Registration No. 33-67012
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. _______ [ ]
Post-Effective Amendment No. ___8___ [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. ___9___ [X]
LB VARIABLE ANNUITY ACCOUNT I
(Exact Name of Registrant)
LUTHERAN BROTHERHOOD
(Name of Depositor)
625 Fourth Avenue South, Minneapolis, Minnesota 55415
(Address of Depositor's Principal Executive Offices) ( Zip Code)
Depositor's Telephone Number, including Area Code: (612) 340-7215
David J. Larson
Senior Vice President, Secretary and General Counsel
Lutheran Brotherhood
625 Fourth Avenue South
Minneapolis, Minnesota 55415
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box)
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on May 1, 1998 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(i) of Rule 485
[ ] on (date) pursuant to paragraph (a)(i) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(ii) of Rule 485
[ ] on (date) pursuant to paragraph (a)(iii) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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<PAGE>
LB VARIABLE ANNUITY ACCOUNT I
CROSS REFERENCE SHEET
Pursuant to Rule 495 under the Securities Act of 1933 indicating the
location in the Prospectus of the information called for by the Items of
Parts A and B of Form N-4.
Part A
Item Number and Caption Location
- ----------------------- --------
1. Cover Page Cover Page
2. Definitions Definitions
3. Synopsis or Highlights Summary
4. Condensed Financial
Information Condensed Financial Information
5. General Description of Registrant,
Depositor, and Portfolio Companies Lutheran Brotherhood, the Variable
Account and the Fund; Voting
Rights; Sales and Other Agreements
6. Deductions Charges and Deductions; Sales and
Other Agreements
7. General Description of
Variable Annuity Contracts Lutheran Brotherhood, the Variable
Account and the Fund -- Addition,
Deletion or Substitution of
Investments; The Contracts --
Allocation of Premiums; --
Surrenders (Redemptions); --
Transfers; -- Contract Owner,
Beneficiaries and
Annuitants; Annuity Provisions --
Frequency and Amount of Annuity
Payments; General Provisions --
Postponement of Payments
8. Annuity Period Annuity Provisions
9. Death Benefit The Contracts -- Death Benefit
Before the Maturity Date; -- Death
Benefit After the Maturity Date
10. Purchases and Contract Value The Contracts -- Issuance of a
Contract; -- Allocation of
Premiums; -- Accumulated Value;
Accumulation Units and Accumulation
Unit Value; Sales and Other
Agreements
11. Redemptions The Contracts -- Free Look Period;
-- Surrender (Redemptions); General
Provisions -- Postponement of
Payments
12. Taxes Charges and Deductions -- Other
Taxes; Federal Tax Status
13. Legal Proceedings Legal Proceedings
14. Table of Contents of the Statement
of Additional Information Statement of Additional Information
Table of Contents
Part B
15. Cover Page Cover Page
16. Table of Contents Table of Contents
17. General Information and History Introduction
18. Services Administration of the Contracts;
Custody of Assets; Independent
Public Accountants and Financial
Statements
19. Purchase of Securities Being
Offered Distribution of the Contracts
20. Underwriters Distribution of the Contracts
21. Calculation of Yield Quotations of
Money Market Sub-Accounts Calculation of Yield
22. Annuity Payments See "Annuity Provisions" in Part A
23. Financial Statements Independent Public Accountants and
Financial Statements
Part C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered in Part C to this Registration Statement.
<PAGE>
PROSPECTUS
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INDIVIDUAL FLEXIBLE PREMIUM
VARIABLE ANNUITY CONTRACT
ISSUED BY
LUTHERAN BROTHERHOOD
625 Fourth Avenue South * Minneapolis, Minnesota 55415 * (612) 340-7210
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This Prospectus describes an individual flexible premium variable annuity
contract (the "Contract") being offered by Lutheran Brotherhood ("LB"), a
fraternal benefit society organized under the laws of the state of
Minnesota. LB is offering the Contract only in situations in which the
Annuitant is eligible for membership in Lutheran Brotherhood. The Contract
may be sold to or in connection with retirement plans which may or may not
qualify for special Federal tax treatment under the Internal Revenue Code.
Annuity payments under the Contract are deferred until a selected later
date.
The Contract Owner may elect to have premiums accumulate on a variable basis
and/or on a fixed basis. Premiums may be allocated, as designated by the
Contract Owner, to one or more Subaccounts of LB Variable Annuity Account I
(the "Variable Account"), a separate account of LB, and/or to the Fixed
Account (which is the general account of LB, and which pays interest at a
guaranteed fixed rate). The assets of each Subaccount will be invested
solely in a corresponding Portfolio of LB Series Fund, Inc. (the "Fund"),
which is a diversified, open-end management investment company (commonly
known as a "mutual fund"). The accompanying Prospectus for the Fund
describes the investment objectives and attendant risks of the seven
Portfolios of the Fund -- the Growth Portfolio, the High Yield Portfolio,
the Income Portfolio, the Opportunity Growth Portfolio, the Mid Cap Growth
Portfolio, the World Growth Portfolio, and the Money Market Portfolio.
Additional Subaccounts (together with the related additional Portfolios of
the Fund) may be added in the future. The Accumulated Value of the Contract
in the Subaccounts and, except to the extent fixed amount annuity payments
are elected by the Contract Owner, the amount of annuity payments will vary,
primarily based on the investment experience of the Portfolio whose shares
are held in the Subaccounts designated. Premiums allocated to the Fixed
Account will accumulate at fixed rates of interest declared by LB.
This Prospectus describes only the elements of the Contract pertaining to
the Variable Account except where reference to the Fixed Account of the
Contract is specifically made.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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This Prospectus sets forth concisely the information about the Contract that
a prospective investor ought to know before investing, and should be read
and kept for future reference. It is valid only when accompanied
or preceded by the current Prospectus of LB Series Fund, Inc.
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The date of this Prospectus is May 1, 1998.
[Continued from cover page]
On the date LB approves the Contract Owner's application, the initial
premium and any interest accumulations accrued during the underwriting
period will be allocated among the Subaccount(s) and the Fixed Account
according to the Contract Owner's instructions. See "THE CONTRACTS--
Allocation of Premiums." Subsequent premiums will be allocated among the
Subaccounts and the Fixed Account in the same proportion as the initial
premium, at the end of the Valuation Period in which the subsequent premium
is received by LB.
Additional information about the Contract, LB and the Variable Account,
contained in a Statement of Additional Information dated May 1, 1998, has
been filed with the Securities and Exchange Commission and is available upon
request without charge by writing to Lutheran Brotherhood, 625 Fourth Avenue
South, Minneapolis, Minnesota 55415. The Statement of Additional Information
relating to the Contract having the same date as this Prospectus is
incorporated by reference in this Prospectus. The Securities and Exchange
Commission maintains a web site (http://www.sec.gov) that contains the
Statement of Additional Information material incorporated by reference
herein and other information regarding the Contract. The Table of Contents
for the Statement of Additional Information may be found on page 34 of this
Prospectus. Information about the Fixed Account may be found in Appendix A
of this Prospectus.
TABLE OF CONTENTS
PAGE
DEFINITIONS 4
SUMMARY FEE TABLE 6
SUMMARY 8
LUTHERAN BROTHERHOOD, THE VARIABLE ACCOUNT AND THE FUND 12
Lutheran Brotherhood 12
The Variable Account 12
LB Series Fund, Inc. 13
Addition, Deletion or Substitution of Investments 15
THE CONTRACTS 16
Issuance of a Contract 16
Free Look Period 16
Allocation of Premium 16
Accumulated Value; Accumulation Units
and Accumulation Unit Value 17
Death Benefit Before the Maturity Date 18
Death Benefit After the Maturity Date 19
Surrender (Redemption) 19
Transfers 20
Telephone Transfers 20
Special Transfer Service -- Dollar Cost Averaging 20
Assignments 21
Contract Owner, Beneficiaries and Annuitants 21
CHARGES AND DEDUCTIONS 21
Surrender Charge (Contingent Deferred Sales Charge) 21
Administrative Charge 23
Mortality and Expense Risk Charge 23
Investment Advisory Fee of the Fund 23
Taxes 24
Sufficiency of Charges 24
ANNUITY PROVISIONS 24
Maturity Date 24
Settlement Options 24
Frequency and Amount of Annuity Payments 25
Subaccount Annuity Unit Value 26
Assumed Investment Rate 26
GENERAL PROVISIONS 26
Postponement of Payments 26
Date of Receipt 27
Reports to Contract Owners 27
Contract Inquiries 27
FEDERAL TAX STATUS 27
Introduction 27
Variable Account Tax Status 27
Taxation of Annuities in General 27
Qualified Plans 29
1035 Exchanges 30
Diversification Requirements 30
Withholding 31
Other Considerations 31
EMPLOYMENT-RELATED BENEFIT PLANS 31
VOTING RIGHTS 32
SALES AND OTHER AGREEMENTS 32
YEAR 2000 33
LEGAL PROCEEDINGS 33
LEGAL MATTERS 33
FINANCIAL STATEMENTS AND EXPERTS 33
FURTHER INFORMATION 33
STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS 34
ORDER FORM 34
APPENDIX A -- MORE INFORMATION ABOUT THE GENERAL ACCOUNT 35
APPENDIX B -- ILLUSTRATION OF MONTHLY VARIABLE
ANNUITY SETTLEMENT OPTION 36
DEFINITIONS
Accumulated Value. The total amount of value held under a Contract at any
time prior to and including the Maturity Date. A Contract's Accumulated
Value will reflect the investment experience of the chosen Subaccounts of
the Variable Account, any amount of value in the Fixed Account, any premiums
paid, any surrenders, and any charges assessed in connection with the
Contract.
Accumulation Unit. A unit of measure by which the value of the Contract's
interest in each Subaccount is determined.
Accumulation Unit Value. The value of each Accumulation Unit representing
the Contract's interest in each Subaccount.
Annuitant. The person(s) named in the Contract whose life is used to
determine the duration of annuity payments involving life contingencies.
Annuity Unit. A unit of measure which is used in the calculation of the
second and each subsequent variable annuity payment.
Annuity Unit Value. The value of each Annuity Unit.
Beneficiary. The person(s) named by the Contract Owner to receive the
Contract's death benefit.
Contract. The individual flexible premium variable annuity contract offered
by LB and described in this Prospectus.
Contract Anniversary. The same date in each succeeding year as the Date of
Issue.
Contract Owner. The person(s) who controls all the rights under the Contract
while an Annuitant is alive. The Annuitant is the Contract Owner, unless
another owner is named in the Contract application. While an Annuitant is
living, the Contract Owner may exercise all rights set out in the Contract.
If there are two Contract Owners, both must act in concert to exercise
ownership rights.
Contract Year. The period from one Contract Anniversary to the next. The
first Contract Year will be the period beginning on the Date of Issue and
ending on the first Contract Anniversary.
Date of Issue. The date on which the application and the first premium are
received by LB at its Home Office.
Fixed Account. The Fixed Account is the general account of LB, which
consists of all assets of LB other than those allocated to a separate
account of LB. Premium payments allocated to the Fixed Account will be paid
a fixed rate of interest (which may not be less than 3.0%) declared by LB at
least annually. Amounts accumulated in the Fixed Account are guaranteed by
LB. (See Appendix A.)
Fund. LB Series Fund, Inc., which is described in the accompanying
Prospectus.
Home Office. LB's office at 625 Fourth Avenue South, Minneapolis, Minnesota
55415 or such other office as LB shall specify in a notice to the Contract
Owner.
LB Representative. A person who is licensed by state insurance officials to
sell the Contracts and who is also a registered representative of LBSC.
LBSC. Lutheran Brotherhood Securities Corp., which is an indirect subsidiary
of Lutheran Brotherhood and which acts as the principal underwriter of the
Contracts.
Lutheran Brotherhood ("LB"). A fraternal benefit society organized under the
laws of the State of Minnesota and owned by and operated for its members and
the issuer of the Contracts, and which acts as investment adviser to the
Fund.
Maturity Date. The date on which the annuity payments are to start as
selected by the Contract Owner, which date must be a Contract Anniversary at
least three years after the Date of Issue.
Minimum Death Benefit Date. For purposes of calculating the amount of the
death benefit before the Maturity Date, the first such date is the Date of
Issue of the Contract. Thereafter, such date occurs every six years on the
Contract Anniversary.
Portfolio. A Portfolio of the Fund. Each Subaccount invests exclusively in
the shares of a corresponding Portfolio of the Fund.
Qualified Plan. A retirement plan qualified under Section 401, 403, 408 or
408A or similar provisions of the Internal Revenue Code.
Subaccount. A subdivision of the Variable Account. Each Subaccount invests
exclusively in the shares of a corresponding Portfolio of the Fund.
Currently, there are seven Subaccounts: the Growth Subaccount (which
invests exclusively in the Growth Portfolio); the High Yield Subaccount
(which invests exclusively in the High Yield Portfolio); the Income
Subaccount (which invests exclusively in the Income Portfolio); the
Opportunity Growth Subaccount (which invests exclusively in the Opportunity
Growth Portfolio); the Mid Cap Growth Subaccount (which invests in the Mid
Cap Growth Portfolio); the World Growth Subaccount (which invests
exclusively in the World Growth Portfolio); and the Money Market Subaccount
(which invests exclusively in the Money Market Portfolio).
Valuation Date. Each day the New York Stock Exchange is open for trading and
any other day on which there is sufficient trading in the securities of a
Portfolio of the Fund such that the current net asset value of its shares
might be materially affected.
Valuation Period. The period commencing at the close of business of a
Valuation Date and ending at the close of business of the next Valuation
Date.
Variable Account. LB Variable Annuity Account I, which is a separate account
of LB. The Subaccounts are subdivisions of the Variable Account.
Written Notice. A written request or notice signed by the Contract Owner and
received by LB at its Home Office.
SUMMARY FEE TABLE
The Contract Owner may allocate premiums and transfer Accumulated Value to
any one of seven Subaccounts -- Growth, High Yield, Income , Opportunity
Growth, Mid Cap Growth, World Growth and Money Market -- or to the Fixed
Account or to any combination of the Subaccounts and the Fixed Account. The
following table shows the various fees and expenses associated with the
Contract.
Contract Owner Transaction Expenses
Sales Load Imposed on Purchase (as a percentage of purchase payments) 0%
Maximum Deferred Sales Load (as a percentage of Excess
Amount surrendered) 6%(1)
Exchange Fee 0%
Annual Contract Fee $30.00(2)
Annual Expenses For Growth, High Yield, Income, Money Market,
Mid Cap Growth and Opportunity Growth Subaccounts
(as a percentage of average daily Accumulated Value or Annuity Unit Value)
Mortality and Expense Risk Fees 1.10%(3)
Total Subaccount Annual Expenses 1.10%
Annual Expenses For Growth, High Yield, Income, Money Market,
Mid Cap Growth and Opportunity Growth Portfolios
(as a percentage of Portfolio average daily net assets)
Management Fees (Investment Advisory Fees) 0.40%(4)
Other Expenses After Expense Reimbursement 0%(5)
Total Portfolio Annual Expenses 0.40%
EXAMPLE (6)
1 year 3 years 5 years 10 years
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If you surrender or annuitize your
Contract at the end of the
applicable time period:
You would pay the following expenses
on a $1,000 investment, assuming
5% annual return on assets $71 $88 $104 $181
If you do not surrender or annuitize your
Contract:
You would pay the following expenses on
a $1,000 investment, assuming 5%
annual return on assets $15 $48 $ 83 $181
Annual Expenses For World Growth Subaccount
(as a percentage of average daily Accumulated Value or Annuity Unit Value)
Mortality and Expense Risk Fees 1.10%(3)
Total Subaccount Annual Expenses 1.10%
Annual Expenses For World Growth Portfolio
(as a percentage of Portfolio average daily net assets)
Management Fees (Investment Advisory Fees) 0.85%(4)
Other Expenses After Expense Reimbursement 0%(5)
Total Portfolio Annual Expenses 0.85%
EXAMPLE (6)
1 year 3 years 5 years 10 years
------ ------- ------- --------
If you surrender or annuitize your
Contract at the end
of the applicable time period:
You would pay the following expenses on
a $1,000 investment, assuming 5%
annual return on assets $76 $101 $127 $230
If you do not surrender or annuitize your
Contract:
You would pay the following expenses on
a $1,000 investment, assuming 5%
annual return on assets $20 $ 62 $106 $230
_________________
(1) See "CHARGES AND DEDUCTIONS--Surrender Charge (Contingent Deferred Sales
Charge)". A surrender charge is deducted only if a full or partial surrender
occurs during the first six Contract Years; no surrender charge is deducted
for surrenders occurring in Contract Years seven and later. The surrender
charge will also be deducted at the time annuity payments begin, except
under certain circumstances. Up to 10% of the Accumulated Value existing at
the time the first surrender in a Contract Year is made may be surrendered
without charge; only the Excess Amount will be subject to a surrender
charge. The maximum charge is 6% of the Excess Amount and is in effect for
the first Contract Year. Thereafter, the surrender charge decreases by 1%
each subsequent Contract Year.
(2) See "CHARGES AND DEDUCTIONS--Administrative Charge". A $30 annual
administrative charge is deducted on each Contract Anniversary only if, on
that Contract Anniversary, the total of premiums paid under the Contract
minus all prior surrenders is less than $5,000 and the Accumulated Value is
less than $5,000. The $30 fee is a Contract charge and is deducted
proportionately from the Subaccounts and the Fixed Account that make up the
Contract's Accumulated Value.
(3) See "CHARGES AND DEDUCTIONS--Mortality and Expense Risk Charge".
(4) See "CHARGES AND DEDUCTIONS--Investment Advisory Fee of the Fund".
(5) The amount shown for Fund Annual Expenses does not reflect a deduction
for operating expenses of the Fund, other than the investment advisory fee,
because LB and its affiliates have agreed to reimburse the Fund for these
operating expenses. For the fiscal year of the Fund ending December 31,
1997, the Fund was reimbursed approximately $2,631,150 for such operating
expenses. See "LUTHERAN BROTHERHOOD, THE VARIABLE ACCOUNT AND THE FUND--LB
Series Fund, Inc.".
(6) In this example, the $30 annual administrative charge is approximated as
a .02% charge based on LB's average contract size.
The purpose of the table is to assist the Contract Owner in understanding
the various costs and expenses that a Contract Owner will bear directly or
indirectly. The table reflects expenses of the Variable Account as well as
the Fund. Cross-references to the relevant sections of the Prospectus for
more complete descriptions of the various costs and expenses have been
provided.
THE EXAMPLE SHOWING EXPENSES FOR SURRENDERS AT 1, 3, 5, AND 10-YEAR PERIODS
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND
ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
SUMMARY
The Contracts
Issuance of a Contract. The Contracts are individual flexible premium
variable annuity contracts issued by LB. In order to purchase a Contract,
application must be made to LB through a licensed LB Representative, who is
also a registered representative of LBSC. The Contracts are offered only in
situations in which the Annuitant is eligible for membership in Lutheran
Brotherhood. The Contracts may be sold to or in connection with retirement
plans which may or may not qualify for special Federal tax treatment under
the Internal Revenue Code. Annuity payments under the Contracts are deferred
until a selected later date.
The minimum amount LB will accept as an initial premium is $600 on an
annualized basis. LB may, however, in its sole discretion, waive such
minimum initial premium requirements. Subsequent premiums may be paid under
the Contracts, but LB may choose not to accept any subsequent premium if it
is less than $50.
Free Look Period. The Contract Owner has the right to return the Contract
within 10 days after such Contract Owner receives the Contract. See "THE
CONTRACTS--Free Look Period".
Allocation of Premiums. Premiums under the Contract may be allocated to one
or more Subaccounts of the Variable Account and to the Fixed Account as
designated by the Contract Owner. The assets of each Subaccount will be
invested solely in a corresponding Portfolio of the Fund--the Growth
Portfolio, the High Yield Portfolio, the Income Portfolio, the Opportunity
Growth Portfolio, the Mid Cap Growth Portfolio, the World Growth Portfolio,
or the Money Market Portfolio. See "LUTHERAN BROTHERHOOD, THE VARIABLE
ACCOUNT AND THE FUND" and "THE CONTRACTS--Allocation of Premiums". The
Accumulated Value of the Contract in the Subaccounts and, except to the
extent fixed amount annuity payments are elected by the Contract Owner, the
amount of annuity payments will vary, primarily based on the investment
experience of the Portfolio whose shares are held in the Subaccounts
designated. Premiums allocated to the Fixed Account will accumulate at fixed
rates of interest declared by LB. (See Appendix A.) See "THE CONTRACTS--
Accumulated Value; Accumulation Units and Accumulation Unit Value".
On the date LB approves the Contract Owner's application, LB will transfer
from the general account the initial premium and any interest accumulations
accrued during the underwriting period among the Subaccount(s) and/or Fixed
Account according to the Contract Owner's instructions. See "THE CONTRACTS--
Allocation of Premiums." Subsequent premiums will be allocated to the
Subaccounts and the Fixed Account in the same proportion as the initial
premium, at the end of the Valuation Period in which the subsequent premium
is received by LB. See "THE CONTRACTS--Allocation of Premiums".
Surrenders. If a Written Notice from the Contract Owner requesting a
surrender is received on or before the Maturity Date, all or part of the
Accumulated Value of a Contract will be paid to the Contract Owner after
deducting any applicable surrender charge. Partial surrenders must be for at
least $500, and may be requested only if the remaining Accumulated Value is
not less than $1,000. Under certain circumstances the Contract Owner may
make surrenders after the Maturity Date. See "THE CONTRACTS--Surrender
(Redemption)".
Transfers. On or before the Maturity Date the Contract Owner may request the
transfer of all or a part of a Contract's Accumulated Value to other
Subaccounts or to the Fixed Account. The total amount transferred each time
must be at least $500 (unless the total value in the Subaccount or the Fixed
Account is less than $500, in which case the entire amount may be
transferred). LB reserves the right to limit the number of transfers in any
Contract Year, provided that at least two such transfers each Contract Year
will always be allowed. With respect to the Fixed Account, transfers out of
the Fixed Account are limited to only one each Contract Year and must be
made on or within 45 days after a Contract Anniversary. After the Maturity
Date, the Contract Owner may, by Written Notice and only once each Contract
Year, change the percentage allocation of variable annuity payments among
the available Subaccounts. See "THE CONTRACTS--Transfers".
Charges and Deductions
The following charges and deductions are made in connection with the
Contracts:
Surrender Charge (Contingent Deferred Sales Charge). No charge for sales
expense is deducted from premiums at the time premiums are paid. However, if
a Contract is surrendered in whole or in part before it has been in force
for six full Contract Years, a surrender charge is deducted from the amount
surrendered; provided that in each Contract Year, a Contract Owner may
surrender without a surrender charge up to 10% of a Contract's Accumulated
Value existing at the time the first surrender is made in that Contract
Year. The maximum charge is 6% of the Excess Amount and is in effect for the
first Contract Year. Thereafter, the surrender charge decreases by 1% each
subsequent Contract Year. In no event will the total surrender charge on any
one Contract exceed 6 1/2% of total gross premiums paid under the Contract.
The surrender charge will also be deducted at the time annuity payments
begin except as set forth under the heading "CHARGES AND DEDUCTIONS--
Surrender Charge (Contingent Deferred Sales Charge)".
Administrative Charge. On each Contract Anniversary prior to and including
the Maturity Date, LB deducts an annual administrative charge of $30 from
the Accumulated Value of each Contract. No such charge is deducted if on
that Contract Anniversary the total amount of premiums paid under the
Contract, less the amount of all prior partial surrenders (which includes
the amount of related surrender charges), is equal to or greater than $5,000
or the Accumulated Value is greater than $5,000.
Mortality and Expense Risk Charge. LB deducts a daily mortality and expense
risk charge to compensate LB for assuming certain mortality and expense
risks. The charge is deducted from the net assets of the Variable Account.
The charge is currently in an amount equal to an annual rate of 1.10%
(approximately 0.80% for mortality risk and approximately 0.30% for expense
risk) of the average daily net assets of each Subaccount in the Variable
Account. This charge is guaranteed not to increase above an annual rate of
1.25%.
Investment Advisory Fee of the Fund. Because the Variable Account purchases
shares of the Fund, the net assets of the Variable Account will reflect the
investment advisory fee incurred by the Fund. LB is paid a daily fee by the
Fund for its investment management services equal to an annual rate of 0.40%
of the aggregate average daily net assets of the Money Market Portfolio,
Growth Portfolio, Income Portfolio, High Yield Portfolio, Mid Cap Growth
Portfolio and Opportunity Growth Portfolio. LB also receives a daily
investment advisory fee from the Fund equal to .85% of the aggregate average
daily net assets of the World Growth Portfolio.
For a more detailed description of these charges and deductions, see
"CHARGES AND DEDUCTIONS".
Annuity Provisions
The Contract Owner may select an annuity settlement option or options, and
may select whether payments are to be made on a fixed or variable (or a
combination of fixed and variable) basis. The Contract Owner may also elect
to receive a single sum by surrendering the Contract on the Maturity Date
and paying any applicable surrender charge. See "ANNUITY PROVISIONS".
Federal Tax Status
For a description of the Federal income tax status of annuities, see
"FEDERAL TAX STATUS --Taxation of Annuities in General". Generally, a
distribution from a Contract before the taxpayer attains age 59 1/2 will
result in a penalty tax of 10% of the amount of the distribution which is
includable in gross income.
Condensed Financial Information
The following condensed financial information is derived from the financial
statements of the Variable Account. The data should be read in conjunction
with the financial statements, related notes and other financial information
included in the Statement of Additional Information.
Selected data for Accumulation Units outstanding throughout the period
ending December 31:
Opportunity Growth Subaccount
-----------------------------
1997 1996
---- ----
Accumulation Unit Value:
Beginning of period $11.79** $10.00
End of period 11.77 11.79
Number of Accumulation Units
outstanding at end of period 15,755,047 8,925,231
World Growth Subaccount
-----------------------
1997 1996
---- ----
Accumulation Unit Value:
Beginning of period $10.93** $10.00
End of period 11.11 10.93
Number of Accumulation Units
outstanding at end of period 12,470,902 6,809,063
<TABLE>
<CAPTION>
Growth Subaccount
-----------------
1997 1996 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Accumulation Unit Value:
Beginning of period $29.52 $24.38 $17.95 $19.68*
End of period 38.02 29.52 24.38 17.95
Number of Accumulation Units
outstanding at end of period 19,279,447 13,809,177 7,742,874 3,142,640
High Yield Subaccount
----------------------
1997 1996 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Accumulation Unit Value:
Beginning of period $24.35 $22.06 $18.64 $20.41
End of period 27.50 24.35 22.06 18.64
Number of Accumulation Units
outstanding at end of period 15,720,991 10,632,678 5,557,895 2,514,043
Income Subaccount
-----------------
1997 1996 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Accumulation Unit Value:
Beginning of period $19.39 $18.98 $16.07 $17.21
End of period 20.86 19.39 18.98 16.07
Number of Accumulation Units
outstanding at end of period 11,878,420 9,066,360 5,274,785 2,264,894
Money Market Subaccount
-----------------------
1997 1996 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Accumulation Unit Value:
Beginning of period $1.48 $1.43 $1.33 $1.33
End of period 1.55 1.48 1.43 1.36
Number of Accumulation Units
outstanding at end of period 34,676,637 31,024,219 15,771,786 5,984,694
- ----------
</TABLE>
*Commencing February 1, 1994, the date the Registration Statement for the
Variable Account was declared effective.
**Commencing January 18, 1996.
Commening January 30, 1998, the Mid Cap Growth Subaccount was made available
for investment.
The financial statements of LB are also contained in the Statement of
Additional Information.
Calculation of Performance
From time to time the Variable Account will advertise the Money Market
Subaccount's "yield" and "effective yield". Both yield figures are based on
historical earnings and are not intended to indicate future performance. The
"yield" of the Subaccount refers to the income generated by an investment in
the Subaccount over a seven-day period (which period will be stated in the
advertisement). This income is then "annualized". That is, the amount of
income generated by the investment during that week is assumed to be
generated each week over a 52-week period and is shown as a percentage of
the investment. The "effective yield" is calculated similarly but, when
annualized, the income earned by an investment in the Subaccount is assumed
to be reinvested. The annualized current yield and effective yield for the
seven-day base period ended December 31, 1997, was 4.51% and 4.61%,
respectively. For more information, see the Statement of Additional
Information.
Also, the Variable Account may advertise for the Subaccounts other than the
Money Market Subaccount a yield quotation based on a 30-day (or one month)
period computed by dividing the net investment income per Accumulation Unit
earned during the period (the net investment income earned by the Fund
portfolio attributable to shares owned by the Subaccount less expenses
incurred during the period) by the maximum offering price per Accumulation
Unit on the last day of the period. The current yield for the 30-day based
period ended December 31, 1997 for the High Yield Subaccount was 8.08%. The
current yield for the same 30-day base period for the Income Subaccount was
5.38%. For more information, see the Statement of Additional Information.
From time to time, LB may advertise the average annual total return
quotations for the Subaccounts for the 1, 5 and 10-year periods computed by
finding the average annual compounded rates of return over the 1, 5 and 10-
year periods that would equate the initial amount invested to the ending
redeemable value of a hypothetical $1,000 payment made at the beginning of
the 1, 5 or 10-year periods. For periods prior to February 1, 1994, total
return figures are based on a hypothetical Contract assumed to have been
invested in a Portfolio of the Fund when that Portfolio was first available
for investment under a variable annuity contract issued by an LB affiliate,
Lutheran Brotherhood Variable Insurance Products Company. If the assumed
investment was made less than 10 years from the date of the quotation, the
total return from the date of such investment will be given.
The average annual total returns for the 1, 3 and 5-year periods through
December 31, 1997 and for the period from commencement of operations through
December 31, 1997 for the Subaccounts are as follows:
Commencement
1 Year 3 Year 5 Year of Operations
------- ------ ------ -------------
Opportunity Growth
Subaccount (1/18/96) -5.57% -- -- 6.18%
World Growth Subaccount (1/18/96) -3.81% -- -- 3.08%
Growth Subaccount (3/8/88) 21.83%* 26.86%* 16.38%* 14.56%*
High Yield Subaccount (3/8/88) 6.77%* 12.44%* 10.74%* 10.84%*
Income Subaccount (3/8/88) 1.76%* 7.75%* 5.82%* 7.77%*
Money Market Subaccount (2/18/88) -1.35%* 3.03%* 3.12%* 4.52%*
Performance information is not available for the Mid Cap Growth Subaccount
since it is new.
*Does not include the annual administrative charge of $30 deducted from any
Contract for which the total of premiums paid under such Contract minus all
prior surrenders is less than $5,000 and the Accumulated Value is less than
$5,000. Inclusion of the administrative charge would reduce the total return
figures shown above. Assumes applicable sales charge upon surrender.
Average annual total return quotations assume a steady rate of growth.
Actual performance fluctuates and will vary from the quoted results for
periods of time within the quoted periods. For more information, see the
Statement of Additional Information.
The Variable Account's performance reported from time to time in
advertisements and sales literature may be compared with that of other
insurance company separate accounts or mutual funds included in the
generally accepted indices, analyses or rankings prepared by Lipper
Analytical Service, Inc., Standard & Poor's Corporation, Morningstar, Inc.,
VARDS, Dow Jones or similar independent rating or statistical investment
services that monitor the performance of insurance company separate accounts
or mutual funds. Performance of the Variable Account may be quoted or
compared to rankings, yields or returns as published or prepared by
independent rating or statistical services or publishers of publications
such as THE BANK RATE MONITOR NATIONAL INDEX, BARRON'S, BUSINESS WEEK,
DONOGHUE'S MONEY MARKET FUND REPORT, FINANCIAL SERVICES WEEK, FINANCIAL
TIMES, FINANCIAL WORLD, FORBES, FORTUNE, GLOBAL INVESTOR, INSTITUTIONAL
INVESTOR, INVESTOR'S DAILY, KIPLINGER'S PERSONAL FINANCE, LIPPER ANALYTICAL
SERVICES, MONEY, MUTUAL FUND FORECASTER, NEWSWEEK, THE NEW YORK TIMES,
PERSONAL INVESTOR, STANGER REPORT, SYLVIA PORTER'S PERSONAL FINANCE, USA
TODAY, U.S. NEWS AND WORLD REPORT, THE WALL STREET JOURNAL and WIESENBERGER
INVESTMENT COMPANIES SERVICE.
LUTHERAN BROTHERHOOD, THE VARIABLE ACCOUNT
AND THE FUND
Lutheran Brotherhood
The Contracts are issued by LB. Lutheran Brotherhood, a fraternal benefit
society owned and operated for its members, was founded in 1917 under the
laws of the State of Minnesota. LB is currently licensed to transact life
insurance business in all 50 states and the District of Columbia and is
offering the Contracts in states where it has authority to issue variable
contracts. At the end of 1997, LB had total assets of approximately $13.2
billion.
LB is subject to regulation by the Insurance Division of the State of
Minnesota as well as by the insurance departments of all the other states
and jurisdictions in which it does business. LB submits annual reports on
its operations and finances to insurance officials in such states and
jurisdictions. The forms of Contracts described in this Prospectus are filed
with and (where required) approved by insurance officials in each state and
jurisdiction in which Contracts are sold. LB is also subject to certain
Federal securities laws and regulations.
The Variable Account
The Variable Account is a separate account of LB, established by the Board
of Directors of LB in 1993 pursuant to the laws of the State of Minnesota.
The Variable Account meets the definition of a "separate account" under the
federal securities laws. LB has caused the Variable Account to be registered
with the Securities and Exchange Commission (the "SEC") as a unit investment
trust under the Investment Company Act of 1940 (the "1940 Act"). Such
registration does not involve supervision by the SEC of the management or
investment policies or practices of the Variable Account.
The assets of the Variable Account are owned by LB, and LB is not a trustee
with respect to such assets. However, the Minnesota laws under which the
Variable Account was established provide that the Variable Account shall not
be chargeable with liabilities arising out of any other business LB may
conduct. LB may transfer to its general account assets of the Variable
Account which exceed the reserves and other liabilities of the Variable
Account.
Income and realized and unrealized gains and losses from each Subaccount of
the Variable Account are credited to or charged against that Subaccount
without regard to any of LB's other income, gains or losses. LB may
accumulate in the Variable Account the charge for expense and mortality
risk, mortality gains and losses and investment results applicable to those
assets that are in excess of net assets supporting the Contracts.
LB Series Fund, Inc.
Each Contract Owner may allocate the premiums paid under the Contract to one
or more of the seven Subaccounts of the Variable Account -- the Growth
Subaccount, the High Yield Subaccount, the Income Subaccount, the
Opportunity Growth Subaccount, the Mid Cap Growth Subaccount, the World
Growth Subaccount and the Money Market Subaccount. The assets of each such
Subaccount will be invested in the corresponding Portfolio (the Growth
Portfolio, the High Yield Portfolio, the Income Portfolio, the Opportunity
Growth Portfolio, the Mid Cap Growth Portfolio, the World Growth Portfolio
or the Money Market Portfolio) of the Fund. The investment objectives of the
Portfolios of the Fund (individually a "Portfolio" and collectively the
"Portfolios") are:
Growth Portfolio. To achieve long-term growth of capital through investment
primarily in common stocks of established corporations that appear to offer
attractive prospects of a high total return from dividends and capital
appreciation.
High Yield Portfolio. To achieve a higher level of income through a
diversified portfolio of high yield securities ("junk bonds") which involve
greater risks than higher quality investments, while also considering growth
of capital as a secondary objective.
Income Portfolio. To achieve a high level of income over the longer term
while providing reasonable safety of capital through investment primarily in
readily marketable intermediate and long-term fixed income securities.
Money Market Portfolio. To achieve the maximum current income that is
consistent with stability of capital and maintenance of liquidity through
investment in high-quality, short-term debt obligations.
Opportunity Growth Portfolio. To achieve long term growth of capital by
investing primarily in a professionally managed diversified portfolio of
smaller capitalization common stocks.
Mid Cap Growth Portfolio. To achieve long term growth of capital by
investing primarily in a professionally managed diversified portfolio of
common stocks of companies with medium market capitalizations.
World Growth Portfolio. To achieve long-term growth of capital by investing
primarily in a professionally managed diversified portfolio of common stocks
of established, non-U.S. companies.
No assurance can be given that the Portfolios of the Fund will achieve their
respective investment objectives.
Shares of the Fund purchased by each Subaccount of the Variable Account will
be held by LB as custodian for the Variable Account.
The Fund is designed to provide an investment vehicle for variable annuity
and variable life insurance contracts. Shares of the Fund will be sold to
other insurance company separate accounts of LB and separate accounts of its
wholly owned indirect subsidiary, Lutheran Brotherhood Variable Insurance
Products Company ("LBVIP"), and the Fund may in the future create new
portfolios. It is conceivable that in the future it may be disadvantageous
for both variable annuity separate accounts and variable life insurance
separate accounts to invest simultaneously in the Fund, although LB does not
foresee any such disadvantages to either variable annuity or variable life
insurance contract owners. The management of the Fund intends to monitor
events in order to identify any material conflicts between such contract
owners and to determine what action, if any, should be taken in response.
Such action could include the sale of Fund shares by one or more of the
separate accounts, which could have adverse consequences. Material conflicts
could result from, for example, (1) changes in state insurance laws, (2)
changes in Federal income tax law, (3) changes in the investment management
of the Fund, or (4) differences in voting instructions between those given
by the contract owners from the different separate accounts. In addition, if
LB believes the Fund's response to any of those events or conflicts
insufficiently protects Contract Owners, it will take appropriate action on
its own.
The Fund is registered with the SEC under the 1940 Act as a diversified,
open-end management investment company (commonly called a "mutual fund").
This registration does not involve supervision by the SEC of the management
or investment practices or policies of the Fund. Shares of the Fund may be
sold to other separate accounts, and the Fund may in the future create new
Portfolios.
The Variable Account will purchase and redeem shares from the Fund at net
asset value. Shares will be redeemed to the extent necessary for LB to
collect charges under the Contracts, to make payments upon surrenders, to
provide benefits under the Contracts, or to transfer assets from one
Subaccount to another as requested by Contract Owners. Any dividend or
capital gain distribution received from a Portfolio of the Fund will be
reinvested immediately at net asset value in shares of that Portfolio and
retained as assets of the corresponding Subaccount.
The Fund receives investment advice with respect to each of its Portfolios
from LB, which acts as investment adviser to the Fund. LB is a registered
investment adviser under the Investment Advisers Act of 1940. Lutheran
Brotherhood Research Corp. ("LBRC"), an indirect subsidiary of Lutheran
Brotherhood, acted as investment adviser to the Fund until January 1994,
when it was replaced by LB. LBRC provided investment advisory services to
the Fund using personnel and services provided by LB. As investment adviser
to the Fund, LB charges the Fund a daily investment advisory fee equal to an
annual rate of .40% of the aggregate average daily net assets of the Money
Market, Income, High Yield, Growth, Opportunity Growth, and Mid Cap Growth
Portfolios. LB also charges the Fund an annual investment advisory fee
equal to .85% of the aggregate average daily net assets of the World Growth
Portfolio.
The Fund has entered into an Investment Advisory Agreement with LB under
which LB will, subject to the direction of the Board of Directors of the
Fund, carry on the day-to-day management of the Fund, and provide advice and
recommendations with respect to investments and the purchase and sale of
securities in accordance with the Fund's investment objectives, policies and
restrictions. LB also furnishes at its own expenses all necessary
administrative services, office space, equipment and clerical personnel for
servicing the investments of the Fund and maintaining its organization, and
investment advisory facilities and executive and supervisory personnel for
managing the investments and effecting the portfolio transactions of the
Fund. The Investment Advisory Agreement provides that the Fund will pay, or
provide for the payment of, all of its own expenses, including, without
limitation, the compensation of the directors who are not affiliated with LB
or its affiliates, governmental fees, interest charges, taxes, membership
dues in the Investment Company Institute allocable to the Fund, fees and
expenses of the independent auditors, of legal counsel and of any transfer
agent, registrar and dividend disbursing agent of the Fund, expenses of
preparing, printing and mailing prospectuses, shareholders' reports,
notices, proxy statements and reports to governmental officers and
commissions, expenses connected with the execution, recording and settlement
of portfolio security transactions, insurance premiums, fees and expenses of
the Fund's custodian for all services to the Fund, including safekeeping of
funds and securities and keeping of books and calculating the net asset
value of the shares of the Portfolios of the Fund, expenses of shareholders'
meetings and expenses relating to the issuance, registration and
qualification of shares of the Fund. LB and LBVIP have agreed with the Fund
to pay, or to reimburse the Fund for the payment of, all of the foregoing
expenses and all other expense associated with operating the Fund pursuant
to a separate written agreement (the "Expense Reimbursement Agreement"). The
Expense Reimbursement Agreement could be terminated at any time by the
mutual agreement of the Fund, LB and LBVIP, but the Fund and LB and LBVIP
currently contemplate that the Expense Reimbursement Agreement will continue
so long as the Fund remains in existence. If the Expense Reimbursement
Agreement were terminated, the Fund would be required to pay those operating
expenses, which would reduce the net investment return on the shares of the
Fund held by the Subaccounts of the Variable Account.
LB has engaged T. Rowe Price Associates, Inc. ("T. Rowe Price") as
investment sub-adviser for the Opportunity Growth Portfolio. T. Rowe Price
was founded in 1937 and has its principal offices in Baltimore, Maryland.
As of December 31, 1997, T. Rowe Price and its affiliates managed over $124
billion. Richard T. Whitney, Managing Director of T. Rowe Price, is
primarily responsible for day-to-day management of the Opportunity Growth
Portfolio and developing and executing the Portfolio's investment program.
LB pays the Sub-adviser for the Opportunity Growth Portfolio an annual sub-
advisory fee for the performance of sub-advisory services. The fee payable
is equal to .30% of that Portfolio's average daily net assets.
LB has engaged Rowe Price-Fleming International, Inc., ("Price-Fleming") as
investment sub-adviser for the World Growth Portfolio. Price-Fleming was
founded in 1979 as a joint venture between T. Rowe Price Associates, Inc.
and Robert Fleming Holdings Limited. Price-Fleming is one of the world's
largest international mutual fund asset managers with approximately the U.S.
equivalent of $30 billion under management as of December 31, 1997 in its
offices in Baltimore, London, Tokyo and Hong Kong. Price-Fleming has an
investment advisory group that has day-to-day responsibility for managing
the World Growth Portfolio and developing and executing the Portfolio's
investment program.
LB pays the Sub-adviser for the World Growth Portfolio an annual sub-
advisory fee for the performance of sub-advisory services. The fee payable
is equal to a percentage of that Portfolio's average daily net assets. The
percentage varies with the size of the Portfolio's net assets, decreasing as
the Portfolio's assets increase. The formula for determining the sub-
advisory fee is described fully in the prospectus for the Fund.
Each Contract Owner should periodically consider the allocation among the
Subaccounts in light of current market conditions and the investment risks
attendant to investing in the Fund's various Portfolios. A full description
of the Fund, its investment objectives, policies and restrictions, its
expenses, the risks attendant to investing in the Fund's Portfolios and
other aspects of its operation is contained in the accompanying Prospectus
for the Fund, which should be carefully read together with this Prospectus.
Addition, Deletion or Substitution of Investments
LB reserves the right, subject to applicable law, to make additions to,
deletions from, or substitutions for the shares that are held in the
Variable Account or that the Variable Account may purchase. If the shares of
a Portfolio of the Fund are no longer available for investment or if in LB's
judgment further investment in any Portfolio should become inappropriate in
view of the purposes of the Variable Account, LB may redeem the shares, if
any, of that Portfolio and substitute shares of another registered open-end
management company. LB will not substitute any shares attributable to a
Contract interest in a Subaccount of the Variable Account without notice and
prior approval of the SEC and state insurance authorities, to the extent
required by applicable law.
LB also reserves the right to establish additional Subaccounts of the
Variable Account, each of which would invest in shares corresponding to a
new Portfolio of the Fund or in shares of another investment company having
a specified investment objective. Subject to applicable law and any required
SEC approval, LB may, in its sole discretion, establish new Subaccounts or
eliminate one or more Subaccounts if marketing needs, tax considerations or
investment conditions warrant. Any new Subaccounts may be made available to
existing Contract Owners on a basis to be determined by LB.
If any of these substitutions or changes are made, LB may by appropriate
endorsement change the Contract to reflect the substitution or change. If LB
deems it to be in the best interest of Contract Owners and Annuitants, and
subject to any approvals that may be required under applicable law, the
Variable Account may be operated as a management company under the 1940 Act,
it may be deregistered under that Act if registration is no longer required,
or it may be combined with other LB separate accounts.
THE CONTRACTS
Issuance of a Contract
In order to purchase a Contract, application must be made to LB through a
licensed LB Representative, who is also a registered representative of LBSC.
LB is offering Contracts only in situations in which the Annuitant is
eligible for membership in Lutheran Brotherhood. Contracts may be sold to or
in connection with retirement plans which may or may not be Qualified Plans.
LB reserves the right to reject an application for any reason permitted by
law.
The minimum amount LB will accept as an initial premium is $600 on an
annualized basis. LB may, however, in its sole discretion, waive such
minimum initial premium requirements. Subsequent premiums may be paid under
the Contracts, but LB may choose not to accept any subsequent premium if it
is less than $50.
Free Look Period
The Contract provides for an initial "free look" period. The Contract Owner
has the right to return the Contract within 10 days after such Contract
Owner receives the Contract. When LB receives the returned Contract at its
Home Office, it will be cancelled and LB will refund to the Contract Owner
an amount equal to the sum of (i) the Accumulated Value (as of the date the
returned Contract is received by LB at its Home Office or by the LB
Representative from whom the Contract was purchased) plus (ii) the amount
attributable to the Contract for mortality and expense risk charges deducted
from the Variable Account plus (iii) the advisory fees charged by the Fund
against the net asset value in the Fund Portfolios attributable to the
Contract's value in the corresponding Subaccounts of the Variable Account.
If, however, applicable state law so requires, the full amount of any
premium received by LB will be refunded.
For Contracts issued in Pennsylvania, when LB receives the returned Contract
at its Home Office, it will be canceled and LB will refund to the Contract
Owner an amount equal to the sum of (i) the difference between the premiums
paid and the amount allocated to the Variable and Fixed Accounts plus (ii)
the Accumulated Value on the day the Contract is received by the LB
Representative from whom the Contract was purchased.
With respect to individual retirement annuities, under the Employee
Retirement Income Security Act of 1974 ("ERISA") a Contract Owner
establishing an Individual Retirement Account must be furnished with a
disclosure statement containing certain information about the Contract and
applicable legal requirements. This statement must be furnished on or before
the date the individual retirement annuity is established. If the Contract
Owner is furnished with such disclosure statement before the seventh day
preceding the date the individual retirement annuity is established, the
Contract Owner will not have any right of revocation under ERISA. If the
disclosure statement is furnished after the seventh day preceding the
establishment of the individual retirement annuity, then the Contract Owner
may give a notice of revocation to LB at any time within seven days after
the Date of Issue. Upon such revocation, LB will refund the premiums paid by
the Contract Owner. The foregoing right of revocation with respect to an
individual retirement annuity is in addition to the return privilege set
forth in the preceding paragraphs, i.e., LB will allow a participant
establishing an individual retirement annuity a "ten day free-look",
notwithstanding the provisions of ERISA.
Allocation of Premium
Until the date LB approves the Contract Owner's application, the initial
premium will be deposited into LB's general account. Interest will be
credited on the initial premium held in LB's general account at a rate of
interest determined by LB. On the date LB approves the Contract Owner's
application, LB will add this accumulation amount to the initial premium and
allocate this amount among the Subaccount(s) and/or the Fixed Account
according to the Contract Owner's instructions. If the Date of Issue and the
date of acceptance by LB are the same day, then the initial premium payment
will be immediately allocated among the chosen Subaccount(s) and/or Fixed
Account according to the Contract Owner's instructions.
This initial premium allocation procedure is designed as a way to give the
Contract Owner interest on the initial premium from the Date of Issue to the
date LB approves the Contract Owner's application, with the interest payment
being paid by LB. Other Contract Owners' interests will not be adversely
affected by this initial premium allocation procedure, because LB, and not
the existing Contract Owners, will bear any expenses in effecting the
procedure, including the expense of crediting the interest accumulations.
If the application is determined to be in good order, LB will allocate the
premium payment to the chosen subaccount and/or Fixed Account within two
days of receipt of the completed application and premium payment. If the
application is determined by LB not to be in good order, LB will attempt to
complete the application within five business days. If the application is
not complete at the end of this period, LB will inform the applicant of the
reason for the delay and that the initial premium will be returned
immediately unless the applicant specifically consents to LB keeping the
initial premium until the application is complete.
The percentages of each premium that may be allocated to any Subaccount of
the Variable Account or the Fixed Account must be in whole numbers and the
sum of the allocation percentages must be 100%. LB reserves the right to
adjust allocation percentages to eliminate fractional percentages.
Subsequent premiums will be allocated among the Subaccounts and the Fixed
Account in the same proportion as the initial premium, at the end of the
Valuation Period in which the subsequent premium is received by LB. The
allocation proportion for future premiums may, however, be changed without
charge at any time by providing LB with Written Notice or by telephone (if
the Contract Owner has completed the Telephone Transaction Authorization
Form). Premiums paid thereafter will be allocated in the manner provided in
such changed instruction, unless another change is subsequently requested.
The values in the Subaccounts of the Variable Account will vary with the
investment experience of the Subaccounts and the Contract Owner bears the
entire investment risk. Contract Owners should periodically review their
allocations of premiums in light of market conditions and the Contract
Owner's overall financial objectives.
Accumulated Value; Accumulation Units and Accumulation Unit Value
The Accumulated Value of the Contract is the total amount of value held
under the Contract at any time prior to and including the Maturity Date. A
Contract's Accumulated Value will reflect the investment experience of the
chosen Subaccounts of the Variable Account, any amount of value in the Fixed
Account, any premiums paid, any surrenders, and any charges assessed in
connection with the Contract. There is no guaranteed minimum Accumulated
Value, and, because a Contract's Accumulated Value on any future date
depends upon a number of variables, it cannot be predetermined.
Calculation of Accumulated Value. The Accumulated Value of the Contract is
determined on each Valuation Date. The Contract's Accumulated Value will be
the aggregate of the values attributable to the Contract in each of the
Subaccounts, determined for each Subaccount by multiplying the Subaccount's
Accumulation Unit Value on the relevant Valuation Date by the number of
Subaccount Accumulation Units allocated to the Contract, plus any amounts in
the Fixed Account.
Determination of Number of Accumulation Units. Any amounts allocated to the
Subaccounts will be converted into Accumulation Units of the Subaccount. The
number of Accumulation Units to be credited to the Contract is determined by
dividing the dollar amount being allocated by the Accumulation Unit Value as
of the end of the Valuation Period during which the amount was allocated.
The number of Subaccount Accumulation Units in any Subaccount will be
increased by (i) any premiums allocated to the Subaccount during the current
Valuation Period, and (ii) any Accumulated Value transferred to the
Subaccount from another Subaccount or from the Fixed Account during the
current Valuation Period. The number of Subaccount Accumulation Units in any
Subaccount will be decreased by (i) any Accumulated Value transferred from
the Subaccount to another Subaccount or to the Fixed Account during the
current Valuation Period, (ii) the amount of any partial surrender
(including any related surrender charge) during the current Valuation
Period, and (iii) any administrative charge taken from the Subaccount during
the current Valuation Period.
The Accumulation Unit Value is determined before any Contract transactions
on the Valuation Date that would affect the number of Subaccount
Accumulation Units (see the immediately preceding paragraph). If the
Contract's Accumulated Value in the Variable Account is to be calculated for
a day that is not a Valuation Date, the next following Valuation Date will
be used.
Determination of Accumulation Unit Value. The Accumulation Unit Value for a
Subaccount is calculated on each Valuation Date by dividing (1) by (2),
where
(1) is the net result of:
(a) the net asset value of the corresponding Portfolio of the Subaccount at
the end of the current Valuation Period, plus
(b) the amount of any dividend or capital gain distribution declared by the
Portfolio if the "ex-dividend" date occurs during the Valuation Period, plus
or minus
(c) a charge or credit for any taxes reserved which LB determines to be a
result of the investment operation of the Portfolio, less
(d) the mortality and expense risk charge (see "CHARGES AND DEDUCTIONS --
Mortality and Expense Risk Charge") for each day during the current
Valuation Period (a current charge of .003014%, but never to exceed
.003425%, of the net assets for each day during the current Valuation
Period), and
(2) is the number of Accumulation Units for the Subaccount attributable to
all Contracts, including Accumulation Units held as reserves for the
Contracts.
Death Benefit Before the Maturity Date
If an Annuitant, who is the Contract Owner unless another owner is named in
the application, dies before the Maturity Date, the Beneficiary will be
entitled to receive a death benefit under the Contract calculated on the
later of (a) the date LB receives proof of the Annuitant's death and (b) the
date LB receives a written request from the Beneficiary for either a single
sum payment or a settlement option. If no such request is made within one
year from the date of the Annuitant's death, the Beneficiary will be deemed
to have requested a single sum payment. Any proceeds not subsequently
withdrawn will be paid in a lump sum on the date 5 years after the date of
death. If the Contract has two Annuitants, LB will pay the Beneficiary in
the manner described above on the death of the first Annuitant. (If the
Beneficiary is the spouse of the deceased Contract Owner, such spouse may,
to the extent permitted by law, elect to continue the Contract in force, in
which case such spouse shall become and be treated as the Annuitant. This
election will be automatic if the spouse Beneficiary is also an Annuitant.)
Amount of Death Benefit. If a death benefit has become payable under a
Contract as described above, the amount of the death benefit will be the
greatest of (i) the Accumulated Value calculated on the later of the date LB
receives the proof of death and the written request referred to above, (ii)
the sum of the premiums received by LB under the Contract to the date of
such receipt, less any previous partial surrenders (including any applicable
charges); and (iii) the Accumulated Value on the preceding Minimum Death
Benefit Date plus the sum of premiums received by LB since that date, less
the amount of any partial surrenders since then (including any related
surrender charge).
Manner of Payment -- Contracts Not Issued in Connection with Certain
Qualified Plans. If the Contract in question was not issued in connection
with a Qualified Plan, the following rules govern the manner of payment of
the death benefit if the Annuitant dies before the Maturity Date:
(a) if a single sum is requested, the death benefit will be paid within
seven days after the day LB receives the proof of death and written request
referred to above under "Amount of Death Benefit"; or
(b) if a settlement option is requested, (i) it must be a settlement option
that the Contract Owner could have selected before the Maturity Date, and
(ii) the settlement option must provide that the entire amount due under the
Contract will be distributed (1) within five years from the date of death,
or (2) over the life of the Beneficiary or for a period not in excess of the
Beneficiary's life expectancy, provided that the distributions must begin
within one year from the date of death.
Manner of Payment -- Contracts Issued in Connection with Qualified Plans. If
the Contract in question was issued in connection with a Qualified Plan,
certain restrictions on the manner of payment of the death benefit prior to
the Maturity Date, similar to those described above under "Manner of Payment
- -- Contracts Not Issued in Connection with Certain Qualified Plans", are
applicable. The manner of payment of such death benefit under a Contract
issued in connection with a Qualified Plan will be stated in the Contract or
the plan documents. Purchasers acquiring Contracts pursuant to Qualified
Plans should consult qualified pension or tax advisers.
Death Benefit After the Maturity Date
If an Annuitant, who is the Contract Owner unless another owner is named in
the application, dies after the Maturity Date, the death benefit, if any,
shall be as stated in the settlement option in effect, provided, however,
that death benefit payments must be paid at least as rapidly as payments
were being paid under the settlement option in effect on the date of death.
With respect to a Contract issued in connection with a Qualified Plan,
certain additional restrictions on the manner of payment of the death
benefit after the Maturity Date, similar to those described above under
"Death Benefit Before the Maturity Date -- Manner of Payment -- Contracts
Not Issued in Connection with Certain Qualified Plans", are also applicable.
Surrender (Redemption)
If a Written Notice from the Contract Owner requesting a surrender is
received by LB on or before the Maturity Date, all or part of the
Accumulated Value will be paid to the Contract Owner after deducting any
applicable surrender charge (see "CHARGES AND DEDUCTIONS--Surrender Charge
(Contingent Deferred Sales Charge)").
A surrender will take place at the end of the Valuation Period during which
the requirements for surrender are completed and payment will be made within
seven days after such surrender. If a surrender is partial, the surrender
payments will be taken proportionately from all Subaccounts and the Fixed
Account on a basis that reflects their proportionate percentage of the
Accumulated Value. The Contract Owner may select a different allocation
basis with LB's approval. Partial surrenders must be for at least $200, and
may be requested only if the remaining Accumulated Value is not less than
$1,000.
LB may cancel the Contract on any Contract Anniversary if (a) the
Accumulated Value is less than $1,000 and no premium payments have been made
under the Contract within the last 24 months or (b) the Accumulated Value as
of the Contract Anniversary is less than the administrative charge (see
"CHARGES AND DEDUCTIONS--Administrative Charge"). LB will notify the
Contract Owner 60 days before such Contract Anniversary and provide the
Contract Owner the minimum dollar amount required to keep the Contract in
force. Failure to make sufficient payment will result in cancellation of the
Contract on the Contract Anniversary. If such Contract Anniversary is not a
Valuation Date, then the Accumulated Value will be determined on the next
Valuation Date. Upon cancellation under (a) above, LB will pay the Contract
Owner the Accumulated Value as of such Valuation Date.
After the Maturity Date, certain of the available settlement options (those
that do not involve a life contingency) also permit surrenders by the
Contract Owner. In such cases, the amount available for surrender is the
commuted value of any unpaid annuity installments, computed on the basis of
the assumed interest rate incorporated in such annuity installments.
However, a surrender charge is deducted at the time of annuitization if
these settlement options are selected (see "CHARGES AND DEDUCTIONS--
Surrender Charge (Contingent Deferred Sales Charge")).
Consideration should be given to the tax implications of a surrender prior
to making a surrender request. See "FEDERAL TAX STATUS--Taxation of
Annuities in General".
Transfers
On or before the Maturity Date, the Contract Owner may request by Written
Notice (or by telephone if the Contract Owner has completed the Telephone
Transaction Authorization Form) the transfer, subject to any conditions the
Portfolio whose shares are involved may impose, of all or a part of a
Contract's Accumulated Value among the Subaccounts of the Variable Account
and the Fixed Account. The transfer will be made by LB without charge on the
day Written Notice (or telephonic instructions) requesting such transfer is
received by LB. To accomplish a transfer from the Variable Account, the
Variable Account will surrender Accumulation Units in the particular
Subaccounts and reinvest that value in Accumulation Units of other
particular Subaccounts and the Fixed Account as directed in the request. The
total amount transferred each time must be at least $200 (unless the total
value in a Subaccount of the Variable Account or the Fixed Account is less
than $200, in which case the entire amount may be transferred). LB reserves
the right to limit the number of transfers in any Contract Year, provided
that at least two such transfers each Contract Year will always be allowed.
With respect to the Fixed Account, transfers out of the Fixed Account are
limited to only one during each Contract Year and must be made on or within
45 days after a Contract Anniversary. To accomplish a transfer from the
Fixed Account, the Fixed Account will surrender Accumulated Value from the
Fixed Account and reinvest that value in Accumulation Units of particular
Subaccounts of the Variable Account as directed in the request.
After the Maturity Date, the Contract Owner may, by Written Notice and only
once each Contract Year, change the percentage allocation of variable
annuity payments among the available Subaccounts.
Telephone Transfers
Telephone transfers are available when the Contract Owner completes the
Telephone Transaction Form. If the Contract Owner elects to complete the
Telephone Transaction Authorization Form, the Contract Owner thereby agrees
that LB, its agents and employees will not be liable for any loss, liability
cost or expense when LB, its agents and employees act in accordance with the
telephone transfer instructions that have been properly received and
recorded on voice recording equipment. If a telephone authorization or
instruction, processed after the Contract Owner has completed the Telephone
Transaction Authorization Form, is later determined not to have been made by
the Contract Owner or was made without the Contract Owner's authorization,
and a loss results from such unauthorized instruction, the Contract Owner
bears the risk of this loss. LB will employ reasonable procedures to confirm
that instructions communicated by telephone are genuine. In the event LB
does not employ such procedures, LB may be liable for any losses due to
unauthorized or fraudulent instructions. Such procedures may include, among
others, requiring forms of personal identification prior to acting upon
telephone instructions, providing written confirmation of such instructions
and/or tape recording telephone instructions.
Special Transfer Service -- Dollar Cost Averaging
LB administers a dollar cost averaging program which enables a Contract
Owner to pre-authorize a periodic exercise of the transfer rights described
above. A Contract Owner entering into a dollar cost averaging agreement will
instruct LB to periodically transfer predetermined dollar amounts from the
Money Market Subaccount to as many of the five other Subaccounts or to the
Fixed Account as specified by the Contract Owner until the amount in the
Money Market Subaccount is exhausted or the agreement is terminated by the
Contract Owner. The dollar cost averaging program is generally suitable for
Contract Owners making a substantial deposit to the Contract and who wish to
use the other Subaccounts or the Fixed Account investment option, but desire
to control the risk of investing at the top of a market cycle. The dollar
cost averaging program allows such investments to be made in equal
installments over time in an effort to reduce such risk. Dollar cost
averaging does not guarantee that the Variable Account will gain in value,
nor will it protect against a decline in value if market prices fall.
However, if a Contract Owner can continue to invest regularly throughout
changing market conditions, it can be an effective strategy to help meet
long-term goals. Contract Owners interested in the dollar cost averaging
program may obtain an application and full information concerning the
program and its restrictions from LB.
Assignments
If the Contract is used in a Qualified Plan and the Contract Owner is a
trust, custodian or employer, then the Contract Owner may transfer ownership
to the Annuitant. Otherwise, the Contract may not be sold, assigned,
discounted or pledged as collateral for a loan or as security for
performance of an obligation or for any other purpose to any person other
than LB.
If the Contract is not used in a Qualified Plan, then ownership may be
transferred, but not to a natural person, and the Contract may be assigned
as Collateral.
LB shall not be bound by any sale, assignment, pledge or transfer until
Written Notice thereof is actually received by LB at its Home Office and
shall not be responsible for the validity of any sale, assignment, pledge or
transfer. Any payments made or actions taken by LB before LB actually
receives Written Notice shall not be affected by the sale, assignment,
pledge or transfer.
Considerations should be given to the tax implications of an assignment. See
"FEDERAL TAX STATUS--Taxation of Annuities in General".
Contract Owner, Beneficiaries and Annuitants
Unless another owner is named as the Contract Owner in the application for
the Contract, the Annuitant is the Contract Owner and may exercise all of
the Contract Owner's rights under the Contract.
The Contract Owner may name a Beneficiary to receive the death benefit
payable under the Contract. If the Beneficiary is not living on the date
payment is due or if no Beneficiary has been named, the death benefit will
be paid to the estate of the Annuitant.
The Contract Owner may change the Beneficiary by giving LB Written Notice of
the change, but the change shall not be effective until actually received by
LB at its Home Office. Upon receipt by LB of a notice of change, it will be
effective as of the date it was signed but shall not affect any payments
made or actions taken by LB before LB received the Written Notice, and LB
shall not be responsible for the validity of any change.
CHARGES AND DEDUCTIONS
Surrender Charge (Contingent Deferred Sales Charge)
General. No charge for sales expense is deducted from premiums at the time
premiums are paid. However, within certain time limits described below a
surrender charge is deducted from the Accumulated Value of the Contract in
the case of surrender, in whole or in part, before annuity payments begin
and, if certain settlement options are selected, at the time annuity
payments begin. In the event surrender charges are not sufficient to cover
sales expenses, the loss will be borne by LB; conversely, if the amount of
such charges proves more than enough, the excess will be retained by LB (see
"Sufficiency of Charges" below). LB does not currently believe that the
surrender charges imposed will cover the expected costs of distributing the
Contracts.
If a Contract is surrendered in whole or in part before it has been in force
for six full Contract Years, a surrender charge is deducted from the amount
surrendered; provided that in each Contract Year, a Contract Owner may
surrender without a surrender charge, up to 10% of a Contract's Accumulated
Value existing at the time the first surrender is made in that Contract
Year. For example, if a total surrender is made during a Contract Year in
which a partial surrender has been made, the Contract Owner may surrender
free of charge an amount equal to 10% of the Accumulated Value of the
Contract at the time of the partial surrender less the total of the partial
surrender to which no charge was applied. This right is not cumulative from
Contract Year to Contract Year. In the event that a surrender is made in
excess of the amount which may be surrendered free of charge, only the
excess (the "Excess Amount") will be subject to a surrender charge.
The charge is applied as a percentage of the Excess Amount surrendered, but
in no event will the total surrender charge on any one Contract exceed a
maximum limit of 6 1/2% of total gross premiums paid under the Contract.
Such total charge equals the aggregate of all applicable surrender charges
for total and partial surrenders, including any charges deducted at the time
annuity payments begin (as described below).
Charges for Total and Partial Surrenders. If a Contract is surrendered, in
whole or in part, while the Contract is in force and on or before the
Maturity Date, a surrender charge is imposed on the Excess Amount of such
surrender if such surrender occurs before the Contract has been in force for
six full Contract Years as follows:
Contract Year in which
Total or Partial Charge as Percentage of
Surrender Occurs Excess Amount Surrendered*
----------------------- ---------------------------
1 6%
2 5
3 4
4 3
5 2
6 1
7 and after 0
- ------------
* Although the charge as a percentage of Excess Amount surrendered decreases
from 6% to 0 over time, the actual aggregate amount of surrender charge
deducted may be up to the 6 1/2% of total gross premiums paid maximum limit
described above.
For purposes hereof, the amount surrendered is equal to the amount of the
surrender request, and the amount received by the Contract Owner is equal to
the amount of the surrender request less the applicable surrender charge and
any withholding if applicable.
No surrender charge is deducted if the surrender occurs after expiration of
the time period applicable to such charge as shown in the table above.
Surrender charges otherwise payable will be waived with respect to
surrenders made by the Contract Owner when the Annuitant is totally disabled
(as defined in the Contract) or confined to a hospital, nursing home or a
hospice if the confinement begins while the Contract is in force and has
continued for six consecutive months.
Certain surrenders are subject to a 10% Federal tax penalty on the amount of
income withdrawn (see "FEDERAL TAX STATUS--Taxation of Annuities in
General").
Charge at the Time Annuity Payments Begin. Generally, at the time annuity
payments begin, a surrender charge as described above will apply. Such
charge is the same as that which would apply had the Contract been fully
surrendered on the Maturity Date, taking into account the 10% free surrender
provision described above and subject to the maximum 6 1/2% limitation
described above. If, however, the Contract Owner has chosen a settlement
option providing an income for a fixed period (e.g., Option 3V described
under "Annuity Provisions--Settlement Options"), for any annuitization made
more than three years after the Date of Issue, no surrender charge will be
deducted from the portion of Accumulated Value annuitized provided that
payments under such a settlement option will be made for at least five years
and that proceeds may not be withdrawn. This surrender charge will be waived
if the Annuitant is totally disabled (as defined in the Contract) or
confined to a hospital, nursing home or a hospice if the confinement begins
while the Contract is in force and has continued for six consecutive months
on the Maturity Date. No further surrender charge is deducted with respect
to surrenders during the annuity period under such a settlement option.
No surrender charge is imposed at the time of annuitization (if
annuitization occurs more than three years after the Date of Issue) if a
settlement option involving a life income with a guaranteed period is chosen
(e.g., Option 4V or Option 5V described under "ANNUITY PROVISIONS--
Settlement Options"), but surrenders are not permitted during the annuity
period under such a settlement option.
Administrative Charge
On each Contract Anniversary prior to and including the Maturity Date, LB
deducts from the Accumulated Value, proportionately from the Subaccounts and
the Fixed Account that make up such Accumulated Value, an annual
administrative charge of $30 to reimburse LB for administrative expenses
relating to the Contract, the Variable Account and the Subaccounts. Subject
to LB's approval, the Contract Owner may specify a different allocation for
the administrative charge. No such charge is deducted if on that Contract
Anniversary the total amount of premiums paid under the Contract, less the
amount of all prior partial surrenders (which includes the amount of related
surrender charges), is equal to or greater than $5,000 or the Accumulated
Value is greater than $5,000. LB does not expect to make a profit on this
charge. No administration charge is payable during the annuity period.
Mortality and Expense Risk Charge
The variable annuity payments made to Annuitants will vary in accordance
with the investment experience of the Subaccounts selected by the Contract
Owner. However, neither such variable annuity payments, nor fixed annuity
payments if fixed annuity payments have been selected, will be affected by
the mortality experience (death rate) of persons receiving annuity payments.
LB assumes this "mortality risk" and has guaranteed the annuity rates
incorporated in the Contract, which cannot be changed. LB also assumes the
mortality risk that Beneficiaries of Contract Owners or Annuitants dying
before the Maturity Date may receive amounts in excess of the then current
Accumulated Value (see "THE CONTRACTS--Death Benefit Before the Maturity
Date"). In addition, LB will not increase charges for administrative
expenses regardless of its actual expenses.
To compensate LB for assuming such mortality and expense risks, LB deducts a
daily mortality and expense risk charge from the average daily net assets in
the Variable Account. LB has determined that a mortality and expense risk
charge at an annual rate of 1.25% of the average daily net assets of each
Subaccount in the Variable Account would be reasonable in relation to the
mortality and expense risks assumed by LB under the Contract. LB will,
however, initially impose a daily mortality and expense risk charge in an
amount that is equal to an annual rate of 1.10% (approximately 0.80% for
mortality risk and approximately 0.30% for expense risk) of the average
daily net assets of each Subaccount in the Variable Account. The mortality
and expense risk charge is guaranteed not to increase above an annual rate
of 1.25%.
If the mortality and expense risk charge is insufficient to cover the actual
cost of the mortality and expense risk undertaken by LB, LB will bear the
loss. Conversely, if the mortality and expense risk charge proves more than
sufficient, the excess will be profit to LB and would be available for any
proper corporate purpose including, among other things, payment of sales
expenses. See "Sufficiency of Charges" below.
Investment Advisory Fee of the Fund
Because the Variable Account purchases shares of the Fund, the net assets of
the Variable Account will reflect the investment advisory fee incurred by
the Fund. LB is paid a daily fee by the Fund for its investment management
services equal to an annual rate of 0.40% of the aggregate average daily net
assets of the Money Market Portfolio, Growth Portfolio, Income Portfolio,
High Yield Portfolio, Mid Cap Growth Portfolio and Opportunity Growth
Portfolio, and .85% of the aggregate average daily net assets of the World
Growth Portfolio. See "LUTHERAN BROTHERHOOD, THE VARIABLE ACCOUNT AND THE
FUND--LB Series Fund, Inc.", and the accompanying current Prospectus for the
Fund.
Taxes
Currently, no charge will be made against the Variable Account for Federal
income taxes. LB may, however, make such a charge in the future if income or
gains within the Variable Account will result in any Federal income tax
liability to LB. Charges for other taxes, if any, attributable to the
Variable Account may also be made. See "FEDERAL TAX STATUS".
Sufficiency of Charges
If the amount of all charges assessed in connection with the Contracts as
described above is not enough to cover all expenses incurred in connection
therewith, the loss will be borne by LB. Any such expenses borne by LB will
be paid out of its general account which may include, among other things,
proceeds derived from mortality and expense risk charges deducted from the
Variable Account. Conversely, if the amount of such charges proves more than
enough, the excess will be retained by LB.
ANNUITY PROVISIONS
Maturity Date
The Contract Owner selects the Maturity Date, which must be a Contract
Anniversary at least three years after the Date of Issue, when making
application for the Contract. The Contract Owner may change a Maturity Date
selection by Written Notice received by LB at least 30 days before both the
Maturity Date currently in effect and the new Maturity Date. The new date
selected must satisfy the requirements for a Maturity Date.
For a Contract issued in Pennsylvania, the following requirements for
maximum maturity ages of the Contract will be used. Maturity age is the last
birthday of the Annuitant on the Contract Anniversary on or immediately
prior to the Maturity Date.
PENNSYLVANIA MAXIMUM MATURITY AGES
Age on Maximum
Date of Issue Maturity Age
-------------- -------------
70 or less 85
71 - 75 86
76 - 80 88
81 - 85 90
86 - 90 93
91 - 93 96
94 - 95 98
96 99
Settlement Options
The Contract Owner may select an annuity settlement option or options, and
may select whether payments are to be made on a fixed or variable (or a
combination of fixed and variable) basis. To the extent a fixed annuity is
selected, Accumulated Value will be transferred to the Fixed Account, and
the annuity payments will be guaranteed as to minimum dollar amount. See
APPENDIX -- MORE INFORMATION ABOUT THE FIXED ACCOUNT. The Contract Owner may
also change a choice of settlement option by Written Notice received by LB
at least 30 days before the Maturity Date.
The following variable annuity settlement options are generally available
under the Contract:
Option 3V--Income for a Fixed Period. Income will be paid for a fixed number
of years not to exceed 30.
Option 4V--Life Income with Guaranteed Period. Income will be paid for the
lifetime of the payee. If the payee dies during the guaranteed period,
payments will be continued to the named Beneficiary to the end of that
period. A period of 10 or 20 years may be selected. After the first payment
is made, this option may not be revoked or changed.
Option 5V--Joint and Survivor Life Income with Guaranteed Period. Income
will be paid for as long as at least one of two payees is alive. If both
payees die during the guaranteed period, payments will be continued to the
named Beneficiary to the end of that period. A period of 10 or 20 years may
be selected. After the first payment is made, this option may not be revoked
or changed.
Payments may be made under any other settlement option suggested by the
Contract Owner that is agreed to by LB.
LB also provides fixed annuity options, which are not described here. Any
one of the variable annuity options or any one of the fixed annuity options
may be selected, or any one of the variable annuity options may be selected
in combination with any one of the fixed annuity options.
If no valid selection of a settlement option has been made by the Maturity
Date and one Annuitant is living on the Maturity Date, the Life Income with
10-Year Guarantee Period fixed annuity settlement option shall be
automatically effective. If no valid selection of a settlement option has
been made by the Maturity Date and two Annuitants are living on the Maturity
Date, the Joint and Survivor Life Income with 10-Year Guarantee Period fixed
annuity settlement option shall be automatically effective.
It should be noted that under a settlement option providing an income for a
fixed period (e.g., Option 3V described above), for any annuitization made
more than three years after the Date of Issue, no surrender charge will be
deducted from the portion of Accumulated Value annuitized, provided that
payments under such settlement option will be made for at least five years
and that proceeds may not be withdrawn. Also, no surrender charge will be
imposed at the time of annuitization (if annuitization occurs more than
three years after the Date of Issue) under a settlement option providing a
life income with a guaranteed period (e.g., Option 4V or Option 5V above).
Surrenders after the Maturity Date are permitted only in connection with
settlement options that do not involve a life contingency (see "THE
CONTRACTS--Surrender (Redemption)").
