............................................................42
Directors..............................................................42
Executive Officers.....................................................44
State Regulation.........................................................44
Montana Residents........................................................45
Legal Proceedings........................................................45
Bonding Arrangements.....................................................45
Legal Matters............................................................45
Experts..................................................................45
Registration Statement Contains Further Information......................45
Financial Statements.....................................................45
Appendix A - The Fixed Account..........................................A-1
Appendix B - Calculation of Accumulation Value..........................B-1
Appendix C - Illustration of Accumulation Values, Surrender Charges,
Cash Surrender Values and Death Benefits....................C-1
Appendix D - Monthly Amount Charge Per $1,000 of
Face Amount.................................................D-1
Fund Prospectuses
Fidelity's Variable Insurance Products Fund (VIP):....................VIP
Money Market Portfolio..............................................VIP
High Income Portfolio...............................................VIP
Equity-Income Portfolio.............................................VIP
Growth Portfolio....................................................VIP
</TABLE>
4
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Fidelity's Variable Insurance Products Fund II (VIP II):..............VIP
Investment Grade Bond Portfolio.....................................VIP
Index 500 Portfolio.................................................VIP
Contrafund Portfolio................................................VIP
Northstar Variable Trust (Northstar):
Northstar Income and Growth Fund............................Northstar-1
Northstar Multi-Sector Bond Fund............................Northstar-1
Putnam Variable Trust:........................................Putnam VT-1
Putnam VT Diversified Income Fund...........................Putnam VT-1
Putnam VT Growth and Income Fund............................Putnam VT-1
Putnam VT Voyager Fund......................................Putnam VT-1
</TABLE>
5
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DEFINITIONS
ACCUMULATION VALUE. The total value attributable to a specific Policy, which
equals the sum of the Variable Accumulation Value (the total of the values in
each Sub-Account of the Variable Account) and the Fixed Accumulation Value
(the value in the Fixed Account). See "Accumulation Value" at page 23 and
Appendix B.
AVERAGE AGE. The sum of the ages of the Joint Insureds divided by two rounded to
the higher age.
CASH SURRENDER VALUE. The Accumulation Value less any Surrender Charge, Loan
Amount and unpaid Monthly Deductions.
CASH VALUE. The Accumulation Value less any Surrender Charge.
CODE. Internal Revenue Code of 1986, as amended.
DEATH BENEFIT. The amount determined under the applicable Death Benefit Option
(the Level Amount Option or the Variable Amount Option). The proceeds payable to
the beneficiary of the Policy upon the death of the Surviving Joint Insured
under either Death Benefit Option will be reduced by any Loan Amount and any
unpaid Monthly Deductions. See "Death Benefit" at page 15.
DEATH BENEFIT GUARANTEE. A feature of the Policy guaranteeing that the Policy
will not lapse during the Death Benefit Guarantee Period specified in your
Policy if, on each Monthly Anniversary, the total premiums paid on the
Policy, less any partial withdrawals and any Loan Amount, equals or exceeds
the total required Minimum Monthly Premium payments specified in your Policy,
including the Minimum Monthly Premium for the current Monthly Anniversary.
See "Death Benefit Guarantee" at page 22.
DEATH BENEFIT OPTION. Either of two death benefit options available under the
Policy (the Level Amount Option and the Variable Amount Option). See "Death
Benefit -- Death Benefit Options" at page 15.
FACE AMOUNT. The minimum Death Benefit under the Policy to age 100 of the
younger Joint Insured as long as the Policy remains in force. See "Death
Benefit" at page 15.
FIXED ACCOUNT. The assets of ReliaStar Life Insurance Company other than those
allocated to the Variable Account or any other separate account. See Appendix A.
FIXED ACCUMULATION VALUE. The value attributable to a specific Policy to the
extent such amount is attributable to the Fixed Account (our General Account).
Unlike the Variable Accumulation Value, the Fixed Accumulation Value will not
reflect the investment performance of the Funds. See "Accumulation Value" at
page 23 and Appendix B.
FUNDS. Any open-end management investment company (or portfolio thereof) or unit
investment trust (or series thereof) in which a Sub-Account invests as described
herein. See "Investments of the Variable Account" at page 32.
ISSUE DATE. The date insurance coverage under a Policy begins.
JOINT INSUREDS. The persons upon whose lives this Policy is issued.
LEVEL AMOUNT OPTION. One of two Death Benefit Options available under the
Policy. Under this option, the Death Benefit is the greater of the current Face
Amount or the Accumulation Value multiplied by the corridor percentage
according to the younger Joint Insured's attained age. After age 100 the
Death Benefit is equal to the Accumulation Value. See "Death Benefit -- Death
Benefit Options" at page 15.
LOAN AMOUNT. The sum of all unpaid Policy loans including unpaid interest due
thereon. See "Policy Loans" at page 30.
MINIMUM FACE AMOUNT. The minimum Face Amount shown in the Policy (currently
$250,000).
MINIMUM MONTHLY PREMIUM. A monthly premium amount specified in the Policy and
determined by us at issuance of the Policy. The initial Minimum Monthly Premium
will depend upon each Joint Insured's sex, age at issue, Rate Class, optional
insurance benefits added by rider, and the Initial Face Amount. A requested
increase or decrease in the Face Amount, a change in the Death
6
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Benefit Option, or the addition or termination of a Policy rider may change
the Minimum Monthly Premium. The Minimum Monthly Premium determines the
payments required to maintain the Death Benefit Guarantee. See "Death Benefit
Guarantee" at page 22.
MONTHLY ANNIVERSARY. The same date in each succeeding month as the Policy Date.
Whenever the Monthly Anniversary falls on a date other than a Valuation Date,
the Monthly Anniversary will be considered to be the next Valuation Date. The
Monthly Anniversary begins with the Policy Date.
MONTHLY DEDUCTION. A monthly charge deducted from the Accumulation Value of the
Policy. This charge includes the cost of insurance, the Monthly Administrative
Charge, the Monthly Mortality and Expense Risk Charge, the Monthly Guarantee
Death Benefit Charge, and any charges for optional insurance benefits. See
"Deductions and Charges -- Monthly Deduction" at page 24.
MONTHLY ADMINISTRATIVE CHARGE. A monthly charge to reimburse us for expenses
incurred in administering the Policy. This charge is part of the Monthly
Deduction. The amount of this charge is currently $8.25 per month and is
guaranteed not to exceed $12.00 per month. See "Deductions and Charges --
Monthly Deduction" at page 24.
MONTHLY AMOUNT CHARGE. A monthly charge per $1,000 of Face Amount to reimburse
us for expenses incurred in distributing and issuing the Policy. This charge is
deducted for each Policy Month during the first 20 Policy Years (and for 20
Policy Years following any requested increase in Face Amount) and is part of
the Monthly Deduction. The amount of this charge varies by average age of the
Joint Insureds on the Policy Date (or on the effective date of any requested
increase in Face Amount, as appropriate). See "Deductions and Charges --
Monthly Deduction" at page 25. See Appendix D for the Monthly Amount Charge
per $1,000 of Face Amount.
MONTHLY MORTALITY AND EXPENSE RISK CHARGE. A monthly charge to compensate us for
certain mortality and expense risks we assume under the Policy. The Mortality
and Expense Risk Charge will be an annual rate of (.90%) of the Variable
Accumulation Value of the Policy during the first 10 Policy Years. During
each Policy Year thereafter, it is anticipated that the charge will be an
annual rate of .25% guaranteed not to exceed .90% for the duration of the
Policy. See "Deductions and Charges -- Monthly Mortality and Expense Risk
Charge" at page 25.
NET PREMIUM. The gross premium less a Premium Expense Charge deducted from each
premium.
NORTHSTAR. Northstar Variable Trust
Northstar Income and Growth Fund
Northstar Multi-Sector Bond Fund
PUTNAM VARIABLE TRUST
Putnam VT Diversified Income Fund
Putnam VT Growth and Income Fund
Putnam VT Voyager Fund
PLANNED PERIODIC PREMIUM. The scheduled premium selected by you of a level
amount at a fixed interval. The initial Planned Periodic Premium you select will
be shown in the Policy. See "Payment and Allocation of Premiums -- Planned
Periodic Premiums" at page 21.
POLICY, POLICIES. The survivorship flexible premium variable life insurance
Policy offered by us and described in this Prospectus.
POLICY ANNIVERSARY. The same date in each succeeding year as the Policy Date.
Whenever the Policy Anniversary falls on a date other than a Valuation Date, the
Policy Anniversary will be considered to be the next Valuation Date.
POLICY DATE. The Policy Date is used in determining Policy Years, Policy Months,
Monthly Anniversaries, and Policy Anniversaries. The Policy Date will be shown
in the Policy.
POLICY MONTH. A month beginning on the Monthly Anniversary.
POLICY YEAR. A year beginning on the Policy Anniversary.
PREMIUM EXPENSE CHARGE. An amount deducted from each premium payment. The
Premium Expense Charge is guaranteed not to exceed 6.25% of each premium
payment. The Premium Expense
7
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Charge is currently 6.25% of each premium payment in Policy Years 1-10 and
3.75% of each premium after the tenth Policy Year. See "Deductions and
Charges -- Premium Expense Charge" at page 24.
RATE CLASS. A group of Insureds we determine based on our expectation that they
will have similar mortality experience.
SEC. Securities and Exchange Commission.
SIGNATURE GUARANTEE. A guarantee of your signature by a member firm of the New
York, American, Boston, Midwest, Philadelphia, or Pacific Stock Exchange, or by
a commercial bank (not a savings bank) which is a member of the Federal
Deposit Insurance Corporation, or, in certain cases, by a member firm of the
National Association of Securities Dealers, Inc. that has entered into an
appropriate agreement with us.
SUB-ACCOUNT. A sub-division of the Variable Account. Each Sub-Account invests
exclusively in the shares of a specified Fund.
SURRENDER CHARGE. A charge imposed upon total surrender or lapse of the Policy
during the first 15 Policy Years and the first 15 years following any requested
increase in Face Amount. See "Deductions and Charges -- Surrender Charge" at
page 25.
SURVIVING JOINT INSURED. The Joint Insured who remains alive after the other
Joint Insured has died.
UNIT VALUE. The unit measure by which the value of the Policy's interest in each
Sub-Account is determined. See Appendix B.
VALUATION DATE. Each day on which the New York Stock Exchange is open for
business except for a day that a Sub-Account's corresponding Fund does not value
its shares. The New York Stock Exchange is currently closed on weekends and
on the following holidays: New Year's Day; Presidents' Day; Good Friday;
Memorial Day; July Fourth; Labor Day; Thanksgiving Day; and Christmas Day.
VALUATION PERIOD. The period between two successive Valuation Dates, commencing
at the close of business of a Valuation Date and ending at the close of business
of the next Valuation Date. See Appendix B.
VARIABLE ACCOUNT. Select*Life Variable Account, a separate investment account
established by us to receive and invest Net Premiums paid under the Policy. See
"The Variable Account" at page 13.
VARIABLE ACCUMULATION VALUE. The value attributable to a specific Policy to the
extent such amount is attributable to the Variable Account. See "Accumulation
Value" at page 23 and Appendix B.
VARIABLE AMOUNT OPTION. One of two Death Benefit Options available under the
Policy. Under this option, the Death Benefit is the greater of the Face Amount
plus the Accumulation Value of the Policy, or the Accumulation Value
multiplied by the corridor percentage on the Valuation Date on or next
following the date of the younger Joint Insured's death. After age 100 the
Death Benefit is equal to the Accumulation Value. See "Death Benefit -- Death
Benefit Options" at page 15.
VIP. Variable Insurance Products Fund
Money Market Portfolio
High Income Portfolio
Equity-Income Portfolio
Growth Portfolio
VIP II. Variable Insurance Products Fund II
Investment Grade Bond Portfolio
Index 500 Portfolio
Contrafund Portfolio
WE, US, OUR OR THE COMPANY. ReliaStar Life Insurance Company.
YOU, YOUR. The Policy owner(s) as designated in the application for the Policy
or as subsequently changed. If a Policy has been absolutely assigned, the
assignee is the Policy owner. A collateral assignee is not the Policy owner.
8
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PART 1. SUMMARY
This is a brief summary of the Policy's features. More detailed information
follows later in this Prospectus.
HOW DOES THE POLICY COMPARE TO TRADITIONAL LIFE INSURANCE?
Like traditional life insurance:
-The Policy provides a guaranteed minimum amount of life insurance coverage.
-As long as you meet the requirements for the Death Benefit Guarantee, your
Policy will remain in force during the Death Benefit Guarantee Period
specified in your Policy.
-You can surrender the Policy while the Surviving Joint Insured is living
and receive its Cash Surrender Value.
-The Policy has a loan value.
-The Fixed Accumulation Value is guaranteed.
Unlike traditional life insurance:
-You choose where the Net Premiums for the Policy are invested.
-You may transfer existing values among the investment options.
-The Variable Accumulation Value may increase or decrease based on the
investment performance of the Funds you select.
-You choose between two Death Benefit Options.
-You choose the amount and frequency of your premium payments.
-After the fourth Policy Year, you can increase or decrease the Face Amount.
WHAT IS THE DEATH BENEFIT?
You choose one of two Death Benefit Options -- the Level Amount Option or
the Variable Amount Option. The Death Benefit under the Level Amount Option is
the greater of the Face Amount or the Accumulation Value multiplied by the
corridor percentage according to the younger Joint Insured's attained age. The
Death Benefit under the Variable Amount Option is equal to the greater of the
Face Amount plus the Accumulation Value, or the Accumulation Value multiplied by
the corridor percentage according to the younger Joint Insured's attained age.
See "Death Benefit".
The proceeds payable upon the death of the Surviving Joint Insured under
either Death Benefit Option will be reduced by any Loan Amount and any unpaid
Monthly Deductions.
The Death Benefit up to age 100 of the younger Joint Insured will never be
less than the Face Amount as long as the Policy is in force and there is no Loan
Amount or unpaid Monthly Deductions. After age 100 the Death Benefit is the
Accumulation Value.
WHAT FLEXIBILITY DO YOU HAVE TO ADJUST THE AMOUNT OF THE DEATH BENEFIT?
After the fourth Policy Year, you have flexibility to adjust the Death
Benefit by increasing or decreasing the Face Amount. You cannot decrease the
Face Amount below the Minimum Face Amount shown in the Policy. Any increase in
the Face Amount must be at least $5,000 and may require additional evidence of
insurability satisfactory to us and will result in additional charges. See
"Death Benefit -- Requested Changes in Face Amount".
Generally, you may also change the Death Benefit Option at any time after
the fourth Policy Year. We may require evidence of insurability satisfactory to
us. See "Death Benefit -- Change in Death Benefit Option".
For a discussion of available techniques to adjust the amount of insurance
protection to satisfy changing insurance needs. See "Death Benefit -- Insurance
Protection".
WHAT IS THE DEATH BENEFIT GUARANTEE?
During the Death Benefit Guarantee Period specified in your Policy, if you
meet the requirements for the Death Benefit Guarantee we will not lapse your
Policy, even if the Cash Surrender Value is not sufficient to cover the Monthly
Deduction that is due. See "Death Benefit Guarantee".
IF THE DEATH BENEFIT GUARANTEE IS NOT IN EFFECT, WHAT WILL CAUSE THE POLICY TO
LAPSE?
The Policy will only lapse if the Cash Surrender Value is less than the
Monthly Deduction due and if a grace period of 61 days expires without a
sufficient payment. The Policy thus differs in two
9
<PAGE>
important respects from traditional life insurance. First, the failure to pay a
Planned Periodic Premium will not automatically cause the Policy to lapse.
Second, even if Planned Periodic Premiums have been paid, the Policy may lapse.
See "Policy Lapse and Reinstatement -- Lapse".
WHAT IS THE FIXED ACCOUNT?
The Fixed Account consists of all of our assets other than those in our
separate accounts (including the Variable Account). We credit interest of at
least 4% per year on any amounts you have in the Fixed Account. From time to
time we may guarantee interest in excess of 4%. Interests in the Fixed Account
have not been registered under the Securities Act of 1933 nor is the Fixed
Account subject to the restrictions of the Investment Company Act of 1940. See
Appendix A, "The Fixed Account".
WHAT IS THE VARIABLE ACCOUNT?
The Select*Life Variable Account is one of our separate accounts. Only
premiums from our variable life insurance policies are invested in the Variable
Account. See "The Variable Account".
The Variable Account is divided into Sub-Accounts. Premiums allocated to
each Sub-Account are invested in shares, at net asset value, of the Fund
corresponding to that Sub-Account. The Variable Accumulation Value of the Policy
will vary with, among other things, the investment performance of the Funds to
which Policy premiums are allocated and the charges deducted from the Variable
Accumulation Value. See "Accumulation Value".
WHAT ARE THE MINIMUM AND MAXIMUM PREMIUM PAYMENTS ALLOWED?
With certain restrictions, you can choose when you pay premiums and how much
each payment will be. In most cases, however, payment of cumulative premiums
sufficient to maintain the Death Benefit Guarantee will be required to keep the
Policy in force during at least the first several Policy Years. See "Death
Benefit Guarantee". We may choose not to accept a payment of less than $25.00.
We do, however, reserve the right to limit the amount of any payment and certain
maximum limits apply. We will return to you any premium paid to the extent that
total premiums paid, both scheduled and unscheduled, would exceed the current
maximum premium payments allowed for life insurance under Federal tax law. See
"Payment and Allocation of Premiums -- Amount and Timing of Premiums".
HOW ARE PREMIUMS ALLOCATED TO THE INVESTMENT OPTIONS?
You choose the premium allocation on the application. You can allocate
premiums to the Fixed Account and/or one or more Sub-Accounts of the Variable
Account. The initial allocation remains in effect for any future premium
payments until you change it. See "Payment and Allocation of Premiums --
Allocation of Premiums".
WHO ARE THE INVESTMENT ADVISERS OF THE FUNDS?
Fidelity Management & Research Company is the investment adviser of VIP's
four portfolios and of VIP II's three portfolios.
Northstar Investment Management Corporation, an affiliate of ours, is the
investment adviser of Northstar's two funds.
Putnam Investment Management, Inc. ("Putnam Management") is the investment
adviser of Putnam Variable Trust's three funds.
For the expenses of each Fund see "Deductions and Charges -- Charges against
the Variable Account".
WHAT ARE THE CHARGES AGAINST THE VARIABLE ACCOUNT?
Certain charges will be deducted as a percentage of the value of the net
assets of the Variable Account. These charges will not be deducted from assets
in the Fixed Account.
TAXES. Currently no charge is made to the Variable Account for Federal
income taxes that may be attributable to the Variable Account. We may, however,
make such a charge in the future. Charges for other taxes, if any, attributable
to the Variable Account may also be made.
WHAT ARE THE INVESTMENT ADVISORY FEES AND OTHER FUND EXPENSES AFTER
REIMBURSEMENT?
Because the Variable Account purchases shares of the Funds, the net asset
value of the investments of the Variable Account will reflect the investment
advisory fees and other expenses incurred by the Funds. Set forth below is
information provided by each Fund on its total 1996 annual expenses as a
percentage of the Fund's average net assets. For more information concerning
these expenses, see the prospectuses for the Funds that accompany this
Prospectus.
10
<PAGE>
<TABLE>
<CAPTION>
TOTAL INVESTMENT
MANAGEMENT OTHER FUND ANNUAL
FEES EXPENSES EXPENSES
---------- -------- ----------------
<S> <C> <C> <C>
VIP Money Market Portfolio.... 0.21% 0.09% 0.30%
VIP High Income Portfolio..... 0.59% 0.12% 0.71%
VIP Equity-Income Portfolio
(a).......................... 0.51% 0.07% 0.58%
VIP Growth Portfolio (a)...... 0.61% 0.08% 0.69%
VIP II Investment Grade Bond
Portfolio.................... 0.45% 0.13% 0.58%
VIP II Index 500 Portfolio
(b).......................... 0.13% 0.15% 0.28%
VIP II Contrafund Portfolio
(a).......................... 0.61% 0.13% 0.74%
Northstar Income and Growth
Fund (c)..................... 0.75% 0.05% 0.80%
Northstar Multi-Sector Bond
Fund (c)..................... 0.75% 0.05% 0.80%
Putnam VT Diversified Income
Fund......................... 0.70% 0.13% 0.83%
Putnam VT Growth and Income
Fund......................... 0.49% 0.05% 0.54%
Putnam VT Voyager Fund........ 0.57% 0.06% 0.63%
</TABLE>
(a) A portion of the brokerage commissions that certain funds pay was used to
reduce funds expenses. In addition, certain funds have entered into
arrangements with their custodian and transfer agent whereby interest earned
on uninvested cash balances was used to reduce custodian and transfer agent
expenses. Including these reductions, the total operating expenses presented
in the table would have been .56% for Equity Income Portfolio, .67% for
Growth Portfolio and .71% for Contrafund Portfolio.
(b) FMR agreed to reimburse a portion of Index 500 Portfolio's expenses during
the period. Without this reimbursement, the funds' management fee, other
expenses and total expenses would have been .28%, .15%, and .43%
respectively.
(c) The investment adviser to the Northstar Variable Trust has agreed to
reimburse the two Northstar Funds for any expenses in excess of 0.80% of
each Fund's average daily net assets. In the absence of the investment
adviser's expense reimbursements, the actual expenses that would have been
paid by each Fund during its fiscal year ended December 31, 1996 would have
been 1.40% for Income and Growth Fund and 1.68% for Multi-Sector Bond Fund.
WHAT CHARGES DO WE MAKE AGAINST EACH PREMIUM PAYMENT?
We deduct an amount (the Premium Expense Charge) from each premium and
credit the remaining premium (the Net Premium) to the Fixed Account or to the
Variable Account in accordance with your instructions. The Premium Expense
Charge is guaranteed not to exceed 6.25% of each premium payment. The Premium
Expense Charge is currently 6.25% of each premium payment in Policy Years 1-10
and 3.75% of each premium after the tenth Policy Year. See "Deductions and
Charges -- Premium Expense Charge".
WHAT CHARGES DO WE MAKE AGAINST THE ACCUMULATION VALUE?
The Accumulation Value of the Policy is subject to several charges -- the
Monthly Deduction and transfer and partial withdrawal charges.
The Monthly Deduction will be deducted monthly from both the Fixed
Accumulation Value and the Variable Accumulation Value and includes the cost of
insurance, the Monthly Administrative Charge, the Monthly Mortality and Expense
Risk Charge, the Monthly Amount Charge, and charges for optional insurance
benefits. The cost of insurance will be determined by multiplying the applicable
cost of insurance rate(s) by the net amount at risk. The Monthly Administrative
Charge is currently $8.25 per month and is guaranteed not to exceed $12.00 per
month. The Monthly Amount Charge will be determined by multiplying the Face
Amount by the applicable charge per $1,000 of Face Amount. This Charge applies
only during the first 20 Policy Years (and 20 Policy Years after any requested
Face Amount increase relative to the increase amounts). The Monthly Mortality
and Expense Risk Charge will be equal to one-twelfth of .90% of the Variable
Accumulation Value (that is, the total value attributable to a specific Policy
in the Sub-Accounts of the Variable Account) of the Policy during the first 10
Policy Years. Beginning on Policy Year 11 and each year thereafter, it is
currently anticipated that this monthly charge will be one-twelfth of .25% but
in no event will it exceed one-twelfth of .90% for the duration of the Policy.
The charges for optional insurance benefits will vary depending upon the
benefit(s) selected. See "Deductions and Charges -- Monthly Deduction".
11
<PAGE>
There is currently no charge imposed for each transfer but we presently
charge $10.00 for each partial withdrawal. The charge for transfers and partial
withdrawals is guaranteed not to exceed $25.00 per transfer or partial
withdrawal. See "Deductions and Charges -- Partial Withdrawal and Transfer
Charges".
WHAT CHARGES DO WE MAKE UPON LAPSE OR TOTAL SURRENDER OF THE POLICY?
During the first 15 years the Policy is in force and the first 15 years
following a requested increase in the Face Amount, there is a charge if the
Policy lapses or you surrender the Policy (the Surrender Charge). See
"Deductions and Charges -- Surrender Charge".
The maximum Surrender Charge on the Initial Face Amount will be equal to
$10.00 per thousand of Initial Face Amount. The maximum Surrender Charge on any
requested increase in Face Amount will be equal to $10.00 per thousand of
increase in Face Amount. This maximum charge then remains level during the first
five years (adjusted for increases in the first three years) in the relevant 15
year period, and then reduces in equal monthly increments until it becomes zero
at the end of 15 years.
The Surrender Charge imposed upon early surrender or lapse will be
significant. As a result, you should purchase a Policy only if you have the
financial capability to keep it in force for a substantial period of time.
WHAT IS THE VALUE OF THE POLICY IF YOU SURRENDER IT?
In general, the Cash Surrender Value is the amount you would receive if you
surrender the Policy. To determine the Cash Surrender Value, your Accumulation
Value is reduced by the Surrender Charge, if any, and any Loan Amount and unpaid
Monthly Deductions. See "Surrender Benefits -- Total Surrender".
CAN YOU MAKE PARTIAL WITHDRAWALS?
