REGISTRATION NO. 33-72386
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 7
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
[X] on May 1, 1998 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(i) of Rule 485
[ ] on (date) pursuant to paragraph (a)(i) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(ii) of Rule 485
[ ] on (date) pursuant to paragraph (a)(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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<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 seven Portfolios of the Fund, the Growth
Portfolio, the High Yield Portfolio, the Income Portfolio, the Opportunity
Growth Portfolio, the Mid Cap Growth Portfolio, the World Growth Portfolio,
and the Money Market Portfolio. 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.
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The date of this Prospectus is May 1, 1998.
TABLE OF CONTENTS
Page
DEFINITIONS 5
SUMMARY 8
The Contract 8
Subaccounts of the Variable Account; Portfolios of the Fund 8
Death Proceeds and Death Benefit Options 9
Additional Insurance Benefits 9
Amount of Accumulated Value and Cash Surrender Value 10
Flexibility to Adjust Amount of Death Benefit 10
Contract Issuance 11
Allocation of Net Premiums 11
Contract Lapse and Reinstatement 11
Death Benefit Guarantee Protection 12
Charges Assessed in Connection with the Contract 12
Free Look Privileges 14
Loan Privileges 14
Exchange Privileges 15
Surrender of the Contract 15
Tax Treatment of Accumulated Value 15
Tax Treatment of Death Benefits Received by the Beneficiary 16
Employment-Related Benefit Plans 16
LUTHERAN BROTHERHOOD AND THE VARIABLE ACCOUNT 16
Lutheran Brotherhood 16
The Variable Account 16
LB Series Fund, Inc. 17
Performance Information 18
Addition, Deletion or Substitution of Investments 18
CONTRACT BENEFITS 19
Death Benefits 19
Accumulated Value and Cash Surrender Value 24
Payment of Contract Benefits 25
PAYMENT AND ALLOCATION OF PREMIUMS 26
Issuance of a Contract 26
Amount and Timing of Premiums 27
Allocation of Premiums and Accumulated Value 28
Contract Lapse and Reinstatement 29
CHARGES AND DEDUCTIONS 31
Premium Expense Charges 31
Accumulated Value Charges 32
Decrease Charge 32
Monthly Deduction 35
Partial Surrender Charge 39
Charges Against the Variable Account 39
DEATH BENEFIT GUARANTEE 39
CONTRACT RIGHTS 42
Loan Privileges 42
Surrender Privileges 43
Free Look Privileges 46
Exchange Privileges 46
GENERAL PROVISIONS 47
Postponement of Payments 47
Date of Receipt 47
The Contract 47
Suicide 48
Incontestability 48
Change of Owner or Beneficiary 48
Assignment as Collateral 48
Misstatement of Age or Gender 48
Due Proof of Death 48
Reports to Contract Owners 48
Additional Insurance Benefits 49
Charitability for Life 49
Accelerated Benefits Rider 50
Reservation of Certain Rights 50
FEDERAL TAX MATTERS 51
Contract Proceeds 51
LB's Tax Status 53
EMPLOYMENT-RELATED BENEFIT PLANS 54
VOTING RIGHTS 54
DIRECTORS AND OFFICERS OF LB 55
Directors 55
Executive Officers 55
SALES AND OTHER AGREEMENTS 56
YEAR 2000 57
LEGAL PROCEEDINGS 58
LEGAL MATTERS 58
EXPERTS 58
FURTHER INFORMATION 58
FINANCIAL STATEMENTS 58
APPENDIX A - Illustrations of Death Benefits, Accumulated
Values and Cash Surrender Values A-1
APPENDIX B - Deferred Administrative Charges Per
$1,000 of Face Amount B-1
APPENDIX C - Initial Monthly Administrative Charges Per
$1,000 of Face Amount C-1
APPENDIX D - Prior Contracts D-1
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 seven Subaccounts of the Variable
Account--the Growth Subaccount, the High Yield Subaccount, the Income
Subaccount, the Opportunity Growth Subaccount, the Mid Cap Growth
Subaccount, the World Growth Subaccount, and the Money Market Subaccount.
The assets of each such Subaccount will be invested in the corresponding
Portfolio (the Growth Portfolio, the High Yield Portfolio, the Income
Portfolio, the Opportunity Growth Portfolio, the Mid Cap Growth Portfolio,
the World Growth Portfolio, or the Money Market Portfolio) of the Fund.
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.
Mid Cap Growth Portfolio. To achieve long term growth of capital by
investing primarily in a professionally managed diversified portfolio of
common stocks of companies with medium market capitalizations.
World Growth Portfolio. To achieve long-term growth of capital by investing
primarily in a professionally managed diversified portfolio of common stocks
of established, non-U.S. companies.
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, Mid Cap 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 1997, LB had total
assets of approximately $13.2 billion.
LB is subject to regulation by the Insurance Division of the State of
Minnesota as well as by the insurance departments of all the other states
and jurisdictions in which it does business. LB submits annual reports on
its operations and finances to insurance officials in such states and
jurisdictions. The forms of Contracts described in 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, Mid Cap 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 T. Rowe Price Associates, Inc. ("T. Rowe Price") as
investment sub-adviser for the Opportunity Growth Portfolio. T. Rowe Price
was founded in 1937 and has its principal offices in Baltimore, Maryland.
As of December 31, 1997, T. Rowe Price and its affiliates managed over $124
billion. Richard T. Whitney, Managing Director of T. Rowe Price, is
primarily responsible for day-to-day management of the Opportunity Growth
Portfolio and developing and executing the Portfolio's investment program.
LB pays the Sub-adviser for the Opportunity Growth Portfolio an annual sub-
advisory fee for the performance of sub-advisory services. The fee payable
is equal to .30% of that Portfolio's average daily net assets.
LB has engaged Rowe Price-Fleming International, Inc., ("Price-Fleming") as
investment sub-adviser for the World Growth Portfolio. Price-Fleming was
founded in 1979 as a joint venture between T. Rowe Price Associates, Inc.
and Robert Fleming Holdings Limited. Price-Fleming is one of the world's
largest international mutual fund asset managers with approximately the U.S.
equivalent of $30 billion under management as of December 31, 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. 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, Mid Cap 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. 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 10, 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 28 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. If certain requirements are satisfied,
however, accelerated death benefits paid under the Accelerated Benefits
Rider to a terminally or chronically ill insured individual, as defined in
the Code, may not be subject to 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". The Code contains a safe harbor provision
which provides that insurance contracts such as the Contract meet the
diversification requirements if, as of the end of each quarter, the
underlying assets of the Variable Account meet the diversification
requirements applicable to regulated investment companies, and no more than
fifty-five percent (55%) of the total assets underlying the Variable Account
consist of cash, cash items, U.S. government securities and securities of
other regulated investment companies.
On March 1, 1989, the Treasury Department adopted regulations (Treas. Reg.
1.817-5) which established diversification requirements for the investments
underlying variable contracts such as the Contract. The regulations amplify
the diversification requirements for variable contracts set forth in the
Code and provide an alternative to the safe harbor provision described
above. Under the regulations, the Variable Account will be deemed
adequately diversified if: (1) no more than 55% of the value of the total
assets of the account is represented by any one investment; (2) no more than
70% of the value of the total assets of the account is represented by any
two investments; (3) no more than 80% of the value of the total assets of
the account is represented by any three investments; and (4) no more than
90% of the value of the total assets of the account is represented by any
four investments.
The assets of the Fund are expected to meet the diversification
requirements. 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.
<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 W. Angstadt Executive Vice President and Chief Marketing Officer
David J. Larson Senior Vice President, Secretary and General Counsel
Dr. Edward A. Lindell Senior Vice President - External Affairs
Michael E. Loken Senior Vice President - Management Information Services
Bruce J. Nicholson Executive Vice President and Chief Operating Officer
Paul R. Ramseth Executive Vice President - Strategic Development
William H. Reichwald Executive Vice President - Steward Project
Jennifer H. Martin Senior Vice President - Human Resources
Jerald E. Sourdiff Senior Vice President and Chief Financial Officer
Mary M. Abbey Vice President - Client Systems
Galen R. Becklin Vice President - Management Information Services
Larry A. Borlaug Vice President - Prototype Development
Colleen Both Vice President - Chief Compliance Officer
J. Keith Both Senior Vice President - Marketing
Randall L. Boushek Vice President - Portfolio Manager
Michael R. Braun Vice President - Management Information Services
David J. Christianson Vice President - Insurance Services
Craig R. Darrington Vice President - Marketing
Pamela H. Desnick Vice President - Communications
Mitchell F. Felchle Vice President - Institutional Relations Group
Charles E. Heeren Vice President - Bond Investments
Wayne A. Hellbusch Regional Vice President
Otis F. Hilbert Vice President - Law
Gary J. Kallsen Vice President - Mortgages and Real Estate
Fred O. Konrath Vice President - Marketing
Douglas B. Miller Regional Vice President - Marketing
C. Theodore Molen Regional Vice President - Marketing
Susan Oberman Smith Vice President - Product Management
James R. Olson Senior Vice President - Member Services
Kay J. Owen Vice President - Corporate Administration
Dennis K. Peterson Vice President - Corporate Scorecard
Bruce M. Piltingsrud Vice President - Member Strategies
Richard B. Ruckdashel Vice President - Product Marketing
Rolf H. Running Vice President - New Ventures Group
Lynette J.C. Stertz Vice President - Controller's
David K. Stewart Vice President and Treasurer
John O. Swanson, M.D. Vice President and Medical Director
Louise K. 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 - Systems Support
</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 Mid Cap Growth Fund, Lutheran Brotherhood World 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.
YEAR 2000
LB has conducted a review of its computer systems to identify systems that
could be affected by the "Year 2000" problem and is developing an
implementation plan to resolve the issue. The Year 2000 problem is the
result of computer programs being written using two digits (rather than
four) to define the applicable year. Any of LB's computer programs that
have time-sensitive software may recognize a date using "00" as the year
1900 rather than the year 2000. This could result in a major system failure
or miscalculations. LB presently believes that, with modifications to its
existing software and conversion to new software, the Year 2000 problem will
not pose significant operational problems for its computer systems as so
modified and converted. If, however, such modifications and conversions are
not completed timely, the Year 2000 problem may have a material impact on
the operations of LB. The Year 2000 readiness of other third parties whose
system failures could have an impact on LB's operations is currently being
evaluated. The potential materiality of any such impact is not known at
this time. A description of the Fund's preparations for the "Year 2000" is
contained in the accompanying prospectus for the Fund.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account is a party or
to which the assets of the Variable Account are subject. Neither LB nor
LBSC are involved in any litigation that is of material importance in
relation to their total assets or that relates to the Variable Account.
LEGAL MATTERS
All matters of applicable state law pertaining to the Contracts, including
LB's right to issue the Contracts thereunder, have been passed upon by James
M. Odland, Counsel to LB.
EXPERTS
The financial statements of LB and the Variable Account included in this
Prospectus have been so included in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm
as experts in auditing and accounting.
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. The SEC also maintains a web site
(http://www.sec.gov) that contains all of the material incorporated by
reference herein, and other information regarding the Contract. 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.
3100 Multifoods Tower
33 South Sixth Street
Minneapolis, MN 55402-3795
Price Waterhouse
[GRAPHIC OMITTED: LOGO]
Report of Independent Accountants
To Lutheran Brotherhood and Contract
Owners of LB Variable Insurance Account I
In our opinion, the accompanying statement of assets and liabilities
and the related statements of operations and of changes in net assets
present fairly, in all material respects, the financial position of
the Opportunity Growth, World Growth, Growth, High Yield, Income, and
Money Market subaccounts of LB Variable Insurance Account I at
December 31, 1997, the results of each of their operations for the
year then ended and the changes in each of their net assets for each
of the two years in the period then ended, in conformity with
generally accepted accounting principles. These financial statements
are the responsibility of Lutheran Brotherhood's management; our
responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
/s/Price Waterhouse LLP
March 20, 1998
LB Variable Insurance Account I
Opportunity Growth Subaccount
Financial Statements
Statement of Assets and Liabilities
December 31, 1997
ASSETS:
Investment in LB Series Fund, Inc. 1,129,991
shares at net asset value of $11.55 per share
(cost $13,029,824) $13,049,680
Receivable from LB for units issued 14,234
------------
Total assets 13,063,914
------------
LIABILITIES:
Payable to LB for mortality and expense
risk charge 6,795
------------
Total liabilities 6,795
------------
NET ASSETS $13,057,119
============
Number of units outstanding 1,098,368
============
Unit Value (net assets divided by units outstanding) $11.89
======
Statement of Operations
Year Ended December 1997
INVESTMENT INCOME:
Dividend Income $70,581
Mortality and expense risk charge (58,995)
-----------
Net investment income 11,586
-----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investments 2,747
Net change in unrealized appreciation
of investments 231,093
-----------
Net gain on investments 233,840
-----------
Net increase in net assets resulting
from operations $245,426
===========
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended December 31, 1997 and 1996
1997 1996
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C>
Net investment income (loss) $11,586 $(9,229)
Net realized gain on investments 2,747 296,560
Net change in unrealized appreciation or depreciation
of investments 231,093 (211,237)
------------ ------------
Net increase in net assets resulting from operations 245,426 76,094
------------ ------------
UNIT TRANSACTIONS:
Proceeds from units issued 7,036,303 6,377,190
Net asset value of units redeemed (1,267,888) (1,112,659)
Transfers from other subaccounts 1,104,165 1,422,314
Transfers to other subaccounts (546,909) (276,917)
------------ ------------
Net increase in net assets from unit transactions 6,325,671 6,409,928
------------ ------------
Net increase in net assets 6,571,097 6,486,022
NET ASSETS:
Beginning of period 6,486,022 --
------------ ------------
End of period $13,057,119 $6,486,022
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
LB VARIABLE INSURANCE ACCOUNT I
WORLD GROWTH SUBACCOUNT
Financial Statements
Statement of Assets and Liabilities
December 31, 1997
ASSETS:
Investment in LB Series Fund, Inc. 704,564
shares at net asset value of $11.12 per share
(cost $7,659,439) $7,835,159
------------
Total assets 7,835,159
------------
LIABILITIES:
Payable to LB for units redeemed 137,253
Payable to LB for mortality and expense
risk charge 4,106
------------
Total liabilities 141,359
------------
NET ASSETS $7,693,800
============
Number of units outstanding 685,805
============
Unit Value (net assets divided by units outstanding) $11.22
======
Statement of Operations
Year Ended December 1997
INVESTMENT INCOME:
Dividend Income $88,709
Mortality and expense risk charge (36,016)
-----------
Net investment income 52,693
-----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investments 12,125
Net change in unrealized depreciation
of investments (38,743)
-----------
Net loss on investments (26,618)
-----------
Net increase in net assets resulting
from operations $26,075
===========
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended December 31, 1997 and 1996
1997 1996
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $52,693 $20,479
Net realized gain on investments 12,125 10,331
Net change in unrealized appreciation or depreciation
of investments (38,743) 214,463
------------ ------------
Net increase in net assets resulting from operations 26,075 245,273
------------ ------------
UNIT TRANSACTIONS:
Proceeds from units issued 4,438,408 3,779,351
Net asset value of units redeemed (737,765) (771,933)
Transfers from other subaccounts 530,199 862,964
Transfers to other subaccounts (525,824) (152,948)
------------ ------------
Net increase in net assets from unit transactions 3,705,018 3,717,434
------------ ------------
Net increase in net assets 3,731,093 3,962,707
NET ASSETS:
Beginning of period 3,962,707 --
------------ ------------
End of period $7,693,800 $3,962,707
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
LB Variable Insurance Account I
Growth Subaccount
Financial Statements
Statement of Assets and Liabilities
December 31, 1997
ASSETS:
Investment in LB Series Fund, Inc. 1,685,982
shares at net asset value of $21.58 per share
(cost $30,200,228) $36,389,676
Receivable from LB for units issued 205,687
------------
Total assets 36,595,363
------------
LIABILITIES:
Payable to LB for mortality and expense
risk charge 19,069
------------
Total liabilities 19,069
------------
NET ASSETS $36,576,294
============
Number of units outstanding 898,762
============
Unit Value (net assets divided by units outstanding) $40.70
======
Statement of Operations
Year Ended December 1997
INVESTMENT INCOME:
Dividend Income $317,263
Mortality and expense risk charge (167,145)
------------
Net investment income 150,118
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investments 2,962,492
Net change in unrealized appreciation
of investments 3,695,763
------------
Net gain on investments 6,658,255
------------
Net increase in net assets resulting
from operations $6,808,373
============
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended December 31, 1997 and 1996
1997 1996
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $150,118 $117,288
Net realized gain on investments 2,962,492 1,244,003
Net change in unrealized appreciation or depreciation
of investments 3,695,763 1,287,772
------------ ------------
Net increase in net assets resulting from operations 6,808,373 2,649,063
------------ ------------
UNIT TRANSACTIONS:
Proceeds from units issued 13,763,423 11,029,372
Net asset value of units redeemed (3,469,292) (1,911,531)
Transfers from other subaccounts 1,480,476 1,161,920
Transfers to other subaccounts (1,023,510) (1,987,506)
------------ ------------
Net increase in net assets from unit transactions 10,751,097 8,292,255
------------ ------------
Net increase in net assets 17,559,470 10,941,318
NET ASSETS:
Beginning of period 19,016,824 8,075,506
------------ ------------
End of period $36,576,294 $19,016,824
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
LB Variable Insurance Account I
High Yield Subaccount
Financial Statements
Statement of Assets and Liabilities
December 31, 1997
ASSETS:
Investment in LB Series Fund, Inc. 1,634,819
shares at net asset value of $10.44 per share
(cost $16,381,948) $17,061,975
Receivable from LB for units issued 23,341
------------
Total assets 17,085,316
------------
LIABILITIES:
Payable to LB for mortality and expense
risk charge 8,978
------------
Total liabilities 8,978
------------
NET ASSETS $17,076,338
============
Number of units outstanding 541,770
============
Unit Value (net assets divided by units outstanding) $31.52
======
Statement of Operations
Year Ended December 1997
INVESTMENT INCOME:
Dividend Income $1,258,212
Mortality and expense risk charge (79,770)
------------
Net investment income 1,178,442
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investments 2,633
Net change in unrealized appreciation
of investments 508,761
------------
Net gain on investments 511,394
------------
Net increase in net assets resulting
from operations $1,689,836
============
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended December 31, 1997 and 1996
1997 1996
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $1,178,442 $609,756
Net realized gain on investments 2,633 2,820
Net change in unrealized appreciation or depreciation
of investments 508,761 70,483
------------ ------------
Net increase in net assets resulting from operations 1,689,836 683,059
------------ ------------
UNIT TRANSACTIONS:
Proceeds from units issued 7,196,585 5,931,970
Net asset value of units redeemed (1,543,682) (921,110)
Transfers from other subaccounts 585,503 666,982
Transfers to other subaccounts (472,347) (930,942)
------------ ------------
Net increase in net assets from unit transactions 5,766,059 4,746,900
------------ ------------
Net increase in net assets 7,455,895 5,429,959
NET ASSETS:
Beginning of period 9,620,443 4,190,484
------------ ------------
End of period $17,076,338 $9,620,443
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
LB Variable Insurance Account I
Income Subaccount
Financial Statements
Statement of Assets and Liabilities
December 31, 1997
ASSETS:
Investment in LB Series Fund, Inc. 573,147
shares at net asset value of $9.92 per share
(cost $5,535,421) $5,683,788
Receivable from LB for units issued 831
------------
Total assets 5,684,619
------------
LIABILITIES:
Payable to LB for mortality and expense
risk charge 3,014
------------
Total liabilities 3,014
------------
NET ASSETS $5,681,605
============
Number of units outstanding 247,851
============
Unit Value (net assets divided by units outstanding) $22.92
======
Statement of Operations
Year Ended December 1997
INVESTMENT INCOME:
Dividend Income $309,835
Mortality and expense risk charge (27,882)
-----------
Net investment income 281,953
-----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investments 2,406
Net change in unrealized appreciation
of investments 89,688
-----------
Net gain on investments 92,094
-----------
Net increase in net assets resulting
from operations $374,047
===========
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended December 31, 1997 and 1996
1997 1996
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $281,953 $165,976
Net realized gain on investments 2,406 2,214
Net change in unrealized appreciation or depreciation
of investments 89,688 (41,957)
------------ ------------
Net increase in net assets resulting from operations 374,047 126,233
------------ ------------
UNIT TRANSACTIONS:
Proceeds from units issued 2,068,339 2,439,769
Net asset value of units redeemed (492,446) (329,654)
Transfers from other subaccounts 221,606 265,423
Transfers to other subaccounts (309,439) (530,843)
------------ ------------
Net increase in net assets from unit transactions 1,488,060 1,844,695
------------ ------------
Net increase in net assets 1,862,107 1,970,928
NET ASSETS:
Beginning of period 3,819,498 1,848,570
------------ ------------
End of period $5,681,605 $3,819,498
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
LB Variable Insurance Account I
Money Market Subaccount
Financial Statements
Statement of Assets and Liabilities
December 31, 1997
ASSETS:
Investment in LB Series Fund, Inc. 1,205,670
shares at net asset value of $1.00 per share
(cost $1,205,670) $1,205,670
Receivable from LB for units issued 56,513
------------
Total assets 1,262,183
------------
LIABILITIES:
Payable to LB for mortality and expense
risk charge 583
------------
Total liabilities 583
------------
NET ASSETS $1,261,600
============
Number of units outstanding 725,340
============
Unit Value (net assets divided by units outstanding) $1.74
======
Statement of Operations
Year Ended December 1997
INVESTMENT INCOME:
Dividend Income $59,789
Mortality and expense risk charge (6,821)
------------
Net investment income $52,968
============
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Years Ended December 31, 1997 and 1996
1997 1996
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $52,968 $34,638
------------ ------------
UNIT TRANSACTIONS:
Proceeds from units issued 1,548,437 1,063,424
Net asset value of units redeemed (344,437) (138,122)
Transfers from other subaccounts 235,290 221,848
Transfers to other subaccounts (1,279,210) (722,295)
------------ ------------
Net increase in net assets from unit transactions 160,080 424,855
------------ ------------
Net increase in net assets 213,048 459,493
NET ASSETS:
Beginning of period 1,048,552 589,059
------------ ------------
End of period $1,261,600 $1,048,552
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
LB Variable Insurance Account I
Notes to Financial Statements
December 31, 1997
(1) ORGANIZATION
The LB Variable Insurance Account I (the Variable Account), a unit
investment trust registered under the Investment Company Act of 1940,
was established as a separate account of Lutheran Brotherhood (LB) in
1993, pursuant to the laws of the State of Minnesota. LB offers
financial services to Lutherans and is a fraternal benefit society
owned by and operated for its members. The Variable Account contains
six subaccounts--Opportunity Growth, World Growth, Growth, High Yield,
Income and Money Market--each of which invests only in a corresponding
portfolio of the LB Series Fund, Inc. (the Fund). The Fund is
registered under the Investment Company Act of 1940 as a diversified
open-end investment company.
The Variable Account is used to support only flexible premium variable
life ("Variable Universal Life") insurance contracts issued by LB.
Under applicable insurance law, the assets and liabilities of the
Variable Account are clearly identified and distinguished from the
other assets and liabilities of LB. The assets of the Variable Account
will not be charged with any liabilities arising out of any other
business conducted by LB.
(2) SIGNIFICANT ACCOUNTING POLICIES
Investments
The investments in shares of the Fund are stated at the net asset
value of the Fund. The cost of shares sold and redeemed is determined
on the average cost method. Dividend distributions received from the
Fund are reinvested in additional shares of the Fund and recorded as
income by the Variable Account on the ex-dividend date.
Federal Income Taxes
LB qualifies as a tax-exempt organization under the Internal Revenue
Code. Accordingly, no provision for income taxes has been charged
against the Variable Account.
Other
The preparation of financial statements in conformity with generally
accepted accounting principals requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of income
and expenses during the reporting period. Actual results could differ
from those estimates.
(3) RELATED PARTY TRANSACTIONS
Proceeds received by the Variable Account from units issued represent
gross contract premiums received by LB less deductions for sales
distribution expenses of 5% of the gross contract premium. Total
deductions from gross contract premiums received were $1,951,347 and
$1,591,460 in 1997 and 1996, respectively.
A monthly charge is deducted from the cash value of the contract by LB
for the cost of insurance, insurance administration of the contract
and the cost of any optional benefits added by riders. This charge is
deducted by redeeming units of the subaccounts of the Variable
Account. Total monthly charges were $5,705,294 and $3,074,410 in 1997
and 1996, respectively.
A daily charge is deducted from the value of the net assets of the
Variable Account to compensate LB for mortality and expense risks
assumed in connection with the contract and is equivalent to an annual
rate of 0.6% of the average daily net assets of the Variable Account.
Mortality and expense risk charges of $376,629 and $170,714 were
deducted in 1997 and 1996, respectively.
A deferred charge is deducted from the cash value of the contract to
compensate LB for certain selling and administrative expenses if: (1)
within the first ten years a contract is in force, it is surrendered
or lapses, or (2) a contract owner requests a decrease in the face
amount either within the first ten years a contract is in force, or
within ten years after a requested increase in face amount. The
deferred charge remains at a level amount during the first five years
of the applicable ten year period, and then is reduced on a monthly
basis by equal amounts until the deferred charge is zero after ten
years. This charge is deducted by redeeming units of the subaccounts
of the Variable Account. Deferred charges of $225,038 and $88,519 were
deducted in 1997 and 1996, respectively.
<TABLE>
<CAPTION>
(4) UNIT ACTIVITY
Transactions in units (including transfers among subaccounts) were as follows:
Subaccounts
------------------------------------------------------------------------------------------
Opportunity World High Money
Growth Growth Growth Yield Income Market
------------ ----------- ------------ ------------ ------------ ------------
<S> <S> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1995 N/A N/A 312,505 167,426 89,495 371,052
Units issued 642,239 421,874 462,183 264,834 139,597 1,049,735
Units redeemed (94,878) (60,904) (169,955) (85,838) (48,972) (789,174)
---------- -------- -------- -------- -------- ---------
Units outstanding at
December 31, 1996 547,361 360,970 604,733 346,422 180,120 631,613
Units issued 760,538 466,957 446,991 280,960 111,607 1,092,048
Units redeemed (209,531) (142,122) (152,962) (85,612) (43,876) (998,321)
---------- -------- -------- -------- -------- ---------
Units outstanding at
December 31, 1997 1,098,368 685,805 898,762 541,770 247,851 725,340
========== ======== ======== ======== ======== ========
<CAPTION>
(5) PURCHASES AND SALES OF INVESTMENTS
The aggregate costs of purchases and proceeds from sales of investments
in the LB Series Fund, Inc. were as follows:
Subaccounts
------------------------------------------------------------------------------------------
Opportunity World High Money
Growth Growth Growth Yield Income Market
------------ ----------- ------------ ------------ ------------ ------------
<S> <S> <C> <C> <C> <C> <C>
Units outstanding at
For the year ended
December 31, 1996
Purchases $7,389,888 $4,301,799 $9,903,067 $5,539,995 $2,173,394 $1,293,887
Sales 811,400 588,738 241,539 119,879 126,491 913,233
For the year ended
December 31, 1997
Purchases 6,420,288 4,078,838 13,884,925 7,099,708 1,996,048 1,301,015
Sales 54,001 151,078 180,360 143,267 219,731 1,047,418
</TABLE>
<PAGE>
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.
Report of Independent Accountants
March 12, 1998
To The Board of Directors and Members
of Lutheran Brotherhood
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, of members' equity and of cash flows
present fairly, in all material respects, the financial position of Lutheran
Brotherhood (the Society) and its subsidiaries at December 31, 1997 and
1996, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1997 in conformity with
generally accepted accounting principles. These financial statements are
the responsibility of the Society's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
/s/ Price Waterhouse LLP
Price Waterhouse
1997 1996
ASSETS
Investments:
Fixed income securities available
for sale, at fair value $ 6,977 $ 6,200
Equity securities available for sale, at fair value 651 532
Mortgage loans 2,258 2,437
Real estate 42 45
Loans to contractholders 675 652
Short-term investments 211 219
Other invested assets 142 96
------- -------
Total investments 10,956 10,181
Cash and cash equivalents 553 500
Deferred policy acquisition costs 903 915
Investment income due and accrued 127 117
Other assets 112 101
Separate account assets 5,451 4,011
------- -------
Total assets $18,102 $15,825
======= =======
LIABILITIES AND MEMBERS' EQUITY
Liabilities:
Contract reserves $ 9,551 $ 9,268
Benefits in the process of payment 41 37
Dividends payable 92 84
Amounts due to brokers 482 376
Other liabilities 240 209
Separate account liabilities 5,451 4,011
------- -------
Total liabilities 15,857 13,985
Members' equity:
Net unrealized gains 277 120
Retained earnings 1,968 1,720
------- -------
Total members' equity 2,245 1,840
------- -------
Total liabilities and members' equity $18,102 $15,825
======= =======
The accompanying notes are an
integral part of these financial statements.
1997 1996 1995
Revenues:
Premiums $ 482 $ 457 $ 442
Net investment income 769 719 706
Net realized investment gains 127 66 63
Contract charges 148 126 107
Other income 77 73 55
------ ------ ------
Total revenues 1,603 1,441 1,373
Benefits and other deductions:
Net additions to contract reserves 294 280 269
Contractholder benefits 574 563 544
Dividends 177 164 155
Commissions 95 96 86
Operating expenses 180 154 136
Increase in deferred policy acquisition costs (37) (63) (50)
Fraternal activities 63 59 50
------ ------ ------
Total benefits and other deductions 1,346 1,253 1,190
Income before income taxes 257 188 183
Provision for income taxes 9 11 11
------ ------ ------
Net income $ 248 $ 177 $ 172
====== ====== ======
The accompanying notes are an
integral part of these financial statements.
Unrealized Gains (Losses) Total
-------------------------
Acquisition Retained Members'
Investments Costs Earnings Equity
Balance at December 31, 1994 $(226) $ 78 $1,371 $1,223
1995 transactions:
Net income - - 172 172
Unrealized gains (losses) 572 (200) - 372
----- ---- ------ ------
Balance at December 31, 1995 346 (122) 1,543 1,767
1996 transactions:
Net income - - 177 177
Unrealized gains (losses) (179) 75 - (104)
----- ---- ------ ------
Balance at December 31, 1996 167 (47) 1,720 1,840
1997 transactions:
Net income - - 248 248
Unrealized gains (losses) 206 (49) - 157
----- ---- ------ ------
Balance at December 31, 1997 $ 373 $ (96) $1,968 $2,245
===== ===== ====== ======
The accompanying notes are an
integral part of these financial statements.
1997 1996 1995
Cash flows from operating activities:
Net income $ 248 $ 177 $ 172
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization (10) (4) 3
Deferred policy acquisition costs (37) (63) (50)
Equity in earnings of other invested
assets (26) (13)
Realized investment (gains) and
losses, net (127) (66) (63)
Change in operating assets and liabilities:
Loans to contractholders (23) (24) (31)
Other assets (7) (10) (32)
Contract reserves 283 235 626
Other liabilities 43 49 34
------- ------- -------
Total adjustments 96 104 487
------- ------- -------
Net cash provided by
operating activities 344 281 659
------- ------- -------
Cash flows from investing activities:
Proceeds from investments sold,
matured or repaid:
Fixed income securities available
for sale 8,061 8,588 4,703
Equity securities available for sale 688 430 351
Mortgage loans 431 265 170
Short-term investments 553 678 592
Other invested assets 18 56 13
Costs of investments acquired
Fixed income securities available
for sale (8,527) (8,917) (4,893)
Equity securities available for sale (703) (509) (464)
Mortgage loans (245) (295) (426)
Short-term investments (539) (729) (675)
Other invested assets (28) (12) (32)
------- ------- -------
Net cash used in investing activities (291) (445) (661)
------- ------- -------
Net increase (decrease) in cash
and cash equivalents 53 (164) (2)
------- ------- -------
Cash and cash equivalents, beginning
of year 500 664 666
------- ------- -------
Cash and cash equivalents, end of year $ 553 $ 500 $ 664
======= ======= =======
The accompanying notes are an
integral part of these financial statements.
1. ORGANIZATION AND BASIS OF PRESENTATION
NATURE OF OPERATIONS AND PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
Lutheran Brotherhood (the Society), a fraternal benefit organization
offering life insurance and related financial service products as well as
fraternal benefits for Lutherans throughout the United States. Also
included in the accounts of the Society are its wholly owned subsidiary,
Lutheran Brotherhood Financial Corporation (LBFC), which is the parent
company of Lutheran Brotherhood Variable Insurance Products Company (LBVIP),
a stock life insurance company; an investment adviser; a broker-dealer; a
real estate development company and a property and casualty agency. All
significant intercompany balances and transactions have been eliminated in
consolidation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates
and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand, money market instruments and
other debt issues with an original maturity of 90 days or less.
INVESTMENTS
See disclosures regarding the determination of fair value of financial
instruments at Note 8.
Carrying value of investments is determined as follows:
Fixed income securities Fair value
Equity securities Fair value
Mortgage loans on real estate Amortized cost less
impairment allowance
Investment real estate Cost less accumulated
depreciation and impairment
allowance
Real estate joint ventures Equity accounting method
Real estate acquired through Lower of cost or fair value
foreclosure less estimated cost to sell
Loans to contractholders Unpaid principal balance
Short-term investments Amortized cost
Other invested assets Equity accounting method
Fixed income securities which may be sold prior to maturity and equity
securities (common stock and nonredeemable preferred stock) are classified
as available for sale.
Realized investment gains and losses on sales of securities are determined
on a specific identification method for fixed income securities and the
average cost method for equity securities and are reported in the
Consolidated Statement of Income. Unrealized investment gains and losses on
fixed income and equity securities classified as available for sale, net of
the impact of unrealized investment gains and losses on deferred
acquisitions costs, are excluded from net income and reported in a separate
component of members' equity.
Mortgage loans are considered impaired when it is probable that the Society
will be unable to collect all amounts according to the contractual terms of
the loan agreement. Real estate is considered impaired when the carrying
value exceeds the fair value. In cases where impairment is present,
valuation allowances are utilized and netted against the asset categories to
which they apply and changes in the valuation allowances are included in
realized investment gains or losses.
DEFERRED ACQUISITION COSTS
Those costs of acquiring new business, which vary with and are primarily
related to the production of new business, have been deferred. Such costs
include commissions, certain costs of contract issuance and underwriting,
and certain variable agency expenses. Deferred contract acquisition costs
are subject to recoverability testing at the time of contract issue and loss
recognition testing at the end of each accounting period. Deferred policy
acquisition costs are adjusted for the impact of unrealized gains or losses
on investments as if those gains or losses had been realized, with
corresponding credits or charges included in equity.
For participating-type long duration contracts, deferred acquisition costs
are amortized over the expected average life of the contracts in proportion
to estimated gross margins. The effects of revisions to experience on
previous amortization of deferred acquisition costs are reflected in
earnings and change in unrealized investment gains (losses) in the period
estimated gross profits are revised.
For universal life-type and investment-type contracts, deferred acquisition
costs are amortized over the average expected life of the contracts in
proportion to estimated gross profits from mortality, investment, and
expense margins and surrender charges. The effects of revisions to
experience on previous amortization of deferred acquisition costs are
reflected in earnings and change in unrealized investment gains (losses) in
the period estimated gross profits are revised.
For health insurance and certain term life insurance contracts, deferred
acquisition costs are amortized over the average expected premium paying
period, in proportion to expected premium revenues at the time of issue.
SEPARATE ACCOUNT ASSETS AND LIABILITIES
Separate account assets include segregated funds invested by the Society for
the benefit of variable life insurance and variable annuity contract owners.
The assets (principally investments) and liabilities (principally to
contractholders) of each account are clearly identifiable and
distinguishable from other assets and liabilities of the Society. Assets
are valued at market. The investment income, gains and losses of these
accounts generally accrue to the contractholders, and, therefore, are not
included in the Society's consolidated net income.
DERIVATIVE FINANCIAL INSTRUMENTS
The Society's current utilization of derivative financial instruments is not
significant. Most of the Society's derivative transactions are used to
reduce or modify interest rate risk and to replicate assets in certain
markets. These strategies use option contracts, interest rate swaps and
structured securities. The Society does not use derivative instruments for
speculative purposes. Changes in the market value of these contracts are
deferred and realized upon disposal of the hedged assets. The effect of
derivative transactions is not significant to the Society's results from
operations or financial position.
OTHER ASSETS
Other assets include property and equipment reported at depreciated cost.
The Society provides for depreciation of property and equipment using the
straight-line method over the useful lives of the assets which are three to
ten years for equipment and forty years for property.
FUTURE CONTRACT BENEFITS
Liabilities for future contract benefits on participating-type long duration
contracts are the net level premium reserve for death benefits. Liabilities
are calculated using dividend fund interest rates and mortality rates
guaranteed in calculating cash surrender values.
Liabilities for future contract and contract benefits on universal life-type
and investment-type contracts are based on the contract account balance.
Liabilities for future contract benefits on health insurance and certain
term life insurance contracts are calculated using the net level premium
method and assumptions as to investment yields, mortality, morbidity and
withdrawals. The assumptions, made at the time of issue, are based on best
estimates of expected experience and include provision for possible adverse
deviation.
Use of these actuarial tables and methods involves estimation of future
mortality and morbidity based on past experience. Actual future experience
could differ from these estimates.
PREMIUM REVENUE AND BENEFITS TO CONTRACTHOLDERS
RECOGNITION OF CERTAIN PARTICIPATING-TYPE CONTRACTS REVENUE AND BENEFITS TO
CONTRACTHOLDERS
Participating contracts are long-duration participating contracts with
expected dividends to contractholders based on actual experience for which
contractholder dividends are paid in accordance with the contribution
principle. Premiums are recognized as revenues when due. Death and
surrender benefits incurred are reported as expenses. Dividends to
contractholders based on estimates of amounts to be paid for the period are
reported separately as expenses.
RECOGNITION OF UNIVERSAL LIFE-TYPE CONTRACTS REVENUE AND BENEFITS TO
CONTRACTHOLDERS
Universal life-type contracts are insurance contracts with terms that are
not fixed and guaranteed. The terms that may be changed could include one
or more of the amounts assessed the contractholder, premiums paid by the
contractholder or interest accrued to contractholder balances. Amounts
received as payments for such contracts are not reported as premium
revenues.
Revenues for universal-type contracts consist of investment income, charges
assessed against contract account values for deferred contract loading, the
cost of insurance and contract administration. Contract benefits and claims
that are charged to expense include interest credited to contracts and
benefit claims incurred in the period in excess of related contract account
balances.
RECOGNITION OF INVESTMENT CONTRACT REVENUE AND BENEFITS TO CONTRACTHOLDERS
Contracts that do not subject the Society to risks arising from
contractholder mortality or morbidity are referred to as investment
contracts. Certain deferred annuities are considered investment contracts.
Amounts received as payments for such contracts are not reported as premium
revenues.
Revenues for investment products consist of investment income and contract
administration charges. Contract benefits that are charged to expense
include benefit claims incurred in the period in excess of related contract
balances, and interest credited to contract balances.
RECOGNITION OF TERM LIFE, HEALTH AND ANNUITY PREMIUM REVENUE AND BENEFITS TO
CONTRACTHOLDERS
Products with fixed and guaranteed premiums and benefits consist principally
of health insurance contracts, certain term life contracts and annuities
with life contingencies (immediate annuities). Premiums are recognized as
revenue when due. Benefits and expenses are associated with earned premiums
so as to result in recognition of profits over the life of the contracts.
This association is accomplished by means of the provision for liabilities
for future contract benefits and the amortization of deferred contract
acquisition costs.
DIVIDENDS
The dividend scale, approved annually by the Board of Directors, seeks to
achieve equity among contractholders. Dividends charged to operations
represent an estimation of those incurred during the current year.
INCOME TAXES
Lutheran Brotherhood qualifies as a tax-exempt organization under the
Internal Revenue Code. Accordingly, no provision for income taxes has been
made. Lutheran Brotherhood's subsidiary, Lutheran Brotherhood Financial
Corporation (LBFC) is a taxable entity. LBFC and its subsidiaries file a
consolidated federal income tax return. Federal income taxes are charged or
credited to operations based upon amounts estimated to be payable or
recoverable as a result of taxable operations for the current year.
Deferred income tax assets and liabilities are recognized based on the
temporary differences between financial statement carrying amounts and
income tax bases of assets and liabilities using enacted income tax rates
and laws.
The provision for income taxes reflected on the Consolidated Statement of
Income consisted of federal and state income tax expense of $9. At December
31, 1997, LBFC had recorded a deferred federal income tax liability of $26.
The deferred tax liability is mainly due to the net effect of the temporary
differences of reserves held for future benefits and deferred acquisitions
costs as computed for financial statement and tax return purposes.
3. INVESTMENTS
FIXED INCOME SECURITIES
Investments in fixed income securities are primarily intended to back long-
term liabilities; therefore, care should be exercised in drawing any
conclusions from market value information.
Investments in fixed income securities at December 31, 1997 and 1996 follow:
Available for Sale (Carried at Fair Value)
December 31, 1997
------------------------------------------
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
Fixed income securities:
U.S. government $1,076 $ 30 $ $1,106
Mortgage-backed securities 1,976 58 1 2,033
Non-investment grade bonds 467 22 1 488
All other corporate bonds 3,180 189 19 3,350
------ ---- --- ------
Total available for sale $6,699 $299 $21 $6,977
====== ==== === ======
Available for Sale (Carried at Fair Value)
December 31, 1996
------------------------------------------
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
Fixed income securities:
U.S. government $ 635 $ 6 $ 4 $ 637
Mortgage-backed securities 2,225 26 16 2,235
Non-investment grade bonds 376 14 3 387
All other corporate bonds 2,860 105 24 2,941
------ ---- --- ------
Total available for sale $6,096 $151 $47 $6,200
====== ==== === ======
EQUITY SECURITIES
Investments in equity securities and preferred stock at December 31, 1997
and 1996 are as follows:
1997 1996
Cost $560 $469
Gross unrealized gains 110 75
Gross unrealized losses 19 12
---- ----
Carrying value $651 $532
==== ====
CONTRACTUAL MATURITY OF FIXED INCOME SECURITIES
The amortized cost and fair value of fixed income securities available for
sale as of December 31, 1997 are shown below by contractual maturity.
Actual maturities may differ from contractual maturities because securities
may be restructured, called or prepaid.
Amortized Fair
Years to Maturity Cost Value
One year or less $ 55 $ 55
After one year through five years 1,068 1,109
After five years through ten years 1,635 1,699
After ten years 1,966 2,081
Mortgage-backed securities 1,975 2,033
------ ------
Total available for sale $6,699 $6,977
====== ======
Mortgage Loans and Real Estate: The Society's mortgage loans and real
estate investments are diversified by property type and location and, for
mortgage loans, borrower and loan size.
At December 31, the carrying values of mortgage loans and real estate
investments were as follows:
1997 1996
Mortgage loans:
Residential and commercial $1,945 $2,132
Loans to Lutheran Churches 313 305
------ ------
Total mortgage loans $2,258 $2,437
====== ======
Real estate:
To be disposed of $ 2 $ 12
To be held and used 40 33
------ ------
Total real estate $ 42 $ 45
====== ======
SECURITIES LOANED
To generate additional income, the Society participates in a securities
lending program administered by the Society's custodian bank. Securities
are periodically loaned to brokers, banks and other institutional borrowers
of securities, for which collateral in the form of cash or U.S. Government
securities is received by the custodian in an amount at least equal to 102%
of the market value of the securities loaned. Collateral received in the
form of cash is invested in short-term investments by the custodian from
which earnings are shared between the borrower, custodian and the Society at
negotiated rates. The Society may experience delays in recovery of the
collateral should the borrower of securities fail financially. As of
December 31, 1997, the market value of securities loaned and the cash
collateral received were $283 and $292, respectively.
4. INVESTMENT INCOME AND REALIZED GAINS AND LOSSES
Investment income summarized by type of investment was as follows:
1997 1996 1995
Fixed income securities $426 $393 $398
Equity securities 15 10 9
Mortgage loans 202 214 202
Real estate 11 15 16
Contract loans 44 42 40
Other invested assets 42 15 15
Short-term investments 55 59 56
---- ---- ----
Gross investment income 795 748 736
Investment expenses 26 29 30
---- ---- ----
Net investment income $769 $719 $706
==== ==== ====
Gross realized investment gains and losses on sales of all types of
investments are as follows:
Year Ended December 31,
-----------------------
1997 1996 1995
Fixed income securities:
Realized gains $ 68 $ 84 $ 52
Realized losses 40 65 23
Equity securities:
Realized gains 109 62 45
Realized losses 33 27 16
Other investments:
Realized gains 25 22 12
Realized losses 2 10 7
---- --- ---
Total net realized investment gains $127 $66 $63
==== === ===
5. EMPLOYEE BENEFIT PLANS
PENSION PLANS
DEFINED BENEFIT
Lutheran Brotherhood has noncontributory defined benefit plans which cover
substantially all employees. The Society's policy is to fund all accrued
defined benefit pension costs using the aggregate level value method. In
comparison to other acceptable methods, the annual contributions under the
aggregate level method are generally higher in the earlier years and
decrease over time.
Components of net pension cost for the year ended December 31 were as
follows (in thousands):
1997 1996 1995
Service cost - benefits earned during the year $ 3,682 $ 3,322 $ 3,181
Interest cost on projected benefit obligations 7,771 7,084 6,745
Actual return on assets (7,722) (6,769) (6,212)
Net amortization and deferral 444 127 127
------- ------- -------
Net pension cost $ 4,175 $ 3,764 $ 3,841
======= ======= =======
The following rates were used in computing the pension cost for each of the
three years in the period ended December 31:
Discount rates used to determine expense 8.00%
Assumed rates of compensation increases 6.00%
Expected long-term rates of return 8.00%
The following table summarizes the status as of December 31 of the pension
plan and the amounts for the actuarial present value of benefit obligations
shown in the accompanying balance sheet at December 31 (in thousands):
1997 1996
Actuarial present value of benefit obligations:
Vested benefit obligation $ 96,782 $ 88,307
Accumulated benefit obligation 99,050 90,340
Projected benefit obligation 106,821 97,206
Less plan assets at fair value 101,020 92,427
-------- -------
Projected benefit obligation in excess of
plan assets 5,801 4,779
Unrecognized net gain (loss) (808) 605
Unrecognized prior service cost
Unrecognized transition obligation (1,412) (1,539)
-------- --------
Accrued pension cost included in other
liabilities $ 3,581 $ 3,845
======== ========
Plan assets are invested primarily in corporate bonds and mortgage loans.
Plan contributions are accumulated in a deposit administration fund, which
is a part of the general investment fund of the Society.
The following rates were used in computation of the funded status for the
plan:
1997 1996
Discount rates used for obligations 8.00% 8.00%
Assumed rates of compensation increases 6.00% 6.00%
DEFINED CONTRIBUTION
The Society has noncontributory defined contribution retirement plans which
cover substantially all employees and field representatives and a
noncontributory non-qualified deferred compensation plan which covers
substantially all of its general agents. As of January 1, 1997,
approximately $113 of the defined contribution retirement plans' assets were
held by the Society and the remaining $101 were held in a separate trust.
The accrued retirement liability at December 31, 1997, of $130 is included
in contract reserves. Expenses related to the retirement plan for the years
ended December 31, 1997, 1996 and 1995 were $10, $10 and $9, respectively.
Accumulated vested deferred compensation benefits at December 31, 1997 total
$53 and are included in other liabilities.
POSTRETIREMENT BENEFITS OTHER THAN PENSION
The Society has no significant obligation for post-retirement medical
benefits for retirees. The Society does provide a minor subsidy of certain
medical benefits for eligible early retirees until age 65.
The Society's post retirement medical benefit plan is currently not funded.
The accumulated postretirement benefit obligation (APBO) and the accrued
postretirement benefit liability were $4 and $7, respectively, at December
31, 1997 and $5 and $7, respectively, at December 31, 1996. The assumed
discount rate used in determining the APBO was 8% at December 31, 1997 and
1996. Net periodic postretirement benefit costs were $.4 and $.5 for the
years ended December 31, 1997 and 1996, respectively.
The assumed health care cost trend rate used in measuring the APBO as of
December 31, 1997 was 12% decreasing gradually to 6% in the year 2007 and
thereafter. The assumed health care cost trend rate used in measuring the
APBO as of December 31, 1997 was 12%, decreasing gradually to 6% in the year
2007 and thereafter. A 1% increase in the assumed health care cost trend
rate for each year would increase the APBO as of December 31, 1997 by
approximately $1.
The valuation of retirement and post-retirement medical benefits based on
the actuarial present value of future plan benefits involves estimation of
future mortality and morbidity. Actual future experience could differ from
those estimates.
6. REINSURANCE
In the normal course of business, the Society seeks to limit its exposure to
loss on any single insured and to recover a portion of benefits paid by
ceding business to other insurance enterprises or reinsurers under
reinsurance contracts. As of December 31, 1997, total life insurance
inforce approximated $45 billion, of which approximately $866 had been ceded
to various reinsurers. The Society retains a maximum of $2 of coverage per
individual life. Premiums ceded to other companies of $6 are reported as a
reduction in premium income and benefits were reduced by $2 for reinsurance
recoverable for the year ended December 31, 1997.
Reinsurance contracts do not relieve the Society from its obligations to
contractholders. Failure of reinsurers to honor their obligations could
result in losses to the Society; consequently, allowances are established
for amounts deemed uncollectible. The amount of the allowance for
uncollectible reinsurance receivables was immaterial at December 31, 1997.
7. COMMITMENTS AND CONTINGENCIES
FINANCIAL COMMITMENTS
The Society has committed to extend credit for mortgage loans of $61 and $66
at December 31, 1997 and 1996, respectively. Commitments to other invested
assets were $5 and $14 at December 31, 1997 and 1996, respectively.
8. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used in estimating fair value
disclosures for financial instruments. In cases where quoted market prices
are not available, fair values are based on estimates using present value or
other valuation techniques. Those techniques are significantly affected by
the assumptions used, including the discount rate and estimates of future
cash flows. In that regard, the derived fair value estimates cannot be
substantiated by comparison to independent markets and, in many cases, could
not be realized in immediate settlement of the instrument.
Fixed Income Securities: Fair values for fixed income securities are based
on quoted market prices, where available. For fixed maturities not actively
traded in the market, fair values are estimated using market quotes from
brokers or internally developed pricing methods.
Equity Securities: Fair value equals carrying value as these securities are
carried at quoted market value.
Mortgage Loans: The fair values for mortgage loans are estimated using
discounted cash flow analyses, using interest rates currently being offered
in the marketplace for similar loans to borrowers with similar credit
ratings.
Loans on Insurance Contracts: The carrying amount reported in the balance
sheet approximates fair value since loans on insurance contracts reduce the
amount payable at death or at surrender of the contract.
Cash and Cash Equivalents, Short-Term Investments: The carrying amounts for
these assets approximate the assets' fair values.
Other Financial Instruments Reported as Assets: The carrying amounts for
these financial instruments (primarily premiums and other accounts
receivable and accrued investment income), approximate those assets' fair
values.
Investment Contract Liabilities: The fair value for deferred annuities was
estimated to be the amount payable on demand at the reporting date as those
investment contracts have no defined maturity and are similar to a deposit
liability. The amount payable at the reporting date was calculated as the
account balance less applicable surrender charges.
The fair values for supplementary contracts and immediate annuities without
life contingencies were estimated using discounted cash flow analyses using
similar maturities or by using cash surrender value.
