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As filed with the Securities and Exchange Commission on ________________, 1997
File No. 333-
File No. 811-7536
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
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Post-Effective Amendment No. [ ]
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 16 [X]
PAINEWEBBER LIFE
VARIABLE ANNUITY ACCOUNT
(Exact Name of Registrant)
PAINEWEBBER LIFE INSURANCE COMPANY
(Name of Depositor)
1200 Harbor Boulevard
Weehawken, New Jersey 07087
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number: (201) 902-3301
Dennis J. Hess
PaineWebber Incorporated
1200 Harbor Boulevard, 4th Floor
Weehawken, New Jersey 07087
(Name and Address of Agent for Service of Process)
Copy to:
Kimberly J. Smith, Esquire
Sutherland, Asbill & Brennan, L.L.P.
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after the effective date of the Registration Statement.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the Registrant
hereby elects to register an indefinite amount of the securities being offered.
The filing fee of $500 has been paid.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant files a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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CROSS REFERENCE SHEET
Pursuant to Rules 481(a) and 495(a)
Showing location in Part A (prospectus) and Part B (Statement of Additional
Information) of registration statement of information required by Form N-4
PART A
<TABLE>
<S> <C>
ITEM OF FORM N-4 . . . . . . . . . . . PROSPECTUS CAPTION
1. Cover Page . . . . . . . . . . . . Cover Page
2. Definitions . . . . . . . . . . . . Index of Terms
3. Synopsis . . . . . . . . . . . . . Fee Table; Profile
4. Condensed Financial Information . . How is the performance of the Contract presented?
5. General
(a) Depositor . . . . . . . . . . . What other information should I know?
(b) Registrant . . . . . . . . . . What other information should I know?
(c) Portfolio Company . . . . . . . What are my allocation options?
(d) Fund Prospectus . . . . . . . . Cover Page
(e) Voting Rights . . . . . . . . . What other information should I know?
(f) Administrators . . . . . . . . What other information should I know?
6. Deductions and Expenses
(a) General . . . . . . . . . . . . What are the expenses under the Contract?
(b) Sales Load % . . . . . . . . . Fee Table; Example
(c) Systematic Purchase Program . . How do I purchase a Contract?
(d) Commissions . . . . . . . . . . What other information should I know?
(e) Fund Expenses . . . . . . . . Fee Table; Example
(f) Expenses - Registrant . . . . Fee Table; What are the expenses under the Contract?
(g) Organizational Expenses . . . . N/A
7. Contracts
(a) Persons with Rights . . . . . . What is the Contract?; What are my annuity options?; How do I
purchase a Contract?; How do I access my money?; What other
information should I know?
(b)(i) Allocation of Purchase
Payments . . . . . . . . . How do I access my money?; Does the Contract have a Death
Benefit?; What are my annuity options?
(ii) Transfers . . . . . . . . . What are my allocation options?
(iii) Exchanges . . . . . . . . . N/A
(c) Changes . . . . . . . . . . . . What other information should I know?
(d) Inquiries . . . . . . . . . . . What other information should I know?
8. Annuity Period . . . . . . . . . . What are my annuity options?
9. Death Benefit . . . . . . . . . . . Does the Contract have a Death Benefit?
</TABLE>
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<TABLE>
<S> <C>
10. Purchases and Contract Value
(a) Purchases . . . . . . . . . . How do I purchase a Contract?
(b) Valuation . . . . . . . . . . What are my allocation options?
(c) Daily Calculation . . . . . . What are my allocation options?
(d) Underwriter . . . . . . . . . What other information should I know?
11. Redemptions
(a) - By Owners . . . . . . . . . How do I access my money?
- By Annuitant . . . . . . . What are my annuity options?
(b) Texas ORP . . . . . . . . . . N/A
(c) Check Delay . . . . . . . . . N/A
(d) Lapse . . . . . . . . . . . . N/A
(e) Free Look . . . . . . . . . . How do I purchase a Contract?
12. Taxes . . . . . . . . . . . . . How will my investment in the Contract be taxed?
13. Legal Proceedings . . . . . . . What other information should I know?
14. Table of Contents for the
Statement of Additional
Information . . . . . . . . . . What other information should I know?
PART B
ITEM OF FORM N-4 PART B CAPTION
15. Cover Page . . . . . . . . . Cover Page
16. Table of Contents . . . . . Table of Contents
17. General Information and
History . . . . . . . . . . N/A
18. Services
(a) Fees and Expenses of
Registrant . . . . . . . N/A
(b) Management Contracts . . N/A
(c) Custodian . . . . . . . . N/A
Independent Public
Accountant . . . . . . . Experts
(d) Assets of Registrant . . N/A
(e) Affiliated Persons . . . N/A
(f) Principal Underwriter . . Distribution of the Contracts
19. Purchase of Securities
Being Offered . . . . . . . Distribution of the Contracts
Offering Sales Load . . . . N/A
20. Underwriters . . . . . . . . Distribution of the Contracts
</TABLE>
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<TABLE>
<S> <C>
21. Calculation of Performance
Data . . . . . . . . . . . Calculation of Historical Performance Data
22. Annuity Payments . . . . . . Annuity Payment Provisions
23. Financial Statements . . . . Financial Statements
PART C -- OTHER INFORMATION
ITEM OF FORM N-4 PART C CAPTION
24. Financial Statements and
Exhibits . . . . . . . . . Financial Statements and Exhibits
(a) Financial Statements . . (a) Financial Statements
(b) Exhibits . . . . . . . . (b) Exhibits
25. Directors and Officers of
the Depositor Directors and Officers of the Depositor
26. Persons Controlled By or
Under Common Control
with the Depositor or Persons Controlled By or In Common Control with the Depositor or
Registrant . . . . . . . . Registrant
27. Number of Contract Owners . Number of Contract Owners
28. Indemnification . . . . . . Indemnification
29. Principal Underwriters . . . Principal Underwriter
30. Location of Accounts and
Records . . . . . . . . . Location of Books and Records
31. Management Services . . . . Management Services
32. Undertakings . . . . . . . . Undertakings and Representations
Signature Page . . . . . . Signatures
</TABLE>
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PART A
PROSPECTUS
<PAGE> 6
PROFILE DATED _________________, 1997
________________________________VARIABLE ANNUITY CONTRACT
PAINEWEBBER LIFE VARIABLE ANNUITY ACCOUNT
OF PAINEWEBBER LIFE INSURANCE COMPANY
THIS PROFILE IS A SUMMARY OF SOME OF THE MORE IMPORTANT POINTS THAT YOU SHOULD
KNOW AND CONSIDER BEFORE PURCHASING A CONTRACT. THE CONTRACT IS MORE FULLY
DESCRIBED IN THE FULL PROSPECTUS THAT ACCOMPANIES THIS PROFILE. PLEASE READ
THAT PROSPECTUS CAREFULLY.
"We," "us," and "our" refer to PaineWebber Life Insurance Company.
"You" and "your" refer to the owner of a Contract.
1. WHAT IS THE CONTRACT? The Contract is a contract between you and us,
PaineWebber Life Insurance Company. We have designed the Contract to be both
an investment vehicle and a source of lifetime retirement income. You purchase
the Contract by paying an initial purchase payment, and you add money when you
wish. You choose an "Annuity Date" when you want annuity payments to begin,
and we will start sending you payments. There are also other ways to access
your money, each of which is discussed below.
The Contract permits you to allocate purchase payments to nine
subdivisions, or "Divisions," of the PaineWebber Life Variable Annuity Account
(the "Separate Account"). Each Division invests in a corresponding investment
portfolio (each, a "Portfolio") of the PaineWebber Series Trust. Any purchase
payments you allocate to the Divisions will fluctuate depending on market
conditions. Therefore, you bear the investment risk on your Contract Value in
the divisions. If you allocate purchase payments to our fixed account (the
"Stable Value Fixed Account"), we will guarantee principal and interest. The
Net Contract Value you accumulate before the Annuity Date will determine the
amount of annuity payments you receive, although on the application you may
elect an Annual Reset Income Benefit Option or an Interest Accrual Income
Benefit Option that may provide enhanced annuity income (for an additional
daily charge amount).
The Contract offers important features. The Portfolios are
professionally managed. Your earnings generally grow tax-free until withdrawn,
although if you withdraw money before you are 59 1/2 years old, you also may
have to pay a 10% IRS tax penalty. When you decide you want to start receiving
annuity payments, you can choose an annuity option that will provide you with a
lifetime income.
2. WHAT ARE MY ANNUITY OPTIONS? When you want to begin receiving annuity
payments, you can choose from four annuity options. If you choose a "life
annuity," you will receive payments as long as the Annuitant lives (for
example, if you have named yourself as the Annuitant, you will receive payments
for as long as you live). If you choose a "life annuity with guaranteed period
for 10 or 20 years," you will receive payments as long as the Annuitant lives,
or to the end of the guaranteed period of either 10 or 20 years, if longer. If
you choose a "joint and last survivor life annuity," you will receive payments
as long as the Annuitant or the
<PAGE> 7
Annuitant's spouse is alive. If you choose a "fixed period annuity," you will
receive payments for the number of years (at least 5) chosen.
We will use the money you have accumulated under your Contract to
provide annuity payments. We may deduct an early withdrawal charge on the
Annuity Date unless the Annuity Date is the latest allowed, the Annuity Option
chosen contains life contingencies, or the Annuity Option is for five years or
more with no ability to commute the remaining payments. You tell us how much
of your money to apply to fixed annuity payments and how much to apply to
variable annuity payments. Amounts that you apply to provide fixed annuity
payments will be allocated to the Stable Value Fixed Account, and the amount of
each annuity payment will be the same. Amounts that you apply to provide
variable annuity payments will be allocated to the divisions you select, and
the amount of each annuity payment will vary according to the investment
performance of those divisions.
3. HOW DO I PURCHASE A CONTRACT?
You can purchase a Contract through any one of our authorized agents.
Under most circumstances, the minimum initial purchase payment is $5,000 for a
non-tax-qualified Contract and $1,000 for a tax-qualified Contract. You may
make additional purchase payments of at least $500 for a non-tax qualified
Contract and $50 for a tax-qualified Contract at any time before the Annuity
Date. (If you participate in our systematic purchase program, you may make
monthly purchase payments of $100 or more).
4. WHAT ARE MY ALLOCATION OPTIONS?
There are ten different allocation options under the Contract. You
can allocate purchase payments to one or more of the nine Divisions of the
Separate Account. Each Division, in turn, invests in a corresponding Portfolio
of the PaineWebber Series Trust. The nine Portfolios are:
Money Market Portfolio Growth and Income Portfolio
Strategic Fixed Income Portfolio Growth Portfolio
High Grade Fixed Income Portfolio Aggressive Growth Portfolio
Global Income Portfolio Global Growth Portfolio
Balanced Portfolio
You can also allocate purchase payments to the Stable Value Fixed
Account. We will pay you interest on your Contract Value in the Stable Value
Fixed Account at an effective annual rate of at least 3%.
2
<PAGE> 8
5. WHAT ARE THE EXPENSES UNDER THE CONTRACT?
Insurance Charges. We deduct a daily charge from the assets of the
Separate Account. The daily charge consists of the Basic Benefit Charge of
1.00%, and one or more of the following, depending on the death benefit and
annuity income options that you select in the application: Traditional Death
Benefit Charge of .20%; Annual Reset Death Benefit Charge of .15%; Annual Reset
Income Benefit Charge of .15%; Interest Accrual Death Benefit Charge of .15%
and Interest Accrual Income Benefit Charge of .15%
Early Withdrawal Charge. PaineWebber Life may deduct an early
withdrawal charge when you make a full or partial withdrawal, when you take
annuity payments, or when proceeds are paid upon your death. We will not
deduct an early withdrawal charge from net purchase payments made seven or more
Contract years prior to the date of withdrawal, annuitization, or death benefit
payment, or on annuitization where the Annuity Date is the latest allowed, the
Annuity Option chosen contains life contingencies, or the Annuity Option is for
at least five years with no ability to commute the remaining payments. The
early withdrawal charge is calculated as a percentage of each net purchase
payment made, and is based on the period of time after it is received by us.
The applicable percentage is 6% during each of the first two years after the
payment is made, and declines by 1% in each following year, until it reaches 0%
in the eighth year. Each Contract Year, an amount equal to 15% of the Contract
Value on the first Valuation Day of the Contract Year may be withdrawn without
an early withdrawal charge.
Transaction Expenses. We may charge you a $10 transfer processing fee
for transfers in excess of 12 per year. If you make more than two unscheduled
withdrawals in a year, we may charge you an excess withdrawal charge equal to
the lesser of $25 dollars or 2% of the amount withdrawn. We may also charge
you an administrative fee of $1.50 for each payment under the systematic
withdrawal program.
Portfolio Expenses. There are Portfolio expenses that range on an
annual basis from .__% to 1.__% of the average daily value of your money
invested in the Portfolios.
The following chart is designed to help you understand the expenses
that you will pay when you invest in the Contract. The column "Total Annual
Insurance Charges" shows the daily charge, which depends on the death benefit
and annuity income options selected by you. The column "Total Annual Portfolio
Charges" shows the investment charges for each Portfolio. The column "Total
Annual Charges" shows the combined total of the Total Annual Insurance Charges
and Total Annual Portfolio Charges columns. The next two columns show you two
examples of the charges, in dollars, you would pay under a Contract. The
examples assume that you invested $1,000 in a Contract that earns 5% annually
and that you withdraw your money: (1) at the end of year 1, (2) at the end of
year 5, and (3) at the end of year 10. For years 1 and 5, all charges under
the Contract, including an early withdrawal charge, are deducted. For year 10,
the example shows all charges under the Contract assessed over a ten year
period under the Contract, but an early withdrawal charge is not deducted.
3
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<TABLE>
<CAPTION>
Examples: Total Annual
Expenses at End of:
Total Annual Total Annual Total Annual(1) (1) (2)
Portfolio Insurance Charges Portfolio Charges 1 Year 10 Years
(Maximum) Charges
<S> <C>
Money Market Portfolio
Strategic Fixed Income
Portfolio
High Grade Fixed Income
Portfolio
Global Income Portfolio
Balanced Portfolio
Growth and Income Portfolio
Growth Portfolio
Aggressive Growth Portfolio
Global Growth Portfolio
</TABLE>
(1) We may also assess you additional charges on a per transaction basis. See
Transaction Expenses above.
6. HOW WILL MY INVESTMENT IN THE CONTRACT BE TAXED?
You should consult a qualified tax advisor with regard to your
Contract. Generally, taxation of earnings under variable annuities is deferred
until amounts are withdrawn and distributions made. The deferral of taxes on
earnings under variable annuity policies is designed to encourage long-term
personal savings and supplemental retirement plans. The taxable portion of a
withdrawal or distribution is taxed as ordinary income. Additional penalty
taxes are generally imposed on withdrawals before age 59 1/2.
7. HOW DO I ACCESS MY MONEY?
When you are ready to start taking money out of your Contract, you can
choose among several different options. You can withdraw part of your money.
You can withdraw all your money, taking the proceeds as a single lump sum
payment or applying the proceeds to an annuity option. You can also take
withdrawals using our systematic withdrawal program.
8. DOES THE CONTRACT HAVE A DEATH BENEFIT?
4
<PAGE> 10
In the application you select one of four different Death Benefits
that will be paid if the Owner dies before the Annuity Date. The Basic Death
Benefit is equal to the Net Contract Value. The Traditional Death Benefit is
the greater of (1) the sum of Net Purchase Payments less any withdrawals and
less any applicable withdrawal or transfer charges, and (2) the Contract Value.
Both amounts will be calculated on the Valuation Day we receive proof of the
Annuitant's death. The Annual Reset Death Benefit and the Interest Accrual
Death Benefit may provide enhanced death benefits (for an additional daily
charge amount).
9. WHAT OTHER INFORMATION DO I NEED TO KNOW?
The Contract has several additional features that you may be
interested in, including the following:
FREE LOOK RIGHT. You should know that you have a "free-look right";
that is, the right to return the Contract to us at our Administrative Office or
to an authorized PaineWebber Life agent and have us cancel the Contract within
a certain number of days (usually 10 days from the date you receive the
Contract, but some states require different periods). If you exercise this
right, we will cancel the Contract (and it will be considered void from the
beginning) and send you a refund equal to the Net Purchase Payment allocated to
the Stable Value Fixed Account, plus any Variable Account Value, plus any
charges deducted from any Purchase Payment, computed at the end of the
Valuation Period in which the Contract is received by us.
TRANSFERS. Prior to or after the Annuity Date, you may transfer
Contract Value from one Division to another Division(s) or to the Stable Value
Fixed Account. You may also transfer Contract Value from the Stable Value
Fixed Account to another Division(s). Transfers from the Stable Value Fixed
Account may be subject to restrictions.
DOLLAR-COST AVERAGING. Our dollar-cost averaging program permits you
to systematically transfer, on a monthly, quarterly, semi-annual, or annual
basis, a set dollar amount from the Division investing in the Money Market
Portfolio or the Stable Value Fixed Account to any Divisions and/or the Stable
Value Fixed Account, subject to certain limitations. You may choose to
transfer a constant dollar amount each period until either the outgoing
Division is exhausted or it reduces to an amount you specify in advance. You
may also choose a number of periods over which total value in a Division is
transferred out. The minimum transfer amount each period is $100. The
dollar-cost averaging method of investment is designed to reduce the risk of
making purchases only when the price of units in the Contract is high.
SYSTEMATIC WITHDRAWAL PROGRAM. Our systematic withdrawal program
provides an automatic monthly, quarterly, semi-annual or annual payment to you
from the amounts you have accumulated in the Divisions and/or the Stable Value
Fixed Account. Certain restrictions apply.
10. HOW CAN I MAKE INQUIRIES?
5
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If you need further information about the Contract, please write us at
our Administrative Office, call us at (800) XXX-XXXX, or contact an authorized
PaineWebber Life Agent. The address of our Administrative Office is:
PaineWebber Life Insurance Company
601 6th Avenue
Des Moines, Iowa 50309
Telephone: (800) XXX-XXXX.
6
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PROSPECTUS DATED ___________________, 1997
PAINEWEBBER LIFE ____ VARIABLE ANNUITY
PAINEWEBBER LIFE VARIABLE ANNUITY ACCOUNT
OF PAINEWEBBER LIFE INSURANCE COMPANY
Administrative Office: Executive Office:
601 6th Avenue 1200 Harbor Boulevard
Des Moines, Iowa 50309 Weehawken, New Jersey 07087
Telephone: (800) XXX-XXXX Telephone: (800) XXX-XXXX
UNLESS OTHERWISE INDICATED, THIS PROSPECTUS DESCRIBES THE OPERATION OF
THE CONTRACT BEFORE THE ANNUITY DATE. DEFINITIONS OF CERTAIN TERMS USED IN
THIS PROSPECTUS MAY BE FOUND BY REFERRING TO THE INDEX OF TERMS.
This prospectus describes a group deferred variable annuity contract
and individual certificates thereunder (hereinafter each referred to as
"Contracts") offered by PaineWebber Life Insurance Company ("PaineWebber Life,"
"we," "us," or "our"). The Contract is designed to be both an investment
vehicle and a source of lifetime retirement income. The purchaser of a
Contract (the "Owner," "you," or "your") can purchase the Contract by making a
minimum initial Purchase Payment, and by making additional Purchase Payments
thereafter. The Owner determines the amount and timing of additional Purchase
Payments.
The Owner may allocate Net Purchase Payments and transfer Contract
Value to the PaineWebber Life Variable Annuity Account (the "Separate Account")
and also to PaineWebber Life's Stable Value Fixed Account (the "Stable Value
Fixed Account"), within certain limits. The Separate Account will invest in
shares of PaineWebber Series Trust, an open-end, management investment company
registered under the Investment Act of 1940 (the "1940 Act"). The Portfolios
currently available in the PaineWebber Series Trust are the Money Market
Portfolio, the Strategic Fixed Income Portfolio, the High Grade Fixed Income
Portfolio, the Global Income Portfolio, the Balanced Portfolio, the Growth and
Income Portfolio, the Growth Portfolio, the Aggressive Growth Portfolio and the
Global Growth Portfolio. The accompanying prospectus for the PaineWebber
Series Trust describes each of the Portfolios, including the risks of investing
in each Portfolio, and provides other information about the PaineWebber Series
Trust.
This prospectus sets forth basic information about the Contract and
the Separate Account that a prospective investor ought to know before
investing. Additional information about the Contract and the Separate Account
is contained in the Statement of Additional Information, which has been filed
with the Securities and Exchange Commission. The Statement of Additional
Information is dated the same as this prospectus and is incorporated herein by
reference. The table of contents for the Statement of Additional Information
is on page ___ of this prospectus. You may obtain a copy of the Statement of
Additional Information free of charge by writing to PaineWebber Life's
Administrative Office.
CONTRACT VALUE IS BASED ON THE PERFORMANCE OF THE PORTFOLIOS TO THE
EXTENT OF ALLOCATIONS TO THE SEPARATE ACCOUNT; SO NO GUARANTEED MINIMUM
CONTRACT VALUE OR NET CONTRACT VALUE. ON ANY GIVEN DAY, THE CONTRACT VALUE
COULD BE MORE OR LESS THAN THE PURCHASE PAYMENTS PAID. THE CONTRACT ALSO
PERMITS WITHDRAWALS, WITHIN CERTAIN LIMITS. THE CONTRACT PROVIDES ADDITIONAL
BENEFITS, INCLUDING FOUR ANNUITY OPTIONS, A MINIMUM DEATH BENEFIT UPON THE
OWNER'S DEATH, DOLLAR COST AVERAGING, AND SYSTEMATIC WITHDRAWAL
<PAGE> 13
PROGRAMS. AN OWNER MAY ELECT CERTAIN ENHANCED DEATH BENEFITS AND ANNUITY
INCOME OPTIONS IN THE APPLICATION.
THIS PROSPECTUS SHOULD BE READ CAREFULLY AND RETAINED FOR FUTURE REFERENCE.
A PROSPECTUS FOR PAINEWEBBER SERIES TRUST MUST ACCOMPANY THIS PROSPECTUS AND
SHOULD BE READ IN CONJUNCTION WITH THIS PROSPECTUS.
These securities have not been approved or disapproved by the Securities and
Exchange Commission nor has the Securities and Exchange Commission passed upon
the accuracy or adequacy of this prospectus. Any representation to the
contrary is a criminal offense.
<PAGE> 14
TABLE OF CONTENTS
<TABLE>
<S> <C>
INDEX OF TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FEE TABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXAMPLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1. What is the Contract? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. What are my annuity options? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. How do I purchase a Contract? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. What are my allocation options? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. What are the expenses under the Contract? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Early Withdrawal Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Excess Transfer Processing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Excess Withdrawal Transaction Charge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Systematic Withdrawal Processing Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Daily Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Portfolio Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6. How will my investment in the Contract be taxed? . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax Status of PaineWebber Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-Qualified Annuities: Tax Deferral During Accumulation
Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxation of Withdrawals from Non-Qualified Annuities . . . . . . . . . . . . . . . . . . . . .
Taxation of Annuity Payments from Non-Qualified Annuities . . . . . . . . . . . . . . . . . . .
Taxation of Death Benefit Proceeds from Non-Qualified Annuities . . . . . . . . . . . . . . . .
Assignment, Pledges, and Gratuitous Transfers of Non-Qualified Annuities . . . . . . . . . . .
Section 1035 Exchanges of Non-Qualified Annuities . . . . . . . . . . . . . . . . . . . . . . .
Penalty Tax on Premature Distributions from Non-Qualified Annuities . . . . . . . . . . . . . .
Aggregation of Non-Qualified Annuity Contracts . . . . . . . . . . . . . . . . . . . . . . . .
Use of the Contract in Connection with Qualified Plans . . . . . . . . . . . . . . . . . . . .
Individual Retirement Annuities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Types of Qualified Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Direct Rollovers and Federal Income Tax Withholding for "Eligible Rollover Distributions" . . .
Federal Income Tax Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
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<TABLE>
<S> <C>
7. How do I access my money? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Systematic Withdrawal Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Requesting Payments and Telephone Transactions . . . . . . . . . . . . . . . . . . . . . . . .
8. How is the performance of the Contract presented . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9. Does the Contract have a Death Benefit? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10. What other information should I know? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PaineWebber Life and the Separate Account . . . . . . . . . . . . . . . . . . . . . . . . . .
Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distribution of the Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reports to Contract Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11. How can I make inquiries? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
ii
<PAGE> 16
INDEX OF TERMS
ACCUMULATION UNIT - A unit of measure used to calculate values in a Division
prior to the Annuity Date.
ACCUMULATION UNIT VALUE - The value of a Division's Accumulation Unit. A
Division's Accumulation Unit Value varies to reflect the performance of the
underlying Portfolio, and may increase or decrease from Valuation Day to
Valuation Day.
ADMINISTRATIVE OFFICE - 601 6th Avenue, Des Moines, Iowa 50309.
ANNUITANT - The natural person on whose life the annuity benefit for the
Contract is based.
ANNUITY DATE - The date on which the first annuity payment is made.
ANNUITY UNIT - A unit of measure used to calculate the Variable Annuity
Payments from a Division.
BENEFICIARY - The person named to receive the payments under a Contract due to
the Owner's death.
CODE - The United States Internal Revenue Code, as amended.
CONTRACT VALUE - The sum of the Contract Owner's values in each Division of the
Separate Account and in the Stable Value Fixed Account.
CONTRACT DATE - The date of issue of this Contract.
CONTRACT MONTH, YEAR, OR ANNIVERSARY - Each Contract Month, Year, or
Anniversary is measured from the Contract Date.
DIVISION - A subdivision of the Separate Account, the assets of which are
invested in a corresponding Portfolio.
FINAL ANNUITY DATE - The Contract Anniversary when the Annuitant is age 90 (85
in Pennsylvania).
FIXED ANNUITY PAYMENT - An annuity payment supported by our General Account.
Payment does not vary from one payment to the next.
FIXED CONTRACT VALUE - The Contract Value in the Fixed Account.
GENERAL ACCOUNT - Our assets not allocated to the Separate Account or any other
separate account.
INITIAL PURCHASE PAYMENT - The amount shown in the Contract that was first paid
to purchase the Contract.
- 1 -
<PAGE> 17
NET ASSET VALUE PER SHARE - The value per share of any Portfolio on any
Valuation Day. The method of computing the Net Asset Value Per Share is
described in the prospectus for the PaineWebber Life Series Trust.
NET CONTRACT VALUE - The Contract Value less any applicable contract
maintenance charges, early withdrawal charges and premium taxes.
NET PURCHASE PAYMENT - A Purchase Payment less any premium taxes that may be
deducted from such Purchase Payment, as provided in the Contract under which
the Purchase Payment is made.
OWNER - The person named in a Contract who is entitled to exercise all rights
and privileges of ownership under a Contract. If Joint Owners exist, both
persons must agree to the exercise of any right and privilege of ownership
under the Contract.
PURCHASE PAYMENT - Any money the Owner paid us for his or her Contract.
REQUEST - A written request signed by the person making the request. Such
request must be sent to and received by us and be in a form acceptable to us.
We may, in our sole discretion, accept telephone requests in connection with
certain transactions, in accordance with rules and procedures established by
us.
SEC - The United States Securities and Exchange Commission.
SEPARATE ACCOUNT - A separate account of ours consisting of Divisions to which
Net Purchase Payments may be allocated or Contract Value may be transferred.
STABLE VALUE FIXED ACCOUNT - Part of our General Account to which Net Purchase
Payments may be allocated or Contract Value may be transferred under a
Contract.
VALUATION DAY - Any day the New York Stock Exchange is open and PaineWebber
Life Insurance Company is open for business.
VALUATION PERIOD - The interval from the end of one Valuation Day to the end of
the next Valuation Day of an investment portfolio. Valuation occurs at the end
of each Valuation Day, which is the close of the New York Stock Exchange
(usually, 4pm Eastern Time).
VARIABLE ANNUITY PAYMENT - An annuity payment that may vary in amount from one
payment to the next with the investment experience of one or more Divisions you
have chosen to support such payments.
- 2 -
<PAGE> 18
FEE TABLE
<TABLE>
<S> <C>
CONTRACT OWNER TRANSACTION EXPENSES
Contract Maintenance Charge $ 0
<CAPTION>
Early Withdrawal Charge(1)/ % of Net
Purchase
Year Payment
---- --------
<S> <C>
1 6%
2 6%
3 5%
4 4%
5 3%
6 2%
7 1%
8
and over 0%
<CAPTION>
<S> <C>
Excess Withdrawal Transaction The lesser amount of $25 or 2%
Charge (for unscheduled withdrawals of the amount withdrawn.
in excess of two per year)(2)/
Transfer Processing Fee No charge for first 12 transfers in a Contract Year;
thereafter, $10 fee per transfer
may be charged
</TABLE>
- --------------------
(1)/ After the "free-look" period, you may withdraw a portion of your
Contract Value without incurring an early withdrawal charge. This amount is
called the "Free Withdrawal Amount." The Free Withdrawal Amount is equal to 15%
of your Contract Value as of the previous Contract Anniversary. If the entire
15% is not withdrawn in a particular Contract Year, the unused Free Withdrawal
Amount does not carry over to the next Contract Year. The early withdrawal
charge may be waived in certain additional circumstances. See "Early Withdrawal
Charge," page ___.
(2)/ Withdrawals through a systematic withdrawal service may be assessed
a $1.50 administrative fee for each payment.
- 3 -
<PAGE> 19
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of Variable Contract Value)
Daily Charge:
<TABLE>
<CAPTION>
Benefit Selected
-------------------------------------------------------------------------------------------------
Interest
Annual Reset Accrual
Basic Interest Death Benefit Death Benefit
Death Traditional Annual Reset Accrual & Income & Income
Benefit Death Benefit Death Benefit Death Benefit Benefit Benefit
------- ------------- ------------- ------------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Basic Death Benefit 1.00 1.00 1.00 1.00 1.00 1.00
Traditional Death Benefit(3) .20 .20 .20 .20 .20
Annual Reset Death Benefit(3) .15 .15
Interest Accrual .15 .15
Death Benefit(3)
Annual Reset .15
Income Benefit(3)
Interest Accrual
Income Benefit(3) .15
- ----------------- ----------- ----------- ----------- ----------- ----------- ---------
Total 1.00 1.20 1.35 1.35 1.50 1.50
</TABLE>
- ------------------------
(3) The total daily charge depends upon the death benefit and income
options selected by the Owner. The total daily charge for selected options
will not exceed 1.50%.
- 4 -
<PAGE> 20
PORTFOLIO ANNUAL EXPENSES
(as a percentage of average daily net assets of a Portfolio)
<TABLE>
<CAPTION>
============================================================================================
PaineWebber Investment Total Annual
Series Trust Advisory Fees Other Expenses Expenses
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Money Market Portfolio .50% .67% 1.17 %
Strategic Fixed Income Portfolio .50%(3)/ 1.02% 1.52 %
High Grade Fixed Income Portfolio .50% 1.12 % 1.62 %
Global Income Portfolio .75% .81 % 1.56 %
Balanced Portfolio .75% .49 % 1.24 %
Growth and Income Portfolio .70% .88 % 1.58 %
Growth Portfolio .75% .39 % 1.14 %
Aggressive Growth Portfolio .80%(4)/ .72 % 1.52 %
Global Growth Portfolio .75%(4)/ .35 % 1.10 %
============================================================================================
</TABLE>
EXAMPLE
<TABLE>
<CAPTION>
===============================================
You would pay the following 1. If you surrender 2. If you do not
expenses on a $1,000 initial or annuitize your surrender or annuitize
Purchase Payment, assuming a 5% Contract at the end your Contract at the
annual return on assets and the of the stated time end of the stated time
maximum charges and expenses period: period:
listed in the Fee Table above:
-----------------------------------------------
1 Year 3 Years 1 Year 3 Years
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Money Market Portfolio $_____ $______ $______ $______
Strategic Fixed Income Portfolio $_____ $______ $______ $______
High Grade Fixed Income Portfolio $_____ $______ $______ $______
Global Income Portfolio $_____ $______ $______ $______
Balanced Portfolio $_____ $______ $______ $______
Growth and Income Portfolio $_____ $______ $______ $______
Growth Portfolio $_____ $______ $______ $______
Aggressive Growth Portfolio $_____ $______ $______ $______
Global Growth Portfolio $_____ $______ $______ $______
====================================================================================
</TABLE>
The purpose of the Fee Table is to assist you in understanding the
expenses that you will pay directly or indirectly when you invest in the
Contract. The amount of the investment
- --------------------
(3)/ Mitchell Hutchins Asset Management Inc., the investment adviser to each
Portfolio of the PaineWebber Series Trust, pays a percentage of its investment
advisory fee from the Strategic Fixed Income Portfolio, the Aggressive Growth
Portfolio and the Global Growth Portfolio as compensation for subadvisory
services as follows: .25% for the Strategic Fixed Income Portfolio, .50% for the
Aggressive Growth Portfolio and .29% for the Global Growth Portfolio.
- 5 -
<PAGE> 21
advisory fees and other expenses in the Fee Table are the actual expenses
incurred by the Portfolios in 1996.
The purpose of the Example is to demonstrate the effect of the
expenses on a $1,000 investment in the Division shown. For a more complete
description of these expenses, see "What are the expenses under the Contract?,"
page __. The expenses and fees for each Portfolio are described in the
prospectus for the PaineWebber Series Trust.
The Fee Table and the Example do not reflect transfer or withdrawal
processing fees. You might incur processing fees if you make more than a
specified number of transfers or withdrawals in a Contract Year. See "Transfer
Processing Fee," page ___ and "Excess Withdrawal Transaction Charge," page
___. The Fee Table and the Example assume that you have invested all your
money in the Divisions of the Separate Account.
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THE
ASSUMED 5% ANNUAL RATE OF RETURN IS HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE ANNUAL RETURNS, WHICH MAY BE GREATER OR LESS
THAN THIS ASSUMED RATE.
