<PAGE> 1
As filed with the Securities and Exchange Commission on April 25, 1997
Registration No. 33-64410
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 4
FORM S-6
FOR THE REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2
A. Exact name of trust:
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
VARIABLE UNIVERSAL LIFE SEPARATE ACCOUNT - I
B. Name of depositor:
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
C. Complete address of depositor's principal executive office:
51 Madison Avenue
New York, New York 10010
D. Name and complete address of agent for service:
Linda M. Reimer, Esq.
New York Life Insurance and
Annuity Corporation
51 Madison Avenue
New York, New York 10010
Copies to:
Michael Berenson, Esq. Michael J. McLaughlin, Esq.
Jordan Burt Berenson & Johnson, LLP Senior Vice President
Suite 400 East and General Counsel
1025 Thomas Jefferson Street, N.W. New York Life Insurance Company
Washington, DC 20007 51 Madison Avenue
New York, New York 10010
It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485.
[ X ] on May 1, 1997 pursuant to paragraph (b) of Rule 485.
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485.
[ ] on ___________ pursuant to paragraph (a)(1) of Rule 485.
[ ] 75 days after filing pursuant to paragraph (a)(2) of Rule 485.
[ ] on ___________ pursuant to paragraph (a)(2) of Rule 485.
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE> 2
E. Title and amount of securities being registered:
Flexible Premium Variable Universal Life Insurance Policy.
F. Proposed maximum aggregate offering price to the public of the
securities being registered:
Pursuant to Rule 24f-2 under the Investment Company Act of 1940,
Registrant has registered an indefinite amount of the securities being offered
pursuant to this Registration Statement. On February 25, 1997, Registrant
filed its Form 24F-2 for Registrant's most recent fiscal year.
<PAGE> 3
CROSS REFERENCE SHEET
INFORMATION REQUIRED IN A PROSPECTUS
<TABLE>
<CAPTION>
Item of Form N-8B-2 Prospectus Caption
- ------------------- ------------------
<S> <C>
1 Cover Page; Basic Questions and Answers About Us and Our Policy
2 Cover Page
3 Not Applicable
4 Sales and Other Agreements
5 The Separate Accounts
6 The Separate Accounts
9 Legal Proceedings
10 General Provisions of the Policy; Death Benefit Under the Policy; Free Look
Provision; Exchange Privilege; Cash Value and Cash Surrender Value; Policy Loan
Privilege; The Separate Accounts; The Fixed Account; Charges Under the Policy; Sales
and Other Agreements; When We Pay Proceeds; Payment Options; Our Rights; Your Voting
Rights; Basic Questions and Answers About Us and Our Policy
11 The Separate Accounts; MainStay VP Series Fund, Inc.; The Alger American Fund;
Acacia Capital Corporation; Fidelity Variable Insurance Products Fund and Fidelity
Variable Insurance Products Fund II; Janus Aspen Series; Morgan Stanley Universal
Funds, Inc.
12 The Separate Accounts; Sales and Other Agreements
13 The Separate Accounts; Charges Under the Policy; MainStay VP Series Fund, Inc.; The
Alger American Fund; Acacia Capital Corporation; Fidelity Variable Insurance
Products Fund and Fidelity Variable Insurance Products Fund II; Janus Aspen Series;
Morgan Stanley Universal Funds, Inc.
14 Basic Questions and Answers About Us and Our Policy; The Separate Accounts; Sales
and Other Agreements
15 Basic Questions and Answers About Us and Our Policy; General Provisions of the
Policy
16 The Separate Accounts; Investment Return; Basic Questions and Answers About Us and
Our Policy; MainStay VP Series Fund, Inc.; The Alger American Fund; Acacia Capital
Corporation; Fidelity Variable Insurance Products Fund and Fidelity Variable
Insurance Products Fund II; Janus Aspen Series; Morgan Stanley Universal Funds, Inc.
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
Item of Form N-8B-2 Prospectus Caption
- ------------------- ------------------
<S> <C>
17 Cash Surrender Value; Policy Surrenders and Partial Withdrawals; General Provisions
of the Policy
18 The Separate Accounts; MainStay VP Series Fund, Inc.; The Alger American Fund;
Acacia Capital Corporation; Fidelity Variable Insurance Products Fund and Fidelity
Variable Insurance Products Fund II; Janus Aspen Series; Morgan Stanley Universal
Funds, Inc.; Investment Return
19 Records and Reports
20 Not Applicable
21 Policy Loan Privilege
22 Not Applicable
23 Not Applicable
24 Additional Provisions of the Policy
25 What are NYLIAC and New York Life?
26 Not Applicable
27 What are NYLIAC and New York Life?
28 Directors and Principal Officers of NYLIAC
29 What are NYLIAC and New York Life?
30 Not Applicable
31 Not Applicable
32 Not Applicable
33 Not Applicable
34 Not Applicable
35 Not Applicable
37 Not Applicable
38 Sales and Other Agreements
39 Sales and Other Agreements
40 Not Applicable
41 Sales and Other Agreements
42 Not Applicable
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
Item of Form N-8B-2 Prospectus Caption
- ------------------- ------------------
<S> <C>
43 Not Applicable
44 The Separate Accounts; Investment Return; General Provisions of the Policy
45 Not Applicable
46 The Separate Accounts; Investment Return
47 The Separate Accounts; MainStay VP Series Fund, Inc.; The Alger American Fund;
Acacia Capital Corporation; Fidelity Variable Insurance Products Fund and Fidelity
Variable Insurance Products Fund II; Janus Aspen Series; Morgan Stanley Universal
Funds, Inc.
48 Not Applicable
49 Not Applicable
50 The Separate Accounts
51 Cover Page; Basic Questions and Answers About Us and Our Policy
52 The Separate Accounts; Our Rights
53 Federal Income Tax Considerations
54 Not Applicable
55 Not Applicable
59 Financial Statements
</TABLE>
<PAGE> 6
NYLIAC VARIABLE UNIVERSAL LIFE SEPARATE ACCOUNT-I
NYLIAC VARIABLE UNIVERSAL LIFE SEPARATE ACCOUNT-II
PROSPECTUS DATED MAY 1, 1997
FOR
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICIES
OFFERED BY
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
(A DELAWARE CORPORATION)
51 MADISON AVENUE, NEW YORK, NEW YORK 10010
This Prospectus describes a flexible premium variable universal life
insurance policy offered by New York Life Insurance and Annuity Corporation
("NYLIAC"). The Policy provides lifetime insurance protection for individuals.
The policy offers flexible premium payments, a choice of two death benefit
options, loan privileges, increases and decreases to the policy's face amount of
insurance and a choice of premium allocation alternatives, including a
guaranteed interest option and the eighteen variable investment divisions listed
below.
<TABLE>
<S> <C>
- -- MainStay VP Capital Appreciation
- -- MainStay VP Cash Management
- -- MainStay VP Convertible
- -- MainStay VP Government
- -- MainStay VP High Yield Corporate Bond
- -- MainStay VP International Equity
- -- MainStay VP Total Return
- -- MainStay VP Value
- -- MainStay VP Bond
- -- MainStay VP Growth Equity
- -- MainStay VP Indexed Equity
- -- Alger American Small Capitalization
- -- Calvert Socially Responsible
- -- Fidelity VIP II: Contrafund
- -- Fidelity VIP: Equity-Income
- -- Janus Aspen Balanced
- -- Janus Aspen Worldwide Growth
- -- Morgan Stanley Emerging Markets Equity
</TABLE>
We do not guarantee the investment performance of these investment divisions,
which involve varying degrees of risk.
The death benefit may, and the cash surrender value of a policy will, vary
up or down depending on the performance of the investment divisions. There is no
guaranteed minimum cash surrender value for a policy. However, a policy's death
benefit will never be less than its face amount, less outstanding policy debt.
Although premiums are flexible, additional premiums may be required to keep the
policy in effect. The policy may terminate if its cash surrender value is too
small to pay the policy's monthly charges.
You can borrow against or withdraw money from the policy, within limits.
Loans and withdrawals will reduce the policy's death benefit and cash surrender
value. You can also surrender the policy. A surrender charge will apply if you
surrender the policy during the first fifteen policy years. This charge may also
apply if you request a reduction of the face amount or if the policy terminates.
You may examine the policy for a limited period and cancel it for a full
refund of the greater of cash value or premiums paid. Replacing existing
insurance with this policy may not be to your advantage.
This Prospectus provides information that a prospective investor should
know before investing. Please read it carefully and retain it for future
reference. This Prospectus is not valid unless attached to current prospectuses
for the MainStay VP Series Fund, Inc., The Alger American Fund, the Acacia
Capital Corporation, the Fidelity Variable Insurance Products Fund II, the
Fidelity Variable Insurance Products Fund, the Janus Aspen Series and the Morgan
Stanley Universal Funds, Inc.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DEFINITION OF TERMS................ 4
BASIC QUESTIONS AND ANSWERS ABOUT
US AND OUR POLICY................ 8
What are NYLIAC and New York
Life?......................... 8
What Variable Life Insurance
Policy are we offering?....... 8
How is the Policy available?..... 8
What is the Cash Value of the
Policy?....................... 9
How is the value of an
Accumulation Unit
determined?................... 9
What are the Investment Divisions
of the Separate Accounts?..... 9
What is the Fixed Account?....... 10
How long will the Policy remain
in force?..................... 10
Is the level of the Death Benefit
guaranteed?................... 10
Is the Death Benefit subject to
income taxes?................. 10
Does the Policy have a Cash
Surrender Value?.............. 10
What is a modified endowment
contract?..................... 10
Can the Policy become a modified
endowment contract?........... 11
What about Premiums?............. 11
What are Unscheduled Premiums?... 11
When are Premiums put into the
Fixed Account or the Separate
Accounts?..................... 11
How are Premiums allocated among
the Allocation
Alternatives?................. 12
Are there charges against the
Policy?....................... 12
What is the loan privilege?...... 13
Do I have a right to cancel?..... 13
Can the Policy be exchanged or
all amounts allocated to the
Fixed Account?................ 13
CHARGES UNDER THE POLICY........... 13
Deductions from Premiums......... 13
<CAPTION>
PAGE
----
<S> <C>
Sales Expense Charge.......... 14
Premium Tax Charge............ 14
Federal Tax Charge............ 14
Cash Value Charges............... 14
Monthly Contract Charge....... 14
Charge for Cost of Insurance
Protection................. 15
Separate Account Charges......... 15
Mortality and Expense Risk
Charge..................... 15
Administrative Charge......... 15
Other Charges for Federal
Income Taxes............... 15
Surrender Charges................ 18
Exceptions to Surrender
Charge..................... 19
THE SEPARATE ACCOUNTS.............. 19
MAINSTAY VP SERIES FUND, INC. ..... 20
THE ALGER AMERICAN FUND............ 21
ACACIA CAPITAL CORPORATION......... 21
FIDELITY VARIABLE INSURANCE
PRODUCTS FUND AND FIDELITY
VARIABLE INSURANCE PRODUCTS FUND
II............................... 21
JANUS ASPEN SERIES................. 22
MORGAN STANLEY UNIVERSAL FUNDS,
INC. ............................ 22
PORTFOLIOS......................... 23
Additions, Deletions or
Substitutions of
Investments................... 26
Reinvestment..................... 27
GENERAL PROVISIONS OF THE POLICY... 27
Premiums......................... 27
Scheduled Premiums............... 27
Unscheduled Premiums............. 28
Minimum and Maximum Premium
Payments...................... 28
Termination...................... 28
Late Period...................... 28
Maturity Date.................... 28
DOLLAR COST AVERAGING.............. 29
AUTOMATIC ASSET REALLOCATION....... 30
</TABLE>
2
<PAGE> 8
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DEATH BENEFIT UNDER THE POLICY..... 30
Face Amount Changes.............. 31
CASH VALUE AND CASH SURRENDER
VALUE........................... 32
Cash Value....................... 32
Investment Return................ 32
Cash Surrender Value............. 33
Partial Withdrawals.............. 33
POLICY LOAN PRIVILEGE.............. 34
Source of Loan................... 34
Loan Interest.................... 34
Repayment........................ 34
Interest on Loaned Value......... 35
FREE LOOK PROVISION................ 35
EXCHANGE PRIVILEGE................. 35
Special New York Requirements.... 36
YOUR VOTING RIGHTS................. 36
OUR RIGHTS......................... 37
DIRECTORS AND PRINCIPAL OFFICERS OF
NYLIAC........................... 38
THE FIXED ACCOUNT.................. 39
Interest Crediting............... 40
Transfers to Investment
Divisions..................... 40
Procedures for Telephone
Transfers..................... 40
FEDERAL INCOME TAX
CONSIDERATIONS................... 41
Tax Status of NYLIAC and the
Separate Accounts............. 41
Charges for Taxes................ 42
Diversification Standards and
Control Issues................ 42
Life Insurance Status of
Policy........................ 43
Modified Endowment Contract
Status........................ 43
Policy Surrenders and Partial
Withdrawals................... 44
<CAPTION>
PAGE
----
<S> <C>
Policy Loans and Interest
Deductions.................... 45
Corporate Alternative Minimum
Tax........................... 45
Exchanges or Assignments of
Policies...................... 45
STEP Program..................... 46
Other Tax Issues................. 46
Qualified Plans.................. 46
Withholding...................... 46
ADDITIONAL PROVISIONS OF THE
POLICY........................... 46
Reinstatement Option............. 46
Additional Benefits You Can Get
By Rider...................... 47
Payment Options.................. 48
Payees........................... 48
Proceeds at Interest Options
(Options 1A and 1B)........... 49
Life Income Option (Option 2).... 49
Beneficiary...................... 49
Assignment....................... 49
Limits on Our Rights to Challenge
the Policy.................... 50
Misstatement of Age or Sex....... 50
Suicide.......................... 50
When We Pay Proceeds............. 50
RECORDS AND REPORTS................ 51
SALES AND OTHER AGREEMENTS......... 51
LEGAL PROCEEDINGS.................. 51
INDEPENDENT ACCOUNTANTS............ 52
EXPERTS............................ 52
FINANCIAL STATEMENTS............... 52
FINANCIAL STATEMENTS............... F-1
APPENDIX A. Illustrations of Death
Benefits, Cash Surrender Values
and Accumulated Premiums......... A-1
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN
WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE. NYLIAC DOES NOT AUTHORIZE ANY
INFORMATION OR REPRESENTATIONS REGARDING THE OFFERING DESCRIBED IN THIS
PROSPECTUS OTHER THAN AS CONTAINED IN THIS PROSPECTUS OR ANY ATTACHED SUPPLEMENT
THERETO OR IN ANY SUPPLEMENTAL SALES MATERIAL AUTHORIZED BY NYLIAC.
3
<PAGE> 9
DEFINITION OF TERMS
ACCUMULATION UNITS: Accumulation Units are the accounting units used to
calculate the values under the Policy held in a Separate Account.
ACCUMULATION VALUE: The value of Accumulation Units in the Investment Divisions
of the Separate Accounts. The sum of the products of the current Accumulation
Unit value(s) for each of the Investment Divisions multiplied by the number of
Accumulation Units held in the respective Investment Divisions.
ALLOCATION ALTERNATIVES: The Investment Divisions of the applicable Separate
Account and the Fixed Account constitute the Allocation Alternatives.
BENEFICIARY: The person or entity specified by the Policyowner to receive
insurance proceeds after the Insured dies.
BUSINESS DAY: Generally, any day on which NYLIAC is open and the New York Stock
Exchange is open for trading. We are closed on national holidays, Martin Luther
King, Jr. Day and the Friday after Thanksgiving. In addition, we may choose to
close on the day immediately preceding or following a national holiday. Our
Business Day ends at 4:00 p.m. Eastern Time or the closing of the New York Stock
Exchange, if earlier.
CASH SURRENDER VALUE: The amount payable to a Policyowner upon surrender of the
Policy. It is equal to the Cash Value less any surrender charges, any deferred
contract charges and any Policy Debt. However, for purposes of determining
whether the Policy lapses, any deferred contract charge will not be considered
during the deferral period.
CASH VALUE: The sum of the Accumulation Value of the Separate Account and the
Fixed Account Value of the Policy.
DEATH BENEFIT: The amount payable to the named Beneficiary when the Insured
dies. The Death Benefit is equal to the amount calculated under the applicable
Life Insurance Benefit Option plus any Death Benefit payable under a Policy
rider less any Policy Debt.
ELIGIBLE PORTFOLIOS ("PORTFOLIOS"): The available mutual fund portfolios of the
Funds. The MainStay VP Series Fund currently has eleven Portfolios available for
investment by the Investment Divisions of the Separate Accounts: the MainStay VP
Capital Appreciation, MainStay VP Cash Management, MainStay VP Convertible,
MainStay VP Government, MainStay VP High Yield Corporate Bond, MainStay VP
International Equity, MainStay VP Total Return, MainStay VP Value, MainStay VP
Bond, MainStay VP Growth Equity and MainStay VP Indexed Equity Portfolios. The
Alger American Fund has one Portfolio available to the Separate Accounts: the
Alger American Small Capitalization Portfolio. The Acacia Fund has one Portfolio
available to the Separate Accounts: the Calvert Responsibly Invested Balanced
Portfolio ("Calvert Socially Responsible Portfolio"). The Fidelity Funds have
two Portfolios available to the Separate Accounts: the Contrafund Portfolio of
the Fidelity Variable Insurance Products Fund II ("Fidelity VIP II: Contrafund
Portfolio") and the Equity-Income Portfolio of the Fidelity Variable Insurance
Products Fund ("Fidelity VIP: Equity-Income Portfolio"). The Janus Aspen Series
has two Portfolios available to the Separate Accounts: the Balanced Portfolio of
the Janus Aspen Series ("Janus Aspen Balanced Portfolio") and the Worldwide
Growth Portfolio of the Janus Aspen Series ("Janus Aspen Worldwide Growth
Portfolio"). The Morgan Stanley Fund has one Portfolio available to the Separate
Accounts: the Emerging Markets Equity Portfolio of the Morgan Stanley Universal
Funds, Inc. ("Morgan Stanley Emerging Markets Equity Portfolio").
FIXED ACCOUNT: Assets in the Fixed Account are not part of the Separate
Accounts of NYLIAC. The value of the Fixed Account is supported by assets in the
General Account of NYLIAC, which are subject to the claims of its general
creditors.
4
<PAGE> 10
FIXED ACCOUNT VALUE: The sum of the Net Premiums and transfers allocated to the
Fixed Account, plus interest credited, less any amounts withdrawn, deducted for
charges and/or transferred from the Fixed Account.
FUNDS (EACH INDIVIDUALLY A "FUND"): The MainStay VP Series Fund, Inc.
("MainStay VP Series Fund" and, formerly, "New York Life MFA Series Fund,
Inc."), The Alger American Fund ("The Alger American Fund"), the Acacia Capital
Corporation ("Acacia Fund"), the Fidelity Variable Insurance Products Fund and
the Fidelity Variable Insurance Products Fund II (collectively the "Fidelity
Variable Insurance Products Funds" or the "Fidelity Funds"), the Janus Aspen
Series and the Morgan Stanley Universal Funds, Inc. ("Morgan Stanley Fund").
GUIDELINE ANNUAL PREMIUM: Same as "guideline level premium" as defined in
Section 7702 of the Internal Revenue Code ("IRC"). On the date of issue, it is
the annual Premium for the benefits provided, based on guaranteed mortality and
expense risk charges and an interest rate of 4% (for surrender charge purposes
only, an interest rate of 5% is used).
INSURED: Person whose life the Policy insures.
INVESTMENT DIVISION: A division of each of the Separate Accounts. Each
Investment Division invests exclusively in shares of a specified Eligible
Portfolio.
ISSUE DATE: The same date as the Policy Date.
LIFE INSURANCE BENEFIT OPTIONS: There are two Life Insurance Benefit Options:
OPTION 1--Provides a life insurance benefit equal to the greater of the face
amount of the Policy or a percentage of the Cash Value equal to the minimum
necessary for the Policy to qualify as life insurance under Section 7702 of the
IRC. (See the following table for these percentages.)
OPTION 2--Provides a life insurance benefit equal to the greater of the face
amount of the Policy plus the Cash Value or a percentage of the Cash Value equal
to the minimum necessary for the Policy to qualify as life insurance under
Section 7702 of the IRC. (See the following table for these percentages.)
<TABLE>
<CAPTION>
INSURED'S AGE INSURED'S AGE
ON POLICY IRC SECTION 7702 ON POLICY IRC SECTION 7702
ANNIVERSARY LIFE INSURANCE % ANNIVERSARY LIFE INSURANCE %
- -------------- ---------------- ------------- ----------------
<S> <C> <C> <C>
0-40 250 61 128
41 243 62 126
42 236 63 124
43 229 64 122
44 222 65 120
45 215 66 119
46 209 67 118
47 203 68 117
48 197 69 116
49 191 70 115
50 185 71 113
51 178 72 111
52 171 73 109
53 164 74 107
54 157 75-90 105
55 150 91 104
56 146 92 103
57 142 93 102
58 138 94 101
59 134 95 & Over 100
60 130
</TABLE>
5
<PAGE> 11
MINIMUM FACE AMOUNT: $50,000.
MONTHLY DEDUCTION DAY: The date on which the monthly deductions under the
Policy are deducted from the Cash Value. The first Monthly Deduction Day will be
the Policy Date, and subsequent monthly deductions will be on the same date of
each succeeding calendar month.
NET PREMIUM: Premium paid less the Sales Expense, Premium Tax and Federal Tax
Charges.
NON-QUALIFIED POLICIES: Policies that do not qualify for special federal income
tax treatment.
PARTIAL WITHDRAWAL: A withdrawal of a portion of the Cash Value by the
Policyowner.
POLICY: The Flexible Premium Variable Universal Life Insurance Policy offered
by NYLIAC that is described in this Prospectus.
POLICY ANNIVERSARY: The anniversary of the Policy Date.
POLICYOWNER: The person(s) and/or entity(ies) who owns the Policy.
POLICY DATA PAGE: Page 2 of the Policy, containing the Policy specifications.
POLICY DATE: The date shown in the Policy which is the starting point for
determining Policy Anniversary dates, Policy Years and Monthly Deduction Days.
POLICY DEBT: The amount of the obligation from a Policyowner to NYLIAC from
outstanding loans in the Fixed Account to the Policyowner under the Policy. This
amount includes any loan interest accrued to date.
POLICY YEAR: The twelve-month period commencing with the Policy Date, and each
twelve-month period thereafter.
PREMIUMS: The total dollar amount paid for the Policy.
PREMIUM TAX CHARGE: A charge based on the expected average amount of premium
tax to be paid by NYLIAC to state or other governmental authorities.
PRINCIPAL OFFICE: The administrative office and home office of NYLIAC, which is
located at 51 Madison Avenue, New York, New York 10010. All Policies are
serviced through the Principal Office.
QUALIFIED POLICIES: Policies acquired by plans that qualify for special federal
income tax treatment.
SEC GUIDELINE ANNUAL PREMIUM: Same as Guideline Annual Premium, except that it
uses 5% interest rate, Death Benefit Option 1, and assumes that there are no
riders. It is used for purposes of calculating surrender charges.
SEPARATE ACCOUNT: Separate Account I or Separate Account II, collectively the
Separate Accounts.
SEPARATE ACCOUNT I: NYLIAC Variable Universal Life Separate Account-I, a
segregated asset account established by NYLIAC to receive and invest Net
Premiums paid under Non-Qualified Policies.
SEPARATE ACCOUNT II: NYLIAC Variable Universal Life Separate Account-II, a
segregated asset account established by NYLIAC to receive and invest Net
Premiums paid under Qualified Policies. Separate Account II may be available in
the future.
6
<PAGE> 12
SURRENDER: A surrender by the Policyowner of all rights under the Policy in
exchange for the entire Cash Surrender Value under the Policy.
VALUATION PERIOD: The period, consisting of one or more days, from one
Valuation Time to the next succeeding Valuation Time.
VALUATION TIME: The time of the close of the New York Stock Exchange (currently
4:00 p.m. Eastern Time) on any day on which the New York Stock Exchange is open.
WE OR US: NYLIAC.
7
<PAGE> 13
BASIC QUESTIONS AND ANSWERS ABOUT US AND OUR POLICY
1. WHAT ARE NYLIAC AND NEW YORK LIFE?
New York Life Insurance and Annuity Corporation ("NYLIAC") is a stock life
insurance company incorporated in Delaware in 1980. NYLIAC is licensed to sell
life, accident and health insurance and annuities in the District of Columbia
and all states. In addition to the Policies described in this Prospectus, NYLIAC
offers other life insurance policies and annuities. NYLIAC's Financial
Statements are included herein.
NYLIAC is a wholly-owned subsidiary of New York Life Insurance Company
("New York Life"), a mutual life insurance company founded in New York in 1845.
New York Life had total assets amounting to $78.8 billion at the end of 1996,
and is authorized to do business in all states, the District of Columbia and the
Commonwealth of Puerto Rico. New York Life has invested in NYLIAC, and will, in
order to maintain capital and surplus in accordance with state requirements,
occasionally make additional contributions to NYLIAC.
2. WHAT VARIABLE LIFE INSURANCE POLICY ARE WE OFFERING?
In this Prospectus we are offering a Flexible Premium Variable Universal
Life Insurance Policy. We issue the Policy to provide for a Death Benefit, Cash
Surrender Value, loan privileges and flexible Premiums. It is called "flexible"
because the Policyowner may select the timing and amount of Premiums and adjust
the Death Benefit by increasing or decreasing the face amount (subject to
certain restrictions). It is called "variable" because, unlike the fixed
benefits of a traditional whole life policy, the Death Benefits and duration of
the Policy may, and Cash Surrender Values will, vary to the extent that Cash
Value under the Policy is allocated to the Investment Division(s) of the
Separate Accounts.
The Policy is a legal contract between the Policyowner and NYLIAC. The
entire contract consists of the application for the Policy (the "Application")
and the Policy, which includes any riders the Policy has.
3. HOW IS THE POLICY AVAILABLE?
The Policy is available as a Non-Qualified Policy and may in the future be
available as a Qualified Policy. The Minimum Face Amount of a Policy is $50,000.
Increases must be for at least $5,000 and, in some states, are subject to
NYLIAC's maximum retention limits. In New Jersey and New York, increases are
allowed once each Policy Year. The Insured may not be older than age 80 as of
the Policy Date. Before issuing any Policy we will require satisfactory evidence
of insurability. For certain eligible groups under employer-sponsored plans, the
Policy and face amount increases may be issued based on simplified underwriting
rules and procedures defined by us.
In some states, Policies may also be purchased in connection with the
Severance Trust Executive Program ("STEP"), a non-qualified employee benefit
plan. STEP Policies are issued on a unisex basis and any reference in this
Prospectus which makes a distinction based on the sex of the Insured, as may be
applicable to such Policies, shall be disregarded.
In Massachusetts and Montana, the Policy is issued only on a unisex basis,
and any reference in this Prospectus which makes a distinction based on the sex
of the Insured shall be disregarded.
8
<PAGE> 14
4. WHAT IS THE CASH VALUE OF THE POLICY?
The Cash Value is determined by the amount and frequency of Premiums, the
investment experience of the Investment Divisions chosen by the Policyowner, the
interest earned on the Fixed Account Value, and any Partial Withdrawals and
charges imposed in connection with the Policy. The Policyowner bears the
investment risk of any depreciation in value of the underlying assets of the
Investment Divisions but he or she also reaps the benefit of any appreciation in
their value.
5. HOW IS THE VALUE OF AN ACCUMULATION UNIT DETERMINED?
The value of an Accumulation Unit on any business day is determined by
multiplying the value of that unit on the immediately preceding business day by
the net investment factor for the Valuation Period. The Valuation Period is the
period from the close of the immediately preceding business day to the close of
the current business day. The net investment factor for the Policy used to
calculate the value of an Accumulation Unit in any Investment Division of the
Separate Accounts for the Valuation Period is determined by dividing (a) by (b)
and subtracting (c) from the result, where:
(a) is the sum of:
(1) the net asset value of a fund share held in the Separate
Accounts for that Investment Division determined at the end of the
current Valuation Period, plus
(2) the per share amount of any dividends or capital gain
distributions made by the fund for shares held in the Separate Accounts
for that Investment Division if the ex-dividend date occurs during the
Valuation Period.
(b) is the net asset value of a fund share held in the Separate
Accounts for that Investment Division determined as of the end of the
immediately preceding Valuation Period.
(c) is a factor representing the mortality and expense risk fee and
administrative charges. This factor accrues daily and is currently equal,
on an annual basis, to .70% of the daily net asset value of a fund share in
the Separate Accounts for that Investment Division.
The net investment factor may be greater or less than one; therefore, the
value of an Accumulation Unit may increase or decrease.
6. WHAT ARE THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNTS?
Each Separate Account has eighteen Investment Divisions--MainStay VP
Capital Appreciation, MainStay VP Cash Management, MainStay VP Convertible,
MainStay VP Government, MainStay VP High Yield Corporate Bond, MainStay VP
International Equity, MainStay VP Total Return, MainStay VP Value, MainStay VP
Bond, MainStay VP Growth Equity, MainStay VP Indexed Equity, Alger American
Small Capitalization, Calvert Socially Responsible, Fidelity VIP II: Contrafund,
Fidelity VIP: Equity-Income, Janus Aspen Balanced, Janus Aspen Worldwide Growth
and Morgan Stanley Emerging Markets Equity. Each Investment Division of the
Separate Accounts invests only in the shares of a single corresponding Eligible
Portfolio. The Investment Divisions are designed to provide money to pay
benefits under the Policy but they do not guarantee a minimum interest rate nor
guarantee against asset depreciation.
9
<PAGE> 15
7. WHAT IS THE FIXED ACCOUNT?
As an alternative to the Separate Accounts, you may allocate or transfer
all or part of your funds to the Fixed Account. Premiums applied to and any
amounts transferred to the Fixed Account are credited with interest using a
fixed interest rate. NYLIAC will set a rate in advance to be effective no
earlier than the next day. This rate will never be less than 4% per year. All
amounts (including amounts applied to or transferred to the Fixed Account
thereafter) receive the new interest rate. Different rates may apply to loaned
and unloaned funds.
8. HOW LONG WILL THE POLICY REMAIN IN FORCE?
The Policy does not automatically terminate for failure to pay scheduled
Premiums. Payment of these amounts does not guarantee the Policy will remain in
force. The Policy terminates only when the Cash Surrender Value is insufficient
to pay the monthly deduction or where there is an excess loan, and a late period
expires without sufficient payment. In New York, Policies issued on or after May
1, 1995 will terminate at the Insured's age 100.
9. IS THE LEVEL OF THE DEATH BENEFIT GUARANTEED?
So long as the Policy remains in force, the proceeds payable under the
Policy will be based on the Life Insurance Benefit Option in effect on the date
of death. Death Benefit proceeds will, however, be reduced by any outstanding
Policy Debt, and/or increased by any additional death benefits added by rider.
10. IS THE DEATH BENEFIT SUBJECT TO INCOME TAXES?
A Death Benefit paid under our Policies may be fully excludable from the
gross income of the Beneficiary for federal income tax purposes. For details see
FEDERAL INCOME TAX CONSIDERATIONS at page 41.
11. DOES THE POLICY HAVE A CASH SURRENDER VALUE?
The Policyowner may surrender the Policy at any time and receive its Cash
Value less any Policy Debt less the then applicable surrender charge and any
deferred contract charges. Partial Withdrawals are also allowed subject to
certain restrictions. The Cash Surrender Value of a Policy fluctuates with the
investment performance of the Separate Account Investment Divisions in which the
Policy has Accumulation Value and the amount held in the Fixed Account. It may
increase or decrease daily.
For federal income tax purposes, the Policyowner usually is not taxed on
increases in the Cash Surrender Value until he or she actually surrenders the
Policy. However, in connection with certain Partial Withdrawals of Cash Value
and loans on the Policy, the Policyowner may be taxed on all or a part of the
amount distributed. For details see CASH SURRENDER VALUE at page 33 and FEDERAL
INCOME TAX CONSIDERATIONS at page 41.
12. WHAT IS A MODIFIED ENDOWMENT CONTRACT?
A modified endowment contract (as defined by the IRC) is a life insurance
policy under which the premiums paid during the first seven contract years
exceed the cumulative premiums payable under a policy providing for guaranteed
benefits upon the payment of seven level annual premiums. Certain changes to the
Policy can subject it to retesting for a new seven-year period. During the
Insured's lifetime, distributions from a modified endow-
10
<PAGE> 16
ment contract, including collateral assignments, loans and Partial Withdrawals,
are taxable to the extent of any income in the contract and may also incur a
penalty tax if the Policyowner is not yet age 59 1/2.
13. CAN THE POLICY BECOME A MODIFIED ENDOWMENT CONTRACT?
Since the Policy permits flexible Premium payments, it may become a
modified endowment contract. NYLIAC currently has the systems capability to test
a Policy at issue to determine whether it will be classified as a modified
endowment contract. This at-issue test examines the Policy for the first seven
contract years, based on the Policy application and the initial Premium
requested, and based on the assumption that there are no increases in Premiums
during the period. NYLIAC has instituted procedures to monitor whether a Policy
may become a modified endowment contract after issue. For details see FEDERAL
INCOME TAX CONSIDERATIONS--Modified Endowment Contract Status at page 43.
14. WHAT ABOUT PREMIUMS?
The amount and interval of any scheduled Premiums are shown on the Policy
Data Page. A scheduled Premium does not have to be paid to keep the Policy in
force, if there is enough Cash Surrender Value to cover the charges made on the
Monthly Deduction Day. The amount of any scheduled Premium may be increased or
decreased subject to the limits we set. However, in no event may the Premium be
an amount which would jeopardize the Policy continuing to qualify as "life
insurance," as defined under Section 7702 of the IRC. The frequency of Premium
payments may also be changed subject to our minimum Premium rules. Scheduled
Premiums end on the Policy Anniversary on which the Insured is age 95.
15. WHAT ARE UNSCHEDULED PREMIUMS?
While the Insured is living, you may pay unscheduled Premiums at any time
prior to the Policy Anniversary on which the Insured is age 95. Any unscheduled
Premiums must equal at least $50. However, in no event may the Premium be an
amount which would jeopardize the Policy continuing to qualify as "life
insurance," as defined under Section 7702 of the IRC. Unscheduled Premiums also
include the proceeds of an exchange made in accordance with Section 1035 of the
IRC. If an unscheduled Premium would result in an increase in the life insurance
benefit greater than the increase in the Cash Value, we reserve the right to
require proof of insurability before accepting that Premium and applying it to
the Policy. We also reserve the right to limit the number and amount of any
unscheduled Premiums. In certain states, including New York and New Jersey,
unscheduled Premiums may be made once each Policy Year. For details see GENERAL
PROVISIONS OF THE POLICY--Premiums at page 27.
16. WHEN ARE PREMIUMS PUT INTO THE FIXED ACCOUNT OR THE SEPARATE ACCOUNTS?
When we receive a Premium, whether scheduled or unscheduled, we will deduct
a Sales Expense Charge not to exceed the amount shown on the Policy Data Page.
We will also deduct the Premium Tax and Federal Tax Charges. The balance of the
Premium (the Net Premium) will be applied to the Separate Accounts, at the
Accumulation Unit value determined at the end of the Valuation Period, and to
the Fixed Account, when the Premium is received in accordance with your
allocation election in effect at that time, and before any
11
<PAGE> 17
other deductions which may be due are made. (Deductions are described in greater
detail in "Are there charges against the Policy?")
17. HOW ARE PREMIUMS ALLOCATED AMONG THE ALLOCATION ALTERNATIVES?
You may currently maintain Accumulation Value in any number of Allocation
Alternatives. Moreover, you may raise or lower the percentages of the Net
Premium (which must be in whole number percentages) allocated to each Allocation
Alternative at the time you make a Premium payment. Premiums will be allocated
to the MainStay VP Cash Management Investment Division until 20 days (10 days in
New York) after the Issue Date. Thereafter, Net Premiums will be allocated in
accordance with the Policyowner's instructions. (In the District of Columbia,
when the Policy is issued, the Premium is allocated entirely to the MainStay VP
Cash Management Investment Division. On the later of 20 days after the Policy is
delivered or 45 days after the application is executed, the Net Premium is
allocated according to the Policyowner's instructions.)
18. ARE THERE CHARGES AGAINST THE POLICY?
Certain charges are made against the Policy. Three charges are deducted
from each Premium, whether scheduled or unscheduled. A Sales Expense Charge not
to exceed 5% is used to partially cover sales expenses. Deductions of 2% and
1.25% are also made for Premium Tax and Federal Tax Charges, respectively. Each
Premium, net of these charges, is allocated to the Fixed Account or the
Investment Divisions of the Separate Accounts and becomes a part of the Cash
Value. For details see DEDUCTIONS FROM PREMIUMS at page 13.
On each Monthly Deduction Day, the following deductions are made from the
Policy's Cash Value:
(a) A monthly contract charge not to exceed, on an annual basis, the
amount shown on the Policy Data Page. (In the first Policy Year, the excess
of the monthly charge over the amount of the monthly charge applicable in
renewal years is deferred to the earlier of the first Policy Anniversary or
surrender of the Policy. However, if the Policy is surrendered in the first
Policy Year, the full amount deferred is deducted).
(b) The monthly cost of insurance for the amount of the life insurance
benefit in effect at that time;
(c) The monthly cost for any riders attached to the Policy.
The Monthly Deduction Day for the Policy is shown on the Policy Data Page.
The first Monthly Deduction Day is the Issue Date of the Policy. All monthly
deductions are made on a pro-rata basis from each of the Investment Divisions
and any unloaned amount in the Fixed Account.
Some deductions are made on a daily basis against the assets of each
Separate Account's Investment Divisions. Daily charges calculated at an annual
rate of .60% and .10% of the value of the assets of each Investment Division is
charged for mortality and expense risks and administrative charges,
respectively. The mortality and expense risk charge may be changed at NYLIAC's
option subject to a maximum charge of .90%. Similarly, tax assessments may be
calculated daily. Currently, we are not making any charges for income taxes, but
we may make charges in the future against the Separate Accounts' Investment
Divisions for federal income taxes attributable to them.
12
<PAGE> 18
There are also certain charges when a Policyowner surrenders a Policy or
decreases the Policy's face amount. A Partial Withdrawal or a change in the Life
Insurance Benefit Option may result in a decrease in face amount. Upon surrender
or any transaction which results in a decrease in face amount, a surrender
charge is assessed. The surrender charge is deducted from the Cash Value at the
time of surrender or decrease.
Partial Withdrawals of Cash Value are permitted. A charge not to exceed the
lesser of $25 or 2% of the amount withdrawn is imposed for each Partial
Withdrawal. Where the face amount is decreased, a surrender charge is also
imposed. For details see CHARGES UNDER THE POLICY at page 13 and FEDERAL INCOME
TAX CONSIDERATIONS at page 41.
19. WHAT IS THE LOAN PRIVILEGE?
Using the Policy as sole security, you can borrow any amount up to the loan
value of the Policy. The loan value on any given date is equal to 90% of the
Cash Value less applicable surrender charges, less any deferred contract charge
and less any Policy Debt.
20. DO I HAVE A RIGHT TO CANCEL?
Yes. Upon issue, Premiums will be allocated to the MainStay VP Cash
Management Division until the end of the free look period, as stated in your
Policy. Under the free look provision, you, the Policyowner, generally have
twenty days (ten days in New York) after you receive the Policy to return the
Policy and receive a refund. The Policy may be returned to our Principal Office,
to any of our agency offices, or to the registered representative who sold you
the Policy. For details see FREE LOOK PROVISION at page 35.
21. CAN THE POLICY BE EXCHANGED OR ALL AMOUNTS ALLOCATED TO THE FIXED
ACCOUNT?
You have the right during the first two Policy Years to either (1) transfer
all of the Policy's Accumulation Value to the Fixed Account, or (2) exchange the
Policy for a permanent fixed benefit policy offered by us for this purpose.
Similar rights are available during the first two years after an increase in the
Policy's face amount. For details see EXCHANGE PRIVILEGE at page 35. Policies
issued in Colorado, Massachusetts and New York have special rights when NYLIAC
changes the objective of an Investment Division. See your Policy for additional
details, as well as EXCHANGE PRIVILEGE at page 35 and OUR RIGHTS at page 37.
CHARGES UNDER THE POLICY
Certain charges are deducted to compensate for providing the insurance
benefits under the Policy, for any riders, for administering the Policy, for
assuming certain risks, and for incurring certain expenses in distributing the
Policy.
DEDUCTIONS FROM PREMIUMS
When we receive a Premium, whether scheduled or unscheduled, we will deduct
a Sales Expense Charge not to exceed the amount shown on the Policy Data Page,
which is part of the Policy provided to each Policyowner. The Sales Expense
Charge will not exceed 5% of any Premium. We will also deduct a Premium Tax
Charge which is an amount equal to the expected average premium tax and a
federal tax charge. The Net Premium will be
13
<PAGE> 19
applied to the Separate Accounts and Fixed Account in accordance with your
allocation election in effect at that time, and before any other deductions
which may be due are made.
SALES EXPENSE CHARGE
The Sales Expense Charge component of the Premium deduction will not exceed
5% of any Premium and is in addition to the surrender charge (for a discussion
of the surrender charge, see SURRENDER CHARGES at page 18). The Sales Expense
Charge is currently eliminated after the tenth Policy Year. We reserve the right
to impose this charge in Policy Year 11 and thereafter in the future. The amount
of the Sales Expense Charge in a Policy Year is not necessarily related to our
actual sales expenses for that particular year. To the extent that sales
expenses are not covered by the Sales Expense Charge and the surrender charge,
they will be recovered from NYLIAC surplus, including any amounts derived from
the mortality and expense risk charge or the cost of insurance charge. For a
discussion of the commissions paid under the Policy, see SALES AND OTHER
AGREEMENTS at page 51.
PREMIUM TAX CHARGE
Various states and jurisdictions impose a tax on premiums received by
insurance companies. These taxes vary from state to state. We deduct 2% of each
Premium to cover state premium taxes. NYLIAC reserves the right to increase this
charge (except in New Jersey) consistent with changes in applicable law.
FEDERAL TAX CHARGE
NYLIAC's federal tax obligations will increase based upon Premiums received
under the Policies. We deduct 1.25% of each Premium to cover this federal tax
charge. NYLIAC reserves the right to increase this charge consistent with
changes in applicable law and subject to any required approval of the Securities
and Exchange Commission (the "SEC").
CASH VALUE CHARGES
On each Monthly Deduction Day, a monthly contract charge, a cost of
insurance charge, and a rider charge for the cost of any additional riders are
deducted from the Accumulation Value and Fixed Account Value in proportion to
the non-loaned Cash Value in the Separate Accounts and the Fixed Account.
MONTHLY CONTRACT CHARGE
In the first Policy Year, there is a charge currently equal to $300 on an
annual basis to compensate NYLIAC for costs incurred in providing certain
administrative services including premium collection, recordkeeping, processing
claims and communicating with Policyowners. In subsequent Policy Years, the
charge currently is equal to $72 on an annual basis. These charges are not
designed to produce a profit. While these charges may increase or decrease, they
will never exceed $324 on an annual basis in the first Policy Year and $96 in
each Policy Year thereafter. These charges are deducted on the Issue Date and on
each Monthly Deduction Day thereafter. In the first Policy Year, the excess of
the annual charge over the amount of the annual charge applicable in renewal
years (currently $228) is advanced to your Accumulation Value and deduction is
deferred to the earlier of the first Policy Anniversary or Surrender of the
Policy.
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<PAGE> 20
CHARGE FOR COST OF INSURANCE PROTECTION
A charge for the cost of insurance protection is deducted on each Monthly
Deduction Day and is based on such factors as the sex, smoker class, duration,
underwriting class, and issue age of the Insured and the face amount of the
Policy. This charge is also based on future expectations of such factors as
investment income, mortality, expense and persistency. Any changes in the charge
will be in accordance with the procedures and standards on file with all
appropriate officials, including the Superintendent of Insurance of the State of
New York. For the initial face amount, the monthly cost of insurance charge will
be reviewed whenever the rates for new issues change, but in any event, at least
once every five years and not more frequently than annually. This charge will
never exceed the guaranteed charge shown in the Policy. For increases in face
amount, the charge for the cost of insurance protection will vary based on the
sex, smoker class, underwriting class, attained age at the time of the increase
and the duration from the date of the increase, not the current attained age.
The charge varies monthly because it is determined by multiplying the applicable
cost of insurance rates by the amount at risk each Policy month and then adding
the amount of any applicable flat extra charge. Charges for any optional
benefits added by rider are also deducted from the Cash Value.
Under an increase in face amount, new cost of insurance rates apply to the
new coverage segment based on the rating for the increase. Elected decreases in
face amount reduce or cancel prior segments and their associated cost of
insurance rates on a last-in-first-out basis.
SEPARATE ACCOUNT CHARGES
MORTALITY AND EXPENSE RISK CHARGE
We charge the Investment Divisions for the mortality and expense risks we
assume. We deduct a daily charge at an effective annual rate of .60% of the
value of each Investment Division's assets, subject to a guaranteed maximum of
.90%.
The mortality risk we assume is that the group of lives insured under our
Policies may, on average, live for shorter periods of time than we estimated.
The expense risk we assume is that our costs of issuing and administering
Policies may be more than we estimated.
If these charges are insufficient to cover actual costs and assumed risks,
the loss will fall on NYLIAC. Conversely, if the charge proves more than
sufficient, any excess will be added to the NYLIAC surplus.
ADMINISTRATIVE CHARGE
We charge the Investment Divisions a daily charge for providing Policy
administrative services equal, on an annual basis, to .10% of the average daily
net asset value of the applicable Separate Account. This charge is not designed
to produce a profit and is guaranteed not to increase.
OTHER CHARGES FOR FEDERAL INCOME TAXES
We do not currently make any charge against the Investment Divisions for
federal income taxes attributable to them. However, we may make such a charge
eventually in order to provide for the future federal income tax liability of
the Investment Divisions. For more information on charges for federal income
taxes, see FEDERAL INCOME TAX CONSIDERATIONS at page 41.
15
<PAGE> 21
The chart on the following two pages summarizes the 1996 Separate Account
charges applicable to a Policy, as well as the charges at the Fund level:(a)
<TABLE>
<CAPTION>
MAINSTAY MAINSTAY VP
MAINSTAY VP VP MAINSTAY HIGH YIELD MAINSTAY VP
CAPITAL CASH MAINSTAY VP VP CORPORATE INTERNATIONAL
APPRECIATION MANAGEMENT CONVERTIBLE GOVERNMENT BOND EQUITY
------------ ---------- ----------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a % of average account value)
Mortality and Expense Risk Fees(b)............. 0.60% 0.60% 0.60% 0.60% 0.60% 0.60%
Administration Fees............................ 0.10% 0.10% 0.10% 0.10% 0.10% 0.10%
Total Separate Account Annual Expenses......... 0.70% 0.70% 0.70% 0.70% 0.70% 0.70%
FUND ANNUAL EXPENSES AFTER REIMBURSEMENT
(as a % of average net assets)
Advisory Fees.................................. 0.36% 0.25% 0.36% 0.30% 0.30% 0.60%
Administration Fees............................ 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%
Other Expenses................................. 0.19%(c) 0.19%(c) 0.17%(d) 0.21%(c) 0.17%(d) 0.17%(d)
Total Fund Annual Expenses..................... 0.75%(c) 0.64%(c) 0.73%(d) 0.71%(c) 0.67%(d) 0.97%(d)
<CAPTION>
MAINSTAY VP
TOTAL MAINSTAY VP MAINSTAY VP
RETURN VALUE BOND
----------- ----------- -----------
<S> <C> <C> <C>
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a % of average account value)
Mortality and Expense Risk Fees(b)............. 0.60% 0.60% 0.60%
Administration Fees............................ 0.10% 0.10% 0.10%
Total Separate Account Annual Expenses......... 0.70% 0.70% 0.70%
FUND ANNUAL EXPENSES AFTER REIMBURSEMENT
(as a % of average net assets)
Advisory Fees.................................. 0.32% 0.36% 0.25%
Administration Fees............................ 0.20% 0.20% 0.20%
Other Expenses................................. 0.19%(c) 0.17%(d) 0.13%(c)
Total Fund Annual Expenses..................... 0.71%(c) 0.73%(d) 0.58%(c)
</TABLE>
- ------------
(a) This chart does not reflect deductions from Premiums and Cash Value charges
which are described in the immediately preceding sections.
(b) This is the current fee; maximum is 0.90%.
(c) An expense reimbursement agreement which limited "Other Expenses" to 0.17%
annually was in effect until December 31, 1996. "Other Expenses" and "Total
Fund Annual Expenses" have been restated to reflect the absence of the
limitation in 1996.
(d) These numbers reflect an expense reimbursement agreement effective through
December 31, 1997 limiting "Other Expenses" to 0.17% annually. In the
absence of the expense reimbursement arrangement, the "Total Fund Annual
Expenses" for the year ended December 31, 1996 would have been 1.46%, 0.71%,
1.51% and 0.79% for the MainStay VP Convertible, MainStay VP High Yield
Corporate Bond, MainStay VP International Equity and MainStay VP Value
Portfolios, respectively. Numbers for the MainStay VP Convertible Portfolio
have been annualized based on the period from October 1, 1996 (the date of
inception) to December 31, 1996.
16
<PAGE> 22
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP ALGER AMERICAN CALVERT FIDELITY VIP:
GROWTH INDEXED SMALL SOCIALLY FIDELITY VIP II: EQUITY-
EQUITY EQUITY CAPITALIZATION RESPONSIBLE CONTRAFUND INCOME
----------- ----------- -------------- ----------- ---------------- --------------
<S> <C> <C> <C> <C> <C> <C>
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a % of average account value)
Mortality and Expense Risk Fees(b)....... 0.60% 0.60% 0.60% 0.60% 0.60% 0.60%
Administration Fees...................... 0.10% 0.10% 0.10% 0.10% 0.10% 0.10%
Total Separate Account Annual
Expenses............................... 0.70% 0.70% 0.70% 0.70% 0.70% 0.70%
FUND ANNUAL EXPENSES AFTER REIMBURSEMENT
(as a % of average account value)
Advisory Fees............................ 0.25% 0.10% 0.85% 0.71%(e) 0.61% 0.51%
Administration Fees...................... 0.20% 0.20% -- -- -- --
Other Expenses........................... 0.13%(c) 0.20%(c) 0.03% 0.13%(e) 0.13% 0.07%
Total Fund Annual Expenses............... 0.58%(c) 0.50%(c) 0.88% 0.84%(e) 0.74%(f) 0.58%(f)
<CAPTION>
JANUS ASPEN MORGAN STANLEY
JANUS ASPEN WORLDWIDE EMERGING
BALANCED GROWTH MARKETS EQUITY
----------- ----------- --------------
<S> <C> <C> <C>
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a % of average account value)
Mortality and Expense Risk Fees(b)....... 0.60% 0.60% 0.60%
Administration Fees...................... 0.10% 0.10% 0.10%
Total Separate Account Annual
Expenses............................... 0.70% 0.70% 0.70%
FUND ANNUAL EXPENSES AFTER REIMBURSEMENT
(as a % of average account value)
Advisory Fees............................ 0.79% 0.66% 0.85%
Administration Fees...................... -- -- 0.25%
Other Expenses........................... 0.15% 0.14% 0.65%
Total Fund Annual Expenses............... 0.94%(g) 0.80%(g) 1.75%(h)
</TABLE>
- ------------
(e) "Other Expenses" are based on expenses for fiscal year 1996, and have been
restated to reflect an increase in transfer agency expenses of 0.03%
expected to be incurred in 1997. The "Advisory Fee" includes a performance
adjustment which could cause the fee to be as high as 0.85% or as low as
0.55%, depending on performance. "Other Expenses" reflect an indirect fee of
0.03%. "Total Fund Annual Expenses" after reductions for fees paid
indirectly would have been 0.81%.
(f) A portion of the brokerage commissions that these Portfolios pay was used to
reduce the Portfolios' annual expenses. In addition, these Portfolios have
entered into arrangements with their custodian and transfer agent whereby
interest earned on uninvested cash balances was used to reduce custodian and
transfer agent expenses. Including these reductions, the "Total Fund Annual
Expenses" would have been 0.71% for the Fidelity VIP II: Contrafund
Portfolio and 0.56% for the Fidelity VIP: Equity-Income Portfolio.
(g) Janus Capital Corporation ("JCC") has agreed to reduce the advisory fee for
each Portfolio to the extent that such fee exceeds the effective rate of the
Janus retail fund corresponding to such Portfolio. JCC may terminate this
fee reduction at any time upon 90 days' notice to the Board of Trustees of
the Janus Aspen Series. Absent such reductions, "Advisory Fees" and "Total
Fund Annual Expenses" for the fiscal year ended December 31, 1996 would have
been 0.92% and 1.07%, respectively, for the Janus Aspen Balanced Portfolio
and 0.77% and 0.91%, respectively, for the Janus Aspen Worldwide Growth
Portfolio.