The carrying amounts reported for other investment contracts which includes
participating pension contracts and retirement plan deposits approximate
those liabilities' fair value.
Other Deposit Liabilities: The carrying amounts for dividend accumulations
and premium deposit funds approximate the liabilities' fair value.
The carrying amounts and estimated fair values of the Society's financial
instruments are as follows:
1997 1996
---------------- ---------------
Carrying Fair Carrying Fair
Amount Value Amount Value
Financial instruments recorded as assets:
Fixed income securities $6,977 $6,977 $6,200 $6,200
Equity securities 651 651 532 532
Mortgage loans:
Commercial 1,945 2,039 2,132 2,195
Church 313 317 305 303
Contract loans 675 675 652 652
Cash and cash equivalents 553 553 500 500
Short-term investments 211 211 219 219
Other financial instruments
recorded as assets 331 331 270 270
Financial instruments recorded as
liabilities:
Investment contracts:
Deferred annuities 8,244 8,003 7,048 6,832
Supplementary contracts and
immediate annuities 312 312 256 256
Other deposit liabilities:
Dividend accumulations 33 33 33 33
Premium deposit funds 3 3 3 3
9. STATUTORY FINANCIAL INFORMATION
Accounting practices used to prepare statutory financial statements for
regulatory filing of fraternal life insurance companies differ from
generally accepted accounting principles. The following reconciles the
Society's statutory net change in surplus and statutory surplus determined
in accordance with accounting practices prescribed or permitted by the
Insurance Department of the State of Minnesota with net income and members'
equity on a generally accepted accounting principles basis.
Year Ended
December 31,
-------------------
1997 1996
Net change in statutory surplus $ 210 $ 150
Change in asset valuation reserves 25 40
------- -------
Net change in statutory surplus and asset
valuation reserves 235 190
Adjustments:
Future contract benefits and contractholders'
account balances (45) (52)
Deferred acquisition costs 37 63
Investment gains (losses) 13 (11)
Other, net 8 (13)
------- -------
Net income $ 248 $ 177
======= =======
Year Ended
December 31,
-------------------
1997 1996
Statutory surplus $ 1,021 $ 811
Asset valuation reserves 242 218
------- -------
Statutory surplus and asset valuation reserves 1,263 1,029
Adjustments:
Future contract benefits and contractholders'
account balances (410) (359)
Deferred acquisition costs 903 915
Interest maintenance reserves 136 109
Valuation of investments 300 114
Unearned revenue liability (45) (45)
Dividend liability 92 84
Other, net 6 (7)
------- -------
Members' equity $ 2,245 $ 1,840
======= =======
10. SUPPLEMENTARY FINANCIAL DATA
Following is a condensed synopsis of statutory financial information of the
Society (excluding affiliated subsidiaries) at December 31, 1997 and 1996.
This information is included to satisfy certain state reporting requirements
for fraternals.
December 31,
-------------------
1997 1996
Invested and other admitted assets $11,283 $10,670
Assets held in separate accounts 1,871 1,108
------- -------
Total assets 13,154 11,778
------- -------
Contract reserves 9,050 8,822
Liabilities related to separate accounts 1,788 1,057
Other liabilities and assets reserves 1,295 1,088
------- -------
Total liabilities and asset reserves 12,133 10,967
------- -------
Unassigned surplus 1,021 811
------- -------
Total liabilities, asset reserves and surplus 13,154 11,778
------- -------
Savings from operations before net realized
capital gains 142 110
Net realized capital gains 74 34
------- -------
Net savings from operations 216 144
Total other changes (6) 6
------- -------
Net increase in unassigned surplus $ 210 $ 150
======= =======
<PAGE>
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-3
through A-8 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 .46% 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%); Mid Cap Growth (0.40%); and World Growth
(0.85%); and the daily charge to each Subaccount for assuming mortality and
expense risks, which is equivalent to a charge at an annual current rate of
.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 .46% 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 .46% 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, 1997, the Fund was reimbursed
approximately $2,631,150 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 1,192 244 101,251 1,251 303
3 3,310 101,761 1,761 873 101,856 1,856 968
4 4,525 102,313 2,313 1,485 102,453 2,453 1,625
5 5,801 102,846 2,846 2,078 103,033 3,033 2,265
6 7,142 103,362 3,362 2,671 103,606 3,606 2,915
7 8,549 103,849 3,849 3,235 104,173 4,173 3,559
8 10,026 104,318 4,318 3,780 104,723 4,723 4,185
9 11,577 104,759 4,759 4,298 105,266 5,266 4,805
10 13,206 105,172 5,172 4,788 105,792 5,792 5,408
11 14,917 105,544 5,544 5,237 106,301 6,301 5,994
12 16,712 105,877 5,877 5,647 106,780 6,780 6,550
13 18,598 106,183 6,183 6,029 107,231 7,231 7,077
14 20,578 106,450 6,450 6,373 107,653 7,653 7,576
15 22,657 106,678 6,678 6,678 108,047 8,047 8,047
16 24,840 106,928 6,928 6,928 108,472 8,472 8,472
17 27,132 107,128 7,128 7,128 108,846 8,846 8,846
18 29,539 107,266 7,266 7,266 109,168 9,168 9,168
19 32,065 107,343 7,343 7,343 109,439 9,439 9,439
20 34,719 107,349 7,349 7,349 109,671 9,671 9,671
Age
60 50,113 106,132 6,132 6,132 110,118 10,118 10,118
65 69,760 101,852 1,852 1,852 108,933 8,933 8,933
70 94,836 100,000 0 0 * 105,105 5,105 5,105
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 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 1,196 248 100,000 1,254 306
3 3,310 100,000 1,768 880 100,000 1,861 973
4 4,525 100,000 2,324 1,496 100,000 2,463 1,635
5 5,801 100,000 2,864 2,096 100,000 3,047 2,279
6 7,142 100,000 3,387 2,696 100,000 3,626 2,935
7 8,549 100,000 3,883 3,269 100,000 4,200 3,586
8 10,026 100,000 4,364 3,826 100,000 4,757 4,219
9 11,577 100,000 4,819 4,358 100,000 5,310 4,849
10 13,206 100,000 5,247 4,863 100,000 5,846 5,462
11 14,917 100,000 5,638 5,331 100,000 6,367 6,060
12 16,712 100,000 5,993 5,763 100,000 6,860 6,630
13 18,598 100,000 6,324 6,170 100,000 7,328 7,174
14 20,578 100,000 6,619 6,542 100,000 7,770 7,693
15 22,657 100,000 6,879 6,879 100,000 8,187 8,187
16 24,840 100,000 7,164 7,164 100,000 8,638 8,638
17 27,132 100,000 7,404 7,404 100,000 9,043 9,043
18 29,539 100,000 7,588 7,588 100,000 9,402 9,402
19 32,065 100,000 7,716 7,716 100,000 9,716 9,716
20 34,719 100,000 7,778 7,778 100,000 9,996 9,996
Age
60 50,113 100,000 6,927 6,927 100,000 10,763 10,763
65 69,760 100,000 3,060 3,060 100,000 10,062 10,062
70 94,836 100,000 0 0 * 100,000 6,848 6,848
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 2,152 101,323 1,323 375 101,385 1,385 437
3 3,310 102,015 2,015 1,127 102,118 2,118 1,230
4 4,525 102,730 2,730 1,902 102,886 2,886 2,058
5 5,801 103,467 3,467 2,699 103,680 3,680 2,912
6 7,142 104,229 4,229 3,538 104,514 4,514 3,823
7 8,549 105,003 5,003 4,389 105,388 5,388 4,774
8 10,026 105,804 5,804 5,266 106,294 6,294 5,756
9 11,577 106,620 6,620 6,159 107,244 7,244 6,783
10 13,206 107,451 7,451 7,067 108,229 8,229 7,845
11 14,917 108,287 8,287 7,980 109,251 9,251 8,944
12 16,712 109,127 9,127 8,897 110,298 10,298 10,068
13 18,598 109,985 9,985 9,831 111,373 11,373 11,219
14 20,578 110,848 10,848 10,771 112,476 12,476 12,399
15 22,657 111,716 11,716 11,716 113,609 13,609 13,609
16 24,840 112,653 12,653 12,653 114,835 14,835 14,835
17 27,132 113,586 13,586 13,586 116,073 16,073 16,073
18 29,539 114,505 14,505 14,505 117,323 17,323 17,323
19 32,065 115,408 15,408 15,408 118,585 18,585 18,585
20 34,719 116,281 16,281 16,281 119,874 19,874 19,874
Age
60 50,113 119,960 19,960 19,960 126,576 26,576 26,576
65 69,760 121,055 21,055 21,055 133,263 33,263 33,263
70 94,836 116,345 16,345 16,345 138,667 38,667 38,667
75 126,839 100,241 241 241 140,135 40,135 40,135
</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 1,327 379 100,000 1,388 440
3 3,310 100,000 2,023 1,135 100,000 2,124 1,236
4 4,525 100,000 2,744 1,916 100,000 2,897 2,069
5 5,801 100,000 3,489 2,721 100,000 3,698 2,930
6 7,142 100,000 4,261 3,570 100,000 4,540 3,849
7 8,549 100,000 5,050 4,436 100,000 5,424 4,810
8 10,026 100,000 5,869 5,331 100,000 6,343 5,805
9 11,577 100,000 6,707 6,246 100,000 7,308 6,847
10 13,206 100,000 7,566 7,182 100,000 8,311 7,927
11 14,917 100,000 8,436 8,129 100,000 9,355 9,048
12 16,712 100,000 9,319 9,089 100,000 10,430 10,200
13 18,598 100,000 10,228 10,074 100,000 11,540 11,386
14 20,578 100,000 11,152 11,075 100,000 12,685 12,608
15 22,657 100,000 12,093 12,093 100,000 13,869 13,869
16 24,840 100,000 13,116 13,116 100,000 15,156 15,156
17 27,132 100,000 14,152 14,152 100,000 16,469 16,469
18 29,539 100,000 15,193 15,193 100,000 17,812 17,812
19 32,065 100,000 16,241 16,241 100,000 19,187 19,187
20 34,719 100,000 17,287 17,287 100,000 20,607 20,607
Age
60 50,113 100,000 22,380 22,380 100,000 28,390 28,390
65 69,760 100,000 26,440 26,440 100,000 37,369 37,369
70 94,836 100,000 27,454 27,454 100,000 47,544 47,544
75 126,839 100,000 20,884 20,884 100,000 58,916 58,916
</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 1,459 511 101,525 1,525 577
3 3,310 102,291 2,291 1,403 102,403 2,403 1,515
4 4,525 103,202 3,202 2,374 103,376 3,376 2,548
5 5,801 104,200 4,200 3,432 104,443 4,443 3,675
6 7,142 105,294 5,294 4,603 105,627 5,627 4,936
7 8,549 106,483 6,483 5,869 106,941 6,941 6,327
8 10,026 107,789 7,789 7,251 108,386 8,386 7,848
9 11,577 109,212 9,212 8,751 109,989 9,989 9,528
10 13,206 110,766 10,766 10,382 111,754 11,754 11,370
11 14,917 112,453 12,453 12,146 113,700 13,700 13,393
12 16,712 114,285 14,285 14,055 115,834 15,834 15,604
13 18,598 116,293 16,293 16,139 118,176 18,176 18,022
14 20,578 118,483 18,483 18,406 120,748 20,748 20,671
15 22,657 120,875 20,875 20,875 123,577 23,577 23,577
16 24,840 123,554 23,554 23,554 126,754 26,754 26,754
17 27,132 126,475 26,475 26,475 130,228 30,228 30,228
18 29,539 129,653 29,653 29,653 134,031 34,031 34,031
19 32,065 133,115 33,115 33,115 138,200 38,200 38,200
20 34,719 136,881 36,881 36,881 142,787 42,787 42,787
Age
60 50,113 161,334 61,334 61,334 173,597 73,597 73,597
65 69,760 198,333 98,333 98,333 223,276 123,276 123,276
70 94,836 253,534 153,534 153,534 303,223 203,223 203,223
75 126,839 334,850 234,850 234,850 431,452 331,452 331,452
</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 1,463 515 100,000 1,528 580
3 3,310 100,000 2,300 1,412 100,000 2,410 1,522
4 4,525 100,000 3,219 2,391 100,000 3,389 2,561
5 5,801 100,000 4,227 3,459 100,000 4,465 3,697
6 7,142 100,000 5,336 4,645 100,000 5,661 4,970
7 8,549 100,000 6,546 5,932 100,000 6,989 6,375
8 10,026 100,000 7,879 7,341 100,000 8,454 7,916
9 11,577 100,000 9,339 8,878 100,000 10,081 9,620
10 13,206 100,000 10,940 10,556 100,000 11,878 11,494
11 14,917 100,000 12,689 12,382 100,000 13,865 13,558
12 16,712 100,000 14,602 14,372 100,000 16,051 15,821
13 18,598 100,000 16,712 16,558 100,000 18,461 18,307
14 20,578 100,000 19,031 18,954 100,000 21,122 21,045
15 22,657 100,000 21,584 21,584 100,000 24,061 24,061
16 24,840 100,000 24,465 24,465 100,000 27,376 27,376
17 27,132 100,000 27,639 27,639 100,000 31,030 31,030
18 29,539 100,000 31,136 31,136 100,000 35,064 35,064
19 32,065 100,000 34,997 34,997 100,000 39,527 39,527
20 34,719 100,000 39,262 39,262 100,000 44,478 44,478
Age
60 50,113 100,000 68,727 68,727 105,688 78,871 78,871
65 69,760 144,835 118,717 118,717 166,738 136,670 136,670
70 94,836 232,601 200,518 200,518 269,569 232,387 232,387
75 126,839 358,453 335,003 335,003 418,739 391,345 391,345
</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>
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 MORE
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>
<PAGE>
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 MORE
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 32 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 35 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.
<PAGE>
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(h) 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%); Mid Cap Growth
(0.40%); and World Growth (0.85%); and the daily charge to each Subaccount
for assuming mortality and expense risks, which is equivalent to a charge at
an annual current rate of .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 .46% 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 .46% 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, 1997, the Fund was reimbursed
approximately $2,631,150 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 1,331 767 101,406 1,406 842
3 3.310 101,967 1,967 1,451 102,080 2,080 1,564
4 4,525 102,584 2,584 2,116 102,735 2,735 2,267
5 5,801 103,181 3,181 2,761 103,371 3,371 2,951
6 7,142 103,759 3,759 3,423 103,989 3,989 3,653
7 8,549 104,307 4,307 4,055 104,588 4,588 4,336
8 10,026 104,835 4,835 4,667 105,169 5,169 5,001
9 11,577 105,334 5,334 5,250 105,732 5,732 5,648
10 13,206 105,803 5,803 5,803 106,277 6,277 6,277
11 14,917 106,290 6,290 6,290 106,841 6,841 6,841
12 16,712 106,736 6,736 6,736 107,374 7,374 7,374
13 18,598 107,153 7,153 7,153 107,878 7,878 7,878
14 20,578 107,529 7,529 7,529 108,353 8,353 8,353
15 22,657 107,864 7,864 7,864 108,788 8,788 8,788
16 24,840 108,161 8,161 8,161 109,182 9,182 9,182
17 27,132 108,406 8,406 8,406 109,537 9,537 9,537
18 29,539 108,589 8,589 8,589 109,852 9,852 9,852
19 32,065 108,710 8,710 8,710 110,104 10,104 10,104
20 34,719 108,759 8,759 8,759 110,294 10,294 10,294
Age
60 50,113 107,753 7,753 7,753 110,126 10,126 10,126
65 69,760 103,693 3,693 3,693 107,766 7,766 7,766
70 94,836 100,000 0 0 * 102,146 2,146 2,146
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 1,409 845
3 3,310 100,000 1,975 1,459 100,000 2,086 1,570
4 4,525 100,000 2,597 2,129 100,000 2,746 2,278
5 5,801 100,000 3,202 2,782 100,000 3,389 2,969
6 7,142 100,000 3,788 3,452 100,000 4,014 3,678
7 8,549 100,000 4,347 4,095 100,000 4,623 4,371
8 10,026 100,000 4,889 4,721 100,000 5,215 5,047
9 11,577 100,000 5,403 5,319 100,000 5,791 5,707
10 13,206 100,000 5,890 5,890 100,000 6,351 6,351
11 14,917 100,000 6,398 6,398 100,000 6,932 6,932
12 16,712 100,000 6,869 6,869 100,000 7,487 7,487
13 18,598 100,000 7,314 7,314 100,000 8,015 8,015
14 20,578 100,000 7,722 7,722 100,000 8,518 8,518
15 22,657 100,000 8,094 8,094 100,000 8,985 8,985
16 24,840 100,000 8,431 8,431 100,000 9,416 9,416
17 27,132 100,000 8,723 8,723 100,000 9,813 9,813
18 29,539 100,000 8,958 8,958 100,000 10,174 10,174
19 32,065 100,000 9,139 9,139 100,000 10,481 10,481
20 34,719 100,000 9,253 9,253 100,000 10,733 10,733
Age
60 50,113 100,000 8,685 8,685 100,000 11,003 11,003
65 69,760 100,000 5,176 5,176 100,000 9,266 9,266
70 94,836 100,000 0 0 * 100,000 4,286 4,286
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 2,152 101,471 1,471 907 101,550 1,550 986
3 3,310 102,241 2,241 1,725 102,364 2,364 1,848
4 4,525 103,036 3,036 2,568 103,206 3,206 2,738
5 5,801 103,857 3,857 3,437 104,078 4,078 3,658
6 7,142 104,705 4,705 4,369 104,981 4,981 4,645
7 8,549 105,569 5,569 5,317 105,916 5,916 5,664
8 10,026 106,462 6,462 6,294 106,884 6,884 6,716
9 11,577 107,373 7,373 7,289 107,889 7,889 7,805
10 13,206 108,304 8,304 8,304 108,931 8,931 8,931
11 14,917 109,303 9,303 9,303 110,049 10,049 10,049
12 16,712 110,314 10,314 10,314 111,197 11,197 11,197
13 18,598 111,349 11,349 11,349 112,378 12,378 12,378
14 20,578 112,397 12,397 12,397 113,593 13,593 13,593
15 22,657 113,458 13,458 13,458 114,831 14,831 14,831
16 24,840 114,534 14,534 14,534 116,094 16,094 16,094
17 27,132 115,612 15,612 15,612 117,382 17,382 17,382
18 29,539 116,680 16,680 16,680 118,697 18,697 18,697
19 32,065 117,738 17,738 17,738 120,015 20,015 20,015
20 34,719 118,773 18,773 18,773 121,338 21,338 21,338
Age
60 50,113 123,366 23,366 23,366 127,782 27,782 27,782
65 69,760 125,596 25,596 25,596 133,444 33,444 33,444
70 94,836 122,333 22,333 22,333 136,767 36,767 36,767
75 126,839 108,139 8,139 8,139 134,556 34,556 34,556
</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 1,553 989
3 3,310 100,000 2,250 1,734 100,000 2,372 1,856
4 4,525 100,000 3,052 2,584 100,000 3,220 2,752
5 5,801 100,000 3,882 3,462 100,000 4,100 3,680
6 7,142 100,000 4,743 4,407 100,000 5,014 4,678
7 8,549 100,000 5,623 5,371 100,000 5,962 5,710
8 10,026 100,000 6,536 6,368 100,000 6,949 6,781
9 11,577 100,000 7,473 7,389 100,000 7,975 7,891
10 13,206 100,000 8,436 8,436 100,000 9,043 9,043
11 14,917 100,000 9,474 9,474 100,000 10,194 10,194
12 16,712 100,000 10,533 10,533 100,000 11,383 11,383
13 18,598 100,000 11,625 11,625 100,000 12,613 12,613
14 20,578 100,000 12,742 12,742 100,000 13,886 13,886
15 22,657 100,000 13,885 13,885 100,000 15,196 15,196
16 24,840 100,000 15,058 15,058 100,000 16,544 16,544
17 27,132 100,000 16,252 16,252 100,000 17,935 17,935
18 29,539 100,000 17,459 17,459 100,000 19,371 19,371
19 32,065 100,000 18,682 18,682 100,000 20,836 20,836
20 34,719 100,000 19,912 19,912 100,000 22,334 22,334
Age
60 50,113 100,000 26,118 26,118 100,000 30,285 30,285
65 69,760 100,000 31,784 31,784 100,000 39,146 39,146
70 94,836 100,000 35,392 35,392 100,000 48,945 48,945
75 126,839 100,000 33,697 33,697 100,000 59,653 59,653
</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 1,050 100,772 772 160 100,812 812 200
2 2,152 101,616 1,616 1,052 101,700 1,700 1,136
3 3,310 102,538 2,538 2,022 102,673 2,673 2,157
4 4,525 103,547 3,547 3,079 103,739 3,739 3,271
5 5,801 104,653 4,653 4,233 104,910 4,910 4,490
6 7,142 105,864 5,864 5,528 106,196 6,196 5,860
7 8,549 107,182 7,182 6,930 107,610 7,610 7,358
8 10,026 108,629 8,629 8,461 109,166 9,166 8,998
9 11,577 110,206 10,206 10,122 110,880 10,880 10,796
10 13,206 111,929 11,929 11,929 112,769 12,769 12,769
11 14,917 113,863 13,863 13,863 114,890 14,890 14,890
12 16,712 115,968 15,968 15,968 117,218 17,218 17,218
13 18,598 118,275 18,275 18,275 119,775 19,775 19,775
14 20,578 120,793 20,793 20,793 122,586 22,586 22,586
15 22,657 123,545 23,545 23,545 125,668 25,668 25,668
16 24,840 126,556 26,556 26,556 129,048 29,048 29,048
17 27,132 129,841 29,841 29,841 132,761 32,761 32,761
18 29,539 133,418 33,418 33,418 136,842 36,842 36,842
19 32,065 137,318 37,318 37,318 141,306 41,306 41,306
20 34,719 141,563 41,563 41,563 146,196 46,196 46,196
Age
60 50,113 169,202 69,202 69,202 178,587 78,587 78,587
65 69,760 211,258 111,258 111,258 230,108 130,108 130,108
70 94,836 274,513 174,513 174,513 312,272 212,272 212,272
75 126,839 368,707 268,707 268,707 443,073 343,073 343,073
</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 1,140
3 3,310 100,000 2,549 2,033 100,000 2,682 2,166
4 4,525 100,000 3,566 3,098 100,000 3,756 3,288
5 5,801 100,000 4,684 4,264 100,000 4,937 4,517
6 7,142 100,000 5,913 5,577 100,000 6,238 5,902
7 8,549 100,000 7,255 7,003 100,000 7,673 7,421
8 10,026 100,000 8,733 8,565 100,000 9,257 9,089
9 11,577 100,000 10,352 10,268 100,000 11,006 10,922
10 13,206 100,000 12,129 12,129 100,000 12,939 12,939
11 14,917 100,000 14,132 14,132 100,000 15,119 15,119
12 16,712 100,000 16,328 16,328 100,000 17,522 17,522
13 18,598 100,000 18,748 18,748 100,000 20,176 20,176
14 20,578 100,000 21,410 21,410 100,000 23,109 23,109
15 22,657 100,000 24,343 24,343 100,000 26,346 26,346
16 24,840 100,000 27,579 27,579 100,000 29,923 29,923
17 27,132 100,000 31,148 31,148 100,000 33,882 33,882
18 29,539 100,000 35,081 35,081 100,000 38,270 38,270
19 32,065 100,000 39,426 39,426 100,000 43,123 43,123
20 34,719 100,000 44,228 44,228 100,000 48,503 48,503
Age
60 50,113 103,780 77,448 77,448 115,009 85,827 85,827
65 69,760 161,984 132,773 132,773 180,696 148,112 148,112
70 94,836 258,169 222,560 222,560 290,992 250,855 250,855
75 126,839 395,024 369,181 369,181 450,575 421,098 421,098
</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>
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
<PAGE>
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. 7 Registration Statement comprises the
following papers and documents:
The facing sheet.
The general form of Prospectus.
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. (1)
Accountant - filed as Exhibit 10. (1)
Counsel - filed as Exhibit 11. (1)
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). (2)
(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) (2)
Child Term Life Insurance Benefit Rider -
Form # WR3-VC-CIB-1 (97) (2)
Guaranteed Increase Option Benefit Rider -
Form # WR3-VG-GIO-1 (97) (2)
Cost of Living Benefit Rider -
Form # WR3-VL-COL-1 (97) (2)
Spouse Adjustable Term Life Insurance Benefit Rider -
Form # WR3-VS-SIB-1 (97) (2)
Waiver of Selected Amount Benefit Rider -
Form # WR3-VW-WSA-1 (97) (2)
Accelerated Benefits Rider
Form # WR3-VX-ACCB-1 (97) (2)
Aviation Exclusion Amendatory Agreement -
Form # U-UA-Amend.AVEX (97) (2)
Armed Forces Aviation Exclusion Amendatory Agreement -
Form # U-UF-Amend.AFAE (97) (2)
Lutheran Charity Benefit Rider -
Form # LR3-KY-LCB-1 (97) (2)
Survival Provision - Form L-KS-Amend.Surv.Pro (97) (2)
Primary Beneficiary Survival Provision -
Form # L-KP-Amend.PBSP (97) (2)
(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. (1)
3. None.
4. Not Applicable.
5. Not Applicable.
6. Actuarial Opinion and Consent. (1)
7. Not applicable.
8. Procedures Memorandum pursuant to Rule 6e-3(T)(b)(12)(ii) under the 1940
Act. (1)
9. Not applicable.
10. Accountant's Consent. (1)
11. Counsel Consent. (1)
12. Powers of Attorney. (1)(3)
________________________________
(1) Filed herewith.
(2) Included in the Post-Effective Amendment No. 5 to the registration
statement on Form S-6, Registration No. 33-72386, filed by Registrant
February 28, 1997.
(3) Included in the Post-Effective Amendment No. 4 to the registration
statement on Form S-6, Registration No. 33-72386, filed by Registrant
April 30, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it meets all of the requirements for effectiveness of this
amendment to the Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this amendment to the
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Minneapolis and State of Minnesota
on the 29th day of April, 1998.
LB VARIABLE 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 29th day of April, 1998.
LUTHERAN BROTHERHOOD
(Depositor)
By /s/ Robert P. Gandrud
----------------------------
Robert P. Gandrud, President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed on the 28th day of April, 1998
by the following directors and officers of Depositor in the capacities
indicated:
/s/ Robert P. Gandrud President and Chief Executive Officer
----------------------- (Chief Executive Officer)
Robert P. Gandrud
/s/ Jerald E. Sourdiff Chief Financial Officer (Principal
----------------------- Financial Officer)
Jerald E. Sourdiff
/s/ David K. Stewart Treasurer (Principal Accounting Officer)
-----------------------
David K. Stewart
A Majority of the Board of Directors:
Robert O. Blomquist Herbert D. Ihle
Richard W. Duesenberg Richard Kessler
Robert P. Gandrud Judith K. Larsen
Bobby I. Griffin Luther S. Luedtke
William R. Halling John P. McDaniel
James M. Hushagen Mary Ellen H. Schmider
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
Number Exhibit
--------- -------
1A(1) Resolutions of Board of Directors of Lutheran Brotherhood
("LB") establishing the LB Variable Insurance Account I
("the Account").
1A(3)(a) Distribution Agreement between Lutheran Brotherhood
Securities Corp. ("LBSC") and LB.
1A(3)(b) Form of Agreement between LBSC and General Agent with
respect to the sale of the Contracts.
1A(3)(c) Form of Agreement between LBSC and Registered Representative
with respect to the sale of the Contracts.
1A(3)(d) Schedules of sales commissions.
1A(5)(a) Form of Contract.
1A(5)(a)(ii) Flexible Premium Variable Life Insurance Contract -
Form # W2-BL-VUL-1
1A(5)(b) Available Contract Riders.
1A(5)(b)(ii) Accidental Death Benefit Rider - Form # WR2-BA-ADB-1
Child Term Life Insurance Benefit Rider -
Form # WR2-BC-CIB-1
Cost of Living Benefit Rider - Form # WR2-BL-COL-1
Guaranteed Increase Option Benefit Rider -
Form # WR2-BG-GIO-1
Spouse Adjustable Term Life Insurance Benefit Rider -
Form # WR2-BS-SIB-1
Waiver of Selected Amount Benefit Rider -
Form # WR2-BZ-WSA-1
Accelerated Benefits Rider - Form WR2-BX-ACCB-1
Amendatory Agreement - Form # W-BX-Amend.AVEX
Amendatory Agreement - Form # W-BR-Amend.AFAE
Amendatory Agreement - Form # W-BS-Amend.Surv Prov
Amendatory Agreement - Form # W-BP-Amend.PBSP
1A(6) Articles of Incorporation and Bylaws of LB.
1A(10) Contract Application Form.
2 Opinion of Counsel as to the legality of the securities being
registered.
6 Actuarial Opinion and Consent.
8 Procedures Memorandum pursuant to Rule 6e-3(T)(b)(12)(ii) under the
1940 Act.
10 Accountant's Consent.
11 Counsel Consent.
12 Powers of Attorney.
<PAGE>
625 Fourth Avenue South
Minneapolis, Minnesota 55415
[logo] LUTHERAN
BROTHERHOOD EXHIBIT 6
April 29, 1998
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. 7 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
KAD:JMO\#20644
<PAGE>
EXHIBIT 10
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Post-Effective Amendment No. 7 to the registration statement on Form S-6
(the "Registration Statement") of our report dated March 20, 1998, relating
to the financial statements of LB Variable Insurance Account I which appears
in such Prospectus. We also consent to the reference to us under the
heading "Experts" in such Prospectus.
We also consent to the use in such Prospectus of our report dated March 12,
1998, relating to the financial statements of Lutheran Brotherhood which
appears in such Prospectus.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Minneapolis, Minnesota
April 28, 1998
#20645
<PAGE>
625 Fourth Avenue South
Minneapolis, Minnesota 55415
(612) 340-5727
Fax: (612) 340-7062
[logo] LUTHERAN
BROTHERHOOD EXHIBIT 11
James M. Odland
Assistant Vice President
Law Division
April 29, 1998
Lutheran Brotherhood
625 Fourth Avenue South
Minneapolis, MN 55415
Ladies and Gentlemen:
I consent to the use of my name under the heading "Legal Matters" in the
Prospectuses constituting part of the Registration Statement, on Form S-6
(File No. 33-72386), of LB Variable Insurance Account I.
Very truly yours,
/s/ James M. Odland
James M. Odland
JMO:jkr\#20646
<PAGE>
EXHIBIT 12
LUTHERAN BROTHERHOOD
LB VARIABLE INSURANCE ACCOUNT I
POWER OF ATTORNEY OF
DIRECTORS AND OFFICERS
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
and/or officer of LUTHERAN BROTHERHOOD, a fraternal benefit society
organized under the laws of the state of Minnesota (the "Society"), the
Depositor of LB VARIABLE INSURANCE ACCOUNT I, does hereby make, constitute
and appoint David J. Larson, Otis F. Hilbert, James M. Odland, and Randall
L. Wetherille, and each or any of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of such Society to an Exemptive Order
Application, Registration Statement or Registration Statements, on Form S-6
or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by such Society with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration
under the Securities Act of 1933, as amended, and the Investment Company Act
of 1940, as amended, of shares of such Society, and to file the same, with
all exhibits thereto and other supporting documents, with such Commission,
granting unto such attorneys-in-fact, and each of them, full power and
authority to do and perform any and all acts necessary or incidental to the
performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set his or
her hand this 15th day of July, 1993.
/s/ROBERT O. BLOMQUIST Director
- -------------------------------
Robert O. Blomquist
<PAGE>
LUTHERAN BROTHERHOOD
LB VARIABLE INSURANCE ACCOUNT I
POWER OF ATTORNEY OF
DIRECTORS AND OFFICERS
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
and/or officer of LUTHERAN BROTHERHOOD, a fraternal benefit society
organized under the laws of the state of Minnesota (the "Society"), the
Depositor of LB VARIABLE INSURANCE ACCOUNT I, does hereby make, constitute
and appoint David J. Larson, Otis F. Hilbert, James M. Odland, and Randall
L. Wetherille, and each or any of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of such Society to an Exemptive Order
Application, Registration Statement or Registration Statements, on Form S-6
or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by such Society with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration
under the Securities Act of 1933, as amended, and the Investment Company Act
of 1940, as amended, of shares of such Society, and to file the same, with
all exhibits thereto and other supporting documents, with such Commission,
granting unto such attorneys-in-fact, and each of them, full power and
authority to do and perform any and all acts necessary or incidental to the
performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set his or
her hand this 15th day of July, 1993.
/s/RICHARD W. DUESENBERG Director
- -------------------------------
Richard W. Duesenberg
<PAGE>
LUTHERAN BROTHERHOOD
LB VARIABLE INSURANCE ACCOUNT I
POWER OF ATTORNEY OF
DIRECTORS AND OFFICERS
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
and/or officer of LUTHERAN BROTHERHOOD, a fraternal benefit society
organized under the laws of the state of Minnesota (the "Society"), the
Depositor of LB VARIABLE INSURANCE ACCOUNT I, does hereby make, constitute
and appoint David J. Larson, Otis F. Hilbert, James M. Odland, and Randall
L. Wetherille, and each or any of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of such Society to an Exemptive Order
Application, Registration Statement or Registration Statements, on Form S-6
or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by such Society with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration
under the Securities Act of 1933, as amended, and the Investment Company Act
of 1940, as amended, of shares of such Society, and to file the same, with
all exhibits thereto and other supporting documents, with such Commission,
granting unto such attorneys-in-fact, and each of them, full power and
authority to do and perform any and all acts necessary or incidental to the
performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set his or
her hand this 15th day of July, 1993.
/s/ROBERT P. GANDRUD Director
- -------------------------------
Robert P. Gandrud
<PAGE>
LUTHERAN BROTHERHOOD
LB VARIABLE INSURANCE ACCOUNT I
POWER OF ATTORNEY OF
DIRECTORS AND OFFICERS
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
and/or officer of LUTHERAN BROTHERHOOD, a fraternal benefit society
organized under the laws of the state of Minnesota (the "Society"), the
Depositor of LB VARIABLE INSURANCE ACCOUNT I, does hereby make, constitute
and appoint David J. Larson, Otis F. Hilbert, James M. Odland, and Randall
L. Wetherille, and each or any of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of such Society to an Exemptive Order
Application, Registration Statement or Registration Statements, on Form S-6
or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by such Society with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration
under the Securities Act of 1933, as amended, and the Investment Company Act
of 1940, as amended, of shares of such Society, and to file the same, with
all exhibits thereto and other supporting documents, with such Commission,
granting unto such attorneys-in-fact, and each of them, full power and
authority to do and perform any and all acts necessary or incidental to the
performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set his or
her hand this 15th day of July, 1993.
/s/WILLIAM R. HALLING Director
- -------------------------------
William R. Halling
<PAGE>
LUTHERAN BROTHERHOOD
LB VARIABLE INSURANCE ACCOUNT I
POWER OF ATTORNEY OF
DIRECTORS AND OFFICERS
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
and/or officer of LUTHERAN BROTHERHOOD, a fraternal benefit society
organized under the laws of the state of Minnesota (the "Society"), the
Depositor of LB VARIABLE INSURANCE ACCOUNT I, does hereby make, constitute
and appoint David J. Larson, Otis F. Hilbert, James M. Odland, and Randall
L. Wetherille, and each or any of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of such Society to an Exemptive Order
Application, Registration Statement or Registration Statements, on Form S-6
or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by such Society with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration
under the Securities Act of 1933, as amended, and the Investment Company Act
of 1940, as amended, of shares of such Society, and to file the same, with
all exhibits thereto and other supporting documents, with such Commission,
granting unto such attorneys-in-fact, and each of them, full power and
authority to do and perform any and all acts necessary or incidental to the
performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set his or
her hand this 15th day of July, 1993.
/s/HERBERT D. IHLE Director
- -------------------------------
Herbert D. Ihle
<PAGE>
LUTHERAN BROTHERHOOD
LB VARIABLE INSURANCE ACCOUNT I
POWER OF ATTORNEY OF
DIRECTORS AND OFFICERS
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
and/or officer of LUTHERAN BROTHERHOOD, a fraternal benefit society
organized under the laws of the state of Minnesota (the "Society"), the
Depositor of LB VARIABLE INSURANCE ACCOUNT I, does hereby make, constitute
and appoint David J. Larson, Otis F. Hilbert, James M. Odland, and Randall
L. Wetherille, and each or any of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of such Society to an Exemptive Order
Application, Registration Statement or Registration Statements, on Form S-6
or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by such Society with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration
under the Securities Act of 1933, as amended, and the Investment Company Act
of 1940, as amended, of shares of such Society, and to file the same, with
all exhibits thereto and other supporting documents, with such Commission,
granting unto such attorneys-in-fact, and each of them, full power and
authority to do and perform any and all acts necessary or incidental to the
performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set his or
her hand this 15th day of July, 1993.
/s/RICHARD KESSLER Director
- -------------------------------
Richard Kessler
<PAGE>
LUTHERAN BROTHERHOOD
LB VARIABLE INSURANCE ACCOUNT I
POWER OF ATTORNEY OF
DIRECTORS AND OFFICERS
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
and/or officer of LUTHERAN BROTHERHOOD, a fraternal benefit society
organized under the laws of the state of Minnesota (the "Society"), the
Depositor of LB VARIABLE INSURANCE ACCOUNT I, does hereby make, constitute
and appoint David J. Larson, Otis F. Hilbert, James M. Odland, and Randall
L. Wetherille, and each or any of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of such Society to an Exemptive Order
Application, Registration Statement or Registration Statements, on Form S-6
or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by such Society with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration
under the Securities Act of 1933, as amended, and the Investment Company Act
of 1940, as amended, of shares of such Society, and to file the same, with
all exhibits thereto and other supporting documents, with such Commission,
granting unto such attorneys-in-fact, and each of them, full power and
authority to do and perform any and all acts necessary or incidental to the
performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set his or
her hand this 15th day of July, 1993.
/s/JUDITH K. LARSEN Director
- -------------------------------
Dr. Judith K. Larsen
<PAGE>
LUTHERAN BROTHERHOOD
LB VARIABLE INSURANCE ACCOUNT I
POWER OF ATTORNEY OF
DIRECTORS AND OFFICERS
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
and/or officer of LUTHERAN BROTHERHOOD, a fraternal benefit society
organized under the laws of the state of Minnesota (the "Society"), the
Depositor of LB VARIABLE INSURANCE ACCOUNT I, does hereby make, constitute
and appoint David J. Larson, Otis F. Hilbert, James M. Odland, and Randall
L. Wetherille, and each or any of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of such Society to an Exemptive Order
Application, Registration Statement or Registration Statements, on Form S-6
or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by such Society with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration
under the Securities Act of 1933, as amended, and the Investment Company Act
of 1940, as amended, of shares of such Society, and to file the same, with
all exhibits thereto and other supporting documents, with such Commission,
granting unto such attorneys-in-fact, and each of them, full power and
authority to do and perform any and all acts necessary or incidental to the
performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set his or
her hand this 15th day of July, 1993.
/s/JOHN P. MCDANIEL Director
- -------------------------------
John P. McDaniel
<PAGE>
LUTHERAN BROTHERHOOD
LB VARIABLE INSURANCE ACCOUNT I
POWER OF ATTORNEY OF
DIRECTORS AND OFFICERS
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
and/or officer of LUTHERAN BROTHERHOOD, a fraternal benefit society
organized under the laws of the state of Minnesota (the "Society"), the
Depositor of LB VARIABLE INSURANCE ACCOUNT I, does hereby make, constitute
and appoint David J. Larson, Otis F. Hilbert, James M. Odland, and Randall
L. Wetherille, and each or any of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of such Society to an Exemptive Order
Application, Registration Statement or Registration Statements, on Form S-6
or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by such Society with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration
under the Securities Act of 1933, as amended, and the Investment Company Act
of 1940, as amended, of shares of such Society, and to file the same, with
all exhibits thereto and other supporting documents, with such Commission,
granting unto such attorneys-in-fact, and each of them, full power and
authority to do and perform any and all acts necessary or incidental to the
performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set his or
her hand this 15th day of July, 1993.
/s/DR. MARY ELLEN H. SCHMIDER Director
- -------------------------------
Dr. Mary Ellen Schmider
<PAGE>
LUTHERAN BROTHERHOOD
LB VARIABLE INSURANCE ACCOUNT I
POWER OF ATTORNEY OF
DIRECTORS AND OFFICERS
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
and/or officer of LUTHERAN BROTHERHOOD, a fraternal benefit society
organized under the laws of the state of Minnesota (the "Society"), the
Depositor of LB VARIABLE INSURANCE ACCOUNT I, does hereby make, constitute
and appoint David J. Larson, Otis F. Hilbert, James M. Odland, and Randall
L. Wetherille, and each or any of them, the undersigned's true and lawful
attorneys-in-fact, with power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of such Society to an Exemptive Order
Application, Registration Statement or Registration Statements, on Form S-6
or other applicable form, and all amendments, including post-effective
amendments, thereto, to be filed by such Society with the Securities and
Exchange Commission, Washington, D.C., in connection with the registration
under the Securities Act of 1933, as amended, and the Investment Company Act
of 1940, as amended, of shares of such Society, and to file the same, with
all exhibits thereto and other supporting documents, with such Commission,
granting unto such attorneys-in-fact, and each of them, full power and
authority to do and perform any and all acts necessary or incidental to the
performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set his or
her hand this 28th day of February, 1995.
/s/BOBBY I. GRIFFIN Director
- -------------------------------
Bobby I. Griffin
#20772
<PAGE>
EXHIBIT 1.A(1)
LUTHERAN BROTHERHOOD
CERTIFICATE OF RESOLUTION
-------------------------
I, Otis F. Hilbert, being the duly elected Assistant Secretary
of LUTHERAN BROTHERHOOD, a fraternal benefit society organized and existing
under and by virtue of the laws of the State of Minnesota (hereinafter
called "the Society") having its principal office at 625 Fourth Avenue
South, Minneapolis, do hereby certify that the following is a true and
complete copy of resolutions duly adopted at a meeting of the Board of
Directors of the Society duly called and held on May 8, 1993, at which a
quorum was present and voting; that said resolutions are still in full force
and effect and have not been rescinded; and that said resolutions are not in
conflict with the articles of Incorporation or the Bylaws of the Society:
IN WITNESS WHEREOF, I have hereunto set my hand and the Seal of
the Society this 29th day of June, 1993.
Corporate Seal Attached /s/Otis F. Hilbert/initials/
-------------------------------
Assistant Secretary
Signed and subscribed to before me
this 29th day of June, 1993.
/s/Audrey P. Hodgson
- -------------------------------------
Notary Public
[NOTARY SEAL] AUDREY P. HODGSON
Notary Public - Minnesota
HENNEPIN COUNTY
My Commission Expires Dec. 16, 1997
LUTHERAN BROTHERHOOD
RESOLUTION
----------
WHEREAS, the Society desires to develop, sell and administer
flexible premium variable life insurance contracts, and
WHEREAS, the Society desires to establish such separate accounts
as may be necessary and appropriate for the Society's planned flexible
premium variable life insurance contracts, and
WHEREAS, the Society desires to authorize management of the
Society to proceed with the development of this product and obtain the
necessary state and federal approvals for the issuance of such product.
NOW THEREFORE BE IT RESOLVED, that pursuant to Minnesota Statutes,
the Society hereby establishes a separate account under the name "LB
Variable Insurance Account I" (the "Account"), for assets to be held and
applied exclusively for the benefit of the holders of flexible premium
variable life insurance contracts issued by the Society and designated by
the Society as contracts under which the dollar amount of death benefits
may, and the accumulated value thereof shall vary so as to reflect the
investment results of the Account, and the assets held in the Account shall
not be chargeable with liabilities arising out of any other business the
Society may conduct but shall be held and applied exclusively for the
benefit of the holders of such contracts.
RESOLVED, that the Account be registered as a unit investment
trust under the Investment Company Act of 1940, as amended (the "1940 Act"),
and that application be made for exemptions from such provisions of the 1940
Act as the Chief Executive Officer, President, any Executive Vice President,
any Senior Vice President, Secretary or the Treasurer of the Society may
deem necessary or advisable.
RESOLVED, that the Chief Executive Officer, President, any
Executive Vice President, any Senior Vice President, the Secretary or the
Treasurer of the Society is hereby authorized, for and on behalf of the
Society and with respect to the Account, to execute and file with the
Securities and Exchange Commission a notification of registration on
Form N-8A and N-8B2, respectively, or other applicable forms, for the
registration of the Account under the 1940 Act and to execute and file
notification of claim of exemptions, or application for exemptions, from
provisions of the 1940 Act, all in such form as such officer may approve,
with such amendments, exhibits and other supporting documents thereto, and
to execute and deliver all such other and further instruments, and to take
such other and further action on connection therewith, as such officer may
deem necessary or advisable.
RESOLVED, that the Chief Executive Officer, President, any
Executive Vice President, any Senior Vice President, the Secretary or the
Treasurer of the Society is hereby authorized, for and on behalf of the
Society, to execute and file with the Securities and Exchange Commission a
registration statement on Form S-6, or other applicable form, for the
registration under the Securities Act of 1933, as amended (the "1933 Act"),
of flexible premium variable life insurance contracts to be issued by the
Society in connection with the Account and other interests in the Account,
in such form as such officer may approve, with such amendments, exhibits and
other supporting documents thereto, and to execute and deliver all such
other and further instruments, and to take such other and further action in
connection therewith, as such officer may deem necessary or advisable.
RESOLVED, that David J. Larson is hereby designated as the person
authorized to receive notices and communications from the Securities and
Exchange Commission with respect to such registration statements to be filed
under the 1933 Act, with the powers conferred upon him as such person by the
1933 Act and the rules and regulations of such Commission issued thereunder.
RESOLVED, that the Chief Executive Officer, President, any
Executive Vice President, any Senior Vice President, the Secretary or the
Treasurer of the Society, and such other officers and employees of the
Society as the President of the Society may designate, and each of them, are
hereby authorized, for and on behalf of the Society, to execute such other
and further instruments (including, without limitation, a distribution
agreement with respect to sale of the contracts), and to take such other and
further action, as they, or any of them, may deem necessary or advisable to
carry out the purposes of the foregoing resolutions.
#20759
<PAGE>
EXHIBIT 1.A3(a)
-------------------
DISTRIBUTION AGREEMENT
----------------------
AGREEMENT made this _______ day of __________________, by and between
Lutheran Brotherhood, a fraternal benefit society organized under the laws
of the state of Minnesota ("LB"), on its own behalf and on behalf of the LB
Variable Insurance Account I (the "Variable Account"), and Lutheran
Brotherhood Securities Corp., a Pennsylvania corporation ("LBSC").
WITNESSETH:
-----------
WHEREAS, LB has established and maintains the Variable Account, a
separate investment account, pursuant to the laws of Minnesota for the
purpose of selling flexible premium variable life insurance contracts
("Contracts"), to commence after the effectiveness of the Registration
Statement relating thereto filed with the Securities and Exchange Commission
on Form S-6 pursuant to the Securities Act of 1933, as amended (the "1933
Act"); and
WHEREAS, the Variable Account will be registered as a unit investment
trust under the Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, LBSC is registered as a broker-dealer under the Securities
Exchange Act of 1934 (the "Securities Exchange Act") and is a member of the
National Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, LB and LBSC wish to enter into an agreement to have LBSC act
as the Company's principal underwriter for the sale of the Contracts through
the Variable Account;
NOW, THEREFORE, the parties agree as follows:
1. APPOINTMENT OF THE DISTRIBUTOR
LB agrees that during the term of this Agreement it will take
all action which is required to cause the Contracts to comply
as an insurance product and a registered security with all
applicable federal and state laws and regulations. LB appoints
LBSC and LBSC agrees to act as the principal underwriter for
the sale of Contracts to the public, during the term of this
Agreement, in each state and other jurisdiction in which such
Contracts may lawfully be sold. LBSC shall offer the Contracts
for sale and distribution at premium rates set by LB.
Applications for the Contracts shall be solicited only by
representatives duly and appropriately licensed or otherwise
qualified for the sale of such Contracts in each state or other
jurisdiction. LB shall undertake to appoint LBSC's qualified
registered representatives as life insurance or annuity agents
of LB. Completed applications for Contracts shall be
transmitted directly to LB for acceptance or rejection in
accordance with underwriting rules established by LB. Initial
premium payments under the Contracts shall be made by check
payable to LB and shall be held at all times by LBSC or its
registered representatives in a fiduciary capacity and remitted
promptly to LB. Anything in this Agreement to the contrary
notwithstanding, LB retains the ultimate right to control the
sale of the Contracts and to appoint and discharge life
insurance agents of LB. LBSC shall be held to the exercise of
reasonable care in carrying out the provisions of this
Agreement.
2. SALES AGREEMENTS
LBSC is hereby authorized to enter into separate written
agreements, on such terms and conditions as LBSC may determine
not inconsistent with this Agreement, with one or more
registered representatives who agree to participate in the
distribution of Contracts. Such registered representatives
shall be registered as securities agents with the NASD. LBSC
and its registered representatives soliciting applications for
Contracts shall also be duly and appropriately licensed,
registered or otherwise qualified for the sale of such
Contracts (and the riders and other policies offered in
connection therewith) under the insurance laws and any
applicable blue sky laws of each state or other jurisdiction in
which LB is authorized to offer the Contracts. LBSC shall have
the responsibility for ensuring that its registered
representatives are properly supervised. LBSC shall assume any
legal responsibilities of LB for the acts, commissions or
defalcations of such registered representatives insofar as they
relate to the sale of the Contracts. Applications for
Contracts solicited by LBSC through its registered
representatives shall be transmitted directly to LB. All
premium payments under the Contracts shall be made by check to
LB and, if received by LBSC, shall be held at all times in a
fiduciary capacity and remitted promptly to LB.
3. LIFE INSURANCE OR ANNUITY LICENSING
LB shall be responsible for ensuring that the registered
representatives are duly qualified under the insurance laws of
the applicable jurisdictions to sell the Contracts.
4. SUITABILITY
LB wishes to ensure that Contracts sold by LBSC will be issued
to purchasers for whom the Contract will be suitable. LBSC
shall take reasonable steps to ensure that the various
registered representatives appointed by it shall not make
recommendations to an applicant to purchase a Contract in
the absence of reasonable grounds to believe that the purchase
of the Contract is suitable for such applicant. While not
limited to the following, a determination of suitability shall
be based on information furnished to a registered
representative after reasonable inquiry of such applicant
concerning the applicant's insurance and investment objectives,
financial situation and needs, and the likelihood that the
applicant will continue to make the premium payments
contemplated by the Contracts.
5. PROMOTION MATERIALS
LB shall have the responsibility for furnishing to LBSC and its
registered representatives sales promotion materials and
individual sales proposals related to the sale of the
Contracts. LBSC shall not use any such materials that have not
been approved by LB.
6. COMPENSATION
LB shall arrange for the payment of commissions directly to
those registered representatives of LBSC who are entitled
thereto in connection with the sale of the Contracts on behalf
of LBSC, in the amounts and on such terms and conditions as LB
and LBSC have determined, provided, however, that such terms,
conditions and commissions as are set forth in or as are not
inconsistent with the Prospectus included as part of the
Registration Statement for the Contracts and effective under
the 1933 Act. LB may, at its option, adjust the commissions
paid for contracts and riders hereafter sold, by giving written
notice to LBSC thirty days in advance of such change.
LB shall reimburse LBSC for the costs and expenses incurred by
LBSC in furnishing or obtaining the services, materials and
supplies required by the terms of this Agreement, in the
initial sales efforts and the continuing obligations hereunder.