1. WHAT IS THE CONTRACT?
The Contract is a deferred variable annuity contract offered by us,
PaineWebber Life Insurance Company. Under the terms of the Contract, we
promise to pay you annuity payments after the Annuity Date. Until the Annuity
Date, you may make Purchase Payments under the Contract, and you will generally
not be taxed on increases in the value of your Contract as long as you do not
take distributions. When you use the Contract in connection with a
tax-qualified retirement plan, federal income taxes may be deferred on your
Purchase Payments, as well as increases in the value of your Contract. See
"How will my investment in the Contract be taxed?," page __. The Contract, and
certain benefits or options under the Contract, may not be available in all
states.
You can allocate Net Purchase Payments to one or more of the nine
subdivisions of the Separate Account, known as "Divisions." Payments allocated
to a Division will be invested solely in a Portfolio, as you direct. Your
Contract Value in a Division, called the "Variable Contract Value," will vary
according to the performance of the corresponding Portfolio. Depending on
market conditions, your Variable Contract Value in each Division could increase
or decrease.
You can also allocate Net Purchase Payments to our Stable Value Fixed
Account. Your Contract Value in the Stable Value Fixed Account is called the
Fixed Contract Value. When you allocate Net Purchase Payments to the Stable
Value Fixed Account, we guarantee principal and interest. See "Stable Value
Fixed Account Option," page ___.
You can request that we transfer Contract Value from one account to
another, subject to certain conditions. See "Transfers," page __.
- 6 -
<PAGE> 22
2. WHAT ARE MY ANNUITY OPTIONS?
You choose the Annuity Date when you want annuity payments to begin.
The Annuity Date must be on the first day of a month, and may not be earlier
than the next month after the Earliest Annuity Date, which is the Contract
Anniversary when the Annuitant is age 18, or later than the next month after
the Latest Annuity Date, which is the Contract Anniversary when the Annuitant
is age 90 (85 in Pennsylvania). We may approve a later Annuity Date. You
select an annuity option from those listed below, and indicate whether you want
your annuity payments to be fixed or variable or a combination of fixed and
variable. If an annuity option is not chosen by the Latest Annuity Date,
Option 3 for life with payments guaranteed for 10 years (described below) will
be used on that date. An early withdrawal charge may be assessed at the
Annuity Date unless the Annuity Date is the latest allowed, the Annuity Option
chosen contains life contingencies, or the Annuity Option is for at least 5
years with no ability to commute the remaining payments. Unless you request
otherwise, any money that you have invested in the Divisions will be used to
provide variable annuity income, and any money that you have invested in the
Stable Value Fixed Account will be used to provide a fixed annuity income.
Your first annuity payment, whether fixed or variable, will be based
on the amount of proceeds applied under the annuity option you have selected
and on "annuity purchase rates" based on the Annuitant's age and sex and, if
applicable, upon the age and sex of a second designated person. The annuity
purchase rate that we apply will never be lower than the rate shown in your
Contract. The annuity purchase rates are based on the 1983 Table "a" for
Individual Annuity Valuation with projection scale G and interest at 2.5% if the
Annuity Date is prior to the 9th Certificate Anniversary and 3% for Annuity
Dates on or after the 9th Certificate Anniversary. The amount of proceeds
applied depends upon the annuity income option you select in the application
for the Contract. In general, Net Contract Value will be applied. However, if
the Interest Accrual Income Benefit Option is selected, the amount applied will
be (i) or (ii), whichever results in higher annuity payments: (i) the Net
Contract Value on the Annuity Date applied at the current annuity settlement
option rates; or (ii) the Interest Accrual Death Benefit amount (see "Does the
Contract have a Death Benefit?" below) applied to any life contingent annuity
option for fixed annuity payments, applied at guaranteed annuity settlement
option rates. (In order for this income benefit option to be selected, the
Interest Accrual Death Benefit Option must also be selected in the
application.) If the Annual Reset Income Benefit Option is selected, the
amount applied will be (i) or (ii) whichever results in higher annuity
payments: (i) the Net Contract Value on the Annuity Date applied at current
annuity settlement option rates; or (ii) the Annual Reset Death Benefit amount
(see "Does the Contract have a Death Benefit?" below) applied to any life
contingent annuity option for fixed annuity payments, applied at guaranteed
annuity settlement option rates. (In order for this income benefit option to
be selected, the Annual Reset Death Benefit Option must also be selected in the
application.) Both the Interest Accrual Income Benefit Option and the Annual
Income Benefit Option may be exercised on or after the seventh contract
Anniversary, but must be exercised prior to the Latest Annuity Date. Neither
option is available for Variable Annuity payments.
If you have told us you want fixed annuity payments, the payments will
always be the same amount as the first annuity payment. If you told us you
want variable annuity payments, the amount of variable annuity payments will
vary according to the investment performance of the Portfolios you have
selected to support your variable annuity payments.
Annuity payments will be made on the first Valuation Day of each month
starting with the month in which the Annuity Date falls. Prior to the Annuity
Date, you may choose a less frequent payment interval. The amount of each
payment on an annual, semi-annual, or quarterly basis will not be less than the
monthly payment computed from the appropriate annuity tables multiplied by the
factors shown in the Contract. If any payment would be less than $100, we may
change the payment interval so that payments are at least $100. If the amount
to be applied at the Annuity Date is less than $5,000, we may pay such amount
in a lump sum.
- 7 -
<PAGE> 23
We may require satisfactory proof that the Annuitant is living when
each annuity payment is due. If proof is required, payments will stop until
such proof is given. If any payment is made by check and the Annuitant
personally endorses the check on or after the date on which such payment is
due, no other proof will be required.
The available annuity options are:
- OPTION 1 - PAYMENTS FOR A GUARANTEED FIXED PERIOD. Payments
will be made for the period chosen. The period must be at
least 5 years. If this Option is taken as a Variable Annuity
Payment, you may at any time choose to receive in a lump sum
the value of the remaining payments commuted at the assumed
investment rate of 4%.
- OPTION 2 - LIFE ANNUITY. Payments will be made as long as the
Annuitant lives. PAYMENTS WILL END WITH THE LAST PAYMENT DUE
PRIOR TO THE ANNUITANT'S DEATH.
- OPTION 3 - LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10 OR 20
YEARS. Payments will be made for the guaranteed period chosen
(10 or 20 years), and for as long thereafter as the Annuitant
lives.
- OPTION 4 - JOINT AND SURVIVOR LIFE ANNUITY. Payments will be
made during the lifetimes of the Annuitant and the Annuitant's
spouse. The amount of such payments will not change due to
the first death. Payment will end with the last payment due
prior to the second death.
3. HOW DO I PURCHASE A CONTRACT?
APPLYING FOR A CONTRACT. To purchase a Contract, you must complete an
application and submit it to an authorized PaineWebber Life agent. You must
make an initial Purchase Payment at least equal to the minimum required. See
"Initial Purchase Payment," below. We reserve the right not to accept an
application for any lawful reason.
INITIAL PURCHASE PAYMENT. The Contract may be purchased to use in
connection with tax-qualified plans, or it may be purchased on a
non-tax-qualified basis. To purchase a non-tax-qualified Contract, you may not
be more than 85 years old on the Contract Date if the Basic or Traditional
Death Benefit option is selected, or more than 80 years old on the Contract
Date if the Interest Accrual Death Benefit or Annual Reset Death Benefit is
selected. (You may not be more than 75 years old in Pennsylvania.) To
purchase a tax-qualified Contract, you must be at least 16 years old and not
older than 70 years old on the Contract Date. You must also make a minimum
initial Purchase Payment of $1,000 if you are purchasing a tax-qualified
Contract, or $5,000 if you are purchasing a non-tax-qualified Contract.
ISSUANCE OF A CONTRACT. Once we receive your initial Purchase Payment
and your completed application information at our Administrative Office, we
will usually issue your Contract within two Valuation Days. However, if you
did not give us all the information we need, we will try to contact you to get
the additional needed information. If we cannot complete the application
within five Valuation Days, we will either send your money back or obtain your
permission to keep your money until we receive all the necessary information.
The Contract Date will be the date we issue your Contract.
- 8 -
<PAGE> 24
FREE-LOOK RIGHT TO CANCEL CONTRACT. During your "free-look" period,
you may cancel your Contract. The free-look period expires 10 days after you
receive your Contract. Some states may require a longer period. If you decide
to cancel the Contract, you must return it by mail or other delivery method to
PaineWebber Life or to an authorized PaineWebber Life agent. You will receive
a refund equal to any Net Purchase Payment allocated to the Stable Value Fixed
Account plus any Variable Contract Value, plus any charges deducted from any
Purchase Payment, computed at the end of the Valuation Period in which the
Contract is received by us at our Administrative Office. Immediately after
mailing or delivery, the Contract will be deemed void from the beginning.
Certain states require the refund to be equal to the Purchase Payments
made. In such cases, the refund will be the greater of the Purchase Payments
or Contract Value. In those states, the portion of the initial Net Purchase
Payment allocated to the Separate Account will be held in the Money Market
Division until the end of the "free-look" period. The portion of the initial
Net Purchase Payments allocated to the Stable Value Fixed Account will be put
into the Stable Value Fixed Account immediately. At the end of the
"free-look" period, Contract Value in the Money Market Division is allocated
among the Divisions of the Separate Account based on the Purchase Payment
allocation percentages specified in the application. For this purpose, we
assume your free-look period begins 5 days after we issue your Contract.
MAKING ADDITIONAL PURCHASE PAYMENTS. You may make additional Purchase
Payments at any time before the Annuity Date. Minimum payments are $50 for a
qualified plan, and $500 for a non-qualified plan. Any Net Purchase Payment
received after the Contract Date will be credited to the Contract on the
Valuation Day it is received at our Administrative Office. We reserve the
right to refuse a Purchase Payment if total Purchase Payments made would exceed
$1.5 million.
SYSTEMIC PURCHASE PROGRAM. You may also arrange to have a specific
dollar amount automatically withdrawn from your bank account or your Paine
Webber Resource Management Account at periodic intervals (monthly or quarterly)
and transferred to PaineWebber Life as Purchase Payments. Your bank must be a
member of the Automated Clearing House. Your payments must be at least $100
each. Net Purchase Payments will be allocated among the Divisions and the
Stable Value Fixed Account according to your most recent allocation on record.
Your may terminate your participation in this program at any time.
4. WHAT ARE MY ALLOCATION OPTIONS?
PURCHASE PAYMENT ALLOCATIONS. When you apply for a Contract, you
specify the percentage of each Net Purchase Payment to be allocated to each
Division of the Separate Account and the Stable Value Fixed Account. If no
direction is given for the first payment, it will be allocated 100% to the
Money Market Division. If no direction is given after the first payment,
subsequent payments will be allocated based on the last allocation on record.
You can change the allocation percentages at any time by sending a satisfactory
written or telephone request to our Administrative Office. The change will
apply to all Purchase Payments received at the same time or after we receive
your request. Purchase Payment allocations must be in percentages totaling
100%, and each allocation percentage must be a whole number of at least 1%.
- 9 -
<PAGE> 25
DIVISION OPTIONS. The Separate Account has nine Divisions, each
investing in a specific Portfolio of the PaineWebber Series Trust. The
PaineWebber Series Trust is a series-type fund registered with the Securities
and Exchange Commission as a diversified open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"). The
investment objective(s) of each of the Portfolios in which Divisions invest are
summarized below. There is no assurance that these objectives will be met.
THE MONEY MARKET PORTFOLIO seeks maximum current income consistent
with liquidity and conservation of capital. To achieve its objective, the
Portfolio invests in high grade money market instruments and repurchase
agreements secured by such instruments. AN INVESTMENT IN THE MONEY MARKET FUND
IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT.
THE STRATEGIC FIXED INCOME PORTFOLIO seeks total return consisting of
capital appreciation and income. To achieve this objective, this Portfolio
invests primarily in fixed income securities of varying maturities with a
dollar-weighted average portfolio duration between three and eight years.
THE HIGH GRADE FIXED INCOME PORTFOLIO primarily seeks current income
consistent with the preservation of capital and secondarily seeks capital
appreciation. This Portfolio invests primarily in debt securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities and high
quality corporate debt securities and mortgage-backed and asset-backed
securities of private issuers.
THE GLOBAL INCOME PORTFOLIO primarily seeks high current income and
secondarily seeks capital appreciation. To achieve its objective, this
Portfolio invests principally in high quality debt securities of foreign and
U.S. issuers.
THE BALANCED PORTFOLIO seeks a high total return with low volatility.
To achieve its objective, the Portfolio allocates investments among equity
securities, investment grade debt securities and money market instruments.
THE GROWTH AND INCOME PORTFOLIO seeks current income and capital
growth. This portfolio invests primarily in dividend-paying equity securities
believed by Mitchell Hutchins to have the potential for rapid earnings growth.
THE GROWTH PORTFOLIO seeks to provide long-term capital appreciation.
To achieve its objective, this Portfolio invests primarily in equity securities
of companies that, in the judgment of Mitchell Hutchins, have substantial
potential for capital growth.
THE AGGRESSIVE GROWTH PORTFOLIO seeks to maximize long-term capital
appreciation. This Portfolio invests primarily in the common stocks of U.S.
companies.
THE GLOBAL GROWTH PORTFOLIO seeks to provide long-term capital
appreciation. To achieve its objective, this Portfolio invests primarily in
common stocks of companies based in the U.S., Europe, Japan and the Pacific
Basin.
- 10 -
<PAGE> 26
FURTHER INFORMATION ABOUT THE PORTFOLIOS IS CONTAINED IN THE ACCOMPANYING
PROSPECTUS FOR THE PAINEWEBBER SERIES TRUST, WHICH YOU SHOULD READ IN
CONJUNCTION WITH THIS PROSPECTUS. SEE ALSO "PAINEWEBBER SERIES TRUST,"
PAGE __.
STABLE VALUE FIXED ACCOUNT OPTION. The Stable Value Fixed Account is
part of our General Account. It is not a separate account. Amounts allocated
to the Stable Value Fixed Account are credited with interest for the period of
allocation at rates determined in our sole discretion, but in no event will
interest credited on these amounts be less than an effective annual rate of 3%
per year, compounded annually. We may credit current interest in excess of
this guaranteed rate. The current interest rate and the guarantee period for
that rate are determined periodically, usually weekly. Each guarantee period
will be at least one year. You assume the risk that interest credited
thereafter may not exceed the guaranteed rate of 3% per year. See "PaineWebber
Life's Stable Value Fixed Account Option," page __.
The Stable Value Fixed Account may credit higher current interest
rates with respect to Contracts under which Owners have elected certain asset
allocation or other services.
TRANSFERS. After the end of the free-look period, prior to and after
the Annuity Date, you may transfer Contract Value from and among the Divisions
and the Stable Value Fixed Account. Currently, there is no limit on the amount
or timing of transfers out of the Stable Value Fixed Account; however,
transfers out of the Stable Value Fixed Account may be subject to restrictions
in the future.
Transfer requests may be made by satisfactory written or telephone
request. If you do not want telephone transfer privileges, you must notify us
in your application or in writing. A transfer will take effect on the
Valuation Day the request is received at the Administrative Office.
PaineWebber Life may, however, defer transfers under the same conditions that
we may delay paying proceeds. See "Requesting Payments and Telephone
Transactions," page __. There is currently no limit on the number of transfers
from and among the Divisions. However, PaineWebber Life reserves the right to
impose a $10 transfer processing fee on each transfer in a Contract Year in
excess of twelve. For purposes of assessing the transfer processing fee, each
transfer request is considered one transfer, regardless of the number of
Divisions affected by the transfer. Any unused "free" transfers do not carry
over to the next Contract Year. PaineWebber Life reserves the right to modify,
restrict, suspend or eliminate the transfer privileges, including telephone
transfer privileges, at any time, for any reason.
DOLLAR-COST AVERAGING. The dollar-cost averaging program permits you
to systematically transfer, on a monthly, quarterly, semi-annual, or annual
basis, a set dollar amount from the Money Market Division of the Separate
Account and/or the Stable Value Fixed Account to other Divisions. The
dollar-cost averaging method of investment is designed to reduce the risk of
making purchases only when the price of Accumulation Units is high, but you
should carefully consider your financial ability to continue the program over a
long enough period of time to purchase units when their value is low as well as
when it is high. DOLLAR-COST AVERAGING DOES NOT ASSURE A PROFIT OR PROTECT
AGAINST A LOSS.
You may elect to participate in the dollar-cost averaging program at
any time before the Annuity Date by sending us a written request on the form
supplied by PaineWebber Life.
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Participation in the program will begin one month after PaineWebber Life has
received and processed the application. The minimum transfer amount is $100.
Transfers will be allocated according to the most recent dollar cost averaging
instruction on record with PaineWebber Life. Transfers will occur on the same
day of the month as the Contract Date. If the resulting day is not a Valuation
Day, then the transfer will be made on the next Valuation Day. Once elected,
dollar cost averaging remains in effect from the date we receive your request
until the Annuity Date or until the value of the Division or account from which
transfers are being made is depleted, or until you cancel the program by
written request or by telephone if we have your telephone authorization on
file. You can request changes in writing or by phone, if we have your
telephone authorization on file. There is no additional charge for dollar-cost
averaging. A transfer under this program is not considered a transfer for
purposes of assessing an excess transfer charge. We reserve the right to
discontinue offering the dollar-cost averaging program at any time and for any
reason.
CONTRACT VALUE. The Contract Value serves as a starting point for
calculating certain values under a Contract. It is the aggregate of the
Contract Values in each Division and the Fixed Contract Value. The Contract
Value is determined first on the Contract Date and thereafter on each Valuation
Day. The Contract Value will vary to reflect the performance of the Divisions
to which Net Purchase Payments have been allocated, interest credited on
amounts allocated to the Fixed Account, charges, transfers, withdrawals, and
full surrenders. It may be more or less than Purchase Payments paid.
NET CONTRACT VALUE. The Net Contract Value on a Valuation Day is the
Contract Value, reduced by any applicable early withdrawal charge that would be
deducted if the Contract were surrendered that day, and any applicable premium
taxes.
VARIABLE CONTRACT VALUE IN A DIVISION. On any Valuation Day, the
Variable Contract Value in a Division is equal to the number of Accumulation
Units attributable to that Division multiplied by the Accumulation Unit Value
for that Division for that Valuation Day. When you allocate an amount to a
Division, either by Net Purchase Payment allocation or transfer of Contract
Value, your Contract is credited with Accumulation Units in that Division. The
number of Accumulation Units is determined by dividing the amount allocated or
transferred to the Division by the Division's Accumulation Unit Value for that
Valuation Day. Similarly, when an amount is transferred from a Division or a
full or partial withdrawal is taken from the Division, the number of
Accumulation Units in the Division is reduced by dividing the amount
transferred or withdrawn by the Division's Accumulation Unit Value for that
Valuation Day.
ACCUMULATION UNIT VALUES. A Division's Accumulation Unit Value is the
value of its Accumulation Unit. Accumulation Unit Values vary to reflect the
investment experience of the underlying Portfolio, and will increase or
decrease from one Valuation Day to the next. The Accumulation Unit Value for
each Division was arbitrarily set at $10 when the Division was established.
For each Valuation Period after the date of establishment, the Accumulation
Unit Value is determined by multiplying the Accumulation Unit Value for a
Division for the prior Valuation Period by the net investment factor for the
Division for the current Valuation Period.
NET INVESTMENT FACTOR. The net investment factor is an index used to
measure the investment performance of a Division from one Valuation Period to
the next. The net investment
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factor for any Division for any Valuation Period reflects the change in the net
asset value per share of the Portfolio held in the Division from one Valuation
Period to the next, adjusted for deduction of the applicable daily charge from
assets in the Division. If any "ex-dividend" date occurs during the Valuation
Period, the per share amount of any dividend or capital gain distribution is
taken into account. Also, if any taxes need to be reserved, a per share charge
or credit for any taxes reserved for, which is determined by us to have
resulted from the operations of the Division, is taken into account.
FIXED CONTRACT VALUE. The Fixed Contract Value on any date after the
Contract Date is equal to: (1) the sum of the following amounts in the Stable
Value Fixed Account: Net Purchase Payment allocations, Contract Value
transfers, and interest accruals; minus (2) the sum of any withdrawals or
transfers (including any withdrawal processing or transfer processing fee) from
the Stable Value Fixed Account.
5. WHAT ARE THE EXPENSES UNDER THE CONTRACT?
PaineWebber Life deducts the charges described below. The charges are
for the services and benefits provided, costs and expenses incurred and risks
assumed by PaineWebber Life under or in connection with the Contracts.
Services and benefits provided by PaineWebber Life include: the ability for
Owners to make full or partial withdrawals under the Contract; the death
benefit; the income benefit; the available investment options, including dollar
cost averaging, and systematic withdrawal programs; and administration of the
annuity options available under the Contract; and the distribution of various
reports to Owners. Costs and expenses incurred by PaineWebber Life include
those associated with various overhead and other expenses associated with
providing the services and benefits provided by the Contract, sales and
marketing expenses, and other costs of doing business. Risks assumed by
PaineWebber Life include the risks that Annuitants may live for a longer period
of time than estimated when the annuity factors under the Contract were
established, and the risks that the costs of providing the services and
benefits under the Contracts will exceed the charges deducted. In addition to
the charges below, we may deduct any taxes imposed by a state or other
government on us because of the Contract. We can deduct such taxes when
incurred; however, we may delay deducting them until annuitization or full
withdrawal.
EARLY WITHDRAWAL CHARGE
If you make a full or partial withdrawal, PaineWebber Life may deduct
an early withdrawal charge calculated as a percentage of Net Purchase
Payment(s) deemed to be withdrawn. We will not deduct an early withdrawal
charge from Net Purchase Payments made seven or more Contract Years prior to
the date of the withdrawal. The applicable percentage is 6% in each of the
first two calendar years after the payment is made, and declines by 1% in each
following year, until it reaches 0% in the eighth year. For purposes of
calculating the early withdrawal charges we will deem withdrawals to be made in
the following order: (i) first, from any Free Withdrawal Amount; (ii) then,
from payments with no early withdrawal charge period remaining; (iii) then,
from payments with the shortest early withdrawal charge period remaining and
(iv) any remaining amount. For purposes of determining early withdrawal
charges on future withdrawals, any Free Withdrawal Amount is not considered a
liquidation of Purchase Payments. We may also deduct a charge when you take
annuity payments or when proceeds are paid upon the Owner's death. However, we
will not deduct an early withdrawal charge on annuitization, if the Annuity
Date is the latest allowed, the Annuity Option chosen contains life
contingencies, or the Annuity Option is for at least 5 years with no ability to
commute the remaining payments. We may also waive the early withdrawal charge:
(i) for Contracts issued to officers, directors, agents or full-time employees
of PaineWebber Life and
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their families; the investment adviser or subadvisers of the PaineWebber Series
Trust; the distributor and agents of the distributor; or the third party
administrator; (ii) for group plans; or (iii) where the amount withdrawn is
used to purchase another Contract issued by us. See "What are my annuity
options?," page __.
If you make a full withdrawal, the early withdrawal charge is deducted
from the Contract Value in determining the Net Contract Value. If you make a
partial withdrawal, the applicable early withdrawal charge is deducted from the
Contract Value remaining after you have been paid the amount requested, and the
early withdrawal charge will be calculated as the applicable percentage of the
Net Purchase Payments from which the withdrawal is deemed to have been made
(see above). Unless you specify otherwise, we will deduct the early withdrawal
charge from each Division and the Stable Value Fixed Account in the ratio of
the amount withdrawn from each to the total value withdrawn.
FREE WITHDRAWAL AMOUNT. After the "free-look" period, you may
withdraw a portion of your Contract Value without incurring an early withdrawal
charge. This amount is called the "Free Withdrawal Amount." The Free
Withdrawal Amount is equal to 15% of your Contract Value as of the previous
Contract Anniversary. If the entire 15% is not withdrawn in a particular
Contract Year, the unused Free Withdrawal Amount does not carry over to the
next Contract Year.
EXCESS TRANSFER PROCESSING FEE
We reserve the right to deduct a transfer processing fee of $10 for
the 13th and each subsequent transfer during a Contract Year. For the purpose
of assessing the excess transfer processing fee, each written or telephone
request is considered to be one transfer, regardless of the number of Divisions
affected by the transfer. The fee will be deducted from the Divisions or the
Stable Value Fixed Account to which the transfer is made. If a transfer is
made to more than one Division and/or the Stable Value Fixed Account at the
same time, the excess transfer fee will be deducted pro-rata from the affected
Divisions and/or the Stable Value Fixed Account. We reserve the right to waive
the excess transfer processing fee.
EXCESS WITHDRAWAL TRANSACTION CHARGE
If you make unscheduled withdrawals in excess of two each year, we may
charge you an excess withdrawal transaction charge. This charge is equal to
the lesser of $25 or 2% of the amount withdrawn.
SYSTEMATIC WITHDRAWAL PROCESSING FEE
We may charge you a systematic withdrawal processing fee of $1.50 for
each payment when you make withdrawals through our systematic withdrawal
program.
DAILY CHARGE
PaineWebber Life currently deducts a daily charge on an annual basis
equal to a percentage of the daily net asset value of the Separate Account
Divisions attributable to the
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Contracts. The Basic Benefit Charge is 1.00%; if you select a traditional
death benefit and annuity benefit, the daily charge is a total of 1.20%; if you
select an annual reset death benefit, the daily charge is 1.35%; if you choose
to add the annual reset income benefit, the daily charge is 1.50%; if you
select an interest accrual death benefit, the daily charge is 1.35%; if you
choose to add the interest accrual income benefit, the daily charge is 1.50%.
Your total daily charge depends on the death benefit and income options you
select. The total daily charge for selected options will not exceed a maximum
1.50%. This charge does not apply to Fixed Contract Value attributable to the
Policies. This charge is factored into the net investment factor. See "Net
Investment Factor," page ___.
PORTFOLIO EXPENSES
Because the Separate Account purchases shares or units of the various
Portfolios, the net assets of the Separate Account will reflect the investment
advisory fees and other operating expenses incurred by the Portfolios. A table
of each Portfolio's advisory fees and other expenses can be found in the front
of this prospectus in the Fee Table. For a description of each Portfolio's
expenses, advisory fees and other expenses, see the prospectus for the
PaineWebber Series Trust.
6. HOW WILL MY INVESTMENT IN THE CONTRACT BE TAXED?
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE.
INTRODUCTION
The following discussion of the federal income tax treatment of the
Contract is not exhaustive, does not purport to cover all situations, and is
not intended as tax advice. The federal income tax treatment of the Contract
is unclear in certain circumstances, and a competent tax adviser should always
be consulted with regard to the application of the tax law to individual
circumstances. This discussion is based on the Internal Revenue Code of 1986,
as amended, Treasury Department regulations, and interpretations existing on
the date of this prospectus. These authorities, however, are subject to change
by Congress, the Treasury Department, and judicial decisions.
This discussion does not address federal estate and gift tax
consequences, or any state or local tax consequences, associated with the
purchase of the Contract. In addition, PAINEWEBBER LIFE MAKES NO GUARANTEE
REGARDING ANY TAX TREATMENT -- FEDERAL, STATE OR LOCAL -- OF ANY CONTRACT OR OF
ANY TRANSACTION INVOLVING A CONTRACT.
TAX STATUS OF PAINEWEBBER LIFE
PaineWebber Life is taxed as a life insurance company under the Code.
Since the operations of the Separate Account are a part of, and are taxed with,
the operations of PaineWebber Life, the Separate Account is not separately
taxed as a "regulated investment company" under the Code. Under existing
federal income tax laws, investment income and capital gains of the Separate
Account are not taxed to PaineWebber Life to the extent they are
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applied under a Contract. PaineWebber Life does not anticipate that it will
incur any federal income tax liability in the Separate Account attributable to
such income and gains, and therefore PaineWebber Life does not intend to make
provision for any such taxes. If PaineWebber Life is taxed on investment
income or capital gains of the Separate Account, then PaineWebber Life may
impose a charge against the Separate Account in order to make provision for
such taxes.
NON-QUALIFIED ANNUITIES: TAX DEFERRAL DURING ACCUMULATION PERIOD
The Contract may be issued as a "non-qualified annuity contract," that
is, an annuity contract not issued in connection with a Qualified Plan. Under
existing provisions of the Code, except as described below, any increase in a
Contract Owner's Contract Value is generally not taxable to the Contract Owner
until amounts are received from such a Contract, either in the form of Annuity
payments as contemplated by the Contract, or in some other form of
distribution. However, certain requirements must be satisfied in order for
this general rule to apply, including: (1) the investments of the Separate
Account must be "adequately diversified" in accordance with Treasury Department
regulations, (2) PaineWebber Life, rather than the Contract Owner, must be
considered the owner of the assets of the Separate Account for federal income
tax purposes, and (3) the Contract must be owned by an individual (or treated
as owned by an individual).
DIVERSIFICATION REQUIREMENTS. The Code and Treasury Department
regulations prescribe the manner in which the investments of a segregated asset
account, such as the Divisions of the Separate Account, are to be "adequately
diversified." If a Division of the Separate Account failed to comply with these
diversification standards, Contracts based on that segregated asset account
would not be treated as annuity contracts for federal income tax purposes and
the Contract Owners would generally be taxable currently on the income on the
contract (as defined in the tax law) beginning with the period of
non-diversification. PaineWebber Life expects that the Divisions of the
Separate Account will comply with the diversification requirements prescribed
by the Code and Treasury Department regulations.
OWNERSHIP TREATMENT. In certain circumstances, variable annuity
contract owners may be considered the owners, for federal income tax purposes,
of the assets of a segregated asset account, such as the assets of the
Divisions of the Separate Account, used to support their contracts. In those
circumstances, income and gains from the segregated asset account would be
includible in the contract owners' gross income. The Internal Revenue Service
(the "IRS") has stated in published rulings that a variable contract owner will
be considered the owner of the assets of a segregated asset account if the
owner possesses incidents of ownership in those assets, such as the ability to
exercise investment control over the assets. In addition, the Treasury
Department announced, in connection with the issuance of regulations concerning
investment diversification, that those regulations "do not provide guidance
concerning the circumstances in which investor control of the investments of a
segregated asset account may cause the investor, rather than the insurance
company, to be treated as the owner of the assets in the account." This
announcement also stated that guidance would be issued by way of regulations or
rulings on the "extent to which policyholders may direct their investments to
particular sub-accounts [of a segregated asset account] without being treated
as owners of the underlying assets." As of the date of this prospectus, no such
guidance has been issued.
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The ownership rights under the Contract are similar to, but different
in certain respects from, those described by the IRS in rulings in which it was
determined that contract owners were not owners of the assets of a segregated
asset account. For example, under this Contract, the Contract Owner has the
choice of more investment options to which to allocate Purchase Payments and
the Contract Value, and may be able to transfer among investment options more
frequently, than in such rulings. These differences could result in the
Contract Owner being treated as the owner of all or a portion of the assets of
the Separate Account. In addition, PaineWebber Life does not know what
standards will be set forth in the regulations or rulings which the Treasury
Department has stated it expects to issue. PaineWebber Life therefore reserves
the right to modify the Contract as necessary to attempt to prevent Contract
Owners from being considered the owners of the assets of the Separate Account.
However, there is no assurance that such efforts would be successful.
Frequently, if the IRS or the Treasury Department sets forth a new
position which is adverse to taxpayers, the position is applied on a
prospective basis only. Thus, if the IRS or the Treasury Department were to
issue regulations or a ruling which treated a Contract Owner as the owner of
the Separate Account, that treatment might apply on a prospective basis.
However, if the regulations or ruling were not considered to set forth a new
position, a Contract Owner might retroactively be determined to be the owner of
the assets of the Separate Account.
NON-NATURAL OWNER. As a general rule, contracts held by "non-natural
persons" such as a corporation, trust or other similar entity, as opposed to a
natural person, are not treated as annuity contracts for federal tax purposes.
The income on such contracts (as defined in the tax law) is taxed as ordinary
income that is received or accrued by the owner of the contract during the
taxable year. There are several exceptions to this general rule for
non-natural owners. First, contracts will generally be treated as held by a
natural person if the nominal owner is a trust or other entity which holds the
contract as an agent for a natural person. However, this special exception
will not apply in the case of any employer who is the nominal owner of a
contract under a non-qualified deferred compensation arrangement for its
employees.
In addition, exceptions to the general rule for non-natural owners
will apply with respect to (a) contracts acquired by an estate of a decedent by
reason of the death of the decedent, (b) certain contracts issued in connection
with certain Qualified Plans, (c) certain contracts purchased by employers upon
the termination of certain Qualified Plans, (d) certain contracts used in
connection with structured settlement agreements, and (e) contracts purchased
with a single Purchase Payment when the annuity starting date (as defined in
the tax law) is no later than a year from purchase of the contract and
substantially equal periodic payments are made, not less frequently than
annually, during the annuity period.
The remainder of this discussion assumes that the Contract will be
treated as an annuity contract for federal income tax purposes.
TAXATION OF WITHDRAWALS FROM NON-QUALIFIED ANNUITIES
In the case of a partial withdrawal prior to the Annuity Date, amounts
received generally are includible in income to the extent the Contract Owner's
Contract Value before the withdrawal exceeds his or her "investment in the
contract." In the case of a complete withdrawal for the Net
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Contract Value, amounts received are includible in income to the extent they
exceed the "investment in the contract." For these purposes, the investment in
the contract at any time generally equals the total of the Purchase Payments
made under the Contract to that time less any amounts previously received from
the Contract which were not includible in income.
In the case of withdrawals made under the systematic withdrawal
program, the amount of each withdrawal will generally be taxed in the same
manner as a partial withdrawal made prior to the Annuity Date, as described
above. However, there is some uncertainty regarding the tax treatment of
systematic partial withdrawals, and it is possible that additional amounts may
be includible in income.
The Contract provides an Enhanced Death Benefit that in certain
circumstances may exceed the greater of the Purchase Payments and the Contract
Value. As described elsewhere in this prospectus, PaineWebber Life imposes
certain charges with respect to the Enhanced Death Benefit. It is possible
that all or a portion of those charges could be treated for federal income tax
purposes as a partial withdrawal from the Contract.
