<PAGE>
REGISTRATION NO. 33-72386
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 5
TO
FORM S-6
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
LB VARIABLE INSURANCE ACCOUNT I
(Exact Name Of Registrant)
LUTHERAN BROTHERHOOD
(Name of Depositor)
625 Fourth Avenue South, Minneapolis, Minnesota 55415
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: (612) 340-7215
David J. Larson
Senior Vice President, Secretary and General Counsel
Lutheran Brotherhood
625 Fourth Avenue South
Minneapolis, Minnesota 55415
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[ ] on (date) pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(i) of Rule 485
[X] on May 1, 1997 pursuant to paragraph (a)(i) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(ii) of Rule 485
[ ] on (date) pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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Registrant has filed with the Securities and Exchange Commission a declaration
pursuant to Rule 24f-2 under the Investment Company Act of 1940, and:
[X] filed the Notice required by that Rule on February 25, 1997 or
[ ] intends to file the Notice required by that Rule on or about (date); or
[ ] during the most recent fiscal year did not sell any securities
pursuant to Rule 24f-2 under the Investment Company Act of 1940, and,
pursuant to Rule 24f-2(b)(2), need not file the Notice.
==============================================================================
<PAGE>
LB VARIABLE INSURANCE ACCOUNT I
CROSS REFERENCE SHEET
(Reconciliation and Tie Sheet)
Item Number of
Form N-8B-2 Heading in the Prospectus
- -------------- -------------------------
1 Cover Page
2 Cover Page
3 Not Applicable
4 Sales and Other Agreements
5 The Variable Account
6 The Variable Account
7 Not Applicable
8 Not Applicable
9 Legal Proceedings
10 Summary; Contract Benefits; Payment and Allocation of
Premiums; Death Benefit Guarantee; Contract Rights;
General Provisions; Voting Rights
11 Summary; LB Series Fund, Inc.
12 LB Series Fund, Inc.; Sales and Other Agreements
13 Summary; Charges and Deductions; LB Series Fund, Inc.
14 Lutheran Brotherhood and the Variable Account;
Issuance of a Contract; General Provisions
15 Payment and Allocation of Premiums
16 Lutheran Brotherhood and the Variable Account;
Payment and Allocation of Premiums
17 Summary; LB Series Fund, Inc.; Contract Benefits;
Charges and Deductions; Contract Rights; General
Provisions
18 Lutheran Brotherhood and the Variable Account;
Contract Benefits; Payment and Allocation of
Premiums; Contract Rights; Safekeeping of the
Variable Account's Assets
19 General Provisions; Voting Rights
20 Not Applicable
21 Loan Privileges
22 Not Applicable
23 Safekeeping of the Variable Account's Assets; Sales
and Other Agreements
24 Definitions; General Provisions
25 Lutheran Brotherhood and the Variable Account
26 Not Applicable
27 Lutheran Brotherhood and the Variable Account
28 Lutheran Brotherhood and the Variable Account;
Directors and Officers of LB
29 Lutheran Brotherhood and the Variable Account
30 Not Applicable
31 Not Applicable
32 Not Applicable
33 Not Applicable
34 Not Applicable
35 Sales and Other Agreements
36 Not Applicable
37 Not Applicable
38 Summary; Sales and Other Agreements
39 Summary; Sales and Other Agreements
40 Not Applicable
41 Summary; Sales and Other Agreements
42 Not Applicable
43 Not Applicable
44 Summary; Lutheran Brotherhood and the Variable
Account; Accumulated Value and Cash Surrender
Value; Payment and Allocation of Premiums; Charges
and Deductions; Employment-Related Benefit Plans
45 Not Applicable
46 Summary; LB Series Fund, Inc.; Charges and Deductions
47 Lutheran Brotherhood and the Variable Account;
Payment and Allocation of Premiums
48 Not Applicable
49 Not Applicable
50 Lutheran Brotherhood and the Variable Account
51 Cover Page; Summary; Lutheran Brotherhood; Contract
Benefits; Payment and Allocation of Premiums;
Charges and Deductions; Contract Rights; General
Provisions
52 Addition, Deletion or Substitution of Investments
53 Federal Tax Matters
54 Not Applicable
55 Not Applicable
56 Not Applicable
57 Not Applicable
58 Not Applicable
59 Financial Statements
<PAGE>
Prospectus
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Flexible Premium
Variable Life Insurance Contract
Issued By
Lutheran Brotherhood
625 Fourth Avenue South * Minneapolis, Minnesota 55415 *
(800) 423-7056 * (612) 340-7210
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This Prospectus describes a flexible premium variable life insurance contract
(the "Contract") being offered by Lutheran Brotherhood ("LB"), a fraternal
benefit society organized under the laws of the state of Minnesota. LB is
offering the Contract only to persons who are eligible for membership in
Lutheran Brotherhood.
This Contract is designed to provide maximum flexibility in connection with
premium payments and death benefits by giving the Contract owner the
opportunity to allocate net premiums among investment alternatives with
different investment objectives. A Contract owner may, subject to certain
restrictions, including limitations on premium payments, vary the frequency
and amount of premium payments and increase or decrease the level of death
benefits payable under the Contract. This flexibility allows a Contract owner
to provide for changing insurance needs under a single insurance contract.
Prior to May 1, 1997, LB issued a class of flexible premium variable contract
("prior contract" or "VUL 1" contracts), which will no longer be issued as
various states approve the Contract. The VUL 1 contracts were sold from
February 1994 until at least May 1, 1997, and until various states approve the
Contract. Your LB representative will be able to inform you whether the
Contract has become available after May 1, 1997. Even though the VUL 1
contracts will no longer be issued, premium payments are still made under the
VUL 1 contracts. This prospectus principally describes the Contract but also
describes the VUL 1 contracts. The principal differences between the Contract
and the VUL 1 contracts relate to the charges made by LB, different premium
classes, issue ages and maturity ages, and different ranges of face amounts.
See the section entitled "APPENDIX D - PRIOR CONTRACTS" in the Prospectus.
In general, net premiums will be allocated to one or more of the Subaccounts
of the Variable Account according to the Contract owner's instructions. The
assets of each Subaccount will be invested solely in a corresponding Portfolio
of LB Series Fund, Inc. (the "Fund"), which is a diversified, open-end
management investment company (commonly known as a "mutual fund"). The
accompanying Prospectus for the Fund describes the investment objectives and
attendant risks of the six Portfolios of the Fund, the Growth Portfolio, the
High Yield Portfolio, the Income Portfolio, the Opportunity Growth Portfolio,
the World Growth Portfolio, and the Money Market Portfolio. The Contract owner
bears the entire investment risk for all amounts allocated to the Variable
Account; no minimum Accumulated Value is guaranteed.
Because the charges imposed upon early surrender or lapse may be significant,
you should purchase a Contract only if you have the financial capability to
keep it in force for a substantial period of time. Also, charges imposed upon
surrender or lapse of the Contract will usually exceed the Accumulated Value
of the Contract during the early Contract years, which means that payments
sufficient to maintain the Death Benefit Guarantee will usually be required to
avoid lapse during this period of time. Moreover, because additional charges
may be imposed upon surrender or lapse after a requested increase in Face
Amount, the Death Benefit Guarantee may be required to avoid lapse after a
requested increase whenever the Accumulated Value is not sufficient to cover
these additional charges.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THE PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------------------------
This Prospectus should be read and kept for future reference. It is valid only
when accompanied or preceded by the current prospectus of LB Series Fund, Inc.
----------------------------------
The date of this Prospectus is May 1, 1997.
TABLE OF CONTENTS
Page
DEFINITIONS
SUMMARY
The Contract
Subaccounts of the Variable Account; Portfolios of the Fund
Death Proceeds and Death Benefit Options
Additional Insurance Benefits
Amount of Accumulated Value and Cash Surrender Value
Flexibility to Adjust Amount of Death Benefit
Contract Issuance
Allocation of Net Premiums
Contract Lapse and Reinstatement
Death Benefit Guarantee Protection
Charges Assessed in Connection with the Contract
Free Look Privileges
Loan Privileges
Exchange Privileges
Surrender of the Contract
Tax Treatment of Accumulated Value
Tax Treatment of Death Benefits Received by the Beneficiary
Employment-Related Benefit Plans
LUTHERAN BROTHERHOOD AND THE VARIABLE ACCOUNT
Lutheran Brotherhood
The Variable Account
LB Series Fund, Inc.
Performance Information
Addition, Deletion or Substitution of Investments
CONTRACT BENEFITS
Death Benefits
Accumulated Value and Cash Surrender Value
Payment of Contract Benefits
PAYMENT AND ALLOCATION OF PREMIUMS
Issuance of a Contract
Amount and Timing of Premiums
Allocation of Premiums and Accumulated Value
Contract Lapse and Reinstatement
CHARGES AND DEDUCTIONS
Premium Expense Charges
Accumulated Value Charges
Decrease Charge
Monthly Deduction
Partial Surrender Charge
Charges Against the Variable Account
DEATH BENEFIT GUARANTEE
CONTRACT RIGHTS
Loan Privileges
Surrender Privileges
Free Look Privileges
Exchange Privileges
GENERAL PROVISIONS
Postponement of Payments
Date of Receipt
The Contract
Suicide
Incontestability
Change of Owner or Beneficiary
Assignment as Collateral
Misstatement of Age or Gender
Due Proof of Death
Reports to Contract Owners
Additional Insurance Benefits
Charitability for Life
Accelerated Benefits Rider
Reservation of Certain Rights
FEDERAL TAX MATTERS
Contract Proceeds
LB's Tax Status
EMPLOYMENT-RELATED BENEFIT PLANS
VOTING RIGHTS
DIRECTORS AND OFFICERS OF LB
Directors
Executive Officers
SALES AND OTHER AGREEMENTS
LEGAL PROCEEDINGS
LEGAL MATTERS
EXPERTS
FURTHER INFORMATION
FINANCIAL STATEMENTS
APPENDIX A - Illustrations of Death Benefits, Accumulated
Values and Cash Surrender Values
APPENDIX B - Deferred Administrative Charges Per
$1,000 of Face Amount
APPENDIX C - Initial Monthly Administrative Charges Per
$1,000 of Face Amount
APPENDIX D - Prior Contracts
Replacing existing insurance with a Contract described in this Prospectus may
not be to your advantage. In addition, it may not be to your advantage to
purchase this Contract to obtain additional insurance protection if you
already own another life insurance contract.
This Prospectus does not constitute an offering or solicitation in any
jurisdiction in which such offering or solicitation may not be lawfully made.
No person is authorized to give any information or to make any representations
in connection with this offering other than those contained in this Prospectus
or the accompanying Fund prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized.
This entire Prospectus should be read to completely understand the Contract
being offered.
The primary purpose of the Contract is to provide insurance protection for the
beneficiary named in the Contract. No claim is made that the Contract is in
any way similar or comparable to a systematic investment plan of a mutual
fund.
DEFINITIONS
Accumulated Value. The total amount of value held under a Contract at any time
(which equals the sum of the amounts held in the Loan Account and Variable
Account). The Accumulated Value should be distinguished from the Cash
Surrender Value. The Accumulated Value, unlike the Cash Surrender Value, is
not reduced by any Decrease Charge or Contract Debt.
Attained Age. On any day during the first Contract Year, the age of the
Insured on the Date of Issue, and then, on any day during each succeeding
Contract Year, the age of the Insured on the Contract Anniversary on or
immediately prior to that day.
Beneficiary. The Beneficiary designated by the applicant in the application.
If changed, the Beneficiary is as shown in the latest change filed with LB. If
no Beneficiary survives and unless otherwise provided, the Insured's estate
will be the Beneficiary.
Cash Surrender Value. The Accumulated Value less any Contract Debt and any
Decrease Charge.
CDSC Premium. An annual premium amount determined by LB and used solely for
the purpose of calculating the maximum Contingent Deferred Sales Charge.
Contingent Deferred Sales Charge. A contingent deferred sales charge to
compensate LB for the cost of selling the Contract, including sales
commissions, the printing of prospectuses and sales literature, and
advertising. The Contingent Deferred Sales Charge will be imposed if the
Contract is surrendered or lapses, or will be imposed in part if the Contract
Owner requests a decrease in Face Amount, in each case at any time before 180
Monthly Deductions have been made. A separate Contingent Deferred Sales Charge
will also be calculated, and then reduced over a 15-year period, in a similar
manner upon a requested increase in Face Amount.
Contract. The flexible premium variable life insurance contract offered by LB
and described in this Prospectus.
Contract Anniversary. The same date in each succeeding year as the Date of
Issue.
Contract Date. The latest of (i) the Date of Issue; (ii) the date LB receives
the first premium payment on the Contract at its Home Office; and (iii) any
other date mutually agreed upon by LB and the Contract Owner. The Contract
Date is the date on which the initial Net Premium payment(s) will be allocated
to the Variable Account.
Contract Month. The period from one Monthly Anniversary to the next. The first
Contract Month will be the period beginning on the Date of Issue and ending on
the first Monthly Anniversary.
Contract Owner. The Insured, unless otherwise designated in the application.
If a Contract has been absolutely assigned, the assignee becomes the Contract
Owner. A collateral assignee is not the Contract Owner.
Contract Year. The period from one Contract Anniversary to the next. The first
Contract Year will be the period beginning on the Date of Issue and ending on
the first Contract Anniversary.
Date of Issue. The date shown on page 3 of the Contract that is used to
determine Contract Anniversaries, Monthly Anniversaries, Contract Years and
Contract Months, each of which is measured from the Date of Issue.
Death Benefit. The amount calculated under the applicable Death Benefit Option
(Option A or Option B). The Death Benefit should be distinguished from the
cash proceeds payable on the Insured's death, which will be the Death Benefit
less Contract Debt and any unpaid Monthly Deductions.
Death Benefit Guarantee. A feature of the Contract guaranteeing that the
Contract will not lapse if on each Monthly Anniversary the total cumulative
premiums paid under the Contract, less any partial surrenders and Contract
Loan Amount, equal or exceed the sum of the Death Benefit Guarantee Premiums
in effect for each Monthly Anniversary since the issuance of the Contract.
Death Benefit Guarantee Premium. A monthly premium amount specified in the
Contract. The Death Benefit Guarantee Premium determines the payments required
to maintain the Death Benefit Guarantee.
Death Benefit Option. Either of two death benefit options available under the
Contract (Option A and Option B).
Death Benefit Option A, or Option A. One of two Death Benefit Options
available under the Contract. Under this option, the Death Benefit is the
greater of (a) the Face Amount plus the Accumulated Value and (b) the
applicable percentage of Accumulated Value (with the Accumulated Value in each
case being determined on the Valuation Date on or next following the date of
the Insured's death).
Death Benefit Option B, or Option B. One of two Death Benefit Options
available under the Contract. Under this option, the Death Benefit is the
greater of (a) the Face Amount and (b) the applicable percentage of
Accumulated Value on the Valuation Date on or next following the date of the
Insured's death.
Debt. The sum of all unpaid Contract loans (including any unpaid loan interest
added to the loan balance) outstanding on a relevant date, less any unearned
prepaid loan interest. Contract Debt should be distinguished from the Loan
Amount (see definition of "Loan Amount" below), in that the Loan Amount
includes any unearned prepaid loan interest.
Decrease Charge. A deferred Contract charge consisting of the Contingent
Deferred Sales Charge and the Deferred Administrative Charge. The Decrease
Charge is deducted from the Subaccounts of the Variable Account and paid to LB
upon full lapse or surrender of the Contract, or in part upon a requested
decrease in Face Amount. A separate amount of Decrease Charge is determined
for the initial Face Amount and for each requested increase in Face Amount.
Deferred Administrative Charge. A deferred administrative charge to reimburse
LB for administrative expenses incurred in issuing the Contract. The Deferred
Administrative Charge will be imposed if the Contract is surrendered or
lapses, or will be imposed in part if the Contract Owner requests a decrease
in the Face Amount, in each case at any time before 180 Monthly Deductions
have been made. A separate Deferred Administrative Charge will also be
calculated, and then reduced over a 15-year period, in a similar manner upon a
requested increase in Face Amount.
Face Amount. The minimum Death Benefit under the Contract as long as the
Contract remains in force. The Face Amount will be specified in the Contract.
Free Look Period. A period which follows the application for the Contract and
its issuance to the Contract Owner (the "initial Free Look Period") and which
also follows any application for and approval of an increase in Face Amount.
During the initial Free Look Period, the Contract Owner may cancel the
Contract and receive a refund. During a Free Look Period that applies
following a requested increase in Face Amount, the Contract Owner has a right
to cancel the increase in Face Amount and, in effect, receive a credit or
refund of charges and deductions attributable to such increase.
Fund. LB Series Fund, Inc., which is described in the accompanying Prospectus.
General Account. The assets of LB other than those allocated to the Variable
Account or any other separate account.
Home Office. LB's office at 625 Fourth Avenue South, Minneapolis, Minnesota
55415 or such other office as LB shall specify in a notice to the Contract
Owner.
Initial Monthly Charge. An initial monthly charge to reimburse LB for
administrative expenses incurred in issuing the Contract. The Initial Monthly
Charge will be deducted as part of the first 180 Monthly Deductions. A
separate Initial Monthly Charge for Increases will also be calculated in a
similar manner upon a requested increase in Face Amount or the issuance of a
rider providing additional insurance benefits on the Insured's spouse.
Insured. The person upon whose life the Contract is issued.
LB Representative. A person who is licensed by state insurance officials to
sell the Contracts and who is also a registered representative of Lutheran
Brotherhood Securities Corp.
LBVIP. Lutheran Brotherhood Variable Insurance Products Company, which is an
indirect subsidiary of Lutheran Brotherhood.
Loan Account. The funds transferred from the Subaccount(s) of the Variable
Account to LB's General Account as security for Contract loans.
Loan Amount. The sum of all unpaid Contract loans (including any unpaid loan
interest added to the loan balance) outstanding on a relevant date. The Loan
Amount should be distinguished from Contract Debt (see definition of "Debt"
above), in that Contract Debt excludes any unearned prepaid loan interest.
Lutheran Brotherhood ("LB"). Lutheran Brotherhood, a fraternal benefit society
organized under the laws of the State of Minnesota and owned by and operated
for its members.
Minimum Conditional Insurance Premium. The premium required to put temporary
insurance coverage into effect on a conditional basis.
Minimum Contract Issuance Premium. The minimum premium required for issuance
of the Contract.
Minimum Face Amount. The minimum Face Amount for a Contract at issuance and
after any requested decrease in Face Amount.
Monthly Anniversary. The same date in each succeeding month as the Date of
Issue.
Monthly Deduction. Monthly charges deducted from the Accumulated Value of the
Contract. These charges include the cost of insurance charge; a basic monthly
administrative charge ($10.00 per month); the Initial Monthly Charge; and
charges for additional insurance benefits. "Monthly Deduction" also includes
any Decrease Charge being deducted for a requested decrease in Face Amount
during the preceding Contract Month.
Net Premium. The premium paid less the Premium Expense Charges.
Planned Annual Premium. The initial Scheduled Premium under the Contract on an
annualized basis as selected by the Contract Owner at the time of issue. The
Planned Annual Premium will be shown in the Contract.
Portfolio. A Portfolio of the Fund. Each Subaccount invests exclusively in the
shares of a corresponding Portfolio of the Fund.
Premium Expense Charges. An amount deducted from each premium payment, which
consists of a percent-of-premium charge of 5% of each premium payment (a 5%
sales charge ) and a premium processing charge of $1.00 per premium payment
($.50 for automatic payment plans). LB reserves the right to increase the
premium processing charge in the future to an amount not exceeding $2.00 per
premium payment ($1.00 for automatic payment plans).
Scheduled Premium(s). The scheduled periodic premium payments selected by the
Contract Owner. This premium payment can be changed by the Contract Owner at
any time. Scheduled Premiums are relevant only in determining how much a
Contract Owner will be billed periodically and determining the Minimum
Contract Issuance Premium.
Subaccount. A subdivision of the Variable Account. Each Subaccount invests
exclusively in the shares of a corresponding Portfolio of the Fund.
Unit. The measure by which the value of the Contract's interest in each
Subaccount is determined.
Unit Value. The value of each Unit representing the Contract's interest in
each Subaccount.
Valuation Date. Each day the New York Stock Exchange is open for trading and
any other day on which there is sufficient trading in the securities of a
Portfolio of the Fund to affect materially the Unit Value in the corresponding
Subaccount of the Variable Account.
Valuation Period. The period commencing at the close of business of a
Valuation Date and ending at the close of business of the next Valuation Date.
Variable Account. LB Variable Insurance Account I, which is a separate account
of LB. The Subaccounts are subdivisions of the Variable Account.
Written Notice. A written request signed by the Contract Owner and received by
LB at its Home Office.
SUMMARY
The Contract
This flexible premium variable life insurance contract (the "Contract") issued
by Lutheran Brotherhood ("LB") allows the Contract Owner, subject to certain
limitations, to make premium payments in any amount up to the Insured's
Attained Age 100 and at any frequency. As long as the Contract remains in
force, it will provide for (1) life insurance coverage on the named Insured;
(2) Accumulated Value; (3) surrender rights and Contract loan privileges; and
(4) a variety of additional insurance benefits. The Contract described in this
Prospectus is being offered by LB to provide protection against economic loss
when the Insured dies, and not primarily as an investment.
The Contract is called "flexible premium" because, unlike many other insurance
contracts, there is no fixed schedule for premium payments, even though each
Contract Owner may establish a schedule of periodic premium payments
("Scheduled Premiums") which may be changed by the Contract Owner at any time.
See "PAYMENT AND ALLOCATION OF PREMIUMS--Amount and Timing of Premiums". The
Contract is called "variable" because, unlike a conventional fixed-benefit
whole life insurance contract, the Death Benefit under the Contract may, and
the Accumulated Value and the Cash Surrender Value will, vary to reflect the
investment performance of the selected Subaccounts of the Variable Account, as
well as other factors. See "CONTRACT BENEFITS".
The failure to pay Scheduled Premiums will not itself cause the Contract to
lapse. Conversely, the payment of premiums in any amount or frequency
(including Scheduled Premiums) will not necessarily guarantee that the
Contract will remain in force, except to the extent these premium payments are
sufficient to maintain the Death Benefit Guarantee. See "DEATH BENEFIT
GUARANTEE". In general, subject to the Death Benefit Guarantee, the Contract
will lapse when (a) Cash Surrender Value is insufficient to pay the Monthly
Deduction (for insurance and administration charges) or (b) Contract Debt
exceeds Accumulated Value less any Decrease Charge, and in either case if a
grace period expires without sufficient additional payments. See "PAYMENT AND
ALLOCATION OF PREMIUMS--Contract Lapse and Reinstatement".
LB will require satisfactory evidence of insurability before issuing any
Contract.
LB is offering the Contract only to Insureds who are eligible for membership
in Lutheran Brotherhood.
Subaccounts of the Variable Account; Portfolios of the Fund
Each Contract Owner allocates the Net Premium payments made under such owner's
Contract to one or more of the six Subaccounts of the Variable Account--the
Growth Subaccount, the High Yield Subaccount, the Income Subaccount, the
Opportunity Growth Subaccount, the World Growth Subaccount, and the Money
Market Subaccount. The assets of each such Subaccount will be invested in the
corresponding Portfolio (the Growth Portfolio, the High Yield Portfolio, the
Income Portfolio, the Opportunity Growth Portfolio, the World Growth
Portfolio, or the Money Market Portfolio) of the Fund. Subject to certain
restrictions, the Contract Owner may transfer amounts among the Subaccounts of
the Variable Account (see "PAYMENT AND ALLOCATION OF PREMIUMS--Allocation of
Premiums and Accumulated Value").
The investment objectives of the Portfolios of the Fund (individually a
"Portfolio" and collectively the "Portfolios") are:
Growth Portfolio. To achieve long-term growth of capital through investment
primarily in common stocks of established corporations that appear to offer
attractive prospects of a high total return from dividends and capital
appreciation.
High Yield Portfolio. To achieve a higher level of income through a
diversified portfolio of high yield securities ("junk bonds") which involve
greater risks than higher quality investments, while also considering growth
of capital as a secondary objective.
Income Portfolio. To achieve a high level of income over the longer term while
providing reasonable safety of capital through investment primarily in readily
marketable intermediate and long-term fixed income securities.
Opportunity Growth Portfolio. To achieve long term growth of capital by
investing primarily in a professionally managed diversified portfolio of
smaller capitalization common stocks.
World Growth Portfolio. To achieve long-term growth of capital by investing
primarily in a professionally managed diversified portfolio of common stocks
of established, non-U.S. companies.
Money Market Portfolio. To achieve the maximum current income that is
consistent with stability of capital and maintenance of liquidity through
investment in high-quality, short-term debt obligations.
No assurance can be given that the Portfolios of the Fund will achieve their
respective investment objectives.
The Fund is a diversified, open-end management investment company (commonly
called a "mutual fund"), for which LB acts as investment adviser. LB is paid a
daily fee by the Fund for its investment management services equal to an
annual rate of .40% of the aggregate average daily net assets of the Money
Market, Income, High Yield, Growth, and Opportunity Growth Portfolios. LB
also receives a daily investment advisory fee from the Fund equal to .85% of
the aggregate average daily net assets of the World Growth Portfolio, as
described in the accompanying current prospectus for the Fund. See "LUTHERAN
BROTHERHOOD AND THE VARIABLE ACCOUNT--LB Series Fund, Inc." The accompanying
prospectus of the Fund contains detailed information about the Fund, its
Portfolios, the investment advisory arrangement, and other matters relating to
the Fund and its investment objectives and policies.
Death Proceeds and Death Benefit Options
As long as the Contract remains in force, LB will pay the proceeds from the
Contract to the Beneficiary upon receipt of due proof of death of the Insured.
If the Insured dies before age 100, the proceeds from the Contract will
consist of the Contract's Death Benefit, plus any insurance proceeds provided
by additional insurance benefits on the Insured's life, less any outstanding
Debt and any unpaid Monthly Deductions. If the Insured dies at or after age
100, the amount payable will be the Cash Surrender Value on the date of death.
See "CONTRACT BENEFITS--Death Benefits" and "GENERAL PROVISIONS--Additional
Insurance Benefits".
There are two Death Benefit Options. Death Benefit Option A provides for the
greater of (a) the Face Amount plus the Accumulated Value and (b) the
applicable percentage of Accumulated Value (with Accumulated Value in each
case being determined on the Valuation Date on or next following the Insured's
date of death). Death Benefit Option B provides for the greater of (a) the
Face Amount and (b) the applicable percentage of Accumulated Value on the
Valuation Date on or next following the date of the Insured's death. As long
as the Contract remains in force, the Death Benefit will not be less that the
Contract's Face Amount in force.
Additional Insurance Benefits
Additional insurance benefits offered under the Contract include: waiver of
selected amount in the event of total disability; additional insurance
coverage for accidental death; term insurance on the Insured's spouse; term
insurance on the Insured's children; a right to increase the Face Amount of
the Contract on certain specified dates or life events without proof of
insurability; and a cost of living insurance adjustment without proof of
insurability. See "GENERAL PROVISIONS--Additional Insurance Benefits". The
cost of these additional insurance benefits will be deducted from the
Accumulated Value as part of the Monthly Deduction. See "CHARGES AND
DEDUCTIONS--Accumulated Value Charges--Monthly Deduction".
Charitability for Life (SM) is a benefit that enables Contract Owners to
increase their charitable gifts to Lutheran charitable organizations and
congregations. Charitability for Life is available for no additional premium
whenever a Contract Owner has designated a Lutheran charitable organization or
congregation as a beneficiary for at least $1,000 of Death Benefit on his or
her Contract. See "GENERAL PROVISIONS -- Charitability for Life."
Under certain circumstances, an Accelerated Benefits Rider allows a Contract
Owner residing in a state that has approved such rider to receive benefits
from the Contract that would be otherwise payable upon the death of the
Insured. See "GENERAL PROVISIONS--Accelerated Benefits Rider". The tax
treatment of benefits paid under the Accelerated Benefits Rider is currently
uncertain. See "FEDERAL TAX MATTERS--Contract Proceeds--Benefits Paid under
the Accelerated Benefits Rider".
Amount of Accumulated Value and Cash Surrender Value
The Accumulated Value of the Contract is the total amount of the value held
under the Contract at any time (which equals the sum of the amounts held in
the Loan Account and the Variable Account). The Contract's Accumulated Value
in the Variable Account will reflect the investment performance of the chosen
Subaccounts of the Variable Account, any Net Premiums paid, any partial
surrenders, any loans, any loan repayments, any loan interest paid or
credited, and any charges assessed in connection with the Contract (including
any Decrease Charge previously imposed upon a requested decrease in Face
Amount). The Contract Owner bears the entire investment risk for amounts
allocated to the Variable Account. LB does not guarantee a minimum Accumulated
Value. See "CONTRACT BENEFITS--Accumulated Value and Cash Surrender Value".
The Accumulated Value is relevant to continuation of the Contract, to Cash
Surrender Value (which determines various other rights under the Contract), to
determining the amount available for Contract loans, and to computation of
cost of insurance charges, and may be relevant to the computation of Death
Benefits.
The Contract's Cash Surrender Value will be the Accumulated Value less any
Contract Debt and any Decrease Charge. The Cash Surrender Value is relevant to
continuation of the Contract and to determining the amount available upon
partial or total surrender of the Contract.
Flexibility to Adjust Amount of Death Benefit
The Contract Owner has significant flexibility to adjust the Death Benefit by
increasing or decreasing the Face Amount of the Contract. Any change in the
Face Amount may affect the charges under the Contract. Any increase in the
Face Amount will result in an increase in the Monthly Deduction, and any
requested increase in Face Amount will also increase the Decrease Charge,
which is imposed upon lapse or surrender of the Contract or in part upon a
requested decrease in Face Amount. For any requested decrease in Face Amount,
that part of the Decrease Charge reflecting the decrease will reduce the
Accumulated Value attributable to the Contract, and the Decrease Charge will
be reduced by this amount. See "CONTRACT BENEFITS--Death Benefits--Changes in
Face Amount".
The minimum requested increase in Face Amount is $25,000 and any requested
increase may require additional evidence of insurability. See "CONTRACT
BENEFITS--Death Benefits--Changes in Face Amount". Any requested increase in
Face Amount is subject to a limited "free look" privilege (see "CONTRACT
RIGHTS--Free Look Privileges"), and, during the first 24 months following the
increase, to an exchange privilege (see "CONTRACT RIGHTS--Exchange
Privileges").
Any requested decrease in Face Amount cannot result in a Face Amount less than
the Minimum Face Amount. The minimum Face Amount ("Minimum Face Amount") at
issue for a Contract is $50,000 for Insureds with an Attained Age of 18
through 50, and $25,000 for all other Insureds. After issuance of the
Contract, the Minimum Face Amount at issue continues to apply to the Contract,
except that if a Contract has a Minimum Face Amount of $50,000 the Minimum
Face Amount will be reduced to $25,000 after an Insured reaches Attained Age
51. LB reserves the right to establish a different Minimum Face Amount for
Contracts issued in the future.
To the extent that a requested decrease in Face Amount would result in
cumulative premiums exceeding the maximum premium limitations applicable under
the Internal Revenue Code for life insurance, LB will not effect the decrease.
See "PAYMENT AND ALLOCATION OF PREMIUMS--Amount and Timing of Premiums--
Premium Limitations".
Contract Issuance
If the applicant desires to have temporary insurance pending Contract
issuance, LB will require a premium payment (the "Minimum Conditional
Insurance Premium") equal to three initial Death Benefit Guarantee Premiums,
or, in the case of automatic monthly payment plans, two initial Death Benefit
Guarantee Premiums. If LB subsequently determines that the proposed Insured is
not an acceptable risk under LB's underwriting standards and rules, even if
the Minimum Conditional Insurance Premium has been paid, no temporary
insurance coverage will have been provided and any premium paid will be
refunded (without interest). Upon delivery of the Contract, the balance (if
any) of the premium required before issuance of the Contract (the "Minimum
Contract Issuance Premium") must be paid. The Minimum Contract Issuance
Premium will equal the initial Scheduled Premium selected by the Contract
Owner (e.g., the quarterly, semi-annual or annual premium payment selected by
the Contract Owner), or, in the case of automatic monthly payment plans, the
greater of the Minimum Conditional Insurance Premium or the initial Scheduled
Premium. If the Date of Issue precedes the Contract Date and the Minimum
Contract Issuance Premium otherwise required would not provide a premium
payment sufficient to cover the next Contract Month, additional Scheduled
Premium payment(s) sufficient to cover through the next Contract Month will be
required. See "PAYMENT AND ALLOCATION OF PREMIUMS--Amount and Timing of
Premiums".
Until the Contract Date, premium payments will be held in LB's General
Account. If a Contract is issued, interest will be credited on premium
payments held in the General Account at a rate of interest determined by LB;
no interest will be credited on these premium payments if no Contract is
issued (but the full amount of any premiums paid, without deduction of any
Contract charges, will be refunded). On the Contract Date, the Premium Expense
Charges attributable to the premiums paid will be deducted and the balance of
the amount of such premiums held in the General Account, together with any
interest credited on premiums held in the General Account (on which no Premium
Expense Charges will be imposed), will be transferred from the General Account
and allocated to the Variable Account among the Subaccount(s) pursuant to the
Contract Owner's instructions. See "PAYMENT AND ALLOCATION OF PREMIUMS--
Issuance of a Contract".
Allocation of Net Premiums
Net Premiums are the premiums paid less the Premium Expense Charges. See
"CHARGES AND DEDUCTIONS--Premium Expense Charges". Net Premiums will generally
be allocated to the Subaccount(s) of the Variable Account in accordance with
the Contract Owner's instructions (as specified in the Application for the
Contract or as subsequently changed). Each Subaccount invests in a
corresponding Portfolio of the Fund. The Contract Owner will bear the
investment risk of Net Premiums allocated to the Subaccount(s). Subject to
certain restrictions, a Contract Owner may transfer amounts among the
Subaccounts of the Variable Account. See "PAYMENT AND ALLOCATION OF PREMIUMS--
Allocation of Premiums and Accumulated Value".
The Contract Owner must notify LB if payment is a premium payment; otherwise,
it will be considered a loan repayment.
Contract Lapse and Reinstatement
The failure to make a Scheduled Premium payment will not itself cause a
Contract to lapse. Subject to the Death Benefit Guarantee (see "DEATH BENEFIT
GUARANTEE"), lapse will only occur when (a) the Cash Surrender Value (that is,
the Accumulated Value less any Contract Debt and any Decrease Charge) is
insufficient to cover the Monthly Deduction or (b) Contract Debt exceeds the
Accumulated Value less any Decrease Charge, and in either case if a 61-day
grace period expires without a sufficient payment. See "PAYMENT AND ALLOCATION
OF PREMIUMS--Contract Lapse and Reinstatement".
Subject to certain conditions (including evidence of insurability satisfactory
to LB and the payment of a sufficient premium), a Contract may be reinstated
at any time within 5 years after the expiration of the grace period. See
"PAYMENT AND ALLOCATION OF PREMIUMS--Contract Lapse and Reinstatement".
Death Benefit Guarantee Protection
The Contract will not lapse if sufficient premium payments have been made to
maintain the Death Benefit Guarantee. In general, in order to maintain the
Death Benefit Guarantee, as of each Monthly Anniversary the total cumulative
premiums paid under the Contract, less any partial surrenders and Contract
Loan Amount must equal or exceed the sum of the Death Benefit Guarantee
Premiums in effect for each Monthly Anniversary since the issuance of the
Contract. If the Death Benefit Guarantee requirement is not met on a Monthly
Anniversary but the Cash Surrender Value less any unearned prepaid loan
interest is greater than or equal to the sum of Death Benefit Guarantee
Premiums from the Date of Issue through that Monthly Anniversary, then the sum
of premiums paid as used above will be deemed to increase through that date to
the amount necessary to meet the Death Benefit Guarantee requirement. In
addition, a portion of any partial surrender or Contract Loan Amount may be
excluded when determining if the Death Benefit Guarantee requirement is met.
The Death Benefit Guarantee applies until the specified Attained Age of the
Insured shown in the Contract, which Attained Age will be the later of (a) the
Insured's Attained Age 71 and (b) the Attained Age of the Insured at the end
of a period ranging from 8 to 34 years (varying with the Insured's Attained
Age at issue) from the Date of Issue. The Death Benefit Guarantee terminates
immediately as of any Monthly Anniversary when these cumulative premium
requirements are not satisfied. LB will send written notice to the Contract
Owner indicating that the Death Benefit Guarantee has terminated, and the
Contract Owner will have 31 days from the date such notice is sent by LB to
reinstate the Death Benefit Guarantee, after which the Death Benefit Guarantee
can never be reinstated. During this 31 day reinstatement period, the Contract
Owner will not have the protection of the Death Benefit Guarantee. The written
notice of termination from LB to the Contract Owner will indicate the premium
payment required to reinstate the Death Benefit Guarantee. See "DEATH BENEFIT
GUARANTEE".
Whenever the Monthly Deduction to be made would result in a Cash Surrender
Value less than zero, any excess of Accumulated Value over Contract Debt will
be used to pay the Monthly Deduction. If available Accumulated Value is less
than the Monthly Deduction then due and the Death Benefit Guarantee is in
effect, LB will pay the deficiency.
The Death Benefit Guarantee provides significant protection against lapse of
the Contract. First, the Death Benefit Guarantee can prevent lapse of the
Contract due to a decrease in Cash Surrender Value resulting from poor
investment performance. Also, the Death Benefit Guarantee will probably be
necessary to avoid lapse of the Contract during the early Contract Years
because the Cash Surrender Value will probably not be sufficient to cover the
Monthly Deduction. Finally, because the Decrease Charge will increase after a
requested increase in Face Amount, thereby reducing the Cash Surrender Value,
the Death Benefit Guarantee may also be necessary to avoid lapse after a
requested increase in Face Amount. See "DEATH BENEFIT GUARANTEE".
Charges Assessed in Connection with the Contract
Premium Expense Charges. Certain charges (the "Premium Expense Charges") will
be deducted from each premium payment. The Premium Expense Charges will
consist of a percent-of-premium charge of 5% of each premium payment (a 5%
sales charge) and a premium processing charge of $1.00 per premium payment
($.50 for automatic payment plans). LB reserves the right to increase the
premium processing charge in the future to an amount not exceeding $2.00 per
premium payment ($1.00 for automatic payment plans).
Monthly Deduction. On the Contract Date and on each Monthly Anniversary
thereafter, the Accumulated Value will be reduced by a Monthly Deduction equal
to the sum of the monthly cost of insurance charge, monthly administration
charges, and a charge for any additional insurance benefits added by rider.
The monthly cost of insurance charge will be determined by multiplying the net
amount at risk (that is, in general, the Death Benefit less Accumulated Value)
by the applicable cost of insurance rate(s), which will depend upon the
gender, Attained Age and premium class of the Insured and upon LB's
expectation as to future mortality experience, but which will not exceed the
guaranteed cost of insurance rates set forth in the Contract based on the
Insured's Attained Age and the 1980 Commissioners Standard Ordinary Mortality
Table. See "CHARGES AND DEDUCTIONS--Accumulated Value Charges--Monthly
Deduction". The monthly administration charges will include (1) a basic
monthly administrative charge equal to $10.00 per month and (2) the Initial
Monthly Charge, which applies until 180 Monthly Deductions have been made
following Contract issuance or a requested increase in Face Amount and which
will be computed as a charge per $1,000 of Face Amount (with the amount of
this charge depending upon the initial Face Amount and the Insured's Attained
Age at issue and, except for Insureds with an Attained Age at Contract
issuance under 18 upon the Insured's gender, and whether the Insured is a
tobacco user or not). If the Face Amount is increased, a separate Initial
Monthly Charge for Increases will be deducted from Accumulated Value as part
of the first 180 Monthly Deductions after the increase. See "CHARGES AND
DEDUCTIONS--Accumulated Value Charges--Monthly Deduction--Monthly
Administration Charge". The charge for additional insurance benefits added by
rider will be specified in the Contract or in a supplement to the Contract.
See "GENERAL PROVISIONS--Additional Insurance Benefits". The cost of insurance
rate and the Initial Monthly Charge per $1,000 of Face Amount will be lower
for Contracts having a Face Amount at issuance or after requested increases
that equal or exceed the following amounts: $500,000-$999,999; and $1,000,000.
Montana has enacted legislation that requires that cost of insurance rates and
other charges applicable to Contracts purchased in Montana cannot vary on the
basis of the Insured's gender, and so, in Montana, this charge will not be
based on the gender of the Insured.
Decrease Charge. A deferred charge (the "Decrease Charge") will be deducted
upon Contract lapse or surrender, or in part upon a requested decrease in Face
Amount, if these events occur before 180 Monthly Deductions have been made
(that is, approximately 15 years) following Contract issuance or a requested
increase in Face Amount. The Decrease Charge consists of a contingent deferred
sales charge (the "Contingent Deferred Sales Charge") and a deferred
administrative charge (the "Deferred Administrative Charge"). The term
"Decrease Charge" is used to describe this charge because, during the
applicable 15-year period, the charge is imposed in connection with a decrease
in the Face Amount, either as the result of a requested decrease in Face
Amount or as the result of lapse or full surrender of the Contract (which can
be viewed as a decrease in the Face Amount to zero).
The Decrease Charge will be deducted from the Accumulated Value in determining
the Contract's Cash Surrender Value (which is the Accumulated Value less any
Contract Debt and any Decrease Charge). The Cash Surrender Value determines
various rights under the Contract (including how long the Contract remains in
effect). See "CONTRACT BENEFITS--Accumulated Value and Cash Surrender Value".
Subject to an additional limitation keyed to actual premium payments
(described below), the maximum Contingent Deferred Sales Charge will be
determined at issuance of the Contract and will equal 25% of an annual premium
amount used solely for the purpose of calculating the Contingent Deferred
Sales Charge (the "CDSC Premium"). The maximum Contingent Deferred Sales
Charge based upon the CDSC Premium will be shown in the Contract. (For further
information concerning the determination of the CDSC Premium and the
calculation of the Contingent Deferred Sales Charge, see "CHARGES AND
DEDUCTIONS--Accumulated Value Charges--Decrease Charge".) The maximum
Contingent Deferred Sales Charge calculated in this manner will remain level
until the fifth Contract Anniversary and will then be reduced on each Monthly
Anniversary commencing on the fifth Contract Anniversary. After the 120th
Monthly Deduction following the fifth Contract Anniversary, the Contingent
Deferred Sales Charge will be zero. The actual Contingent Deferred Sales
Charge will, however, never exceed 25% of premiums paid (before deducting the
Premium Expense Charges) during the first Contract Year.
The maximum Deferred Administrative Charge will be determined at issuance of
the Contract and will equal an amount per $1,000 of Face Amount based upon the
initial Face Amount, the Insured's Attained Age at Contract issuance, and,
except for Insureds with an Attained Age at Contract issuance under 18, the
Insured's gender and whether the Insured is a tobacco user or not. (For
further information concerning the calculation of the Deferred Administrative
Charge, see "CHARGES AND DEDUCTIONS--Accumulated Value Charges--Decrease
Charge.") The Deferred Administrative Charge is reduced on the Date of Issue
and on each subsequent Monthly Anniversary so that it reaches zero when 180
Monthly Deductions have been made. See "CHARGES AND DEDUCTIONS--Accumulated
Value Charges--Decrease Charge". Montana has enacted legislation that
requires that cost of insurance rates and other charges applicable to
Contracts purchased in Montana cannot vary on the basis of the Insured's
gender, and so, in Montana, this charge will not be based on the gender of the
Insured.
A separate Decrease Charge will also be calculated, and then reduced over a
15-year period, in a similar manner upon a requested increase in Face Amount.
See "CHARGES AND DEDUCTIONS--Accumulated Value Charges--Decrease Charge".
Partial Surrender Charge. A charge equal to $25 or 2% of the surrender amount
requested, whichever is less, will be deducted by LB from the amount withdrawn
to compensate it for costs upon partial surrenders--that is, partial
Accumulated Value withdrawals--by the Contract Owner. See "CHARGES AND
DEDUCTIONS--Accumulated Value Charges--Partial Surrender Charge".
Daily Charges Against the Variable Account. A daily charge for LB's assumption
of certain mortality and expense risks incurred in connection with the
Contract will be imposed. LB has determined that a Mortality and Expense Risk
Charge (see "CHARGES AND DEDUCTIONS--Charges Against the Variable Account") at
an annual rate of .75% of the average daily net assets of each Subaccount of
the Variable Account is reasonable in relation to the mortality and expense
risks assumed by LB under the Contract. LB will, however, initially impose the
Mortality and Expense Risk Charge at an annual rate of .60% of the average
daily net assets of each Subaccount of the Variable Account. See "CHARGES AND
DEDUCTIONS--Charges Against the Variable Account".
No charges are currently made against the Variable Account for Federal or
state income taxes. Should LB determine that such taxes may be imposed,
deductions from the Variable Account to pay these taxes may be made. See
"FEDERAL TAX MATTERS".
In addition, because the Variable Account purchases shares of the Fund, the
value of Units in the Subaccount(s) of the Variable Account will reflect the
net asset value of the shares of the Fund held therein, and therefore the
investment advisory fee incurred by the Fund. See "LUTHERAN BROTHERHOOD AND
THE VARIABLE ACCOUNT--LB Series Fund, Inc." and "CONTRACT BENEFITS--
Accumulated Value and Cash Surrender Value".
Free Look Privileges
The Contract provides for an initial Free Look Period. The Contract Owner may
cancel the Contract until the latest of (a) 45 days after Part I of the
application for the Contract is signed, (b) 10 days after the Contract Owner
receives the Contract, and (c) 10 days after LB mails or personally delivers a
notice of withdrawal right to the Contract Owner. Upon returning the Contract,
the Contract Owner will receive a refund equal to the sum of (i) the
Accumulated Value (as of the date the returned Contract is received by LB at
its Home Office or by the LB Representative from whom the Contract was
purchased), without any deduction of the Decrease Charge, plus (ii) the amount
of any Premium Expense Charges, plus (iii) any Monthly Deductions charged
against the Contract's Accumulated Value, plus (iv) any Mortality and Expense
Risk Charges deducted from the value of the net assets or the Variable Account
attributable to the Contract, plus (v) the advisory fees charged by the Fund
against net asset value in the Fund Portfolios attributable to the Contract's
value in the corresponding Subaccount(s) of the Variable Account. See
"CONTRACT RIGHTS--Free Look Privileges". When state law requires a minimum
refund equal to gross premiums paid, the refund will instead equal the gross
premiums paid on the Contract and will not reflect the investment experience
of the Variable Account.
Similar free look privileges apply after a requested increase in Face Amount.
See "CONTRACT RIGHTS--Free Look Privileges".
Loan Privileges
The Contract Owner may at any time after the Contract Date obtain Contract
loans in an amount not exceeding in the aggregate 90% of the excess of
Accumulated Value over any Decrease Charge on the date of any loan. See
"CONTRACT RIGHTS--Loan Privileges".
Contract loans will bear interest at a fixed rate of 8.0% per year, which is
7.4% per year when paid in advance. Loan interest is calculated on a prepaid
basis, and is payable in advance at the time any Contract loan is made (for
the rest of the Contract Year) and at the beginning of each Contract Year
thereafter (for that entire Contract Year). If interest is not paid when due,
it will be added to the loan balance. Contract loans may be repaid at any
time. Each repayment must be at least $25. When Contract loans are repaid, any
prepaid interest attributable to the repaid amount will be credited to the
Subaccount(s) in the same manner as the repayment.
Contract loans are allocated against the Subaccounts of the Variable Account
in proportion to the Accumulated Value in the respective Subaccounts or, with
LB's approval, in accordance with the Contract Owner's instructions. The loan
amount is, in effect, treated as part of the Contract's Accumulated Value, but
the proceeds payable under the Contract will be reduced by the Debt.
Accumulated Value equal to the Contract loan will be transferred from the
appropriate Subaccount(s) to LB's General Account (such amounts being herein
called the "Loan Account"). This amount in the Loan Account will earn interest
for the Contract Owner at an effective annual rate of 6%. This interest will
be credited monthly to the Contract's Accumulated Value held in the
Subaccount(s).
The Contract Owner must notify LB if a payment is a premium payment;
otherwise, it will be considered a loan repayment.
Any partial or full repayment of Debt by the Contract Owner, as well as any
interest credited from the Loan Account, will be allocated to the
Subaccount(s) in proportion to the Accumulated Value in the respective
Subaccounts. Subject to LB's approval, a Contract Owner may choose a different
allocation. A loan taken from a Contract may have Federal income tax
consequences. See "CONTRACT RIGHTS--Loan Privileges".
Exchange Privileges
During the first 24 Contract Months after the Date of Issue, subject to
certain restrictions, the Contract Owner may exchange the Contract for a fixed
benefit permanent life insurance contract issued by LB. The new contract will
have the same Date of Issue and issue age as the Contract. The new contract
will also have, at the option of the Contract Owner, either a death benefit
equal to the Death Benefit under the Contract on the effective date of the
exchange or a net amount at risk equaling the net amount at risk under the
Contract on the effective date of the exchange. An additional premium payment
may be required. See "CONTRACT RIGHTS--Exchange Privileges". An exchange may
have tax consequences. See "FEDERAL TAX MATTERS--Contract Proceeds".
Surrender of the Contract
The Contract Owner may at any time fully surrender the Contract and receive in
cash the Cash Surrender Value, if any. The Cash Surrender Value will equal the
Accumulated Value of the Contract, less any Contract Debt and any Decrease
Charge. The Cash Surrender Value will include any unearned prepaid loan
interest. As unearned prepaid loan interest is earned, the Cash Surrender
Value will decrease. See "CONTRACT RIGHTS--Surrender Privileges".
Subject to certain restrictions (including a minimum surrender amount of $500
and a remaining Cash Surrender Value of at least $500), and a partial
surrender charge of $25 or 2% of the surrender amount requested, whichever is
less, the Contract Owner may also partially surrender the Contract and
withdraw part of the Contract's Accumulated Value at any time while the
Insured is living. If Death Benefit Option B is in effect, a partial surrender
may result in a reduction in the Face Amount in force. Under either Death
Benefit Option, a partial surrender will reduce the Death Benefit. A surrender
taken from a Contract may have federal income tax consequences. See "CONTRACT
RIGHTS--Surrender Privileges".
Tax Treatment of Accumulated Value
Under current tax law, Accumulated Value under a Contract should be subject to
the same Federal income tax treatment as cash value in a conventional fixed-
premium, fixed-benefit whole life insurance contract. A change of Contract
Owners or a partial or total surrender may have tax consequences depending on
the circumstances. See "FEDERAL TAX MATTERS--Contract Proceeds".
Tax Treatment of Death Benefits Received by the Beneficiary
Under current tax law, like death benefits payable under conventional life
insurance contracts, Death Benefit proceeds payable under the Contract should
ordinarily be completely excludable from the gross income of the Beneficiary.
As a result, the Beneficiary will generally not be taxed on the proceeds. See
"FEDERAL TAX MATTERS--Contract Proceeds".
Employment-Related Benefit Plans
The cost of insurance rates applicable to Contracts purchased under
employment-related insurance or benefit programs may in some cases not vary
depending on the Insured's gender, as is the case generally (except for
Contracts issued in the state of Montana) under the Contracts. In addition,
different limitations with respect to the minimum Face Amount, increases in
Face Amount, additional insurance benefits, and issue ages may apply to
Contracts issued in connection with employment-related insurance or benefit
programs. SEE "EMPLOYMENT-RELATED BENEFIT PLANS".
------------------------
For further information, please read the following detailed description.
Illustrations of how investment performance of the Variable Account may cause
Death Benefits, Accumulated Values and Cash Surrender Values under the
Contract to vary are included in Appendix A commencing on page A-1.
Each Contract Owner should retain a copy of the Contract. The document,
together with the application attached to the Contract, any supplemental
applications and any Contract supplements, and the Articles of Incorporation
and Bylaws of LB which are in force on the Date of Issue, constitutes the
entire agreement between the Contract Owner and LB.
LUTHERAN BROTHERHOOD AND THE VARIABLE ACCOUNT
Lutheran Brotherhood
The Contracts are issued by LB. LB, a fraternal benefit society owned by and
operated for its members, was founded in 1917 under the laws of the State of
Minnesota. LB is currently licensed to transact life insurance business in all
50 states and the District of Columbia. At the end of 1996, LB had total
assets of nearly $11.8 billion.
LB is subject to regulation by the Insurance Division of the State of
Minnesota as well as by the insurance departments of all the other states and
jurisdictions in which it does business. LB submits annual reports on its
operations and finances to insurance officials in such states and
jurisdictions. The forms of Contracts described in the Prospectus are filed
with and (where required) approved by insurance officials in each state and
jurisdiction in which Contracts are sold. LB is also subject to certain
Federal securities laws and regulations.
Financial Statements of LB are included elsewhere in this Prospectus.
The Variable Account
The Variable Account is a separate account of LB, established by the Board of
Directors of LB in 1993 pursuant to the laws of the State of Minnesota. The
Variable Account meets the definition of a "separate account" under the
federal securities laws. LB has caused the Variable Account to be registered
with the Securities and Exchange Commission (the "SEC") as a unit investment
trust under the Investment Company Act of 1940 (the "1940 Act"). Such
registration does not involve supervision by the SEC of the management or
investment policies or practices of the Variable Account.