7. RECORDS
LBSC shall have the responsibility for maintaining the records
of representatives licensed, registered and otherwise qualified
to sell the Contracts. LBSC shall maintain such other records
as are required of it by applicable laws and regulations. The
books, accounts and records of LB, the Variable Account and
LBSC shall be maintained so as to clearly and accurately
disclose the nature and details of the transactions. All
records maintained by LBSC or in connection with this Agreement
shall be the property of LB and shall be returned to LB upon
termination of this Agreement, free from any claims or
retention of rights by LBSC. LBSC shall keep confidential any
information obtained pursuant to this Agreement and shall
disclose such information, only if LB has authorized such
disclosure, or if such disclosure is expressly required by
applicable federal or state regulatory authorities.
8. INVESTIGATIONS AND PROCEEDINGS
(a) LBSC and LB agree to cooperate fully in any insurance
regulatory investigation, proceeding or judicial
proceeding arising in connection with the Contracts
distributed under this Agreement. LBSC and LB further
agree to cooperate fully in any securities regulatory
investigation, proceeding or judicial proceeding with
respect to LB, LBSC, their affiliates and their agents or
representatives to the extent that such investigation or
proceeding is in connection with Contracts distributed
under this Agreement. LBSC shall furnish applicable
federal and state regulatory authorities with any
information or reports in connection with its services
under this Agreement which such authorities may request
in order to ascertain whether the LB's operations are
being conducted in a manner consistent with any
applicable law or regulation.
(b) In the case of a written customer complaint, LBSC and LB
will cooperate in investigating such complaint and any
response to such complaint will be sent to the other
party to this Agreement for approval not less than five
business days prior to its being sent to the customer or
regulatory authority, except that if a more prompt
response is required, the proposed response shall be
communicated by telephone or telegraph.
9. TERMINATION
This Agreement shall terminate automatically upon its
assignment by either party without the prior written consent of
both parties. This Agreement may be terminated at any time by
either party on 60 days' written notice to the other party,
without the payment of any penalty. Upon termination of this
Agreement all authorizations, rights and obligations shall
cease except the obligation to settle accounts hereunder,
including commissions on premiums subsequently received for
Contracts in effect at time of termination, and the agreements
contained in paragraph 8 hereof.
10. REGULATION
This Agreement shall be subject to the provisions of the
1933 Act, the 1940 Act and the Securities Exchange Act and the
rules, regulations and rulings promulgated thereunder and of
the applicable rules and regulations of the NASD, from time to
time in effect, and the terms hereof shall be interpreted and
construed in accordance therewith.
11. SEVERABILITY
If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
12. APPLICABLE LAW
This Agreement shall be construed and enforced in accordance
with and governed by the laws of the State of Minnesota.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
LUTHERAN BROTHERHOOD
By
---------------------------------
LUTHERAN BROTHERHOOD
SECURITIES CORP.
By
---------------------------------
#20760
<PAGE>
EXHIBIT 1. A(3)(b)
-------------------
GENERAL AGENT'S AGREEMENT
-------------------------
AGREEMENT dated __________________, by and between Lutheran
Brotherhood Securities Corp. hereinafter referred to as "LBSC", a
Pennsylvania corporation, and _____________________ hereinafter referred as
"General Agent", an individual.
WHEREAS, General Agent is a registered representative of LBSC
pursuant to a General Agent's Agreement; and
WHEREAS, General Agent of Lutheran Brotherhood, a Minnesota
Corporation ("LB"), the parent of LBSC, and/or of Lutheran Brotherhood
Variable Insurance Products Company, hereinafter referred to as "LBVIP", a
Minnesota Corporation (collectively known as the "Companies"); and
WHEREAS, LB has the authority to issue variable contracts in certain
states and LBVIP has the authority to issue variable contracts in certain
other states; and
WHEREAS, the parties hereto desire that General Agent represent LBSC
and the Companies in the sale of LB's variable contracts in states where LB
is so authorized and LBVIP's variable contracts in states where LBVIP is so
authorized;
WITNESSETH: In consideration of the mutual promises contained
herein, the parties hereto agree as follows:
A. DEFINITIONS
(1) Contracts - The variable universal life insurance contracts
and variable annuity contracts which the Companies propose to
issue in appropriate states and for which LBSC has been
appointed the principal underwriter pursuant to Distribution
Agreements.
(2) The Variable Accounts - The variable life insurance and
variable annuity separate accounts established and maintained
by the Companies pursuant to the laws of Minnesota to fund
the benefits under the Contracts.
(3) The Fund - An open-end management investment company
registered under the 1940 Act, shares of which are sold to
the Variable Accounts in connection with the sale of the
Contracts.
(4) Registration Statement - The registration statements and
amendments thereto relating to the Contracts, the Variable
Accounts, and the Fund, including financial statements and
all exhibits.
(5) Prospectuses - The prospectuses included within the
registration statements referred to herein.
(6) 1933 Act - The Securities Act of 1933, as amended.
(7) 1934 Act - The Securities Exchange Act of 1934, as amended.
(8) 1940 Act - The Investment Company Act of 1940, as amended.
(9) SEC - The Securities and Exchange Commission.
B. AGREEMENTS OF LBSC
(1) Pursuant to the authority delegated to it by the Companies,
LBSC hereby authorizes General Agent during the term of this
Agreement to solicit and obtain applications for Contracts
directly or through LBSC Registered Representatives obtained
by and holding under General Agent a written selected
Registered Representative Agreement and appointed by the
Companies from eligible persons provided that there is an
effective Registration Statement relating to such Contracts
and provided further that General Agent has been notified by
LBSC that the Contracts are qualified for sale under all
applicable securities and insurance laws of the state or
jurisdiction in which the application will be solicited. In
connection with the solicitation of applications for
Contracts, General Agent is hereby authorized to offer riders
and benefits that are available with the Contracts in
accordance with instructions furnished by LBSC or the
Companies.
(2) LBSC, during the term of this Agreement, will notify General
Agent of the issuance by the SEC of any stop order with
respect to the Registration Statement or any amendments
thereto or the initiation of any proceedings for that purpose
or for any other purpose relating to the registration and/or
offering of the Contracts and of any other action or
circumstances that may prevent the lawful sale of the
Contracts in any state or jurisdiction.
(3) During the term of this Agreement, LBSC shall advise General
Agent of any amendment to the Registration Statement of any
amendment or supplement to any Prospectus.
C. AGREEMENTS OF GENERAL AGENT
(1) It is understood and agreed that General Agent is a duly
registered representative of LBSC pursuant to a General
Agent's Agreement. General Agent agrees to comply with all
of the terms and agreements of said General Agent's Agreement
which is hereby incorporated herein by reference to the
extent it is not inconsistent with the terms herein.
(2) Commencing at such time as LBSC and General Agent shall agree
upon, General Agent agrees to use his/her best efforts to
find purchasers for the contracts acceptable to the
Companies. In meeting his/her obligation to use his/her best
efforts to solicit applications for Contracts, General Agent
shall, during the term of this Agreement, engage in the
following activities:
(a) Continuously utilize training, sales and promotional
materials which have been approved by the Companies;
(b) Permit periodic inspection and supervision of his/her
sales practices and submit periodic reports to LBSC as
may be requested on the results of such inspections
and the compliance with procedures.
(c) General Agent shall not make recommendations to an
applicant to purchase a Contract in the absence of
reasonable grounds to believe that the purchase of the
Contract is suitable for such applicant. While not
limited to the following, a determination of
suitability shall be based on information furnished to
General Agent after reasonable inquiry of such
applicant concerning the applicant's insurance and
investment objectives, financial situation and needs,
and the likelihood that the applicant will continue to
make the premium payments contemplated by the
Contract.
(3) All payments for Contracts collected by General Agent shall
be held at all times in a fiduciary capacity and shall be
remitted promptly in full together with such applications,
forms and other required documentation to the Companies as
designated by LBSC. Checks or money orders in payment of
initial premiums shall be drawn to the order of "Lutheran
Brotherhood" or "Lutheran Brotherhood Variable Insurance
Products Company", whichever is appropriate. General Agent
acknowledges that the Companies retain the ultimate right to
control the sale of the Contracts and that LBSC or the
Companies shall have the unconditional right to reject, in
whole or in part, any application for the Contract. In the
event the Companies or LBSC rejects an application, the
Companies immediately will return all payments directly to
the purchaser and General Agent will be notified of such
action. In the event that any purchaser of a Contract elects
to return such Contract in accordance with the Contract's
free look provision, any amounts paid will be refunded
pursuant to the law of the state in which the purchaser
resides and General Agent will be notified of such action.
General Agent will comply with Lutheran Brotherhood's policy
on Field Force Fiduciary Responsibility.
(4) General Agent shall act at all times as an independent
contractor in carrying out the duties hereunder and shall not
be considered an employee of the Companies or LBSC except for
the purposes of the Federal Insurance Contributions
Act (26 U.S.C. 3101, ET. SEQ.) and Title II of the Social
Security Act (42 U.S.C.401, ET. SEQ.). As such General
Agent shall have full control of his or her daily activities,
with the right to exercise independent judgment as to the
time, place, and manner of soliciting applications, servicing
Contracts, and otherwise carrying out the provisions of this
Agreement. General Agent and his/her employees and
Registered Representatives obtained by and holding under
General Agent shall not hold themselves out to be employees
of the Companies or LBSC in this connection or in any
dealings with the public.
(5) General Agent agrees that any material he or she develops,
approves or uses for sales, training, explanatory or other
purposes in connection with the solicitation of applications
for Contracts hereunder (other than generic advertising
materials which do not make specific reference to the
Contracts) will not be used without the prior written consent
of LBSC and, where appropriate, the endorsement of the
Companies to be obtained by LBSC.
(6) Solicitation and other activities by General Agent shall be
undertaken only in accordance with applicable laws and
regulations. General Agent shall not solicit applications
for the contracts until duly licensed and appointed by the
Companies as a life insurance and variable contract agent of
the Companies in the appropriate states or other
jurisdictions. General Agent shall fulfill any training
requirements necessary to be licensed. General Agent
understands and acknowledges that he/she is not authorized by
LBSC or the Companies to give any information or make any
representation in connection with this Agreement or the
offering of the Contracts other than those contained in the
Prospectus or other solicitation material authorized in
writing by LBSC or the Companies.
(7) General Agent shall not represent himself or herself as
having any nor shall he or she have authority on behalf of
LBSC or the Companies to: make, alter or discharge any
Contract or other form; waive any forfeiture, extend the time
of paying any premium, or to alter, waive, or forfeit any of
the rights of the Companies or LBSC; receive any moneys or
premiums due, or to become due, to the Companies, except as
set forth in Section C(3) of this Agreement. General Agent
shall not expend, nor contract for the expenditure of the
funds of LBSC or the Companies, nor shall General Agent
possess or exercise any authority on behalf of LBSC or the
Companies by this Agreement.
(8) General Agent shall maintain such records as are required of
him/her by applicable laws and regulations. The books,
accounts and records of the Companies, the Variable Accounts,
LBSC and General Agent relating to the sale of the Contracts
shall be maintained so as to clearly and accurately disclose
the nature and details of the transactions. All records
maintained by General Agent in connection with this Agreement
shall be the property of LBSC or the Companies and shall be
returned to LBSC or the Companies upon termination of this
Agreement, free from any claims or retention of rights by
General Agent. General Agent shall keep confidential any
information obtained pursuant to this Agreement and shall
disclose such information, only if LBSC or the Companies has
authorized such disclosure, or if such disclosure is
expressly required by applicable federal or state regulatory
authorities.
(9) All business produced and serviced under this Agreement is
the property of LBSC or the Companies and no attempt will be
made by General Agent to prejudice the Contract Owners or
interfere with the collection of premiums or transfer any
existing Contracts to another company or organization.
Information regarding names, addresses, ages and all other
information and records of Contract owners acquired from the
Companies of LBSC and coming into the possession of General
Agent during the effective period of this Agreement, or any
prior Agreement, are trade secrets wholly owned by the
Companies. All forms and other material, including
electronic data, whether furnished by the Companies or LBSC
or purchased by General Agent, upon which this information is
recorded shall be the sole and exclusive property of the
Companies. General Agent shall return any part or all of
such information and records upon the request of the
Companies or LBSC. General Agent will safeguard and protect
all such information within his or her control from any
unauthorized access and use.
(10) The Companies and LBSC may furnish to General Agent, without
charge, certain manuals, forms, records, electronic data, and
such other materials and supplies as they may deem advisable
to provide. All such property furnished by them shall remain
the property of the Companies. In addition, they may offer
at General Agent's expense such additional materials and
supplies as they believe may be helpful to General Agent.
(11) The expense of any office, including rental, furniture, and
equipment; signs; supplies not furnished by the Companies or
LBSC; the salaries of the employees of General Agent;
automobile; transportation; telephone; postage; advertising;
and all other charges or expense incurred by General Agent in
the performance of this Agreement shall be incurred at
his/her discretion and paid for by him/her.
(12) General Agent expressly covenants and agrees that after
termination of this Agreement, for any reason, he/she shall
not for a period of one year thereafter, nor shall he/she
assist, encourage or induce others to do, any of the
following things: induce, or attempt to induce, any of the
Contract owners to whom he/she or any Registered
Representative in his/her General Agency was assigned while
this Agreement was in effect, to cancel, lapse, or surrender
their contracts with the Companies.
(13) Upon termination of this Agreement, General Agent will
deliver to the Companies, or its authorized representatives,
all records, materials, supplies, advertising, licenses, and
all other documents pertaining to the Companies, used in
carrying out this Agreement.
(14) General Agent will, at the option of the Companies or LBSC,
furnish a fidelity bond for such sum and with such surety as
they may require.
(15) General Agent shall maintain an errors and omissions
insurance policy in an amount, form, and surety acceptable to
the Companies for the performance of his or her professional
services, duties, and obligations.
D. COMPENSATION
(1) Pursuant to the Distribution Agreement between LBSC and the
Companies, LBSC shall cause the Companies to arrange for the
payment of commissions to General Agent as compensation for
the sale of each contract sold by General Agent or Registered
Representative obtained by and holding under General Agent.
The amount of such compensation shall be based on a schedule
to be determined by agreement of the Companies and LBSC.
(2) General Agent shall have no right to withhold or deduct any
part of any premium he/she shall receive for purposes of
payment of commission or otherwise. General Agent shall have
no interest in any compensation paid by the Companies to
LBSC, now or hereafter, in connection with the sale of any
Contracts hereunder.
(3) The Companies are hereby given a paramount and prior lien and
security interest upon any commissions payable under or as a
result of this or any previous agreement and under all
agreements amendatory hereof or supplementary hereto, as
security for the payment of any claim or indebtedness or
reimbursement whatsoever due or to become due to LBVIP, LBSC,
LB or any of its subsidiaries or affiliates, from General
Agent. Any sums becoming due to General Agent at any time
may be applied, directly, by the Companies to the liquidation
of any indebtedness or obligation of General Agent to any of
the secured parties, but the failure to so apply any sum
shall not be deemed a waiver of the Companies' lien on or
security interest in any other sums becoming due nor impair
its right to so apply such sums.
(4) Notwithstanding the vesting provisions provided for in the
Distribution Agreement and/or the schedule referred to in
section D(1) herein, General Agent will forfeit all
compensation and any other payments which have otherwise been
vested or reserved to General Agent by this or any previous
or related Agreement, if this Agreement terminates and any of
the following events have occurred or subsequently occur:
(a) General Agent engages in any form of rebating,
directly or indirectly, or if General Agent defaults
in the payment to the Companies of any premiums
collected by him/her, demands or accepts any
remuneration from a Contract Owner, beneficiary, or
their representative for services in connection with
the payment of any claim under any contract issued by
the Companies;
(b) General Agent fails to deliver to the Companies or
their authorized representative any of the following:
all records, including electronic data, materials,
supplies, advertising, licenses, and all other
documents containing the Companies' confidential
information and/or trade secrets, upon the written
request of the Companies;
(c) General Agent violates any of the applicable federal
and state laws, regulations or rules, or commits any
fraud, in connection with his or her duties as a
General Agent or as a registered representative; or
(d) General Agent violates any of the covenants set forth
in section C(12) herein.
E. COMPLAINTS AND INVESTIGATIONS
General Agent and LBSC jointly agree to cooperate fully in any
insurance regulatory investigation or proceeding or judicial
proceeding arising in connection with the contracts marketed under
this Agreement. General Agent and LBSC further agree to cooperate
fully in any securities regulatory investigation or proceeding or
judicial proceeding with respect to General Agent, LBSC, or their
affiliates and their agents or representatives to the extent that
such investigation or proceeding is in connection with Contracts
marketed under this Agreement.
F. TERM OF AGREEMENT
(1) This Agreement shall continue in force for one year from its
effective date and thereafter shall automatically be renewed
every year for a further one year period; provided that
either party may unilaterally terminate this Agreement upon
thirty (30) days' written notice to the other party of its
intention to do so.
(2) Upon termination of this Agreement, all authorizations,
rights and obligations under this agreement shall cease
except (a) the agreements contained in Section E hereof;
(b) the indemnity set forth in Section G hereof; (c) the
obligations to settle accounts hereunder, including payments
on premiums subsequently received for Contracts, in effect at
the time of termination or issued pursuant to applications
received by General Agent prior to termination; and (d) the
covenants set forth in Sections C(9), C(12) and C(13).
(3) This Agreement will automatically terminate on the first day
of the month next following the seventieth birthday of
General Agent.
(4) In the event that the General Agent's Agreement between
General Agent and Lutheran Brotherhood or the General Agent's
Agreement between General Agent and LBSC is terminated, this
Agreement will also terminate.
(5) LBSC may immediately terminate this agreement for breach of
any of the covenants and agreements herein by General Agent.
G. INDEMNITY
(1) General Agent shall be held to the exercise of reasonable
care in carrying out the provisions of this Agreement.
(2) General Agent agrees to indemnify and hold harmless the
Companies and LBSC and each of their current and former
directors and officers and each person, if any, who controls
or has controlled the Companies or LBSC within the meaning of
the 1933 Act or the 1934 Act, against any losses, claims,
damages or liabilities to which the Companies or LBSC and any
such director or officer or controlling person may become
subject, under the 1933 Act or otherwise insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon:
(a) Any unauthorized use of sales materials or any verbal
or written misrepresentations or any unlawful sales
practices concerning the Contracts by General Agent;
or
(b) The failure of General Agent, his/her employees or
Registered Representatives obtained by and holding
under General Agent, to comply with the provisions or
this Agreement; and General Agent will reimburse the
Companies, LBSC, or such director, officer or
controlling person in connection with investigating or
defending any such loss, claims, damage, liability or
action. This indemnity agreement will be in addition
to any liability which General Agent may otherwise
have.
H. GENERAL TERMS
(1) This Agreement shall not be assigned by either party without
the written consent of the other.
(2) This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota.
(3) The forbearance or neglect of LBSC to insist upon strict
compliance by General Agent with any of the provisions of
this Agreement, whether continuing or not, shall not be
construed as a waiver of LBSC's rights or privileges
hereunder. No waiver of any right or privilege of LBSC
arising from any default or failure of performance by General
Agent shall affect LBSC's rights or privileges in the event
of a further default or failure of performance.
(4) Whenever required for proper interpretation of this
Agreement, the singular number shall include the plural, the
plural the singular, and the use of any gender shall include
all genders.
(5) The unenforceability or invalidity of any provisions hereof
shall not render any other provision or provisions herein
contained unenforceable or invalid.
(6) This Agreement contains the entire understanding of the
parties hereto, and no modification hereof or addition hereto
shall be binding unless the same is in writing and signed by
the parties hereto.
(7) This Agreement shall be binding upon and inure to the benefit
of the parties hereto, and their respective successors and
permissive assigns, and General Agent's estate, heirs and
personal representatives.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
LUTHERAN BROTHERHOOD
SECURITIES CORP.(LBSC)
By
--------------------------------
--------------------------------
(General Agent)
#20761
<PAGE>
EXHIBIT 1. A(3)(c)
-------------------
SELECTED REGISTERED REPRESENTATIVE AGREEMENT
--------------------------------------------
AGREEMENT dated ___________________, by and between Lutheran
Brotherhood Securities Corp. hereinafter referred to as "LBSC", a
Pennsylvania corporation, and hereinafter
referred to as "Registered Representative", an individual.
WHEREAS, Registered Representative is a registered representative of
LBSC pursuant to a Registered Representative's Agreement; and
WHEREAS, Registered Representative is a District Representative of
Lutheran Brotherhood, a Minnesota Corporation, the parent of LBSC, and/or of
Lutheran Brotherhood Variable Insurance Products Company, hereinafter
referred to as "LBVIP", a Minnesota Corporation; and (collectively known as
the "Companies"); and
WHEREAS, LB has the authority to issue variable contracts in certain
states and LBVIP has the authority to issue variable contracts in certain
other states; and
WHEREAS, the parties hereto desire that Registered Representative
represent LBSC and the Companies in the sale of LB's variable contracts in
states where LB is so authorized and LBVIP's variable contracts in states
where LBVIP is so authorized;
WITNESSETH: In consideration of the mutual promises contained
herein, the parties hereto agree as follows:
A. DEFINITIONS
(1) Contracts - The variable universal life insurance contracts
and variable annuity contracts which the Companies propose to
issue in appropriate states and for which LBSC has been
appointed the principal underwriter pursuant to Distribution
Agreements.
(2) The Variable Accounts - The variable life insurance and
variable annuity separate accounts established and maintained
by the Companies pursuant to the laws of Minnesota to fund
the benefits under the Contracts.
(3) The Fund - An open-end management investment company
registered under the 1940 Act, shares of which are sold to
the Variable Accounts in connection with the sale of the
Contracts.
(4) Registration Statement - The registration statements and
amendments thereto relating to the Contracts, the Variable
Accounts, and the Fund, including financial statements and
all exhibits.
(5) Prospectuses - The prospectuses included within the
registration statements referred to herein.
(6) 1933 Act - The Securities Act of 1933, as amended.
(7) 1934 Act - The Securities Exchange Act of 1934, as amended.
(8) 1940 Act - The Investment Company Act of 1940, as amended.
(9) SEC - The Securities and Exchange Commission.
B. AGREEMENTS OF LBSC
(1) Pursuant to the authority delegated to it by the Companies,
LBSC hereby authorizes Registered Representative during the
term of this Agreement to solicit applications for Contracts
from eligible persons provided that there is an effective
Registration Statement relating to such Contracts and
provided further that Registered Representative has been
notified by LBSC that the Contracts are qualified for sale
under all applicable securities and insurance laws of the
state or jurisdiction in which the application will be
solicited. In connection with the solicitation of
applications for Contracts, Registered Representative is
hereby authorized to offer riders and benefits that are
available with the Contracts in accordance with instructions
furnished by LBSC or the Companies.
(2) LBSC, during the term of this Agreement, will notify
Registered Representative of the issuance by the SEC of any
stop order with respect to the Registration Statement or any
amendments thereto or the initiation of any proceedings for
that purpose or for any other purpose relating to the
registration and/or offering of the Contracts and of any
other action or circumstances that may prevent the lawful
sale of the Contracts in any state or jurisdiction.
(3) During the term of this Agreement, LBSC shall advise
Registered Representative of any amendment to the
Registration Statement of any amendment or supplement to any
Prospectus.
C. AGREEMENTS OF REGISTERED REPRESENTATIVE
(1) It is understood and agreed that Registered Representative is
a duly registered representative of LBSC pursuant to a
Registered Representative's Agreement. Registered
Representative agrees to comply with all of the terms and
agreements of said Registered Representative's Agreement
which is hereby incorporated herein by reference to the
extent it is not inconsistent with the terms herein.
(2) Commencing at such time as LBSC and Registered Representative
shall agree upon, Registered Representative agrees to use
his/her best efforts to find purchasers for the contracts
acceptable to the Companies. In meeting its obligation to
use its best efforts to solicit applications for Contracts,
Registered Representative shall, during the term of this
Agreement, engage in the following activities:
(a) Continuously utilize training, sales and promotional
materials which have been approved by the Companies;
(b) Permit periodic inspection and supervision of his/her
sales practices and submit periodic reports to LBSC as
may be requested on the results of such inspections and
the compliance with procedures.
(c) Registered Representative shall not make
recommendations to an applicant to purchase a Contract
in the absence of reasonable grounds to believe that
the purchase of the Contract is suitable for such
applicant. While not limited to the following, a
determination of suitability shall be based on
information furnished to Registered Representative
after reasonable inquiry of such applicant concerning
the applicant's insurance and investment objectives,
financial situation and needs, and the likelihood that
the applicant will continue to make the premium
payments contemplated by the Contract.
(3) All payments for Contracts collected by Registered
Representative shall be held at all times in a fiduciary
capacity and shall be remitted promptly in full together with
such applications, forms and other required documentation to
the Companies as designated by LBSC. Checks or money orders
in payment of initial premiums shall be drawn to the order of
"Lutheran Brotherhood" or "Lutheran Brotherhood Variable
Insurance Products Company", whichever is appropriate.
Registered Representative acknowledges that the Companies
retain the ultimate right to control the sale of the
Contracts and that LBSC or the Companies shall have the
unconditional right to reject, in whole or in part, any
application for the Contract. In the event the Companies or
LBSC rejects an application, the Companies immediately will
return all payments directly to the purchaser and Registered
Representative will be notified of such action. In the event
that any purchaser elects to return a Contract in accordance
with the Contract's free look provision, any amounts paid
will be refunded pursuant to the law of the state in which
the purchaser resides and Registered Representative will be
notified of such action. Registered Representative will
comply with Lutheran Brotherhood's policy on Field Force
Fiduciary Responsibility.
(4) Registered Representative shall act at all times as an
independent contractor in carrying out the duties hereunder
and shall not be considered an employee of the Companies or
LBSC, except for the purposes of the Federal Insurance
Contributions Act (26 U.S.C.3101 et.seq.), and Title II, of
the Social Security Act (42 U.S.C.401 et.seq.). As such
Registered Representative shall have full control of his or
her daily activities, with the right to exercise independent
judgment as to the time, place, and manner of soliciting
applications, servicing Contracts, and otherwise carrying out
the provisions of this Agreement. Registered Representative
and his/her employees shall not hold themselves out to be
employees of the Companies or LBSC in this connection or in
any dealings with the public.
(5) Registered Representative agrees that any material he or she
develops, approves or uses for sales, training, explanatory
or other purposes in connection with the solicitation of
applications for Contracts hereunder (other than generic
advertising materials which do not make specific reference to
the Contracts) will not be used without the prior written
consent of LBSC and, where appropriate, the endorsement of
the Companies to be obtained by LBSC.
(6) Solicitation and other activities by Registered
Representative shall be undertaken only in accordance with
applicable laws and regulations. Registered Representative
shall not solicit applications for the contracts until duly
licensed and appointed by the Companies as a life insurance
and variable contract agent of the Companies in the
appropriate states or other jurisdictions. Registered
Representative shall fulfill any training requirements
necessary to be licensed. Registered Representative
understands and acknowledges that he/she is not authorized by
LBSC or the Companies to give any information or make any
representation in connection with this Agreement or the
offering of the Contracts other than those contained in the
Prospectus or other solicitation material authorized in
writing by LBSC or the Companies.
(7) Registered Representative shall not represent himself or
herself as having any nor shall he or she have authority on
behalf of LBSC or the Companies to: make, alter or discharge
any Contract or other form; waive any forfeiture, extend the
time of paying any premium, or to alter, waive, or forfeit
any of the rights of the Companies or LBSC; receive any
moneys or premiums due, or to become due, to the Companies,
except as set forth in Section C(3) of this Agreement.
Registered Representative shall not expend, nor contract for
the expenditure of the funds of LBSC or the Companies, nor
shall Registered Representative possess or exercise any
authority on behalf of LBSC or the Companies by this
Agreement.
(8) Registered Representative shall maintain such records as are
required of him/her by applicable laws and regulations. The
books, accounts and records of the Companies, the Variable
Accounts, LBSC and Registered Representative relating to the
sale of the Contracts shall be maintained so as to clearly
and accurately disclose the nature and details of the
transactions. All records maintained by Registered
Representative in connection with this Agreement shall be the
property of the Companies and shall be returned to the
Companies upon termination of this Agreement, free from any
claims or retention of rights by Registered Representative.
Registered Representative shall keep confidential any
information obtained pursuant to this Agreement and shall
disclose such information, only if the Companies has
authorized such disclosure, or if such disclosure is
expressly required by applicable federal or state regulatory
authorities.
(9) All business produced and serviced under this Agreement is
the property of the Companies and no attempt will be made by
Registered Representative to prejudice the Contract Owners or
interfere with the collection of premiums or transfer any
existing Contracts to another company or organization.
Information regarding names, addresses, ages and all other
information and records of Contract Owners acquired from the
Companies of LBSC and coming into the possession of
Registered Representative during the effective period of this
Agreement, or any prior Agreement, are trade secrets wholly
owned by the Companies. All forms and other material,
including electronic data, whether furnished by the Companies
or LBSC or purchased by Registered Representative, upon which
this information is recorded shall be the sole and exclusive
property of the Companies. Registered Representative shall
return any part or all of such information and records upon
the request of the Companies or LBSC. Registered
Representative will safeguard and protect all such
information within his or her control from any unauthorized
access and use.
(10) The Companies and LBSC may furnish to Registered
Representative, without charge, certain manuals, forms,
records, electronic data, and such other materials and
supplies as they may deem advisable to provide. All such
property furnished by them shall remain the property of the
Companies. In addition, they may offer at Registered
Representative's expense such additional materials and
supplies as they believe may be helpful to Registered
Representative.
(11) The expense of any office, including rental, furniture and
equipment; signs; supplies not furnished by the Companies or
LBSC, the salaries of the employees of Registered
Representative; automobile; transportation; telephone;
postage; advertising; and all other charges or expense
incurred by Registered Representative in the performance of
this Agreement shall be incurred at his/her discretion and
paid for by him/her.
(12) Registered Representative expressly covenants and agrees
that after termination of this Agreement, for any reason,
he/she shall not for a period of one year thereafter, nor
shall he/she assist, encourage or induce others to do, any of
the following things: induce, or attempt to induce, any of
the Contract owners to whom he/she was the "Writing
Registered Representative" or was assigned as the "Servicing
or Correspondent Registered Representative" while this
Agreement was in effect, to cancel, lapse, or surrender their
contracts with the Companies.
(13) Upon termination of this Agreement, Registered Representative
will deliver to the Companies, or its authorized
representatives, all records, materials, supplies,
advertising, licenses, and all other documents pertaining to
the Companies, used in carrying out this Agreement.
(14) Registered Representative will, at the option of the
Companies or LBSC, furnish a fidelity bond for such sum and
with such surety as they may require.
(15) Registered Representative shall maintain an errors and
omissions insurance policy in an amount, form, and surety
acceptable to the Companies for the performance of his or her
professional services, duties, and obligations.
D. COMPENSATION
(1) Pursuant to the Distribution Agreement between LBSC and the
Companies, LBSC shall cause the Companies to arrange for the
payment of commissions to Registered Representative as
compensation for the sale of each contract sold by Registered
Representative. The amount of such compensation shall be
based on a schedule to be determined by agreement of the
Companies and LBSC. A copy of the schedule of commission
rates has been furnished to the Registered Representative.
(2) Registered Representative shall have no right to withhold or
deduct any part of any premium he/she shall receive for
purposes of payment of commission or otherwise. Registered
Representative shall have no interest in any compensation
paid by the Companies to LBSC, now or hereafter, in
connection with the sale of any Contracts hereunder.
(3) The Companies are hereby given a paramount and prior lien and
security interest upon any commissions payable under or as a
result of this or any previous agreement and under all
agreements amendatory hereof or supplementary hereto, as
security for the payment of any claim or indebtedness or
reimbursement whatsoever due or to become due to LBVIP, LBSC,
or LB or any of its subsidiaries or affiliates, from
Registered Representative. Any sums becoming due to
Registered Representative at any time may be applied,
directly, by the Companies to the liquidation of any
indebtedness or obligation of Registered Representative to
any of the secured parties, but the failure to so apply any
sum shall not be deemed a waiver of the Companies' lien on or
security interest in any other sums becoming due nor impair
its right to so apply such sums.
(4) Notwithstanding the vesting provisions provided for in the
Distribution Agreement and/or the schedule referred to in
section D(1) herein, Registered Representative will forfeit
all compensation and any other payments which have otherwise
been vested or reserved to Registered Representative by this
or any previous or related Agreement, if this Agreement
terminates and any of the following events have occurred or
subsequently occur:
(a) Registered Representative engages in any form of
rebating, directly or indirectly, or if Registered
Representative defaults in the payment to the Companies
of any premiums collected by him/her, demands or
accepts any remuneration from a Contract Owner,
beneficiary, or their representative for services in
connection with the payment of any claim under any
contract issued by the Companies;
(b) Registered Representative fails to deliver to the
Companies or their authorized representative any of the
following: all records, including electronic data,
materials, supplies, advertising, licenses, and all
other documents containing the Companies' confidential
information and/or trade secrets, upon the written
request of the Companies;
(c) Registered Representative violates any of the
applicable federal and state laws, regulations or
rules, or commits any fraud, in connection with his or
her duties as a Registered Representative; or
(d) Registered Representative violates any of the covenants
set forth in section C(12) herein.
E. COMPLAINTS AND INVESTIGATIONS
Registered Representative and LBSC jointly agree to cooperate fully
in any insurance regulatory investigation or proceeding or judicial
proceeding arising in connection with the Contracts marketed under
this Agreement. Registered Representative and LBSC further agree to
cooperate fully in any securities regulatory investigation or
proceeding or judicial proceeding with respect to Registered
Representative, LBSC, or their affiliates and their agents or
representatives to the extent that such investigation or proceeding
is in connection with Contracts marketed under this Agreement.
F. TERM OF AGREEMENT
(1) Either party may unilaterally terminate this Agreement upon
thirty (30) days' written notice to the other party of its
intention to do so.
(2) Upon termination of this Agreement, all authorizations,
rights and obligations under this agreement shall cease
except (a) the agreements contained in Section E hereof;
(b) the indemnity set forth in Section G hereof; (c) the
obligations to settle accounts hereunder, including payments
on premiums subsequently received for Contracts in effect at
the time of termination or issued pursuant to applications
received by Registered Representative prior to termination;
and (d) the covenants set forth in Sections C(9), C(12)
and C(13).
(3) This Agreement will automatically terminate on the first day
of the month next following the seventieth birthday of
Registered Representative.
(4) In the event that either the District Representative's
Agreement between Registered Representative and Lutheran
Brotherhood or the Registered Representative's Agreement
between Registered Representative and LBSC is terminated,
this Agreement will also terminate.
(5) LBSC may immediately terminate this agreement for breach of
any of the covenants and agreements herein by Registered
Representative.
G. INDEMNITY
(1) Registered Representative shall be held to the exercise of
reasonable care in carrying out the provisions of this
Agreement.
(2) Registered Representative agrees to indemnify and hold
harmless the Companies and LBSC and each of their current and
former directors and officers and each person, if any, who
controls or has controlled the Companies or LBSC within the
meaning of the 1933 Act or the 1934 Act, against any losses,
claims, damages or liabilities to which the Companies or LBSC
and any such director or officer or controlling person may
become subject, under the 1933 Act or otherwise insofar as
such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon:
(a) Any unauthorized use of sales materials or any verbal
or written misrepresentations or any unlawful sales
practices concerning the Contracts by Registered
Representative; or
(b) The failure of Registered Representative or his/her
employees, to comply with the provisions or this
Agreement; and Registered Representative will reimburse
the Companies, LBSC, or such director, officer or
controlling person in connection with investigating or
defending any such loss, claims, damage, liability or
action. This indemnity agreement will be in addition
to any liability which Registered Representative may
otherwise have.
H. GENERAL TERMS
(1) This Agreement shall not be assigned by either party without
the written consent of the other.
(2) This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota.
(3) The forbearance or neglect of LBSC to insist upon strict
compliance by Registered Representative with any of the
provisions of this Agreement, whether continuing or not,
shall not be construed as a waiver of LBSC's rights or
privileges hereunder. No waiver of any right or privilege of
LBSC arising from any default or failure of performance by
Registered Representative shall affect LBSC's rights or
privileges in the event of a further default or failure of
performance.
(4) Whenever required for proper interpretation of this
Agreement, the singular number shall include the plural, the
plural the singular, and the use of any gender shall include
all genders.
(5) The unenforceability or invalidity of any provisions hereof
shall not render any other provision or provisions herein
contained unenforceable or invalid.
(6) This Agreement contains the entire understanding of the
parties hereto, and no modification hereof or addition hereto
shall be binding unless the same is in writing and signed by
the parties hereto.
(7) This Agreement shall be binding upon and inure to the benefit
of the parties hereto, and their respective successors and
permissive assigns, and Registered Representative's estate,
heirs and personal representatives.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
LUTHERAN BROTHERHOOD
SECURITIES CORP.(LBSC)
By
--------------------------
-----------------------------
(Registered Representative)
#20762
<PAGE>
EXHIBIT 1. A(3)(d)
SCHEDULE OF COMMISSION RATES
EXHIBIT I
EXHIBIT IA
LUTHERAN BROTHERHOOD
LUTHERAN BROTHERHOOD VARIABLE INSURANCE PRODUCTS
Minneapolis, Minnesota
Please file in Compensation Section 7, of the DR Planner
<PAGE>
THIS PAGE IS INTENTIONALLY BLANK
<PAGE>
SCHEDULE OF COMMISSION RATES
TABLE OF CONTENTS
Cover Page and Table of Contents
EXHIBIT I:
I Payment Provisions
II. Life Insurance Contracts (Excluding Flexible Premium Adjustable Life)
A. Permanent
Life; Presidential Plus, Life Paid-Up at 96;
Partners Presidential Plus, Survivor Presidential Plus
B. Renewable and Convertible Term
C. Other Term
Juvenile Protection
III. Life Insurance Riders (Excluding Riders on Flexible Premium
Adjustable Life)
A. Issued with Basic Contract
Renewable and Convertible Term
Other Term: Child Term Life Ins. Benefit
Additional Premium Option (PUA Rider)
B. Issued after Basic Contract
Renewable and Convertible Term
Other Term: Child Term Life Ins. Benefit
Additional Premium Option (PUA Rider)
IV. Flexible Premium Adjustable Life (UL) - Series I
A. 1st Year Commission
B. Service Commission
C. Special Renewal Commission
D. Increase Commission per $1,000
E. Cost of Living Increase Commission per $1,000
F. Riders Added After Issue Commission per $1,000
V. Flexible Premium Adjustable Life (UL) - Series II
A. 1st Year Commission
B. Service Commission
C. Renewal Commission per $1,000
1. Face Amount Less Than $250,000
2. Face Amount More Than $249,999
3. Spouse Insurance Benefit
D. Increase Commission per $1,000
1. Face Amount Less Than $250,000
2. Face Amount More Than $249,999
E. Cost of Living Increase Commission per $1,000
1. Face Amount Less Than $250,000
2. Face Amount More Than $249,999
F. Riders Increased/Added After Issue Commission per $1,000
VI. Flexible Premium Adjustable Life Series (UL) - III, IV and
Juvenile-Issue
A. 1st Year Commission
B. Additional Commission (Based on Premium)
C. Renewal Commission per $1,000 of face amount
1. Face Amount Less Than $250,000 and Juvenile-Issue
2. Face Amount More Than $249,999 and Less Than $500,000
3. Face Amount More Than $499,000
4. Spouse Insurance Benefit
D. Increase Commission per $1,000
1. Face Amount Less Than $250,000 and Juvenile-Issue
2. Face Amount More Than $249,999 and Less Than $500,000
3. Face Amount More Than $499,000
E. Cost of Living Increase Commission per $1,000
1. Face Amount Less Than $250,000 and Juvenile-Issue
2. Face Amount More Than $249,999 and Less Than $500,000
3. Face Amount More Than $499,999
F. Riders Increased/Issued After Basic Contract
VII. Flexible Premium Variable Life (VUL)
A. 1st Year Commission
B. Additional Commission (Based on Premium)
C. Renewal Commission per $1,000 of face amount
1. Face Amount Less Than $250,000
2. Face Amount More Than $249,999
3. Spouse Insurance Benefit
D. Increase Commission per $1,000
1. Face Amount Less Than $250,000
2. Face Amount More Than $249,999
E. Cost of Living Increase Commission per $1,000
1. Face Amount Less Than $250,000
2. Face Amount More Than $249,999
F. Riders Increased/Issued After Basic Contract
VIII. Annuity Contracts
A. Single Premium
B. Flexible Premium Deferred Annuity '89
Variable Annuity
C. Flexible Premium Deferred Annuity - TSA Qualified
D. FPDA other than FPDA '89 - Nonqualified
IX. Health Insurance
A. Contracts
B. Riders
X. Supplemental Benefits
XI. Settlement Options
EXHIBIT IA: Target Premiums
I. Flexible Premium Adjustable Life - Series II
A. Face Amount Less Than $250,000
B. Face Amount More Than $249,999
II. Flexible Premium Adjustable Life - Series III, IV and Juvenile-Issue
A. Face Amount Less Than $250,000 and Juvenile-Issue
B. Face Amount More Than $249,000 and Less Than $500,000
C. Face Amount More Than $499,999
III. Riders and Supplemental Benefits
IV. Special Class
V. Flexible Premium Variable Life Insurance Riders
Amendments
<PAGE>
[BLANK PAGE]
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
I. PAYMENT PROVISIONS
A. First Year Commissions, Renewal Commissions, Increase Commissions,
Rider Commissions and for Flexible Premium Variable Life contracts
written on or after June 1, 1990, Rollover Commissions are payable
to the Representative* who sold the coverage.
B. Service Commissions, Special Service Commissions, Rollover
Commissions for all products except Flexible Premium Variable Life
(VUL) written after June 1, 1990, and Cost of Living Increase
Commissions are payable to the Representative* who is assigned to
service the contract at the time the commission is payable.
C. FREQUENCY OF COMMISSION PAYMENTS
Commissions will be paid at the same frequency as the related
premiums are paid except
1) First Year Commissions that are expressed as a percent of
premiums and all Increase Commissions on contracts for which
premiums are paid by Pre-Authorized Collection will be
annualized and payable when the contract is issued or increased;
except that the additional 3% of all premium paid on Flexible
Premium Adjustable Life and Flexible Premium Variable Life and
the First Year Commissions on Flexible Premium Annuity and
Variable Annuity contracts paid by Pre-Authorized Collection
will not be annualized.
2) Renewal Commissions which are expressed as an amount per $1,000
will be paid monthly.
D. Recovery of Commissions Previously Paid
1) If the Society returns all or any portion of a premium payment,
any commissions paid to the Representative* on this premium
shall be repaid to the Society and the Society shall have the
right to recover such commission from any compensation
thereafter due and payable to the Representative*.
2) On Flexible Premium Adjustable Life and Flexible Premium
Variable Life Insurance contracts which terminate during the
first contract year, First Year Commission will not exceed the
sum of a) 3% of all premium paid plus b) the pro rata portion
of the First Year Commission based on premium up to target that
would be paid if the contract remained in force for the year.
On Flexible Premium Adjustable Life Insurance Series II, III, IV
and Juvenile-Issue and Flexible Premium Variable Life contracts
which terminate during the first contract year, First Year
Commissions based on premiums up to target will be the product
of the First Year Commission rate and the lesser of
(1) premiums paid and credited on the contract, and
(2) one-twelfth of the Target Premium times the number of full
months the contract remained in force.
First year Commissions paid will be reduced by the amounts, if
any, in excess of those determined above.
E. Contract Changes and Conversions
The Society will determine the amount of compensation and which
Representative* will be paid the compensation on contract changes
(except for the addition of term insurance and health insurance
riders) and conversions, the continuation of Juvenile Term
Insurance contracts and the rollover of Modified Premium Whole Life
contracts. If a contract replaces in whole or in part a contract
previously issued by Lutheran Brotherhood or any subsidiary or
affiliate, the Society shall have the right to determine what, if
any, compensation shall be allowed.
F. All variable products will be subject to the vesting provisions of
Section II.C. of the District Representative Agreement.
- ---------------------------------------
* All references to a Representative include a District Representative
and/or a Registered Representative. An appropriate Registered
Representative license is required before the sale of any variable
product.
II. LIFE INSURANCE CONTRACTS (Excluding Flexible Premium Adjustable Life)
Commissions are a percentage of the premium due and payable on the
basic contract during each contract year (excluding any extra premium
paid for aviation or temporary extra premium).
A. Permanent Life
<TABLE>
<CAPTION>
WHOLE LIFE
(Presidential Plus)
LIFE PAID UP AT 96 Survivor
$50,000 AND OVER Presidential Plus
LIFE* PARTNER PRES.PLUS (SPLUS)
================ ===================== =====================
Number of
Annual 1st Year 1st Renewal 1st Year 1st Renewal 1st Year 1st Renewal
Premiums Commission Commission Commission Commission Commission Commission
- ---------- --------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
45 and over 65 % 17 % 55 % 17 % 50 % 13 %
42-44 65 16.5 55 16.5 50 13
35-41 65 16 55 16 50 13
32-34 65 15.5 55 15.5 47.5 13
30-31 62.5 15.5 53 15.5 45 12.5
27-29 62.5 15 53 15 42.5 12.5
25-26 60 14.5 51 14.5 40 12
23-24 57.5 14.5 49 14.5 40 12
22 55 14.5 47 14.5 40 12
21 52.5 14.5 46 14.5 40 12
20 52.5 14.5 45 14.5 40 12
18-19 50 14 44 14 40 12
17 50 14 43 14 40 12
15-16 47.5 14 41 14 40 12
14 44.5 13.5 39 13.5 40 12
13 42.5 13.5 37 13.5 N/A N/A
12 39 13.5 35 13.5 N/A N/A
11 37 13.5 33 13.5 N/A N/A
10 35 13.5 31 13.5 N/A N/A
9 33 13.0 29 13.0 N/A N/A
8 31 13.0 27 13.0 N/A N/A
7 29 13.0 25 13.0 N/A N/A
6 27 13.0 23 13.0 N/A N/A
5 25 13.0 21 13.0 N/A N/A
*Except as otherwise provided in this schedule.
</TABLE>
2ND AND 3RD RENEWAL COMM.: One-half of the 1st Renewal
Commission rate.
4TH RENEWAL COMM.: 5%
5TH, 6TH AND 7TH RENEWAL COMM.: 2%
On any plan other than Survivor Presidential Plus with premium
payable beyond age 85, the number of annual premiums to be paid is
determined as though premiums were payable to age 85.
On a Survivor Presidential Plus plan the number of annual premiums
to be paid is the number of annual premiums payable from the joint
issue age to age 100.
1st Year Renewal
Commission Commissions
---------- -----------
Single Premium Life 3% None
B. Renewable and Convertible Term Insurance Contracts
<TABLE>
<CAPTION>
Commission Rates
Commission Rates for Initial Face Commission Rates
for Initial Face Amount More for Initial Face
Amount Less Than Than $499,999 and Amount More
$500,000 Less Than $1,000,000 Than $999,999
================= ===================== ====================
First First First 1st - 7th First 1st - 7th
Issue Year Renewal Year Renewal Year Renewal
Age Commission Commission Commission Commissions Commission Commissions
- ---------- --------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
16-40 45 % 14 % 30 % 10 % 25 % 10 %
41-43 45 13.5 30 10 25 10
44-53 45 13 30 10 25 10
54 43 13 30 10 25 10
55 43 13 28 10 23.5 10
56-58 43 12.5 28 10 23.5 10
59 41.5 12 28 10 23.5 10
60 41.5 12 26 10 21.5 10
61-62 40 12 26 10 21.5 10
63 38.5 12 26 10 21.5 10
64 37 12 26 10 21.5 10
65 37 12 24 10 20 10
66-68 35.5 12 24 10 20 10
69-70 34 12 24 10 20 10
</TABLE>
Renewal Commission Rates for Initial Face Amount Less
Than $500,000:
2ND AND 3RD RENEWAL COMM.: One-half of the 1st Renewal
Commission rate.
4TH RENEWAL COMMISSION: 5%
5TH, 6TH AND 7TH RENEWAL COMMISSIONS: 2%
C. Other Term Insurance Contracts
First Year First Renewal
Commission Commission
---------- ----------
Juvenile Protector 45% 14%
At Attained Age 5 At Attained Age 6
----------------- -----------------
JumpStart 45% 14%
2ND AND 3RD RENEWAL COMM.: One-half of the 1st Renewal
Commission rate.
4TH RENEWAL COMMISSION: 5%
5TH, 6TH AND 7TH RENEWAL COMMISSIONS: 2%
III. LIFE INSURANCE RIDERS (Excluding Riders On
Flexible Premium Adjustable Life)
Commissions are a percentage of the premium due and payable on the
rider during the rider year (excluding any extra premium paid for
aviation or temporary extra premium).
A. Riders issued with the basic contract.
RENEWABLE AND CONVERTIBLE TERM INSURANCE RIDER: BASIC AND SPOUSE
<TABLE>
Commission Rates
Commission Rates for Initial Face Commission Rates
for Initial Face Amount More for Initial Face
Amount Less Than Than $499,999 and Amount More
$500,000 Less Than $1,000,000 Than $999,999
================ ====================== ==================
First First First 1st - 7th First 1st - 7th
Issue Year Renewal Year Renewal Year Renewal
Age Commission Commission Commission Commissions Commission Commissions
- ---------- --------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
16-40 45 % 14 % 30 % 10 % 25 % 10 %
41-43 45 13.5 30 10 25 10
44-53 45 13 30 10 25 10
54 43 13 30 10 25 10
55 43 13 28 10 23.5 10
56-58 43 12.5 28 10 23.5 10
59 41.5 12 28 10 23.5 10
60 41.5 12 26 10 21.5 10
61-62 40 12 26 10 21.5 10
63 38.5 12 26 10 21.5 10
64 37 12 26 10 21.5 10
65 37 12 24 10 20 10
66-68 35.5 12 24 10 20 10
69-70 34 12 24 10 20 10
</TABLE>
Issue
Age of First Year First Renewal
Rider Commission Commission
----- ---------- ----------
CHILD TERM LIFE INSURANCE BENEFIT: All Ages 45% 14%
Renewal Commission rates for Renewable and Convertible Term
Insurance Riders with Initial Face Amount Less Than $500,000 and
Child Term Life Insurance Benefit issued with the basic contract:
2ND AND 3RD RENEWAL COMM.: One-half of the 1st Renewal
Commission rate.
4TH RENEWAL COMMISSION: 5%
5TH, 6TH AND 7TH RENEWAL COMMISSIONS: 2%
ADDITIONAL PREMIUM OPTION (PUA RIDER)
The commission is a service commission equal to 3% of all premium
paid and credited by the Society whenever paid and credited.
B. Riders added after issue of the basic contract.
RENEWABLE AND CONVERTIBLE TERM INSURANCE RIDER: BASIC AND SPOUSE
<TABLE>
Commission Rates
Commission Rates for Initial Face Commission Rates
for Initial Face Amount More for Initial Face
Amount Less Than Than $499,999 and Amount More
$500,000 Less Than $1,000,000 Than $999,999
================ ====================== ==================
First First First 1st - 7th First 1st - 7th
Issue Year Renewal Year Renewal Year Renewal
Age Commission Commission Commission Commissions Commission Commissions
- ---------- --------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
16-53 41.5 % 8 % 27.5 % 9 % 22.5 % 9 %
54 40 8 27.5 9 22.5 9
55-58 40 8 25.5 9 21 9
59 38 8 25.5 9 21 9
60 38 8 23.5 9 19 9
61-62 36.5 8 23.5 9 19 9
63 34.5 8 23.5 9 19 9
64 33 8 23.5 9 19 9
65 33 8 21.5 9 17.5 9
66-68 31.5 8 21.5 9 17.5 9
69-70 30 8 21.5 9 17.5 9
</TABLE>
Issue
Age of First Year First Renewal
Rider Commission Commission
----- ---------- ----------
CHILD TERM LIFE
INSURANCE BENEFIT: All Ages 45% 14%
Renewal Commission rates for Renewable and Convertible Term
Insurance Riders with Initial Face Amount less than $500,000, Child
Term Life Insurance Benefit added after the basic contract:
2ND AND 3RD RENEWAL COMM.: One-half of the 1st Renewal
Commission rate.