TAXATION OF ANNUITY PAYMENTS FROM NON-QUALIFIED ANNUITIES
Normally, the portion of each Annuity payment taxable as ordinary
income is equal to the excess of the payment over the exclusion amount. In the
case of fixed Annuity payments, the exclusion amount is the amount determined
by multiplying (1) the fixed Annuity payment by (2) the ratio of the
"investment in the contract" (defined above), adjusted for any period certain
or refund feature, allocated to the fixed Annuity option to the total expected
amount of fixed Annuity payments for the period of the Contract (determined
under Treasury Department regulations). In the case of variable Annuity
payments, the exclusion amount for each variable Annuity payment is a specified
dollar amount equal to the investment in the contract allocated to the variable
Annuity option when payments begin divided by the number of variable payments
expected to be made (determined under Treasury Department regulations). There
is some uncertainty regarding the tax treatment of variable annuity payments
under Option 1, "payments for a guaranteed fixed period," and it is possible
that certain additional amounts might be includible in income.
Once the total amount of the investment in the contract is excluded
using these formulas, Annuity payments will be fully taxable. If Annuity
payments cease because of the death of the Annuitant and before the total
amount of the investment in the contract is recovered, the unrecovered amount
will be allowed as a deduction.
TAXATION OF DEATH BENEFIT PROCEEDS FROM NON-QUALIFIED ANNUITIES
Prior to the Annuity Date, the Enhanced Death Benefit may be
distributed from a Contract because of the death of a Contract Owner. Such
death benefit proceeds are includible in income as follows: (1) if distributed
in a lump sum, they are taxed in the same manner as a complete withdrawal, as
described above, or (2) if distributed under an Annuity option, they are taxed
in the same manner as Annuity payments, as described above. After the Annuity
Date, where a guaranteed period exists under an Annuity option and the
Annuitant dies before the end of that period, payments made to the beneficiary
for the remainder of that period are includible in
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income as follows: (1) if received in a lump sum, they are includible in income
to the extent that they exceed the unrecovered investment in the contract at
that time, or (2) if distributed in accordance with the existing Annuity option
selected, they are fully excludable from income until the remaining investment
in the contract is deemed to be recovered, and all Annuity payments thereafter
are fully includible in income.
If certain amounts become payable in a lump sum from a Contract, such
as the Enhanced Death Benefit, it is possible that such amounts might be viewed
as constructively received and thus subject to tax, even though not actually
received. The Enhanced Death Benefit will not be constructively Received if it
is applied under an Annuity option within 60 days after the day on which it
becomes payable. (Any Annuity option selected must comply with any applicable
minimum distribution requirements under the Contract).
ASSIGNMENT, PLEDGES, AND GRATUITOUS TRANSFERS OF NON-QUALIFIED ANNUITIES
Any assignment or pledge (or agreement to assign or pledge) any
portion of the value of the Contract is treated for federal income tax purposes
as a partial withdrawal of such amount or portion. The investment in the
contract is increased by the amount includible in income with respect to such
assignment or pledge, though it is not affected by any other aspect of the
assignment or pledge (including its release). If a Contract Owner transfers a
Contract without adequate consideration to a person other than the Contract
Owner's spouse (or to a former spouse incident to divorce), the Contract Owner
will be taxed on the difference between the cash surrender value (within the
meaning of the tax law) and the investment in the contract at the time of
transfer. In such case, the transferee's investment in the contract will be
increased to reflect the increase in the transferor's income.
SECTION 1035 EXCHANGES OF NON-QUALIFIED ANNUITIES
Section 1035 of the Code provides that no gain or loss is recognized
when an annuity contract is received in exchange for a life insurance,
endowment, or annuity contract if no cash or other property is received in the
exchange transaction. Special rules and procedures apply in order for an
exchange to meet the requirements of section 1035. Prospective purchasers of
this Contract should consult a tax advisor before entering into a section 1035
exchange.
PENALTY TAX ON PREMATURE DISTRIBUTIONS FROM NON-QUALIFIED ANNUITIES
A 10% penalty tax applies to the taxable amount of any payment from
the Contract unless the payment is: (a) received on or after the taxpayer
reaches age 59-1/2; (b) attributable to the taxpayer's becoming disabled (as
defined in the tax law); (c) made on or after the death of the Contract Owner
or, if the Contract Owner is not an individual, on or after the death of the
primary annuitant (as defined in the tax law); (d) made as a series of
substantially equal periodic payments (not less frequently than annually) over
the life (or life expectancy) of the taxpayer or the joint lives (or joint life
expectancies) of the taxpayer and a designated beneficiary (as defined in the
tax law); or (e) made under a Contract purchased with a single Purchase Payment
when the annuity starting date (as defined in the tax law) is no later than a
year from purchase of the Contract and substantially equal periodic payments
are made, not less frequently than annually, during the Annuity period. It is
unclear whether variable Annuity distributions, or withdrawals
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made pursuant to the systematic withdrawal program, will qualify for exceptions
(d) or (e) above. Accordingly, a prospective purchaser of a non-qualified
Contract who expects to receive distributions prior to attaining age 59-1/2
should consult a qualified tax advisor regarding the application of the penalty
tax to distributions.
AGGREGATION OF NON-QUALIFIED ANNUITY CONTRACTS
In certain circumstances, the amount of an Annuity payment, partial
withdrawal, or complete withdrawal from a Contract that is includible in income
is determined by combining some or all of the annuity contracts owned by an
individual. For example, if a person purchases two or more deferred annuity
contracts from the same insurance company (or its affiliates) during any
calendar year, all such contracts will be treated as one contract for purposes
of determining whether any payment not received as an annuity (including a
withdrawal prior to the annuity starting date) is includible in income. In
addition, if a person purchases a Contract offered by this prospectus and also
purchases at approximately the same time an immediate annuity, the IRS may
treat the two contracts as one contract. The effects of such aggregation are
not clear; however, it could affect the time when income is taxable and the
amount which might be subject to the 10% penalty tax described above.
USE OF THE CONTRACT IN CONNECTION WITH QUALIFIED PLANS
In addition to issuing the Contracts as non-qualified annuities,
PaineWebber Life currently issues the Contracts as Individual Retirement
Annuities ("IRAs"). PaineWebber Life may also issue the Contracts in
connection with certain other types of Qualified Plans which receive favorable
treatment under the Code. Numerous special tax rules apply to the Contract
Owners under IRAs and other Qualified Plans and to the Contracts used in
connection with such plans. Therefore, no attempt is made to provide more than
general information about the use of Contracts with the various types of
Qualified Plans. A tax advisor should be consulted before the purchase,
change, or transfer of a Contract (or of funds held thereunder) in connection
with a Qualified Plan.
The tax rules applicable to Qualified Plans vary according to the type
of plan and the terms and conditions of the plan itself. For example, for both
withdrawals and Annuity payments under certain Contracts issued in connection
with Qualified Plans, there may be no "investment in the contract" and the
total amount received may be taxable. Also, special rules apply to the time at
which distributions must commence and the form in which the distributions must
be paid. For example, the length of any guarantee period may be limited in
some circumstances to satisfy certain minimum distribution requirements under
the Code. In addition, loans, assignments and pledges are permitted only in
limited circumstances under Contracts issued in connection with Qualified
Plans.
When issued in connection with a Qualified Plan, a Contract will be
amended as necessary to conform to the requirements of the plan. However,
Contract Owners, Annuitants, and beneficiaries are cautioned that the rights of
any person to any benefits under Qualified Plans may be subject to the terms
and conditions of the plans themselves, regardless of the terms and conditions
of the Contract. In addition, PaineWebber Life is not bound by terms and
conditions
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of Qualified Plans to the extent such terms and conditions contradict the
Contract, unless PaineWebber Life consents.
INDIVIDUAL RETIREMENT ANNUITIES
IN GENERAL. As indicated above, PaineWebber Life currently issues the
Contract as an IRA. If the Contract is used for this purpose, the Contract
Owner must be the Annuitant.
PURCHASE PAYMENTS. When this Contract is issued as an IRA, both the
Purchase Payments that may be paid, and the tax deduction that the Contract
Owner may claim for such Purchase Payments, are limited by the tax law. In
general, the Purchase Payments that may be made for an IRA for any year are
limited to the lesser of $2,000 or 100% of the Contract Owner's earned income
for the year. Also, with respect to an individual who has less income than his
or her spouse, Purchase Payments may be made by that individual to an IRA to
the extent of the lesser of (1) $2,000, or (2) the sum of (i) the compensation
includible in such individual's gross income for the taxable year and (ii) the
compensation includible in the gross income of the individual's spouse for the
taxable year reduced by the amount allowed as a deduction for IRA contributions
to such spouse. An excise tax is imposed on IRA contributions that exceed the
law's limits.
The deductible amount of the Purchase Payments made for an IRA for any
taxable year is limited to the amount of Purchase Payments that may be paid for
the Contract for that year, or a lesser amount where the individual or his or
her spouse is an active participant in certain Qualified Plans. A single
person who is an active participant in a Qualified Plan (including a qualified
pension, profit-sharing, or annuity plan, a simplified employee pension plan, a
"section 403(b)" annuity plan, or a SIMPLE retirement account, as discussed
below) and who has adjusted gross income in excess of $35,000 may not deduct
Purchase Payments, and such a person with adjusted gross income between $25,000
and $35,000 may deduct only a portion of such payments. Also, married persons
who file a joint return, one of whom is an active participant in a Qualified
Plan, and who have adjusted gross income in excess of $50,000 may not deduct
Purchase Payments, and those with adjusted gross income between $40,000 and
$50,000 may deduct only a portion of such payments. Married persons filing
separately may not deduct Purchase Payments if either the taxpayer or the
taxpayer's spouse is an active participant in a Qualified Plan.
In applying these and other rules applicable to an IRA, all individual
retirement accounts and IRAs owned by an individual are treated as one
contract, and all amounts distributed during any taxable year are treated as
one distribution.
TAX DEFERRAL DURING ACCUMULATION PERIOD. Until distributions are made
from an IRA, increases in the Contract Value of the Contract are not taxed.
IRAs and individual retirement accounts (that may invest in this
Contract) generally may not invest in life insurance contracts, but an annuity
contract that is issued as an IRA (or that is purchased by an individual
retirement account) may provide a death benefit that equals the greater of the
Purchase
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Payments paid and the contract's cash value. This Contract provides an
Enhanced Death Benefit that in certain circumstances may exceed the greater of
the Purchase Payments and the Contract Value. It is possible that the Enhanced
Death Benefit could be viewed as violating the prohibition on investment in
life insurance contracts with the result that the Contract would not be viewed
as satisfying the requirements of an IRA.
TAXATION OF DISTRIBUTIONS AND ROLLOVERS. If all Purchase Payments
made to an IRA were deductible, all amounts distributed from the Contract are
included in the recipient's income when distributed. However, if nondeductible
Purchase Payments were made to an IRA (within the limits allowed by the tax
law), only a portion of each distribution from the Contract typically is
includible in income when it is distributed. In such a case, any amount
distributed as an Annuity payment or in a lump sum upon death or a withdrawal
is taxed as described above in connection with such a distribution from a
nonqualified annuity, treating as the investment in the contract the sum of the
nondeductible Purchase Payments at the end of the taxable year in which the
distribution commences or is made (less any amounts previously distributed that
were excluded from income). Also, in such a case, any amount distributed upon
a partial withdrawal is partially includible in income. The includible amount
is the excess of the distribution over the exclusion amount, which in turn
equals the distribution multiplied by the ratio of the investment in the
contract to the Contract Value immediately before the distribution.
In any event, subject to the direct rollover and mandatory withholding
requirements (discussed below), amounts may be "rolled over" from certain
Qualified Plans to an IRA (or from one IRA or individual retirement account to
an IRA) without incurring current income tax if certain conditions are met.
Only certain types of distributions to eligible individuals from Qualified
Plans, individual retirement accounts, and IRAs may be rolled over.
PENALTY TAXES. Subject to certain exceptions, a penalty tax is
imposed on distributions from an IRA equal to 10% of the amount of the
distribution includible in income. (Amounts rolled over from an IRA generally
are excludable from income.) The exceptions provide, however, that this penalty
tax does not apply to distributions made to the Contract Owner (a) on or after
age 59-1/2, (b) on or after death or because of disability (as defined in the
tax law), or (c) as part of a series of substantially equal periodic payments
over the life (or life expectancy) of the Contract Owner or the joint lives (or
joint life expectancies) of the Contract Owner and his or her beneficiary (as
defined in the tax law). It is unclear whether variable Annuity distributions
from this Contract, or withdrawals made pursuant to the systematic withdrawal
program, will qualify for exception (c) above. In addition to the foregoing,
failure to comply with a minimum distribution requirement will result in the
imposition of a penalty tax of 50% of the amount by which a minimum required
distribution exceeds the actual distribution from an IRA. Under this
requirement, distributions of minimum amounts from an IRA as specified in the
tax law must generally commence by April 1 of the calendar year following the
calendar year in which the Contract Owner attains age 70-1/2.
OTHER TYPES OF QUALIFIED PLANS
The following sections describe tax considerations of Contracts used
in connection with various types of Qualified Plans other than IRAs.
PaineWebber Life may not offer all of the types of Qualified Plans described at
any given time. Prospective purchasers of Contracts for use in connection with
such Qualified Plans should therefore contact PaineWebber Life's
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Administrative Office at 601 6th Avenue, Des Moines, Iowa 50309 to ascertain
the availability of the Contract for certain Qualified Plans at any given time.
SIMPLIFIED EMPLOYEE PENSIONS (SEP-IRAS). Section 408(k) of the Code
allows employers to establish simplified employee pension plans for their
employees, using the employees' IRAs for such purposes, if certain criteria are
met. Under these plans the employer may, within specified limits, make
deductible contributions on behalf of the employees to IRAs. As discussed
above (see Individual Retirement Annuities), there is some uncertainty
regarding the treatment of the Contract's Enhanced Death Benefit for purposes
of certain tax rules governing IRAs (which would include SEP-IRAs). Employers
intending to use the Contract in connection with SEP-IRAs should seek competent
advice.
SIMPLE IRAS. Section 408(p) of the Code permits certain small
employers to establish "SIMPLE retirement accounts," including SIMPLE IRAs, for
their employees. Under SIMPLE IRAs, certain deductible contributions are made
by both employees and employers. SIMPLE IRAs are subject to various
requirements, including limits on the amounts that may be contributed, the
persons who may be eligible, and the time when distributions may commence. As
discussed above (see Individual Retirement Annuities), there is some
uncertainty regarding the proper characterization of the Contract's Enhanced
Death Benefit for purposes of certain tax rules governing IRAs (which would
include SIMPLE IRAs). Employers intending to use the Contract in connection
with SIMPLE IRAs should seek competent tax advice.
CORPORATE AND SELF-EMPLOYED ("H.R. 10" OR "KEOGH") PENSION AND
PROFIT-SHARING PLANS. Sections 401(a) and 403(a) of the Code permit corporate
employers to establish various types of tax-favored retirement plans for
employees. The Self-Employed Individuals' Tax Retirement Act of 1962, as
amended, commonly referred to as "H.R. 10" or "Keogh," permits self-employed
individuals also to establish such tax-favored retirement plans for themselves
and their employees. Such retirement plans may permit the purchase of the
Contract in order to provide benefits under the plans. The Contract provides
an Enhanced Death Benefit that in certain circumstances may exceed the greater
of the Purchase Payments and the Contract Value. It is possible that this
Enhanced Death Benefit could be characterized as an incidental death benefit.
There are limitations on the amount of incidental benefits that may be provided
under pension and profit sharing plans. In addition, the provision of such
benefits may result in currently taxable income to participants. Employers
intending to use the Contract in connection with such plans should seek
competent advice.
SECTION 403(b) ANNUITY CONTRACTS. Section 403(b) of the Code permits
public school employees, employees of certain types of charitable, educational
and scientific organizations exempt from tax under section 501(c)(3) of the
Code, and employees of certain types of State educational organizations
specified in section 170(b)(1)(A)(ii), to have their employers purchase annuity
contracts for them and, subject to certain limitations, to exclude the amount
of Purchase Payments from gross income for federal income tax purposes.
Purchasers of the Contracts for use as a "Section 403(b) Annuity Contract"
should seek competent advice as to eligibility, limitations on permissible
amounts of Purchase Payments and other tax consequences associated with such
Contracts. In particular, purchasers and their advisors should consider that
this Contract provides an Enhanced Death
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Benefit that in certain circumstances may exceed the greater of the Purchase
Payments and the Contract Value. It is possible that this Enhanced Death
Benefit be characterized as an incidental death benefit. If the Enhanced Death
Benefit were so characterized, this could result in currently taxable income to
purchasers. In addition, there are limitations on the amount of incidental
death benefits that may be provided under a Section 403(b) Annuity Contract.
Even if the Enhanced Death Benefit under the Contract were characterized as an
incidental death benefit, it is unlikely to violate those limits unless the
purchaser also purchases a life insurance contract as part of his or her
section 403(b) plan.
Section 403(b) Annuity Contracts contain restrictions on withdrawals
of (i) contributions made pursuant to a salary reduction agreement in years
beginning after December 31, 1988, (ii) earnings on those contributions, and
(iii) earnings after 1988 on amounts attributable to salary reduction
contributions (and earnings on those contributions) held as of the last year
beginning before January 1, 1989. These amounts can be paid only if the
employee has reached age 59-1/2, separated from service, died, or become
disabled (within the meaning of the tax law), or in the case of hardship.
Amounts permitted to be distributed in the event of hardship are limited to
actual contributions; earnings thereon cannot be distributed on account of
hardship. (These limitations on withdrawals do not apply to the extent
PaineWebber Life is directed to transfer some or all of the Contract Value as a
tax-free direct transfer to the issuer of another Section 403(b) Annuity
Contract or into a section 403(b)(7) custodial account subject to withdrawal
restrictions which are at least as stringent.)
DEFERRED COMPENSATION PLANS OF STATE AND LOCAL GOVERNMENTS AND
TAX-EXEMPT ORGANIZATIONS. Section 457 of the Code permits employees of state
and local governments and tax-exempt organizations to defer a portion of their
compensation without paying current taxes. The employees must be participants
in an eligible deferred compensation plan. Generally, a Contract purchased by
a state or local government or a tax-exempt organization will not be treated as
an annuity contract for federal income tax purposes. Those who intend to use
the Contracts in connection with such plans should seek competent advice.
DIRECT ROLLOVERS AND FEDERAL INCOME TAX WITHHOLDING FOR "ELIGIBLE ROLLOVER
DISTRIBUTIONS"
In the case of an annuity contract used in connection with a Qualified
Plan that is qualified under sections 401(a), 403(a), or 403(b) of the Code,
any "eligible rollover distribution" from the contract will be subject to
direct rollover and mandatory withholding requirements. An eligible rollover
distribution generally is the taxable portion of any distribution from such
Qualified Plans, excluding certain amounts such as minimum distributions
required under section 401(a)(9) of the Code and certain distributions which
are part of a "series of substantially equal periodic payments" made not less
frequently than annually for the life (or life expectancy) of the employee, or
for the joint lives (or joint life expectancies) of the employee and the
employee's designated beneficiary (within the meaning of the tax law), or for a
specified period of 10 years or more.
Under these requirements, federal income tax equal to 20% of the
eligible rollover distribution will be withheld from the amount of the
distribution. Unlike withholding on certain other amounts distributed from a
contract, discussed below, the taxpayer cannot elect out of withholding with
respect to an eligible rollover distribution. However, this 20% withholding
will not apply to that portion of the eligible rollover distribution which,
instead of receiving, the
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taxpayer elects to have directly transferred to certain eligible retirement
plans (such as to this Contract when issued as an IRA).
If this Contract is issued in connection with a Qualified Plan that is
qualified under sections 401(a), 403(a), or 403(b) of the Code, then, prior to
receiving an eligible rollover distribution, the Contract Owner will receive a
notice (from the plan administrator or PaineWebber Life) explaining generally
the direct rollover and mandatory withholding requirements and how to avoid the
20% withholding by electing a direct rollover.
FEDERAL INCOME TAX WITHHOLDING
PaineWebber Life will withhold and remit to the federal government a
part of the taxable portion of each distribution made under a Contract unless
the distributee notifies PaineWebber Life at or before the time of the
distribution that he or she elects not to have any amounts withheld. In
certain circumstances, however, PaineWebber Life may be required to withhold
tax in any event. The withholding rates applicable to the taxable portion of
periodic Annuity payments (other than eligible rollover distributions) are the
same as the withholding rates generally applicable to payments of wages. In
addition, the withholding rate applicable to the taxable portion of
non-periodic payments (including withdrawals prior to the Annuity Date) is 10%.
Regardless of whether an election is made to have federal income tax withheld,
the Contract Owner is still liable for payment of federal income tax on the
taxable portion of the payment. As discussed above, the withholding rate
applicable to eligible rollover distributions is 20%.
7. HOW DO I ACCESS MY MONEY?
You may make full or partial withdrawals under the Contract. Proceeds
are also payable upon the death of the Owner before the Annuity Date. See
"Does the Contract have a Death Benefit?," page ___. When you surrender the
Contract or when proceeds are payable on the death of an Owner, you can request
that the proceeds be paid under an annuity option. See "What are my annuity
options?," page ___.
WITHDRAWALS
Prior to the Annuity Date and the Owner's death, you may request a
withdrawal of part or all of the Net Contract Value. Requests for withdrawals
may be made in writing, or in another form of communication acceptable to us.
Written requests must be signed by you. The signature should match the name
reflected on your account, and the request should include your Contract number.
We will contact you if we do not receive the request in proper form. If you
are requesting a full withdrawal you must include your Contract with your
request. See "Requesting Payments and Telephone Transactions," page __. Any
withdrawal must be at least $500 and must be less than the Net Contract Value
on the day the request for withdrawal is received at our Administrative Office.
We will pay you the withdrawal amount in one sum. We may defer paying you a
withdrawal attributable to the Fixed Contract Value for up to 6 months.
When you request a withdrawal, you should direct how the withdrawal
should be allocated and deducted from your Contract Value. If you provide no
directions, the withdrawal
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will be deducted from your Contract Value in the Divisions and Stable Value
Fixed Account in the ratio of the value in each Division and Stable Value Fixed
Account to the Contract Value.
You may request a full withdrawal of the Net Contract Value at any
time prior to the Annuity Date and the Owner's death. The Contract will
terminate on the Valuation Day we receive your request or such later date as
you might request. We will pay you the Net Contract Value in one sum unless
you choose an annuity option. We may defer paying you the Net Contract Value
attributable to the Fixed Contract Value for up to 6 months.
SYSTEMATIC WITHDRAWAL PROGRAM
The systematic withdrawal program provides an automatic monthly,
quarterly, semi-annual, or annual payment to you from the amounts you have
accumulated in the Divisions and/or the Stable Value Fixed Account.
You can choose to have the withdrawals transferred electronically to
your PaineWebber account, to your bank account, or paid by check. At your
request, we will withhold taxes from your payment. You may also specify the
day of the month on which we will make your withdrawals. Unless you notify us
otherwise, we will allocate each systematic withdrawal among the Divisions and
the Stable Value Fixed Account in the ratio of the Contract Value in each
Division and the Stable Value Fixed Account to the Variable Contract Value.
The minimum payment is $100. To use the program, you must maintain Contract
Value of at least $1,000. You may elect to participate in the systematic
withdrawal program at any time before the Annuity Date by sending a written
request, or other form of communication acceptable to us, to our Administrative
Office. You decide when the program will begin, however, we generally need one
month to process your order after we receive your request. The program will
remain in effect until your Contract Value drops below $1,000. You may cancel
or make changes in the program at any time by sending us a written request or
by calling us by telephone if we have your telephone authorization on file.
We will assess any applicable early withdrawal charge on these
withdrawals. We may also assess a $1.50 systematic withdrawal processing fee.
See "Early Withdrawal Charge" and "Systematic Withdrawal Processing Fee," page
__. We reserve the right to discontinue offering the systematic withdrawal
program at any time and for any reason.
REQUESTING PAYMENTS AND TELEPHONE TRANSACTIONS
REQUESTING PAYMENTS. Requests for payment may be in writing or other
form of communication acceptable to us, and must be sent to our Administrative
Office or given to an authorized PaineWebber Life agent for forwarding to our
Administrative Office. We will ordinarily pay any Death Benefit or full or
partial withdrawal proceeds within seven days after receipt at our
Administrative Office of all the documents required for such a payment. The
amount will be determined as of the date our Administrative Office receives all
required documents.
We may delay making a payment or processing a transfer request if:
(1) the disposal or valuation of the Separate Account's assets is not
reasonably practicable because the New York
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Stock Exchange is closed for other than a regular holiday or weekend, trading
is restricted by the SEC, or the SEC declares that an emergency exists; or (2)
the SEC by order permits postponement of payment to protect PaineWebber Life's
Contract Owners. We also may defer making payments attributable to a check
that has not cleared, and we may defer payment of proceeds from the Stable
Value Fixed Account for a full or partial withdrawal request for up to six
months from the date we receive the request. However, Net Contract Value paid
under an annuity option will not be deferred.
TELEPHONE TRANSACTIONS. You may make certain requests under the
Contract by telephone if we have a written telephone authorization on file.
These include requests for transfers, withdrawals, changes in Net Purchase
Payment allocation instructions, dollar-cost averaging changes, and systematic
withdrawal changes. Our Administrative Office will employ reasonable procedures
to confirm that instructions communicated by telephone are genuine. Such
procedures may include, among others, requiring some form of personal
identification prior to acting upon instructions received by telephone,
providing written confirmation of such transactions, and/or tape recording of
telephone instructions. Your request for telephone transactions authorizes us
to record telephone calls. If reasonable procedures are not employed, we may
be liable for any losses due to unauthorized or fraudulent instructions. If
reasonable procedures are employed, we will not be liable for any losses due to
unauthorized or fraudulent instructions.
8. HOW IS THE PERFORMANCE OF THE CONTRACT PRESENTED?
We may advertise or include in sales literature yields, effective
yields and total returns for the Divisions. Effective yields and total returns
for the Divisions are based on the investment performance of the corresponding
Portfolio of the PaineWebber Series Trust. THESE FIGURES ARE BASED ON
HISTORICAL EARNINGS AND DO NOT INDICATE OR PROJECT FUTURE PERFORMANCE. We may
also advertise or include in sales literature a Division's performance compared
to certain performance rankings and indexes compiled by independent
organizations, and we may present performance rankings and indexes without such
a comparison. More detailed information about performance data appears in the
Statement of Additional Information.
The yield of the Division investing in the Money Market Portfolio
refers to the annualized income generated by an investment in the Division over
a specified seven-day period. The yield is calculated by assuming that the
income generated for that seven-day period is generated each seven-day period
over a 52-week period. The effective yield is calculated similarly but, when
annualized, the income earned by an investment in the Division is assumed to be
reinvested. The effective yield will be slightly higher than the yield because
of the compounding effect of this assumed reinvestment.
The yield of a Division (except the Money Market Division) refers to
the annualized income generated by an investment in the Division over a
specified 30-day or one-month period. The yield is calculated by assuming that
the income generated by the investment during that 30-day or one-month period
is generated each period over a 12-month period.
The total return of a Division refers to return quotations assuming an
investment under a Contract has been held in the Division for various periods
of time. Average annual total return of
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a Division tells you the return you would have experienced if you allocated a
$1,000 Net Purchase Payment to a Division for the specified period.
"Standardized" average annual total return reflects all historical investment
results, less all charges and deductions applied against the Division,
including any surrender charge that would apply if you terminated the Contract
at the end of each period indicated, but excluding any deductions for premium
taxes. "Non-Standard" average annual total return information may be
presented, computed on the same basis as described above, except that
deductions will not include the early withdrawal charge. In addition, we may
from time to time disclose average annual total return in non-standard formats
and cumulative total return for a Division.
We may, from time to time, also disclose yield, standard total
returns, and non-standard total returns for the Portfolios. We may also
disclose yield, standard total returns, and non-standard total returns of funds
or other accounts managed by the investment adviser or a subadviser with
investment objectives similar to those of the Portfolios, and Division
performance based on that performance data. Non-standard performance will be
accompanied by standard performance.
In advertising and sales literature, the performance of each Division
may be compared to the performance of other variable annuity issuers in general
or to the performance of particular types of variable annuities investing in
mutual funds, or investment series of mutual funds with investment objectives
similar to each of the Divisions. Advertising and sales literature may also
compare the performance of each Division to the Standard & Poor's Index of 500
Common Stocks, a widely used measure of stock performance. This unmanaged
index assumes the reinvestment of dividends but does not reflect any
"deduction" for the expense of operating or managing an investment portfolio.
Other independent ranking services and indexes may also be used as a source of
performance comparison. We may also report other information, including the
effect of tax-deferred compounding on a Division's investment returns, or
returns in general, which may be illustrated by tables, graphs, or charts.
9. DOES THE CONTRACT HAVE A DEATH BENEFIT?
If the Owner dies before the Annuity Date and a Death Benefit is
payable, the Beneficiary will receive a Death Benefit determined in accordance
with the death benefit option selected by the Owner in the application.
BASIC DEATH BENEFIT. The amount paid is equal to the Net Contract
Value if the owner dies prior to the Annuity Date and prior to age 90.
TRADITIONAL DEATH BENEFIT. The amount paid will be the greater of (1)
the sum of Net Purchase Payments less any withdrawals and less any previously
deducted withdrawal or transfer charges, and (2) the Contract Value. Both
amounts will be calculated on the Valuation Day we receive due proof of the
Annuitant's death.
ANNUAL RESET DEATH BENEFIT. The amount paid will be the greatest of
(A), (B), or (C) where: (A) is the Contract Value, (B) is the sum of Net
Purchase Payments less any withdrawals and less any previously deducted
withdrawal or transfer charges; and (C) is the greatest Contract Value as
measured on each Contract Anniversary, plus any Purchase Payments after that
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anniversary; less any withdrawals and less any withdrawal or transfer charges
deducted after that anniversary.
The Contract Values taken into account for purposes of calculating (C)
are based on the Owner's age at issue. If the Owner's age at issue is 0-75,
(C) will take into account Contract Values for Contract Anniversaries when the
Owner's age is less than or equal to age 80. Thereafter, no subsequent
Contract Values will be taken into account, but prior Contract Values will
continue to be adjusted as described in (C). If the Owner's age at issue is
76-80, (C) will take into account Contract Values on each of the first five
Contract Anniversaries. Thereafter, no Contract Values will be taken into
account, but prior Contract Values will continue to be adjusted as described in
(C).
The Annual Reset Death Benefit on or after the Owner's 90th birthday
is the Net Contract Value.
INTEREST ACCRUAL DEATH BENEFIT. The amount paid will be the greatest
of (A) or (B), where: (A) is the Contract Value, and (B) is Net Purchase
Payments less any withdrawals and any previously deducted withdrawal or
transfer charges, all accumulated at the Death Benefit Interest Rate. The
Death Benefit Interest Rate is a weighted average of Interest Accrual Rates for
eligible Divisions, each ineligible Division, and each Stable Fixed Account
option. The calculation is done on a daily basis. The Interest Accrual Rate
for eligible Divisions is .0159654%, which is equivalent to 6% on an annual
basis. The Interest Accrual Rate for each ineligible Division and for each
Stable Fixed Account option is equal to the actual net rate of return for such
ineligible Division or Stable Value Fixed Account option. The Death Benefit
Interest Rate is based on the Interest Accrual Rates, each weighted by the
daily Contract Values in the eligible Divisions, each ineligible Division, and
each Stable Value Fixed Account option under the Contract.
Currently, Eligible Divisions are ___________. Ineligible Divisions
are ___________. We reserve the right to change the Eligible and Ineligible
Divisions in the future.
The calculation of (B) is based on the Owner's age at issue. If Joint
Owners exist, the age of the youngest Joint Owner is used. If the age at issue
is 0-75, (B) accumulates until the Contract Anniversary when the Owner reaches
age 80. After the Contract Anniversary when the Owner reaches age 80, (B) is
increased by any Net Purchase Payments and decreased by any withdrawals and
withdrawal or transfer charges since that date, but no further interest
accumulates. If the age at issue is 76-80, (B) accumulates until the Contract
Anniversary five years after the issue date of the Contract. Beyond this
anniversary, (B) is increased by any Net Purchase Payments and decreased by any
withdrawals and withdrawal or transfer charges since that date, but no further
interest accumulates.
The Interest Accrual Death Benefit after the maximum maturity age and
before the Annuity Date is the Net Contract Value.
If the Death Benefit is payable and an annuity option is chosen for
payment of the Death Benefit, the Annuity Date will be the date we receive due
proof of the Owner's death. The beneficiary must choose the annuity option as
well as whether the annuity payments are to be
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fixed or variable or a combination of fixed and variable. See "What are my
annuity options?," page ___. If, after 90 days, no annuity option has been
chosen for the Death Benefit to be paid, payment will be in one lump sum. If
the Beneficiary dies at the same time or within 10 days after the Owner dies,
the payments under the Contract due the Owner's death will be paid as if the
Beneficiary had died before the Owner. The order for payment to beneficiaries,
as well as a discussion of how beneficiaries are designated, see "Annuity
Payments Provisions" in the Statement of Additional Information.
For a discussion of the rules for paying the proceeds upon the death
of an Owner, see "Death of Owner" in the Statement of Additional Information.
10. WHAT OTHER INFORMATION SHOULD I KNOW?
PAINEWEBBER LIFE AND THE SEPARATE ACCOUNT
PAINEWEBBER LIFE INSURANCE COMPANY. PaineWebber Life is a stock life
insurance company organized under the laws of the State of California in 1956
as Pacific Fidelity Life Insurance Company. The executive and administrative
offices of PaineWebber Life are at 1200 Harbor Boulevard, Weehawken, New Jersey
07087 and 601 6th Avenue, Des Moines, Iowa 50309, respectively. PaineWebber
Life is a wholly-owned subsidiary of PaineWebber Life Holdings Inc., which in
turn is a wholly-owned subsidiary of PaineWebber Group Inc. PaineWebber Life
is subject to regulation by the Insurance Department of the State of California
as well as by the insurance departments of all other states and jurisdictions
in which it does business. PaineWebber Life is admitted to conduct life
insurance business in the District of Columbia and all states except
Connecticut and New York, and intends to market the Contract in all of the
jurisdictions in which it is admitted. PaineWebber Life submits annual
statements on its operations and finances to insurance officials in such states
and jurisdictions. The Contract described in this prospectus has been filed
with and, where required, approved by, insurance officials in those
jurisdictions where it is sold.
