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As filed with the Securities and Exchange Commission on October 31, 1997
Registration No.
------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-6
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FOR THE REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2
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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:
Jeffrey S. Puretz Michael J. McLaughlin, Esq.
Dechert Price & Rhoads Senior Vice President
1500 K Street, N. W. and General Counsel
Washington, D. C. 20005 New York Life Insurance Company
51 Madison Avenue
New York, New York 10010
E. Title of securities being registered:
Interests in the Separate Account under Survivorship Variable
Adjustable Life Insurance Policies.
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F. Approximate date of proposed public offering: As soon as practicable
after the effective date of the Registration Statement. Registrant
hereby amends this Registration Statement on such date or dates as may
be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as the
Securities and Exchange Commission, acting pursuant to Section 8(a),
may determine.
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CROSS REFERENCE SHEET
INFORMATION REQUIRED IN A PROSPECTUS
<TABLE>
<CAPTION>
Item of Form N-8B-2 Prospectus Caption
- ------------------- ------------------
<S> <C>
1 Definitions; The Separate Account
2 About NYLIAC
3 Not Applicable
4 Sales and Other Agreements
5 The Separate Account
6 The Separate Account
9 Legal Proceedings
10 Summary of Policy Features; General
Description; Life Insurance Protection; Cash
Value and Cash Surrender Value; Loans; Partial
Withdrawals; Surrenders; Additional Benefits
through Riders and Options; Policy Split
Option; Premiums; Investments; Deductions and
Charges; Policy Proceeds; Additional Policy
Provisions; Free Look; Exchange Privilege;
Additional Provisions Regarding the Separate
Account; About NYLIAC; Sales and Other
Agreements
11 Cash Value and Cash Surrender Value; The Separate
Account
12 Funds; Portfolios; About NYLIAC; Sales and Other
Agreements
13 Summary of Policy Features; General Description;
Loans; Partial Withdrawals; Surrenders; Premiums;
Investments; Deductions and Charges; Sales and
Other Agreements
14 Summary of Policy Features; General Description;
Premiums; Investments; Sales and Other Agreements
15 Summary of Policy Features; General Description;
Cash Value and Cash Surrender Value; Premium;
Investments
16 Summary of Policy Features; General Description;
Cash Value and Cash Surrender Value; Premium;
Investments
17 Summary of Policy Features; General Description;
Cash Value and Cash Surrender Value; Loans;
Partial Withdrawals; Surrenders
18 Summary of Policy Features; General Description;
Cash Value and Cash Surrender Value; Loans;
Partial Withdrawals; Surrenders; Premiums;
Investments
19 Records and Reports
20 Not Applicable
21 Loans
22 Not Applicable
23 Not Applicable
</TABLE>
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<TABLE>
<CAPTION>
Item of Form N-8B-2 Prospectus Caption
- ------------------- ------------------
<S> <C>
24 Additional Policy Provisions; Additional
Provisions Regarding the Separate Account
25 About NYLIAC
26 Deductions and Charges; Loans; Withdrawals;
Surrenders; Reinstatement; Additional Policy
Provisions
27 About NYLIAC
28 Directors and Principal Officers of NYLIAC
29 About NYLIAC
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 Sales and Other Agreements
41 Sales and Other Agreements
42 Not Applicable
43 Not Applicable
44 Cash Value and Cash Surrender Value
45 Not Applicable
46 Cash Value and Cash Surrender Value; Loans;
Partial Withdrawals; Surrenders; Deductions
and Charges; Investments
47 Cash Value and Cash Surrender Value; Loans;
Partial Withdrawals; Surrenders; Deductions
and Charges; Investments
48 Not Applicable
49 Not Applicable
</TABLE>
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<TABLE>
<CAPTION>
Item of Form N-8B-2 Prospectus Caption
- ------------------- ------------------
<S> <C>
50 Investments; Additional Provisions Regarding the
Separate Account
51 Cover Page; Summary of Policy Features; Life
Insurance Protection; Additional Benefits
through Riders and Options; Policy Split Option;
Surrenders; Premium; Policy Proceeds; Additional
Policy Provisions
52 Investments; Additional Provisions Regarding
the Separate Account
53 Federal Income Tax Considerations
54 Not Applicable
55 Not Applicable
</TABLE>
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SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE POLICIES
PROSPECTUS DATED , 1998
This Prospectus describes a flexible premium survivorship variable
universal life insurance policy offered by New York Life Insurance and Annuity
Corporation ("NYLIAC").
POLICY FEATURES
LIFE INSURANCE PROTECTION--This policy offers life insurance protection on two
insureds, with a life insurance benefit payable when the last surviving insured
dies while the policy is in effect.
CHOICE OF LIFE INSURANCE BENEFIT OPTIONS--You may choose either a fixed life
insurance benefit equal to the face amount of your policy or a variable life
insurance benefit equal to the sum of your policy's face amount and cash value.
If you choose a variable benefit, the life insurance benefit may increase or
decrease depending on the performance of the investment options you select. Your
policy's life insurance benefit will never be less than the face amount of your
policy. A higher life insurance benefit may apply if necessary to qualify as
life insurance under the Internal Revenue Code. The policy proceeds we pay will
be the sum of this life insurance benefit plus any rider death benefits less any
loans (including any accrued loan interest).
FLEXIBLE PREMIUM PAYMENTS--You may decide the amount of premiums to pay and when
to pay them, within limits. Although premium payments are flexible, additional
premiums may be required to keep the policy in effect. The policy may terminate
if its cash surrender value is insufficient to pay the policy's monthly charges.
The cash surrender value of your policy will fluctuate depending on the
performance of the investment options you have chosen.
LOANS, WITHDRAWALS AND SURRENDERS--You can borrow against or withdraw money from
your policy, within limits. Loans and withdrawals will reduce the policy's
proceeds and cash surrender value. You can also surrender your policy at any
time. The cash surrender value of your policy may increase or decrease depending
on the performance of the investment options you select. There is no guaranteed
cash surrender value for your policy. If you surrender your policy or take a
partial withdrawal during the first fifteen policy years or within fifteen years
after you increase the face amount, a surrender charge may apply.
FACE AMOUNT INCREASES AND DECREASES--You may increase or decrease the face
amount of your policy, within limits. We will apply a new schedule of surrender
charges to any increase in your policy's face amount. We may also deduct a
surrender charge for any reduction in the face amount.
INVESTMENT OPTIONS--Your policy allows you to choose how you want to invest your
premium payments. You have the option of allocating your premiums among eighteen
investment divisions and a fixed account. The eighteen investment divisions
available under your policy are:
<TABLE>
<S> <C>
- -- MainStay VP Capital Appreciation
- -- MainStay VP Cash Management
- -- MainStay VP Convertible
- -- MainStay VP Government
- -- MainStay VP High Yield Corporation 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 the investment divisions,
which involve varying degrees of risk.
FREE LOOK PERIOD--You may examine the policy for a limited period and cancel it
for a refund of the greater of the cash value of your policy or the total
premiums you have paid less any loans or withdrawals you have taken.
REPLACING EXISTING INSURANCE WITH THIS POLICY MAY NOT BE TO YOUR ADVANTAGE.
IMPORTANT NOTICES
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.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES, OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
SUMMARY OF POLICY FEATURES............. 4
DEFINITIONS............................ 8
GENERAL DESCRIPTION.................... 10
How the Policy is Available.......... 10
How the Policy Works................. 10
LIFE INSURANCE PROTECTION.............. 12
Your Policy Proceeds................. 12
Your Life Insurance Benefit....... 12
CASH VALUE AND CASH SURRENDER VALUE.... 16
Cash Value........................... 16
Amount in the Separate Account.... 16
Amount in the Fixed Account....... 17
Investment Return................. 17
Cash Surrender Value................. 17
LOANS.................................. 18
Your Policy as Collateral for the
Loan.............................. 18
Loan Interest........................ 18
Interest on the Cash Value Held as
Collateral........................ 18
When Loan Interest is Due............ 19
Loan Repayment....................... 19
The Effects of a Policy Loan......... 19
PARTIAL WITHDRAWALS.................... 20
Amount Available to Withdraw......... 20
Requesting a Partial Withdrawal...... 20
When is the Partial Withdrawal
Effective......................... 20
Partial Withdrawal Fees and Charges.. 20
Allocation of Partial Withdrawal and
Fee............................... 20
The Effects of a Partial
Withdrawal........................ 21
SURRENDERS............................. 21
Requesting a Surrender............... 21
When is the Surrender Effective...... 21
Surrender Charges.................... 21
Charges on Surrenders in Policy
Years 1-15...................... 21
Additional Charges on a Surrender
in the First Policy Year........ 22
Surrender Charges after Face
Amount Increases................ 22
Surrender Charges on Face Amount
Decreases....................... 22
Exceptions to Surrender Charge.... 23
ADDITIONAL BENEFITS THROUGH RIDERS AND
OPTIONS.............................. 23
How the Riders are Available......... 23
<CAPTION>
PAGE
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<S> <C>
Guaranteed Minimum Death Benefit
Rider............................. 24
GMDB Premium Test................. 24
Supplementary Term Rider............. 24
First-to-Die Monthly Deduction Waiver
Rider............................. 26
Level First-to-Die Term Rider........ 26
Living Benefits Rider................ 26
POLICY SPLIT OPTION.................... 27
About Your New Policy................ 27
PREMIUMS............................... 28
Termination.......................... 29
Late Period.......................... 30
Reinstatement Option................. 30
Maturity Date........................ 31
INVESTMENTS............................ 31
The Separate Account................. 32
Funds............................. 33
Portfolios........................ 34
Additions, Deletions or
Substitutions of Investments.... 38
Reinvestment...................... 39
The Fixed Account.................... 39
Interest Credited on Amounts in
the Fixed Account............... 39
Assets in the Fixed Account....... 39
Transfers Between Investment
Divisions and/or the Fixed
Account........................... 39
Requesting a Transfer............. 40
Dollar Cost Averaging................ 40
Automatic Asset Reallocation......... 41
Interest Sweep....................... 42
DEDUCTIONS AND CHARGES................. 42
Deductions from Premiums............. 43
Sales Expense Charge.............. 43
Premium Tax Charge................ 44
Federal Tax Charge................ 44
Deductions from Cash Value........... 44
Monthly Contract Charge........... 45
Charges for Cost of Insurance
Protection...................... 45
Charges Per $1,000 of Initial Face
Amount.......................... 46
Rider Charges..................... 46
Separate Account Charges............. 46
Mortality and Expense Risk
Charge.......................... 46
Administrative Charge............. 46
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
Fund Charges......................... 47
POLICY PROCEEDS........................ 49
Beneficiary.......................... 49
When We Pay Proceeds................. 49
Payment Options...................... 50
Payees............................... 51
ADDITIONAL POLICY PROVISIONS........... 51
Limits on Our Rights to Challenge
Your Policy....................... 51
Suicide.............................. 51
Misstatement of Age or Sex........... 52
Assignment........................... 52
FREE LOOK.............................. 52
EXCHANGE PRIVILEGE..................... 53
ADDITIONAL PROVISIONS REGARDING THE
SEPARATE ACCOUNT..................... 53
Your Voting Rights................... 53
Our Rights........................... 54
FEDERAL INCOME TAX CONSIDERATIONS...... 54
ABOUT NYLIAC........................... 61
Directors and Principal Officers of
NYLIAC............................ 62
RECORDS AND REPORTS.................... 63
SALES AND OTHER AGREEMENTS............. 63
LEGAL PROCEEDINGS...................... 63
INDEPENDENT ACCOUNTANTS................ 64
FINANCIAL STATEMENTS................... 64
APPENDIX A: Illustrations.............. A-1
APPENDIX B: Variations By
Jurisdiction......................... B-1
</TABLE>
IMPORTANT NOTICE
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN
WHICH SUCH AN OFFERING MAY NOT LAWFULLY BE MADE. WE DO NOT AUTHORIZE ANY
INFORMATION OR REPRESENTATIONS REGARDING THE OFFERING DESCRIBED IN THIS
PROSPECTUS OTHER THAN AS CONTAINED IN THIS PROSPECTUS OR ANY ATTACHED
SUPPLEMENT OR IN ANY SUPPLEMENTAL SALES MATERIAL WE AUTHORIZE.
3
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SUMMARY OF POLICY FEATURES
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE TERMS OF YOUR
POLICY AND RIDERS AND THE MORE DETAILED INFORMATION CONTAINED LATER IN THIS
PROSPECTUS, INCLUDING THE APPENDIX OF VARIATIONS BY JURISDICTION CONTAINED IN
APPENDIX B.
POLICY PROCEEDS -- When the last surviving insured dies, we will pay the
beneficiary of your Policy an amount equal to your Policy's Life Insurance
Benefit plus any rider death benefits less any outstanding loans (including
accrued loan interest).
- -- LIFE INSURANCE BENEFITS
- Option 1--a fixed benefit equal to your Policy's face amount.
- Option 2--a variable benefit that equals the sum of your Policy's face
amount and cash value.
- In some cases, a higher Life Insurance Benefit may apply if necessary to
qualify as life insurance under the Internal Revenue Code.
- Within limits, you may increase or decrease the face amount of your Policy.
The minimum face amount for your Policy is $100,000.
RIDER BENEFITS -- You may apply for the following additional rider benefits:
- -- GUARANTEED MINIMUM DEATH BENEFIT RIDER
- -- SUPPLEMENTARY TERM RIDER
- -- FIRST-TO-DIE MONTHLY DEDUCTION WAIVER RIDER
- -- LEVEL FIRST-TO-DIE TERM RIDER
- -- LIVING BENEFITS RIDER
LOANS -- You may borrow up to 90% of your Policy's cash surrender value. Any
amount that secures a loan remains part of your Policy's cash surrender value
but is transferred to the Fixed Account. Amounts securing a loan may earn a
different interest rate than other amounts in the Fixed Account. For the first
ten Policy Years, the interest rate we currently credit on the amounts set aside
to secure the loan is 1.0% lower than the rate we charge for loan interest.
Beginning in the eleventh Policy Year, the interest we currently credit on the
loaned amounts is 0.5% lower than the interest rate we charge for loan interest.
We guarantee the interest we credit on the loaned amounts will never be less
than 2.0% lower than the interest we charge for loan interest.
PARTIAL WITHDRAWALS -- You may request a partial withdrawal from your Policy's
cash surrender value at any time, within limits. When you make a partial
withdrawal, we will deduct a fee for processing the withdrawal. A surrender
charge may apply as a result of a partial withdrawal.
SURRENDERS -- You may surrender your Policy for its cash surrender value at any
time while either insured is living. If you surrender your Policy during the
first fifteen Policy Years or within fifteen years after you increase the face
amount of your Policy, a surrender charge may apply.
4
<PAGE> 10
PREMIUMS -- You may make premium payments as often as you like and for any
amount you choose, within limits. Other than the initial premium, there are no
required premium payments. However, under certain conditions, you may be
required to make additional premium payments to keep your Policy from
terminating.
DEDUCTIONS AND CHARGES --
DEDUCTIONS FROM PREMIUMS
- -- SALES EXPENSE CHARGE
- Target Premium--We assess a sales expense charge based on your Policy's
Target Premium. Your initial Target Premium is set at the time your Policy
is issued. You can find this initial Target Premium on the Policy Data Page
of your Policy. Your Target Premium may change if you change the face amount
of your Policy or make certain changes to the riders you have chosen.
- Current--During each of the first ten Policy Years, we currently deduct a
sales expense charge of 8% of any premiums paid up to the Target Premium.
Once the Target Premium for that Policy Year has been reached, we currently
deduct a sales expense charge of 4% from any additional premiums paid in
that Policy Year. During each Policy Year beginning with the eleventh Policy
Year, we currently deduct a sales expense charge of 4% of any premiums paid
up to the Target Premium, with no charge for premiums paid in excess of the
Target Premium.
- Guaranteed--During each of the first ten Policy Years, we guarantee that any
sales expense charge we deduct will never exceed 9% of any premiums paid up
to the Target Premium. Once the Target Premium for that Policy Year has been
reached, we will never deduct a sales expense charge more than 6.5% of any
additional premiums paid in that Policy Year. Beginning with the eleventh
Policy Year, we guarantee that any sales expense charge will never exceed
6.5% of any premiums paid.
- -- PREMIUM TAX CHARGE
We deduct 2% of each premium payment you make as a premium tax charge. We may
increase this charge to reflect changes in the law.
- -- FEDERAL TAX CHARGE
For Non-Qualified Policies, we deduct 1.25% of each premium payment you make
as a Federal tax charge. We may increase this charge to reflect changes in
the law.
DEDUCTIONS FROM CASH VALUE
- -- MONTHLY CONTRACT CHARGE
- Current--We currently deduct a monthly contract charge of $59 per month
during the first Policy Year and $9 per month in later Policy Years.
- Guaranteed--We guarantee that we will never deduct a monthly contract charge
that exceeds $62 per month during the first Policy Year and $12 per month in
later Policy Years.
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- -- CHARGE FOR COST OF INSURANCE PROTECTION
We deduct a charge for cost of insurance protection each month. This charge
is equal to the net amount at risk multiplied by a monthly cost of insurance
rate plus any applicable flat extra charge. The monthly cost of insurance
rate is determined based on the insureds' issue ages, sexes, and underwriting
classes and the Policy Year. The cost of insurance rates will never exceed
the guaranteed maximum cost of insurance rates for your Policy.
- -- CHARGE PER $1,000 OF THE INITIAL FACE AMOUNT
During the first three Policy Years, we will deduct $0.04 per $1,000 of your
Policy's initial face amount (not including riders). We guarantee we will
never increase this charge. This charge will always be at least $10 per month
and will never be more than $100 per month.
- -- RIDER CHARGES
Each month, we will deduct any cost of insurance charges for the optional
riders you have chosen.
SEPARATE ACCOUNT CHARGES
- -- MORTALITY AND EXPENSE RISK CHARGE
- Current--We currently deduct a daily mortality and expense risk charge that
is equivalent to an annual rate of 0.60% of the average daily net asset
value of each Investment Division.
- Guaranteed--We guarantee that the mortality and expense risk charge will
never exceed the equivalent of an annual rate of 0.90% of the average daily
net asset value of each Investment Division.
- -- ADMINISTRATIVE CHARGE
We deduct a daily administrative charge equivalent to an annual rate of 0.10%
of the average daily net asset value of each Investment Division. We
guarantee we will never increase this charge.
- -- OTHER CHARGES FOR FEDERAL INCOME TAXES
We do not currently deduct a charge for Federal income taxes from the
Investment Divisions, though we may do so in the future, to reflect changes
in the law.
FUND CHARGES-- Each Investment Division of the Separate Account purchases shares
of the corresponding Eligible Portfolio at net asset value. The net asset value
reflects the investment advisory fees and other expenses that are deducted from
the assets of the Portfolio. The advisory fees and other expenses are not fixed
or specified under the terms of the Policy, and they may vary from year to year.
These fees and expenses are described in the Funds' prospectuses. (See page 48
for a list of these charges.)
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INVESTMENTS -- The balance of your premium payment after we deduct the premium
charges is called your net premium. Your net premium is allocated between the
eighteen Investment Divisions available under the Policy and the Fixed Account,
based on your instructions. The eighteen Investment Divisions available under
your Policy are:
<TABLE>
<S> <C>
- -- MainStay VP Capital Appreciation -- MainStay VP Growth Equity
- -- MainStay VP Cash Management -- MainStay VP Indexed Equity
- -- MainStay VP Convertible -- Alger American Small Capitalization
- -- MainStay VP Government -- Calvert Socially Responsible
- -- MainStay VP High Yield Corporation Bond -- Fidelity VIP II: Contrafund
- -- MainStay VP International Equity -- Fidelity VIP: Equity-Income
- -- MainStay VP Total Return -- Janus Aspen Balanced
- -- MainStay VP Value -- Janus Aspen Worldwide Growth
- -- MainStay VP Bond -- Morgan Stanley Emerging Markets Equity
</TABLE>
You may adjust your allocation to various Investment Divisions and/or the
Fixed Account by changing your premium allocation percentages or making
transfers among these options, within limits.
ADDITIONAL INFORMATION
FREE LOOK PERIOD
- -- You have the right to examine your Policy. If you are not satisfied with it,
you may cancel it within twenty days.
- -- If you cancel the Policy, we will refund the greater of the cash value of
your Policy or the total premiums you have paid, less any loans or partial
withdrawals you have taken.
INCOME TAX EFFECT
- -- Generally, life insurance benefits are not currently subject to Federal
income tax. The earnings on the amounts you invest in the Investment
Divisions and the Fixed Account are also generally not subject to income tax
as long as they remain invested in the Policy. If you take a partial
withdrawal, surrender or terminate your Policy, or if your Policy matures,
you may incur taxable income. You may also incur taxable income if your
Policy becomes a modified endowment contract and you take a Policy loan.
IMPORTANT NOTICE
THE POLICY IS A LEGAL CONTRACT BETWEEN YOU AND NYLIAC. THE CONTRACT
CONSISTS OF THE APPLICATION FOR THE POLICY AND THE POLICY, AND ANY RIDERS AND
ENDORSEMENTS ATTACHED TO IT.
VARIATIONS
SURVIVORSHIP VARIABLE UNIVERSAL LIFE IS SUBJECT TO THE INSURANCE LAWS AND
REGULATIONS OF EACH JURISDICTION IN WHICH IT IS SOLD. AS A RESULT, CERTAIN TERMS
OF OUR SURVIVORSHIP VARIABLE UNIVERSAL LIFE POLICIES MAY VARY FROM JURISDICTION
TO JURISDICTION. APPENDIX B LISTS ALL OF THE VARIATIONS THAT APPLY TO
SURVIVORSHIP VARIABLE UNIVERSAL LIFE. PLEASE REVIEW THIS LIST TO DETERMINE
WHETHER ANY OF THESE VARIATIONS APPLY TO YOUR POLICY.
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DEFINITIONS
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 Account: 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 Account: the
Alger American Small Capitalization Portfolio. The Acacia Fund has one Portfolio
available to the Separate Account: the Calvert Responsibly Invested Balanced
Portfolio ("Calvert Socially Responsible Portfolio"). Fidelity Investments(R)
has two Portfolios available to the Separate Account: 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 Account: 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 Account: the Emerging Markets Equity Portfolio of the Morgan Stanley
Universal Funds, Inc. ("Morgan Stanley Emerging Markets Equity Portfolio").
FIXED ACCOUNT: The Fixed Account is supported by assets in the general account
of NYLIAC. The amount in the Fixed Account earns interest on a daily basis.
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 "Fidelity
Investments(R)"), the Janus Aspen Series and the Morgan Stanley Universal Funds,
Inc. ("Morgan Stanley Fund").
INVESTMENT DIVISION: A division of the Separate Account. Each Investment
Division invests exclusively in shares of a specified Eligible Portfolio.
ISSUE DATE: The date we issue the Policy as specified in the Policy Data Page.
LIFE INSURANCE BENEFIT: The benefit calculated under the Life Insurance Benefit
Option you have chosen.
MONTHLY DEDUCTION DAY: The date on which we deduct your monthly charges from
your Policy's cash value. The first Monthly Deduction Day occurs on your
Policy's Issue Date. After that, Monthly Deduction Days occur on each monthly
anniversary of the Policy Date.
NON-QUALIFIED POLICY: A Policy that is issued to persons or entities other than
employee benefit plans that qualify for special Federal income tax treatment.
POLICY: The flexible premium survivorship variable universal life insurance
Policy offered by NYLIAC that is described in this Prospectus.
POLICY DATA PAGE: Page 2 of your Policy. The Policy Data Page contains your
Policy's specifications.
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<PAGE> 14
POLICY DATE: The date used to determine when your life insurance coverage
begins. It is also the date used as the starting point for determining Policy
Years and Monthly Deduction Days (other than the first Monthly Deduction Day
which is based on your Policy's Issue Date). You can find this date on the
Policy Data Page of your Policy.
POLICY PROCEEDS: The benefit we will pay to your beneficiary when we receive
proof that the last surviving insured died. It is equal to the Life Insurance
Benefit plus any additional death benefits under any riders you have chosen
minus any outstanding loans (including any accrued loan interest).
POLICY YEAR: The twelve-month period starting on your Policy Date, and each
twelve-month period thereafter.
QUALIFIED POLICY: A Policy owned by an employee benefit plan that qualifies for
special federal income tax treatment.
SEPARATE ACCOUNT: NYLIAC Variable Universal Life Separate Account-I, a
segregated asset account established by NYLIAC to receive and invest net
premiums to be allocated to the Eligible Portfolios.
TARGET PREMIUM: A hypothetical premium shown on the Policy Data Page of your
Policy that we use to calculate the sales expense and surrender charges.
VARIABLE PRODUCT SERVICES: The place you may write to us at for Policy service.
