<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 23, 1998
FILE NO. 33-72830
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 6
TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES OF UNIT
INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
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A. EXACT NAME OF TRUST:
JPF SEPARATE ACCOUNT C
B. NAME OF DEPOSITOR:
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
C. COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES:
ONE GRANITE PLACE CONCORD, NH 03301
D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
RONALD R. ANGARELLA PRESIDENT
JEFFERSON PILOT SECURITIES CORPORATION
ONE GRANITE PLACE
CONCORD, NH 03301
COPIES TO:
CHARLENE GRANT, ESQ.
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
ONE GRANITE PLACE
CONCORD, NH 03301
JOAN E. BOROS, ESQ.
JORDEN, BURT, BOROS, CIOCHETTI,
BERENSON & JOHNSON LLP
1025 THOMAS JEFFERSON STREET, N.W.
SUITE 400 EAST
WASHINGTON, D.C. 20007-0805
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IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE
BOX)
[_] IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (B)
[X] ON MAY 1, 1998 PURSUANT TO PARAGRAPH (B)
[_] 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(I)
[_] ON MAY 1, 1997 PURSUANT TO PARAGRAPH (A)(I) OF RULE (485)
[_] THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR A
PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT.
E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:
UNITS OF INTEREST IN THE SEPARATE ACCOUNT UNDER INDIVIDUAL AND SURVIVOR-
SHIP FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICIES.
F. PROPOSED MAXIMUM OFFERING PRICE TO THE PUBLIC OF THE SECURITIES BEING
REGISTERED:
REGISTRATION OF INDEFINITE AMOUNT OF SECURITIES UNDER THE SECURITIES ACT
OF 1933 PURSUANT TO RULE 24F-2 UNDER THE INVESTMENT COMPANY ACT OF 1940.
G. AMOUNT OF FILING FEE:
AN INDEFINITE AMOUNT OF THE REGISTRANT'S SECURITIES HAS BEEN REGISTERED
PURSUANT TO A DECLARATION, UNDER RULE 24F-2 UNDER THE INVESTMENT COMPANY
ACT OF 1940, SET OUT IN THE FORM S-6 REGISTRATION STATEMENT. REGISTRANT
FILED A RULE 24F-2 NOTICE FOR THE FISCAL YEAR ENDING DECEMBER 31, 1997
ON MARCH 31, 1998.
H. APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after the effective date.
Registrant elects to be governed by Rule 6e-3(T)(b)(13)(i)(B) under the In-
vestment Company Act of 1940, with respect to the policy described in the Pro-
spectus.
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<PAGE>
THE JPF HERITAGE SERIES
JP FINANCIAL SEPARATE ACCOUNT C
INDIVIDUAL AND SURVIVORSHIP FLEXIBLE
PREMIUM VARIABLE LIFE INSURANCE POLICIES
Issued by
Jefferson Pilot Financial Insurance Company
One Granite Place
Concord, New Hampshire 03301
(603) 226-5000
This Prospectus describes two forms of a flexible premium variable life
insurance policy issued by Jefferson Pilot Financial Insurance Company ("JP
Financial"): an individual flexible premium variable life insurance policy form
("JP Financial Heritage I") and a survivorship flexible premium variable life
insurance policy form ("JP Financial Heritage II") (collectively the "Policy" or
"Policies"), The Policies are designed to provide a Policyowner with both
lifetime insurance protection and maximum flexibility in connection with premium
payments and death benefits, together with the opportunity to participate in the
investment experience of JPF Separate Account C ("Separate Account C"). Although
each Policy contains a schedule of intended premium payments ("Planned Periodic
Premiums") and an intended frequency of premium payments ("Premium Frequency"),
a Policyowner may, subject to certain restrictions, vary the frequency and
amount of the premium payments and increase or decrease the level of life
insurance benefits payable under the Policy. The flexibility allows a
Policyowner to provide for changing insurance needs within the framework of a
single insurance policy. Unlike traditional insurance protection providing fixed
benefits, the Policyowner participates in the investment experience of Separate
Account C. Accumulation Value under the Policies will increase with positive
investment experience and decrease with negative investment experience.
Accumulation Value in Separate Account C is not guaranteed and could decline to
zero.