(h) "Other Expenses" for the Morgan Stanley Emerging Markets Equity Portfolio
are estimated for the current fiscal year. Morgan Stanley Asset Management
Inc. has agreed to a reduction in its management fees and to reimburse the
Portfolio if such fees would cause the "Total Fund Annual Expenses" to
exceed 1.75% of average daily net assets. Absent such reductions, it is
estimated that "Advisory Fees" and "Total Fund Annual Expenses" would be
1.25% and 6.17%, respectively.
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<PAGE> 23
SURRENDER CHARGES
During the first 15 policy years, a surrender charge will be assessed on a
complete Surrender or decrease in face amount, including decreases caused by a
change in the Life Insurance Benefit Option or Partial Withdrawals on Option 1
Policies. This surrender charge is in addition to the Sales Expense Charge
discussed above. The surrender charge in the first Policy Year is equal to 25%
of Premiums paid to date up to the Guideline Annual Premium, as determined in
accordance with applicable SEC rules, for the first year, plus 5% of Premiums
paid in that year which are in excess of the SEC Guideline Annual Premium for
the first year but not in excess of the sum of the SEC Guideline Annual Premiums
through the sixth Policy Year. The surrender charge in the second Policy Year
and thereafter is equal to the applicable percentage shown in the table below
multiplied by the Base Surrender Charge. The Base Surrender Charge is equal to
25% of the lesser of the Premiums paid to date or the SEC Guideline Annual
Premium for the first Policy Year, plus 5% of the lesser of: (i) Premiums paid
in excess of the SEC Guideline Annual Premium for the first Policy Year, or (ii)
the sum of the SEC Guideline Annual Premiums for the first six Policy Years,
minus the SEC Guideline Annual Premium for the first Policy Year.
<TABLE>
<CAPTION>
YEAR SURRENDER CHARGE
----------------------------------------------------- ----------------
<S> <C>
2-6.................................................. 100%
7.................................................. 90%
8.................................................. 80%
9.................................................. 70%
10.................................................. 60%
11.................................................. 50%
12.................................................. 40%
13.................................................. 30%
14.................................................. 20%
15.................................................. 10%
16+................................................. 0%
</TABLE>
During the first two Policy Years, the surrender charge is further limited
to the sum of: (i) 30% of all Premiums paid during the first two Policy Years up
to one SEC Guideline Annual Premium, plus (ii) 10% of all Premiums in the first
two Policy Years in excess of one SEC Guideline Annual Premium, but not more
than two SEC Guideline Annual Premiums, plus (iii) 9% of all Premium payments in
the first two Policy Years in excess of two SEC Guideline Annual Premiums, less
(iv) any Sales Expense Charges deducted from such Premiums, less (v) any
surrender charge previously deducted.
Surrender charges and surrender charge periods are calculated separately
for the initial face amount and for each increase in the face amount, including
an increase caused by a change in the Life Insurance Benefit Option. Premium
payments after an increase will be allocated between the initial face amount and
the increase based on the relative SEC Guideline Annual Premiums. A decrease in
face amount will result in the imposition of a surrender charge equal to the
difference between the surrender charge which would have been payable on a
complete Surrender prior to the decrease and the surrender charge which would be
payable on a complete Surrender after the decrease. For example, assume a Policy
with a $100,000 face amount is to be decreased to a $50,000 face amount. If a
complete Surrender of the Policy prior to the decrease would result in a
surrender charge of $1,250 and a complete Surrender of the $50,000 remaining
face amount after the
18
<PAGE> 24
decrease would result in a surrender charge of $750, the surrender charge
imposed in connection with the decrease will be $500 ($1,250-$750). Where,
because of increases in face amount, there are multiple schedules of surrender
charges, the charge applied will be based first on the surrender charge
associated with the last increase in face amount, then on each prior increase,
in the reverse order in which the increases occurred, and then to the initial
face amount.
The percentages specified above and/or the Policy Year in which the
surrender charge is reduced may vary for individuals having a life expectancy of
less than 20 years either at the time that a Policy is issued or the face amount
is increased.
EXCEPTIONS TO SURRENDER CHARGE
There are a number of exceptions to the imposition of a surrender charge,
including among others, cancellation of a Policy by NYLIAC, the payment of
proceeds upon the death of the Insured, or a Surrender or Partial Withdrawal
which constitutes an IRS minimum distribution for the Policy.
How the Policy Works
This example is based on the illustration from page A-1, assuming a 6%
hypothetical gross annual investment return and current charges:
<TABLE>
<S> <C>
Scheduled Annual Premium.......................................... $2,000.00
less: Sales Expense Charge (5%).............................. 100.00
Premium Tax Charge (2%)................................ 40.00
Federal Tax Charge (1.25%)............................. 25.00
---------
equals: Net Premium............................................ $1,835.00
plus: Net investment performance (varies monthly)............ 74.29
less: Monthly contract charges ($6 per month currently)...... 72.00
less: Charges for cost of insurance (varies monthly)......... 283.78
---------
equals: Cash Value............................................. $1,553.51
less: Surrender Charge (25% of Premium up to SEC Guideline
Annual Premium plus 5% of excess Premiums paid)........ 473.49
less: Balance of First Year Monthly Contract Charge(1)....... 228.00
---------
equals: Cash Surrender Value................................... $ 852.02
</TABLE>
- ------------
(1) In the first Policy Year, the excess of the annual charge over the annual
charge applicable in renewal years is advanced to your Accumulation Value
and deduction is deferred to the earlier of the first Policy Anniversary or
Surrender of the Policy.
THE SEPARATE ACCOUNTS
Each of the Separate Accounts was established as of June 4, 1993, pursuant
to resolutions of the NYLIAC Board of Directors. The Separate Accounts are
registered as unit investment trusts with the SEC under the Investment Company
Act of 1940, but such registration does not signify that the SEC supervises the
management, or the investment practices or policies, of the Separate Accounts.
The Separate Accounts meet the definition of "separate account" under the
federal securities laws.
Although the assets of each of the Separate Accounts belong to NYLIAC,
these assets are held separately from the other assets of NYLIAC, and are not
chargeable with liabilities
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<PAGE> 25
incurred in any other business operations of NYLIAC (except to the extent that
assets in the Separate Accounts exceed the reserves and other liabilities of
that Separate Account). The income, capital gains and capital losses incurred on
the assets of the Separate Accounts are credited to or are charged against the
assets of those Accounts, without regard to the income, capital gains or capital
losses arising out of any other business NYLIAC may conduct. Therefore, the
investment performance of the Separate Accounts is entirely independent of both
the investment performance of NYLIAC's Fixed Account and the performance of any
other separate account.
Each of the Separate Accounts currently has eighteen Investment Divisions
which invest Premiums solely in the corresponding Eligible Portfolios of the
Funds. The Eligible Portfolios are: the MainStay VP Capital Appreciation
Portfolio, the MainStay VP Cash Management Portfolio, the MainStay VP
Convertible Portfolio, the MainStay VP Government Portfolio, the MainStay VP
High Yield Corporate Bond Portfolio, the MainStay VP International Equity
Portfolio, the MainStay VP Total Return Portfolio, the MainStay VP Value
Portfolio, the MainStay VP Bond Portfolio, the MainStay VP Growth Equity
Portfolio, the MainStay VP Indexed Equity Portfolio, the Alger American Small
Capitalization Portfolio, the Calvert Socially Responsible Portfolio, the
Fidelity VIP II: Contrafund Portfolio, the Fidelity VIP: Equity-Income
Portfolio, the Janus Aspen Balanced Portfolio, the Janus Aspen Worldwide Growth
Portfolio and the Morgan Stanley Emerging Markets Equity Portfolio.
Investment Divisions may, subject to any required regulatory approvals, be
added or deleted at the discretion of NYLIAC.
NYLIAC may accumulate in the Separate Accounts the charge for mortality and
expense risks, monthly charges assessed against the Policy and investment
results applicable to those assets that are in excess of net assets supporting
the Policies.
MAINSTAY VP SERIES FUND, INC.
The Separate Accounts currently invest in eleven Eligible Portfolios of the
MainStay VP Series Fund, a diversified open-end management investment company.
MacKay-Shields Financial Corporation ("MacKay-Shields") is the investment
adviser to the MainStay VP Capital Appreciation, MainStay VP Cash Management,
MainStay VP Convertible, MainStay VP Government, MainStay VP High Yield
Corporate Bond, MainStay VP International Equity, MainStay VP Total Return, and
MainStay VP Value Portfolios. Monitor Capital Advisors, Inc. ("Monitor") is the
investment adviser to the MainStay VP Indexed Equity Portfolio and New York Life
is the investment adviser to the MainStay VP Bond and MainStay VP Growth Equity
Portfolios. MacKay-Shields, Monitor and New York Life provide investment
advisory services to these Portfolios in accordance with the policies, programs
and guidelines established by the Board of Directors of the MainStay VP Series
Fund. As compensation for such services, the MainStay VP Series Fund pays
MacKay-Shields a fee in the form of a daily charge at an annual rate of .36%,
.25%, .36%, .30%, .30%, .60%, .32% and .36% of the aggregate daily net assets of
the MainStay VP Capital Appreciation Portfolio, the MainStay VP Cash Management
Portfolio, the MainStay VP Convertible Portfolio, the MainStay VP Government
Portfolio, the MainStay VP High Yield Corporate Bond Portfolio, the MainStay VP
International Equity Portfolio, the MainStay VP Total Return Portfolio and the
MainStay VP Value Portfolio, respectively. The MainStay VP Series Fund pays
Monitor a fee in the form of a daily charge at an annual rate of .10% of the
aggregate daily net assets of the MainStay VP Indexed Equity Portfolio. The
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<PAGE> 26
MainStay VP Series Fund pays New York Life a fee in the form of a daily charge
at an annual rate of .25% of the aggregate daily net assets of each of the
MainStay VP Bond and MainStay VP Growth Equity Portfolios. See the prospectus
for the MainStay VP Series Fund which is attached to this Prospectus.
THE ALGER AMERICAN FUND
The Separate Accounts currently invest in the Alger American Small
Capitalization Portfolio of The Alger American Fund. Currently, the Alger
American Small Capitalization Portfolio is the only Eligible Portfolio available
through The Alger American Fund for investment by the Separate Accounts.
Fred Alger Management, Inc. ("FAM") provides investment advisory services
to the Alger American Small Capitalization Portfolio in accordance with the
policies, programs and guidelines established by the Board of Trustees of The
Alger American Fund. As compensation for such services, The Alger American Fund
pays FAM a fee in the form of a daily charge at an annual rate of .85% of the
average daily net assets of the Portfolio. See the prospectus for The Alger
American Fund which is attached to this Prospectus.
ACACIA CAPITAL CORPORATION
The Separate Accounts currently invest in the Calvert Socially Responsible
Portfolio of Acacia Capital Corporation. Currently, the Calvert Socially
Responsible Portfolio is the only Eligible Portfolio available through the
Acacia Fund for investment by the Separate Accounts.
Calvert Asset Management Company, Inc. ("CAM") provides investment advisory
services to the Calvert Socially Responsible Portfolio in accordance with the
policies, programs and guidelines established by the Board of Directors of the
Acacia Fund. As compensation for such services, the Acacia Fund pays CAM a fee
in the form of a daily charge at an annual rate of .70% of the first $500
million of the average daily net assets of the Calvert Socially Responsible
Portfolio, .65% of the next $500 million of average daily net assets of the
Portfolio, and .60% of the average daily net assets of the Portfolio in excess
of $1 billion. This fee may be reduced or increased by up to 0.15%, depending on
the performance of the Calvert Socially Responsible Portfolio relative to the
Lipper Balanced Funds Index. See the prospectus for the Acacia Capital
Corporation which is attached to this Prospectus.
FIDELITY VARIABLE INSURANCE PRODUCTS FUND AND
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
The Separate Accounts currently invest in the Fidelity VIP II: Contrafund
and Fidelity VIP: Equity-Income Portfolios of the Fidelity Variable Insurance
Products Funds. Currently, the Fidelity VIP II: Contrafund and Fidelity VIP:
Equity-Income Portfolios are the only Eligible Portfolios available through the
Fidelity Funds for investment by the Separate Accounts.
Fidelity Management and Research Company ("FMR") provides investment
advisory services to the Fidelity VIP II: Contrafund and Fidelity VIP:
Equity-Income Portfolios in accordance with the policies, programs and
guidelines established by the Boards of
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<PAGE> 27
Trustees of the Fidelity Variable Insurance Products Funds. As compensation for
such services, the Fidelity Funds pay FMR a monthly fee in the form of a charge,
calculated on a monthly basis by adding a group fee rate to an individual
Portfolio fee rate, and multiplying the result by the Portfolios' average net
assets. The group fee rate is based on the average net assets of all the mutual
fund assets advised by FMR, and cannot rise above .52%. FMR pays, at its own
expense, FMR U.K. and FMR Far East an annual fee equal to 50% of its management
fee rate with respect to the Fidelity VIP II: Contrafund Portfolio's investments
that each sub-advisor manages on a discretionary basis. See the prospectus for
the Fidelity Variable Insurance Products Funds which is attached to this
Prospectus.
JANUS ASPEN SERIES
The Separate Accounts currently invest in the Janus Aspen Balanced and
Janus Aspen Worldwide Growth Portfolios of the Janus Aspen Series. Currently,
the Janus Aspen Balanced and Janus Aspen Worldwide Growth Portfolios are the
only Eligible Portfolios available through the Janus Aspen Series for investment
by the Separate Accounts.
Janus Capital Corporation ("JCC") provides investment advisory services to
the Janus Aspen Balanced and Janus Aspen Worldwide Growth Portfolios in
accordance with the policies, programs and guidelines established by the Board
of Trustees of the Janus Aspen Series. As compensation for such services, the
Janus Aspen Series pays JCC a management fee in the form of a daily charge at an
annual rate of 1.00% for the first $30 million of the average daily net assets
of each Portfolio, .75% of the next $270 million of the average daily net assets
of each Portfolio, .70% of the next $200 million of the average daily net assets
of each Portfolio, and .65% of an amount over $500 million of the average daily
net assets of each Portfolio. JCC has agreed to reduce the advisory fee for each
Portfolio to the extent that such fee exceeds the effective rate of the Janus
retail fund corresponding to such Portfolio. JCC may terminate this fee
reduction at any time upon 90 days' notice to the Board of Trustees of the Janus
Aspen Series. See the prospectus for the Janus Aspen Series which is attached to
this Prospectus.
MORGAN STANLEY UNIVERSAL FUNDS, INC.
The Separate Accounts currently invest in the Morgan Stanley Emerging
Markets Equity Portfolio of the Morgan Stanley Universal Funds, Inc. Currently,
the Morgan Stanley Emerging Markets Equity Portfolio is the only Eligible
Portfolio available through the Morgan Stanley Fund for investment by the
Separate Accounts.
Morgan Stanley Asset Management Inc. ("MSAM") provides investment advisory
services to the Morgan Stanley Emerging Markets Equity Portfolio in accordance
with the policies, programs and guidelines established by the Board of Directors
of the Morgan Stanley Fund. As compensation for such services, the Morgan
Stanley Fund pays MSAM a quarterly management fee in the form of a daily charge
at an annual rate of 1.25% for the first $500 million of the average daily net
assets of the Portfolio, 1.20% of the next $500 million of the average daily net
assets of the Portfolio, and 1.15% of the average daily net assets of the
Portfolio in excess of $1 billion. MSAM has agreed to a reduction in their
management fees and to reimburse the Portfolio if such fees would cause the
total annual operating expenses of the Portfolio to exceed 1.75% of average
daily net assets. See the prospectus for the Morgan Stanley Universal Funds,
Inc. which is attached to this Prospectus.
22
<PAGE> 28
PORTFOLIOS
The assets of each Eligible Portfolio are separate from the others and each
such Portfolio has different investment objectives and policies. As a result,
each Eligible Portfolio operates as a separate investment fund and the
investment performance of one Portfolio has no effect on the investment
performance of any other Portfolio.
THE MAINSTAY VP CAPITAL APPRECIATION PORTFOLIO
The MainStay VP Capital Appreciation Portfolio seeks long-term growth of
capital. It seeks to achieve its primary investment objective by maintaining a
flexible approach towards investing in various types of companies as well as
types of securities depending upon the economic environment and the relative
attractiveness of the various securities markets. Generally, the Portfolio will
seek to invest in securities issued by companies with investment characteristics
such as participation in expanding markets, increasing unit sales volume, growth
in revenues and earnings per share superior to that of the average common stocks
comprising indices such as the Standard & Poor's 500 Composite Price Index ("S&P
500") and increasing return on investment. Dividend income, if any, is a
consideration incidental to the Portfolio's objective of growth of capital.
THE MAINSTAY VP CASH MANAGEMENT PORTFOLIO
The MainStay VP Cash Management Portfolio seeks as high a level of current
income as is consistent with preservation of capital and maintenance of
liquidity. It invests primarily in short-term U.S. Government Securities,
obligations of banks, commercial paper, short-term corporate obligations and
obligations of U.S. and non-U.S. issuers denominated in U.S. dollars. An
investment in the MainStay VP Cash Management Portfolio is neither insured nor
guaranteed by the U.S. Government, and there can be no assurance that the
Portfolio will be able to maintain a stable net asset value of $1.00 per share.
THE MAINSTAY VP CONVERTIBLE PORTFOLIO
The MainStay VP Convertible Portfolio seeks capital appreciation together
with current income. The Portfolio will invest primarily in convertible
securities consisting of bonds, debentures, corporate notes, preferred stocks or
other securities which are convertible into common stocks. Certain of the
Portfolio's investments have speculative characteristics, as further discussed
in the MainStay VP Series Fund prospectus.
THE MAINSTAY VP GOVERNMENT PORTFOLIO
The MainStay VP Government Portfolio seeks a high level of current income,
consistent with safety of principal. It will invest primarily in U.S. Government
securities which include U.S. Treasury obligations and obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities. The U.S.
Government securities purchased for this Portfolio, but not the shares of the
Portfolio themselves, are issued or guaranteed by the U.S. Government or its
agencies or instrumentalities.
THE MAINSTAY VP HIGH YIELD CORPORATE BOND PORTFOLIO
The MainStay VP High Yield Corporate Bond Portfolio seeks maximum current
income through investment in a diversified portfolio of high yield, high risk
debt securities. This Portfolio seeks to achieve its primary objective by
investment in a diversified portfolio of high yield debt securities which are
ordinarily in the lower rating categories of recognized
23
<PAGE> 29
rating agencies that is, rated Baa to B by Moody's Investors Services, Inc.
("Moody's") or BBB to B by Standard & Poor's ("S&P"). Securities rated lower
than Baa by Moody's or BBB by S&P, or, if not rated, of equivalent quality, are
sometimes referred to as "high yield" securities or "junk bonds." The potential
for high yield is accompanied by higher risk. Certain of the Portfolio's
investments have speculative characteristics, as further discussed in the
MainStay VP Series Fund prospectus. Capital appreciation is a secondary
objective which will be sought only when consistent with this Portfolio's
primary objective.
THE MAINSTAY VP INTERNATIONAL EQUITY PORTFOLIO
The MainStay VP International Equity Portfolio seeks long-term growth of
capital by investing in a portfolio consisting primarily of non-U.S. equity
securities. Current income is a secondary objective. In pursuing its investment
objective, the Portfolio will seek to invest in securities that provide the
potential for strong return but that do not, in MacKay-Shields' judgment,
present undue or imprudent risk. The Portfolio pursues its objectives by
investing its assets in a diversified portfolio of common stocks, preferred
stocks, warrants and comparable equity securities. Foreign investing involves
certain risks which are discussed in greater detail in the MainStay VP Series
Fund prospectus.
THE MAINSTAY VP TOTAL RETURN PORTFOLIO
The MainStay VP Total Return Portfolio seeks to realize current income
consistent with reasonable opportunity for future growth of capital and income.
The Portfolio maintains a flexible approach by investing in a broad range of
securities, which may be diversified by company, by industry and by type. The
Portfolio may invest in common stocks, convertible securities, warrants and
fixed-income securities, such as bonds, preferred stocks and other debt
obligations, including money market instruments.
THE MAINSTAY VP VALUE PORTFOLIO
The MainStay VP Value Portfolio seeks maximum long-term total return from a
combination of capital growth and income. It seeks to achieve this objective by
following flexible investment policies emphasizing investment in common stocks
which are, in the opinion of MacKay-Shields, undervalued at the time of
purchase. This Portfolio will normally invest in dividend-paying common stocks
that are listed on a national securities exchange or traded in the
over-the-counter market, but may also invest in non-dividend paying stocks in
accordance with MacKay-Shields' judgment.
THE MAINSTAY VP BOND PORTFOLIO
The MainStay VP Bond Portfolio seeks the highest income over the long-term
consistent with preservation of principal. It will invest primarily in
fixed-income debt securities of an investment grade, but may also invest in
lower-rated securities, convertible debt, and preferred and convertible
preferred stock.
THE MAINSTAY VP GROWTH EQUITY PORTFOLIO
The MainStay VP Growth Equity Portfolio seeks long-term growth of capital,
with income as a secondary consideration. It will invest principally in common
stock (and securities convertible into, or with rights to purchase, common
stock) of well-established, well-managed companies which appear to have better
than average growth potential.
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<PAGE> 30
THE MAINSTAY VP INDEXED EQUITY PORTFOLIO
The MainStay VP Indexed Equity Portfolio seeks to provide investment
results that correspond to the total return performance (reflecting reinvestment
of dividends) of common stocks in the aggregate, as represented by the S&P 500.
Using a full replication method, the Portfolio invests in all 500 stocks in the
S&P 500 in the same proportion as their representation in the S&P 500. The S&P
500 is an unmanaged index considered representative of the U.S. stock market.
The MainStay VP Indexed Equity Portfolio is neither sponsored by or affiliated
with the S&P 500.
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
Alger American Small Capitalization Portfolio seeks long-term capital
appreciation. Except during temporary defensive periods, the Portfolio invests
at least 65% of its total assets in equity securities of companies that, at the
time of purchase of the securities, have total market capitalization within the
range of companies included in the Russell 2000 Growth Index or the S&P Small
Cap 600 Index, updated quarterly. Both indexes are broad indexes of small
capitalization stocks. The Portfolio may invest up to 35% of its total assets in
equity securities of companies that, at the time of purchase, have total market
capitalization outside this combined range and in excess of that amount (up to
100% of its assets) during temporary defensive periods.
THE CALVERT SOCIALLY RESPONSIBLE PORTFOLIO
The Calvert Socially Responsible Portfolio seeks to achieve a total return
above the rate of inflation through an actively managed nondiversified portfolio
of common and preferred stocks, bonds and money market instruments that offer
income and capital growth opportunity and that satisfy the social concern
criteria established for this Portfolio.
THE FIDELITY VIP II: CONTRAFUND PORTFOLIO
The Fidelity VIP II: Contrafund Portfolio seeks long-term capital
appreciation. The Portfolio will normally invest in common stock or securities
convertible into common stock of companies believed to be undervalued due to an
overly pessimistic appraisal by the public. This Portfolio also has the
flexibility to invest in any type of security that may produce capital
appreciation.
THE FIDELITY VIP: EQUITY-INCOME PORTFOLIO
The Fidelity VIP: Equity-Income Portfolio seeks reasonable income by
investing primarily in income producing equity securities. Its goal is to
achieve a yield in excess of the composite yield of the S&P 500. At least 65% of
this Portfolio will be invested in income producing common or preferred stock.
The remainder will normally be invested in convertible and non-convertible debt
obligations.
THE JANUS ASPEN BALANCED PORTFOLIO
The Janus Aspen Balanced Portfolio seeks long-term capital growth,
consistent with preservation of capital and balanced by current income. It is a
diversified Portfolio that, under normal circumstances, pursues its objective by
investing 40 to 60% of its assets in securities selected primarily for their
growth potential and 40 to 60% of its assets in securities selected primarily
for their income potential. The Portfolio normally invests at
25
<PAGE> 31
least 25% of its assets in fixed-income senior securities, which include debt
securities and preferred stock.
THE JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
The Janus Aspen Worldwide Growth Portfolio seeks long-term growth of
capital in a manner consistent with the preservation of capital. It invests in a
diversified portfolio of common stocks of foreign and domestic issuers. The
Portfolio has the flexibility to invest on a worldwide basis in companies and
organizations of any size, regardless of country of organization or place of
principal business activity. The Portfolio normally invests in issuers from at
least five different countries, including the United States. The Portfolio may
at times invest in fewer than five countries or even in a single country.
THE MORGAN STANLEY EMERGING MARKETS EQUITY PORTFOLIO
The Morgan Stanley Emerging Markets Equity Portfolio seeks long-term
capital appreciation by investing primarily in common and preferred stocks,
convertible securities, rights and warrants to purchase common stocks, sponsored
and unsponsored ADR's and other equity securities of emerging market country
issuers. Under normal circumstances, at least 65% of the Portfolio's total
assets will be invested in emerging market countries in which the Portfolio's
investment adviser believes the economies are developing strongly and in which
the markets are becoming more sophisticated.
THERE IS NO ASSURANCE THAT ANY OF THE ELIGIBLE PORTFOLIOS WILL ATTAIN THEIR
RESPECTIVE STATED OBJECTIVES.
Additional information concerning the investment objectives and policies of
the Eligible Portfolios and the investment advisory services and charges can be
found in the current prospectus for the relevant Fund, each of which is attached
to this Prospectus. The Funds' prospectuses should be read carefully before any
decision is made concerning the allocation of Premiums to an Investment Division
corresponding to a particular Eligible Portfolio.
The Funds' shares may also be available to certain separate accounts
funding variable annuity policies offered by NYLIAC. This is called "mixed
funding." Shares of The Alger American Fund, the Acacia Fund, the Fidelity
Funds, the Janus Fund and the Morgan Stanley Fund may also be available to
separate accounts of insurance companies unaffiliated with NYLIAC and, in
certain instances, to qualified plans. This is called "shared funding." Although
we do not anticipate any inherent difficulties arising from mixed and shared
funding, it is theoretically possible that, due to differences in tax treatment
or other considerations, the interests of owners of various contracts
participating in the Funds might at some time be in conflict. The Board of
Directors/Trustees of each Fund, each Fund's investment advisers, and NYLIAC are
required to monitor events to identify any material conflicts that arise from
the use of the Funds for mixed and shared funding. For more information about
the risks of mixed and shared funding please refer to the relevant Fund
prospectus.
ADDITIONS, DELETIONS OR SUBSTITUTIONS OF INVESTMENTS
NYLIAC retains the right, subject to any applicable law, to make additions
to, deletions from, or substitutions for, the Eligible Portfolio shares held by
any Investment Division. NYLIAC reserves the right to eliminate the shares of
any of the Eligible Portfolios and to
26
<PAGE> 32
substitute shares of another portfolio of a Fund, or of another registered
open-end management investment company, if the shares of the Eligible Portfolios
are no longer available for investment or, if in NYLIAC's judgment, investment
in any Eligible Portfolio would become inappropriate in view of the purposes of
the Separate Accounts. To the extent required by the Investment Company Act of
1940, substitutions of shares attributable to a Policyowner's interest in an
Investment Division will not be made until the Policyowner has been notified of
the change.
Nothing contained herein shall prevent the Separate Accounts from
purchasing other securities for other series or classes of policies, or from
effecting a conversion between series or classes of policies on the basis of
requests made by Policyowners.
Each of the Separate Accounts currently has eighteen Investment Divisions
which invest Premiums solely in the corresponding Eligible Portfolios of the
Funds. NYLIAC may also establish additional Investment Divisions for each of the
Separate Accounts. Each additional Investment Division will purchase shares in a
new portfolio of a Fund or in another mutual fund. New Investment Divisions may
be established when, in the sole discretion of NYLIAC, marketing, tax,
investment or other conditions so warrant. Any new Investment Divisions will be
made available to existing Policyowners on a basis to be determined by NYLIAC.
NYLIAC may also eliminate one or more Investment Divisions, if, in its sole
discretion, marketing, tax, investment or other conditions warrant.
In the event of any such substitution or change, NYLIAC may, by appropriate
endorsement, make such changes in the Policies as may be necessary or
appropriate to reflect such substitution or change. If deemed to be in the best
interests of persons having voting rights under the Policies, the Separate
Accounts may be operated as management companies under the Investment Company
Act of 1940, may be deregistered under such Act in the event such registration
is no longer required, or may be combined with one or more other separate
accounts.
REINVESTMENT
All dividends and capital gain distributions from Eligible Portfolios are
automatically reinvested in shares of the distributing Portfolio at their net
asset value on the payable date.
GENERAL PROVISIONS OF THE POLICY
This section of the Prospectus describes the general provisions of the
Policy, and is subject to the terms of the Policy. You may review a copy of the
Policy upon request.
PREMIUMS
The Policyowner may allocate a portion of each Premium to one or more
Investment Divisions or the Fixed Account. The Policyowner may currently
maintain Accumulation Value in any number of Allocation Alternatives. The
Policyowner selects a Premium payment schedule in the Application and is not
bound by an inflexible Premium schedule. Two premium concepts are very important
under the Policy: scheduled Premiums and unscheduled Premiums.
SCHEDULED PREMIUMS
The amount of the scheduled Premium is shown on the Policy Data Page.
27
<PAGE> 33
UNSCHEDULED PREMIUMS
While the Insured is living, you may make unscheduled Premium payments at
any time prior to the Policy Anniversary on which the Insured is age 95. Any
unscheduled Premium must equal at least $50. However, in no event may the
Premium be an amount which would jeopardize the Policy continuing to qualify as
"life insurance," as defined under Section 7702 of the IRC. Unscheduled Premiums
also include the proceeds of an exchange made in accordance with Section 1035 of
the IRC. If an unscheduled Premium would result in an increase in the life
insurance benefit greater than the increase in the Cash Value, we reserve the
right to require proof of insurability before accepting that payment and
applying it to the Policy. We also reserve the right to limit the number and
amount of any unscheduled Premiums. In certain states, including New York and
New Jersey, unscheduled Premiums may be made once each Policy Year.
There is no penalty if the scheduled Premium is not paid, nor does payment
of this amount guarantee coverage for any period of time. Instead, the duration
of the Policy depends upon the Policy's Cash Surrender Value. Even if scheduled
Premiums are paid, the Policy terminates when the Cash Surrender Value becomes
insufficient to pay certain monthly charges and a grace period expires without
sufficient payment. For details see TERMINATION below.
MINIMUM AND MAXIMUM PREMIUM PAYMENTS
While the Policy is in force, Premiums may be paid at any time while the
Insured is living and before the Policy Anniversary on which the Insured is age
95, subject to certain restrictions on scheduled and unscheduled Premiums
described above. The minimum unscheduled Premium payment is $50.00. Premiums
should be sent to our Principal Office or to the address indicated for payment
on the notice.
TERMINATION
The Policy does not terminate for failure to pay Premiums since payments,
other than the initial Premium, are not specifically required. Rather, if on a
Monthly Deduction Day, the Cash Surrender Value is less than the Monthly
Deduction Charge for the next policy month, the Policy will continue for a late
period of 62 days after that Monthly Deduction Day.
LATE PERIOD
We allow 62 days to pay any Premium necessary to cover the overdue monthly
deduction and/or excess Policy loan. NYLIAC will mail a notice to you at your
last known address, and a copy to the last known assignee on our records, if
any, at least 31 days before the end of the late period which sets forth this
amount. During the late period, the Policy remains in force. If we do not
receive the required payment before the end of the late period, the Policy will
end and there will be no Cash Value or life insurance benefit. If the Insured
dies during the late period, we will pay the Death Benefit. However, these
proceeds will be reduced by the amount of any unpaid loan and accrued interest
and Monthly Deduction Charges for the full policy month or months that run from
the beginning of the late period through the policy month in which the Insured
dies.
MATURITY DATE
For all Policies issued in New Jersey and for Policies issued on or after
May 1, 1995 in all other states, a Policy matures beginning on the anniversary
on which the Insured is age
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<PAGE> 34
95 and the face amount of the Policy, as shown on the Policy Data Page, will no
longer apply. Instead, the life insurance benefit under the Policy will equal
the Cash Value of the Policy, less surrender charges and outstanding Policy
Debt. The Owner will be notified one year prior to maturity that, upon reaching
attained age 95, the Owner may elect either to receive the Cash Value of the
Policy at such time or to continue to hold the Policy. Please consult your tax
adviser regarding the tax implications of these options. If the Policy is held,
the Policy's Accumulation Value will be transferred to the Fixed Account and the
Owners will receive interest payments at an effective guaranteed annual rate of
not less than 4%. No further monthly deductions will be made for cost of
insurance. You may surrender the Policy for an amount equal to the Cash Value of
the Policy by presenting to NYLIAC's Principal Office a signed written request
providing such information as is requested by NYLIAC. NYLIAC will deduct any
unpaid loan and accrued interest from such proceeds. (In New York, when the
Insured reaches attained age 100, the Owner will automatically receive the Cash
Value of the Policy.) If the Policy is still in force upon the death of the
Insured, these proceeds will be paid to the Beneficiary.
Any insurance on an Other Covered Insured, provided by a rider attached to
the Policy, which is still in effect will end on the Policy Anniversary when the
Insured under a Policy is age 95. However, if an Other Covered Insured is
younger than age 70 when the rider ends, that insured can convert the term
insurance at that time as provided in the rider.
DOLLAR COST AVERAGING
Dollar Cost Averaging is a systematic method of investing in which
securities are purchased at regular intervals in fixed dollar amounts so that
the cost of securities is averaged over time and over various market cycles. The
Policyowner may specify, prior to termination of the Policy, a specific dollar
amount to be transferred from any Investment Division to any combination of
Investment Divisions and the Fixed Account. The Policyowner will specify the
Investment Division to transfer money from, the Investment Divisions and/or
Fixed Account to transfer money to, the amounts to be transferred, the date on
which transfers will be made, subject to our rules, and the frequency of the
transfers, either monthly, quarterly, semi-annually or annually. This process is
called Dollar Cost Averaging. Dollar Cost Averaging transfers are not available
from the Fixed Account, but these transfers may be made into the Fixed Account.
A minimum of $100 must change divisions (for each Investment Division and the
Fixed Account) with each transfer. The minimum Cash Value required to elect this
option is $5,000.
The main objective of Dollar Cost Averaging is to achieve an average cost
per share that is lower than the average price per share in a fluctuating
market. Since the same dollar amount is transferred to a division with each
transfer, more units are purchased in a division if the value per unit is low
and fewer units are purchased if the value per unit is high. Therefore, a lower
than average cost per unit will be achieved if prices fluctuate over the long
term. Similarly, for each transfer out of an Investment Division, more units are
sold in an Investment Division if the value per unit is low and fewer units are
sold if the value per unit is high. Dollar Cost Averaging does not assure a
profit or protect against a loss in declining markets.
NYLIAC will make all Dollar Cost Averaging transfers on the day of each
calendar month specified by the Policyowner, or on the next Business Day. The
Policyowner may specify any day of the month with the exception of the 29th,
30th or 31st of a month. In
29
<PAGE> 35
order to process a Dollar Cost Averaging transfer, NYLIAC must have received a
request in writing to NYLIAC's Principal Office no later than one week prior to
the date Dollar Cost Averaging transfers are to commence.
The Dollar Cost Averaging option may be canceled at any time by the
Policyowner in a written request or by NYLIAC automatically if the Cash Value is
less than $5,000. The Dollar Cost Averaging option may not be elected if a
Policyowner has selected the Automatic Asset Reallocation option.
AUTOMATIC ASSET REALLOCATION
Selection of this option allows an Owner to maintain the percentage of the
Owner's Accumulation Value allocated to each Investment Division at a pre-set
level. For example, an Owner might specify that 50% of the Accumulation Value of
a Policy be allocated to the MainStay VP Growth Equity Investment Division and
50% of the Accumulation Value be allocated to the MainStay VP Bond Investment
Division. Over time, the variations in each such Investment Division's
investment results will shift this balance. If you elect this reallocation
option, NYLIAC will automatically transfer your Accumulation Value back to the
percentages you specify. You may choose to have reallocations made quarterly,
semi-annually or annually. NYLIAC will process Automatic Asset Reallocations of
less than $500. The minimum Accumulation Value required to elect this option is
$5,000; thereafter, you must maintain a minimum Accumulation Value of $4,500 in
order to have subsequent reallocations under this option. There is no minimum
amount which you must allocate among the Investment Divisions pursuant to this
option.
The Automatic Asset Reallocation option may be canceled at any time by the
Policyowner in a written request to NYLIAC's Principal Office or by NYLIAC
automatically if the Cash Value is less than $4,500. The Automatic Asset
Reallocation option may not be elected if a Policyowner has selected the Dollar
Cost Averaging option.
DEATH BENEFIT UNDER THE POLICY
The Death Benefit is the amount payable to the named Beneficiary when the
Insured dies. Upon receiving due proof of death, we pay the Beneficiary the
Death Benefit amount determined as of the date the Insured dies. All or part of
the benefit can be paid in cash or applied under one or more of our payment
options described under ADDITIONAL PROVISIONS OF THE POLICY--Payment Options at
page 48.
The amount of the Death Benefit is determined by whether you have chosen
Life Insurance Benefit Option 1 or Life Insurance Benefit Option 2. See "Life
Insurance Benefit Options" under DEFINITION OF TERMS at page 5. Added to the
amount determined by the selected Life Insurance Benefit Option is the value of
any additional benefits provided by rider. We pay interest on the Death Benefit
from the date of death to the date the Death Benefit is paid or a payment option
becomes effective. The interest rate equals the rate determined under the
Interest Payment Option as described in ADDITIONAL PROVISIONS OF THE
POLICY--Payment Options. We subtract any outstanding Policy Debt, and any unpaid
monthly deductions if the death occurs during the 62-day late Period and then
credit the interest. Under both Life Insurance Benefit Options, negative
investment experience in the Investment Divisions will never result in a Death
Benefit that will be less than the face amount, so long as the Policy remains in
force.
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<PAGE> 36
EXAMPLE
The following example shows how the Death Benefit varies as a result of
investment performance on a Policy with Life Insurance Benefit Option 1 assuming
age at death is 45:
<TABLE>
<CAPTION>
POLICY A POLICY B
--------- ---------
<S> <C> <C>
Face amount........................................... $ 100,000 $ 100,000
Cash Value on Date of Death........................... $ 50,000 $ 40,000
IRC Section 7702 Life Insurance Percentage On Date of
Death............................................... 215% 215%
</TABLE>
For Policy A, the Death Benefit would equal $107,500 which is the greater
of the $100,000 face amount or the Cash Value times the IRC Section 7702 Life
Insurance Percentage. For Policy B, the Death Benefit would equal the $100,000
face amount.
FACE AMOUNT CHANGES
Certain states may impose limitations on increasing or decreasing the face
amount of your Policy. Refer to your Policy for details. You can apply in
writing to have the face amount increased or decreased. An increase in coverage
must be for at least $5,000 and, in some states, is subject to NYLIAC's maximum
retention limits. Evidence of insurability must be submitted with the
application. A surrender charge may be imposed on decreases in face amount. The
Insured may not be older than age 90 as of the date of any increase in face
amount.
You can change the Life Insurance Benefit Option of the Policy. Any change
of option will take effect on the Monthly Deduction Day on or after the date we
receive your signed request at our Principal Office or such other location that
we indicate to you in writing. If you change from Option 1 to Option 2, the face
amount of the Policy will be decreased by the Cash Value. A surrender charge
will be assessed in that event if a surrender charge is then currently
applicable. If you change from Option 2 to Option 1, the face amount of the
Policy will be increased by the Cash Value. A new schedule of surrender charges
will apply to the increase.
Increases in face amount may be applied for and, in some states, are
subject to NYLIAC's maximum retention limits. The minimum amount of any increase
is $5,000. Evidence of insurability satisfactory to us is required for an
increase. We reserve the right to limit increases, and the number of increases
may be limited by state law. Any increase will take effect on the next Monthly
Deduction Day on or after we approve the application for increase. An increase
in face amount may affect the net amount at risk which may affect a
Policyowner's cost of insurance charge. Face amount increases incur new 15 year
surrender charge periods on the amount of the increase.
Decreases in coverage are allowed. The face amount will be reduced by
canceling insurance segments on a last purchased, first canceled basis and the
appropriate surrender charge will be deducted from the Cash Value. (For a
discussion of the charges associated with a decrease, see SURRENDER CHARGES at
page 18.) Consult your tax adviser regarding the tax consequences of decreasing
your coverage. A decrease in face amount is effective on the next Monthly
Deduction Day following the receipt of a written request. The face amount may
not be decreased to less than $50,000. We reserve the right to terminate the
option of decreasing the face amount, and the number of decreases may be limited
by state law.
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<PAGE> 37
CASH VALUE AND CASH SURRENDER VALUE
CASH VALUE
The Cash Value of the Policy is the amount provided for investment in the
Separate Accounts and the Fixed Account. The Cash Value of the Policy is held in
one or more Investment Divisions of the Separate Accounts and the Fixed Account.
Initially, this value equals the net amount of the first Premium paid under the
Policy. This amount is allocated among the Fixed Account and the Investment
Divisions according to the allocation percentages requested in the Application,
or as subsequently changed by the Policyowner.
All or part of the Cash Value may be transferred among Investment
Divisions. Amounts may be transferred between Investment Divisions of the same
Separate Account or to the Fixed Account. We reserve the right to limit the
number of transfers to the Fixed Account after the first two Policy Years. (In
New Jersey and New York, no more than twelve transfers per Policy Year may be
made from the Investment Divisions to the Fixed Account after the first two
Policy Years.) The minimum value of Accumulation Units that may be transferred
from one Investment Division to another Investment Division within the Separate
Accounts, or to the Fixed Account, is the lesser of (i) $500 or (ii) the total
value of the Accumulation Units in the Investment Division. The value of the
remaining Accumulation Units in the Investment Division or the Fixed Account
Value must equal at least $500. If, after an ordered transfer, the value of the
remaining Accumulation Units in an Investment Division or the Fixed Account
Value would be less than $500, the entire value will be transferred. There is no
charge for the first twelve transfers in any one Policy Year. NYLIAC reserves
the right to charge $30 for each transfer in excess of twelve per year.
Transfers may also be made from the Fixed Account to the Investment
Divisions in certain situations. (See THE FIXED ACCOUNT at page 39.)
Transfer requests must be in writing on a form approved by NYLIAC or by
telephone in accordance with established procedures. (Telephone transfers are
not permitted in New York.) Transfers from Investment Divisions will be made
based on the Accumulation Unit values at the end of the Valuation Period during
which NYLIAC receives the transfer request. (See WHEN WE PAY PROCEEDS at page
50.)
INVESTMENT RETURN
The investment return of a Policy is based on:
-- The Accumulation Units held in each Investment Division of the Separate
Accounts for that Policy,
-- The investment experience of each Investment Division as measured by its
actual net rate of return, and
-- The interest rate credited on Cash Values held in the Fixed Account.
The investment experience of an Investment Division of the Separate
Accounts reflects increases or decreases in the net asset value of the shares of
the underlying Fund, any dividend or capital gains distributions declared by the
Fund, and any charges against the assets of the Investment Division. This
investment experience is determined each day on which the net asset value of the
underlying Fund is determined that is, on each Valuation Date. The actual net
rate of return for a Investment Division measures the investment experience from
the end of one Valuation Date to the end of the next Valuation Date.
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<PAGE> 38
CASH SURRENDER VALUE
The Policy may be surrendered for its Cash Surrender Value at any time
before the Insured dies. Unless a later effective date is selected, the
Surrender is effective on the date we receive the Policy and a written request
in proper form at our Principal Office. The Policy and written request for
Surrender are deemed received on the date on which they are received by mail at
NYLIAC's Principal Office or such other location that we indicate to you in
writing. If, however, the date on which they are received is not a Valuation
Date, or if they are received other than through the mail after the closing of
the New York Stock Exchange, they are deemed received on the next Valuation
Date. The Cash Surrender Value is the Cash Value less any surrender charges, any
deferred contract charges and outstanding Policy Debt.
Since the Cash Value of the Policy fluctuates with the performance of the
Investment Divisions and the interest rate earned by the Fixed Account, and
because certain Surrenders or Partial Withdrawals are subject to a surrender
charge, the total amount paid upon Surrender of the Policy (taking into account
any prior withdrawals) may be more or less than the total Premiums.
PARTIAL WITHDRAWALS
The Policyowner may make a Partial Withdrawal or Surrender the Policy to
receive part or all of the Policy's Cash Surrender Value, at any time while the
Insured is living. The minimum Partial Withdrawal is $500, unless NYLIAC agrees
otherwise. Uniform rules will be applied in agreeing to Partial Withdrawals
under $500. The amount available for a Partial Withdrawal is the Policy's Cash
Value at the end of the valuation period during which the written request for
the Partial Withdrawal is received at NYLIAC's Principal Office, less any
surrender charges and any deferred contract charge and Policy Debt. The Partial
Withdrawal will be made on a pro-rata basis from the Fixed Account and/or
Investment Divisions, unless you indicate otherwise. If the portion of your
request for a Partial Withdrawal from the Fixed Account or Investment Division
is greater than the amount in the Fixed Account and/or Investment Division, we
will reduce the Partial Withdrawal by that amount and pay you the entire value
of that Fixed Account and/or Investment Division, less any surrender charge
which may apply. Partial Withdrawals will cause a reduction in the Policy's face
amount when Life Insurance Benefit Option 1 is in effect. NYLIAC reserves the
right to limit the amount and frequency of Partial Withdrawals, and state law
limitations may also apply. Partial Withdrawals and Surrenders may be subject to
surrender charges. For details see CHARGES UNDER THE POLICY at page 13.
NYLIAC may charge a fee, not to exceed the lesser of $25 or 2% of the
amount withdrawn, for processing a Partial Withdrawal. This fee will be deducted
from the remaining balance of the Fixed Account and/or Investment Divisions
based on the withdrawal allocation, or if the fee amount exceeds the remaining
balance, it will be deducted from the Fixed Account and/or Investment Divisions
on a pro rata basis. When you make a Partial Withdrawal, the life insurance
benefit, the Cash Value, and the Cash Surrender Value will be reduced by the
amount of the withdrawal proceeds you receive as of the date you receive the
payment and any applicable surrender charge.
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<PAGE> 39
POLICY LOAN PRIVILEGE
Using the Policy as sole security, you can borrow any amount up to the loan
value of the Policy. The loan value on any given date is equal to 90% of the
Cash Value less any applicable surrender charges, less any deferred contract
charge and less any Policy Debt. Certain of the provisions discussed below,
applicable to Policy loans, differ considerably in the state of New Jersey. New
Jersey Policyowners should review their Policy for further details.
SOURCE OF LOAN
When a loan is requested, an amount necessary to increase the Fixed Account
Value to 108% of the new loan amount, less the excess of the Accumulation Value
of the Fixed Account over any outstanding Policy loan, is transferred from the
Separate Accounts to the Fixed Account. This transfer will be made on a pro-rata
basis from the various Investment Divisions. While a Policy loan is outstanding,
no Partial Withdrawals or transfers which would reduce the Accumulation Value of
the Fixed Account below 108% of the outstanding loan are permitted. However,
monthly deductions, such as the cost of insurance charge, may reduce the Fixed
Account below the 108% threshold.
LOAN INTEREST
The effective annual loan interest rate is 8%, which is payable in arrears.
We reserve the right to set a lower rate which we will determine at least once
every twelve months, but not more frequently than once in any three month
period. Loan interest for the Policy Year in which a loan is taken will be due
on the next Policy Anniversary. Loan interest accrues each day and is payable on
the Policy Anniversary, on the date of death, Surrender, or lapse, or on the
date of a loan increase or loan repayment. Loan interest not paid in cash as of
the Policy Anniversary, or prior to the expiration of the late period, will be
charged as a new loan. An amount may need to be transferred to the Fixed Account
to cover this increased loan amount.
If the loan interest rate is lower than 8% per year, any subsequent
increase in the interest rate will be subject to the following conditions:
(1) The effective date of any increase in the interest rate shall not
be earlier than one year after the effective date of the establishment of
the previous rate.
(2) The amount by which the interest rate may be increased will not
exceed one percent per year, but the rate of interest shall in no event
ever exceed 8%.
(3) We will give notice of the interest rate in effect when a loan is
made and when sending notice of loan interest due.
(4) If a loan is outstanding 40 days or more before the effective date
of an increase in the interest rate, we will notify you of that increase at
least 30 days prior to the effective date of the increase.
(5) We will give notice of any increase in the interest rate when a
loan is made during the 40 days before the effective date of the increase.
REPAYMENT
All or part of an unpaid loan can be repaid before the Insured's death or
before the Policy is surrendered. Loan repayments are allocated to the
Investment Divisions and/or the Fixed Account in accordance with premium
allocations in effect at the time of the loan
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<PAGE> 40
repayment, unless you indicate otherwise. If a loan is outstanding when the life
insurance or surrender proceeds become payable, we will deduct the amount of any
Policy Debt from these proceeds. In addition, it may happen in a given Policy
Year that, based on the loan interest rate in effect when that year began
(ignoring any subsequent increase in the rate during that year), an unpaid loan
and accrued interest exceeds the Cash Value of the Policy, less any applicable
surrender charges and any deferred contract charge. In that event, we will mail
a notice to you at your last known address, and a copy to the last known
assignee on our records, if any. All insurance will end 31 days after the date
on which we mail that notice to you if the excess amount is not paid within that
31 days.
INTEREST ON LOANED VALUE
Any loaned amount is held in the Fixed Account and earns interest at a rate
determined by NYLIAC, which will never be less than 2% less than the effective
annual loan interest rate and in no event less than 4%.
As long as a loan is outstanding, that portion of the Policy's Cash Value
held in the Fixed Account is not affected by the Separate Account's investment
performance. The Cash Value is also affected because the portion of the Cash
Value equal to the Policy loan is credited with an interest rate declared by
NYLIAC rather than a rate of return reflecting the investment performance of the
Separate Accounts. Any interest credited on the loan amount in the Fixed Account
remains in the Fixed Account unless the Policyowner transfers amounts no longer
needed as security to the Separate Accounts.
FREE LOOK PROVISION
The Policy contains a provision which permits cancellation by returning it
to us, or to the registered representative through whom it was purchased within
20 days (or the amount of time required by state law but not less than 10 days)
after the Policyowner receives it. The Policyowner may cancel increases in the
face amount under the same time limitations. Premiums will be allocated to the
MainStay VP Cash Management Division until 20 days (10 days in New York) after
the Issue Date. (In the District of Columbia, when the Policy is issued, the
Premium is allocated entirely to the MainStay VP Cash Management Investment
Division. On the later of 20 days after the Policy is delivered or 45 days after
the application is executed, the Net Premium is allocated according to the
Policyowner's instructions.) Upon cancellation, the Policyowner will then
receive from us the greater of the Policy's Cash Value as of the date the Policy
is returned or the Premiums paid, less loans and Partial Withdrawals. For
canceled increases in the face amount, the refund equals the amount of Premiums
that are in excess of scheduled premiums which are allocated to the increase in
accordance with the surrender charge provision, less any portion of such amount
previously paid to the Policyowner.
EXCHANGE PRIVILEGE
At any time within 24 months of the Issue Date or after an increase in the
face amount of the Policy, the Policyowner may request that the entire
Accumulation Value of the Policy be transferred to the Fixed Account to acquire
fixed benefit life insurance protection on the life of the Insured; provided,
however, that the Owner may request such a transfer within 24 months after an
increase in the face amount of the Policy solely with respect to the lesser of
that portion of the post-increase Premiums attributable to the increase in the
face
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<PAGE> 41
amount of the Policy or the Accumulation Value under the Policy. The exchange
will become effective when NYLIAC receives proper written request.
At any time within 24 months of the Issue Date, the Policyowner may
exchange the Policy for a Policy on a permanent plan of life insurance which we
are offering for this purpose. NYLIAC will not require evidence of insurability.
The date of exchange will be the later of (a) the date you send us the Policy
along with a proper written request; or (b) the date we receive at our Principal
Office or such other location that we indicate to you in writing, the necessary
payment for the exchange. Upon an exchange of a Policy, all riders and benefits
will end unless we agree otherwise or unless required under state law. The
endorsed policy will have the same Issue Date, issue age and risk classification
as the original Policy. In order to exchange the Policy, we will require: (a)
that the Policy be in effect on the date of exchange; (b) repayment of any
unpaid loan plus accrued interest; and (c) an adjustment, if any, for Premiums
and Cash Values of the Policy and any new policy.