You may write to us at Variable Product Services, Madison Square Station, P.O.
Box 922, New York, New York 10159, or Variable Product Services, 51 Madison
Avenue, Room 452, New York, New York 10010.
WE OR US: NYLIAC.
YOU: The person(s) and/or entity(ies) who owns the Policy.
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<PAGE> 15
GENERAL DESCRIPTION
This Prospectus describes a flexible premium survivorship variable
universal life insurance policy offered by New York Life Insurance and Annuity
Corporation ("NYLIAC"). The Policy provides life insurance protection on two
lives (the insureds), and pays Policy Proceeds when the last surviving insured
dies while the Policy is in effect. The Policy offers:
-- flexible premium payments, where you select the timing and amount of the
premium;
-- a choice of two Life Insurance Benefit Options;
-- loan and partial withdrawal privileges;
-- the ability to increase or decrease the Policy's face amount of
insurance;
-- additional benefits through the use of optional riders; and
-- a selection of premium and expense allocation alternatives, including
eighteen variable Investment Divisions and a Fixed Account with a
guaranteed interest rate.
HOW THE POLICY IS AVAILABLE
Survivorship Variable Universal Life is available to our policyowners as
either a Non-Qualified or Qualified Policy. A Policy may also be purchased in
connection with a Severance Trust Executive Program ("STEP"), a non-qualified
employee benefit plan. We issue Qualified Policies and STEP Policies on a unisex
basis. Any reference in this Prospectus which makes a distinction based on the
sex of the insureds shall be disregarded as it relates to such Policies.
HOW THE POLICY WORKS
We will pay your beneficiary the Life Insurance Benefit plus any additional
rider death benefit (less any loans including any accrued loan interest) if your
Policy is still in effect when the last surviving insured dies. Your Policy will
stay in effect so long as the cash surrender value of your Policy is sufficient
to pay your Policy's monthly charges. The following example demonstrates how we
determine the cash surrender value of your Policy.
10
<PAGE> 16
EXAMPLE
This example is based on the illustration shown in Appendix A. It assumes
current charges and a 6% hypothetical gross annual investment return, which
results in a % net annual investment return. It also assumes the Policy is in
its first Policy Year.
<TABLE>
<S> <C> <C>
PREMIUM(1) $15,000.00 You choose the amount of premium you
Less sales expense charge(2) 1,105.40 intend to pay and the frequency with
Less premium tax charge (2%) 300.00 which you intend to make these payments.
Less Federal tax charge (1.25%) 187.50 We call this your planned premium. Any
(if applicable) additional premium payments you make are
called unplanned premiums.
- ------------------------------------
NET PREMIUM $13,407.10 Net Premium is allocated to the
Plus net investment performance [ ] Investment Divisions and/or the Fixed
(earned from the Investment Account based on your instructions.
Divisions and/or the Fixed
Account) (varies monthly)
Less total annual monthly contract 708.00
charge(3)
Less total annual monthly cost of [ ]
insurance charge (varies
monthly)
Less total annual charge per 480.00
$1,000 of the initial face
amount of your Policy
(not including riders)
Less total annual monthly cost of 0.00
riders(4)
- ------------------------------------
CASH VALUE [ ] Cash Value is used to determine the
Less surrender charge(5) $ 2,527.00 amount of your Life Insurance Benefit as
(if applicable) well as the cash surrender value of your
Policy.
We may assess a surrender charge when
you make a partial withdrawal or full
surrender in the first fifteen Policy
Years or within fifteen years after you
increase the face amount.
- ------------------------------------
CASH SURRENDER VALUE [ ] The amount of loans, withdrawals and
surrenders you can make is based on your
Policy's cash surrender value. Your
Policy will terminate if your cash
surrender value is insufficient to pay
your Policy's monthly charges.
</TABLE>
- ------------
(1) This example assumes you pay an annual planned premium of $15,000 at the
beginning of the Policy Year and that you do not make any unplanned premium
payments.
(2) For details about how we calculate the sales expense charge for your Policy,
please refer to page 43. This example assumes the charges we are currently
deducting.
(3) We currently deduct a monthly contract charge of $59 per month from Policies
in their first Policy Year. For Policies in later Policy Years, we currently
deduct a monthly contract charge of $9 per month.
(4) This example assumes you have not chosen any riders.
(5) If you surrender your Policy in the first Policy Year, we will include an
additional contract charge in the surrender charge we deduct from your
Policy. For details, please refer to page 22.
11
<PAGE> 17
LIFE INSURANCE PROTECTION
YOUR POLICY PROCEEDS:
We will pay proceeds to your beneficiary when we receive satisfactory proof
that the last surviving insured died. These proceeds will equal:
<TABLE>
<S> <C> <C>
1) the Life Insurance Benefit calculated under the Life Insurance
Benefit Option you have chosen;
plus 2) any additional death benefits under the riders you have chosen;
less 3) any outstanding loans, (including any accrued loan interest) on the
Policy.
</TABLE>
We will pay interest on these proceeds from the date the last surviving
insured died until the date we pay the proceeds or the date when the payment
option you have chosen becomes effective.
YOUR LIFE INSURANCE BENEFIT
Under your Policy, the Life Insurance Benefit depends on the Life Insurance
Benefit Option you choose. Your Policy offers two options:
OPTION 1-- The Life Insurance Benefit under this option is equal to the
Policy's face amount. Except as described below, your Life
Insurance Benefit under this option will be a fixed amount.
OPTION 2-- The Life Insurance Benefit under this option is equal to the
Policy's face amount plus the Policy's cash value. The Life
Insurance Benefit under this option is variable and will
fluctuate with the Policy's cash value. Your Life Insurance
Benefit will never be less than your Policy's face amount.
Under both options, your Life Insurance Benefit may be greater if the
minimum percentage of the Policy's cash value necessary for the Policy to
qualify as life insurance under Section 7702 of the Internal Revenue Code is
greater than the amount calculated under the option you have chosen. This higher
Life Insurance Benefit will be the cash value of your Policy multiplied by the
minimum percentage required by Section 7702 of the Internal Revenue Code. (You
can find this percentage on the Policy Data Page of your Policy).
Assuming your Life Insurance Benefit does not increase as described in the
above paragraph, and assuming the same face amount and premium payments under
both options:
- If you choose Option 1, your Life Insurance Benefit will not vary in
amount and you will generally have lower total Policy cost of
insurance charges and lower Policy Proceeds.
- If you choose Option 2, your Life Insurance Benefit will vary with
your Policy's cash value and you will generally have higher total
Policy cost of insurance charges and higher Policy Proceeds.
12
<PAGE> 18
EXAMPLES
(Effect of IRC Section 7702 on Life Insurance Benefit)
LIFE INSURANCE BENEFIT OPTION 1
<TABLE>
<S> <C>
EXAMPLE 1:
Life Insurance Benefit = Face Amount
Face Amount: $100,000
Cash Value: $ 25,000
IRC Section 7702 Percentage 379%
Greater of:
Face Amount: $100,000
% of Cash Value:
($25,000 X 379%) $ 94,750
----------------------- ----------
Life Insurance Benefit: $100,000
EXAMPLE 2:
Life Insurance Benefit = % of Cash Value
Face Amount: $100,000
Cash Value: $ 50,000
IRC Section 7702 Percentage 379%
Greater of:
Face Amount: $100,000
% of Cash Value:
($50,000 X 379%) $189,500
----------------------- ----------
Life Insurance Benefit: $189,500
LIFE INSURANCE BENEFIT OPTION 2
<CAPTION>
<S> <C>
EXAMPLE 1:
Life Insurance Benefit = Face Amount +
Cash Value
Face Amount: $100,000
Cash Value: $ 20,000
IRC Section 7702 Percentage 379%
Greater of:
Face Amount + Cash Value: $120,000
% of Cash Value:
($20,000 X 379%) $ 75,800
----------------------- ----------
Life Insurance Benefit: $120,000
EXAMPLE 2:
Life Insurance Benefit = % of Cash Value
Face Amount: $100,000
Cash Value: $ 40,000
IRC Section 7702 Percentage 379%
Greater of:
Face Amount + Cash Value: $140,000
% of Cash Value:
($40,000 X 379%) $151,600
----------------------- ----------
Life Insurance Benefit: $151,600
</TABLE>
CHANGING YOUR LIFE INSURANCE BENEFIT OPTION
You can change the Life Insurance Benefit Option for your Policy at any
time while both insureds are still living. However, we may prohibit you from
changing the Life Insurance Benefit Option if the change would cause the face
amount of the Policy to be less than $100,000, would cause the Policy to fail to
qualify as life insurance under Section 7702 of the Internal Revenue Code, or
would cause the Policy's face amount to exceed our retention limits.
Additionally, if you elect to have the Supplementary Term Rider
13
<PAGE> 19
included in your Policy, you must Select Option 1 and you can never change your
Life Insurance Benefit Option to Option 2, even if the Supplementary Term Rider
ends.
CHANGES FROM OPTION 1 TO OPTION 2
If you change from Option 1 to Option 2, we will decrease the face amount
of your Policy by the amount of the cash value, so that your Life Insurance
Benefit immediately before and after the change remains the same. If a
surrender charge is applicable to face amount decreases at the time you change
your Life Insurance Benefit Option, we will assess a surrender charge on the
amount of the face amount decrease.
CHANGES FROM OPTION 2 TO OPTION 1
If you change from Option 2 to Option 1, we will increase the face amount
of your Policy by the amount of the cash value, so that your Life Insurance
Benefit immediately before and after the change remains the same. We will
continue to apply the existing surrender charge schedule to your Policy, but
we will not apply a new surrender charge schedule to the increased face amount
resulting from the change in this option.
In order to change your Life Insurance Benefit Option, you must submit a
signed request to Variable Product Services (or any other address we indicate to
you in writing). We will change your Life Insurance Benefit Option on the
Monthly Deduction Day on or after the date we receive your written request.
EXAMPLE
<TABLE>
<CAPTION>
CHANGE FROM OPTION 1 TO OPTION 2
<S> <C>
Cash Value $ 200,000
Face Amount
before option change $1,000,000
Face Amount
after option change $ 800,000
($1,000,000 - $200,000)
Life Insurance Benefit
immediately before and
after Option change $1,000,000
<CAPTION>
CHANGE FROM OPTION 2 TO OPTION 1
<S> <C>
Cash Value $ 150,000
Face Amount
before option change $1,000,000
Face Amount
after option change $1,150,000
($1,000,000 + $200,000)
Life Insurance Benefit
immediately before and
after option change $1,150,000
</TABLE>
14
<PAGE> 20
CHANGING THE FACE AMOUNT OF YOUR POLICY
The face amount of your Policy affects the amount of the Life Insurance
Benefit of your Policy.
INCREASING YOUR POLICY'S FACE AMOUNT
You may request an increase in the face amount of your Policy if all of
the following conditions are met:
-- both insureds are still living;
-- the older insured is age 90 or younger;
-- the increase you are requesting is $5,000 or more;
-- the requested increase will not cause the Policy's face amount to
exceed our maximum retention limit; and
-- you submit a written application signed by each insured along with
satisfactory evidence of insurability.
We may limit any increase in the face amount of your Policy.
If we approve your request for a face amount increase, your Policy's face
amount will be increased on the Monthly Deduction Day on or after the day we
approve the increase.
An increase in the face amount of your Policy may have the following
consequences which you should consider:
-- additional cost of insurance charges;
-- a new fifteen year surrender charge period applicable only to the
amount of the increase;
-- a new suicide and contestability period applicable only to the amount
of the increase; and
-- a change in the life insurance percentage applied to the entire Policy
under Section 7702 of the Internal Revenue Code.
DECREASING YOUR POLICY'S FACE AMOUNT
You may request a decrease in the face amount of your Policy if both of
the following conditions are met:
-- either insured is still living; and
-- the decrease you are requesting will not reduce the Policy's face
amount below $100,000.
We may limit any decrease in the face amount of your Policy.
If we approve your request for a face amount decrease, your Policy's face
amount will be decreased on the Monthly Deduction Day on or after the day we
receive your written request for a decrease.
A decrease in the face amount of your Policy may have the following
consequences which you should consider:
-- lower total Policy cost of insurance charges;
-- a surrender charge may apply to the amount of the decreased face
amount based on a last increased, first canceled basis; and
-- possible adverse tax consequences.
15
<PAGE> 21
CASH VALUE AND CASH SURRENDER VALUE
CASH VALUE
The cash value of your Policy is the sum of the amounts in the Investment
Divisions in the Separate Account and in the Fixed Account (net of fees and
charges). These amounts are allocated based on the instructions you have given
us. A number of factors affect your Policy's cash value including but not
limited to:
-- the amount and frequency of the premiums you pay;
-- the investment experience of the Investment Divisions you choose;
-- the interest earned on the amount in the Fixed Account; and
-- the amount of any partial withdrawals you make (including any charges
you incur as a result of the withdrawal).
The cash value is not necessarily the amount you receive when you surrender
your Policy. See CASH SURRENDER VALUE on page 17 and SURRENDERS on page 21 for
details about surrendering your Policy.
AMOUNT IN THE SEPARATE ACCOUNT--Amounts allocated to an Investment Division
are used to purchase accumulation units of an Investment Division. Accumulation
units are redeemed from an Investment Division when amounts are withdrawn,
transferred or deducted for charges or loan interest. The number of accumulation
units purchased or redeemed in an Investment Division is calculated by dividing
the dollar amount of the transaction by the Investment Division's accumulation
unit value. On any given day, the amount you have in the Separate Account is the
value of the accumulation units you have in all of the Investment Divisions of
the Separate Account. The value of the accumulation units you have in a given
Investment Division equals the current accumulation unit value for the
Investment Division multiplied by the number of accumulation units held in that
Investment Division.
We determine accumulation unit values for the Investment Divisions as of
the end of each valuation day. A valuation day is any day on which the New York
Stock Exchange is open for trading.
The value of an accumulation unit on any valuation day equals the
accumulation unit on the preceding valuation day multiplied by the net
investment factor for the period from the time the New York Stock Exchange
closed on the immediately preceding valuation day to the time it closed on the
current valuation day.
The net investment factor for an Investment Division for this period equals
(a) divided by (b) less (c) [i.e., (a / b) - c]where:
(a) is the sum of:
(1) the net asset value of the Fund share held in the Separate
Account for that Investment Division determined at the end of
the 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 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 previous valuation day,
16
<PAGE> 22
(c) is a factor representing the mortality and expense risk charge and
administrative charges. This factor accrues daily and is currently
equal, on an annual basis, to .70% (the sum of .60% and .10%) of
the daily average net asset value of the Investment Division.
The net investment factor may be greater or less than one; therefore, the
value of an accumulation unit may increase or decrease.
AMOUNT IN THE FIXED ACCOUNT--The amount you have in the Fixed Account
equals:
1) the sum of the net premiums you have allocated to the Fixed
Account;
plus 2) any transfers you have made from the Separate Account to the
Fixed Account;
plus 3) any interest credited to the Fixed Account;
less 4) any amounts you have withdrawn from the Fixed Account;
less 5) any charges we have deducted from the Fixed Account;
less 6) any transfers you have made from the Fixed Account to the
Separate Account.
INVESTMENT RETURN
The investment return of your Policy is based on the amount you have in
each Investment Division of the Separate Account, the amount you have in the
Fixed Account, the investment experience of each Investment Division as measured
by its actual net rate of return, and the interest rate we credit on the amount
you have in the Fixed Account.
The investment experience of an Investment Division of the Separate Account
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 valuation day, which is when the net
asset value of the underlying Fund is determined. The actual net rate of return
for an Investment Division measures the investment experience from the end of
one valuation day to the end of the next valuation day.
CASH SURRENDER VALUE
The cash surrender value of your Policy is the amount we will pay you if
you surrender your Policy. The cash surrender value of your Policy is equal to
the cash value of the Policy less any surrender charges, any additional contract
charge, and any outstanding Policy loans (including any accrued loan interest).
Since the cash value of the Policy fluctuates with the performance of the
Investment Divisions and the interest earned by the Fixed Account, and because a
surrender charge may apply, the cash surrender value may be more or less than
the total premium payments you have made.
Cash surrender value is significant for two reasons:
-- Loans and Partial Withdrawals--You can take loans and partial
withdrawals from your Policy based on the amount of the Policy's
cash surrender value.
17
<PAGE> 23
-- Premium Flexibility--Although premium payments are flexible,
additional premium payments may be required so that the cash
surrender value of your Policy is sufficient to pay the charges
needed to keep your Policy in effect.
LOANS
You can borrow up to 90% of your Policy's cash surrender value. Your Policy
will be used as collateral to secure this loan. Any amount that secures a loan
remains part of your Policy's cash surrender value but is transferred to the
Fixed Account. We credit any amount that secures a loan (the loaned amount) with
an interest rate that we expect to be different from the interest rate we credit
on any unloaned amount.
YOUR POLICY AS COLLATERAL FOR THE LOAN
When you request a loan, we will transfer funds from the Separate Account
to the Fixed Account so that the cash value of the amount in the Fixed Account
(less any outstanding loans, including any accrued loan interest) is at least
108% of the requested loan. We will transfer these funds from the Investment
Divisions of the Separate Account in proportion to the amounts you have in each
Investment Division. While any Policy loan is outstanding, we will not allow you
to make any partial withdrawals or transfer any funds from the Fixed Account if
the partial withdrawal or transfer would cause the cash value of the Fixed
Account to fall below 108% of all outstanding loans. Additionally, if the
monthly deductions from cash value will cause the cash value of the Fixed
Account to fall below 108% of all outstanding Policy loans, we may take these
deductions from the Investment Divisions of the Separate Account in proportion
to the amounts you have in each Investment Division.
LOAN INTEREST
We currently charge an effective annual loan interest rate of 8%, which is
payable in arrears. We may set a lower rate. If we set a lower rate, we will
determine this lower rate at least once every twelve months, but not more
frequently than once every three months. If we lower this rate, we may increase
it again in the future by no more than 1% per calendar year, within certain
limits.
INTEREST ON THE CASH VALUE HELD AS COLLATERAL
When you take a loan from your Policy, the amount we hold in the Fixed
Account to secure the loan earns interest at a different rate than the rate we
charge you for loan interest. The rate we credit on loaned amounts will never be
less than 2.0% less than the rate we charge for Policy loans. We guarantee that
the interest we credit on loaned amounts will always be at least 4.0%. For the
first ten Policy Years, the rate we currently credit on loaned amounts is 1.0%
less than the rate we charge for loan interest. Beginning in the eleventh Policy
Year, the rate we currently credit on loaned amounts is 0.5% less than the rate
we charge for loan interest.
18
<PAGE> 24
WHEN LOAN INTEREST IS DUE
The interest we charge on a loan accrues daily and is payable on the
earliest of the following dates:
-- the Policy anniversary;
-- the date of a loan increase or loan repayment;
-- the date the Policy is surrendered;
-- the date the Policy lapses; or
-- the date on which the last surviving insured dies.
Any loan interest due on a Policy anniversary which is not paid will be
charged against the Policy as an additional loan.
LOAN REPAYMENT
You may repay all or part of a Policy loan at any time while your Policy is
in effect. We will allocate your loan repayments to the Investment Divisions
and/or Fixed Account according to your most recent instructions on how to
allocate your premium payments. If you would like your loan repayment allocated
differently, you must indicate this in writing at the time of the repayment. Any
payment we receive from you while you have a loan outstanding will be considered
a premium payment unless you tell us in writing that it is a loan repayment.
If the amount of any unpaid loans (including any accrued loan interest) is
greater than the cash surrender value of your Policy, we will mail a notice to
you at your last known address. We will also send a copy of the notice to the
last known assignee, if any, on our records. If you do not pay the necessary
amount within 31 days after the day we mail you this notice, your Policy will
terminate.
THE EFFECTS OF A POLICY LOAN
As long as there is an outstanding loan, the amount held as collateral
remains in the Fixed Account which does not share in the Separate Account's
investment performance. As you repay your loan, the amount held as collateral
will be reduced. You may then choose whether to invest the amounts no longer
required for collateral in the Investment Divisions and/or to leave them
invested in the Fixed Account. If your Policy is a modified endowment contract,
a loan may result in taxable income to you. See FEDERAL INCOME TAX
CONSIDERATIONS on page 54 for more information.
A loan will affect the cash surrender value of your Policy, and its Policy
Proceeds. If you surrender your Policy, if your Policy terminates, or if a Life
Insurance Benefit becomes payable under the Policy, and there are any
outstanding loans at that time, we will deduct the amount of any outstanding
loans (including any accrued loan interest) from the cash surrender value of
your Policy or from the Policy Proceeds we pay.
19
<PAGE> 25
PARTIAL WITHDRAWALS
You may request a partial withdrawal from your Policy's cash surrender
value if the following conditions are met:
-- at least one insured is living;
-- the partial withdrawal being requested is at least $500; and
-- the partial withdrawal will not cause the Policy to fail to qualify as
life insurance under Section 7702 of the Internal Revenue Code.
AMOUNT AVAILABLE TO WITHDRAW
You may withdraw an amount up to the cash surrender value of your Policy as
of the close of the New York Stock Exchange on the day after we receive your
written request. If you request a partial withdrawal that would reduce the face
amount of your Policy (not including riders) below $100,000, we may require you
to surrender your Policy.
REQUESTING A PARTIAL WITHDRAWAL
You may request a partial withdrawal from your Policy by sending a written
request to Variable Product Services.
WHEN IS THE PARTIAL WITHDRAWAL EFFECTIVE
Unless you choose a later effective date, your requested partial withdrawal
will be effective on the date we receive your written request. However, if the
day we receive your request is not a day on which the New York Stock Exchange is
open or if your request is received after the close of the New York Stock
Exchange, then the requested partial withdrawal will be effective on the next
day on which the New York Stock Exchange is open.
PARTIAL WITHDRAWAL FEE AND SURRENDER CHARGE
When you make a partial withdrawal, we will deduct a fee for processing the
partial withdrawal. This fee will not exceed the lesser of $25 or 2% of the
amount withdrawn. Additionally, a partial withdrawal may result in a decrease in
your Policy's face amount which may cause a surrender charge to apply as
described in SURRENDER CHARGES on page 21.
ALLOCATION OF PARTIAL WITHDRAWAL AND FEE
You may specify how much of the partial withdrawal you want taken from the
amount you have in each of the Investment Divisions and in the Fixed Account. If
you do not specify how you would like your partial withdrawal allocated, we will
deduct the partial withdrawal and any withdrawal fee from the Investment
Divisions and/or the Fixed Account in proportion to the amounts you have in each
of these investment options. If you request a partial withdrawal that is greater
than the amount in the Investment Divisions and/or in the Fixed Account you have
chosen, we will reduce the amount of the partial withdrawal to the amount
available in those Investment Divisions and/or in the Fixed Account and pay you
that amount less any applicable withdrawal fee and surrender charge.
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<PAGE> 26
THE EFFECTS OF A PARTIAL WITHDRAWAL
When you make a partial withdrawal, your Policy Proceeds, cash value and
cash surrender value will be reduced by the amount of the partial withdrawal,
including any applicable withdrawal fee and surrender charge. Additionally, if
you have elected Life Insurance Benefit Option 1, the partial withdrawal will
reduce your Policy's face amount. A partial withdrawal may result in taxable
income to you. See FEDERAL INCOME TAX CONSIDERATIONS on page 54 for more
information.
We may restrict the amount and frequency of partial withdrawals, within
certain limits.
SURRENDERS
You may surrender your Policy for its cash surrender value at any time
while either insured is living.
REQUESTING A SURRENDER
You may surrender the Policy by sending a written request and the Policy to
Variable Product Services.
WHEN IS THE SURRENDER EFFECTIVE
Unless you choose a later effective date, your surrender will be effective
on the date we receive your written request and the Policy. However, if the day
we receive your request is not a day on which the New York Stock Exchange is
open or if your request is received after the close of the New York Stock
Exchange, then the requested surrender will be effective on the next day on
which the New York Stock Exchange is open.
SURRENDER CHARGES
We will deduct any applicable surrender charge from the amounts you have in
the Investment Divisions and the Fixed Account in proportion to these amounts.
CHARGES IN POLICY YEARS 1-15
During the first fifteen Policy Years, we will deduct a surrender charge
from the cash value of your Policy if you:
- surrender your Policy;
- decrease the face amount of your Policy (including a decrease in the
face amount that results from changing the Life Insurance Benefit
Option or from a partial withdrawal);
- terminate a First-to-Die Monthly Deduction Waiver Rider; or
- decrease or terminate a Level First-to-Die Term Rider.
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<PAGE> 27
This surrender charge is in addition to the sales expense charge. The
surrender charge we will deduct is equal to the percentage shown in the table
below multiplied by 20% of the Target Premium. See page 44 for an explanation of
Target Premium.