The Contract Owner may elect the receipt of a single sum, rather than
payment pursuant to annuity settlement options, by surrendering the Contract
in full on the Maturity Date. In such case, a surrender charge will be
deducted from the Accumulated Value of the Contract if the Maturity Date
occurs at any time during the surrender charge period, taking into account
the 10% free surrender provision and subject to the maximum 6 1/2%
limitation described under "CHARGES AND DEDUCTIONS--Surrender Charge
(Contingent Deferred Sales Charge)".
Frequency and Amount of Annuity Payments
Annuity payments under a settlement option will be paid as monthly
installments, unless the Contract Owner and LB agree to a different payment
schedule. However, if the Accumulated Value at the Maturity Date is less
than $2,000 or would not result in a payment of at least $25, LB may pay the
Accumulated Value in a single sum and the Contract will be canceled. Also,
if annuity payments would be or become less than $25 if a single settlement
option is chosen, or $25 on each basis if a combination of variable and
fixed options is chosen, LB may change the frequency of payments to
intervals that will result in payments of at least $25 each from each option
chosen.
The amount of the first variable annuity payment (and, in the case of fixed
annuities, the amount of subsequent payments) is determined by applying the
Accumulated Value to be applied to the settlement option at the Maturity
Date, less any surrender charge due (see "Settlement Options" above), to the
annuity table in the Contract for the settlement option selected. The table
shows the amount of the initial annuity payment for each $1,000 applied.
Subsequent variable annuity payments vary in amount in accordance with the
investment experience of the selected Subaccount(s). Assuming annuity
payments are based on the unit values of a single Subaccount, the dollar
amount of the first annuity payment, determined as set forth above, is
divided by the Annuity Unit Value as of the Maturity Date to establish the
number of Annuity Units representing each annuity payment. This number of
Annuity Units remains fixed during the annuity payment period. The dollar
amount of the second and subsequent variable annuity payments is not
predetermined and may change from payment to payment. The dollar amount of
the second and each subsequent variable annuity payment is determined by
multiplying the fixed number of Annuity Units by the Annuity Unit Value (see
"Subaccount Annuity Unit Value" below) with respect to such Subaccount at
the end of the last Valuation Date of the period with respect to which the
payment is due. If the payment is based upon the Annuity Unit Values of more
than one Subaccount, the foregoing procedure is repeated for each applicable
Subaccount and the sum of the payments based on each Subaccount is the
amount of the annuity payment.
The annuity tables in the Contracts are based on the mortality table
specified in the Contract. Under such tables, the longer the life expectancy
of the Annuitant under any life annuity option or the duration of any period
for which payments are guaranteed under the option, the smaller will be the
amount of the first monthly variable annuity payment. LB guarantees that the
dollar amount of each fixed and variable annuity payment after the first
payment will not be affected by variations in expenses or in mortality
experience from the mortality assumptions used to determine the first
payment.
Subaccount Annuity Unit Value
The value of an Annuity Unit is determined independently for each
Subaccount.
For each Subaccount, the Annuity Unit Value on any Valuation Date is
determined by multiplying the Annuity Unit Value at the end of the
immediately preceding Valuation Date by the net investment factor for the
Valuation Date for which the Annuity Unit Value is being calculated, and
multiplying the result by an interest factor which offsets the effect of the
assumed investment earnings rate of 3 1/2% per annum which is assumed in the
annuity tables contained in the Contract.
The net investment factor for each Subaccount for a Valuation Date is
determined by dividing the value of an Accumulation Unit for the applicable
Subaccount as of the end of the current Valuation Period by the value of an
Accumulation Unit for the applicable Subaccount as of the end of the
immediately preceding Valuation Period.
Assumed Investment Rate
A 3 1/2% assumed investment rate is built into the annuity tables contained
in the Contracts. A higher assumption would mean a higher initial payment
but more slowly rising and more rapidly falling subsequent payments. A lower
assumption would have the opposite effect. If the actual net investment rate
were at the annual rate of 3 1/2%, the annuity payments would be level.
GENERAL PROVISIONS
Postponement of Payments
General. LB may defer payment of any surrender and annuity payment amounts,
or death benefit amounts that are in the Variable Account if (a) the New
York Stock Exchange is closed other than customary weekend and holiday
closings, or trading on the New York Stock Exchange is restricted as
determined by the SEC, or (b) an emergency exists, as determined by the SEC,
as a result of which disposal of securities is not reasonably practicable or
it is not reasonably practicable to determine the value of the Variable
Account's net assets. Transfers and allocations of Accumulated Value to and
against the Subaccounts of the Variable Account may also be postponed under
these circumstances.
Payment by Check. Payments under the Contract of any amounts derived from
premiums paid by check may be delayed until such time as the check has
cleared the Contract Owner's bank.
Date of Receipt
Except as otherwise stated herein, the date of receipt by LB of any Written
Notice, premium payment, telephone instruction or other communication is the
actual date it is received at LB's Home Office in proper form unless
received (1) after the close of the New York Stock Exchange, or (2) on a
date which is not a Valuation Date. In either of these two cases, the date
of receipt will be deemed to be the next Valuation Date.
Reports to Contract Owners
LB will mail each Contract Owner, at such Contract Owner's last known
address of record, at least annually after the first Contract Year, a report
containing the Accumulated Value or current value of the Contract as of a
date not more than two months prior to the date of mailing and any further
information required by any applicable law or regulation.
Contract Inquiries
Inquiries regarding a Contract may be made by writing to LB at its Home
Office, 625 Fourth Avenue South, Minneapolis, Minnesota 55415.
FEDERAL TAX STATUS
Introduction
The ultimate effect of Federal income taxes on a Contract's Accumulated
Value, on annuity payments and on the economic benefit to the Contract
Owner, the Annuitant or the Beneficiary depends upon the tax status of such
person, LB, and, if the Contract is purchased under a retirement plan, upon
the type of retirement plan and upon the tax and employment status of the
individual concerned. The discussion contained herein is general in nature
and is not intended as tax advice. No attempt is made to consider any
applicable state or other tax laws. Moreover, the discussion contained
herein is based on LB's understanding of Federal income tax laws as
currently interpreted. No representation is made regarding the likelihood of
continuation of these interpretations by the Internal Revenue Service. LB
does not make any guarantee regarding the tax status of any Contract. Each
person concerned should consult a qualified tax adviser.
Variable Account Tax Status
The Internal Revenue Code of 1986, as amended (the "Code") in effect
provides that the income and gains and losses from separate account
investments are not income to the insurance company issuing the variable
contracts so long as the contracts and the separate account meet certain
requirements set forth in the Code. Because the Contracts and the Variable
Account intend to meet such requirements, LB anticipates no tax liability
resulting from the Contracts, and consequently no reserve for income taxes
is currently charged against, or maintained by LB with respect to, the
Contracts. LB is currently exempt from state and local taxes. If there is a
material change in state or local tax laws, charges for such taxes, if any,
attributable to the Variable Account may be made.
Taxation of Annuities in General
Section 72 of the Code governs taxation of annuities in general.
Contracts Held by Individuals. An individual Contract Owner is not taxed on
increases in the value of a Contract until a distribution occurs, either in
the form of a single sum payment or as annuity payments under the settlement
option selected.
Upon receipt of a single sum payment or of an annuity payment under the
Contract, the recipient is taxed on the portion of such payment that exceeds
the investment in the Contract.
For single sum payments, the taxable portion is generally the amount in
excess of the premiums paid under the Contract. Such taxable portion is
taxed at ordinary income tax rates. The investment in the Contract is not
affected by loans or assignments of the Contract but is increased by any
amount included in gross income as a result of the loan or assignment.
Payments in partial or full surrender of a Contract generally will be taxed
as ordinary income to the extent that the Accumulated Value exceeds the
taxpayer's investment in the Contract. An assignment of the Contract (other
than a gift to the Contract Owner's spouse or incident to a divorce) or the
use of the Contract as collateral for a loan will be treated in the same
manner as a surrender.
For annuity payments, the taxable portion is generally determined by a
formula which establishes the ratio that the investment in the Contract
bears to the expected return under the Contract as of the Maturity Date.
Where annuity payments are made under certain Qualified Plans, the portion
of each payment that is excluded from gross income will generally be equal
to the total amount of any investment in the Contract as of the Maturity
Date, divided by the number of anticipated payments, which are determined by
reference to the age of the Annuitant. The taxable portion is taxed at
ordinary income tax rates. For certain types of Qualified Plans there may be
no investment in the Contract within the meaning of Section 72 of the Code.
In such event, the total payments received may be taxable. Contract Owners,
Annuitants and Beneficiaries under such Contracts should seek qualified tax
and financial advice about the tax consequences of distributions under the
retirement plan in connection with which such Contracts are purchased.
Generally, a distribution from a Contract before the taxpayer attains age 59
1/2 will result in an additional tax of 10% of the amount of the
distribution which is includable in gross income. The penalty tax will not
apply if the distribution is made as follows:
(1) in connection with death or disability as described in section 72(q)(2)
of the Code;
(2) from certain Qualified Plans;
(3) under a qualified funding trust (commonly referred to as structured
settlement plans); or
(4) it is one of a series of substantially equal periodic annual payments
for the life or life expectancy of the taxpayer or the joint lives or joint
life expectancies of the taxpayer and the beneficiary; for this purpose, if
there is a significant modification of the payment schedule before the
taxpayer is age 59 1/2 or before the expiration of five years from the time
of the annuity starting date, the taxpayer's income shall be increased by
the amount of tax and deferred interest that otherwise would have been
incurred.
Depending on the type of Qualified Plan, distributions may be subject to a
10% penalty tax.
Contracts Held by Other Than Individuals. The Tax Reform Act of 1986
provides that, except as hereafter noted, a Contract held by other than a
natural person, such as a corporation, estate or trust, will not be treated
as an annuity contract for Federal income tax purposes. The income on such a
Contract will be taxable in the year received or accrued by the Contract
Owner. The provision does not apply if the Contract Owner is acting as an
agent for an individual, if the Contract Owner is an estate which acquired
the Contract as a result of the death of the decedent, if the Contract is
held by certain Qualified Plans, if the Contract is held pursuant to a
qualified funding trust (commonly referred to as structured settlement
plans), if the Contract was purchased by an employer with respect to a
terminated Qualified Plan or if the Contract is an immediate annuity.
Multiple Contracts. Section 72(e)(11) of the Code provides that for the
purposes of determining the amount includable in gross income, all non-
qualified annuity contracts entered into on or after October 22, 1988 by the
same company with the same contract owner during any calendar year shall be
treated as one contract. This section will likely accelerate the recognition
of income by a Contract Owner owning multiple contracts and may have the
further effect of increasing the portion of income that will be subject to
the 10% penalty tax.
Qualified Plans
The Contracts are designed for use with several types of Qualified Plans.
The tax rules applicable to participants in such Qualified Plans vary
according to the type of plan and the terms and conditions of the plan.
Therefore, no attempt is made herein to provide more than general
information about the use of the Contracts with the various types of
Qualified Plans. Participants under such Qualified Plans as well as Contract
Owners, Annuitants and Beneficiaries are cautioned that the rights of any
person to any benefits under such Qualified Plans may be subject to the
terms and conditions of the plans themselves regardless of the terms and
conditions of the Contracts issued in connection therewith. Following are
brief descriptions of the various types of Qualified Plans and of the use of
the Contracts in connection therewith.
Tax-Sheltered Annuities. Section 403(b) of the Code permits employers of
public school employees and of employees of certain types of charitable,
educational and scientific organizations specified in Section 501(c)(3) of
the Code to purchase on behalf of their employees annuity contracts and,
subject to certain limitations, have the amount of purchase payments
excluded from the employees' gross income for tax purposes. These annuity
contracts are commonly referred to as "tax-sheltered annuities". Purchasers
of the Contracts for such purposes should seek qualified advice as to
eligibility, limitations on permissible amounts of purchase payments and tax
consequences on distribution.
An amendment to Section 403(b) of the Code, adopted pursuant to the Tax
Reform Act of 1986, imposes restrictions on certain distributions from tax-
sheltered annuity contracts meeting the requirements of Section 403(b),
which will apply to tax years beginning on or after January 1, 1989. The
amendment adds a new Section 403(b)(11) that requires that distributions
from Section 403(b) tax-sheltered annuities that are attributable to
contributions made pursuant to a salary reduction agreement may be paid only
when the employee reaches age 59 1/2, separates from service, dies or
becomes disabled, or in the case of hardship (hardship, for this purpose, is
generally defined as an immediate and heavy financial need, such as for
paying for medical expenses, for the purchase of a principal residence, or
for paying certain tuition expenses).
A participant in a Contract purchased as a tax-sheltered Section 403(b)
annuity contract will not, therefore, be entitled to exercise the surrender
right, described under the heading "THE CONTRACTS--Surrender (Redemption)",
in order to receive Accumulated Value attributable to elective contributions
credited under the Contract to such participant unless one of the above-
described conditions has been satisfied. The restrictions imposed by Section
403(b)(11) of the Code conflict with certain sections of the 1940 Act that
are applicable to the Contracts. In this regard, LB is relying on a no-
action letter issued by the Office of Insurance Products and Legal
Compliance of the SEC, and the requirements for such reliance have been
complied with by LB.
H.R. 10 Plans. The Self-Employed Individuals Tax Retirement Act of 1962,
which is commonly referred to as "H.R. 10", permits self-employed
individuals to establish Qualified Plans for themselves and their employees.
The tax consequences to participants under such plans depend upon the plan
itself. In addition, such plans are limited by law to maximum permissible
contributions, distribution dates, nonforfeitability of interest and tax
rates applicable to distributions. In order to establish such a plan, a plan
document, usually in prototype form pre-approved by the Internal Revenue
Service, is adopted and implemented by the employer. Purchasers of the
Contracts for use with H.R. 10 plans should seek qualified advice as to the
suitability of the proposed plan document and of the Contracts to their
specific needs.
Individual Retirement Annuities. Section 408 of the Code permits eligible
individuals to contribute to an individual retirement program known as an
"individual retirement annuity". These individual retirement annuities are
subject to limitations on the amount that may be contributed, on the persons
who may be eligible, and on the time when distributions may commence. In
addition, distributions from certain other types of Qualified Plans may be
placed on a tax-deferred basis into an individual retirement annuity. When
issued in connection with an individual retirement annuity, the Contracts
will be specifically amended to conform to the requirements under such
plans. Sales of the Contracts for use with individual retirement annuities
may be subject to special requirements imposed by the Internal Revenue
Service. Purchasers of the Contracts for such purposes will be provided with
such supplementary information as may be required by the Internal Revenue
Service or other appropriate agency.
Roth IRAs. Section 408A of the Code permits eligible individuals to make
nondeductible contributions to an individual retirement program known as a
Roth IRA. Section 408A includes limits on how much an individual may
contribute to a Roth IRA and when distributions may commence. Qualified
distributions from Roth IRAs are excluded from gross income if (a) made more
than five years after the taxable year of the first contribution to the Roth
IRA, and (b) meet any of the following conditions: (1) the annuity owner
has reached age 59 1/2; (2) the distribution is paid to a beneficiary after
the owner's death; (3) the annuity owner is disabled; or (4) the
distribution (not exceeding $10,000) will be used for a first time home
purchase. Nonqualified distributions are includible in gross income only to
the extent they exceed contributions made to the Roth IRA. The taxable
portion of a nonqualified distribution may be subject to a 10% penalty tax.
Subject to certain limitations, a traditional individual retirement account
or annuity may be converted into a Roth IRA and upon such a conversion, an
individual is required to include the taxable portion of the conversion in
gross income, but is not subject to a 10% penalty tax.
Corporate Pension and Profit-Sharing Plans. Sections 401(a) and 403(a) of
the Code permit corporate employers to establish various types of retirement
plans for employees. Such retirement plans may permit the purchase of the
Contracts to provide benefits under the plans. Corporate employers intending
to use the Contracts in connection with such plans should seek qualified
advice in connection therewith.
Section 457 Plans. Section 457 of the Code permits states, local governments
and tax-exempt organizations to establish deferred compensation plans on
behalf of their employees. Such plans may permit the purchase of the
Contracts to provide benefits under the plans. Employers intending to use
the Contracts in connection with such plans should seek qualified advice in
connection therewith.
1035 Exchanges
Section 1035(a) of the Code permits the exchange of certain life insurance,
endowment and annuity contracts for an annuity contract without a taxable
event occurring. Thus, potential purchasers who already own such a contract
issued by another insurer are generally able to exchange that contract for a
Contract issued by LB without a taxable event occurring. There are certain
restrictions which apply to such exchanges, including that the contract
surrendered must truly be exchanged for the Contract issued by LB and not
merely surrendered in exchange for cash. Further, the same person or persons
must be the obligee or obligees under the Contract received in the exchange
as under the original contract surrendered in the exchange. Careful
consideration must be given to compliance with the Code provisions and
regulations and rulings relating to exchange requirements, and potential
purchasers should be sure that they understand any surrender charges or loss
of benefits which might arise from terminating a contract they hold. Owners
considering such an exchange should consult their tax advisers to insure
that the requirements of Section 1035 are met.
Diversification Requirements
The Code imposes certain diversification standards on the underlying assets
of variable annuity contracts. The Code provides that a variable annuity
contract shall not be treated as an annuity contract for any period (and any
subsequent period) for which the investments are not "adequately
diversified". The Code contains a safe harbor provision which provides that
annuity contracts such as the Contract meet the diversification requirements
if, as of the end of each quarter, the underlying assets of the Variable
Account meet the diversification requirements applicable to regulated
investment companies, and no more than fifty-five percent (55%) of the total
assets underlying the Variable Account consist of cash, cash items, U.S.
government securities and securities of other regulated investment
companies.
On March 1, 1989, the Treasury Department adopted regulations (Treas. Reg.
1.817-5) which established diversification requirements for the investments
underlying variable contracts such as the Contract. The regulations amplify
the diversification requirements for variable contracts set forth in the
Code and provide an alternative to the safe harbor provision described
above. Under the regulations, the Variable Account will be deemed
adequately diversified if: (1) no more than 55% of the value of the total
assets of the account is represented by any one investment; (2) no more than
70% of the value of the total assets of the account is represented by any
two investments; (3) no more than 80% of the value of the total assets of
the account is represented by any three investments; and (4) no more than
90% of the value of the total assets of the account is represented by any
four investments.
The assets of the Fund are expected to meet the diversification
requirements. The Company will monitor the Contracts and the regulations of
the Treasury Department to ensure that the Contract will continue to qualify
as a variable annuity contract. Disqualification of the Contract as an
annuity contract would result in imposition of Federal income tax on the
Contract Owner with respect to earnings allocable to the Contract prior to
the receipt of payments under the Contract.
Withholding
The taxable portion of a distribution to an individual is subject to Federal
income tax withholding unless the taxpayer elects not to have withholding.
LB will provide the Contract Owner with the election form and further
information as to withholding prior to the first distribution. Generally,
however, amounts are withheld from periodic payments at the same rate as
wages and at the rate of 10% from non-periodic payments.
Also, effective January 1, 1993, certain distributions from retirement plans
qualified under Section 401 or 403(b) of the Code, that are not directly
rolled over to another eligible retirement plan or individual retirement
account or individual retirement annuity, are subject to a mandatory 20%
withholding for Federal income tax. The 20% withholding requirement does not
apply to: a) distributions for the life or life expectancy of the
participant or joint and last survivor expectancy of the participant and a
designated beneficiary; b) distributions for a specified period of 10 years
or more; or c) distributions which are required minimum distributions. For
complete information on withholding, a qualified tax adviser should be
consulted.
Other Considerations
Because of the complexity of the law and its application to a specific
individual, tax advice may be needed by a person contemplating purchase of a
Contract or the exercise of elections under a Contract. The above comments
concerning Federal income tax consequences are not exhaustive, and special
rules are provided with respect to situations not discussed in this
Prospectus.
The preceding description is based upon LB's understanding of current
Federal income tax law. LB cannot assess the probability that changes in tax
laws, particularly affecting annuities, will be made.
The preceding comments do not take into account state income or other tax
considerations which may be involved in the purchase of a Contract or the
exercise of elections under the Contract. For complete information on such
Federal and state tax considerations, a qualified tax adviser should be
consulted.
EMPLOYMENT-RELATED BENEFIT PLANS
The Contracts described in this Prospectus (except for Contracts issued in
the state of Montana) involve settlement option rates that distinguish
between men and women. Montana has enacted legislation requiring that
optional annuity benefits offered pursuant to Contracts purchased in Montana
not vary on the basis of sex. On July 6, 1983, the Supreme Court held in
Arizona Governing Committee v. Norris that optional annuity benefits
provided under an employer's deferred compensation plan could not, under
Title VII of the Civil Rights Act of 1964, vary between men and women on the
basis of sex. Because of this decision, the settlement option rates
applicable to Contracts purchased under an employment-related insurance or
benefit program may in some cases not vary on the basis of sex. Any unisex
rates to be provided by LB will apply for tax-qualified plans and those
plans where an employer believes that the Norris decision applies. Employers
and employee organizations should consider, in consultation with legal
counsel, the impact of Norris, and Title VII generally, and any comparable
state laws that may be applicable, on any employment-related insurance or
benefit plan for which a Contract may be purchased.
VOTING RIGHTS
To the extent required by law, LB will vote the Fund shares held in the
Variable Account at regular and special shareholder meetings of the Fund in
accordance with instructions received from persons having voting interests
in the corresponding Subaccounts of the Variable Account. If, however, the
1940 Act or any regulation thereunder should be amended or if the present
interpretation thereof should change, and as a result LB determines that it
is permitted to vote the Fund shares in its own right, it may elect to do
so.
Before the Maturity Date, the Contract Owner shall have the voting interest
with respect to Fund shares attributable to the Contract. On and after the
Maturity Date, the person entitled to receive annuity payments shall have
the voting interest with respect to such shares, which voting interest will
generally decrease during the annuity period.
The number of votes which a Contract Owner or person entitled to receive
annuity payments has the right to instruct will be calculated separately for
each Subaccount. The number of votes which each Contract Owner has the right
to instruct will be determined by dividing a Contract's Accumulated Value in
a Subaccount by the net asset value per share of the corresponding Portfolio
in which the Subaccount invests. The number of votes which each person
entitled to receive annuity payments has the right to instruct will be
determined by dividing the Contract's reserves in a Subaccount by the net
asset value per share of the corresponding Portfolio in which the Subaccount
invests. Fractional shares will be counted. The number of votes of the
Portfolio which the Contract Owner or person entitled to receive annuity
payments has the right to instruct will be determined as of the date
coincident with the date established by the Portfolio for determining
shareholders eligible to vote at the meeting of the Fund. Voting
instructions will be solicited by written communications prior to such
meeting in accordance with procedures established by the Fund.
Any Portfolio shares held in the Variable Account for which LB does not
receive timely voting instructions, or which are not attributable to
Contract Owners, will be voted by LB in proportion to the instructions
received from all Contract Owners. Any Portfolio shares held by LB or its
affiliates in general accounts will, for voting purposes, be allocated to
all separate accounts of LB and its affiliates having a voting interest in
that Portfolio in proportion to each such separate account's votes. Voting
instructions to abstain on any item to be voted upon will be applied on a
pro rata basis to reduce the votes eligible to be cast.
Each person having a voting interest in a Subaccount will receive proxy
materials, reports and other materials relating to the appropriate
Portfolio.
SALES AND OTHER AGREEMENTS
Lutheran Brotherhood Securities Corp. ("LBSC"), 625 Fourth Avenue South,
Minneapolis, Minnesota 55415, an indirect subsidiary of Lutheran
Brotherhood, acts as the principal underwriter of the Contracts pursuant to
a Distribution Agreement to which LB and the Variable Account are also
parties. The Contracts are sold through LB Representatives who are licensed
by state insurance officials to sell the Contracts. These LB Representatives
are also registered representatives of LBSC. The Contracts are offered in
all states where LB is authorized to sell variable annuities.
Compensation of LB Representatives. Commissions and other distribution
compensation to be paid to LB Representatives on the sale of Contracts will
be paid by LB and will not result in any charge to Contract Owners or to the
Variable Account in addition to the charges described in this Prospectus. LB
Representatives selling the Contracts will be paid a commission of not more
than 4% of the premiums paid on the contracts. Further, LB Representatives
may be eligible to receive certain benefits based on the amount of earned
commissions.
YEAR 2000
LB has conducted a review of its computer systems to identify systems that
could be affected by the "Year 2000" problem and is developing an
implementation plan to resolve the issue. The Year 2000 problem is the
result of computer programs being written using two digits (rather than
four) to define the applicable year. Any of LB's computer programs that
have time-sensitive software may recognize a date using "00" as the year
1900 rather than the year 2000. This could result in a major system failure
or miscalculations. LB presently believes that, with modifications to its
existing software and conversion to new software, the Year 2000 problem will
not pose significant operational problems for its computer systems as so
modified and converted. If, however, such modifications and conversions are
not completed timely, the Year 2000 problem may have a material impact on
the operations of LB. The Year 2000 readiness of other third parties whose
system failures could have an impact on LB's operations is currently being
evaluated. The potential materiality of any such impact is not known at
this time. A description of the Fund's preparations for the "Year 2000" is
contained in the accompanying prospectus for the Fund.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account is a party or
to which the assets of the Variable Account are subject. Neither LB nor
LBSC are involved in any litigation that is of material importance in
relation to their total assets or that relates to the Variable Account.
LEGAL MATTERS
All matters of applicable state law pertaining to the Contracts, including
LB's right to issue the Contracts thereunder, have been passed upon by James
M. Odland, Counsel for LB. Certain legal matters relating to the Federal
securities laws have been passed upon by the law firm of Jones & Blouch
L.L.P., Washington, D.C.
FINANCIAL STATEMENTS AND EXPERTS
Financial statements of LB and the Variable Account are contained in the
Statement of Additional Information.
The financial statements of LB and the Variable Account included in the
Statement of Additional Information have been so included in reliance of
Price Waterhouse LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
FURTHER INFORMATION
A Registration Statement under the Securities Act of 1933 has been filed
with the SEC with respect to the Contracts described herein. This Prospectus
and the Statement of Additional Information do not contain all of the
information set forth in the Registration Statement and exhibits thereto, to
which reference is hereby made for further information concerning the
Variable Account, LB and the Contracts. The information so omitted may be
obtained from the SEC's principal office located at 450 Fifth Street, N.W.,
Washington, D.C. 20549, upon payment of the fee prescribed by the SEC, or
examined there without charge. Statements contained in this Prospectus as to
the provisions of the Contracts and other legal documents are summaries, and
reference is made to the documents as filed with the SEC for a complete
statement of the provisions thereof.
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Page
Introduction 2
Custody of Assets 2
Independent Accountants and Financial Statements 2
Distribution of the Contracts 2
Calculation of Performance 3
Money Market Subaccount 3
Other Subaccounts 3
Financial Statements of Variable Account 7
Comment on Financial Statements of LB 18
Financial Statements of LB 18
How To Obtain the INDIVIDUAL FLEXIBLE PREMIUM
VARIABLE ANNUITY CONTRACT
Statement of Additional Information
Send this request form to:
Lutheran Brotherhood
P.O. Box 288
Minneapolis, MN 55440-9041
Please send me a copy of the most recent INDIVIDUAL FLEXIBLE PREMIUM
VARIABLE ANNUITY CONTRACT SAI.
- ---------------------------------------------------------------------------
(Name) (Date)
- ---------------------------------------------------------------------------
(Street Address)
- ---------------------------------------------------------------------------
(City) (State) (Zip Code)
<PAGE>
APPENDIX A
MORE INFORMATION ABOUT THE FIXED ACCOUNT
Because of exemptive and exclusionary provisions, interests in the Fixed
Account have not been registered under the Securities Act of 1933 ("1933
Act"), nor is the Fixed Account registered as an investment company under
the Investment Company Act of 1940 ("1940 Act"). Accordingly neither the
Fixed Account nor any interests therein are generally subject to the
provisions of the 1933 or 1940 Acts. Disclosures regarding the Fixed Account
option and the Fixed Account, however, may be subject to certain generally
applicable provisions of the federal securities laws relating to the
accuracy and completeness of statements in prospectuses. LB has been advised
that the staff of the Securities and Exchange Commission has not reviewed
disclosure relating to the Fixed Account.
Accumulated Values allocated to the Fixed Account are combined with all the
general assets of LB and are invested in those assets chosen by LB and
allowed by applicable law. LB allocates the investment income of the Fixed
Account to the Contracts covered by the Fixed Account in the amounts
guaranteed in such Contracts. Immediately prior to the Maturity Date, the
Accumulated Value of the Contract in the Fixed Account is subject to a
reduction for any surrender charge, if applicable.
Under the Fixed Account option, LB allocates premium payments to the Fixed
Account, guarantees the amounts allocated to the Fixed Account, and pays a
declared interest rate. The guaranteed minimum interest credited to the
Fixed Account will be at the effective rate of 3% per year, compounded
daily. LB may credit interest at a rate in excess of 3% per year; however,
LB is not obligated to credit any interest in excess of 3% per year. There
is no specific formula for the determination of excess interest credits.
Such credits, if any, will be determined by LB based on information as to
expected investment yields. Some of the factors that LB may consider in
determining whether to credit interest above 3% to amounts allocated to the
Fixed Account, and the amount thereof, are general economic trends, rates of
return currently available and anticipated on LB's investments, regulatory
and tax requirements and competitive factors. ANY INTEREST CREDIT TO AMOUNTS
ALLOCATED TO THE FIXED ACCOUNT IN EXCESS OF 3% PER YEAR WILL BE DETERMINED
AT THE SOLE DISCRETION OF LB. THE CONTRACT OWNER ASSUMES THE RISK THAT
INTEREST CREDITED TO FIXED ACCOUNT ALLOCATIONS MAY NOT EXCEED THE MINIMUM
GUARANTEE OF 3% FOR ANY GIVEN YEAR.
Nonetheless, for any amount allocated or transferred to the Fixed Account,
LB guarantees that the initial interest rate will be effective for at least
12 months, and subsequent interest rates will not be changed more often than
once every 12 months.
To the extent a fixed annuity payment option is selected by the Contract
Owner, Accumulated Value at the Maturity Date will be transferred to the
Fixed Account, which supports the insurance and annuity obligations of LB.
Contract Owners have no voting rights in the Variable Account with respect
to Fixed Account values.
<PAGE>
APPENDIX B
ILLUSTRATION OF MONTHLY VARIABLE ANNUITY SETTLEMENT OPTION
The illustration included in this appendix shows how the monthly variable
annuity settlement option income may change with the investment experience
of the Variable Account. The illustration shows how the monthly income
would vary over time if the investment return on the assets held in each
Portfolio of the Fund were a uniform, gross, after-tax annual rate of 0
percent, 5.06 percent and 12 percent. The incomes would be different from
those shown if the gross annual investment returns average 0 percent, 5.06
percent and 12 percent over a period of years, but fluctuated above and
below these averages for individual Contract years.
The monthly incomes reflect the fact that the net investment return of the
Subaccounts of the Variable Account is lower than the gross, after-tax
return on the assets held in the Fund as a result of the advisory fee paid
by the Fund and charges made against the Subaccounts. The incomes shown
take into account the following fees: Growth (0.40%); High Yield (0.40%);
Income (0.40%); Money Market (0.40%); Opportunity Growth (0.40%); Mid Cap
Growth (0.40%); and World Growth (0.85%); and the daily charge to each
Subaccount for assuming mortality and expense risks which is equivalent to a
charge at an annual current rate of 1.10% of the average assets of the
Subaccounts and which is guaranteed never to exceed an annual rate of 1.25%.
After deduction of these amounts, the illustrated gross investment rates of
return 0%, 5.06% and 12% correspond to net annual rates of -1.56%, 3.50% and
10.44%, respectively, assuming an average investment advisory fee of 0.46%.
The illustration assumes 100% of the assets are invested in Subaccounts of
the Variable Account. For comparison purposes, a current fixed annuity
income, available through the Fixed Account, is also provided. The first
variable payment is always based on an investment rate of 3.50%. After the
first variable annuity payment, future variable payments will increase if
the annualized net rate of return exceeds the 3.50%, and will decrease if
the annualized net rate of return is less than the 3.50%.
The hypothetical values shown are based upon a male, age 65 selecting a life
income with a 10-year guaranteed period and having $100,000 of non-qualified
funds at settlement. Upon request, LB(VIP) will provide a comparable
illustration based upon the proposed Annuitant's age, gender (except for
Contracts issued in the state of Montana), settlement option, type of funds
and cash available at settlement. Contracts purchased in Montana cannot
vary on the basis of the Annuitant's gender.
<PAGE>
Variable Annuity Payout Illustration
Prepared for: Prospect Commencement Date: 4/30/1998
Prepared by: Lutheran Brotherhood Cash Available at Settlement: $100,000
(Variable Insurance
Products Company)
Sex: Male Date of Birth: 4/30/1933 Funds: Nonqualified
State: MN Initial Monthly Income: $608
Income Option: Life Income with 10 Year Guaranteed Period
The monthly variable annuity income amount shown below assumes a
constant annual investment return. The assumed investment rate of 3.50% is
used to calculate the first monthly payment. Thereafter, monthly payments
will increase or decrease based upon the relationship between 3.50% and the
performance of the Subaccounts selected. The investment returns shown are
hypothetical and not a representation of future results.
Annual Rate of Return
--------------------------------------
0% Gross 5.06% Gross 12.00% Gross
Date Age (-1.56% Net) (3.50% Net) (10.44% Net)
- ----------------------- --- ------------ ------------ ------------
April 30, 1998 65 $608 $608 $ 608
April 30, 1999 66 578 608 649
April 30, 2000 67 550 608 692
April 30, 2001 68 523 608 739
April 30, 2002 69 498 608 788
April 30, 2007 74 387 608 1,090
April 30, 2012 79 301 608 1,508
April 30, 2017 84 235 608 2,087
April 30, 2022 89 183 608 2,886
April 30, 2027 94 142 608 3,993
April 30, 2032 99 111 608 5,524
April 30, 2033 100 105 608 5,894
If 100% of your cash available at settlement was applied to provide a fixed
annuity on the commencement date of this illustration, the fixed annuity
income amount would be $687.
Net rates of return reflect expenses totaling 1.56%, which consist of the
current 1.10% Variable Account mortality and expense risk charge and 0.46%
for the Fund advisory fee (this is an average with the actual varying from
0.40% to 0.85%).
This is an illustration only and not a contract.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
INDIVIDUAL FLEXIBLE PREMIUM
VARIABLE ANNUITY CONTRACT
Issued By
LUTHERAN BROTHERHOOD
This Statement of Additional Information is not a prospectus, but should be
read in conjunction with the Prospectus dated May 1, 1998 (the "Prospectus")
describing an individual flexible premium variable annuity contract (the
"Contract") being offered by Lutheran Brotherhood ("LB"). Purchase payments
will be allocated to one or more Subaccounts of LB Variable Annuity Account
I (the "Variable Account"), a separate account of LB and/or to the Fixed
Account (which is the general account of LB, and which pays interest at a
guaranteed fixed rate). Much of the information contained in this Statement
of Additional Information expands upon subjects discussed in the Prospectus.
A copy of the Prospectus may be obtained from Lutheran Brotherhood, 625
Fourth Avenue South, Minneapolis, Minnesota 55415.
Capitalized terms used in this Statement of Additional Information that are
not otherwise defined herein shall have the meanings given to them in the
Prospectus.
--------------------------------------------------
TABLE OF CONTENTS
Page
INTRODUCTION 2
CUSTODY OF ASSETS 2
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS 2
DISTRIBUTION OF THE CONTRACTS 2
CALCULATION OF PERFORMANCE 3
Money Market Subaccount 3
Other Subaccounts 3
FINANCIAL STATEMENTS OF VARIABLE ACCOUNT 7
COMMENT ON FINANCIAL STATEMENTS OF LB 18
FINANCIAL STATEMENTS OF LB 18
--------------------------------------------------
The date of this Statement of Additional Information
is May 1, 1998.
INTRODUCTION
The Contracts are issued by LB. Lutheran Brotherhood, a fraternal benefit
society owned and operated for its members, was founded in 1917 under the
laws of the State of Minnesota. LB is currently licensed to transact life
insurance business in all 50 states and the District of Columbia. At the
end of 1997, LB had total assets of approximately $13.2 billion. The
Contract may be sold to or in connection with retirement plans which may or
may not qualify for special federal tax treatment under the Internal Revenue
Code. Annuity payments under the Contract are deferred until a selected
later date.
Premiums will be allocated, as designated by the Contract Owner, to one or
more Subaccounts of the Variable Account, a separate account of LB and/or to
the Fixed Account (which is the general account of LB, and which pays
interest at a guaranteed fixed rate). The assets of each Subaccount will be
invested solely in a corresponding Portfolio of LB Series Fund, Inc. (the
"Fund"), which is a diversified, open-end management investment company
(commonly known as a "mutual fund"). The Prospectus for the Fund that
accompanies the Prospectus describes the investment objectives and attendant
risks of the seven Portfolios of the Fund-the Growth Portfolio, the High
Yield Portfolio, the Income Portfolio, the Opportunity Growth Portfolio, the
Mid Cap Growth Portfolio, the World Growth Portfolio and the Money Market
Portfolio. Additional Subaccounts (together with the related additional
Portfolios of the Fund) may be added in the future. The Accumulated Value of
the Contract and, except to the extent fixed amount annuity payments are
elected by the Contract Owner, the amount of annuity payments will vary,
primarily based on the investment experience of the Portfolios whose shares
are held in the Subaccounts designated. Premiums allocated to the Fixed
Account will accumulate at fixed rates of interest declared by LB.
CUSTODY OF ASSETS
LB, whose address appears on the cover of the Prospectus, maintains custody
of the assets of the Variable Account.
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS
The financial statements of LB and the Variable Account included in this
Statement of Additional Information have been so included in reliance on the
report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The financial statements of LB should be considered only as bearing upon the
ability of LB to meet its obligations under the Contracts. The financial
statements of LB should not be considered as bearing on the investment
experience of the assets held in the Variable Account.
DISTRIBUTION OF THE CONTRACTS
Lutheran Brotherhood Securities Corp. ("LBSC"), an indirect subsidiary of
Lutheran Brotherhood, acts as the principal underwriter of the Contracts
pursuant to a Distribution Agreement to which LB and the Variable Account
are also parties. The Contracts are sold through LB Representatives who are
licensed by state insurance officials to sell the Contracts. These LB
Representatives are also registered representatives of LBSC. The Contracts
are offered in all states where LB is authorized to sell variable annuities.
The offering of the Contracts is continuous.
There are no special purchase plans or exchange privileges not described in
the Prospectus (see "THE CONTRACTS--Transfers" in the Prospectus).
No charge for sales expense is deducted from premiums at the time premiums
are paid. However, a surrender charge, which may be deemed to be a
contingent deferred sales charge, is deducted from the Accumulation Value of
the Contract in the case where the Contract is surrendered, in whole or in
part, before annuity payments begin and, if certain settlement options are
selected, at the time annuity payments begin, under the circumstances
described in, and in amounts calculated as described in, the Prospectus
under the heading "CHARGES AND DEDUCTIONS--Surrender Charge (Contingent
Deferred Sales Charge)".
CALCULATION OF PERFORMANCE
Money Market Subaccount
The Prospectus contains information with respect to the yield and effective
yield of a hypothetical preexisting account having a balance of one Money
Market Portfolio Subaccount Accumulation Unit at the beginning of a
specified seven-day period. Such yield quotations have been calculated by
determining the net change, exclusive of capital changes, in the value of a
hypothetical pre-existing account having a balance of one Accumulation Unit
of the Subaccount at the beginning of the period, subtracting a hypothetical
charge reflecting deductions from Contract Owner accounts, dividing the net
change by the value of the account at the beginning of the period to obtain
the base period return, and multiplying the base period return by 365/7. The
effective yield has been calculated by compounding the yield quotation for
such period by adding 1 and raising the sum to a power equal to 365/7, and
subtracting 1 from the result.
In determining the net change in the value of the account as described in
the preceding paragraph, all deductions that are charged to all Contract
Owner accounts have been reflected in proportion to the length of the seven-
day base period and the mean (or median) account size under a substantially
identical contract issued by an LB affiliate. Deductions from purchase
payments and surrender charges assessed have not been reflected in, and
realized gains and losses from the sale of securities and unrealized
appreciation and depreciation of the Subaccount and the related portfolio
company have been excluded from, the computation of yield.
This example illustrates the yield quotation for the Money Market Subaccount
for the seven-day period ended December 31, 1997:
Value of hypothetical pre-existing account with exactly
one Accumulation Unit at the beginning of the period $1.545282
Value of same account (excluding capital changes) at end
of the seven-day period $1.546619
Net change in account value $0.001337
Base Period Return:
Net change in account value divided by beginning account value $0.000685
Annualized Current Yield [0.000685 X (365/7)] 4.51%
Effective Yield (0.000685 + 1)365/7-1 4.61%
The annualization of a seven-day average yield is not a representation of
future actual yield.
Other Subaccounts
The Prospectus contains information with respect to yield quotations by
Subaccounts other than the Money Market Subaccount. These yield quotations
are based on a 30-day (or one month) period computed by dividing the net
investment income per accumulation unit earned during the period (the net
investment income earned by the Fund portfolio attributable to shares owned
by the Subaccount less expenses incurred during the period) by the maximum
offering price per Accumulation Unit on the last day of the period, by
setting yield equal to two times the difference between the sixth power of
one plus the designated ratio and one, where the designated ratio is the
difference between the net investment income earned during the period and
the expenses accrued for the period (net of reimbursement) divided by the
product of the average daily number of Accumulation Units outstanding during
the period and the maximum offering price per Accumulation Unit on the last
day of the period.
For fees that vary with the size of the Contract, a Contract size equal to
the mean (or median) contract size of a substantially identical contract
issued by an LB affiliate has been assumed.
The following example illustrates the annualized current yield calculation
for the High Yield Subaccount for the 30-day base period ended December 31,
1997:
Dividends and interest earned by the High Yield Subaccount
during the base period $3,341,114
Expenses accrued for the base period $ 522,260
------------
$2,818,854(A)
============
Product of the maximum public offering price on
the last day of the base period and the average
daily number of Units outstanding during
the base period that were entitled to receive
dividends ($27.484584 x 15,507,278 Units) = $426,211,085(B)
=============
Quotient of dividends and interest earned minus
expenses accrued divided by product of maximum
public offering price multiplied by average
Units outstanding (A divided by B) = 0.006614(C)
Adding one and raising total to the
6th power (C + 1)6= 1.040344(D)
Annualized current yield [2(D - 1) X 100] = 8.08%
The following example illustrates the annualized current yield calculation
for the Income Subaccount for the 30-day base period ended December 31,
1997:
Dividends and interest earned by the Income Subaccount
during the base period $1,381,688
Expenses accrued for the base period $ 299,516
------------
$1,082,172(A)
============
Product of the maximum public offering price on
the last day of the base period and the average
daily number of Units outstanding during
the base period that were entitled to receive
dividends ($20.855132 x 11,716,363 Units) = $244,346,297(B)
Quotient of dividends and interest earned minus
expenses accrued divided by product of maximum
public offering price multiplied by average
Units outstanding (A divided by B) = 0.004429(C)
Adding one and raising total to the 6th power (C + 1)6 = 1.026869(D)
Annualized current yield [2(D-1) X 100] = 5.38%
Annualized current yield of any specific base period is not a representation
of future actual yield.
The Prospectus contains information with respect to performance data
relating to the Contracts. Such performance data includes average annual
total return quotations for the 1, 5 and 10-year periods computed by finding
the average annual compounded rates of return over the 1, 5 and 10-year
periods that would equate the initial amount invested to the ending
redeemable value, by equating the ending redeemable value to the product of
a hypothetical initial payment of $1,000, and one plus the average annual
total return raised to a power equal to the applicable number of years. For
periods prior to February 1, 1994, total return figures are based on a
hypothetical Contract assumed to have been invested in a Portfolio of the
Fund when that Portfolio was first available for investment under a variable
annuity contract issued by an LB affiliate, Lutheran Brotherhood Variable
Insurance Products Company. If the assumed investment was made less than 10
years from the date of the quotation, the total return from the date of such
investment will be given.
Such performance data assumes that any applicable charges have been deducted
from the initial $1,000 payment and includes all recurring fees that are
charged to all Contract Owners. If recurring fees charged to Contract Owners
are paid other than by redemption of Accumulation Units, such fees will be
appropriately reflected.
Average annual total return for any specific period is not a representation
of future actual results. Average annual total return assumes a steady rate
of growth. Actual performance fluctuates and will vary from the quoted
results for periods of time within the quoted periods.
The following example illustrates the average annual total return for the
Growth Subaccount of a hypothetical Contract invested in the Growth
Portfolio of the Fund from the date the Portfolio was first available for
investment under a contract issued by an LB affiliate through December 31,
1997:
Hypothetical $1,000 initial investment on March 8, 1988 $1,000
Ending redeemable value of the investment on
December 31, 1997 (after deferred sales charge) $3,802
Total return for the period is the difference between the
ending redeemable value and the hypothetical $1,000 initial
investment divided by the hypothetical $1,000 initial
investment; the result is expressed in terms of a percentage
(For example, 2 equals 200%) 280.19%*
Average annual total return from inception through
December 31, 1997 is the sum of the total return
calculated above plus one; such sum is raised to
the power of 1/n where n is expressed as nine years
and 10 months; the result is reduced by one and is
expressed in terms of a percentage
(For example, 0.2 equals 20%) 14.56%*
The following example illustrates the average annual total return for the
High Yield Subaccount of a hypothetical Contract invested in the High Yield
Portfolio of the Fund from the date the Portfolio was first available for
investment under a contract issued by an LB affiliate through December 31,
1997:
Hypothetical $1,000 initial investment on March 8, 1988 $1,000
Ending redeemable value of the investment on
December 31, 1997 (after deferred sales charge) $2,749
Total return for the period is the difference between the
ending redeemable value and the hypothetical $1,000
initial investment divided by the hypothetical $1,000
initial investment; the result is expressed in terms of
a percentage (For example, 2 equals 200%) 174.85%*
Average annual total return from inception through
December 31, 1997 is the sum of the total return
calculated above plus one; such sum is raised to the
power of 1/n where n is expressed as nine years
and 10 months; the result is reduced by one and is
expressed in terms of a percentage
(For example, 0.2 equals 20%) 10.84%*
The following example illustrates the average annual total return for the
Income Subaccount of a hypothetical Contract invested in the Income
Portfolio of the Fund from the date the Portfolio was first available for
investment under a contract issued by an LB affiliate through December 31,
1997:
Hypothetical $1,000 initial investment on March 8, 1988 $1,000
Ending redeemable value of the investment on December 31, 1997
(after deferred sales charge) $2,086
Total return for the period is the difference between the
ending redeemable value and the hypothetical $1,000
initial investment divided by the hypothetical $1,000
initial investment; the result is expressed in terms
of a percentage (For example, 2 equals 200%) 108.55%*
Average annual total return from inception through
December 31, 1997 is the sum of the total return
calculated above plus one; such sum is raised to the
power of 1/n where n is expressed as nine years
and 10 months; the result is reduced by one and is
expressed in terms of a percentage
(For example, 0.2 equals 20%) 7.77%*
The following example illustrates the average annual total return for the
Money Market Subaccount of a hypothetical Contract invested in the Money
Market Portfolio of the Fund from the date the Portfolio was first available
for investment under a contract issued by an LB affiliate through December
31, 1997:
Hypothetical $1,000 initial investment on February 18, 1988 $1,000
Ending redeemable value of the investment on December 31, 1997
(after deferred sales charge) $1,547
Total return for the period is the difference between
the ending redeemable value and the hypothetical $1,000
initial investment divided by the hypothetical $1,000
initial investment; the result is expressed in terms
of a percentage (For example, 2 equals 200%) 54.70%*
Average annual total return from inception through
December 31, 1997 is the sum of the total return
calculated above plus one; such sum is raised to the
power of 1/n where n is expressed as nine years and
11 months; the result is reduced by one and is
expressed in terms of a percentage
(For example, 0.2 equals 20%) 4.52%*
The following example illustrates the average annual total return for the
Opportunity Growth Subaccount from the date of inception through the period
ended December 31, 1997:
Hypothetical $1,000 initial investment on January 18, 1996 $1,000
Ending redeemable value of the investment on
December 31, 1997 (after deferred sales charge) $1,124
Total return for the period is the difference between the
ending redeemable value and the hypothetical $1,000
initial investment divided by the hypothetical $1,000
initial investment; the result is expressed in terms of
a percentage (For example, 2 equals 200%) 12.42%*
Average annual total return from inception through December
31, 1997 is the sum of the total return calculated above plus
one; such sum is raised to the power of 1/n where n is
expressed as one year and 347 days; the result is reduced
by one and is expressed in terms of a percentage
(For example, 0.2 equals 20%)..................................... 6.18%
The following example illustrates the average annual total return for the
World Growth Subaccount from the date of inception through December 31,
1997:
Hypothetical $1,000 initial investment on January 18, 1996 $1,000
Ending redeemable value of the investment on December 31, 1997
(after deferred sales charge) $1,061
Total return for the period is the difference between the
ending redeemable value and the hypothetical $1,000
initial investment divided by the hypothetical $1,000
initial investment; the result is expressed in terms
of a percentage (For example, 2 equals 200%) 6.10%*
Average annual total return from inception through December
31, 1997 is the sum of the total return calculated above
plus one; such sum is raised to the power of 1/n where n
is expressed as one year and 347 days; the result is
reduced by one and is expressed in terms of a percentage
(For example, 0.2 equals 20%)..................................... 3.08%
- -----------------------------
*Does not include the annual administrative charge of $30 deducted from any
Contract for which the total of premiums paid under such Contract minus all
prior surrenders is less than $5,000 and the Accumulated Value is less than
$5,000. Inclusion of the administrative charge would reduce the total
return figures shown above.
FINANCIAL STATEMENTS OF VARIABLE ACCOUNT
Set forth on the following pages are the audited financial statements of the
Variable Account.
3100 Multifoods Tower
33 South Sixth Street
Minneapolis, MN 55402-3795
Price Waterhouse
[PRICE WATERHOUSE LOGO HERE]
Report of Independent Accountants
To Lutheran Brotherhood and Contract
Owners of LB Variable Annuity Account I
In our opinion, the accompanying statement of assets and liabilities
and the related statements of operations and of changes in net
assets present fairly, in all material respects, the financial
position of the Opportunity Growth, World Growth, Growth, High
Yield, Income, and Money Market subaccounts of LB Variable Annuity
Account at December 31, 1997, the results of each of their
operations for the year then ended and the changes in each of their
net assets for each of the two years in the period then ended, in
conformity with generally accepted accounting principles. These
financial statements are the responsibility of Lutheran
Brotherhood's management; our responsibility is to express an
opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
/S/Price Waterhouse LLP
March 20, 1998
<TABLE>
<CAPTION>
LB Variable Annuity Account I
Opportunity Growth Subaccount
Financial Statements
Statement of Assets and Liabilities
December 31, 1997
<S> <C>
ASSETS:
Investment in LB Series Fund, Inc. 16,044,702
shares at net asset value of $11.55 per share
(cost $185,912,564) $185,291,954
Receivable from LB for units issued 358,026
------------
Total assets 185,649,980
------------
LIABILITIES:
Payable to LB for mortality and expense
risk charge 179,963
------------
Total liabilities 179,963
------------
NET ASSETS $185,470,017
============
Number of units outstanding 15,755,047
============
Unit Value (net assets divided by units outstanding) $11.77
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year ended December 31, 1997
<S> <C>
INVESTMENT INCOME:
Dividend Income $1,002,172
Mortality and expense risk charge (1,633,865)
------------
Net investment loss (631,693)
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investments 20,285
Net change in unrealized appreciation
of investments 3,255,747
------------
Net gain on investments 3,276,032
------------
Net increase in net assets resulting
from operations $2,644,339
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended December 31, 1997 and 1996
1997 1996
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
OPERATIONS:
Net investment loss $(631,693) $(399,451)
Net realized gain on investments 20,285 3,482,409
Net change in unrealized appreciation or depreciation
of investments 3,255,747 (3,876,358)
------------ ------------
Net change in net assets resulting from operations 2,644,339 (793,400)
------------ ------------
UNIT TRANSACTIONS:
Proceeds from units issued 69,812,923 82,789,088
Net asset value of units redeemed (4,283,131) (1,318,472)
Transfers from other subaccounts 25,429,696 28,509,130
Transfers to other subaccounts (13,400,910) (4,938,549)
Transfers from fixed account 318,086 1,050,449
Transfers to fixed account (309,720) (39,512)
------------ ------------
Net increase in net assets from unit transactions 77,566,944 106,052,134
------------ ------------
Net increase in net assets 80,211,283 105,258,734
NET ASSETS:
Beginning of period 105,258,734 --
------------ ------------
End of period $185,470,017 $105,258,734
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB Variable Annuity Account I
World Growth Subaccount
Financial Statements
Statement of Assets and Liabilities
December 31, 1997
<S> <C>
ASSETS:
Investment in LB Series Fund, Inc. 12,453,704
shares at net asset value of $11.12 per share
(cost $134,853,503) $138,492,409
Receivable from LB for units issued 192,628
------------
Total assets 138,685,037
------------
LIABILITIES:
Payable to LB for mortality and expense
risk charge 135,687
------------
Total liabilities 135,687
------------
NET ASSETS $138,549,350
============
Number of units outstanding 12,470,902
============
Unit Value (net assets divided by units outstanding) $11.11
=======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year ended December 31, 1997
<S> <C>
INVESTMENT INCOME:
Dividend Income $1,567,986
Mortality and expense risk charge (1,239,329)
------------
Net investment income 328,657
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investments 72,345
Net change in unrealized depreciation
of investments (494,823)
------------
Net loss on investments (422,478)
------------
Net decrease in net assets resulting
from operations $(93,821)
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended December 31, 1997 and 1996
1997 1996
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
OPERATIONS:
Net investment income $328,657 $217,288
Net realized gain on investments 72,345 990
Net change in unrealized appreciation or depreciation
of investments (494,823) 4,133,732
------------ ------------
Net change in net assets resulting from operations (93,821) 4,352,010
------------ ------------
UNIT TRANSACTIONS:
Proceeds from units issued 56,715,967 53,280,698
Net asset value of units redeemed (3,028,143) (1,095,783)
Transfers from other subaccounts 17,992,353 19,907,516
Transfers to other subaccounts (7,431,894) (2,825,123)
Transfers from fixed account 197,461 798,420
Transfers to fixed account (197,878) (22,433)
------------ ------------
Net increase in net assets from unit transactions 64,247,866 70,043,295
------------ ------------
Net increase in net assets 64,154,045 74,395,305
NET ASSETS:
Beginning of period 74,395,305 --
------------ ------------
End of period $138,549,350 $74,395,305
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB Variable Annuity Account I
Growth Subaccount
Financial Statements
Statement of Assets and Liabilities
December 31, 1997
<S> <C>
ASSETS:
Investment in LB Series Fund, Inc. 33,949,073
shares at net asset value of $21.58 per share
(cost $599,058,938) $732,745,348
Receivable from LB for units issued 944,021
------------
Total assets 733,689,369
------------
LIABILITIES:
Payable to LB for mortality and expense
risk charge 711,243
------------
Total liabilities 711,243
------------
NET ASSETS $732,978,126
============
Number of units outstanding 19,279,447
============
Unit Value (net assets divided by units outstanding) $38.02
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year ended December 31, 1997
<S> <C>
INVESTMENT INCOME:
Dividend Income $6,502,161
Mortality and expense risk charge (6,334,044)
------------
Net investment income 168,117
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investments 61,772,252
Net change in unrealized appreciation
of investments 76,572,734
------------
Net gain on investments 138,344,986
------------
Net increase in net assets resulting
from operations $138,513,103
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended December 31, 1997 and 1996
1997 1996
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
OPERATIONS:
Net investment income $168,117 $1,110,052
Net realized gain on investments 61,772,252 27,647,204
Net change in unrealized appreciation or depreciation
of investments 76,572,734 28,567,353
------------ ------------
Net increase in net assets resulting from operations 138,513,103 57,324,609
------------ ------------
UNIT TRANSACTIONS:
Proceeds from units issued 190,243,960 169,902,448
Net asset value of units redeemed (20,194,521) (8,581,093)
Transfers from other subaccounts 49,173,572 37,521,563
Transfers to other subaccounts (31,446,677) (38,282,281)
Transfers from fixed account 844,149 1,379,808
Transfers to fixed account (1,825,504) (356,880)
------------ ------------
Net increase in net assets from unit transactions 186,794,979 161,583,565
------------ ------------
Net increase in net assets 325,308,082 218,908,174
NET ASSETS:
Beginning of period 407,670,044 188,761,870
------------ ------------
End of period $732,978,126 $407,670,044
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB Variable Annuity Account I
High Yield Subaccount
Financial Statements
Statement of Assets and Liabilities
December 31, 1997
<S> <C>
ASSETS:
Investment in LB Series Fund, Inc. 41,395,137
shares at net asset value of $10.44 per share
(cost $415,114,048) $432,025,087
Receivable from LB for units issued 773,573
------------
Total assets 432,798,660
------------
LIABILITIES:
Payable to LB for mortality and
expense risk charge 421,279
------------
Total liabilities 421,279
------------
NET ASSETS $432,377,381
============
Number of units outstanding 15,720,991
============
Unit Value (net assets divided by units outstanding) $27.50
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year ended December 31, 1997
<S> <C>
INVESTMENT INCOME:
Dividend Income $32,529,124
Mortality and expense risk charge (3,778,143)
------------
Net investment income 28,750,981
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investments 6,266
Net change in unrealized appreciation
of investments 13,269,345
------------
Net gain on investments 13,275,611
------------
Net increase in net assets resulting
from operations $42,026,592
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended December 31, 1997 and 1996
1997 1996
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
OPERATIONS:
Net investment income $28,750,981 $16,393,047
Net realized gain on investments 6,266 682
Net change in unrealized appreciation or depreciation
of investments 13,269,345 1,879,021
------------- -------------
Net increase in net assets resulting from operations 42,026,592 18,272,750
------------- -------------
UNIT TRANSACTIONS:
Proceeds from units issued 132,360,574 122,024,025
Net asset value of units redeemed (13,827,786) (6,153,855)
Transfers from other subaccounts 31,697,501 22,925,879
Transfers to other subaccounts (18,330,438) (21,972,449)
Transfers from fixed account 547,725 1,085,659
Transfers to fixed account (1,028,730) (282,809)
------------- -------------
Net increase in net assets from unit transactions 131,418,846 117,626,450
------------- -------------
Net increase in net assets 173,445,438 135,899,200
NET ASSETS:
Beginning of period 258,931,943 123,032,743
------------- -------------
End of period $432,377,381 $258,931,943
============= =============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB Variable Annuity Account I
Income Subaccount
Financial Statements
Statement of Assets and Liabilities
December 31, 1997
<S> <C>
ASSETS:
Investment in LB Series Fund, Inc. 24,979,281
shares at net asset value of $9.92 per share
(cost $241,863,237) $247,714,728
Receivable from LB for units issued 252,846
------------
Total assets 247,967,574
------------
LIABILITIES:
Payable to LB for mortality and expense
risk charge 241,558
------------
Total liabilities 241,558
------------
NET ASSETS $247,726,016
============
Number of units outstanding 11,878,420
============
Unit Value (net assets divided by units outstanding) $20.86
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year ended December 31, 1997
<S> <C>
INVESTMENT INCOME:
Dividend Income $13,839,146
Mortality and expense risk charge (2,281,315)
------------
Net investment income 11,557,831
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investments 8,983
Net change in unrealized appreciation
of investments 4,025,454
------------
Net gain on investments 4,034,437
------------
Net increase in net assets resulting
from operations $15,592,268
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended December 31, 1997 and 1996
1997 1996
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
OPERATIONS:
Net investment income $11,557,831 $7,707,218
Net realized gain on investments 8,983 7,088
Net change in unrealized appreciation or depreciation
of investments 4,025,454 (2,869,862)
------------ ------------
Net increase in net assets resulting from operations 15,592,268 4,844,444
------------ ------------
UNIT TRANSACTIONS:
Proceeds from units issued 65,314,529 82,629,245
Net asset value of units redeemed (9,593,742) (5,629,826)
Transfers from other subaccounts 16,778,453 14,441,126
Transfers to other subaccounts (15,507,951) (20,758,730)
Transfers from fixed account 247,864 580,605
Transfers to fixed account (884,697) (444,722)
------------ ------------
Net increase in net assets from unit transactions 56,354,456 70,817,698
------------ ------------
Net increase in net assets 71,946,724 75,662,142
NET ASSETS:
Beginning of period 175,779,292 100,117,150
------------ ------------
End of period $247,726,016 $175,779,292
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
<CAPTION>
LB Variable Annuity Account I
Money Market Subaccount
Financial Statements
Statement of Assets and Liabilities
December 31, 1997
<S> <C>
ASSETS:
Investment in LB Series Fund, Inc. 53,347,259
shares at net asset value of $1.00 per share
(cost $53,347,259) $53,347,259
Receivable from LB for units issued 336,378
------------
Total assets 53,683,637
------------
LIABILITIES:
Payable to LB for mortality and expense
risk charge. 52,104
------------
Total liabilities 52,104
------------
NET ASSETS $53,631,533
============
Number of units outstanding 34,676,637
============
Unit Value (net assets divided by units outstanding) $1.55
======
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
Year ended December 31, 1997
<S> <C>
INVESTMENT INCOME:
Dividend Income $2,643,400
Mortality and expense risk charge (551,946)
------------
Net investment income $2,091,454
============
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended December 31, 1997 and 1996
1997 1996
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
OPERATIONS:
Net investment income $2,091,454 $1,262,199
------------ ------------
UNIT TRANSACTIONS:
Proceeds from units issued 64,588,565 59,027,074
Net asset value of units redeemed (3,375,750) (1,675,110)
Transfers from other subaccounts 28,246,878 13,036,406
Transfers to other subaccounts (83,200,583) (47,564,488)
Transfers from fixed account 787,334 546,795
Transfers to fixed account (1,532,524) (1,094,085)
------------ ------------
Net increase in net assets from unit transactions 5,513,920 22,276,592
------------ ------------
Net increase in net assets 7,605,374 23,538,791
NET ASSETS:
Beginning of period 46,026,159 22,487,368
------------ ------------
End of period $53,631,533 $46,026,159
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
LB Variable Annuity Account I
Notes to Financial Statements
December 31, 1997
(1) ORGANIZATION
The LB Variable Annuity Account I (the Variable Account), a unit
investment trust registered under the Investment Company Act of
1940, was established as a separate account of Lutheran Brotherhood
(LB) in 1993, pursuant to the laws of the State of Minnesota. LB
offers financial services to Lutherans and is a fraternal benefit
society owned by and operated for its members. The Variable Account
contains six subaccounts -- Opportunity Growth, World Growth,
Growth, High Yield, Income and Money Market -- each of which invests
only in a corresponding portfolio of the LB Series Fund, Inc. (the
Fund). The Fund is registered under the Investment Company Act of
1940 as a diversified open-end investment company.
The Variable Account is used to support only flexible premium
deferred variable annuity contracts issued by LB. Under applicable
insurance law, the assets and liabilities of the Variable Account
are clearly identified and distinguished from the other assets and
liabilities of LB. The assets of the Variable Account will not be
charged with any liabilities arising out of any other business
conducted by LB.
(2) SIGNIFICANT ACCOUNTING POLICIES
Investments
The investments in shares of the Fund are stated at the net asset
value of the Fund. The cost of shares sold and redeemed is
determined on the average cost method. Dividend distributions
received from the Fund are reinvested in additional shares of the
Fund and recorded as income by the Variable Account on the ex-
dividend date.
Federal Income Taxes
LB qualifies as a tax-exempt organization under the Internal Revenue
Code. Accordingly, no provision for income taxes has been charged
against the Variable Account.
Other
The preparation of financial statements in conformity with generally
accepted accounting principals requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
income and expenses during the reporting period. Actual results
could differ from those estimates.
(3) RELATED PARTY TRANSACTIONS
Proceeds received by the Variable Account for units issued represent
gross contract premiums received by LB. No charge for sales
distribution expense is deducted from premiums received.
A surrender charge is deducted by LB if a contract is surrendered in
whole or in part during the first six years the contract is in
force. The surrender charge is 6% during the first contract year,
and decreases by 1% each subsequent contract year. For purposes of
the surrender charge calculation, up to 10% of a contract's
accumulated value may be excluded from the calculation each year.
Surrender charges of $816,199 and $336,096 were deducted in 1997 and
1996, respectively.
An annual administrative charge of $30 is deducted on each contract
anniversary from the accumulated value of the contract to compensate
LB for administrative expenses relating to the contract and the
Variable Account. This charge is deducted by redeeming units of the
subaccounts of the Variable Account. No such charge is deducted from
contracts for which total premiums paid, less surrenders, equals or
exceeds $5,000. No administrative charge is payable during the
annuity period. Administrative charges of $295,514 and $165,767 were
deducted in 1997 and 1996, respectively.
A daily charge is deducted from the value of the net assets of the
Variable Account to compensate LB for mortality and expense risks
assumed in connection with the contract and is equivalent to an
annual rate of 1.1% of the average daily net assets of the Variable
Account. Mortality and expense risk charges of $15,818,642 and
$8,169,646 were deducted in 1997 and 1996, respectively.
A fixed account investment option is available for Contract Owners
of the flexible premium deferred variable annuity. Assets of the
fixed account are combined with the general assets of LB and
invested by LB as allowed by applicable law. Accordingly, the fixed
account assets are not included in the Variable Account financial
statements. The asset value of net transfers to the fixed account
was $2,236,434 and $3,201,295 in 1997 and 1996, respectively.
<TABLE>
<CAPTION>
LB Variable Annuity Account I
Notes to Financial Statements
December 31, 1997
(4) UNIT ACTIVITY
Transactions in units (including transfers among subaccounts) were as follows:
Subaccounts
----------------------------------------------------------------------------------------------------------
Opportunity World High Money
Growth Growth Growth Yield Income Market
---------------- -------------- -------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1995 N/A N/A 7,742,874 5,577,895 5,274,785 15,771,786
Units issued 9,659,172 7,335,630 8,077,479 6,430,892 5,401,769 52,009,809
Units redeemed (733,941) (526,567) (2,011,176) (1,376,109) (1,610,194) (36,757,376)
-------------- -------------- -------------- -------------- -------------- --------------
Units outstanding at
December 31, 1996 8,925,231 6,809,063 13,809,177 10,632,678 9,066,360 31,024,219
Units issued 8,717,193 6,845,002 7,373,534 6,664,785 4,338,746 63,079,116
Units redeemed (1,887,377) (1,183,163) (1,903,264) (1,576,472) (1,526,686) (59,426,698)
-------------- -------------- -------------- -------------- -------------- --------------
Units outstanding at
December 31, 1997 15,755,047 12,470,902 19,279,447 15,720,991 11,878,420 34,676,637
============== ============== ============== ============== ============== ==============
<CAPTION>
(5) PURCHASES AND SALES OF INVESTMENTS
The aggregate costs of purchases and proceeds from sales of investments in the LB Series Fund, Inc. were as follows:
Subaccounts
----------------------------------------------------------------------------------------------------------
Opportunity World High Money
Growth Growth Growth Yield Income Market
---------------- -------------- -------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
For the year ended
December 31, 1996
Purchases $108,462,323 $69,846,540 $190,486,874 $133,738,546 $79,688,912 $40,423,773
Sales 101,856 60,816 17,012 64,594 777,602 17,362,280
For the year ended
December 31, 1997
Purchases 77,878,517 65,101,401 250,228,610 160,898,635 69,354,377 35,455,852
Sales 357,743 36,473 1,026,398 146,129 1,128,583 27,215,621
</TABLE>
COMMENTS ON FINANCIAL STATEMENTS OF LB
The financial statements of LB included in this Statement of Additional
Information should be considered as bearing only upon the ability of LB to
meet its obligations under the Contracts. The value of the interests of
Contract Owners, Annuitants and Beneficiaries under the Contracts are
affected primarily by the investment experience of the Subaccounts of the
Variable Account. The financial statements of LB should not be considered
as bearing on the investment performance of the assets held in the Variable
Account.
FINANCIAL STATEMENTS OF LB
Set forth on the following pages are the audited financial statements of LB.
Report of Independent Accountants
March 12, 1998
To The Board of Directors and Members
of Lutheran Brotherhood
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, of members' equity and of cash flows
present fairly, in all material respects, the financial position of Lutheran
Brotherhood (the Society) and its subsidiaries at December 31, 1997 and
1996, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1997 in conformity with
generally accepted accounting principles. These financial statements are
the responsibility of the Society's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
/s/ Price Waterhouse LLP
Price Waterhouse
1997 1996
ASSETS
Investments:
Fixed income securities available
for sale, at fair value $ 6,977 $ 6,200
Equity securities available for sale, at fair value 651 532
Mortgage loans 2,258 2,437
Real estate 42 45
Loans to contractholders 675 652
Short-term investments 211 219
Other invested assets 142 96
------- -------
Total investments 10,956 10,181
Cash and cash equivalents 553 500
Deferred policy acquisition costs 903 915
Investment income due and accrued 127 117
Other assets 112 101
Separate account assets 5,451 4,011
------- -------
Total assets $18,102 $15,825
======= =======
LIABILITIES AND MEMBERS' EQUITY
Liabilities:
Contract reserves $ 9,551 $ 9,268
Benefits in the process of payment 41 37
Dividends payable 92 84
Amounts due to brokers 482 376
Other liabilities 240 209
Separate account liabilities 5,451 4,011
------- -------
Total liabilities 15,857 13,985
Members' equity:
Net unrealized gains 277 120
Retained earnings 1,968 1,720
------- -------
Total members' equity 2,245 1,840
------- -------
Total liabilities and members' equity $18,102 $15,825
======= =======
The accompanying notes are an
integral part of these financial statements.
1997 1996 1995
Revenues:
Premiums $ 482 $ 457 $ 442
Net investment income 769 719 706
Net realized investment gains 127 66 63
Contract charges 148 126 107
Other income 77 73 55
------ ------ ------
Total revenues 1,603 1,441 1,373
Benefits and other deductions:
Net additions to contract reserves 294 280 269
Contractholder benefits 574 563 544
Dividends 177 164 155
Commissions 95 96 86
Operating expenses 180 154 136
Increase in deferred policy acquisition costs (37) (63) (50)
Fraternal activities 63 59 50
------ ------ ------
Total benefits and other deductions 1,346 1,253 1,190
Income before income taxes 257 188 183
Provision for income taxes 9 11 11
------ ------ ------
Net income $ 248 $ 177 $ 172
====== ====== ======
The accompanying notes are an
integral part of these financial statements.
Unrealized Gains (Losses) Total
-------------------------
Acquisition Retained Members'
Investments Costs Earnings Equity
Balance at December 31, 1994 $(226) $ 78 $1,371 $1,223
1995 transactions:
Net income - - 172 172
Unrealized gains (losses) 572 (200) - 372
----- ---- ------ ------
Balance at December 31, 1995 346 (122) 1,543 1,767
1996 transactions:
Net income - - 177 177
Unrealized gains (losses) (179) 75 - (104)
----- ---- ------ ------
Balance at December 31, 1996 167 (47) 1,720 1,840
1997 transactions:
Net income - - 248 248
Unrealized gains (losses) 206 (49) - 157
----- ---- ------ ------
Balance at December 31, 1997 $ 373 $ (96) $1,968 $2,245
===== ===== ====== ======
The accompanying notes are an
integral part of these financial statements.
1997 1996 1995
Cash flows from operating activities:
Net income $ 248 $ 177 $ 172
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization (10) (4) 3
Deferred policy acquisition costs (37) (63) (50)
Equity in earnings of other invested
assets (26) (13)
Realized investment (gains) and
losses, net (127) (66) (63)
Change in operating assets and liabilities:
Loans to contractholders (23) (24) (31)
Other assets (7) (10) (32)
Contract reserves 283 235 626
Other liabilities 43 49 34
------- ------- -------
Total adjustments 96 104 487
------- ------- -------
Net cash provided by
operating activities 344 281 659
------- ------- -------
Cash flows from investing activities:
Proceeds from investments sold,
matured or repaid:
Fixed income securities available
for sale 8,061 8,588 4,703
Equity securities available for sale 688 430 351
Mortgage loans 431 265 170
Short-term investments 553 678 592
Other invested assets 18 56 13
Costs of investments acquired
Fixed income securities available
for sale (8,527) (8,917) (4,893)
Equity securities available for sale (703) (509) (464)
Mortgage loans (245) (295) (426)
Short-term investments (539) (729) (675)
Other invested assets (28) (12) (32)
------- ------- -------
Net cash used in investing activities (291) (445) (661)
------- ------- -------
Net increase (decrease) in cash
and cash equivalents 53 (164) (2)
------- ------- -------
Cash and cash equivalents, beginning
of year 500 664 666
------- ------- -------
Cash and cash equivalents, end of year $ 553 $ 500 $ 664
======= ======= =======
The accompanying notes are an
integral part of these financial statements.
1. ORGANIZATION AND BASIS OF PRESENTATION
NATURE OF OPERATIONS AND PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
Lutheran Brotherhood (the Society), a fraternal benefit organization
offering life insurance and related financial service products as well as
fraternal benefits for Lutherans throughout the United States. Also
included in the accounts of the Society are its wholly owned subsidiary,
Lutheran Brotherhood Financial Corporation (LBFC), which is the parent
company of Lutheran Brotherhood Variable Insurance Products Company (LBVIP),
a stock life insurance company; an investment adviser; a broker-dealer; a
real estate development company and a property and casualty agency. All
significant intercompany balances and transactions have been eliminated in
consolidation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates
and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand, money market instruments and
other debt issues with an original maturity of 90 days or less.
INVESTMENTS
See disclosures regarding the determination of fair value of financial
instruments at Note 8.
Carrying value of investments is determined as follows:
Fixed income securities Fair value
Equity securities Fair value
Mortgage loans on real estate Amortized cost less
impairment allowance
Investment real estate Cost less accumulated
depreciation and impairment
allowance
Real estate joint ventures Equity accounting method
Real estate acquired through Lower of cost or fair value
foreclosure less estimated cost to sell
Loans to contractholders Unpaid principal balance
Short-term investments Amortized cost
Other invested assets Equity accounting method
Fixed income securities which may be sold prior to maturity and equity
securities (common stock and nonredeemable preferred stock) are classified
as available for sale.
Realized investment gains and losses on sales of securities are determined
on a specific identification method for fixed income securities and the
average cost method for equity securities and are reported in the
Consolidated Statement of Income. Unrealized investment gains and losses on
fixed income and equity securities classified as available for sale, net of
the impact of unrealized investment gains and losses on deferred
acquisitions costs, are excluded from net income and reported in a separate
component of members' equity.
Mortgage loans are considered impaired when it is probable that the Society
will be unable to collect all amounts according to the contractual terms of
the loan agreement. Real estate is considered impaired when the carrying
value exceeds the fair value. In cases where impairment is present,
valuation allowances are utilized and netted against the asset categories to
which they apply and changes in the valuation allowances are included in
realized investment gains or losses.