Yes, you can withdraw part of your Cash Surrender Value. You will not incur
a Surrender Charge, but partial withdrawals are subject to a processing charge.
We currently make a $10.00 charge for each partial withdrawal. The charge is
guaranteed not to exceed $25.00 per partial withdrawal. Only one partial
withdrawal is allowed in any Policy Year. See "Surrender Benefits -- Partial
Withdrawal".
WHAT ARE THE FREE LOOK AND CONVERSION RIGHTS?
You have a limited free look period during which you have a right to return
the Policy and receive a refund of all premiums paid. See "Free Look and
Conversion Rights -- Free Look Rights". The Policy must be returned to us by
midnight of the 10th day after you receive it.
Also, the Policy may in effect be converted in whole or in part to a "fixed
benefit" policy (providing benefits that do not vary with the investment
performance of the Variable Account) at any time during the first two Policy
Years by transferring all or part of the Accumulation Value of the Policy from
the Variable Account to the Fixed Account.
Similar free look and conversion rights will be available for requested
increases in the Face Amount.
CAN YOU TRANSFER BETWEEN THE SUB-ACCOUNTS AND/OR THE FIXED ACCOUNT?
Subject to certain restrictions, you can transfer all or part of your
Accumulation Value among the investment options of the Policy. We currently
allow up to twelve transfers per year. Transfers from the Fixed Account are
subject to certain additional restrictions. We reserve the right to limit you to
four transfers per year and to make a charge for each transfer. We currently
make no charge for each transfer. This charge is guaranteed not to exceed $25.00
per transfer. To the extent, however, that you request a transfer from the
Variable Account to the Fixed Account in connection with exercising your
conversion rights under the Policy (see "Free Look and Conversion Rights --
Conversion Rights"), the limit on the number of transfers and the charge will
not apply. See "Transfers".
CAN YOU BORROW AGAINST THE VALUE OF THE POLICY?
At any time after the first Policy Year, you can borrow up to 75% of the
Cash Value of the Policy less any existing Loan Amount. (In Texas, the
percentage is 100% and in Alabama, Maryland and Virginia, the percentage is 90%.
In Indiana you can borrow up to 75% of the Cash Value of the Policy during the
first Policy Year.) Each loan must be at least $500, except in Connecticut it
must be at least $200. Interest is payable in advance for each Policy Year and
accrues daily at an effective annual rate that will not exceed 8.00% (which is
7.40% when payable in advance). After the tenth Policy Year, we
12
<PAGE>
will charge interest at an annual rate of 5.50% (which is 5.21% when payable in
advance) on the portion of your Loan Amount that is not in excess of (a) the
Accumulation Value, less (b) the total of all premiums paid net of all partial
withdrawals. See "Policy Loans".
ARE DEATH BENEFIT PROCEEDS TAXABLE INCOME TO THE BENEFICIARY?
Under current Federal tax law, as long as the Policy qualifies as life
insurance, the Death Benefit under the Policy will be subject to the same
Federal income tax treatment as proceeds of traditional life insurance.
Therefore, the Death Benefit should not be taxable income to the beneficiary.
See "Federal Tax Matters -- Policy Proceeds".
ARE ACCUMULATION VALUE INCREASES INCLUDED IN YOUR TAXABLE INCOME?
Under current Federal tax law, as long as the Policy qualifies as life
insurance, Accumulation Value increases will also be subject to the same Federal
income tax treatment as traditional life insurance cash values. Therefore, any
increases should accumulate on a tax deferred basis. See "Federal Tax Matters --
Policy Proceeds".
WILL EXERCISING CERTAIN POLICY RIGHTS HAVE TAX CONSEQUENCES?
A change of owners, a partial withdrawal, a total surrender, or a Policy
loan may have tax consequences depending on the particular circumstances. See
"Federal Tax Matters -- Policy Proceeds".
WHO SELLS THE POLICIES?
The Policies are sold by licensed insurance agents who are also registered
representatives of broker-dealers registered under the Securities Exchange Act
of 1934 and who are members of the National Association of Securities Dealers,
Inc. Washington Square Securities, Inc., an affiliate of ours, is the Principal
Underwriter of the Policies. See "Distribution of the Policies".
PART 2. DETAILED INFORMATION
RELIASTAR LIFE INSURANCE COMPANY
We are a stock life insurance company organized in 1885 and incorporated
under the laws of the State of Minnesota. We are a direct, wholly-owned
subsidiary of ReliaStar Financial Corp., a Minneapolis based holding Company
whose subsidiaries specialize in life insurance and related financial services
businesses. We offer individual life insurance and annuities, employee benefits
and retirement contracts. The Policies described in this Prospectus are
nonparticipating. On a consolidated basis, ReliaStar Financial Corp. has $190
billion of life insurance in force and assets of $16.7 billion. Our Home Office
is at 20 Washington Avenue South, Minneapolis, Minnesota 55401 (telephone
612-372-5507).
THE VARIABLE ACCOUNT
The Variable Account is a Separate Account of ours, established by the Board
of Directors on October 11, 1984 pursuant to the laws of the State of Minnesota.
The Variable Account will receive and invest the Net Premiums paid and allocated
to it under this Policy. In addition, the Variable Account currently receives
and invests net premiums for other classes of flexible premium variable life
insurance policies and may do so for additional classes in the future. The
Variable Account meets the definition of a "separate account" under the federal
securities laws and has been registered with the SEC as a unit investment trust
under the Investment Company Act of 1940. The registration does not involve
supervision by the SEC of the management or investment policies or practices of
the Variable Account, us, or the Funds.
We own the assets of the Variable Account. However, the Minnesota laws under
which the Variable Account was established provide that the Variable Account
cannot be charged with liabilities arising out of any other business we may
conduct. We are required to maintain assets which are at least equal to the
reserves and other liabilities of the Variable Account. We may transfer assets
which exceed these reserves and liabilities to our general account (the Fixed
Account).
For a description of the Fixed Account, see Appendix A to this Prospectus.
We may receive compensation from an affiliate or affiliates of certain of
the Funds held in the Sub-Accounts based upon an annual percentage of the
average net assets held in that Sub-Account by us. These amounts are intended to
compensate us for administrative and other services provided by us to the Funds
and/or the affiliate(s). Payment of such amounts by an affiliate or affiliates
of the Funds do not increase the fees paid by the Funds or their shareholders.
(See Investments of the Variable Account).
13
<PAGE>
PERFORMANCE INFORMATION
Performance information for the Sub-Accounts of the Variable Account and the
Funds available for investment by the Variable Account may appear in
advertisements, sales literature, or reports to Policy owners or prospective
purchasers. Performance information for the Sub-Accounts will reflect deductions
of Fund expenses and be adjusted to reflect the Mortality and Expense Risk
Charge, but will not reflect deductions for the cost of insurance or the
Surrender Charge. Quotations of performance information for the Funds will be
accompanied by performance information for the Sub-Accounts. Performance
information for the Funds will take into account all fees and charges at the
Fund level, but will not reflect any deductions from the Variable Account.
Performance information reflects only the performance of a hypothetical
investment during a particular time period in which the calculations are based.
Performance information showing total returns and average annual total returns
may be provided for periods prior to the date a Sub-Account commenced operation.
Such performance information will be calculated based on the assumption that the
Sub-Accounts were in existence for the same periods as those indicated for the
Funds, with the level of charges at the Variable Account level that were in
effect at the inception of the Sub-Accounts. Performance information should be
considered in light of the investment objectives and policies, characteristics
and quality of the portfolio of the Fund in which the Sub-Account invests, and
the market conditions during the given period of time, and should not be
considered as a representation of what may be achieved in the future.
We may also provide individualized hypothetical illustrations of Policy
Accumulation Value, Cash Surrender Value and Death Benefit based on historical
investment returns of the Funds. These illustrations will reflect deductions for
Fund expenses and Policy and Variable Account charges, including the Monthly
Deduction, Premium Expense Charge and the Surrender Charge. These hypothetical
illustrations will be based on the actual historical experience of the Funds as
if the Sub-Accounts had been in existence and a Policy issued for the same
periods as those indicated for the Funds.
Performance of the Sub-Accounts and/or the Funds as reported from time to
time in advertisements and sales literature may be compared to other variable
life insurance issuers in general or to the performance of particular types of
variable life insurance policies investing in mutual funds, or investment series
of mutual funds with investment objectives similar to each of the Sub-Accounts,
whose performance is reported by Lipper Analytical Services, Inc. ("Lipper") and
Morningstar, Inc. ("Morningstar") or reported by other series, companies,
individuals or other industry or financial publications of general interest,
such as FORBES, MONEY, THE WALL STREET JOURNAL, BUSINESS WEEK, BARRON'S,
KIPLINGER'S PERSONAL FINANCE, and FORTUNE. Lipper and Morningstar are
independent services which monitor and rank the performances of variable life
insurance issuers in each of the major categories of investment objectives on an
industry-wide basis.
Lipper's and Morningstar's rankings include variable annuity issuers as well
as variable life insurance issuers. The performance analysis prepared by Lipper
and Morningstar ranks such issuers on the basis of total return, assuming
reinvestment of distributions, but does not take sales charges, redemption fees
or certain expense deductions at the separate account level into consideration.
We may also compare the performance of each Sub-Account in advertising and
sales literature to the Standard & Poor's Index of 500 common stocks and the Dow
Jones Industrials, which are widely used measures of stock market performance.
We may also compare the performance of each Sub-Account to other widely
recognized indices. Unmanaged indices may assume the reinvestment of dividends,
but typically do not reflect any "deduction" for the expense of operating or
managing an investment portfolio.
THE POLICIES
The Policies are survivorship flexible premium variable life insurance
contracts with death benefits, cash values, and other features of traditional
life insurance contracts. They are "flexible premium" because premiums do not
have to be paid according to a fixed schedule. They are "variable" because, to
the extent Accumulation Value is attributable to the Variable Account,
Accumulation Values and, under certain circumstances, the Death Benefit will
increase and decrease based on the investment performance of the Funds in which
the Sub-Accounts to which you allocate your premium payments invest.
14
<PAGE>
DEATH BENEFIT
Like traditional life insurance, we pay a death benefit if the Surviving
Joint Insured dies while the Policy is in force. The proceeds payable upon the
death of the Surviving Joint Insured will be the Death Benefit (see "Death
Benefit Options" below) reduced by any Loan Amount and unpaid Monthly
Deductions. All or part of the proceeds may be paid in cash to your
beneficiaries or under one or more of the settlement options we offer (see
"General Provisions -- Settlement Options").
The Policy provides two Death Benefit Options: the Level Amount Option and
the Variable Amount Option. You choose the Death Benefit Option on the
application for the Policy. Subject to certain limitations, you can change the
Death Benefit Option after issuance of the Policy. See "Death Benefit -- Change
in Death Benefit Option".
The Death Benefit may vary with the Policy's Accumulation Value. Under the
Level Amount Option, the Death Benefit will only vary with the Accumulation
Value whenever the Accumulation Value multiplied by the corridor percentage (see
"Death Benefit Options -- Level Amount Option") exceeds the Face Amount of the
Policy. The Death Benefit under the Variable Amount Option will always vary with
the Accumulation Value because the Death Benefit equals the Face Amount plus the
Accumulation Value, or the corridor percentage of the Accumulation Value. Under
either Death Benefit Option, however, the Death Benefit to age 100 of the
younger Joint Insured will never be less than the current Face Amount of the
Policy and will be payable only as long as the Policy remains in force. After
age 100 the Death Benefit is the Accumulation Value.
In addition to affecting the amount of the Death Benefit as described above,
the Accumulation Value generally determines how long the Policy remains in
force. See "Policy Lapse and Reinstatement". This means that, to the extent
Accumulation Value is attributable to the Variable Account, the investment
performance of the Variable Account (and the underlying Funds) may affect the
duration of the Policy by affecting the amount of Accumulation Value. You bear
the investment risk with respect to any amounts allocated to the Variable
Account. If, however, the Death Benefit Guarantee is in effect (see "Death
Benefit Guarantee"), the Policy will stay in force without regard to the
investment performance under the Policy.
Appendix C illustrates Accumulation Values, Surrender Charges, Cash
Surrender Values, and Death Benefits assuming different levels of premium
payments and investment returns for selected ages and Face Amounts.
DEATH BENEFIT OPTIONS
The Level Amount Option and the Variable Amount Option are described below.
LEVEL AMOUNT OPTION. The Death Benefit is the greater of the current Face
Amount of the Policy or the Accumulation Value multiplied by the corridor
percentage according to the younger Joint Insured's attained age. The corridor
percentage is 250% for the younger Joint Insured age 40 or below, and the
percentage declines with increasing ages as shown in the Corridor Percentage
Table on page 16. Accordingly, under the Level Amount Option the Death Benefit
will remain level unless the corridor percentage of Accumulation Value exceeds
the current Face Amount, in which case the amount of the Death Benefit will vary
as the Accumulation Value varies.
ILLUSTRATION OF LEVEL AMOUNT OPTION. For purposes of this illustration,
assume that the younger Joint Insured is under age 40, and that there is no Loan
Amount. Under the Level Amount Option, a Policy with a $100,000 Face Amount will
generally have a $100,000 Death Benefit. However, because the Death Benefit must
be equal to or be greater than 250% of the Accumulation Value, any time the
Accumulation Value of the Policy exceeds $40,000, the Death Benefit will exceed
the $100,000 Face Amount. Each additional dollar added to the Accumulation Value
above $40,000 will increase the Death Benefit by $2.50. Thus, if the
Accumulation Value exceeds $40,000 and increases by $100 because of investment
performance or premium payments, the Death Benefit will increase by $250. A
Policy owner with an Accumulation Value of $50,000 will be entitled to a Death
Benefit of $125,000 ($50,000 X 250%); an Accumulation Value of $75,000 will
yield a Death Benefit of $187,500 ($75,000 X 250%); and an Accumulation Value of
$100,000 will yield a Death Benefit of $250,000 ($100,000 X 250%).
Similarly, as long as the Accumulation Value exceeds $40,000, each dollar
taken out of the Accumulation Value will reduce the Death Benefit by $2.50. If,
for example, the Accumulation Value is reduced from $75,000 to $70,000 because
of partial withdrawals, charges, or negative investment
15
<PAGE>
performance, the Death Benefit will be reduced from $187,500 to $175,000. If at
any time before the younger Joint Insured's age 100, however, the Accumulation
Value multiplied by the corridor percentage is less than the Face Amount, the
Death Benefit will equal the current Face Amount of the Policy.
The corridor percentage becomes lower as the younger Joint Insured's age
increases. If the current age of the younger Joint Insured in the illustration
above were, for example, 50 (rather than under age 40), the corridor percentage
would be 185%. The Death Benefit would not exceed the $100,000 Face Amount
unless the Accumulation Value exceeded approximately $54,055 (rather than
$40,000), and each $1 then added to or taken from the Accumulation Value would
change the Death Benefit by $1.85 (rather than $2.50).
CORRIDOR PERCENTAGE TABLE
<TABLE>
<CAPTION>
Younger Joint
Insured's Age on
Previous Policy Corridor Percentage
Anniversary of Accumulation Value
- ------------------------ -------------------------
<S> <C>
40 or younger 250%
41 243
42 236
43 229
44 222
45 215
46 209
47 203
48 197
49 191
50 185
51 178
52 171
53 164
54 157
55 150
56 146
57 142
58 138
59 134
60 130
61 128
62 126
63 124
64 122
65 120
66 119
67 118
68 117
69 116
70 115
71 113
72 111
73 109
74 107
75-90 105
91 104
92 103
93 102
94 101
95-100 100
</TABLE>
16
<PAGE>
VARIABLE AMOUNT OPTION. The Death Benefit is equal to the greater of the
current Face Amount plus the Accumulation Value of the Policy, or the
Accumulation Value multiplied by the corridor percentage according to the
younger Joint Insured's attained age. The corridor percentage is 250% for the
younger Joint Insured age 40 or below, and the percentage declines with
increasing age as shown in the Corridor Percentage Table above. Accordingly,
under the Variable Amount Option the amount of the Death Benefit will always
vary as the Accumulation Value varies.
ILLUSTRATION OF VARIABLE AMOUNT OPTION. For purposes of this illustration,
assume that the younger Joint Insured is under age 40 and that there is no Loan
Amount. Under the Variable Amount Option, a Policy with a Face Amount of
$100,000 will generally pay a Death Benefit of $100,000 plus the Accumulation
Value. Thus, for example, a Policy with an Accumulation Value of $20,000 will
have a Death Benefit of $120,000 ($100,000 + $20,000); an Accumulation Value of
$40,000 will yield a Death Benefit of $140,000 ($100,000 + $40,000). The Death
Benefit, however, must be at least 250% of the Accumulation Value. As a result,
if the Accumulation Value of the Policy exceeds approximately $66,667, the Death
Benefit will be greater than the Face Amount plus the Accumulation Value. Each
additional dollar of the Accumulation Value above $66,667 will increase the
Death Benefit by $2.50. Thus, if the Accumulation Value exceeds $66,667 and
increases by $100 because of investment performance or premium payments, the
Death Benefit will increase by $250. A Policy owner with an Accumulation Value
of $75,000 will be entitled to a Death Benefit of $187,500 ($75,000 X 250%); an
Accumulation Value of $100,000 will yield a Death Benefit of $250,000 ($100,000
X 250%); and an Accumulation Value of $125,000 will yield a Death Benefit of
$312,500 ($125,000 X 250%).
Similarly, any time the Accumulation Value exceeds $66,667, each dollar
taken out of the Accumulation Value will reduce the Death Benefit by $2.50. If,
for example, the Accumulation Value is reduced from $75,000 to $70,000 because
of partial withdrawals, charges, or negative investment performance, the Death
Benefit will be reduced from $187,500 to $175,000. If at any time before the
younger Joint Insured's age 100, however, the Accumulation Value multiplied by
the corridor percentage is less than the Face Amount plus the Accumulation
Value, then the Death Benefit will be the current Face Amount plus the
Accumulation Value of the Policy. The Death Benefit after age 100 is the
Accumulation Value.
The corridor percentage becomes lower as the younger Joint Insured's age
increases. If the current age of the younger Joint Insured in the illustration
above were, for example, 50 (rather than under 40), the corridor percentage
would be 185%. The amount of the Death Benefit would be the sum of the
Accumulation Value plus $100,000 unless the Accumulation Value exceeded
approximately $117,647 (rather than $66,667), and each $1 then added to or taken
from the Accumulation Value would change the Death Benefit by $1.85 (rather than
$2.50).
WHICH DEATH BENEFIT OPTION TO CHOOSE
If you prefer to have premium payments and favorable investment performance
reflected partly in the form of an increasing Death Benefit, you should choose
the Variable Amount Option. If you are satisfied with the amount of your
existing insurance coverage and prefer to have premium payments and favorable
investment performance reflected to the maximum extent in the Accumulation
Value, you should choose the Level Amount Option.
REQUESTED CHANGES IN FACE AMOUNT
Subject to certain limitations, you may request an increase or decrease in
the Face Amount. No increase or decrease in the Face Amount will be permitted
during the first two Policy Years.
INCREASES. For an increase in the Face Amount, a written request must be
submitted to us. We may also require additional evidence of insurability
satisfactory to us. The effective date of the increase will be the Monthly
Anniversary on or next following our approval of the increase. The increase may
not be less than $5,000 and no increase will be permitted after any Joint
Insured reaches age 85. You cannot request an increase in the Face Amount more
frequently than once every two years. We will deduct any charges associated with
the increase (the increases in the cost of insurance and the Surrender Charge
upon lapse or total surrender -- see "Effect of Requested Changes in Face
Amount") from the Accumulation Value, whether or not you pay an additional
premium in connection with the increase. You will be entitled to limited free
look and conversion rights and refund rights with respect to requested increases
in Face Amount. See "Free Look and Conversion Rights".
DECREASES. For a decrease in the Face Amount, a written request must also be
submitted to us. Any decrease in the Face Amount will be effective on the
Monthly Anniversary on or next following our receipt of a written request. You
cannot request a decrease in the Face Amount more frequently
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<PAGE>
than once every six months. The Face Amount remaining in force after any
requested decrease may not be less than the Minimum Face Amount shown in the
Policy. Under our current policies, the Minimum Face Amount is $250,000, but we
reserve the right to establish a different Minimum Face Amount in the future.
If, following a decrease in Face Amount, the Policy would no longer qualify as
life insurance under Federal tax law (see "Federal Tax Matters -- Policy
Proceeds"), the decrease will be limited to the extent necessary to meet these
requirements.
For purposes of determining the cost of insurance, decreases in the Face
Amount will be applied to reduce the current Face Amount in the following order:
(a) The Face Amount provided by the most recent increase;
(b) The next most recent increases successively; and
(c) The Face Amount when the Policy was issued.
By reducing the current Face Amount in this manner, the Rate Class
applicable to the most recent increase in Face Amount will be eliminated first,
then the Rate Class applicable to the next most recent increase, and so on, for
the purposes of calculating the cost of insurance. This assumption will affect
the cost of insurance under the Policy only if different Rate Classes have been
applied to the current Face Amount. A Rate Class is a group of Insureds we
determine based upon our expectation that they will have similar mortality
experience. We currently place Insureds into standard Rate Classes or into
substandard Rate Classes that involve a higher mortality risk (for example, a
200% Rate Class or a 300% Rate Class). In an otherwise identical Policy, an
Insured in the standard Rate Class will have a lower cost of insurance than an
Insured in a substandard Rate Class with higher mortality risks. See "Deductions
and Charges -- Monthly Deduction".
For example, assume that the Initial Face Amount was $50,000 with a standard
Rate Class, and that successive increases of $25,000 (at a Rate Class of 200%)
and $50,000 (at a Rate Class of 300%) were added. If a decrease of $50,000 or
less is requested, the amount of insurance at a 300% Rate Class will be reduced
first. If a decrease of more than $50,000 is requested, the amount at a 300%
Rate Class will be eliminated, and the excess over $50,000 will next reduce the
amount of insurance at a 200% Rate Class.
EFFECT OF REQUESTED CHANGES IN FACE AMOUNT. An increase or decrease in Face
Amount will affect the Monthly Deduction because the cost of insurance and the
Monthly Amount Charge depend upon the Face Amount. The charge for certain
optional insurance benefits may also be affected. See "Deductions and Charges --
Monthly Deduction". An increase in the Face Amount will increase the Surrender
Charge, but a decrease in the Face Amount will not reduce the Surrender Charge.
The Surrender Charge is, however, imposed only upon lapse or total surrender of
the Policy and not upon a requested decrease in Face Amount. See "Deductions and
Charges -- Surrender Charge".
An increase in the Face Amount will increase the Minimum Monthly Premium as
of the effective date of the increase. Therefore, additional premium payments
may be required to maintain the Death Benefit Guarantee. A decrease in the Face
Amount will reduce the Minimum Monthly Premium as of the effective date of the
decrease. Face Amount changes may also change the Death Benefit Guarantee
Period. See "Death Benefit Guarantee".
The additional Surrender Charge on a requested increase in the Face Amount
will reduce the Cash Surrender Value (which is the Accumulation Value less any
Surrender Charge, Loan Amount and unpaid Monthly Deductions). If the resulting
Cash Surrender Value is not sufficient to cover the Monthly Deduction, the
Policy may lapse unless the Death Benefit Guarantee is in effect. See "Policy
Lapse and Reinstatement -- Lapse" and "Death Benefit Guarantee".
INSURANCE PROTECTION
You may increase or decrease the pure insurance protection provided by the
Policy (that is, the difference between the Death Benefit and the Accumulation
Value) in one of several ways as your insurance needs change. These ways include
increasing or decreasing the Face Amount of insurance, changing the level of
premium payments, and, to a lesser extent, making a partial withdrawal under the
Policy. Although the consequences of each of these methods will depend upon the
individual circumstances, they may be generally summarized as follows:
(a) A decrease in the Face Amount will, subject to the corridor percentage
limitations (see "Death Benefit -- Death Benefit Options"), decrease the
pure insurance protection without reducing the
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<PAGE>
Accumulation Value. If the Face Amount is decreased, the Policy charges
generally will decrease as well. (Note that the Surrender Charge will not be
reduced. See "Deductions and Charges -- Surrender Charge".)
(b) An increase in the Face Amount (which is generally subject to underwriting
approval -- see "Death Benefit -- Requested Changes in Face Amount") will
likely increase the amount of pure insurance protection, depending on the
amount of Accumulation Value and the resultant corridor percentage
limitation. If the insurance protection is increased, the Policy charges
generally will increase as well.
(c) A partial withdrawal will reduce the Death Benefit. See "Surrender Benefits
-- Partial Withdrawal". However, it has a limited effect on the amount of
pure insurance protection and charges under the Policy, because the decrease
in the Death Benefit is usually equal to the amount of Accumulation Value
withdrawn. The primary use of a partial withdrawal is to withdraw
Accumulation Value. Furthermore, it results in a reduced amount of
Accumulation Value and increases the possibility that the Policy will lapse.
(d) Under the Level Amount Option, until the corridor percentage of Accumulation
Value exceeds the Face Amount, (i) an increased level of premium payments
will reduce the amount of pure insurance protection, and (ii) a reduced
level of premium payments will increase the amount of pure insurance
protection.