The assets of the Variable Account are owned by LB, and LB is not a trustee
with respect to such assets. However, the Minnesota laws under which the
Variable Account was established provide that the Variable Account shall not
be chargeable with liabilities arising out of any other business LB may
conduct. LB may transfer to its General Account assets of the Variable Account
which exceed the reserves and other liabilities of the Variable Account.
Income and realized and unrealized gains and losses from each Subaccount of
the Variable Account are credited to or charged against that Subaccount
without regard to any of LB's other income, gains or losses. LB may accumulate
in the Variable Account the charge for expense and mortality risks, mortality
gains and losses and investment results applicable to those assets that are in
excess of net assets supporting the Contracts.
LB Series Fund, Inc.
Each Subaccount of the Variable Account will invest only in the shares of a
corresponding Portfolio of the Fund. The Fund is registered with the SEC under
the 1940 Act as a diversified, open-end management investment company. This
registration does not involve supervision by the SEC of the management or
investment practices or policies of the Fund. The Fund is designed to provide
an investment vehicle for variable annuity and variable life insurance
contracts. Shares of the Fund are sold to other insurance company separate
accounts of LB and separate accounts of its wholly owned indirect subsidiary,
Lutheran Brotherhood Variable Insurance Products Company ("LBVIP"), and the
Fund may in the future create new portfolios. It is conceivable that in the
future it may be disadvantageous for both variable annuity separate accounts
and variable life insurance separate accounts to invest simultaneously in the
Fund, although LB does not foresee any such disadvantages to either variable
annuity or variable life insurance contract owners. The management of the Fund
intends to monitor events in order to identify any material conflicts between
such contract owners and to determine what action, if any, should be taken in
response. Such action could include the sale of Fund shares by one or more of
the separate accounts, which could have adverse consequences. Material
conflicts could result from, for example, (1) changes in state insurance laws,
(2) changes in Federal income tax law, (3) changes in the investment
management of the Fund, or (4) differences in voting instructions between
those given by the contract owners from the different separate accounts. In
addition, if LB believes the Fund's response to any of those events or
conflicts insufficiently protects Contract Owners, it will take appropriate
action on its own.
The Variable Account will purchase and redeem shares from the Fund at net
asset value. Shares will be redeemed to the extent necessary for LB to collect
charges under the Contracts, to pay Cash Surrender Value upon full surrenders
of the Contracts, to pay partial surrenders, to make Contract loans, to
provide benefits under the Contracts, or to transfer assets from one
Subaccount to another as requested by Contract Owners. Any dividend or capital
gain distribution received from a Portfolio of the Fund will be reinvested
immediately at net asset value in shares of that Portfolio and retained as
assets of the corresponding Subaccount.
The Fund receives investment advice with respect to each of its Portfolios
from LB, which acts as investment adviser to the Fund. LB is a registered
investment adviser under the Investment Advisers Act of 1940. As investment
adviser to the Fund, LB charges the Fund a daily investment advisory fee equal
to an annual rate of .40% of the aggregate average daily net assets of the
Money Market, Income, High Yield, Growth, and Opportunity Growth Portfolios.
LB also charges the Fund an annual investment advisory fee equal to .85% of
the aggregate average daily net assets of the World Growth Portfolio, as
described in the accompanying current prospectus for the Fund.
LB has engaged Rowe Price-Fleming International, Inc., ("Price-Fleming") as
investment sub-adviser for the World Growth Portfolio. Price-Fleming was
founded in 1979 as a joint venture between T. Rowe Price Associates, Inc. and
Robert Fleming Holdings Limited. Price-Fleming is one of the world's largest
international mutual fund asset managers with approximately $___ billion under
management as of December 31, 1996 in its offices in Baltimore, London, Tokyo
and Hong Kong. Price-Fleming has an investment advisory group that has day-
to-day responsibility for managing the World Growth Portfolio and developing
and executing the Portfolio's investment program. LB pays the Sub-adviser for
the World Growth Portfolio an annual sub-advisory fee for the performance of
sub-advisory services. The formula for determining the sub-advisory fee is
described fully in the prospectus for the Fund.
The investment objectives of the current Portfolios available to Contract
Owners through corresponding Subaccounts of the Variable Account are set forth
in the accompanying prospectus for the Fund. There is no assurance that these
objectives will be met.
Each Contract Owner should periodically consider the allocation among the
Subaccounts in light of current market conditions and the investment risks
attendant to investing in the Fund's various Portfolios. A full description of
the Fund, its investment objectives, policies and restrictions, its expenses,
the risks attendant to investing in the Fund's Portfolios and other aspects of
its operation is contained in the accompanying Prospectus for the Fund, which
should be carefully read together with this Prospectus.
Performance Information
Performance information for the Variable Account and/or the Fund may appear in
advertisements, sales literature, or reports to Contract Owners. Performance
information for the Fund will appear only when accompanied by performance
information for the Variable Account. Performance information for the Variable
Account will reflect the deduction of applicable charges to the Contract.
Quotations of performance information for the Fund will not take into account
charges or deductions against the Variable Account to which Fund shares are
sold or deductions against the Contract. Performance information reflects only
the performance of a hypothetical investment during a particular time period
on which the calculations are based. Performance information should be
considered in light of the investment objectives and policies, characteristics
and quality of the Portfolios of the Fund in which the Variable Account
invests, and the market conditions during the given period of time, and should
not be considered as a representation of what may be achieved in the future.
Performance for the Variable Account and/or the Fund as reported from time to
time in advertisements and sale literature may be compared with that of other
company separate accounts or mutual funds included in the generally accepted
indices, analyses or rankings prepared by Lipper Analytical Service, Inc.,
Standard & Poor's Corporation, Morningstar, Inc., VARDS, Dow Jones or similar
independent rating or statistical investment services that monitor the
performance of insurance company separate accounts or mutual funds.
Performance of the Variable Account may be quoted or compared to rankings,
yields or returns as published or prepared by independent rating or
statistical services or publishers or publications such as THE BANK RATE
MONITOR NATIONAL INDEX, BARRON'S, BUSINESS WEEK, DONOGHUE'S MONEY MARKET FUND
REPORT, FINANCIAL SERVICES WEEK, FINANCIAL TIMES, FINANCIAL WORLD, FORBES,
FORTUNE, GLOBAL INVESTOR, INSTITUTIONAL INVESTOR, INVESTOR'S DAILY,
KIPLINGER'S PERSONAL FINANCE, LIPPER ANALYTICAL SERVICES, MONEY, MUTUAL FUND
FORCASTER, NEWSWEEK, THE NEW YORK TIMES, PERSONAL INVESTOR, STANGER REPORT,
SYLVIA PORTER'S PERSONAL FINANCE, USA TODAY, U.S. NEWS AND WORLD REPORT, THE
WALL STREET JOURNAL and WIESENBERGER INVESTMENT COMPANIES SERVICE.
Addition, Deletion or Substitution of Investments
LB reserves the right, subject to applicable law, to make additions to,
deletions from, or substitutions for the shares that are held in the Variable
Account or that the Variable Account may purchase. If the shares of a
Portfolio of the Fund are no longer available for investment or if in LB's
judgment further investment in any Portfolio should become inappropriate in
view of the purposes of the Variable Account, LB may redeem the shares, if
any, of that Portfolio and substitute shares of another registered open-end
management company. LB will not substitute any shares attributable to a
Contract interest in a Subaccount of the Variable Account without notice and
prior approval of the SEC and state insurance authorities, to the extent
required by applicable law. The Variable Account may to the extent permitted
by law purchase other securities for other contracts or permit a conversion
between contracts upon request by the Contract Owners.
LB also reserves the right to establish additional Subaccounts of the Variable
Account, each of which would invest in shares corresponding to a new Portfolio
of the Fund or in shares of another investment company having a specified
investment objective. Subject to applicable law and any required SEC approval,
LB may, in its sole discretion, establish new Subaccounts or eliminate one or
more Subaccounts if marketing needs, tax considerations or investment
conditions warrant. Any new Subaccounts may be made available to existing
Contract Owners on a basis to be determined by LB.
If any of these substitutions or changes are made, LB may by appropriate
endorsement change the Contract to reflect the substitution or change. If LB
deems it to be in the best interest of Contract Owners, and subject to any
approvals that may be required under applicable law, the Variable Account may
be operated as a management company under the 1940 Act, it may be deregistered
under that Act if registration is no longer required, or it may be combined
with other LB separate accounts.
CONTRACT BENEFITS
Death Benefits
General. As long as the Contract remains in force (see "PAYMENT AND ALLOCATION
OF PREMIUMS--Contract Lapse and Reinstatement"), the death proceeds of the
Contract will, upon due proof of the Insured's death, be paid to the named
Beneficiary in accordance with the designated Death Benefit Option. The
proceeds may be paid in cash or under one of the settlement options set forth
in the Contract. See "CONTRACT BENEFITS--Payment of Contract Benefits". The
amount payable under the designated Death Benefit Option will be reduced by
any outstanding Contract Debt and any due and unpaid Monthly Deduction(s), and
will be increased by any additional insurance benefits on the Insured's life
provided for in the Contract.
If the Insured dies at or after age 100, the amount payable will be the Cash
Surrender Value on the date of death.
Death Benefit Options. The Contract provides two Death Benefit Options: Option
A and Option B. The Contract Owner designates the Death Benefit Option in the
application.
Option A. The Death Benefit is equal to the greater of (a) the Face Amount of
the Contract plus the Accumulated Value of the Contract and (b) the
Accumulated Value multiplied by the specified percentage shown in the
following table (with the Accumulated Value in each case being determined on
the Valuation Date on or next following the Insured's date of death):
Specified Specified
Attained Age Percentage Attained Age Percentage
40 or less 250% 61 128%
41 243 62 126
42 236 63 124
43 229 64 122
44 222 65 120
45 215 66 119
46 209 67 118
47 203 68 117
48 197 69 116
49 191 70 115
50 185 71 113
51 178 72 111
52 171 73 109
53 164 74 107
54 157 75 to 90 105
55 150 91 104
56 146 92 103
57 142 93 102
58 138 94 101
59 134 95 to 99 100
60 130
Illustration of Option A. For purposes of this illustration, assume that the
Insured is under the age of 40 and that there is no Contract Debt. (The
specified percentage is 250% for an Insured aged 40 or below on the Contract
Anniversary prior to the date of death.)
Under Option A, a Contract with a Face Amount of $50,000 will generally pay a
Death Benefit of $50,000 plus Accumulated Value. Thus, for example, a Contract
with an Accumulated Value of $5,000 will have a Death Benefit of $55,000
($50,000 + $5,000); an Accumulated Value of $10,000 will yield a Death Benefit
of $60,000 ($50,000 + $10,000); and an Accumulated Value of $25,000 will yield
a Death Benefit of $75,000 ($50,000 + $25,000). The Death Benefit, however,
will be at least 2.50 times the Accumulated Value. As a result, if the
Accumulated Value of the Contract exceeds $33,333, the Death Benefit will be
greater than the Face Amount plus Accumulated Value. Each additional dollar
added to Accumulated Value above $33,333 will increase the Death Benefit by
$2.50. An Insured with an Accumulated Value of $35,000 will therefore have a
Death Benefit of $87,500 (2.50 X $35,000); an Accumulated Value of $40,000
will yield a Death Benefit of $100,000 (2.50 X $40,000); and an Accumulated
Value of $50,000 will yield a Death Benefit of $125,000 (2.50 X $50,000).
Similarly, any time Accumulated Value exceeds $33,333 each dollar taken out of
Accumulated Value will reduce the Death Benefit by $2.50. If at any time,
however, Accumulated Value multiplied by the specified percentage is less than
the Face Amount plus the Accumulated Value of the Contract, the Death Benefit
will be the Face Amount plus the Accumulated Value.
Option B. The Death Benefit is the greater of (a) the Face Amount of the
Contract and (b) the Accumulated Value on the Valuation Date on or next
following the Insured's date of death multiplied by the specific percentage
shown in the table above.
Illustration of Option B. For purposes of this illustration, assume that the
Insured is under the age of 40 and that there is no Contract Debt.
Under Option B, a Contract with a Face Amount of $50,000 will generally pay a
Death Benefit of $50,000. However, because the Death Benefit must be equal to
or be greater than 2.50 times the Accumulated Value, any time the Accumulated
Value of the Contract exceeds $20,000, the Death Benefit will exceed the Face
Amount. Each additional dollar added to Accumulated Value above $20,000 will
increase the Death Benefit by $2.50. Thus, a 40-year-old Insured with an
Accumulated Value of $25,000 will have a Death Benefit of $62,500 (2.50 X
$25,000); an Accumulated Value of $30,000 will yield a Death Benefit of
$75,000 (2.50 X $30,000); and an Accumulated Value of $40,000 will yield a
Death Benefit of $100,000 (2.50 X $40,000).
Similarly, any time Accumulated Value exceeds $20,000 each dollar taken out of
Accumulated Value will reduce the Death Benefit by $2.50. If at any time,
however, the Accumulated Value multiplied by the specified percentage is less
than the Face Amount, the Death Benefit will be the Face Amount of the
Contract.
Which Death Benefit Option to Choose. If a Contract Owner prefers to have
premium payments and favorable investment performance reflected partly in the
form of an increasing Death Benefit, the Contract Owner should choose Option
A. If the Contract Owner is satisfied with the amount of the Insured's
existing insurance coverage and prefers to have premium payments and favorable
investment performances reflected to the maximum extent in the Accumulated
Value, the Contract Owner should select Option B.
Change in Death Benefit Option. At any time when the Death Benefit would be
the Face Amount plus the Accumulated Value (if Option A is in effect) or the
Face Amount (if Option B is in effect), the Death Benefit Option in effect may
be changed by sending LB a Written Notice of change. No charges will be
imposed to make a change in Death Benefit Option. The effective date of any
such change will be the Monthly Anniversary on or next following the date LB
receives the Written Notice.
If the Death Benefit Option is changed from Option A to Option B, the Face
Amount will not change and the Death Benefit will be decreased by the
Accumulated Value of the Contract on the effective date of the change. These
changes will generally have the effect of decreasing the net amount at risk
under the Contract. In addition, if a Contract Owner changed from Option A to
Option B, and then back to Option A from Option B, the resulting Face Amount
and net amount at risk under Option A would generally be lower as a result of
the intervening change to Option B.
If the Death Benefit Option is changed from Option B to Option A, the Death
Benefit will not change and the Face Amount will be decreased by the
Accumulated Value of the Contract on the effective date of the change;
however, this change may not be made if it would reduce the Face Amount to
less than $5,000.
The effects of these Death Benefit Option changes on the Face Amount, Death
Benefit and net amount at risk (that is, the difference between the Death
Benefit and Accumulated Value) can be illustrated as follows. Assume that a
Contract under Option A has a Face Amount of $100,000 and an Accumulated Value
of $10,000, and therefore a Death Benefit of $110,000 ($100,000 + $10,000) and
a net amount at risk of $100,000 ($110,000 - $10,000). If the Death Benefit
Option is changed from Option A to Option B, the Face Amount would remain the
same, the Death Benefit (which equals the Face Amount under Option B) would be
reduced from $110,000 to $100,000, and the net amount at risk would be reduced
from $100,000 to $90,000 ($100,000 - $10,000). If the Death Benefit Option
were then changed back to Option A, the Death Benefit would remain the same,
the Face Amount would be reduced from $100,000 to $90,000 (that is, reduced by
the amount of the Accumulated Value), and the net amount at risk would remain
the same ($100,000 - $10,000 = $90,000). The overall effect of changing from
Option A to Option B and then back to Option A would be to have reduced the
Face Amount from $100,000 to $90,000, to have reduced the Death Benefit from
$110,000 to $100,000, and to have reduced the net amount at risk from $100,000
to $90,000.
If a change in Death Benefit Option would result in cumulative premiums
exceeding the maximum premium limitations under the Internal Revenue Code for
life insurance, LB will not effect the change in Death Benefit Option. See
"PAYMENT AND ALLOCATION OF PREMIUMS--Amount and Timing of Premiums--Premium
Limitations".
A change in Death Benefit Option may affect the monthly cost of insurance
charge because this charge varies with the net amount at risk--that is, in
general, the Death Benefit less the Accumulated Value. See "CHARGES AND
DEDUCTIONS--Accumulated Value Charges--Monthly Deduction". Changing from
Option A to Option B will generally decrease the net amount at risk, thereby
reducing the cost of insurance charges. Changing from Option B to Option A
will generally result in a net amount at risk that remains level. Such a
change from Option B to Option A, however, will result in an increase in the
cost of insurance charges over time because the net amount at risk will
(unless the Death Benefit is based on the applicable percentage of Accumulated
Value) remain level rather than decreasing as the Accumulated Value increases.
How Death Benefits May Vary in Amount. The Death Benefit may vary with the
Contract's Accumulated Value. The Death Benefit under Option A will always
vary with the Accumulated Value because the Death Benefit equals the greater
of (a) the Face Amount plus the Accumulated Value and (b) the Accumulated
Value multiplied by the specified percentage shown in the foregoing table.
Under Option B, the Death Benefit will only vary with the Contract's
Accumulated Value whenever the specified percentage of Accumulated Value
exceeds the Face Amount of the Contract.
Ability to Change Face Amount. Subject to certain limitations (see "Decreases"
and "Increases" below), generally a Contract Owner may, at any time before the
Insured's Attained Age 100, increase or decrease the Contract's Face Amount in
force by submitting a written application to LB. The effective date of the
increase or decrease will be the Monthly Anniversary on or next following
approval of the request. An increase in Face Amount may have tax consequences.
See "TAX MATTERS--Contract Proceeds". The effect of changes in Face Amount on
Contract charges, as well as certain additional considerations, are described
below:
Decreases. A decrease in the Face Amount may affect the total net amount at
risk and the portion of the net amount at risk covered by various premium
classes, both of which may affect a Contract Owner's monthly insurance
charges. See "CHARGES AND DEDUCTIONS--Accumulated Value Charges--Monthly
Deduction".
A decrease in the Face Amount will result in the partial imposition of the
Decrease Charge as of the Monthly Anniversary on which the decrease becomes
effective. See "CHARGES AND DEDUCTIONS--Accumulated Value Charges--Decrease
Charge". Whenever the Decrease Charge is imposed in part in connection with a
requested decrease in Face Amount, the Initial Monthly Charge included in the
first 180 Monthly Deductions will be reduced proportionately to take into
account the amount of the Deferred Administrative Charge included in the
Decrease Charge then imposed. See "CHARGES AND DEDUCTIONS--Accumulated Value
Charges--Monthly Deduction--Initial Monthly Charge".
See Appendix D for information about differences in charges on VUL 1
contracts.
If the Death Benefit Guarantee is in force, then on the effective date of any
requested decrease in Face Amount the Accumulated Value less any Contract Debt
must be sufficient to cover the Decrease Charge imposed in connection with the
requested decrease and the Monthly Deduction due on that date. If the Death
Benefit Guarantee is not in force, then the Cash Surrender Value must be
sufficient to cover the Monthly Deduction due on that date. If these
requirements are not satisfied, then the requested decrease in Face Amount
will not be effected.
The Face Amount in force after any requested decrease may not be less than the
Minimum Face Amount. Also, to the extent a decrease in Face Amount would
result in cumulative premiums exceeding the maximum premium limitations
applicable under the Internal Revenue Code for life insurance, LB will not
effect the decrease (see "PAYMENT AND ALLOCATION OF PREMIUMS--Amount and
Timing of Premiums--Premium Limitations"). As discussed previously (see
"CONTRACT BENEFITS--Death Benefit--Change in Death Benefit Option"), if the
Death Benefit Option is changed from Option B to Option A, the Death Benefit
will not change and the Face Amount will be decreased by the Accumulated Value
of the Contract on the effective date of the change; however, this change may
not be made if it would reduce the Face Amount to less than $5,000.
A request for partial surrender will not be implemented if or to the extent
the requested partial surrender would reduce the Face Amount below $5,000.
Also, if a partial surrender would decrease the Face Amount, to the extent
that the partial surrender would result in cumulative premiums exceeding the
maximum premium limitations applicable under the Internal Revenue Code for
life insurance, LB will not effect such partial withdrawal. See "PAYMENT AND
ALLOCATION OF PREMIUMS--Amount and Timing of Premiums--Premium Limitations".
For purposes of determining the cost of insurance charge, any decrease in the
Face Amount will reduce the Face Amount in force in the following order: (a)
the Face Amount provided by the most recent increase; (b) the next most recent
increases successively; and (c) the initial Face Amount. See "CHARGES AND
DEDUCTIONS--Accumulated Value Charges--Monthly Deduction". If the Contract
Owner requests a decrease in Face Amount, that part of any Decrease Charge
applicable to the decrease will reduce the Accumulated Value attributable to
the Contract and the Decrease Charge will be reduced by this amount. See
"CHARGES AND DEDUCTIONS--Accumulated Value Charges--Decrease Charge".
Increases. An increase in the Face Amount will generally affect the total net
amount at risk and may affect the portion of the net amount at risk covered by
various premium classes (if multiple premium classes apply), both of which may
affect a Contract Owner's monthly insurance charges. See "CHARGES AND
DEDUCTIONS--Accumulated Value Charges--Monthly Deduction".
An increase in the Face Amount will also increase the Decrease Charge and will
result in the imposition of a new Initial Monthly Charge for Increases (which
is included in the monthly Deduction) as of the Monthly Anniversary when the
increase becomes effective. See "CHARGES AND DEDUCTIONS--Accumulated Value
Charges--Decrease Charge--Monthly Deduction".
A request for an increase in Face Amount may not be for less than $25,000. The
Contract Owner may not increase the Face Amount after the Insured's Attained
Age 85. To obtain the increase, the Contract Owner must submit an application
for the increase. LB may require that additional evidence of insurability be
submitted with any request for an increase. An increase need not be
accompanied by an additional premium, but LB will continue to deduct the
Premium Expense Charges from any premiums paid and will deduct other charges
associated with the increase from Accumulated Value. After increasing the Face
Amount, the Contract Owner will have the right (i) during a Free Look Period,
to have the increase cancelled and receive a credit or refund (see "CONTRACT
RIGHTS--Free Look Privileges"), and (ii) during the first 24 months following
the increase to exchange the increase in Face Amount for a fixed benefit
permanent life insurance contract issued by Lutheran Brotherhood, subject to
the same conditions and principles as apply to an exchange of the entire
Contract for such a new contract (see "CONTRACT RIGHTS--Exchange Privileges").
See Appendix D for information about changes in face amounts for VUL 1
contracts.
Unless the Death Benefit Guarantee is in effect, on the effective date of an
increase the Accumulated Value must be sufficient to cover any Contract Debt
and any Decrease Charge (including the additional Decrease Charge arising from
the requested increase) and the Monthly Deduction due on that date--in other
words, on that date, and taking the increase into account, the Cash Surrender
Value before the Monthly Deduction must be equal to or greater than the amount
of the Monthly Deduction then due. If the existing Accumulated Value at the
time of a requested increase does not result in a sufficient Cash Surrender
Value after the increase, a Contract Owner may have to make additional premium
payments to increase the Accumulated Value and thereby increase the Cash
Surrender Value sufficiently. If the Death Benefit Guarantee is in effect, the
Cash Surrender Value after the increase before the Monthly Deduction may be
less than the Monthly Deduction then due, even though the Death Benefit
Guarantee Premium will be increased as a result of any requested increase in
Face Amount (see "DEATH BENEFIT GUARANTEE--Death Benefit Guarantee Premium").
Insurance Protection. A Contract Owner may increase or decrease the pure
insurance protection provided by the Contract (that is, the net amount at
risk, which is, in general, the difference between the Death Benefit and the
Accumulated Value) in one of several ways as insurance needs change. These
ways include increasing or decreasing the Face Amount, changing the level of
premium payments, and, to a lesser extent, making a partial surrender under
the Contract. Although the consequences of each of these methods will depend
upon the individual circumstances, they may be generally summarized as
follows:
(a) A decrease in the Face Amount will, subject to the applicable percentage
limitations (see "CONTRACT BENEFITS--Death Benefits--Death Benefit Options"),
decrease the pure insurance protection without reducing the Accumulated Value
(except for the deduction of any Decrease Charge applicable to the decrease).
If the Face Amount is decreased, the Monthly Deduction generally will decrease
as well, but any Decrease Charge then applicable will be imposed in part upon
a requested decrease in Face Amount (see "Charges and Deductions--Decrease
Charge--Monthly Deduction").
(b) An increase in the Face Amount (which may require satisfactory evidence
of insurability--see "Increases--Additional Considerations" above) will likely
increase the amount of pure insurance protection, depending on the amount of
Accumulated Value and the resultant applicable percentage limitation. If the
insurance protection is increased, the Monthly Deduction will increase as
well.
(c) Under Death Benefit Option A, until the applicable percentage of
Accumulated Value exceeds the Face Amount plus the Accumulated Value, the
level of premium payments will not affect the amount of pure insurance
protection.
(d) Under Death Benefit Option B, until the applicable percentage of
Accumulated Value exceeds the Face Amount, an increased level of premium
payments will generally reduce the amount of pure insurance protection.
(e) Under either Death Benefit Option, if the Death Benefit is the
applicable percentage of Accumulated Value, then an increased level of premium
payments will increase the amount of pure insurance protection.
(f) A partial surrender will reduce the Death Benefit. See "CONTRACT RIGHTS-
- -Surrender Privileges". However, it has a limited effect on the pure insurance
protection and charges under the Contract, because the partial surrender will
affect the net amount at risk only when the Death Benefit is based on the
applicable percentage of Accumulated Values (see "CONTRACT RIGHTS--Surrender
Privileges--Partial Surrender"). The primary use of a partial surrender is to
withdraw Accumulated Value. Furthermore, it results in a reduced amount of
Accumulated Value and increases the possibility that the Contract will lapse.
The techniques described in this section for changing the amount of pure
insurance protection under the contract (for example, changing the face
amount, making a partial surrender, and changing the amount of premium
payments) must be considered together with the other restrictions and
considerations described elsewhere in this prospectus.
How the Duration of the Contract May Vary. Subject to the Death Benefit
Guarantee (which depends upon the level of premium payments, partial
surrenders and the Contract Loan Amount--see "DEATH BENEFIT GUARANTEE"), the
duration of the Contract depends upon the Cash Surrender Value (that is, the
Accumulated Value less any Contract Debt and any Decrease Charge). The
Contract will remain in force as long as (a) the Cash Surrender Value of the
Contract is sufficient to pay the Monthly Deduction and (b) Contract Debt does
not exceed Accumulated Value less any Decrease Charge. In general, however,
when Cash Surrender Value is insufficient to pay the Monthly Deduction or when
Contract Debt exceeds Accumulated Value less any Decrease Charge, and a grace
period expires without an adequate payment by the Contract Owner, the Contract
will lapse and terminate without value. The Contract Owner has certain rights
to reinstate the Contract. See "PAYMENT AND ALLOCATION OF PREMIUMS--Contract
Lapse and Reinstatement".
Accumulated Value and Cash Surrender Value
The Accumulated Value of the Contract is the total amount of value held under
the Contract at any time. The Accumulated Value is used in determining the
Cash Surrender Value (the Accumulated Value less any Contract Debt and any
Decrease Charge). See "CONTRACT RIGHTS--Surrender Privileges". There is no
guaranteed minimum Accumulated Value, and because a Contract's Accumulated
Value on any future date depends upon a number of variables, it cannot be
predetermined.
A Contract's Accumulated Value and Cash Surrender Value will reflect the
investment performance of the chosen Subaccounts of the Variable Account, any
Net Premiums paid, any partial surrenders, any loans, any loan repayments, any
loan interest paid or credited, and any charges assessed in connection with
the Contract (including any Decrease Charge previously imposed on a requested
decrease in Face Amount).
Calculation of Accumulated Value. The Accumulated Value of the Contract is
determined first on the Contract Date and thereafter on each Valuation Date.
On the Contract Date, the Accumulated Value will be the New Premiums received,
plus any interest earned during the period when premiums are held in LB's
General Account (before being transferred to the Variable Account) (see
"PAYMENT AND ALLOCATION OF PREMIUMS--Issuance of a Contract"), less any
Monthly Deductions due on the Contract Date. On each Valuation Date after the
Contract Date, the Contract's Accumulated Value will be:
(1) the aggregate of the values attributable to the Contract in each of the
Subaccounts on the Valuation Date, determined for each Subaccount by
multiplying the Subaccount's Unit Value on the date by the number of
Subaccount Units allocated to the Contract; plus
(2) the value attributable to the Contract in the Loan Account (see
"CONTRACT RIGHTS--Loan Privileges") on the Valuation Date.
Determination of Number of Units. Any amounts allocated to the Subaccounts
will be converted into Units of the Subaccount. The number of Units to be
credited to the Contract is determined by dividing the dollar amount being
allocated by the Unit Value as of the end of the Valuation Period during which
the amount was allocated. The number of Subaccount Units in any Subaccount
will be increased by: (i) any Net Premiums allocated to the Subaccount during
the current Valuation Period; (ii) any Accumulated Value transferred to the
Subaccount from the General Account or another Subaccount during the current
Valuation Period; (iii) any repayments of the Contract Debt during the current
Valuation Period; and (iv) any interest earned on the amount in the Loan
Account and transferred to the Variable Account during the current Valuation
Period. The number of Subaccount Units in any Subaccount will be decreased by:
(i) any Monthly Deduction allocated to the Subaccount during the current
Valuation Period to cover the Contract Month following a Monthly Anniversary;
(ii) any Accumulated Value transferred from the Subaccount to another
Subaccount or the General Account; (iii) the amount of any partial surrender
(including the partial surrender charge) during the current Valuation Period;
and (iv) any Contract loans allocated to the Subaccount and transferred to the
Loan Account during the current Valuation Period.
The Subaccount Unit Value is determined before any Contract transactions on
the Valuation Date that would affect the number of Subaccount Units (see
immediately preceding paragraph). If the Contract's Accumulated Value in the
Variable Account is to be calculated for a day that is not a Valuation Date,
the next following Valuation Date will be used.
Determination of Unit Value. The Unit Value for a Subaccount is calculated on
each Valuation Date by dividing (1) by (2):
Where:
(1) is the net result of:
(a) the net asset value of the corresponding Portfolio of the Subaccount at
the end of the current Valuation Period, plus
(b) the amount of any dividend or capital gain distribution by the Portfolio
if the "ex-dividend" date occurs during the Valuation Period, plus or minus
(c) a charge or credit or any taxes reserved which LB determines a result of
the investment operation of the Portfolio, minus
(d) the Mortality and Expense Risk Charge (see "CHARGES and DEDUCTIONS--
Charges Against the Variable Account--Mortality and Expense Risk Charge") for
each day during the current Valuation Period (a current charge of .001644%,
but never to exceed .002055%, of the net assets for each day during the
current Valuation Period), and
(2) is the number of Units for the Subaccount attributable to all Contracts.
Payment of Contract Benefits
If the Insured dies before age 100, the proceeds from the Contract
will consist of the Contract's Death Benefit, plus any insurance
proceeds provided by additional insurance benefits on the Insured's
life, less any outstanding Debt and any unpaid Monthly Deductions. If
the Insured dies at or after age 100, the amount payable will be the
Cash Surrender Value on the date of death.
See Appendix D for information about benefits at maturity date on VUL 1
contracts, which is the Contract Anniversary on or next following the
Insured's 96th birthday.
Death proceeds under a Contract will ordinarily be paid within seven days
after LB receives due proof of death. The Cash Surrender Value (Accumulated
Value less any Contract Debt and any Decrease Charge), partial surrenders and
Contract loans will ordinarily be paid within seven days of receipt of a
Written Notice. Payments may be postponed in certain circumstances. See
"GENERAL PROVISIONS--Postponement of Payments". The Contract Owner may decide
the form in which the proceeds will be paid. During the Insured's lifetime,
the Contract Owner may arrange for the death proceeds to be paid in a lump sum
or under one of the settlement options described below. These choices are also
available if the Contract is surrendered. If no election is made, the proceeds
will be paid pursuant to Option 1 described below.
For an option to be used, the proceeds to be applied must be at least $2,000.
Election of an option is also subject to the conditions that (a) payments must
not be less than $50 each and (b) payments must be made only at annual, semi-
annual, quarterly or monthly intervals.
Settlement options currently offered under a Contract are as follows:
Option 1--Interest Income. The proceeds may be left on deposit. Interest will
be paid at a rate of not less than 3% per year. These proceeds may be
withdrawn upon request.
Option 2--Income of a Fixed Amount. Income of a fixed amount will be paid at
agreed upon intervals. This income is subject to the conditions that (a)
income per year must not be less than 6% of the proceeds, and (b) income is
paid until the proceeds, with interest credited at the rate of 3 1/2% per year
on the unpaid balance, are paid in full (this income may be increased by the
crediting of additional interest).
Option 3--Income for a Fixed Period. Income for a fixed number of years will
be paid, not to exceed 30 (the income will not be less than the amounts set
forth in a table in the Contract relating to this option).
Option 4--Life Income with Guaranteed Period. Income for the lifetime of the
payee will be paid. If the payee dies during the guaranteed period, payments
will be continued to the payee's beneficiary to the end of that period. A
period of 10 or 20 years may be elected (the income will not be less than the
amounts set forth in tables in the Contract relating to this option). After
the first payment is made, this option may not be revoked or changed.
Option 5--Other Options. The proceeds may be paid under any other settlement
option agreeable to LB.
A Contract Owner may elect an option by Written Notice to LB during the
Insured's lifetime. The option must be elected before proceeds become payable.
Assignees and third-party owners may elect an option only with LB's consent.
Election of Option 4 may be made only if the payee is a natural person who is
the Insured or a Beneficiary.
If it is the death proceeds under a Contract that are payable, the Beneficiary
may elect a settlement option provided that (a) the manner of settlement has
not been restricted before the Insured's death, and (b) the death proceeds
have not been paid.
Under certain circumstances, an Accelerated Benefits Rider allows a Contract
Owner to receive benefits from the Contract that would be otherwise payable
upon the death of the Insured. An LB representative should be consulted as to
whether and to what extent the rider is available in a particular state and on
any particular Contract. See "GENERAL PROVISIONS--Accelerated Benefits Rider".
The tax treatment of benefits paid under the Accelerated Benefits Rider is
currently uncertain. See "FEDERAL TAX MATTERS--Contract Proceeds--Benefits
Paid under the Accelerated Benefits Rider".
PAYMENT AND ALLOCATION OF PREMIUMS
Issuance of a Contract
In order to purchase a Contract, an individual must make application to LB
through a licensed LB Representative, who is also a registered representative
of Lutheran Brotherhood Securities Corp. LB is offering Contracts only to
Insureds who are eligible for membership in Lutheran Brotherhood. At issue the
Minimum Face Amount of a Contract under LB's rules is currently $50,000 for
Insureds with an Attained Age of 18 through 50, and $25,000 for all other
Insureds. LB reserves the right to revise its rules from time to time to
specify a different Minimum Face Amount at issue for subsequently issued
Contracts. A Contract will be issued only on Insureds who have an Attained Age
of 85 or less and who provide satisfactory evidence of insurability to LB.
Acceptance is subject to LB's underwriting rules. LB reserves the right to
reject an application for any reason permitted by law.
At the time an application for a Contract is accepted, subject to LB's
underwriting rules, an applicant can obtain temporary insurance protection
pending issuance of the Contract by submitting payment of the Minimum
Conditional Insurance Premium. The Minimum Conditional Insurance Premium will
equal three initial Death Benefit Guarantee Premiums, or, in the case of
automatic monthly payment plans, two initial Death Benefit Guarantee Premiums.
If LB subsequently determines that the proposed Insured is not an acceptable
risk under LB's underwriting standards and rules, even if the Minimum
Conditional Insurance Premium has been paid, no temporary insurance coverage
will have been provided and any premium paid will be refunded (without
interest).
Upon delivery of the Contract, the balance (if any) of the Minimum Contract
Issuance Premium must be paid. The Minimum Contract Issuance Premium will
equal the initial Scheduled Premium selected by the Contract Owner (see
"Amount and Timing of Premiums" below), or, in the case of automatic monthly
payment plans, the greater of the Minimum Conditional Insurance Premium or the
initial Scheduled Premium. If the Date of Issue precedes the Contract Date and
the Minimum Contract Issuance Premium otherwise required would not provide a
premium payment sufficient to cover the next Contract Month, additional
Scheduled Premium payment(s) sufficient to cover through the next Contract
Month will be required.
The Date of Issue is the date used to determine Contract Months, Contract
Years, Monthly Anniversaries and Contract Anniversaries and will be shown on
page 3 of the Contract. The Contract Date is the date on which the initial Net
Premium(s) will be allocated to the Variable Account. The Contract Date will
be the latest of (i) the Date of Issue; (ii) the date LB receives the first
premium payment on the Contract at its Home Office; and (iii) any other date
mutually agreed upon by LB and the Contract Owner.
Until the Contract Date, premium payments will be held in LB's General
Account. If a Contract is issued, interest will be credited on premium
payments held in LB's General Account at a rate of interest determined by LB;
no interest will be credited on these premium payments if no Contract is
issued (but the full amount of any premiums paid, without deduction of any
Contract charges, will be refunded). Any interest on these premium payments
will be credited to the Contract on the Contract Date in the same manner as a
premium payment, except without deduction of any Premium Expense Charge. On
the Contract Date, the Premium Expense Charges attributable to the premiums
paid will be deducted and the balance of the amount held in the General
Account (on which no Premium Expense Charges will be imposed) will be
transferred from the General Account and allocated to the Variable Account and
allocated among the Subaccount(s) pursuant to the Contract Owner's
instructions.
Amount and Timing of Premiums
A Contract Owner has considerable flexibility in determining the frequency and
amount of premiums.
Scheduled Premiums. Each Contract Owner will select a periodic premium payment
schedule (based on a periodic billing mode of annual, semi-annual, or
quarterly payment) which provides for the billing of a level premium at the
specified interval. Also, under several automatic payment plans, the Contract
Owner can select a monthly payment schedule pursuant to which premium payments
will be automatically deducted from a bank account or other payment source
rather than being billed. The periodic payment selected by the Contract Owner
is called the "Scheduled Premium". The initial Scheduled Premium on an
annualized basis will be shown in the Contract as the "Planned Annual
Premium". The Contract Owner is not, however, required to pay Scheduled
Premiums in accordance with the specified schedule. The Contract Owner has the
flexibility to alter the amount, frequency and time period over which the
premiums are paid. Payment of Scheduled Premiums will not, however, guarantee
that the Contract will remain in force. Instead, the duration of the Contract
depends upon the Contract's Accumulated Value and Cash Surrender Value and
upon whether the Death Benefit Guarantee is in effect. See "CONTRACT BENEFITS-
- -Death Benefits" and "DEATH BENEFIT GUARANTEE". Thus, even if Scheduled
Premiums are paid by the Contract Owner, unless the Death Benefit Guarantee is
in effect, the Contract will lapse whenever (a) Cash Surrender Value is
insufficient to pay the Monthly Deduction or (b) Contract Debt exceeds
Accumulated Value less any Decrease Charge, and in either case if a grace
period expires without an adequate payment by the Contract Owner. See
"Contract Lapse and Reinstatement" below.
Minimum Conditional Insurance Premium. The Minimum Conditional Insurance
Premium is the minimum premium required to provide temporary insurance
protection pending issuance of the Contract. See "Issuance of a Contract"
above.
Minimum Contract Issuance Premium. The Minimum Contract Issuance Premium is
the minimum premium required upon delivery of the Contract. See "Issuance of a
Contract" above.
Death Benefit Guarantee Premium. The Death Benefit Guarantee Premium is a
monthly premium amount specified in the Contract and determined by LB. The
Death Benefit Guarantee Premium may change as the result of Contract changes.
The Death Benefit Guarantee Premium determines the payments required to
maintain the Death Benefit Guarantee. See "DEATH BENEFIT GUARANTEE".
Premium Flexibility. Unlike some insurance contracts, the Contract frees the
owner from the requirement that premiums be paid in accordance with a fixed
premium schedule. Although each Contract Owner determines a Scheduled Premium
(initially, on an annualized basis, this premium will be called the Planned
Annual Premium), a Contract Owner need not make premium payments in accordance
with this schedule and the failure to make such payments will not in itself
cause the Contract to lapse. See "Contract Lapse and Reinstatement" below.
Moreover, subject to the requirements described above regarding the Minimum
Conditional Insurance Premium and the Minimum Contract Issuance Premium (see
"Issuance of a Contract" above), and to the minimum and maximum premium
limitations described below, a Contract Owner may make premium payments at any
time before age 100 in any amount. The Contract, therefore, provides the owner
with the flexibility to vary the frequency and amount of premium payments.
Premium Limitations. The Internal Revenue Code provides for exclusion of the
Death Benefit from gross income if total premium payments do not exceed
certain stated limits. In no event can the total of all premiums paid under a
Contract exceed such limits. If at any time a premium is paid which would
result in total premiums exceeding such limits, LB will only accept that
portion of the premium which will make total premiums equal that amount. Any
part of the premium in excess of that amount will be refunded, and no further
premiums will be accepted until allowed by the current maximum premium
limitations set forth in the Internal Revenue Code.
The maximum premium limitations set forth in the Internal Revenue Code depend
in part upon the amount of the Death Benefit at any time. As a result,
Contract changes that affect the amount of the Death Benefit may affect
whether cumulative premiums paid under the Contract exceed these maximum
premium limitations. For example, a decrease in Face Amount made at the
Contract Owner's request (see "CONTRACT BENEFITS--Death Benefits--Ability to
Change Face Amount") or made as a result of a partial surrender (see "CONTRACT
RIGHTS--Surrender Privileges--Partial Surrender"), or a change in the Death
Benefit Option (see "CONTRACT RIGHTS--Death Benefits--Change in Death Benefit
Option"), could result in cumulative premiums paid exceeding these maximum
premium limitations. To the extent that any such Contract change would result
in cumulative premiums exceeding these maximum premium limitations, LB will
not effect such change.
Allocation of Premiums and Accumulated Value
Net Premiums. The Net Premium equals the premium paid less the Premium Expense
Charges. See "CHARGES AND DEDUCTIONS--Premium Expense Charges".
Allocation of Net Premiums. The Contract Owner will, in the application for
the Contract, indicate how Net Premiums should be allocated to the
Subaccount(s) of the Variable Account. Until the Contract Date, premium
payments will be allocated to LB's General Account. If a Contract is issued,
interest will be credited on premium payments held in the General Account at a
rate of interest determined by LB; no interest will be credited on these
premium payments if no Contract is issued (but the full amount of any premiums
paid will be refunded). On the Contract Date, Net Premiums, together with any
interest credited on premiums held in the General Account, will be transferred
from LB's General Account and allocated to the Variable Account among the
Subaccount(s) of the Variable Account chosen by the Contract Owner. Any Net
Premiums received after the Contract Date will be allocated to the
Subaccount(s) chosen by the Contract Owner.
The percentages of each Net Premium that may be allocated to any Subaccount of
the Variable Account must be in whole numbers and the sum of the allocation
percentages must be 100%. LB reserves the right to adjust allocation
percentages to eliminate fractional percentages. The allocation for future Net
Premiums may be changed without charge at any time by providing LB with
Written Notice or by telephone (if the Contract Owner has completed the
Telephone Transaction Authorization Form).
The values of the Subaccount(s) of the Variable Account will vary with the
investment experience of the Subaccount(s) and the Contract Owner bears the
entire investment risk. Contract Owners should periodically review their
allocations of premiums in light of market conditions and the Contract Owner's
overall financial objectives.
The Contract Owner must notify LB if a payment is a premium payment;
otherwise, it will be considered a loan repayment.
Transfers. Accumulated Value may be transferred among the Subaccounts of the
Variable Account upon receipt of Written Notice or by telephone (if the
Contract Owner has completed the Telephone Transaction Authorization Form).
The total amount transferred each time must be at least $500 (unless the total
cash value in a Subaccount is less than $500, in which case the entire amount
may be transferred). No fees are currently charged for transfers. Transfers
may be postponed in certain circumstances. See "GENERAL PROVISIONS--
Postponement of Payments". Under present law, transfers are not taxable
transactions.
The provisions described above can be illustrated as follows. If a Contract
Owner wishes to transfer a total of $500 or more, any amount can be
transferred from the various Subaccounts (for example, $300 from the Money
Market Subaccount and $200 from the Income Subaccount, or any other
combination that totals $500 or more). A Contract Owner may transfer a total
of less than $500 only if the amount transferred from each Subaccount equals
the total Accumulated Value in that Subaccount (for example, a $300 total
transfer taken totally from the Money Market Subaccount when $300 represents
the total Accumulated Value in that Subaccount, or a $300 total transfer taken
$200 from the Money Market Subaccount and $100 from the Income Subaccount when
these amounts represent the total Accumulated Value in these Subaccounts).
Telephone Transfers. Telephone transfers are available when the Contract Owner
completes the Telephone Transaction Authorization Form. If the Contract Owner
elects to complete the Telephone Transaction Authorization Form, the Contract
Owner thereby agrees that LB, its agents and employees will not be liable for
any loss, liability cost or expense when LB, its agents and employees act in
accordance with the telephone transfer instructions that have been properly
received and recorded on voice recording equipment. If a telephone
authorization or instruction, processed after the Contract Owner has completed
the Telephone Transaction Authorization Form, is later determined not to have
been made by the Contract Owner or was made without the Contract Owner's
authorization, and a loss results from such unauthorized instruction, the
Contract Owner bears the risk of this loss. LB will employ reasonable
procedures to confirm that instructions communicated by telephone are genuine.
In the event, LB does not employ such procedures, LB may be liable for any
losses due to unauthorized or fraudulent instructions. Such procedures may
include among others, requiring forms of personal identification prior to
acting upon telephone instructions, providing written confirmation of such
instructions and/or tape recording telephone instructions.
Contract Owners should periodically review their allocations of Accumulated
Value in light of market conditions and the Contract Owner's overall financial
objectives.
Special Transfer Service--Dollar Cost Averaging. LB administers a dollar cost
averaging program which enables a Contract Owner to pre-authorize a periodic
exercise of the transfer rights described above. A Contract Owner entering
into a dollar cost averaging agreement will instruct LB to periodically
transfer predetermined dollar amounts from the Money Market Subaccount to as
many of three other Subaccounts as specified by the Contract Owner until the
amount in the Money Market Subaccount is exhausted or the agreement is
terminated by the Contract Owner. The dollar cost averaging program is
generally suitable for Contract Owners making a substantial deposit to the
Contract and who wish to use the other Subaccounts investment option, but
desire to control the risk of investing at the top of a market cycle. The
dollar cost averaging program allows such investments to be made in equal
installments over time in an effort to reduce such risk. Dollar cost averaging
does not guarantee that the Variable Account will gain in value, nor will it
protect against a decline in value if market prices fall. However, if a
Contract Owner can continue to invest regularly throughout changing market
conditions, it can be an effective strategy to help meet long-term goals.
Contract Owners interested in the dollar cost averaging program may obtain an
application and full information concerning the program and its restrictions
from LB.
Contract Lapse and Reinstatement
Lapse. The failure to make a Scheduled Premium payment will not itself cause a
Contract to lapse. Subject to the Death Benefit Guarantee (see "DEATH BENEFIT
GUARANTEE"), lapse will only occur when (a) the Cash Surrender Value is
insufficient to cover the Monthly Deduction or (b) Contract Debt exceeds the
Accumulated Value less any Decrease Charge, and in either case if a grace
period expires without a sufficient payment. Even if the Cash Surrender Value
is insufficient to cover the Monthly Deduction, the Contract will not lapse if
the Death Benefit Guarantee is in effect.
Because unearned prepaid loan interest will not be included in Contract Debt
(see definition of "Contract Debt" in section entitled "DEFINITIONS"), the
Cash Surrender Value (which is Accumulated Value less any Contract Debt and
any Decrease Charge) will always include any unearned prepaid loan interest.
This means that, in effect, unearned prepaid loan interest will be applied to
keep the Contract in force because this amount will be available to pay the
Monthly Deduction and because the grace period for the Contract does not
commence until the Cash Surrender Value is insufficient to cover the Monthly
Deduction. Any payment made by the Contract Owner after unearned prepaid loan
interest has been applied in this manner will first be used to replace
unearned prepaid loan interest so applied.
The Contract provides for a 61-day grace period that is measured from the date
on which notice is sent by LB. Thus, the Contract does not lapse, and the
insurance coverage continues, until the expiration of this grace period. This
notice will be sent by LB on or after the Monthly Anniversary on which (a)
Cash Surrender Value is insufficient to pay the Monthly Deduction chargeable
on the Monthly Anniversary or (b) Contract Debt exceeds the Accumulated Value
less any Decrease Charge.
In order to prevent lapse, the Contract Owner must during the grace period
make a premium payment or make a loan repayment sufficient to (a) increase the
Cash Surrender Value (that is, Accumulated Value less any Contract Debt and
any Decrease Charge) to an amount sufficient to cover any unpaid Monthly
Deductions or (b) reduce Contract Debt to an amount equal to or less than the
Accumulated Value less any Decrease Charge.
When the Contract enters the grace period, LB will notify the Contract Owner.
The Contract Owner will then have 61 days, measured from the date notice is
mailed to the Contract Owner, to make sufficient payments. The notice will
specify the payment required to keep the Contract in force and the length of
the grace period. Failure to make a sufficient payment within the grace period
will result in lapse of the Contract without value.
At the commencement of the grace period, LB will transfer the Contract's
Accumulated Value attributable to the Variable Account (that is, Accumulated
Value in excess of the amount held in the Loan Account) into LB's General
Account. If sufficient payments are made during the grace period to avoid
lapse of the Contract, then any Accumulated Value in excess of the amount to
be held in the Loan Account will be reallocated to the Variable Account upon
receipt of such payments. The amount reallocated to the Variable Account will
be reduced by the amount of any Monthly Deductions not paid during the grace
period. The amount allocated to the Variable Account will be allocated among
the Subaccount(s) in the same proportion as the Accumulated Value was
transferred to the General Account from the Subaccount(s) at the commencement
of the grace period.
If a sufficient payment is made during the grace period, Net Premiums will be
allocated among the Subaccount(s) according to the current Net Premium
allocation and then any amount required to pay unpaid Contract charges will be
deducted. See "Allocations of Premiums and Accumulated Value" above.
If the Insured dies during the grace period, the proceeds under the Contract
will equal the amount of the Death Benefit and any additional life insurance
benefits on the Insured provided by rider as of the Monthly Anniversary on or
immediately preceding the commencement of the grace period, reduced by any
Contract Debt and any unpaid Monthly Deductions.
If a sufficient payment is not made during the grace period, the Contract will
lapse without value and insurance coverage will end as of the expiration of
the grace period. The Contract will have no Accumulated Value or Cash
Surrender Value upon termination of the Contract.
On any Monthly Anniversary when the Death Benefit Guarantee is in effect, the
Contract will not lapse. See "DEATH BENEFIT GUARANTEE".
Reinstatement. A Contract that lapses without value may be reinstated at any
time within 5 years after the expiration of the grace period by submitting the
following items to LB:
(1) Written application for reinstatement;
(2) Evidence of insurability satisfactory to LB;
(3) Payment or reinstatement of any Contract Debt (including interest earned
during the grace period) that existed on the date the grace period expired;
(4) A payment that is sufficient to cover: (a) payment of any unpaid Monthly
Deductions for the grace period; and (b) a premium repayment sufficient to
increase Cash Surrender Value (that is, Accumulated Value less any Contract
Debt and any Decrease Charge) to an amount at least equal to the Monthly
Deductions and interest on Contract loans for the next two Contract Months,
based on Unit Values on the date of reinvestment.
The amount of Cash Surrender Value on the date of reinstatement will equal the
Accumulated Value on that date less any reinstated Contract Debt and any
reinstated Decrease Charge (discussed below). The amount of Accumulated Value
on the date of reinstatement will equal: (a) the Accumulated Value as of the
expiration of the grace period before termination of the Contract; plus (b)
any premiums received at the time of reinstatement, reduced by the Premium
Expense Charges; less (c) any Monthly Deductions and any loan interest due for
the grace period; less (d) the Monthly Deduction for the next Contract Month.
Contract charges will, in effect, be calculated and reinstated on a reinstated
Contract as if the Contract had been reinstated effective as of the expiration
of the grace period. Any Decrease Charge and any Initial Monthly Charge that
applied to the Contract at the expiration of the grace period will be
reinstated. The period of time from Contract lapse until Contract
reinstatement will not be taken into account in determining when the 15-year-
time periods for the Decrease Charge and the Initial Monthly Charge expire or
in determining when the first Contract Year expires for the purpose of
calculating the Contingent Deferred Sales Charge (see "CHARGES AND DEDUCTIONS-
- -Accumulated Value Charges--Decrease Charge--Amount of Contingent Deferred
Sales Charge"). Moreover, the Monthly Deductions and any loan interest that
would have otherwise been payable during the grace period must be paid before
reinstatement, which is also consistent with treating a reinstated Contract as
if the Contract has been reinstated effective as of the expiration of the
grace period.
See Appendix D for information about differences in the Decrease Charge and
the Deferred Administrative Charge on VUL 1 contracts.
The effective date of reinstatement will be the date on which the
reinstatement application was approved.
The Death Benefit Guarantee cannot be reinstated after lapse of the Contract.
See "DEATH BENEFIT GUARANTEE".
CHARGES AND DEDUCTIONS
Charges will be deducted in connection with the Contract to compensate LB for:
(a) providing the insurance benefits set forth in the Contract and any
additional insurance benefits added by rider; (b) administering the Contract;
(c) assuming certain risks in connection with the Contract; and (d) incurring
expenses in distributing the Contract. The nature and amount of these charges
are described more fully below.