DEFERRED ACQUISITION COSTS
Those costs of acquiring new business, which vary with and are primarily
related to the production of new business, have been deferred. Such costs
include commissions, certain costs of contract issuance and underwriting,
and certain variable agency expenses. Deferred contract acquisition costs
are subject to recoverability testing at the time of contract issue and loss
recognition testing at the end of each accounting period. Deferred policy
acquisition costs are adjusted for the impact of unrealized gains or losses
on investments as if those gains or losses had been realized, with
corresponding credits or charges included in equity.
For participating-type long duration contracts, deferred acquisition costs
are amortized over the expected average life of the contracts in proportion
to estimated gross margins. The effects of revisions to experience on
previous amortization of deferred acquisition costs are reflected in
earnings and change in unrealized investment gains (losses) in the period
estimated gross profits are revised.
For universal life-type and investment-type contracts, deferred acquisition
costs are amortized over the average expected life of the contracts in
proportion to estimated gross profits from mortality, investment, and
expense margins and surrender charges. The effects of revisions to
experience on previous amortization of deferred acquisition costs are
reflected in earnings and change in unrealized investment gains (losses) in
the period estimated gross profits are revised.
For health insurance and certain term life insurance contracts, deferred
acquisition costs are amortized over the average expected premium paying
period, in proportion to expected premium revenues at the time of issue.
SEPARATE ACCOUNT ASSETS AND LIABILITIES
Separate account assets include segregated funds invested by the Society for
the benefit of variable life insurance and variable annuity contract owners.
The assets (principally investments) and liabilities (principally to
contractholders) of each account are clearly identifiable and
distinguishable from other assets and liabilities of the Society. Assets
are valued at market. The investment income, gains and losses of these
accounts generally accrue to the contractholders, and, therefore, are not
included in the Society's consolidated net income.
DERIVATIVE FINANCIAL INSTRUMENTS
The Society's current utilization of derivative financial instruments is not
significant. Most of the Society's derivative transactions are used to
reduce or modify interest rate risk and to replicate assets in certain
markets. These strategies use option contracts, interest rate swaps and
structured securities. The Society does not use derivative instruments for
speculative purposes. Changes in the market value of these contracts are
deferred and realized upon disposal of the hedged assets. The effect of
derivative transactions is not significant to the Society's results from
operations or financial position.
OTHER ASSETS
Other assets include property and equipment reported at depreciated cost.
The Society provides for depreciation of property and equipment using the
straight-line method over the useful lives of the assets which are three to
ten years for equipment and forty years for property.
FUTURE CONTRACT BENEFITS
Liabilities for future contract benefits on participating-type long duration
contracts are the net level premium reserve for death benefits. Liabilities
are calculated using dividend fund interest rates and mortality rates
guaranteed in calculating cash surrender values.
Liabilities for future contract and contract benefits on universal life-type
and investment-type contracts are based on the contract account balance.
Liabilities for future contract benefits on health insurance and certain
term life insurance contracts are calculated using the net level premium
method and assumptions as to investment yields, mortality, morbidity and
withdrawals. The assumptions, made at the time of issue, are based on best
estimates of expected experience and include provision for possible adverse
deviation.
Use of these actuarial tables and methods involves estimation of future
mortality and morbidity based on past experience. Actual future experience
could differ from these estimates.
PREMIUM REVENUE AND BENEFITS TO CONTRACTHOLDERS
RECOGNITION OF CERTAIN PARTICIPATING-TYPE CONTRACTS REVENUE AND BENEFITS TO
CONTRACTHOLDERS
Participating contracts are long-duration participating contracts with
expected dividends to contractholders based on actual experience for which
contractholder dividends are paid in accordance with the contribution
principle. Premiums are recognized as revenues when due. Death and
surrender benefits incurred are reported as expenses. Dividends to
contractholders based on estimates of amounts to be paid for the period are
reported separately as expenses.
RECOGNITION OF UNIVERSAL LIFE-TYPE CONTRACTS REVENUE AND BENEFITS TO
CONTRACTHOLDERS
Universal life-type contracts are insurance contracts with terms that are
not fixed and guaranteed. The terms that may be changed could include one
or more of the amounts assessed the contractholder, premiums paid by the
contractholder or interest accrued to contractholder balances. Amounts
received as payments for such contracts are not reported as premium
revenues.
Revenues for universal-type contracts consist of investment income, charges
assessed against contract account values for deferred contract loading, the
cost of insurance and contract administration. Contract benefits and claims
that are charged to expense include interest credited to contracts and
benefit claims incurred in the period in excess of related contract account
balances.
RECOGNITION OF INVESTMENT CONTRACT REVENUE AND BENEFITS TO CONTRACTHOLDERS
Contracts that do not subject the Society to risks arising from
contractholder mortality or morbidity are referred to as investment
contracts. Certain deferred annuities are considered investment contracts.
Amounts received as payments for such contracts are not reported as premium
revenues.
Revenues for investment products consist of investment income and contract
administration charges. Contract benefits that are charged to expense
include benefit claims incurred in the period in excess of related contract
balances, and interest credited to contract balances.
RECOGNITION OF TERM LIFE, HEALTH AND ANNUITY PREMIUM REVENUE AND BENEFITS TO
CONTRACTHOLDERS
Products with fixed and guaranteed premiums and benefits consist principally
of health insurance contracts, certain term life contracts and annuities
with life contingencies (immediate annuities). Premiums are recognized as
revenue when due. Benefits and expenses are associated with earned premiums
so as to result in recognition of profits over the life of the contracts.
This association is accomplished by means of the provision for liabilities
for future contract benefits and the amortization of deferred contract
acquisition costs.
DIVIDENDS
The dividend scale, approved annually by the Board of Directors, seeks to
achieve equity among contractholders. Dividends charged to operations
represent an estimation of those incurred during the current year.
INCOME TAXES
Lutheran Brotherhood qualifies as a tax-exempt organization under the
Internal Revenue Code. Accordingly, no provision for income taxes has been
made. Lutheran Brotherhood's subsidiary, Lutheran Brotherhood Financial
Corporation (LBFC) is a taxable entity. LBFC and its subsidiaries file a
consolidated federal income tax return. Federal income taxes are charged or
credited to operations based upon amounts estimated to be payable or
recoverable as a result of taxable operations for the current year.
Deferred income tax assets and liabilities are recognized based on the
temporary differences between financial statement carrying amounts and
income tax bases of assets and liabilities using enacted income tax rates
and laws.
The provision for income taxes reflected on the Consolidated Statement of
Income consisted of federal and state income tax expense of $9. At December
31, 1997, LBFC had recorded a deferred federal income tax liability of $26.
The deferred tax liability is mainly due to the net effect of the temporary
differences of reserves held for future benefits and deferred acquisitions
costs as computed for financial statement and tax return purposes.
3. INVESTMENTS
FIXED INCOME SECURITIES
Investments in fixed income securities are primarily intended to back long-
term liabilities; therefore, care should be exercised in drawing any
conclusions from market value information.
Investments in fixed income securities at December 31, 1997 and 1996 follow:
Available for Sale (Carried at Fair Value)
December 31, 1997
------------------------------------------
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
Fixed income securities:
U.S. government $1,076 $ 30 $ $1,106
Mortgage-backed securities 1,976 58 1 2,033
Non-investment grade bonds 467 22 1 488
All other corporate bonds 3,180 189 19 3,350
------ ---- --- ------
Total available for sale $6,699 $299 $21 $6,977
====== ==== === ======
Available for Sale (Carried at Fair Value)
December 31, 1996
------------------------------------------
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
Fixed income securities:
U.S. government $ 635 $ 6 $ 4 $ 637
Mortgage-backed securities 2,225 26 16 2,235
Non-investment grade bonds 376 14 3 387
All other corporate bonds 2,860 105 24 2,941
------ ---- --- ------
Total available for sale $6,096 $151 $47 $6,200
====== ==== === ======
EQUITY SECURITIES
Investments in equity securities and preferred stock at December 31, 1997
and 1996 are as follows:
1997 1996
Cost $560 $469
Gross unrealized gains 110 75
Gross unrealized losses 19 12
---- ----
Carrying value $651 $532
==== ====
CONTRACTUAL MATURITY OF FIXED INCOME SECURITIES
The amortized cost and fair value of fixed income securities available for
sale as of December 31, 1997 are shown below by contractual maturity.
Actual maturities may differ from contractual maturities because securities
may be restructured, called or prepaid.
Amortized Fair
Years to Maturity Cost Value
One year or less $ 55 $ 55
After one year through five years 1,068 1,109
After five years through ten years 1,635 1,699
After ten years 1,966 2,081
Mortgage-backed securities 1,975 2,033
------ ------
Total available for sale $6,699 $6,977
====== ======
Mortgage Loans and Real Estate: The Society's mortgage loans and real
estate investments are diversified by property type and location and, for
mortgage loans, borrower and loan size.
At December 31, the carrying values of mortgage loans and real estate
investments were as follows:
1997 1996
Mortgage loans:
Residential and commercial $1,945 $2,132
Loans to Lutheran Churches 313 305
------ ------
Total mortgage loans $2,258 $2,437
====== ======
Real estate:
To be disposed of $ 2 $ 12
To be held and used 40 33
------ ------
Total real estate $ 42 $ 45
====== ======
SECURITIES LOANED
To generate additional income, the Society participates in a securities
lending program administered by the Society's custodian bank. Securities
are periodically loaned to brokers, banks and other institutional borrowers
of securities, for which collateral in the form of cash or U.S. Government
securities is received by the custodian in an amount at least equal to 102%
of the market value of the securities loaned. Collateral received in the
form of cash is invested in short-term investments by the custodian from
which earnings are shared between the borrower, custodian and the Society at
negotiated rates. The Society may experience delays in recovery of the
collateral should the borrower of securities fail financially. As of
December 31, 1997, the market value of securities loaned and the cash
collateral received were $283 and $292, respectively.
4. INVESTMENT INCOME AND REALIZED GAINS AND LOSSES
Investment income summarized by type of investment was as follows:
1997 1996 1995
Fixed income securities $426 $393 $398
Equity securities 15 10 9
Mortgage loans 202 214 202
Real estate 11 15 16
Contract loans 44 42 40
Other invested assets 42 15 15
Short-term investments 55 59 56
---- ---- ----
Gross investment income 795 748 736
Investment expenses 26 29 30
---- ---- ----
Net investment income $769 $719 $706
==== ==== ====
Gross realized investment gains and losses on sales of all types of
investments are as follows:
Year Ended December 31,
-----------------------
1997 1996 1995
Fixed income securities:
Realized gains $ 68 $ 84 $ 52
Realized losses 40 65 23
Equity securities:
Realized gains 109 62 45
Realized losses 33 27 16
Other investments:
Realized gains 25 22 12
Realized losses 2 10 7
---- --- ---
Total net realized investment gains $127 $66 $63
==== === ===
5. EMPLOYEE BENEFIT PLANS
PENSION PLANS
DEFINED BENEFIT
Lutheran Brotherhood has noncontributory defined benefit plans which cover
substantially all employees. The Society's policy is to fund all accrued
defined benefit pension costs using the aggregate level value method. In
comparison to other acceptable methods, the annual contributions under the
aggregate level method are generally higher in the earlier years and
decrease over time.
Components of net pension cost for the year ended December 31 were as
follows (in thousands):
1997 1996 1995
Service cost - benefits earned during the year $ 3,682 $ 3,322 $ 3,181
Interest cost on projected benefit obligations 7,771 7,084 6,745
Actual return on assets (7,722) (6,769) (6,212)
Net amortization and deferral 444 127 127
------- ------- -------
Net pension cost $ 4,175 $ 3,764 $ 3,841
======= ======= =======
The following rates were used in computing the pension cost for each of the
three years in the period ended December 31:
Discount rates used to determine expense 8.00%
Assumed rates of compensation increases 6.00%
Expected long-term rates of return 8.00%
The following table summarizes the status as of December 31 of the pension
plan and the amounts for the actuarial present value of benefit obligations
shown in the accompanying balance sheet at December 31 (in thousands):
1997 1996
Actuarial present value of benefit obligations:
Vested benefit obligation $ 96,782 $ 88,307
Accumulated benefit obligation 99,050 90,340
Projected benefit obligation 106,821 97,206
Less plan assets at fair value 101,020 92,427
-------- -------
Projected benefit obligation in excess of
plan assets 5,801 4,779
Unrecognized net gain (loss) (808) 605
Unrecognized prior service cost
Unrecognized transition obligation (1,412) (1,539)
-------- --------
Accrued pension cost included in other
liabilities $ 3,581 $ 3,845
======== ========
Plan assets are invested primarily in corporate bonds and mortgage loans.
Plan contributions are accumulated in a deposit administration fund, which
is a part of the general investment fund of the Society.
The following rates were used in computation of the funded status for the
plan:
1997 1996
Discount rates used for obligations 8.00% 8.00%
Assumed rates of compensation increases 6.00% 6.00%
DEFINED CONTRIBUTION
The Society has noncontributory defined contribution retirement plans which
cover substantially all employees and field representatives and a
noncontributory non-qualified deferred compensation plan which covers
substantially all of its general agents. As of January 1, 1997,
approximately $113 of the defined contribution retirement plans' assets were
held by the Society and the remaining $101 were held in a separate trust.
The accrued retirement liability at December 31, 1997, of $130 is included
in contract reserves. Expenses related to the retirement plan for the years
ended December 31, 1997, 1996 and 1995 were $10, $10 and $9, respectively.
Accumulated vested deferred compensation benefits at December 31, 1997 total
$53 and are included in other liabilities.
POSTRETIREMENT BENEFITS OTHER THAN PENSION
The Society has no significant obligation for post-retirement medical
benefits for retirees. The Society does provide a minor subsidy of certain
medical benefits for eligible early retirees until age 65.
The Society's post retirement medical benefit plan is currently not funded.
The accumulated postretirement benefit obligation (APBO) and the accrued
postretirement benefit liability were $4 and $7, respectively, at December
31, 1997 and $5 and $7, respectively, at December 31, 1996. The assumed
discount rate used in determining the APBO was 8% at December 31, 1997 and
1996. Net periodic postretirement benefit costs were $.4 and $.5 for the
years ended December 31, 1997 and 1996, respectively.
The assumed health care cost trend rate used in measuring the APBO as of
December 31, 1997 was 12% decreasing gradually to 6% in the year 2007 and
thereafter. The assumed health care cost trend rate used in measuring the
APBO as of December 31, 1997 was 12%, decreasing gradually to 6% in the year
2007 and thereafter. A 1% increase in the assumed health care cost trend
rate for each year would increase the APBO as of December 31, 1997 by
approximately $1.
The valuation of retirement and post-retirement medical benefits based on
the actuarial present value of future plan benefits involves estimation of
future mortality and morbidity. Actual future experience could differ from
those estimates.
6. REINSURANCE
In the normal course of business, the Society seeks to limit its exposure to
loss on any single insured and to recover a portion of benefits paid by
ceding business to other insurance enterprises or reinsurers under
reinsurance contracts. As of December 31, 1997, total life insurance
inforce approximated $45 billion, of which approximately $866 had been ceded
to various reinsurers. The Society retains a maximum of $2 of coverage per
individual life. Premiums ceded to other companies of $6 are reported as a
reduction in premium income and benefits were reduced by $2 for reinsurance
recoverable for the year ended December 31, 1997.
Reinsurance contracts do not relieve the Society from its obligations to
contractholders. Failure of reinsurers to honor their obligations could
result in losses to the Society; consequently, allowances are established
for amounts deemed uncollectible. The amount of the allowance for
uncollectible reinsurance receivables was immaterial at December 31, 1997.
7. COMMITMENTS AND CONTINGENCIES
FINANCIAL COMMITMENTS
The Society has committed to extend credit for mortgage loans of $61 and $66
at December 31, 1997 and 1996, respectively. Commitments to other invested
assets were $5 and $14 at December 31, 1997 and 1996, respectively.
8. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used in estimating fair value
disclosures for financial instruments. In cases where quoted market prices
are not available, fair values are based on estimates using present value or
other valuation techniques. Those techniques are significantly affected by
the assumptions used, including the discount rate and estimates of future
cash flows. In that regard, the derived fair value estimates cannot be
substantiated by comparison to independent markets and, in many cases, could
not be realized in immediate settlement of the instrument.
Fixed Income Securities: Fair values for fixed income securities are based
on quoted market prices, where available. For fixed maturities not actively
traded in the market, fair values are estimated using market quotes from
brokers or internally developed pricing methods.
Equity Securities: Fair value equals carrying value as these securities are
carried at quoted market value.
Mortgage Loans: The fair values for mortgage loans are estimated using
discounted cash flow analyses, using interest rates currently being offered
in the marketplace for similar loans to borrowers with similar credit
ratings.
Loans on Insurance Contracts: The carrying amount reported in the balance
sheet approximates fair value since loans on insurance contracts reduce the
amount payable at death or at surrender of the contract.
Cash and Cash Equivalents, Short-Term Investments: The carrying amounts for
these assets approximate the assets' fair values.
Other Financial Instruments Reported as Assets: The carrying amounts for
these financial instruments (primarily premiums and other accounts
receivable and accrued investment income), approximate those assets' fair
values.
Investment Contract Liabilities: The fair value for deferred annuities was
estimated to be the amount payable on demand at the reporting date as those
investment contracts have no defined maturity and are similar to a deposit
liability. The amount payable at the reporting date was calculated as the
account balance less applicable surrender charges.
The fair values for supplementary contracts and immediate annuities without
life contingencies were estimated using discounted cash flow analyses using
similar maturities or by using cash surrender value.
The carrying amounts reported for other investment contracts which includes
participating pension contracts and retirement plan deposits approximate
those liabilities' fair value.
Other Deposit Liabilities: The carrying amounts for dividend accumulations
and premium deposit funds approximate the liabilities' fair value.
The carrying amounts and estimated fair values of the Society's financial
instruments are as follows:
1997 1996
---------------- ---------------
Carrying Fair Carrying Fair
Amount Value Amount Value
Financial instruments recorded as assets:
Fixed income securities $6,977 $6,977 $6,200 $6,200
Equity securities 651 651 532 532
Mortgage loans:
Commercial 1,945 2,039 2,132 2,195
Church 313 317 305 303
Contract loans 675 675 652 652
Cash and cash equivalents 553 553 500 500
Short-term investments 211 211 219 219
Other financial instruments
recorded as assets 331 331 270 270
Financial instruments recorded as
liabilities:
Investment contracts:
Deferred annuities 8,244 8,003 7,048 6,832
Supplementary contracts and
immediate annuities 312 312 256 256
Other deposit liabilities:
Dividend accumulations 33 33 33 33
Premium deposit funds 3 3 3 3
9. STATUTORY FINANCIAL INFORMATION
Accounting practices used to prepare statutory financial statements for
regulatory filing of fraternal life insurance companies differ from
generally accepted accounting principles. The following reconciles the
Society's statutory net change in surplus and statutory surplus determined
in accordance with accounting practices prescribed or permitted by the
Insurance Department of the State of Minnesota with net income and members'
equity on a generally accepted accounting principles basis.
Year Ended
December 31,
-------------------
1997 1996
Net change in statutory surplus $ 210 $ 150
Change in asset valuation reserves 25 40
------- -------
Net change in statutory surplus and asset
valuation reserves 235 190
Adjustments:
Future contract benefits and contractholders'
account balances (45) (52)
Deferred acquisition costs 37 63
Investment gains (losses) 13 (11)
Other, net 8 (13)
------- -------
Net income $ 248 $ 177
======= =======
Year Ended
December 31,
-------------------
1997 1996
Statutory surplus $ 1,021 $ 811
Asset valuation reserves 242 218
------- -------
Statutory surplus and asset valuation reserves 1,263 1,029
Adjustments:
Future contract benefits and contractholders'
account balances (410) (359)
Deferred acquisition costs 903 915
Interest maintenance reserves 136 109
Valuation of investments 300 114
Unearned revenue liability (45) (45)
Dividend liability 92 84
Other, net 6 (7)
------- -------
Members' equity $ 2,245 $ 1,840
======= =======
10. SUPPLEMENTARY FINANCIAL DATA
Following is a condensed synopsis of statutory financial information of the
Society (excluding affiliated subsidiaries) at December 31, 1997 and 1996.
This information is included to satisfy certain state reporting requirements
for fraternals.
December 31,
-------------------
1997 1996
Invested and other admitted assets $11,283 $10,670
Assets held in separate accounts 1,871 1,108
------- -------
Total assets 13,154 11,778
------- -------
Contract reserves 9,050 8,822
Liabilities related to separate accounts 1,788 1,057
Other liabilities and assets reserves 1,295 1,088
------- -------
Total liabilities and asset reserves 12,133 10,967
------- -------
Unassigned surplus 1,021 811
------- -------
Total liabilities, asset reserves and surplus 13,154 11,778
------- -------
Savings from operations before net realized
capital gains 142 110
Net realized capital gains 74 34
------- -------
Net savings from operations 216 144
Total other changes (6) 6
------- -------
Net increase in unassigned surplus $ 210 $ 150
======= =======
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Part A: None.
Part B: Financial Statements of Lutheran Brotherhood. (1)
Financial Statements of LB Variable Annuity Account I. (1)
(b) Exhibits:
1. Resolution of the Board of Directors of Lutheran Brotherhood
("Depositor") authorizing the establishment of LB Variable
Annuity Account I ("Registrant"). (1)
2. Not Applicable.
3.(a) Form of Distribution Agreement between Depositor and
Lutheran Brotherhood Securities Corp ("LBSC"). (1)
(b) Forms of General Agent's Agreement and Selected Registered
Representative Agreement between LBSC and agents with
respect to the sale of Contracts. (1)
4. Form of Contract. (1)
5. Contract Application Form. (1)
6. Articles of Incorporation and Bylaws of Depositor. (1)
7. Not Applicable.
8. Not Applicable.
9. Opinion of counsel as to the legality of the securities being
registered (including written consent). (1)
10. Not Applicable.
11. Not Applicable.
12. Not Applicable.
13. Computations of Performance Data. (1)
14. Consent of Independent Accountant. (1)
15. Powers of Attorney. (1)(2)
16. Consent of Counsel. (1)
________________________________
(1) Filed herewith.
(2) Included in post-effective amendment No. 5 to the registration
statement on Form N-4, Registration No. 33-67012, filed by the Registrant on
April 30, 1996.
Item 25. Directors and Officers of the Depositor
DIRECTORS POSITIONS AND OFFICES WITH DEPOSITOR
Robert O. Blomquist Chairman of the Board
Lutheran Brotherhood of Directors
625 Fourth Avenue South
Minneapolis, Minnesota
Robert P. Gandrud President, Chief Executive
Lutheran Brotherhood Officer and Director
625 Fourth Avenue South
Minneapolis, Minnesota
Richard W. Duesenberg Director
Retired, formerly Senior Vice President
General Counsel and Secretary
Monsanto Company
One Indian Creek Lane
St. Louis, Missouri
Bobby I. Griffin Director
Executive Vice President
Medtronic, Inc.
7000 Central Avenue Northeast
Minneapolis, Minnesota
William R. Halling Director
The Economic Club of Detroit
333 W. Fort Street, Suite 100
Detroit, Michigan
James M. Hushagen Director
Partner, Eisenhower & Carlson
1200 First Interstate Plaza
Tacoma, Washington
Herbert D. Ihle Director
Retired, formerly President
Diversified Financial Services
10453 Shelter Grove
Eden Prairie, Minnesota
Richard C. Kessler Director
President
The Kessler Enterprise, Inc.
6649 Westwood Boulevard, Suite 130
Orlando, Florida
Judith K. Larsen Director
Vice President
Dataquest
3790 La Selva
Palo Alto, California
Dr. Luther S. Luedtke Director
California Lutheran University
60 West Olsen Road
Thousand Oaks, California
John P. McDaniel Director
President
Medlantic Healthcare Group
100 Irving Street, N.W.
Washington, D.C.
Mary Ellen H. Schmider Director
Retired, formerly Dean of Graduate Studies
Coordinator of Grants
Moorhead State University
7701 180th Street
Chippewa Falls, Wisconsin
OFFICERS POSITIONS AND OFFICES WITH DEPOSITOR
Robert P. Gandrud President and Chief Executive
Officer
Rolf F. Bjelland Executive Vice President -
Investments
David J. Larson Senior Vice President, Secretary
and General Counsel
Dr. Edward A. Lindell Senior Vice President - External
Affairs
Michael E. Loken Senior Vice President - Management
Information Services
Bruce J. Nicholson Executive Vice President and
Chief Operating Officer
Paul R. Ramseth Executive Vice President - Strategic
Development
William H. Reichwald Executive Vice President - Marketing
David W. Angstadt Executive Vice President - Marketing
Jennifer H. Martin Senior Vice President - Human
Resources
Jerald E. Sourdiff Senior Vice President and Chief
Financial Officer
Mary M. Abbey Vice President - Client Systems
Galen R. Becklin Vice President - Tech Support & Data
Processing
Larry A. Borlaug Vice President - Prototype
Development
Colleen Both Vice President - Chief Compliance
Officer
J. Keith Both Senior Vice President - Marketing
Randall L. Boushek Vice President - Portfolio Manager
Michael R. Braun Vice President - Management
Information Services
David J. Christianson Vice President - Insurance Services
Craig R. Darrington Vice President - Marketing
Pamela H. Desnick Vice President - Communications
Mitchell F. Felchle Vice President - Institutional
Relations Group
Charles E. Heeren Vice President - Bond Investments
Wayne A. Hellbusch Vice President - Agency Services
Otis F. Hilbert Vice President - Law
Gary J. Kallsen Vice President - Mortgages and Real
Estate
Fred O. Konrath Vice President - Marketing
Douglas B. Miller Regional Vice President - Marketing
C. Theodore Molen Regional Vice President - Marketing
Susan Oberman Smith Vice President - Product Management
James R. Olson Vice President - Investor
Services/Administration
Kay J. Owen Vice President - Corporate
Administration
Dennis K. Peterson Vice President
Bruce M. Piltingsrud Vice President - Research/Marketing
Strategies
Richard B. Ruckdashel Vice President - Product Marketing
Rolf H. Running Vice President - New Ventures Group
Lynette J.C. Stertz Vice President - Controller's
David K. Stewart Vice President and Treasurer
John O. Swanson, M.D. Vice President and Medical Director
Louise K. Thoresen Vice President - Fraternal
James M. Walline Vice President - Equities/Mutual
Funds Investment
Daniel G. Walseth Vice President - Law
Anita J.T. Young Vice President
The principal business address of each of the foregoing officers is 625
Fourth Avenue South, Minneapolis, Minnesota 55415.
Item 26. Persons Controlled by or Under Common Control with Depositor or
Registrant
Registrant is a separate account of Depositor, established by the Board of
Directors of Depositor in 1993 pursuant to the laws of the State of
Minnesota. Depositor is a fraternal insurance society organized under the
laws of the state of Minnesota and is owned by and operated for its members.
It has no stockholders nor is it subject to the control of any affiliated
persons. Depositor controls the following wholly owned direct and indirect
subsidiaries: (a) Lutheran Brotherhood Financial Corporation ("LBFC"), a
Minnesota corporation which is a holding company that has no independent
operations; (b) Lutheran Brotherhood Variable Insurance Products Company
("LBVIP"), a Minnesota corporation organized as a stock life insurance
company; (c) LBSC, a Pennsylvania corporation which is a registered broker-
dealer; (d) Lutheran Brotherhood Research Corp., a Minnesota corporation
which is a licensed investment adviser; and (e) Lutheran Brotherhood Real
Estate Products Company, a Minnesota corporation.
Item 27. Number of Contract Owners
There were 69,209 Contract Owners as of April 14, 1998.
Item 28. Indemnification
Reference is hereby made to Section 5 of Depositor's Bylaws, filed as an
Exhibit to this Registration Statement, and to Section 5 of LBSC's By-Laws,
which mandate indemnification by Depositor and LBSC of directors, officers
and certain others under certain conditions. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of Depositor or LBSC, pursuant
to the foregoing provisions or otherwise, Depositor and LBSC have 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 Depositor or LBSC of
expenses incurred or paid by a director or officer or controlling person of
Depositor or LBSC in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person of
Depositor or LBSC in connection with the securities being registered,
Depositor or LBSC 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 of whether or not such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
An insurance company blanket bond is maintained providing $10,000,000
coverage for officers and employees of Lutheran Brotherhood, Depositor and
LBSC, and $750,000 coverage for their general agents and Depositor's
Representatives, both subject to a $100,000 deductible.
Item 29. Principal Underwriter
(a) LBSC, the principal underwriter of the Contracts, is also named as
distributor of the stock of The Lutheran Brotherhood Family of Funds, a
diversified open-end investment company organized as a Delaware business
trust, consisting of the following series: Lutheran Brotherhood Money Market
Fund, Lutheran Brotherhood Opportunity Growth Fund, Lutheran Brotherhood Mid
Cap Growth Fund, Lutheran Brotherhood Fund, Lutheran Brotherhood World
Growth Fund, Lutheran Brotherhood Income Fund, Lutheran Brotherhood High
Yield Fund, and Lutheran Brotherhood Municipal Bond Fund. LBSC also acts or
will act as the principal underwriter of the following variable contracts:
flexible premium variable life insurance contracts issued by Depositor
through LB Variable Insurance Account I, a separate account of Depositor to
be registered as a unit investment trust under the Investment Company Act of
1940; flexible premium deferred variable annuity contracts issued by LBVIP
through LBVIP Variable Annuity Account I, a separate account of LBVIP
registered as a unit investment trust under the Investment Company Act of
1940; flexible premium variable life insurance contracts issued by LBVIP
through LBVIP Variable Insurance Account, a separate account of LBVIP
registered as a unit investment trust under the Investment Company Act of
1940; and of single premium variable life insurance contracts issued by
LBVIP through LBVIP Variable Insurance Account II, a separate account of
LBVIP registered as a unit investment trust under the Investment Company Act
of 1940.
(b) The directors and officers of LBSC are as follows:
Robert P. Gandrud Chairman and Director
Rolf F. Bjelland Director
Bruce J. Nicholson Director
David W. Angstadt President and Director
David J. Larson Director
Jennier H. Martin Director
Jerald E. Sourdiff Chief Financial Officer and Director
David K. Stewart Treasurer
Otis F. Hilbert Vice President and Secretary
Larry A. Borlaug Vice President
Colleen Both Vice President
J. Keith Both Vice President
Craig R. Darrington Vice President
Mitchell F. Felchle Vice President
Wayne A. Hellbusch Vice President
Douglas B. Miller Vice President
C. Theodore Molen Vice President
James R. Olson Vice President
William H. Reichwald Vice President
Richard B. Ruckdashel Vice President
Vicki R. Brandt Assistant Vice President
Stephen R. Grinna Assistant Vice President
Douglas J. Halvorson Assistant Vice President
Katie S. Kloster Assistant Vice President
Frederick P. Johnson Assistant Vice President
Brenda J. Pederson Assistant Vice President
Marie A. Sorensen Assistant Vice President
John C. Bjork Assistant Secretary
James M. Odland Assistant Secretary
The principal business address of each of the foregoing officers is 625
Fourth Avenue South, Minneapolis, Minnesota 55415.
(c) Not Applicable.
Item 30. Location of Accounts and Records
The accounts and records of Registrant are located at the office of
Depositor at 625 Fourth Avenue South, Minneapolis, Minnesota 55415.
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
Registrant will file a post-effective amendment to this Registration
Statement as frequently as is necessary to ensure that the audited financial
statements in this Registration Statement are never more than 16 months old
for so long as payments under the Contracts may be accepted.
Registrant will include either (1) as part of any application to purchase a
Contract offered by the Prospectus, a space that an applicant can check to
request a Statement of Additional Information, or (2) a postcard or similar
written communication affixed to or included in the Prospectus that the
applicant can remove to send for a Statement of Additional Information.
Registrant will deliver any Statement of Additional Information and any
financial statements required to be made available under this form promptly
upon written or oral request.
Lutheran Brotherhood hereby represents that, as to the individual flexible
premium variable annuity contracts that are the subject of this registration
statement, File Number 33-67012, that the fees and charges deducted under
the contracts, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred and the risks assumed by
Lutheran Brotherhood.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it meets all of the requirements for effectiveness
of this amendment to the Registration Statement pursuant to Rule 485(b)
under the Securities Act of 1933 and has duly caused this amendment to the
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Minneapolis and State of Minnesota
on the 29th day of April, 1998.
LB VARIABLE ANNUITY ACCOUNT I
(Registrant)
By LUTHERAN BROTHERHOOD
(Depositor)
By /s/ Robert P. Gandrud
----------------------------
Robert P. Gandrud, President
Pursuant to the requirements of the Securities Act of 1933, the
Depositor has duly caused this Amendment to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Minneapolis and State of Minnesota on the 29th day of April, 1998.
LUTHERAN BROTHERHOOD
(Depositor)
By /s/ Robert P. Gandrud
---------------------------
Robert P. Gandrud, President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed on the 29th day of
April, 1998 by the following directors and officers of Depositor in the
capacities indicated:
/s/ Robert P. Gandrud President and Chief Executive Officer
----------------------- (Chief Executive Officer)
Robert P. Gandrud
/s/ Jerald E. Sourdiff Chief Financial Officer (Principal
----------------------- Financial Officer)
Jerald E. Sourdiff
/s/ David K. Stewart Treasurer (Principal Accounting Officer)
-----------------------
David K. Stewart
A Majority of the Board of Directors:
Robert O. Blomquist Richard Kessler
Richard W. Duesenberg Judith K. Larsen
Robert P. Gandrud Luther S. Luedtke
Bobby I. Griffin John P. McDaniel
William R. Halling Mary Ellen H. Schmider
James M. Hushagen
Herbert D. Ihle
Otis F. Hilbert, by signing his name hereto, does hereby sign this
document on behalf of each of the above-named directors of Lutheran
Brotherhood pursuant to powers of attorney duly executed by such persons.
/s/ Otis F. Hilbert
--------------------------------
Otis F. Hilbert, Attorney-in-Fact
<PAGE>
INDEX TO EXHIBITS
LB VARIABLE ANNUITY ACCOUNT I
EXHIBIT NO.
- ----------
1 Resolution of the Board of Directors of Lutheran
Brotherhood ("Depositor") authorizing the
establishment of LB Variable Annuity Account I
("Registrant").
3(a) Form of Distribution Agreement between Depositor and
Lutheran Brotherhood Securities Corp ("LBSC").
3(b) Forms of General Agent's Agreement and Selected
Registered Representative Agreement between LBSC and
agents with respect to the sale of Contracts.
4 Form of Contract.
5 Contract Application Form.
6 Articles of Incorporation and Bylaws of Depositor.
9 Opinion of counsel as to the legality of the
securities being registered (including written
consent).
13 Computations of Performance Data.
14 Consent of Independent Accountant.
15 Powers of Attorney.
16 Consent of Counsel.
<PAGE>
EXHIBIT 14
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 8 to the registration
statement on Form N-4 (the "Registration Statement") of our report dated
March 20, 1998, relating to the financial statements of LB Variable Annuity
Account I, which appears in such Statement of Additional Information, and to
the incorporation by reference of our report into the Prospectus which
constitutes part of this Registration Statement. We also consent to the
references to us under the heading "Financial Statements and Experts" in
such Prospectus and under the heading "Independent Accountants and Financial
Statements" in such Statement of Additional Information.
We also consent to the use in such Statement of Additional Information of
our report dated March 12, 1998, relating to the financial statements of
Lutheran Brotherhood which appears in such Statement of Additional
Information.
/s/ Price Waterhouse LLP
Minneapolis, Minnesota
April 28, 1998
#20614
<PAGE>
EXHIBIT 15
----
LUTHERAN BROTHERHOOD
LB VARIABLE ANNUITY ACCOUNT I
POWER OF ATTORNEY OF
DIRECTORS AND OFFICERS
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
and/or officer of LUTHERAN BROTHERHOOD, a fraternal benefit society
organized under the laws of the state of Minnesota (the "Society"), the
Depositor of LB VARIABLE ANNUITY ACCOUNT I, does hereby make, constitute and
appoint David J. Larson, Otis F. Hilbert, James M. Odland, and Randall L.
Wetherille, and each or any of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of such Society to an Exemptive Order
Application, Registration Statement or Registration Statements, on Form N-4
or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by such Society with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration
under the Securities Act of 1933, as amended, and the Investment Company Act
of 1940, as amended, of shares of such Society, and to file the same, with
all exhibits thereto and other supporting documents, with such Commission,
granting unto such attorneys-in-fact, and each of them, full power and
authority to do and perform any and all acts necessary or incidental to the
performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her
hand this 15th day of July, 1993.
/s/ Robert 0. Blomquist Director
- --------------------------
Robert 0. Blomquist
<PAGE>
EXHIBIT 15
----
LUTHERAN BROTHERHOOD
LB VARIABLE ANNUITY ACCOUNT I
POWER OF ATTORNEY OF
DIRECTORS AND OFFICERS
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
and/or officer of LUTHERAN BROTHERHOOD, a fraternal benefit society
organized under the laws of the state of Minnesota (the "Society"), the
Depositor of LB VARIABLE ANNUITY ACCOUNT I, does hereby make, constitute and
appoint David J. Larson, Otis F. Hilbert, James M. Odland, and Randall L.
Wetherille, and each or any of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of such Society to an Exemptive Order
Application, Registration Statement or Registration Statements, on Form N-4
or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by such Society with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration
under the Securities Act of 1933, as amended, and the Investment Company Act
of 1940, as amended, of shares of such Society, and to file the same, with
all exhibits thereto and other supporting documents, with such Commission,
granting unto such attorneys-in-fact, and each of them, full power and
authority to do and perform any and all acts necessary or incidental to the
performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her
hand this 15th day of July, 1993.
/s/ Richard W. Duesenberg Director
- ----------------------------
Richard W. Duesenberg
<PAGE>
EXHIBIT 15
----
LUTHERAN BROTHERHOOD
LB VARIABLE ANNUITY ACCOUNT I
POWER OF ATTORNEY OF
DIRECTORS AND OFFICERS
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
and/or officer of LUTHERAN BROTHERHOOD, a fraternal benefit society
organized under the laws of the state of Minnesota (the "Society"), the
Depositor of LB VARIABLE ANNUITY ACCOUNT I, does hereby make, constitute and
appoint David J. Larson, Otis F. Hilbert, James M. Odland, and Randall L.
Wetherille, and each or any of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of such Society to an Exemptive Order
Application, Registration Statement or Registration Statements, on Form N-4
or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by such Society with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration
under the Securities Act of 1933, as amended, and the Investment Company Act
of 1940, as amended, of shares of such Society, and to file the same, with
all exhibits thereto and other supporting documents, with such Commission,
granting unto such attorneys-in-fact, and each of them, full power and
authority to do and perform any and all acts necessary or incidental to the
performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her
hand this 15th day of July, 1993.
/s/ Robert P. Gandrud Director
- ------------------------------
Robert P. Gandrud
<PAGE>
EXHIBIT 15
----
LUTHERAN BROTHERHOOD
LB VARIABLE ANNUITY ACCOUNT I
POWER OF ATTORNEY OF
DIRECTORS AND OFFICERS
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
and/or officer of LUTHERAN BROTHERHOOD, a fraternal benefit society
organized under the laws of the state of Minnesota (the "Society"), the
Depositor of LB VARIABLE ANNUITY ACCOUNT I, does hereby make, constitute and
appoint David J. Larson, Otis F. Hilbert, James M. Odland, and Randall L.
Wetherille, and each or any of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of such Society to an Exemptive Order
Application, Registration Statement or Registration Statements, on Form N-4
or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by such Society with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration
under the Securities Act of 1933, as amended, and the Investment Company Act
of 1940, as amended, of shares of such Society, and to file the same, with
all exhibits thereto and other supporting documents, with such Commission,
granting unto such attorneys-in-fact, and each of them, full power and
authority to do and perform any and all acts necessary or incidental to the
performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her
hand this 15th day of July, 1993.
/s/ William R. Halling Director
- -------------------------------
William R. Halling
<PAGE>
EXHIBIT 15
----
LUTHERAN BROTHERHOOD
LB VARIABLE ANNUITY ACCOUNT I
POWER OF ATTORNEY OF
DIRECTORS AND OFFICERS
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
and/or officer of LUTHERAN BROTHERHOOD, a fraternal benefit society
organized under the laws of the state of Minnesota (the "Society"), the
Depositor of LB VARIABLE ANNUITY ACCOUNT I, does hereby make, constitute and
appoint David J. Larson, Otis F. Hilbert, James M. Odland, and Randall L.
Wetherille, and each or any of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of such Society to an Exemptive Order
Application, Registration Statement or Registration Statements, on Form N-4
or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by such Society with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration
under the Securities Act of 1933, as amended, and the Investment Company Act
of 1940, as amended, of shares of such Society, and to file the same, with
all exhibits thereto and other supporting documents, with such Commission,
granting unto such attorneys-in-fact, and each of them, full power and
authority to do and perform any and all acts necessary or incidental to the
performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her
hand this 15th day of July, 1993.
/s/ Herbert D. Ihle Director
- -----------------------------
Herbert D. Ihle
<PAGE>
EXHIBIT 15
----
LUTHERAN BROTHERHOOD
LB VARIABLE ANNUITY ACCOUNT I
POWER OF ATTORNEY OF
DIRECTORS AND OFFICERS
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
and/or officer of LUTHERAN BROTHERHOOD, a fraternal benefit society
organized under the laws of the state of Minnesota (the "Society"), the
Depositor of LB VARIABLE ANNUITY ACCOUNT I, does hereby make, constitute and
appoint David J. Larson, Otis F. Hilbert, James M. Odland, and Randall L.
Wetherille, and each or any of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of such Society to an Exemptive Order
Application, Registration Statement or Registration Statements, on Form N-4
or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by such Society with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration
under the Securities Act of 1933, as amended, and the Investment Company Act
of 1940, as amended, of shares of such Society, and to file the same, with
all exhibits thereto and other supporting documents, with such Commission,
granting unto such attorneys-in-fact, and each of them, full power and
authority to do and perform any and all acts necessary or incidental to the
performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her
hand this 15th day of July, 1993.
/s/ Richard Kessler Director
- ----------------------------
Richard Kessler
<PAGE>
EXHIBIT 15
----
LUTHERAN BROTHERHOOD
LB VARIABLE ANNUITY ACCOUNT I
POWER OF ATTORNEY OF
DIRECTORS AND OFFICERS
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
and/or officer of LUTHERAN BROTHERHOOD, a fraternal benefit society
organized under the laws of the state of Minnesota (the "Society"), the
Depositor of LB VARIABLE ANNUITY ACCOUNT I, does hereby make, constitute and
appoint David J. Larson, Otis F. Hilbert, James M. Odland, and Randall L.
Wetherille, and each or any of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of such Society to an Exemptive Order
Application, Registration Statement or Registration Statements, on Form N-4
or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by such Society with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration
under the Securities Act of 1933, as amended, and the Investment Company Act
of 1940, as amended, of shares of such Society, and to file the same, with
all exhibits thereto and other supporting documents, with such Commission,
granting unto such attorneys-in-fact, and each of them, full power and
authority to do and perform any and all acts necessary or incidental to the
performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her
hand this 15th day of July, 1993.
/s/ Judith K. Larsen Director
- ------------------------------
Dr. Judith K. Larsen
<PAGE>
EXHIBIT 15
----
LUTHERAN BROTHERHOOD
LB VARIABLE ANNUITY ACCOUNT I
POWER OF ATTORNEY OF
DIRECTORS AND OFFICERS
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
and/or officer of LUTHERAN BROTHERHOOD, a fraternal benefit society
organized under the laws of the state of Minnesota (the "Society"), the
Depositor of LB VARIABLE ANNUITY ACCOUNT I, does hereby make, constitute and
appoint David J. Larson, Otis F. Hilbert, James M. Odland, and Randall L.
Wetherille, and each or any of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of such Society to an Exemptive Order
Application, Registration Statement or Registration Statements, on Form N-4
or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by such Society with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration
under the Securities Act of 1933, as amended, and the Investment Company Act
of 1940, as amended, of shares of such Society, and to file the same, with
all exhibits thereto and other supporting documents, with such Commission,
granting unto such attorneys-in-fact, and each of them, full power and
authority to do and perform any and all acts necessary or incidental to the
performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her
hand this 15th day of July, 1993.
/s/ John McDaniel Director
- --------------------------
John P. McDaniel
<PAGE>
EXHIBIT 15
----
LUTHERAN BROTHERHOOD
LB VARIABLE ANNUITY ACCOUNT I
POWER OF ATTORNEY OF
DIRECTORS AND OFFICERS
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
and/or officer of LUTHERAN BROTHERHOOD, a fraternal benefit society
organized under the laws of the state of Minnesota (the "Society"), the
Depositor of LB VARIABLE ANNUITY ACCOUNT I, does hereby make, constitute and
appoint David J. Larson, Otis F. Hilbert, James M. Odland, and Randall L.
Wetherille, and each or any of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of such Society to an Exemptive Order
Application, Registration Statement or Registration Statements, on Form N-4
or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by such Society with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration
under the Securities Act of 1933, as amended, and the Investment Company Act
of 1940, as amended, of shares of such Society, and to file the same, with
all exhibits thereto and other supporting documents, with such Commission,
granting unto such attorneys-in-fact, and each of them, full power and
authority to do and perform any and all acts necessary or incidental to the
performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her
hand this 15th day of July, 1993.
/s/ Dr. Mary Ellen H. Schmider Director
- ------------------------------------
Dr. Mary Ellen Schmider
<PAGE>
LUTHERAN BROTHERHOOD
LB VARIABLE ANNUITY ACCOUNT I
POWER OF ATTORNEY OF
DIRECTORS AND OFFICERS
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
and/or officer of LUTHERAN BROTHERHOOD, a fraternal benefit society
organized under the laws of the state of Minnesota (the "Society"), the
Depositor of LB VARIABLE ANNUITY ACCOUNT I, does hereby make, constitute and
appoint David J. Larson, Otis F. Hilbert, James M. Odland, and Randall L.
Wetherille, and each or any of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of such Society to an Exemptive Order
Application, Registration Statement or Registration Statements, on Form N-4
or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by such Society with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration
under the Securities Act of 1933, as amended, and the Investment Company Act
of 1940, as amended, of shares of such Society, and to file the same, with
all exhibits thereto and other supporting documents, with such Commission,
granting unto such attorneys-in-fact, and each of them, full power and
authority to do and perform any and all acts necessary or incidental to the
performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her
hand this 28th day of February, 1995.
/s/ Bobby I. Griffin Director
- --------------------------
Bobby I. Griffin
#20716
<PAGE>
EXHIBIT 16
625 Fourth Avenue South
Minneapolis, Minnesota 55415
(612) 340-5727
Fax: (612) 340-7062
[logo] LUTHERAN
BROTHERHOOD
James M. Odland
Assistant Vice President
Law Division
April 28, 1998
Lutheran Brotherhood
625 Fourth Avenue South
Minneapolis, MN 55415
Ladies and Gentlemen:
I consent to the use of my name under the heading "Legal Matters" in the
Prospectuses constituting part of the Registration Statement, on Form N-4
(File No. 33-67012), of LB Variable Annuity Account I.
Very truly yours,
/s/ James M. Odland
James M. Odland
#20615
<PAGE>
EXHIBIT 16
JONES & BLOUCH L.L.P.
SUITE 405 WEST
1025 THOMAS JEFFERSON STREET, N.W.
WASHINGTON, D.C. 20007-0805
JORDEN BURT BERENSON & JOHNSON LLP TELEPHONE (202) 223-3500
AFFILIATED COUNSEL TELECOPIER (202) 223-4593
April 27, 1998
Lutheran Brotherhood
625 Fourth Avenue South
Minneapolis, Minnesota 55415
Re: LB Variable Annuity Account I
Gentlemen:
We hereby consent to the reference to this firm under the caption "Legal
Matters" in the prospectus contained in Post-Effective Amendment No. 8 to
the registration statement, on Form N-4, File No. 33-67012, to be filed with
the Securities and Exchange Commission.
Very truly yours,
/s/ Jones & Blouch L.L.P.
Jones & Blouch L.L.P.
#20616
<PAGE>
EXHIBIT 1
-----
LUTHERAN BROTHERHOOD
CERTIFICATE OF RESOLUTION
-------------------------
I, Otis F. Hilbert, being the duly elected Assistant Secretary of
LUTHERAN BROTHERHOOD, a fraternal benefit society organized and existing
under and by virtue of the laws of the State of Minnesota (hereinafter
called "the Society") having its principal office at 625 Fourth Avenue
South, Minneapolis, do hereby certify that the following is a true and
complete copy of resolutions duly adopted at a meeting of the Board of
Directors of the Society duly called and held on May 8, 1993, at which a
quorum was present and voting; that said resolutions are still in full force
and effect and have not been rescinded; and that said resolutions are not in
conflict with the Articles of Incorporation or the Bylaws of the Society:
IN WITNESS WHEREOF, I have hereunto set my hand and the Seal of the
Society this 29th day of June, 1993.
Corporate Seal Attached
/s/ Otis F. Hilbert /initials/
----------------------------------
Assistant Secretary
Signed and subscribed to before me
this 29th day of June, 1993.
/s/ Audrey P. Hodgson
- --------------------------------
Notary Public
/Notary Seal/
AUDREY P. HODGSON
NOTARY PUBLIC - MINNESOTA
HENNEPIN COUNTY
My Commission Expires Dec. 16, 1997
<PAGE>
LUTHERAN BROTHERHOOD
RESOLUTION
----------
WHEREAS, the Society desires to develop, sell and administer
flexible premium deferred variable annuity contracts, and
WHEREAS, the Society desires to establish such separate accounts as
may be necessary and appropriate for the Society's planned flexible premium
deferred variable annuity contracts, and
WHEREAS, the Society desires to authorize management of the Society
to proceed with the development of this product and obtain the necessary
state and federal approvals for the issuance of such product.
NOW THEREFORE BE IT RESOLVED, that pursuant to Minnesota Statutes,
the Society hereby establishes a separate account under the name "LB
Variable Annuity Account I" (the "Account"), for assets to be held and
applied exclusively for the benefit of the holders of flexible premium
deferred variable annuity contracts issued by the Society and designated by
the Society as contracts under which the dollar amount of annuity payments,
death benefits may and the accumulated value thereof shall vary so as to
reflect the investment results of the Account, and the assets held in the
Account shall not be chargeable with liabilities arising out of any other
business the Society may conduct but shall be held and applied exclusively
for the benefit of the holders of such contracts.
RESOLVED, that the Account be registered as a unit investment trust
under the Investment Company Act of 1940, as amended (the "1940 Act"), and
that application be made for exemptions from such provisions of the 1940 Act
as the Chief Executive Officer, President, any Executive Vice President, any
Senior Vice President, Secretary or the Treasurer of the Society may deem
necessary or advisable.
RESOLVED, that the Chief Executive Officer, President, any
Executive Vice President, any Senior Vice President, the Secretary or the
Treasurer of the Society is hereby authorized, for and on behalf of the
Society and with respect to the Account, to execute and file with the
Securities and Exchange Commission a notification of registration and a
registration statement on Form N-8A or other applicable form, for the
registration of the Account under the 1940 Act and to execute and file
notification of claim of exemptions, or application for exemptions, from
provisions of the 1940 Act, all in such form as such officer may approve,
with such amendments, exhibits and other supporting documents thereto, and
to execute and deliver all such other and further instruments, and to take
such other and further action in connection therewith, as such officer may
deem necessary or advisable.
RESOLVED, that the Chief Executive Officer, President, any
Executive Vice President, any Senior Vice President, the Secretary or the
Treasurer of the Society is hereby authorized, for and on behalf of the
Society, to execute and file with the Securities and Exchange Commission a
registration statement on Form N-4, or other applicable form, for the
registration under the Securities Act of 1933, as amended (the "1933 Act"),
of flexible premium deferred variable annuity contracts to be issued by the
Society in connection with the Account and other interests in the Account,
in such form as such officer may approve, with such amendments, exhibits and
other supporting documents thereto, and to execute and deliver all such
other and further instruments, and to take such other and further action in
connection therewith, as such officer may deem necessary or advisable.
RESOLVED, that David J. Larson is hereby designated as the person
authorized to receive notices and communications from the Securities and
Exchange Commission with respect to such registration statements to be filed
under the 1933 Act, with the powers conferred upon him as such person by the
1933 Act and the rules and regulations of such Commission issued thereunder.
RESOLVED, that the Chief Executive Officer, President, any
Executive Vice President, any Senior Vice President, the Secretary or the
Treasurer of the Society, and such other officers and employees of the
Society as the President of the Society may designate, and each of them, are
hereby authorized, for and on behalf of the Society, to execute such other
and further instruments (including, without limitation, a distribution
agreement with respect to sale of the contracts), and to take such other and
further action, as they, or any of them, may deem necessary or advisable to
carry out the purposes of the foregoing resolutions.
#20708
<PAGE>
DRAFT EXHIBIT 3(a)
DISTRIBUTION AGREEMENT
----------------------
AGREEMENT made this _______ day of ______________ , by and between
Lutheran Brotherhood, a fraternal benefit society organized under the laws
of the state of Minnesota ("LB"), on its own behalf and on behalf of the LB
Variable Annuity Account I (the "Variable Account"), and Lutheran
Brotherhood Securities Corp., a Pennsylvania corporation ("LBSC").
WITNESSETH:
WHEREAS, LB has established and maintains the Variable Account, a
separate investment account, pursuant to the laws of Minnesota for the
purpose of selling flexible premium variable annuity contracts
("Contracts"), to commence after the effectiveness of the Registration
Statement relating thereto filed with the Securities and Exchange Commission
on Form N-4 pursuant to the Securities Act of 1933, as amended (the "1933
Act") and the Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, the Variable Account will be registered as a unit
investment trust under the 1940 Act; and
WHEREAS, LBSC is registered as a broker-dealer under the Securities
Exchange Act of 1934 (the "Securities Exchange Act") and is a member of the
National Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, LB and LBSC wish to enter into an agreement to have LBSC
act as the Company's principal underwriter for the sale of the Contracts
through the Variable Account;
NOW, THEREFORE, the parties agree as follows:
1. APPOINTMENT OF THE DISTRIBUTOR
LB agrees that during the term of this Agreement it will take
all action which is required to cause the Contracts to comply
as an insurance product and a registered security with all
applicable federal and state laws and regulations. LB
appoints LBSC and LBSC agrees to act as the principal
underwriter for the sale of Contracts to the public, during
the term of this Agreement, in each state and other
jurisdiction in which such Contracts may lawfully be sold.
LBSC shall offer the Contracts for sale and distribution at
premium rates set by LB. Applications for the Contracts shall
be solicited only by representatives duly and appropriately
licensed or otherwise qualified for the sale of such Contracts
in each state or other jurisdiction. LB shall undertake to
appoint LBSC's qualified registered representatives as life
insurance or annuity agents of LB. Completed applications for
Contracts shall be transmitted directly to LB for acceptance
or rejection in accordance with underwriting rules established
by LB. Initial premium payments under the Contracts shall be
made by check payable to LB and shall be held at all times by
LBSC or its registered representatives in a fiduciary capacity
and remitted promptly to LB. Anything in this Agreement to
the contrary notwithstanding, LB retains the ultimate right to
control the sale of the Contracts and to appoint and discharge
life insurance agents of LB. LBSC shall be held to the
exercise of reasonable care in carrying out the provisions of
this Agreement.
2. SALES AGREEMENTS
LBSC is hereby authorized to enter into separate written
agreements, on such terms and conditions as LBSC may determine
not inconsistent with this Agreement, with one or more
registered representatives who agree to participate in the
distribution of Contracts. Such registered representatives
shall be registered as securities agents with the NASD. LBSC
and its registered representatives soliciting applications for
Contracts shall also be duly and appropriately licensed,
registered or otherwise qualified for the sale of such
Contracts (and the riders and other policies offered in
connection therewith) under the insurance laws and any
applicable blue sky laws of each state or other jurisdiction
in which LB is authorized to offer the Contracts. LBSC shall
have the responsibility for ensuring that its registered
representatives are properly supervised. LBSC shall assume
any legal responsibilities of LB for the acts, commissions or
defalcations of such registered representatives insofar as
they relate to the sale of the Contracts. Applications for
Contracts solicited by LBSC through its registered
representatives shall be transmitted directly to LB. All
premium payments under the Contracts shall be made by check to
LB and, if received by LBSC, shall be held at all times in a
fiduciary capacity and remitted promptly to LB.
3. LIFE INSURANCE OR ANNUITY LICENSING
LB shall be responsible for ensuring that the registered
representatives are duly qualified under the insurance laws of
the applicable jurisdictions to sell the Contracts.
4. SUITABILITY
LB wishes to ensure that Contracts sold by LBSC will be issued
to purchasers for whom the Contract will be suitable. LBSC
shall take reasonable steps to ensure that the various
registered representatives appointed by it shall not make
recommendations to an applicant to purchase a Contract in the
absence of reasonable grounds to believe that the purchase of
the Contract is suitable for such applicant. While not
limited to the following, a determination of suitability shall
be based on information furnished to a registered
representative after reasonable inquiry of such applicant
concerning the applicant's insurance and investment
objectives, financial situation and needs, and the likelihood
that the applicant will continue to make the premium payments
contemplated by the Contracts.
5. PROMOTION MATERIALS
LB shall have the responsibility for furnishing to LBSC and
its registered representatives sales promotion materials and
individual sales proposals related to the sale of the
Contracts. LBSC shall not use any such materials that have
not been approved by LB.
6. COMPENSATION
LB shall arrange for the payment of commissions directly to
those registered representatives of LBSC who are entitled
thereto in connection with the sale of the Contracts on behalf
of LBSC, in the amounts and on such terms and conditions as LB
and LBSC have determined in the VARIABLE PRODUCTS SCHEDULE OF
COMMISSION RATES attached hereto as Exhibit A and Exhibit B
and incorporated by reference herein; provided, however, that
such terms, conditions and commissions as are set forth in or
as are not inconsistent with the Prospectus included as part
of the Registration Statement for the Contracts and effective
under the 1933 Act. LB may, at its option, adjust the
VARIABLE PRODUCTS SCHEDULE OF COMMISSION RATES for contracts
and riders hereafter sold, by giving written notice to LBSC
thirty days in advance of such change.
LB shall reimburse LBSC for the costs and expenses incurred by
LBSC in furnishing or obtaining the services, materials and
supplies required by the terms of this Agreement, in the
initial sales efforts and the continuing obligations
hereunder.
7. RECORDS
LBSC shall have the responsibility for maintaining the records
of representatives licensed, registered and otherwise
qualified to sell the Contracts. LBSC shall maintain such
other records as are required of it by applicable laws and
regulations. The books, accounts and records of LB, the
Variable Account and LBSC shall be maintained so as to clearly
and accurately disclose the nature and details of the
transactions. All records maintained by LBSC or in connection
with this Agreement shall be the property of LB and shall be
returned to LB upon termination of this Agreement, free from
any claims or retention of rights by LBSC. LBSC shall keep
confidential any information obtained pursuant to this
Agreement and shall disclose such information, only if LB has
authorized such disclosure, or if such disclosure is expressly
required by applicable federal or state regulatory
authorities.
8. INVESTIGATIONS AND PROCEEDINGS
(a) LBSC and LB agree to cooperate fully in any insurance
regulatory investigation, proceeding or judicial
proceeding arising in connection with the Contracts
distributed under this Agreement. LBSC and LB further
agree to cooperate fully in any securities regulatory
investigation, proceeding or judicial proceeding with
respect to LB, LBSC, their affiliates and their agents
or representatives to the extent that such investigation
or proceeding is in connection with Contracts
distributed under this Agreement. LBSC shall furnish
applicable federal and state regulatory authorities with
any information or reports in connection with its
services under this Agreement which such authorities may
request in order to ascertain whether the LB's
operations are being conducted in a manner consistent
with any applicable law or regulation.
(b) In the case of a written customer complaint, LBSC and LB
will cooperate in investigating such complaint and any
response to such complaint will be sent to the other
party to this Agreement for approval not less than five
business days prior to its being sent to the customer or
regulatory authority, except that if a more prompt
response is required, the proposed response shall be
communicated by telephone or telegraph.
9. TERMINATION
This Agreement shall terminate automatically upon its
assignment by either party without the prior written consent
of both parties. This Agreement may be terminated at any time
by either party on 60 days' written notice to the other party,
without the payment of any penalty. Upon termination of this
Agreement all authorizations, rights and obligations shall
cease except the obligation to settle accounts hereunder,
including commissions on premiums subsequently received for
Contracts in effect at time of termination, and the agreements
contained in paragraph 8 hereof.
10. REGULATION
This Agreement shall be subject to the provisions of the 1933
Act, the 1940 Act and the Securities Exchange Act and the
rules, regulations and rulings promulgated thereunder and of
the applicable rules and regulations of the NASD, from time to
time in effect, and the terms hereof shall be interpreted and
construed in accordance therewith.
11. SEVERABILITY
If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
12. APPLICABLE LAW
This Agreement shall be construed and enforced in accordance
with and governed by the laws of the State of Minnesota.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
LUTHERAN BROTHERHOOD
By
---------------------------------
LUTHERAN BROTHERHOOD
SECURITIES CORP.
By
---------------------------------
#20709
DRAFT EXHIBIT 3(B)
------------
GENERAL AGENT'S AGREEMENT
-------------------------
AGREEMENT dated ________________ , by and between Lutheran
Brotherhood Securities Corp. hereinafter referred to as "LBSC", a
Pennsylvania corporation, and ___________________________ hereinafter
referred to as "General Agent", an individual.
WHEREAS, General Agent is a registered representative of LBSC
pursuant to a General Agent's Agreement; and
WHEREAS, General Agent is a General Agent of Lutheran Brotherhood,
a Minnesota Corporation ("LB"), the parent of LBSC and/or of Lutheran
Brotherhood Variable Insurance Products Company, hereinafter referred to as
"LBVIP", a Minnesota Corporation (collectively known as the "Companies");
and
WHEREAS, LB has the authority to issue variable contracts in
certain states and LBVIP has the authority to issue variable contracts in
certain other states; and
WHEREAS, the parties hereto desire that General Agent represent
LBSC and the Companies in the sale of the LB's variable contracts in states
where LB is so authorized and LBVIP's variable contracts in states where
LBVIP is so authorized;
WITNESSETH: In consideration of the mutual promises contained
herein, the parties hereto agree as follows:
A. DEFINITIONS
(1) Contracts-The variable universal life insurance contracts
and variable annuity contracts which the Companies propose
to issue in appropriate states and for which LBSC has been
appointed the principal underwriter pursuant to Distribution
Agreements.
(2) The Variable Accounts-The variable life insurance and
variable annuity separate accounts established and
maintained by the Companies pursuant to the laws of
Minnesota to fund the benefits under the Contracts.
(3) The Fund-An open-end management investment company
registered under the 1940 Act, shares of which are sold to
the Variable Accounts in connection with the sale of the
Contracts.
(4) Registration Statement-The registration statements and
amendments thereto relating to the Contracts, the Variable
Accounts, and the Fund, including financial statements and
all exhibits.
(5) Prospectuses-The prospectuses included within the
registration statements referred to herein.
(6) 1933 Act-The Securities Act of 1933, as amended.
(7) 1934 Act-The Securities Exchange Act of 1934, as amended.
(8) 1940 Act-The Investment Company Act of 1940, as amended.
(9) SEC-The Securities and Exchange Commission.
B. AGREEMENTS OF LBSC
(1) Pursuant to the authority delegated to it by the Companies,
LBSC hereby authorizes General Agent during the term of this
Agreement to solicit and obtain applications for Contracts
directly or through LBSC Registered Representatives obtained
by and holding under General Agent a written selected
Registered Representative Agreement and appointed by the
Companies from eligible persons provided that there is an
effective Registration Statement relating to such Contracts
and provided further that General Agent has been notified by
LBSC that the Contracts are qualified for sale under all
applicable securities and insurance laws of the state or
jurisdiction in which the application will be solicited. In
connection with the solicitation of applications for
Contracts, General Agent is hereby authorized to offer
riders and benefits that are available with the Contracts in
accordance with instructions furnished by LBSC, the
Companies.
(2) LBSC, during the term of this Agreement, will notify
General Agent of the issuance by the SEC of any stop order
with respect to the Registration Statement or any amendments
thereto or the initiation of any proceedings for that
purpose or for any other purpose relating to the
registration and/or offering of the Contracts and of any
other action or circumstances that may prevent the lawful
sale of the Contracts in any state or jurisdiction.
(3) During the term of this Agreement, LBSC shall advise General
Agent of any amendment to the Registration Statement of any
amendment or supplement to any Prospectus.
C. AGREEMENTS OF GENERAL AGENT
(1) It is understood and agreed that General Agent is a duly
registered representative of LBSC pursuant to a General
Agent's Agreement. General Agent agrees to comply with all
of the terms and agreements of said General Agent's
Agreement which is hereby incorporated herein by reference
to the extent it is not inconsistent with the terms herein.
(2) Commencing at such time as LBSC and General Agent shall
agree upon, General Agent agrees to use his/her best efforts
to find purchasers for the contracts acceptable to the
Companies. In meeting his/her obligation to use his/her
best efforts to solicit applications for Contracts, General
Agent shall, during the term of this Agreement, engage in
the following activities:
(a) Continuously utilize training, sales and promotional
materials which have been approved by the Companies;
(b) Permit periodic inspection and supervision of his/her
sales practices and submit periodic reports to LBSC as
may be requested on the results of such inspections
and the compliance with procedures.
(c) General Agent shall not make recommendations to an
applicant to purchase a Contract in the absence of
reasonable grounds to believe that the purchase of the
Contract is suitable for such applicant. While not
limited to the following, a determination of
suitability shall be based on information furnished to
General Agent after reasonable inquiry of such
applicant concerning the applicant's insurance and
investment objectives, financial situation and needs,
and the likelihood that the applicant will continue to
make the premium payments contemplated by the
Contract.
(3) All payments for Contracts collected by General Agent shall
be held at all times in a fiduciary capacity and shall be
remitted promptly in full together with such applications,
forms and other required documentation to the Companies as
designated by LBSC. Checks or money orders in payment of
initial premiums shall be drawn to the order of "Lutheran
Brotherhood" or "Lutheran Brotherhood Variable Insurance
Products Company", whichever is appropriate. General Agent
acknowledges that the Companies retains the ultimate right
to control the sale of the Contracts and that the LBSC or
the Companies shall have the unconditional right to reject,
in whole or in part, any application for the Contract. In
the event the Companies or LBSC rejects an application, the
Companies immediately will return all payments directly to
the purchaser and General Agent will be notified of such
action. In the event that any purchaser of a Contract
elects to return such Contract pursuant to Rule
6e-3T(b)(13)(viii) of the 1940 Act, any premium paid will be
refunded to the purchaser and General Agent will be notified
of such action. General Agent will comply with Lutheran
Brotherhood's policy on Field Force Fiduciary
Responsibility.
(4) General Agent shall act at all times as an independent
contractor in carrying out the duties hereunder and shall
not be considered an employee of the Companies or LBSC. As
such General Agent shall have full control of his or her
daily activities, with the right to exercise independent
judgment as to the time, place, and manner of soliciting
applications, servicing Contracts, and otherwise carrying
out the provisions of this Agreement. General Agent and
his/her employees and Registered Representatives obtained by
and holding under General Agent shall not hold themselves
out to be employees of the Companies or LBSC in this
connection or in any dealings with the public.
(5) General Agent agrees that any material he or she develops,
approves or uses for sales, training, explanatory or other
purposes in connection with the solicitation of applications
for Contracts hereunder (other than generic advertising
materials which do not make specific reference to the
Contracts) will not be used without the prior written
consent of LBSC and, where appropriate, the endorsement of
the Companies to be obtained by LBSC.
(6) Solicitation and other activities by General Agent shall be
undertaken only in accordance with applicable laws and
regulations. General Agent shall not solicit applications
for the contracts until duly licensed and appointed by the
Companies as a life insurance and variable contract agent of
the Companies in the appropriate states or other
jurisdictions. General Agent shall fulfill any training
requirements necessary to be licensed. General Agent
understands and acknowledges that he/she is not authorized
by LBSC or the Companies to give any information or make any
representation in connection with this Agreement or the
offering of the Contracts other than those contained in the
Prospectus or other solicitation material authorized in
writing by LBSC or the Companies.
(7) General Agent shall not represent himself or herself as
having any nor shall he or she have authority on behalf of
LBSC or the Companies to: make, alter or discharge any
Contract or other form; waive any forfeiture, extent the
time of paying any premium, or to alter, waive, or forfeit
any of the rights of the Companies or LBSC; receive any
moneys or premiums due, or to become due, to the Companies,
except as set forth in Section C(3) of this Agreement.
General Agent shall not expend, nor contract for the
expenditure of the funds of LBSC or the Companies, nor shall
General Agent possess or exercise any authority on behalf of
LBSC or the Companies by this Agreement.
(8) General Agent shall maintain such records as are required of
him/her by applicable laws and regulations. The books,
accounts and records of the Companies, the Variable
Accounts, LBSC and General Agent relating to the sale of the
Contracts shall be maintained so as to clearly and
accurately disclose the nature and details of the
transactions. All records maintained by General Agent in
connection with this Agreement shall be the property of the
Companies and shall be returned to the Companies upon
termination of this Agreement, free from any claims or
retention of rights by General Agent. General Agent shall
keep confidential any information obtained pursuant to this
Agreement and shall disclose such information, only if the
Companies has authorized such disclosure, or if such
disclosure is expressly required by applicable federal or
state regulatory authorities.
(9) All business produced and serviced under this Agreement is
the property of the Companies and no attempt will be made by
General Agent to prejudice the Contract Owners or interfere
with the collection of premiums or transfer any existing
Contracts to another company or organization. Information
regarding names, addresses, ages and all other information
and records of Contract owners acquired from the Companies
or LBSC and coming into the possession of General Agent
during the effective period of this Agreement, or any prior
Agreement, are trade secrets wholly owned by the Companies.
All forms and other material, including electronic data,
whether furnished by the Companies or LBSC or purchased by
General Agent, upon which this information is recorded shall
be the sole and exclusive property of the Companies.
General Agent shall return any part or all of such
information and records upon the request of the Companies or
LBSC. General Agent will safeguard and protect all such
information within his or her control from any unauthorized
access and use.
(10) the Companies and LBSC may furnish to General Agent, without
charge, certain manuals, forms, records, electronic data,
and such other materials and supplies as they may deem
advisable to provide. All such property furnished by them
shall remain the property of the Companies. In addition,
they may offer at General Agent's expense such additional
materials and supplies as they believe may be helpful to
General Agent.
(11) The expense of any office, including rental, furniture, and
equipment; signs; supplies not furnished by the Companies or
LBSC; the salaries of the employees of General Agent;
automobile; transportation; telephone; postage; advertising;
and all other charges or expense incurred by General Agent
in the performance of this Agreement shall be incurred at
his/her discretion and paid for by him/her.
(12) General Agent expressly covenants and agrees that after
termination of this Agreement, for any reason, he/she shall
not for a period of one year thereafter, nor shall he/she
assist, encourage or induce others to do, any of the
following things: induce, or attempt to induce, any of the
Contract owners to whom he/she or any Registered
Representative in his/her General Agency was assigned while
this Agreement was in effect, to cancel, lapse, or surrender
their contracts with the Companies.
(13) Upon termination of this Agreement, General Agent will
deliver to the Companies, or its authorized representatives,
all records, materials, supplies, advertising, licenses,
and all other documents pertaining to the Companies, used in
carrying out this Agreement.
(14) General Agent will, at the option of the Companies or LBSC,
furnish a fidelity bond for such sum and with such surety as
they may require.
(15) General Agent shall maintain an errors and omissions
insurance policy in an amount, form, and surety acceptable
to the Companies for the performance of his or her
professional services, duties, and obligations.
D. COMPENSATION
(1) Pursuant to the Distribution Agreement between LBSC and the
Companies, LBSC shall cause the Companies to arrange for the
payment of commissions to General Agent as compensation for
the sale of each contract sold by General Agent or
Registered Representative obtained by and holding under
General Agent. The amount of such compensation shall be
based on a schedule to be determined by agreement of the
Companies and LBSC.
(2) General Agent shall have no right to withhold or deduct any
part of any premium he/she shall receive for purposes of
payment of commission or otherwise. General Agent shall
have no interest in any compensation paid by the Companies
to LBSC, now or hereafter, in connection with the sale of
any Contracts hereunder.
(3) the Companies is hereby given a paramount and prior lien and
security interest upon any commissions payable under or as a
result of this or any previous agreement and under all
agreements amendatory hereof or supplementary hereto, as
security for the payment of any claim or indebtedness or
reimbursement whatsoever due or to become due to LBVIP,
LBSC, LB or any of its subsidiaries or affiliates, from
General Agent. Any sums becoming due to General Agent at
any time may be applied, directly, by the Companies to the
liquidation of any indebtedness or obligation of General
Agent to any of the secured parties, but the failure to so
apply any sum shall not be deemed a waiver of the
Companies' lien on or security interest in any other sums
becoming due nor impair its right to so apply such sums.
(4) Notwithstanding the vesting provisions provided for in the
Distribution Agreement and/or the schedule referred to in
section D(l) herein, General Agent will forfeit all
compensation and any other payments which have otherwise
been vested or reserved to General Agent by this or any
previous or related Agreement, if this Agreement terminates
and any of the following events have occurred or
subsequently occur:
(a) General Agent engages in any form of rebating,
directly or indirectly, or if General Agent defaults
in the payment to the Companies of any premiums
collected by him/her, demands or accepts any
remuneration from a Contract Owner, beneficiary, or
their representative for services in connection with
the payment of any claim under any contract issued
by the Companies;
(b) General Agent fails to deliver to the Companies or its
authorized representative any of the following: all
records, including electronic data, materials,
supplies, advertising, licenses, and all other
documents containing the Companies confidential
information and/or trade secrets, upon the written
request of the Companies;
(c) General Agent violates any of the applicable federal
and state laws, regulations or rules, or commits any
fraud, in connection with his or her duties as a
General Agent or as a registered representative; or
(d) General Agent violates any of the covenants set forth
in section C(12) herein.
E. COMPLAINTS AND INVESTIGATIONS
General Agent and LBSC jointly agree to cooperate fully in any
insurance regulatory investigation or proceeding or judicial
proceeding arising in connection with the Contracts marketed under
this Agreement. General Agent and LBSC further agree to cooperate
fully in any securities regulatory investigation or proceeding or
judicial proceeding with respect to General Agent, LBSC, or their
affiliates and their agents or representatives to the extent that
such investigation or proceeding is in connection with Contracts
marketed under this Agreement.
F. TERM OF AGREEMENT
(1) This Agreement shall continue in force for one year from its
effective date and thereafter shall automatically be renewed
every year for a further one year period; provided that
either party may unilaterally terminate this Agreement upon
thirty (30) days' written notice to the other party of its
intention to do so.
(2) Upon termination of this Agreement, all authorizations,
rights and obligations under this agreement shall cease
except (a) the agreements contained in Section E hereof;
(b) the indemnity set forth in Section G hereof; (c) the
obligations to settle accounts hereunder, including payments
on premiums subsequently received for Contracts in effect at
the time of termination or issued pursuant to applications
received by General Agent prior to termination; and (d) the
covenants set forth in Sections C(9), C(12) and C(13).