SPECIAL NEW YORK REQUIREMENTS. In the event of a material change in the
investment policy of any Portfolio, you have the option of converting your
Policy within 60 days after the effective date of such change or the date you
receive notification of such change, whichever is later. You may elect to
convert your Policy, without providing evidence of insurability to NYLIAC, to a
new flexible premium life insurance policy, for an amount of insurance not to
exceed the amount of Death Benefit under the original Policy, on the date of
conversion. The new policy will be based on the same issue age, sex and class of
risk as your original Policy, but will not offer variable investment options
such as the Investment Divisions. All riders attached to your original Policy
will end on the date of any such conversion.
YOUR VOTING RIGHTS
The Funds are not required to hold routine annual stockholder meetings.
Each Fund's Board of Directors/Trustees has decided not to hold routine annual
stockholder meetings. Special stockholder meetings will be called when
necessary. Not holding routine annual meetings will result in Policyowners
having a lesser role in governing the business of the Funds.
To the extent required by law, the Eligible Portfolio shares held in the
Separate Accounts will be voted by NYLIAC at special shareholder meetings of the
Funds in accordance with instructions received from persons having voting
interests in the corresponding Investment Division. If, however, the Investment
Company Act of 1940 or any regulation thereunder should change, and as a result,
NYLIAC determines that it is allowed to vote the Eligible Portfolio shares in
its own right, NYLIAC may elect to do so.
The number of votes which are available to a Policyowner will be calculated
separately for each Investment Division of the Separate Accounts. That number
will be determined by applying his or her percentage interest, if any, in a
particular Investment Division to the total number of votes attributable to the
Investment Division.
While a Policy is in force, the Policyowner holds a voting interest in each
Investment Division to which Accumulation Value is allocated. The number of
votes which are available to a Policyowner will be determined by dividing the
Accumulation Value attributable to an Investment Division by the net asset value
per share of the applicable Eligible Portfolios.
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<PAGE> 42
The number of votes of the Eligible Portfolio which are available will be
determined as of the date coincident with the date established by that Portfolio
for determining shareholders eligible to vote at the meeting of the relevant
Fund. Voting instructions will be solicited by written communication prior to
such meeting in accordance with procedures established by the relevant Fund.
Fund shares as to which no timely instructions are received will be voted
in proportion to the voting instructions which are received with respect to all
Policies participating in that Investment Division. Voting instructions to
abstain on any item to be voted upon will be applied on a pro rata basis to
reduce the votes eligible to be cast. Each person having a voting interest in an
Investment Division will receive proxy material, reports and other materials
relating to the appropriate Eligible Portfolio.
OUR RIGHTS
We reserve the right to take certain actions in connection with our
operations and the operations of the Separate Accounts. These actions will be
taken in accordance with applicable laws (including obtaining any required
approval of the SEC and any other required regulatory approvals). If necessary,
we will seek approval by Policyowners.
Specifically, we reserve the right to:
-- Add or remove any Investment Division;
-- Create new separate accounts;
-- Combine the Separate Accounts with one or more other separate accounts;
-- Operate the Separate Accounts as management investment companies under
the 1940 Act or in any other form permitted by law;
-- Deregister the Separate Accounts under the 1940 Act;
-- Manage the Separate Accounts under the direction of a committee or
discharge such committee at any time;
-- Transfer the assets of the Separate Accounts to one or more other
separate accounts; and
-- Restrict or eliminate any of the voting rights of Policyowners or other
persons who have voting rights as to the Separate Accounts.
NYLIAC also reserves the right to change the names of the Separate
Accounts.
We have reserved all rights to the name of New York Life Insurance Company
or any part of it. We may allow the Separate Accounts and other entities to use
our name or part of it, but we may also withdraw this right.
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<PAGE> 43
DIRECTORS AND PRINCIPAL OFFICERS OF NYLIAC
<TABLE>
<S> <C>
DIRECTORS: POSITIONS DURING LAST FIVE YEARS:
Seymour Sternberg......................... Chairman of the Board, Chief Executive
Officer and President of New York Life
from April 1997 to date; President and
Chief Operating Officer of New York Life
from October 1995 to April 1997; Vice
Chairman and President Elect from Febru-
ary 1995 to October 1995; Executive Vice
President prior thereto. President of
NYLIAC from November 1995 to date.
Jay S. Calhoun, III....................... Senior Vice President and Treasurer of
New York Life from March 1997 to date;
Vice President and Treasurer from Novem-
ber 1992 to March 1997; Vice President
and Associate Treasurer from March 1992
to November 1992; Corporate Vice Presi-
dent prior thereto. Vice President and
Treasurer of NYLIAC from January 1993 to
date.
Richard M. Kernan, Jr..................... Executive Vice President and Chief
Investment Officer of New York Life from
March 1991 to date.
Robert D. Rock............................ Senior Vice President in charge of the
Individual Annuity Department of New York
Life from March 1992 to date; Vice
President in charge of the Individual
Annuity Department from November 1991 to
March 1992; Vice President prior thereto.
Senior Vice President of NYLIAC from
April 1992 to date; Vice President prior
thereto.
Frederick J. Sievert...................... Vice Chairman and Executive Vice
President of New York Life from January
1997 to date; Executive Vice President
from February 1995 to December 1996;
Senior Vice President and Chief Financial
Officer--Individual Operations prior
thereto. Executive Vice President of
NYLIAC from November 1995 to date; Senior
Vice President from June 1992 to November
1995.
Stephen N. Steinig........................ Senior Vice President and Chief Actuary
of New York Life from February 1994 to
date; Chief Actuary and Controller prior
thereto. Senior Vice President and Chief
Actuary of NYLIAC from May 1991 to date.
</TABLE>
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<PAGE> 44
<TABLE>
<S> <C>
OFFICERS:
Michael Gallo............................. Senior Vice President in charge of the
Individual Life Department of New York
Life from July 1995 to date; Senior Vice
President--Northeastern Agencies from
February 1994 to July 1995; Vice
President prior thereto. Senior Vice
President of NYLIAC from August 1995 to
date.
Solomon Goldfinger........................ Senior Vice President in charge of
Financial Management of New York Life
from July 1995 to date; Senior Vice
President in charge of the Individual
Life Department from March 1992 to July
1995; Vice President and Actuary in
charge of the Individual Life Department
prior thereto. Senior Vice President of
NYLIAC from April 1992 to date; Vice
President from February 1992 to April
1992; Vice President and Actuary prior
thereto.
Jean E. Hoystradt......................... Senior Vice President in charge of
Investment Department of New York Life
from March 1992 to date; Vice President
prior thereto. Senior Vice President of
NYLIAC from April 1992 to date; Vice
President prior thereto.
Maryann L. Ingenito....................... Vice President of New York Life from
April 1990 to date. Vice President and
Controller (Principal Accounting Officer)
of NYLIAC from December 1994 to date;
Vice President and Assistant Controller
prior thereto.
Frank J. Ollari........................... Senior Vice President in charge of the
Mortgage Finance Department of New York
Life from October 1989 to date. Senior
Vice President of NYLIAC from April 1992
to date; Vice President prior thereto.
</TABLE>
THE FIXED ACCOUNT
The Fixed Account is supported by the assets in NYLIAC's general account,
which includes all of NYLIAC's assets except those assets specifically allocated
to separate accounts. NYLIAC has sole discretion to invest the assets of the
Fixed Account subject to applicable law. An interest in the Fixed Account is not
registered under the Securities Act of 1933, and the Fixed Account is not
registered as an investment company under the Investment Company Act of 1940.
Accordingly neither the Fixed Account nor any interests therein are generally
subject to the provisions of these statutes, and NYLIAC has been advised that
the staff of the SEC has not reviewed the disclosures in this Prospectus
relating to the Fixed Account. These disclosures regarding the Fixed Account
may,
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<PAGE> 45
however, be subject to certain applicable provisions of the Federal securities
laws relating to the accuracy and completeness of statements made in
prospectuses.
INTEREST CREDITING
NYLIAC guarantees that it will credit interest at an effective annual rate
of at least 4% to Premiums or portions of Premiums allocated or transferred to
the Fixed Account under the Policies. NYLIAC may, AT ITS SOLE DISCRETION, credit
a higher rate of interest to the Fixed Account, or to amounts allocated or
transferred to the Fixed Account. The interest rate will be set by NYLIAC and
can change daily. The interest rate may differ for loaned and non-loaned amounts
in the Fixed Account.
TRANSFERS TO INVESTMENT DIVISIONS
Amounts may be transferred from the Fixed Account to the Separate Account
Investment Divisions, subject to the following conditions.
1. Maximum Transfer. An amount not greater than 20% of the Fixed Account
Value at the beginning of the Policy Year may be transferred during that
Policy Year from the Fixed Account to the Investment Divisions.
2. Minimum Transfer. Transfers of at least the minimum amount are
permitted. In New York, the minimum amount that may be transferred from
the Fixed Account to the Investment Divisions is the lesser of (i) $500
or (ii) the Fixed Account Value. In most other states, we will consider
transfers of amounts less than this minimum.
3. Minimum Remaining Value. Additionally, the remaining values in the
Fixed Account must be at least $500. If, after a contemplated transfer,
the remaining values in the Fixed Account would be less than $500, that
amount must be included in the transfer.
NYLIAC reserves the right to limit transfers from the Investment Divisions
to the Fixed Account after the first two Policy Years. In New Jersey and New
York, transfers to the Fixed Account after the first two Policy Years may not be
made more than twelve times per Policy Year. Policyowners should review their
Policy for further details.
Unlimited transfers between Investment Divisions are permitted each Policy
Year, although we reserve the right to impose a charge of $30 per transfer for
each transfer in excess of twelve transfers in any Policy Year. Any transfer
made in connection with the Dollar Cost Averaging and Automatic Asset
Reallocation Options will not count as a transfer toward the twelve transfer
limit.
Transfer requests must be in writing on a form approved by NYLIAC or by
telephone (not available in New York) in accordance with established procedures.
See the Policy for details and a description of the Fixed Account.
PROCEDURES FOR TELEPHONE TRANSFERS
In all states except New York, Policyowners may effect telephone transfers
in two ways. All Policyowners may directly contact a service representative.
Policyowners may also request access to an electronic service known as a Voice
Response Unit (VRU). The VRU will permit the unassisted transfer of monies among
the Investment Divisions and/or the Fixed Account and change of allocation of
future payments. All Policyowners intending
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<PAGE> 46
to conduct telephone transfers through the VRU will be asked to complete a
Telephone Authorization Form.
NYLIAC will undertake reasonable procedures to confirm that instructions
communicated by telephone are genuine. Before a service representative accepts
any request, the caller will be asked for their social security number and
address. All calls will also be recorded. A Personal Identification Number (PIN)
will be assigned to all Policyowners who request VRU access. The PIN is selected
by and known only to the Policyowner. Proper entry of the PIN is required before
any transactions will be allowed through the VRU. Furthermore, all transactions
performed over the VRU, as well as with a service representative, will be
confirmed by NYLIAC through a written letter. Moreover, all VRU transactions
will be assigned a unique confirmation number which will become part of the
Policy's history. NYLIAC is not liable for any loss, cost or expense for action
on telephone instructions which are believed to be genuine in accordance with
these procedures. Telephone transfer requests must be received no later than
4:00 p.m. Eastern Time to assure same-day processing. Requests received after
4:00 p.m. will be processed on the next Business Day.
FEDERAL INCOME TAX CONSIDERATIONS
THE DISCUSSION CONTAINED HEREIN IS GENERAL IN NATURE, IS NOT AN EXHAUSTIVE
DISCUSSION OF ALL TAX QUESTIONS THAT MIGHT ARISE UNDER THE POLICIES, AND IS NOT
INTENDED AS TAX ADVICE. NO ATTEMPT IS MADE TO CONSIDER ANY APPLICABLE STATE OR
OTHER TAX LAWS AND NO REPRESENTATION IS MADE AS TO THE LIKELIHOOD OF
CONTINUATION OF CURRENT FEDERAL INCOME TAX LAWS AND TREASURY REGULATIONS OR OF
CURRENT INTERPRETATIONS OF THE INTERNAL REVENUE SERVICE.
WHILE NYLIAC RESERVES THE RIGHT TO MAKE CHANGES IN THE POLICY TO ASSURE
THAT IT CONTINUES TO QUALIFY AS LIFE INSURANCE FOR TAX PURPOSES, NYLIAC CANNOT
MAKE ANY GUARANTEE REGARDING THE FUTURE TAX TREATMENT OF ANY POLICY. FOR
COMPLETE INFORMATION ON THE IMPACT OF CHANGES WITH RESPECT TO THE POLICY AND
FEDERAL AND STATE CONSIDERATIONS, A QUALIFIED TAX ADVISOR SHOULD BE CONSULTED.
The ultimate effect of federal income taxes on values under the Policy and
on the economic benefit to the Policyowner or Beneficiary depends upon NYLIAC's
tax status, upon the terms of the Policy and upon the tax status of the
individual concerned.
TAX STATUS OF NYLIAC AND THE SEPARATE ACCOUNTS
NYLIAC is taxed as a life insurance company under Subchapter L of the
Internal Revenue Code of 1986 (the "Code"). The Separate Accounts are not
separate taxable entities from NYLIAC and their operations are taken into
account by NYLIAC in determining its income tax liability. All investment income
and realized net capital gains on the assets of the Separate Accounts are
reinvested and taken into account in determining Policy Cash Values and are
automatically applied to increase the book reserves associated with the
Policies. Under existing federal income tax law, neither the investment income
nor any net capital gains of the Separate Accounts, are taxed to NYLIAC to the
extent those items are applied to increase reserves associated with the
Policies.
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<PAGE> 47
CHARGES FOR TAXES
NYLIAC imposes a Federal Tax Charge equal to 1.25% of Premiums received
under the Policy to compensate NYLIAC for the federal income tax liability it
incurs under Section 848 of the Code by reason of its receipt of Premiums under
the Policy. NYLIAC believes that this charge is reasonable in relation to the
increased tax burden it incurs as a result of Section 848. No other charge is
currently made to the Separate Accounts for federal income taxes of NYLIAC that
may be attributable to the Separate Accounts. Periodically, NYLIAC reviews the
appropriateness of charges to the Separate Accounts for NYLIAC's federal income
taxes, and in the future, a charge may be made for federal income taxes incurred
by NYLIAC that are attributable to the Separate Accounts. In addition, depending
on the method of calculating interest on Policy Values allocated to the Fixed
Account (see preceding section), a charge may also be imposed for the Policy's
share of NYLIAC's federal income taxes attributable to the Fixed Account.
Under current laws, NYLIAC may incur state or local taxes (in addition to
premium taxes) in several states. At present, these taxes are not significant.
If there is a material change in applicable state or local tax laws, NYLIAC
reserves the right to charge the Separate Accounts for the portion of such
taxes, if any, attributable to the Separate Accounts.
DIVERSIFICATION STANDARDS AND CONTROL ISSUES
In addition to other requirements imposed by the Code, a Policy will
qualify as life insurance under the Code only if the diversification
requirements of Code Section 817(h) are satisfied by each Separate Account in
which any of the Policy values are held. To assure that each Policy continues to
qualify as life insurance for federal income tax purposes, NYLIAC intends for
each Separate Account to comply with Code Section 817(h) and the Regulations
thereunder. To satisfy these diversification standards, the Regulations
generally require that on the last day of each quarter of a calendar year no
more than 55% of the value of a Separate Account's assets can be represented by
any one investment, no more than 70% can be represented by any two investments,
no more than 80% can be represented by any three investments, and no more than
90% can be represented by any four investments. For purposes of these rules, all
securities of the same issuer generally are treated as a single investment, but
each U.S. Government agency or instrumentality is treated as separate issuer. In
addition a "look-through" rule applies to treat a pro-rata portion of each asset
of each Eligible Portfolio as an asset of each Separate Account holding an
interest in such Portfolio.
With respect to variable life insurance contracts, the general
diversification requirements of Code Section 817(h) are modified to the extent
that any of the assets of the Separate Accounts are direct obligations of the
United States Treasury. Even if such a Separate Account invests only in United
States Treasury Securities it will be treated as adequately diversified under
Code Section 817(h). In addition, for purposes of determining whether its
holdings of assets other than United States Treasury Securities are adequately
diversified, the generally applicable percentage limitations are increased based
on the value of the Separate Accounts' investment in United States Treasury
Securities. Notwithstanding this modification of the general diversification
requirements, however, the investments of the Separate Accounts will be
structured to comply with the general diversification standards because they
serve as an investment vehicle for certain variable annuity contracts which must
comply with the general standards.
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<PAGE> 48
In connection with its issuance of temporary regulations under Code Section
817(h) in 1986, the Treasury Department announced that such temporary
regulations did not provide guidance concerning the extent to which Policyowners
could be permitted to direct their investments to particular divisions of a
separate account and that guidance on this issue would be forthcoming.
Regulations addressing this issue have not yet been issued or proposed, and it
is not clear, at this time, whether such regulations will ever be issued or what
such regulations might provide. If such regulations were to be issued in the
future, it is possible that the Policy might need to be modified to comply with
such regulations. For these reasons, NYLIAC reserves the right to modify the
Policy, as necessary, to prevent the Policyowner from being considered the owner
of the assets of the Separate Accounts.
LIFE INSURANCE STATUS OF POLICY
NYLIAC believes that the Policy meets the statutory definition of life
insurance under Code Section 7702 and that the Policyowner and Beneficiary of
any Policy will receive the same federal income tax treatment as that accorded
to owners and beneficiaries of fixed benefit life insurance policies.
Specifically, the Death Benefit under the Policy will be excludable from the
gross income of the Beneficiary subject to the terms and conditions of Section
101(a)(1) of the Code. Pursuant to Section 101(g) of the Code, amounts received
after December 31, 1996, by the Policyowner may also be excludable from the
Policyowner's gross income when the Insured has a terminal illness. (Death
benefits under a "modified endowment contract" as discussed below are treated in
the same manner as death benefits under life insurance contracts that are not so
classified.)
In addition, unless the Policy is a "modified endowment contract," in which
case the receipt of any loan under the Policy may result in recognition of
income to the Policyowner, the Policyowner will not be deemed to be in
constructive receipt of the Cash Values, including increments thereon, under the
Policy until proceeds of the Policy are received upon a surrender of the Policy
or a Partial Withdrawal.
MODIFIED ENDOWMENT CONTRACT STATUS
A Policy will be a modified endowment contract if it satisfies the
definition of life insurance set out in the Internal Revenue Code, but it either
fails the additional "7-pay test" set forth in Code Section 7702A or was
received in exchange for a modified endowment contract. A Policy will fail the
7-pay test if the accumulated amount paid under the contract at any time during
the first seven contract years exceeds the total premiums that would have been
payable under a policy providing for guaranteed benefits upon the payment of
seven level annual premiums. A Policy received in exchange for a modified
endowment contract will be taxed as a modified endowment contract even if it
would otherwise satisfy the 7-pay test.
While the 7-pay test is generally applied as of the time the Policy is
issued, certain changes in the contractual terms of a Policy will require a
Policy to be retested to determine whether the change has caused the Policy to
become a modified endowment contract. For example, a reduction in death benefits
during the first seven contract years will cause the Policy to be retested as if
it had originally been issued with the reduced death benefit.
In addition, if a "material change" occurs at any time while the Policy is
in force, a new 7-pay test period will start and the Policy will need to be
retested to determine whether it continues to meet the 7-pay test. The term
"material change" generally includes increases in death benefits, but does not
include an increase in death benefits which is attributable to
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<PAGE> 49
the payment of premiums necessary to fund the lowest level of death benefits
payable during the first seven contract years, or which is attributable to the
crediting of interest with respect to such premiums.
Because the Policy provides for flexible Premiums, NYLIAC has instituted
procedures to monitor whether increases in death benefits or additional Premiums
cause either the start of a new seven-year test period or the taxation of
distributions and loans. All additional Premiums will be considered in these
determinations.
If a Policy fails the 7-pay test, all distributions (including loans)
occurring in the year of failure and thereafter will be subject to the rules for
modified endowment contracts. A recapture provision also applies to loans and
distributions that are received in anticipation of failing the 7-pay test. Under
the Code, any distribution or loan made within two years prior to the date that
a Policy fails the 7-pay test is considered to have been made in anticipation of
the failure.
POLICY SURRENDERS AND PARTIAL WITHDRAWALS
Upon a full surrender of a Policy for its Cash Surrender Value the
Policyowner will recognize ordinary income for federal tax purposes to the
extent that the Cash Surrender Value exceeds the investment in the contract (the
total of all Premiums paid but not previously recovered plus any other
consideration paid for the Policy). The tax consequences of a Partial Withdrawal
from a Policy will depend upon whether the Partial Withdrawal results in a
reduction of future benefits under the Policy and whether the Policy is a
modified endowment contract.
If the Policy is not a modified endowment contract, the general rule is
that a Partial Withdrawal from a Policy is taxable only to the extent that it
exceeds the total investment in the contract. An exception to this general rule
applies, however, if a reduction of future benefits occurs during the first 15
years after a Policy is issued and there is a cash distribution associated with
that reduction. In such a case, Code Section 7702(f)(7) overrides the general
rule and prescribes a formula under which the Policyowner may be taxed on all or
a part of the amount distributed. After 15 years, the rule of Code Section
7702(f)(7) no longer applies so that cash distributions from a Policy that is
not a modified endowment contract will not be subject to federal income tax,
except to the extent they exceed the total investment in the contract. NYLIAC
suggests that a Policyowner consult with a tax advisor in advance of a proposed
decrease in face amount or a Partial Withdrawal. In addition, any amounts
distributed under a "modified endowment contract" (including proceeds of any
loan) are taxable to the extent of any accumulated income in the Policy. In
general, the amount which may be subject to tax is the excess of the Cash Value
(both loaned and unloaned) over the previously unrecovered Premiums paid.
Under certain circumstances, a distribution under a modified endowment
contract (including a loan) may be taxable even though it exceeds the amount of
accumulated income in the Policy. This can occur because for purposes of
determining the amount of income received upon a distribution (or loan) from a
modified endowment contract, the Code requires the aggregation of all modified
endowment contracts issued to the same Policyowner by an insurer and its
affiliates within the same calendar year. Therefore, loans and distributions
from any one such Policy are taxable to the extent of the income accumulated in
all the modified endowment contracts required to be so aggregated.
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<PAGE> 50
If any amount is taxable as a distribution of income under a modified
endowment contract (as a result of a policy surrender, a Partial Withdrawal or a
loan), it may also be subject to a 10% penalty tax under Code Section 72(v).
Limited exceptions from the additional penalty tax are available for certain
distributions to individual Policyowners. The penalty tax will not apply to
distributions: (i) that are made on or after the date the taxpayer attains age
59 1/2; or (ii) that are attributable to the taxpayer's becoming disabled; or
(iii) that are part of a series of substantially equal periodic payments (made
not less frequently than annually) made for the life or life expectancy of the
taxpayer.
POLICY LOANS AND INTEREST DEDUCTIONS
NYLIAC also believes that under current law any loan received under the
Policy will be treated as Policy Debt of a Policyowner and that, unless the
Policy is a modified endowment contract, no part of any loan under a Policy will
constitute income to the Policyowner. If the Policy is a modified endowment
contract (see discussion above) loans will be fully taxable to the extent of the
income in the Policy (and in any other contracts with which it must be
aggregated) and could be subject to the additional 10 percent tax.
Code Section 264 imposes stringent limitations on the deduction of interest
paid or accrued on loans in connection with a Policy. In addition, under the
"personal" interest limitation provisions of Code Section 163, no deduction is
allowed for interest on any Policy loan if the proceeds are used for personal
purposes, even if the Policy and loan otherwise meet the requirements of Code
Section 264. The limitations on deductibility of personal interest may not apply
to disallow all or part of the interest expense as a deduction if the loan
proceeds are used for "trade or business" or "investment" purposes. NYLIAC
suggests consultation with a tax advisor for further guidance.
CORPORATE ALTERNATIVE MINIMUM TAX
Ownership of a Policy by a corporation may affect the Policyowner's
exposure to the corporate alternative minimum tax. In determining whether it is
subject to alternative minimum tax a corporate Policyowner must make two
computations. First, the corporation must take into account a portion of the
current year's increase in the "inside build up" or income on the contract in
its corporate-owned policies. Second, the corporation must take into account a
portion of the amount by which the Death Benefits received under any Policy
exceed the sum of (i) the Premiums paid on that Policy in the year of death, and
(ii) the corporation's basis in the Policy (as measured for alternative minimum
tax purposes) as of the end of the corporation's tax year immediately preceding
the year of death.
EXCHANGES OR ASSIGNMENTS OF POLICIES
A change of the Policyowner or the Insured or an exchange or assignment of
a Policy may have significant tax consequences depending on the circumstances.
For example, an assignment or exchange of a Policy may result in taxable income
to the transferring Policyowner. Further, Code Section 101(a) provides, subject
to certain exceptions, that where a Policy has been transferred for value, only
the portion of the Death Benefit which is equal to the total consideration paid
for the Policy may be excluded from gross income. For complete information with
respect to Policy assignments and exchanges, a qualified tax advisor should be
consulted.
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STEP PROGRAM
The Severance Trust Executive Program ("STEP") is an employee welfare
benefit plan that provides severance benefits and life insurance coverage
through a ten-or-more employer trust as described in Section 419A(f)(6) of the
Code. The tax consequences of participating in a STEP trust are uncertain under
current law. There is a reasonable possibility that contributions to the STEP
trust may not be deductible for income tax purposes. Moreover, there is at least
some risk that an employee or owner may be viewed by the Internal Revenue
Service as receiving gross income in the year contributions are made to the STEP
trust. Prospective participants should have their own qualified advisors review
the legal and actuarial opinions applicable to the STEP Program.
OTHER TAX ISSUES
Federal estate and state and local estate, inheritance, and other tax
consequences of ownership or receipt of Policy proceeds depend on the
circumstances of each Policyowner or Beneficiary.
QUALIFIED PLANS
In the future, NYLIAC may make the Policy available to certain
tax-qualified employee benefit plans. The rules governing such use are complex,
and a purchaser should not use the Policy in conjunction with any such qualified
plan until he or she has consulted a competent tax advisor. The Policy may not
be acquired by an Individual Retirement Account (IRA).
WITHHOLDING
Under Section 3405 of the Code, withholding is generally required with
respect to certain taxable distributions under insurance contracts. In the case
of periodic payments (payments made as an annuity or on a similar basis), the
withholding is at graduated rates (as though the payments were employee wages).
With respect to non-periodic distributions, the withholding is at a flat rate of
10%. A Policyowner can elect to have either non-periodic or periodic payments
made without withholding except where the Policyowner's tax identification
number has not been furnished to NYLIAC or the Internal Revenue Service has
notified NYLIAC that the tax identification number furnished by the Policyowner
is incorrect.
ADDITIONAL PROVISIONS OF THE POLICY
REINSTATEMENT OPTION
For a period of five (5) years after termination, you, as Policyowner, can
request that we reinstate the Policy during the Insured's lifetime. We will not
reinstate the Policy if it has been returned for its Cash Surrender Value. Note
that a termination or reinstatement may cause the Policy to become a modified
endowment contract.
Before we will reinstate the Policy, we must receive the following:
-- A payment in an amount which is sufficient to keep the Policy in force
for at least 3 months plus, if the Policy lapses before, and is
reinstated after, the first Policy Anniversary, an amount equal to 150%
of any deferred contract charge not previously deducted. This payment
will be in lieu of the payment of all Premiums in
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<PAGE> 52
arrears. Any unpaid loan must also be repaid, together with loan
interest at 6% compounded once each year from the end of the late period
to the date of reinstatement. If a Policy loan interest rate of less
than 6% is in effect when the Policy is reinstated, the interest rate
for any unpaid loan at the time of reinstatement will be the same as the
Policy loan interest rate. The effective date of reinstatement will be
the Monthly Deduction Day on or following the date we approve the
request for reinstatement; and
-- Evidence of insurability satisfactory to us if the reinstatement is
requested more than 30 days after termination.
If we do reinstate the Policy, the face amount for the reinstated Policy
will be the same as it would have been if the Policy had not terminated.
ADDITIONAL BENEFITS YOU CAN GET BY RIDER
The Policy can include additional benefits that we approve based on our
standards and limits for issuing insurance and classifying risks. None of these
benefits depends on the investment performance of the Separate Accounts or the
Fixed Account. An additional benefit is provided by a rider and is subject to
the terms of both the Policy and the rider. The following riders are available.
Children's Insurance Rider
This rider provides level term insurance coverage on the lives of children
of the Insured until the earlier of the Policy Anniversary on which the child is
age 25 or the one on which the Insured is or would have been age 65. The rider
coverage may be converted at that time to a current-dated permanent life
insurance policy.
Term Insurance On Other Covered Insured Rider (also referred to as
Supplemental Insurance Benefit Rider)
This rider provides level term insurance coverage on one or more insureds
which is convertible up until the Policy Anniversary on which that insured is
age 71 or on the death of the Insured, if earlier.
Monthly Deduction Waiver Rider
This rider provides for the waiver of Monthly Deductions in the event of
total disability of the Insured.
Accidental Death Benefit Rider
This rider provides for an additional Death Benefit in the event the
Insured's death was caused by accidental bodily injury occurring within one year
of the Insured's death. No benefit is payable under this rider if the Insured
dies before his or her first birthday or after the Policy Anniversary when the
Insured is age 70.
Guaranteed Insurability Rider
This rider allows the Policyowner to increase the face amount of the Policy
or purchase a new policy on the Insured for a specified option amount on
specified dates, without evidence of insurability.
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Spouse Paid-Up Insurance Purchase Option Rider (not available in New York)
This rider allows the Insured's spouse or the spouse of an Other Covered
Insured to purchase a paid-up insurance policy on his or her life on that
insured's death in the amount up to the Death Benefit on the Policy, provided
the spouse is the beneficiary under the policy or the applicable Term Insurance
On Other Covered Insured Rider.
Accelerated Benefits Rider
This rider allows the Policyowner to receive 25% or more of the Death
Benefit up to $250,000, less an interest adjustment, when the Insured has a life
expectancy of twelve months or less. Amounts received under this rider after
December 31, 1996 will generally be excludable from the Policyowner's gross
income under Section 101(g) of the Code. The exclusion from gross income will
not apply, however, if the Policyowner is not the Insured and the Policyowner
has an insurable interest in the life of the Insured either because the Insured
is a director, officer or employee of the Policyowner or because the Insured has
a financial interest in a business of the Policyowner.
PAYMENT OPTIONS
The proceeds of the Policy will be paid in one sum, or if elected, all or
part of these proceeds can be placed under one or more of the options described
in this section. If we agree, the proceeds may be placed under some other method
of payment instead. Any life insurance proceeds paid in one sum will bear
interest compounded each year from the Insured's death to the date of payment.
We set the interest rate each year. This rate will be at least 3% per year, and
will not be less than required by law.
While the Insured is living, you can elect or change an option. You can
also elect or change one or more Beneficiaries who will be the payee or payees
under that option. After the Insured dies, any person who is to receive proceeds
in one sum (other than an assignee) can elect an option and name payees. The
person who elects an option can also name one or more successor payees to
receive any amount remaining at the death of the payee. Naming these payees
cancels any prior choice of successor payees. A payee who did not elect the
option does not have the right to advance or assign payments, take the payments
in one sum, or make any other change. However, the payees may be given the right
to do one or more of these things if the person who elects the option tells us
in writing and we agree. If we agree, a payee who elects Option 1A, 1B, or 2 may
later elect to have any amount we still have, or the present value of any
elected payments, placed under some other option described in this section. When
any payment under an option would be less than $100, we may pay any unpaid
amount or present value in one sum.
PAYEES
Only individuals who are to receive payments in their own behalf may be
named as payees or successor payees, unless we agree otherwise. We may require
proof of the age or the survival of a payee. It may happen that when the last
surviving payee dies, we still have an unpaid amount, or there are some payments
which remain to be made. If so, we will pay the unpaid amount with interest to
the date of payment, or pay the present value of the remaining payments, to that
payee's estate in one sum. The present value of the remaining payments is based
on the interest rate used to compute them, and is always less than their sum.
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PROCEEDS AT INTEREST OPTIONS (OPTIONS 1A AND 1B)
The Policy proceeds may be left with us at interest. We will set the
interest rate each year. This rate will be at least 3% per year.
For the Interest Accumulation Option (Option 1A), we credit interest each
year on the amount we still have. This amount can be withdrawn at any time in
sums of $100 or more. We pay interest to the date of withdrawal on sums
withdrawn.
For the Interest Payment Option (Option 1B), we pay interest once each
month, every 3 months, every 6 months, or once each year, as chosen, based on
the amount we still have.
LIFE INCOME OPTION (OPTION 2) (NOT AVAILABLE IN MASSACHUSETTS AND MONTANA)
We make equal payments each month during the lifetime of the payee or
payees. We determine the amount of the monthly payment by applying the Policy
proceeds to purchase a corresponding single Premium life annuity policy which is
being issued when the first payment is due. Payments are based on the
appropriately adjusted annuity Premium rate in effect at that time, but will not
be less than the corresponding minimum amount shown in the appropriate Option 2
Table. These minimum amounts are based on the 1983 Table "a" with Projection
Scale G and with interest compounded each year at 3%.
When asked, we will state in writing what the minimum amount of each
monthly payment would be under these options. It is based on the sex and
adjusted age of the payee. To find the adjusted age in the year the first
payment is due, we increase or decrease the payee's age at that time, as
follows:
<TABLE>
<CAPTION>
1995 AND 2036 AND
EARLIER 1996-2005 2006-2015 2016-2025 2026-2035 LATER
- -------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
+2 +1 0 -1 -2 -3
</TABLE>
For Option 2, we make a payment each month while the payee is living.
Payments do not change, and are guaranteed for 10 years, even if both payees die
sooner.
BENEFICIARY
A Beneficiary is any person or entity named on our records to receive
insurance proceeds after the Insured dies. You name the Beneficiary when you
apply for the Policy. There may be different classes of beneficiaries, such as
primary and secondary. These classes set the order of payment. There may be more
than one Beneficiary in a class.
The Beneficiary may be changed during the Insured's lifetime by writing to
our Principal Office or such other location that we indicate to you in writing.
Generally, the change will take effect as of the date the request is signed. If
no Beneficiary is living when the Insured dies, unless provided otherwise, the
Death Benefit is paid to the Policyowner or, if deceased, the Policyowner's
estate.
ASSIGNMENT
The Policy may be assigned as collateral for a loan or other obligation.
But for any assignment to be binding on us, we must receive a signed copy of it
at our Principal Office or such other location that we indicate to you in
writing. We are not responsible for the validity of any assignment.
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LIMITS ON OUR RIGHTS TO CHALLENGE THE POLICY
Except for any increases in face amount, other than one due solely to a
change in the Life Insurance Benefit Option, we must bring any legal action to
contest the validity of a Policy within two years from its Issue Date. After
that we cannot contest its validity, except for failure to pay Premiums unless
the Insured died within that two year period. For any increase in the face
amount, other than one due solely to a change in the Life Insurance Benefit
Option, we must bring legal action to contest that increase within two years
from the effective date of the increase.
MISSTATEMENT OF AGE OR SEX
If the Insured's age or sex is misstated in the Policy application, the
Cash Value (except in Pennsylvania), Cash Surrender Value and the Death Benefit
will be adjusted to reflect the correct age and sex. The Death Benefit payable
under the Policy will be adjusted based on what the Policy would provide
according to the most recent mortality charge for the correct date of birth or
correct sex.
SUICIDE
If the Insured commits suicide within two years from the Issue Date or with
respect to an increase in face amount, the effective date of the increase (or
less where required by law), and while the Policy is in force, we pay a limited
Death Benefit in one sum to the Beneficiary. The limited Death Benefit is the
amount of Premiums, less any Policy Debt or amounts withdrawn. For any increases
in the face amount, the limited Death Benefit will be the monthly deductions
made for that increase. If the limited Death Benefit for the entire Policy is
payable, there will be no additional payment for the increase.
WHEN WE PAY PROCEEDS
If the Policy has not terminated, payment of the Cash Surrender Value, loan
proceeds or the Death Benefit are made within 7 days after we receive all
requirements at our Principal Office or such other location that we indicate to
you in writing. But we can delay payment of the Cash Surrender Value or any
Partial Withdrawal from the Separate Accounts, loan proceeds attributable to the
Separate Accounts, or the Death Benefit during any period that:
-- It is not reasonably practicable to determine the amount because the New
York Stock Exchange is closed (other than customary weekend and holiday
closings), trading is restricted by the SEC, or the SEC declares that an
emergency exists; or
-- The SEC, by order, permits us to delay payment in order to protect our
Policyowners.
We may delay paying any surrender value or loan proceeds on the Fixed
Account for up to 6 months from the date the request is received at our
Principal Office. We can delay payment of the entire Death Benefit if payment is
contested. We investigate all death claims arising within the two-year
contestable period. Upon receiving the information from a completed
investigation, we generally make a determination within five days as to whether
the claim should be authorized for payment. Payments are made promptly after
authorization. If payment of a Cash Surrender Value or Partial Withdrawal value
is delayed for 30 days or more, we add interest at an annual rate of 3%. We add
interest to a Death Benefit from the date of death to the date of payment at the
same rate as is paid under the Interest Payment Option.
50
<PAGE> 56
RECORDS AND REPORTS
All records and accounts relating to the Separate Accounts and the Fixed
Account are maintained by New York Life or NYLIAC. Each year we will mail you a
report showing the Cash Value, Cash Surrender Value and Policy Debt as of the
latest Policy Anniversary. This report contains any additional information
required by any applicable law or regulation.
Reports and promotional literature may contain the ratings New York Life
and NYLIAC have received from independent rating agencies. Both companies are
among only a few companies that have consistently received among the highest
possible ratings from the four major independent rating companies: A.M. Best and
Moody's (for financial strength and stability) and Standard and Poor's and Duff
& Phelps (for claims paying ability). However, neither New York Life nor NYLIAC
guarantees the investment performance of the Investment Divisions.
SALES AND OTHER AGREEMENTS
NYLIFE Distributors Inc., ("NYLIFE Distributors") 51 Madison Avenue, New
York, New York 10010, is the principal underwriter and the distributor of the
Policies and is an indirect wholly-owned subsidiary of New York Life. The
commissions paid to registered representatives of broker-dealers who have
entered into dealer agreements with NYLIFE Distributors during a Policy's first
year will not exceed 50% of the Premiums paid up to a Policy's "breakpoint"
Premium (6.5% in the second and subsequent Policy Years) plus 3.5% of Premiums
paid in excess of such amount. The "breakpoint" Premium is the lesser of the
target premium and the annualized scheduled Premium specified on the
Application. Commissions in excess of the percentage payable on renewal Premiums
are available for Premiums paid in connection with most increases in a Policy's
face amount. Registered representatives who meet certain productivity standards
and/or participate in certain programs may receive additional compensation. From
time to time, NYLIFE Distributors may enter into a special arrangement with a
broker-dealer, which provides for the payment of higher commissions to such
broker-dealer in connection with sales of the Policies. Purchasers of Policies
will be informed prior to purchase of any applicable special arrangement.
LEGAL PROCEEDINGS
In 1995, NYLIAC and New York Life settled a class action related to the
sale of whole life and universal life insurance policies from 1982 through 1994.
In entering into the settlement, NYLIAC specifically denied any wrongdoing. The
settlement was approved by the judge, and has now been upheld on appeal,
including a recent refusal by the New York State Court of Appeals to permit a
discretionary appeal from the Appellate Division. The lone appellant has
recently filed two motions in the trial court seeking to enjoin implementation
of the settlement and to renew his objections to the settlement. The lone
appellant may file a writ of certiorari in the United States Supreme Court
during the prescribed statutory period.
There are also actions in various jurisdictions by individual policyowners
who either did or did not exclude themselves from the settlement of the
nationwide class action; and in each of two jurisdictions a purported class
action claiming to include numerous policyowners who excluded themselves from
the settlement of the nationwide class action; and in
51
<PAGE> 57
one jurisdiction a purported class action claiming to include numerous
policyowners who did not exclude themselves from the class action. Most of these
actions seek substantial or unspecified compensatory and punitive damages.
NYLIAC is also a defendant in other individual and alleged class actions
arising from its insurance, investment and/or other operations, including
actions involving retail sales practices. Most of these actions also seek
substantial or unspecified compensatory and punitive damages. NYLIAC is also
from time to time involved as a party in various governmental, administrative,
and investigative proceedings and inquiries.
Given the uncertain nature of litigation and regulatory inquiries, the
outcome of the above cannot be predicted. NYLIAC nevertheless believes that the
ultimate liability that could result from such litigation and proceedings would
not have a material adverse effect on NYLIAC's financial position; however, it
is possible that settlements or adverse determinations in one or more actions or
other proceedings in the future could have a material adverse effect on NYLIAC's
operating results for a given year.
INDEPENDENT ACCOUNTANTS
The financial statements included herein have been included in reliance on
the reports of Price Waterhouse LLP, independent accountants, given on the
authority of that firm as experts in accounting and auditing.
EXPERTS
Actuarial matters in this Prospectus have been examined by Jane L. Hamrick,
Vice President and Actuary. An opinion on actuarial matters is filed as an
exhibit to the registration statements we filed with the SEC.
FINANCIAL STATEMENTS
The audited financial statements of NYLIAC (including the auditor's report
thereon) for the fiscal years ended December 31, 1996, 1995 and 1994, and of
Separate Account I (including the auditor's report thereon) for the years ended
December 31, 1996 and 1995 are included herein. The financial statements of
NYLIAC included herein should be considered only as bearing upon the ability of
NYLIAC to meet its obligations under the Policy.
52
<PAGE> 58
(THIS PAGE INTENTIONALLY LEFT BLANK)
F-1
<PAGE> 59
STATEMENT OF ASSETS AND LIABILITIES
As of December 31, 1996
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP
CAPITAL CASH MAINSTAY VP
APPRECIATION MANAGEMENT CONVERTIBLE
<S> <C> <C> <C>
------------------------------------------------------
ASSETS:
Investment at net asset value (Identified Cost:
$48,667,330; $6,464,446; $134,827; $1,492,560;
$16,343,089; $12,912,261; $15,063,636; $11,136,037;
$2,970,811, respectively)............................... $ 59,965,214 $ 6,464,445 $ 134,775
LIABILITIES:
Liability for mortality and expense risk charges.......... 99,423 6,675 93
------------ ------------ ------------
Total equity.......................................... $ 59,865,791 $ 6,457,770 $ 134,682
============ ============ ============
TOTAL EQUITY REPRESENTED BY:
Equity of Policyowners:
Variable accumulation units outstanding: 3,874,548;
5,717,419; 13,068; 124,904; 415,774; 161,413;
1,253,878; 465,658; 243,279, respectively............. $ 59,865,791 $ 6,457,770 $ 134,682
Equity of New York Life Insurance and Annuity Corporation:
Variable accumulation units outstanding: --; --; --; --;
1,000,000; 1,000,000; --; 500,000; --, respectively... -- -- --
------------ ------------ ------------
Total equity.......................................... $ 59,865,791 $ 6,457,770 $ 134,682
============ ============ ============
Variable accumulation unit value........................ $ 15.45 $ 1.13 $ 10.31
============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
ALGER
MAINSTAY VP MAINSTAY VP AMERICAN
GROWTH INDEXED SMALL
EQUITY EQUITY CAPITALIZATION
<S> <C> <C> <C>
------------------------------------------------------
ASSETS:
Investment at net asset value (Identified Cost:
$11,416,122; $11,917,085; $121,568; $24,968; $255,170;
$102,918; $107,229; $256,313; $75,290, respectively).... $ 11,700,081 $ 13,930,581 $ 121,451
LIABILITIES:
Liability for mortality and expense risk charges.......... 19,697 23,288 64
------------ ------------ ------------
Total equity.......................................... $ 11,680,384 $ 13,907,293 $ 121,387
============ ============ ============
TOTAL EQUITY REPRESENTED BY:
Equity of Policyowners:
Variable accumulation units outstanding: 726,099;
795,174; 12,566; 2,410; 24,683; 9,882; 10,541; 25,158;
7,563, respectively................................... $ 11,680,384 $ 13,907,293 $ 121,387
============ ============ ============
Variable accumulation unit value........................ $ 16.09 $ 17.49 $ 9.66
============ ============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
F-2
<PAGE> 60
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
VL SEPARATE ACCOUNT I
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP MAINSTAY VP
MAINSTAY VP HIGH YIELD INTERNATIONAL TOTAL MAINSTAY VP MAINSTAY VP
GOVERNMENT CORPORATE BOND EQUITY RETURN VALUE BOND
<S> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------
$ 1,437,692 $ 18,075,182 $ 13,595,698 $ 17,285,730 $ 13,754,542 $ 2,888,675
2,560 30,590 23,727 28,959 23,008 4,724
------------ ------------ ------------ ------------ ------------ ------------
$ 1,435,132 $ 18,044,592 $ 13,571,971 $ 17,256,771 $ 13,731,534 $ 2,883,951
============ ============ ============ ============ ============ ============
$ 1,435,132 $ 5,299,198 $ 1,886,227 $ 17,256,771 $ 6,621,595 $ 2,883,951
-- 12,745,394 11,685,744 -- 7,109,939 --
------------ ------------ ------------ ------------ ------------ ------------
$ 1,435,132 $ 18,044,592 $ 13,571,971 $ 17,256,771 $ 13,731,534 $ 2,883,951
============ ============ ============ ============ ============ ============
$ 11.49 $ 12.75 $ 11.69 $ 13.76 $ 14.22 $ 11.85
============ ============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
JANUS MORGAN STANLEY
CALVERT FIDELITY FIDELITY JANUS ASPEN EMERGING
SOCIALLY VIP II: VIP: ASPEN WORLDWIDE MARKETS
RESPONSIBLE CONTRAFUND EQUITY-INCOME BALANCED GROWTH EQUITY
<S> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------
$ 24,003 $ 256,660 $ 102,621 $ 107,026 $ 258,913 $ 75,779
4 112 37 48 132 43
------------ ------------ ------------ ------------ ------------ ------------
$ 23,999 $ 256,548 $ 102,584 $ 106,978 $ 258,781 $ 75,736
============ ============ ============ ============ ============ ============
$ 23,999 $ 256,548 $ 102,584 $ 106,978 $ 258,781 $ 75,736
============ ============ ============ ============ ============ ============
$ 9.96 $ 10.39 $ 10.38 $ 10.15 $ 10.29 $ 10.01
============ ============ ============ ============ ============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
F-3
<PAGE> 61
STATEMENT OF OPERATIONS
For the year ended December 31, 1996
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP
CAPITAL CASH MAINSTAY VP
APPRECIATION MANAGEMENT CONVERTIBLE(a)
<S> <C> <C> <C>
---------------------------------------------------------
INVESTMENT INCOME (LOSS):
Dividend income........................................... $ 38,304 $ 146,044 $ 1,302
Mortality and expense risk charges........................ (298,254) (20,874) (93)
------------ ------------ ------------
Net investment income (loss).......................... (259,950) 125,170 1,209
------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS):
Proceeds from sale of investments......................... 386,834 11,310,178 474
Cost of investments sold.................................. (269,348) (11,310,209) (466)
------------ ------------ ------------
Net realized gain (loss) on investments............... 117,486 (31) 8
Realized gain distribution received....................... -- -- 225
Change in unrealized appreciation (depreciation)
on investments.......................................... 6,900,669 11 (52)
------------ ------------ ------------
Net gain (loss) on investments........................ 7,018,155 (20) 181
------------ ------------ ------------
Increase (decrease) attributable to funds of New
York Life Insurance and Annuity Corporation
retained by Separate Account............................ (3,153) 89 --
------------ ------------ ------------
Net increase in total equity resulting
from operations..................................... $ 6,755,052 $ 125,239 $ 1,390
============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
ALGER
MAINSTAY VP MAINSTAY VP AMERICAN
GROWTH INDEXED SMALL
EQUITY EQUITY CAPITALIZATION(a)
<S> <C> <C> <C>
---------------------------------------------------------
INVESTMENT INCOME (LOSS):
Dividend income........................................... $ 99,338 $ 197,939 $ --
Mortality and expense risk charges........................ (56,192) (62,431) (67)
------------ ------------ ------------
Net investment income (loss).......................... 43,146 135,508 (67)
------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS):
Proceeds from sale of investments......................... 166,219 236,731 1,802
Cost of investments sold.................................. (136,186) (172,129) (1,832)
------------ ------------ ------------
Net realized gain (loss) on investments............... 30,033 64,602 (30)
Realized gain distribution received....................... 1,437,459 166,736 --
Change in unrealized appreciation (depreciation)
on investments.......................................... 161,667 1,454,231 (117)
------------ ------------ ------------
Net gain (loss) on investments........................ 1,629,159 1,685,569 (147)
------------ ------------ ------------
Increase (decrease) attributable to funds of New
York Life Insurance and Annuity Corporation
retained by Separate Account............................ (1,387) (1,534) 3
------------ ------------ ------------
Net increase (decrease) in total equity resulting
from operations..................................... $ 1,670,918 $ 1,819,543 $ (211)
============ ============ ============
</TABLE>
(a) For the period October 1, 1996 (Commencement of Operations) through December
31, 1996.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
F-4
<PAGE> 62
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
VL SEPARATE ACCOUNT I
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP MAINSTAY VP
MAINSTAY VP HIGH YIELD INTERNATIONAL TOTAL MAINSTAY VP MAINSTAY VP
GOVERNMENT CORPORATE BOND EQUITY RETURN VALUE BOND
<S> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------
$ 91,242 $ 860,881 $ 715,628 $ 346,226 $ 161,558 $ 179,666
(8,535) (103,383) (85,083) (90,521) (68,829) (14,430)
------------ ------------ ------------ ------------ ------------ ------------
82,707 757,498 630,545 255,705 92,729 165,236
------------ ------------ ------------ ------------ ------------ ------------
269,345 470,395 156,211 300,305 81,604 268,143
(256,787) (421,956) (145,355) (230,692) (65,612) (255,243)
------------ ------------ ------------ ------------ ------------ ------------
12,558 48,439 10,856 69,613 15,992 12,900
-- 233,076 17,725 -- 186,950 --
(60,509) 1,191,289 485,209 1,096,527 1,787,101 (115,255)
------------ ------------ ------------ ------------ ------------ ------------
(47,951) 1,472,804 513,790 1,166,140 1,990,043 (102,355)
------------ ------------ ------------ ------------ ------------ ------------
(51) (2,719) (1,988) (891) (1,752) (91)
------------ ------------ ------------ ------------ ------------ ------------
$ 34,705 $ 2,227,583 $ 1,142,347 $ 1,420,954 $ 2,081,020 $ 62,790
============ ============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
JANUS MORGAN STANLEY
CALVERT FIDELITY FIDELITY JANUS ASPEN EMERGING
SOCIALLY VIP II: VIP: ASPEN WORLDWIDE MARKETS
RESPONSIBLE(A) CONTRAFUND(A) EQUITY-INCOME(A) BALANCED(A) GROWTH(A) EQUITY(A)
<S> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------
$ 262 $ -- $ -- $ 894 $ 1,253 $ 125
(4) (111) (36) (47) (130) (43)
------------ ------------ ------------ ------------ ------------ ------------
258 (111) (36) 847 1,123 82
------------ ------------ ------------ ------------ ------------ ------------
21 7,996 2,794 133 30,583 999
(21) (7,620) (2,673) (132) (30,340) (994)
------------ ------------ ------------ ------------ ------------ ------------
-- 376 121 1 243 5
645 -- -- -- -- --
(965) 1,491 (298) (203) 2,600 489
------------ ------------ ------------ ------------ ------------ ------------
(320) 1,867 (177) (202) 2,843 494
------------ ------------ ------------ ------------ ------------ ------------
-- (1) -- -- (2) --
------------ ------------ ------------ ------------ ------------ ------------
$ (62) $ 1,755 $ (213) $ 645 $ 3,964 $ 576
============ ============ ============ ============ ============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
F-5
<PAGE> 63
STATEMENT OF CHANGES IN TOTAL EQUITY
For the years ended December 31, 1996
and December 31, 1995
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP
CAPITAL APPRECIATION CASH MANAGEMENT
----------------------------- -----------------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
---------------------------------------------------------
INCREASE IN TOTAL EQUITY:
Operations:
Net investment income (loss)............................ $ (259,950) $ (6,428) $ 125,170 $ 78,935
Net realized gain (loss) on investments................. 117,486 8,055 (31) (21)
Realized gain distribution received..................... -- -- -- --
Change in unrealized appreciation (depreciation)
on investments........................................ 6,900,669 4,319,912 11 (10)
Increase (decrease) attributable to funds of New York
Life Insurance and Annuity Corporation retained by
Separate Account...................................... (3,153) (4,266) 89 (106)
----------- ----------- ---------- -----------
Net increase in total equity resulting
from operations..................................... 6,755,052 4,317,273 125,239 78,798
----------- ----------- ---------- -----------
Contributions and withdrawals:
Equity contributions by New York Life Insurance and
Annuity Corporation................................... -- -- -- --
Policyowners' premium payments.......................... 26,843,479 13,583,511 32,779,343 16,416,407
Cost of insurance....................................... (9,093,725) (4,921,516) (989,566) (583,667)
Policyowners' surrenders................................ (1,271,171) (350,169) (56,535) (2,298)
Net transfers to Fixed Account.......................... (1,045,732) (173,462) (557,133) (227,064)
Transfers between Investment Divisions.................. 11,653,145 6,607,556 (27,966,704) (14,242,324)
Policyowners' death benefits............................ (29,669) (6,744) -- --
----------- ----------- ---------- -----------
Net contributions and withdrawals..................... 27,056,327 14,739,176 3,209,405 1,361,054
----------- ----------- ---------- -----------
Increase in total equity............................ 33,811,379 19,056,449 3,334,644 1,439,852
TOTAL EQUITY:
Beginning of period..................................... 26,054,412 6,997,963 3,123,126 1,683,274
----------- ----------- ---------- -----------
End of period........................................... $59,865,791 $26,054,412 $ 6,457,770 $ 3,123,126
=========== =========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP
TOTAL RETURN VALUE
----------------------------- -----------------------------
1996 1995 1996 1995(a)
<S> <C> <C> <C> <C>
---------------------------------------------------------
INCREASE IN TOTAL EQUITY:
Operations:
Net investment income (loss)............................ $ 255,705 $ 168,296 $ 92,729 $ 29,332
Net realized gain (loss) on investments................. 69,613 7,782 15,992 5,133
Realized gain distribution received..................... -- -- 186,950 --
Change in unrealized appreciation (depreciation)
on investments........................................ 1,096,527 1,184,761 1,787,101 831,404
Increase (decrease) attributable to funds of New York
Life Insurance and Annuity Corporation retained by
Separate Account...................................... (891) (1,368) (1,752) (915)
----------- ----------- ----------- -----------
Net increase (decrease) in total equity resulting
from operations..................................... 1,420,954 1,359,471 2,081,020 864,954
----------- ----------- ----------- -----------
Contributions and withdrawals:
Equity contributions by New York Life Insurance and
Annuity Corporation................................... -- -- -- 5,000,000
Policyowners' premium payments.......................... 7,504,745 4,559,675 2,967,711 397,494
Cost of insurance....................................... (2,550,631) (1,729,202) (906,758) (81,413)
Policyowners' surrenders................................ (393,720) (175,199) (62,672) (4,246)
Net transfers from (to) Fixed Account................... (241,714) (153,144) (31,930) --
Transfers between Investment Divisions.................. 2,569,434 1,903,627 2,776,686 732,516
Policyowners' death benefits............................ (12,043) (1,793) (1,828) --
----------- ----------- ----------- -----------
Net contributions and withdrawals..................... 6,876,071 4,403,964 4,741,209 6,044,351
----------- ----------- ----------- -----------
Increase in total equity............................ 8,297,025 5,763,435 6,822,229 6,909,305
TOTAL EQUITY:
Beginning of period..................................... 8,959,746 3,196,311 6,909,305 --
----------- ----------- ----------- -----------
End of period........................................... $17,256,771 $ 8,959,746 $13,731,534 $ 6,909,305
=========== =========== =========== ===========
</TABLE>
(a) For the period May 1, 1995 (Commencement of Operations) through December 31,
1995.