4TH RENEWAL COMMISSION: 4% except Child Rider. Child Rider = 5%
5TH, 6TH AND 7TH RENEWAL COMMISSIONS: 2%
ADDITIONAL PREMIUM OPTION (PUA RIDER):
The commission is a service commission equal to 3% of the premium
paid to and credited by the Society whenever paid and credited.
IV. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE - SERIES I
A. First Year Commission
Issue Age Commission Rate
--------- ---------------
0-63 50 %
64-68 47.5
69-70 45
71-72 42.5
73 40
74-75 37.5
First Year Commission is a percentage of all premium paid and
credited in the first contract year up to but not exceeding the
amount required to pay the annual cost of insurance, the cost of
any supplemental benefits and riders issued with the basic contract
and first year loads. Premium paid and credited includes amounts
paid for supplemental benefits and riders issued with the basic
contract.
B. Service Commission
5% of all premium paid and credited whenever paid and credited.
C. Special Renewal Commission
This Commission is payable only upon termination of this Agreement
on or after the Qualified Early Retirement Date or upon termination
of this Agreement due to death as specified in the District
Representative Agreement.
Issue Age Commission Per $1,000*
--------- ----------------------
0-25 $.12
26-50 .24
51-75 .36
* One-twelfth of the Special Renewal Commission is paid monthly on
the portion of the initial face amount remaining in force each
month during the first four renewal years.
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
IV. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE - SERIES ICONTINUED
D. Increase Commission per $1,000* of increase in face amount
<TABLE>
Attained Male Female Attained Male Female
Age Std. Nsmkr. Std. Nsmkr. Age Std. Nsmkr. Std. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 1.68 1.56 38 2.88 2.52 2.28 2.04
1 1.44 1.32 39 3.12 2.76 2.52 2.16
2 1.20 1.20 40 3.36 2.88 2.64 2.28
3 1.08 1.08 41 3.60 3.00 2.88 2.40
4 .96 .96 42 3.96 3.24 3.12 2.64
5 .84 .84 43 4.32 3.48 3.36 2.76
6 .72 .72 44 4.80 3.72 3.60 3.00
7 .72 .72 45 5.16 3.96 3.84 3.24
8 .72 .72 46 5.64 4.32 4.20 3.48
9 .72 .72 47 6.12 4.68 4.44 3.84
10 .72 .72 48 6.60 5.16 4.80 4.08
11 .84 .72 49 7.08 5.64 5.16 4.44
12 .96 .84 50 7.56 6.00 5.52 4.68
13 1.08 .84 51 8.04 6.36 5.88 4.92
14 1.20 .84 52 8.40 6.72 6.12 5.16
15 1.32 .96 53 8.88 7.08 6.48 5.40
16 1.44 1.08 54 9.36 7.56 6.72 5.76
17 1.44 1.08 55 9.84 7.92 7.08 6.00
18 1.44 1.20 56 10.32 8.40 7.44 6.36
19 1.56 1.32 57 10.92 8.76 7.80 6.60
20 1.56 1.44 1.32 1.08 58 11.52 9.24 8.28 6.96
21 1.56 1.44 1.32 1.20 59 12.12 9.84 8.64 7.32
22 1.56 1.44 1.32 1.20 60 12.72 10.32 9.12 7.80
23 1.68 1.56 1.32 1.32 61 13.32 10.92 9.72 8.40
24 1.68 1.56 1.32 1.32 62 13.92 11.40 10.32 9.00
25 1.68 1.56 1.32 1.32 63 14.52 12.12 11.04 9.72
26 1.68 1.56 1.32 1.32 64 15.12 12.72 11.76 10.44
27 1.80 1.68 1.44 1.32 65 15.84 13.44 12.48 11.16
28 1.92 1.80 1.56 1.44 66 16.68 14.40 13.20 12.00
29 1.92 1.80 1.56 1.44 67 17.52 15.36 14.04 12.72
30 2.04 1.80 1.56 1.44 68 18.48 16.32 14.76 13.56
31 2.16 1.92 1.68 1.56 69 19.20 17.28 15.36 14.28
32 2.16 1.92 1.68 1.56 70 19.68 17.88 15.84 14.76
33 2.16 1.92 1.68 1.56 71 19.44 17.76 15.60 14.64
34 2.28 2.04 1.80 1.68 72 19.32 17.64 15.48 14.64
35 2.40 2.16 1.92 1.80 73 19.08 17.64 15.36 14.64
36 2.52 2.28 2.04 1.90 74 18.84 17.64 15.24 14.64
37 2.76 2.40 2.16 1.92 75 18.72 17.52 15.12 14.52
Age used is attained age of the insured on the effective date of the
increase in face amount of contract or attained age of spouse on the
effective date of the increase in the Spouse Insurance Benefit rider. Std.
includes contracts and riders with increased face amounts having premium
class "Standard" or "Special"; Nsmkr. includes contracts and riders with
increased face amounts having premium class "Nonsmoker" or Nonsmoker
Special".
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
IV. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE - SERIES I
E. Cost of Living Increase Commission per $1,000* of increase in face amount
<TABLE>
Attained Male Female Attained Male Female
Age Std. Nsmkr. Std. Nsmkr. Age Std. Nsmkr. Std. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 .48 .36 36 .84 .72 .60 .60
2 .36 .36 37 .96 .84 .72 .60
3 .36 .36 38 .96 .84 .72 .60
4 .24 .24 39 1.08 .96 .84 .72
5 .24 .24 40 1.08 .96 .84 .72
6 .24 .24 41 1.20 .96 .96 .72
7 .24 .24 42 1.32 1.08 .96 .84
8 .24 .24 43 1.44 1.20 1.08 .96
9 .24 .24 44 1.56 1.20 1.20 .96
10 .24 .24 45 1.68 1.32 1.32 1.08
11 .24 .24 46 1.80 1.44 1.44 1.20
12 .36 .24 47 1.92 1.56 1.56 1.32
13 .36 .36 48 2.04 1.68 1.56 1.32
14 .48 .36 49 2.28 1.92 1.68 1.44
15 .48 .36 50 2.52 2.04 1.80 1.56
16 .48 .36 51 2.76 2.16 1.92 1.68
17 .48 .36 52 2.88 2.28 2.04 1.80
18 .48 .48 53 3.00 2.40 2.16 1.80
19 .48 .48 54 3.12 2.52 2.28 1.92
20 .48 .48 .48 .36 55 3.24 2.64 2.40 2.04
21 .48 .48 .48 .36 56 3.48 2.76 2.52 2.16
22 .48 .48 .48 .36 57 3.60 3.00 2.64 2.28
23 .60 .48 .48 .48 58 3.84 3.24 2.76 2.40
24 .60 .48 .48 .48 59 4.08 3.36 2.88 2.52
25 .60 .48 .48 .48 60 4.20 3.48 3.00 2.64
26 .60 .48 .48 .48 61 4.32 3.60 3.12 2.76
27 .72 .60 .48 .48 62 4.32 3.60 3.24 2.76
28 .72 .60 .48 .48 63 4.32 3.60 3.24 2.88
29 .72 .60 .48 .48 64 4.32 3.60 3.36 3.00
30 .72 .60 .48 .48 65 4.32 3.60 3.36 3.00
31 .72 .60 .48 .48 66 4.32 3.72 3.36 3.12
32 .72 .60 .48 .48 67 4.44 3.72 3.48 3.12
33 .84 .72 .60 .60 68 4.44 3.72 3.48 3.12
34 .84 .72 .60 .60 69 4.20 3.60 3.36 3.00
35 .84 .72 .60 .60 70 3.96 3.60 3.12 3.00
* One-twelfth of Cost of Living Increase Commission on the portion of the
increase remaining in force each month after the effective date of the
increase is paid monthly for one year after the effective date of the
increase. Age used is attained age of the insured on the effective
date of the increase in face amount. Std. includes increased face
amounts with premium class "Standard" or "Special"; Nsmkr. includes
increased face amounts with premium class "Nonsmoker" or "Nonsmoker
Special".
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
IV. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE - SERIES I
F. Riders Issued After Basic Contract
Spouse Insurance Benefit Commission per $1,000* of face amount
<TABLE>
Issue Male Female Issue Male Female
Age Std. Nsmkr. Std. Nsmkr. Age Std. Nsmkr. Std. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
18 2.16 1.80 47 9.00 7.08 6.72 5.64
19 2.28 1.80 48 9.84 7.80 7.20 6.12
20 2.28 2.16 1.92 1.68 49 10.56 8.40 7.80 6.60
21 2.28 2.16 1.92 1.80 50 11.28 9.00 8.28 7.08
22 2.40 2.16 2.04 1.80 51 12.00 9.60 8.76 7.44
23 2.40 2.16 2.04 1.80 52 12.60 10.08 9.12 7.80
24 2.52 2.28 2.04 1.92 53 13.32 10.68 9.60 8.16
25 2.52 2.28 2.04 1.92 54 14.04 11.28 10.08 8.64
26 2.64 2.40 2.04 1.92 55 14.76 11.88 10.56 9.00
27 2.64 2.40 2.16 2.04 56 15.60 12.48 11.04 9.48
28 2.76 2.52 2.16 2.04 57 16.32 13.20 11.64 9.84
29 2.88 2.52 2.16 2.04 58 17.28 13.92 12.24 10.32
30 3.00 2.64 2.28 2.16 59 18.12 14.64 12.84 10.92
31 3.12 2.76 2.40 2.28 60 19.08 15.48 13.68 11.64
32 3.24 2.88 2.52 2.28 61 20.04 16.44 14.64 12.60
33 3.36 3.00 2.64 2.40 62 21.12 17.40 15.72 13.68
34 3.48 3.12 2.76 2.52 63 22.20 18.36 16.92 14.88
35 3.60 3.2 2.88 2.64 64 23.28 19.56 18.12 16.08
36 3.84 3.36 3.00 2.76 65 24.48 20.76 19.32 17.28
37 4.08 3.60 3.24 2.88 66 25.80 22.20 20.52 18.60
38 4.32 3.84 3.48 3.12 67 27.36 23.88 21.84 19.92
39 4.68 4.08 3.72 3.24 68 28.80 25.56 23.16 21.24
40 5.04 4.32 3.96 3.48 69 30.24 27.12 24.36 22.56
41 5.52 4.56 4.32 3.72 70 31.44 28.56 25.32 23.64
42 6.00 4.92 4.56 3.96 71 32.52 29.88 26.28 24.72
43 6.48 5.16 4.92 4.20 72 33.48 30.96 27.00 25.56
44 7.08 5.52 5.40 4.44 73 34.20 31.92 27.60 26.28
45 7.68 6.00 5.76 4.80 74 34.56 32.40 27.96 26.76
46 8.40 6.48 6.24 5.16 75 34.68 32.64 28.08 27.00
* One-twelfth of the commission on the portion of the face amount of the
rider remaining in force each month is paid monthly for one year after
the effective date of the rider. Age used is issue age of the spouse.
Std. includes riders issued with premium class "Standard" or
"Special"; Nsmkr. includes riders issued with premium class "Nonsmoker"
or "Nonsmoker Special".
Child Insurance Benefit Commission per $1,000 of face amount
Commission is $2.76 per $1,000. One-twelfth of the commission is paid
monthly.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
V. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE -- SERIES II
A. First Year Commission
First Year Commission is a percentage of all premiums paid and
credited in the first contract year up to but not exceeding the
Target Premium. (Target Premiums are illustrated in Exhibit IA).
Issue Age Commission Rate
--------- ---------------
0-53 52%
54-58 50
59-60 48
61-62 46
63 44
64 43
65 42
66-67 41
68 40
69-70 38
71 36
72 34
73 32
74 30
75 28
B. Service Commission
3% of all premium paid and credited whenever paid and credited.
<PAGE>
<TABLE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
V. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE -- SERIES II
C. Renewal Commission per $1,000* of face amount (initial or increase)
1. Basic Contract - Highest Total Face Amount** Less Than $250,000
Male Female Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.12 0.12 38 0.36 0.36 0.36 0.24
1 0.12 0.12 39 0.36 0.36 0.36 0.24
2 0.12 0.12 40 0.48 0.36 0.36 0.24
3 0.12 0.12 41 0.48 0.36 0.36 0.36
4 0.12 0.12 42 0.48 0.36 0.36 0.36
5 0.12 0.12 43 0.60 0.48 0.48 0.36
6 0.12 0.12 44 0.60 0.48 0.48 0.36
7 0.12 0.12 45 0.60 0.48 0.48 0.36
8 0.12 0.12 46 0.72 0.48 0.48 0.36
9 0.12 0.12 47 0.72 0.48 0.60 0.48
10 0.12 0.12 48 0.84 0.60 0.6 0.48
11 0.12 0.12 49 0.84 0.60 0.60 0.48
12 0.12 0.12 50 0.84 0.60 0.60 0.48
13 0.12 0.12 51 0.96 0.72 0.72 0.60
14 0.12 0.12 52 0.96 0.72 0.72 0.60
15 0.12 0.12 53 1.08 0.84 0.84 0.60
16 0.12 0.12 54 1.20 0.84 0.84 0.72
17 0.12 0.12 55 1.20 0.96 0.84 0.72
18 0.12 0.12 56 1.32 0.96 0.96 0.72
19 0.12 0.12 57 1.44 1.08 0.96 0.84
20 0.12 0.12 0.12 0.12 58 1.44 1.08 1.08 0.84
21 0.24 0.12 0.12 0.12 59 1.56 1.20 1.08 0.96
22 0.24 0.12 0.12 0.12 60 1.68 1.32 1.20 0.96
23 0.24 0.12 0.12 0.12 61 1.80 1.32 1.32 1.08
24 0.24 0.24 0.12 0.12 62 1.80 1.44 1.44 1.20
25 0.24 0.24 0.12 0.12 63 1.92 1.56 1.44 1.32
26 0.24 0.24 0.12 0.12 64 2.04 1.68 1.56 1.32
27 0.24 0.24 0.12 0.12 65 2.16 1.80 1.68 1.44
28 0.24 0.24 0.24 0.12 66 2.28 1.92 1.80 1.56
29 0.24 0.24 0.24 0.12 67 2.40 2.04 1.80 1.68
30 0.24 0.24 0.24 0.12 68 2.52 2.16 1.92 1.80
31 0.24 0.24 0.24 0.24 69 2.64 2.28 2.04 1.80
32 0.24 0.24 0.24 0.24 70 2.76 2.40 2.16 1.92
33 0.24 0.24 0.24 0.24 71 2.88 2.64 2.28 2.04
34 0.24 0.24 0.24 0.24 72 3.12 2.76 2.40 2.16
35 0.36 0.24 0.24 0.24 73 3.24 3.00 2.52 2.28
36 0.36 0.24 0.24 0.24 74 3.48 3.12 2.64 2.40
37 0.36 0.24 0.24 0.24 75 3.60 3.24 2.76 2.64
* One-twelfth of the Renewal Commission on the portion of the initial face
amount or increase in face amount remaining in force each month is paid
monthly during the first four renewal years after issue or requested
increase. Age used is issue age of contract or, for increases in face
amount, attained age of the insured on the effective date of the
increase. Smkr. includes contracts with face amounts/increased face
amounts having premium class "Smoker" or "Smoker Special"; Nsmkr.
includes contracts with face amounts/increased face amounts having
premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
V. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE -- SERIES II
C. Renewal Commission per $1,000* of face amount (initial or increase)
2. Basic Contract - Highest Total Face Amount** More Than $249,999
<TABLE>
Male Female Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 0.12 0.12 46 0.48 0.36 0.36 0.36
17 0.12 0.12 47 0.60 0.36 0.36 0.36
18 0.12 0.12 48 0.60 0.48 0.48 0.36
19 0.12 0.12 49 0.60 0.48 0.48 0.36
20 0.12 0.12 0.12 0.12 50 0.72 0.48 0.48 0.36
21 0.12 0.12 0.12 0.12 51 0.72 0.48 0.48 0.36
22 0.12 0.12 0.12 0.12 52 0.84 0.60 0.60 0.48
23 0.12 0.12 0.12 0.12 53 0.84 0.60 0.60 0.48
24 0.12 0.12 0.12 0.12 54 0.84 0.60 0.60 0.48
25 0.12 0.12 0.12 0.12 55 0.96 0.72 0.72 0.60
26 0.12 0.12 0.12 0.12 56 0.96 0.72 0.72 0.60
27 0.12 0.12 0.12 0.12 57 1.08 0.84 0.72 0.60
28 0.24 0.12 0.12 0.12 58 1.20 0.84 0.84 0.72
29 0.24 0.12 0.12 0.12 59 1.20 0.96 0.84 0.72
30 0.24 0.12 0.12 0.12 60 1.32 0.96 0.96 0.72
31 0.24 0.12 0.12 0.12 61 1.32 1.08 0.96 0.84
32 0.24 0.24 0.12 0.12 62 1.44 1.08 1.08 0.96
33 0.24 0.24 0.12 0.12 63 1.56 1.20 1.20 0.96
34 0.24 0.24 0.12 0.12 64 1.56 1.32 1.20 1.08
35 0.24 0.24 0.24 0.12 65 1.68 1.32 1.32 1.08
36 0.24 0.24 0.24 0.12 66 1.80 1.44 1.32 1.20
37 0.24 0.24 0.24 0.24 67 1.80 1.56 1.44 1.32
38 0.24 0.24 0.24 0.24 68 1.92 1.68 1.56 1.32
39 0.36 0.24 0.24 0.24 69 2.04 1.80 1.56 1.44
40 0.36 0.24 0.24 0.24 70 2.16 1.80 1.68 1.44
41 0.36 0.24 0.24 0.24 71 2.28 2.04 1.80 1.56
42 0.36 0.36 0.36 0.24 72 2.40 2.16 1.80 1.68
43 0.48 0.36 0.36 0.24 73 2.52 2.28 1.92 1.80
44 0.48 0.36 0.36 0.24 74 2.64 2.40 2.04 1.92
45 0.48 0.36 0.36 0.24 75 2.76 2.52 2.16 2.04
* One-twelfth of the Renewal Commission on the portion of the initial
face amount or increase in face amount remaining in force each month is
paid monthly during the first four renewal years after issue or
requested increase. Age used is issue age of contract or, for
increases in face amount, attained age of the insured on the effective
date of the increase. Smkr. includes contracts with face
amounts/increased face amounts having premium class "Smoker" or
"Smoker Special"; Nsmkr. includes contracts with face amounts/increased
face amounts having premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
V. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE -- SERIES II
C. Renewal Commission per $1,000* of face amount (initial or increase)
3. Spouse Insurance Benefit
<TABLE>
Male Female Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 0.12 0.00 46 0.24 0.12 0.12 0.12
17 0.12 0.00 47 0.24 0.12 0.24 0.12
18 0.12 0.00 48 0.36 0.12 0.24 0.12
19 0.12 0.00 49 0.36 0.12 0.24 0.12
20 0.12 0.12 0.00 0.00 50 0.36 0.24 0.24 0.12
21 0.12 0.12 0.00 0.00 51 0.36 0.24 0.24 0.12
22 0.12 0.12 0.00 0.00 52 0.48 0.24 0.24 0.24
23 0.12 0.12 0.00 0.00 53 0.48 0.24 0.36 0.24
24 0.12 0.12 0.12 0.00 54 0.48 0.24 0.36 0.24
25 0.12 0.12 0.12 0.00 55 0.60 0.36 0.36 0.24
26 0.12 0.12 0.12 0.00 56 0.60 0.36 0.36 0.24
27 0.12 0.12 0.12 0.00 57 0.72 0.36 0.36 0.24
28 0.12 0.12 0.12 0.00 58 0.72 0.48 0.36 0.24
29 0.12 0.12 0.12 0.00 59 0.84 0.48 0.48 0.24
30 0.12 0.12 0.12 0.00 60 0.84 0.48 0.48 0.36
31 0.12 0.12 0.12 0.00 61 0.96 0.60 0.48 0.36
32 0.12 0.12 0.12 0.00 62 0.96 0.60 0.60 0.36
33 0.12 0.12 0.12 0.12 63 1.08 0.72 0.60 0.48
34 0.12 0.12 0.12 0.12 64 1.08 0.72 0.60 0.48
35 0.12 0.12 0.12 0.12 65 1.20 0.84 0.72 0.48
36 0.12 0.12 0.12 0.12 66 1.32 0.96 0.72 0.60
37 0.12 0.12 0.12 0.12 67 1.44 1.08 0.84 0.60
38 0.12 0.12 0.12 0.12 68 1.56 1.08 0.84 0.72
39 0.12 0.12 0.12 0.12 69 1.68 1.20 0.96 0.72
40 0.12 0.12 0.12 0.12 70 1.80 1.32 0.96 0.84
41 0.12 0.12 0.12 0.12 71 1.92 1.56 1.08 0.96
42 0.24 0.12 0.12 0.12 72 2.04 1.68 1.20 0.96
43 0.24 0.12 0.12 0.12 73 2.28 1.80 1.32 1.08
44 0.24 0.12 0.12 0.12 74 2.40 2.04 1.32 1.20
45 0.24 0.12 0.12 0.12 75 2.64 2.16 1.44 1.20
* One-twelfth of the Renewal Commission on the portion of the initial
rider face amount or increase in rider face amount remaining in force
each month is paid monthly during the first four renewal years after
issue of the rider or increase of the rider. Age used is issue age of
spouse or, for increases in face amount, attained age of the spouse on
the effective date of the increase. Smkr. includes riders with face
amounts/increased face amounts having premium class "Smoker" or
"Smoker Special"; Nsmkr. includes riders with face amounts/increased
face amounts having premium class "Nonsmoker" or Nonsmoker Special".
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
V. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE -- SERIES II
D. Increase Commission per $1,000* of increase in face amount
1. Basic Contract - Highest Total Face Amount** Less Than $250,000
<TABLE>
Attained Male Female Attained Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 1.56 1.56 38 5.04 4.08 3.96 3.48
1 1.56 1.56 39 5.28 4.20 4.20 3.72
2 1.56 1.56 40 5.64 4.44 4.44 3.84
3 1.56 1.56 41 6.12 4.80 4.80 4.08
4 1.56 1.56 42 6.72 5.16 5.16 4.32
5 1.56 1.56 43 7.20 5.52 5.52 4.44
6 1.56 1.56 44 7.68 5.76 5.76 4.80
7 1.56 1.56 45 8.28 6.12 6.12 4.92
8 1.56 1.56 46 8.88 6.60 6.60 5.28
9 1.56 1.56 47 9.60 6.96 7.08 5.52
10 1.56 1.56 48 10.20 7.44 7.44 5.88
11 1.68 1.56 49 10.80 7.92 7.92 6.24
12 1.68 1.56 50 11.52 8.40 8.28 6.60
13 1.68 1.68 51 12.36 9.00 8.88 7.08
14 1.80 1.68 52 13.20 9.72 9.60 7.56
15 1.80 1.68 53 14.16 10.32 10.20 8.16
16 1.92 1.68 54 14.52 10.68 10.44 8.28
17 2.04 1.68 55 15.36 11.28 11.04 8.76
18 2.16 1.68 56 16.44 12.24 11.76 9.48
19 2.16 1.80 57 17.52 13.20 12.60 10.20
20 2.28 2.04 1.80 1.56 58 18.60 14.04 13.44 10.92
21 2.40 2.16 1.80 1.68 59 18.84 14.40 13.68 11.04
22 2.52 2.16 1.92 1.80 60 19.92 15.24 14.40 11.76
23 2.52 2.28 2.04 1.80 61 20.16 15.72 14.88 12.36
24 2.64 2.40 2.16 1.92 62 21.36 16.80 15.96 13.44
25 2.76 2.40 2.16 2.04 63 21.48 17.16 16.32 13.92
26 2.88 2.52 2.28 2.04 64 22.08 17.76 16.92 14.52
27 3.00 2.64 2.28 2.16 65 22.56 18.36 17.52 15.24
28 3.00 2.64 2.40 2.16 66 23.28 19.32 18.00 15.84
29 3.24 2.76 2.52 2.28 67 24.48 20.76 18.96 16.92
30 3.36 2.88 2.52 2.28 68 25.20 21.60 19.44 17.52
31 3.48 3.00 2.64 2.40 69 25.08 21.72 19.44 17.52
32 3.60 3.00 2.76 2.52 70 26.28 23.04 20.28 18.48
33 3.72 3.24 2.88 2.64 71 26.40 23.40 20.28 18.72
34 3.84 3.24 3.00 2.64 72 26.28 23.64 20.16 18.72
35 3.96 3.36 3.12 2.76 73 26.16 23.52 20.04 18.60
36 4.32 3.60 3.36 3.00 74 25.80 23.40 19.68 18.48
37 4.56 3.84 3.60 3.24 75 25.20 23.04 19.20 18.12
Age used is attained age of the insured on the effective date of the
requested increase in face amount. Smkr. includes increased face amounts
with premium class "Smoker" or "Smoker Special"; Nsmkr. includes increased
face amounts with premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
V. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE -- SERIES II
D. Increase Commission per $1,000* of increase in face amount
2. Basic Contract - Highest Total Face Amount** More Than $249,999
<TABLE>
Attained Male Female Attained Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 1.44 1.20 46 6.84 5.04 5.16 4.08
17 1.56 1.32 47 7.32 5.40 5.40 4.32
18 1.68 1.32 48 7.92 5.76 5.76 4.56
19 1.68 1.32 49 8.40 6.12 6.00 4.80
20 1.80 1.68 1.32 1.20 50 8.88 6.48 6.48 5.04
21 1.92 1.68 1.44 1.20 51 9.60 6.96 6.84 5.40
22 1.92 1.68 1.44 1.32 52 10.20 7.44 7.32 5.88
23 2.04 1.80 1.56 1.44 53 10.92 8.04 7.92 6.24
24 2.16 1.92 1.68 1.44 54 11.16 8.28 8.04 6.48
25 2.16 1.92 1.68 1.56 55 11.88 8.76 8.52 6.84
26 2.28 1.92 1.80 1.68 56 12.72 9.48 9.12 7.32
27 2.28 2.04 1.80 1.68 57 13.56 10.20 9.72 7.92
28 2.40 2.16 1.92 1.68 58 14.40 10.92 10.32 8.40
29 2.52 2.16 1.92 1.80 59 14.62 11.16 10.56 8.52
30 2.52 2.28 2.04 1.80 60 15.36 11.76 11.16 9.12
31 2.64 2.28 2.16 1.92 61 15.60 12.12 11.52 9.60
32 2.76 2.40 2.16 1.92 62 16.44 13.08 12.36 10.32
33 2.88 2.52 2.28 2.04 63 16.68 13.32 12.60 10.80
34 3.00 2.52 2.28 2.16 64 16.92 13.68 12.96 11.16
35 3.12 2.64 2.40 2.16 65 17.40 14.28 13.56 11.76
36 3.36 2.76 2.64 2.28 66 17.88 14.88 13.92 12.24
37 3.60 2.88 2.76 2.52 67 18.84 15.96 14.64 13.08
38 3.84 3.12 3.00 2.64 68 19.56 16.68 15.12 13.56
39 4.08 3.36 3.24 2.88 69 19.08 16.68 14.88 13.44
40 4.32 3.48 3.48 3.00 70 20.04 17.64 15.48 14.16
41 4.80 3.72 3.72 3.12 71 20.52 18.24 15.84 14.52
42 5.16 3.96 3.96 3.36 72 20.16 18.00 15.48 14.28
43 5.52 4.20 4.20 3.48 73 20.04 18.12 15.36 14.28
44 6.00 4.44 4.44 3.72 74 19.80 18.00 15.12 14.16
45 6.36 4.80 4.80 3.84 75 19.32 17.76 14.76 13.92
Age used is attained age of the insured on the effective date of the
requested increase in face amount. Smkr. includes increased face amounts
with premium class "Smoker" or "Smoker Special"; Nsmkr. includes increased
face amounts with premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
V. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE -- SERIES II
E. Cost of Living Increase Commission per $1,000* of increase in face amount
1. Highest Total Face Amount** Less Than $250,000 (Band 1)
<TABLE>
Attained Male Female Attained Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.48 0.48 33 1.08 0.96 0.84 0.72
1 0.48 0.48 34 1.08 0.96 0.84 0.72
2 0.48 0.48 35 1.20 0.96 0.84 0.84
3 0.48 0.48 36 1.20 1.08 0.96 0.84
4 0.48 0.48 37 1.32 1.08 1.08 0.96
5 0.48 0.48 38 1.44 1.20 1.08 0.96
6 0.48 0.48 39 1.56 1.20 1.20 1.08
7 0.48 0.48 40 1.56 1.32 1.32 1.08
8 0.48 0.48 41 1.80 1.44 1.44 1.20
9 0.48 0.48 42 1.92 1.44 1.44 1.20
10 0.48 0.48 43 2.04 1.56 1.56 1.32
11 0.48 0.48 44 2.28 1.68 1.68 1.32
12 0.48 0.48 45 2.40 1.80 1.80 1.44
13 0.48 0.48 46 2.52 1.92 1.92 1.56
14 0.48 0.48 47 2.76 2.04 2.04 1.56
15 0.48 0.48 48 2.88 2.16 2.16 1.68
16 0.60 0.48 49 3.12 2.28 2.28 1.80
17 0.60 0.48 50 3.36 2.40 2.40 1.92
18 0.60 0.48 51 3.60 2.64 2.52 2.04
19 0.60 0.48 52 3.84 2.76 2.76 2.16
20 0.72 0.60 0.48 0.48 53 4.08 3.00 2.88 2.28
21 0.72 0.60 0.48 0.48 54 4.20 3.12 3.00 2.40
22 0.72 0.60 0.60 0.48 55 4.44 3.24 3.12 2.52
23 0.72 0.72 0.60 0.48 56 4.68 3.48 3.36 2.76
24 0.72 0.72 0.60 0.60 57 5.04 3.84 3.60 2.88
25 0.84 0.72 0.60 0.60 58 5.40 4.08 3.84 3.12
26 0.84 0.72 0.60 0.60 59 5.40 4.20 3.96 3.24
27 0.84 0.72 0.72 0.60 60 5.76 4.44 4.20 3.36
28 0.84 0.72 0.72 0.60 61 5.88 4.56 4.32 3.60
29 0.96 0.84 0.72 0.60 62 6.12 4.80 4.56 3.84
30 0.96 0.84 0.72 0.72 63 6.24 4.92 4.68 3.96
31 0.96 0.84 0.72 0.72 64 6.36 5.16 4.92 4.20
32 1.08 0.84 0.84 0.72
Age used is attained age of the insured on the effective date of the
increase in face amount. Smkr. includes increased face amounts with premium
class "Smoker" or "Smoker Special"; Nsmkr. includes increased face amounts
with premium class "Nonsmoker" or "Nonsmoker Special.
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
Please note: A COLA increase alone will not trigger a change to the next
higher band.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
V. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE -- SERIES II
E. Cost of Living Increase Commission per $1,000* of increase in face amount
2. Highest Total Face Amount** More Than $249,999 (Band 2)
<TABLE>
Attained Male Female Attained Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 0.48 0.36 41 1.32 1.08 1.08 0.84
17 0.48 0.36 42 1.44 1.20 1.20 0.96
18 0.48 0.36 43 1.56 1.20 1.20 0.96
19 0.48 0.36 44 1.68 1.32 1.32 1.08
20 0.48 0.48 0.36 0.36 45 1.80 1.32 1.44 1.08
21 0.48 0.48 0.36 0.36 46 1.92 1.44 1.44 1.20
22 0.60 0.48 0.48 0.36 47 2.16 1.56 1.56 1.20
23 0.60 0.48 0.48 0.36 48 2.28 1.68 1.68 1.32
24 0.60 0.48 0.48 0.48 49 2.40 1.80 1.80 1.44
25 0.60 0.48 0.48 0.48 50 2.52 1.92 1.80 1.44
26 0.60 0.60 0.48 0.48 51 2.76 2.04 1.92 1.56
27 0.72 0.60 0.48 0.48 52 3.00 2.16 2.16 1.68
28 0.72 0.60 0.48 0.48 53 3.12 2.28 2.28 1.80
29 0.72 0.60 0.60 0.48 54 3.24 2.40 2.28 1.80
30 0.72 0.60 0.60 0.48 55 3.36 2.52 2.40 1.92
31 0.72 0.72 0.60 0.48 56 3.60 2.76 2.64 2.16
32 0.84 0.72 0.60 0.60 57 3.84 2.88 2.76 2.28
33 0.84 0.72 0.60 0.60 58 4.08 3.12 3.00 2.40
34 0.84 0.72 0.72 0.60 59 4.20 3.24 3.00 2.40
35 0.84 0.72 0.72 0.60 60 4.44 3.36 3.24 2.64
36 0.96 0.84 0.72 0.72 61 4.56 3.48 3.36 2.76
37 1.08 0.84 0.84 0.72 62 4.80 3.72 3.60 3.00
38 1.08 0.84 0.84 0.72 63 4.80 3.84 3.60 3.12
39 1.20 0.96 0.96 0.84 64 4.92 3.96 3.72 3.24
40 1.20 0.96 0.96 0.84
Age used is attained age of the insured on the effective date of the
increase in face amount. Smkr. includes increased face amounts with premium
class "Smoker" or "Smoker Special"; Nsmkr. includes increased face amounts
with premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
Please note: A COLA increase alone will not trigger a change to the next
higher band.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
V. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE -- SERIES II
F. Riders Increased/Issued After Basic Contract
Spouse Insurance Benefit Commission per $1,000* of face amount
<TABLE>
Male Female Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 0.96 0.48 46 3.36 1.92 2.28 1.44
17 0.96 0.48 47 3.60 1.92 2.40 1.68
18 0.96 0.48 48 3.96 2.16 2.52 1.68
19 0.96 0.48 49 4.32 2.16 2.64 1.80
20 1.08 0.84 0.60 0.48 50 4.68 2.40 2.88 1.92
21 1.08 0.84 0.60 0.48 51 5.16 2.52 3.12 2.28
22 1.08 0.84 0.60 0.48 52 5.76 3.00 3.48 2.40
23 1.20 0.84 0.60 0.48 53 6.36 3.36 3.96 2.64
24 1.20 0.84 0.84 0.60 54 6.72 3.60 4.20 2.76
25 1.20 0.84 0.84 0.60 55 7.32 3.96 4.44 3.00
26 1.20 0.84 0.84 0.60 56 7.92 4.44 4.80 3.12
27 1.20 0.84 0.84 0.60 57 8.52 4.92 5.04 3.24
28 1.20 0.84 0.84 0.60 58 9.24 5.28 5.28 3.36
29 1.32 0.96 0.84 0.60 59 9.48 5.52 5.16 3.48
30 1.44 0.96 0.96 0.60 60 10.32 6.24 5.52 3.60
31 1.44 0.96 0.96 0.60 61 10.68 6.72 5.88 3.84
32 1.56 0.96 0.96 0.72 62 11.40 7.32 6.36 4.32
33 1.56 0.96 1.08 0.84 63 11.64 7.68 6.48 4.68
34 1.56 0.96 1.20 0.96 64 12.24 8.16 6.96 5.04
35 1.68 1.08 1.20 0.96 65 12.84 8.76 7.32 5.40
36 1.68 1.08 1.32 0.96 66 13.56 9.48 7.68 5.88
37 1.80 1.08 1.44 1.08 67 14.52 10.44 8.28 6.48
38 1.92 1.20 1.56 1.20 68 15.36 11.28 8.64 6.96
39 2.04 1.20 1.56 1.20 69 15.72 11.76 8.88 7.20
40 2.16 1.32 1.56 1.20 70 17.04 13.08 9.60 7.92
41 2.28 1.32 1.68 1.20 71 17.52 13.56 9.84 8.16
42 2.40 1.44 1.68 1.20 72 17.76 14.04 9.96 8.28
43 2.64 1.56 1.80 1.20 73 18.00 14.52 10.08 8.52
44 2.88 1.68 1.92 1.20 74 18.36 14.88 10.20 8.64
45 3.12 1.68 2.04 1.32 75 18.48 15.36 10.20 8.76
Age used is issue age of the spouse or, for increases in face amount,
attained age of the spouse on the effective date of the increase.
Smkr. includes riders with face amounts/increased face amounts having
premium class "Smoker" or "Smoker Special"; Nsmkr. includes riders with
face amounts/increased face amounts having premium class "Nonsmoker" or
"Nonsmoker Special".
Child Insurance Benefit Commission per $1,000 of face amount
Commission is $3.00 per $1,000.
One-twelfth of the commission is paid monthly.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE - SERIES III, IV AND
JUVENILE-ISSUE
A. First Year Commission
First Year Commission is a percentage of all premium paid and
credited in the first contract year up to but not exceeding the
Target Premium. (Target Premiums are illustrated in Exhibit IA).
Issue Age Commission Rate
--------- ---------------
0-53 52 %
54-58 50
59-60 48
61-62 46
63 44
64 43
65 42
66-67 41
68 40
69-70 38
71 36
72 34
73 32
74 30
75 28
76 26
77 24.5
78 23
79 21.5
80 20
For contracts issued on or after June 1, 1990, an additional First
Year Commission is 3% of all premium paid and credited whenever
paid and credited during the first year.
B. Additional commission based on premium
1. For contracts issued on or after June 1, 1990, a Renewal
Commission based on premium is paid equal to 3% of all premium
paid and credited whenever paid and credited in contract
year 2 or later.
2. For contracts issued before June 1, 1990, a Service Commission
is paid equal to 3% of all premium paid and credited whenever
paid and credited.
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III, IV AND JUVENILE-ISSUE
C. Renewal Commission per $1,000* of face amount (initial or increase)
1. Basic Contract - Highest Total Face Amount** of
Series III and IV Less Than $250,000
(No limit on face amount of Juvenile-Issue contract)
<TABLE>
Male Female Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.12 0.12 41 0.48 0.36 0.36 0.36
1 0.12 0.12 42 0.48 0.36 0.36 0.36
2 0.12 0.12 43 0.60 0.48 0.48 0.36
3 0.12 0.12 44 0.60 0.48 0.48 0.36
4 0.12 0.12 45 0.60 0.48 0.48 0.36
5 0.12 0.12 46 0.72 0.48 0.48 0.36
6 0.12 0.12 47 0.72 0.48 0.60 0.48
7 0.12 0.12 48 0.72 0.60 0.60 0.48
8 0.12 0.12 49 0.84 0.60 0.60 0.48
9 0.12 0.12 50 0.84 0.60 0.60 0.48
10 0.12 0.12 51 0.96 0.72 0.72 0.60
11 0.12 0.12 52 0.96 0.72 0.72 0.60
12 0.12 0.12 53 1.08 0.72 0.84 0.60
13 0.12 0.12 54 1.20 0.84 0.84 0.72
14 0.12 0.12 55 1.20 0.84 0.84 0.72
15 0.12 0.12 56 1.32 0.96 0.96 0.72
16 0.12 0.12 57 1.44 0.96 0.96 0.84
17 0.12 0.12 58 1.44 1.08 1.08 0.84
18 0.12 0.12 59 1.56 1.20 1.08 0.96
19 0.12 0.12 60 1.68 1.32 1.20 0.96
20 0.12 0.12 0.12 0.12 61 1.80 1.32 2.04 1.08
21 0.24 0.12 0.12 0.12 62 1.80 1.44 1.44 1.20
22 0.24 0.12 0.12 0.12 63 1.92 1.56 1.44 1.32
23 0.24 0.12 0.12 0.12 64 2.04 1.68 1.56 1.32
24 0.24 0.24 0.12 0.12 65 2.16 1.80 1.68 1.44
25 0.24 0.24 0.12 0.12 66 2.28 1.92 1.80 1.56
26 0.24 0.24 0.12 0.12 67 2.40 2.04 1.80 1.68
27 0.24 0.24 0.12 0.12 68 2.52 2.16 1.92 1.80
28 0.24 0.24 0.24 0.12 69 2.64 2.28 2.04 1.80
29 0.24 0.24 0.24 0.12 70 2.76 2.40 2.16 1.92
30 0.24 0.24 0.24 0.12 71 2.88 2.64 2.28 2.04
31 0.24 0.24 0.24 0.24 72 3.12 2.76 2.40 2.16
32 0.24 0.24 0.24 0.24 73 3.24 3.00 2.52 2.28
33 0.24 0.24 0.24 0.24 74 3.48 3.12 2.64 2.40
34 0.24 0.24 0.24 0.24 75 3.60 3.24 2.76 2.64
35 0.36 0.24 0.24 0.24 76 3.72 3.48 2.88 2.76
36 0.36 0.24 0.24 0.24 77 3.96 3.60 3.00 2.88
37 0.36 0.24 0.24 0.24 78 4.08 3.84 3.12 3.00
38 0.36 0.36 0.36 0.24 79 4.32 3.96 3.24 3.12
39 0.36 0.36 0.36 0.24 80 4.44 4.20 3.36 3.24
40 0.48 0.36 0.36 0.24
* One-twelfth of the Renewal Commission on the portion of the initial face
amount or increase in face amount remaining in force each month is paid
monthly during the first four renewal years after issue or requested
increase. Age used is issue age of contract or, for increases in face
amount, attained age of the insured on the effective date of the
increase. Smkr. includes contracts with face amounts/increased face
amounts having premium class "Smoker" or "Smoker Special"; Nsmkr.
includes contracts with face amounts/increased face amounts having
premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III AND IV
C. Renewal Commission per $1,000* of face amount (initial or increase)
2. Basic Contract - Highest Total Face Amount**
More Than $249,999 and Less Than $500,000
<TABLE>
Male Female Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 0.12 0.12 0.12 0.12 51 0.72 0.48 0.48 0.36
21 0.12 0.12 0.12 0.12 52 0.72 0.60 0.60 0.48
22 0.12 0.12 0.12 0.12 53 0.84 0.60 0.60 0.48
23 0.12 0.12 0.12 0.12 54 0.84 0.60 0.60 0.48
24 0.12 0.12 0.12 0.12 55 0.96 0.72 0.72 0.60
25 0.12 0.12 0.12 0.12 56 0.96 0.72 0.72 0.60
26 0.12 0.12 0.12 0.12 57 1.08 0.84 0.72 0.60
27 0.12 0.12 0.12 0.12 58 1.08 0.84 0.84 0.72
28 0.24 0.12 0.12 0.12 59 1.20 0.96 0.84 0.72
29 0.24 0.12 0.12 0.12 60 1.32 0.96 0.96 0.72
30 0.24 0.12 0.12 0.12 61 1.32 1.08 0.96 0.84
31 0.24 0.12 0.12 0.12 62 1.44 1.08 1.08 0.96
32 0.24 0.24 0.12 0.12 63 1.56 1.20 1.20 0.96
33 0.24 0.24 0.12 0.12 64 1.56 1.32 1.20 1.08
34 0.24 0.24 0.12 0.12 65 1.68 1.32 1.32 1.08
35 0.24 0.24 0.24 0.12 66 1.80 1.44 1.32 1.20
36 0.24 0.24 0.24 0.12 67 1.80 1.56 1.44 1.32
37 0.24 0.24 0.24 0.24 68 1.92 1.68 1.56 1.32
38 0.24 0.24 0.24 0.24 69 2.04 1.80 1.56 1.44
39 0.36 0.24 0.24 0.24 70 2.16 1.80 1.68 1.44
40 0.36 0.24 0.24 0.24 71 2.28 2.04 1.80 1.56
41 0.36 0.24 0.24 0.24 72 2.40 2.16 1.80 1.68
42 0.36 0.36 0.36 0.24 73 2.52 2.28 1.92 1.80
43 0.48 0.36 0.36 0.24 74 2.64 2.40 2.04 1.92
44 0.48 0.36 0.36 0.24 75 2.76 2.52 2.16 2.04
45 0.48 0.36 0.36 0.24 76 2.88 2.64 2.16 2.04
46 0.48 0.36 0.36 0.36 77 3.00 2.76 2.28 2.16
47 0.60 0.36 0.36 0.36 78 3.12 3.00 2.40 2.28
48 0.60 0.48 0.48 0.36 79 3.24 3.12 2.52 2.40
49 0.60 0.48 0.48 0.36 80 3.48 3.24 2.64 2.52
50 0.72 0.48 0.48 0.36
* One-twelfth of the Renewal Commission on the portion of the initial face
amount or increase in face amount remaining in force each month is paid
monthly during the first four renewal years after issue or requested
increase. Age used is issue age of contract or, for increases in face
amount, attained age of the insured on the effective date of the
increase. Smkr. includes contracts with face amounts/increased face
amounts having premium class "Smoker" or "Smoker Special"; Nsmkr.
includes contracts with face amounts/increased face amounts having
premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III AND IV
C. Renewal Commission per $1,000* of face amount (initial or increase)
3. Basic Contract - Highest Total Face Amount** More Than $499,999
<TABLE>
Male Female Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 0.12 0.12 0.12 0.12 51 0.48 0.36 0.36 0.24
21 0.12 0.12 0.12 0.12 52 0.48 0.36 0.36 0.36
22 0.12 0.12 0.12 0.12 53 0.60 0.36 0.36 0.36
23 0.12 0.12 0.12 0.12 54 0.60 0.48 0.48 0.36
24 0.12 0.12 0.12 0.12 55 0.60 0.48 0.48 0.36
25 0.12 0.12 0.12 0.12 56 0.72 0.48 0.48 0.36
26 0.12 0.12 0.12 0.12 57 0.72 0.60 0.48 0.48
27 0.12 0.12 0.12 0.12 58 0.84 0.60 0.60 0.48
28 0.12 0.12 0.12 0.12 59 0.84 0.60 0.60 0.48
29 0.12 0.12 0.12 0.12 60 0.96 0.72 0.60 0.48
30 0.12 0.12 0.12 0.12 61 0.96 0.72 0.72 0.60
31 0.12 0.12 0.12 0.12 62 0.96 0.84 0.72 0.60
32 0.12 0.12 0.12 0.12 63 1.08 0.84 0.84 0.72
33 0.12 0.12 0.12 0.12 64 1.08 0.96 0.84 0.72
34 0.12 0.12 0.12 0.12 65 1.20 0.96 0.96 0.84
35 0.12 0.12 0.12 0.12 66 1.20 1.08 0.96 0.84
36 0.12 0.12 0.12 0.12 67 1.32 1.08 0.96 0.96
37 0.24 0.12 0.12 0.12 68 1.32 1.20 1.08 0.96
38 0.24 0.12 0.12 0.12 69 1.44 1.20 1.08 0.96
39 0.24 0.12 0.12 0.12 70 1.56 1.32 1.20 1.08
40 0.24 0.24 0.12 0.12 71 1.68 1.44 1.20 1.20
41 0.24 0.24 0.24 0.12 72 1.80 1.56 1.32 1.20
42 0.24 0.24 0.24 0.12 73 1.92 1.68 1.44 1.32
43 0.24 0.24 0.24 0.24 74 2.04 1.80 1.56 1.44
44 0.36 0.24 0.24 0.24 75 2.16 2.04 1.68 1.56
45 0.36 0.24 0.24 0.24 76 2.28 2.16 1.80 1.68
46 0.36 0.24 0.24 0.24 77 2.40 2.28 1.92 1.80
47 0.36 0.24 0.24 0.24 78 2.64 2.40 1.92 1.92
48 0.36 0.24 0.24 0.24 79 2.76 2.52 2.04 1.92
49 0.48 0.36 0.36 0.24 80 2.88 2.64 2.16 2.04
50 0.48 0.36 0.36 0.24
* One-twelfth of the Renewal Commission on the portion of the initial face
amount or increase in face amount remaining in force each month is paid
monthly during the first four renewal years after issue or requested
increase. Age used is issue age of contract or, for increases in face
amount, attained age of the insured on the effective date of the
increase. Smkr. includes contracts with face amounts/increased face
amounts having premium class "Smoker" or "Smoker Special"; Nsmkr.
includes contracts with face amounts/increased face amounts having
premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III, IV AND JUVENILE-ISSUE
C. Renewal Commission per $1,000* of face amount (initial or increase)
4. Spouse Insurance Benefit
<TABLE>
Male Female Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 0.00 0.00 49 0.24 0.12 0.12 0.12
17 0.00 0.00 50 0.36 0.24 0.24 0.12
18 0.12 0.00 51 0.36 0.24 0.24 0.12
19 0.12 0.00 52 0.36 0.24 0.24 0.12
20 0.12 0.00 0.00 0.00 53 0.36 0.24 0.24 0.12
21 0.12 0.00 0.00 0.00 54 0.48 0.24 0.24 0.12
22 0.12 0.00 0.00 0.00 55 0.48 0.24 0.24 0.12
23 0.12 0.00 0.00 0.00 56 0.48 0.24 0.24 0.24
24 0.12 0.00 0.00 0.00 57 0.60 0.36 0.24 0.24
25 0.12 0.00 0.00 0.00 58 0.60 0.36 0.36 0.24
26 0.12 0.00 0.00 0.00 59 0.60 0.36 0.36 0.24
27 0.12 0.00 0.00 0.00 60 0.72 0.36 0.36 0.24
28 0.12 0.00 0.00 0.00 61 0.72 0.48 0.36 0.24
29 0.12 0.00 0.00 0.00 62 0.84 0.48 0.36 0.24
30 0.12 0.00 0.12 0.00 63 0.84 0.48 0.36 0.24
31 0.12 0.00 0.12 0.00 64 0.84 0.48 0.48 0.36
32 0.12 0.12 0.12 0.00 65 0.96 0.60 0.48 0.36
33 0.12 0.12 0.12 0.00 66 0.96 0.60 0.48 0.36
34 0.12 0.12 0.12 0.00 67 1.08 0.72 0.48 0.36
35 0.12 0.12 0.12 0.00 68 1.20 0.72 0.60 0.36
36 0.12 0.12 0.12 0.00 69 1.32 0.84 0.60 0.48
37 0.12 0.12 0.12 0.12 70 1.44 0.96 0.72 0.48
38 0.12 0.12 0.12 0.12 71 1.56 1.08 0.72 0.60
39 0.12 0.12 0.12 0.12 72 1.68 1.20 0.84 0.60
40 0.12 0.12 0.12 0.12 73 1.80 1.32 0.84 0.72
41 0.12 0.12 0.12 0.12 74 1.92 1.44 0.96 0.72
42 0.24 0.12 0.12 0.12 75 2.16 1.56 0.96 0.84
43 0.24 0.12 0.12 0.12 76 2.52 1.80 1.20 0.84
44 0.24 0.12 0.12 0.12 77 2.76 1.92 1.44 0.96
45 0.24 0.12 0.12 0.12 78 3.00 2.16 1.56 1.08
46 0.24 0.12 0.12 0.12 79 3.24 2.28 1.68 1.20
47 0.24 0.12 0.12 0.12 80 3.48 2.52 1.92 1.44
48 0.24 0.12 0.12 0.12
* The twelfth of the Renewal Commission on the portion of the rider face
amount or increase in rider face amount remaining in force each month is
paid monthly during the first four renewal years after issue of the rider
or increase of the rider. Age used is issue age of spouse or, for
increases in face amount, attained age of the spouse on the effective
date of the increase. Smkr. includes riders with face amounts/increased
face amounts having premium class "Smoker" or "Smoker Special"; includes
riders with face amounts/increased face amounts having premium class
"Nonsmoker" or "Nonsmoker Special".