<TABLE>
<CAPTION>
YOUNGER INSURED LESS YOUNGER INSURED GREATER THAN OR
THAN ISSUE AGE 85 EQUAL TO ISSUE AGE 85
- --------------------------------- ---------------------------------
POLICY YEAR SURRENDER CHARGE POLICY YEAR SURRENDER CHARGE
- ----------- ---------------- ----------- ----------------
<S> <C> <C> <C>
1-6 100% 1-4 100%
7 90% 5 80%
8 80% 6 60%
9 70% 7 40%
10 60% 8 20%
11 50% 9+ 0%
12 40%
13 30%
14 20%
15 10%
16+ 0%
</TABLE>
ADDITIONAL CHARGE ON A SURRENDER IN THE FIRST POLICY YEAR
If you surrender your Policy during the first Policy Year, we will deduct
an additional contract charge when you surrender your Policy. This additional
charge equals the difference between a and b multiplied by c [i.e.,
(a - b) X c], where:
a = the monthly contract charge for the first Policy Year;
b = the monthly contract charge for subsequent Policy Years; and
c = the number of Monthly Deduction Days between the day you surrender your
Policy and the first anniversary of your Policy Date.
SURRENDER CHARGES AFTER FACE AMOUNT INCREASES
If you increase your Policy's face amount (including an increase in the
face amount that results from changing the Life Insurance Benefit Option), we
will apply a new surrender charge schedule to the amount of the increase in the
face amount. This schedule will start on the day we process your request. The
original surrender charge schedule will continue to apply to the original face
amount of your Policy.
If you have made multiple increases to the face amount of your Policy, and
later decide to decrease the face amount of your Policy or surrender it, we will
calculate the surrender charge in the following order:
1) based on the surrender charge associated with the last increase in face
amount;
2) based on each prior increase, in the reverse order in which the
increases occurred; and
3) based on the initial face amount.
SURRENDER CHARGES ON FACE AMOUNT DECREASES
If you decrease the face amount of your Policy or if you decrease or
terminate the Level First-to-Die Term Rider, we will deduct a surrender charge,
if applicable. This charge will equal the difference between the surrender
charge that we would have charged if you
22
<PAGE> 28
had surrendered your entire Policy before the decrease and the surrender charge
that we would charge if you surrendered your entire Policy after the decrease.
<TABLE>
<CAPTION>
EXAMPLE:
----------------------------------------------------------------------
<S> <C> <C>
Face Amount prior to Decrease: $ 500,000
Amount of Decrease: $ 100,000
------------------------ ----------
Face Amount after Decrease: $ 400,000
Surrender Charge on Face Amount
prior to Decrease ($500,000) $ 1,280
Less Surrender Charge on Face
Amount after Decrease ($400,000) $ 1,030
---------------------------------- ----------
Surrender Charge on Decrease $ 250
</TABLE>
We will not impose a surrender charge on a decrease or termination of the
Supplementary Term Rider.
EXCEPTIONS TO SURRENDER CHARGE
We will not deduct a surrender charge for a surrender or a partial
withdrawal that results from:
-- our canceling the Policy;
-- payment of proceeds upon the death of the last surviving insured;
-- a required Internal Revenue Service minimum distribution; or
-- your exercise of the Policy Split Option.
ADDITIONAL BENEFITS THROUGH RIDERS AND OPTIONS
You may apply for additional benefits by selecting any of the following
optional riders:
-- Guaranteed Minimum Death Benefit Rider
-- Supplementary Term Rider
-- First-to-Die Monthly Deduction Waiver Rider
-- Level First-to-Die Term Rider
-- Living Benefits Rider (also known as Accelerated Benefits Rider)
HOW THE RIDERS ARE AVAILABLE
Generally, you must select your riders when you apply for your Policy.
However, you may only elect the Living Benefits Rider after the death of the
first insured.
The Living Benefits Rider is only available on Non-Qualified Policies.
Generally, all other riders are available on both Non-Qualified and Qualified
Policies. However, the only rider available under the Severence Trust Executive
Program is the Guaranteed Minimum Death Benefit Rider.
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<PAGE> 29
GUARANTEED MINIMUM DEATH BENEFIT RIDER
As long as this rider is in effect and the benefit period has not expired,
this rider, guarantees that your Policy will never end due to its cash surrender
value being insufficient to cover the current monthly deduction charges. Under
this rider, if the amount of your monthly deduction charges is greater than the
cash value of your Policy, we will deduct as much of the monthly deduction
charges from your cash value as possible. We will then waive any excess amount
of these charges including the charge for this and any other rider. Generally,
this rider is available with a benefit period up to the younger insured's age 80
or 100. You may choose either expiry date as long as the benefit period is at
least ten years.
In exchange for the guarantee provided by this rider, you must pay certain
premiums into your Policy. The premium you must pay under this rider is called
the "monthly Guaranteed Minimum Death Benefit (GMDB) premium." You can find it
on the Policy Data Page of your Policy. The monthly GMDB premium may change if
you make certain changes to your Policy or to any of the riders attached to your
Policy. Although this premium is expressed as a monthly premium, you do not need
to pay it on a monthly basis. Rather, we will perform a GMDB premium test each
month to determine if you have paid enough total premiums to keep the rider in
effect.
GMDB PREMIUM TEST (PERFORMED ON EACH MONTHLY DEDUCTION DAY)
<TABLE>
<S> <C> <C> <C> <C>
Total premiums less Any partial must be at least The cumulative sum of all monthly
paid to date withdrawals equal to GMDB premiums to date
</TABLE>
If your Policy does not satisfy the GMDB premium test and your Policy fails
the test by an amount that is more than one monthly GMDB premium, we will notify
you that your Policy has failed this test. The rider will terminate unless you
pay us the amount necessary to pass the GMDB premium test before the next
Monthly Deduction Day. If the rider terminates, we will reinstate it if we
receive the required payment before the Monthly Deduction Day which follows the
date the rider terminated. If the rider terminates while the rider benefit is in
effect, your Policy will enter the late period and will lapse unless the
required payment is made.
Having this rider affects your ability to take Policy loans in the
following way:
(a) If you take a loan during the first two Policy Years, this rider will
end.
(b) After the first two Policy Years, you may take loans within certain
limits. On the day you take the loan (or when any unpaid loan interest
is charged as an additional loan), the cash surrender value of your
Policy less the amount of any additional loan must be greater than the
total of the monthly GMDB premiums, accumulated at an annual effective
interest rate of 6.0%, as of that date.
This rider is not available on a Policy with a Supplementary Term Rider.
SUPPLEMENTARY TERM RIDER
This rider provides a term insurance death benefit that is payable when the
last surviving insured dies. It insures the same individuals covered by your
base Policy. At the
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<PAGE> 30
time you apply for this rider, you select a target face amount for your Policy.
The initial term insurance death benefit under this rider equals the target face
amount less the initial face amount of your base Policy (not including riders).
We recalculate the term insurance death benefit on each Monthly Deduction Day,
so that the amount of the term insurance death benefit equals the target face
amount less the current Life Insurance Benefit at that time.
Because the Life Insurance Benefit of your base Policy (not including
riders) may increase or decrease depending on investment performance, the
rider's term insurance death benefit will do the reverse in order to maintain a
level target face amount. For example, if your Life Insurance Benefit increases,
the rider's term insurance death benefit will decrease by the same amount. If
the base Policy's Life Insurance Benefit changes for any reason other than
because of the requirements of Section 7702 of the Internal Revenue Code, we
will make a corresponding adjustment to the target face amount.
<TABLE>
<S> <C> <C> <C> <C>
Target Base Policy's Supplementary
Face less Life Insurance equals Term Rider
Amount Benefit Death Benefit
</TABLE>
If you compare a Policy with this rider to a Policy that initially provides
the same Policy Proceeds but does not have this rider, the Policy with this
rider will have lower surrender charges and a lower Target Premium.
We will only allow you to elect this rider if:
-- the initial target face amount is at least $1,000,000;
-- the base Policy Life Insurance Benefit is at least $200,000;
-- the initial term insurance death benefit is no greater than four times
the Policy's Life Insurance Benefit; and
-- you have chosen Life Insurance Benefit Option 1.
Within certain limits, you may:
-- increase or decrease this rider's term insurance death benefit or target
face amount; and/or
-- convert this rider to increase the face amount of your base Policy.
(Note: The target face amount of your Policy after this conversion will
be the same as the target face amount of your Policy including riders
before the conversion.)
You may request changes to your Policy under this rider if:
(a) you do not decrease the target face amount below $1,000,000, unless the
decrease is due to a partial withdrawal;
(b) you do not decrease the base Policy's Life Insurance Benefit below
$200,000, unless the decrease is due to a partial withdrawal; and
(c) you do not make a change that causes the term insurance death benefit
to be greater than four times the Policy's Life Insurance Benefit. This
requirement
25
<PAGE> 31
prohibits you from increasing the term insurance death benefit or decreasing the
base Policy face amount to an amount that would violate this maximum ratio.
Once you choose this rider, you may not change your Life Insurance Benefit
Option, even after this rider ends or is terminated.
This rider is not available on a Policy with a Guaranteed Minimum Death
Benefit Rider.
FIRST-TO-DIE MONTHLY DEDUCTION WAIVER RIDER
If either insured dies while this rider is in effect, we will waive your
Policy's monthly deductions from cash value for the remainder of the Policy. The
charges we will waive under this rider are:
(a) the monthly contract charge;
(b) the monthly cost of insurance charge for the base Policy (not including
riders);
(c) the charge per $1,000 of the initial face amount (not including
riders), which only applies during the first three Policy Years;
(d) any monthly rider charges.
These deductions are described in more detail under DEDUCTIONS FROM CASH
VALUE on page 44 and on the Policy Data Page of your Policy. If you choose this
rider, it will increase the Target Premium for your Policy, which will increase
the sales expense and surrender charges we deduct from your Policy. If you
terminate this rider, the Target Premium for your Policy will decrease, which
will decrease the future sales expense and surrender charges we deduct from your
Policy. We may deduct a surrender charge if you terminate this rider during the
surrender charge period.
LEVEL FIRST-TO-DIE TERM RIDER
This rider provides a level term insurance death benefit which we will pay
when the first insured dies while this rider is in effect. We will only pay the
benefit under this rider once, even if both insureds die at the same time.
You may decrease the face amount of this rider as long as you do not
decrease it below the minimum amount we require to issue the rider. You may not
increase the face amount of this rider. If you choose this rider, it will
increase the Target Premium for your Policy, which will increase the sales
expense and surrender charges we deduct from your Policy. If you terminate this
rider or decrease the rider death benefit, the Target Premium for your Policy
will decrease, which will decrease the future sales expense and surrender
charges we deduct from your Policy. We may deduct a surrender charge if you
terminate this rider or decrease the rider death benefit during the surrender
charge period.
LIVING BENEFITS RIDER (ALSO KNOWN AS ACCELERATED BENEFITS RIDER)
Under this rider, after the first insured dies, if the last surviving
insured has a life expectancy of twelve months or less, you may request a
portion or all of the Policy Proceeds as an accelerated death benefit.
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<PAGE> 32
You may elect to receive an accelerated death benefit of 25%, 50%, 75%, or
100% of certain eligible proceeds from your Policy Proceeds. We will pay you an
amount equal to:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Elected X Eligible X Interest - Administrative fee - Elected percentage of an
percentage proceeds factor (up to $150) unpaid Policy loan
</TABLE>
Minimum accelerated benefit amount: $25,000.
Maximum accelerated benefit amount: $250,000 (total for all of your NYLIAC
policies).
If you accelerate less than 100% of the eligible proceeds, the remaining
face amount of your Policy after we pay this benefit must be at least $100,000.
When we make a payment under this rider, we will reduce your Policy's face
amount, rider death benefits, premium, monthly cost of insurance, cash value,
and any unpaid Policy loan based on the percentage you elected.
POLICY SPLIT OPTION
You may split your Policy into two single adjustable life insurance
policies that each insure the life of one of the insureds under certain
circumstances. You are allowed to make this split within six months after either
of the following two dates:
(1) the date a final divorce decree which terminates the marriage of the
insureds has been in effect for six months; or
(2) the effective date of a change in the Federal tax law which results in
(a) a reduction in the unlimited Federal Estate Tax marital deduction
provision (Section 2056 of the Internal Revenue Code), or
(b) a reduction of at least 50% in the level of estate tax rate from
the 1986 Tax Act payable on death.
You must request a Policy split in writing. At the time of the split:
-- both insureds must be living;
-- we will not ask for evidence of insurability;
-- each new Policy will be an adjustable life insurance Policy which we
offer for the purpose of this option and which was available on the
Policy Date of your original Policy; and
-- an insurable interest must exist between the owner of each new policy
and the insured of that new policy under all applicable laws.
ABOUT YOUR NEW POLICY
-- The Policy Date and Issue Date of each new policy will be the date when
you split the Policy.
-- The policyowner and beneficiary of each new policy will be the same as
under the original Policy, unless otherwise stated.
-- We will not assess a fee or surrender charge on a Policy that is
terminating as a result of a Policy split. However, all fees and charges
that generally apply to the type of policy you are splitting your Policy
into, including a new surrender charge schedule, will apply to each of
the new policies that result from the Policy split.
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<PAGE> 33
-- The cost of insurance rates for each new policy will be based on the
insured's age and sex on the date of the split and original underwriting
class.
-- The initial premium for each new policy will be one half of the cash
value of the original Policy less any unpaid loan (including any accrued
loan interest).
-- The face amount of each new policy will equal one half of the original
base Policy face amount, plus one half of the face amount of any riders
on the original Policy. The benefits from any Level First-to-Die Term
Rider in effect will be excluded from this calculation.
-- If the original Policy has been assigned, each new policy will have the
same assignment.
Splitting your Policy may have certain adverse tax consequences. Please
read the FEDERAL INCOME TAX CONSIDERATIONS on page 54 for more details.
PREMIUMS
Although premium payments are flexible, additional premium payments may be
required so that the cash surrender value of your Policy is sufficient to pay
the charges needed to keep your Policy effective.
Premiums are the total dollar amount you pay into your Policy. When we
receive a premium payment, we deduct the sales expense, premium tax, and Federal
tax charges that apply. The balance of the premium is called the net premium. We
apply your net premium to the Investment Divisions and/or the Fixed Account,
according to your instructions. For more details on when and how your premiums
are applied, see INVESTMENTS on page 31.
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<PAGE> 34
For purposes of determining whether we require additional underwriting when
accepting a premium payment, we divide your premium payments into planned and
unplanned premiums.
PLANNED PREMIUM
When you apply for your Policy, you select a premium payment schedule,
which indicates the amount and frequency of premium payments you intend to make.
The premium amount you select for this schedule is called your "planned
premium." It is shown on the Policy Data Page of your Policy.
- -- You may increase or decrease the amount of your planned premium and change
the frequency of your payments, within limits.
- -- Planned premium payments end on the Policy anniversary on which the younger
insured is, or would have been, age 100.
- -- Your Policy will not automatically terminate if you are unable to pay the
planned premium. However, payment of your planned premium does not guarantee
your Policy will remain in effect. Your Policy will terminate if the cash
surrender value is insufficient to pay the monthly deduction charges or if
you have an excess Policy loan, and you reach the end of the late period and
you have not made the necessary payment. See LATE PERIOD on page 30 and
TERMINATION below for more details.
- -- Special provisions apply to how long your Policy will stay in effect if you
have a Guaranteed Minimum Death Benefit Rider. See GUARANTEED MINIMUM DEATH
BENEFIT RIDER on page 24 for more details.
UNPLANNED PREMIUM
An unplanned premium is a payment you make that is not part of the premium
payment schedule you choose.
- -- While at least one insured is living, you may make unplanned premium payments
at any time before the Policy anniversary on which the younger insured is, or
would have been, age 100. However, if payment of an unplanned premium will
cause the Life Insurance Benefit of your Policy to increase more than the
cash value will increase, both insureds must be living, and we will require
proof of insurability before accepting that payment and applying it to your
Policy.
- -- If you exchange another life insurance policy to acquire this Policy under
Section 1035 of the Internal Revenue Code, we will treat the proceeds of that
exchange as an unplanned premium.
- -- The minimum unplanned premium amount we allow is $50.
- -- We may limit the number and amount of any unplanned premium payments.
TERMINATION
If your Policy's cash surrender value on any Monthly Deduction Day is less
than the monthly deductions from cash value for the next Policy month, your
Policy will continue in the late period for 62 days after that date. If the late
period expires without sufficient payment, then your Policy will end without any
benefits. See LATE PERIOD on page 30 for more details.
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<PAGE> 35
LATE PERIOD
The late period is the 62 days following the Monthly Deduction Day on which
the cash surrender value of your Policy is insufficient to pay for monthly
deductions from cash value for the next Policy month. During this period, you
have the opportunity to pay any premium needed to cover any overdue charges. We
will mail a notice to your last known address stating this amount. We will also
send a copy to the last known assignee, if any, on our records. We will mail
these notices at least 31 days before the end of the late period. Your Policy
remains in effect during the late period. However, if we do not receive the
required payment before the end of the late period, your Policy will end without
any benefits.
During the late period, we will pay you any benefits you are entitled to as
follows:
-- If the last surviving insured dies during the late period, we will pay
the death benefit, which we will reduce by the amount of any unpaid loan
(including any accrued loan interest), and by the monthly deductions
from cash value for the full Policy months from the beginning of the
late period through the Policy month in which the last surviving insured
dies.
-- If the Policy has a First-to-Die Monthly Deduction Waiver Rider and the
first insured dies while the Policy is in the late period, we will
approve the waiver claim when you pay all overdue monthly deductions
from cash value.
-- If the Policy has a Level First-to-Die Term rider and the first insured
dies while the Policy is in the late period, we will pay the proceeds
due under this rider less any overdue charges for this rider.
REINSTATEMENT OPTION
You can request that we reinstate your Policy if all of these conditions
are met:
-- your request is made within five years after your Policy terminated;
-- both insureds are living (However, we will accept your reinstatement
request when only one insured is living, if the other insured died
before your Policy terminated); and
-- you have not surrendered your Policy.
It is important to realize that a termination or reinstatement may cause
your Policy to become a modified endowment contract. Modified endowment
contracts are subject to less favorable tax treatment. For more information
about modified endowment contracts, please see page 57.
Before we will reinstate your Policy, we must receive the following:
(1) a payment equal to the sum of (a), (b) and (c), where:
(a) is an amount which is sufficient to keep the Policy in effect for at
least three months;
(b) is 150% of any additional contract charge for a Policy that ended
during the first Policy Year and is later reinstated. (This
additional contract charge is equal to the difference between the
monthly contract charge for the first Policy Year and the monthly
contract charge for subsequent Policy Years multiplied by the number
of Monthly Deduction Days missed during the first Policy Year
because the Policy was not in effect); and
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<PAGE> 36
(c) any unpaid loan (including any loan interest accrued at the lesser
of 6% or the Policy's loan interest rate at the time of
reinstatement, compounded once each year from the end of the late
period to the date of the reinstatement).
(2) satisfactory evidence of insurability, if your reinstatement request is
more than 31 days after termination.
The effective date of reinstatement will be the Monthly Deduction Day on or
following the date we approve your request. If your Policy is reinstated, the
face amount for the reinstated Policy will be the same as it would have been if
the Policy had not terminated.
MATURITY DATE
Your Policy matures on the Policy anniversary on which the younger insured
is, or would have been, age 100. Beginning on this maturity date, the face
amount of your Policy, as shown on the Policy Data Page, will no longer apply.
Instead, your Life Insurance Benefit will equal the cash surrender value of your
Policy.
One year before your Policy's maturity date, we will notify you that you
may elect either:
(1) to receive the cash surrender value of your Policy when it matures; or
(2) to continue the Policy, without having to pay any more cost of
insurance charges.
If you choose to surrender your Policy, you must submit a signed request to
Variable Product Services (or any other address we indicate to you in writing).
Please consult your tax advisor regarding the tax implications of these
options.
If your Policy is still in effect when the last surviving insured dies, we
will pay the Policy Proceeds to the beneficiary.
INVESTMENTS
Your Policy offers a choice of investment options in which you can invest
your net premium. You may allocate your net premium (1) to any of the Investment
Divisions of the Separate Account, and/or (2) to the Fixed Account. We refer to
the Investment Divisions and the Fixed Account as your investment options.
Your net premium, which equals the balance of any planned or unplanned
premium payment after we deduct sales expense, premium tax, and any Federal tax
charges that apply, is applied to the Investment Divisions of the Separate
Account and/or to the Fixed Account according to the most recent premium
allocation election you have given to us. The only exception to this allocation
of your premium is for any premium payments you make during the free look
period. The net premiums from any payments made during this period are initially
allocated to the Mainstay VP Cash Management Investment Division. They remain
there until the end of the free look period. For more details, see FREE LOOK on
page 52. When the free look period is over, we will allocate your net premiums
according to your instructions. You can change your premium allocation any time
you make a premium payment by submitting a revised premium allocation form. The
allocation percentages must be in whole numbers.
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<PAGE> 37
THE SEPARATE ACCOUNT
NYLIAC Variable Universal Life Separate Account-I, referred to by us as the
Separate Account, is a segregated asset account established by NYLIAC to receive
and invest your net premiums.
The Separate Account was established on June 4, 1993 under the laws of
Delaware, in accordance with the resolutions set forth by the NYLIAC Board of
Directors. The Separate Account is registered as a unit investment trust with
the Securities and Exchange Commission (SEC) under the Investment Company Act of
1940. This registration does not mean that the SEC supervises the management, or
the investment practices or policies, of the Separate Account.
Although the assets of the Separate Account belong to NYLIAC, these assets
are held separately from the other assets of NYLIAC, and under applicable
insurance law, cannot be charged for liabilities incurred in any other business
operations of NYLIAC (except to the extent that assets in the Separate Account
exceed the reserves and other liabilities of the Separate Account). These assets
are not subject to the claims of our general creditors. The income, capital
gains and capital losses incurred on the assets of the Separate Account are
credited to or are charged against the assets of the Separate Account, 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 Account is entirely independent of both the investment performance of
NYLIAC's Fixed Account and the performance of any other separate account.
The Separate Account currently consists of twenty-two Investment Divisions,
eighteen of which are available under your Policy. The Investment Divisions
invest exclusively in the corresponding Eligible Portfolios of the Funds. The
income, capital gains, and capital losses incurred on the assets of an
Investment Division are credited to or are charged against the assets of the
Investment Division, without regard to the income, capital gains or capital
losses of any other Investment Division. The Investment Divisions of the
Separate Account are designed to provide money to pay benefits under your
Policy, but they do not guarantee a minimum rate of return or protect against
asset depreciation. They will
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<PAGE> 38
fluctuate up and down depending on market conditions. The Eligible Portfolios of
the relevant Funds, along with their portfolio managers, are listed in the
following table:
<TABLE>
<CAPTION>
FUND PORTFOLIO MANAGERS ELIGIBLE PORTFOLIOS
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
MainStay VP Series Fund, Inc. MacKay-Shields Financial MainStay VP Capital Appreciation;
Corporation 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 Series Fund, Inc. Monitor Capital Advisors, Inc. MainStay VP Indexed Equity
- -----------------------------------------------------------------------------------------------------
MainStay VP Series Fund, Inc. New York Life Insurance MainStay VP Bond;
Company MainStay VP Growth Equity
- -----------------------------------------------------------------------------------------------------
The Alger American Fund Fred Alger Management, Inc. Alger American Small
Capitalization
- -----------------------------------------------------------------------------------------------------
Acacia Capital Corporation Calvert Asset Management Calvert Socially Responsible
Company
- -----------------------------------------------------------------------------------------------------
Fidelity Variable Insurance Fidelity Management and Fidelity VIP II: Contrafund
Products Fund II Research Company
- -----------------------------------------------------------------------------------------------------
Fidelity Variable Insurance Fidelity Management and Fidelity VIP: Equity-Income
Products Fund Research Company
- -----------------------------------------------------------------------------------------------------
Janus Aspen Series Janus Capital Corporation Janus Aspen Balanced;
Janus Aspen Worldwide Growth
- -----------------------------------------------------------------------------------------------------
Morgan Stanley Universal Morgan Stanley Asset Morgan Stanley Emerging Markets
Funds, Inc. Management Inc. Equity
</TABLE>
FUNDS
Mainstay VP Series Fund, Inc.--The Separate Account currently invests in
eleven Eligible Portfolios of the MainStay VP Series Fund, a diversified
open-end management investment company. MacKay-Shields, Monitor and New York
Life are required to 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. See the Prospectus for the MainStay
VP Series Fund which is attached to this Prospectus.
The Alger American Fund--The Separate Account currently invests 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 Account. Fred Alger Management, Inc. is required to provide
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. See the Prospectus for The
Alger American Fund which is attached to this Prospectus.