JP Financial Heritage I provides life insurance coverage on one Insured,
with the Death Benefit payable at the Insured's death. JP Financial Heritage II
provides life insurance coverage on two Insureds, with the Death Benefit payable
upon the death of the last surviving Insured. If Net Premiums are allocated to
Separate Account C, the amount of the Death Benefit may reflect the investment
experience of the chosen Divisions, as well as the frequency and amount of
premiums, any withdrawals of Cash Value ("withdrawal"), and the charges assessed
in connection with the Policy. As long as the Policy remains in force, the Death
Benefit will not be less than the current Specified Amount of the Policy,
reduced by any outstanding indebtedness and any due and unpaid fees and charges.
The minimum initial Specified Amount is $500,000 for JPF Heritage I and
$2,000,000 for JP Financial Heritage II. Alter a withdrawal, the Specified
Amount may not be reduced to less than $250,000 for JP Financial Heritage I and
$500,000 for JP Financial Heritage II Policy.
The Death Benefit is payable under two options. The Policyowner will make
two elections to determine the Death Benefit under the Policy. First, the
Policyowner will choose one of two Death Benefit options offered under the
Policy. Second, the Policyowner will choose the Death Benefit qualification
test, which is the method for qualifying the Policy as a life insurance contract
for purposes of Federal tax law. In general, under Death Benefit Option I, the
Death Benefit payable under the Policy is equal to the current Specified Amount.
Under Death Benefit Option II, the Death Benefit equals the current Specified
Amount plus the Accumulation Value of the Policy on the date of death. The
Policy will also increase the Death Benefit if necessary to ensure that the
Policy will continue to qualify as life insurance under Federal tax laws. The
Policyowner may not change the Death Benefit qualification test once selected
but may, subject to certain restrictions, change from one death benefit option
to the other after the Policy has been issued.
The initial premium payment must be sufficient to keep the Policy in force
for at least three months. If a Policyowner chooses the Guaranteed Death Benefit
Rider, the Death Benefit will be guaranteed to never be less than the Specified
Amount, provided that a cumulative minimum premium requirement is met. No
premium payment may be less than $500.
The Policy will remain in force so long as Cash Value exceeds indebtedness
and Cash Value less indebtedness is sufficient to pay certain monthly charges
imposed in connection with the Policy. The Cash Value equals the Accumulation
Value less any Surrender Charge. Accumulation Value in Separate Account C will
reflect the investment experience of the chosen Divisions, the amount and
frequency of premium payments, any withdrawals, and charges imposed in
connection with the Policy. Adherence to the schedule of Planned Periodic
Premiums will not assure the Policy will remain in force. The Policyowner bears
the entire investment risk for all amounts allocated to Separate Account C; no
minimum Accumulation Value is guaranteed and the Accumulation Value could
decline to zero. So long as Cash Value exceeds indebtedness and subject to
certain conditions described in this Prospectus, a Policyowner may obtain policy
loans at any time after the first policy anniversary and may make withdrawals at
any time. Both withdrawals and policy loans must be made prior to the Policy's
Maturity Date.
The Policyowner may allocate Net Premiums to one or more of the Divisions
or to JP Financial's General Account on the Allocation Date. Each Division will
invest solely in a corresponding portfolio (a "Portfolio") of J.P. Morgan
Series Trust II (the "Trust"). Prior to the Allocation Date the Net Premiums
paid will be deposited in JP Financial's General Account. There is a "free look"
period during which the Policyowner may cancel the Policy. If the Policyowner
elects during this "free look" period to cancel the Policy, JP Financial will
reimburse, within seven days from the date the Policy is surrendered to JP
Financial, the full amount of premium paid. The accompanying Prospectus for the
Trust and the Statement of Additional Information, available on request,
describe the investment objectives and risks of the five Portfolios of the
Trust. The Policies described in this Prospectus are not available in all
states.
JP Financial believes the Policy will in general receive favorable tax
treatment under the Internal Revenue Code of 1986 ("the Code"). However, because
there are issues as to which the law is developing or changing, there can be no
guarantees. Information in this Prospectus is not intended as tax advice and JP
Financial recommends that prospective purchasers rely only on the advice of a
qualified tax adviser. Prospective purchasers of this Policy are advised that
replacement of existing insurance coverage may not be financially advantageous
and should consult with their financial advisers with respect to the Policy. It
may also not be advantageous to purchase this Policy if the prospective
purchaser already owns a flexible premium variable life insurance policy.