PaineWebber Life has entered into a contract with American Republic
Insurance Company, 601 6th Avenue, Des Moines, Iowa 50309, under which the
latter has agreed to perform certain of the administrative services relating to
the Contract. Such administrative services include: issuing Contracts,
maintaining Contract Owner records (accounting, valuation and reporting
services) and issuing reports.
PaineWebber Life intends to reinsure all or a portion of its
guaranteed obligations under the Contracts.
PAINEWEBBER LIFE'S STABLE VALUE FIXED ACCOUNT OPTION. The Stable
Value Fixed Account is part of PaineWebber Life's general account assets.
PaineWebber Life's general account assets are used to support our insurance and
annuity obligations other than those funded by separate accounts. Subject to
applicable law, PaineWebber Life has sole discretion over the investment of the
assets of the Stable Value Fixed Account.
BECAUSE OF EXEMPTIVE AND EXCLUSIONARY PROVISIONS, INTERESTS IN THE
STABLE VALUE FIXED ACCOUNT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 NOR HAS THE STABLE VALUE FIXED ACCOUNT BEEN REGISTERED AS AN INVESTMENT
COMPANY UNDER THE 1940 ACT. ACCORDINGLY, NEITHER THE STABLE VALUE FIXED
ACCOUNT NOR ANY INTERESTS THEREIN ARE SUBJECT TO THE PROVISIONS
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<PAGE> 46
OF THESE ACTS AND, AS A RESULT, THE STAFF OF THE SECURITIES AND EXCHANGE
COMMISSION HAS NOT REVIEWED THE DISCLOSURE IN THIS PROSPECTUS RELATING TO THE
STABLE VALUE FIXED ACCOUNT. THE DISCLOSURE REGARDING THE STABLE VALUE FIXED
ACCOUNT MAY, HOWEVER, BE SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF
THE FEDERAL SECURITIES LAWS RELATING TO THE ACCURACY AND COMPLETENESS OF
STATEMENTS MADE IN A PROSPECTUS.
THE SEPARATE ACCOUNT. PaineWebber Life established the Separate
Account on December 31, 1992, pursuant to the provisions of the California
insurance laws, as a segregated investment account of PaineWebber Life. The
Separate Account is registered with the SEC as a unit investment trust under
the 1940 Act. Such registration does not involve supervision of the management
of the Separate Account or PaineWebber Life by the SEC.
The Separate Account currently has nine available Divisions each of
which is invested in shares of a designated portfolio of the Fund: the Money
Market Portfolio, the Strategic Fixed Income Portfolio, the High Grade Fixed
Income Portfolio, the Global Income Portfolio, the Balanced Portfolio, the
Growth and Income Portfolio, the Growth Portfolio, the Aggressive Growth
Portfolio, and the Global Growth Portfolio. The Separate Account and each
Division therein is administered as part of the general business of PaineWebber
Life. Income, gains and losses, realized or unrealized, of each Division are
credited to or charged against that Division without regard to any other
income, gains or losses of any other Division or PaineWebber Life. California
insurance law provides that the assets of the Separate Account are not
chargeable with liabilities arising out of any other business PaineWebber Life
may conduct.
PaineWebber Life owns the assets in the Separate Account and is
obligated to pay all benefits under the Policies. The Contract Value allocated
to the Divisions and the amount of Variable Annuity payments will vary with the
investment experience of the Divisions(s) to which the Contract Owner's
Contract Value is allocated. Such amounts will be subject to certain charges
and deductions.
The Separate Account may include other Divisions that are not
available under the Contract and are not otherwise discussed in this
prospectus. PaineWebber Life may substitute another division or insurance
company separate account under the Contracts if, in PaineWebber Life's
judgment, investment in a Division should no longer be possible or becomes
inappropriate to the purposes of the Contracts, or if investment in another
division or insurance company separate account is in the best interest of
Owners. No substitution may take place without notice to Owners and prior
approval of the SEC and insurance regulatory authorities, to the extent
required by the 1940 Act and applicable law.
PAINEWEBBER SERIES TRUST. Mitchell Hutchins Asset Management Inc.
("Mitchell Hutchins") acts as the investment adviser and administrator for each
Portfolio and the PaineWebber Series Trust. Mitchell Hutchins is a Delaware
corporation and a wholly-owned subsidiary of PaineWebber Incorporated, which is
in turn a wholly-owned subsidiary of PaineWebber Group Inc., a publicly held
financial services holding company. Mitchell Hutchins has engaged the
following investment management firms to serve as investment subadvisers, and
provide day-to-day management for the Portfolios indicated: (i) Pacific
Investment Management Company for the Strategic Fixed Income Portfolio; (ii)
Nicholas-Applegate Capital Management for the Aggressive Growth Portfolio; and
(iii) GE Investment Management Incorporated for the
- 31 -
<PAGE> 47
Global Growth Portfolio. For more information concerning the investment
adviser and investment sub-advisers, please see the accompanying prospectus for
the PaineWebber Series Trust.
VOTING OF FUND SHARES. PaineWebber Life is the legal owner of shares
held by the Divisions of the Separate Account and as such has the right to vote
on all matters submitted to shareholders of the Portfolios. However, as
required by law, PaineWebber Life will vote shares held in the Divisions of the
Separate Account at regular and special meetings of shareholders of the
Portfolios in accordance with instructions received from Owners with Contract
Value in the Divisions of the Separate Account. To obtain voting instructions
from Owners, before a meeting of shareholders of the Portfolios, PaineWebber
Life will send Owners voting instruction materials, a voting instruction form
and any other related material. Shares held by a Division of the Separate
Account for which no timely instructions are received will be voted by
PaineWebber Life in the same proportion as those shares for which voting
instructions are received. Should the applicable federal securities laws,
regulations or interpretations thereof change so as to permit PaineWebber Life
to vote shares of the Portfolios in its own right, PaineWebber Life may elect
to do so.
MODIFICATION
We may modify the Contract to conform the Contract, our operations, or
the operation of the Separate Account to the requirements of any law (or
regulation issued by a government agency) to which we, the Contract, or the
Separate Account is subject. The Contract may be modified only by an executive
officer of PaineWebber Life.
DOLLARS
Any money we pay, or which is paid to us, must be in United States
dollars.
DISTRIBUTION OF THE POLICIES
PaineWebber Incorporated ("PWI"), a wholly-owned subsidiary of
PaineWebber Group, Inc., acts as the principal underwriter of the Contracts.
PWI is a corporation organized under the laws of the State of
[_____________________] in [DATE], is registered as a broker-dealer under the
Securities Exchange Act of 1934, and is a member of the National Association of
Securities Dealers, Inc. (the "NASD"). The Contracts may not be available in
all states. The Contracts are sold by certain registered representatives of
PWI who are also appointed and licensed as insurance agents. These registered
representatives receive commissions for selling Contracts calculated as a
percentage of Purchase Payments. Registered representatives who meet certain
productivity and profitability standards may be eligible for additional
compensation. The commissions paid to dealers range up to a maximum of [__%]
of Purchase Payments made, and the selling compensation paid in turn to an
agent may be up to the amount paid to dealers. Selling agents may also
receiver service fees and/or additional compensation based on persistency or
other Contract related features up to a maximum of [____%] of the value of the
Contract per year beginning in the second Contract year, as well as non-cash
compensation, each in accordance with applicable rules of the National
Association of Securities Dealers, Inc.
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<PAGE> 48
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account is a
party or the assets of the Separate Account are subject. We are not involved
in any litigation that is of material importance in relation to our total
assets or that relates to the Separate Account.
REPORTS TO CONTRACT OWNERS
PaineWebber Life maintains records and accounts of all transactions
involving the Contract, the Separate Account, and the Stable Value Fixed
Account. Each year, or more often if required by law, you will be sent a
report showing information about your Contract for the period covered by the
report. You will also be sent an annual and a semi-annual report for each
Portfolio underlying a Division of the Separate Account to which you have
allocated Contract Value, as required by the 1940 Act. In addition, when you
make Purchase Payments, or if you make transfers or withdrawals, you will
receive a confirmation of these transactions. You will also be sent notices,
proxies and solicitation materials which relate to the PaineWebber Series
Trust.
FINANCIAL STATEMENTS
The audited balance sheets for the PaineWebber Life Insurance Company
as of December 31, 1996 and 1995, and the related statements of income,
stockholder's equity, and cash flows for the year ended December 31, 1996, as
well as the Report of the Independent Auditors, are contained in the Statement
of Additional Information. The financial statements of the PaineWebber Life
Insurance Company should be considered only as bearing on our ability to meet
our obligations under the Policies. They should not be considered as bearing
on the investment performance of the assets held in the Separate Account.
11. HOW CAN I MAKE INQUIRIES?
Inquiries regarding a Contract may be made by writing to us at our
Administrative Office, by calling us at (800) XXX-XXXX, or by contacting an
authorized PaineWebber Life agent.
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<PAGE> 49
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION
Additional information about the policies and the Separate Account is
contained in the Statement of Additional Information. You can obtain a free
copy of the Statement of Additional Information by writing to us at the address
shown on the front cover or by calling 1-800-___-____. The following is the
Table of Contents for the Statement of Additional Information.
TABLE OF CONTENTS
<TABLE>
<S> <C>
ADDITIONAL CONTRACT PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
CALCULATION OF HISTORICAL PERFORMANCE DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
NET INVESTMENT FACTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ANNUITY PAYMENT PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
PAYMENT OF PROCEEDS UPON DEATH OF OWNER OR ANNUITANT . . . . . . . . . . . . . . . . . . . . . . . . . 9
DEATH OF ANNUITANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SAFEKEEPING OF ACCOUNT ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
DISTRIBUTION OF THE POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
- 34 -
<PAGE> 50
PART B
STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 51
STATEMENT OF ADDITIONAL INFORMATION
DATED _____________ __, 1997
_______________________________________VARIABLE ANNUITY CONTRACT
PAINEWEBBER LIFE VARIABLE ANNUITY ACCOUNT
OF PAINEWEBBER LIFE INSURANCE COMPANY
Administrative Office: Executive Office:
601 6th Avenue 1200 Harbor Boulevard
Des Moines, Iowa 50309 Weehawken, New Jersey 07087
--------------------
This Statement of Additional Information expands upon subjects
discussed in the current Prospectus for the group deferred variable annuity
contracts and individual certificates issued thereunder (collectively referred
to as the "Contracts") offered by PaineWebber Life Insurance Company
("PaineWebber Life, "we," "us," or "our"). You may obtain a copy of the
Prospectus dated ____________________ by calling 1-800-XXX-XXXX or by writing
to our Administrative Office at the above address. Terms used in the current
Prospectus for the Contract are incorporated into and made a part of this
Statement of Additional Information.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE READ
ONLY IN CONJUNCTION WITH THE PROSPECTUSES
FOR THE CONTRACT AND THE PORTFOLIOS.
<PAGE> 52
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ADDITIONAL CONTRACT PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Incontestability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Error in Age or Sex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
CALCULATION OF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Money Market Division Yields . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Other Division Yields . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Average Annual Total Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Other Total Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Use of Indexes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
NET INVESTMENT FACTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ANNUITY PAYMENT PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Illustration of Calculation of Annuity Unit Value . . . . . . . . . . . . . . . . . . . 8
Illustration of Variable Annuity Payments . . . . . . . . . . . . . . . . . . . . . . . 9
PAYMENT OF PROCEEDS UPON DEATH OF OWNER OR ANNUITANT . . . . . . . . . . . . . . . . . . . . . . 9
DEATH OF ANNUITANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . 12
SAFEKEEPING OF ACCOUNT ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
DISTRIBUTION OF THE POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
- i -
<PAGE> 53
ADDITIONAL CONTRACT PROVISIONS
THE CONTRACT
The Contract includes the group contract, the individual certificate
issued thereunder, any amendments, endorsements, and riders, and a copy of the
group contract and individual certificate applications. The Contract is the
entire contract.
Only an officer has the right to change the Contract. No agent has
the authority to change the Contract or to waive any of its terms. All
endorsements, amendments, or riders must be signed by an officer to be valid.
OWNERSHIP
You, as the Owner, are named in the application. You may exercise any
provision of the Contract only by request and while the Annuitant is alive.
You may change the Owner by sending us a request while the Annuitant
is alive. We have the right to request the Contract to make the change on it.
The change will take effect the day you sign the request, but the change will
not affect any action we have taken before we receive the request. A change of
Owner does not change the beneficiary designation. No more than two Owners can
be named.
INCONTESTABILITY
We will not contest the Contract. Any rider has its own
incontestability provision.
ERROR IN AGE OR SEX
If the Annuitant's or second designated person's date of birth or sex
is not correct, every benefit will be such as premiums paid would have bought
at the correct age or sex, based on the rates at the date of issue. We may
require proof of age and sex before annuity payments start. Any overpayment
with compound interest at 6% a year will be charged against future payments
after the error is found. Any underpayment with compound interest at 6% a year
will be paid to you in full with the next payment.
PARTICIPATION
We will not pay dividends on the Contract.
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<PAGE> 54
ASSIGNMENT
You may assign the Contract or any interest in it. We will recognize
an assignment only if it is in writing and filed with us. We are not
responsible for the validity or effect of any assignment. An assignment may
limit the interest of any Beneficiary.
CALCULATION OF HISTORICAL PERFORMANCE DATA
From time to time, PaineWebber Life may disclose yields, total
returns, and other performance data of the Divisions and the Portfolios. Such
performance data will be computed, or accompanied by performance data computed,
in accordance with the standards defined by the SEC.
MONEY MARKET DIVISION YIELDS
From time to time, advertisements and sales literature may quote the
current annualized yield of the Division investing in the Money Market
Portfolio of the PaineWebber Series Trust for a seven-day period in a manner
that does not take into consideration any realized or unrealized gains or
losses on shares of the Money Market Portfolio (the "Money Market Division").
This current annualized yield is computed by determining the net
change (exclusive of realized gains and losses on the sale of securities and
unrealized appreciation and depreciation) at the end of the seven-day period in
the value of a hypothetical account under a Contract having a balance of one
Accumulation Unit of the Money Market Division at the beginning of the period,
dividing such net change in account value by the value of the hypothetical
account at the beginning of the period to determine the base period return, and
annualizing this quotient on a 365-day basis. The net change in account value
reflects: 1) net income from the Money Market Portfolio attributable to the
hypothetical account; and 2) charges and deductions imposed under the Contract
which are attributable to the hypothetical account. The charges and deductions
include the per unit charges for the hypothetical account for the daily charge.
Current Yield is calculated according to the following formula:
Current Yield = ((NCS - ES)/UV) X (365/7)
Where:
NCS = the net change in the value of the Money Market
Portfolio (exclusive of realized gains or losses on
the sale of securities and unrealized appreciation
and depreciation) for the seven-day period
attributable to a hypothetical account having a
balance of one Accumulation Unit.
ES = per unit expenses attributable to the hypothetical
account for the seven-day period.
- 2 -
<PAGE> 55
UV = the unit value for the first day of the seven-day
period.
365/7
Effective yield = (1 + ((NCS-ES)/UV)) - 1
Where:
NCS = the net change in the value of the Money Market
Portfolio (exclusive of realized gains or losses on
the sale of securities and unrealized appreciation
and depreciation) for the seven-day period
attributable to a hypothetical account having a
balance of one Accumulation Unit.
ES = per unit expenses attributable to the hypothetical
account for the seven-day period.
UV = the unit value for the first day of the seven-day
period.
Because of the charges and deductions imposed under the Contract, the
yield for the Money Market Division is lower than the yield for the Money
Market Portfolio.
The current and effective yields on amounts held in the Money Market
Division normally fluctuate on a daily basis. THEREFORE, THE DISCLOSED YIELD
FOR ANY GIVEN PAST PERIOD IS NOT AN INDICATION OR REPRESENTATION OF FUTURE
YIELDS OR RATES OF RETURN. The Money Market Division's actual yield is
affected by changes in interest rates on money market securities, average
portfolio maturity of the Money Market Portfolio, the types and quality of
portfolio securities held by the Money Market Portfolio and the Money Market
Portfolio's operating expenses. Yields on amounts held in the Money Market
Division may also be presented for periods other than a seven-day period.
Yield calculations do not take into account the Early Withdrawal
Charge that is assessed on certain withdrawals of Contract Value.
OTHER DIVISION YIELDS
From time to time, sales literature or advertisements may quote the
current annualized yield of one or more of the Divisions (except the Money
Market Division) under the Contract for 30-day or one-month periods. The
annualized yield of a Division refers to income generated by the Division
during a 30-day or one-month period and is assumed to be generated each period
over a 12-month period.
The yield is computed by: 1) dividing the net investment income of
the Portfolio attributable to the Division units less Division expenses for the
period; by 2) the maximum offering price per unit on the last day of the period
times the daily average number of Accumulation Units outstanding for the
period; by 3) compounding that yield for a six-month period; and by 4)
multiplying that result by 2. Expenses attributable to the Division include
the daily charge. The 30-day or one-month yield is calculated according to the
following formula:
- 3 -
<PAGE> 56
6
Yield = 2 X (((NI - ES)/(U X UV)) + 1) - 1)
Where:
NI = net income of the portfolio for the 30-day or
one-month period attributable to the Division's
Accumulation Units.
ES = expenses of the Division for the 30-day or one-month
period.
U = the average number of units outstanding.
UV = the unit value at the close (highest) of the last
day in the 30-day or one-month period.
Because of the charges and deductions imposed under the Contracts, the
yield for the Division is lower than the yield for the corresponding Portfolio.
The yield on the amounts held in the Divisions normally fluctuates
over time. THEREFORE, THE DISCLOSED YIELD FOR ANY GIVEN PAST PERIOD IS NOT AN
INDICATION OR REPRESENTATION OF FUTURE YIELDS OR RATES OF RETURN. A Division's
actual yield is affected by the types and quality of portfolio securities held
by the corresponding Portfolio and that Portfolio's operating expenses.
Yield calculations do not take into account the Early Withdrawal
Charge that is assessed on certain withdrawals, annuitization, and death
benefit payment under the Contract.
AVERAGE ANNUAL TOTAL RETURNS
From time to time, sales literature or advertisements may also quote
average annual total returns for one or more of the Divisions for various
periods of time.
When a Division or Portfolio has been in operation for 1, 5, and 10
years, respectively, the average annual total return for these periods will be
provided. Average annual total returns for other periods of time may, from
time to time, also be disclosed.
Standard average annual total returns represent the average annual
compounded rates of return that would equate an initial investment of $1,000
under a Contract to the redemption value of that investment as of the last day
of each of the periods. The ending date for each period for which total return
quotations are provided will be for the most recent calendar quarter-end
practicable, considering the type of the communication and the media through
which it is communicated.
Standard average annual total returns are calculated using Division
Unit Values which PaineWebber Life calculates on each Valuation Day based on
the performance of the Division's underlying Portfolio and the deductions for
the daily charge. The calculation also assumes surrender of Contract Value at
the end of the period for the return quotation, taking into account
- 4 -
<PAGE> 57
the applicable Free Withdrawal Amount. The total return is calculated
according to the following formula:
1/N
TR = ((ERV/P) ) - 1
Where:
TR = the average annual total return net of Division
recurring charges.
ERV = the ending redeemable value (net of any applicable
Early Withdrawal Charge) of the hypothetical account
at the end of the period.
P = a hypothetical initial payment of $1,000.
N = the number of years in the period.
From time to time, sales literature or advertisements may quote
average annual total returns for periods prior to the date the Divisions
commenced operations. Such performance information for the Divisions is
calculated based on the performance of the various Portfolios and the
assumption that the Divisions were in existence for the same periods as those
indicated for the Portfolios, with the level of Contract charges that were in
effect at the inception of the Divisions.
OTHER TOTAL RETURNS
From time to time, sales literature or advertisements may also quote
average annual total returns that do not reflect deduction of the Early
Withdrawal Charge. Other total returns are calculated in exactly the same way
as average annual total returns described above, except that the ending
redeemable value of the hypothetical account for the period is replaced with an
ending value for the period that does not take into account any charges on
amounts withdrawn.
PaineWebber Life may disclose cumulative total returns in conjunction
with the standard formats described above. The cumulative total returns will
be calculated using the following formula:
CTR = (ERV/P) - 1
Where:
CTR = The cumulative total return net of Division recurring
charges for the period.
ERV = The ending redeemable value of the hypothetical investment at
the end of the period.
P = A hypothetical single payment of $1,000.
USE OF INDEXES
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<PAGE> 58
From time to time, the performance of certain historical indexes may
be presented in advertisements or sales literature. The performance of these
indexes may be compared to the performance of certain Divisions or Portfolios,
or may be presented without such a comparison.
OTHER INFORMATION
The following is a partial list of those publications which may be
cited in the Portfolios' advertising shareholder materials which contain
articles describing investment results or other data relative to one or more of
the Divisions. Other publications may also be cited.
<TABLE>
<S> <C>
Broker World Financial World
Across the Board Advertising Age
American Banker Barron's
Best's Review Business Insurance
Business Month Business Week
Changing Times Consumer Reports
Economist Financial Planning
Forbes Fortune
Inc. Institutional Investor
Insurance Forum Insurance Sales
Insurance Week Journal of Accountancy
Journal of the American Society of Journal of Commerce
CLU & ChFC
Life Insurance Selling Life Association News
MarketFacts Manager's Magazine
National Underwriter Money
Morningstar, Inc. Nation's Business
New Choices (formerly 50 Plus) New York Times
Pension World Pensions & Investments
Rough Notes Round the Table
U.S. Banker VARDs
Wall Street Journal Working Woman
</TABLE>
NET INVESTMENT FACTOR
The Net Investment Factor is an index applied to measure the
investment performance of a Division from one Valuation Period to the next.
The Net Investment Factor for any Division for any Valuation Period is equal to
(1) divided by (2) and subtracting (3) from the result, where:
(1) is the result of:
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<PAGE> 59
(a) the Net Asset Value Per Share of the Portfolio held
in the Division determined at the end of the current
Valuation Period; plus
(b) the per share amount of any dividend or capital gain
or other distribution made by the Portfolio held in
the Division, if the "ex-dividend" date occurs
during the Valuation period; plus or minus
(c) a per share charge or credit for any taxes reserved
for the current Valuation Period, which resulted
from the investment operations of the Division;
(2) is the Net Asset Value Per Share of the Portfolio held in
the Division, determined at the end of the prior Valuation
Period,
(3) is a daily factor representing the daily charge deducted
from the Division, based on the death benefit and income
benefit options selected by the Owner in the application,
adjusted for the number of days in the Valuation Period.
Such charge will not exceed an annual rate of [1.30%] of the
daily net asset value of the Separate Account.
ANNUITY PAYMENT PROVISIONS
AMOUNT OF FIXED ANNUITY PAYMENTS. On the Annuity Date, the amount you
have chosen to apply to provide fixed annuity payments will be applied under
the annuity option you have chosen. The annuity option payment factor in
effect on the Annuity Date times that amount will be the dollar amount of each
payment. Each payment will be equal and will not change.
The annuity option payment factor used to determine the amount of the
fixed annuity payments will not be less than the guaranteed minimum annuity
payment factors shown in the Contract.
AMOUNT OF VARIABLE ANNUITY PAYMENTS. These payments will vary in
amount. The dollar amount of each payment attributable to each Division is the
number of Annuity Units for each Division times the Annuity Unit Value of that
Division. The sum of the dollar amounts for each Division is the amount of the
total variable annuity payment. The Annuity Unit Value for each payment will be
determined on the date the annuity payment is due. We guarantee the payment
will not vary due to changes in mortality or expenses.
ANNUITY UNITS. On the Annuity Date, the number of Annuity Units for
an applicable Division is:
(1) The amount of the first monthly Variable Annuity Payment
attributable to that Division; divided by
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<PAGE> 60
(2) the Annuity Unit Value for the Division for the first
Valuation Day on or after the Annuity Date.
ANNUITY UNIT VALUE. The Annuity Unit Values for each Division were
arbitrarily set initially at $10 when that Division began operation.
Thereafter, the Annuity Unit Value for every Valuation Period is the Annuity
Unit Value at the end of the previous Valuation Day times the Net Investment
Factor times the Annuity Interest Factor. The Annuity Interest Factor is used
to neutralize the Assumed Investment Rate of 4% a year used to determine the
annuity option payment factors. The Assumed Investment Rate is significant in
determining the amount of each variable annuity payment and the amount by which
each variable annuity payments varies from one payment to the next.
ILLUSTRATION OF CALCULATION OF ANNUITY UNIT VALUE
<TABLE>
<S> <C>
1. Accumulation unit value for current
valuation period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. Accumulation unit value for immediately
preceding valuation period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. Annuity unit value for immediately preceding
valuation period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. Factor to compensate for the assumed
investment rate of 3.5% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. Annuity unit value of current valuation
period ((1) / (2)) x (3) x (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
ILLUSTRATION OF VARIABLE ANNUITY PAYMENTS
<TABLE>
<S> <C>
1. Number of accumulation units at Maturity Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. Accumulation unit value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. Adjusted Contract Value (1)x(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. First monthly annuity payment per $1,000
of adj. Contract Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. First monthly annuity payment (3)x(4) / 1,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6. Annuity unit value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7. Number of annuity units (5)/(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8. Assume annuity unit value for second month equal to . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9. Second monthly annuity payment (7)x(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10. Assume annuity unit value for third month equal to . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11. Third monthly annuity payment (7)x(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
PAYMENT OF PROCEEDS UPON DEATH OF OWNER OR ANNUITANT
- 8 -
<PAGE> 61
DEATH OF OWNER
The Code requires the following distributions under an annuity when
you die.
(1) If you die before the Annuity Date, you are not the
Annuitant, and you either have not named a successor owner
or your named successor owner is not a living natural
person, the Net Contract Value must be paid within five
years after your date of death.
(2) If you die before the Annuity Date, you are the Annuitant,
and you either have not named any beneficiary or your named
beneficiary is not a living natural person, the death
benefit must be paid within 5 years after your date of
death.
(3) If you die before the Annuity Date, you are not the
Annuitant, and your sole successor owner is a person other
than your spouse, your successor owner may elect to have the
Net Contract Value paid under an annuity option or any other
method of payment then provided by us other than an interest
only method of payment. The election must be made and
payments must start within one year after your death and
must not extend beyond the life expectancy of your successor
owner. If no election is made within this time,
distribution will be made within five years after your date
of death.
(4) If you die before the Annuity Date, you are the Annuitant,
and your sole named surviving primary beneficiary is a
person other than your spouse, your surviving primary
beneficiary may elect to have the Death Benefit paid under
an annuity option or any other method of payment then
provided by us other than an interest only method of
payment. The election must be made and payments must start
within one year after your death and must not extend beyond
the life expectancy of your primary beneficiary. If no
election is made within this time, distribution will be made
within five years after your date of death.
(5) If you die before the Annuity Date, you are not the
Annuitant, and your sole successor owner is your surviving
spouse, your surviving spouse becomes the Owner.
(6) If you die before the Annuity Date, you are the Annuitant,
and your surviving spouse is your sole named primary
beneficiary, your spouse will replace you as Owner and may
replace you as Annuitant. This is a one-time option, and is
not available to any future spouse of the surviving spouse.
If your spouse does not elect to replace you as Annuitant,
the Death Benefit must be paid to your spouse under an
annuity option or any other
- 9 -
<PAGE> 62
method of payment then provided by us for an owner. For
purposes of the preceding sentence, the election must be
made, payments must start within one year after your death,
and must not extend beyond your spouse's life expectancy;
however, if your spouse does not choose a method of payment
within this time, distribution will be made under Annuity
Option 2.
(7) If you die on or after the Annuity Date and you are not the
Annuitant, any remaining payments must be paid to your
successor owner at least as fast as the method of payment in
effect at your death.
(8) If you die on or after the Annuity Date and you are the
Annuitant, any remaining payments must be paid to the
beneficiary at least as fast as the method of payment in
effect at your death.
If you are not a living natural person, the Annuitant will be treated
as the Owner for purposes of this provision. If you are not a living natural
person and there is a change in the Annuitant, such change shall be treated as
the death of the Owner for purposes of this provision. If the Contract has two
owners, the first death of either owner treated as death of the owner for
purposes of this provision. For purposes of this provision, the amount of any
distribution will be determined on that date of such distribution.
Notwithstanding anything in the Contract to the contrary, the surviving joint
owner will be treated as the successor owner of the Contract.
DEATH OF ANNUITANT
DEATH OF ANNUITANT WHO IS NOT AN OWNER. No Death Benefit is paid if an
Annuitant who is not the Owner dies prior to the Owner. If the Annuitant dies
prior to the Owner, the Owner automatically becomes the Annuitant. If Joint
Owners exist, the younger of the Joint Owners will become the Annuitant.
BENEFICIARY DESIGNATION. This is as shown in the application. It
includes the name of the beneficiary and the order and method of payment. If
you name "estate" as a beneficiary, it means the executors or administrators of
the last survivor of you and all beneficiaries. If you name "children" of a
person as a beneficiary, only children born to or legally adopted by that
person as of the Annuitant's date of death will be included.
We may rely on an affidavit as to the ages, names, and other facts
about all beneficiaries. We will incur no liability if we act on such
affidavit.
- 10 -
<PAGE> 63
CHANGE OF BENEFICIARY DESIGNATION. You may make a change while the
Annuitant is alive by sending us a request. The change will take effect the
date the request is signed and will replace previous beneficiary designations
for the Contract, but the change will not affect any action we have taken
before we receive the request. We have the right to request your Contract to
make the change on it.
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS
CHANGES TO THE VARIABLE ACCOUNT. Where permitted by applicable law,
we may:
(1) create new separate accounts;
(2) combine separate accounts, including the Separate Account;
(3) add new Divisions to or remove existing Divisions from the
Separate Account or combine Divisions;
(4) make any Division available to such classes of policies as
we may determine;
(5) add new Portfolios or remove existing Portfolios;
(6) substitute new Portfolios for any existing Portfolio if
shares of the Portfolio are no longer available for
investment or if we determine investment in a Portfolio is
no longer appropriate in the light of the purposes of the
Separate Account;
(7) deregister the Separate Account under the Act if such
registration is no longer required; and
(8) operate the Separate Account as a management investment
company under the Act or in any other form permitted by law.
The investment policies of the Separate Account will only be changed
after we obtain any required approval of the insurance supervisory official of
the State of California, our State of domicile. The investment policy of the
Separate Account is to invest in one or more investment companies. The process
for such approval is on file.
SAFEKEEPING OF ACCOUNT ASSETS
PaineWebber Life holds the title to the assets of the Separate
Account. The assets are kept physically segregated and held separate and apart
from PaineWebber Life's General Account assets and from the assets in any other
separate account.
- 11 -
<PAGE> 64
Records are maintained of all purchases and redemptions of Portfolio
shares held by each of the Divisions.
A fidelity bond in the amount of $___________________ million,
covering our directors, officers, and employees, has been issued by
________________________________________.
DISTRIBUTION OF THE POLICIES
PaineWebber Incorporated ("PWI"), 1285 Avenue of the Americas, New
York, New York 10019, acts as the principal underwriter of the Contracts. The
Contracts are offered to the public on a continuous basis. We do not
anticipate discontinuing the offering of the Contracts, but reserve the right
to discontinue the offering.
PWI received underwriting compensation from PaineWebber Life Insurance
Company in connection with the sale of variable contracts in the amounts of
$3,494,777 in 1994, $700,176 in 1995 and $194,010 in 1996.
LEGAL MATTERS
All matters relating to California law pertaining to the Contracts,
including the validity of the Contracts and PaineWebber Life's authority to
issue the Contracts, have been passed upon by _________________. Sutherland,
Asbill & Brennan, L.L.P. of Washington, D.C. has provided advice on certain
matters relating to the federal securities laws.
EXPERTS
The balance sheets of PaineWebber Life Insurance Company as of
December 31, 1996 and 1995, and the related statements of income, stockholder's
equity, and cash flows for each of the years in the period ended December 31,
1995 which have been audited by ______________, independent auditors, as set
forth in their reports thereon are set forth below.
The financial statements of the Company contained herein should be
considered only for the purposes of informing investors as to its ability to
carry out contratual obligations as a sponsor under the Contracts as described
herein and in the Prospectus.
- 12 -
<PAGE> 65
OTHER INFORMATION
A registration statement has been filed with the SEC under the
Securities Act of 1933, as amended, with respect to the Contracts discussed in
this Statement of Additional Information. Not all the information set forth in
the registration statement, amendments and exhibits thereto has been included
in this Statement of Additional Information. Statements contained in this
Statement of Additional Information concerning the content of the Contracts and
other legal instruments are intended to be summaries. For a complete statement
of the terms of these documents, reference should be made to the instruments
filed with the SEC.
FINANCIAL STATEMENTS
[TO BE FILED BY PRE-EFFECTIVE AMENDMENT.]
- 13 -
<PAGE> 66
PART C
OTHER INFORMATION
<PAGE> 67
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
All required financial statements will be included in Part B and will
be filed by Pre-Effective Amendment.
(b) Exhibits
(1) Resolutions establishing the Separate Account (the "Separate
Account").**
(2) Not Applicable.
(3) Form of Distribution Contract.***
(4) (a) Form of Group Contract.
(b) Form of Individual Certificate.
(5) Form of Application.
(6) Depositor - Corporate Documents
(a) Certificate of Incorporation.**
(b) By-Laws.***
(c) Certificate of Authority.***
(7) Not Applicable.
(8) Not Applicable.
(9) Opinion and Consent of Counsel.*
(10) (a) Consent of Sutherland, Asbill & Brennan, L.L.P.*
(b) Consent of Auditors.*
(11) Not Applicable.
(12) Not Applicable.
(13) Performance Computations.**
(14) Diagram and Listing of all Persons directly or indirectly
controlled by or under common control with PaineWebber Life
Insurance Company, the Depositor of the Registrant.***
(15) Financial Data Schedule.*
<PAGE> 68
- ----------------
* To be filed by Pre-Effective Amendment.
** Previously filed with Registrant's registration statement No.
33-58808 on April 22, 1993.
*** Previously filed with Registrant's Pre-Effective Amendment No. 1
to registration statement No. 33-58808 on June 25, 1993.
