<PAGE>
As filed with the Securities and Exchange Commission on
April 30, 1997
'33 Act File No. 33-67386
____________________________________________________________________
____________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
Post-Effective Amendment No. 8
to
Form S-6
________
For Registration Under the Securities Act of 1933
of Securities of Unit Investment Trusts
Registered on Form N-8B2
________
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
LINCOLN BENEFIT LIFE COMPANY
Depositor
206 South 13th Street
Lincoln, Nebraska 68508
________
JOHN MORRIS
Lincoln Benefit Life Company
206 South 13th Street
Lincoln, Nebraska 68508
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph (b) of Rule 485
x on May 1, 1997 pursuant to paragraph (b) of Rule 485
___
___ 60 days after filing pursuant to paragraph (a) of Rule 485
___ on (date) pursuant to paragraph (a) of Rule 485
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the Registrant
has registered an indefinite amount of securities under the Securities Act of
1933. A 24f-2 notice for the fiscal year ending December 31, 1996 was filed on
February 26, 1997.
<PAGE>
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
CROSS REFERENCE SHEET TO PROSPECTUS
Cross reference sheet pursuant to Rule 404(c) showing location in prospectus of
information required by Items of Form N-8B-2
<TABLE>
<CAPTION>
ITEM NUMBER IN FORM N-8B-2 CAPTION IN PROSPECTUS
- -------------------------- ---------------------
ORGANIZATION AND GENERAL INFORMATION
------------------------------------
<S> <C> <C>
1. (a) Name of trust...................................... Cover, Definitions
(b) Title of each class of............................. Cover, Payment & Allocation of Premiums
securities issued
2. Name & address of each depositor....................... Cover, Lincoln Benefit Life Company
3. Name & address of custodian............................ Separate Account
4. Name & address of principal............................ Payment & Allocation of Premiums,
underwriter Distribution of the Policy
5. State in which organized............................... Separate Account
6. Date of organization................................... Separate Account
9. Material litigation.................................... Legal Proceedings
</TABLE>
GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
------------------------------------------------------------
General Information Concerning Securities and Rights of Holders
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
10. (a),(b) Type of Securities............................ Cover, Payment & Allocation of Premiums
(c) Rights of securityholders..................... Cover, Surrender & Withdrawal Privileges
re: withdrawal or redemption Policy Loans, "Free Look" Period, Right
to Exchange
(d) Rights of securityholders..................... Cover, Right to Exchange, Surrender &
re: conversion, transfer or Withdrawal Privileges, Payment &
partial withdrawal Allocation of Premiums, Transfers,
"Free Look" Period
(e) Rights of securityholders..................... Policy Lapse, Reinstatement
re: lapses, default,
& reinstatement
(f) Provisions re: voting......................... Voting Rights
rights
(g) Notice to securityholders..................... Reports & Records
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITEM NUMBER IN FORM N-8B-2 CAPTION IN PROSPECTUS
- -------------------------- ---------------------
<S> <C>
(h) Consent of Security............................. Additions, Deletions or Substitutions of
Holders Investments, Payment & Allocation of
Premiums
(i) Other principal features........................ Charges & Deductions, Policy Benefits
& Rights, Policy Value, Other Matters
Information Concerning Securities Underlying Trust's Securities
- ---------------------------------------------------------------
11. Unit of specified securities in which.................... Cover, The Portfolios
securityholders have an interest
12. (a)-(d) Name of company, & name.......................... Cover, The Portfolios
& address of its custodian
Information Concerning Loads, Fees, Charges & Expenses
- ------------------------------------------------------
13. (a) With respect to each load,....................... Charges & Deductions
fee, charge & expense
(b) Deductions for sales charges..................... Surrender Charge
(c) Sales load as percentage......................... Surrender Charge
of amount invested
(d)-(g) Other loads, fees &.............................. Monthly Deductions, Premium Charges,
expenses Risk Charge, Transfer Fee, Administrative
Expense Charge, Other Charges
Information Concerning Operation of Trust
- -----------------------------------------
14. Procedure for applications for &......................... Payment & Allocation of Premiums,
issuance of trust's securities Distribution of the Policy
15. Procedure for receipt of payments........................ Payment & Allocation of Premiums,
from purchases of trust's securities Payment of Premiums, Monthly Guarantee
Premiums, Allocation of Premiums,
Transfers
16. Acquisition & disposition of............................. Cover, The Portfolios
underlying securities
17. (a) Procedure for withdrawal......................... Cover, Surrender & Withdrawal Privileges
"Free Look" Period, Right to Exchange
(b) Redemption or repurchase......................... "Free Look" Period, Right to Exchange
(c) Cancellation or resale........................... "Free Look" Period, Right to Exchange
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
ITEM NUMBER IN FORM N-8B-2 CAPTION IN PROSPECTUS
- -------------------------- ---------------------
<S> <C> <C>
18. Purchase of underlying securities................... The Portfolios, Allocation of Premiums,
Transfers
19. Procedure for keeping records &..................... The Portfolios, Reports & Records
furnishing information to
securityholders
21. (a) & (b) Loans to securityholders.................. Policy Loans
23. Bonding arrangements for depositor.................. Safekeeping of the Separate Account's
Assets
24. Other material provisions........................... General Provisions
ORGANIZATION, PERSONNEL & AFFILIATED PERSONS OF DEPOSITOR
---------------------------------------------------------
Organization & Operations of Depositor
- --------------------------------------
25. Form, state & date of organization................. Lincoln Benefit Life Company
of depositor
27. General character of business of................... Lincoln Benefit Life Company
depositor
28. (a) 5% ownership................................... Lincoln Benefit Life Company
(b) Business experience of......................... Executive Officers & Directors of
officers & directors of Lincoln Benefit Life Company
the depositor
Companies Owning Securities of Depositor
- ----------------------------------------
29. Each company owning 5% of voting................... Lincoln Benefit Life Company
securities of depositor
Controlling Persons
- -------------------
30. Control of depositor............................... Lincoln Benefit Life Company
DISTRIBUTION & REDEMPTION OF SECURITIES
---------------------------------------
Distribution of Securities
- --------------------------
35. Distribution....................................... Lincoln Benefit Life Company,
Distribution of the Policy
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
ITEM NUMBER IN FORM N-8B-2 CAPTION IN PROSPECTUS
- -------------------------- ---------------------
<C> <C> <S> <C>
38. (a) General description of.......................... Distribution of the Policy
method of distribution of
securities
(b) Selling agreement between....................... Distribution of the Policy
trust or depositor &
underwriter
(c) Substance of current............................ Distribution of the Policy
agreements
Principal Underwriter
- -------------------------
39. (a) & (b) Principal Underwriter........................ Distribution of the Policy
41. Character of Underwriter's business.................... Distribution of the Policy
Offering Price or Acquisition Value of Securities of Trust
- ----------------------------------------------------------
44. Information concerning offering........................ The Portfolios, Policy Value, Net
price or acquisition valuation of Investment Factor
securities of trust. (All underlying
securities are shares in registered
investment companies.)
Redemption Valuation of Securities of Trust
- -------------------------------------------
46. Information concerning redemption ..................... The Portfolios, Policy Value, Net
valuation of securities of trust. (All Investment Factor
underlying shares are shares in a
registered investment company.)
Purchase & Sale of Interests in Underlying Securities
- -----------------------------------------------------
47. Maintenance of Position................................ Cover, Separate Account, The
Portfolios, Payment & Allocation of
Premiums
INFORMATION CONCERNING TRUSTEE OR CUSTODIAN
-------------------------------------------
48. Custodian of trust..................................... Separate Account
50. Lien on trust assets................................... Separate Account
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
ITEM NUMBER IN FORM N-8B-2 CAPTION IN PROSPECTUS
- -------------------------- ---------------------
INFORMATION CONCERNING INSURANCE OF HOLDERS OF SECURITIES
---------------------------------------------------------
<C> <C> <S> <C>
51. (a) Name & address of insurer....................... Cover, Lincoln Benefit Life Company
(b) Types of policies............................... Cover, Payment & Allocation of Premiums,
Federal Tax Matters
(c) Risks insured & excluded........................ Death Benefit, Optional Insurance Benefits
Misstatements, Suicide
(d) Coverage........................................ Cover, Payment & Allocation of Premiums
(e) Beneficiaries................................... Death Benefit, Beneficiaries
(f) Terms of cancellations.......................... Policy Lapse, Reinstatement
& reinstatement
(g) Method of determining........................... Payment of Premiums, Monthly Guarantee
amount of premium paid Premiums, Premium Limitations, Allocation
by holder of Premiums
POLICY OF REGISTRANT
--------------------
52. (a) & (c) Selection of Portfolio....................... Additions, Deletions or Substitutions of
securities Investments
Regulated Investment Company
- ----------------------------
53. (a) Taxable status of trust...................... Taxation of the Separate Account
FINANCIAL AND STATISTICAL INFORMATION
-------------------------------------
59. Financial Statements................................... Financial Statements
</TABLE>
________________________
* Items not listed are not applicable to this Registration Statement
v
<PAGE>
PROSPECTUS
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
ISSUED BY
LINCOLN BENEFIT LIFE COMPANY
OPERATIONS CENTER ADDRESS: MAILING ADDRESS:
206 SOUTH 13TH STREET P.O. BOX 82532
LINCOLN, NEBRASKA 68508 LINCOLN, NEBRASKA 68501-2532
The Flexible Premium Variable Life Insurance Policy ("Policy") described in this
Prospectus is offered by Lincoln Benefit Life Company ("Lincoln Benefit Life"),
a wholly owned subsidiary of Allstate Life Insurance Company. The policy is
designed to provide both life insurance protection and maximum flexibility in
connection with premium payments and death benefits. You may, subject to certain
restrictions, vary the frequency and amount of the premium payments and increase
or decrease the level of life insurance benefits payable under the Policy. This
flexibility allows you to provide for changing insurance needs within the
confines of a single insurance policy.
The Policy provides for a Death Benefit payable at the Insured's death. You may
choose one of two Death Benefit options: a level amount which generally equals
the face amount of the Policy, or a variable amount which generally equals the
face amount plus the Policy Value. As long as the Policy remains in force, the
Death Benefit will not be less than the current face amount of the Policy,
reduced by any outstanding Policy debt and any due and unpaid charges. The
minimum face amount of a Policy is $50,000 ($25,000 for Insureds age 65 or over
at the Policy date). The Policy can be guaranteed to stay in force and provide a
Guaranteed Minimum Death Benefit for a specified period through the payment of a
Monthly Guaranteed Premium (see page 8).
The Policy does not contain a minimum guaranteed policy value. The Policy Value
will vary up or down to reflect the investment experience of the amounts
allocated to the selected funds. You bear the entire investment risk for all
amounts so allocated. The Policy Value will also reflect the amount of premium
payments, any partial surrenders, and charges imposed.
You may choose to invest in one or more Subaccounts of the Separate Account or
the Fixed Account, discussed further on pages 6 to 8. The Policy provides a free
look period. You may cancel the Policy by returning it to us within the latest
of 10 days after you receive the Policy, 10 days after we mail or deliver a
written notice of withdrawal right to you, or 45 days after you sign the
application. We will refund the policy value as of the date we receive the
Policy plus any charges previously deducted, unless your state requires a refund
of premium.
The Funds underlying the Separate Account currently are:
JANUS ASPEN SERIES: Flexible Income Portfolio, Balanced Portfolio, Growth
Portfolio, Aggressive Growth Portfolio, Worldwide Growth Portfolio
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND: Money Market Portfolio; Equity-
Income Portfolio; Growth Portfolio; Overseas Portfolio
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND II: Asset Manager Portfolio;
Contrafund Portfolio
IAI RETIREMENT FUNDS, INC.: IAI Regional Portfolio; IAI Balanced Portfolio; IAI
Reserve Portfolio
FEDERATED INSURANCE MANAGEMENT SERIES: Federated Utility Fund II; Federated Fund
for U.S. Government Securities II; Federated High Income Bond Fund II
SCUDDER VARIABLE LIFE INVESTMENT FUND: Bond Portfolio
It may not be financially advantageous to replace existing insurance coverage or
buy additional insurance if you already own another flexible premium variable
life insurance policy.
THIS PROSPECTUS IS VALID ONLY IF ACCOMPANIED OR PRECEDED BY A CURRENT PROSPECTUS
FOR THE JANUS ASPEN SERIES; THE FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND AND
THE VARIABLE INSURANCE PRODUCTS FUND II; THE IAI RETIREMENT FUNDS, INC.; THE
FEDERATED INSURANCE MANAGEMENT SERIES; AND THE SCUDDER VARIABLE LIFE INVESTMENT
FUND.
PLEASE READ THIS PROSPECTUS CAREFULLY AND RETAIN IT FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS MAY 1, 1997
1
<PAGE>
TABLE OF CONTENTS
DEFINITIONS........................................ 3
QUESTIONS AND ANSWERS ABOUT
YOUR POLICY ....................................... 4
LINCOLN BENEFIT LIFE AND THE
INVESTMENT OPTIONS ................................ 6
Lincoln Benefit Life Company ...................... 6
Separate Account .................................. 6
The Portfolios .................................... 6
Additions, Deletions or Substitutions
of Investments ................................... 8
The Fixed Account.................................. 8
PAYMENT AND ALLOCATION
OF PREMIUMS ....................................... 8
General ........................................... 8
Payment of Premiums ............................... 8
Monthly Guarantee Premiums ........................ 8
Premium Limitations ............................... 9
Modified Endowment Contracts ...................... 9
Allocation of Premiums ............................ 9
Dollar Cost Averaging Program ..................... 9
Portfolio Rebalancing ............................ 9
Transfers ......................................... 10
Policy Lapse ...................................... 11
Reinstatement ..................................... 11
POLICY BENEFITS AND RIGHTS ........................ 11
Death Benefit ..................................... 11
Death Benefit Options ............................. 11
Optional Methods of Payment ....................... 12
Policy Value ...................................... 13
Net Investment Factor ............................. 13
Policy Loans ...................................... 13
Surrender and Withdrawal Privileges ............... 14
Free Look Period .................................. 14
Right to Exchange ................................. 14
CHARGES AND DEDUCTIONS ............................ 15
Premium Charges ................................... 15
Monthly Deductions ................................ 15
Administrative Expense Charge ..................... 15
Risk Charge ....................................... 15
Surrender Charge .................................. 15
Transfer Fee ...................................... 15
Other Charges ..................................... 16
GENERAL PROVISIONS ................................ 17
The Policy ........................................ 17
Beneficiaries ..................................... 17
Assignment ........................................ 17
Incontestability .................................. 17
Misstatements ..................................... 17
Suicide ........................................... 17
Postponement of Payments .......................... 17
Reports and Records ............................... 17
Optional Insurance Benefits ....................... 17
DISTRIBUTION OF THE POLICY ........................ 18
FEDERAL TAX MATTERS ............................... 18
Taxation of the Separate Account .................. 18
Taxation of Policyowners .......................... 18
Modified Endowment Contracts ...................... 18
Diversification Requirements ...................... 19
Qualified Plans ................................... 19
Tax Advice ........................................ 19
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS ...... 20
VOTING RIGHTS ..................................... 20
STATE REGULATION OF
LINCOLN BENEFIT LIFE ............................. 20
EXECUTIVE OFFICERS AND DIRECTORS
OF LINCOLN BENEFIT LIFE .......................... 20
LEGAL MATTERS ..................................... 21
LEGAL PROCEEDINGS ................................. 21
EXPERTS ........................................... 22
REGISTRATION STATEMENT............................. 22
FINANCIAL STATEMENTS .............................. 22
ILLUSTRATIONS .................................... A-1
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. THE COMPANY DOES NOT AUTHORIZE ANY
INFORMATION OR REPRESENTATIONS REGARDING THE OFFERING DESCRIBED IN THIS
PROSPECTUS OTHER THAN AS CONTAINED IN THIS PROSPECTUS.
2
<PAGE>
DEFINITIONS
In addition to the terms which are defined elsewhere in this Prospectus, the
following words and phrases shall have the indicated meanings:
AGE - The Insured's age at last birthday.
ATTAINED AGE - The age of the Insured at the last Policy Anniversary.
BENEFICIARY(IES) - The person(s) designated to receive any Death Benefit under
the Policy.
CODE - The Internal Revenue Code.
COMPANY ("we", "us", "our", "Lincoln Benefit Life") - Lincoln Benefit Life
Company.
DEATH BENEFIT - The amount payable to the Beneficiary under the Policy upon the
death of the Insured.
DUE PROOF OF DEATH - (1) a certified original copy of the death certificate; or
(2) a certified copy of a decree of a court of competent jurisdiction as to the
finding of death; or (3) a written statement by a medical doctor who attended
the deceased at the time of death; or (d) any other proof satisfactory to the
Company.
FIXED ACCOUNT - The portion of Policy Value invested in our general account.
INSURED - The person whose life is covered by the Policy.
ISSUE AGE - The Insured's age as of the Issue Date.
ISSUE DATE - The date the Policy is issued. It is used to determine policy
years and policy months in the Policy.
LAPSE DETERMINATION VALUE - The value that must be available to pay a monthly
deduction in order for the Policy to remain in force. We use the Policy Value
to determine this value if no loans are on the Policy; and the Net Surrender
Value if the Policy has outstanding loans.
LOAN ACCOUNT - An account established for amounts transferred from the
Subaccounts and the Fixed Account as security for outstanding policy loans.
MONTHLY AUTOMATIC PAYMENT - A method of making payments each month
automatically; for example, by bank draft or salary deduction.
MONTHLY DEDUCTION DAY - The same day in each month as the Issue Date. The day
of the month on which deductions are made.
NET DEATH BENEFIT - The Death Benefit less any Policy Debt.
NET POLICY VALUE - The Policy Value less any Policy Debt.
NET PREMIUM - The gross premium less the premium tax charge of 2 1/2%.
NET SURRENDER VALUE - The Surrender Value less any Policy Debt.
OWNER "YOU" - The person(s) having the privileges of ownership defined in the
Policy. Such privileges may be restricted by a retirement plan pursuant to
which the Contract is issued.
POLICY DEBT - The sum of all unpaid policy loans and accrued interest thereon.
POLICY VALUE - The sum of the values of your interests in the Subaccounts of the
Separate Account, plus the value of the Fixed Account and the Loan Account. The
amount from which monthly deductions are made and the death benefit is
determined.
PORTFOLIO(S) - The underlying mutual fund(s) (or investment series thereof) in
which the Subaccounts invest.
PREMIUM - The amount paid to us under the Policy. Premiums may be paid at any
time.
RECORD DATE - The date we record the Policy on our books as an inforce policy.
SEPARATE ACCOUNT - A segregated investment account of the Company entitled
Lincoln Benefit Life Variable Life Account.
SUBACCOUNT - A subdivision of the Separate Account invested wholly in shares of
one of the Portfolios.
SURRENDER VALUE - The Policy Value less any applicable surrender charges.
VALUATION DATE - Each day the New York Stock Exchange ("NYSE") is open for
business.
VALUATION PERIOD - The period commencing at the close of normal trading on the
NYSE (currently 4:00 p.m. Eastern time) on each Valuation Date and ending at the
close of the NYSE on the next succeeding Valuation Date.
3
<PAGE>
QUESTIONS AND ANSWERS
ABOUT YOUR POLICY
The following is a compilation of answers to selected questions that you might
have about some of the most important features of your Policy. The remainder of
the prospectus, which follows immediately afterward, contains a more complete
discussion of these and other matters.
1. WHAT IS A FLEXIBLE PREMIUM VARIABLE LIFE POLICY?
This policy has a Death Benefit, Policy Value, and other features of life
insurance providing fixed benefits. It is a 'flexible premium' policy since,
once you decide upon a Death Benefit, you have a great amount of flexibility in
determining when and how much premium you want to pay. It is a 'variable'
policy because the Death Benefit and Policy Value vary according to the
investment experience of the funds to which you have allocated your premium.
The Policy Value is not guaranteed. The Death Benefit may be guaranteed under
the Guaranteed Minimum Death Benefit provision. This policy provides you with
the opportunity to take advantage of appreciation in your Policy Value, but you
also bear the risk of any depreciation.
2. WHAT ARE THE DEATH BENEFIT OPTIONS?
We will pay a Death Benefit to the Beneficiary upon the Insured's death while
this policy is in force. The Policy provides for two Death Benefit options.
Under either option, the Death Benefit will not be less than the current face
amount of the Policy minus any outstanding Policy Debt and any due and unpaid
charges.
Under 'Option 1,' the Death Benefit is a generally level amount equal to the
policy's face amount. The Death Benefit at any time under Option 1 is the
greater of the face amount or the Policy Value times a specified percentage.
'Option 2' provides a Death Benefit which is the greater of the face amount plus
the Policy Value on the Insured's date of death or the Policy Value times a
specified percentage. The Death Benefit under Option 2 is a variable amount.
(See page 11).
3. WHAT IS THE GUARANTEED MINIMUM DEATH BENEFIT FEATURE?
Unless otherwise required by your state, we agree to keep the Policy in force
regardless of investment performance of the underlying funds and provide a
Guaranteed Minimum Death Benefit ("GMDB") for either a) the Insured's lifetime,
or b) for issue ages 0-55: to the Insured's attained age 65; for issue ages 56-
70: 10 policy years; or for issue ages 71-79: to the Insured's attained age
80, so long as you pay the appropriate monthly guarantee premium (see page 8).
4. HOW WILL MY POLICY VALUE BE DETERMINED?
The Policy Value is the sum of the values of your interests in the Subaccounts
of the Separate Account, plus the values in the Fixed Account and the Loan
Account. Your Policy Value will reflect any Net Premiums paid, partial
withdrawals, charges assessed and the performance of the underlying Funds. We
do not guarantee a minimum Policy Value.
5. HOW DO I PAY PREMIUMS FOR THIS POLICY?
You have considerable flexibility as to the timing and amount of your premium
payments. You have a required premium in your policy which is based on your
policy's face amount and the Insured's age, sex, and risk class. You do not
have to pay the required premium after the first Policy Year.
To take advantage of the Guaranteed Minimum Death Benefit feature, you must pay
the cumulative monthly guarantee premiums due. If you allow the GMDB feature to
terminate, you must pay enough premium so that your Lapse Determination Value
can pay monthly deductions. Otherwise, any level of premium payment is
acceptable. The failure to pay a planned periodic premium will not
automatically cause the policy to lapse. See "Payment of Premiums" on page 8
and "Policy Lapse" on page 11.
6. CAN I INCREASE OR DECREASE MY POLICY'S FACE AMOUNT?
Yes, you have considerable flexibility to increase or decrease your Policy's
face amount. You may request an increase and/or a decrease after the fifth
Policy Year. You may do so by sending us a written request. To apply for an
increase in face amount, you must provide us with satisfactory evidence of
insurability. You must increase the face amount by at least $10,000. Any
increase will result in additional charges. No decrease in face amount will be
allowed if the resulting face amount would be less than $25,000. (See page 11).
7. HOW ARE NET PREMIUMS ALLOCATED?
Before the premiums are allocated to the Policy Value, we deduct 2 1/2% for
premium taxes. (See "Premium Charges," page 15.) The remaining amount is
called the Net Premium. You allocate your Net Premiums among the mutual fund
Portfolios and the Fixed Account when you apply for the Policy. Percentages
must be in whole numbers and the total allocation must equal 100%. When you pay
additional premiums, you should again specify how you want your Net Premiums
allocated. If you don't, we will automatically allocate the payment based on
the then current Net Premium allocation (see page 9).
You may transfer Policy Values among the Subaccounts and the Fixed Account while
the Policy is in force, by writing us or calling us at 1-800-865-5237 (see page
9). There are additional transfer restrictions for the Fixed Account (see page
10).
You may also want to take advantage of our automatic dollar cost averaging or
portfolio rebalancing programs. Under the dollar cost averaging program, your
values are automatically transferred from the Fixed Account or a Subaccount of
your choosing to up to eight other Subaccounts at regular intervals. Transfers
may be made monthly, quarterly or annually. (See "Dollar Cost Averaging
Program", page 9).
Under the portfolio rebalancing program, you can maintain the percentage of your
Policy Value allocated to each Subaccount at a pre-set level. Investment results
will shift this balance of your Policy Value allocations. If you select
rebalancing, we will automatically transfer your Policy Value back to the
percentages at the frequency (monthly,
4
<PAGE>
quarterly, semiannually, or annually) that you specify. (See "Portfolio
Rebalancing," page 10.)
8. IN WHICH MUTUAL FUNDS DOES THE SEPARATE ACCOUNT INVEST?
The Separate Account currently invests exclusively in shares of the these mutual
funds:
Fund Portfolio(s)
- -------------------------------------------------------
Janus Aspen Series Flexible Income Portfolio
Balanced Portfolio
Growth Portfolio
Aggressive Growth
Portfolio
Worldwide Growth
Portfolio
- -------------------------------------------------------
Fidelity's Money Market Portfolio
Variable Insurance Equity-Income Portfolio
Products Fund Growth Portfolio
Overseas Portfolio
- -------------------------------------------------------
Fidelity's Asset Manager Portfolio
Variable Insurance Contrafund Portfolio
Products Fund II
- -------------------------------------------------------
IAI Retirement IAI Regional Portfolio
Funds Inc. IAI Balanced Portfolio
IAI Reserve Portfolio
- -------------------------------------------------------
Federated Insurance Federated Utility Fund II
Management Series Federated Fund for U.S.
Government Securities II
Federated High Income
Bond Fund II
- -------------------------------------------------------
Scudder Variable Life Bond Portfolio
Investment Fund
- -------------------------------------------------------
The assets of each Portfolio are held separately from the other Portfolios and
each has distinct investment objectives which are described in the accompanying
prospectuses for the Funds.
9. MAY I MAKE A POLICY LOAN?
Yes, you may borrow money from us using your Policy as security for the loan.
The maximum loan amount is equal to 90% of the Surrender Value. Other
restrictions may apply if this Policy is issued in connection with a qualified
plan. See "Qualified Plans" on page 19.
10. WHAT ARE THE CHARGES DEDUCTED FROM MY POLICY VALUE?
We will make a monthly deduction from your Policy Value. Unless otherwise
requested, it will be taken pro-rata from each of your Subaccounts and the Fixed
Account. The monthly deduction is:
a) Your Policy's cost of insurance and cost of additional benefits provided by
rider; and
b) A $5.00 Policy fee.
We also impose an annual administrative charge of 0.20% of your Policy Value
during the first twelve Policy Years.
A Mortality and Expense Risk Charge of .70% (on an annual basis) of the value of
the Subaccount is assessed daily against each Subaccount.
See "Charges and Deductions," page 15, for more details.
11. MAY I SURRENDER THE POLICY?
Yes, as long as the Policy is in force, you may surrender your Policy in whole
or make partial withdrawals (see page 14). A surrender charge may be imposed
upon surrender. The surrender charge is comprised of a contingent deferred sales
charge and a contingent deferred administrative charge. The surrender charge is
based on the face amount of the Policy, and also depends on the issue age,
premium class and sex of the Insured. During the lifetime of the Policy, the
minimum partial withdrawal that may be taken at any time is $250.
We will waive the surrender charge for a 60 day period if we raise your cost of
insurance rate scale during the first five Policy Years. See "Surrender Charge,"
page 15.
12. WHAT ARE THE TAX CONSEQUENCES OF BUYING THIS POLICY?
Your Policy is structured to satisfy the definition of a life insurance contract
under the Code. As such, we may be required to limit the premiums you pay to
ensure that your Policy continues to meet this definition.
The Policy Value under your Policy is subject to the same federal income tax
treatment as the policy value under a fixed benefit life insurance policy. Under
existing tax law, if your Policy is not a modified endowment contract as
discussed in the following paragraphs, you generally will be taxed on
Policy Value withdrawn from the Policy and Surrender Value received upon
surrender of the Policy only to the extent these amounts, when added to previous
distributions, exceed the total premiums paid. Amounts received upon surrender
or withdrawal in excess of premiums paid will be treated as ordinary income.