Acacia Capital Corporation--The Separate Account currently invests 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
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<PAGE> 39
investment by the Separate Account. Calvert Asset Management Company, Inc.
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. 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 Account currently invests 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 Fidelity Investments for investment by the Separate Account.
Fidelity Management and Research Company 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 Trustees of Fidelity Investments. See the Prospectus for the Fidelity
Investments which is attached to this Prospectus.
Janus Aspen Series--The Separate Account currently invests 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 Account. Janus Capital Corporation
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. See
the Prospectus for the Janus Aspen Series which is attached to this Prospectus.
Morgan Stanley Universal Funds, Inc.--The Separate Account currently
invests in the Morgan Stanley Emerging Markets Equity Portfolio of the Morgan
Stanley Fund. Currently, the Morgan Stanley Emerging Markets Equity Portfolio is
the only Eligible Portfolio available through the Morgan Stanley Fund for
investment by the Separate Account. Morgan Stanley Asset Management Inc.
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. See the
Prospectus for the Morgan Stanley Fund which is attached to this Prospectus.
PORTFOLIOS
The Eligible Portfolios, which are offered by the Funds mentioned in the
previous section, are the mutual fund portfolios which you may invest in through
the Investment Divisions of the Separate Account. The assets of each Eligible
Portfolio are separate from the others and each 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 following describes the investment characteristics of each of the eighteen
Portfolios in greater detail:
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 compa-
34
<PAGE> 40
nies 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 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
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<PAGE> 41
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.
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
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<PAGE> 42
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 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.
You can find additional information concerning the investment objectives
and policies of the Eligible Portfolios and the investment advisory services and
charges and expenses in the current prospectus for the relevant Funds. These
prospectuses are attached at the end of this Prospectus. It is important to read
the Funds' prospectuses carefully before you make any decision about your
allocation of premiums to an Investment Division.
The Funds' shares may also be available to certain separate accounts we use
to fund our variable annuity policies. This is called "mixed funding." Shares of
The Alger American
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Fund, the Acacia Fund, Fidelity Investments(R), the Janus Aspen Series and the
Morgan Stanley Fund may also be available to separate accounts of insurance
companies that are not affiliated with NYLIAC and, in certain instances, to
qualified plans. This is called "shared funding." Although we do not anticipate
that any difficulties will result from mixed and shared funding, it is possible
that differences in tax treatment and other considerations may cause the
interests of owners of various contracts participating in the Funds to 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.
We render certain services to owners of the Policies in connection with
investment of premiums and commitment of cash values to the Investment
Divisions, which, in turn, invest in the Eligible Portfolios. These services
include, among others, providing information about the Eligible Portfolios. We
receive a service fee from the investment advisers or other service providers of
some of the Funds in return for providing services of this type. Currently, we
receive service fees at annual rates ranging from % to % of the
aggregate net asset value of the shares of the Eligible Portfolios held by the
Investment Divisions.
ADDITIONS, DELETIONS OR SUBSTITUTIONS OF INVESTMENTS
We may add, delete or substitute the Eligible Portfolio shares held by any
Investment Division, within certain limits. We may eliminate the shares of any
of the Eligible Portfolios and substitute shares of another portfolio of a Fund,
or of another registered open-end management investment company or other
investment vehicles, if the shares of the Eligible Portfolios are no longer
available for investment or, if we decide that investment in an Eligible
Portfolio is inappropriate given the purposes of the Separate Account. We will
not substitute shares attributable to your interest in an Investment Division
until you have been notified of the change, as required by the Investment
Company Act of 1940.
The Separate Account may purchase other securities for other series or
classes of policies, or may convert between series or classes of policies based
on your request.
In the future, we may establish additional investment divisions for the
Separate Account. Each additional investment division will purchase shares in a
new portfolio of a Fund or in another mutual fund. We may establish new
investment divisions and/or eliminate one or more Investment Divisions when
marketing, tax, investment or other conditions make it appropriate. We may
decide whether or not the new investment divisions will be made available to
existing policyowners.
If we make a substitution or change to the Investment Divisions, we may
change your Policy to reflect such substitution or change. If we decide it is in
the best interests of our policyholders who have voting rights under the
Policies, the Separate Account may be (1) operated as management companies under
the Investment Company Act of 1940 or managed under the direction of a
committee, (2) deregistered under such Act in the event such registration is no
longer required, or (3) combined with one or more other separate accounts.
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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 date they are paid.
THE FIXED ACCOUNT
You may choose to allocate all or part of your net premiums to the Fixed
Account.
INTEREST CREDITED ON AMOUNTS IN THE FIXED ACCOUNT
We will credit any amounts in the Fixed Account with an interest rate that
we determine. We can change this rate periodically. We will set this rate in
advance and any new rate we set will become effective on or after the next day.
We will credit the entire amount in the Fixed Account with interest at this new
interest rate. We may credit different interest rates to loaned and unloaned
amounts in the Fixed Account. We guarantee that the interest rate that we credit
on amounts in the Fixed Account will never be less than an effective annual rate
of 4%.
ASSETS IN THE FIXED ACCOUNT
The Fixed Account is supported by the assets in our general account, which
includes all of our assets except those assets specifically allocated to
separate accounts. These assets are subject to the claims of our general
creditors. We may invest the assets of the Fixed Account however we choose,
within limits. Your 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. Therefore, the Fixed Account
and any interests earned in the Fixed Account are generally not subject to these
statutes. 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, however, be subject to certain applicable provisions of the Federal
securities laws relating to the accuracy and completeness of statements made in
prospectuses.
TRANSFERS BETWEEN INVESTMENT DIVISIONS AND/OR THE FIXED ACCOUNT
You may transfer all or part of the cash value of your Policy (1) from the
Fixed Account to the Investment Divisions of the Separate Account, (2) from the
Investment Divisions of the Separate Account to the Fixed Account, or (3)
between the Investment Divisions in the Separate Account.
You may request a transfer, under the following conditions:
-- Maximum Transfer--There is no limit on the amount you may transfer from
one Investment Division to another Investment Division or to the Fixed
Account. The maximum amount you may transfer from the Fixed Account to
the Investment Divisions during any Policy Year is 10% of the amount in
the Fixed Account at the beginning of the Policy Year.
-- Minimum Transfer--The minimum amount that you may transfer from the
Investment Divisions or the Fixed Account is the lesser of (i) $500 or
(ii) the total amount in the Investment Divisions or the Fixed Account.
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-- Minimum Remaining Value--If a transfer will cause the amount you have in
the Investment Divisions or the Fixed Account to be less than $500, we
will transfer the entire amount in the Investment Divisions and/or the
Fixed Account you have chosen.
-- Number of Transfers--You may make an unlimited number of transfers from
the Investment Divisions of the Separate Account to the Fixed Account
within the first two Policy Years. We may limit this type of transfer
after the first two Policy Years. You may make an unlimited number of
transfers between Investment Divisions each Policy Year. You may make an
unlimited number of transfers from the Fixed Account to the Investment
Divisions each Policy Year.
-- Transfer Charge--We may impose a charge up to $30 per transfer for each
transfer after the first twelve in any Policy Year. We will not count
any transfer made in connection with the Dollar Cost Averaging,
Automatic Asset Reallocation and Interest Sweep Options as a transfer
toward the twelve transfer limit.
REQUESTING A TRANSFER:
You can request a transfer in two ways:
-- submit your request in writing on a form we approve to Variable Product
Services; or
-- telephone a service representative at 800-598-2019 on business days
between the hours of 8:00 a.m. and 4:00 p.m. (Eastern Time).
We will use reasonable procedures to make sure that the instructions we
receive through the telephone are genuine. Before a service representative
accepts any request, he or she will ask the caller for the caller's social
security number and address. We will also record all calls. We are not
responsible for any loss, cost or expense for any actions we take based on
telephone instructions we believe are genuine.
DOLLAR COST AVERAGING
Dollar Cost Averaging is a systematic method of investing which allows you
to purchase shares of the Investment Divisions at regular intervals in fixed
dollar amounts so that the cost of your shares is averaged over time and over
various market cycles. 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 given
Investment Division on each transfer, more units are purchased in an Investment
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 growth or protect against a loss in declining
markets.
If you decide to use the Dollar Cost Averaging feature, we will ask you to
specify:
-- the dollar amount you want to have transferred (minimum transfer: $100);
-- the Investment Division you want to transfer money from;
-- the Investment Divisions and/or Fixed Account you want to transfer money
to;
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-- the date on which you want the transfers to be made, within limits; and
-- how often you would like the transfers made, either monthly, quarterly,
semi-annually or annually.
You are not allowed to make Dollar Cost Averaging transfers from the Fixed
Account, but you can make Dollar Cost Averaging transfers into the Fixed
Account.
We will make all Dollar Cost Averaging transfers on the date you specify,
or on the next business day. You may specify any day of the month with the
exception of the 29th, 30th or 31st of a month. We will not process a Dollar
Cost Averaging transfer, unless we have received a written request at Variable
Product Services. We must receive this request at least one week before the date
Dollar Cost Averaging transfers are scheduled to begin.
The minimum cash value required to elect this option is $5,000. We will
automatically suspend this feature if the cash value is less than $4,500 on a
transfer date. Once the cash value equals or exceeds this amount, the Dollar
Cost Averaging transfers will automatically resume as scheduled.
You may cancel the Dollar Cost Averaging option at any time by written
request. You may not elect Dollar Cost Averaging if you have chosen Automatic
Asset Reallocation. However, you have the option of alternating between these
two Policy features.
AUTOMATIC ASSET REALLOCATION
If you choose the Automatic Asset Reallocation feature, we will
automatically reallocate your assets among the Investment Divisions in order to
maintain a pre-determined percentage invested in the Investment Division(s) you
have selected. For example, you could specify that 50% of the amount you have in
the Separate Account be allocated to a particular Investment Division and the
other 50% be allocated to another Investment Division. Over time, the variations
in each of these Investment Division's investment results would cause this
balance to shift. If you elect the Automatic Asset Reallocation feature, we will
automatically reallocate the amounts you have in the Separate Account among the
various Investment Divisions so that they are invested in the percentages you
specify.
You may choose to schedule the reallocations quarterly, semi-annually or
annually. You may not choose to have your investments reallocated on a monthly
basis. The minimum amount you must have in the Separate Account in order to
elect this option is $5,000. We will automatically suspend this feature if the
cash value is less than $4,500 on a reallocation date. Once the cash value
equals or exceeds this amount, Automatic Asset Reallocation will automatically
resume as scheduled. There is no minimum amount which you must allocate among
the Investment Divisions under this feature.
You may cancel the Automatic Asset Reallocation feature at any time by
written request. You may not elect Automatic Asset Reallocation if you have
chosen Dollar Cost Averaging. However, you have the option of alternating
between these two Policy features.
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INTEREST SWEEP
You may instruct us to periodically transfer the interest earned in the
Fixed Account into the Investment Division(s) you specify. This automatic
process is called Interest Sweep. If You choose the Interest Sweep feature, we
will ask you to specify:
-- the date you want this feature to start;
-- the percentages you want to be transferred to each Investment Division;
and
-- how often you want us to make these transfers monthly, quarterly,
semi-annually or annually.
We will begin to make Interest Sweep transfers if the amount in the Fixed
Account is at least $5,000. You may specify any date that you want us to make
these automatic transfers, with the exception of the 29th, 30th or 31st of a
month.
You may not choose the Interest Sweep feature if you have instructed us to
allocate any part of your Policy expenses to the Fixed Account. If you want to
elect the Interest Sweep feature and you want to allocate your expenses, you
must allocate your expenses to the MainStay VP Cash Management Investment
Division.
You may request Interest Sweep in addition to either the Dollar Cost
Averaging or Automatic Asset Reallocation features. If an Interest Sweep
transfer is scheduled for the same day as a Dollar Cost Averaging or Automatic
Asset Reallocation transfer, we will process the Interest Sweep transfer first.
If an Interest Sweep transfer would cause more than 10% of the amount you
have in the Fixed Account at the beginning of the Policy Year to be transferred
from the Fixed Account, we will not process the transfer and we will suspend the
Interest Sweep feature. If the amount you have in the Fixed Account is less than
$4,500, we will automatically suspend this feature. Once the amount you have in
the Fixed Account equals or exceeds this amount, the Interest Sweep feature will
automatically resume as scheduled. You may cancel the Interest Sweep feature at
any time by written request.
DEDUCTIONS AND CHARGES
We assess certain charges and deductions from your Policy as compensation
for providing the Life Insurance Benefit under your Policy, for providing the
benefits under any riders, for administering the Policy, for assuming certain
risks and for incurring certain expenses in issuing the Policy. Four types of
charges are deducted from your Policy:
-- deductions from premiums,
-- deductions from cash value,
-- Separate Account charges, and
-- Fund charges.
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Additionally, surrender charges may be assessed under certain
circumstances. Surrender charges are explained on page 21. All other charges are
described below.
SUMMARY OF DEDUCTIONS AND CHARGES
<TABLE>
<CAPTION>
CURRENT GUARANTEED
------------------------ --------------------------
<S> <C> <C>
DEDUCTIONS FROM PREMIUMS
Sales Expense Charge
Policy Years 1-10 8% up to Target Premium 9% up to Target Premium
4% over Target Premium 6.5% over Target Premium
Policy Years 11+ 4% up to Target Premium 6.5% of all premiums
0% over Target Premium
Premium Tax Charge 2% may vary
Federal Tax Charge
Non-Qualified Policies 1.25% may vary
Qualified Policies N/A N/A
DEDUCTIONS FROM CASH VALUE
Monthly Contract Charge
Policy Year 1 $59 per month $62 per month
Policy Year 2+ $ 9 per month $12 per month
Charges for Cost of Insurance based on current rates based on guaranteed rates
Charge per $1,000 Initial Face Amount
Policy Years 1-3 $0.04/$1,000 per month $0.04/$1,000 per month
(min $10; max $100) (min $10; max $100)
Policy Years 4+ $0 $0
Rider Charges vary vary
SEPARATE ACCOUNT CHARGES
Mortality and Expense Risk Charge .60%* .90%*
Administrative Charge .10%* .10%*
FUND CHARGES
(see chart on page ) vary vary
</TABLE>
* equivalent to an annual rate of .
DEDUCTIONS FROM PREMIUMS
When we receive a premium payment from you, whether planned or unplanned,
we will deduct a sales expense charge and a premium tax charge. If your Policy
is a Non-Qualified Policy we will also deduct a Federal tax charge.
SALES EXPENSE CHARGE
We deduct a sales expense charge from each premium you pay to partially
cover our expenses for selling the Policy to you. The amount of the sales
expense charge in a Policy Year is not necessarily related to our actual
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, the charge for cost of insurance protection or the
charge per $1,000 of initial face amount. The sales expense charge we deduct is
a
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<PAGE> 49
percentage of the premium you pay. This percentage varies depending on whether
the total premium you have paid in any given Policy Year is above or below the
Target Premium for your Policy.
TARGET PREMIUM
When your Policy is issued, we determine the initial Target Premium for
your Policy. You can find this initial Target Premium on the Policy Data Page of
your Policy. If you choose to have a First-to-Die Monthly Deduction Waiver Rider
and/or Level First-to-Die Term Rider included in your Policy, we will increase
your Target Premium. If you terminate or decrease either of these riders, we
will reduce your Target Premium. Also, if you increase or decrease the face
amount of your Policy, we will make a corresponding increase or decrease to your
Target Premium.
CURRENT SALES EXPENSE CHARGE
During each of the first ten Policy Years, we currently deduct a sales
expense charge of 8% of any premiums paid up to the Target Premium. Once the
Target Premium for that Policy Year has been reached, we currently deduct a
sales expense charge of 4% from any additional premiums paid in that Policy
Year. Beginning in the eleventh Policy Year, we currently deduct a sales expense
charge of 4% of any premiums paid up to the Target Premium for a given Policy
Year, with no charge for any premiums paid in excess of the Target Premium.
GUARANTEED SALES EXPENSE CHARGE
We may change the sales expense charge at anytime. During each of the first
ten Policy Years, we guarantee that any sales expense charge we deduct will
never exceed 9% of any premiums paid up to the Target Premium. Once the Target
Premium for that Policy Year has been reached, we will never deduct a sales
expense charge of more than 6.5% of any additional premiums paid in that Policy
Year. Beginning in the eleventh Policy Year, we guarantee that any sales expense
charge will never exceed 6.5% of any premiums paid.
PREMIUM TAX CHARGE
Some jurisdictions impose a tax on the premiums insurance companies receive
from their policyholders. We deduct 2% of each premium payment you make to cover
these premium taxes. We may increase the amount we deduct as a premium tax
charge to reflect changes in the law. Our right to increase this charge is
limited in some jurisdictions by law.
FEDERAL TAX CHARGE
The Federal government imposes limitations on our ability to deduct certain
expenses associated with Non-Qualified Policies. For Non-Qualified Policies, we
deduct 1.25% of each premium payment you make to cover the Federal tax that
results. We do not deduct this charge from Qualified Policies. We may increase
the amount we deduct as a Federal tax charge to reflect changes in the law.
DEDUCTIONS FROM CASH VALUE
Each month, we will deduct a monthly contract charge, a cost of insurance
charge, and a rider charge for the cost of any additional riders. During the
first three Policy Years, we
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<PAGE> 50
will also deduct a charge per $1,000 of the initial face amount of your Policy
(not including riders).
We will deduct these charges from the cash value of your Policy on the
Monthly Deduction Day. The first Monthly Deduction Day is the Issue Date of your
Policy. Subsequent Monthly Deduction Days occur on each monthly anniversary of
your Policy Date. If the Issue Date and the Policy Date of your Policy are
different, the charges we deduct on the first Monthly Deduction Day will include
the monthly charges we would have deducted on each Monthly Deduction Day from
the Policy Date to the Issue Date if we had issued the Policy on the Policy
Date.
You may instruct us on how to deduct these cash value charges from the
MainStay VP Cash Management Investment Division and/or the Fixed Account. If you
do not provide us with any instructions on how you would like your expenses
allocated, or if the values in the MainStay VP Cash Management Investment
Division and/or the Fixed Account you have chosen are insufficient to pay these
charges, we will deduct these charges from the amount in the Investment
Divisions and/or the amount not held as collateral for a loan in the Fixed
Account in proportion to these amounts.
MONTHLY CONTRACT CHARGE
On each Monthly Deduction Day, we will deduct a monthly contract charge to
cover our costs for providing certain administrative services including premium
collection, record keeping, processing claims and communicating to our
policyowners.
CURRENT MONTHLY CONTRACT CHARGE
Currently, we deduct a monthly contract charge of $59 per month from
Policies in their first Policy Year and $9 per month from Policies in later
Policy Years.
GUARANTEED MONTHLY CONTRACT CHARGE
While we may change the monthly contract charge we deduct from your Policy
at any time, we guarantee that we will never charge you a monthly contract
charge that is more than $62 per month during the first Policy Year and $12 per
month in later Policy Years.
CHARGE FOR COST OF INSURANCE PROTECTION
On each Monthly Deduction Day, we will deduct a charge for cost of
insurance protection from the cash value of your Policy. This charge covers the
cost of providing Life Insurance Benefits to you.
The cost of insurance charge is calculated by multiplying the net amount at
risk on the Monthly Deduction Day by the monthly cost of insurance rate which
applies to the insureds at that time and then adding any applicable flat extra
charge. The net amount at risk is based on the difference between the current
Life Insurance Benefit of your Policy and the Policy's cash value.
Your cost of insurance charge will vary from month to month depending upon
changes in the net amount at risk.
The monthly cost of insurance rate we apply to your Policy will be based on
our current monthly cost of insurance rates. We may change these rates from time
to time. However,
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<PAGE> 51
the current rates will never be more than the guaranteed maximum rates shown on
the Policy Data Page of your Policy. The guaranteed rates are based on the
Commissioner's 1980 Standard Ordinary Mortality Tables if the insureds are a
standard underwriting class. The guaranteed rates for Policies that insure
insureds in substandard underwriting classes are based on different scales. The
current monthly cost of insurance rates are based on such factors as the sexes,
underwriting classes and issue ages of both insureds and the Policy Year.
CHARGE PER $1,000 OF INITIAL FACE AMOUNT
During the first three Policy Years, on each Monthly Deduction Day we will
deduct a charge of $0.04 per $1,000 of your Policy's initial face amount (not
including riders) from your Policy's cash value. However, this charge will
always be at least $10 per month and will never be more than $100 per month.
RIDER CHARGES
On each Monthly Deduction Day, we will deduct charges for any optional
rider benefits you have chosen from the cash value of your Policy.
SEPARATE ACCOUNT CHARGES
In addition to the deductions from premiums and the deductions from cash
value, we will also deduct certain charges from the Separate Account's
Investment Divisions. These deductions are made on a daily basis.
MORTALITY AND EXPENSE RISK CHARGE
We deduct a mortality and expense risk charge daily from each Investment
Division to cover our mortality and expense risk. We assume a mortality risk
that the group of lives we have insured under our Policies will not live as long
as we expected. In addition, we assume an expense risk that the cost of issuing
and administering the policies we have sold will be greater than we estimated.
We may use any profit derived from this charge for any lawful purpose, including
any distribution expenses not covered by the sales expense charge.
CURRENT MORTALITY AND EXPENSE RISK CHARGE
We currently deduct a daily mortality and expense risk charge that is
equivalent to an annual rate of .60% of the average daily net asset value of the
Separate Account.
GUARANTEED MORTALITY AND EXPENSE RISK CHARGE
While we may change the mortality and expense risk charge we deduct, we
guarantee that this charge will never be more than an annual rate of .90% of the
average daily net asset value of each Investment Division.
ADMINISTRATIVE CHARGE
We deduct an administrative charge daily from each Investment Division to
cover the cost of providing administrative Policy services. We deduct a daily
administrative charge equivalent to an annual rate of .10% of the average daily
net asset value of the Separate Account to cover these costs. This charge is
designed not to produce a profit and is guaranteed not to increase.
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<PAGE> 52
OTHER CHARGES FOR FEDERAL INCOME TAXES
We do not currently deduct any charges from the Investment Divisions for
Federal income taxes attributable to them. We may choose to deduct such a charge
in the future in order to provide for any future income tax liability of the
Investment Divisions.
FUND CHARGES
Each Investment Division of the Separate Account purchases shares of the
corresponding Portfolio at net asset value. The net asset value reflects the
investment advisory fees and other expenses that are deducted from the assets of
the Portfolio. The advisory fees and other expenses are not fixed or specified
under the terms of the Policy, and they may vary from year to year. These fees
and expenses are described in the Funds' Prospectuses. The following chart
reflects 1997 fees and charges:
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<PAGE> 53
<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>
FUND ANNUAL EXPENSES AFTER REIMBURSEMENT
(as a % of average net assets)
Advisory Fees............................ % % % % % %
Administration Fees...................... % % % % % %
Other Expenses........................... % % %(a) % %(a) %(a)
Total Fund Annual Expenses............... % % %(a) % %(a) %(a)
<CAPTION>
MAINSTAY VP
TOTAL MAINSTAY VP MAINSTAY VP
RETURN VALUE BOND
----------- ----------- --------------
<S> <C> <C> <C>
FUND ANNUAL EXPENSES AFTER REIMBURSEMENT
(as a % of average net assets)
Advisory Fees............................ % % %
Administration Fees...................... % % %
Other Expenses........................... % %(a) %
Total Fund Annual Expenses............... % %(a) %
</TABLE>
<TABLE>
<CAPTION>
MAINSTAY
MAINSTAY VP 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>
FUND ANNUAL EXPENSES AFTER
REIMBURSEMENT
(as a % of average account value)
Advisory Fees............................ % % % %(b) % %
Administration Fees...................... % % -- -- -- --
Other Expenses........................... % % % %(b) % %
Total Fund Annual Expenses............... % % % %(b) %(c) %(c)
<CAPTION>
JANUS ASPEN MORGAN STANLEY
JANUS ASPEN WORLDWIDE EMERGING
BALANCED GROWTH MARKETS EQUITY
----------- ----------- --------------
<S> <C> <C> <C>
FUND ANNUAL EXPENSES AFTER
REIMBURSEMENT
(as a % of average account value)
Advisory Fees............................ % % %
Administration Fees...................... -- -- %
Other Expenses........................... % % %
Total Fund Annual Expenses............... %(d) %(d) %(e)
</TABLE>
- ------------
(a) An expense reimbursement agreement which limited "Other Expenses" to 0.17%
annually was in effect until December 31, 1997. "Other Expenses" and "Total
Fund Annual Expenses" have been restated to reflect values as if this
limitation were not in effect during 1997.
(b) 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 %.
(c) 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 % for the Fidelity VIP II: Contrafund Portfolio
and % for the Fidelity VIP: Equity-Income Portfolio.