Premium Expense Charges
Sales Charges. Sales charges, generally called "sales load", will be deducted
to compensate LB for the costs of selling the Contract. These costs include
sales commissions, the printing of prospectuses and sales literature, and
advertising. There are two types of sales load under the Contract. The first,
a front-end sales load, will be 5% of each premium payment, and will be
deducted from each premium payment upon receipt prior to allocation of the Net
Premium to the Variable Account. The second, the Contingent Deferred Sales
Charge which is part of the Decrease Charge, will reduce the Accumulated Value
in the Variable Account attributable to the Contract in the event of full
surrender or lapse of the Contract, or in part upon a requested decrease in
the Face Amount. See "Charges Against Accumulated Value--Decrease Charge"
below.
The sales charges in any Contract year are not necessarily related to actual
distribution expenses incurred during that Contract Year. Instead, LB expects
to incur the majority of distribution expenses in the early Contract Years and
to recover any deficiency over the life of the Contract. To the extent that
sales and distribution expenses exceed sales loads (both front-end and
deferred) in any year, LB will pay them from its other assets or surplus in
its General Account, which includes amounts derived from the Mortality and
Expense Risk Charge deducted from the net assets held in the Variable Account
(see "Accumulated Value Charges--Mortality and Expense Risk Charge" below).
Premium Processing Charge. LB will deduct an amount equal to $1.00 per premium
payment ($.50 for automatic payment plans) to compensate it for the cost of
collecting and processing premiums. This amount will be deducted from each
premium payment prior to allocation of the net proceeds to the Variable
Account. LB reserves the right to increase this charge to an amount not
exceeding $2.00 per premium payment ($1.00 for automatic payment plans).
Accumulated Value Charges
Decrease Charge
The Contract provides for the Decrease Charge, which is a deferred charge that
will be imposed if the Contract is surrendered or lapses, or in part if the
Contract Owner requests a decrease in the Face Amount, in each case at any
time before 180 Monthly Deductions have been made after issuance of a Contract
or after a requested increase in Face Amount. The term "Decrease Charge" is
used to describe this charge because, during the applicable 15-year period,
the charge is imposed in connection with a decrease in the Face Amount, either
as a result of a requested decrease in Face Amount or as the result of lapse
or full surrender of the Contract (which can be viewed as a decrease in the
Face Amount to zero). The Decrease Charge consists of the Contingent Deferred
Sales Charge (described below) and the Deferred Administrative Charge
(described below). The Contingent Deferred Sales Charge compensates LB for the
cost of selling the Contracts, including sales commissions, the printing of
prospectuses and sales literature, and advertising. The Deferred
Administrative Charge reimburses LB for administrative expenses in connection
with the issuance of the Contract, including medical exams, review of
applications for insurance underwriting decisions, and processing of the
applications and establishing Contract records. (Similar administrative and
sales expenses are expected in connection with future changes in the Contract
initiated by the Contract Owner which involve "insurability" decisions, such
as applications for increases in Face Amount.)
The following sections describe how the amount of the Contingent Deferred
Sales Charge and the Deferred Administrative Charge will be determined and how
these charges will be deducted from Accumulated Value.
Amount of Contingent Deferred Sales Charge--Initial Face Amount. At Contract
issuance, LB will compute a maximum Contingent Deferred Sales Charge equal to
25% of the CDSC Premium, which is a premium amount used solely for the purpose
of calculating the Contingent Deferred Sales Charge. As described below, the
Contingent Deferred Sales Charge calculated in this manner will be reduced
beginning on the fifth Contract Anniversary and will be subject to an
additional limitation keyed to actual premiums paid during the first Contract
Year. The Contingent Deferred Sales Charge actually imposed will equal this
maximum Contingent Deferred Sales Charge calculated as 25% of the CDSC Premium
(subject to the scheduled reductions) unless the limitation keyed to 25% of
actual premiums paid applies to the Contract. In other words, the Contingent
Deferred Sales Charge for the initial Face Amount, if imposed, would never
exceed the lesser of (a) 25% of the CDSC Premium and (b) 25% of actual
premiums paid during the first Contract Year.
The maximum Contingent Deferred Sales Charge calculated as described above
(and subject to the additional limitation keyed to 25% of actual premiums
paid), will remain at that level until the fifth Contract Anniversary.
Commencing on the fifth Contract Anniversary, and then on each subsequent
Monthly Anniversary until 120 Monthly Deductions have been made on and after
the fifth Contract Anniversary, this maximum Contingent Deferred Sales Charge
determined during the first Contract Year will be reduced as of each Monthly
Anniversary in level amounts equal to approximately .83% (10% on an annual
basis) of the maximum Contingent Deferred Sales Charge, which means that the
actual Contingent Deferred Sales Charge would be reduced to 80% of the maximum
Contingent Deferred Sales Charge after approximately 7 Contract Years, 60% of
the maximum after approximately 9 Contract Years, 40% of the maximum after
approximately 11 Contract Years, 20% of the maximum after approximately 13
Contract Years, and zero after approximately 15 Contract Years.
The CDSC Premium is an annual premium amount determined by LB on the same
basis as the Death Benefit Guarantee Premium (see "DEATH BENEFIT GUARANTEE"),
except that the CDSC Premium, unlike the Death Benefit Guarantee Premium, will
not take into account any additional charge for an Insured in a substandard
premium class, any charge for additional insurance benefits added by rider, or
the basic monthly administrative charge of $10.00 per month, or any premium
processing charge. The maximum Contingent Deferred Sales Charge based on the
applicable CDSC Premium will be shown in the Contract. Even though the Death
Benefit Guarantee Premium may change after issuance of the Contract, once the
CDSC Premium is determined for purposes of calculating the Contingent Deferred
Sales Charge on the initial Face Amount or on any increase, as the case may
be, the CDSC Premium will not change. The CDSC Premium will never exceed the
"guideline annual premium", as that term is defined under SEC Rule 6e-3(T),
for the Contract.
The Contingent Deferred Sales Charge calculated as described above will be
subject to an additional limitation keyed to actual premiums paid. The actual
Contingent Deferred Sales Charge will never exceed 25% of premiums paid
(before deducting Premium Expense Charges) during the first Contract Year.
Amount of Contingent Deferred Sales Charge--Increases in Face Amount. If the
Face Amount is increased, LB will compute a maximum Contingent Deferred Sales
Charge for the increase equal to 25% of the CDSC Premium for the increase. The
Contingent Deferred Sales Charge actually imposed will equal this maximum
Contingent Deferred Sales Charge calculated as 25% of the CDSC Premium for the
increase (subject to the scheduled reductions) unless the limitation keyed to
25% of the amount of premiums attributable to the increase applies. Like the
similar limitation for the initial Face Amount, the CDSC Premium for the
increase will never exceed the "guideline annual premium", as that term is
defined under SEC Rule 6e-3(T), for the increase. In other words, the
Contingent Deferred Sales Charge for an increase, if imposed, would never
exceed the lesser of (a) 25% of the CDSC Premium for the increase and (b) 25%
of the amount of premiums attributable to the increase made during the 12
Contract Months after the effective date of the increase.
The maximum Contingent Deferred Sales Charge for an increase calculated as
described above will be subject to an additional limitation keyed to 25% of
"the amount of premiums attributable to the increase". The Contingent Deferred
Sales Charge actually imposed for an increase will never exceed 25% of the
"amount of premiums attributable to the increase" made during the 12 Contract
Months after the effective date of the increase.
A special rule applies to determine "the amount of premiums attributable to
the increase" because additional premium payments are not required to fund a
requested increase in Face Amount. The premiums attributable to the increase
will equal the sum of a proportionate share of the Cash Surrender Value on the
effective date of the increase plus a proportionate share of premium payments
made on the effective date of the increase or during the 12 Contract Months
after the effective date of the increase. This means that, in effect, a
portion of the existing Cash Surrender Value will be deemed to be a premium
payment for the increase, and subsequent premium payments will be prorated.
The proportion of existing Cash Surrender Value and subsequent premium
payments attributable to the increase will equal the ratio of the increase in
Face Amount to the resulting total Face Amount after the increase. For
example, if the Face Amount is increased from $100,000 to $200,000, the ratio
of the increase to the resulting total Face Amount is 1/2 ($100,000/$200,000).
If the Cash Surrender Value on the effective date of the increase is $5,000
and premium payments totaling $3,000 are made during the 12 Contract Months
after the effective date of the increase, the premiums attributable to the
increase would be 1/2 ($5,000) + 1/2 ($3,000), or a total of $4,000.
The part of the Contingent Deferred Sales Charge attributable to the increase
will be charged and reduced in accordance with the same principles as
applicable to the basic Contingent Deferred Sales Charge. It will remain at
the maximum level through approximately five years from the effective date of
the increase in Face Amount. It will then be reduced in level monthly amounts
equal to approximately .83% (10% on an annual basis) of the maximum Contingent
Deferred Sales Charge for the increase on the fifth anniversary of the
increase and on each subsequent monthly anniversary of the increase until 120
Monthly Deductions have been taken on and after the fifth anniversary of the
increase. Thus, after the 120th Monthly Deduction following the fifth
anniversary of the increase, the Contingent Deferred Sales Charge on the
increase will be reduced to zero.
Amount of Deferred Administrative Charge. At Contract issuance, LB will
compute a Deferred Administrative Charge. In general, this charge will equal
an amount per $1,000 of Face Amount based upon the initial Face Amount, the
Insured's Attained Age at Contract issuance the Insured's gender, and whether
the Insured is a tobacco user or not. For Insureds with an Attained Age under
18, the Deferred Administrative Charge will equal an amount per $1,000 of Face
Amount based upon the initial Face Amount and the Insured's Age at Contract
issuance. The maximum Deferred Administrative Charge per $1,000 of Face Amount
will be determined from Appendix B. As shown in Appendix B, the Deferred
Administrative Charge per $1,000 of Face Amount will be less for Contracts
having a Face Amount at issuance that equal or exceed the following amounts:
$500,000-$999,999; and $1,000,000. Montana has enacted legislation that
requires that cost of insurance rates and other charges applicable to
Contracts purchased in Montana cannot vary on the basis of the Insured's
gender, and so, in Montana, this charge will not be based on the gender of the
Insured.
The maximum Deferred Administrative Charge, as determined at Contract
issuance, will be reduced as Monthly Deductions are made. Beginning on the
Date of Issue, and continuing on each Monthly Anniversary until 180 Monthly
Deductions have been made, this Deferred Administrative Charge determined at
Contract issuance will be reduced in level amounts equal to approximately .55%
of the maximum Deferred Administrative Charge (or a 6 2/3% reduction of the
maximum Deferred Administrative Charge on an annual basis). In this way, the
Deferred Administrative Charge will be reduced to zero as of the Monthly
Anniversary when the 180th Monthly Deduction is made.
If the Face Amount is increased, a separate Deferred Administrative Charge
will be calculated for the increase in an amount determined in the same manner
as for the initial Face Amount, (except that the Insured's Attained Age on the
effective date of the increase will be used and the charge per $1,000 of Face
Amount to be applied to the increase will be based on the amount of the entire
new Face Amount after giving effect to the increase). The part of the Deferred
Administrative Charge attributable to the increase will be charged and reduced
in accordance with the same principles as applicable to the basic Deferred
Administrative Charge. The maximum Deferred Administrative Charge for an
increase will be determined on the effective date of the increase and will
then be reduced in level amounts equal to .55% of the maximum Deferred
Administrative Charge (or a 6 2/3% reduction of the maximum Deferred
Administrative Charge on an annual basis) as Monthly Deductions are taken on
the effective date of the increase and as of each succeeding Monthly
Anniversary until 180 Monthly Deductions have been made after the effective
date of the increase, when the Deferred Administrative Charge on the increase
will be reduced to zero.
The administrative expenses covered by the Deferred Administrative Charge are
the same expenses covered by the Initial Monthly Charge included in the
Monthly Deduction. See "Accumulated Value Charges--Monthly Deduction" below.
Even though the same administrative expenses are covered by both charges, LB
will not be reimbursed twice for these issuance expenses. Except as described
below for spouse riders, these two charges have been calculated so that these
administrative expenses related to issuance will generally be collected either
through the Monthly Deduction (which covers these charges through the Initial
Monthly Charge) or through the Decrease Charge (which covers these charges
through the Deferred Administrative Charge). Each of these charges applies
until 180 Monthly Deductions have been made, and the scheduled reductions in
the Deferred Administrative Charge described above over this period have been
calculated to take into account the amount of issuance expenses that would
have already been collected through the Initial Monthly Charge. In effect, the
collection of the Deferred Administrative Charge included in the Decrease
Charge, which would be collected only upon lapse or surrender of the Contract
or in part upon a requested decrease in Face Amount, would be an
"acceleration" of the amounts that otherwise would have been paid during this
15-year period through the Initial Monthly Charge included in the Monthly
Deduction. If the Deferred Administrative Charge is imposed in part due to a
requested decrease in Face Amount, the amount of the Initial Monthly Charge
will be reduced accordingly (see "CHARGES AND DEDUCTIONS--Monthly Deduction--
Initial Monthly Charge").
The discussion in the immediately preceding paragraph does not apply to spouse
riders. The Deferred Administrative Charge is not an "acceleration" of the
Initial Monthly Charge applicable to any spouse rider providing insurance
benefits on the Insured's spouse. An Initial Monthly Charge will arise upon
issuance of a spouse rider, but no Deferred Administrative Charge will be
calculated. If the Contract lapses or is surrendered when the Initial Monthly
Charge applies for a spouse rider, this charge will not be collected through
the Deferred Administrative Charge or otherwise, unless the Contract is
reinstated (see "PAYMENT AND ALLOCATION OF PREMIUMS--Contract Lapse and
Reinstatement").
Method of Deduction and Effect of Decrease Charge. The Decrease Charge will be
treated as a deduction against the Contract Owner's Accumulated Value, and
will compensate LB for sales and issuance expenses described above upon
surrender or lapse of the Contract or in part upon a requested decrease in
Face Amount. Otherwise, the Decrease Charge will not be taken out of the
Accumulated Value held for investment under the Contract, and the Accumulated
Value will continue to reflect the investment experience of the selected
Subaccount(s), though the Decrease Charge will be treated as a deduction for
purposes of determining the Contract's Cash Surrender Value, which will affect
various Contract rights. Deducting the Decrease Charge in determining the Cash
Surrender Value will affect (a) the amount available for Contract loans (see
"CONTRACT RIGHTS--Loan Privileges"), (b) the Cash Surrender Value available in
connection with full or partial surrenders (see "CONTRACT RIGHTS--Surrender
Privileges"), and (c) the Cash Surrender Value available to pay Monthly
Deductions, which will, subject to the Death Benefit Guarantee (see "DEATH
BENEFIT GUARANTEE"), determine the Contract's duration and possible lapse (see
"PAYMENT AND ALLOCATION OF PREMIUMS--Contract Lapse and Reinstatement").
If the Face Amount is decreased at the Contract Owner's request, that part of
any existing Decrease Charge amount attributable to the decrease will reduce
the Accumulated Value attributable to the Contract, and the Decrease Charge
will be reduced by this amount. The amount by which the Decrease Charge is
reduced will be allocated against the Subaccount(s) of the Variable Account in
the same manner that Monthly Deductions are allocated against the
Subaccount(s). See "Charges Against Accumulated Value--Monthly Deductions"
below. If the Cash Surrender Value is not sufficient to cover the Decrease
Charge imposed in connection with the requested decrease, the requested
decrease will not be made.
The Decrease Charge imposed for a requested decrease in Face Amount will be
determined by using the Decrease Charge then applicable to various parts of
the current Face Amount in the following order: (a) the Decrease Charge for
the most recent increase; (b) the Decrease Charge for the next most recent
increases successively; and (c) the Decrease Charge for the initial Face
Amount.
The calculation of the Decrease Charge for requested decreases can be
illustrated as follows. Assume that a Contract has an initial Face Amount of
$100,000, and the Face Amount is first increased by $20,000, and then
increased by $30,000, and then the Face Amount is decreased by $40,000. The
Decrease Charge imposed for the $40,000 decrease would be determined by using
the Decrease Charge for the most recent increase in Face Amount ($30,000) and
then adding a proportionate part of the Decrease Charge for the next most
recent increase ($10,000/$20,000, or one-half of the Decrease Charge for that
increase). If, instead, the requested decrease was $60,000, the Decrease
Charge imposed for the $60,000 decrease would be determined by using the
Decrease Charge for the two increases (which were $30,000 and $20,000,
respectively) and then adding a proportionate part of the Decrease Charge for
the initial Face Amount ($10,000/$100,000, or one-tenth of the Decrease Charge
for the initial Face Amount).
If, alternatively, it is assumed that a Contract has an initial Face Amount of
$100,000, and the Face Amount is first decreased by $20,000, then increased by
$50,000, and then decreased by $30,000, the Decrease Charge on the requested
decreases would be as follows. The Decrease Charge imposed for the first
decrease ($20,000) would be determined by using a proportionate part of the
Decrease Charge for the initial Face Amount ($20,000/$100,000, or one-fifth of
the Decrease Charge for the initial Face Amount). The Decrease Charge imposed
for the second decrease ($30,000), would be determined by using a
proportionate part of the Decrease Charge for the most recent increase
($30,000/$50,000, or six-tenths of the Decrease Charge for that increase.
Reinstatement of Decrease Charge. If a Contract lapses and is then reinstated,
any Decrease Charge applicable at the time of lapse will also be reinstated.
See "PAYMENT AND ALLOCATION OF PREMIUMS--Contract Lapse and Reinstatement".
See Appendix D for information about differences in the Decrease Charge and
the Deferred Administrative Charge on VUL 1 contracts.
Monthly Deduction
Charges will be deducted on the Contract Date and each Monthly Anniversary
from the Accumulated Value of the Contract (the "Monthly Deduction") to
compensate LB for administrative expenses and the insurance provided by the
Contract. The Monthly Deduction consists of three components--(a) the cost of
insurance, (b) insurance underwriting and expenses in connection with issuing
the Contract or any increase in Face Amount, and the costs of ordinary
administration of the Contract, and (c) the cost of any additional benefits
added by rider. Because portions of the Monthly Deduction, such as the cost of
insurance, can vary from month to month, the Monthly Deduction itself will
vary in amount from month to month.
The Monthly Deduction will be deducted on the Contract Date and on each
subsequent Monthly Anniversary prior to the Insured's Attained Age 100. (On
the Contract Date, a Monthly Deduction covering the period of time from the
Date of Issue until the first Monthly Anniversary will be deducted and, if any
Monthly Anniversary occurs prior to the Contract Date, the Monthly
Deduction(s) for such Monthly Anniversaries will also be made on the Contract
Date.) The Monthly Deduction will be deducted from the Accumulated Value of
the Contract by redeeming units from the Subaccounts of the Variable Account
and will be allocated against each Subaccount of the Variable Account in the
same proportion that the Contract's Accumulated Value in each Subaccount bears
to the total Accumulated Value of the Contract, less Accumulated Value in the
Loan Account, at the Monthly Anniversary. Subject to LB's approval, the
Contract Owner may specify a different allocation for the Monthly Deduction.
Cost of Insurance. Because the cost of insurance depends upon several
variables, the cost for each Contract Month can vary from month to month. LB
will determine the monthly cost of insurance charge by multiplying the
applicable cost of insurance rate or rates by the net amount at risk for each
Contract Month. The net amount at risk on any Monthly Anniversary is the
amount by which the Death Benefit which would have been payable on that
Monthly Anniversary exceeds the Accumulated Value on that Monthly Anniversary.
For the purposes of this calculation, the Death Benefit will be divided by
1.0040741, which reduces the net amount at risk by taking into account assumed
monthly earnings at an annual rate of 5%. In general, the actual cost of
insurance rate will be lower for Contracts having a Face Amount at issuance or
after a requested increase that equal or exceed the following amounts:
$500,000-$999,999; and $1,000,000.
The monthly cost of insurance will be determined separately for each component
of the net amount at risk, using the cost of insurance rate applicable to the
component, in the following order: (1) the initial Face Amount; (2)
successively, each increase in Face Amount up to the Face Amount in force, in
the order in which the increase took effect; and (3) any Death Benefit that
would be payable by reason of Accumulated Value calculations (that is,
whenever the Death Benefit is based on the applicable percentage of
Accumulated Value) over the Face Amount in force. For example, when a Contract
Owner has elected to make an increase in the Face Amount, the monthly cost of
insurance would be computed separately on the initial Face Amount using the
cost of insurance rate for the premium class determined upon Contract
issuance, and to each increase in Face Amount using the cost of insurance rate
for the premium class determined for such increase as specified in the
supplement to the Contract evidencing that increase.
Because the monthly cost of insurance must be determined separately for each
component of the net amount at risk described above, the Accumulated Value
must be allocated to each component. For purposes of determining the net
amounts at risk for each component if Option B is in effect, Accumulated Value
will first be considered a part of the initial Face Amount, and then each
successive increase in the Face Amount. If the Accumulated Value is greater
than the initial Face Amount, it will be considered a part of each increase in
order, starting with the first increase. When Option A is in effect, the
Accumulated Value is not included within the Face Amount. Accordingly, the
cost of insurance rates applicable will be the rate(s) applicable to the Face
Amount (and any increases in Face Amount). The cost of insurance rate
applicable to the remaining Death Benefit, if any, that would be payable by
reason of Accumulated Value calculations (which is the remainder of the net
amount at risk) will be that applicable to the initial Face Amount.
Any change in the net amount at risk will affect the total cost of insurance
paid by the Contract Owner. For example, because generally the net amount at
risk equals the excess of the Death Benefit over the Accumulated Value, the
net amount at risk may be affected by changes in the Accumulated Value, in the
Face Amount, or in the Death Benefit Option in effect. See "CONTRACT BENEFITS-
- -Death Benefits--Accumulated Value and Cash Surrender Value".
Cost of Insurance Rate. Cost of insurance rates will be based on the Face
Amount and the gender, issue age, Attained Age and premium class of the
Insured. The actual monthly cost of insurance rates will be based on LB's
expectations as to future mortality experience. They will not, however, be
greater than the guaranteed cost of insurance rates set forth in the Contract.
These guaranteed rates are based on the Insured's Attained Age and the 1980
Commissioners Standard Ordinary Mortality Table. Any change in the cost of
insurance rates will be based on the Initial Face Amount and any requested
increases in Face Amount, and will apply to all Insureds of the same premium
class, gender, issue age and Attained Age. In general, the actual cost of
insurance rate will be lower for Contracts having a Face Amount at issuance or
after a requested increase that equal or exceed the following amounts:
$500,000-$999,999; and $1,000,000. Montana has enacted legislation that
requires that cost of insurance rates applicable to Contracts purchased in
Montana cannot vary on the basis of the Insured's gender, and so, for
Contracts issued in the state of Montana, the cost of insurance rate will not
be based on the basis of gender. In connection with certain employment-related
plans, cost of insurance rates may in some circumstances not distinguish
between men and women. See "EMPLOYMENT-RELATED BENEFIT PLANS".
Premium Class. The premium class of an Insured will affect the cost of
insurance rates. LB currently places Insureds into standard premium classes
and into rated premium classes, which involve a higher mortality risk. In an
otherwise identical Contract, an Insured in the standard premium class will
have a lower cost of insurance than an Insured in a premium class with higher
mortality risks. The premium classes are also divided into two categories:
tobacco users and non-tobacco users. Non-tobacco user Insureds will generally
incur lower cost of insurance rates than Insureds who are classified as
tobacco users. In addition, certain Insureds over Attained Age 18 and less
than Attained Age 75 who are non-tobacco users and who meet special
underwriting requirements may be classified as preferred. An Insured in a
preferred premium class will have a lower cost of insurance than an Insured in
a standard or rated premium class.
Any Insured with an Attained Age at issuance under 18 will not be classified
initially as a tobacco user or a non-tobacco user and then will be classified
as a tobacco user at Attained Age 18 unless the Insured provides satisfactory
evidence that the Insured is a non-tobacco user. (LB will provide notice to
the Contract Owner of the opportunity for the Insured to be classified as a
non-tobacco user when the Insured reaches Attained Age 18.)
Monthly Administration Charge. LB has primary responsibility for the
administration of the Contract and the Variable Account. As a result, LB
expects to incur certain ordinary administrative expenses and certain issuance
expenses. A monthly administration charge included in the Monthly Deduction
will be used to reimburse LB for these expenses, except to the extent that
these expenses are reimbursed through the collection of the Deferred
Administrative Charge included in the Decrease Charge, which is, in effect, an
"acceleration" of the initial administrative charge described below.
There are two administrative charges included in the monthly administration
charge--a basic monthly administrative charge that is collected every Contract
Month and an initial monthly charge that is deducted as part of the first 180
Monthly Deductions (the "Initial Monthly Charge ") following Contract issuance
and following any requested increase in Face Amount.
Basic Monthly Administrative Charge. A basic monthly administrative charge of
$10.00 will be deducted from Accumulated Value on the Contract Date and each
Monthly Anniversary prior to the Insured's Attained Age 100 as part of the
Monthly Deduction. This charge is intended to reimburse LB for ordinary
administrative expenses expected to be incurred, including record keeping,
processing Death Benefit claims, certain Contract changes, preparing and
mailing reports, and overhead costs.
Initial Monthly Charge. The Initial Monthly Charge will be deducted from
Accumulated Value as part of the first 180 Monthly Deductions following
Contract issuance, commencing with the Monthly Deduction(s) collected on the
Contract Date. This monthly charge will equal an amount per $1,000 of Face
Amount based upon the Insured's Attained Age at Contract issuance and, except
for Insureds with an Attained Age at Contract issuance under 18, the Insured's
gender and upon whether the Insured is a tobacco user or not. The Initial
Monthly Charge per $1,000 of Face Amount will be determined from Appendix C.
As shown in Appendix C, the Initial Monthly Charge will be less for Contracts
having a Face Amount at issuance that equal or exceed the following amounts:
$500,000-$999,999; and $1,000,000.
If the Face Amount is increased, a separate Initial Monthly Charge for
Increases will be deducted from Accumulated Value as part of the first 180
Monthly Deductions after the increase beginning with the Monthly Anniversary
on which the increase becomes effective. This separate Initial Monthly Charge
for Increases will be determined in the same manner as for the initial Face
Amount, except that the Insured's Attained Age on the effective date of the
increase will be used and the charge per $1,000 of Face Amount to be applied
to the increase will be based on the amount of the entire new Face Amount
after giving effect to the increase.
If a spouse rider providing additional insurance benefits on the Insured's
spouse is added, a separate Initial Monthly Charge will be deducted from
Accumulated Value as part of the first 180 Monthly Deductions after the
issuance of the spouse rider, beginning with the Monthly Anniversary on which
the spouse rider becomes effective. This additional Initial Monthly Charge
will be determined in the same manner as for the initial Face Amount, except
that the spouse's Attained Age and tobacco user status and gender on the
effective date of the rider will be used.
Montana has enacted legislation that requires that cost of insurance rates and
other charges applicable to Contracts purchased in Montana cannot vary on the
basis of the Insured's gender, and so, in Montana, this charge will not be
based on the gender of the Insured.
The Initial Monthly Charge is intended to reimburse LB for administrative
expenses in connection with the issuance of the Contract, including medical
exams, review of applications for insurance underwriting decisions, and
processing of the applications and establishing Contract records. Similar
expenses are expected in connection with future changes in the Contract
initiated by the Contract Owner which involve "insurability" decisions, such
as applications for increases in Face Amount and the issuance of spouse
riders.
The issuance expenses covered by the Initial Monthly Charge are the same
expenses covered by the Deferred Administrative Charge included in the
Decrease Charge. See "CHARGES AND DEDUCTIONS--Accumulated Value Charges--
Decrease Charge" above. LB will not, however, be reimbursed twice for these
expenses. As described above (see "CHARGES AND DEDUCTIONS--Accumulated Value
Charge--Decrease Charge"), and except in the case of charges attributable to
spouse riders (see discussion below), if a Contract lapses or is totally
surrendered during the 15-year period when the Initial Monthly Charge applies,
or if a requested decrease in Face Amount occurs during the 15-year period
when the Initial Monthly Charge generally applies, the Initial Monthly Charge
will, in effect, generally be "accelerated" and collected in the form of the
Deferred Administrative Charge included in the Decrease Charge.
Because the Deferred Administrative Charge included in the Decrease Charge is
in effect an "acceleration" of the Initial Monthly Charge, the imposition of
the Deferred Administrative Charge will generally eliminate or reduce the
Initial Monthly Charge. If the Contract lapses or is totally surrendered
during the 15-year period when the Initial Monthly Charge applies so that the
Decrease Charge is imposed, the Initial Monthly Charge will not be collected.
If the Face Amount is decreased at the Contract Owner's request during this
15-year period so that the Decrease Charge (including the Deferred
Administrative Charge) is imposed in part, the Initial Monthly Charge will be
reduced because of the Deferred Administrative Charge imposed (being applied
to reduce proportionately or eliminate the Initial Monthly Charge attributable
to that portion of the Face Amount covered by the Decrease Charge).
If a Contract lapses and is then reinstated, the Initial Monthly Charge will
be reinstated until a total of 180 Monthly Deductions have been taken. See
"PAYMENT AND ALLOCATION OF PREMIUMS--Contract Lapse and Reinstatement".
No Deferred Administrative Charge will be calculated for the issuance of a
spouse rider, even though a separate Initial Monthly Charge will be calculated
for spouse riders. As a result, the Initial Monthly Administrative Charge
attributable to a spouse rider will not be "accelerated" and collected in the
form of the Deferred Administrative Charge included in the Decrease Charge
upon surrender or lapse or upon a requested decrease in Face Amount. If a
lapse or total surrender of the Contract or a cancellation of the spouse rider
occurs during the 15-year period when an Initial Monthly Charge applies for a
spouse rider, the charge will not be collected. If a requested decrease on a
spouse rider occurs during this 15-year period, the Initial Monthly Charge
attributable to the spouse rider will be reduced proportionately.
Additional Insurance Benefits Charges. The Monthly Deduction will include
charges for any additional insurance benefits added to the Contract by rider.
These charges are for insurance protection, and the monthly amounts will be
specified in the Contract. See "GENERAL PROVISIONS--Additional Insurance
Benefits".
See Appendix D for information about differences in the Monthly Deduction,
including the cost of insurance rates, basic monthly administrative charge,
and the Initial Monthly Charge on VUL 1 contracts.
Partial Surrender Charge
A partial surrender charge of $25 or 2% of the surrender amount requested,
whichever is less, will be deducted from the amount withdrawn for each partial
surrender to compensate LB for the administrative costs in effecting the
requested payment and in making necessary calculations for any reductions in
Face Amount which may be required by reason of the partial surrender. This
charge is guaranteed not to increase.
Charges Against the Variable Account
Mortality and Expense Risk Charge. A daily charge (the "Mortality and Expense
Risk Charge") will be deducted from the value of the net assets of the
Variable Account to compensate LB for mortality and expense risks assumed in
connection with the Contract. LB has determined that a Mortality and Expense
Risk Charge at an annual rate of .75% of the average daily net assets of each
Subaccount of the Variable Account would be reasonable in relation to the
mortality and expense risks assumed by LB under the Contract. LB will,
however, initially impose a Mortality and Expense Risk Charge at an annual
rate of .60% (or a daily rate of .001644%) of the average daily net assets of
each Subaccount of the Variable Account. The Mortality and Expense Risk Charge
is guaranteed not to increase above an annual rate exceeding .75%. The daily
charge will be deducted from the net asset value of the Variable Account, and
therefore the Subaccounts, on each Valuation Date. When the previous day or
days was not a Valuation Date, the deduction on the Valuation Date will be
.001644% multiplied by the number of days since the last Valuation Date.
The mortality risk assumed by LB is that Insureds may live for a shorter time
than projected because of inaccuracies in the projections, and that an
aggregate amount of Death Benefits greater than that projected accordingly
will be payable. The expense risk assumed is that expenses incurred in issuing
and administering the Contracts will exceed the administrative charges
provided in the Contracts.
Taxes. Currently, no charge will be made against the Variable Account for
Federal income taxes. LB may, however, make such a charge in the future if
income or gains within the Variable Account will incur any Federal income tax
liability. Charges for other taxes, if any, attributable to the Variable
Account may also be made. See "FEDERAL TAX MATTERS".
Investment Advisory Fee of the Fund. Because the Variable Account purchases
shares of the Fund, the net assets of the Variable Account will reflect the
investment advisory fee incurred by the Fund. See "LUTHERAN BROTHERHOOD AND
THE VARIABLE ACCOUNT--LB Series Fund, Inc.", and the accompanying current
prospectus for the Fund.
DEATH BENEFIT GUARANTEE
General. If a Contract Owner meets the requirement described below for the
Death Benefit Guarantee, LB guarantees that the Contract will not lapse.
Whenever the Monthly Deduction to be made would result in a Cash Surrender
Value less than zero, any excess of Accumulated Value over Contract Debt will
be used to pay the Monthly Deduction. If available Accumulated Value is less
than the Monthly Deduction then due and the Death Benefit Guarantee is in
effect, LB will pay the deficiency.
If the Death Benefit Guarantee terminates, the Contract will not necessarily
lapse. For a discussion of the circumstances under which the Contract may
lapse, see "PAYMENT AND ALLOCATION OF PREMIUMS--Contract Lapse and
Reinstatement". The Death Benefit Guarantee does, however, provide additional
protection against the possibility of lapse.
The Death Benefit Guarantee provides significant protection against lapse of
the Contract. First, to the extent Cash Surrender Value declines due to poor
investment performance, the Death Benefit Guarantee may be necessary to avoid
lapse of the Contract. Second, during the early Contract Years, the Cash
Surrender Value will generally not be sufficient to cover the Monthly
Deduction, so that the Death Benefit Guarantee will be necessary to avoid
lapse of the Contract. This occurs because the Decrease Charge usually exceeds
the Accumulated Value in these years. In this regard, a Contract Owner should
consider that if an increase in Face Amount is requested, an additional
Decrease Charge would apply for the 15 years following the increase, which
could create a similar possibility of lapse as exists during the early
Contract Years. THUS, EVEN THOUGH THE CONTRACT PERMITS PREMIUM PAYMENTS LESS
THAN THE PAYMENTS REQUIRED TO MAINTAIN THE DEATH BENEFIT GUARANTEE, THE
CONTRACT OWNER WILL LOSE THE SIGNIFICANT PROTECTION PROVIDED BY THE DEATH
BENEFIT GUARANTEE BY PAYING LESS THAN THE PREMIUMS REQUIRED TO MAINTAIN THE
GUARANTEE.
WHEN CONSIDERING CONTRACT LOANS (see "CONTRACT RIGHTS--Loan Privileges") OR
PARTIAL SURRENDERS (see "CONTRACT RIGHTS--Surrender Privileges"), A CONTRACT
OWNER SHOULD KEEP IN MIND THAT A CONTRACT LOAN OR PARTIAL SURRENDER COULD
CAUSE TERMINATION OF THE DEATH BENEFIT GUARANTEE BECAUSE THE AMOUNT OF ANY
PARTIAL SURRENDER OR CONTRACT LOAN AMOUNT WILL, SUBJECT TO CERTAIN EXCEPTIONS,
BE DEDUCTED FROM CUMULATIVE PREMIUM PAYMENTS IN DETERMINING WHETHER THE
REQUIREMENTS FOR THE DEATH BENEFIT GUARANTEE HAVE BEEN MET.
Death Benefit Guarantee Requirement. The Death Benefit Guarantee applies if
the total cumulative premiums paid (before deduction of the Premium Expense
Charges) under the Contract, less any partial surrenders and the Loan Amount,
equals or exceeds the sum of the Death Benefit Guarantee Premiums (described
below) on each Monthly Anniversary since the issuance of the Contract.
However, if the Death Benefit Guarantee requirement is not met on a Monthly
Anniversary but the Cash Surrender Value less any unearned interest is greater
than or equal to the sum of Death Benefit Guarantee Premiums from the Date of
Issue through that Monthly Anniversary, then the sum of premiums paid as used
above will be deemed to increase through that date to the amount necessary to
meet the Death Benefit Guarantee requirement.
In addition, a portion of any partial surrender or Contract Loan Amount may be
excluded when determining if the Death Benefit Guarantee requirement is met.
The amount excluded is calculated on the date of the partial surrender or
Contract loan and is equal to the lesser of:
1) The amount of the partial surrender or unpaid Contract loan; and
2) The excess, if any, of the Cash Surrender Value less unearned prepaid loan
interest over the greater of (a) and (b) where:
a) Is the sum of premiums paid less the amount of any partial surrenders and
Contract loans not previously excluded when determining if the Death Benefit
Guarantee requirement was met; and
b) Is the sum of Death Benefit Guarantee Premiums from the Date of Issue
through the Monthly Anniversary on or next after the date of the partial
surrender or Contract loan.
These calculations for Death Benefit Guarantee compliance are intended to
provide the Contract Owner with the flexibility to take advantage of certain
increases in Cash Surrender Value without losing the benefit of the Death
Benefit Guarantee. First, by "deeming" the sum of premiums paid to be
increased under the circumstances described above for purposes of the Death
Benefit Guarantee, the Contract Owner can take advantage of increases in Cash
Surrender Value by reducing or suspending actual premium payments so long as
Cash Surrender Value, less any unearned prepaid loan interest, remains at a
sufficient level to maintain the Death Benefit Guarantee under the formula
described above. Second, by excluding part of a partial surrender or a
Contract loan under the circumstances described above for purposes of the
Death Benefit Guarantee, the Contract Owner can take advantage of increases in
Cash Surrender Value by withdrawing a part of such increases by means of a
partial surrender or Contract loan, provided that on the date of such
surrender or loan the Cash Surrender Value, less any unearned prepaid loan
interest, is at a sufficient level under the formula described above. Of
course, any such actions by a Contract Owner will have the effect (directly or
indirectly) of reducing Cash Surrender Value, which may mean that less Cash
Surrender Value will be available for future Contract charges and for
determining future compliance with the requirements for the Death Benefit
Guarantee. A Contract Owner should also consider the other effects of varying
the amount and frequency of premium payments (see "PAYMENT AND ALLOCATION OF
PREMIUMS") and of partial surrenders and Contract loans (see "CONTRACT RIGHTS-
- -Loan Privileges" and "CONTRACT RIGHTS--Surrender Privileges").
If sufficient premium payments have been made, the Death Benefit Guarantee
will apply until the specified Attained Age of the Insured shown in the
Contract, which Attained Age will be the later of (a) the Insured's Attained
Age 71 and (b) the Attained Age of the Insured at the end of a period ranging
from 8 to 34 years (varying with the Insured's Attained Age at issue) from the
Date of Issue.
LB will determine on each Monthly Anniversary whether the requirements for the
Death Benefit Guarantee have been satisfied, but premiums need not be paid on
a monthly basis. If, as of any Monthly Anniversary, the Contract Owner has not
made sufficient premium payments to maintain the Death Benefit Guarantee, the
Death Benefit Guarantee will terminate immediately, subject to only a limited
right of reinstatement, as described below under "Reinstatement".
See Appendix D for information about differences in the Death Benefit
Guarantee on VUL 1 contracts.
Reinstatement. After termination of the Death Benefit Guarantee, LB will send
written notice to the Contract Owner that the Death Benefit Guarantee has
terminated and the Contract Owner will have 31 days from the date such notice
is sent by LB to reinstate the Death Benefit Guarantee. The written notice of
termination from LB to the Contract Owner will indicate the premium payment
required to reinstate the Death Benefit Guarantee. If LB does not receive this
required premium payment within 31 days after this written notice is sent to
the Contract Owner by LB, the Death Benefit Guarantee will remain terminated
and can never be reinstated. During this 31 day reinstatement period, the
Contract Owner will not have the protection of the Death Benefit Guarantee.
WHEN DETERMINING THE AMOUNT AND FREQUENCY OF PREMIUM PAYMENTS, A CONTRACT
OWNER SHOULD CAREFULLY CONSIDER THAT THE DEATH BENEFIT GUARANTEE TERMINATES
IMMEDIATELY WHEN THE REQUIREMENTS DESCRIBED ABOVE ARE NOT SATISFIED, AND THE
ABILITY TO REINSTATE THE DEATH BENEFIT GUARANTEE PERMANENTLY EXPIRES ON THE
FOLLOWING MONTHLY ANNIVERSARY OF THE CONTRACT 31 DAYS AFTER LB SENDS WRITTEN
NOTICE OF TERMINATION.
Death Benefit Guarantee Premium. A monthly premium amount required to maintain
the Death Benefit Guarantee (the "Death Benefit Guarantee Premium") will be
set forth in the Contract. The Death Benefit Guarantee Premium is determined
by LB based upon a formula taking into account the applicable cost of
insurance charge for the Insured, using the Insured's actual premium class
(see "CHARGES AND DEDUCTIONS--Monthly Deduction--Cost of Insurance"); a
percentage of assumed monthly Death Benefit Guarantee Premium payment together
with an assumed premium processing charge; the applicable Initial Monthly
Charge (see "CHARGES AND DEDUCTIONS--Monthly Deduction--Initial Monthly
Charge"); the charge for any additional insurance benefits added by rider (see
"GENERAL PROVISIONS--Additional Insurance Benefits"); and the basic monthly
administrative charge of $10.00 per month (see "CHARGES AND DEDUCTIONS--
Monthly Deduction--Basic Monthly Administrative Charge"). Due to the factors
considered in calculating these charges, the Death Benefit Guarantee Premium
will vary depending upon, among other things, the Insured's gender, the
Insured's Attained Age, the Insured's premium class, the Face Amount, the
Death Benefit Option, and which additional insurance benefits, if any, are
added by rider. The Death Benefit Guarantee Premium will change as the result
of certain Contract changes, including an increase or decrease in Face Amount;
a change in Death Benefit Option; a change in premium class; and an increase,
decrease, addition or deletion of additional insurance benefits. Whenever the
Death Benefit Guarantee Premium changes, the Contract Owner will be notified
promptly of the new Death Benefit
Guarantee Premium.
CONTRACT RIGHTS
Loan Privileges
General. The Contract Owner may at any time after the Contract Date borrow
money from LB using the Contract as the only security for the loan. The
Contract Owner may at any time after the Contract Date obtain Contract loans
in an amount not exceeding in the aggregate 90% of the excess of Accumulated
Value over any Decrease Charge on the date of any loan. Loans have priority
over the claims of any assignee or other person. The loan may be repaid in
full or in part at any time while the Insured is living.
See Appendix D for information about differences in Loan Privileges on VUL 1
contracts.
As used in this Prospectus, the term "Loan Amount" means the sum of all unpaid
Contract loans (including any prepaid loan interest added to the then
outstanding Loan Amount), and the term "Debt" means the sum of all unpaid
Contract loans less any unearned prepaid loan interest). The Loan Amount is
used in calculating whether the requirement for the Death Benefit Guarantee
has been satisfied (see "DEATH BENEFIT GUARANTEE"). Contract Debt is used in
calculating the Contract's Cash Surrender Value (see "CONTRACT BENEFITS--
Accumulated Value and Cash Surrender Value") the amount of Death Benefit
proceeds payable to the beneficiary (see "CONTRACT BENEFITS--Death Benefits"),
and (in some cases) in determining whether the Contract will lapse (see
"PAYMENT AND ALLOCATION OF PREMIUMS--Contract Lapse and Reinstatement).
Allocation of Contract Loan. LB will allocate a Contract loan among the
Subaccounts of the Variable Account in the same proportion that the Contract's
Accumulated Value in each Subaccount bears to the Contract's total Accumulated
Value in the Variable Account, as of the day on which the request is received
or, if that is not a Valuation Date, on the next following Valuation Date.
With LB's approval, the Contract Owner can select a different allocation.
Loans will normally be paid within seven days after receipt of Written Notice.
Postponement of loans may take place under certain circumstances. See "GENERAL
PROVISIONS--Postponement of Payments".
Interest. The interest rate charged on Contract loans accrues daily at an
annual rate of 7.4%, payable in advance, which is equivalent to a fixed rate
of 8% per year. Loan interest is calculated on a prepaid basis, and is payable
in advance at the time any Contract loan is made (for the rest of the Contract
Year) and at the beginning of each Contract Year thereafter (for that entire
Contract Year). If interest is not paid when due, it will be added to the loan
balance and will bear interest at the same rate. If death or full surrender
occurs before the next Contract Anniversary, unearned interest will be added
to the proceeds payable.
Effect of Contract Loans. Accumulated Value equal to the portion of the
Contract loan allocated to each Subaccount will be transferred from the
Subaccount to the Loan Account, thereby reducing the Contract's Accumulated
Value in that Subaccount.
As long as the Contract is in force, Accumulated Value in the Loan Account
will be credited with interest at an effective annual rate of 6%. NO
ADDITIONAL INTEREST WILL BE CREDITED TO THESE ASSETS. The interest earned
during a Contract Month will be credited at the end of the Contract Month. Any
interest credited will be allocated to the Subaccount(s) in proportion to the
Accumulated Value in the respective Subaccounts. See "PAYMENT AND ALLOCATION
OF PREMIUMS--Allocation of Premiums and Accumulated Value".
Although Contract loans may be repaid at any time, Contract loans will
permanently affect the Contract's potential Accumulated Value and Cash
Surrender Value and may permanently affect the Death Benefit under the
Contract. The effect on Accumulated Value and Death Benefit could be favorable
or unfavorable depending on whether the investment performance of the
Accumulated Value in the Subaccount(s) is less than or greater than the
interest being credited on the assets in the Loan Account while the loan is
outstanding. Compared to a Contract under which no loan is made, values under
the Contract will be lower when such interest credited is less than the
investment performances of assets held in the Subaccount(s). In addition, the
Death Benefit proceeds will be reduced by the amount of any outstanding
Contract Debt.
THE AMOUNT OF ANY CONTRACT LOAN WILL, SUBJECT TO CERTAIN EXCEPTIONS, BE
DEDUCTED FROM CUMULATIVE PREMIUM PAYMENTS IN DETERMINING WHETHER THE
REQUIREMENTS FOR THE DEATH BENEFIT GUARANTEE HAVE BEEN SATISFIED. AS A RESULT,
A CONTRACT LOAN COULD RESULT IN TERMINATION OF THE DEATH BENEFIT GUARANTEE.
See "DEATH BENEFIT GUARANTEE".
Repayment of Contract Debt. Debt may be repaid any time while the Insured is
living. Each repayment must be at least $25. If not repaid, LB will deduct
Debt from any proceeds payable under the Contract. As Debt is repaid, the
Contract's Accumulated Value held in the Subaccount(s) of the Variable Account
will be restored and any prepaid interest attributable to the repaid amount
will likewise be allocated to the Subaccount(s) in the same proportion as Debt
repayments will be allocated. LB will allocate the amount of such repayment
(as well as any prepaid loan interest that was unearned by LB at the time of
repayment) to the Subaccount(s) of the Variable Account in the same proportion
that the Contract's Accumulated Value in a Subaccount bears to the Contract's
total Accumulated Value in the Variable Account (the Contract Owner may select
a different allocation basis with LB's approval). See "PAYMENT AND ALLOCATION
OF PREMIUMS--Allocation of Premiums and Accumulated Value". When the entire
Debt is repaid, interest that would be credited upon the assets held in the
Loan Account during the period from the last Monthly Anniversary to the date
of repayment will also be allocated to the Subaccount(s) in the same
proportion as Debt repayments will be allocated. LB will allocate the
repayment of Debt as of the date on which the repayment is received or, if
that is not a Valuation Date, on the next following Valuation Date.
The Contract Owner must notify LB if a payment is a premium payment;
otherwise, it will be considered a loan repayment.
Tax Considerations. Under the Technical and Miscellaneous Revenue Act of 1988,
any loans taken from a "modified endowment contract" will be treated as a
taxable distribution. In addition, with certain exceptions, a ten percent
(10%) additional income tax penalty would be imposed on the portion of any
loan that is included in income. See "FEDERAL TAX MATTERS--Contract Proceeds".
Surrender Privileges
At any time before the death of the Insured, the Contract Owner may partially
or totally surrender the Contract by sending Written Notice to LB. The Cash
Surrender Value will equal the Accumulated Value less any Contract Debt and
any Decrease Charge. A Contract Owner may elect to have the amount paid in
cash or under a settlement option. See "CONTRACT BENEFITS--Payment of Contract
Benefits".
Full Surrender. If the Contract is fully surrendered, the Contract Owner will
be paid the Cash Surrender Value of the Contract determined as of the date a
Written Notice requesting surrender is received by LB (or as of such later
date as the Contract Owner shall specify in the Written Notice), or, if this
date is not a Valuation Date, the next following Valuation Date. To surrender
the Contract fully, the Contract must be delivered to LB along with the
Written Notice requesting surrender.
Partial Surrender. The Contract may be surrendered in part for any amount, as
long as the amount of the partial surrender is at least $500 and as long as
the remaining Cash Surrender Value is not less than $500 (in each case with
the Cash Surrender Value being determined on the day Written Notice is
received by LB, or if this is not a Valuation Date, the next following
Valuation Date). The amount surrendered, including any surrender charge, will
be deducted from the Subaccount(s) of the Variable Account in the same
proportion that the Contract Owner's Accumulated Value in the respective
Subaccount(s) bears to the Contract's total Accumulated Value in the
Subaccount(s) at that time (the Contract Owner may select a different
allocation basis with LB's approval). A surrender charge of $25 or 2% of the
surrender amount requested, whichever is less, will be deducted by LB from the
amount withdrawn. For a discussion of certain limitations and considerations
applicable to partial surrenders, see "Partial Surrenders--Certain Other
Considerations" below.
Effect of Partial Surrenders on Face Amount and Death Benefit. A partial
surrender will always decrease the Death Benefit and may also decrease the
Face Amount. As described below, the effect of a partial surrender on the
Death Benefit and the Face Amount may vary depending upon the Death Benefit
Option in effect and whether the Death Benefit is based on the applicable
percentage of Accumulated Value.
Option A--Effect of Partial Surrenders. The effect of a partial surrender on
the Face Amount and Death Benefit under Option A can be described as follows.
The Face Amount will never be decreased by a partial surrender. A partial
surrender will, however, always decrease the Death Benefit under Option A by
one of the following amounts:
(bullet)If the Death Benefit equals the Face Amount plus the Accumulated
Value, a partial surrender will reduce the Accumulated Value by the amount of
the partial surrender and thus the Death Benefit will also be reduced by the
amount of the partial surrender.
Illustration. For the purpose of this illustration (and any following
illustrations of partial surrenders), assume that the Attained Age of the
Insured is under 40, and there is no Contract Debt. (The applicable percentage
is 250% for an Insured with an Attained Age of 40 or below. See "CONTRACT
BENEFITS--Death Benefits".)
Under Option A, a Contract with a Face Amount of $100,000 and an Accumulated
Value of $60,000 will have a Death Benefit of $160,000 ($100,000 + $60,000).
Assume that the Contract Owner wishes to take a partial surrender of $20,000.
Because the Death Benefit equals the Face Amount plus the Accumulated Value,
the partial surrender will reduce the Accumulated Value to $40,000 ($60,000 -
$20,000 = $40,000) and the Death Benefit to $140,000 ($100,000 + $40,000). The
Face Amount is not changed.
(bullet)If the Death Benefit immediately prior to the partial surrender is
based on the applicable percentage of Accumulated Value, the Death Benefit
will be reduced to equal, the greater of (a) the Face Amount plus Accumulated
Value after deducting the partial surrender and (b) the Death Benefit based on
the applicable percentage of Accumulated Value after deducting the partial
surrender.
Illustration. Under Option A, a Contract with a Face Amount of $100,000 and an
Accumulated Value of $80,000 will have a Death Benefit of $200,000 ($80,000 X
2.5). Assume that the Contract Owner wishes to take a partial surrender of
$20,000. Because the Death Benefit is based on the applicable percentage of
Accumulated Value, the partial surrender will reduce the Accumulated Value to
$60,000 ($80,000 - $20,000) and the Death Benefit to the greater of (a) the
Face Amount plus the Accumulated Value ($100,000 + $60,000 = $160,000), and
(b) the Death Benefit based on the applicable percentage of Accumulated Value
($60,000 X 2.5 = $150,000). Therefore, the Death Benefit will be $160,000. The
Face Amount is not changed.
Option B--Effect of Partial Surrenders. The effect of a partial surrender on
the Face Amount and Death Benefit under Option B can be described as follows:
(bullet)If the Death Benefit equals the Face Amount, a partial surrender will
reduce the Face Amount and the Death Benefit by the amount of the partial
surrender.
Illustration. Under Option B, a Contract with a Face Amount of $100,000 and an
Accumulated Value of $30,000 will have a Death Benefit of $100,000 (that is,
the Face Amount). Assume that the Contract Owner wishes to take a partial
surrender of $10,000. The partial surrender will reduce the Accumulated Value
to $20,000 ($30,000 - $10,000) and the Death Benefit and Face Amount to
$90,000 ($100,000 - $10,000).
(bullet)If the Death Benefit is based on the applicable percentage of
Accumulated Value and the amount of the partial surrender multiplied by the
applicable percentage is less than the Death Benefit immediately prior to the
partial surrender minus the Face Amount at that time, the Face Amount will not
be reduced and the Death Benefit will be reduced by the amount of the partial
surrender multiplied by the applicable percentage.