Special rules govern withdrawals from life insurance contracts referred to as
modified endowment contracts. In short, if your Policy fails the "7-pay test"
described on page 18, your Policy would be classified as a modified endowment
contract.
Withdrawals (including policy loans) from modified endowment contracts are
treated differently than withdrawals from other life insurance contracts as
follows. First, amounts withdrawn would be treated as income first and taxed
accordingly. Second, an additional 10% penalty tax would generally be imposed on
the taxable portion of amounts received before age 59 1/2. For more information,
see "Federal Tax Matters," page 18.
13. CAN I RETURN THIS POLICY AFTER IT HAS BEEN DELIVERED?
You may return the Policy to us within forty-five days after signing the
application, ten days after you receive your Policy or ten days after we have
delivered a notice of your right of withdrawal, whichever is later (unless your
state requires a longer "free look period"). You will receive a refund of your
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Policy Value plus any charges previously deducted, unless your
state requires a refund of premium.
LINCOLN BENEFIT LIFE
AND THE INVESTMENT OPTIONS
LINCOLN BENEFIT LIFE COMPANY. Lincoln Benefit Life Company is a stock life
insurance company organized under the laws of the state of Nebraska in 1938.
Our legal domicile and principal business address is 206 South 13th Street,
Lincoln, Nebraska 68508. Lincoln Benefit Life is a wholly-owned subsidiary of
Allstate Life Insurance Company ("Allstate Life"), a stock life insurance
company incorporated under the laws of the State of Illinois. Allstate Life
Insurance Company is a wholly-owned subsidiary of Allstate Insurance Company
("Allstate"), a stock property-liability insurance company incorporated under
the laws of Illinois. All outstanding Capital stock of Allstate is owned by The
Allstate Corporation ("Corporation").
We are admitted to conduct life insurance and annuity business in the District
of Columbia, Guam and in all states except New York. The Policy will be
marketed in all of the jurisdictions in which we are admitted to conduct
variable life business. The Policies offered by this prospectus are issued by
us and will be funded in the Separate Account and the Fixed Account.
Lincoln Benefit Life Company is highly rated by independent agencies, including
A.M. Best, Moody's, and Standard & Poor's. These ratings are based on the
Company's reinsurance agreement with Allstate Life Insurance Company, as
explained below, and reflect financial soundness and strong operating
performance. The ratings are not intended to reflect the financial strength or
investment experience of the Separate Account. We may from time to time
advertise these ratings in our sales literature.
We receive our ratings through Allstate Life, which reinsures all net new
business from the Lincoln Benefit Life fixed account. Through the reinsurance
agreement, all of the assets backing Lincoln Benefit Life's reinsured
liabilities are owned by Allstate Life Insurance Company. These assets represent
our fixed account and are invested and managed by Allstate Life Insurance
Company. While the reinsurance agreement provides Lincoln Benefit Life with
financial backing from Allstate Life, it does not create any direct contractual
relationship with individual Lincoln Benefit Life policyholders.
SEPARATE ACCOUNT. Lincoln Benefit Life Variable Life Account was originally
established by Lincoln Benefit on May 17, 1990, pursuant to the provisions of
Nebraska law, as a segregated asset account of the Company. The Separate
Account meets the definition of a "separate account" under the federal
securities laws and is registered with the Securities and Exchange Commission as
a unit investment trust under the Investment Company Act of 1940. This
registration does not involve supervision of the management of the Separate
Account or the Company by the Securities and Exchange Commission.
The assets of the Separate Account are our property. However, the assets of the
Separate Account, equal to its reserves and other contract liabilities, are not
chargeable with liabilities arising out of any other business we may conduct.
Our obligations arising under the Contracts are general corporate obligations of
Lincoln Benefit Life.
Income, gains, and losses, whether or not realized, from assets allocated to the
Separate Account are credited to or charged against the Separate Account without
regard to our other income, gains, or losses.
The Separate Account is divided into Subaccounts, with the assets of each
Subaccount invested in the shares of one of the Portfolios. We do not guarantee
the investment performance of the Separate Account, its Subaccounts or the
Portfolios. Values allocated to the Separate Account will vary with the values
of shares of the Portfolios, and are also reduced by Policy charges. The
Separate Account may also fund other contracts issued by Lincoln Benefit Life,
which will be accounted for separately.
THE PORTFOLIOS. Each of the Subaccounts of the Separate Account invests in the
shares of one of the Portfolios, which are open-end management investment
companies ("Funds") registered under the Investment Company Act of 1940
(commonly known as "mutual funds"), or separate investment series of such Funds.
Following is a summary description of the Portfolios in which the Subaccounts
invest. More detailed information concerning the Portfolios appears in the
respective accompanying prospectuses for the Funds.
JANUS ASPEN SERIES (investment adviser: Janus Capital Corporation)
- ------------------
FLEXIBLE INCOME PORTFOLIO seeks to maximize total return from a combination of
current income and capital appreciation, with an emphasis on the income
component of total return. Flexible Income Portfolio invests in all types of
income-producing securities. This Portfolio may have substantial holdings of
debt securities rated below investment grade (commonly known as "junk bonds").
Investments in such securities present special risks; you are urged to carefully
read the risk disclosure in the accompanying prospectus relating to the
Portfolio before allocating amounts to the Janus Flexible Income Subaccount.
BALANCED PORTFOLIO seeks both growth of capital and current income. Balanced
Portfolio normally invests 40-60% of its assets in securities selected primarily
for their growth potential and 40-60% of its assets in income securities
selected primarily for their income potential.
GROWTH PORTFOLIO seeks long-term growth of capital by investing primarily in a
diversified portfolio of common stocks of a large number of issuers of any size.
Generally, this Portfolio emphasizes issuers with larger market capitalizations.
AGGRESSIVE GROWTH PORTFOLIO seeks long-term growth of capital. The Portfolio is
a non-diversified fund that pursues its objective by normally investing at least
50% of its equity assets in securities issued by medium-sized companies, those
whose market capitalizations fall within the range of companies in the S&P
MidCap 400 Index (the "MidCap Index"). Compa-
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nies whose capitalization falls outside this range after the Portfolio's initial
purchase continue to be considered medium-sized companies for the purpose of
this policy. The range of the MidCap Index is expected to change on a regular
basis. Subject to the above policy, the Portfolio may also invest in smaller or
larger issuers.
WORLDWIDE GROWTH PORTFOLIO seeks long-term growth of capital by investing in a
diversified portfolio of common stocks of foreign and domestic issuers of any
size. Worldwide Growth Portfolio normally invests in issuers from at least five
different countries including the United States.
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND (investment adviser: Fidelity
Management & Research Company)
MONEY MARKET PORTFOLIO seeks to obtain as high a level of current income as is
consistent with preserving capital and providing liquidity. The Portfolio will
limit its investments to securities with remaining maturities of 397 days or
less.
EQUITY-INCOME PORTFOLIO seeks reasonable income by investing primarily in
income-producing equity securities. The goal is to achieve a yield in excess of
the composite yield of the S&P 500 Composite Stock Price Index. At least 65% of
the Portfolio's assets will be invested in income producing common or preferred
stock. The remainder will normally be invested in convertible and non-
convertible debt obligations.
GROWTH PORTFOLIO seeks to achieve capital appreciation. The Portfolio normally
purchases common stocks, although its investments are not restricted to any one
type of security.
OVERSEAS PORTFOLIO seeks long-term growth of capital primarily through
investments in foreign securities. At least 65% of the Portfolio's assets will
be invested in securities of issuers outside of North America. Most issuers
will be located in developed countries in the Americas, the Far East and Pacific
Basin, Scandinavia and Western Europe.
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND II (investment adviser: Fidelity
Management & Research Company)
ASSET MANAGER PORTFOLIO seeks to obtain high total return with reduced risk over
the long term by allocating its assets among domestic and foreign stocks, bonds,
and short-term fixed-income securities. Normally, the Portfolio's assets will
be allocated within the following investment parameters: 0-50% in short-term
instruments; 20-60% in bonds (intermediate to long-term debt); and 30-70% in
stocks (equities).
CONTRAFUND PORTFOLIO seeks capital appreciation by investing mainly in equity
securities of companies that Fidelity Management and Research Company believes
to be undervalued due to an overly pessimistic appraisal by the public. The fund
usually invests primarily in common stock and securities convertible into common
stock, but it has the flexibility to invest in any type of security that may
produce capital appreciation.
IAI RETIREMENT FUNDS, INC. (investment adviser: Investment Advisers, Inc.)
IAI REGIONAL PORTFOLIO pursues its objective of capital appreciation by
investing at least 80% of its equity investments in companies which have their
headquarters in Minnesota, Wisconsin, Iowa, Illinois, Nebraska, Montana, North
Dakota or South Dakota.
IAI BALANCED PORTFOLIO'S investment objective is to maximize total return to
investors. Balanced Portfolio pursues its objective by investing in a broadly
diversified portfolio of stocks, bonds and short-term instruments. The
Portfolio's assets will be allocated among these three classes of assets. Under
normal market conditions, the Portfolio will hold between 25% and 75% of its
assets in stocks and other equity securities, between 25% and 75% of its assets
in bonds and other fixed income securities, and up to 50% of its assets in short
term instruments.
IAI RESERVE PORTFOLIO'S investment objectives are to provide its shareholders
with high levels of capital stability and liquidity and, to the extent
consistent with these primary objectives, a high level of current income.
Reserve Portfolio pursues its investment objectives by investing primarily in a
diversified portfolio of investment grade bonds and other debt securities of
similar quality. Reserve Portfolio's dollar weighted average maturity will not
exceed twenty-five (25) months.
FEDERATED INSURANCE MANAGEMENT SERIES (investment adviser: Federated Advisers)
FEDERATED UTILITY FUND II'S investment objective is to achieve high current
income and moderate capital appreciation. The Fund endeavors to achieve its
objective by investing at least 65% of its assets in equity and debt securities
of utility companies that produce, transmit, or distribute gas and electric
energy, as well as those companies that provide communications facilities, such
as telephone and telegraph companies.
FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES II'S investment objective is to
provide current income. The Fund invests in securities which are primarily or
direct obligations of the U.S. government or its agencies or instrumentalities,
or which are guaranteed by the U.S. government, its agencies, or
instrumentalities. The Fund may also invest in certain collateralized mortgage
obligations ("CMOs") and repurchase agreements.
FEDERATED HIGH INCOME BOND FUND II'S investment objective is to seek high
current income. The Fund endeavors to achieve its objective by investing at
least 65% of its assets in lower rated corporate debt obligations (commonly
known as "junk bonds"), such as preferred stocks, bonds, debentures, notes,
equipment lease certificates and equipment trust certificates. Investments in
such securities present special risks; you are urged to carefully read the risk
disclosure in the accompanying prospectus relating to the Corporate Bond Fund
before allocating amounts to the corresponding Subaccount. Some of these fixed
income securities may involve equity features. Under normal circumstances, the
Fund will not invest more than 10% of the value of its total assets in equity
securities.
SCUDDER VARIABLE LIFE INVESTMENT FUND (investment adviser: Scudder, Stevens &
Clark, Inc.) The Scudder Variable
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Life Investment Fund portfolios have two classes of shares. The Subaccounts
invest in those Class A that do not impose distribution fees.
BOND PORTFOLIO seeks high income from a high quality portfolio of debt
securities. Under normal circumstances, Bond Portfolio invests at least 65% of
its assets in bonds including those of the U.S. Government and its agencies and
those of corporations and other notes and bonds paying high current income. The
portfolio is actively managed and can invest in a broad range of short,
intermediate and long term securities.
There is no assurance that the investment objective of any of the Portfolios
will be met. Detailed information about the Portfolios is contained in the
accompanying current prospectuses of the Funds. You should carefully review
those prospectuses before allocating amounts to be invested in the Subaccounts
of the Separate Account.
ADDITIONS, DELETIONS OR SUBSTITUTIONS OF INVESTMENTS. If the shares of any of
the Portfolios should no longer be available for investment by the Separate
Account or if, in the judgment of our Board of Directors, further investment in
the shares of a Portfolio is no longer appropriate in view of the purposes of
the Policy, we may add, delete or substitute shares of another mutual fund (or
series thereof) for Portfolio shares already purchased and/or to be purchased in
the future by Purchase Payments under the Policy. No such substitution of
securities may take place without prior approval of the Securities and Exchange
Commission and under such conditions as the Commission may impose.
THE FIXED ACCOUNT The portion of the Policy relating to the Fixed Account is not
registered under the Securities Act of 1933 ("1933 Act") and the Fixed Account
is not registered as an Investment Company under the Investment Company Act of
1940 ("1940 Act"). Accordingly, neither the Fixed Account nor any interests
therein are subject to the provisions or restrictions of the 1933 Act or the
1940 Act, and the disclosure regarding the Fixed Account has not been reviewed
by the staff of the Securities and Exchange Commission. The following
disclosure about the Fixed Account may be subject to certain generally
applicable provisions of the federal securities law regarding the accuracy and
completeness of disclosure.
You may allocate part or all of your net premiums to the Fixed Account, and any
such amounts become part of the general assets of Lincoln Benefit. Pursuant to
the reinsurance agreement discussed on page 6, Allstate Life invests the assets
of the general account in accordance with applicable laws governing the
investments of insurance company general accounts.
We guarantee that the interest rate credited to the Fixed Account will be at
least an annual effective rate of 4%. We may credit interest above the minimum
rate at 4%, but we are not obligated to do so. Any interest credited to the
Fixed Account in excess of the minimum guaranteed rate will be determined by us
at our sole discretion. You assume the risk that interest credited to the Fixed
Account may not exceed the minimum guaranteed rate of 4%.
Transfers from the Fixed Account are subject to certain limitations (see
Transfers, page 9). Also, we reserve the right to limit payment of partial
withdrawals or Surrender Value from the Fixed Account for up to 6 months (see
Postponement of Payments, page 16).
The Fixed Account is not available in all states.
PAYMENT AND ALLOCATION OF PREMIUMS
GENERAL. The Policy is designed to provide you with life insurance protection
and flexibility in connection with the amount and frequency of premium payments
and the level of life insurance proceeds payable under the Policy. You are not
required to pay scheduled premiums after the first policy year, and may, subject
to certain limitations, vary the frequency and amount of premium payments.
Death Benefits are payable under two options as described in "Death Benefit
Options," page 11.
To purchase a Policy, a completed application must be sent to us at our home
office. We generally will not issue Policies to insure persons older than age
80. The minimum face amount for a Policy to be issued by us is $50,000 ($25,000
if the Insured is age 65 or greater). Acceptance is subject to our underwriting
rules and we may, at our sole discretion, reject any application or premium for
any reason.
PAYMENT OF PREMIUMS. Premiums for the Policy are referred to as payments.
Payments are flexible. This means that you may change the amount of payments
and the time between payments, unlike a traditional policy.
You may determine, within specified limits, your own payment schedule. These
limits are set forth by us and include a required payment for the first policy
year. In order to help you obtain the insurance benefits desired, a planned
payment will be shown in the Policy. The required payment and the time between
payments will also be shown. We will send you a reminder notice if you pay
annually, semi-annually, or quarterly. You may also make a Monthly Automatic
Payment. You are not required to pay planned payments, except during the first
year. Failure to make a payment will not necessarily result in lapse of the
Policy provided that the Lapse Determination Value is sufficient to pay monthly
deductions. Conversely, making planned payments will not necessarily assure
that the Policy will remain in force (see "Policy Lapse," page 11). However,
making planned payments will generally provide greater benefits than if a lower
amount of premium is paid. They also can help ensure that your coverage remains
in force if they are greater than or equal to a Monthly Guarantee Premium, as
described in the next section. Payments must be sent to us at our home office.
MONTHLY GUARANTEE PREMIUMS. In order to provide assurance that coverage will
remain in force for specified periods, the Policy offers a Guaranteed Minimum
Death Benefit ("GMDB") feature with two levels of monthly guarantee premiums--
the Lifetime Guarantee Premium and the Safety Net Premium.
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LIFETIME GUARANTEE PREMIUM. In states where available, if total payments, less
partial withdrawals and Policy Debt, are greater than or equal to the sum of the
monthly Lifetime Guarantee Premium times the number of months elapsed since the
issue date, then the Policy is guaranteed to stay in force for the insured's
lifetime, even if the Lapse Determination Value becomes insufficient to cover
monthly deductions.
SAFETY NET PREMIUM. If total payments, less partial withdrawals and Policy
Debt, are greater than or equal to the sum of the monthly Safety Net Premium
times the number of months elapsed since the issue date, then the Policy is
guaranteed to stay in force for a pre-determined time period, even if the Lapse
Determination Value becomes insufficient to cover monthly deductions. In most
states, the pre-determined time period varies by Issue Age as follows:
Issue Ages 0-55: to the Insured's attained age 65;
Issue Ages 56-70: 10 Policy Years; or
Issue Ages 71-79: to the Insured's attained age 80.
Some states may require us to offer different pre-determined time periods.
The Safety Net Premium is equal to the required payment for the first policy
year.
The specific Monthly Guarantee Premium option must be selected at issue. If no
option is elected, the Safety Net Premium will apply. If, at any time the total
payments, less partial withdrawals and policy debt, is less than the sum of the
appropriate Monthly Guarantee Premium times the number of months elapsed, we
will let you know and you will be given 61 days to satisfy any shortfall. If
such payments are not made during this period, the GMDB will expire; once it has
expired, it cannot be reinstated. After the GMDB has expired, the Policy will
continue in force only so long as its Lapse Determination Value is sufficient to
pay the monthly deductions (see "Policy Lapse," page 11).
Increases, decreases, partial withdrawals, Death Benefit option changes and
addition or deletion of riders may affect the Monthly Guarantee Premiums.
PREMIUM LIMITATIONS. Premium payments which result in any increase in the net
amount at risk under the Policy will require evidence of insurability. The Code
provides certain limits on the amount of premium that can be contributed with
respect to a life insurance contract. This premium limitation under the Policy
is imposed in order to insure favorable federal income tax treatment of the
Policy and its Death Benefit. We will not accept any premiums which would cause
the total premiums to exceed the maximum premium limitation. No further
premiums will be accepted until allowed by the current maximum premium
limitation required by the Code or unless the insured increases the face amount
of the Policy.
MODIFIED ENDOWMENT CONTRACTS. Under certain circumstances, including the
payment of premiums in excess of specified amounts and a reduction in Death
Benefit levels, a Policy could be classified as a "modified endowment contract"
("MEC"), a category of life insurance contracts defined in the Code. If the
Policy were to become a MEC, distributions and loans from the Policy could have
adverse tax consequences. See "Federal Tax Matters - Modified Endowment
Contracts," page 18.
We will monitor the status of the Policies and, if action is required to be
taken in order to prevent a Policy from being deemed to be a modified endowment
contract, we will advise you of such status.
If you are replacing a policy issued by another insurer with our Policy, our
ability to determine if the replaced policy is a MEC is based solely on the
sufficiency of the policy data we receive from the insurer of the policy being
replaced. We do not consider ourselves to be liable to you if such data is
insufficient to accurately determine if the replaced policy is a MEC. You
should discuss this issue with your tax advisor if it pertains to your
situation. Based on the information provided to us, we will notify you as to
whether you have the opportunity to contribute more premium to your Policy
without violating the MEC rules.
ALLOCATION OF PREMIUMS. Net Premium payments will be allocated among the
Subaccounts and Fixed Account as you have selected. When you make your initial
premium payment, you must specify your allocation on the application.
Percentages must be in whole numbers and the total allocation must equal 100%.
In most states, we will allocate such net premiums, less monthly deductions, to
the Fixed Account and Subaccounts you have selected on the Record Date. In
states that require us to refund at least your premiums, we will keep the net
premiums in the Money Market Subaccount for 20 days following the Record Date or
longer if required by state law, before we allocate them (plus earnings and less
monthly deductions) to the Subaccounts and Fixed Account as directed by you,
unless your state requires a longer "free look period." No interest or earnings
will be credited prior to the Record Date. You may change your allocation of
future premium payments among the Subaccounts of the Separate Account and Fixed
Account by written notice (or by telephone notice, if authorized) to us without
payment of any fee or penalties.
The allocation of each Net Premium payment to a Subaccount and/or the Fixed
Account will be determined by multiplying the Net Premium payment by the
appropriate percentage that the Policyowner has selected.
All valuations in connection with the Policy, e.g., with respect to determining
Policy Value in connection with Policy loans, transfers, partial withdrawals, or
payment of Death Benefits, and with respect to determining the value to be
credited to a Subaccount or the Fixed Account with each Net Premium Payment,
will be made on the date the premium is received or the request for payment is
received if such date is a Valuation Date and a date that the Company is open
for business; otherwise, such determination will be made on the next succeeding
day which is a Valuation Date.
DOLLAR COST AVERAGING PROGRAM. Owners who wish to make allocations to one or
more of the Subaccounts or the Fixed Account over a period of time may be able
to do so through the Automatic Dollar Cost Averaging ("DCA") Program. Under
this program, you may authorize the automatic transfer of a fixed dollar amount
from the Fixed
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Account or a Subaccount of your choosing (the "Source Subaccount") to up to
eight options, including the other Subaccounts and the Fixed Account ("Target
Subaccount(s)"). Each Target Subaccount will then purchase shares of its
corresponding Portfolio at the share prices determined on the dates of the
transfers. The interval between transfers may be monthly, quarterly, or
annually, at your option. The transfers will continue until you instruct
otherwise, or until there is not enough money in the Source Subaccount to make
the transfer, whichever is earlier. Currently, the minimum transfer amount from
the Source Subaccount is $100, subject to the Company's discretion. If you elect
DCA, the first DCA will occur one period after the Issue Date. Your request for
DCA will be effective when received in good form. Special DCA considerations
apply with respect to transfers from the Fixed Account. (See Transfers, page
10).
The theory of dollar cost averaging is that greater numbers of shares are
purchased at times when the share prices are relatively low than are purchased
when the prices are higher. This has the effect, when purchases are made at
fluctuating prices, of reducing the aggregate average cost per share to less
than the average of the share prices on the same purchase dates. However,
participation in the DCA Program does not assure you of a greater profit from
your purchases under the Program; nor will it prevent or necessarily alleviate
losses in a declining market. You may not use DCA and portfolio rebalancing at
the same time.
You may elect to increase, decrease or change the frequency or amount of
payments under a Dollar Cost Averaging Program. The application and any
payments should be sent to Lincoln Benefit Life Company, P.O. Box 82532,
Lincoln, Nebraska 68501-2532.
PORTFOLIO REBALANCING. Portfolio rebalancing allows you to maintain the
percentage of your Policy Value allocated to each Subaccount at a pre-set level.
For example, you could specify that 30% of your Policy Values should be in the
Balanced Portfolio, 40% in the Growth Portfolio--Janus Aspen Series, and 30% in
Federated High Income Bond Fund II. Over time, the variations in each
Subaccount's investment results will shift this balance of your Policy Value
allocations. If you elect the portfolio rebalancing feature, we will
automatically transfer your Policy Value including new premium (unless you
specify otherwise) back to the percentages you specify, but only if investment
results shift greater than minimum requirements that we establish.
You may choose to have rebalances made monthly, quarterly, semiannually, or
annually. No Transfer Fees will be charged for portfolio rebalancing. No more
than eight Subaccounts can be included for portfolio rebalancing at any time. If
you include the Fixed Account for Portfolio Rebalancing, subject to the
Company's discretion, you may not make more than two changes in any given twelve
month period to the allocation percentages with the net cumulative change to the
Fixed Account being adjusted during the period no more than 20%.
Procedures for selecting portfolio rebalancing are generally the same as those
discussed in detail above for selecting dollar cost averaging. When you
established Portfolio Rebalancing, the restrictions described under Fixed
Account will apply. You may make your request and it will be effective when we
receive it in good form. If you stop portfolio rebalancing, you must wait 30
days to begin again. The date of your rebalancing must coincide with the same
day of the month as your Policy Issue Date. If you request rebalancing on your
application but do not specify a date for the first rebalance, it will occur one
period after your Issue Date. If those Subaccounts, collectively, selected for
rebalancing fall below any minimum value that we may establish, we have the
right, at our option, to prohibit or limit the use of portfolio rebalancing. You
may not use dollar cost averaging and portfolio rebalancing at the same time. We
may change, terminate, limit, or suspend portfolio rebalancing at any time.
TRANSFERS. You may transfer Contract Values among the Fixed Account and
Subaccounts by written request or telephone authorization. Currently, a minimum
transfer amount is not required, unless your state requires one. We reserve the
right to impose a minimum amount that may be transferred among the investment
options under the Contract. Additional restrictions apply to transfers from/to
the Fixed Account as discussed below.
Telephone calls authorizing transfers must be completed by 4:00 p.m. Eastern
time on a Valuation Date in order to be effected at the price determined on such
date. Transfer authorizations whether written or by telephone, which are
received after 4:00 p.m. Eastern time will be processed as of the next Valuation
Date. A transfer fee may be assessed in connection with transfers (see "Charges
and Deductions - Transfer Fee," page 16). Also, the telephone transfer privilege
may be suspended, modified or terminated at any time without notice.
We utilize procedures that we believe provide reasonable assurance that
telephone authorized transfers are genuine. Such procedures include taping of
telephone conversations with persons purporting to authorize such transfers and
requesting identifying information from such persons. Accordingly, we disclaim
any liability for losses resulting from such transfers by reason of their
allegedly not having been properly authorized. However, if we do not take
reasonable steps to help ensure that such authorizations are valid, we may be
liable for such losses.
Transfers from the Fixed Account to the Subaccounts may only be made during the
60 day period beginning on the issue date or the Contract Anniversary unless the
transfer is made by Dollar Cost Averaging. The maximum amount which may be
transferred from the Fixed Account during a Contract Year is the greater of 30%
of the Fixed Account balance as of the last Contract Anniversary or the greatest
amount of any prior transfer from the Fixed Account. If desired, you may elect
to have the above amount transferred quarterly or monthly via Dollar Cost
Averaging. Alternatively, you may elect to transfer the entire Fixed Account
balance to the Subaccount(s) via Dollar Cost Averaging. Subject to the
Company's discretion to modify or waive this requirement, the maximum monthly
amount allowed would be 1/36 of the Fixed Account Balance at the time of the
first transfer. No additional transfers or payments may be made into the Fixed
Account if transfers are being made out via Dollar Cost Averaging.
Notwithstanding the above, we will allow 100% of the Fixed Account balance to be
transferred to the Subaccount(s) if either (a) or (b) occurs:
(a) If, on the last Contract Anniversary, the interest rate credited to the
Fixed Account is less than it was on the immediately preceding anniversary (or
on the issue date for the first Contract Anniversary).
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(b) The credited interest rate on the last Contract Anniversary is less than 4%.
This offer will apply for 60 days following the date we mail notification to
you.
We reserve the right to defer transfers from the Fixed Account for up to six
months from the date you ask us. Also, we reserve the right to restrict
transfers from the Subaccounts to the Fixed Account each Contract Year to no
more than 30% of the Separate Account balances as of the last Contract
Anniversary. We currently are not imposing this restriction.
POLICY LAPSE. Failure to make a premium payment will not necessarily cause the
Policy to lapse. The Policy will remain in force so long as the Lapse
Determination Value is sufficient to pay the monthly deduction. In the event
the Lapse Determination Value is insufficient to pay the monthly deduction, you
will be given a sixty-one day period ("grace period") within which to make a
premium payment to avoid lapse. The premium required to avoid lapse must be
sufficient to keep the Policy in force for three months. The required premium
will be set forth in a written notice which we will send to you on the date that
the Lapse Determination Value is insufficient to meet the monthly deduction. The
Policy will continue in force through the grace period, but if no payment is
forthcoming the Policy will terminate at the end of the grace period.
Notwithstanding the above, the Policy will not terminate if the Guaranteed
Minimum Death Benefit provision is in effect (see Monthly Guarantee Premiums,"
page 8).
If the Insured dies during the grace period, the Death Benefit payable will be
reduced by the amount of the monthly deduction due and unpaid and the amount of
any outstanding Policy Debt. In addition, whenever the Policy Debt exceeds the
Surrender Value, the grace period provision will apply.