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III, IV AND JUVENILE-ISSUE
D. Increase Commission per $1,000* of increase in face amount
1. Basic Contract - Highest Total Face Amount** of
Series III and IV Less Than $250,000
(No limit on face amount of Juvenile-Issue contract)
<TABLE>
Attained Male Female Attained Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 1.32 1.32 41 6.12 4.80 4.80 4.08
1 1.32 1.32 42 6.60 5.16 5.16 4.32
2 1.32 1.32 43 7.08 5.52 5.52 4.44
3 1.32 1.32 44 7.68 5.76 5.76 4.80
4 1.32 1.32 45 8.28 6.12 6.12 4.92
5 1.32 1.32 46 8.88 6.60 6.60 5.28
6. 1.32 1.32 47 9.48 6.96 7.08 5.52
7. 1.32 1.32 48 9.96 7.44 7.44 5.88
8 1.32 1.32 49 10.56 7.92 7.92 6.24
9 1.32 1.32 50 11.28 8.40 8.28 6.60
10 1.32 1.32 51 12.12 8.88 8.88 7.08
11 1.32 1.32 52 12.96 9.36 9.60 7.56
12 1.44 1.32 53 13.92 9.96 10.20 8.16
13 1.44 1.32 54 14.52 10.20 10.44 8.28
14 1.68 1.44 55 15.36 10.92 11.04 8.76
15 1.80 1.44 56 16.44 11.76 11.76 9.48
16 1.92 1.56 57 17.52 12.60 12.60 10.20
17 2.04 1.68 58 18.60 13.56 13.44 10.92
18 2.16 1.68 59 18.84 14.04 13.68 11.04
19 2.16 1.80 60 19.92 15.24 14.40 11.76
20 2.28 2.04 1.80 1.56 61 20.16 15.72 14.88 12.36
21 2.40 2.16 1.80 1.68 62 21.36 16.80 15.96 13.44
22 2.52 2.16 1.92 1.80 63 21.48 17.16 16.32 13.92
23 2.52 2.28 2.04 1.80 64 22.08 17.76 16.92 14.52
24 2.64 2.40 2.16 1.92 65 22.56 18.36 17.52 15.24
25 2.76 2.40 2.16 2.04 66 23.28 19.32 18.00 15.84
26 2.88 2.52 2.28 2.04 67 24.48 20.76 18.96 16.92
27 3.00 2.64 2.28 2.16 68 25.20 21.60 19.44 17.52
28 3.00 2.64 2.40 2.16 69 25.08 21.72 19.44 17.52
29 3.24 2.76 2.52 2.28 70 26.28 23.04 20.28 18.48
30 3.36 2.88 2.52 2.28 71 26.40 23.40 20.28 18.72
31 3.48 3.00 2.64 2.40 72 26.28 23.64 20.16 18.72
32 3.60 3.00 2.76 2.52 73 26.16 23.52 20.04 18.60
33 3.72 3.24 2.88 2.64 74 25.80 23.40 19.68 18.48
34 3.84 3.24 3.00 2.64 75 25.20 23.04 19.20 18.12
35 3.96 3.36 3.12 2.76 76 24.48 22.56 18.60 17.64
36 4.32 3.60 3.36 3.00 77 24.12 22.32 18.24 17.40
37 4.56 3.84 3.60 3.24 78 23.64 21.96 17.88 17.04
38 5.04 4.08 3.96 3.48 79 22.92 21.48 17.28 16.56
39 5.28 4.20 4.20 3.72 80 22.20 20.88 16.68 16.08
40 5.64 4.44 4.44 3.84
Age used is attained age of the insured on the effective date of the
requested increase in face amount. Smkr. includes increased face amounts
with premium class "Smoker" or "Smoker Special"; Nsmkr. includes increased
face amounts with premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III AND IV
D. Increase Commission per $1,000* of increase in face amount
2. Basic Contract - Highest Total Face Amount**
More Than $249,999 and Less Than $500,000
<TABLE>
Attained Male Female Attained Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 1.80 1.68 1.32 1.20 51 9.36 6.96 6.84 5.40
21 1.92 1.68 1.44 1.20 52 10.08 7.32 7.32 5.88
22 1.92 1.68 1.44 1.32 53 10.80 7.68 7.92 6.24
23 2.04 1.80 1.56 1.44 54 11.16 7.92 8.04 6.48
24 2.16 1.92 1.68 1.44 55 11.88 8.52 8.52 6.84
25 2.16 1.92 1.68 1.56 56 12.72 9.12 9.12 7.32
26 2.28 1.92 1.80 1.68 57 13.56 10.20 9.72 7.92
27 2.28 2.04 1.80 1.68 58 14.40 10.92 10.32 8.40
28 2.40 2.16 1.92 1.68 59 14.52 11.04 10.56 8.52
29 2.52 2.16 1.92 1.80 60 15.36 11.76 11.16 9.12
30 2.52 2.28 2.04 1.80 61 15.60 12.12 11.52 9.60
31 2.64 2.28 2.16 1.92 62 16.44 13.08 12.36 10.32
32 2.76 2.40 2.16 1.92 63 16.68 13.32 12.60 10.80
33 2.88 2.52 2.28 2.04 64 16.92 13.68 12.96 11.16
34 3.00 2.52 2.28 2.16 65 17.40 14.28 13.56 11.76
35 3.12 2.64 2.40 2.16 66 17.88 14.88 13.92 12.24
36 3.36 2.76 2.64 2.28 67 18.84 15.96 14.64 13.08
37 3.60 2.88 2.76 2.52 68 19.56 16.68 15.12 13.56
38 3.84 3.12 3.00 2.64 69 19.08 16.68 14.88 13.44
39 4.08 3.36 3.24 2.88 70 20.04 17.64 15.48 14.16
40 4.32 3.48 3.48 3.00 71 20.52 18.24 15.84 14.52
41 4.80 3.72 3.72 3.12 72 20.16 18.00 15.48 14.28
42 5.16 3.96 3.96 3.36 73 20.04 18.12 15.36 14.28
43 5.52 4.20 4.20 3.48 74 19.80 18.00 15.12 14.16
44 6.00 4.44 4.44 3.72 75 19.32 17.76 14.76 13.92
45 6.36 4.80 4.80 3.84 76 18.84 17.40 14.28 13.56
46 6.84 5.04 5.16 4.08 77 18.60 17.16 14.04 13.44
47 7.20 5.40 5.40 4.32 78 18.24 16.92 13.80 13.20
48 7.68 5.76 5.76 4.56 79 17.64 16.56 13.44 12.84
49 8.28 6.12 6.00 4.80 80 17.16 16.08 12.96 12.48
50 8.76 6.48 5.04
Age used is attained age of the insured on the effective date of the
requested increase in face amount. Smkr. includes increased face amounts
with premium class "Smoker" or "Smoker Special"; Nsmkr. includes increased
face amounts with premium class "Nonsmoker" or "Nonsmoker" or
"Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III AND IV
D. Increase Commission per $1,000* of increase in face amount
3. Basic Contract - Highest Total Face Amount** More Than $499,999
<TABLE>
Attained Male Female Attained Male Female
Age Smkr Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 1.32 1.08 0.96 0.84 51 6.36 4.68 4.68 3.72
21 1.32 1.20 0.96 0.84 52 6.84 5.04 5.04 3.96
22 1.32 1.20 1.08 0.96 53 7.32 5.28 5.28 4.20
23 1.32 1.20 1.08 0.96 54 7.68 5.52 5.52 4.44
24 1.44 1.32 1.20 1.08 55 8.16 5.88 5.88 4.68
25 1.44 1.32 1.20 1.08 56 8.76 6.36 6.24 5.04
26 1.44 1.32 1.20 1.08 57 9.36 6.84 6.72 5.40
27 1.56 1.44 1.32 1.20 58 10.08 7.44 7.20 5.76
28 1.68 1.44 1.32 1.20 59 10.20 7.68 7.32 5.88
29 1.68 1.44 1.32 1.20 60 10.80 8.28 7.80 6.36
30 1.80 1.44 1.32 1.20 61 11.04 8.52 8.04 6.72
31 1.80 1.56 1.44 1.32 62 11.64 9.12 8.64 7.32
32 1.92 1.68 1.44 1.32 63 11.64 9.24 8.88 7.56
33 1.92 1.68 1.44 1.32 64 12.00 9.72 9.24 8.04
34 2.04 1.68 1.56 1.44 65 12.36 10.08 9.60 8.40
35 2.16 1.80 1.68 1.44 66 12.72 10.56 9.84 8.76
36 2.28 1.92 1.80 1.68 67 13.32 11.16 10.32 9.24
37 2.40 2.04 1.92 1.80 68 13.68 11.76 10.56 9.60
38 2.52 2.16 2.04 1.92 69 13.68 11.88 10.68 9.60
39 2.76 2.28 2.16 2.04 70 14.52 12.72 11.16 10.32
40 2.88 2.40 2.28 2.04 71 14.64 13.08 11.28 10.44
41 3.24 2.52 2.52 2.16 72 14.76 13.32 11.40 10.56
42 3.48 2.64 2.64 2.28 73 15.00 13.56 11.52 10.68
43 3.72 2.88 2.88 2.40 74 15.12 13.92 11.64 10.92
44 4.08 3.00 3.12 2.52 75 15.36 14.04 11.64 11.04
45 4.32 3.24 3.24 2.52 76 15.12 13.92 11.52 10.80
46 4.56 3.48 3.48 2.76 77 15.00 13.92 11.40 10.80
47 4.92 3.60 3.72 2.88 78 14.88 13.80 11.28 10.68
48 5.16 3.84 3.84 3.00 79 14.64 13.68 11.04 10.56
49 5.52 4.08 4.08 3.24 80 14.28 13.32 10.80 10.32
50 5.88 4.32 4.32 3.48
Age used is attained age of the insured on the effective date of the
requested increase in face amount. Smkr. includes increased face amounts
with premium class "Smoker" or "Smoker Special"; Nsmkr. includes increased
face amounts with premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III, IV AND JUVENILE-ISSUE
E. Cost of Living Increase Commission per $1,000* of increase in face amount
1. Highest Total Face Amount** of
Series III and IV Less Than $250,000 (Band 1)
(No limit on face amount of Juvenile-Issue contract)
<TABLE>
Attained Male Female Attained Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.36 0.36 33 1.08 0.96 0.84 0.72
1 0.36 0.36 34 1.08 0.96 0.84 0.72
2 0.36 0.36 35 1.20 0.96 0.96 0.84
3 0.36 0.36 36 1.20 1.08 0.96 0.84
4 0.36 0.36 37 1.32 1.08 1.08 0.96
5 0.36 0.36 38 1.44 1.20 1.08 0.96
6 0.36 0.36 39 1.56 1.20 1.20 1.08
7 0.36 0.36 40 1.68 1.32 1.32 1.08
8 0.36 0.36 41 1.80 1.44 1.44 1.20
9 0.36 0.36 42 1.92 1.44 1.44 1.20
10 0.36 0.36 43 2.04 1.56 1.56 1.32
11 0.36 0.36 44 2.28 1.68 1.68 1.32
12 0.36 0.36 45 2.40 1.80 1.80 1.44
13 0.48 0.36 46 2.52 1.92 1.92 1.56
14 0.48 0.36 47 2.76 2.04 2.04 1.56
15 0.48 0.48 48 2.88 2.16 2.16 1.68
16 0.60 0.48 49 3.00 2.28 2.28 1.80
17 0.60 0.48 50 3.24 2.40 2.40 1.92
18 0.60 0.48 51 3.48 2.52 2.52 2.04
19 0.60 0.48 52 3.72 2.76 2.76 2.16
20 0.72 0.60 0.48 0.48 53 3.96 2.88 2.88 2.40
21 0.72 0.60 0.48 0.48 54 4.20 3.00 3.00 2.40
22 0.72 0.60 0.60 0.48 55 4.44 3.12 3.12 2.52
23 0.72 0.72 0.60 0.48 56 4.68 3.36 3.36 2.76
24 0.72 0.72 0.60 0.60 57 5.04 3.60 3.60 2.88
25 0.84 0.72 0.60 0.60 58 5.40 3.96 3.84 3.12
26 0.84 0.72 0.60 0.60 59 5.40 4.08 3.96 3.24
27 0.84 0.72 0.72 0.60 60 5.76 4.44 4.20 3.36
28 0.84 0.72 0.72 0.60 61 5.88 4.56 4.32 3.60
29 0.96 0.84 0.72 0.60 62 6.12 4.80 4.56 3.84
30 0.96 0.84 0.72 0.72 63 6.24 4.92 4.68 3.96
31 0.96 0.84 0.72 0.72 64 6.36 5.16 4.92 4.20
32 1.08 0.84 0.84 0.72
Age used is attained age of the insured on the effective date of the
increase in face amount. Smkr. includes increased face amounts with premium
class "Smoker" or "Smoker Special"; Nsmkr, includes increased face amounts
with premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
Please note: A COLA increase alone will not trigger a change to the
next higher band.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III AND IV
E. Cost of Living Increase Commission per $1,000* of increase in face amount
2. Highest Total Face Amount** More Than $249,999 and
Less Than $500,000 (Band 2)
<TABLE>
Attained Male Female Attained Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 0.48 0.48 0.36 0.36 42 1.44 1.20 1.20 0.96
21 0.60 0.48 0.36 0.36 43 1.56 1.20 1.20 0.96
22 0.60 0.48 0.48 0.36 44 1.68 1.32 1.32 1.08
23 0.60 0.48 0.48 0.36 45 1.80 1.32 1.44 1.08
24 0.60 0.60 0.48 0.48 46 1.92 1.44 1.44 1.20
25 0.60 0.60 0.48 0.48 47 2.04 1.56 1.56 1.20
26 0.60 0.60 0.48 0.48 48 2.28 1.68 1.68 1.32
27 0.72 0.60 0.48 0.48 49 2.40 1.80 1.80 1.44
28 0.72 0.60 0.60 0.48 50 2.52 1.92 1.80 1.44
29 0.72 0.60 0.60 0.48 51 2.76 2.04 2.04 1.56
30 0.72 0.60 0.60 0.48 52 2.88 2.16 2.16 1.68
31 0.72 0.72 0.60 0.60 53 3.12 2.28 2.28 1.80
32 0.84 0.72 0.60 0.60 54 3.24 2.28 2.28 1.80
33 0.84 0.72 0.60 0.60 55 3.36 2.40 2.40 1.92
34 0.84 0.72 0.72 0.60 56 3.60 2.64 2.64 2.16
35 0.96 0.72 0.72 0.60 57 3.84 2.88 2.76 2.28
36 0.96 0.84 0.72 0.72 58 4.08 3.12 3.00 2.40
37 1.08 0.84 0.84 0.72 59 4.20 3.12 3.00 2.40
38 1.08 0.96 0.84 0.72 60 4.44 3.36 3.24 2.64
39 1.20 0.96 0.96 0.84 61 4.56 3.48 3.36 2.76
40 1.32 0.96 0.96 0.84 62 4.80 3.72 3.60 3.00
41 1.32 1.08 1.08 0.96 63 4.80 3.84 3.60 3.12
64 4.92 3.96 3.72 3.24
Age used is attained age of the insured on the effective date of the
increase in face amount. Smkr. includes increased face amounts with premium
class "Smoker" or "Smoker Special"; Nsmkr. includes increased face amounts
with premium class "Nonsmoker" or "Nonsmoker" or Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
Please Note: A COLA increase will not trigger a change to the
next higher band.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III AND IV
E. Cost of Living Increase Commission per $1,000* of increase in face amount
3. Highest Total Face Amount** More Than $499,999 (Band 3)
<TABLE>
Attained Male Female Attained Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 0.36 0.36 0.24 0.24 42 0.96 0.72 0.72 0.60
21 0.36 0.36 0.24 0.24 43 1.08 0.84 0.84 0.72
22 0.36 0.36 0.36 0.24 44 1.20 0.84 0.84 0.72
23 0.36 0.36 0.36 0.24 45 1.20 0.96 0.96 0.72
24 0.36 0.36 0.36 0.36 46 1.32 0.96 0.96 0.84
25 0.36 0.36 0.36 0.36 47 1.44 1.08 1.08 0.84
26 0.48 0.36 0.36 0.36 48 1.44 1.08 1.08 0.84
27 0.48 0.36 0.36 0.36 49 1.56 1.20 1.20 0.96
28 0.48 0.36 0.36 0.36 50 1.68 1.32 1.32 0.96
29 0.48 0.48 0.36 0.36 51 1.80 1.32 1.32 1.08
30 0.48 0.48 0.36 0.36 52 2.04 1.44 1.44 1.20
31 0.48 0.48 0.36 0.36 53 2.16 1.56 1.56 1.20
32 0.60 0.48 0.48 0.36 54 2.16 1.56 1.56 1.32
33 0.60 0.48 0.48 0.36 55 2.40 1.68 1.68 1.32
34 0.60 0.48 0.48 0.36 56 2.52 1.80 1.80 1.44
35 0.60 0.48 0.48 0.48 57 2.76 1.92 1.92 1.56
36 0.60 0.60 0.48 0.48 58 2.88 2.16 2.04 1.68
37 0.72 0.60 0.60 0.48 59 3.00 2.28 2.16 1.68
38 0.72 0.60 0.60 0.60 60 3.12 2.40 2.28 1.80
39 0.84 0.60 0.60 0.60 61 3.12 2.52 2.28 1.92
40 0.84 0.72 0.72 0.60 62 3.36 2.64 2.52 2.16
41 0.96 0.72 0.72 0.60 63 3.36 2.64 2.52 2.16
64 3.48 2.76 2.64 2.28
Age used is attained age of the insured on the effective date of the
increase in face amount. Smkr. includes increased face amounts with premium
class "Smoker" or "Smoker Special"; Nsmkr. includes increased face amounts
with premium class "Nonsmoker" or "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the total Face Amount after a requested increase.
Please note: A COLA increase alone will not trigger a change to the
next higher band.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VI. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III, IV AND JUVENILE-ISSUE
F. Riders Increased/Issued after Basic Contract
Spouse Insurance Benefit Commission per $1,000* of face amount
<TABLE>
Male Female Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 0.60 0.36 49 3.60 2.28 2.28 1.68
17 0.72 0.36 50 3.96 2.40 2.40 1.80
18 0.84 0.36 51 4.32 2.52 2.64 1.80
19 0.84 0.48 52 4.80 2.64 2.88 1.92
20 0.96 0.60 0.48 0.36 53 5.28 2.88 3.12 2.04
21 0.96 0.60 0.48 0.36 54 5.52 3.00 3.12 2.04
22 0.96 0.60 0.48 0.48 55 6.12 3.36 3.36 2.16
23 0.96 0.72 0.48 0.48 56 6.60 3.60 3.48 2.28
24 0.96 0.72 0.48 0.48 57 6.96 3.84 3.72 2.40
25 0.96 0.72 0.48 0.48 58 7.56 4.20 3.96 2.64
26 1.08 0.72 0.60 0.48 59 7.80 4.32 3.96 2.64
27 1.08 0.72 0.60 0.48 60 8.28 4.68 4.08 2.76
28 1.08 0.72 0.60 0.48 61 8.40 4.92 4.20 2.76
29 1.08 0.72 0.72 0.48 62 9.00 5.28 4.56 3.12
30 1.08 0.72 0.84 0.48 63 9.00 5.28 4.56 3.12
31 1.20 0.72 0.84 0.48 64 9.36 5.52 4.80 3.36
32 1.20 0.84 0.84 0.60 65 9.72 5.76 4.92 3.48
33 1.32 0.84 0.96 0.60 66 10.20 6.24 5.04 3.60
34 1.44 0.84 0.96 0.60 67 11.16 6.84 5.40 3.96
35 1.56 0.84 1.08 0.60 68 11.88 7.44 5.76 4.20
36 1.56 0.96 1.08 0.72 69 12.24 7.92 5.88 4.44
37 1.68 0.96 1.20 0.84 70 13.32 8.88 6.48 4.92
38 1.80 1.08 1.20 0.84 71 13.68 9.36 6.60 5.28
39 1.92 1.08 1.32 0.84 72 14.16 9.96 6.84 5.40
40 2.16 1.20 1.32 0.96 73 14.52 10.44 6.96 5.64
41 2.28 1.20 1.56 0.96 74 14.76 10.80 6.96 5.76
42 2.40 1.32 1.68 1.08 75 15.00 11.16 6.96 5.76
43 2.52 1.56 1.80 1.20 76 16.56 11.40 8.16 5.76
44 2.64 1.56 1.80 1.20 77 16.92 11.88 8.52 6.00
45 2.88 1.68 1.92 1.32 78 17.16 12.24 8.88 6.24
46 3.00 1.92 2.16 1.44 79 17.28 12.48 9.12 6.60
47 3.24 1.92 2.16 1.56 80 17.28 12.72 9.36 6.96
48 3.36 2.16 2.28 1.56
Age used is issue age of the spouse or, for increases in face amount,
attained age of the spouse on the effective date of the increase. Smkr.
includes riders issued with face amounts/increased face amounts having
premium class "Smoker" or "Smoker Special"; Nsmkr. includes riders with face
amounts/increased face amounts having premium class "Nonsmoker" or
"Nonsmoker Special".
Child Insurance Benefit Commission per $1,000 of face amount
Commission is $3.00 per $1,000. One-twelfth of the commission is
paid monthly.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VII. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
A. First Year Commission
1. First year commission is a percentage of all premiums paid and
credited in the first contract year up to but not exceeding the
Target Premium.*
Commission Rate for Initial
Face Amount Less than Commission Rate
$250,000; Spouse and Child for Initial Face
Riders Issued with the Amount Greater
Issue Age** Basic Contract Than $249,999
--------- -------------- -------------
0-51 47 % 40 %
52-53 47 39
54-55 45 38
56-57 45 37
58-59 45 36
60 45 35
61 43 35
62 43 34
63 41 34
64-65 41 33
66-67 40 32
68 39 31
69 37 30
70 36 29
71 34 28
72 32 27
73 30 26
74 28 25
75 27 24
76 25.5 22
77 24 20.5
78 22.5 19
79 21.5 17.5
80 20 16
* The total Target Premium is equal to the initial Death Benefit
Guarantee Premium for the contract excluding any extra premium paid
for aviation or temporary extra premium. Target Premiums for the
rider coverages are found in Exhibit IA. The Target Premium that
is apportioned to the basic coverage is the total Target Premium
less any rider Target Premium.
** Issue Age is the issue age of the insured for the basic coverage;
the age at issue of the spouse for the spouse rider.
2. For contracts issued on or after June 1, 1990, an additional
First Year Commission is 3% of all premium paid and credited in
the first contract year.
B. Additional commission based on premium
1. For contracts issued on or after June 1, 1990, a Renewal
Commission based on premium is paid equal to 3% of all premium
paid and credited whenever paid and credited in contract year
two or later.
2. For contracts issued before June 1, 1990, a Service Commission
is paid equal to 3% of all premium paid and credited whenever
paid and credited.
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VII. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
C. Renewal Commissions per $1,000* of Face Amount (Initial or Increase)
1. Basic Contract - Highest Total Face Amount** Less Than $250,000
<TABLE>
Male Female Male Female
Std./ Std./ Std./ Std./
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.24 0.12 41 0.96 0.72 0.60 0.48
1 0.24 0.12 42 1.08 0.72 0.60 0.48
2 0.24 0.12 43 1.08 0.72 0.72 0.48
3 0.24 0.12 44 1.20 0.84 0.72 0.60
4 0.24 0.12 45 1.32 0.84 0.72 0.60
5 0.24 0.12 46 1.32 0.96 0.84 0.60
6 0.24 0.12 47 1.44 0.96 0.84 0.72
7 0.24 0.12 48 1.56 1.08 0.84 0.72
8 0.24 0.24 49 1.68 1.20 0.96 0.72
9 0.24 0.24 50 1.68 1.20 0.96 0.72
10 0.36 0.24 51 1.80 1.32 1.08 0.84
11 0.36 0.24 52 1.92 1.32 1.08 0.84
12 0.36 0.24 53 2.04 1.44 1.20 0.96
13 0.36 0.24 54 2.16 1.56 1.20 0.96
14 0.36 0.24 55 2.28 1.68 1.32 1.08
15 0.36 0.24 56 2.40 1.80 1.32 1.08
16 0.36 0.24 57 2.52 1.92 1.44 1.20
17 0.36 0.24 58 2.64 2.04 1.44 1.20
18 0.36 0.24 59 2.88 2.28 1.56 1.32
19 0.48 0.24 60 3.00 2.40 1.68 1.44
20 0.48 0.36 0.24 0.24 61 3.24 2.52 1.80 1.56
21 0.48 0.36 0.24 0.24 62 3.36 2.64 1.92 1.56
22 0.48 0.36 0.36 0.24 63 3.60 2.88 1.92 1.68
23 0.48 0.36 0.36 0.24 64 3.84 3.12 2.16 1.80
24 0.48 0.36 0.36 0.24 65 3.96 3.24 2.16 1.92
25 0.48 0.36 0.36 0.24 66 4.20 3.36 2.28 2.04
26 0.48 0.36 0.36 0.24 67 4.56 3.72 2.52 2.28
27 0.60 0.36 0.36 0.24 68 4.68 3.84 2.64 2.40
28 0.60 0.36 0.36 0.24 69 4.92 4.08 2.76 2.52
29 0.60 0.36 0.36 0.24 70 5.28 4.44 3.00 2.76
30 0.60 0.36 0.36 0.36 71 5.64 4.68 3.12 2.88
31 0.60 0.48 0.48 0.36 72 5.88 5.04 3.36 3.00
32 0.72 0.48 0.48 0.36 73 6.36 5.40 3.60 3.36
33 0.72 0.48 0.48 0.36 74 6.60 5.64 3.84 3.48
34 0.72 0.48 0.48 0.36 75 6.96 6.00 3.96 3.72
35 0.72 0.48 0.48 0.36 76 7.32 6.36 4.20 3.96
36 0.84 0.48 0.48 0.36 77 7.68 6.72 4.44 4.20
37 0.84 0.60 0.48 0.36 78 8.04 6.96 4.68 4.44
38 0.84 0.60 0.60 0.36 79 8.40 7.32 4.92 4.68
39 0.84 0.60 0.60 0.48 80 8.76 7.68 5.16 4.92
40 0.96 0.60 0.60 0.48
* One-twelfth of the Renewal Commission on the portion of the initial face
amount or increase in face amount remaining in force each month is paid
monthly during the first two renewal years after issue or requested
increase. Age used is issue age of contract or, for increases in face
amount, attained age of the insured on the effective date of the
increase. Smkr. includes contracts with face amounts/increased face
amounts having premium class "Smoker" or "Smoker Special"; Nsmkr.
includes contracts with face amounts/increased face amounts having
premium class "Nonsmoker" or "Nonsmoker Special". Std. includes
contracts with face amounts/increased face amounts having premium class
"Standard" or "Standard Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a Requested Increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VII. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
C. Renewal Commissions per $1,000* of Face Amount (Initial or Increase)
2. Basic Contract - Highest Total Face Amount** More Than $249,999
<TABLE>
Male Female Male Female
Std./ Std./ Std./ Std./
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.24 0.12 41 0.84 0.60 0.48 0.36
1 0.24 0.12 42 0.84 0.60 0.48 0.36
2 0.24 0.12 43 0.96 0.60 0.60 0.48
3 0.24 0.12 44 0.96 0.60 0.60 0.48
4 0.24 0.12 45 1.08 0.72 0.60 0.48
5 0.24 0.12 46 1.08 0.72 0.60 0.48
6 0.24 0.12 47 1.20 0.84 0.72 0.48
7 0.24 0.12 48 1.20 0.84 0.72 0.60
8 0.24 0.12 49 1.32 0.96 0.72 0.60
9 0.24 0.12 50 1.44 0.96 0.84 0.60
10 0.24 0.12 51 1.44 1.08 0.84 0.72
11 0.24 0.12 52 1.56 1.08 0.84 0.72
12 0.24 0.12 53 1.68 1.20 0.96 0.72
13 0.24 0.24 54 1.80 1.32 0.96 0.84
14 0.24 0.24 55 1.92 1.44 1.08 0.84
15 0.36 0.24 56 1.92 1.44 1.08 0.84
16 0.36 0.24 57 2.16 1.56 1.20 0.96
17 0.36 0.24 58 2.16 1.68 1.20 0.96
18 0.36 0.24 59 2.40 1.80 1.32 1.08
19 0.36 0.24 60 2.52 1.92 1.32 1.20
20 0.36 0.24 0.24 0.24 61 2.64 2.04 1.44 1.20
21 0.36 0.24 0.24 0.24 62 2.76 2.16 1.56 1.32
22 0.36 0.24 0.24 0.24 63 2.88 2.28 1.56 1.32
23 0.36 0.24 0.24 0.24 64 3.12 2.52 1.68 1.56
24 0.36 0.24 0.24 0.24 65 3.24 2.64 1.80 1.56
25 0.36 0.24 0.24 0.24 66 3.48 2.76 1.92 1.68
26 0.48 0.24 0.24 0.24 67 3.72 3.00 2.04 1.80
27 0.48 0.36 0.24 0.24 68 3.84 3.24 2.16 1.92
28 0.48 0.36 0.36 0.24 69 4.08 3.36 2.28 2.04
29 0.48 0.36 0.36 0.24 70 4.32 3.60 2.40 2.16
30 0.48 0.36 0.36 0.24 71 4.56 3.84 2.52 2.40
31 0.48 0.36 0.36 0.24 72 4.80 4.08 2.76 2.52
32 0.60 0.36 0.36 0.24 73 5.16 4.44 3.00 2.76
33 0.60 0.36 0.36 0.24 74 5.40 4.68 3.12 2.88
34 0.60 0.36 0.36 0.24 75 5.64 4.92 3.24 3.00
35 0.60 0.36 0.36 0.24 76 6.00 5.16 3.48 3.24
36 0.60 0.48 0.36 0.36 77 6.24 5.40 3.60 3.36
37 0.72 0.48 0.48 0.36 78 6.60 5.76 3.84 3.60
38 0.72 0.48 0.48 0.36 79 6.84 6.00 4.08 3.72
39 0.72 0.48 0.48 0.36 80 7.08 6.24 4.20 3.96
40 0.72 0.48 0.48 0.36
* One-twelfth of the Renewal Commission on the portion of the initial face
amount or increase in face amount remaining in force each month is paid
monthly during the first two renewal years after issue or requested
increase. Age used is issue age of contract or, for increases in face
amount, attained age of the insured on the effective date of the
increase. Smkr. includes contracts with face amounts/increased face
amounts having premium class "Smoker" or "Smoker Special"; Nsmkr.
includes contracts with face amounts/increased face amounts having
premium class "Nonsmoker" or "Nonsmoker Special". Std. includes
contracts with face amounts/increased face amounts having premium class
"Standard" or "Standard Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a Requested Increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VII. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
C. Renewal Commissions per $1,000* of Face Amount (Initial or Increase)
3. Spouse Insurance Benefit
<TABLE>
Male Female Male Female
Std./ Std./ Std./ Std./
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 0.36 0.24 49 1.68 1.20 0.84 0.72
17 0.36 0.24 50 1.68 1.20 0.96 0.72
18 0.36 0.24 51 1.92 1.32 0.96 0.72
19 0.36 0.24 52 1.92 1.32 0.96 0.84
20 0.48 0.24 0.24 0.24 53 2.16 1.56 1.08 0.84
21 0.48 0.24 0.24 0.24 54 2.16 1.56 1.08 0.84
22 0.48 0.36 0.24 0.24 55 2.40 1.68 1.20 0.96
23 0.48 0.36 0.24 0.24 56 2.52 1.80 1.20 0.96
24 0.48 0.36 0.24 0.24 57 2.64 1.92 1.32 1.08
25 0.48 0.36 0.36 0.24 58 2.76 2.04 1.32 1.08
26 0.48 0.36 0.36 0.24 59 3.00 2.28 1.44 1.20
27 0.48 0.36 0.36 0.24 60 3.12 2.40 1.44 1.32
28 0.60 0.36 0.36 0.24 61 3.24 2.52 1.56 1.32
29 0.60 0.36 0.36 0.24 62 3.60 2.76 1.68 1.44
30 0.60 0.36 0.36 0.24 63 3.72 2.88 1.68 1.56
31 0.60 0.36 0.36 0.24 64 3.84 3.00 1.80 1.56
32 0.60 0.48 0.36 0.36 65 4.20 3.24 1.92 1.68
33 0.72 0.48 0.48 0.36 66 4.32 3.48 2.04 1.80
34 0.72 0.48 0.48 0.36 67 4.56 3.60 2.16 1.92
35 0.72 0.48 0.48 0.36 68 4.92 3.96 2.28 2.16
36 0.72 0.48 0.48 0.36 69 5.16 4.20 2.52 2.16
37 0.84 0.48 0.48 0.36 70 5.40 4.44 2.64 2.40
38 0.84 0.48 0.48 0.36 71 5.76 4.80 2.76 2.52
39 0.84 0.60 0.48 0.36 72 6.12 5.04 3.00 2.76
40 0.96 0.60 0.60 0.48 73 6.36 5.28 3.12 2.88
41 0.96 0.72 0.60 0.48 74 6.84 5.76 3.48 3.24
42 1.08 0.72 0.60 0.48 75 7.44 6.36 3.84 3.60
43 1.20 0.72 0.60 0.48 76 7.80 6.72 4.08 3.84
44 1.20 0.84 0.72 0.48 77 8.16 6.96 4.32 4.08
45 1.32 0.84 0.72 0.60 78 8.52 7.32 4.56 4.32
46 1.32 0.96 0.72 0.60 79 8.76 7.68 4.80 4.56
47 1.44 0.96 0.84 0.60 80 9.12 8.04 5.04 4.80
48 1.56 1.08 0.84 0.60
* One-twelfth of the Renewal Commission on the portion of the initial rider
face amount or increase in rider face amount remaining in force each
month is paid monthly during the first two renewal years after issue of
the rider or increase of the rider. Age used is issue age of spouse or,
for increases in face amount, attained age of the spouse on the effective
date of the increase. Smkr. includes riders with face amounts/increased
face amounts having premium class "Smoker" or "Smoker Special"; Nsmkr.
includes riders with face amounts/increased face amounts/increased face
amounts having premium class "Nonsmoker" or "Nonsmoker Special". Std.
includes riders with face amounts/increased face amounts having premium
class "Standard" or "Standard Special".
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VII. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
D. Increase Commissions per $1,000* of Increase in Face Amount
1. Basic Contract - Highest Total Face Amount** Less Than $250,000
<TABLE>
Male Female Male Female
Std./ Std./ Std./ Std./
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 1.44 1.08 41 6.72 4.56 4.20 3.24
1 1.56 1.08 42 7.08 4.80 4.44 3.36
2 1.56 1.08 43 7.56 5.16 4.68 3.60
3 1.56 1.08 44 7.92 5.40 4.80 3.72
4 1.68 1.08 45 8.52 5.88 5.16 3.96
5 1.68 1.08 46 9.00 6.24 5.40 4.08
6 1.80 1.20 47 9.60 6.72 5.76 4.44
7 1.80 1.20 48 10.08 7.08 6.00 4.68
8 1.92 1.20 49 10.92 7.68 6.36 4.92
9 1.92 1.32 50 11.40 8.04 6.60 5.16
10 2.04 1.32 51 12.24 8.76 7.08 5.64
11 2.16 1.44 52 12.84 9.24 7.32 5.76
12 2.16 1.44 53 13.80 10.08 7.80 6.36
13 2.28 1.56 54 13.80 10.08 7.68 6.24
14 2.40 1.56 55 14.76 11.04 8.28 6.84
15 2.52 1.56 56 15.48 11.52 8.64 7.08
16 2.52 1.68 57 16.56 12.60 9.24 7.68
17 2.64 1.68 58 17.28 13.20 9.60 8.04
18 2.76 1.80 59 18.60 14.40 10.32 8.64
19 2.88 1.80 60 19.44 15.12 10.68 9.12
20 2.88 2.04 1.92 1.44 61 19.92 15.72 11.04 9.48
21 3.00 2.04 1.92 1.56 62 20.88 16.56 11.52 9.96
22 3.12 2.16 2.04 1.56 63 20.88 16.56 11.52 9.96
23 3.24 2.16 2.04 1.68 64 22.32 18.00 12.36 10.80
24 3.36 2.28 2.16 1.68 65 23.40 18.96 12.96 11.40
25 3.48 2.28 2.28 1.68 66 24.00 19.44 13.20 11.64
26 3.60 2.40 2.40 1.80 67 25.68 21.12 14.40 12.72
27 3.72 2.52 2.40 1.92 68 26.40 21.72 14.64 13.08
28 3.84 2.64 2.52 1.92 69 26.28 21.72 14.64 13.08
29 3.96 2.76 2.64 1.92 70 27.48 22.92 15.48 14.04
30 4.20 2.76 2.76 2.04 71 27.24 22.92 15.36 13.92
31 4.32 2.88 2.88 2.04 72 27.00 22.80 15.24 13.92
32 4.56 3.00 2.88 2.16 73 27.12 23.16 15.48 14.28
33 4.68 3.12 3.00 2.28 74 26.64 22.80 15.24 14.04
34 4.80 3.24 3.12 2.40 75 26.88 23.16 15.48 14.40
35 5.04 3.36 3.24 2.40 76 26.64 22.56 15.48 14.28
36 5.28 3.60 3.36 2.52 77 26.28 22.32 15.24 14.28
37 5.52 3.72 3.60 2.64 78 25.68 21.96 15.12 14.04
38 5.76 3.84 3.72 2.76 79 25.68 21.48 15.24 14.04
39 6.00 3.96 3.84 2.88 80 24.96 20.88 14.88 13.92
40 6.24 4.20 3.96 3.00
* One-twelfth of the Increase Commission on the portion of the increase
remaining in force each month is paid monthly for one year after the
effective date of the requested increase in face amount. Age used is
attained age of the insured on the effective date of the increase in face
amount. Smkr. includes increased face amounts with premium class
"Smoker" or "Smoker Special"; Nsmkr. includes increased face amounts with
premium class "Nonsmoker" or "Nonsmoker Special". Std. includes
increased face amounts with premium class "Standard" or
"Standard "Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a Requested Increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VII. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
D. Increase Commissions per $1,000* of Increase in Face Amount
2. Basic Contract - Highest Total Face Amount** More Than $249,999
<TABLE>
Male Female Male Female
Std./ Std./ Std./ Std./
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 1.20 0.84 41 5.52 3.72 3.36 2.52
1 1.20 0.84 42 5.76 3.84 3.60 2.64
2 1.20 0.84 43 6.12 4.20 3.72 2.88
3 1.32 0.84 44 6.48 4.32 3.84 3.00
4 1.32 0.96 45 6.96 4.80 4.20 3.12
5 1.44 0.96 46 7.20 5.04 4.32 3.36
6 1.44 0.96 47 7.80 5.52 4.56 3.60
7 1.44 0.96 48 8.16 5.76 4.80 3.72
8 1.56 0.96 49 8.88 6.24 5.04 3.96
9 1.56 1.08 50 9.24 6.60 5.28 4.20
10 1.68 1.08 51 9.96 7.20 5.64 4.56
11 1.68 1.08 52 10.20 7.32 5.76 4.56
12 1.80 1.20 53 10.92 7.92 6.12 4.92
13 1.92 1.20 54 11.04 8.16 6.24 5.04
14 1.92 1.20 55 11.88 8.88 6.60 5.40
15 2.04 1.32 56 12.12 9.12 6.72 5.52
16 2.04 1.32 57 12.96 9.84 7.20 6.00
17 2.16 1.44 58 13.20 10.08 7.32 6.00
18 2.16 1.44 59 14.16 10.92 7.80 6.60
19 2.28 1.44 60 14.40 11.16 7.80 6.72
20 2.40 1.56 1.56 1.20 61 15.48 12.24 8.52 7.32
21 2.40 1.68 1.56 1.20 62 15.72 12.48 8.64 7.44
22 2.52 1.68 1.68 1.20 63 16.56 13.08 9.00 7.80
23 2.64 1.68 1.68 1.32 64 17.16 13.80 9.48 8.28
24 2.64 1.80 1.80 1.32 65 18.00 14.52 9.96 8.76
25 2.76 1.92 1.80 1.44 66 18.36 14.88 10.08 8.88
26 2.88 1.92 1.92 1.44 67 19.68 16.08 10.92 9.72
27 3.00 2.04 1.92 1.44 68 20.04 16.44 11.04 9.96
28 3.12 2.04 2.04 1.56 69 20.40 16.80 11.28 10.08
29 3.24 2.16 2.16 1.56 70 21.12 17.64 11.88 10.68
30 3.36 2.28 2.16 1.68 71 21.48 18.00 12.00 10.92
31 3.48 2.28 2.28 1.68 72 21.72 18.36 12.24 11.16
32 3.60 2.40 2.40 1.68 73 22.44 19.08 12.84 11.76
33 3.84 2.52 2.40 1.80 74 22.68 19.44 12.96 12.00
34 3.96 2.64 2.52 1.92 75 22.80 19.56 13.08 12.12
35 4.08 2.76 2.64 1.92 76 21.96 18.96 12.60 11.76
36 4.32 2.88 2.76 2.04 77 21.36 18.60 12.48 11.52
37 4.44 3.00 2.88 2.16 78 20.76 18.12 12.12 11.28
38 4.68 3.12 3.00 2.16 79 19.92 17.52 11.76 11.04
39 4.80 3.24 3.12 2.28 80 18.96 16.80 11.28 10.56
40 5.04 3.36 3.24 2.40
* One-twelfth of the Increase Commission on the portion of the increase
remaining in force each month is paid monthly for one year after the
effective date of the requested increase in face amount. Age used is
attained age of the insured on the effective date of the increase in face
amount. Smkr. includes increased face amounts with premium class
"Smoker" or "Smoker Special"; Nsmkr. includes increased face amounts with
premium class "Nonsmoker" or "Nonsmoker Special". Std. includes
increased face amounts with premium class "Standard" or
"Standard Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a Requested Increase.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VII. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
E. Cost of Living Increase Commissions per $1,000* of
Increase in Face Amount
1. Highest Total Face Amount** Less Than $250,000
<TABLE>
Male Female Male Female
Std./ Std./ Std./ Std./
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.48 0.36 41 2.16 1.44 1.32 1.08
1 0.48 0.36 42 2.28 1.56 1.44 1.08
2 0.48 0.36 43 2.40 1.68 1.44 1.08
3 0.48 0.36 44 2.52 1.68 1.56 1.20
4 0.48 0.36 45 2.76 1.92 1.68 1.32
5 0.60 0.36 46 2.88 2.04 1.68 1.32
6 0.60 0.36 47 3.12 2.16 1.80 1.44
7 0.60 0.36 48 3.24 2.28 1.92 1.44
8 0.60 0.36 49 3.48 2.40 2.04 1.56
9 0.60 0.36 50 3.60 2.52 2.16 1.68
10 0.72 0.48 51 3.96 2.76 2.28 1.80
11 0.72 0.48 52 4.08 3.00 2.28 1.80
12 0.72 0.48 53 4.44 3.24 2.52 2.04
13 0.72 0.48 54 4.56 3.36 2.52 2.04
14 0.72 0.48 55 4.92 3.72 2.76 2.28
15 0.84 0.48 56 5.16 3.84 2.88 2.40
16 0.84 0.48 57 5.52 4.20 3.12 2.52
17 0.84 0.60 58 5.76 4.44 3.24 2.64
18 0.84 0.60 59 6.24 4.80 3.48 2.88
19 0.96 0.60 60 6.48 5.04 3.60 3.00
20 0.96 0.60 0.60 0.48 61 6.96 5.52 3.84 3.24
21 0.96 0.72 0.60 0.48 62 7.32 5.76 3.96 3.48
22 0.96 0.72 0.60 0.48 63 7.68 6.12 4.20 3.60
23 1.08 0.72 0.72 0.48 64 8.16 6.60 4.56 3.96
24 1.08 0.72 0.72 0.60 65 8.52 6.96 4.68 4.20
25 1.08 0.72 0.72 0.60 66 9.00 7.32 4.92 4.32
26 1.08 0.72 0.72 0.60 67 9.60 7.92 5.40 4.80
27 1.20 0.84 0.72 0.60 68 10.08 8.40 5.64 5.04
28 1.20 0.84 0.84 0.60 69 10.68 8.88 5.88 5.28
29 1.32 0.84 0.84 0.60 70 11.40 9.60 6.48 5.88
30 1.32 0.84 0.84 0.60 71 12.00 10.08 6.72 6.12
31 1.44 0.96 0.96 0.72 72 12.60 10.68 7.08 6.48
32 1.44 0.96 0.96 0.72 73 13.56 11.52 7.80 7.20
33 1.44 0.96 0.96 0.72 74 14.28 12.24 8.16 7.56
34 1.56 1.08 0.96 0.72 75 15.00 12.84 8.64 7.92
35 1.68 1.08 1.08 0.72 76 15.72 13.56 9.12 8.40
36 1.68 1.08 1.08 0.84 77 16.44 14.28 9.60 8.88
37 1.80 1.20 1.08 0.84 78 17.16 15.00 10.08 9.36
38 1.80 1.20 1.20 0.84 79 17.88 15.72 10.56 9.96
39 1.92 1.32 1.20 0.96 80 18.72 16.56 11.16 10.44
40 2.04 1.32 1.32 0.96
* One-twelfth of the Cost of Living Increase Commission on the portion of
the increase remaining in force each month is paid monthly for one year
after the effective date of the increase. Age used is attained age of
the insured on the effective date of the increase in face amount. Smkr.
includes increased face amounts with premium class "Smoker" or
"Smoker Special"; Nsmkr. includes increased face amounts with premium
class "Nonsmoker" or "Nonsmoker Special". Std. includes increased face
amounts with premium class "Standard" or "Standard Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a Requested Increase.
Please note: A COLA increase alone will not trigger a change to the
next higher band.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VII. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
E. Cost of Living Increase Commissions per $1,000* of
Increase in Face Amount
2. Highest Total Face Amount** More Than $249,999
<TABLE>
Male Female Male Female
Std./ Std./ Std./ Std./
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 0.48 0.36 41 2.04 1.44 1.32 0.96
1 0.48 0.36 42 2.16 1.44 1.32 0.96
2 0.48 0.36 43 2.28 1.56 1.44 1.08
3 0.48 0.36 44 2.40 1.68 1.44 1.08
4 0.48 0.36 45 2.64 1.80 1.56 1.20
5 0.48 0.36 46 2.76 1.92 1.68 1.20
6 0.60 0.36 47 2.88 2.04 1.68 1.32
7 0.60 0.36 48 3.12 2.16 1.80 1.44
8 0.60 0.36 49 3.36 2.40 1.92 1.44
9 0.60 0.36 50 3.48 2.52 2.04 1.56
10 0.60 0.36 51 3.72 2.64 2.16 1.68
11 0.60 0.36 52 3.96 2.76 2.16 1.80
12 0.72 0.48 53 4.20 3.12 2.40 1.92
13 0.72 0.48 54 4.32 3.24 2.40 2.04
14 0.72 0.48 55 4.68 3.48 2.64 2.16
15 0.72 0.48 56 4.92 3.72 2.76 2.28
16 0.72 0.48 57 5.28 3.96 2.88 2.40
17 0.84 0.48 58 5.52 4.20 3.00 2.52
18 0.84 0.60 59 5.88 4.56 3.24 2.76
19 0.84 0.60 60 6.24 4.80 3.36 2.88
20 0.84 0.60 0.60 0.48 61 6.60 5.28 3.60 3.12
21 0.96 0.60 0.60 0.48 62 6.96 5.52 3.84 3.24
22 0.96 0.60 0.60 0.48 63 7.32 5.76 3.96 3.48
23 0.96 0.60 0.60 0.48 64 7.80 6.24 4.32 3.72
24 0.96 0.72 0.72 0.48 65 8.16 6.60 4.56 3.96
25 1.08 0.72 0.72 0.48 66 8.64 6.96 4.68 4.20
26 1.08 0.72 0.72 0.60 67 9.24 7.56 5.16 4.56
27 1.08 0.72 0.72 0.60 68 9.72 7.92 5.40 4.80
28 1.20 0.72 0.72 0.60 69 10.20 8.40 5.64 5.04
29 1.20 0.84 0.84 0.60 70 10.92 9.12 6.12 5.52
30 1.32 0.84 0.84 0.60 71 11.52 9.60 6.48 5.88
31 1.32 0.84 0.84 0.60 72 12.12 10.20 6.72 6.12
32 1.32 0.96 0.84 0.60 73 12.96 11.04 7.44 6.84
33 1.44 0.96 0.96 0.72 74 13.56 11.64 7.80 7.20
34 1.44 0.96 0.96 0.72 75 14.28 12.24 8.16 7.56
35 1.56 1.08 0.96 0.72 76 15.00 12.96 8.64 8.04
36 1.56 1.08 1.08 0.72 77 15.60 13.56 9.12 8.52
37 1.68 1.08 1.08 0.84 78 16.32 14.28 9.60 8.88
38 1.80 1.20 1.08 0.84 79 17.04 15.00 10.08 9.36
39 1.80 1.20 1.20 0.84 80 17.88 15.72 10.56 9.96
40 1.92 1.32 1.20 0.96
* One-twelfth of the Cost of Living Increase Commission on the portion of
the increase remaining in force each month is paid monthly for one year
after the effective date of the increase. Age used is attained age of
the insured on the effective date of the increase in face amount. Smkr.
includes increased face amounts with premium class "Smoker" or
"Smoker Special"; Nsmkr. includes increased face amounts with premium
class "Nonsmoker" or "Nonsmoker Special". Std. includes increased face
amounts with premium class "Standard" or "Standard Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a Requested Increase.
Please note: A COLA increase alone will not trigger a change to the
next higher band.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VII. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
F. Riders Increased/Issued After Basic Contract
Spouse Insurance Benefit Commissions per $1,000* of Face Amount
<TABLE>
Male Female Male Female
Std./ Std./ Std./ Std./
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 2.52 1.56 49 11.16 7.68 5.88 4.56
17 2.64 1.56 50 11.64 8.04 6.12 4.80
18 2.76 1.68 51 12.60 8.76 6.48 5.16
19 2.76 1.68 52 13.20 9.24 6.72 5.40
20 2.88 1.92 1.80 1.32 53 14.16 10.08 7.08 5.76
21 3.00 1.92 1.80 1.44 54 14.16 10.20 7.08 5.76
22 3.00 2.04 1.92 1.44 55 15.24 11.04 7.56 6.12
23 3.12 2.04 1.92 1.44 56 15.96 11.64 7.80 6.48
24 3.24 2.16 1.92 1.56 57 17.28 12.72 8.28 6.96
25 3.36 2.16 2.04 1.56 58 18.00 13.32 8.64 7.20
26 3.48 2.28 2.16 1.68 59 19.44 14.64 9.12 7.68
27 3.60 2.40 2.16 1.68 60 20.28 15.36 9.48 8.16
28 3.72 2.40 2.28 1.80 61 20.28 15.48 9.48 8.16
29 3.84 2.52 2.40 1.80 62 21.72 16.80 10.20 8.88
30 4.08 2.64 2.52 1.92 63 21.72 16.80 10.20 8.88
31 4.20 2.76 2.64 1.92 64 22.68 17.76 10.68 9.36
32 4.44 2.88 2.76 2.04 65 24.36 19.20 11.52 10.20
33 4.56 2.88 2.88 2.04 66 24.96 19.80 11.76 10.44
34 4.68 3.00 2.88 2.16 67 26.04 20.76 12.36 11.04
35 4.92 3.12 3.00 2.28 68 27.36 22.08 12.96 11.76
36 5.16 3.36 3.12 2.28 69 27.24 22.08 12.96 11.76
37 5.40 3.48 3.24 2.40 70 27.72 22.56 13.32 12.12
38 5.64 3.60 3.36 2.52 71 28.20 23.28 13.68 12.48
39 6.00 3.84 3.60 2.76 72 27.84 23.04 13.68 12.48
40 6.36 4.08 3.72 2.88 73 27.36 22.80 13.56 12.48
41 6.84 4.56 3.96 3.00 74 27.60 23.28 13.92 12.84
42 7.08 4.68 4.08 3.12 75 28.68 24.48 14.64 13.68
43 7.68 5.16 4.32 3.36 76 28.32 24.36 14.64 13.80
44 8.04 5.40 4.56 3.48 77 27.84 24.00 14.64 13.80
45 8.64 5.76 4.80 3.72 78 27.24 23.52 14.52 13.68
46 9.12 6.12 5.04 3.84 79 27.12 23.52 14.52 13.68
47 9.84 6.60 5.28 4.08 80 26.16 22.92 14.40 13.56
48 10.32 6.96 5.52 4.32
* One-twelfth of the Spouse Insurance Benefit Commission on the portion of
the rider face amount remaining in force each month is paid monthly for
one year after the effective date on increases in face amount of the
rider and on riders issued after the basic contract. Age used is issue
age of the spouse or, for increases in face amount, attained age of the
spouse on the effective date of the increase. Smkr. includes riders with
face amounts/increased face amounts having premium class "Smoker" or
"Smoker Special"; Nsmkr. includes riders with face amounts/increased face
amounts having premium class "Nonsmoker" or "Nonsmoker Special". Std.
includes riders with face amounts/increased face amounts having premium
class "Standard" or "Standard Special".