Illustration. Under Option B, a Contract with a Face Amount of $100,000 and an
Accumulated Value of $60,000 will have a Death Benefit of $150,000 ($60,000 X
2.5). Assume that the Contract Owner wishes to take a partial surrender of
$10,000. The amount of the partial surrender multiplied by the applicable
percentage ($10,000 X 2.5 = $25,000) is less than the Death Benefit minus the
Face Amount prior to the partial surrender ($150,000 - $100,000 = $50,000).
Because the Death Benefit is based on the applicable percentage of Accumulated
Value and the amount of the partial surrender multiplied by the applicable
percentage is less than the Death Benefit minus the Face Amount, the Face
Amount will not be reduced and the Death Benefit will be reduced by the amount
of the partial surrender multiplied by the applicable percentage ($150,000 -
($10,000 X 2.5) = $125,000). This is also the Death Benefit based on the
applicable percentage of Accumulated Value after the partial surrender
(($60,000 - $10,000) X 2.5 = $125,000).
(bullet)If the Death Benefit immediately prior to the partial surrender is
based on the applicable percentage of Accumulated Value and the amount of the
partial surrender multiplied by the applicable percentage exceeds the Death
Benefit immediately prior to the partial surrender minus the Face Amount at
that time, the Face Amount will be reduced by an amount equal to (a) the
amount of the partial surrender, less (b) the result obtained by dividing (i)
the difference between the Death Benefit and the Face Amount immediately prior
to the partial surrender by (ii) the applicable percentage. The Death Benefit
will be reduced to equal the Face Amount after the partial surrender.
Illustration. Under Option B, a Contract with a Face Amount of $100,000 and an
Accumulated Value of $60,000 will have a Death Benefit of $150,000 ($60,000 X
2.5). Assume that the Contract Owner wishes to take a partial surrender of
$30,000. The amount of the partial surrender multiplied by the applicable
percentage ($30,000 X 2.5 = $75,000) exceeds the Death Benefit minus the Face
Amount prior to the partial surrender ($150,000 - $100,000 = $50,000). Because
the Death Benefit is based on the applicable percentage of Accumulated Value
and the amount of the partial surrender multiplied by the applicable
percentage exceeds the Death Benefit minus the Face Amount, the Face Amount
will be reduced by an amount equal to (1) the amount of the partial surrender,
less (2) the result obtained by dividing (A) the difference between the Death
Benefit and the Face Amount prior to the partial surrender by (B) the
specified percentage ($30,000 - (($150,000 - $100,000) (divided by) 2.5)) =
$10,000). The Face Amount after the partial surrender will be $90,000
($100,000 - $10,000) and the Death Benefit will be $90,000.
Partial Surrenders--Certain Other Considerations. THE AMOUNT OF ANY PARTIAL
SURRENDER WILL, SUBJECT TO CERTAIN EXCEPTIONS, BE DEDUCTED FROM CUMULATIVE
PREMIUM PAYMENTS IN DETERMINING WHETHER THE REQUIREMENTS FOR THE DEATH BENEFIT
GUARANTEE HAVE BEEN SATISFIED. AS A RESULT, A PARTIAL SURRENDER COULD RESULT
IN TERMINATION OF THE DEATH BENEFIT GUARANTEE. See "DEATH BENEFIT GUARANTEE".
Because a partial surrender can affect the Face Amount and the Death Benefit
(as described above), a partial surrender may also affect the net amount at
risk under a Contract. The net amount at risk is, in general, the difference
between the Death Benefit and the Accumulated Value and will be used in
calculating the cost of insurance protection provided under the Contract. See
"CHARGES AND DEDUCTIONS--Accumulated Value Charges--Monthly Deduction--Cost of
Insurance".
A request for partial surrender will not be implemented if or to the extent
the requested partial surrender would reduce the Face Amount below $5,000.
Also, if a partial surrender would decrease the Face Amount, to the extent
that the partial surrender would result in cumulative premiums exceeding the
maximum premium limitations applicable under the Internal Revenue Code for
life insurance, LB will not effect such partial withdrawal. See "PAYMENT AND
ALLOCATION OF PREMIUMS--Amount and Timing of Premiums--Premium Limitations".
Tax Considerations. Under the Technical and Miscellaneous Revenue Act of 1988,
any surrender of a "modified endowment contract" will be treated as a taxable
distribution. In addition, with certain exceptions, a ten percent (10%)
additional income tax penalty would be imposed on the portion of any loan that
is included in income. See "FEDERAL TAX MATTERS--Contract Proceeds".
Free Look Privileges
The Contract provides for two types of "free look" privileges, one after the
application and issuance of the Contract and the other after any increase in
Face Amount.
Free Look for Contract. The Contract provides for an initial Free Look Period.
The Contract Owner may cancel the Contract until the latest of (a) 45 days
after Part I of the application for the Contract is signed, (b) 10 days after
the Contract Owner receives the Contract, and (c) 10 days after LB mails or
personally delivers a notice of withdrawal right to the Contract Owner. Upon
giving notice of cancellation and returning the Contract (if it has been
delivered), the Contract Owner will receive a refund equal to the sum of (i)
the Accumulated Value (as of the date the returned Contract is received by LB
at its Home Office or by the LB representative from whom the Contract was
purchased), without any deduction of the Decrease Charge, plus (ii) the amount
of any Premium Expense Charges, plus (iii) any Monthly Deductions charged
against the Contract's Accumulated Value, plus (iv) any Mortality and Expense
Risk Charges deducted from the value of the net assets of the Variable Account
attributable to the Contract, plus (v) the advisory fees charged by the Fund
against net asset value in the Fund Portfolios attributable to the Contract's
value in the corresponding Subaccount(s) of the Variable Account. When state
law requires a minimum refund equal to gross premiums paid, the refund will
instead equal the gross premiums paid on the Contract and will not reflect the
investment experience of the Variable Account. The notice of withdrawal right
for the Contract will include a statement of the Decrease Charge and of the
Initial Monthly Charge (included in the Monthly Deduction--see "CHARGES AND
DEDUCTIONS--Accumulated Value Charges--Monthly Deduction") attributable to the
Contract, as well as a form for requesting cancellation of the Contract during
the Free Look Period.
Free Look for Increase in Face Amount. Any requested increase in Face Amount
is also subject to a "free look" privilege. The Contract Owner may cancel a
requested increase in Face Amount until the latest of (a) 45 days after Part I
of the application for increase is signed, (b) 10 days after the Contract
Owner receives a Contract supplement for the increase in Face Amount, and (c)
10 days after LB mails or personally delivers a notice of withdrawal right to
the Contract Owner. Upon requesting cancellation of the increase, the Contract
Owner will receive a refund, if he or she so requests, or otherwise a
restoration of the Contract's Accumulated Value allocated among the
Subaccount(s) of the Variable Account as if it were a Net Premium, equal to
all Monthly Deductions attributable to the increase in Face Amount (including
rider costs arising from the increase). This refund or credit will be made
within seven days after LB receives the request for cancellation on the
appropriate form. In addition, the Decrease Charge will be adjusted, if
necessary, so that it will be as though no increase in Face Amount had
occurred. The notice of withdrawal right upon an increase in Face Amount will
include a statement of the increase in the Decrease Charge and of the Initial
Monthly Charge for Increases (included in the Monthly Deduction--see "CHARGES
AND DEDUCTIONS--Accumulated Value Charges--Monthly Deduction") attributable to
the increase in Face Amount, as well as a form for requesting cancellation of
the increase during the Free Look Period.
Net Premiums paid after an increase in Face Amount will be allocated to the
Subaccount(s) of the Variable Account and will not be refunded following
cancellation of the increase. Contract Owners who request an increase in Face
Amount should consider this in deciding whether to make any premium payments
during the Free Look Period for the increase.
Exchange Privileges
Exchange of the Contract. During the first 24 months following the Date of
Issue, the Contract Owner may on one occasion, without evidence of
insurability, exchange any Contract still in force for a fixed benefit
permanent life insurance contract issued by LB. This new contract will not be
dependent upon future investment results of the Variable Account or any other
separate account of LB. In order to make this exchange for such a contract,
the Contract Owner must surrender the Contract to LB at its Home Office, the
Insured must be living on the exchange date, and any assignee must agree in
writing to the exchange. In addition, any Debt under the Contract must be
repaid and any amount required to pay the first premium on the new contract
must be paid.
The new contract will have the same issue age, and premium class as the
Contract. The exchange will become effective on the date (the "exchange date")
that LB receives the exchange request and the Contract at its Home Office. The
Contract will end at the end of the day before the exchange date, and the new
contract will become effective on the exchange date. On the exchange date, the
new contract will have, at the option of the Contract Owner, either a death
benefit equaling the Death Benefit under the Contract on the effective date of
the exchange or a net amount at risk equaling the net amount at risk under the
Contract on the effective date of the exchange. (An additional premium payment
may be required.) The Accumulated Value of the new contract on the exchange
date will vary depending upon the type of contract for which the Contract is
being exchanged. The conversion will be subject to an equitable adjustment in
payments and Contract values to reflect variances, if any, in the payments and
Contract values under the existing Contract and the new contract. The new
contract's provisions and charges will be those that would have been
applicable under LB's standard practices if the fixed benefit permanent life
insurance contract had been issued on the Date of Issue. See "FEDERAL TAX
MATTERS" for a discussion of the Federal income tax consequences of an
exchange.
Exchange of Increase in Face Amount. During the first 24 months following an
increase in Face Amount, the Contract Owner may on one occasion, without
evidence of insurability, exchange the amount of the increase in Face Amount
for a fixed benefit permanent life insurance contract. Premiums under this new
contract will be based on the same issue age and premium class of the Insured
as were applied on the effective date of the increase in the Face Amount of
the Contract. The conditions and principles applicable to an exchange of the
entire Contract for such a contract which are described immediately above will
be equally applicable to this exchange of an increase in Face Amount for such
a new contract. See "FEDERAL TAX MATTERS" for a discussion of the Federal
income tax consequences of an exchange.
GENERAL PROVISIONS
Postponement of Payments
General. LB may defer payment of maturity proceeds, any loan or surrender and
any portion of the death proceeds in excess of the Face Amount if (a) 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 SEC, or (b) an emergency exists, as determined by the SEC,
as a result of which disposal of securities is not reasonably practicable or
it is not reasonably practicable to determine the value of the Variable
Account's net assets. Transfers and allocations of Accumulated Value to and
against the Subaccounts of the Variable Account may also be postponed under
these circumstances.
Payment by Check. Payments under the Contract of any amounts derived from
premiums paid by check may be delayed until such time as the check has cleared
the Contract Owner's bank.
Date of Receipt
Except as otherwise stated herein, the date of receipt by LB of any Written
Notice, premium payment, telephonic instructions or other communication is the
actual date it is received at LB's Home Office in proper form unless received
(1) after the close of the New York Stock Exchange, or (2) on a date which is
not a Valuation Date. In either of these two cases, the date of receipt will
be deemed to be the next Valuation Date.
The Contract
The entire Contract consists of the Contract including any attached riders or
amendments, an attached copy of the Application and any supplemental
Applications, and the Articles of Incorporation and Bylaws of LB which are in
force on the Date of Issue. Only statements in the Application and any
supplemental Applications can be used to void the Contract or defend a claim.
The statements are considered representations and not warranties. Any change
to the Contract must be in writing and signed by the President and the
Secretary of LB. Pursuant to various applicable state laws, certain of the
provisions of the Contract may vary from state to state.
The benefits provided pursuant to the Contract through LB's General Account
will not change. If the solvency of LB becomes impaired, a Contract Owner may
be required to make an extra payment. LB's Board of Directors will determine
the amount of any extra payment. It will be based on each LB member's fair
share of the deficiency. The amount will be charged as a loan against the
Contract with interest compounded at the rate of 5% per year.
Suicide
If the Insured dies by suicide within two years (or such shorter period
provided by applicable state law) from the Date of Issue, LB will pay an
amount equal to premiums paid, less any partial surrenders (and partial
surrender charges) and Contract Debt. If the Insured commits suicide within
two years after the effective date of any increase in Face Amount requiring
evidence of insurability (or such shorter period required by applicable state
law), the amount LB will pay with respect to the increase will be only an
amount equal to the Monthly Deductions previously made for the increase.
Incontestability
LB cannot contest the validity of a Contract after it has been in force during
the Insured's lifetime for two years from its Date of Issue, except for any
provisions granting benefits in the event of total disability. Similar
incontestability will apply to an increase in Face Amount or any reinstatement
after it has been in force during the Insured's lifetime for two years from
its effective date.
Change of Owner or Beneficiary
As long as the Contract is in force, the Contract Owner or Beneficiary may be
changed by Written Notice to LB. The Contract need not be returned unless
requested by LB. The change will take effect as of the date the request is
signed, whether or not the Insured is living when the request is received by
LB. LB will not, however, be liable for any payment made or action taken
before receipt of the Written Notice.
Assignment as Collateral
The Contract may be assigned as collateral. LB will not be bound by the
assignment until a copy has been received at its Home Office, and LB assumes
no responsibility for determining whether an assignment is valid or the extent
of the assignees interest. All assignments will be subject to any Contract
Debt. The interest of any Beneficiary or other person will be subordinate to
any assignment.
Misstatement of Age or Gender
If the age or gender of the Insured has been misstated, the Accumulated Value
and/or Death Benefit will be adjusted, using the most recent cost of insurance
rates, to the amounts that would have been provided based on the correct age
and gender.
Due Proof of Death
LB will accept as due proof of death of the Insured a completed claimant's
statement, which will be furnished by LB, together with either a certified
death certificate or an attending physician's statement. In some
circumstances, LB may require an attending physician's statement even though a
death certificate is furnished.
Reports to Contract Owners
LB will mail to Contract Owners, at their last known address of record, within
30 days after each Contract Anniversary, annual reports confirming the status
of each Contract's values and benefits. These reports will show the following
as of the beginning and end of the Contract Year: the Face Amount; the Death
Benefit; the Accumulated Value; any outstanding Decrease Charge; any Contract
Debt; and Cash Surrender Value. The annual reports will show how future Net
Premiums will be allocated among the Subaccount(s) pursuant to the Contract
Owner's current allocation instructions. In addition, LB will mail to Contract
Owners quarterly reports that will show all Contract transactions since the
last Contract Anniversary, including, but not limited to, the amount and dates
of premium payments (including those paid under an automatic payment plan
offered by LB or those paid prior to the initial transfer to the Subaccount(s)
on the Contract Date), monthly charges deducted, loans (as well as the loan
interest that became due, interest credited from the General Account and loan
repayments), partial surrenders, transfers, exchanges or an exercise of a free
look privilege.
Within seven days of the following transactions, LB will mail a confirmation
statement or letter to the Contract Owner confirming such transactions, in
addition to showing them in the quarterly and annual reports: any premium
payment (other than those paid under an automatic payment plan offered by LB
or those paid prior to the initial transfer to the Subaccount(s) on the
Contract Date, which will be confirmed by LB in the annual report), any
Contract loan, interest payment or loan repayment, any change in instructions
for allocation of Net Premiums or other Contract transactions, any transfer of
amounts among Subaccount(s) (including the initial transfer on the Contract
Date), any partial surrender, any decrease in Face Amount that results in a
reduction of the Decrease Charge and thus the assets attributable to the
Contract in the Subaccount(s), any restoration to Accumulated Value following
an exercise of a free-look privilege for an increase in the Face Amount and
the manner in which such amount is allocated among the Subaccount(s), any
exercise of the free-look privilege for an increase in the Face Amount when a
refund is made, any exercise of the free look privilege for the Contract, any
exchange of the Contract, any full surrender of the Contract, payment of a
Death Benefit and payment at Maturity Date. Upon request, any Contract Owner
will be sent a receipt for any premium payment.
LB will maintain all records relating to the Variable Account. LB will mail to
Contract Owners, at their last known address of record, any reports required
by any applicable law or regulation. Each Contract Owner will also be sent an
annual and a semi-annual report for the Fund as required by the Investment
Company Act of 1940.
Additional Insurance Benefits
Subject to certain requirements, one or more of the following additional
insurance benefits may be added to the Contract at the option of the Contract
Owner by rider at the time the Contract is applied for or at a later date. At
present, these options include: additional insurance coverage for accidental
death, waiver of selected amount in the event of total disability, term
insurance on the Insured's spouse, term insurance on the Insured's children, a
right to increase the Face Amount of the Contract on certain specified dates
or life events without proof of insurability, and a cost of living insurance
adjustment without proof of insurability. LB may offer additional optional
benefits in the future. The cost of any additional insurance benefits will be
deducted as part of the Monthly Deduction. See "CHARGES AND DEDUCTIONS--
Accumulated Value Charges--Monthly Deduction". The amounts of these benefits
do not vary with the investment experience of the Variable Account. Certain
restrictions apply and are clearly described in the applicable rider. Any LB
Representative authorized to sell the Contract can explain these extra
benefits further. Samples of the provisions are available from LB upon written
request. Any additional insurance benefits purchased will be described in a
rider attached to the Contract. The charge for additional insurance benefits
added by rider will be specified in the Contract or in a supplement to the
Contract. An additional charge will apply for any insurance benefits added by
rider at any time after issuance of the Contract. Cost of insurance rates for
additional term insurance benefits added by spouse rider for Contracts issued
in the state of Montana will be based on unisex rates.
The issuance of a rider providing insurance coverage on the Insured's spouse
will result in an additional Initial Monthly Charge. See "CHARGES AND
DEDUCTIONS--Accumulated Value Charges--Monthly Deduction--Initial Monthly
Charge ".
Adding insurance benefits may have Federal income tax consequences. See
"FEDERAL TAX MATTERS--Contract Proceeds."
Charitability for Life
Charitability for Life (SM) is a benefit that enables Contract Owners to
increase their charitable gifts to Lutheran charitable organizations and
congregations. Charitability for Life is available for no additional premium
whenever a Contract Owner has designated a Lutheran charitable organization or
congregation as a beneficiary for at least $1,000 of Death Benefit on his or
her Contract.
Upon the death of the Insured, the Lutheran charitable organization or
congregation will receive the Death Benefit proceeds as designated, and LB
will contribute an additional 10% of that amount to the charitable
organization or congregation, up to $25,000 per insured. Any legally
incorporated nonprofit Lutheran organization that qualifies under Internal
Revenue Code Section 170(c) is eligible to receive Charitability for Life
benefits. The benefit may vary state-by-state and an LB representative should
be consulted as to whether and to what extent the benefit is available in a
particular state and on any particular Contract.
Accelerated Benefits Rider
Under certain circumstances, the Accelerated Benefits Rider allows a Contract
Owner residing in a state that has approved such rider to receive benefits
from the Contract that would be otherwise payable upon the death of the
Insured. The benefit may vary state-by-state.
The Accelerated Benefits Rider allows the Contract Owner to elect an
accelerated payment of all or part of the Contract's Death Benefit, adjusted
to reflect current value, at a time when certain special needs exist. The
benefits paid under the Accelerated Benefits Rider are available when LB has
received Written Notice request and proof satisfactory (a certification by a
doctor) that the Insured has a life expectancy of 12 months or less (or such
shorter period provided by applicable state law), or has been confined in a
nursing home due to a condition which usually requires continuous confinement,
for at least 6 consecutive months and confinement is expected to continue for
the lifetime of the Insured. The amount of the benefit will always be less
than the Death Benefit, but will generally be greater than the Contracts'
Accumulated Value.
LB will determine the amount available as an accelerated benefit. All or part
of the eligible amount may be accelerated under the Accelerated Benefits
Rider. The benefit payable for any person must be at least $10,000, or if
smaller, that person's entire eligible amount. If the entire amount is paid,
the Contract will terminate. If only a portion of the eligible amount is paid,
the Contract will remain in force. The amount of insurance, the Loan Amount
and Accumulated Value of the Contract will be reduced by the same percentage
as the percentage of the eligible amount received under the Accelerated
Benefits Rider. The benefit will be paid in a lump sum, unless otherwise
agreed to by LB. With LB's approval, the Contract Owner may instead elect to
have the benefit paid in equal periodic payments over a fixed period, and the
minimum periodic payment must be at least $500. If the Insured dies before all
periodic payments have been made, LB will pay the beneficiary the present
value of the remaining payments, based on the same interest rate as that used
to determine the periodic payments.
There is no charge for adding the benefit to the Contract. However, an
administrative fee (not to exceed $150) will be charged at the time the
benefit is paid. LB agrees that unless otherwise required by law, no benefit
will be paid if the Contract Owner is required to elect it in order to meet
the claims of creditors or to obtain a government benefit. In addition,
receipt of payment of the Accelerated Benefits rider may affect eligibility
for government sponsored benefits programs, including Medicaid. LB can furnish
details about the amount of the Accelerated Benefits Rider available to an
eligible Contract Owner under a particular Contract, and the adjusted premium
payments that would be in effect if less than the entire amount eligible for
payment is paid. See "GENERAL PROVISIONS--Accelerated Benefits Rider". The tax
treatment of benefits paid under the Accelerated Benefits Rider is currently
uncertain. See "FEDERAL TAX MATTERS--Contract Proceeds--Benefits Paid under
the Accelerated Benefits Rider".
Reservation of Certain Rights
LB reserves the right, to the extent permitted or required by law (including
SEC rules under the 1940 Act), to eliminate or modify certain rights provided
under the Contract:
(1) the withdrawal rights during the initial Free Look Period (see "CONTRACT
RIGHTS--Free Look Privileges--Free Look for Contract");
(2) the withdrawal rights during any Free Look Period after an increase in
Face Amount (see "CONTRACT RIGHTS--Free Look Privileges--Free Look for
Increase in Face Amount");
(3) the exchange rights during the first 24 months following the Date of Issue
(see "CONTRACT RIGHTS--Exchange Privileges--Exchange of the Contract"); and
(4) the exchange rights during the first 24 months following an increase in
Face Amount (see "CONTRACT RIGHTS--Exchange Privileges--Exchange of Increase
in Face Amount").
LB will provide Contract Owners with written notice if it exercises its right
to eliminate or modify any of these rights.
FEDERAL TAX MATTERS
The following discussion is general and is not intended as tax advice. Any
person concerned about these tax implications should consult a competent tax
adviser. This discussion is based on LB's understanding of the present Federal
income tax laws as they are currently interpreted by the Internal Revenue
Service. No representation is made as to the likelihood of continuation of
these current laws and interpretations. It should be further understood that
the following discussion is not exhaustive and that special rules not
described in this Prospectus may be applicable in certain situations.
Moreover, no attempt has been made to consider any applicable state or other
tax laws. LB does not make any guarantee regarding the tax status of any
Contract.
Contract Proceeds
General. The Contract will qualify as a life insurance contract under Section
7702 of the Internal Revenue Code of 1986, as amended (the "Code"). Section
7702 of the Code provides that the Contract will so qualify if it satisfies a
cash value accumulation test or a guideline premium requirement and falls
within a cash value corridor. The qualification of the Contract under Section
7702 depends in part upon the Death Benefit payable under the Contract at any
time. To the extent a change in the Contract, such as a decrease in Face
Amount or a change in Death Benefit Option, would cause the Contract not to
qualify, LB will not make the change. See "PAYMENT AND ALLOCATION OF PREMIUMS-
- -Amount and Timing of Premiums--Premium Limitations". Although the Secretary
of the Treasury is authorized to prescribe regulations interpreting the manner
in which these tests are to be applied, such regulations have not been issued.
In addition, the Technical and Miscellaneous Revenue Act of 1988 (the "Act")
provides additional requirements under Section 7702 for mortality and other
expense charges of life insurance contracts. Nonetheless, LB believes that the
Contract should meet the statutory definition in Section 7702 of a life
insurance contract.
Death Benefits. The Death Benefit proceeds payable under either Option A or
Option B will be excludable from the gross income of the Beneficiary under
Section 101(a) of the Code.
Distributions. The Contract Owner will not be taxed upon the increase in
Accumulated Value of the Contract unless and until there is a taxable
distribution from the Contract. The Act was enacted on November 11, 1988 and
makes certain changes to the income tax treatment of distributions from
Contracts classified as "modified endowment contracts" under the Code. A
modified endowment contract is any Contract that fails a special premium
limitation test set forth in the Code. This test requires that the cumulative
amount paid during the first seven years since the Date of Issue (or date of
certain increases in coverage) not exceed the cumulative amount of the level
annual premium which, in theory, would provide a paid-up Contract after seven
years. If this test is ever violated, LB will notify the Contract Owner, who
may then take certain timely steps to return the Contract to non-modified
endowment contract status. This premium limitation test does not supercede the
premium limitations previously established by the Code as discussed under
"Premium Limitations" at page 33 of the Prospectus.
The Act involves complex considerations and unresolved interpretive issues. It
should be understood, however, that if there is material change in the
Contract, the Contract is treated as a new Contract as of the date of the
material change for purposes of determining whether it will be treated as a
modified endowment contract. Such a change will create a modified endowment
contract only if cumulative amounts paid in the seven years following the
change violate the new cumulative premium limitation test. Certain increases
in Contract benefits (including increases in Face Amount and in additional
insured benefits) will trigger the start of a new seven year period from the
date of this change, along with a new level annual premium to be used in the
test. In addition, a reduction in Contract benefits at any time while the test
is applicable could in itself create a modified endowment contract, depending
on certain factors. In this case, the premium limitation test will be applied
as though the Contract were originally issued at the lower benefit unless the
benefits are reinstated in a timely manner.
Tax Treatment of Modified Endowment Contracts. Under the Act, distributions
from a Contract treated as a modified endowment contract are taxable up to the
amount equal to the excess (if any) of the Accumulated Value immediately
before the distribution over the investment in the Contract at such time.
Investment in the Contract is generally defined as the premiums paid for the
Contract (plus or minus any loss or gain, respectively, transferred into the
Contract as a result of a tax-free exchange), minus any non-taxable
distributions (where taxable gain calculations are based on surrender values
net of loans). Loans taken from such a Contract, as well as surrenders and
benefits paid at maturity (other than the Death Benefit), will be treated as
taxable distributions. (The assignment or pledge of a Contract with a maximum
death benefit of $25,000 or less made to secure only burial or prearranged
funeral expenses is not treated as a distribution). A ten percent (10%)
additional income tax will be imposed on the portion of any distribution from
such a Contract that is included in income except where the distribution is
made on or after the date on which the Contract Owner attains age 59 1/2, or
is attributable to the Contract Owner becoming disabled, or is a part of a
series of substantially equal periodic payments for the life or life
expectancy of the Contract Owner or the joint lives or joint life expectancies
of the Contract Owner and Beneficiary.
Any withdrawal or loan proceeds that were paid 24 months prior to such a
Contract becoming a modified endowment contract will also potentially be a
taxable distribution.
Generally, interest on such Contract loans, even if paid, will not be tax
deductible.
Under the Act, all modified endowment contracts, issued by LB (or its
affiliates) to the same Contract Owner during any calendar year are treated as
one modified endowment contract for purposes of determining the amount
includible in the gross income under Section 72(e) of the Code.
Tax Treatment of Contracts that are NOT Modified Endowment Contracts. The Act
does not apply to life insurance contracts entered into prior to June 21,
1988, provided that the contract owner does not request an increase in
contract benefits (although certain increases in Face Amount are exempted) on
or after that date. These pre-June 21, 1988, contracts (as well as Contracts
entered into after June 20, 1988, that are not modified endowment contracts)
remain subject to the taxation provisions described below.
A full surrender distribution of the Contract will, under Section 72(e)(5) of
the Code, be included in the Contract Owner's gross income to the extent it
exceeds the Contract Owner's investment in the Contract.
A partial surrender distribution from the Contract will be taxed under the
"cost recovery" rule in that, the distribution will be included in the
Contract Owner's gross income to the extent it exceeds the investment in the
Contract. However, certain cash distributions received as a result of certain
Contract benefit changes will be taxed under the "interest-first" rule if the
distribution occurs during the first fifteen years after issue. The amount of
the cash distribution to be included in gross income will be limited to the
minimum of the taxable gain and the applicable recapture ceiling as defined in
Section 7702. No ten percent (10%) additional penalty will apply.
In addition, under Section 72(e)(5) of the Code, loans received under the
Contract will not be included in gross income. (However, loans may or may not
be taxable at the time of a full or partial surrender.) Interest paid to LB
with respect to the loan may or may not be deductible. Due to the complexity
of these factors, a Contract Owner should consult a competent tax adviser as
to the deductibility of interest paid on any Contract loans.
Benefits Paid under the Accelerated Benefits Rider. Adding the Accelerated
Benefits Rider to a newly issued Contract has no adverse consequences;
however, electing to use it could. The tax treatment of benefits paid under
the Accelerated Benefits Rider is currently uncertain. Future legislation or
interpretations may treat all or part of such payments as taxable
distributions from the Contract. Unlike a death benefit received by a
beneficiary after the death of an insured, receiving a benefit paid under the
Accelerated Benefits Rider may give rise to a federal or state income tax. A
competent tax adviser should be consulted for further information.
Withholding. The taxable portion of a distribution to an individual is subject
to Federal income tax withholding unless the taxpayer elects not to have
withholding. LB will provide the Contract Owner with the election form and
further information as to withholding prior to the first distribution.
Changes in Contract Owners. The right to change Contract Owners may have tax
consequences, depending on a number of factors. Due to the complexity of these
factors, a Contract Owner should consult a competent tax adviser as to the tax
consequences of such a change.
Exchanges. The right to exchange the Contract for a fixed benefit permanent
life insurance contract (see "CONTRACT RIGHTS--Exchange Privileges") will be
treated as a tax-free exchange under Section 1035. A life insurance contract
received in exchange for a modified endowment contract will also be treated as
a modified endowment contract. Also, if a Contract Owner exchanges any life
insurance contract entered into before June 21, 1988, for a Contract described
in this prospectus, then the new provisions regarding modified endowment
contracts described above may apply. Accordingly, a Contract Owner should
consult a tax adviser before effecting an exchange of any life insurance
contract, including the Contract.
Other Taxes. Federal estate taxes and the state and local estate, inheritance
and other taxes may become due depending on applicable law and the
circumstances of each Contract Owner or Beneficiary, if the Contract Owner or
Insured dies. Any person concerned about the estate implications of the
Contract should consult a competent tax adviser.
Diversification Requirements. Flexible premium variable life insurance
policies such as the Contracts will be treated as life insurance contracts
under the Code, among other things, so long as the separate accounts funding
them are "adequately diversified". Section 817(h) of the Code also requires
that investments of the Variable Account meet certain diversification
requirements stated in section 817(h)(2) or as may be prescribed by the
Treasury Department in regulations. The assets of the Fund will meet the
diversification requirements. LB will monitor the Contracts and the
regulations of the Treasury Department to insure that the Contract will
continue to qualify as a life insurance contract under sections 7702 and 817.
Pension and Profit-Sharing Plans. If a Contract is purchased by a trust which
forms part of a pension or profit-sharing plan qualified under Section 401(a)
of the Code for the benefit of participants covered under the plan, the
Federal income tax treatment of such Contracts will be somewhat different from
that described above. A competent tax adviser should be consulted on these
matters.
LB's Tax Status
LB does not initially expect to incur any income tax burden upon the earnings
or the realized capital gains attributable to the Variable Account. Based on
this expectation, no charge is being made currently to the Variable Account
for Federal income taxes which may be attributable to the Account. If,
however, LB determines that it may incur such tax burden, it may assess a
charge for such burden from the Variable Account. In addition, if there is a
material change in state or local tax laws, charges for such taxes, if any,
attributable to the Variable Account, may be made.
EMPLOYMENT-RELATED BENEFIT PLANS
The Contracts described in this Prospectus (except for Contracts issued in the
state of Montana) contain guaranteed and current cost of insurance rates that
distinguish between men and women. On July 6, 1983, the Supreme Court held in
ARIZONA GOVERNING COMMITTEE V. NORRIS that optional annuity benefits provided
under an employer's deferred compensation plan could not, under Title VII of
the Civil Rights Act of 1964, vary between men and women on the basis of
gender. Because of this decision, the cost of insurance rates applicable to
Contracts purchased under an employment-related insurance or benefit program
may in some cases not vary on the basis of the Insured's gender. Any unisex
rates to be provided by LB will apply for tax-qualified plans and those plans
where an employer believes that the NORRIS decision applies. Contracts issued
in connection with employment-related insurance benefit plans may also be
subject to different limitations with respect to the Minimum Face Amount,
increases in Face Amount, additional insurance benefits, and issues ages.
Employers and employee organizations should consider, in consultation
with legal counsel, the impact of NORRIS, and Title VII generally, and any
comparable state laws that may be applicable, on any employment-related
insurance or benefit plan for which a Contract may be purchased.
VOTING RIGHTS
General. As stated above, all of the assets held in the Subaccounts of the
Variable Account will be invested in shares of the corresponding Portfolios of
the Fund. LB is the legal owner of those shares and as such has the right to
vote to elect the Board of Directors of the Fund, to vote upon certain matters
that are required by the 1940 Act to be approved or ratified by the
shareholders of a mutual fund and to vote upon at a shareholders' meeting.
However, LB will, as required by law, vote the shares of the Fund at regular
and special meetings of the shareholders of the Fund in accordance with
instructions received from Contract Owners. If, however, the 1940 Act or any
regulation thereunder should be amended or if the present interpretation
thereof should change, and as a result LB determines that it is permitted to
vote the Fund shares in its own right, it may elect to do so. The Fund's
Bylaws provided that regular meetings of the shareholders of the Fund may be
held on an annual or less frequent basis as determined by the Board of
Directors of the Fund. For a more complete discussion, see the accompanying
prospectus for the Fund.
The number of votes which a Contract Owner has the right to instruct will be
calculated separately for each Subaccount. The number of votes which each
Contract Owner has right to instruct will be determined by dividing a
Contract's Accumulated Value in a Subaccount by the net asset value per share
of the corresponding Portfolio in which the subaccount invests. Fractional
shares will be counted. The number of votes of the Portfolio which the
Contract Owner has right to instruct will be determined as of the date
coincident with the date established by that Portfolio for determining
shareholders eligible to vote at the meeting of the Fund. Voting instructions
will be solicited by written communications prior to such meeting in
accordance with procedures established by the Fund.
Any Portfolio shares held in the Variable Account for which LB does not
receive timely voting instructions, or which are not attributable to Contract
Owners, will be voted by LB in proportion to the instructions received from
all Contract Owners. Any Portfolio shares held by LB or its affiliates in
general accounts will, for voting purposes, be allocated to all separate
accounts of LB and its affiliates having a voting interest in that Portfolio
in proportion to each such separate account's voting interest in that
Portfolio, and will be voted in the same manner as are such separate account's
votes. Voting instructions to abstain on any item to be voted upon will be
applied on a pro rata basis to reduce the votes eligible to be cast.
Each person having a voting interest in a Subaccount will receive proxy
materials, reports and other materials relating to the appropriate Portfolio.
Disregard of Voting Instructions. LB may, when required by state insurance
regulatory authorities, disregard voting instructions if the instructions
require that the shares be voted so as to cause a change in the
subclassification or investment objective of the Fund or one or more of its
Portfolios or to approve or disapprove an investment advisory contract for a
Portfolio of the Fund. In addition, LB itself may disregard voting
instructions in favor of changes initiated by a Contract Owner in the
investment policy or the investment adviser of a Portfolio of the Fund if LB
reasonably disapproves 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 LB determined that the change would have an adverse effect on
its General Account in that the proposed investment policy for a Portfolio may
result in overly speculative or unsound investments. In the event LB does
disregard voting instructions, a summary of that action and the reasons for
such action will be included in the next annual report of the Fund to Contract
Owners.
DIRECTORS AND OFFICERS OF LB
Directors
The Directors of Lutheran Brotherhood, their principal occupations and their
addresses are: Robert O. Blomquist, Chairman of the Board of Directors,
Lutheran Brotherhood, 625 Fourth Avenue South, Minneapolis, Minnesota; Richard
W. Duesenberg, Director, Retired, formerly Senior Vice President, General
Counsel and Secretary, Monsanto Company, One Indian Creek Lane, St. Louis,
Missouri; Robert P. Gandrud, President, Chief Executive Officer and Director,
Lutheran Brotherhood, 625 Fourth Avenue South, Minneapolis, Minnesota; Bobby I
Griffin, Director, Executive Vice President, Medtronic, Inc., 7000 Central
Avenue NE, Minneapolis, Minnesota; William R. Halling, Director, President,
The Economic Club of Detroit, 333 W Fort Street, Suite 100, Detroit, Michigan;
James M. Hushagen, Director, Partner, Eisenhower & Carlson, 1200 First
Interstate Plaza, Tacoma, Washington; Herbert D. Ihle, Director, President,
Diversified Financial Services, 10453 Shelter Grove, Eden Prairie, Minnesota;
Richard C. Kessler, Director, President, The Kessler Enterprise, Inc., 6649
Westwood Boulevard, Suite 130, Orlando, Florida; Judith K. Larsen, Director,
Vice President, Dataquest, 3790 LaSelva, Palo Alto, California; Luther S.
Luedtke, Director, Professor, California Lutheran University, 60 West Olsen
Road, Thousand Oaks, California, John P. McDaniel, Director, President,
Medlantic Health Group, Inc., 100 Irving Street, N.W., Washington, D.C.; Mary
Ellen H. Schmider, Director, Retired, formerly Dean of Graduate Studies -
Coordinator of Grants, Moorhead State University, 7701 Island Lane, 180th
Street, Chippewa Falls, Wisconsin; Russel M. Smith, Director, Retired, 906
Dunes, Rockport, Texas.
<TABLE>
<CAPTION>
Executive Officers
<S> <C>
Name Principal Occupation
Robert P. Gandrud President and Chief Executive Officer
Rolf F. Bjelland Executive Vice President - Investments
David J. Larson Senior Vice President, Secretary and General Counsel
Dr. Edward A. Lindell Senior Vice President - External Affairs
Michael E. Loken Senior Vice President - Management Information Services
Bruce J. Nicholson Executive Vice President and Chief Financial Officer
Paul R. Ramseth Executive Vice President - Strategic Development
William H. Reichwald Executive Vice President - Marketing
Jennifer H. Smith Senior Vice President - Human Resources
Jerald E. Sourdiff Senior Vice President - Controller's
Mary M. Abbey Vice President - Client Systems
Galen R. Becklin Vice President - Management Information Services
Larry A. Borlaug Regional Vice President - Marketing
Colleen Both Vice President - Chief Compliance Officer
J. Keith Both Senior Vice President - Marketing
Randall L. Boushek Vice President - Portfolio Manager
David J. Christianson Vice President - Insurance Services
Craig R. Darrington Vice President - Marketing
Pamela H. Desnick Vice President - Communications
Mitchell F. Felchle Vice President - New Ventures Group
Charles E. Heeren Vice President - Bond Investments
Wayne A. Hellbusch Vice President - Agency Services
Otis F. Hilbert Vice President - Law
Gary J. Kallsen Vice President - Mortgages and Real Estate
Fred O. Konrath Vice President - Staffing and Employment Relations
Douglas B. Miller Regional Vice President - Marketing
C. Theodore Molen Regional Vice President - Marketing
James R. Olson Vice President - Investor Services/Administration
Kevin B. Pedersen Vice President - Lutheran Trust
Dennis K. Peterson Vice President - New Ventures Group
Bruce M. Piltingsrud Vice President - Research/Marketing Strategies
Rolf H. Running Vice President - New Ventures Group
Lynette J.C. Stertz Vice President - Controller's
John O. Swanson, M.D. Vice President and Medical Director
Louise K. Thoreson Vice President - Fraternal
James M. Walline Vice President - Equities/Mutual Funds Investment
Daniel G. Walseth Vice President - Law
Anita J.T. Young Vice President and Treasurer
</TABLE>
The principal business address of each of the foregoing officers is 625 Fourth
Avenue South, Minneapolis, Minnesota 55415.
SALES AND OTHER AGREEMENTS
Lutheran Brotherhood Securities Corp., 625 Fourth Avenue South, Minneapolis,
Minnesota 55415, an indirect subsidiary of LB, acts as the principal
underwriter of the Contracts pursuant to a Distribution Agreement to which LB
and the Variable Account are also parties.
Lutheran Brotherhood Securities Corp. is registered with the SEC as a broker-
dealer under the Securities Exchange Act of 1934 and is a member of the
National Association of Securities Dealers, Inc. Lutheran Brotherhood
Securities Corp. is also named as distributor of the stock of Lutheran
Brotherhood Money Market Fund, Lutheran Brotherhood Opportunity Growth Fund,
Lutheran Brotherhood Fund, Lutheran Brotherhood Income Fund, Lutheran
Brotherhood High Yield Fund, and Lutheran Brotherhood Municipal Bond Fund.
Each fund is a diversified series of The Lutheran Brotherhood Family of Funds,
an open-end investment company.
The Contracts are sold through LB Representatives who are licensed by state
insurance officials to sell the Contracts. These LB Representatives are also
registered representatives of Lutheran Brotherhood Securities Corp. The
Contracts are offered in all states where LB is authorized to sell variable
life insurance. Under the Distribution Agreement, Lutheran Brotherhood
Securities Corp. will perform suitability review.
Under the Distribution Agreement, LB Representatives receive commissions and
service fees from Lutheran Brotherhood Securities Corp. for selling and
servicing the Contracts. LB reimburses Lutheran Brotherhood Securities Corp.
for such compensation. LB also reimburses Lutheran Brotherhood Securities
Corp. for other expenses incurred in marketing and selling the Contracts.
These include general agent compensation, LB Representatives' training
allowances and agency expense allowances.
Compensation of LB Representatives. LB Representatives selling the Contracts
will receive a 3% service fee of all premiums paid on the Contract. In
addition to the service fee, commissions will be paid to the LB
Representatives based on a commission schedule summarized below. Further, LB
Representatives may be eligible to receive certain benefits based on the
account of earned commissions.
During the first Contract Year, commissions will be not more than 52% of the
Death Benefit Guarantee Premium for the Contract. In the second and third
Contract Years, commissions will equal, in general, 7% of the Death Benefit
Guarantee Premium for the Contract. The Death Benefit Guarantee Premium at
issue will include premiums attributable to riders and supplemental benefits
included in the Contract.
For the first year following an increase in Face Amount, commissions will be
not more than 52% of the Death Benefit Guarantee Premium for the increase. In
the second and third year following an increase, commissions will equal, in
general, 7% of the Death Benefit Guarantee Premium for the increase.
For Contracts with an initial Face Amount greater than or equal to $500,000
but less than $1,000,000, during the first Contract Year after issue or
following an increase in Face Amount, the commissions will be not more than
42% of the applicable Death Benefit Guarantee Premium. For Contracts with an
initial Face Amount greater than or equal to $1,000,000, during the first
Contract Year after issue or following an increase in Face Amount, the
commissions will be not more than 32% of the applicable Death Benefit
Guarantee Premium. In the second and third year after issue or following an
increase, the commissions will equal, in general, 6% of the applicable Death
Benefit Guarantee Premium.
For the first year following the addition of a spouse rider or an increase in
the Face Amount of a spouse rider, the commission will be not more than 52% of
the Death Benefit Guarantee Premium for the rider or the increase. In the
second and third year following the addition of a spouse rider or an increase,
commissions will equal, in general, 7% of the Death Benefit Guarantee Premium
for the rider or the increase.
For a spouse rider with an initial Face Amount greater than or equal to
$500,000 but less than $1,000,000, during the first Contract Year after issue
or following an increase in Face Amount, the commissions will be not more than
42% of the applicable Death Benefit Guarantee Premium. For spouse rider with
an initial Face Amount greater than or equal to $1,000,000, during the first
Contract Year after issue or following an increase in Face Amount, the
commissions will be not more than 32% of the applicable Death Benefit
Guarantee Premium. In the second and third year after issue or following an
increase, the commissions will equal, in general, 6% of the applicable Death
Benefit Guarantee Premium.
For the first year following the addition of a child rider, the commission
will be not more than 52% of the Death Benefit Guarantee Premium for the
increase in Face Amount of the rider. In the second and third year following
the increase, commissions will equal, in general, 7% of the Death Benefit
Guarantee Premium for the rider.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account is a party or to
which the assets of the Variable Account are subject. Neither LB nor LBSC are
involved in any litigation that is of material importance in relation to their
total assets or that relates to the Variable Account.
LEGAL MATTERS
All matters of applicable state law pertaining to the Contracts, including
LB's right to issue the Contracts thereunder, have been passed upon by
_____________________, Counsel to LB.
EXPERTS
The financial statements of LB and the Variable Account included in this
Prospectus have been so included in reliance of ________________________,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
Actuarial matters included in this Prospectus have been examined by Kenneth A.
Dahlberg, FSA, MAAA, Actuary of LB, whose opinion is filed as an exhibit to
the Registration Statement.
FURTHER INFORMATION
A Registration Statement under the Securities Act of 1933 has been filed with
the SEC, with respect to the Contracts described herein. This Prospectus does
not contain all of the information set forth in the Registration Statement and
exhibits thereto, to which reference is hereby made for further information
concerning the Account, LB and the Contracts. The information so omitted may
be obtained from the SEC's principal office in Washington, D.C., upon payment
of the fee prescribed by the SEC, or examined there without charge. Statements
contained in this Prospectus as to the provisions of the Contracts and other
legal documents are summaries, and reference is made to the documents as filed
with the SEC for a complete statement of the provisions thereof.
FINANCIAL STATEMENTS
The financial statements of LB which are included in this Prospectus should be
distinguished from the financial statements of the Variable Account and should
be considered only as bearing upon the ability of LB to meet its obligations
under the Contracts. They should not be considered as bearing on the
investment performance of the assets held in the Variable Account.
[VARIABLE ACCOUNT FINANCIAL STATEMENTS TO BE ADDED BY SUBSEQUENT AMENDMENT]
COMMENT ON FINANCIAL STATEMENTS OF LB
The financial statements of LB included in this Prospectus should be
considered as bearing only upon the ability of LB to meet its obligations
under the Contracts. The value of the interests of owners and beneficiaries
under the Contracts are affected primarily by the investment results of the
Subaccounts of the Variable Account.
[LB FINANCIAL STATEMENTS TO BE ADDED BY SUBSEQUENT AMENDMENT]
APPENDIX A
Illustration of Death Benefits,
Accumulated Values and Cash Surrender Values
The following tables illustrate how the Death Benefits, Accumulated Values and
Cash Surrender Values of a Contract may change with the investment experience
of the Variable Account. The tables show how the Death Benefits, Accumulated
Values and Cash Surrender Values of a Contract issued to an Insured of a given
age would vary over time if the investment return on the assets held in each
Portfolio of the Fund were a uniform, gross, after-tax annual rate of 0
percent, 6 percent and 12 percent. The tables on pages A-___ through A-___
illustrate a Contract issued to a male age 35 or, in the non-tobacco preferred
premium class. The Death Benefits, Accumulated Values and Cash Surrender
Values would be lower if the Insured were in a special premium class or if the
Insured were a tobacco user because the cost of insurance would be increased.
Also, the Death Benefits, Accumulated Values and Cash Surrender Values would
be different from those shown if the gross annual investment returns averaged
0 percent, 6 percent and 12 percent over a period of years, but fluctuated
above and below those averages for individual Contract Years.
The second column of the tables shows the Accumulated Value of the premiums
paid at a 5% interest rate. The third and sixth columns illustrate the Death
Benefit of a Contract over the designated period. The fourth and seventh
columns illustrate the Accumulated Value of the Contract over the designated
period. (The Accumulated Value is the total amount held under a Contract at
any time.) The fifth and eighth columns illustrate the Cash Surrender Value of
a Contract over the designated period. (The Cash Surrender Value is equal to
the Accumulated Value less any Decrease Charge, Contract Debt (assumed to be 0
in these illustrations) and unpaid Monthly Deductions (also assumed to be 0 in
these illustrations).) The sixth through the eighth columns assume that
throughout the life of the Contract, the monthly charge for the cost of
insurance is based on the current cost of insurance rates and the current
Mortality and Expense Risk Charge. The third through the fifth columns assume
that the Mortality and Expense Risk Charge and also that the monthly charge
for the cost of insurance are based on the maximum level permitted under the
Contract. These maximum allowable cost of insurance rates are based on the
1980 Commissioners Standard Ordinary Mortality Table.
Because the Death Benefit values vary depending on the Death Benefit Option in
effect, Option A and Option B are illustrated separately. (Option A provides
for a Death Benefit equal to the greater of (a) the Face Amount plus the
Accumulated Value and (b) the applicable percentage of Accumulated Value and
Option B provides for a Death Benefit equal to the greater of (a) the Face
Amount and (b) the applicable percentage of Accumulated Value.)
Any amounts held in the Loan Account would not participate in the investment
experience illustrated in these tables. Instead, such amounts will be credited
with interest as described in the Prospectus in the section entitled,
"CONTRACT RIGHTS--Loan Privileges".
The amounts shown for Death Benefits, Accumulated Values and Cash Surrender
Values reflect the fact that the net investment return of the Subaccounts of
the Variable Account is lower than the gross, after-tax return on the assets
held in the Fund as a result of the advisory fee paid by the Fund and charges
made against the Subaccounts. The values shown take into account the following
fees and charges: the daily investment advisory fee paid by the Fund, which is
assumed to be equivalent to an annual rate of .48% of the aggregate average
daily net assets of the Fund, based on the following fees: Growth (0.40%);
High Yield (0.40%); Income (0.40%); Money Market (0.40%); Opportunity Growth
(0.40%); and World Growth (0.85%); and the daily charge to each Subaccount for
assuming mortality and expense risks, which is equivalent to a charge at an
annual current rate of .60% of the average assets of the Subaccounts and which
is guaranteed never to exceed an annual rate of .75%. After deduction of
these amounts, the illustrated gross annual investment rates of return 0%, 6%
and 12% correspond to (a) net annual rates of -1.23%, 4.77% and 10.77%,
respectively, assuming an advisory fee of .48% and a Mortality and Expense
Risk Charge of .75% and (b) net annual rates of -1.08%, 4.92% and 10.92%,
respectively, assuming an advisory fee of .48% and a Mortality and Expense
Risk Charge of .60%.
The amounts shown for Death Benefits, Accumulated Values and Cash Surrender
Values do not reflect a deduction for operating expenses of the Fund, other
than the investment advisory fee, because LB and LBVIP have agreed to
reimburse the Fund for these operating expenses pursuant to a separate written
agreement (the "Expense Reimbursement Agreement"). For the fiscal year of the
Fund ended December 31, 1996, the Fund was reimbursed approximately
$____________ for such operating expenses. The Expense Reimbursement Agreement
could be terminated at any time by the mutual agreement of the Fund, LB and
LBVIP, but the Fund, LB and LBVIP currently contemplate that the Expense
Reimbursement Agreement will continue so long as the Fund remains in
existence. If the Expense Reimbursement Agreement were terminated, the Fund
would be required to pay these operating expenses, which would reduce the net
investment return on the shares of the Fund held by the Subaccounts of the
Variable Account.
The hypothetical values shown in the tables do not reflect any charges for
Federal income taxes attributable to the Variable Account because LB does not
currently make any such charges. However, such charges may be made in the
future and, in that event, the gross annual investment return would have to
exceed 0%, 6% or 12% by an amount sufficient to cover the tax charges in order
to produce the Death Benefits and values illustrated. (See section entitled
"FEDERAL TAX MATTERS" in the Prospectus.)
The tables illustrate the Contract values 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 Variable Account and if no Contract
loans have been made. The tables are also based on the assumptions that the
Contract Owner has not requested an increase or decrease in the Face Amount,
that no partial surrenders have been made.
Upon request, LB will provide a comparable illustration based upon the
proposed Insured's age, gender (except for Contracts issued in the state of
Montana) and premium class, the Death Benefit Option, Face Amount, Scheduled
Premium and any available riders requested. Montana has enacted legislation
that requires that cost of insurance rates applicable to Contracts purchased
in Montana cannot vary on the basis of the insured's gender.
See Appendix D for Illustrations of Death Benefits, Accumulated Values and
Cash Surrender Values on VUL 1 contracts.
<PAGE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male Issue Age: 35; Preferred, $1,000.00 Annual Premium, $100,000 Face Amount
Option A--Varying Death Benefit Option
Assumed Hypothetical Gross Annual Investment Rate of Return: 0%
[1] [2] [3] [4] [5] [6] [7] [8]
Premiums Assuming Guaranteed Costs (1)(2) Assuming Current Costs (1)(2)
Accumul. -------------------------------- --------------------------------
End of at 5% Cash Cash
Cont. Interest Death Accumulated Surrender Death Accumulated Surrender
Year Per Year Benefit Value Value Benefit Value Value
------ -------- ------- ----------- --------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,050 100,605 605 0 * 100,629 629 0 *
2 2,152 101,192 1,192 241 101,251 1,251 300
3 3,310 101,760 1,760 870 101,855 1,855 964
4 4,525 102,311 2,311 1,481 102,452 2,452 1,621
5 5,801 102,844 2,245 2,074 103,031 3,031 2,260
6 7,142 103,359 3,359 2,666 103,603 3,603 2,910
7 8,549 103,845 3,845 3,229 104,170 4,170 3,553
8 10,026 104,314 4,314 3,775 104,718 4,718 4,179
9 11,577 104,754 4,754 4,292 105,261 5,261 4,799
10 13,206 105,166 5,166 4,780 105,786 5,786 5,400
11 14,917 105,537 5,537 5,229 106,293 6,293 5,985
12 16,712 105,869 5,869 5,638 106,771 6,771 6,650
13 18,598 106,173 6,173 6,019 107,220 7,220 7,066
14 20,578 106,439 6,439 6,362 107,641 7,641 7,564
15 22,657 106,666 6,666 6,666 108,033 8,033 8,033
16 24,840 106,914 6,914 6,914 108,457 8,457 8,457
17 27,132 107,113 7,113 7,113 108,829 8,829 8,829
18 29,539 107,250 7,250 7,250 109,149 9,149 9,149
19 32,065 107,326 7,326 7,326 109,418 9,418 9,418
20 34,719 107,330 7,330 7,330 109,649 9,649 9,649
Age
60 50,113 106,106 6,106 6,106 110,087 10,087 10,087
65 69,760 101,824 1,824 1,824 108,894 8,894 5,060
70 94,836 100,000 0 0 * 105,060 0 0 *
75 126,839 100,000 0 0 * 100,000 0 *****
</TABLE>
(1) Assumes a $1,000.00 premium is paid at the beginning of each Contract
Year. Values will be different if premiums are paid with a different
frequency or in different amounts.