REINSTATEMENT. If the Policy lapses, you may reinstate the Policy. An
application for reinstatement must be made within five years of lapse, and
satisfactory proof of insurability and payment of a reinstatement premium is
required. The reinstatement premium, after deduction of premium charges, must
be an amount equal to the monthly deductions for the time, up to six months,
since the Policy Value became zero, plus sufficient premium to keep the Policy
in force for three months. If a loan was outstanding at the time of lapse, we
will require repayment or reinstatement of the loan before permitting
reinstatement of the Policy. When a Policy is reinstated, it will be treated as
if the Policy had been in force since the original issue date.
POLICY BENEFITS AND RIGHTS
DEATH BENEFIT. So long as it remains in force, the Policy provides for the
payment of life insurance proceeds upon the death of the Insured. Proceeds will
be paid to a named Beneficiary or contingent Beneficiary. One or more
Beneficiaries or contingent Beneficiaries may be named. Life insurance proceeds
may be paid in a lump sum or under an optional payment plan (see "Optional
Methods of Payment," page 12.) The amount of Death Benefit proceeds payable
will be determined at the end of the Valuation Period during which the Insured
dies.
Proceeds of the Policy will be reduced by any outstanding Policy debt and any
due and unpaid charges and increased by any benefits added by rider. Proceeds
will ordinarily be paid within seven days after we receive due Proof of Death
and all other requirements we deem necessary have been satisfied.
The death benefit will be based on: 1. The death benefit option in effect on the
date of death; 2. Any increases or decreases to the face amount.
DEATH BENEFIT OPTIONS. While the Insured is alive you may choose between two
death benefit options:
If you select Option 1, the Death Benefit will be the greater of: a. The face
amount; or b. The Policy Value multiplied by the applicable corridor percentage
as described below.
If you select Option 2, the Death Benefit will be the greater of: a. The face
amount plus the Policy Value; or b. The Policy Value multiplied by the
applicable corridor percentage as described below.
Option 1 is designed to provide a specific amount of Death Benefit which does
not vary with the changes in Policy Value. Therefore, under Option 1, as Policy
Value increases, the net amount at risk will decrease. Option 2, on the other
hand, generally involves a constant amount at risk and, therefore, a set amount
against which to apply the cost of insurance rate. Since the cost of insurance
deduction is based upon the net amount at risk, the cost of insurance deduction
from Policy Value will be less under a Policy with an Option 1 Death Benefit
than under a similar Policy with an Option 2 Death Benefit. Because of this,
based on favorable investment results, the Policy Value under Option 1 will have
a tendency to increase faster than under Option 2, but the total Death Benefit
under Option 2 will increase or decrease directly with changes in Policy Value.
Thus, Option 1 may be more suitable if you are more interested in increasing
your Policy Value based upon positive investment experience while Option 2 is
designed to increase total Death Benefits.
The corridor percentage depends upon the Attained Age of the Insured. The
corridor percentage for each age is set forth in the table below:
<TABLE>
<CAPTION>
ATTAINED CORRIDOR
AGE PERCENTAGE
---------- ----------
(%)
<S> <C>
40 & below 250
41 243
42 236
43 229
44 222
45 215
46 209
47 203
48 197
49 191
50 185
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
ATTAINED CORRIDOR
AGE PERCENTAGE
----------- ----------
(%)
<S> <C>
51 178
52 171
53 164
54 157
55 150
56 146
57 142
58 138
59 134
60 130
61 128
62 126
63 124
64 122
65 120
66 119
67 118
68 117
69 116
70 115
71 113
72 111
73 109
74 107
75-90 105
91 104
92 103
93 102
94 101
95 & higher 100
</TABLE>
You may change the Death Benefit option by writing to us. If you ask to change
from Option 2 to Option 1, the face amount will be increased by the amount of
the Policy Value. If you ask to change from Option 1 to Option 2, the face
amount will be decreased by the amount of the Policy Value. The change will
take effect on the Monthly Deduction Day on or immediately following the date we
receive the written request.
We do not presently require you to prove insurability for a change in Death
Benefit options. No change in the Death Benefit option will be allowed if it
causes the face amount remaining in force to be less than $25,000.
You may increase and/or decrease the face amount after the fifth Policy Year.
To make a change, you must send a written request to us at our home office. A
change in the face amount will change the net amount at risk, which will, in
turn, affect your cost of insurance charge. Any change in the face amount will
become effective on the Monthly Deduction Day after we approve the request.
Any decrease in face amount will first apply to coverage provided by the most
recent face amount increase, then to the next most recent increase successively
and finally to the coverage under the original application. No decrease in the
face amount will be allowed if the face amount remaining in force would be less
than $25,000.
To apply for an increase in the face amount, a supplemental application must be
completed and submitted to us with satisfactory evidence that the Insured is
insurable. No increase will be permitted on or after the Insured's Attained Age
80. The minimum amount by which the face amount may be increased is $10,000.
An increase in face amount will generate a new layer of surrender charges equal
to the contingent deferred administrative charge only, based upon the effective
date of the increase (see "Surrender Charge," page 15). The increase will not
become effective if the Lapse Determination Value is insufficient to cover the
deduction for the cost of the increased insurance for the policy month following
the increase. Increases in face amount will also increase any Guaranteed Minimum
Death Benefit Amount and will increase the Monthly Guarantee Premium.
OPTIONAL METHODS OF PAYMENT. In addition to a lump sum payment of benefits
under the Policy, any proceeds to be paid under the Policy may be paid in any of
five methods. A settlement option may be designated by notifying us in writing
at our home office. Any amount left with us for payment under an optional
payment plan will be transferred to the General Account. Any amounts
transferred to the General Account will not be affected by the investment
performance associated with the Separate Account.
You may elect to have the proceeds of this Policy paid under any of the payment
options described below by making written request during the Insured's lifetime.
If no election is in effect at the Insured's death, the Beneficiary may elect a
payment option not later than 12 months after the Death Benefit is payable and
before it is paid. If a Beneficiary is changed, the payment plan selection will
no longer be in effect unless you request that it continue. The proceeds may be
paid in any other manner agreed to by us.
OPTION A - INTEREST. We will hold the proceeds at interest, and pay out the
funds when the person entitled to them requests.
OPTION B - FIXED PAYMENTS. We will pay a selected monthly income until the
proceeds, with interest, are exhausted.
OPTION C - LIFE INCOME - GUARANTEED PERIOD CERTAIN.We will pay the proceeds in a
monthly income for as long as the payee lives. Guarantee periods may be
selected between 5 and 20 years. If a guarantee period is selected, payments
will continue until the later of the death of the payee or the end of the
guarantee period. If the payee dies before the end of the guarantee period, we
will continue payments to a successor payee. If no guarantee period is
selected, then payments will cease after the death of the payee. It is possible
for the payee to receive only one payment under this option, if the payee dies
before the second payment is due.
OPTION D - JOINT AND SURVIVOR. We will pay the proceeds in a monthly income to
two payees for as long as either payee is alive. Payments will stop when both
payees have died. It is possible for the payees to receive only one payment, if
both payees die before the second payment is due.
12
<PAGE>
OPTION E - PERIOD CERTAIN. We will pay the proceeds in monthly installments for
a specified number of years, from 5 to 25. If the payee dies before the end of
the specified period, the remaining guaranteed payments will be paid to a
successor payee.
We will consent to an election of an option only if: (1) the option would
provide guaranteed payments of more than $50 a month, or (2) proceeds are not
payable to a corporation, association, partnership, trust, estate, or assignee.
We may have other options available. Information about them may be obtained by
writing or calling us.
POLICY VALUE. The Policy Value is the sum of the values in the Subaccounts of
the Separate Account, plus the values in the Fixed Account and the Loan Account.
The Policy Value will vary daily with the performance of the Subaccounts in
which you have a Policy Value, interest credited to the Fixed Account, any net
premiums paid, partial withdrawals, and charges assessed. There is no guaranteed
minimum Policy Value.
On the Issue Date or, if later, the date the first premium is received, the
Policy Value is the Net premium less the monthly deduction for the first policy
month.
On each Valuation Date, the Policy Value in a Subaccount is: (1) The Policy
Value of the Subaccount on the preceding Valuation Date, multiplied by the net
investment factor for the Subaccount for the current Valuation Period, plus (2)
any Net Premium received and allocated to the Subaccount during the current
Valuation Period, plus (3) any Policy Value transferred to the Subaccount during
the current Valuation Period, minus (4) any Policy Value transferred from the
Subaccount during the current Valuation Period, minus (5) any partial
withdrawals (plus applicable withdrawal charges) from the Subaccount during the
current Valuation Period, minus (6) the portion of any monthly deduction or
administrative expense charge allocated to the Subaccount during the current
Valuation Period for the policy month following the Monthly Deduction Day.
All Policy Values equal or exceed those required by law. Detailed explanations
of methods or calculation are on file with appropriate regulatory authorities.
NET INVESTMENT FACTOR. The net investment factor measures investment performance
of a Subaccount during a Valuation Period. The net investment factor is (1)
divided by (2), minus (3) where: (1)is the net result of: (a) the net asset
value per share of the Portfolio held in the Subaccount at the end of the
current Valuation Period, plus (b) the per share amount of any dividend or
capital gain distribution made by the Portfolio during the current Valuation
Period, plus or minus (c) a per share credit or charge with respect to any taxes
which we paid or for which we reserved during the Valuation Period which are
determined by us to be attributable to the operation of the Subaccount (no
federal income taxes are applicable under present law). (2) is the net asset
value per share of the Portfolio held in the Subaccount at the end of the last
prior Valuation Period. (3) is a charge of 0.70% on an annualized basis which is
assessed each day in the Valuation Period for mortality and expense risks.
POLICY LOANS. So long as the Policy remains in force, you may borrow money from
us using the Policy as the only security for the loan. Loans have priority over
the claims of any assignee or any other person. The maximum loan amount is an
amount equal to 90% of the Surrender Value at the end of the Valuation period
during which the loan request is received. Other restrictions may apply if this
Policy is issued in connection with a qualified plan. See "Qualified Plans" on
page 19.
We will ordinarily disburse proceeds of policy loans within seven days from the
date of receipt of a request for a loan at our home office, although payments
may be postponed under certain circumstances (see "Postponement of Payments,"
page 17.) As long as the Policy remains in force, the loan may be repaid in
whole or in part without penalty at any time while the Insured is living.
When a policy loan is made, a portion of the Policy Value sufficient to secure
the loan will be transferred to the Loan Account reducing the Policy Value in
the Separate Account, and/or the Fixed Account. Any loan interest that is due
and unpaid will also be so transferred. Amounts transferred to the Loan Account
will accrue interest at an annual rate of 4.0 percent. You must allocate a
policy loan among the Subaccounts of the Separate Account, and the Fixed
Account. Amounts transferred to the Loan Account will no longer be affected by
the investment experience of the Separate Account. Thus, the remaining Policy
Value may be greater than or less than that which it would have been had the
policy loan not been made depending on the investment experience of the Separate
Account and the interest credited to the Fixed Account. In addition, the
proceeds payable on the death of the Insured will be reduced by the amount of
Policy debt outstanding.
An amount equal to your Policy Value less all premiums paid may be taken as a
Preferred Loan. The interest rate charged for Preferred Loans is 4.0% per year.
A Standard Loan is the amount that may be borrowed from the sum of premiums
paid. The Standard Loan interest rate is 6.0% per year.
Interest on policy loans accrues daily and is due at the end of each Policy
Year. Any interest not paid when due becomes part of the policy loan and will
bear interest at the same rate.
If you have a loan on a policy with another company, and you are terminating
that policy to buy one from us, the old loan would normally be paid off during
the process of surrendering the old policy. Income taxes on the interest earned
may be due. We permit you to carry this old loan over to your new Lincoln
Benefit Life Policy through a Code Section 1035 tax-free exchange, up to certain
limits. The use of a Code Section 1035 tax-free exchange may eliminate any
income tax liability which would be due if the old loan was extinguished.
The maximum portion that can be carried over as "preferred" is 20% of the total
Policy Value, as shown below.
13
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Policy Value of old Policy: $190,000.00
Policy Loan: 40,000.00
-----------
Surrender Value: $150,000.00
20% of Policy Value: $ 38,000.00
"Preferred" portion transferable $ 38,000.00
Remaining ("Standard") portion: $ 2,000.00
</TABLE>
Policy Debt equals the total of all outstanding policy loans and accrued
interest on policy loans. We will not allow Policy Debt to exceed the Surrender
Value. If Policy Debt would otherwise exceed the Surrender Value, we will
notify you and any assignee of record. We will require a payment sufficient to
keep the policy in force for at least three more months. If such payment is not
received within the grace period, the Policy will lapse and terminate without
value (see "Policy Lapse," page 11). The Policy may, however, later be
reinstated (see "Reinstatement," page 11). If the policy lapses with an
outstanding policy loan, significant adverse tax consequences may result.
Please consult a qualified tax advisor for details.
So long as the Policy remains in force, Policy Debt may be repaid in whole or in
part at any time during the Insured's life. If you do not designate the payment
as a loan repayment, we will apply payments received as premium payments. Upon
repayment, the Policy Value securing the repaid portion of the debt in the Loan
Account will be transferred to the Subaccounts of the Separate Account and the
Fixed Account using the same percentage used to allocate Net premiums. Any
outstanding Policy Debt is subtracted from life insurance proceeds payable at
the Insured's death and from Surrender Value upon complete surrender.
SURRENDER AND WITHDRAWAL PRIVILEGES. As long as the Policy is in force, you may
surrender the Policy or make a partial withdrawal at any time by sending a
written request to us at our home office. Surrender payments may be subject to
the charges described in "Surrender Charge," page 15. Other restrictions may
apply if this Policy is issued in connection with a qualified plan. See
"Qualified Plans" on page 19.
The Net Surrender Value of the Policy is the Policy Value less any applicable
surrender charges and Policy debt. The Net Surrender Value will be determined
at the end of the Valuation period during which the request for a surrender is
received.
The amount payable upon complete surrender of the Policy is the Net Surrender
Value which may be paid in a lump sum or under one of the optional payment plans
specified in the Policy (see "Optional Methods of Payment," page 12.) Proceeds
will generally be paid within seven days of receipt of a request for surrender
in good form.
You can obtain a portion of the Net Surrender Value by making a partial
withdrawal from the Policy. A partial withdrawal may not reduce the net
Surrender Value below $500. A charge will be assessed on partial withdrawals
during the first 12 Policy Years (see "Surrender Charge" on page 15 for
details). The minimum withdrawal at any time is $250.
You should be aware that if you make a partial withdrawal you may incur a tax
liability. See "Taxation of Policyowners," on page 18. A partial withdrawal
will affect your Policy Value and Death Benefit.
OPTION 1. Partial withdrawals generally will affect both the Policy Value and
the life insurance proceeds payable under the Policy. The Policy Value will be
reduced to reflect the amount of the withdrawal. Moreover, life insurance
proceeds payable under the Policy will generally be reduced to reflect the
amount of the partial withdrawal. The face amount remaining after a partial
withdrawal may not be less than $25,000. If increases in face amount previously
have occurred, a partial withdrawal will first reduce the face amount of the
most recent increase, then the most recent increases successively, then the
coverage under the original Policy.
OPTION 2. Under Option 2, which provides for life insurance proceeds equal to
the face amount plus Policy Value, a reduction in Policy Value as a result of a
partial surrender will typically result in a dollar per dollar reduction in the
life insurance proceeds payable under the Policy.
You may allocate a partial withdrawal among the Subaccounts of the Separate
Account and the Fixed Account. Before any withdrawals can be made, a proper
withholding form must be on file. The amount of the partial withdrawal will be
allocated proportionately from the Subaccounts and the Fixed Account, unless you
specify otherwise.
FREE LOOK PERIOD. You may cancel the Policy within the latest of: 10 days
after you receive the policy, 10 days after we mail or deliver a written notice
of withdrawal right to you, or 45 days after you sign the application (unless
your state requires a longer free look period). To cancel the Policy, you must
return it by mail or personal delivery to us. You will receive a refund equal
to the sum of:
(a) the premium charge deducted from premiums for state premium taxes;
(b) the total amount of Monthly Deduction and any other charges deducted from
Policy Value; and
(c) the Policy Value on the date we receive the returned Policy, less any Policy
Debt.
If state law prohibits the above calculation, you will receive a refund of all
premiums paid for the Policy.
RIGHT TO EXCHANGE. Once during the first 24 policy months following issuance of
the Policy, you may convert the Policy into a fixed benefit policy. You may
elect either the Net Death Benefit of the Policy on the date of exchange, or the
net amount at risk under the Policy on the date of exchange, less any Policy
debt. The net amount at risk under the Policy is determined by the Death
Benefit option you selected (see "Death Benefits," page 11). Premiums will be
based on the same Issue Age, Sex and Premium Class of the Insured as the
existing Policy. The conversion will be subject to an equitable adjustment in
payments and Policy Values to reflect variances, if any, in the payments and
Policy Values under the existing Policy and the new policy. Policy Values will
be determined as of the date we receive the exchange request.
14
<PAGE>
Evidence of insurability will not be required. Upon conversion, the Net Policy
Value is transferred to our General Account and is no longer affected by the
investment experience of the Separate Account.
CHARGES AND DEDUCTIONS
PREMIUM CHARGES. Upon receipt of each premium payment and before allocation of
the payment to the Policy Value, we will deduct 2.5% of the premium to pay state
premium taxes. Premium payments from which we will deduct 2.5% will include
funds transferred from existing policies (Section 1035 exchange) of this Company
or any other company. This deduction represents an amount we consider necessary
to pay all premium taxes imposed by the states and their subdivisions. Premium
taxes currently range up to 4.0% of premium payments; therefore, the 2.5%
deduction from your premium payments under the Policies may be more or less than
the amount assessed as premium taxes in your state.
MONTHLY DEDUCTIONS. On each Monthly Deduction Day, we will deduct from the
Policy Value of a Policy an amount to cover certain charges and expenses
incurred in connection with the Policy. Unless otherwise requested, the Monthly
Deduction will be taken pro rata from each of the Subaccounts of the Separate
Account and the Fixed Account. The monthly deduction is intended to compensate
the Company for expenses incurred in connection with the issuance of a Policy,
the cost of insurance for the Policy, any optional insurance benefits added by
rider, and certain administrative expenses. The administrative expenses include
salaries, postage, telephone, office equipment and periodic reports.
The amount of the monthly deduction is equal to (i) the cost of insurance for
the Policy, as described below, and the cost of additional benefits provided by
rider, plus (ii) a monthly administration charge of $5.00 which is payable so
long as the Policy remains in effect.
The cost of insurance is determined on a monthly basis, and is determined
separately for the initial face amount and each subsequent increase in face
amount. The cost of insurance is determined by multiplying the applicable
current cost of insurance rate per $1,000 by the net amount at risk for each
policy month. The net amount at risk is (a) - (b), where (a) is the Death
Benefit as of the prior Monthly Deduction Date divided by 1.003273739, and (b)
is the Policy Value as of the prior Monthly Deduction Day less the $5.00 monthly
administration charge and less the cost of any benefit riders attached to the
Policy. The cost of insurance rate is based on the sex, Issue Age, Policy Year,
and premium rating class of the Insured under the Policy. However, we issue
unisex policies in Montana and in connection with tax-qualified plans.
Although we will determine the cost of insurance rate based upon expectations as
to future mortality experience, it can never exceed a maximum cost of insurance
rate based on the 1980 Commissioners Standard Ordinary (1980 CSO) Smoker and
Non-Smoker Mortality Table based on the Insured's sex and age last birthday.
Cost of insurance rates for unisex policies can never exceed a maximum based on
the 1980 CSO Table B assuming a blend of 80% male and 20% female lives.
In addition, if we ever charge you a cost of insurance rate during the first
five Policy Years which is greater than the rate provided by the rate scale in
effect on the Issue Date, we must notify you. If you ask us to surrender the
Policy within 60 days of the date we mail you such notice, we will waive any
applicable surrender charge.
ADMINISTRATIVE EXPENSE CHARGE. An annual administrative expense charge of .20%
of the Policy Value is assessed on each Policy Anniversary during the first
twelve Policy Years. This charge is intended to help reimburse the Company for
certain administrative expenses related to maintenance of the Policy and the
Separate Account, as well as issue expenses and start up costs associated with
the administrative systems for the Policy not covered by the contingent deferred
administrative charge.
RISK CHARGE. We will also assess a charge on a daily basis against each
Subaccount of the Separate Account which is currently .70% per year (guaranteed
not to exceed .90%) of the value of the Subaccount to compensate us for our
assumption of certain mortality and expense risks in connection with the Policy.
Specifically, we bear the risk that the total amount of Death Benefits payable
under the Policy will be greater than anticipated, and we also assume the risk
that the actual cost we incur to administer the Policy will not be covered by
administrative charges assessed under the Policy.
SURRENDER CHARGE. If you totally surrender your Policy, a surrender charge may
apply, as described below.
The surrender charge has two parts: a contingent deferred sales charge and a
contingent deferred administrative charge. The surrender charge during any
Policy Year is equal to the sum of these two items multiplied by the applicable
surrender percentage as shown in the Policy. The surrender charge is based on
the face amount, and also depends on the Issue Age, premium class and sex of the
Insured. Once determined, the surrender charge for the initial face amount is
multiplied by the surrender percentage as shown below to obtain the surrender
charge for a given Policy Year:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
Policy Year/Year from Effective Date of Increase 1-5 6 7 8 9 10 11 12 13 on
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Surrender Percentage 100 95 90 80 70 50 40 20 0
---------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
The contingent deferred sales charge is equal to 30% of the first SEC guideline
annual premium paid. (The guideline annual premium is the level annual amount
payable for future benefits under the contract, based on 1980 Commissioners
Standard Ordinary Mortality Tables, net investment earnings of 5%, an Option 1
Death Benefit, and any fees and charges as set forth in the Policy). The
contingent deferred sales charge is imposed to cover our actual sales expenses,
which include agents' sales commissions and other sales and distribution
expenses. We expect to recover total sales expenses of the Policy over the life
of the Policy. To the extent distribution costs are not recovered by the
contingent deferred sales charge, the shortfall may be made up from the assets
of our General Account which includes funds derived from mortality and expense
risk charges deducted from Separate Account assets.
The contingent deferred administrative charge varies by age as follows:
Contingent Deferred Administrative Charge (CDAC)
<TABLE>
<CAPTION>
Issue Age or CDAC Issue Age or CDAC
Attained Age per Attained Age per
at Increase $1,000 at Increase $1,000
------------ ------ ------------ ------
<S> <C> <C> <C>
0-25 $1.45 36 $3.27
26 1.60 37 3.46
27 1.75 38 3.65
28 1.90 39 3.85
29 2.05 40 4.04
30 2.20 41 4.23
31 2.35 42 4.42
32 2.50 43 4.62
33 2.69 44 4.81
34 2.88 45 + 5.00
35 3.08
</TABLE>
The contingent deferred administrative charge is imposed to cover the expenses
we incur in issuing and administering the Policy, as well as start-up and
maintenance costs associated with the administrative systems for the Policy and
the Separate Account.
If you increase your face amount, an additional surrender charge will be applied
for 12 years from the effective date of the increase. The initial charge will be
determined by multiplying the increase in face amount, in thousands, by the
applicable contingent deferred administrative charge for the Insured's Attained
Age at the time of the increase. The resulting product is then multiplied by the
same schedule of applicable surrender percentages as shown above to obtain the
additional surrender charge for any 12 month period following the effective date
of the increase. Lincoln Benefit Life does not anticipate making a profit on
this charge.
If you decrease the face amount, any applicable surrender charge will remain the
same.
For partial withdrawals made during the first 12 Policy Years we will assess a
proportionate percentage of the surrender charge. The proportionate percentage
is the amount of the partial withdrawal requested divided by the surrender
value.
When a partial withdrawal charge is assessed, we will reduce any remaining
surrender charges in a proportionate manner. No surrender or partial withdrawal
charges will be applied under Policies issued to employees of Lincoln Benefit
Life Company or its affiliates or issued to spouse or minor children of such
employees.
TRANSFER FEE. In general, a transfer fee of $25 may be assessed on the second
and each subsequent transaction in each calendar month in which transfer(s) are
effected between Subaccount(s) and/or the Fixed Account. We currently are
waiving this fee.
The transfer fee will be deducted from Policy Values which remain in the
Subaccount(s) or Fixed Account from which the transfer was made. If such
remaining Policy Value is insufficient to pay the transfer fee, then the fee
will be deducted from transferred Policy Values.
OTHER CHARGES. We also reserve the right to charge the assets of each Subaccount
to provide for any income taxes that we may be required to pay on the assets
attributable to that Subaccount. The net assets of each Subaccount will reflect
the investment advisory fee and other expenses of its underlying Portfolio (see
"The Portfolios," page 6.) For more information concerning these charges, see
the individual Fund prospectuses. Lincoln Benefit Life may receive compensation
from the investment advisors or administrators in connection with administrative
service and cost savings experienced by the investment advisors or
administrators.
16
<PAGE>
GENERAL PROVISIONS
THE POLICY. The Policy and attached copy of the application and any supplemental
applications are the entire Contract. Only a Lincoln Benefit Life Officer may
approve a change in or waive any provisions of the Policy. We reserve the right
to change the terms of the Policy to comply with changes in applicable law.
BENEFICIARIES. The original Beneficiaries and contingent Beneficiaries are
designated by you on the application. If changed, the primary Beneficiary or
contingent Beneficiary is as shown in the latest change filed with us. One or
more primary or contingent Beneficiaries may be named in the application. In
such case, the proceeds of the Policy will be paid in equal shares to the
survivors in the appropriate Beneficiary class unless you requested otherwise.
However, other restrictions may apply if this Policy is issued in connection
with a qualified plan. See "Qualified Plans" on page 19.
ASSIGNMENT. The Policy can be assigned as collateral security, unless issued in
connection with a qualified plan (see page 19). We must be notified in writing
if the Policy has been assigned. Each assignment will be subject to any payments
we may make or action we may take before we receive notice of such assignment.
We are not responsible for the validity of an assignment. Your rights and the
rights of the Beneficiary may be affected by an assignment.
INCONTESTABILITY. We will not contest the insurance coverage provided under the
Policy, except for Policy reinstatements and subsequent increases in face
amount, after the Policy has been in force during the lifetime of the Insured
for a period of two years from the Issue Date. A reinstated Policy will not be
contested after the reinstated Policy has been in force during the lifetime of
the Insured for a period of two years following the effective date of the
reinstatement. Any increase in the face amount will not be contested after such
increase has been in force during the lifetime of the Insured for two years
following the effective date of the increase. Any increase will be contestable
within the two year period only with regard to statements concerning the
increase.
MISSTATEMENTS. If the Insured's Age or sex has been stated incorrectly:
(1) the Death Benefit will be: (a) the Policy Value on the date of death; plus
(b) the amount that the cost of insurance, which was deducted from the Policy
Value for the Policy month during which death occurred, would have purchased had
the cost of the insurance been calculated using the cost of insurance rates for
the correct Age and sex;
(2) the Surrender Value will be adjusted to the amount which premiums paid would
have provided at the correct Age and sex.
SUICIDE. The Policy does not cover the risk of suicide within two years from the
Policy date or two years from the date of any increase in face amount with
respect to such increase, whether the Insured is sane or insane. In the event of
suicide within two years of the Policy date, our only liability will be a refund
of premiums paid, without interest, less any Policy debt and less any partial
surrender. In the event of suicide within two years of an increase in face
amount, our maximum liability with respect to the increase will be a refund of
the cost of insurance for such increase.
POSTPONEMENT OF PAYMENTS. We may defer for up to 15 days the payment of any
amount attributable to a premium payment made by check to allow the check
reasonable time to clear. Payment of any amount upon total surrender or partial
withdrawal, policy loan, or Death Benefits may be postponed whenever: (i) the
New York Stock Exchange is closed other than customary week-end and holiday
closings, or trading on the New York Stock Exchange is restricted as determined
by the Commission; (ii) the Commission by order permits postponement for the
protection of Policyowners; or (iii) an emergency exists, as determined by the
Commission, as a result of which disposal of securities is not reasonably
practicable or it is not reasonably practicable to determine the value of the
Separate Account's net assets. In addition, we may delay payment of the
Surrender Value in the Fixed Account for up to 6 months (or a shorter period if
required by applicable law).