C-2
<PAGE> 69
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
<TABLE>
<CAPTION>
NAME AND PRINCIPAL
BUSINESS ADDRESS* POSITION WITH PAINEWEBBER
---------------- -------------------------
<S> <C>
Dennis J. Hess Director, Chairman of the Board and President
Robert J. Bethoney Director and Executive Vice President
Allan P. Golotko Vice President
Gerianne J. Silva Vice President and Assistant Secretary
Kenneth D. Levine Assistant Treasurer
Richard J. Tucker Director, Senior Vice President, and Secretary
</TABLE>
* The principal business address of all the persons listed above is 1200
Harbor Boulevard, Weehawken, New Jersey 07087.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
The Registrant is a separate account of the Depositor. For a complete
listing and diagram of all persons directly or indirectly controlled by or
under common control with the Depositor, see Exhibit 14 to Pre-Effective
Amendment No. 1 to the Registration Statement filed on June 25, 1993 (File Nos.
33-58808 and 811-7536).
ITEM 27. NUMBER OF CONTRACT OWNERS
Not applicable.
ITEM 28. INDEMNIFICATION
Paine Webber Group, Inc., the ultimate parent of the Depositor and
PaineWebber Incorporated ("PWI"), (the depositor and principal underwriter for
the Registrant, respectively) maintains directors and officers liability and
corporate reimbursement insurance for itself and all subsidiaries. This
insurance provides for coverage against loss arising from claims made against
directors and officers in their capacity as such. The general scope of
coverage is any breach of duty, neglect, error, misstatement, misleading
statement or omission. In addition, the Distribution Contract between
Depositor and PWI will generally provide that each such party indemnities the
other party against any and all losses, claims, liabilities, expenses and
damages insofar as such matters arise or are based on material misstatements or
omissions in this registration statement (or allegations thereof) made in
reliance upon information furnished in writing to the indemnitee by the
indemnitor.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons, or
otherwise, the Registrant has been
C-3
<PAGE> 70
advised that in the opinion of the Commission such indemnification may be
against public policy as expressed in that Act and may be, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
ITEM 29. PRINCIPAL UNDERWRITER
(a) PWI serves as principal underwriter for the Registrant. In
addition to the registrant, PWI serves as principal
underwriter for the following investment companies:
Liquid Institutional Reserves
PaineWebber Cashfund, Inc.
PaineWebber Managed Municipal Trust
PaineWebber Municipal Money Market Series
PaineWebber RMA Money Fund, Inc.
PaineWebber RMA Tax-Free Fund, Inc.
(b) Officers and Directors of PWI.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address* With the Underwriter
- ------------------ ---------------------
<S> <C>
Donald B. Marron . . . . . . . . . . . . . . . . . . . . . . Chairman, Chief Executive Officer & Director
Margo N. Alexander . . . . . . . . . . . . . . . . . . . . . . . . . . Executive Vice President & Director
Terry L. Atkinson . . . . . . . . . . . . . . . . Managing Director & Director, Municipal Securities Group
Geraldine L. Banyai . . . . . . . . . . . . . . . . . . . . Divisional Vice President & Assistant Secretary
Brian Barefoot . . . . . . . . . . . . . . . . . . Executive Vice President & Director, Investment Banking
Steven P. Baum . . . . . . . . . . . . . . . . . Executive Vice President & Director, Global Fixed Income
Timothy E. Cronin . . . . . . . . . . . . . . . Executive Vice President, Global Risk Strategist & Director
</TABLE>
C-4
<PAGE> 71
<TABLE>
<S> <C>
Anthony M. DiIorio . . . . . . . . . . . . . . . . . . . . . . . . . . Executive Vice President & Controller
Regina A. Dolan . . . . . . . . . . . . . . . . . Executive Vice President, Chief Financial Officer & Director
Joseph J. Grano, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . President & Director
Dorothy F. Haughey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President & Secretary
Theodore A. Levine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Executive Vice President
Jerome A. Lichtstein . . . . . . . . . . . . . . . . . . Executive Vice President & Director, Retail Branches
James P. MacGilvray . . . . . . . . . . . . . . . . . . . . . . . . . . . Executive Vice President & Director,
Global Equities & Transaction Services
William J. Nolan . . . . . . . . . . . . . . . . . . . . . . . . . . . . Executive Vice President & Treasurer
Ronald M. Schwartz . . . . . . . . . . . . . Executive Vice President, Chief Administrative Officer & Director
Robert H. Silver . . . . . . . . . . . . . . . . . . Executive Vice President & Director, Operations & Systems
Mark B. Sutton . . . . . . . . . . . . . . . . . . Executive Vice President & Director, Private Clients Group
Edward M. Kerschner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Director
</TABLE>
* The principal business address of all of the persons listed above is
1200 Harbor Boulevard, Weehawken, New Jersey 07087.
ITEM 30. LOCATION BOOKS AND RECORDS
The Administrative Office of the Depositor is located at 601 6th
Avenue, Des Moines, Iowa 50309. PWI, the principal underwriter of the
Contracts, is located at 1285 Avenue of the Americas, New York, New
York 10019. Each maintains those accounts and records required to be
maintained by it pursuant to Section 31(a) of the Investment Company
Act of 1940 and the rules promulgated thereunder.
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
C-5
<PAGE> 72
ITEM 32. UNDERTAKINGS AND REPRESENTATIONS
Undertakings.
(a) The registrant undertakes that it will file a post-effective
amendment to this registration statement as frequently as is
necessary to ensure that the audited financial statements in
the registration statement are never more than 16 months old
for as long as payments under the variable annuity contracts
may be accepted.
(b) The registrant undertakes that it will include either (1) as
part of any application to purchase a Contract offered by
the prospectus forming part of this registration statement,
a space that an applicant can check to request a Statement
of Additional Information, or (2) a post card or similar
written communication affixed to or included in the
prospectus that the applicant can remove and send to
PaineWebber for a Statement of Additional Information.
(c) The registrant undertakes to deliver any Statement of
Additional Information and any financial statements required
to be made available under this Form N-4 promptly upon
written or oral request to PaineWebber at the address or
phone number listed in the prospectus.
Representations.
PaineWebber Life Insurance Company hereby represents that the fees and
charges deducted under the Contract, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred, and
the risks assumed by PaineWebber Life Insurance Company.
The Registrant hereby represents that it is relying upon a No-Action
Letter issued to the American Council of Life Insurance (pub. avail. November
28, 1988) and that the following provisions have been complied with:
1. Include appropriate disclosure regarding the redemption
restrictions imposed by Section 403(b)(11) in each
registration statement, including the prospectus, used in
connection with the offer of the contract;
2. Include appropriate disclosure regarding the redemption
restrictions imposed by Section 403(b)(11) in any sales
literature used in connection with the offer of the
contract;
C-6
<PAGE> 73
3. Instruct sales representatives who solicit participants to
purchase the contract specifically to bring the redemption
restrictions imposed by Section 403(b)(11) to the attention
of the potential participants;
4. Obtain from each plan participant who purchases a Section
403(b) annuity contract, prior to or at the time of such
purchase, a signed statement acknowledging the participant's
understanding of (1) the restrictions on redemption imposed
by Section 403(b)(11), and (2) other investment alternatives
available under the employer's Section 403(b) arrangement to
which the participant may elect to transfer his or her
contract value.
C-7
<PAGE> 74
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrant has duly caused this REGISTRATION STATEMENT to be
signed on its behalf, in the City of Weehawken, and the State of New Jersey on
this 23rd day of May, 1997.
<TABLE>
<S> <C>
PAINEWEBBER LIFE VARIABLE ANNUITY ACCOUNT
-----------------------------------------------
(Registrant)
By: PAINEWEBBER LIFE INSURANCE COMPANY
--------------------------------------------
(Depositor)
By: Dennis J. Hess*
--------------------------------------------
Dennis J. Hess
President
</TABLE>
As required by the Securities Act of 1933, this Registration Statement
has been signed below by the following persons in the capacities and on the
dates indicated:
<TABLE>
<S> <C> <C>
Dennis J. Hess* Chairman of the Board of May 23, 1997
- ------------------------------------------------ Directors and President
Dennis J. Hess (Principal Executive
Officer)
Arthur M. Scutro, Jr.* Principal Financial and May 23, 1997
- ------------------------------------------- Principal Accounting
Arthur M. Scutro, Jr. Officer
Robert J. Bethoney* Director and Executive Vice May 23, 1997
- --------------------------------------------- President
Robert J. Bethoney
Richard J. Tucker Director, Senior Vice May 23, 1997
- ----------------------------------------------- President and Secretary
Richard J. Tucker
</TABLE>
* Signed by Richard J. Tucker pursuant to power of attorney
C-8
<PAGE> 75
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned PAINEWEBBER LIFE INSURANCE
COMPANY, a stock life insurance company organized under the law of the State of
California (the "Company"), the undersigned PAINEWEBBER LIFE VARIABLE ANNUITY
ACCOUNT, a separate account of the Company created under the California
Insurance Code (the "Separate Account") and the undersigned directors and
officers of the Company, hereby constitute and appoint RICHARD J. TUCKER,
GERIANNE JASINKIEWICZ SILVA and/or any one of them, their true and lawful
attorneys and agents, to do any and all acts and things and to execute any and
all instruments that said attorneys and agents may deem necessary or advisable
to enable the Separate Account to comply with any rules, regulations and
requirements of the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended, and, in connection with any Variable Annuity
Contracts which may be registered under the Securities Act of 1933, as amended,
and offered in connection with the Separate Account to comply with any rules,
regulations and requirements of the Securities and Exchange Commission under
those Acts or under any other Federal securities law, including specifically
but without limiting the generality of the foregoing, power and authority to
sign the name of the Company or the name of the Separate Account, or the names
of the Company and the Separate Account, and the names of the undersigned
directors and officers, to any instrument or documents filed as part of or in
connection with or in any way related to (i) the registration and any amendment
to the registration of the Separate Account under the Investment Company Act of
1940, as amended; (ii) any action taken to comply with any rules, regulations
or requirements of the Securities and Exchange Commission under said Act or any
other Federal securities law; (iii) any application
<PAGE> 76
for and the securing of any exemptions from said Act or any other Federal
securities law; (iv) the registration of additional Variable Annuity Contracts
under the Securities Act of 1933, as amended, if such registration is deemed
necessary; and (v) any and all amendments to any registration statement which
may be filed under the Securities Act of 1933 in connection with such Variable
Annuity Contracts; each of the undersigned hereby ratifies and confirms all
that said attorneys and agents shall do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, each of the undersigned has subscribed or caused
to be subscribed these presents this 16th day of May, 1997.
<TABLE>
<S> <C>
PAINEWEBBER LIFE INSURANCE COMPANY
(Seal)
By: /s/Dennis J. Hess
--------------------------------------
Dennis J. Hess, President
ATTEST:
/s/Richard J. Tucker
- ----------------------------------
Richard J. Tucker, Secretary
</TABLE>
<PAGE> 77
<TABLE>
<S> <C>
PAINEWEBBER LIFE VARIABLE ANNUITY
ACCOUNT
By: PaineWebber Life Insurance Company
By: /s/Dennis J. Hess
---------------------------------------
Dennis J. Hess, President
ATTEST:
/s/Richard J. Tucker
- -----------------------------------
Richard J. Tucker, Secretary
</TABLE>
<PAGE> 78
DIRECTORS OF PAINEWEBBER LIFE INSURANCE COMPANY
<TABLE>
<S> <C> <C>
/s/Dennis J. Hess Principal Executive Officer May 16, 1997
- -------------------------- ------
Dennis J. Hess
/s/Arthur M. Scutro, Jr. Principal Accounting Officer May 16, 1997
- ------------------------ ------
Arthur M. Scutro, Jr.
/s/Arthur M. Scutro, Jr. Principal Financial Officer May 16, 1997
- ----------------------------- ------
Arthur M. Scutro, Jr.
/s/Robert J. Bethoney Director May 16, 1997
- ----------------------------- ------
Robert J. Bethoney
/s/Dennis J. Hess Director May 16, 1997
- ----------------------------- ------
Dennis J. Hess
/s/Richard J. Tucker Director May 16, 1997
- ----------------------------- ------
Richard J. Tucker
</TABLE>
<PAGE> 79
EXHIBIT INDEX
<TABLE>
<CAPTION>
Page No.*
---------
<S> <C>
4. (a) Form of Group Contract.
4. (b) Form of Individual Certificate.
5 Form of Application.
</TABLE>
- ---------------
* Page numbers included only in manually executed original in compliance with
Rule 403(d) under the Securities Act of 1933.
<PAGE> 1
Exhibit 4(a)
Form of Group Contract
<PAGE> 2
EXHIBIT (4)(a)
PAINEWEBBER LIFE
PAINEWEBBER LIFE INSURANCE COMPANY
Administrative Office
601 Sixth Avenue, Des Moines, Iowa 50309
GROUP CONTRACT NO. [9999999]
CONTRACTHOLDER: [THE ABC TRUST]
CONTRACT DELIVERED IN AND GOVERNED BY THE LAWS OF: [RHODE ISLAND]
DATE OF ISSUE: [SEPTEMBER 1, 1995]
[Page Num]This is a legal contract between the Contractholder and PaineWebber
Life Insurance Company. Read this Group Contract with care. PaineWebber Life
Insurance Company agrees, in accordance with the provisions of this Group
Contract, to pay benefits to the extent required by this Group Contract, to
those persons entitled to such benefits.
10 DAY RIGHT TO EXAMINE CERTIFICATE
Any certificate issued under this Group Contract may be returned by mailing or
delivering the certificate to us, or to our agent. If returned, the certificate
will be considered void from the beginning. The Certificate Owner will be sent
any Net Purchase Payment allocated to the Fixed Account plus any Variable
Account Value, plus any charges deducted from any Purchase Payment, computed at
the end of the Valuation Period in which this Certificate is received by us at
our Administrative Office.
Signed by PaineWebber Life Insurance Company on the Issue Date.
President Secretary
ALL PAYMENTS, VALUES, AND BENEFITS, WHEN BASED ON THE INVESTMENT EXPERIENCE OF
THE SEPARATE ACCOUNT, MAY INCREASE OR DECREASE DEPENDING ON INVESTMENT RESULTS,
AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT.
GROUP DEFERRED VARIABLE ANNUITY CERTIFICATE
FLEXIBLE PURCHASE PAYMENTS
WITH FIXED ACCOUNT OPTION
COUNTERSIGNED BY
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C>
1 DEFINITIONS ..............................................................................
2 OWNER ....................................................................................
3 ANNUITANT ................................................................................
4 BENEFICIARY ..............................................................................
5 SEPARATE ACCOUNT .........................................................................
6 FIXED ACCOUNT ............................................................................
7 PURCHASE PAYMENTS ........................................................................
8 TRANSFERS ................................................................................
9 WITHDRAWALS ..............................................................................
10 DEATH OF OWNER PRIOR TO THE ANNUITY DATE .................................................
11 CHARGES AND DEDUCTIONS ...................................................................
12 GENERAL PROVISIONS .......................................................................
13 TERMINATION PROVISIONS ...................................................................
14 ANNUITY PROVISIONS .......................................................................
15 FIXED ANNUITY PAYMENTS ...................................................................
16 VARIABLE ANNUITY PAYMENTS ................................................................
17 DEATH OF ANNUITANT .......................................................................
18 ANNUITY OPTIONS ..........................................................................
19 ANNUITY TABLES - NONQUALIFIED ............................................................
</TABLE>
<PAGE> 4
SCHEDULE PAGE
ELIGIBLE CLASSES: [All customers and employees of Sponsor]
ANNUITANT ISSUE AGES: [0 - 85]
CERTIFICATE OWNER ISSUE AGES: [0 - 85] (Applies to both Owners if Joint
Owners exist.)
ELIGIBLE OWNER ISSUE AGES
ANNUAL RESET DEATH BENEFIT OPTION: 0-80
INTEREST ACCRUAL DEATH BENEFIT OPTION: 0-80
ANNUAL RESET INCOME BENEFIT OPTION: 0-80
INTEREST ACCRUAL INCOME BENEFIT OPTION: 0-80
(Applies to both Owners if Joint Owners exist):
EARLIEST ANNUITY DATE: [99/99/99*]
LATEST ANNUITY DATE: [99/99/99*]
AUTOMATIC ANNUITY DATE: [99/99/99*]
MAXIMUM MATURITY AGE: OWNER'S AGE [90]
If there are Joint Owners, Maximum Maturity Age refers to the age of the
youngest Joint Owner.
(* date based on Owner's age.)
NONQUALIFIED QUALIFIED IRA
MINIMUM INITIAL CERTIFICATE
PURCHASE PAYMENT:
[$5,000] [$1,000] [$200]
MINIMUM ADDITIONAL CERTIFICATE
PURCHASE PAYMENTS:
[$ 500] [$ 50] [$ 50]
MAXIMUM AGGREGATE PURCHASE PAYMENTS WITHOUT PRIOR HOME OFFICE APPROVAL:
[$1,500,000]
<PAGE> 5
SCHEDULE PAGE (CONTINUED)
AVAILABLE SEPARATE ACCOUNT DIVISIONS
EACH DIVISION OF THE PAINEWEBBER LIFE VARIABLE ANNUITY ACCOUNT INVESTS IN A
SPECIFIC INVESTMENT PORTFOLIO INDICATED BELOW. FOLLOWING ARE THE SEPARATE
ACCOUNT DIVISIONS AND THE INVESTMENT PORTFOLIOS IN WHICH THEY INVEST:
<TABLE>
<S> <C>
[Money Market Division Money Market Portfolio of PaineWebber Series
Trust
High Grade Fixed Income Division* High Grade Fixed Income Portfolio of AAA
Series Trust
Global Income Division* Global Income Portfolio of BBB Series Trust
Balanced Division* Balanced Portfolio of CCC Series Trust
Growth Division* Growth Portfolio of DDD Series Trust
Aggressive Growth Division* Aggressive Growth Portfolio of EEE Series Trust
Global Growth Division* Global Growth Portfolio of FFF Series Trust
Strategic Fixed Income Division* Strategic Fixed Income Portfolio of GGG Series
Trust
Growth and Income Division* Growth and Income Portfolio of HHH Series Trust
</TABLE>
[*Indicates Eligible Divisions as set out in the Interest Accrual Death Benefit
Option and the Interest Accrual Income Benefit Option]
AVAILABLE FIXED ACCOUNT OPTIONS
FIXED ACCOUNTS:
STABLE VALUE FIXED ACCOUNT A:
MINIMUM GUARANTEED INTEREST RATE: [3%] PER YEAR
BONUS INTEREST RATE: [1%] FOR [1] YEAR(S)
STABLE VALUE FIXED ACCOUNT B:
MINIMUM GUARANTEED INTEREST RATE: [3%] PER YEAR
BONUS INTEREST RATE: [0%] for [1] YEAR(S)
Stable Value Fixed Account B is only available for allocations of
Certificate Value subject to our Dollar Cost Averaging Program.
<PAGE> 6
SCHEDULE PAGE (CONTINUED)
SCHEDULE OF CHARGES
CONTRACT MAINTENANCE CHARGE: $0
DAILY CHARGE: On an annual basis the asset charges are the percentage, shown
below, of the daily net asset value of the Divisions of the Separate Account.
BASIC BENEFIT RISK CHARGE: [1.00%]
TRADITIONAL DEATH BENEFIT CHARGE: [0.20%]
[ANNUAL RESET DEATH BENEFIT CHARGE: [0.15%]
[ANNUAL RESET INCOME BENEFIT CHARGE [0.15%]
[INTEREST ACCRUAL DEATH BENEFIT CHARGE: [0.15%]
[INTEREST ACCRUAL INCOME BENEFIT CHARGE: [0.15%]
-------
TOTAL: [1.80%]
The Daily Charge is equal to the annual charges divided by 365.
[EARLY WITHDRAWAL CHARGE: The Early Withdrawal Charge is a percentage of each
Net Purchase Payment made and is based on the period of time after it is
received by us.
Age of Purchase Payment in Calendar Years
------------------------------------------
1 2 3 4 5 6 7 8+
Early Withdrawal Charge 6% 6% 5% 4% 3% 2% 1% 0%
TRANSFER OPTIONS AND CHARGES:
NUMBER OF FREE TRANSFERS IN A CERTIFICATE YEAR: [12]
EXCESS TRANSFER CHARGE: [$10]
PARTIAL WITHDRAWAL OPTIONS AND CHARGES:
WITHDRAWALS:
MINIMUM WITHDRAWAL AMOUNT: [$500], except for a
SYSTEMATIC WITHDRAWAL SERVICE (ACCEPTABLE TO US): [$100]
MINIMUM CERTIFICATE VALUE AFTER WITHDRAWAL: If a withdrawal would reduce the
Certificate Value below the greater of A or the sum of B and C, then we will
treat the transaction as a full withdrawal.
(A) is [$1,000];
(B) is the Early Withdrawal Charge on any Purchase
Payments with a Early Withdrawal Charge Period
remaining; and
(C) is the amount of state premium tax owed, if any.
EARLY WITHDRAWAL CHARGE PERIOD for a Purchase Payment is the 7-year period
following the date the Purchase Payment was made.
<PAGE> 7
NUMBER OF WITHDRAWALS IN A CERTIFICATE YEAR NOT SUBJECT TO A TRANSACTION
CHARGE: [2]
EXCESS WITHDRAWAL TRANSACTION CHARGE: [FOR EACH WITHDRAWAL: $25 or 2% of the
amount withdrawn, whichever is less.] The Excess Withdrawal Transaction Charge
does not apply on or after the Annuity Date or to any withdrawal made through a
systematic withdrawal service acceptable to us. However, withdrawals through a
systematic withdrawal service may be assessed a [$1.50] administrative fee for
each payment.
FREE WITHDRAWAL AMOUNT: The Free Withdrawal Amount is the amount that may be
withdrawn each Certificate Year without the application of the Early Withdrawal
Charge. The Free Withdrawal Amount is equal to [15% of the Certificate Value on
the first Valuation Day of the Certificate Year.]
For the purpose of determining the Early Withdrawal Charge, we assume that all
withdrawals are taken:
(A) first from any remaining Free Withdrawal Amount;
(B) next from Net Purchase Payments with no Early Withdrawal Charge Period
remaining;
(C) next from Net Purchase Payments with an Early Withdrawal Charge Period
remaining, starting with the shortest Early Withdrawal Charge Period remaining
and progressing to the longest;
(D) next from any remaining amount.
For purposes of determining Early Withdrawal Charges on future withdrawals, any
Free Withdrawal Amount is not considered a liquidation of Purchase Payments.
<PAGE> 8
SCHEDULE PAGE (CONTINUED)
[ANNUAL RESET DEATH BENEFIT OPTION: The ANNUAL RESET DEATH BENEFIT OPTION may
be elected by the Owner in the application for the Certificate.
ANNUAL RESET DEATH BENEFIT OPTION: If the Owner dies prior to the Annuity
Date and on or prior to the Maximum Maturity Age, the Death Benefit is the
greatest of (A), (B), or (C) where:
(A) is the Certificate Value
(B) is the sum of all Net Purchase Payments less any prior partial withdrawals,
Early Withdrawal Charges, Excess Withdrawal Transaction Charges and Excess
Transfer Charges.
(C) is the greatest Certificate Value as measured on each Certificate
Anniversary, plus any Purchase Payments after that anniversary; less any
partial withdrawals, Early Withdrawal Charges, Excess Withdrawal Transaction
Charges and Excess Transfer Charges imposed after that anniversary.
The Certificate Values taken into account for purpose of calculating (C)
are based on the Owner's age at issue. If Joint Owners exist, the age of the
youngest Joint Owner is used.
1) If the age at issue is 0-75, (C) will take into account Certificate
Values for Certificate Anniversaries when the Owner's age is less than or equal
to age 80. Thereafter, no additional Certificate Values will be taken into
account, but prior Certificate Values will continue to be adjusted as described
in (C).
2) If the age at issue is 76-80, (C) will take into account Certificate
Values on each of the first five Certificate Anniversaries. Thereafter, no
additional Certificate Values will be taken into account, but prior Certificate
Values will continue to be adjusted as described in (C).
DEATH BENEFIT AFTER THE MAXIMUM MATURITY AGE AND BEFORE THE ANNUITY DATE: The
Death Benefit after the Maximum Maturity Age and before the Annuity Date is the
Net Certificate Value.
ANNUAL RESET DEATH BENEFIT CHARGE: The Annual Reset Death Benefit Risk Charge
will be computed and deducted from the Separate Account Divisions for each day
this Certificate is in force prior to the Annuity Date. On an annual basis it
equals the percentage, shown on the Schedule Page, of the daily net asset value
of the Divisions.
The PAYMENT OF THE DEATH BENEFIT and PAYMENT OPTION provisions in section 10 of
this Certificate also apply to Annual Reset Death Benefit Option.]
<PAGE> 9
SCHEDULE PAGE (CONTINUED)
[INTEREST ACCRUAL DEATH BENEFIT OPTION: The Interest Accrual Death Benefit may
be elected by the Owner in the application for the Certificate.
INTEREST ACCRUAL DEATH BENEFIT OPTION: If the Owner dies prior to the Annuity
Date and on or prior to the Maximum Maturity Age, the Death Benefit is the
greatest of (A) or (B), where:
(A) is the Certificate Value.
(B) is Net Purchase Payments less any partial withdrawals, Early
Withdrawal Charges, Excess Withdrawal Transaction Charges, and Excess
Transfer Charges all accumulated at the Death Benefit Accrual Rate.
The Death Benefit Accrual Rate is a weighted average of the accrual
rates for Eligible Divisions, each Ineligible Division, and each Fixed
Account Option. The calculation is done on a daily basis. The daily
accrual rate for Eligible Divisions is .0159654%, which is equivalent
to 6% on an annual basis. The daily accrual rate for each Ineligible
Division and each Fixed Account option is equal to the actual net rate
of return of each. The daily accrual rates are weighted by the daily
Certificate Values in the Eligible Divisions, each Ineligible
Division, and each Fixed Account option.
The calculation of (B) is based on the Owner's age at issue. If Joint
Owners exist, the age of the youngest Joint Owner is used.
1) If the age at issue is 0-75, (B) accumulates until the Certificate
Anniversary when the Owner reaches age 80. After the Certificate Anniversary
when the Owner reaches age 80, (B) is increased by any Net Purchase Payments
and decreased by any partial withdrawals, Early Withdrawal Charges, Excess
Withdrawal Transaction Charges, and Excess Transfer Charges since that date but
no further interest accumulates.
2) If the age at issue is 76-80, (B) accumulates until the Certificate
Anniversary five years after the issue date of the Certificate. Beyond this
anniversary, (B) is increased by any Net Purchase Payments and decreased by any
partial withdrawals, Early Withdrawal Charges, Excess Withdrawal Transaction
Charges and Excess Transfer Charges since that date, but no further interest
accumulates.
DEATH BENEFIT AFTER THE MAXIMUM MATURITY AGE AND BEFORE THE ANNUITY DATE: The
Death Benefit after the Maximum Maturity Age and before the Annuity Date is the
Net Certificate Value.
ELIGIBLE DIVISIONS: The current Eligible Divisions are shown in the Schedule
Page. We reserve the right to add, delete, or substitute Eligible Divisions.
The Owner will be notified of
<PAGE> 10
any such change in Eligible Divisions.
INTEREST ACCRUAL DEATH BENEFIT CHARGE: The Interest Accrual Death Benefit Risk
Charge will be computed and deducted from the Separate Account Divisions for
each day this Certificate is in force prior to the Annuity Date. On an annual
basis it equals the percentage, shown in the Schedule Page, of the daily net
asset value of the Divisions.
The PAYMENT OF THE DEATH BENEFIT and PAYMENT OPTION provisions in Section 10 of
this certificate also apply to Interest Accrual Death Benefit option.]
<PAGE> 11
SCHEDULE PAGE (CONTINUED)
[TRADITIONAL DEATH BENEFIT: The TRADITIONAL DEATH BENEFIT may be elected by
the Owner in the application for the Certificate.
TRADITIONAL DEATH BENEFIT: If the Owner dies prior to the Annuity Date and on
or prior to the Maximum Maturity Age, the Death Benefit is the greater of (A)
or (B), where:
(A) is the Certificate Value.
(B) is the sum of all Net Purchase Payments, less any prior partial
withdrawals, Early Withdrawal Charges, Excess Withdrawal Transaction Charges
and Excess Transfer Charges.
DEATH BENEFIT AFTER THE MAXIMUM MATURITY AGE AND BEFORE THE ANNUITY DATE: The
Death Benefit after Maximum Maturity Age and before the Annuity Date is the Net
Certificate Value.
TRADITIONAL DEATH BENEFIT CHARGE: The Traditional Death Benefit Risk Charge
will be computed and deducted from the Separate Account Divisions for each day
this Certificate is in force prior to the Annuity Date. On an annual basis it
equals the percentage, shown on the Schedule Page, of the daily net asset value
of the Divisions.
The PAYMENT OF THE DEATH BENEFIT and PAYMENT OPTION provisions in Section 10 of
this Certificate also apply to the Death Benefit.]
<PAGE> 12
SCHEDULE PAGE (CONTINUED)
[BASIC DEATH BENEFIT: The BASIC DEATH BENEFIT may be elected by the Owner in
the application for the Certificate.
BASIC DEATH BENEFIT: If the Owner dies prior to the Annuity Date, the Death
Benefit equals the Net Certificate Value.
The PAYMENT OF DEATH BENEFIT and PAYMENT OPTION provisions in Section 10 of
this certificate also apply to this Death Benefit.]
<PAGE> 13
SCHEDULE PAGE (CONTINUED)
[ANNUAL RESET INCOME BENEFIT OPTION may be selected by the Owner in the
application for the Certificate if the Owner also selects the Annual Reset
Death Benefit Option.
ANNUAL RESET INCOME BENEFIT OPTION: This Benefit Option provides that the
Fixed Annuity Payment on the Annuity Date will be the greater of (A) or (B):
(A) The Net Certificate Value on the Annuity Date at the Current Annuity
Settlement Option Rates, as explained in Section 15; or
(B) The amount determined under the Annual Reset Death Benefit, applied to any
Life Contingent Annuity Options for Fixed Annuity Payments at the Guaranteed
Annuity Settlement Option Rates. Life Contingent Annuity Options are methods
for determining the amount of each Annuity Payment over the Life of the
Annuitant. The Life Contingent Annuity Options for this Certificate are
currently Option 2 - Life Annuity, Option 3 - Life Annuity with Payments
Guaranteed for 10 or 20 years, and Option 4 - Joint and Survivor Life Annuity.
The Options are explained in Sections 18 and 19 of this Certificate.
Additional Life Contingent Annuity Options may be made available in the future.
This amount can not be applied to Current Annuity Settlement Option Rates.
The value of this benefit is not available to be taken as a withdrawal of
Certificate Value.
This benefit is not available for Variable Annuity Payments.
This benefit option may be exercised on or after the 7th Certificate
Anniversary, but must be exercised prior to the Latest Annuity Date.
ANNUAL RESET INCOME BENEFIT CHARGE will be computed and deducted from the
Separate Account Divisions for each day this Certificate is in force prior to
the Annuity Date. On an annual basis, it equals the percentage shown on the
Schedule Page, of the daily net asset value of the Divisions.
<PAGE> 14
SCHEDULE PAGE (CONTINUED)
[INTEREST ACCRUAL INCOME BENEFIT OPTION may be selected by the Owner in the
application for the Certificate if the Owner also selects the Interest Accrual
Death Benefit Option.
INTEREST ACCRUAL INCOME BENEFIT OPTION: This Benefit Option provides that the
Fixed Annuity Payment on the Annuity Date will be the greater of (A) or (B):
(A) The Net Certificate Value on the Annuity Date at the Current Annuity
Settlement Option Rates, as explained in Section 15; or
(B) The amount determined under the Interest Accrual Death Benefit, applied to
any Life Contingent Annuity Options for Fixed Annuity Payments at the
Guaranteed Annuity Settlement Option Rates. Life Contingent Annuity Options
are methods for determining the amount of each Annuity Payment over the Life of
the Annuitant. The Life Contingent Annuity Options for this Certificate are
currently Option 2 - Life Annuity, Option 3 - Life Annuity with Payments
Guaranteed for 10 or 20 years, and Option 4 - Joint and Survivor Life Annuity.
The Options are explained in Sections 18 and 19 of this Certificate.
Additional Life Contingent Annuity Options may be made available in the future.
This amount can not be applied to Current Annuity Settlement Option Rates.
The value of this benefit is not available to be taken as a withdrawal of
Certificate Value.
This benefit is not available for Variable Annuity Payments.
This benefit option may be exercised on or after the 7th Certificate
Anniversary, but must be exercised prior to the Latest Annuity Date.
The INTEREST ACCRUAL INCOME BENEFIT CHARGE will be computed and deducted from
the Separate Account Divisions for each day this Certificate is in force prior
to the Annuity Date. On an annual basis it equals the percentage, shown in the
Schedule Page, of the daily net asset value of the Divisions.]
<PAGE> 15
SCHEDULE PAGE (CONTINUED)
[STABLE VALUE FIXED ACCOUNT: The Stable Value Fixed Account is credited with
interest rate(s) which will not be less than the minimum guaranteed interest
rate shown in the Schedule Page. We may declare, from time to time at our sole
discretion, a current interest rate which is higher than the minimum guaranteed
interest rate and which is guaranteed for at least one year.
Net Purchase Payments allocated to, or transfers made into, the Stable Value
Fixed Account will earn interest at the current interest rate being declared at
that time. When the current interest rate expires, a new current interest
rate will be declared. The Value in the Stable Value Fixed Account will be
adjusted for any Early Withdrawal Charge, Excess Transaction Charge, or Excess
Transfer Charge that is allocated to the Stable Value Fixed Account.
The guaranteed benefits under this Group Certificate are provided through our
General Account and are subject to the claims arising out of other business we
may conduct.
BONUS INTEREST RATE: Interest, in addition to the declared current interest
rate, which will be credited in the amount shown in the Schedule Page, for the
length of time shown in the Schedule Page. The Bonus Interest Rate will not be
available beyond the length of time shown in the Schedule Page.
<PAGE> 16
SECTION 1 DEFINITIONS
ACCUMULATION UNIT is a unit of measurement we use to compute values in a
Division prior to the Annuity Date.