CHILD INSURANCE BENEFIT COMMISSION PER $1,000 OF FACE AMOUNT
Commission is $2.76 per $1,000. One-twelfth of
the commission is paid monthly.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
VIII. ANNUITY CONTRACTS
A. SINGLE PREMIUM ANNUITY CONTRACTS
First Year Renewal
Commission Commissions
---------- -----------
1. Single Premium Immediate Annuity
a. Life Annuity 2.50% None
b. Fixed Period Installment Annuity
Tier One
(Fixed period: 5-9 yrs.) 1.00% None
Tier Two
(Fixed period: 10-14 yrs.) 1.75 None
Tier Three (Fixed
period: 15 or more yrs.) 2.50 None
2. Single Premium Deferred Annuity 3.00% None
The commission is a percentage of the single premium paid and
credited to the contract.
B. FLEXIBLE PREMIUM DEFERRED ANNUITY '89 CONTRACTS
VARIABLE ANNUITY CONTRACTS
Qualified (other than TSA) and Non-qualified
CONTRACT YEAR 1 SUCCEEDING YEARS
=============== ================
First Year Service
Commission Commission
---------- ----------
3% 3%
The commission is a percentage of all premium paid and credited to
the contract whenever paid and credited.
C. FLEXIBLE PREMIUM DEFERRED ANNUITY CONTRACTS -- TSA QUALIFIED
PRE-FPA '89 QUALIFIED
1. On Rollover Premium
3% of any premiums paid to and credited by the Society which are
transfers of distribution from other tax-qualified plans
(Rollover Premium).
2. On premiums not in excess of the Stipulated Annual Premium or
the premium paid during the first contract year, whichever is
less (excluding Rollover Premium).
CONTRACT YEAR 1 SUCCEEDING YEARS
=============== ==============================
1st Year Renewal Service
Age* Commission Commission Commission
--- ----------- ---------- ----------
0-59 6 Continuous at 1% 1%
60 and up 3 Continuous at 1% 1%
3. On premiums in excess of the Stipulated Annual Premium or the
premium paid in the first contract year, whichever is less
(excluding Rollover Premium).
CONTRACT YEAR 1 SUCCEEDING YEARS
======================== =========================
Special
Renewal Service Service Service
Age* Commission Commission Commission Commission**
--- ---------- ---------- ---------- ----------
0-59 1% 1% 2% 6%
60 and up 1 1 2 3
D. FLEXIBLE PREMIUM DEFERRED ANNUITY CONTRACTS -- NONQUALIFIED
(PRE-FPA '89)
1. On premiums not in excess of the Stipulated Annual Premium or
the premium paid during the first contract year, whichever is
less.
CONTRACT YEAR 1 SUCCEEDING YEARS
=============== ================
1st Year Service
Age* Commission Commission
--- ---------- ----------
0-59 3% 3%
60 and up 3 2
2. On premiums in excess of the Stipulated Annual Premium or the
premium paid in the first contract year, whichever is less.
CONTRACT YEAR 1 SUCCEEDING YEARS
=============== ===============================
Service Service Special Service
Age* Commission Commission Commission**
--- ---------- ---------- ----------
0-59 3% 3% 3%
60 and up 2 2% 3%
* Age of annuitant on contract anniversary prior to date of premium
payment for Service Commission. Age at issue for Renewal
Commission and 1st year Commission.
** Paid in lieu of any other Service Commission on premium paid to
and credited by the Society in a renewal contract year in excess
of the highest total premium paid in any prior contract year.
The total premium paid in the first contract year is the lesser
of the Stipulated Annual Premium and the premiums paid in that
year. Rollover premium is excluded from consideration in all
contract years.
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
IX. HEALTH INSURANCE
Commissions are a percentage of the premium due and payable on the
coverage during each year (excluding any extra premium paid for
aviation or temporary extra premium).
A. Health Contracts
Disability Income and BOE (1988 Series)
1st - 4th Continuous
Level Premium First Renewal Renewals
Contracts: DI/BOE Year Commission Thereafter
------------------ ---- ---------- ----------
Noncancellable - DI/BOE
Occ Classes 4A, 5A 50 10 3
Occ Classes 1A*, 2A, 3A 45 8 3
Guaranteed Renewable - DI/BOE
Occ Classes 4A, 5A 45 10 3
Occ Classes 1A*, 2A, 3A 40 8 3
*BOE available for Occ. Class 2A through 5A only.
Renewal Continuous
Step Rate First Commission Commission Renewals
Contracts: DI Year Until Step At Step Thereafter
-------------- ---- ---------- ------- ----------
Noncancellable-
All Classes 45 3 35** 3
Guaranteed Renewable-
All Classes 40 3 35** 3
** The commission at the step and the renewal commissions thereafter
are paid to the DR assigned at the time of the step.
<PAGE>
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INTENTIONALLY BLANK
<PAGE>
THIS PAGE IS
INTENTIONALLY BLANK
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
IX. HEALTH INSURANCE
Surrender Value:
Combined DI Contract and SV Rider
---------------------------------
Commissions for the SV product are calculated using Level Premium
Commission rates for the base contract and at least a 3% commission
rate for the surrender value rider. Blended commission rates are
listed below.
<TABLE>
Occ. Class 4A,5A Occ. Class 1A,2A,3A
================ ===================
1st-4th 1st-4th
First Year Renewal First Year Renewal
---------- ------- ---------- -------
Issue
Age NC GR NC&GR NC GR NC&GR
--- -- -- ----- -- -- -----
<S> <C> <C> <C> <C> <C> <C>
18-26 37 33 8 33 30 7
27 36 33 8 33 29 7
28 36 32 8 32 29 7
29 35 32 8 32 28 7
30 35 31 8 31 28 7
31 34 31 8 31 28 7
32 34 31 8 31 27 7
33 34 30 8 30 27 7
34 33 30 8 30 27 7
35 33 30 8 30 27 7
36 32 29 8 29 26 7
37 32 29 8 29 26 6
38 31 28 8 28 25 6
39 31 28 8 28 25 6
40 30 27 7 27 24 6
41 29 27 7 27 24 6
42 28 26 7 26 23 6
43 28 25 7 25 23 6
44 27 24 7 24 22 6
45 26 23 7 23 21 6
46 25 23 7 23 20 6
47 24 22 6 22 20 6
48 23 21 6 21 19 6
49 22 20 6 20 18 5
50 21 19 6 19 17 5
51 20 18 6 18 16 5
52 19 17 6 17 16 5
53 18 17 6 17 15 5
54 17 16 6 16 14 5
55 17 15 5 15 14 5
Renewals thereafter are continuous at 3%.
NC = Noncancellable Disability Income
GR = Guaranteed Renewable Disability Income
SV = Surrender Value
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
IX. HEALTH INSURANCE
CONTRACT YEAR 1 RENEWAL YEARS
=============== =============================
Continuous***
1st Renewal
First Year Renewal Commissions
Commission Commission Thereafter
---------- ---------- -----------
Disability Income (1980 Series)
Noncancellable -
Occ. Classes 4A,5A 50% l7% 5%
Occ. Classes 3A,2A 45 17 5
Guaranteed Renewable
Occ. Classes 2A,1A 40 10 4
Business Overhead (1980 Series) 45 17 5
Long Term Care (1992 Series)* 35** 5 3
Long Term Care (1990 Series)* 35** 5 5***
Long Term Care (1987 Series) 35 5 5***
Family Hospital
Issue Ages 60 and Under 40 10 4
Issue Age 61 35 10 4
Issue Age 62 30 10 4
Issue Age 63 25 10 4
Issue Age 64 20 10 4
MagniMed
Issue Ages 60 and Under 15 None 7
Issue Age 61 13 None 7
Issue Age 62 11 None 7
Issue Age 63 9 None 7
Issue Age 64 7 None 7
MagniMed ElectaCare
Issue Ages 60 and Under 20 None 5
Issue Age 61 18 None 5
Issue Age 62 15 None 5
Issue Age 63 12 None 5
Issue Age 64 9 None 5
InterMed 15 None None
InterMed ElectaCare 15 None None
SuppliMed - 83 Series 15 None 5
SupliMed, SuppliMed Plus,
and SuppliMed Premiere 20 None 3
* State variations are given in the Amendment section at the end of
this Schedule.
** The Long Term Care (1992 and 1990 Series) First Year Commission Rate
for issue ages higher than 70 reduces 1% per year until it reaches 21%
at issue age 84. (The first year commission percent = 35-(Issue
Age - 70) for issue ages higher than 70.)
*** Exception: Renewal commissions for Long Term Care (1987 and 1990
Series) are paid through renewal year 4; zero thereafter.
B. Health Insurance Riders
The First Year, Renewal and Service Commission rates for any Health
Insurance riders, except the Maternity Benefit rider, attached to a
Health Insurance contract will be the same as the corresponding
commission rates for the Health Insurance contract. No commission
is paid on the Maternity Benefit rider.
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT I
X. SUPPLEMENTAL BENEFITS
Commission rates for supplemental benefits issued with the basic
contract will be the same as the corresponding commission rates for
the basic contract.
Commission rates for supplemental benefits issued after the basic
contract will be determined by the Society.
XI. SETTLEMENT OPTIONS
The commission is a percentage of the proceeds applied under one of
the following Income Settlement Options.
First Year
Commission
----------
A. Current Life Income Settlement Options 2.50%
B. Non-withdrawable Fixed Period Settlement Options
Tier One (Fixed period: 5 through 9 yrs.) 1.00%
Tier Two (Fixed period: 10 through 14 yrs.) 1.75
Tier Three (Fixed period: 15 or more yrs.) 2.50
No commission is payable on amounts left on Deposit or on amounts
applied under withdrawable Fixed Amount or Fixed Period Settlement
Options.
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT IA
TARGET PREMIUMS
I. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE - SERIES II
A. Basic Contract* - Highest Total Face Amount** Less Than $250,000
<TABLE>
Issue Male Female Issue Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 3.00 3.00 38 9.60 7.80 7.56 6.60
1 3.00 3.00 39 10.20 8.16 8.04 7.08
2 3.00 3.00 40 10.80 8.64 8.52 7.44
3 3.00 3.00 41 11.76 9.24 9.24 7.80
4 3.00 3.00 42 12.84 9.84 9.84 8.28
5 3.00 3.00 43 13.80 10.56 10.56 8.64
6 3.00 3.00 44 14.88 11.16 11.16 9.12
7 3.00 3.00 45 15.84 11.76 11.88 9.48
8 3.00 3.00 46 17.04 12.60 12.72 10.08
9 3.00 3.00 47 18.36 13.44 13.56 10.68
10 3.00 3.00 48 19.56 14.40 14.28 11.40
11 3.12 3.00 49 20.88 15.24 15.12 12.00
12 3.24 3.00 50 22.08 16.08 15.96 12.60
13 3.24 3.12 51 23.76 17.40 17.16 13.56
14 3.36 3.12 52 25.44 18.72 18.36 14.52
15 3.48 3.12 53 27.24 19.92 19.56 15.60
16 3.72 3.12 54 28.92 21.24 20.76 16.56
17 3.84 3.24 55 30.60 22.56 21.96 17.52
18 4.08 3.24 56 32.76 24.36 23.52 18.96
19 4.20 3.36 57 34.92 26.28 25.20 20.28
20 4.44 3.96 3.36 3.00 58 37.50 28.08 26.76 21.72
21 4.56 4.08 3.48 3.12 59 39.36 30.00 28.44 23.04
22 4.80 4.20 3.72 3.36 60 41.52 31.80 30.00 24.48
23 4.92 4.44 3.84 3.48 61 43.92 34.20 32.28 26.88
24 5.16 4.56 4.08 3.72 62 46.32 36.60 34.68 29.16
25 5.28 4.68 4.20 3.84 63 48.84 39.00 36.96 31.56
26 5.52 4.80 4.32 3.96 64 51.24 41.40 39.36 33.84
27 5.76 5.04 4.44 4.08 65 53.64 43.80 41.64 36.24
28 5.88 5.16 4.68 4.20 66 56.76 47.16 44.04 38.76
29 6.12 5.40 4.80 4.32 67 59.76 50.52 46.32 41.28
30 6.36 5.52 4.92 4.44 68 62.88 53.88 48.72 43.68
31 6.60 5.76 5.16 4.68 69 65.88 57.24 51.00 46.20
32 6.84 5.88 5.40 4.80 70 69.00 60.60 53.40 48.72
33 7.20 6.12 5.52 5.04 71 73.20 64.92 56.40 51.84
34 7.44 6.24 5.76 5.16 72 77.40 69.36 59.40 55.08
35 7.68 6.48 6.00 5.40 73 81.60 73.68 62.52 58.20
36 8.28 6.96 6.48 5.76 74 85.80 78.12 65.52 61.44
37 8.88 7.32 6.96 6.24 75 90.00 82.44 68.52 64.56
* Smkr. includes premium class "Smoker" and "Smoker Special"; Nsmkr.
includes premium class "Nonsmoker" and "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a requested increase.
Add $31.56 per contract to cover the monthly expense.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT IA
TARGET PREMIUMS
I. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE - SERIES II
B. Basic Contract* - Highest Total Face Amount** More Than $249,999
<TABLE>
Issue Male Female Issue Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
============================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 2.88 2.40 46 13.20 9.72 9.84 7.80
17 3.00 2.52 47 14.16 10.44 10.44 8.28
18 3.24 2.52 48 15.12 11.16 11.04 8.88
19 3.24 2.64 49 16.08 11.76 11.64 9.24
20 3.48 3.12 2.64 2.40 50 17.04 12.48 12.36 9.72
21 3.60 3.24 2.76 2.40 51 18.36 13.44 13.20 10.44
22 3.72 3.24 2.88 2.64 52 19.68 14.40 14.16 11.28
23 3.84 3.48 3.00 2.76 53 21.00 15.36 15.12 12.00
24 4.08 3.60 3.24 2.88 54 22.32 16.44 16.08 12.84
25 4.08 3.60 3.24 3.00 55 23.64 17.40 16.92 13.56
26 4.32 3.72 3.36 3.12 56 25.32 18.84 18.12 14.64
27 4.44 3.96 3.48 3.24 57 27.00 20.28 19.44 15.72
28 4.56 4.08 3.60 3.24 58 28.68 21.72 20.64 16.80
29 4.80 4.20 3.72 3.36 59 30.36 23.16 21.96 17.76
30 4.92 4.32 3.84 3.48 60 32.04 24.60 23.16 18.96
31 5.16 4.44 4.08 3.60 61 33.96 26.40 24.96 20.76
32 5.28 4.56 4.20 3.72 62 35.76 28.32 26.88 22.56
33 5.64 4.80 4.32 3.96 63 37.80 30.24 28.56 24.48
34 5.76 4.80 4.44 4.08 64 39.36 31.80 30.24 26.04
35 6.00 5.04 4.68 4.20 65 41.52 33.96 32.28 28.08
36 6.48 5.40 5.04 4.44 66 43.68 36.24 33.84 29.88
37 6.84 5.64 5.40 4.80 67 45.96 38.88 35.64 31.80
38 7.44 6.00 5.88 5.16 68 48.84 41.76 37.80 33.96
39 7.92 6.36 6.24 5.52 69 50.28 43.80 39.00 35.28
40 8.40 6.72 6.60 5.76 70 52.68 46.32 40.80 37.20
41 9.12 7.20 7.20 6.00 71 57.00 50.52 43.92 40.32
42 9.96 7.68 7.68 6.48 72 59.28 53.04 45.48 42.12
43 10.68 8.16 8.16 6.72 73 62.52 56.52 47.88 44.64
44 11.52 8.64 8.64 7.08 74 65.88 60.00 50.28 47.16
45 12.24 9.12 9.24 7.32 75 69.12 63.36 52.68 49.68
* Smkr. includes premium class "Smoker" and "Smoker Special"; Nsmkr.
includes premium class "Nonsmoker" and "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a requested increase.
Add $31.56 per contract to cover the monthly expense.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT IA
TARGET PREMIUMS
II. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III, IV AND JUVENILE-ISSUE
A. Basic Contract* - Highest Total Face Amount** of
Series III and IV Less Than $250,000
(No limit on face amount of Juvenile-Issue Contract)
<TABLE>
Issue Male Female Issue Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 2.52 2.52 41 11.76 9.24 9.24 7.80
1 2.52 2.52 42 12.72 9.84 9.84 8.28
2 2.52 2.52 43 13.68 10.56 10.56 8.64
3 2.52 2.52 44 14.88 11.16 11.16 9.12
4 2.52 2.52 45 15.84 11.76 11.88 9.48
5 2.52 2.52 46 17.04 12.60 12.72 10.08
6 2.52 2.52 47 18.12 13.44 13.56 10.68
7 2.52 2.52 48 19.20 14.40 14.28 11.40
8 2.52 2.52 49 20.40 15.24 15.12 12.00
9 2.52 2.52 50 21.72 16.08 15.96 12.60
10 2.52 2.52 51 23.28 17.04 17.16 13.56
11 2.64 2.52 52 24.96 18.00 18.36 14.52
12 2.76 2.52 53 26.76 19.20 19.56 15.60
13 2.88 2.64 54 28.92 20.40 20.76 16.56
14 3.12 2.76 55 30.60 21.84 21.96 17.52
15 3.36 2.88 56 32.76 23.40 23.52 18.96
16 3.60 3.00 57 34.92 25.08 25.20 20.28
17 3.84 3.12 58 37.20 27.12 26.76 21.72
18 4.08 3.24 59 39.36 29.28 28.44 23.04
19 4.20 3.36 60 41.52 31.80 30.00 24.48
20 4.44 3.96 3.36 3.00 61 43.92 34.20 32.28 26.88
21 4.56 4.08 3.48 3.12 62 46.32 36.60 34.68 29.16
22 4.80 4.20 3.72 3.36 63 48.84 39.00 36.96 31.56
23 4.92 4.44 3.84 3.48 64 51.24 41.40 39.36 33.84
24 5.16 4.56 4.08 3.72 65 53.64 43.80 41.64 36.24
25 5.28 4.68 4.20 3.84 66 56.76 47.16 44.04 38.76
26 5.52 4.80 4.32 3.96 67 59.76 50.52 46.32 41.28
27 5.76 5.04 4.44 4.08 68 62.88 53.88 48.72 43.68
28 5.88 5.16 4.68 4.20 69 65.88 57.24 51.00 46.20
29 6.12 5.40 4.80 4.32 70 69.00 60.60 53.40 48.72
30 6.36 5.52 4.92 4.44 71 73.20 64.92 56.40 51.84
31 6.60 5.76 5.16 4.68 72 77.40 69.36 59.40 55.08
32 6.84 5.88 5.40 4.80 73 81.60 73.68 62.52 58.20
33 7.20 6.12 5.52 5.04 74 85.80 78.12 65.52 61.44
34 7.44 6.24 5.76 5.16 75 90.00 82.44 68.52 64.56
35 7.68 6.48 6.00 5.40 76 94.20 86.88 71.64 67.80
36 8.28 6.96 6.48 5.76 77 98.40 91.20 74.64 70.92
37 8.88 7.32 6.96 6.24 78 102.60 95.64 77.64 74.16
38 9.60 7.80 7.56 6.60 79 106.80 99.96 80.64 77.28
39 10.20 8.16 8.04 7.08 80 111.00 104.28 83.64 80.40
40 10.80 8.64 8.52 7.44
* Smkr. includes premium class "Smoker" and "Smoker Special"; Nsmkr.
includes premium class "Nonsmoker" and "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a requested increase.
Add $22.08 per Juvenile-Issue contract and $28.32 per "Series III or IV"
contract to cover the monthly administrative charge.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT IA
TARGET PREMIUMS
II. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III AND IV
B. Basic Contract* - Highest Total Face Amount** More
Than $249,999 and Less Than $500,000
<TABLE>
Issue Male Female Issue Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 3.48 3.12 2.64 2.40 51 18.00 13.32 13.20 10.44
21 3.60 3.24 2.76 2.40 52 19.32 14.04 14.16 11.28
22 3.72 3.24 2.88 2.64 53 20.76 14.88 15.12 12.00
23 3.84 3.48 3.00 2.76 54 22.20 15.84 16.08 12.84
24 4.08 3.60 3.24 2.88 55 23.64 16.92 16.92 13.56
25 4.08 3.60 3.24 3.00 56 25.32 18.24 18.12 14.64
26 4.32 3.72 3.36 3.12 57 27.00 20.28 19.44 15.72
27 4.44 3.96 3.48 3.24 58 28.68 21.72 20.64 16.80
28 4.56 4.08 3.60 3.24 59 30.36 22.92 21.96 17.76
29 4.80 4.20 3.72 3.36 60 32.04 24.60 23.16 18.96
30 4.92 4.32 3.84 3.48 61 33.96 26.40 24.96 20.76
31 5.16 4.44 4.08 3.60 62 35.76 28.32 26.88 22.56
32 5.28 4.56 4.20 3.72 63 37.80 30.24 28.56 24.48
33 5.64 4.80 4.32 3.96 64 39.36 31.80 30.24 26.04
34 5.76 4.80 4.44 4.08 65 41.52 33.96 32.28 28.08
35 6.00 5.04 4.68 4.20 66 43.68 36.24 33.84 29.88
36 6.48 5.40 5.04 4.44 67 45.96 38.88 35.64 31.80
37 6.84 5.64 5.40 4.80 68 48.84 41.76 37.80 33.96
38 7.44 6.00 5.88 5.16 69 50.28 43.80 39.00 35.28
39 7.92 6.36 6.24 5.52 70 52.68 46.32 40.80 37.20
40 8.40 6.72 6.60 5.76 71 57.00 50.52 43.92 40.32
41 9.12 7.20 7.20 6.00 72 59.28 53.04 45.48 42.12
42 9.96 7.68 7.68 6.48 73 62.52 56.52 47.88 44.64
43 10.68 8.16 8.16 6.72 74 65.88 60.00 50.28 47.16
44 11.52 8.64 8.64 7.08 75 69.12 63.36 52.68 49.68
45 12.24 9.12 9.24 7.32 76 72.48 66.84 55.08 52.20
46 13.08 9.72 9.84 7.80 77 75.72 70.20 57.48 54.72
47 13.92 10.44 10.44 8.28 78 79.08 73.68 59.88 57.24
48 14.88 11.16 11.04 8.88 79 82.32 77.04 62.28 59.76
49 15.84 11.76 11.64 9.24 80 85.56 80.40 64.56 62.16
50 16.80 12.48 12.36 9.72
* Smkr. includes premium class "Smoker" and "Smoker Special"; Nsmkr.
includes premium class "Nonsmoker" and "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a requested increase.
Add $28.32 per contract to cover the monthly administrative charge.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT IA
TARGET PREMIUMS
II. FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III AND IV
C. Basic Contract* - Highest Total Face Amount** More Than $499,999
<TABLE>
Issue Male Female Issue Male Female
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 2.64 2.16 1.80 1.56 51 12.24 9.00 9.00 7.08
21 2.64 2.28 1.92 1.68 52 13.20 9.60 9.60 7.68
22 2.64 2.40 2.04 1.80 53 14.16 10.20 10.20 8.16
23 2.64 2.40 2.16 1.92 54 15.24 10.92 10.92 8.76
24 2.76 2.52 2.28 2.04 55 16.32 11.64 11.64 9.36
25 2.76 2.52 2.28 2.04 56 17.52 12.60 12.48 10.08
26 2.88 2.64 2.40 2.16 57 18.72 13.68 13.32 10.80
27 3.00 2.76 2.52 2.28 58 20.04 14.88 14.28 11.52
28 3.12 2.76 2.52 2.28 59 21.36 16.08 15.36 12.36
29 3.24 2.88 2.64 2.40 60 22.56 17.28 16.32 13.32
30 3.36 2.88 2.64 2.40 61 23.88 18.60 17.52 14.52
31 3.48 3.00 2.76 2.52 62 25.20 19.80 18.84 15.84
32 3.60 3.12 2.88 2.64 63 26.52 21.12 20.16 17.16
33 3.72 3.12 2.88 2.64 64 27.96 22.56 21.48 18.60
34 3.96 3.24 3.00 2.76 65 29.40 24.00 22.80 19.92
35 4.08 3.36 3.12 2.88 66 30.96 25.68 24.12 21.24
36 4.32 3.60 3.36 3.12 67 32.40 27.36 25.20 22.56
37 4.68 3.84 3.60 3.36 68 34.08 29.28 26.52 23.88
38 4.92 4.08 3.84 3.60 69 36.00 31.20 27.96 25.32
39 5.28 4.32 4.20 3.84 70 38.16 33.60 29.52 27.00
40 5.64 4.56 4.44 3.96 71 40.68 36.24 31.44 28.92
41 6.12 4.92 4.80 4.20 72 43.56 39.24 33.48 31.08
42 6.60 5.16 5.16 4.32 73 46.80 42.48 35.88 33.48
43 7.20 5.52 5.52 4.56 74 50.52 46.20 38.64 36.24
44 7.80 5.76 6.00 4.80 75 54.72 50.16 41.64 39.24
45 8.28 6.12 6.24 4.92 76 58.08 53.52 44.16 41.76
46 8.88 6.60 6.72 5.28 77 61.44 56.88 46.56 44.16
47 9.36 6.96 7.08 5.52 78 64.68 60.12 48.96 46.68
48 9.96 7.44 7.44 5.88 79 68.04 63.48 51.36 49.08
49 10.56 7.92 7.92 6.24 80 71.28 66.72 53.76 51.48
50 11.28 8.40 8.40 6.60
* Smkr. includes premium class "Smoker" and "Smoker Special"; Nsmkr.
includes premium class "Nonsmoker" and "Nonsmoker Special".
** The Highest Total Face Amount is the greater of 1) the Initial Face
Amount or 2) the Total Face Amount after a requested increase.
Add $28.32 per contract to cover the monthly administrative charge.
</TABLE>
<PAGE>
SCHEDULE OF COMMISSION RATES
EXHIBIT IA
TARGET PREMIUMS
III. RIDERS AND SUPPLEMENTAL BENEFITS
Target Premium equals the annual cost of the rider or supplemental
benefit divided by 0.95.
IV. SPECIAL CLASS
Target Premium for a special class table rating equals the extra
annual cost for the table rating divided by 0.95.
Premiums paid for aviation coverage and temporary extra premiums are
not commissionable.
<PAGE>
EXHIBIT IA
SCHEDULE OF COMMISSION RATES
V. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE RIDERS
TARGET PREMIUMS
A. SPOUSE RIDER
<TABLE>
Male Female Male Female
Issue Std./ Std./ Issue Std./ Std./
Age Smkr. Nsmkr. Smkr. Nsmkr. Age Smkr. Nsmkr. Smkr. Nsmkr.
===========================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 5.40 3.24 49 23.76 16.32 12.48 9.72
17 5.52 3.36 50 24.84 17.16 12.96 10.20
18 5.76 3.48 51 26.76 18.72 13.68 10.92
19 5.88 3.60 52 27.96 19.68 14.28 11.40
20 6.12 4.08 3.72 2.88 53 30.24 21.48 15.12 12.24
21 6.36 4.20 3.84 3.00 54 31.56 22.56 15.72 12.72
22 6.48 4.32 3.96 3.12 55 33.96 24.60 16.68 13.68
23 6.72 4.44 4.08 3.12 56 35.52 25.92 17.28 14.28
24 6.96 4.56 4.20 3.24 57 38.28 28.20 18.36 15.36
25 7.08 4.68 4.44 3.36 58 39.96 29.64 19.08 15.96
26 7.44 4.80 4.56 3.48 59 43.08 32.40 20.28 17.16
27 7.68 5.04 4.68 3.60 60 45.00 34.08 21.12 18.12
28 7.92 5.16 4.92 3.72 61 47.04 35.88 22.08 18.96
29 8.28 5.40 5.04 3.84 62 50.64 39.12 23.76 20.64
30 8.64 5.52 5.28 3.96 63 52.92 41.04 24.84 21.72
31 9.00 5.76 5.52 4.20 64 55.32 43.20 26.16 22.80
32 9.36 6.00 5.76 4.32 65 59.52 46.92 28.08 24.84
33 9.72 6.24 6.00 4.44 66 62.28 49.44 29.40 26.16
34 10.08 6.48 6.12 4.56 67 65.16 51.96 30.96 27.60
35 10.56 6.72 6.36 4.80 68 70.20 56.64 33.36 30.00
36 10.92 7.08 6.72 4.92 69 73.56 59.64 35.16 31.68
37 11.40 7.32 6.96 5.16 70 77.04 62.76 37.08 33.60
38 11.88 7.68 7.20 5.40 71 82.92 68.40 40.20 36.72
39 12.84 8.28 7.68 5.76 72 86.88 72.12 42.60 39.00
40 13.44 8.76 7.92 6.00 73 91.08 75.84 45.00 41.52
41 14.52 9.60 8.40 6.36 74 98.52 83.04 49.56 45.96
42 15.12 9.96 8.76 6.60 75 106.20 90.72 54.36 50.88
43 16.32 10.92 9.24 7.08 76 111.00 95.28 57.60 54.12
44 17.04 11.40 9.60 7.32 77 115.92 99.96 61.08 57.36
45 18.48 12.36 10.32 7.92 78 120.84 104.76 64.56 60.84
46 19.44 12.96 10.68 8.16 79 125.88 109.68 68.28 64.44
47 21.00 14.16 11.28 8.76 80 130.92 114.84 72.12 68.04
48 21.96 14.88 11.76 9.12
* Smkr. includes premium class "Smoker" or "Smoker Special";
Nsmkr. includes premium class "Nonsmoker" or "Nonsmoker Special".
Std. includes premium class "Standard" or "Standard Special".
CHILD RIDER
TARGET PREMIUM EQUALS $5.76 PER $1,000 OF FACE AMOUNT.
<PAGE>
DISTRICT REPRESENTATIVE AGREEMENT
LUTHERAN BROTHERHOOD
Minneapolis, Minnesota
AMENDMENT TO EXHIBIT I, IA
SCHEDULE OF COMMISSION RATES
FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE
SERIES III, IV, AND JUVENILE-ISSUE
Exhibit I, Section VI and Exhibit IA, Section II
1. All columns headed by "Male" are amended to read "Male/Unisex**"
2. Add a footnote which reads:
**Unisex rates are used for contracts which prohibit discrimination on
the basis of gender.
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Exhibit I, Section VII. C1,C2,D1,D2,E1,E2 -- Basic Contract
C3, F-Spouse Insurance Benefit (except in Montana)
and Exhibit IA, Section V.
1. All columns headed by "Male" are amended to read "Male/Unisex**"
2. Add a footnote which reads:
**Unisex rates are used for contracts which prohibit discrimination on
the basis of gender.
C3, F-SPOUSE INSURANCE BENEFIT: MONTANA ONLY
1. All columns headed by "Female" are amended to read "Female/Unisex**"
2. Add a footnote which reads:
**Unisex rates are used for contracts which prohibit discrimination on
the basis of gender.
<PAGE>
DISTRICT REPRESENTATIVE AGREEMENT
LUTHERAN BROTHERHOOD
Minneapolis, Minnesota
SCHEDULE OF COMMISSION RATES
AMENDMENT TO EXHIBIT I
Section VIII. HEALTH INSURANCE
The following rates apply to Long Term Care (1992 Series) contracts sold to
residents of the indicated state.
INDIANA WISCONSIN MICHIGAN
COMMISSIONS COMMISSIONS COMMISSIONS
Continuous Continuous Continuous
Issue Renewal Renewal Renewal
Age Year 1 Year 2+ Year 1 Year 2+ Year 1-3 Year 4+
--- ------ ------- ------ ------- -------- -------
50-71 18% 9% 24% 7% 18% 3%
72 18 9 24 7 17 3
73 17 9 23 7 17 3
74 16 9 23 7 16 3
75 16 9 23 6 16 3
76 16 8 23 6 16 3
77 16 8 23 6 15 3
78 16 8 22 6 15 3
79 16 8 21 6 14 3
80 15 8 20 6 14 3
81 15 8 20 5 14 3
82 14 8 20 5 13 3
83 14 7 20 5 13 3
84 14 7 19 5 12 3
<PAGE>
DISTRICT REPRESENTATIVE AGREEMENT
LUTHERAN BROTHERHOOD
Minneapolis, Minnesota
SCHEDULE OF COMMISSION RATES
AMENDMENT TO EXHIBIT I
Section VIII. HEALTH INSURANCE
The following rates apply to Long Term Care (1990 Series) contracts sold to
residents of the indicated state.
Commissions Commissions
MICHIGAN Issue Ages Years 1,2&3 Years 4&5
---------- -------------- -----------
50-70 17% 5%
71-73 16 5
74-76 15 5
77-79 14 5
80-82 13 5
82-84 12 5
1st Year Commissions
WISCONSIN Issue Ages Commissions Years 2,3,4,5&6
---------- ----------- -----------------
50-70 27% 7%
71 26 7
72 25 7
73-74 24 7
75-76 24 6
77 23 6
78 22 6
79 21 6
80-81 20 6
82-83 20 5
84 19 5
1st Year Commissions
INDIANA Issue Ages Commissions Years 2,3,4,5&6
---------- ----------- -----------------
50-70 18% 10%
71-72 18 9
73 17 9
74-75 16 9
76-77 16 8
78-79 15 8
80 14 8
81-82 14 7
83-84 13 7
<PAGE>
DISTRICT REPRESENTATIVE AGREEMENT
LUTHERAN BROTHERHOOD
Minneapolis, Minnesota
SCHEDULE OF COMMISSION RATES
AMENDMENT TO EXHIBIT I
Section VIII. HEALTH INSURANCE
The following rates apply to Long Term Care (1992 Series) contracts sold to
residents of the indicated state.
DELAWARE
COMMISSIONS
Issue
Age Year 1 Year 2 Year 3 Year 4 Year 5+
--- ------ ------ ------ ------ -------
50-72 16% 16% 16% 8% 3%
73 16 16 16 5 3
74 16 16 16 3 3
75 16 16 13 3 3
76 16 16 11 3 3
77 16 16 10 3 3
78 16 16 9 3 3
79 16 16 7 3 3
80 16 16 5 3 3
81 16 16 4 3 3
82 16 16 3 3 3
83 16 13 3 3 3
84 16 12 3 3 3
<PAGE>
THIS PAGE IS
INTENTIONALLY BLANK
#20763
</TABLE>
<PAGE>
EXHIBIT 1.A5(a)
Standard face page with Return of
Investment Experience provision
LUTHERAN
[LOGO] 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. We will
pay you the Maturity Proceeds if the Insured is living on the Maturity
* Date (see page 3). We will pay the Death Proceeds (see Section 2.4) to
* the beneficiary upon receiving proof that the death of the Insured
occurred before the Maturity Date. Maturity Proceeds and Death Proceeds
will be paid 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 a telegram or
* mailing or delivering written notice to Lutheran Brotherhood, 625 Fourth
Avenue South, Minneapolis, MN 55415 or to the representative through
whom you bought it, and (2) returning the contract. Notice is 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 the sum of: (1) The Accumulated Value on the day the contract is
first received by us or our representative; (2) The Premium Payment
Charges and Percent of Premium Charges deducted; (3) The Monthly
Deductions made; and (4) The amount attributable to this contract for
the risk charges and taxes, if any, deducted from the Variable Account
and for advisory fees charged against the net asset value in the Fund
portfolios.
Death Proceeds payable at death prior to Maturity Date.
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 /s/ROBERT P. GANDRUD [THE WORD-SAMPLE-IS STAMPED UNDER SIGNATURE]
- ----------------------------------------------------------------------------
Secretary /s/DAVID J. LARSON [THE WORD-SAMPLE-IS STAMPED UNDER SIGNATURE]
============================================================================
INSURED: JOHN DOE AGE: 35 SEX: MALE
CONTRACT NUMBER: LV1234567 DATE OF ISSUE: OCTOBER 1, 1993
INITIAL FACE AMOUNT: $50,000
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 Settlement Provisions
Section 13 Dividends
Additional Benefits, Amendments, Application
- ----------------------------------------------------------------------------
INDEX
- ----------------------------------------------------------------------------
Section
Accumulated Value .................................................... 6
Allocation of Net Premiums ........................................... 9
Annual Report ........................................................ 2
Assignment ........................................................... 3
Beneficiary .......................................................... 11
Cash Surrender Value ................................................. 6
Change of Death Benefit Option ....................................... 5
Change of Investment Policy .......................................... 9
Continuation of Insurance ............................................ 6
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
Maturity Proceeds .................................................... 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 ................................................... 12
Suicide .............................................................. 2
Surrender ............................................................ 6
Cash Surrender Value ............................................... 6
Partial Surrender .................................................. 6
Full Surrender ..................................................... 6
Termination .......................................................... 2
Transfer Among Subaccounts ........................................... 9
Unit Value ........................................................... 9
Variable Account ..................................................... 9
<PAGE>
Adult VUL (Issue ages GREATER THAN 20)
with no Additional Benefits
LUTHERAN For information about this contract,
[LOGO] BROTHERHOOD consult your Lutheran Brotherhood
625 Fourth Avenue South Representative or write to us at our
Minneapolis, Minnesota 55415 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 96
MATURITY DATE: OCTOBER 1, 2054
PREMIUM CLASS: NONSMOKER
COVERAGE MAY TERMINATE PRIOR TO MATURITY DATE. 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 LESS THAN THE
MONTHLY DEDUCTION REQUIRED. INVESTMENT PERFORMANCE OR PAYMENT OF PLANNED
ANNUAL PREMIUMS MAY NOT BE SUFFICIENT TO CONTINUE COVERAGE TO MATURITY
DATE.
- ----------------------------------------------------------------------------
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: OCTOBER 1, 1993
INITIAL FACE AMOUNT: $50,000
<PAGE>
Date of Issue: OCTOBER 1, 1993 Contract Number: LV1234567
INSURED: JOHN DOE
AGE: 35 SEX: MALE FLEXIBLE PREMIUM
INITIAL FACE AMOUNT: $50,000 VARIABLE LIFE INSURANCE
============================================================================
CONTRACT CHARGES
MONTHLY ADMINISTRATIVE CHARGES
BASIC CHARGE $4.00 PER MONTH
INITIAL CHARGE $0.04 PER $1,000 OF FACE AMOUNT, CHARGED
IN FIRST 120 MONTHLY DEDUCTIONS ONLY
PARTIAL SURRENDER CHARGE $25.00 OR 2% OF AMOUNT SURRENDERED, IF LESS
PERCENT OF PREMIUM CHARGE 5.0% OF EACH PREMIUM
CURRENT CHARGE MAXIMUM CHARGE
PREMIUM PROCESSING CHARGE
AUTOMATIC PAYMENT PLANS $ 0.50 PER PAYMENT $ 1.00 PER PAYMENT
ALL OTHER PAYMENTS $ 1.00 PER PAYMENT $ 2.00 PER PAYMENT
TRANSFER CHARGE $10.00 PER TRANSFER $20.00 PER TRANSFER
(FOR EACH TRANSFER IN EXCESS
OF TWO IN A CONTRACT YEAR)
CURRENT PREMIUM PROCESSING CHARGES AND TRANSFER 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
THEREAFTER 0.00 0.00
# 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.
INITIAL MONTHLY
BEGINNING COST OF ADMINISTRATIVE
ON CONTRACT ATTAINED INSURANCE CHARGE FOR
ANNIVERSARY AGE RATE* INCREASES#
OCT 1,
1993 35 $ 0.14 $ 0.04
1994 36 0.15 0.04
1995 37 0.16 0.04
1996 38 0.17 0.04
1997 39 0.18 0.04
1998 40 0.19 0.05
1999 41 0.21 0.05
2000 42 0.22 0.05
2001 43 0.24 0.05
2002 44 0.26 0.05
2003 45 0.28 0.05
2004 46 0.31 0.05
2005 47 0.33 0.05
2006 48 0.36 0.05
2007 49 0.39 0.05
2008 50 0.42 0.06
2009 51 0.46 0.06
2010 52 0.51 0.06
2011 53 0.56 0.06
2012 54 0.62 0.06
2013 55 0.68 0.06
2014 56 0.75 0.06
2015 57 0.82 0.06
2016 58 0.91 0.06
2017 59 1.00 0.06
2018 60 1.10 0.07
2019 61 1.22 0.07
2020 62 1.35 0.07
2021 63 1.50 0.07
2022 64 1.67 0.07
2023 65 1.85 0.07
2024 66 2.05 0.07
2025 67 2.26 0.07
2026 68 2.49 0.07
2027 69 2.74 0.07
2028 70 3.03 0.07
2029 71 3.36 0.07
2030 72 3.74 0.07
2031 73 4.17 0.07
2032 74 4.64 0.07
2033 75 5.15 0.07
2034 76 5.68 0.07
2035 77 6.24 0.07
2036 78 6.82 0.07
2037 79 7.46 0.07
2038 80 8.15
2039 81 8.93
2040 82 9.81
2041 83 10.79
2042 84 11.84
2043 85 12.95
2044 86 14.09
2045 87 15.26
2046 88 16.44
2047 89 17.65
2048 90 18.92
2049 91 20.26
2050 92 21.73
2051 93 23.47
2052 94 25.81
2053 95 29.32
* MAXIMUM MONTHLY COST PER $1,000 INSURANCE FOR NONSMOKER PREMIUM CLASS,
BASED ON COMMISSIONERS 1980 STANDARD ORDINARY MORTALITY TABLE FOR
NONSMOKERS.
# 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 120 MONTHLY DEDUCTIONS ON OR AFTER THE EFFECTIVE DATE OF THE
INCREASE.
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 the LB Series Fund, Inc. Subaccounts
* of the Variable Account and the portfolios in which they invest
are as follows:
GROWTH SUBACCOUNT -- Amounts credited to this subaccount
are invested in the Growth
Portfolio. This portfolio invests
primarily in equity securities.
HIGH YIELD SUBACCOUNT -- Amounts credited to this subaccount
are invested in the High Yield
Portfolio. This portfolio invests
primarily in high yield securities.
INCOME SUBACCOUNT -- Amounts credited to this subaccount
are invested in the Income
Portfolio. This portfolio invests
primarily in fixed income
securities.
MONEY MARKET SUBACCOUNT -- Amounts credited to this subaccount
are invested in the Money Market
Portfolio. This portfolio invests
primarily in money market
instruments.
* The LB Series Fund, Inc. receives investment advice for each
* portfolio from Lutheran Brotherhood. As investment advisor,
* Lutheran Brotherhood charges the LB Series Fund, Inc. a daily
* investment advisory fee equal to an annual rate of 0.04% of the
* aggregate average daily net assets of the LB Series Fund, Inc.
For a complete description of the Variable Account and the
* designated portfolios, please refer to the current prospectus
* for the LB Series Fund, Inc.
CONTRACT NUMBER: LV1234567
============================================================================
1. DEFINITIONS
============================================================================
APPLICATION. The application(s) and all amendments and supplements.
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 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 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, except the day after Thanksgiving Day and the
day before Christmas Day, that the New York Stock Exchange is open for
trading or there is sufficient trading in a Fund portfolio's securities
to affect the 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; and
* 3) The Articles of Incorporation and Bylaws of the Society which
* are in force on the Date of Issue.
2.2 CHANGE OF CONTRACT. No change in this contract is valid unless it
is made in writing and signed by our President and Secretary.
2.3 MATURITY PROCEEDS. The amount payable if the Insured is living on
the Maturity Date will be the Accumulated Value less the sum of:
1) Any Debt; and
2) The amount, if any, needed to cover Monthly Deductions
through the Maturity Date.
2.4 DEATH PROCEEDS. The amount payable on the Insured's death before
the Maturity Date 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.
2.5 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 Administrative Charge for the
increase included in any Monthly Deduction(s) made.
2.6 STATEMENTS IN THE APPLICATION. We will not use any statement to
contest a claim or to have this contract declared invalid unless
the statement is contained in the Application. All statements made
in the Application are representations, not warranties.
2.7 INCONTESTABILITY. 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 5.3, 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.
2.8 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.
2.9 EXEMPTIONS FROM CLAIMS OF CREDITORS. To the extent permitted by
law, the proceeds of this contract and any payments under it will
not be subject to the claims of creditors or to any legal
proceedings.
* 2.10 MAINTENANCE OF SOLVENCY. This provision applies only to 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 against the contract with interest compounded at
* the rate of 5% per year.
* You may prefer to make the extra payment by an equivalent reduction
* in benefits or by a payment in cash. You may do this within 60
* days from the date we notify you of your share of the deficiency.
2.11 DEFERMENT. 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
Maturity Proceeds will normally be paid within 7 days of the
Maturity Date. 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 Maturity Proceeds, 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.
2.12 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.
2.13 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.
2.14 TERMINATION. This contract will terminate on the earliest of:
1) The date of death of the Insured;
2) The Maturity Date;
3) The end of the grace period if the premium required to keep
this contract in force has not been paid;
4) The date you surrender this contract; and
5) The date this contract terminates from excess loan under
Section 8.5.
============================================================================
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.
============================================================================
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.
You may pay more or less than the Planned Annual Premium in any
Contract Year. 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 may be paid at any time before the Maturity Date and in
any amount, subject to Section 4.3 Cumulative Premium Limit.
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 applied to the premium paid.
The Percent of Premium Charge is shown on page 4; 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 Cash Surrender Value is
less than the Monthly Deduction to be made on that day. 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, but not beyond the Maturity Date. 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 Cash Surrender Value
is less than the Monthly Deduction to be made on that day. If the
Cash Surrender Value is less than the Monthly Deduction, the
deduction made will not exceed the Accumulated Value less any Debt
and we will pay the balance of the Monthly Deduction.
4.6a DEATH BENEFIT GUARANTEE REQUIREMENT. On any Monthly Anniversary,
the Death Benefit Guarantee Requirement is met if the sum of
premiums paid less any Partial Surrenders and any unpaid contract
loans is greater than or equal to the sum of Death Benefit
Guarantee Premiums from the Date of Issue through that Monthly
Anniversary.
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 to the amount necessary to meet the Death
Benefit Guarantee Requirement.
In addition, a portion of any Partial Surrender or contract loan
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 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 according to Section 5.3 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 will be shown on the
supplemental contract schedule that we will mail to you. 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.
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.
4.7 REINSTATEMENT. This contract may be reinstated within five years
after the end of the grace period but before the Maturity Date,
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 the 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 grade 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 2.7 Incontestability will apply from
* the date the contract is reinstated with regard to statements made
in the application for reinstatement. The Death Benefit Guarantee
cannot be reinstated under this provision.
============================================================================
5. INSURANCE COVERAGE
============================================================================
5.1 DEATH BENEFIT. We will pay the Death Benefit to the beneficiary
upon receiving proof that the death of the Insured occurred before
the Maturity Date. It is payable as part of the Death Proceeds.
The benefit 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 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.
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 80th
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 $10,000.
4) The Cash Surrender Value must not be less than the Monthly
Deduction on the effective date of the increase (unless the
Death Benefit Guarantee is in force).
5) The Initial Monthly Administrative Charge for the increase
(see Section 7.1(3)) will be charged on the effective date of
the increase and then on each Monthly Anniversary until
120 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 2.7 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 2.5 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,
refunded to you.
5.5 DECREASE IN FACE AMOUNT. You may decrease the Face Amount at any
time. 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. That minimum is $50,000 for decreases made
before the Contract Anniversary after the Insured's 50th
birthday and $25,000 for decreases made after that date.
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.
* 8) If this contract includes an Accidental Death Benefit rider
* and the Face Amount after the decrease is less than the
* Accidental Death Benefit, the Accidental Death Benefit will
* be decreased to be equal to the Face Amount after its
* decrease.
============================================================================
6. ACCUMULATED VALUE AND SURRENDER PROVISIONS
============================================================================
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 equal to the sum of the accumulated values for
this contract in the subaccounts and the Loan Account (see
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.
6.2 FULL SURRENDER. You may surrender this contract for its Cash
Surrender Value by giving Written Notice before the Maturity Date
and while the Insured is alive. The surrender will be effective on
the later of:
1) The date we receive Written Notice; and
2) The date you specify.
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 before the Maturity Date and while
the Insured is alive. We will deduct a Partial Surrender Charge
from every Partial Surrender. The amount of this charge is shown
on page 4.
A Partial Surrender:
1) Must be at least $500;
2) May be made only once each Contract Month;
3) 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;
4) Must not reduce the remaining Cash Surrender Value to less
than $500;
5) 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 12) 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 5.5(2). The Face Amount may not be
reduced to less than $5,000; and
6) Will be effective on the date we receive Written Notice.
A Partial Surrender may cause the Death Benefit Guarantee to
terminate.
6.5 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 Maturity Date;
3) The end of the grace period if the premium required to keep
this contract in force has not been paid;
4) The date you surrender this contract; and
5) The date this contract terminates from excess loan under
Section 8.5.
============================================================================
7. MONTHLY DEDUCTION
============================================================================
7.1 MONTHLY DEDUCTION. The Monthly Deduction is made on the Contract
Date and on each subsequent Monthly Anniversary. 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 Cost of Insurance (see Section 7.2);
2) The Monthly Administrative Charge. This charge is the
sum of:
a) The Basic Monthly Administrative Charge shown on
page 4; and
b) Any Initial Monthly Administrative Charge. This is a
charge per $1,000 of the 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 120 charges have been made. The
charge per $1,000 is shown on page 4;
3) Any Initial Monthly Administrative 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 120 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 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.
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, Initial 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. For any Face Amount with Premium Class other than
"standard," "smoker" or "nonsmoker," 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 premium is added to the Cost of Insurance.
We may charge less than the maximum rate. Any change in Cost of
Insurance Rates will apply to all insureds of the same Premium
Class, sex, Initial Face Amount and Attained Age.
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 or maturity
(Face Amount decreases to zero).
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.
============================================================================
8. LOANS
============================================================================
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; and
3) The amount of the loan is at least $100.
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.
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 before the Maturity Date and while the Insured is alive. Each
repayment must be at least $25. You must notify us if a payment to
us is a repayment of Debt. Otherwise, it will be considered a
premium payment. 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.