REPORTS AND RECORDS. Each year a report will be sent to you which shows the
current Death Benefit, Surrender Value, Policy Debt, partial withdrawals,
earnings, premiums paid and deductions made since the last annual report. We
will also include any information required by state law or regulation. In
addition, we will send you the reports required by the 1940 Act. Confirmation
notices (or other appropriate notification) of Policy transactions will be
mailed at least quarterly or at such more frequent times as may be required by
law. You should therefore give us prompt written notice of any address change.
You should read your statements and confirmations carefully and verify their
accuracy. Questions about periodic statements should be communicated to us
promptly.
OPTIONAL INSURANCE BENEFITS. Subject to evidence of insurability, one or more
optional benefits may be included with a Policy by rider. The cost of any riders
will be deducted as part of the monthly deductions (See "Monthly Deductions,"
page 15.) We reserve the right to not make available a rider or to offer
additional riders. The riders currently available are as follows:
CHILDREN'S LEVEL TERM RIDER: Provides for level term insurance on the Insured's
children, as defined in the rider. Coverage is provided to the earlier of the
child's 25th birthday or the Insured's age 65. The death benefit will be paid to
the Policyowner unless another beneficiary is provided. If the Insured dies
prior to the termination of the rider, coverage on each child becomes paid-up
term insurance to age 25. The rider may be exchanged for a new Policy on each
child's 25th birthday or the Insured's age 65, if sooner, without evidence of
insurability.
ACCIDENTAL DEATH BENEFIT: Provides additional insurance if the Insured's death
results from accidental bodily injury as defined in the rider. The rider
terminates on the earlier of the policy anniversary following the Insured's 70th
birthday, the date the policy terminates, or the next monthly deduction day
after the Policyowner requests.
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<PAGE>
CONTINUATION OF PREMIUM: This rider will contribute a monthly amount to the
Policy Value in the event that the Insured becomes totally disabled as defined
in the rider. This rider terminates at age 60, or upon policy termination or the
next monthly deduction day after the Policyowner requests, if earlier.
ADDITIONAL INSURED RIDER: Provides for coverage on an additional Insured. The
face amount of the rider will be paid to the named beneficiary upon due proof
that the additional Insured died while the rider was in force. Coverage is
renewable until the additional Insured's age 99. The rider may be exchanged for
a new Policy on the additional insured's life prior to the additional Insured's
75th birthday,without evidence of insurability, subject to certain conditions as
defined in the rider.
PRIMARY INSURED RIDER: Provides for additional term coverage on the primary
Insured. Coverage is renewable until the Insured's age 99. The rider may be
exchanged for a new policy without evidence of insurability prior to age 75, or
converted to the base Policy after the 5th Policy Year and prior to age 75,
subject to certain conditions as defined in the rider.
If the Policy is issued in connection with a Qualified Plan, not all of the
benefits provided by these riders will be available.
DISTRIBUTION OF THE POLICY
Contracts are sold by registered representatives of broker-dealers who are our
licensed insurance agents, either individually or through an incorporated
insurance agency. We pay all such commissions and incentives.
Lincoln Benefit Financial Services, Inc. ("LBFS") located at 206 South 13th
Street, Lincoln, Nebraska 68508 serves as principal underwriter of the Policies.
LBFS is a wholly-owned subsidiary of Lincoln Benefit Life Company. It is
registered as a broker-dealer under the Securities Exchange Act of 1934, as
amended, and is a member of the National Association of Securities Dealers, Inc.
Registered representatives of LBFS who sell the Policy will be paid a maximum
sales commission of approximately 70% of all premium payments up to the
commissionable first year premium paid plus 2.85% of all premiums in excess
thereof. Certain commissions may be reduced for ages 50 and older. In addition,
certain bonuses and managerial compensation may be paid.
FEDERAL TAX MATTERS
The following description of Federal income tax considerations is based on the
law in effect on the date of this Prospectus.
TAXATION OF THE SEPARATE ACCOUNT
We are taxed as a life insurance company under Part I of Subchapter L of the
Code. The operations of the Separate Account are taxed as part of the total
operations of the Company. However, the investment income and capital gains of
the Separate Account to the extent allocated to the Policies are not subject to
Federal income taxes.
No charge or provision for federal income taxes is currently being made against
the Separate Account for our federal income taxes. Should the tax treatment of
the Separate Account be changed, we may charge each Subaccount in the Separate
Account for its allocable share of Federal income tax.
In several states, we may incur state and local taxes on the operations of the
Separate Account. To the extent that these taxes are not significant, no charge
or provision is currently being made for them against the Separate Account. If
these taxes should be increased, we may make a charge or provision for them
against the Subaccounts of the Separate Account. Any charges or provisions for
taxes against the Subaccounts will adversely affect their investment
performance.
TAXATION OF POLICYOWNERS
The Policy is structured to satisfy the definition of a life insurance contract
under the Code with the result that the Death Benefit will be fully excluded
from the gross income of the Beneficiary. The Death Benefit will be included in
your gross estate for Federal estate tax purposes if the proceeds are payable to
the estate. If the Beneficiary is other than your estate but you retained
incidents of ownership in the Policy, the Death Benefit will also be included.
Examples of incidents of ownership include, but are not limited to, the right to
change beneficiaries, to assign the Policy or revoke an assignment, and to
pledge the Policy or obtain a policy loan. If you own and are the Insured under
a Policy and if you transfer all incidents of ownership in the Policy, the Death
Benefit will be included in your gross estate if you die within three years from
the date of the ownership transfer. State and local estate and inheritance tax
consequences may apply.
Under the Code, loans received under the Policy are treated the same as loans
under a fixed benefit life insurance policy. Consequently, no portion of any
loan under the Policy is normally expected to constitute income to the owner.
Similarly, withdrawals of Policy Value should constitute income to the Policy
owner only to the extent the amounts withdrawn exceed the premiums paid.
However, under certain circumstances, a Policy might be deemed to constitute a
"modified endowment contract", as discussed immediately below; under such
circumstances, pre-death distributions and Policy loans may have adverse tax
consequences.
MODIFIED ENDOWMENT CONTRACTS
The Technical and Miscellaneous Revenue Act of 1988 amended the federal income
tax treatment of pre-death withdrawals from a class of life insurance contracts
referred to as modified endowment contracts ("MECs"). Unlike other life
insurance contracts, amounts received before death from a MEC, including policy
loans, are treated first as income (to the extent of gain) and then as recovered
investment. For purposes of determining the amount includible in income, all
MECs issued by the same company (or affiliate) to the same policyholder during
any calendar year will be treated as one MEC. Finally, an additional 10% income
tax is generally
18
<PAGE>
imposed on the taxable portion of amounts received before age 59 1/2.
In general, a MEC is a life insurance contract entered into or materially
changed after June 20, 1988 that fails to meet a "7-pay test". Under the 7-pay
test, if the amount of premiums paid under the life insurance contract at any
time during the first 7 policy years exceeds the sum of the net level premiums
which would have been paid if the contract provided for paid-up future benefits
after the payment of 7 level annual payments, the contract is a MEC. A policy
may have to be reviewed under the 7-pay test even after the first seven policy
years in the case of certain events such as a material modification of the
policy as discussed below. If there is a reduction in benefits under the
contract during any 7-pay testing period, the 7-pay test is applied using the
reduced benefits level.
Any distribution made within two years before a policy fails the 7-pay test is
treated as made in anticipation of such failure. Whether or not a particular
policy meets these definitional requirements is dependent on the date the
contract was entered into, premium payments made and the periodic premium
payments to be made, the level of death benefits, any changes in the level of
death benefits, the extent of any prior cash withdrawals, and other factors. A
life insurance policy which is issued in exchange for a MEC will also be
considered a MEC. If action is required to be taken in order to prevent a
Policy from being deemed to be a modified endowment contract, we will advise you
of such status.
A Policy should be reviewed upon issuance, upon making a cash withdrawal, upon
making a change in future benefits and upon making a material modification to
the Policy to determine to what extent, if any, these tax rules apply. A
material modification to a Policy includes, but is not limited to, an increase
in the future benefits provided under the Policy. The annual statement sent to
you will include information regarding the modified endowment contract status of
your Policy.
Counsel and other competent advisors should be consulted to determine how these
rules apply to an individual situation and before making unscheduled premium
payments, increasing or decreasing the specified face amount, or adding or
removing a rider.
Congress may, in the future, consider other legislation that, if enacted, could
adversely affect the tax treatment of life insurance policies. In addition, the
Treasury Department may by regulation or interpretation modify the above
described tax effects. Any legislative or administrative action could be
applied retroactively.
DIVERSIFICATION REQUIREMENTS
Flexible premium variable life insurance policies will be treated as life
insurance contracts under the Code so long as the investments of the separate
accounts funding them are "adequately diversified" under Treasury regulations.
If the investments of a separate account are determined to be not adequately
diversified, policyowners in the separate account will be treated as the owners
of the underlying assets and thus currently taxable on earnings and gains. It
is intended that the investments of the Separate Account are now and will remain
adequately diversified under the Treasury regulations.
In connection with the issuance of the regulations on diversification
requirements, the Treasury announced that such regulations do not provide
guidance concerning the extent to which owners may direct their investments
among Subaccounts of a Variable Account. The Internal Revenue Service has
previously stated in published rulings that a variable contract owner will be
considered the owner of separate account assets if the owner possesses incidents
of ownership in those assets such as the ability to exercise investment control
over the assets. At the time of the issuance of the diversification
regulations, the Treasury announced that guidance would be issued in the future
on the extent to which owners could direct their investments among Subaccounts
without being treated as owners of the underlying assets of the Variable
Account. As of the date of this prospectus, no such guidance has been issued.
It is possible that the Treasury's position, when announced, may adversely
affect the tax treatment of existing contracts. The Company, therefore,
reserves the right to modify the contract as necessary to attempt to prevent the
Owner from being considered the owner of the assets of the Variable Account or
otherwise to attempt to qualify the contract for favorable tax treatment.
QUALIFIED PLANS
The Policy may be suitable for purchase by pension and profit-sharing plans
established by corporations, partnerships, sole proprietors and other eligible
organizations which are qualified for favorable tax treatment under Sections
401(a) and 403(b) of the Code ("qualified plans"). The primary purpose of a
qualified plan is to provide retirement benefits for the participants and any
pre-retirement benefit, such as life insurance protection, must be incidental to
this primary purpose or the plan risks disqualification. Unisex cost of
insurance rates apply to policies issued in connection with qualified plans. The
tax treatment of "qualified" life insurance policies differs from traditional
life insurance; tax advice on these matters should be sought from competent tax
counsel.
The rules regarding the use of life insurance in connection with qualified plans
are complex. There may be special limitations that apply if the Policy is
purchased as qualified life insurance. These limitations include, but are not
limited to, nontransferability, alienation of benefits, incidental life
insurance provisions relating to premium limitations, joint and survivor annuity
provisions, spousal rights, required minimum distributions, eligibility for plan
distributions (including loans), and supplemental benefit restrictions.
TAX ADVICE
The foregoing summary does not purport to be a complete discussion of the tax
treatment of the Policy. Tax advice on these matters should be sought from
competent tax counsel.
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<PAGE>
SAFEKEEPING OF THE
SEPARATE ACCOUNT'S ASSETS
We hold the assets of the Separate Account. The assets are kept physically
segregated and held separate and apart from the general account assets.
Additional protection is provided in the form of an insurance company blanket
bond which covers directors and employees of the Company. The bond, which was
issued by Lloyds of London, covers up to $1,000,000 per loss.
VOTING RIGHTS
To the extent required by law, we will vote the Fund shares held in the various
Subaccounts of the Separate Account at regular and special shareholder meetings
of the Fund in accordance with the instructions received from persons having
voting interests in the Separate Account. The number of votes you have the
right to instruct will be determined by dividing the Policy's Policy Value in a
Subaccount of the Separate Account by $100.00. Fractional votes will be
counted. The number of votes on which you have the right to instruct will be
determined as of a record date not more than 90 days before any meeting at which
such vote is held. Voting instructions will be solicited by written
communications prior to such meeting in accordance with procedures established
by the Separate Account.
We will vote Fund shares as to which no instructions are received, and shares
which are not attributable to Policyowners, in proportion to the voting
instructions which are received with respect to all Policies participating in
the Fund. Each person having a voting interest will receive proxy material,
reports and other materials relating to the Fund.
We may, when required by state insurance regulatory authorities, disregard
voting instructions if the instructions require that shares be voted so as to
cause a change in subclassification or investment objective of the Fund or
disapprove an investment advisory contract of the Fund. In addition, we may
disregard voting instructions in favor of changes initiated by a Policyowner in
the investment policy or the investment adviser of the Fund if we reasonably
disapprove of such changes. A change would be disapproved only if the proposed
change is contrary to state law or prohibited by state regulatory authorities or
we determine that the change would be inconsistent with the investment
objectives of the Fund or would result in the purchase of securities for the
Fund which vary from the general quality and nature of investments and
investment techniques utilized by the Fund. In the event that we disregard
voting instructions, a summary of that action and the reason for such actions
will be included in the next semi-annual financial report to you.
STATE REGULATION OF
LINCOLN BENEFIT LIFE
We are organized under the laws of the State of Nebraska and are subject to
regulation by the Commissioner of Insurance of that state. An annual statement
is filed with the Director of Insurance of the State of Nebraska each year
covering the operations and reporting on the financial condition of the Company
as of December 31 of the preceding year. A full examination of the Company's
operations is periodically conducted by the National Association of Insurance
Commissioners.
In addition, we are subject to the insurance laws and regulations of other
states within which we are licensed to operate. Generally, the insurance
department of any other state applies the laws of the state of domicile in
determining permissible investments.
EXECUTIVE OFFICERS AND DIRECTORS
OF LINCOLN BENEFIT LIFE
(NAME; POSITION WITH LBL AND YEAR OF ELECTION; Principal Occupation Last 5
Years)
DOUGLAS F. GAER; EXECUTIVE VICE PRESIDENT, 1997; DIRECTOR, 1981; Senior Vice
President, 4/95-2/97; Senior Vice President and Treasurer, 4/94-3/95, Vice
President 3/81-4/94, Director, Lincoln Benefit Life Company; Senior Vice
President and Treasurer, Surety Life Insurance Company 1/94-present; Director
Lincoln Benefit Financial Services, Inc., 5/93-present.
PETER H. HECKMAN; VICE CHAIRMAN OF THE BOARD 1996, DIRECTOR, 1990; Vice
President, Director 4/92-present, Glenbrook Life & Annuity Company; Vice
President 11/90-present, Director 9/90-present, Glenbrook Life Insurance
Company; Vice President 6/89-present, Director 7/90-present, Allstate Life
Insurance Company of New York; Vice President 4/89-present, Director 12/88-
present, Allstate Life Insurance Company; Vice President 12/88-present, Director
12/88-present, Northbrook Life Insurance Company; Director 5/90-present, Surety
Life Insurance Company; Director 5/90-present, Lincoln Benefit Life Company;
Director 5/91-9/93, Allstate Life Financial Services.
WILLIAM F. KRUEGER; SENIOR VICE PRESIDENT, 1994; DIRECTOR, 1987; Senior Vice
President, 4/94-present, Vice President 1/84-4/94, Director, Lincoln Benefit
Life Company; Vice President, Director, 5/93-present, Lincoln Benefit Financial
Services, Inc.
LOUIS G. LOWER, II; CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE OFFICER, 1989;
DIRECTOR, 1989; Chairman of the Board & President, 4/92-6/95, Chairman of the
Board and Chief Executive Officer 6/95-present, Glenbrook Life & Annuity
Company; Chairman of the Board & President 1/91-12/95, Chairman of the Board and
Chief Executive Officer 12/95-present, Director 9/90-present, Glenbrook Life
Insurance Company; President 1/90-present, Executive Vice President 1/89-1/90,
Senior Vice President & Treasurer 10/86-12/88, Director, Allstate Life Insurance
Company; Chairman of the Board and Chief Executive Officer 6/95-present,
Chairman of the Board and President 4/90-6/95, Chairman of the Board 4/90-7/90,
Executive Vice President 1/89-4/90, Senior Vice President and Treasurer 10/86-
4/89, Director, Northbrook Life Insurance Company; Chairman of the Board &
President 6/90-present, Vice President & Treasurer 12/86-6/90, Director,
Allstate Life Insurance Company of New York; Chairman of the Board & Chief
Executive Officer, Director 5/90-
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present, Lincoln Benefit Life Company; Chairman of the Board & Chief Executive
Officer 3/90-present, Director 5/89-present, Surety Life Insurance Company;
Group Vice President 76-89, Director, Allstate Insurance Company; Director
4/90-present, Allstate Settlement Company; Director 5/91-present, Allstate Life
Financial Services.
JOHN J. MORRIS; SENIOR VICE PRESIDENT/SECRETARY, 1994; DIRECTOR, 1987; Senior
Vice President & Secretary, 4/94-present,Vice President & Secretary 8/85-4/94,
Director, Lincoln Benefit Life Company; Vice President & Secretary, Director
5/93-present, Lincoln Benefit Financial Services Inc.
LAWRENCE POLLOCK; DIRECTOR, 1995; Senior Vice President and Secretary, 1990-
present, Surety Life; Senior Vice President and Director, 1987-present, Surety
Life.
ROBERT E. RICH; EXECUTIVE VICE PRESIDENT 1996; DIRECTOR, 1987; Senior Vice
President/Chief Actuary and Treasurer, 4/95-5/96; Senior Vice President,
Assistant Secretary, 4/94-3/95, Vice President/Assistant Secretary, 1/84-4/94,
Director, Lincoln Benefit Life Company; Senior Vice President and Chief Actuary,
1/94-present, Director, Surety Life Insurance Company, 9/93-present; Director
5/93-present, Lincoln Benefit Financial Services, Inc.
THEODORE A. SCHNELL; DIRECTOR, 1987; Assistant Treasurer 4/92-present, Glenbrook
Life& Annuity Company; Assistant Treasurer 9/90-present, Director 9/90-7/92,
Glenbrook Life Insurance Company; Assistant Vice President,Assistant Secretary &
Assistant Treasurer 4/89-present, Assistant Treasurer & Assistant Secretary
1/87-4/89, Northbrook Life Insurance Company; Assistant Vice President 6/90-
present,Assistant Treasurer 6/88-6/90, Director 4/95-present, Allstate Life
Insurance Company of New York; Assistant Vice President, Assistant Secretary &
Assistant Treasurer 4/89-present, Assistant Treasurer & Assistant Secretary
1/86-12/89, Allstate Life Insurance Company;Director, Lincoln Benefit Life
Company; Director, Surety Life Insurance Company.
KEVIN R. SLAWIN; DIRECTOR, 1996; Director and Vice President-Finance and
Planning, Allstate Life Insurance Company, 1996; Director, Allstate Life
Insurance Company of New York, 1996; Director Laughlin Group Holdings, Inc.
1996; Director, Northbrook Life Insurance Company, 1996; Director, Surety Life
Insurance Company, 1996; Director, Glenbrook Life Insurance Company, 1996;
Assistant Vice President, Assistant Treasurer, Allstate Insurance Company, 1995-
1996.
STEPHEN W. SUTTON; SENIOR VICE PRESIDENT, 1994; DIRECTOR, 1981;Senior Vice
President, 4/94-present, Vice President, 1/75-4/94; Director, Lincoln Benefit
Life Company.
MICHAEL J. VELOTTA; DIRECTOR, 1992; Vice President, Secretary & General Counsel
1/93-present, Director 12/92-present, Allstate Life Insurance Company; Vice
President, Secretary & General Counsel 1/93-present, Director 12/92-present,
Glenbrook Life Insurance Company; Vice President, Secretary & General Counsel
1/93-present, Director 12/92-present, Glenbrook Life & Annuity Company; Vice
President, Secretary & General Counsel 1/93-present, Director 12/92-present,
Allstate Life Insurance Company of New York; Vice President, Secretary & General
Counsel 1/93-present, Director 12/92-present, Northbrook Life Insurance Company;
Vice President, Secretary & General Counsel 1/93-present, Director 12/92-
present, Surety Life Insurance Company; Assistant Vice President & Assistant
General Counsel 1989, Allstate Insurance Company; Director 12/92-present,
Lincoln Benefit Life Company.
RANDY J. VON FUMETTI; SENIOR VICE PRESIDENT, 1996; Director, 1996; Senior Vice
President, 1996, Surety Life Insurance Company; Senior Actuary and Director
8/87-9/96 Allstate Life Insurance Company.
CAROL S. WATSON; SENIOR VICE PRESIDENT/GENERAL COUNSEL, 1994;DIRECTOR , 1992;
Senior Vice President & General Counsel 4/94-present, Vice President & General
Counsel, 7/91-4/94, Director 5/92-present, Lincoln Benefit Life Company, Senior
Vice President, Assistant Secretary and General Counsel, Surety Life Insurance
Company 1/94-present; President, 1996, Director 1993 Vice President and General
Counsel, Director 5/93-present, Lincoln Benefit Financial Services, Inc.
B. EUGENE WRAITH; PRESIDENT, CHIEF OPERATING OFFICER, 1996; DIRECTOR, 1984;
President and Chief Operating Officer, 3/96-present, Director, Senior Vice
President, 4/94-3/96, Vice President, 12/81-4/94, Lincoln Benefit Life Company;
President and Chief Operating Officer, Director, 3/96-present, Surety Life
Insurance Company; Executive Vice President 1/94-3/96, Director 9/93-present,
Surety Life Insurance Company; President, Chairman of the Board , 1993;
Director, 1993; President, 5/93-11/96, Lincoln Benefit Financial Services, Inc.
Lincoln Benefit Financial Services, Inc.
LEGAL MATTERS
All matters of Nebraska law pertaining to the Policy, including the validity of
the Policy and the Company's right to issue the Policy under Nebraska insurance
law have been passed upon by Carol S. Watson, Senior Vice President and General
Counsel of the Company. Legal matters relating to the federal securities laws in
connection with the Contracts described herein are being passed upon by the law
firm of Katten, Muchin & Zavis, 1025 Thomas Jefferson St., East Lobby, Suite 70,
Washington, D.C. 20007-5201.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account is a party or to
which the assets of any of the Subaccounts thereof are subject. We are not
involved in any litigation that is of material importance in relation to its
total assets or that relates to the Separate Account.
EXPERTS
The financial statements of the Separate Account and Consolidated financial
statements and supplemental schedule for Lincoln Benefit Life Company included
in this Prospectus have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports. Such financial statements and supplemental
schedule have been included herein in reliance upon the reports of Deloitte &
Touche LLP, given upon their authority as experts in accounting and auditing.
Actuarial matters included in this Prospectus have been examined by Dean M. Way,
Vice President and Actuary of the Company.
REGISTRATION STATEMENT
A registration statement has been filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, with respect to the
Policy offered hereby. This Prospectus does not contain all the information set
forth in the
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registration statement and the amendments and exhibits to the registration
statement to all of which reference is made for further information concerning
the Separate Account, the Company and the Policy offered hereby. Statements
contained in this Prospectus as to the contents of the Policy and other legal
instruments are summaries. For a complete statement of the terms thereof
reference is made to such instruments as filed.
FINANCIAL STATEMENTS
The financial statements of the Company which are included in this Prospectus
should be considered only as bearing on the ability of the Company to meet its
obligations under the Policy. They should not be considered as bearing on the
investment performance of the assets held in the Separate Account.
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<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS AND SHAREHOLDER OF
LINCOLN BENEFIT LIFE COMPANY:
We have audited the accompanying Statement of Net Assets of Lincoln Benefit Life
Variable Life Account (the "Account") as of December 31, 1996, and the related
Statements of Operations and Statements of Changes in Net Assets for each of the
three years ended December 31, 1996. These financial statements are the
responsibility of the Account's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. Our procedures included
confirmation of securities owned at December 31, 1996. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Account as of December 31, 1996, and the
results of its operations and changes in its net assets for each of the three
years ended December 31, 1996, in conformity with generally accepted accounting
principles.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Lincoln, Nebraska
April 18, 1997
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<PAGE>
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
NET ASSETS
Investments in the Janus Aspen Series
Flexible Income Portfolio - 38,082 shares (cost $409,829) $ 428,042
Balanced Portfolio - 105,737 shares (cost $1,461,188) 1,561,733
Growth Portfolio - 244,605 shares (cost $3,423,880) 3,793,828
Aggressive Growth Portfolio - 269,395 shares (cost $4,818,210) 4,913,768
Worldwide Growth Portfolio - 326,832 shares (cost $5,657,812) 6,353,619
Investments in IAI Retirement Funds, Inc.
Regional Portfolio - 109,411 shares (cost $1,534,113) 1,643,358
Reserve Portfolio - 11,043 shares (cost $111,000) 110,761
Balanced Portfolio - 18,646 shares (cost $220,282) 236,992
Investments in Fidelity Variable Insurance Products Fund II
Asset Manager - 142,008 shares (cost $2,131,918) 2,404,187
Contra Fund - 85,981 shares (cost $1,314,920) 1,423,840
Investments in Fidelity Variable Insurance Products Fund
Money Market Fund - 4,724,189 shares (cost $4,724,189) 4,724,189
Equity Income Fund - 374,685 shares (cost $7,222,415) 7,879,624
Growth Fund - 294,663 shares (cost $8,446,182) 9,175,807
Overseas Fund - 148,225 shares (cost $2,529,381) 2,792,565
Investments in Federated Investors
High Income Bond Fund II - 55,836 shares (cost $533,552) 571,757
Utility Fund II - 75,484 shares (cost $837,971) 891,472
U.S. Gov't Securities Fund II - 16,727 shares (cost $166,222) 168,774
Investments in the Scudder Variable Life Investment Fund
Bond Portfolio - 66,853 shares (cost $433,611) 449,923
-----------
Net Assets $49,524,239
===========
See notes to financial statements.
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<PAGE>
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Janus Aspen Series
-----------------------------------------------------------------
Flexible Aggressive Worldwide
Income Balanced Growth Growth Growth
Portfolio Portfolio Portfolio Portfolio Portfolio
----------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 28,956 $ 24,060 $ 66,561 $ 32,872 $ 70,248
Charges from Lincoln Benefit Life:
Mortality and expense risk (3,081) (5,133) (17,622) (22,971) (27,157)
Annual maintenance fees (444) (966) (4,300) (4,954) (6,001)
----------- --------- ----------- ----------- -----------
Net investment income (loss) 25,431 17,961 44,639 4,947 37,090
----------- --------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS
Realized gains (losses) from
sales of investments:
Proceeds from sales 3,253,040 540,583 4,619,681 3,894,105 4,047,850
Cost of investments sold (3,262,450) (512,659) (4,460,153) (3,743,475) (3,723,899)
----------- --------- ----------- ----------- -----------
Net realized gains (losses) (9,410) 27,924 159,528 150,630 323,951
----------- --------- ----------- ----------- -----------
CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) 12,685 63,972 196,507 (106,700) 449,881
----------- --------- ----------- ----------- -----------
Net gains (losses) on investments 3,275 91,896 356,035 43,930 773,832
----------- --------- ----------- ----------- -----------
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS $ 28,706 $ 109,857 $ 400,674 $ 48,877 $ 810,922
=========== ========= =========== =========== ===========
</TABLE>
See notes to financial statements.