(d) 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, 1997 would have
been % and %, respectively, for the Janus Aspen Balanced Portfolio
and % and %, respectively, for the Janus Aspen Worldwide Growth
Portfolio.
(e) 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 % and %, respectively.
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<PAGE> 54
POLICY PROCEEDS
BENEFICIARY
The beneficiary is the person(s) or entity(ies) you have specified on our
records to receive insurance proceeds from your Policy.
-- You name the beneficiary when you apply for the Policy.
-- The beneficiary receives insurance proceeds after the last surviving
insured dies, or if there is a Level First-to-Die Term Rider, after
either insured dies.
-- You may elect to have different classes of beneficiaries, such as
primary and secondary, where these classes determine the order of
payment. You may have more than one beneficiary in a class.
-- You may name a different beneficiary to receive benefits under a Level
First-to-Die Term Rider than the beneficiary you name to receive
benefits under your base Policy.
-- You may change the beneficiary while at least one insured is living, by
writing to Variable Product Services (or another address we indicate to
you in writing). Generally, the change will take effect on the date you
sign the request.
-- If no beneficiary is living when the last surviving insured dies, we
will pay the Policy Proceeds to you or if you are deceased, to your
estate, unless you tell us to do otherwise.
WHEN WE PAY PROCEEDS
If your Policy is still in effect, we will pay any cash surrender value,
loan proceeds, or the Policy Proceeds generally within seven days after we
receive all of the necessary requirements at Variable Product Services (or any
other address we indicate to you in writing).
Situations where payment of proceeds may be delayed:
-- We may delay payment of any loan proceeds attributable to the Separate
Account, any partial withdrawal from the Separate Account, the cash
surrender value or the Policy Proceeds during any period that:
a) we are unable to determine the amount to be paid because the New
York Stock Exchange is closed (other than customary weekend and
holiday closings); or
b) the SEC, by order, permits us to delay payment in order to protect
our policyowners.
-- We may delay payment of any portion of any loan or surrender request,
including requests for partial withdrawals, from the Fixed Account for
up to six months from the date we receive your request.
-- We may delay payment of the entire Policy Proceeds if we contest the
payment. We investigate all death claims that occur within the two year
contestable period. Upon receiving the information from a completed
investigation we will make a determina-
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<PAGE> 55
tion, generally within five days, as to whether the claim should be authorized
for payment. Payments are made promptly after authorization.
We add interest at an annual rate of 3% (or at a higher rate if required by
law) if payment of a partial withdrawal or cash surrender value is delayed for
30 days or more.
We add interest to Policy Proceeds from the date of death to the date of
payment at the same rate as is paid under the Interest Payment Option.
PAYMENT OPTIONS
We will pay your Policy Proceeds in one sum unless you choose otherwise.
There are three payment options you may choose from: an Interest Accumulation
Option, an Interest Payment Option, and a Life Income Option. If any payment
under these options is less than $100, we may pay any unpaid amount or present
value in one sum.
Any Policy Proceeds paid in one sum will be paid in cash and bear interest
compounded each year from the last surviving insured's death to the date of
payment. We set the interest rate each year. This rate will be at least 3% per
year (or a higher rate if required by law).
-- Interest Accumulation Option (Option 1A)
Under this option, the portion of the Policy Proceeds you choose to keep
with us will bear interest each year. You may make withdrawals from this
amount at any time in sums of $100 or more. We will pay interest on the
sum withdrawn up to the date of the withdrawal.
-- Interest Payment Option (Option 1B)
Under this option, we will pay interest on all or part of the Policy
Proceeds you choose to keep with us. You elect the frequency of the
interest payments we make: once each month, every three months, every
six months or each year.
-- Life Income Option (Option 2)
Under this option, we make equal monthly payments during the lifetime of
the payee or payees. We determine the amount of the monthly payment by
applying the Policy Proceeds to the purchase of a corresponding single
premium life annuity policy, which is issued when the first payment is
due.
Payments remain the same and are guaranteed for ten years, even if the
specified payee dies sooner.
Payments are based on an adjusted annuity premium rate in effect at the
time the annuity policy is issued. This rate will not be less than the
corresponding minimum amount shown in the Option 2 table found in your
Policy. These minimum amounts are based on the 1983 Table "a" with
Projection Scale G and with interest compounded each year at 3%.
If you ask us, we will send you a statement of the minimum amount due
with respect to each monthly payment in writing. The minimum is based
on the sex and adjusted
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<PAGE> 56
age of the payee(s). 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>
1998-2005 2006-2015 2016-2025 2026-2035 2036 AND LATER
- ---------- ---------- ---------- ---------- ---------------
<S> <C> <C> <C> <C>
+1 0 -1 -2 -3
</TABLE>
Electing or changing a payment option:
While at least one of the insureds is living, you can elect or change your
payment option. You can also elect or change one or more of the beneficiaries
who will be the payee(s) under that option.
After the last surviving insured dies, any person who is entitled to
receive Policy Proceeds in one sum (other than an assignee) can elect a payment
option and name payees. The person who elects a payment option can also name one
or more successor payees to receive any amount remaining at the death of the
payees. Naming these payees cancels any prior choice of successor payees. A
payee who did not elect the payment option has the right to advance or assign
payments, take the payments in one sum, change the payment option, or make any
other change, only if the person who elects the payment option notifies us in
writing and we agree.
PAYEES
You can only name individuals who are able to receive payments on their own
behalf as payees or successor payees, unless we agree otherwise. We may require
proof of the age of the payee or proof that the payee is living. If we still
have an unpaid amount, or there are some payments which still need to be made
when the last surviving payee dies, 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. We will make this payment 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.
ADDITIONAL POLICY PROVISIONS
LIMITS ON OUR RIGHTS TO CHALLENGE YOUR POLICY
Generally, we must bring any legal action contesting the validity of your
Policy within two years of the Issue Date, including any action taken to contest
a face increase as a result of a change in the Life Insurance Benefit Option.
For any increase(s) in face amount other than one due to a change in the Life
Insurance Benefit Option, this two year period begins on the effective date of
the increase. Unless one or both insureds die during the two year period, we can
only contest the validity of your Policy after this period if you fail to pay
premiums.
SUICIDE
While your Policy is in effect:
-- If the death of the first insured who dies is a result of suicide within
two years of the Issue Date, your Policy will continue to be in effect
on the last surviving insured.
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<PAGE> 57
-- If the suicide of both insureds at the same time, or of the last
surviving insured occurs within two years of the Issue Date, we will pay
a limited life insurance benefit in one sum to the beneficiary. The
limited life insurance benefit is the total amount of premiums, less any
outstanding loans (including accrued loan interest) and/or amounts
withdrawn. If the suicide(s) occurs within two years of the effective
date of a face amount increase, we will also pay the limited life
insurance benefit, or, if the limited life insurance benefit is not
payable, the monthly deductions from cash value made for that increase.
MISSTATEMENT OF AGE OR SEX
If either or both of the insured's age or sex is misstated in the Policy
application, we will adjust the cash value, the cash surrender value, and the
Life Insurance Benefit to reflect the correct ages and sexes. We will adjust the
Life Insurance Benefit provided by your Policy based on the most recent
mortality charge for the correct dates of birth or correct sexes.
ASSIGNMENT
You may assign a Non-Qualified Policy as collateral for a loan or other
obligation. In order for this assignment to be binding on us, we must receive a
signed copy of it at Variable Product Services (or any other location we
indicate to you in writing). We are not responsible for the validity of any
assignment. If your Policy is a modified endowment contract, assigning your
policy may result in taxable income to you. For more information, please read
FEDERAL INCOME TAX CONSIDERATIONS on page 54. You may not assign Qualified
Policies.
FREE LOOK
You have a right to cancel your Policy, within certain limits. Under the
free look provision of your Policy, you generally have twenty days after you
receive your Policy to return the Policy to us and receive a refund. You may
cancel increases in the face amount of your Policy under the same time limits.
If you cancel your Policy, we will pay you the greater of your Policy's
cash value on the date you return the Policy or the total premium payments you
have made, less any loans and any partial withdrawals you have taken. We will
allocate premium payments you make during the free look period to the MainStay
VP Cash Management Investment Division until the end of the free look period, as
stated in your Policy.
If you cancel an increase in face amount of your Policy, we will refund the
premium payments you have paid in excess of the planned premiums which are
allocated to the increase in accordance with the surrender charge provision,
less any part of the excess premium payments which we have already paid you.
You may return the Policy to Variable Product Services or you may return it
to any of our agency offices or to the registered representative who sold you
the Policy.
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<PAGE> 58
EXCHANGE PRIVILEGE
During the first two Policy Years if you decide you do not want to own a
variable Policy, you may either (1) transfer all of the amounts you have
invested in the Investment Divisions to the Fixed Account of your Policy or (2)
exchange your Policy for a new fixed premium survivorship permanent plan of life
insurance that we (or one of our affiliates) offer for this purpose. The new
policy will have the same policy date, issue age, risk classification and
initial face amount as your original Policy, but will not offer variable
investment options such as the Investment Divisions.
In order to exchange your Policy:
-- your Policy must be in effect on the date of the exchange;
-- you must repay any unpaid loan (including any accrued loan interest);
and
-- you must submit a proper written request.
We will process your request for an exchange on the later of: (a) the date
you send in your written request along with your Policy or (b) the date we
receive the necessary payment for your exchange at Variable Product Services (or
any other location we indicate to you in writing). The exchange will be
effective on the later of these two dates. We will require you to make any
adjustment to the premiums and cash values of your Policy and the new policy, if
necessary.
When you exchange your Policy, all riders and benefits on that Policy will
end, unless required by law. The new policy will have the same issue date, issue
ages, and risk classifications as your original Policy.
You have rights during the first two years after any increase in the face
amount of your Policy. During this two year period, the maximum amount you may
request as a transfer from the Separate Account to the Fixed Account is the
lesser of the premium payments you made after you increased your Policy's face
amount which are attributable to the increase in face amount or the amount in
the Separate Account.
ADDITIONAL PROVISIONS REGARDING THE SEPARATE ACCOUNT
YOUR VOTING RIGHTS
We will vote the shares that the Investment Divisions of the Separate
Account hold in the Funds at any regular and special shareholder meetings of the
Funds. We will vote these shares according to the instructions we receive from
our policyholders who have invested their premiums in Investment Divisions that
invest in the Fund. However, if the law changes to allow us to vote the shares
in our own right, we may decide to do so.
While your Policy is in effect, you hold a voting interest in each
Investment Division that you have amounts invested in. The number of votes you
are entitled to will be determined by dividing the amount you have invested in
an Investment Division by the net asset value per unit for the Eligible
Portfolio underlying that Investment Division.
We will determine the number of votes you are entitled to on the date
established by the underlying Fund for determining shareholders that are
eligible to vote at the meeting of the relevant Fund. We will send you written
voting instructions prior to the meeting
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<PAGE> 59
according to the procedures established by the Fund. We will send proxy
material, reports and other materials relating to the Fund to each person having
a voting interest.
We will vote the Fund shares for which we do not receive timely
instructions in the same proportion as the shares for which we receive voting
instructions in a timely manner. Voting instructions to abstain from voting on
an item will be used to reduce the number of votes eligible to be cast.
OUR RIGHTS
We may take certain actions relating to our operations and the operations
of the Separate Account. We will take these actions 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 our
policyowners.
Specifically, we reserve the right to:
-- add or remove any Investment Division;
-- create new separate accounts;
-- combine the Separate Account with one or more other separate accounts;
-- operate the Separate Account as a management investment company under
the Investment Company Act of 1940 or in any other form permitted by
law;
-- deregister the Separate Account under the Investment Company Act of
1940;
-- manage the Separate Account under the direction of a committee or
discharge such committee at any time;
-- transfer the assets of the Separate Account 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 Account.
We may also change the name of the Separate Account.
We have reserved all rights to the name of New York Life Insurance Company
or any part of it. We may allow the Separate Account and other entities to use
our name or part of it, but we may also withdraw this right.
FEDERAL INCOME TAX CONSIDERATIONS
OUR INTENT
Our intent in the discussion in this section is to provide general
information about Federal income tax considerations related to the Policies.
This is not an exhaustive discussion of all tax questions that might arise under
the Policies. This discussion is not intended to be tax advice for you. Tax
results may vary according to your particular circumstances, and you may need
tax advice in connection with the purchase or use of your Policy.
The discussion in this section is based on our understanding of the present
Federal income tax laws as they are currently interpreted by the Internal
Revenue Service ("IRS"). We have not included any information about applicable
state or other tax laws. Further, you
54
<PAGE> 60
should note that tax law changes from time to time. We do not know whether the
treatment of life insurance policies under Federal income tax or estate or gift
tax laws will continue. Future legislation could adversely affect the tax
treatment of life insurance policies. You should consult a tax advisor for
information on the tax treatment of the Policies, for the tax treatment under
the laws of your state, or for information on the impact of future changes in
tax law.
The ultimate effect of Federal income taxes on values under the Policy and
on the economic benefit to you or the beneficiary depends upon NYLIAC's tax
status, upon the terms of the Policy and upon your circumstances.
TAX STATUS OF NYLIAC AND THE SEPARATE ACCOUNT
NYLIAC is taxed as a life insurance company under Subchapter L of the
Internal Revenue Code. The Separate Account is not a separate taxable entity
from NYLIAC and we take its operations into account in determining NYLIAC's
income tax liability. All investment income and realized net capital gains on
the assets of the Separate Account 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
Account, are taxed to NYLIAC to the extent those items are applied to increase
reserves associated with the Policies.
CHARGES FOR TAXES
We impose a Federal tax charge on Non-Qualified Policies equal to 1.25% of
premiums received under the Policy to compensate us for taxes we have to pay
under Section 848 of the Internal Revenue Code in connection with our receipt of
premiums under Non-Qualified Policies. No other charge is currently made to the
Separate Account for our Federal income taxes that may be attributable to the
Separate Account. In the future, we may impose a charge for our Federal income
taxes that are attributable to the Separate Account. In addition, depending on
the method of calculating interest on amounts allocated to the Fixed Account, we
may impose a charge for the Policy's share of NYLIAC's Federal income taxes
attributable to the Fixed Account.
Under current laws, we 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, we reserve
the right to charge the Separate Account for the portion of such taxes, if any,
attributable to the Separate Account or the Policies.
DIVERSIFICATION STANDARDS AND CONTROL ISSUES
In addition to other requirements imposed by the Internal Revenue Code, a
Policy will qualify as life insurance under the Internal Revenue Code only if
the diversification requirements of Internal Revenue Code Section 817(h) are
satisfied by the Separate Account. We intend for the Separate Account to comply
with Internal Revenue Code Section 817(h) and related regulations. To satisfy
these diversification standards, the regulations generally require that on the
last day of each calendar quarter, 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
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<PAGE> 61
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 a separate issuer. Under a
"look through" rule, we are able to meet the diversification requirements by
looking through the Separate Account to the underlying Eligible Portfolio. Each
of the Funds have committed to us that the Eligible Portfolios will meet the
diversification requirements.
The Internal Revenue Service has stated in published rulings that a
variable policyowner will be considered the owner of separate account assets if
he or she possesses incidents of ownership in those assets, such as the ability
to exercise investment control over the assets. In those circumstances, income
and gains from the separate account assets would be includable in the variable
policyowner's gross income. In connection with its issuance of temporary
regulations under Internal Revenue 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 investment 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. The ownership rights under your Policy are
similar to, but different in certain respects from, those described by the
Internal Revenue Service in rulings in which it was determined that policyowners
were not owners of separate account assets. For example, you have additional
flexibility in allocating premium payments and Policy cash values. These
differences could result in your being treated as the owner of your Policy's pro
rata portion of the assets of the Separate Account. In addition, we do not know
what standards will be set forth, if any, in the regulations or ruling which the
Treasury Department has stated it expects to issue. We therefore reserve the
right to modify the Policy, as deemed appropriate by us, to attempt to prevent
you from being considered the owner of your Policy's pro rata share of the
assets of the Separate Account. Moreover, in the event that regulations are
adopted or rulings are issued, there can be no assurance that the Eligible
Portfolios will continue to be available, will be able to operate as currently
described in the Fund prospectuses, or that a Fund will not have to change an
Eligible Portfolio's investment objective or investment policies.
LIFE INSURANCE STATUS OF POLICY
We believe that the Policy meets the statutory definition of life insurance
under Internal Revenue Code Section 7702 and that you and the beneficiary of
your Policy will receive the same Federal income tax treatment as that accorded
to owners and beneficiaries of fixed benefit life insurance policies.
Specifically, we believe that the Life Insurance Benefit under your Policy will
be excludable from the gross income of the beneficiary subject to the terms and
conditions of Section 101(a)(1) of the Internal Revenue Code. Pursuant to
Section 101(g) of the Internal Revenue Code, amounts received by the policyowner
may also be excludable from the policyowner's gross income when either insured
has a terminal illness. (Life insurance benefits under a "modified endowment
contract" as discussed below are treated in the same manner as life insurance
benefits under life insurance policies 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, we believe that the policyowner will not be deemed to
be in constructive receipt of the cash
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<PAGE> 62
values, including increments thereon, under the Policy until proceeds of the
Policy are received upon a surrender of the Policy or a partial withdrawal.
The area of the tax law relating to the definition of life insurance does
not explicitly address all of the facts that are relevant for the Policies
(including, for example, the treatment of substandard risk policies, policies
with term insurance on the Insureds, and certain tax requirements relating to
joint survivorship life insurance policies). We reserve the right to make
changes to the Policy if we think appropriate to attempt to assure qualification
of the Policy as a life insurance contract. If a Policy were determined not to
qualify as life insurance, the Policy would not provide the tax advantages
normally provided by life insurance.
MODIFIED ENDOWMENT CONTRACT STATUS
Internal Revenue Code Section 7702A defines a class of life insurance
policies referred to as modified endowment contracts. Under this provision, the
policies will be treated for tax purposes in one of two ways. Policies that are
not classified as modified endowment contracts will be taxed as conventional
life insurance policies, as described below. Taxation of pre-death distributions
from policies that are classified as modified endowment contracts and that are
entered into on or after June 21, 1988 is somewhat different, as described
below.
A life insurance policy becomes a "modified endowment contract" if, at any
time during the first seven years, the sum of actual premiums paid exceeds the
sum of the "seven-pay premium." Generally, the "seven-pay premium" is the level
annual premium, such that if paid for each of the first seven years, will fully
pay for all future life insurance and endowment benefits under a life insurance
policy. For example, if the "seven-pay premiums" were $1,000, the maximum
premiums that could be paid during the first seven years to avoid "modified
endowment" treatment would be $1,000 in the first year, $2,000 through the first
two years and $3,000 through the first three years, etc. Under this test, a
policy may or may not be a modified endowment contract, depending on the amount
of premiums paid during each of the policy's first seven years. 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.
Certain changes in the terms of a policy including a reduction in life
insurance benefits will require a policy to be retested to determine whether the
change has caused the policy to become a modified endowment contract. 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. A "material
change" generally includes increases in life insurance benefits, but does not
include an increase in life insurance benefits which is attributable to the
payment of premiums necessary to fund the lowest level of life insurance
benefits payable during the first seven policy 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 Life Insurance 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.
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If a Policy fails the 7-pay test, all distributions (including loans)
occurring in the policy 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 Internal Revenue Code, any distribution or loan made within two
Policy 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, you will
recognize ordinary income for Federal tax purposes to the extent that the cash
surrender value exceeds the investment in your Policy (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 your Policy will
depend upon whether the partial withdrawal results in a reduction of future
benefits under your Policy and whether your Policy is a modified endowment
contract.
If your 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 policy. An exception to this general rule
applies, however, if a reduction of future benefits occurs during the first
fifteen years after a policy is issued and there is a cash distribution
associated with that reduction. In such a case, the Internal Revenue Code
prescribes a formula under which you may be taxed on all or a part of the amount
distributed. After fifteen years, 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 policy. We suggest that you
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 that may be
subject to tax is the excess of the cash value (both loaned and unloaned) over
the previously unrecovered premiums paid.
For purposes of determining the amount of income received upon a
distribution (or loan) from a modified endowment contract, the Internal Revenue
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.
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 Internal Revenue Code
Section 72(v). Limited exceptions from the additional penalty tax are available
for certain distributions to individuals who own policies. 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.
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<PAGE> 64
POLICY LOANS AND INTEREST DEDUCTIONS
We believe that under current law any loan received under your Policy will
be treated as policy debt to you and that, unless your Policy is a modified
endowment contract, no part of any loan under your Policy will constitute income
to you. If your 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% tax.
Internal Revenue 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 Internal
Revenue 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 Internal Revenue 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. We suggest consultation with a tax
advisor for further guidance.
CORPORATE OWNERS
If you are a corporation, ownership of a Policy may affect your exposure to
the corporate alternative minimum tax. If you intend to use the Policies to fund
deferred compensation arrangements, you should consider the tax consequences of
these arrangements. You should consult your tax advisors on these matters.
EXCHANGES OR ASSIGNMENTS OF POLICIES
If you change the policyowner or exchange or assign your Policy it may have
significant tax consequences depending on the circumstances. For example, an
assignment or exchange of the Policy may result in taxable income to you.
Further, Internal Revenue Code Section 101(a) provides, subject to certain
exceptions, that where a policy has been transferred for value, only the portion
of the life insurance 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.
REASONABLENESS REQUIREMENT FOR CHARGES
Another provision of the tax law deals with allowable charges for mortality
costs and other expenses that are used in making calculations to determine
whether a policy qualifies as life insurance for Federal income tax purposes.
For life insurance policies entered into on or after October 21, 1988, these
calculations must be based upon reasonable mortality charges and other charges
reasonably expected to be actually paid. The Treasury Department has issued
proposed regulations and is expected to promulgate temporary or final
regulations governing reasonableness standards for mortality charges. Under the
proposed regulations, the standards applicable to joint survivor life insurance
policies are not entirely clear. While we believe under Internal Revenue Service
pronouncements currently in effect that the mortality costs and other expenses
used in making calculations to determine whether your Policy qualifies as life
insurance meet the current requirements, we cannot assure you that the Internal
Revenue Service would necessarily agree. It is
59
<PAGE> 65
possible that future regulations will contain standards that would require us to
modify the mortality charges used for the purposes of the calculations in order
to retain the qualification of your Policy as life insurance for Federal income
tax purposes, and we reserve the right to make any such modifications.
LIVING BENEFITS RIDER (AKA ACCELERATED BENEFITS RIDER)
A Living Benefits Rider is available in connection with the Policy. Amounts
received under this rider will generally be excludable from your gross income
under Section 101(g) of the Internal Revenue Code. The exclusion from gross
income will not apply, however, if you are not one of the insureds or if you do
not have an insurable interest in the life of the surviving insured either
because the surviving insured is your director, officer or employee or because
the surviving insured has a financial interest in a business of yours.
In some cases, there may be a question as to whether a life insurance
Policy that has an accelerated living benefit rider can meet certain technical
aspects of the definition of "life insurance contract" under the Internal
Revenue Code. We reserve the right to (but we are not obligated to) modify the
rider to conform with requirements the Internal Revenue Service may promulgate.
POLICY SPLIT OPTION
This option permits a Policy to be split into two individual policies. A
Policy split could have adverse tax consequences. The Internal Revenue Service
has ruled privately that where the insured or insureds of an insurance policy
that is exchanged for a new policy are not identical to the insured or insureds
of the new policy, the exchange is taxable.
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
Internal Revenue 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
The Policies may be used with qualified plans. The tax rules applicable to
participants and beneficiaries in such qualified plans vary according to the
type of plan and the terms and conditions of the plan itself. Special favorable
tax treatment may be available for certain types of contributions and
distributions (including special rules for certain lump sum distributions to
individuals who attained the age of 50 by January 1, 1986). Adverse tax
consequences may result from contributions in excess of specified limits,
distributions prior to age 59 1/2 (subject to certain exceptions), distributions
that do not conform to specified minimum distribution rules, and in certain
other circumstances. Therefore, we
60
<PAGE> 66
make no attempt to provide more than general information about use of the
Policies with qualified plans. Owners and participants under qualified plans as
well as beneficiaries are cautioned that the rights of any person to any
benefits under qualified plans may be subject to the terms and conditions of the
plans themselves, regardless of the terms and conditions of the Policy issued in
connection therewith. Purchasers of Policies for use with any qualified plan
should seek competent legal and tax advice regarding the suitability of the
Policy therefore.
STEP Policies are not available as Qualified Policies.
WITHHOLDING
Under Section 3405 of the Internal Revenue Code, withholding is generally
required with respect to certain taxable distributions under insurance policies.
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%. You can elect to have either non-periodic or periodic
payments made without withholding except where your tax identification number
has not been furnished to us, or where the Internal Revenue Service has notified
us that a tax identification number is incorrect.