(e) Under the Variable Amount Option, until the corridor percentage of
Accumulation Value exceeds the Face Amount plus the Accumulation Value, the
level of premium payments will not affect the amount of pure insurance
protection. (However, both the Accumulation Value and the Death Benefit will
be increased if premium payments are increased, and reduced if premium
payments are reduced.)
(f) Under either Death Benefit Option, if the Death Benefit is the corridor
percentage of Accumulation Value, then (i) an increased level of premium
payments will increase the amount of pure insurance protection (subject to
underwriting approval -- see "Payment and Allocation of Premiums -- Amount
and Timing of Premiums"), and (ii) a reduced level of premium payments will
reduce the pure insurance protection.
THE TECHNIQUES DESCRIBED IN THIS SECTION FOR CHANGING THE AMOUNT OF PURE
INSURANCE PROTECTION UNDER THE POLICY (FOR EXAMPLE, CHANGING THE FACE
AMOUNT, MAKING A PARTIAL WITHDRAWAL, AND CHANGING THE AMOUNT OF PREMIUM
PAYMENTS) MUST BE CONSIDERED TOGETHER WITH THE OTHER RESTRICTIONS AND
CONSIDERATIONS DESCRIBED ELSEWHERE IN THIS PROSPECTUS.
CHANGE IN DEATH BENEFIT OPTION
After the first two Policy Years and at least two years after any increase
in Face Amount, you may change the Death Benefit Option once each Policy Year.
You must submit a written request to change the Death Benefit Option. The change
is effective on the Monthly Anniversary on or next following the date we receive
your request. A change in the Death Benefit Option will also change the Face
Amount. If the Death Benefit Option is changed from the Level Amount Option to
the Variable Amount Option, the Face Amount will be decreased by an amount equal
to the Accumulation Value on the effective date of the change. You cannot change
from the Level Amount Option to the Variable Amount Option if the resulting Face
Amount would fall below the Minimum Face Amount.
If the Death Benefit Option is changed from the Variable Amount Option to
the Level Amount Option, the Face Amount will be increased by an amount equal to
the Policy's Accumulation Value on the effective date of the change.
An increase or decrease in Face Amount resulting from a change in the Death
Benefit Option will affect the future Monthly Deductions because the cost of
insurance depends upon the Face Amount. The charge for certain optional
insurance benefits may also be affected. See "Deductions and Charges -- Monthly
Deduction". The Surrender Charge, however, will not be affected by an increase
or decrease in Face Amount resulting from a change in Death Benefit Option. The
Death Benefit Guarantee Period may also be affected.
Changes in the Death Benefit Option may require additional evidence of
insurability.
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PAYMENT AND ALLOCATION OF PREMIUMS
ISSUING THE POLICY
To apply for a Policy, both individuals must complete the application and
personally deliver it to our licensed agent. We will generally only issue a
Policy to an applicant where both Joint Insureds' ages are 85 or less and both
supply evidence of insurability satisfactory to us. Acceptance is subject to our
underwriting rules and we reserve the right to reject an application for any
reason permitted by law.
COVERAGE. Coverage under a Policy begins on the later of the Issue Date or
the date we receive at least the minimum initial premium (see immediately
following section). In general, if the applicant pays at least the minimum
initial premium with the application, the Issue Date will be the later of the
date of the application or the date of any medical examination required by our
underwriting procedures. However, if underwriting approval has not occurred
within 45 days after we receive the application or if you authorize premiums to
be paid by bank account monthly deduction, the Issue Date will be the date of
underwriting approval.
If you authorize premiums to be paid by government allotment, the Issue Date
generally will be, subject to our underwriting approval, the first day of the
month in which we receive the first Minimum Monthly Premium through government
allotment, whether or not a Minimum Monthly Premium is collected with the
application. If a Minimum Monthly Premium is collected with the application, it
will be allocated to the Sub-Accounts of the Variable Account and the Fixed
Account on the Valuation Date next following the Issue Date.
MINIMUM INITIAL PREMIUM. The minimum initial premium is three Minimum
Monthly Premiums. See "Death Benefit Guarantee". If, however, you authorize
premiums to be paid by bank account monthly deduction or government allotment,
we will accept one Minimum Monthly Premium together with the required
authorization forms. The Minimum Monthly Premium is specified in the Policy and
determines the payments required to maintain the Death Benefit Guarantee.
TEMPORARY INSURANCE. At the time the application is taken, the applicant can
receive temporary insurance coverage by paying a premium equal to 10% of
annualized Minimum Monthly Premium. The temporary insurance will be for the face
amount specified in the premium receipt and will be effective until the earliest
of the following:
-The date the coverage under the Policy is effective.
-The date the applicant receives an offer for an alternative policy, a
notice of termination of temporary insurance coverage, or notice that we
have rejected the application.
-The date of death of the proposed Surviving Joint Insured or any proposed
additional Joint Insured.
-The 180th day after the date of the receipt for the temporary insurance.
CREDITING NET PREMIUMS. We will credit Net Premiums to the Sub-Accounts of
the Variable Account and to the Fixed Account on the basis of the applicant's
allocation on the latest of the following dates:
-The Valuation Date following the date of underwriting approval.
-The Valuation Date on or next following the Policy Date.
-The Valuation Date on or next following the date we have received at least
the required minimum initial premium payment.
-In the case of Policies issued under government allotment programs, the
Valuation Date next following the Issue Date.
Until the date on which Net Premiums are credited as described above,
premium payments will be held in our General Account. No interest will be earned
on these premium payments during this period of time.
REFUNDING PREMIUM. We will return all premiums paid without interest if any
of the following occur:
-We send notice to the applicant(s) that the insurance is declined.
-The applicant(s) refuses an offer for an alternative policy.
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-The applicant(s) does not supply required medical exams or tests within 30
days of the date of the application.
-The applicant(s) returns the Policy under the limited free look right. See
"Free Look and Conversion Rights -- Free Look Rights".
ALLOCATION OF PREMIUMS
You choose the initial allocation of your Net Premiums (your gross premiums
less the Premium Expense Charge) to the Fixed Account and the Sub-Accounts of
the Variable Account on the application for the Policy. You may change the
allocation at any time by notifying us in writing. Changes will not be effective
until the date we receive your request and will only affect premiums we receive
on or after that date. The premium allocation may be 100% to the Fixed Account
or the Sub-Accounts or divided among the Fixed Account and the Sub-Accounts in
whole percentage points totaling 100%. We reserve the right to adjust any
allocation to eliminate fractional percentages. Changing the current Net Premium
allocation will not affect the allocation of existing Accumulation Value.
AMOUNT AND TIMING OF PREMIUMS
The amount and frequency of premium payments will affect the Accumulation
Value, the Cash Surrender Value, and how long the Policy will remain in force
(including affecting whether the Death Benefit Guarantee is in effect ). See
"Death Benefit Guarantee". After the initial premium, you may determine the
amount and timing of subsequent premium payments within the following
restrictions:
-PAYMENT OF CUMULATIVE PREMIUMS SUFFICIENT TO MAINTAIN THE DEATH
BENEFIT GUARANTEE MAY BE REQUIRED TO KEEP THE POLICY IN FORCE DURING AT
LEAST THE FIRST SEVERAL POLICY YEARS. SEE "DEATH BENEFIT GUARANTEE".
-We may choose not to accept any premium less than $25.00.
-We reserve the right to limit the amount of any premium payment. In
general, during the first Policy Year we will not accept total premium
payments in excess of $250,000 on the lives of the Joint Insureds for the
Policy, whether such payments are received on a Policy or on any other
insurance policy issued by us or our affiliates. Also, we will not accept
any premium payment in excess of $50,000 on any Policy after the first
Policy Year. At our discretion, however, we may waive any of these premium
limitations.
-We may require additional evidence of insurability satisfactory to us if
any premium would increase the difference between the Death Benefit and the
Accumulation Value (that is, the net amount at risk). A premium payment
would increase the net amount at risk if at the time of payment the Death
Benefit would be based upon the applicable percentage of Accumulation
Value. See "Death Benefit -- Death Benefit Options".
-In no event may the total of all premiums paid, both scheduled and
unscheduled, exceed the current maximum premium payments allowed for life
insurance under Section 7702 of the Code. If at any time a premium is paid
which would result in total premiums exceeding the current maximum premiums
allowed, we will only accept that portion of the premium which would make
total premiums equal the maximum. Any part of the premium in excess of that
amount will be returned, and no further premiums will be accepted until
allowed by the current maximum premium limitations.
-If you contemplate a large premium payment under this Policy, and you wish
to avoid Modified Endowment Contract classification, you may contact us in
writing before making the payment and we will tell you the maximum amount
which can be paid into the Policy. See "Federal Tax Matters -- Policy
Proceeds".
PLANNED PERIODIC PREMIUMS
You may choose a Planned Periodic Premium schedule which indicates a
preference as to future amounts and frequency of payment. The Planned Periodic
Premiums may be paid annually, semi-annually, quarterly or, if you choose, you
can pay the Planned Periodic Premiums by bank account monthly deduction or
government allotment.
The amount and frequency of your initial Planned Periodic Premium will be
shown in the Policy. You may change the Planned Periodic Premium at any time by
written request. We may limit the amount of any increase.
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As mentioned above, the amount and frequency of premium payments will affect
Accumulation Value, Cash Surrender Value, and how long the Policy will remain in
force. Failure to make any Planned Periodic Premium payment will not, however,
necessarily result in lapse of the Policy. On the other hand, making Planned
Periodic Premium payments will not guarantee that the Policy remains in force.
See "Death Benefit Guarantee" and "Policy Lapse and Reinstatement".
UNSCHEDULED ADDITIONAL PREMIUMS
Premiums, other than Planned Periodic Premiums, may be paid at any time
while the Policy is in force. We may limit the number and amount of these
additional payments.
PAYING PREMIUMS BY MAIL
Planned Periodic Premiums and Unscheduled Additional Premiums may be paid to
the Company by mailing them to:
ReliaStar Life Insurance Company
P.O. Box 802511
Chicago, Illinois 60680-2511
DEATH BENEFIT GUARANTEE
If you meet the requirements described below, we guarantee that we will not
lapse the Policy even if the Cash Surrender Value is not sufficient to cover the
Monthly Deduction that is due. This feature of the Policy is called the "Death
Benefit Guarantee". The length of the Death Benefit Guarantee Period is
specified in your Policy and is uniquely determined on a Policy by Policy basis.
The Death Benefit Guarantee Period depends on the issue ages and premium classes
of the Joint Insureds, Death Benefit Option, and any Optional Insurance
Benefits. Certain Policy changes may also change the Death Benefit Guarantee
Period. Following is a table of typical Death Benefit Guarantee Periods. The
examples assume that the Joint Insureds are a male and a female, both of the
same issue age, both with no substandard ratings, a $1,000,000 Face Amount, and
no Optional Insurance Benefits. Policies with substandard ratings and Optional
Insurance Benefits will typically have a shorter Death Benefit Guarantee Period.
<TABLE>
<CAPTION>
Age and Class of Joint Death Benefit Death Benefit
Insureds Option Guarantee Period
- ---------------------------- ------------- -----------------
<S> <C> <C>
45 Non-Tobacco A (Level) 37 Years
45 Non-Tobacco B (Variable) 35 Years
65 Non-Tobacco A (Level) 17 Years
65 Non-Tobacco B (Variable) 16 Years
45 Tobacco A (Level) 35 Years
45 Tobacco B (Variable) 33 Years
65 Tobacco A (Level) 15 Years
65 Tobacco B (Variable) 14 Years
</TABLE>
In general, the two most significant benefits from the Death Benefit
Guarantee are as follows. First, during the early Policy Years, the Cash
Surrender Value may not be sufficient to cover the Monthly Deduction, so that
the Death Benefit Guarantee will be necessary to avoid lapse of the Policy. See
"Policy Lapse and Reinstatement". This occurs when the Surrender Charge exceeds
the Accumulation Value in these years. In this regard, you should consider that
if you request an increase in Face Amount, an additional Surrender Charge would
apply for the fifteen years following the increase, which could create a similar
possibility of lapse as exists during the early Policy Years. Second, to the
extent the Cash Surrender Value declines due to poor investment performance, or
due to an additional Surrender Charge after a requested increase, the Cash
Surrender Value may not be sufficient even in later Policy Years to cover the
Monthly Deduction, so that the Death Benefit Guarantee may also be necessary in
later Policy Years to avoid lapse of the Policy. THUS, EVEN THOUGH THE POLICY
PERMITS PREMIUM PAYMENTS THAT ARE LESS THAN THE MINIMUM MONTHLY PREMIUMS, YOU
MAY LOSE THE SIGNIFICANT PROTECTION PROVIDED BY THE DEATH BENEFIT GUARANTEE BY
PAYING LESS THAN THE MINIMUM MONTHLY PREMIUMS.
REQUIREMENTS
The Death Benefit Guarantee will be in effect during the specified Death
Benefit Guarantee Period if the sum of all premiums paid minus any partial
withdrawals and any loans are equal to or
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greater than the sum of the Minimum Monthly Premiums since the Policy Date,
including the Minimum Monthly Premium for the current Monthly Anniversary.
The requirements for the Death Benefit Guarantee must be satisfied as of
each Monthly Anniversary, even though you do not have to pay premiums monthly.
EXAMPLE: The Policy Date is January 1, 1997. The Minimum Monthly Premium is
$1000 per month. No Policy loans or partial withdrawals are taken and no Face
Amount changes have occurred.
Case 1. You pay $1000 each month. The Death Benefit Guarantee is maintained.
Case 2. You pay $10,000 on January 1, 1997. The $10,000 maintains the Death
Benefit Guarantee without your paying any additional premiums for
the next 10 months (through October 31, 1997). However, you must pay
at least $1000 by November 1, 1997 to maintain the Death Benefit
Guarantee through November 30, 1997.
The amount of the initial Minimum Monthly Premium will be determined by us
at issuance of the Policy and will be shown in the Policy. The initial Minimum
Monthly Premium will depend upon each Joint Insured's sex, age at issue, Rate
Class, optional insurance benefits added by rider, and the Initial Face Amount.
The following Policy changes may change the Minimum Monthly Premium and the
Death Benefit Guarantee Period:
-A requested increase or decrease in the Face Amount (see "Death Benefit --
Requested Changes in Face Amount").
-A change in the Death Benefit Option (see "Death Benefit -- Change in Death
Benefit Option").
-The addition or termination of a Policy rider (see "General Provisions --
Optional Insurance Benefits").
We will notify you in writing of any changes in the Minimum Monthly Premium
or the Death Benefit Guarantee Period.
If, as of any Monthly Anniversary, you have not made sufficient premium
payments to maintain the Death Benefit Guarantee, we will send you notice of the
premium payment required to maintain it. If we do not receive the required
premium payment within 61 days from the date of our notice, the Death Benefit
Guarantee will terminate. THE DEATH BENEFIT GUARANTEE CANNOT BE REINSTATED.
Even if the Death Benefit Guarantee terminates, the Policy will not
necessarily lapse. For a discussion of the circumstances under which the Policy
may lapse. See "Policy Lapse and Reinstatement".
ACCUMULATION VALUE
The Accumulation Value of the Policy (that is, the total value attributable
to a specific Policy in the Variable Account and the Fixed Account) is equal to
the sum of the Variable Accumulation Value (the amount attributable to the
Variable Account) plus the Fixed Accumulation Value (the amount attributable to
the Fixed Account). The Accumulation Value should be distinguished from the Cash
Surrender Value that would actually be paid to you upon total surrender of the
Policy, which is the Accumulation Value less any Surrender Charge, Loan Amount
and unpaid Monthly Deductions. See "Surrender Benefits -- Total Surrender". The
Accumulation Value should also be distinguished from the Cash Value, which
determines the amount available for Policy loans, and is the Accumulation Value
less any Surrender Charge. See "Policy Loans."
The Variable Accumulation Value will increase or decrease to reflect the
investment performance of the Funds in which Sub-Accounts of the Variable
Account have been invested. The Variable Accumulation Value will also be
increased by (a) any Net Premiums credited to the Variable Account and (b) any
transfers from the Fixed Account. The Variable Accumulation Value will also be
reduced by (a) the Monthly Deduction attributable to the Variable Account, (b)
partial withdrawals from the Variable Account, (c) any transfer and partial
withdrawal charges attributable to the Variable Account, and (d) any amounts
transferred from the Variable Account to the Fixed Account (including amounts
transferred from the Variable Account to the Fixed Account as security for
Policy loans ). See "Policy Loans". The Variable Accumulation Value will
generally vary daily.
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The Fixed Accumulation Value will be increased by (a) any Net Premiums
credited to it in the Fixed Account, (b) any interest credited to it in the
Fixed Account (determined at our discretion, but guaranteed not to be less than
4%), and (c) any amounts transferred from the Variable Account to it in the
Fixed Account (including amounts transferred to the Fixed Account as security
for Policy loans). See "Policy Loans". The Fixed Accumulation Value will be
reduced by (a) the Monthly Deduction attributable to it in the Fixed Account,
(b) partial withdrawals from it in the Fixed Account, (c) any transfer and
partial withdrawal charges attributable to it in the Fixed Account, and (d) any
amounts transferred from the Fixed Account to the Variable Account.
For a detailed discussion of the calculation of Accumulation Value, see
Appendix B. An illustration of various Accumulation Values, Surrender Charges,
Cash Surrender Values, and Death Benefits, assuming different levels of premium
payments and various investment returns for selected ages and Face Amounts, is
shown in Appendix C.
DEDUCTIONS AND CHARGES
Charges will be deducted in connection with the Policy to compensate us for
(a) providing the insurance benefits of the Policy (including any riders), (b)
administering the Policy, (c) assuming certain risks in connection with the
Policy, and (d) incurring expenses in distributing the Policy.
Some of these charges are deducted from each premium payment. Certain other
charges are deducted monthly from both the Fixed Account and the Variable
Account, or from the Variable Account only. A charge is also made for each
partial withdrawal and a charge may be made for each transfer.
PREMIUM EXPENSE CHARGE
We deduct the Premium Expense Charge from each premium. The Premium Expense
Charge is guaranteed not to exceed 6.25% of each premium payment. The Premium
Expense Charge is currently 6.25% of each premium payment in Policy Years 1-10
and 3.75% of each premium after the tenth Policy Year. The amount remaining
after we have deducted the Premium Expense Charge is called the Net Premium. The
Net Premium is then credited to the Fixed Account and the Sub-Accounts of the
Variable Account according to your allocation.
MONTHLY DEDUCTION
We deduct the charges described below from the Accumulation Value of the
Policy on a monthly basis. The total of these charges is called the Monthly
Deduction.
The Monthly Deduction will be deducted on each Monthly Anniversary from the
Fixed Account and the Sub-Accounts of the Variable Account on a proportionate
basis depending on their relative Accumulation Values at that time. For purposes
of determining these proportions, the Fixed Accumulation Value is reduced by the
Loan Amount. Because the cost of insurance portion of the Monthly Deduction can
vary from month to month, the Monthly Deduction itself will vary in amount from
month to month.
If the Cash Surrender Value is not sufficient to cover the Monthly Deduction
on a Monthly Anniversary and the Death Benefit Guarantee is not in effect, the
Policy may lapse. See "Death Benefit Guarantee" and "Policy Lapse and
Reinstatement".
COST OF INSURANCE. We will determine the monthly cost of insurance by
multiplying the applicable cost of insurance rate or rates by the net amount at
risk under the Policy. The net amount at risk under the Policy for a Policy
Month is (a) the Death Benefit at the beginning of the Policy Month divided by
1.00327374 (which reduces the net amount at risk, solely for purposes of
computing the cost of insurance, by taking into account assumed monthly earnings
at an annual rate of 4%), less (b) the Accumulation Value at the beginning of
the Policy Month (reduced by any charges for rider benefits). As a result, the
net amount at risk may be affected by changes in the Accumulation Value or in
the Death Benefit.
The Rate Class of any Joint Insured may affect the cost of insurance. A Rate
Class is a group of Insureds we determine based upon our expectation that they
will have similar mortality experience. We currently place Insureds into
standard Rate Classes or into substandard Rate Classes that involve a higher
mortality risk. In an otherwise identical Policy, any Insured in the standard
Rate Class will have a lower cost of insurance than any Insured in a Rate Class
with higher mortality risks.
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If there is an increase in the Face Amount and the Rate Class applicable to
the increase is different from that for the Initial Face Amount or any prior
requested increases in Face Amount, the net amount at risk will be calculated
separately for each Rate Class. For purposes of determining the net amount at
risk for each Rate Class, the Accumulation Value will first be assumed to be
part of the Initial Face Amount. If the Accumulation Value is greater than the
Initial Face Amount, it will then be assumed to be part of each increase in
order, starting with the first increase.
Cost of insurance rates will be based on the sex, Issue age, Policy Year and
Rate Class(es) of each Joint Insured. The actual monthly cost of insurance rates
will reflect our expectations as to future experience. They will not, however,
be greater than the guaranteed cost of insurance rates shown in the Policy,
which are based on the Commissioner's 1980 Standard Ordinary Mortality Tables
for Smokers or Nonsmokers, respectively.
MONTHLY ADMINISTRATIVE CHARGE. Each month we deduct an administrative charge
of $8.25 which is guaranteed not to exceed $12.00 each month.
MONTHLY MORTALITY AND EXPENSE RISK CHARGE. Each month during the first 10
Policy Years we will deduct a charge at an annual rate of .90% of the Variable
Accumulation Value of the Policy. Each month thereafter, it is currently
anticipated that we will deduct this charge at an annual rate of .25% of the
Variable Accumulation Value but in no event will it exceed .90% for the duration
of the Policy.
The mortality risk assumed is that Joint Insureds may live for a shorter
period of time than we estimated and that, as a result, we would have to pay a
greater amount in Death Benefits than we collect in premium payments. The
expense risk assumed is that expenses incurred in issuing and administering the
Policy will be greater than we estimated.
MONTHLY AMOUNT CHARGE. Each month during the first 20 Policy Years (and for
20 Policy Years following any requested increase in Face Amount) we deduct a
monthly charge per $1,000 of Face Amount. The amount of this charge varies by
average age of the Joint Insureds on the Policy Date (or on the effective date
of any requested increase in Face Amount, as appropriate). See Appendix D.
OPTIONAL INSURANCE BENEFIT CHARGES. Each month we deduct charges for any
optional insurance benefits added to the Policy by rider. See "General
Provisions -- Optional Insurance Benefits".
SURRENDER CHARGE
GENERAL. During the first 15 Policy Years and during the first 15 years
following any requested increase in Face Amount, we make a Surrender Charge if
you surrender the Policy or the Policy lapses. The Surrender Charge will not be
affected by any decrease in Face Amount or by any change in Face Amount
resulting from a change in the Death Benefit Option.
The Surrender Charge imposed upon early surrender or lapse will be
significant. For example, if you make premium payments no greater than the
Minimum Monthly payments specified in your Policy, you can expect that during at
least the early Policy Years, all or substantially all of your premium payments
will be required to pay the Surrender Charge and other charges associated with
the Policy. As a result, you should purchase a Policy only if you have the
financial capability to keep it in force for a substantial period of time.
SURRENDER CHARGE. The maximum Surrender Charge for the Initial Face Amount
or any requested increase in Face Amount will be determined on the Policy Date
or on the effective date of any requested increase respectively. The maximum
Surrender Charge on the Initial Face Amount will be equal to $10.00 per $1,000
of Initial Face Amount. The maximum Surrender Charge on any requested increase
in Face Amount will be equal to $10.00 per $1,000 of increase in the Face
Amount. This Surrender Charge for the Initial Face Amount remains level equal to
the maximum Surrender Charge during the first five Policy Years and then reduces
in equal monthly increments until it becomes zero at the end of 15 years. The
Surrender Charge for any requested increase in Face Amount follows a similar
pattern except that the Surrender Charge is reduced in the first three Policy
Years following the effective date of the increase.
SURRENDER CHARGE CALCULATION. The Surrender Charge for the Initial Face
Amount or any requested increase in Face Amount is determined by multiplying (i)
$10.00 by (ii) the Initial Face Amount or the Face Amount of the increase, as
applicable, and by (iii) the applicable percentage from the Surrender Charge
Percentage Table below, and then dividing this amount by 1000.
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SURRENDER CHARGE PERCENTAGE TABLE
<TABLE>
<CAPTION>
The following percentage
of the
Surrender Charge will be
If surrender or lapse occurs payable for:
in Initial
the last month of Policy Face Face Amount
Year:* Amount** Increases
- ---------------------------- ---------- ------------
<S> <C> <C>
1 100% 33%
2 100% 67%
3 100% 100%
4 100% 100%
5 100% 100%
6 90% 90%
7 80% 80%
8 70% 70%
9 60% 60%
10 50% 50%
11 40% 40%
12 30% 30%
13 20% 20%
14 10% 10%
15 and later 0% 0%
</TABLE>
*For requested increases, years are measured from the date of the increase.
**The percentages reduce equally for each Policy Month during the years shown.
For example, during the eleventh Policy Year, the percentage reduces equally
each month from 50% at the end of the tenth Policy Year to 40% at the end of
the eleventh Policy Year.