25
<PAGE>
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Fidelity
Variable Insurance
IAI Retirement Funds, Inc. Products Fund II
-------------------------------------------------------------
Regional Reserve Balanced Asset Contra
Portfolio Portfolio Portfolio Manager Fund
----------- --------- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 57,490 $ 5,848 $ 2,836 $ 93,832 $ 0
Charges from Lincoln Benefit Life:
Mortality and expense risk (7,876) (840) (1,181) (13,197) (3,942)
Annual maintenance fees (2,112) (280) (231) (3,365) (390)
----------- --------- -------- --------- -----------
Net investment income (loss) 47,502 4,728 1,424 77,270 (4,332)
----------- --------- -------- --------- -----------
REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS
Realized gains (losses) from
sales of investments:
Proceeds from sales 1,894,171 219,306 55,724 723,977 2,224,121
Cost of investments sold (1,831,828) (219,298) (54,000) (697,067) (2,182,941)
----------- --------- -------- --------- -----------
Net realized gains (losses) 62,343 8 1,724 26,910 41,180
----------- --------- -------- --------- -----------
CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) 5,699 (185) 12,703 142,549 108,920
----------- --------- -------- --------- -----------
Net gains (losses) on investments 68,042 (177) 14,427 169,459 150,100
----------- --------- -------- --------- -----------
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS $ 115,544 $ 4,551 $ 15,851 $ 246,729 $ 145,768
=========== ========= ======== ========= ===========
</TABLE>
See notes to financial statements.
26
<PAGE>
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Fidelity Variable Insurance Products Fund
-------------------------------------------------------
Money Equity
Market Income Growth Overseas
Fund Fund Fund Fund
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 184,977 $ 152,414 $ 297,028 $ 44,034
Charges from Lincoln Benefit Life:
Mortality and expense risk (24,780) (34,708) (43,959) (15,011)
Annual maintenance fees (5,123) (7,053) (9,321) (3,434)
------------ ----------- ------------ -----------
Net investment income (loss) 155,074 110,653 243,748 25,589
------------ ----------- ------------ -----------
REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS
Realized gains (losses) from
sales of investments:
Proceeds from sales 54,683,921 4,355,338 13,992,446 3,383,186
Cost of investments sold (54,683,921) (4,195,680) (13,911,634) (3,363,999)
------------ ----------- ------------ -----------
Net realized gains (losses) 0 159,658 80,812 19,187
------------ ----------- ------------ -----------
CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) 0 381,436 366,501 206,427
------------ ----------- ------------ -----------
Net gains (losses) on investments 0 541,094 447,313 225,614
------------ ----------- ------------ -----------
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS $ 155,074 $ 651,747 $ 691,061 $ 251,203
============ =========== ============ ===========
</TABLE>
See notes to financial statements.
27
<PAGE>
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Scudder
Variable
Life
Investment
Federated Investors Fund
---------------------------------------- ----------
U.S.
High Government
Income Bond Utility Securities Bond
Fund II Fund II Fund II Portfolio Total
----------- ----------- --------- --------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 49,976 $ 29,575 $ 9,335 $ 30,112 $ 1,180,154
Charges from Lincoln Benefit Life:
Mortality and expense risk (3,879) (4,861) (1,097) (2,803) (234,098)
Annual maintenance fees (760) (890) (314) (762) (50,700)
----------- ----------- --------- --------- -------------
Net investment income (loss) 45,337 23,824 7,924 26,547 895,356
----------- ----------- --------- --------- -------------
REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS
Realized gains (losses) from
sales of investments:
Proceeds from sales 3,205,249 1,512,094 174,412 925,592 103,704,796
Cost of investments sold (3,199,911) (1,456,969) (174,781) (947,810) (102,622,475)
----------- ----------- --------- --------- -------------
Net realized gains (losses) 5,338 55,125 (369) (22,218) 1,082,321
----------- ----------- --------- --------- -------------
CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) 22,230 20,781 1,087 6,529 1,891,022
----------- ----------- --------- --------- -------------
Net gains (losses) on investments 27,568 75,906 718 (15,689) 2,973,343
----------- ----------- --------- --------- -------------
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS $ 72,905 $ 99,730 $ 8,642 $ 10,858 $ 3,868,699
========== =========== ========= ========= =============
</TABLE>
See notes to financial statements.
28
<PAGE>
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Janus Aspen Series
----------------------------------------------------------
Flexible Aggressive Worldwide
Income Balanced Growth Growth Growth
Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 15,216 $ 4,567 $ 25,501 $ 15,772 $ 6,290
Charges from Lincoln Benefit Life:
Mortality and expense risk (1,039) (1,527) (4,706) (5,057) (6,656)
Annual maintenance fees (329) (285) (796) (686) (1,446)
--------- --------- --------- --------- ---------
Net investment income (loss) 13,848 2,755 19,999 10,029 (1,812)
--------- --------- --------- --------- ---------
REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS
Realized gains (losses) from
sales of investments:
Proceeds from sales 232,553 112,818 636,133 518,563 445,568
Cost of investments sold (222,593) (107,078) (662,471) (498,166) (432,957)
--------- --------- --------- --------- ---------
Net realized gains (losses) 9,960 5,740 (26,338) 20,397 12,611
--------- --------- --------- --------- ---------
CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) 6,761 38,145 171,492 196,555 243,950
--------- --------- --------- --------- ---------
Net gains (losses) on investments 16,721 43,885 145,154 216,952 256,561
--------- --------- --------- --------- ---------
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS $ 30,569 $ 46,640 $ 165,153 $ 226,981 $ 254,749
========= ========= ========= ========= =========
</TABLE>
See notes to financial statements.
29
<PAGE>
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Fidelity
Variable
Insurance
Products
IAI Retirement Funds, Inc. Fund II
--------------------------------- ---------
Regional Reserve Balanced Asset
Portfolio Portfolio Portfolio Manager
--------- --------- -------- ---------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 391 $ 2,803 $ 342 $ 10,894
Charges from Lincoln Benefit Life:
Mortality and expense risk (2,296) (399) (290) (6,567)
Annual maintenance fees (467) (27) (66) (1,562)
-------- --------- -------- ---------
Net investment income (loss) (2,372) 2,377 (14) 2,765
-------- --------- -------- ---------
REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS
Realized gains (losses) from
sales of investments:
Proceeds from sales 77,888 118,098 22,109 646,139
Cost of investments sold (74,346) (118,123) (21,100) (637,477)
-------- --------- -------- ---------
Net realized gains (losses) 3,542 (25) 1,009 8,662
-------- --------- -------- ---------
CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) 100,661 (56) 4,124 137,732
-------- --------- -------- ---------
Net gains (losses) on investments 104,203 (81) 5,133 146,394
-------- --------- -------- ---------
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS $101,831 $ 2,296 $ 5,119 $ 149,159
======== ========= ======== =========
</TABLE>
See notes to financial statements.
30
<PAGE>
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Fidelity Variable Insurance Products Fund
------------------------------------------------------
Money Equity
Market Income Growth Overseas
Fund Fund Fund Fund
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 98,362 $ 60,295 $ 7,367 $ 605
Charges from Lincoln Benefit Life:
Mortality and expense risk (12,073) (9,845) (14,424) (5,217)
Annual maintenance fees (5,034) (2,112) (2,186) (1,208)
------------ ----------- ----------- -----------
Net investment income (loss) 81,255 48,338 (9,243) (5,820)
------------ ----------- ----------- -----------
REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS
Realized gains (losses) from
sales of investments:
Proceeds from sales 18,399,162 1,886,514 2,970,149 2,446,575
Cost of investments sold (18,399,162) (1,826,552) (2,917,091) (2,419,166)
------------ ----------- ----------- -----------
Net realized gains (losses) 0 59,962 53,058 27,409
------------ ----------- ----------- -----------
CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) 0 275,549 331,893 57,016
------------ ----------- ----------- -----------
Net gains (losses) on
investments 0 335,511 384,951 84,425
------------ ----------- ----------- -----------
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS $ 81,255 $ 383,849 $ 375,708 $ 78,605
============ =========== =========== ===========
</TABLE>
See notes to financial statements.
31
<PAGE>
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Scudder
Variable
Life
Investment
Federated Investors Fund
------------------------------------ ----------
Corporate Government
Bond Utility Bond Bond
Fund Fund Fund Portfolio Total
--------- -------- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 30,744 $ 7,247 $ 1,869 $ 7,251 $ 295,516
Charges from Lincoln Benefit Life:
Mortality and expense risk (2,473) (1,151) (243) (757) (74,720)
Annual maintenance fees (570) (193) (25) (100) (17,092)
--------- -------- -------- --------- ------------
Net investment income (loss) 27,701 5,903 1,601 6,394 203,704
--------- -------- -------- --------- ------------
REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS
Realized gains (losses) from
sales of investments:
Proceeds from sales 451,177 85,202 86,158 170,888 29,305,694
Cost of investments sold (444,415) (85,352) (86,376) (169,924) (29,122,349)
--------- -------- -------- --------- ------------
Net realized gains (losses) 6,762 (150) (218) 964 183,345
--------- -------- -------- --------- ------------
CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) 23,136 33,395 1,469 9,628 1,631,450
--------- -------- -------- --------- ------------
Net gains (losses) on investments 29,898 33,245 1,251 10,592 1,814,795
--------- -------- -------- --------- ------------
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS $ 57,599 $ 39,148 $ 2,852 $ 16,986 $ 2,018,499
========= ======== ======== ========= ============
</TABLE>
See notes to financial statements.
32
<PAGE>
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Janus Aspen Series
--------------------------------------------------------
Flexible Aggressive Worldwide
Income Balanced Growth Growth Growth
Portfolio Portfolio Portfolio Portfolio Portfolio
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 1,162 $ 762 $ 1,747 $ 874 $ 3
Charges from Lincoln Benefit Life:
Mortality and expense risk (115) (247) (470) (200) (554)
Annual maintenance fees 0 0 0 0 0
------- -------- -------- -------- --------
Net investment income (loss) 1,047 515 1,277 674 (551)
------- -------- -------- -------- --------
REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS
Realized gains (losses) from
sales of investments:
Proceeds from sales 4,522 9,897 13,228 47,143 90,642
Cost of investments sold (4,542) (10,036) (13,170) (46,235) (91,583)
------- -------- -------- -------- --------
Net realized gains (losses) (20) (139) 58 908 (941)
------- -------- -------- -------- --------
CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) (1,233) (1,572) 1,949 5,703 1,976
------- -------- -------- -------- --------
Net gains (losses) on investments (1,253) (1,711) 2,007 6,611 1,035
------- -------- -------- -------- --------
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS ($206) ($1,196) $ 3,284 $ 7,285 $ 484
======= ======== ======== ======== ========
</TABLE>
See notes to financial statements.
33
<PAGE>
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Fidelity
Variable
Insurance
Products
IAI Retirement Funds, Inc. Fund II
--------------------------------- --------
Regional Reserve Balanced Asset
Portfolio Portfolio Portfolio Manager
--------- --------- --------- --------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 0 $ 42 $ 0 $ 101
Charges from Lincoln Benefit Life:
Mortality and expense risk (222) (10) (39) (717)
Annual maintenance fees 0 0 0 0
--------- --------- --------- --------
Net investment income (loss) (222) 32 (39) (616)
--------- --------- --------- --------
REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS
Realized gains (losses) from
sales of investments:
Proceeds from sales 3,797 150 5,342 39,930
Cost of investments sold (3,870) (150) (5,271) (40,020)
--------- --------- --------- --------
Net realized gains (losses) (73) 0 71 (90)
--------- --------- --------- --------
CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) 2,885 2 (117) (8,012)
--------- --------- --------- --------
Net gains (losses) on investments 2,812 2 (46) (8,102)
--------- --------- --------- --------
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS $ 2,590 $ 34 ($85) ($8,718)
========= ========= ========= ========
</TABLE>
See notes to financial statements.
34
<PAGE>
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Fidelity Variable Insurance Products Fund
----------------------------------------------
Money Equity
Market Income Growth Overseas
Fund Fund Fund Fund
----------- --------- --------- --------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 25,302 $ 1,974 $ 0 $ 0
Charges from Lincoln Benefit Life:
Mortality and expense risk (3,570) (491) (958) (56)
Annual maintenance fees 0 0 0 0
----------- --------- --------- --------
Net investment income (loss) 21,732 1,483 (958) (56)
----------- --------- --------- --------
REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS
Realized gains (losses) from
sales of investments:
Proceeds from sales 7,438,438 426,684 433,687 60,117
Cost of investments sold (7,438,438) (427,571) (432,184) (60,397)
----------- --------- --------- --------
Net realized gains (losses) 0 (887) 1,503 (280)
----------- --------- --------- --------
CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) 0 224 31,231 (259)
----------- --------- --------- --------
Net gains (losses) on investments 0 (663) 32,734 (539)
----------- --------- --------- --------
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS $ 21,732 $ 820 $ 31,776 ($595)
=========== ========= ========= ========
</TABLE>
See notes to financial statements.
35
<PAGE>
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Scudder
Variable
Life
Investment
Federated Investors Fund
--------------------------------- ---------
Corporate Government
Bond Utility Bond Bond
Fund Fund Fund Portfolio Total
-------- ------- ----- --------- -----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 6,727 $ 812 $ 267 $ 57 $ 39,830
Charges from Lincoln Benefit Life:
Mortality and expense risk (442) (131) (44) (28) (8,294)
Annual maintenance fees 0 0 0 0 0
-------- ------- ----- --------- -----------
Net investment income (loss) 6,285 681 223 29 31,536
-------- ------- ----- --------- -----------
REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS
Realized gains (losses) from
sales of investments:
Proceeds from sales 41,916 2,121 173 526 8,618,313
Cost of investments sold (43,216) (2,120) (172) (529) (8,619,504)
-------- ------- ----- --------- -----------
Net realized gains (losses) (1,300) 1 1 (3) (1,191)
-------- ------- ----- --------- -----------
CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) (7,160) (675) (4) 155 25,093
-------- ------- ----- --------- -----------
Net gains (losses) on investments (8,460) (674) (3) 152 23,902
-------- ------- ----- --------- -----------
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS ($2,175) $ 7 $ 220 $ 181 $ 55,438
======== ======= ===== ========= ===========
</TABLE>
See notes to financial statements.
36
<PAGE>
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Janus Aspen Series
---------------------------------------------------------------
Flexible Aggressive Worldwide
Income Balanced Growth Growth Growth
Portfolio Portfolio Portfolio Portfolio Portfolio
--------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 25,431 $ 17,961 $ 44,639 $ 4,947 $ 37,090
Net realized gains (losses) (9,410) 27,924 159,528 150,630 323,951
Net change in unrealized
appreciation (depreciation) 12,685 63,972 196,507 (106,700) 449,881
--------- ----------- ----------- ----------- -----------
Change in net assets resulting
from operations 28,706 109,857 400,674 48,877 810,922
--------- ----------- ----------- ----------- -----------
FROM CAPITAL TRANSACTIONS
Deposits 85,862 204,931 719,690 1,342,956 1,124,819
Payments on termination (232) (6,092) (17,043) (18,264) (26,458)
Contract maintenance charges (22,958) (65,055) (214,961) (348,185) (316,106)
Loans - net (27,782) (68,815) (37,895) (56,014) (80,694)
Transfers among the portfolios
and with the Fixed Account - net (96,699) 1,115,245 1,690,669 2,549,453 3,163,364
--------- ----------- ----------- ----------- -----------
Change in net assets resulting
from capital transactions (61,809) 1,180,214 2,140,460 3,469,946 3,864,925
--------- ----------- ----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS (33,103) 1,290,071 2,541,134 3,518,823 4,675,847
Net assets at beginning of year 461,145 271,662 1,252,694 1,394,945 1,677,772
---------- ----------- ----------- ----------- -----------
Net assets at end of year $428,042 $1,561,733 $3,793,828 $4,913,768 $6,353,619
========== ========== ========== ========== ==========
Net asset value per unit at end of year $12.95 $13.94 $15.09 $15.76 $15.68
========== ========== ========== ========== ==========
</TABLE>
See notes to financial statements.
37
<PAGE>
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Fidelity Variable
Insurance Products
IAI Retirement Funds, Inc. Fund II
----------------------------------- -----------------------
Regional Reserve Balanced Asset Contra
Portfolio Portfolio Portfolio Manager Fund
---------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 47,502 $ 4,728 $ 1,424 $ 77,270 ($4,332)
Net realized gains (losses) 62,343 8 1,724 26,910 41,180
Net change in unrealized
appreciation (depreciation) 5,699 (185) 12,703 142,549 108,920
---------- --------- --------- ---------- ----------
Change in net assets resulting
from operations 115,544 4,551 15,851 246,729 145,768
---------- --------- --------- ---------- ----------
FROM CAPITAL TRANSACTIONS
Deposits 343,362 13,112 51,124 662,368 102,405
Payments on termination (7,220) (551) (1,205) (24,618) 0
Contract maintenance charges (104,916) (4,235) (14,316) (161,536) (29,352)
Loans - net (18,705) (997) 0 (32,946) (19,365)
Transfers among the portfolios
and with the Fixed Account - net 676,488 (30,796) 115,327 387,506 1,224,384
---------- --------- --------- ---------- ----------
Change in net assets resulting
from capital transactions 889,009 (23,467) 150,930 830,774 1,278,072
---------- --------- --------- ---------- ----------
INCREASE (DECREASE) IN NET ASSETS 1,004,553 (18,916) 166,781 1,077,503 1,423,840
Net assets at beginning of year 638,805 129,677 70,211 1,326,684 0
---------- --------- --------- ---------- ----------
Net assets at end of year $1,643,358 $ 110,761 $ 236,992 $2,404,187 $1,423,840
========== ========= ========= ========== ==========
Net asset value per unit at end of year $ 15.55 $ 11.05 $ 12.78 $ 12.09 $ 11.20
========== ========= ========= ========== ==========
</TABLE>
See notes to financial statements.
38
<PAGE>
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Fidelity Variable Insurance Products Fund
---------------------------------------------------
Money Equity
Market Income Growth Overseas
Fund Fund Fund Fund
------------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 155,074 $ 110,653 $ 243,748 $ 25,589
Net realized gains (losses) 0 159,658 80,812 19,187
Net change in unrealized
appreciation (depreciation) 0 381,436 366,501 206,427
------------ ---------- ---------- ----------
Change in net assets resulting
from operations 155,074 651,747 691,061 251,203
------------ ---------- ---------- ----------
FROM CAPITAL TRANSACTIONS
Deposits 24,378,924 1,398,362 875,462 412,557
Payments on termination (35,551) (74,997) (68,498) (40,055)
Contract maintenance charges (522,398) (385,392) (544,933) (161,877)
Loans - net (590,538) (83,003) (214,348) (34,744)
Transfers among the portfolios
and with the Fixed Account - net (21,432,109) 3,843,389 4,847,161 976,028
------------ ---------- ---------- ----------
Change in net assets resulting
from capital transactions 1,798,328 4,698,359 4,894,844 1,151,909
------------ ---------- ---------- ----------
INCREASE (DECREASE) IN NET ASSETS 1,953,402 5,350,106 5,585,905 1,403,112
Net assets at beginning of year 2,770,787 2,529,518 3,589,902 1,389,453
------------ ---------- ---------- ----------
Net assets at end of year $ 4,724,189 $7,879,624 $9,175,807 $2,792,565
============ ========== ========== ==========
Net asset value per unit at end of year $ 11.36 $ 15.79 $ 15.02 $ 11.59
============ ========== ========== ==========
</TABLE>
See notes to financial statements.
39
<PAGE>
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Scudder
Variable
Life
Investment
Federated Investors Fund
----------------------------------- ----------
U.S.
High Government
Income Bond Utility Securities Bond
Fund II Fund II Fund II Portfolio Total
----------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 45,337 $ 23,824 $ 7,924 $ 26,547 $ 895,356
Net realized gains (losses) 5,338 55,125 (369) (22,218) 1,082,321
Net change in unrealized
appreciation (depreciation) 22,230 20,781 1,087 6,529 1,891,022
-------- -------- -------- -------- -----------
Change in net assets resulting
from operations 72,905 99,730 8,642 10,858 3,868,699
-------- -------- -------- -------- -----------
FROM CAPITAL TRANSACTIONS
Deposits 95,514 127,342 24,448 83,616 32,046,854
Payments on termination (1,551) (8,053) (3,459) (276) (334,123)
Contract maintenance charges (31,732) (50,454) (11,772) (28,247) (3,018,425)
Loans - net (39,467) (21,158) (3,938) (18,941) (1,349,350)
Transfers among the portfolios
and with the Fixed Account - net 6,812 406,803 99,536 234,823 (222,616)
-------- -------- -------- -------- -----------
Change in net assets resulting
from capital transactions 29,576 454,480 104,815 270,975 27,122,340
-------- -------- -------- -------- -----------
INCREASE (DECREASE) IN NET ASSETS 102,481 554,210 113,457 281,833 30,991,039
Net assets at beginning of year 469,276 337,262 55,317 168,090 18,533,200
-------- -------- -------- -------- -----------
Net assets at end of year $571,757 $891,472 $168,774 $449,923 $49,524,239
======== ======== ======== ======== ===========
Net asset value per unit at end of year $ 12.98 $ 13.07 $ 11.37 $ 11.29
======== ======== ======== ========
</TABLE>
See notes to financial statements.
40
<PAGE>
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Janus Aspen Series
----------------------------------------------------------
Flexible Aggressive Worldwide
Income Balanced Growth Growth Growth
Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) $13,848 $2,755 $19,999 $10,029 ($1,812)
Net realized gains (losses) 9,960 5,740 (26,338) 20,397 12,611
Net change in unrealized
appreciation (depreciation) 6,761 38,145 171,492 196,555 243,950
-------- -------- ---------- ---------- ----------
Change in net assets resulting
from operations 30,569 46,640 165,153 226,981 254,749
-------- -------- ---------- ---------- ----------
FROM CAPITAL TRANSACTIONS
Deposits 10,669 55,811 283,682 406,026 388,437
Payments on termination (124) (761) (1,732) (4,942) (4,931)
Contract maintenance charges (11,298) (15,221) (67,706) (104,389) (94,089)
Loans - net 0 (1,433) (7,607) (32,044) (47,187)
Transfers among the portfolios
and with the Fixed Account - net 389,968 81,757 264,589 775,032 813,116
-------- -------- ---------- ----------- ----------
Change in net assets resulting
from capital transactions 389,215 120,153 471,226 1,039,683 1,055,346
-------- -------- ---------- ----------- ----------
INCREASE (DECREASE) IN NET ASSETS 419,784 166,793 636,379 1,266,664 1,310,095
Net assets at beginning of year 41,361 104,869 616,315 128,281 367,677
-------- -------- ---------- ----------- ----------
Net assets at end of year $461,145 $271,662 $1,252,694 $1,394,945 $1,677,772
======== ======== ========== ========== ==========
Net asset value per unit at end of year $11.95 $12.08 $12.83 $14.70 $12.24
======== ========= ========== ========== ==========
</TABLE>
See notes to financial statements.
41
<PAGE>
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Fidelity
Variable
Insurance
Products
IAI Retirement Funds, Inc. Fund II
------------------------------------ -------
Regional Reserve Balanced Asset
Portfolio Portfolio Portfolio Manager
---------- --------- --------- --------
<S> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) ($2,372) $ 2,377 ($14) $ 2,765
Net realized gains (losses) 3,542 (25) 1,009 8,662
Net change in unrealized
appreciation (depreciation) 100,661 (56) 4,124 137,732
--------- --------- ------- ----------
Change in net assets resulting
from operations 101,831 2,296 5,119 149,159
--------- -------- ------- ----------
FROM CAPITAL TRANSACTIONS
Deposits 131,169 3,547 27,036 399,744
Payments on termination (2,921) (317) 0 (9,558)
Contract maintenance charges (35,129) (1,716) (7,156) (86,715)
Loans - net (8,260) (22,590) 0 5,446
Transfers among the portfolios
and with the Fixed Account - net 334,872 129,578 23,114 419,689
--------- -------- ------- ----------
Change in net assets resulting
from capital transactions 419,731 108,502 42,994 728,606
--------- -------- ------- ----------
INCREASE (DECREASE) IN NET ASSETS 521,562 110,798 48,113 877,765
Net assets at beginning of year 117,243 18,879 22,098 448,919
--------- -------- ------- ----------
Net assets at end of year $638,805 $129,677 $70,211 $1,326,684
========= ======== ======= ==========
Net asset value per unit at end of year $13.99 $10.60 $11.72 $10.63
========= ======== ======= ==========
</TABLE>
See notes to financial statements.
42
<PAGE>
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Fidelity Variable Insurance Products Fund
--------------------------------------------------
Money Equity
Market Income Growth Overseas
Fund Fund Fund Fund
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 81,255 $ 48,338 ($9,243) ($5,820)
Net realized gains (losses) 0 59,962 53,058 27,409
Net change in unrealized
appreciation (depreciation) 0 275,549 331,893 57,016
----------- ---------- ---------- ----------
Change in net assets resulting
from operations 81,255 383,849 375,708 78,605
----------- ---------- ---------- ----------
FROM CAPITAL TRANSACTIONS
Deposits 10,495,922 473,129 483,983 210,360
Payments on termination (5,990) (2,784) (11,971) (685)
Contract maintenance charges (397,235) (115,539) (159,587) (75,108)
Loans - net (202,651) (23,719) (77,830) 12,808
Transfers among the portfolios
and with the Fixed Account - net (8,380,114) 1,460,319 2,163,097 1,101,355
----------- ---------- ---------- ----------
Change in net assets resulting
from capital transactions 1,509,932 1,791,406 2,397,692 1,248,730
----------- ---------- ---------- ----------
INCREASE (DECREASE) IN NET ASSETS 1,591,187 2,175,255 2,773,400 1,327,335
Net assets at beginning of year 1,179,600 354,263 816,502 62,118
----------- ---------- ---------- ----------
Net assets at end of year $ 2,770,787 $2,529,518 $3,589,902 $1,389,453
=========== ========== ========== ==========
Net asset value per unit at end of year $ 10.85 $ 13.91 $ 13.18 $ 10.31
=========== ========== ========== ==========
</TABLE>
See notes to financial statements.
43
<PAGE>
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Scudder
Variable
Life
Investment
Federated Investors Fund
----------------------------------- ---------
Corporate Government
Bond Utility Bond Bond
Fund Fund Fund Portfolio Total
--------- -------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 27,701 $ 5,903 $ 1,601 $ 6,394 $ 203,704
Net realized gains (losses) 6,762 (150) (218) 964 183,345
Net change in unrealized
appreciation (depreciation) 23,136 33,395 1,469 9,628 1,631,450
-------- -------- -------- -------- -----------
Change in net assets resulting
from operations 57,599 39,148 2,852 16,986 2,018,499
-------- -------- -------- -------- -----------
FROM CAPITAL TRANSACTIONS
Deposits 28,214 78,406 18,318 37,943 13,532,396
Payments on termination (692) (1,138) (34) 0 (48,580)
Contract maintenance charges (11,794) (17,065) (3,768) (11,654) (1,215,169)
Loans - net (288) (1,280) 0 6,891 (399,744)
Transfers among the portfolios
and with the Fixed Account - net 185,091 184,485 (33,379) 79,226 (8,205)
-------- -------- -------- -------- -----------
Change in net assets resulting
from capital transactions 200,531 243,408 (18,863) 112,406 11,860,698
-------- -------- -------- -------- -----------
INCREASE (DECREASE) IN NET ASSETS 258,130 282,556 (16,011) 129,392 13,879,197
Net assets at beginning of year 211,146 54,706 71,328 38,698 4,654,003
-------- -------- -------- -------- -----------
Net assets at end of year $469,276 $337,262 $ 55,317 $168,090 $18,533,200
======== ======== ======== ======== ===========
Net asset value per unit at end of year $ 11.44 $ 11.80 $ 10.99 $ 11.06
======== ======== ======== ========
</TABLE>
See notes to financial statements.