(2) Assumes that no Contract loans or partial surrenders have been made.
Excessive loans or withdrawals may cause the Contract to lapse because of
insufficient Cash Surrender Value.
* Based on (1) and (2) above, the Death Benefit Guarantee is in effect to
Attained Age 71. Therefore, the Contract remains in force even though the
Cash Surrender Value is zero. The $1,000.00 premium illustrated is
greater than the Death Benefit Guarantee Premium for this Contract.
The hypothetical investment results are illustrative only, and should not be
deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown, and will depend on a
number of factors, including the investment allocations by a Contract Owner,
and the different investment returns for the Fund. The Death Benefit,
Accumulated Value and Cash Surrender Value for a Contract would be different
from those shown above if the actual investment results applicable to the
Contract average 0% over a period of years, but also fluctuated above or below
the average for individual Contract Years. No representation can be made by
us or by the Fund that these hypothetical returns can be achieved for any one
year, or sustained over any one year, or sustained over any period of time.
<PAGE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male Issue Age: 35; Preferred, $1,000.00 Annual Premium, $100,000 Face Amount
Option B--Level Death Benefit Option
Assumed Hypothetical Gross Annual Investment Rate of Return: 0%
[1] [2] [3] [4] [5] [6] [7] [8]
Premiums Assuming Guaranteed Costs (1)(2) Assuming Current Costs (1)(2)
Accumul. -------------------------------- ---------------------------------
End of at 5% Cash Cash
Cont. Interest Death Accumulated Surrender Death Accumulated Surrender
Year Per Year Benefit Value Value Benefit Value Value
------ -------- ------- ----------- --------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,050 100,000 606 0 * 100,000 630 0 *
2 2,152 100,000 1,195 245 100,000 1,254 303
3 3,310 100,000 1,767 877 100,000 1,860 970
4 4,525 100,000 2,323 1,492 100,000 2,461 1,631
5 5,801 100,000 2,862 2,091 100,000 3,045 2,275
6 7,142 100,000 3,385 2,691 100,000 3,623 2,930
7 8,549 100,000 3,880 3,264 100,000 4,196 3,580
8 10,026 100,000 4,360 3,821 100,000 4,753 4,213
9 11,577 100,000 4,813 4,351 100,000 5,304 4,842
10 13,206 100,000 5,240 4,855 100,000 5,839 5,454
11 14,917 100,000 5,631 5,323 100,000 6,359 6,050
12 16,712 100,000 5,985 5,753 100,000 6,851 6,620
13 18,598 100,000 6,314 6,160 100,000 7,317 7,163
14 20,578 100,000 6,608 6,531 100,000 7,758 7,681
15 22,657 100,000 6,866 6,866 100,000 8,173 8,173
16 24,840 100,000 7,150 7,150 100,000 8,623 8,623
17 27,132 100,000 7,388 7,388 100,000 9,026 9,026
18 29,539 100,000 7,571 7,571 100,000 9,383 9,383
19 32,065 100,000 7,697 7,697 100,000 9,695 9,695
20 34,719 100,000 7,758 7,758 100,000 9,973 9,973
Age
60 50,113 100,000 6,899 6,899 100,000 10,730 10,730
65 69,760 100,000 3,025 3,205 100,000 10,017 10,017
70 94,836 100,000 0 0 * 100,000 6,794 6,794
75 126,839 100,000 0 0 * 100,000 0 0 *
</TABLE>
(1) Assumes a $1,000.00 premium is paid at the beginning of each Contract
Year. Values will be different if premiums are paid with a different
frequency or in different amounts.
(2) Assumes that no Contract loans or partial surrenders have been made.
Excessive loans or withdrawals may cause the Contract to lapse because of
insufficient Cash Surrender Value.
* Based on (1) and (2) above, the Death Benefit Guarantee is in effect to
Attained Age 71. Therefore, the Contract remains in force even though the
Cash Surrender Value is zero. The $1,000.00 premium illustrated is greater
than the Death Benefit Guarantee Premium for this Contract.
The hypothetical investment results are illustrative only, and should not be
deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown, and will depend on a
number of factors, including the investment allocations by a Contract Owner,
and the different investment returns for the Fund. The Death Benefit,
Accumulated Value and Cash Surrender Value for a Contract would be different
from those shown above if the actual investment results applicable to the
Contract average 0% over a period of years, but also fluctuated above or below
the average for individual Contract Years. No representation can be made by
us or by the Fund that these hypothetical returns can be achieved for any one
year, or sustained over any one year, or sustained over any period of time.
<PAGE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male Issue Age: 35; Preferred, $1,000.00 Annual Premium, $100,000 Face Amount
Option A--Varying Death Benefit Option
Assumed Hypothetical Gross Annual Investment Rate of Return: 6%
[1] [2] [3] [4] [5] [6] [7] [8]
Premiums Assuming Guaranteed Costs (1)(2) Assuming Current Costs (1)(2)
Accumul. -------------------------------- ---------------------------------
End of at 5% Cash Cash
Cont. Interest Death Accumulated Surrender Death Accumulated Surrender
Year Per Year Benefit Value Value Benefit Value Value
------ -------- ------- ----------- --------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,050 100,651 651 0 * 100,676 676 0 *
2 2,152 101,322 1,322 372 101,385 1,385 434
3 3,310 102,014 2,014 1,124 102,117 2,117 1,226
4 4,525 102,728 2,728 1,898 102,885 2,885 2,054
5 5,801 103,465 3,465 2,694 103,678 3,678 2,907
6 7,142 104,225 4,225 3,532 104,511 4,511 3,817
7 8,549 104,999 4,999 4,383 105,384 5,384 4,768
8 10,026 105,798 5,798 5,259 106,288 6,288 5,749
9 11,577 106,612 6,612 6,150 107,237 7,237 6,774
10 13,206 107,442 7,442 7,057 108,220 8,220 7,835
11 14,917 108,276 8,276 7,968 109,239 9,239 8,931
12 16,712 109,114 9,114 8,883 110,284 10,284 10,053
13 18,598 109,969 9,969 9,815 111,356 11,356 11,201
14 20,578 110,829 10,829 10,752 112,455 12,455 12,378
15 22,657 111,694 11,694 11,694 113,585 13,585 13,585
16 24,840 112,627 12,627 12,627 114,807 14,807 14,807
17 27,132 113,557 13,557 13,557 116,040 16,040 16,040
18 29,539 114,471 14,471 14,471 117,285 17,285 17,285
19 32,065 115,369 15,369 15,369 118,542 18,542 18,542
20 34,719 116,238 16,238 16,238 119,825 19,825 19,825
Age
60 50,113 119,884 19,884 19,884 126,488 26,488 26,488
65 69,760 120,937 20,937 20,937 133,119 33,119 33,119
70 94,836 116,172 16,172 16,172 138,445 38,445 38,445
75 126,839 100,011 11 11 139,809 39,809 39,809
</TABLE>
(1) Assumes a $1,000.00 premium is paid at the beginning of each Contract
Year. Values will be different if premiums are paid with a different
frequency or in different amounts.
(2) Assumes that no Contract loans or partial surrenders have been made.
Excessive loans or withdrawals may cause the Contract to lapse because of
insufficient Cash Surrender Value.
* Based on (1) and (2) above, the Death Benefit Guarantee is in effect to
Attained Age 71. Therefore, the Contract remains in force even though the
Cash Surrender Value is zero. The $1,000.00 premium illustrated is greater
than the Death Benefit Guarantee Premium for this Contract.
The hypothetical investment results are illustrative only, and should not be
deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown, and will depend on a
number of factors, including the investment allocations by a Contract Owner,
and the different investment returns for the Fund. The Death Benefit,
Accumulated Value and Cash Surrender Value for a Contract would be different
from those shown above if the actual investment results applicable to the
Contract average 6% over a period of years, but also fluctuated above or below
the average for individual Contract Years. No representation can be made by
us or by the Fund that these hypothetical returns can be achieved for any one
year, or sustained over any one year, or sustained over any period of time.
<PAGE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male Issue Age: 35; Preferred, $1,000.00 Annual Premium, $100,000 Face Amount
Option B--Level Death Benefit Option
Assumed Hypothetical Gross Annual Investment Rate of Return: 6%
[1] [2] [3] [4] [5] [6] [7] [8]
Premiums Assuming Guaranteed Costs (1)(2) Assuming Current Costs (1)(2)
Accumul. -------------------------------- ---------------------------------
End of at 5% Cash Cash
Cont. Interest Death Accumulated Surrender Death Accumulated Surrender
Year Per Year Benefit Value Value Benefit Value Value
------ -------- ------- ----------- --------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,050 100,000 652 0 * 100,000 677 0 *
2 2,152 100,000 1,326 376 100,000 1,388 437
3 3,310 100,000 2,022 1,132 100,000 2,123 1,233
4 4,525 100,000 2,742 1,912 100,000 2,896 2,065
5 5,801 100,000 3,487 2,716 100,000 3,696 2,925
6 7,142 100,000 4,258 3,565 100,000 4,536 3,843
7 8,549 100,000 5,046 4,429 100,000 5,420 4,803
8 10,026 100,000 5,863 5,323 100,000 6,337 5,797
9 11,577 100,000 6,699 6,237 100,000 7,300 6,838
10 13,206 100,000 7,556 7,171 100,000 8,302 7,916
11 14,917 100,000 8,425 8,117 100,000 9,343 9,035
12 16,712 100,000 9,306 9,074 100,000 10,416 10,184
13 18,598 100,000 10,211 10,057 100,000 11,522 11,368
14 20,578 100,000 11,132 11,055 100,000 12,664 12,587
15 22,657 100,000 12,070 12,070 100,000 13,844 13,844
16 24,840 100,000 13,089 13,089 100,000 15,126 15,126
17 27,132 100,000 14,121 14,121 100,000 16,435 16,435
18 29,539 100,000 15,157 15,157 100,000 17,773 17,773
19 32,065 100,000 16,200 16,200 100,000 19,142 19,142
20 34,719 100,000 17,240 17,240 100,000 20,556 20,556
Age
60 50,113 100,000 22,295 22,295 100,000 28,296 28,296
65 69,760 100,000 26,295 26,295 100,000 37,207 37,207
70 94,836 100,000 27,210 27,210 100,000 47,273 47,273
75 126,839 100,000 20,464 20,464 100,000 58,465 58,465
</TABLE>
(1) Assumes a $1,000.00 premium is paid at the beginning of each Contract
Year. Values will be different if premiums are paid with a different
frequency or in different amounts.
(2) Assumes that no Contract loans or partial surrenders have been made.
Excessive loans or withdrawals may cause the Contract to lapse because of
insufficient Cash Surrender Value.
* Based on (1) and (2) above, the Death Benefit Guarantee is in effect to
Attained Age 71. Therefore, the Contract remains in force even though the Cash
Surrender Value is zero. The $1,000.00 premium illustrated is greater than the
Death Benefit Guarantee Premium for this Contract.
The hypothetical investment results are illustrative only, and should not be
deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown, and will depend on a
number of factors, including the investment allocations by a Contract Owner,
and the different investment returns for the Fund. The Death Benefit,
Accumulated Value and Cash Surrender Value for a Contract would be different
from those shown above if the actual investment results applicable to the
Contract average 6% over a period of years, but also fluctuated above or below
the average for individual Contract Years. No representation can be made by us
or by the Fund that these hypothetical returns can be achieved for any one
year, or sustained over any one year, or sustained over any period of time.
<PAGE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male Issue Age: 35; Preferred, $1,000.00 Annual Premium, $100,000 Face Amount
Option A--Varying Death Benefit Option
Assumed Hypothetical Gross Annual Investment Rate of Return: 12%
[1] [2] [3] [4] [5] [6] [7] [8]
Premiums Assuming Guaranteed Costs (1)(2) Assuming Current Costs (1)(2)
Accumul. -------------------------------- ---------------------------------
End of at 5% Cash Cash
Cont. Interest Death Accumulated Surrender Death Accumulated Surrender
Year Per Year Benefit Value Value Benefit Value Value
------ -------- ------- ----------- --------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,050 100,697 697 0 * 100,723 723 0 *
2 2,152 101,459 1,459 508 101,525 1,525 574
3 3,310 102,290 2,290 1,400 102,402 2,402 1,511
4 4,525 103,200 3,200 2,370 103,374 3,374 2,544
5 5,801 104,197 4,197 3,426 104,441 4,441 3,670
6 7,142 105,290 5,290 4,596 105,623 5,623 4,930
7 8,549 106,477 6,477 5,861 106,935 6,935 6,319
8 10,026 107,781 7,781 7,242 108,378 8,378 7,839
9 11,577 109,202 9,202 8,740 109,978 9,978 9,516
10 13,206 110,753 10,753 10,368 111,740 11,740 11,355
11 14,917 112,436 12,436 12,127 113,682 13,682 13,374
12 16,712 114,264 14,264 14,033 115,811 15,811 15,580
13 18,598 116,267 16,267 16,113 118,147 18,147 17,993
14 20,578 118,450 18,450 18,373 120,713 20,713 20,636
15 22,657 120,834 20,834 20,834 123,534 23,534 23,534
16 24,840 123,505 23,505 23,505 126,701 26,701 26,701
17 27,132 126,416 26,416 26,416 130,163 30,163 30,163
18 29,539 129,582 29,582 29,582 133,953 33,953 33,953
19 32,065 133,031 33,031 33,031 138,107 38,107 38,107
20 34,719 136,780 36,780 36,780 142,676 42,676 42,676
Age
60 50,113 161,109 61,109 61,109 173,345 73,345 73,345
65 69,760 197,863 97,863 97,863 222,740 122,740 122,740
70 94,836 252,601 152,601 152,601 302,138 202,138 202,138
75 126,839 333,061 233,061 233,061 429,327 329,327 329,327
</TABLE>
(1) Assumes a $1,000.00 premium is paid at the beginning of each Contract
Year. Values will be different if premiums are paid with a different
frequency or in different amounts.
(2) Assumes that no Contract loans or partial surrenders have been made.
Excessive loans or withdrawals may cause the Contract to lapse because of
insufficient Cash Surrender Value.
* Based on (1) and (2) above, the Death Benefit Guarantee is in effect to
Attained Age 71. Therefore, the Contract remains in force even though the Cash
Surrender Value is zero. The $1,000.00 premium illustrated is greater than the
Death Benefit Guarantee Premium for this Contract.
The hypothetical investment results are illustrative only, and should not be
deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown, and will depend on a
number of factors, including the investment allocations by a Contract Owner,
and the different investment returns for the Fund. The Death Benefit,
Accumulated Value and Cash Surrender Value for a Contract would be different
from those shown above if the actual investment results applicable to the
Contract average 12% over a period of years, but also fluctuated above or
below the average for individual Contract Years. No representation can be made
by us or by the Fund that these hypothetical returns can be achieved for any
one year, or sustained over any one year, or sustained over any period of
time.
<PAGE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Male Issue Age: 35; Preferred, $1,000.00 Annual Premium, $100,000 Face Amount
Option B--Level Death Benefit Option
Assumed Hypothetical Gross Annual Investment Rate of Return: 12%
[1] [2] [3] [4] [5] [6] [7] [8]
Premiums Assuming Guaranteed Costs (1)(2) Assuming Current Costs (1)(2)
Accumul. -------------------------------- ---------------------------------
End of at 5% Cash Cash
Cont. Interest Death Accumulated Surrender Death Accumulated Surrender
Year Per Year Benefit Value Value Benefit Value Value
------ -------- ------- ----------- --------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,050 100,000 699 0 * 100,000 724 0 *
2 2,152 100,000 1,463 512 100,000 1,528 577
3 3,310 100,000 2,299 1,409 100,000 2,409 1,518
4 4,525 100,000 3,217 2,386 100,000 3,388 2,557
5 5,801 100,000 4,224 3,454 100,000 4,463 3,692
6 7,142 100,000 5,332 4,639 100,000 5,657 4,963
7 8,549 100,000 6,540 5,924 100,000 6,983 6,367
8 10,026 100,000 7,871 7,332 100,000 8,446 7,906
9 11,577 100,000 9,328 8,866 100,000 10,070 9,608
10 13,206 100,000 10,927 10,541 100,000 11,864 11,479
11 14,917 100,000 12,671 12,363 100,000 13,846 13,538
12 16,712 100,000 14,580 14,349 100,000 16,028 15,797
13 18,598 100,000 16,684 16,530 100,000 18,432 18,278
14 20,578 100,000 18,997 18,920 100,000 21,085 21,008
15 22,657 100,000 21,542 21,542 100,000 24,016 24,016
16 24,840 100,000 24,413 24,413 100,000 27,321 27,321
17 27,132 100,000 27,577 27,577 100,000 30,963 30,963
18 29,539 100,000 31,061 31.061 100,000 34,984 34,984
19 32,065 100,000 34,907 34,907 100,000 39,430 39,430
20 34,719 100,000 39,154 39,154 100,000 44,362 44,362
Age
60 50,113 100,000 68,474 68,474 105,325 78,601 78,601
65 69,760 144,189 118,188 118,188 166,043 136,101 136,101
70 94,836 231,387 199,471 199,471 268,234 231,236 231,236
75 126,893 356,296 332,987 332,987 416,324 389,088 389,088
</TABLE>
(1) Assumes a $1,000.00 premium is paid at the beginning of each Contract
Year. Values will be different if premiums are paid with a different
frequency or in different amounts.
(2) Assumes that no Contract loans or partial surrenders have been made.
Excessive loans or withdrawals may cause the Contract to lapse because of
insufficient Cash Surrender Value.
* Based on (1) and (2) above, the Death Benefit Guarantee is in effect to
Attained Age 71. Therefore, the Contract remains in force even though the Cash
Surrender Value is zero. The $1,000.00 premium illustrated is greater than the
Death Benefit Guarantee Premium for this Contract.
The hypothetical investment results are illustrative only, and should not be
deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown, and will depend on a
number of factors, including the investment allocations by a Contract Owner,
and the different investment returns for the Fund. The Death Benefit,
Accumulated Value and Cash Surrender Value for a Contract would be different
from those shown above if the actual investment results applicable to the
Contract average 12% over a period of years, but also fluctuated above or
below the average for individual Contract Years. No representation can be made
by us or by the Fund that these hypothetical returns can be achieved for any
one year, or sustained over any one year, or sustained over any period of
time.
APPENDIX B
DEFERRED ADMINISTRATIVE CHARGES
PER $1,000 OF FACE AMOUNT
The following tables include the maximum Deferred Administrative Charge Per
$1,000 of Face Amount that will apply under a Contract. The specific maximum
charge applicable to a Contract at issuance can be determined from the
attached tables based upon the initial Face Amount, the Insured's Attained Age
at Contract issuance, and, except for Insured's with an Attained Age under 18,
the Insured's gender and whether the Insured is a tobacco user or not. For an
Insured with an Attained Age under 18, reference should be made to the column
entitled "Standard" in each table, rather than to the columns entitled
"Tobacco User" or "Non-Tobacco User".
In general, the maximum Deferred Administrative Charge applicable to a
Contract will be determined from Table 1. The lower maximum charges shown in
Table 2 apply to a Contract with a Face Amount of $500,000 or more, but less
than a 1,000,000. The lower maximum charges shown in Table 3 apply to a
Contract with a Face Amount of $1,000,000 ore more. Subsequent requested
increases in Face Amount result in a total Face Amount that equals or exceeds
the next range of Face Amount will qualify for the lower maximum charges shown
in Tables 2 or 3.
If the Face Amount is increased, an additional Deferred Administrative Charge
will be calculated for the increase in an amount determined in the same manner
as for the initial Face Amount, except that the Insured's Attained Age on the
effective date of the increase and the resulting total Face Amount will be
used.
The Deferred Administrative Charge does not apply to spouse riders.
As described in the Prospectus in the section entitled "CHARGES AND
DEDUCTIONS--Accumulated Value Charges--Decrease Charge", the sum of the
Deferred Administrative Charge and the Contingent Deferred Sales Charge will
equal the Decrease Charge.
<PAGE>
<TABLE>
TABLE 1
FACE AMOUNTS LESS THAN $500,000
Maximum Deferred
Administrative Charges Per $1,000 of Face Amount
<CAPTION>
Standard
(Attained Age
Attained Age under 18) Tobacco User Non Tobacco User
------------ ------------- ------------ ----------------
Male Female Male Female Male Female
---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C>
0-4 $7.20 $7.20
5-9 $7.20 $7.20
10-14 $7.20 $7.20
15-17 $7.20 $7.20
18-24 $ 9.00 $ 5.40 $ 9.00 $ 5.40
25-29 $ 9.00 $ 5.40 $ 9.00 $ 5.40
30-34 $10.80 $ 7.20 $10.80 $ 5.40
35-39 $12.60 $ 9.00 $10.80 $ 5.40
40-44 $14.40 $10.80 $12.60 $ 7.20
45-49 $16.20 $12.60 $12.60 $ 7.20
50-54 $18.00 $14.40 $14.40 $ 9.00
55-59 $18.00 $14.40 $14.40 $10.80
60-64 $18.00 $14.40 $14.40 $10.80
65-69 $18.00 $14.40 $14.40 $10.80
70-74 $18.00 $14.40 $14.40 $10.80
75-79 $18.00 $14.40 $14.40 $10.80
80-85 $18.00 $14.40 $14.40 $10.80
</TABLE>
<PAGE>
<TABLE>
TABLE 2
FACE AMOUNTS OF $500,000 OR MORE, BUT LESS THAN $1,000,000
Maximum Deferred
Administrative Charges Per $1,000 of Face Amount
<CAPTION>
Standard
(Attained Age
Attained Age under 18) Tobacco User Non Tobacco User
------------ ------------- ------------ ----------------
Male Female Male Female Male Female
---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C>
0-4 $1.80 $1.80
5-9 $1.80 $1.80
10-14 $1.80 $1.80
15-17 $1.80 $1.80
18-24 $ 3.60 $3.60 $ $1.80 $1.80
25-29 $ 3.60 $3.60 $ $1.80 $1.80
30-34 $ 5.40 $5.40 $ $3.60 $1.80
35-39 $ 7.20 $5.40 $ $3.60 $1.80
40-44 $ 9.00 $7.20 $ $5.40 $3.60
45-49 $10.80 $7.20 $ $7.20 $3.60
50-54 $12.60 $9.00 $10.80 $5.40
55-59 $14.40 $9.00 $12.60 $5.40
60-64 $16.20 $9.00 $14.40 $5.40
65-69 $16.20 $9.00 $14.40 $5.40
70-74 $16.20 $9.00 $14.40 $5.40
75-79 $16.20 $9.00 $14.40 $5.40
80-85 $16.20 $9.00 $14.40 $5.40
</TABLE>
<PAGE>
<TABLE>
TABLE 3
FACE AMOUNTS OF $1,000,000 OR MRE
Maximum Deferred
Administrative Charges Per $1,000 of Face Amount
<CAPTION>
Standard
(Attained Age
under 18) Tobacco User Non Tobacco User
Attained Age Male Female Male Female Male Female
----------- ---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C>
0-4 $1.80 $1.80
5-9 $1.80 $1.80
10-14 $1.80 $1.80
15-17 $1.80 $1.80
18-24 $1.80 $1.80 $1.80 $1.80
25-29 $1.80 $1.80 $1.80 $1.80
30-34 $3.60 $3.60 $1.80 $1.80
35-39 $3.60 $3.60 $1.80 $1.80
40-44 $5.40 $3.60 $3.60 $1.80
45-49 $7.20 $3.60 $3.60 $1.80
50-54 $9.00 $5.40 $5.40 $1.80
55-59 $9.00 $5.40 $5.40 $1.80
60-64 $9.00 $5.40 $5.40 $1.80
65-69 $9.00 $5.40 $5.40 $1.80
70-74 $9.00 $5.40 $5.40 $1.80
75-79 $9.00 $5.40 $5.40 $1.80
80-85 $9.00 $5.40 $5.40 $1.80
</TABLE>
APPENDIX C
Initial Monthly Administrative Charges
Per $1,000 of Face Amount
The following tables include the Initial Monthly Administrative Charge for
$1,000 of Face Amount that will apply under a Contract. The specific charge
applicable to a Contract at issuance can be determined from the attached
tables based upon the initial Face Amount, the Insured's Attained Age at
Contract issuance, and, except for Insureds with an Attained Age under 18,
reference should be made to the column entitled "Standard" in each table,
rather than to the columns entitled "Smoker" or "Nonsmoker".
In general, the Initial Monthly Administrative Charge applicable to a Contract
will be determined from Table 1. The lower maxmimum charges shown in Table 2
apply to a Contract with a Face Amount of $500,000 or more, but less than a
1,000,000. The lower maximum charges shown in Table 3 apply to a Contract
with a Face Amount of $1,000,000 ore more.
If the Face Amount is increased, an additional Initial Monthly Charge will be
calculated for the increase in an amount determined in the same manner as for
the initial Face Amount, except that the Insured's Attained Age on the
effective date of the increase and the resulting total Face Amount will be
used.
If a spouse rider providing life insurance benefits on the Insured's spouse is
included in the original Contract or added subsequently, an additional Initial
Monthly Charge will be calculated for the spouse rider in an amount determined
in the same manner as for the initial Face Amount, except that the spouse's
Attained Age and tobacco user or non-tobacco user status on the effective date
of the rider will be used.
<PAGE>
<TABLE>
TABLE 1
FACE AMOUNTS LESS THAN $500,000
Initial Monthly Administrative Charges
Per $1,000 of Face Amount
<CAPTION>
Standard
(Attained Age
Attained Age under 18) Tobacco User Non Tobacco User
------------ ------------- ------------ ----------------
Male Female Male Female Male Female
---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C>
0-4 $0.04 $0.04
5-9 $0.04 $0.04
10-14 $0.04 $0.04
15-17 $0.04 $0.04
18-24 $0.05 $0.05 $0.03 $0.03
25-29 $0.05 $0.05 $0.03 $0.03
30-34 $0.06 $0.06 $0.04 $0.03
35-39 $0.07 $0.06 $0.05 $0.03
40-44 $0.08 $0.07 $0.06 $0.04
45-49 $0.09 $0.07 $0.07 $0.04
50-54 $0.10 $0.08 $0.08 $0.05
55-59 $0.10 $0.08 $0.08 $0.06
60-64 $0.10 $0.08 $0.08 $0.06
65-69 $0.10 $0.08 $0.08 $0.06
70-74 $0.10 $0.08 $0.08 $0.06
75-79 $0.10 $0.08 $0.08 $0.06
80-86 $0.10 $0.08 $0.08 $0.06
</TABLE>
<PAGE>
<TABLE>
TABLE 2
FACE AMOUNTS $500,000 OR MORE, BUT LESS THAN $1,000,000
Initial Monthly Administrative Charges
Per $1,000 of Face Amount
<CAPTION>
Standard
(Attained Age
Attained Age under 18) Tobacco User Non Tobacco User
------------ ------------- ------------ ----------------
Male Female Male Female Male Female
---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C>
0-4 $0.01 $0.01
5-9 $0.01 $0.01
10-14 $0.01 $0.01
15-17 $0.01 $0.01
18-24 $0.02 $0.02 $0.01 $0.01
25-29 $0.02 $0.02 $0.01 $0.01
30-34 $0.03 $0.03 $0.02 $0.01
35-39 $0.04 $0.03 $0.02 $0.01
40-44 $0.05 $0.04 $0.03 $0.02
45-49 $0.06 $0.04 $0.04 $0.02
50-54 $0.07 $0.05 $0.06 $0.03
55-59 $0.08 $0.05 $0.07 $0.03
60-64 $0.09 $0.05 $0.08 $0.03
65-69 $0.09 $0.05 $0.08 $0.03
70-74 $0.09 $0.05 $0.08 $0.03
75-79 $0.09 $0.05 $0.08 $0.03
80-85 $0.09 $0.05 $0.08 $0.03
</TABLE>
<PAGE>
<TABLE>
TABLE 3
FACE AMOUNTS OF $1,000,000 OR MRE
Initial Monthly Charges
Per $1,000 of Face Amount
<CAPTION>
Standard
(Attained Age
under 18) Tobacco User Non Tobacco User
Attained Age Male Female Male Female Male Female
----------- ---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C>
0-4 $0.01 $0.01
5-9 $0.01 $0.01
10-14 $0.01 $0.01
15-17 $0.01 $0.01
18-24 $0.01 $0.01 $0.01 $0.01
25-29 $0.01 $0.01 $0.01 $0.01
30-34 $0.02 $0.02 $0.01 $0.01
35-39 $0.02 $0.02 $0.01 $0.01
40-44 $0.03 $0.02 $0.02 $0.01
45-49 $0.04 $0.02 $0.02 $0.01
50-54 $0.05 $0.03 $0.03 $0.01
55-59 $0.05 $0.03 $0.03 $0.01
60-64 $0.05 $0.03 $0.03 $0.01
65-69 $0.05 $0.03 $0.03 $0.01
70-74 $0.05 $0.03 $0.03 $0.01
75-79 $0.05 $0.03 $0.03 $0.01
80-85 $0.05 $0.03 $0.03 $0.01
</TABLE>
<PAGE>
APPENDIX D
PRIOR CONTRACTS
Prior to May 1, 1997, LB issued another class of flexible premium variable
life insurance contract ("prior contract" or "VUL 1" contracts), which will
no longer be issued as various states approve the Contract. However, premium
payments may still be made under the VUL 1 contracts.
The principal differences between the Contracts and the VUL 1 contracts
relate to the charges made by LB, issue ages and maturity date, different
ranges of Face Amounts, and the length of the Death Benefit Guarantee
period.
Charges and Deductions
Generally speaking, the Decrease Charge under VUL 1 contracts is assessed
for 10 years (120 months) as opposed to the Decrease Charge under the
Contract, which is generally assessed for 15 years (180 months). In
addition, the basic monthly administration charge for VUL 1 contracts is
$4.00, as opposed to $10.00 for the Contract. The VUL 1 contracts also use
different premium classes and may have different cost of insurance charges.
The prospectus descriptions of the Decrease Charge, Monthly Administration
Charges, Cost of Insurance Rate and Premium Class are modified by the
following discussion applicable to the VUL 1 contracts.
Decrease Charge
Decrease Charge. A deferred charge (the "Decrease Charge") will be deducted
upon VUL 1 contract lapse or surrender, or in part upon a requested decrease
in Face Amount, if these events occur before 120 Monthly Deductions have
been made (that is, approximately ten years) following Contract issuance or
a requested increase in Face Amount. The Decrease Charge consists of a
contingent deferred sales charge (the "Contingent Deferred Sales Charge")
and a deferred administrative charge (the "Deferred Administrative Charge").
The term "Decrease Charge" is used to describe this charge because, during
the applicable 10-year period, the charge is imposed in connection with a
decrease in the Face Amount, either as the result of a requested decrease in
Face Amount or as the result of lapse or full surrender of the Contract
(which can be viewed as a decrease in the Face Amount to zero).
For information concerning the Contingent Deferred Sales Charge, except for
the figures based on a 15, as opposed to 10, year assessment period, see the
discussion under the caption "Decrease Charge", commencing on page ___ of
the Prospectus.
Deferred Administrative Charge. At the time of contract issuance for a VUL 1
contract, LB will compute a Deferred Administrative Charge. In general, this
charge will equal an amount per $1,000 of Face Amount based upon the initial
Face Amount, the Insured's Attained Age at Contract issuance, and whether
the Insured is a smoker or nonsmoker. For Insureds with an Attained Age
under 20, the Deferred Administrative Charge will equal an amount per $1,000
of Face Amount based upon the initial Face Amount and the Insured's Age at
the time of VUL 1 contract issuance. The maximum Deferred Administrative
Charge per $1,000 of Face Amount will be determined from Appendix D-2. As
shown in Appendix D-2, the Deferred Administrative Charge per $1,000 of Face
Amount will be less for VUL 1 contracts having a Face Amount at issuance
that equals or exceeds $250,000.
The maximum Deferred Administrative Charge, as determined at the time of the
VUL 1 contract issuance, will be reduced as Monthly Deductions are made.
Beginning on the Date of Issue, and continuing on each Monthly Anniversary
until 120 Monthly Deductions have been made, this Deferred Administrative
Charge will be reduced in level amounts equal to approximately .83% of the
maximum Deferred Administrative Charge (or a 10% reduction of the maximum
Deferred Administrative Charge on an annual basis). In this way, the
Deferred Administrative Charge will be reduced to zero as of the Monthly
Anniversary when the 120th Monthly Deduction is made.
If the Face Amount is increased, a separate Deferred Administrative Charge
will be calculated for the increase in an amount determined in the same
manner as for the initial Face Amount, (except that the Insured's Attained
Age on the effective date of the increase will be used and the charge per
$1,000 of Face Amount to be applied to the increase will be based on the
amount of the entire new Face Amount after giving effect to the increase).
The part of the Deferred Administrative Charge attributable to the increase
will be charged and reduced in accordance with the same principles as
applicable to the basic Deferred Administrative Charge. The maximum Deferred
Administrative Charge for an increase will be determined on the effective
date of the increase and will then be reduced in level amounts equal to .83%
of the maximum Deferred Administrative Charge (or a 10% reduction of the
maximum Deferred Administrative Charge on an annual basis) as Monthly
Deductions are taken on the effective date of the increase and as of each
succeeding Monthly Anniversary until 120 Monthly Deductions have been made
after the effective date of the increase, when the Deferred Administrative
Charge on the increase will be reduced to zero.
For information concerning the method of deducting the Decrease Charge, see
the discussion under the caption "Method of Deduction and Effect of Decrease
Charge", commencing on page of the Prospectus.
Monthly Deduction
Basic Monthly Administrative Charge. A basic monthly administrative charge
of $4.00 will be deducted from Accumulated Value on the Contract Date and
each Monthly Anniversary as part of the Monthly Deduction.
Initial Monthly Administrative Charge. The Initial Monthly Administrative
Charge will be deducted from Accumulated Value as part of the first 120
Monthly Deductions following Contract issuance, commencing with the Monthly
Deduction(s) collected on the Contract Date. This monthly charge will equal
an amount per $1,000 of Face Amount based upon the Insured's Attained Age at
Contract issuance and, except for Insureds with an Attained Age at Contract
issuance under 20, upon whether the Insured is a smoker or a nonsmoker. The
Initial Monthly Administrative Charge per $1,000 of Face Amount will be
determined from Appendix D-3. As shown in Appendix D-3, the Initial Monthly
Administrative Charge will be less for Contracts having a Face Amount at
issuance that equals or exceeds $250,000.
If the Face Amount is increased, a separate Initial Monthly Administrative
Charge will be deducted from Accumulated Value as part of the first 120
Monthly Deductions after the increase beginning with the Monthly Anniversary
on which the increase becomes effective. This separate Initial Monthly
Administrative Charge will be determined in the same manner as for the
initial Face Amount, except that the Insured's Attained Age on the effective
date of the increase will be used and the charge per $1,000 of Face Amount
to be applied to the increase will be based on the amount of the entire new
Face Amount after giving effect to the increase.
See the discussion under "Accumulated Value Charges -- Decrease Charge --
Amount of Deferred Administrative Charge" in the Prospectus for application
of the Deferred Administrative Charge to spouse riders.
The issuance expenses covered by the Initial Monthly Administrative Charge
are the same expenses covered by the Deferred Administrative Charge included
in the Decrease Charge. LB will not, however, be reimbursed twice for these
expenses. If a Contract lapses or is totally surrendered during the 10-year
period when the Initial Monthly Administrative Charge applies, or if a
requested decrease in Face Amount occurs during the 10-year period when the
Initial Monthly Administrative Charge generally applies, the Initial Monthly
Administrative Charge will, in effect, generally be "accelerated" and
collected in the form of the Deferred Administrative Charge included in the
Decrease Charge.
Because the Deferred Administrative Charge included in the Decrease Charge
is in effect an "acceleration" of the Initial Monthly Administrative Charge,
the imposition of the Deferred Administrative Charge will generally
eliminate or reduce the Initial Monthly Administrative Charge. If the
Contract lapses or is totally surrendered during the 10-year period when the
Initial Monthly Administrative Charge applies so that the Decrease Charge is
imposed, the Initial Monthly Administrative Charge will not be collected. If
the Face Amount is decreased at the Contract Owner's request during this 10-
year period so that the Decrease Charge (including the Deferred
Administrative Charge) is imposed in part, the Initial Monthly
Administrative Charge will be reduced because of the Deferred Administrative
Charge imposed (being applied to reduce proportionately or eliminate the
Initial Monthly Administrative Charge attributable to that portion of the
Face Amount covered by the Decrease Charge).
If a Contract lapses and is then reinstated, the Initial Monthly
Administrative Charge will be reinstated until a total of 120 Monthly
Deductions have been taken. See "PAYMENT AND ALLOCATION OF PREMIUMS--
Contract Lapse and Reinstatement".
Cost of Insurance Rate
Under VUL 1 contracts, cost of insurance rates are be based on the initial
Face Amount and the gender, Attained Age and premium class of the Insured.
The actual monthly cost of insurance rates will be based on LB's
expectations as to future mortality experience. They will not, however, be
greater than the guaranteed cost of insurance rates set forth in the VUL 1
contract. These guaranteed rates are based on the Insured's Attained Age and
the 1980 Commissioners Standard Ordinary Mortality Table. Any change in the
cost of insurance rates will generally apply to all persons of the same
Attained Age, gender and premium class. In general, the actual cost of
insurance rate will be lower for VUL 1 contracts having a Face Amount at
issuance or after a requested increase that equals or exceeds $250,000.
Premium Class
Under VUL 1 contracts, LB places Insureds into standard premium classes and
into substandard premium classes, which involve a higher mortality risk. In
an otherwise identical VUL 1 contract, an Insured in the standard premium
class will have a lower cost of insurance than an Insured in a premium class
with higher mortality risks. The premium classes are also divided into two
categories: smokers and nonsmokers. Nonsmoking Insureds will generally incur
lower cost of insurance rates than Insureds who are classified as smokers.
Any Insured with an Attained Age at issuance under 20 will not be classified
initially as a smoker or nonsmoker and then will be classified as a smoker
at Attained Age 20 unless the Insured provides satisfactory evidence that
the Insured is a nonsmoker. (LB will provide notice to the Contract Owner of
the opportunity for the Insured to be classified as a nonsmoker when the
Insured reaches Attained Age 20.)
Maturity Date
As long as VUL 1 contracts remain in force, VUL 1 contracts provide life
insurance coverage on the named Insured up to the Insured's Attained Age 96.
The Maturity Date under VUL 1 contracts is the Contract Anniversary on or
next following the Insured's 96th birthday. If the Insured is living on the
Maturity Date of the VUL 1 contract, LB will pay the Accumulated Value for
the VUL 1 contract on the Maturity Date, reduced by any Contract Debt and
any unpaid Monthly Deductions and the VUL 1 contract will be terminated.
The Maturity Date is shown in the VUL 1 contract.
Issue Age and Minimum Face Amounts
VUL 1 contracts will be issued only on Insureds who have an Attained Age of
80 or less and who provide satisfactory evidence of insurability. The
Minimum Face Amount of a VUL 1 contract is $50,000 for Insureds with an
Attained Age of 20 through 50, and $25,000 for all other Insureds. The
Minimum Face Amount for a requested increase is $10,000 and a VUL 1 contract
owner may not increase the Face Amount after the Insured's Attained Age 80.
Ranges of Face Amounts
VUL 1 contracts have two ranges of Face Amounts: Face Amounts of less that
$250,000; and Face Amounts of $250,000 or more.
Death Benefit Guarantee Duration
For VUL 1 contracts, if sufficient premium payments have been made, the
Death Benefit Guarantee will apply until the latter of the Insured's
Attained Age 71 and the Attained Age of the Insured at the end of a period
ranging from 6 to 31 years after the Date of Issue.
Other Provisions
Under VUL 1 contracts, a loan request must be made in a minimum amount of
$100.
Sales and Other Agreements
For VUL 1 contracts with an initial Face Amount greater than or equal to
$1,000,000, during the first Contract Year after issue or following an
increase in Face Amount, the commissions will be not more than 40% of the
applicable Death Benefit Guarantee Premium.
APPENDIX D-1
Illustration of Death Benefits,
Accumulated Values and Cash Surrender Values
For VUL 1 Contracts
The following tables illustrate how the Death Benefits, Accumulated Values and
Cash Surrender Values of a VUL 1 contract may change with the investment
experience of the Variable Account. The tables show how the Death Benefits,
Accumulated Values and Cash Surrender Values of a VUL 1 contract issued to an
Insured of a given age (who pays a Scheduled Premium of $1,000 ) would vary
over time if the investment return on the assets held in each Portfolio of the
Fund were a uniform, gross, after-tax annual rate of 0 percent, 6 percent and
12 percent. The tables on pages D-1(a) through D-1(?) illustrate a VUL 1
contract issued to a male age 35 in the nonsmoker premium class. The Death
Benefits, Accumulated Values and Cash Surrender Values would be lower if the
Insured were in a special premium class or if the Insured were a smoker
because the cost of insurance would be increased. Also, the Death Benefits,
Accumulated Values and Cash Surrender Values would be different from those
shown if the gross annual investment returns averaged 0 percent, 6 percent and
12 percent over a period of years, but fluctuated above and below those
averages for individual Contract Years.
The second column of the tables shows the Accumulated Value of the premiums
paid at a 5% interest rate. The third and sixth columns illustrate the Death
Benefit of a VUL 1 contract over the designated period. The fourth and seventh
columns illustrate the Accumulated Value of the VUL 1 contract over the
designated period. (The Accumulated Value is the total amount held under a VUL
1 contract at any time.) The fifth and eighth columns illustrate the Cash
Surrender Value of a VUL 1 contract over the designated period. (The Cash
Surrender Value is equal to the Accumulated Value less any Decrease Charge,
Contract Debt (assumed to be 0 in these illustrations) and unpaid Monthly
Deductions (also assumed to be 0 in these illustrations).) The sixth through
the eighth columns assume that throughout the life of the VUL 1 contract, the
monthly charge for the cost of insurance is based on the current cost of
insurance rates and the current Mortality and Expense Risk Charge. The third
through the fifth columns assume that the Mortality and Expense Risk Charge
and also that the monthly charge for the cost of insurance are based on the
maximum level permitted under the VUL 1 contract. These maximum allowable cost
of insurance rates are based on the 1980 Commissioners Standard Ordinary
Mortality Table.
Because the Death Benefit values vary depending on the Death Benefit Option in
effect, Option A and Option B are illustrated separately. (Option A provides
for a Death Benefit equal to the greater of (a) the Face Amount plus the
Accumulated Value and (b) the applicable percentage of Accumulated Value and
Option B provides for a Death Benefit equal to the greater of (a) the Face
Amount and (b) the applicable percentage of Accumulated Value.)
Any amounts held in the Loan Account would not participate in the investment
experience illustrated in these tables. Instead, such amounts will be credited
with interest as described in the Prospectus in the section entitled,
"CONTRACT RIGHTS--Loan Privileges".
The amounts shown for Death Benefits, Accumulated Values and Cash Surrender
Values for the VUL 1 contract reflect the fact that the net investment return
of the Subaccounts of the Variable Account is lower than the gross, after-tax
return on the assets held in the Fund as a result of the advisory fee paid by
the Fund and charges made against the Subaccounts. The values shown take into
account the following fees and charges: the daily investment advisory fee paid
by the Fund, which is assumed to be equivalent to an annual rate of .48% of
the aggregate average daily net assets of the Fund, based on the following
fees: Growth (0.40%); High Yield (0.40%); Income (0.40%); Money Market
(0.40%); Opportunity Growth (0.40%); and World Growth (0.85%); and the daily
charge to each Subaccount for assuming mortality and expense risks, which is
equivalent to a charge at an annual current rate of .60% of the average assets
of the Subaccounts and which is guaranteed never to exceed an annual rate of
.75%. After deduction of these amounts, the illustrated gross annual
investment rates of return 0%, 6% and 12% correspond to (a) net annual rates
of -1.23%, 4.77% and 10.77%, respectively, assuming an advisory fee of .48%
and a Mortality and Expense Risk Charge of .75% and (b) net annual rates of -
1.08%, 4.92% and 10.92%, respectively, assuming an advisory fee of .48% and a
Mortality and Expense Risk Charge of .60%.
The amounts shown for Death Benefits, Accumulated Values and Cash Surrender
Values do not reflect a deduction for operating expenses of the Fund, other
than the investment advisory fee, because LB and LBVIP have agreed to
reimburse the Fund for these operating expenses pursuant to a separate written
agreement (the "Expense Reimbursement Agreement"). For the fiscal year of the
Fund ended December 31, 1996, the Fund was reimbursed approximately
$__________ for such operating expenses. The Expense Reimbursement Agreement
could be terminated at any time by the mutual agreement of the Fund, LB and
LBVIP, but the Fund, LB and LBVIP currently contemplate that the Expense
Reimbursement Agreement will continue so long as the Fund remains in
existence. If the Expense Reimbursement Agreement were terminated, the Fund
would be required to pay these operating expenses, which would reduce the net
investment return on the shares of the Fund held by the Subaccounts of the
Variable Account.
The hypothetical values shown in the tables do not reflect any charges for
Federal income taxes attributable to the Variable Account because LB does not
currently make any such charges. However, such charges may be made in the
future and, in that event, the gross annual investment return would have to
exceed 0%, 6% or 12% by an amount sufficient to cover the tax charges in order
to produce the Death Benefits and values illustrated. (See section entitled
"FEDERAL TAX MATTERS" in the Prospectus.)
The tables illustrate the VUL 1 contract values 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 Variable Account and if no Contract
loans have been made. The tables are also based on the assumptions that the
Contract Owner has not requested an increase or decrease in the Face Amount,
that no partial surrenders have been made and that no transfers above two have
been made in any Contract Year.
Upon request, LB will provide a comparable illustration based upon the
proposed Insured's age, gender (except for Contracts issued in the state of
Montana) and premium class, the Death Benefit Option, Face Amount, Scheduled
Premium and any available riders requested. Montana has enacted legislation
that requires that cost of insurance rates applicable to Contracts purchased
in Montana cannot vary on the basis of the insured's gender.
<PAGE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE TO AGE 96
Male Issue Age: 35; Nonsmoker, $1,000.00 Annual Premium, $100,000 Face Amount
Option A--Varying Death Benefit Option
Assumed Hypothetical Gross Annual Investment Rate of Return: 0%
[1] [2] [3] [4] [5] [6] [7] [8]
Premiums Assuming Guaranteed Costs (1)(2) Assuming Current Costs (1)(2)
Accumul. -------------------------------- --------------------------------
End of at 5% Cash Cash
Cont. Interest Death Accumulated Surrender Death Accumulated Surrender
Year Per Year Benefit Value Value Benefit Value Value
------ -------- ------- ----------- --------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,050 100,675 675 63 100,712 712 100
2 2,152 101,331 1,331 767 101,405 1,405 841
3 3.310 101,967 1,967 1,451 102,079 2,079 1,563
4 4,525 102,583 2,583 2,115 102,733 2,733 2,265
5 5,801 103,179 3,179 2,759 103,369 3,660 2,949
6 7,142 103,756 3,756 3,420 103,986 3,986 3,650
7 8,549 104,303 4,303 4,051 104,584 4,584 4,332
8 10,026 104,831 4,831 4,663 105,164 5,164 4,996
9 11,577 105,329 5,329 5,245 105,726 5,726 5,642
10 13,206 105,796 5,796 5,796 106,270 6,270 6,270
11 14,917 106,282 6,282 6,282 106,832 6,832 6,832
12 16,712 106,727 6,727 6,727 107,364 7,364 7,364
13 18,598 107,142 7,142 6,727 107,867 7,867 7,867
14 20,578 107,517 7,517 7,517 108,340 8,340 8,340
15 22,657 107,851 7,851 7,851 108,773 8,773 8,773
16 24,840 108,146 8,146 8,146 109,165 9,165 9,165
17 27,132 108,389 8,389 8,389 109,518 9,518 9,518
18 29,539 108,570 8,570 8,570 109,831 9,831 9,831
19 32,065 108,690 8,690 8,690 110,082 10,082 10,082
20 34,719 108,737 8,737 8,737 110,270 10,270 10,270
Age
60 50,113 107,725 7,725 7,725 110,093 10,093 10,093
65 69,760 103,660 3,660 3,660 107,724 7,724 7,724
70 94,836 100,000 0 0 * 102,102 2,102 2,102
75 126,839 100,000 0 0 * 100,000 0 0
</TABLE>
(1) Assumes a $1,000.00 premium is paid at the beginning of each Contract
Year. Values will be different if premiums are paid with a different
frequency or in different amounts.
(2) Assumes that no Contract loans or partial surrenders have been made.
Excessive loans or withdrawals may cause the VUL 1 contract to lapse because
of insufficient Cash Surrender Value.
* Based on (1) and (2) above, the Death Benefit Guarantee is in effect to
Attained Age 71. Therefore, the VUL 1 contract remains in force even though
the Cash Surrender Value is zero. The $1,000.00 premium illustrated is
greater than the Death Benefit Guarantee Premium for this VUL 1 contract.
The hypothetical investment results are illustrative only, and should
not be deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown, and will depend on
a number of factors, including the investment allocations by a Contract
Owner, and the different investment returns for the Fund. The Death Benefit
Accumulated Value and Cash Surrender Value for a VUL 1 contract would be
different from those shown above if the actual investment results applicable
to the VUL 1 contract average 0% over a period of years, but also fluctuated
above or below the average for individual Contract Years. No representation
can be made by us or by the Fund that these hypothetical returns can be
achieved for any one year, or sustained over any one year, or sustained over
any period of time.
<PAGE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE TO AGE 96
Male Issue Age: 35; Nonsmoker, $1,000.00 Annual Premium, $100,000 Face Amount
Option B--Level Death Benefit Option
Assumed Hypothetical Gross Annual Investment Rate of Return: 0%
[1] [2] [3] [4] [5] [6] [7] [8]
Premiums Assuming Guaranteed Costs (1)(2) Assuming Current Costs (1)(2)
Accumul. -------------------------------- ---------------------------------
End of at 5% Cash Cash
Cont. Interest Death Accumulated Surrender Death Accumulated Surrender
Year Per Year Benefit Value Value Benefit Value Value
------ -------- ------- ----------- --------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,050 100,000 677 65 100,000 713 101
2 2,152 100,000 1,335 771 100,000 1,405 844
3 3,310 100,000 1,975 1,459 100,000 2,086 1,570
4 4,525 100,000 2,596 2,128 100,000 2,745 2,277
5 5,801 100,000 3,200 2,780 100,000 3,387 2,967
6 7,142 100,000 3,786 3,340 100,000 4,011 3,675
7 8,549 100,000 4,343 4,091 100,000 4,619 4,367
8 10,026 100,000 4,884 4,716 100,000 5,210 5,042
9 11,577 100,000 5,397 5,313 100,000 5,785 5,701
10 13,206 100,000 5,883 5,883 100,000 6,344 6,344
11 14,917 100,000 6,390 6,390 100,000 6,924 6,924
12 16,712 100,000 6,859 6,859 100,000 7,477 7,477
13 18,598 100,000 7,302 7,302 100,000 8,004 8,004
14 20,578 100,000 7,709 7,709 100,000 8,505 8,505
15 22,657 100,000 8,080 8,080 100,000 8,970 8,970
16 24,840 100,000 8,415 8,415 100,000 9,399 9,399
17 27,132 100,000 8,705 8,705 100,000 9,794 9,794
18 29,539 100,000 8,939 8,939 100,000 10,154 10,154
19 32,065 100,000 9,118 9,118 100,000 10,458 10,458
20 34,719 100,000 9,231 9,231 100,000 10,708 10,708
Age
60 50,113 100,000 8,653 8,653 100,000 10,967 10,967
65 69,760 100,000 5,136 5,136 100,000 9,219 9,219
70 94,836 100,000 0 0 * 100,000 4,229 4,229
75 126,839 100,000 0 0 * 100,000 0 0 *
</TABLE>
(1) Assumes a $1,000.00 premium is paid at the beginning of each Contract
Year. Values will be different if premiums are paid with a different
frequency or in different amounts.
(2) Assumes that no Contract loans or partial surrenders have been made.
Excessive loans or withdrawals may cause the VUL 1 contract to lapse because
of insufficient Cash Surrender Value.
* Based on (1) and (2) above, the Death Benefit Guarantee is in effect to
Attained Age 71. Therefore, the VUL 1 contract remains in force even though
the Cash Surrender Value is zero. The $1,000.00 premium illustrated is
greater than the Death Benefit Guarantee Premium for this VUL 1 contract.
The hypothetical investment results are illustrative only, and should
not be deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown, and will depend on
a number of factors, including the investment allocations by a Contract
Owner, and the different investment returns for the Fund. The Death Benefit,
Accumulated Value and Cash Surrender Value for a VUL 1 contract would be
different from those shown above if the actual investment results applicable
to the VUL 1 contract average 0% over a period of years, but also fluctuated
above or below the average for individual Contract Years. No representation
can be made by us or by the Fund that these hypothetical returns can be
achieved for any one year, or sustained over any one year, or sustained over
any period of time.