(b) For the period October 1, 1996 (Commencement of Operations) through December
31, 1996.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
F-6
<PAGE> 64
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
VL SEPARATE ACCOUNT I
<TABLE>
<CAPTION>
MAINSTAY VP
MAINSTAY VP MAINSTAY VP HIGH YIELD MAINSTAY VP
CONVERTIBLE GOVERNMENT CORPORATE BOND INTERNATIONAL EQUITY
----------- --------------------------- --------------------------- ------------------------------
1996(B) 1996 1995 1996 1995(A) 1996 1995(A)
<S> <C> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------
$ 1,209 $ 82,707 $ 61,962 $ 757,498 $ 371,181 $ 630,545 $ 465,844
8 12,558 6,393 48,439 2,370 10,856 417
225 -- -- 233,076 71,092 17,725 --
(52) (60,509) 33,007 1,191,289 540,804 485,209 198,228
-- (51) (109) (2,719) (1,187) (1,988) (1,004)
------------ ------------ ------------ ------------ ------------ ------------ ------------
1,390 34,705 101,253 2,227,583 984,260 1,142,347 663,485
------------ ------------ ------------ ------------ ------------ ------------ ------------
-- -- -- -- 10,000,000 -- 10,000,000
36,023 588,549 488,388 2,385,150 330,982 958,640 118,017
(2,787) (202,531) (164,242) (696,139) (62,383) (257,367) (24,022)
-- (25,594) (7,422) (61,676) (62) (14,717) (66)
-- (14,290) (15,530) (32,091) (16,477) (9,665) (967)
100,056 90,391 173,606 2,269,082 717,633 794,305 204,077
-- (1,092) -- (1,270) -- (2,096) --
------------ ------------ ------------ ------------ ------------ ------------ ------------
133,292 435,433 474,800 3,863,056 10,969,693 1,469,100 10,297,039
------------ ------------ ------------ ------------ ------------ ------------ ------------
134,682 470,138 576,053 6,090,639 11,953,953 2,611,447 10,960,524
-- 964,994 388,941 11,953,953 -- 10,960,524 --
------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 134,682 $ 1,435,132 $ 964,994 $18,044,592 $11,953,953 $13,571,971 $ 10,960,524
============ ============ ============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
ALGER AMERICAN
MAINSTAY VP MAINSTAY VP MAINSTAY VP SMALL
BOND GROWTH EQUITY INDEXED EQUITY CAPITALIZATION
--------------------------- --------------------------- --------------------------- --------------
1996 1995 1996 1995 1996 1995 1996(B)
<S> <C> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------
$ 165,236 $ 81,522 $ 43,146 $ 36,507 $ 135,508 $ 71,551 $ (67)
12,900 406 30,033 7,884 64,602 17,539 (30)
-- -- 1,437,459 388,941 166,736 128,630 --
(115,255) 53,397 161,667 168,723 1,454,231 572,871 (117)
(91) (136) (1,387) (637) (1,534) (896) 3
------------ ------------ ------------ ------------ ------------ ------------ ------------
62,790 135,189 1,670,918 601,418 1,819,543 789,695 (211)
------------ ------------ ------------ ------------ ------------ ------------ ------------
-- -- -- -- -- -- --
1,242,545 761,127 4,982,537 2,495,614 5,663,276 2,254,847 15,186
(402,055) (265,847) (1,651,492) (802,176) (1,832,018) (785,474) (3,169)
(45,388) (10,640) (203,329) (33,720) (189,215) (45,112) (29)
(31,204) (4,094) (178,949) (63,184) (255,372) (64,176) 80
627,608 481,252 2,251,912 1,936,157 3,981,697 1,482,291 109,530
(2,075) -- (15,505) (513) (2,523) (97) --
------------ ------------ ------------ ------------ ------------ ------------ ------------
1,389,431 961,798 5,185,174 3,532,178 7,365,845 2,842,279 121,598
------------ ------------ ------------ ------------ ------------ ------------ ------------
1,452,221 1,096,987 6,856,092 4,133,596 9,185,388 3,631,974 121,387
1,431,730 334,743 4,824,292 690,696 4,721,905 1,089,931 --
------------ ------------ ------------ ------------ ------------ ------------ ------------
$2,883,951 $ 1,431,730 $11,680,384 $ 4,824,292 $13,907,293 $ 4,721,905 $ 121,387
============ ============ ============ ============ ============ ============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
F-7
<PAGE> 65
STATEMENT OF CHANGES IN TOTAL EQUITY (CONTINUED)
For the years ended December 31, 1996
and December 31, 1995
<TABLE>
<CAPTION>
CALVERT FIDELITY FIDELITY
SOCIALLY VIP II: VIP:
RESPONSIBLE CONTRAFUND EQUITY-INCOME
-------------- -------------- --------------
1996(b) 1996(b) 1996(b)
--------------------------------------------------
<S> <C> <C> <C>
INCREASE IN TOTAL EQUITY:
Operations:
Net investment income (loss)............................ $ 258 $ (111) $ (36)
Net realized gain on investments........................ -- 376 121
Realized gain distribution received..................... 645 -- --
Change in unrealized appreciation (depreciation)
on investments........................................ (965) 1,491 (298)
Decrease attributable to funds of New York
Life Insurance and Annuity Corporation retained by
Separate Account...................................... -- (1) --
------------ ----------- - ----------- -
Net increase (decrease) in total equity resulting
from operations..................................... (62) 1,755 (213)
------------ ----------- - ----------- -
Contributions and withdrawals:
Policyowners' premium payments.......................... 642 26,958 13,334
Cost of insurance....................................... (144) (5,360) (1,305)
Policyowners' surrenders................................ -- (19) --
Net transfers to Fixed Account.......................... -- (374) --
Transfers between Investment Divisions.................. 23,563 233,588 90,768
------------ ----------- - ----------- -
Net contributions and withdrawals..................... 24,061 254,793 102,797
------------ ----------- - ----------- -
Increase in total equity............................ 23,999 256,548 102,584
TOTAL EQUITY:
Beginning of period..................................... -- -- --
------------ ----------- - ----------- -
End of period........................................... $ 23,999 $256,548 $102,584
============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
JANUS MORGAN STANLEY
JANUS ASPEN EMERGING
ASPEN WORLDWIDE MARKETS
BALANCED GROWTH EQUITY
-------------- -------------- --------------
1996(b) 1996(b) 1996(b)
--------------------------------------------------
<S> <C> <C> <C>
INCREASE IN TOTAL EQUITY:
Operations:
Net investment income................................... $ 847 $ 1,123 $ 82
Net realized gain on investments........................ 1 243 5
Change in unrealized appreciation (depreciation)
on investments........................................ (203) 2,600 489
Decrease attributable to funds of New York
Life Insurance and Annuity Corporation retained by
Separate Account...................................... -- (2) --
------------ ----------- - ----------- -
Net increase in total equity resulting
from operations..................................... 645 3,964 576
------------ ----------- - ----------- -
Contributions and withdrawals:
Policyowners' premium payments.......................... 14,020 51,071 11,833
Cost of insurance....................................... (1,851) (6,122) (2,147)
Policyowners' surrenders................................ -- (12) (16)
Transfers between Investment Divisions.................. 94,164 209,880 65,490
------------ ----------- - ----------- -
Net contributions and withdrawals..................... 106,333 254,817 75,160
------------ ----------- - ----------- -
Increase in total equity............................ 106,978 258,781 75,736
TOTAL EQUITY:
Beginning of period..................................... -- -- --
------------ ----------- - ----------- -
End of period........................................... $106,978 $258,781 $ 75,736
============ ============ ============
</TABLE>
(b) For the period October 1, 1996 (Commencement of Operations) through December
31, 1996.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
F-8
<PAGE> 66
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
VL SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS
NOTE 1-- Organization and Accounting Policies:
- --------------------------------------------------------------------------------
N
ew York Life Insurance and Annuity Corporation Variable Universal Life
Separate Account I ("VL Separate Account I") was established on June 4,
1993, under Delaware law by New York Life Insurance and Annuity Corporation,
a wholly-owned subsidiary of New York Life Insurance Company. The VL
Separate Account I policies are designed for individuals who seek lifetime
insurance protection and flexibility with respect to premium payments and death
benefits. The policies are distributed by NYLIFE Distributors Inc. and sold by
registered representatives of NYLIFE Securities Inc. and by registered
representatives of broker-dealers who have entered into dealer agreements with
NYLIFE Distributors Inc. NYLIFE Securities Inc. and NYLIFE Distributors Inc. are
wholly-owned subsidiaries of NYLIFE Inc., which is a wholly-owned subsidiary of
New York Life Insurance Company. VL Separate Account I is registered under the
Investment Company Act of 1940, as amended, as a unit investment trust.
The assets of VL Separate Account I are invested in the shares of the MainStay
VP Series Fund, Inc. (formerly, "New York Life MFA Series Fund, Inc."), The
Alger American Fund, the Acacia Capital Corporation, the Fidelity Variable
Insurance Products Fund, the Fidelity Variable Insurance Products Fund II, the
Janus Aspen Series and the Morgan Stanley Universal Funds, Inc. (collectively,
"Funds"). These assets are clearly identified and distinguished from the other
assets and liabilities of New York Life Insurance and Annuity Corporation.
On October 1, 1996, New York Life Insurance and Annuity Corporation created
eight new Investment Divisions within VL Separate Account I. These new
Investment Divisions offer the VL Separate Account I eight new Eligible
Portfolios to invest in: the MainStay VP Convertible Portfolio, the Alger
American Small Capitalization Portfolio, the Calvert Socially Responsible
Portfolio, the Fidelity VIP II: Contrafund Portfolio, the Fidelity VIP:
Equity-Income Portfolio, the Janus Aspen Balanced Portfolio, the Janus Aspen
Worldwide Growth Portfolio and the Morgan Stanley Emerging Markets Equity
Portfolio.
VL Separate Account I offers the following eighteen variable Investment
Divisions, with their respective fund portfolios, for Policyowners to invest
premium payments: MainStay VP Capital Appreciation, MainStay VP Cash Management,
MainStay VP Convertible, MainStay VP Government, MainStay VP High Yield
Corporate Bond, MainStay VP International Equity, MainStay VP Total Return,
MainStay VP Value, MainStay VP Bond, MainStay VP Growth Equity, MainStay VP
Indexed Equity, Alger American Small Capitalization, Calvert Socially
Responsible, Fidelity VIP II: Contrafund, Fidelity VIP: Equity-Income, Janus
Aspen Balanced, Janus Aspen Worldwide Growth and Morgan Stanley Emerging Markets
Equity. Each Investment Division of VL Separate Account I will invest
exclusively in the corresponding Eligible Portfolio.
Initial premium payments received are allocated to the MainStay VP Cash
Management Investment Division until 20 days (10 days in New York) after the
policy issue date. Thereafter, premium payments will be allocated to the
Investment Divisions of VL Separate Account I in accordance with the
Policyowner's instructions. In addition, the Policyowner has the option to
transfer amounts between the Investment Divisions of VL Separate Account I and
the Fixed Account of New York Life Insurance and Annuity Corporation.
No Federal income tax is payable on investment income or capital gains of VL
Separate Account I under current Federal income tax law.
Security Valuation--The investments are valued at the net asset value of
shares of the respective Fund portfolios.
Security Transactions--Realized gains and losses from security transactions
are reported on the identified cost basis. Security transactions are accounted
for as of the date the securities are purchased or sold (trade date).
Distributions Received--Dividend income and capital gain distributions are
recorded on the ex-dividend date and reinvested in the corresponding portfolio.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
F-9
<PAGE> 67
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2--Investments (in 000's):
- --------------------------------------------------------------------------------
A
t December 31, 1996, the investments of VL Separate Account I are as
follows:
<TABLE>
<CAPTION>
MAINSTAY
MAINSTAY VP VP
CAPITAL CASH MAINSTAY VP
APPRECIATION MANAGEMENT CONVERTIBLE
<S> <C> <C> <C>
-------------------------------------------------------
Number of shares............................................ 3,262 6,465 13
Identified cost*............................................ $ 48,667 $ 6,464 $ 135
</TABLE>
<TABLE>
<CAPTION>
MAINSTAY ALGER
MAINSTAY VP VP AMERICAN
GROWTH INDEXED SMALL
EQUITY EQUITY CAPITALIZATION
<S> <C> <C> <C>
-------------------------------------------------------
Number of shares............................................ 628 865 3
Identified cost*............................................ $ 11,416 $ 11,917 $ 122
</TABLE>
* The cost stated also represents the aggregate cost for Federal income tax
purposes.
Investment activity for the year ended December 31, 1996, was as follows:
<TABLE>
<CAPTION>
MAINSTAY
MAINSTAY VP VP
CAPITAL CASH MAINSTAY VP
APPRECIATION MANAGEMENT CONVERTIBLE
<S> <C> <C> <C>
-------------------------------------------------------
Purchases................................................... $ 27,237 $ 14,648 $ 135
Proceeds from sales......................................... 387 11,310 --
</TABLE>
<TABLE>
<CAPTION>
MAINSTAY ALGER
MAINSTAY VP VP AMERICAN
GROWTH INDEXED SMALL
EQUITY EQUITY CAPITALIZATION
<S> <C> <C> <C>
-------------------------------------------------------
Purchases................................................... $ 6,843 $ 7,919 $ 123
Proceeds from sales......................................... 166 237 2
</TABLE>
F-10
<PAGE> 68
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
VL SEPARATE ACCOUNT I
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP MAINSTAY VP
MAINSTAY VP HIGH YIELD INTERNATIONAL TOTAL MAINSTAY VP MAINSTAY VP
GOVERNMENT CORPORATE BOND EQUITY RETURN VALUE BOND
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------
150 1,557 1,276 1,187 989 225
$ 1,493 $ 16,343 $12,912 $15,064 $11,136 $ 2,971
</TABLE>
<TABLE>
<CAPTION>
JANUS MORGAN STANLEY
CALVERT FIDELITY FIDELITY JANUS ASPEN EMERGING
SOCIALLY VIP II: VIP: ASPEN WORLDWIDE MARKETS
RESPONSIBLE CONTRAFUND EQUITY-INCOME BALANCED GROWTH EQUITY
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------
14 15 5 7 13 8
$ 25 $ 255 $ 103 $ 107 $ 256 $ 75
</TABLE>
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP MAINSTAY VP
MAINSTAY VP HIGH YIELD INTERNATIONAL TOTAL MAINSTAY VP MAINSTAY VP
GOVERNMENT CORPORATE BOND EQUITY RETURN VALUE BOND
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------
$ 788 $ 5,331 $ 2,276 $ 7,445 $ 5,112 $ 1,825
269 470 156 300 82 268
</TABLE>
<TABLE>
<CAPTION>
JANUS MORGAN STANLEY
CALVERT FIDELITY FIDELITY JANUS ASPEN EMERGING
SOCIALLY VIP II: VIP: ASPEN WORLDWIDE MARKETS
RESPONSIBLE CONTRAFUND EQUITY-INCOME BALANCED GROWTH EQUITY
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------
$ 25 $ 263 $ 106 $ 107 $ 287 $ 76
-- 8 3 -- 31 1
</TABLE>
F-11
<PAGE> 69
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3--Mortality and Expense Risk Charges:
- --------------------------------------------------------------------------------
VL
Separate Account I is charged for administrative services provided and
the mortality and expense risks assumed by New York Life Insurance and
Annuity Corporation. These charges are made daily at an annual rate of
.70% of the daily net asset value of each Investment Division. New York
Life Insurance and Annuity Corporation may increase these charges in the future
up to a maximum annual rate of 1.00%. The amounts of these charges retained in
the Investment Divisions represent funds of New York Life Insurance and Annuity
Corporation. Accordingly, New York Life Insurance and Annuity Corporation
participates in the results of each Investment Division ratably with the
Policyowners.
- --------------------------------------------------------------------------------
NOTE 4 --Distribution of Net Income:
- --------------------------------------------------------------------------------
VL
Separate Account I does not expect to declare dividends to Policyowners
from accumulated net investment income and realized gains. The income and
gains are distributed to Policyowners as part of withdrawals of amounts
(in the form of surrenders, death benefits or transfers) in excess of the
net premium payments.
F-12
<PAGE> 70
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
VL SEPARATE ACCOUNT I
(THIS PAGE INTENTIONALLY LEFT BLANK)
F-13
<PAGE> 71
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 5-- Cost to Policyowners and New York Life Insurance and Annuity
Corporation (in 000's):
- --------------------------------------------------------------------------------
A
t December 31, 1996, the cost to Policyowners and New York Life Insurance
and Annuity Corporation for accumulation units outstanding, with adjustments
for net investment income, market appreciation (depreciation) and deduction
for expenses is as follows:
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP
CAPITAL CASH MAINSTAY VP
APPRECIATION MANAGEMENT CONVERTIBLE
<S> <C> <C> <C>
------------------------------------------------------
Cost to Policyowners and New York Life Insurance and
Annuity Corporation (net of withdrawals)............... $ 68,328 $ 14,282 $ 140
Sales charges............................................ (4,552) (6,123) (4)
Cost of insurance........................................ (15,055) (1,923) (2)
Accumulated net investment income (loss)................. (255) 222 1
Accumulated net realized gain on investments and
realized gain distributions received................... 110 -- --
Unrealized appreciation (depreciation) on investments.... 11,298 -- --
Decrease attributable to funds of New York Life Insurance
and Annuity Corporation retained by Separate Account... (8) -- --
-------- -------- --------
Net amount applicable to Policyowners and New York Life
Insurance and Annuity Corporation...................... $ 59,866 $ 6,458 $ 135
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
ALGER
MAINSTAY VP MAINSTAY VP AMERICAN
GROWTH INDEXED SMALL
EQUITY EQUITY CAPITALIZATION
<S> <C> <C> <C>
------------------------------------------------------
Cost to Policyowners and New York Life Insurance and
Annuity Corporation (net of withdrawals)............... $ 12,718 $ 14,921 $ 126
Sales charges............................................ (792) (874) (2)
Cost of insurance........................................ (2,520) (2,759) (3)
Accumulated net investment income........................ 88 227 --
Accumulated net realized gain on investments and
realized gain distributions received................... 1,904 381 --
Unrealized appreciation (depreciation) on investments.... 284 2,013 --
Decrease attributable to funds of New York Life Insurance
and Annuity Corporation retained by Separate Account... (2) (2) --
-------- -------- --------
Net amount applicable to Policyowners and New York Life
Insurance and Annuity Corporation...................... $ 11,680 $ 13,907 $ 121
======== ======== ========
</TABLE>
F-14
<PAGE> 72
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
VL SEPARATE ACCOUNT I
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP MAINSTAY VP
MAINSTAY VP HIGH YIELD INTERNATIONAL TOTAL MAINSTAY VP MAINSTAY VP
GOVERNMENT CORPORATE BOND EQUITY RETURN VALUE BOND
<S> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------
$ 1,864 $15,867 $12,157 $20,577 $12,115 $ 3,593
(146) (275) (109) (1,417) (341) (218)
(418) (759) (281) (4,685) (988) (690)
173 1,129 1,096 495 122 268
17 355 29 67 208 13
(55) 1,732 683 2,222 2,619 (82)
-- (4) (3) (2) (3) --
-------- -------- -------- -------- -------- --------
$ 1,435 $18,045 $13,572 $17,257 $13,732 $ 2,884
======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
JANUS MORGAN STANLEY
CALVERT FIDELITY FIDELITY JANUS ASPEN EMERGING
SOCIALLY VIP II: VIP: ASPEN WORLDWIDE MARKETS
RESPONSIBLE CONTRAFUND EQUITY-INCOME BALANCED GROWTH EQUITY
<S> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------
$ 24 $ 264 $ 105 $ 109 $ 266 $ 79
-- (3) (1) (1) (5) (1)
-- (5) (1) (2) (6) (2)
-- -- -- 1 1 --
1 -- -- -- -- --
(1) 1 -- -- 3 --
-- -- -- -- -- --
-------- -------- -------- -------- -------- --------
$ 24 $ 257 $ 103 $ 107 $ 259 $ 76
======== ======== ======== ======== ======== ========
</TABLE>
F-15
<PAGE> 73
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 6--Unit Transactions (in 000's):
- --------------------------------------------------------------------------------
T
ransactions in accumulation units for the years ended December 31, 1996 and
December 31, 1995, were as follows:
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP
CAPITAL APPRECIATION CASH MANAGEMENT
------------------------ --------------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
--------------------------------------------------------
Units issued on contribution by New York Life
Insurance and Annuity Corporation.................... -- -- -- --
Units issued on premium payments....................... 1,859 1,166 29,552 15,446
Units redeemed on cost of insurance.................... (629) (421) (892) (550)
Units redeemed on surrenders........................... (87) (29) (51) (2)
Units redeemed on death benefits....................... (2) (1) -- --
Units redeemed on net transfers to
Fixed Account........................................ (75) (15) (506) (215)
Units issued (redeemed) on transfers between
Investment Divisions................................. 821 568 (25,270) (13,425)
---------
---
-------- -------- ---------
---- ---- ---
Net increase......................................... 1,887 1,268 2,833 1,254
Units outstanding, beginning of period................. 1,988 720 2,884 1,630
---------
---
-------- -------- ---------
---- ---- ---
Units outstanding, end of period....................... 3,875 1,988 5,717 2,884
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP
TOTAL RETURN VALUE
------------------------ -------------------------
1996 1995 1996 1995(A)
<S> <C> <C> <C> <C>
-------------------------------------------------------
Units issued on contribution by New York Life
Insurance and Annuity Corporation..................... -- -- -- 500
Units issued on premium payments........................ 574 407 230 35
Units redeemed on cost of insurance..................... (195) (153) (70) (7)
Units redeemed on surrenders............................ (30) (15) (5) --
Units redeemed on death benefits........................ (1) -- -- --
Units redeemed on net transfers to
Fixed Account......................................... (20) (14) (3) --
Units issued on transfers between
Investment Divisions.................................. 201 171 219 67
--------
----
-------- -------- --------
---- ---- ----
Net increase.......................................... 529 396 371 595
Units outstanding, beginning of period.................. 725 329 595 --
--------
----
-------- -------- --------
---- ---- ----
Units outstanding, end of period........................ 1,254 725 966 595
============ ============ ============ ============
</TABLE>
(a) For the period May 1, 1995 (Commencement of Operations) through December 31,
1995.
(b) For the period October 1, 1996 (Commencement of Operations) through December
31, 1996.
F-16
<PAGE> 74
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
VL SEPARATE ACCOUNT I
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAINSTAY VP
MAINSTAY VP MAINSTAY VP HIGH YIELD MAINSTAY VP
CONVERTIBLE GOVERNMENT CORPORATE BOND INTERNATIONAL EQUITY
----------- ------------------- ------------------- -----------------------------
1996(B) 1996 1995 1996 1995(A) 1996 1995(A)
<S> <C> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------
-- -- -- -- 1,000 -- 1,000
3 53 47 199 31 86 12
-- (18) (15) (58) (6) (24) (2)
-- (2) (1) (5) -- (1) --
-- -- -- -- -- -- --
-- (1) (1) (2) (2) (1) --
10 8 15 191 68 71 20
-------- -------- -------- --------
---- ---- ---- ----
13 40 45 325 1,091 131 1,030
-- 85 40 1,091 -- 1,030 --
-------- -------- -------- --------
---- ---- ---- ----
13 125 85 1,416 1,091 1,161 1,030
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
ALGER
AMERICAN
MAINSTAY VP MAINSTAY VP MAINSTAY VP SMALL
BOND GROWTH EQUITY INDEXED EQUITY CAPITALIZATION
--------------------------- ------------------- ------------------- --------------
1996 1995 1996 1995 1996 1995 1996(B)
<S> <C> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------
-- -- -- -- -- -- --
108 70 341 212 357 176 2
(35) (25) (113) (67) (115) (61) --
(4) (1) (14) (3) (12) (3) --
-- -- (1) -- -- -- --
(3) -- (13) (5) (16) (5) --
55 44 155 166 253 118 11
-------- -------- -------- --------
---- ---- ---- ----
121 88 355 303 467 225 13
122 34 371 68 328 103 --
-------- -------- -------- --------
---- ---- ---- ----
243 122 726 371 795 328 13
============ ============ ============ ============
</TABLE>
F-17
<PAGE> 75
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 -- Unit Transactions (in 000's) (Continued):
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CALVERT FIDELITY FIDELITY
SOCIALLY VIP II: VIP:
RESPONSIBLE CONTRAFUND EQUITY-INCOME
-------------- -------------- --------------
1996(b) 1996(b) 1996(b)
<S> <C> <C> <C>
----------------------------------------------------
Units issued on premium payments.................... -- 3 1
Units redeemed on cost of insurance................. -- (1) --
Units issued on transfers between
Investment Divisions.............................. 2 23 9
------------ --------- --- ---
Net increase...................................... 2 25 10
Units outstanding, beginning of period.............. -- -- --
------------ --------- --- ---
Units outstanding, end of period.................... 2 25 10
============ ============ ===
</TABLE>
<TABLE>
<CAPTION>
JANUS MORGAN STANLEY
JANUS ASPEN EMERGING
ASPEN WORLDWIDE MARKETS
BALANCED GROWTH EQUITY
-------------- -------------- --------------
1996(b) 1996(b) 1996(b)
<S> <C> <C> <C>
----------------------------------------------------
Units issued on premium payments.................... 2 5 1
Units redeemed on cost of insurance................. -- (1) --
Units issued on transfers between
Investment Divisions.............................. 9 21 7
------------ --------- --- ---
Net increase...................................... 11 25 8
Units outstanding, beginning of period.............. -- -- --
------------ --------- --- ---
Units outstanding, end of period.................... 11 25 8
============ ============ ===
</TABLE>
(b) For the period October 1, 1996 (Commencement of Operations) through December
31, 1996.
F-18
<PAGE> 76
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
VL SEPARATE ACCOUNT I
(THIS PAGE INTENTIONALLY LEFT BLANK)
F-19
<PAGE> 77
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 7--Selected Per Unit Data+:
- --------------------------------------------------------------------------------
T
he following table presents selected per accumulation unit income and
capital changes (for an accumulation unit outstanding throughout each
period) with respect to each Investment Division of VL Separate Account I:
<TABLE>
<CAPTION>
MAINSTAY VP
CAPITAL APPRECIATION
---------------------------------------------
1996 1995 1994 1993++(a)
<S> <C> <C> <C> <C>
---------------------------------------------
Unit value, beginning of period........................... $13.10 $ 9.72 $10.23 $ 10.00
Net investment income (loss).............................. (0.09) -- 0.04 0.02
Net realized and unrealized gains (losses) on security
transactions
and realized capital gain distributions received
(includes the
effect of capital share transactions)................... 2.44 3.38 (0.55) 0.21
------ ------ ------ ------
Unit value, end of period................................. $15.45 $13.10 $ 9.72 $ 10.23
====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
MAINSTAY VP
INTERNATIONAL MAINSTAY VP
EQUITY TOTAL RETURN
------------------- ---------------------------------------------
1996 1995(C) 1996 1995 1994 1993++(a)
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------
Unit value, beginning of period........................... $10.65 $10.00 $12.37 $ 9.70 $10.18 $ 10.00
Net investment income..................................... 0.58 0.46 0.26 0.32 0.52 0.18
Net realized and unrealized gains (losses) on security
transactions
and realized capital gain distributions received
(includes the
effect of capital share transactions)................... 0.46 0.19 1.13 2.35 (1.00) --
------ ------ ------ ------ ------ ------
Unit value, end of period................................. $11.69 $10.65 $13.76 $12.37 $ 9.70 $ 10.18
====== ====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
MAINSTAY VP
INDEXED EQUITY
---------------------------------------------
1996 1995 1994 1993++(a)
<S> <C> <C> <C> <C>
---------------------------------------------
Unit value, beginning of period........................... $14.39 $10.58 $10.00 $ 10.00
Net investment income (loss).............................. 0.24 0.34 0.49 --
Net realized and unrealized gains (losses) on security
transactions
and realized capital gain distributions received
(includes the
effect of capital share transactions)................... 2.86 3.47 0.09 --
------ ------ ------ ------
Unit value, end of period................................. $17.49 $14.39 $10.58 $ 10.00
====== ====== ====== ======
</TABLE>
+ Per unit data based on average monthly units outstanding during the period.
++ Per unit data based on average daily units outstanding during the period.
(a) For the period November 15, 1993 (Commencement of Operations) through
December 31, 1993.
(b) For the period May 2, 1994 (Commencement of Operations) through December 31,
1994.
(c) For the period May 1, 1995 (Commencement of Operations) through December 31,
1995.
(d) For the period October 1, 1996 (Commencement of Operations) through December
31, 1996.
F-20
<PAGE> 78
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
VL SEPARATE ACCOUNT I
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAINSTAY VP
MAINSTAY VP MAINSTAY VP MAINSTAY VP HIGH YIELD
CASH MANAGEMENT CONVERTIBLE GOVERNMENT CORPORATE BOND
--------------------------------------- ----------- ------------------------------------------- ------------------
1996 1995 1994 1993++(A) 1996(D) 1996 1995 1994 1993++(A) 1996 1995(C)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------
$ 1.08 $ 1.03 $ 1.00 $ 1.00 $ 10.00 $11.31 $ 9.76 $10.01 $10.00 $10.95 $10.00
0.04 0.05 0.03 -- 0.16 0.76 0.93 1.46 0.39 0.61 0.36
0.01 -- -- -- 0.15 (0.58) 0.62 (1.71) (0.38) 1.19 0.59
------ ------- ------- ------- ----------- ------- ------- ------- ------- ------ -------
$ 1.13 $ 1.08 $ 1.03 $ 1.00 $ 10.31 $11.49 $11.31 $ 9.76 $10.01 $12.75 $10.95
====== ======= ======= ======= ============ ======== ======== ======== ======== ====== ========
</TABLE>
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP MAINSTAY VP
VALUE BOND GROWTH EQUITY
------------------ ------------------------------------- -------------------------------------
1996 1995(C) 1996 1995 1994(B) 1996 1995 1994(B)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------
$11.62 $10.00 $ 11.70 $ 9.96 $ 10.00 $ 13.01 $ 10.14 $ 10.00
0.12 0.05 0.92 1.03 1.70 0.08 0.17 0.30
2.48 1.57 (0.77) 0.71 (1.74) 3.00 2.70 (0.16)
------ ------- --------- --------- --------- --------- --------- ---------
$14.22 $11.62 $ 11.85 $ 11.70 $ 9.96 $ 16.09 $ 13.01 $ 10.14
====== ======== ========== ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
MORGAN
ALGER JANUS STANLEY
AMERICAN CALVERT FIDELITY FIDELITY JANUS ASPEN EMERGING
SMALL SOCIALLY VIP II: VIP: ASPEN WORLDWIDE MARKETS
CAPITALIZATION RESPONSIBLE CONTRAFUND EQUITY-INCOME BALANCED GROWTH EQUITY
------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
1996(D) 1996(D) 1996(D) 1996(D) 1996(D) 1996(D) 1996(D)
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
(0.01) 0.21 (0.01) (0.01) 0.17 0.09 0.02
(0.33) (0.25) 0.40 0.39 (0.02) 0.20 (0.01)
------ ------ ------ ------ ------ ------ ------
$ 9.66 $ 9.96 $ 10.39 $ 10.38 $ 10.15 $ 10.29 $ 10.01
============== ============== ============== ============== ============== ============== ==============
</TABLE>
F-21
<PAGE> 79
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Directors of New York Life Insurance and
Annuity Corporation and the Variable Universal Life Policyowners:
In our opinion, the accompanying statements of assets and liabilities and the
related statements of operations, the statements of changes in total equity and
the selected per unit data present fairly, in all material respects, the
financial position of the New York Life Insurance and Annuity Corporation
Variable Universal Life Separate Account I comprised of the MainStay VP Capital
Appreciation Investment Division, MainStay VP Cash Management Investment
Division, MainStay VP Convertible Investment Division, MainStay VP Government
Investment Division, MainStay VP High Yield Corporate Bond Investment Division,
MainStay VP International Equity Investment Division, MainStay VP Total Return
Investment Division, MainStay VP Value Investment Division, MainStay VP Bond
Investment Division, MainStay VP Growth Equity Investment Division, MainStay VP
Indexed Equity Investment Division, Alger American Small Capitalization
Investment Division, Calvert Socially Responsible Investment Division, Fidelity
VIP II: Contrafund Investment Division, Fidelity VIP: Equity-Income Investment
Division, Janus Aspen Balanced Investment Division, Janus Aspen Worldwide Growth
Investment Division, and Morgan Stanley Emerging Markets Equity Investment
Division at December 31, 1996, the results of its operations for the year then
ended (for the MainStay VP Convertible Investment Division, the Alger American
Small Capitalization Investment Division, the Calvert Socially Responsible
Investment Division, the Fidelity VIP II: Contrafund Investment Division, the
Fidelity VIP: Equity-Income Investment Division, the Janus Aspen Balanced
Investment Division, the Janus Aspen Worldwide Growth Investment Division and
the Morgan Stanley Emerging Markets Equity Investment Division for the period
October 1, 1996 (commencement of operations) through December 31, 1996), the
changes in its total equity and the selected per unit data for the period
presented in conformity with generally accepted accounting principles. These
financial statements and selected per unit data (herein referred to as the
"financial statements") are the responsibility of management; our responsibility
is to express an opinion on these financial statements based on our audit. We
conducted our audit of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit, which included confirmation of investments at December 31, 1996, with the
MainStay VP Series Fund, Inc., The Alger American Fund, the Acacia Capital
Corporation, the Fidelity Variable Insurance Products Fund, the Fidelity
Variable Insurance Products Fund II, the Janus Aspen Series, and the Morgan
Stanley Universal Funds Inc., provides a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
February 19, 1997
F-22
<PAGE> 80
(THIS PAGE INTENTIONALLY LEFT BLANK)
F-23
<PAGE> 81
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
(A WHOLLY OWNED SUBSIDIARY OF NEW YORK LIFE INSURANCE COMPANY)
BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1996 1995
<S> <C> <C>
-----------------
<CAPTION>
(IN MILLIONS)
<S> <C> <C>
ASSETS
Fixed maturities
Available for sale, at fair value.......................................................... $11,854 $12,237
Held to maturity, at amortized cost........................................................ 647 566
Equity securities............................................................................ 70 70
Mortgage loans............................................................................... 1,113 1,003
Real estate.................................................................................. 151 141
Policy loans................................................................................. 464 435
Other long-term investments.................................................................. 17 17
------- -------
Total investments...................................................................... 14,316 14,469
Cash and cash equivalents.................................................................... 236 326
Deferred policy acquisition costs............................................................ 691 511
Other assets................................................................................. 252 236
Separate account assets...................................................................... 2,445 1,444
------- -------
Total assets........................................................................... $17,940 $16,986
======= =======
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES
Policyholders' account balances.............................................................. $13,163 $12,853
Future policy benefits....................................................................... 251 233
Policy claims................................................................................ 57 81
Deferred income taxes........................................................................ 47 156
Other liabilities............................................................................ 333 591
Separate account liabilities................................................................. 2,403 1,396
------- -------
Total liabilities...................................................................... 16,254 15,310
STOCKHOLDER'S EQUITY
Capital stock -- par value $10,000
(20,000 shares authorized, 2,500 issued and outstanding)................................... 25 25
Additional paid in capital................................................................... 480 480
Net unrealized gains on investments.......................................................... 68 227
Retained earnings............................................................................ 1,113 944
------- -------
Total stockholder's equity............................................................. 1,686 1,676
------- -------
Total liabilities and stockholder's equity............................................. $17,940 $16,986
======= =======
</TABLE>
See accompanying notes to financial statements.
F-24
<PAGE> 82
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
(A WHOLLY OWNED SUBSIDIARY OF NEW YORK LIFE INSURANCE COMPANY)
STATEMENT OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1996 1995 1994
<S> <C> <C> <C>
--------------------------
<CAPTION>
(IN MILLIONS)
<S> <C> <C> <C>
REVENUES
Universal life and annuity fees.................................................... $ 234 $ 224 $ 194
Net investment income.............................................................. 1,048 1,012 1,014
Net realized investment gains (losses)............................................. 65 38 (41)
Other income....................................................................... 58 71 57
------ ------ ------
Total revenues............................................................... 1,405 1,345 1,224
------ ------ ------
EXPENSES
Interest credited to policyholders' account balances............................... 723 742 609
Policyholder benefits.............................................................. 117 168 154
Operating expenses................................................................. 299 239 278
------ ------ ------
Total expenses............................................................... 1,139 1,149 1,041
------ ------ ------
Income before Federal income taxes................................................... 266 196 183
Federal income taxes
Current............................................................................ 121 84 97
Deferred........................................................................... (24) (8) (10)
------ ------ ------
Total Federal income taxes................................................... 97 76 87
Net income........................................................................... $ 169 $ 120 $ 96
====== ====== ======
</TABLE>
See accompanying notes to financial statements.
F-25
<PAGE> 83
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
(A WHOLLY OWNED SUBSIDIARY OF NEW YORK LIFE INSURANCE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1996 1995 1994
<S> <C> <C> <C>
--------------------------
<CAPTION>
(IN MILLIONS)
<S> <C> <C> <C>
Statutory capital and surplus, beginning of year as previously reported.............. $ -- $ -- $ 780
Cumulative effect of comprehensive change in basis of accounting (Note 2)............ -- -- 532
------ ------ ------
Stockholder's equity, beginning of year as adjusted.................................. 1,676 1,141 1,312
Net income........................................................................... 169 120 96
Change in unrealized gains and losses on investments................................. (159) 415 (197)
Dividends paid to stockholder........................................................ -- -- (70)
------ ------ ------
Stockholder's equity, end of year.................................................... $1,686 $1,676 $1,141
====== ====== ======
</TABLE>
See accompanying notes to financial statements.
F-26
<PAGE> 84
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
(A WHOLLY OWNED SUBSIDIARY OF NEW YORK LIFE INSURANCE COMPANY)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
<S> <C> <C> <C>
--------------------------
<CAPTION>
(IN MILLIONS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income.......................................................................... $ 169 $ 120 $ 96
Adjustments to reconcile net income to net cash provided by (used for) operating
activities:
Depreciation and amortization..................................................... (18) (26) (43)
Capitalization of deferred policy acquisition costs............................... (151) (126) (111)
Amortization of deferred policy acquisition costs................................. 107 86 139
Policyholder expense charge....................................................... (188) (183) (168)
Interest credited to policyholders' account balances.............................. 723 742 609
Net realized investment (gains) losses............................................ (65) (38) 41
Deferred income taxes............................................................. (24) (8) (10)
Decrease in net separate account assets........................................... 6 17 2
(Increase) decrease in other assets and other liabilities......................... (127) 308 (179)
(Decrease) increase in policy claims.............................................. (24) 8 19
Increase (decrease) in future policy benefits..................................... 18 (80) 33
------- ------- -------
Net cash provided by operating activities..................................... 426 820 428
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of available for sale fixed maturities........................... 5,787 2,370 3,120
Proceeds from maturity of available for sale fixed maturities....................... 1,505 930 1,266
Proceeds from maturity of held to maturity fixed maturities......................... 141 103 160
Proceeds from sale of equity securities............................................. 47 40 25
Proceeds from repayment of mortgage loans........................................... 143 244 138
Proceeds from sale of real estate................................................... 55 13 16
Proceeds from other invested assets................................................. 4 31 --
Cost of available for sale fixed maturities acquired................................ (7,447) (4,320) (4,605)
Cost of held to maturity fixed maturities acquired.................................. (95) (162) (135)
Cost of equity securities acquired.................................................. (43) (12) (1)
Cost of mortgage loans acquired..................................................... (280) (320) (139)
Cost of real estate acquired........................................................ (35) (14) (54)
Cost of other invested assets acquired.............................................. (8) (5) (16)
Policy loans........................................................................ (29) (25) (31)
Securities sold under agreements to repurchase (net)................................ (37) (168) 105
------- ------- -------
Net cash used in investing activities............................................. (292) (1,295) (151)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Policyholders' account balances:
Deposits.......................................................................... 1,069 1,252 1,153
Withdrawals....................................................................... (562) (751) (793)
Net transfers to the separate accounts............................................ (733) (238) (172)
Other, net.......................................................................... -- (52) (70)
------- ------- -------
Net cash (used in) provided by financing activities........................... (226) 211 118
------- ------- -------
Effect of exchange rate changes on cash and cash equivalents.......................... 2 (1) 1
------- ------- -------
Net (decrease) increase in cash and cash equivalents.................................. (90) (265) 396
Cash and cash equivalents, beginning of year.......................................... 326 591 195
------- ------- -------
Cash and cash equivalents, end of year................................................ $ 236 $ 326 $ 591
======= ======= =======
</TABLE>
See accompanying notes to financial statements.
F-27
<PAGE> 85
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
(A WHOLLY OWNED SUBSIDIARY OF NEW YORK LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE 1--Nature of Operations
- --------------------------------------------------------------------------------
N
ew York Life Insurance and Annuity Corporation ("NYLIAC") is a direct,
wholly owned subsidiary of New York Life Insurance Company ("New York
Life"). NYLIAC offers a wide variety of interest sensitive insurance and
annuity products to a large cross section of the insurance market. NYLIAC
markets its products in all 50 of the United States, the District of Columbia
and Taiwan, primarily through its agency force. In addition, NYLIAC markets
Corporate Owned Life Insurance through independent brokers and brokerage general
agents.
NOTE 2--Significant Accounting Policies
- --------------------------------------------------------------------------------
Basis of Presentation
T
he accompanying financial statements have been prepared in conformity with
generally accepted accounting principles ("GAAP"). The preparation of
financial statements of life insurance enterprises requires management to
make estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements. Actual results may
differ from estimates.
Comprehensive Change in Basis of Accounting
In 1996, NYLIAC adopted Financial Accounting Standards Board ("FASB")
Interpretation No. 40 "Applicability of Generally Accepted Accounting Principles
to Mutual Life Insurance and Other Enterprises," as amended by Statement of
Financial Accounting Standards ("SFAS") No. 120 "Accounting and Reporting by
Mutual Insurance Enterprises and by Insurance Enterprises for Certain
Long-Duration Participating Contracts," effective for fiscal years beginning
after December 15, 1995. Prior to the effective date of the Interpretation,
NYLIAC, consistent with industry practice, issued financial statements in
accordance with statutory accounting practices which were considered GAAP for
mutual life insurance companies and their life insurance subsidiaries.
Interpretation No. 40 establishes a new definition of GAAP for mutual life
insurance companies and their life insurance subsidiaries. Under the
Interpretation, financial statements of mutual life insurance companies and
their life insurance subsidiaries which are prepared on the basis of statutory
accounting practices, are no longer characterized as in conformity with GAAP.
As a result, NYLIAC has prepared financial statements for the year ended
December 31, 1996 in accordance with GAAP. Financial statements for the years
ended December 31, 1995, 1994 and 1993, which were previously prepared on the
basis of statutory accounting, have been restated in accordance with GAAP. The
cumulative effect of the comprehensive change in basis of accounting of $532
million has been recorded as an increase in the beginning of year equity for the
year ended December 31, 1994, the earliest year presented herein (See Note 14
for a reconciliation of NYLIAC's statutory surplus and statutory net income with
stockholder's equity and net income on a GAAP basis).
Investments
Fixed maturity investments, which NYLIAC has both the ability and the intent
to hold to maturity, are stated at amortized cost. Investments identified as
available for sale are reported at fair value. Unrealized gains and losses on
available for sale securities are reported in equity, net of deferred taxes and
related adjustments. The cost basis of fixed maturities is adjusted for
impairments in value deemed to be other than temporary, with the associated
realized loss reported in net income. Equity securities are carried at fair
value. Unrealized gains and losses related to such securities are reflected in
equity, net of deferred taxes and related adjustments. Realized losses are
recognized in net income for other than temporary declines in fair value.
Mortgage loans are carried at unpaid principal balances, net of impairment
allowances, and are generally secured. Investment real estate, which NYLIAC has
the intent to hold for the production of income, is carried at depreciated cost
net of write-downs for other than temporary declines in fair value. Properties
held for sale are carried at the lower of cost or fair value less estimated
selling costs. Policy loans are stated at the aggregate balance due. The
carrying amount approximates fair value since loans on policies have no defined
maturity date and reduce amounts payable at death or surrender. Cash equivalents
include investments that have maturities of 90 days or less at date of purchase
and are carried at amortized cost, which approximates fair value. Short-term
investments are included in fixed maturities on the balance sheet, and are
carried at amortized cost, which approximates fair value.
Derivative financial instruments used by NYLIAC to hedge exposure to interest
rate and foreign currency fluctuations are accounted for on an accrual basis.
Realized gains and losses related to contracts that are effective hedges on
specific assets are deferred and recognized in net income in the same period as
gains and losses on the hedged assets. Amounts payable or
F-28
<PAGE> 86
Investments (Continued)
receivable under interest rate, currency and commodity swap agreements and
interest rate floor agreements are recognized as investment income or expense
when earned. Premiums paid for interest rate floor agreements are amortized into
interest expense over the life of the agreement. Unamortized premiums are
included in other assets in the balance sheet. Unrealized gains and losses on
foreign currency forward exchange contracts are reported in equity. Realized
gains and losses are recognized in net income upon termination or maturity of
the contracts.
Deferred Policy Acquisition Costs
The costs of acquiring new business and certain costs of issuing policies that
vary with and are primarily related to the production of new business have been
deferred and recorded as an asset in the balance sheet. These consist primarily
of commissions, certain expenses of underwriting and issuing contracts, and
certain agency expenses. Acquisition costs for universal life and annuity
contracts are amortized in proportion to estimated gross profits over the
effective life of these contracts, which is assumed to be 25 years for universal
life contracts and 15 years for annuities. Changes in assumptions are reflected
in the current year's amortization.
The carrying amount of the deferred policy acquisition cost asset is adjusted
at each balance sheet date as if the unrealized gains or losses on investments
associated with these insurance contracts had been realized and included in the
gross profits used to determine current period amortization. The increase or
decrease in the deferred policy acquisition cost asset due to unrealized gains
or losses is recorded in stockholder's equity.
Recognition of Income and Related Expenses
Amounts received under universal life and annuity contracts are reported as
deposits to policyholders' account balances. Revenues from these contracts
consist of amounts assessed during the period for mortality and expense risk,
policy administration and surrender charges. Policy benefits and claims that are
charged to expense include benefit claims incurred in the period in excess of
related policyholders' account balances.
Policyholders' Account Balances
Policyholders' account balances on universal life and annuity contracts are
equal to cumulative deposits plus credited interest less withdrawals and
charges.
Federal Income Taxes
NYLIAC is a member of a group which files a consolidated Federal income tax
return with New York Life. The consolidated income tax provision or benefit is
allocated among the members of the group in accordance with a tax allocation
agreement. The tax allocation agreement provides that each member of the group
is allocated its share of the consolidated tax provision or benefit determined
on a separate company basis. Current Federal income taxes are charged or
credited to operations based upon amounts estimated to be payable or recoverable
as a result of taxable operations for the current year. Adjustments to such
estimates are recorded in net income. Deferred income tax assets and liabilities
are recognized for the future tax consequence of temporary differences between
financial statement carrying amounts and income tax bases of assets and
liabilities.
Current Federal income taxes include a provision for NYLIAC's allocable share
of the equity base tax applicable to mutual life insurance companies and their
subsidiaries. The amount recorded is based on NYLIAC's estimate of the
differential earnings rate used to compute the equity base tax.
Reinsurance
NYLIAC enters into reinsurance agreements in the normal course of its
insurance business to reduce overall risk. NYLIAC remains liable for reinsurance
ceded if the reinsurer fails to meet its obligation on the business it has
assumed. NYLIAC evaluates the financial condition of its reinsurers to minimize
its exposure to significant losses from reinsurer insolvencies.
Separate Accounts
NYLIAC has established separate accounts with varying investment objectives
which are segregated from NYLIAC's general account and are maintained for the
benefit of separate account contractholders and NYLIAC. Separate account assets
are stated at market value. The liability for separate accounts represents
contractholders' interests in the separate account assets, including accumulated
net investment income and realized and unrealized gains and losses on those
assets.
F-29
<PAGE> 87
Fair Values of Financial Instruments
Fair values of various assets and liabilities are included throughout the
notes to financial statements. Specifically, fair value disclosure of fixed
maturities, short-term investments, cash equivalents, equity securities and
mortgage loans is reported in Note 2 -- Significant Accounting Policies and Note
3 -- Investments. Fair values for policyholders' account balances are reported
in Note 5 -- Insurance Liabilities. Fair values for derivative financial
instruments are included in Note 10 -- Derivative Financial Instruments and Risk
Management. Fair values for repurchase agreements are included in Note 11 --
Commitments and Contingencies.
Business Risks and Uncertainties
The development of liabilities for future policy benefits and deferred policy
acquisition costs for NYLIAC's products requires management to make estimates
and assumptions regarding mortality, morbidity, lapse, expense and investment
experience. Such estimates are primarily based on historical experience and
future expectations of mortality, morbidity, expense, persistency and investment
assumptions. Actual results could differ from those estimates. Management
monitors actual experience, and where circumstances warrant, revises its
assumptions and the related estimates for liabilities for future policy benefits
and deferred policy acquisition costs.
NYLIAC's investments are primarily comprised of fixed maturities and mortgage
loans. Significant changes in prevailing interest rates and geographic
conditions may adversely affect the timing and amount of cash flows on such
investments, as well as their related values. A significant decline in the
market value of these investments could have an adverse affect on NYLIAC's
balance sheet.
NYLIAC regularly invests in mortgage-backed securities and other securities
subject to prepayment and call risk. Significant changes in prevailing interest
rates may adversely affect the timing and amount of cash flows on such
securities. In addition, the amortization of market premium and accretion of
market discount for mortgage-backed securities is based on historical experience
and estimates of future payment experience on the underlying mortgage loans.