ABOUT NYLIAC
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's principal business address is 51
Madison Avenue, New York, New York 10010.
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 $ billion at the end of 1997,
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.
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<PAGE> 67
DIRECTORS AND PRINCIPAL OFFICERS OF NYLIAC
<TABLE>
<CAPTION>
DIRECTORS: POSITIONS DURING LAST FIVE YEARS:
<S> <C>
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 February 1995 to
October 1995; Executive Vice President prior thereto.
President of NYLIAC from November 1995 to May 1997.
Jay S. Calhoun, III Senior Vice President and Treasurer of New York Life from
March 1997 to date; Vice President and Treasurer from November
1992 to March 1997; Vice President and Associate Treasurer
from November 1992 to March 1997; Corporate Vice President
prior thereto. Senior Vice President and Treasurer of NYLIAC
from May 1997 to date. Vice President and Treasurer of NYLIAC
from January 1993 to May 1997.
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 prior thereto. Senior Vice President of NYLIAC from
April 1992 to date.
Frederick J. Sievert Vice Chairman of New York Life from January 1997 to date;
Executive Vice President from February 1995 to January 1997;
Senior Vice President and Chief Financial Officer--Individual
Operations prior thereto. President of NYLIAC from May 1997 to
date; Executive Vice President from November 1995 to May 1997;
Senior Vice President prior thereto.
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>
<TABLE>
<CAPTION>
OFFICERS: POSITIONS DURING LAST FIVE YEARS:
<S> <C>
Michael G. 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 the Financial Management
Department and Chief Financial Officer of New York Life from
July 1995 to date; Senior Vice President in charge of the
Individual Life Department prior thereto. Senior Vice
President of NYLIAC from April 1992 to date.
Jane L. Hamrick Vice President and Actuary of New York Life from March 1994 to
date; Corporate Vice President and Actuary prior thereto. Vice
President and Actuary of NYLIAC from April 1994 to date.
</TABLE>
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<PAGE> 68
<TABLE>
<S> <C>
Jean E. Hoystradt Senior Vice President in charge of Investment Department of
New York Life from March 1992 to date. Senior Vice President
of NYLIAC from April 1992 to date.
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.
</TABLE>
RECORDS AND REPORTS
All records and accounts relating to the Separate Account 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 outstanding loans
(including accrued loan interest) as of the latest Policy anniversary. This
report contains any additional information required by any applicable law or
regulation. We will also mail you a report each quarter showing this same
information as of the end of the previous quarter.
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 Investor's Services Inc. (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
Policy Year will not exceed 50% of the premiums paid up to a Policy's Target
Premium (8.0% in the second and subsequent Policy Years) plus 3.5% of premiums
paid in excess of such amount. 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 and New York Life specifically denied
any wrongdoing. The settlement was approved and upheld on appeal. All appeals
have been exhausted. The settlement relief is being implemented.
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<PAGE> 69
NYLIAC is also a defendant in individual and alleged class action suits
arising from its insurance, investment, retail securities and/or other
operations, including actions involving retail sales practices and policyowners
who excluded themselves from the class action settlement. 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.
FINANCIAL STATEMENTS
The audited financial statements of NYLIAC (including the auditor's report
thereon) for the fiscal years ended December 31, 1997, 1996 and 1995, and of the
Separate Account (including the auditor's report thereon) for the years ended
December 31, 1997 and 1996 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.
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<PAGE> 70
APPENDIX A
ILLUSTRATIONS
The following tables demonstrate the way in which your Policy works. The
tables are based on the ages, sexes, underwriting classes, initial Life
Insurance Benefit and premium as follows:
The table is for a Policy issued to a male with non-smoker underwriting
class and issue age 55, and a female with non-smoker underwriting class and
issue age 50 with a planned annual premium of $15,000, a Target Premium of
$ , an initial face amount of $1,000,000 and no riders.
The table shows how the cash value, cash surrender value and Life Insurance
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 Life Insurance Benefit, cash value and cash
surrender value of the Policy with other variable life insurance plans.
The Life Insurance 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 Account 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 Account and a daily asset based administrative charge assessed
against the Separate Account 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 % of the average daily
net assets of the Funds. This total is based upon (a) % of average daily
net assets, which is an average of the management fees of each Investment
Division; (b) % of average daily net assets of the Funds which is an
average of actual administrative fees for each Investment Division; and (c)
% of average daily net assets of the Funds which is an average of the other
expenses after expense reimbursement for each Investment Division.
"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, 1997 would have been
%, %, % and % for the MainStay VP Convertible, MainStay VP
High Yield Corporate Bond, MainStay VP International Equity and MainStay VP
Value Portfolios, respectively.
For the Calvert Socially Responsible Portfolio, 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 %.
A-1
<PAGE> 71
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 % for the Fidelity VIP II: Contrafund Portfolio and % 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, 1997 would have been:
% and %, respectively, for the Janus Aspen Balanced Portfolio and
% and %, respectively, for the Janus Aspen Worldwide Growth Portfolio.
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 % and %, respectively.
Taking into account the assumed charges for mortality and expense risks and
administrative fees in the Separate Account 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 %, % and %,
respectively, based on the current charge for mortality and expense risks, and
%, % and %, 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 Life Insurance
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> 72
FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE POLICY
MALE ISSUE AGE: 55, NON-SMOKER
FEMALE ISSUE AGE: 50, NON-SMOKER
PLANNED ANNUAL PREMIUM: $15,000
TARGET PREMIUM: $
INITIAL FACE AMOUNT: $1,000,000
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
3
4
5
6
7
8
9
10
15
20
30
<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
2
3
4
5
6
7
8
9
10
15
20
30
</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> 73
FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE POLICY
MALE ISSUE AGE: 55, NON-SMOKER
FEMALE ISSUE AGE: 50, NON-SMOKER
PLANNED ANNUAL PREMIUM: $15,000
TARGET PREMIUM: $
INITIAL FACE AMOUNT: $1,000,000
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
3
4
5
6
7
8
9
10
15
20
30
<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
2
3
4
5
6
7
8
9
10
15
20
30
</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.
* Without additional Premiums above the annual planned premium, the Policy
would lapse in this scenario.
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> 74
APPENDIX B
VARIATIONS BY JURISDICTION
The following lists by jurisdiction any variation to the statements made in this
Prospectus.
COLORADO
- -- Transfers to the Fixed Account--If there is a change in the investment
strategy of the Separate Account, you may make an unrestricted transfer from
the Separate Account to the Fixed Account, even if such change occurs after
the first two Policy Years.
- -- The Suicide Exclusion period is one year from the Issue Date.
CONNECTICUT
- -- Loan Interest Rate--Due to state regulation, the interest rate we charge on a
loan is fixed at 8.0% and may not be lowered.
DISTRICT OF COLUMBIA
- -- Free Look Period--You have until the later of 20 days from the date you
receive your Policy, or 45 days from the date the application is signed, to
return the Policy and receive a refund. We will allocate the initial premium
and any other premium payments you make during this period to the MainStay VP
Cash Management Investment Division. After the free look period, we will
allocate your net premiums according to your instructions.
MASSACHUSETTS
- -- Transfers to the Fixed Account--If there is a change in the investment
strategy of the Separate Account, you may make an unrestricted transfer from
the Separate Account to the Fixed Account, even if such change occurs after
the first two Policy Years.
NEW JERSEY
- -- Face Amount Increases--You are allowed to increase your Policy's face amount
only once each Policy Year.
- -- Unplanned Premium--You are allowed a maximum of twelve unplanned premium
payments each Policy Year.
- -- Premium Tax Charge--We will not increase the charge above 2.0%.
- -- Transfers--After the first two Policy Years, you are allowed a maximum of
twelve transfers into the Fixed Account each Policy Year.
- -- Changes in Life Insurance Benefit Option--You may make only one change to
your Life Insurance Benefit Option each Policy Year.
- -- Partial Withdrawals--You may take only one partial withdrawal in the first
Policy Year, if Life Insurance Benefit Option 1 is in effect.
NEW YORK
- -- Face Amount Increases--You are allowed to increase your Policy's face amount
only once each Policy Year.
B-1
<PAGE> 75
- -- Unplanned Premium--You are allowed a maximum of twelve unplanned premium
payments each Policy Year.
- -- Transfers--After the first two Policy Years, you are allowed a maximum of
twelve transfers into the Fixed Account each Policy Year.
- -- Changes in Life Insurance Benefit Option--You may make only one change to
your Life Insurance Benefit Option each Policy Year.
- -- Policy Termination--Your Policy will end on the Policy anniversary the
younger insured is, or would have been, age 100. The cash value will be paid
at that time.
- -- Free Look Period--You have ten days from the date you receive your policy. We
will allocate the initial premium and any other premium payments you make
during this period to the MainStay VP Cash Management Investment Division.
After the free look period, we will allocate your net premiums according to
your instructions.
- -- Change in Objective of an Investment Division--If there is a change in the
investment strategy of any Investment Division, you have the option of
converting, without evidence of insurability, 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 to a
new fixed benefit survivorship life insurance policy, for an amount of
insurance not greater than the Life Insurance Benefit of the original Policy,
on the date of conversion. The new policy will be based on the same issue
ages, sexes and underwriting classes 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.
- -- Policy Split Option--You must provide evidence of insurability for any
exercise of this option. Also, in addition to divorce and certain tax law
changes, the Policy may be split in the event of the annulment of the
insureds.
NORTH CAROLINA
- -- Free Look Period--You have until the later of 20 days from the date you
receive your Policy, or 45 days from the date the application is signed, to
return the Policy and receive a refund. We will allocate the initial premium
and any other premium payments you make during this period to the MainStay VP
Cash Management Investment Division. After the free look period, we will
allocate your net premiums according to your instructions.
OREGON
- -- Premium Tax Charge--This charge is currently 1.75%.
- -- Transfers--After the first two Policy Years, you are allowed a maximum of
twelve transfers into the Fixed Account each Policy Year.
PENNSYLVANIA
- -- Policy Split Option--Due to state regulations, the Policy cannot be split in
the event of the divorce of the insureds.
- -- Misstatement of Age or Sex--In the event of such misstatement, we will adjust
the Life Insurance Benefit provided by your Policy, but we will not adjust
the cash value.
B-2
<PAGE> 76
TEXAS
- -- Unplanned Premium--You are allowed a maximum of twelve unplanned premium
payments each Policy Year.
- -- Partial Withdrawals--You may take only one partial withdrawal in the first
Policy Year, if Life Insurance Benefit Option 1 is in effect.
B-3
<PAGE> 77
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 Insurance Company ("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 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
Survivorship Variable Adjustable 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 71 pages.
The undertaking to file reports.
The undertaking pursuant to Rule 484.
II-1
<PAGE> 78
The representation as to the reasonableness of aggregate fees and
charges.
The signatures.
Written consents of the following persons:
(a) Jonathan Gaines, Esq. - to be filed.
(b) Irwin Don, Assistant Actuary - to be filed.
(c) Price Waterhouse, LLP - to be filed.
The following exhibits:
1. The following exhibits correspond to those required by paragraph A of
the instructions as to exhibits for Form N-8B-2:
(1) Resolution of the Board of Directors of NYLIAC establishing
the Separate Account - previously filed as exhibit 1.(1) to an
initial registration statement of Registrant on Form S-6 for
NYLIAC Variable Universal Life Separate Account-I (File No.
33-64410) and re-filed as Exhibit 1.(1) to Post-Effective
Amendment No. 4 to such registration statement on Form S-6 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 as Exhibit 1.(3)(a)[1] to
Post-Effective Amendment No. 4 to the registration statement
on Form S-6 for NYLIAC Variable Universal Life Separate
Account-I (File No. 33-64410) 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 for NYLIAC Variable Universal Life Separate
Account-I (File No. 33-64410).
(b) Not applicable.
(c) Not applicable.
(4) Not applicable.
(5)(a) Form of Policy for Survivorship Variable Adjustable Life
Insurance - filed herewith.
(b) Form of Guaranteed Minimum Death Benefit Rider for
Survivorship Variable Adjustable Life Insurance - filed
herewith.
(c) Form of Level First-To-Die Term Rider for Survivorship
Variable Adjustable Life Insurance - filed herewith.
(d) Form of First-To-Die Monthly Deduction Waiver Rider for
Survivorship Variable Adjustable Life Insurance - filed
herewith.
(e) Form of Supplementary Term Rider for Survivorship Variable
Adjustable Life Insurance - filed
II-2
<PAGE> 79
herewith.
(f) Form of Accelerated Benefits Rider for Survivorship Variable
Adjustable Life Insurance
(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 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 on
Form S-6 (File No. 33-64410) 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) Participation Agreement among Acacia Capital Corporation,
Calvert Asset Management Company, Inc. and NYLIAC, as amended
- previously filed as Exhibit 1.(9)(b)(1) 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).
(c) Participation Agreement among The Alger American Fund,
Fred Alger and Company, Incorporated and NYLIAC - previously
filed as Exhibit 1.(9)(b)(2) 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) Participation Agreement between Janus Aspen Series and
NYLIAC - previously filed as Exhibit 1.(9)(b)(3) 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).
(e) Participation Agreement among Morgan Stanley Universal Funds,
Inc., Morgan Stanley Asset Management Inc. and NYLIAC -
previously filed as Exhibit 1.(9)(b)(4) 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).
(f) Participation Agreement among Variable Insurance Products
Fund, Fidelity Distributors Corporation and NYLIAC -
previously filed as Exhibit 1.(9)(b)(5) 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).
(g) Participation Agreement among Variable Insurance Products
Fund II, Fidelity Distributors Corporation and NYLIAC -
previously filed as Exhibit 1.(9)(b)(6) 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).
(10) Form of Application - previously filed as Exhibit (10) to an
initial registration statement on Form S-6
II-3
<PAGE> 80
for NYLIAC Variable Universal Life Separate Account-I (File
No. 33-64410) and re-filed as Exhibit 1.(10) to Post-Effective
Amendment No. 4 to such registration statement on Form S-6 in
accordance with Regulation S-T, 17 CFR 232.102(e).
2. Opinion and Consent of Jonathan E. Gaines, Esq. - to be filed.
3. Not applicable.
4. Not applicable.
5. Not applicable.
6. Opinion and Consent of Irwin Don, Assistant Actuary - to be filed.
7. Consent of Price Waterhouse, LLP - to be filed.
8.(a) Powers of Attorney for the Directors and Officers of NYLIAC -
previously filed as Exhibit 1.(9)(c) 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, President and Director (Principal Executive
Officer)
Stephen N. Steinig, Senior Vice President, Chief Actuary and Director
Seymour Sternberg, Director
(b) 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).
(c) Memorandum describing NYLIAC's issuance, transfer and redemption
procedures for the survivorship variable adjustable life insurance
policies - to be filed.
II-4
<PAGE> 81
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, NYLIAC Variable Universal Life Separate Account-I, has duly caused
this Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, in the City and State of New York on the 31st day of
October, 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 Registration Statement has been
signed by the following persons in the capacities and on the date indicated.
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* President and Director (Principal Executive
Officer)
Stephen N. Steinig* Senior Vice President, Chief Actuary and Director
Seymour Sternberg* Director
*By /s/ Michael G. Gallo
--------------------
Michael G. Gallo
Attorney-in-Fact
October 31, 1997
II-5
<PAGE> 82
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
1.(5)(a) Form of Policy for Survivorship Variable Adjustable
Life Insurance
1.(5)(b) Form of Guaranteed Minimum Death Benefit Rider for
Survivorship Variable Adjustable Life Insurance
1.(5)(c) Form of Level First-To-Die Term Rider for
Survivorship Variable Adjustable Life Insurance
1.(5)(d) Form of First-To-Die Monthly Deduction Waiver Rider
for Survivorship Variable Adjustable Life Insurance
1.(5)(e) Form of Supplementary Term Rider for Survivorship
Variable Adjustable Life Insurance
1.(5)(f) Form of Accelerated Benefits Rider for Survivorship
Variable Adjustable Life Insurance
</TABLE>
<PAGE> 1
Exhibit 1.(5)(a)
Form of Policy for Survivorship Variable Adjustable Life Insurance
<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 younger Insured is or would have
been age 100, and while at least one of the Insureds 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 planned 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/ Sy Sternberg
----------------
President
/s/ George J. Trapp
-------------------
Secretary
SURVIVORSHIP VARIABLE ADJUSTABLE LIFE INSURANCE POLICY
Variable Life Insurance Benefit - Flexible Premium Payments
Proceeds Payable at Last Surviving 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 Younger Insured's Age 100.
Policy is Non-Participating.
[New York Life Logo]
797-150
<PAGE> 3
AGE AND SEX CLASS OF RISK
INSUREDS-- JOHN DOE 35 MALE STANDARD NON SMOKER
JANE DOE 35 FEMALE STANDARD
POLICY NUMBER -- 66 000 000
POLICY DATE -- MARCH 1, 1997
ISSUE DATE -- MARCH 1, 1997
INITIAL FACE AMOUNT -- $100,000 LIFE INSURANCE BENEFIT OPTION -- 1
BENEFICIARY/OWNER AS DESIGNATED IN THE APPLICATION UNLESS CHANGED AS PROVIDED IN
THE POLICY.
PLANNED PREMIUMS PAYABLE* AT ANNUAL INTERVALS: $723.62
TARGET PREMIUM: $723.62@
ADDITIONAL
BENEFITS AMOUNT MONTHLY RIDER COSTS
- -------- ------ -------------------
* PREMIUMS CANNOT BE PAID ON OR AFTER THE POLICY ANNIVERSARY ON WHICH THE
YOUNGER INSURED IS OR WOULD HAVE BEEN AGE 100, WHICH IS MARCH 1, 2062. 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
@ THE TARGET PREMIUM MAY CHANGE IF THE FACE AMOUNT OF THIS POLICY IS INCREASED
OR DECREASED.
THE FIXED ACCOUNT WILL BE CREDITED WITH INTEREST USING A RATE WHICH WE SET IN
ADVANCE AT LEAST ANNUALLY. THIS RATE IS GUARANTEED TO BE AT LEAST 4% PER YEAR.
PAGE 2 POLICY DATA NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
97150-2
<PAGE> 4
POLICY NO. -- 66 000 000 INSUREDS -- JOHN DOE
JANE DOE
TABLE OF EXPENSE CHARGES
MONTHLY DEDUCTION CHARGES CONSIST OF:
- - A MONTHLY CONTRACT CHARGE NOT TO EXCEED $ 62.00 PER MONTH FOR THE FIRST
POLICY YEAR AND$ 12.00 PER MONTH FOR EACH POLICY YEAR THEREAFTER.
- - MONTHLY COST OF INSURANCE FOR BASIC POLICY.
- - MONTHLY COST OF ANY RIDERS.
- - A MONTHLY CHARGE OF $.04 PER $1,000 OF THE INITIAL FACE AMOUNT OF THE
BASE POLICY. THIS CHARGE ONLY APPLIES FOR THE FIRST 3 POLICY YEARS.
THIS CHARGE WILL BE AT LEAST $10.00, BUT WILL NEVER EXCEED $100.00, PER
MONTH.
OTHER CHARGES AGAINST THE POLICY:
- - EACH PREMIUM PAYMENT IS SUBJECT TO A SALES EXPENSE CHARGE AS FOLLOWS:
(1) DURING THE FIRST 10 POLICY YEARS, A MAXIMUM 9% CHARGE WILL APPLY TO
ALL PREMIUMS PAID UP TO THE TARGET PREMIUM. ONCE THE TARGET PREMIUM FOR
THE YEAR HAS BEEN REACHED, A MAXIMUM 6.5% CHARGE WILL APPLY TO ANY
ADDITIONAL PREMIUMS PAID DURING THAT YEAR. (2) AFTER THE FIRST 10
YEARS, ALL PREMIUM PAYMENTS WILL BE SUBJECT TO A MAXIMUM CHARGE OF
6.5%.
- - 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.
- - WE RESERVE THE RIGHT TO MAKE A CHARGE FOR SEPARATE ACCOUNT FEDERAL
INCOME TAX LIABILITIES IF THE LAW SHOULD CHANGE TO REQUIRE TAXATION OF
SEPARATE ACCOUNTS.
- - PARTIAL WITHDRAWALS ARE SUBJECT TO A PROCESSING CHARGE OF THE LESSER
OF $25.00 OR 2% OF THE AMOUNT WHICH IS BEING WITHDRAWN. THE MINIMUM
AMOUNT THAT MAY BE WITHDRAWN IS $500.00.
** THIS POLICY MAY BE SUBJECT TO AN ADDITIONAL CONTRACT CHARGE AS FOLLOWS:
IF THE POLICY IS SURRENDERED DURING THE FIRST POLICY YEAR, AN
ADDITIONAL CHARGE WILL BE DEDUCTED UPON SURRENDER EQUAL TO THE
DIFFERENCE BETWEEN THE MONTHLY CONTRACT CHARGE FOR THE FIRST POLICY
YEAR AND THE MONTHLY CONTRACT CHARGE FOR SUBSEQUENT YEARS MULTIPLIED BY
THE NUMBER OF MONTHLY DEDUCTION DAYS BETWEEN THE DATE OF SURRENDER AND
THE FIRST POLICY ANNIVERSARY.
IF THE POLICY LAPSES DURING THE FIRST POLICY YEAR AND IS THEN
REINSTATED, AN ADDITIONAL CHARGE WILL BE DEDUCTED UPON REINSTATEMENT
EQUAL TO THE DIFFERENCE BETWEEN THE MONTHLY CONTRACT CHARGE FOR THE
FIRST POLICY YEAR AND THE MONTHLY CONTRACT CHARGE FOR SUBSEQUENT YEARS
MULTIPLIED BY THE NUMBER OF MONTHLY DEDUCTION DAYS MISSED DURING THE
FIRST POLICY YEAR BECAUSE THE POLICY WAS NOT IN FORCE. SEE SECTION 4.11
FOR FURTHER INFORMATION.
CHARGE AGAINST THE SEPARATE ACCOUNT:
- - THE FACTOR WHICH REPRESENTS THE MORTALITY AND EXPENSE RISK CHARGE AND
ADMINISTRATIVE CHARGE, REFERRED TO IN THE SEPARATE ACCOUNT SECTION OF
THIS POLICY, WILL NOT EXCEED 1% OF THE DAILY NET ASSET VALUE OF A FUND
SHARE HELD IN THE SEPARATE ACCOUNT FOR EACH INVESTMENT DIVISION.
PAGE 2.1 POLICY DATA NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
97150-2.1
<PAGE> 5
POLICY NUMBER -- 66 000 000 INSUREDS -- JOHN DOE
JANE DOE
TABLE OF MAXIMUM SURRENDER CHARGES
<TABLE>
<CAPTION>
Policy Surrender
Year Charge
<S> <C>
1 144.72
2 144.72
3 144.72
4 144.72
5 144.72
6 144.72
7 130.25
8 115.78
9 101.31
10 86.83
11 72.36
12 57.89
13 43.42
14 28.94
15 14.17
16 & Later 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.
PAGE 2.2 POLICY DATA NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
97150-2.2
<PAGE> 6
POLICY NO. -- 66 000 000 INSUREDS -- JOHN DOE
JANE DOE
TABLE OF PERCENTAGES FOR LIFE INSURANCE BENEFIT OPTIONS
<TABLE>
<CAPTION>
PERCENT PERCENT
POLICY OF CASH POLICY OF CASH
YEAR VALUE YEAR VALUE
<S> <C> <C> <C>
1 559% 33 176%
2 537% 34 171%
3 517% 35 167%
4 497% 36 162%
5 478% 37 158%
6 460% 38 154%
7 442% 39 150%
8 425% 40 147%
9 409% 41 143%
10 394% 42 140%
11 379% 43 137%
12 365% 44 135%
13 351% 45 132%
14 338% 46 130%
15 326% 47 128%
16 314% 48 126%
17 302% 49 124%
18 291% 50 122%
19 281% 51 120%
20 271% 52 119%
21 261% 53 117%
22 252% 54 116%
23 244% 55 115%
24 235% 56 114%
25 227% 57 112%
26 220% 58 111%
27 213% 59 110%
28 206% 60 109%
29 199% 61 108%
30 193% 62 106%
31 187% 63 105%
32 182% 64 103%
65 102%
</TABLE>
PAGE 2.3 POLICY DATA NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
97150-2.3
<PAGE> 7
POLICY NO. -- 66 000 000 INSUREDS -- JOHN DOE
JANE DOE
TABLE OF GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATES
(PER $1,000)
<TABLE>
<CAPTION>
POLICY POLICY
YEAR YEAR
<S> <C> <C> <C>
1 .00043 33 1.19774
2 .00140 34 1.36161
3 .00261 35 1.54520
4 .00414 36 1.74944
5 .00605 37 1.99230
6 .00845 38 2.28250
7 .01153 39 2.62869
8 .01522 40 3.03186
9 .01972 41 3.49329
10 .02505 42 4.00182
11 .03145 43 4.54960
12 .03887 44 5.13142
13 .04761 45 5.75964
14 .05770 46 6.45568
15 .06962 47 7.23885
16. .08362 48 8.13124
17. .10000 49 9.14548
18. .11940 50 10.31447
19. .14280 51 11.52027
20. .17010 52 12.86132
21. .20150 53 14.19007
22. .23728 54 15.69246
23. .27685 55 17.16392
24. .32054 56 18.82740
25. .36891 57 20.61799
26. .42403 58 22.59981
27. .48940 59 24.94159
28. .56666 60 27.91512
29. .66170 61 32.47109
30. .77243 62 40.15324
31. .90081 63 55.22392
32 1.04164 64 83.33333
65 83.33333
</TABLE>
PAGE 2A POLICY DATA NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
97150-2A
<PAGE> 8
<TABLE>
<S> <C>
WE & YOU
In this policy, the words "we", When you write to us, please
"our" or "us" refer to New York include the policy number,
Life Insurance and Annuity each Insured's full name,
Corporation, and the words and your current address.