(3) This Agreement will automatically terminate on the first day
of the month next following the seventieth birthday of
General Agent.
(4) In the event that the General Agent's Agreement between
General Agent and Lutheran Brotherhood or the General
Agent's Agreement between General Agent and LBSC is
terminated, this Agreement will also terminate.
(5) LBSC may immediately terminate this agreement for breach of
any of the covenants and agreements herein by General Agent.
G. INDEMNITY
(1) General Agent shall be held to the exercise of reasonable
care in carrying out the provisions of this Agreement.
(2) General Agent agrees to indemnify and hold harmless the
Companies and LBSC and each of their current and former
directors and officers and each person, if any, who controls
or has controlled the Companies or LBSC within the meaning
of the 1933 Act or the 1934 Act, against any losses, claims,
damages or liabilities to which the Companies or LBSC and
any such director or officer or controlling person may
become subject, under the 1933 Act or otherwise insofar as
such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon:
(a) Any unauthorized use of sales materials or any verbal
or written misrepresentations or any unlawful sales
practices concerning the Contracts by General Agent;
or
(b) The failure of General Agent, his/her employees or
Registered Representatives obtained by and holding
under General Agent, to comply with the provisions or
this Agreement; and General Agent will reimburse the
Companies, LBSC, or such director, officer or
controlling person in connection with investigating or
defending any such loss, claims, damage, liability or
action. This indemnity agreement will be in addition
to any liability which General Agent may otherwise
have.
H. GENERAL TERMS
(1) This Agreement shall not be assigned by either party without
the written consent of the other.
(2) This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota.
(3) The forbearance or neglect of LBSC to insist upon strict
compliance by General Agent with any of the provisions of
this Agreement, whether continuing or not, shall not be
construed as a waiver of LBSC's rights or privileges
hereunder. No waiver of any right or privilege of LBSC
arising from any default or failure of performance by
General Agent shall affect the LBSC's rights or privileges
in the event of a further default or failure of performance.
(4) Whenever required for proper interpretation of this
Agreement, the singular number shall include the plural, the
plural the singular, and the use of any gender shall include
all genders.
(5) The unenforceability or invalidity of any provisions hereof
shall not render any other provision or provisions herein
contained unenforceable or invalid.
(6) This Agreement contains the entire understanding of the
parties hereto, and no modification hereof or addition
hereto shall be binding unless the same is in writing and
signed by the parties hereto.
(7) This Agreement shall be binding upon and inure to the
benefit of the parties hereto, and their respective
successors and permissive assigns, and General Agent's
estate, heirs and personal representatives.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
LUTHERAN BROTHERHOOD
SECURITIES CORP.(LBSC)
By
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(General Agent)
<PAGE>
DRAFT EXHIBIT 3(b)
SELECTED REGISTERED REPRESENTATIVE AGREEMENT
--------------------------------------------
AGREEMENT dated _________ by and between Lutheran Brotherhood
Securities Corp. hereinafter referred to as "LBSC", a Pennsylvania
corporation, and _____________________ hereinafter referred to as
"Registered Representative", an individual.
WHEREAS, Registered Representative is a registered representative
of LBSC pursuant to a Registered Representative's Agreement; and
WHEREAS, Registered Representative is a District Representative of
Lutheran Brotherhood, a Minnesota Corporation, the parent of LBSC and of
Lutheran Brotherhood Variable Insurance Products Company, hereinafter
referred to as "LBVIP", a Minnesota Corporation; and (collectively known as
the "Companies"); and
WHEREAS, LB has the authority to issue variable contracts in
certain states and LBVIP has the authority to issue variable contracts in
certain other states; and
WHEREAS, the parties hereto desire that Registered Representative
represent LBSC and the Companies in the sale of the LB's variable contracts
in states where LB is so authorized and LBVIP's variable contracts in states
where LBVIP is so authorized;
WITNESSETH: In consideration of the mutual promises contained
herein, the parties hereto agree as follows:
A. DEFINITIONS
(1) Contracts-The variable universal life insurance contracts
and variable annuity contracts which the Companies propose
to issue in appropriate states and for which LBSC has been
appointed the principal underwriter pursuant to Distribution
Agreements.
(2) The Variable Accounts-The variable life insurance and
variable annuity separate accounts established and
maintained by the Companies pursuant to the laws of
Minnesota to fund the benefits under the Contracts.
(3) The Fund-An open-end management investment company
registered under the 1940 Act, shares of which are sold to
the Variable Accounts in connection with the sale of the
Contracts.
(4) Registration Statement-The registration statements and
amendments thereto relating to the Contracts, the Variable
Accounts, and the Fund, including financial statements and
all exhibits.
(5) Prospectuses-The prospectuses included within the
registration statements referred to herein.
(6) 1933 Act-The Securities Act of 1933, as amended.
(7) 1934 Act-The Securities Exchange Act of 1934, as amended.
(8) 1940 Act-The Investment Company Act of 1940, as amended.
(9) SEC-The Securities and Exchange Commission.
B. AGREEMENTS OF LBSC
(1) Pursuant to the authority delegated to it by the Companies,
LBSC hereby authorizes Registered Representative during the
term of this Agreement to solicit applications for Contracts
from eligible persons provided that there is an effective
Registration Statement relating to such Contracts and
provided further that Registered Representative has been
notified by LBSC that the Contracts are qualified for sale
under all applicable securities and insurance laws of the
state or jurisdiction in which the application will be
solicited. In connection with the solicitation of
applications for Contracts, Registered Representative is
hereby authorized to offer riders and benefits that are
available with the Contracts in accordance with instructions
furnished by LBSC or the Companies.
(2) LBSC, during the term of this Agreement, will notify
Registered Representative of the issuance by the SEC of any
stop order with respect to the Registration Statement or any
amendments thereto or the initiation of any proceedings for
that purpose or for any other purpose relating to the
registration and/or offering of the Contracts and of any
other action or circumstances that may prevent the lawful
sale of the Contracts in any state or jurisdiction.
(3) During the term of this Agreement, LBSC shall advise
Registered Representative of any amendment to the
Registration Statement of any amendment or supplement to any
Prospectus.
C. AGREEMENTS OF REGISTERED REPRESENTATIVE
(1) It is understood and agreed that Registered Representative
is a duly registered representative of LBSC pursuant to a
Registered Representative's Agreement. Registered
Representative agrees to comply with all of the terms and
agreements of said Registered Representative's Agreement
which is hereby incorporated herein by reference to the
extent it is not inconsistent with the terms herein.
(2) Commencing at such time as LBSC and Registered
Representative shall agree upon, Registered Representative
agrees to use his/her best efforts to find purchasers for
the contracts acceptable to the Companies. In meeting its
obligation to use its best efforts to solicit applications
for Contracts, Registered Representative shall, during the
term of this Agreement, engage in the following activities:
(a) Continuously utilize training, sales and promotional
materials which have been approved by the Companies;
(b) Permit periodic inspection and supervision of his/her
sales practices and submit periodic reports to LBSC as
may be requested on the results of such inspections
and the compliance with procedures.
(c) Registered Representative shall not make
recommendations to an applicant to purchase a Contract
in the absence of reasonable grounds to believe that
the purchase of the Contract is suitable for such
applicant. While not limited to the following, a
determination of suitability shall be based on
information furnished to Registered Representative
after reasonable inquiry of such applicant concerning
the applicant's insurance and investment objectives,
financial situation and needs, and the likelihood that
the applicant will continue to make the premium
payments contemplated by the Contract.
(3) All payments for Contracts collected by Registered
Representative shall be held at all times in a fiduciary
capacity and shall be remitted promptly in full together
with such applications, forms and other required
documentation to the Companies as designated by LBSC.
Checks or money orders in payment of initial premiums shall
be drawn to the order of "Lutheran Brotherhood" or "Lutheran
Brotherhood Variable Insurance Products Company", which ever
is appropriate. Registered Representative acknowledges that
the Companies retains the ultimate right to control the sale
of the Contracts and that the LBSC or the Companies shall
have the unconditional right to reject, in whole or in part,
any application for the Contract. In the event the
Companies or LBSC rejects an application, the Companies
immediately will return all payments directly to the
purchaser and Registered Representative will be notified of
such action. In the event that any purchaser elects to
return a Contract in accordance with the Contract's free
look provision, any amounts paid will be refunded pursuant
to the law of the state in which the purchaser resides
and Registered Representative will be notified of such
action. Registered Representative will comply with Lutheran
Brotherhood's policy on Field Force Fiduciary
Responsibility.
(4) Registered Representative shall act at all times as an
independent contractor in carrying out the duties hereunder
and shall not be considered an employee of the Companies or
LBSC, except for purposes of the Federal Insurance
Contributions Act (26 U.S.C. 3101 et.seq.), and Title II,
of the Social Security Act (42 U.S.C. 401 et. seq.). As such
Registered Representative shall have full control of his or
her daily activities, with the right to exercise independent
judgment as to the time, place, and manner of soliciting
applications, servicing Contracts, and otherwise carrying
out the provisions of this Agreement. Registered
Representative and his/her employees shall not hold
themselves out to be employees of the Companies or LBSC in
this connection or in any dealings with the public.
(5) Registered Representative agrees that any material he or she
develops, approves or uses for sales, training, explanatory
or other purposes in connection with the solicitation of
applications for Contracts hereunder (other than generic
advertising materials which do not make specific reference
to the Contracts) will not be used without the prior written
consent of LBSC and, where appropriate, the endorsement of
the Companies to be obtained by LBSC.
(6) Solicitation and other activities by Registered
Representative shall be undertaken only in accordance with
applicable laws and regulations. Registered Representative
shall not solicit applications for the contracts until duly
licensed and appointed by the Companies as a life insurance
and variable contract agent of the Companies in the
appropriate states or other jurisdictions. Registered
Representative shall fulfill any training requirements
necessary to be licensed. Registered Representative
understands and acknowledges that he/she is not authorized
by LBSC or the Companies to give any information or make any
representation in connection with this Agreement or the
offering of the Contracts other than those contained in the
Prospectus or other solicitation material authorized in
writing by LBSC or the Companies.
(7) Registered Representative shall not represent himself or
herself as having any nor shall he or she have authority on
behalf of LBSC or the Companies to: make, alter or
discharge any Contract or other form; waive any forfeiture,
extend the time of paying any premium, or to alter, waive,
or forfeit any of the rights of the Companies or LBSC;
receive any moneys or premiums due, or to become due, to the
Companies, except as set forth in Section C(3) of this
Agreement. Registered Representative shall not expend, nor
contract for the expenditure of the funds of LBSC or the
Companies, nor shall Registered Representative possess or
exercise any authority on behalf of LBSC or the Companies by
this Agreement.
(8) Registered Representative shall maintain such records as are
required of him/her by applicable laws and regulations. The
books, accounts and records of the Companies, the Variable
Accounts, LBSC and Registered Representative relating to the
sale of the Contracts shall be maintained so as to clearly
and accurately disclose the nature and details of the
transactions. All records maintained by Registered
Representative in connection with this Agreement shall be
the property of the Companies and shall be returned to the
Companies upon termination of this Agreement, free from any
claims or retention of rights by Registered Representative.
Registered Representative shall keep confidential any
information obtained pursuant to this Agreement and shall
disclose such information, only if the Companies has
authorized such disclosure, or if such disclosure is
expressly required by applicable federal or state regulatory
authorities.
(9) All business produced and serviced under this Agreement is
the property of the Companies and no attempt will be made by
Registered Representative to prejudice the Contract Owners
or interfere with the collection of premiums or transfer any
existing Contracts to another company or organization.
Information regarding names, addresses, ages and all other
information and records of Contract Owners acquired from the
Companies or LBSC and coming into the possession of
Registered Representative during the effective period of
this Agreement, or any prior Agreement, are trade secrets
wholly owned by the Companies. All forms and other
material, including electronic data, whether furnished by
the Companies or LBSC or purchased by Registered
Representative, upon which this information is recorded
shall be the sole and exclusive property of the Companies.
Registered Representative shall return any part or all of
such information and records upon the request of the
Companies or LBSC. Registered Representative will safeguard
and protect all such information within his or her control
from any unauthorized access and use.
(10) the Companies and LBSC may furnish to Registered
Representative, without charge, certain manuals, forms,
records, electronic data, and such other materials and
supplies as they may deem advisable to provide. All such
property furnished by them shall remain the property of the
Companies. In addition, they may offer at Registered
Representative's expense such additional materials and
supplies as they believe may be helpful to Registered
Representative.
(11) The expense of any office, including rental, furniture, and
equipment; signs; supplies not furnished by the Companies or
LBSC; the salaries of the employees of Registered
Representative; automobile; transportation; telephone;
postage; advertising; and all other charges or expense
incurred by Registered Representative in the performance of
this Agreement shall be incurred at his/her discretion and
paid for by him/her.
(12) Registered Representative expressly covenants and agrees
that after termination of this Agreement, for any reason,
he/she shall not for a period of one year thereafter, nor
shall he/she assist, encourage or induce others to do, any
of the following things: induce, or attempt to induce, any
of the Contract holders to whom he/she was the "Writing
Registered Representative" or was assigned as the "Servicing
or Correspondent Registered Representative" while this
Agreement was in effect, to cancel, lapse, or surrender
their contracts with the Companies.
(13) Upon termination of this Agreement, Registered
Representative will deliver to the Companies, or its
authorized representatives, all records, materials,
supplies, advertising, licenses, and all other documents
pertaining to the Companies, used in carrying out this
Agreement.
(14) Registered Representative will, at the option of the
Companies or LBSC, furnish a fidelity bond for such sum and
with such surety as they may require.
(15) Registered Representative shall maintain an errors and
omissions insurance policy in an amount, form, and surety
acceptable to the Companies for the performance of his or
her professional services, duties, and obligations.
D. COMPENSATION
(1) Pursuant to the Distribution Agreement between LBSC and the
Companies, LBSC shall cause the Companies to arrange for the
payment of commissions to Registered Representative as
compensation for the sale of each contract sold by
Registered Representative. The amount of such compensation
shall be based on a schedule to be determined by agreement
of the Companies and LBSC. A copy of the schedule of
commission rates has been furnished to the Registered
Representative.
(2) Registered Representative shall have no right to withhold or
deduct any part of any premium he/she shall receive for
purposes of payment of commission or otherwise. Registered
Representative shall have no interest in any compensation
paid by the Companies to LBSC, now or hereafter, in
connection with the sale of any Contracts hereunder.
(3) the Companies is hereby given a paramount and prior lien and
security interest upon any commissions payable under or as a
result of this or any previous agreement and under all
agreements amendatory hereof or supplementary hereto, as
security for the payment of any claim or indebtedness or
reimbursement whatsoever due or to become due to LBVIP,
LBSC, or LB or any of its subsidiaries or affiliates, from
Registered Representative. Any sums becoming due to
Registered Representative at any time may be applied,
directly, by the Companies to the liquidation of any
indebtedness or obligation of Registered Representative to
any of the secured parties, but the failure to so apply any
sum shall not be deemed a waiver of the Companies' lien on
or security interest in any other sums becoming due nor
impair its right to so apply such sums.
(4) Notwithstanding the vesting provisions provided for in the
Distribution Agreement and/or the schedule referred to in
section D(l) herein, Registered Representative will forfeit
all compensation and any other payments which have otherwise
been vested or reserved to Registered Representative by this
or any previous or related Agreement, if this Agreement
terminates and any of the following events have occurred or
subsequently occur:
(a) Registered Representative engages in any form of
rebating, directly or indirectly, or if Registered
Representative defaults in the payment to the
Companies of any premiums collected by him/her,
demands or accepts any remuneration from a Contract
Owner, beneficiary, or their representative for
services in connection with the payment of any claim
under any contract issued by the Companies;
(b) Registered Representative fails to deliver to the
Companies or its authorized representative any of the
following: all records, including electronic data,
materials, supplies, advertising, licenses, and all
other documents containing the Companies confidential
information and/or trade secrets, upon the written
request of the Companies;
(c) Registered Representative violates any of the
applicable federal and state laws, regulations or
rules, or commits any fraud, in connection with his or
her duties as a Registered Representative; or
(d) Registered Representative violates any of the
covenants set forth in section C(12) herein.
E. COMPLAINTS AND INVESTIGATIONS
Registered Representative and LBSC jointly agree to cooperate fully
in any insurance regulatory investigation or proceeding or judicial
proceeding arising in connection with the Contracts marketed under
this Agreement. Registered Representative and LBSC further agree
to cooperate fully in any securities regulatory investigation or
proceeding or judicial proceeding with respect to Registered
Representative, LBSC, or their affiliates and their agents or
representatives to the extent that such investigation or proceeding
is in connection with Contracts marketed under this Agreement.
F. TERM OF AGREEMENT
(1) Either party may unilaterally terminate this Agreement upon
thirty (30) days' written notice to the other party of its
intention to do so.
(2) Upon termination of this Agreement, all authorizations,
rights and obligations under this agreement shall cease
except (a) the agreements contained in Section E hereof;
(b) the indemnity set forth in Section G hereof; (c) the
obligations to settle accounts hereunder, including payments
on premiums subsequently received for Contracts in effect at
the time of termination or issued pursuant to applications
received by Registered Representative prior to termination;
and (d) the covenants set forth in Sections C(9), C(12) and
C(13).
(3) This Agreement will automatically terminate on the first day
of the month next following the seventieth birthday of
Registered Representative.
(4) In the event that either the District Representative's
Agreement between Registered Representative and Lutheran
Brotherhood or the Registered Representative's Agreement
between Registered Representative and LBSC is terminated,
this Agreement will also terminate.
(5) LBSC may immediately terminate this agreement for breach of
any of the covenants and agreements herein by Registered
Representative.
G. INDEMNITY
(1) Registered Representative shall be held to the exercise of
reasonable care in carrying out the provisions of this
Agreement.
(2) Registered Representative agrees to indemnify and hold
harmless the Companies and LBSC and each of their current
and former directors and officers and each person, if any,
who controls or has controlled the Companies or LBSC within
the meaning of the 1933 Act or the 1934 Act, against any
losses, claims, damages or liabilities to which the
Companies or LBSC and any such director or officer or
controlling person may become subject, under the 1933 Act or
otherwise insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or
are based upon:
(a) Any unauthorized use of sales materials or any verbal
or written misrepresentations or any unlawful sales
practices concerning the Contracts by Registered
Representative; or
(b) The failure of Registered Representative or his/her
employees, to comply with the provisions or this
Agreement; and Registered Representative will
reimburse the Companies, LBSC, or such director,
officer or controlling person in connection with
investigating or defending any such loss, claims,
damage, liability or action. This indemnity agreement
will be in addition to any liability which Registered
Representative may otherwise have.
H. GENERAL TERMS
(1) This Agreement shall not be assigned by either party without
the written consent of the other.
(2) This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota.
(3) The forbearance or neglect of LBSC to insist upon strict
compliance by Registered Representative with any of the
provisions of this Agreement, whether continuing or not,
shall not be construed as a waiver of LBSC's rights or
privileges hereunder. No waiver of any right or privilege
of LBSC arising from any default or failure of performance
by Registered Representative shall affect the LBSC's rights
or privileges in the event of a further default or failure
of performance.
(4) Whenever required for proper interpretation of this
Agreement, the singular number shall include the plural, the
plural the singular, and the use of any gender shall include
all genders.
(5) The unenforceability or invalidity of any provisions hereof
shall not render any other provision or provisions herein
contained unenforceable or invalid.
(6) This Agreement contains the entire understanding of the
parties hereto, and no modification hereof or addition
hereto shall be binding unless the same is in writing and
signed by the parties hereto.
(7) This Agreement shall be binding upon and inure to the
benefit of the parties hereto, and their respective
successors and permissive assigns, and Registered
Representative's estate, heirs and personal representatives.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
LUTHERAN BROTHERHOOD
SECURITIES CORP. (LBSC)
By
--------------------------------------
----------------------------------------
(Registered Representative)
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
EXHIBIT IA
LUTHERAN BROTHERHOOD
LUTHERAN BROTHERHOOD VARIABLE INSURANCE PRODUCTS
Minneapolis, Minnesota
Please file in Compensation Section 7, of the DR Planner
<PAGE>
THIS PAGE IS INTENTIONALLY BLANK
<PAGE>
SCHEDULE OF COMMISSION RATES
TABLE OF CONTENTS
Cover Page and Table of Contents
EXHIBIT I:
I Payment Provisions
II. Life Insurance Contracts (Excluding Flexible Premium Adjustable Life)
A. Permanent
Life; Presidential Plus, Life Paid-Up at 96;
Partners Presidential Plus, Survivor Presidential Plus
B. Renewable and Convertible Term
C. Other Term
Juvenile Protection
III. Life Insurance Riders (Excluding Riders on Flexible Premium
Adjustable Life)
A. Issued with Basic Contract
Renewable and Convertible Term
Other Term: Child Term Life Ins. Benefit
Additional Premium Option (PUA Rider)
B. Issued after Basic Contract
Renewable and Convertible Term
Other Term: Child Term Life Ins. Benefit
Additional Premium Option (PUA Rider)
IV. Flexible Premium Adjustable Life (UL) - Series I
A. 1st Year Commission
B. Service Commission
C. Special Renewal Commission
D. Increase Commission per $1,000
E. Cost of Living Increase Commission per $1,000
F. Riders Added After Issue Commission per $1,000
V. Flexible Premium Adjustable Life (UL) - Series II
A. 1st Year Commission
B. Service Commission
C. Renewal Commission per $1,000
1. Face Amount Less Than $250,000
2. Face Amount More Than $249,999
3. Spouse Insurance Benefit
D. Increase Commission per $1,000
1. Face Amount Less Than $250,000
2. Face Amount More Than $249,999
E. Cost of Living Increase Commission per $1,000
1. Face Amount Less Than $250,000
2. Face Amount More Than $249,999
F. Riders Increased/Added After Issue Commission per $1,000
VI. Flexible Premium Adjustable Life Series (UL) - III, IV and
Juvenile-Issue
A. 1st Year Commission
B. Additional Commission (Based on Premium)
C. Renewal Commission per $1,000 of face amount
1. Face Amount Less Than $250,000 and Juvenile-Issue
2. Face Amount More Than $249,999 and Less Than $500,000
3. Face Amount More Than $499,000
4. Spouse Insurance Benefit
D. Increase Commission per $1,000
1. Face Amount Less Than $250,000 and Juvenile-Issue
2. Face Amount More Than $249,999 and Less Than $500,000
3. Face Amount More Than $499,000
E. Cost of Living Increase Commission per $1,000
1. Face Amount Less Than $250,000 and Juvenile-Issue
2. Face Amount More Than $249,999 and Less Than $500,000
3. Face Amount More Than $499,999
F. Riders Increased/Issued After Basic Contract
VII. Flexible Premium Variable Life (VUL)
A. 1st Year Commission
B. Additional Commission (Based on Premium)
C. Renewal Commission per $1,000 of face amount
1. Face Amount Less Than $250,000
2. Face Amount More Than $249,999
3. Spouse Insurance Benefit
D. Increase Commission per $1,000
1. Face Amount Less Than $250,000
2. Face Amount More Than $249,999
E. Cost of Living Increase Commission per $1,000
1. Face Amount Less Than $250,000
2. Face Amount More Than $249,999
F. Riders Increased/Issued After Basic Contract
VIII. Annuity Contracts
A. Single Premium
B. Flexible Premium Deferred Annuity '89
Variable Annuity
C. Flexible Premium Deferred Annuity - TSA Qualified
D. FPDA other than FPDA '89 - Nonqualified
IX. Health Insurance
A. Contracts
B. Riders
X. Supplemental Benefits
XI. Settlement Options
EXHIBIT IA: Target Premiums
I. Flexible Premium Adjustable Life - Series II
A. Face Amount Less Than $250,000
B. Face Amount More Than $249,999
II. Flexible Premium Adjustable Life - Series III, IV and Juvenile-Issue
A. Face Amount Less Than $250,000 and Juvenile-Issue
B. Face Amount More Than $249,000 and Less Than $500,000
C. Face Amount More Than $499,999
III. Riders and Supplemental Benefits
IV. Special Class
V. Flexible Premium Variable Life Insurance Riders
Amendments
<PAGE>
[BLANK PAGE]
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
I. PAYMENT PROVISIONS
A. First Year Commissions, Renewal Commissions, Increase Commissions,
Rider Commissions and for Flexible Premium Variable Life contracts
written on or after June 1, 1990, Rollover Commissions are payable
to the Representative* who sold the coverage.
B. Service Commissions, Special Service Commissions, Rollover
Commissions for all products except Flexible Premium Variable Life
(VUL) written after June 1, 1990, and Cost of Living Increase
Commissions are payable to the Representative* who is assigned to
service the contract at the time the commission is payable.
C. FREQUENCY OF COMMISSION PAYMENTS
Commissions will be paid at the same frequency as the related
premiums are paid except
1) First Year Commissions that are expressed as a percent of
premiums and all Increase Commissions on contracts for which
premiums are paid by Pre-Authorized Collection will be
annualized and payable when the contract is issued or increased;
except that the additional 3% of all premium paid on Flexible
Premium Adjustable Life and Flexible Premium Variable Life and
the First Year Commissions on Flexible Premium Annuity and
Variable Annuity contracts paid by Pre-Authorized Collection
will not be annualized.
2) Renewal Commissions which are expressed as an amount per $1,000
will be paid monthly.
D. Recovery of Commissions Previously Paid
1) If the Society returns all or any portion of a premium payment,
any commissions paid to the Representative* on this premium
shall be repaid to the Society and the Society shall have the
right to recover such commission from any compensation
thereafter due and payable to the Representative*.
2) On Flexible Premium Adjustable Life and Flexible Premium
Variable Life Insurance contracts which terminate during the
first contract year, First Year Commission will not exceed the
sum of a) 3% of all premium paid plus b) the pro rata portion
of the First Year Commission based on premium up to target that
would be paid if the contract remained in force for the year.
On Flexible Premium Adjustable Life Insurance Series II, III, IV
and Juvenile-Issue and Flexible Premium Variable Life contracts
which terminate during the first contract year, First Year
Commissions based on premiums up to target will be the product
of the First Year Commission rate and the lesser of
(1) premiums paid and credited on the contract, and
(2) one-twelfth of the Target Premium times the number of full
months the contract remained in force.
First year Commissions paid will be reduced by the amounts, if
any, in excess of those determined above.
E. Contract Changes and Conversions
The Society will determine the amount of compensation and which
Representative* will be paid the compensation on contract changes
(except for the addition of term insurance and health insurance
riders) and conversions, the continuation of Juvenile Term
Insurance contracts and the rollover of Modified Premium Whole Life
contracts. If a contract replaces in whole or in part a contract
previously issued by Lutheran Brotherhood or any subsidiary or
affiliate, the Society shall have the right to determine what, if
any, compensation shall be allowed.
F. All variable products will be subject to the vesting provisions of
Section II.C. of the District Representative Agreement.
- ---------------------------------------
* All references to a Representative include a District Representative
and/or a Registered Representative. An appropriate Registered
Representative license is required before the sale of any variable
product.
II. LIFE INSURANCE CONTRACTS (Excluding Flexible Premium Adjustable Life)
Commissions are a percentage of the premium due and payable on the
basic contract during each contract year (excluding any extra premium
paid for aviation or temporary extra premium).
A. Permanent Life
<TABLE>
<CAPTION>
WHOLE LIFE
(Presidential Plus)
LIFE PAID UP AT 96 Survivor
$50,000 AND OVER Presidential Plus
LIFE* PARTNER PRES.PLUS (SPLUS)
================ ===================== =====================
Number of
Annual 1st Year 1st Renewal 1st Year 1st Renewal 1st Year 1st Renewal
Premiums Commission Commission Commission Commission Commission Commission
- ---------- --------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
45 and over 65 % 17 % 55 % 17 % 50 % 13 %
42-44 65 16.5 55 16.5 50 13
35-41 65 16 55 16 50 13
32-34 65 15.5 55 15.5 47.5 13
30-31 62.5 15.5 53 15.5 45 12.5
27-29 62.5 15 53 15 42.5 12.5
25-26 60 14.5 51 14.5 40 12
23-24 57.5 14.5 49 14.5 40 12
22 55 14.5 47 14.5 40 12
21 52.5 14.5 46 14.5 40 12
20 52.5 14.5 45 14.5 40 12
18-19 50 14 44 14 40 12
17 50 14 43 14 40 12
15-16 47.5 14 41 14 40 12
14 44.5 13.5 39 13.5 40 12
13 42.5 13.5 37 13.5 N/A N/A
12 39 13.5 35 13.5 N/A N/A
11 37 13.5 33 13.5 N/A N/A
10 35 13.5 31 13.5 N/A N/A
9 33 13.0 29 13.0 N/A N/A
8 31 13.0 27 13.0 N/A N/A
7 29 13.0 25 13.0 N/A N/A
6 27 13.0 23 13.0 N/A N/A
5 25 13.0 21 13.0 N/A N/A
*Except as otherwise provided in this schedule.
</TABLE>
2ND AND 3RD RENEWAL COMM.: One-half of the 1st Renewal
Commission rate.
4TH RENEWAL COMM.: 5%
5TH, 6TH AND 7TH RENEWAL COMM.: 2%
On any plan other than Survivor Presidential Plus with premium
payable beyond age 85, the number of annual premiums to be paid is
determined as though premiums were payable to age 85.
On a Survivor Presidential Plus plan the number of annual premiums
to be paid is the number of annual premiums payable from the joint
issue age to age 100.
1st Year Renewal
Commission Commissions
---------- -----------
Single Premium Life 3% None
B. Renewable and Convertible Term Insurance Contracts
<TABLE>
<CAPTION>
Commission Rates
Commission Rates for Initial Face Commission Rates
for Initial Face Amount More for Initial Face
Amount Less Than Than $499,999 and Amount More
$500,000 Less Than $1,000,000 Than $999,999
================= ===================== ====================
First First First 1st - 7th First 1st - 7th
Issue Year Renewal Year Renewal Year Renewal
Age Commission Commission Commission Commissions Commission Commissions
- ---------- --------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
16-40 45 % 14 % 30 % 10 % 25 % 10 %
41-43 45 13.5 30 10 25 10
44-53 45 13 30 10 25 10
54 43 13 30 10 25 10
55 43 13 28 10 23.5 10
56-58 43 12.5 28 10 23.5 10
59 41.5 12 28 10 23.5 10
60 41.5 12 26 10 21.5 10
61-62 40 12 26 10 21.5 10
63 38.5 12 26 10 21.5 10
64 37 12 26 10 21.5 10
65 37 12 24 10 20 10
66-68 35.5 12 24 10 20 10
69-70 34 12 24 10 20 10
</TABLE>
Renewal Commission Rates for Initial Face Amount Less
Than $500,000:
2ND AND 3RD RENEWAL COMM.: One-half of the 1st Renewal
Commission rate.
4TH RENEWAL COMMISSION: 5%
5TH, 6TH AND 7TH RENEWAL COMMISSIONS: 2%
C. Other Term Insurance Contracts
First Year First Renewal
Commission Commission
---------- ----------
Juvenile Protector 45% 14%
At Attained Age 5 At Attained Age 6
----------------- -----------------
JumpStart 45% 14%
2ND AND 3RD RENEWAL COMM.: One-half of the 1st Renewal
Commission rate.
4TH RENEWAL COMMISSION: 5%
5TH, 6TH AND 7TH RENEWAL COMMISSIONS: 2%
III. LIFE INSURANCE RIDERS (Excluding Riders On
Flexible Premium Adjustable Life)
Commissions are a percentage of the premium due and payable on the
rider during the rider year (excluding any extra premium paid for
aviation or temporary extra premium).
A. Riders issued with the basic contract.
RENEWABLE AND CONVERTIBLE TERM INSURANCE RIDER: BASIC AND SPOUSE
<TABLE>
Commission Rates
Commission Rates for Initial Face Commission Rates
for Initial Face Amount More for Initial Face
Amount Less Than Than $499,999 and Amount More
$500,000 Less Than $1,000,000 Than $999,999
================ ====================== ==================
First First First 1st - 7th First 1st - 7th
Issue Year Renewal Year Renewal Year Renewal
Age Commission Commission Commission Commissions Commission Commissions
- ---------- --------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
16-40 45 % 14 % 30 % 10 % 25 % 10 %
41-43 45 13.5 30 10 25 10
44-53 45 13 30 10 25 10
54 43 13 30 10 25 10
55 43 13 28 10 23.5 10
56-58 43 12.5 28 10 23.5 10
59 41.5 12 28 10 23.5 10
60 41.5 12 26 10 21.5 10
61-62 40 12 26 10 21.5 10
63 38.5 12 26 10 21.5 10
64 37 12 26 10 21.5 10
65 37 12 24 10 20 10
66-68 35.5 12 24 10 20 10
69-70 34 12 24 10 20 10
</TABLE>
Issue
Age of First Year First Renewal
Rider Commission Commission
----- ---------- ----------
CHILD TERM LIFE INSURANCE BENEFIT: All Ages 45% 14%
Renewal Commission rates for Renewable and Convertible Term
Insurance Riders with Initial Face Amount Less Than $500,000 and
Child Term Life Insurance Benefit issued with the basic contract:
2ND AND 3RD RENEWAL COMM.: One-half of the 1st Renewal
Commission rate.
4TH RENEWAL COMMISSION: 5%
5TH, 6TH AND 7TH RENEWAL COMMISSIONS: 2%
ADDITIONAL PREMIUM OPTION (PUA RIDER)
The commission is a service commission equal to 3% of all premium
paid and credited by the Society whenever paid and credited.
B. Riders added after issue of the basic contract.
RENEWABLE AND CONVERTIBLE TERM INSURANCE RIDER: BASIC AND SPOUSE
<TABLE>
Commission Rates
Commission Rates for Initial Face Commission Rates
for Initial Face Amount More for Initial Face
Amount Less Than Than $499,999 and Amount More
$500,000 Less Than $1,000,000 Than $999,999
================ ====================== ==================
First First First 1st - 7th First 1st - 7th
Issue Year Renewal Year Renewal Year Renewal
Age Commission Commission Commission Commissions Commission Commissions
- ---------- --------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
16-53 41.5 % 8 % 27.5 % 9 % 22.5 % 9 %
54 40 8 27.5 9 22.5 9
55-58 40 8 25.5 9 21 9
59 38 8 25.5 9 21 9
60 38 8 23.5 9 19 9
61-62 36.5 8 23.5 9 19 9
63 34.5 8 23.5 9 19 9
64 33 8 23.5 9 19 9
65 33 8 21.5 9 17.5 9
66-68 31.5 8 21.5 9 17.5 9
69-70 30 8 21.5 9 17.5 9
</TABLE>
Issue
Age of First Year First Renewal
Rider Commission Commission
----- ---------- ----------
CHILD TERM LIFE
INSURANCE BENEFIT: All Ages 45% 14%
Renewal Commission rates for Renewable and Convertible Term
Insurance Riders with Initial Face Amount less than $500,000, Child
Term Life Insurance Benefit added after the basic contract:
2ND AND 3RD RENEWAL COMM.: One-half of the 1st Renewal
Commission rate.
4TH RENEWAL COMMISSION: 4% except Child Rider. Child Rider = 5%
5TH, 6TH AND 7TH RENEWAL COMMISSIONS: 2%
ADDITIONAL PREMIUM OPTION (PUA RIDER):
The commission is a service commission equal to 3% of the premium
paid to and credited by the Society whenever paid and credited.
IV. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE - SERIES I
A. First Year Commission
Issue Age Commission Rate
--------- ---------------
0-63 50 %
64-68 47.5
69-70 45
71-72 42.5
73 40
74-75 37.5
First Year Commission is a percentage of all premium paid and
credited in the first contract year up to but not exceeding the
amount required to pay the annual cost of insurance, the cost of
any supplemental benefits and riders issued with the basic contract
and first year loads. Premium paid and credited includes amounts
paid for supplemental benefits and riders issued with the basic
contract.
B. Service Commission
5% of all premium paid and credited whenever paid and credited.
C. Special Renewal Commission
This Commission is payable only upon termination of this Agreement
on or after the Qualified Early Retirement Date or upon termination
of this Agreement due to death as specified in the District
Representative Agreement.
Issue Age Commission Per $1,000*
--------- ----------------------
0-25 $.12
26-50 .24
51-75 .36
* One-twelfth of the Special Renewal Commission is paid monthly on
the portion of the initial face amount remaining in force each
month during the first four renewal years.
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
IV. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE - SERIES ICONTINUED
D. Increase Commission per $1,000* of increase in face amount
<TABLE>
Attained Male Female Attained Male Female
Age Std. Nsmkr. Std. Nsmkr. Age Std. Nsmkr. Std. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 1.68 1.56 38 2.88 2.52 2.28 2.04
1 1.44 1.32 39 3.12 2.76 2.52 2.16
2 1.20 1.20 40 3.36 2.88 2.64 2.28
3 1.08 1.08 41 3.60 3.00 2.88 2.40
4 .96 .96 42 3.96 3.24 3.12 2.64
5 .84 .84 43 4.32 3.48 3.36 2.76
6 .72 .72 44 4.80 3.72 3.60 3.00
7 .72 .72 45 5.16 3.96 3.84 3.24
8 .72 .72 46 5.64 4.32 4.20 3.48
9 .72 .72 47 6.12 4.68 4.44 3.84
10 .72 .72 48 6.60 5.16 4.80 4.08
11 .84 .72 49 7.08 5.64 5.16 4.44
12 .96 .84 50 7.56 6.00 5.52 4.68
13 1.08 .84 51 8.04 6.36 5.88 4.92
14 1.20 .84 52 8.40 6.72 6.12 5.16
15 1.32 .96 53 8.88 7.08 6.48 5.40
16 1.44 1.08 54 9.36 7.56 6.72 5.76
17 1.44 1.08 55 9.84 7.92 7.08 6.00
18 1.44 1.20 56 10.32 8.40 7.44 6.36
19 1.56 1.32 57 10.92 8.76 7.80 6.60
20 1.56 1.44 1.32 1.08 58 11.52 9.24 8.28 6.96
21 1.56 1.44 1.32 1.20 59 12.12 9.84 8.64 7.32
22 1.56 1.44 1.32 1.20 60 12.72 10.32 9.12 7.80
23 1.68 1.56 1.32 1.32 61 13.32 10.92 9.72 8.40
24 1.68 1.56 1.32 1.32 62 13.92 11.40 10.32 9.00
25 1.68 1.56 1.32 1.32 63 14.52 12.12 11.04 9.72
26 1.68 1.56 1.32 1.32 64 15.12 12.72 11.76 10.44
27 1.80 1.68 1.44 1.32 65 15.84 13.44 12.48 11.16
28 1.92 1.80 1.56 1.44 66 16.68 14.40 13.20 12.00
29 1.92 1.80 1.56 1.44 67 17.52 15.36 14.04 12.72
30 2.04 1.80 1.56 1.44 68 18.48 16.32 14.76 13.56
31 2.16 1.92 1.68 1.56 69 19.20 17.28 15.36 14.28
32 2.16 1.92 1.68 1.56 70 19.68 17.88 15.84 14.76
33 2.16 1.92 1.68 1.56 71 19.44 17.76 15.60 14.64
34 2.28 2.04 1.80 1.68 72 19.32 17.64 15.48 14.64
35 2.40 2.16 1.92 1.80 73 19.08 17.64 15.36 14.64
36 2.52 2.28 2.04 1.90 74 18.84 17.64 15.24 14.64
37 2.76 2.40 2.16 1.92 75 18.72 17.52 15.12 14.52
Age used is attained age of the insured on the effective date of the
increase in face amount of contract or attained age of spouse on the
effective date of the increase in the Spouse Insurance Benefit rider. Std.
includes contracts and riders with increased face amounts having premium
class "Standard" or "Special"; Nsmkr. includes contracts and riders with
increased face amounts having premium class "Nonsmoker" or Nonsmoker
Special".
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
IV. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE - SERIES I
E. Cost of Living Increase Commission per $1,000* of increase in face amount
<TABLE>
Attained Male Female Attained Male Female
Age Std. Nsmkr. Std. Nsmkr. Age Std. Nsmkr. Std. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 .48 .36 36 .84 .72 .60 .60
2 .36 .36 37 .96 .84 .72 .60
3 .36 .36 38 .96 .84 .72 .60
4 .24 .24 39 1.08 .96 .84 .72
5 .24 .24 40 1.08 .96 .84 .72
6 .24 .24 41 1.20 .96 .96 .72
7 .24 .24 42 1.32 1.08 .96 .84
8 .24 .24 43 1.44 1.20 1.08 .96
9 .24 .24 44 1.56 1.20 1.20 .96
10 .24 .24 45 1.68 1.32 1.32 1.08
11 .24 .24 46 1.80 1.44 1.44 1.20
12 .36 .24 47 1.92 1.56 1.56 1.32
13 .36 .36 48 2.04 1.68 1.56 1.32
14 .48 .36 49 2.28 1.92 1.68 1.44
15 .48 .36 50 2.52 2.04 1.80 1.56
16 .48 .36 51 2.76 2.16 1.92 1.68
17 .48 .36 52 2.88 2.28 2.04 1.80
18 .48 .48 53 3.00 2.40 2.16 1.80
19 .48 .48 54 3.12 2.52 2.28 1.92
20 .48 .48 .48 .36 55 3.24 2.64 2.40 2.04
21 .48 .48 .48 .36 56 3.48 2.76 2.52 2.16
22 .48 .48 .48 .36 57 3.60 3.00 2.64 2.28
23 .60 .48 .48 .48 58 3.84 3.24 2.76 2.40
24 .60 .48 .48 .48 59 4.08 3.36 2.88 2.52
25 .60 .48 .48 .48 60 4.20 3.48 3.00 2.64
26 .60 .48 .48 .48 61 4.32 3.60 3.12 2.76
27 .72 .60 .48 .48 62 4.32 3.60 3.24 2.76
28 .72 .60 .48 .48 63 4.32 3.60 3.24 2.88
29 .72 .60 .48 .48 64 4.32 3.60 3.36 3.00
30 .72 .60 .48 .48 65 4.32 3.60 3.36 3.00
31 .72 .60 .48 .48 66 4.32 3.72 3.36 3.12
32 .72 .60 .48 .48 67 4.44 3.72 3.48 3.12
33 .84 .72 .60 .60 68 4.44 3.72 3.48 3.12
34 .84 .72 .60 .60 69 4.20 3.60 3.36 3.00
35 .84 .72 .60 .60 70 3.96 3.60 3.12 3.00
* One-twelfth of Cost of Living Increase Commission on the portion of the
increase remaining in force each month after the effective date of the
increase is paid monthly for one year after the effective date of the
increase. Age used is attained age of the insured on the effective
date of the increase in face amount. Std. includes increased face
amounts with premium class "Standard" or "Special"; Nsmkr. includes
increased face amounts with premium class "Nonsmoker" or "Nonsmoker
Special".
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
IV. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE - SERIES I
F. Riders Issued After Basic Contract
Spouse Insurance Benefit Commission per $1,000* of face amount
<TABLE>
Issue Male Female Issue Male Female
Age Std. Nsmkr. Std. Nsmkr. Age Std. Nsmkr. Std. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
18 2.16 1.80 47 9.00 7.08 6.72 5.64
19 2.28 1.80 48 9.84 7.80 7.20 6.12
20 2.28 2.16 1.92 1.68 49 10.56 8.40 7.80 6.60
21 2.28 2.16 1.92 1.80 50 11.28 9.00 8.28 7.08
22 2.40 2.16 2.04 1.80 51 12.00 9.60 8.76 7.44
23 2.40 2.16 2.04 1.80 52 12.60 10.08 9.12 7.80
24 2.52 2.28 2.04 1.92 53 13.32 10.68 9.60 8.16
25 2.52 2.28 2.04 1.92 54 14.04 11.28 10.08 8.64
26 2.64 2.40 2.04 1.92 55 14.76 11.88 10.56 9.00
27 2.64 2.40 2.16 2.04 56 15.60 12.48 11.04 9.48
28 2.76 2.52 2.16 2.04 57 16.32 13.20 11.64 9.84
29 2.88 2.52 2.16 2.04 58 17.28 13.92 12.24 10.32
30 3.00 2.64 2.28 2.16 59 18.12 14.64 12.84 10.92
31 3.12 2.76 2.40 2.28 60 19.08 15.48 13.68 11.64
32 3.24 2.88 2.52 2.28 61 20.04 16.44 14.64 12.60
33 3.36 3.00 2.64 2.40 62 21.12 17.40 15.72 13.68
34 3.48 3.12 2.76 2.52 63 22.20 18.36 16.92 14.88
35 3.60 3.2 2.88 2.64 64 23.28 19.56 18.12 16.08
36 3.84 3.36 3.00 2.76 65 24.48 20.76 19.32 17.28
37 4.08 3.60 3.24 2.88 66 25.80 22.20 20.52 18.60
38 4.32 3.84 3.48 3.12 67 27.36 23.88 21.84 19.92
39 4.68 4.08 3.72 3.24 68 28.80 25.56 23.16 21.24
40 5.04 4.32 3.96 3.48 69 30.24 27.12 24.36 22.56
41 5.52 4.56 4.32 3.72 70 31.44 28.56 25.32 23.64
42 6.00 4.92 4.56 3.96 71 32.52 29.88 26.28 24.72
43 6.48 5.16 4.92 4.20 72 33.48 30.96 27.00 25.56
44 7.08 5.52 5.40 4.44 73 34.20 31.92 27.60 26.28
45 7.68 6.00 5.76 4.80 74 34.56 32.40 27.96 26.76
46 8.40 6.48 6.24 5.16 75 34.68 32.64 28.08 27.00
* One-twelfth of the commission on the portion of the face amount of the
rider remaining in force each month is paid monthly for one year after
the effective date of the rider. Age used is issue age of the spouse.
Std. includes riders issued with premium class "Standard" or
"Special"; Nsmkr. includes riders issued with premium class "Nonsmoker"
or "Nonsmoker Special".
Child Insurance Benefit Commission per $1,000 of face amount
Commission is $2.76 per $1,000. One-twelfth of the commission is paid
monthly.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
V. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE -- SERIES II
A. First Year Commission
First Year Commission is a percentage of all premiums paid and
credited in the first contract year up to but not exceeding the
Target Premium. (Target Premiums are illustrated in Exhibit IA).
Issue Age Commission Rate
--------- ---------------
0-53 52%
54-58 50
59-60 48
61-62 46
63 44
64 43
65 42
66-67 41
68 40
69-70 38
71 36
72 34
73 32
74 30
75 28
B. Service Commission
3% of all premium paid and credited whenever paid and credited.
<PAGE>
<TABLE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
V. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE -- SERIES II
C. Renewal Commission per $1,000* of face amount (initial or increase)
1. Basic Contract - Highest Total Face Amount** Less Than $250,000
Male Female Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.12 0.12 38 0.36 0.36 0.36 0.24
1 0.12 0.12 39 0.36 0.36 0.36 0.24
2 0.12 0.12 40 0.48 0.36 0.36 0.24
3 0.12 0.12 41 0.48 0.36 0.36 0.36
4 0.12 0.12 42 0.48 0.36 0.36 0.36
5 0.12 0.12 43 0.60 0.48 0.48 0.36
6 0.12 0.12 44 0.60 0.48 0.48 0.36
7 0.12 0.12 45 0.60 0.48 0.48 0.36
8 0.12 0.12 46 0.72 0.48 0.48 0.36
9 0.12 0.12 47 0.72 0.48 0.60 0.48
10 0.12 0.12 48 0.84 0.60 0.6 0.48
11 0.12 0.12 49 0.84 0.60 0.60 0.48
12 0.12 0.12 50 0.84 0.60 0.60 0.48
13 0.12 0.12 51 0.96 0.72 0.72 0.60
14 0.12 0.12 52 0.96 0.72 0.72 0.60
15 0.12 0.12 53 1.08 0.84 0.84 0.60
16 0.12 0.12 54 1.20 0.84 0.84 0.72
17 0.12 0.12 55 1.20 0.96 0.84 0.72
18 0.12 0.12 56 1.32 0.96 0.96 0.72
19 0.12 0.12 57 1.44 1.08 0.96 0.84
20 0.12 0.12 0.12 0.12 58 1.44 1.08 1.08 0.84
21 0.24 0.12 0.12 0.12 59 1.56 1.20 1.08 0.96
22 0.24 0.12 0.12 0.12 60 1.68 1.32 1.20 0.96
23 0.24 0.12 0.12 0.12 61 1.80 1.32 1.32 1.08
24 0.24 0.24 0.12 0.12 62 1.80 1.44 1.44 1.20
25 0.24 0.24 0.12 0.12 63 1.92 1.56 1.44 1.32
26 0.24 0.24 0.12 0.12 64 2.04 1.68 1.56 1.32
27 0.24 0.24 0.12 0.12 65 2.16 1.80 1.68 1.44
28 0.24 0.24 0.24 0.12 66 2.28 1.92 1.80 1.56
29 0.24 0.24 0.24 0.12 67 2.40 2.04 1.80 1.68
30 0.24 0.24 0.24 0.12 68 2.52 2.16 1.92 1.80
31 0.24 0.24 0.24 0.24 69 2.64 2.28 2.04 1.80
32 0.24 0.24 0.24 0.24 70 2.76 2.40 2.16 1.92
33 0.24 0.24 0.24 0.24 71 2.88 2.64 2.28 2.04
34 0.24 0.24 0.24 0.24 72 3.12 2.76 2.40 2.16
35 0.36 0.24 0.24 0.24 73 3.24 3.00 2.52 2.28
36 0.36 0.24 0.24 0.24 74 3.48 3.12 2.64 2.40
37 0.36 0.24 0.24 0.24 75 3.60 3.24 2.76 2.64
* One-twelfth of the Renewal Commission on the portion of the initial face
amount or increase in face amount remaining in force each month is paid
monthly during the first four renewal years after issue or requested
increase. Age used is issue age of contract or, for increases in face
amount, attained age of the insured on the effective date of the
increase. Smkr. includes contracts with face amounts/increased face
amounts having premium class "Smoker" or "Smoker Special"; Nsmkr.
includes contracts with face amounts/increased face amounts having
premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
V. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE -- SERIES II
C. Renewal Commission per $1,000* of face amount (initial or increase)
2. Basic Contract - Highest Total Face Amount** More Than $249,999
<TABLE>
Male Female Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 0.12 0.12 46 0.48 0.36 0.36 0.36
17 0.12 0.12 47 0.60 0.36 0.36 0.36
18 0.12 0.12 48 0.60 0.48 0.48 0.36
19 0.12 0.12 49 0.60 0.48 0.48 0.36
20 0.12 0.12 0.12 0.12 50 0.72 0.48 0.48 0.36
21 0.12 0.12 0.12 0.12 51 0.72 0.48 0.48 0.36
22 0.12 0.12 0.12 0.12 52 0.84 0.60 0.60 0.48
23 0.12 0.12 0.12 0.12 53 0.84 0.60 0.60 0.48
24 0.12 0.12 0.12 0.12 54 0.84 0.60 0.60 0.48
25 0.12 0.12 0.12 0.12 55 0.96 0.72 0.72 0.60
26 0.12 0.12 0.12 0.12 56 0.96 0.72 0.72 0.60
27 0.12 0.12 0.12 0.12 57 1.08 0.84 0.72 0.60
28 0.24 0.12 0.12 0.12 58 1.20 0.84 0.84 0.72
29 0.24 0.12 0.12 0.12 59 1.20 0.96 0.84 0.72
30 0.24 0.12 0.12 0.12 60 1.32 0.96 0.96 0.72
31 0.24 0.12 0.12 0.12 61 1.32 1.08 0.96 0.84
32 0.24 0.24 0.12 0.12 62 1.44 1.08 1.08 0.96
33 0.24 0.24 0.12 0.12 63 1.56 1.20 1.20 0.96
34 0.24 0.24 0.12 0.12 64 1.56 1.32 1.20 1.08
35 0.24 0.24 0.24 0.12 65 1.68 1.32 1.32 1.08
36 0.24 0.24 0.24 0.12 66 1.80 1.44 1.32 1.20
37 0.24 0.24 0.24 0.24 67 1.80 1.56 1.44 1.32
38 0.24 0.24 0.24 0.24 68 1.92 1.68 1.56 1.32
39 0.36 0.24 0.24 0.24 69 2.04 1.80 1.56 1.44
40 0.36 0.24 0.24 0.24 70 2.16 1.80 1.68 1.44
41 0.36 0.24 0.24 0.24 71 2.28 2.04 1.80 1.56
42 0.36 0.36 0.36 0.24 72 2.40 2.16 1.80 1.68
43 0.48 0.36 0.36 0.24 73 2.52 2.28 1.92 1.80
44 0.48 0.36 0.36 0.24 74 2.64 2.40 2.04 1.92
45 0.48 0.36 0.36 0.24 75 2.76 2.52 2.16 2.04
* One-twelfth of the Renewal Commission on the portion of the initial
face amount or increase in face amount remaining in force each month is
paid monthly during the first four renewal years after issue or
requested increase. Age used is issue age of contract or, for
increases in face amount, attained age of the insured on the effective
date of the increase. Smkr. includes contracts with face
amounts/increased face amounts having premium class "Smoker" or
"Smoker Special"; Nsmkr. includes contracts with face amounts/increased
face amounts having premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
V. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE -- SERIES II
C. Renewal Commission per $1,000* of face amount (initial or increase)
3. Spouse Insurance Benefit
<TABLE>
Male Female Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 0.12 0.00 46 0.24 0.12 0.12 0.12
17 0.12 0.00 47 0.24 0.12 0.24 0.12
18 0.12 0.00 48 0.36 0.12 0.24 0.12
19 0.12 0.00 49 0.36 0.12 0.24 0.12
20 0.12 0.12 0.00 0.00 50 0.36 0.24 0.24 0.12
21 0.12 0.12 0.00 0.00 51 0.36 0.24 0.24 0.12
22 0.12 0.12 0.00 0.00 52 0.48 0.24 0.24 0.24
23 0.12 0.12 0.00 0.00 53 0.48 0.24 0.36 0.24
24 0.12 0.12 0.12 0.00 54 0.48 0.24 0.36 0.24
25 0.12 0.12 0.12 0.00 55 0.60 0.36 0.36 0.24
26 0.12 0.12 0.12 0.00 56 0.60 0.36 0.36 0.24
27 0.12 0.12 0.12 0.00 57 0.72 0.36 0.36 0.24
28 0.12 0.12 0.12 0.00 58 0.72 0.48 0.36 0.24
29 0.12 0.12 0.12 0.00 59 0.84 0.48 0.48 0.24
30 0.12 0.12 0.12 0.00 60 0.84 0.48 0.48 0.36
31 0.12 0.12 0.12 0.00 61 0.96 0.60 0.48 0.36
32 0.12 0.12 0.12 0.00 62 0.96 0.60 0.60 0.36
33 0.12 0.12 0.12 0.12 63 1.08 0.72 0.60 0.48
34 0.12 0.12 0.12 0.12 64 1.08 0.72 0.60 0.48
35 0.12 0.12 0.12 0.12 65 1.20 0.84 0.72 0.48
36 0.12 0.12 0.12 0.12 66 1.32 0.96 0.72 0.60
37 0.12 0.12 0.12 0.12 67 1.44 1.08 0.84 0.60
38 0.12 0.12 0.12 0.12 68 1.56 1.08 0.84 0.72
39 0.12 0.12 0.12 0.12 69 1.68 1.20 0.96 0.72
40 0.12 0.12 0.12 0.12 70 1.80 1.32 0.96 0.84
41 0.12 0.12 0.12 0.12 71 1.92 1.56 1.08 0.96
42 0.24 0.12 0.12 0.12 72 2.04 1.68 1.20 0.96
43 0.24 0.12 0.12 0.12 73 2.28 1.80 1.32 1.08
44 0.24 0.12 0.12 0.12 74 2.40 2.04 1.32 1.20
45 0.24 0.12 0.12 0.12 75 2.64 2.16 1.44 1.20
* One-twelfth of the Renewal Commission on the portion of the initial
rider face amount or increase in rider face amount remaining in force
each month is paid monthly during the first four renewal years after
issue of the rider or increase of the rider. Age used is issue age of
spouse or, for increases in face amount, attained age of the spouse on
the effective date of the increase. Smkr. includes riders with face
amounts/increased face amounts having premium class "Smoker" or
"Smoker Special"; Nsmkr. includes riders with face amounts/increased
face amounts having premium class "Nonsmoker" or Nonsmoker Special".
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
V. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE -- SERIES II
D. Increase Commission per $1,000* of increase in face amount
1. Basic Contract - Highest Total Face Amount** Less Than $250,000
<TABLE>
Attained Male Female Attained Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 1.56 1.56 38 5.04 4.08 3.96 3.48
1 1.56 1.56 39 5.28 4.20 4.20 3.72
2 1.56 1.56 40 5.64 4.44 4.44 3.84
3 1.56 1.56 41 6.12 4.80 4.80 4.08
4 1.56 1.56 42 6.72 5.16 5.16 4.32
5 1.56 1.56 43 7.20 5.52 5.52 4.44
6 1.56 1.56 44 7.68 5.76 5.76 4.80
7 1.56 1.56 45 8.28 6.12 6.12 4.92
8 1.56 1.56 46 8.88 6.60 6.60 5.28
9 1.56 1.56 47 9.60 6.96 7.08 5.52
10 1.56 1.56 48 10.20 7.44 7.44 5.88
11 1.68 1.56 49 10.80 7.92 7.92 6.24
12 1.68 1.56 50 11.52 8.40 8.28 6.60
13 1.68 1.68 51 12.36 9.00 8.88 7.08
14 1.80 1.68 52 13.20 9.72 9.60 7.56
15 1.80 1.68 53 14.16 10.32 10.20 8.16
16 1.92 1.68 54 14.52 10.68 10.44 8.28
17 2.04 1.68 55 15.36 11.28 11.04 8.76
18 2.16 1.68 56 16.44 12.24 11.76 9.48
19 2.16 1.80 57 17.52 13.20 12.60 10.20
20 2.28 2.04 1.80 1.56 58 18.60 14.04 13.44 10.92
21 2.40 2.16 1.80 1.68 59 18.84 14.40 13.68 11.04
22 2.52 2.16 1.92 1.80 60 19.92 15.24 14.40 11.76
23 2.52 2.28 2.04 1.80 61 20.16 15.72 14.88 12.36
24 2.64 2.40 2.16 1.92 62 21.36 16.80 15.96 13.44
25 2.76 2.40 2.16 2.04 63 21.48 17.16 16.32 13.92
26 2.88 2.52 2.28 2.04 64 22.08 17.76 16.92 14.52
27 3.00 2.64 2.28 2.16 65 22.56 18.36 17.52 15.24
28 3.00 2.64 2.40 2.16 66 23.28 19.32 18.00 15.84
29 3.24 2.76 2.52 2.28 67 24.48 20.76 18.96 16.92
30 3.36 2.88 2.52 2.28 68 25.20 21.60 19.44 17.52
31 3.48 3.00 2.64 2.40 69 25.08 21.72 19.44 17.52
32 3.60 3.00 2.76 2.52 70 26.28 23.04 20.28 18.48
33 3.72 3.24 2.88 2.64 71 26.40 23.40 20.28 18.72
34 3.84 3.24 3.00 2.64 72 26.28 23.64 20.16 18.72
35 3.96 3.36 3.12 2.76 73 26.16 23.52 20.04 18.60
36 4.32 3.60 3.36 3.00 74 25.80 23.40 19.68 18.48
37 4.56 3.84 3.60 3.24 75 25.20 23.04 19.20 18.12
Age used is attained age of the insured on the effective date of the
requested increase in face amount. Smkr. includes increased face amounts
with premium class "Smoker" or "Smoker Special"; Nsmkr. includes increased
face amounts with premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
V. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE -- SERIES II
D. Increase Commission per $1,000* of increase in face amount
2. Basic Contract - Highest Total Face Amount** More Than $249,999
<TABLE>
Attained Male Female Attained Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 1.44 1.20 46 6.84 5.04 5.16 4.08
17 1.56 1.32 47 7.32 5.40 5.40 4.32
18 1.68 1.32 48 7.92 5.76 5.76 4.56
19 1.68 1.32 49 8.40 6.12 6.00 4.80
20 1.80 1.68 1.32 1.20 50 8.88 6.48 6.48 5.04
21 1.92 1.68 1.44 1.20 51 9.60 6.96 6.84 5.40
22 1.92 1.68 1.44 1.32 52 10.20 7.44 7.32 5.88
23 2.04 1.80 1.56 1.44 53 10.92 8.04 7.92 6.24
24 2.16 1.92 1.68 1.44 54 11.16 8.28 8.04 6.48
25 2.16 1.92 1.68 1.56 55 11.88 8.76 8.52 6.84
26 2.28 1.92 1.80 1.68 56 12.72 9.48 9.12 7.32
27 2.28 2.04 1.80 1.68 57 13.56 10.20 9.72 7.92
28 2.40 2.16 1.92 1.68 58 14.40 10.92 10.32 8.40
29 2.52 2.16 1.92 1.80 59 14.62 11.16 10.56 8.52
30 2.52 2.28 2.04 1.80 60 15.36 11.76 11.16 9.12
31 2.64 2.28 2.16 1.92 61 15.60 12.12 11.52 9.60
32 2.76 2.40 2.16 1.92 62 16.44 13.08 12.36 10.32
33 2.88 2.52 2.28 2.04 63 16.68 13.32 12.60 10.80
34 3.00 2.52 2.28 2.16 64 16.92 13.68 12.96 11.16
35 3.12 2.64 2.40 2.16 65 17.40 14.28 13.56 11.76
36 3.36 2.76 2.64 2.28 66 17.88 14.88 13.92 12.24
37 3.60 2.88 2.76 2.52 67 18.84 15.96 14.64 13.08
38 3.84 3.12 3.00 2.64 68 19.56 16.68 15.12 13.56
39 4.08 3.36 3.24 2.88 69 19.08 16.68 14.88 13.44
40 4.32 3.48 3.48 3.00 70 20.04 17.64 15.48 14.16
41 4.80 3.72 3.72 3.12 71 20.52 18.24 15.84 14.52
42 5.16 3.96 3.96 3.36 72 20.16 18.00 15.48 14.28
43 5.52 4.20 4.20 3.48 73 20.04 18.12 15.36 14.28
44 6.00 4.44 4.44 3.72 74 19.80 18.00 15.12 14.16
45 6.36 4.80 4.80 3.84 75 19.32 17.76 14.76 13.92
Age used is attained age of the insured on the effective date of the
requested increase in face amount. Smkr. includes increased face amounts
with premium class "Smoker" or "Smoker Special"; Nsmkr. includes increased
face amounts with premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
V. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE -- SERIES II
E. Cost of Living Increase Commission per $1,000* of increase in face amount
1. Highest Total Face Amount** Less Than $250,000 (Band 1)
<TABLE>
Attained Male Female Attained Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.48 0.48 33 1.08 0.96 0.84 0.72
1 0.48 0.48 34 1.08 0.96 0.84 0.72
2 0.48 0.48 35 1.20 0.96 0.84 0.84
3 0.48 0.48 36 1.20 1.08 0.96 0.84
4 0.48 0.48 37 1.32 1.08 1.08 0.96
5 0.48 0.48 38 1.44 1.20 1.08 0.96
6 0.48 0.48 39 1.56 1.20 1.20 1.08
7 0.48 0.48 40 1.56 1.32 1.32 1.08
8 0.48 0.48 41 1.80 1.44 1.44 1.20
9 0.48 0.48 42 1.92 1.44 1.44 1.20
10 0.48 0.48 43 2.04 1.56 1.56 1.32
11 0.48 0.48 44 2.28 1.68 1.68 1.32
12 0.48 0.48 45 2.40 1.80 1.80 1.44
13 0.48 0.48 46 2.52 1.92 1.92 1.56
14 0.48 0.48 47 2.76 2.04 2.04 1.56
15 0.48 0.48 48 2.88 2.16 2.16 1.68
16 0.60 0.48 49 3.12 2.28 2.28 1.80
17 0.60 0.48 50 3.36 2.40 2.40 1.92
18 0.60 0.48 51 3.60 2.64 2.52 2.04
19 0.60 0.48 52 3.84 2.76 2.76 2.16
20 0.72 0.60 0.48 0.48 53 4.08 3.00 2.88 2.28
21 0.72 0.60 0.48 0.48 54 4.20 3.12 3.00 2.40
22 0.72 0.60 0.60 0.48 55 4.44 3.24 3.12 2.52
23 0.72 0.72 0.60 0.48 56 4.68 3.48 3.36 2.76
24 0.72 0.72 0.60 0.60 57 5.04 3.84 3.60 2.88
25 0.84 0.72 0.60 0.60 58 5.40 4.08 3.84 3.12
26 0.84 0.72 0.60 0.60 59 5.40 4.20 3.96 3.24
27 0.84 0.72 0.72 0.60 60 5.76 4.44 4.20 3.36
28 0.84 0.72 0.72 0.60 61 5.88 4.56 4.32 3.60
29 0.96 0.84 0.72 0.60 62 6.12 4.80 4.56 3.84
30 0.96 0.84 0.72 0.72 63 6.24 4.92 4.68 3.96
31 0.96 0.84 0.72 0.72 64 6.36 5.16 4.92 4.20
32 1.08 0.84 0.84 0.72
Age used is attained age of the insured on the effective date of the
increase in face amount. Smkr. includes increased face amounts with premium
class "Smoker" or "Smoker Special"; Nsmkr. includes increased face amounts
with premium class "Nonsmoker" or "Nonsmoker Special.
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
Please note: A COLA increase alone will not trigger a change to the next
higher band.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
V. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE -- SERIES II
E. Cost of Living Increase Commission per $1,000* of increase in face amount
2. Highest Total Face Amount** More Than $249,999 (Band 2)
<TABLE>
Attained Male Female Attained Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 0.48 0.36 41 1.32 1.08 1.08 0.84
17 0.48 0.36 42 1.44 1.20 1.20 0.96
18 0.48 0.36 43 1.56 1.20 1.20 0.96
19 0.48 0.36 44 1.68 1.32 1.32 1.08
20 0.48 0.48 0.36 0.36 45 1.80 1.32 1.44 1.08
21 0.48 0.48 0.36 0.36 46 1.92 1.44 1.44 1.20
22 0.60 0.48 0.48 0.36 47 2.16 1.56 1.56 1.20
23 0.60 0.48 0.48 0.36 48 2.28 1.68 1.68 1.32
24 0.60 0.48 0.48 0.48 49 2.40 1.80 1.80 1.44
25 0.60 0.48 0.48 0.48 50 2.52 1.92 1.80 1.44
26 0.60 0.60 0.48 0.48 51 2.76 2.04 1.92 1.56
27 0.72 0.60 0.48 0.48 52 3.00 2.16 2.16 1.68
28 0.72 0.60 0.48 0.48 53 3.12 2.28 2.28 1.80
29 0.72 0.60 0.60 0.48 54 3.24 2.40 2.28 1.80
30 0.72 0.60 0.60 0.48 55 3.36 2.52 2.40 1.92
31 0.72 0.72 0.60 0.48 56 3.60 2.76 2.64 2.16
32 0.84 0.72 0.60 0.60 57 3.84 2.88 2.76 2.28
33 0.84 0.72 0.60 0.60 58 4.08 3.12 3.00 2.40
34 0.84 0.72 0.72 0.60 59 4.20 3.24 3.00 2.40
35 0.84 0.72 0.72 0.60 60 4.44 3.36 3.24 2.64
36 0.96 0.84 0.72 0.72 61 4.56 3.48 3.36 2.76
37 1.08 0.84 0.84 0.72 62 4.80 3.72 3.60 3.00
38 1.08 0.84 0.84 0.72 63 4.80 3.84 3.60 3.12
39 1.20 0.96 0.96 0.84 64 4.92 3.96 3.72 3.24
40 1.20 0.96 0.96 0.84
Age used is attained age of the insured on the effective date of the
increase in face amount. Smkr. includes increased face amounts with premium
class "Smoker" or "Smoker Special"; Nsmkr. includes increased face amounts
with premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
Please note: A COLA increase alone will not trigger a change to the next
higher band.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
V. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE -- SERIES II
F. Riders Increased/Issued After Basic Contract
Spouse Insurance Benefit Commission per $1,000* of face amount
<TABLE>
Male Female Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 0.96 0.48 46 3.36 1.92 2.28 1.44
17 0.96 0.48 47 3.60 1.92 2.40 1.68
18 0.96 0.48 48 3.96 2.16 2.52 1.68
19 0.96 0.48 49 4.32 2.16 2.64 1.80
20 1.08 0.84 0.60 0.48 50 4.68 2.40 2.88 1.92
21 1.08 0.84 0.60 0.48 51 5.16 2.52 3.12 2.28
22 1.08 0.84 0.60 0.48 52 5.76 3.00 3.48 2.40
23 1.20 0.84 0.60 0.48 53 6.36 3.36 3.96 2.64
24 1.20 0.84 0.84 0.60 54 6.72 3.60 4.20 2.76
25 1.20 0.84 0.84 0.60 55 7.32 3.96 4.44 3.00
26 1.20 0.84 0.84 0.60 56 7.92 4.44 4.80 3.12
27 1.20 0.84 0.84 0.60 57 8.52 4.92 5.04 3.24
28 1.20 0.84 0.84 0.60 58 9.24 5.28 5.28 3.36
29 1.32 0.96 0.84 0.60 59 9.48 5.52 5.16 3.48
30 1.44 0.96 0.96 0.60 60 10.32 6.24 5.52 3.60
31 1.44 0.96 0.96 0.60 61 10.68 6.72 5.88 3.84
32 1.56 0.96 0.96 0.72 62 11.40 7.32 6.36 4.32
33 1.56 0.96 1.08 0.84 63 11.64 7.68 6.48 4.68
34 1.56 0.96 1.20 0.96 64 12.24 8.16 6.96 5.04
35 1.68 1.08 1.20 0.96 65 12.84 8.76 7.32 5.40
36 1.68 1.08 1.32 0.96 66 13.56 9.48 7.68 5.88
37 1.80 1.08 1.44 1.08 67 14.52 10.44 8.28 6.48
38 1.92 1.20 1.56 1.20 68 15.36 11.28 8.64 6.96
39 2.04 1.20 1.56 1.20 69 15.72 11.76 8.88 7.20
40 2.16 1.32 1.56 1.20 70 17.04 13.08 9.60 7.92
41 2.28 1.32 1.68 1.20 71 17.52 13.56 9.84 8.16
42 2.40 1.44 1.68 1.20 72 17.76 14.04 9.96 8.28
43 2.64 1.56 1.80 1.20 73 18.00 14.52 10.08 8.52
44 2.88 1.68 1.92 1.20 74 18.36 14.88 10.20 8.64
45 3.12 1.68 2.04 1.32 75 18.48 15.36 10.20 8.76
Age used is issue age of the spouse or, for increases in face amount,
attained age of the spouse on the effective date of the increase.
Smkr. includes riders with face amounts/increased face amounts having
premium class "Smoker" or "Smoker Special"; Nsmkr. includes riders with
face amounts/increased face amounts having premium class "Nonsmoker" or
"Nonsmoker Special".
Child Insurance Benefit Commission per $1,000 of face amount
Commission is $3.00 per $1,000.
One-twelfth of the commission is paid monthly.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE - SERIES III, IV AND
JUVENILE-ISSUE
A. First Year Commission
First Year Commission is a percentage of all premium paid and
credited in the first contract year up to but not exceeding the
Target Premium. (Target Premiums are illustrated in Exhibit IA).
Issue Age Commission Rate
--------- ---------------
0-53 52 %
54-58 50
59-60 48
61-62 46
63 44
64 43
65 42
66-67 41
68 40
69-70 38
71 36
72 34
73 32
74 30
75 28
76 26
77 24.5
78 23
79 21.5
80 20
For contracts issued on or after June 1, 1990, an additional First
Year Commission is 3% of all premium paid and credited whenever
paid and credited during the first year.
B. Additional commission based on premium
1. For contracts issued on or after June 1, 1990, a Renewal
Commission based on premium is paid equal to 3% of all premium
paid and credited whenever paid and credited in contract
year 2 or later.
2. For contracts issued before June 1, 1990, a Service Commission
is paid equal to 3% of all premium paid and credited whenever
paid and credited.