This Prospectus generally describes only the portion of the Policy
involving Separate Account C. For a brief summary of Jefferson Pilot Financial's
General Account, see "THE GENERAL ACCOUNT."
This Prospectus Is Valid Only If Accompanied Or Preceded By
A Current Prospectus For J.P. Morgan Series Trust II.
HERITAGE I AND HERITAGE II VARIABLE UNIVERSAL LIFE INSURANCE POLICIES AND SHARES
OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF OR GUARANTEED BY ANY BANK. THEY
ARE NOT FEDERALLY INSURED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY. INVESTING
IN THE CONTRACTS INVOLVES CERTAIN INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL INVESTED. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES DIVISION, NOR HAS
THE COMMISSION, OR ANY STATE SECURITIES DIVISION, PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
Please Read This Prospectus Carefully and Retain It For Future Reference.
The Date of This Prospectus is May 1, 1998
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page Page
---- ----
<S> <C> <C> <C>
DEFINITIONS....................................... 3
SUMMARY........................................... 4 OTHER MATTERS......................................... 23
JEFFERSON PILOT FINANCIAL INSURANCE Voting Rights..................................... 23
COMPANY........................................... 9 Additions, Deletions or Substitutions of
JPF SEPARATE ACCOUNT C............................ 9 Investments....................................... 23
Divisions..................................... 9 Annual Report..................................... 23
J.P. MORGAN SERIES TRUST II....................... 9 Confirmation...................................... 23
THE POLICIES...................................... 10 Limitation on Right to Contest.................... 24
General....................................... 10 Misstatements..................................... 24
Payment of Premiums........................... 11 Suicide........................................... 24
Guaranteed Death Benefit Premiums............. 11 Beneficiaries..................................... 24
Premium Limitations........................... 11 Postponement of Payments.......................... 24
Allocation of Premiums........................ 11 Assignment........................................ 24
Transfers..................................... 12 Illustration of Benefits and Values............... 25
Telephone Transfers, Loans and Reallocations.. 13 Non-Participating Policy.......................... 25
Policy Lapse.................................. 13 Year 2000 Matter.................................. 25
Reinstatement................................. 13 THE GENERAL ACCOUNT................................... 25
Policy "Free Look"............................ 14 General Description............................... 25
CHARGES AND DEDUCTIONS............................ 14 General Account Accumulation Value................ 26
Premium Charges............................... 14 Determination of Charges.......................... 26
Monthly Deduction............................. 14 Premium Deposit Fund.............................. 26
Risk Charge................................... 15 DISTRIBUTION OF THE POLICY............................ 26
Surrender Charge.............................. 15 Group or Sponsored Arrangements................... 27
Administrative Fees........................... 16 MANAGEMENT OF JP FINANCIAL............................ 28
Other Charges................................. 16 Executive Officers and Directors of JP Financial.. 28
POLICY BENEFITS AND RIGHTS........................ 16 Executive Officers (Other Than Directors)......... 28
Death Benefits................................ 16 STATE REGULATION OF JP FINANCIAL...................... 29
Guaranteed Death Benefit...................... 18 FEDERAL TAX MATTERS................................... 29
Combined Requests............................. 18 Tax Considerations................................ 29
Maturity of the Policy........................ 18 Policy Proceeds................................... 29
Optional Insurance Benefits................... 18 Charge for JP Financial Income Taxes.............. 31
Settlement Options............................ 19 EMPLOYEE BENEFIT PLANS................................ 32
CALCULATION OF ACCUMULATION LEGAL PROCEEDINGS..................................... 32
VALUE............................................. 20 EXPERTS............................................... 32
Unit Values................................... 20 REGISTRATION STATEMENT................................ 32
Net Investment Factor......................... 21 FINANCIAL STATEMENTS.................................. 32
CASH VALUE BENEFITS............................... 21 ILLUSTRATIONS......................................... A-1
Surrender Privileges.......................... 21
Policy Loans.................................. 22
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. JP FINANCIAL DOES NOT AUTHORIZE ANY
INFORMATION OR REPRESENTATIONS REGARDING THE OFFERING DESCRIBED IN THIS
PROSPECTUS OTHER THAN AS CONTAINED IN THIS PROSPECTUS, THE PROSPECTUS OF THE
TRUST OR THE STATEMENT OF ADDITIONAL INFORMATION OF THE TRUST.