"you" or "your" refer to the
owner, or owners, of this policy.
</TABLE>
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 5-6
FOUR PREMIUMS 6-7
FIVE SEPARATE ACCOUNT 8-9
(Separate Account Charges)
SIX FIXED ACCOUNT 10
SEVEN CASH VALUE AND LOANS 10-12
(Policy Charges)
EIGHT PAYMENT OF POLICY PROCEEDS 13-14
NINE GENERAL PROVISIONS 14-16
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 Corporation.
PLEASE READ THIS POLICY CAREFULLY FOR FULL DETAILS.
PAGE 3
97150-3
<PAGE> 9
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 both Insureds died while the life insurance under this policy was
in effect, subject to the General Provisions Section of this policy.
1.2 WHAT IS THE AMOUNT OF LIFE INSURANCE PROCEEDS WHICH ARE PAYABLE UNDER
THIS POLICY? The proceeds payable under this policy consist of the life
insurance benefit of the policy plus the death benefit payable under
any riders in effect on the date of the last surviving Insured's death.
We will deduct any unpaid loan and accrued interest from this amount.
The life insurance benefit is based on the Life Insurance Benefit
Option in effect and the policy's initial face amount shown on the
Policy Data page, and will also reflect any changes to the face amount
made in accordance with the provisions of this policy.
1.3 WHAT ARE THE LIFE INSURANCE BENEFIT OPTIONS WHICH ARE AVAILABLE UNDER
THIS POLICY? The 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 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. (A table of
these percentages is shown on Policy Data page 2.3).
OPTION 2 - This option 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 this
policy to qualify as life insurance under Section 7702 of the Internal
Revenue Code. (A table of these percentages is shown on Policy Data
page 2.3).
1.4 DOES THE POLICY MATURE? Beginning on the anniversary on which the
younger Insured is or would have been age 100, the face amount of the
policy shown on the Policy Data page will no longer apply. Instead, the
life insurance benefit of this policy will equal the cash value, as
defined in Section 7.1. No further monthly deductions will be made for
cost of insurance. However, the monthly contract charge will continue
to be deducted. You can surrender this policy for its cash surrender
value by submitting to us a signed written request which gives us the
facts that we need. If this policy is still in force upon the death of
the last surviving Insured, these proceeds will be paid to the
beneficiary.
SECTION TWO - OWNER AND BENEFICIARY
2.1 WHO IS THE OWNER OF THIS POLICY? The owner(s) of this policy is (are)
stated on the Policy Data page. In this policy, the words "you" and
"your" refer to the policyowner. If this policy is owned by more than
one person, the words "you" and "your" refer to all current
policyowners. As the owner, you have all rights of ownership in this
policy while at least one of the Insureds is living. If this policy is
owned by more than one person, we will require the written consent of
all current owners before any rights in this policy may be exercised.
However, you do not need the consent of any successor owner. If more
than one person is named as owner or successor owner, on the death of
one owner or successor owner, ownership rights will pass to the
surviving owners or successor owners.
2.2 CAN A SUCCESSOR OWNER BE NAMED? One or more successor owners can be
named in the application, or in a notice you sign which gives us the
facts that we need. The successor owner will become the new owner, if
you die before both Insureds have died. If no successor owner survives
you, and you die before both Insureds have died, your estate becomes
the new owner.
PAGE 4
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<PAGE> 10
SECTION TWO - OWNER AND BENEFICIARY (continued)
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 both Insureds. If no first beneficiaries survive, payment
will be made to any beneficiaries surviving in the second class, and so
on.
2.5 MAY YOU CHANGE A BENEFICIARY? While at least one of the Insureds 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 both Insureds, the right to these proceeds, or
this share, will pass to you. If you are no longer living, 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 last surviving Insured's death, if any beneficiary dies
at the same time as that Insured, or within 15 days after that Insured
but before we receive proof of that 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 these changes on a uniform basis
by class. Face amount increases and changes in the Life Insurance
Benefit Option can only be made while both Insureds are living. Changes
may only be made 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. The face amount cannot be increased if
the older Insured is over age 90. To increase the face amount, we must
have your written application, also signed by each 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 each Insured's
issue age, the duration since the policy date, and each Insured's sex
and class of risk at the time the increase takes effect. 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.
PAGE 5
97150-5
<PAGE> 11
SECTION THREE - POLICY CHANGES (continued)
3.3 WHAT HAPPENS WHEN YOU DECREASE THE FACE AMOUNT? You can decrease the
face amount, provided the new face amount is at least $100,000. 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. 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 the number of changes in the Life Insurance Benefit
Option. Any change of Option will take effect on the Monthly Deduction
Day on or after the date we receive your signed request. 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. We reserve the
right to limit changes in the Life Insurance Benefit Option which would
cause the face amount to fall below $100,000. In addition, if you elect
to have the Supplementary Term Rider included in this policy, Option 1
must be selected and can never be changed to Option 2, even if the
rider ends or is terminated.
SECTION FOUR - PREMIUMS
4.1 HOW DO YOU PAY PREMIUMS? At any time before the policy anniversary on
which the younger Insured is or would have been age 100, and while
either 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 planned
premiums and/or unplanned premiums.
4.2 WHAT ARE PLANNED PREMIUMS? The amount and interval of any planned
premiums, as stated in the application, are shown on the Policy Data
page. The first premium is payable as of the policy date. A planned
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 planned 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.
Premiums may no longer be paid beginning on the policy anniversary on
which the younger Insured is or would have been age 100.
4.3 WHAT ARE UNPLANNED PREMIUMS? From time to time, you may make unplanned
premium payments which are in addition to planned premiums. At least
one of the Insureds must be living and payment must be made prior to
the policy anniversary on which the younger Insured is or would have
been age 100. If an unplanned 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. In
addition, both Insureds must be alive for such a premium payment to be
accepted. We also reserve the right to limit the number and amount of
any unplanned premiums.
PAGE 6
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<PAGE> 12
SECTION FOUR - PREMIUMS (continued)
4.5 HOW ARE YOUR PREMIUM PAYMENTS ALLOCATED? 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, if applicable, 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 to the Fixed Account in
accordance with your premium allocation election in effect at that
time, and before any other deductions which may be due are made. See
the Policy Data page for an explanation of deductions and charges.
4.6 CAN YOUR PREMIUM ALLOCATION ELECTION BE CHANGED? You can change your
premium allocation election stated in the application by submitting a
signed request. Your allocation percentages must total 100%. Each
percentage must be either zero, or a whole number which is at least 1%.
This change will take effect on the date we receive the signed request.
4.7 WHAT HAPPENS IF YOU STOP MAKING PREMIUM PAYMENTS? When premium payments
are not made as planned, this policy will continue in effect as long as
the cash surrender value is sufficient to pay Monthly Deduction
Charges.
4.8 WHAT IS THE LATE PERIOD? It may happen that, on a Monthly Deduction
Day, the cash surrender value is less than the Monthly Deduction Charge
for the next policy month. This may happen even if all planned premiums
have been paid. If this happens, 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.
4.9 WHAT IF THE LAST SURVIVING INSURED DIES DURING THE LATE PERIOD? If the
last surviving Insured dies during the late period, we will pay the
policy proceeds. However, these proceeds will be reduced by the amount
of the unpaid 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 that Insured died.
4.10 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. However, this policy can only be reinstated if either:
(a) both Insureds are alive; or (b) one Insured is alive and the policy
ended after the death of the other Insured. When you apply for
reinstatement, you must provide proof of insurability that is
acceptable to us. However, if the required premium payment is made
within 31 days after the end of the late period, no proof of
insurability is required.
4.11 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 at
that time 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. 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. If this policy lapses during the first policy year and
is subsequently reinstated, we will also require a payment equal to
150% of the additional contract charge described on Policy Data page
2.1.
The effective date of reinstatement will be the Monthly Deduction Day
on or following the date we approve your signed request for
reinstatement.
PAGE 7
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<PAGE> 13
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, combine or eliminate any Investment Division of the
Separate Account, subject to any required regulatory approvals.
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. 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.
5.7 CAN A CHANGE IN THE INVESTMENT OBJECTIVE OR STRATEGY OF THE SEPARATE
ACCOUNT BE REQUIRED? When required by law or regulation, an investment
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 WHAT IS THE INTEREST OF THIS POLICY IN THE SEPARATE ACCOUNT? 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.
5.9 WHAT ARE ACCUMULATION UNITS? Accumulation units are the accounting
units used to calculate the values under this policy. The number of
accumulation units purchased in an Investment Division will be
determined by dividing the part of any premium 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.
PAGE 8
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<PAGE> 14
SECTION FIVE - SEPARATE ACCOUNT (continued)
5.10 HOW IS THE NUMBER OF ACCUMULATION UNITS DETERMINED? Accumulation units
are bought and sold each time there is a policy transaction. The number
of accumulation units in an Investment Division on any date is
determined as follows:
Step 1: From the units as of the end of the prior Monthly Deduction
Day, subtract the units sold to pay any partial withdrawals per Section
7.3. or sold to pay any surrender charge assessed due to a face amount
decrease per Section 3.3 or Section 7.3.
Step 2: Add units bought with premiums received since the prior Monthly
Deduction Day per Section 4.5 and allocated to the Investment
Divisions.
Step 3: Subtract units sold to transfer amounts into other Investment
Divisions and the Fixed Account per Section 5.12.
Step 4: Add units bought with amounts transferred from other
Investment Divisions and from the Fixed Account per Sections 5.12 and
6.2, respectively.
The number of units on a Monthly Deduction Day is the result of steps 1
to 4, minus the number of units sold to pay the Monthly Deduction
Charges per Section 7.5.
5.11 HOW IS THE VALUE OF AN ACCUMULATION UNIT DETERMINED? The value of an
accumulation unit on any day during which the New York Stock Exchange
is open for trading is determined by multiplying the value of that unit
on the immediately preceding day during which the New York Stock
Exchange was open for trading by the net investment factor for the
valuation period. The valuation period is the period from the close of
the immediately preceding day during which the New York Stock Exchange
was open for trading to the close of the current day during which the
New York Stock Exchange is open for trading. 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. The maximum charges are shown on Data page
2.1.
The net investment factor may be greater or less than one; therefore,
the value of an accumulation unit may increase or decrease.
5.12 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.
5.13 WHEN WILL THESE TRANSFERS TAKE EFFECT? Transfers will take effect as of
the business day we receive your signed written consent which gives us
the facts that we need.
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 on a
pro-rata basis to the Investment Divisions (or Fixed Account) to which
the transfer is being made.
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.
PAGE 9
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<PAGE> 15
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 the amount shown on the Policy Data page. Interest
accrues daily and is credited on the Monthly Deduction Day. 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 10% 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 value of your policy's accumulation
units in the Separate Account plus the amount in 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 either Insured is living,
you may surrender it for its cash surrender value. The cash surrender
value is equal to the cash value less any surrender charges which may
apply, 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.
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 at least one of the Insureds 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 the
Fixed Account and/or that 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. In addition, if a partial withdrawal would cause
the policy face amount to drop below $100,000, we reserve the right to
require a full surrender of the policy.
PAGE 10
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SECTION SEVEN - CASH VALUE AND LOANS (continued)
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 a
requested decrease 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 for the initial face amount
and for each increase in the face amount. In addition, no surrender
charge applies to this policy if it is exchanged for two new policies
as described in Section 9.17.
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.
(d) A charge per $1,000, as shown on the Policy Data page, based on the
initial face amount of the base policy.
A deduction may also be made for any temporary flat extra charges which
may apply. The amount and duration of these flat extra charges, if any,
are shown in a footnote 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 issue date of the policy.
If the issue date and policy date of the policy are different,
deductions made on the issue date will include the monthly deductions
specified in (a) through (d) above which would have been made on each
Monthly Deduction Day for the period from the policy date to the issue
date as if the policy were issued on the policy date. All monthly
deductions are made in accordance with your expense allocation, if any.
If no expense allocation is in effect, monthly deductions will be 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 the monthly deduction charges are made).
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 each Insured's issue age, the duration since
the policy date, and each Insured's sex and class of risk at the time
the initial face amount or increase took effect. 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 each Insured's issue age, sex and class of risk, as well as
the duration since the policy date.
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 90% of the cash
surrender value.
PAGE 11
97150-11
<PAGE> 17
SECTION SEVEN - CASH VALUE AND LOANS (continued)
7.10 WHAT HAPPENS WHEN YOU REQUEST A LOAN? When a new loan is taken
(including the situation where unpaid loan interest is charged as a new
loan), a transfer is made from the Separate Account to the Fixed
Account. This transfer is made so that, after the transfer, the amount
in the Fixed Account which is securing the outstanding loan(s) will
equal 108% of the sum of the new loan, and any previous unpaid loans.
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. In addition,
if any portion of a Monthly Deduction Charge would cause the amount in
the Fixed Account to fall below 108% of the outstanding loan, we
reserve the right to deduct that portion of the Monthly Deduction
Charge on a pro-rata basis instead.
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 and in no
event less than 4%.
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 of the last surviving Insured, 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 last surviving Insured's death or
before the policy is surrendered. Loan repayments are allocated to the
Investment Divisions and the Fixed Account using the same allocation in
effect for the payment of premiums, unless indicated otherwise.
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.
However, if a higher interest rate or rates take effect during the
policy year, this policy will not end any sooner than it would have if
the rate had not changed.
PAGE 12
97150-12
<PAGE> 18
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 at least one of
the Insureds 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 last surviving 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 13
97150-13
<PAGE> 19
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:
1997-2005 2006-2015 2016-25 2026-35 2036 & later
+1 0 -1 -2 -3
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 statements 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.
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 each Insured for 2
years from the issue date. Our right to contest beyond this 2 year
period is limited to only the Insured(s) who died during such period.
The policy is incontestable with respect to the Insured(s) who survived
the 2 year period. It may happen that the face amount of this policy is
increased as described in Section 3.2. 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. No new contestable period will apply if the face amount
increase was due solely to a change in the Life Insurance Benefit
Option.
PAGE 14
97150-14
<PAGE> 20
SECTION NINE - GENERAL PROVISIONS (continued)
9.4 DOES THIS POLICY COVER SUICIDE OF THE INSUREDS? In the event of the
suicide of the first of the Insureds to die, while sane or insane,
within 2 years of the issue date, the policy will continue in force on
the surviving Insured. Suicide of both Insureds at the same time, or of
the surviving Insured, while sane or insane, within 2 years of the
issue date, is not covered by this policy. In that event, this policy
will end and the amount payable will be the premiums paid to us, less
any unpaid loan and any partial withdrawal benefits paid.
It may happen that the face amount of this policy is increased as
described in Section 3.2. 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 deducted for the increase. No new suicide exclusion
period will apply if the face amount increase was due solely to a
change in the Life Insurance Benefit Option.
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 on a policy anniversary, we
mean his or her age on the birthday which is nearest that date. At any
other time, age means the age on the birthday which is nearest to the
previous policy 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 either
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 of 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. In addition, we
reserve the right to defer any of these payments based on funds
allocated to the Fixed Account for as long as six months.
.9 MAY YOU ASSIGN OR TRANSFER THE POLICY? While at least one of the
Insureds 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.
.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.
.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.
.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.
.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.
.14 IS THIS POLICY SUBJECT TO ANY LAW? This policy is subject to all laws
which apply.
PAGE 15
97150-15
<PAGE> 21
SECTION NINE - GENERAL PROVISIONS (continued)
9.15 ARE ANY DIVIDENDS PAYABLE ON THIS POLICY? This is a non-participating
policy, on which no dividends are payable.
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 while either
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 THIS POLICY BE SPLIT INTO 2 SEPARATE POLICIES? You may exchange
this policy, without evidence of insurability, for separate life
policies on each of the Insureds within 6 months of either of the
following 2 dates:
(1) The date a final divorce decree issued with respect to the marriage
of the Insureds has been in effect for 6 months; or
(2) The effective date of a change in the Federal Tax Law which results
in (a) a reduction in the unlimited Federal Estate Tax marital
deduction provision (Section 2056 of the Internal Revenue Code), or
(b) a reduction of at least 50% in the level of estate tax rate
from the 1986 Tax Act payable on death.
In addition, an exchange can be made for any other reason, provided we
agree. You must request the exchange in writing and both Insureds must
be living when we receive your request. Each new policy will be on a
variable adjustable life plan which was being offered by us on the
policy date of this policy. The policy date and issue date of each new
policy will be the date of exchange. Unless otherwise stated, the
policyowner and beneficiary of each new policy will be the same as
under this policy. At the time each new policy is issued, an insurable
interest must exist under applicable state law. If this policy has been
assigned, the assignment will apply to each new policy.
The cost of insurance rates for each new policy will be determined
based on each Insured's age, sex and risk class on the date of the
exchange. A new set of surrender charges will apply on each new policy.
The face amount of each new policy will equal one half of the face
amount of this policy, plus one half of the face amount of any riders
attached to this policy, on the date of exchange. The benefits of any
first-to-die riders which are in effect will not be included in this
calculation. One half of the cash value of this policy less any unpaid
loan and accrued interest will be allocated as the initial premium for
each new policy.
9.18 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 lives of the
Insureds 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 new policy will be on a permanent plan of life insurance covering 2
Insureds which was being offered for this purpose by us, or one of our
affiliated companies, on the issue date of this policy. The new policy
will not offer variable investment options, such as the Investment
Divisions. 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 ages,
sexes and classes of risk as this policy. All riders attached to this
policy will end on the date of exchange, unless we agree otherwise.
9.19 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 Male and Female, Smoker and
Non-Smoker Tables of Mortality if the Insureds are in a standard class
of risk. Separate scales of maximum cost of insurance rates apply to
substandard 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 16
97150-16
<PAGE> 22
<TABLE>
<CAPTION>
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION SURVIVORSHIP VARIABLE ADJUSTABLE LIFE INSURANCE POLICY
<S> <C>
Variable Life Insurance Benefit-Flexible Premium
51 Madison Avenue Payments. Proceeds Payable at Last Surviving Insured's Death.
New York, N.Y. 10010 AMOUNT OF VARIABLE LIFE INSURANCE OR CASH
VALUE PROCEEDS MAY VARY, REFLECTING INVESTMENT
EXPERIENCE OF SEPARATE ACCOUNT.
No Premiums Payable on or After Younger Insured Age 100.
A Stock Company Incorporated in Delaware Policy is Non-Participating.
</TABLE>
797-150
<PAGE> 1
Exhibit 1.(5)(b)
Form of Guaranteed Minimum Death Benefit Rider for Survivorship
Variable Adjustable Life Insurance
<PAGE> 2
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
RIDER
GUARANTEED MINIMUM DEATH BENEFIT (GMDB)
1. WHAT IS THE BENEFIT FOR THIS RIDER? Prior to its Expiry Date, this
rider guarantees that the policy to which it is attached will never
lapse because the policy's cash surrender value is not enough to cover
the current Monthly Deduction Charges defined in the policy. The Expiry
Date is shown on the Policy Data page and is based on the benefit
period you selected at time of application for this rider.
2. HOW DOES THE RIDER BENEFIT OPERATE? If on any Monthly Deduction Day,
the policy's cash surrender value is not enough to cover the required
Monthly Deduction Charges, this rider will be activated provided it is
still in force.
When this rider is activated, the Monthly Deduction Charges will be
deducted from the policy's cash value to the extent there is sufficient
value. The amount of the Monthly Deduction Charges which exceeds the
available cash value will be waived, including the charge for this
rider.
3. WHEN IS THIS RIDER IN FORCE? This rider will be in force if all of the
following conditions are met:
(a) The policy is still in force;
(b) This rider has not reached its Expiry Date;
(c) The Guaranteed Minimum Death Benefit (GMDB) Premium Test described
in Section 4 of this rider is satisfied. If this test is not
satisfied, this rider will still be in force provided it has not
ended as described in Section 7; and
(d) The requirements for policy loans, stated in Section 8 of this
rider, must have been satisfied.
If the rider ends during a period when the rider benefit is activated,
the policy will enter the Late Period, as described in the "Premiums"
Section of this policy on the date this rider ends and will lapse in
the event the required payment is not made.
4. HOW IS THE GMDB PREMIUM TEST SATISFIED? The GMDB Premium Test is
satisfied as of a Monthly Deduction Day if the total premiums paid to
date under the policy, less any partial withdrawals made, are at least
equal to the Total GMDB Premium as of that date.
5. WHAT IS A GMDB PREMIUM? The Total GMDB Premium on a Monthly Deduction
Day is equal to the cumulative sum of all Monthly GMDB Premiums from
the Policy Date up to that Monthly Deduction Day. The Monthly GMDB
Premium is shown on the Policy Data page.
6. CAN THE GMDB PREMIUM EVER CHANGE? The Monthly GMDB Premium can change
if: (a) the face amount of the policy or any attached riders changes;
(b) the Life Insurance Benefit Option changes; (c) any riders are added
to or removed from the policy; (d) the class of risk of either Insured
changes; or (e) a partial withdrawal is made. If the Monthly GMDB
Premium changes, the Total GMDB Premium will increase each month by the
new Monthly GMDB Premium beginning on the Monthly Deduction Day on or
after the date of the change.
If the Monthly GMDB Premium changes, we will give you new Policy Data
pages which reflect the change.
7. WHAT HAPPENS IF THE GMDB PREMIUM TEST IS NOT SATISFIED? If on a Monthly
Deduction Day, this policy does not satisfy the GMDB Premium Test and
the amount by which the Test is failed is more than one Monthly GMDB
Premium, we will send a notice to you requesting a payment equal to the
amount necessary to pass the GMDB Premium Test as of that Monthly
Deduction Day. If this payment is not received by the next Monthly
Deduction Day, this rider will end on that day. However, we will
reinstate this rider if the required payment is received before the
Monthly Deduction Day which follows the date the rider ended.
(OVER)
797-295
<PAGE> 3
GUARANTEED MINIMUM DEATH BENEFIT (GMDB)
(CONTINUED)
8. WHAT HAPPENS TO THIS RIDER IF I TAKE A POLICY LOAN? In order to keep
this rider in force, the following restrictions apply to loans taken
under the policy to which this rider is attached:
(a) If a loan is taken during the first 2 policy years, this rider will
end when the loan is taken.
(b) If a loan is requested after the first 2 policy years (or when
unpaid loan interest is charged as a new loan), the cash surrender
value less the new loan and any previous unpaid loans and accrued
interest must exceed the total of the Monthly GMDB Premiums,
accumulated at an annual effective rate of 6%, as of that date.
If the new loan is for an amount which would cause this rider to
end, we will notify you prior to granting the loan.
9. IS THERE A CHARGE FOR THIS RIDER? There is a charge for this rider, as
shown on the Policy Data page. This charge will be deducted from the
policy's cash value on each Monthly Deduction Day.
10. ARE SUPPLEMENTARY BENEFIT RIDERS COVERED UNDER THIS RIDER? The GMDB
benefit also covers the monthly deductions due for any other riders
which may be included in this policy. However, if Monthly Deduction
Charges are being waived under another rider attached to this policy,
that other rider's benefit supersedes any benefits under the GMDB
rider.
11. DOES THIS RIDER HAVE CASH VALUE OR LOAN VALUE? This rider does not have
cash or loan value.
12. HOW ARE DATES AND AMOUNTS FOR THIS RIDER SHOWN?
When this rider is issued at the same time as the policy, we show the
Expiry Date, the Monthly GMDB Premium and the charge for this rider on
the Policy Data page. The rider and policy have the same date of issue.
When this rider is added to a policy which is already inforce, we also
put in an add-on rider. The add-on rider shows the Expiry Date, the
Monthly GMDB Premium, the charge for this rider and the date of issue,
which will be a Monthly Deduction Day.