Actual prepayment speeds will differ from original estimates and may result in
material adjustments to amortization or accretion recorded in future periods.
As a subsidiary of a mutual life insurance company, NYLIAC is subject to a tax
on its equity base. The rates applied to NYLIAC's equity base are determined
annually by the Internal Revenue Service ("IRS") after comparison of mutual life
insurance company earnings for the year to the average earnings of the 50
largest stock life insurance companies for the prior three years. Due to the
timing of earnings information, estimates of the current year's tax must be made
by management. The ultimate amounts of equity base tax incurred may vary
considerably from the original estimates.
NOTE 3-- Investments
- --------------------------------------------------------------------------------
Fixed Maturities
F
or publicly traded fixed maturities, estimated fair value is determined
using quoted market prices. For fixed maturities without a readily
ascertainable market value, NYLIAC has determined an estimated fair value
using either a discounted cash flow approach (including provisions for
credit risk, generally based upon the assumption such securities will be held to
maturity) or a proprietary matrix pricing model.
At December 31, 1996 and 1995, the maturity distribution of fixed maturities
was as follows (in millions):
<TABLE>
<CAPTION>
1996 1995
---------------------- ----------------------
AMORTIZED ESTIMATED AMORTIZED ESTIMATED
COST FAIR VALUE COST FAIR VALUE
--------------------------------------------
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE
Due in one year or less............................................. $ 489 $ 491 $ 755 $ 762
Due after one year through five years............................... 3,019 3,039 2,782 2,850
Due after five years through ten years.............................. 2,122 2,151 1,642 1,736
Due after ten years................................................. 2,030 2,091 1,795 1,967
Asset-backed securities:
Government or government agency................................... 2,866 2,916 4,089 4,233
Other............................................................. 1,168 1,166 657 689
------- ------- ------- -------
Total Available for Sale.................................... $11,694 $ 11,854 $11,720 $ 12,237
======= ======= ======= =======
</TABLE>
F-30
<PAGE> 88
Fixed Maturities (Continued)
<TABLE>
<CAPTION>
1996 1995
---------------------- ----------------------
AMORTIZED ESTIMATED AMORTIZED ESTIMATED
COST FAIR VALUE COST FAIR VALUE
--------------------------------------------
<S> <C> <C> <C> <C>
HELD TO MATURITY
Due in one year or less............................................. $ 24 $ 24 $ 29 $ 29
Due after one year through five years............................... 192 194 232 237
Due after five years through ten years.............................. 235 241 208 221
Due after ten years................................................. 100 105 67 75
Asset-backed securities............................................. 96 96 30 31
---- ---- ---- ----
Total Held to Maturity...................................... $ 647 $660 $ 566 $593
==== ==== ==== ====
</TABLE>
At December 31, 1996 and 1995, the distribution of gross unrealized gains and
losses on investments in fixed maturities was as follows (in millions):
<TABLE>
<CAPTION>
1996
------------------------------------------------
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
---------------------------------------------
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE
U.S. Treasury and U.S. Government corporations and agencies........ $ 1,243 $ 24 $ 7 $ 1,260
U.S. agencies, state and municipal................................. 2,561 64 15 2,610
Foreign governments................................................ 191 13 1 203
Corporate.......................................................... 6,531 131 47 6,615
Other.............................................................. 1,168 19 21 1,166
------- ---- --- -------
Total Available for Sale................................... $11,694 $251 $ 91 $ 11,854
======= ==== === =======
HELD TO MATURITY
Corporate.......................................................... $ 551 $ 15 $ 2 $ 564
Asset-backed securities............................................ 96 -- -- 96
------- ---- --- -------
Total Held to Maturity..................................... $ 647 $ 15 $ 2 $ 660
======= ==== === =======
</TABLE>
<TABLE>
<CAPTION>
1995
------------------------------------------------
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
---------------------------------------------
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE
U.S. Treasury and U.S. Government corporations and agencies........ $ 1,840 $ 82 $ 2 $ 1,920
U.S. agencies, state and municipal................................. 3,563 150 8 3,705
Foreign governments................................................ 318 26 1 343
Corporate.......................................................... 5,342 249 11 5,580
Other.............................................................. 657 33 1 689
------- ---- --- -------
Total Available for Sale................................... $11,720 $540 $ 23 $ 12,237
======= ==== === =======
HELD TO MATURITY
Corporate.......................................................... $ 536 $ 26 $ -- $ 562
Asset-backed securities............................................ 30 1 -- 31
------- ---- --- -------
Total Held to Maturity..................................... $ 566 $ 27 $ -- $ 593
======= ==== === =======
</TABLE>
Equity Securities
Estimated fair value for equity securities, substantially all of which have a
readily ascertainable market value, has been determined using quoted market
prices.
At December 31, 1996 and 1995, the distribution of gross unrealized gains and
losses on equity securities is as follows (in millions):
<TABLE>
<CAPTION>
UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
---------------------------------------
<S> <C> <C> <C> <C>
1996..................................................................... $63 $ 8 $1 $ 70
1995..................................................................... $45 $ 28 $3 $ 70
</TABLE>
F-31
<PAGE> 89
Mortgage Loans
NYLIAC's mortgage loans are diversified by property type, location and
borrower. Mortgage loans are collateralized by the related property and
generally approximate 75% of the property's value at the time the original loan
is made. The carrying value of mortgage loans was $1,113 million and $1,003
million at December 31, 1996 and 1995, respectively.
The fair market value of the mortgage loan portfolio at December 31, 1996 and
1995, is estimated to be $1,194 million and $1,103 million, respectively. Market
values are determined by discounting the projected cash flow for each individual
loan to determine the current net present value. The discount rate used
approximates the current rate for new mortgages with comparable characteristics
and similar remaining maturities.
At December 31, 1996, contractual commitments to extend credit under
commercial mortgage loan agreements amounted to approximately $25 million, all
at a fixed market rate of interest. These commitments are diversified by
property type and geographic region.
Allowances related to mortgage loans were $20 million at December 31, 1996 and
1995. The activity in the allowances as of December 31, 1996 and 1995, is
summarized below (in millions):
<TABLE>
<CAPTION>
1996 1995
-------------
<S> <C> <C>
Beginning balance.................................................................................. $20 $19
Charged to net loss................................................................................ (1) (5)
Principal write-offs............................................................................... 1 6
--- ---
Ending balance..................................................................................... $20 $20
=== ===
</TABLE>
Impaired mortgage loans along with specific allowances for losses as of
December 31, 1996 and 1995, were as follows (in millions):
<TABLE>
<CAPTION>
1996 1995
-------------
<S> <C> <C>
Impaired mortgage loans with provisions for losses................................................. $39 $51
Provision for losses............................................................................... (14) (13)
---- ----
Net impaired mortgage loans........................................................................ $25 $38
==== ====
</TABLE>
NYLIAC accrues interest income on impaired loans to the extent it is deemed
collectible (delinquent less than 90 days) and the loan continues to perform
under its original or restructured contractual terms. Interest income on problem
loans is generally recognized on a cash basis. Cash payments on loans in the
process of foreclosure are generally treated as a return of principal.
At December 31, 1996 and 1995, the distribution of the mortgage loan portfolio
by property type and geographic region was as follows (in millions):
<TABLE>
<CAPTION>
1996 1995
---------------
<S> <C> <C>
PROPERTY TYPE:
Office building................................................................................ $ 643 $ 639
Retail......................................................................................... 235 184
Apartments..................................................................................... 179 151
Other.......................................................................................... 56 29
------ ------
Total.................................................................................... $1,113 $1,003
====== ======
GEOGRAPHIC REGION:
Central........................................................................................ $ 246 $ 207
Pacific........................................................................................ 133 131
Middle Atlantic................................................................................ 377 365
South Atlantic................................................................................. 307 273
New England.................................................................................... 33 12
Other.......................................................................................... 17 15
------ ------
Total.................................................................................... $1,113 $1,003
====== ======
</TABLE>
F-32
<PAGE> 90
Real Estate
At December 31, 1996 and 1995, NYLIAC's real estate portfolio consisted of the
following (in millions):
<TABLE>
<CAPTION>
1996 1995
-------------
<S> <C> <C>
Investment......................................................................................... $105 $101
Acquired through foreclosure....................................................................... 39 40
Real estate joint ventures......................................................................... 7 --
---- ----
Total real estate.......................................................................... $151 $141
==== ====
</TABLE>
Accumulated depreciation on real estate was $5 million at December 31, 1996
and 1995. Depreciation expense for 1996, 1995 and 1994, totaled $3 million, $3
million and $2 million, respectively.
NOTE 4--Investment Income and Capital Gains and Losses
- --------------------------------------------------------------------------------
T
he components of net investment income for the years ended December 31,
1996, 1995 and 1994, were as follows (in millions):
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
------------------------
Fixed maturities....................................................................... $ 920 $ 904 $ 890
Equity securities...................................................................... 3 3 5
Mortgage loans......................................................................... 93 82 86
Real estate............................................................................ 21 19 16
Policy loans........................................................................... 37 35 31
Other.................................................................................. 6 4 13
------ ------ ------
Gross investment income............................................................ 1,080 1,047 1,041
Investment expenses.................................................................... (32) (35) (27)
------ ------ ------
Net investment income.............................................................. $1,048 $1,012 $1,014
====== ====== ======
</TABLE>
For the years ended December 31, 1996, 1995 and 1994, realized investment
gains and losses computed under the specific identification method are as
follows (in millions):
<TABLE>
<CAPTION>
1996 1995 1994
---------------- ---------------- ----------------
GAINS LOSSES GAINS LOSSES GAINS LOSSES
-----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fixed maturities.......................................... $100 $ (64) $ 62 $ (32) $ 98 $(132)
Equity securities......................................... 22 (1) 16 (7) 5 (1)
Mortgage loans............................................ 15 (19) 15 (19) 1 (5)
Real estate............................................... 6 (3) 1 (1) 1 (4)
Derivative instruments.................................... 46 (41) 102 (102) 4 (14)
Other..................................................... 7 (3) 9 (6) 7 (1)
---- ----- ---- ----- ---- -----
Subtotal................................................ $196 $(131) $205 $(167) $116 $(157)
---- ----- ---- ----- ---- -----
Net realized investment gains (losses).................... $65 $38 $(41)
=== === ===
</TABLE>
F-33
<PAGE> 91
NOTE 4--Investment Income and Capital Gains and Losses (Continued)
- --------------------------------------------------------------------------------
Stockholder's equity at December 31, 1996 and 1995, includes net unrealized
gains and losses as follows (in millions):
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
-------------
Net unrealized gains on investments before adjustments............................................ $163 $ 535
Related adjustments:
Deferred policy acquisition costs............................................................... (60) (196)
Policyholder liabilities........................................................................ 2 9
Deferred Federal income taxes................................................................... (37) (121)
---- ----
(95) (308)
Net unrealized gains on investments included in stockholder's equity.............................. $68 $ 227
==== ====
</TABLE>
Changes in net unrealized gains and losses on investments were as follows (in
millions):
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
--------------
Net unrealized gains (losses) on investments before adjustments:
Beginning of year.............................................................................. $ 535 $ (477)
End of year.................................................................................... 163 535
---- ----
Net change..................................................................................... (372) 1,012
Change in related adjustments:
Deferred policy acquisition costs.............................................................. 136 (391)
Policyholder liabilities....................................................................... (7) 17
Deferred Federal income taxes.................................................................. 84 (223)
---- ----
Change in unrealized gains on investments........................................................ (159) 415
Net unrealized gains (losses) on investments at beginning of year................................ 227 (188)
---- ----
Net unrealized gains on investments at end of year............................................... $ 68 $ 227
==== ====
</TABLE>
NOTE 5--Insurance Liabilities
- --------------------------------------------------------------------------------
Policyholders' Account Balances
N
YLIAC's annuity contracts are primarily deferred annuities. The carrying
value, which approximates fair value, of NYLIAC's liabilities for deferred
annuities at December 31, 1996 and 1995, was $7,345 million and $7,559
million, respectively.
NOTE 6--Separate Accounts
- --------------------------------------------------------------------------------
N
YLIAC maintains seven non-guaranteed, registered separate accounts for its
variable deferred annuity and variable life products with assets of $2,445
million and $1,444 million at December 31, 1996 and 1995, respectively.
NYLIAC maintains investments in the registered separate accounts of $42
million and $48 million at December 31, 1996 and 1995, respectively. The assets
of the separate accounts, which are carried at market value, represent
investments in shares of the New York Life sponsored MainStay VP Series Fund and
seven nonproprietary funds.
F-34
<PAGE> 92
NOTE 7--Deferred Policy Acquisition Costs
- --------------------------------------------------------------------------------
A
n analysis of deferred policy acquisition costs for the years ended December
31, 1996, 1995 and 1994, is as follows (in millions):
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
----------------------
Balance at beginning of year before adjustment for unrealized (gains) losses on
investments............................................................................ $ 707 $ 667 $ 695
Current year deferral.................................................................... 151 126 111
Amortized during year.................................................................... (107) (86) (139)
------ ------ ------
Balance at end of year before adjustment for unrealized (gains) losses on investments.... 751 707 667
Adjustment for unrealized (gains) losses on investments.................................. (60) (196) 195
------ ------ ------
Balance at end of year................................................................... $ 691 $ 511 $ 862
====== ====== ======
</TABLE>
NOTE 8--Federal Income Taxes
- --------------------------------------------------------------------------------
T
he components of the net deferred income tax liability as of December 31,
1996 and 1995, are as follows (in millions):
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
-------------
Deferred Tax Assets:
Future policy benefits.......................................................................... $114 $ 105
Employee benefits............................................................................... 26 43
Other........................................................................................... 36 9
---- ----
Gross deferred tax assets..................................................................... 176 157
---- ----
Deferred Tax Liabilities:
Deferred policy acquisition costs............................................................... 161 110
Investments..................................................................................... 54 191
Other........................................................................................... 8 12
---- ----
Gross deferred tax liabilities................................................................ 223 313
---- ----
Net deferred tax liability.................................................................... $(47) $(156)
==== ====
</TABLE>
The gross deferred tax asset relates to temporary differences that are
expected to reverse as net ordinary deductions. Management believes that
NYLIAC's taxable income in future years will be sufficient to realize the
deferred tax benefits and therefore, no valuation allowance has been recorded.
Set forth below is a reconciliation of the Federal income tax rate to the
effective tax rate for 1996, 1995 and 1994:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
---------------------
Statutory Federal income tax rate......................................................... 35.0% 35.0% 35.0%
Equity base tax....................................................................... 3.2 -- 11.7
Investments in employee stock option loans............................................ (.7) (1.3) (1.4)
Other................................................................................. (.9) 5.2 3.3
---- ---- ----
Effective tax rate.................................................................... 36.6% 38.9% 48.6%
==== ==== ====
</TABLE>
NYLIAC's Federal income tax returns are routinely audited by the IRS and
provisions are made in the financial statements in anticipation of the results
of these audits. The IRS has completed audits through 1990. There were no
material effects on NYLIAC's results of operations as a result of these audits.
NYLIAC believes that its recorded income tax liabilities are adequate for all
open years.
F-35
<PAGE> 93
NOTE 9--Reinsurance
- --------------------------------------------------------------------------------
A
group reinsurance agreement between NYLIAC and New York Life was approved by
the New York State Insurance Department in 1981 and was terminated effective
December 31, 1995. Under the terms of the agreement, NYLIAC assumed the
liabilities for group health long-term disability policies issued by New York
Life. Cash settlements were made between the companies as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
----------------------
1996 1995 1994
<S> <C> <C> <C>
---------------------
Premiums due.............................................................................. $-- $(32) $(33)
Benefit reimbursement..................................................................... 22 20 18
Experience refund......................................................................... 4 8 16
--- --- ---
Net settlement paid (received) by NYLIAC.................................................. $26 $(4) $ 1
=== === ===
</TABLE>
As a result of the termination of the group reinsurance agreement between
NYLIAC and New York Life, NYLIAC transferred $119 million in fixed maturities to
New York Life during 1996 as payment for the policy liabilities related to
disability claims covered under the group reinsurance contract. At December 31,
1995, NYLIAC had established a liability of $119 million for this payment.
NOTE 10--Derivative Financial Instruments and Risk Management
- --------------------------------------------------------------------------------
N
YLIAC uses derivative financial instruments to manage interest rate,
currency and market risk. These derivative financial instruments include
foreign currency forward exchange contracts, interest rate floors, and
interest rate and commodity swaps. NYLIAC does not engage in derivative
financial instrument transactions for the purpose of trading.
Notional or contractual amounts of derivative financial instruments provide
only a measure of involvement in these types of transactions and they do not
represent the amounts exchanged between the parties engaged in the transaction.
The amounts exchanged are determined by reference to the notional amounts and
other terms of the derivative financial instruments which relate to interest
rates, exchange rates, or other financial indices.
Interest Rate Risk Management
NYLIAC enters into various types of interest rate contracts primarily to
minimize exposure of specific assets held by NYLIAC to fluctuations in interest
rates.
The following table summarizes the notional amounts and credit exposures of
interest rate related derivative transactions (in thousands):
<TABLE>
<CAPTION>
1996 1995
--------------------- ---------------------
NOTIONAL CREDIT NOTIONAL CREDIT
AMOUNT EXPOSURE AMOUNT EXPOSURE
<S> <C> <C> <C> <C>
---------------------------------------------
Interest Rate Swaps............................................... $57,000 $992 $50,000 --
Floors............................................................ $150,000 $120 $150,000 --
</TABLE>
Interest rate swaps are agreements with other parties to exchange, at
specified intervals, the difference between fixed-rate and floating-rate
interest amounts calculated by reference to an agreed upon notional amount. Swap
contracts outstanding at December 31, 1996 are between eight years, eight months
and fourteen years, four months in maturity. At December 31, 1995 such contracts
were between ten months and eight years, seven months in maturity. NYLIAC does
not act as an intermediary or broker in interest rate swaps.
F-36
<PAGE> 94
Interest Rate Risk Management (Continued)
The following table shows the type of swaps used by NYLIAC and the weighted
average interest rates. Average variable rates are based on the rates which
determine the last payment received or paid on each contract; those rates may
change significantly, affecting future cash flows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
-------------------
Receive -- fixed swaps -- Notional amount (in thousands).................................... $57,000 $15,000
Average receive rate...................................................................... 7.19% 7.93%
Average pay rate.......................................................................... 5.92% 7.39%
Pay -- fixed swaps -- Notional amount (in thousands)........................................ -- $35,000
Average pay rate.......................................................................... -- 7.46%
Average receive rate...................................................................... -- 6.02%
</TABLE>
During the term of the swap, net settlement amounts are recorded as investment
income or expense when earned. Fair values of interest rate swaps were $569,000
and ($2,000,000) at December 31, 1996 and 1995, respectively, based on quoted
market prices.
Interest rate floor agreements entitle NYLIAC to receive amounts from
counterparties based upon the difference between a strike price and current
interest rates. Such agreements serve as hedges against declining interest rates
on a portfolio of assets. Amounts received during the term of interest rate
floor agreements are recorded as investment income.
At December 31, 1996 and 1995, unamortized premiums on interest rate floors
amounted to $522,000 and $597,000, respectively. Fair values of such agreements
were $120,000 and $395,000 at December 31, 1996 and 1995, respectively, based on
quoted market prices.
NYLIAC is exposed to credit-related losses in the event that a counterparty
fails to perform its obligations under contractual terms. The credit exposure of
derivative financial instruments is represented by the sum of fair values of
contracts with each counterparty, if the net value is positive, at the reporting
date.
NYLIAC deals with highly rated counterparties and does not expect the
counterparties to fail to meet their obligations. NYLIAC has controls in place
to monitor credit exposures by limiting transactions with specific
counterparties within specified dollar limits and assessing the future
creditworthiness of counterparties. NYLIAC uses master netting agreements and
adjusts transaction levels, when appropriate, to minimize risk.
Foreign Exchange Risk Management
NYLIAC enters into foreign currency forward exchange contracts and foreign
currency swaps primarily as a portfolio hedge against foreign currency
fluctuations. The purpose of NYLIAC's foreign currency hedging activities is to
protect it from the risk that the value of foreign currency denominated
investments will be adversely affected by changes in exchange rates.
NYLIAC's foreign currency forward exchange contracts involve the exchange of
two currencies at a specified future date and at a specified price. The average
term of the contracts is three to six months.
The table below summarizes, by major currency, the contractual amounts of
NYLIAC's foreign currency forward exchange contracts. The amounts represent the
U.S. dollar equivalent of commitments to buy and sell foreign currencies,
translated at December 31, 1996 and 1995 exchange rates (in thousands):
<TABLE>
<CAPTION>
1996 1995
------------------ -----------------
BUY SELL BUY SELL
<S> <C> <C> <C> <C>
---------------------------------
Japanese Yen.................................................................. $ -- $14,000 $ -- $ 49,000
Italian Lire.................................................................. -- 9,000 -- 21,000
French Francs................................................................. -- 8,000 -- 24,000
Other......................................................................... 4,000 43,000 -- 107,000
------ ------- --- --------
$4,000 $74,000 $ -- $201,000
====== ======= === ========
</TABLE>
F-37
<PAGE> 95
Foreign Exchange Risk Management (Continued)
The fair values of foreign currency forward exchange contracts at December 31,
1996 and 1995 were $1 million and $(3) million, respectively, based on current
market rates.
NYLIAC is exposed to credit-related losses in the event of non-performance by
counterparties, which could result in an unhedged position. NYLIAC deals with
highly rated counterparties and does not expect the counterparties to fail to
meet their obligations under the contracts. For contracts with counterparties
where no master netting arrangement exists, in the event of default on the part
of the counterparty, credit exposure is defined as the fair value of contracts
in a gain position at the reporting date. Credit exposure to counterparties,
where a master netting arrangement is in place in the event of default is
defined as the net fair value, if positive, of all outstanding contracts with
each specific counterparty. The credit exposure of NYLIAC's foreign currency
forward exchange contracts at December 31, 1996 and 1995 was $1,000,000 and
$137,000, respectively.
NOTE 11--Commitments and Contingencies
- --------------------------------------------------------------------------------
Litigation
I
n 1995, NYLIAC and New York Life settled a class action related to the sale
of whole life and universal life insurance policies from 1982 through 1994.
In entering into the settlement, NYLIAC specifically denied any wrongdoing.
The settlement was approved by the judge, and has now been upheld on appeal,
including a recent refusal by the New York State Court of Appeals to permit a
discretionary appeal from the Appellate Division. The lone appellant has
recently filed two motions in the trial court seeking to enjoin implementation
of the settlement and to renew his objections to the settlement. The lone
appellant may file a writ of certiorari in the United States Supreme Court
during the prescribed statutory period.
There are also actions in various jurisdictions by individual policyowners who
excluded themselves from the settlement of the nationwide class action; and in
each of two jurisdictions a purported class action claiming to include numerous
policyowners who excluded themselves from the settlement of the nationwide class
action. Most of these actions seek substantial or unspecified compensatory and
punitive damages.
NYLIAC is also a defendant in other individual and alleged class actions
arising from its insurance, investment and/or other operations, including
actions involving retail sales practices. Most of these actions also seek
substantial or unspecified compensatory and punitive damages. NYLIAC is also
from time to time involved as a party in various governmental, administrative,
and investigative proceedings and inquiries.
Given the uncertain nature of litigation and regulatory inquiries, the outcome
of the above cannot be predicted. NYLIAC nevertheless believes that the ultimate
liability that could result from such litigation and proceedings would not have
a material adverse effect on NYLIAC's financial position; however, it is
possible that settlements or adverse determinations in one or more actions or
other proceedings in the future could have a material adverse effect on NYLIAC's
operating results for a given year.
Loaned Securities and Repurchase Agreements
NYLIAC participates in a secured lending program for the purpose of enhancing
income on securities held. At December 31, 1996, $826 million ($1,222 million at
December 31, 1995) of NYLIAC's bonds were on loan to others, but were fully
collateralized in an account held in trust for NYLIAC. Such assets reflect the
extent of NYLIAC's involvement in securities lending, not its risk of loss.
NYLIAC enters into agreements to sell and repurchase securities for the
purpose of enhancing income on securities held. Under these agreements, NYLIAC
obtains the use of funds from a broker for approximately one month. The
liability reported in the balance sheet at December 31, 1996 of $50 million ($86
million at December 31, 1995) is considered to be fair value. The investments
acquired with the funds received from the securities sold are primarily included
in cash and cash equivalents in the balance sheet.
NOTE 12--Related Party Transactions
- --------------------------------------------------------------------------------
N
o dividends were declared or paid to New York Life in 1996 or 1995. In 1994,
NYLIAC declared and paid a dividend of $70 million to New York Life. This
dividend was paid from current year earnings, as permitted by the Delaware
Insurance Department.
F-38
<PAGE> 96
NOTE 12--Related Party Transactions (Continued)
- --------------------------------------------------------------------------------
New York Life provides NYLIAC with services and facilities for the sale of
insurance and other activities related to the business of insurance. NYLIAC
reimburses New York Life for the identified costs associated with these services
and facilities under the terms of a Service Agreement between New York Life and
NYLIAC. Such costs, amounting to $191 million for the year ended December 31,
1996 ($166 million for 1995 and $147 million for 1994) are reflected in
operating expenses and net investment income in the accompanying Statement of
Income.
NOTE 13--Supplemental Cash Flow Information
- --------------------------------------------------------------------------------
A
s a result of the reinsurance agreement with New York Life discussed in Note
9, NYLIAC transferred $119 million in fixed maturities to New York Life
during 1996.
Federal income taxes paid were $146 million, $57 million, and $105 million
during 1996, 1995 and 1994, respectively.
Interest paid was $3 million, $2 million and $2 million during 1996, 1995 and
1994, respectively.
NOTE 14--Reconciliations Between Statutory Accounting and GAAP
- --------------------------------------------------------------------------------
A
ccounting practices used to prepare statutory financial statements for
regulatory filings of life insurance companies differ in certain instances
from GAAP. The following chart reconciles NYLIAC's statutory capital and
surplus determined in accordance with accounting practices prescribed by the
Delaware Insurance Department with stockholder's equity on a GAAP basis, and the
cumulative effect of adopting GAAP as of January 1, 1994 (in millions):
<TABLE>
<CAPTION>
CUMULATIVE
YEAR ENDED EFFECT
DECEMBER 31, OF ADOPTING GAAP
---------------------------- ----------------
1996 1995 1994 JANUARY 1, 1994
<S> <C> <C> <C> <C>
----------------------------------------------
Statutory Capital and Surplus.................................... $ 998 $ 878 $ 845 $ 780
------ ------ ------ ------
Adjustments:
Deferred policy acquisition costs.............................. 691 511 862 694
Asset valuation reserve........................................ 164 137 105 79
Investment related............................................. 151 511 (490) (7)
Interest maintenance reserve................................... 35 26 20 55
Non-admitted assets............................................ 31 26 23 17
Policyholder liabilities....................................... (262) (187) (203) (184)
Deferred income taxes.......................................... (47) (156) 59 (55)
Employee benefit liabilities................................... (63) (61) (61) (60)
Other.......................................................... (12) (9) (19) (7)
------ ------ ------ ------
Total adjustments............................................ 688 798 296 532
------ ------ ------ ------
Total GAAP Stockholder's Equity.................................. $1,686 $1,676 $1,141 $1,312
====== ====== ====== ======
</TABLE>
F-39
<PAGE> 97
NOTE 14--Reconciliations Between Statutory Accounting and GAAP (Continued)
- --------------------------------------------------------------------------------
The following chart reconciles NYLIAC's statutory net income determined in
accordance with accounting practices prescribed by the Delaware Insurance
Department with net income on a GAAP basis (in millions):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
----------------------
1996 1995 1994
<S> <C> <C> <C>
---------------------
Statutory Net Income...................................................................... $148 $95 $166
---- ---- ---
Adjustments:
Deferred policy acquisition costs....................................................... 44 40 (28)
Deferred income taxes................................................................... 24 8 10
Interest maintenance reserve............................................................ 9 6 (35)
Investment related...................................................................... 1 (11) --
Policyholder liabilities................................................................ (54) (4) (14)
Other................................................................................... (3) (14) (3)
---- ---- ---
Total Adjustments................................................................. 21 25 (70)
---- ---- ---
GAAP Net Income........................................................................... $169 $120 $96
==== ==== ===
</TABLE>
Financial statements prepared on the statutory basis of accounting vary from
those prepared under GAAP, primarily as follows: (1) the costs related to
acquiring business, principally commissions and certain policy issue expenses
are charged to income in the year incurred, whereas under GAAP they would be
deferred and amortized over the periods benefitted; (2) funds received under
deposit-type contracts are reported as premium income, whereas under GAAP, such
funds are recorded as a liability; (3) life insurance reserves are based on
different assumptions than they are under GAAP; (4) life insurance companies are
required to establish an Asset Valuation Reserve ("AVR") by a direct charge to
surplus to offset potential investment losses, whereas, under GAAP, the AVR is
not recognized and any allowances for losses on investments would be deducted
from the assets to which they relate and would be charged to income; (5)
investments in fixed maturities are generally carried at amortized cost or
values prescribed by the National Association of Insurance Commissioners
("NAIC"); under GAAP, investments in fixed maturities, which are available for
sale or held for trading, are generally carried at market value, with changes in
market value charged against equity or reflected in earnings; (6) realized gains
and losses resulting from changes in interest rates on fixed income investments
are deferred in the interest maintenance reserve ("IMR") and amortized into
investment income over the remaining life of the investment sold, whereas under
GAAP, the gains and losses are recognized in income at the time of sale; and (7)
deferred Federal income taxes are not provided for as they are under GAAP.
The New York State Insurance Department recognizes only statutory accounting
practices for determining and reporting the financial condition and results of
operations of an insurance company, and for determining its solvency under the
New York Insurance Law. No consideration is given by the Department to financial
statements prepared in accordance with generally accepted accounting principles
in making such determinations.
At December 31, 1996 and 1995, admitted assets on a statutory basis were
$17,099 million and $15,977 million, respectively, and total liabilities were
$16,101 million and $15,099 million, respectively, which included policy
reserves of $13,099 million and $12,821 million, respectively.
F-40
<PAGE> 98
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder of
New York Life Insurance and Annuity Corporation
I
n our opinion, the accompanying balance sheets and the related statements of
income, of changes in stockholder's equity and of cash flows present fairly,
in all material respects, the financial position of New York Life Insurance
and Annuity Corporation at December 31, 1996 and 1995, and the results of its
operations and its cash flows for the three years in the period ended December
31, 1996, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
As discussed in Note 2, the Company changed its accounting policies to adopt
pronouncements of the Financial Accounting Standards Board in 1996.
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York
April 16, 1997
F-41
<PAGE> 99
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE> 100
APPENDIX A
ILLUSTRATIONS
The following tables demonstrate the way in which your Policy works. The
tables are based on the age, initial death benefit and premium as follows:
The Table is for a Policy issued to a male, non-smoker, age 35 with a
scheduled annual premium of $2,000 and an initial Death Benefit of $150,000.
The table shows how the Cash Value, Cash Surrender Value and Death Benefit
would vary over an extended period of time assuming hypothetical gross rates of
return equivalent to a constant annual rate of 0%, 6% or 12%. The table will
assist in the comparison of the Death Benefit, Cash Value and Cash Surrender
Value of the Policy with other variable life insurance plans.
The Death Benefit, Cash Value and Cash Surrender Value for a policy would
be different from the amounts shown if the actual gross rates of return averaged
0%, 6% or 12%, but varied above and below those averages for the period. They
would also be different depending on the allocation of the Cash Value among the
Investment Divisions of the Separate Accounts and the Fixed Account, if the
actual gross rate of return for all Investment Divisions averaged 0%, 6% or 12%,
but varied above or below that average for individual Investment Divisions. They
would also differ if any policy loans or Partial Withdrawals were made during
the period of time illustrated.
The illustration reflects all charges under the Policy and assumes that the
cost of insurance charges are based on our guaranteed maximum cost of insurance
rates and reflect the deduction of all charges from the Cash Value at their
guaranteed maximum levels. They also reflect a daily mortality and expense risk
charge assessed against the Separate Accounts equivalent to an annual charge of
0.60% (on a current basis) and 0.90% (on a guaranteed basis) of the assets in
the Separate Accounts and a daily asset based administrative charge assessed
against the Separate Accounts equivalent to an annual charge of 0.10% on the
assets in each Investment Division attributable to the Policies.
The illustration also reflects total assumed investment advisory fees
together with the expenses incurred by the Funds of 0.78% of the average daily
net assets of the Funds. The total is based upon (a) 0.47% of average daily net
assets, which is an average of the management fees of each Portfolio; (b) 0.14%
of average daily net assets of the Funds which is an average of actual
administrative fees for each Portfolio; and (c) 0.18% of average daily net
assets of the Funds which is an average of the other expenses after expense
reimbursement for each Portfolio.
An expense reimbursement agreement which limited "Other Expenses" to 0.17%
annually was in effect until December 31, 1996 for the MainStay VP Capital
Appreciation, MainStay VP Cash Management, MainStay VP Government, MainStay VP
Total Return, MainStay VP Bond, MainStay VP Growth Equity and MainStay VP
Indexed Equity Portfolios. "Other Expenses" and "Total Fund Annual Expenses"
have been restated to reflect the absence of the limitation in 1996. "Other
Expenses" and "Total Fund Annual Expenses" for the MainStay VP Convertible,
MainStay VP High Yield Corporate Bond, MainStay VP International Equity and
MainStay VP Value Portfolios reflect an expense reimbursement agreement
effective through December 31, 1997 limiting "Other Expenses" to 0.17% annually.
In the absence of the expense reimbursement arrangement, the "Total Fund Annual
Expenses" for the year ended December 31, 1996 would have been 1.46%, 0.71%,
1.51% and 0.79% for the MainStay VP Convertible, MainStay VP High Yield
Corporate Bond, MainStay VP International Equity and MainStay VP Value
Portfolios, respectively. Numbers for the MainStay VP Convertible Portfolio have
been annualized based on the period October 1, 1996 (the date of inception) to
December 31, 1996.
A-1
<PAGE> 101
For the Calvert Socially Responsible Portfolio, "Other Expenses" are based
on expenses for fiscal year 1996, and have been restated to reflect an increase
in transfer agency expenses of 0.03% expected to be incurred in 1997. The
"Advisory Fee" includes a performance adjustment which could cause the fee to be
as high as 0.85% or as low as 0.55%, depending on performance. "Other Expenses"
reflect an indirect fee of 0.03%. "Total Fund Annual Expenses" after reductions
for fees paid indirectly would have been 0.81%.
A portion of the brokerage commissions that the Fidelity VIP II: Contrafund
and Fidelity VIP: Equity Income Portfolios pay was used to reduce the
Portfolios' annual expenses. In addition, these Portfolios have entered into
arrangements with their custodian and transfer agent whereby interest earned on
uninvested cash balances was used to reduce custodian and transfer agent
expenses. Including these reductions, the "Total Fund Annual Expenses" would
have been 0.71% for the Fidelity VIP II: Contrafund Portfolio and 0.56% for the
Fidelity VIP: Equity-Income Portfolio.
Janus Capital Corporation ("JCC") has agreed to reduce the advisory fee for
both Janus Portfolios to the extent that such fee exceeds the effective rate of
the Janus retail fund corresponding to such Portfolio. JCC may terminate this
fee reduction at any time upon 90 days' notice to the Board of Trustees of the
Janus Aspen Series. Absent such reductions, "Advisory Fees" and "Total Fund
Annual Expenses" for the fiscal year ended December 31, 1996 would have been:
0.92% and 1.07%, respectively, for the Janus Aspen Balanced Portfolio and 0.77%
and 0.91%, respectively, for the Janus Aspen Worldwide Growth Portfolio.
"Other Expenses" for the Morgan Stanley Emerging Markets Equity Portfolio
are estimated for the current fiscal year. Morgan Stanley Asset Management Inc.
has agreed to a reduction in its management fees and to reimburse the Morgan
Stanley Emerging Markets Equity Portfolio if such fees would cause the "Total
Fund Annual Expenses" to exceed 1.75% of average daily net assets. Absent such
reductions, it is estimated that "Advisory Fees" and "Total Fund Annual
Expenses" for the current fiscal year would be 1.25% and 6.17%, respectively.
Taking into account the assumed charges for mortality and expense risks and
administrative fees in the Separate Accounts and the average investment advisory
fees and expenses of the Funds, the gross rates of return of 0%, 6% and 12%
would correspond to actual net investment returns of -1.48%, 4.52% and 10.52%,
respectively, based on the current charge for mortality and expense risks, and
- -1.78%, 4.22% and 10.22%, respectively, based on the guaranteed maximum charge
for mortality and expense risks.
The actual investment advisory fees and expenses may be more or less than
the amounts illustrated and will depend on the allocations made by the
Policyowner.
The second column of the tables show the amount which would accumulate if
an amount equal to the initial premium were invested and earned interest, after
taxes, at 5% per year, compounded annually.
NYLIAC will furnish upon request a comparable illustration using the age,
sex and underwriting classification of an Insured for any initial Death Benefit
and premium requested. In addition to an illustration assuming Policy charges at
their maximum, we will furnish an illustration assuming current Policy charges
and current cost of insurance rates.
A-2
<PAGE> 102
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE ISSUE AGE: 35, NON-SMOKER
SCHEDULED ANNUAL PREMIUM: $2,000
INITIAL FACE AMOUNT: $150,000
LIFE INSURANCE BENEFIT OPTION 1
ASSUMING CURRENT CHARGES
<TABLE>
<CAPTION>
END OF YEAR DEATH BENEFIT(2) END OF YEAR CASH VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
TOTAL PREMIUMS PAID ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
VALUE(2) PLUS INTEREST AT 5% ------------------------------- -----------------------------
POLICY YEAR AS OF END OF YEAR(1) 0% 6% 12% 0% 6% 12%
- ----------- -------------------- ------- ------- ------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2,100 150,000 150,000 150,000 1,455 1,554 1,652
2 4,305 150,000 150,000 150,000 2,648 2,924 3,211
3 6,620 150,000 150,000 150,000 4,034 4,580 5,172
4 9,051 150,000 150,000 150,000 5,403 6,314 7,343
5 11,604 150,000 150,000 150,000 6,754 8,131 9,748
6 14,284 150,000 150,000 150,000 8,071 10,017 12,394
7 17,078 150,000 150,000 150,000 9,372 11,992 15,325
8 20,053 150,000 150,000 150,000 10,640 14,045 18,556
9 23,156 150,000 150,000 150,000 11,875 16,180 22,118
10 26,414 150,000 150,000 150,000 13,080 18,400 26,049
15 45,315 150,000 150,000 150,000 19,058 31,464 53,458
20 69,439 150,000 150,000 153,686 23,790 47,130 98,677
30 139,522 150,000 150,000 356,556 28,444 89,221 294,640
<CAPTION>
END OF YEAR
CASH SURRENDER VALUE
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
VALUE(2) ---------------------------
POLICY YEAR 0% 6% 12%
- ----------- ------ ------ -------
<S> <C> <C> <C>
1 753 852 951
2 2,075 2,350 2,638
3 3,361 3,906 4,498
4 4,629 5,540 6,569
5 5,881 7,257 8,874
6 7,138 9,083 11,460
7 8,532 11,152 14,485
8 9,893 13,298 17,809
9 11,222 15,526 21,464
10 12,519 17,840 25,489
15 18,964 31,371 53,365
20 23,790 47,130 98,677
30 28,444 89,221 294,640
</TABLE>
- ------------
(1) All premiums are illustrated as if made at the beginning of the Policy Year.
(2) Assumes no policy loan or Partial Withdrawal has been made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN
ABOVE ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS
THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER AND THE INVESTMENT EXPERIENCE OF THE
PORTFOLIOS OF THE FUNDS. THE DEATH BENEFIT, CASH VALUE AND CASH SURRENDER VALUE
FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS ANNUAL
RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. THEY WOULD
ALSO BE DIFFERENT IF ANY POLICY LOANS OR PARTIAL WITHDRAWALS WERE MADE. NO
REPRESENTATIONS CAN BE MADE BY NEW YORK LIFE INSURANCE AND ANNUITY COMPANY OR
THE SEPARATE ACCOUNTS OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN
BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER A PERIOD OF TIME.
A-3
<PAGE> 103
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE ISSUE AGE: 35, NON-SMOKER
SCHEDULED ANNUAL PREMIUM: $2,000
INITIAL FACE AMOUNT: $150,000
LIFE INSURANCE BENEFIT OPTION 1
ASSUMING GUARANTEED CHARGES
<TABLE>
<CAPTION>
END OF YEAR DEATH BENEFIT(2) END OF YEAR CASH VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
TOTAL PREMIUMS PAID ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
VALUE(2) PLUS INTEREST AT 5% ------------------------------- -----------------------------
POLICY YEAR AS OF END OF YEAR(1) 0% 6% 12% 0% 6% 12%
- ----------- -------------------- ------- ------- ------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2,100 150,000 150,000 150,000 1,391 1,488 1,585
2 4,305 150,000 150,000 150,000 2,518 2,785 3,065
3 6,620 150,000 150,000 150,000 3,835 4,361 4,933
4 9,051 150,000 150,000 150,000 5,097 5,972 6,962
5 11,604 150,000 150,000 150,000 6,323 7,638 9,185
6 14,284 150,000 150,000 150,000 7,497 9,345 11,608
7 17,078 150,000 150,000 150,000 8,620 11,095 14,252
8 20,053 150,000 150,000 150,000 9,677 12,875 17,125
9 23,156 150,000 150,000 150,000 10,686 14,703 20,270
10 26,414 150,000 150,000 150,000 11,631 16,567 23,702
15 45,315 150,000 150,000 150,000 15,414 26,482 46,428
20 69,439 150,000 150,000 150,000 17,228 37,240 82,910
30 139,522 150,000 150,000 288,198 10,356 59,160 238,044
<CAPTION>
END OF YEAR
CASH SURRENDER VALUE
ASSUMING HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN OF
VALUE(2) ----------------------------
POLICY YEAR 0% 6% 12%
- ----------- ------ ------ -------
<S> <C> <C> <C>
1 689 786 883
2 1,945 2,212 2,491
3 3,162 3,688 4,260
4 4,324 5,199 6,188
5 5,450 6,765 8,312
6 6,564 8,412 10,674
7 7,780 10,255 13,412
8 8,930 12,128 16,378
9 10,032 14,049 19,617
10 11,071 16,006 23,142
15 15,321 26,389 46,335
20 17,228 37,240 82,910
30 10,356 59,160 238,044
</TABLE>
- ------------
(1) All premiums are illustrated as if made at the beginning of the Policy Year.
(2) Assumes no policy loan or Partial Withdrawal has been made.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN
ABOVE ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS
THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER AND THE INVESTMENT EXPERIENCE OF THE
PORTFOLIOS OF THE FUNDS. THE DEATH BENEFIT, CASH VALUE AND CASH SURRENDER VALUE
FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS ANNUAL
RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. THEY WOULD
ALSO BE DIFFERENT IF ANY POLICY LOANS OR PARTIAL WITHDRAWALS WERE MADE. NO
REPRESENTATIONS CAN BE MADE BY NEW YORK LIFE INSURANCE AND ANNUITY COMPANY OR
THE SEPARATE ACCOUNTS OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN
BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER A PERIOD OF TIME.
A-4
<PAGE> 104
PART II
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934 , the undersigned Registrant hereby undertakes to file
with the Securities and Exchange Commission such supplementary and periodic
information, documents and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
RULE 484 UNDERTAKING
Reference is made to Article VIII of the Depositor's By-Laws.
New York Life maintains Directors and Officers Liability/Company
Reimbursement ("D&O") insurance which covers directors, officers and trustees
of New York Life, its subsidiaries, and its subsidiaries and certain affiliates
including the Depositor while acting in their capacity as such. The total
annual aggregate of D&O coverage is $100 million applicable to all insureds
under the D&O policies. There is no assurance that such coverage will be
maintained by New York Life or for the Depositor in the future as, in the past,
there have been large variances in the availability of D&O insurance for
financial institutions.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Depositor pursuant to the foregoing provisions, or otherwise, the
Depositor has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Depositor of expenses incurred or paid by a director, officer or controlling
person of the Depositor 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 Depositor will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
REPRESENTATION AS TO THE REASONABLENESS OF AGGREGATE FEES AND CHARGES
New York Life Insurance and Annuity Corporation ("NYLIAC"), the
sponsoring insurance company of the NYLIAC Variable Universal Life Separate
Account-I, hereby represents that the fees and charges deducted under the
Flexible Premium Variable Universal Life Insurance Policies are reasonable in
relation to the services rendered, the expenses expected to be incurred and the
risks assumed by NYLIAC.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and
documents:
The facing sheet.
The prospectus consisting of 97 pages.
----
The undertaking to file reports.
II-1
<PAGE> 105
The undertaking pursuant to Rule 484.
The representation as to the reasonableness of aggregate fees and
charges.
The signatures.
Written consents of the following persons:
(a) Robert J. Hebron, Esq.
(b) Jane L. Hamrick, Vice President and Actuary
(c) Price Waterhouse, LLP
The following exhibits:
1. The following exhibits correspond to those required by paragraph A of
the instructions as to exhibits in Form N-8B-2:
(1) Resolution of the Board of Directors of NYLIAC
establishing the Separate Account - previously filed
as exhibit 1.(1) to the initial Registration
Statement on Form S-6 and filed herewith in
accordance with Regulation S-T, 17 CFR 232.102(e).
(2) Not applicable.
(3)(a)[1] Distribution Agreement between NYLIFE Securities Inc.
and NYLIAC - previously filed as Exhibit 1.(3)(a) to
Post-Effective Amendment No. 1 to the registration
statement on Form S-6 for NYLIAC MFA Separate
Account-I (File No. 2- 86084) and re-filed herewith
in accordance with Regulation S-T, 17 CFR 232.102(e).
(a)[2] Distribution Agreement between NYLIFE Distributors
Inc. and NYLIAC - previously filed as Exhibit
1.(3)(a)[2] to Post- Effective Amendment No. 3 to the
Registration Statement on Form S-6.
(b) Not applicable.
(c) Not applicable.
(4) Not applicable.
(5) Form of Policy - previously filed as Exhibit 1.(5) to
the initial Registration Statement and filed herewith
in accordance with Regulation S-T, 17 CFR 232.102(e).
(6)(a) Certificate of Incorporation of NYLIAC - previously
filed as Exhibit 1.A.(6)(a) to the registration
statement on Form S-6 for NYLIAC MFA Separate
Account-I (File No. 2-86083) and re-filed in
accordance with Regulation S-T, 17 CFR 232.102(e) as
Exhibit 1.(6)(a) to the initial registration
statement on Form S-6 for NYLIAC Corporate Sponsored
Variable Universal Life Separate Account-I (File No.
333-07617).
(b) By-Laws of NYLIAC - previously filed as Exhibit
1.A.(6)(b) to the registration statement on Form S-6
for NYLIAC MFA Separate Account-I (File No. 2-86083)
and re-filed in accordance with Regulation S-T, 17
CFR 232.102(e) as Exhibit 1.(6)(b) to the initial
registration statement on Form
II-2
<PAGE> 106
S-6 for NYLIAC Corporate Sponsored Variable Universal
Life Separate Account-I (File No. 333-07617).
(7) Not applicable.
(8) Not applicable.
(9) (a) Stock Sale Agreement between NYLIAC and New York Life
MFA Series Fund, Inc. - previously filed as Exhibit
1.(9) to Pre-Effective Amendment No. 1 to the
Registration Statement and as Exhibit 1.(9)(a) to
Pre-Effective Amendment No. 1 to the registration
statement on Form S-6 for NYLIAC Corporate Sponsored
Variable Universal Life Separate Account-I (File No.
333-07617).
(b) Powers of Attorney for the Directors and Officers of
NYLIAC - previously filed as Exhibit 1.(9)(c) to to
Pre-Effective Amendment No. 2 to the registration
statement on Form S-6 for NYLIAC Corporate Sponsored
Variable Universal Life Separate Account-I (File No.
333-07617). for the following:
Jay S. Calhoun, Vice President, Treasurer and
Director (Principal Financial Officer)
Richard M. Kernan, Jr., Director
Robert D. Rock, Senior Vice President and Director
Frederick J. Sievert, Executive Vice President and
Director
Stephen N. Steinig, Senior Vice President,
Chief Actuary and Director
Seymour Sternberg, President and Director
(Principal Executive Officer)
(c) Power of Attorney for Maryann L. Ingenito, Vice President
and Controller (Principal Accounting Officer) previously
filed as Exhibit 1.(9)(d) to Pre-Effective Amendment No. 1
to the registration statement on Form S-6 for NYLIAC
Corporate Sponsored Variable Universal Life Separate
Account-I (File No. 333-07617).
(d) Memorandum describing NYLIAC's issuance, transfer and
redemption procedures for the Policies - previously filed
as Exhibit 1.(11) to Pre-Effective Amendment No. 1 to the
Registration Statement on Form S-6 and filed herewith in
accordance with Regulation S-T, 17 CFR 232.102(e).
(10) Form of Application - previously filed as Exhibit (10) to
the initial Registration Statement on Form S-6 and filed
herewith in accordance with Regulation S-T, 17 CFR
232.102(e).
2. Opinion and Consent of Robert J. Hebron, Esq.
3. Not applicable.
4. Not applicable.
5. Financial Data Schedule.
6. Opinion and Consent of Jane L. Hamrick, Vice President and Actuary.
7. Consent of Price Waterhouse, LLP.
II-3
<PAGE> 107
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, NYLIAC Variable Universal Life Separate Account-I, certifies that
it meets all of the requirements for effectiveness of this Amendment to the
Registration Statement pursuant to Rule 485(b) and has duly caused this
Amendment to the Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized, in the City and State of New York on the
25th day of April, 1997.
NYLIAC VARIABLE UNIVERSAL LIFE
SEPARATE ACCOUNT-I
(Registrant)
By /s/Michael G. Gallo
---------------------
Michael G. Gallo
Senior Vice President
NEW YORK LIFE INSURANCE AND
ANNUITY CORPORATION
(Depositor)
By /s/Michael G.Gallo
--------------------
Michael G. Gallo
Senior Vice President
As required by the Securities Act of 1933, this Amendment to the Registration
Statement has been signed by the following persons in the capacities and on the
date indicated.
<TABLE>
<S> <C>
Jay S. Calhoun* Vice President, Treasurer and Director (Principal Financial Officer)
Maryann L. Ingenito* Vice President and Controller (Principal Accounting Officer)
Richard M. Kernan, Jr.* Director
Robert D. Rock* Senior Vice President and Director
Frederick J. Sievert* Executive Vice President and Director
Stephen N. Steinig* Senior Vice President, Chief Actuary and Director
Seymour Sternberg* President and Director (Principal
Executive Officer)
</TABLE>
*By /s/ Michael G. Gallo
--------------------
Michael G. Gallo
Attorney-in-Fact
April 25, 1997
II-4
<PAGE> 108
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
1.(1) Resolution of the Board of Directors of NYLIAC Establishing the Separate Account
1.(3)(a)[1] Distribution Agreement between NYLIFE Securities Inc. and NYLIAC
1.(5) Form of Policy
1.(9)(d) Memorandum Describing NYLIAC's Issuance, Transfer and Redemption Procedures for the Policies
1.(10) Form of Application
2. Opinion and Consent of Robert J. Hebron, Esq.
5. Financial Data Schedule.
6. Opinion and Consent of Jane Hamrick, Actuary
7. Consent of Price Waterhouse, LLP
</TABLE>
<PAGE> 1
Exhibit 1.(1)
Resolution of the Board of Directors of NYLIAC Establishing the Separate
Account
<PAGE> 2
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
* * * * * *
CONSENT OF BOARD OF DIRECTORS
In Lieu of
Special Meeting of Board of Directors
Dated as of June 4, 1993
* * * * * *
Pursuant to Section 141(f) of the General Corporation Law of the State of
Delaware and the By-Laws of NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
("Corporation"), a Delaware corporation, the undersigned, being all the
directors of the Corporation, consent that a Special Meeting of the Board of
Directors be dispensed with and the following resolutions be adopted:
RESOLVED, that the investments made by the Corporation during March
1993, as set forth in the attached schedule, are hereby ratified and
approved.
RESOLVED, that Nancy Brenner and Carol Y. Kendrick are each elected
Assistant Secretary of the Corporation, to hold such office until the next
Annual Meeting of the Board of Directors or until the election and
qualification of her successor.
FURTHER RESOLVED, that Dorothea Rodd be elected Assistant Vice
President of the Corporation, to hold such office until the next Annual
Meeting of the Board of Directors or until the election and qualification
of her successor.
RESOLVED, that Tom T. Lin be and is hereby appointed to replace Mr.