2
<PAGE>
DEFINITIONS
In addition to terms which are defined elsewhere in this Prospectus, the
following words and phrases shall have the indicated meanings:
Accumulation Value--The total amount that a Policy provides for investment
at any time plus the amount held as collateral for Policy Debt.
Age--The Insured's age at his or her nearest birthday.
Allocation Date--The date when the initial premium is placed in the
Divisions and the General Account in accordance with the Policyowner's
allocation instructions in the application. The Allocation Date is 20 days from
the date the Policy is issued.
Attained Age--The age of the Insured at the last policy anniversary.
Beneficiary--The person designated by the Policyowner in the application to
receive the Death Benefit proceeds. If changed, the Beneficiary is as shown in
the latest change filed with JP Financial. If no Beneficiary survives the
Insured, the Policyowner or the Policyowner's estate will be the Beneficiary.
The interest of any Beneficiary is subject to that of any assignee.
Cash Value--The Accumulation Value less any applicable Surrender Charge.
This amount less the amount of
Policy Debt is payable to the Policyowner on the earlier of surrender of the
Policy or the Maturity Date.
Date of Receipt--Any business day of JP Financial prior to 4:00 P.M.
Eastern time, on which a notice or premium payment is received at JP Financial's
service center or home office.
Death Benefit--The amount, less the amount of Policy Debt, which is payable
to the Beneficiary under the Policy upon the death of the Insured under JPF
Heritage I and the death of the last surviving Insured under JPF Heritage II.
Division--A separate division of Separate Account C which invests
exclusively in the shares of a specified Portfolio of the Trust.
General Account--The assets of JP Financial other than those allocated to
Separate Account C or any other separate account.
Insured(s)--The person(s) upon whose life the Policy is issued.
Issue Age--The Insured's age at his or her nearest birthday on the Policy
Date.
Joint Equal Age--On JPF Heritage II, this will be calculated pursuant to a
formula which converts the specific age, gender and underwriting classifications
of the two Insureds into one age. The Joint Equal Age is used in determining
issue age limitations, minimum premiums and guaranteed death benefit premiums.
Loan Value--Generally, 90% of a Policy's Cash Value on the date of a loan.
Maturity Date-- Unless otherwise specified, the Maturity Date will be the
policy anniversary nearest to the Insured's 100th birthday for JPF Heritage I
and the younger Insured's 100th birthday for JPF Heritage II.
Monthly Anniversary Date--The same day in each month as the Policy Date.
Net Premium--The gross premium less a 2.5% state premium tax charge, a
1.25% Federal deferred acquisition cost tax charge and a 3% sales charge.
Owner (Policyowner)--The person or entity so designated in the application
or as subsequently changed.
Policy Date--The date set forth in the Policy, which is the date requested
by the Owner. If no date is requested, it is the date the Policy is issued. The
Policy Date is the date from which policy years, policy months, and policy
anniversaries will be determined. If the Policy Date should fall on the 29th,
30th, or 31st of a month, the Policy Date will be the 1st of the following
month.
Policy Debt--The sum of all unpaid policy loans and accrued interest
thereon.
Portfolio--A separate investment Portfolio of the Trust.
Proof of Death--One or more of the following:
(a) A copy of a certified death certificate.
(b) A copy of a certified decree of a court of competent jurisdiction
as to the finding of death.
(c) A written statement by a medical doctor who attended the Insured.
(d) Any other proof satisfactory to JP Financial.
Separate Account C--JPF Separate Account C, a separate investment account
created by JP Financial to receive and invest Net Premiums paid under the Policy
and other flexible premium variable life insurance policies offered by JP
Financial.
Specified Amount--The face amount of the Policy which is the minimum death
benefit payable under the Policy.
Surrender Charge--A sales charge assessed only upon surrender or
withdrawal.
Trust--J.P. Morgan Series Trust II, a series mutual fund.