44
<PAGE>
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Janus Aspen Series
---------------------------------------------------------------
Flexible Aggressive Worldwide
Income Balanced Growth Growth Growth
Portfolio Portfolio Portfolio Portfolio Portfolio
--------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 1,047 $ 515 $ 1,277 $ 674 $ (551)
Net realized gains (losses) (20) (139) 58 908 (941)
Net change in unrealized
appreciation (depreciation) (1,233) (1,572) 1,949 5,703 1,976
------- -------- -------- -------- --------
Change in net assets resulting
from operations (206) (1,196) 3,284 7,285 484
------- -------- -------- -------- --------
FROM CAPITAL TRANSACTIONS
Deposits 2,698 6,952 28,284 24,319 58,494
Payments on termination (2,154) (2,143) 0 (2,736) (2,143)
Contract maintenance charges (318) (1,248) (5,010) (6,478) (9,948)
Loans - net 0 0 0 0 0
Transfers among the portfolios
and with the Fixed Account - net 41,341 102,504 589,757 105,891 320,790
------- -------- -------- -------- --------
Change in net assets resulting
from capital transactions 41,567 106,065 613,031 120,996 367,193
------- -------- -------- -------- --------
INCREASE (DECREASE) IN NET ASSETS 41,361 104,869 616,315 128,281 367,677
Net assets at beginning of year 0 0 0 0 0
------- -------- -------- -------- --------
Net assets at end of year $41,361 $104,869 $616,315 $128,281 $367,677
======= ======== ======== ======== ========
Net asset value per unit at end of year $ 9.71 $ 9.75 $ 9.92 $ 11.61 $ 9.68
======= ======== ======== ======== ========
</TABLE>
See notes to financial statements.
45
<PAGE>
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Fidelity
Variable
Insurance
Products
IAI Retirement Funds, Inc. Fund II
----------------------------------------- ---------
Regional Reserve Balanced Asset
Portfolio Portfolio Portfolio Manager
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) ($222) $ 32 ($39) ($616)
Net realized gains (losses) (73) 0 71 (90)
Net change in unrealized
appreciation (depreciation) 2,885 2 (117) (8,012)
------- ------- ------- -------
Change in net assets resulting
from operations 2,590 34 (85) (8,718)
-------- ------- ------- --------
FROM CAPITAL TRANSACTIONS
Deposits 10,408 89 5,462 64,112
Payments on termination 0 0 0 0
Contract maintenance charges (2,536) (150) (656) (12,710)
Loans - net 0 0 0 0
Transfers among the portfolios
and with the Fixed Account - net 106,781 18,906 17,377 406,235
-------- ------- ------- --------
Change in net assets resulting
from capital transactions 114,653 18,845 22,183 457,637
-------- ------- ------- --------
INCREASE (DECREASE) IN NET ASSETS 117,243 18,879 22,098 448,919
Net assets at beginning of year 0 0 0 0
-------- ------- ------- --------
Net assets at end of year $117,243 $18,879 $22,098 $448,919
======== ======= ======= ========
Net asset value per unit at end of year $ 10.55 $ 10.16 $ 10.16 $ 9.15
======== ======= ======= ========
</TABLE>
See notes to financial statements.
46
<PAGE>
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Fidelity Variable Insurance Products Fund
-----------------------------------------
Money Equity
Market Income Growth Overseas
Fund Fund Fund Fund
------ ------ ------ --------
<S> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 21,732 $ 1,483 ($958) ($56)
Net realized gains (losses) 0 (887) 1,503 (280)
Net change in unrealized
appreciation (depreciation) 0 224 31,231 (259)
---------- -------- -------- -------
Change in net assets resulting
from operations 21,732 820 31,776 (595)
---------- -------- -------- -------
FROM CAPITAL TRANSACTIONS
Deposits 4,675,005 32,259 66,518 4,141
Payments on termination (112) 0 0 0
Contract maintenance charges (94,059) (8,211) (9,964) (1,396)
Loans - net 0 0 0 0
Transfers among the portfolios
and with the Fixed Account - net (3,422,966) 329,395 728,172 59,968
---------- -------- -------- -------
Change in net assets resulting
from capital transactions 1,157,868 353,443 784,726 62,713
---------- -------- -------- -------
INCREASE (DECREASE) IN NET ASSETS 1,179,600 354,263 816,502 62,118
Net assets at beginning of year 0 0 0 0
---------- -------- -------- -------
Net assets at end of year $1,179,600 $354,263 $816,502 $62,118
========== ======== ======== =======
Net asset value per unit at end of year $ 10.32 $ 10.37 $ 9.81 $ 9.46
========== ======== ======== =======
</TABLE>
See notes to financial statements.
47
<PAGE>
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Scudder
Variable
Life
Investment
Federated Investors Fund
----------------------------------- ----------
Corporate Government
Bond Utility Bond Bond
Fund Fund Fund Portfolio Total
-------- ------- ------- --------- ----------
<S> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 6,285 $ 681 $ 223 $ 29 $ 31,536
Net realized gains (losses) (1,300) 1 1 (3) (1,191)
Net change in unrealized
appreciation (depreciation) (7,160) (675) (4) 155 25,093
-------- ------- ------- ------- ----------
Change in net assets resulting
from operations (2,175) 7 220 181 55,438
-------- ------- ------- ------- ----------
FROM CAPITAL TRANSACTIONS
Deposits 633 3,284 694 1,438 4,984,790
Payments on termination 0 0 0 0 (9,288)
Contract maintenance charges (1,107) (1,141) (169) (491) (155,592)
Loans - net 0 0 0 0 0
Transfers among the portfolios
and with the Fixed Account - net 213,795 52,556 70,583 37,570 (221,345)
-------- ------- ------- ------- ----------
Change in net assets resulting
from capital transactions 213,321 54,699 71,108 38,517 4,598,565
-------- ------- ------- ------- ----------
INCREASE (DECREASE) IN NET ASSETS 211,146 54,706 71,328 38,698 4,654,003
Net assets at beginning of year 0 0 0 0 0
-------- ------- ------- ------- ----------
Net assets at end of year $211,146 $54,706 $71,328 $38,698 $4,654,003
======== ======= ======= ======= ==========
Net asset value per unit at end of year $9.57 $9.57 $10.18 $9.43
======== ======= ======= =======
</TABLE>
See notes to financial statements.
48
<PAGE>
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
THREE YEARS ENDED DECEMBER 31, 1996
- -------------------------------------------------------------------------------
1. ORGANIZATION
Lincoln Benefit Life Variable Life Account (the "Account"), a unit investment
trust registered with the Securities and Exchange Commission under the
Investment Company Act of 1940, is a Separate Account of Lincoln Benefit Life
Company ("Lincoln Benefit"). The assets of the Account are legally segregated
from those of Lincoln Benefit. Lincoln Benefit is wholly owned by Allstate
Life Insurance Company, a wholly owned subsidiary of Allstate Insurance
Company, which is wholly owned by The Allstate Corporation. The account was
established on May 17, 1990, by resolution of the Board of Directors of
Lincoln Benefit and began accepting policyholder deposits on January 1, 1994.
Lincoln Benefit writes certain life policies, the proceeds of which are
invested at the direction of the policyholder. Policyholders primarily invest
in units of the portfolios comprising the Account, for which they bear all of
the investment risk. The Account is divided into 18 subaccounts. Each
subaccount invests solely in the shares of one of the following portfolios:
Janus Aspen Series: Flexible Income Portfolio, Balanced Portfolio, Growth
Portfolio, Aggressive Growth Portfolio, Worldwide Growth Portfolio; IAI
Retirement Funds, Inc.: Regional Portfolio, Reserve Portfolio, Balanced
Portfolio; Fidelity Variable Insurance Products Fund: Money Market Fund,
Equity Income Fund, Growth Fund, Overseas Fund; Fidelity Variable Insurance
Products Fund II: Asset Manager, Contra Fund (added May 1, 1996); Federated
Investors: High Income Bond Fund II, Utility Fund II, U.S. Government
Securities Bond Fund II; Scudder Variable Life Investment Fund: Bond
Portfolio (collectively the "Funds"). The policyholder may also invest in the
general account of Lincoln Benefit (the "Fixed Account"), which was an option
added May 1, 1994. The Fixed Account option is not available in all states.
Effective January 1, 1996, the name of the Federated Investors: Corporate
Bond Fund, Utility Fund, and Government Bond Fund changed to High Income Bond
Fund II, Utility Fund II and U.S. Government Securities Bond Fund II,
respectively. While certain of the investment policies of the portfolios have
changed, the overall investment strategy has remained the same.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Valuation of Investments - Investments consist of shares in the portfolios of
the Funds, and are stated at fair value based on quoted market prices.
Recognition of Investment Income - Investment income consists of dividends
declared by the portfolios of the Funds, and is recognized on the date of
record.
Realized Gains and Losses - Realized gains and losses represent the
difference between the proceeds from sales of shares by the Account and the
cost of such shares, which is determined on a weighted average basis.
Policyholder Account Activity - Account activity is reflected in individual
policyholder accounts on a daily basis.
Federal Income Taxes - Net investment income and realized gains and losses on
investments of the Account are reported to policyholders who are responsible
for the related income taxes based on their particular tax status.
Accordingly, no provision for income taxes has been recorded.
Account Values - Certain calculations that could be made in the financial
statements may differ from published amounts due to truncation of actual
Account values.
49
<PAGE>
3. PREMIUM, CONTRACT MAINTENANCE, MORTALITY AND EXPENSE RISK AND ADMINISTRATIVE
EXPENSE CHARGES
Upon receipt of each premium payment and before allocation to the policy
value, Lincoln Benefit deducts 2.5% of the premium to pay state premium
taxes. This deduction represents an amount Lincoln Benefit considers
necessary to pay all premium taxes imposed by states and their subdivisions.
Each month a deduction is made which is equal to (i) the cost of insurance
for the policy, including riders, plus (ii) a monthly administration charge
of $5. The monthly deduction is intended to compensate Lincoln Benefit for
expenses incurred in connection with the issuance of a policy, the cost of
insurance for the policy, any optional benefits added by rider and certain
administrative expenses.
Lincoln Benefit assumes certain mortality and expense risks related to the
operations of the Account and deducts charges daily at a rate, on an annual
basis, equal to .70% of the daily net assets of the Account. Lincoln Benefit
guarantees that the rate of this charge will not exceed .90%.
An annual administrative expense change of .20% of the policy value is
assessed on each policy anniversary during the first twelve policy years.
This charge is designed to cover expenses related to the maintenance of the
policy and the Account and other administrative expenses.
Other charges may be assessed related to surrenders, partial withdrawals and
transfers between funds and/or the fixed account.
4. FINANCIAL INSTRUMENTS
The investments of the Separate Account are carried at fair value, based on
quoted market prices.
50
<PAGE>
5. UNITS ISSUED AND REDEEMED
Units issued and redeemed by the Account were as follows:
<TABLE>
<CAPTION>
Janus Aspen Series
-----------------------------------------------------------
Flexible Aggressive Worldwide
Income Balanced Growth Growth Growth
Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Units Outstanding at January 1, 1994 0 0 0 0 0
Unit Activity during 1994:
Issued 4,722 11,768 63,441 15,307 47,310
Redeemed (463) (1,009) (1,339) (4,258) (9,309)
-------- ------- -------- -------- --------
Units Outstanding at December 31, 1994 4,259 10,759 62,102 11,049 38,001
Unit Activity during 1995:
Issued 54,780 21,857 96,785 123,925 140,650
Redeemed (20,434) (10,125) (61,238) (40,067) (41,554)
-------- ------- -------- -------- --------
Units Outstanding at December 31, 1995 38,605 22,491 97,649 94,907 137,097
Unit Activity during 1996
Issued 266,006 130,171 480,958 463,262 546,209
Redeemed (271,562) (40,590) (327,181) (246,291) (278,119)
-------- ------- -------- -------- --------
Units Outstanding at December 31, 1996 33,049 112,072 251,426 311,878 405,187
======== ======= ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Fidelity
Variable
Insurance
Products
IAI Retirement Funds, Inc. Fund II
----------------------------------- ---------------------
Regional Reserve Balanced Asset Contra
Portfolio Portfolio Portfolio Manager Fund
--------- --------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Units Outstanding at January 1, 1994 0 0 0 0 0
Unit Activity during 1994:
Issued 11,473 1,873 2,702 53,309 0
Redeemed (365) (15) (526) (4,241) 0
---------- -------- -------- ------- ------
Units Outstanding at December 31, 1994 11,108 1,858 2,176 49,068 0
Unit Activity during 1995:
Issued 40,975 21,622 5,767 141,678 0
Redeemed (6,431) (11,252) (1,953) (65,891) 0
---------- -------- -------- ------- ------
Units Outstanding at December 31, 1995 45,652 12,228 5,990 124,855 0
Unit Activity during 1996
Issued 188,183 17,954 17,150 139,271 338,835
Redeemed (128,123) (20,159) (4,596) (65,304) (211,679)
---------- -------- -------- ------- -------
Units Outstanding at December 31, 1996 105,712 10,023 18,544 198,822 127,156
========== ======== ======== ======= =======
</TABLE>
51
<PAGE>
5. UNITS ISSUED AND REDEEMED (continued)
Units issued and redeemed by the Account were as follows:
<TABLE>
<CAPTION>
Fidelity Variable Insurance Products Fund
---------------------------------------------
Money Equity
Market Income Growth Overseas
Fund Fund Fund Fund
--------- --------- -------- --------
<S> <C> <C> <C> <C>
Units Outstanding at January 1, 1994 0 0 0 0
Unit Activity during 1994:
Issued 840,720 74,543 127,944 12,748
Redeemed (726,462) (40,383) (44,687) (6,185)
---------- -------- --------- --------
Units Outstanding at December 31, 1994 114,258 34,160 83,257 6,563
Unit Activity during 1995:
Issued 1,898,719 299,363 440,120 376,825
Redeemed (1,757,813) (151,708) (251,063) (248,603)
---------- -------- --------- --------
Units Outstanding at December 31, 1995 255,164 181,815 272,314 134,785
Unit Activity during 1996
Issued 5,081,025 611,419 1,263,767 421,293
Redeemed (4,920,343) (294,151) (924,989) (315,117)
---------- -------- --------- --------
Units Outstanding at December 31, 1996 415,846 499,083 611,092 240,961
========== ======== ========= ========
</TABLE>
<TABLE>
<CAPTION>
Scudder
Variable
Life
Investment
Federated Investors Fund
--------------------------------- ----------
Corporate Government
Bond Utility Bond Bond
Fund Fund Fund Portfolio
--------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Units Outstanding at January 1, 1994 0 0 0 0
Unit Activity during 1994:
Issued 26,485 5,939 7,027 4,162
Redeemed (4,448) (221) (17) (56)
-------- -------- ------- -------
Units Outstanding at December 31, 1994 22,037 5,718 7,010 4,106
Unit Activity during 1995:
Issued 60,897 31,076 6,417 27,659
Redeemed (41,903) (8,206) (8,395) (16,569)
-------- -------- ------- -------
Units Outstanding at December 31, 1995 41,031 28,588 5,032 15,196
Unit Activity during 1996
Issued 270,979 161,287 25,496 110,172
Redeemed (267,970) (121,664) (15,691) (85,527)
-------- -------- ------- -------
Units Outstanding at December 31, 1996 44,040 68,211 14,837 39,841
======== ======== ======= =======
</TABLE>
52
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS AND SHAREHOLDER OF
LINCOLN BENEFIT LIFE COMPANY:
We have audited the accompanying consolidated statements of financial position
of Lincoln Benefit Life Company and subsidiary (wholly owned by Allstate Life
Insurance Company) as of December 31, 1996 and 1995, and the related
consolidated statements of operations, shareholder's equity and cash flows for
each of the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Lincoln Benefit Life Company and
subsidiary as of December 31, 1996 and 1995, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1996 in conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The supplemental schedule on
page 68 is presented for the purpose of additional analysis and is not a
required part of the basic consolidated financial statements. This schedule is
the responsibility of the Company's management. Such schedule has been subjected
to the auditing procedures applied in our audits of the basic consolidated
financial statements and, in our opinion, is fairly stated in all material
respects when considered in relation to the basic consolidated financial
statements taken as a whole.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Lincoln, Nebraska
April 18, 1997
53
<PAGE>
LINCOLN BENEFIT LIFE COMPANY
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
December 31,
----------------------
($ in thousands) 1996 1995
---------- ----------
<S> <C> <C>
ASSETS
Investments
Fixed income securities, at fair value (amortized
cost $134,866 and $125,738) $ 137,638 $ 133,428
Real estate 2,797 2,753
Policy loans - 585
Short-term 1,861 6,350
---------- ----------
Total investments 142,296 143,116
Reinsurance recoverable from Allstate Life
Insurance Company 6,544,750 6,011,669
Reinsurance recoverable from third parties 113,645 36,383
Receivable from Allstate Life Insurance Company
and affiliates, net 19,923 25,699
Cash 7,412 409
Other assets 24,595 19,205
Separate Accounts 255,881 110,616
---------- ----------
Total assets $7,108,502 $6,347,097
========== ==========
LIABILITIES
Reserve for life-contingent contract benefits $ 239,449 $ 158,960
Contractholder funds 6,422,126 5,897,744
Income taxes payable 923 718
Deferred income taxes 3,480 5,263
Other liabilities and accrued expenses 44,482 31,488
Separate Accounts 255,881 110,616
---------- ----------
Total liabilities 6,966,341 6,204,789
---------- ----------
COMMITMENTS AND CONTINGENT LIABILITIES (NOTE 8)
SHAREHOLDER'S EQUITY
Common stock, $100 par value, 30,000 shares
authorized, 25,000 issued and outstanding 2,500 2,500
Additional capital paid-in 116,750 116,750
Unrealized net capital gains 1,801 4,998
Retained income 21,110 18,060
---------- ----------
Total shareholder's equity 142,161 142,308
---------- ----------
Total liabilities and shareholder's equity $7,108,502 $6,347,097
========== ==========
</TABLE>
See notes to consolidated financial statements.
54
<PAGE>
LINCOLN BENEFIT LIFE COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
($ in thousands) 1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
REVENUES
Net investment income $9,951 $8,796 $5,637
Realized capital gains and losses 6 258 198
------ ------ ------
9,957 9,054 5,835
COSTS AND EXPENSES
Provision for policy benefits (net of reinsurance
recoveries of $419,936, $375,662 and $312,650) 465 462 587
Operating costs and expenses 889 754 607
------ ------ ------
1,354 1,216 1,194
------ ------ ------
INCOME BEFORE INCOME TAX EXPENSE 8,603 7,838 4,641
INCOME TAX EXPENSE 3,020 2,745 1,605
------ ------ ------
NET INCOME $5,583 $5,093 $3,036
====== ====== ======
</TABLE>
See notes to consolidated financial statements.
55
<PAGE>
LINCOLN BENEFIT LIFE COMPANY
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------
($ in thousands) 1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
COMMON STOCK $ 2,500 $ 2,500 $ 2,500
-------- -------- --------
ADDITIONAL CAPITAL PAID-IN
Balance, beginning of year 116,750 96,750 66,750
Capital contribution - 20,000 30,000
-------- -------- --------
Balance, end of year 116,750 116,750 96,750
-------- -------- --------
UNREALIZED NET CAPITAL GAINS
Balance, beginning of year 4,998 (2,630) 2,076
Net (decrease) increase (3,197) 7,628 (4,706)
-------- -------- --------
Balance, end of year 1,801 4,998 (2,630)
RETAINED INCOME
Balance, beginning of year 18,060 12,967 9,931
Dividend-in-kind (2,533) - -
Net income 5,583 5,093 3,036
-------- -------- --------
Balance, end of year 21,110 18,060 12,967
-------- -------- --------
Total shareholder's equity $142,161 $142,308 $109,587
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
56
<PAGE>
LINCOLN BENEFIT LIFE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
($ in thousands) 1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 5,583 $ 5,093 $ 3,036
Adjustments to reconcile net income to net
cash provided by (used in) operating activities
Depreciation, amortization and other non-cash items 50 96 308
Realized capital gains and losses (6) (258) (198)
Decrease in life-contingent contract benefits and
contractholder funds, net of reinsurance (4,918) (130) (61)
Change in deferred income taxes (62) (156) (96)
Changes in other operating assets and liabilities 11,083 (5,940) 945
-------- --------- ---------
Net cash provided by (used in) operating activities 11,730 (1,295) 3,934
-------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales
Fixed income securities - 5,633 2,507
Equity securities - 108,255 105,388
Investment collections
Fixed income securities 8,759 13,769 6,269
Investment purchases
Fixed income securities (17,570) (34,372) (57,703)
Equity securities - (108,255) (105,388)
Real estate (405) (644) (402)
Change in short-term investments, net 4,489 (2,920) 13,865
Change in policy loans, net - 24 100
-------- --------- ---------
Net cash used in investing activities (4,727) (18,510) (35,364)
-------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Capital contribution - 20,000 30,000
-------- --------- ---------
Net cash provided by financing activities - 20,000 30,000
-------- --------- ---------
NET INCREASE (DECREASE) IN CASH 7,003 195 (1,430)
CASH AT BEGINNING OF YEAR 409 214 1,644
-------- --------- ---------
CASH AT END OF YEAR $ 7,412 $ 409 $ 214
======== ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Noncash financing activity:
Dividend-in-kind to ALIC $ (2,533) $ - $ -
======== ========= =========
</TABLE>
See notes to consolidated financial statements.
57
<PAGE>
LINCOLN BENEFIT LIFE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands)
1. General
Basis of presentation
The accompanying consolidated financial statements include the accounts of
Lincoln Benefit Life Company (the "Company") and its wholly owned subsidiary,
Lincoln Benefit Financial Services, Inc. ("LBFS"), a registered broker-dealer.
The Company is a wholly owned subsidiary of Allstate Life Insurance Company
("ALIC"), which is wholly owned by Allstate Insurance Company ("AIC"), a wholly
owned subsidiary of The Allstate Corporation (the "Corporation"). On June 30,
1995, Sears, Roebuck and Co. ("Sears") distributed its 80.3% ownership in the
Corporation to Sears common shareholders through a tax-free dividend (the
"Distribution"). These consolidated financial statements have been prepared in
conformity with generally accepted accounting principles. All significant
intercompany accounts and transactions have been eliminated.
Nature of operations
The Company markets a broad line of life insurance and annuity products in the
United States. Life insurance includes traditional products such as whole life
and term life insurance, as well as universal life and other interest-sensitive
life products. Annuities include deferred annuities, such as variable annuities
and fixed rate single and flexible premium annuities; and immediate annuities.
The Company distributes its products primarily through independent agents and
brokers specializing in life insurance and annuities.
Annuity contracts issued by the Company are subject to discretionary withdrawal
or surrender by the contractholder, subject to applicable surrender charges.
These contracts are reinsured primarily with ALIC (see Note 3) which invests
premiums and deposits to create cash flows that will fund future benefits and
expenses. In order to support competitive credited rates, ALIC adheres to a
basic philosophy of matching assets with related liabilities to limit interest
rate risk, while maintaining adequate liquidity and a prudent and diversified
level of credit risk.
The Company monitors economic and regulatory developments which have the
potential to impact its business. There continues to be proposed federal
legislation and regulation which would allow banks greater participation in
securities and insurance businesses, which could present an increased level of
competition for sales of the Company's annuity contracts. Furthermore, the
market for deferred annuities and interest-sensitive life insurance is enhanced
by the tax incentives available under current law. Any legislative changes which
lessen these incentives are likely to negatively impact the market for these
products.
The Company is authorized to sell life and annuity products in all states except
New York, as well as the District of Columbia, Guam and the U.S. Virgin Islands.
The top geographic locations for statutory premiums earned are California,
Florida, Illinois, Minnesota and Pennsylvania for the year ended December 31,
1996. No other jurisdiction accounted for more than 5% of statutory premiums.
Substantially all premiums and contract charges are ceded to ALIC under
reinsurance agreements.
58
<PAGE>
LINCOLN BENEFIT LIFE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands)
2. Summary of Significant Accounting Policies
Investments
Fixed income securities include bonds and mortgage-backed securities. All fixed
income securities are carried at fair value and may be sold prior to their
contractual maturity ("available for sale"). The difference between amortized
cost and fair value, net of deferred income taxes, is reflected as a component
of shareholder's equity. Provisions are recognized for declines in the value of
fixed income securities that are other than temporary. Such writedowns are
included in realized capital gains and losses.
Short-term investments are carried at cost which approximates fair value. Policy
loans are carried at the unpaid principal balances. Real estate represents
property owned and occupied by the Company. The investment is carried at
depreciated cost.
Investment income consists primarily of interest, which is recognized on an
accrual basis. Interest income on mortgaged-backed securities is determined on
the effective yield method, based on the estimated principal repayments. Accrual
of income is suspended for fixed income securities that are in default or when
the receipt of interest payments is in doubt. Realized capital gains and losses
are determined on a specific identification basis.
Recognition of premium revenues and contract charges
Premiums for traditional life insurance are recognized as revenue when due.
Accident and disability premiums are earned on a pro rata basis over the policy
period. Revenues on interest-sensitive life insurance contracts are comprised of
contract charges and fees, and are recognized when assessed against the
policyholder account balance. Revenues on investment contracts include contract
charges and fees for contract administration and surrenders. These revenues are
recognized when levied against the contract balances. Gross premium in excess of
the net premium on limited payment contracts are deferred and recognized over
the contract period.
Reinsurance
The Company has reinsurance agreements under which essentially all premiums,
contract charges, credited interest and policy benefits are ceded and reflected
net of such cessions in the statements of operations. The premiums and contract
changes ceded were $200,853, $128,975 and $96,964 in 1996, 1995 and 1994,
respectively. The net investment income and realized capital gains and losses
shown in the Company's statements of operations relate to the investment of
those assets of the Company that are not transferred to ALIC under reinsurance
agreements. Reinsurance recoverable and the related reserve for life-contingent
contract benefits and contractholder funds are reported separately in the
statements of financial position. The Company continues to have primary
liability as the direct insurer for risks reinsured.
Income Taxes
The income tax provision is calculated under the liability method. Deferred tax
assets and liabilities are recorded based on the difference between the
financial statement and tax bases of assets and liabilities and the enacted tax
regulations. Deferred income taxes also arise from unrealized capital gains or
losses on fixed income securities carried at fair value.
Separate Accounts
The Company issues flexible premium deferred variable annuity contracts and
flexible premium variable life contracts, the assets and liabilities of which
are legally segregated and reflected in the accompanying consolidated statements
of financial position as assets and liabilities of the Separate Accounts. Assets
and liabilities of the Separate Accounts represent funds of Lincoln Benefit Life
Variable Annuity Account and Lincoln Benefit Life Variable Life Account
("Separate Accounts"), unit investment trusts registered with the Securities and
Exchange Commission.
59
<PAGE>
LINCOLN BENEFIT LIFE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands)
The assets of the Separate Accounts are carried at fair value. Investment income
and realized capital gains and losses of the Separate Accounts accrue directly
to the contractholders and, therefore, are not included in the Company's
consolidated statements of operations. Revenues to the Company from the Separate
Accounts consist of contract maintenance fees, administrative fees and mortality
and expense risk charges, which are ceded to ALIC.
Reserve for life-contingent contract benefits
The reserve for life-contingent contract benefits, which relates to traditional
life insurance, annuities with life contingencies, and disability insurance, is
computed on the basis of assumptions as to future investment yields, mortality,
morbidity, terminations and expenses. These assumptions, which for traditional
life are applied using the net level premium method, include provisions for
adverse deviation and generally vary by such characteristics as type of
coverage, year of issue and policy duration. Reserve interest rates ranged from
4.00% to 10.00% during 1996. To the extent that unrealized gains on available
for sale securities would result in a premium deficiency had those gains
actually been realized, the related increase in reserves is recorded as a
reduction of the unrealized gains included in shareholder's equity.
Contractholder funds
Contractholder funds arise from the issuance of individual or group contracts
that include an investment component, including most annuities and interest-
sensitive life insurance contracts. Payments received are recorded as interest-
bearing liabilities. Contractholder funds are equal to deposits received and
interest credited to the benefit of the contractholder less withdrawals,
mortality charges and administrative expenses. During 1996, credited interest
rates on contractholder funds ranged from 4.40% to 9.25% for those contracts
with fixed interest rates and from 3.10% to 14.00% for those contracts with
flexible rates.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
3. Related Party Transactions
Reinsurance
The company reinsures all of its annuity and substantially all of its life
insurance with ALIC. Effective December 31, 1996, the reinsurance treaty with
ALIC was amended to also include a paid up block of life business which was
previously retained by the Company. The reinsurance premium related to the
transfer was $8,255 on a statutory accounting basis and $5,722 based upon
generally accepted accounting principles, creating a dividend-in-kind of $2,533.