<PAGE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE TO AGE 96
Male Issue Age: 35; Nonsmoker, $1,000.00 Annual Premium, $100,000 Face Amount
Option A--Varying Death Benefit Option
Assumed Hypothetical Gross Annual Investment Rate of Return: 6%
[1] [2] [3] [4] [5] [6] [7] [8]
Premiums Assuming Guaranteed Costs (1)(2) Assuming Current Costs (1)(2)
Accumul. -------------------------------- ---------------------------------
End of at 5% Cash Cash
Cont. Interest Death Accumulated Surrender Death Accumulated Surrender
Year Per Year Benefit Value Value Benefit Value Value
------ -------- ------- ----------- --------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,050 100,724 724 112 100,762 762 150
2 2,152 101,470 1,470 906 101,549 1,549 985
3 3,310 102,240 2,240 1,724 102,363 2,363 1,847
4 4,525 103,034 3,034 2,566 103,205 3,205 2,737
5 5,801 103,854 3,854 3,434 104,076 4,076 3,656
6 7,142 104,701 4,701 4,365 104,977 4,977 4,641
7 8,549 105,564 5,564 5,312 105,911 5,911 5,659
8 10,026 106,456 6,456 6,288 106,878 6,878 6,710
9 11,577 107,365 7,365 7,281 107,881 7,881 7,797
10 13,206 108,294 8,294 8,294 108,920 8,920 8,920
11 14,917 109,291 9,291 9,291 110,036 10,036 10,026
12 16,712 110,300 10,300 10,300 111,182 11,182 11,182
13 18,598 111,332 11,332 11,332 112,359 12,359 12,359
14 20,578 112,376 12,376 12,376 113,571 13,571 13,571
15 22,657 113,434 13,434 13,343 114,805 14,805 14,805
16 22,840 114,505 14,505 14,505 116,063 16,063 16,063
17 24,840 115,579 15,579 15,579 117,346 17,346 17,346
18 29,529 116,642 16,642 16,642 118,656 18,656 18,656
19 32,065 117,695 17,695 17,695 119,968 19,968 19,968
20 34,719 118,725 18,725 18,725 121,284 21,284 21,284
Age
60 50,113 123,281 23,281 23,281 127,687 27,687 27,687
65 59,760 125,463 25,463 25,463 133,290 33,290 33,290
70 94,836 122,137 22,137 22,137 136,533 36,533 36,533
75 126,839 107,873 7,873 7,873 134,219 34,219 34,219
</TABLE>
(1) Assumes a $1,000.00 premium is paid at the beginning of each Contract
Year. Values will be different if premiums are paid with a different
frequency or in different amounts.
(2) Assumes that no Contract loans or partial surrenders have been made.
Excessive loans or withdrawals may cause the VUL 1 contract to lapse because
of insufficient Cash Surrender Value.
* Based on (1) and (2) above, the Death Benefit Guarantee is in effect to
Attained Age 71. Therefore, the VUL 1 contract remains in force even though
the Cash Surrender Value is zero. The $1,000.00 premium illustrated is
greater than the Death Benefit Guarantee Premium for this VUL 1 contract.
The hypothetical investment results are illustrative only, and should
not be deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown, and will depend on
a number of factors, including the investment allocations by a Contract
Owner, and the different investment returns for the Fund. The Death Benefit,
Accumulated Value and Cash Surrender Value for a VUL 1 contract would be
different from those shown above if the actual investment results applicable
to the VUL 1 contract average 0% over a period of years, but also fluctuated
above or below the average for individual Contract Years. No representation
can be made by us or by the Fund that these hypothetical returns can be
achieved for any one year, or sustained over any one year, or sustained over
any period of time.
<PAGE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE TO AGE 96
Male Issue Age: 35; Nonsmoker, $1,000.00 Annual Premium, $100,000 Face Amount
Option B--Level Death Benefit Option
Assumed Hypothetical Gross Annual Investment Rate of Return: 6%
[1] [2] [3] [4] [5] [6] [7] [8]
Premiums Assuming Guaranteed Costs (1)(2) Assuming Current Costs (1)(2)
Accumul. -------------------------------- ---------------------------------
End of at 5% Cash Cash
Cont. Interest Death Accumulated Surrender Death Accumulated Surrender
Year Per Year Benefit Value Value Benefit Value Value
------ -------- ------- ----------- --------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,050 100,000 725 113 100,000 763 151
2 2,152 100,000 1,475 911 100,000 1,533 989
3 3,310 100,000 2,249 1,733 100,000 2,371 1,855
4 4,525 100,000 3,051 2,583 100,000 3,218 2,750
5 5,801 100,000 3,880 3,460 100,000 4,098 3,678
6 7,142 100,000 4,739 4,403 100,000 5,010 4,674
7 8,549 100,000 5,618 5,366 100,000 5,958 5,706
8 10,026 100,000 6,530 6,362 100,000 6,942 6,774
9 11,577 100,000 7,465 7,381 100,000 7,967 7,883
10 13,206 100,000 8,425 8,425 100,000 9,032 9,032
11 14,917 100,000 9,462 9,462 100,000 10,181 10,181
12 16,712 100,000 10,518 10,518 100,000 11,367 11,367
13 18,598 100,000 11,607 11,607 100,000 12,593 12,593
14 20,578 100,000 12,720 12,720 100,000 13,863 13,863
15 22,657 100,000 13,860 13,860 100,000 15,168 15,168
16 24,840 100,000 15,028 15,028 100,000 16,512 16,512
17 27,132 100,000 16,218 16,218 100,000 17,898 17,898
18 29,539 100,000 17,420 17,420 100,000 19,328 19,328
19 32,065 100,000 18,636 18,636 100,000 20,787 20,787
20 34,719 100,000 19,861 19,861 100,000 22,278 22,278
Age
60 50,113 100,000 26,024 26,024 100,000 30,181 30,181
65 69,760 100,000 31,622 31,622 100,000 38,967 38,967
70 94,836 100,000 35,118 35,118 100,000 48,643 48,643
75 126,839 100,000 33,220 33,220 100,000 59,142 59,142
</TABLE>
(1) Assumes a $1,000.00 premium is paid at the beginning of each Contract
Year. Values will be different if premiums are paid with a different
frequency or in different amounts.
(2) Assumes that no Contract loans or partial surrenders have been made.
Excessive loans or withdrawals may cause the VUL 1 contract to lapse because
of insufficient Cash Surrender Value.
* Based on (1) and (2) above, the Death Benefit Guarantee is in effect to
Attained Age 71. Therefore, the VUL 1 contract remains in force even though
the Cash Surrender Value is zero. The $1,000.00 premium illustrated is
greater than the Death Benefit Guarantee Premium for this VUL 1 contract.
The hypothetical investment results are illustrative only, and should
not be deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown, and will depend on
a number of factors, including the investment allocations by a Contract
Owner, and the different investment returns for the Fund. The Death Benefit,
Accumulated Value and Cash Surrender Value for a VUL 1 contract would be
different from those shown above if the actual investment results applicable
to the VUL 1 contract average 0% over a period of years, but also fluctuated
above or below the average for individual Contract Years. No representation
can be made by us or by the Fund that these hypothetical returns can be
achieved for any one year, or sustained over any one year, or sustained over
any period of time.
<PAGE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE TO AGE 96
Male Issue Age: 35; Nonsmoker, $1,000.00 Annual Premium, $100,000 Face Amount
Option A--Varying Death Benefit Option
Assumed Hypothetical Gross Annual Investment Rate of Return: 12%
[1] [2] [3] [4] [5] [6] [7] [8]
Premiums Assuming Guaranteed Costs (1)(2) Assuming Current Costs (1)(2)
Accumul. -------------------------------- ---------------------------------
End of at 5% Cash Cash
Cont. Interest Death Accumulated Surrender Death Accumulated Surrender
Year Per Year Benefit Value Value Benefit Value Value
------ -------- ------- ----------- --------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,050 100,772 772 160 100,811 811 199
2 2,152 101,616 1,616 1,052 101,699 1,699 1,135
3 3,310 102,537 2,537 2,021 102,672 2,672 2,156
4 4,525 103,545 3,545 3,077 103,737 3,737 3,269
5 5,801 104,650 4,650 4,230 104,907 4,907 4,487
6 7,142 105,860 5,860 5,524 106,192 6,192 5,856
7 8,549 107,176 7,176 6,924 107,604 7,604 7,352
8 10,026 108,620 8,620 8,452 109,158 9,158 8,990
9 11,577 110,195 10,195 10,111 110,869 10,869 10,785
10 13,206 111,195 11,195 11,915 112,754 12,754 12,754
11 14,917 113,845 13,845 13,845 112,870 12,870 12,870
12 16,712 115,945 15,945 15,945 114,870 14,870 14,870
13 18,598 118,246 18,246 18,246 117,193 17,193 17,193
14 20,578 120,757 20,757 20,757 119,743 19,743 19,743
15 22,657 123,500 23,500 23,500 122,548 22,548 22,548
16 22,840 126,502 26,502 26,502 125,620 25,620 25,620
17 24,840 129,776 29,776 29,776 128,990 28,990 28,990
18 29,529 133,339 33,339 33,339 132,690 32,690 32,690
19 32,065 137,224 37,224 37,224 141,205 41,205 41,205
20 34,719 141,451 41,451 41,451 146,075 46,075 46,075
Age
60 50,113 168,952 68,952 68,952 178,313 78,312 78,312
65 59,760 210,737 110,737 110,737 229,529 129,529 129,529
70 94,836 273,482 173,482 173,482 311,106 211,106 211,106
75 126,839 366,732 266,732 266,732 440,799 340,799 340,799
</TABLE>
(1) Assumes a $1,000.00 premium is paid at the beginning of each Contract
Year. Values will be different if premiums are paid with a different
frequency or in different amounts.
(2) Assumes that no Contract loans or partial surrenders have been made.
Excessive loans or withdrawals may cause the VUL 1 contract to lapse because
of insufficient Cash Surrender Value.
* Based on (1) and (2) above, the Death Benefit Guarantee is in effect to
Attained Age 71. Therefore, the VUL 1 contract remains in force even though
the Cash Surrender Value is zero. The $1,000.00 premium illustrated is
greater than the Death Benefit Guarantee Premium for this VUL 1 contract.
The hypothetical investment results are illustrative only, and should
not be deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown, and will depend on
a number of factors, including the investment allocations by a Contract
Owner, and the different investment returns for the Fund. The Death Benefit,
Accumulated Value and Cash Surrender Value for a VUL 1 contract would be
different from those shown above if the actual investment results applicable
to the VUL 1 contract average 0% over a period of years, but also fluctuated
above or below the average for individual Contract Years. No representation
can be made by us or by the Fund that these hypothetical returns can be
achieved for any one year, or sustained over any one year, or sustained over
any period of time.
<PAGE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE TO AGE 96
Male Issue Age: 35; Nonsmoker, $1,000.00 Annual Premium, $100,000 Face Amount
Option B--Level Death Benefit Option
Assumed Hypothetical Gross Annual Investment Rate of Return: 12%
[1] [2] [3] [4] [5] [6] [7] [8]
Premiums Assuming Guaranteed Costs (1)(2) Assuming Current Costs (1)(2)
Accumul. -------------------------------- ---------------------------------
End of at 5% Cash Cash
Cont. Interest Death Accumulated Surrender Death Accumulated Surrender
Year Per Year Benefit Value Value Benefit Value Value
------ -------- ------- ----------- --------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,050 100,000 774 162 100,000 813 201
2 2,152 100,000 1,621 1,057 100,000 1,703 1,139
3 3,310 100,000 2,548 2,032 100,000 2,680 2,164
4 4,525 100,000 3,565 3,097 100,000 3,754 3,286
5 5,801 100,000 4,681 4,261 100,000 4,934 4,514
6 7,142 100,000 5,909 5,573 100,000 6,234 5,898
7 8,549 100,000 7,248 6,996 100,000 7,667 7,415
8 10,026 100,000 8,724 8,556 100,000 9,248 9,080
9 11,577 100,000 10,341 10,257 100,000 10,994 10,910
10 13,206 100,000 12,114 12,114 100,000 12,924 12,924
11 14,917 100,000 14,113 14,113 100,000 15,099 15,099
12 16,712 100,000 16,303 16,303 100,000 17,497 17,497
13 18,598 100,000 18,718 18,718 100,000 20,144 20,144
14 20,578 100,000 21,372 21,372 100,000 23,070 23,070
15 22,657 100,000 24,297 24,297 100,000 26,297 26,297
16 24,840 100,000 27,523 27,523 100,000 29,863 29,863
17 27,132 100,000 31,079 31,079 100,000 33,809 33,809
18 29,539 100,000 34,998 34,998 100,000 38,182 38,182
19 32,065 100,000 39,326 39,326 100,000 43,017 43,017
20 34,719 100,000 44,108 44,108 100,000 48,376 48,376
Age
60 50,113 103,407 77,169 77,169 114,614 85,533 85,533
65 69,760 161,284 132,200 132,200 179,944 147,495 147,495
70 94,836 256,855 221,426 221,416 289,551 249,613 249,613
75 126,839 392,693 367,002 367,002 447,977 418,670 418,670
</TABLE>
(1) Assumes a $1,000.00 premium is paid at the beginning of each Contract
Year. Values will be different if premiums are paid with a different
frequency or in different amounts.
(2) Assumes that no Contract loans or partial surrenders have been made.
Excessive loans or withdrawals may cause the VUL 1 contract to lapse because
of insufficient Cash Surrender Value.
* Based on (1) and (2) above, the Death Benefit Guarantee is in effect to
Attained Age 71. Therefore, the VUL 1 contract remains in force even though
the Cash Surrender Value is zero. The $1,000.00 premium illustrated is
greater than the Death Benefit Guarantee Premium for this VUL 1 contract.
The hypothetical investment results are illustrative only, and should
not be deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown, and will depend on
a number of factors, including the investment allocations by a Contract
Owner, and the different investment returns for the Fund. The Death Benefit,
Accumulated Value and Cash Surrender Value for a VUL 1 contract would be
different from those shown above if the actual investment results applicable
to the VUL 1 contract average 0% over a period of years, but also fluctuated
above or below the average for individual Contract Years. No representation
can be made by us or by the Fund that these hypothetical returns can be
achieved for any one year, or sustained over any one year, or sustained over
any period of time.
APPENDIX D-2
DEFERRED ADMINISTRATIVE CHARGES
PER $1,000 OF FACE AMOUNT
VUL 1 CONTRACTS
The following tables include the maximum Deferred Administrative Charge Per
$1,000 of Face Amount that will apply under a VUL 1 contract. The specific
maximum charge applicable to a VUL 1 contract at issuance can be determined
from the attached tables based upon the initial Face Amount, the Insured's
Attained Age at VUL 1 contract issuance, and, except for Insured's with an
Attained Age under 20, whether the Insured is a smoker or nonsmoker. For an
Insured with an Attained Age under 20, reference should be made to the column
entitled "Standard" in each table, rather than to the columns entitled
"Smoker" or "Nonsmoker".
In general, the maximum Deferred Administrative Charge applicable to a VUL 1
contract will be determined from Table 1. The lower maximum charges shown in
Table 2 apply to VUL 1 contracts with a Face Amount that equals or exceeds
$250,000 at issuance. Subsequent requested increases in Face Amount result in
a total Face Amount that equals or exceeds $250,000 will qualify for the lower
maximum charges shown in Table 2.
If the Face Amount is increased, an additional Deferred Administrative Charge
will be calculated for the increase in an amount determined in the same manner
as for the initial Face Amount, except that the Insured's Attained Age on the
effective date of the increase and the resulting total Face Amount will be
used.
The Deferred Administrative Charge does not apply to spouse riders.
As described in the Prospectus in the section entitled "CHARGES AND
DEDUCTIONS--Accumulated Value Charges--Decrease Charge", the sum of the
Deferred Administrative Charge and the Contingent Deferred Sales Charge will
equal the Decrease Charge.
TABLE 1
FACE AMOUNTS OF LESS THAN $250,000
Maximum Deferred
Administrative Charges Per $1,000 of Face Amount
Attained Age at Date of Issuance Standard
or Effective Date of Requested (Attained Age
Increase, As Appropriate under 20) Smoker Nonsmoker
-------------------------------- ------------ ------ ---------
0-4 $3.60
5-9 $3.60
10-14 $4.80
15-19 $4.80
20-24 $6.00 $4.80
25-29 $6.00 $4.80
30-34 $7.20 $4.80
35-39 $7.20 $4.80
40-44 $7.20 $6.00
45-49 $8.40 $6.00
50-54 $8.40 $7.20
55-59 $8.40 $7.20
60-64 $8.40 $8.40
65-69 $8.40 $8.40
70-74 $8.40 $8.40
75-80 $8.40 $8.40
TABLE 2
FACE AMOUNTS OF $250,000 OR MORE
Maximum Deferred
Administrative Charges Per $1,000 of Face Amount
Attained Age at Date of Issuance Standard
or Effective Date of Requested (Attained Age
Increase, As Appropriate under 20) Smoker Nonsmoker
-------------------------------- ------------ ------ ---------
0-4 $2.40
5-9 $2.40
10-14 $3.60
15-19 $3.60
20-24 $4.80 $3.60
25-29 $4.80 $3.60
30-34 $6.00 $3.60
35-39 $6.00 $3.60
40-44 $6.00 $4.80
45-49 $6.00 $4.80
50-54 $6.00 $6.00
55-59 $6.00 $6.00
60-64 $6.00 $6.00
65-69 $6.00 $6.00
70-74 $6.00 $6.00
75-80 $6.00 $6.00
APPENDIX D-3
Initial Monthly Administrative Charges
Per $1,000 of Face Amount
VUL 1 Contracts
The following tables include the Initial Monthly Administrative Charge
for $1,000 of Face Amount that will apply under a VUL 1 contract. The
specific charge applicable to a VUL 1 contract at issuance can be
determined from the attached tables based upon the initial Face Amount,
the Insured's Attained Age at contract issuance, and, except for
Insureds with an Attained Age under 20, reference should be made to the
column entitled "Standard" in each table, rather than to the columns
entitled "Smoker" or "Nonsmoker".
In general, the Initial Monthly Administrative Charge applicable to a
VUL 1 contract will be determined from Table 1. The lower charges shown
in Table 2 apply to contracts with a Face Amount that equals or exceeds
$250,000 at issuance. Subsequent increases in Face Amount that result in
a total Free Amount that equals or exceeds $250,000, will qualify for
the lower charges shown in Table 2.
If the Face Amount is increased, an additional Initial Monthly
Administrative Charge will be calculated for the increase in an amount
determined in the same manner as for the initial Face Amount, except
that the Insured's Attained Age on the effective date of the increase
and the resulting total Face Amount will be used.
If a spouse rider providing life insurance benefits on the Insured's
spouse is included in the original contract or added subsequently, an
additional Initial Monthly Administrative Charge will be calculated for
the spouse rider in an amount determined in the same manner as for the
initial Face Amount, except that the spouse's Attained Age and smoker or
nonsmoker status on the effective date of the rider will be used. For a
spouse with an Attained Age under 20, reference should be made to the
column entitled "Standard", rather than to the columns entitled "Smoker"
or "Nonsmoker". Spouse riders do not qualify for the lower rates in
Table 2.
<PAGE>
TABLE 1
FACE AMOUNTS OF LESS THAN $250,000
Initial Monthly Administrative Charges
Per $1,000 of Face Amount
Attained Age at Date of Issuance Standard
or Effective Date of Requested (Attained Age
Increase, As Appropriate under 20) Smoker Nonsmoker
-------------------------------- ------------ ------ ---------
0-4 $0.03
5-9 $0.03
10-14 $0.04
15-19 $0.04
20-24 $0.05 $0.04
25-29 $0.05 $0.04
30-34 $0.06 $0.05
35-39 $0.06 $0.04
40-44 $0.06 $0.05
45-49 $0.07 $0.05
50-54 $0.07 $0.06
55-59 $0.07 $0.06
60-64 $0.07 $0.07
65-69 $0.07 $0.07
70-74 $0.07 $0.07
75-80 $0.07 $0.07
TABLE 2
FACE AMOUNTS OF $250,000 OR MORE
Initial Monthly Administrative Charges
Per $1,000 of Face Amount
Attained Age at Date of Issuance Standard
or Effective Date of Requested (Attained Age
Increase, As Appropriate under 20) Smoker Nonsmoker
-------------------------------- ------------ ------ ---------
0-4 $0.02
5-9 $0.02
10-14 $0.03
15-19 $0.03
20-24 $0.04 $0.03
25-29 $0.04 $0.03
30-34 $0.05 $0.03
35-39 $0.05 $0.03
40-44 $0.05 $0.04
45-49 $0.05 $0.04
50-54 $0.05 $0.05
55-59 $0.05 $0.05
60-64 $0.05 $0.05
65-69 $0.05 $0.05
70-74 $0.05 $0.05
75-80 $0.05 $0.05
<PAGE>
Part II
UNDERTAKINGS
Undertaking required by Section 26(e)(1) of the Investment Company Act of
1940.
Lutheran Brotherhood hereby represents that, as to the flexible premium
variable life contracts that are the subject of this registration statement,
File Number 33-72386, that the fees and charges deducted under the contracts,
in the aggregate, are reasonable in relation to the services rendered, the
expenses expected to be incurred and the risks assumed by Lutheran
Brotherhood.
CONTENTS OF REGISTRATION STATEMENT
This Post-Effective Amendment No. 5 Registration Statement comprises the
following papers and documents:
The facing sheet.
The general form of Prospectus, consisting of __ pages.
The undertaking pursuant to Rule 484 under the Securities Act of 1933. (1)
Representations, descriptions, and undertakings pursuant to Rule 6e-3(T) under
the Investment Company Act of 1940 (the "1940 Act). (1)
The signatures (including Powers of Attorney).
Written consents of the following persons:
Actuary - filed as Exhibit 6. (3)
Accountant - filed as Exhibit 10. (4)
Counsel - filed as Exhibit 11. (4)
The following exhibits:
1. The following exhibits correspond to those required by paragraph A of the
instructions as to exhibits in Form N-8B-2:
A. (1) Resolutions of Board of Directors of Lutheran Brotherhood ("LB")
establishing the LB Variable Insurance Account I ("the Account").
(1)
(2) Not Applicable.
(3) (a) Distribution Agreement between Lutheran Brotherhood
Securities Corp. ("LBSC") and LB. (1)
(b) Form of Agreement between LBSC and General Agent with respect
to the sale of the Contracts. (1)
(c) Form of Agreement between LBSC and Registered Representative
with respect to the sale of the Contracts. (1)
(d) Schedules of sales commissions. (1)
(4) Not Applicable.
(5) (a) Form of Contract.
(i) Flexible Premium Variable Life Insurance Contract -
Form # W3-VC-VUL-1 (97). (3)
(ii) Flexible Premium Variable Life Insurance Contract -
Form # W2-BL-VUL-1 (1)
(b) Available Contract Riders.
(i) Accidental Death Benefit Rider -
Form # WR3-VA-ADB-1 (97) (3)
Child Term Life Insurance Benefit Rider -
Form # WR3-VC-CIB-1 (97) (3)
Guaranteed Increase Option Benefit Rider -
Form # WR3-VG-GIO-1 (97) (3)
Cost of Living Benefit Rider -
Form # WR3-VL-COL-1 (97) (3)
Spouse Adjustable Term Life Insurance Benefit Rider -
Form # WR3-VS-SIB-1 (97) (3)
Waiver of Selected Amount Benefit Rider -
Form # WR3-VW-WSA-1 (97) (3)
Accelerated Benefits Rider
Form # WR3-VX-ACCB-1 (97) (3)
Aviation Exclusion Amendatory Agreement -
Form # U-UA-Amend.AVEX (97) (3)
Armed Forces Aviation Exclusion Amendatory Agreement -
Form # U-UF-Amend.AFAE (97) (3)
Lutheran Charity Benefit Rider -
Form # LR3-KY-LCB-1 (97) (3)
Survival Provision - Form L-KS-Amend.Surv.Pro (97) (3)
Primary Beneficiary Survival Provision -
Form # L-KP-Amend.PBSP (97) (3)
(ii) Accidental Death Benefit Rider -
Form # WR2-BA-ADB-1 (1)
Child Term Life Insurance Benefit Rider -
Form # WR2-BC-CIB-1 (1)
Cost of Living Benefit Rider -
Form # WR2-BL-COL-1 (1)
Guaranteed Increase Option Benefit Rider -
Form # WR2-BG-GIO-1 (1)
Spouse Adjustable Term Life Insurance Benefit Rider -
Form # WR2-BS-SIB-1 (1)
Waiver of Selected Amount Benefit Rider -
Form # WR2-BZ-WSA-1 (1)
Accelerated Benefits Rider - Form WR2-BX-ACCB-1 (1)
Amendatory Agreement - Form # W-BX-Amend.AVEX (1)
Amendatory Agreement - Form # W-BR-Amend.AFAE (1)
Amendatory Agreement - Form # W-BS-Amend.Surv Prov
(1)
Amendatory Agreement - Form # W-BP-Amend.PBSP (1)
(6) Articles of Incorporation and Bylaws of LB. (1)
(7) Not Applicable.
(8) See Exhibit 1.A.(3)(a). (1)
(9) Not Applicable.
(10) Contract Application Form. (1)
2. Opinion of Counsel as to the legality of the securities being registered.
(2)
3. None.
4. Not Applicable.
5. Not Applicable.
6. Actuarial Opinion and Consent. (3)
7. Actuarial basis of cash value adjustment pursuant to Rule
6e-3(T)(b)(13)(v)(B) under the 1940 Act. (1)
8. Procedures Memorandum pursuant to Rule 6e-3(T)(b)(12)(ii) under the 1940
Act. (1)
9. Pursuant to Rule 6e-3(T)(b)(13)(iii)(F)(3) under the 1940 Act, brief
description of methodology used to support the representation made
regarding the level of the Mortality Risk Charge and the Expense Risk
Charge pursuant to Rule 6e-3(T)(b)(13)(iii)(F)(2) under the 1940 Act. (1)
10. Accountant's Consent. (4)
11. Counsel Consent. (4)
12. Powers of Attorney. (1)
________________________________
(1) Included in the initial registration statement on Form S-6, Registration
No. 33-72386, filed by the Registrant on December 2, 1993.
(2) Included in pre-effective amendment No. 1 to the registration statement
on Form S-6, Registration No. 33-72386, filed by the Registrant on January 20,
1994.
(3) Filed herewith.
(4) To be filed by subsequent amendment.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it meets all of the requirements for effectiveness of this
amendment to the Registration Statement pursuant to Rule 485(a) under the
Securities Act of 1933 and has duly caused this amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Minneapolis and State of Minnesota on the 28th day
of February, 1997.
LB VARIABLE INSURANCE ACCOUNT I
(Registrant)
By LUTHERAN BROTHERHOOD
(Depositor)
By /s/ Robert P. Gandrud
----------------------------
Robert P. Gandrud, President
Pursuant to the requirements of the Securities Act of 1933, the Depositor has
duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Minneapolis and State of Minnesota on the 28th day of February, 1997.
LUTHERAN BROTHERHOOD
(Depositor)
By /s/ Robert P. Gandrud
----------------------------
Robert P. Gandrud, President
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed on the 28th day of February, 1997
by the following directors and officers of Depositor in the capacities
indicated:
/s/ Robert P. Gandrud President and Chief Executive Officer
----------------------- (Chief Executive Officer)
Robert P. Gandrud
/s/ Bruce J. Nicholson Chief Financial Officer (Principal
----------------------- Financial Officer)
Bruce J. Nicholson
/s/ Anita J.T. Young Treasurer (Principal Accounting Officer)
-----------------------
Anita J.T. Young
A Majority of the Board of Directors:
Robert O. Blomquist Richard Kessler
Richard W. Duesenberg Judith K. Larsen
Robert P. Gandrud Luther S. Luedtke
Bobby I. Griffin John P. McDaniel
William R. Halling Mary Ellen H. Schmider
James M. Hushagen Russel M. Smith
Herbert D. Ihle
Otis F. Hilbert, by signing his name hereto, does hereby sign this document on
behalf of each of the above-named directors of Lutheran Brotherhood pursuant
to powers of attorney duly executed by such persons.
/s/ Otis F. Hilbert
-------------------------------
Otis F. Hilbert, Attorney-in-Fact
<PAGE>
LB VARIABLE INSURANCE ACCOUNT I
INDEX TO EXHIBITS
Exhibit Sequential Page
Number Exhibit Number
--------- ------- ---------------
5(a)(i) Form of Contract
Flexible Premium Variable Life Insurance Contract -
Form # W3-VC-VUL-1 (97).
5(b)(i) Form of Contract Riders
Accidental Death Benefit Rider -
Form # WR3-VA-ADB-1 (97)
Child Term Life Insurance Benefit Rider -
Form # WR3-VC-CIB-1 (97)
Guaranteed Increase Option Benefit Rider -
Form # WR3-VG-GIO-1 (97)
Cost of Living Benefit Rider -
Form # WR3-VL-COL-1 (97)
Spouse Adjustable Term Life Insurance Benefit Rider -
Form # WR3-VS-SIB-1 (97)
Waiver of Selected Amount Benefit Rider -
Form # WR3-VW-WSA-1 (97)
Accelerated Benefits Rider
Form # WR3-VX-ACCB-1 (97)
Aviation Exclusion Amendatory Agreement -
Form # U-UA-Amend.AVEX (97)
Armed Forces Aviation Exclusion Amendatory Agreement -
Form # U-UF-Amend.AFAE (97)
Lutheran Charity Benefit Rider -
Form # LR3-KY-LCB-1 (97)
Survival Provision - Form L-KS-Amend.Surv.Pro (97)
Primary Beneficiary Survival Provision -
Form # L-KP-Amend.PBSP (97)
6 Actuarial Opinion and Consent
625 Fourth Avenue South
Minneapolis, Minnesota 55415
[logo] LUTHERAN
BROTHERHOOD EXHIBIT 6
February 28, 1997
To Whom It May Concern:
This opinion is furnished in connection with the registration by Lutheran
Brotherhood of a flexible premium variable life insurance contract
("Contract") under the Securities Act of 1933. The prospectus included in
Post-Effective Amendment No. 5 to Registration Statement No. 33-72386 filed
on Form S-6 for the Contract describes the Contract. The form of the
Contract was designed under my supervision, and I am familiar with the
Registration Statement and Exhibits attached thereto.
In my opinion:
The illustration of Death Benefits, Accumulated Values and Cash Surrender
Values included in the section entitled, "Illustration of Death Benefits,
Accumulated Values and Cash Surrender Values" in Appendix A of the
prospectus, based on the assumptions stated on the illustrations, are
consistent with the provisions of the Contract. The pricing of the Contract
was not completed so as to make the relationship between premiums and
benefits, as shown in the illustrations, appear more favorable to a
prospective purchaser of the Contract for a male in the preferred class aged
35, than to prospective purchasers of the Contract for other premium
classes, for other ages, or for females.
The illustration of Death Benefits, Accumulated Values and Cash Surrender
Values included in the section entitled, "Illustration of Death Benefits,
Accumulated Values and Cash Surrender Values" in Appendix D of the
prospectus, based on the assumptions stated on the illustrations, are
consistent with the provisions of the Contract. The pricing of the Contract
was not completed so as to make the relationship between premiums and
benefits, as shown in the illustrations, appear more favorable to a
prospective purchaser of the Contract for a nonsmoker male aged 35, than to
prospective purchasers of the Contract for other premium classes, for other
ages, or for females.
I hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference to my name under the heading
"EXPERTS" in the Prospectus.
Sincerely,
/s/ Kenneth A. Dahlberg
Kenneth A. Dahlberg, FSA, MAAA
Managing Actuary
KAB:JMO\Exh-6
[logo]
LUTHERAN BROTHERHOOD
A Fraternal Benefit Society FLEXIBLE PREMIUM
Minneapolis, Minnesota 55415 VARIABLE LIFE INSURANCE
- ----------------------------------------------------------------------------
This is a legal contract between you and Lutheran Brotherhood. We accept
the Insured as a member. We issue this contract based on the Application
signed by the applicant and the payment of the initial premium. Upon
receiving proof of the Insured's death, we will pay the Death Proceeds (see
Section 2.3) to the beneficiary according to the provisions of this
contract.
The amount or duration of the Death Benefit may vary with the Accumulated
Value. As long as this contract remains in force and there is no Debt or
unpaid Monthly Deductions, the Death Proceeds will always be at least equal
to the Face Amount. If you meet the Death Benefit Guarantee Requirement
(see Section 4.6), this contract will remain in force at least until the
Death Benefit Guarantee Termination Date shown on page 3.
The Accumulated Value may increase or decrease daily based on the investment
experience of the Variable Account.
Right to Cancel. Please read this contract carefully. You may cancel the
contract before midnight of the latest of: (1) The 10th day after you first
receive it; (2) The 45th day after you complete Part I of the Application;
and (3) The 10th day after a notice of withdrawal right is mailed or
delivered to you. Do this by (1) sending or delivering written notice to
Lutheran Brotherhood, 625 Fourth Avenue South, Minneapolis, MN 55415 or to
the representative through whom you bought it, and (2) returning the
contract. Notice given by mail and return of the contract by mail are
effective on being postmarked, properly addressed and postage prepaid. If
you cancel the contract, it will be deemed void from the beginning. Within
7 days after we receive notice of cancellation and the returned contract, we
will refund all premiums you have paid.
Life insurance payable at death.
Adjustable death benefit.
Flexible premiums.
Return on investments reflected in contract benefits.
Annual dividends payable if earned.
Settlement options to provide retirement income.
Signed for the Society at Minneapolis, Minnesota
- ----------------------------------------------------------------------------
President SAMPLE /s/ Robert P. Gandrud
- ----------------------------------------------------------------------------
Secretary SAMPLE /s/ David J. Larson
- ----------------------------------------------------------------------------
INSURED: JOHN DOE AGE: 35 SEX: MALE
CONTRACT NUMBER: LV1234567 DATE OF ISSUE: MAY 1, 1997
INITIAL FACE AMOUNT: $ 50,000
W3-VC-VUL-1 (97)
<PAGE>
Contract Number: LV1234567
- ---------------------------------------------------------------------------
Table of Contents
- ---------------------------------------------------------------------------
Cover Page
Index
Contract Schedule, Contract Data
Section 1 Definitions
Section 2 General Provisions
Section 3 Membership and Ownership
Section 4 Premiums and Reinstatement
Section 5 Insurance Coverage
Section 6 Accumulated Value and Surrender Provisions
Section 7 Monthly Deduction
Section 8 Loans
Section 9 Variable Account and Unit Value
Section 10 Exchange of Contract
Section 11 Beneficiary
Section 12 Dividends
Additional Benefits, Amendments, Application
Section 13 Dividends
- -----------------------------------------------------------------
Index
- -----------------------------------------------------------------
Section
Accumulated Value.............................................. 6
Allocation of Net Premiums..................................... 9
Annual Report.................................................. 2
Assignment..................................................... 3
Beneficiary.................................................... 3
Cash Surrender Value........................................... 6
Change of Death Benefit Option................................. 5
Change of Investment Policy.................................... 9
Continuation of Insurance...................................... 4
Cost of Insurance.............................................. 7
Death Benefit.................................................. 5
Death Benefit Guarantee........................................ 4
Death Benefit Guarantee Premium................................ 4
Death Benefit Guarantee Requirement............................ 4
Death Proceeds................................................. 2
Decrease Charge................................................ 7
Decrease in Face Amount........................................ 5
Deferment...................................................... 2
Dividends......................................................13
Entire Contract................................................ 2
Exchange Privilege.............................................10
General Account................................................ 9
Grace Period................................................... 4
Incontestability............................................... 2
Increase in Face Amount........................................ 5
Loan Account................................................... 8
Loans.......................................................... 8
Maintenance of Solvency........................................ 2
Membership..................................................... 3
Misstatement of Age or Sex..................................... 2
Monthly Deduction.............................................. 7
Net Premium.................................................... 4
Ownership...................................................... 3
Premium in Default and Grace Period............................ 4
Premiums....................................................... 4
Reinstatement.................................................. 4
Settlement Options.............................................11
Suicide........................................................ 2
Surrender...................................................... 6
Cash Surrender Value........................................ 6
Partial Surrender........................................... 6
Full Surrender.............................................. 6
Transfers Among Subaccounts.................................... 9
Unit Value..................................................... 9
Variable Account............................................... 9
W3-VC-VUL-2 page 2
<PAGE>
[logo]
LUTHERAN BROTHERHOOD
625 Fourth Avenue South
Minneapolis, Minnesota 55415
For information about this contract,
consult your Lutheran Brotherhood
Representative or write to
us at our home office.
- ---------------------------------------------------------------------------
Contract Schedule PLANNED
ANNUAL
PREMIUM
BASIC BENEFIT
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE $1,000.00
PREMIUMS PAYABLE TO THE CONTRACT ANNIVERSARY AFTER AGE 100
PREMIUM CLASS: NON-TOBACCO
ACCUMULATED VALUES DEPEND ON INVESTMENT PERFORMANCE OF THE VARIABLE ACCOUNT
AND, EXCEPT AS PROVIDED BY PAYMENT OF THE DEATH BENEFIT GUARANTEE PREMIUM
(SEE SECTION 4.6), COVERAGE WILL TERMINATE IF THE CASH SURRENDER VALUE IS
NOT SUFFICIENT TO COVER THE MONTHLY DEDUCTION. INVESTMENT PERFORMANCE OR
PAYMENT OF PLANNED ANNUAL PREMIUMS MAY NOT BE SUFFICIENT TO CONTINUE THIS
CONTRACT IN FORCE.
- ----------------------------------------------------------------------------
DEATH BENEFIT OPTION B (SEE SECTION 5.1)
LOAN INTEREST RATE 7.40% PER YEAR PAYABLE IN ADVANCE
DEATH BENEFIT GUARANTEE SEE SECTION 4.6
PREMIUM $35.03 PER MONTH
TERMINATION DATE CONTRACT ANNIVERSARY AFTER AGE 71
- ----------------------------------------------------------------------------
INSURED: JOHN DOE AGE: 35 SEX: MALE
CONTRACT NUMBER: LV1234567 DATE OF ISSUE: MAY 1, 1997
INITIAL FACE AMOUNT: $ 50,000
W3-VC-VUL-3 page 3
<PAGE>
Date of Issue: May 1, 1997 Contract Number: LV1234567
INSURED: JOHN DOE
AGE: 35 SEX: MALE FLEXIBLE PREMIUM
INITIAL FACE AMOUNT: $50,000 VARIABLE LIFE INSURANCE
- ----------------------------------------------------------------------------
CONTRACT CHARGES
ADMINISTRATIVE CHARGES
BASIC MONTHLY CHARGE $10.OO PER MONTH
INITIAL MONTHLY CHARGE $0.04 PER $1,000 OF FACE AMOUNT, CHARGED
ONLY IN FIRST 180 MONTHLY DEDUCTIONS
PARTIAL SURRENDER CHARGE $25.00 PER PARTIAL SURRENDER OR 2% OF
SURRENDER AMOUNT REQUESTED, IF LESS
PERCENT OF PREMIUM CHARGE 5.0% OF EACH PREMIUM
CURRENT CHARGE MAXIMUM CHARGE
PREMIUM PROCESSING CHARGE $ 0.50 PER PAYMENT 1.00 PER PAYMENT
AUTOMATIC PAYMENT PLANS $ 1.00 PER PAYMENT $ 2.00 PER PAYMENT
ALL OTHER PAYMENTS
CURRENT PREMIUM PROCESSING CHARGES ARE SUBJECT TO CHANGE. HOWEVER, THESE
CHARGES WILL NEVER EXCEED THE MAXIMUM CHARGES SHOWN ABOVE. YOU WILL BE
NOTIFIED OF ANY CHANGE IN CURRENT CHARGES.
DECREASE CHARGE #
MAXIMUM
BEGINNING OF DEFERRED CONTINGENT
CONTRACT ADMINISTRATIVE DEFERRED
YEAR CHARGE SALES CHARGE
1 $ 238.00 $ 90.00
2 214.00 90.00
3 190.00 90.00
4 166.00 90.00
5 142.00 90.00
6 118.00 88.50
7 94.00 70.50
8 70.00 52.50
9 46.00 34.50
10 22.00 16.50
11 X.XX X.XX
12 X.XX X.XX
13 X.XX X.XX
14 X.XX X.XX
15 X.XX X.XX
THEREAFTER X.XX X.XX
# DECREASE CHARGE IF THE INITIAL FACE AMOUNT IS DECREASED.
DEFERRED ADMINISTRATIVE CHARGE REDUCES BY $2.00 ON EACH MONTHLY ANNIVERSARY
THAT THE CONTRACT IS IN FORCE. BEGINNING IN CONTRACT YEAR 6, THE MAXIMUM
CONTINGENT DEFERRED SALES CHARGE REDUCES ON EACH MONTHLY ANNIVERSARY THAT
THE CONTRACT IS IN FORCE. ADDITIONAL DECREASE CHARGES WILL APPLY TO
INCREASES IN FACE AMOUNT.
W3-VC-VUL-4 page 4
<PAGE>
Date of issue: MAY 1, 1997 Contract Number: LV1234567
INSURED: JOHN DOE
AGE: 35 SEX: MALE FLEXIBLE PREMIUM
INITIAL FACE AMOUNT: $ 50,000 VARIABLE LIFE INSURANCE
- ----------------------------------------------------------------------------
BEGINNING COST OF INITIAL MONTHLY
ON CONTRACT ATTAINED INSURANCE CHARGE FOR
ANNIVERSARY AGE RATE * INCREASES #
MAY 1,
1997 35 $ 0.14 $ 0.04
1998 36 0.15 0.04
1999 37 0.16 0.04
2000 38 0.17 0.04
2001 39 0.18 0.04
2002 40 0.19 0.05
2003 41 0.21 0.05
2004 42 0.22 0.05
2005 43 0.24 0.05
2006 44 0.26 0.05
2007 45 0.28 0.05
2008 46 0.31 0.05
2009 47 0.33 0.05
2010 48 0.36 0.05
2011 49 0.39 0.05
2012 50 0.42 0.06
2013 51 0.46 0.06
2014 52 0.51 0.06
2015 53 0.56 0.06
2016 54 0.62 0.06
2017 55 0.68 0.06
2018 56 0.75 0.06
2019 57 0.82 0.06
2020 58 0.91 0.06
2021 59 1.00 0.06
2022 60 1.10 0.07
2023 61 1.22 0.07
2024 62 1.35 0.07
2025 63 1.50 0.07
2026 64 1.67 0.07
* MAXIMUM MONTHLY COST PER $1,000 INSURANCE FOR NON-TOBACCO PREMIUM CLASS,
BASED ON COMMISSIONERS 1980 STANDARD ORDINARY MORTALITY TABLE. AGE AT ISSUE
IS AGE LAST BIRTHDAY.
# MONTHLY CHARGE PER $1,000 OF INCREASE IN FACE AMOUNT UNDER SECTION 5.3 OR
UNDER ANY GUARANTEED INCREASE OPTION BENEFIT RIDER, CHARGED ONLY IN THE
FIRST 180 MONTHLY DEDUCTIONS ON OR AFTER THE EFFECTIVE DATE OF THE INCREASE.
W3-VC-VUL-5 page 5
<PAGE>
Date of issue: MAY 1, 1997 Contract Number: LV1234567
INSURED: JOHN DOE
AGE: 35 SEX: MALE FLEXIBLE PREMIUM
INITIAL FACE AMOUNT: $ 50,000 VARIABLE LIFE INSURANCE
- ---------------------------------------------------------------------------
BEGINNING COST OF INITIAL MONTHLY
ON CONTRACT ATTAINED INSURANCE CHARGE FOR
ANNIVERSARY AGE RATE * INCREASES #
MAY 1,
2027 65 $ 1.85 $ 0.07
2028 66 2.05 0.07
2029 67 2.26 0.07
2030 68 2.49 0.07
2031 69 2.74 0.07
2032 70 3.03 0.07
2033 71 3.36 0.07
2034 72 3.74 0.07
2035 73 4.17 0.07
2036 74 4.64 0.07
2037 75 5.15 0.07
2038 76 5.68 0.07
2039 77 6.24 0.07
2040 78 6.82 0.07
2041 79 7.46 0.07
2042 80 8.15 0.07
2043 81 8.93 o.xx
2044 82 9.81 o.xx
2045 83 10.79 o.xx
2046 84 11.84 o.xx
2047 85 12.95 o.xx
2048 86 14.09
2049 87 15.26
2050 88 16.44
2051 89 17.65
2052 90 18.92
2053 91 20.26
2054 92 21.73
2055 93 23.47
2056 94 25.81
2057 95 29.32
2058 96 zz.zz
2059 97 zz.zz
2060 98 zz.zz
2061 99 zz.zz
* MAXIMUM MONTHLY COST PER $1,000 INSURANCE FOR NON-TOBACCO PREMIUM CLASS,
BASED ON COMMISSIONERS 1980 STANDARD ORDINARY MORTALITY TABLE. AGE AT ISSUE
IS AGE LAST BIRTHDAY.
# MONTHLY CHARGE PER $1,000 OF INCREASE IN FACE AMOUNT UNDER SECTION 5.3 OR
UNDER ANY GUARANTEED INCREASE OPTION BENEFIT RIDER, CHARGED ONLY IN THE
FIRST 180 MONTHLY DEDUCTIONS ON OR AFTER THE EFFECTIVE DATE OF THE INCREASE.
W3-VC-VUL-5 Cl page 5 Continued
<PAGE>
Date of issue: MAY 1, 1997 Contract Number: LV1234567
INSURED: JOHN DOE
AGE: 35 SEX: MALE FLEXIBLE PREMIUM
INITIAL FACE AMOUNT: $ 50,000 VARIABLE LIFE INSURANCE
- ----------------------------------------------------------------------------
VARIABLE ACCOUNT INFORMATION
Investment Company - LB Series Fund, Inc.
Variable Account - LB Variable Insurance Account I
Each subaccount of the LB Variable Insurance Account I invests in a specific
portfolio of LB Series Fund, Inc. Subaccounts of the Variable Account and
the portfolios in which they invest are as follows:
Growth Subaccount - Amounts credited to this subaccount are invested in
the Growth Portfolio. This portfolio invests
primarily in equity securities.
High Yield Subaccount - Amounts credited to this subaccount are invested
in the High Yield Portfolio. This portfolio
invests primarily in high yield securities.
Income Subaccount - Amounts credited to this subaccount are invested in
the Income Portfolio. This portfolio invests
primarily in fixed income securities.
Opportunity Growth Subaccount - Amounts credited to this subaccount are
invested in the Opportunity Growth
Portfolio. This portfolio invests
primarily in smaller capitalization
equity securities.
World Growth Subaccount - Amounts credited to this subaccount are
invested in the World Growth Portfolio. This
portfolio invests primarily in equity
securities of established, non-U.S. companies.
Money Market Subaccount - Amounts credited to this subaccount are
invested in the Money Market Portfolio. This
portfolio invests primarily in money market
instruments.
LB Series Fund, Inc. receives investment advice for each portfolio from
Lutheran Brotherhood. As investment advisor, Lutheran Brotherhood charges LB
Series Fund, Inc. a daily investment advisory fee equal to an annual
percentage of the aggregate average daily net assets of LB Series Fund, Inc.
portfolios. For the Growth, High Yield, Income, Opportunity Growth and
Money Market Portfolios, that percentage is 0.40%; for the World Growth
Portfolio that percentage is 0.85%.
For a complete description of the Variable Account and the designated
portfolios, please refer to the current prospectus for LB Series Fund, Inc.
W3-VC-VUL-6 page 6
<PAGE>
Contract Number: LV1234567
- ----------------------------------------------------------------------------
1. DEFINITIONS
- ----------------------------------------------------------------------------
Application. The application(s) and all amendments and supplements to the
application.
Attained Age. Attained Age on any day is the age last birthday of the
Insured on the Contract Anniversary on or immediately prior to that day.
Contract Anniversary. The Date of Issue on page 3 and the same month and
day for years after issue as in the Date of Issue.
Contract Date. The latest of (1) The Date of Issue; (2) The date we receive
at our Home Office the first premium payment on this contract; and (3) Any
other date agreed upon by you and us.
Contract Month. The period from one Monthly Anniversary to the next Monthly
Anniversary.
Contract Year. The first Contract Year begins on the Date of Issue and
continues until the end of the period for which the 12th Monthly Deduction
is made. Thereafter, Contract Years are successive periods during which 12
Monthly Deductions are made, each year beginning at the end of the prior
Contract Year and continuing to the end of the period for which the 12th
Monthly Deduction is made.
Debt. All unpaid contract loans less any unearned interest.
Increase Year. An Increase Year begins on the effective date of each
increase in Face Amount according to Section 5.3 and continues until the end
of the period for which the 12th Monthly Deduction on or after the effective
date of the increase is made. Thereafter, Increase Years are successive
periods during which 12 Monthly Deductions are made, each year beginning at
the end of the prior Increase Year and continuing to the end of the period
for which the 12th Monthly Deduction is made.
Insured. The person named as Insured on page 3.
Monthly Anniversary. The same day for months after issue as in the Date of
Issue.
SEC. Securities and Exchange Commission.
Valuation Day. Any day that the New York Stock Exchange is open for trading
or there is sufficient trading in a Fund portfolio's securities to affect
the Unit Value of the corresponding subaccount of the Variable Account.
Valuation Period. The period of time from the end of one Valuation Day to
the end of the next Valuation Day.
We, Our, Us, Society. Lutheran Brotherhood.
Written Notice. A written request signed by you and received by us at our
Home Office in Minneapolis, Minnesota.
You, Your, Yours. The owner of this contract.
- ----------------------------------------------------------------------------
2. GENERAL PROVISIONS
- ----------------------------------------------------------------------------
2.1 ENTIRE CONTRACT. The entire contract consists of:
1) This contract including any attached riders or amendments;
2) The Application attached to this contract.
3) The Articles of Incorporation and Bylaws of the Society which are
in force on the Date of Issue.
2.2 CHANGE OF CONTRACT. No change in this contract is valid unless it is
made in writing and signed by our President and Secretary.
W3-VC-VUL-7 page 7
<PAGE>
Contract Number: LV1234567
- ----------------------------------------------------------------------------
2. GENERAL PROVISIONS (continued)
- ----------------------------------------------------------------------------
2.3 DEATH PROCEEDS. If the Insured dies before Attained Age 100, the
amount payable will be the sum, on the date of death, of:
1) The Death Benefit (see Section 5.1); and
2) Any insurance on the Insured's life provided by Additional Benefits
in this contract;
Less the sum of:
3) Any Debt; and
4) The amount, if any, needed to cover Monthly Deductions through the
month of death.
If the Insured dies at or after Attained Age 100, the amount payable will be
the Cash Surrender Value on the date of death.
2.4 STATEMENTS IN THE APPLICATION. We will not use any statement to
contest a claim or to have this contract declared invalid unless the
statement is contained in the Application. All statements made in the
Application are representations, not warranties.
2.5 INCONTESTABILITY. We will not contest the validity of this
contract after it has been in force during the Insured's lifetime
for two years from the Date of Issue except for any provisions granting
benefits in the event of total disability.
If the Face Amount is increased according to Section S.3, this provision
will apply to the increase from its effective date with regard to statements
made in the application for the increase. This provision will apply from the
date this contract is reinstated with regard to statements made in the
application for reinstatement.
2.6 MISSTATEMENT OF AGE OR SEX. If the Insured's age or sex has been
misstated, any contract values will be adjusted to the amounts that would
have been provided based on the correct age and sex, using the ratio of the
most recent Cost of Insurance Rates applied on this contract to the current
rates based on the correct age and sex.
2.7 EXCLUSION: SUICIDE. If the Insured dies by suicide, while sane or
insane, within two years after the Date of Issue, the Death Proceeds of this
contract are limited to premiums paid less the sum of:
1) Any Debt; and
2) Any Partial Surrenders.
If the Insured dies by suicide, while sane or insane, within two years after
the effective date of an increase in Face Amount according to Section 5.3,
the Death Proceeds with respect to the increase are limited to the Cost of
Insurance for the increase (see Section 7.2) plus the Initial Monthly Charge
for Increases for the increase included in any Monthly Deduction(s) made.
2.8 EXEMPTIONS FROM CLAIMS OF CREDITORS. To the extent permitted by law,
the proceeds of this contract and any payments under it will not be subject
to the claims of creditors or to any legal proceedings.
2.9 MAINTENANCE OF SOLVENCY. This provision applies only to benefits
provided through the General Account. These benefits will not change. If
the solvency of the Society becomes impaired, you may be required to make an
extra payment. The Board of Directors will determine the amount of any
extra payment. It will be based on each member's fair share of the
deficiency. The amount will be charged as a loan again the contract with
interest compounded at the rate of 5% per year.
You may prefer to make the extra payment by an equivalent reduction in
benefits or by a payment in cash. You may do this within 60 days from the
date we notify you of your share of the deficiency.