ANNUITANT means the natural person on whose life the annuity benefit for the
Certificate is based.
ANNUITY DATE means the date on which the first Annuity Payment is made.
ANNUITY UNIT means a unit of measurement we use to compute the Variable Annuity
Payments from a Division.
BENEFICIARY means the person named to receive the payments under the
Certificate due to the Owner's death.
CERTIFICATE means a form which describes a Certificate Owner's interest in this
Group Contract.
CERTIFICATE ANNIVERSARY means the date 12 months from the date of issue of the
Certificate and annually thereafter.
CERTIFICATE YEAR means each 12 month period from the date of issue of the
Certificate.
CERTIFICATE VALUE means the sum of a Certificate Owner's values in each
Division of the Separate Account and in each Fixed Account option.
CONTRACT means the Master Group Contract form, A-3422, issued to the [ABC
Trust.]
CONTRACT ANNIVERSARY means the date 12 months from the date of issue of the
Contract and annually thereafter.
CONTRACTHOLDER means the person or entity shown in page 1 unless later changed,
that owns the master group contract under which an Annuity Certificate is
issued.
CURRENT ANNUITY SETTLEMENT OPTION RATES means the monthly income rates that
will be at least as favorable as those listed in section 19.
DIVISION means an investment option in the Separate Account. Each Division
invests in an investment portfolio shown on the Schedule Page. "Division" does
not include the Fixed Account.
<PAGE> 17
FIXED ACCOUNT means any account, as shown on the Schedule Page, for which
amounts allocated receive a fixed rate of interest determined by us from
time to time.
GUARANTEED ANNUITY SETTLEMENT OPTION RATES means the monthly income rates shown
in Section 19.
NET CERTIFICATE VALUE means the Owner's Certificate Value less all applicable
maintenance charges, Early Withdrawal Charges and premium taxes.
NET PURCHASE PAYMENT means a Purchase Payment less any premium taxes that may
be deducted from such Purchase Payment, as provided in the Certificate under
which the Purchase Payment is made.
OWNER means the person named in a Certificate who is entitled to exercise all
rights and privileges of ownership under a Certificate. If Joint Owners exist,
both persons must agree to the exercise of any right and privilege of ownership
under the Certificate.
PURCHASE PAYMENT means any money the Owner paid us for his or her Certificate.
SEPARATE ACCOUNT means PaineWebber Life Variable Annuity Account, a separate
investment account of PaineWebber Life Insurance Company. Assets allocated to
the Separate Account remain our property. Assets of the Separate Account equal
to its reserves and other liabilities are not subject to the claims arising out
of any other business we may conduct.
VALUATION DAY means any day the New York Stock Exchange is open and PaineWebber
Life Insurance Company is open for business.
VALUATION PERIOD means the interval from the end of one Valuation Day to the
end of the next Valuation Day of an investment portfolio. Valuation occurs at
the end of each Valuation Day, which is the close of the New York Stock
Exchange (usually, 4pm Eastern Time).
WE, US, or OUR means PaineWebber Life Insurance Company.
YOU or YOUR means the Owner of this Certificate.
SECTION 2 OWNER
OWNER: The Owner is the person or persons named as such on the Schedule Page of
a Certificate, or by later change. The Owner owns his or her Certificate while
the Owner is alive.
OWNERSHIP RIGHTS: The Owner and we may agree to a change in the Ownership of
the Certificate, but our consent to a change will not be unreasonably withheld.
Also, unless we endorse it to say otherwise, the Owner can exercise the rights
given by various sections of the
<PAGE> 18
Certificate. If there are Joint Owners, both Owners must agree to exercise any
rights under this Certificate. These include:
(1) the right to choose and change the Beneficiary;
(2) the right to choose and change the Annuitant, subject to Section 3;
(3) the right to surrender the Certificate;
(4) the right to transfer the Certificate Value among the Divisions and
the Fixed Account;
(5) the right to make withdrawals from the Certificate;
(6) the right to choose how the Death Benefit will be paid; and
(7) the right to assign the Certificate as security for an obligation or
assign future guarantee payments.
SECTION 3 ANNUITANT
ANNUITANT: The Annuitant is the person named as such on the Schedule Page of a
Certificate, or as indicated by later change.
CHANGING THE ANNUITANT: The Owner and we may agree to change the Annuitant at
any time before the earlier of the Annuity Date or the death of the Annuitant.
DEATH OF ANNUITANT: If the Annuitant dies before the Owner, the Owner becomes
the Annuitant.
SECTION 4 BENEFICIARY
BENEFICIARY: The Beneficiary is the person who will receive the payments under
a Certificate due to the Owner's death. If Joint Owners have been named, and
one of the Joint Owners dies, the surviving Joint Owner takes precedence over
the named Beneficiary for all ownership rights, and the receipt of any
payments. If there is no Beneficiary when the Owner dies, payment will be made
to the Owner's estate.
CONTINGENT BENEFICIARY: The Owner may name a Contingent Beneficiary. The
Contingent Beneficiary will become the Beneficiary if all the Beneficiaries die
while the Owner is alive.
IRREVOCABLE BENEFICIARY: The Owner can name any Beneficiary to be an
Irrevocable Beneficiary. An Irrevocable Beneficiary must provide his or her
consent for any change of Beneficiary, withdrawal of any part of the Net
Certificate Value, or any collateral assignment of the Certificate. Otherwise,
the Owner can change a Beneficiary as set out below.
<PAGE> 19
CHANGING THE BENEFICIARY: The Owner names the Beneficiary in the Application
for the Certificate. The Owner may change the Beneficiary or Contingent
Beneficiary at any time during the Owner's lifetime. A change cancels all prior
Beneficiaries.
SIMULTANEOUS DEATH: If the Beneficiary dies at the same time or within 10 days
after the Owner dies, the payments under the Certificate due to the Owner's
death will be paid as if the Beneficiary had died before the Owner.
<PAGE> 20
SECTION 5 SEPARATE ACCOUNT
SEPARATE ACCOUNT is a separate investment account of PaineWebber Life Insurance
Company established in accordance with California's insurance laws. Assets
allocated to the Separate Account remain our property. The income, gains and
losses, whether or not realized, from assets allocated to each Division are
credited to or charged against that Division in accordance with the terms of
the Contract, without regard to other income, gains or losses of the Company.
Assets of the Separate Account equal to its reserves and other liabilities are
not subject to the claims arising out of any other business we may conduct.
INVESTMENT PORTFOLIOS: Investment portfolios in which Separate Account
Divisions invest are shown in the Schedule Page. For each investment portfolio
there is a corresponding Separate Account Division.
CHANGES TO INVESTMENT PORTFOLIOS: We may add, substitute, or delete investment
portfolios. Such changes may be made to existing Certificate Values and the
investment of future Purchase Payments.
NET INVESTMENT FACTOR is the index used to measure the investment performance
of a Division from one Valuation Period to the next. For any Division, the Net
Investment Factor for a Valuation Period is found by dividing (A) by (B) and
subtracting (C):
(A) The net asset value per share of the investment portfolio held in the
Division, as of the end of the Valuation Period, plus the per share amount of
any dividend, capital gain or other distribution made by the investment
portfolio in the Valuation Period, plus or minus a per share charge or credit
for any taxes reserved for in the current Valuation Period, which we determine
resulted from the investment operations of the Division;
(B) The net asset value per share of the investment portfolio held in the
Division as of the end of the previous Valuation Period;
(C) The Daily Charge as set out in Section 11, Charges and Deductions.
VALUE OF EACH ACCUMULATION UNIT: For each Division, the value of an
Accumulation Unit was set at $10 when the Division was established. The value
may increase or decrease from one Valuation Period to the next. For any
Valuation Period the value is:
(A) The value of an Accumulation Unit at the end of the last Valuation
Period; multiplied by
(B) The Net Investment Factor for that Division for the current Valuation
Period.
NUMBER OF ACCUMULATION UNITS: The number of your Accumulation Units for each
Division is the sum of:
<PAGE> 21
(A) Each Net Purchase Payment allocated to the Division; divided by
(B) The value of an Accumulation Unit for that Division for the Valuation
Period in which we received the Net Purchase Payment.
The number will be adjusted for transfers, withdrawals, charges and deductions.
Adjustments will be made as of the Valuation Period in which we receive
satisfactory notice and any additional requirements for the transaction are
satisfied.
CERTIFICATE VALUE OF EACH DIVISION: The Certificate Value in each Division on
any Valuation Day is equal to the number of Accumulation Units attributable to
that Division multiplied by the value of each Accumulation Unit in that
Division.
SECTION 6 FIXED ACCOUNT
FIXED ACCOUNT: The Fixed Accounts are options to which your Purchase Payments
and Certificate Value may be allocated. Fixed Account options available are
described on the Schedule Page. Certain Fixed Account options may only be
available if an Owner has elected certain asset allocation or other services.
See Schedule Pages for details.
SECTION 7 PURCHASE PAYMENTS
MINIMUM PURCHASE PAYMENTS: The Minimum Initial Purchase Payment and Minimum
Additional Purchase Payment are shown in the Schedule Page.
Additional Purchase Payments may be made at any time. We have the right to
refuse any Purchase Payment that causes the sum of the Purchase Payments paid
to date to exceed the Maximum Aggregate Purchase Payments amount shown in the
Schedule Page.
PURCHASE PAYMENT ALLOCATION: Your Net Purchase Payments will be allocated to
the Divisions in the Separate Account and Fixed Account options as the Owner
directs. However, if the Owner resides in a state that requires us to refund
Purchase Payments if the Right To Examine Contract is invoked, Purchase
Payment amounts received during the Right To Examine Contract period which are
to be allocated to Fixed Account options will be immediately allocated.
Purchase Payment amounts that are to be allocated anywhere else will be
initially allocated to the Money Market Division. The Money Market Division
Certificate Value will be transferred automatically to the Separate Account
Divisions elected in the Certificate application, or any more recent allocation
instructions received by us, at the end of the Right To Examine Contract
period.
Additional Net Purchase Payments received without satisfactory notice of
investment instructions will be allocated among the Divisions and Fixed Account
options, in the ratio of the
<PAGE> 22
Certificate Value in each to the total Certificate Value.
We will notify the Owner of the acceptance of a Purchase Payment and how the
Net Purchase Payment was allocated.
SECTION 8 TRANSFERS
TRANSFERS: Upon satisfactory notice to us, the Owner may transfer all or part
of his or her Certificate Value among the Separate Account Divisions and the
Fixed Account. All transfers will be subject to any rules and procedures shown
on the Schedule Page. Transfers will be based on values for the Valuation
Period in which the Owner's notice is received at our Administrative Office. If
the instructions are not properly completed, the transfer will not be executed
and we will contact the Owner.
TRANSFER CHARGES: The Owner may make a transfer at any time. The number of free
transfers allowed in a Certificate Year and the transfer charge for transfers
in excess of that number are shown in the Schedule Page. We have the right to
waive the charge for transfers completed through an allocation service
acceptable to us.
Any Transfer Charge will be deducted from the Divisions and the Fixed Account
options to which the Certificate Value is transferred for transfers made before
the Annuity Date. The deduction will be in the ratio of the Certificate Value
transferred to each Division or Fixed Account option to the total Certificate
Value transferred. Transfers made after the Annuity Date will have the transfer
charge deducted from the next Annuity Payment.
SECTION 9 WITHDRAWALS
WITHDRAWALS: The Owner may withdraw all or part of the Net Certificate Value.
We must receive satisfactory notice of the Owner's request prior to the earlier
of the Annuity Date or the death of the Owner. If the notice is not
satisfactory, then no withdrawal will be made and we will contact the Owner.
SIZE AND FREQUENCY: The Owner may make a withdrawal at any time prior to the
Annuity Date. Our rules with regard to the permitted size and frequency of
withdrawals and withdrawal transaction charges are shown in the Schedule Page.
MINIMUM CERTIFICATE VALUE: If a withdrawal reduces the Certificate Value below
the Minimum Certificate Value after Withdrawal shown in the Schedule Page, we
will distribute the Net Certificate Value to the Owner and the Certificate will
terminate.
PAYMENT OF WITHDRAWALS: Withdrawals will be based on values for the Valuation
Period in which the Owner's satisfactory notice (and the Certificate, if
required) is received at our Administrative Office. Withdrawals will generally
be paid within 7 days.
DEDUCTION OF ANY WITHDRAWAL CHARGES: Any charges relating to a withdrawal,
<PAGE> 23
Excess Withdrawal Transaction Charges and Early Withdrawal Charges, will be
deducted from the affected Divisions and Fixed Account in the ratio of the
Certificate Value withdrawn from each to the total Certificate Value withdrawn.
If the amount in any Division or Fixed Account is not enough to cover its share
of the charges, the excess will be deducted from the remaining Divisions and
Fixed Account in the ratio of the value in each to the total Certificate Value.
SECTION 10 DEATH OF OWNER PRIOR TO THE ANNUITY DATE
DEATH BENEFIT: [The death benefits available are shown in the Schedule Page of
the Contract.]
Upon the death of the Owner (or if Joint Owners exist, upon the death of any
Owner) prior to the Annuity Date, the Beneficiary will be entitled to all
ownership rights under the Certificate and, if the Beneficiary elects the Death
Benefit, the Certificate Value will be increased so that it equals the Death
Benefit. For this purpose, if any Owner is not an individual, the death of any
Annuitant will be considered the death of an Owner.
The amount of the Death Benefit is determined as of the Valuation Day on or
next following the day on which we receive due proof of the Owner's death and
notice from the Beneficiary stating that he or she elects the Death Benefit at
our Administrative Office. The Beneficiary must choose the method of
settlement within 90 days of the determination of the death benefit amount.
DISTRIBUTION RULES: If the Owner or if Joint Owners exist, upon the death of
any Owner prior to the Annuity Date, the Certificate may continue for five
years from the date of death and, at the end of such five years, any
Certificate Value remaining must be distributed to the Beneficiary and the
Certificate will terminate. For this purpose, if any Owner is not an
individual, the death or change of any Annuitant will be considered the death
of an Owner.
If the Beneficiary is an individual, the distribution rule set forth above will
be considered satisfied as to the portion of the Certificate which is payable
to or for the benefit of that Beneficiary and which will be distributed under
an Annuity Option over the life of the Beneficiary or Beneficiary (within the
meaning of the tax law), provided such distributions begin within one year of
the Owner's death, any Annuity Option selected will have to provide for full
payment within five years of the Owner's death.
SPOUSAL OPTION: If the Beneficiary is the surviving spouse of the deceased
Owner, that Beneficiary may, instead of electing the Death Benefit, continue
the Certificate as its Owner, and above distribution rules will be applied on
the death of the surviving spouse.
If the Certificate is continued pursuant to this spousal option, the Death
Benefit may be elected on the death of the surviving spouse. However, this
spousal exception to the above distribution rules will not again be available
upon the death of the surviving spouse.
DEATH OF OWNER AFTER ANNUITY DATE: If any Owner dies on or after the Annuity
<PAGE> 24
Date and before the entire interest in the Certificate has been distributed,
the remaining portion of such interest must be distributed at least as rapidly
as under the method of distributions being used as of the date of death.
SECTION 11 CHARGES AND DEDUCTIONS
MAINTENANCE CHARGE: Any Maintenance Charge is shown in the Schedule Page. It
will be deducted on the first Valuation Day on or next following each
Certificate Anniversary prior to the Annuity Date. It will also be deducted
upon a full withdrawal or if Annuity Payments begin on other than the first
Valuation Day on or next following a Certificate Anniversary. This charge will
be deducted from the Divisions and Fixed Account in the ratio of the
Certificate Value in each to the total Certificate Value.
DAILY CHARGE: The Daily Charge will be computed and deducted from each Division
for each day the Certificate is in force. On an annual basis it equals the
percentage of the daily net asset value of the Divisions of the Separate
Account, as shown in the Schedule Page.
WITHDRAWAL TRANSACTION CHARGES: There may be Withdrawal Transaction Charges as
set forth in the Schedule Page.
EARLY WITHDRAWAL CHARGES: Early Withdrawal Charges for a partial or full
withdrawal of the Certificate Value are shown in the Schedule Page.
DEDUCTION OF ANY WITHDRAWAL CHARGES: Any charges relating to a withdrawal will
be deducted from the affected Divisions and Fixed Account options in the ratio
of the Certificate Value withdrawn from each to the total Certificate Value
withdrawn. If the amount in any Division or Fixed Account option is not enough
to cover its share of the charges, then the excess will be deducted from the
remaining Divisions or Fixed Account options in the ratio of the Certificate
Value in each to the total Certificate value.
PREMIUM AND OTHER TAXES: Any taxes imposed by a state or other government on us
because of this Group Contract will be deducted. We can deduct such taxes when
incurred. However, we may delay deducting them until annuitization or
surrender.
SECTION 12 GENERAL PROVISIONS
THE CONTRACT: This Group Contract, any Application and any attachments make up
the entire contract. This Group Contract cannot be changed unless the
Contractholder has asked for the change in writing. Only an Executive Officer
of the Company can agree to the change for us. No agent of ours can change this
Group Contract. At any time we may make such changes in this Contract as are
required to make it conform with any law, regulation or ruling issued by a
government agency.
INCONTESTABILITY: We will not contest this Contract.
<PAGE> 25
PERIODIC REPORTS: At least once a year, prior to the Annuity Date, we will
furnish each Owner a report of his or her Certificate Value. It will set forth
the current number of Accumulation Units, the value of each Accumulation Unit,
the total value of the Separate Account and the total value of the Fixed
Account. Each person with voting rights in the Separate Account will be
furnished reports required by the Investment Company Act of 1940.
CERTIFICATE PAYMENTS: All sums payable to or by us under a Certificate are
payable to or from our Administrative Office. We may require return of a
Certificate prior to making any payment. Annuity payments, Net Certificate
Values, and Death Benefits will not be less than the minimum required by any
statute of the state in which this Group Contract is delivered.
NOTICES, CHANGES AND CHOICES: All notices, changes and choices must be made by
the Owner and received by us at our Administrative Office. We allow written
notices, changes and choices by the Owner regarding the Certificate. However,
forms of communication other than written may be acceptable to us. If
satisfactory, notices, changes and choices relating to Beneficiaries, Ownership
and Annuitants will take effect as of the date signed unless we have already
acted in reliance on the prior status. We are not responsible for their
validity. We may require return of the Certificate prior to any change.
DELAYS: For withdrawals and transfers from the Separate Account Divisions, we
may defer payment if:
(A) The New York Stock Exchange is closed (other than customary weekend
and Holiday closings) or trading on the New York Stock Exchange is restricted;
(B) An emergency exists such that it is not reasonably practicable to
dispose of securities in the Separate Account or to determine the value of its
net assets; or
(C) The Securities and Exchange Commission has by order permitted
suspension of redemptions for the protection of security holders.
Conditions (B) and (C) will be decided by or in accordance with rules of the
Securities and Exchange Commission.
Payment of amounts derived from Net Purchase Payments paid by check may also be
delayed until the check has cleared the Owner's bank.
For withdrawals and transfers from the Fixed Account, we may defer payment for
up to 6 months except for withdrawals to pay premiums under insurance or
annuity contracts issued by us.
AGES: Ages are figured on a last birthday basis.
NONPARTICIPATING: This Group Contract does not pay dividends. It will not
share in our earnings or surplus.
<PAGE> 26
PROOF OF AGE, SEX OR SURVIVAL: We may require due proof of the age, sex or
survival of any person on whose continued life any payment under this Group
Contract or Certificate thereunder depends.
MISSTATEMENT OF AGE OR SEX: If the age or sex of the annuitant or any payee is
misstated, we will adjust the Annuity Payments to reflect the correct age and
sex. Any amount we have overpaid as a result of such misstatement will be
deducted from future payments. Interest on the overpayment will be charged at
the rate of 6% per year compounded annually. Any amount we have underpaid will
be paid in full with the next payment. We will pay interest on the underpayment
at the rate of 6% per year compounded annually.
PROTECTION OF PROCEEDS: To the extent allowed by law, payments are not subject
to legal process for debts.
COLLATERAL ASSIGNMENT: The Owner may assign his or her Certificate as security
for an obligation upon written notice to us. This assignment will not change
the Ownership of the Certificate. The rights of an assignee have priority over
the rights of a Beneficiary.
FUTURE PAYMENT ASSIGNMENT: Upon notice to us, the Owner may assign future
guaranteed payments.
SECTION 13 TERMINATION PROVISIONS
TERMINATION OF GROUP CONTRACT: This Group Contract may be discontinued by us or
the Contractholder. The party who initiates the discontinuance will send a
notice to each Owner of record, at his or her last known address, at least 15
days prior to the date of discontinuance.
No new applications for new Owners will be accepted on or after the date notice
of discontinuance is received or sent by us, whichever is applicable. Any
Certificates in force on the date of discontinuance will not be affected by
the discontinuance.
The Group Contract will terminate when all Certificates issued under this Group
Contract have terminated.
SECTION 14 ANNUITY PROVISIONS
ANNUITY DATE: The Annuity Date must be on the first day of a month. It may not
be earlier than the first day of the next month after the Earliest Annuity
Date. It may not be later than the first day of the next month after the Latest
Annuity Date or any later date that we approve. If the Owner has not specified
an Annuity Date, it will be the first day of the next month after the Automatic
Annuity Date. The Earliest, Latest and Automatic Annuity Dates are shown in the
Schedule Page. The Annuity Date may be delayed even further to a date agreed
upon by the Owner and us.
<PAGE> 27
The Owner may change the Annuity Date up to [30]days prior to the Annuity Date
by sending us satisfactory written notice. We must receive any request of
change at our Administrative Office at least [30] days prior to when such
change is to be effective.
ANNUITY OPTIONS: The Annuity Options available are set out in Section 18. All
Options are available as fixed or variable payment annuities. Other Annuity
Options not set forth in this Group Contract may be chosen if they are
acceptable to us. The Owner may change the Annuity Option at any time up to
[30] days prior to the Annuity Date. We reserve the right to make additional
Annuity Options available. If the Owner has not chosen an Annuity Option,
Option 3 with a variable payment for life with payments guaranteed for 10 years
will apply.
ANNUITIZED VALUE: The amount to be annuitized on the Annuity Date (the
"Annuitized Value") is the Net Certificate Value on the Valuation Day on or
next following the Annuity Date.
An Early Withdrawal Charge will be assessed at the Annuity Date, if applicable.
This charge will be waived if the Annuity Date is the latest allowed, if the
Annuity Option chosen contains life contingencies, or the Annuity Option is for
[5] years or more with no ability to commute the remaining payments.
ANNUITY PAYMENT SIZE AND FREQUENCY: If the amount to be applied at the Annuity
Date is less than [$5,000], we may pay such amount in a lump sum. If any
Annuity Payment would be less than [$100], we may change the frequency so the
payments are at least $100 each.
Annuity Payments will be made on the first Valuation Day of each month starting
with the month in which the Annuity Date falls. Prior to the Annuity Date, you
may choose a less frequent payment interval. The amount of each payment on an
annual, semiannual or quarterly basis will not be less than the monthly payment
computed from the appropriate Annuity Tables multiplied by the factors shown in
Section 19.
SECTION 15 FIXED ANNUITY PAYMENTS
FIXED ANNUITY: A fixed annuity is a series of level periodic payments. The
amount of each payment does not vary with the investment experience of the
Separate Account.
AMOUNT OF FIXED ANNUITY PAYMENTS: The Annuitized Value will be applied to the
Annuity Option chosen at our Current Annuity Settlement Option rates. These
rates will be given to you upon request. The Annuity Tables show the amount of
the first Annuity Payment for each $1,000 applied, based on the Annuitant's age
and sex where appropriate at the Annuity Date. [The Tables are based on the
1983 Table 'a' for Individual Annuity Valuation with projection scale G and
interest at 2.5% if the Annuity Date is prior to the 9th Certificate
Anniversary and 3% for Annuity Dates on or after the 9th Certificate
Anniversary.]
SECTION 16 VARIABLE ANNUITY PAYMENTS
<PAGE> 28
VARIABLE ANNUITY: A variable annuity is a series of periodic payments. The
amount of each payment will vary with the investment experience of the
Divisions in which your Certificate Value is allocated.
FIRST VARIABLE ANNUITY PAYMENT: The Annuitized Value will be applied to the
Table for the Annuity Option chosen. The Tables show the amount of the first
Annuity Payment for each $1,000 applied, based on the Annuitant's age and sex
where appropriate at the Annuity Date. [The Tables are based on the 1983 Table
'a' for Individual Annuity Valuation with a projection scale G and an assumed
investment return of 2.5% if the Annuity Date is prior to the 9th Certificate
Anniversary and 3% for Annuity Dates on or after the 9th Certificate
Anniversary.] Other assumed investment return rates may be made available in
the future.
NUMBER OF ANNUITY UNITS: The number of Annuity Units for a Division is:
(A) The amount of the first monthly variable Annuity Payment attributable
to that Division; divided by
(B) The value of an Annuity Unit for that Division as of the first
Valuation Day on or next following the Annuity Date.
The number of Annuity Units is fixed on the first Valuation Day on or next
following the Annuity Date except for adjustments for Division transfers.
Adjustments will be made as of the Valuation Period in which we receive
satisfactory notice for the transfer request.
VALUE OF EACH ANNUITY UNIT: For each Division, the value of an Annuity Unit was
set at $10 when the Division was established. The value may increase or
decrease from one Valuation Period to the next. The Annuity Unit value for any
Valuation Period is:
(A) The value of an Annuity Unit at the end of the last Valuation Period;
multiplied by
(B) The Net Investment Factor for that Division for the current Valuation
Period; multiplied by
(C) A daily factor to offset the effect of the assumed investment return
built into the Annuity Tables.
SUBSEQUENT VARIABLE ANNUITY PAYMENTS: Payments after the first will vary in
amount according to the investment performance of the Divisions you have
chosen. The amount may change from month to month. The amount of each
subsequent payment is the sum of:
(A) The number of Annuity Units for each Division; multiplied by
(B) The value of an Annuity Unit for that Division at the end of the
Valuation Period immediately preceding the Valuation Period in which
payment is made.
<PAGE> 29
We guarantee that subsequent Annuity Payments will not be affected by
variations in our expenses or mortality experience
SECTION 17 DEATH OF ANNUITANT
PRIOR TO THE ANNUITY DATE: If the Annuitant dies before the Annuity Date, the
Owner then becomes the Annuitant if the Owner is an individual. If Joint Owners
exist and if the death of the Annuitant occurs before the Annuity Date, the
younger of the Joint Owners will become the Annuitant.
AFTER THE ANNUITY DATE: If there are guaranteed payments which are unpaid under
the Annuity Option when the Annuitant dies, the Owner may choose to have the
payments continue for the guarantee period to a designated payee; or to receive
the present value of the remaining guaranteed payments in a lump sum.
Present values will be computed at the investment rate assumed when the first
Annuity Payment was calculated.
SECTION 18 ANNUITY OPTIONS
OPTION 1 - PAYMENTS FOR A GUARANTEED FIXED PERIOD: Payments will be made for
the period chosen. The period must be at least 5 years. If this Option is
taken as a Variable Annuity Payment, you may at any time choose to receive in a
lump sum the value of the remaining payments commuted at the investment rate
assumed when first Annuity Payment was calculated.
OPTION 2 - LIFE ANNUITY: Payments will be made for the life of the Annuitant.
Payments will end with the last payment due prior to the Annuitant's death.
OPTION 3 - LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10 OR 20 YEARS: Payments
will be made for the guaranteed period chosen (10 or 20 years), and for as long
thereafter as the Annuitant lives.
OPTION 4 - JOINT AND SURVIVOR LIFE ANNUITY: Payments will be made during the
lifetimes of the Annuitant and the second individual selected by the Owner. The
amount of such payments will not change due to the first death. Payments will
end with the last payment due prior to the second death.
<PAGE> 30
SECTION 19 ANNUITY TABLES - NONQUALIFIED
GUARANTEED FIRST MONTHLY ANNUITY PAYMENTS FOR EACH $1,000
APPLIED FOR ANNUITY DATES PRIOR TO THE 9TH CERTIFICATE
ANNIVERSARY
<TABLE>
<CAPTION>
OPTION I (PAYMENTS FOR A GUARANTEED FIXED PERIOD)
Years Each Years Each Years Each Years Each
Payable Payment Payable Payment Payable Payment Payable Payment
<S> <C> <C> <C> <C> <C> <C> <C>
5 17.70 9 10.32 13 7.49 17 6.00
6 14.93 10 9.39 14 7.03 18 5.73
7 12.95 11 8.64 15 6.64 19 5.49
8 11.47 12 8.02 16 6.30 20 5.27
<CAPTION>
OPTION 2 (LIFE ANNUITY)
Age Male Female Age Male Female Age Male Female
<S> <C> <C> <C> <C> <C> <C> <C> <C>
56 3.89 3.53 66 4.85 4.28 76 6.56 5.68
57 3.96 3.59 67 4.98 4.38 77 6.79 5.88
58 4.04 3.65 68 5.12 4.49 78 7.04 6.09
59 4.12 3.72 69 5.27 4.61 79 7.30 6.32
60 4.21 3.78 70 5.42 4.73 80 7.59 6.57
61 4.30 3.85 71 5.59 4.86 81 7.89 6.84
62 4.40 3.93 72 5.76 5.00 82 8.22 7.13
63 4.50 4.01 73 5.94 5.16 83 8.57 7.44
64 4.61 4.10 74 6.13 5.32 84 8.96 7.76
65 4.73 4.19 75 6.34 5.49 85 9.37 8.16
<CAPTION>
OPTION 3 (LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10 YEARS)
Age Male Female Age Male Female Age Male Female
<S> <C> <C> <C> <C> <C> <C> <C> <C>
56 3.86 3.52 66 4.73 4.24 76 6.07 5.47
57 3.93 3.57 67 4.84 4.33 77 6.23 5.63
58 4.00 3.63 68 4.96 4.43 78 6.40 5.79
59 4.07 3.70 69 5.08 4.54 79 6.57 5.97
60 4.16 3.76 70 5.21 4.65 80 6.74 6.15
61 4.24 3.83 71 5.34 4.77 81 6.92 6.35
62 4.33 3.90 72 5.48 4.89 82 7.11 6.54
63 4.42 3.98 73 5.62 5.03 83 7.29 6.75
</TABLE>
<PAGE> 31
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
64 4.52 4.06 74 5.76 5.17 84 7.48 6.96
65 4.62 4.15 75 5.91 5.31 85 7.67 7.17
<CAPTION>
OPTION 3 (LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 20 YEARS)
Age Male Female Age Male Female Age Male Female
<S> <C> <C> <C> <C> <C> <C> <C> <C>
56 3.74 3.47 66 4.35 4.07 76 4.96 4.80
57 3.80 3.52 67 4.42 4.14 77 5.01 4.87
58 3.85 3.57 68 4.48 4.21 78 5.06 4.93
59 3.91 3.63 69 4.55 4.28 79 5.11 5.00
60 3.97 3.68 70 4.61 4.36 80 5.15 5.06
61 4.03 3.74 71 4.68 4.43 81 5.18 5.11
62 4.09 3.80 72 4.74 4.51 82 5.21 5.16
63 4.16 3.87 73 4.80 4.58 83 5.23 5.19
64 4.22 3.93 74 4.85 4.65 84 5.25 5.22
65 4.29 4.00 75 4.91 4.73 85 5.26 5.24
</TABLE>
<PAGE> 32
<TABLE>
<CAPTION>
OPTION 4 (JOINT AND SURVIVOR LIFE ANNUITY)
Male Age
Female
Age 50 55 60 65 70 75 80 85
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 3.02 3.08 3.13 3.17 3.22 3.32 3.48 3.71
55 3.13 3.22 3.29 3.35 3.40 3.47 3.60 3.80
60 3.22 3.35 3.46 3.56 3.63 3.69 3.79 3.96
65 3.30 3.47 3.63 3.78 3.91 4.01 4.08 4.21
70 3.37 3.57 3.79 4.01 4.21 4.38 4.51 4.61
75 3.42 3.65 3.92 4.21 4.52 4.79 5.03 5.21
80 3.46 3.72 4.02 4.39 4.79 5.21 5.61 5.95
85 3.48 3.76 4.10 4.52 5.02 5.58 6.19 6.80
</TABLE>
Information for ages not shown will be furnished on request.