William D. McDermott as the Authorized Representative and Branch Manager
of New York Life Insurance and Annuity Corporation, Taiwan Branch, with
full powers to receive and acknowledge on behalf of this corporation
service of all legal documents and instruments from and to perform all
functions pertaining to being the Authorized Representative and Branch
Manager.
FURTHER RESOLVED, that Tom T. Lin be and is hereby appointed President
and Chief Operating Officer of New York Life Insurance and Annuity
Corporation, Taiwan Branch, to hold such office until the next Annual
Meeting of the Board of Directors or until the election and qualification
of his successor.
RESOLVED, that the officers of the Corporation are hereby authorized
to make a charitable contribution in the amount of ONE MILLION DOLLARS
($1,000,000) to the New York Life Foundation.
RESOLVED, that the Corporation establish, in accordance with Section
2932 of the Delaware Insurance Code, a separate account to be known as
"New York Life Insurance and Annuity Corporation Variable Universal Life
Insurance Separate Account I" ("VL Separate Account I"), or such other
name as the President may determine, for the purpose of investing payments
received under variable life contracts ("VL Policies") issued by the
Corporation; that the assets of the VL Separate Account I be invested in
shares of New York Life MFA Series Fund, Inc. ("MFA Series Fund"), an
open-end diversified management investment company of the series type, or
in lieu thereof or in addition thereto, in the shares of any other
investment company approved by an officer of the Corporation and
registered under the Investment Company Act of 1940 ("Investment Company
Act"), at the net asset value of such shares at the time of acquisition.
FURTHER RESOLVED, that the Corporation establish, in accordance with
Section 2932 of the Delaware Insurance Code, a separate account to be
known as "New York Life Insurance and Annuity Corporation VL Separate
Account II" ("VL Separate Account II"), or such other name as the
President may determine, for the purpose of investing payments received
under VL Policies issued by the Corporation and designed to qualify for
favored tax treatment under the Internal Revenue Code of 1986, as amended
("Code"); that the assets of VL Separate Account II be invested in shares
of MFA Series Fund, an open-end diversified management investment company
of the series type, or in lieu thereof or in addition thereto, in the
shares of any other investment company approved by an officer of the
Corporation and registered under the Investment Company Act, at the net
asset value of such shares at the time of acquisition.
FURTHER RESOLVED, that the officers of the Corporation, or any person
designated by them, are
<PAGE> 3
severally authorized to take all action deemed necessary or appropriate to
effect the establishment of VL Separate Account I and VL Separate Account
II, to operate and manage them in accordance with the Plan of Operations
filed with these resolutions in the minute book, and to comply with
applicable federal and state laws in order that VL Policies may be offered
and sold in all jurisdictions in which the Corporation is authorized to
conduct a variable life business.
FURTHER RESOLVED, that VL Separate Account I and VL Separate Account
II each be organized as a unit investment trust, that each be registered,
if necessary or appropriate, with the United States Securities and
Exchange Commission ("SEC") under the Investment Company Act, and that the
VL Policies be registered for sale under the Securities Act of 1933; that
for such purpose the President, any Vice President, the Secretary and any
Assistant Secretary of the Corporation are severally authorized and
empowered to execute and file or cause to be filed with the SEC, in the
name and on behalf of the Corporation and each of VL Separate Account I
and VL Separate Account II, a Notification of Registration on form N-8A
and Registration Statements on Forms N-8B-2 and S-6 or on any other forms
which the Rules and Regulations of the SEC may, from time to time, permit,
and to take all other actions which are necessary or advisable in
connection with the offering of the VL Policies for sale and the operation
of VL Separate Account I and VL Separate Account II, in order to comply
with the Investment Company Act, the Securities Exchange Act of 1934, the
Securities Act of 1933, and other applicable federal and state laws,
including the filing of any amendments or supplements to registration
statements, any undertakings, and any applications for exemptions from the
Investment Company Act or other applicable federal or state laws as the
individual or individuals so acting shall deem necessary, advisable or
appropriate, including applications which seek exemptive relief in
connection with separate accounts established in the future; and that the
Secretary of the Corporation hereby is appointed as designated agent for
service under any such registration statements and duly authorized to
receive communications and notices from the SEC and to respond with
respect thereto.
FURTHER RESOLVED, that the Corporation has established and maintains
Standards of Conduct in regard to the sale of variable life policies and
the establishment of separate accounts in connection therewith and
Standards of Suitability which reflect the policy of the Corporation, with
respect to determining the suitability of its variable life products.
Such Standards of Conduct and Standards of Suitability shall apply to the
sale of VL Policies and shall be binding upon the Corporation and
applicable to its officers, directors, employees, affiliates and agents,
and shall specify that no recommendation shall be made to an applicant to
purchase a VL Policy and no such contract shall be issued in the absence
of reasonable grounds to believe that the purchase of such contract is not
unsuitable for such applicant on the basis of information furnished after
reasonable inquiry of such applicant concerning the applicant's insurance
and investment objectives, financial situation and needs, and any other
information known to the Corporation or any of its affiliates or to the
agent making the recommendation.
FURTHER RESOLVED, that the monthly cost of insurance rate structure
and methodology filed with this resolution in the minute book as well as
all non-guaranteed charges set forth in the Plan of Operations filed with
this resolution in the minute book are approved for use in connection with
new issues of VL Policies issued by the Corporation and, based on that
methodology and rate structure, the officers of the Corporation are hereby
authorized to take all appropriate actions to effect a rate structure for
VL Policies. These rates will become effective on such date or dates as
the President or other such officers designated by him, may determine.
<PAGE> 4
/s/Harry G. Hohn /s/George A.W. Bundschuh
- ------------------------------------------------------------------------------
Harry G. Hohn George A.W. Bundschuh
/s/Lee M. Gammill, Jr. /s/Richard M. Kernan, Jr.
- ------------------------------------------------------------------------------
Lee M. Gammill, Jr. Richard M. Kernan, Jr.
/s/Robert D. Rock /s/Frederick J. Sievert
- ------------------------------------------------------------------------------
Robert D. Rock Frederick J. Sievert
/s/Stephen N. Steinig /s/Jay S. Calhoun
- ------------------------------------------------------------------------------
Stephen N. Steinig Jay S. Calhoun
<PAGE> 1
Exhibit 1.(3)(a)[1]
Distribution Agreement between NYLIFE Securities Inc. and NYLIAC
<PAGE> 2
DISTRIBUTION AGREEMENT
RELATING TO MULTI-FUNDED ANNUITIES AND
VARIABLE LIFE INSURANCE
AGREEMENT, made as of this 1st day of November, 1983, between New York
Life Insurance and Annuity Corporation ("NYLIAC"), a Delaware corporation
having its principal office at 372 Park Avenue South, New York, New York, 10010
and New York Life Variable Contracts Corporation ("Broker"), a New York
corporation, having its principal office at 51 Madison Avenue, New York, New
York, 10010, and being a registered broker/dealer under the Securities Exchange
Act of 1934 ("Securities Exchange Act").
1. NYLIAC is engaged, among other things, in the issuance and sale
of multi-funded annuity contracts ("contracts") and variable life insurance
policies ("Policies"), pursuant to the insurance laws of the State of Delaware,
as well as other states of the United States and the District of Columbia.
2. The Contracts and the Policies may be deemed to be securities
under the federal securities law and the laws of some states.
3. In connection with the issuance and sale of Contracts and
Policies, NYLIAC proposes to have many of its licensed life insurance agents
and others, which it may designate from time to time (collectively referred to
as "Agents"), sell or engage in the sale of the Contracts and Policies, and for
such purpose desires to have the Agents become and continue to be registered
representatives associated with the Broker.
4. NYLIAC and the Broker desire to enter into an agreement, pursuant
to which the Broker will select, train, license and supervise the Agents, all
as more particularly described herein.
NOW, THEREFORE, IT IS MUTUALLY AGREED AS FOLLOWS:
1. NYLIAC will furnish to the Broker the names of those agents
designated by it to sell the Contracts and Policies and who indicate a
willingness to become registered representatives.
2. The Broker will, after careful investigation, select, or cause to
be selected, the Agents who are to be trained and qualified to make such sales,
will use its best efforts to train, or cause to be trained, such Agents so that
they may become qualified under applicable federal and state laws, and in
accordance with the requirements of the National Association of Securities
Dealers ("NASD"), to sell the Contracts and the Policies and become registered
representatives of the Broker.
3. Upon request, the Broker will furnish NYLIAC, in writing, a list
of those Agents who have become so qualified and the date of such qualification
and also a list of those Agents who are not selected or who have failed to
qualify. In the event that an Agent who has qualified fails or refuses to
submit to the supervision of the Broker in accordance with this Agreement, or
otherwise fails to comply with the rules and standards imposed by the Broker on
its registered representatives, the Broker shall certify such fact to NYLIAC
and shall immediately notify Agent that he is no longer authorized to sell the
Contracts and the Policies and the Broker and NYLIAC shall take whatever
additional action may be necessary to terminate the sales activities of the
Agent relating to the Contracts and the Policies.
4. Prior to permitting any Agent to sell the Contracts and the
Policies, NYLIAC, the Broker and the Agent will enter into a mutually
satisfactory agreement pursuant to which the Agent will acknowledge that he
will be a registered representative of the Broker in connection with his
securities activities relating to the Contracts and the Policies, that such
activities will be under the supervision of the Broker and any supervisor
designated by the Broker, and that the Agent's right to continue to sell the
Contracts and the Policies is subject to his continued compliance with such
agreement and the rules and procedures established by the Broker for compliance
with applicable federal, state and NASD requirements.
5. The Broker will comply with all applicable federal, state and
NASD requirements and will establish such rules and procedures as may be
necessary for the diligent supervision of the securities activities of the
Agents relating to the Contracts and the Policies. Upon request by the Broker,
NYLIAC will furnish or require the Agents to furnish such appropriate records
as may be necessary to insure such diligent supervision. NYLIAC will furnish
to the Broker the names of all those persons who are designated to assist in
the supervision of the Agents in the securities activities related to the
Contracts and the Policies and who will become persons associated with the
Broker and will be registered with the NASD. In the event any such person
shall fail or refuse to provide such supervision to the satisfaction of the
Broker, the Broker shall certify such fact to NYLIAC. If NYLIAC fails to
furnish a replacement for such person or the Broker is unable, otherwise, to
furnish proper supervision, the authority of any Agents, who remain
unsupervised by such failure to sell the Contracts and the Policies, shall be
withdrawn.
6. All monies paid by or on behalf of the owners of the Contracts or
the Policies or other persons having an interest in the Contracts or the
Policies will be paid to and will be the property of NYLIAC.
7. Monies payable to Agents, in connection with the sale of the
Contracts and the Policies, shall be paid by NYLIAC to the Agents under the
existing procedures of NYLIAC for the payment of commissions to its Agents, and
nothing contained herein will obligate the Broker to pay any commissions or
other remuneration to the Agents or to reimburse the Agents for expenses
incurred by them, nor will the Broker have any interest whatsoever in any
commissions or other remuneration payable to the Agents by NYLIAC.
8. All books and records maintained in connection with the offer and
sale of the Contracts and the Policies will be maintained and preserved in
conformity with the applicable requirements of the Securities Exchange Act, and
the rules and regulations
<PAGE> 3
promulgated thereunder, to the extent that such requirements are applicable to
the Contracts and the Policies and operations relating thereto. All such books
and records which are the property of the Broker shall be maintained by NYLIAC
on behalf of and as agent for the Broker. Such books and records will at all
times be subject to inspection by the Securities and Exchange Commission
("SEC") in accordance with the applicable provisions of the Securities and
Exchange Act.
9. The Broker will assume full responsibility for the sales activities of
the Agents relating to the Contracts and the Policies and for initial and
continued compliance by itself and the Agents with applicable federal, state and
NASD requirements, and, in connection therewith, may demand and receive such
assurances from NYLIAC, as it deems appropriate, demonstrating compliance with
the Securities Act of 1933 and the Investment Company Act of 1940.
10. NYLIAC and the Broker shall agree on the value of the expenses
involved in the discharge by the Broker and NYLIAC of their respective
obligations under this Agreement and any difference therein will be settled by
appropriate payments at least annually.
11. This Agreement may not be assigned by NYLIAC or the Broker, except by
mutual consent and shall continue for a period of one year, and from year to
year thereunder, subject to termination by either party at any time upon 60
days written notice to the other party and to the SEC, except that in the event
the Broker shall cease to be a registered broker/dealer under the Securities
Exchange Act, this Agreement shall immediately terminate.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
NEW YORK LIFE INSURANCE AND
ANNUITY CORPORATION
By: /s/Jacob B. Underhill
-----------------------
President
Attest:
/s/Virginia A. DeFeis
- -----------------------
Assistant Secretary
NEW YORK LIFE VARIABLE
CONTRACTS CORPORATION
By: /s/Jerald R. Hinrichs
-----------------------
President
Attest
/s/George Grace
- -----------------
Assistant Secretary
<PAGE> 4
AMENDMENT NO. 1
Dated as of July 30, 1984
To
Distribution Agreement
Dated as of November 1, 1983
Between
New York Life Variable Contracts Corporation
(predecessor in interest to New York Life Securities Corp.)
And
New York Life Insurance and Annuity Corporation
* * * * *
New York Life Securities Corp. ("Broker"), the predecessor in interest
to New York Life Variable Contracts Corporation ("V.C.C."), and New York Life
Insurance and Annuity Corporation ("NYLIAC"), hereby mutually agree to amend
that certain Distribution Agreement ("Agreement"), dated as of November 1,
1983, between V.C. and NYLIAC, in the manner herein set forth:
(i) paragraph 3 of the Agreement is deleted, in its entirety, and
a new paragraph 3, in the form set forth immediately
hereunder, is substituted therefor, with the same force and
effect as if such paragraph had appeared in the Agreement, as
originally executed:
"3. Upon request, the Broker will furnish
NYLIAC, in writing, a list of those Agents who have
become so qualified and the date of such
qualification and also a list of those Agents who are
not selected or who have failed to qualify.
Notwithstanding the ultimate right of NYLIAC to
appoint and discharge agents, in the event an Agent
who has qualified fails or refuses to submit to the
supervision of the Broker in accordance with this
Agreement, or otherwise fails to comply with the
rules and standards imposed by the Broker on its
registered representatives, the Broker will certify
such fact to NYLIAC and will immediately notify the
Agent that such Agent is no longer authorized to sell
the Contracts and the Policies and the Broker and
NYLIAC will take whatever additional action may be
necessary to terminate the sales activities of the
Agent relating to the Contracts and the Policies."
(ii) Paragraph 9 of the Agreement is deleted, in its entirety, and
a new paragraph 9, in the form set forth immediately hereunder, is
substituted therefor, with the same force and effect as if such
paragraph had appeared in the Agreement, as originally executed:
"9. (a) The Broker will assume full
responsibility for the sales activities of the Agents
relating to the Contracts and the Policies for
initial and for continued compliance by itself and
the Agents with applicable federal, state and NASD
requirements, and, in connection therewith, may
demand and receive such assurances from NYLIAC, as it
deems appropriate, demonstrating compliance with the
Securities Act of 1933 and the Investment Company Act
of 1940;
(b) NYLIAC will retain the
ultimate right of control over, and responsibility
for, marketing the Contracts and the Policies;
(c) NYLIAC will undertake to
review and approve all advertising relating to the
Contracts and the Policies; and
(d) NYLIAC will retain the right
to reject Contracts and Policy applications and
maintain ultimate responsibility for any underwriting
in connection therewith."
Except to the extent specifically provided herein, the Agreement shall
remain in full force and effect in accordance to its terms. This Amendment No.
1 shall become effective as of the date hereof.
Dated as of this 30th
day of July 1984 NEW YORK LIFE SECURITIES CORP.
By: Jerald R. Hinrichs
--------------------
President
Attest:
/s/George Grace
- -----------------
Assistant Secretary
NEW YORK LIFE INSURANCE AND ANNUITY
CORPORATION
By: /s/Jacob B. Underhill
-----------------------
President
Attest:
/s/Franklin Ciaccio
- ---------------------
Secretary
<PAGE> 1
Exhibit 1.(5)
Form of Policy
<PAGE> 2
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
(A Delaware Corporation)
The Corporation will pay the benefits of this policy in accordance with its
provisions. The pages which follow are also a part of this policy.
Right to Examine Policy. Please examine your policy. Within 20 days after
delivery, you can return the policy to the Corporation or to the Registered
Representative through whom it was purchased. If this policy is returned, the
policy will be void from the start and a refund will be made. The amount we
refund will equal the greater of the policy's cash value as of the date the
policy is returned or the premiums paid, less loans and withdrawals.
VARIABLE LIFE INSURANCE BENEFIT. The Life Insurance Benefit of this policy may
increase or decrease, depending on the investment experience of the Separate
Account and the Life Insurance Benefit Option selected. Further information
regarding this benefit is given in the Life Insurance Benefit section on Page 4
of the policy.
CASH VALUE. To the extent the policy's cash value is allocated to the Separate
Account, the cash value of this policy will vary from day to day reflecting the
investment experience of the Separate Account. The method of determining the
cash value is described in the Cash Value and Loans section. There is no
guaranteed minimum cash value.
Payment of Premiums. While this policy is in force, premiums can be paid at any
time before the policy anniversary on which the Insured is age 95, and while
the Insured is living. They can be paid at any interval or by any method we
make available, subject to the Premiums section. The amount and interval of
scheduled premiums, as stated in the application for this policy, are shown on
the Policy Data page.
Annual Report to Owner. An annual report in connection with this policy will be
provided to you without charge. This report will tell you how much cash value
and cash surrender value there is as of the most recent policy anniversary,
together with the amount of any unpaid loan. The report will also give you any
other facts required by state law or regulation.
/s/Lee M. Gammill, Jr.
President
/s/George Grace
Secretary
Variable Adjustable Life Insurance Policy
Variable Life Insurance Benefit - Flexible Premium Payments
Proceeds Payable at Insured's Death.
AMOUNT OF VARIABLE LIFE INSURANCE OR CASH VALUE
PROCEEDS MAY VARY, REFLECTING INVESTMENT EXPERIENCE
OF SEPARATE ACCOUNT.
No Premiums Payable on or After Age 95.
Policy is Non-Participating.
793-90
<PAGE> 3
<TABLE>
<S> <C> <C> <C>
INSURED - JOHN DOE INSURED'S AGE AND SEX
AT ISSUE - 35 MALE
POLICY NUMBER - 66 000 000
INSURED'S CLASS
POLICY DATE/ISSUE DATE - NOVEMBER 1, 1993 OF RISK - STANDARD
INITIAL FACE AMOUNT - $50,000 LIFE INSURANCE BENEFIT OPTION -1
</TABLE>
BENEFICIARY/OWNER AS DESIGNATED IN THE APPLICATION UNLESS CHANGED AS PROVIDED
IN THE POLICY.
SCHEDULED PREMIUMS PAYABLE* AT ANNUAL INTERVALS: $648.00
ADDITIONAL*
BENEFITS AMOUNT MONTHLY RIDER COSTS
* PREMIUMS CANNOT BE PAID ON OR AFTER THE POLICY ANNIVERSARY ON WHICH
THE INSURED IS AGE 95. WHICH IS NOVEMBER 1, 2053. COVERAGE WILL
EXPIRE WHEN THE CASH VALUE LESS SURRENDER CHARGES, AND ANY UNPAID
LOANS AND ACCRUED INTEREST IS INSUFFICIENT TO COVER THE MONTHLY
DEDUCTION. IN ADDITION, BECAUSE POLICY VALUES ARE BASED ON THE
INVESTMENT PERFORMANCE OF THE SEPARATE ACCOUNT, PAYMENT OF PREMIUMS IN
ANY FREQUENCY OR AMOUNT WILL NOT GUARANTEE THAT THE POLICY WILL REMAIN
IN FORCE TO THE DATE SHOWN.
MONTHLY DEDUCTION DAY - FIRST DAY OF EACH CALENDAR MONTH
PAGE 2 POLICY DATA NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
9390-2
<PAGE> 4
POLICY NUMBER - 66 000 00 INSURED - JOHN DOE
TABLE OF EXPENSE CHARGES
MONTHLY DEDUCTION CHARGE CONSISTS OF:
- AN ANNUAL CONTRACT CHARGE NOT TO EXCEED $324.00 IN THE FIRST
POLICY YEAR AND $96.00 IN EACH POLICY YEAR THEREAFTER. THESE
CHARGES ARE DEDUCTED ON A MONTHLY BASIS. THE EXCESS OF THE
CONTRACT CHARGE FOR THE FIRST POLICY YEAR OVER THE AMOUNT OF
THE CONTRACT CHARGE APPLICABLE IN A RENEWAL YEAR IS DEFERRED
TO THE EARLIER OF THE FIRST POLICY ANNIVERSARY OR THE
SURRENDER OF THE POLICY. HOWEVER, IF THE POLICY IS
SURRENDERED IN THE FIRST POLICY YEAR, THE FULL FIRST YEAR
CONTRACT CHARGE IS DEDUCTED.
- MONTHLY COST OF INSURANCE FOR BASIC POLICY.
- MONTHLY COST OF ANY RIDERS.
OTHER CHARGES AGAINST THE POLICY:
- PERCENT OF SALES EXPENSE CHARGE NOT TO EXCEED 5% OF ANY
PREMIUM PAID.
- PREMIUM TAX CHARGE OF 2% OF EACH PREMIUM PAYMENT. THIS AMOUNT
IS SUBTRACTED FROM EACH PREMIUM PAYMENT. WE RESERVE THE RIGHT
TO CHANGE THIS PERCENTAGE TO CONFORM TO CHANGES IN THE LAW.
- FEDERAL TAX CHARGE OF 1.25% OF EACH PREMIUM PAYMENT. THIS
AMOUNT IS SUBTRACTED FROM EACH PREMIUM PAYMENT. WE RESERVE
THE RIGHT TO CHANGE THIS PERCENTAGE TO CONFORM TO CHANGES IN
THE LAW.
PAGE 2.1 POLICY DATA NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
9390-2.1
<PAGE> 5
POLICY NUMBER - 66 000 00 INSURED - JOHN DOE
TABLE OF MAXIMUM SURRENDER CHARGES
<TABLE>
<CAPTION>
Policy Surrender
Year Charge
---- ------
<S> <C>
1 202.32
2 242.79
3 283.25
4 323.71
5 364.18
6 404.64
7 364.18
8 323.71
9 283.25
10 242.79
11 202.32
12 161.86
13 121.39
14 80.93
15 40.46
16 0.00
</TABLE>
THIS TABLE APPLIES TO THE INITIAL FACE AMOUNT FOR THE NUMBER OF YEARS SHOWN
ABOVE. THE ACTUAL SURRENDER CHARGE, WHICH APPLIES IN ANY YEAR, IS DESCRIBED IN
THE MOST CURRENT PROSPECTUS WHICH IS ON FILE WITH THE SEC.
PARTIAL WITHDRAWALS ARE SUBJECT TO A PROCESSING CHARGE OF THE LESSER OF $25 OR
2% OF THE AMOUNT WHICH IS BEING WITHDRAWN. THE MINIMUM AMOUNT THAT MAY BE
WITHDRAWN IS $500.
PAGE 2.2 POLICY DATA NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
9390-2.2
<PAGE> 6
TABLE OF GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATES
(PER $1,000)
GUARANTEED
MALE
<TABLE>
<CAPTION>
ATTAINED ATTAINED
AGE AGE
<S> <C> <C> <C>
0 .35 48 .48
1 .09 49 .52
2 .08 50 .56
3 .08 51 .61
4 .08 52 .66
5 .08 53 .73
6 .07 54 .80
7 .07 55 .87
8 .06 56 .96
9 .06 57 1.04
10 .06 58 1.13
11 .06 59 1.23
12 .07 60 1.34
13 .08 61 1.46
14 .10 62 1.60
15 .11 63 1.76
16 .13 64 1.93
17 .14 65 2.12
18 .15 66 2.33
19 .16 67 2.54
20 .16 68 2.77
21 .16 69 3.02
22 .16 70 3.30
23 .16 71 3.62
24 .15 72 3.99
25 .15 73 4.41
26 .14 74 4.87
27 .14 75 5.38
28 .14 76 5.91
29 .14 77 6.47
30 .14 78 7.04
31 .15 79 7.65
32 .15 80 8.31
33 .16 81 9.04
34 .17 82 9.87
35 .18 83 10.80
36 .19 84 11.83
37 .20 85 12.91
38 .22 86 14.04
39 .23 87 15.19
40 .25 88 16.37
41 .27 89 17.58
42 .30 90 18.83
43 .32 91 20.15
44 .35 92 21.58
45 .38 93 23.20
46 .41 94 25.28
47 .44
</TABLE>
PAGE 2A POLICY DATA NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
9390-2A
<PAGE> 7
WE & YOU
In this policy, the words "we", "our" or "us" refer to New York Life Insurance
and Annuity Corporation, and the words "you" or "your" refer to the owner of
this policy.
When you write to us, please include the policy number, the Insured's full
name, and your current address.
CONTENTS
<TABLE>
<CAPTION>
SECTION PROVISIONS PAGE
<S> <C> <C>
POLICY DATA PAGES 2
ONE LIFE INSURANCE BENEFITS 4
TWO OWNER AND BENEFICIARY 4-5
THREE POLICY CHANGES 5
FOUR PREMIUMS 6-7
FIVE SEPARATE ACCOUNT 7-9
(Separate Account Charges)
SIX FIXED ACCOUNT 9
SEVEN CASH VALUE AND LOANS 9-12
(Policy Charges)
EIGHT PAYMENT OF POLICY PROCEEDS 12-13
NINE GENERAL PROVISIONS 13-15
APPLICATION - Attached to the Policy
RIDERS OR ENDORSEMENTS
(IF ANY) - Attached to the Policy
</TABLE>
Note: This policy is a legal contract between the policyowner and
the Company. PLEASE READ THIS POLICY CAREFULLY FOR FULL
DETAILS.
PAGE 3
9390-3
<PAGE> 8
SECTION ONE - LIFE INSURANCE BENEFITS
1.1 Is A Life Insurance Benefit Payable Under This Policy? We will pay
the life insurance proceeds to the beneficiary promptly, when we have
proof that the Insured died while the life insurance under this policy
was in effect.
1.2 What Is The Amount Of Life Insurance Proceeds Which Are Payable Under
This Policy? The proceeds payable under this policy will be based on
the Life Insurance Benefit Option in effect on the date of death, and
any increases or decreases that are made in the initial face amount
shown on the Policy Data page. We will deduct any unpaid loan and
accrued interest. The Policy Changes section of this policy contains
information about how to change this policy. It also provides details
about the effect of any change on the Life Insurance Benefit.
1.3 What Are The Life Insurance Benefit Options Which Are Available Under
This Policy? The amount of life insurance benefit payable under this
policy will be determined in accordance with one of the following
options:
Option 1 - This option provides a life insurance benefit option equal
to the greater of the face amount of the policy or a percentage of the
cash value equal to the minimum necessary for this policy to qualify
as life insurance under Section 7702 of the Internal Revenue Code.
(See the following table for these percentages.)
Option 2 - This option provides a life insurance benefit option equal
to the greater of the face amount of the policy plus the cash value or
a percentage of the cash value equal to the minimum necessary for this
policy to qualify as life insurance under Section 7702 of the Internal
Revenue Code. (See the following table for these percentages.)
<TABLE>
<CAPTION>
Insured's Age Insured's Age
on Policy % of Cash on Policy % of Cash
Anniversary Value Anniversary Value
<S> <C> <C> <C>
0-40 250 68 117
41 243 69 116
42 236 70 115
43 229 71 113
44 222 72 111
45 215 73 109
46 209 74 107
47 203 75 105
48 197 76 105
49 191 77 105
50 185 78 105
51 178 79 105
52 171 80 105
53 164 81 105
54 157 82 105
55 150 83 105
56 146 84 105
57 142 85 105
58 138 86 105
59 134 87 105
60 130 88 105
61 128 89 105
62 126 90 105
63 124 91 104
64 122 92 103
65 120 93 102
66 119 94 101
67 118 95&Over 100
</TABLE>
SECTION TWO - OWNER AND BENEFICIARY
2.1 Who Is The Owner Of This Policy? The owner of this policy is stated
on the Policy Data page. In this policy, the words "you" and "your"
refer to the policyowner.
2.2 Can A Successor To The Owner Be Named? A successor owner can be named
in the application, or in a notice you sign which gives us the facts
that we need. If you die before the successor owner, the successor
owner will become the new owner. If no successor owner survives you
and you die before the Insured, your estate becomes the new owner.
2.3 How Do You Change The Owner Of This Policy? You may change the owner
of this policy, from yourself to a new owner, in a notice you sign
which gives us the facts that we need. This change will take effect
as of the date you signed the notice, subject to any payment we made
or action we took before recording this change. When this change
takes effect, all rights of ownership will pass to the new owner.
Changing the owner cancels any prior choice of owner, but does not
change the beneficiary.
2.4 May More Than One Beneficiary Be Named For This Policy? One or more
beneficiaries for any life insurance proceeds may be named in the
application. If more than one beneficiary is named, they can be
classed as first, second and so on. If 2 or more are named in a
class, their shares in the proceeds are equal, unless you state
otherwise. The stated shares of the proceeds will be paid to any
first beneficiaries who survive the Insured. If no first
beneficiaries survive, payment will be made to any beneficiaries
surviving in the second class, and so on.
PAGE 4
9390-4
<PAGE> 9
SECTION TWO - OWNER AND BENEFICIARY (continued)
2.5 May You Change A Beneficiary? While the Insured is living, you can
change a beneficiary in a notice you sign which gives us the facts
that we need. This change will take effect as of the date you signed
the notice, subject to any payment we made or action we took before
recording the change.
2.6 What Happens If No Beneficiaries Are Living When The Proceeds Become
Payable? If no beneficiary for the life insurance proceeds, or for a
stated share, survives the Insured, the right to these proceeds, or
this share, will pass to you. If you are the Insured, this right will
pass to your estate.
2.7 What If The Beneficiary And The Insured Die At The Same Time? Unless
stated otherwise in the policy or in your signed notice which is in
effect at the Insured's death, if any beneficiary dies at the same
time as the Insured, or within 15 days after the Insured but before we
receive proof of the Insured's death, we will pay the proceeds as
though that beneficiary died first.
SECTION THREE - POLICY CHANGES
3.1 What Changes May You Make To This Policy? You can apply in writing to
have the face amount increased or decreased (without changing the Life
Insurance Benefit Option), or have the Life Insurance Benefit Option
changed. We reserve the right to limit increases in the face amount,
and to limit decreases in the face amount and Life Insurance Benefit
Option changes in the first policy year, on a uniform basis by class.
Changes may only be made while the Insured is living, and only if this
policy would continue to qualify as Life Insurance, as defined under
Section 7702 of the Internal Revenue Code. See Section 7.4 for
further information regarding decreases in face amount and changes in
the Life Insurance Benefit Option.
3.2 What Happens When You Apply To Increase The Policy Face Amount? You
can have the face amount of this policy increased, if we agree,
subject to our minimum amount requirements. To increase the face
amount, we must have your written application, also signed by the
Insured, together with any proof of insurability that we require. We
reserve the right to limit increases in the face amount. Any increase
will take effect on the Monthly Deduction Day on or after the day we
approve the application for the increase.
The cost of insurance for each increase will be based on the Insured's
age, sex, and class of risk at the time the increase takes effect, as
well as the duration since the increase. A new set of surrender
charges will apply to the increased face amount. We will tell you the
amount of these charges when you apply for the increase. They will
also be shown on a new Policy Data page when the increase takes
effect. For the amount of the increase, new Incontestability and
Suicide Exclusion periods will apply, beginning on the effective date
of such increase.
3.3 What Happens When You Decrease The Face Amount? You can decrease the
face amount, provided the new face amount is at least $50,000. We
reserve the right to limit decreases in the face amount. Any decrease
will take effect on the Monthly Deduction Day on or after the day we
receive your signed request at our Home Office. The decrease will
first be applied to reduce the most recent increase in the face
amount. It will then be applied to reduce other increases in the face
amount in the reverse order in which they took place, and then to the
initial face amount.
When the face amount is decreased, we will deduct from the cash value
a surrender charge equal to the difference between the surrender
charge immediately before the decrease and the surrender charge
immediately after the decrease. In assessing this surrender charge,
we first take into account the surrender charge associated with any
increases in face amount in the reverse order made, and then the
initial face amount.
3.4 What Happens When You Change The Life Insurance Benefit Option? You
can change the Life Insurance Benefit Option of this policy. We
reserve the right to limit Life Insurance Benefit Option changes. Any
change of Option will take effect on the Monthly Deduction Day on or
after the date we receive your signed request at our Home Office. If
you change from Option 1 to Option 2, the face amount of the policy
will be decreased by the cash value. If you change from Option 2 to
Option 1, the face amount will be increased by the cash value.
PAGE 5
9390-5
<PAGE> 10
SECTION FOUR - PREMIUMS
4.1 How Do You Pay Premiums? At any time before the policy anniversary on
which the Insured is age 95, and while the Insured is living, premiums
can be paid at any interval or by any method we make available.
Premiums are payable at our Home Office or at any other location that
we indicate to you in writing. The cash value and amount of insurance
under this policy are based on the amount and interval of the premiums
that have been paid. You may pay scheduled premiums and/or unscheduled
premiums.
4.2 What Are Scheduled Premiums? The amount and interval of any scheduled
premiums, as stated in the application, are shown on the Policy Data
page. The first premium is payable as of the policy's date of issue.
A scheduled premium does not have to be paid to keep this policy in
force, if the cash surrender value is enough to cover the charges made
on the Monthly Deduction Day. The amount of any scheduled premium may
be increased or decreased subject to the limits we set. The frequency
of premium payments may also be changed subject to our minimum premium
rules. Scheduled premiums end on the policy anniversary on which the
Insured is age 95.
4.3 What Are Unscheduled Premiums? From time to time, you may make
unscheduled premium payments which are in addition to scheduled
premiums. The Insured must be living and payment must be made prior
to the policy anniversary on which the Insured is age 95. If an
unscheduled premium payment would result in an increase in the life
insurance benefit greater than the increase in the cash value, we
reserve the right to require proof of insurability before accepting
that payment and applying it to the policy. We also reserve the right
to limit the number and amount of any unscheduled premiums.
4.4 How Are Your Premium Payments Allocated To The Investment Divisions?
When we receive a premium payment, we will deduct a Sales Expense
Charge not to exceed the amount shown on the Policy Data page. We
will also deduct an amount equal to the Premium Tax Charge and the
Federal Tax Charge in effect at that time. The balance of the premium
(the net premium) will be applied to the Separate Account and Fixed
Account in accordance with your allocation election in effect at that
time, and before any other deductions which may be due are made.
4.5 Can Your Allocation Election Be Changed? You can change your
allocation election stated in the application by a written request.
Your allocation percentages must total 100%. Each percentage must be
either zero, or a whole number which is at least 1%.
4.6 What Happens If You Stop Making Premium Payments? When premium
payments are not made as scheduled, this policy will continue in
effect as long as the cash value less any surrender charge, policy
loan and accrued interest, is sufficient to pay Monthly Deduction
Charges.
4.7 What Is The Late Period? If, on a Monthly Deduction Day, the cash
value less any surrender charge, policy loan and accrued interest is
less than the Monthly Deduction Charge for the next policy month, the
policy will continue for a late period of 62 days after that Monthly
Deduction Day. If we do not receive payment before the end of the
late period, the policy will end and there will be no more benefits
under the policy. To inform you of this event, we will mail a notice
to you at your last known address at least 31 days before the end of
the late period. We will also mail a copy of the notice to the last
known address of any assignee on our records.
4.8 What If The Insured Dies During The Late Period? If the Insured dies
during the late period, we will pay the policy proceeds. However,
these proceeds will be reduced by the amount of any unpaid loan and
accrued interest and Monthly Deduction Charges for the full policy
month or months that run from the beginning of the late period through
the policy month in which the Insured died.
PAGE 6
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<PAGE> 11
SECTION FOUR - PREMIUMS (continued)
4.9 Can You Reinstate The Policy If It Ends? Within 5 years after this
policy has ended, you may apply to reinstate the policy if you did not
surrender it. When you apply for reinstatement, you must provide
proof of insurability that is acceptable to us. However, if the
required payment is made within 31 days after the end of the late
period, no proof of insurability is required.
4.10 What Payment Is Required To Reinstate The Policy? In order to
reinstate this policy, a payment must be made in an amount which is
sufficient to keep this policy in force for at least 3 months. This
payment will be in lieu of the payment of all premiums in arrears. It
may happen that the policy lapses before, and is reinstated after, the
first policy anniversary. In this case, we will also require payment
of 150% of the deferred contract charge to reinstate this policy. Any
unpaid loan must also be repaid, together with loan interest at 6%
compounded once each year from the end of the late period to the date
of reinstatement. If a policy loan interest rate of less than 6% is
in effect when the policy is reinstated, the interest rate for any
unpaid loan at the time of reinstatement will be the same as the
policy loan interest rate. The effective date of reinstatement will
be the Monthly Deduction Day on or following the date we approve the
request for reinstatement.
SECTION FIVE - SEPARATE ACCOUNT
5.1 How Is The Separate Account Established And Maintained? We have
established and maintained the Separate Account under the laws of the
State of Delaware. Any realized or unrealized income, net gains and
losses from the assets of the Separate Account are credited or charged
to it without regard to our other income, gains or losses. We put
assets in the Separate Account for this policy, and we may also do the
same for any other variable life insurance policies we may issue.
5.2 How Are The Separate Account Assets Invested? The Separate Account
invests its assets in shares of one or more mutual funds. Fund shares
are purchased, redeemed and valued on behalf of the Separate Account.
The Separate Account is divided into Investment Divisions. We reserve
the right to add or remove any Investment Division of the Separate
Account.
5.3 To Whom Do The Assets In The Separate Account Belong? The assets of
the Separate Account are our property. There are Separate Account
assets which equal the reserves and other contract liabilities of the
Separate Account. Those assets will not be chargeable with
liabilities arising out of any other business we conduct. We reserve
the right to transfer assets of an Investment Division, in excess of
the reserves and other contract liabilities with respect to that
Investment Division, to another Investment Division or to our General
Account.
5.4 How Will The Assets Of The Separate Account Be Valued? We will
determine the value of the assets of the Separate Account on each day
during which the New York Stock Exchange is open for trading except
for the Friday after Thanksgiving and the day before Christmas. The
assets of the Separate Account will be valued at fair market value, as
determined in accordance with a method of valuation which we
established in good faith.
5.5 Can We Transfer Assets Of The Separate Account To Another Separate
Account? We reserve the right to transfer assets of the Separate
Account, which we determine to be associated with the class of
policies to which this policy belongs, to another separate account.
If this type of transfer is made, the term "Separate Account", as used
in this policy, shall then mean the separate account to which the
assets were transferred.
5.6 What Other Rights Do We Have? We also reserve the right, when
permitted by law, to:
(a) de-register the Separate Account under the Investment Company
Act of 1940;
(b) manage the Separate Account under the direction of a committee
or discharge such committee at any time;
(c) restrict or eliminate any voting rights of policyowners or
other persons who have voting rights as to the Separate
Account; and
(d) combine the Separate Account with one or more other separate
accounts.
PAGE 7
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<PAGE> 12
SECTION FIVE - SEPARATE ACCOUNT (continued)
5.7 Can A Change In The Investment Objective Or Strategy Of The Separate
Account Be Required? When required by law or regulation, an invest-
ment objective of the Separate Account may be changed. It will only
be changed if approved by the appropriate insurance official of the
State of Delaware or deemed approved in accordance with such law or
regulation. If so required, the request to obtain such approval will
be filed with the insurance official of the state or district in which
this policy is delivered.
5.8 If The Assets In The Separate Account Belong To Us, What Do Your Funds
Purchase? The interest of this policy in the Separate Account prior to
the date on which the life insurance benefit becomes payable is
represented by accumulation units. The number of accumulation units
purchased in an Investment Division will be determined by dividing the
part of any payment or the part of any transfer applied to that
Investment Division, by the value of an accumulation unit for that
Division on the transaction date. Payments allocated, transferred or
otherwise added to the Investment Divisions will be applied to provide
accumulation units in those Investment Divisions. Accumulation units
are redeemed when amounts are loaned, transferred, surrendered or
otherwise deducted. These transactions are called policy transactions.
5.9 What Are Accumulation Units? Accumulation units are the accounting
units used to calculate the values under this policy.
5.10 How Is The Value Of An Accumulation Unit Determined? The value of an
accumulation unit on any business day is determined by multiplying the
value of that unit on the immediately preceding business day by the net
investment factor for the valuation period. The valuation period is
the period from the close of the immediately preceding business day to
the close of the current business day. The net investment factor for
this policy used to calculate the value of an accumulation unit in any
Investment Division of the Separate Account for the valuation period is
determined by dividing (a) by (b) and subtracting (c) from the result,
where:
(a) is the sum of:
(1) the net asset value of a fund share held in the
Separate Account for that Investment Division
determined at the end of the current valuation period,
plus
(2) the per share amount of any dividends or capital gain
distributions made by the fund for shares held in the
Separate Account for that Investment Division if the
ex-dividend date occurs during the valuation period.
(b) is the net asset value of a fund share held in the Separate
Account for that Investment Division determined as of the end
of the immediately preceding valuation period.
(c) is a factor representing the mortality and expense risk charge
and administrative charges. This factor represents a charge
which accrues daily and is currently equal, on an annual basis,
to .70% of the daily net asset value of a fund share in the
Separate Account for that Investment Division. We reserve the
right to increase this charge, but it will never exceed one
percent.
The net investment factor may be greater or less than one; therefore,
the value of an accumulation unit may increase or decrease.
5.11 Can You Transfer Funds Between Investment Divisions And To The Fixed
Account? Transfers may be made between Investment Divisions of the
Separate Account and to the Fixed Account. We reserve the right to
limit the number of transfers to the Fixed Account after the first two
policy years.
5.12 How Do You Make A Transfer Between Investment Divisions And To The
Fixed Account? If you want to make a transfer, you must tell us in a
notice you sign which gives us the facts that we need. We reserve the
right to limit the amount of transfers to the Fixed Account after the
first two policy years.
5.13 When Will These Transfers Take Effect? Transfers will take effect as
of the day after we receive your signed written consent.
PAGE 8
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<PAGE> 13
SECTION FIVE - SEPARATE ACCOUNT (continued)
5.14 Are There Limits On What You May Transfer? The minimum amount that
can be transferred is the lesser of $500 or the value of all remaining
accumulation units in the Investment Division, unless we agree
otherwise. The Investment Division from which the transfer is being
made must maintain a minimum balance of $500 after the transfer is
completed. If, after a transfer, the value of the remaining
accumulation units in an Investment Division would be less than $500,
we have the right to include that amount as part of the transfer.
There is no limit to the number of transfers that can be made. We
reserve the right to apply a charge, not to exceed $30, for each
transfer after the first twelve in a given policy year. This charge
is applied to the appropriate Investment Divisions on the basis of the
amount of the total transfer which is allocated from each Investment
Division.
Amounts which may be transferred from the Fixed Account to the
Investment Divisions are limited as provided in the Fixed Account
Section of this policy.
SECTION SIX - FIXED ACCOUNT
6.1 What Is The Fixed Account? The Fixed Account is supported by assets of
the Corporation that are not segregated in any of the separate accounts
of New York Life Insurance and Annuity Corporation. Payments applied
to and any amounts transferred to the Fixed Account are credited with
interest using a fixed interest rate which we declare periodically. We
will set this rate in advance at least annually. This rate will never
be less than 4% per year. All payments applied to, or amounts
transferred to, the Fixed Account thereafter receive the rate in effect
at that time. The interest we credit may be different for loaned and
unloaned amounts.
6.2 Can Transfers Be Made From The Fixed Account To The Separate Account?
Each policy year you may make transfers from the Fixed Account to the
Separate Account Investment Divisions. The minimum amount which may
be transferred is the lesser of: (a) $500, or (b) the accumulation
value in the Fixed Account, unless we agree otherwise. However, if
the values remaining in the Fixed Account would be less than $500, we
have the right to include that amount as part of the transfer. The
sum of all such transfers in a policy year may not be greater than 20%
of the accumulation value in the Fixed Account at the beginning of
that policy year.
SECTION SEVEN - CASH VALUE AND LOANS
7.1 What Is The Cash Value Of This Policy? The cash value of this policy
at any time is equal to the total accumulation value of the portion of
the cash value of this policy allocated to the Separate Account plus
the portion of the cash value of this policy allocated to the Fixed
Account.
7.2 Can You Surrender This Policy Or Make A Partial Withdrawal? At any
time after this policy has cash value, and while the Insured is
living, you may surrender it for that value. The cash surrender value
is equal to the cash value less any surrender charges which may apply,
including any deferred contract charge less any unpaid loan and
accrued interest. You can also elect to make a partial withdrawal for
a selected amount or a percentage of the cash surrender value.
PAGE 9
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<PAGE> 14
SECTION SEVEN - CASH VALUE AND LOANS (continued)
7.3 How Can Funds Be Withdrawn From This Policy? You may request a
partial withdrawal by sending us your signed written request which
must be received while the Insured is living. The minimum amount
which may be withdrawn is $500, unless we agree otherwise. The
withdrawal will be made on a pro-rata basis from the Fixed Account
and/or Investment Divisions, unless you indicate otherwise. If the
portion of your request for a partial withdrawal from the Fixed
Account or Investment Division is greater than the amount in the Fixed
Account and/or Investment Division, we will pay you the entire value
of that Fixed Account and/or Investment Division, less any surrender
charge which may apply. (See Section 7.4 for additional information.)
We may charge a fee, not to exceed the lesser of $25, or 2% of the
amount withdrawn, for processing a partial withdrawal. This fee will
be deducted from the Fixed Account and/or Investment Divisions based
on the withdrawal allocation or, if none, on a pro-rata basis. When
you make a partial withdrawal, the life insurance benefit, the cash
value, and the cash surrender value will be reduced by the amount of
the withdrawal proceeds and any applicable surrender charge, you
receive as of the date we make the payment.
We reserve the right to limit partial withdrawals in the first policy
year, if Life Insurance Benefit Option 1 is in effect.
7.4 How Is The Surrender Charge Determined? For the number of years shown
on the Surrender Charge page a surrender charge will be assessed any
time the face amount is decreased, whether due to a partial
withdrawal, full surrender, a change in the Life Insurance Benefit
Option or requested decreases in the face amount. A table of maximum
surrender charges is shown on the Surrender Charge page. A surrender
charge will be assessed when the face amount is decreased but the
policy is not fully surrendered. This charge will be no larger than
the difference between the surrender charge shown on the Surrender
Charge page and the surrender charge applicable to the new face amount
as determined by us. A separate surrender charge is calculated
separately for the initial face amount and for each increase in the
face amount.
7.5 What Monthly Deductions Are Made Against The Cash Value? On each
Monthly Deduction Day, the following deductions are made from the
policy's cash value:
(a) A monthly contract charge not to exceed the amount shown on the
Policy Data page;
(b) The monthly cost of insurance for the amount of the life
insurance benefit in effect at that time;
(c) The monthly cost for any riders attached to this policy.
A deduction may also be made for any temporary flat extras which may
apply. The amount and duration of these flat extras, if any, are
shown in a footnote on the Policy Data page. In addition, a deferred
contract charge will be deducted at the first anniversary, as
described on the Policy Data page.
The Monthly Deduction Day for this policy is shown on the Policy Data
page. The first Monthly Deduction Day is the date of issue of the
policy. All monthly deductions are made on a pro-rata basis from each
of the Investment Divisions and the Fixed Account.
7.6 How Is The Cost Of Insurance For This Policy Calculated? The cost of
insurance is calculated on each Monthly Deduction Day. The monthly
cost of insurance for the initial face amount, and for each subsequent
increase in the face amount, is calculated separately. For this
calculation, the cash value will be used to reduce the cost of
insurance first with regard to any increases in face amount, in the
reverse order made, and then to the initial face amount. The monthly
cost of insurance is equal to (1) multiplied by the result of (2)
minus (3) where:
(1) is the monthly cost of insurance rate per $1,000 of insurance;
(2) is the number of thousands of life insurance benefit as of the
Monthly Deduction Day divided by 1.00327; and
(3) is the number of thousands of cash value as of the Monthly
Deduction Day (before this cost of insurance, any applicable
contract charge, and the monthly cost of any riders are
deducted).
PAGE 10
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<PAGE> 15
SECTION SEVEN - CASH VALUE AND LOANS (continued)
7.7 What Is The Cost Of Insurance Rate? The rates used to obtain the cost
of insurance for the initial face amount and for each increase in the
face amount are based on the Insured's issue age, sex, and class of
risk at the time the initial face amount or increase took effect, as
well as the duration since issue of such insurance. For the initial
face amount, the monthly cost of insurance rates will never exceed the
maximum rates shown in the Table of Guaranteed Maximum Monthly Cost of
Insurance Rates attached to this policy. The actual rate will be set
by us, in advance, at least once a year. Any change in cost of
insurance rates will be made on a uniform basis for Insureds in the
same class, based on issue age, as well as the duration since issue of
such insurance, sex and risk classification.
7.8 What Is The Monthly Cost Of Riders? The monthly cost of any riders
attached to this policy is described on the Policy Data pages.
7.9 What Is The Loan Value Of This Policy? Using this policy as sole
security, you can borrow any amount up to the loan value of this
policy. The loan value on any given date is equal to: (1) 90% of the
cash value less surrender charges and less any deferred contract
charge, less (2) any unpaid loan and accrued interest, on that date.
7.10 What Happens When You Request A Loan? When a loan is requested, an
amount is transferred from the Separate Account to the Fixed Account
equal to the excess of: (a) 108% of the requested loan amount over
(b) the cash value in the Fixed Account, less any outstanding policy
loan. This transfer will be made on a pro-rata basis from the various
Investment Divisions. While a policy loan is outstanding, no partial
withdrawals or transfers which would reduce the cash value of the
Fixed Account below 108% of the outstanding loan are permitted.
The amount in the Fixed Account which equals the amount of an unpaid
loan will be credited with interest at a rate which will never be less
than 2% less than the effective annual loan interest rate.
7.11 What Is The Loan Interest Rate For The Policy? Unless we set a lower
rate for any period, the effective annual loan interest rate is 8%,
which is payable in arrears. Loan interest for the policy year in
which a loan is taken will be due on the next policy anniversary.
Loan interest accrues each day and is payable on the anniversary, on
the date of death, surrender, or lapse, or on the date of a loan
increase or loan repayment. Loan interest not paid when due will be
charged as a new unpaid loan.
7.12 If The Loan Interest Rate Is Reduced, Can It Subsequently Increase?
Yes. If we have set a rate lower than 8% per year, any subsequent
increase in the interest rate will be subject to the following
conditions:
(1) The effective date of any increase in the interest rate shall
not be earlier than one year after the effective date of the
establishment of the previous rate.
(2) The amount by which the interest rate may be increased will not
exceed one percent per year, but the rate of interest shall in
no event ever exceed 8%.
(3) We will give notice of the interest rate in effect when a loan
is made and when sending notice of loan interest due.
(4) If a loan is outstanding 40 days or more before the effective
date of an increase in the interest rate, we will notify you of
that increase at least 30 days prior to the effective date of
the increase.
(5) We will give notice of any increase in the interest rate when a
loan is made during the 40 days before the effective date of
the increase.
7.13 How Are Loan Repayments Credited To The Policy? All or part of an
unpaid loan can be repaid before the Insured's death or before the
policy is surrendered. Loan repayments are allocated to the
Investment Divisions using the same allocation in effect for the
payment of premiums, unless you indicate otherwise.
PAGE 11
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<PAGE> 16
SECTION SEVEN - CASH VALUE AND LOANS (continued)
7.14 What Happens If A Loan Is Not Repaid? If a loan is outstanding when
the life insurance benefit becomes payable, we will deduct the amount
of the unpaid loan plus accrued interest from these proceeds. The
cash surrender value reflects a deduction of any outstanding policy
loan and accrued interest. In addition, it may happen in a given
policy year that, based on the loan interest rate in effect when that
year began (ignoring any subsequent increase in the rate during that
year), any unpaid loan plus accrued interest exceeds the cash value of
this policy less surrender charges. In that event, we will mail a
notice to you at your last known address, and a copy to the last known
assignee on our records. All insurance will end 31 days after the
date on which we mail that notice to you if the excess of the unpaid
loan plus accrued interest over the cash value less surrender charges
is not paid within that 31 days.
SECTION EIGHT - PAYMENT OF POLICY PROCEEDS
8.1 How Will Policy Proceeds Be Paid? The proceeds of this policy will be
paid in one sum, or if elected, all or part of these proceeds can be
placed under one or more of the options described in this section. If
we agree, the proceeds may be placed under some other method of
payment instead.