W3-VC-VUL-8 page 8
<PAGE>
Contract Number: LV1234567
- ----------------------------------------------------------------------------
2. GENERAL PROVISIONS (continued)
- ----------------------------------------------------------------------------
2.10 DEFERMENT. Death Proceeds will normally be paid within 7 days after we
receive at our Home Office due proof of the Insured's death and all other
requirements necessary for us to make payment. The Cash Surrender Value,
Partial Surrenders and contract loans will normally be paid within 7 days
after we receive Written Notice of surrender or loan. However, we may defer
payment of any loan or surrender and any portion of the Death Benefit in
excess of the Face Amount while:
1) The New York Stock Exchange is closed for trading; or
2) The SEC requires that trading be restricted or declares an
emergency.
2.11 RESERVATION OF RIGHTS. To the extent permitted or required by law
(including SEC rules under the Investment Company Act of 1940), we reserve
the right to eliminate or modify:
1) The withdrawal rights provided in the Right to Cancel provision
(page 1) and in Section 5.4; and
2) The exchange rights provided in Sections 10.1 and 10.2.
2.12 ANNUAL REPORT. We will mail you a statement of the value of this
contract within 30 days after each Contract Anniversary. The report will
show the Accumulated Value, Cash Surrender Value, Death Benefit, all
payments and deductions since the last report and any outstanding Debt.
Any further information required by law will also be given to you.
- ----------------------------------------------------------------------------
3. MEMBERSHIP AND OWNERSHIP
- ----------------------------------------------------------------------------
3.1 MEMBERSHIP. The Insured is an adult member of the Society upon
reaching age 16. Rights and privileges of membership are set forth in the
Bylaws of the Society or in the Application. These rights and privileges
are separate from the ownership of this contract.
3.2 OWNERSHIP. The Insured is the owner unless another owner is named in
the Application. Ownership may be changed through assignment. While the
Insured is living, the owner may exercise all rights set out in this
contract. The owner has no membership rights unless the owner is the
Insured.
3.3 ASSIGNMENT. You may assign this contract. We are not bound by the
assignment unless it is in writing and filed at our Home Office. We are not
responsible for the validity or effect of any assignment. Any Debt on this
contract will have prior claim over any assignment. The Insured will keep
all membership rights and privileges.
W3-VC-VUL-9 page 9
<PAGE>
Contract Number: LV1234567
- ----------------------------------------------------------------------------
4. PREMIUMS AND REINSTATEMENT
- ----------------------------------------------------------------------------
4.1 PREMIUM PAYMENTS. The amount of the Planned Annual Premium is shown on
page 3. The initial premium is due and payable on the Date of Issue.
Premiums may be paid at any time and in any amount before Attained Age 100,
subject to Section 4.3 Cumulative Premium Limit. You may pay more or less
than the Planned Annual Premium. However, except as provided in Section 4.6,
to continue the contract in force on each Monthly Anniversary the Cash
Surrender Value must be sufficient to cover the Monthly Deduction.
Premiums are payable at our Home Office. Upon request we will give you a
receipt, signed by an officer of the Society, for the premium paid.
4.2 NET PREMIUM. The Net Premium is the portion of each premium which is
applied to the subaccounts of the Variable Account. The Net Premium is
equal to the premium paid less the sum of:
1) The Percent of Premium Charge equal to 5% of the premium paid; and
2) The Premium Processing Charge. We reserve the right to change the
amount of this charge. However, the Premium Processing Charge will
never exceed the maximum charge shown on page 4.
4.3 CUMULATIVE PREMIUM LIMIT. The Internal Revenue Code provides for
exclusion of the Death Benefit from gross income. To qualify for the
exclusion, total premium payments must not exceed the limit stated in the
Code. The portion of any premiums paid in excess of that limit will be
refunded to you.
4.4 PREMIUM BILLING. We will send premium billings based on the amount and
frequency of premium payments which you request. You may change the amount
and, subject to our published rules, the frequency or method of billing by
giving Written Notice. If we do not receive any premium payments for 24
consecutive months, we will stop billings.
4.5 PREMIUM IN DEFAULT AND GRACE PERIOD. If the Death Benefit Guarantee is
not in effect under Section 4.6, a premium is in default on a Monthly
Anniversary if the Monthly Deduction to be made on that day would result in
a Cash Surrender Value less than zero. Notice of the premium required to
keep this contract in force will be mailed to you at the address last known
to us. You will have a grace period of 61 days after the date we mail the
notice in which to pay the premium required. This contract will remain in
force during the grace period. Any accumulated value in the subaccounts for
this contract will be transferred to the General Account until we receive
the required premium.
If the required premium is paid within the grace period, any accumulated
value for this contract in the General Account but not in the Loan Account
will be transferred back to the subaccounts on the date we receive the
premium and we will deduct any Monthly Deductions not made while a premium
was in default. Otherwise, this contract will terminate without value at the
end of the grace period.
4.6 DEATH BENEFIT GUARANTEE. The Death Benefit Guarantee protects against
premium default due to investment experience. If, on a Monthly Anniversary:
1) The Death Benefit Guarantee Requirement is met; and
2) The Death Benefit Guarantee has not terminated;
then no premium will be in default even if the Monthly Deduction to be made
on that day would result in a Cash Surrender Value less than zero. If the
Monthly Deduction to be made on that day is greater than the Cash Surrender
Value, the deduction made will not exceed the Accumulated Value less any
Debt and we will pay the balance of the Monthly Deduction.
W3-VC-VUL-10 page 10
<PAGE>
Contract Number: LV1234567
- ----------------------------------------------------------------------------
4. PREMIUMS AND REINSTATEMENT (continued)
- ----------------------------------------------------------------------------
4.6a Death Benefit Guarantee Requirement. On any Monthly Anniversary, the
Death Benefit Guarantee Requirement is met if (1) is greater than or equal
to (2) where:
1) Is the sum of:
a) Premiums paid; less
b) Any Partial Surrenders; and less
c) Any unpaid contract loans; and
2) Is the sum of Death Benefit Guarantee Premiums from the Date of Issue
through that Monthly Anniversary. For purposes of the Death Benefit
Guarantee Requirement, the Death Benefit Guarantee Premium will be
zero for any Monthly Anniversary that a premium is credited to this
contract under a disability waiver benefit rider.
If the Death Benefit Guarantee Requirement is not met on a Monthly
Anniversary but the Cash Surrender Value less any unearned interest is
greater than or equal to the sum of Death Benefit Guarantee Premiums from
the Date of Issue through that Monthly Anniversary, then the sum of premiums
paid as used above will be deemed to increase to the amount necessary to
meet the Death Benefit Guarantee Requirement.
When determining if the Death Benefit Guarantee Requirement is met, a
portion of any Partial Surrender or contract loan may be excluded. The
amount excluded is calculated on the date of the Partial Surrender or
contract loan and is equal to the lesser of:
1) The amount of Partial Surrender or unpaid contract loan; and
2) The excess, if any, of the Cash Surrender Value less unearned
interest on any unpaid contract loans over the greater of (a) and (b)
where:
a) Is the sum of premiums paid less the amount of any Partial
Surrenders and unpaid contract loans not previously excluded when
determining if the Death Benefit Guarantee Requirement was met;
and
b) Is the sum of Death Benefit Guarantee Premiums from the Date of
Issue through the Monthly Anniversary on or next after the date
of Partial Surrender or contract loan.
4.6b Death Benefit Guarantee Premium. The Death Benefit Guarantee Premium
on the Date of Issue is shown on page 3. If the Death Benefit Guarantee has
not terminated, a new Death Benefit Guarantee Premium will be determined
whenever:
1) The Death Benefit Option is changed;
2) The Face Amount is increased or decreased (An increase in Face
Amount may also result in a new Death Benefit Guarantee
Termination Date.);
3) The Premium Class is changed; or
4) Additional Benefits are increased, decreased, or added to or deleted
from this contract.
The new Death Benefit Guarantee Premium and Termination Date will be shown
on the supplemental contract schedule that we will mail to you.
4.6c Termination of Death Benefit Guarantee. The Death Benefit Guarantee
will terminate on the earlier of:
1) Any Monthly Anniversary that the Death Benefit Guarantee Requirement
is not met; and
2) The Death Benefit Guarantee Termination Date shown on page 3.
In the event of termination under (1), we will mail to you at the address
last known to us a notice of the premium needed to meet the Death Benefit
Guarantee Requirement and reinstate the Death Benefit Guarantee. If this
amount is not received at our Home Office within 31 days after the date we
mail the notice, the Death Benefit Guarantee cannot be reinstated.
W3-VC-VUL-ll page 11
<PAGE>
Contract Number: LV1234567
- ----------------------------------------------------------------------------
4. PREMIUMS AND REINSTATEMENT (continued)
- ----------------------------------------------------------------------------
4.7 CONTINUATION OF INSURANCE COVERAGE. If you stop premium payments, this
contract will remain in force until the earliest of:
1) The date of death of the Insured;
2) The end of the grace period if the premium required to keep this
contract in force has not been paid;
3) The date you surrender this contract; and
4) The date this contract terminates from excess loan under Section 8.5.
4.8 REINSTATEMENT. This contract may be reinstated within five years after
the end of the grace period unless it has been surrendered. To reinstate we
require:
1) Evidence of insurability which meets our standards;
2) Payment to cover the Monthly Deductions that were not made during the
grace period;
3) Payment of an amount to keep this contract in force for at least two
months, based on unit values on the date of reinstatement; and
4) Payment or reinstatement of all Debt existing at the end of the grace
period.
The effective date of a reinstatement is the date the application for
reinstatement is approved by us. The Accumulated Value on that date will be
the sum of:
1) The accumulated values for this contract which were transferred to
the General Account at the time of premium default (see Section 4.5);
2) Any accumulated value for this contract in the Loan Account; and
3) The accumulated values provided by the payment made to reinstate;
Less the sum of:
4) Monthly Deductions that were not made during the grace period; and
5) The Monthly Deduction made on the date of reinstatement.
The Decrease Charge on the date of reinstatement will be equal to the
Decrease Charge at the end of the grace period when this contract
terminated. Section 2.5 Incontestability will apply from the date the
contract is reinstated with regard to statements made in the application for
reinstatement. Death Benefit Guarantee cannot be reinstated under this
provision.
W3-VC-VUL-12 page 12
<PAGE>
Contract Number: LV1234567
- ----------------------------------------------------------------------------
5. INSURANCE COVERAGE
- ----------------------------------------------------------------------------
5.1 DEATH BENEFIT. The Death Benefit payable as part of the Death Proceeds
is determined as follows:
1) Option A. The Death Benefit on any day is the greater of:
a) The sum of the Face Amount and the Accumulated Value; and
b) The Accumulated Value multiplied by the Factor for the Attained
Age on that day (see Table of Factors).
2) Option B. The Death Benefit on any day is the greater of:
a) The Face Amount; and
b) The Accumulated Value multiplied by the Factor for the Attained
Age on that day (see Table of Factors).
The Death Benefit Option at issue of this contract is shown on page 3.
TABLE OF FACTORS
Attained Attained
Age Factor Age Factor
40 or less 2.50 61 1.28
41 2.43 62 1.26
42 2.36 63 1.24
43 2.29 64 1.22
44 2.22 65 1.20
45 2.15 66 1.19
46 2.09 67 1.18
47 2.03 68 1.17
48 1.97 69 1.16
49 1.91 70 1.15
50 1.85 71 1.13
51 1.78 72 1.11
52 1.71 73 1.09
53 1.64 74 1.07
54 1.57 75 to 90 1.05
55 1.50 91 1.04
56 1.46 92 1.03
57 1.42 93 1.02
58 1.38 94 1.01
59 1.34 95 to 99 1.00
60 1.30
5.2 CHANGE OF DEATH BENEFIT OPTION. You may change the Death Benefit
Option at any time except when the Death Benefit is a multiple of the
Accumulated Value according to Section 5.1(1)(b) or 5.1(2)(b). The change is
subject to the following:
1) You must give Written Notice.
2) If you change from Option B to Option A, the Death Benefit will not
change and the Face Amount will be decreased by the Accumulated Value
on the effective date of the change. The decrease in Face Amount
will be applied in the order specified in Section 5.5(2). However,
this change may not be made if it would reduce the Face Amount to
less than $5,000.
3) If you change from Option A to Option B, the Face Amount will not
change and the Death Benefit will be decreased by the Accumulated
Value on the effective date of the change.
4) The change may not be made if it would cause total premium payments
already made to exceed the Cumulative Premium Limit of the Internal
Revenue Code.
5) A new Death Benefit Guarantee Premium will be determined if the Death
Benefit Guarantee is in effect on the effective date of the change.
6) The effective date of the change will be the Monthly Anniversary on
or next after the date we receive Written Notice. The new Death
Benefit Option will be shown on the supplemental contract schedule
that we will mail to you.
W3-VC-VUL-13 page 13
<PAGE>
Contract Number: LV1234567
- ----------------------------------------------------------------------------
5. INSURANCE COVERAGE (continued)
- ----------------------------------------------------------------------------
5.3 INCREASE IN FACE AMOUNT. You may increase the Face Amount any time
before the Contract Anniversary on or next after the Insured's 85th
birthday. The increase is subject to the following:
1) You must make written application to us at our Home Office.
2) We will require evidence of insurability which meets our standards.
3) The increase must be at least $25,000.
4) The Cash Surrender Value must be sufficient to cover the Monthly
Deduction on the effective date of the increase (unless the Death
Benefit Guarantee is in force).
5) The Initial Monthly Charge for Increases (see Section 7.1(3)) will be
charged on the effective date of the increase and then on each
Monthly Anniversary until 180 charges have been made.
6) A new schedule of Decrease Charges will apply to the increase in Face
Amount.
7) A new Death Benefit Guarantee Premium will be determined if the Death
Benefit Guarantee is in effect on the effective date of the increase.
8) The effective date of the increase will be the date shown on the
supplemental contract schedule that we will mail to you.
Section 2.5 Incontestability will apply to the increase from its effective
date with regard to statements made in the application for the increase in
Face Amount. Section 2.7 Exclusion: Suicide will apply to the increase from
its effective date.
5.4 RIGHT TO CANCEL INCREASE IN FACE AMOUNT. You may cancel any increase in
Face Amount by notifying your representative or giving Written Notice before
the latest of:
1) 10 days after you receive the supplemental contract schedule showing
the increase;
2) 45 days after you complete the application for the increase in Face
Amount; and
3) 10 days after a notice of withdrawal right is mailed or delivered to
you.
If you cancel any increase in Face Amount under this provision, the portion
of any Monthly Deduction(s) made which is due to the increase will be
applied as a Net Premium or, if you request, be refunded to you.
W3-VC-VUL-14 page 14
<PAGE>
Contract Number: LV1234567
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5. INSURANCE COVERAGE
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5.5 DECREASE IN FACE AMOUNT. You may decrease the Face Amount at any time
before the Insured's Attained Age 100. The decrease is subject to the
following:
1) You must give Written Notice.
2) The decrease and Decrease Charge (see Section 7.3) will be applied,
in successive order, against:
a) The most recent increase in Face Amount;
b) The next most recent
increase(s); then
c) The Initial Face Amount.
3) The decrease may not be made if the Accumulated Value less Debt on
the effective date of the decrease is less than the Decrease Charge
for the decrease.
4) The Face Amount after the decrease must not be less than the minimum
required. For issue ages zero to 17, that minimum is $25,000. For all
other issue ages, that minimum is $50,000 for decreases made before
the Insured's Attained Age 50 and $25,000 for decreases made on or
after Attained Age 50.
5) The decrease may not be made if it would cause total premium payments
already made to exceed the Cumulative Premium Limit of the Internal
Revenue Code.
6) A new Death Benefit Guarantee Premium will be determined if the Death
Benefit Guarantee is in effect on the effective date of the decrease.
7) The effective date of the decrease will be the Monthly Anniversary on
or next after the date we receive Written Notice. That date will be
shown on the supplemental contract schedule that we will mail to you.
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6. ACCUMULATED VALUE AND SURRENDER PROVISIONS
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6.1 ACCUMULATED VALUE. On the Contract Date, the Accumulated Value is equal
to the Net Premium(s) received plus any interest earned on premiums for this
contract held in the General Account less the Monthly Deduction(s) made on
that date. On any later date that this contract is not in the grace period,
the Accumulated Value of this contract is the sum of the accumulated values
for this contract in the subaccounts and the Loan Account (see Section 8.3).
The accumulated value in any subaccount on a Valuation Day is equal to:
1) The number of units for this contract in that subaccount (see Section
9.5); multiplied by
2) The unit value for that subaccount (see Section 9.6).
The accumulated value in the Loan Account on any date is the sum of:
1) Any Debt;
2) Any interest on loans on this contract payable in advance to the next
Contract Anniversary, provided that interest has not been applied to
pay any Monthly Deductions; and
3) Any interest accrued in the Loan Account on loans on this contract.
The accumulated value for any day that is not a Valuation Day will be
determined on the next Valuation Day. During the grace period, the
Accumulated Value of this contract is equal to the sum of any accumulated
value for this contract transferred to the General Account at the time of
premium default plus any accumulated value for this contract in the Loan
Account.
W3-VC-VUL-15 page 15
<PAGE>
Contract Number: LV1234567
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6. ACCUMULATED VALUE AND SURRENDER PROVISIONS (continued)
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6.2 FULL SURRENDER. You may surrender this contract for its Cash Surrender
Value by giving Written Notice while the Insured is living. The surrender
will be effective on the later of:
1) The date we receive Written Notice; and
2) The date you specify.
If surrender is effective on a Monthly Anniversary, the Accumulated Value is
determined without regard to the Monthly Deduction on that date. Insurance
coverage ceases on the effective date of the surrender.
6.3 CASH SURRENDER VALUE. The Cash Surrender Value on any date is equal to
the Accumulated Value less the sum of:
1) Any Debt;
2) The amount, if any, needed to cover unpaid Monthly Deductions; and
3) The Decrease Charges, if any, applied on that date to the Face Amount
and to any prior decreases in Face Amount (for which Decrease Charges
were not previously made) due to Partial Surrender or change of Death
Benefit Option.
6.4 PARTIAL SURRENDER. You may surrender a portion of the Accumulated Value
by giving Written Notice while the Insured is living. The Partial Surrender
includes the Partial Surrender Charge shown on page 4.
A Partial Surrender:
1) Must be at least $500;
2) Will reduce the Accumulated Value by the amount of the Partial
Surrender. The reduction will be applied against each subaccount of
the Variable Account according to the ratio for this contract of the
accumulated value in the subaccount to the sum of the accumulated
values in all the subaccounts. With our approval, you may choose
other allocations to the subaccounts;
3) Must not reduce the remaining Cash Surrender Value to less than $500;
4) If the Death Benefit Option is B, will affect the Face Amount as
follows:
a) If the Death Benefit on the effective date of the Partial
Surrender is equal to the Face Amount, then the surrender will
reduce the Face Amount by the amount of the Partial Surrender.
b) If the Death Benefit on the effective date of the Partial
Surrender is a multiple of the Accumulated Value according to
Section 5.1(2)(b), then the Face Amount will be reduced only if,
on that day, the amount of the surrender multiplied by the Factor
for the Attained Age on that day (see Table of Factors on page
13) exceeds the Death Benefit minus the Face Amount. In that
case, the Face Amount will be reduced by:
i) The amount of the Partial Surrender; less
ii) The Death Benefit less the Face Amount prior to the
surrender, divided by the Factor applied.
Any decrease in Face Amount will be applied in the order specified
in Section 5.S(2). The Face Amount may not be reduced to less than
$5,000. Decrease Charges are not applied at the time of Partial
Surrender; and
5) Will be effective on the date we receive Written Notice.
A Partial Surrender may cause the Death Benefit Guarantee to terminate.
W3-VC-VUL-16 page 16
<PAGE>
Contract Number: LV1234567
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7. MONTHLY DEDUCTION
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7.1 MONTHLY DEDUCTION. The Monthly Deduction is made on the Contract Date
and on each subsequent Monthly Anniversary prior to the Insured's Attained
Age 100. If any Monthly Anniversary occurs prior to the Contract Date, the
deduction(s) for such day(s) will also be made on the Contract Date. The
Monthly Deduction made from the subaccounts of the Variable Account is the
sum of:
1) The monthly Cost of Insurance (see Section 7.2);
2) The monthly Administrative Charge. This charge is the sum of:
a) The Basic Monthly Charge of $10.00; and
b) Any Initial Monthly Charge. This is a charge per $1,000 of
Initial Face Amount. However, if the Initial Face Amount is
decreased according to Section 5.5, the charge will be based on
the Face Amount remaining after the decrease. The charge is made
on the Contract Date and then on each Monthly Anniversary until
180 charges have been made. The charge per $1,000 is shown on
page 4;
3) Any Initial Monthly Charge for Increases. This is a charge per $1,000
of increase in Face Amount. However, if the increased Face Amount is
later decreased according to Section 5.5, the charge will be based on
the amount of the increased Face Amount remaining after the decrease.
The charge is made on the effective date of each increase according
to Section 5.3 and then on each Monthly Anniversary until 180 charges
have been made. The charge is based on Attained Age on the date of
the increase. The charge per $1,000 is shown on page 5;
4) Any Decrease Charge which results from a requested decrease in Face
Amount according to Section 5.5; and
5) The monthly cost of any Additional Benefits.
However, if the Monthly Deduction is greater than the Cash Surrender Value
and the requirements of the Death Benefit Guarantee are met, the deduction
made will not exceed the Accumulated Value less any Debt. We will pay the
balance of the Monthly Deduction.
The Monthly Deduction is taken from each subaccount according to the ratio
for this contract of the accumulated value in the subaccount to the sum of
the accumulated values in all the subaccounts. With our approval, you may
choose other allocations of the Monthly Deduction.
7.2 COST OF INSURANCE. The Cost of Insurance is determined on the Contract
Date and on each Monthly Anniversary. It is equal to the Cost of Insurance
Rate multiplied by the Risk Amount divided by 1,000.
7.2a Cost of Insurance Rate. We will determine the Cost of Insurance Rate
monthly. The rate is based on the Insured's Premium Class, sex, Issue Age,
Face Amount and Attained Age.
The Premium Class for the Initial Face Amount is shown on page 3. The
Premium Class for any increase in Face Amount according to Section 5.3 will
be determined on the effective date of the increase. If the Death Benefit is
a multiple of the Accumulated Value according to Section 5.1(1)(b) or
5.1(2)(b), the Premium Class of the resulting increase in Death Benefit will
be the Premium Class shown on page 3. The Cost of Insurance Rate for the
Initial Face Amount and for any increase in Face Amount with the same
Premium Class as shown on page 3 will not exceed the rates shown on page 5.
However, for any Face Amount with a rated Premium Class, the maximum cost is
increased in one or both of the following ways as specified on page 5:
1) The maximum Cost of Insurance Rate is multiplied by a percentage
rating.
2) An extra monthly amount is added to the Cost of Insurance.
We may charge less than the maximum rate. Any change in Cost of Insurance
Rates will be based on the Initial Face Amount and any requested increases
in Face Amount and will apply to all insureds of the same Premium Class,
sex, Issue Age and attained age.
W3-VC-VUL-17 page 17
<PAGE>
Contract Number: LV1234567
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7. MONTHLY DEDUCTION (continued)
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7.2b Risk Amount. The Risk Amount is equal to:
1) The Death Benefit divided by 1.0040741;
Less
2) The Accumulated Value (before the Cost of Insurance and the cost of
the disability waiver benefit, if any, is deducted).
If the Death Benefit Option is B and the Initial Face Amount has been
increased, the Accumulated Value will be considered part of the Initial Face
Amount. If the Accumulated Value is greater than the Initial Face Amount,
the excess will be considered to be part of successive increases in Face
Amount starting with the first increase.
7.3 DECREASE CHARGE. The Decrease Charge is charged on:
1) The effective date of each decrease in Face Amount you make according
to Section 5.5; and
2) Termination of this contract other than by death.
The Decrease Charge is applied as in Section 5.5(2).
If the Initial Face Amount is decreased, the Decrease Charge is the product
of:
1) The ratio of the decrease in Face Amount to the Initial Face Amount;
and
2) The sum of:
a) The Deferred Administrative Charge; and
b) The lesser of:
i) The Maximum Contingent Deferred Sales Charge; and
ii) 25% of premiums paid in the first Contract Year.
The Deferred Administrative Charge and the Maximum Contingent Deferred Sales
Charge are shown on page 4.
If an increase in Face Amount is decreased, the Decrease Charge is the
product of:
1) The ratio of the amount of the increase being decreased to the
initial amount of the increase in Face Amount; and
2) The sum of:
a) The Deferred Administrative Charge for the increase in Face
Amount; and
b) The lesser of:
i) The Maximum Contingent Deferred Sales Charge for the increase
in Face Amount; and
ii) 25% of the premium attributable to the increase in Face
Amount which is decreased (see Section 7.4).
For any increase in Face Amount, the Deferred Administrative Charge and the
Maximum Contingent Deferred Sales Charge will be shown on supplemental
schedule pages that we will mail to you.
7.4 ATTRIBUTABLE PREMIUM. For purposes of the Contingent Deferred Sales
Charge, the premium attributable to an increase in Face Amount is equal to
(1) multiplied by (2 + 3) where:
1) Is the ratio of the increase in Face Amount to the total Face Amount
including that increase;
2) Is the Cash Surrender Value on the effective date of the increase;
and
3) Is premiums paid during the Increase Year which begins on the
effective date of the increase.
W3-VC-VUL-18 page 18
<PAGE>
Contract Number: LV1234567
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8. LOANS
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8.1 CONTRACT LOANS. After the Contract Date, you may obtain a loan from us
with this contract as sole security if:
1) You give Written Notice;
2) The loan with interest does not increase the total loan to more than
90% of the excess of the Accumulated Value over any Decrease Charge
on the date of the loan.
Accumulated value equal to the amount of the loan will be transferred from
the subaccounts to the Loan Account. The amount taken from each subaccount
will be according to the ratio for this contract of the accumulated value in
the subaccount to the sum of the accumulated values in all the subaccounts.
With our approval, you may choose other allocations from the subaccounts.
Contract loans may cause the Death Benefit Guarantee to terminate.
8.2 LOAN INTEREST. The loan interest rate is 7.4% per year. Interest on any
loan will be charged at that rate. It is payable in advance on the date of
the loan and on each Contract Anniversary. Interest is computed to the next
Contract Anniversary. If interest is not paid when due, it will be added to
the loan and bear interest at the same rate. If death or full surrender
occurs before the next Contract Anniversary, unearned interest will be added
to the proceeds payable.
8.3 LOAN ACCOUNT. The Loan Account is an account of the Society. Assets from
the Variable Account are transferred to the Loan Account in amounts equal to
contract loans on this and similar contracts.
Interest will be credited to this account at the rate of 0.48676% per month.
This is an effective rate of 6.0% per year. Loans on this contract will be
credited with interest while this contract is in force. Interest credited
will be transferred to the subaccounts on each Monthly Anniversary and on
the date the entire Debt is repaid in full. The amount transferred to each
subaccount will be according to the ratio for this contract of the
accumulated value in the subaccount to the sum of the accumulated values in
all the subaccounts.
8.4 REPAYMENT OF DEBT. All or part of the Debt may be repaid at any time
while the Insured is living. Each repayment must be at least $25. If there
is a loan on this contract, you must notify us if a payment to us is a
premium payment. Otherwise, it will be considered a repayment of Debt. No
charges are deducted from Debt repayments. Repayments of Debt, and any
unearned loan interest that was paid in advance on that portion of the Debt,
will be deducted from the Loan Account and transferred to each subaccount of
the Variable Account according to the ratio for this contract of the
accumulated value in the subaccount to the sum of the accumulated values in
all the subaccounts at the time of repayment or, if that sum is zero,
according to the Premium Allocation Percentages. With our approval, you may
choose other allocations to the subaccounts. Upon death or full surrender
any Debt will be deducted from the proceeds.
8.5 TERMINATION FROM EXCESS LOAN. If the Death Benefit Guarantee is not in
force, this contract will terminate when:
1) The Debt exceeds the Accumulated Value less the Decrease Charge
applied to the Face Amount and to any decreases in Face Amount (for
which Decrease Charges were not previously made) due to Partial
Surrender or change of Death Benefit Option; and
2) Sixty-one days have elapsed since we mailed a notice to you at the
address last known to US.
W3-VC-VUL-19 page 19
<PAGE>
Contract Number: LV1234567
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9. VARIABLE ACCOUNT AND UNIT VALUE
- -------------------------------------------------------------------------
9.1 VARIABLE ACCOUNT. We have established the Variable Account shown on
page 6 as a separate investment account according to Minnesota laws. The
Variable Account is registered with the SEC as a unit investment trust under
the Investment Company Act of 1940.
The Variable Account has subaccounts which invest in shares of the LB Series
Fund, Inc. (the Fund). The Fund is registered with the SEC under the
Investment Company Act of 1940 as a diversified open-end management
investment company. Each subaccount purchases shares in a specified
portfolio of the Fund. Amounts allocated to each subaccount buy shares of
the portfolio for that subaccount at net asset value. The portfolios and
subaccounts are shown on page 6. We may add additional subaccounts to invest
in a new portfolio of the Fund or in a different investment company.
We own the assets of the Variable Account. Assets equal to the reserves and
other liabilities of the Variable Account may not be charged with
liabilities from any other business we conduct. However, we may transfer
assets of the Variable Account in excess of account reserves and liabilities
to our General Account.
Income and realized and unrealized gains and losses from each subaccount of
the Variable Account are credited to or charged against that subaccount. The
value of the assets in the Variable Account is determined at the end of each
Valuation Day.
9.2 GENERAL ACCOUNT. The General Account includes all assets we own that
are not in the Variable Account. The Loan Account and reserves for the Death
Benefit Guarantee are maintained in the General Account.
9.3 ALLOCATION OF NET PREMIUMS. Any premiums received before the Contract
Date are applied entirely to the General Account. On the Contract Date, the
amount in that account equal to the premium payments received will be
applied as a premium payment. Any balance remaining for this contract will
be applied as a Net Premium on that date. After the Contract Date, payments
are applied on the date we receive them.
Each Net Premium will be applied to the subaccounts of the Variable Account
according to the premium allocation percentages for this contract. The
initial premium allocation percentages are specified in the Application.
You may change these premium allocation percentages by giving Written
Notice. The change will be effective for each premium received with or after
your notice. The sum of the premium allocation percentages must be 100%, and
each premium allocation percentage must be a whole number not more than
100%. We reserve the right to adjust your allocation to eliminate fractional
percentages.
9.4 TRANSFERS AMONG SUBACCOUNTS. You may transfer some or all of the
accumulated values among the subaccounts of the Variable Account. You do
this by giving Written Notice. The transfer of accumulated value is subject
to the following:
1) The total amount transferred cannot be less than the smaller of:
a) $500; and
b) The accumulated value in the subaccount(s) from which the
transfer is being made.
2) The transfer will occur at the end of the day on which we receive
Written Notice.
We may defer making transfers subject to the same conditions as in Section
2.10 Deferment.
W3-VC-VUL-20 page 20
<PAGE>
Contract Number: LV1234567
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VARIABLE ACCOUNT AND UNIT VALUE (continued)
- ----------------------------------------------------------------------------
9.5 NUMBER OF UNITS. On the Contract Date, the number of units for this
contract in any subaccount is equal to:
1) The accumulated value for this contract in that subaccount; divided
by
2) The unit value for that subaccount.
The number of units for this contract in any subaccount may increase or
decrease at the end of each Valuation Period. The number of units increases
when, during the period:
1) Net Premiums are allocated to the subaccount;
2) Accumulated value is transferred to the subaccount from another
subaccount or from the General Account;
3) Repayments of Debt are transferred to the subaccount; or
4) Interest is transferred from the Loan Account to the subaccount.
The number of units decreases when, during the Valuation Period:
1) Monthly Deductions are taken from the subaccount;
2) Accumulated value is transferred from the subaccount to another
subaccount or to the General Account;
3) Partial Surrenders are applied against the subaccount; or
4) Contract loans are transferred from the subaccount.
The increase or decrease in the number of units for this contract in any
subaccount is equal to:
1) The dollar amount allocated or transferred to or from that
subaccount; divided by
2) The unit value for that subaccount at the end of the Valuation Period
during which the amounts are allocated or transferred.
9.6 UNIT VALUE. The unit value for a subaccount is equal to (1) divided by
(2) where:
1) Is the sum of:
a) The net asset value of the corresponding portfolio of the
subaccount at the end of the current Valuation Period; plus
b) The amount of any dividend or capital gain distribution made by
the portfolio if the "ex-dividend" date occurs during the
Valuation Period; plus or minus
c) A charge or credit for any taxes reserved for which we determine
to be a result of the investment operation of the portfolio;
Less
d) The risk charge we deduct for each day in the Valuation Period.
This charge for mortality and expense risks is guaranteed not to
exceed, on an annual basis, 0.75% of the daily value of the
subaccount.
2) Is the number of units of that subaccount for all contracts.
Unit values are determined at the end of each Valuation Day before the
transfer or allocation of any amounts to or from the subaccounts. The unit
values may increase or decrease on each Valuation Day.
W3-VC-VUL-21 page 21
<PAGE>
Contract Number: LV1234567
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9. VARIABLE ACCOUNT AND UNIT VALUE (continued)
- ----------------------------------------------------------------------------
9.7 CHANGE OF INVESTMENT POLICY. The investment policy for the Variable
Account is described on page 6. We may change the investment policy of the
Variable Account with the approval of the insurance supervisory officials of
the State of Minnesota. We will notify you if there is a material change in
investment policy.
9.8 CHANGE OF PORTFOLIO. We may determine that a portfolio has become
unsuitable for investment by a subaccount or shares of a portfolio may cease
to be available for investment. In such event, we may substitute another
portfolio of the investment company or invest in a different investment
company. This change would not be made unless approved by:
1) The SEC; and
2) If required, the insurance supervisory officials in the state where
this contract is delivered.
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10. EXCHANGE OF CONTRACT
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10.1 EXCHANGE PRIVILEGE. Within 24 months after the Date of Issue, you may
exchange this contract for any fixed benefit permanent life insurance
contract that we offer. The new contract will be on the Insured's life with
no evidence of insurability required. The exchange is subject to the
following:
1) You must make written application to us at our Home Office and
surrender this contract.
2) The exchange must be made while this contract is in force.
3) No premium may be in default at the time of the exchange.
4) The issue age and date of issue of the new contract are the same as
the issue age and Date of Issue for this contract. Premiums will be
based on rates in effect on the Date of Issue.
5) The new contract will have its own Incontestability and Suicide
provisions measured from the date of issue. As used in these
provisions, the date of issue will be this contract's Date of Issue.
6) The new contract will be issued in the same Premium Class as the
Initial Face Amount for this contract. The Premium Class for amounts
in excess of the Initial Face Amount will be according to Section
10.2(6). If this contract has an exclusion rider, the new contract
will also have such an exclusion rider.
7) The new contract will have, at your election, either:
a) A death benefit equal to the Death Benefit of this contract on
the effective date of the exchange; or
b) A net amount at risk equal to the Death Benefit of this contract
on the effective date of the exchange less the Accumulated Value
on that date.
8) The new contract may include a disability waiver benefit rider if:
a) This contract has a disability waiver benefit rider;
b) Exchange is made before the Contract Anniversary after the
Insured's 65th birthday; and
c) The new contract has premiums payable to at least age 85.
No other additional benefits will be allowed on the new contract
unless evidence of insurability which meets our standards is
provided.
9) Any outstanding Debt on this contract must be repaid.
10) The effective date of the exchange will be the date we receive this
contract and your written application.
W3-VC-VUL-22 page 22
<PAGE>
Contract Number: LV1234567
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10. EXCHANGE OF CONTRACT
- ---------------------------------------------------------------------------
10.2 EXCHANGE OF INCREASE IN FACE AMOUNT. Within 24 months after the
effective date of any increase in Face Amount according to Section 5.3, you
may exchange the increase in Face Amount for any fixed benefit permanent
life insurance contract that we offer. The new contract will be on the
Insured's life with no evidence of insurability required. The exchange is
subject to the following:
1) You must make written application to us at our Home Office.
2) The exchange must be made while this contract is in force.
3) No premium may be in default at the time of the exchange.
4) The issue age and date of issue of the new contract are the same as
the attained age and effective date for the increase in Face Amount.
Premiums will be based on rates in effect on the effective date of
the increase.
5) The new contract will have its own Incontestability and Suicide
provisions measured from the date of issue. As used in these
provisions, the date of issue will be the effective date of the
increase.
6) The new contract will be issued in the same Premium Class as the
increase in Face Amount. If this contract has an exclusion rider, the
new contract will also have such an exclusion rider.
7) The new contract will have, at your election, either:
a) A death benefit equal to the amount of the increase in Face
Amount; or
b) A net amount at risk equal to the increase in Face Amount less
the Accumulated Value of this contract on the effective date of
the exchange which is considered to be part of the increase in
Face Amount (see Section 7.2b).
8) The new contract may include a disability waiver benefit rider if:
a) This contract has a disability waiver benefit rider;
b) Exchange is made before the Contract Anniversary after the
Insured's 65th birthday; and
c) The new contract has premiums payable to at least age 85.
No other additional benefits will be allowed on the new contract
unless evidence of insurability which meets our standards is
provided.
9) The effective date of the exchange will be the date we receive your
written application.
10.3 CASH ADJUSTMENT ON EXCHANGE. Upon exchange, a cash adjustment may be
necessary to reflect differences between the accumulated values of this
contract and the new contract. The adjustment will be determined as of the
date we receive at our Home Office your written application for exchange. If
the cash adjustment is to be paid to you, we will make the payment when the
new contract is issued. If the adjustment is to be paid by you to us, we
will mail you notice of the amount due. If this amount is not paid within 31
days of the date we mail the notice, the exchanged coverage will terminate.
W3-VC-VUL-23 page 23
<PAGE>
Contract Number: LV12345567
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11. BENEFICIARY
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11.1 BENEFICIARY. The beneficiary is named in the Application. You may
change the beneficiary by giving Written Notice while the Insured is living.
The change will become effective if:
1) We receive Written Notice; and
2) We acknowledge the change.
The effective date of the change will be the date the notice was signed. We
will not be liable for any payment made or action taken by us before we
receive the notice.
11.2 SUCCESSION OF BENEFICIARIES. You may designate one or more
beneficiaries to receive the Death Proceeds. You will classify each
beneficiary as primary or contingent. Upon the Insured's death, we will pay
the Death Proceeds to the beneficiaries of the Insured as follows:
1) Proceeds will be paid to the primary beneficiaries who are then
alive;
2) If no primary beneficiaries are living, proceeds will be paid to the
surviving contingent beneficiaries;
3) If no beneficiary survives, proceeds will be paid to the Insured's
estate.
Other designations or successions of beneficiaries may be arranged with us.
11.3 SHARE OF PROCEEDS. Unless you specify otherwise, each beneficiary
receiving proceeds will have an equal share in any Death Proceeds payable.
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12. SETTLEMENT PROVISIONS
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12.1 PAYMENT OF PROCEEDS. Proceeds from death or surrender are payable in a
lump sum unless otherwise provided. On Death Proceeds, we will pay interest
at the rate payable in Option I Interest Income or, if greater, the rate
required by law. Interest is payable from the date of death until the date
of settlement. Instead of a lump sum, proceeds of $2,000 or more may be paid
under any settlement option in Section 12.2 by means of a supplementary
contract which we will issue.
12.2 OPTIONAL PLANS OF SETTLEMENT. Proceeds payable under a settlement
option may be paid under one or more of the following options.
Option 1 - Interest Income. The proceeds may be left on deposit. We will pay
interest at a rate not less than 3% per year. These proceeds may be
withdrawn upon request.
Option 2 - Income of a Fixed Amount. We will pay an income of a fixed amount
at agreed upon intervals. The total income per year must be at least 6% of
the proceeds applied under this option. Interest will be credited on the
unpaid balance at a rate not less than 3 1/2% per year. Income will be paid
until the proceeds and interest are paid in full.
W3-VC-VUL-24 page 24
<PAGE>
Contract Number: LV1234567
- ---------------------------------------------------------------------------
12. SETTLEMENT PROVISIONS (continued)
- ---------------------------------------------------------------------------
Option 3 - Income For a Fixed Period. We will pay an income for a fixed
number of years, not to exceed 30. Interest will be credited on the unpaid
balance at a rate not less than 3 1/2% per year. The income will not be less
than the amount shown in the table for this option below.
Option 4 - Life Income with Guaranteed Period. We will pay an income for the
lifetime of the payee. A guaranteed period of 10 or 20 years may be elected.
If the payee dies during the guaranteed period, payments will be continued
to the end of the period and will be paid to the payee's beneficiary. After
the first payment is made, this option may not be revoked or changed.
The income will not be less than the amount determined from the tables for
this option on page 26, based on the sex and adjusted age of the payee on
the date the first payment is due. Adjusted age is the age last birthday
decreased by the adjustment shown below:
Year of First Age
Payment Adjustment
1990-1999 0
2000-2009 1
2010-2019 2
2020-2029 3
2030-2039 4
2040-2049 5
* For each succeeding decade, the age adjustment continues to
increase by 1.
Option 5 - Other Options. The proceeds may be paid under any other
settlement option agreeable to us.
12.3 ELECTION OF AN OPTION. You may elect an option by Written Notice during
the Insured's lifetime. The option must be elected before proceeds become
payable. Assignees and third-party owners may elect an option only with our
consent. Election of Option 4 may be made only if the payee is a natural
person who is the Insured or a beneficiary.
If Death Proceeds are payable, the beneficiary may elect a settlement option
provided that:
1) The manner of settlement has not been restricted before the Insured's
death; and
2) The Death Proceeds have not been paid.
Election of an option is subject to these conditions:
1) Payments must not be less than $50;
2) Payments are made only at annual, semiannual, quarterly or monthly
intervals; and
3) The first payment, except under Option 1 Interest Income, is payable
as of the date the option becomes effective. Under Option 1, interest
is payable at the end of the first payment interval.
If the beneficiary does not receive Death Proceeds or elect a settlement
option by the date one year after we receive proof of the Insured's death,
Death Proceeds will then be calculated and applied under Option I - Interest
Income.
<TABLE>
OPTION 3
Guaranteed Monthly Payments for Each $1,000 of Proceeds
<CAPTION>
Years Monthly Years Monthly Years Monthly Years Monthly Years Monthly
Payable Payment Payable Payment Payable Payment Payable Payment Payable Payment
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 84.65 7 13.37 13 7.93 19 5.96 25 4.96
2 43.05 8 11.89 14 7.48 20 5.75 26 4.84
3 29.19 9 10.75 15 7.10 21 5.56 27 4.73
4 22.26 10 9.83 16 6.76 22 5.39 28 4.62
5 18.11 11 9.08 17 6.46 23 5.23 29 4.53
6 15.34 12 8.46 18 6.20 24 5.09 30 4.44
Annual, Semiannual or Quarterly payments are 11.813, 5.957 and 2.991
respectively, times the Monthly payments.
</TABLE>
W3-VC-VUL-24 page 25
<PAGE>
Contract Number: LV1234567
<TABLE>
OPTION 4
Male Payee - Monthly Life Income
GUARANTEED MONTHLY LIFE INCOME FOR EACH $1,000 OF PROCEEDS
<CAPTION>
Adjusted Payments Payments Adjusted Payments Payments
Age of Payee Guaranteed Guaranteed Age of Payee Guaranteed Guaranteed
on Date of for for on Date of for for
First Payment 10 years 20 years First Payment 10 years 20 years
<S> <C> <C> <C> <C> <C>
40 3.86 3.82 65 5.80 5.16
45 4.09 4.02 66 5-94 5.22
50 4.38 4.26 67 6.08 5.28
68 6.23 5.33
55 4.74 4.54 69 6.38 5.38
60 5.20 4.85 70 6.54 5.43
61 5.31 4.91 71 6.71 5.48
62 5.42 4.97 72 6.87 5.52
63 5.54 5.04 73 7.05 5.55
64 5.67 5.10 74 7.22 5.59
</TABLE>
Adjusted Payments Payments
Age of Payee Guaranteed Guaranteed
on Date of for for
First Payment 10 years 20 years
75 7.40 5.62
76 7.57 5.64
77 7.75 5.65
78 7.92 5.65
79 8.09 5.65
80 8.26 5.65
85 8.97 5.65
90 9.46 5.65
95 9.72 5.65
<TABLE>
Female Payee - Monthly Life Income
GUARANTEED MONTHLY LIFE INCOME FOR EACH $1,000 OF PROCEEDS
<CAPTION>
Adjusted Payments Payments Adjusted Payments Payments
Age of Payee Guaranteed Guaranteed Age of Payee Guaranteed Guaranteed
on Date of for for on Date of for for
First Payment 10 years 20 years First Payment 10 years 20 years
<S> <C> <C> <C> <C> <C>
40 3.65 3.64 65 5.25 4.91
45 3.84 3.81 66 5.37 4.98
67 5.50 5.05
50 4.07 4.01 68 5.63 5.12
55 4.36 4.27 69 5.77 5.19
60 4.75 4.57 70 5.91 5.25
61 4.84 4.64 71 6.07 5.32
62 4.93 4.70 72 6.23 5.37
63 5.03 4.77 73 6.40 5.43
64 5.14 4.84 74 6.58 5.48
</TABLE>
Adjusted Payments Payments
Age of Payee Guaranteed Guaranteed
on Date of for for
First Payment 10 years 20 years
75 6.76 5.52
76 6.95 5.57
77 7.14 5.60
78 7.34 5.63
79 7.54 5.65
80 7.74 5.65
85 8.67 5.65
90 9.32 5.65
95 9.66 5.65
- ----------------------------------------------------------------------------
13. DIVIDENDS
- ----------------------------------------------------------------------------
13.1 DIVIDENDS. Each year we will determine our divisible surplus. This
contract's share, if any, will be credited as a dividend on the Contract
Anniversary. Since we do not expect this contract to contribute to
divisible surplus, it is not expected that any dividends will be credited.
13.2 DIVIDEND OPTIONS> You may choose to apply dividends under any of the
options listed below. Dividends will be applied under Option 13.2b Premium
Payment unless a different option has been chosen in writing.
13.2a Cash. Dividends are paid in cash.
13.2b Premium Payment. Dividends are applied as payment of a Net
Premium.
W3-VC-VUL-26 page 26
<PAGE>
[logo]
LUTHERAN BROTHERHOOD
A Fraternal Benefit Society FLEXIBLE PREMIUM
Minneapolis, Minnesota 55415 VARIABLE LIFE INSURANCE
- ----------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Life insurance payable at death.
Adjustable death benefit.
Flexible premiums.
Return on investments reflected in contract benefits.
Annual dividends payable if earned.
Settlement options to provide retirement income.
<PAGE>
Contract Number: LV1234567
W3-VC-VUL-27 (Blank)
RIDER Contract Number: LV1234567
- ----------------------------------------------------------------------------
ACCIDENTAL DEATH BENEFIT
- ----------------------------------------------------------------------------
1. CONSIDERATION. We include this rider as part of this contract based on
the Application signed by the applicant and the deduction of the monthly
cost as stated on page 5-ADB.
2. DATE OF ISSUE OF THIS RIDER. Unless otherwise stated on page 5-ADB, the
date of issue of this rider is the Date of Issue of this contract.
3. THE BENEFIT. We will pay to the beneficiary as part of the Death
Proceeds the Accidental Death Benefit shown on page 5-ADB upon receiving
proof that the death of the Insured:
1) Resulted from accidental bodily injury directly and independently of
all other causes;
2) Occurred within 120 days of the date of injury; and
3) Occurred before this rider terminated.
4. DEATHS NOT COVERED. The Accidental Death Benefit is not payable if the
Insured's death results directly or indirectly, in whole or in part, from:
1) Infirmity or disease of the body or mind; or
2) Infection, unless it is a result of an accidental bodily injury; or
3) Suicide, while sane or insane; o
4) Intentionally self-inflicted injury, while sane or insane; or
5) Committing or attempting to commit a felony;
6) Any act of war, declared or undeclared, or any act incident to war;
or
7) Voluntarily taking, inhaling or absorbing into the body any
hallucinogen, narcotic or other drug except as prescribed by the
Insured's physician; or
8) Operating, descending from, or riding in any aircraft where the
Insured:
a) Is a pilot, officer, or member of the crew of that aircraft; or
b) Is giving or receiving any kind of training or instruction aboard
that aircraft; or
c) Has any duties aboard that aircraft; or
d) Is being flown for the purpose of descent from that aircraft
while in flight.
5. INCONTESTABILITY. We will not contest the Benefit is not payable if the
Insured's death results validity of this rider after it has been in force
directly or indirectly, in whole or in part, from: during the Insured's
lifetime for two years from the
6. TERMINATION. This rider will terminate on the earliest of:
1) The Contract Anniversary after the Insured's 70th birthday;
2) The date this contract terminates; and
3) The date you give Written Notice to cancel this rider.
Signed for Lutheran Brotherhood
- ----------------------------------------------------------------------------
President SAMPLE /s/ Robert P. Gandrud
- ----------------------------------------------------------------------------
Secretary SAMPLE /s/ David J. Larson
- ----------------------------------------------------------------------------
WR3-VA-ADB-1 (97)
<PAGE>
Date of Issue of this Rider: MAY 1 , 1997 Contract Number: LV1234567
- ----------------------------------------------------------------------------
ACCIDENTAL DEATH BENEFIT
- ----------------------------------------------------------------------------
INSURED: JOHN DOE AGE: 35 SEX: MALE
ACCIDENTAL DEATH BENEFIT $50,000 FORM WR3-VA-ADB-1 (97)
TABLE OF MONTHLY COSTS
BEGINNING
ON RIDER ATTAINED MONTHLY
ANNIVERSARY AGE * COST
MAY 1,
1997 35 $ 2.50
1998 36 2.50
1999 37 2.50
2000 38 2.50
2001 39 2.50
2002 40 2.50
2003 41 2.50
2004 42 2.50
2005 43 2.50
2006 44 2.50
2007 45 2.50
2008 46 2.50
2009 47 3.00
2010 48 3.00
2011 49 3.00
2012 50 3.00
2013 51 3.00
2014 52 3.00
2015 53 3.00
2016 54 3.00
2017 55 3.00
2018 56 3.50
2019 57 3.50
2020 58 3.50
2021 59 3.50
2022 60 4.00
2023 61 4.00
2024 62 4.00
2025 63 4.50
2026 64 4.50
2027 65 5.00
2028 66 5.00
2029 67 5.50
2030 68 6.00
2031 69 6.00
* AGE LAST BIRTHDAY ON RIDER ANNIVERSARY ON OR IMMEDIATELY PRIOR TO MONTHLY
ANNIVERSARY.
WR3-VA-5 page 5-ADB
<PAGE>
RIDER Contract Number: LV1234567
- ---------------------------------------------------------------------------
CHILD TERM LIFE INSURANCE BENEFIT
- ---------------------------------------------------------------------------
1. CONSIDERATION. We include this rider as part of this contract based on
the Application signed by the applicant and the deduction of the monthly
cost as stated on page 5-CIB.
2. DEFINITIONS.
2a. Date of Issue of this Rider. Unless otherwise stated on page 5-
CIB, the date of issue of this rider is the Date of Issue of this
contract.
2b. Rider Anniversary. The same month and day for years after issue of
this rider as in the date of issue of this rider.
2c. Child. A Child insured under this rider is:
1) Any child named in the Application for this rider;
2) Any live child born to the Insured after the date of issue of
this rider;
3) Any child legally adopted by the Insured after the date of
issue of this rider and prior to the Rider Anniversary after
the child's 18th birthday; and
4) Any child accepted for coverage under this rider based on
written application made after the date of issue of this rider.
Child does not include a child for whom insurance has been terminated by
Written Notice.
3. THE BENEFIT. We will provide the benefits described below upon each of
the following events:
3a. Death of a Child. We will pay the amount of Child Term Insurance
shown for this rider on page 5-CIB to the Child's beneficiary upon
receiving proof that the death of the Child occurred before:
1) This rider has terminated; and
2) The Rider Anniversary next after the Child's 21st birthday.
3b. Death of the Insured. Upon receiving proof that the death of the
Insured occurred before this rider terminated, any Child Term
Insurance then in force will become Child Paid-Up Term Insurance to
the Rider Anniversary after the Child's 21st birthday. The amount
of Child Paid-Up Term Insurance is the same as the amount of Child
Term Insurance.
4. MONTHLY COST. The monthly cost for this rider is shown on page 5-CIB.
It is deducted only while at least one child is insured under this rider.
If there are no children insured under this rider on the date of birth or
adoption of any child, you must give us Written Notice of birth or adoption
before the sixth Monthly Anniversary after that date. The monthly cost will
then be deducted beginning on the sixth Monthly Anniversary after the date
of birth or adoption. If the required notice is not given, insurance on
that Child will terminate on that sixth Monthly Anniversary.
5. OPTION TO PURCHASE INSURANCE. On the Rider Anniversary after a Child's
21st birthday, that Child will have the option to purchase an insurance
contract on his or her life with no evidence of insurability required. This
option to purchase will be effective for 31 days. If the Child dies while
this option is in effect and before the option has been exercised, we will
pay the amount of Child Term Insurance or Child Paid-Up Term Insurance to
the Child's beneficiary. This option is subject to the following:
1) Written application must be made to us at our Home Office.
2) No premium may be in default on the date of purchase.
3) The new contract's date of issue will be the date of purchase. The
issue age will be the Child's age last birthday on that date.
Premiums will be based on rates in effect on the date of purchase.
4) The new contract will have its own Incontestability and Suicide
provisions measured from the date of issue. As used in those
provisions, the date of issue will be the date of issue of this
rider.