Factor for payments other than monthly:
Annual: 11.86526 Semi-annual: 5.96925 Quarterly: 2.99384
<PAGE> 33
SECTION 19 ANNUITY TABLES - NONQUALIFIED
GUARANTEED FIRST MONTHLY ANNUITY PAYMENTS FOR EACH $1,000
APPLIED FOR ANNUITY DATES ON OR AFTER THE 9TH CERTIFICATE
ANNIVERSARY
<TABLE>
<CAPTION>
OPTION I (PAYMENTS FOR A GUARANTEED FIXED PERIOD)
Years Each Years Each Years Each Years Each
Payable Payment Payable Payment Payable Payment Payable Payment
<S> <C> <C> <C> <C> <C> <C> <C>
5 17.91 9 10.53 13 7.71 17 6.53
6 15.14 10 9.61 14 7.26 18 5.96
7 13.16 11 8.86 15 6.87 19 5.73
8 11.68 12 8.24 16 6.53 20 5.51
<CAPTION>
OPTION 2 (LIFE ANNUITY)
Age Male Female Age Male Female Age Male Female
<S> <C> <C> <C> <C> <C> <C> <C> <C>
56 4.18 3.82 66 5.13 4.56 76 6.84 5.96
57 4.25 3.87 67 5.26 4.66 77 7.08 6.16
58 4.33 3.93 68 5.40 4.77 78 7.33 6.37
59 4.41 4.00 69 5.55 4.88 79 7.59 6.60
60 4.49 4.06 70 5.71 5.00 80 7.88 6.85
61 4.58 4.14 71 5.87 5.14 81 8.18 7.11
62 4.68 4.21 72 6.04 5.28 82 8.51 7.40
63 4.78 4.29 73 6.23 5.43 83 8.86 7.72
64 4.89 4.37 74 6.42 5.59 84 9.24 8.06
65 5.01 4.46 75 6.62 5.77 85 9.66 8.43
<CAPTION>
OPTION 3 (LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10 YEARS)
Age Male Female Age Male Female Age Male Female
<S> <C> <C> <C> <C> <C> <C> <C> <C>
56 4.14 3.80 66 5.01 4.51 76 6.33 5.73
57 4.21 3.86 67 5.12 4.60 77 6.49 5.89
58 4.28 3.91 68 5.23 4.70 78 6.55 6.05
59 4.35 3.98 69 5.35 4.81 79 6.82 6.23
60 4.44 4.04 70 5.48 4.92 80 6.99 6.41
61 4.52 4.11 71 5.61 5.04 81 7.17 6.60
62 4.61 4.18 72 5.74 5.16 82 7.35 6.79
63 4.70 4.26 73 5.88 5.29 83 7.54 7.00
64 4.80 4.34 74 6.03 5.43 84 7.72 7.20
65 4.90 4.42 75 6.18 5.58 85 7.91 7.42
</TABLE>
<PAGE> 34
<TABLE>
<CAPTION>
OPTION 3 (LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 20 YEARS)
Age Male Female Age Male Female Age Male Female
<S> <C> <C> <C> <C> <C> <C> <C> <C>
56 4.02 3.75 66 4.61 4.33 76 5.21 5.04
57 4.07 3.80 67 4.68 4.40 77 5.25 5.11
58 4.13 3.85 68 4.74 4.47 78 5.30 5.18
59 4.18 3.90 69 4.80 4.54 79 5.35 5.24
60 4.24 3.96 70 4.87 4.61 80 5.39 5.30
61 4.30 4.01 71 4.93 4.69 81 5.42 5.35
62 4.36 4.07 72 4.99 4.76 82 5.45 5.40
63 4.42 4.13 73 5.05 4.83 83 5.47 5.43
64 4.49 4.20 74 5.10 4.90 84 5.49 5.46
65 4.55 4.26 75 5.16 4.97 85 5.50 5.48
<CAPTION>
OPTION 4 (JOINT AND SURVIVOR LIFE ANNUITY)
Male Age
Female
Age 50 55 60 65 70 75 80 85
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 4.19 4.27 4.34 4.39 4.43 4.45 4.47 4.48
55 4.32 4.45 4.55 4.64 4.71 4.76 4.79 4.81
60 4.45 4.62 4.79 4.94 5.06 5.14 5.20 5.24
65 4.56 4.79 5.03 5.27 5.47 5.63 5.74 5.82
70 4.65 4.94 5.27 5.61 5.94 6.22 6.44 6.59
75 4.73 5.06 5.46 5.93 6.43 6.90 7.31 7.61
80 4.78 5.15 5.62 6.20 6.87 7.60 8.30 8.89
85 4.81 5.21 5.72 6.39 7.23 8.22 9.29 10.32
</TABLE>
Information for ages not shown will be furnished upon request.
Factors for payments other than monthly:
Annual: 11.83895 Semi-annual: 5.96322 Quarterly: 2.99263
<PAGE> 1
Exhibit 4(b)
Form of Individual Certificate
<PAGE> 2
EXHIBIT (4)(b)
PAINEWEBBER LIFE
PAINEWEBBER LIFE INSURANCE COMPANY
Administrative Office
601 Sixth Avenue, Des Moines, Iowa 50309
CERTIFICATE NUMBER: [99999999]
CERTIFICATEHOLDER: [John Doe]
GROUP CONTRACT NO. [9999999]
CONTRACTHOLDER: [THE ABC TRUST]
CONTRACT GOVERNED BY THE LAWS OF: [RHODE ISLAND]
DATE OF ISSUE: [SEPTEMBER 1, 1995]
[PageNum]This is a legal contract between the Certificateholder and PaineWebber
Life Insurance Company. Read this Certificate with care. PaineWebber Life
Insurance Company agrees, in accordance with the provisions of the Certificate,
to pay benefits to the extent required by this Certificate, to those persons
entitled to such benefits.
10 DAY RIGHT TO EXAMINE CERTIFICATE
This Certificate may be returned by mailing or delivering the Certificate to
us, or to our agent. If returned, the Certificate will be considered void from
the beginning. The Certificate Owner will be sent any Net Purchase Payment
allocated to the Fixed Account plus any Variable Account Value, plus any
charges deducted from any Purchase Payment, computed at the end of the
Valuation Period in which this Certificate is received by us at our
Administrative Office.
Signed by PaineWebber Life Insurance Company on the Issue Date.
President Secretary
ALL PAYMENTS, VALUES, AND BENEFITS, WHEN BASED ON THE INVESTMENT EXPERIENCE OF
THE SEPARATE ACCOUNT, MAY INCREASE OR DECREASE DEPENDING ON INVESTMENT RESULTS,
AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT.
GROUP DEFERRED VARIABLE ANNUITY CERTIFICATE
FLEXIBLE PURCHASE PAYMENTS
WITH FIXED ACCOUNT OPTION
COUNTERSIGNED BY
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C>
1 DEFINITIONS ......................................................................................
2 OWNER ............................................................................................
3 ANNUITANT ........................................................................................
4 BENEFICIARY ......................................................................................
5 SEPARATE ACCOUNT .................................................................................
6 FIXED ACCOUNT ....................................................................................
7 PURCHASE PAYMENTS ................................................................................
8 TRANSFERS ........................................................................................
9 WITHDRAWALS ......................................................................................
10 DEATH OF OWNER PRIOR TO THE ANNUITY DATE .........................................................
11 CHARGES AND DEDUCTIONS ...........................................................................
12 GENERAL PROVISIONS ...............................................................................
13 TERMINATION PROVISIONS ...........................................................................
14 ANNUITY PROVISIONS ...............................................................................
15 FIXED ANNUITY PAYMENTS ...........................................................................
16 VARIABLE ANNUITY PAYMENTS.........................................................................
17 DEATH OF ANNUITANT ...............................................................................
18 ANNUITY OPTIONS ..................................................................................
19 ANNUITY TABLES - NONQUALIFIED ....................................................................
</TABLE>
<PAGE> 4
SCHEDULE PAGE
ELIGIBLE CLASSES: [All customers and employees of Sponsor]
ANNUITANT ISSUE AGES: [0 - 85]
CERTIFICATE OWNER ISSUE AGES: [0 - 85]
(Applies to both Owners if Joint Owners exist.)
ELIGIBLE OWNER ISSUE AGES
ANNUAL RESET DEATH BENEFIT OPTION: 0-80
INTEREST ACCRUAL DEATH BENEFIT OPTION: 0-80
ANNUAL RESET INCOME BENEFIT OPTION: 0-80
INTEREST ACCRUAL INCOME BENEFIT OPTION: 0-80
(Applies to both Owners if Joint Owners exist):
EARLIEST ANNUITY DATE: [99/99/99*]
LATEST ANNUITY DATE: [99/99/99*]
AUTOMATIC ANNUITY DATE: [99/99/99*]
MAXIMUM MATURITY AGE: OWNER'S AGE [90]
If there are Joint Owners, Maximum Maturity Age refers to the age of the
youngest Joint Owner.
(* date based on Owner's age.)
NONQUALIFIED QUALIFIED IRA
MINIMUM INITIAL CERTIFICATE
PURCHASE PAYMENT:
[$5,000] [$1,000] [$200]
MINIMUM ADDITIONAL CERTIFICATE
PURCHASE PAYMENTS:
[$ 500] [$ 50] [$ 50]
MAXIMUM AGGREGATE PURCHASE PAYMENTS WITHOUT PRIOR HOME OFFICE APPROVAL:
[$1,500,000]
<PAGE> 5
SCHEDULE PAGE (CONTINUED)
AVAILABLE SEPARATE ACCOUNT DIVISIONS
EACH DIVISION OF THE PAINEWEBBER LIFE VARIABLE ANNUITY ACCOUNT INVESTS IN A
SPECIFIC INVESTMENT PORTFOLIO INDICATED BELOW. FOLLOWING ARE THE SEPARATE
ACCOUNT DIVISIONS AND THE INVESTMENT PORTFOLIOS IN WHICH THEY INVEST:
<TABLE>
<S> <C>
[Money Market Division Money Market Portfolio of PaineWebber Series
Trust
High Grade Fixed Income Division* High Grade Fixed Income Portfolio of AAA
Series Trust
Global Income Division* Global Income Portfolio of BBB Series Trust
Balanced Division* Balanced Portfolio of CCC Series Trust
Growth Division* Growth Portfolio of DDD Series Trust
Aggressive Growth Division* Aggressive Growth Portfolio of EEE Series Trust
Global Growth Division* Global Growth Portfolio of FFF Series Trust
Strategic Fixed Income Division* Strategic Fixed Income Portfolio of GGG Series
Trust
Growth and Income Division* Growth and Income Portfolio of HHH Series Trust
</TABLE>
[*Indicates Eligible Divisions as set out in the Interest Accrual Death Benefit
Option and the Interest Accrual Income Benefit Option]
AVAILABLE FIXED ACCOUNT OPTIONS
FIXED ACCOUNTS:
STABLE VALUE FIXED ACCOUNT A:
MINIMUM GUARANTEED INTEREST RATE: [3%] PER YEAR
BONUS INTEREST RATE: [1%] FOR [1] YEAR(S)
STABLE VALUE FIXED ACCOUNT B:
MINIMUM GUARANTEED INTEREST RATE: [3%] PER YEAR
BONUS INTEREST RATE: [0%] for [1] YEAR(S)
Stable Value Fixed Account B is only available for allocations of
Certificate Value subject to our Dollar Cost Averaging Program.
<PAGE> 6
SCHEDULE PAGE (CONTINUED)
SCHEDULE OF CHARGES
CERTIFICATE MAINTENANCE CHARGE: $0
DAILY CHARGE: On an annual basis the asset charges are the percentage, shown
below, of the daily net asset value of the Divisions of the Separate Account.
BASIC BENEFIT RISK CHARGE: [1.00%]
TRADITIONAL DEATH BENEFIT CHARGE: [0.20%]
[ANNUAL RESET DEATH BENEFIT CHARGE: [0.15%]
[ANNUAL RESET INCOME BENEFIT CHARGE [0.15%]
[INTEREST ACCRUAL DEATH BENEFIT CHARGE: [0.15%]
[INTEREST ACCRUAL INCOME BENEFIT CHARGE: [0.15%]
-------
TOTAL: [1.80%]
The Daily Charge is equal to the annual charges divided by 365.
[EARLY WITHDRAWAL CHARGE: The Early Withdrawal Charge is a percentage of each
Net Purchase Payment made and is based on the period of time after it is
received by us.
<TABLE>
<CAPTION>
Age of Purchase Payment in Calendar Years
-----------------------------------------
1 2 3 4 5 6 7 8+
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Early Withdrawal Charge 6% 6% 5% 4% 3% 2% 1% 0%
</TABLE>
TRANSFER OPTIONS AND CHARGES:
NUMBER OF FREE TRANSFERS IN A CERTIFICATE YEAR: [12]
EXCESS TRANSFER CHARGE: [$10]
PARTIAL WITHDRAWAL OPTIONS AND CHARGES:
WITHDRAWALS:
MINIMUM WITHDRAWAL AMOUNT: [$500], except for a
SYSTEMATIC WITHDRAWAL SERVICE (ACCEPTABLE TO US): [$100]
MINIMUM CERTIFICATE VALUE AFTER WITHDRAWAL: If a withdrawal would reduce the
Certificate Value below the greater of A or the sum of B and C, then we will
treat the transaction as a full withdrawal.
(A) is [$1,000];
(B) is the Early Withdrawal Charge on any Purchase
Payments with a Early Withdrawal Charge Period
remaining; and
(C) is the amount of state premium tax owed, if any.
EARLY WITHDRAWAL CHARGE PERIOD for a Purchase Payment is the 7-year period
following the date the Purchase Payment was made.
<PAGE> 7
NUMBER OF WITHDRAWALS IN A CERTIFICATE YEAR NOT SUBJECT TO A TRANSACTION
CHARGE: [2]
EXCESS WITHDRAWAL TRANSACTION CHARGE: [FOR EACH WITHDRAWAL: $25 or 2% of the
amount withdrawn, whichever is less.] The Excess Withdrawal Transaction Charge
does not apply on or after the Annuity Date or to any withdrawal made through a
systematic withdrawal service acceptable to us. However, withdrawals through a
systematic withdrawal service may be assessed a [$1.50] administrative fee for
each payment.
FREE WITHDRAWAL AMOUNT: The Free Withdrawal Amount is the amount that may be
withdrawn each Certificate Year without the application of the Early Withdrawal
Charge. The Free Withdrawal Amount is equal to [15% of the Certificate Value on
the first Valuation Day of the Certificate Year.]
For the purpose of determining the Early Withdrawal Charge, we assume that all
withdrawals are taken:
(A) first from any remaining Free Withdrawal Amount;
(B) next from Net Purchase Payments with no Early Withdrawal Charge Period
remaining;
(C) next from Net Purchase Payments with an Early Withdrawal Charge Period
remaining, starting with the shortest Early Withdrawal Charge Period remaining
and progressing to the longest;
(D) next from any remaining amount.
For purposes of determining Early Withdrawal Charges on future withdrawals, any
Free Withdrawal Amount is not considered a liquidation of Purchase Payments.
<PAGE> 8
SCHEDULE PAGE (CONTINUED)
[ANNUAL RESET DEATH BENEFIT OPTION: The ANNUAL RESET DEATH BENEFIT OPTION may
be elected by the Owner in the application for the Certificate.
ANNUAL RESET DEATH BENEFIT OPTION: If the Owner dies prior to the Annuity
Date and on or prior to the Maximum Maturity Age, the Death Benefit is the
greatest of (A), (B), or (C) where:
(A) is the Certificate Value
(B) is the sum of all Net Purchase Payments less any prior partial withdrawals,
Early Withdrawal Charges, Excess Withdrawal Transaction Charges and Excess
Transfer Charges.
(C) is the greatest Certificate Value as measured on each Certificate
Anniversary, plus any Purchase Payments after that anniversary; less any
partial withdrawals, Early Withdrawal Charges, Excess Withdrawal Transaction
Charges and Excess Transfer Charges imposed after that anniversary.
The Certificate Values taken into account for purpose of calculating
(C) are based on the Owner's age at issue. If Joint Owners exist, the age of
the youngest Joint Owner is used.
1) If the age at issue is 0-75, (C) will take into account
Certificate Values for Certificate Anniversaries when the Owner's age is less
than or equal to age 80. Thereafter, no additional Certificate Values will be
taken into account, but prior Certificate Values will continue to be adjusted
as described in (C).
2) If the age at issue is 76-80, (C) will take into account Certificate
Values on each of the first five Certificate Anniversaries. Thereafter, no
additional Certificate Values will be taken into account, but prior Certificate
Values will continue to be adjusted as described in (C).
DEATH BENEFIT AFTER THE MAXIMUM MATURITY AGE AND BEFORE THE ANNUITY DATE: The
Death Benefit after the Maximum Maturity Age and before the Annuity Date is the
Net Certificate Value.
ANNUAL RESET DEATH BENEFIT CHARGE: The Annual Reset Death Benefit Risk Charge
will be computed and deducted from the Separate Account Divisions for each day
this Certificate is in force prior to the Annuity Date. On an annual basis it
equals the percentage, shown on the Schedule Page, of the daily net asset value
of the Divisions.
The PAYMENT OF THE DEATH BENEFIT and PAYMENT OPTION provisions in section 10 of
this Certificate also apply to Annual Reset Death Benefit Option.]
<PAGE> 9
SCHEDULE PAGE (CONTINUED)
[INTEREST ACCRUAL DEATH BENEFIT OPTION: The Interest Accrual Death Benefit may
be elected by the Owner in the application for the Certificate.
INTEREST ACCRUAL DEATH BENEFIT OPTION: If the Owner dies prior to the Annuity
Date and on or prior to the Maximum Maturity Age, the Death Benefit is the
greatest of (A) or (B), where:
(A) is the Certificate Value.
(B) is Net Purchase Payments less any partial withdrawals, Early
Withdrawal Charges, Excess Withdrawal Transaction Charges, and Excess
Transfer Charges all accumulated at the Death Benefit Accrual Rate.
The Death Benefit Accrual Rate is a weighted average of the accrual
rates for Eligible Divisions, each Ineligible Division, and each Fixed
Account Option. The calculation is done on a daily basis. The daily
accrual rate for Eligible Divisions is .0159654%, which is equivalent
to 6% on an annual basis. The daily accrual rate for each Ineligible
Division and each Fixed Account option is equal to the actual net rate
of return of each. The daily accrual rates are weighted by the daily
Certificate Values in the Eligible Divisions, each Ineligible
Division, and each Fixed Account option.
The calculation of (B) is based on the Owner's age at issue. If Joint
Owners exist, the age of the youngest Joint Owner is used.
1) If the age at issue is 0-75, (B) accumulates until the Certificate
Anniversary when the Owner reaches age 80. After the Certificate Anniversary
when the Owner reaches age 80, (B) is increased by any Net Purchase Payments
and decreased by any partial withdrawals, Early Withdrawal Charges, Excess
Withdrawal Transaction Charges, and Excess Transfer Charges since that date but
no further interest accumulates.
2) If the age at issue is 76-80, (B) accumulates until the Certificate
Anniversary five years after the issue date of the Certificate. Beyond this
anniversary, (B) is increased by any Net Purchase Payments and decreased by any
partial withdrawals, Early Withdrawal Charges, Excess Withdrawal Transaction
Charges and Excess Transfer Charges since that date, but no further interest
accumulates.
DEATH BENEFIT AFTER THE MAXIMUM MATURITY AGE AND BEFORE THE ANNUITY DATE: The
Death Benefit after the Maximum Maturity Age and before the Annuity Date is the
Net Certificate Value.
ELIGIBLE DIVISIONS: The current Eligible Divisions are shown in the Schedule
Page. We reserve the right to add, delete, or substitute Eligible Divisions.
The Owner will be notified of
<PAGE> 10
any such change in Eligible Divisions.
INTEREST ACCRUAL DEATH BENEFIT CHARGE: The Interest Accrual Death Benefit Risk
Charge will be computed and deducted from the Separate Account Divisions for
each day this Certificate is in force prior to the Annuity Date. On an annual
basis it equals the percentage, shown in the Schedule Page, of the daily net
asset value of the Divisions.
The PAYMENT OF THE DEATH BENEFIT and PAYMENT OPTION provisions in Section 10 of
this certificate also apply to Interest Accrual Death Benefit option.]
<PAGE> 11
SCHEDULE PAGE (CONTINUED)
[TRADITIONAL DEATH BENEFIT: The TRADITIONAL DEATH BENEFIT may be elected by
the Owner in the application for the Certificate.
TRADITIONAL DEATH BENEFIT: If the Owner dies prior to the Annuity Date and on
or prior to the Maximum Maturity Age, the Death Benefit is the greater of (A)
or (B), where:
(A) is the Certificate Value.
(B) is the sum of all Net Purchase Payments, less any prior partial
withdrawals, Early Withdrawal Charges, Excess Withdrawal Transaction Charges
and Excess Transfer Charges.
DEATH BENEFIT AFTER THE MAXIMUM MATURITY AGE AND BEFORE THE ANNUITY DATE: The
Death Benefit after Maximum Maturity Age and before the Annuity Date is the Net
Certificate Value.
TRADITIONAL DEATH BENEFIT CHARGE: The Traditional Death Benefit Risk Charge
will be computed and deducted from the Separate Account Divisions for each day
this Certificate is in force prior to the Annuity Date. On an annual basis it
equals the percentage, shown on the Schedule Page, of the daily net asset value
of the Divisions.
The PAYMENT OF THE DEATH BENEFIT and PAYMENT OPTION provisions in Section 10 of
this Certificate also apply to the Death Benefit.]
<PAGE> 12
SCHEDULE PAGE (CONTINUED)
[BASIC DEATH BENEFIT: The BASIC DEATH BENEFIT may be elected by the Owner in
the application for the Certificate.
BASIC DEATH BENEFIT: If the Owner dies prior to the Annuity Date, the Death
Benefit equals the Net Certificate Value.
The PAYMENT OF DEATH BENEFIT and PAYMENT OPTION provisions in Section 10 of
this certificate also apply to this Death Benefit.]
<PAGE> 13
SCHEDULE PAGE (CONTINUED)
[ANNUAL RESET INCOME BENEFIT OPTION may be selected by the Owner in the
application for the Certificate if the Owner also selects the Annual Reset
Death Benefit Option.
ANNUAL RESET INCOME BENEFIT OPTION: This Benefit Option provides that the
Fixed Annuity Payment on the Annuity Date will be the greater of (A) or (B):
(A) The Net Certificate Value on the Annuity Date at the Current Annuity
Settlement Option Rates, as explained in Section 15; or
(B) The amount determined under the Annual Reset Death Benefit, applied to any
Life Contingent Annuity Options for Fixed Annuity Payments at the Guaranteed
Annuity Settlement Option Rates. Life Contingent Annuity Options are methods
for determining the amount of each Annuity Payment over the Life of the
Annuitant. The Life Contingent Annuity Options for this Certificate are
currently Option 2 - Life Annuity, Option 3 - Life Annuity with Payments
Guaranteed for 10 or 20 years, and Option 4 - Joint and Survivor Life Annuity.
The Options are explained in Sections 18 and 19 of this Certificate.
Additional Life Contingent Annuity Options may be made available in the future.
This amount can not be applied to Current Annuity Settlement Option Rates.
The value of this benefit is not available to be taken as a withdrawal of
Certificate Value.
This benefit is not available for Variable Annuity Payments.
This benefit option may be exercised on or after the 7th Certificate
Anniversary, but must be exercised prior to the Latest Annuity Date.
ANNUAL RESET INCOME BENEFIT CHARGE will be computed and deducted from the
Separate Account Divisions for each day this Certificate is in force prior to
the Annuity Date. On an annual basis, it equals the percentage shown on the
Schedule Page, of the daily net asset value of the Divisions.
<PAGE> 14
SCHEDULE PAGE (CONTINUED)
[INTEREST ACCRUAL INCOME BENEFIT OPTION may be selected by the Owner in the
application for the Certificate if the Owner also selects the Interest Accrual
Death Benefit Option.
INTEREST ACCRUAL INCOME BENEFIT OPTION: This Benefit Option provides that the
Fixed Annuity Payment on the Annuity Date will be the greater of (A) or (B):
(A) The Net Certificate Value on the Annuity Date at the Current Annuity
Settlement Option Rates, as explained in Section 15; or
(B) The amount determined under the Interest Accrual Death Benefit, applied to
any Life Contingent Annuity Options for Fixed Annuity Payments at the
Guaranteed Annuity Settlement Option Rates. Life Contingent Annuity Options
are methods for determining the amount of each Annuity Payment over the Life of
the Annuitant. The Life Contingent Annuity Options for this Certificate are
currently Option 2 - Life Annuity, Option 3 - Life Annuity with Payments
Guaranteed for 10 or 20 years, and Option 4 - Joint and Survivor Life Annuity.
The Options are explained in Sections 18 and 19 of this Certificate.
Additional Life Contingent Annuity Options may be made available in the future.
This amount can not be applied to Current Annuity Settlement Option Rates.
The value of this benefit is not available to be taken as a withdrawal of
Certificate Value.
This benefit is not available for Variable Annuity Payments.
This benefit option may be exercised on or after the 7th Certificate
Anniversary, but must be exercised prior to the Latest Annuity Date.
The INTEREST ACCRUAL INCOME BENEFIT CHARGE will be computed and deducted from
the Separate Account Divisions for each day this Certificate is in force prior
to the Annuity Date. On an annual basis it equals the percentage, shown in the
Schedule Page, of the daily net asset value of the Divisions.]
<PAGE> 15
SCHEDULE PAGE (CONTINUED)
[STABLE VALUE FIXED ACCOUNT: The Stable Value Fixed Account is credited with
interest rate(s) which will not be less than the minimum guaranteed interest
rate shown in the Schedule Page. We may declare, from time to time at our sole
discretion, a current interest rate which is higher than the minimum guaranteed
interest rate and which is guaranteed for at least one year.
Net Purchase Payments allocated to, or transfers made into, the Stable Value
Fixed Account will earn interest at the current interest rate being declared at
that time. When the current interest rate expires, a new current interest
rate will be declared. The Value in the Stable Value Fixed Account will be
adjusted for any Early Withdrawal Charge, Excess Transaction Charge, or Excess
Transfer Charge that is allocated to the Stable Value Fixed Account.
The guaranteed benefits under this Certificate are provided through our General
Account and are subject to the claims arising out of other business we may
conduct.
BONUS INTEREST RATE: Interest, in addition to the declared current interest
rate, which will be credited in the amount shown in the Schedule Page, for the
length of time shown in the Schedule Page. The Bonus Interest Rate will not be
available beyond the length of time shown in the Schedule Page.
<PAGE> 16
SECTION 1 DEFINITIONS
ACCUMULATION UNIT is a unit of measurement we use to compute values in a
Division prior to the Annuity Date.
ANNUITANT means the natural person on whose life the annuity benefit for this
certificate is based.
ANNUITY DATE means the date on which the first Annuity Payment is made.
ANNUITY UNIT means a unit of measurement we use to compute the Variable Annuity
Payments from a Division.
BENEFICIARY means the person named to receive the payments under this
certificate due to the Owner's death.
CERTIFICATE means a form which describes a Certificate Owner's interest in this
Group Contract.
CERTIFICATE ANNIVERSARY means the date 12 months from the date of issue of this
certificate and annually thereafter.
CERTIFICATE YEAR means each 12 month period from the date of issue of the
Certificate.
CERTIFICATE VALUE means the sum of a Certificate Owner's values in each
Division of the Separate Account and in each Fixed Account option.
CONTRACT means the Master Group Contract form, A-3422, issued to the [ABC
Trust.]
CONTRACT ANNIVERSARY means the date 12 months from the date of issue of the
Contract and annually thereafter.
CONTRACTHOLDER means the person or entity shown in page 1 unless later changed,
that owns the master group contract under which an Annuity Certificate is
issued.
CURRENT ANNUITY SETTLEMENT OPTION RATES means the monthly income rates that
will be at least as favorable as those listed in section 19.
DIVISION means an investment option in the Separate Account. Each Division
invests in an investment portfolio shown on the Schedule Page. "Division" does
not include the Fixed Account.
<PAGE> 17
FIXED ACCOUNT means any account, as shown on the Schedule Page, for which
amounts allocated receive a fixed rate of interested determined by us from time
to time.
GUARANTEED ANNUITY SETTLEMENT OPTION RATES means the monthly income rates shown
in Section 19.
NET CERTIFICATE VALUE means the Owner's Certificate Value less all applicable
maintenance charges, Early Withdrawal Charges and premium taxes.
NET PURCHASE PAYMENT means a Purchase Payment less any premium taxes that may
be deducted from such Purchase Payment, as provided in this certificate under
which the Purchase Payment is made.
OWNER means the person named in a Certificate who is entitled to exercise all
rights and privileges of ownership under a Certificate. If Joint Owners exist,
both persons must agree to the exercise of any right and privilege of ownership
under the Certificate.
PURCHASE PAYMENT means any money the Owner paid us for his or her Certificate.
SEPARATE ACCOUNT means PaineWebber Life Variable Annuity Account, a separate
investment account of PaineWebber Life Insurance Company. Assets allocated to
the Separate Account remain our property. Assets of the Separate Account equal
to its reserves and other liabilities are not subject to the claims arising out
of any other business we may conduct.
VALUATION DAY means any day the New York Stock Exchange is open and PaineWebber
Life Insurance Company is open for business.
VALUATION PERIOD means the interval from the end of one Valuation Day to the
end of the next Valuation Day of an investment portfolio. Valuation occurs at
the end of each Valuation Day, which is the close of the New York Stock
Exchange (usually, 4pm Eastern Time).
WE, US, or OUR means PaineWebber Life Insurance Company.
YOU or YOUR means the Owner of this Certificate.
SECTION 2 OWNER
OWNER: The Owner is the person or persons named as such on the Schedule Page of
this Certificate, or by later change. The Owner owns his or her Certificate
while the Owner is alive.
OWNERSHIP RIGHTS: The Owner and we may agree to a change in the Ownership of
the Certificate, but our consent to a change will not be unreasonably withheld.
Also, unless we endorse it to say otherwise, the Owner can exercise the rights
given by various sections of the
<PAGE> 18
Certificate. If there are Joint Owners, both Owners must agree to exercise any
rights under this Certificate. These include:
(1) the right to choose and change the Beneficiary;
(2) the right to choose and change the Annuitant, subject to Section 3;
(3) the right to surrender the Certificate;
(4) the right to transfer this certificate Value among the Divisions and
the Fixed Account;
(5) the right to make withdrawals from the Certificate;
(6) the right to choose how the Death Benefit will be paid; and
(7) the right to assign this certificate as security for an obligation or
assign future guarantee payments.
SECTION 3 ANNUITANT
ANNUITANT: The Annuitant is the person named as such on the Schedule Page of
this Certificate, or as indicated by later change.
CHANGING THE ANNUITANT: The Owner and we may agree to change the Annuitant at
any time before the earlier of the Annuity Date or the death of the Annuitant.
DEATH OF ANNUITANT: If the Annuitant dies before the Owner, the Owner becomes
the Annuitant.
SECTION 4 BENEFICIARY
BENEFICIARY: The Beneficiary is the person who will receive the payments under
this Certificate due to the Owner's death. If Joint Owners have been named,
and one of the Joint Owners dies, the surviving Joint Owner takes precedence
over the named Beneficiary for all ownership rights, and the receipt of any
payments. If there is no Beneficiary when the Owner dies, payment will be made
to the Owner's estate.
CONTINGENT BENEFICIARY: The Owner may name a Contingent Beneficiary. The
Contingent Beneficiary will become the Beneficiary if all the Beneficiaries die
while the Owner is alive.
IRREVOCABLE BENEFICIARY: The Owner can name any Beneficiary to be an
Irrevocable Beneficiary. An Irrevocable Beneficiary must provide his or her
consent for any change of Beneficiary, withdrawal of any part of the Net
Certificate Value, or any collateral assignment of the Certificate. Otherwise,
the Owner can change a Beneficiary as set out below.
<PAGE> 19
CHANGING THE BENEFICIARY: The Owner names the Beneficiary in the Application
for this Certificate. The Owner may change the Beneficiary or Contingent
Beneficiary at any time during the Owner's lifetime. A change cancels all prior
Beneficiaries.
SIMULTANEOUS DEATH: If the Beneficiary dies at the same time or within 10 days
after the Owner dies, the payments under this Certificate due to the Owner's
death will be paid as if the Beneficiary had died before the Owner.
SECTION 5 SEPARATE ACCOUNT
SEPARATE ACCOUNT is a separate investment account of PaineWebber Life Insurance
Company established in accordance with California's insurance laws. Assets
allocated to the Separate Account remain our property. The income, gains and
losses, whether or not realized, from assets allocated to each Division are
credited to or charged against that Division in accordance with the terms of
the Certificate, without regard to other income, gains or losses of the
Company. Assets of the Separate Account equal to its reserves and other
liabilities are not subject to the claims arising out of any other business we
may conduct.
INVESTMENT PORTFOLIOS: Investment portfolios in which Separate Account
Divisions invest are shown in the Schedule Page. For each investment portfolio
there is a corresponding Separate Account Division.
CHANGES TO INVESTMENT PORTFOLIOS: We may add, substitute, or delete investment
portfolios. Such changes may be made to existing Certificate Values and the
investment of future Purchase Payments.
NET INVESTMENT FACTOR is the index used to measure the investment performance
of a Division from one Valuation Period to the next. For any Division, the Net
Investment Factor for a Valuation Period is found by dividing (A) by (B) and
subtracting (C):
(A) The net asset value per share of the investment portfolio held in the
Division, as of the end of the Valuation Period, plus the per share amount of
any dividend, capital gain or other distribution made by the investment
portfolio in the Valuation Period, plus or minus a per share charge or credit
for any taxes reserved for in the current Valuation Period, which we determine
resulted from the investment operations of the Division;
(B) The net asset value per share of the investment portfolio held in the
Division as of the end of the previous Valuation Period;
(C) The Daily Charge as set out in Section 11, Charges and Deductions.
VALUE OF EACH ACCUMULATION UNIT: For each Division, the value of an
Accumulation Unit was set at $10 when the Division was established. The value
may increase or decrease from one Valuation Period to the next. For any
Valuation Period the value is:
<PAGE> 20
(A) The value of an Accumulation Unit at the end of the last Valuation
Period; multiplied by
(B) The Net Investment Factor for that Division for the current Valuation
Period.
NUMBER OF ACCUMULATION UNITS: The number of your Accumulation Units for each
Division is the sum of:
(A) Each Net Purchase Payment allocated to the Division; divided by
(B) The value of an Accumulation Unit for that Division for the Valuation
Period in which we received the Net Purchase Payment.
The number will be adjusted for transfers, withdrawals, charges and deductions.
Adjustments will be made as of the Valuation Period in which we receive
satisfactory notice and any additional requirements for the transaction are
satisfied.
CERTIFICATE VALUE OF EACH DIVISION: The Certificate Value in each Division on
any Valuation Day is equal to the number of Accumulation Units attributable to
that Division multiplied by the value of each Accumulation Unit in that
Division.
SECTION 6 FIXED ACCOUNT
FIXED ACCOUNT: The Fixed Accounts are options to which your Purchase Payments
and Certificate Value may be allocated. Fixed Account options available are
described on the Schedule Page. Certain Fixed Account options may only be
available if an Owner has elected certain asset allocation or other services.
See Schedule Pages for details.
SECTION 7 PURCHASE PAYMENTS
MINIMUM PURCHASE PAYMENTS: The Minimum Initial Purchase Payment and Minimum
Additional Purchase Payment are shown in the Schedule Page.
Additional Purchase Payments may be made at any time. We have the right to
refuse any Purchase Payment that causes the sum of the Purchase Payments paid
to date to exceed the Maximum Aggregate Purchase Payments amount shown in the
Schedule Page.
PURCHASE PAYMENT ALLOCATION: Your Net Purchase Payments will be allocated to
the Divisions in the Separate Account and Fixed Account options as the Owner
directs. However, if the Owner resides in a state that requires us to refund
Purchase Payments if the Right To Examine Certificate is invoked, Purchase
Payment amounts received during the Right To Examine Certificate period which
are to be allocated to Fixed Account options will be immediately allocated.