PARTIAL WITHDRAWAL AND TRANSFER CHARGES
We currently make no charge for transfers and a $10.00 charge for each
partial withdrawal. These charges are guaranteed not to exceed $25.00 per
transfer or partial withdrawal for the duration of the Policy. The transfer
charge will not be imposed on transfers that occur as a result of Policy loans
or the exercise of conversion rights.
REDUCTION OF CHARGES
Any of the charges under the Policy, as well as the Minimum Face Amount set
forth in this Prospectus, may be reduced because of special circumstances that
result in lower sales, administrative, or mortality expenses. For example,
special circumstances may exist in connection with group sales to our
policyholders or those of affiliated insurance companies, or sales to employees
or clients of members of our affiliated group of insurance companies. The amount
of any reductions will reflect the reduced sales effort and administrative costs
resulting from, or the different mortality experience expected as a result of,
the special circumstances. Reductions will not be unfairly discriminatory
against any person, including the affected Policy owners and owners of all other
policies funded by the Variable Account.
POLICY LAPSE AND REINSTATEMENT
LAPSE. Unlike traditional life insurance policies, the failure to make a
Planned Periodic Payment will not by itself cause the Policy to lapse. If the
Death Benefit Guarantee is not in effect, the Policy will lapse only if, as of
any Monthly Anniversary, the Cash Surrender Value is less than the Monthly
Deduction due, and a grace period of 61 days expires without a sufficient
payment.
During the early Policy Years, the Cash Surrender Value will generally not
be sufficient to cover the Monthly Deduction, so that premium payments
sufficient to maintain the Death Benefit Guarantee will be required to avoid
lapse. See "Death Benefit Guarantee".
The Policy does not lapse, and the insurance coverage continues, until the
expiration of a 61-day grace period which begins on the date we send you written
notice indicating that the Cash Surrender Value is less than the Monthly
Deduction due. Our written notice to you will indicate the amount of the payment
required to avoid lapse. Failure to make a sufficient payment within the grace
period will result in lapse of the Policy without value.
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If the Surviving Joint Insured dies during the grace period, the proceeds
payable will equal the amount of the Death Benefit on the Valuation Date on or
next following the date of the Surviving Joint Insured's death, reduced by any
Loan Amount and any unpaid Monthly Deductions.
If the Death Benefit Guarantee is in effect, we will not lapse the Policy.
See "Death Benefit Guarantee".
REINSTATEMENT. Reinstatement means putting a lapsed Policy back in force.
You may reinstate a lapsed Policy by written request any time within five years
after it has lapsed if it has not been surrendered for its Cash Surrender Value.
To reinstate the Policy and any riders, you must submit evidence of
insurability satisfactory to us that each Joint Insured is still insurable, or
if the policy lapsed after the first death of the Joint Insured, then evidence
of insurability for the Surviving Joint Insured. You must pay a premium large
enough to keep the Policy in force for at least two months.
The Death Benefit Guarantee cannot be reinstated. See "Death Benefit
Guarantee".
SURRENDER BENEFITS
Subject to certain limitations, you may make a total surrender of the Policy
or a partial withdrawal of the Policy's Cash Surrender Value by sending us a
written request. The amount available for a total surrender or partial
withdrawal will be determined at the end of the Valuation Period during which
your written request is received. Any amounts payable from the Variable Account
upon total surrender or partial withdrawal will generally be paid within seven
days of receipt of your written request. Postponement of payments may, however,
occur in certain circumstances. See "General Provisions -- Postponement of
Payments".
TOTAL SURRENDER
By making a written request, you may surrender the Policy at any time for
its Cash Surrender Value. The Cash Surrender Value is the Accumulation Value of
the Policy reduced by any Surrender Charge, Loan Amount and unpaid Monthly
Deductions. If the Cash Surrender Value at the time of a surrender exceeds
$25,000, the written request must include a Signature Guarantee. An illustration
of Accumulation Values, Surrender Charges, Cash Surrender Values, and Death
Benefits assuming different levels of premium payments and investment returns
for selected ages and Face Amounts is shown in Appendix C.
PARTIAL WITHDRAWAL
After the first Policy Year, you may also withdraw part of the Policy's Cash
Surrender Value by sending us a written request. If the amount being withdrawn
exceeds $25,000, the written request must include a Signature Guarantee. Only
one partial withdrawal is allowed in any Policy Year. We currently make a $10.00
charge for each partial withdrawal. This charge is guaranteed not to exceed
$25.00 for each partial withdrawal. See "Deductions and Charges -- Partial
Withdrawal and Transfer Charges". The amount of any partial withdrawal must be
at least $500 and, during the first 15 Policy Years, may not be more than 20% of
the Cash Surrender Value on the date we receive your written request.
Unless you specify a different allocation, we make partial withdrawals from
the Fixed Account and the Sub-Accounts of the Variable Account on a
proportionate basis based upon the Accumulation Value. These proportions will be
determined at the end of the Valuation Period during which your written request
is received. For purposes of determining these proportions, any outstanding Loan
Amount is first subtracted from the Fixed Accumulation Value.
EFFECT OF PARTIAL WITHDRAWALS. The Accumulation Value will be reduced by the
amount of any partial withdrawal. The Death Benefit will also be reduced by the
amount of the withdrawal, or, if the Death Benefit is based on the corridor
percentage of Accumulation Value (see "Death Benefit -- Death Benefit Options"),
by an amount equal to the corridor percentage times the amount of the partial
withdrawal.
If the Level Amount Option is in effect, the Face Amount will be reduced by
the amount of the partial withdrawal. When increases in the Face Amount have
occurred previously, we reduce the current Face Amount by the amount of the
partial withdrawal in the following order:
(a) The Face Amount provided by the most recent increase;
(b) The next most recent increases successively; and
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<PAGE>
(c) The Face Amount when the policy was issued.
(This assumption also applies to requested decreases in Face Amount -- see
"Death Benefit -- Requested Changes in Face Amount".) Thus, partial withdrawals
may affect the way in which the cost of insurance is calculated and the amount
of pure insurance protection under the Policy. See "Death Benefit -- Requested
Changes in Face Amount", "Deductions and Charges -- Monthly Deduction" and
"Death Benefit -- Insurance Protection".
We do not allow a partial withdrawal if the Face Amount after a partial
withdrawal would be less than the Minimum Face Amount.
If the Variable Amount Option is in effect, a partial withdrawal does not
affect the Face Amount.
A partial withdrawal may also cause the termination of the Death Benefit
Guarantee because the amount of the partial withdrawal is deducted from the
total premiums paid in calculating whether sufficient premiums have been paid in
order to maintain the Death Benefit Guarantee.
Like partial withdrawals, Policy loans are a means of withdrawing funds from
the Policy. See "Policy Loans". A partial withdrawal or a Policy loan may have
tax consequences depending on the circumstances of such withdrawal or loan. See
"Federal Tax Matters -- Policy Proceeds".
TRANSFERS
You may transfer all or part of the Variable Accumulation Value between the
Sub-Accounts or to the Fixed Account subject to any conditions the Funds whose
shares are involved may impose. Transfer requests must be in writing unless you
have completed a telephone transfer authorization form. You may also direct us
to automatically make periodic transfers under the Dollar Cost Averaging or
Portfolio Rebalancing services as described below.
To transfer all or part of the Variable Accumulation Value from a
Sub-Account, Accumulation Units are redeemed and their values are reinvested in
other Sub-Accounts, or the Fixed Account, as directed in your request. We will
effect transfers, and determine all values in connection with transfers, at the
end of the Valuation Period during which we receive your request, except as
otherwise specified for the Dollar Cost Averaging or Portfolio Rebalancing
services. With respect to future Net Premium payments, however, your current
premium allocation will remain in effect unless (i) you have requested the
Portfolio Rebalancing service, or (ii) you are transferring all of the Variable
Accumulation Value from the Variable Account to the Fixed Account in exercise of
conversion rights. See "Free Look and Conversion Rights -- Conversion Rights".
Transfers from the Fixed Account to the Variable Account are subject to the
following additional restrictions: (i) your transfer request must be postmarked
no more than 30 days before or after the Policy Anniversary in any year, and
only one transfer is permitted during this period, (ii) the Fixed Accumulation
Value after the transfer must be at least equal to the Loan Amount, (iii) no
more than 50% of the Fixed Accumulation Value, less any Loan Amount, may be
transferred unless the balance, after the transfer, would be less than $1,000,
in which event the full Fixed Accumulation Value, less any Loan Amount, may be
transferred, and (iv) you must transfer at least the lesser of $500 or the total
Fixed Accumulation Value, less any Loan Amount. See Appendix A. Some of these
restrictions may be waived for transfers due to the Portfolio Rebalancing
service.
TELEPHONE/FAX TRANSFER REQUESTS. You may request a transfer by telephone/fax
on any Valuation Date after you complete a telephone/fax transfer authorization
form. If you elect to complete the authorization form, you agree that we will
not be liable for any loss, liability, cost or expense when we act in accordance
with the telephone/fax transfer instructions that are received and, if by
telephone, are recorded on voice recording equipment. If a telephone/fax
transfer request is later determined not to have been made by you or was made
without your authorization, and loss results from such unauthorized transfer,
you bear the risk of this loss. Any requests via fax are considered telephone
requests and are bound by the conditions in the telephone/fax transfer
authorization form you sign. Any fax request should include your name, daytime
telephone number, Policy number and, in the case of transfers, the names of the
Sub-Accounts from which and to which money will be transferred and the
allocation percentage. We will employ reasonable procedures to confirm that
instructions communicated by telephone/fax are genuine. In the event we do not
employ such procedures, we may be liable for any losses due to unauthorized or
fraudulent instructions. Such procedures may include, among others, requiring
forms of personal identification prior to acting upon telephone/fax
instructions, providing written confirmation of such instructions, and/or tape
recording telephone instructions.
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<PAGE>
DOLLAR COST AVERAGING SERVICE. You may request this service if your
Accumulation Value, less any Loan Amount, is at least $5,000. If you request
this service, you direct us to automatically make specific periodic transfers of
a fixed dollar amount from any of the Sub-Accounts to one or more of the Sub-
Accounts or to the Fixed Account. No transfers from the Fixed Account are
permitted under this service. Transfers of this type may be made on a monthly,
quarterly, semi-annual, or annual basis. This service is intended to allow you
to use "Dollar Cost Averaging", a long term investment method which provides for
regular investments over time. We make no guarantees that Dollar Cost Averaging
will result in a profit or protect against loss. You may discontinue this
service at any time by notifying us in writing.
If you are interested in the Dollar Cost Averaging service you may obtain a
separate application form and full information concerning this service and its
restrictions from us.
If you are using the Dollar Cost Averaging service, this service will be
discontinued immediately (i) on receipt of any request to begin a Portfolio
Rebalancing service, (ii) if the Policy is in the grace period on any date when
Dollar Cost Averaging transfers are scheduled, or (iii) if the specified
transfer amount from any Sub-Account is more than the Accumulation Value in that
Sub-Account.
We reserve the right to discontinue, modify, or suspend this service. Any
such modification or discontinuation would not affect any Dollar Cost Averaging
service requests already commenced.
PORTFOLIO REBALANCING SERVICE. You may request this service if your
Accumulation Value, less any Loan Amount, is at least $10,000. If you request
this service, you direct us to automatically make periodic transfers to maintain
your specified percentage allocation of Accumulation Value, less any Loan
Amount, among the Sub-Accounts of the Variable Account and the Fixed Account;
your allocation of future Net Premium payments will also be changed to be equal
to this specified percentage allocation. Transfers made under this service may
be made on a quarterly, semi-annual, or annual basis. This service is intended
to maintain the allocation you have selected consistent with your personal
objectives.
The Accumulation Value in each Sub-Account of the Variable Account and the
Fixed Account will grow or decline at different rates over time. Portfolio
Rebalancing will periodically transfer Accumulation Values from those accounts
that have increased in value to those accounts that have increased at a slower
rate or declined in value. If all accounts decline in value, it will transfer
Accumulation Values from those that have decreased less in value to those that
have decreased more in value. We make no guarantees that Portfolio Rebalancing
will result in a profit or protect against loss. You may discontinue this
service at any time by notifying us in writing.
If you are interested in the Portfolio Rebalancing service you may obtain a
separate application form and full information concerning this service and its
restrictions from us.
If you are using the Portfolio Rebalancing service, this service will be
discontinued immediately (i) on receipt of any request to change the allocation
of premiums to the Fixed Account and Sub-Account of the Variable Account, (ii)
on receipt of any request to begin a Dollar Cost Averaging service, (iii) upon
receipt of any request to transfer Accumulation Value among the Fixed Account or
Sub-Accounts, or (iv) if the policy is in the grace period or the Accumulation
Value, less any Loan Amount, is less than $7,500 on any Valuation Date when
Portfolio Rebalancing transfers are scheduled.
We reserve the right to discontinue, modify, or suspend this service. Any
such modification or discontinuation could affect Portfolio Rebalancing services
currently in effect, but only after 30 days notice to affected Policy owners.
TRANSFER LIMITS. We currently allow twelve transfers in a Policy Year,
although we reserve the right to limit you to no more than four transfers per
Policy Year. All transfers that are effective on the same Valuation Date will be
treated as one transfer transaction. Transfers made due to the Dollar Cost
Averaging or Portfolio Rebalancing services do not currently count toward the
limit on number of transfers.
TRANSFER CHARGES. While there is currently no charge imposed on a transfer
we reserve the right to make a charge not to exceed $25.00 per transfer for the
duration of the Policy. See "Deductions and Charges -- Partial Withdrawal and
Transfer Charges". In no event, however, will any charge be imposed in
connection with the exercise of a conversion right or transfers occurring as the
result of
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<PAGE>
Policy Loans. All transfers are also subject to any charges and conditions
imposed by the Fund whose shares are involved. All transfers that are effective
on the same Valuation Date will be treated as one transfer transaction.
POLICY LOANS
GENERAL. As long as the Policy remains in effect, you may borrow money from
us at any time after the first Policy Year using the Policy as security for the
loan (except that under Policies issued in Indiana loans may be made during the
first Policy Year). You may not borrow at any time more than the Loan Value of
the Policy, which is equal to 75% of the Cash Value less the existing Loan
Amount, except that under Policies issued in Texas the percentage is 100% and
under Policies issued in Alabama, Maryland and Virginia, the percentage is 90%.
Each Policy loan must be at least $500, except in Connecticut it must be at
least $200. After age 65, we currently allow 100% of the Cash Surrender Value to
be borrowed.
Loan requests may be made in writing or by telephoning us on any Valuation
Date. Any loan request in excess of $25,000 will require a Signature Guarantee
and telephone loan requests cannot exceed $10,000. No election form is currently
required to make telephone loan requests. We will employ reasonable procedures
to confirm that loan requests made by telephone are genuine. In the event we do
not employ such procedures, we may be liable for any losses due to unauthorized
or fraudulent instructions. Such procedures may include, among others, requiring
forms of personal identification prior to acting upon telephone instructions,
providing written confirmations of such instructions and/or tape recording
telephone instructions.
Policy loans have priority over the claims of any subsequent assignee or
other person. A Policy loan may be repaid in whole or in part at any time while
any Joint Insured is alive.
The loan proceeds will normally be paid to you within seven days after we
receive your request. Payment of loan proceeds to you may be postponed under
certain circumstances. See "General Provisions -- Postponement of Payments".
Payments made by you generally will be treated as premium payments, rather
than Policy loan repayments, unless you indicate that the payment should be
treated otherwise or unless we decide, at our discretion, to apply the payment
as a Policy loan repayment. As a result, unless you indicate that a payment is a
loan repayment, all payments you make to the Policy will generally be subject to
the Premium Expense Charge. See "Deductions and Charges -- Premium Expense
Charge".
The total of your outstanding Policy loans including unpaid interest due
thereon is called the "Loan Amount".
IMMEDIATE EFFECT OF POLICY LOANS. When we make a Policy loan, an amount
equal to the Policy loan (which includes interest payable in advance) will be
segregated within the Accumulation Value of your Policy and held in the Fixed
Account as security for the loan. As described below, you will pay interest to
us on the Policy loan, but we will also credit interest to you on the amount
held in the Fixed Account as security for the loan. The amount segregated in the
Fixed Account as security for the Policy loan will be included as part of the
Fixed Accumulation Value under the Policy, but will (as described below) be
credited with interest on a basis different from other amounts in the Fixed
Account.
Unless you specify differently, amounts held as security for the Policy loan
will come proportionately from the Fixed Accumulation Value and the Variable
Accumulation Value (with the proportions being determined as described below).
Assets equal to the portion of the Policy loan coming from the Variable
Accumulation Value will be transferred from the Sub-Accounts of the Variable
Account to the Fixed Account, THEREBY REDUCING THE ACCUMULATION VALUE HELD IN
THE SUB-ACCOUNTS. These transfers are not treated as transfers for the purposes
of the transfer charge or the limit on the number of transfers.
ILLUSTRATION OF DETERMINATION OF PROPORTIONS. The segregated amount that
will be security for a Policy loan will come from the Fixed Accumulation Value
and the Variable Accumulation Value in the same proportion that the sum of (a)
the Policy's Fixed Accumulation Value, less any existing Loan Amount, and (b)
the Policy's Variable Accumulation Value, bear to the Policy's total
Accumulation Value less any existing Loan Amount (determined, in each case, at
the end of the Valuation Period during which your request is received).
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<PAGE>
This can be illustrated as follows. Assume that the Fixed Accumulation Value
is $5,000 and the Variable Accumulation Value is $6,000, with Sub-Account XXX =
$2,000, and Sub-Account YYY = $4,000. Assume that the existing Loan Amount is
$1,000, and the new Policy loan request is $5,000. For purposes of determining
the proportions, we first subtract the existing Loan Amount from the Fixed
Accumulation Value, and then we add the Variable Accumulation Value, which in
our example would be ($5,000 - $1,000) + $6,000 = $10,000. The proportionate
percentages of the Policy loan coming from the Fixed Accumulation Value and the
Variable Accumulation Value are then determined as a percentage of this total,
which would be $4,000/$10,000 = 40% from the Fixed Accumulation Value, and
$6,000/$10,000 = 60% from the Variable Accumulation Value. The percentage
deducted from the Variable Accumulation Value would be distributed as follows:
$2,000/$10,000 = 20% from Sub-Account XXX; and $4,000/$10,000 = 40% from
Sub-Account YYY. The actual amounts coming from the various Accounts in
connection with the new $5,000 Policy loan would be 40% X $5,000 = $2,000 from
the Fixed Account; 20% X $5,000 = $1,000 from Sub-Account XXX; and 40% X $5,000
= $2,000 from Sub-Account YYY.
EFFECT ON INVESTMENT PERFORMANCE. Amounts coming from the Variable Account
as security for Policy loans will no longer participate in the investment
performance of the Variable Account. All amounts held in the Fixed Account as
security for Policy loans (that is, the Loan Amount) will only be credited with
interest at an effective annual rate currently equal to 5.50% (guaranteed to be
no less than 4.00%). NO ADDITIONAL INTEREST WILL BE CREDITED TO THESE AMOUNTS.
On the Policy Anniversary, any interest credited on these amounts will be
credited to the Fixed Account and the Variable Account according to the premium
allocation then in effect. See "Payment and Allocation of Premiums -- Allocation
of Premiums".
Although Policy loans may be repaid in whole or in part at any time, Policy
loans will permanently affect the Policy's potential Accumulation Value. As a
result, to the extent that the Death Benefit depends upon the Accumulation Value
(see "Death Benefit -- Death Benefit Options"), Policy loans will also affect
the Death Benefit under the Policy. This effect could be favorable or
unfavorable depending on whether the investment performance of the assets
allocated to the Sub-Account(s) is less than or greater than the interest being
credited on the assets transferred to the Fixed Account while the loan is
outstanding. Compared to a Policy under which no loan is made, values under the
Policy will be lower when such interest credited is less than the investment
performance of assets held in the Sub-Account(s).
EFFECT ON POLICY COVERAGE. If, on any Monthly Anniversary, the Loan Amount
is greater than the Accumulation Value, less the then applicable Surrender
Charge, we will notify you. If we do not receive sufficient payment within 61
days from the date we send notice to you, the Policy will lapse and terminate
without value. Our written notice to you will indicate the amount of the payment
required to avoid lapse. The Policy may, however, later be reinstated. See
"Policy Lapse and Reinstatement".
A Policy loan may also cause termination of the Death Benefit Guarantee,
because the Loan Amount is deducted from the total premiums paid in calculating
whether sufficient premiums have been paid in order to maintain the Death
Benefit Guarantee. See "Death Benefit Guarantee".
Proceeds payable upon the death of the Surviving Joint Insured will be
reduced by any Loan Amount.
INTEREST. The interest rate charged on Policy loans will be an annual rate
of 7.40%, payable in advance. After the tenth Policy Year, we will charge
interest at an annual rate of 5.21%, payable in advance, on that portion of your
Loan Amount that is not in excess of (a) the Accumulation Value, less (b) the
total of all premiums paid and all partial withdrawals. This portion of your
loan amount is called a preferred loan. Any excess of this amount will be
charged interest at the annual rate of 7.40%.
Interest is payable in advance (for the rest of the Policy Year) at the time
any Policy loan is made and at the beginning of each Policy Year thereafter (for
that entire Policy Year). If interest is not paid when due, it will be deducted
from the Cash Surrender Value as an additional Policy loan (see "Immediate
Effect of Policy Loans" above) and will be added to the existing Loan Amount.
Because we charge interest in advance, any interest that we have not earned
will be refunded to you upon lapse or surrender of the Policy or repayment of
the Policy Loan.
REPAYMENT OF LOAN AMOUNT. The Loan Amount may be repaid any time while any
Joint Insured is living. If not repaid, the Loan Amount will be deducted by us
from any amount payable under the
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Policy. As described above, unless you provide us with notice to the contrary,
any payments on the Policy will generally be treated as premium payments, which
are subject to the Premium Expense Charge, rather than repayments on the Loan
Amount. Any repayments on the Loan Amount will result in amounts being
reallocated from the Fixed Account and to the Sub-Accounts of the Variable
Account according to your current premium allocation.
TAX CONSIDERATIONS. A Policy loan may have tax consequences depending on the
circumstances of the loan. See "Federal Tax Matters -- Policy Proceeds".
FREE LOOK AND CONVERSION RIGHTS
FREE LOOK RIGHTS
The Policy provides for two types of return or "free look" periods, one
after application for and issuance of the Policy and the other after any
requested increase in Face Amount.
AT INITIAL ISSUE. The Policy provides for an initial free look period during
which you have a right to return the Policy for cancellation and receive a
refund of all premiums paid. You must return the Policy to us or your agent and
ask us to cancel the Policy by midnight of the 10th day after receiving it.
FOLLOWING A REQUESTED INCREASE IN FACE AMOUNT. Any requested increase in
Face Amount is also subject to a free look period during which you have a right
to cancel the increase and receive a refund. You must notify us or your agent
and ask us to cancel the increase by midnight of the 10th day after receiving a
new Policy Data Page.
Upon requesting cancellation of the increase, you will receive a refund, if
you so request, or otherwise a restoration to the Policy's Accumulation Value
(allocated among the Fixed Account and the Sub-Accounts of the Variable Account
as if it were a Net Premium payment), in an amount equal to all Monthly
Deductions attributable to the increase in Face Amount, including rider costs
arising from the increase. This refund or credit will be made within seven days
after we receive the request for cancellation on the appropriate form. In
addition, the Surrender Charge will be adjusted so that it will be as though no
such increase in Face Amount had occurred. Premiums paid after an increase in
Face Amount will not be refunded following cancellation of the increase. If you
request an increase in Face Amount you should take this into account in deciding
whether to make any premium payments during the free look period for the
increase.
CONVERSION RIGHTS
During the first two Policy Years and the first two years following a
requested increase in Face Amount, we provide you with an option to convert the
Policy or any requested increase in Face Amount to a life insurance policy under
which the benefits do not vary with the investment experience of the Variable
Account. This option is made available by permitting you to transfer all or a
part of your Variable Accumulation Value to the Fixed Account.
GENERAL OPTION. You may exercise your conversion right by transferring all
or any part of your Variable Accumulation Value to the Fixed Account. If, at any
time during the first two Policy Years or the first two years following a
requested increase in Face Amount, you request transfer from the Variable
Account to the Fixed Account and indicate that you are making the transfer in
exercise of your conversion right, the transfer will not be subject to the
transfer charge and will not count against the limit on the number of transfers.
At the time of such transfer, there is no effect on the Policy's Death Benefit,
Face Amount, net amount at risk, Rate Class(es) or issue age -- only the method
of funding the Accumulation Value under the Policy will be affected. See "Death
Benefit", "Accumulation Value" and Appendix A, "The Fixed Account".
If you transfer all of the Variable Accumulation Value from the Variable
Account to the Fixed Account and indicate that you are making this transfer in
exercise of your Conversion Right, we will automatically credit all future
premium payments on the policy to the Fixed Account unless you request a
different allocation.