Any life insurance proceeds paid in one sum will bear interest
compounded each year from the Insured's death to the date of payment.
We set the interest rate each year. This rate will be at least 3% per
year, and will not be less than required by law.
8.2 How Do You Elect An Optional Method Of Payment? While the Insured is
living, you can elect or change an option. You can also elect or
change one or more beneficiaries who will be the payee or payees under
that option.
After the Insured dies, any person who is to receive proceeds in one
sum (other than an assignee) can elect an option and name payees. The
person who elects an option can also name one or more successor payees
to receive any amount remaining at the death of the payee. Naming
these payees cancels any prior choice of successor payees.
A payee who did not elect the option does not have the right to
advance or assign payments, take the payments in one sum, or make any
other change. However, the payees may be given the right to do one or
more of these things if the person who elects the option tells us in
writing and we agree.
8.3 How Can An Option Be Changed? If we agree, a payee who elects Option
1A, 1B or 2 may later elect to have any amount we still have, or the
present value of any elected payments, placed under some other option
described in this section.
8.4 Who Can Be Named Payees? Only individuals who are to receive payments
on their own behalf may be named as payees or successor payees, unless
we agree otherwise. We may require proof of the age or the survival
of a payee.
8.5 What Happens If The Payee Dies Before All Proceeds Have Been Paid? It
may happen that when the last surviving payee dies, we still have an
unpaid amount, or there are some payments which remain to be made. If
so, we will pay the unpaid amount with interest to the date of
payment, or pay the present value of the remaining payments, to that
payee's estate in one sum. The present value of the remaining
payments is based on the interest rate used to compute them, and is
always less than their sum.
8.6 Is There A Minimum Payment The Company Will Make? When any payment
under an option would be less than $100, we may pay any unpaid amount
or present value in one sum.
8.7 What Are The Proceeds At Interest Options (1A and 1B)? The policy
proceeds may be left with us at Interest. We will set the interest
rate each year. This rate will be at least 3% per year.
For the Interest Accumulation Option (Option 1A), we credit interest
each year on the amount we still have. This amount can be withdrawn
at any time in sums of $100 or more. We pay interest to the date of
withdrawal on sums withdrawn.
For the Interest Payment Option (Option 1B), we pay interest once each
month, every 3 months, every 6 months, or once each year, as chosen,
based on the amount we still have.
PAGE 12
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<PAGE> 17
SECTION EIGHT - PAYMENT OF POLICY PROCEEDS (continued)
8.8 What Is The Life Income Option (2)? We make equal payments each month
during the lifetime of the payee or payees. We determine the amount
of the monthly payment by applying the policy proceeds to purchase a
corresponding single premium life annuity policy which is being issued
when the first payment is due. Payments are based on the
appropriately adjusted annuity premium rate in effect at that time,
but will not be less than the corresponding minimum shown in the
Option 2 Table. These minimum amounts are based on the 1983 Table "a"
with Projection Scale G, and with interest compounded each year at 3%.
When asked, we will state in writing what the minimum amount of each
monthly payment would be under this option. It is based on the sex
and adjusted age of the payee or payees.
To find the adjusted age in the year the first payment is due, we
increase or decrease the payee's age at that time, as follows:
<TABLE>
<CAPTION>
1995 & 1996-2005 2006-2015 2016-25 2026-35 2036 &
earlier later
<S> <C> <C> <C> <C> <C>
+2 +1 0 -1 -2 -3
</TABLE>
We make a payment each month during the lifetime of the payee.
Payments do not change, and are guaranteed for 10 years, even if that
payee dies sooner.
OPTION 2 TABLE
Minimum Monthly Payment per $1,000 of Proceeds
Guaranteed for 10 years
<TABLE>
<CAPTION>
Payee's
Adjusted
Age MALE FEMALE
<S> <C> <C>
60 4.46 4.03
61 4.55 4.11
62 4.66 4.19
63 4.76 4.27
64 4.87 4.37
65 4.99 4.46
66 5.11 4.57
67 5.24 4.67
68 5.38 4.79
69 5.52 4.91
70 5.66 5.04
71 5.81 5.18
72 5.96 5.32
73 6.12 5.47
74 6.28 5.63
75 6.45 5.79
76 6.61 5.96
77 6.78 6.14
78 6.96 6.32
79 7.13 6.51
80 7.30 6.70
81 7.46 6.89
82 7.63 7.07
83 7.78 7.26
84 7.93 7.44
85 & over 8.07 7.62
</TABLE>
SECTION NINE - GENERAL PROVISIONS
9.1 What Constitutes The Entire Contract? The entire contract consists of
this policy, any attached riders or endorsements, and the attached
copy of the application. Also, any application used to apply for
increases in the policy face amount will be attached to and made a
part of this policy. Only our Chairman, President, Secretary, or one
of our Vice Presidents is authorized to change the contract, and then,
only in writing. No change will be made to this contract without your
consent. No agent is authorized to change this contract.
9.2 How Important Is The Information You Provide In The Application For
This Policy? In issuing this policy, we have relied on the statements
made in the application. All such statements are deemed to be
representations and not warranties. We assume these statements are
true and complete to the best of the knowledge and belief of those who
made them. No statement made in connection with the application will
be used by us to void this policy unless that statement is a material
misrepresentation and is part of the application.
PAGE 13
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<PAGE> 18
SECTION NINE - GENERAL PROVISIONS (continued)
9.3 Will We Be Able To Contest This Policy? We will not contest the
payment of the life insurance proceeds based on the initial face
amount, after this policy has been in force during the lifetime of the
Insured for 2 years from the date of issue.
It may happen that the face amount of this policy is increased as
described in the Policy Changes section. In this case, the 2 year
contestable period for each increase will begin on the effective date
of such increase. We may contest the payment of that amount only on
the basis of those statements made in the application for such
increase in face amount.
9.4 Does This Policy Cover Suicide Of The Insured? Suicide of the
Insured, while sane or insane within 2 years of the date of issue, is
not covered by this policy. In that event, this policy will end and
the only amount payable will be the premiums paid to us, less any
unpaid loan and any partial surrender benefits paid.
It may happen that the face amount of this policy is increased as
described in the Policy Changes section. In this case, the 2 year
suicide exclusion period for each increase will begin on the effective
date of such increase. If the suicide exclusion period applies to
such an increase, the only amount payable with respect to that
increase will be the total cost of insurance we deducted for the
increase.
9.5 How Are The Dates Referred To In This Policy Measured? Policy years,
months, and anniversaries are measured from the policy date, unless
otherwise stated.
9.6 How Is A Person's Age Calculated For The Purposes Of This Policy?
When we refer to a person's age in this policy, we mean his or her age
on the birthday which is nearest to the previous anniversary.
9.7 What Happens If A Person's Age Or Sex Has Been Stated Incorrectly? If
we would pay too little or too much because the age or sex of the
Insured is not correct as stated, we will adjust the proceeds, up or
down, to reflect the correct age or sex. The amount of the death
benefit shall be that which would be purchased by the most recent
mortality charge at the correct age and sex.
9.8 Can Payment Of A Loan Or Surrender Proceeds Be Deferred? Generally,
we will grant any loan, or pay any surrender proceeds or life
insurance proceeds within 7 days after we receive all the requirements
that we need. However, we may defer making any of these payments for
any period during which the New York Stock Exchange is closed for
trading (other than the usual weekend or holiday closings), or if the
Securities and Exchange Commission restricts trading or has determined
that a state of emergency exists. If so, it may not be practical for
us to determine the investment experience of the Separate Account.
9.9 May You Assign Or Transfer The Policy? While the Insured is living,
you may assign this policy, or any interest in it. If you do this,
your interest, and anyone else's is subject to that of the assignee.
As owner, you still have the rights of ownership which have not been
assigned.
9.10 May The Assignee Change The Owner Or Beneficiary? An assignee cannot
change the owner or beneficiary of this policy, and may not elect or
change an optional method of payment of proceeds. Any amount payable
to the assignee will be paid in one sum.
9.11 How Do You Assign The Policy? You must provide us with a copy of the
assignment. We are not responsible for the validity of any
assignment. Any assignment will be subject to any payment we make or
other action we take before we record the assignment.
9.12 Are The Payments Made Under This Policy Protected Against Creditors?
Payments we make under this policy are, to the extent the law permits,
exempt from the claims, attachments, or levies of any creditors.
9.13 To Whom Should Payments For This Policy Be Made? Any payment made to
us by check or money order must be payable to New York Life Insurance
and Annuity Corporation. When asked, we will provide a countersigned
receipt, signed by our President or Secretary, for any premium paid to
us.
9.14 Is This Policy Subject To Any Law? This policy is subject to all laws
which apply.
9.15 Are Any Dividends Payable On This Policy? This is a non-participating
policy, on which no dividends are payable.
PAGE 14
9390-14
<PAGE> 19
SECTION NINE - GENERAL PROVISIONS (continued)
9.16 Will You Be Updated Regarding The Status Of Your Policy? Each policy
year after the first, while this policy is in force and the Insured is
living, we will send a written report to you within 30 days after the
policy anniversary. It will show, as of that anniversary, the cash
value, and the amount of any unpaid loan and accrued interest. This
report will also give you any other facts required by state law or
regulation.
9.17 Can You Exchange Your Policy? Within 24 months of the issue date of
this policy, you may exchange it for a new policy on the life of the
Insured without evidence of insurability. In order to exchange this
policy, we will require:
(a) that this policy be in effect on the date of exchange;
(b) repayment of any unpaid loan and accrued interest;
(c) an adjustment, if any, for premiums and cash values of this and
the new policy.
The date of exchange will be the later of: (a) the date you send us
this policy along with a signed written request for an exchange; or
(b) the date we receive at our Home Office, or at any other location
that we indicate to you in writing, the necessary payment for the
exchange. The benefits of the new policy will not reflect the
investment experience of the Separate Account. The new policy will be
on a permanent plan of life insurance which we were offering for this
purpose on the date of issue of this policy. The new policy will have
a face amount equal to the initial face amount of this policy. It
will be based on the same issue age, sex and class of risk as this
policy. All riders attached to this policy will end on the date of
exchange, unless we agree otherwise.
9.18 What Is The Basis Used For Computation Of Policy Values? All cash
surrender values and maximum cost of insurance rates referred to in
this policy are based on the 1980 CSO Tables of Mortality if the
Insured is in a standard class of risk. Separate scales of maximum
cost of insurance rates apply to other risk classes. Continuous
functions are used, with interest as stated in the Fixed Account
section. We have filed a statement with the insurance official in the
state or district in which this policy is delivered. It describes, in
detail, how we compute policy benefits and cash surrender values.
PAGE 15
9390-15
<PAGE> 1
Exhibit 1.(9)(d)
Memorandum Describing NYLIAC's Issuance, Transfer and Redemption Procedures for
the Policies
<PAGE> 2
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION'S
ISSUANCE, REDEMPTION AND TRANSFER PROCEDURES FOR
POLICIES PURSUANT TO RULE 6E-3(T)(B)(12)(III)]
This document sets forth, as required by Rule 6e-3(T)(b)(12)(ii), the
administrative procedures that will be followed by New York Life lnsurance and
Annuity Corporation ("NYLIAC") in connection with the issuance of the flexible
premium variable universal life insurance policy (the "Policy") described in
this Registration Statement, the transfer of assets held thereunder, and the
redemption by Policyowners of their interests in the Policies.
1. "Public Offering Price":
Purchase and Related Transactions
Set out below is a summary of the principal Policy provisions and
administrative procedures which might be deemed to constitute, either directly
or indirectly, a "purchase" transaction. The summary shows that, because of the
insurance nature of the Policies, the procedures involved necessarily differ in
certain significant respects from the purchase procedures for mutual funds and
contractual plans.
(a) Premium Schedules and Underwriting Standards
A premium payment schedule may be selected at the time of application and
may be changed at any time. The scheduled premium is set forth in the Policy.
There is no penalty if the scheduled premium is not paid, nor does payment of
this amount guarantee coverage for any period of time. Even if scheduled
premiums are paid, the Policy terminates when the Cash Surrender Value becomes
insufficient to pay certain monthly charges and a grace period expires without
sufficient payment.
A Policyowner may make additional unscheduled premium payments at any time
before the death of the Insured prior to the Policy Anniversary on which the
insured is age 95. The minimum premium payment is $50.00. If the unscheduled
premium would result in an increase in the life insurance benefit greater than
the increase in the Cash Value, NYLIAC reserves the right to require proof of
insurability. NYLIAC also reserves the right to limit the number and amount of
unscheduled premiums.
The Policies will be offered and sold pursuant to established underwriting
standards and in accordance with state insurance laws. State insurance laws
prohibit unfair discrimination among lnsureds but recognize that mortality
charges must be based upon factors such as age, sex, health and smoker status,
and occupation.
(b) Application and Initial Premium Processing
Individuals wishing to purchase a Policy must complete an Application.
The Policy is available as a Qualified Policy or a Non-qualified Policy. The
minimum Face Amount of a Policy is $50,000. The insured may not be older than
attained age 80 as of the Policy Date or the date of any increase in Face
Amount. Before issuing any Policy NYLIAC will require satisfactory evidence of
insurability. For certain eligible groups and when Policies are issued in
connection with employer-sponsored plans, the Policy may be issued based on
simplified underwriting rules and procedures defined by NYLIAC.
The Policyowner selects a premium payment schedule in the Application.
The amount of the scheduled premium is shown on the Policy Data Page. There is
no penalty if the scheduled premium is not paid, nor does payment of this
amount guarantee coverage for any period of time. While the Insured is living,
the owner may make unscheduled premium payments at any time prior to the Policy
Anniversary on which the Insured is age 95.
When a Premium Payment is received, NYLIAC may deduct a Sales Expense
Charge, as well as Premium Tax and Federal Tax Charges. The balance of the
premium (the net premium) will be applied to the Investment Divisions of the
Separate Account at the Accumulation Unit Value determined at the end of the
Valuation Period when the payment is received and to the Fixed Account in
accordance with a Policyowner~s allocation election in effect at that time, and
before any other deductions which may be due are made.
(c) Free Look Provision
A Policy may be canceled within 20 days (or longer if required by state
law) after the Policyowner receives it by returning it to NYLIAC or the
registered representative through whom it was purchased. Premiums will be
allocated to the Cash Management Division until 20 days after the Issue Date.
The Policyowner will then receive from NYLIAC the greater of the Policy's Cash
Value as of the date the Policy is returned or the premiums paid; less loans
and Partial Withdrawals. The Policyowner may cancel increases in the Selected
Face Amount under the same time limitations. For canceled increases in the
Face Amount, the refund equals the amount of premiums allocated to the increase
in accordance with the surrender charge provision, less any portion of such
amount previously paid to the Policyowner.
(d) Repayment of Indebtedness
Unless NYLIAC sets a lower rate for any period, the effective annual loan
interest rate is 8%, which is payable in arrears. Loan interest for the Policy
Year in which a loan is taken will be due on the next Policy Anniversary. Loan
interest accrues each day and is payable on the Policy Anniversary, on the date
of death, surrender, or lapse. Loan interest not paid in cash as of the Policy
Anniversary, or prior to the expiration of the late period will be charged as a
new loan and amounts may need to be transferred to the Fixed Account to cover
the increased loan amount.
If the loan interest rate is lower than 8% per year, any subsequent
increase in the interest rate will be subject to the following conditions:
<PAGE> 3
(1) The effective date of any increase in the interest rate shall not
be earlier than one year after the effective date of the
establishment of the previous rate.
(2) The amount by which the interest rate may be increased will not
exceed one percent per year, but the rate of interest shall in no
event ever exceed 8%.
(3) NYLIAC will give notice of the interest rate in effect when a loan
is made and when sending notice of loan interest due.
(4) If a loan is outstanding 40 days or more before the effective date
of an increase in the interest rate, NYLIAC will notify the
Policyowner of that increase at least 30 days prior to the
effective date of the increase.
(5) NYLIAC will give notice of any increase in the interest rate when
a loan is made during the 40 days before the effective date of the
increase.
All or part of an unpaid loan can be repaid before the Insured's death or
before the Policy is surrendered. Loan repayments are allocated to the
Investment Divisions or the Fixed Account in accordance with premium
allocations in effect at the time of the loan repayment, unless indicated
otherwise. lf a loan is outstanding when the life insurance or surrender
proceeds become payable, NYLIAC will deduct the amount of any Policy Debt from
these proceeds. In addition, it may happen in a given Policy year that, based
on the loan interest rate in effect when that year began (ignoring any
subsequent increase in the rate during that year), an unpaid loan and accrued
interest exceed the Cash Value of the Policy, less any applicable surrender
charges and any deferred contract charge. ln that event, NYLIAC will mail a
notice to the Policyowner at his last known address, and a copy to the last
known assignee on NYLIAC's records. All insurance will end 31 days after the
date on which NYLIAC mails that notice to the Policyowner if the excess amount
is not paid within that 31 days.
(e) Correction of Misstatement of Age or Sex
If the Insured's age or sex is misstated in the Policy application, the
Death Benefit payable under the Policy will be adjusted based on what the
Policy would provide according to the most recent mortality charge for the
correct date of birth or correct sex.
2. "Redemption Procedures":
Surrender and Related Transactions
This section outlines those procedures which might be deemed to constitute
redemptions under the Policy. These procedures differ in certain significant
respects from the redemption procedures for mutual funds and contractual plans.
(a) Account Values
The owner of a Policy may make a Partial Withdrawal or surrender the
Policy to receive part of all of the Policy's Cash Surrender Value, at any time
while the Insured is living. The Cash Surrender Value is the Cash Value less
any surrender charges, any deferred contract charges and outstanding Policy
Debt. The Cash Value of the Policy is the amount provided for investment in
the Separate Accounts and the Fixed Account. The Cash Value of the Policy is
held in one or more divisions of the Separate Accounts and the Fixed Account.
Initially, this value equals the net amount of the first premium paid under the
Policy. This amount is allocated among the Fixed Account and the Investment
Divisions according to the allocation percentages requested in the Application,
or as subsequently changed by the Policyowner.
Partial Withdrawals are not permitted during the first Policy Year when
Life Insurance Benefit Option 1 is in effect. The minimum Partial Withdrawal
is $500, unless NYLIAC agrees otherwise. Uniform rules will be applied in
agreeing to Partial Withdrawals under $500. The amount available is the
Policy's Cash Value at the end of the valuation period during which the written
request for the surrender or Partial Withdrawal is received by NYLIAC, less any
surrender charges and any deferred contract charge and Policy Debt. A Partial
Withdrawal will be made on a pro rata basis from the Fixed Account and/or
Investment Divisions, unless the Policyowner indicates otherwise. If the
portion of the request for a Partial Withdrawal from the Fixed Account or
Investment Division is greater than the amount in the Fixed Account or
Investment Division, NYLIAC will reduce the Partial Withdrawal by that amount
and pay the Policyowner the entire value of the Fixed Account and/or that
investment Division, less any surrender charge which may apply. Partial
Withdrawals will cause a reduction in the Policy's Face Amount when Life
insurance Benefit Option 1 is in effect. NYLIAC reserves the right to limit the
amount and frequency of Partial Withdrawals. Partial Withdrawals and surrenders
may be subject to charges.
During the first 15 Policy Years, a surrender charge will be assessed on a
complete surrender or decrease in Face Amount, including a decrease caused by a
change in the Life Insurance Benefit Option. The surrender charge in the first
Policy Year is equal to 25% of the premiums paid to date up to the guideline
annual premium for the first year plus 5% of premiums paid in that year which
are in excess of the guideline annual premium for the first year but not in
excess of the accumulated guideline annual premiums through the sixth Policy
Year. The surrender charge in the second Policy Year and thereafter is equal to
the applicable percentage shown in the table below multiplied by the Base
Surrender Charge. The Base Surrender Charge is equal to 25% of the lesser of
the premium paid to date or the guideline annual premium for the first Policy
Year, plus 5% of the lesser of: (i) premiums paid in excess of the guideline
annual premium for the first Policy Year, or (ii) the sum of the guideline
annual premiums for the first six Policy Years, minus the guideline annual
premium for the first Policy Year.
<PAGE> 4
<TABLE>
<CAPTION>
Year
----
<S> <C> <C>
2 - 6 - 100%
7 - 90%
8 - 80%
9 - 70%
10 - 60%
11 - 50%
12 - 40%
13 - 30%
14 - 20%
15 - 10%
16 - 0%
</TABLE>
Surrender charges are calculated separately for the initial Face Amount
and for each increase in the Face Amount, including an increase caused by a
change in the Life Insurance Benefit Option. Premium payments after an
increase will be allocated between the initial Face Amount and the increase
based on the relative guideline annual premiums. A decrease in Face Amount
will result in the imposition of a surrender charge equal to the difference
between the surrender charge which would have been payable on a complete
surrender prior to the decrease and the surrender charge which would be payable
on a complete surrender after the decrease. Where, because of increases in
Face Amount, there are multiple schedules of surrender charges, the charge
applied will be based first on the surrender charge associated with the last
increase in face amount, then on each prior increase, in the reverse order in
which the increases occurred, and then to the initial Face Amount.
ln addition to the surrender charge, NYLIAC may charge a fee, not to
exceed the lesser of $25 or 2% of the amount withdrawn, for processing a
Partial Withdrawal. This fee will be deducted from the remaining balance of
the Fixed Account and/or Investment Divisions based on the Partial Withdrawal
allocation, or if the fee amount exceeds the remaining balance, it will be
deducted from the Fixed Account and/or Investment Divisions on a pro rata
basis. When the Policyowner makes a Partial Withdrawal, the life insurance
benefit, the Cash Value, and the Cash Surrender Value will be reduced by the
amount of the Partial Withdrawal proceeds as of the date the Policyowner
receives the payment and any applicable surrender charge.
NYLIAC reserves the right to limit the amount and frequency of Partial
Withdrawals.
(b) Benefit Claims
If the Policy has not terminated, payment of the Cash Surrender Value, any
Partial Withdrawal, loan proceeds or the Death Benefit are made within 7 days
after NYLIAC receives all required documents at its Principal Office or such
other location that NYLIAC indicates to the Policyowner in writing. But NYLIAC
can delay payment of the Cash Surrender Value or any Partial Withdrawal from
the Separate Accounts, loan proceeds attributable to the Separate Accounts, or
the Death Benefit during any period that:
o lt is not reasonably practicable to determine the amount because the
New York Stock Exchange is closed (other than customary weekend and
holiday closings), trading is restricted by the Securities and
Exchange Commission (Commission), or the Commission declares that an
emergency exists; or
o The Commission, by order, permits NYLIAC to delay payment in order to
protect Policyowners.
NYLIAC may delay paying any surrender value or loan proceeds on the Fixed
Account for up to 6 months from the date the request is received at its
Principal Office. NYLIAC can delay payment of the entire Death Benefit if
payment is contested. NYLIAC investigates all death claims arising within the
two-year contestable period. Upon receiving the information from a completed
investigation, NYLIAC generally makes a determination within five days as to
whether the claim should be authorized for payment. Payments are made promptly
after authorization. If payment of a Cash Surrender Value or Partial
Withdrawal value is delayed for 30 days or more, NYLIAC adds interest at an
annual rate of 3%, or more, if required by law. NYLIAC adds interest to a
Death Benefit from the date of death to the date of payment at the same rate as
is paid under the lnterest Payment Option.
The Death Benefit is the amount payable to the named Beneficiary when the
Insured dies. Upon receiving due proof of death, NYLIAC pays the Beneficiary
the Death Benefit amount determined as of the date the Insured dies. All or
part of the benefit can be paid in cash or applied under one or more of the
payment options under the Policy.
Added to the greater of the Face Amount or Minimum Face Amount is the
value of any additional benefits provided by rider. NYLIAC pays interest on
the Death Benefit from the date of death to the date the Death Benefit is paid
or a payment option becomes effective. NYLIAC subtracts any outstanding Policy
Debt, and any unpaid monthly deductions if the death occurs during the 62-day
late period and then credits the interest. The Death Benefit is unaffected by
investment experience unless the Death Benefit is based on the Minimum Face
Amount or Life insurance Benefit Option 2.
(c) Policy Loans
<PAGE> 5
Using the Policy as sole security, the Policyowner can borrow any amount
up to the loan value of the Policy. The loan value on any given date is equal
to 90% of the Cash Value less any applicable surrender charges, less any
deferred contract charge and less any Policy Debt.
When a loan is requested, an amount necessary to increase the Fixed
Account Value to 108% of the new loan amount, less the excess of the
Accumulation Value of the Fixed Account over any outstanding Policy loan, is
transferred from the Separate Account to the Fixed Account. This transfer will
be made on a pro rata basis from the various Investment Divisions. While a
Policy loan is outstanding, no Partial Withdrawals or transfers which would
reduce the Accumulation Value of the Fixed Account below 108% of the
outstanding loan are permitted. It is possible, however, that the deduction of
monthly charges, such as the cost of insurance charge, may reduce the Fixed
Account below the 108% threshold. The amount transferred to the Fixed Account
is not affected by the Separate Account's investment performance. The Cash
Value is also affected because the portion of the Cash Value equal to the
Policy loan is credited with interest at a fixed rate determined by NYLIAC,
which will never be less than 2% less than the effective annual loan interest
rate, rather than a rate of return reflecting the investment performance of the
Separate Accounts. This loan interest stays in the Fixed Account unless the
Policyowner transfers any amounts no longer needed as security to the Separate
Accounts.
If the Policy has not terminated, payment of loan proceeds is made within
7 days after NYLIAC receives any required documents at its Principal Office or
any other location indicated in writing by NYLIAC. NYLIAC can delay payment of
loan proceeds attributable to the Separate Account during any period that:
o It is not reasonably practicable to determine the amount because
the New York Stock Exchange is closed (other than customary week-
end and holiday closings), trading is restricted by the
Commission, or the Commission declares that an emergency exists;
or
o The Commission, by order, permits NYLIAC to delay payment in order
to protect Policyowners.
NYLIAC may delay paying any loan proceeds from the Fixed Account for up to
6 months from the date the request is received at its Principal Office.
(d) Policy Termination
The Policy does not terminate for failure to pay premiums since
payments, other than the initial premium, are not specifically required.
Rather, if on a Monthly Deduction Day, the Cash Surrender Value is less
than the Monthly Deduction Charge for the next Policy month, the Policy
will continue for a late period of 62 days after that Monthly Deduction
Day.
NYLIAC allows 62 days to pay any premium necessary to cover the overdue
monthly deduction and/or excess Policy loan. NYLIAC will mail a notice to the
Policyowner at his last known address, and a copy to the last known assignee on
the records at least 31 days before the end of the late period which sets forth
this amount. During the grace period, the Policy remains in force. If NYLIAC
does not receive the required payment before the end of the late period, the
Policy will end and there will be no Cash Value or life insurance benefit. If
the Insured dies during the late period, NYLIAC will pay the Death Benefit.
However, these proceeds will be reduced by the amount of any Monthly Deduction
Charges for the full Policy month or months that run from the beginning of the
late period through the Policy month in which the Insured dies or by the amount
of the excess Policy loan.
For a period of five (5) years after termination, the Policyowner can
request that NYLIAC reinstate the Policy during the Insured's lifetime. NYLIAC
will not reinstate the Policy if it has been returned for its Cash Surrender
Value.
Before NYLIAC will reinstate the Policy, NYLIAC must receive the
following:
o A payment in an amount which is sufficient to keep the Policy in
force for at least 3 months plus an amount equal to 150% of any
deferred contract charge not previously deducted. This payment
will be in lieu of the payment of all premiums in arrears. Any
unpaid loan must also be repaid, together with loan interest at 6%
compounded once each year from the end of the late period to the
date of reinstatement. lf a policy loan interest rate of less
than 6% is in effect when the Policy is reinstated, the interest
rate for any unpaid loan at the time of reinstatement will be the
same as the Policy loan interest rate. The effective date of
reinstatement will be the Monthly Deduction Day on or following
the date NYLIAC approves the request for reinstatement; and
o Evidence of insurability satisfactory to NYLIAC, if the
reinstatement is requested more than 30 days after termination.
If NYLIAC does reinstate the Policy, the Face Amount for the reinstated
Policy will be the same as it would have been if the Policy had not terminated.
3. Transfers
All or part of the Cash Value may be transferred among Investment
Divisions of the Separate Account or to the Fixed Account. The minimum value
of Accumulation Units that may be transferred between Investment Divisions or
to the Fixed Account, is the lesser of (i) $500 or (ii) the total value of the
Accumulation Units in the Investment Division. If, after an ordered transfer,
the value of the remaining Accumulation Units in an Investment Division or the
Fixed Account Value would
<PAGE> 6
be less than $500, the entire value will be transferred. There is no charge
for the first twelve transfers in any one Policy Year. NYLIAC reserves the
right to charge $30 for each transfer in excess of twelve per year.
Amounts may be transferred from the Fixed Account to the Separate Account
investment Divisions, subject to the following conditions.
1. Maximum Transfer. An amount not greater than 20% of the Fixed Account
Value at the beginning of the Policy Year may be transferred during
that Policy Year from the Fixed Account to the Investment Divisions.
2. Minimum Transfer. Transfers of at least the minimum amount are
permitted. The minimum amount that may be transferred from the Fixed
Account to the Investment Divisions is the lesser of (i) $500 or (ii)
the Fixed Account Value, unless NYLIAC agrees otherwise.
3. Minimum Remaining Value. Additionally, the remaining values in the
Fixed Account must be at least $500. If, after a contemplated
transfer, the remaining values in the Fixed Account would be less than
$500, that amount must be included in the transfer.
NYLIAC reserves the right to limit transfers from the Investment Divisions
to the Fixed Account after the first two Policy Years.
Transfer requests must be in writing on a form approved by NYLIAC or by
telephone in accordance with established procedures.
Through a process called Dollar Cost Averaging, the Policyowner may
specify, prior to termination of the Policy, a specific dollar amount to be
transferred from any Investment Division to any combination of Investment
Divisions and the Fixed Account. The Policyowner will specify the Investment
Divisions to transfer money from, the Investment Divisions and/or Fixed Account
to transfer money to, the amounts to be transferred, the date on which
transfers will be made, subject to the rules of NYLIAC, and the frequency of
the transfers, either monthly, quarterly, semi-annually or annually. Dollar
Cost Averaging transfers are not available from the Fixed Account, but these
transfers may be made into the Fixed Account. All Dollar Cost Averaging
transfers to or from an Investment Division or to the Fixed Account made on the
same date will count as one transfer for purposes of determining whether the
transfer is free or may be subject to a charge. A minimum of $100 must change
divisions (for each Investment Division and the Fixed Account) with each
transfer. The minimum Cash Value required to elect this option is $5,000.
NYLIAC will make all Dollar Cost Averaging transfers on the day of each
calendar month specified by the Policyowner, or on the next Business Day. The
Policyowner may specify any day of the month with the exception of the 29th,
30th or 31st of a month. In order to process a Dollar Cost Averaging transfer,
NYLIAC must have received a request in writing no later than one week prior to
the date Dollar Cost Averaging transfers are to commence.
The Dollar Cost Averaging option may be canceled at any time by written
request or automatically if the Cash Value is less than $5,000.
EXCHANGE PROCEDURE
At any time within 24 months of the Issue Date, the Policyowner may
request that the entire Accumulation Value of the Policy be transferred to
the Fixed Account to acquire fixed benefit life insurance protection on
the life of the Insured. The exchange will become effective when NYLIAC
receives a proper written request.
At any time within 24 months of the Issue Date, the Policyowner may
exchange the Policy for a Policy on a permanent plan of life insurance which
NYLIAC is offering for this purpose. NYLIAC will not require evidence of
insurability. The date of exchange will be the later of (a) the date the
Policyowner sends NYLIAC the Policy along with a proper written request; or (b)
the date NYLIAC receives at the Principal Office or such other location that
NYLIAC indicates to the Policyowner in writing, the necessary payment for the
exchange. All riders will end. The endorsed policy will have the same Issue
Date, issue age and risk classification as the original Policy. ln order to
exchange the Policy, NYLIAC will require: (a) that the Policy be in effect on
the date of exchange; (b) repayment of any unpaid loan plus accrued interest;
and (c) an adjustment, if any, for premiums and cash values of the Policy and
any new policy.
<PAGE> 1
Exhibit 1.(10)
Form of Application
<PAGE> 2
QG410214
LIFE INSURANCE APPLICATION (PART I) TO:
[NEW YORK LIFE LOGO]
[ ] NEW YORK LIFE INSURANCE COMPANY (NYLIC)
51 Madison Ave., New York, N.Y. 10010
[ ] NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION (NYLIAC)(A Delaware Corp.)
51 Madison Ave., N.Y., N.Y. 10010
[ ] New [ ] Amend Application
Application Dated / /
[ ] Reinstatement } { [ ] Conversion [ ] Att age [ ] Orig age
Pol. No._________
[ ] Change Request } { [ ] GIO/PPO/GIR
_______________________________________________________________________________
1. PERSON PROPOSED FOR COVERAGE
<TABLE>
<S> <C>
Occupation
[ ] Proposed Insured is also an OCI under OCI or 7YT Rider(s) Duties
Sex [ ] M [ ] F Title [ ] Mr [ ] Mrs [ ] Ms [ ] _ _ _ _ Employer
First/Mid Address
Name _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Street
LAST NAME
& Suffix _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ City
[ ] Maiden Time
[ ] Known as _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ State _ _ Zip _ _ _ _ _ + _ _ _ _ Yr/Mo _ _ / _ _
Born Birthplace Prev Occupation
M/D/Y _ _ / _ _ / _ _ State, Ctry. (within 2 yrs)
Soc Tax Previous
Sec _ _ _ - _ _ - _ _ _ _ ID# _ _ - _ _ _ _ _ _ _ Duties
Address Previous
Street Employer
Previous
City Street
Time
State _ _ Zip _ _ _ _ _ + _ _ _ _ Yr/Mo _ _ / _ _ City
Prev Str Time
(within State _ _ Zip _ _ _ _ _ + _ _ _ _ Yr/Mo _ _ / _ _
2 yrs)
Mail
City Addr [ ] Res [ ] Bus Telephone _ _ _ - _ _ _ - _ _ _ _
Time Best time to call
State _ _ Zip _ _ _ _ _ + _ _ _ _ Yr/Mo _ _ / _ _ between 8-5 EST _ _ : _ _ AM _ _ : _ _ PM
</TABLE>
<TABLE>
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2. NYLIC NYLIC NYLIC NYLIC NYLIC NYLIAC NYLIAC
_____________________________________________________________________________________________________________________________
PLAN [ ] WL [ ] MPWL [ ] 7YT [ ] 10YT [ ] IPT [ ]________ [ ] TL [ ] SPL
Amount $ $ $ $ $ $ $
Or [ ] 1
Premium $ $ $ $ ___________ OPTION $
APL [ ] Yes [ ] Yes [ ] 2
______________________________________________________________________________________
RIDERS [ ] WP [ ] WP [ ] WP [ ] WP [ ] WP Sched.
[ ] ADB [ ] ADB [ ] ADB [ ] ADB [ ] ADB $
$ $ $ $ $ Initial
[ ] OPP [ ] COM [ ] OPP [ ] COM [ ] PPO [ ] LBR [ ] PPO $
Sched. Sched. $ [ ] $ ________________________________________
$ $ [ ] 7YTR PI [ ] LBR [ ] MDW [ ] LBR
Unsched. Unsched. $ [ ] [ ] ADB [ ]
$ $ [ ] ADB $
[ ] DOT [ ] DOT $ [ ] GIR
$ $ [ ] PPO $
[ ] PPO [ ] PPO $ [ ] OCI PI
$ $ [ ] LBR $
[ ] 7YTR PI [ ] 7YTR PI [ ] [ ] LBR
$ $ [ ]
[ ] IPTR [ ] IPTR
$ $
[ ] LBR [ ] LBR
[ ] [ ]
</TABLE>
Note: For Riders covering other insureds, use Multilife application form
<TABLE>
_______________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C>
DIVIDEND
OPTION [ ] 1YT &/or [ ] Pd Up Ad [ ] Accum [ ] Prem [ ] Cash [ ] Note: For NYLIC plans only
_______________________________________________________________________________________________________________________________
</TABLE>
992-501 SINGLE LIFE 9925011
<PAGE> 3
QG410214
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
INSURANCE IN FORCE OR PENDING
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Yes No
Do you have other Life Insurance (all Companies) in force? / / / / If "Yes", Total Amount in all Companies $
Yes No
Do you have other Life Ins. (all Cos.) pending or issued in last year? / / / / If "Yes", Company
Amount $ Plan No.
- ----------------------------------------------------------------------------------------------------------------------------------
3. ENDORSEMENTS AND OTHER REQUESTS
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. Tax Qualified: / / TSA / / Pens. Trust / / Keogh / / Keogh with Lt. Jt. Control / /
Split Dollar: / / Basic / / Estate / / Contributory / / Non-Contributory
Pension Option / / Yes "Non-Trsf." Option / / Yes Reduced Pd. Up at lapse / / Yes
Preliminary Term to Mo/Dy/Yr / / (available on WL, MPWL only) Note: Policy Date question is not applicable if prelim. term
- ----------------------------------------------------------------------------------------------------------------------------------
4. MODE / / Ann / / Semi / / Qrtly / / COM / / Nyla / / Gvt / / Arr, for U.S. Tax Qual. Plan / / Note: COM or Ann only for 7YT
- ----------------------------------------------------------------------------------------------------------------------------------
5. POLICY DATE if no "other date" is shown, policy date is:
(a) later date of Part I and any required Part II, if cash (c) the option date, if insurability option being exercised; or
paid with Part I; or (d) OTHER Mo/Dy/Yr
(b) the policy's date of issue, if cash-not paid; or DATE / /
- ----------------------------------------------------------------------------------------------------------------------------------
5. REPLACEMENT
- ----------------------------------------------------------------------------------------------------------------------------------
Is the insurance applied for intended to replace, in whole or in part, any existing insurance or annuity? / / Yes / / No
Company Pol. No. Plan Amount $
Is it a 1035 Exchange? / / Yes / / No If more than one policy being replaced, use Details, Q. 18.
- ----------------------------------------------------------------------------------------------------------------------------------
7. BENEFICIARY (SUBJECT TO CHANGE. COMPLETE AS APPLICABLE.)
- ----------------------------------------------------------------------------------------------------------------------------------
/ / Spouse / / Estate
/ / 1st, Spouse / / 1st, Spouse
2nd, Children of marriage 2nd, Children of marriage and legally adopted
/ / 1st, Spouse / / 1st, Spouse
2nd, Children of marriage and named children / / 2nd, Named children
For children, if trustee during minority is to be named:
Name of Trustee Relationship of Trustee to Insured
- ----------------------------------------------------------------------------------------------------------------------------------
/ / Named Beneficiaries (indicate Order as 1st, 2nd, etc.)
Order Full Name Relationship
- ----------------------------------------------------------------------------------------------------------------------------------
Note: For the following designations, use the above section / / Creditors (-"as interest may appear, bal, if any, to"-)
/ / Fractions (Specify order, shares, full names and relationships) / / Split Dollar (Pt A, bus. Pt B, pers; recommend B, Est
/ / Trust Agreement (give Name of Trustee and Date of Trust) of Insd
/ / Last Will and Testament (indicate "Testamentary Trust") / / Other if Basic; Est of last surv bene if Est Tx)
/ / Uniform Gifts to Minors (recommend Estate of Insured)
- ----------------------------------------------------------------------------------------------------------------------------------
8. CURRENT HEALTH
- ----------------------------------------------------------------------------------------------------------------------------------
Yes No
(a) In the last 2 years, have you been unable to work, unable to attend school or been disabled for one month or more? / / / /
(b) In the last 2 years, have you been in a hospital or other medical facility for more than 5 consecutive days? / / / /
(c) Are you consulting or intending to consult a physician for any reason (excluding minor colds)? / / / /
Note: If "Yes" to any part of question 8, cash CAN NOT be paid and an Application Part II must be completed in all cases.
- ----------------------------------------------------------------------------------------------------------------------------------
9(a) Answer if cash is intended to be paid with this application. Is it agreed that cash will be received subject to
the terms of the attached receipt, that any coverage will be provided only as stated in the attached receipt and Yes No
only if all conditions to coverage are met, and that any such coverage will be temporary and limited in amount? / / / /
If "No" to 9(a), or if Questions 8(a), 8(b) or 8(c) are answered "Yes", cash can not be paid.
(b) TOTAL CASH PAID? $ If amendment, cash previously paid: $
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
992-501 9925012
<PAGE> 4
QG410214
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------
10. Is a spouse or dependent child applying for SCI/CI Ins. coverage? (If yes, this form must not be used;
use Multilife application form) Yes [ ] No [ ]
- ------------------------------------------------------------------------------------------------------------------------------
11. INSURANCE ON CHILD? Answer if Proposed Insured is under 14 yrs. 6 mos. (Explain any "No" in Details, Q. 18.)
- ------------------------------------------------------------------------------------------------------------------------------
Yes No
(a) Is Applicant a parent or legal guardian (attach proof of guardianship) of Proposed Insured?.............. [ ] [ ]
(b) Is Applicant employed and providing Proposed Insured's main support?..................................... [ ] [ ]
(c) Is all life insurance in force on Applicant at least equal to that on Proposed Insured?.................. [ ] [ ]
If Child resides in NY and age is over 4 yrs 6 mos is amount in force on applicant at least equal to
2 times amount on Child?.............................................................................. [ ] [ ]
If Child resides in NY and age is under 4 yrs 6 mos is amount in force on applicant at least equal to
4 times amount on Child?.............................................................................. [ ] [ ]
(d) Are all other children in family insured or to be insured for an amount at least equal to that on
Proposed Insured?........................................................................................ [ ] [ ]
- ------------------------------------------------------------------------------------------------------------------------------
12. TOBACCO/NICOTINE
- ------------------------------------------------------------------------------------------------------------------------------
Yes No
If age 20 or over on Policy Date, have you used tobacco or nicotine in any form in last 5 years?................. [ ] [ ]
If "Yes", indicate type used date of last use (Mo/Yr) /
- ------------------------------------------------------------------------------------------------------------------------------
13. UNDERWRITING DATA
- ------------------------------------------------------------------------------------------------------------------------------
(a) In last 2 years, have you engaged in or do you now intend to engage in? If "Yes", submit Form 7663
aircraft flying other than
as a passenger [ ] Yes [ ] No scuba diving [ ] Yes [ ] No ultralight flying [ ] Yes [ ] No
motorcycle driving [ ] Yes [ ] No ballooning [ ] Yes [ ] No mountaineering [ ] Yes [ ] No
snowmobile driving [ ] Yes [ ] No parachuting [ ] Yes [ ] No rodeo riding [ ] Yes [ ] No
motorized racing [ ] Yes [ ] No hang gliding [ ] Yes [ ] No
- ------------------------------------------------------------------------------------------------------------------------------
(b) In last 2 years, have you been arrested or imprisoned for any reason or had your driver's license
suspended or revoked? [ ] Yes [ ] No
If yes, give details, dates, driver's lic. # and State of lic. in Details, Q. 18.
- ------------------------------------------------------------------------------------------------------------------------------
(c) In last 2 years, have you been declined for issue, reinstatement or renewal of any type of Life or
Health Insurance? [ ] Yes [ ] No
If "Yes", give Company name and reason in Details, Q. 18.
- ------------------------------------------------------------------------------------------------------------------------------
(d) In last 2 years, have you traveled or resided outside the U.S. or Canada or do you intend to
do so within the next 12 mos? [ ] Yes [ ] No
If "Yes", give Where, When, How long in Details, Q. 18.
Answer Ques. 14-17, so far as known, if underwriting is required, but an Application Part II is not. Details
are required for all "Yes" answers.
- ------------------------------------------------------------------------------------------------------------------------------
14. MEDICAL UNDERWRITING
- ------------------------------------------------------------------------------------------------------------------------------
(a) In last 10 years have you had or been treated for:
heart trouble [ ] Yes [ ] No irregular pulse [ ] Yes [ ] No cancer [ ] Yes [ ] No
angina [ ] Yes [ ] No hypertension [ ] Yes [ ] No tumor [ ] Yes [ ] No
stroke [ ] Yes [ ] No diabetes [ ] Yes [ ] No
- ------------------------------------------------------------------------------------------------------------------------------
(b) In last 10 years have you been counseled, treated, or hospitalized for:
psychiatric condition [ ] Yes [ ] No emotional condition [ ] Yes [ ] No mental health condition [ ] Yes [ ] No
- ------------------------------------------------------------------------------------------------------------------------------
(c) In last 10 years have used cocaine [ ] Yes [ ] No or have you been counseled, treated or
or other controlled substance [ ] Yes [ ] No hospitalized for drug used [ ] Yes [ ] No
- ------------------------------------------------------------------------------------------------------------------------------
(d) In last 10 years have you been absent from work because of alcohol use [ ] Yes [ ] No
or have you been counseled, treated or hospitalized for alcohol use [ ] Yes [ ] No
- ------------------------------------------------------------------------------------------------------------------------------
15. In last 2 years have you had or been treated for:
(a) unexplained weight loss [ ] Yes [ ] No recurring fever [ ] Yes [ ] No pneumonia [ ] Yes [ ] No
swollen glands [ ] Yes [ ] No recurring infection [ ] Yes [ ] No thrush [ ] Yes [ ] No
recurring diarrhea [ ] Yes [ ] No persistent cough [ ] Yes [ ] No
- ------------------------------------------------------------------------------------------------------------------------------
(b) edema [ ] Yes [ ] No muscle weakness [ ] Yes [ ] No shortness of breath [ ] Yes [ ] No
transient visual loss [ ] Yes [ ] No back or spine disorder [ ] Yes [ ] No internal bleeding [ ] Yes [ ] No
- ------------------------------------------------------------------------------------------------------------------------------
16. In last 5 years have you had or been treated for:
(a) chronic respiratory disorder [ ] Yes [ ] No blood disorder [ ] Yes [ ] No seizures [ ] Yes [ ] No
kidney disorder [ ] Yes [ ] No circulatory disorder [ ] Yes [ ] No other nervous
intestinal disorder [ ] Yes [ ] No system disorder [ ] Yes [ ] No
- ------------------------------------------------------------------------------------------------------------------------------
(b) liver disorder [ ] Yes [ ] No immune system disorder (including AIDS or AIDS-Related Complex) [ ] Yes [ ] No
pancreas disorder [ ] Yes [ ] No
- ------------------------------------------------------------------------------------------------------------------------------
17. Your height (ft., in.) Your weight (lbs.)
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 5
QG410214
18. Details: Give nature and severity, dates and duration, treatment,
including prescription medication, and results of each "Yes" answer to
questions 14, 15 and 16. Also use this space for any other additional
details and special requests. (Indicate Ques. No. if applicable).
Q.# Details Name, Addr of Dr./Hosp.
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
19. APPLICANT (if not Prop. Insd)
______________________________________________________________
First/Mid
Name |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
LAST NAME
& Suffix |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
Born
M/D/Y |_|_|/|_|_|/|_|_|
Soc Tax
Sec |_|_|_|-|_|_|-|_|_|_|_| ID # |_|_|-|_|_|_|_|_|_|_|
Relationship to Proposed Insured
/ / Spouse / / Parent / / Employer / /
Address / / Same as Pl Res / / Same as Pl Bus / / other as follows
________________________________________________________________________________
Street
City
State |_|_| Zip|_|_|_|_|_|+|_|_|_|_|
Employer
Business
Street
City
Mail
State |_|_| Zip|_|_|_|_|_|+|_|_|_|_| Addr / / Res / / Bus
- --------------------------------------------------------------------------------
20. OWNER (if not Prop. Insd)
______________________________________________________________
First/Mid
Name |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
LAST NAME
& Suffix |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
Born
M/D/Y |_|_|/|_|_|/|_|_|
Soc Tax
Sec |_|_|_|-|_|_|-|_|_|_|_| ID # |_|_|-|_|_|_|_|_|_|_|
Relationship to Proposed Insured
/ / Spouse / / Parent / / Employer / /
Mail Addr / / Same as Pl's / / Same as Applic's / / other as follows
/ / Check if multiple owners. Give addl name, birthdate, SS#, relationship in
Details, Q. 18. Unless otherwise specified in Question 18. If more than one
owner is shown, ownership will be joint with right of survivorship.
________________________________________________________________________________
Street
City
State |_|_| Zip|_|_|_|_|_|+|_|_|_|_|
If Corp., Yr.
Place Inc. Inc. |_|_|_|_|
Successor Owner Relationship
/ / Pl / / as below to Prop Insd
Name |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
________________________________________________________________________________
21. AMENDING APPLICATION PREVIOUSLY SUBMITTED.
Since the date the application for the policy (including any Part II) has
been completed, have you:
(a) been admitted to a hospital, sanitarium, or other medical Yes No
facility? If "Yes" to (a), submit a new application Part II. / / / /
(b) had any illness, or consulted any physician or practitioner
for any reason? If "Yes" to (b), give full details in Q. 18. / / / /
________________________________________________________________________________
22. EXERCISING A GUARANTEED INSURABILITY OPTION.
(a) Option Date , 19
(b) / / Scheduled Option Date / / Alternate Option Date
(c) If Alternate Option Date / / date of marriage / / birth / / adoption
Mo. Day Year Submit proof of Alt. Opt. Date
________________________________________________________________________________
23. EXERCISING CONVERSION PRIVILEGE FROM TERM COVERAGE TO PERMANENT INSURANCE
________________________________________________________________________________
The insurer is requested to issue the policy applied for on the Age Basis
selected and continue the following Rider(s) to the Policy(ies) listed on
Page 1 of this application, as indicated below, when the policy applied for
takes effect.
Age Basis Convert All: Convert Partial:
/ / Attained Age / / term policy / / Term policy (with pro rata reduction
/ / Original Age / / term rider of any ADB)
/ / 1 YT Div Opt $ amount remaining as term policy
/ / OCI/7YTR / / Term rider
/ / SCI/CI/FI $ amount remaining as term rider
Does the coverage / / Yes If "Yes", does the insured / / Yes If "Yes",
to be converted / / No have any disability which / / No give dates
include Waiver or prevents him or her from and details
Premium Benefit? being actively at work? in Q.18
Is Additional coverage being / / Yes If "Yes", refer to General
applied for? Requirements for Various
/ / No Types of Requested Actions
992-501 9925014
<PAGE> 6
QG410214
=============================================================================
THOSE PERSONS WHO SIGN BELOW AGREE THAT:
1. All of the statements which are part of the application are correctly
recorded, and are complete and true to the best of the knowledge and belief
of those persons who made them. Answers that are not true, and complete
may, subject to the policy's Incontestability Provision, invalidate
coverage.
2. No agent or medical examiner has any right to accept risks, make or change
contracts, or give up any of NYLIC's or NYLIAC's rights or requirements.
3. "Cash Paid" with the application, with respect to a new policy or additional
benefit, provides a limited amount of temporary coverage for up to 60 days,
if the terms and conditions of the receipt are met. Temporary coverage is
not provided if a policy or benefit is applied for under the terms of a
conversion privilege or a guaranteed insurability option, or if
reinstatement is applied for.
4. To put a policy or benefit issued in response to this application in force,
the policy or written evidence of the benefit must be delivered to the
Applicant and the full first premium paid while the person to be covered is
living. If temporary coverage, with respect to a policy or benefit, is not
in effect at time of delivery, there must not have been any material change
in the insurability of that person, as described by the statements in the
application; this means that these statements must still be complete and
true as if made at the time of delivery.
However, if the policy or benefit is being applied for under the terms of a
conversion privilege or guaranteed insurability option, and NYLIC's or
NYLIAC's approval is not required to put it in force, the policy or benefit
will take effect as soon as the requirements of that privilege or option
have been met.
5. Under penalties of perjury, it is certified that: (a) The social security or
Employer Id. numbers shown in this application are correct taxpayer
identification numbers; and (b) the holders of said numbers are not subject
to any backup withholding of U.S. Federal income tax for failure to report
interest or dividends.
Dated at on Mo/Day/Yr / /
I certify I have truly and accurately Signature of Applicant
recorded all answers give to me.
Other Required Signature
Witness Signature of Proposed Insured if
other than Applicant
Agent
Signature of Parent if Proposed Insured is
under 14 yrs. 6 mos. and Parent has not
signed as applicant
Countersigned by Lic. resident agt. (if reqd.) Title if signed on
behalf of corporation,
trust, etc.
Countersign Code# Surname
992-501 9925015
ACKNOWLEDGEMENT
I have been given a copy of "Information Practices Related to Underwriting
Your Application" which tells how New York Life Insurance Company and New York
Life Insurance and Annuity Corporation obtain and use data about me. It
includes the notice required by the state and federal Fair Credit Reporting
Acts and a description of MIB, Inc. (Medical Information Bureau).