Purchase Payment amounts that are to be allocated anywhere else will be
<PAGE> 21
initially allocated to the Money Market Division. The Money Market Division
Certificate Value will be transferred automatically to the Separate Account
Divisions elected in the Certificate application, or any more recent allocation
instructions received by us, at the end of the Right To Examine Certificate
period.
Additional Net Purchase Payments received without satisfactory notice of
investment instructions will be allocated among the Divisions and Fixed Account
options, in the ratio of the Certificate Value in each to the total Certificate
Value.
We will notify the Owner of the acceptance of a Purchase Payment and how the
Net Purchase Payment was allocated.
SECTION 8 TRANSFERS
TRANSFERS: Upon satisfactory notice to us, the Owner may transfer all or part
of his or her Certificate Value among the Separate Account Divisions and the
Fixed Account. All transfers will be subject to any rules and procedures shown
on the Schedule Page. Transfers will be based on values for the Valuation
Period in which the Owner's notice is received at our Administrative Office. If
the instructions are not properly completed, the transfer will not be executed
and we will contact the Owner.
TRANSFER CHARGES: The Owner may make a transfer at any time. The number of free
transfers allowed in a Certificate Year and the transfer charge for transfers
in excess of that number are shown in the Schedule Page. We have the right to
waive the charge for transfers completed through an allocation service
acceptable to us.
Any Transfer Charge will be deducted from the Divisions and the Fixed Account
options to which the Certificate Value is transferred for transfers made before
the Annuity Date. The deduction will be in the ratio of the Certificate Value
transferred to each Division or Fixed Account option to the total Certificate
Value transferred. Transfers made after the Annuity Date will have the transfer
charge deducted from the next Annuity Payment.
SECTION 9 WITHDRAWALS
WITHDRAWALS: The Owner may withdraw all or part of the Net Certificate Value.
We must receive satisfactory notice of the Owner's request prior to the earlier
of the Annuity Date or the death of the Owner. If the notice is not
satisfactory, then no withdrawal will be made and we will contact the Owner.
SIZE AND FREQUENCY: The Owner may make a withdrawal at any time prior to the
Annuity Date. Our rules with regard to the permitted size and frequency of
withdrawals and withdrawal transaction charges are shown in the Schedule Page.
MINIMUM CERTIFICATE VALUE: If a withdrawal reduces the Certificate Value below
the Minimum Certificate Value after Withdrawal shown in the Schedule Page, we
will distribute the
<PAGE> 22
Net Certificate Value to the Owner and the Certificate will terminate.
PAYMENT OF WITHDRAWALS: Withdrawals will be based on values for the Valuation
Period in which the Owner's satisfactory notice (and the Certificate, if
required) is received at our Administrative Office. Withdrawals will generally
be paid within 7 days.
DEDUCTION OF ANY WITHDRAWAL CHARGES: Any charges relating to a withdrawal,
Excess Withdrawal Transaction Charges and Early Withdrawal Charges, will be
deducted from the affected Divisions and Fixed Account in the ratio of the
Certificate Value withdrawn from each to the total Certificate Value withdrawn.
If the amount in any Division or Fixed Account is not enough to cover its share
of the charges, the excess will be deducted from the remaining Divisions and
Fixed Account in the ratio of the value in each to the total Certificate Value.
SECTION 10 DEATH OF OWNER PRIOR TO THE ANNUITY DATE
DEATH BENEFIT: [The death benefits available are shown in the Schedule Page of
the Certificate.]
Upon the death of the Owner (or if Joint Owners exist, upon the death of any
Owner) prior to the Annuity Date, the Beneficiary will be entitled to all
ownership rights under the Certificate and, if the Beneficiary elects the Death
Benefit, the Certificate Value will be increased so that it equals the Death
Benefit. For this purpose, if any Owner is not an individual, the death of any
Annuitant will be considered the death of an Owner.
The amount of the Death Benefit is determined as of the Valuation Day on or
next following the day on which we receive due proof of the Owner's death and
notice from the Beneficiary stating that he or she elects the Death Benefit at
our Administrative Office. The Beneficiary must choose the method of
settlement within 90 days of the determination of the death benefit amount.
DISTRIBUTION RULES: If the Owner or if Joint Owners exist, upon the death of
any Owner prior to the Annuity Date, the Certificate may continue for five
years from the date of death and, at the end of such five years, any
Certificate Value remaining must be distributed to the Beneficiary and the
Certificate will terminate. For this purpose, if any Owner is not an
individual, the death or change of any Annuitant will be considered the death
of an Owner.
If the Beneficiary is an individual, the distribution rule set forth above will
be considered satisfied as to the portion of this certificate which is payable
to or for the benefit of that Beneficiary and which will be distributed under
an Annuity Option over the life of the Beneficiary or Beneficiary (within the
meaning of the tax law), provided such distributions begin within one year of
the Owner's death, any Annuity Option selected will have to provide for full
payment within five years of the Owner's death.
SPOUSAL OPTION: If the Beneficiary is the surviving spouse of the deceased
Owner, that Beneficiary may, instead of electing the Death Benefit, continue
this certificate as its Owner, and
<PAGE> 23
above distribution rules will be applied on the death of the surviving spouse.
If this certificate is continued pursuant to this spousal option, the Death
Benefit may be elected on the death of the surviving spouse. However, this
spousal exception to the above distribution rules will not again be available
upon the death of the surviving spouse.
DEATH OF OWNER AFTER ANNUITY DATE: If any Owner dies on or after the Annuity
Date and before the entire interest in this certificate has been distributed,
the remaining portion of such interest must be distributed at least as rapidly
as under the method of distributions being used as of the date of death.
SECTION 11 CHARGES AND DEDUCTIONS
MAINTENANCE CHARGE: Any Maintenance Charge is shown in the Schedule Page. It
will be deducted on the first Valuation Day on or next following each
Certificate Anniversary prior to the Annuity Date. It will also be deducted
upon a full withdrawal or if Annuity Payments begin on other than the first
Valuation Day on or next following a Certificate Anniversary. This charge will
be deducted from the Divisions and Fixed Account in the ratio of the
Certificate Value in each to the total Certificate Value.
DAILY CHARGE: The Daily Charge will be computed and deducted from each Division
for each day this certificateis in force. On an annual basis it equals the
percentage of the daily net asset value of the Divisions of the Separate
Account, as shown in the Schedule Page.
WITHDRAWAL TRANSACTION CHARGES: There may be Withdrawal Transaction Charges as
set forth in the Schedule Page.
EARLY WITHDRAWAL CHARGES: Early Withdrawal Charges for a partial or full
withdrawal of the Certificate Value are shown in the Schedule Page.
DEDUCTION OF ANY WITHDRAWAL CHARGES: Any charges relating to a withdrawal will
be deducted from the affected Divisions and Fixed Account options in the ratio
of the Certificate Value withdrawn from each to the total Certificate Value
withdrawn. If the amount in any Division or Fixed Account option is not enough
to cover its share of the charges, then the excess will be deducted from the
remaining Divisions or Fixed Account options in the ratio of the Certificate
Value in each to the total Certificate value.
PREMIUM AND OTHER TAXES: Any taxes imposed by a state or other government on us
because of this Certificate will be deducted. We can deduct such taxes when
incurred. However, we may delay deducting them until annuitization or
surrender.
SECTION 12 GENERAL PROVISIONS
THE CERTIFICATE: This Certificate, any Application and any attachments make up
the entire certificate. This Certificate cannot be changed unless the
Certificate holder has asked for the
<PAGE> 24
change in writing. Only an Executive Officer of the Company can agree to the
change for us. No agent of ours can change this Certificate. At any time we may
make such changes in this Certificate as are required to make it conform with
any law, regulation or ruling issued by a government agency.
INCONTESTABILITY: We will not contest this Certificate.
PERIODIC REPORTS: At least once a year, prior to the Annuity Date, we will
furnish each Owner a report of his or her Certificate Value. It will set forth
the current number of Accumulation Units, the value of each Accumulation Unit,
the total value of the Separate Account and the total value of the Fixed
Account. Each person with voting rights in the Separate Account will be
furnished reports required by the Investment Company Act of 1940.
CERTIFICATE PAYMENTS: All sums payable to or by us under a Certificate are
payable to or from our Administrative Office. We may require return of a
Certificate prior to making any payment. Annuity payments, Net Certificate
Values, and Death Benefits will not be less than the minimum required by any
statute of the state in which this Certificate is delivered.
NOTICES, CHANGES AND CHOICES: All notices, changes and choices must be made by
the Owner and received by us at our Administrative Office. We allow written
notices, changes and choices by the Owner regarding the Certificate. However,
forms of communication other than written may be acceptable to us. If
satisfactory, notices, changes and choices relating to Beneficiaries, Ownership
and Annuitants will take effect as of the date signed unless we have already
acted in reliance on the prior status. We are not responsible for their
validity. We may require return of the Certificate prior to any change.
DELAYS: For withdrawals and transfers from the Separate Account Divisions, we
may defer payment if:
(A) The New York Stock Exchange is closed (other than customary weekend
and Holiday closings) or trading on the New York Stock Exchange is restricted;
(B) An emergency exists such that it is not reasonably practicable to
dispose of securities in the Separate Account or to determine the value of its
net assets; or
(C) The Securities and Exchange Commission has by order permitted
suspension of redemptions for the protection of security holders.
Conditions (B) and (C) will be decided by or in accordance with rules of the
Securities and Exchange Commission.
Payment of amounts derived from Net Purchase Payments paid by check may also be
delayed until the check has cleared the Owner's bank.
For withdrawals and transfers from the Fixed Account, we may defer payment for
up to 6 months
<PAGE> 25
except for withdrawals to pay premiums under insurance or annuity contracts
issued by us.
AGES: Ages are figured on a last birthday basis.
NONPARTICIPATING: This Certificate does not pay dividends. It will not share
in our earnings or surplus.
PROOF OF AGE, SEX OR SURVIVAL: We may require due proof of the age, sex or
survival of any person on whose continued life any payment under this
Certificate or Certificate thereunder depends.
MISSTATEMENT OF AGE OR SEX: If the age or sex of the annuitant or any payee is
misstated, we will adjust the Annuity Payments to reflect the correct age and
sex. Any amount we have overpaid as a result of such misstatement will be
deducted from future payments. Interest on the overpayment will be charged at
the rate of 6% per year compounded annually. Any amount we have underpaid will
be paid in full with the next payment. We will pay interest on the underpayment
at the rate of 6% per year compounded annually.
PROTECTION OF PROCEEDS: To the extent allowed by law, payments are not subject
to legal process for debts.
COLLATERAL ASSIGNMENT: The Owner may assign his or her Certificate as security
for an obligation upon written notice to us. This assignment will not change
the Ownership of the Certificate. The rights of an assignee have priority over
the rights of a Beneficiary.
FUTURE PAYMENT ASSIGNMENT: Upon notice to us, the Owner may assign future
guaranteed payments.
SECTION 13 TERMINATION PROVISIONS
TERMINATION OF CERTIFICATE: This Certificate may be discontinued by us or the
Contractholder. The party who initiates the discontinuance will send a notice
to each Owner of record, at his or her last known address, at least 15 days
prior to the date of discontinuance.
No new applications for new Owners will be accepted on or after the date notice
of discontinuance is received or sent by us, whichever is applicable. Any
Certificates in force on the date of discontinuance will not be affected by
the discontinuance.
The Group Contract will terminate when all Certificates issued under the Group
Contract have terminated.
SECTION 14 ANNUITY PROVISIONS
<PAGE> 26
ANNUITY DATE: The Annuity Date must be on the first day of a month. It may not
be earlier than the first day of the next month after the Earliest Annuity
Date. It may not be later than the first day of the next month after the Latest
Annuity Date or any later date that we approve. If the Owner has not specified
an Annuity Date, it will be the first day of the next month after the Automatic
Annuity Date. The Earliest, Latest and Automatic Annuity Dates are shown in the
Schedule Page. The Annuity Date may be delayed even further to a date agreed
upon by the Owner and us.
The Owner may change the Annuity Date up to [30]days prior to the Annuity Date
by sending us satisfactory written notice. We must receive any request of
change at our Administrative Office at least [30] days prior to when such
change is to be effective.
ANNUITY OPTIONS: The Annuity Options available are set out in Section 18. All
Options are available as fixed or variable payment annuities. Other Annuity
Options not set forth in this Certificate may be chosen if they are acceptable
to us. The Owner may change the Annuity Option at any time up to [30] days
prior to the Annuity Date. We reserve the right to make additional Annuity
Options available. If the Owner has not chosen an Annuity Option, Option 3 with
a variable payment for life with payments guaranteed for 10 years will apply.
ANNUITIZED VALUE: The amount to be annuitized on the Annuity Date (the
"Annuitized Value") is the Net Certificate Value on the Valuation Day on or
next following the Annuity Date.
An Early Withdrawal Charge will be assessed at the Annuity Date, if applicable.
This charge will be waived if the Annuity Date is the latest allowed, if the
Annuity Option chosen contains life contingencies, or the Annuity Option is for
[5] years or more with no ability to commute the remaining payments.
ANNUITY PAYMENT SIZE AND FREQUENCY: If the amount to be applied at the Annuity
Date is less than [$5,000], we may pay such amount in a lump sum. If any
Annuity Payment would be less than [$100], we may change the frequency so the
payments are at least $100 each.
Annuity Payments will be made on the first Valuation Day of each month starting
with the month in which the Annuity Date falls. Prior to the Annuity Date, you
may choose a less frequent payment interval. The amount of each payment on an
annual, semiannual or quarterly basis will not be less than the monthly payment
computed from the appropriate Annuity Tables multiplied by the factors shown
in Section 19.
SECTION 15 FIXED ANNUITY PAYMENTS
FIXED ANNUITY: A fixed annuity is a series of level periodic payments. The
amount of each payment does not vary with the investment experience of the
Separate Account.
AMOUNT OF FIXED ANNUITY PAYMENTS: The Annuitized Value will be applied to the
Annuity Option chosen at our Current Annuity Settlement Option rates. These
rates will be given to you upon request. The Annuity Tables show the amount of
the first Annuity Payment for each
<PAGE> 27
$1,000 applied, based on the Annuitant's age and sex where appropriate at the
Annuity Date. [The Tables are based on the 1983 Table 'a' for Individual
Annuity Valuation with projection scale G and interest at 2.5% if the Annuity
Date is prior to the 9th Certificate Anniversary and 3% for Annuity Dates on or
after the 9th Certificate Anniversary.]
SECTION 16 VARIABLE ANNUITY PAYMENTS
VARIABLE ANNUITY: A variable annuity is a series of periodic payments. The
amount of each payment will vary with the investment experience of the
Divisions in which your Certificate Value is allocated.
FIRST VARIABLE ANNUITY PAYMENT: The Annuitized Value will be applied to the
Table for the Annuity Option chosen. The Tables show the amount of the first
Annuity Payment for each $1,000 applied, based on the Annuitant's age and sex
where appropriate at the Annuity Date. [The Tables are based on the 1983 Table
'a' for Individual Annuity Valuation with a projection scale G and an assumed
investment return of 2.5% if the Annuity Date is prior to the 9th Certificate
Anniversary and 3% for Annuity Dates on or after the 9th Certificate
Anniversary.] Other assumed investment return rates may be made available in
the future.
NUMBER OF ANNUITY UNITS: The number of Annuity Units for a Division is:
(A) The amount of the first monthly variable Annuity Payment attributable
to that Division; divided by
(B) The value of an Annuity Unit for that Division as of the first
Valuation Day on or next following the Annuity Date.
The number of Annuity Units is fixed on the first Valuation Day on or next
following the Annuity Date except for adjustments for Division transfers.
Adjustments will be made as of the Valuation Period in which we receive
satisfactory notice for the transfer request.
VALUE OF EACH ANNUITY UNIT: For each Division, the value of an Annuity Unit was
set at $10 when the Division was established. The value may increase or
decrease from one Valuation Period to the next. The Annuity Unit value for any
Valuation Period is:
(A) The value of an Annuity Unit at the end of the last Valuation Period;
multiplied by
(B) The Net Investment Factor for that Division for the current Valuation
Period; multiplied by
(C) A daily factor to offset the effect of the assumed investment return
built into the Annuity Tables.
SUBSEQUENT VARIABLE ANNUITY PAYMENTS: Payments after the first will vary in
amount according to the investment performance of the Divisions you have
chosen. The amount
<PAGE> 28
may change from month to month. The amount of each subsequent payment is the
sum of:
(A) The number of Annuity Units for each Division; multiplied by
(B) The value of an Annuity Unit for that Division at the end of the
Valuation Period immediately preceding the Valuation Period in which
payment is made.
We guarantee that subsequent Annuity Payments will not be affected by
variations in our expenses or mortality experience
SECTION 17 DEATH OF ANNUITANT
PRIOR TO THE ANNUITY DATE: If the Annuitant dies before the Annuity Date, the
Owner then becomes the Annuitant if the Owner is an individual. If Joint Owners
exist and if the death of the Annuitant occurs before the Annuity Date, the
younger of the Joint Owners will become the Annuitant.
AFTER THE ANNUITY DATE: If there are guaranteed payments which are unpaid under
the Annuity Option when the Annuitant dies, the Owner may choose to have the
payments continue for the guarantee period to a designated payee; or to receive
the present value of the remaining guaranteed payments in a lump sum.
Present values will be computed at the investment rate assumed when the first
Annuity Payment was calculated.
SECTION 18 ANNUITY OPTIONS
OPTION 1 - PAYMENTS FOR A GUARANTEED FIXED PERIOD: Payments will be made for
the period chosen. The period must be at least 5 years. If this Option is
taken as a Variable Annuity Payment, you may at any time choose to receive in a
lump sum the value of the remaining payments commuted at the investment rate
assumed when first Annuity Payment was calculated.
OPTION 2 - LIFE ANNUITY: Payments will be made for the life of the Annuitant.
Payments will end with the last payment due prior to the Annuitant's death.
OPTION 3 - LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10 OR 20 YEARS: Payments
will be made for the guaranteed period chosen (10 or 20 years), and for as long
thereafter as the Annuitant lives.
OPTION 4 - JOINT AND SURVIVOR LIFE ANNUITY: Payments will be made during the
lifetimes of the Annuitant and the second individual selected by the Owner. The
amount of such payments will not change due to the first death. Payments will
end with the last payment due prior to the second death.
<PAGE> 29
SECTION 19 ANNUITY TABLES - NONQUALIFIED
GUARANTEED FIRST MONTHLY ANNUITY PAYMENTS FOR EACH $1,000
APPLIED FOR ANNUITY DATES PRIOR TO THE 9TH CERTIFICATE
ANNIVERSARY
<TABLE>
<CAPTION>
OPTION I (PAYMENTS FOR A GUARANTEED FIXED PERIOD)
Years Each Years Each Years Each Years Each
Payable Payment Payable Payment Payable Payment Payable Payment
<S> <C> <C> <C> <C> <C> <C> <C>
5 17.70 9 10.32 13 7.49 17 6.00
6 14.93 10 9.39 14 7.03 18 5.73
7 12.95 11 8.64 15 6.64 19 5.49
8 11.47 12 8.02 16 6.30 20 5.27
<CAPTION>
OPTION 2 (LIFE ANNUITY)
Age Male Female Age Male Female Age Male Female
<S> <C> <C> <C> <C> <C> <C> <C> <C>
56 3.89 3.53 66 4.85 4.28 76 6.56 5.68
57 3.96 3.59 67 4.98 4.38 77 6.79 5.88
58 4.04 3.65 68 5.12 4.49 78 7.04 6.09
59 4.12 3.72 69 5.27 4.61 79 7.30 6.32
60 4.21 3.78 70 5.42 4.73 80 7.59 6.57
61 4.30 3.85 71 5.59 4.86 81 7.89 6.84
62 4.40 3.93 72 5.76 5.00 82 8.22 7.13
63 4.50 4.01 73 5.94 5.16 83 8.57 7.44
64 4.61 4.10 74 6.13 5.32 84 8.96 7.76
65 4.73 4.19 75 6.34 5.49 85 9.37 8.16
<CAPTION>
OPTION 3 (LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10 YEARS)
Age Male Female Age Male Female Age Male Female
<S> <C> <C> <C> <C> <C> <C> <C> <C>
56 3.86 3.52 66 4.73 4.24 76 6.07 5.47
57 3.93 3.57 67 4.84 4.33 77 6.23 5.63
58 4.00 3.63 68 4.96 4.43 78 6.40 5.79
59 4.07 3.70 69 5.08 4.54 79 6.57 5.97
60 4.16 3.76 70 5.21 4.65 80 6.74 6.15
61 4.24 3.83 71 5.34 4.77 81 6.92 6.35
62 4.33 3.90 72 5.48 4.89 82 7.11 6.54
63 4.42 3.98 73 5.62 5.03 83 7.29 6.75
</TABLE>
<PAGE> 30
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
64 4.52 4.06 74 5.76 5.17 84 7.48 6.96
65 4.62 4.15 75 5.91 5.31 85 7.67 7.17
<CAPTION>
OPTION 3 (LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 20 YEARS)
Age Male Female Age Male Female Age Male Female
<S> <C> <C> <C> <C> <C> <C> <C> <C>
56 3.74 3.47 66 4.35 4.07 76 4.96 4.80
57 3.80 3.52 67 4.42 4.14 77 5.01 4.87
58 3.85 3.57 68 4.48 4.21 78 5.06 4.93
59 3.91 3.63 69 4.55 4.28 79 5.11 5.00
60 3.97 3.68 70 4.61 4.36 80 5.15 5.06
61 4.03 3.74 71 4.68 4.43 81 5.18 5.11
62 4.09 3.80 72 4.74 4.51 82 5.21 5.16
63 4.16 3.87 73 4.80 4.58 83 5.23 5.19
64 4.22 3.93 74 4.85 4.65 84 5.25 5.22
65 4.29 4.00 75 4.91 4.73 85 5.26 5.24
</TABLE>
<PAGE> 31
<TABLE>
<CAPTION>
OPTION 4 (JOINT AND SURVIVOR LIFE ANNUITY)
Male Age
Female
Age 50 55 60 65 70 75 80 85
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 3.02 3.08 3.13 3.17 3.22 3.32 3.48 3.71
55 3.13 3.22 3.29 3.35 3.40 3.47 3.60 3.80
60 3.22 3.35 3.46 3.56 3.63 3.69 3.79 3.96
65 3.30 3.47 3.63 3.78 3.91 4.01 4.08 4.21
70 3.37 3.57 3.79 4.01 4.21 4.38 4.51 4.61
75 3.42 3.65 3.92 4.21 4.52 4.79 5.03 5.21
80 3.46 3.72 4.02 4.39 4.79 5.21 5.61 5.95
85 3.48 3.76 4.10 4.52 5.02 5.58 6.19 6.80
</TABLE>
Information for ages not shown will be furnished on request.
Factor for payments other than monthly:
Annual: 11.86526 Semi-annual: 5.96925 Quarterly: 2.99384
<PAGE> 32
SECTION 19 ANNUITY TABLES - NONQUALIFIED
GUARANTEED FIRST MONTHLY ANNUITY PAYMENTS FOR EACH $1,000
APPLIED FOR ANNUITY DATES ON OR AFTER THE 9TH CERTIFICATE
ANNIVERSARY
<TABLE>
<CAPTION>
OPTION I (PAYMENTS FOR A GUARANTEED FIXED PERIOD)
Years Each Years Each Years Each Years Each
Payable Payment Payable Payment Payable Payment Payable Payment
<S> <C> <C> <C> <C> <C> <C> <C>
5 17.91 9 10.53 13 7.71 17 6.53
6 15.14 10 9.61 14 7.26 18 5.96
7 13.16 11 8.86 15 6.87 19 5.73
8 11.68 12 8.24 16 6.53 20 5.51
<CAPTION>
OPTION 2 (LIFE ANNUITY)
Age Male Female Age Male Female Age Male Female
<S> <C> <C> <C> <C> <C> <C> <C> <C>
56 4.18 3.82 66 5.13 4.56 76 6.84 5.96
57 4.25 3.87 67 5.26 4.66 77 7.08 6.16
58 4.33 3.93 68 5.40 4.77 78 7.33 6.37
59 4.41 4.00 69 5.55 4.88 79 7.59 6.60
60 4.49 4.06 70 5.71 5.00 80 7.88 6.85
61 4.58 4.14 71 5.87 5.14 81 8.18 7.11
62 4.68 4.21 72 6.04 5.28 82 8.51 7.40
63 4.78 4.29 73 6.23 5.43 83 8.86 7.72
64 4.89 4.37 74 6.42 5.59 84 9.24 8.06
65 5.01 4.46 75 6.62 5.77 85 9.66 8.43
<CAPTION>
OPTION 3 (LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10 YEARS)
Age Male Female Age Male Female Age Male Female
<S> <C> <C> <C> <C> <C> <C> <C> <C>
56 4.14 3.80 66 5.01 4.51 76 6.33 5.73
57 4.21 3.86 67 5.12 4.60 77 6.49 5.89
58 4.28 3.91 68 5.23 4.70 78 6.55 6.05
59 4.35 3.98 69 5.35 4.81 79 6.82 6.23
60 4.44 4.04 70 5.48 4.92 80 6.99 6.41
61 4.52 4.11 71 5.61 5.04 81 7.17 6.60
62 4.61 4.18 72 5.74 5.16 82 7.35 6.79
63 4.70 4.26 73 5.88 5.29 83 7.54 7.00
64 4.80 4.34 74 6.03 5.43 84 7.72 7.20
65 4.90 4.42 75 6.18 5.58 85 7.91 7.42
</TABLE>
<PAGE> 33
<TABLE>
<CAPTION>
OPTION 3 (LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 20 YEARS)
Age Male Female Age Male Female Age Male Female
<S> <C> <C> <C> <C> <C> <C> <C> <C>
56 4.02 3.75 66 4.61 4.33 76 5.21 5.04
57 4.07 3.80 67 4.68 4.40 77 5.25 5.11
58 4.13 3.85 68 4.74 4.47 78 5.30 5.18
59 4.18 3.90 69 4.80 4.54 79 5.35 5.24
60 4.24 3.96 70 4.87 4.61 80 5.39 5.30
61 4.30 4.01 71 4.93 4.69 81 5.42 5.35
62 4.36 4.07 72 4.99 4.76 82 5.45 5.40
63 4.42 4.13 73 5.05 4.83 83 5.47 5.43
64 4.49 4.20 74 5.10 4.90 84 5.49 5.46
65 4.55 4.26 75 5.16 4.97 85 5.50 5.48
<CAPTION>
OPTION 4 (JOINT AND SURVIVOR LIFE ANNUITY)
Male Age
Female
Age 50 55 60 65 70 75 80 85
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 4.19 4.27 4.34 4.39 4.43 4.45 4.47 4.48
55 4.32 4.45 4.55 4.64 4.71 4.76 4.79 4.81
60 4.45 4.62 4.79 4.94 5.06 5.14 5.20 5.24
65 4.56 4.79 5.03 5.27 5.47 5.63 5.74 5.82
70 4.65 4.94 5.27 5.61 5.94 6.22 6.44 6.59
75 4.73 5.06 5.46 5.93 6.43 6.90 7.31 7.61
80 4.78 5.15 5.62 6.20 6.87 7.60 8.30 8.89
85 4.81 5.21 5.72 6.39 7.23 8.22 9.29 10.32
</TABLE>
Information for ages not shown will be furnished upon request.
Factors for payments other than monthly:
Annual: 11.83895 Semi-annual: 5.96322 Quarterly: 2.99263
<PAGE> 1
Exhibit 5
Form of Application
<PAGE> 2
PAINEWEBBER LIFE
APPLICATION FOR
VARIABLE ANNUITY
O W N E R S H I P
Name............................................................................
If an institution or trust, include the name of the person
authorized to represent it.
Address ........................................................................
City............................................................................
State . . . . . . . . . . . . . . . . . . . . Zip . . . . . . . . . . .
Birth date: Mo[ ][ ] Day [ ][ ] Yr [ ][ ]
Sex: M [ ] F [ ]
Taxpayer ID/
Soc. Sec # [ ][ ][ ]-[ ][ ]-[ ][ ][ ][ ]
JOINT OWNER: COMPLETE IF APPLICABLE.
OWNERSHIP IS JOINT WITH THE RIGHT OF SURVIVORSHIP.
Name............................................................................
Birth date: Mo [ ][ ] Day [ ][ ] Yr [ ][ ]
Sex: M [ ] F [ ]
Taxpayer ID/
Soc. Sec # [ ][ ][ ]-[ ][ ]-[ ][ ][ ][ ]
A N N U I T A N T
Complete only if different from Owner
Name ...........................................................................
Address.........................................................................
City............................................................................
State . . . . . . . . . . . . . . . . . Zip . . . . . . . . . . . . . . . . . .
Birth date: Mo [ ][ ] Day [ ][ ] Yr [ ][ ] Sex: M [ ] F [ ]
Taxpayer ID/Soc. Sec # [ ][ ][ ]-[ ][ ]-[ ][ ][ ][ ]
B E N E F I C I A R Y
Name............................................................................
Relationship....................................................................
Contingent Beneficiary..........................................................
Relationship....................................................................
If a trust is the beneficiary or contingent beneficiary, include the date
established.
B E N E F I T O P T I O N S
[ ] Traditional Death Benefit
[ ] Interest Accrual Death Benefit
[ ] Annual Reset Death Benefit
[ ] Interest Accrual Death & Income Benefit
[ ] Annual Reset Death & Income Benefit
[ ] Basic Benefit
INITIAL PURCHASE PAYMENT
$......................................................................
A L L O C A T I O N O P T I O N S
Stable Value Fixed Income.............................................%
Money Market Division.................................................%
Domestic Fixed Income.................................................%
Strategic Fixed Income................................................%
High Income Division..................................................%
International Fixed Income Division...................................%
Tactical Asset Allocation Division....................................%
Balanced Division.....................................................%
Growth & Income Division..............................................%
Growth & Income Division B............................................%
Growth A Division.....................................................%
Growth B Division.....................................................%
Aggressive Growth A Division..........................................%
Aggressive Growth B Division..........................................%
International Equity A Division.......................................%
International Equity B Division.......................................%
Asia Pacific Division.................................................%
Financial Services Division...........................................%
Specialty Division....................................................%
Total..............................................................100%
ALLOCATIONS MUST BE WHOLE PERCENTAGES TOTALING 100% ----
T Y P E O F P L A N
CHECK ONE
[ ] Non Qualified [ ] IRA [ ] SEP-IRA
[ ] IRA Rollover [ ] IRA Transfer
INITIAL PURCHASE PAYMENT IS FOR TAX YEAR...............................
IF LEFT BLANK, WILL BE THE YEAR OF ISSUE.
Asset of:
[ ] 401A [ ] 401k [ ] 403b [ ] HR10 [ ] 457
A N N U I T Y D A T E
The first day of: Month . . . . . . . . . Year . . . . . . . . . .
If left blank, will be the latest date allowed.
<PAGE> 3
R E P L A C E M E N T
Will the annuity applied for replace any existing life
or annuity coverage? [ ] No [ ] Yes
If yes:
Company Name....................................................................
Company address.................................................................
City. . . . . . . . . . . . . . . . . . .State. . . . . . . .Zip. . . . . . . .
Contract # . . . . . . . . . . . . . . . . . . . . . . .Issue Date. . . . . . .
Will this be a 1035 Exchange or transfer of qualified funds?
[ ] No [ ] Yes, if yes, attach appropriate form.
A U T H O R I Z A T I O N
Telephone/Facsimile Service
I authorize the Company to accept certain instructions given by telephone or
facsimile by me, or by person(s) authorized by me, provided that proper
identification is furnished. I will automatically have this privilege unless I
decline it in writing. The Company will employ reasonable procedures to confirm
that instructions are genuine. If these procedures are not followed, the Company
may be liable for any losses due to unauthorized or fraudulent instructions.
These procedures will include obtaining information specific to this contract,
recording any telephone conversation, and sending written confirmation of a
transaction to the owner. The Company reserves the right to modify or
discontinue the telephone/facsimile services at any time without notice.
R E M A R K S
................................................................................
................................................................................
S I G N A T U R E S
I hereby represent my answers to the above questions to be correct and true to
the best of my knowledge and belief and agree that this application shall be a
part of my annuity contract issued by the Company. I understand that no one
except an Executive Officer of the Company can make or change any contract
issued by the Company. I have received a current prospectus for this contract
and the Divisions of the PaineWebber Life Variable Annuity Account. I UNDERSTAND
THAT CONTRACT VALUES, WITHDRAWAL VALUES AND ANNUITY PAYMENTS, WHEN BASED UPON
THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND NOT GUARANTEED
AS TO A FIXED DOLLAR AMOUNT. RECEIPT OF A CURRENT VARIABLE ANNUITY AND FUND
PROSPECTUS IS HEREBY ACKNOWLEDGED. (FLORIDA DISCLOSURE - ANY PERSON WHO
KNOWINGLY AND WITH INTENT TO INJURE, DEFRAUD, OR DECEIVE ANY INSURER FILES A
STATEMENT OF CLAIM OR AN APPLICATION CONTAINING ANY FALSE, INCOMPLETE, OR
MISLEADING INFORMATION IS GUILTY OF A FELONY OF THE THIRD DEGREE.)
Signed at: City .......................State ...............Date ...............
Owner .................................Joint Owner..............................
(If a trust, trustee should sign)
PAINEWEBBER LIFE INSURANCE COMPANY - ADMINISTRATIVE OFFICE -
601 SIXTH AVENUE - DES MOINES, IOWA 50309
- --------------------------------------------------------------------------------
A G E N T S T A T E M E N T
Agent: Do you have reason to believe the Contract applied for is to replace
existing annuities or insurance owned by the Owner?
[ ] No [ ] Yes If yes, I have complied with all state replacement
requirements. Required replacement forms and information must be submitted to
the Company.
<TABLE>
<CAPTION>
<S> <C>
Signature ........................................ Agent Name (Print) .........................
PaineWebber Account #[ ][ ]-[ ][ ][ ][ ][ ]-[ ][ ] Agent's Telephone ( )....................
FL Agents: License ID #....................
</TABLE>
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