The premium is equal to the sum of the aggregate statutory basis policy reserves
and policyholder dividend accumulations on this block of business as of December
31, 1996. The policy loans and accrued interest relating to this block of
business totaled $554 and were also ceded to ALIC as of December 31, 1996,
creating a non-cash financing transaction.
Premiums and contract charges ceded to ALIC were $73,659 and $48,111 in 1996,
$56,008 and $44,655 in 1995, and $45,017 and $34,357 in 1994. Credited interest,
policy benefits and expenses ceded to ALIC amounted to $496,735 $466,508 and
$386,985 in 1996, 1995, and 1994. Investment income earned on the assets which
support contractholder funds is not included in the Company's financial
statements as those assets are owned and managed by ALIC under the terms of
reinsurance agreements.
60
<PAGE>
LINCOLN BENEFIT LIFE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands)
Business operations
The Company utilizes services and business facilities owned or leased, and
operated by AIC in conducting its business activities. The Company reimburses
AIC for the operating expenses incurred by AIC on behalf of the Company. The
cost to the Company is determined by various allocation methods and is primarily
related to the level of services provided. Operating expenses, including
compensation and retirement and other benefit programs, allocated to the Company
were $6,577, $3,052 and $2,191 in 1996, 1995 and 1994, respectively.
substantially all of these costs are ceded to ALIC under reinsurance agreements.
4. Investments
Fair values
The amortized cost, gross unrealized gains and losses and fair value for fixed
income securities are as follows:
<TABLE>
<CAPTION>
Gross Unrealized
Amortized --------------------- Fair
At December 31, 1996 Cost Gains (Losses) Value
--------- ------ -------- --------
<S> <C> <C> <C> <C>
U.S. government and agencies $ 16,960 $ 780 $ (25) $ 17,715
Corporate 55,778 1,178 (1,274) 55,682
Foreign government 3,048 225 - 3,273
Mortgage-backed securities 59,080 2,493 (605) 60,968
-------- ------ ------- --------
Total fixed income securities $134,866 $4,676 $(1,904) $137,638
======== ====== ======= ========
At December 31, 1995
U.S. government and agencies $ 18,237 $1,886 $ - $ 20,123
Corporate 38,866 1,904 (111) 40,659
Foreign government 3,056 361 - 3,417
Mortgage-backed securities 65,579 3,706 (56) 69,229
-------- ------ ------- --------
Total fixed income securities $125,738 $7,857 $ (167) $133,428
======== ====== ======= ========
</TABLE>
Scheduled maturities
The scheduled maturities for fixed income securities at December 31, 1996 are
as follows:
<TABLE>
<CAPTION>
Amortized Fair
Cost Value
--------- --------
<S> <C> <C>
Due in one year or less $ 3,064 $ 3,102
Due after one year through five years 11,395 11,609
Due after five years through ten years 47,589 47,522
Due after ten years 13,738 14,436
-------- --------
75,786 76,669
Mortgage-backed securities 59,080 60,969
-------- --------
Total $134,866 $137,638
======== ========
</TABLE>
Actual maturities may differ from those scheduled as a result of prepayments by
the issuers.
61
<PAGE>
LINCOLN BENEFIT LIFE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands)
Net investment income
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1996 1995 1994
------- ------ ------
<S> <C> <C> <C>
Fixed income securities $ 9,825 $8,710 $5,587
Short-term 215 177 139
Other 31 31 33
------- ------ ------
Investment income, before expenses 10,071 8,918 5,759
Investment expense 120 122 122
------- ------ ------
Net investment income $ 9,951 $8,796 $5,637
======= ====== ======
Realized capital gains and losses
Year Ended December 31,
-----------------------
1996 1995 1994
------- ------ ------
Fixed income securities - 258 198
Other investments 6 - -
------- ------ ------
Realized capital gains and losses 6 258 198
Income taxes 2 90 69
------- ------ ------
Realized capital gains and losses, after tax $ 4 $ 168 $ 129
======= ====== ======
</TABLE>
Proceeds from sales of fixed income securities
No fixed income securities were sold in 1996. Proceeds from sales of investments
in fixed income securities were $5,633 and $2,507 in 1995 and 1994,
respectively. Gross gains of $251 and $7 were realized on sales of fixed income
securities during 1995 and 1994.
Unrealized net capital gains and losses
Unrealized net capital gains and losses on fixed income and equity securities
included in shareholder's equity at December 31, 1996 are as follows:
<TABLE>
<CAPTION>
Cost/ Unrealized
Amortized Fair Net
Cost Value Gains
---------- -------- ----------
<S> <C> <C> <C>
Fixed income securities $ 134,866 $137,638 $ 2,772
========= ======== ==========
Deferred income taxes (971)
----------
Unrealized net capital gains
$ 1,801
==========
</TABLE>
62
<PAGE>
LINCOLN BENEFIT LIFE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands)
Change in unrealized net capital gains and losses
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Fixed income securities $(4,918) $11,735 $(7,240)
Deferred income taxes 1,721 (4,107) 2,534
------- ------- -------
Change in unrealized net capital gains $(3,197) $ 7,628 $(4,706)
======= ======= =======
</TABLE>
Securities on deposit
At December 31, 1996, fixed income securities with a carrying value of $8,077
were on deposit with regulatory authorities as required by law.
5. Financial Instruments
In the normal course of business, the Company invests in various financial
assets and incurs various financial liabilities. The fair value estimates of
financial instruments presented below are not necessarily indicative of the
amounts the Company might pay or receive in actual market transactions.
Potential taxes and other transaction costs have not been considered in
estimating fair value. The disclosures that follow do not reflect the fair value
of the Company as a whole since a number of the Company's assets (including
reinsurance recoverable and deferred income taxes) and liabilities (including
the reserve for life-contingent contract benefits) are not considered financial
instruments and are not carried at fair value. Other assets and liabilities
considered financial instruments, including accrued investment income and cash,
are generally of a short-term nature. It is assumed that their carrying value
approximates fair value.
Financial assets
<TABLE>
<CAPTION>
At December 31,
---------------
1996 1995
---- ----
Carrying Fair Carrying Fair
Value Value Value Value
-------- -------- --------------- --------
<S> <C> <C> <C> <C>
Fixed income securities $137,638 $137,638 $133,428 $133,428
Short-term investments 1,861 1,861 6,350 6,350
Policy loans - - 585 585
Separate Accounts 255,881 255,881 110,616 110,616
</TABLE>
Fair values for fixed income securities are based on quoted market prices where
available. Non-quoted securities are valued based on discounted cash flows using
current interest rates for similar securities. Short-term investments are highly
liquid investments with maturities of less than one year whose carrying value
approximates fair value. The carrying value of policy loans approximates its
fair value. Assets of the Separate Accounts are carried in the consolidated
statements of financial position at fair value.
63
<PAGE>
LINCOLN BENEFIT LIFE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands)
Financial liabilities
<TABLE>
<CAPTION>
At December 31,
---------------
1996 1995
---- ----
Carrying Fair Carrying Fair
Value Value Value Value
-------- ----- -------- -----
<S> <C> <C> <C> <C>
Contractholder funds on
investment contracts $5,180,396 $4,921,842 $4,853,902 $4,603,369
Separate Accounts 255,881 255,881 110,616 110,616
</TABLE>
The fair value of contractholder funds on investment contracts is based on the
terms of the underlying contracts. Reserves on investment contracts with no
stated maturities (single premium and flexible premium deferred annuities) are
valued at the account balance less surrender charges. The fair value of
immediate annuities and annuities without life contingencies with fixed terms is
estimated using discounted cash flow calculations based on interest rates
currently offered for contracts with similar terms and durations. Separate
Account liabilities are carried at the fair value of the underlying assets.
6. Federal Income Taxes
Consolidated federal income tax returns are filed by the Corporation and its
eligible subsidiaries, including the Company. Tax liabilities and benefits
realized by the consolidated group are allocated as generated by the respective
subsidiaries.
Prior to the Distribution, the Corporation and all of its domestic subsidiaries,
including the Company, (the "Allstate Group") joined with Sears and its domestic
business units (the "Sears Group") in the filing of a consolidated federal
income tax return (the "Sears Tax Group") and were parties to a federal income
tax allocation agreement (the "Tax Sharing Agreement"). Under the Tax Sharing
Agreement, the Company, through the Corporation, paid to or received from the
Sears Group the amount, if any, by which the Sears Tax Group's federal income
tax liability was affected by virtue of inclusion of the Company in the
consolidated federal income tax return. Effectively, this resulted in the
Company's annual income tax provision being computed as if the Company filed a
separate return, except that items such as net operating losses, capital losses,
or similar items, which might not be recognized in a separate return, were
allocated according to the Tax Sharing Agreement.
The Allstate Group and Sears Group have entered into an agreement which governs
their respective rights and obligations with respect to federal income taxes for
all periods prior to the Distribution ("Consolidated Tax Years"). The agreement
provides that all Consolidated Tax Years will continue to be governed by the Tax
Sharing Agreement with respect to the Company's federal income tax liability.
64
<PAGE>
LINCOLN BENEFIT LIFE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands)
The components of the deferred income tax liabilities are as follows:
<TABLE>
<CAPTION>
At December 31,
---------------
1996 1995
------ ------
<S> <C> <C>
Deferred liabilities
Difference in tax bases of investments $2,510 $2,572
Unrealized net capital gains 970 2,691
------ ------
Total deferred liabilities $3,480 $5,263
====== ======
</TABLE>
The components of income tax expense are as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------
1996 1995 1994
-------- ------- -------
<S> <C> <C> <C>
Current $3,082 $2,901 $1,702
Deferred (62) (156) (97)
------ ------ ------
Total income tax expense $3,020 $2,745 $1,605
====== ====== ======
</TABLE>
The Company paid income taxes of $2,864, $3,125 and $2,530 in 1996, 1995 and
1994, respectively, to ALIC. Income taxes payable to ALIC were $923 and $718 at
December 31, 1996 and 1995, respectively.
Prior to January 1, 1984, the Company was entitled to exclude certain amounts
from taxable income and accumulate such amounts in a "policyholder surplus"
account. The balance in this account at December 31, 1996, approximately $340,
will result in taxes payable of $119 if distributed by the Company to ALIC. No
provision for taxes has been made as the Company has no plan to distribute
amounts from this account. No further additions to the account are allowed under
the Tax Reform Act of 1984.
65
<PAGE>
LINCOLN BENEFIT LIFE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands)
7. Statutory Financial Information
The following tables reconcile net income and shareholder's equity as reported
herein in conformity with generally accepted accounting principles with
statutory net income and capital and surplus, determined in accordance with
statutory accounting practices prescribed or permitted by insurance regulatory
authorities:
<TABLE>
<CAPTION>
Net Income
-----------
Year Ended December 31,
-----------------------
1996 1995 1994
------- ------- --------
<S> <C> <C> <C>
Balance per generally accepted $5,583 $5,093 $ 3,036
accounting principles
Deferred income taxes (62) (156) (96)
Capital gains (6) (258) (198)
Investment income 44 (188) (200)
Other 2 638 (1,230)
------ ------ -------
Balance per statutory accounting practices $5,561 $5,129 $ 1,312
====== ====== =======
</TABLE>
<TABLE>
<CAPTION>
Shareholder's Equity
--------------------
At December 31,
---------------
1996 1995
-------- --------
<S> <C> <C>
Balance per generally accepted accounting principles $142,161 $142,308
Deferred income taxes 3,480 5,263
Unrealized net capital gains (losses) (1,801) (4,998)
Non-admitted assets and statutory reserves (13,407) (11,951)
Other 2,603 788
-------- --------
Balance per statutory accounting practices $133,036 $131,410
======== ========
</TABLE>
Permitted statutory accounting practices
The Company prepares its statutory financial statements in accordance with
accounting principles and practices prescribed or permitted by the Nebraska
Department of Insurance. Prescribed statutory accounting practices include a
variety of publications of the National Association of Insurance Commissioners,
as well as state laws, regulations and general administrative rules. Permitted
statutory accounting practices encompass all accounting practices not so
prescribed. The Company does not follow any permitted statutory accounting
practices that have a material effect on statutory surplus or risk-based
capital.
Dividends
The ability of the Company to pay dividends is dependent on business conditions,
income, cash requirements of the Company and other relevant factors. The payment
of shareholder dividends by insurance companies without the prior approval of
the state insurance regulator is limited to formula amounts based on net income
and capital and surplus, determined in accordance with statutory accounting
practices, as well as the timing and amount of dividends paid in the preceding
twelve months. The maximum amount of dividends that the Company can distribute
during 1997 without prior approval of the Nebraska Department of Insurance is
$5,561.
66
<PAGE>
LINCOLN BENEFIT LIFE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands)
8. Commitments and Contingent Liabilities
The Company leases certain office facilities. Total rent expense for all leases
was $1,039, $741 and $723 in 1996, 1995, and 1994, respectively. Minimum rental
commitments under non-cancelable leases with a remaining term of more than one
year as of December 31, 1996, are as follows:
<TABLE>
<CAPTION>
<S> <C>
1997 $ 925
1998 953
1999 981
2000 1,007
2001 1,003
Thereafter 530
------
$5,399
======
</TABLE>
Beyond 1998, the Company has the option to cancel the agreement for office
space, subject to a cancellation charge of an amount equal to one year's rent.
67
<PAGE>
LINCOLN BENEFIT LIFE COMPANY
SUPPLEMENTAL SCHEDULE - REINSURANCE
<TABLE>
<CAPTION>
($ in thousands)
Gross
Year Ended December 31, 1996 Amount Ceded Net Amount
------ ----- ----------
<S> <C> <C> <C>
Life insurance in force $51,514,000 $51,514,000 $ -
=========== =========== =======
Premiums and contracts charges:
Life and annuities $ 200,853 $ 200,853 $ -
=========== =========== =======
Gross
Year Ended December 31, 1995 Amount Ceded Net Amount
------ ----- ----------
Life insurance in force $28,215,000 $28,200,000 $15,000
=========== =========== =======
Premiums and contracts charges:
Life and annuities $ 128,975 $ 128,975 $ -
=========== =========== =======
Gross
Year Ended December 31, 1994 Amount Ceded Net Amount
------ ----- ----------
Life insurance in force $20,207,000 $20,191,000 $16,000
=========== =========== =======
Premiums and contracts charges:
Life and annuities $ 96,964 $ 96,964 $ -
=========== =========== =======
</TABLE>
68
<PAGE>
APPENDIX
ILLUSTRATIONS OF SURRENDER VALUES AND DEATH BENEFITS
The following tables illustrate how the Surrender Values and Death Benefits of a
Policy change with the investment experience of the Portfolios. The tables show
how the Surrender Values and Death Benefits of a Policy issued to an Insured of
a given age and underwriting risk classification who pays the specified annual
premium would vary over time if the investments return on the assets held in the
underlying Portfolio(s) was a uniform, gross, after-tax annual rate of 0%, 6%,
or 12%. The tables on pages A-2 through A-5 illustrate a Policy issued to a
male, age 45, $150,000 face amount, under a preferred nonsmoker risk
classification and Death Benefit Option 1.
The illustrations on pages A-2 and A-3 assume annual payment of $1,883, which is
the Safety Net Premium (see Monthly Guarantee Premiums, page 8). Payment of
this premium each year would guarantee death benefit coverage to age 65,
regardless of investment performance, assuming no loans or withdrawals are
taken.
The illustrations on page A-2 assume current charges and cost of insurance
rates, while the illustrations on page A-3 assume maximum guaranteed charges and
cost of insurance rates (based on the 1980 Commissioners Standard Ordinary
Mortality Table).
The illustrations on page A-4 and A-5 assume annual payment of $2,935, which is
the Lifetime Guarantee Premium (see "Monthly Guarantee Premiums," page 8).
Payment of this premium each year would guarantee death benefit coverage for the
Insured's lifetime, regardless of investment performance, assuming no loans or
withdrawals are taken. The illustrations on page A-4 assume current charges and
cost of insurance rates, while the illustrations on page A-5 assume maximum
guaranteed charges and cost of insurance rates (based on the 1980 Commissioners
Standard Ordinary Mortality Table).
The amounts shown for the Death Benefit, Policy Value and Surrender Value
reflect the fact that the net investment return of the Subaccounts is lower than
the gross, after-tax return on the assets held in the Portfolios as a result of
expenses paid by the Portfolios and charges levied against the Subaccounts. The
values shown take into account the average daily investment advisory fees paid
by the Portfolios, which is equivalent to an average annual rate of .39% of the
average daily net assets of the Funds, and the average of other daily Portfolio
expenses, which is equivalent to an average annual rate of .40% of the average
daily net assets of the Funds. Also reflected is our daily charge to each
Subaccount for assuming mortality and expense risks. The current charge is an
annual rate of .70% of the average net assets of the Subaccounts. The mortality
and expense risk charge is guaranteed never to exceed .90% of the average net
assets. The illustrations also reflect the deduction from premium payments for
premium taxes, the monthly administrative fee of $5, and, for the first twelve
policy years, the annual administrative charge of 0.2% of Policy Value. After
deduction of these amounts, the illustrated gross annual investment rates of
return of 0%, 6%, and 12%, "Assuming Current Costs" correspond to approximate
net annual rates of -1.49%, 4.51%, and 10.51% respectively. The illustrated
gross annual investment rates of return of 0%, 6%, and 12%, "Assuming Guaranteed
Costs" correspond to approximate net annual rates of return of -1.69%, 4.31% and
10.31% respectively.
The hypothetical values shown in the tables do not reflect any charges for
Federal income taxes against the Separate Account, since we are not currently
making this charge. However, this charge may be made in the future and, in that
event, the gross annual investment rate of return would have to exceed 0%,
6%, and 12% by an amount sufficient to cover the tax charge in order to produce
the Death Benefits, Policy Values and Surrender Values illustrated (see "Federal
Tax Matters," page 17).
The tables illustrate the Policy Values, Surrender Values and Death Benefits
that would result based upon the hypothetical investment rates of return if
premiums are paid as indicated, if all net premiums are allocated to the
Separate Account, and if no Policy loans are taken. The tables also assume that
you have not requested an increase or decrease in the face amount of the Policy
and that no partial surrenders or transfers have been made.
The "Premiums Accumulated at 5%" column of each table shows the amount which
would accumulate if an amount equal to the premium were invested to earn
interest at 5% per year, compounded annually.
Upon request, we will provide a comparable illustration based upon the proposed
Insured's actual age, sex and underwriting classification, the face amount,
death benefit option, the proposed amount and frequency of premium payments and
any available riders requested.
A-1
<PAGE>
LINCOLN BENEFIT LIFE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
HYPOTHETICAL ILLUSTRATIONS
Male issue age 45
Face Amount $150,000 Preferred Non-Smoker Class
Annual Premium $1,883 Death Benefit Option 1
Current Cost of Insurance Rates
DEATH BENEFIT
Assuming Hypothetical Gross and
Net Annual Investment Return of
Policy Premiums Accumulated 0% Gross 6% Gross 12% Gross
Year at 5% -1.49% Net 4.51% Net 10.51% Net
1 1,977 150,000 150,000 150,000
2 4,053 150,000 150,000 150,000
3 6,233 150,000 150,000 150,000
4 8,522 150,000 150,000 150,000
5 10,925 150,000 150,000 150,000
6 13,448 150,000 150,000 150,000
7 16,098 150,000 150,000 150,000
8 18,880 150,000 150,000 150,000
9 21,801 150,000 150,000 150,000
10 24,868 150,000 150,000 150,000
15 42,664 150,000 150,000 150,000
20 (age 65) 65,376 150,000 150,000 150,000
30 (age 75) 131,360 150,000 150,000 253,820
40 (age 85) 238,839 * 150,000 693,213
54 (age 99) 511,635 * * 2,622,670
<TABLE>
<CAPTION>
POLICY VALUE SURRENDER VALUE
Assuming Hypothetical Gross and Assuming Hypothetical Gross and
Net Annual Investment Return of Net Annual Investment Return of
Policy 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
Year -1.49% Net 4.51% Net 10.51% Net -1.49% Net 4.51% Net 10.51% Net
<S> <C> <C> <C> <C> <C> <C>
1 1,287 1,380 1,474 0 65 159
2 2,523 2,790 3,069 984 1,251 1,530
3 3,714 4,236 4,804 2,175 2,697 3,265
4 4,858 5,718 6,692 3,319 4,179 5,153
5 5,955 7,237 8,748 4,416 5,698 7,209
6 7,012 8,801 10,998 5,550 7,339 9,537
7 8,011 10,394 13,445 6,626 9,009 12,060
8 8,957 12,022 16,114 7,726 10,791 14,883
9 9,835 13,671 19,015 8,758 12,594 17,938
10 10,644 15,341 22,173 9,875 14,571 21,404
15 14,178 24,647 43,692 14,178 24,647 43,692
20 (age 65) 15,975 35,084 79,126 15,975 35,084 79,126
30 (age 75) 4,792 52,682 237,215 4,792 52,682 237,215
40 (age 85) * 47,190 660,203 * 47,190 660,203
54 (age 99) * * 2,622,670 * * 2,622,670
</TABLE>
Assumes the premium shown is paid at the beginning of each policy year. Values
would be different if premiums are paid with a different frequency or in
different amounts.
Assumes that no policy loans or withdrawals have been made. An * indicates lapse
in the absence of additional premium payment.
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past of future investment rates of return. Actual investment rates of return may
be more or less than those shown and will depend on a number of different
factors, including the investment allocations by the owner and different
investment rates of return for the portfolios. The death benefit, policy value,
and surrender value for a policy would be different from those shown if the
actual investment rates of return averaged the rates shown above over a period
of years, but fluctuated above or below those averages for individual policy
years. No representation can be made by the company or the fund that this
assumed investment rate of return can be achieved for any one year or sustained
over a period of time.
A-2
<PAGE>
LINCOLN BENEFIT LIFE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
HYPOTHETICAL ILLUSTRATIONS
Male issue age 45
Face Amount $150,000 Preferred Non-Smoker Class
Annual Premium $1,883 Death Benefit Option 1
Guaranteed Cost of Insurance Rates
DEATH BENEFIT
Assuming Hypothetical Gross and
Net Annual Investment Return of
Policy Premiums Accumulated 0% Gross 6% Gross 12% Gross
Year at 5% -1.69% Net 4.31% Net 10.31% Net
1 1,977 150,000 150,000 150,000
2 4,053 150,000 150,000 150,000
3 6,233 150,000 150,000 150,000
4 8,522 150,000 150,000 150,000
5 10,925 150,000 150,000 150,000
6 13,448 150,000 150,000 150,000
7 16,098 150,000 150,000 150,000
8 18,880 150,000 150,000 150,000
9 21,801 150,000 150,000 150,000
10 24,868 150,000 150,000 150,000
15 42,664 150,000 150,000 150,000
20 (age 65) 65,376 150,000 150,000 150,000
30 (age 75) 131,360 * * 182,174
40 (age 85) 238,839 * * 486,725
54 (age 99) 511,635 * * 1,740,836
<TABLE>
<CAPTION>
POLICY VALUE SURRENDER VALUE
Assuming Hypothetical Gross and Assuming Hypothetical Gross and
Net Annual Investment Return of Net Annual Investment Return of
Policy 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
Year -1.69% Net 4.31% Net 10.31% Net -1.69% Net 4.31% Net 10.31% Net
<S> <C> <C> <C> <C> <C> <C>
1 1,237 1,329 1,421 0 14 106
2 2,415 2,675 2,947 876 1,136 1,408
3 3,531 4,037 4,588 1,992 2,498 3,049
4 4,583 5,412 6,352 3,044 3,873 4,813
5 5,569 6,798 8,249 4,030 5,259 6,710
6 6,483 8,187 10,286 5,021 6,725 8,824
7 7,318 9,574 12,473 5,933 8,189 11,088
8 8,067 10,950 14,817 6,836 9,719 13,586
9 8,720 12,303 17,326 7,643 11,226 16,249
10 9,269 13,626 20,013 8,500 12,857 19,244
15 10,229 19,538 36,886 10,229 19,538 36,886
20 (age 65) 6,774 22,668 61,821 6,774 22,668 61,821
30 (age 75) * * 170,256 * * 170,256
40 (age 85) * * 463,548 * * 463,548
54 (age 99) * * 1,740,836 * * 1,740,836
</TABLE>
Assumes the premium shown is paid at the beginning of each policy year. Values
would be different if premiums are paid with a different frequency or in
different amounts.
Assumes that no policy loans or withdrawals have been made. An * indicates lapse
in the absence of additional premium payment.
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual investment rates of return may
be more or less than those shown and will depend on a number of different
factors, including the investment allocations by the owner and different
investment rates of return for the portfolios. The death benefit, policy value,
and surrender value for a policy would be different from those shown if the
actual investment rates of return averaged the rates shown above over a period
of years, but fluctuated above or below those averages for individual policy
years. No representation can be made by the company or the fund that this
assumed investment rate of return can be achieved for any one year or sustained
over a period of time.
A-3
<PAGE>
LINCOLN BENEFIT LIFE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
HYPOTHETICAL ILLUSTRATIONS
Male issue age 45
Face Amount $150,000 Preferred Non-Smoker Class
Annual Premium $2,935 Death Benefit Option 1
Current Cost of Insurance Rates
DEATH BENEFIT
Assuming Hypothetical Gross and
Net Annual Investment Return of
Policy Premiums Accumulated 0% Gross 6% Gross 12% Gross
Year at 5% -1.49% Net 4.51% Net 10.51% Net
1 3,081 150,000 150,000 150,000
2 6,317 150,000 150,000 150,000
3 9,714 150,000 150,000 150,000
4 13,281 150,000 150,000 150,000
5 17,026 150,000 150,000 150,000
6 20,959 150,000 150,000 150,000
7 25,088 150,000 150,000 150,000
8 29,423 150,000 150,000 150,000
9 33,976 150,000 150,000 150,000
10 38,756 150,000 150,000 150,000
15 66,490 150,000 150,000 150,000
20 (age 65) 101,885 150,000 150,000 186,706
30 (age 75) 204,717 150,000 150,000 486,583
40 (age 85) 372,218 150,000 253,882 1,317,635
54 (age 99) 797,354 150,000 484,802 4,966,946
<TABLE>
<CAPTION>
POLICY VALUE SURRENDER VALUE
Assuming Hypothetical Gross and Assuming Hypothetical Gross and
Net Annual Investment Return of Net Annual Investment Return of
Policy 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
Year -1.49% Net 4.51% Net 10.51% Net -1.49% Net 4.51% Net 10.51% Net
<S> <C> <C> <C> <C> <C> <C>
1 2,298 2,453 2,608 759 914 1,069
2 4,532 4,986 5,459 2,993 3,447 3,920
3 6,707 7,607 8,583 5,168 6,068 7,045
4 8,824 10,321 12,011 7,285 8,782 10,473
5 10,881 13,131 15,774 9,343 11,592 14,235
6 12,888 16,048 19,915 11,426 14,586 18,453
7 14,826 19,061 24,459 13,441 17,676 23,074
8 16,703 22,179 29,456 15,472 20,948 28,225
9 18,503 25,395 34,943 17,426 24,318 33,866
10 20,227 28,714 40,976 19,458 27,945 40,207
15 28,306 47,758 82,672 28,306 47,758 82,672
20 (age 65) 34,713 71,233 153,038 34,713 71,233 153,038
30 (age 75) 35,111 136,123 454,751 35,111 136,123 454,751
40 (age 85) 0 241,792 1,254,890 0 241,792 1,254,890
54 (age 99) 0 484,802 4,966,946 0 484,802 4,966,946
</TABLE>
Assumes the premium shown is paid at the beginning of each policy year. Values
would be different if premiums are paid with a different frequency or in
different amounts.