AUTHORIZATION
(In this Authorization, "the Insurer" means New York Life Insurance Company
or New York Life Insurance and Annuity Corporation, whichever applies.) In
order to see if (and on what basis) I qualify for insurance or for the
benefits which that insurance may provide, I authorize the following:
MEDICAL INFORMATION Physicians or practitioners; hospitals; medical or
medically related facilities; laboratories; insurance companies; or MIB may
give to the Insurer (or any consumer reporting agency acting in its behalf) and
to any of its reinsurers data and copies of records that they may have about my
physical and mental health. The data and records may include important
history, findings, diagnoses and treatment.
OTHER UNDERWRITING INFORMATION MIB and other insurance companies may give to
the Insurer and to any of its reinsurers data about: my driving record; any
criminal activity or association; hazardous sport or aviation activity; use of
alcohol or drugs; any claim of eligibility for disability income benefits; and
other applications for insurance.
EXAMINATIONS AND TESTS The Insurer may obtain physical examinations or medical
tests deemed necessary to underwrite my application. These tests (where
permitted by law) may include, but are not limited to, electrocardiograms,
chest x-rays and tests of blood and urine to determine, among other things,
exposure to causative agents of disease (for example, exposure to the AIDS
virus) and the presence of drugs. However, a separate notification/
authorization form will be provided with respect to testing of the AIDS virus.
INVESTIGATIVE CONSUMER REPORT The Insurer may obtain an investigative consumer
report and may give the consumer reporting agency information concerning the
amount and type of my coverage and my use, if any, of tobacco. The report may
add to or confirm the types of data mentioned above. It may also contain data
about: my identity; age; residence; marital status; past and present jobs
(including work duties); economic conditions; driving record; personal and
business reputation in the community; and mode of living; but will not include
any information relating directly or indirectly to sexual orientation.
IDENTIFICATION To obtain the data described above, the Insurer may give my
name, address, and date and place of birth to the above persons or organization.
RELEASE OF INFORMATION TO OTHERS When necessary, the Insurer may give data
about me that affects my insurability to: its subsidiaries; its affiliates; its
parent company; its agents and their staffs; its reinsurers; and the Insurer
and its reinsurers may give such data to MIB. However, this will not be done
in connection with information relating to the AIDS virus.
I also authorize the release of these same types of data about any of my
children who are to be insured.
This authorization shall be valid for 30 months from the date shown below.
A photocopy of it shall be as valid as the original.
In giving this authorization, I release the above parties from all liability
in the securing and use of the above underwriting data. I know that a copy of
this form is in the Insurer's statement on "Information Practices Related to
Underwriting Your Application".
Date____________,19__ Witness__________________
Agent _______________________________
Signature of Parent or Guardian
if the Prop. Insd. is under
14 yrs. 6 mos.
______________________________
Signature of Proposed Insured
17852 7-91 (S) 178521
<PAGE> 7
QG410214
NOT PART OF THE APPLICATION AGENT'S STATEMENT
- --------------------------------------------------------------------------------
SECTION A - ANSWER FOR ALL CASES.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
1. If cash was collected, did you give the receipt and explain that coverage is provided only as stated, YES NO
and that it is temporary and limited in amount? If "No", cash must be refunded, (If Applicant did not
give cash, then enter, in Q. 21 name and address of person who did.) ................................... [ ] [ ]
2. a. Did you ask each question, were answers recorded exactly as made to you (also see Section B), and
were all required signatures obtained in your presence? If "No", explain in Q. 21 ................... [ ] [ ]
b. Did the Proposed Insured communicate in English well enough to understand and answer each question
in English (including those on Non-Medical Part II, If applicable)? ................................. [ ] [ ]
c. If "No" to b., who acted as interpreter? Agent [ ]; Other [ ]
If "Other", give name and relationship to Proposed Insured __________________________________________
3. As far as you know, does anyone intend to make a loan, now or in the future, against the cash value
of any policy presently in force, because of the purchase of the policy applied for? If "Yes", give
details in Q. 21 below ................................................................................. [ ] [ ]
4. By reason of this transaction, is replacement involved? If "Yes", give details in Q. 21 below .......... [ ] [ ]
</TABLE>
- --------------------------------------------------------------------------------
5. Proposed Insured's County of Residence? _______________________________
6. Estimated Annualized Premium? Check box if TAS agent [ ]
$[ . ]
7. How well do you know the Proposed Insured?
(a) [ ] Approached by Proposed Insured
(b) [ ] Well, for _____ years
(c) [ ] Casually _____ years
(d) [ ] Other NYLIC Agent
(e) [ ] Met on solicitation
(f) [ ] Relative (relationship ___________________________)
(g) [ ] Relative of Other NYL Agent
8. Source?
(a) [ ] My Client
(b) [ ] Direct Mail
(c) [ ] Group Contract
(d) [ ] Client Referral
(e) [ ] Canvass
(f) [ ] Customer List
(g) [ ] Unassigned Policyowner
(h) [ ] Ad Reply
(i) [ ] Rel
(j) [ ] Other
9. Purpose? (See Q. 13 in Section C if more than
$250,000 in force and applied for.)
(a) [ ] Personal
(b) [ ] Key Employee
(c) [ ] Sec. 303
(d) [ ] Buy Out
(e) [ ] Split Dollar
(f) [ ] Deferred Comp.
(g) [ ] Charity or Gift (Premiums will be paid by )
(h) [ ] Other (give full details in Q. 21 below)
- --------------------------------------------------------------------------------
SECTION B - ANSWER IF UNDERWRITING REQUIRED
(I.E., WHEN PART I QUESTIONS 14-17 OR A PART II REQUIRED).
- --------------------------------------------------------------------------------
NOTE: It is your responsibility, as the Agent in this case, to disclose
information that may affect the underwriting of this application, whether
or not such information may appear elsewhere in the application. This
includes information obtained after the application is submitted.
10. Are you aware of any of the following underwriting factors (past, present
or contemplated) that apply to any person proposed for coverage?
Yes No
(a) rating or declination by any company? [ ] [ ]
(b) physical or mental abnormality or handicap? [ ] [ ]
(c) hospitalization, surgery, treatment, or counseling? [ ] [ ]
(d) activities in a hazardous avocation or occupation? [ ] [ ]
(e) smoking of cigarettes within the past year? [ ] [ ]
(f) alcohol or drug abuse? [ ] [ ]
(g) arrests, or driver's license suspension or revocation? [ ] [ ]
(h) inaccurate weight and/or height reported to you? [ ] [ ]
(i) foreign residence or travel? [ ] [ ]
If "Yes" to any (a) - (i), give details in Q. 21 or
in a separate letter.
(j) Med. Underwriting Rules Chart used?
[ ] A, [ ] B, [ ] C for prior insured, multi-life,
single sum, [ ] Vanish Loan, [ ] Sel Agt
- --------------------------------------------------------------------------------
SECTION C - ANSWER IF THE SUM OF LIFE INSURANCE IN FORCE AND APPLIED
FOR ON PROP. OR OTHER INSURED IS $250,000 OR MORE.
- --------------------------------------------------------------------------------
11. Life insurance in force on Proposed Insured (If none, enter "0")
In New York Life, with: Personal Beneficiary
(incl. subsidiaries) Business Beneficiary
In other companies, with: Personal Beneficiary
Business Beneficiary
Total With WP ADB Amount
(a) $__________ (b) $__________ (c) $__________
(d) $__________ (e) $__________ (f) $__________
(g) $__________ (h) $__________ (i) $__________
(j) $__________ (k) $__________ (l) $__________
12. Estimated net worth and income: (If none, enter "0")
Proposed Insured's
Owner's (if not Proposed Insured)
Net Worth Annual Earned Income Annual Unearned Income
(a) $__________ (b) $__________ (c) $__________
(d) $__________ (e) $__________ (f) $__________
13. Insurance on Others? In Q. 21, give names, relationships and amounts of
business or personal insurance to be applied for (use "A"), pending (use
"P") and in force (use "F") on (a) other members of business (e.g., key
employees, partners, shareholders) or (b) other family members.
- --------------------------------------------------------------------------------
SECTION D - ANSWER IF POLICY TO BE ADDED TO EXISTING PLAN OR ARRANGEMENT
OR IF NYL-A-PLAN TYPE OR GOV'T ALLOT. MODE APPLIED FOR.
- --------------------------------------------------------------------------------
14. Arrangement No. (incl. C-O-M, Nyl-A-Plan, Nyl-A-Plus, KPA, PTA, TSA)
PAY POINT [ ][ ][ ][ ]
15. (a) Nyl-A-Plan or Nyl-A-Plus Name
(b) Type [ ] 8071 (Employer $) [ ] 8072 [ ] 17916
16. Tax-Qualified plan: Name
17. Gov't Allot
(a) Mil. Service Branch
(b) Pay Grade
(c) Soc Sec (Ins.) No. of Allotter ___-__-____
- --------------------------------------------------------------------------------
SECTION E - ANSWER IF TRUSTEE IS APPLICANT, OWNER, SUCCESSOR OWNER, OR PAYOR.
- --------------------------------------------------------------------------------
18. Date of Trust
19. Date of last amendment, if any
20. Certified copy of Trust and last amendment, if any
[ ] will be forwarded [ ] furnished with Policy No.
- --------------------------------------------------------------------------------
21. Remarks, Additional Details
------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
22. Was app by mail? [ ] Yes [ ] No
Is del. by mail expected? [ ] Yes [ ] No
Delivery State?
--------------------------
- --------------------------------------------------------------------------------
I DECLARE THAT: (a) the application was secured by me personally, and that I
have no understanding or agreement with any other person, directly or
indirectly, as to commissions or compensation on any policy applied for, except
as may be specified below; and (b) I have not paid or allowed, and I agree that
I will not hereafter pay or allow, either directly or indirectly, any
compensation or commission other than below, or any rebate of premium in any
manner whatsoever to the Applicant or to any other person.
I HEREWITH SUBMIT the cash collected with this application. Date
Share% Code No. Surname
Any other person(s) sharing commission
Share% Code No. Surname Sign below
[ ]
[ ] "OFFICE"
Signature [ ] Date Received
[ ] Stamp Here
[ ]
1061
<PAGE> 8
/ /NEW YORK LIFE INSURANCE COMPANY RECEIPT
/ /NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION RECEIPT
(In this receipt, "we" and "our" mean the Insurer checked above.)
Received from________________________________on_____________________,19_____
the sum of_______________________________________ Dollars ($________________),
the amount specified in Question 9 of Part 1 of an application bearing the same
date and number as this receipt. This payment is received subject to the
provisions of this receipt and its Conditional Temporary Coverage Agreement
below.
If the application modifies a previous application and cash was paid in
connection with the previous application, this receipt replaces and cancels any
receipt which was previously given for cash. We shall have no liability on
account of the previous receipt or any temporary coverage provided under it and
our liability on account of any cash payment shall be as provided under this
receipt and its Conditional Temporary Coverage Agreement below.
Any check tendered must be made payable to New York Life Insurance Company
or New York Life Insurance and Annuity Corporation, as shown above. Do Not
make any check payable to the Agent or leave the Payee blank. Any check will
be received subject to collection. This receipt is not transferable.
- -------------------------------------
Agent's Signature
CONDITIONAL TEMPORARY COVERAGE AGREEMENT (LIMITED IN AMOUNT)
1. COVERAGE NOT PROVIDED. No coverage is provided under this receipt:
(a) unless all of the Conditions to Coverage in paragraph 2 are fully met;
(b) for suicide or intentionally self-inflicted injury. (Item (b) is not
applicable to policies issued for delivery to a Missouri citizen);
(c) if reinstatement of a policy is being applied for;
(d) for a policy or benefit that is applied for under the terms of a
conversion privilege or guaranteed insurability option. If that policy
or benefit does not require our approval to put it in force, it will
take effect as soon as the requirements of that privilege or option
have been met.
2. CONDITIONS TO COVERAGE. The Conditions to Coverage are as follows:
(a) Any required application Part II and any medical or paramedical
examination, which is part of the initial requirements for this
application, must have been completed;
(b) All statements which are in the application for the policy, including
both Part I and any required Part II, must be complete and true, to the
best of the knowledge and belief of those persons who made them;
(c) Questions 8(a), 8(b) and 8(c) must have been answered "No"; and
(d) The sum paid in exchange for this receipt must be enough to provide at
least one month's coverage for the face amount of insurance and under
any riders being applied for.
3. AMOUNT OF COVERAGE - MAXIMUM LIMITATIONS. The temporary coverage will
provide the same benefits, and be subject to the same provisions,
conditions, exceptions, limitations and reductions, that would apply under
the policy had it become effective, except that OUR AGGREGATE LIABILITY on
account of all the temporary coverage, under this and any other receipt on
the person proposed for coverage in the application, for all benefits
(including any Accidental Death Benefits and any other benefits)SHALL IN NO
EVENT EXCEED $500,000 in total; and such liability shall be further limited
for any disability waiver of premium benefit so that it does not exceed
$300 per month.
4. DATE COVERAGE BEGINS. The temporary coverage will begin on the LATEST of the
following dates:
(a) The date of completion of any required application Part II and any
medical or paramedical examination which is part of the initial
requirements for this application;
(b) The date of this receipt; or
(c) The policy date as specified in Part I of the application.
However, where the temporary coverage under this receipt replaces temporary
coverage with respect to the same policy under another receipt given for
cash previously paid, the temporary coverage under this receipt begins as
of the same date that the replaced temporary coverage began.
5. COVERAGE TERMINATES - 60 DAY MAXIMUM. The temporary coverage will terminate
on the EARLIEST of the following dates:
(a) The sixtieth day following the date coverage begins under this receipt;
(b) The fifth day after we mail to the Applicant notice that the
application has been declined;
(c) The date the Applicant makes written request for a full refund of the
cash payment, in which event all coverage will be void from the start;
(d) The date the policy is put into force. If and when the policy is put
into force, it will replace the temporary coverage under this receipt.
In that event, we shall have no liability because of the temporary
coverage, and the liability shall only be as provided under the policy.
6. REFUND OF CASH PAYMENT.
(a) If no claim for benefits arises under the temporary coverage, a full
refund of the cash payment made with respect to the policy will be
made, if
(i) we decline the application, or
(ii) a written request for the refund is made not later than 10 days
after delivery of the policy.
(b) If a claim for benefits arises under the temporary coverage, a refund
will be made of an appropriate part of the cash payment made with
respect to the policy, if
(i) we decline the application, or
(ii) our liability on account of the temporary coverage is, because of
paragraph 3, less than it would have been under the policy.
7. LIMITATION ON AUTHORITY. No agent or medical examiner has any right to
accept risks, make or change contracts, give up any of our rights or
requirements, or change the provisions of this receipt.
NEW YORK LIFE INSURANCE COMPANY
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION (A DELAWARE CORP.)
51 MADISON AVENUE, NEW YORK, N.Y. 10010
<PAGE> 9
REQUEST FOR CHECK-O-MATIC PREMIUM PAYMENT ARRANGEMENT
==============================================================================
IMPORTANT
1 - NYLIC and NYLIAC policies cannot be included together in the same
Check-O-Matic arrangement. Use a separate C-O-M request form for each
Insurer.
2 - NYLIAC Life Insurance and NYLIAC Annuity policies also cannot be included
in the same NYLIAC Check-O-Matic arrangement.
3 - Please complete both sides of the request portion of this form.
4 - Please complete the depositor's authorization if (a) you are authorizing
the establishment of a new Check-O-Matic arrangement under a checking
account which is not now being used for this purpose, or (b) you are
changing financial organizations, branches or accounts.
5 - Please furnish a specimen check on the checking account to be used.
However, this is not necessary if (a) the policy is simply being added to
an existing Check-O-Matic arrangement with the same Insurer and there is no
change in the account being used, or (b) payment is being made by check on
the account to be used for the arrangement and the check accompanies this
form.
================================================================================
- --------------------------------------------------------------------------------
REQUEST FOR CHECK-O-MATIC PREMIUM PAYMENT ARRANGEMENT (CHECK ONE)
/ /NEW YORK LIFE INSURANCE COMPANY (NYLIC)
/ /NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION (NYLIAC - A DELAWARE
CORPORATION)
With the consent of each owner, I ask that the Insurer indicated above start a
Check-O-Matic arrangement to pay monthly premiums for each policy indicated on
the back of this form. I have read and agree to the following terms, and
acknowledge that they are not a part of any policy:
1. The Insurer will draw checks or other instruments to its own order, or
will direct the transfer of funds, to pay the premiums from the account
I have designated on the back of this form. This will be done each
month under a regular schedule established by the Insurer. The
Insurer will not send premium notices while this arrangement is in
effect.
2. This arrangement does not change the premium, due dates specified in
the policy, and it does not extend any of the grace or late periods
for paying these premiums. The policy or policies will lapse at the
end of the grace or late period if the premium remains unpaid.
3. I may stop the arrangement by written notice to the Insurer. The
owner of each policy may stop it for his or her own policy. In either
of these cases, the arrangement ends on the day the Insurer receives
the notice.
4. The Insurer may stop the arrangement by written notice to me and to
the owner of each policy that I do not own. The arrangement ends on
the day the Insurer mails the notices.
5. If this arrangement ends, I will be responsible for those premiums
covered by checks or other instruments, or fund transfers, that are
drawn or directed by the Insurer prior to the day the arrangement
ends. On and after that day, premiums may be paid on any mode of
premium payment then being offered by the Insurer.
6. Any policy included under this arrangement is subject to the Insurer's
minimum and maximum premium rules.
Date X
------------------------------------- ------------------------------------
Signature of Depositor
Date X
------------------------------------- ------------------------------------
Signature of Depositor
(PLEASE ALSO COMPLETE REVERSE SIDE)
15585-U.S. 6/87 1558511
- --------------------------------------------------------------------------------
DEPOSITOR'S AUTHORIZATION TO FINANCIAL ORGANIZATION
================================================================================
Name of Depositor Account Number
as shown on records of
Financial Organization, (Print)
- --------------------------------------------------------------------------------
Name and Address of
Financial Organization
where account
is maintained.
- --------------------------------------------------------------------------------
I authorize you to pay and charge to my account any checks or instruments,
or any fund transfers, drawn or directed by New York Life Insurance Company or
New York Life Insurance and Annuity Corporation, as applicable to its own
order. Until you receive my written cancellation of this authorization, you are
fully protected when you honor any of those orders.
Your treatment of, and your rights regarding those orders, shall be the
same as if I signed or initiated them. If any of those orders are not honored,
for cause or not, you shall have no liability, even if insurance is forfeited
as a result.
- --------------------------------------------------------------------------------
Date Signature of depositor(s) as
shown on Financial Organization's X
records for the account --------------------------
identified above. X
- --------------------------------------------------------------------------------
When writing to Insurer please refer to this number
----------------------
8069 6/87 806911
[NEW YORK LIFE LOGO]
NEW YORK LIFE INSURANCE
COMPANY, 51 MADISON AVENUE,
NEW YORK, N.Y. 10010
NEW YORK LIFE INSURANCE AND
ANNUITY CORPORATION
51 MADISON AVENUE,
NEW YORK, N.Y. 10010
================================================================================
NAMES AND ADDRESSES OF FOUR FRIENDS AND RELATIVES
1. 3.
-------------------------------------- ---------------------------------
-------------------------------------- ---------------------------------
2. 4.
-------------------------------------- ---------------------------------
-------------------------------------- ---------------------------------
<PAGE> 10
GENERAL REQUIREMENTS FOR VARIOUS TYPES OF REQUESTED ACTIONS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
ACTION REQUESTED ENTRY IN HEADING QUESTIONS REQUIRING AN ANSWER ADDITIONAL INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Amending Previous Insert application Ques. 1, 2-7 for application items being If cash is being paid with amendment, the
Application (Policy date in "Amend amended; 8 & 9 if cash being paid; 18 to total cash paid must be at least one
not delivered) Application Dated" delete riders; 21 (unless a required Part month's premium for the policy on the
II not yet completed, or unless temporary changed basis. Only the indicated changes,
coverage is still in effect and change does including deletions, will be made.
not increase risk).
- ------------------------------------------------------------------------------------------------------------------------------------
Add-on rider, Insert Policy Number Ques. 1, 2 for add-on, 6, 8, 9, 11-13; also If Ques. 8(a), 8(b) or 8(c) is answered
increase in face "Change Request" and 14-17 for new coverage within Simplified "Yes", cash may not be paid and Simplified
amount of policy check Box Underwriting limits.* For Increase indicate Underwriting is not available - Part II
(for Target Life) "Increase Face Amount to $ " required. See "Quick check card 13047" and
only on policies in Ques. 18. Agents' Manual, Sect. UND VI for coverage
issued after 1/1/85 beyond Simplified Und. limits.
- ------------------------------------------------------------------------------------------------------------------------------------
PPO/GIO or TEmPPO Check "GIO/PPO/GIR/ Ques. 1, 2, 4-7, 9, 12 and 22. For Target For amounts in excess of option amounts, see
Option, GIR Option SPO" Box, and insert Life, indicate "Increase Face Amount to Agents' Manual, Section UND VI.
to increase face basic Policy Number $ " in Ques. 18 instead of completing
amount of Target Ques. 2.
Life Policy
- ------------------------------------------------------------------------------------------------------------------------------------
Term Conversion Insert Policy Number Ques. 1, 2, 4, 5 (attained age only), 6, 7, For additional coverage: Ques: 8, 13, Also
and check appropriate 9, 12, and 23. 14-17 if a Simplified Underwriting case.*
"Conversion" Boxes
- ------------------------------------------------------------------------------------------------------------------------------------
Reinstatement Insert Policy Number Within 6 mos., if underwriting required; After 6 mos.; See Agents' Manual, Section
and check Ques. 1, 8, 9, 12, 13, 14-17.* UND VI.
"Reinstatement" Box
- ------------------------------------------------------------------------------------------------------------------------------------
Reduction in Insert Policy Number Ques. 1, 8, 12, and 13. In Ques. 18, enter APS if required. See Agts' Manual for
Rating and check "Change "Request for Reduction of Rating for appropriate Part II's, Occupation; in
Request" Box ." Ques. 18, give dates and describe
occupations in last 5 years or since issue
date, if less, Avocation or Aviation;
Form 7663. Driving Record: Give Lic. No. in
Q. 18.
- ------------------------------------------------------------------------------------------------------------------------------------
Reconsideration Insert Policy Number Ques. 1, 8, 12, and 13. In Ques. 18, enter Simplified Und. or Appropriate Part II.
for Non-Smoker or and check "Change "Request for Reconsideration to See Agents' Manual, Section UND VI.
Preferred Risk Request" Box ."
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* If a Part II is required, omit Questions 14-17.
<TABLE>
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<S> <C> <C> <C> <C>
[ ] SINGLE C-O-M [ ] MULT. C-O-M [ ] ADD TO C-O-M [ ] ACCOUNT CHANGE [ ] CASE REF. OR POL. NO.
- ----------------------------------------------------------------------------------------------------------------
Depositor's Name as shown Account No.
on Financial Organization's
records. (Print)
- ----------------------------------------------------------------------------------------------------------------
Name of TRANSIT NO.
Financial
Organization ------------------------------------------------------------------------
(including -------------------
branch) and
address ------------------------------------------------------------------------
where
account is
maintained.
- ----------------------------------------------------------------------------------------------------------------
A. APPLIED FOR POLICIES: Name of Proposed Insured or Annuitant Policy Date, if known (if policy number
------------------------------------- --------------------- known, give below)
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
B. IN-FORCE POLICIES - The C-O-M arrangement will apply to the policies listed below, and will cover all
premiums scheduled to be paid on or after the date to which premiums for these policies have been paid.
Pol. No. Name of Insured or Annuitant C-O-M Prem. Pol. No. Name of Insured or Annuitant C-O-M Prem.
-------- ---------------------------- ----------- -------- ---------------------------- -----------
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
15585 - U.S. 6/87 PLEASE ALSO DATE AND SIGN OR REVERSE SIDE. 1558512
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
INDEMNIFICATION AGREEMENT
TO: FINANCIAL ORGANIZATION NAMED ON THE REVERSE SIDE
If you comply with the request and authorization of the depositor named on the
reverse side of this form.
1. The Insurer will indemnify and hold you harmless from any liability to a
person who has an account with you, because you honored a check or other
instrument or a fund transfer the Insurer drew or directed to its own order
on that person's account. Similarly, the Insurer will assume any liability
you may have to that person, or to the owner or beneficiary of a New York
Life Insurance Company or a New York Life Insurance and Annuity
Corporation policy, as applicable. If you do not honor such an order when
there are sufficient funds in the account to pay the order when it is
presented.
2. The insurer will refund to you any amount you have paid to it in error upon
receipt of a claim which you may submit at any time up to twelve months after
the date of that payment.
Authorized on May 16, 1979 in a resolution Authorized on August 17, 1981 in a resolution
adopted by the Board of Directors of adopted by the Board of Directors of
NEW YORK LIFE INSURANCE COMPANY NEW YORK LIFE INSURANCE
AND ANNUITY CORPORATION
(A DELAWARE CORPORATION)
By /s/ GEORGE A. W. BUNDSCHUH By /s/ LEE M. GAMMILL, JR.
--------------------------------------- ----------------------------------------
President President
/s/ MELBORNE NUNES /s/ MELBORNE NUNES
--------------------------------------- ----------------------------------------
Secretary Secretary
</TABLE>
8069-A 6/87 806912
<PAGE> 1
Exhibit 2
Opinion and Consent of Robert J. Hebron, Esq.
<PAGE> 2
[LOGO] [NEW YORK LIFE INSURANCE COMPANY LETTERHEAD]
April 15, 1997
New York Life Insurance
and Annuity Corporation
51 Madison Avenue
New York, NY 10010
RE: NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
VARIABLE UNIVERSAL LIFE SEPARATE ACCOUNT-I
Ladies and Gentlemen:
This opinion is furnished in connection with the filing by New York Life
Insurance and Annuity Corporation ("NYLIAC") of Post-Effective Amendment No. 4
to the registration statement on Form S-6 ("Registration Statement") under the
Securities Act of 1933, as amended, of NYLIAC Variable Universal Life Separate
Account-I ("Separate Account-I"). Separate Account-I receives and invests
premiums allocated to it under a flexible premium variable universal life
insurance policy ("Policy"). The Policy is offered in the manner described in
the Registration Statement.
In my capacity as Vice President and Associate General Counsel for New
York Life Insurance Company, I have authority to assist the General Counsel in
supervising and administering the general business affairs of the Office of the
General Counsel, including authority to act with respect to any matter within
his authority or responsibility relating to legal affairs. This would include
general supervision of NYLIAC's legal affairs. In this capacity, I am familiar
with Separate Account-I, which was established as of June 4, 1993, pursuant to
a resolution adopted by the Board of Directors of NYLIAC for a separate account
for assets applicable to the Policy, pursuant to the provisions of Section 2932
of the Delaware Insurance Code. In addition, I have made such examination of
the law and have examined such corporate records and such other documents as I
consider appropriate as a basis for the opinion hereinafter expressed. On the
basis of such examination, it is my professional opinion that:
<PAGE> 3
New York Life Insurance
and Annuity Corporation
April 15, 1997
Page 2
1. NYLIAC is a corporation duly organized and validly existing under the
laws of the State of Delaware.
2. Separate Account-I is an account established and maintained by NYLIAC
pursuant to the laws of the State of Delaware, under which income,
capital gains and capital losses incurred on the assets of Separate
Account-I are credited to or charged against the assets of Separate
Account-I without regard to the income, capital gains or capital
losses arising out of any other business which NYLIAC may conduct.
3. The Policies have been duly authorized by NYLIAC and, when sold in
jurisdictions authorizing such sales, in accordance with the
Registration Statement, will constitute validly issued and binding
obligations of NYLIAC in accordance with their terms.
4. Each owner of a Policy will not be subject to any deductions, charges,
or assessments imposed by NYLIAC other than those provided in the
Policy.
I consent to the use of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/Robert J. Hebron
-------------------
Robert J. Hebron
Vice President and
Associate General Counsel
<PAGE> 1
Exhibit 6
Opinion and Consent of Jane Hamrick, Actuary
<PAGE> 2
[NEW YORK LIFE INSURANCE COMPANY LETTERHEAD]
April 15, 1997
New York Life Insurance
and Annuity Corporation
51 Madison Avenue
New York, NY 10010
RE: NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
VARIABLE UNIVERSAL LIFE SEPARATE ACCOUNT-I
Ladies and Gentlemen:
This opinion is furnished in connection with the referenced registration
statement filed by New York Life Insurance and Annuity Corporation ("NYLIAC")
under the Securities Act of 1933 (the "Registration Statement"). The
prospectus included in the Registration Statement on Form S-6 describes
flexible premium variable universal life policies (the "Policies"). The forms
of Policies were prepared under my direction, and I am familiar with the
Registration Statement, as amended, and Exhibits thereto.
In my opinion, the illustrations of benefits under the Policies included
in the Section entitled "Illustrations" in Appendix A of the prospectus, based
on the assumptions stated in the illustrations, are consistent with the
provisions of the respective forms of the Policies. The age selected in the
illustrations is representative of the manner in which the Policies operate.
In addition, I have reviewed the discount rate used in calculating the
present value of NYLIAC's future tax deductions resulting from the amortization
of its deduction for certain acquisition costs. In my opinion, the DAC tax
charge is reasonable in relation to NYLIAC's increased federal tax burden under
section 848 resulting from the receipt of premiums; the targeted rate of return
used in calculating such charges is reasonable; and the factors taken into
account by NYLIAC in determining the targeted rate of return are appropriate.
<PAGE> 3
New York Life Insurance
and Annuity Corporation
April 15, 1997
Page 2
I hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference to my name under the heading
"Experts" in the prospectus.
Very truly yours,
/s/Jane L. Hamrick
------------------
Jane L. Hamrick
Vice President and Actuary
<PAGE> 1
Exhibit 7
Consent of Price Waterhouse, LLP
<PAGE> 2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Post-Effective Amendment No. 4 to the registration statement on Form S-6 (the
"Registration Statement") of our report dated April 16, 1997, relating to the
financial statements of New York Life Insurance and Annuity Corporation, and of
our report dated February 19, 1997, relating to the financial statements and
selected per unit data of New York Life Insurance and Annuity Corporation
Variable Universal Life Separate Account I. We also consent to the reference
to us under the heading "Independent Accountants" which appears in such
Prospectus.
PRICE WATERHOUSE, LLP
1177 Avenue of the Americas
New York, NY
April 16, 1997
<PAGE> 3
Exhibit 5
Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NEW YORK
LIFE INSURANCE AND ANNUITY CORPORATION VARIABLE UNIVERSAL LIFE SEPARATE
ACCOUNT-I FINANCIAL STATEMENTS AND NOTES THERETO AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES THERETO.
</LEGEND>
<SERIES>
<NUMBER> 01
<NAME> NYLIAC UNIVERSAL LIFE SEPARATE ACCOUNT I; MAINSTAY VP CAPITAL
APPRECIATION
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 48,667,330
<INVESTMENTS-AT-VALUE> 59,965,213
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 59,965,213
<TOTAL-ASSETS> 59,965,213
<PAYABLE-FOR-SECURITIES> 99,423
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 99,423
<TOTAL-LIABILITIES> 99,423
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 53,110,739
<SHARES-COMMON-STOCK> 3,874,548
<SHARES-COMMON-PRIOR> 1,988,398
<ACCUMULATED-NII-CURRENT> (254,648)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 109,593
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11,297,883
<NET-ASSETS> 59,865,791
<DIVIDEND-INCOME> 36,304
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 301,407
<NET-INVESTMENT-INCOME> (259,949)
<REALIZED-GAINS-CURRENT> 117,486
<APPREC-INCREASE-CURRENT> 6,900,669
<NET-CHANGE-FROM-OPS> 6,755,052
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,886,150
<ACCUMULATED-NII-PRIOR> 5,302
<ACCUMULATED-GAINS-PRIOR> (7,893)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NEW YORK
LIFE INSURANCE AND ANNUITY CORPORATION VARIABLE UNIVERSAL LIFE SEPARATE
ACCOUNT-I FINANCIAL STATEMENTS AND NOTES THERETO AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES THERETO.
</LEGEND>
<SERIES>
<NUMBER> 02
<NAME> NYLIAC VARIABLE UNIVERSAL LIFE SEPARATE ACCOUNT I; MAINSTAY VP CASH
MANGEMENT
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 6,464,446
<INVESTMENTS-AT-VALUE> 6,464,445
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 6,464,445
<TOTAL-ASSETS> 6,464,445
<PAYABLE-FOR-SECURITIES> 6,675
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,675
<TOTAL-LIABILITIES> 6,675
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,332,530
<SHARES-COMMON-STOCK> 5,717,419
<SHARES-COMMON-PRIOR> 2,883,826
<ACCUMULATED-NII-CURRENT> 221,735
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (55)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (0)
<NET-ASSETS> 6,457,770
<DIVIDEND-INCOME> 146,044
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 20,785
<NET-INVESTMENT-INCOME> 125,171
<REALIZED-GAINS-CURRENT> (31)
<APPREC-INCREASE-CURRENT> 11
<NET-CHANGE-FROM-OPS> 125,240
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,833,594
<ACCUMULATED-NII-PRIOR> 96,565
<ACCUMULATED-GAINS-PRIOR> (24)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NEW YORK
LIFE INSURANCE AND ANNUITY CORPORATION VARIABLE UNIVERSAL LIFE SEPARATE
ACCOUNT-I FINANCIAL STATEMENTS AND NOTES THERETO AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES THERETO.
</LEGEND>
<SERIES>
<NUMBER> 03
<NAME> NYLIAC VARIABLE UNIVERSAL LIFE SEPARATE ACCOUNT I; MAINSTAY VP
CONVERTIBLE
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 134,827
<INVESTMENTS-AT-VALUE> 134,775
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 134,775
<TOTAL-ASSETS> 134,775
<PAYABLE-FOR-SECURITIES> 93
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 93
<TOTAL-LIABILITIES> 93
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 133,293
<SHARES-COMMON-STOCK> 13,068
<SHARES-COMMON-PRIOR> 328,212
<ACCUMULATED-NII-CURRENT> 1,209
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 232
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (52)
<NET-ASSETS> 134,682
<DIVIDEND-INCOME> 1,526
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 93
<NET-INVESTMENT-INCOME> 1207
<REALIZED-GAINS-CURRENT> 8
<APPREC-INCREASE-CURRENT> (52)
<NET-CHANGE-FROM-OPS> 1389
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (315,144)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NEW YORK
LIFE INSURANCE AND ANNUITY CORPORATION VARIABLE UNIVERSAL LIFE SEPARATE
ACCOUNT-I FINANCIAL STATEMENTS AND NOTES THERETO AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES THERETO.
</LEGEND>
<SERIES>
<NUMBER> 04
<NAME> NYLIAC VARIABLE UNIVERSAL LIFE SEPARATE ACCOUNT I; MAINSTAY VP
GOVERNMENT
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 1,492,560
<INVESTMENTS-AT-VALUE> 1,437,892
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1,437,692
<TOTAL-ASSETS> 1,437,692
<PAYABLE-FOR-SECURITIES> 2,560
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,560
<TOTAL-LIABILITIES> 2,560
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,400,428
<SHARES-COMMON-STOCK> 124,904
<SHARES-COMMON-PRIOR> 85,299
<ACCUMULATED-NII-CURRENT> 173,078
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 16,448
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (54,867)
<NET-ASSETS> 1,435,132
<DIVIDEND-INCOME> 91,242
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 8,586
<NET-INVESTMENT-INCOME> 82,707
<REALIZED-GAINS-CURRENT> 12,558
<APPREC-INCREASE-CURRENT> (60,509)
<NET-CHANGE-FROM-OPS> 34,705
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 39,605
<ACCUMULATED-NII-PRIOR> 90,371
<ACCUMULATED-GAINS-PRIOR> 3,890
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NEW YORK
LIFE INSURANCE AND ANNUITY CORPORATION VARIABLE UNIVERSAL LIFE SEPARATE
ACCOUNT-I FINANCIAL STATEMENTS AND NOTES THERETO AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES THERETO.
</LEGEND>
<SERIES>
<NUMBER> 05
<NAME> NYLIAC VARIABLE UNIVERSAL LIFE SEPARATE ACCOUNT I; MAINSTAY VP HIGH
YIELD CORPORATE BOND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 16,343,089
<INVESTMENTS-AT-VALUE> 18,075,182
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 18,075,182
<TOTAL-ASSETS> 18,075,182
<PAYABLE-FOR-SECURITIES> 30,590
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 30,590
<TOTAL-LIABILITIES> 30,590
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 15,817,009
<SHARES-COMMON-STOCK> 1,415,774
<SHARES-COMMON-PRIOR> 1,091,397
<ACCUMULATED-NII-CURRENT> 1,128,679
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 354,978
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,732,093
<NET-ASSETS> 18,044,592
<DIVIDEND-INCOME> 1,093,958
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 106,102
<NET-INVESTMENT-INCOME> 757,498
<REALIZED-GAINS-CURRENT> 48,439
<APPREC-INCREASE-CURRENT> 1,191,289
<NET-CHANGE-FROM-OPS> 2,227,584
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 324,377
<ACCUMULATED-NII-PRIOR> 371,181
<ACCUMULATED-GAINS-PRIOR> 73,462
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NEW YORK
LIFE INSURANCE AND ANNUITY CORPORATION VARIABLE UNIVERSAL LIFE SEPARATE
ACCOUNT-I FINANCIAL STATEMENTS AND NOTES THERETO AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES THERETO.
</LEGEND>
<SERIES>
<NUMBER> 06
<NAME> NYLIAC VARIABLE UNIVERSAL LIFE SEPARATE ACCOUNT I; MAINSTAY VP
INTERNATIONAL EQUITY
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 12,912,261
<INVESTMENTS-AT-VALUE> 13,595,698
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 13,595,698
<TOTAL-ASSETS> 13,595,698
<PAYABLE-FOR-SECURITIES> 23,727
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 23,727
<TOTAL-LIABILITIES> 23,727
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,429,625
<SHARES-COMMON-STOCK> 1,161,413
<SHARES-COMMON-PRIOR> 1,029,571
<ACCUMULATED-NII-CURRENT> 1,096,389
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 28,998
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 683,437
<NET-ASSETS> 13,571,971
<DIVIDEND-INCOME> 733,353
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 87,071
<NET-INVESTMENT-INCOME> 630,545
<REALIZED-GAINS-CURRENT> 10,856
<APPREC-INCREASE-CURRENT> 485,209
<NET-CHANGE-FROM-OPS> 1,142,347
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 131,841
<ACCUMULATED-NII-PRIOR> 465,844
<ACCUMULATED-GAINS-PRIOR> 417
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NEW YORK
LIFE INSURANCE AND ANNUITY CORPORATION VARIABLE UNIVERSAL LIFE SEPARATE
ACCOUNT-I FINANCIAL STATEMENTS AND NOTES THERETO AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES THERETO.
</LEGEND>
<SERIES>
<NUMBER> 07
<NAME> NYLIAC VARIABLE UNIVERSAL LIFE SEPARATE ACCOUNT I; MAINSTAY VP TOTAL
RETURN
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 15,063,636
<INVESTMENTS-AT-VALUE> 17,285,730
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 17,285,730
<TOTAL-ASSETS> 17,285,730
<PAYABLE-FOR-SECURITIES> 28,959
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 28,959
<TOTAL-LIABILITIES> 28,959
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 15,835,817
<SHARES-COMMON-STOCK> 1,253,878
<SHARES-COMMON-PRIOR> 724,564
<ACCUMULATED-NII-CURRENT> 495,117
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 66,662
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,222,094
<NET-ASSETS> 17,256,771
<DIVIDEND-INCOME> 346,226
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 91,412
<NET-INVESTMENT-INCOME> 255,704
<REALIZED-GAINS-CURRENT> 69,613
<APPREC-INCREASE-CURRENT> 1,096,527
<NET-CHANGE-FROM-OPS> 1,420,954
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 529,314
<ACCUMULATED-NII-PRIOR> 239,413
<ACCUMULATED-GAINS-PRIOR> (2,951)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NEW YORK
LIFE INSURANCE AND ANNUITY CORPORATION VARIABLE UNIVERSAL LIFE SEPARATE
ACCOUNT-I FINANCIAL STATEMENTS AND NOTES THERETO AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES THERETO.
</LEGEND>
<SERIES>
<NUMBER> 08
<NAME> NYLIAC VARIABLE UNIVERSAL LIFE SEPARATE ACCOUNT I; MAINSTAY VP VALUE
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 11,136,037
<INVESTMENTS-AT-VALUE> 13,754,542
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 13,754,542
<TOTAL-ASSETS> 13,754,542
<PAYABLE-FOR-SECURITIES> 23,008
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 23,008
<TOTAL-LIABILITIES> 23,008
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 11,650,514
<SHARES-COMMON-STOCK> 965,658
<SHARES-COMMON-PRIOR> 594,528
<ACCUMULATED-NII-CURRENT> 122,062
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 208,075
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,618,505
<NET-ASSETS> 13,731,534
<DIVIDEND-INCOME> 348,508
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 70,581
<NET-INVESTMENT-INCOME> 92,729
<REALIZED-GAINS-CURRENT> 15,992
<APPREC-INCREASE-CURRENT> 1,787,101
<NET-CHANGE-FROM-OPS> 2,081,020
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 371,129
<ACCUMULATED-NII-PRIOR> 29,333
<ACCUMULATED-GAINS-PRIOR> 5,133
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NEW YORK
LIFE INSURANCE AND ANNUITY CORPORATION VARIABLE UNIVERSAL LIFE SEPARATE
ACCOUNT-I FINANCIAL STATEMENTS AND NOTES THERETO AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES THERETO.
</LEGEND>
<SERIES>
<NUMBER> 09
<NAME> NYLIAC VARIABLE UNIVERSAL LIFE SEPARATE ACCOUNT I; MAINSTAY VP BOND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 2,970,811
<INVESTMENTS-AT-VALUE> 2,888,675
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 2,888,675
<TOTAL-ASSETS> 2,888,675
<PAYABLE-FOR-SECURITIES> 4,724
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,724
<TOTAL-LIABILITIES> 4,724
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,821,162
<SHARES-COMMON-STOCK> 243,279
<SHARES-COMMON-PRIOR> 122,386
<ACCUMULATED-NII-CURRENT> 268,030
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 13,302
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (82,136)
<NET-ASSETS> 2,883,951
<DIVIDEND-INCOME> 179,666
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 14,522
<NET-INVESTMENT-INCOME> 165,236
<REALIZED-GAINS-CURRENT> 12,900
<APPREC-INCREASE-CURRENT> (115,255)
<NET-CHANGE-FROM-OPS> 62,789
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 120,893
<ACCUMULATED-NII-PRIOR> 102,794
<ACCUMULATED-GAINS-PRIOR> 402
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NEW YORK
LIFE INSURANCE AND ANNUITY CORPORATION VARIABLE UNIVERSAL LIFE SEPARATE
ACCOUNT-I FINANCIAL STATEMENTS AND NOTES THERETO AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES THERETO.
</LEGEND>
<SERIES>
<NUMBER> 10
<NAME> NYLIAC VARIABLE UNIVERSAL LIFE SEPARATE ACCOUNT I; MAINSTAY VP
GROWTH EQUITY
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 11,416,122
<INVESTMENTS-AT-VALUE> 11,700,081
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 11,700,081
<TOTAL-ASSETS> 11,700,081
<PAYABLE-FOR-SECURITIES> 19,697
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 19,697
<TOTAL-LIABILITIES> 19,697
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 10,009,465
<SHARES-COMMON-STOCK> 726,099
<SHARES-COMMON-PRIOR> 370,775
<ACCUMULATED-NII-CURRENT> 87,947
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,904,067
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 283,959
<NET-ASSETS> 11,680,384
<DIVIDEND-INCOME> 1,536,797
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 57,579
<NET-INVESTMENT-INCOME> 43,146
<REALIZED-GAINS-CURRENT> 30,033
<APPREC-INCREASE-CURRENT> 161,667
<NET-CHANGE-FROM-OPS> 1,670,919
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 355,324
<ACCUMULATED-NII-PRIOR> 44,800
<ACCUMULATED-GAINS-PRIOR> 436,575
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NEW YORK
LIFE INSURANCE AND ANNUITY CORPORATION VARIABLE UNIVERSAL LIFE SEPARATE
ACCOUNT-I FINANCIAL STATEMENTS AND NOTES THERETO AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES THERETO.
</LEGEND>
<SERIES>
<NUMBER> 11
<NAME> NYLIAC VARIABLE UNIVERSAL LIFE SEPARATE ACCOUNT I; MAINSTAY VP
INDEXED EQUITY
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 11,917,085
<INVESTMENTS-AT-VALUE> 13,930,582
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 13,930,582
<TOTAL-ASSETS> 13,930,582
<PAYABLE-FOR-SECURITIES> 23,288
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 23,288
<TOTAL-LIABILITIES> 23,288
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,087,750
<SHARES-COMMON-STOCK> 795,174
<SHARES-COMMON-PRIOR> 328,212
<ACCUMULATED-NII-CURRENT> 227,369
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 381,362
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,013,496
<NET-ASSETS> 13,907,293
<DIVIDEND-INCOME> 364,675
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 63,964
<NET-INVESTMENT-INCOME> 135,508
<REALIZED-GAINS-CURRENT> 64,602
<APPREC-INCREASE-CURRENT> 1,454,231
<NET-CHANGE-FROM-OPS> 1,819,544
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 466,962
<ACCUMULATED-NII-PRIOR> 91,861
<ACCUMULATED-GAINS-PRIOR> 150,024
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NEW YORK
LIFE INSURANCE AND ANNUITY CORPORATION VARIABLE UNIVERSAL LIFE SEPARATE
ACCOUNT-I FINANCIAL STATEMENTS AND NOTES THERETO AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES THERETO.
</LEGEND>
<SERIES>
<NUMBER> 12
<NAME> NYLIAC VARIABLE UNIVERSAL LIFE SEPARATE ACCOUNT I; ALGER AMERICAN
SMALL CAPITALIZATION
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 121,568
<INVESTMENTS-AT-VALUE> 121,451
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 121,451
<TOTAL-ASSETS> 121,451
<PAYABLE-FOR-SECURITIES> 64
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 64
<TOTAL-LIABILITIES> 64
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 121,599
<SHARES-COMMON-STOCK> 12,566
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (67)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (30)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (117)
<NET-ASSETS> 121,387
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 64
<NET-INVESTMENT-INCOME> (67)
<REALIZED-GAINS-CURRENT> (30)
<APPREC-INCREASE-CURRENT> (117)
<NET-CHANGE-FROM-OPS> (212)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 12,566
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NEW YORK
LIFE INSURANCE AND ANNUITY CORPORATION VARIABLE UNIVERSAL LIFE SEPARATE
ACCOUNT-I FINANCIAL STATEMENTS AND NOTES THERETO AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES THERETO.
</LEGEND>
<SERIES>
<NUMBER> 13
<NAME> NYLIAC VARIABLE UNIVERSAL LIFE SEPARATE ACCOUNT I; CALVERT SOCIALLY
RESPONSIBLE
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 24,968
<INVESTMENTS-AT-VALUE> 24,004
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 24,004
<TOTAL-ASSETS> 24,004
<PAYABLE-FOR-SECURITIES> 4
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4
<TOTAL-LIABILITIES> 4
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 24,062
<SHARES-COMMON-STOCK> 2,410
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 258
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 645
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (965)
<NET-ASSETS> 23,999
<DIVIDEND-INCOME> 907
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 4
<NET-INVESTMENT-INCOME> 258
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> (965)
<NET-CHANGE-FROM-OPS> (62)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,410
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NEW YORK
LIFE INSURANCE AND ANNUITY CORPORATION VARIABLE UNIVERSAL LIFE SEPARATE
ACCOUNT-I FINANCIAL STATEMENTS AND NOTES THERETO AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES THERETO.
</LEGEND>
<SERIES>
<NUMBER> 14
<NAME> NYLIAC VARIABLE UNIVERSAL LIFE SEPARATE ACCOUNT I; FIDELITY VIP II:
CONTRAFUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 255,170
<INVESTMENTS-AT-VALUE> 256,660
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 256,660
<TOTAL-ASSETS> 256,660
<PAYABLE-FOR-SECURITIES> 112
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 112
<TOTAL-LIABILITIES> 112
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 254,794
<SHARES-COMMON-STOCK> 24,683
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (111)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 376
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,491
<NET-ASSETS> 256,548
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 112
<NET-INVESTMENT-INCOME> (111)
<REALIZED-GAINS-CURRENT> 376
<APPREC-INCREASE-CURRENT> 1,491
<NET-CHANGE-FROM-OPS> 1,754
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 24,683
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NEW YORK
LIFE INSURANCE AND ANNUITY CORPORATION VARIABLE UNIVERSAL LIFE SEPARATE
ACCOUNT-I FINANCIAL STATEMENTS AND NOTES THERETO AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES THERETO.
</LEGEND>
<SERIES>
<NUMBER> 15
<NAME> NYLIAC VARIABLE UNIVERSAL LIFE SEPARATE ACCOUNT I; FIDELITY VIP:
EQUITY INCOME
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 102,918
<INVESTMENTS-AT-VALUE> 102,621
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 102,621
<TOTAL-ASSETS> 102,621
<PAYABLE-FOR-SECURITIES> 37
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 37
<TOTAL-LIABILITIES> 37
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 102,798
<SHARES-COMMON-STOCK> 9,882
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (36)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 121
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (298)
<NET-ASSETS> 102,585
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 37
<NET-INVESTMENT-INCOME> (36)
<REALIZED-GAINS-CURRENT> 121
<APPREC-INCREASE-CURRENT> (298)
<NET-CHANGE-FROM-OPS> (214)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 9,882
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NEW YORK
LIFE INSURANCE AND ANNUITY CORPORATION VARIABLE UNIVERSAL LIFE SEPARATE
ACCOUNT-I FINANCIAL STATEMENTS AND NOTES THERETO AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES THERETO.
</LEGEND>
<SERIES>
<NUMBER> 16
<NAME> NYLIAC VARIABLE UNIVERSAL LIFE SEPARATE ACCOUNT I; JANUS ASPEN BALANCED
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 107,229
<INVESTMENTS-AT-VALUE> 107,026
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 107,026
<TOTAL-ASSETS> 107,026
<PAYABLE-FOR-SECURITIES> 48
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 48
<TOTAL-LIABILITIES> 48
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 106,334
<SHARES-COMMON-STOCK> 10,541
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 847
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (203)
<NET-ASSETS> 106,976
<DIVIDEND-INCOME> 894
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 48
<NET-INVESTMENT-INCOME> 847
<REALIZED-GAINS-CURRENT> 1
<APPREC-INCREASE-CURRENT> (203)
<NET-CHANGE-FROM-OPS> 645
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 10,541
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NEW YORK
LIFE INSURANCE AND ANNUITY CORPORATION VARIABLE UNIVERSAL LIFE SEPARATE
ACCOUNT-I FINANCIAL STATEMENTS AND NOTES THERETO AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES THERETO.
</LEGEND>
<SERIES>
<NUMBER> 17
<NAME> NYLIAC VARIABLE UNIVERSAL LIFE SEPARATE ACCOUNT I; JANUS ASPEN
WORLDWIDE
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 256,313
<INVESTMENTS-AT-VALUE> 258,912
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 258,912
<TOTAL-ASSETS> 258,912
<PAYABLE-FOR-SECURITIES> 132
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 132
<TOTAL-LIABILITIES> 132
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 254,817
<SHARES-COMMON-STOCK> 25,158
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1,122
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 243
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,600
<NET-ASSETS> 258,781
<DIVIDEND-INCOME> 1,253
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 132
<NET-INVESTMENT-INCOME> 1,122
<REALIZED-GAINS-CURRENT> 243
<APPREC-INCREASE-CURRENT> 2,600
<NET-CHANGE-FROM-OPS> 3,964
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 25,158
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NEW YORK
LIFE INSURANCE AND ANNUITY CORPORATION VARIABLE UNIVERSAL LIFE SEPARATE
ACCOUNT-I FINANCIAL STATEMENTS AND NOTES THERETO AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES THERETO.
</LEGEND>
<SERIES>
<NUMBER> 18
<NAME> NYLIAC VARIABLE UNIVERSAL LIFE SEPARATE ACCOUNT I; MORGAN STANLEY
EMERGING MARKETS EQUITY
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 75,290
<INVESTMENTS-AT-VALUE> 75,779
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 75,779
<TOTAL-ASSETS> 75,779
<PAYABLE-FOR-SECURITIES> 43
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 43
<TOTAL-LIABILITIES> 43
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 75,160
<SHARES-COMMON-STOCK> 7,563
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 82
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 489
<NET-ASSETS> 75,736
<DIVIDEND-INCOME> 125
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 43
<NET-INVESTMENT-INCOME> 82
<REALIZED-GAINS-CURRENT> 5
<APPREC-INCREASE-CURRENT> 489
<NET-CHANGE-FROM-OPS> 576
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 7,563
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