INVESTMENTS OF THE VARIABLE ACCOUNT
There are currently twelve investment alternatives available under the
Variable Account. Fidelity Management & Research Company is the investment
adviser for the four portfolios of VIP and the three portfolios of VIP II.
Northstar Investment Management Corporation is the investment adviser of the two
Northstar Funds. Putnam Management is the investment adviser for the three funds
of Putnam Variable Trust.
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We reserve the right to establish additional Sub-Accounts of the Variable
Account, each of which could invest in a new Fund with a specified investment
objective. The Variable Account would then consist of more than the current
twelve investment options. You would only be permitted, however, to participate
in a total of seventeen investment options over the lifetime of your Policy. You
would not have to choose your investment options in advance, but upon
participation in the seventeenth Fund since the issue of the Policy, you would
only be able to transfer within the seventeen Funds already utilized and which
are still available.
The Company or its affiliates may receive compensation from an affiliate or
affiliates of certain of the Funds based upon an annual percentage of the
average net assets held in that Fund by the Company and by certain of the
Company's insurance company affiliates. These amounts are intended to compensate
the Company or the Company's affiliates for administrative, recordkeeping,
distribution, and other services provided by the Company and it affiliates to
Funds and/or the Funds' affiliates. Payments of such amounts by an affiliate or
affiliates of the Funds do not increase the fees paid by the Funds or their
shareholders.
The Company has entered into agreements with Fidelity Investments
Institutional Operations Company and Fidelity Distributors Corporation which
provide that, assuming aggregated net asset goals are met, the Company or its
affiliates will receive a quarterly payment for administrative, recordkeeping,
and distribution services provided by the Company or such affiliates in
connection with the sale and servicing of certain of the Fidelity VIP and VIP II
Funds.
The Funds currently offered are described below. A brief summary of
investment objectives is contained in the description of each Fund. In addition,
you should read the prospectuses of the Funds, which are combined with this
prospectus, for more detailed information and particularly, a more thorough
explanation of investment objectives, because several of the Funds and
portfolios may have objectives that are quite similar. There is no assurance
that any Fund will achieve its investment objectives. There is a possibility
that one Fund might become liable for any misstatement, inaccuracy or incomplete
disclosure in another Fund's prospectus.
The Fund shares may be available to fund benefits under both variable
annuity and variable life contracts and policies. This could, in the future,
result in an irreconcilable conflict between the interests of the holders of the
different types of variable contracts. The Funds have advised us that they will
monitor for such conflicts and will promptly provide us with information
regarding any such conflicts should they arise or become imminent and we will
promptly advise the Funds if we become aware of any such conflicts. If any such
material irreconcilable conflict arises we will arrange to eliminate and remedy
such conflict up to and including establishing a new management investment
company and segregating the assets underlying the variable policies and
contracts at no cost to the holders of the policies and contracts. For a brief
explanation of the conflicts that may be involved in such situations, refer to
the section entitled "FMR and Its Affiliates" in the VIP and VIP II Prospectuses
and the section entitled "Sales and Redemptions" in the Putnam Variable Trust
Prospectus.
The Funds described below distribute dividends and capital gains. However,
distributions are automatically reinvested in additional Fund shares, at net
asset value. The Sub-Account receives the distributions which are then reflected
in the Unit Value of that Sub-Account. See "Accumulation Value".
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND (VIP)
VIP is a mutual fund trust currently including five investment portfolios,
each with a different investment objective. Presently, the following four
portfolios are available within this Policy.
MONEY MARKET PORTFOLIO seeks to obtain as high a level of current income as
is consistent with preserving capital and providing liquidity. The portfolio
will invest only in high-quality U.S. dollar denominated money market
instruments of domestic and foreign issuers. An investment in the portfolio is
not insured or guaranteed by the U.S. Government, and there can be no assurance
that the Portfolio will maintain a stable net asset value per share of $1.00.
HIGH INCOME PORTFOLIO seeks to obtain a high level of current income by
investing primarily in high-yielding, lower-rated fixed-income securities
(sometimes referred to as "junk bonds"), while also considering growth of
capital. Lower-rated fixed-income securities are considered speculative and
involve greater risk of default than higher-rated fixed-income securities and
are more sensitive to the issuer's capacity to pay. Consult the VIP Prospectus
for further information on the risks associated with the portfolio's investment
in lower-rated fixed-income securities.
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EQUITY-INCOME PORTFOLIO seeks reasonable income by investing primarily in
income-producing equity securities. In choosing these securities the portfolio
will also consider the potential for capital appreciation. The portfolio's goal
is to achieve a yield which exceeds the composite yield on the securities
comprising the Standard & Poor's Composite Index of 500 Stocks.
GROWTH PORTFOLIO seeks to achieve capital appreciation. The portfolio
normally purchases common stocks, although its investments are not restricted to
any one type of security. Capital appreciation may also be found in other types
of securities, including bonds and preferred stocks.
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND II (VIP II)
VIP II is a mutual fund trust currently including five investment
portfolios, each with a different investment objective. Presently, the following
three portfolios are available within this Policy.
INVESTMENT GRADE BOND PORTFOLIO seeks as high a level of current income as
is consistent with the preservation of capital by investing in a broad range of
investment-grade fixed-income securities.
INDEX 500 PORTFOLIO seeks to provide investment results that correspond to
the total return (i.e., the combination of capital changes and income) of common
stocks publicly traded in the United States. In seeking this objective, the
portfolio attempts to duplicate the composition and total return of the Standard
& Poor's Composite Index of 500 Stocks while keeping transaction costs and other
expenses low. The portfolio is designed as a long-term investment option.
CONTRAFUND PORTFOLIO seeks capital appreciation by investing in companies
believed to be undervalued due to an overly pessimistic appraisal by the public.
The portfolio invests primarily in common stock and securities convertible into
common stock, but it has the flexibility to invest in any type of security that
may produce capital appreciation.
NORTHSTAR VARIABLE TRUST (NORTHSTAR)
Northstar is a diversified management investment company currently offering
four investment funds, each with a different investment objective. The following
two Northstar Funds are available under this Policy.
NORTHSTAR INCOME AND GROWTH FUND is a diversified portfolio with an
investment objective of seeking current income balanced with the objective of
achieving capital appreciation. This Fund will seek to achieve its objective
through investments in common and preferred stocks, convertible securities,
investment grade corporate debt securities and government securities, selected
for their prospects of producing income and capital appreciation. Wilson/Bennet
Capital Management, Inc. is the sub-advisor to this Fund and is responsible for
the day-to-day investment management of the Fund, subject to the supervision of
the investment adviser and the Trustees of the Fund.
NORTHSTAR MULTI-SECTOR BOND FUND is a diversified portfolio with an
investment objective of maximizing current income. This Fund will seek to
achieve its objective by investment in the following sectors of the fixed income
securities markets: (a) securities issued or guaranteed as to principal and
interest by the U.S. Government, its agencies, authorities or instrumentalities;
(b) investment grade corporate debt securities; (c) investment grade or
comparable quality debt securities issued by foreign corporate issuers, and
securities issued by foreign governments and their political subdivisions,
limited to 35% of assets determined at the time of investment; and (d) high
yield -- high risk fixed income securities of U.S. and foreign issuers, limited
to 50% of assets determined at the time of investment.
PUTNAM VARIABLE TRUST
Putnam Variable Trust is a mutual fund currently offering sixteen investment
funds, each with a different investment objective. Presently, only the following
three funds are available under this Policy.
PUTNAM VT DIVERSIFIED INCOME FUND seeks high current income consistent with
capital preservation by investing in the following three sectors of the fixed
income securities markets: a U.S. Government Sector, a High-Yield Sector (which
invests primarily in securities that are commonly known as "junk bonds") and an
International Sector. Consult the Putnam Variable Trust Prospectus for further
information on the risks associated with this Fund's investments in high-yield
higher-risk fixed income securities.
PUTNAM VT GROWTH AND INCOME FUND seeks capital growth and current income by
investing primarily in common stocks that offer potential for capital growth,
current income, or both.
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PUTNAM VT VOYAGER FUND seeks capital appreciation primarily from a portfolio
of common stocks that Putnam Management believes have potential for capital
appreciation that is significantly greater than that of market averages.
ADDITION, DELETION, OR SUBSTITUTION OF INVESTMENTS
We reserve the right, subject to compliance with applicable law, to make
additions to, deletions from, or substitutions for the shares that are held by
the Variable Account or that the Variable Account may purchase. We reserve the
right to eliminate the shares of any of the Funds and to substitute shares of
another Fund or of another open-end, registered investment company. We will not
substitute any shares attributable to your interest in a Sub-Account of the
Variable Account without notice and prior approval of the SEC, to the extent
required by the Investment Company Act of 1940 or other applicable law. Nothing
contained herein shall prevent the Variable Account from purchasing other
securities of other Funds or classes of policies, or from permitting a
conversion between Funds or classes of policies on the basis of requests made by
Policy owners.
We also reserve the right to establish additional Sub-Accounts of the
Variable Account, each of which would invest in a new Fund, or in shares of
another investment company, with a specified investment objective. New
Sub-Accounts may be established when, in our sole discretion, marketing needs or
investment conditions warrant, and any new Sub-Accounts will be made available
to existing Policy owners on a basis to be determined by us. We may also
eliminate one or more Sub-Accounts if, in our sole discretion, marketing, tax,
or investment conditions warrant.
In the event of any such substitution or change, we may make such changes in
this and other policies as may be necessary or appropriate to reflect such
substitution or change. If all or a portion of your investments are allocated to
any of the current funds that are being substituted for on the date such
substitution is announced, you may transfer the portion of the Accumulation
Value affected without payment of a transfer charge to available Sub-Accounts.
If deemed by us to be in the best interests of persons having voting rights
under the Policies, the Variable Account may be operated as a management company
under the Investment Company Act of 1940, it may be deregistered under that Act
in the event such registration is no longer required, or it may be combined with
our other separate accounts.
VOTING RIGHTS
You have the right to instruct us how to vote the Fund shares attributable
to the Policy at regular meetings and special meetings of the Funds. We will
vote the Fund shares held in Sub-Accounts according to the instructions
received, as long as:
-The Variable Account is registered as a unit investment trust under the
Investment Company Act of 1940; and
-The assets of the Variable Account are invested in Fund shares.
If we determine that, because of applicable law or regulation, we do not
have to vote according to the voting instructions received, we will vote the
Fund shares at our discretion.
All persons entitled to voting rights and the number of votes they may cast
are determined as of a record date, selected by us, not more than 90 days before
the meeting of the Fund. All Fund proxy materials and appropriate forms used to
give voting instructions will be sent to persons having voting interests.
Any Fund shares held in the Variable Account for which we do not receive
timely voting instructions, or which are not attributable to Policy owners, will
be voted by us in proportion to the instructions received from all Policy owners
having a voting interest in the Fund. Any Fund shares held by us or any of our
affiliates in general accounts will, for voting purposes, be allocated to all
separate accounts having voting interests in the Fund in proportion to each
account's voting interest in the respective Fund, and will be voted in the same
manner as are the respective account's votes.
Owning the Policy does not give you the right to vote at meetings of our
stockholders.
DISREGARD OF VOTING INSTRUCTIONS. We may, when required by state insurance
regulatory authorities, disregard voting instructions if the instructions
require that the shares be voted so as to cause a change in the
subclassification or investment objective of any Fund or to approve or
disapprove an investment advisory contract for any Fund. In addition, we may
disregard voting instructions in favor of changes initiated by a Policy owner in
the investment policy or the investment adviser of any Fund if we
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reasonably disapprove of such changes. A change would be disapproved only if the
proposed change is contrary to state law or prohibited by state regulatory
authorities or we determine that the change would have an adverse effect on the
Variable Account in that the proposed investment policy for a Fund may result in
speculative or unsound investments. In the event we do disregard voting
instructions, a summary of that action and the reasons for such action will be
included in the next annual report to owners.
GENERAL PROVISIONS
BENEFITS AFTER AGE 100
If either of the Joint Insureds is living after age 100 of the younger Joint
Insured and the Policy is in force, the Death Benefit will be the Accumulation
Value.
OWNERSHIP
While the Surviving Joint Insured is alive, subject to the Policy's
provisions you may:
-Change the amount and frequency of premium payments.
-Change the allocation of premiums.
-Make transfers between accounts.
-Surrender the Policy for cash.
-Make a partial withdrawal for cash.
-Receive a cash loan.
-Assign the Policy as collateral.
-Change the beneficiary.
-Transfer ownership of the Policy.
-Enjoy any other rights the Policy allows.
While both Joint Insureds are alive, subject to this policy's provisions,
you may:
-Change the Death Benefit Option.
-Change the Face Amount.
PROCEEDS
At the Surviving Joint Insured's death, the proceeds payable include the
Death Benefit then in force:
-Plus any additional amounts provided by rider on the life of the Surviving
Joint Insured;
-Plus any Policy loan interest that we have collected but not earned;
-Minus any Loan Amount; and
-Minus any unpaid Monthly Deductions.
BENEFICIARY
You may name one or more beneficiaries on the application when you apply for
the Policy. You may later change beneficiaries by written request. If no
beneficiary is surviving when the Surviving Joint Insured dies, the Death
Benefit will be paid to you, if surviving, or otherwise to your estate.
POSTPONEMENT OF PAYMENTS
Payments from the Variable Account for Death Benefits, cash surrender,
partial withdrawal, or loans will generally be made within seven days after we
receive all the documents required for the payments.
We may, however, delay making a payment when we are not able to determine
the Variable Accumulation Value because (i) the New York Stock Exchange is
closed, other than customary weekend or holiday closings, or trading on the New
York Stock Exchange is restricted by the SEC, (ii) the SEC by order permits
postponement for the protection of Policyholders, or (iii) an emergency exists,
as determined by the SEC, as a result of which disposal of securities is not
reasonably practicable or it is not reasonably practicable to determine the
value of the Variable Account's net assets. Transfers and allocation to and
against any Sub-Account of the Variable Account may also be postponed under
these circumstances.
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Any of the payments described above which are made from the Fixed Account
may be delayed up to six months from the date we receive the documents required.
We will pay interest at an effective annual rate of 3.50% from the date of the
request to the date of payment if we delay payment more than 30 days. No
additional interest will be credited to any delayed payments. The time a payment
from the Fixed Account may be delayed and the rate of interest paid on such
amounts may vary among states.
SETTLEMENT OPTIONS
Settlement Options are ways you can choose to have the Policy's proceeds
paid. These options apply to proceeds paid:
-At the Surviving Joint Insured's death.
-On total surrender of the Policy.
The proceeds are paid to one or more payees. The proceeds may be paid in a
lump sum or may be applied to one of the following Settlement Options. Proceeds
will be paid in one sum unless one or more Options are requested. A combination
of options may be used. At least $2,500 must be applied to any option for each
payee under that option. Under an installment Option, each payment must be at
least $25.00. We may adjust the interval between payments to make each payment
at least $25.00.
Proceeds applied to any Option no longer earn interest at the rate applied
to the Fixed Account or participate in the investment performance of the Funds.
Option 1 - Proceeds are left with us to earn interest. Withdrawals and any
changes are subject to our approval.
Option 2 - Proceeds and interest are paid in equal installments of a
specified amount until the proceeds and interest are all paid.
Option 3 - Proceeds and interest are paid in equal installments for a
specified period until the proceeds and interest are all paid.
Option 4 - The proceeds provide an annuity payment with a specified number
of months "certain". The payments are continued for the life of the primary
payee. If the primary payee dies before the certain period is over, the
remaining payments are paid to a contingent payee.
Option 5 - The proceeds provide a life income for two payees. When one payee
dies, the surviving payee receives two-thirds of the amount of the joint
monthly payment for life.
Option 6 -- The proceeds are used to provide an annuity based on the rates
in effect when the proceeds are applied. We do not apply this Option if a
similar option would be more favorable to the payee at that time.
INTEREST ON SETTLEMENT OPTIONS. We base the interest rate for proceeds
applied under Options 1 and 2 on the interest rate we declare on funds that we
consider to be in the same classification based on the Option, restrictions on
withdrawal, and other factors. The interest rate will never be less than an
effective annual rate of 3.50%.
In determining amounts to be paid under Options 3 and 4, we assume interest
at an effective annual rate of 3.50%. Also, for Option 3 and "certain" periods
under Option 4, we credit any excess interest we may declare on funds that we
consider to be in the same classification based on the Option, restrictions on
withdrawal, and other factors.
INCONTESTABILITY
After the Policy has been in force during both Joint Insured's lifetime for
two years from the Policy's Issue Date, we cannot claim the Policy is void or
refuse to pay any proceeds unless the Policy has lapsed.
If you make a Face Amount increase or a premium payment which requires proof
of insurability, the corresponding Death Benefit increase has its own two-year
contestable period measured from the date of the increase.
If the Policy is reinstated, the contestable period is measured from the
date of reinstatement with respect to statements made on the application for
reinstatement.
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MISSTATEMENT OF AGE AND SEX
If any Joint Insured's age or sex or both are misstated, the Death Benefit
will be the amount that the most recent cost of insurance would purchase using
the current cost of insurance rate for the correct age and sex.
SUICIDE
If any Joint Insured commits suicide, whether sane or insane, within two
years of the Policy's Issue Date, we do not pay the Death Benefit. Instead, we
refund all premiums paid for the Policy and any attached riders, minus any Loan
Amounts and partial withdrawals.
If you make a Face Amount increase or a premium payment which requires proof
of insurability, the corresponding Death Benefit increase has its own two-year
suicide limitation for the proceeds associated with that increase. If any Joint
Insured commits suicide, whether sane or insane, within two years of the
effective date of the increase, we pay the Death Benefit prior to the increase
and refund the cost of insurance for that increase.
Under Policies issued in Colorado and North Dakota, the suicide period is
shortened to one year.
TERMINATION
The Policy terminates when any of the following occurs:
-The Policy lapses. See "Policy Lapse and Reinstatement".
-The Surviving Joint Insured dies.
-The Policy is surrendered for its Cash Surrender Value.
-The Policy is amended according to the amendment provision described below
and you do not accept the amendment.
AMENDMENT
We reserve the right to amend the Policy in order to include any future
changes relating to the following:
-Any SEC rulings and regulations.
-The Policy's qualification for treatment as a life insurance policy under
the following:
- The Code.
- Internal Revenue Service rulings and regulations.
- Any requirements imposed by the Internal Revenue Service.
REPORTS
ANNUAL STATEMENT. We will send you an Annual Statement once each year free
of charge, showing the Face Amount, Death Benefit, Accumulation Value, Cash
Surrender Value, Loan Amount, premiums paid, Planned Periodic Premiums, interest
credits, partial withdrawals, transfers, and charges since the last statement.
Additional statements are available upon request. We may make a charge not
to exceed $50.00 for each additional Annual Statement you request.
PROJECTION REPORT. Upon request after the first Policy Year, we will provide
you a report projecting future results based on the Death Benefit Option you
specify, the Planned Periodic Premiums you specify, the Accumulation Value of
your Policy at the end of the prior Policy Year and any other assumptions
specified by you or us (subject to any SEC limitations). The first request for a
Projection Report in any Policy Year will be without charge; thereafter, we may
make a charge not to exceed $50.00 for each Projection Report you request.
DIVIDENDS
The Policy does not entitle you to participate in our surplus. We do not pay
you dividends under the Policy.
The Sub-Account receives any dividends paid by the related Fund. Any such
dividend is credited to you through the calculation of the Sub-Account's daily
Unit Value.
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COLLATERAL ASSIGNMENT
You may assign the benefits of the Policy as collateral for a debt. This
limits your rights to the Cash Surrender Value and the beneficiary's rights to
the proceeds. An assignment is not binding on us until we receive written
notice.
OPTIONAL INSURANCE BENEFITS
The Policy can include additional benefits, in the form of riders to the
Policy, if our requirements for issuing such benefits are met. We currently
offer the following benefit riders although some riders may not be available in
some states.
POLICY SPLIT OPTION RIDER (PSO) -- Allows the policyowner to split the
Policy into two individual permanent life insurance policies in the event of a
divorce of the Joint Insureds, dissolution of a business partnership of the
Joint Insureds, or if there is a change in the federal estate tax laws that
would eliminate the unlimited marital deduction or reduce by at least 50% the
estate taxes payable at death. Evidence of insurability on each Joint Insured
may be required to exercise this option. There is no cost for this rider.
SURVIVORSHIP TERM RIDER (STR) -- Provides a level term insurance benefit
payable on the death of the Surviving Joint Insured if death occurs prior to age
100 of the younger Joint Insured. The current cost of insurance rates for the
rider are expected to be lower than for the base Policy. In addition, the base
policy's Monthly Amount Charge per $1,000 and Surrender Charge do not apply to
coverage under the rider. However, the Survivorship Term Rider will cause the
Death Benefit Guarantee Period of the base Policy to be shortened.
There may be times in which it will be to your economic advantage to include
a significant portion of your insurance coverage under a term rider. In some
other circumstances, it may be in your interest to obtain a Policy without term
rider coverage. These circumstances depend on many factors, including the
premium levels and amount and duration of coverage you choose, as well as the
ages, sexes, and premium classes of the Joint Insureds.
FOUR YEAR TERM RIDER (FTR) -- Provides a four year, level term benefit if
the Surviving Joint Insured dies during the first four Policy Years.
FIRST TO DIE RIDER (FDR) -- Provides level term insurance coverage on the
first death of the Joint Insureds if death occurs before the end of the term
period.
FEDERAL TAX MATTERS
The following discussion is not intended to be a complete description of the
tax status of the Policies. Rather, it provides information about how we believe
the tax laws apply in the most commonly occurring circumstances. The tax
treatment of certain aspects of the Policies, such as surrenders and partial
withdrawals, is uncertain or may be changed by regulations adopted in the
future. For these reasons, Policy owners are advised to consult with their own
tax advisers with regard to the tax implications of the Policies.
POLICY PROCEEDS
DEFINITION OF LIFE INSURANCE. In order to qualify as a life insurance
contract for federal tax purposes, the Policy must meet the definition of a life
insurance contract which is set forth in Section 7702 of the Code. The manner in
which Section 7702 should be applied to certain features of the Policy offered
in this Prospectus is not directly addressed by Section 7702. We nevertheless
believe it is reasonable to conclude that the Policy will meet the Section 7702
definition of a life insurance contract, so that:
-The Death Benefit should be fully excludable from the gross income of the
beneficiary under Section 101(a)(1) of the Code; and
-The Policy owner should not be considered in constructive receipt of the
Cash Value, including increases, until actual cancellation of the Policy.
In the absence of final regulations or other pertinent interpretations of
Section 7702, however, there is necessarily some uncertainty as to whether a
Policy will meet the statutory life insurance contract definition, particularly
if it insures substandard risks. If a Policy were determined not to be a life
insurance contract for purposes of Section 7702, such Policy would not provide
most of the tax advantages normally provided by a life insurance contract.
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We reserve the right to make changes to the Policy if such changes are
deemed necessary to attempt to assure its qualification as a life insurance
contract.
MODIFIED ENDOWMENT CONTRACTS. Under the Code, life insurance policies can be
classified as "Modified Endowment Contracts". Policy loans, partial surrenders
and partial withdrawals of cash from a policy which is classified as a Modified
Endowment Contract are taxable as ordinary income to the Policy owner.
Additionally, taxable distributions, if made before the Policy owner is 59 1/2,
are subject to a Federal income tax penalty of 10%.
Modified Endowment Contract classification may be avoided by limiting the
amount of premiums paid under the Policy. If you contemplate a large premium
payment under this Policy, and you wish to avoid Modified Endowment Contract
classification, you may contact us in writing before making the payment and we
will tell you the maximum amount which can be paid into the Policy.
AGGREGATION OF MODIFIED ENDOWMENT CONTRACTS. In the case of a pre-death
distribution (including a loan, partial withdrawal, collateral assignment or
complete surrender) from a Policy that is treated as a modified endowment
contract, a special aggregation requirement may apply for purposes of
determining the amount of the income on the contract. Specifically, if we or any
of our affiliates issue to the same Policy owner more than one modified
endowment contract within a calendar year, then for purposes of measuring the
income on the Policy with respect to a distribution from any of those Policies,
the income on the Policy for all those Policies will be aggregated and
attributed to that distribution.
TAX TREATMENT OF POLICY SPLIT. The Policy Split Option Rider permits a
Policy to be split into two individual Policies upon the occurrence of a divorce
of Joint Insureds, dissolution of a business partnership of the Joint Insureds
or certain changes in federal estate tax law. A policy split could have adverse
tax consequences; for example, it is not clear whether a policy split will be
treated as a nontaxable exchange under Sections 1031 through 1043 of the Code.
If a policy split option is not treated as a nontaxable exchange, a split could
result in the recognition of taxable income in an amount up to any gain in the
Policy at the time of the split. In addition, it is not clear whether the
individual Policies that result from a policy split would in all circumstances
be treated as life insurance contracts for federal income tax purposes and, if
so treated, whether the individual contracts would be classified as modified
endowment contracts. Before the Policy owner exercises rights provided by the
Policy Split Option Rider, it is important that he or she consults with a
competent tax advisor regarding the possible consequences of a policy split.