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III, IV AND JUVENILE-ISSUE
C. Renewal Commission per $1,000* of face amount (initial or increase)
1. Basic Contract - Highest Total Face Amount** of
Series III and IV Less Than $250,000
(No limit on face amount of Juvenile-Issue contract)
<TABLE>
Male Female Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.12 0.12 41 0.48 0.36 0.36 0.36
1 0.12 0.12 42 0.48 0.36 0.36 0.36
2 0.12 0.12 43 0.60 0.48 0.48 0.36
3 0.12 0.12 44 0.60 0.48 0.48 0.36
4 0.12 0.12 45 0.60 0.48 0.48 0.36
5 0.12 0.12 46 0.72 0.48 0.48 0.36
6 0.12 0.12 47 0.72 0.48 0.60 0.48
7 0.12 0.12 48 0.72 0.60 0.60 0.48
8 0.12 0.12 49 0.84 0.60 0.60 0.48
9 0.12 0.12 50 0.84 0.60 0.60 0.48
10 0.12 0.12 51 0.96 0.72 0.72 0.60
11 0.12 0.12 52 0.96 0.72 0.72 0.60
12 0.12 0.12 53 1.08 0.72 0.84 0.60
13 0.12 0.12 54 1.20 0.84 0.84 0.72
14 0.12 0.12 55 1.20 0.84 0.84 0.72
15 0.12 0.12 56 1.32 0.96 0.96 0.72
16 0.12 0.12 57 1.44 0.96 0.96 0.84
17 0.12 0.12 58 1.44 1.08 1.08 0.84
18 0.12 0.12 59 1.56 1.20 1.08 0.96
19 0.12 0.12 60 1.68 1.32 1.20 0.96
20 0.12 0.12 0.12 0.12 61 1.80 1.32 2.04 1.08
21 0.24 0.12 0.12 0.12 62 1.80 1.44 1.44 1.20
22 0.24 0.12 0.12 0.12 63 1.92 1.56 1.44 1.32
23 0.24 0.12 0.12 0.12 64 2.04 1.68 1.56 1.32
24 0.24 0.24 0.12 0.12 65 2.16 1.80 1.68 1.44
25 0.24 0.24 0.12 0.12 66 2.28 1.92 1.80 1.56
26 0.24 0.24 0.12 0.12 67 2.40 2.04 1.80 1.68
27 0.24 0.24 0.12 0.12 68 2.52 2.16 1.92 1.80
28 0.24 0.24 0.24 0.12 69 2.64 2.28 2.04 1.80
29 0.24 0.24 0.24 0.12 70 2.76 2.40 2.16 1.92
30 0.24 0.24 0.24 0.12 71 2.88 2.64 2.28 2.04
31 0.24 0.24 0.24 0.24 72 3.12 2.76 2.40 2.16
32 0.24 0.24 0.24 0.24 73 3.24 3.00 2.52 2.28
33 0.24 0.24 0.24 0.24 74 3.48 3.12 2.64 2.40
34 0.24 0.24 0.24 0.24 75 3.60 3.24 2.76 2.64
35 0.36 0.24 0.24 0.24 76 3.72 3.48 2.88 2.76
36 0.36 0.24 0.24 0.24 77 3.96 3.60 3.00 2.88
37 0.36 0.24 0.24 0.24 78 4.08 3.84 3.12 3.00
38 0.36 0.36 0.36 0.24 79 4.32 3.96 3.24 3.12
39 0.36 0.36 0.36 0.24 80 4.44 4.20 3.36 3.24
40 0.48 0.36 0.36 0.24
* One-twelfth of the Renewal Commission on the portion of the initial face
amount or increase in face amount remaining in force each month is paid
monthly during the first four renewal years after issue or requested
increase. Age used is issue age of contract or, for increases in face
amount, attained age of the insured on the effective date of the
increase. Smkr. includes contracts with face amounts/increased face
amounts having premium class "Smoker" or "Smoker Special"; Nsmkr.
includes contracts with face amounts/increased face amounts having
premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III AND IV
C. Renewal Commission per $1,000* of face amount (initial or increase)
2. Basic Contract - Highest Total Face Amount**
More Than $249,999 and Less Than $500,000
<TABLE>
Male Female Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 0.12 0.12 0.12 0.12 51 0.72 0.48 0.48 0.36
21 0.12 0.12 0.12 0.12 52 0.72 0.60 0.60 0.48
22 0.12 0.12 0.12 0.12 53 0.84 0.60 0.60 0.48
23 0.12 0.12 0.12 0.12 54 0.84 0.60 0.60 0.48
24 0.12 0.12 0.12 0.12 55 0.96 0.72 0.72 0.60
25 0.12 0.12 0.12 0.12 56 0.96 0.72 0.72 0.60
26 0.12 0.12 0.12 0.12 57 1.08 0.84 0.72 0.60
27 0.12 0.12 0.12 0.12 58 1.08 0.84 0.84 0.72
28 0.24 0.12 0.12 0.12 59 1.20 0.96 0.84 0.72
29 0.24 0.12 0.12 0.12 60 1.32 0.96 0.96 0.72
30 0.24 0.12 0.12 0.12 61 1.32 1.08 0.96 0.84
31 0.24 0.12 0.12 0.12 62 1.44 1.08 1.08 0.96
32 0.24 0.24 0.12 0.12 63 1.56 1.20 1.20 0.96
33 0.24 0.24 0.12 0.12 64 1.56 1.32 1.20 1.08
34 0.24 0.24 0.12 0.12 65 1.68 1.32 1.32 1.08
35 0.24 0.24 0.24 0.12 66 1.80 1.44 1.32 1.20
36 0.24 0.24 0.24 0.12 67 1.80 1.56 1.44 1.32
37 0.24 0.24 0.24 0.24 68 1.92 1.68 1.56 1.32
38 0.24 0.24 0.24 0.24 69 2.04 1.80 1.56 1.44
39 0.36 0.24 0.24 0.24 70 2.16 1.80 1.68 1.44
40 0.36 0.24 0.24 0.24 71 2.28 2.04 1.80 1.56
41 0.36 0.24 0.24 0.24 72 2.40 2.16 1.80 1.68
42 0.36 0.36 0.36 0.24 73 2.52 2.28 1.92 1.80
43 0.48 0.36 0.36 0.24 74 2.64 2.40 2.04 1.92
44 0.48 0.36 0.36 0.24 75 2.76 2.52 2.16 2.04
45 0.48 0.36 0.36 0.24 76 2.88 2.64 2.16 2.04
46 0.48 0.36 0.36 0.36 77 3.00 2.76 2.28 2.16
47 0.60 0.36 0.36 0.36 78 3.12 3.00 2.40 2.28
48 0.60 0.48 0.48 0.36 79 3.24 3.12 2.52 2.40
49 0.60 0.48 0.48 0.36 80 3.48 3.24 2.64 2.52
50 0.72 0.48 0.48 0.36
* One-twelfth of the Renewal Commission on the portion of the initial face
amount or increase in face amount remaining in force each month is paid
monthly during the first four renewal years after issue or requested
increase. Age used is issue age of contract or, for increases in face
amount, attained age of the insured on the effective date of the
increase. Smkr. includes contracts with face amounts/increased face
amounts having premium class "Smoker" or "Smoker Special"; Nsmkr.
includes contracts with face amounts/increased face amounts having
premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III AND IV
C. Renewal Commission per $1,000* of face amount (initial or increase)
3. Basic Contract - Highest Total Face Amount** More Than $499,999
<TABLE>
Male Female Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 0.12 0.12 0.12 0.12 51 0.48 0.36 0.36 0.24
21 0.12 0.12 0.12 0.12 52 0.48 0.36 0.36 0.36
22 0.12 0.12 0.12 0.12 53 0.60 0.36 0.36 0.36
23 0.12 0.12 0.12 0.12 54 0.60 0.48 0.48 0.36
24 0.12 0.12 0.12 0.12 55 0.60 0.48 0.48 0.36
25 0.12 0.12 0.12 0.12 56 0.72 0.48 0.48 0.36
26 0.12 0.12 0.12 0.12 57 0.72 0.60 0.48 0.48
27 0.12 0.12 0.12 0.12 58 0.84 0.60 0.60 0.48
28 0.12 0.12 0.12 0.12 59 0.84 0.60 0.60 0.48
29 0.12 0.12 0.12 0.12 60 0.96 0.72 0.60 0.48
30 0.12 0.12 0.12 0.12 61 0.96 0.72 0.72 0.60
31 0.12 0.12 0.12 0.12 62 0.96 0.84 0.72 0.60
32 0.12 0.12 0.12 0.12 63 1.08 0.84 0.84 0.72
33 0.12 0.12 0.12 0.12 64 1.08 0.96 0.84 0.72
34 0.12 0.12 0.12 0.12 65 1.20 0.96 0.96 0.84
35 0.12 0.12 0.12 0.12 66 1.20 1.08 0.96 0.84
36 0.12 0.12 0.12 0.12 67 1.32 1.08 0.96 0.96
37 0.24 0.12 0.12 0.12 68 1.32 1.20 1.08 0.96
38 0.24 0.12 0.12 0.12 69 1.44 1.20 1.08 0.96
39 0.24 0.12 0.12 0.12 70 1.56 1.32 1.20 1.08
40 0.24 0.24 0.12 0.12 71 1.68 1.44 1.20 1.20
41 0.24 0.24 0.24 0.12 72 1.80 1.56 1.32 1.20
42 0.24 0.24 0.24 0.12 73 1.92 1.68 1.44 1.32
43 0.24 0.24 0.24 0.24 74 2.04 1.80 1.56 1.44
44 0.36 0.24 0.24 0.24 75 2.16 2.04 1.68 1.56
45 0.36 0.24 0.24 0.24 76 2.28 2.16 1.80 1.68
46 0.36 0.24 0.24 0.24 77 2.40 2.28 1.92 1.80
47 0.36 0.24 0.24 0.24 78 2.64 2.40 1.92 1.92
48 0.36 0.24 0.24 0.24 79 2.76 2.52 2.04 1.92
49 0.48 0.36 0.36 0.24 80 2.88 2.64 2.16 2.04
50 0.48 0.36 0.36 0.24
* One-twelfth of the Renewal Commission on the portion of the initial face
amount or increase in face amount remaining in force each month is paid
monthly during the first four renewal years after issue or requested
increase. Age used is issue age of contract or, for increases in face
amount, attained age of the insured on the effective date of the
increase. Smkr. includes contracts with face amounts/increased face
amounts having premium class "Smoker" or "Smoker Special"; Nsmkr.
includes contracts with face amounts/increased face amounts having
premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III, IV AND JUVENILE-ISSUE
C. Renewal Commission per $1,000* of face amount (initial or increase)
4. Spouse Insurance Benefit
<TABLE>
Male Female Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 0.00 0.00 49 0.24 0.12 0.12 0.12
17 0.00 0.00 50 0.36 0.24 0.24 0.12
18 0.12 0.00 51 0.36 0.24 0.24 0.12
19 0.12 0.00 52 0.36 0.24 0.24 0.12
20 0.12 0.00 0.00 0.00 53 0.36 0.24 0.24 0.12
21 0.12 0.00 0.00 0.00 54 0.48 0.24 0.24 0.12
22 0.12 0.00 0.00 0.00 55 0.48 0.24 0.24 0.12
23 0.12 0.00 0.00 0.00 56 0.48 0.24 0.24 0.24
24 0.12 0.00 0.00 0.00 57 0.60 0.36 0.24 0.24
25 0.12 0.00 0.00 0.00 58 0.60 0.36 0.36 0.24
26 0.12 0.00 0.00 0.00 59 0.60 0.36 0.36 0.24
27 0.12 0.00 0.00 0.00 60 0.72 0.36 0.36 0.24
28 0.12 0.00 0.00 0.00 61 0.72 0.48 0.36 0.24
29 0.12 0.00 0.00 0.00 62 0.84 0.48 0.36 0.24
30 0.12 0.00 0.12 0.00 63 0.84 0.48 0.36 0.24
31 0.12 0.00 0.12 0.00 64 0.84 0.48 0.48 0.36
32 0.12 0.12 0.12 0.00 65 0.96 0.60 0.48 0.36
33 0.12 0.12 0.12 0.00 66 0.96 0.60 0.48 0.36
34 0.12 0.12 0.12 0.00 67 1.08 0.72 0.48 0.36
35 0.12 0.12 0.12 0.00 68 1.20 0.72 0.60 0.36
36 0.12 0.12 0.12 0.00 69 1.32 0.84 0.60 0.48
37 0.12 0.12 0.12 0.12 70 1.44 0.96 0.72 0.48
38 0.12 0.12 0.12 0.12 71 1.56 1.08 0.72 0.60
39 0.12 0.12 0.12 0.12 72 1.68 1.20 0.84 0.60
40 0.12 0.12 0.12 0.12 73 1.80 1.32 0.84 0.72
41 0.12 0.12 0.12 0.12 74 1.92 1.44 0.96 0.72
42 0.24 0.12 0.12 0.12 75 2.16 1.56 0.96 0.84
43 0.24 0.12 0.12 0.12 76 2.52 1.80 1.20 0.84
44 0.24 0.12 0.12 0.12 77 2.76 1.92 1.44 0.96
45 0.24 0.12 0.12 0.12 78 3.00 2.16 1.56 1.08
46 0.24 0.12 0.12 0.12 79 3.24 2.28 1.68 1.20
47 0.24 0.12 0.12 0.12 80 3.48 2.52 1.92 1.44
48 0.24 0.12 0.12 0.12
* The twelfth of the Renewal Commission on the portion of the rider face
amount or increase in rider face amount remaining in force each month is
paid monthly during the first four renewal years after issue of the rider
or increase of the rider. Age used is issue age of spouse or, for
increases in face amount, attained age of the spouse on the effective
date of the increase. Smkr. includes riders with face amounts/increased
face amounts having premium class "Smoker" or "Smoker Special"; includes
riders with face amounts/increased face amounts having premium class
"Nonsmoker" or "Nonsmoker Special".
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III, IV AND JUVENILE-ISSUE
D. Increase Commission per $1,000* of increase in face amount
1. Basic Contract - Highest Total Face Amount** of
Series III and IV Less Than $250,000
(No limit on face amount of Juvenile-Issue contract)
<TABLE>
Attained Male Female Attained Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 1.32 1.32 41 6.12 4.80 4.80 4.08
1 1.32 1.32 42 6.60 5.16 5.16 4.32
2 1.32 1.32 43 7.08 5.52 5.52 4.44
3 1.32 1.32 44 7.68 5.76 5.76 4.80
4 1.32 1.32 45 8.28 6.12 6.12 4.92
5 1.32 1.32 46 8.88 6.60 6.60 5.28
6. 1.32 1.32 47 9.48 6.96 7.08 5.52
7. 1.32 1.32 48 9.96 7.44 7.44 5.88
8 1.32 1.32 49 10.56 7.92 7.92 6.24
9 1.32 1.32 50 11.28 8.40 8.28 6.60
10 1.32 1.32 51 12.12 8.88 8.88 7.08
11 1.32 1.32 52 12.96 9.36 9.60 7.56
12 1.44 1.32 53 13.92 9.96 10.20 8.16
13 1.44 1.32 54 14.52 10.20 10.44 8.28
14 1.68 1.44 55 15.36 10.92 11.04 8.76
15 1.80 1.44 56 16.44 11.76 11.76 9.48
16 1.92 1.56 57 17.52 12.60 12.60 10.20
17 2.04 1.68 58 18.60 13.56 13.44 10.92
18 2.16 1.68 59 18.84 14.04 13.68 11.04
19 2.16 1.80 60 19.92 15.24 14.40 11.76
20 2.28 2.04 1.80 1.56 61 20.16 15.72 14.88 12.36
21 2.40 2.16 1.80 1.68 62 21.36 16.80 15.96 13.44
22 2.52 2.16 1.92 1.80 63 21.48 17.16 16.32 13.92
23 2.52 2.28 2.04 1.80 64 22.08 17.76 16.92 14.52
24 2.64 2.40 2.16 1.92 65 22.56 18.36 17.52 15.24
25 2.76 2.40 2.16 2.04 66 23.28 19.32 18.00 15.84
26 2.88 2.52 2.28 2.04 67 24.48 20.76 18.96 16.92
27 3.00 2.64 2.28 2.16 68 25.20 21.60 19.44 17.52
28 3.00 2.64 2.40 2.16 69 25.08 21.72 19.44 17.52
29 3.24 2.76 2.52 2.28 70 26.28 23.04 20.28 18.48
30 3.36 2.88 2.52 2.28 71 26.40 23.40 20.28 18.72
31 3.48 3.00 2.64 2.40 72 26.28 23.64 20.16 18.72
32 3.60 3.00 2.76 2.52 73 26.16 23.52 20.04 18.60
33 3.72 3.24 2.88 2.64 74 25.80 23.40 19.68 18.48
34 3.84 3.24 3.00 2.64 75 25.20 23.04 19.20 18.12
35 3.96 3.36 3.12 2.76 76 24.48 22.56 18.60 17.64
36 4.32 3.60 3.36 3.00 77 24.12 22.32 18.24 17.40
37 4.56 3.84 3.60 3.24 78 23.64 21.96 17.88 17.04
38 5.04 4.08 3.96 3.48 79 22.92 21.48 17.28 16.56
39 5.28 4.20 4.20 3.72 80 22.20 20.88 16.68 16.08
40 5.64 4.44 4.44 3.84
Age used is attained age of the insured on the effective date of the
requested increase in face amount. Smkr. includes increased face amounts
with premium class "Smoker" or "Smoker Special"; Nsmkr. includes increased
face amounts with premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III AND IV
D. Increase Commission per $1,000* of increase in face amount
2. Basic Contract - Highest Total Face Amount**
More Than $249,999 and Less Than $500,000
<TABLE>
Attained Male Female Attained Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 1.80 1.68 1.32 1.20 51 9.36 6.96 6.84 5.40
21 1.92 1.68 1.44 1.20 52 10.08 7.32 7.32 5.88
22 1.92 1.68 1.44 1.32 53 10.80 7.68 7.92 6.24
23 2.04 1.80 1.56 1.44 54 11.16 7.92 8.04 6.48
24 2.16 1.92 1.68 1.44 55 11.88 8.52 8.52 6.84
25 2.16 1.92 1.68 1.56 56 12.72 9.12 9.12 7.32
26 2.28 1.92 1.80 1.68 57 13.56 10.20 9.72 7.92
27 2.28 2.04 1.80 1.68 58 14.40 10.92 10.32 8.40
28 2.40 2.16 1.92 1.68 59 14.52 11.04 10.56 8.52
29 2.52 2.16 1.92 1.80 60 15.36 11.76 11.16 9.12
30 2.52 2.28 2.04 1.80 61 15.60 12.12 11.52 9.60
31 2.64 2.28 2.16 1.92 62 16.44 13.08 12.36 10.32
32 2.76 2.40 2.16 1.92 63 16.68 13.32 12.60 10.80
33 2.88 2.52 2.28 2.04 64 16.92 13.68 12.96 11.16
34 3.00 2.52 2.28 2.16 65 17.40 14.28 13.56 11.76
35 3.12 2.64 2.40 2.16 66 17.88 14.88 13.92 12.24
36 3.36 2.76 2.64 2.28 67 18.84 15.96 14.64 13.08
37 3.60 2.88 2.76 2.52 68 19.56 16.68 15.12 13.56
38 3.84 3.12 3.00 2.64 69 19.08 16.68 14.88 13.44
39 4.08 3.36 3.24 2.88 70 20.04 17.64 15.48 14.16
40 4.32 3.48 3.48 3.00 71 20.52 18.24 15.84 14.52
41 4.80 3.72 3.72 3.12 72 20.16 18.00 15.48 14.28
42 5.16 3.96 3.96 3.36 73 20.04 18.12 15.36 14.28
43 5.52 4.20 4.20 3.48 74 19.80 18.00 15.12 14.16
44 6.00 4.44 4.44 3.72 75 19.32 17.76 14.76 13.92
45 6.36 4.80 4.80 3.84 76 18.84 17.40 14.28 13.56
46 6.84 5.04 5.16 4.08 77 18.60 17.16 14.04 13.44
47 7.20 5.40 5.40 4.32 78 18.24 16.92 13.80 13.20
48 7.68 5.76 5.76 4.56 79 17.64 16.56 13.44 12.84
49 8.28 6.12 6.00 4.80 80 17.16 16.08 12.96 12.48
50 8.76 6.48 5.04
Age used is attained age of the insured on the effective date of the
requested increase in face amount. Smkr. includes increased face amounts
with premium class "Smoker" or "Smoker Special"; Nsmkr. includes increased
face amounts with premium class "Nonsmoker" or "Nonsmoker" or
"Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III AND IV
D. Increase Commission per $1,000* of increase in face amount
3. Basic Contract - Highest Total Face Amount** More Than $499,999
<TABLE>
Attained Male Female Attained Male Female
Age Smkr Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 1.32 1.08 0.96 0.84 51 6.36 4.68 4.68 3.72
21 1.32 1.20 0.96 0.84 52 6.84 5.04 5.04 3.96
22 1.32 1.20 1.08 0.96 53 7.32 5.28 5.28 4.20
23 1.32 1.20 1.08 0.96 54 7.68 5.52 5.52 4.44
24 1.44 1.32 1.20 1.08 55 8.16 5.88 5.88 4.68
25 1.44 1.32 1.20 1.08 56 8.76 6.36 6.24 5.04
26 1.44 1.32 1.20 1.08 57 9.36 6.84 6.72 5.40
27 1.56 1.44 1.32 1.20 58 10.08 7.44 7.20 5.76
28 1.68 1.44 1.32 1.20 59 10.20 7.68 7.32 5.88
29 1.68 1.44 1.32 1.20 60 10.80 8.28 7.80 6.36
30 1.80 1.44 1.32 1.20 61 11.04 8.52 8.04 6.72
31 1.80 1.56 1.44 1.32 62 11.64 9.12 8.64 7.32
32 1.92 1.68 1.44 1.32 63 11.64 9.24 8.88 7.56
33 1.92 1.68 1.44 1.32 64 12.00 9.72 9.24 8.04
34 2.04 1.68 1.56 1.44 65 12.36 10.08 9.60 8.40
35 2.16 1.80 1.68 1.44 66 12.72 10.56 9.84 8.76
36 2.28 1.92 1.80 1.68 67 13.32 11.16 10.32 9.24
37 2.40 2.04 1.92 1.80 68 13.68 11.76 10.56 9.60
38 2.52 2.16 2.04 1.92 69 13.68 11.88 10.68 9.60
39 2.76 2.28 2.16 2.04 70 14.52 12.72 11.16 10.32
40 2.88 2.40 2.28 2.04 71 14.64 13.08 11.28 10.44
41 3.24 2.52 2.52 2.16 72 14.76 13.32 11.40 10.56
42 3.48 2.64 2.64 2.28 73 15.00 13.56 11.52 10.68
43 3.72 2.88 2.88 2.40 74 15.12 13.92 11.64 10.92
44 4.08 3.00 3.12 2.52 75 15.36 14.04 11.64 11.04
45 4.32 3.24 3.24 2.52 76 15.12 13.92 11.52 10.80
46 4.56 3.48 3.48 2.76 77 15.00 13.92 11.40 10.80
47 4.92 3.60 3.72 2.88 78 14.88 13.80 11.28 10.68
48 5.16 3.84 3.84 3.00 79 14.64 13.68 11.04 10.56
49 5.52 4.08 4.08 3.24 80 14.28 13.32 10.80 10.32
50 5.88 4.32 4.32 3.48
Age used is attained age of the insured on the effective date of the
requested increase in face amount. Smkr. includes increased face amounts
with premium class "Smoker" or "Smoker Special"; Nsmkr. includes increased
face amounts with premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III, IV AND JUVENILE-ISSUE
E. Cost of Living Increase Commission per $1,000* of increase in face amount
1. Highest Total Face Amount** of
Series III and IV Less Than $250,000 (Band 1)
(No limit on face amount of Juvenile-Issue contract)
<TABLE>
Attained Male Female Attained Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.36 0.36 33 1.08 0.96 0.84 0.72
1 0.36 0.36 34 1.08 0.96 0.84 0.72
2 0.36 0.36 35 1.20 0.96 0.96 0.84
3 0.36 0.36 36 1.20 1.08 0.96 0.84
4 0.36 0.36 37 1.32 1.08 1.08 0.96
5 0.36 0.36 38 1.44 1.20 1.08 0.96
6 0.36 0.36 39 1.56 1.20 1.20 1.08
7 0.36 0.36 40 1.68 1.32 1.32 1.08
8 0.36 0.36 41 1.80 1.44 1.44 1.20
9 0.36 0.36 42 1.92 1.44 1.44 1.20
10 0.36 0.36 43 2.04 1.56 1.56 1.32
11 0.36 0.36 44 2.28 1.68 1.68 1.32
12 0.36 0.36 45 2.40 1.80 1.80 1.44
13 0.48 0.36 46 2.52 1.92 1.92 1.56
14 0.48 0.36 47 2.76 2.04 2.04 1.56
15 0.48 0.48 48 2.88 2.16 2.16 1.68
16 0.60 0.48 49 3.00 2.28 2.28 1.80
17 0.60 0.48 50 3.24 2.40 2.40 1.92
18 0.60 0.48 51 3.48 2.52 2.52 2.04
19 0.60 0.48 52 3.72 2.76 2.76 2.16
20 0.72 0.60 0.48 0.48 53 3.96 2.88 2.88 2.40
21 0.72 0.60 0.48 0.48 54 4.20 3.00 3.00 2.40
22 0.72 0.60 0.60 0.48 55 4.44 3.12 3.12 2.52
23 0.72 0.72 0.60 0.48 56 4.68 3.36 3.36 2.76
24 0.72 0.72 0.60 0.60 57 5.04 3.60 3.60 2.88
25 0.84 0.72 0.60 0.60 58 5.40 3.96 3.84 3.12
26 0.84 0.72 0.60 0.60 59 5.40 4.08 3.96 3.24
27 0.84 0.72 0.72 0.60 60 5.76 4.44 4.20 3.36
28 0.84 0.72 0.72 0.60 61 5.88 4.56 4.32 3.60
29 0.96 0.84 0.72 0.60 62 6.12 4.80 4.56 3.84
30 0.96 0.84 0.72 0.72 63 6.24 4.92 4.68 3.96
31 0.96 0.84 0.72 0.72 64 6.36 5.16 4.92 4.20
32 1.08 0.84 0.84 0.72
Age used is attained age of the insured on the effective date of the
increase in face amount. Smkr. includes increased face amounts with premium
class "Smoker" or "Smoker Special"; Nsmkr, includes increased face amounts
with premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
Please note: A COLA increase alone will not trigger a change to the
next higher band.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III AND IV
E. Cost of Living Increase Commission per $1,000* of increase in face amount
2. Highest Total Face Amount** More Than $249,999 and
Less Than $500,000 (Band 2)
<TABLE>
Attained Male Female Attained Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 0.48 0.48 0.36 0.36 42 1.44 1.20 1.20 0.96
21 0.60 0.48 0.36 0.36 43 1.56 1.20 1.20 0.96
22 0.60 0.48 0.48 0.36 44 1.68 1.32 1.32 1.08
23 0.60 0.48 0.48 0.36 45 1.80 1.32 1.44 1.08
24 0.60 0.60 0.48 0.48 46 1.92 1.44 1.44 1.20
25 0.60 0.60 0.48 0.48 47 2.04 1.56 1.56 1.20
26 0.60 0.60 0.48 0.48 48 2.28 1.68 1.68 1.32
27 0.72 0.60 0.48 0.48 49 2.40 1.80 1.80 1.44
28 0.72 0.60 0.60 0.48 50 2.52 1.92 1.80 1.44
29 0.72 0.60 0.60 0.48 51 2.76 2.04 2.04 1.56
30 0.72 0.60 0.60 0.48 52 2.88 2.16 2.16 1.68
31 0.72 0.72 0.60 0.60 53 3.12 2.28 2.28 1.80
32 0.84 0.72 0.60 0.60 54 3.24 2.28 2.28 1.80
33 0.84 0.72 0.60 0.60 55 3.36 2.40 2.40 1.92
34 0.84 0.72 0.72 0.60 56 3.60 2.64 2.64 2.16
35 0.96 0.72 0.72 0.60 57 3.84 2.88 2.76 2.28
36 0.96 0.84 0.72 0.72 58 4.08 3.12 3.00 2.40
37 1.08 0.84 0.84 0.72 59 4.20 3.12 3.00 2.40
38 1.08 0.96 0.84 0.72 60 4.44 3.36 3.24 2.64
39 1.20 0.96 0.96 0.84 61 4.56 3.48 3.36 2.76
40 1.32 0.96 0.96 0.84 62 4.80 3.72 3.60 3.00
41 1.32 1.08 1.08 0.96 63 4.80 3.84 3.60 3.12
64 4.92 3.96 3.72 3.24
Age used is attained age of the insured on the effective date of the
increase in face amount. Smkr. includes increased face amounts with premium
class "Smoker" or "Smoker Special"; Nsmkr. includes increased face amounts
with premium class "Nonsmoker" or "Nonsmoker" or Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
Please Note: A COLA increase will not trigger a change to the
next higher band.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III AND IV
E. Cost of Living Increase Commission per $1,000* of increase in face amount
3. Highest Total Face Amount** More Than $499,999 (Band 3)
<TABLE>
Attained Male Female Attained Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 0.36 0.36 0.24 0.24 42 0.96 0.72 0.72 0.60
21 0.36 0.36 0.24 0.24 43 1.08 0.84 0.84 0.72
22 0.36 0.36 0.36 0.24 44 1.20 0.84 0.84 0.72
23 0.36 0.36 0.36 0.24 45 1.20 0.96 0.96 0.72
24 0.36 0.36 0.36 0.36 46 1.32 0.96 0.96 0.84
25 0.36 0.36 0.36 0.36 47 1.44 1.08 1.08 0.84
26 0.48 0.36 0.36 0.36 48 1.44 1.08 1.08 0.84
27 0.48 0.36 0.36 0.36 49 1.56 1.20 1.20 0.96
28 0.48 0.36 0.36 0.36 50 1.68 1.32 1.32 0.96
29 0.48 0.48 0.36 0.36 51 1.80 1.32 1.32 1.08
30 0.48 0.48 0.36 0.36 52 2.04 1.44 1.44 1.20
31 0.48 0.48 0.36 0.36 53 2.16 1.56 1.56 1.20
32 0.60 0.48 0.48 0.36 54 2.16 1.56 1.56 1.32
33 0.60 0.48 0.48 0.36 55 2.40 1.68 1.68 1.32
34 0.60 0.48 0.48 0.36 56 2.52 1.80 1.80 1.44
35 0.60 0.48 0.48 0.48 57 2.76 1.92 1.92 1.56
36 0.60 0.60 0.48 0.48 58 2.88 2.16 2.04 1.68
37 0.72 0.60 0.60 0.48 59 3.00 2.28 2.16 1.68
38 0.72 0.60 0.60 0.60 60 3.12 2.40 2.28 1.80
39 0.84 0.60 0.60 0.60 61 3.12 2.52 2.28 1.92
40 0.84 0.72 0.72 0.60 62 3.36 2.64 2.52 2.16
41 0.96 0.72 0.72 0.60 63 3.36 2.64 2.52 2.16
64 3.48 2.76 2.64 2.28
Age used is attained age of the insured on the effective date of the
increase in face amount. Smkr. includes increased face amounts with premium
class "Smoker" or "Smoker Special"; Nsmkr. includes increased face amounts
with premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
Please note: A COLA increase alone will not trigger a change to the
next higher band.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III, IV AND JUVENILE-ISSUE
F. Riders Increased/Issued after Basic Contract
Spouse Insurance Benefit Commission per $1,000* of face amount
<TABLE>
Male Female Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 0.60 0.36 49 3.60 2.28 2.28 1.68
17 0.72 0.36 50 3.96 2.40 2.40 1.80
18 0.84 0.36 51 4.32 2.52 2.64 1.80
19 0.84 0.48 52 4.80 2.64 2.88 1.92
20 0.96 0.60 0.48 0.36 53 5.28 2.88 3.12 2.04
21 0.96 0.60 0.48 0.36 54 5.52 3.00 3.12 2.04
22 0.96 0.60 0.48 0.48 55 6.12 3.36 3.36 2.16
23 0.96 0.72 0.48 0.48 56 6.60 3.60 3.48 2.28
24 0.96 0.72 0.48 0.48 57 6.96 3.84 3.72 2.40
25 0.96 0.72 0.48 0.48 58 7.56 4.20 3.96 2.64
26 1.08 0.72 0.60 0.48 59 7.80 4.32 3.96 2.64
27 1.08 0.72 0.60 0.48 60 8.28 4.68 4.08 2.76
28 1.08 0.72 0.60 0.48 61 8.40 4.92 4.20 2.76
29 1.08 0.72 0.72 0.48 62 9.00 5.28 4.56 3.12
30 1.08 0.72 0.84 0.48 63 9.00 5.28 4.56 3.12
31 1.20 0.72 0.84 0.48 64 9.36 5.52 4.80 3.36
32 1.20 0.84 0.84 0.60 65 9.72 5.76 4.92 3.48
33 1.32 0.84 0.96 0.60 66 10.20 6.24 5.04 3.60
34 1.44 0.84 0.96 0.60 67 11.16 6.84 5.40 3.96
35 1.56 0.84 1.08 0.60 68 11.88 7.44 5.76 4.20
36 1.56 0.96 1.08 0.72 69 12.24 7.92 5.88 4.44
37 1.68 0.96 1.20 0.84 70 13.32 8.88 6.48 4.92
38 1.80 1.08 1.20 0.84 71 13.68 9.36 6.60 5.28
39 1.92 1.08 1.32 0.84 72 14.16 9.96 6.84 5.40
40 2.16 1.20 1.32 0.96 73 14.52 10.44 6.96 5.64
41 2.28 1.20 1.56 0.96 74 14.76 10.80 6.96 5.76
42 2.40 1.32 1.68 1.08 75 15.00 11.16 6.96 5.76
43 2.52 1.56 1.80 1.20 76 16.56 11.40 8.16 5.76
44 2.64 1.56 1.80 1.20 77 16.92 11.88 8.52 6.00
45 2.88 1.68 1.92 1.32 78 17.16 12.24 8.88 6.24
46 3.00 1.92 2.16 1.44 79 17.28 12.48 9.12 6.60
47 3.24 1.92 2.16 1.56 80 17.28 12.72 9.36 6.96
48 3.36 2.16 2.28 1.56
Age used is issue age of the spouse or, for increases in face amount,
attained age of the spouse on the effective date of the increase. Smkr.
includes riders issued with face amounts/increased face amounts having
premium class "Smoker" or "Smoker Special"; Nsmkr. includes riders with face
amounts/increased face amounts having premium class "Nonsmoker" or
"Nonsmoker Special".
Child Insurance Benefit Commission per $1,000 of face amount
Commission is $3.00 per $1,000. One-twelfth of the commission is
paid monthly.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VII. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
A. First Year Commission
1. First year commission is a percentage of all premiums paid and
credited in the first contract year up to but not exceeding the
Target Premium.*
Commission Rate for Initial
Face Amount Less than Commission Rate
$250,000; Spouse and Child for Initial Face
Riders Issued with the Amount Greater
Issue Age** Basic Contract Than $249,999
--------- -------------- -------------
0-51 47 % 40 %
52-53 47 39
54-55 45 38
56-57 45 37
58-59 45 36
60 45 35
61 43 35
62 43 34
63 41 34
64-65 41 33
66-67 40 32
68 39 31
69 37 30
70 36 29
71 34 28
72 32 27
73 30 26
74 28 25
75 27 24
76 25.5 22
77 24 20.5
78 22.5 19
79 21.5 17.5
80 20 16
* The total Target Premium is equal to the initial Death Benefit
Guarantee Premium for the contract excluding any extra premium paid
for aviation or temporary extra premium. Target Premiums for the
rider coverages are found in Exhibit IA. The Target Premium that
is apportioned to the basic coverage is the total Target Premium
less any rider Target Premium.
** Issue Age is the issue age of the insured for the basic coverage;
the age at issue of the spouse for the spouse rider.
2. For contracts issued on or after June 1, 1990, an additional
First Year Commission is 3% of all premium paid and credited in
the first contract year.
B. Additional commission based on premium
1. For contracts issued on or after June 1, 1990, a Renewal
Commission based on premium is paid equal to 3% of all premium
paid and credited whenever paid and credited in contract year
two or later.
2. For contracts issued before June 1, 1990, a Service Commission
is paid equal to 3% of all premium paid and credited whenever
paid and credited.
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VII. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
C. Renewal Commissions per $1,000* of Face Amount (Initial or Increase)
1. Basic Contract - Highest Total Face Amount** Less Than $250,000
<TABLE>
Male Female Male Female
Std./ Std./ Std./ Std./
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.24 0.12 41 0.96 0.72 0.60 0.48
1 0.24 0.12 42 1.08 0.72 0.60 0.48
2 0.24 0.12 43 1.08 0.72 0.72 0.48
3 0.24 0.12 44 1.20 0.84 0.72 0.60
4 0.24 0.12 45 1.32 0.84 0.72 0.60
5 0.24 0.12 46 1.32 0.96 0.84 0.60
6 0.24 0.12 47 1.44 0.96 0.84 0.72
7 0.24 0.12 48 1.56 1.08 0.84 0.72
8 0.24 0.24 49 1.68 1.20 0.96 0.72
9 0.24 0.24 50 1.68 1.20 0.96 0.72
10 0.36 0.24 51 1.80 1.32 1.08 0.84
11 0.36 0.24 52 1.92 1.32 1.08 0.84
12 0.36 0.24 53 2.04 1.44 1.20 0.96
13 0.36 0.24 54 2.16 1.56 1.20 0.96
14 0.36 0.24 55 2.28 1.68 1.32 1.08
15 0.36 0.24 56 2.40 1.80 1.32 1.08
16 0.36 0.24 57 2.52 1.92 1.44 1.20
17 0.36 0.24 58 2.64 2.04 1.44 1.20
18 0.36 0.24 59 2.88 2.28 1.56 1.32
19 0.48 0.24 60 3.00 2.40 1.68 1.44
20 0.48 0.36 0.24 0.24 61 3.24 2.52 1.80 1.56
21 0.48 0.36 0.24 0.24 62 3.36 2.64 1.92 1.56
22 0.48 0.36 0.36 0.24 63 3.60 2.88 1.92 1.68
23 0.48 0.36 0.36 0.24 64 3.84 3.12 2.16 1.80
24 0.48 0.36 0.36 0.24 65 3.96 3.24 2.16 1.92
25 0.48 0.36 0.36 0.24 66 4.20 3.36 2.28 2.04
26 0.48 0.36 0.36 0.24 67 4.56 3.72 2.52 2.28
27 0.60 0.36 0.36 0.24 68 4.68 3.84 2.64 2.40
28 0.60 0.36 0.36 0.24 69 4.92 4.08 2.76 2.52
29 0.60 0.36 0.36 0.24 70 5.28 4.44 3.00 2.76
30 0.60 0.36 0.36 0.36 71 5.64 4.68 3.12 2.88
31 0.60 0.48 0.48 0.36 72 5.88 5.04 3.36 3.00
32 0.72 0.48 0.48 0.36 73 6.36 5.40 3.60 3.36
33 0.72 0.48 0.48 0.36 74 6.60 5.64 3.84 3.48
34 0.72 0.48 0.48 0.36 75 6.96 6.00 3.96 3.72
35 0.72 0.48 0.48 0.36 76 7.32 6.36 4.20 3.96
36 0.84 0.48 0.48 0.36 77 7.68 6.72 4.44 4.20
37 0.84 0.60 0.48 0.36 78 8.04 6.96 4.68 4.44
38 0.84 0.60 0.60 0.36 79 8.40 7.32 4.92 4.68
39 0.84 0.60 0.60 0.48 80 8.76 7.68 5.16 4.92
40 0.96 0.60 0.60 0.48
* One-twelfth of the Renewal Commission on the portion of the initial face
amount or increase in face amount remaining in force each month is paid
monthly during the first two renewal years after issue or requested
increase. Age used is issue age of contract or, for increases in face
amount, attained age of the insured on the effective date of the
increase. Smkr. includes contracts with face amounts/increased face
amounts having premium class "Smoker" or "Smoker Special"; Nsmkr.
includes contracts with face amounts/increased face amounts having
premium class "Nonsmoker" or "Nonsmoker Special". Std. includes
contracts with face amounts/increased face amounts having premium class
"Standard" or "Standard Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a Requested Increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VII. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
C. Renewal Commissions per $1,000* of Face Amount (Initial or Increase)
2. Basic Contract - Highest Total Face Amount** More Than $249,999
<TABLE>
Male Female Male Female
Std./ Std./ Std./ Std./
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.24 0.12 41 0.84 0.60 0.48 0.36
1 0.24 0.12 42 0.84 0.60 0.48 0.36
2 0.24 0.12 43 0.96 0.60 0.60 0.48
3 0.24 0.12 44 0.96 0.60 0.60 0.48
4 0.24 0.12 45 1.08 0.72 0.60 0.48
5 0.24 0.12 46 1.08 0.72 0.60 0.48
6 0.24 0.12 47 1.20 0.84 0.72 0.48
7 0.24 0.12 48 1.20 0.84 0.72 0.60
8 0.24 0.12 49 1.32 0.96 0.72 0.60
9 0.24 0.12 50 1.44 0.96 0.84 0.60
10 0.24 0.12 51 1.44 1.08 0.84 0.72
11 0.24 0.12 52 1.56 1.08 0.84 0.72
12 0.24 0.12 53 1.68 1.20 0.96 0.72
13 0.24 0.24 54 1.80 1.32 0.96 0.84
14 0.24 0.24 55 1.92 1.44 1.08 0.84
15 0.36 0.24 56 1.92 1.44 1.08 0.84
16 0.36 0.24 57 2.16 1.56 1.20 0.96
17 0.36 0.24 58 2.16 1.68 1.20 0.96
18 0.36 0.24 59 2.40 1.80 1.32 1.08
19 0.36 0.24 60 2.52 1.92 1.32 1.20
20 0.36 0.24 0.24 0.24 61 2.64 2.04 1.44 1.20
21 0.36 0.24 0.24 0.24 62 2.76 2.16 1.56 1.32
22 0.36 0.24 0.24 0.24 63 2.88 2.28 1.56 1.32
23 0.36 0.24 0.24 0.24 64 3.12 2.52 1.68 1.56
24 0.36 0.24 0.24 0.24 65 3.24 2.64 1.80 1.56
25 0.36 0.24 0.24 0.24 66 3.48 2.76 1.92 1.68
26 0.48 0.24 0.24 0.24 67 3.72 3.00 2.04 1.80
27 0.48 0.36 0.24 0.24 68 3.84 3.24 2.16 1.92
28 0.48 0.36 0.36 0.24 69 4.08 3.36 2.28 2.04
29 0.48 0.36 0.36 0.24 70 4.32 3.60 2.40 2.16
30 0.48 0.36 0.36 0.24 71 4.56 3.84 2.52 2.40
31 0.48 0.36 0.36 0.24 72 4.80 4.08 2.76 2.52
32 0.60 0.36 0.36 0.24 73 5.16 4.44 3.00 2.76
33 0.60 0.36 0.36 0.24 74 5.40 4.68 3.12 2.88
34 0.60 0.36 0.36 0.24 75 5.64 4.92 3.24 3.00
35 0.60 0.36 0.36 0.24 76 6.00 5.16 3.48 3.24
36 0.60 0.48 0.36 0.36 77 6.24 5.40 3.60 3.36
37 0.72 0.48 0.48 0.36 78 6.60 5.76 3.84 3.60
38 0.72 0.48 0.48 0.36 79 6.84 6.00 4.08 3.72
39 0.72 0.48 0.48 0.36 80 7.08 6.24 4.20 3.96
40 0.72 0.48 0.48 0.36
* One-twelfth of the Renewal Commission on the portion of the initial face
amount or increase in face amount remaining in force each month is paid
monthly during the first two renewal years after issue or requested
increase. Age used is issue age of contract or, for increases in face
amount, attained age of the insured on the effective date of the
increase. Smkr. includes contracts with face amounts/increased face
amounts having premium class "Smoker" or "Smoker Special"; Nsmkr.
includes contracts with face amounts/increased face amounts having
premium class "Nonsmoker" or "Nonsmoker Special". Std. includes
contracts with face amounts/increased face amounts having premium class
"Standard" or "Standard Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a Requested Increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VII. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
C. Renewal Commissions per $1,000* of Face Amount (Initial or Increase)
3. Spouse Insurance Benefit
<TABLE>
Male Female Male Female
Std./ Std./ Std./ Std./
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 0.36 0.24 49 1.68 1.20 0.84 0.72
17 0.36 0.24 50 1.68 1.20 0.96 0.72
18 0.36 0.24 51 1.92 1.32 0.96 0.72
19 0.36 0.24 52 1.92 1.32 0.96 0.84
20 0.48 0.24 0.24 0.24 53 2.16 1.56 1.08 0.84
21 0.48 0.24 0.24 0.24 54 2.16 1.56 1.08 0.84
22 0.48 0.36 0.24 0.24 55 2.40 1.68 1.20 0.96
23 0.48 0.36 0.24 0.24 56 2.52 1.80 1.20 0.96
24 0.48 0.36 0.24 0.24 57 2.64 1.92 1.32 1.08
25 0.48 0.36 0.36 0.24 58 2.76 2.04 1.32 1.08
26 0.48 0.36 0.36 0.24 59 3.00 2.28 1.44 1.20
27 0.48 0.36 0.36 0.24 60 3.12 2.40 1.44 1.32
28 0.60 0.36 0.36 0.24 61 3.24 2.52 1.56 1.32
29 0.60 0.36 0.36 0.24 62 3.60 2.76 1.68 1.44
30 0.60 0.36 0.36 0.24 63 3.72 2.88 1.68 1.56
31 0.60 0.36 0.36 0.24 64 3.84 3.00 1.80 1.56
32 0.60 0.48 0.36 0.36 65 4.20 3.24 1.92 1.68
33 0.72 0.48 0.48 0.36 66 4.32 3.48 2.04 1.80
34 0.72 0.48 0.48 0.36 67 4.56 3.60 2.16 1.92
35 0.72 0.48 0.48 0.36 68 4.92 3.96 2.28 2.16
36 0.72 0.48 0.48 0.36 69 5.16 4.20 2.52 2.16
37 0.84 0.48 0.48 0.36 70 5.40 4.44 2.64 2.40
38 0.84 0.48 0.48 0.36 71 5.76 4.80 2.76 2.52
39 0.84 0.60 0.48 0.36 72 6.12 5.04 3.00 2.76
40 0.96 0.60 0.60 0.48 73 6.36 5.28 3.12 2.88
41 0.96 0.72 0.60 0.48 74 6.84 5.76 3.48 3.24
42 1.08 0.72 0.60 0.48 75 7.44 6.36 3.84 3.60
43 1.20 0.72 0.60 0.48 76 7.80 6.72 4.08 3.84
44 1.20 0.84 0.72 0.48 77 8.16 6.96 4.32 4.08
45 1.32 0.84 0.72 0.60 78 8.52 7.32 4.56 4.32
46 1.32 0.96 0.72 0.60 79 8.76 7.68 4.80 4.56
47 1.44 0.96 0.84 0.60 80 9.12 8.04 5.04 4.80
48 1.56 1.08 0.84 0.60
* One-twelfth of the Renewal Commission on the portion of the initial rider
face amount or increase in rider face amount remaining in force each
month is paid monthly during the first two renewal years after issue of
the rider or increase of the rider. Age used is issue age of spouse or,
for increases in face amount, attained age of the spouse on the effective
date of the increase. Smkr. includes riders with face amounts/increased
face amounts having premium class "Smoker" or "Smoker Special"; Nsmkr.
includes riders with face amounts/increased face amounts/increased face
amounts having premium class "Nonsmoker" or "Nonsmoker Special". Std.
includes riders with face amounts/increased face amounts having premium
class "Standard" or "Standard Special".
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VII. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
D. Increase Commissions per $1,000* of Increase in Face Amount
1. Basic Contract - Highest Total Face Amount** Less Than $250,000
<TABLE>
Male Female Male Female
Std./ Std./ Std./ Std./
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 1.44 1.08 41 6.72 4.56 4.20 3.24
1 1.56 1.08 42 7.08 4.80 4.44 3.36
2 1.56 1.08 43 7.56 5.16 4.68 3.60
3 1.56 1.08 44 7.92 5.40 4.80 3.72
4 1.68 1.08 45 8.52 5.88 5.16 3.96
5 1.68 1.08 46 9.00 6.24 5.40 4.08
6 1.80 1.20 47 9.60 6.72 5.76 4.44
7 1.80 1.20 48 10.08 7.08 6.00 4.68
8 1.92 1.20 49 10.92 7.68 6.36 4.92
9 1.92 1.32 50 11.40 8.04 6.60 5.16
10 2.04 1.32 51 12.24 8.76 7.08 5.64
11 2.16 1.44 52 12.84 9.24 7.32 5.76
12 2.16 1.44 53 13.80 10.08 7.80 6.36
13 2.28 1.56 54 13.80 10.08 7.68 6.24
14 2.40 1.56 55 14.76 11.04 8.28 6.84
15 2.52 1.56 56 15.48 11.52 8.64 7.08
16 2.52 1.68 57 16.56 12.60 9.24 7.68
17 2.64 1.68 58 17.28 13.20 9.60 8.04
18 2.76 1.80 59 18.60 14.40 10.32 8.64
19 2.88 1.80 60 19.44 15.12 10.68 9.12
20 2.88 2.04 1.92 1.44 61 19.92 15.72 11.04 9.48
21 3.00 2.04 1.92 1.56 62 20.88 16.56 11.52 9.96
22 3.12 2.16 2.04 1.56 63 20.88 16.56 11.52 9.96
23 3.24 2.16 2.04 1.68 64 22.32 18.00 12.36 10.80
24 3.36 2.28 2.16 1.68 65 23.40 18.96 12.96 11.40
25 3.48 2.28 2.28 1.68 66 24.00 19.44 13.20 11.64
26 3.60 2.40 2.40 1.80 67 25.68 21.12 14.40 12.72
27 3.72 2.52 2.40 1.92 68 26.40 21.72 14.64 13.08
28 3.84 2.64 2.52 1.92 69 26.28 21.72 14.64 13.08
29 3.96 2.76 2.64 1.92 70 27.48 22.92 15.48 14.04
30 4.20 2.76 2.76 2.04 71 27.24 22.92 15.36 13.92
31 4.32 2.88 2.88 2.04 72 27.00 22.80 15.24 13.92
32 4.56 3.00 2.88 2.16 73 27.12 23.16 15.48 14.28
33 4.68 3.12 3.00 2.28 74 26.64 22.80 15.24 14.04
34 4.80 3.24 3.12 2.40 75 26.88 23.16 15.48 14.40
35 5.04 3.36 3.24 2.40 76 26.64 22.56 15.48 14.28
36 5.28 3.60 3.36 2.52 77 26.28 22.32 15.24 14.28
37 5.52 3.72 3.60 2.64 78 25.68 21.96 15.12 14.04
38 5.76 3.84 3.72 2.76 79 25.68 21.48 15.24 14.04
39 6.00 3.96 3.84 2.88 80 24.96 20.88 14.88 13.92
40 6.24 4.20 3.96 3.00
* One-twelfth of the Increase Commission on the portion of the increase
remaining in force each month is paid monthly for one year after the
effective date of the requested increase in face amount. Age used is
attained age of the insured on the effective date of the increase in face
amount. Smkr. includes increased face amounts with premium class
"Smoker" or "Smoker Special"; Nsmkr. includes increased face amounts with
premium class "Nonsmoker" or "Nonsmoker Special". Std. includes
increased face amounts with premium class "Standard" or
"Standard "Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a Requested Increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VII. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
D. Increase Commissions per $1,000* of Increase in Face Amount
2. Basic Contract - Highest Total Face Amount** More Than $249,999
<TABLE>
Male Female Male Female
Std./ Std./ Std./ Std./
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 1.20 0.84 41 5.52 3.72 3.36 2.52
1 1.20 0.84 42 5.76 3.84 3.60 2.64
2 1.20 0.84 43 6.12 4.20 3.72 2.88
3 1.32 0.84 44 6.48 4.32 3.84 3.00
4 1.32 0.96 45 6.96 4.80 4.20 3.12
5 1.44 0.96 46 7.20 5.04 4.32 3.36
6 1.44 0.96 47 7.80 5.52 4.56 3.60
7 1.44 0.96 48 8.16 5.76 4.80 3.72
8 1.56 0.96 49 8.88 6.24 5.04 3.96
9 1.56 1.08 50 9.24 6.60 5.28 4.20
10 1.68 1.08 51 9.96 7.20 5.64 4.56
11 1.68 1.08 52 10.20 7.32 5.76 4.56
12 1.80 1.20 53 10.92 7.92 6.12 4.92
13 1.92 1.20 54 11.04 8.16 6.24 5.04
14 1.92 1.20 55 11.88 8.88 6.60 5.40
15 2.04 1.32 56 12.12 9.12 6.72 5.52
16 2.04 1.32 57 12.96 9.84 7.20 6.00
17 2.16 1.44 58 13.20 10.08 7.32 6.00
18 2.16 1.44 59 14.16 10.92 7.80 6.60
19 2.28 1.44 60 14.40 11.16 7.80 6.72
20 2.40 1.56 1.56 1.20 61 15.48 12.24 8.52 7.32
21 2.40 1.68 1.56 1.20 62 15.72 12.48 8.64 7.44
22 2.52 1.68 1.68 1.20 63 16.56 13.08 9.00 7.80
23 2.64 1.68 1.68 1.32 64 17.16 13.80 9.48 8.28
24 2.64 1.80 1.80 1.32 65 18.00 14.52 9.96 8.76
25 2.76 1.92 1.80 1.44 66 18.36 14.88 10.08 8.88
26 2.88 1.92 1.92 1.44 67 19.68 16.08 10.92 9.72
27 3.00 2.04 1.92 1.44 68 20.04 16.44 11.04 9.96
28 3.12 2.04 2.04 1.56 69 20.40 16.80 11.28 10.08
29 3.24 2.16 2.16 1.56 70 21.12 17.64 11.88 10.68
30 3.36 2.28 2.16 1.68 71 21.48 18.00 12.00 10.92
31 3.48 2.28 2.28 1.68 72 21.72 18.36 12.24 11.16
32 3.60 2.40 2.40 1.68 73 22.44 19.08 12.84 11.76
33 3.84 2.52 2.40 1.80 74 22.68 19.44 12.96 12.00
34 3.96 2.64 2.52 1.92 75 22.80 19.56 13.08 12.12
35 4.08 2.76 2.64 1.92 76 21.96 18.96 12.60 11.76
36 4.32 2.88 2.76 2.04 77 21.36 18.60 12.48 11.52
37 4.44 3.00 2.88 2.16 78 20.76 18.12 12.12 11.28
38 4.68 3.12 3.00 2.16 79 19.92 17.52 11.76 11.04
39 4.80 3.24 3.12 2.28 80 18.96 16.80 11.28 10.56
40 5.04 3.36 3.24 2.40
* One-twelfth of the Increase Commission on the portion of the increase
remaining in force each month is paid monthly for one year after the
effective date of the requested increase in face amount. Age used is
attained age of the insured on the effective date of the increase in face
amount. Smkr. includes increased face amounts with premium class
"Smoker" or "Smoker Special"; Nsmkr. includes increased face amounts with
premium class "Nonsmoker" or "Nonsmoker Special". Std. includes
increased face amounts with premium class "Standard" or
"Standard Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a Requested Increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VII. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
E. Cost of Living Increase Commissions per $1,000* of
Increase in Face Amount
1. Highest Total Face Amount** Less Than $250,000
<TABLE>
Male Female Male Female
Std./ Std./ Std./ Std./
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.48 0.36 41 2.16 1.44 1.32 1.08
1 0.48 0.36 42 2.28 1.56 1.44 1.08
2 0.48 0.36 43 2.40 1.68 1.44 1.08
3 0.48 0.36 44 2.52 1.68 1.56 1.20
4 0.48 0.36 45 2.76 1.92 1.68 1.32
5 0.60 0.36 46 2.88 2.04 1.68 1.32
6 0.60 0.36 47 3.12 2.16 1.80 1.44
7 0.60 0.36 48 3.24 2.28 1.92 1.44
8 0.60 0.36 49 3.48 2.40 2.04 1.56
9 0.60 0.36 50 3.60 2.52 2.16 1.68
10 0.72 0.48 51 3.96 2.76 2.28 1.80
11 0.72 0.48 52 4.08 3.00 2.28 1.80
12 0.72 0.48 53 4.44 3.24 2.52 2.04
13 0.72 0.48 54 4.56 3.36 2.52 2.04
14 0.72 0.48 55 4.92 3.72 2.76 2.28
15 0.84 0.48 56 5.16 3.84 2.88 2.40
16 0.84 0.48 57 5.52 4.20 3.12 2.52
17 0.84 0.60 58 5.76 4.44 3.24 2.64
18 0.84 0.60 59 6.24 4.80 3.48 2.88
19 0.96 0.60 60 6.48 5.04 3.60 3.00
20 0.96 0.60 0.60 0.48 61 6.96 5.52 3.84 3.24
21 0.96 0.72 0.60 0.48 62 7.32 5.76 3.96 3.48
22 0.96 0.72 0.60 0.48 63 7.68 6.12 4.20 3.60
23 1.08 0.72 0.72 0.48 64 8.16 6.60 4.56 3.96
24 1.08 0.72 0.72 0.60 65 8.52 6.96 4.68 4.20
25 1.08 0.72 0.72 0.60 66 9.00 7.32 4.92 4.32
26 1.08 0.72 0.72 0.60 67 9.60 7.92 5.40 4.80
27 1.20 0.84 0.72 0.60 68 10.08 8.40 5.64 5.04
28 1.20 0.84 0.84 0.60 69 10.68 8.88 5.88 5.28
29 1.32 0.84 0.84 0.60 70 11.40 9.60 6.48 5.88
30 1.32 0.84 0.84 0.60 71 12.00 10.08 6.72 6.12
31 1.44 0.96 0.96 0.72 72 12.60 10.68 7.08 6.48
32 1.44 0.96 0.96 0.72 73 13.56 11.52 7.80 7.20
33 1.44 0.96 0.96 0.72 74 14.28 12.24 8.16 7.56
34 1.56 1.08 0.96 0.72 75 15.00 12.84 8.64 7.92
35 1.68 1.08 1.08 0.72 76 15.72 13.56 9.12 8.40
36 1.68 1.08 1.08 0.84 77 16.44 14.28 9.60 8.88
37 1.80 1.20 1.08 0.84 78 17.16 15.00 10.08 9.36
38 1.80 1.20 1.20 0.84 79 17.88 15.72 10.56 9.96
39 1.92 1.32 1.20 0.96 80 18.72 16.56 11.16 10.44
40 2.04 1.32 1.32 0.96
* One-twelfth of the Cost of Living Increase Commission on the portion of
the increase remaining in force each month is paid monthly for one year
after the effective date of the increase. Age used is attained age of
the insured on the effective date of the increase in face amount. Smkr.
includes increased face amounts with premium class "Smoker" or
"Smoker Special"; Nsmkr. includes increased face amounts with premium
class "Nonsmoker" or "Nonsmoker Special". Std. includes increased face
amounts with premium class "Standard" or "Standard Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a Requested Increase.
Please note: A COLA increase alone will not trigger a change to the
next higher band.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VII. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
E. Cost of Living Increase Commissions per $1,000* of
Increase in Face Amount
2. Highest Total Face Amount** More Than $249,999
<TABLE>
Male Female Male Female
Std./ Std./ Std./ Std./
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.48 0.36 41 2.04 1.44 1.32 0.96
1 0.48 0.36 42 2.16 1.44 1.32 0.96
2 0.48 0.36 43 2.28 1.56 1.44 1.08
3 0.48 0.36 44 2.40 1.68 1.44 1.08
4 0.48 0.36 45 2.64 1.80 1.56 1.20
5 0.48 0.36 46 2.76 1.92 1.68 1.20
6 0.60 0.36 47 2.88 2.04 1.68 1.32
7 0.60 0.36 48 3.12 2.16 1.80 1.44
8 0.60 0.36 49 3.36 2.40 1.92 1.44
9 0.60 0.36 50 3.48 2.52 2.04 1.56
10 0.60 0.36 51 3.72 2.64 2.16 1.68
11 0.60 0.36 52 3.96 2.76 2.16 1.80
12 0.72 0.48 53 4.20 3.12 2.40 1.92
13 0.72 0.48 54 4.32 3.24 2.40 2.04
14 0.72 0.48 55 4.68 3.48 2.64 2.16
15 0.72 0.48 56 4.92 3.72 2.76 2.28
16 0.72 0.48 57 5.28 3.96 2.88 2.40
17 0.84 0.48 58 5.52 4.20 3.00 2.52
18 0.84 0.60 59 5.88 4.56 3.24 2.76
19 0.84 0.60 60 6.24 4.80 3.36 2.88
20 0.84 0.60 0.60 0.48 61 6.60 5.28 3.60 3.12
21 0.96 0.60 0.60 0.48 62 6.96 5.52 3.84 3.24
22 0.96 0.60 0.60 0.48 63 7.32 5.76 3.96 3.48
23 0.96 0.60 0.60 0.48 64 7.80 6.24 4.32 3.72
24 0.96 0.72 0.72 0.48 65 8.16 6.60 4.56 3.96
25 1.08 0.72 0.72 0.48 66 8.64 6.96 4.68 4.20
26 1.08 0.72 0.72 0.60 67 9.24 7.56 5.16 4.56
27 1.08 0.72 0.72 0.60 68 9.72 7.92 5.40 4.80
28 1.20 0.72 0.72 0.60 69 10.20 8.40 5.64 5.04
29 1.20 0.84 0.84 0.60 70 10.92 9.12 6.12 5.52
30 1.32 0.84 0.84 0.60 71 11.52 9.60 6.48 5.88
31 1.32 0.84 0.84 0.60 72 12.12 10.20 6.72 6.12
32 1.32 0.96 0.84 0.60 73 12.96 11.04 7.44 6.84
33 1.44 0.96 0.96 0.72 74 13.56 11.64 7.80 7.20
34 1.44 0.96 0.96 0.72 75 14.28 12.24 8.16 7.56
35 1.56 1.08 0.96 0.72 76 15.00 12.96 8.64 8.04
36 1.56 1.08 1.08 0.72 77 15.60 13.56 9.12 8.52
37 1.68 1.08 1.08 0.84 78 16.32 14.28 9.60 8.88
38 1.80 1.20 1.08 0.84 79 17.04 15.00 10.08 9.36
39 1.80 1.20 1.20 0.84 80 17.88 15.72 10.56 9.96
40 1.92 1.32 1.20 0.96
* One-twelfth of the Cost of Living Increase Commission on the portion of
the increase remaining in force each month is paid monthly for one year
after the effective date of the increase. Age used is attained age of
the insured on the effective date of the increase in face amount. Smkr.
includes increased face amounts with premium class "Smoker" or
"Smoker Special"; Nsmkr. includes increased face amounts with premium
class "Nonsmoker" or "Nonsmoker Special". Std. includes increased face
amounts with premium class "Standard" or "Standard Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a Requested Increase.
Please note: A COLA increase alone will not trigger a change to the
next higher band.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VII. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
F. Riders Increased/Issued After Basic Contract
Spouse Insurance Benefit Commissions per $1,000* of Face Amount
<TABLE>
Male Female Male Female
Std./ Std./ Std./ Std./
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 2.52 1.56 49 11.16 7.68 5.88 4.56
17 2.64 1.56 50 11.64 8.04 6.12 4.80
18 2.76 1.68 51 12.60 8.76 6.48 5.16
19 2.76 1.68 52 13.20 9.24 6.72 5.40
20 2.88 1.92 1.80 1.32 53 14.16 10.08 7.08 5.76
21 3.00 1.92 1.80 1.44 54 14.16 10.20 7.08 5.76
22 3.00 2.04 1.92 1.44 55 15.24 11.04 7.56 6.12
23 3.12 2.04 1.92 1.44 56 15.96 11.64 7.80 6.48
24 3.24 2.16 1.92 1.56 57 17.28 12.72 8.28 6.96
25 3.36 2.16 2.04 1.56 58 18.00 13.32 8.64 7.20
26 3.48 2.28 2.16 1.68 59 19.44 14.64 9.12 7.68
27 3.60 2.40 2.16 1.68 60 20.28 15.36 9.48 8.16
28 3.72 2.40 2.28 1.80 61 20.28 15.48 9.48 8.16
29 3.84 2.52 2.40 1.80 62 21.72 16.80 10.20 8.88
30 4.08 2.64 2.52 1.92 63 21.72 16.80 10.20 8.88
31 4.20 2.76 2.64 1.92 64 22.68 17.76 10.68 9.36
32 4.44 2.88 2.76 2.04 65 24.36 19.20 11.52 10.20
33 4.56 2.88 2.88 2.04 66 24.96 19.80 11.76 10.44
34 4.68 3.00 2.88 2.16 67 26.04 20.76 12.36 11.04
35 4.92 3.12 3.00 2.28 68 27.36 22.08 12.96 11.76
36 5.16 3.36 3.12 2.28 69 27.24 22.08 12.96 11.76
37 5.40 3.48 3.24 2.40 70 27.72 22.56 13.32 12.12
38 5.64 3.60 3.36 2.52 71 28.20 23.28 13.68 12.48
39 6.00 3.84 3.60 2.76 72 27.84 23.04 13.68 12.48
40 6.36 4.08 3.72 2.88 73 27.36 22.80 13.56 12.48
41 6.84 4.56 3.96 3.00 74 27.60 23.28 13.92 12.84
42 7.08 4.68 4.08 3.12 75 28.68 24.48 14.64 13.68
43 7.68 5.16 4.32 3.36 76 28.32 24.36 14.64 13.80
44 8.04 5.40 4.56 3.48 77 27.84 24.00 14.64 13.80
45 8.64 5.76 4.80 3.72 78 27.24 23.52 14.52 13.68
46 9.12 6.12 5.04 3.84 79 27.12 23.52 14.52 13.68
47 9.84 6.60 5.28 4.08 80 26.16 22.92 14.40 13.56
48 10.32 6.96 5.52 4.32
* One-twelfth of the Spouse Insurance Benefit Commission on the portion of
the rider face amount remaining in force each month is paid monthly for
one year after the effective date on increases in face amount of the
rider and on riders issued after the basic contract. Age used is issue
age of the spouse or, for increases in face amount, attained age of the
spouse on the effective date of the increase. Smkr. includes riders with
face amounts/increased face amounts having premium class "Smoker" or
"Smoker Special"; Nsmkr. includes riders with face amounts/increased face
amounts having premium class "Nonsmoker" or "Nonsmoker Special". Std.
includes riders with face amounts/increased face amounts having premium
class "Standard" or "Standard Special".
CHILD INSURANCE BENEFIT COMMISSION PER $1,000 OF FACE AMOUNT
Commission is $2.76 per $1,000. One-twelfth of
the commission is paid monthly.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VIII. ANNUITY CONTRACTS
A. SINGLE PREMIUM ANNUITY CONTRACTS
First Year Renewal
Commission Commissions
---------- -----------
1. Single Premium Immediate Annuity
a. Life Annuity 2.50% None
b. Fixed Period Installment Annuity
Tier One
(Fixed period: 5-9 yrs.) 1.00% None
Tier Two
(Fixed period: 10-14 yrs.) 1.75 None
Tier Three (Fixed
period: 15 or more yrs.) 2.50 None
2. Single Premium Deferred Annuity 3.00% None
The commission is a percentage of the single premium paid and
credited to the contract.
B. FLEXIBLE PREMIUM DEFERRED ANNUITY '89 CONTRACTS
VARIABLE ANNUITY CONTRACTS
Qualified (other than TSA) and Non-qualified
CONTRACT YEAR 1 SUCCEEDING YEARS
=============== ================
First Year Service
Commission Commission
---------- ----------
3% 3%
The commission is a percentage of all premium paid and credited to
the contract whenever paid and credited.
C. FLEXIBLE PREMIUM DEFERRED ANNUITY CONTRACTS -- TSA QUALIFIED
PRE-FPA '89 QUALIFIED
1. On Rollover Premium
3% of any premiums paid to and credited by the Society which are
transfers of distribution from other tax-qualified plans
(Rollover Premium).
2. On premiums not in excess of the Stipulated Annual Premium or
the premium paid during the first contract year, whichever is
less (excluding Rollover Premium).
CONTRACT YEAR 1 SUCCEEDING YEARS
=============== ==============================
1st Year Renewal Service
Age* Commission Commission Commission
--- ----------- ---------- ----------
0-59 6 Continuous at 1% 1%
60 and up 3 Continuous at 1% 1%
3. On premiums in excess of the Stipulated Annual Premium or the
premium paid in the first contract year, whichever is less
(excluding Rollover Premium).
CONTRACT YEAR 1 SUCCEEDING YEARS
======================== =========================
Special
Renewal Service Service Service
Age* Commission Commission Commission Commission**
--- ---------- ---------- ---------- ----------
0-59 1% 1% 2% 6%
60 and up 1 1 2 3
D. FLEXIBLE PREMIUM DEFERRED ANNUITY CONTRACTS -- NONQUALIFIED
(PRE-FPA '89)
1. On premiums not in excess of the Stipulated Annual Premium or
the premium paid during the first contract year, whichever is
less.
CONTRACT YEAR 1 SUCCEEDING YEARS
=============== ================
1st Year Service
Age* Commission Commission
--- ---------- ----------
0-59 3% 3%
60 and up 3 2
2. On premiums in excess of the Stipulated Annual Premium or the
premium paid in the first contract year, whichever is less.
CONTRACT YEAR 1 SUCCEEDING YEARS
=============== ===============================
Service Service Special Service
Age* Commission Commission Commission**
--- ---------- ---------- ----------
0-59 3% 3% 3%
60 and up 2 2% 3%
* Age of annuitant on contract anniversary prior to date of premium
payment for Service Commission. Age at issue for Renewal
Commission and 1st year Commission.
** Paid in lieu of any other Service Commission on premium paid to
and credited by the Society in a renewal contract year in excess
of the highest total premium paid in any prior contract year.
The total premium paid in the first contract year is the lesser
of the Stipulated Annual Premium and the premiums paid in that
year. Rollover premium is excluded from consideration in all
contract years.
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
IX. HEALTH INSURANCE
Commissions are a percentage of the premium due and payable on the
coverage during each year (excluding any extra premium paid for
aviation or temporary extra premium).
A. Health Contracts
Disability Income and BOE (1988 Series)
1st - 4th Continuous
Level Premium First Renewal Renewals
Contracts: DI/BOE Year Commission Thereafter
------------------ ---- ---------- ----------
Noncancellable - DI/BOE
Occ Classes 4A, 5A 50 10 3
Occ Classes 1A*, 2A, 3A 45 8 3
Guaranteed Renewable - DI/BOE
Occ Classes 4A, 5A 45 10 3
Occ Classes 1A*, 2A, 3A 40 8 3
*BOE available for Occ. Class 2A through 5A only.
Renewal Continuous
Step Rate First Commission Commission Renewals
Contracts: DI Year Until Step At Step Thereafter
-------------- ---- ---------- ------- ----------
Noncancellable-
All Classes 45 3 35** 3
Guaranteed Renewable-
All Classes 40 3 35** 3
** The commission at the step and the renewal commissions thereafter
are paid to the DR assigned at the time of the step.
<PAGE>
THIS PAGE IS
INTENTIONALLY BLANK
<PAGE>
THIS PAGE IS
INTENTIONALLY BLANK
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
IX. HEALTH INSURANCE
Surrender Value:
Combined DI Contract and SV Rider
---------------------------------
Commissions for the SV product are calculated using Level Premium
Commission rates for the base contract and at least a 3% commission
rate for the surrender value rider. Blended commission rates are
listed below.
<TABLE>
Occ. Class 4A,5A Occ. Class 1A,2A,3A
================ ===================
1st-4th 1st-4th
First Year Renewal First Year Renewal
---------- ------- ---------- -------
Issue
Age NC GR NC&GR NC GR NC&GR
--- -- -- ----- -- -- -----
<S> <C> <C> <C> <C> <C> <C>
18-26 37 33 8 33 30 7
27 36 33 8 33 29 7
28 36 32 8 32 29 7
29 35 32 8 32 28 7
30 35 31 8 31 28 7
31 34 31 8 31 28 7
32 34 31 8 31 27 7
33 34 30 8 30 27 7
34 33 30 8 30 27 7
35 33 30 8 30 27 7
36 32 29 8 29 26 7
37 32 29 8 29 26 6
38 31 28 8 28 25 6
39 31 28 8 28 25 6
40 30 27 7 27 24 6
41 29 27 7 27 24 6
42 28 26 7 26 23 6
43 28 25 7 25 23 6
44 27 24 7 24 22 6
45 26 23 7 23 21 6
46 25 23 7 23 20 6
47 24 22 6 22 20 6
48 23 21 6 21 19 6
49 22 20 6 20 18 5
50 21 19 6 19 17 5
51 20 18 6 18 16 5
52 19 17 6 17 16 5
53 18 17 6 17 15 5
54 17 16 6 16 14 5
55 17 15 5 15 14 5
Renewals thereafter are continuous at 3%.
NC = Noncancellable Disability Income
GR = Guaranteed Renewable Disability Income
SV = Surrender Value
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
IX. HEALTH INSURANCE
CONTRACT YEAR 1 RENEWAL YEARS
=============== =============================
Continuous***
1st Renewal
First Year Renewal Commissions
Commission Commission Thereafter
---------- ---------- -----------
Disability Income (1980 Series)
Noncancellable -
Occ. Classes 4A,5A 50% l7% 5%
Occ. Classes 3A,2A 45 17 5
Guaranteed Renewable
Occ. Classes 2A,1A 40 10 4
Business Overhead (1980 Series) 45 17 5
Long Term Care (1992 Series)* 35** 5 3
Long Term Care (1990 Series)* 35** 5 5***
Long Term Care (1987 Series) 35 5 5***
Family Hospital
Issue Ages 60 and Under 40 10 4
Issue Age 61 35 10 4
Issue Age 62 30 10 4
Issue Age 63 25 10 4
Issue Age 64 20 10 4
MagniMed
Issue Ages 60 and Under 15 None 7
Issue Age 61 13 None 7
Issue Age 62 11 None 7
Issue Age 63 9 None 7
Issue Age 64 7 None 7
MagniMed ElectaCare
Issue Ages 60 and Under 20 None 5
Issue Age 61 18 None 5
Issue Age 62 15 None 5
Issue Age 63 12 None 5
Issue Age 64 9 None 5
InterMed 15 None None
InterMed ElectaCare 15 None None
SuppliMed - 83 Series 15 None 5
SupliMed, SuppliMed Plus,
and SuppliMed Premiere 20 None 3
* State variations are given in the Amendment section at the end of
this Schedule.
** The Long Term Care (1992 and 1990 Series) First Year Commission Rate
for issue ages higher than 70 reduces 1% per year until it reaches 21%
at issue age 84. (The first year commission percent = 35-(Issue
Age - 70) for issue ages higher than 70.)
*** Exception: Renewal commissions for Long Term Care (1987 and 1990
Series) are paid through renewal year 4; zero thereafter.
B. Health Insurance Riders
The First Year, Renewal and Service Commission rates for any Health
Insurance riders, except the Maternity Benefit rider, attached to a
Health Insurance contract will be the same as the corresponding
commission rates for the Health Insurance contract. No commission
is paid on the Maternity Benefit rider.
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
X. SUPPLEMENTAL BENEFITS
Commission rates for supplemental benefits issued with the basic
contract will be the same as the corresponding commission rates for
the basic contract.
Commission rates for supplemental benefits issued after the basic
contract will be determined by the Society.
XI. SETTLEMENT OPTIONS
The commission is a percentage of the proceeds applied under one of
the following Income Settlement Options.
First Year
Commission
----------
A. Current Life Income Settlement Options 2.50%
B. Non-withdrawable Fixed Period Settlement Options
Tier One (Fixed period: 5 through 9 yrs.) 1.00%
Tier Two (Fixed period: 10 through 14 yrs.) 1.75
Tier Three (Fixed period: 15 or more yrs.) 2.50
No commission is payable on amounts left on Deposit or on amounts
applied under withdrawable Fixed Amount or Fixed Period Settlement
Options.