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) 61 days have elapsed since we mailed a notice to you at the
address last known to us.
============================================================================
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.
3) After you have made two transfers in a Contract Year, a
Transfer Charge will be deducted from each subsequent amount
you transfer during the remainder of the Contract Year. The
charge will be deducted from the total amount transferred in
proportion to the amounts transferred from each subaccount.
We reserve the right to change the amount of this charge or
to waive the charge for transfers made under an automatic
transfer plan. However, the Transfer Charge will never
exceed the maximum charge shown on page 4.
* We may defer making transfers subject to the same conditions as in
* Section 2.11 Deferment.
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.
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.
============================================================================
10. EXCHANGE OF CONTRACT
============================================================================
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) 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.
* 4) 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.
5) 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.
6) 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.
7) 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.
* The new contract may include any other additional benefit
* included with this contract if that benefit is customarily
* offered with the new contract.
8) Any outstanding Debt on this contract must be repaid.
9) The effective date of the exchange will be the date we
receive this contract and your written application.
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.
* The new contract may include any other additional benefit
* included with this contract if that benefit is customarily
* offered with the new contract.
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.
============================================================================
11. BENEFICIARY
============================================================================
11.1 BENEFICIARY. The beneficiary is named in the Application. You may
change the beneficiary by giving Written Notice. The change will
become effective if:
1) We receive Written Notice; and
2) We acknowledge the change.
The effective date of the change will be the date the notice was
signed. We will not be liable for any payment made or action taken
by us before we receive the notice.
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 primary beneficiaries
who survive the Insured. If none survive, the Proceeds will be
paid to the surviving contingent beneficiaries. In the event no
beneficiary survives the Insured, 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.
============================================================================
12. SETTLEMENT PROVISIONS
============================================================================
12.1 PAYMENT OF PROCEEDS. Proceeds from death, maturity or surrender
are payable in a lump sum unless otherwise provided. On Death
Proceeds, we will pay interest at the rate payable in
Option 1 - Interest Income or, if greater, the rate required by
law. Interest is payable from the date 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 of 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. This income is subject to
these conditions:
1) Income per year must not be less than 6% of the proceeds.
2) Income is paid until the proceeds, with interest credited at
the rate of 3 1/2% per year on the unpaid balance, are paid
in full. This income may be increased by the crediting of
additional interest.
OPTION 3 - INCOME FOR A FIXED PERIOD. We will pay an income for a
fixed number of years, not to exceed 30. The income will not be
less than the amounts 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. If the payee dies during the
guaranteed period, payments will be continued to the end of that
period and will be paid to the beneficiary. A period of 10 or
20 years may be elected. The income will not be less than the
amounts shown in the table for this option on page 25. 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 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 $25;
2) Payments are made only at annual, semiannual, quarterly or
monthly intervals; and
3) The first payment, except under Option 1 - Interest Income,
is payable as of the date the option becomes effective.
Under Option 1, interest is payable at the end of the first
payment interval.
* If 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 1 - Interest Income.
<PAGE>
<TABLE>
<CAPTION>
Contract Number: LV1234567
OPTION 3
GUARANTEED MONTHLY PAYMENTS FOR EACH $1,000 OF PROCEEDS
========================================================================================================================
Years Monthly Years Monthly Years Monthly Years Monthly Years Monthly
Payable Payment Payable Payment Payable Payment Payable Payment Payable Payment
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 84.65 7 13.37 13 7.93 19 5.96 25 4.96
2 43.05 8 11.89 14 7.48 20 5.75 26 4.84
3 29.19 9 10.75 15 7.10 21 5.56 27 4.73
4 22.26 10 9.83 16 6.76 22 5.39 28 4.62
5 18.11 11 9.08 17 6.46 23 5.23 29 4.53
6 15.34 12 8.46 18 6.20 24 5.09 30 4.44
- ------------------------------------------------------------------------------------------------------------------------
Annual, Semiannual or Quarterly payments are 11.813, 5.957 and 2,991 respectively, times the Monthly payments.
========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
OPTION 4
MALE PAYEE - MONTHLY LIFE INCOME
========================================================================================================================
GUARANTEED MONTHLY LIFE INCOME FOR EACH $1,000 OF PROCEEDS
- ------------------------------------------------------------------------------------------------------------------------
Payments Payments Payments Payments Payments Payments
Age of Payee Guaranteed Guaranteed Age of Payee Guaranteed Guaranteed Age of Payee Guaranteed Guaranteed
on Date of for for on Date of for for on Date of for for
First Payment 10 Years 20 Years First Payment 10 Years 20 Years First Payment 10 Years 20 Years
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
40 3.94 3.89 65 6.08 5.28 75 7.75 5.65
45 4.20 4.11 66 6.23 5.33 76 7.92 5.65
67 6.38 5.38 77 8.09 5.65
50 4.51 4.36 68 6.54 5.43 78 8.26 5.65
55 4.91 4.66 69 6.71 5.48 79 8.42 5.65
- ------------------------------------------------------------------------------------------------------------------------
60 5.42 4.97 70 6.87 5.52 80 8.57 5.65
61 5.54 5.04 71 7.05 5.55 85 9.20 5.65
62 5.67 5.10 72 7.22 5.59
63 5.80 5.16 73 7.40 5.62 90 9.59 5.65
64 5.94 5.22 74 7.57 5.64 95 9.73 5.65
========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
FEMALE PAYEE - MONTHLY LIFE INCOME
========================================================================================================================
GUARANTEED MONTHLY LIFE INCOME FOR EACH $1,000 OF PROCEEDS
- ------------------------------------------------------------------------------------------------------------------------
Payments Payments Payments Payments Payments Payments
Age of Payee Guaranteed Guaranteed Age of Payee Guaranteed Guaranteed Age of Payee Guaranteed Guaranteed
on Date of for for on Date of for for on Date of for for
First Payment 10 Years 20 Years First Payment 10 Years 20 Years First Payment 10 Years 20 Years
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
40 3.72 3.70 65 5.50 5.05 75 7.14 5.60
45 3.92 3.88 66 5.63 5.12 76 7.34 5.63
67 5.77 5.19 77 7.54 5.65
50 4.18 4.11 68 5.91 5.25 78 7.74 5.65
55 4.51 4.38 69 6.07 5.32 79 7.94 5.65
- ------------------------------------------------------------------------------------------------------------------------
60 4.93 4.70 70 6.23 5.37 80 8.13 5.65
61 5.03 4.77 71 6.40 5.43 85 8.97 5.65
62 5.14 4.84 72 6.58 5.48
63 5.25 4.91 73 6.76 5.52 90 9.48 5.65
64 5.37 4.98 74 6.95 5.57 95 9.73 5.65
========================================================================================================================
</TABLE>
<PAGE> Contract Number: LV1234567
============================================================================
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 use dividends credited prior
* to the Maturity Date under any option which follows:
* CASH. Dividends are paid in cash.
* PAID-UP ADDITIONS. Dividends are applied as payment of a Net
* Premium.
* 13.3 AUTOMATIC DIVIDEND OPTION. Dividends will be used under the
* Paid-Up Additions option unless a different option has been chosen
* in writing.
* 13.4 WITHDRAWAL OF DIVIDENDS. Paid-Up Additions may be surrendered for
* their accumulated value unless they are held as security for debt.
* No Decrease Charge or Partial Surrender Charge will apply.
<PAGE>
[BLANK PAGE]
<PAGE>
LUTHERAN
[LOGO] BROTHERHOOD
A Fraternal Benefit Society
Minneapolis, Minnesota 55415
FLEXIBLE PREMIUM
VARIABLE LIFE INSURANCE
============================================================================
Death Proceeds payable at death prior to Maturity Date.
Adjustable death benefit.
Flexible premiums.
Return on investments reflected in contract benefits.
Annual dividends payable if earned.
Settlement options to provide retirement income.
#20764
<PAGE>
EXHIBIT 1.A5(b)
[WR2-BA-ADB-1]
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; or
4) Intentionally self-inflicted injury, while sane or insane; or
5) Committing or attempting to commit a felony; or
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 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.
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 /s/ROBERT P. GANDRUD [THE WORD-SAMPLE-IS STAMPED UNDER SIGNATURE]
- ----------------------------------------------------------------------------
Secretary /s/DAVID J. LARSON [THE WORD-SAMPLE-IS STAMPED UNDER SIGNATURE]
- ----------------------------------------------------------------------------
<PAGE>
[page 5-ADB]
Date of Issue of this Rider: OCTOBER 1, 1993 Contract Number: LV1234567
============================================================================
ACCIDENTAL DEATH BENEFIT
============================================================================
INSURED: JOHN DOE AGE: 35 SEX: MALE
ACCIDENTAL DEATH BENEFIT $50,000 FORM WR2-BA-ADB-1
TABLE OF MONTHLY COSTS
BEGINNING
ON RIDER ATTAINED MONTHLY
ANNIVERSARY AGE* COST
OCT 1,
1993 35 $ 2.50
1994 36 2.50
1995 37 2.50
1996 38 2.50
1997 39 2.50
1998 40 2.50
1999 41 2.50
2000 42 2.50
2001 43 2.50
2002 44 2.50
2003 45 2.50
2004 46 2.50
2005 47 3.00
2006 48 3.00
2007 49 3.00
2008 50 3.00
2009 51 3.00
2010 52 3.00
2011 53 3.00
2012 54 3.00
2013 55 3.00
2014 56 3.50
2015 57 3.50
2016 58 3.50
2017 59 3.50
2018 60 4.00
2019 61 4.00
2020 62 4.00
2021 63 4.50
2022 64 4.50
2023 65 5.00
2024 66 5.00
2025 67 5.50
2026 68 6.00
2027 69 6.00
* AGE LAST BIRTHDAY ON RIDER ANNIVERSARY ON OR IMMEDIATELY PRIOR TO
MONTHLY ANNIVERSARY.
<PAGE>
[WR2-BC-CIB-1]
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; and
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.
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 no children are insured 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 be 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. An option to purchase an insurance
* contract on the Child's life with no evidence of insurability
* required will become effective on the earlier of:
* 1) The Rider Anniversary after the Child's 21st birthday if the
* Child is then insured; and
* 2) The date this rider terminates under Paragraph 7
* Exclusion: Suicide.
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 is the date of purchase. The
issue age is the Child's age last birthday on that date.
Premiums will be based on standard rates in effect on the date
of purchase.
4) The amount of the new contract may not exceed five times the
amount of the Child Term Insurance.
5) The new contract may be any life insurance contract offered at
the time of purchase.
6) 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.
6. INCONTESTABILITY. With respect to each Child, 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 the date of issue of this
rider. This provision will apply from the date this rider is
reinstated with regard to statements made in the application for
reinstatement.
7. EXCLUSION: SUICIDE. If the Insured dies by suicide, while sane or
insane, within two years after the date of issue of this rider, this
rider will terminate (subject to Paragraph 5 Option to Purchase
Insurance) and Paragraph 3b of this rider will not apply.
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 6
Incontestability will apply from the date the rider is reinstated
with regard to statements made in the application for reinstatement.
9. 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.
10. 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 alive. 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 the
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.
11. TERMINATION. This rider will terminate on the earlier of:
1) The date this contract terminates; and
2) 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 /s/ROBERT P. GANDRUD [THE WORD-SAMPLE-IS STAMPED UNDER SIGNATURE]
- ----------------------------------------------------------------------------
Secretary /s/DAVID J. LARSON [THE WORD-SAMPLE-IS STAMPED UNDER SIGNATURE]
- ----------------------------------------------------------------------------
<PAGE>
[page 5-CIB]
Date of Issue of this Rider: OCTOBER 1, 1993 Contract Number: LV1234567
============================================================================
CHILD TERM LIFE INSURANCE BENEFIT
============================================================================
FORM WR2-BC-CIB-1
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 WR2-BC-CIB-1
<PAGE>
[WR2-BG-GIO-1]
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. 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.
3. RIDER ANNIVERSARY. The Rider Anniversary is the same month and day
for years after issue of this rider as in the date of issue of this
rider.
4. THE BENEFIT.
1) You may increase the Face Amount of this contract as
provided in Paragraph 5 Increase Option.
2) We will pay the amount of any Term Insurance (see Paragraph 6)
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.
5. INCREASE OPTION.
5a. 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 5c
and 5d) 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 contract is terminated; or
3) The date this rider is terminated.
5b. 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.
5c. FIXED INCREASE OPTION DATES. Fixed Increase Option Dates occur on
the Rider Anniversary after the 18th, 22nd, 25th, 28th, 31st, 34th,
37th and 40th birthdays of the Insured.
5d. 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 40th 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.
5e. 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 not be less
than the Monthly Deduction on the effective date of the
increase (unless the Death Benefit Guarantee is in force).
5) The Initial Monthly Administrative Charge for the increase
will be charged on the effective date of the increase and then
on each Monthly Anniversary until 120 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 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 Monthly
Anniversary on or next after the date we receive your written
application.
6. FARM 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 5a.) The amount of insurance will be the
Option Amount for this rider as shown on page 5-GIO.
7. PREMIUM CREDITS. We will credit a premium to this contract on the
effective date of each increase under this rider. The amount of the
credit will be $1.25 per $1,000 of increase in Face Amount.
8. 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.
9. TERMINATION. This rider will terminate on the earliest of:
1) The date 90 days following the Rider Anniversary after the
Insured's 40th 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 /s/ROBERT P. GANDRUD [THE WORD-SAMPLE-IS STAMPED UNDER SIGNATURE]
- ----------------------------------------------------------------------------
Secretary /s/DAVID J. LARSON [THE WORD-SAMPLE-IS STAMPED UNDER SIGNATURE]
- ----------------------------------------------------------------------------
<PAGE>
[page 5-GIO]
Date of Issue of this Rider: OCTOBER 1, 1993 Contract Number: LV1234567
============================================================================
GUARANTEED INCREASE OPTION BENEFIT
============================================================================
FORM WR2-BG-GIO-1
INSURED: JOHN DOE
AGE: 35 SEX: MALE
OPTION AMOUNT $50,000
PREMIUM CLASS: NONSMOKER
MONTHLY COST: $7.50
MONTHLY COST IS DEDUCTED TO THE CONTRACT ANNIVERSARY AFTER AGE 40.
<PAGE>
[WR2BL-COL-1]
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
contact.
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 "standard," "smoker" or "nonsmoker"; and
3) $50,000.
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 rider.
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 $500, 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. MONTHLY DEDUCTION. The Cost of Insurance for this contract will
increase according to the increase in Face Amount. 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.
9. REINSTATEMENT. If this rider terminates other than under
paragraphs 8(1) 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 /s/ROBERT P. GANDRUD [THE WORD-SAMPLE-IS STAMPED UNDER SIGNATURE]
- ----------------------------------------------------------------------------
Secretary /s/DAVID J. LARSON [THE WORD-SAMPLE-IS STAMPED UNDER SIGNATURE]
- ----------------------------------------------------------------------------
<PAGE>
[page 5-COL]
Date of Issue of this Rider: OCTOBER 1, 1993 Contract Number: LV1234567
============================================================================
COST OF LIVING BENEFIT
============================================================================
FORM WR2-BL-COL-1
INSURED: JOHN DOE
AGE: 35 SEX: MALE
EXPIRATION DATE: OCTOBER 1, 2013
MONTHLY COST: NONE
<PAGE>
[WR2-BS-SIB-1]
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 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. 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.
4. 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 80th 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 $10,000.
4) The Cash Surrender Value of this contract must not be less
than the Monthly Deduction on the effective date of the
increase (unless the Death Benefit Guarantee is in force).
5) The Spouse Initial Monthly Administrative Charge for the
increase (see Paragraph 6(3)) will be charged on the effective
date of the increase and then on each Monthly Anniversary
until 120 charges have been made.
* 6) The 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 10 Incontestability and Paragraph 11 Exclusion: Suicide
will apply to the increase from its effective date with regard to
statements made in the application for increased insurance.
5. 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.
6. 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;
2) The Spouse Monthly Administrative Charge. This charge is the
sum of:
a) The Spouse Basic Monthly Administrative Charge shown on
page 5-SIB; and
b) The Spouse Initial Monthly Administrative 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 120 charges have been made. The charge per
$1,000 is shown on page 5-SIB; and
3) Any Spouse Initial Monthly Administrative 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
the decrease. The charge is made on the effective date of the
increase and then on each Monthly Anniversary until 120
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.
7. 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 and Attained Age.
The Premium Class for the initial amount of Spouse Term Insurance is
shown on page 5-SIB. 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. For any amount of Spouse Term
Insurance with Premium Class other than "standard," "smoker" or
"nonsmoker," the maximum cost is increased in one or both of the
following ways, as specified in the contract schedule pages:
1) The maximum Spouse Cost of Insurance Rate is multiplied by a
percentage rating.
2) An extra monthly premium is added to the Spouse Cost of
Insurance.
We may charge less than the maximum rate. Any change in Cost of
Insurance Rates will apply to all Spouses of the same Premium Class,
sex, Issue Age and attained age.
8. 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 60 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 60 days of that date.
3) No premium may be in default at the time of conversion.
* 4) The new contract's date of issue is the date the application
* for conversion is signed. The issue age is 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 these 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.
9. MISSTATEMENT OF AGE OR SEX. If the Spouse's age or sex has been
misstated, contract values will be adjusted using the most recent
Spouse Cost of Insurance Rates to the amounts that would have been
provided based on the correct age and sex.
10. 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 4 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.
11. 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 from the effective date of an increase in the amount of Spouse
Term Insurance according to Paragraph 4, the benefit with respect to
the increase is limited to the sum of the monthly cost deductions
made for the increase.
12. 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 10
Incontestability will apply from the date the rider is reinstated
with regard to statements made in the application for reinstatement.
13. 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.
14. TERMINATION. This rider will terminate on the earliest of:
1) The Rider Anniversary after the 96th birthday of the Spouse;
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 the earlier of:
1) 60 days after the death of the Insured; and
2) The date this rider is converted.
Signed for Lutheran Brotherhood
- ----------------------------------------------------------------------------
President /s/ROBERT P. GANDRUD [THE WORD-SAMPLE-IS STAMPED UNDER SIGNATURE]
- ----------------------------------------------------------------------------
Secretary /s/DAVID J. LARSON [THE WORD-SAMPLE-IS STAMPED UNDER SIGNATURE]
- ----------------------------------------------------------------------------
<PAGE>
[page 5-SIB]
Date of Issue of this Rider: OCTOBER 1, 1993 Contract Number: LV1234567
============================================================================
SPOUSE ADJUSTABLE TERM LIFE INSURANCE BENEFIT
============================================================================
SPOUSE: JANE DOE FORM WR2-BS-SIB-1
SPOUSE AGE: 35 SPOUSE SEX: FEMALE
SPOUSE TERM INSURANCE: $50,000
PREMIUM CLASS: NONSMOKER
SPOUSE MONTHLY ADMINISTRATIVE CHARGES:
BASIC CHARGE: $2.00 PER MONTH
INITIAL CHARGE: $0.04 PER $1,000 OF SPOUSE TERM INSURANCE, CHARGED
ONLY IN THE FIRST 120 MONTHLY DEDUCTIONS ON OR
AFTER THE DATE OF ISSUE OF THIS RIDER.
SPOUSE
SPOUSE INITIAL MONTHLY
BEGINNING SPOUSE'S COST OF ADMINISTRATIVE
ON RIDER ATTAINED INSURANCE CHARGE FOR
ANNIVERSARY AGE RATE* INCREASES#
OCT 1,
1993 35 $ 0.12 $ 0.04
1994 36 0.13 0.04
1995 37 0.14 0.04
1996 38 0.15 0.04
1997 39 0.16 0.04
1998 40 0.18 0.05
1999 41 0.19 0.05
2000 42 0.21 0.05
2001 43 0.22 0.05
2002 44 0.24 0.05
2003 45 0.25 0.05
2004 46 0.27 0.05
2005 47 0.29 0.05
2006 48 0.31 0.05
2007 49 0.33 0.05
2008 50 0.36 0.06
2009 51 0.38 0.06
2010 52 0.42 0.06
2011 53 0.45 0.06
2012 54 0.49 0.06
2013 55 0.53 0.06
2014 56 0.56 0.06
2015 57 0.60 0.06
2016 58 0.64 0.06
2017 59 0.68 0.06
2018 60 0.73 0.07
2019 61 0.79 0.07
2020 62 0.87 0.07
2021 63 0.96 0.07
2022 64 1.07 0.07
2023 65 1.18 0.07
2024 66 1.30 0.07
2025 67 1.42 0.07
2026 68 1.55 0.07
2027 69 1.69 0.07
2028 70 1.85 0.07
2029 71 2.05 0.07
2030 72 2.29 0.07
2031 73 2.59 0.07
2032 74 2.92 0.07
2033 75 3.30 0.07
2034 76 3.71 0.07
2035 77 4.14 0.07
2036 78 4.61 0.07
2037 79 5.14 0.07
2038 80 5.73 0.07
2039 81 6.41
2040 82 7.20
2041 83 8.09
2042 84 9.07
2043 85 10.13
2044 86 11.26
2045 87 12.46
2046 88 13.74
2047 89 15.09
2048 90 16.54
2049 91 18.11
2050 92 19.87
2051 93 21.94
2052 94 24.60
2053 95 28.41
* MAXIMUM MONTHLY COST PER $1,000 INSURANCE FOR NONSMOKER PREMIUM CLASS,
BASED ON COMMISSIONERS 1980 STANDARD ORDINARY MORTALITY TABLE FOR
NONSMOKERS.
# MONTHLY CHARGE PER $1,000 OF INCREASE IN SPOUSE TERM INSURANCE, CHARGED
ONLY IN THE FIRST 120 MONTHLY DEDUCTIONS ON OR AFTER THE EFFECTIVE DATE
OF THE INCREASE.
<PAGE>
[WR2-BZ-WSA-1]
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.
4. BENEFIT PERIOD. The Benefit Period is defined below:
1) If Total Disability begins at or after Age 5, but before
Age 60, the Benefit Period starts on the date Total Disability
begins and continues to the Maturity Date.
2) 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"
and "Age 65" mean the Contract Anniversary after the Insured's 5th,
60th, and 65th birthday, respectively.
6. DEFINITION OF TOTAL DISABILITY. Total Disability is a disability of
the Insured:
1) Which begins at or after Age 5, but before Age 65;
2) Which results from 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.
7. PRESUMPTIVE TOTAL DISABILITY. Total disability is presumed upon the
total and permanent loss at or after Age 5, but 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 reasonable 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. 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 /s/ROBERT P. GANDRUD [THE WORD-SAMPLE-IS STAMPED UNDER SIGNATURE]
- ----------------------------------------------------------------------------
Secretary /s/DAVID J. LARSON [THE WORD-SAMPLE-IS STAMPED UNDER SIGNATURE]
- ----------------------------------------------------------------------------
<PAGE>
[page 5-WSA]
Date of Issue of this Rider: OCTOBER 1, 1993 Contract Number: LV1234567
============================================================================
WAIVER OF SELECTED AMOUNT BENEFIT
============================================================================
INSURED: JOHN DOE FORM WR2-BZ-WSA-1
AGE: 35 SEX: MALE SELECTED AMOUNT: $1,200.00
TABLE OF MONTHLY COSTS
BEGINNING
ON RIDER ATTAINED MONTHLY
ANNIVERSARY AGE* COST#
OCT 1,
1993 35 3.0%
1994 36 3.0
1995 37 3.0
1996 38 3.0
1997 39 3.0
1998 40 3.5
1999 41 3.5
2000 42 3.5
2001 43 4.0
2002 44 4.5
2003 45 4.5
2004 46 5.0
2005 47 5.0
2006 48 5.0
2007 49 5.0
2008 50 6.0
2009 51 6.5
2010 52 8.0
2011 53 10.0
2012 54 12.5
2013 55 15.0
2014 56 18.0
2015 57 23.0
2016 58 27.0
2017 59 30.0
2018 60 7.0
2019 61 6.0
2020 62 5.0
2021 63 5.0
2022 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
* ADMINISTRATIVE CHARGES FOR INCREASES AND THE MONTHLY COST OF ANY OTHER
ADDITIONAL BENEFITS AND (2) ONE-TWELFTH OF THE SELECTED AMOUNT.
<PAGE>
[page 5-WSA]
Date of Issue of this Rider: OCTOBER 1, 1993 Contract Number: LV1234567
============================================================================
WAIVER OF SELECTED AMOUNT BENEFIT
============================================================================
INSURED: JOHN DOE FORM WR2-BZ-WSA-1
AGE: 35 SEX: MALE SELECTED AMOUNT: *
TABLE OF MONTHLY COSTS
BEGINNING
ON RIDER ATTAINED MONTHLY
ANNIVERSARY AGE# COST##
OCT 1,
1991 35 7.0%
1992 36 7.0
1993 37 7.0
1994 38 7.0
1995 39 7.0
1996 40 8.0
1997 41 8.0
1998 42 8.0
1999 43 9.0
2000 44 9.0
2001 45 10.0
2002 46 10.0
2003 47 10.0
2004 48 10.0
2005 49 10.0
2006 50 11.0
2007 51 12.0
2008 52 14.0
2009 53 16.0
2010 54 18.0
2011 55 20.0
2012 56 22.0
2013 57 25.0
2014 58 27.0
2015 59 30.0
2016 60 7.0
2017 61 6.0
2018 62 5.0
2019 63 5.0
2020 64 5.0
* *BENEFIT AMOUNT WILL BE BASED ON THE MONTHLY DEDUCTION. FOR A COMPLETE
* DESCRIPTION OF THE BENEFIT, SEE PARAGRAPH 3 OF FORM WR2-BZ-WSA-1
# AGE LAST BIRTHDAY ON RIDER ANNIVERSARY ON OR IMMEDIATELY PRIOR TO MONTHLY
TO MONTHLY ANNIVERSARY.
## PERCENTAGE OF THE SUM OF THE MONTHLY COST OF INSURANCE, THE MONTHLY
ADMINISTRATIVE CHARGES, ANY INITIAL MONTHLY ADMINISTRATIVE CHARGES FOR
INCREASES AND THE MONTHLY COST OF ANY OTHER ADDITIONAL BENEFITS.
<PAGE>
[WR2-BX-ACCB-1]
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.
1a. 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.
1b. 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.
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 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.
4. ELIGIBLE AMOUNT. The amount available as an Accelerated Benefit will
be calculated based on:
1) The amount that would be payable under this contract upon the
death of the Insured;
2) The sex, attained age and reduced life expectancy of the
Insured;
3) Expected future costs of insurance;
4) Expected future charges against this contract;
5) An administrative fee which will not exceed $150.
The Eligible Amount will be calculated on the later of:
1) The date we receive Written Notice requesting an Accelerated
Benefit; and
2) The date we receive satisfactory proof that the Insured meets
the requirements for the benefit (see Paragraph 3)
Expected future costs of insurance and expected future charges
against this contract will be determined using the scales in effect
on that date.
5. EFFECT OF ACCELERATION. If you elect to have all of the Insured's
Eligible Amount paid as an Accelerated Benefit, all insurance
* provided by this contract on the Insured's life will terminate on
* the date the benefit is calculated. 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 and Accumulated
Value of the contract will be reduced. The amount of insurance,
loan amount 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.
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 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.
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 calculated based on:
a) The amount of life insurance provided on that person;
b) The sex, attained age and reduced life expectancy of that
person;
c) Expected future monthly costs or other charges for that
person's life insurance; and
d) An administrative fee which will not exceed $150.
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 calculated. 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) 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 $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 earliest of:
1) The date any premium on this contract remains in default at
the end of the grace period;
2) The date this contract is terminated; and
3) The date you give Written Notice to cancel this rider.
Signed for Lutheran Brotherhood
- ----------------------------------------------------------------------------
President /s/ROBERT P. GANDRUD [THE WORD-SAMPLE-IS STAMPED UNDER SIGNATURE]
- ----------------------------------------------------------------------------
Secretary /s/DAVID J. LARSON [THE WORD-SAMPLE-IS STAMPED UNDER SIGNATURE]
- ----------------------------------------------------------------------------
<PAGE>
[W-BX-Amend.Av Excl]
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-AAE.
* 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 the Insured under this contract, then the
* amount payable is limited to the greater of:
a) The premiums paid on this contract less the sum of any
Debt and any Partial Surrenders; and
b) The Cash Surrender Value.
* 2) If that person is insured under a rider attached to this
* contract, then the amount payable is limited to the sum of the
* monthly cost deductions made for that rider.
In no case will this agreement increase the amount 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 /s/ROBERT P. GANDRUD [THE WORD-SAMPLE-IS STAMPED UNDER SIGNATURE]
- ----------------------------------------------------------------------------
Secretary /s/DAVID J. LARSON [THE WORD-SAMPLE-IS STAMPED UNDER SIGNATURE]
- ----------------------------------------------------------------------------
<PAGE>
[W-BS-Amend.AF Av Excl]
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-AAFAE.
* 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 the Insured under this contract, then the
* amount payable is limited to the greater of:
a) The premiums paid on this contract less the sum of any
Debt and any Partial Surrenders; and
b) The Cash Surrender Value.
* 2) If that person is insured under a rider attached to this
* contract, then the amount payable is limited to the sum of the
* monthly cost deductions made for that rider.
In no case will this agreement increase the amount 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 /s/ROBERT P. GANDRUD [THE WORD-SAMPLE-IS STAMPED UNDER SIGNATURE]
- ----------------------------------------------------------------------------
Secretary /s/DAVID J. LARSON [THE WORD-SAMPLE-IS STAMPED UNDER SIGNATURE]
- ----------------------------------------------------------------------------
<PAGE>
[W-BS-Amend.Surv Prov]
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 /s/ROBERT P. GANDRUD [THE WORD-SAMPLE-IS STAMPED UNDER SIGNATURE]
- ----------------------------------------------------------------------------
Secretary /s/DAVID J. LARSON [THE WORD-SAMPLE-IS STAMPED UNDER SIGNATURE]
- ----------------------------------------------------------------------------
<PAGE>
[W-BP-Amend.PBSP]
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 /s/ROBERT P. GANDRUD [THE WORD-SAMPLE-IS STAMPED UNDER SIGNATURE]
- ----------------------------------------------------------------------------
Secretary /s/DAVID J. LARSON [THE WORD-SAMPLE-IS STAMPED UNDER SIGNATURE]
- ----------------------------------------------------------------------------
#20765
<PAGE>
EXHIBIT 1.A(6)
ARTICLES OF
INCORPORATION AND BYLAWS
OF LUTHERAN BROTHERHOOD
Restated Articles of Incorporation as amended by the General Convention on
May 16, 1987.
We, the undersigned, a majority of whom are adult residents of the State of
Minnesota, for the purpose of forming a corporation under and pursuant to
Section 3537 to 3590, inclusive, of Chapter 19 of the General Statutes of
Minnesota, and especially Chapter 345 of the laws of 1907 and Chapter 96 of
the laws of 1915, and any amendments thereto, do hereby associate ourselves
as a body corporate, without capital stock, organized and carried on solely
for the mutual benefit of its members, and not for profit, and confining its
membership as hereinafter provided, and we do hereby adopt the following
Certificate of Incorporation:
ARTICLE I
The purpose and object of this corporation shall be to serve its membership
by aiding the Lutheran church bodies, their institutions and congregations,
fostering patriotism, loyalty, justice, charity, and benevolence; providing
education and encouragement of the arts; encouraging industry, saving,
thrift, and development on the part of its members; giving aid in case of
poverty, sickness, accident, or other misfortunes; owning and operating
homes, hospitals and sanatoria; furnishing protection and issuing benefit
contracts, and making payment of benefits thereon in case of death, or
disability by sickness, accident or old age; and otherwise promoting the
general welfare of its members.
ARTICLE II
The name of this corporation shall be LUTHERAN BROTHERHOOD. The Home Office
shall be in the City of Minneapolis in the County of Hennepin, in the State
of Minnesota, or in such other location as the Board of Directors may
determine.
ARTICLE III
The supreme legislative or governing body to be known as the General
Convention, shall be composed of delegates elected by local branches, or of
delegates elected through a delegate convention system, as provided in the
Bylaws, together with such other delegates as may be prescribed in the
Bylaws in accordance with law. The Board of Directors shall consist of not
less than five nor more than fifteen members. The officers shall consist of
a president, one or more vice presidents, a secretary, a treasurer, and such
other officers as the Board of Directors may determine, who shall be elected
as provided in the Bylaws. The directors and officers shall be selected and
hold their respective offices pursuant to the provisions of the Bylaws. No
director shall be personally liable to the Society, its General Convention
or its members for monetary damages for breach of fiduciary duty as a
director, except to the extent such exemption from personal liability or
limitation thereof is not permitted by applicable laws.
ARTICLE IV
The first regular meeting of the General Convention for the election of such
officers shall be held on the first Wednesday of June, 1920. The first
meeting of the Board of Directors shall be held at 425 South Fourth Street,
Minneapolis, Minnesota, on the sixth day of July, 1917.
ARTICLE V
The names and places of residence of the persons forming this corporation
are:
H. G. Stub of St. Paul, Minnesota.
T. H. Dahl of Minneapolis, Minnesota.
J. N. Kildahl of St. Paul, Minnesota.
G. M. Bruce of Red Wing, Minnesota.
S. T. Reque of St. Paul, Minnesota.
C. J. Eastvold of Dawson, Minnesota.
Th. Eggen and J. A. O. Preus of Minneapolis, Minnesota.
H. L. Ekern of Madison, Wisconsin.
ARTICLE VI
The names of the members of the first board of directors and first officers
are:
Th. Eggen, C.J. Eastvold, S.T. Reque, H.L. Ekern, and J.A.O. Preus as
directors; Th. Eggen as president, C.J. Eastvold as vice president, and
J.A.O. Preus as secretary-treasurer.
ARTICLE VII
Any person who: (1) has been baptized in the Christian faith or is
affiliated with a Lutheran church organization, and (2) professes to be
Lutheran, shall be entitled to membership and shall become a member in the
manner referred to in the Bylaws. Each adult benefit contract member shall
have one vote for delegates to the General Convention.
ARTICLE VIII
Assets representing the reserves on all outstanding benefit contracts shall
at all times be held in trust for the fulfillment of the payment of the
benefits promised in such contracts; and if the regular payments are
insufficient to pay all death and disability claims in full and provide for
such reserves, additional payments may be required to meet such deficiency.
One or more separate accounts may be established and operated to support
contracts issued on a variable basis in accordance with applicable laws, and
to the extent the provisions of this Article are inconsistent therewith such
provisions shall not apply to the separate accounts or contracts issued on a
variable basis.
ARTICLE IX
These Articles may be amended by a vote of not less than two-thirds of all
delegates voting thereon at any regular meeting of the General Convention;
and unless otherwise provided by law may be amended in like manner at any
special meeting of the General Convention, provided notice of the proposed
amendment has been given with the notice of such meeting.
The above Restated Articles as amended by the General Convention at its
meeting held on the 16th day of May, 1987, shall supersede and take the
place of the Articles of Incorporation originally adopted on June 13, 1917,
and all amendments thereto.
In testimony whereof, we, the present members of the Board of Directors have
hereunto set our hands this 24th day of June, 1987.
Arley R. Bjella Judith K. Larsen
Robert O. Blomquist Sigurd D. Medhus
William R. Halling Clair E. Strommen
Richard M. Heins Lloyd Svendsbye
Herbert D. Ihle Stanford O. Tostengard
James W. Krause George A. Wade
Amended BYLAWS as adopted in part by the Twenty-Third General Convention on
May 4, 1991.
SECTION 1
ADMISSION TO MEMBERSHIP
Admission to membership and benefit contracts may be obtained upon
application and approval by such officers and upon such conditions as the
Board of Directors may determine.
SECTION 2
ORGANIZATION OF BRANCHES
LUTHERAN BROTHERHOOD shall consist of members organized in branches. The
members who do not belong to a local branch shall constitute and be members
of a separate branch designated as a regional branch. Local branches,
regional branches, or any combination thereof shall be established, and
governing rules and regulations shall be prescribed in accordance with these
Bylaws. A member may elect to belong to a branch of his own choice. In the
event a member wishes to transfer from one branch to another, such transfer
is effective ninety days following receipt of notification by the Secretary
of LUTHERAN BROTHERHOOD. Notice of a meeting of any branch may be published
in the Lutheran Brotherhood BOND, the official publication of LUTHERAN
BROTHERHOOD, and any such notice shall be deemed sufficient notice to all
members of such branch. Branches may admit social members.
SECTION 3
THE GENERAL CONVENTION
A The supreme governing body of LUTHERAN BROTHERHOOD shall be the General
Convention, composed of delegates as provided in Section 6 of these
Bylaws, provided that the elected delegates shall have not less than
two-thirds of the votes. The Chairman of the Board of Directors of
LUTHERAN BROTHERHOOD shall preside at all meetings of the General
Convention. In the event that the Chairman of the Board of Directors is
unable to serve, the Vice Chairman of the Board of Directors shall
preside. In the event neither is able to serve, another board member or
officer designated by the Board of Directors shall preside.
B Regular meetings of the General Convention shall be held every fourth
year from 1975, at such time and place as fixed by the Board of
Directors.
C The Chairman of the Board of Directors shall propose to the Board of
Directors a Nominating Committee from the list of certified delegates
prior to each regular General Convention to select nominees for the
Board of Directors' positions to be filled. The Chairman of the Board
of Directors shall report to the Board of Directors the recommendation
of a Nominating Committee, at a regular or special meeting, and the
Board of Directors shall confirm or, in the alternative, substitute, add
to or delete names of those proposed by the Chairman of the Board of
Directors and appoint the Nominating Committee. The appointed
Nominating Committee shall make its report to the delegates by mail at
least forty days prior to the General Convention and to the General
Convention. In order to assure the preservation of the representative
form of government, guaranteed by the fraternal laws of the State of
Minnesota, the only other method of making nominations for directors to
the General Convention shall be by filing with the Secretary of LUTHERAN
BROTHERHOOD at least twenty days prior to the date of the General
Convention a petition containing the name or names of the proposed
nominee or nominees, such petition of a nominee or nominees to be signed
and subscribed to by not less than ten percent of the certified
delegates to the General Convention. Notice of the names of those
persons duly petitioned and thereby nominated for director shall be
provided to the certified delegates by mail prior to the General
Convention.
D The Chairman of the Board of Directors of LUTHERAN BROTHERHOOD shall
also appoint General Convention committees, including a committee to
audit the expense accounts of the delegates and alternate delegates, a
Credentials Committee, a Resolutions Committee, and such other
committees as may be deemed necessary for transacting the business of
the General Convention.
E Special meetings of the General Convention shall consist of the elected
delegates certified to the last preceding regular General Convention
together with the ex-officio delegates as provided in Section 6 and may
be called by not less than two-thirds of the members of the Board of
Directors or on written request signed by not less than two-thirds of
said delegates in good standing, as defined in Section 6. If one or
more of the said delegates ceases to be an adult benefit contract member
in good standing, as provided for in Section 6, with respect to the
General Convention, such person shall be ineligible to be a delegate and
such vacancy or vacancies shall be filled by one alternate or alternates
respectively, and if any elected alternates shall fill such vacancies as
defined herein, such alternates shall assume all of the obligations and
responsibilities of the delegate replaced.
F Any undertaking by delegates or others to call a special meeting of the
General Convention shall be governed by the following rules:
(1) Prior to or at the time of any solicitation of any written
requests for a special meeting of the General Convention, the
Secretary shall be notified in writing by any delegate or group of
delegates of the intention to seek a call of a special meeting of
the General Convention. Such notice shall be filed with the
Secretary and shall specify the business to be considered at the
special meeting of the General Convention.
(2) Any written requests of the delegates shall be filed with the
Secretary no sooner than thirty days after the said notice and
within sixty after the notice and shall be dated and signed after
the date of the notice.
(3) When any written request is so filed with the Secretary such shall
be deemed a final filing and no amendments thereto nor subsequent
written requests concerning the same subject matter shall be
accepted by the Secretary.
(4) When the Secretary has counted and verified the written
signatures, and those revocations filed and bearing a date prior
to the filing of the written request, and the number of valid
written signatures thereon is insufficient to convene a special
meeting of the General Convention, then no further written request
shall be circulated or filed involving the same subject matter for
one year from the date of filing said request.
If, in the determination of the Secretary, a request is proper and
complies with all legal requirements, the Secretary shall certify and
file the request with the Board of Directors. Thereupon, the Board of
Directors shall set a date and place for such special meeting of the
General Convention, which shall be not less than thirty days nor more
than ninety days from the date of the receipt of said written request by
the Secretary. If a special meeting of the General Convention is called
by either the Board of Directors or by action of the delegates as
prescribed herein, the Secretary shall give to each delegate twenty days
written notice of such special meeting of the General Convention,
specifying the business to be considered at such a special meeting of
the General Convention.
SECTION 4
THE BOARD OF DIRECTORS
A There shall be twelve directors, four of whom shall be elected at each
regular quadrennial meeting of the General Convention for a term of
twelve years each. Further, at each regular quadrennial meeting, the
General Convention may elect an additional voting director for a term of
four years, the candidate for which shall be the person then holding the
position of Chief Executive Officer of the Society, who shall serve as
an additional voting member of the Board for the term, but only for the
period that the person holds the position of Chief Executive Officer.
B No person who is an officer or director of LUTHERAN BROTHERHOOD shall be
paid any commission, fee, or other compensation for writing any contract
of insurance with LUTHERAN BROTHERHOOD while such person is an officer
or director, nor shall any officer or director hold a contract as agent
or general agent during the term as an officer or director of LUTHERAN
BROTHERHOOD. All individuals elected as members of the Board at the
Twenty-Third General Convention in 1991, and thereafter, except for the
Chief Executive Officer if elected a director pursuant to Section 4A
above, must be persons other than officers, employees or persons
receiving compensation for current active service to the Society,
excluding director fees. No officer or employee of LUTHERAN BROTHERHOOD
shall receive a Board fee for serving on the Board of LUTHERAN
BROTHERHOOD or on the Board of any LUTHERAN BROTHERHOOD subsidiary.
C No person elected as a director at the Eighteenth General Convention
in 1971, or thereafter, shall continue to serve as a director after
attaining age seventy (70); provided that any director elected prior to
the Eighteenth General Convention may continue to serve as a director to
the end of the elected term or any successive term without regard to the
age limitation herein specified; provided that any such director shall
retire upon reaching age seventy-five (75).
D The Board of Directors, following each regular meeting of the General
Convention, and annually thereafter, shall elect a chairman of the Board
and a vice chairman from among its members, and shall elect annually the
following senior officers: a chief executive, a president, one or more
vice presidents, a secretary, and a treasurer. One or more of the above
offices may be held by the same person. The Board may, in its
discretion, designate one or more of said elected vice presidents as
executive vice president or senior vice president, respectively. The
senior officers shall hold office at the pleasure of the Board of
Directors. The Board of Directors may elect annually such other
officers as it may deem prudent, who shall be junior officers and who
shall hold office at the pleasure of the Board of Directors or until
removed by the Chief Executive. A vacancy in any office may be filled
by the Board of Directors. No person shall be discriminated against as
an officer, director, employee, general agent or district representative
of LUTHERAN BROTHERHOOD because of race, color, national origin, age or
sex. Each person who serves as director, officer, general agent or
district representative must be an adult benefit contract member of
LUTHERAN BROTHERHOOD.
E The Board of Directors may appoint by a majority vote of the entire
Board of Directors a director to fill a vacancy in the Board until the
next regular or special meeting of the General Convention, at which time
the General Convention shall elect a director to complete the unexpired
term, if any. A vacancy may be declared upon the happening of any of
the following events: (1) death, (2) resignation, or (3) disability.
Disability may involve either physical or mental disability which
seriously affects the ability of a director to participate in the
meetings of the Board. Such physical or mental disability shall be
certified to after examination by one or more physicians selected by
majority vote of the remaining directors. A director shall be deemed to
be disabled if he or she is unable to attend five (5) consecutive
regular meetings of the Board of Directors, because of such disability.
F The Board of Directors may create committees and define their powers and
duties and shall also elect from its membership an Executive Committee
of not less than four nor more than six members, a quorum of which shall
consist of three members. Such Executive Committee shall have and
exercise all the powers of the Board of Directors while the Board is not
in session, except the power to amend the Bylaws and matters over which
the Board of Directors has retained jurisdiction. The Executive
Committee shall also perform such duties as are specifically delegated
to it by the Board of Directors.
G Regular and special meetings of the Board of Directors shall be held as
determined by the Board or on call of the Chairman of the Board, or on
written request signed by any four directors and filed with the
Secretary.
SECTION 5
INDEMNIFICATION
A The Society shall indemnify and reimburse every person who is or was a
party or is or was threatened to be made a party to any action,
suit, arbitration or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that such person is or was a
director, officer, employee or agent of the Society or of any
firm, corporation, partnership, joint venture, trust, employee benefit
plan, or other organization which the person served in any capacity at
the request of the Society against expenses (including counsel fees),
judgments, claims, liabilities, penalties, forfeitures, fines and
amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding, to the full
extent permitted by applicable law. The indemnification provided
hereby shall continue as to a person who has ceased to be a
director, officer, employee, agent or trustee and shall inure to the
benefit of the heirs, executors and administrators of such person. In
the event that a determination is necessary as to whether the conduct
of the person to be indemnified meets the standard required by
applicable law in order to justify indemnification and reimbursement,
such determination shall be made by the Board of Directors by a majority
vote of a quorum consisting of persons who were not parties to the
action, suit or proceeding. Such indemnification shall include advances
of expenses in advance of final disposition of such action, suit or
proceeding, subject to the provisions of any applicable statute.
B The Society shall have power to purchase and maintain liability
insurance on behalf of any person who is serving in any capacity
mentioned in Paragraph A of this Section, whether or not the Society
would have the power to indemnify such person as herein provided.
SECTION 6
DELEGATES TO THE GENERAL CONVENTION
A The Board of Directors, by a majority vote of the entire Board, shall
divide the membership of the Society into Delegate Districts. In so
doing, the Board of Directors shall take into consideration geographical
boundaries, the number of adult benefit contract members, general agency
territories and any other factors that the Board of Directors may
consider material, and shall set the boundaries of the Delegate
Districts accordingly.
B Each Delegate District shall be entitled to delegates based on the
number of adult benefit contract members in good standing as of the
certification date, which shall be a date not more than twelve months
preceding the date of the regular meeting of the General Convention. As
of the certification date, the Board of Directors shall allot delegates
to each Delegate District as follows: each Delegate District shall be
entitled to two delegates and an additional delegate or delegates as
determined by the Board of Directors on the basis of the number of adult
benefit contract members residing in said District. In addition to the
allotted delegates to each Delegate District, each Delegate District
shall elect two alternates to act as delegate or delegates should one or
more of the elected delegates (i) for any reason be unable to serve at
the regular meeting of the General Convention, or (ii) be declared by
the Board of Directors not to be a delegate in good standing.
C The Board of Directors shall cause to be published in the Lutheran
Brotherhood BOND, in no event less than five months preceding the date
of the regular meeting of the General Convention, the official
certification of the number of delegates to which each Delegate District
is entitled. In the same issue of the Lutheran Brotherhood BOND, the
Board of Directors shall direct the Secretary to publish the boundaries
and the number assigned to each Delegate District, the time and place
for the Delegate District balloting to elect delegates to the regular
meeting of the General Convention, the time and place of the General
Convention, the name of the Deputy Secretary for each Delegate District
and the manner of nominating delegates. The Delegate District balloting
shall be held within ninety days following the publication of notice in
the Lutheran Brotherhood BOND. The aforesaid publication in the
Lutheran Brotherhood BOND shall be deemed sufficient notice to all
members.
D Delegates and alternates from the Delegate District shall be chosen and
qualify in the following manner:
(1) The Board of Directors shall appoint a Deputy Secretary for each
Delegate District, who along with any assistants that might be
designated, shall appoint a District Nominating Committee made up
of members residing within the Delegate District to nominate
candidates for delegates and two candidates for alternate
delegates.
(2) The District Nominating Committee shall file its report in
duplicate, one copy with the Secretary and one copy with the
Deputy Secretary, not later than twenty-five days prior to the
date set for the Delegate District balloting. Nominations for
delegates may also be made by a petition signed by not less than
thirty-five adult benefit contract members residing in the
Delegate District. Residence shall be determined as the residence
of record of the contract member. Petition nominations for
delegates shall be filed with the Secretary and Deputy Secretary
in the same manner required for the report of the District
Nominating Committee.
(3) Any candidate for a delegate or alternate or elected delegate or
alternate must be an adult benefit contract member residing within
the Delegate District and a member in good standing; provided that
only one candidate who is a district representative, general
agent, or other person receiving compensation for current active
service to LUTHERAN BROTHERHOOD may be elected, or vote, as a
delegate from each Delegate District. In order to be a member in
good standing, the candidate or elected delegate or alternate:
(a) Must be an adult benefit contract member.
(b) Must not have business or personal interests which would
constitute a conflict of interest in relation to the
business operation of LUTHERAN BROTHERHOOD. The Board of
Directors or a subcommittee thereof shall determine whether
a delegate or a candidate for delegate is or is not in good
standing: (i) the Board of Directors shall cause the
Secretary to give written notice to said delegate or
candidate for delegate of the charges specifying wherein the
former apparently fails to comply with Paragraph D(3) of
this Section; (ii) the challenged delegate or candidate for
delegate shall be afforded the opportunity to appear
personally before the Board of Directors, or its
subcommittee, or to answer the charges in writing within
twenty days; (iii) the decision of the Board of Directors
or a subcommittee thereof as to whether or not the delegate
or candidate for delegate is in good standing shall be
final.
(4) The vote of a member must be cast in person at a designated
location in the Delegate District in which the member resides,
except that the Board of Directors may provide for the return of
marked ballots by mail to the Secretary. A member shall be
entitled to one vote regardless of the number of adult benefit
contracts issued to the member.
(5) The Secretary shall count the ballots under the supervision of the
Board of Directors or committee thereof. The candidates receiving
the highest number of votes shall be the duly elected delegates
for the respective Delegate District, and shall be equal in number
to the number of delegates allotted to a particular Delegate
District, and the candidate for alternate receiving the most votes
shall be the duly elected first alternate and the other candidate
shall be the second alternate for the respective Delegate
District. In the event of a tie vote as to a delegate or an
alternate, the election shall be decided by lot by the candidates
involved, under the direction of the Deputy Secretary. The names
of the delegates and alternates so elected, together with the
names of the ex-officio delegates, shall be certified to by the
Secretary and published in the issue of the Lutheran Brotherhood
BOND no later than sixty days preceding the date of the regular
meeting of the General Convention. Such listing in the Lutheran
Brotherhood BOND shall constitute an official certified list of
the delegates and alternates for the next regular meeting of the
General Convention, and upon the election and the qualification of
delegates to the General Convention the term of office of
previously elected delegates shall cease. The publication in the
Lutheran Brotherhood BOND shall be deemed sufficient notice to all
members and delegates.
(6) The expenses of the Deputy Secretaries in connection with the
delegate elections, and the expenses of the delegates to any
regular or special meeting of the General Convention shall be
determined and fixed by order of the Board of Directors.
E Ex-officio delegate representation at the General Convention shall be
determined as follows:
(1) The senior officers, each director, and certain junior officers as
provided in subparagraph (2) of this Paragraph, who hold such
positions at the time of any regular or special meeting of the
General Convention shall be ex-officio delegates to the said
General Convention, each entitled to one vote. Any person ceasing
to hold one of such positions shall cease to be a delegate.
(2) The Board of Directors shall establish a procedure for the
selection by lot of ex-officio delegates from among the junior
officers. The number of such additional Home Office ex-officio
delegates shall be one-third of the total of directors and senior
officers, as of ninety days prior to the General Convention.