DIVERSIFICATION REQUIREMENTS. Flexible premium variable life insurance
policies such as these Policies will be treated as life insurance contracts if
they meet the definition of a life insurance contract under the Code and as long
as the separate accounts funding them are "adequately diversified" under section
817(h) of the Code and regulations issued by the Internal Revenue Service. If
the Variable Account is determined to be not adequately diversified, Policy
owners in the Variable Account will be treated as the owners of the underlying
assets and thus currently taxable on earnings and gains. The investment adviser
of the respective mutual fund investment options has responsibility for
maintaining the investment diversification required under the Code.
In connection with the issuance of temporary diversification regulations,
the Internal Revenue Service stated that it anticipates the issuance of
regulations or rulings prescribing the circumstances in which an owner's control
of the investments of a separate account may cause the owner, rather than the
insurance company, to be treated as the owner of the assets in the account. If
the Policy owner is considered the owner of the assets of the separate account,
income and gains from the account would be included in the owner's gross income.
The ownership rights under the Policy offered in the Prospectus are similar
to, but different in certain respects from, those described by the Internal
Revenue Service, in rulings in which it determined that the owners were not
owners of separate account assets. For example, the owner of the Policy has
additional flexibility in allocating payments and cash values. These differences
could result in the owner being treated as the owner of the assets of the
separate account. In addition, we do not know what standards will be set forth
in the regulations or rulings which the Internal Revenue Service has stated it
expects to be issued. We reserve the right to modify the Policy as necessary to
attempt to prevent the Policy owner from being considered as owner of the assets
of the separate account.
40
<PAGE>
DEATH BENEFITS. The Death Benefit proceeds payable under either the Level
Amount Option or the Variable Amount Option will be excludable from the gross
income of the beneficiary under Section 101(a) of the Code.
TAXATION OF DISTRIBUTIONS
SURRENDERS AND PARTIAL WITHDRAWALS. A surrender or lapse of the Policy may
have tax consequences. Upon surrender, the owner will not be taxed on the Cash
Surrender Value except for the amount, if any, that exceeds the gross premiums
paid less the untaxed portion of any prior withdrawals. The amount of any Policy
loan will, upon surrender or lapse, be added to the Cash Surrender Value and
treated, for this purpose, as if it had been received. The treatment of a
preferred loan is unclear; such a loan may be considered a withdrawal instead of
an indebtedness of the Policy owner. See "Policy Loans -- Interest". A loss
incurred upon surrender is generally not deductible. The tax consequences of a
surrender may differ if the proceeds are received under any income payment
settlement option.
A complete surrender of the Policy will, and a partial withdrawal may, under
Section 72(e)(5) of the Code, be included in your gross income to the extent
that the distribution exceeds your investment in the Policy. The treatment of a
preferred loan is unclear, such a loan may be considered a withdrawal instead of
an indebtedness of the Policy owner. Withdrawals or partial surrenders generally
are not taxable unless the total of such withdrawals exceeds total premiums paid
to the date of withdrawal less the untaxed portion of any prior withdrawals.
During the first 15 Policy Years, however, an additional amount may be taxable
if the partial surrender results in or is necessitated by a reduction in
benefits. A qualified tax adviser should be consulted regarding the tax
consequences of any surrender or partial withdrawal during the first 15 Policy
Years.
The increase in Accumulation Value of the Policy will not be included in
gross income unless and until there is a total surrender or partial withdrawal
under the Policy. A complete surrender of the Policy will, and a partial
withdrawal may, under Section 72(e)(5) of the Code, be included in your gross
income to the extent the distribution exceeds your investment in the Policy.
The Unemployment Compensation Amendments of 1992 require us to withhold
Federal income tax at the rate of 20% on most distributions from qualified
plans, unless the distribution is an "eligible rollover distribution" as defined
by the Unemployment Compensation Act of 1992 and the Policy owner files a
written request with us for a direct rollover to an individual retirement
account as described in 408(b) of the Code, or as applicable, to another
qualified plan or a Section 403(b) arrangement that accepts rollovers.
POLICY LOANS. Under Section 72(e)(5) of the Code, loans received under the
Policy will be generally recognized as loans for tax purposes and will not be
considered to be distributions subject to tax. Pursuant to Section 163 of the
Code, interest paid to us with respect to the loan may or may not be deductible,
depending upon a number of factors. If the Policy is a Modified Endowment
Contract, a Policy loan or assignment of any portion of the Accumulation Value
will be taxable in an amount equal to the lesser of the amount of the
loan/assignment or the excess of Accumulation Value over the Owner's investment
in the Policy. Due to the complexity of these factors, a Policy owner should
consult a competent tax adviser as to the deductibility of interest paid on any
Policy loans.
OTHER TAXES. Federal estate taxes and state and local estate, inheritance
and other taxes may become due depending on applicable law and your
circumstances or the circumstances of the Policy beneficiary if you or the Joint
Insured dies. Any person concerned about the estate implications of the Policy
should consult a competent tax adviser.
TAXATION OF POLICIES HELD BY PENSION AND CERTAIN DEFERRED COMPENSATION PLANS
PENSION AND PROFIT-SHARING PLANS. If a Policy is purchased by a trust which
forms part of a pension or profit-sharing plan qualified under Section 401(a) of
the Code for the benefit of participants covered under the plan, the Federal
income tax treatment of such Policies will be somewhat different from that
described above. A competent tax adviser should be consulted on these matters.
TAXATION OF RELIASTAR LIFE INSURANCE COMPANY
We do not initially expect to incur any income tax burden upon the earnings
or the realized capital gains attributable to the Variable Account. Based on
this expectation, no charge is being made currently to the Variable Account for
Federal income taxes which may be attributable to the Account. If, however, we
determine that we may incur such tax burden, we may assess a charge for such
burden from the Variable Account.
41
<PAGE>
We may also incur state and local taxes, in addition to premium taxes, in
several states. At present these taxes are not significant. If there is a
material change in state or local tax laws, charges for such taxes, if any,
attributable to the Variable Account, may be made.
OTHER CONSIDERATIONS
The foregoing discussion is general and is not intended as tax advice. Any
person concerned about these tax implications should consult a competent tax
adviser. This discussion is based on our understanding of the present Federal
income tax laws as they are currently interpreted by the IRS. No representation
is made as to the likelihood of continuation of these current laws and
interpretations. It should be further understood that the foregoing discussion
is not exhaustive and that special rules not described in this Prospectus may be
applicable in certain situations. Moreover, no attempt has been made to consider
any applicable state or other tax laws.
DISTRIBUTION OF THE POLICIES
We intend to sell the Policies in all jurisdictions where we are licensed.
The Policies will be sold by licensed insurance agents who are also registered
representatives of broker-dealers registered with the SEC under the Securities
Exchange Act of 1934 who are members of the National Association of Securities
Dealers, Inc.
The Policies will be distributed by the general distributor, Washington
Square Securities, Inc., (WSSI), a Minnesota corporation, which is an affiliate
of ours. WSSI is a securities broker-dealer registered with the SEC and is a
member of the National Association of Securities Dealers, Inc. It is primarily a
mutual funds dealer and has dealer agreements under which it markets shares of
more than 50 mutual funds. It also markets limited partnerships and other
tax-sheltered or tax-deferred investments, and acts as general distributor
(principal underwriter) for variable annuity products issued by us. The Policies
may also be sold through other broker-dealers authorized by WSSI and applicable
law to do so. Registered representatives of such broker-dealers may be paid on a
different basis than described below.
Registered representatives who sell the Policies will receive commissions
based on a commission schedule. In the first Policy Year, commissions generally
will be no more than 40% of the premiums paid up to the annualized Minimum
Monthly Premium, plus 2% of additional premiums. In subsequent Policy Years 2
through 10, commissions generally will be 2% of premiums paid in that year.
Corresponding commissions will be paid upon a requested increase in Face Amount.
In addition, a commission of .10% of the average monthly Accumulation Value
during each Policy Year may be paid. Further, registered representatives may be
eligible to receive certain overrides and other benefits based on the amount of
earned commissions.
MANAGEMENT
<TABLE>
<CAPTION>
TERM PRINCIPAL OCCUPATION
DIRECTORS EXPIRES AND BUSINESS EXPERIENCE
- --------------------- ----------- ------------------------------------------------------
<S> <C> <C>
R. Michael Conley 1997 Senior Vice President of ReliaStar Financial Corp.
since 1991; Senior Vice President, ReliaStar Employee
Benefits of ReliaStar Life Insurance Company since
1986; President of NWNL Benefits Corporation since
1988; Executive Vice President of ReliaStar Bankers
Security Life Insurance Company since 1996; Director
of subsidiaries of ReliaStar Financial Corp.
Richard R. Crowl 1999 Senior Vice President, General Counsel and Secretary
of ReliaStar Financial Corp. since 1996; Senior Vice
President and General Counsel of ReliaStar Life
Insurance Company, ReliaStar Bankers Security Life
Insurance Company, Northern Life Insurance Company,
and ReliaStar United Services Life Insurance Company
since 1996; Executive Vice President and General
Counsel of Washington Square Advisers, Inc. since
1986; Vice President and Associate General Counsel of
ReliaStar Financial Corp. from 1989 to 1996; Vice
President and Associate General Counsel of ReliaStar
Life Insurance Company from 1985 to 1996; Director and
Vice President of subsidiaries of ReliaStar Financial
Corp.
</TABLE>
42
<PAGE>
<TABLE>
<S> <C> <C>
John H. Flittie 1999 Vice Chairman, President and Chief Operating Officer
of ReliaStar Life Insurance Company since 1996;
President and Chief Operating Officer of ReliaStar
Financial Corp. and ReliaStar Life Insurance Company
since 1993; Vice Chairman, Chief Executive Officer and
President of ReliaStar Bankers Security Life Insurance
Company since 1996; Vice Chairman of ReliaStar United
Services Life Insurance Company and ReliaStar Bankers
Security Life Insurance Company since 1995; Senior
Executive Vice President and Chief Operating Officer
of ReliaStar Financial Corp. and ReliaStar Life
Insurance Company from 1992 to 1993; Senior Executive
Vice President and Chief Operating Officer of
ReliaStar Financial Corp. from 1991 to 1992; Executive
Vice President and Chief Financial Officer of
ReliaStar Financial Corp. and ReliaStar Life Insurance
Company from 1989 to 1991; Director of Community First
BankShares, Inc. and subsidiaries of ReliaStar
Financial Corp.
Wayne R. Huneke 1998 Senior Vice President, Chief Financial Officer and
Treasurer of ReliaStar Financial Corp. and ReliaStar
Life Insurance Company since 1994; Vice President,
Treasurer and Chief Accounting Officer from 1990 to
1994; Director and Officer of subsidiaries of
ReliaStar Financial Corp.
Kenneth U. Kuk 1997 Senior Vice President of ReliaStar Financial Corp. and
ReliaStar Life Insurance Company since 1996; Vice
President, Strategic Marketing of ReliaStar Financial
Corp. and ReliaStar Life Insurance Company since 1996;
Vice President, Investments of ReliaStar Financial
Corp. from 1991 to 1996; President of Washington
Square Advisers, Inc. since 1995; Chairman of
ReliaStar Mortgage Corporation since 1988; Director
and Officer of subsidiaries of ReliaStar Financial
Corp.
William R. Merriam 1999 Senior Vice President, Life & Health Reinsurance of
ReliaStar Life Insurance Company since 1991; Vice
President from 1984 to 1991.
Robert C. Salipante 1997 Senior Vice President of Personal Financial Services
of ReliaStar Financial Corp. and ReliaStar Life
Insurance Company since 1996; Executive Vice President
of ReliaStar Bankers Security Life Insurance Company
since 1996; Senior Vice President, of Individual
Division and Technology of ReliaStar Life Insurance
Company since 1996; Senior Vice President of Strategic
Marketing and Technology of ReliaStar Financial Corp.
and ReliaStar Life Insurance Company from 1994 to
1996; Senior Vice President and Chief Financial
Officer of ReliaStar Financial Corp. and ReliaStar
Life Insurance Company from 1992 to 1994; Executive
Vice President of Ameritrust Corporation from 1988 to
1992; Director and Officer of subsidiaries of
ReliaStar Financial Corp.
Donald L. Swanson 1997 Senior Vice President, ReliaStar Retirement Plans of
ReliaStar Life Insurance Company since 1993; Vice
President from 1990 to 1993.
</TABLE>
43
<PAGE>
<TABLE>
<S> <C> <C>
John G. Turner 1998 Chairman and Chief Executive Officer of ReliaStar
Financial Corp. and ReliaStar Life Insurance Company
since 1993; Chairman of ReliaStar United Services Life
Insurance Company and ReliaStar Bankers Security Life
Insurance Company since 1995; Chairman of Northern
Life Insurance Company since 1992; Chairman, President
and Chief Executive Officer of ReliaStar Financial
Corp. and ReliaStar Life Insurance Company in 1993;
President and Chief Executive Officer of ReliaStar
Financial Corp. and ReliaStar Life Insurance Company
from 1991 to 1993; President and Chief Operating
Officer of ReliaStar Financial Corp. from 1989 to
1991; President and Chief Operating Officer of
ReliaStar Life Insurance Company from 1986 to 1991;
Director of subsidiaries of ReliaStar Financial Corp.
Steven W. Wishart 1999 Senior Vice President and Chief Investment Officer of
ReliaStar Financial Corp. since 1989; Senior Vice
President of ReliaStar Life Insurance Company since
1981; President and Chief Executive Officer of
ReliaStar Investment Research, Inc. since 1996;
President of Washington Square Capital Inc. from 1981
to 1996; President of WSCR, Inc. from 1986 to 1996;
Director of National Benefit Resources Group Services
Inc. and subsidiaries of ReliaStar Financial Corp.
</TABLE>
The Executive Committee and Finance Committee of our Board of Directors consists
of Directors Flittie, Huneke, Salipante, Crowl and Turner.
EXECUTIVE OFFICERS
<TABLE>
<S> <C>
John G. Turner Chairman and Chief Executive Officer
John H. Flittie Vice Chairman, President and Chief Operating Officer
R. Michael Conley Senior Vice President
Richard R. Crowl Senior Vice President and General Counsel
Wayne R. Huneke Senior Vice President, Chief Financial Officer and
Treasurer
Kenneth U. Kuk Senior Vice President
Robert C. Salipante Senior Vice President
Donald L. Swanson Senior Vice President
Steven W. Wishart Senior Vice President and Chief Investment Officer
</TABLE>
All of the foregoing executive officers have been officers or employees of
ours for the past five years, except Mr. Salipante. Mr. Salipante became
employed with the Company on July 6, 1992. Prior to joining the Company, Mr.
Salipante was Executive Vice President of the Banking Services Group of
Ameritrust Corp.
STATE REGULATION
We are subject to the laws of the State of Minnesota governing insurance
companies and to regulation and supervision by the Insurance Division of the
State of Minnesota Department of Commerce. An annual statement in a prescribed
form is filed with the Insurance Division each year, and in each state we do
business, covering our operations for the preceding year and our financial
condition as of the end of that year. Our books and accounts are subject to
review by the Insurance Division and a full examination of our operations is
conducted periodically (usually every three years) by the National Association
of Insurance Commissioners. This regulation does not, however, involve
supervision or management of our investment practices or policies.
In addition, we are subject to regulation under the insurance laws of other
jurisdictions in which we operate.
We are also subject to supervision and verification by the State of
Minnesota regarding participating business allocated to the Participation Fund
Account, which was established in connection with the reorganization and
demutualization of the Company in 1989. The Participation Fund Account was
established for the purpose of maintaining the dividend practices relative to
certain policies previously issued by the Company's former Mutual Department.
The Participation Fund Account is not a
44
<PAGE>
separate account as described under Minnesota Statutes Chapter 61A. An annual
examination of the Participation Fund Account is made by independent consulting
actuaries representing the Insurance Division of the State of Minnesota.
MONTANA RESIDENTS
All Policy provisions described in the prospectus that are based on the sex
of the Joint Insureds should be disregarded. This Policy will be issued on a
unisex basis.
References made to the rates and mortality tables applicable to this Policy
are to be disregarded and substituted with an 80% male 20% female blend of the
1980 Commissioner's Standard Ordinary Smoker and Non-Smoker Mortality Tables,
Age Last Birthday.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account is a party. We
are engaged in litigation of various kinds; however, our management does not
believe that any of this litigation is of material importance in relation to our
total assets.
BONDING ARRANGEMENTS
An insurance company blanket bond is maintained providing $25,000,000
coverage for our officers and employees and those of Washington Square
Securities, Inc. (WSSI), subject to a $500,000 deductible.
LEGAL MATTERS
Legal matters in connection with the Variable Account and the Policy
described in this Prospectus have been passed upon by Robert B. Saginaw,
Esquire, Attorney for the Company.
EXPERTS
The financial statements of ReliaStar's Select*Life Variable Account as of
December 31, 1996 and for each of the three years then ended and the annual
financial statements of ReliaStar Life Insurance Company included in this
Prospectus have been audited by , independent auditors, as
stated in their reports which are included herein, and have been so included in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.
Actuarial matters included in this Prospectus have been examined by
, as stated in the opinion filed as an exhibit to
the Registration Statement.
REGISTRATION STATEMENT CONTAINS FURTHER INFORMATION
A Registration Statement has been filed with the SEC under the Securities
Act of 1933 with respect to the Policies. This Prospectus does not contain all
information included in the Registration Statement, its amendments and exhibits.
For further information concerning the Variable Account, the Funds, the Policies
and us, please refer to the Registration Statement.
Statements in this Prospectus concerning provisions of the Policy and other
legal documents are summaries. Please refer to the documents as filed with the
SEC for a complete statement of the provisions of those documents.
Information may be obtained from the SEC's principal office in Washington,
D.C., for a fee it prescribes, or examined there without charge.
FINANCIAL STATEMENTS
The financial statements for the Variable Account reflect the operations of
the Variable Account and its Sub-Accounts as of December 31, 1996 and March 31,
1997, and for each of the three years in the period then ended December 31,
1996. Although the December 31, 1996 financial statements are audited, the
periods they cover are not necessarily indicative of the longer term performance
of the assets held in the Variable Account. The March 31, 1997 financial
statements are unaudited.
The financial statements of ReliaStar Life Insurance Company which are
included in this Prospectus should be distinguished from the financial
statements of the Variable Account and should be considered only as bearing upon
the ability of ReliaStar Life Insurance Company to meet its obligations under
the Policies. They should not be considered as bearing on the investment
performance of the assets held in the Variable Account.
45
<PAGE>
APPENDIX A
THE FIXED ACCOUNT
The Fixed Account consists of all of our assets other than those in our
separate accounts. We have complete ownership and control of all of the assets
of the Fixed Account.
Because of exemptions and exclusions contained in the Securities Act of 1933
and the Investment Company Act of 1940, the Fixed Account has not been
registered under these acts. Neither the Fixed Account nor any interest in it is
subject to the provisions of these acts and as a result the SEC has not reviewed
the disclosures in this Prospectus relating to the Fixed Account. However,
disclosures relating to the Fixed Account are subject to generally applicable
provisions of the federal securities laws relating to the accuracy and
completeness of statements made in prospectuses.
We guarantee both principal and interest on amounts credited to the Fixed
Account. We credit interest at an effective annual rate of at least 4%,
independent of the investment experience of the Fixed Account. From time to
time, we may guarantee interest at a rate higher than 4%.
ANY INTEREST CREDITED TO AMOUNTS ALLOCATED TO THE FIXED ACCOUNT IN EXCESS OF
4% PER YEAR WILL BE DETERMINED AT OUR SOLE DISCRETION. YOU ASSUME THE RISK THAT
INTEREST CREDITED TO THE FIXED ACCOUNT MAY NOT EXCEED THE MINIMUM GUARANTEE OF
4% FOR A GIVEN YEAR.
We do not use a specific formula for determining excess interest credits.
However, we consider the following:
-General economic trends,
-Rates of return currently available on our investments,
-Rates of return anticipated in our investments, regulatory and tax factors,
and
-Competitive factors.
We are not aware of any statutory limitations to the maximum amount of
interest we may credit and our Board of Directors has not set any limitations.
The Fixed Accumulation Value of the Policy is the sum of the Net Premiums
credited to it in the Fixed Account. It is increased by transfers and Loan
Amounts from the Variable Account, and interest credits. It is decreased by
Monthly Deductions and partial withdrawals taken from it in the Fixed Account
and transfers to the Variable Account. The Fixed Accumulation Value will be
calculated at least monthly on the monthly anniversary date.
You may transfer all or part of your Fixed Accumulation Value to the
Sub-Accounts of the Variable Account, subject to the following transfer
limitations:
-The request to transfer must be postmarked no more than 30 days before the
Policy Anniversary and no later than 30 days after the Policy Anniversary.
Only one transfer is allowed during this period.
-The Fixed Accumulation Value after the transfer must be at least equal to
the Loan Amount.
-No more than 50% of the Fixed Accumulation Value (minus any Loan Amount)
may be transferred unless the balance, after the transfer, would be less
than $1,000. If the balance would be less than $1,000, the full Fixed
Accumulation Value (minus any Loan Amount) may be transferred.
-You must transfer at least:
-- $500, or
-- the total Fixed Accumulation Value (minus any Loan Amount) if less
than $500.
We make the Monthly Deduction from your Fixed Accumulation Value in
proportion to the total Accumulation Value of the Policy.
The Surrender Charge described in the Prospectus applies to the total
Accumulation Value, which includes the Fixed Accumulation Value. If the Owner
surrenders the Policy for its Cash Surrender Value, the Fixed Accumulation Value
will be reduced by any applicable Surrender Charge, any Loan Amount and unpaid
Monthly Deductions applicable to the Fixed Account.
A-1
<PAGE>
APPENDIX B
CALCULATION OF ACCUMULATION VALUE
The Accumulation Value of the Policy is equal to the sum of the Variable
Accumulation Value plus the Fixed Accumulation Value.
VARIABLE ACCUMULATION VALUE
The Variable Accumulation Value is the total of your values in each
Sub-Account. The value for each Sub-Account is equal to:
1 multiplied by 2, where:
1
Is your current number of Accumulation Units (described below).
2
Is the current Unit Value (described below).
The Variable Accumulation Value will vary from Valuation Date to Valuation
Date (described below) reflecting changes in 1 and 2 above.
ACCUMULATION UNITS. When transactions are made which affect the Variable
Accumulation Value, dollar amounts are converted to Accumulation Units. The
number of Accumulation Units for a transaction is found by dividing the dollar
amount of the transaction by the current Unit Value.
The number of Accumulation Units for a Sub-Account increases when:
-Net Premiums are credited to that Sub-Account; or
-Transfers from the Fixed Account or other Sub-Accounts are credited to that
Sub-Account.
The number of Accumulation Units for a Sub-Account decreases when:
-You take out a Policy loan from that Sub-Account;
-You take a partial withdrawal from that Sub-Account;
-We take a portion of the Monthly Deduction from that Sub-Account; or
-Transfers are made from that Sub-Account to the Fixed Account or other
Sub-Accounts.
UNIT VALUE. The Unit Value for a Sub-Account on any Valuation Date is equal
to the previous Unit Value times the Net Investment Factor for that Sub-Account
(described below) for the Valuation Period (described below) ending on that
Valuation Date. The Unit Value was initially set at $10 when the Sub-Account
first purchased Fund shares.
NET INVESTMENT FACTOR. The Net Investment Factor is a number that reflects
charges to the Policy and the investment performance during a Valuation Period
of the Fund in which a Sub-Account is invested. If the Net Investment Factor is
greater than one, the Unit Value is increased. If the Net Investment Factor is
less than one, the Unit Value is decreased. The Net Investment Factor for a Sub-
Account is determined by dividing 1 by 2.
(1 DIVIDED BY 2), where:
1
Is the result of:
-The net asset value per share of the Fund shares in which the Sub-Account
invests, determined at the end of the current Valuation Period;
-Plus the per share amount of any dividend or capital gain distributions
made on the Fund shares in which the Sub-Account invests during the current
Valuation Period;
-Plus or minus a per share charge or credit for any taxes reserved which we
determine has resulted from the investment operations of the Sub-Account
and to be applicable to the Policy.
B-1
<PAGE>
2
Is the result of:
-The net asset value per share of the Fund shares held in the Sub-Account,
determined at the end of the last prior Valuation Period;
-Plus or minus a per share charge or credit for any taxes reserved for
during the last prior Valuation Period which we determine resulted from the
investment operations of the Sub-Account and was applicable to the Policy.
VALUATION DATE; VALUATION PERIOD. A Valuation Date is each day the New York
Stock Exchange is open for business except for a day that a Sub-Account's
corresponding Fund does not value its shares. A Valuation Period is the period
between two successive Valuation Dates, commencing at the close of business of a
Valuation Date and ending at the close of business on the next Valuation Date.
FIXED ACCUMULATION VALUE
The Fixed Accumulation Value on the Policy Date is your Net Premium credited
to the Fixed Account on that date minus the Monthly Deduction applicable to the
Fixed Accumulation Value for the first Policy Month.
After the Policy Date, the Fixed Accumulation Value is calculated as:
1 + 2 + 3 + 4 - 5 - 6, where:
1
Is the Fixed Accumulation Value on the preceding Monthly Anniversary, plus
interest from the Monthly Anniversary to the date of the calculation.