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT IA
TARGET PREMIUMS
I. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE - SERIES II
A. Basic Contract* - Highest Total Face Amount** Less Than $250,000
<TABLE>
Issue Male Female Issue Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 3.00 3.00 38 9.60 7.80 7.56 6.60
1 3.00 3.00 39 10.20 8.16 8.04 7.08
2 3.00 3.00 40 10.80 8.64 8.52 7.44
3 3.00 3.00 41 11.76 9.24 9.24 7.80
4 3.00 3.00 42 12.84 9.84 9.84 8.28
5 3.00 3.00 43 13.80 10.56 10.56 8.64
6 3.00 3.00 44 14.88 11.16 11.16 9.12
7 3.00 3.00 45 15.84 11.76 11.88 9.48
8 3.00 3.00 46 17.04 12.60 12.72 10.08
9 3.00 3.00 47 18.36 13.44 13.56 10.68
10 3.00 3.00 48 19.56 14.40 14.28 11.40
11 3.12 3.00 49 20.88 15.24 15.12 12.00
12 3.24 3.00 50 22.08 16.08 15.96 12.60
13 3.24 3.12 51 23.76 17.40 17.16 13.56
14 3.36 3.12 52 25.44 18.72 18.36 14.52
15 3.48 3.12 53 27.24 19.92 19.56 15.60
16 3.72 3.12 54 28.92 21.24 20.76 16.56
17 3.84 3.24 55 30.60 22.56 21.96 17.52
18 4.08 3.24 56 32.76 24.36 23.52 18.96
19 4.20 3.36 57 34.92 26.28 25.20 20.28
20 4.44 3.96 3.36 3.00 58 37.50 28.08 26.76 21.72
21 4.56 4.08 3.48 3.12 59 39.36 30.00 28.44 23.04
22 4.80 4.20 3.72 3.36 60 41.52 31.80 30.00 24.48
23 4.92 4.44 3.84 3.48 61 43.92 34.20 32.28 26.88
24 5.16 4.56 4.08 3.72 62 46.32 36.60 34.68 29.16
25 5.28 4.68 4.20 3.84 63 48.84 39.00 36.96 31.56
26 5.52 4.80 4.32 3.96 64 51.24 41.40 39.36 33.84
27 5.76 5.04 4.44 4.08 65 53.64 43.80 41.64 36.24
28 5.88 5.16 4.68 4.20 66 56.76 47.16 44.04 38.76
29 6.12 5.40 4.80 4.32 67 59.76 50.52 46.32 41.28
30 6.36 5.52 4.92 4.44 68 62.88 53.88 48.72 43.68
31 6.60 5.76 5.16 4.68 69 65.88 57.24 51.00 46.20
32 6.84 5.88 5.40 4.80 70 69.00 60.60 53.40 48.72
33 7.20 6.12 5.52 5.04 71 73.20 64.92 56.40 51.84
34 7.44 6.24 5.76 5.16 72 77.40 69.36 59.40 55.08
35 7.68 6.48 6.00 5.40 73 81.60 73.68 62.52 58.20
36 8.28 6.96 6.48 5.76 74 85.80 78.12 65.52 61.44
37 8.88 7.32 6.96 6.24 75 90.00 82.44 68.52 64.56
* Smkr. includes premium class "Smoker" and "Smoker Special"; Nsmkr.
includes premium class "Nonsmoker" and "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a requested increase.
Add $31.56 per contract to cover the monthly expense.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT IA
TARGET PREMIUMS
I. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE - SERIES II
B. Basic Contract* - Highest Total Face Amount** More Than $249,999
<TABLE>
Issue Male Female Issue Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 2.88 2.40 46 13.20 9.72 9.84 7.80
17 3.00 2.52 47 14.16 10.44 10.44 8.28
18 3.24 2.52 48 15.12 11.16 11.04 8.88
19 3.24 2.64 49 16.08 11.76 11.64 9.24
20 3.48 3.12 2.64 2.40 50 17.04 12.48 12.36 9.72
21 3.60 3.24 2.76 2.40 51 18.36 13.44 13.20 10.44
22 3.72 3.24 2.88 2.64 52 19.68 14.40 14.16 11.28
23 3.84 3.48 3.00 2.76 53 21.00 15.36 15.12 12.00
24 4.08 3.60 3.24 2.88 54 22.32 16.44 16.08 12.84
25 4.08 3.60 3.24 3.00 55 23.64 17.40 16.92 13.56
26 4.32 3.72 3.36 3.12 56 25.32 18.84 18.12 14.64
27 4.44 3.96 3.48 3.24 57 27.00 20.28 19.44 15.72
28 4.56 4.08 3.60 3.24 58 28.68 21.72 20.64 16.80
29 4.80 4.20 3.72 3.36 59 30.36 23.16 21.96 17.76
30 4.92 4.32 3.84 3.48 60 32.04 24.60 23.16 18.96
31 5.16 4.44 4.08 3.60 61 33.96 26.40 24.96 20.76
32 5.28 4.56 4.20 3.72 62 35.76 28.32 26.88 22.56
33 5.64 4.80 4.32 3.96 63 37.80 30.24 28.56 24.48
34 5.76 4.80 4.44 4.08 64 39.36 31.80 30.24 26.04
35 6.00 5.04 4.68 4.20 65 41.52 33.96 32.28 28.08
36 6.48 5.40 5.04 4.44 66 43.68 36.24 33.84 29.88
37 6.84 5.64 5.40 4.80 67 45.96 38.88 35.64 31.80
38 7.44 6.00 5.88 5.16 68 48.84 41.76 37.80 33.96
39 7.92 6.36 6.24 5.52 69 50.28 43.80 39.00 35.28
40 8.40 6.72 6.60 5.76 70 52.68 46.32 40.80 37.20
41 9.12 7.20 7.20 6.00 71 57.00 50.52 43.92 40.32
42 9.96 7.68 7.68 6.48 72 59.28 53.04 45.48 42.12
43 10.68 8.16 8.16 6.72 73 62.52 56.52 47.88 44.64
44 11.52 8.64 8.64 7.08 74 65.88 60.00 50.28 47.16
45 12.24 9.12 9.24 7.32 75 69.12 63.36 52.68 49.68
* Smkr. includes premium class "Smoker" and "Smoker Special"; Nsmkr.
includes premium class "Nonsmoker" and "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a requested increase.
Add $31.56 per contract to cover the monthly expense.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT IA
TARGET PREMIUMS
II. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III, IV AND JUVENILE-ISSUE
A. Basic Contract* - Highest Total Face Amount** of
Series III and IV Less Than $250,000
(No limit on face amount of Juvenile-Issue Contract)
<TABLE>
Issue Male Female Issue Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 2.52 2.52 41 11.76 9.24 9.24 7.80
1 2.52 2.52 42 12.72 9.84 9.84 8.28
2 2.52 2.52 43 13.68 10.56 10.56 8.64
3 2.52 2.52 44 14.88 11.16 11.16 9.12
4 2.52 2.52 45 15.84 11.76 11.88 9.48
5 2.52 2.52 46 17.04 12.60 12.72 10.08
6 2.52 2.52 47 18.12 13.44 13.56 10.68
7 2.52 2.52 48 19.20 14.40 14.28 11.40
8 2.52 2.52 49 20.40 15.24 15.12 12.00
9 2.52 2.52 50 21.72 16.08 15.96 12.60
10 2.52 2.52 51 23.28 17.04 17.16 13.56
11 2.64 2.52 52 24.96 18.00 18.36 14.52
12 2.76 2.52 53 26.76 19.20 19.56 15.60
13 2.88 2.64 54 28.92 20.40 20.76 16.56
14 3.12 2.76 55 30.60 21.84 21.96 17.52
15 3.36 2.88 56 32.76 23.40 23.52 18.96
16 3.60 3.00 57 34.92 25.08 25.20 20.28
17 3.84 3.12 58 37.20 27.12 26.76 21.72
18 4.08 3.24 59 39.36 29.28 28.44 23.04
19 4.20 3.36 60 41.52 31.80 30.00 24.48
20 4.44 3.96 3.36 3.00 61 43.92 34.20 32.28 26.88
21 4.56 4.08 3.48 3.12 62 46.32 36.60 34.68 29.16
22 4.80 4.20 3.72 3.36 63 48.84 39.00 36.96 31.56
23 4.92 4.44 3.84 3.48 64 51.24 41.40 39.36 33.84
24 5.16 4.56 4.08 3.72 65 53.64 43.80 41.64 36.24
25 5.28 4.68 4.20 3.84 66 56.76 47.16 44.04 38.76
26 5.52 4.80 4.32 3.96 67 59.76 50.52 46.32 41.28
27 5.76 5.04 4.44 4.08 68 62.88 53.88 48.72 43.68
28 5.88 5.16 4.68 4.20 69 65.88 57.24 51.00 46.20
29 6.12 5.40 4.80 4.32 70 69.00 60.60 53.40 48.72
30 6.36 5.52 4.92 4.44 71 73.20 64.92 56.40 51.84
31 6.60 5.76 5.16 4.68 72 77.40 69.36 59.40 55.08
32 6.84 5.88 5.40 4.80 73 81.60 73.68 62.52 58.20
33 7.20 6.12 5.52 5.04 74 85.80 78.12 65.52 61.44
34 7.44 6.24 5.76 5.16 75 90.00 82.44 68.52 64.56
35 7.68 6.48 6.00 5.40 76 94.20 86.88 71.64 67.80
36 8.28 6.96 6.48 5.76 77 98.40 91.20 74.64 70.92
37 8.88 7.32 6.96 6.24 78 102.60 95.64 77.64 74.16
38 9.60 7.80 7.56 6.60 79 106.80 99.96 80.64 77.28
39 10.20 8.16 8.04 7.08 80 111.00 104.28 83.64 80.40
40 10.80 8.64 8.52 7.44
* Smkr. includes premium class "Smoker" and "Smoker Special"; Nsmkr.
includes premium class "Nonsmoker" and "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a requested increase.
Add $22.08 per Juvenile-Issue contract and $28.32 per "Series III or IV"
contract to cover the monthly administrative charge.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT IA
TARGET PREMIUMS
II. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III AND IV
B. Basic Contract* - Highest Total Face Amount** More
Than $249,999 and Less Than $500,000
<TABLE>
Issue Male Female Issue Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 3.48 3.12 2.64 2.40 51 18.00 13.32 13.20 10.44
21 3.60 3.24 2.76 2.40 52 19.32 14.04 14.16 11.28
22 3.72 3.24 2.88 2.64 53 20.76 14.88 15.12 12.00
23 3.84 3.48 3.00 2.76 54 22.20 15.84 16.08 12.84
24 4.08 3.60 3.24 2.88 55 23.64 16.92 16.92 13.56
25 4.08 3.60 3.24 3.00 56 25.32 18.24 18.12 14.64
26 4.32 3.72 3.36 3.12 57 27.00 20.28 19.44 15.72
27 4.44 3.96 3.48 3.24 58 28.68 21.72 20.64 16.80
28 4.56 4.08 3.60 3.24 59 30.36 22.92 21.96 17.76
29 4.80 4.20 3.72 3.36 60 32.04 24.60 23.16 18.96
30 4.92 4.32 3.84 3.48 61 33.96 26.40 24.96 20.76
31 5.16 4.44 4.08 3.60 62 35.76 28.32 26.88 22.56
32 5.28 4.56 4.20 3.72 63 37.80 30.24 28.56 24.48
33 5.64 4.80 4.32 3.96 64 39.36 31.80 30.24 26.04
34 5.76 4.80 4.44 4.08 65 41.52 33.96 32.28 28.08
35 6.00 5.04 4.68 4.20 66 43.68 36.24 33.84 29.88
36 6.48 5.40 5.04 4.44 67 45.96 38.88 35.64 31.80
37 6.84 5.64 5.40 4.80 68 48.84 41.76 37.80 33.96
38 7.44 6.00 5.88 5.16 69 50.28 43.80 39.00 35.28
39 7.92 6.36 6.24 5.52 70 52.68 46.32 40.80 37.20
40 8.40 6.72 6.60 5.76 71 57.00 50.52 43.92 40.32
41 9.12 7.20 7.20 6.00 72 59.28 53.04 45.48 42.12
42 9.96 7.68 7.68 6.48 73 62.52 56.52 47.88 44.64
43 10.68 8.16 8.16 6.72 74 65.88 60.00 50.28 47.16
44 11.52 8.64 8.64 7.08 75 69.12 63.36 52.68 49.68
45 12.24 9.12 9.24 7.32 76 72.48 66.84 55.08 52.20
46 13.08 9.72 9.84 7.80 77 75.72 70.20 57.48 54.72
47 13.92 10.44 10.44 8.28 78 79.08 73.68 59.88 57.24
48 14.88 11.16 11.04 8.88 79 82.32 77.04 62.28 59.76
49 15.84 11.76 11.64 9.24 80 85.56 80.40 64.56 62.16
50 16.80 12.48 12.36 9.72
* Smkr. includes premium class "Smoker" and "Smoker Special"; Nsmkr.
includes premium class "Nonsmoker" and "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a requested increase.
Add $28.32 per contract to cover the monthly administrative charge.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT IA
TARGET PREMIUMS
II. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III AND IV
C. Basic Contract* - Highest Total Face Amount** More Than $499,999
<TABLE>
Issue Male Female Issue Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 2.64 2.16 1.80 1.56 51 12.24 9.00 9.00 7.08
21 2.64 2.28 1.92 1.68 52 13.20 9.60 9.60 7.68
22 2.64 2.40 2.04 1.80 53 14.16 10.20 10.20 8.16
23 2.64 2.40 2.16 1.92 54 15.24 10.92 10.92 8.76
24 2.76 2.52 2.28 2.04 55 16.32 11.64 11.64 9.36
25 2.76 2.52 2.28 2.04 56 17.52 12.60 12.48 10.08
26 2.88 2.64 2.40 2.16 57 18.72 13.68 13.32 10.80
27 3.00 2.76 2.52 2.28 58 20.04 14.88 14.28 11.52
28 3.12 2.76 2.52 2.28 59 21.36 16.08 15.36 12.36
29 3.24 2.88 2.64 2.40 60 22.56 17.28 16.32 13.32
30 3.36 2.88 2.64 2.40 61 23.88 18.60 17.52 14.52
31 3.48 3.00 2.76 2.52 62 25.20 19.80 18.84 15.84
32 3.60 3.12 2.88 2.64 63 26.52 21.12 20.16 17.16
33 3.72 3.12 2.88 2.64 64 27.96 22.56 21.48 18.60
34 3.96 3.24 3.00 2.76 65 29.40 24.00 22.80 19.92
35 4.08 3.36 3.12 2.88 66 30.96 25.68 24.12 21.24
36 4.32 3.60 3.36 3.12 67 32.40 27.36 25.20 22.56
37 4.68 3.84 3.60 3.36 68 34.08 29.28 26.52 23.88
38 4.92 4.08 3.84 3.60 69 36.00 31.20 27.96 25.32
39 5.28 4.32 4.20 3.84 70 38.16 33.60 29.52 27.00
40 5.64 4.56 4.44 3.96 71 40.68 36.24 31.44 28.92
41 6.12 4.92 4.80 4.20 72 43.56 39.24 33.48 31.08
42 6.60 5.16 5.16 4.32 73 46.80 42.48 35.88 33.48
43 7.20 5.52 5.52 4.56 74 50.52 46.20 38.64 36.24
44 7.80 5.76 6.00 4.80 75 54.72 50.16 41.64 39.24
45 8.28 6.12 6.24 4.92 76 58.08 53.52 44.16 41.76
46 8.88 6.60 6.72 5.28 77 61.44 56.88 46.56 44.16
47 9.36 6.96 7.08 5.52 78 64.68 60.12 48.96 46.68
48 9.96 7.44 7.44 5.88 79 68.04 63.48 51.36 49.08
49 10.56 7.92 7.92 6.24 80 71.28 66.72 53.76 51.48
50 11.28 8.40 8.40 6.60
* Smkr. includes premium class "Smoker" and "Smoker Special"; Nsmkr.
includes premium class "Nonsmoker" and "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a requested increase.
Add $28.32 per contract to cover the monthly administrative charge.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT IA
TARGET PREMIUMS
III. RIDERS AND SUPPLEMENTAL BENEFITS
Target Premium equals the annual cost of the rider or supplemental
benefit divided by 0.95.
IV. SPECIAL CLASS
Target Premium for a special class table rating equals the extra
annual cost for the table rating divided by 0.95.
Premiums paid for aviation coverage and temporary extra premiums are
not commissionable.
<PAGE>
EXHIBIT IA
SCHEDULE OF COMMISSION RATES
V. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE RIDERS
TARGET PREMIUMS
A. SPOUSE RIDER
<TABLE>
Male Female Male Female
Issue Std./ Std./ Issue Std./ Std./
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 5.40 3.24 49 23.76 16.32 12.48 9.72
17 5.52 3.36 50 24.84 17.16 12.96 10.20
18 5.76 3.48 51 26.76 18.72 13.68 10.92
19 5.88 3.60 52 27.96 19.68 14.28 11.40
20 6.12 4.08 3.72 2.88 53 30.24 21.48 15.12 12.24
21 6.36 4.20 3.84 3.00 54 31.56 22.56 15.72 12.72
22 6.48 4.32 3.96 3.12 55 33.96 24.60 16.68 13.68
23 6.72 4.44 4.08 3.12 56 35.52 25.92 17.28 14.28
24 6.96 4.56 4.20 3.24 57 38.28 28.20 18.36 15.36
25 7.08 4.68 4.44 3.36 58 39.96 29.64 19.08 15.96
26 7.44 4.80 4.56 3.48 59 43.08 32.40 20.28 17.16
27 7.68 5.04 4.68 3.60 60 45.00 34.08 21.12 18.12
28 7.92 5.16 4.92 3.72 61 47.04 35.88 22.08 18.96
29 8.28 5.40 5.04 3.84 62 50.64 39.12 23.76 20.64
30 8.64 5.52 5.28 3.96 63 52.92 41.04 24.84 21.72
31 9.00 5.76 5.52 4.20 64 55.32 43.20 26.16 22.80
32 9.36 6.00 5.76 4.32 65 59.52 46.92 28.08 24.84
33 9.72 6.24 6.00 4.44 66 62.28 49.44 29.40 26.16
34 10.08 6.48 6.12 4.56 67 65.16 51.96 30.96 27.60
35 10.56 6.72 6.36 4.80 68 70.20 56.64 33.36 30.00
36 10.92 7.08 6.72 4.92 69 73.56 59.64 35.16 31.68
37 11.40 7.32 6.96 5.16 70 77.04 62.76 37.08 33.60
38 11.88 7.68 7.20 5.40 71 82.92 68.40 40.20 36.72
39 12.84 8.28 7.68 5.76 72 86.88 72.12 42.60 39.00
40 13.44 8.76 7.92 6.00 73 91.08 75.84 45.00 41.52
41 14.52 9.60 8.40 6.36 74 98.52 83.04 49.56 45.96
42 15.12 9.96 8.76 6.60 75 106.20 90.72 54.36 50.88
43 16.32 10.92 9.24 7.08 76 111.00 95.28 57.60 54.12
44 17.04 11.40 9.60 7.32 77 115.92 99.96 61.08 57.36
45 18.48 12.36 10.32 7.92 78 120.84 104.76 64.56 60.84
46 19.44 12.96 10.68 8.16 79 125.88 109.68 68.28 64.44
47 21.00 14.16 11.28 8.76 80 130.92 114.84 72.12 68.04
48 21.96 14.88 11.76 9.12
* Smkr. includes premium class "Smoker" or "Smoker Special";
Nsmkr. includes premium class "Nonsmoker" or "Nonsmoker Special".
Std. includes premium class "Standard" or "Standard Special".
CHILD RIDER
TARGET PREMIUM EQUALS $5.76 PER $1,000 OF FACE AMOUNT.
<PAGE>
DISTRICT REPRESENTATIVE AGREEMENT
LUTHERAN BROTHERHOOD
Minneapolis, Minnesota
AMENDMENT TO EXHIBIT I, IA
SCHEDULE OF COMMISSION RATES
FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III, IV, AND JUVENILE-ISSUE
Exhibit I, Section VI and Exhibit IA, Section II
1. All columns headed by "Male" are amended to read "Male/Unisex**"
2. Add a footnote which reads:
**Unisex rates are used for contracts which prohibit discrimination on
the basis of gender.
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Exhibit I, Section VII. C1,C2,D1,D2,E1,E2 -- Basic Contract
C3, F-Spouse Insurance Benefit (except in Montana)
and Exhibit IA, Section V.
1. All columns headed by "Male" are amended to read "Male/Unisex**"
2. Add a footnote which reads:
**Unisex rates are used for contracts which prohibit discrimination on
the basis of gender.
C3, F-SPOUSE INSURANCE BENEFIT: MONTANA ONLY
1. All columns headed by "Female" are amended to read "Female/Unisex**"
2. Add a footnote which reads:
**Unisex rates are used for contracts which prohibit discrimination on
the basis of gender.
<PAGE>
DISTRICT REPRESENTATIVE AGREEMENT
LUTHERAN BROTHERHOOD
Minneapolis, Minnesota
SCHEDULE OF COMMISSION RATES
AMENDMENT TO EXHIBIT I
Section VIII. HEALTH INSURANCE
The following rates apply to Long Term Care (1992 Series) contracts sold to
residents of the indicated state.
INDIANA WISCONSIN MICHIGAN
COMMISSIONS COMMISSIONS COMMISSIONS
Continuous Continuous Continuous
Issue Renewal Renewal Renewal
Age Year 1 Year 2+ Year 1 Year 2+ Year 1-3 Year 4+
--- ------ ------- ------ ------- -------- -------
50-71 18% 9% 24% 7% 18% 3%
72 18 9 24 7 17 3
73 17 9 23 7 17 3
74 16 9 23 7 16 3
75 16 9 23 6 16 3
76 16 8 23 6 16 3
77 16 8 23 6 15 3
78 16 8 22 6 15 3
79 16 8 21 6 14 3
80 15 8 20 6 14 3
81 15 8 20 5 14 3
82 14 8 20 5 13 3
83 14 7 20 5 13 3
84 14 7 19 5 12 3
<PAGE>
DISTRICT REPRESENTATIVE AGREEMENT
LUTHERAN BROTHERHOOD
Minneapolis, Minnesota
SCHEDULE OF COMMISSION RATES
AMENDMENT TO EXHIBIT I
Section VIII. HEALTH INSURANCE
The following rates apply to Long Term Care (1990 Series) contracts sold to
residents of the indicated state.
Commissions Commissions
MICHIGAN Issue Ages Years 1,2&3 Years 4&5
---------- -------------- -----------
50-70 17% 5%
71-73 16 5
74-76 15 5
77-79 14 5
80-82 13 5
82-84 12 5
1st Year Commissions
WISCONSIN Issue Ages Commissions Years 2,3,4,5&6
---------- ----------- -----------------
50-70 27% 7%
71 26 7
72 25 7
73-74 24 7
75-76 24 6
77 23 6
78 22 6
79 21 6
80-81 20 6
82-83 20 5
84 19 5
1st Year Commissions
INDIANA Issue Ages Commissions Years 2,3,4,5&6
---------- ----------- -----------------
50-70 18% 10%
71-72 18 9
73 17 9
74-75 16 9
76-77 16 8
78-79 15 8
80 14 8
81-82 14 7
83-84 13 7
<PAGE>
DISTRICT REPRESENTATIVE AGREEMENT
LUTHERAN BROTHERHOOD
Minneapolis, Minnesota
SCHEDULE OF COMMISSION RATES
AMENDMENT TO EXHIBIT I
Section VIII. HEALTH INSURANCE
The following rates apply to Long Term Care (1992 Series) contracts sold to
residents of the indicated state.
DELAWARE
COMMISSIONS
Issue
Age Year 1 Year 2 Year 3 Year 4 Year 5+
--- ------ ------ ------ ------ -------
50-72 16% 16% 16% 8% 3%
73 16 16 16 5 3
74 16 16 16 3 3
75 16 16 13 3 3
76 16 16 11 3 3
77 16 16 10 3 3
78 16 16 9 3 3
79 16 16 7 3 3
80 16 16 5 3 3
81 16 16 4 3 3
82 16 16 3 3 3
83 16 13 3 3 3
84 16 12 3 3 3
<PAGE>
THIS PAGE IS
INTENTIONALLY BLANK
#20710
</TABLE>
<PAGE>
1993 Variable Annuity issued
by LB with two annuitants
EXHIBIT 4
-----
LUTHERAN
[LOGO] BROTHERHOOD
A Fraternal Benefit Society
Minneapolis, Minnesota 55415
FLEXIBLE PREMIUM
DEFERRED VARIABLE ANNUITY
- ----------------------------------------------------------------------------
This is a legal contract between you and Lutheran Brotherhood. We accept
each Annuitant as a member. We issue this contract based on the Application
signed by the applicant(s) and the payment of the first premium.
We will pay you the Annuity Income beginning on the Maturity Date (see page
3) if an Annuitant is living on that date and this contract is still in
force. If an Annuitant dies after Annuity Income payments have begun, any
amount payable will depend upon the terms of the settlement option elected.
We will pay the Death Proceeds to the beneficiary upon receiving proof that
the death of the Annuitant, or the death of the first Annuitant to die if
this contract has two Annuitants, occurred before the Maturity Date. The
Annuity Income and Death Proceeds will be paid according to the provisions
of this contract.
THE ACCUMULATED VALUE AND THE DEATH PROCEEDS MAY INCREASE OR DECREASE DAILY
BASED ON THE INVESTMENT EXPERIENCE OF THE VARIABLE ACCOUNT. ANNUITY
PAYMENTS PROVIDED BY THIS CONTRACT, WHEN BASED ON THE INVESTMENT EXPERIENCE
OF THE VARIABLE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO MINIMUM
DOLLAR AMOUNT.
RIGHT TO CANCEL. PLEASE READ THIS CONTRACT CAREFULLY. You may cancel the
contract before midnight of the 10th day after you first receive it. Do
this by (1) sending a telegram or mailing or delivering written notice to
Lutheran Brotherhood, 625 Fourth Avenue South, Minneapolis, MN 55415 or to
the representative through whom you bought it, and (2) returning the
contract. Notice given by mail and return of the contract by mail are
effective on being postmarked, properly addressed and postage prepaid. If
you cancel the contract, it will be deemed void from the beginning. Within
7 days after we receive it, we will refund the sum of: (1) The Accumulated
Value on the day the contract is first received by us or our representative;
and (2) The amount attributable to this contract for risk charges deducted
from the Variable Account and for advisory fees charged against the net
asset value in the Fund portfolios.
Annuity Income payable at maturity.
Death Proceeds payable at death before maturity.
Flexible premiums.
Return on investments reflected in contract benefits.
Annual dividends payable if earned.
Signed for the Society at Minneapolis, Minnesota
- ----------------------------------------------------------------------------
President SAMPLE /s/ Robert P. Gandrud
- ----------------------------------------------------------------------------
Secretary SAMPLE /s/ David J. Larson
- ----------------------------------------------------------------------------
ANNUITANT: JOHN DOE AGE: 35 SEX: MALE
ANNUITANT: JANE DOE AGE: 35 SEX: FEMALE
CONTRACT NUMBER: LC1234567 DATE OF ISSUE: JULY 1, 1993
- ----------------------------------------------------------------------------
TABLE OF CONTENTS
- ----------------------------------------------------------------------------
Cover Page
Index
Contract Schedule, Contract Data
SECTION 1 Definitions
SECTION 2 General Provisions
SECTION 3 Membership and Ownership
SECTION 4 Premiums
SECTION 5 Accumulated Value
SECTION 6 Surrender
SECTION 7 Accounts and Unit Values
SECTION 8 Settlement Provisions
SECTION 9 Beneficiary
SECTION 10 Dividends
Additional Benefits, Amendments, Application
- ----------------------------------------------------------------------------
INDEX
- ----------------------------------------------------------------------------
SECTION
Accumulated Value .................................................... 5
Accumulation Unit Value .............................................. 7
Administrative Charge ................................................ 5
Allocation of Premiums ............................................... 7
Annual Report ........................................................ 5
Annuity Income ....................................................... 2
Annuity Unit Value ................................................... 7
Beneficiary .......................................................... 9
Cash Surrender Value ................................................. 6
Change in Annuity Unit Allocation .................................... 7
Change in Contract ................................................... 2
Change of Investment Policy .......................................... 7
Dividends ............................................................ 10
Death Proceeds ....................................................... 2
Deferment ............................................................ 2
Entire Contract ...................................................... 2
Exchange Provision ................................................... 3
Fixed Account ........................................................ 7
General Account ...................................................... 7
Incontestability ..................................................... 2
Maintenance of Solvency .............................................. 2
Membership ........................................................... 3
Minimum Accumulated Value Required ................................... 5
Misstatement of Age or Sex ........................................... 2
Ownership ............................................................ 3
Premiums ............................................................. 4
Settlement Options ................................................... 8
Surrender ............................................................ 6
Cash Surrender Value ............................................... 6
Full Surrender ..................................................... 6
Partial Surrender .................................................. 6
Surrender Charge ................................................... 6
Transfer and Assignment .............................................. 3
Transfer of Accumulated Values ....................................... 7
Variable Account ..................................................... 7
<PAGE>
LUTHERAN BROTHERHOOD For information about this
[LOGO] BROTHERHOOD contract, consult your
625 Fourth Avenue South Lutheran Brotherhood
Minneapolis, Minnesota 55415 Representative or write to
us at our home office.
- ----------------------------------------------------------------------------
CONTRACT SCHEDULE
BASIC BENEFIT
FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY
MATURITY DATE: July 1, 2023
GUARANTEED PERIOD: 10 YEARS
PREMIUM RECEIVED ON DATE OF ISSUE: $1,000.00
DATE OF INITIAL PREMIUM ALLOCATION: JULY 1, 1993
(SEE SECTION 7.4)
ACCUMULATED VALUES IN THE VARIABLE ACCOUNT DEPEND ON THE INVESTMENT
EXPERIENCE OF THE VARIABLE ACCOUNT.
- ----------------------------------------------------------------------------
ADMINISTRATIVE CHARGE: $30.00 PER YEAR (SEE SECTION 5.2)
SURRENDER CHARGES*
CONTRACT YEAR PERCENT APPLIED
1 6%
2 5%
3 4%
4 3%
5 2%
6 1%
THEREAFTER 0%
*SEE SECTION 6.4 FOR A FULL DESCRIPTION OF THE SURRENDER CHARGE.
- ----------------------------------------------------------------------------
ANNUITANT: JOHN DOE AGE: 35 SEX: MALE
ANNUITANT: JANE DOE AGE: 35 SEX: FEMALE
CONTRACT NUMBER: LC1234567 DATE OF ISSUE: JULY 1, 1993
FLEXIBLE PREMIUM
DEFERRED VARIABLE ANNUITY
- ----------------------------------------------------------------------------
VARIABLE ACCOUNT INFORMATION
Investment Company -- LB Series Fund, Inc.
Variable Account -- LB Variable Annuity Account I
Each subaccount of the LB Variable Annuity Account I invests in a
specific portfolio of LB Series Fund, Inc. Subaccounts of the
Variable Account and the portfolios in which they invest are as
follows:
GROWTH SUBACCOUNT -- Amounts credited to this
subaccount are invested in the
Growth Portfolio. This portfolio
invests primarily in equity
securities.
HIGH YIELD SUBACCOUNT -- Amounts credited to this
subaccount are invested in the
High Yield Portfolio. This
portfolio invests primarily in
high yield securities.
INCOME SUBACCOUNT -- Amounts credited to this
subaccount are invested in the
Income Portfolio. This portfolio
invests primarily in fixed income
securities.
MONEY MARKET SUBACCOUNT -- Amounts credited to this
subaccount are invested in the
Money Market Portfolio. This
portfolio invests primarily in
money market instruments.
The LB Series Fund, Inc. receives investment advice for each
portfolio from Lutheran Brotherhood. As investment advisor,
Lutheran Brotherhood charges the LB Series Fund, Inc. a daily
investment advisory fee equal to an annual rate of 0.4% of the
aggregate average daily net assets of LB Series Fund, Inc.
For a complete description of the Variable Account and the
designated portfolios, please refer to the current prospectus for
LB Series Fund, Inc.
FIXED ACCOUNT INFORMATION
Invests in the General Account of Lutheran Brotherhood.
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1. DEFINITIONS
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ANNUITANT. The person(s) named as Annuitant on page 3.
APPLICATION. The application(s) and all amendments and supplements.
CONTRACT ANNIVERSARY. The Date of Issue on page 3 and the same month and
day for years after issue as in the Date of Issue.
CONTRACT YEAR. The period of time from one Contract Anniversary to the next
Contract Anniversary.
FIXED ANNUITY. An annuity whose payments are:
1) Guaranteed as to minimum amount; and
2) Not dependent on the investment experience of the Variable
Account.
SEC. Securities and Exchange Commission.
VALUATION DAY. Any day, except the day after Thanksgiving Day and the day
before Christmas Day, that the New York Stock Exchange is open for trading
or there is sufficient trading in a Fund portfolio's securities to affect
the accumulation unit value of the corresponding subaccount of the Variable
Account.
VALUATION PERIOD. The period of time from the end of one Valuation Day to
the end of the next Valuation Day.
VARIABLE ANNUITY. An annuity whose payments vary depending on the
investment experience of the Variable Account.
WE, OUR, US, SOCIETY. Lutheran Brotherhood.
WRITTEN NOTICE. A written request or notice signed by you and received by
us at our Home Office in Minneapolis, Minnesota.
YOU, YOUR, YOURS. The owner(s) of this contract.
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2. GENERAL PROVISIONS
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2.1 ENTIRE CONTRACT. The Entire Contract consists of:
1) This contract including any attached riders, amendments or
endorsements;
2) The Application attached to this contract; and
3) The Articles of Incorporation and Bylaws of the Society which are
in force on the Date of Issue.
2.2 CHANGE OF CONTRACT. No change in this contract is valid unless it is
made in writing and signed by our President and Secretary.
2.3 DEATH PROCEEDS. The amount of Death Proceeds is calculated on the
later of:
1) The date we receive proof of death; and
2) The date we receive signed notice of the Beneficiary's election
to receive Death Proceeds.
The amount is the greatest of:
1) The Accumulated Value on the date Death Proceeds are calculated;
2) The sum of the premiums received by us, less the amount of any
Partial Surrenders; and
3) The Accumulated Value on the preceding Minimum Death Benefit Date
plus the sum of premiums received by us since that date, less the
amount of any Partial Surrenders since then. The first Minimum
Death Benefit Date is the Date of Issue of this contract.
Thereafter, Minimum Death Benefit Dates occur every 6 years on
the Contract Anniversary.
The Death Proceeds are not less than the minimum values required by law.
2.4 ANNUITY INCOME. The Annuity Income will be the amount provided by
the Cash Surrender Value on the Maturity Date. This income may be paid
under a Fixed Annuity, Variable Annuity, or both. Unless you elect
otherwise, the income will be determined according to Section 8.2 Optional
Plans of Settlement using the Guaranteed Period shown on page 3 and Option 4
if one Annuitant is living on the Maturity Date or Option 5 if two
Annuitants are then living.
2.5 MATURITY DATE. The Maturity Date is shown on page 3. We will pay
you the Annuity Income beginning on the Maturity Date if an Annuitant is
then living. You may change this date by giving Written Notice before the
Maturity Date.
2.6 STATEMENTS IN THE APPLICATION. We will not use any statement to
contest a claim or to have this contract declared invalid unless the
statement is contained in the Application. All statements made in the
Application are representations, not warranties.
2.7 INCONTESTABILITY. With respect to each Annuitant, we will not
contest the validity of this contract after it has been in force during the
Annuitant's lifetime for two years from the Date of Issue.
2.8 MISSTATEMENT OF AGE OR SEX. If an Annuitant's age or sex has been
misstated, any amount payable will be that which the premiums paid would
have bought at the correct age and sex. If we make any underpayment as a
result of misstatement of age or sex, we will pay you the underpayment with
interest compounded at the rate of 4% per year. If we make any overpayment,
future payments will be reduced until we have recovered the amount of the
overpayment plus interest compounded at 4% per year.
2.9 EXEMPTIONS FROM CLAIMS OF CREDITORS. To the extent permitted by law,
the proceeds of this contract and any payments under it will not be subject
to the claims of creditors or to any legal proceedings.
2.10 MAINTENANCE OF SOLVENCY. This provision applies only to values in
the Fixed Account:
Benefits provided by this contract will not change. If the solvency of the
Society becomes impaired, you may be required to make an extra payment. The
Board of Directors will determine the amount of any extra payment. It will
be based on each member's fair share of the deficiency. The amount will be
charged as a loan against the contract with interest compounded at the rate
of 5% per year.
You may prefer to make the extra payment by an equivalent reduction in
benefits or by a payment in cash. You may do this within 60 days from the
date we notify you of your share of the deficiency.
2.11 DEFERMENT. The Cash Surrender Value and Partial Surrenders will
normally be paid within 7 days after we receive Written Notice of surrender.
The Death Proceeds and Annuity Income will be paid as in Section 8.
However, we may defer the payment of any portion of surrender amounts, Death
Proceeds or Annuity Income which is in the Variable Account while:
1) The New York Stock Exchange is closed for trading; or
2) The SEC requires that trading be restricted or declares an
emergency.
We may defer for not more than six months the payment of any portion of
surrender amounts, Death Proceeds or Annuity Income which is in the Fixed
Account.
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3. MEMBERSHIP AND OWNERSHIP
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3.1 MEMBERSHIP. Each Annuitant is an adult member of the Society.
Rights and privileges of membership are set forth in the Bylaws of the
Society or in the Application. These rights and privileges are separate
from the ownership of this contract.
3.2 OWNERSHIP. The Annuitant is the owner unless another owner is named
in the Application. While an Annuitant is living, the owner may exercise
all rights set out in this contract. If there are two owners, both must act
in concert to exercise ownership rights. An owner has no membership rights
unless the owner is an Annuitant.
3.3 EXCHANGE PROVISION. If an Annuitant dies before Annuity Income
payments begin and that Annuitant's spouse is the sole primary beneficiary,
then the spouse may elect, to the extent permitted by law, to continue this
contract in force as the Annuitant in lieu of receiving Death Proceeds.
Election must be made by giving Written Notice within 60 days after we
receive due proof of death. This election will be automatic if the spouse
beneficiary is also an Annuitant.
3.4 TRANSFER AND ASSIGNMENT. If this contract is used in a qualified
plan under Section 401, 403, 408 or 457 of the Internal Revenue Code, as
amended, then:
1) If the owner is a trust, custodian or employer, you may transfer
ownership to the Annuitant, otherwise
2) This contract may not be sold, assigned, discounted or pledged as
collateral for a loan or as security for performance of an
obligation or for any other purpose to any person other than us.
If this contract is not used in a qualified plan as described above, then:
1) Ownership may be transferred but not to a natural person; and
2) This contract may be assigned as collateral.
We are not bound by any assignment unless it is in writing and filed at our
Home Office. We are not responsible for the validity or effect of any
assignment.
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4. PREMIUMS
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4.1 PREMIUM PAYMENTS. The amount of the premium received on the Date of
Issue is shown on page 3. Additional premiums may be paid at any time
before the Maturity Date and in any amount except that we reserve the right
to require that each premium payment must be at least $50.
Premiums are payable at our Home Office. Upon request we will give you a
receipt, signed by an officer of the Society, for the premium paid. Except
as provided in Section 5.3, failure to pay premiums will not lapse this
contract.
4.2 PREMIUM BILLING. We will send premium billings based on the amount
and frequency of premium payments which you request. You may change the
amount and, subject to our published rules, the frequency or method of
billing by giving Written Notice. If we do not receive any premium payments
for 24 consecutive months, we will stop billings.
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5. ACCUMULATED VALUE
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5.1 ACCUMULATED VALUE. On or before the Maturity Date, the Accumulated
Value of this contract is equal to the sum of the accumulated values for
this contract in the subaccounts and in the Fixed Account.
The accumulated value in any subaccount on a Valuation Day is equal to:
1) The number of accumulation units for this contract in that
subaccount (see Section 7.6); multiplied by
2) The accumulation unit value for that subaccount (see
Section 7.7).
The accumulated value for any day that is not a Valuation Day will be
determined on the next Valuation Day.
The accumulated value in the Fixed Account on any day is the sum of:
1) Premiums allocated to the Fixed Account;
2) Accumulated value transferred to the Fixed Account from a
subaccount; and
3) Interest credited;
Less
4) Partial Surrenders which are applied against the Fixed Account;
5) Accumulated value transferred from the Fixed Account to a
subaccount; and
6) Administrative Charges that are taken from the Fixed Account.
5.2 ADMINISTRATIVE CHARGE. On each Contract Anniversary prior to and
including the Maturity Date, if the sum of premiums received by us less the
amount of any Partial Surrenders is less than $5,000, we will deduct an
Administrative Charge from the Accumulated Value. The portion of the charge
applied against each subaccount of the Variable Account and the Fixed
Account will be determined according to the ratio for this contract of the
accumulated value in the subaccount or Fixed Account to the sum of the
accumulated values in all the subaccounts and the Fixed Account. The charge
applied against each subaccount will be the prorata portion of the
Administrative Charge for that subaccount. The charge applied against the
Fixed Account will be the lesser of:
1) The prorata portion of the Administrative Charge for the Fixed
Account; and
2) Interest accrued for the Contract Year in excess of interest
accrued at 3%.
With our approval, you may choose other allocations of the Administrative
Charge. The amount of the Administrative Charge is shown on page 3.
5.3 MINIMUM ACCUMULATED VALUE REQUIRED. We will terminate this contract
on any Contract Anniversary if:
1) The Accumulated Value is less than $1,000 and no premium payment
has been received in the Home Office for at least 24 months; or
2) The Accumulated Value (before any Administrative Charge is
applied) is less than the Administrative Charge.
Upon termination under paragraph (1) of this provision we will pay you the
Accumulated Value.
5.4 ANNUAL REPORT. We will mail you a statement of the value of this
contract at least once each year until the Maturity Date. The report will
show the Accumulated Value and any additional information required by law.
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6. SURRENDER
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6.1 FULL SURRENDER. On or before the Maturity Date, you may surrender
this contract for its Cash Surrender Value by giving Written Notice before
the Maturity Date and while an Annuitant is alive. The surrender will be
effective on the later of:
1) The date we receive Written Notice; and
2) The date you specify.
6.2 CASH SURRENDER VALUE. The Cash Surrender Value on any date is equal
to:
1) The Accumulated Value;
Less
2) Any Surrender Charge (see Section 6.4).
The Cash Surrender Values are not less than the minimum values required by
law.
6.3 PARTIAL SURRENDER. On or before the Maturity Date, you may surrender
a portion of the Accumulated Value by giving Written Notice before the
Maturity Date and while an Annuitant is alive. The portion surrendered is
the Partial Surrender. We will deduct any Surrender Charge (see Section
6.4) from the Partial Surrender, as determined on the date we receive
Written Notice.
A Partial Surrender:
1) Must be at least $500;
2) Will reduce the Accumulated Value by the amount of the Partial
Surrender. The reduction will be applied against each subaccount
of the Variable Account and against the Fixed Account according
to the ratio for this contract of the accumulated value in the
subaccount or Fixed Account to the sum of the accumulated values
in all the subaccounts and the Fixed Account. With our approval,
you may choose other allocations to the subaccounts and the Fixed
Account;
3) Must not reduce the remaining Accumulated Value to less than
$1,000; and
4) Will be effective on the date we receive Written Notice.
6.4 SURRENDER CHARGE. A Surrender Charge will be applied to Full and
Partial Surrenders. The charge is made as a percentage of the Accumulated
Value surrendered. The percent applied is shown on page 3. However:
1) On any date, the sum of all Surrender Charges applied up to that
date will not exceed 6 1/2% of the total of premiums paid to
that date;
2) For any surrender made more than three years after the Date of
Issue, no Surrender Charge will be deducted from the portion of
the Accumulated Value surrendered which is paid under:
a) Option 2, 3 or 3V of Section 8.2 provided that payments will
be made for at least 5 years and that the proceeds may not be
withdrawn; or
b) Option 4, 4V, 5 or 5V of Section 8.2 or any other life income
option agreed to by us;
3) In each Contract Year you may surrender without a Surrender
Charge up to 10% of the Accumulated Value existing at the time
the first surrender is made in that Contract Year; and
4) No Surrender Charge will be applied for surrenders made while an
Annuitant is confined in a hospital, nursing home or hospice if
the confinement begins while this contract is in force and has
continued for six consecutive months.
5) No Surrender Charge will be applied for surrenders made during
Total Disability of an Annuitant. Total Disability is a
disability:
a) Which begins before the Contract Anniversary after the
Annuitant's 65th birthday;
b) Which has continued for six consecutive months;
c) Which results from bodily injury sustained or disease which
first appears while this contract is in force; and
d) Which completely prevents the Annuitant from engaging in an
Occupation for gain or profit. During the first 24 months of
disability, Occupation is the Annuitant's regular occupation
when the disability begins. After this, it is any
occupation for which the Annuitant is or becomes qualified
by reason of education, training or experience. However, if
the Annuitant is primarily a homemaker when Total Disability
begins, Occupation for gain or profit means performing
household duties.
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7. ACCOUNTS AND UNIT VALUES
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7.1 VARIABLE ACCOUNT. We have established the Variable Account shown on
page 4 as a separate investment account according to Minnesota laws. The
Variable Account is registered with the SEC as a unit investment trust under
the Investment Company Act of 1940.
The Variable Account has subaccounts which invest in shares of the LB Series
Fund, Inc. (the Fund). The Fund is registered with the SEC under the
Investment Company Act of 1940 as a diversified open-end management
investment company. Each subaccount purchases shares in a specified
portfolio of the Fund. Amounts allocated to each subaccount buy shares of
the portfolio for that subaccount at net asset value. The portfolios and
subaccounts are shown on page 4. We may add additional subaccounts to invest
in a new portfolio of the Fund or in a different investment company.
We own the assets of the Variable Account. Assets equal to the reserves and
other liabilities of the Variable Account may not be charged with
liabilities from any other business we conduct. However, we may transfer
assets of the Variable Account in excess of account reserves and liabilities
to our General Account.
Income and realized and unrealized gains and losses from each subaccount of
the Variable Account are credited to or charged against that subaccount.
The value of the assets in the Variable Account is determined at the end of
each Valuation Day.
7.2 FIXED ACCOUNT. Amounts allocated to the Fixed Account are invested
with our General Account assets. Interest will be credited on premiums
allocated to the Fixed Account and on accumulated value transferred to the
Fixed Account from the date of allocation or transfer. The rate applied to
amounts in the Fixed Account depends on the date of allocation or transfer
to the Fixed Account. For any amount allocated or transferred to the Fixed
Account, we guarantee that the initial interest rate will be effective for
at least 12 months, and subsequent interest rates will not be changed more
often than once every 12 months. Interest will be compounded daily.
Interest rates will never be less than an effective rate of 3% per year.
The last-in, first-out accounting method will be used to credit interest for
Partial Surrenders, transfers and the Administrative Charge.
7.3 GENERAL ACCOUNT. The General Account includes all assets we own that
are not in the Variable Account or any other separate account of the
Society. Reserves for any Fixed Annuity are maintained in the General
Account.
7.4 ALLOCATION OF PREMIUMS. The first premium payment is applied on the
Date of Issue. After the Date of Issue, payments are applied on the date we
receive them.
The Date of Issue of this contract is the date the first premium is received
in our Home Office. The Date of Initial Premium Allocation is the date we
approve your Application. Both of these dates are shown on page 3.
Premiums are allocated to the subaccounts of the Variable Account and to the
Fixed Account as follows:
1) Each premium received before the Date of Initial Premium
Allocation will be applied to the Money Market Subaccount as of
the Date of Issue. On the Date of Initial Premium Allocation,
the accumulated value in the Money Market Subaccount will be
allocated to the subaccounts of the Variable Account and to the
Fixed Account.
2) Each premium received on or after the Date of Initial Premium
Allocation will be allocated to the subaccounts of the Variable
Account and to the Fixed Account.
Premiums are allocated according to the premium allocation percentages for
this contract. The initial premium allocation percentages are specified in
the Application. If you do not designate allocation percentages, the entire
premium will be allocated to the Money Market Subaccount.
You may change these premium allocation percentages by giving Written
Notice. The change will be effective for each premium received with or
after your notice. The sum of the premium allocation percentages must be
100%, and each premium allocation percentage must be a whole number not more
than 100%. We reserve the right to adjust your allocation to eliminate
fractional percentages.
7.5 TRANSFER OF ACCUMULATED VALUES. On or before the Maturity Date, you
may transfer some or all of the accumulated values among the subaccounts of
the Variable Account and the Fixed Account. You do this by giving Written
Notice. The transfer of accumulated value is subject to the following:
1) The total amount transferred cannot be less than the smaller of:
a) $500; and
b) The accumulated value in the subaccount(s) or Fixed Account
from which the transfer is being made.
2) The transfer will occur at the end of the day on which we receive
Written Notice.
3) We reserve the right to limit the number of transfers in each
Contract Year. However, subject to the limit on Fixed
Account transfers stated in (4), we will always allow at least
two transfers per Contract Year.
4) Transfers from the Fixed Account must be made on or within 45
days after a Contract Anniversary. Only one transfer from the
Fixed Account will be allowed per Contract Year.
We may defer making transfers subject to the same conditions as in Section
2.11 Deferment.
7.6 NUMBER OF ACCUMULATION UNITS. The number of accumulation units for
this contract in any subaccount may increase or decrease at the end of each
Valuation Period. The number of accumulation units increases when, during
the period:
1) Premiums are allocated to the subaccount; or
2) Accumulated value is transferred to the subaccount from another
subaccount or from the Fixed Account.
The number of accumulation units decreases when, during the Valuation
Period:
1) Accumulated value is transferred from the subaccount to another
subaccount or to the Fixed Account;
2) Partial Surrenders are applied against the subaccount; or
3) Administrative Charges are taken from the subaccount.
The increase or decrease in the number of accumulation units for this
contract in any subaccount is equal to:
1) The dollar amount allocated or transferred to or from that
subaccount;
Divided by
2) The accumulation unit value for that subaccount at the end of the
Valuation Period during which the amounts are allocated or
transferred.
7.7 ACCUMULATION UNIT VALUE. The accumulation unit value for a
subaccount is equal to (1) divided by (2) where:
1) Is the sum of:
a) The net asset value of the corresponding portfolio of the
subaccount at the end of the current Valuation Period; plus
b) The amount of any dividend or capital gain distribution made
by the portfolio if the "ex-dividend" date occurs during the
Valuation Period; plus or minus
c) A charge or credit for any taxes reserved for that we
determine to be a result of the investment operation of the
portfolio;
Less
d) The risk charge we deduct for each day in the Valuation
Period. This charge for mortality and expense risks is
guaranteed not to exceed, on an annual basis, 1.25% of the
daily value of the subaccount.
2) Is the number of accumulation units of that subaccount for all
contracts, including accumulation units held as reserves for
Variable Annuities.
Accumulation unit values are determined at the end of each Valuation Day
before the transfer or allocation of any amounts to or from the subaccounts.
The accumulation unit values may increase or decrease on each Valuation Day.
7.8 NUMBER OF ANNUITY UNITS. If a Variable Annuity is payable, each
annuity payment is defined in terms of annuity units. The total amount
payable is the sum of the payments from each subaccount. The number of
annuity units payable from any subaccount is equal to:
1) The dollar amount of the first annuity payment provided by that
subaccount;
Divided by
2) The annuity unit value for that subaccount on the Valuation Day
on which the first payment is calculated.
After the first payment, the number of annuity units payable from each
subaccount will not change unless you request a change in allocation as
provided in Section 7.11. The dollar amount payable from any subaccount
will be equal to:
1) The number of units payable from that subaccount;
Multiplied by
2) The annuity unit value for that subaccount on the Valuation Day
on which the payment is calculated.
7.9 ANNUITY UNIT VALUE. On any Valuation Day, the annuity unit value for a
subaccount is equal to:
1) The annuity unit value for the subaccount at the end of the prior
Valuation Day;
Multiplied by
2) The Investment Factor (see Section 7.10) for the subaccount for
that day;
Multiplied by
3) A discount factor equivalent to an assumed interest rate of
3 1/2% per year.
Annuity unit values are determined at the end of each Valuation Day before
the transfer or allocation of any amounts to or from the subaccounts. The
annuity unit values may increase or decrease on each Valuation Day.
7.10 INVESTMENT FACTOR. The Investment Factor for a subaccount measures
the investment performance of that subaccount. The Investment Factor for a
subaccount is equal to:
1) The accumulation unit value of the subaccount at the end of the
current Valuation Period;
Divided by
2) The accumulation unit value of the subaccount at the end of the
last prior Valuation Period.
7.11 CHANGE IN ANNUITY UNIT ALLOCATION. You may change the allocation of
Annuity Units among the subaccounts of the Variable Account. Any change in
Annuity Unit allocations:
1) Will occur at the end of the day on which we receive Written
Notice;
2) Will be based on annuity unit values for the subaccounts on that
day; and
3) May be made only once each Contract Year.
7.12 CHANGE OF INVESTMENT POLICY. The investment policy for the Variable
Account is described on page 4. We may change the investment policy of the
Variable Account with the approval of the insurance supervisory officials of
the State of Minnesota. We will notify you if there is a material change in
investment policy.
7.13 CHANGE OF PORTFOLIO. We may determine that a portfolio has become
unsuitable for investment by a subaccount or shares of a portfolio may cease
to be available for investment. In such event, we may substitute another
portfolio of the investment company or invest in a different investment
company. This change would not be made unless approved by:
1) The SEC; and
2) If required, the insurance supervisory officials in the state
where this contract is delivered.
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8. SETTLEMENT PROVISIONS
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8.1 PAYMENT OF PROCEEDS. Proceeds from death or surrender are payable in
a lump sum unless otherwise provided. On Death Proceeds, we will pay
interest at the rate payable in Option 1 - Interest Income or, if greater,
the rate required by law. Interest is payable from the date the amount of
Death Proceeds is calculated (see Section 2.3) until the date of settlement.
Instead of a lump sum, proceeds of $2,000 or more may be paid under any
settlement option in Section 8.2 by means of a supplementary contract which
we will issue.
8.2 OPTIONAL PLANS OF SETTLEMENT. Proceeds payable under a settlement
option may be paid under one or more of the following options.
OPTION 1 - INTEREST INCOME. The proceeds may be left on deposit. Interest
will be paid at a rate of not less than 3% per year. These proceeds may be
withdrawn upon request.
FIXED ANNUITY OPTION 2 - INCOME OF A FIXED AMOUNT. We will pay an income of
a fixed amount at agreed upon intervals. This income is subject to these
conditions:
1) Income per year must not be less than 6% of the proceeds.
2) Income is paid until the proceeds, with interest credited at the
rate of 3 1/2% per year on the unpaid balance, are paid in full.
This income may be increased by the crediting of additional
interest.
FIXED ANNUITY OPTION 3 AND VARIABLE ANNUITY OPTION 3V - INCOME FOR A FIXED
PERIOD. We will pay an income for a fixed number of years, not to exceed
30. Guaranteed payments for Options 3 and 3V are shown in the table on page
16. We use an effective annual interest rate of 3 1/2%. Under Option 3,
the income per $1,000 of proceeds will not be less than the amount shown.
Under Option 3V, the first monthly payment per $1,000 of proceeds in any
subaccount will be the amount shown.
FIXED ANNUITY OPTION 4 AND VARIABLE ANNUITY OPTION 4V - LIFE INCOME WITH
GUARANTEED PERIOD. We will pay an income for the lifetime of the payee. If
the payee dies during the guaranteed period, payments will be continued to
the end of that period and will be paid to the beneficiary. A period of 10
or 20 years may be elected. Guaranteed payments for Options 4 and 4V are
shown in the table on page 17. The incomes are based on the 1983 Table A
for Annuity Valuation using an effective annual interest rate of 3 1/2%.
Under Option 4, the income per $1,000 of proceeds will not be less than the
amount shown. Under Option 4V, the first monthly payment per $1,000 of
proceeds in any subaccount will be the amount shown. After the first
payment is made, Options 4 and 4V may not be revoked or changed.
FIXED ANNUITY OPTION 5 AND VARIABLE ANNUITY OPTION 5V - JOINT AND SURVIVOR
LIFE INCOME WITH GUARANTEED PERIOD. We will pay an income as long as at
least one of two payees is alive. If both payees die during the guaranteed
period, payments will be continued to the end of that period and will be
paid to the beneficiary. A period of 10 or 20 years may be elected.
Guaranteed payments for Options 5 and 5V for selected ages are shown in the
table on page 17. The incomes are based on the 1983 Table A for Annuity
Valuation using an effective annual interest rate of 3 1/2%. Under Option
5, the income per $1,000 of proceeds will not be less than the amount so
determined. Under Option 5V, the first monthly payment per $1,000 of
proceeds in any subaccount will be the amount so determined. After the
first payment is made, Options 5 and 5V may not be revoked or changed.
OPTION 6 - OTHER OPTIONS. The proceeds may be paid under any other
settlement option agreeable to us.
8.3 ELECTION OF AN OPTION. You may elect an option by Written Notice
during an Annuitant's lifetime. The option must be elected before proceeds
become payable. Assignees and third-party owners may elect an option only
with our consent. Each payee under Options 4, 4V, 5 and 5V must be a
natural person who is an Annuitant or a beneficiary.
If Death Proceeds are payable, the beneficiary may elect a settlement option
provided that:
1) The manner of settlement has not been restricted before the
Annuitant's death;
2) The Death Proceeds have not been paid; and
3) Either:
a) The principal and interest are completely distributed
within 5 years after the date of death; or
b) If you have designated a natural person as beneficiary,
distribution of the principal and interest is made by means of
a periodic payment which:
i) Begins within one year after the date of death; and
ii) Is not guaranteed for a period which extends beyond the
life expectancy of the beneficiary.
Election of an option is subject to these conditions:
1) Payments must not be less than $25;
2) Payments are made only at annual, semiannual, quarterly or
monthly intervals; and
3) The first payment, except under Option 1 - Interest Income, is
payable as of the date the option becomes effective. Under
Option 1, interest is payable at the end of the first payment
interval.
If annuity payments would be or become less than $25, we reserve the right
to change the frequency of payments to an interval such that payments are
not less than $25.
If the Beneficiary does not receive Death Proceeds or elect a settlement
option by the date one year after we receive proof of the Annuitant's death,
Death Proceeds will then be calculated and applied under Option 1 - Interest
Income. Any proceeds not subsequently withdrawn will be paid in a lump sum
on the date 5 years after the date of death.
<PAGE>
<TABLE>
<CAPTION>
OPTIONS 3 AND 3V
Option 3 - Guaranteed Monthly Payments for Each $1,000 of Proceeds
Option 3V - First Monthly Payment for Each $1,000 of Proceeds
- -----------------------------------------------------------------------------------------------------
Years Monthly Years Monthly Years Monthly Years Monthly Years Monthly
Payable Payment Payable Payment Payable Payment Payable Payment Payable Payment
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 84.65 7 13.37 13 7.93 19 5.96 25 4.96
2 43.05 8 11.89 14 7.48 20 5.75 26 4.84
3 29.19 9 10.75 15 7.10 21 5.56 27 4.73
4 22.26 10 9.83 16 6.76 22 5.39 28 4.62
5 18.11 11 9.08 17 6.46 23 5.23 29 4.53
6 15.34 12 8.46 18 6.20 24 5.09 30 4.44
- -----------------------------------------------------------------------------------------------------
Annual, Semiannual or Quarterly payments are 11.813, 5.957 and 2.991 respectively,
times the Monthly payments.
- -----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
OPTIONS 4 AND 4V
Male Payee - Monthly Life Income
- -----------------------------------------------------------------------------------------------------
Option 4 - Guaranteed Monthly Life Income for Each $1,000 of Proceeds
Option 4V - First Monthly Life Income Payment for Each $1,000 of Proceeds
- -----------------------------------------------------------------------------------------------------
Payments Payments Payments Payments
Age of Payee Guaranteed Guaranteed Age of Payee Guaranteed Guaranteed
on Date of for for on Date of for for
First Payment 10 years 20 years First Payment 10 years 20 years
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
40 3.94 3.89 70 6.87 5.52
45 4.20 4.11 71 7.05 5.55
50 4.51 4.36 72 7.22 5.59
55 4.91 4.66 73 7.40 5.62
60 5.42 4.97 74 7.57 5.64
61 5.54 5.04 75 7.75 5.65
62 5.67 5.10 76 7.92 5.65
63 5.80 5.16 77 8.09 5.65
64 5.94 5.22 78 8.26 5.65
65 6.08 5.28 79 8.42 5.65
66 6.23 5.33 80 8.57 5.65
67 6.38 5.38 85 9.20 5.65
68 6.54 5.43 90 9.59 5.65
69 6.71 5.48 95 9.73 5.65
- -----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Female Payee - Monthly Life Income
- -----------------------------------------------------------------------------------------------------
Option 4 - Guaranteed Monthly Life Income for Each $1,000 of Proceeds
Option 4V - First Monthly Life Income Payment for Each $1,000 of Proceeds
- -----------------------------------------------------------------------------------------------------
Payments Payments Payments Payments
Age of Payee Guaranteed Guaranteed Age of Payee Guaranteed Guaranteed
on Date of for for on Date of for for
First Payment 10 years 20 years First Payment 10 years 20 years
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
40 3.72 3.70 70 6.23 5.37
45 3.92 3.88 71 6.40 5.43
50 4.18 4.11 72 6.58 5.48
55 4.51 4.38 73 6.76 5.52
60 4.93 4.70 74 6.95 5.57
61 5.03 4.77 75 7.14 5.60
62 5.14 4.84 76 7.34 5.63
63 5.25 4.91 77 7.54 5.65
64 5.37 4.98 78 7.74 5.65
65 5.50 5.05 79 7.94 5.65
66 5.63 5.12 80 8.13 5.65
67 5.77 5.19 85 8.97 5.65
68 5.91 5.25 90 9.48 5.65
69 6.07 5.32 95 9.73 5.65
- -----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
OPTIONS 5 AND 5V
Male and Female Payees - Monthly Life Income
- -----------------------------------------------------------------------------------------------------
Option 5 - Guaranteed Monthly Life Income For Each $1,000 Of Proceeds
Option 5V - First Monthly Life Income Payment For Each $1,000 Of Proceeds
- -----------------------------------------------------------------------------------------------------
Payments Guaranteed for 10 Years Payments Guaranteed for 20 Years
- -----------------------------------------------------------------------------------------------------
Age of Male
Payee On Age of Female Payee Age of Female Payee
Date of on Date of First Payment on Date of First Payment
First Payment 60 65 70 75 60 65 70 75
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
60 4.51 4.75 4.98 5.16 4.45 4.66 4.82 4.92
65 4.65 4.98 5.31 5.61 4.57 4.83 5.05 5.19
70 4.76 5.17 5.62 6.07 4.65 4.95 5.22 5.40
75 4.84 5.32 5.88 6.48 4.68 5.02 5.32 5.53
- -----------------------------------------------------------------------------------------------------
Rates not shown will be calculated on the same basis as the above rates and will be provided
upon request.
</TABLE>
<PAGE>
- ----------------------------------------------------------------------------
9 BENEFICIARY
- ----------------------------------------------------------------------------
9.1 BENEFICIARY. The beneficiary is named in the Application. You may
change the beneficiary by giving Written Notice. The change will become
effective if:
1) We receive Written Notice; and
2) We acknowledge the change.
The effective date of the change will be the date the notice was signed. We
will not be liable for any payment made or action taken by us before we
receive the notice.
9.2 RIGHTS OF BENEFICIARIES. Unless you designate otherwise, a surviving
beneficiary entitled to receive Annuity Income may:
1) Designate a contingent beneficiary; or
2) Take as a lump sum the commuted value of the Annuity Income
remaining payable to the end of the Guaranteed Period. The
commuted value will be based on the interest rate used to
determine the Annuity Income.
9.3 SUCCESSION OF BENEFICIARIES. You may designate one or more
beneficiaries to receive any Death Proceeds payable or any Annuity Income
remaining payable upon an Annuitant's death. You will classify each
beneficiary as primary or contingent. Upon the Annuitant's death, we will
pay to the primary beneficiaries who survive the Annuitant any proceeds or
income payable. If none survive, we will pay the surviving contingent
beneficiaries. In the event no beneficiary survives the Annuitant, any
Death Proceeds payable or the commuted value of any Annuity Income remaining
payable will be paid to the Annuitant's estate.
Other designations or successions of beneficiaries may be arranged with us.
9.4 SHARE OF PROCEEDS. Unless you specify otherwise, each beneficiary
receiving payments will have an equal share in any Death Proceeds payable or
any Annuity Income remaining payable. If this contract has two Annuitants
and both die such that the order of death cannot be determined, then one-
half of the Death Proceeds will be paid to the beneficiary of each
Annuitant.
- ---------------------------------------------------------------------------
10. DIVIDENDS
- ---------------------------------------------------------------------------
10.1 DIVIDENDS. Each year we will determine our divisible surplus. This
contract's share, if any, will be credited as a dividend on the Contract
Anniversary. Since we do not expect this contract to contribute to
divisible surplus, it is not expected that any dividends will be credited.
10.2 DIVIDEND OPTIONS. You may choose to use dividends credited prior to
the Maturity Date under any option which follows. After the Maturity Date,
dividends will be paid in cash.
CASH. Dividends are paid in cash.
PAYMENT OF PREMIUM. Dividends are applied as an additional premium
payment on the Contract Anniversary.
10.3 AUTOMATIC DIVIDEND OPTION. Dividends will be applied under the
Payment of Premium option unless a different option has been chosen in
writing.
<PAGE>
LUTHERAN
[LOGO] BROTHERHOOD
A Fraternal Benefit Society
Minneapolis, Minnesota 55415
FLEXIBLE PREMIUM
DEFERRED VARIABLE ANNUITY
- ----------------------------------------------------------------------------
Annuity Income payable at maturity.
Death Proceeds payable at death before maturity.
Flexible premiums.
Return on investments reflected in contract benefits.
Annual dividends payable if earned.
#20711
28
<PAGE>
EXHIBIT 5
-----
[LOGO] LUTHERAN BROTHERHOOD
A Fraternal Benefit Society APPLICATION FOR
Minneapolis, MN 55415 VARIABLE ANNUITY
/ 1 / PROPOSED ANNUITANT PLEASE PRINT IN BLACK INK
- ----------------------------------------------------------------------------
First Middle Last Soc Sec #
- ----------------------------------------------------------------------------
Street Address-Residence of Proposed Annuitant
- ----------------------------------------------------------------------------
City State Zip
- ----------------------------------------------------------------------------
Sex Birthdate Age Birth State Marital Status Phone# Day ( )
Mo Day Yr Eve.( )
- ----------------------------------------------------------------------------
(Available only on a Non-Qualified annuity.)
(The Proposed Joint Annuitant must be the
/ 2 / PROPOSED JOINT ANNUITANT spouse of the Proposed Annuitant.)
- ----------------------------------------------------------------------------
First Middle Last Soc Sec #
- ----------------------------------------------------------------------------
Sex Birthdate Age Birth State Marital Status Phone# Day ( )
Mo Day Yr Eve.( )
- ----------------------------------------------------------------------------
If address for Proposed Joint Annuitant is different from number 1, give
address in number 10.
(If selecting Membership Class 5, a Limited Membership
/ 3 / MEMBERSHIP Application must be completed.)
- ----------------------------------------------------------------------------
Give membership class for each proposed annuitant and, if available, the
number of his or her active contract or account.
- ----------------------------------------------------------------------------
First Name / Membership Class Number / LB/LBVIP Contract# or LBSC ACCOUNT#
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
MEMBERSHIP CLASS (Write number above):
1. Current Benefit Contract Member of Lutheran Brotherhood. (LB)
2. Current Associate Member of Lutheran Brotherhood. (LBVIP/LBSC)
3. Baptized in the Christian faith and professes to be Lutheran.
4. Current Family Limited Member of LB.
5. Current Situational Limited Member of LB or applying for Limited
membership. (Complete Limited Membership Application)
(NOT AVAILABLE ON A JOINT ANNUITY.)
(Only a Trust or Plan may be designated as a
Third Party Owner and the Third Party Owner will
be the Beneficiary. For Pension and Profit
/ 4 / THIRD PARTY OWNER Sharing Plans, the Plan must own the contract.)
- ----------------------------------------------------------------------------
For an individual annuity, the Proposed Annuitant will be the Owner unless
a Third Party Owner is named below.
- ----------------------------------------------------------------------------
Full name of Trust or Plan to be Third Party Owner/ Tax ID# of Trust or Plan
- ----------------------------------------------------------------------------
Name of Trust (Complete for Trust or Plan / State and Date of Trust
, TRUSTEE Mo Day Yr
- ----------------------------------------------------------------------------
Street Address of Trustee City State Zip
(Complete for Trust or Plan)
- ----------------------------------------------------------------------------
(If a Trust is Beneficiary and is not the Third Party
Owner, a Beneficiary Change Trust Designation form must
/ 5 / BENEFICIARY be completed.)
- ----------------------------------------------------------------------------
AUTOMATIC PRIMARY * Any Third Party Owner will be the sole Primary
BENEFICIARY Beneficiary
* For a joint annuity, each proposed annuitant will
be the other's sole Primary Beneficiary.
OTHER THAN AUTOMATIC * For an individual annuity, complete boxes a. and b.
BENEFICIARY below for Proposed Annuitant.
* For a joint annuity, the First Contingent
Beneficiary boxes b. and c. below may be completed.
a. PRIMARY BENEFICIARY OF PROPOSED ANNUITANT:
- ----------------------------------------------------------------------------
Name / Relationship to Proposed Annuitant / Address & Soc Sec #
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
b. FIRST CONTINGENT BENEFICIARY OF PROPOSED ANNUITANT:
- ----------------------------------------------------------------------------
Name / Relationship to Proposed Annuitant / Address & Soc Sec #
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
c. FIRST CONTINGENT BENEFICIARY OF PROPOSED JOINT ANNUITANT:
- ----------------------------------------------------------------------------
Name / Relationship to Proposed Joint Annuitant / Address & Soc Sec #
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Unless specified otherwise, each Beneficiary receiving payments will have an
equal share in any Death Proceeds payable or any Annuity Income remaining
payable.
* Add Day Survival Provision:
----------
/ / Primary or / / Entire Beneficiary
/ 6 / REPLACEMENT
- ----------------------------------------------------------------------------
Will the annuity contract applied for replace any existing annuity or
life insurance on the proposed annuitant(s)? (This includes a lapse
or surrender, taking a loan or partial surrender, or cancelling a
benefit.)
/ / Yes / / No
If Yes, give details in number 10 and complete a replacement
disclosure form, if required by the state.
/ 7 / VARIABLE ANNUITY
- ----------------------------------------------------------------------------
a. PRODUCT
/ / Individual Deferred
/ / Joint Deferred
/ /
--------------------------
GUARANTEED PERIOD
--------------
(Will be 10 yrs C&L if blank)
MATURITY AGE/DATE
--------------
(Will be the maximum if blank.
If individual use Maturity Age.
If joint use Maturity Date.)
b. PLAN TYPE (MUST CHECK ONE BELOW):
/ / Non-Qualified
/ / IRA
/ / Spousal IRA
/ / SEP IRA (Include adoption agreement or appropriate IRS
Form.)
/ / TSA 403(b) (Include contribution calc., Agreement for
Salary Reduction and TSA disclosure.)
/ / Pension Plan (Including money purchase, target benefit,
defined benefit and HR-10s)
/ / Profit Sharing Plan (Including profit sharing, 401(k) and
HR-10s)
(Check appropriate boxes below, complete Third Party Owner
section and include adoption agreement from Plan prototype.)
/ / Sole Proprietor / / New Plan
/ / Corporation / / Add Contract to Existing
Plan #
------------------
(Give other existing
cont./acct. # on Plan
for reference)
/ / -------------------------
(PREMIUM ALLOCATIONS MUST TOTAL 100% AND BE
/ 8 / PREMIUM ALLOCATION IN WHOLE NUMBERS.)
- ----------------------------------------------------------------------------
GROWTH % High Yield % Income % Money Market %
----- ----- ----- -----
FIXED %
-----
%
-------------------- -----
(Other)
(If someone other than the Owner(s) is to be
/ 9 / PREMIUM PAYMENTS billed, give billing instructions in number 10.)
- ----------------------------------------------------------------------------
Payment with Application $ / HO USE / DT / BATCH /
-------------
--------- ------ -------
Bill for Premiums of $
------------------
/ / A / / SA / / Q / / M
/ / New PAC (Complete PAC app.) / / Suspend Billing
/ / Existing PAC # Draw Date
-------------- ------------
Additional Funds of $ coming from
---------- --------------------------
(name of source)
/ / Rollover / / Direct Rollover / / Transfer
(Complete Rollover/Transfer request form, as appropriate.)
/ / 1035 TFE
IRA Contribution Year
------------------
/ 10 / DETAILS AND ENDORSEMENTS
- ----------------------------------------------------------------------------
SPECIAL REQUESTS/DETAILS
- ----------------------------------------------------------------------------
HOME OFFICE ENDORSEMENTS (Home Office use only. Acceptance of the
contract shall ratify changes entered here by the Society.)
- ----------------------------------------------------------------------------
SIGNATURE FOR APPLICATION
- ----------------------------------------------------------------------------
I have read the statements and answers recorded on this application. They
are given to obtain this annuity and are, to the best of my knowledge and
belief, true and complete and correctly recorded. I agree that they will
become part of this application and any contract issued. The statements and
answers recorded in number 3 above shall be the basis of my membership in
Lutheran Brotherhood. No Registered Representative has the authority to
waive any question contained in the application or to modify the application
in any way.
I ALSO UNDERSTAND THAT, UNDER THE ANNUITY CONTRACT APPLIED FOR, THE
ACCUMULATED VALUE AND DEATH PROCEEDS MAY INCREASE OR DECREASE DAILY BASED ON
THE INVESTMENT EXPERIENCE OF THE VARIABLE ACCOUNT; AND THAT THE ANNUITY
PAYMENTS, WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE VARIABLE ACCOUNT,
ARE VARIABLE AND ARE NOT GUARANTEED AS TO MINIMUM DOLLAR AMOUNT. RECEIPT OF
A CURRENT VARIABLE ANNUITY PROSPECTUS IS HEREBY ACKNOWLEDGED.
- ----------------------------------- -------------------------------------
Dated At (City and State) Date Proposed Annuitant Signature
- ----------------------------------- -------------------------------------
Registered Representative RR# Proposed Joint Annuitant
Signature Signature (if applicable)
, TRUSTEE
------------------------------------
Trustee Signature (as named in Third
Party Owner section, if applicable)
REGISTERED REPRESENTATIVE REPORT (Complete for all applications)
- ----------------------------------------------------------------------------
PLEASE ALSO COMPLETE VARIABLE PRODUCT SUITABILITY SUPPLEMENT ON REVERSE SIDE
1. Do any of the proposed annuitant(s) and/or owner(s) have a relationship
with LB/LBVIP/LBSC?
(This includes being the insured, annuitant, owner or payor on another
contract or account, or having a fraternal relationship with us.)
/ / Yes / / No If Yes, give details in number 8 below.
2. Is the BOND magazine received by anyone in the household of the proposed
annuitant(s)?
/0/ Yes /1/ No
3. How long have you known the proposed annuitant(s)? yrs mos
------ ------
How well?
--------------------------------------------------------------
4. Former address (if not at present address at least 2 yrs):
-------------
------------------------------------------------------------------------
5. Maiden and/or any previous names:
--------------------------------------
6. Split Commissions (if applicable):
Print name, RR number and percent
commission: Signatures of all RRs:
RR of Record No. %
----- ---- ------------------------------
RR No. %
--------------------- ----- ---- ------------------------------
RR No. %
--------------------- ----- ---- ------------------------------
7. Source of Business (CIRCLE AT LEAST ONE BOX FOR ALL CASES):
/A/ Annual Review /D/ Fin. Dim. /J/ Pension /N/ TSA/IRA
/Y/ Estate/Charitable Planning /U/ Direct Mail
/P/ RR Personal Bus. /Q/ Fact Finding /R/ Referral
/T/ Seminar /9/ Other / / BNA / / ENA / / FNA
------------------------------------------------------------------------
8. DETAILS AND INSTRUCTIONS
------------------------------------------------------------------------
I certify that I personally solicited and secured this application; that I
have read each question on it to all persons applying for this annuity and
have truly and accurately recorded the answers exactly as given. I state,
to the best of my knowledge, this application IS/IS NOT (CIRCLE ONE) for the
purchase of an annuity that will replace any existing insurance or annuity
contract.