(continued)
WR3-VC-CIB-1 (97)
<PAGE>
Contract Number: LV1234567
- ----------------------------------------------------------------------------
CHILD TERM LIFE INSURANCE BENEFIT (continued)
- ----------------------------------------------------------------------------
5. OPTION TO PURCHASE INSURANCE (continued).
5) The amount of the new contract may not exceed five times the amount
of the Child Term Insurance.
6) The new contract may be any life insurance contract that we offer at
the time of purchase.
7) If the new contract is a whole life insurance contract with premiums
payable to at least age 85, then the new contract may contain a
disability waiver benefit rider. However, the disability waiver
benefit rider on the new contract will not cover disability
resulting from injury or disease occurring prior to the date of
purchase.
No other additional benefits will be allowed on the new contract
unless evidence of insurability which meets our standards is
provided.
6. BENEFICIARY. The beneficiary of the insurance on the children is named
in the Application. You may change the beneficiary for a Child by giving us
Written Notice while the Child is living. If the owner dies and the Child
has attained age 18, the Child may change the beneficiary by making a
written request to us. If the owner dies and the Child has not attained age
18, the Child's legal guardian may change the beneficiary by making a
written request to us.
The change will become effective if we receive the notice or request at our
Home Office and we acknowledge the change. The effective date of the change
will be the date the notice or request was signed. We will not be liable
for any payment made or action taken by us before we receive the notice or
request.
7. INCONTESTABILITY. With respect to each Child named in an application
for coverage under this rider, we will not contest the validity of this
rider after it has been in force during the lifetime of that Child for two
years from its effective date. This provision will apply from the date this
rider is reinstated with regard to statements made in the application for
reinstatement.
8. REINSTATEMENT. This rider may be reinstated if the contract is
reinstated. To reinstate this rider we require evidence of each Child's
insurability which meets our standards. Paragraph 7 Incontestability will
apply from the date the rider is reinstated with regard to statements made
in the application for reinstatement.
9. SURRENDER OF CHILD PAID-UP TERM INSURANCE. If this rider is in force as
Child Paid-Up Term Insurance, you may surrender the Child Paid-Up Term
Insurance for, its accumulated value by giving Written Notice while the
Child is living. The surrender will be effective on the date the notice is
signed. The accumulated value is the net single premium for the Child Paid-
Up Term Insurance. Values are not less than the minimum values required by
law. Information on applicable accumulated values will be furnished upon
request.
If we receive Written Notice to surrender the Child Paid-Up Term Insurance
within 30 days after a Rider Anniversary, the accumulated value will not be
less than it was on that anniversary.
10. TERMINATION. This rider will terminate on the earlier of:
1) The Rider Anniversary after the 100th birthday of the Insured;
2) The date this contract terminates; and
3) The date you give Written Notice to cancel this rider.
However, if this contract terminates due to the death of the Insured, this
rider will remain in force until all Child Paid-Up Term Insurance under this
rider terminates.
Signed for Lutheran Brotherhood
- ----------------------------------------------------------------------------
President SAMPLE /s/ Robert P. Gandrud
- ----------------------------------------------------------------------------
Secretary SAMPLE /s/ David J. Larson
- ----------------------------------------------------------------------------
WR3-VC-CIB-2 (97)
<PAGE>
Date of Issue of this Rider: MAY 1 , 1997 Contract Number: LV1234567
- ----------------------------------------------------------------------------
CHILD TERM LIFE INSURANCE BENEFIT
- ----------------------------------------------------------------------------
FORM WR3-VC-CIB-1 (97)
CHILD TERM INSURANCE
BIRTH TO 15 DAYS $0
15 DAYS TO 6 MONTHS $5,000
6 MONTHS TO RIDER ANNIVERSARY
AFTER 21ST BIRTHDAY $10,000
MONTHLY COST: $4.50
MONTHLY COST APPLIES ONLY WHILE AT LEAST ONE CHILD IS INSURED UNDER THIS
RIDER. SEE PARAGRAPH 4 OF FORM WR3-VC-CIB-1 (97)
WR3-VC-5 page 5-CIB
<PAGE>
RIDER
Contract Number: LV1234567
- ----------------------------------------------------------------------------
GUARANTEED INCREASE OPTION BENEFIT
- ----------------------------------------------------------------------------
1. CONSIDERATION. We include this rider as part of this contract based on
the Application signed by the applicant and the deduction of the monthly
cost as stated on page 5-GIO.
2. DEFINITIONS.
2a. Date of Issue of this Rider. Unless otherwise stated on page 5-
GIO, the date of issue of this rider is the Date of Issue of this
contract.
2b. Rider Anniversary. The same month and day for years after issue of
this rider as in the date of issue of this rider.
3. THE BENEFIT.
1) You may increase the Face Amount of this contract as provided in
Paragraph 4 Increase Option.
2) We will pay the amount of any Term Insurance (see Paragraph 5) in
force under this rider to the beneficiary as part of the Death
Proceeds upon receiving proof that the death of the Insured occurred
before this rider terminated.
4. INCREASE OPTION.
4a. Increase in Face Amount. An option to increase the Face Amount of
this contract will become effective on each Fixed Increase Option
Date and each Additional Increase Option Date (see paragraphs 4c
and 4d) if less than the Maximum Number of Options have been used
to increase the Face Amount. Each option will be in effect for 90
days after the effective date of the option but will terminate
earlier upon:
1) The date the Face Amount is increased under this rider; or
2) The date this rider terminates.
4b. Maximum Number of Options. The Maximum Number of Options that may
be used to increase the Face Amount is the number of Fixed Increase
option Dates occurring after the date of issue of this rider.
4c. Fixed Increase Option Dates. Fixed Increase Option Dates occur on
the Rider Anniversary after the 25th, 28th, 31st, 34th, 37th, 40th
and 43rd birthdays of the Insured.
4d. Additional Increase Option Dates. An Additional Increase Option
Date occurs upon each of the following events which takes place
between the date of issue of this rider and the Rider Anniversary
after the Insured's 43rd birthday:
1) Marriage of the Insured;
2) Birth of each live child born to the Insured; and
3) Legal adoption of a child by the Insured.
4e. Conditions of Increase. The Face Amount of this contract may be
increased with no evidence of insurability required. The increase
is subject to the following:
1) You must make written application to us at our Home Office.
2) Premium Class for the increase in Face Amount will be the same
as for this rider.
3) The amount of the increase must be at least $10,000 and may not
exceed the Option Amount for this rider as shown on page 5-GIO.
4) The Cash Surrender Value of this contract must be sufficient to
cover the Monthly Deduction on the effective date of the
increase (unless the Death Benefit Guarantee is in force).
5) The Initial Monthly Charge for Increases will be charged on the
effective date of the increase and then on each Monthly
Anniversary until 180 charges have been made.
6) A new schedule of Decrease Charges will apply to the increase
in Face Amount.
(continued)
WR3-VG-GIO-1 (97)
<PAGE>
Contract Number: LV1234567
- ----------------------------------------------------------------------------
GUARANTEED INCREASE OPTION BENEFIT (continued)
- ----------------------------------------------------------------------------
4e. Conditions of Increase (continued).
7) A new Death Benefit Guarantee Premium for this contract will be
determined if the Death Benefit Guarantee is in effect on the
effective date of the increase.
8) The effective date of the increase will be the date shown on the
supplementary contract schedule that we will mail to you.
5. TERM INSURANCE. We will provide Term Insurance on the Insured's life
during the period while at least one Increase Option is in effect. (Periods
during which Increase Options are in effect are specified in Paragraph 4a.)
The amount of insurance will be the Option Amount for this rider as shown on
page 5-GIO.
6. INCONTESTABILITY. We will not contest the validity of this rider after
it has been in force during the Insured's lifetime for two years from the
date of issue of this rider.
7. TERMINATION. This rider will terminate on the earliest of:
1) The date 90 days following the Rider Anniversary after the Insured's
43rd birthday;
2) The date the cumulative total of options used to increase the Face
Amount equals the Maximum Number of Options;
3) The date this contract terminates; and
4) The date you give Written Notice to cancel this rider.
Signed for Lutheran Brotherhood
- ----------------------------------------------------------------------------
President SAMPLE /s/ Robert P. Gandrud
- ----------------------------------------------------------------------------
Secretary SAMPLE /s/ David J. Larson
- ----------------------------------------------------------------------------
WR3-VG-GIO-2 (97)
<PAGE>
Date of Issue of this Rider: MAY 1, 1997 Contract Number: LV1234567
- ----------------------------------------------------------------------------
GUARANTEED INCREASE OPTION BENEFIT
- ----------------------------------------------------------------------------
FORM WR3-VG-GIO-1 (97)
INSURED: JOHN DOE
AGE: 35 SEX: MALE
OPTION AMOUNT $50,000
PREMIUM CLASS: NON-TOBACCO
MONTHLY COST IS DEDUCTED TO THE CONTRACT ANNIVERSARY AFTER AGE 43.
WR3-VG-5 page 5-GIO
<PAGE>
RIDER Contract Number: LV1234567
- ----------------------------------------------------------------------------
COST OF LIVING BENEFIT
- ----------------------------------------------------------------------------
1. CONSIDERATION. We include this rider as part of this contract based on
the Application signed by the applicant and the deduction of the monthly
cost as stated on page 5-COL.
2. DATE OF ISSUE OF THIS RIDER. Unless otherwise stated on page 5-COL, the
date of issue of this rider is the Date of Issue of this contract.
3. THE BENEFIT. This rider increases the Face Amount of this contract.
Increases are effective on each Contract Anniversary after the date of issue
of this rider, provided this rider is then in force. The amount of the
increase is determined on each Contract Anniversary. It is the smallest of:
1) The CPI Increase;
2) 10% of the Eligible Face Amount on the day before the increase,
rounded to the nearest $1,000. The Eligible Face Amount is that
part of the Face Amount with Premium Class which is not rated; and
3) $100,000.
However, no increase will be made if the amount determined above is less
than $1,000. The Premium Class for the increase in Face Amount will be the
same as for this contract.
4. THE CPI INCREASE. The CPI Increase is equal to:
1) The percentage increase in Consumer Price Index from the Base Index
Month to the Current Index Month; multiplied by
2) The Eligible Face Amount on the day before the increase.
The CPI Increase is rounded to the nearest $1,000. If this increase before
rounding is less than $5OO, the CPI Increase for that Contract Anniversary
will be zero. The index used is the Consumer Price Index for All Urban
Consumers. If this index is discontinued or changed we will use a similar
index.
5. INDEX MONTHS. The Current Index Month is the third calendar month
before the Contract Anniversary. The Base Index is the month one year
before the Current Index Month.
6. PREMIUM INCREASE. The increase in Face Amount will increase the monthly
Cost of Insurance for this contract. Your premium billing will be increased
by the greater of:
1) The percentage increase in Face Amount; and
2) The increase in the Death Benefit Guarantee Premium due to the
increase in Face Amount. This amount will be zero if the Death
Benefit Guarantee is not in effect on the effective date of the
increase in Face Amount.
We will mail you a supplemental contract schedule one month before any
Contract Anniversary in which an increase will occur. You may reject the
increase in Face Amount by giving Written Notice before that Contract
Anniversary.
7. INCONTESTABILITY. We will not contest the validity of this rider after
it has been in force during the Insured's lifetime for two years from the
date of issue of this rider.
8. TERMINATION. This rider will terminate on the earliest of:
1) The Expiration Date for this rider shown on page 5-COL;
2) The date this contract terminates;
3) The date you reject an increase in Face Amount under this rider;
4) The date you decrease the Face Amount;
5) The date the sum of the increases in Face Amount due to this rider
equals or exceeds two times the Initial Face Amount; and
6) The date you give Written Notice to cancel this rider.
(continued )
WR3-VL-COL-1 (97)
<PAGE>
Contract Number: LV1234567
- ----------------------------------------------------------------------------
COST OF LIVING BENEFIT (continued)
- ----------------------------------------------------------------------------
9. REINSTATEMENT. If this rider terminates other than under paragraphs 8(l)
and 8(5), it may be reinstated any time before the Expiration Date for this
rider. To reinstate we require evidence of insurability which meets our
standards. The effective date of the reinstatement is the Monthly
Anniversary on or next after the date the application for reinstatement is
approved by us. Paragraph 7 Incontestability will apply from the date of
reinstatement with regard to statements made in the application for
reinstatement.
Signed for Lutheran Brotherhood
- ----------------------------------------------------------------------------
President SAMPLE /s/ Robert P. Gandrud
- ----------------------------------------------------------------------------
Secretary SAMPLE /s/ David J. Larson
- ----------------------------------------------------------------------------
WR3-VL-COL-2 (97)
<PAGE>
Date of Issue of this Rider: MAY 1 , 1997 Contract Number: LV1234567
- ----------------------------------------------------------------------------
COST OF LIVING BENEFIT
- ----------------------------------------------------------------------------
FORM WR3-VL-COL-1 (97)
INSURED: JOHN DOE
AGE: 35 SEX: MALE
EXPIRATION DATE: MAY 1, 2017
MONTHLY COST: NONE
WR3-VL-5 page 5-COL
<PAGE>
RIDER Contract Number: LV1234567
- ----------------------------------------------------------------------------
SPOUSE ADJUSTABLE TERM LIFE INSURANCE BENEFIT
- ----------------------------------------------------------------------------
1. CONSIDERATION. We include this rider as part of this contract based on
the Application signed by the applicant and the deduction of the monthly
cost as stated on page 5-SIB.
2. DEFINITIONS.
2a. Date of Issue of this Rider. Unless otherwise stated on page 5-
SIB, the date of issue of this rider is the Date of Issue of this
contract.
2b. Rider Anniversary. The date of issue of this rider and the same
month and day for years after issue of this rider as in the date of
issue of this rider.
2c. Spouse. The Spouse is the Insured's Spouse named on page 5-SIB.
2d. Spouse's Attained Age. The Spouse's Attained Age on any day is the
Spouse's age last birthday on the Rider Anniversary on or
immediately prior to that day.
3. SPOUSE MEMBERSHIP. We accept the Spouse as an adult member of the
Society. Rights and privileges of membership are set forth in the Bylaws of
the Society or in the Application. These rights and privileges are separate
from the ownership of this contract. Membership rights and privileges
cannot be assigned.
4. THE BENEFIT. Upon receiving proof that the death of the Spouse occurred
before this rider terminated, we will pay to the Spouse's beneficiary the
amount of Spouse Term Insurance shown on page 5-SIB.
5. MONTHLY COST. The monthly cost of this benefit to be deducted on each
Monthly Anniversary is the sum of:
1) The Spouse Cost of Insurance. This amount is determined on each
Monthly Anniversary. It is equal to the Spouse Cost of Insurance
Rate multiplied by the amount of Spouse Term Insurance divided by
1,000;
2) The Spouse Initial Monthly Charge. This is a charge per $1,000 of
the initial amount of Spouse Term Insurance. However, if the initial
amount of Spouse Term Insurance is decreased, the charge will be
based on the amount of Spouse Term Insurance remaining after the
decrease. The charge is made on the date of issue of this rider and
then on each Monthly Anniversary until a total of 180 charges have
been made. The charge per $1,000 is shown on page 5-SIB; and
3) Any Spouse Initial Monthly Charge for Increases. This is a charge
per $1,000 of increase in Spouse Term Insurance. However, if the
increased insurance is later decreased, the charge will be based on
the amount of the increase in Spouse Term Insurance remaining in
force after the decrease. The charge is made on the effective date
of the increase and then on each Monthly Anniversary until 180
charges have been made. The charge is based on the Spouse's
Attained Age on the date of increase. The charge per $1,000 is
shown on page 5-SIB.
WR3-VS-SIB-1 (97)
<PAGE>
Contract Number: LV1234567
- ----------------------------------------------------------------------------
SPOUSE ADJUSTABLE TERM LIFE INSURANCE BENEFIT (continued)
- ----------------------------------------------------------------------------
6. SPOUSE COST OF INSURANCE RATE. We will determine the Spouse Cost of
Insurance Rate monthly. The rate is based on the Spouse's Premium Class,
sex, Issue Age, Attained Age and amount of Spouse Term Insurance.
The Premium Class for the initial amount of Spouse Term Insurance is shown
on page 5-5lB. The Premium Class for any increase in Spouse Term Insurance
will be determined on the effective date of the increase. The Cost of
Insurance Rate for the initial amount of Spouse Term Insurance and for any
increase in Spouse Term Insurance with the same Premium Class as shown on
page 5-SIB will not exceed the rates shown on page 5-SIB. However, for any
amount of Spouse Term Insurance with a rated Premium Class, the maximum cost
is increased in one or both of the following ways, as specified on page 5-
SIB:
1) The maximum Spouse Cost of Insurance Rate is multiplied by a
percentage rating.
2) An extra monthly amount is added to the Spouse Cost of Insurance.
We may charge less than the maximum rate. Any change in Spouse Cost of
Insurance Rates will be based on the initial amount of Spouse Term Insurance
and any requested increases in Spouse Term Insurance and will apply to all
Spouses of the same Premium Class, sex, Issue Age and attained age.
7. INCREASE IN SPOUSE TERM INSURANCE. You may increase the amount of
Spouse Term Insurance any time before the Rider Anniversary next after the
Spouse's 85th birthday. The increase is subject to the following:
1) You must make written application to us at our Home Office.
2) We will require evidence of insurability which meets our standards.
3) The increase must be at least $25,000.
4) The Cash Surrender Value of this contract must be sufficient to
cover the Monthly Deduction on the effective date of the increase
(unless the Death Benefit Guarantee is in force).
5) The Spouse Initial Monthly Charge for Increases (see Paragraph 5(3))
will be charged on the effective date of the increase and then on
each Monthly Anniversary until 180 charges have been made.
6) A new Death Benefit Guarantee Premium for this contract will be
determined if the Death Benefit Guarantee is in effect on the
effective date of the increase.
7) The effective date of the increase will be the date shown on the
supplemental contract schedule that we will mail to you.
Paragraph 11 Incontestability and Paragraph 12 Exclusion: Suicide will apply
to the increase from its effective date with regard to statements made in
the application for increased insurance.
8. DECREASE IN SPOUSE TERM INSURANCE. You may decrease the amount of
Spouse Term Insurance at any time. The decrease is subject to the
following:
1) You must give Written Notice.
2) The decrease will be applied, in successive order, against:
a) The most recent increase in the amount of Spouse Term Insurance;
b) The next most recent increase(s); then
c) The initial amount of Spouse Term Insurance.
3) The remaining amount of Spouse Term Insurance must not be less than
$25,000.
4) A new Death Benefit Guarantee Premium for this contract will be
determined if the Death Benefit Guarantee is in effect on the
effective date of the decrease.
5) The effective date of the decrease will be the Monthly Anniversary
on or next after the date we receive Written Notice. That date will
be shown on the supplemental contract schedule that we will mail to
you.
WR3-VS-SIB-2 (97)
<PAGE>
Contract Number: LV1234567
- ----------------------------------------------------------------------------
SPOUSE ADJUSTABLE TERM LIFE INSURANCE BENEFIT (continued)
- ----------------------------------------------------------------------------
9. CONVERSION PRIVILEGE. You may convert this rider to any life insurance
contract, other than term insurance, that we offer at the time of
conversion. The new contract will be on the life of the Spouse with no
evidence of insurability required. Conversion is subject to the following:
1) Written application must be made to us at our Home Office and this
rider must be surrendered.
2) Conversion must be made while this rider is in force and before the
Rider Anniversary after the 75th birthday of the Spouse. However,
if the Insured dies at any time while this rider is in force, you
may convert this rider within 90 days of the date of the Insured's
death. If the Insured is the owner of this contract, then the
Spouse may convert this rider within 90 days of the date of the
Insured's death.
3) No premium may be in default at the time of conversion.
4) The new contract's date of issue will be the date of conversion.
The issue age will be the Spouse's age last birthday on that date.
Premiums will be based on rates in effect on the date of conversion.
5) The new contract will have its own Incontestability and Suicide
provisions measured from the date of issue. As used in those
provisions, if an increase in Spouse Term Insurance is converted,
the date of issue will be the effective date of the increase.
Otherwise, the date of issue will be the date of issue of this
rider.
6) The new contract will be issued on the same Premium Class as this
rider. If any exclusion rider applies to this rider, the new
contract will also have such an exclusion rider.
7) The amount of the new contract may not exceed the amount of the
Spouse Term Insurance.
10. MISSTATEMENT OF AGE OR SEX. If the Spouse's age or sex has been
misstated, contract values will be adjusted to the amounts that would have
been provided based on the correct age and sex, using the ratio of the most
recent Spouse Cost of Insurance Rates applied on this contract to the
current rates based on the correct age and sex.
11. INCONTESTABILITY. We will not contest the validity of this rider after
it has been in force during the lifetime of the Spouse for two years from
the date of issue of this rider.
If the amount of Spouse Term Insurance is increased according to Paragraph
7, this provision will apply to the increase from its effective date with
regard to statements made in the application for increased insurance. This
provision will apply from the date this rider is reinstated with regard to
statements made in the application for reinstatement.
12. EXCLUSION: SUICIDE. If the Spouse dies by suicide, while sane or
insane, within two years after the date of issue of this rider, the benefit
of this rider is limited to the sum of the monthly cost deductions made for
this rider.
If the Spouse dies by suicide, while sane or insane, within two years after
the effective date of an increase in the amount of Spouse Term Insurance
according to Paragraph 7, the benefit with respect to the increase is
limited to the sum of the monthly cost deductions made for the increase.
13. REINSTATEMENT. This rider may be reinstated if the contract is
reinstated. To reinstate this rider we require evidence of the Spouse's
insurability which meets our standards. Paragraph 11 Incontestability will
apply from the date the rider is reinstated with regard to statements made
in the application for reinstatement.
WR3-VS-SIB-3 (97)
<PAGE>
Contract Number: LV1234567
- ---------------------------------------------------------------------------
SPOUSE ADJUSTABLE TERM LIFE INSURANCE BENEFIT (continued)
- ---------------------------------------------------------------------------
14. BENEFICIARY. The beneficiary of this rider is named in the
Application. You may change the beneficiary by giving us Written Notice
while the Spouse is living. The change will become effective if we receive
the notice or request at our Home Office and we acknowledge the change. The
effective date of the change will be the date the notice or request was
signed. We will not be liable for any payment made or action taken by us
before we receive the notice or request.
15. TERMINATION. This rider will terminate on the earliest of:
1) The Expiration Date for this rider shown on page 5-SIB;
2) The date this contract terminates;
3) The date this rider is converted; and
4) The date you give Written Notice to cancel this rider.
However, if this contract terminates due to the death of the Insured, this
rider will remain in force until the earlier of:
1) 90 days after the date of the Insured's death, and
2) The date this rider is converted.
Signed for Lutheran Brotherhood
- ----------------------------------------------------------------------------
President SAMPLE /s/ Robert P. Gandrud
- ----------------------------------------------------------------------------
Secretary SAMPLE /s/ David J. Larson
- ----------------------------------------------------------------------------
WR3-VS-SIB-4 (97)
<PAGE>
Date of Issue of this Rider: MAY 1 , 1997 Contract Number: LV1234567
- ----------------------------------------------------------------------------
SPOUSE ADJUSTABLE TERM LIFE INSURANCE BENEFIT
- ----------------------------------------------------------------------------
SPOUSE: JANE DOE FORM WR3-VS-SIB-1 (97)
SPOUSE AGE: 35 SPOUSE SEX: FEMALE
SPOUSE TERM INSURANCE: $50,000
PREMIUM CLASS: NON-TOBACCO
SPOUSE INITIAL MONTHLY CHARGE: $V.VV PER $1,000 OF SPOUSE TERM INSURANCE,
CHARGED ONLY IN THE FIRST 180 MONTHLY
DEDUCTIONS ON OR AFTER THE DATE OF ISSUE OF
THIS RIDER.
SPOUSE SPOUSE
BEGINNING SPOUSE'S COST OF INITIAL MONTHLY
ON RIDER ATTAINED INSURANCE CHARGE FOR
ANNIVERSARY AGE RATE * INCREASES #
MAY 1,
1997 35 $ 0.12 $ 0.04
1998 36 0.13 0.04
1999 37 0.14 0.04
2000 38 0.15 0.04
2001 39 0.16 0.04
2002 40 0.18 0.05
2003 41 0.19 0.05
2004 42 0.21 0.05
2005 43 0.22 0.05
2006 44 0.24 0.05
2007 45 0.25 0.05
2008 46 0.27 0.05
2009 47 0.29 0.05
2010 48 0.31 0.05
2011 49 0.33 0.05
2012 50 0.36 0.06
2013 51 0.38 0.06
2014 52 0.42 0.06
2015 53 0.45 0.06
2016 54 0.49 0.06
* MAXIMUM MONTHLY COST PER $1,000 INSURANCE FOR NON-TOBACCO PREMIUM CLASS,
BASED ON COMMISSIONERS 1980 STANDARD ORDINARY MORTALITY TABLE. AGE AT ISSUE
IS AGE LAST BIRTHDAY.
# MONTHLY CHARGE PER $1,000 OF INCREASE IN SPOUSE TERM INSURANCE, CHARGED
ONLY IN THE FIRST 180 MONTHLY DEDUCTIONS ON OR AFTER THE EFFECTIVE DATE OF
THE INCREASE.
EXPIRATION DATE: MAY 1, 2062
WR3-VS-5 page 5-SIB
<PAGE>
Date of Issue of this Rider: MAY 1 , 1997 Contract Number: LV1234567
- ----------------------------------------------------------------------------
SPOUSE ADJUSTABLE TERM LIFE INSURANCE BENEFIT (continued)
- ----------------------------------------------------------------------------
SPOUSE: JANE DOE FORM WR3-VS-SIB-1 (97)
SPOUSE AGE: 35 SPOUSE SEX: FEMALE
SPOUSE TERM INSURANCE: $50,000
SPOUSE SPOUSE
BEGINNING SPOUSE'S COST OF INITIAL MONTHLY
ON RIDER ATTAINED INSURANCE CHARGE FOR
ANNIVERSARY AGE RATE * INCREASES #
MAY 1,
2017 55 $ 0.53 $ 0.06
2018 56 0.56 0.06
2019 57 0.60 0.06
2020 58 0.64 0.06
2021 59 0.68 0.06
2022 60 0.73 0.07
2023 61 0.79 0.07
2024 62 0.87 0.07
2025 63 0.96 0.07
2026 64 1.07 0.07
2027 65 1.18 0.07
2028 66 1.30 0.07
2029 67 1.42 0.07
2030 68 1.55 0.07
2031 69 1.69 0.07
2032 70 1.85 0.07
2033 71 2.05 0.07
2034 72 2.29 0.07
2035 73 2.59 0.07
2036 74 2.92 0.07
2037 75 3.30 0.07
2038 76 3.71 0.07
2039 77 4.14 0.07
2040 78 4.61 0.07
2041 79 5.14 0.07
2042 80 5.73 0.07
2043 81 6.41 0.xx
2044 82 7.20 0.xx
2045 83 8.09 0.xx
046 84 9.07 0.xx
2047 85 10.13 0.xx
* MAXIMUM MONTHLY COST PER $1,000 INSURANCE FOR NON-TOBACCO PREMIUM CLASS,
BASED ON COMMISSIONERS 1980 STANDARD ORDINARY MORTALITY TABLE. AGE AT ISSUE
IS AGE LAST BIRTHDAY.
# MONTHLY CHARGE PER $1,000 OF INCREASE IN SPOUSE TERM INSURANCE, CHARGED
ONLY IN THE FIRST 180 MONTHLY DEDUCTIONS ON OR AFTER THE EFFECTIVE DATE OF
THE INCREASE.
WR3-VS-5 Cl page 5-SIB Continued
<PAGE>
Date of Issue of this Rider: MAY 1 , 1997 Contract Number: LV1234567
- ----------------------------------------------------------------------------
SPOUSE ADJUSTABLE TERM LIFE INSURANCE BENEFIT (continued)
- ----------------------------------------------------------------------------
SPOUSE: JANE DOE FORM WR3-VS-SIB-1 (97)
SPOUSE AGE: 35 SPOUSE SEX: FEMALE
SPOUSE TERM INSURANCE: $50,000
SPOUSE SPOUSE
BEGINNING SPOUSE'S COST OF INITIAL MONTHLY
ON RIDER ATTAINED INSURANCE CHARGE FOR
ANNIVERSARY AGE RATE * INCREASES #
MAY 1,
2048 86 $ 11.26 $
2049 87 12.46
2050 88 13.74
2051 89 15.09
2052 90 16.54
2053 91 18.11
2054 92 19.87
2055 93 21.94
2056 94 24.60
2057 95 28.41
2058 96 xx.xx
2059 97 xx.xx
2060 98 xx.xx
2061 99 xx.xx
* MAXIMUM MONTHLY COST PER $1,000 INSURANCE FOR NON-TOBACCO PREMIUM CLASS,
BASED ON COMMISSIONERS 1980 STANDARD ORDINARY MORTALITY TABLE. AGE AT ISSUE
IS AGE LAST BIRTHDAY.
# MONTHLY CHARGE PER $1,000 OF INCREASE IN SPOUSE TERM INSURANCE, CHARGED
ONLY IN THE FIRST 180 MONTHLY DEDUCTIONS ON OR AFTER THE EFFECTIVE DATE OF
THE INCREASE.
WR3-VS-5 C2 page 5-SIB Continued
<PAGE>
RIDER
Contract Number: LV1234567
- ---------------------------------------------------------------------------
WAIVER OF SELECTED AMOUNT BENEFIT
- ---------------------------------------------------------------------------
1. CONSIDERATION. We include this rider as part of this contract based on
the Application signed by the applicant and the deduction of the monthly
cost as stated on page 5-WSA.
2. DATE OF ISSUE OF THIS RIDER. Unless otherwise stated on page 5-WSA, the
date of issue of this rider is the Date of Issue of this contract.
3. THE BENEFIT. Upon receiving proof that Total Disability has continued
for six consecutive months, we will credit premiums to this contract on each
Monthly Anniversary during the Benefit Period while Total Disability
continues. The premium credited on a Monthly Anniversary will be equal to
the greater of:
1) One-twelfth of the Selected Amount on the date Total Disability
began; and
2) The amount which provides the Monthly Deduction for that Monthly
Anniversary.
In addition, for each Monthly Anniversary that occurred during the Benefit
Period but before we received proof of Total Disability, we will credit the
greater of:
1) A premium equal to one-twelfth of the Selected Amount on the date
Total Disability began; and
2) A Net Premium equal to the Monthly Deduction on that Monthly
Anniversary.
This amount will be credited on the day your claim for waiver is approved by
us.
Unless this contract terminates due to excess loan, each premium credited
will continue this contract in force until the next Monthly Anniversary.
4. BENEFIT PERIOD.
1) If the Insured has a Total Disability at Age 5, the Benefit Period
starts at Age 5 and continues until Age 100.
2) If Total Disability begins after Age 5, but before Age 60, the
Benefit Period starts on the date Total Disability begins and
continues until Age 100.
3) If Total Disability begins at or after Age 60, but before Age 65,
the Benefit Period starts on the date Total Disability begins and
continues until the later of:
a) Age 65 of the Insured; and
b) The date two years after Total Disability begins.
5. DEFINITION OF AGE. For purposes of this rider, "Age 5," "Age 60," "Age
65" and "Age 100" mean the Contract Anniversary after the Insured's 5th,
60th, 65th, and 100th birthday, respectively.
6. DEFINITION OF TOTAL DISABILITY. Total Disability is a disability of the
Insured:
1) Which begins before Age 65;
2) Which results from accidental bodily injury sustained or disease
which first appears while both this contract and this rider are in
force; and
3) Which completely prevents the Insured from engaging in an Occupation
for gain or profit. During the first 24 months of disability,
Occupation is the Insured's regular occupation when disability
begins. After this, it is any occupation for which the Insured is
or becomes qualified by reason of education, training or experience.
However:
a) If the Insured is a full-time student under age 18 when Total
Disability begins, Occupation for gain or profit means attending
school outside the home. This definition applies until the
disabled Insured reaches age 18, or for 24 months if later.
b) If the Insured is primarily a homemaker when Total Disability
begins, Occupation for gain or profit means performing household
duties.
WR3-VW-WSA-1 (97)
<PAGE>
Contract Number: LV1234567
- ----------------------------------------------------------------------------
WAIVER OF SELECTED AMOUNT BENEFIT (continued)
- ----------------------------------------------------------------------------
7. PRESUMPTIVE TOTAL DISABILITY. Total Disability is presumed upon the
total and permanent loss before Age 65, of:
1) Use of both hands or both feet; or
2) Use of one hand and one foot; or
3) Sight in both eyes.
This presumption will continue for 60 months from the date of loss.
However, benefits are payable only as provided in Paragraph 3 The Benefit.
After the 60 month period, Total Disability is no longer presumed.
8. RISKS NOT ASSUMED. No premiums will be credited under this
rider if the Total Disability results from:
1) Intentionally self-inflicted injury, while sane or insane; or
2) Any act of war, declared or undeclared, or any act incident to war.
9. NOTICE AND PROOF OF CLAIM. Written notice and proof of claim must be
given to us at our Home Office within one year after the end of each period
for which we are liable. However, failure to give proof within one year
will not affect the claim if proof is given as soon as is reasonably
possible.
10. PROOF OF CONTINUANCE OF TOTAL DISABILITY. Proof of continuance of
Total Disability, at your expense, will be required at reasonable intervals.
If you do not give proof, no further premiums will be credited under this
rider. After premiums have been credited for two full years, we will not
require proof more than once a year. As part of any proof we may require
the Insured, at our expense, to have an examination by a physician whom we
will name.
11. BENEFITS AFTER PREMIUM IN DEFAULT. No premiums will be credited under
this rider until your claim for waiver is approved.
If a premium is in default, your claim for waiver will be approved only if:
1) Total Disability began before the end of the grace period of the
first premium in default;
2) Written notice of claim is given within one year from the end of the
grace period of the first premium in default, or as soon as
reasonably possible; and
3) All other conditions of this rider are met.
If Total Disability began during the grace period of the first premium in
default, no claim will be considered until the required premium is paid.
12. CONTRACT BENEFITS NOT REDUCED. Premiums credited under this rider will
not reduce any other contract benefits. Accumulated Values and all other
benefits will be the same as if the credited premiums had been paid in cash.
13. PREMIUMS NOT CREDITED. We will not credit the amount of monthly cost
deductions for an Additional Benefit on this contract or for a requested
increase in coverage on any person insured under this contract if the Total
Disability is a result of accidental bodily injury sustained or disease
which first appears before the date of issue of that Additional Benefit or
the effective date of the increase.
14. TERMINATION. This rider will terminate on the earliest of:
1) The date the Insured reaches Age 65 or the end of the Benefit
Period, if later;
2) The date this contract terminates; and
3) The date you give Written Notice to cancel this rider.
Signed for Lutheran Brotherhood
- ----------------------------------------------------------------------------
President SAMPLE /s/ Robert P. Gandrud
- ----------------------------------------------------------------------------
Secretary SAMPLE /s/ David J. Larson
- ----------------------------------------------------------------------------
WR3-VW-WSA-2 (97)
<PAGE>
Date of Issue of this Rider: MAY 1 , 1997 Contract Number: LV1234567
- ----------------------------------------------------------------------------
WAIVER OF SELECTED AMOUNT BENEFIT
- ----------------------------------------------------------------------------
INSURED: JOHN DOE FORM WR3-VW-WSA-1 (97)
AGE: 35 SEX: MALE SELECTED AMOUNT: $1,200.00
TABLE OF MONTHLY COSTS
BEGINNING
ON RIDER ATTAINED MONTHLY
ANNIVERSARY AGE * COST #
MAY 1,
1997 35 3.0%
1998 36 3.0
1999 37 3.0
2000 38 3.0
2001 39 3.0
2002 40 3.5
2003 41 3.5
2004 42 3.5
2005 43 4.0
2006 44 4.5
2007 45 4.5
2008 46 5.0
2009 47 5.0
2010 48 5.0
2011 49 5.0
2012 50 6.0
2013 51 6.5
2014 52 8.0
2015 53 10.0
2016 54 12.5
2017 55 15.0
2018 56 18.0
2019 57 23.0
2020 58 27.0
2021 59 30.0
2022 60 7.0
2023 61 6.0
2024 62 5.0
2025 63 5.0
2026 64 5.0
* AGE LAST BIRTHDAY ON RIDER ANNIVERSARY ON OR IMMEDIATELY PRIOR TO MONTHLY
ANNIVERSARY.
# PERCENTAGE OF THE GREATER OF (1) THE SUM OF THE MONTHLY COST OF INSURANCE,
THE MONTHLY ADMINISTRATIVE CHARGES, ANY INITIAL MONTHLY CHARGES FOR
INCREASES AND THE MONTHLY COST OF ANY OTHER ADDITIONAL BENEFITS AND (2) ONE-
TWELFTH OF THE SELECTED AMOUNT.
WR3-VW-5 page 5-WSA
<PAGE>
RIDER Contract Number: LV1234567
- --------------------------------------------------------------------------
ACCELERATED BENEFITS
- --------------------------------------------------------------------------
We include this rider as part of this contract. If you so elect, we will
pay the Accelerated Benefit according to the provisions of this rider. If
we pay you an Accelerated Benefit, the amount of insurance and the
Accumulated Value for this contract will be reduced or eliminated.
BENEFIT PAYMENTS UNDER THIS RIDER MAY BE TAXABLE. CONSULT YOUR TAX ADVISOR.
1. DEFINITIONS.
la. Doctor. A physician having the designation M.D. or a doctor of
osteopathy having the designation D.O. acting within the legal scope
of his or her license. Doctor does not include you or the Insured or
a member of your family or the Insured's family.
lb. Nursing Home. A facility or that part of one which provides room,
board and inpatient care and:
1) Is licensed by the state in which it operates;
2) Provides nursing services under the supervision of a Doctor or a
registered graduate nurse (RN), licensed practical nurse (LPN)
or licensed vocational nurse (LVN);
3) Has an RN, LPN or LVN on duty or on call at all times and at
least one RN, LPN or LVN who is employed full time on the day
shift; and
4) Keeps a daily medical record of each patient.
Nursing Home does not include that part of any facility which is
primarily:
1) A sheltered living accommodation, a residence home or a similar
living arrangement; or
2) A home or facility for the treatment of alcoholism, drug
addiction or mental illness.
1c. Calculation Rate. The Calculation Rate on any day is the greater
of:
1) The yield on 90-day Treasury bills on that day; and
2) The maximum statutory adjustable policy loan interest rate on
that day.
2. EFFECTIVE DATE OF THIS RIDER. Unless a different date is
shown above, the effective date of this rider is the Date of Issue of
this contract.
3. THE BENEFIT. We will pay an Accelerated Benefit if you give us Written
Notice requesting the benefit and we receive proof satisfactory to us that
the Insured:
1) Has a life expectancy of twelve months or less; or
2) Has been confined in a Nursing Home, due to a condition which
usually requires continuous confinement, for at least six
consecutive months and confinement is expected to continue for the
lifetime of the Insured.
Proof must include certification by a Doctor. We may, at our expense,
require independent medical verification.
You may elect to receive all or part of the Eligible Amount (see Paragraph
4) as an Accelerated Benefit. Payment of an Accelerated Benefit is subject
to the Conditions of Payment (Paragraph 7). The benefit will be paid in a
lump sum. With our approval, you may instead elect to have the Accelerated
Benefit paid in equal periodic payments over a fixed period. The minimum
periodic payment is $500. If the Insured dies before all periodic payments
have been made, we will pay to the beneficiary the present value of the
remaining payments, calculated based on the same interest rate as that used
to determine the periodic payments.
WR3-VX-ACCB-1 (97)
<PAGE>
Contract Number: LV1234567
- ----------------------------------------------------------------------------
ACCELERATED BENEFITS (continued)
- ----------------------------------------------------------------------------
4. ELIGIBLE AMOUNT. The amount available as an Accelerated Benefit will be
the present value of:
1) The amount that would be payable under this contract upon the death
of the Insured;
2) Expected future dividends;
Less
3) Expected future costs of insurance;
4) Expected future charges against this contract; and
5) An administrative fee of $150.
Present values will be calculated using the reduced life expectancy of the
Insured and an interest rate not greater than the Calculation Rate. The
Eligible Amount will be calculated on the date we receive satisfactory proof
that the Insured meets the requirements for the benefit (see Paragraph 3).
Items 2, 3 and 4 will be determined using the scales in effect on that date.
THE ELIGIBLE AMOUNT WILL BE LESS THAN THE AMOUNT THAT WOULD BE PAYABLE UPON
THE DEATH OF THE INSURED.
5. EFFECT OF ACCELERATION. If you elect to have all of the Insured's
Eligible Amount paid as an Accelerated Benefit, this contract will terminate
on the date the benefit is paid. Any riders on this contract that provide
insurance on the life of any other person will be administered according to
the rider provisions regarding the death of the Insured.
If only a portion of the Eligible Amount is paid as an Accelerated Benefit,
this contract will remain in force and the cost of insurance, amount of
insurance, amount of any loan balance and Accumulated Value of the contract
will be reduced. The amount of insurance, loan balance and accumulated value
in each subaccount will be reduced by the same percentage as the percentage
of the Eligible Amount that you elect to receive as an Accelerated Benefit.
The new cost of insurance will be that which would have been charged for the
new face amount based on the Date of Issue of this contract and the
Insured's issue age. Any insurance not included in the calculation of the
Eligible Amount will not be affected. We will send you information showing
the new cost of insurance, amount of insurance, contract loan amount and
Accumulated Value. Existing provisions for premium payments will continue.
If you elect to have only a portion of the Eligible Amount paid as an
Accelerated Benefit, you may make later requests for additional Accelerated
Benefits.
6. OTHER INSUREDS. If a rider on this contract provides life insurance on
a person other than the Insured, that insurance may be used to provide an
Accelerated Benefit on that person if we receive proof satisfactory to us
that he or she:
1) Has a life expectancy of twelve months or less; or
2) Has been confined in a Nursing Home, due to a condition which
usually requires continuous confinement, for at least six
consecutive months and confinement is expected to continue for the
lifetime of that person.
Proof must include certification by a Doctor. We may, at our expense,
require independent medical verification.
WR3-VX-ACCB-2 (97)
<PAGE>
Contract Number: LV1234567
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ACCELERATED BENEFITS (continued)
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6. OTHER INSUREDS (continued). The Accelerated Benefit for any person
other than the Insured is subject to the provisions and conditions of this
rider except that:
1) The Eligible Amount is the present value of:
a) The amount of life insurance provided on that person;
Less
b) Expected future monthly costs or other charges for that
person's life insurance; and
c) An administrative fee of $150.
Present values will be calculated using the reduced life expectancy
of that person and an interest rate not greater than the
Calculation Rate. The Eligible Amount for that person will be
calculated on the date we receive satisfactory proof that he or she
meets the requirements for the benefit. Item (b) will be
determined using the scales in effect on that date.
2) If you elect to have all of that person's Eligible Amount paid as an
Accelerated Benefit, all insurance on that person's life will
terminate on the date the benefit is paid. If only a portion of the
Eligible Amount is paid as an Accelerated Benefit, the rider will
remain in force and the monthly cost and amount of insurance for the
rider will be reduced. The amount of insurance will be reduced by
the same percentage as the percentage of the person's Eligible
Amount that you elect to receive as an Accelerated Benefit.
Insurance provided on the Insured or on any other person will not be
affected. We will send you information for the rider showing the
new monthly cost and the new amount of insurance.
7. CONDITIONS OF PAYMENTS. Payment of an Accelerated Benefit is subject to
the following conditions:
1) This contract must be in force.
2) Any assignee, irrevocable beneficiary or other party with ownership
rights must consent to payment of the Accelerated Benefit.
3) Election of an Accelerated Benefit is voluntary. You may not elect
an Accelerated Benefit if:
a) You are required by law to use this rider to meet the claims of
creditors; or
b) You are required by a government agency to use this benefit in
order to apply for, obtain or keep a government benefit or
entitlement.
4) The Accelerated Benefit payable for any person must be at least
$10,000 or, if smaller, that person's entire Eligible Amount.
5) If you elect to have only part of any person's Eligible Amount paid
as an Accelerated Benefit, the amount of insurance remaining in
force on that person after payment of the benefit must be at least
$10,000.
8. TERMINATION. This rider will terminate on the earlier of:
1) The date this contract is terminated; and
2) The date you give Written Notice to cancel this rider.
Signed for Lutheran Brotherhood
- ----------------------------------------------------------------------------
President SAMPLE /s/ Robert P. Gandrud
- ----------------------------------------------------------------------------
Secretary SAMPLE /s/ David J. Larson
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WR3-VX-ACCB-3 (97)
<PAGE>
RIDER Contract Number: LV1234567
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LUTHERAN CHARITY BENEFIT
- --------------------------------------------------------------------------
We include this rider as part of this contract. If, upon the death of a
person insured under this contract, we pay Charitable Death Proceeds of at
least $1,000 to a Lutheran Charitable Organization, then we will also pay a
Charitable Amount to that organization.
1. CHARITABLE AMOUNT. The Charitable Amount that we will pay to a Lutheran
Charitable Organization is the lesser of:
1) 10% of the Charitable Death Proceeds paid to that organization; and
2) $25,000.
However, if the amount determined above is less than $100, then no
Charitable Amount is payable to that organization.
2. LUTHERAN CHARITABLE ORGANIZATION. A legally incorporated nonprofit
organization which:
1) Qualifies as a charitable organization under Internal Revenue Code
Section 170(c), or its successor; and
2) Identifies itself as Lutheran.
3. CHARITABLE DEATH PROCEEDS. The amount we pay as a result of the death
of any person insured under this contract to a Lutheran Charitable
Organization designated as a beneficiary of that person's life insurance.
4. MULTIPLE CHARITABLE BENEFICIARIES. If Charitable Death Proceeds under
this contract are paid to more than one Lutheran Charitable Organization and
the total of Charitable Amounts determined as in Paragraph I would exceed
$25,000, then we will pay pro rata amounts to each organization such that
the total of Charitable Amounts that we pay on the death of a person insured
under this contract is equal to $25,000.
5. MULTIPLE CONTRACTS. If Charitable Death Proceeds are paid under more
than one Lutheran Brotherhood contract upon the death of the Insured and the
total of Charitable Amounts payable under all contracts as determined in
Paragraph 1 would exceed $25,000, then we will pay pro rata amounts to each
organization such that the total Charitable Amounts that we pay to Lutheran
Charitable Organizations upon the death of any insured person is equal to
$25,000.
Signed for Lutheran Brotherhood
- ----------------------------------------------------------------------------
President SAMPLE /s/ Robert P. Gandrud
- ----------------------------------------------------------------------------
Secretary SAMPLE /s/ David J. Larson
- ----------------------------------------------------------------------------
WR3-VY-LCB-1 (97)
<PAGE>
AMENDATORY AGREEMENT Contract Number: LV1234567
- ----------------------------------------------------------------------------
AVIATION EXCLUSION
- ----------------------------------------------------------------------------
1. CONFLICT WITH OTHER PROVISIONS. This agreement takes precedence over
any provision of this contract with which it is in conflict.
2. DESIGNATED INSURED. This agreement applies only to the Designated
Insured(s) named for this agreement on page 5-AVEX.
3. EXCLUSION. The amount payable upon the death of a Designated Insured is
limited if that person's death is a result of operating, descending from, or
riding in any aircraft where the Designated Insured:
1) Is a pilot, officer, or member of the crew of that aircraft; or
2) Is giving or receiving any kind of training or instruction aboard
that aircraft; or
3) Has any duties aboard that aircraft; or
4) Is being flown for the purpose of descent from that aircraft while in
flight.
4. LIMITED DEATH PROCEEDS. If a Designated Insured dies as in Paragraph 3,
the amount payable upon that person's death is limited as follows:
1) If that person is named as Insured on page 3 of this contract, then
the amount payable is limited to the greater of:
a) The reserve for this contract less any Debt; and
b) The premiums paid on this contract less the sum of:
i) The monthly cost deductions made for any riders which
provide coverage on a person other than the Designated
Insured;
ii) Any Partial Surrenders; and
iii) Any Debt.
2) If that person is covered only under a rider attached to this
contract, then the amount payable is limited to the sum of the
monthly cost deductions made for the rider covering that person.
In no case will this agreement increase the amount otherwise payable under
this contract. Any amount payable will be paid in a lump sum.
5. SCOPE OF THIS AGREEMENT. If this contract is changed or converted, this
agreement will be included in the new contract.
Signed for Lutheran Brotherhood
- ----------------------------------------------------------------------------
President SAMPLE /s/ Robert P. Gandrud
- ----------------------------------------------------------------------------
Secretary SAMPLE /s/ David J. Larson
- ----------------------------------------------------------------------------
W-VA-Amend.AVEX (97)
<PAGE>
Contract Number: LV1234567
- ----------------------------------------------------------------------------
AVIATION EXCLUSION
- ----------------------------------------------------------------------------
FORM W-VA-AMEND.AVEX (97)
DESIGNATED INSURED: JOHN DOE
W-VA-5 page 5-AVEX
<PAGE>
AMENDATORY AGREEMENT Contract Number: LV1234567
- ----------------------------------------------------------------------------
ARMED FORCES AVIATION EXCLUSION
- ----------------------------------------------------------------------------
1. CONFLICT WITH OTHER PROVISIONS. This agreement takes precedence over
any provision of this contract with which it is in conflict.
2. DESIGNATED INSURED. This agreement applies only to the Designated
Insured(s) named for this agreement on page 5-AFAE.
3. EXCLUSION. The amount payable upon the death of a Designated Insured is
limited if that person's death is a result of operating, descending from, or
riding in any aircraft where the Designated Insured:
1) Is a pilot, officer, or member of the crew of that aircraft; or
2) Is giving or receiving any kind of training or instruction aboard
that aircraft; or
3) Is being flown for the purpose of descent from that aircraft while
in flight.
This exclusion will apply only while the Designated Insured is:
1) Acting as an advisor; or
2) On full or part-time duty; or
3) In training,
for the armed forces of one or more countries.
4. LIMITED DEATH PROCEEDS. If a Designated Insured dies as in Paragraph 3,
the amount payable upon that person's death is limited as follows:
1) If that person is named as Insured on page 3 of this contract, then
the amount payable is limited to the greater of:
a) The reserve for this contract less any Debt; and
b) The premiums paid on this contract less the sum of:
i) The monthly cost deductions made for any riders which
provide coverage on a person other than the Designated
Insured;
ii) Any Partial Surrenders; and
iii) Any Debt.
2) If that person is covered only under a rider attached to this
contract, then the amount payable is limited to the sum of the
monthly cost deductions made for the rider covering that person.
In no case will this agreement increase the amount otherwise payable under
this contract. Any amount payable will be paid in a lump sum.
5. SCOPE OF THIS AGREEMENT. If this contract is changed or converted, this
agreement will be included in the new contract.
Signed for Lutheran Brotherhood
- ----------------------------------------------------------------------------
President SAMPLE /s/ Robert P. Gandrud
- ----------------------------------------------------------------------------
Secretary SAMPLE /s/ David J. Larson
- ----------------------------------------------------------------------------
W-VF-Amend.AFAE (97)
<PAGE>
Contract Number: LV1234567
- ----------------------------------------------------------------------------
ARMED FORCES AVIATION EXCLUSION
- ----------------------------------------------------------------------------
FORM W-VF-AMEND.AFAE (97)
DESIGNATED INSURED: JOHN DOE
W-VF-5 page 5-AFAE
<PAGE>
AMENDATORY AGREEMENT Contract Number: LV1234567
- ----------------------------------------------------------------------------
SURVIVAL PROVISION
- ----------------------------------------------------------------------------
1. CONFLICT WITH OTHER PROVISIONS. This agreement takes precedence over
any provision of this contract with which it is in conflict.
2. SURVIVAL PROVISION. Payment of proceeds will be made to the
beneficiaries according to the provisions of this contract. However, to
determine who will receive the proceeds on the death of any person insured
under this contract, any beneficiary of that person who dies simultaneously
with that person or within a specified number of days after that person will
be deemed to have died before that person. The number of days is on the
request form for this agreement.
3. TERMINATION. You may terminate this agreement by Written Notice.
Signed for Lutheran Brotherhood
- ----------------------------------------------------------------------------
President SAMPLE /s/ Robert P. Gandrud
- ----------------------------------------------------------------------------
Secretary SAMPLE /s/ David J. Larson
W-VS-Amend.Surv Prov (97)
<PAGE>
AMENDATORY AGREEMENT
Contract Number: LV1234567
- ----------------------------------------------------------------------------
PRIMARY BENEFICIARY SURVIVAL PROVISION
- ----------------------------------------------------------------------------
1. CONFLICT WITH OTHER PROVISIONS. This agreement takes precedence over
any provision of this contract with which it is in conflict.
2. PRIMARY BENEFICIARY SURVIVAL PROVISION. Payment of proceeds will be
made to the beneficiaries according to the provisions of this contract.
However, to determine who will receive the proceeds on the death of any
person insured under this contract, any primary beneficiary of that person
who dies simultaneously with that person or within a specified number of
days after that person will be deemed to have died before that person. The
number of days is on the request form for this agreement.
3. TERMINATION. You may terminate this agreement by Written Notice.
Signed for Lutheran Brotherhood
- ----------------------------------------------------------------------------
President SAMPLE /s/ Robert P. Gandrud
- ----------------------------------------------------------------------------
Secretary SAMPLE /s/ David J. Larson
W-VP-Amend.PBSP (97)
lb-vl\s-6\1997\riders.doc
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