2
Is the total of your Net Premiums credited to the Fixed Account since the
preceding Monthly Anniversary, plus interest from the date premiums are credited
to the date of the calculation.
3
Is the total of your transfers from the Variable Account to the Fixed Account
since the preceding Monthly Anniversary, plus interest from the date of transfer
to the date of the calculation.
4
Is the total of your Loan Amount transferred from the Variable Account since the
preceding Monthly Anniversary.
5
Is the total of your transfers to the Variable Account from the Fixed Account
since the preceding Monthly Anniversary, plus interest from the date of transfer
to the date of the calculation.
6
Is the total of your partial withdrawals from the Fixed Account since the
preceding Monthly Anniversary, plus interest from the date of withdrawal to the
date of the calculation.
If the date of the calculation is a Monthly Anniversary, we also reduce the
Fixed Accumulation Value by the applicable Monthly Deduction for the Policy
Month following the Monthly Anniversary.
The minimum interest rate applied in the calculation of the Fixed
Accumulation Value is an effective annual rate of 4%. Interest in excess of the
minimum rate may be applied in the calculation of your Fixed Accumulation Value
in a manner which our Board of Directors determines.
B-2
<PAGE>
APPENDIX C
ILLUSTRATION OF ACCUMULATION VALUES, SURRENDER CHARGES,
CASH SURRENDER VALUES, AND DEATH BENEFITS
The following tables illustrate how the Accumulation Values, Cash Surrender
Values, and Death Benefits of a Policy may change with the investment experience
of the Variable Account. The tables show how the Accumulation Values, Cash
Surrender Values, and Death Benefits of a Policy issued to two hypothetical
Joint Insureds (who pay the given Planned Periodic Premiums annually) would vary
over time if the investment return of the assets held in the Funds were a
uniform, gross, after-tax, annual rate of 0 percent, 6 percent or 12 percent.
The tables on pages C-2 through C-7 illustrate a Policy issued to a male
Joint Insured Age 55 and a female Joint Insured Age 55, in a standard Rate Class
and qualifying for non-tobacco rates. The Accumulation Values, Cash Surrender
Values, and Death Benefits would be lower if either Joint Insured were in a
substandard Rate Class or did not qualify for the non-tobacco rates because the
cost of insurance would be increased. The Accumulation Values, Cash Surrender
Values and Death Benefits would be different from those shown if the gross
annual investment returns averaged 0 percent, 6 percent, and 12 percent over a
period of years, but fluctuated above and below those averages for individual
Policy Years.
Within the tables, the second and fifth columns illustrate the Accumulation
Value of the Policy over the designated period. The Accumulation Value is the
total amount that a Policy provides for investment at any time. The third and
sixth columns illustrate the Cash Surrender Value of a Policy over the
designated period. The Cash Surrender Value is equal to the Accumulation Value
less any Surrender Charges, Loan Amount (assumed to be zero in these
illustrations) and unpaid Monthly Deductions (also assumed to be zero). The
fourth and seventh columns illustrate the Death Benefit of a Policy over the
designated period. The second, third, and fourth columns assume that throughout
the life of the Policy, the monthly charge for the cost of insurance, the
Monthly Mortality and Expense Charge and the Monthly Administrative Charge are
based upon the maximums (i.e., guaranteed) permitted in the policy. The maximum
allowable cost of insurance rates are based on the frasierized 1980
Commissioners Standard Ordinary Mortality Tables for Nonsmokers and Smokers. The
fifth, sixth, and seventh columns assume that the monthly charge for cost of
insurance, the Monthly Mortality and Expense Charge, and the Monthly
Administrative Charge are based on the current amounts expected to be charged.
The Death Benefits also vary between tables depending upon whether the Level
Amount Death Benefit Option (Tables at pages C-2 through C-4) or the Variable
Amount Death Benefit Option (Tables at pages C-5 through C-7) is illustrated.
The amounts shown for the Accumulation Values, Cash Surrender Values, and
Death Benefits reflect the fact that the net investment return of the
Sub-Accounts of the Variable Account is lower than the gross, after-tax return
on the assets held in the Funds as a result of the Funds' operating expenses.
The values shown take into account the daily total operating expenses paid by
the available portfolios of the VIP, VIP II, Northstar and PCM which together
are assumed to be at an average annual rate of 0.70% for all years. This figure
is derived based on an average of the Funds' 1996 operating expenses net of any
limitations on such expenses paid by the Funds. Thus, the illustrated gross
annual investment rates of return of 0 percent, 6 percent, and 12 percent
correspond to approximate net annual rates of return of -0.70%, 5.30%, and
11.30%, respectively. Without such expense reimbursements, total expenses would
be 0.79%. Hypothetical Accumulation Values, Cash Surrender Values and the Death
Benefits may be lower without the expense reimbursement. Expense reimbursements
are voluntary. While it is currently anticipated that expense reimbursements
will continue past the current year, there is no assurance of ongoing
reimbursements.
The hypothetical values shown in the tables do not reflect any charges for
Federal income taxes attributable to the Variable Account because we do not
currently make any such charges. However, such charges may be made in the future
and, in that event, the gross annual investment return would have to exceed 0
percent, 6 percent, or 12 percent by an amount sufficient to cover the tax
charges in order to produce the Accumulation Values, Cash Surrender Values, and
Death Benefits illustrated. (See section entitled "Federal Tax Matters" in the
prospectus).
The tables illustrate the Policy values that would result based upon the
hypothetical rates of return if premiums are paid as indicated, if all Net
Premiums are allocated to the Variable Account, and if no Policy loans have been
made. The tables are also based on the assumptions that the Policy owner has not
requested an increase or decrease in the Face Amount, that no partial
withdrawals have been made, that no transfers have been made, and total
operating expenses of the Funds continue as anticipated. Actual results will
depend on the expenses and performance of the investment choice made by the
owner.
Upon request, we will provide a comparable illustration based upon each
proposed Joint Insureds' Age, sex, underwriting classification, the Face Amount
and Planned Periodic Premium schedule requested, and any available riders
requested.
C-1
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY
SURVIVORSHIP FLEXIBLE PREMIUM VARIABLE LIFE
1 FEMALE AND 1 MALE JOINT INSURED
BOTH NON-TOBACCO PREMIUM CLASS
BOTH ISSUE AGE: 55
$8,500.00 ANNUAL PREMIUM
$1,000,000 FACE AMOUNT
LEVEL DEATH BENEFIT OPTION
ASSUMED HYPOTHETICAL GROSS ANNUAL
INVESTMENT RATE OF RETURN: 0%
<TABLE>
<CAPTION>
GUARANTEED COSTS CURRENT COSTS
-------------------------------------------------------- --------------------------------------------------------
(1) (2) (1) (2) (1) (2) (1) (2) (1) (2) (1) (2)
POLICY ACCUMULATION CASH SURRENDER DEATH ACCUMULATION CASH SURRENDER DEATH
YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
20
</TABLE>
- --------------------------------------------------------------------------------
(1) ASSUMES A $8,500.00 PREMIUM (WHICH EXCEEDS THE ANNUALIZED MINIMUM MONTHLY
PREMIUM) IS PAID AT THE BEGINNING OF EACH POLICY YEAR. VALUES WILL BE
DIFFERENT IF PREMIUMS ARE PAID WITH A DIFFERENT FREQUENCY OR IN DIFFERENT
AMOUNTS.
(2) ASSUMES THAT NO POLICY LOANS OR PARTIAL WITHDRAWALS HAVE BEEN MADE.
EXCESSIVE LOANS OR WITHDRAWALS MAY CAUSE THE POLICY TO LAPSE BECAUSE OF
INSUFFICIENT CASH SURRENDER VALUE.
* BASED ON (1) AND (2) ABOVE, THE DEATH BENEFIT GUARANTEE IS IN EFFECT DURING
THE YEARS SHOWN, THEREFORE, THE POLICY REMAINS IN FORCE EVEN THOUGH THE CASH
SURRENDER VALUE IS ZERO.
** POLICY TERMINATES PRIOR TO AGE 85.
THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICYHOLDER, AND THE
DIFFERENT INVESTMENT RETURNS FOR THE FUNDS. THE ACCUMULATION VALUE, CASH
SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN ABOVE IF THE ACTUAL INVESTMENT RESULTS APPLICABLE TO THE POLICY AVERAGE 0%
OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY US OR BY THE FUNDS
THAT THESE HYPOTHETICAL RETURNS CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
C-2
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY
SURVIVORSHIP FLEXIBLE PREMIUM VARIABLE LIFE
1 FEMALE AND 1 MALE JOINT INSURED
BOTH NON-TOBACCO PREMIUM CLASS
BOTH ISSUE AGE: 55
$8,500.00 ANNUAL PREMIUM
$1,000,000 FACE AMOUNT
LEVEL DEATH BENEFIT OPTION
ASSUMED HYPOTHETICAL GROSS ANNUAL
INVESTMENT RATE OF RETURN: 6%
<TABLE>
<CAPTION>
GUARANTEED COSTS CURRENT COSTS
-------------------------------------------------------- --------------------------------------------------------
(1) (2) (1) (2) (1) (2) (1) (2) (1) (2) (1) (2)
POLICY ACCUMULATION CASH SURRENDER DEATH ACCUMULATION CASH SURRENDER DEATH
YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
20
</TABLE>
- --------------------------------------------------------------------------------
(1) ASSUMES A $8,500.00 PREMIUM (WHICH EXCEEDS THE ANNUALIZED MINIMUM MONTHLY
PREMIUM) IS PAID AT THE BEGINNING OF EACH POLICY YEAR. VALUES WILL BE
DIFFERENT IF PREMIUMS ARE PAID WITH A DIFFERENT FREQUENCY OR IN DIFFERENT
AMOUNTS.
(2) ASSUMES THAT NO POLICY LOANS OR PARTIAL WITHDRAWALS HAVE BEEN MADE.
EXCESSIVE LOANS OR WITHDRAWALS MAY CAUSE THE POLICY TO LAPSE BECAUSE OF
INSUFFICIENT CASH SURRENDER VALUE.
* BASED ON (1) AND (2) ABOVE, THE DEATH BENEFIT GUARANTEE IS IN EFFECT DURING
THE YEARS SHOWN, THEREFORE, THE POLICY REMAINS IN FORCE EVEN THOUGH THE CASH
SURRENDER VALUE IS ZERO.
** POLICY TERMINATES PRIOR TO AGE 90.
THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICYHOLDER, AND THE
DIFFERENT INVESTMENT RETURNS FOR THE FUNDS. THE ACCUMULATION VALUE, CASH
SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN ABOVE IF THE ACTUAL INVESTMENT RESULTS APPLICABLE TO THE POLICY AVERAGE 6%
OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY US OR BY THE FUNDS
THAT THESE HYPOTHETICAL RETURNS CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
C-3
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY
SURVIVORSHIP FLEXIBLE PREMIUM VARIABLE LIFE
1 FEMALE AND 1 MALE JOINT INSURED
BOTH NON-TOBACCO PREMIUM CLASS
BOTH ISSUE AGE: 55
$8,500.00 ANNUAL PREMIUM
$1,000,000 FACE AMOUNT
LEVEL DEATH BENEFIT OPTION
ASSUMED HYPOTHETICAL GROSS ANNUAL
INVESTMENT RATE OF RETURN: 12%
<TABLE>
<CAPTION>
GUARANTEED COSTS CURRENT COSTS
----------------------------------------------------- -----------------------------------------------------
(1) (2) (1) (2) (1) (2) (1) (2) (1) (2) (1) (2)
POLICY ACCUMULATION CASH SURRENDER DEATH ACCUMULATION CASH SURRENDER DEATH
YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
20
AGE
90
95
100
</TABLE>
- --------------------------------------------------------------------------------
(1) ASSUMES A $8,500.00 PREMIUM (WHICH EXCEEDS THE ANNUALIZED MINIMUM MONTHLY
PREMIUM) IS PAID AT THE BEGINNING OF EACH POLICY YEAR. VALUES WILL BE
DIFFERENT IF PREMIUMS ARE PAID WITH A DIFFERENT FREQUENCY OR IN DIFFERENT
AMOUNTS.
(2) ASSUMES THAT NO POLICY LOANS OR PARTIAL WITHDRAWALS HAVE BEEN MADE.
EXCESSIVE LOANS OR WITHDRAWALS MAY CAUSE THE POLICY TO LAPSE BECAUSE OF
INSUFFICIENT CASH SURRENDER VALUE.
THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICYHOLDER, AND THE
DIFFERENT INVESTMENT RETURNS FOR THE FUNDS. THE ACCUMULATION VALUE, CASH
SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN ABOVE IF THE ACTUAL INVESTMENT RESULTS APPLICABLE TO THE POLICY AVERAGE
12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY US OR BY THE FUNDS
THAT THESE HYPOTHETICAL RETURNS CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
C-4
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY
SURVIVORSHIP FLEXIBLE PREMIUM VARIABLE LIFE
1 FEMALE AND 1 MALE JOINT INSURED
BOTH NON-TOBACCO PREMIUM CLASS
BOTH ISSUE AGE: 55
$8,500.00 ANNUAL PREMIUM
$1,000,000 FACE AMOUNT
VARIABLE DEATH BENEFIT OPTION
ASSUMED HYPOTHETICAL GROSS ANNUAL
INVESTMENT RATE OF RETURN: 0%
<TABLE>
<CAPTION>
GUARANTEED COSTS CURRENT COSTS
-------------------------------------------------------- --------------------------------------------------------
(1) (2) (1) (2) (1) (2) (1) (2) (1) (2) (1) (2)
ACCUMULATION CASH SURRENDER DEATH ACCUMULATION CASH SURRENDER DEATH
POLICY YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
20
**
</TABLE>
- --------------------------------------------------------------------------------
(1) ASSUMES A $8,500.00 PREMIUM (WHICH EXCEEDS THE ANNUALIZED MINIMUM MONTHLY
PREMIUM) IS PAID AT THE BEGINNING OF EACH POLICY YEAR. VALUES WILL BE
DIFFERENT IF PREMIUMS ARE PAID WITH A DIFFERENT FREQUENCY OR IN DIFFERENT
AMOUNTS.
(2) ASSUMES THAT NO POLICY LOANS OR PARTIAL WITHDRAWALS HAVE BEEN MADE.
EXCESSIVE LOANS OR WITHDRAWALS MAY CAUSE THE POLICY TO LAPSE BECAUSE OF
INSUFFICIENT CASH SURRENDER VALUE.
* BASED ON (1) AND (2) ABOVE, THE DEATH BENEFIT GUARANTEE IS IN EFFECT DURING
THE YEARS SHOWN, THEREFORE, THE POLICY REMAINS IN FORCE EVEN THOUGH THE CASH
SURRENDER VALUE IS ZERO.
** POLICY TERMINATES PRIOR TO AGE 85.
THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICYHOLDER, AND THE
DIFFERENT INVESTMENT RETURNS FOR THE FUNDS. THE ACCUMULATION VALUE, CASH
SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN ABOVE IF THE ACTUAL INVESTMENT RESULTS APPLICABLE TO THE POLICY AVERAGE 0%
OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY US OR BY THE FUNDS
THAT THESE HYPOTHETICAL RETURNS CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
C-5
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY
SURVIVORSHIP FLEXIBLE PREMIUM VARIABLE LIFE
1 FEMALE AND 1 MALE JOINT INSURED
BOTH NON-TOBACCO PREMIUM CLASS
BOTH ISSUE AGE: 55
$8,500.00 ANNUAL PREMIUM
$1,000,000 FACE AMOUNT
VARIABLE DEATH BENEFIT OPTION
ASSUMED HYPOTHETICAL GROSS ANNUAL
INVESTMENT RATE OF RETURN: 6%
<TABLE>
<CAPTION>
GUARANTEED COSTS CURRENT COSTS
-------------------------------------------------------- -------------------------------------------------------
(1) (2) (1) (2) (1) (2) (1) (2) (1) (2) (1) (2)
POLICY ACCUMULATION CASH SURRENDER DEATH ACCUMULATION CASH SURRENDER DEATH
YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
20
**
</TABLE>
- --------------------------------------------------------------------------------
(1) ASSUMES A $8,500.00 PREMIUM (WHICH EXCEEDS THE ANNUALIZED MINIMUM MONTHLY
PREMIUM) IS PAID AT THE BEGINNING OF EACH POLICY YEAR. VALUES WILL BE
DIFFERENT IF PREMIUMS ARE PAID WITH A DIFFERENT FREQUENCY OR IN DIFFERENT
AMOUNTS.
(2) ASSUMES THAT NO POLICY LOANS OR PARTIAL WITHDRAWALS HAVE BEEN MADE.
EXCESSIVE LOANS OR WITHDRAWALS MAY CAUSE THE POLICY TO LAPSE BECAUSE OF
INSUFFICIENT CASH SURRENDER VALUE.
* BASED ON (1) AND (2) ABOVE, THE DEATH BENEFIT GUARANTEE IS IN EFFECT DURING
THE YEARS SHOWN, THEREFORE, THE POLICY REMAINS IN FORCE EVEN THOUGH THE CASH
SURRENDER VALUE IS ZERO.
** POLICY TERMINATES PRIOR TO AGE 90.
THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICYHOLDER, AND THE
DIFFERENT INVESTMENT RETURNS FOR THE FUNDS. THE ACCUMULATION VALUE, CASH
SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN ABOVE IF THE ACTUAL INVESTMENT RESULTS APPLICABLE TO THE POLICY AVERAGE 6%
OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY US OR BY THE FUNDS
THAT THESE HYPOTHETICAL RETURNS CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
C-6
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY
SURVIVORSHIP FLEXIBLE PREMIUM VARIABLE LIFE
1 FEMALE AND 1 MALE JOINT INSURED
BOTH NON-TOBACCO PREMIUM CLASS
BOTH ISSUE AGE: 55
$8,500.00 ANNUAL PREMIUM
$1,000,000 FACE AMOUNT
VARIABLE DEATH BENEFIT OPTION
ASSUMED HYPOTHETICAL GROSS ANNUAL
INVESTMENT RATE OF RETURN: 12%
<TABLE>
<CAPTION>
GUARANTEED COSTS CURRENT COSTS
-------------------------------------------------------- -----------------------------------------------------
(1) (2) (1) (2) (1) (2) (1) (2) (1) (2) (1) (2)
POLICY ACCUMULATION CASH SURRENDER DEATH ACCUMULATION CASH SURRENDER DEATH
YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
20
AGE
90
95
100
</TABLE>
- --------------------------------------------------------------------------------
(1) ASSUMES A $8,500.00 PREMIUM (WHICH EXCEEDS THE ANNUALIZED MINIMUM MONTHLY
PREMIUM) IS PAID AT THE BEGINNING OF EACH POLICY YEAR. VALUES WILL BE
DIFFERENT IF PREMIUMS ARE PAID WITH A DIFFERENT FREQUENCY OR IN DIFFERENT
AMOUNTS.
(2) ASSUMES THAT NO POLICY LOANS OR PARTIAL WITHDRAWALS HAVE BEEN MADE.
EXCESSIVE LOANS OR WITHDRAWALS MAY CAUSE THE POLICY TO LAPSE BECAUSE OF
INSUFFICIENT CASH SURRENDER VALUE.
THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICYHOLDER, AND THE
DIFFERENT INVESTMENT RETURNS FOR THE FUNDS. THE ACCUMULATION VALUE, CASH
SURRENDER VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN ABOVE IF THE ACTUAL INVESTMENT RESULTS APPLICABLE TO THE POLICY AVERAGE
12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY US OR BY THE FUNDS
THAT THESE HYPOTHETICAL RETURNS CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
C-7
<PAGE>
APPENDIX D
MONTHLY AMOUNT CHARGE
PER $1,000 OF FACE AMOUNT
The following table provides the factors that are used in determining the
Monthly Amount Charge which is deducted each Policy Month during the first 20
Policy Years (and for 20 Policy Years after any requested increase in Face
Amount relative to the increased amount). The Monthly Amount Charge per $1,000
is based on the average age of the Joint Insureds on the Policy Date (or on the
effective date of any requested increase in Face Amount, as appropriate).
<TABLE>
<CAPTION>
Monthly Amount
Average Age of Charge Per $1,000 of
Joint Insureds Face Amount
- --------------- ---------------------
<S> <C>
0-25 $ 0.050
26 0.050
27 0.050
28 0.050
29 0.050
30 0.055
31 0.055
32 0.055
33 0.055
34 0.055
35 0.055
36 0.055
37 0.055
38 0.060
39 0.060
40 0.060
41 0.060
42 0.060
43 0.065
44 0.065
45 0.065
46 0.065
47 0.070
48 0.070
49 0.070
50 0.075
51 0.075
52 0.075
53 0.075
54 0.080
55 0.080
<CAPTION>
Monthly Amount
Average Age of Charge Per $1,000 of
Joint Insureds Face Amount
- --------------- ---------------------
<S> <C>
56 $ 0.080
57 0.085
58 0.085
59 0.090
60 0.090
61 0.090
62 0.095
63 0.095
64 0.100
65 0.100
66 0.110
67 0.120
68 0.125
69 0.135
70 0.145
71 0.155
72 0.165
73 0.170
74 0.180
75 0.190
76 0.205
77 0.220
78 0.230
79 0.245
80 0.260
81 0.275
82 0.290
83 0.300
84 0.315
85 0.330
</TABLE>
D-1
<PAGE>
"REASONABLENESS" REPRESENTATION PURSUANT TO 26(e)(2)(A)
OF THE INVESTMENT COMPANY ACT OF 1940
Depositor represents that the fees and charges deducted under the
flexible premium variable life insurance policy, in the aggregate, are
reasonable in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by ReliaStar Life Insurance Company.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Registrant has duly
caused this Post-Effective Amendment No. 1 to Registration Statement S-6 to be
signed on its behalf, in the City of Minneapolis, and State of Minnesota, on the
12th day of May, 1997.
SELECT*LIFE VARIABLE ACCOUNT
(Registrant)
By: RELIASTAR LIFE INSURANCE COMPANY
(Depositor)
By: /s/ John G. Turner
---------------------------------
John G. Turner, Chairman
and Chief Executive Officer
As required by the Securities Act of 1933, Depositor has caused this Post-
Effective Amendment No. 1 to Registration Statement to be signed on its behalf,
in the City of Minneapolis and State of Minnesota, on this 12th day of May,
1997.
RELIASTAR LIFE INSURANCE COMPANY
(Depositor)
By: /s/ John G. Turner
---------------------------------
John G. Turner, Chairman
and Chief Executive Officer
As required by the Securities Act of 1933, this Post-Effective Amendment No. 1
to the Registration Statement S-6 has been signed on this 12th day of May, 1997
by the following directors and officers of Depositor in the capacities
indicated:
/s/ John G. Turner Chairman and Chief Executive Officer
- ---------------------------
John G. Turner
/s/ Wayne R. Huneke Senior Vice President and Chief Financial Officer
- ---------------------------
Wayne R. Huneke
/s/ Chris D. Schreier Second Vice President and Controller
- --------------------------- (Principal Accounting Officer)
Chris D. Schreier
R. Michael Conley Kenneth U. Kuk Donald L. Swanson
Richard R. Crowl William R. Merriam John G. Turner
John H. Flittie Robert C. Salipante Steven W. Wishart
Wayne R. Huneke
* A majority of the Board of Directors
*Robert B. Saginaw, by signing his name hereto, does hereby sign this document
on behalf of each of the above-named directors of ReliaStar Life Insurance
Company pursuant to powers of attorney duly executed by such persons.
/s/ Robert B. Saginaw
-----------------------------------
Robert B. Saginaw, Attorney-In-Fact
<PAGE>
PART II
Contents of Registration Statement
This Post-Effective Amendment No. 1 to the Registration Statement comprises the
following papers and documents:
The Facing Sheet.
The general form of Prospectus, consisting of 56 pages.
Undertakings to file reports.* (Filed in S-6EL24 on December 23, 1996,
File No. 333-18517, and incorporated herein by reference.)
Rule 484 Undertakings.* (Filed in S-6EL24 on December 23, 1996, File No.
333-18517, and incorporated herein by reference.)
Representation pursuant to Section 26(e)(2)(A).
The signatures.
Written consents of the following persons;
1. Robert B. Saginaw - Filed as part of EX-99.2.
2. Actuary's Consent - Will be filed in Rule 485(b) filing prior to the
effectiveness of this Registration Statement.
3. Auditors' Consent - Will be filed in a Rule 485(b) filing prior to the
effectiveness of this Registration Statement.
The following exhibits:
1. The following exhibits correspond to those required by Paragraph A of the
instructions as to exhibits in Form N-8B-2:
A. (1) Resolutions of Board of Directors of Northwestern National Life
Insurance Company ("NWNL") establishing the Select*Life Variable Account.*
(Filed as an Exhibit in S-6EL24 on December 23, 1996, File No. 333-18517,
and incorporated herein by reference.)
(2) Not applicable.