Assumes that no policy loans or withdrawals have been made. An * indicates lapse
in the absence of additional premium payment.
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual investment rates of return may
be more or less than those shown and will depend on a number of different
factors, including the investment allocations by the owner and different
investment rates of return for the portfolios. The death benefit, policy value,
and surrender value for a policy would be different from those shown if the
actual investment rates of return averaged the rates shown above over a period
of years, but fluctuated above or below those averages for individual policy
years. No representation can be made by the company or the fund that this
assumed investment rate of return can be achieved for any one year or sustained
over a period of time.
A-4
<PAGE>
LINCOLN BENEFIT LIFE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
HYPOTHETICAL ILLUSTRATIONS
Male issue age 45
Face Amount $150,000 Preferred Non-Smoker Class
Annual Premium $2,935 Death Benefit Option 1
Guaranteed Cost of Insurance Rates
<TABLE>
<CAPTION>
DEATH BENEFIT
Assuming Hypothetical Gross and
Net Annual Investment Return of
Policy Premiums Accumulated 0% Gross 6% Gross 12% Gross
Year at 5% -1.69% Net 4.31% Net 10.31% Net
<S> <C> <C> <C> <C>
1 3,081 150,000 150,000 150,000
2 6,317 150,000 150,000 150,000
3 9,714 150,000 150,000 150,000
4 13,281 150,000 150,000 150,000
5 17,026 150,000 150,000 150,000
6 20,959 150,000 150,000 150,000
7 25,088 150,000 150,000 150,000
8 29,423 150,000 150,000 150,000
9 33,976 150,000 150,000 150,000
10 38,756 150,000 150,000 150,000
15 47,502 150,000 150,000 150,000
20 (age 65) 101,885 150,000 150,000 168,911
30 (age 75) 204,717 150,000 150,000 428,515
40 (age 85) 372,218 150,000 161,335 1,119,895
54 (age 99) 797,354 150,000 308,346 3,966,410
</TABLE>
<TABLE>
<CAPTION>
POLICY VALUE SURRENDER VALUE
Assuming Hypothetical Gross and Assuming Hypothetical Gross and
Net Annual Investment Return of Net Annual Investment Return of
Policy 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
Year -1.69% Net 4.31% Net 10.31% Net -1.69% Net 4.31% Net 10.31% Net
<S> <C> <C> <C> <C> <C> <C>
1 2,247 2,400 2,553 708 861 1,015
2 4,418 4,865 5,332 2,880 3,327 3,793
3 6,515 7,398 8,357 4,976 5,859 6,818
4 8,534 9,998 11,653 6,995 8,460 10,114
5 10,474 12,667 15,246 8,935 11,128 13,707
6 12,331 15,401 19,164 10,869 13,939 17,702
7 14,100 18,200 23,436 12,715 16,815 22,051
8 15,774 21,058 28,096 14,543 19,827 26,865
9 17,345 23,972 33,181 16,268 22,895 32,104
10 18,809 26,940 38,735 18,039 26,171 37,966
15 24,427 42,772 76,088 24,427 42,772 76,088
20 (age 65) 26,065 59,974 138,451 26,065 59,974 138,451
30 (age 75) 2,927 97,203 400,481 2,927 97,203 400,481
40 (age 85) 0 153,653 1,066,567 0 153,653 1,066,567
54 (age 99) 0 308,346 3,966,410 0 308,346 3,966,410
</TABLE>
Assumes the premium shown is paid at the beginning of each policy year. Values
would be different if premiums are paid with a different frequency or in
different amounts.
Assumes that no policy loans or withdrawals have been made. An * indicates lapse
in the absence of additional premium payment.
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual investment rates of return may
be more or less than those shown and will depend on a number of different
factors, including the investment allocations by the owner and different
investment rates of return for the portfolios. The death benefit, policy value,
and surrender value for a policy would be different from those shown if the
actual investment rates of return averaged the rates shown above over a period
of years, but fluctuated above or below those averages for individual policy
years. No representation can be made by the company or the fund that this
assumed investment rate of return can be achieved for any one year or sustained
over a period of time.
A-5
<PAGE>
PART II
CONTENTS OF THIS REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
Facing Page
Cross Reference Sheet required by Rule 404(c)
A Prospectus consisting of 57 pages relating to the Flexible Premium
Variable Life Insurance Policies
Undertaking to File Reports
Indemnification Undertaking
Representation Relating to Rule 6e-3(T)
Section 26(e) Representation
Signature Page
Exhibits
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned Registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
INDEMNIFICATION UNDERTAKING
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officer and controlling persons of the
Registrant, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
REPRESENTATION RELATING TO RULE 6e-3(T)
This filing is made pursuant to 6e-3(T) under the Investment Company Act
of 1940.
SECTION 26(e) REPRESENTATION
Lincoln Benefit Life hereby represents that, as to the variable universal
life insurance policies which are the subject of this Registration Statement,
File No. 33-67386, the fees and charges deducted under the policy, in the
aggregate are reasonable in relation to the services rendered, the expenses
expected to be incurred and the risk assumed by Lincoln Benefit Life.
A
<PAGE>
EXHIBITS
--------
<TABLE>
<CAPTION>
<C> <S> <C>
(1) Resolution of the Board of Directors of
Lincoln Benefit Life Company authorizing
establishment of Registrant.............................................. *
(2) Custodian Agreement...................................................... Not Applicable
(3) (a) Form of Underwriting Agreement Herewith.............................. *
(b) Form of Dealer Agreement............................................. *
(c) Schedule of Sales Commissions........................................ *
(4) Other Agreements......................................................... *
(5) Flexible Premium Policy.................................................. *
(6) (a) Articles of Incorporation of
Lincoln Benefit Life Company......................................... *
(b) By-Laws of Lincoln Benefit Life Company.............................. *
(7) Insurance Company Blanket Bond........................................... *
(8) Fund Participation Agreement............................................. *
(9) Other Material Contracts................................................. Not Applicable
(10) Application Form......................................................... Herewith
(11) Consent of Independent Accountants....................................... Herewith
(12) Opinion and Consent of Counsel........................................... Herewith
(13) Actuarial Opinion and Consent............................................ *
(14) Actuarial basis of payment and cash
value adjustment pursuant to
Rule 6e-3(T)(b)(13)(v)(B)................................................ *
(15) Procedures Memorandum pursuant to
Rule 6e-3(T)(b)(12)(ii).................................................. *
(16) Powers of Attorney....................................................... Not Applicable
(27) Financial Data Schedules................................................. Herewith
</TABLE>
* Previously Filed
B
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets the requirements of Securities Act
Rule 485(b) for effectiveness of this Post-Effective Amendment to the
Registration Statement and has duly caused this Post-Effective Amendment to the
Registration Statement to be signed on its behalf, in the City of Lincoln, and
the State of Nebraska, on this 30th day of April, 1997.
LINCOLN BENEFIT LIFE VARIABLE
LIFE ACCOUNT
(Registrant)
By: LINCOLN BENEFIT LIFE COMPANY
(Depositor)
By: /s/B. Eugene Wraith
---------------------------
B. Eugene Wraith, President
and Chief Operating Officer
As required by the Securities Act of 1933, this Post-Effective Amendment to
the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
SIGNATURE TITLE DATE
--------- ----- ----
/s/B. Eugene Wraith President, Chief Operating April 30, 1997
- ---------------------- Officer and Director --------------
B. Eugene Wraith (Principal Executive Officer)
/s/Robert E. Rich Executive Vice President April 30, 1997
- ---------------------- and Director --------------
Robert E. Rich
/s/Randy J. Von Fumetti Senior Vice President, April 30, 1997
- ----------------------- Treasurer and Director --------------
Randy J. Von Fumetti (Principal Financial Officer)
/s/Janet P. Anderbery Vice President and April 30, 1997
- ---------------------- Controller (Principal --------------
Janet P. Anderbery Accounting Officer)
Director
- ---------------------- --------------
Peter H. Heckman
/s/William F. Krueger Director April 30, 1997
- --------------------- --------------
William F. Krueger
<PAGE>
SIGNATURE TITLE DATE
--------- ----- ----
- --------------------- Director ------------------
Louis G. Lower, II
/s/John J. Morris Director April 30, 1997
- --------------------- ------------------
John J. Morris
/s/Lawrence Pollock Director April 30, 1997
- --------------------- ------------------
Lawrence Pollock
/s/Douglas F. Gaer Director April 30, 1997
- --------------------- ------------------
Douglas F. Gaer
- --------------------- Director ------------------
Theodore A. Schnell
- --------------------- Director ------------------
Kevin Slawin
/s/Stephen W. Sutton Director April 30, 1997
- --------------------- ------------------
Stephen W. Sutton
- --------------------- Director ------------------
Michael J. Velotta
/s/Carol S. Watson Director April 30, 1997
- --------------------- ------------------
Carol S. Watson
<PAGE>
INDEX TO EXHIBITS
FOR
REGISTRATION STATEMENT ON FORM S-6
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
EXHIBIT NO. SEQUENTIAL PAGE NO.
- ----------- -------------------
(10) Application Form
(11) Consent of Independent Auditors
(12) Opinion and Consent of Counsel
(27) Financial Data Schedules
<PAGE>
Exhibit 10
Lincoln Benefit Life Company, PO Box 82532, Lincoln, NE 68501-2532
SUPPLEMENT TO APPLICATION
Flexible Premium Variable Life Insurance Policy
IMPORTANT NOTICE: Any person who, with intent to defraud or knowing that he is
facilitating a fraud against an insurer, submits an application or files a claim
containing a false or deceptive statement is guilty of insurance fraud.
Proposed Primary Insured _______________________________________________________
Guaranteed Minimum Death Benefit Option:
[_] Safety Net (will apply if no selection made) [_] Lifetime
<TABLE>
<CAPTION>
- --------------------------------------------
PREMIUM ALLOCATION: (whole percentages only)
- --------------------------------------------
<S> <C> <C> <C> <C> <C>
(Janus Aspen Series) (Fidelity VIPF) (Federated Insurance Management Series)
Plan Lump Plan Lump Plan Lump
Premium Sum Premium Sum Premium Sum
______% ______% (Flexible Income) ______% ______% (Money Market) ______% ______% (Utility Fund)
______% ______% (Balanced) ______% ______% (Equity-Income) ______% ______% (Fund for U.S. Gov't Securities)
______% ______% (Growth) ______% ______% (Overseas) ______% ______% (High Income Bond)
______% ______% (Aggressive Growth) ______% ______% (Growth)
______% ______% (Worldwide Growth)
(Scudder Variable Life Investment Fund) (Fidelity VIPF II) (IAI Retirement Funds, Inc.)
Plan Lump Plan Lump Plan Lump
Premium Sum Premium Sum Premium Sum
______% ______% (Bond) ______% ______% (Asset Manager) ______% ______% (IAI Regional)
______% ______% (Contrafund) ______% ______% (IAI Balanced)
(Fixed Account) (not available in Florida)
Plan Lump ______% ______% (IAI Reserve)
Premium Sum
______% ______%
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------
MORTALITY CHARGE ALLOCATION: (whole percentages only)
- -----------------------------------------------------
[_] Prorata: According to percentages of cash value in subaccounts (will apply if no selection made).
[_] Premium Allocation: According to allocation of future money received.
[_] Specific Allocation: Specified funds. Indicate below.
<S> <C> <C>
(Janus Aspen Series) (Fidelity VIPF) (Federated Insurance Management Series)
Specific Specific Specific
Allocation Allocation Allocation
______% (Flexible Income) ______% (Money Market) ______% (Utility Fund)
______% (Balanced) ______% (Equity-Income) ______% (Fund for U.S. Gov't Securities)
______% (Growth) ______% (Overseas) ______% (High Income Bond)
______% (Aggressive Growth) ______% (Growth)
______% (Worldwide Growth)
(Scudder Variable Life Investment Fund) (Fidelity VIPF II) (IAI Retirement Funds, Inc.)
Specific Specific Specific
Allocation Allocation Allocation
______% (Bond) ______% (Asset Manager) ______% (IAI Regional)
______% (Contrafund) ______% (IAI Balanced)
(Fixed Account) (not available in Florida)
Specific ______% (IAI Reserve)
Allocation
______%
</TABLE>
I understand that
THE AMOUNT AND DURATION OF THE DEATH BENEFIT MAY VARY UNDER SPECIFIED
CONDITIONS.
POLICY VALUES MAY INCREASE OR DECREASE IN ACCORDANCE WITH THE EXPERIENCE OF
THE SEPARATE ACCOUNT.
ILLUSTRATIONS OF BENEFITS, INCLUDING DEATH BENEFITS, POLICY VALUES, AND CASH
SURRENDER VALUES ARE AVAILABLE UPON REQUEST.
The undersigned represent that I/we have received a current prospectus for the
contract and that all statements and answers on this Supplement to Application
are made part of the application and that such are complete and correctly
recorded to the best of my/our knowledge and belief.
Proposed Insured (Child over age 15 must sign)___________________ Date_________
__________________________________________________ _________________________
Signature of applicant (owner) other than proposed Date
insured (if business insurance, show title of
officer and name of firm) (If proposed insured is
under age 18, parent must sign)
_____________________________________ _______________________________________
Witness Registered Representative
VLA 9390, Rev. 3/97
<PAGE>
<TABLE>
____________________________________________________________________________________________________________________________________
DOLLAR COST AVERAGING/PORTFOLIO REBALANCING:
Select only one. You may not use Dollar Cost Averaging and Portfolio Rebalancing at the same time.
<S> <C> <C>
[_] Dollar Cost Averaging (DCA): [_] Portfolio Rebalancing (PR):
Please dollar cost average in the amount of $ ______________ Please rebalance in the percentages specified below:
($100 minimum transfer) from _______________________________ Frequency: [_] Monthly [_] Semiannual
Source Subaccount (only one source Subaccount may be chosen) [_] Quarterly [_] Annual
to the following Subaccounts (eight maximum) dollar amounts only:
Frequency: [_] Monthly [_] Quarterly [_] Annual
(Janus Aspen Series) (Fidelity VIPF) Federated Insurance Management Series
DCA PR DCA PR DCA PR
$______ ______% (Flexible Income) $______ ______% (Money Market) $______ ______% (Utility Fund)
$______ ______% (Balanced) $______ ______% (Equity-Income) $______ ______% (Fund for U.S. Gov't. Securities)
$______ ______% (Growth) $______ ______% (Overseas) $______ ______% (High Income Bond)
$______ ______% (Aggressive Growth) $______ ______% (Growth)
$______ ______% (Worldwide Growth)
(Scudder Variable Life Investment (Fidelity VIPF II) (IAI Retirement Funds, Inc.)
Fund) DCA PR DCA PR
$______ ______% (Asset Manager) $______ ______% (IAI Regional)
DCA PR
$______ ______% (Bond) $______ ______% (Contrafund) $______ ______% (IAI Balanced)
$______ ______% (IAI Reserve)
(Fixed Account) (not available in Florida)
DCA PR
$______ ______% (Restrictions apply for DCA--see prospectus for details)
- ----------------------
TRANSFER AUTHORIZATION:
- ----------------------
[ ] I authorize Lincoln Benefit Life Company ("LBL") to act upon the written or
telephone instructions from the person named below to 1) change the
allocation of payments and deductions between and among the subaccounts; and
2) transfer amounts among the subaccounts. Neither LBL nor any person
authorized by us will be responsible for any claim, loss, liability or
expense in connection with such transfer authorization if LBL, or its
employees, acts upon transfer instructions in good faith. LBL may establish
procedures to determine the proper identification of the person requesting a
transfer.
Name and Relationship of Authorized Person:
Name: _____________________________________________________ Relationship __________________________ SS# ________________________
Signature of Owner __________________________________________________________________ Date ___________________________________
</TABLE>
<PAGE>
Exhibit 11
INDEPENDENT AUDITORS' CONSENT
- -----------------------------
We consent to the use in this Post-Effective Amendment No. 8 to Registration
Statement No. 33-67386 of Lincoln Benefit Life Variable Life Account of our
reports dated April 18, 1997 on the financial statements of Lincoln Benefit Life
Variable Life Account and the consolidated financial statements and supplemental
schedule of Lincoln Benefit Life Company appearing in the Prospectus, which is a
part of such Registration Statement, and to the reference to us under the
heading "Experts" in such Prospectus.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Lincoln, Nebraska
April 28, 1997
<PAGE>
[LETTERHEAD OF LINCOLN BENEFIT LIFE COMPANY]
April 30, 1997
Exhibit 12
Securities and Exchange Commission
450 Fifth Street, NW
Washington, D.C. 20549
RE: Lincoln Benefit Life Variable Life Account
File No 33-67386
Commissioners:
I am an attorney at law admitted to the Bar of the state of Nebraska. I am
Counsel of Lincoln Benefit Life Company. I provide legal counsel for the
Lincoln Benefit Life Variable Life Account. In such capacity, I have reviewed
the Lincoln Benefit Life Variable Life Account's Post-Effective Amendment No. 8
to Form S-6 filed pursuant to Rule 485(b) under the Securities Act of 1933 and
represent that such Amendment does not contain disclosure which would render it
ineligible to become effective pursuant to Rule 485(b).
Sincerely,
/s/ Gregory C. Sernett
Gregory C. Sernett
Counsel
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> Lincoln Benefit Life VUL Total All Subaccounts
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 45,977
<INVESTMENTS-AT-VALUE> 49,524
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 49,524
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<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> 49,524
<DIVIDEND-INCOME> 597
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 285
<NET-INVESTMENT-INCOME> 312
<REALIZED-GAINS-CURRENT> 1666
<APPREC-INCREASE-CURRENT> 1891
<NET-CHANGE-FROM-OPS> 3869
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 61,063
<NUMBER-OF-SHARES-REDEEMED> 57,663
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 30,991
<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> 34,029
<PER-SHARE-NAV-BEGIN> 0<F1>
<PER-SHARE-NII> .06
<PER-SHARE-GAIN-APPREC> .66
<PER-SHARE-DIVIDEND> .11
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0<F1>
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>See Attached
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> Janus Flexible Income
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 410
<INVESTMENTS-AT-VALUE> 428
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 428
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<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> 428
<DIVIDEND-INCOME> 29
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 4
<NET-INVESTMENT-INCOME> 25
<REALIZED-GAINS-CURRENT> (9)
<APPREC-INCREASE-CURRENT> 13
<NET-CHANGE-FROM-OPS> 29
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 293
<NUMBER-OF-SHARES-REDEEMED> 297
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (33)
<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> 445
<PER-SHARE-NAV-BEGIN> 11.11
<PER-SHARE-NII> .63
<PER-SHARE-GAIN-APPREC> .10
<PER-SHARE-DIVIDEND> .73
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.24
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> Janus Balanced
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 1,461
<INVESTMENTS-AT-VALUE> 1,562
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,562
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<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> 1,562
<DIVIDEND-INCOME> 24
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 6
<NET-INVESTMENT-INCOME> 18
<REALIZED-GAINS-CURRENT> 28
<APPREC-INCREASE-CURRENT> 64
<NET-CHANGE-FROM-OPS> 110
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 123
<NUMBER-OF-SHARES-REDEEMED> 38
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,290
<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> 917
<PER-SHARE-NAV-BEGIN> 13.03
<PER-SHARE-NII> .29
<PER-SHARE-GAIN-APPREC> 1.46
<PER-SHARE-DIVIDEND> .38
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.77
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> Janus Growth
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 3,424
<INVESTMENTS-AT-VALUE> 3,794
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,794
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<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> 3,794
<DIVIDEND-INCOME> 57
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 22
<NET-INVESTMENT-INCOME> 35
<REALIZED-GAINS-CURRENT> 169
<APPREC-INCREASE-CURRENT> 196
<NET-CHANGE-FROM-OPS> 400
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 468
<NUMBER-OF-SHARES-REDEEMED> 316
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,541
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 2,523
<PER-SHARE-NAV-BEGIN> 13.45
<PER-SHARE-NII> .21
<PER-SHARE-GAIN-APPREC> 2.16
<PER-SHARE-DIVIDEND> .34
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.51
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> Janus Aggressive Growth
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 4,818
<INVESTMENTS-AT-VALUE> 4,914
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,914
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<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> 4,914
<DIVIDEND-INCOME> 26
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 28
<NET-INVESTMENT-INCOME> (2)
<REALIZED-GAINS-CURRENT> 157
<APPREC-INCREASE-CURRENT> (107)
<NET-CHANGE-FROM-OPS> 48
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 402
<NUMBER-OF-SHARES-REDEEMED> 214
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3,519
<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> 3,154
<PER-SHARE-NAV-BEGIN> 17.08
<PER-SHARE-NII> (.01)
<PER-SHARE-GAIN-APPREC> .28
<PER-SHARE-DIVIDEND> .15
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.24
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> Janus Worldwide Growth
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 5,658
<INVESTMENTS-AT-VALUE> 6,353
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,353
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<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> 6,353
<DIVIDEND-INCOME> 58
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 33
<NET-INVESTMENT-INCOME> 25
<REALIZED-GAINS-CURRENT> 337
<APPREC-INCREASE-CURRENT> 450
<NET-CHANGE-FROM-OPS> 812
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 441
<NUMBER-OF-SHARES-REDEEMED> 223
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 4,676
<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> 4,016
<PER-SHARE-NAV-BEGIN> 15.31
<PER-SHARE-NII> .11
<PER-SHARE-GAIN-APPREC> 3.61
<PER-SHARE-DIVIDEND> .27
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.44
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> IAI Regional
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 1,534
<INVESTMENTS-AT-VALUE> 1,643
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,643
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<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> 1,643
<DIVIDEND-INCOME> 4
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 10
<NET-INVESTMENT-INCOME> (6)
<REALIZED-GAINS-CURRENT> 116
<APPREC-INCREASE-CURRENT> 6
<NET-CHANGE-FROM-OPS> 116
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 195
<NUMBER-OF-SHARES-REDEEMED> 131
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,005
<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> 1,141
<PER-SHARE-NAV-BEGIN> 14.16
<PER-SHARE-NII> (.08)
<PER-SHARE-GAIN-APPREC> 1.58
<PER-SHARE-DIVIDEND> .05
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.02
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> IAI Reserve
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 111
<INVESTMENTS-AT-VALUE> 111
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 111
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<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> 111
<DIVIDEND-INCOME> 6
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1
<NET-INVESTMENT-INCOME> 5
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 5
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 20
<NUMBER-OF-SHARES-REDEEMED> 22
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (19)
<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> 120
<PER-SHARE-NAV-BEGIN> 10.05
<PER-SHARE-NII> .42
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .50
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.03
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 9
<NAME> IAI Balanced
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 220
<INVESTMENTS-AT-VALUE> 237
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 237
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<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> 237
<DIVIDEND-INCOME> 1
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 3
<APPREC-INCREASE-CURRENT> 13
<NET-CHANGE-FROM-OPS> 16
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 17
<NUMBER-OF-SHARES-REDEEMED> 5
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 167
<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> 154
<PER-SHARE-NAV-BEGIN> 11.78
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 1.33
<PER-SHARE-DIVIDEND> .08
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.71
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 10
<NAME> Fidelity Money Market
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 4,724
<INVESTMENTS-AT-VALUE> 4,724
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,724
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<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> 4,724
<DIVIDEND-INCOME> 185
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 30
<NET-INVESTMENT-INCOME> 155
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 155
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 56,662
<NUMBER-OF-SHARES-REDEEMED> 54,709
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,953
<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> 3,747
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .05
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> Fidelity Equity Income
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 7,223
<INVESTMENTS-AT-VALUE> 7,880
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,880
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<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> 7,880
<DIVIDEND-INCOME> 5
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 42
<NET-INVESTMENT-INCOME> (37)
<REALIZED-GAINS-CURRENT> 307
<APPREC-INCREASE-CURRENT> 381
<NET-CHANGE-FROM-OPS> 651
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 466
<NUMBER-OF-SHARES-REDEEMED> 222
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5,350
<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> 5,205
<PER-SHARE-NAV-BEGIN> 19.27
<PER-SHARE-NII> (.15)
<PER-SHARE-GAIN-APPREC> 2.72
<PER-SHARE-DIVIDEND> .02
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 21.03
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 12
<NAME> Fidelity Growth
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 8,446
<INVESTMENTS-AT-VALUE> 9,176
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 9,176
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<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> 9,176
<DIVIDEND-INCOME> 11
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 53
<NET-INVESTMENT-INCOME> (42)
<REALIZED-GAINS-CURRENT> 367
<APPREC-INCREASE-CURRENT> 366
<NET-CHANGE-FROM-OPS> 691
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 653
<NUMBER-OF-SHARES-REDEEMED> 481
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5,586
<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> 6,383
<PER-SHARE-NAV-BEGIN> 29.20
<PER-SHARE-NII> (.20)
<PER-SHARE-GAIN-APPREC> 3.51
<PER-SHARE-DIVIDEND> .05
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 31.14
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME> Fidelity Overseas
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 2,529
<INVESTMENTS-AT-VALUE> 2,792
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,792
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<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> 2,792
<DIVIDEND-INCOME> 21
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 18
<NET-INVESTMENT-INCOME> 3
<REALIZED-GAINS-CURRENT> 42
<APPREC-INCREASE-CURRENT> 206
<NET-CHANGE-FROM-OPS> 251
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 262
<NUMBER-OF-SHARES-REDEEMED> 195
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,403
<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> 2,091
<PER-SHARE-NAV-BEGIN> 17.05
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 2.16
<PER-SHARE-DIVIDEND> .18
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.84
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 14
<NAME> Fidelity Asset Manager
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 2,132
<INVESTMENTS-AT-VALUE> 2,404
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,404
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<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> 2,404
<DIVIDEND-INCOME> 52
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 17
<NET-INVESTMENT-INCOME> 35
<REALIZED-GAINS-CURRENT> 69
<APPREC-INCREASE-CURRENT> 143
<NET-CHANGE-FROM-OPS> 247
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 105
<NUMBER-OF-SHARES-REDEEMED> 47
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,078
<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> 1,865
<PER-SHARE-NAV-BEGIN> 15.79
<PER-SHARE-NII> .31
<PER-SHARE-GAIN-APPREC> 1.88
<PER-SHARE-DIVIDEND> .46
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.93
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 15
<NAME> Fidelity Contra
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 1,315
<INVESTMENTS-AT-VALUE> 1,424
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,424
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<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> 1,424
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 4
<NET-INVESTMENT-INCOME> (4)
<REALIZED-GAINS-CURRENT> 41
<APPREC-INCREASE-CURRENT> 109
<NET-CHANGE-FROM-OPS> 146
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 230
<NUMBER-OF-SHARES-REDEEMED> 144
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,424
<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> 712
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> (.09)
<PER-SHARE-GAIN-APPREC> 3.49
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.56
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 16
<NAME> Federated High Income Bond
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 534
<INVESTMENTS-AT-VALUE> 572
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 572
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<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> 572
<DIVIDEND-INCOME> 50
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 5
<NET-INVESTMENT-INCOME> 45
<REALIZED-GAINS-CURRENT> 5
<APPREC-INCREASE-CURRENT> 22
<NET-CHANGE-FROM-OPS> 72
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 334
<NUMBER-OF-SHARES-REDEEMED> 326
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 102
<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> 521
<PER-SHARE-NAV-BEGIN> 9.79
<PER-SHARE-NII> .87
<PER-SHARE-GAIN-APPREC> .52
<PER-SHARE-DIVIDEND> .96
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.24
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 17
<NAME> Federated Utility
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 838
<INVESTMENTS-AT-VALUE> 891
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 891
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<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> 891
<DIVIDEND-INCOME> 29
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 6
<NET-INVESTMENT-INCOME> 23
<REALIZED-GAINS-CURRENT> 56
<APPREC-INCREASE-CURRENT> 21
<NET-CHANGE-FROM-OPS> 100
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 178
<NUMBER-OF-SHARES-REDEEMED> 133
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 554
<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> 614
<PER-SHARE-NAV-BEGIN> 11.03
<PER-SHARE-NII> .43
<PER-SHARE-GAIN-APPREC> 1.45
<PER-SHARE-DIVIDEND> .55
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