SECTION 7
BENEFIT CONTRACTS, SEPARATE ACCOUNTS, FUNDS AND APPORTIONMENT OF DEFICIENCY
A The Board of Directors shall provide for benefit contracts to be issued,
upon application and acceptance in a manner and upon such conditions as
the Board may determine, to persons: (1) baptized in the Christian
faith or affiliated with a Lutheran church organization, and (2) who
profess to be Lutheran, as provided in the Articles of Incorporation.
The Board of Directors may provide for the establishment and operation
of one or more separate accounts and issue contracts on a variable basis
providing for the dollar amount of benefits or other contractual
payments or values thereunder to vary so as to reflect the investment
results of such separate accounts.
B Benefit contracts may be issued on such basis, form, and for such
benefits and naming such persons as beneficiaries, as the Board of
Directors may direct. The Board of Directors may to the extent it deems
necessary adopt special procedures for the conduct of the business and
affairs of any separate account.
C The assets of LUTHERAN BROTHERHOOD shall be kept in one fund or such
funds as the Board of Directors shall prescribe or the laws shall
require.
D In the event of the impairment of the solvency of LUTHERAN BROTHERHOOD,
an apportionment shall be charged against each outstanding benefit
contract on the basis of the member's equitable share of the deficiency
as determined by the Board of Directors. The provisions of this
Subparagraph D shall not apply to contracts issued on a variable basis.
SECTION 8
PROVISION APPLICABLE TO BENEFIT CONTRACTS
A The benefit contract of a member shall consist of the application, the
benefit contract, any amendments or riders thereto, and the Articles of
Incorporation and Bylaws now or hereafter in force, except that a
contract on a variable basis shall be subject to the Articles of
Incorporation and Bylaws in force on the date of its issue.
B The benefit contract shall also be governed by the following specific
provisions, unless such contract provides otherwise, or unless such
provisions are prohibited by state law:
(1) Upon disaffirmance of a benefit contract by a minor, only the cash
surrender value of the contract shall be payable, and tender of
such sum shall be a complete discharge of all liability on such
contract.
(2) Payment of any claim under a benefit contract pursuant to the
contract or any assignment thereof without notice to the Society
of any alleged conflicting claimant shall be a complete discharge
of the obligation for such claim on the contract or assignment.
(3) In case a benefit contract is lost, destroyed or beyond the
member's control, such member may, on a form furnished by LUTHERAN
BROTHERHOOD, have a substitute contract or other evidence of
coverage issued in its place. No requested change from the
original contract shall be effective until the date of issue of
the substitute contract.
SECTION 9
ROBERT'S RULES OF ORDER TO GOVERN
Unless otherwise provided in the Articles of Incorporation or the Bylaws
of LUTHERAN BROTHERHOOD, the latest edition of Robert's Rules of Order
shall govern the proceedings at all meetings. No vote by proxy shall be
recognized in any meeting of the General Convention or of the Board of
Directors.
SECTION 10
AMENDMENTS TO BYLAWS
A These Bylaws may be amended by a vote of not less than two-thirds of all
delegates voting thereon at any regular or special meeting of the
General Convention, or by a vote of not less than three-fourths of all
the members of the Board of Directors at any regular or special meeting
of the Board of Directors.
B In order to be considered by the Convention, any proposed amendment to
the Bylaws, other than an amendment submitted by the Board of Directors,
must be signed by at least ten percent of the certified delegates to
such Convention. Any proposed amendment shall be filed with the
Secretary of LUTHERAN BROTHERHOOD at the Home Office at least forty days
prior to such meeting. A copy of the proposed amendment shall be
forwarded by the Secretary to each delegate at least twenty days prior
to such meeting.
C Any member of the Board of Directors must file a proposed amendment with
the Secretary of LUTHERAN BROTHERHOOD at the Home Office twenty days
prior to a regular or special meeting of the Board of Directors in order
to have the same considered by the Board of Directors.
D Amendments may also be passed without prior notice by unanimous vote of
the General Convention or of the Board of Directors.
E Any Bylaw provision relating to the retirement age of directors may be
amended only by the General Convention in accordance with this Section.
I, __________________________________ of Lutheran Brotherhood, hereby
certify that the annexed copy of the Articles of Incorporation and the
Bylaws of Lutheran Brotherhood, are a true, exact, and complete copy
thereof; the Bylaws having been amended by the Board of Directors on July
31, 1953; by the Fifteenth General Convention on October 28, 1959; by the
Board of Directors on August 5, 1960, May 25, 1962, September 19, 1962; by
the Sixteenth General Convention on May 18, 1963; by the Board of Directors
on July 31, 1964, September 25, 1964, August 5, 1966, September 30, 1966,
July 28, 1967, October 6, 1967, May 1, 1970, November 6, 1970, May 27, 1971,
December 15, 1972, December 9, 1977, May 5, 1978; the Articles of
Incorporation having been amended and restated by the Twentieth General
Convention on May 5, 1979; the Bylaws having been amended in part by the
Twentieth General Convention on May 5, 1979 and in part by the Board of
Directors on May 16, 1979 and May 7, 1982; the Articles of Incorporation and
Bylaws having been amended in part by the Twenty-First General Convention on
May 7, 1983; the Bylaws having been amended in part by the Board of
Directors on August 10, 1984 and November 2, 1984; the Articles of
Incorporation having been amended in part by the Twenty-Second General
Convention on May 16, 1987; the Bylaws having been amended in part by the
Twenty-Second General Convention on May 16, 1987 and by the Board of
Directors on June 24, 1987 and November 4, 1988, and by the Twenty-Third
General Convention on May 4, 1991.
Given under my hand and the seal of the said Lutheran Brotherhood, as hereto
affixed at Minneapolis, Minnesota, this
day of A.D., 19
- ----------------- -----------------------------
- -----------------------------------------------------------------------
Secretary
Subscribed and sworn to before me, a Notary Public, this
day of , 19
- ----------------- ------------------------------------ ---------
- ------------------------------------------------------------------------
Notary Public
#20766
<PAGE>
EXHIBIT 1A(10)
[LOGO] LUTHERAN BROTHERHOOD
A Fraternal Benefit Society
Minneapolis, MN 55415
APPLICATION FOR VARIABLE LIFE INSURANCE
=======================================
/ 1 / PROPOSED INSURED PLEASE PRINT IN BLACK INK PART I
============================================================================
First Middle Last Soc Sec #
- ----------------------------------------------------------------------------
Street Address (Residence of Proposed Insured)
- ----------------------------------------------------------------------------
City State Zip
- ----------------------------------------------------------------------------
Sex Date of Birth Age Birth State Marital Status Phone# Day ( )
Mo Day Yr Eve ( )
- ----------------------------------------------------------------------------
/ 2 / OTHER PROPOSED INSURED (Spouse Rider or joint life contract)
============================================================================
First Middle Last Soc Sec #
- ----------------------------------------------------------------------------
Date of Birth Age Birth State Relationship to person in #1
Mo Day Yr
- ----------------------------------------------------------------------------
If address/phone number of Other Proposed Insured is different from
number 1, write this information in number 6.
/ 3 / JUVENILE OTHER PROPOSED INSURED(S) (Child Rider, ages 0-18)
============================================================================
First Middle Last Soc Sec #
- ----------------------------------------------------------------------------
Date of Birth Age Birth State Relationship to person in #1
Mo Day Yr
- ----------------------------------------------------------------------------
First Middle Last Soc Sec #
- ----------------------------------------------------------------------------
Date of Birth Age Birth State Relationship to person in #1
Mo Day Yr
- ----------------------------------------------------------------------------
First Middle Last Soc Sec #
- ----------------------------------------------------------------------------
Date of Birth Age Birth State Relationship to person in #1
Mo Day Yr
- ----------------------------------------------------------------------------
If address/phone number of Juvenile Other Proposed Insured(s) is different
from number 1, write this information in number 6.
/ 4 / MEMBERSHIP
============================================================================
Is each proposed insured currently a member
of Lutheran Brotherhood? / / Yes / / No
(If No, complete Membership application for each
proposed insured not currently a member.)
Give contract/account number(s) of any proposed
insured member (LB/LBVIP/LBSC) #
----------------------
(Complete only if Proposed Insured
/ 5 / ADULT APPLICANT named in number 1 is age 0-17.)
============================================================================
First Middle Last Soc Sec #
- ----------------------------------------------------------------------------
Street Address (Residence of Proposed Insured)
- ----------------------------------------------------------------------------
City State Zip
- ----------------------------------------------------------------------------
Sex Date of Birth Age Birth State Marital Status Phone# Day ( )
Mo Day Yr Eve ( )
- ----------------------------------------------------------------------------
OWNERSHIP FOR PROPOSED INSURED AGE 0-17 NAMED IN NUMBER 1
(Referred to as "Insured" below)
Before the Insured's 18th birthday, the Adult Applicant will be the Owner
of the contract, unless another Owner is named as Third Party Owner in
number 10. If the Owner dies before the Insured's 18th birthday, the
Beneficiary will be the Owner. If the Beneficiary does not survive the
Insured, a surviving parent or legally appointed guardian of the Insured
will be the Owner. If no Third Party Owner has been named, the Insured
will become the Owner of the contract on his/her 18th birthday. The Adult
Applicant will no longer own the contract. Any Third party owner named
will continue to own the contract unless ownership has been changed through
assignment.
/ 6 / DETAILS AND ENDORSEMENTS
============================================================================
Special Requests/Details
- ----------------------------------------------------------------------------
HOME OFFICE ENDORSEMENTS (HOME OFFICE USE ONLY.)
- ----------------------------------------------------------------------------
/ 7 / VARIABLE LIFE INSURANCE
============================================================================
a. BASIC BENEFIT:
Initial Face Amount $
----------------------
/ / Variable Universal Life (VUL) / / Option A / / Option B
/ /
-------------------------------------------
b. TERM RIDERS:
/ / Spouse Rider $
------------------------
/ / Child Rider for future children (If no covered children at time
of application)
/ / Child Rider $
-------------------------
(Reduced Death Benefits for Child Rider:
Birth through age 14 days -- no benefit.
Age 15 days to age 6 months -- 50% of the Child Rider amount.
Age 6 months and up -- amount of the Child Rider.)
/ /
--------------------------------------
c. ADDITIONAL BENEFITS:
/X/ Waiver of Selected Amount (WSA) $
--------------------------
(If no amount is given, benefit
amount will be based on the
Monthly Deduction.)
/ /
-----------------------------------------------------------
/ /
-----------------------------------------------------------
/X/ Cost of Living Benefit (COLA)
/ / Accidental Death Benefit (ADB) $
---------------------------
/ / Guaranteed Increase Option (GIO) $
-------------------------
(Not available with
Third Party Owner)
/ /
-----------------------------------------------------------
(PREMIUM ALLOCATIONS
/ 8 / PREMIUM ALLOCATION MUST TOTAL 100% AND BE IN WHOLE NUMBERS.)
============================================================================
Growth % High Yield % Income % Money Market % %
--- --- --- --- ------------- ---
(Other)
(If someone other than the Owner(s) is to be
/ 9 / PREMIUM PAYMENTS billed, give billing instructions in number 6.)
============================================================================
H.O. USE / DT / BATCH
=========================
Payment with Application $
-----------------------
Bill for Premiums of $
---------------------------
Planned Annual Premium $
-------------------------
/ / A / / SA / / Q / / New PAC (Complete PAC app.)
/ / Suspend Billing / / Existing PAC #
-------------
DRAW DATE
-------------
Additional Funds of $ coming from
--------- -------------------- / / 1035 TFE
(name of source)
/ 10 / THIRD PARTY OWNER
============================================================================
Complete below if the Owner(s) of the contract will be other than:
* The proposed insured(s) named in number 1 or
numbers 1 and 2 (if joint life contract).
* The Adult Applicant for Proposed Insured age 0-17 named in number 1.
(If more than two Natural Person Owners,
use number 6 to give additional Owner
a. NATURAL PERSON OWNER(S): information.)
- ----------------------------------------------------------------------------
First Middle Last Soc Sec # Sex Date of Birth Age
Mo Day Yr
- ----------------------------------------------------------------------------
Street Address City State Zip Relationship to
person in #1
- ----------------------------------------------------------------------------
First Middle Last Soc Sec # Sex Date of Birth Age
Mo Day Yr
- ----------------------------------------------------------------------------
Street Address City State Zip Relationship to
person in #1
- ----------------------------------------------------------------------------
If more than one Natural Person Owner is requested, all Owners must act in
concert to exercise ownership rights. Indicate type of ownership:
/ / Joint Tenancy with right of survivorship
/ / Tenancy in common
(If more room is needed
for additional Trustee
b. TRUST, CORPORATION OR PARTNERSHIP OWNER: information, use number 6)
- ----------------------------------------------------------------------------
Full name of Trust, Corporation or Tax ID # of
Partnership to be Third Party Owner Trust/Corp./Partnership
- ----------------------------------------------------------------------------
Name and Title of person(s) State and Date of Trust/Corp./Partnership
signing as Third Party Owner Mo Day Yr
(If Trust, name all Trustees)
- ----------------------------------------------------------------------------
Street Address of Corporation, City State Zip
Partnership, or each Trustee
- ----------------------------------------------------------------------------
A contract cannot be issued without a correct
Beneficiary. (If a Trust is Beneficiary and
is not the Third Party Owner, a Beneficiary
Change Trustee Designation form must be
completed. If the address of any Beneficiary
is different from that of the Proposed Insured
/ 11 / BENEFICIARY named in number 1, give complete address.)
============================================================================
Unless specified otherwise, each surviving Beneficiary receiving proceeds
will have an equal share in any Death Proceeds payable.
- ----------------------------------------------------------------------------
AUTOMATIC * Available only if a Spouse Rider or joint life contract
BENEFICIARY: on spouses is applied for.
* Do not complete sections a, b, and c below or a
Beneficiary Change form.
THE AUTOMATIC BENEFICIARY FOR:
* The Proposed Insured will be the surviving spouse named in number 2 of
this application, otherwise the surviving children born to or legally
adopted by their parents named in numbers 1 and 2 of this application.
* The Other Proposed Insured will be the surviving spouse named in
number 1 of this application, otherwise the surviving children born to
or legally adopted by their parents named in numbers 1 and 2 of this
application.
* The Juvenile Other Proposed Insured(s) will be the surviving parents
named in numbers 1 and 2 of this application, otherwise the surviving
children born to or legally adopted by their parents named in
numbers 1 and 2 of this application.
- ----------------------------------------------------------------------------
OTHER THAN AUTOMATIC * If you do not want the Automatic Beneficiary
BENEFICIARY: listed above, complete either the sections below
(as applicable) or a Beneficiary Change form.
a. PRIMARY BENEFICIARY OF PROPOSED INSURED NAMED IN NUMBER 1:
- ----------------------------------------------------------------------------
Relationship to
First Middle Last Proposed Insured Soc Sec# or Tax ID#
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
FIRST CONTINGENT BENEFICIARY:
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
CLASS DESIGNATION for First Contingent Beneficiary
(Proposed Insured referred to as "MY"):
/ / MY surviving CHILDREN born to my spouse named in this application
or legally adopted by us.
/ / MY surviving BROTHERS AND SISTERS born to my parents named in this
application or legally adopted by them.
b. PRIMARY BENEFICIARY OF (Spouse Rider or
OTHER PROPOSED INSURED NAMED IN NUMBER 2 joint life contract):
- ----------------------------------------------------------------------------
Relationship to Other
First Middle Last Proposed Insured Soc Sec# or Tax ID#
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
FIRST CONTINGENT BENEFICIARY:
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
CLASS DESIGNATION for First Contingent Beneficiary
(Other Proposed Insured referred to as "MY"):
/ / MY surviving CHILDREN born to my spouse named in this application
or legally adopted by us.
c. PRIMARY BENEFICIARY OF JUVENILE OTHER (Applies to all children
PROPOSED INSURED(S) NAMED IN NUMBER 3: covered by Child Rider)
- ----------------------------------------------------------------------------
Relationship to Juvenile
First Middle Last Other Proposed Insured(s) Soc Sec# or Tax ID#
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
FIRST CONTINGENT BENEFICIARY:
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
CLASS DESIGNATION for First Contingent Beneficiary
(Juvenile Other Proposed Insured(s) referred to as "MY"):
/ / MY surviving BROTHERS AND SISTERS born to my parents named in this
application or legally adopted by them.
- ----------------------------------------------------------------------------
SURVIVAL PROVISION: / / ADD 15 DAY SURVIVAL PROVISION TO:
/ / Primary Beneficiary for all proposed insureds
/ / All Beneficiaries for all proposed insureds
If other than 15 days is desired, enter number of days here
-------
<PAGE>
/ 12 / (THIS SECTION INTENTIONALLY LEFT BLANK)
============================================================================
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>
(Complete for all
/ 13 / INSURANCE NOW IN FORCE OR APPLIED FOR proposed insureds.)
============================================================================
a. EXISTING/PENDING LIFE COVERAGE / / CHECK HERE IF "NONE"
- ----------------------------------------------------------------------------
Life Accidental Will be Continued?
First Name Name of Company Amount Death Amount Yes No Date
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
b. Within the past 6 months, has any life or health insurance been applied
for, issued, modified, postponed, declined or has any renewal or
reinstatement of such insurance been refused?
/ / Yes / / No
- ----------------------------------------------------------------------------
If Yes, give details including the company name, date, insurance applied
for and reason for any modification.
- ----------------------------------------------------------------------------
/ 14 / REPLACEMENT (Complete for all applications.)
============================================================================
Will the contract applied for replace any annuity or life insurance on any
proposed insured? (This includes a lapse or surrender, partial surrender,
exchange, or cancelling a benefit. This does not
include term conversion of an existing LB/LBVIP
contract or rider.)
/ / Yes / / No
- ----------------------------------------------------------------------------
If Yes, give details including the company name and contract number(s).
Complete a replacement disclosure form, if required by the issue state.
- ---------------------------------------------------------------------------
/ 15 / EMPLOYMENT (Complete for all proposed insureds ages 18 and over.)
============================================================================
PROPOSED INSURED OTHER PROPOSED INSURED
(named in #1) (named in #2)
- ----------------------------------------------------------------------------
a. Occupational Title
- ----------------------------------------------------------------------------
b. Occupational Duties
- ----------------------------------------------------------------------------
c. How long at this
occupation? yrs mos yrs mos
- ----------------------------------------------------------------------------
d. Name of Employer
and Business Address
- ----------------------------------------------------------------------------
e. Adjusted Gross Income
Earned $ Earned $
------------ --------------
Unearned $ Unearned $
------------ --------------
- ----------------------------------------------------------------------------
f. Within the past / / Yes / / No / / Yes / / No
6 months, has any
illness, injury, If Yes, give details. If Yes, give details.
or other health
condition caused
the proposed
insured to change
occupation, place of
employment, or hours
of work?
- ----------------------------------------------------------------------------
(Complete for all proposed
/ 16 / NONPHYSICAL DATA insureds ages 16 and over.)
============================================================================
In the past 5 years, has any proposed insured: YES NO
a. Flown as a pilot, copilot, student pilot, crew
member, or have any intent to fly as such? / / / /
If Yes, complete the Aviation Supplement.
b. Participated in hang-gliding, skydiving, skin
or scuba diving, rock or mountain climbing, vehicle
racing (land, air, water) or have any intent to
participate in such activities? / / / /
c. Resided in a foreign country; or, within the
next 6 months, does any proposed insured intend to
travel or reside in a foreign country for more
than 30 days? / / / /
d. Been refused a driver's license, had a license
suspended or had a moving violation or accident?
If Yes, give details below including name and
driver's license number. / / / /
e. Used, except as prescribed by a physician, any
controlled substance (e.g. cocaine, amphetamines
or other stimulant; barbiturates or other
sedative; LSD, marijuana, or other hallucinogen;
heroin, morphine, opium or other narcotic)? / / / /
f. Been convicted of a felony? / / / /
- ----------------------------------------------------------------------------
If Yes to any question above, give details.
- ----------------------------------------------------------------------------
/ 17 / TOBACCO USAGE (Complete for all proposed insureds ages 20 and over.)
============================================================================
PROPOSED INSURED OTHER PROPOSED INSURED
Date Date
HAS THE PROPOSED INSURED: YES NO Discontinued YES NO Discontinued
- ----------------------------------------------------------------------------
a. Smoked one or more
cigarettes in the
last 12 months?
- ----------------------------------------------------------------------------
b. Formerly smoked
cigarettes?
- ----------------------------------------------------------------------------
c. Used any other
form of tobacco
in the last
12 months?
- ----------------------------------------------------------------------------
d. Formerly used any
other form of
tobacco?
- ----------------------------------------------------------------------------
If Yes to c or d, give details including form(s) of tobacco used (e.g. pipe,
cigar, chewing, snuff, etc.).
- ----------------------------------------------------------------------------
NONMEDICAL (Complete for all proposed insureds.) PART II
============================================================================
1a. Height and weight:
First Name Height Weight First Name Height Weight
ft in lbs ft in lbs
------------ --- --- ------ ------------ --- --- ------
ft in lbs ft in lbs
------------ --- --- ------ ------------ --- --- ------
ft in lbs ft in lbs
------------ --- --- ------ ------------ --- --- ------
b. For any proposed insured under age 1, give birth weight. lbs oz
----- -----
2a. Name, address and phone number of primary health care provider of
Proposed Insured named in #1, page 1:
/ / Check here if "None"
----------------------------------------
----------------------------------------
( )
----------------------------------------
b. Date and reason last consulted
----------------------------------------
----------------------------------------
c. Results
---------------------------------------------------------------
3a. Name, address and phone number of primary health care provider of
Other Proposed Insured named in #2, page 1:
/ / Check here if "None"
----------------------------------------
----------------------------------------
( )
----------------------------------------
b. Date and reason last consulted
----------------------------------------
----------------------------------------
c. Results
---------------------------------------------------------------
4. Has any proposed insured had parents, brothers, or sisters who have had
diabetes, cancer, high blood pressure, heart disease, Huntington's
chorea, polycistic kidney disease or other congenital disorder?
/ / Yes / / No
- ----------------------------------------------------------------------------
If Yes, give details including relationship, condition, current age, or
age at death.
- ----------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
PART II -- CONTINUED (Complete for all proposed insureds.)
========================================================================================================================
5. IN THE PAST 10 YEARS, HAS ANY PROPOSED INSURED
HAD ANY INDICATION OF, BEEN DIAGNOSED AS HAVING, GIVE DETAILS FOR "YES" ANSWERS INCLUDING:
OR BEEN TREATED BY A PHYSICIAN OR OTHER HEALTH NAME AND
CARE PROVIDER FOR ANY DISEASE OR DISORDER OF QUES. ADDRESS OF PHYSICIAN/CLINIC
THE FOLLOWING: YES NO NO. PERSON DATE, DIAGNOSIS AND TREATMENT
----------- -------------------------------------------------
<S> <C> <C>
a. Eyes, ears, nose, throat, or skin? / / / /
b. Circulatory system (e.g. heart, blood or
blood vessels), such as chest pain, high
blood pressure, heart attack, heart murmur,
stroke, transient ischemic attack (TIA),
anemia, or phlebitis? / / / /
c. Digestive system (e.g. esophagus, stomach,
intestines, liver, gallbladder, or pancreas),
such as intestinal bleeding, ulcer, Crohn's
disease, hernia, hemorrhoids, colitis, or
diarrhea of more than one week's duration? / / / /
d. Endocrine (hormonal) system e.g. thyroid,
adrenal, or pituitary glands), such as
diabetes, thyroid, or other glandular
disorder? / / / /
e. Reproductive system (female or male,
e.g. breasts, ovaries, uterus, prostate,
or testes), such as menstrual disorder,
complications of pregnancy, or prostate
disorder? / / / /
f. Genitourinary system (e.g. kidney or
bladder), such as sugar, albumin or blood
in urine, or kidney stones? / / / /
g. Skeletal system (e.g. muscles, bones,
or joints), such as arthritis, back or neck
disorder, sciatica, gout, or lupus or other
connective tissue disease? / / / /
h. Nervous system (e.g. brain, spinal cord,
or nerves), such as convulsions, epilepsy,
paralysis, multiple sclerosis, cerebral
palsy, dizziness, or fainting? / / / /
i. Respiratory system (e.g. lungs), such as
allergies, asthma, shortness of breath,
or emphysema? / / / /
j. Immune system (e.g. lymph nodes), such as
any immunosuppressive condition, Acquired
Immune Deficiency Syndrome (AIDS), AIDS
Related Complex (ARC), or any disorder or
swelling of the lymph nodes? / / / /
- ----------------------------------------------------------------------
6. IN THE PAST 10 YEARS, HAS ANY PROPOSED INSURED:
a. Been diagnosed or treated for cancer, tumor,
or cyst, either malignant or benign? / / / /
b. Tested positive for antibodies to the AIDS
virus (HIV positive)? / / / /
c. Been treated, received counseling, been
advised to seek counseling, or joined a
support organization because of alcohol
or drug usage? / / / /
d. Received any care or counseling (individual,
family, or group) for any emotional or mental
health problem, nervous disorder, depression,
anxiety, or stress? / / / /
e. Requested or received a pension, benefits,
or payment because of any injury, sickness,
or disability? / / / /
- ----------------------------------------------------------------------
7. OTHER THAN THE ABOVE, WITHIN THE PAST 5 YEARS,
HAS ANY PROPOSED INSURED:
(State specific reason why done or what prompted)
a. Had a checkup, physical consultation,
chiropractic or therapist consultation;
or any other illness or surgical procedure? / / / /
b. Been treated or evaluated at a hospital,
clinic, or other facility, or been advised
to have any test or surgical procedure
not completed? / / / /
c. Had an electrocardiogram, X-ray, blood
or heart studies, or other tests? / / / /
d. Received treatment or any medication for
any reason? / / / /
- ------------------------------------------------------------------------------------------------------------------------
Sign here ONLY IF Proposed Insured is age 0-17 and does not live with Adult Applicant:
--------------------------------------------------------------------------------------
Signature of person with whom child usually resides Date
</TABLE>
<PAGE>
SIGNATURE STATEMENT FOR APPLICATION
============================================================================
I have read, or had read to me, the statements and answers recorded on this
application. They are given to obtain this insurance and are, the best of
my knowledge and belief, true and complete and correctly recorded. I agree
that they will become part of this application and any contract issued. I
also agree that:
1. Except as provided in the Conditional Variable Life Insurance Agreement,
issued if the Minimum Conditional Insurance Premium is paid in advance,
no insurance will take effect unless and until:
a. A contract of insurance is issued and delivered;
b. The full first premium is paid; and
c. The health of all persons to be insured remains as stated in this
application.
2. No Representative has the authority to waive any question contained in
the application or to modify the application in any way.
3. Changes in amount, plan, benefits, classification, or issue age applied
for must be agreed to in writing by me.
4. THE FOLLOWING STATEMENTS MUST BE READ BY OR TO THE ADULT PROPOSED
INSURED(S) OR ADULT APPLICANT AND ANY THIRD PARTY OWNER(S):
a. I HAVE RECEIVED A CURRENT PROSPECTUS FOR THE CONTRACT APPLIED FOR.
b. I UNDERSTAND THAT UNDER THE CONTRACT APPLIED FOR THE AMOUNT OF THE
ACCUMULATED VALUE MAY INCREASE OR DECREASE DAILY BASED ON THE
INVESTMENT EXPERIENCE OF THE VARIABLE ACCOUNT AND THAT THE AMOUNT OR
DURATION OF THE DEATH BENEFIT MAY VARY WITH THE ACCUMULATED VALUE.
c. WITH THIS IN MIND, THE CONTRACT APPLIED FOR IS IN ACCORD WITH MY
INVESTMENT OBJECTIVES AND ANTICIPATED INSURANCE AND FINANCIAL NEEDS.
AUTHORIZATION TO OBTAIN AND DISCLOSE INFORMATION
FOR ANY PERSON TO BE INSURED
============================================================================
I authorize Lutheran Brotherhood, its agents, employees, reinsurers,
insurance support organizations, and their representatives to obtain
information about me or my children (if coverage is applied for on my
children) to evaluate this application. This information may be about
(a) age; (b) physical and mental health history, condition and care;
(c) occupation; (d) income; (e) avocations; (f) driving record; (g)
other personal characteristics; and (h) other insurance. I understand that
my records may contain information regarding the medical diagnosis or
treatment of HIV (AIDS virus), sexually transmitted diseases, drug and/or
alcohol abuse, and psychiatric or psychological treatment or care. I give
my specific authorization for these records to be released.
I authorize any physician, health care provider, hospital, clinic, medical
facility, the Veterans Administration, the Medical Information Bureau, Inc.
(MIB), employer, consumer reporting agency, or other insurance company to
release information about me or my children to Lutheran Brotherhood or its
representatives on receipt of a copy of this Authorization. Lutheran
Brotherhood or its representatives may also release this information about
me or my children to its reinsurers, to the MIB, or to another insurance
company to whom I have applied or may apply or to whom a claim has been
made. No other releases may be made except as allowed by law or as I
further authorize. I also understand that I have the right to revoke this
Authorization at any time except to the extent that the program or person
which is to release the information has already acted in reliance on it.
I have read this Authorization or had it read to me and know that I may
request to receive a copy.
I have received a copy of Lutheran Brotherhood's Notice regarding Consumer
Reports and the Medical Information Bureau, Inc. I authorize Lutheran
Brotherhood to obtain an investigative consumer report on me.
/ / I REQUEST TO BE PERSONALLY INTERVIEWED IF AN INVESTIGATIVE
REPORT IS DONE.
- ----------------------------------------------------------------
Names of children to be covered by this Authorization
THIS AUTHORIZATION IS VALID FOR 30 MONTHS FROM THE DATE IT IS SIGNED AND A
COPY IS AS VALID AS THE ORIGINAL.
SIGNATURE FOR APPLICATION AND AUTHORIZATION
============================================================================
- ----------------------------------------------------------------------------
Dated at (City and State) Date
- ----------------------------------------------------------------------------
Representative Signature RR#
- ----------------------------------------------------------------------------
Proposed Insured Signature (age 18 or over) or Adult Applicant Signature
if Proposed Insured is age 0-17
- ----------------------------------------------------------------------------
Other Proposed Insured Signature if applicable (age 18 or over)
- ----------------------------------------------------------------------------
Third Party Owner(s) Signature if applicable (all Trustees must sign)
<PAGE>
REPRESENTATIVE REPORT (Complete for all applications)
============================================================================
PLEASE ALSO COMPLETE VARIABLE PRODUCT SUITABILITY SUPPLEMENT ON PAGE 10
1. How long have you known the proposed insured(s)?
yrs mos How well?
------- ------- ------------------------------
2. Do any of the proposed insured(s and/or owner(s)
have a relationship with LB/LBVIP/LBSC? / / Yes / / No
If Yes, give details in number 13. (This includes
being the Insured, Annuitant, Owner or payor on
another contract or account, or having a fraternal
relationship with us.)
3. a. Maiden and/or any previous names:
----------------------------------
b. Former address (if not at present
address at least 2 yrs):
-------------------------------------------
c. Former employer (if not at present
employer at least 2 yrs):
------------------------------------------
4. a. Were all persons to be insured present when
the proof of insurability was completed? / / Yes / / No
b. If family coverage applied for, has any
family member, who qualified by age,
been omitted? / / Yes / / No
c. Is application the result of the inquiry
of the person(s) to be insured? / / Yes / / No
5. a. Do all child(ren) to be insured reside
with both parents? If No, give details
in number 13 below. / / Yes / / No
b. Is the child(ren) adopted or being adopted
by one or both of the parents? (Also
complete questions , , and .) / / Yes / / No
6. a. Is any proposed insured now in
military service? / / Yes / / No
b. Branch Rank Duties
---------- ---------- -------------------------------
c. Has any proposed insured been
alerted for overseas duty? / / Yes / / No
7. a. The following tests have been arranged for:
/ / Paramed Exam / / Blood Profile (including urine sample)
/ / Electrocardiogram / / Stress ECG / / M.D. Exam
b. Name and address of Paramed facility:
/ / Fees have been discussed
--------------------------------------
c. Pre-payment of $ required for APS from:
------- ----------------------
8. a. The most convenient time and place for the Personal History
Interview (PHI) call is:
Proposed Insured -- Time Frame - AM/PM
-------- ---------
Other Proposed Insured -- Time Frame - AM/PM
-------- --------
b. May we talk to the proposed insured's spouse? / / Yes / / No
9. ALTERNATE/ADDITIONAL COVERAGE on Proposed Insured
named in number 1 of this application:
a. / / Alternate LB Variable Life / / Additional LB Variable Life
b. Basic Benefits: Plan Initial Face Amount $
------------ ------------
c. Additional Benefits:
/ / WSA $ / / COLA ADB $ GIO $
----------- ---------- ----------
10. Is the BOND Magazine received by anyone in
the household of the proposed insured(s)? / / Yes / / No
11. SPLIT COMMISSIONS (if applicable)
Print name, RR number and percent commissions: Signatures of all RRs:
RR of Record No. %
---------------- ---- ---- ----------------------------
RR No. %
-------------------------- ---- ---- ----------------------------
RR No. %
-------------------------- ---- ---- ----------------------------
12. SOURCE OF BUSINESS (Circle one box for each category):
Appointment:
1. Cold Call 3. Direct Mail
2. Referral 4. Periodic Review
Process:
1. BNA 3. ELNA (ENA)
2. CNA 4. Other
Kind:
1. Personal 3. Charitable
2. Business 4. Other
- ----------------------------------------------------------------------------
13. DETAILS AND INSTRUCTIONS
- ----------------------------------------------------------------------------
REPRESENTATIVE REPORT SIGNATURE STATEMENT
- ----------------------------------------------------------------------------
I certify that I personally solicited and secured this application; that I
have read each question on it to all persons applying for this insurance and
have truly and accurately recorded the answers exactly as given. I state,
to the best of my knowledge, this application IS/IS NOT (CIRCLE ONE) for the
purchase of a contract that will replace any existing insurance or annuity
contract.
------------------- ---------------------------------------------
Date Representative Signature RR#
<PAGE>
[LOGO] LUTHERAN BROTHERHOOD
A Fraternal Benefit Society VARIABLE PRODUCT
Minneapolis, MN 55415 SUITABILITY SUPPLEMENT
============================================================================
Registered Representatives are required to make inquiries and provide
information relating to the financial condition of the purchasers of
variable products. A recommendation to purchase a variable product must be
based on a reasonable belief that the purchase is suitable. The proposed
insured(s) is urged to supply the following information to allow us to make
an informed judgment. Suitability is assessed by a Registered Principal of
Lutheran Brotherhood Securities Corp. and all information is kept
confidential.
1. NAME OF PROPOSED INSURED:
----------------------------------------------
Occupation:
------------------------------------------------------------
Employer's Name:
-------------------------------------------------------
Employer's Address:
----------------------------------------------------
----------------------------------------------------
2. NAME OF OTHER PROPOSED INSURED:
----------------------------------------
Occupation:
------------------------------------------------------------
Employer's Name:
-------------------------------------------------------
Employer's Address:
----------------------------------------------------
----------------------------------------------------
3. TAXABLE INCOME: (Joint income, if applicable)
/ / Under $15,000 / / $75,000 - $149,999
/ / $15,000 - $49,999 / / $150,000 and over
/ / $50,000 - $74,999
Estimated Tax Bracket: %
------------
4. PRESENT FINANCIAL ASSETS: (include amount being invested)
(Joint assets, if applicable)
Savings: $ Business: $
--------------- --------------
Mutual Funds: $ Other: $
--------------- --------------
Bonds: $
---------------
Debt
Stocks: $ Obligations: ($ )
--------------- --------------
Residence: $ Net Worth: $
--------------- ==============
5. INSURANCE: (Joint coverage, if applicable)
Life insurance owned: Face Amount $ Cash Value $
----------- -----------
Disability Income insurance owned: Monthly Amount $
-----------
6. INVESTMENT TIME HORIZON: / / Short-Term (0-3 yrs)
/ / Long-Term (3+ yrs)
7. RISK TEMPERAMENT: (From Fact Finder)
/ / Conservative / / Moderate / / Aggressive
8. THE FOLLOWING INFORMATION IS MANDATORY:
If the proposed insured(s)/Owner is employed by or associated with a
member of the NASD, please complete:
-----------------------------------------------------------------------
Firm Name and Address
I have read the statements and answers recorded on this Suitability
Supplement and they are, to the best of my knowledge and belief, true and
complete and correctly recorded.
I have received and reviewed a current prospectus and understand the
investment objectives and potential risk. I understand that the value of
the units is not guaranteed. When units are redeemed, they may be worth
more or less than what was paid for them. I understand there may be a
surrender charge as explained in the prospectus and for this and other
reasons, most investments should be made for the long-term (three or more
years).
I agree to arbitrate any disputes between Lutheran Brotherhood, Lutheran
Brotherhood Securities Corp. and me. I specifically agree and recognize
that all controversies which may arise between Lutheran Brotherhood,
Lutheran Brotherhood Securities Corp., its agents, representatives or
employees and me, concerning any transaction, account or the interpretation,
performance or breach of this agreement between Lutheran Brotherhood,
Lutheran Brotherhood Securities Corp. and me will be determined by
arbitration to the full extent provided by law. Such arbitration will be in
accordance with the rules then in effect of the National Association of
Securities Dealers, Inc.
I further understand and agree that:
1. Arbitration is final and binding on all parties.
2. I am waiving my right to seek remedies in court, including the right
to a jury trial.
3. Pre-arbitration discovery is generally more limited than and different
from court proceedings.
4. The arbitrators' award is not required to include factual findings or
legal reasoning and any party's right to appeal or seek modification
of rulings by the arbitrators is strictly limited.
5. The panel of arbitrators will typically include a minority of
arbitrators who are affiliated with the securities industry.
I acknowledge that this supplement contains a binding and enforceable
arbitration agreement.
- ----------------------------------------------------------------------------
Dated at (City and State) Date
- ------------------------------------- ------------------------------------
Proposed Insured Signature (age 18 or over) or Adult Applicant's Signature
if Proposed Insured is age 0-17
- ----------------------------------------------------------------------------
Other Proposed Insured Signature if applicable (age 18 or over)
- ----------------------------------------------------------------------------
Third Party Owner(s) Signature applicable (all Trustees must sign)
- ----------------------------------------------------------------------------
Registered Representative Signature RR#
===================================================================
(Home Office use only)
---------------------------------------------------------------
Suitability Approved by Registered Principal Date
===================================================================
#20767
<PAGE>
EXHIBIT 2
625 Fourth Avenue South
Minneapolis, Minnesota 55415
(612) 340-5727
FAX: (612) 340-7062
LUTHERAN
[LOGO] BROTHERHOOD
James M. Odland
Assistant Vice President
Law Division
January 17, 1994
Lutheran Brotherhood
625 Fourth Avenue South
Minneapolis, MN 55415
Gentlemen:
In connection with the proposed registration under the Securities Act of
1933, as amended, of individual flexible premium variable life insurance
contracts (the "Contracts") and interests in LB Variable Life Insurance
Account I (the "Variable Account"), I have examined documents relating to
the establishment of the Variable Account by the Board of Directors of
Lutheran Brotherhood (the "Society") as a separate account for assets
applicable to variable life insurance contracts, pursuant to Minnesota
Statutes Sections 61A.13 to 61A.21, as amended, and the Registration
Statement, on Form S-6, as amended by Amendment No. 1 thereto, File
No. 33-72386 (the "Registration Statement"), and I have examined such other
documents and have reviewed such matters of law as I have deemed necessary
for this opinion, and I advise you that in my opinion:
1. The Variable Account is a separate account of the Society duly
created and validly existing pursuant to the laws of the State of
Minnesota.
2. The Contracts, when issued in accordance with the Prospectus
constituting a part of the Registration Statement and upon compliance
with applicable local law, will be legal and binding obligations of
the Society in accordance with their respective terms.
3. The portion of the assets held in the Variable Account equal to
reserves and other contract liabilities with respect to the Variable
Account are not chargeable with liabilities arising out of any other
business the Society may conduct.
I consent to the filing of this opinion as an exhibit to the Registration
Statement and to the use of my name under the heading "Legal Opinions" in
the Prospectus constituting a part of the Registration Statement and to the
references to me wherever appearing therein.
Very truly yours,
/s/James M. Odland
James M. Odland
#20768
<PAGE>
EXHIBIT 8
-----
DESCRIPTION OF LUTHERAN BROTHERHOOD'S
PURCHASE, REDEMPTION AND TRANSFER PROCEDURES
FOR CONTRACTS PURSUANT TO RULE 6e-3(T)(b)(12)(ii)
=================================================
This document sets forth the administrative procedure that will be followed
by Lutheran Brotherhood (LB) in connection with the issuance of its flexible
premium variable life insurance contract (the 'Contract') described in this
Registration Statement, the transfer of the Contract's assets, and the
redemption by the Contract Owners of their interest in the Contracts.
Capitalized terms that are not defined herein shall have the same meaning as
such terms are defined in the Flexible Premium Variable Life Insurance
Contract Prospectus.
"PUBLIC OFFERING PRICE":
PURCHASE AND RELATED TRANSACTIONS
=================================
The following is a summary of the principle Contract provisions and
administrative procedures which constitute either direct or indirect
purchase transactions. The insurance aspects of the Contract cause
procedures to differ in certain significant respects from purchase
procedures for mutual funds or contractual plans.
Premium Schedules and Underwriting Standards
- --------------------------------------------
Premiums for the Contract will not be the same for all Contract Owners. LB
requires payment of the minimum Contract Issuance Premium before the
Contract will be issued. The Minimum Contract Issuance Premium will
generally equal the initial Scheduled Premium selected by the Contract
Owner, or, for automatic payment plans, the greater of two Death Benefit
Guarantee Premiums 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 for the
next Contract Month, additional Scheduled Premium payment(s) sufficient for
the next Contract Month will be required.
The Contract has a Death Benefit Guarantee if the Contract Owner chooses to
pay premiums sufficient to maintain the Death Benefit Guarantee. This
premium is set forth in the Contract. If the Death Benefit Guarantee is in
effect, LB guarantees the Contract will stay in force until 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 6 to 31 years (varying with the
Insured's Attained Age at issue) from the Date of Issue. The Accumulated
Value is not guaranteed.
The Contract Owner will determine a Scheduled Premium that provides for a
level premium payable at a fixed interval. Payment of the Scheduled Premium
is not, however, mandatory and failure to do so will not in itself cause the
Contract to lapse. Instead, Contract Owners may determine the amount and
timing of subsequent premiums subject to the following restrictions:
* In most cases, payment of a cumulative premium sufficient to
maintain the Death Benefit Guarantee will be required to keep the
Contract in force during the first few Contract Years.
* LB will return to the Contract Owner any premium paid that would
exceed the current maximum premium payments allowed for life
insurance under Federal law.
The Contract will stay in force as long as the Cash Surrender Value is
sufficient to pay the Monthly Deduction (the charges imposed in connection
with the Contract.) The amount of premium, if any, required to keep the
Contract in force depends on the Cash Surrender Value which in turn depends
on such factors as the investment experience, the amount of any outstanding
loans, and the Decrease Charge. The Monthly Deduction varies with the cost
of insurance charge. The cost of insurance is based on the principle of
pooling and distribution of mortality risks, which assumes that each
Contract owner pays cost of insurance charges commensurate with his or her
mortality risk which is actuarially determined based on the Insured's sex,
Attained Age, and premium class. The same rate applies to all Insureds in a
given actuarial category and within the same initial Face Amount category.
The rate is based on LB's expectations as to future mortality experience.
The Contract will be sold according to established underwriting standards
and state insurance laws. State insurance laws prohibit unfair
discrimination among Contract Owners but recognize that premiums must be
based on factors such as age, sex, health, and occupation.
Application and Initial Premium Processing
- ------------------------------------------
LB will follow certain insurance underwriting procedures to determine
whether the proposed Insured is insurable. The process of underwriting
evaluates risks from the information provided on the application,
verification procedures such as medical examinations, and additional
information furnished by the applicant on request. LB will not issue the
Contract until the underwriting procedure has been completed.
At the time an application 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 or 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 will generally equal the initial Scheduled Premium 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
Schedule 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 for the next Contract Month, additional Schedule
Premium payment(s) sufficient for 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. 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.
Allocation of Net Premiums
- --------------------------
The Contract Owner will, in the Application, 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 to 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%. The allocation for future Net Premiums
may be changed without charge at any time by providing LB with Written
Notice.
Premium Processing
- ------------------
Premium Expense Charges will be deducted from each premium payment. The
Premium Expense Charges will consist of a sales charge of 5% of each premium
payment; 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). The net premium is
allocated to the Variable Account on the Valuation Date on or next following
the date LB receives the premium payment.
Reinstatement
- -------------
A Contract that lapses without value may be reinstated at any time within
5 years after the expiration of the grace period and before the Maturity
Date by submitting the following items to LB:
1. Written application for reinstatement;
2. Evidence of insurability satisfactory to LB;
3. Payment or reinstatement of the Contract Debt (including any loan
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
payment or loan repayment sufficient to increase Cash Surrender
Value (that is, Accumulated Value less any Contract Debt and any
Decrease Charge) to an amount equal to Monthly Deductions and
interest on Contract loans for the next two Contract Months based
on Unit Values on the date of reinstatement.
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 has been reinstated effective as of
the expiration of the grace period. Any Decrease Charge and any Initial
Monthly Administrative Charge that applied to the Contract at the expiration
of the grace period will be reinstated. The period of time from Contract
termination until Contract reinstatement will not be taken into account in
determining when the ten year time periods for the Decrease Charge and the
Initial Monthly Administrative Charge expire or in determining when the
first Contract Year expires for the purpose of calculating the Contingent
Deferred Sales Charge. The cost of insurance after reinstatement will be
based on the Attained Age of the Contract Owner. 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. No contract charges are
made for the period of time from Contract termination to Contract
reinstatement.
The effective date of reinstatement will be the date the reinstatement
application was approved.
The Death Benefit Guarantee cannot be reinstated after lapse of the
Contract.
Loan Repayments
- ---------------
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.
Debt may be repaid any time before the Maturity Date while the Insured is
living. 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. LB will
transfer the amount of such repayment (as well as any prepaid loan interest
that was unearned by LB at the time of repayment) from the Loan Account 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 transfer basis with LB's approval). 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, as well as any unearned prepaid loan interest, 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 loan repayment;
otherwise, it will be considered a premium payment.
Correcting a Misstatement of Age or Sex
- ---------------------------------------
If the Insured's age or sex was misstated, the Accumulated Value and the
Death Benefit will be adjusted, using the most recent Cost of Insurance
Rates, to the amount that would have been provided based on the correct age
and sex.
"REDEMPTION PROCEDURES"
SURRENDER AND RELATED TRANSACTIONS
==================================
The following is a summary of the principle Contract provisions and
administrative procedures which constitute redemptions under the Contract.
These procedures differ in certain significant respects from redemption
procedures for mutual funds or contractual plans.
Cash Surrender Value
- --------------------
At any time before the earlier of the death of the Insured and the Maturity
Date, the Contract Owner may totally surrender the Contract by giving
Written Notice to LB. The Cash Surrender Value will equal the Accumulated
Value less any Contract Debt and any Decrease Charge.
The Accumulated Value of the Contract is the total amount of 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.
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, to determining the amount available for
Contract loans, and to determining the amount available upon partial or
total surrender of the Contract.
Partial Surrender
- -----------------
The Contract Owner may also partially surrender the Contract by sending
Written Notice to LB. The amount of any Partial Surrender must be at least
$500 and the remaining Cash Surrender Value must not be 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 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 deduction basis with LB's
approval). A surrender charge of $25 or 2% of the amount withdrawn,
whichever is less, will be deducted by LB from the amount withdrawn.
Death Benefits and Benefit at Maturity
- --------------------------------------
As long as the Contract remains in force, LB will, upon due proof of the
Insured's death, pay the death proceeds of the Contract 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. The amount payable under the designated Death
Benefit Option will be reduced by any outstanding Contract Debt and any due
and unpaid Contract charges, and will be increased by any additional
insurance benefits provided for in the Contract.
The Contract provides two Death Benefit Options: Option A and Option B.
The Contract Owner designates the Death Benefit Option in the application.
The Option A 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 set forth in the
Contract (with the Accumulated Value in each case being determined on the
Valuation Date on or next following the Insured's date of death).
The Option B 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 specified percentage
set forth in the Contract.
If the Insured is living on the Maturity Date of the Contract, LB will pay
the Accumulated Value of the Contract on the Maturity Date, reduced by any
Contract Debt. The Maturity Date will be shown in the Contract and will be
the Contract Anniversary on or next following the Insured's 96th birthday.
Loans
- -----
The Contract Owner may at any time after the first Contract Year borrow
money from LB using the Contract as the only security for the loan. The
Contract Owner may at any time after the first Contract Year obtain Contract
loans in a minimum amount of $100 but Contract loans can not exceed in the
total 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.
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.
The interest rate charged on Contract loans accrues daily at an annual rate
of 7.4%, payable in advance, which is equivalent to 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 remainder 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.
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.
Like total or partial surrenders, Contract loans are a means of withdrawing
Accumulated Value from the Contract. A total or partial surrender may have
tax consequences depending on the circumstances of such withdrawal.
Contract Lapse
- --------------
The failure to make a Schedule Premium payment will not itself cause a
Contract to lapse. Subject to the Death Benefit Guarantee, lapse will only
occur when (a) the 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 sufficient 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, 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. Thus, the Contract does
not lapse, and the insurance coverage continues, until the expiration of a
grace period after the Monthly Anniversary on which (a) Cash Surrender
Value is insufficient to pay the Monthly Deduction chargeable on that
Monthly Anniversary or (b) Contract Debt exceeds the Accumulated Value less
any Decrease Charge.
When the Contract enters the grace period, LB will notify the Contract
Owner. Any Accumulated Value in the Subaccounts for this contract will be
transferred to the general account until we receive the required payment.
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.
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 lapse.
On any Monthly Anniversary when the Death Benefit Guarantee is in effect,
the Contract will not lapse.
Transfers
- ---------
Accumulated Value may be transferred among the Subaccounts of the Variable
Account. The total amount transferred each time must be at least $500
(unless the total Accumulated Value in a Subaccount is less than $500, in
which case the entire amount may be transferred). LB will process transfers
and determine all values in connection with transfers on the day on which
the transfer request is received.
After two transfers have been made in any Contract Year, a transfer charge
of $10 will be deducted from each subsequent amount transferred during the
remainder of such Contract Year. LB may increase this charge to an amount
not exceeding $20. Transfers resulting from Contract loans, the exercise of
exchange privileges or the initial reallocation of Accumulated Value from
LB's General Account to the Variable Account will not be subject to a
transfer charge and will not count against the two free transfers in any
Contract Year. All transfers included in a request are treated as one
transfer transaction. Under present law, transfers are not taxable
transactions.
#20770
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the LB
Variable Insurance Accout I Annual Report to Shareholders dated December 31,
1997 and is qualified in its entirety by reference to such Annual Report.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 74,012,529
<INVESTMENTS-AT-VALUE> 81,225,948
<RECEIVABLES> 300,606
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 81,526,554
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 179,798
<TOTAL-LIABILITIES> 179,798
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 81,346,756
<DIVIDEND-INCOME> 2,104,389
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 376,629
<NET-INVESTMENT-INCOME> 1,727,760
<REALIZED-GAINS-CURRENT> 2,982,403
<APPREC-INCREASE-CURRENT> 4,486,562
<NET-CHANGE-FROM-OPS> 9,196,725
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,159,102
<NUMBER-OF-SHARES-REDEEMED> 1,632,425
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 37,392,710
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