13. IS THIS RIDER A PART OF THE CONTRACT? This rider, when paid for, is
made a part of the policy, based on the application for the rider.
14. WHEN WILL THIS RIDER END? You may cancel this rider, at any time, by
sending us your signed notice. This rider will end on the Monthly
Deduction Day on or next following the date we receive your request.
This rider will also end for any of the following reasons:
(a) If the rider reaches its Expiry Date;
(b) The GMDB Premium Test is not satisfied on a Monthly Deduction Day,
and any required payment is not received by the next Monthly
Deduction Day;
(c) If a loan is taken under the policy which violates the restrictions
set forth in Section 8;
(d) If the policy ends or is surrendered.
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
/s/George J. Trapp /s/Frederick J. Sievert
- ------------------ -----------------------
Secretary President
<PAGE> 1
Exhibit 1.(5)(c)
Form of Level First-To-Die Term Rider for Survivorship
Variable Adjustable Life Insurance
<PAGE> 2
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
RIDER
LEVEL FIRST-TO-DIE TERM (FTD)
1. WHAT IS YOUR BENEFIT? We will pay the face amount of this rider
promptly when we have proof that either Insured died while this rider
was in effect. The benefit under this rider will only be paid once,
even if both Insureds die at the same time. In this case, if each
Insured has a different beneficiary, we will split the rider benefit
equally between these beneficiaries.
2. CAN THE FACE AMOUNT OF THIS RIDER BE CHANGED? You can decrease the face
amount of this rider by sending us your signed written notice. However,
the new face amount cannot be less than our minimum amount to issue the
rider. The face amount of this rider cannot be increased.
3. WHAT IS THE COST OF INSURANCE FOR THIS RIDER? The monthly cost of
insurance for this rider will be deducted from the cash value of the
policy on each Monthly Deduction Day.
The cost of insurance rates for this rider will be set by us in
advance, at least once each year. Any change in cost of insurance rates
will be made on a uniform basis for all Insureds in the same class. The
cost of insurance rates are guaranteed to never exceed the rates shown
in the Table of Maximum Cost of Insurance Rates for this rider which is
included among the Policy Data pages.
4. DOES THIS RIDER HAVE CASH OR LOAN VALUES? The term insurance provided
by this rider does not have cash or loan values.
5. IS THIS RIDER PART OF THE CONTRACT? This rider, when paid for, is made
part of the policy, based on the application for the rider.
6. MAY WE CONTEST THIS RIDER? We will not contest this rider after it has
been in force during the lifetime of both Insureds for 2 years from the
date of issue of the rider.
7. DOES THIS INSURANCE COVER SUICIDE OF THE INSUREDS? Suicide of the first
of the Insureds to die or the suicide of either Insured, if both
Insureds die at the same time, while sane or insane, within 2 years of
the date of issue of this rider, is not covered by this rider. In that
event, this rider will end and the only amount payable will be the cost
of insurance charges made in connection with this rider.
8. WHAT IS THE RIDER'S DATE OF ISSUE? When this rider is issued at the
same time as the policy, the rider and the policy have the same date of
issue.
When this rider is added to a policy which is already in effect, we
also put in an add-on rider. The amount of new term insurance and the
date of issue are also shown in the add-on rider.
9. WHEN DOES THIS RIDER END? You may cancel this rider at any time. To do
this, you must send your signed notice to us. The rider will end on the
Monthly Deduction Day which is on or next follows the date we receive
your request. This rider ends at the earlier of the date of death of
the first of the Insureds to die or the policy anniversary on which the
older Insured is age 95. This rider will also end if the policy ends or
is surrendered.
10. IS THERE A SURRENDER CHARGE FOR THIS RIDER? The Table of Maximum
Surrender Charges and the Target Premium indicated on the Policy Data
pages include amounts for this rider. If the face amount of this rider
is decreased, or if the rider ends but the policy remains in force, the
Target Premium will be reduced and a surrender charge will be deducted
if the policy's initial face amount is within the surrender charge
period. However, this does not apply if the rider ends due to the death
of either Insured or due to the older Insured reaching age 95. In
addition, if both the policy and rider end at the same time, any
surrender charge which applies to the policy will also include an
amount for this rider.
NEW YORK LIFE INSURANCE AND
ANNUITY CORPORATION
/s/George J. Trapp /s/Frederick J. Sievert
- ------------------ -----------------------
Secretary President
797-475
<PAGE> 1
Exhibit 1.(5)(d)
Form of First-To-Die Monthly Deduction Waiver Rider for Survivorship
Variable Adjustable Life Insurance
<PAGE> 2
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
RIDER
FIRST-TO-DIE MONTHLY DEDUCTION WAIVER (FTDMDW)
1. WHAT IS YOUR BENEFIT? This rider provides for the waiver of monthly
deduction charges, made against the policy's cash value, in the event
that either Insured dies while this rider is in effect.
2. WHAT MONTHLY DEDUCTIONS WILL BE WAIVED? The monthly deductions for this
policy which we will waive on each Monthly Deduction Day are:
(a) The monthly contract charge;
(b) The monthly cost of insurance for the base policy;
(c) The monthly cost for any riders attached to the policy;
(d) The charge per $1,000 of policy face amount, if applicable.
These deductions are described in more detail in the Cash Value and
Loans section of the policy and on the Policy Data Pages.
3. WHEN WILL MONTHLY DEDUCTIONS BE WAIVED? We will start to waive the
monthly deductions for this policy as defined above, on the Monthly
Deduction Day which is on or next follows the date on which proof is
furnished that either Insured died while this rider was in effect.
It may happen that the death of either Insured occurs during the late
period. In this case, before we will approve any claim under this
rider, we will require that sufficient cash surrender value be
available to pay the monthly deduction charges for the policy month or
months that run from the beginning of the late period until the policy
month in which the death of the Insured occurred.
4. WHAT RESTRICTIONS APPLY WHILE THIS RIDER'S BENEFIT IS IN EFFECT?. After
the death of one of the Insureds, increases to the policy's face amount
and changes to the Life Insurance Benefit Option are no longer
permitted. In addition, unplanned premiums which would result in an
increase in the life insurance benefit greater than the increase in the
cash value, cannot be paid.
5. WHAT IS THE MONTHLY COST FOR THIS RIDER? The monthly cost for this
rider will be deducted from the cash value of the policy on each
Monthly Deduction Day except when this rider's benefit is in effect.
On the issue date and each subsequent anniversary, we will determine
the monthly cost for this rider the next policy year. This cost will be
equal to the monthly cost of insurance rate per $1,000 multiplied by
the result of the following calculation:
(a) first, we determine the present value of all future monthly
deductions that would be waived assuming one Insured died on that
anniversary and the other Insured survived to his or her (a)life
expectancy.
(b) next, we repeat the same calculation, but assume that the Insured
who we assumed survived in paragraph (a) died on that anniversary and
that the other Insured survived to his or her life expectancy.
(c) next, we compare the 2 present values which were calculated in
paragraphs (a) and (b) and take the greater amount.
For the purposes of this calculation, we use the guaranteed minimum
interest rate of the Fixed Account and also assume the guaranteed
monthly contract charge, and the then current cost of insurance
charges. We will also take into account the per $1,000 charge, if
applicable.
(over)
797-260
<PAGE> 3
FIRST-TO-DIE MONTHLY DEDUCTION WAIVER (FTDMDW)
(CONTINUED)
The actual cost of insurance rates per $1,000 for this rider will be
set by us, in advance, at least once each year. Any change in cost of
insurance rates will be made on a uniform basis for all Insureds in the
same class. The cost of insurance rates are guaranteed to never exceed
the rates shown in the Table of Maximum Cost of Insurance Rates for
this rider which is included among the Policy Data pages.
6. DOES THIS RIDER HAVE CASH OR LOAN VALUES? This rider does not have cash
or loan values.
7. IS THIS RIDER PART OF THE CONTRACT? This rider, when paid for, is made
a part of the policy, based on the application for the rider.
8. MAY WE CONTEST THIS RIDER? We will not contest this rider after it has
been in force during the lifetime of both Insureds for 2 years from its
date of issue.
9. DOES THIS RIDER COVER SUICIDE OF THE INSUREDS? Suicide of the first of
the Insureds to die, while sane or insane, within 2 years of the date
of issue of this rider, is not covered by this rider. In that event,
this rider will end and the only amount payable will be the cost of
insurance charges which were made in connection with this rider.
10. WHAT IS THE RIDER'S DATE OF ISSUE? When this rider is issued at the
same time as the policy, the rider and the policy have the same date of
issue. When this rider is added to a policy which is already in force,
we also put in an add-on rider. The add-on rider shows the date of
issue.
9. WHEN DOES THIS RIDER END? You can cancel this rider at any time. To do
this, you must send your signed notice to us. This rider will end on
the Monthly Deduction Day which is on or next follows the date we
receive your request. This rider ends on the policy anniversary on
which the older Insured is age 95, unless the rider's benefit is in
effect at that time.
This rider also ends if the policy ends or is surrendered.
10. IS THERE A SURRENDER CHARGE FOR THIS RIDER? The Table of Maximum
Surrender Charges and the Target Premium indicated on the Policy Data
pages include amounts for this rider. If this rider ends but the policy
remains in force, the Target Premium will be reduced and a surrender
charge will be deducted if the policy's initial face amount is within
the surrender charge period. However, this does not apply if the rider
ends due to the older Insured reaching age 95. In addition, if both the
policy and rider end at the same time, any surrender charge which
applies to the policy will also include an amount for this rider.
NEW YORK LIFE INSURANCE AND
ANNUITY CORPORATION
/s/George J. Trapp /s/Frederick J. Sievert
- ------------------ -----------------------
Secretary President
797-260
<PAGE> 1
Exhibit 1.(5)(e)
Form of Supplementary Term Rider for Survivorship
Variable Adjustable Life Insurance
<PAGE> 2
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
RIDER
SUPPLEMENTARY TERM (STR)
1. WHAT IS THE BENEFIT FOR THIS RIDER? We will pay the Term Insurance
Benefit to the beneficiary promptly when we have proof that both
Insureds died while this rider was in effect.
On the issue date of the policy, the Term Insurance Benefit is the
amount you specified in the application. The initial Term Insurance
Benefit is shown on the Policy Data Page. The initial Term Insurance
Benefit when added to the initial face amount of the base policy equals
the initial Target Face Amount, which is also shown on the Policy Data
page.
On each subsequent Monthly Deduction Day, the Term Insurance Benefit
for this rider will equal the Target Face Amount less the life
insurance benefit under the policy in effect at that time.
2. WHAT ARE THE RESTRICTIONS ON THE POLICY'S LIFE INSURANCE BENEFIT
OPTION? In order for this rider to be issued, Life Insurance Benefit
Option 1 must be in effect under the policy. The Life Insurance Benefit
Option may not be changed, even after this rider ends or is terminated.
3. DOES THE AMOUNT OF INSURANCE UNDER THIS RIDER CHANGE? It may happen
that the life insurance benefit under the policy increases in
accordance with Section 1.3 of the policy. In this case, the Term
Insurance Benefit will automatically decrease by the same amount on the
Monthly Deduction Day which is on or next follows the date of the
increase. If, instead, the policy's life insurance benefit decreases in
accordance with Section 1.3 of the policy, the Term Insurance Benefit
will automatically increase by the same amount on the Monthly Deduction
Day which is on or next follows the date of the decrease. These changes
to the Term Insurance Benefit will be made in order to maintain a level
Target Face Amount.
If the policy's life insurance benefit changes for any reason other
than as stated in Section 1.3 of the policy, the Term Insurance Benefit
of this rider will not be changed. Instead, a corresponding increase or
decrease resulting from the change in the policy's life insurance
benefit, will be made to the Target Face Amount.
You can also request an increase or decrease in the Term Insurance
Benefit under this rider at any time. In this case, a corresponding
change will be made to the Target Face Amount.
Any requested decrease to the Target Face Amount will first be taken
from the Term Insurance Benefit and then, if necessary, the policy's
life insurance benefit, unless indicated otherwise in your request.
Both Insureds must be alive in order to increase the Target Face
Amount. Evidence of insurability, satisfactory to us, must be furnished
any time there is an increase in the Target Face Amount.
4. DOES THIS RIDER CONTINUE IF THE TERM INSURANCE BENEFIT EQUALS ZERO? If,
on a Monthly Deduction Day, the life insurance benefit under the policy
equals or exceeds the Target Face Amount, the Term Insurance Benefit
will be reduced to zero, but the rider will remain in force. If the
policy's life insurance benefit subsequently drops below the Target
Face Amount, the Term Insurance Benefit will again equal the difference
between the Target Face Amount and the policy's life insurance benefit.
5. WHAT IS THE COST OF INSURANCE FOR THIS RIDER? The monthly cost of
insurance for this rider will be deducted from the policy cash value,
on each Monthly Deduction Day. The cost of insurance will be based on
the Term Insurance Benefit as determined on each Monthly Deduction Day
and the cost of insurance rate in effect at that time. The cost of
insurance rates will be based upon the duration of the policy and each
Insured's current underwriting class. See Section 3.2 of the policy for
further information. The cost of insurance rates for this rider will be
set by us, in advance, at least once each year. Any change in these
rates will be made on a uniform basis for all Insureds in the same
class. The cost of insurance rates are guaranteed to never exceed the
rates shown in the Table of Maximum Cost of Insurance Rates for this
rider which is included among the Policy Data pages.
(OVER)
797-240
<PAGE> 3
SUPPLEMENTARY TERM (STR)
(CONTINUED)
6. MAY THE TERM INSURANCE UNDER THIS RIDER BE CONVERTED? You can have all
or part of the Term Insurance Benefit under this rider used to increase
the face amount of the policy to which this rider is attached. This
type of change is called a conversion. A new set of surrender charges
will apply to the increased policy face amount. No evidence of
insurability will be required for a conversion. In addition, no change
will be made to the Target Face Amount. The rider must be in effect on
the date of the conversion. The conversion takes effect on the Monthly
Deduction Day which is on or next follows the date we receive your
written request for the conversion. Any term insurance which is
converted ends when the conversion takes effect.
7. WHEN MAY THE TERM INSURANCE BE CONVERTED? While at least one Insured is
alive, the term insurance provided under this rider can be converted to
the base policy as of any Monthly Deduction Day. The final date you can
request a conversion is the policy anniversary on which the older
Insured is or would have been age 90.
8. ARE THERE AMOUNT LIMITATIONS ON THE TARGET FACE AMOUNT, THE POLICY LIFE
INSURANCE BENEFIT AND THE TERM INSURANCE BENEFIT? The following amount
limitations apply under this rider. These limits do not apply to
changes in the policy's life insurance benefit made in accordance with
Section 1.3 of the policy or the resulting changes made to the Term
Insurance Benefit.
(a) The Target Face Amount cannot be decreased to an amount below
$1,000,000, unless the decrease is due to a partial withdrawal under
the policy.
(b) The policy's life insurance benefit cannot be decreased to an
amount below $200,000, unless the decrease is due to a partial
withdrawal under the policy.
(c) The Term Insurance Benefit cannot exceed 4 times the policy's life
insurance benefit. No increase in the Term Insurance Benefit will be
permitted that would violate this limit. If a change is made which
would reduce the policy's life insurance benefit in violation of this
limit, the amount of term insurance which exceeds 4 times the policy's
new life insurance benefit will be converted to the base policy.
If you request a change which would cause the limitations stated in (a)
or (b) to be violated (except due to a partial withdrawal), you will be
notified. If you still wish to have the change made, the term insurance
under this rider must be fully converted or this rider must be
terminated.
9. DOES THIS RIDER HAVE CASH OR LOAN VALUE? The term insurance provided by
this rider does not have cash or loan values.
10. IS THIS RIDER PART OF THE CONTRACT? This rider, when paid for, is made
part of the policy, based on the application for the rider.
11. MAY WE CONTEST THIS RIDER? We will not contest this rider after it has
been in force during the lifetime of each Insured for 2 years from the
date of issue of this rider. The right to contest beyond this 2 year
period is limited to only the Insured(s) who died during such period.
The rider is incontestable with respect to the Insured(s) who survived
the 2 year period.
We will not contest the amount of any increase in the Term Insurance
Benefit after this additional insurance has been in force during the
lifetime of each Insured for 2 years from the effective date of the
increase. The right to contest beyond this 2 year period is limited to
only the Insured(s) who died during such period. The additional
insurance is incontestable with respect to the Insured(s) who survived
the 2 year period.
However, if the increase in the Term Insurance Benefit is the result of
a corresponding decrease in the life insurance benefit of the base
policy, no new contestable period will apply to this insurance.
97240-2
<PAGE> 4
SUPPLEMENTARY TERM (STR)
(CONTINUED)
12. DOES THIS INSURANCE COVER SUICIDE OF THE INSUREDS? In the event of the
suicide of the first of the Insureds to die, within 2 years of the date
of issue of this rider, the rider will continue in force on the
surviving Insured.
Suicide of both Insureds at the same time, or the surviving Insured,
while sane or insane, within 2 years of the date of issue of this
rider, is not covered by this rider. In that event, any monthly costs
which were deducted for this rider will be part of any amount payable
because of the Insured's death.
For any increase in the Term Insurance Benefit under this rider, the 2
year suicide exclusion period will be measured from the effective date
of the increase.
However, if the increase in the Term Insurance Benefit is the result of
a corresponding decrease in the life insurance benefit of the base
policy, no new suicide exclusion period will apply to this insurance.
13. WHAT IS THIS RIDER'S DATE OF ISSUE? When this rider is issued at the
same time as the policy, the rider and the policy have the same date of
issue.
When this rider is added to a policy which is already in effect, we
also put in an add-on rider. The Term Insurance Benefit, the Target
Face Amount and the date of issue are also shown in the add-on rider.
14. WHEN DOES THIS RIDER END? You may cancel this rider by sending us your
signed notice. This rider will end on the Monthly Deduction Day which
is on or next follows the date we receive your request. This rider ends
on the policy anniversary on which the younger Insured is or would have
been age 100, or if the rider is fully converted. This rider also ends
if the policy ends or is surrendered.
NEW YORK LIFE INSURANCE AND
ANNUITY CORPORATION
/s/George J. Trapp /s/Frederick J. Sievert
- ------------------ -----------------------
Secretary President
97240-3
<PAGE> 1
Exhibit 1.(5)(f)
Form of Accelerated Benefits Rider for Survivorship
Variable Adjustable Life Insurance
<PAGE> 2
RIDER
ACCELERATED
BENEFITS
(AB)
RECEIPT OF ACCELERATED BENEFITS MAY BE TAXABLE OR MAY AFFECT YOUR ELIGIBILITY
FOR BENEFITS UNDER STATE OR FEDERAL LAW. YOU SHOULD CONSULT WITH YOUR PERSONAL
TAX ADVISOR. DEATH BENEFITS, AND ANY CASH OR LOAN VALUES, WILL BE REDUCED IF AN
ACCELERATED BENEFIT IS PAID.
BENEFIT This is a life insurance rider which pays accelerated death benefits as
described below. Provided the policy is in force on the date we receive an
election under this rider, we will make a payment of these death benefits in a
single sum to you as the Owner, when we have proof that the Insured under the
basic policy has a life expectancy of 12 months or less.
The amount payable under this rider will equal: the Percentage Elected
multiplied by the Eligible Proceeds; multiplied by the Interest Factor; minus an
Administrative Fee of up to $150; minus the elected percentage of any unpaid
policy loan.
ELIGIBLE PROCEEDS The total amount of Eligible Proceeds under this rider shall
be determined as of the date we receive your application for benefits under this
rider and shall equal:
(a) the life insurance benefit; plus
(b) any paid-up insurance additions or other benefits provided under the basic
policy; plus
(c) the amount payable under any rider providing a level amount of insurance
on the Insured.
However, any level term insurance rider shall not be considered part of the
Eligible Proceeds under this rider, if its expiration date is within one year of
the date we receive your application. Instead, such rider will continue to its
expiry date.
PERCENTAGE ELECTED You can elect to receive the minimum accelerated death
benefit of 25% of the Eligible Proceeds. You may also elect to receive an
accelerated death benefit based on 50%, 75% or 100% of the Eligible Proceeds.
However, in no event can this benefit be less than $25,000, or exceed $250,000
under all of our policies in force on the Insured. You may elect to receive an
accelerated death benefit based on another percentage, or based on Eligible
Proceeds in excess of $250,000, only if we agree.
INTEREST FACTOR The Interest Factor shall be an adjustment which reduces the
Eligible Proceeds. This adjustment will be based on our assumptions of the life
expectancy of the Insured. We also will determine, based on these assumptions,
the appropriate adjustments for interest on any cash value, or for any monthly
costs of insurance or scheduled premiums.
These adjustments are based upon procedures and standards on file with, or
required by, the Insurance Department of the state in which this rider is
delivered.
APPLICATION FOR BENEFITS You must provide us with a written application for
benefits under this rider specifying the Percentage Elected along with the
policy. You must also provide evidence of the Insured's reduced life expectancy
which is satisfactory to us. Such evidence must include a certification from a
licensed physician that the Insured's life expectancy is 12 months or less. In
addition, we reserve the right to have the Insured examined by a physician of
our choice, at our expense.
If the policy is subject to an irrevocable beneficiary designation or an
assignment, you must provide us with a written consent by any such beneficiary
or assignee to any payment under this rider.
Your application for benefits under this rider must be received by us more than
one year prior to the expiration date of the policy.
CONTINUATION OF POLICY COVERAGE The face amount of any insurance which stays in
force after a payment under the terms of this rider must meet our minimum amount
limits for the plan of insurance under the policy or $25,000, whichever is
greater.
Upon our making payment under the terms of this rider, the basic policy's face
amount and any other death benefits, the basic policy premiums, monthly costs of
insurance, and any cash values, paid-up insurance additions or unpaid policy
loan will be reduced based on the Percentage Elected. The amount of any
insurance under a rider which is part of the Eligible Proceeds shall also be
reduced based on the Percentage Elected.
(OVER)
929-495
<PAGE> 3
ACCELERATED
BENEFITS
(AB)
(CONTINUED)
All policy and rider benefits, premiums, monthly costs of insurance and any cash
values, shall also be adjusted, based on our rules in effect at that time for
determining applicable benefits, premiums, monthly costs of insurance and
values. All such adjustments will be made effective as of the date your
application for benefits under this rider is received by us.
CONTINUATION OF RIDERS All riders attached to the policy, except an Accidental
Death Benefit rider, a Waiver of Premium Benefit or Monthly Deduction Waiver
rider or a decreasing term insurance rider, shall end when we make a partial
payment under the terms of this rider, unless we agree otherwise. In the case of
a partial payment, any Waiver of Premium Benefit or Monthly Deduction Waiver
rider and the full amount of any Accidental Death Benefit rider shall continue
in accordance with its terms. In addition, if the policy contains a decreasing
term rider, such rider can not be accelerated. Instead, it shall be continued to
its expiry date.
COVERAGE ON ANOTHER INSURED Any rider providing a level amount of insurance on
the life of another Insured not covered under the basic policy can be
accelerated. However, we must have proof that the other Insured has a life
expectancy of 12 months or less. Such rider must be accelerated 100%, unless we
agree to a lower percentage.
RESTORATION OF DEATH BENEFIT If we have proof that the Insured died within 60
days after the payment of an Accelerated Benefit under this rider, we will
refund to the beneficiary, the Administrative Fee and the amount of the Interest
Factor adjustment that we deducted when benefits were accelerated.
VALUES This rider does not have any cash or loan value. It is not eligible for
dividends.
CONTRACT This rider is made a part of the policy to which it is attached at
issue of the policy. If added to a policy which is already in force, this rider
is made a part of that policy, based on the application for this rider.
DATES This rider and the policy to which it is attached have the same date of
issue, unless the rider is added to a policy which is already in force. In this
case, the date of issue of this rider is shown in an add-on rider. The add-on
rider will be put in the policy.
PROTECTION AGAINST CREDITORS AND GOVERNMENT AGENCIES Payments we make under this
rider are, to the extent applicable law permits, exempt from the claims,
attachments or levies of creditors or government agencies. If you are required
by a government agency to use this option in order to apply for, obtain, or keep
a government benefit or entitlement, you are not eligible for this benefit.
WHEN RIDER ENDS Unless we agree otherwise, this rider ends when we receive an
application for benefits under this rider. This rider also ends if the policy is
surrendered or if it lapses, even if it is continued as extended term or reduced
paid-up insurance. You may cancel this rider on any date by sending us a signed
written request which will be effective when we receive it.
NEW YORK LIFE INSURANCE AND
ANNUITY CORPORATION
BY /s/Frederick J. Sievert
-----------------------
President
/s/George J. Trapp
------------------
Secretary
929-495