------------------ --------------------------------------------
Date Registered Representative Signature RR#
(Owner(s) may complete this section to
TELEPHONE TRANSACTION AUTHORIZATION authorize telephone transaction.)
- ----------------------------------------------------------------------------
I authorize Lutheran Brotherhood ("LB") to accept and act upon telephone
instructions from me or any other authorized person to transfer Accumulated
Value under the contract for which application is being made among the
subaccounts of the Variable Account and/or the Fixed Account of the contract
or to change the allocation percentages of future premiums to the
subaccounts of the Variable Account and/or the Fixed Account. I understand
that such transfers shall be made on the basis of the relative Unit Values
next determined following LB's receipt of such instructions in proper order.
I understand that LB reserves the right to refuse at any time any telephone
instructions if the caller cannot properly identify himself/herself or
his/her account. I fully understand and agree that LB, the Variable
Account, and any affiliate or agent will not in any manner be liable for any
loss, expense or cost arising out of any telephone instruction effected.
Additionally, I specifically waive all rights to dispute such instruction,
and I agree to indemnify and hold harmless any entity mentioned or implied
in this paragraph against any such liability.
I further understand this telephone transaction privilege may be modified,
suspended or discontinued at any time without prior notice to me and that
this telephone transaction authorization remains in effect until written
cancellation signed by me is received by LB. I also understand that this
privilege is subject to the conditions and provisions of the contract, the
current prospectus of the Variable Account, and such other rules and
administrative regulations as LB shall enact.
I understand that as a condition of allowing telephone instructions to be
made, LB, in its sole option and without prior disclosure to me, any person
or my agent, may record all or part of any telephone conversation containing
such instructions. This form constitutes Written Notice for the transfer of
Accumulated Value or for the change of allocation percentages. All terms
are binding upon my agents, heirs and assigns.
CONTRACT OWNER(S) ONLY SIGN BELOW
----------------- ---------------------------------
Date Proposed Annuitant Signature
- ------------------------------------ -----------------------------------
Irrevocable Beneficiary Signature Proposed Joint Annuitant Signature
(if applicable)
, TRUSTEE
-----------------------------------
Trustee Signature (as named in
Third Party Owner section of the
application, if applicable)
#20713
<PAGE>
EXHIBIT (6)(a) and (b)
----------------------------------------
ARTICLES OF
INCORPORATION
AND
BYLAWS
EFFECTIVE MAY 4, 1991
[LOGO] LUTHERAN
BROTHERHOOD
Minneapolis, Minnesota
----------------------------------------
<PAGE>
BOARD OF DIRECTORS
CLAIR E. STROMMEN
Chairman of the Board
and Director
ROBERT P. GANDRUD
Director
President and Chief Executive
Officer
ROBERT O. BLOMQUIST
Director
WILLIAM R. HALLING
Director
HERBERT D. IHLE
Director
RICHARD C. KESSLER
Director
JUDITH K. LARSEN
Director
JOHN P. MCDANIEL
Director
SIGURD D. MEDHUS
Director
MARY ELLEN H. SCHMIDER
Director
RUSSEL M. SMITH
Director
LLOYD SVENDSBYE
Director
STANFORD O. TOSTENGARD
Director
<PAGE>
ARTICLES OF
INCORPORATION AND BYLAWS
OF LUTHERAN BROTHERHOOD
RESTATED ARTICLES OF INCORPORATION AS AMENDED BY THE GENERAL CONVENTION ON
MAY 16, 1987.
We, the undersigned, a majority of whom are adult residents of the State of
Minnesota, for the purpose of forming a corporation under and pursuant to
Section 3537 to 3590, inclusive, of Chapter 19 of the General Statutes of
Minnesota, and especially Chapter 345 of the laws of 1907 and Chapter 96 of
the laws of 1915, and any amendments thereto, do hereby associate ourselves
as a body corporate, without capital stock, organized and carried on solely
for the mutual benefit of its members, and not for profit, and confining its
membership as hereinafter provided, and we do hereby adopt the following
Certificate of Incorporation:
ARTICLE I
The purpose and object of this corporation shall be to serve its membership
by aiding the Lutheran church bodies, their institutions and congregations,
fostering patriotism, loyalty, justice, charity, and benevolence; providing
education and encouragement of the arts; encouraging industry, saving,
thrift, and development on the part of its members; giving aid in case of
poverty, sickness, accident, or other misfortunes; owning and operating
homes, hospitals and sanatoria; furnishing protection and issuing benefit
contracts, and making payment of benefits thereon in case of death, or
disability by sickness, accident or old age; and otherwise promoting the
general welfare of its members.
ARTICLE II
The name of this corporation shall be LUTHERAN BROTHERHOOD. The Home Office
shall be in the City of Minneapolis in the County of Hennepin, in the State
of Minnesota, or in such other location as the Board of Directors may
determine.
ARTICLE III
The supreme legislative or governing body to be known as the General
Convention, shall be composed of delegates elected by local branches, or of
delegates elected through a delegate convention system, as provided in the
Bylaws, together with such other delegates as may be prescribed in the
Bylaws in accordance with law. The Board of Directors shall consist of not
less than five nor more than fifteen members. The officers shall consist of
a president, one or more vice presidents, a secretary, a treasurer, and such
other officers as the Board of Directors may determine, who shall be elected
as provided in the Bylaws. The directors and officers shall be selected and
hold their respective offices pursuant to the provisions of the Bylaws. No
director shall be personally liable to the Society, its General Convention
or its members for monetary damages for breach of fiduciary duty as a
director, except to the extent such exemption from personal liability or
limitation thereof is not permitted by applicable laws.
ARTICLE IV
The first regular meeting of the General Convention for the election of such
officers shall be held on the first Wednesday of June, 1920. The first
meeting of the Board of Directors shall be held at 425 South Fourth Street,
Minneapolis, Minnesota, on the sixth day of July, 1917.
ARTICLE V
The names and places of residence of the persons forming this
corporation are:
H. G. Stub of St. Paul, Minnesota.
T. H. Dahl of Minneapolis, Minnesota.
J. N. Kildahl of St. Paul, Minnesota.
G. M. Bruce of Red Wing, Minnesota.
S. T. Reque of St. Paul, Minnesota.
C. J. Eastvold of Dawson, Minnesota.
Th. Eggen and J. A. O. Preus of Minneapolis, Minnesota.
H. L. Ekern of Madison, Wisconsin.
ARTICLE VI
The names of the members of the first board of directors and first officers
are:
Th. Eggen, C. J. Eastvold, S. T. Reque, H. L. Ekern, and J. A. O. Preus as
directors; Th. Eggen as president, C. J. Eastvold as vice president, and J.
A. O. Preus as secretary-treasurer.
ARTICLE VII
Any person who: (1) has been baptized in the Christian faith or is
affiliated with a Lutheran church organization, and (2) professes to be
Lutheran, shall be entitled to membership and shall become a member in the
manner referred to in the Bylaws. Each adult benefit contract member shall
have one vote for delegates to the General Convention.
ARTICLE VIII
Assets representing the reserves on all outstanding benefit contracts shall
at all times be held in trust for the fulfillment of the payment of the
benefits promised in such contracts; and if the regular payments are
insufficient to pay all death and disability claims in full and provide for
such reserves, additional payments may be required to meet such deficiency.
One or more separate accounts may be established and operated to support
contracts issued on a variable basis in accordance with applicable law, and
to the extent the provisions of this Article are inconsistent therewith such
provisions shall not apply to the separate accounts or contracts issued on a
variable basis.
ARTICLE IX
These Articles may be amended by a vote of not less than two-thirds of all
delegates voting thereon at any regular meeting of the General Convention;
and unless otherwise provided by law may be amended in like manner at any
special meeting of the General Convention, provided notice of the proposed
amendment has been given with the notice of such meeting.
The above Restated Articles as amended by the General Convention at its
meeting held on the 16th day of May, 1987, shall supersede and take the
place of the Articles of Incorporation originally adopted on June 13, 1917,
and all amendments thereto.
In testimony whereof, we, the present members of the Board of Directors have
hereunto set our hands this 24th day of June, 1987.
Arley R. Bjella Judith K. Larsen
Robert O. Blomquist Sigurd D. Medhus
William R. Halling Clair E. Strommen
Richard M. Heins Lloyd Svendsbye
Herbert D. Ihle Stanford O. Tostengard
James W. Krause George A. Wade
AMENDED BYLAWS AS ADOPTED IN PART BY THE TWENTY-THIRD GENERAL CONVENTION ON
MAY 4, 1991.
SECTION 1
ADMISSION TO MEMBERSHIP
Admission to membership and benefit contracts may be obtained upon
application and approval by such officers and upon such conditions as the
Board of Directors may determine.
SECTION 2
ORGANIZATION OF BRANCHES
LUTHERAN BROTHERHOOD shall consist of members organized in branches. The
members who do not belong to a local branch shall constitute and be members
of a separate branch designated as a regional branch. Local branches,
regional branches, or any combination thereof shall be established, and
governing rules and regulations shall be prescribed in accordance with these
Bylaws. A member may elect to belong to a branch of his own choice. In the
event a member wishes to transfer from one branch to another, such transfer
is effective ninety days following receipt of notification by the Secretary
of LUTHERAN BROTHERHOOD. Notice of a meeting of any branch may be published
in the Lutheran Brotherhood BOND, the official publication of LUTHERAN
BROTHERHOOD, and any such notice shall be deemed sufficient notice to all
members of such branch. Branches may admit social members.
SECTION 3
THE GENERAL CONVENTION
A The supreme governing body of LUTHERAN BROTHERHOOD shall be the General
Convention, composed of delegates as provided in Section 6 of these Bylaws,
provided that the elected delegates shall have not less than two-thirds of
the votes. The Chairman of the Board of Directors of LUTHERAN BROTHERHOOD
shall preside at all meetings of the General Convention. In the event that
the Chairman of the Board of Directors is unable to serve, the Vice Chairman
of the Board of Directors shall preside. In the event neither is able to
serve, another board member or officer designated by the Board of Directors
shall preside.
B Regular meetings of the General Convention shall be held every fourth
year from 1975, at such time and place as fixed by the Board of Directors.
C The Chairman of the Board of Directors shall propose to the Board of
Directors a Nominating Committee from the list of certified delegates prior
to each regular General Convention to select nominees for the Board of
Directors' positions to be filled. The Chairman of the Board of Directors
shall report to the Board of Directors the recommendation of a Nominating
Committee, at a regular or special meeting, and the Board of Directors shall
confirm or, in the alternative, substitute, add to or delete names of those
proposed by the Chairman of the Board of Directors and appoint the
Nominating Committee. The appointed Nominating Committee shall make its
report to the delegates by mail at least forty days prior to the General
Convention and to the General Convention. In order to assure the
preservation of the representative form of government, guaranteed by the
fraternal laws of the State of Minnesota, the only other method of making
nominations for directors to the General Convention shall be by filing with
the Secretary of LUTHERAN BROTHERHOOD at least twenty days prior to the date
of the General Convention a petition containing the name or names of the
proposed nominee or nominees, such petition of a nominee or nominees to be
signed and subscribed to by not less than ten percent of the certified
delegates to the General Convention. Notice of the names of those persons
duly petitioned and thereby nominated for director shall be provided to the
certified delegates by mail prior to the General Convention.
D The Chairman of the Board of Directors of LUTHERAN BROTHERHOOD shall
also appoint General Convention committees, including a committee to audit
the expense accounts of the delegates and alternate delegates, a Credentials
Committee, a Resolutions Committee, and such other committees as may be
deemed necessary for transacting the business of the General Convention.
E Special meetings of the General Convention shall consist of the elected
delegates certified to the last preceding regular General Convention
together with the ex-officio delegates as provided in Section 6 and may be
called by not less than two-thirds of the members of the Board of Directors
or on written request signed by not less than two-thirds of said delegates
in good standing, as defined in Section 6. If one or more of the said
delegates ceases to be an adult benefit contract member in good standing, as
provided for in Section 6, with respect to the General Convention, such
person shall be ineligible to be a delegate and such vacancy or vacancies
shall be filled by one alternate or alternates respectively, and if any
elected alternates shall fill such vacancies as defined herein, such
alternates shall assume all of the obligations and responsibilities of the
delegate replaced.
F Any undertaking by delegates or others to call a special meeting of the
General Convention shall be governed by the following rules:
(1) Prior to or at the time of any solicitation of any written requests
for a special meeting of the General Convention, the Secretary shall
be notified in writing by any delegate or group of delegates of the
intention to seek a call of a special meeting of the General
Convention. Such notice shall be filed with the Secretary and shall
specify the business to be considered at the special meeting of the
General Convention.
(2) Any written requests of the delegates shall be filed with the
Secretary no sooner than thirty days after the said notice and within
sixty days after the notice and shall be dated and signed after the
date of the notice.
(3) When any written request is so filed with the Secretary such shall be
deemed a final filing and no amendments thereto nor subsequent
written requests concerning the same subject matter shall be accepted
by the Secretary.
(4) When the Secretary has counted and verified the written signatures,
and those revocations filed and bearing a date prior to the filing of
the written request, and the number of valid written signatures
thereon is insufficient to convene a special meeting of the General
Convention, then no further written request shall be circulated or
filed involving the same subject matter for one year from the date of
filing said request.
If, in the determination of the Secretary, a request is proper and complies
with all legal requirements, the Secretary shall certify and file the
request with the Board of Directors. Thereupon, the Board of Directors
shall set a date and place for such special meeting of the General
Convention, which shall be not less than thirty days nor more than ninety
days from the date of the receipt of said written request by the Secretary.
If a special meeting of the General Convention is called by either the Board
of Directors or by action of the delegates as prescribed herein, the
Secretary shall give to each delegate twenty days written notice of such
special meeting of the General Convention, specifying the business to be
considered at such a special meeting of the General Convention.
SECTION 4
THE BOARD OF DIRECTORS
A There shall be twelve elected directors, four of whom shall be elected
at each regular quadrennial meeting of the General Convention for a term of
twelve years each. Further, at each regular quadrennial meeting, the
General Convention may elect an additional voting director for a term of
four years, the candidate for which shall be the person then holding the
position of Chief Executive Officer of the Society, who shall serve as an
additional voting member of the Board for the term, but only for the period
that the person holds the position of Chief Executive Officer.
B No person who is an officer or director of LUTHERAN BROTHERHOOD shall
be paid any commission, fee, or other compensation for writing any contract
of insurance with LUTHERAN BROTHERHOOD while such person is an officer or
director, nor shall any officer or director hold a contract as agent or
general agent during the term as an officer or director of LUTHERAN
BROTHERHOOD. All individuals elected as members of the Board at the
Twenty-Third General Convention in 1991, and thereafter, except for the
Chief Executive Officer if elected a director pursuant to Section 4A above,
must be persons other than officers, employees or persons receiving
compensation for current active service to the Society, excluding director
fees. No officer or employee of LUTHERAN BROTHERHOOD shall receive a Board
fee for serving on the Board of LUTHERAN BROTHERHOOD or on the Board of any
LUTHERAN BROTHERHOOD subsidiary.
C No person elected as a director at the Eighteenth General Convention in
1971, or thereafter, shall continue to serve as a director after attaining
age seventy (70); provided that any director elected prior to the Eighteenth
General Convention may continue to serve as a director to the end of the
elected term or any successive term without regard to the age limitation
herein specified; provided that any such director shall retire upon reaching
age seventy-five (75).
D The Board of Directors, following each regular meeting of the General
Convention, and annually thereafter, shall elect a chairman of the Board and
a vice chairman from among its members, and shall elect annually the
following senior officers: a chief executive, a president, one or more vice
presidents, a secretary, and a treasurer. One or more of the above offices
may be held by the same person. The Board may, in its discretion, designate
one or more of said elected vice presidents as executive vice president or
senior vice president, respectively. The senior officers shall hold office
at the pleasure of the Board of Directors. The Board of Directors may elect
annually such other officers as it may deem prudent, who shall be junior
officers and who shall hold office at the pleasure of the Board of Directors
or until removed by the Chief Executive. A vacancy in any office may be
filled by the Board of Directors. No person shall be discriminated against
as an officer, director, employee, general agent or district representative
of LUTHERAN BROTHERHOOD because of race, color, national origin, age or sex.
Each person who serves as director, officer, general agent or district
representative must be an adult benefit contract member of LUTHERAN
BROTHERHOOD.
E The Board of Directors may appoint by a majority vote of the entire
Board of Directors a director to fill a vacancy in the Board until the next
regular or special meeting of the General Convention, at which time the
General Convention shall elect a director to complete the unexpired term, if
any. A vacancy may be declared upon the happening of any of the following
events: (1) death, (2) resignation, or (3) disability. Disability may
involve either physical or mental disability which seriously affects the
ability of a director to participate in the meetings of the Board. Such
physical or mental disability shall be certified to after examination by one
or more physicians selected by majority vote of the remaining directors. A
director shall be deemed to be disabled if he or she is unable to attend
five (5) consecutive regular meetings of the Board of Directors, because of
such disability.
F The Board of Directors may create committees and define their powers
and duties and shall also elect from its membership an Executive Committee
of not less than four nor more than six members, a quorum of which shall
consist of three members. Such Executive Committee shall have and exercise
all the powers of the Board of Directors while the Board is not in session,
except the power to amend the Bylaws and matters over which the Board of
Directors has retained jurisdiction. The Executive Committee shall also
perform such duties as are specifically delegated to it by the Board of
Directors.
G Regular and special meetings of the Board of Directors shall be held as
determined by the Board or on call of the Chairman of the Board, or on
written request signed by any four directors and filed with the Secretary.
SECTION 5
INDEMNIFICATION
A The Society shall indemnify and reimburse every person who is or was a
party or is or was threatened to be made a party to any action, suit,
arbitration or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is or was a director,
officer, employee or agent of the Society or of any firm, corporation,
partnership, joint venture, trust, employee benefit plan, or other
organization which the person served in any capacity at the request of the
Society against expenses (including counsel fees), judgments, claims,
liabilities, penalties, forfeitures, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such
action, suit or proceeding, to the full extent permitted by applicable law.
The indemnification provided hereby shall continue as to a person who has
ceased to be a director, officer, employee, agent or trustee and shall inure
to the benefit of the heirs, executors and administrators of such person.
In the event that a determination is necessary as to whether the conduct of
the person to be indemnified meets the standard required by applicable law
in order to justify indemnification and reimbursement, such determination
shall be made by the Board of Directors by a majority vote of a quorum
consisting of persons who were not parties to the action, suit or
proceeding. Such indemnification shall include advances of expenses in
advance of final disposition of such action, suit or proceeding, subject to
the provisions of any applicable statute.
B The Society shall have power to purchase and maintain liability
insurance on behalf of any person who is serving in any capacity mentioned
in Paragraph A of this Section, whether or not the Society would have the
power to indemnify such person provided.
SECTION 6
DELEGATES TO THE GENERAL CONVENTION
A The Board of Directors, by a majority vote of the entire Board, shall
divide the membership of the Society into Delegate Districts. In so doing,
the Board of Directors shall take into consideration geographical
boundaries, the number of adult benefit contract members, general agency
territories and any other factors that the Board of Directors may consider
material, and shall set the boundaries of the Delegate Districts
accordingly.
B Each Delegate District shall be entitled to delegates based on the
number of adult benefit contract members in good standing as of the
certification date, which shall be a date not more than twelve months
preceding the date of the regular meeting of the General Convention. As of
the certification date, the Board of Directors shall allot delegates to each
Delegate District as follows: each Delegate District shall be entitled to
two delegates and an additional delegate or delegates as determined by the
Board of Directors on the basis of the number of adult benefit contract
members residing in said District. In addition to the alloted delegates to
each Delegate District, each Delegate District shall elect two alternates to
act as delegate or delegates should one or more of the elected delegates
(i) for any reason be unable to serve at the regular meeting of the General
Convention, or (ii) be declared by the Board of Directors not to be a
delegate in good standing.
C The Board of Directors shall cause to be published in the Lutheran
Brotherhood BOND, in no event less than five months preceding the date of
the regular meeting of the General Convention, the official certification of
the number of delegates to which each Delegate District is entitled. In the
same issue of the Lutheran Brotherhood BOND, the Board of Directors shall
direct the Secretary to publish the boundaries and the number assigned to
each Delegate District, the time and place for the Delegate District
balloting to elect delegates to the regular meeting of the General
Convention, the time and place of the General Convention, the name of the
Deputy Secretary for each Delegate District and the manner of nominating
delegates. The Delegate District balloting shall be held within ninety days
following the publication notice in the Lutheran Brotherhood BOND. The
aforesaid publication in the Lutheran Brotherhood BOND shall be deemed
sufficient notice to all members.
D Delegates and alternates from the Delegate District shall be chosen and
qualify in the following manner:
(l) The Board of Directors shall appoint a Deputy Secretary for each
Delegate District, who along with any assistants that might be
designated, shall appoint a District Nominating Committee made up of
members residing within the Delegate District to nominate candidates
for delegates and two candidates for alternate delegates.
(2) The District Nominating Committee shall file its report in duplicate,
one copy with the Secretary and one copy with the Deputy Secretary,
not later than twenty-five days prior to the date set for the
Delegate District balloting. Nominations for delegates may also be
made by a petition signed by not less than thirty-five adult benefit
contract members residing in the Delegate District. Residence shall
be determined as the residence of record of the contract member.
Petition nominations for delegates shall be filed with the Secretary
and Deputy Secretary in the same manner required for the report of
the District Nominating Committee.
(3) Any candidate for a delegate or alternate or elected delegate or
alternate must be an adult benefit contract member residing within
the Delegate District and a member in good standing; provided that
only one candidate who is a district representative, general agent,
or other person receiving compensation for current active service to
LUTHERAN BROTHERHOOD may be elected, or vote, as a delegate from each
Delegate District. In order to be a member in good standing, the
candidate or elected delegate or alternate:
(a) Must be an adult benefit contract member.
(b) Must not have business or personal interests which would
constitute a conflict of interest in relation to the business
operation of LUTHERAN BROTHERHOOD. The Board of Directors or
a subcommittee thereof shall determine whether a delegate or a
candidate for delegate is or is not in good standing: (i) the
Board of Directors shall cause the Secretary to give written
notice to said delegate or candidate for delegate of the
charges specifying wherein the former apparently fails to
comply with Paragraph D(3) of this Section; (ii) the
challenged delegate or candidate for delegate shall be
afforded the opportunity to appear personally before the Board
of Directors, or its subcommittee, or to answer the charges in
writing within twenty days; (iii) the decision of the Board
of Directors or a subcommittee thereof as to whether or not
the delegate or candidate for delegate is in good standing
shall be final.
(4) The vote of a member must be cast in person at a designated location
in the Delegate District in which the member resides, except that the
Board of Directors may provide for the return of marked ballots by
mail to the Secretary. A member shall be entitled to one vote
regardless of the number of adult benefit contracts issued to the
member.
(5) The secretary shall count the ballots under the supervision of the
Board of Directors or committee thereof. The candidates receiving
the highest number of votes shall be the duly elected delegates for
the respective Delegate District, and shall be equal in number to the
number of delegates alloted to a particular Delegate District, and
the candidate for alternate receiving the most votes shall be the
duly elected first alternate and the other candidate shall be second
alternate for the respective Delegate District. In the event of a
tie vote as to a delegate or an alternate, the election shall be
decided by lot by the candidates involved, under the direction of the
Deputy Secretary. The names of the delegates and alternates so
elected, together with the names of the ex-officio delegates, shall
be certified to by the Secretary and published in the issue of the
Lutheran Brotherhood BOND no later than sixty days preceding the date
of the regular meeting of the General Convention. Such listing in
the Lutheran Brotherhood BOND shall constitute an official certified
list of the delegates and alternates for the next regular meeting of
the General Convention, and upon the election and the qualification
of delegates to the General Convention the term of office of
previously elected delegates shall cease. The publication in the
Lutheran Brotherhood BOND shall be deemed sufficient notice to all
members and delegates.
(6) The expenses of the Deputy Secretaries in connection with the
delegate elections, and the expenses of the delegates to any regular
or special meeting of the General Convention shall be determined and
fixed by order of the Board of Directors.
E Ex-officio delegate representation at the General Convention shall be
determined as follows:
(1) The senior officers, each director, and certain junior officers as
provided in subparagraph (2) of this Paragraph, who hold such
positions at the time of any regular or special meeting of the
General Convention shall be ex-officio delegates to the said General
Convention, each entitled to one vote. Any person ceasing to hold
one of such positions shall cease to be a delegate.
(2) The Board of Directors shall establish a procedure for the selection
by lot of ex-officio delegates from among the junior officers. The
number of such additional Home Office ex-officio delegates shall be
one-third of the total of directors and senior officers, as of ninety
days prior to the General Convention.
SECTION 7
BENEFIT CONTRACTS, SEPARATE ACCOUNTS, FUNDS AND APPORTIONMENT OF DEFICIENCY
A The Board of Directors shall provide for benefit contracts to be
issued, upon application and acceptance in a manner and upon such conditions
as the Board may determine, to persons: (1) baptized in the Christian faith
or affiliated with a Lutheran church organization, and (2) who profess to
be Lutheran, as provided in the Articles of Incorporation. The Board of
Directors may provide for the establishment and operation of one or more
separate accounts and issue contracts on a variable basis providing for the
dollar amount of benefits or other contractual payments or values thereunder
to vary so as to reflect the investment results of such separate accounts.
B Benefit contracts may be issued on such basis, form, and for such
benefits and naming such persons as beneficiaries, as the Board of Directors
may direct. The Board of Directors may to the extent it deems necessary
adopt special procedures for the conduct of the business and affairs of any
separate account.
C The assets of LUTHERAN BROTHERHOOD shall be kept in one fund or such
funds as the Board of Directors shall prescribe or the laws shall require.
D In the event of the impairment of the solvency of LUTHERAN BROTHERHOOD,
an apportionment shall be charged against each outstanding benefit contract
on the basis of the member's equitable share of the deficiency as determined
by the Board of Directors. The provisions of this Subparagraph D shall not
apply to the contracts issued on a variable basis.
SECTION 8
PROVISION APPLICABLE TO BENEFIT CONTRACTS
A The benefit contract of a member shall consist of the application, the
benefit contract, any amendments or riders thereto, and the Articles of
Incorporation and Bylaws now or hereafter in force, except that a contract
on a variable basis shall be subject to the Articles of Incorporation and
Bylaws in force on the date of its issue.
B The benefit contract shall also be governed by the following specific
provisions, unless such contract provides otherwise, or unless such
provisions are prohibited by state law:
(1) Upon disaffirmance of a benefit contract by a minor, only the cash
surrender value of the contract shall be payable, and tender of such
sum shall be a complete discharge of all liability on such contract.
(2) Payment of any claim under a benefit contract pursuant to the
contract or any assignment thereof without notice to the Society of
any alleged conflicting claimant shall be a complete discharge of the
obligation for such claim on the contract or assignment.
(3) In case a benefit contract is lost, destroyed or beyond the member's
control, such member may, on a form furnished by LUTHERAN
BROTHERHOOD, have a substitute contract or other evidence of coverage
issued in its place. No requested change from the original contract
shall be effective until the date of issue of the substitute
contract.
SECTION 9
ROBERT'S RULES OF ORDER TO GOVERN
Unless otherwise provided in the Articles of Incorporation or the Bylaws of
LUTHERAN BROTHERHOOD, the latest edition of Robert's Rules of Order shall
govern the proceedings at all meetings. No vote by proxy shall be
recognized in any meeting of the General Convention or of the Board of
Directors.
SECTION 10
AMENDMENTS TO BYLAWS
A These Bylaws may be amended by a vote of not less than two-thirds of
all delegates voting thereon at any regular or special meeting of the
General Convention, or by a vote of not less than three-fourths of all the
members of the Board of Directors at any regular or special meeting of the
Board of Directors.
B In order to be considered by the Convention, any proposed amendment to
the Bylaws, other than an amendment submitted by the Board of Directors,
must be signed by at least ten percent of the certified delegates to such
Convention. Any proposed amendment shall be filed with the Secretary of
LUTHERAN BROTHERHOOD at the Home Office at least forty days prior to such
meeting. A copy of the proposed amendment shall be forwarded by the
Secretary to each delegate at least twenty days prior to such meeting.
C Any member of the Board of Directors must file a proposed amendment
with the Secretary of LUTHERAN BROTHERHOOD at the Home Office twenty days
prior to a regular or special meeting of the Board of Directors in order to
have the same considered by the Board of Directors.
D Amendments may also be passed without prior notice by unanimous vote of
the General Convention or of the Board of Directors.
E Any Bylaw provision relating to the retirement age of directors may be
amended only by the General Convention in accordance with this Section.
I, /s/David J. Larson of
----------------------------------------------------------------------
Lutheran Brotherhood, hereby certify that the annexed copy of the Articles
of Incorporation and the Bylaws of Lutheran Brotherhood, are a true, exact,
and complete copy thereof; the Bylaws having been amended by the Board of
Directors on July 31, 1953; by the Fifteenth General Convention on October
28, 1959; by the Board of Directors on August 5, 1960, May 25, 1962,
September 19, 1962; by the Sixteenth General Convention on May 18, 1963; by
the Board of Directors on July 31, 1964, September 25, 1964, August 5, 1966,
September 30, 1966, July 28, 1967, October 6, 1967, May 1, 1970, November 6,
1970, May 27, 1971, December 15, 1972, December 9, 1977, May 5, 1978; the
Articles of Incorporation having been amended and restated by the Twentieth
General Convention on May 5, 1979; the Bylaws having been amended in part by
the Twentieth General Convention on May 5, 1979 and in part by the Board of
Directors on May 16, 1979 and May 7, 1982; the Articles of Incorporation and
Bylaws having been amended in part by the Twenty-First General Convention on
May 7, 1983; the Bylaws having been amended in part by the Board of
Directors on August 10, 1984 and November 2, 1984; the Articles of
Incorporation having been amended in part by the Twenty-Second General
Convention on May 16, 1987; the Bylaws having been amended in part by the
Twenty-Second General Convention on May 16, 1987 and by the Board of
Directors on June 24, 1987 and November 4, 1988, and by the Twenty-Third
General Convention on May 4, 1991.
Given under my hand and the seal of the said Lutheran Brotherhood, as hereto
affixed at Minneapolis, Minnesota, this
7th day of May A.D., 19 92
- --------------- -------------------------------------- -----
/s/David J. Larson
- ----------------------------------------------------------------------------
Secretary
Subscribed and sworn to before me, a Notary Public, this
7th day of May A.D., 19 92
- --------------- -------------------------------------- -----
/s/Ann J. Bistodeau
- ----------------------------------------------------------------------------
Notary Public
/Notary Seal/ ANN J. BISTODEAU
NOTARY PUBLIC - MINNESOTA
[State Seal] WRIGHT COUNTY
My commission expires 5-1-94
#20714
<PAGE>
EXHIBIT 9
625 Fourth Avenue South
Minneapolis, Minnesota 55415
(612) 340-5727
[LOGO] LUTHERAN
BROTHERHOOD
JAMES M. ODLAND
Assistant Vice President
Law Division
January 17, 1994
Lutheran Brotherhood
625 Fourth Avenue South
Minneapolis, MN 55415
Gentlemen:
In connection with the proposed registration under the Securities Act of
1933, as amended, of individual flexible premium deferred variable annuity
contracts (the "contracts") and interests in LB Variable Annuity Account I
(the "Separate Account"), I have examined documents relating to the
establishment of the Separate Account by the Board of Directors of Lutheran
Brotherhood (the "Society") as a separate account for assets applicable to
variable annuity contracts, pursuant to Minnesota Statutes Sections 61A.13
to 61A.21, as amended, and the Registration Statement, on Form N-4, File No.
33-67012 (the "Registration Statement"), and I have examined such other
documents and have reviewed such matters of law as I have deemed necessary
for this opinion and I advise you that in my opinion:
1. The Separate Account is a separate account of the Society duly
created and validly existing pursuant to the laws of the State of
Minnesota.
2. The contracts, when issued in accordance with the Prospectus
constituting a part of the Registration Statement and upon compliance
with applicable local law, will be legal and binding obligations of
the Society in accordance with their respective terms.
3. The portion of the assets held in the Separate Account equal to
reserves and other contract liabilities with respect to the Separate
Account are not chargeable with liabilities arising out of any other
business the Society may conduct.
I consent to the filing of this opinion as an exhibit to the Registration
Statement and to the use of my name under the heading "Legal Matters" in the
Prospectus constituting a part of the Registration Statement and to the
references wherever appearing therein.
Very truly yours,
/s/James M. Odland
James M. Odland
#20715
<PAGE>
EXHIBIT 13
-----------
LB VARIABLE ANNUITY ACCOUNT I
COMPUTATION OF PERFORMANCE DATA
MONEY MARKET SUBACCOUNT CALCULATION OF YIELD QUOTATION
The Prospectus contains or will contain information with respect
to the yield and effective yield of a hypothetical preexisting account
having a balance of one Money Market Portfolio Subaccount Accumulation Unit
at the beginning of a specified seven-day period. Such yield quotations
have been calculated by determining the net change, exclusive of capital
changes, in the value of a hypothetical pre-existing account having a
balance of one Accumulation Unit of the Subaccount at the beginning of the
period, subtracting a hypothetical charge reflecting deductions from
Contract Owner accounts, dividing the net change by the value of the account
at the beginning of the period to obtain the base period return, and
multiplying the base period return by 365/7. The effective yield has been
calculated by compounding the yield quotation for such period by adding 1
and raising the sum to a power equal to 365/7, and subtracting 1 from the
result.
In determining the net change in the value of the account as
described in the preceding paragraph, all deductions that are charged to all
Contract Owner accounts have been reflected in proportion to the length of
the seven-day base period and the mean (or median) account size under a
substantially identical contract issued by an LB affiliate. Deductions from
purchase payments and surrender charges assessed have not been reflected in,
and realized gains and losses from the sale of securities and unrealized
appreciation and depreciation of the Subaccount and the related portfolio
company have been excluded from the computation of yield.
Following is an example of a yield calculation by LBVIP Variable
Annuity Account I Money Market Subaccount for the variable annuity contract
issued by Lutheran Brotherhood Variable Insurance Products Company, which is
substantially identical to the Contract to be issued pursuant to this
Registration Statement.
LBVIP VARIABLE ANNUITY ACCOUNT I
MONEY MARKET SUBACCOUNT
CALCULATION OF YIELD QUOTATIONS AS OF 31-Dec-92
Value of a hypothetical pre-existing account having a
balance of one Accumulation Unit at the beginning of
the seven-day period.......................................... $1.302336 (A)
Value of the same account (excluding capital changes)
at the end of the seven-day period............................ 1.302833
----------
Net change in value of one Accumulation Unit.................. $0.000497 (B)
==============
Base Period Return:
Net change in value of one Accumulation Unit
divided by value of one Accumulation Unit at the
beginning of the seven-day period (A)/(B).................. 0.000382 (C)
==============
Annualized Current Net Yield.................................. 1.99%
==============
Effective Yield............................................... 2.01%
==============
Footnotes:
- ----------------------------------------------------------
(a) Annualized Current Net Yield = (C) x (365/7))
365/7
(b) Effective Yield = ((C + 1) -1)
HIGH YIELD SUBACCOUNT AND INCOME SUBACCOUNT STANDARDIZED YIELD CALCULATIONS
The Prospectus contains or will contain information with respect
to yield quotations by Subaccounts other than the Money Market Subaccount.
These yield quotations are based on a 30-day (or one month) period computed
by dividing the net investment income per accumulation unit earned during
the period (the net investment income earned by the Fund portfolio
attributable to shares owned by the Subaccount less expenses incurred during
the period) by the maximum offering price per Accumulation Unit on the last
day of the period, by setting yield equal to two times the difference
between the sixth power of one plus the designated ratio and one, where the
designated ratio is the difference between the net investment income earned
during the period and the expenses accrued for the period (net of
reimbursement) divided by the product of the average daily number of
Accumulation Units outstanding during the period and the maximum offering
price per Accumulation Unit on the last day of the period.
For fees that vary with the size of the Contract, a Contract
size equal to the mean (or median) contract size of a substantially
identical contract issued by an LB affiliate has been assumed. Annualized
current yield of any specific base period is not a representation of future
actual yield.
Following are examples of standardized yield calculations by
LBVIP Variable Annuity Account I High Yield Subaccount and LBVIP Variable
Annuity Account I Income Subaccount for the variable annuity contract issued
by Lutheran Brotherhood Variable Insurance Products Company, which is
substantially identical to the Contract to be issued pursuant to this
Registration Statement.
<PAGE>
<TABLE>
<CAPTION>
LBVIP SERIES FUND, INC. - HIGH YIELD PORTFOLIO
STANDARDIZED YIELD CALCULATION
AS OF 31-DEC-92
===================================================================================================================
LBVIP Variable Annuity Account I
LBVIP-HY Portfolio High Yield Subaccount
-------------------- --------------------------------------
% of o/s
Gross Income Earned During Base Period: Amount Yield shares Amount Yield
- -------------------------------------- ---------- ------- --------- ------------- --------
<S> <C> <C> <C> <C> <C>
From Corporate Obligations:
Computed on a Yield to Maturity or
Yield to Call Basis................................ 1,248,057 10.45% 96.446% 1,203,704 10.19%
From Preferred Stock................................. 102,266 0.86% 96.446% 98,632 0.84%
From Short-Term Securities:
Book Income adjusted to reflect a 30-day
base period....................................... 17,394 0.15% 96.446% 16,776 0.14%
------------- -------- ----------- ------
Total Gross Income................................... 1,367,717 11.46% 1,319,112 11.17%
========== ====== ======= ======== ======
Investment advisory fee accrued during
base period........................................ 48,398 0.41% 96.446% 46,678 0.40%
========== ====== ======= ======== ======
Mortality and expense risk charges at the
subaccount level................................... NA 129,101 1.09%
========== ====== ======= ======== ======
Average daily number of shares/units outstanding
during the base period (Schedule 2)............... 15,213,119 8,919,576
=============== ============
Maximum public offering price per share/unit on
the last day of the base period (Schedule 2)..... 9.63 16.209964
=============== ============
Standardized Yield.................................. 11.05%(a) 9.68%(b)
=============== ============
Footnotes:
==========
(a) Current yield is computed using the following formula:
6
2[ [ (Gross Income - Advisory Fee) +1 ] -1 ] X 100
--------------------------------------------------
[ [ (Average Daily shares x Maximum Offering Price) ] ]
(b) Current Yield is computed using the following formula:
6
2[ [ (Gross Income - Advisory Fee - M&E Charge) +1 ] -1 ] x 100
------------------------------------------------
[ [ (Average Daily Units x Maximum Offering Price) ] ]
Preparer: /s/Jane I Sholtz
----------------------------------
Preparer: /s/Rand Mattsson
----------------------------------
</TABLE>
<PAGE>
LBVIP Series Fund - High Yield Portfolio
Calculation of Average Shares Outstanding for
Each Separate Account For Purposes of Computing
SEC Yields for the month end 31-Dec-92
Shares outstanding by separate account:
- ----------------------------------------------------------------------------
Date VUL SPVL VA TOTAL
- ----------------------------------------------------------------------------
12/01/92 482,249.674 45,855.625 14,081,001.473 14,609,106.772
12/02/92 485,721.401 45,867.590 14,125,626.089 14,657,215.080
12/03/92 487,087.089 45,879.484 14,201,449.493 14,734,416.066
12/04/92 487,322.547 45,891.255 14,236,160.957 14,769,374.759
12/07/92 487,681.166 45,902.973 14,278,288.305 14,811,872.444
12/08/92 487,536.723 43,598.800 14,339,028.784 14,870,164.307
12/09/92 488,397.548 43,609.857 14,399,385.655 14,931,393.060
12/10/92 488,894.772 43,620.848 14,426,330.640 14,958,846.260
12/11/92 489,333.526 43,632.051 14,470,789.774 15,003,755.351
12/14/92 490,602.169 43,643.196 14,535,361.773 15,069,607.138
12/15/92 493,160.496 43,685.741 14,617,759.341 15,154,605.578
12/16/92 495,085.959 43,697.040 14,712,491.271 15,251,274.270
12/17/92 498,730.857 43,708.033 14,764,406.766 15,306,845.656
12/18/92 500,127.481 43,720.580 14,823,098.576 15,366,946.637
12/21/92 500,682.882 43,731.736 14,841,440.830 15,385,855.448
12/22/92 495,980.528 43,772.511 14,883,263.069 15,423,016.108
12/23/92 500,275,532 43,783.766 14,942,597.495 15,486,656.793
12/28/92 501,297.538 43,795.184 14,987,920.474 15,533,013.196
12/29/92 503,630.915 43,776.210 15,059,454.782 15,606,861.907
12/30/92 508,885.616 43,845.664 15,122,406.995 15,675,138.275
12/31/92 512,242.641 43,857,105 15,199,657.495 15,755,757.241
0.000
0.000
Average shares
outstanding..... 494,520.336 44,232.155 14,621,329.526 15,160,082.016
=========== ========== ============== ==============
Average shares as a
percentage of total
shares........... 3.262% 0.292% 96.446% 100.000%
========= ======== ======== ========
<PAGE>
<TABLE>
<CAPTION>
LBVIP SERIES FUND, INC. - HIGH YIELD PORTFOLIO
INCOME EARNED FROM COMMON AND PREFERRED STOCKS DURING DECEMBER, 1992
FOR PURPOSES OF COMPUTING SEC STANDARDIZED YIELD
DAILY
ANNUAL DIVIDEND RATE NO. OF GROSS
DIVIDEND PER SHARE DAYS INCOME
EQUITY SHARES RATE (360 DAY DAILY IN BASE FOR BASE
CUSIP ISSUE TYPE OWNED PER SHARE YEAR) INCOME PERIOD PERIOD
- --------- ----------------- ------ ------- --------- ----------- -------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
CASH DIVIDEND SECURITIES:
054904107 B & H Maritime
Carriers C/S 12,200 0.800 0.0022 27.11 30 813.33
482727203 K III
Communication Corp P/S 47,000 2.88 0.0080 375.35 30 11,260.42
873098206 TW Holdings P/S 20,000 1.60 0.0044 88.89 30 2,666.67
909214207 Unisys P/S 15,000 5.63 0.0156 234.38 30 7,031.25
909214207 Unisys P/S 1,350 5.63 0.0156 21.09 14 295.31
---------------
22,066.98
---------------
</TABLE>
<TABLE>
<CAPTION>
NO. OF GROSS
DAYS INCOME
EQUITY SHARES DIVIDEND SHARES PRICE AT QUARTERLY DAILY IN BASE FOR BASE
TYPE OWNED RATE EXPECTED 12/31/92 INCOME INCOME PERIOD PERIOD
------- ------- ----- -------- --------- --------- ------- ------ ----------
PIK DIVIDEND SECURITIES:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
077852200 Bell &
Howell Co. P/S 19,149 0.04250 814 25.25 20,554 228.37 30 6,851.17
077852200 Bell &
Howell Co. P/S 1,627 0.04250 69 25.25 1,742 19.36 0 0.00
256128208 Dr. Pepper
Bottling Co. P/S 15,755 0.04250 670 26.50 17,755 197.28 30 5,918.33
417434404 Harvard
Industries P/S 64,161 0.14250 9,143 22.13 202,289 2,247.65 30 67,429.63
--------------
80,199.13
--------------
Gross Income from Common and Preferred stocks 102,266.10
============
</TABLE>
<TABLE>
<CAPTION>
LBVIP SERIES FUND, INC. - HIGH YIELD PORTFOLIO
BOOK INCOME AND EXPENSES BY MONTH
FOR FISCAL YEAR ENDING 12/31/92
=========================================================================================================
MONTHLY INCOME
--------------------------
AMORT. AMORT. AMORT. TOTAL
L-T OF S-T DIVIDEND OF L-T OF OTHER GROSS
MONTH INTEREST DISCOUNT INCOME DISCOUNT PREMIUM INCOME INCOME
- ---------- ----------- ---------- ----------- ----------- ---------- ---------- -----------
-----------
<S> <C> <C> <C> <C> <C> <C> <C>
Jan-92 410,903 24,698 34,672 81,486 2,055 0 549,705
Feb-92 464,798 25,424 3,274 72,931 2,154 0 564,273
Mar-92 568,084 19,816 22,276 82,483 3,491 0 689,168
Apr-92 589,492 17,366 46,628 72,196 3,427 0 722,255
May-92 589,908 17,492 21 79,418 4,092 0 682,747
Jun-92 784,994 17,709 75,663 94,722 4,666 44,111 976,534
Jul-92 759,897 13,289 45,271 126,583 5,312 7,500 947,228
Aug-92 847,921 8,012 10,895 122,940 5,091 183 984,859
Sep-92 888,244 10,731 78,337 117,613 5,118 857 1,090,665
Oct-92 863,490 22,391 50,427 119,673 5,827 2,436 1,052,590
Nov-92 1,087,783 22,158 169,438 148,152 7,108 1,231 1,421,654
Dec-92 1,271,566 17,974 32,347 153,017 8,039 2,697 1,469,562
- --------- ----------- ---------- --------- ------------ ---------- --------- ------------
(Y-T-D)
TOTALS 9,091,080 217,060 569,249 1,271,215 56,378 59,015 11,151,241
======= ========= ======= ======= ========= ====== ====== ==========
.....CONTINUED.. LBVIP SERIES FUND, INC., - HIGH YIELD PORTFOLIO
BOOK INCOME AND EXPENSES BY MONTH
FOR FISCAL YEAR ENDING 12/31/92.....CONTINUED
==================================================================================================
MONTHLY EXPENSES
---------------------------
ADVISORY NET OTHER TOTAL TOTAL NET
FEE FEE ADVISORY ACCRUED NET INVESTMENT
MONTH EXPENSE WAIVER FEE TAXES EXPENSES EXPENSES INCOME
- ---------- ----------- ----------- ---------- ------ ---------- ----------- --------------
----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Jan-92 20,105 0 20,105 0 0 20,105 529,600
Feb-92 19,950 0 19,950 0 0 19,950 544,323
Mar-92 25,382 0 25,382 0 0 25,382 663,786
Apr-92 25,326 0 25,326 0 0 25,326 696,929
May-92 27,344 0 27,344 0 0 27,344 655,403
Jun-92 32,872 0 32,872 0 0 32,872 943,662
Jul-92 34,781 0 34,781 0 0 34,781 912,447
Aug-92 38,200 0 38,200 0 0 38,200 946,659
Sep-92 39,936 0 39,936 0 0 39,936 1,050,729
Oct-92 42,061 0 42,061 0 0 42,061 1,010,529
Nov-92 46,323 0 46,323 0 0 46,323 1,375,331
Dec-92 50,011 0 50,011 0 0 50,011 1,419,551
- ----------- ----------- -------- ----------- ------ -------- ----------- -------------
(Y-T-D)
TOTALS 402,291 0 402,291 0 0 402,291 10,748,950
======= ==== ======= ==== ==== ======= ==========
</TABLE>
<PAGE>
SCHEDULE 3
LBVIP - HIGH YIELD DECEMBER 1992
- ----------------------------------------------------------------------------
DAILY CUMULATIVE
O/S O/S
DATE DAY SHARES SHARES
============================================================================
DEC 1 TUE 14,612,919 14,612,919
2 WED 14,661,016 29,273,934
3 THU 14,738,196 44,012,131
4 FRI 14,773,146 58,785,277
5 SAT 14,823,180 73,608,457
6 SUN 14,823,180 88,431,637
7 MON 14,823,180 103,254,817
8 TUE 14,873,935 118,128,752
9 WED 14,935,156 133,063,909
10 THU 14,962,688 148,026,597
11 FRI 15,007,588 163,034,185
12 SAT 15,081,124 178,115,309
13 SUN 15,081,124 193,196,433
14 MON 15,081,124 208,277,558
15 TUE 15,158,525 223,436,083
16 WED 15,255,111 238,691,194
17 THU 15,311,240 254,002,434
18 FRI 15,370,868 269,373,302
19 SAT 15,397,680 284,770,982
20 SUN 15,397,680 300,168,662
21 MON 15,397,680 315,566,343
22 TUE 15,426,982 330,993,324
23 WED 15,490,696 346,484,020
24 THU 15,556,460 362,040,480
25 FRI 15,556,460 377,596,940
26 SAT 15,556,460 393,153,400
27 SUN 15,556,460 408,709,861
28 MON 15,556,460 424,266,321
29 TUE 15,631,624 439,897,944
30 WED 15,679,229 455,577,173
DEC 31 THU 16,029,510 471,606,683
AVERAGE OUTSTANDING 15,213,119
VARIABLE ANNUITY-HIGH YIELD (DECEMBER 1992)
-----------------------------------------------
DAILY CUMULATIVE
OUTSTANDING OUTSTANDING
DATE DAY SHARES SHARES
=========================================================================
DECEMBER 1 TUE 8,596,187.136934 8,596,187.136934
2 WED 8,640,128.450160 17,236,315.587094
3 THU 8,659,070.575797 25,895,386.162891
4 FRI 8,682,505.386246 34,577,891.549137
5 SAT 8,712,858.660611 43,290,750.209748
6 SUN 8,712,858.660611 52,003,608.870359
7 MON 8,712,858.660611 60,716,467.530970
8 TUE 8,747,353.063759 69,463,820.594729
9 WED 8,761,555.366137 78,225,375.960866
10 THU 8,786,339.408275 87,011,715.369141
11 FRI 8,823,350.364894 95,835,065.734035
12 SAT 8,866,683.874773 104,701,749.608808
13 SUN 8,866,683.874773 113,568,433.483581
14 MON 8,866,683.874773 122,435,117.358354
15 TUE 8,921,886.811262 131,357,004.169616
16 WED 8,951,178.956619 140,308,183.126235
17 THU 8,984,262.522169 149,292,445.648404
18 FRI 8,993,101.604956 158,285,547.253360
19 SAT 9,011,553.849235 167,297,101.102595
20 SUN 9,011,553.849235 176,308,654.951830
21 MON 9,011,553.849235 185,320,208.801065
22 TUE 9,045,234.129254 194,365,442.930319
23 WED 9,070,345.909488 203,435,788.839807
24 THU 9,107,547.799347 212,543,336.639154
25 FRI 9,107,547.799347 221,650,884.438501
26 SAT 9,107,547.799347 230,758,432.237848
27 SUN 9,107,547.799347 239,865,980.037195
28 MON 9,107,547.799347 248,973,527.836542
29 TUE 9,131,140.190069 258,104,668.026611
30 WED 9,174,772.970938 267,279,440.997549
31 THU 9,227,426.629334 276,506,867.626883
AVERAGE OUTSTANDING: 8,919,576.375061
M & E Charges: 133,404.30
Unit Values: 16.209964
Prepared by: Jill Eriksen - Controllers
Date Prepared: 01/04/93
<PAGE>
<TABLE>
<CAPTION>
LBVIP SERIES FUND, INC. - HIGH YIELD PORTFOLIO STANDARD YIELD CALCULATION
INPUT AREA - PORTFOLIO HOLDINGS
=======================================================================================================================
AS OF 11/30/92 (ADJUSTED FOR UNSETTLED TRADES)
=============================================================
MATURITY 1ST PMT STEP VALUATION ACCRUED INT PAY CALL CALL
ROW CUSIP NO. ISSUER PAR COUPON PRICE DATE DATE COUPON DATE INTEREST DATE DATE PRICE
- --- --------- ----------- --------- ------ ------- ---------- -------- ------ --------- ------ -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
A B C D E F G H I J K L M N
0 002034AB2 ARA GROUP
INC 700,000 12.000 110.375 04/15/2000 11/30/92 10,787 04/15/93 04/15/95 105.000
1 006848AD7 ADELPHIA
COMMUNICATIONS
CORP 2,000,000 11.875 100.500 09/15/2004 11/30/92 53,438 03/15/93
2 016745AA9 ALLBRITTON
COMMUNICATIONS
CO 1,750,000 11.500 98.750 08/15/2004 11/30/92 53,108 02/15/93
3 027429AW9 AMERICAN
MEDICAL
INTL INC 500,000 13.500 109.750 08/15/2001 11/30/92 19,875 02/15/93 08/15/96 103.860
4 027429AY5 AMERICAN MED
INTL INC 300,000 141,000 11/26/2005 11/26/95 15.000 11/30/92 05/26/93 11/26/95 196.717
5 029163AA0 AMERICAN RE
CORP 2,100,000 10.875 104.500 09/15/2004 11/30/92 38,697 03/15/93
AMERICAN
6 029717AE5 STD INC 3,000,000 94.625 06/30/2003 12/30/93 14.250 11/30/92 12/30/92
7 042170AH3 ARMCO INC 1,050,000 11.375 100.500 10/15/99 11/30/92 17,584 04/15/93
8 050297AA8 AUBURN
HILLS TR 1,650,000 16.875 130.000 05/01/2020 11/30/92 23,203 05/01/93
9 066229AA3 BANKERS
LIFE HLDGS
CO 1,300,000 13.000 100.500 11/01/2002 11/30/92 10,328 05/01/93
10 067774AA7 BARNES &
NOBLES INC 900,000 11.875 102.500 01/15/2003 11/30/92 4,453 01/15/93
11 073913AA3 BEATRICE
FOODS INC 1,400,000 12.000 103.250 12/01/2001 11/30/92 84,000 12/01/92
12 077852AA9 BELL &
HOWELL GROUP
INC 599,000 12.875 105.500 05/15/98 11/30/92 3,428 05/15/93
13 088667AA8 BIBB CO DEL 1,000,000 14.000 101.000 10/01/99 11/30/92 23,333 04/01/93
14 131269AA0 CALMAR
SPRAYING SYS
INC 750,000 14.000 105.000 02/15/99 11/30/92 30,917 02/15/93 02/15/93 106.000
15 161241AR5 CHARTER
MEDICAL CORP 840,000 7.500 72.500 02/15/2003 11/30/92 18,550 02/15/93
16 194831AB9 COLLINS &
AIKMAN GROUP
INC 700,000 15.000 98.000 05/01/95 11/30/92 8,750 05/01/93
17 196879AB6 COLTEC INDS
INC 500,000 10.250 102.000 04/01/2002 11/30/92 8,542 04/01/93
18 196879AD2 COLTEC INDS
INC 1,750,000 9.750 101.500 11/01/99 11/30/92 16,589 05/01/93
19 197648BU1 COLUMBIA
GAS SYSTEMS
DEFAULT 1,750,000 10.250 108.250 08/01/2011 11/30/92 02/01/93
20 197709AA6 COLUMBIA
HOSP CORP 900,000 10.875 99.000 03/01/2002 11/30/92 24,469 03/01/93
21 199904AA1 COMCAST
CELLULAR 4,600,000 48.250 03/05/2000 11/30/92 03/05/93
22 211177AE0 CONTINENTAL
CABLEVISION
INC 2,800,000 11.000 106.000 06/01/2007 11/30/92 136,033 12/01/92
23 211642AB9 CONTINENTAL
MED SYS INC 1,400,000 10.875 98.750 08/15/2002 11/30/92 43,983 02/15/93
24 230208AB6 CULLUM COS
INC 2,000,000 89.500 12/01/2003 06/01/94 16.000 11/30/92 12/01/92
25 235529AB0 DALTON B CO 650,000 13.500 107.000 02/01/99 11/30/92 29,250 02/01/93
26 245279AC8 DEL NORTE
FDG CORP
DEFAULT 250,000 11.250 60.232 01/02/2014 11/30/92 01/02/93
27 256128AA7 DR PEPPER
BOTTLING CO
TEX 360,000 15.500 110.500 11/01/98 11/30/92 4,650 05/01/93 11/01/93 105.810
28 256131AD5 DR PEPPER/
SEVEN UP COS
INC 3,500,000 60.125 11/01/2002 05/01/98 11.500 11/30/92 05/01/93
29 269612AA5 EAGLE INDS
INC 1,050,000 13.000 105.000 10/15/98 11/30/92 17,442 04/15/93
30 283681AF1 EL PASO FNDG
DEFAULT 500,000 10.375 62.638 01/02/2011 11/30/92 01/02/93
31 291525AB9 EMMIS
BROADCASTING
CORP 2,350,000 14.625 97.000 12/15/95 11/30/92 158,478 12/15/92
32 29409KAA9 ENVIROSOURCE
INC 2,400,000 14.000 106.500 04/01/98 11/30/92 56,000 04/01/93
33 307669AC5 FARM FRESH
INC 1,750,000 12.250 96.500 10/01/2000 11/30/92 30,965 04/01/93
34 315290AE6 FERRELLGAS
INC 1,350,000 11.625 104.000 12/15/2003 11/30/92 72,366 12/15/92
35 344126AA5 FOAMEX L.P. 1,150,000 11.250 98.000 10/01/2002 11/30/92 17,250 04/01/93
36 344126AB3 FOAMEX L P/
FOAMEX CAP
CORP 800,000 11.875 98.000 10/01/2004 11/30/92 12,667 04/01/93
37 346091AE1 FOREST OIL
CORP 250,000 13.625 96.500 09/15/98 11/30/92 7,191 03/15/93
38 347460AD9 FORT HOWARD
CORP 3,000,000 12.625 104.500 11/01/2000 11/30/92 31,562 05/01/93 11/01/93 105.000
39 368145AE8 GAYLORD
CONTAINER
CORP 590,652 10.250 82.500 12/31/2001 11/30/92 25,226 12/31/92
40 368145AF5 GAYLORD
CONTAINER
CORP 513,440 13.500 99.500 12/31/2003 11/30/92 28,881 12/31/92
41 369330AB1 GENERAL CHEM
CORP 500,000 14.000 111.250 11/01/98 11/30/92 5,833 05/01/93 11/01/94 105.500
42 370064AL1 GENERAL HOST
CORP 750,000 8.000 107.500 02/15/2002 11/30/92 17,667 02/15/93
43 386532AD7 GRAND UN
CO 1,250,000 12.250 99.750 07/15/2002 11/30/92 54,870 07/15/93
44 420877AA0 HAYNES INTL
INC 1,900,000 13.500 91.500 08/15/99 11/30/92 75,525 02/15/93
45 42221HAF4 HEALTHTRUST
INC 1,250,000 10.750 105.750 05/01/2002 11/30/92 11,198 05/01/93
46 42724GAA9 HERITAGE
MEDIA SVCS 2,500,000 11.000 103.000 06/15/2002 11/30/92 121,458 12/15/92
47 431691AA2 HILLS
STORES CO
DEFAULT 267,000 13.500 89.500 12/31/92 11/30/92 12/31/92
48 45167RAC8 IDEX CORP 1,000,000 9.750 102.000 09/15/2002 11/30/92 18,417 03/15/93
49 46624EAG3 JPS TEXTILE
GROUP INC 2,200,000 9.250 89.500 06/01/99 11/30/92 101,750 12/01/92
50 46624EAJ7 JPS TEXTILE
GROUP INC 600,000 7.000 69.500 05/15/2000 11/30/92 1,867 05/15/93
51 540411AA3 LOEHMANNS
HLDS INC 2,100,000 13.750 100.500 02/15/99 11/30/92 85,021 02/15/93
52 541535AA8 LOMAS
FINANCIAL 297,000 9.000 86.875 10/31/2003 11/30/92 2,302 04/30/93
53 559177AE0 MAGNA
COPPER CO 700,000 11.500 106.500 01/15/2002 11/30/92 30,411 01/15/93
54 570387AF7 MARK IV
INDUSTRIES 650,000 6.250 115.250 02/15/2007 11/30/92 11,962 02/15/93
55 586009AF9 MEMOREX
TELEX CORP
PIK 1,663,088 10.000 25.500 02/15/98 11/30/92 02/15/93
56 597520AB1 MIDLAND
FUNDG II 1,900,000 13.250 109.460 07/23/2006 11/30/92 89,511 01/23/93
57 62945JAB2 NWA INC
DEFAULT 1,900,000 8.625 26.244 08/01/96 11/30/92 46,886 02/01/93
58 652478AC2 NEWS AMER
HLDGS INC 750,000 64.500 03/31/2002 11/30/92 03/31/93
59 652478AD0 NEWS AMER
HLDGS INC 1,300,000 9.125 100.250 10/15/99 11/30/92 11,533 04/15/93
60 656559AK7 NORTEK INC 700,000 13.500 100.000 06/15/97 11/30/92 43,575 12/15/92
61 690090AA3 OUTLET
BROADCASTING
INC 350,000 13.250 100.500 02/01/97 11/30/92 15,458 02/01/93
62 690768AX4 OWENS ILL
INC 3,200,000 9.750 98.625 08/15/2004 11/30/92 84,067 02/15/93
63 692766AD0 P & C FOODS
MKTS INC 500,000 13.750 107.000 10/11/98 11/30/92 9,549 04/11/93 10/11/93 104.000
64 692766AE8 P & C FOOD
MKTS INC 400,000 11.500 104.250 10/15/2001 11/30/92 5,878 04/15/93
65 693147AC4 PA HOLDINGS
CORP 500,000 13.750 107.500 07/15/99 11/30/92 25,972 01/15/93 07/15/93 106.880
66 693643AC2 PST HLDGS
INC 2,500,000 13.125 96.000 06/01/97 11/30/92 164,063 12/01/92
67 707832AB7 PENN
TRAFFIC CO 900,000 10.250 99.000 02/15/2002 11/30/92 27,163 02/15/93
68 707832AC5 PENN
TRAFFIC
CO NEW 900,000 10.375 99.000 10/01/2004 11/30/92 13,488 04/01/93
69 727547AA9 PLASTIC
CONTAINER
INC 750,000 10.750 101.500 04/01/2001 11/30/92 13,438 04/01/93
70 744482BF6 PUBLIC SVC
CO N H 458,000 15.230 128.751 07/01/2000 11/30/92 29,064 01/01/93 07/01/95 115.650
71 770685AA3 ROBIN MEDIA
GROUP INC 2,600,000 11.125 91.500 04/01/97 11/30/92 48,208 04/01/93
72 775100AA8 ROGERS
CABLESYSTEMS 1,150,000 9.625 99.500 08/01/2002 11/30/92 35,973 02/01/93
73 775100AB6 ROGERS
CABLESYSTEMS 1,400,000 10.125 99.250 09/01/2012 11/30/92 32,288 03/01/93
74 775103AA2 ROGERS
CANTEL
MOBILE INC 1,850,000 10.750 104.000 11/01/2001 11/30/92 16,573 05/01/93 11/01/96 103.000
75 784628AA7 SPTC HLDG
INC 2,900,000 12.125 95.000 10/01/2000 11/30/92 58,604 04/01/93
76 78462GAF8 SPI HLDG
INC 1,296,000 11.500 92.250 12/01/2002 11/30/92 74,520 12/01/92
77 809388AA9 SCOTT CABLE
COMMUNICATION
INC 1,750,000 12.250 89.500 04/15/2001 11/30/92 27,392 04/15/93
78 818046AA2 SEVEN UP RC
BOTTLING 1,400,000 11.500 99.750 08/01/99 11/30/92 49,194 02/01/93
79 827048AB5 SILGAN
HLDGS INC 3,900,000 62.750 12/15/2002 12/15/96 13.250 11/30/92 12/15/92
80 8595679B7 TELEX
COMMUNICATIONS
INC 1,000,000 14.500 103.000 06/01/99 11/30/92 72,500 12/01/92
81 861589AD1 STONE
CONTAINER
CORP 1,250,000 11.875 101.750 12/01/98 11/30/92 74,219 12/01/92
82 862133AA3 STORER
COMMUNICATIONS
INC 600,000 10.000 96.500 05/15/2003 11/30/92 2,667 05/15/93
83 868446AB1 SUPERMARKETS
GEN HLDGS
CORP 1,000,000 12.625 107.250 06/15/2002 11/30/92 58,215 12/15/92
84 872541AB3 TKR CABLE
INC 1,700,000 10.500 105.750 10/31/2007 11/30/92 10,908 04/30/93
85 873118AD3 T W FOOD
SERVICES
INC 377,775 11.250 100.250 11/01/2004 11/30/92 3,542 05/01/93
86 873118AD5 TW SVCS
INC 650,000 14.750 132.500 05/01/98 11/30/92 7,990 05/01/93
87 873118AE3 TW SVCS
INC 1,500,000 10.875 101.500 12/01/2002 11/30/92 6,344 06/01/93
88 8807799A3 TEREX CORP
NEW 1,400,000 13.000 90.000 08/01/96 11/30/92 60,667 02/01/93
89 893532AG6 TRANSCO
ENERGY CO 3,000,000 11.250 105.250 07/01/99 11/30/92 140,625 01/01/93 07/01/97 101.880
90 8959099A9 TRIANGLE
WIRE &
CABLE INC 500,000 13.500 80.000 01/15/2002 11/30/92 33,750 12/01/92
91 909214AW8 UNISYS
CORP 1,750,000 10.625 98.000 10/01/99 11/30/92 30,990 04/01/93
92 909214AX6 UNISYS
CORP 850,000 8.250 108.250 08/01/2000 11/30/92 23,375 02/01/93
93 909214AY4 UNISYS
CORP 1,000,000 9.750 100.000 09/15/96 11/30/92 18,688 03/15/93
94 930676AE1 WAINOCO
OIL CO 1,250,000 12.000 100.500 08/01/2002 11/30/92 42,917 02/01/93
95 948774AA2 WEIRTON
STL CORP 2,600,000 10.875 83.000 10/15/99 11/30/92 36,129 04/15/93
96 963142AG9 WHEELING
PITTSBURG
CORP 800,000 12.250 99.500 11/15/2000 11/30/92 4,356 05/15/93
97 978093AB8 WOLVERINE
TUBE INC 1,500,000 10.125 101.250 09/01/2002 11/30/92 37,547 03/01/93
------------- -----------
132,311,955 3,248,095
============= ============
</TABLE>
<TABLE>
<CAPTION>
CONTINUED.. PORTFOLIO HOLDINGS - OUTPUT
==================================================================================================================
AS OF 11/30/92 (ADJUSTED FOR UNSETTLED TRADES)..CONTINUED
=========================================================
DAILY MARKET VALUE NO OF GROSS
YIELD AND DAYS INCOME
(360 DAY ACCRUED DAILY IN BASE FOR BASE
ROW CUSIP NO. ISSUER YIELD YEAR) INCOME INCOME PERIOD PERIOD
- --- --------- ---------------------------------- ---------- ----------- -------------- --------- ---- -----------
<S><C> <C> <C> <C> <C> <C> <C><C>
A B C O P Q R S T U
0 002034AB2 ARA GROUP INC 8.9495% 0.024860% 783,411.88 194.75 30 5,842.50
1 006848AD7 ADELPHIA COMMUNICATIONS CORP 11.7511% 0.032642% 2,063,437.50 673.55 30 20,206.50
2 016745AA9 ALLBRITTON COMMUNICATIONS CO 11.7372% 0.032603% 1,781,232.64 580.74 30 17,422.20
3 027429AW9 AMERICAN MEDICAL INTL INC 11.0535% 0.030704% 568,625.00 174.59 30 5,237.70
4 027429AY5 AMERICAN MED INTL INC 12.7839% 0.035511% 423,000.00 150.21 30 4,506.30
5 029163AA0 AMERICAN RE CORP 10.2614% 0.028504% 2,233,196.87 636.55 30 19,096.50
6 029717AE5 AMERICAN STD INC 13.8142% 0.038373% 2,838,750.00 1,089.30 30 32,679.00
7 042170AH3 ARMCO INC 11.2029% 0.031119% 1,072,833.85 333.86 30 10,015.80
8 050297AA8 AUBURN HILLS TR 12.8684% 0.035746% 2,168,203.14 775.04 30 23,251.20
9 066229AA3 BANKERS LIFE HLDGS CO 12.9452% 0.035959% 1,316,827.78 473.52 30 14,205.60
10 067774AA7 BARNES & NOBLES INC 12.1172% 0.033659% 926,953.13 312.00 30 9,360.00
11 073913AA3 BEATRICE FOODS INC 11.4067% 0.031685% 1,529,500.00 484.63 30 14,538.90
12 077852AA9 BELL & HOWELL GROUP INC 11.4758% 0.031877% 635,372.61 202.54 30 6,076.20
13 088667AA8 BIBB CO DEL 13.7376% 0.038160% 1,033,333.33 394.32 30 11,829.60
14 131269AA0 CALMAR SPRAYING SYS INC 17.0573% 0.047381% 818,416.67 387.78 30 11,633.40
15 161241AR5 CHARTER MEDICAL CORP 12.2855% 0.034126% 627,550.01 214.16 30 6,424.80
16 194831AB9 COLLINS AND AIKMAN GROUP INC 15.9675% 0.044354% 694,750.00 308.15 30 9,244.50
17 196879AB6 COLTEC INDS INC 9.9031% 0.027509% 518,541.67 142.64 30 4,279.20
18 196879AD2 COLTEC INDS INC 9.4117% 0.026144% 1,792,838.54 468.71 30 14,061.30
19 197648BU1 COLUMBIA GAS SYSTEMS DEFAULT 0.000000% 1,894,375.00 0.00 30 0.00
20 197709AA6 COLUMBIA HOSP CORP 11.0321% 0.030645% 915,468.75 280.54 30 8,416.20
21 199904AA1 COMCAST CELLULAR 10.2842% 0.028567% 2,219,500.00 634.05 30 19,021.50
22 211177AE0 CONTINENTAL CABLEVISION INC 10.2770% 0.028547% 3,104,033.33 886.12 30 26,583.60
23 211642AB9 CONTINENTAL MED SYS INC 11.0813% 0.030781% 1,426,483.33 439.09 30 13,172.70
24 230208AB6 CULLUM COS INC 15.2620% 0.042394% 1,790,000.00 758.86 30 22,765.80
25 235529AB0 DALTON B CO 11.8405% 0.032890% 724,750.00 238.37 30 7,151.10
26 245279AC8 DEL NORTE FDG CORP DEFAULT 0.000000% 150,579.00 0.00 30 0.00
27 256128AA7 DR PEPPER BOTTLING CO TEX 9.4131% 0.026147% 402,450.00 105.23 30 3,156.90
28 256131AD5 DR PEPPER/SEVEN UP COS INC 11.0052% 0.030570% 2,104,375.00 643.31 30 19,299.30
29 269612AA5 EAGLE INDS INC 11.7723% 0.032701% 1,119,941.66 366.23 30 10,986.90
30 283681AF1 EL PASO FNDG DEFAULT 0.000000% 313,188.50 0.00 30 0.00
31 291525AB9 EMMIS BROADCASTING CORP 15.8697% 0.044083% 2,437,978.14 1,074.72 30 32,241.60
32 29409KAA9 ENVIROSOURCE INC 12.2710% 0.034086% 2,612,000.00 890.33 30 26,709.90
33 307669AC5 FARM FRESH INC 13.0073% 0.036131% 1,719,715.28 621.36 30 18,640.80
34 315290AE6 FERRELLGAS INC 10.9821% 0.030506% 1,476,365.62 450.38 30 13,511.40
35 344126AA5 FOAMEX L.P. 11.6443% 0.032345% 1,144,250.00 370.11 30 11,103.30
36 344126AB3 FOAMEX L P/FOAMEX CAP CORP 12.2499% 0.034028% 796,666.67 271.09 30 8,132.70
37 346091AE1 FOREST OIL CORP 14.4982% 0.040273% 248,440.97 100.05 30 3,001.50
38 347460AD9 FORT HOWARD CORP 12.4903% 0.034695% 3,166,562.49 1,098.65 30 32,959.50
39 368145AE8 GAYLORD CONTAINER CORP 13.6535% 0.037926% 512,513.66 194.38 30 5,831.40
40 368145AF5 GAYLORD CONTAINER CORP 13.5704% 0.037696% 539,753.80 203.46 30 6,103.80
41 369330AB1 GENERAL CHEM CORP 10.0337% 0.027871% 562,083.34 156.66 30 4,699.80
42 370064AL1 GENERAL HOST CORP 6.8790% 0.019108% 823,916.67 157.44 30 4,723.20
43 386532AD7 GRAND UN CO 11.2862% 0.031351% 1,301,744.79 408.10 30 12,243.00
44 420877AA0 HAYNES INTL INC 15.5448% 0.043180% 1,814,025.00 783.30 30 23,499.00
45 42221HAF4 HEALTHTRUST INC 9.7911% 0.027198% 1,333,072.92 362.56 30 10,876.80
46 42724GAA9 HERITAGE MEDIA SVCS 10.5215% 0.029226% 2,696,458.35 788.07 30 23,642.10
47 431691AA2 HILLS STORES CO DEFAULT 0.000000% 238,965.00 0.00 30 0.00
48 45167RAC8 IDEX CORP 9.4539% 0.026261% 1,038,416.67 272.70 30 8,181.00
49 46624EAG3 JPS TEXTILE GROUP INC 11.5869% 0.032186% 2,070,750.00 666.49 30 19,994.70
50 46624EAJ7 JPS TEXTILE GROUP INC 13.6331% 0.037870% 418,866.66 158.62 30 4,758.60
51 540411AA3 LOEHMANNS HLDS INC 13.5921% 0.037756% 2,195,520.83 828.93 30 24,867.90
52 541535AA8 LOMAS FINANCIAL 11.0893% 0.030803% 260,320.50 80.19 30 2,405.70
53 559177AE0 MAGNA COPPER CO 10.3666% 0.028796% 775,911.11 223.43 30 6,702.90
54 570387AF7 MARK IV INDUSTRIES 4.7578% 0.013216% 761,086.80 100.59 30 3,017.70
55 586009AF9 MEMOREX TELEX CORP 10.0000% 0.027778% 424,087.44 117.80 30 3,534.00
56 597520AB1 MIDLAND FUNDG II 11.8197% 0.032833% 2,169,258.71 712.22 30 21,366.60
57 62945JAB2 NWA INC 0.000000% 545,526.26 0.00 30 0.00
58 652478AC2 NEWS AMER HLDGS INC 4.7518% 0.013199% 483,750.00 63.85 30 1,915.50
59 652478AD0 NEWS AMER HLDGS INC 9.1182% 0.025328% 1,314,782.99 333.01 30 9,990.30
60 656559AK7 NORTEK INC 13.4783% 0.037440% 743,575.00 278.39 30 8,351.70
61 690090AA3 OUTLET BROADCASTING INC 13.0490% 0.036247% 367,208.33 133.10 30 3,993.00
62 690768AX4 OWENS ILL INC 9.9749% 0.027708% 3,240,066.67 897.76 30 26,932.80
63 692766AD0 P & C FOODS MKTS INC 9.5528% 0.026536% 544,548.61 144.50 30 4,335.00
64 692766AE8 P & C FOOD MKTS INC 10.7302% 0.029806% 422,877.78 126.04 30 3,781.20
65 693147AC4 PA HOLDINGS CORP 11.7008% 0.032502% 563,472.22 183.14 30 5,494.20
66 693643AC2 PST HLDGS INC 14.3494% 0.039859% 2,564,062.50 1,022.02 30 30,660.60
67 707832AB7 PENN TRAFFIC CO 10.4056% 0.028905% 918,162.50 265.39 30 7,961.70
68 707832AC5 PENN TRAFFIC CO NEW 10.5464% 0.029295% 904,487.50 264.97 30 7,949.10
69 727547AA9 PLASTIC CONTAINER INC 10.4596% 0.029055% 774,687.50 225.08 30 6,752.40
70 744482BF6 PUBLIC SVC CO N H 8.1897% 0.022749% 618,741.67 140.76 30 4,222.80
71 770685AA3 ROBIN MEDIA GROUP INC 13.7559% 0.038211% 2,427,208.33 927.45 30 27,823.50
72 775100AA8 ROGERS CABLESYSTEMS 9.7062% 0.026962% 1,180,223.44 318.21 30 9,546.30
73 775100AB6 ROGERS CABLESYSTEMS 10.2300% 0.028417% 1,421 787.50 404.03 30 12,120.90
74 775103AA2 ROGERS CANTEL MOBILE INC 10.1109% 0.028086% 1,940,572.92 545.03 30 16,350.90
75 784628AA7 SPTC HLDG INC 13.1413% 0.036504% 2,813,604.17 1,027.07 30 30,812.10
76 78462GAF8 SPI HLDG INC 12.8945% 0.035818% 1,270,080.00 454.92 30 13,647.60
77 809388AA9 SCOTT CABLE COMMUNICATION INC 14.4258% 0.040072% 1,593,642.36 638.60 30 19,158.00
78 818046AA2 SEVEN UP RC BOTTLING 11.6018% 0.032227% 1,445,694.44 465.91 30 13,977.30
79 827048AB5 SILGAN HLDGS INC 13.4012% 0.037226% 2,447,250.00 911.00 30 27,330.00
80 8595679B7 TELEX COMMUNICATIONS INC 13.7766% 0.038268% 1,102,500.00 421.91 30 12,657.30
81 861589AD1 STONE CONTAINER CORP 11.4557% 0.031821% 1,346,093.75 428.35 30 12,850.50
82 862133AA3 STORER COMMUNICATIONS INC 10.5530% 0.029314% 581,666.66 170.51 30 5,115.30
83 868446AB1 SUPERMARKETS GEN HLDGS CORP 11.3506% 0.031530% 1,130,715.28 356.51 30 10,695.30
84 872541AB3 TKR CABLE INC 9.7849% 0.027180% 1,808,658.33 491.60 30 14,748.00
85 873118AD3 T W FOOD SERVICES INC 11.2004% 0.031112% 382,261.08 118.93 30 3,567.90
86 873118AD5 TW SVCS INC 7.3546% 0.020429% 869,239.58 177.58 30 5,327.40
87 873118AE3 TW SVCS INC 10.5544% 0.029318% 1,528,843.75 448.22 30 13,446.60
88 8807799A3 TEREX CORP NEW 16.6921% 0.046367% 1,320,666.67 612.35 30 18,370.50
89 893532AG6 TRANSCO ENERGY CO 10.1042% 0.028067% 3,298,125.00 925.69 30 27,770.70
90 8959099A9 TRIANGLE WIRE & CABLE INC 10.4733% 0.029093% 433,750.00 126.19 30 3,785.70
91 909214AW8 UNISYS CORP 11.0296% 0.030638% 1,745,989.58 534.93 30 16,047.90
92 909214AX6 UNISYS CORP 6.8407% 0.019002% 943,500.00 179.28 30 5,378.40
93 909214AY4 UNISYS CORP 9.7842% 0.027178% 1,018,687.50 276.86 30 8,305.80
94 930676AE1 WAINOCO OIL CO 11.9919% 0.033311% 1,299,166.66 432.76 30 12,982.80
95 948774AA2 WEIRTON STL CORP 14.8831% 0.041342% 2,194,129.17 907.10 30 27,213.00
96 963142AG9 WHEELING PITTSBURG CORP 12.3381% 0.034272% 880,355.55 274.30 30 8,229.00
97 978093AB8 WOLVERINE TUBE INC 9.9122% 0.027534% 1,556,296.89 428.51 30 12,855.30
--------------
1,215,668.40
--------------
98
99
100
101
102
103
104
105
106
107
</TABLE>
<TABLE>
<CAPTION>
PURCHASES SETTLING IN DECEMBER
==========================================
PURCHASE MATURITY 1ST PMT STEP SETTLEMENT ACCRUED INT PAY CALL CALL
ROW CUSIP NO. ISSUER PAR COUPON PRICE DATE DATE COUPON DATE INTEREST DATE DATE PRICE
- --- --------- ------------- -------- ------- ------- ----------- ----- ------- -------- --------- -------- ---- -----
A B C D E F G H I J K L M N
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
115 370064AL1 GENERAL HOST
CORP 150,000 8.000 104.750 02/15/2002 12/01/92 3,533 02/15/93
116 465678AA8 ITHACA
INDUSTRIES 1,150,000 11.125 100.000 12/15/2002 12/10/92 06/15/93
117 465678AA8 ITHACA
INDUSTRIES 300,000 11.125 100.750 12/15/2002 12/10/92 06/15/93
118 527480AG2 LEVITZ
FURNITURE 1,100,000 12.375 100.000 04/15/97 12/10/92 04/15/93
119 527480AG2 LEVITZ
FURNITURE 350,000 12.375 100.750 04/15/97 12/11/92 120 04/15/93
120 465678AA8 ITHACA
INDUSTRIES 250,000 11.125 100.750 12/15/2002 12/14/92 309 06/15/93
121 527480AG2 LEVITZ
FURNITURE 450,000 12.375 100.500 04/15/97 12/14/92 619 04/15/93
122 749084AA7 QUORUM HEALTH
GROUP 1,100,000 11.875 100.000 12/15/2002 12/15/92 06/15/93
123 45812CAA4 INTEGRATED
HEALTH SV 375,000 6.000 100.000 01/01/2003 12/16/92 01/01/93
124 749084AA7 QUORUM HEALTH
GROUP 400,000 11.875 101.125 12/15/2002 12/16/92 132 06/15/93
125 302051AB3 EXIDE CORP 1,100,000 10.750 100.000 12/15/2002 12/17/92 06/15/93
126 465856AA0 IVEX
PACKAGING 800,000 12.500 99.299 12/15/2002 12/17/92 06/15/93
127 91528LAA3 UNIVISION
TELEVISION 1,350,000 11.750 100.000 12/15/2000 12/17/92 06/15/93
128 066229AA3 BANKERS LIFE
HLDGS C 500,000 13.000 101.500 11/01/2002 12/21/92 7,583 05/01/93
129 343172AB8 FLORIDA STL
CORP 1,250,000 11.500 100.000 12/15/2000 12/21/92 06/15/93
130 457472AB4 INLAND STL
INDS INC 2,000,000 12.750 100.000 12/15/2002 12/23/92 06/15/93
131 302051AB3 EXIDE CORP 500,000 10.750 101.000 12/15/2002 12/29/92 1,792 06/15/93
132 315290AE6 FERRELLGAS
INC 750,000 11.625 103.750 12/15/2003 12/29/92 3,391 06/15/93
</TABLE>
<TABLE>
<CAPTION>
CONTINUED..PURCHASES SETTLING IN DECEMBER
=================================================
DAILY MARKET VALUE NO. GROSS
YIELD AND OF DAYS INCOME
(360 DAY ACCRUED DAILY IN BASE FOR BASE
ROW CUSIP NO. ISSUER YIELD YEAR) INCOME INCOME PERIOD PERIOD
- --- --------- --------------------- --------- ----------- ------------- ------- ------ ----------
A B C O P Q R S T U
<S> <C> <C> <C> <C> <C> <C> <C> <C>
115 370064AL1 GENERAL HOST CORP 7.2779% 0.020216% 160,658.33 32.48 30 974.40
116 465678AA8 ITHACA INDUSTRIES 11.1005% 0.030835% 1,150,000.00 354.60 21 7,446.60
117 465678AA8 ITHACA INDUSTRIES 10.9753% 0.030487% 302,250.00 92.15 21 1,935.15
118 527480AG2 LEVITZ FURNITURE 12.9318% 0.035922% 1,100,000.00 395.14 21 8,297.94
119 527480AG2 LEVITZ FURNITURE 12.6997% 0.035277% 352,745.31 124.44 20 2,488.80
120 465678AA8 ITHACA INDUSTRIES 10.9741% 0.030484% 252,184.03 76.87 17 1,306.79
121 527480AG2 LEVITZ FURNITURE 12.7767% 0.035491% 452,868.75 160.73 17 2,732.41
122 749084AA7 QUORUM HEALTH GROUP 11.8750% 0.032986% 1,100,000.00 362.85 16 5,805.60
123 45812CAA4 INTEGRATED HEALTH SV 6.3740% 0.017705% 375,000.00 66.40 15 996.00
124 749084AA7 QUORUM HEALTH GROUP 11.6810% 0.032447% 404,631.94 131.29 15 1,969.35
125 302051AB3 EXIDE CORP 10.7594% 0.029887% 1,100,000.00 328.76 14 4,602.64
126 465856AA0 IVEX PACKAGING 12.6371% 0.035103% 794,392.00 278.86 14 3,904.04
127 91528LAA3 UNIVISION TELEVISION 11.7621% 0.032673% 1,350,000.00 441.08 14 6,175.12
128 066229AA3 BANKERS LIFE HLDGS C 12.7663% 0.035462% 515,083.33 182.66 10 1,826.60
129 343172AB8 FLORIDA STL CORP 11.5354% 0.032043% 1,250,000.00 400.53 10 4,005.30
130 457472AB4 INLAND STL INDS INC 12.7981% 0.035550% 2,000,000.00 711.01 8 5,688.08
131 302051AB3 EXIDE CORP 10.5917% 0.029422% 506,791.67 149.11 2 298.22
132 315290AE6 FERRELLGAS INC 11.0238% 0.030622% 781,515.63 239.31 2 478.62
-----------
60,931.66
-----------
133
134
135
136
137
138
139
140
141
142
143
144
145
146
147
148
149
150
141
152
153
154
155
156
157
158
159
160
161
162
163
164
165
166
167
168
169
</TABLE>
<TABLE>
<CAPTION>
SALES SETTLING IN DECEMBER
===================================================
SALE MATURITY 1st PMT STEP SETTLEMENT ACCRUED INT PAY CALL CALL
ROW CUSIP NO. ISSUER PAR COUPON PRICE DATE DATE COUPON DATE INTEREST DATE DATE PRICE
- --- --------- ----------- -------- ------- -------- ---------- ---- ------ --------- -------- -------- ---- -----
A B C D E F G H I J K L M N
<S> <C> <C> <C> <C> <C> <C> <C> <C>
177 344126AB3 FOAMEX L P
/FOAMEX CA 350,000 11.875 98.000 10/01/2004 12/02/92 5,542 04/01/93
178 541535AA8 LOMAS FINL
CORP 297,000 9.000 86.875 10/31/2003 12/02/92 2,302 04/30/93
179 8807799A3 TEREX CORP
NEW 250,000 13.000 90.000 08/01/96 12/04/92 10,833 02/01/93
180 693643AC2 PST HOLDGS
INC 300,000 13.125 96.000 06/01/97 12/09/92 19,688 12/01/92
181 211642AB9 CONTINENTAL
MED SYS 50,000 10.875 98.750 08/15/2002 12/14/92 1,571 02/15/93
182 235529AB0 DALTON
B CO 650,000 13.500 107.000 02/01/99 12/16/92 29,250 02/01/93
183 45812CAA4 INTEGRATED
HEALTH SV 375,000 6.000 100.000 01/01/2003 12/16/92 01/01/93
184 873118AD5 TW SVCS INC 650,000 14.750 132.500 05/01/98 12/16/92 7,990 05/01/93
185 963142AG9 WHEELING
PITTSBURG C 800,000 12.250 99.500 11/15/2000 12/16/92 4,356 05/15/93
186 8807799A3 TEREX CORP
NEW 900,000 13.000 90.000 08/01/96 12/17/92 39,000 02/01/93
</TABLE>
<TABLE>
<CAPTION>
CONTINUED..SALES SETTLING IN DECEMBER
==================================================
DAILY MARKET VALUE NO. GROSS
YIELD AND OF DAYS INCOME
(360 DAY ACCRUED DAILY IN BASE FOR BASE
ROW CUSIP NO. ISSUER YIELD YEAR) INCOME INCOME PERIOD PERIOD
- --- --------- -------------------- -------- ----------- ------------ --------- ----- -----------
A B C O P Q R S T U
<S> <C> <C> <C> <C> <C> <C> <C> <C>
177 344126AB3 FOAMEX L P/FOAMEX CA 12.2499% 0.034028% 348,541.67 118.60 -29 (3,439.40)
178 541535AA8 LOMAS FINL CORP 11.0893% 0.030803% 260,320.50 80.19 -29 (2,325.51)
179 8807799A3 TEREX CORP NEW 16.6921% 0.046367% 235,833.33 109.35 -27 (2,952.45)
180 693643AC2 PST HOLDGS INC 14.3494% 0.039859% 307,687.50 122.64 -22 (2,698.08)
181 211642AB9 CONTINENTAL MED SYS 11.0813% 0.030781% 50,945.83 15.68 -17 (266.56)
182 235529AB0 DALTON B CO 11.8405% 0.032890% 724,750.00 238.37 -15 (3,575.55)
183 45812CAA4 INTEGRATED HEALTH SV 6.3740% 0.017705% 375,000.00 66.40 -15 (996.00)
184 873118AD5 TW SVCS INC 7.3546% 0.020429% 869,239.58 177.58 -15 (2,663.70)
185 963142AG9 WHEELING PITTSBURG C 12.3381% 0.034272% 800,355.55 274.30 -15 (4,114.50)
186 8807799A3 TEREX CORP NEW 16.6921% 0.046367% 849,000.00 393.66 -14 (5,511.24)
------------
(28,542.99)
------------
187
188
189
190
191
192
193
194
195
196
197
198
199
200
201
202
203
204
205
206
207
208
209
210
211
212
213
214
215
216
217
218
219
220
221
222
223
224
225
226
227
228
229
230
231
232
233
234
235
236
237
238
239
240
241
242
243
244
245
246
247
248
249
250
251
---------------
Total Gross Income Earned from Corporate Obligations
Computed on a Yield to Maturity or Yield to Call Basis....... 1,248,057.07
===============
</TABLE>
<TABLE>
<CAPTION>
LBVIP SERIES FUND, INC. - INCOME PORTFOLIO
STANDARDIZED YIELD CALCULATION
AS OF 31-DEC-92
======================================================================================================================
LBVIP Variable Annuity Account I
LBVIP - Income Port. Income Subaccount
-------------------- --------------------------------
% of o/s
Gross Income Earned During Base Period: Amount Yield shares Amount Yield
- -------------------------------------- ------------ ------ -------- ------------ ----------
<S> <C> <C> <C> <C> <C>
From Corporate Obligations:
Computed on a Yield to Maturity or Yield to Call Basis.... $1,237,481 6.21% 97.639% $1,208,259 6.06%
From Mortgage-Backed Obligations:
Book Income & Amortization for Past 30 Days............... 271,893 1.36% 97.639% 265,473 1.33%
Gain/Loss on Paydowns..................................... (16,998) -0.09% 97.639% (16,597) -0.08%
From Common & Preferred Stock.................................. 3,966 0.02% 97.639% 3,872 0.02%
From Short-Term Securities:
Book Income adjusted to reflect a 30-day base period...... 57,825 0.29% 97.639% 56,460 0.28%
------------ -------- ------------ ----------
TOTAL GROSS INCOME............................................. $1,554,167 7.79% $1,517,467 7.61%
============ ======== ============ ==========
Investment advisory fee accrued during base period............. $80,459 0.40% 97.639% 78,559 0.39%
============ ======== ============ ==========
Mortality and expense risk charges at the subaccount Level..... NA 217,169 1.09%
============ ======== ============ ==========
Average daily number of shares/units outstanding
during the base period (Schedule 2)...................... 24,602,501 15,682,993
============ ============
Maximum public offering price per share/unit
on the last day of the base period (Schedule 2).......... 9.87 15.434223
============ ============
Standardized Yield............................................. 7.39%(a) 6.13%(b)
============ ============
Footnotes:
==========
(a) Current yield is computed using the following formula:
6
2[ [ (Gross Income - Advisory Fee) +1 ] -1 ] X 100
---------------------------------------------------
[ [ (Average Daily shares x Maximum Offering Price) ] ]
(b) Current yield is computed using the following formula:
6
2[ [ (Gross Income - Advisory Fee - M&E Charge) +1 ] -1 ] X 100
--------------------------------------------------
[ [ (Average Daily Units x Maximum Offering Price) ] ]
Preparer: /s/Jane I Sholtz
-----------------------
Reviewer: /s/Rand Mattsson
-----------------------
</TABLE>
<PAGE>
LBVIP Series Fund - Income Portfolio
Calculation of Average Shares Outstanding for
Each Separate Account for Purposes of Computing
SEC Yields for the month end 31-Dec-92
Shares outstanding for purposes of allocating daily income:
- ----------------------------------------------------------------------------
DATE VUL SPVL VA TOTAL
- ------------------- ----------- ------------ --------------- ---------------
12/01/92 498,154.650 68,115.889 23,220,919.688 23,787,190.227
12/02/92 500,366.298 68,129.190 23,317,337.261 23,885,832.749
12/03/92 501,397.287 68,142.293 23,372,318.541 23,941,858.121
12/04/92 501,444.711 68,155.431 23,391,942.066 23,961,542.208
12/07/92 501,786.075 68,168.529 23,449,327.169 24,019,281.773
12/08/92 501,488.111 69,342.218 23,495,572.080 24,066,402.409
12/09/92 502,370.719 69,355.547 23,618,658.579 24,190,384.845
12/10/92 503,774.773 69,368.801 23,669,132.953 24,242,276.527
12/11/92 506,489.395 69,382.066 23,753,230.267 24,329,101.728
12/14/92 507,380.432 69,395.312 23,846,705.192 24,423,480.936
12/15/92 508,772.064 69,434.796 23,955,364.547 24,533,571.407
12/16/92 510,241.637 69,447.526 24,044,245.294 24,623,934.457
12/17/92 517,063.694 69,460.652 24,123,347.222 24,709,871.568
12/18/92 518,414.606 69,473.851 24,218,553.396 24,806,441.853
12/21/92 514,888.872 69,486.910 24,261,968.999 24,846,344.781
12/22/92 515,099.647 69,529.920 24,298,017.889 24,882,647.456
12/23/92 516,586.519 69,542.782 24,401,205.836 24,987,335.137
12/28/92 518,093.696 69,556.070 24,487,168.218 25,074,817.984
12/29/92 515,636.963 69,492.187 24,553,160.953 25,138,290.103
12/30/92 523,842.732 69,500.355 24,635,609.340 25,228,952.427
12/31/92 526,597.357 69,513.730 24,752,807.301 25,348,918.388
0.000
0.000
Average shares
outstanding.........509,994.773 69,142.574 23,946,028.228 24,525,165.575
============ ========== ================ ==============
Average shares as a
percentage of total
shares.............. 2.079% 0.282% 97.639% 100.000%
============ ========== ================ ==============
LBVIP Series Fund, Inc. - Income Portfolio
Income Earned from Common and Preferred Stocks during December, 1992
for purposes of computing SEC Standardized Yield
DAILY
ANNUAL DIVIDEND # OF GROSS
DIVIDEND RATE PER DAYS INCOME
RATE SHARE IN FOR
EQUITY SHARES PER (360 DAY DAILY BASE BASE
CUSIP ISSUE TYPE OWNED SHARE YEAR) INCOME PERIOD PERIOD
- --------- -------------- ----- ------ ----- -------- ------- ------ -------
CASH DIVIDEND SECURITIES:
370442873 General Motors P/S 5,000 3.25 0.0090 45.14 30 1,354.17
370442873 General Motors P/S 2,500 3.25 0.0090 22.57 2 45.14
843444308 Southern
National Corp. P/S 17,500 1.76 0.0049 85.56 30 2,566.67
---------
Gross Income from Common and Preferred stocks 3,965.97
=========
# Use 4 days in October.
* Use 6 days in October.
<PAGE>
<TABLE>
<CAPTION>
LBVIP INCOME PORTFOLIO
BOOK INCOME AND EXPENSES BY MONTH
FOR FISCAL YEAR ENDING 12/31/92
======================================================================================================================
MONTHLY INCOME
-----------------------------
AMORT. AMORT. TOTAL
L-T S-T DIVIDEND OF OF OTHER GROSS
MONTH INTEREST INTEREST INCOME DISCOUNT PREMIUM INCOME INCOME
- -------- ---------- ---------- ---------- ----------- --------- --------- -----------
-----------
<S> <C> <C> <C> <C> <C> <C> <C>
Jan-92 631,102 38,601 (6,250) 34,845 12,622 2,721 688,397
Feb-92 635,605 39,090 0 32,264 13,045 21,438 715,352
Mar-92 812,540 32,284 22,563 45,145 19,059 (20,191) 873,280
Apr-92 816,951 37,617 11,015 39,523 21,008 32,537 916,635
May-92 822,198 56,346 (0) 30,932 17,787 1,097 892,786
Jun-92 1,020,881 69,121 30,625 26,873 29,921 1,831 1,119,410
Jul-92 1,059,053 57,708 7,383 24,197 40,179 2,067 1,110,229
Aug-92 1,139,002 53,542 0 29,082 39,413 1,731 1,183,943
Sep-92 1,216,682 48,634 17,344 35,594 44,638 2,116 1,275,731
Oct-92 1,212,824 65,823 7,383 38,169 40,639 2,022 1,285,582
Nov-92 1,422,281 62,518 0 37,859 41,060 1,623 1,483,221
Dec-92 1,482,032 59,753 4,063 36,302 42,557 2,609 1,542,201
- -------- ----------- ------------ --------- ---------- ----------- --------- -------------
(Y-T-D)
TOTALS 12,271,150 621,037 94,124 410,784 361,927 51,600 13,086,769
======== =========== ============ ========= ========== =========== ========== =============
</TABLE>
<TABLE>
<CAPTION>
CONTINUED...... LBVIP INCOME PORTFOLIO
BOOK INCOME AND EXPENSES BY MONTH
FOR FISCAL YEAR ENDING 12/31/92.....CONTINUED
===================================================================================================================
MONTHLY EXPENSES
-------------------------------
ADVISORY NET OTHER TOTAL TOTAL NET
FEE FEE ADVISORY ACCRUED NET INVESTMENT
MONTH EXPENSE WAIVER FEE TAXES EXPENSES EXPENSES INCOME
- --------- ----------- ------- ---------- ------ --------- ----------- ------------
----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Jan-92 34,739 0 34,739 0 0 34,739 653,658
Feb-92 33,972 0 33,972 0 0 33,972 681,380
Mar-92 42,790 0 42,790 0 0 42,790 830,490
Apr-92 43,974 0 43,974 0 0 43,974 872,661
May-92 46,836 0 46,836 0 0 46,836 845,950
Jun-92 55,793 0 55,793 0 0 55,793 1,063,617
Jul-92 59,004 0 59,004 0 0 59,004 1,051,225
Aug-92 64,301 0 64,301 0 0 64,301 1,119,642
Sep-92 67,011 0 67,011 0 0 67,011 1,208,720
Oct-92 70,828 0 70,828 0 0 70,828 1,214,754
Nov-92 77,900 0 77,900 0 0 77,900 1,405,321
Dec-92 83,141 0 83,141 0 0 83,141 1,459,060
- ---------- ----------- ------- ---------- ------- ------- ------------- --------------
(Y-T-D)
TOTALS 680,289 0 680,289 0 0 680,289 12,406,480
========== =========== ======= ========== ======= ======== ============ ==============
</TABLE>
<TABLE>
<CAPTION>
LBVIP SERIES FUND - INCOME PORTFOLIO
PORTFOLIO SECURITY TRANSACTION JOURNAL
12/1/92 - 12/31/92
TRAN PAR ENTRY TRADE SETTLE
CODE VALUE NAME DATE DATE DATE PRICE
- ---- -------- ----- ------ ------- ------- -------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
SALE 26,890 FED HM LN PC C00152 8.0000000% 20220501 92.214 921201 921215 100.000
SALE 43,286 FED HM LN PC # 17022 8.0000000% 20170401 921214 921201 930115 100.000
SALE 798 FED HM LN PC # 29837 8.0000000% 20170801 921214 921201 930115 100.000
SALE 576 FED HM LN PC D23288 8.0000000% 20220901 921214 921201 921215 100.000
SALE 659 FED HM LN PC D23550 8.0000000% 20220901 921214 921201 921215 100.000
SALE 1,059 FED HM LN PC D23661 8.0000000% 20220901 921214 921201 921215 100.000
SALE 1,482 FED HM LN PC D23741 8.0000000% 20220801 921214 921201 921215 100.000
SALE 8,807 GNMA POOL # 158225 9.5000000% 20160515 921215 921201 921215 100.000
SALE 68,889 GNMA POOL # 182919 9.0000000% 20170215 921215 921201 921215 100.000
SALE 791 GNMA POOL # 187288 9.5000000% 20161115 921215 921201 921215 100.000
SALE 60,595 GNMA POOL # 231281 9.5000000% 20181115 921215 921201 921215 100.000
SALE 857 GNMA POOL # 250306 9.5000000% 20181115 921215 921201 921215 100.000
SALE 107,107 GNMA POOL # 284421 9.5000000% 20200215 921215 921201 921215 100.000
SALE 28,129 GNMA # 286074 9.5000000% 20200515 921215 921201 921215 100.000
SALE 27,453 GNMA POOL # 288709 9.5000000% 20200515 921215 921201 921215 100.000
SALE 39,811 GNMA POOL # 291141 9.5000000% 20200515 921215 921201 921215 100.000
SALE 22,933 GNMA POOL 315074 9.0000000% 20211115 921215 921201 921215 100.000
SALE 754 GNMA POOL 325502 9.5000000% 20220315 921215 921201 921215 100.000
SALE 73,771 GNMA POOL 327453 8.0000000% 20220815 921215 921201 921215 100.000
SALE 309,945 PREMIER AUTO TR 4.5500000% 19980315 921216 921215 921215 100.000
SALE 257,460 PREMIER AUTO TR 4.5500000% 19980315 921222 921215 921215 100.000
SALE 122,072 SPNB HOME EQUITY LN 7.8500000% 19980515 921223 921215 921215 100.000
</TABLE>
<TABLE>
<CAPTION>
CONTINUED.. LBVIP SERIES FUND - INCOME PORTFOLIO
PORTFOLIO SECURITY TRANSACTION JOURNAL
12/1/92 - 12/31/92.....CONTINUED
TRAN PAR TOTAL IDENTIFIED S-T L-T
CODE VALUE NAME PROCEEDS INTEREST COST GAIN/LOSS GAIN/LOSS BROKER
---- ------- ----- ------------ ---------- ------------- ----------- ---------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
SALE 26,890 FED HM LN PC C00152 40,093.68 13203.43 26,638.15 252.10 .00 PRINC:
SALE 43,286 FED HM LN PC # 17022 49,971.61 6885.46 41,514.31 .00 1,772.04 PRINC:
SALE 798 FED HM LN PC # 29837 6,170.01 5371.38 765.36 .00 32.67 PRINC:
SALE 576 FED HM LN PC D23288 6,523.95 5947.84 602.03 -25.92 .00 PRINC:
SALE 659 FED HM LN PC D23550 7,443.49 6784.40 688.75 -29.66 .00 PRINC:
SALE 1,059 FED HM LN PC D23661 7,822.83 6763.42 1,107.08 -47.67 .00 PRINC:
SALE 1,482 FED HM LN PC D23741 8,237.99 6756.28 1,548.39 -66.68 .00 PRINC:
SALE 8,807 GNMA POOL # 158225 12,401.26 3594.11 9,544.75 -737.60 .00 PRINC:
SALE 68,889 GNMA POOL # 182919 90,433.47 21544.97 73,667.64 -4,779.14 .00 PRINC:
SALE 791 GNMA POOL # 187288 8,010.37 7219.09 857.55 -66.27 .00 PRINC:
SALE 60,595 GNMA POOL # 231281 68,045.70 7450.68 65,669.85 -5,074.83 .00 PRINC:
SALE 857 GNMA POOL # 250306 7,618.88 6761.81 928.85 -71.78 .00 PRINC:
SALE 107,107 GNMA POOL # 284421 112,365.74 5259.13 106,771.90 .00 334.71 PRINC:
SALE 28,129 GNMA # 286074 34,920.57 6791.78 27,742.02 .00 386.77 PRINC:
SALE 27,453 GNMA POOL # 288709 34,112.47 6659.26 29,675.20 -2,221.99 .00 PRINC:
SALE 39,811 GNMA POOL # 291141 46,744.58 6933.19 43,033.62 -3,222.23 .00 PRINC:
SALE 22,933 GNMA POOL 315074 34,398.48 11465.23 24,201.75 -1,268.50 .00 PRINC:
SALE 754 GNMA POOL 325502 8,127.20 7372.93 817.44 -63.17 .00 PRINC:
SALE 73,771 GNMA POOL 327453 94,263.51 20492.71 77,828.19 -4,057.39 .00 PRINC:
SALE 309,945 PREMIER AUTO TR 309,944.87 .00 309,231.38 713.49 .00 PRINC:
SALE 257,460 PREMIER AUTO TR 257,459.88 .00 254,597.57 2,862.31 .00 PRINC:
SALE 122,072 SPNB HOME EQUITY LN 122,072.15 .00 123,691.51 -1,722.36 103.00 PRINC:
TERM L-T 1,204,125 1,367,182.89 163057.70 1,221,123.29 -19,627.29 2,629.19
TRANSACTION SALE 1,204,125 1,367,182.89 163057.70 1,221,123.29 -19,627.29 2,629.19
1,204,125 1,367,182.89 163057.70 1,221,123.29 -19,627.29 2,629.19
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE OF BOOK INCOME ON MORTGAGE-BACKED SECURITIES FOR Dec-92
# OF DAYS BOOK INCOME
HELD IN EARNED
MATURITY BASE DURING
CUSIP NO. ISSUER PAR COUPON DATE PERIOD DEC-92
- --------- ------------------------ ----------- ------ ---------- ------ --------
GNMA
------------------------
<S> <S> <C> <C> <C> <C> <C>
362159VS1 GNMA POOL # 158225 445185.82 9.5 20160515 30 3,524
362164DY8 GNMA POOL # 182919 2803773.94 9 20170215 30 21,028
3621696Z2 GNMA POOL # 187288 911093.8 9.5 20161115 30 7,213
36218S2N9 GNMA POOL # 231281 880543.22 9.5 20181115 30 6,971
36219JAF6 GNMA POOL # 250306 853266.22 9.5 20181115 30 6,755
36220P4E9 GNMA POOL # 284421 557204.77 9.5 20200215 30 4,411
36220RXB9 GNMA POOL # 286074 829780.8 9.5 20200615 30 6,569
3622OUVA6 GNMA POOL # 288709 813716.99 9.5 20200515 30 6,442
36220XLW3 GNMA POOL # 291141 835959.38 9.5 20200515 30 6,618
36223Q6K8 GNMA POOL 315074 1505763.53 9 20211115 30 11,293
36224DRX5 GNMA POOL 325502 930563.35 9.5 20220315 30 7,367
36224FWN6 GNMA POOL 327453 2819317.71 8.5 20220815 30 19,970
0 0
0 0
-----------
SUBTOTAL FOR GNMA MORTGAGE-BACKED SECURITIES............................... 108,162
-----------
FHLMC
---------------------------
31292GEZ5 FED HM LN PC C00152 1953623.57 8 20220501 30 13,024
313401XQ9 FED HM LN PC # 170220 959532.93 8 20170401 30 6,397
313448JP8 FED HM LN PC # 298370 804998.86 8 20170801 30 5,367
3139595K0 FED HM LN PC D23550 1017000.92 8 20220901 30 6,780
313959UM8 FED HM LN PC D23288 891600.43 8 20220901 30 5,944
313960B62 FED HM LN PC D23661 1013453.88 8 20220901 30 6,756
313960EN2 FED HM LN PC D23741 1011960.1 8 20220801 30 6,746
------------
SUBTOTAL FOR FHLMC SECURITIES.............................................. 51,014
------------
SUBTOTAL OF BOOK INCOME FROM GNMA & FHLMC SECURITIES FOR Dec-92 159,177
------------
31362SZR9 FNMA POOL 707752 4432390.84 9 20011201 8 8,865
31362TZ55 FNMA POOL 070964 2021020.32 9 20061101 8 4,042
------------
SUBTOTAL FOR FNMA MORTGAGE-BACKED SECURITIES............................... 12,907
------------
</TABLE>
<TABLE>
<CAPTION>
# OF DAYS
HELD IN
DISCOUNT BASE
CMO FACTOR PERIOD AMORTIZATION
------------------------------ -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
194196KD2 COLLATERALIZED MTG SECS CORP 500000 9.25 20200720 30 3,854 2.87 30 86
194196KD2 COLLATERALIZED MTG SECS CORP 500000 9.25 20200720 30 3,854 2.73 30 82
312906SR2 FEDERAL HOME LN MTG CORP 1000000 8 20170915 30 6,667 13.93 30 418
312907Z76 FEDERAL HOME LN MTG CORP 3000000 7 20150215 8 4,667 17.18 8 137
31358E6Y3 FEDERAL NATL MTG ASSN 1000000 8.95 20190925 30 7,458 1.57 30 47
31358F5B1 FEDERAL NATL MTG ASSN GTD 1000000 8.25 20171025 30 6,875 9.17 30 275
31358NUH3 FEDERAL NATL MTG ASSN 3000000 7.5 20110625 24 15,000 (111.80) 24 (2,683)
31358NUH3 FEDERAL NATL MTG ASSN 3000000 7.5 20110625 6 3,750 (114.64) 6 (688)
313602E59 FEDERAL NATL MTG ASSN 3382000 8.75 20140225 30 24,660 (143.36) 30 (4,301)
55291DAC7 ML TR XXXVI 1000000 9.55 20150801 30 7,958 (33.00) 30 (990)
902617AF6 UBS MTG TR 1500000 9 20201018 30 11,250 (33.27) 30 (998)
---------- -----------
SUBTOTAL FOR CMO SECURITIES................................................... 95,994 (8,614)
---------- -----------
78462JAB1 SPNB HOME EQUITY LN
ASSET BKD 1900096.9 7.85 19980515 30 12,430
----------
12,430
----------
TOTAL BOOK INCOME AND AMORTIZATION FROM MORTGAGE-BACKED SECURITIES 271,893
---------
---------
MONTHLY CHANGE IN BALANCE FOR INTEREST INCOME FROM MORTGAGE-BACKED
SECURITIES
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
CHANGE IN GENERAL LEDGER ACCOUNT NUMBER 932400
BALANCE AS OF 12/31/92 1,057,694
BALANCE AS OF 11/30/92 898,517
CLOSING ENTRY
------------
CALCULATED CHANGE 159,177
TOTAL FROM ABOVE (159,177)
------------
DIFFERENCE 0
------------
------------
</TABLE>
<PAGE>
SCHEDULE 3
LBVIP - INCOME DECEMBER 1992
- ----------------------------------------------------------------------------
DAILY CUMULATIVE
O/S O/S
DATE DAY SHARES SHARES
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
DEC 1 TUE 23,791,835 23,791,835
2 WED 23,890,426 47,682,261
3 THU 23,946,474 71,628,735
4 FRI 23,966,147 95,594,882
5 SAT 24,033,058 119,627,941
6 SUN 24,033,058 143,660,999
7 MON 24,033,058 167,694,058
8 TUE 24,071,028 191,765,086
9 WED 24,195,008 215,960,094
10 THU 24,246,912 240,207,006
11 FRI 24,333,747 264,540,753
12 SAT 24,437,377 288,978,130
13 SUN 24,437,377 313,415,507
14 MON 24,437,377 337,852,884
15 TUE 24,538,069 362,390,954
16 WED 24,628,588 387,019,542
17 THU 24,714,567 411,734 109
18 FRI 24,811,105 436,545,214
19 SAT 24,860,365 461,405,579
20 SUN 24,860,365 486,265,944
21 MON 24,860,365 511,126,309
22 TUE 24,887,250 536,013,559
23 WED 24,992,110 561,005,669
24 THU 25,099,137 586,104,806
25 FRI 25,099,137 611,203,943
26 SAT 25,099,137 636,303,081
27 SUN 25,099,137 661,402,218
28 MON 25,099,137 686,501,355
29 TUE 25,141,245 711,642,600
30 WED 25,233,808 736,876,408
DEC 31 THU 25,801,109 762,677,517
AVERAGE OUTSTANDING 24,602,501
VARIABLE ANNUITY-INCOME (DECEMBER 1992)
---------------------------------------------
DAILY CUMULATIVE
OUTSTANDING OUTSTANDING
DATE DAY SHARES SHARES
- ------------------ ------- ----------------- -----------------------
- ------------------ ------- ----------------- -----------------------
DECEMBER 1 TUE 15,233,626.998735 15,233,626.998735
2 WED 15,266,671.580947 30,500,298.579682
3 THU 15,276,576.033121 45,776,874.612803
4 FRI 15,311,253.035927 61,088,127.648730
5 SAT 15,332,703.006322 76,420,830.655052
6 SUN 15,332,703.006322 91,753,533.661374
7 MON 15,332,703.006322 107,086,236.667696
8 TUE 15,410,185.460502 122,496,422.128198
9 WED 15,440,197.989256 137,936,620.117454
10 THU 15,492,110.961696 153,428,731.079150
11 FRI 15,550,100.734051 168,978,831.813201
12 SAT 15,612,125.443664 184,590,957.256865
13 SUN 15,612,125.443664 200,203,082.700529
14 MON 15,612,125.443664 215,815,208.144193
15 TUE 15,667,335.715855 231,482,543,860048
16 WED 15,715,988.821853 247,198,532.681901
17 THU 15,775,110.320462 262,973,643.002363
18 FRI 15,800,487.833003 278,774,130.835366
19 SAT 15,815,085.234278 294,589,216.069644
20 SUN 15,815,085.234278 310,404,301.303922
21 MON 15,815,085.234278 326,219,386.538200
22 TUE 15,879,423.557026 342,098,810.095226
23 WED 15,932,354.570556 358,031,164.665782
24 THU 15,973,518.799951 374,004,683.465733
25 FRI 15,973,518.799951 389,978,202.265684
26 SAT 15,973,518.799951 405,951,721.065635
27 SUN 15,973,518.799951 421,925,239.865586
28 MON 15,973,518.799951 437,898,758.665537
29 TUE 16,025,330.408727 453,924,089.074264
30 WED 16,097,222.188901 470,021,311.263165
31 THU 16,151,472.679198 486,172,783.942363
AVERAGE OUTSTANDING: 15,682,993.030399
M & E Charges: 224,408.15
Unit Values: 15.434223
Prepared by: Jill Eriksen - Controllers
Date Prepared: 01/04/93
<PAGE>
LBVIP SERIES FUND, INC. - INCOME PORTFOLIO STANDARD YIELD CALCULATION
<TABLE>
<CAPTION>
INPUT AREA - PORTFOLIO HOLDINGS
=======================================================================================================================
AS OF 11/30/92 (ADJUSTED FOR UNSETTLED TRADES)
===================================================================
1ST
MATURITY PMT STEP VALUATION ACCRUED INT PAY CALL CALL
ROW CUSIP NO. ISSUER PAR COUPON PRICE DATE DATE COUPON DATE INTEREST DATE DATE PRICE
- --- --------- ----------------- -------- ------ ------- -------- ----- ------ -------- -------- ------ -------- -------
A B C D E F G H I J K L M N
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 002034AB2 ARA GROUP INC 3,500,000 12.000 110.375 04/15/2000 11/30/92 54,030 04/15/93 04/15/95 105.000
1 02378FAB2 AMERICAN AIRLINES 2,000,000 9.070 95.790 03/11/2016 11/30/92 34,768 03/11/93
2 025818BA2 AMERICAN EXPRESS
CR 1,000,000 9.450 108.207 02/15/96 11/30/92 27,825 02/15/93
3 029717AD7 AMERICAN STD INC 3,000,000 12.875 102.750 06/30/2000 11/30/92 162,010 12/30/92 06/30/93 104.830
4 030177BW8 AMERICAN TEL &
TELEG CO 2,500,000 8.125 99.375 07/15/2024 11/30/92 76,736 01/15/93
5 031678AD7 AMOCO CDA PETE CO 4,500,000 7.950 95.609 10/01/2022 11/30/92 59,625 04/01/93
6 046003DV8 ASSOCIATES CORP
NORTH AMER 1,000,000 7.500 103.850 10/15/96 11/30/92 9,583 04/15/93
7 053015AC7 AUTOMATIC DATA
PROCESSING INC 1,500,000 39.000 02/20/2012 11/30/92 02/20/93
8 066050BW4 BANKAMERICA CORP 2,500,000 7.500 94.793 10/15/2002 11/30/92 28,646 04/15/93
9 067900AD2 BARCLAYS NORTH
AMERN CAP CORP 2,000,000 9.750 108.081 05/15/2021 11/30/92 8,667 05/15/93
10 083739AD4 BERGEN BRUNSWIG
CORP 3,000,000 44.875 11/16/2004 11/30/92 05/16/93 11/16/94 51.486
11 110601BY6 BRITISH COLUMBIA
HYDRO & PWR 1,900,000 15.500 133.342 07/15/2011 11/30/92 111,256 01/15/93 07/15/96 106.640
12 125509AD1 CIGNA CORP 2,000,000 8.750 104.091 10/01/2001 11/30/92 29,167 04/01/93
13 163717FH9 CHEMICAL BK NEW
YORK CO NY 1,000,000 7.250 94.055 09/15/2002 11/30/92 15,306 03/15/93
14 163722AM3 CHEMICAL BKG CORP 2,500,000 8.125 99.765 06/15/2002 11/30/92 93,663 12/15/92
15 191219AT1 COCA COLA
ENTERPRISE 1,500,000 7.000 98.648 11/15/99 11/30/92 3,500 05/15/93
16 196879AA8 COLTEC INDUSTRIES 2,500,000 9.750 101.500 04/01/2000 11/30/92 40,625 04/01/93
17 202795DL1 COMMONWEALTH
EDISON CO 2,000,000 9.625 106.968 07/01/2019 11/30/92 80,208 01/01/93 01/01/93 106.740
18 205887AC6 CONAGRA INC 1,500,000 9.750 111.644 03/01/2021 11/30/92 36,563 03/01/93
19 239753BM7 DAYTON HUDSON 1,500,000 8.800 102.888 05/15/2022 11/30/92 5,867 05/15/93
20 244217AN5 DEERE JOHN CAP
CORP 2,000,000 9.625 110.499 11/01/98 11/30/92 16,042 05/01/93
21 302154AB5 EXPORT IMPORT BK
KOREA 2,500,000 9.000 108.156 05/01/98 11/30/92 18,750 05/01/93
22 315290AE6 FERRELLGAS INC 2,500,000 11.625 104.000 12/15/2003 11/30/92 134,010 12/15/92
23 339018AF0 FLEET NORSTAR
FINL GROUP INC 2,000,000 8.625 101.493 01/15/2007 11/30/92 65,167 01/15/93
24 347460AD9 FORT HOWARD CORP 3,500,000 12.625 104.500 11/01/2000 11/30/92 36,823 05/01/93 11/01/93 105.000
25 361582AC3 GEICO CORP 3,000,000 9.150 103.406 09/15/2021 11/30/92 57,950 03/15/93
26 362320AT0 GTE CORP 3,000,000 8.750 103.435 11/01/2021 11/30/92 21,875 05/01/93
27 369622CH6 GENERAL ELED CR
CORP 3,000,000 8.850 110.119 04/01/2005 11/30/92 44,250 04/01/93
28 370424FW8 GENERAL MTRS
ACCEP CORP 2,000,000 8.750 102.617 07/15/2005 11/30/92 66,111 01/15/93
29 370424GN7 GENERAL MOTOR
ACCEP CORP 3,000,000 4.625 97.450 10/01/99 11/30/92 23,125 04/01/93
30 373298BG2 GEORGIA PAC CORP 4,000,000 9.500 101.386 05/15/2022 11/30/92 16,889 05/15/93
31 417478AA2 HARVARD UNIV 2,000,000 8.125 104.530 04/15/2007 11/30/92 20,764 04/15/93
32 42221HAD9 HEALTHTRUST
INC-THE HOSPITAL 1,000,000 11.250 109.000 12/01/2002 11/30/92 56,250 12/01/92 06/01/93 107.330
33 42221HAF4 HEALTHTRUST INC 1,500,000 10.750 105.750 05/01/2002 11/30/92 13,438 15/01/93
34 500630AD0 KOREAN DEV BANK 1,000,000 7.900 99.375 02/01/2002 11/30/92 26,333 02/01/93
35 501044AZ4 KROGER CO 3,000,000 9.875 99.000 08/01/2002 11/30/92 91,344 02/01/93
36 55262NAA4 MBNA MASTER CR
CARD TR 1,500,000 7.750 103.777 11/01/98 11/30/92 9,688 05/01/93
37 552673AK1 MCI COMMUNICATIONS
CORP 3,000,000 46.625 12/11/2004 11/30/92 12/11/92 12/11/94 52.747
38 593048AQ4 MEXICO UNITED
MEXICAN STS 2,000,000 8.500 94.912 09/15/2002 11/30/92 35,889 03/15/93
39 597520AA3 MIDLAND FUNDING
CORP 2,500,000 11.750 101.281 07/23/2005 11/30/92 104,444 01/23/93
40 669827DM6 NOVA SCOTIA PROV
CDA 2,000,000 8.750 100.294 04/01/2022 11/30/92 29,167 04/01/93
41 674599BD6 OCCIDENTAL PETE
CORP 3,000,000 9.625 106.096 07/01/99 11/30/92 120,313 01/01/93 07/01/96 100.000
42 683234FU7 ONTARIO PROV CDA 2,900,000 8.400 101.556 01/15/2007 11/30/92 92,027 01/15/93 01/15/93 103.020
43 690768AW6 OWENS ILL 2,000,000 10.000 101.500 08/01/2002 11/30/92 66,667 02/01/93
44 693657AD0 PVNGS FDG INC 1,000,000 11.375 107.958 12/30/2012 11/30/92 47,712 12/30/92 12/30/93 106.830
45 708160BA3 PENNEY J C INC 3,000,000 9.750 110.315 06/15/2021 11/30/92 134,875 12/15/92
46 74046RAL5 PREMIER AUTO TR 8,000,000 4.550 98.405 03/15/98 11/30/92 74,822 03/15/93
47 750755AA8 RAIL CAR TRUST 2,972,580 7.750 101.419 06/01/2004 11/30/92 57,594 12/01/92
48 775103AA2 ROGERS CANTEL
MOBILE INC 3,000,000 10.750 104.000 11/01/2001 11/30/92 26,875 05/01/93 11/01/96 103.000
49 792860AB4 ST PAUL COS INC 2,500,000 9.375 109.994 06/15/97 11/30/92 108,073 12/15/92
50 809877AQ6 SCOTT PAPER CO 2,000,000 10.000 116.648 03/15/2005 11/30/92 42,222 03/15/93
51 81232BAA3 SEARS CREDIT
ACCT MASTER TRI 3,000,000 5.900 97.410 11/15/98 11/30/92 7,867 05/15/93
52 814823BB5 SECURITY PACIFIC
CORP 3,000,000 9.750 110.032 05/15/99 11/30/92 13,000 05/15/93
53 868536AA1 SUPER VALUE STORE 3,000,000 5.875 99.529 11/15/95 11/30/92 7,833 05/15/93
54 868536AC7 SUPER VALUE STORE 2,000,000 8.875 101.632 11/15/2022 11/30/92 7,889 05/15/93
55 880357AA6 TENNECO 4,000,000 8.375 102.637 02/01/97 11/30/92 111,667 02/01/93
56 880357AF5 TENNECO CREDIT 1,000,000 9.625 105.793 08/15/2001 11/30/92 28,340 02/15/93
57 882850BL3 TEXAS UTILITIES
ELECTRIC CO 3,000,000 7.125 100.265 06/01/97 11/30/92 106,875 12/01/93
58 909214AW8 UNISYS CORP 2,000,000 10.625 98.000 10/01/99 11/30/92 35,417 04/01/93
59 909283AB9 UNITED AIR LINES 1,200,000 10.020 102.250 03/22/2014 11/30/92 23,046 03/22/93
60 909284AB7 UNITED AIR LINES 2,000,000 2.529 95.250 4/7/2016 4/7/93 9.350 11/30/92 27,671 04/07/93
61 912803AE3 UNITED STATES
TREAS BD 5,000,000 16.629 11/15/2015 11/30/92 05/15/93
62 912810DU9 UNITED STATES
TREAS BD 2,500,000 9.375 117.593 02/15/2006 11/30/92 68,784 02/15/93
63 912810EL8 UNITED STATES
TREAS BND 2,000,000 8.000 103.968 11/15/2021 11/30/92 7,072 05/15/93
64 912810EM6 UNITED STATES
TREAS BND 3,500,000 7.250 95.624 08/15/2022 11/30/92 74,470 02/15/93
65 912810EN4 UNITED STATES
TREAS BND 4,500,000 7.625 100.468 11/15/2022 11/30/92 15,166 05/15/93
66 912827B50 UNITED STATES
TREAS NTS 2,000,000 8.250 108.187 07/15/98 11/30/92 62,323 01/15/93
67 912827G22 UNITED STATES
TREAS NTS 5,000,000 4.250 99.281 07/31/94 11/30/92 71,026 01/31/93
68 912833CY4 UNITED STATES
TREAS SEC 6,000,000 25.021 08/15/2010 11/30/92 02/15/93
69 927804BS2 VIRGINIA ELEC
& PWR CO 3,000,000 9.375 111.367 06/01/98 11/30/92 140,625 12/01/92
------------- -----------
180,972,580 3,346,601
============= ===========
CONTINUED.. PORTFOLIO HOLDINGS - OUTPUT
===================================================================================================================
AS OF 11/30/92 (ADJUSTED FOR UNSETTLED TRADES).....CONTINUED
============================================================
DAILY MARKET VALUE GROSS
YIELD AND # OF DAYS INCOME
(360 DAY ACCRUED DAILY IN BASE FOR BASE
ROW CUSIP NO. ISSUER YIELD YEAR) INCOME INCOME PERIOD PERIOD
- --- --------- --------------------------------------- --------- ---------- ------------- --------- ----- ----------
A B C O P Q R S T U
<S><C> <C> <C> <C> <C> <C> <C> <C>
0 002034AB2 ARA GROUP INC 8.9483% 0.024856% 3,917,155.05 973.66 30 29,209.80
1 02378FAB2 AMERICAN AIRLINES 9.5451% 0.026514% 1,950,568.33 517.18 30 15,515.40
2 025818BA2 AMERICAN EXPRESS CR 6.5514% 0.018198% 1,109,899.00 201.98 30 6,059.40
3 029717AD7 AMERICAN STD INC 15.7720% 0.043811% 3,244,510.43 1,421.46 30 42,643.80
4 030177BW8 AMERICAN TEL & TELEG CO 8.1758% 0.022710% 2,561,111.11 581.64 30 17,449.20
5 031678AD7 AMOCO CDA PETE CO 8.3463% 0.023184% 4,362,007.50 1,011.29 30 30,338.70
6 046003DV8 ASSOCIATES CORP NORTH AMER 6.3513% 0.017642% 1,048,086.33 184.91 30 5,547.30
7 053015AC7 AUTOMATIC DATA PROCESSING INC 4.9586% 0.013774% 585,000.00 80.58 30 2,417.40
8 066050BW4 BANKAMERICA CORP 8.2454% 0.022904% 2,398,475.83 549.35 30 16,480.50
9 067900AD2 BARCLAYS NORTH AMERN CAP CORP 8.9568% 0.024880% 2,170,286.66 539.97 30 16,199.10
10 083739AD4 BERGEN BRUNSWIG CORP 7.1296% 0.019805% 1,346,250.00 266.62 30 7,998.60
11 110601BY6 BRITISH COLUMBIA HYDRO & PWR 6.6275% 0.018410% 2,644,749.75 486.89 30 14,606.70
12 125509AD1 CIGNA CORP 8.0834% 0.022454% 2,110,984.66 474.00 30 14,220.00
13 163717FH9 CHEMICAL BK NEW YORK CO NY 8.1340% 0.022594% 955,850.55 215.97 30 6,479.10
14 163722AM3 CHEMICAL BKG CORP 8.1556% 0.022654% 2,587,780.70 586.25 30 17,587.50
15 191219AT1 COCA COLA ENTERPRISE 7.2600% 0.020167% 1,483,215.50 299.12 30 8,973.60
16 196879AAB COLTEC INDUSTRIES 9.4474% 0.026243% 2,578,125.00 676.57 30 20,297.10
17 202795DL1 COMMONWEALTH EDISON CO 6.0094% 0.016693% 2,219,564.33 370.51 30 11,115.30
18 205887AC6 CONAGRA INC 8.6355% 0.023987% 1,711,221.00 410.48 30 12,314.40
19 239753BM7 DAYTON HUDSON 8.5272% 0.023687% 1,549,186.67 366.95 30 11,008.50
20 244217AN5 DEERE JOHN CAP CORP 7.3928% 0.020535% 2,226,021.66 457.12 30 13,713.60
21 302154AB5 EXPORT IMPORT BK KOREA 7.1483% 0.019856% 2,722,645.00 540.62 30 16,218.60
22 315290AE6 FERRELLGAS INC 10.9821% 0.030506% 2,734,010.42 834.03 30 25,020.90
23 339018AF0 FLEET NORSTAR FINL GROUP INC 8.4351% 0.023431% 2,095,030.67 490.88 30 14,726.40
24 347460AD9 FORT HOWARD CORP 12.4903% 0.034695% 3,694,322.93 1,281.76 30 38,452.80
25 361582AC3 GEICO CORP 8.8154% 0.024487% 3,160,121.00 773.83 30 23,214.90
26 362320AT0 GTE CORP 8.4267% 0.023408% 3,124,931.01 731.47 30 21,944.10
27 369622CH6 GENERAL ELED CR CORP 7.5664% 0.021018% 3,347,805.00 703.63 30 21,108.90
28 370424FW8 GENERAL MTRS ACCEP CORP 8.4022% 0.023339% 2,118,453.11 494.43 30 14,832.90
29 370424GN7 GENERAL MOTOR ACCEP CORP 5.0665% 0.014073% 2,946,625.00 414.69 30 12,440.70
30 373298BG2 GEORGIA PAC CORP 9.3566% 0.025991% 4,072,340.89 1,058.42 30 31,752.60
31 417478AA2 HARVARD UNIV 7.5960% 0.021100% 2,111,353.89 445.49 30 13,364.70
32 42221HAD9 HEALTHTRUST INC-THE HOSPITAL 7.2132% 0.020037% 1,146,250.00 229.67 30 6,890.10
33 42221HAF4 HEALTHTRUST INC 9.7911% 0.027198% 1,599,687.50 435.08 30 13,052.40
34 500630AD0 KOREAN DEV BANK 7.9886% 0.022190% 1,020,083.33 226.36 30 6,790.80
35 501044AZ4 KROGER CO 10.0662% 0.027962% 3,061,343.75 856.00 30 25,680.00
36 55262NAA4 MBNA MASTER CR CARD TR 6.9527% 0.019313% 1,566,341.00 302.51 30 9,075.30
37 552673AK1 MCI COMMUNICATIONS CORP 6.1675% 0.017132% 1,398,750.00 239.63 30 7,188.90
38 593048AQ4 MEXICO UNITED MEXICAN STS 9.2913% 0.025809% 1,934,134.88 499.18 30 14,975.40
39 597520AA3 MIDLAND FUNDING CORP 11.5396% 0.032054% 2,636,459.45 845.10 30 25,353.00
40 669827DM6 NOVA SCOTIA PROV CDA 8.7159% 0.024211% 2,035,048.66 492.70 30 14,781.00
41 674599BD6 OCCIDENTAL PETE CORP 7.6335% 0.021204% 3,303,177.50 700.41 30 21,012.30
42 683234FU7 ONTARIO PROV CDA 19.0248% 0.052847% 3,037,153.57 1,605.03 30 48,150.90
43 690768AW6 OWENS ILL 9.7438% 0.027066% 2,096,666.67 567.49 30 17,024.70
44 693657AD0 PVNGS FDG INC 9.5360% 0.026489% 1,127,294.81 298.61 30 8,958.30
45 708160BA3 PENNEY J C INC 8.7569% 0.024325% 3,444,328.00 837.82 30 25,134.60
46 74046RAL5 PREMIER AUTO TR 4.8956% 0.013599% 7,947,214.26 1,080.73 30 32,421.90
47 750755AA8 RAIL CAR TRUST 7.8162% 0.021712% 3,072,345.73 667.06 30 20,011.80
48 775103AA2 ROGERS CANTEL MOBILE INC 10.1109% 0.028086% 3,146,875.01 883.83 30 26,514.90
49 792860AB4 ST PAUL COS INC 6.7725% 0.018812% 2,857,917.91 537.64 30 16,129.20
50 809877AQ6 SCOTT PAPER CO 7.8543% 0.021818% 2,375,188.22 518.21 30 15,546.30
51 81232BAA3 SEARS CREDIT ACCT MASTER TRI 6.4252% 0.017848% 2,930,166.67 522.97 30 15,689.10
52 814823BB5 SECURITY PACIFIC CORP 7.7390% 0.021497% 3,313,960.00 712.41 30 21,372.30
53 868536AA1 SUPER VALUE STORE 6.0426% 0.016785% 2,993,703.33 502.50 30 15,075.00
54 868536AC7 SUPER VALUE STORE 8.7171% 0.024214% 2,040,536.89 494.10 30 14,823.00
55 880357AA6 TENNECO 7.6089% 0.021136% 4,217,126.66 891.32 30 26,739.60
56 880357AF5 TENNECO CREDIT 8.6520% 0.024033% 1,086,265.28 261.06 30 7,831.80
57 882850BL3 TEXAS UTILITIES ELECTRIC CO 7.0316% 0.019532% 3,114,825.00 608.40 30 18,252.00
58 909214AW8 UNISYS CORP 11.0296% 0.030638% 1,995,416.66 611.35 30 18,340.50
59 909283AB9 UNITED AIR LINES 9.7579% 0.027105% 1,250,046.00 338.83 30 10,164.90
60 909284AB7 UNITED AIR LINES 9.8681% 0.027411% 1,932,671.06 529.77 30 15,893.10
61 912803AE3 UNITED STATES TREAS BD 7.9688% 0.022136% 831,425.00 184.04 30 5,521.20
62 912810DU9 UNITED STATES TREAS BDS 7.2733% 0.020204% 3,008,606.46 607.85 30 18,235.50
63 912810EL8 UNITED STATES TREAS BND 7.6546% 0.021263% 2,086,429.82 443.63 30 13,308.90
64 912810EM6 UNITED STATES TREAS BND 7.6201% 0.021167% 3,421,306.62 724.18 30 21,725.40
65 912810EN4 UNITED STATES TREAS BND 7.5827% 0.021063% 4,536,221.25 955.47 30 28,664.10
66 912827B50 UNITED STATES TREAS NTS 6.4802% 0.018001% 2,226,061.38 400.71 30 12,021.30
67 912827G22 UNITED STATES TREAS NTS 4.6857% 0.013016% 5,035,070.81 655.35 30 19,660.50
68 912833CY4 UNITED STATES TREAS SEC 7.9777% 0.022160% 1,501,266.00 332.68 30 9,980.40
69 927804BS2 VIRGINIA ELEC & PWR CO 6.8546% 0.019040% 3,481,638.00 662.92 30 19,887.60
--------------
1,221,130.50
--------------
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
</TABLE>
<TABLE>
<CAPTION>
PURCHASES SETTLING IN DECEMBER
======================================================================
PURCHASE MATURITY 1ST PMT STEP SETTLEMENT ACCRUED INT PAY CALL CALL
ROW CUSIP NO. ISSUER PAR COUPON PRICE DATE DATE COUPON DATE INTEREST DATE DATE PRICE
- --- --------- ------------------- ---------- ------ ------- ---------- ---- ------ ---------- ------- ------ ---- -----
A B C D E F G H I J K L M N
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
115 013051BA4 ALBERTA PROV CDA 3,000,000 9.250 111.215 04/01/2000 12/03/92 47,792 04/01/93
116 912810DU9 UNITED STATES TREAS 1,000,000 9.375 117.938 02/15/2006 12/07/92 29,042 02/15/93
117 23329VAA5 DQU FDG CORP 2,000,000 7.230 100.000 12/01/99 12/08/92 06/01/93
118 239753BP0 DAYTON HUDSON CORP 2,500,000 8.500 99.000 12/01/2022 12/09/92 4,722 06/01/93
119 912827G55 UNITED STATES TREAS 1,000,000 6.375 97.422 08/15/2002 12/10/92 20,268 02/15/93
120 013051BA4 ALBERTA PROV CDA 2,000,000 9.250 111.757 04/01/2000 12/15/92 38,028 04/01/93
121 170377AA3 CHOICE CREDIT CARD M 5,000,000 3.775 99.924 10/15/96 12/15/92 04/15/93
122 74155QAA8 PRIME CREDIT CARD MA 3,000,000 7.050 99.844 12/15/97 12/15/92 06/15/93
123 690768AW6 OWENS ILL 500,000 10.000 100.875 08/01/2002 12/17/92 18,889 02/01/93
124 912827YN6 UNITED STATES TREAS 4,000,000 8.500 110.859 02/15/2000 12/17/92 114,565 02/15/93
125 912810EN4 UNITED STATES TREAS 2,500,000 7.625 103.125 11/15/2022 12/28/92 22,643 05/15/93
126 690768AW6 OWENS ILL 500,000 10.000 101.000 08/01/2002 12/29/92 20,556 02/01/93
127 912810EN4 UNITED STATES TREAS 1,500,000 7.625 102.766 11/15/2022 12/29/92 13,902 05/15/93
</TABLE>
<TABLE>
<CAPTION>
CONTINUED..PURCHASES SETTLING IN DECEMBER
==========================================================
DAILY MARKET VALUE NO. OF GROSS
YIELD AND DAYS INCOME
(360 DAY ACCRUED DAILY IN BASE FOR BASE
ROW CUSIP NO. ISSUER YIELD YEAR) INCOME INCOME PERIOD PERIOD
- --- --------- ---------------------- --------- --------- ------------- ------- ------- ----------
A B C O P Q R S T U
<S> <C> <C> <C> <C> <C> <C> <C> <C>
115 013051BA4 ALBERTA PROV CDA 7.2444% 0.020123% 3,384,241.67 681.02 28 19,068.56
116 912810DU9 UNITED STATES TREAS 7.2383% 0.020106% 1,208,417.12 242.97 24 5,831.28
117 23329VAA5 DQU FDG CORP 7.2551% 0.020153% 2,000,000.00 403.06 23 9,270.38
118 239753BP0 DAYTON HUDSON CORP 8.5927% 0.023869% 2,479,722.22 591.88 22 13,021.36
119 912827G55 UNITED STATES TREAS 6.7397% 0.018721% 994,486.34 186.18 21 3,909.78
120 013051BA4 ALBERTA PROV CDA 7.1472% 0.019853% 2,273,167.78 451.30 16 7,220.80
121 170377AA3 CHOICE CREDIT CARD M 3.9727% 0.011035% 4,996,205.00 551.35 16 8,821.60
122 74155QAA8 PRIME CREDIT CARD MA 7.0877% 0.019688% 2,995,311.00 589.72 16 9,435.52
123 690768AW6 OWENS ILL 9.8499% 0.027361% 523,263.89 143.17 14 2,004.38
124 912827YN6 UNITED STATES TREAS 6.5724% 0.018257% 4,548,937.22 830.49 14 11,626.86
125 912810EN4 UNITED STATES TREAS 7.3633% 0.020454% 2,600,768.30 531.95 3 1,595.85
126 690768AW6 OWENS ILL 9.8308% 0.027308% 525,555.56 143.52 2 287.04
127 912810EN4 UNITED STATES TREAS 7.3925% 0.020535% 1,555,385.93 319.39 2 638.78
------------
92,732.19
------------
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145
146
147
148
149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
164
165
166
167
168
169
</TABLE>
<TABLE>
<CAPTION>
SALES SETTLING IN DECEMBER
==================================================
SALE MATURITY 1ST PMT STEP SETTLEMENT ACCRUED INT PAY CALL CALL
ROW CUSIP NO. ISSUER PAR COUPON PRICE DATE DATE COUPON DATE INTEREST DATE DATE PRICE
- --- --------- -------------------- --------- ------ ------- ---------- ---- ------ -------- -------- -------- ---- -----
A B C D E F G H I J K L M N
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
177 882850BL3 TEXAS UTILITIES ELEC 3,000,000 7.125 100.265 06/01/97 12/02/92 106,875 12/01/93
178 814823BB5 SECURITY PAC CORP 3,000,000 9.750 110.032 05/15/99 12/03/92 13,000 05/15/93
179 191219AT1 COCA COLA ENTERPRISE 1,500,000 7.000 98.648 11/15/99 12/09/92 3,500 05/15/93
180 912810DU9 UNITED STATES TREAS 1,000,000 9.375 117.593 02/15/2006 12/14/92 27,514 02/15/93
181 912827G22 UNITED STATES TREAS 5,000,000 4.250 99.281 07/31/94 12/14/92 71,026 01/31/93
182 244217AN5 DEERE JOHN CAP CORP 2,000,000 9.625 110.499 11/01/98 12/15/92 16,042 05/01/93
183 912827B50 UNITED STATES TREAS 2,000,000 8.250 108.187 07/15/98 12/17/92 62,323 01/15/93
184 912827G55 UNITED STATES TREAS 1,000,000 6.375 97.422 08/15/2002 12/17/92 20,268 02/15/93
185 302154AB5 EXPORT IMPORT BK KOR 500,000 9.000 108.156 05/01/98 12/18/92 3,750 05/01/93
</TABLE>
<TABLE>
<CAPTION>
CONTINUED..SALES SETTLING IN DECEMBER
===========================================================
DAILY MARKET VALUE NO. OF GROSS
YIELD AND DAYS INCOME
(360 DAY ACCRUED DAILY IN BASE FOR BASE
ROW CUSIP NO. ISSUER YIELD YEAR) INCOME INCOME PERIOD PERIOD
- --- --------- ------------------------ ------- --------- ------------- -------- ------- -------------
A B C O P Q R S T U
<S> <C> <C> <C> <C> <C> <C> <C> <C>
177 882850BL3 TEXAS UTILITIES ELEC 7.0316% 0.019532% 3,114,825.00 608.40 -29 (17,643.60)
178 814823BB5 SECURITY PAC CORP 7.7390% 0.021497% 3,313,960.00 712.41 -28 (19,947.48)
179 191219AT1 COCA COLA ENTERPRISE 7.2600% 0.020167% 1,483,215.50 299.12 -22 (6,580.64)
180 912810DU9 UNITED STATES TREAS 7.2733% 0.020204% 1,203,442.58 243.14 -17 (4,133.38)
181 912827G22 UNITED STATES TREAS 4.6857% 0.013016% 5,035,070.81 655.35 -17 (11,140.95)
182 244217AN5 DEERE JOHN CAP CORP 7.3928% 0.020535% 2,226,021.66 457.12 -16 (7,313.92)
183 912827B50 UNITED STATES TREAS 6.4802% 0.018001% 2,226,061.38 400.71 -14 (5,609.94)
184 912827G55 UNITED STATES TREAS 6.7397% 0.018721% 994,486.34 186.18 -14 (2,606.52)
185 302154AB5 EXPORT IMPORT BK KOR 7.1483% 0.019856% 544,529.00 108.12 -13 (1,405.56)
---------------
(76,381.99)
---------------
186
187
188
189
190
191
192
193
194
195
196
197
198
199
200
201
202
203
204
205
206
207
208
209
210
211
212
213
214
215
216
217
218
219
220
221
222
223
224
225
226
227
228
229
230
231
232
233
234
235
236
237
238
239
240
241
242
243
244
245
246
247
248
249
250
251
---------------
Total Gross Income Earned from Corporate Obligations
Computed on a Yield to Maturity or Yield to Call Basis..... 1,237,480.70
============
</TABLE>
<PAGE>
AVERAGE ANNUAL TOTAL RETURN CALCULATIONS
The Prospectus contains or will contain information with respect to
performance data relating to the Contracts. Such performance data includes
average annual total return quotations for the 1, 5 and 10-year periods
computed by finding the average annual compounded rates of return over the
1, 5 and 10-year periods that would equate the initial amount invested to
the ending redeemable value, by equating the ending redeemable value to the
product of a hypothetical initial payment of $1,000, and one plus the
average annual total return raised to a power equal to the applicable number
of years. For periods prior to the date of the Prospectus and Statement of
Additional Information, total return figures are based on a hypothetical
Contract assumed to have been invested in a Portfolio of the Fund when that
Portfolio was first available for investment under a variable annuity
contract issued by an LB affiliate, Lutheran Brotherhood Variable Insurance
Products Company. If the assumed investment was made less than 10 years
from the date of the quotation, the total return from the date of such
investment will be given.
Such performance data assumes that any applicable charges have been
deducted from the initial $1,000 payment and includes all recurring fees
that are charged to all Contract Owners. For fees that vary with the size
of the Contract, a Contract size equal to the mean (or median) contract size
of a substantially identical contract issued by an LB affiliate has been
assumed. If recurring fees charged to Contract Owners are paid other than
by redemption of Accumulation Units, such fees will be appropriately
reflected.
The following examples illustrates the average annual total return
for the variable annuity contract issued by Lutheran Brotherhood Variable
Insurance Products Company, which is substantially identical to the Contract
to be issued pursuant to this Registration Statement, invested in the Fund
from the date the Fund was first available for investment through
December 31, 1992:
<PAGE>
<TABLE>
<CAPTION>
LBVIP VARIABLE ANNUITY ACCOUNT I
TOTAL RETURN CALCULATION
This is a hypothetical illustration of an investment
of $1000.00 made in the growth, high yield, and income
subaccounts on 8--Mar--88 and the money market subaccount
on 18--Feb--88, all redeemed on 31--Dec--92 with a 2%
deferred sales charge.
MONEY
GROWTH HIGH YIELD INCOME MARKET
----------- ----------- ----------- -------------
INITIAL $1,000 INVESTMENT:
<S> <C> <C> <C> <C>
Beginning Unit Value $10.000000 $10.000000 $10.000000 $1.000000
Units Purchased 100.000000 100.000000 100.000000 1,000.000000
----------- ----------- ----------- -------------
Total Value $1,000.00 $1,000.00 $1,000.00 $1,000.00
----------- ----------- ----------- -------------
----------- ----------- ----------- -------------
VALUE AT 31--DEC--92 PRIOR TO DEFERRED SALES CHARGE:
Unit Value at 31--Dec--92 $17.485596 $16.209964 $15.434223 $1.302905
Units Owned 100.000000 100.000000 100.000000 1,000.000000
---------- ------------ ----------- -------------
Value prior to deferred sales charge 1,748.56 1,621.00 1,543.42 1,302.91
Less: Deferred sales charge upon surrender (a) (31.47) (29.18) (27.78) (23.45)
----------- ----------- ----------- -------------
Ending redeemable value at 31--Dec--92 $1,717.09 $1,591.82 $1,515.64 $1,279.46
----------- ----------- ----------- -------------
----------- ----------- ----------- -------------
TOTAL RETURN FOR THE PERIOD FROM DATE OF
INITIAL INVESTMENT (b) 71.71% 59.18% 51.56% 27.95%
=========== =========== =========== =============
AVERAGE ANNUAL RETURN FOR THE PERIOD FROM DATE
OF INITIAL INVESTMENT (c) 11.81% 10.08% 8.97% 5.14%
=========== =========== =========== =============
(a) The following formula is used to calculate deferred
sales charge:
Value prior to deferred sales charge x .90 x .02
-- up to 10% of the Accumulated Value may be surrendered
without a sales charge
-- deferred sales charge during the fifth contract year is 2%.
(b) The following formula is used to calculate total return:
(Ending redeemable value -- initial $1,000 investment)
- -----------------------------------------------------------
Initial $1,000 investment
(c) Average annual return is the sum of the total return calculated
above plus one; such sum is raised to the power of 1/n where n is
expressed as 4 years and 10 months (4 years and 11 months for
money market); the result is reduced by one and is expressed in
terms of a percentage.
Prepared by: Jill Eriksen -- Controllers
Date: 04--Jan--93
</TABLE>
<TABLE>
<CAPTION>
LBVIP VARIABLE ANNUITY ACCOUNT I
TOTAL RETURN CALCULATION
This is a hypothetical illustration of an investment
of $1000.00 made on 31--Dec--91 and redeemed
on 31--Dec--92 with a 6% deferred sales charge.
MONEY
DESCRIPTION GROWTH HIGH YIELD INCOME MARKET
- --------------------------------------------------------------------- ----------- ----------- ----------- -------------
INITIAL $1,000 INVESTMENT:
<S> <C> <C> <C> <C>
Beginning Unit Value (31--Dec--91) $16.341071 $13.658785 $14.286364 $1.272375
Units Purchased 61.195499 73.212954 69.996817 785.931820
----------- ----------- ----------- -------------
Total Value $1,000.00 $1,000.00 $1,000.00 $1,000.00
=========== =========== =========== =============
VALUE AT 31--DEC--92 PRIOR TO DEFERRED SALES CHARGE:
Unit Value at 31--Dec--92 $17.485596 $16.209964 $15.434223 $1.302905
Units Owned 61.195499 73.212954 69.996817 785.931820
---------- ------------ ----------- -------------
Value prior to deferred sales charge 1,070.04 1,186.78 1,080.35 1,023.99
Less: Deferred sales charge upon surrender (a) (57.78) (64.09) (58.34) (55.30)
----------- ----------- ----------- -------------
Ending redeemable value at 31--Dec--92 $1,012.26 $1,122.69 $1,022.01 $968.69
=========== =========== =========== =============
TOTAL RETURN FOR THE PERIOD FROM 31--DEC--91 TO 31--DEC--92(b) 1.23% 12.27% 2.20% -3.13%
=========== =========== =========== =============
(a) The following formula is used to calculate deferred
sales charge:
Value prior to deferred sales charge x .90 x .06
-- up to 10% of the Accumulated Value may be surrendered
without a sales charge
-- deferred sales charge during the first contract year is 6%.
(b) The following formula is used to calculate total return:
(Ending redeemable value -- initial $1,000 investment)
- -----------------------------------------------------------
Initial $1,000 investment
Prepared by: Jill Eriksen -- Controllers
Date: 04--Jan--93
</TABLE>
#20717
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the LB
Variable Annuity Accout I Annual Report to Shareholders dated December 31,
1997 and is qualified in its entirety by reference to such Annual Report.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 1,630,149,549
<INVESTMENTS-AT-VALUE> 1,789,616,785
<RECEIVABLES> 2,857,472
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,792,474,257
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,741,834
<TOTAL-LIABILITIES> 1,741,834
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,790,732,423
<DIVIDEND-INCOME> 58,083,989
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 15,818,642
<NET-INVESTMENT-INCOME> 42,265,347
<REALIZED-GAINS-CURRENT> 61,880,131
<APPREC-INCREASE-CURRENT> 96,628,457
<NET-CHANGE-FROM-OPS> 200,773,935
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 97,018,376
<NUMBER-OF-SHARES-REDEEMED> 67,503,660
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 722,670,946
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