(3) (a) General Distributor Agreement between Washington Square
Securities Inc. and ReliaStar.* (Filed in S-6EL24 on December 23, 1996,
File No. 333-18517, and incorporated herein by reference.)
(b) Specimens of Selling Agreements.* (Filed in S-6EL24 on
December 23, 1996, File No. 333-18517, and incorporated herein by
reference.)
(4) Not applicable.
(5) Form of Policy available (together with available Policy riders).**
<PAGE>
(6) (a) Amended Articles of Incorporation of ReliaStar Life Insurance
Company.* (Filed in S-6EL24 on December 23, 1996, File No. 333-18517, and
incorporated herein by reference.)
(6) (b) Amended By-laws of ReliaStar Life Insurance Company.* (Filed
in S-6EL24 on December 23, 1996, File No. 333-18517, and incorporated
herein by reference.)
(7) Not applicable.
(8) (a) Participation Agreement with Fidelity's Variable Insurance
Products Fund and Fidelity Distributors Corporation and Amendments
Nos. 1-8.* (Filed in S-6EL24 on December 23, 1996, File No. 333-18517, and
incorporated herein by reference.)
(8) (b) Participation Agreement with Fidelity's Variable Insurance
Products Fund II and Fidelity Distributors Corporation and Amendments
Nos. 1-7.* (Filed in S-6EL24 on December 23, 1996, File No. 333-18517, and
incorporated herein by reference.)
(8) (c) Form of Service Agreement and Contract between ReliaStar Life
Insurance Company, WSSI, and Fidelity Investments Institutional Operations
Company and Distributors Corporation dated January 1, 1997.* (Filed
in S-6EL24/A on March 31, 1997, File No. 333-18517, and incorporated herein
by reference.)
(8) (d) Participation Agreement with Putnam Capital Manager Trust and
Putnam Mutual Funds Corp. and Amendments Nos. 1-2.* (Filed in S-6EL24 on
December 23, 1996, File No. 333-18517, and incorporated herein by
reference.)
(9) Not applicable.
(10) Policy application.* (Filed in S-6EL24 on December 23, 1996,
File No. 333-18517, and incorporated herein by reference.)
2. Opinion and consent of Robert B. Saginaw, Esquire, as to the legality of
the Securities being registered. See EX-99.2.
3. Not applicable.
4. Not applicable.
EX-99.C1. Auditors' Consent. To be filed by Rule 485(b) filing
prior to the effectiveness of this Registration Statement.
EX-99.C2. Not applicable.
EX-99.C3. Not applicable.
EX-99.C4. See EX-99.2.
EX-99.C5. Not applicable.
EX-99.C6. Actuarial Opinion and Consent.**
<PAGE>
EX-99.D1. Memorandum describing ReliaStar Life's issuance, transfer and
redemption procedures for the Policies and ReliaStar Life's
procedure for conversion to a fixed benefit policy.
EX-24. Powers of Attorney.* (Filed in S-6EL24 on December 23, 1996, File
No. 333-18517, and incorporated herein by reference.)
R. Michael Conley
Richard R. Crowl
John H. Flittie
Wayne R. Huneke
Kenneth U. Kuk
William R. Merriam
Robert C. Salipante
Donald L. Swanson
John G. Turner
Steven W. Wishart
EX-27. Financial Data Schedule. To be filed by Rule 485(b) filing
prior to the effectiveness of this Registration Statement.
* Previously Filed
** To be filed in Rule 485(b) filing prior to the effectiveness of this
Registration Statement.
<PAGE>
ROBERT B. SAGINAW
Counsel
Phone (612) 342-7346
Fax (612) 342-7531
May 12, 1997
ReliaStar Life Insurance Company
20 Washington Avenue S.
Minneapolis, MN 55440
Madam/Sir:
In connection with the proposed registration under the Securities Act of 1933,
as amended, of flexible premium variable life insurance policies (the
"Policies") and interests in Select*Life Variable Account (the "Variable
Account"), I have examined documents relating to the establishment of the
Variable Account by the Board of Directors of ReliaStar Life Insurance Company
(the "Company") as a separate account for assets applicable to variable
contracts, pursuant to Minnesota Statutes Sections 61A.13 to 61A. 21, as
amended, and the Registration Form S-6, as amended through and including Post-
Effective Amendment No. 1 thereto, File No. 333-18517 (the "Registration
Statement") and I have examined such other documents and have reviewed such
matters as I deemed necessary for this opinion, and I advise you that in my
opinion:
1. The Variable Account is a separate account of the Company duly created
and validly existing pursuant to the laws of the State of Minnesota.
2. The Policies, when issued in accordance with the Prospectus
constituting a part of the Registration Statement and upon compliance
with applicable local law, will be legal and binding obligations of
the Company in accordance with their respective terms.
3. The portion of the assets held in the Variable Account equal to
reserves and other contract liabilities with respect to the Variable
Accounts are not chargeable with liabilities arising out of any other
business the Company may conduct.
I consent to the filing of this opinion as an exhibit to the Registration
Statement and to the use of my name under the heading "Legal Matters" in the
Prospectus constituting a part of the Registration Statement and to the
references to me wherever appearing therein.
Very truly yours,
/s/ Robert B. Saginaw
Robert B. Saginaw
Counsel
<PAGE>
EXHIBIT EX-99.D1
DESCRIPTION OF RELIASTAR LIFE INSURANCE COMPANY'S
PURCHASE, REDEMPTION, TRANSFER, AND CONVERSION
PROCEDURES FOR POLICY
This document sets forth the administrative procedures that will be followed by
ReliaStar Life Insurance Company ("ReliaStar Life") in connection with the
issuance of its Survivorship Flexible Premium Variable Life Insurance Policy
(the "Policy") described in the Registration Statement, the transfer of the
Policy's assets, the redemption by Policy owners of their interest in the
Policies and conversion to fixed benefit insurance. Unless otherwise defined
herein, all capitalized terms used below have the meanings ascribed to them in
the Prospectus for the Policy contained in this Registration Statement.
"PUBLIC OFFERING PRICE": PURCHASE AND RELATED TRANSACTIONS
The following is a summary of the principal Policy provisions and administrative
procedures which constitute either direct or indirect purchase transactions.
The insurance aspects of the Policy cause procedures to differ in certain
significant respects from purchase procedures of mutual funds or contractual
plans.
PREMIUM SCHEDULES AND UNDERWRITING STANDARDS
Premiums for the Policy will not be the same for all Policy owners. There is no
insurance until the initial premium is paid and all underwriting requirements
completed. The initial premium must be equal to or greater than three Minimum
Monthly Premiums (see "Payment and Allocation of Premiums - Minimum Initial
Premium") unless the Policy owner authorizes premiums to be paid by bank account
monthly deduction or government allotment. In those cases, ReliaStar Life will
accept one Minimum Monthly Premium.
The Policy has a Death Benefit Guarantee if the Policy owner chooses to pay
premiums sufficient to maintain the Death Benefit Guarantee set forth in the
Policy. If the Death Benefit Guarantee is in effect during the Death Benefit
Guarantee Period as specified in the Policy, ReliaStar Life will then guarantee
that the Policy will remain in force during such period, even if the Policy's
Cash Surrender Value is not sufficient to pay the Monthly Deduction due.
After the initial premium, the Policy owner will determine a planned periodic
premium schedule that provides for a level premium payable at a fixed interval.
Payment of premium according to this schedule is not, however, mandatory and
failure to do so will not of itself cause the Policy to lapse. Instead, Policy
owners may determine the amount and timing of subsequent premiums subject to the
following restrictions:
1. In most cases, payment of a cumulative premium sufficient to maintain the
Death Benefit Guarantee will be required to keep the Policy in force during
the early months of the Death Benefit Guarantee Period.
2. ReliaStar Life may choose not to accept a premium less than $25.00.
<PAGE>
3. ReliaStar Life may require proof that each Joint Insured is still
insurable if any premium would increase the difference between the Death
Benefit Guarantee and the Accumulation Value.
4. ReliaStar Life will return to the Policy owner any premium paid that would
exceed the current maximum premium payments allowed for life insurance
under federal law.
The Policy will stay in force as long as the Cash Surrender Value is sufficient
to pay the Monthly Deduction (the charges imposed in connection with the
Policy). The amount of premium, if any, required to keep the Policy in force
depends on the Cash Surrender Value which in turn depends on such factors as the
investment experience, the amount of any outstanding loans, and the Surrender
Charge. The Monthly Deduction varies with the cost of insurance charge and the
Mortality and Expense Risk Charge. The cost of insurance charge is based on the
principal of pooling and distribution of mortality risks, which assumes that
each Policy owner pays a premium commensurate with the Joint Insureds mortality
risks which are actuarially determined based on issue age, Policy Year, premium
rate class, and in most instances, sex. The same rate applies to all Joint
Insureds in a given actuarial category. The rate is based on ReliaStar Life's
expectations as to future mortality experience and other cost factors. The
Mortality and Expense Risk Charge depends on the amount of the Variable
Accumulation Value.
The Policy will be sold according to established underwriting standards and
state insurance laws. State insurance laws prohibit unfair discrimination among
Policy owners but recognize that premiums must be based on factors such as age,
health, occupation, avocations, and in most states, the sex of the Joint
Insureds.
APPLICATION AND INITIAL PREMIUM PROCESSING
ReliaStar Life will follow certain insurance underwriting procedures to
determine whether the proposed Joint Insureds are insurable. Underwriting
evaluates risks from the information on the application, verification procedures
such as medical examinations, and additional information furnished by the
applicant on request. ReliaStar Life will not issue the Policy until the
underwriting procedure has been completed.
If the minimum initial premium is submitted with the application, insurance
coverage will begin on the Issue Date. After underwriting approval, the Issue
Date will ordinarily be the later of the date of the application or the date of
any required medical examination undertaken according to ReliaStar Life's
underwriting requirements. When, however, underwriting approval has not
occurred within 45 days of the receipt of the application (or with bank
account monthly deduction), the Issue Date will be the date of
underwriting approval. If a premium is not paid with the application, insurance
coverage will begin on the later of the Issue Date or the date the premium is
received.
The Policy Date is generally the same date as the Issue Date. It is used in
determining Policy Years, Policy Months, Monthly Anniversaries and Policy
Anniversaries. It is also the date as of which the insurance ages of the
proposed Joint Insureds is determined. A Policy Date may be any other date
permitted by law and mutually agreed to by ReliaStar Life and the Policy owner.
ReliaStar Life will credit net Premiums (gross premiums less the Premium
Expense Charge) to the Select*Life Variable Account ("Variable Account") or
to the Fixed Account on the later of the following dates:
<PAGE>
1. The Valuation Date(1) following the date of underwriting approval;
2. The Valuation Date on or next following the Policy Date; or
3. The Valuation Date on or next following the date ReliaStar Life receives at
least the required minimum initial premium payment.
<PAGE>
ALLOCATION OF PREMIUMS
The Policy owner chooses the initial allocation of Net Premiums to the Fixed
Account and the Sub-accounts of the Variable Account on the application for the
Policy. The Policy owner may change the allocation at any time by notifying
ReliaStar Life in writing. The Policy owner may allocate 100% of Net Premiums
to any Sub-account or the Policy owner may divide in whole percentages the Net
Premium and allocate such amounts among more than one Sub-account. ReliaStar
Life reserves the right to adjust the allocation of Net Premiums to eliminate
fractional percentages.
PREMIUM PROCESSING
Whenever a premium payment is received during the first 10 Policy Years,
ReliaStar Life will subtract 6.25% of the premium as a Premium Expense Charge.
After the tenth Policy Year, the Premium Expense Charge will be reduced to 3.75%
of the premium, guaranteed not to exceed 6.25% of the premium for the duration
of the Policy. The Net Premium is credited to the Variable and/or Fixed Account
on the Valuation Date on or next following the date ReliaStar Life receives the
premium payment in accordance with the Policy owner's current premium
allocation.
REINSTATEMENT
A lapsed Policy and most riders may be reinstated anytime within five years
after lapse as long as the Policy has not been surrendered for its Cash
Surrender Value. To reinstate the Policy and any riders, the Policy owner
must submit evidence of insurability satisfactory to ReliaStar Life for each
Joint Insured or for the Surviving Joint Insured and due proof that the first
death occurred before the Policy terminated. The Policy owner must pay a
premium sufficient to keep the Policy and any riders in force for at least
two months following the date of reinstatement.
The Death Benefit Guarantee provision cannot be reinstated.
LOAN REPAYMENTS
The interest rate charged on Policy loans will be an annual rate of 7.40%,
payable in advance. After the tenth Policy Year, ReliaStar Life will charge
interest at an annual rate of 5.21%, payable in advance, on that portion of the
loan amount that is not in excess of (a) the Accumulation Value less (b) the
total of all premiums paid less all partial withdrawals. Any excess of this
amount will be charged interest at the annual rate of 7.40%.
A Policy loan may be repaid anytime while the Surviving Joint Insured is living.
Unless the Policy owner specifies that a payment is a loan repayment, ReliaStar
Life generally considers any payments it receives as premium payments and not
loan repayments. However, ReliaStar Life reserves the right, at its discretion,
to apply any payment it receives as a loan repayment.
Loan repayments are credited to the Fixed Account and the Variable Account in
the form of Net Premiums without a Premium Expense Charge. ReliaStar Life
credits repayments according to the
<PAGE>
current premium allocation. Repayments are credited at the end of the Valuation
period during which the payment was received.
CORRECTION OF MISSTATEMENT OF AGE OR SEX
If any Joint Insured's age or sex is misstated, ReliaStar Life adjusts the Death
Benefit to be the amount that the most recent cost of insurance would purchase
using the correct cost of insurance rate for the correct age and sex.
"REDEMPTION PROCEDURES": SURRENDER AND RELATED TRANSACTIONS
The following is a summary of the principal Policy provisions and administrative
procedures which constitute redemptions under the Policy. These procedures
differ in certain significant respects from redemption procedures of mutual
funds or contractual plans.
CASH SURRENDER VALUE
At any time before the earlier of the death of the Surviving Joint Insured or
the maturity date, the Policy owner may totally surrender the Policy by sending
ReliaStar Life a written request. The amount available for surrender is the
Accumulation Value of the Policy reduced by any Loan amount, unpaid Monthly
Deductions, and during the first 15 Policy Years and the first 15 years
following a requested increase in Face Amount, this amount is also reduced by a
Surrender Charge. The Surrender Charge is determined separately for the Face
Amount and any subsequent increase in Face Amount. The Surrender Charge is
based on several factors such as the Face Amount and the Policy Year. The
Surrender Charge is shown in the Policy. The total amount available at
surrender is called the Cash Surrender Value.
The Cash Surrender Value is calculated at the end of the Valuation Period during
which ReliaStar Life receives the Policy owner's surrender request. The Policy
owner may, however, elect to receive all or part of the Cash Surrender Value
under one of the settlement options described in the Policy. All fixed benefit
settlement options are subject to the restrictions and limitations set forth in
the Policy.
PARTIAL WITHDRAWALS
The Policy owner may also withdraw part of the Policy's Cash Surrender Value by
sending ReliaStar Life a written request. Only one partial withdrawal is
allowed in any Policy Year. The amount of any partial withdrawal must be at
least $500.00 but may not be more than 20% of the Cash Surrender Value.
ReliaStar Life currently makes a $10.00 charge for each partial withdrawal.
ReliaStar Life makes partial withdrawals from the Fixed Accumulation Value and
the Variable Accumulation Value on a proportionate basis. For the purpose of
determining the proportions, the outstanding loan amount is subtracted from the
Fixed Accumulation Value.
ReliaStar Life will generally pay the partial withdrawal within seven days of
receipt of the written request.(2)
DEATH BENEFIT
<PAGE>
As long as the Policy is in force, ReliaStar Life will generally pay the
proceeds of the Policy to the named beneficiary in accordance with the
designated Death Benefit Option within seven days after the receipt of due proof
of the Surviving Joint Insured's death. Payment of proceeds may, however, be
postponed under certain circumstances(3). The amount of the Death Benefit is
determined on the Valuation Date on or next following the date of the Surviving
Joint Insured's death. The proceeds payable will be reduced by any Loan
Amount and any unpaid Monthly Deduction. These proceeds will be increased by
any additional insurance provided by rider and by the refund of any unearned
Policy loan interest.
The amount of the Death Benefit to Age 100, of the younger Joint Insured, is
guaranteed not to be less than the current Face Amount of the Policy as long as
the Policy is in force. The Death Benefit may, however, exceed the current Face
Amount. The amount by which the Death Benefit exceeds the Face Amount depends
upon the Death Benefit Option in effect and the Accumulation Value of the
Policy. Under the Level Amount Option, the Death Benefit to Age 100, of the
younger Joint Insured, is the greater of the Face Amount or the applicable
percentage of Accumulation Value set forth in the Option. Under the Variable
Amount Option, the Death Benefit will always vary with the Accumulation Value
since the Death Benefit is the greater of the Face Amount plus the Accumulation
Value of the Policy, or the applicable percentage of the Accumulation Value set
forth in the Option.
After Age 100 of the younger Joint Insured and while the Policy is in force, the
Death Benefit is the Accumulation Value.
LOANS
After the first Policy Year, the Policy owner may use the Policy as
security to take out a loan (except in Indiana, loans may be made in the
first Policy Year). The maximum amount that the Policy owner may borrow at
any time is 75% of the Policy's Cash Value (the Accumulation Value less any
Surrender Charge). As required by state law, higher percentages of Cash
Value may be borrowed by Policy owners in Texas (100%) and in Alabama,
Maryland, and Virginia (90%). Each Policy loan must be at least $500.00
except in Connecticut where the loan must be at least $200.00. The Loan
Value will be determined on the Valuation Date following the date the request
was received.
The portion of the loan allocated to the Sub-accounts of the Variable Account
will normally be paid within seven days after receipt of the written request.
Postponement of loans may take place under certain circumstances.3
The amounts held as security for the Policy loan are segregated within the Fixed
Accumulation Value of the Policy but will be credited with interest on a basis
different from other amounts in the Fixed Account. The total of all outstanding
loans is called the Loan Amount. All amounts held in the Fixed Account as
security for Policy loans will be credited with interest at an effective annual
rate currently equal to 5.50%. No additional interest will be credited to these
amounts.
The interest charged on Policy loans will be an annual rate of 7.40%, payable in
advance. After the tenth Policy Year, ReliaStar Life will charge interest at an
annual rate of 5.21%, payable in advance, on that portion of the Loan Amount
that is not in excess of (a) the Accumulation Value less (b) the total of all
<PAGE>
premiums paid less all partial withdrawals. Any excess of this amount will be
charged interest at the annual rate of 7.40%.
Amounts held as security for a Policy loan will come from the Fixed Account and
Sub-accounts of the Variable Accounts in the same proportion that the Policy's
Fixed Accumulation Value less any Loan Amount and the Policy's Variable
Accumulation Value in each Sub-account, bear to the Policy's total Accumulation
Value less any Loan Amount.
The portion of the Policy loan allocated to each Sub-account will be transferred
from the Sub-account to the Fixed Account thereby reducing the value held in the
Sub-account.
The Loan Amount is deducted from the total premium paid for purposes of
calculating whether the Policy owner has paid premiums sufficient to maintain
the Death Benefit Guarantee. The Loan Amount is deducted from the proceeds when
ReliaStar Life pays a death claim. Loans have priority over the claims of an
assignee or any other person. A Policy loan may be repaid in whole or in part
at any time while the Surviving Joint Insured is living.
POLICY LAPSE
If the Death Benefit Guarantee is not in effect, the Policy will lapse at the
end of a 61-day grace period if, as of that Monthly Anniversary, the Loan Amount
is greater than the Policy's Accumulation Value reduced by the applicable
Surrender Charge; or the Cash Surrender Value is not sufficient to pay the
Monthly Deduction due. The grace period begins on the date ReliaStar Life
notifies the Policy owner and any collateral assignees of record of the required
premium. The Policy owner will then have 61 days from the date the notice is
mailed, to make the required payment to keep the Policy in force. If the
payment is not received within the 61-day period, the Policy will lapse. If the
Surviving Joint Insured dies during this 61-day period, the Loan Amount and any
unpaid Monthly Deduction will be deducted from the proceeds payable.
TRANSFERS
The Variable Account currently has four series Funds with twelve portfolios
available for investment by the Sub-accounts. Each Sub-account invests in
shares, at net asset value, of a specified portfolio of the four series
Funds. A Policy owner may transfer Accumulation Value between the Fixed
Account and the Sub-accounts of the Variable Account or among the
Sub-accounts of the Variable Account by written request (or by telephone or
fax if a telephone/fax authorization form has been completed, is in effect
and a personal identification number has been assigned), subject to any
conditions the Funds whose share are involved may impose. ReliaStar Life
currently allows twelve transfers in a Policy Year but reserves the right to
limit the policyowner to four per year. ReliaStar Life considers all
transfers received in the same request and made on the same initial Valuation
Date as one transfer. Transfers are made on the Valuation Date on or next
following the date the request is received.
To transfer all or part of the Variable Accumulation Value from a Sub-account,
Accumulation Units are redeemed and their value is reinvested in other
Sub-accounts or in the Fixed Account as directed by the Policy owner.
<PAGE>
A Policy owner may transfer all or part of the Fixed Accumulation Value to the
Sub-accounts of the Variable Account, subject to the following limitations:
1. The request to transfer must be postmarked no more than thirty days before
or after the Policy Anniversary in any year, and only one transfer is
permitted during this period;
2. The Fixed Accumulation Value after the transfer must be at least equal to
the Loan Amount;
3. No more than 50% of the Fixed Accumulation Value, less any Loan Amount, may
be transferred unless the balance, after the transfer, would be less than
$1,000.00, in which event the full Fixed Accumulation Value, less any Loan
Amount, may be transferred; and
4. The Policy owner must transfer at least the lesser of $500.00 or the total
Fixed Accumulation Value, less any Loan Amount.
While ReliaStar Life does not currently impose a transfer charge, it reserves
the right to make a charge not to exceed $25.00 per transfer.
Transfers resulting from loans and exercising Conversion Rights under the Policy
are not subject to any transfer charges and do not count against the number of
transfers.
CONVERSION
At any time during the first two Policy Years or the first two years following a
requested increase in Face Amount, the Policy owner can request a transfer from
the Variable Account to the Fixed Account and indicate that he or she is
exercising the Conversion Rights under the Policy. Such transfer will not be
subject to the transfer charge and will not count against the limit on the
number of transfers. At the time of the transfer, there is no effect on the
Policy's Death Benefit, Face Amount, net amount at risk, Rate Class, or issue
age. To the extent that the Accumulation Value is held in the Fixed Account,
the benefits of the Policy do not vary with the investment performance of the
Variable Account.
1. VALUATION DATE - EACH DAY ON WHICH THE NEW YORK STOCK EXCHANGE IS OPEN FOR
BUSINESS EXCEPT FOR A DAY THAT A SUB-ACCOUNT'S CORRESPONDING FUND DOES NOT
VALUE ITS SHARES. THE NEW YORK STOCK EXCHANGE IS CURRENTLY CLOSED ON
WEEKENDS AND ON THE FOLLOWING HOLIDAYS: NEW YEAR'S DAY; PRESIDENTS' DAY;
GOOD FRIDAY; MEMORIAL DAY; JULY FOURTH; LABOR DAY; THANKSGIVING DAY; AND
CHRISTMAS DAY.
2. VALUATION PERIOD - THE PERIOD BETWEEN TWO SUCCESSIVE VALUATION DATES,
COMMENCING AT THE CLOSE OF BUSINESS OF A VALUATION DATE AND ENDING AT THE
CLOSE OF BUSINESS OF THE NEXT VALUATION DATE.
3. PAYMENTS FROM THE VARIABLE ACCOUNT FOR DEATH BENEFITS, CASH SURRENDER,
PARTIAL WITHDRAWAL, OR POLICY LOANS WILL NORMALLY BE PAID WITHIN SEVEN DAYS
OF RECEIPT OF THE WRITTEN REQUEST AND RECEIPT OF THE POLICY FORM, IF
REQUIRED.
RELIASTAR LIFE MAY DELAY MAKING PAYMENT WHEN IT IS NOT ABLE TO DETERMINE THE
VARIABLE ACCUMULATION VALUE BECAUSE THE NEW YORK STOCK EXCHANGE IS CLOSED FOR
TRADING; OR THE SECURITIES AND EXCHANGE COMMISSION DETERMINES THAT A STATE OF
EMERGENCY EXISTS.
<PAGE>
RELIASTAR LIFE HAS THE RIGHT TO DELAY SUCH PAYMENTS FROM THE FIXED ACCOUNT FOR
UP TO SIX MONTHS FROM THE DATE IT RECEIVES THE REQUEST, SUBJECT TO ANY STATE
REQUIREMENTS. IF PAYMENT IS DELAYED FOR 30 DAYS OR MORE, RELIASTAR LIFE PAYS
INTEREST AT AN EFFECTIVE ANNUAL RATE OF 3 1/2% FROM THE DATE OF THE SURVIVING
JOINT INSURED'S DEATH, SURRENDER, PARTIAL WITHDRAWAL, OR POLICY LOAN REQUEST TO
THE DATE OF PAYMENT.