Valuation Date--Each day that the company and the New York Stock Exchange
are open for business, as of the close of regular trading on the New York Stock
Exchange, which is currently 4:00 P.M. Eastern time. In addition to being closed
on all Federal holidays, the Company will be closed on Good Friday, the Friday
following Thanksgiving and the day before or following Christmas.
Valuation Period--The period between two successive Valuation Dates,
commencing at the close of regular trading on the New York Stock Exchange on
each Valuation Date and ending at the close of regular trading on the New York
Stock Exchange on the next succeeding Valuation Date.
3
<PAGE>
SUMMARY
The discussion in this Prospectus assumes that there is no policy loan
outstanding and that state variations will be covered by policy endorsement. The
terms under which the Policies are issued may also vary from those described in
this Prospectus based on particular circumstances. The description of the
Policies in this Prospectus is subject to the terms of the Policy purchased by a
Policyowner and any supplement or endorsement to it. An applicant may review a
copy of the Policy and any supplement or endorsement to it on request.
What are the variable life Policies being offered?
This Prospectus describes two forms of a flexible premium variable life
insurance policy issued by Jefferson Pilot Financial Insurance Company ("JP
Financial"). JP Financial Heritage I provides life insurance coverage on one
Insured, with the Death Benefit payable upon the death of such Insured. JP
Financial Heritage II provides life insurance coverage on two Insureds, with a
Death Benefit payable only when the last surviving Insured dies. The Policyowner
may, subject to certain limitations, make premium payments in any amount at any
frequency. The Policies are life insurance contracts with death benefits, cash
values, and offer features traditionally associated with life insurance. They
are called "flexible premium" because, unlike many insurance contracts, there
are no fixed schedules for premium payments, although each Policyowner may
establish a schedule of premium payments ("Planned Periodic Premiums"). This
flexibility permits a Policyowner to provide for evolving insurance needs within
a single insurance product. The minimum initial Specified Amount is $500,000 for
JP Financial Heritage I and $2,000,000 for JP Financial Heritage II. A
Policyowner may increase or decrease coverage. Increasing coverage under the
Policy, rather than purchasing another policy, may save additional
administrative costs. Increasing coverage under the Policy or purchasing another
policy may require new evidence of insurability. Increasing or decreasing
coverage may have certain tax consequences. See "FEDERAL TAX MATTERS".
The Policies generally work as follows: a Policyowner periodically pays a
premium to JP Financial. JP Financial subtracts an amount for state premium
taxes, the Federal deferred acquisition cost tax charge and the sales charge
from each premium. JP Financial then places the Net Premium into one or more of
the five Divisions and/or JP Financial's General Account as directed by the
Policyowner. Each Division invests its assets in a corresponding Portfolio of
the Trust. During the year, JP Financial takes charges from each Division and
credits or charges each Division with its respective investment experience. The
cost of insurance charge, which is deducted from each Policy's Accumulation
Value, varies monthly based on the sex, Issue Age, policy year, rating class of
the Insured(s), Specified Amount of the Policy, Death Benefit option and
applicable corridor percentage. A policyowner will incur a Surrender Charge for
a surrender or withdrawal during the first five policy years. See "CHARGES AND
DEDUCTIONS--Surrender Charge".
The Death Benefit is payable under two options. The Policyowner will make
two elections to determine the Death Benefit under the Policy. First, the
Policyowner will choose one of two Death Benefit options offered under the
Policy. Second, the Policyowner will choose the Death Benefit qualification
test, which is the method for qualifying the Policy as a life insurance contract
for purposes of Federal tax law. In general, under Death Benefit Option I, the
Death Benefit payable under the Policy is equal to the current Specified Amount;
under Death Benefit Option II, the Death Benefit is equal to the Specified
Amount plus the Accumulation Value of the Policy on the date of death. The
Policy will also increase the Death Benefit if necessary to ensure that the
Policy will continue to qualify as life insurance under Federal tax laws. The
Policyowner may not change the Death Benefit qualification test once selected
but may, subject to certain restrictions, change from Death Benefit Option I to
Option II, and vice versa, after the Policy has been issued. Prospective
Policyowners should be aware that there is no guarantee of Accumulation Value in
Separate Account C. See "POLICY BENEFITS AND RIGHTS--Death Benefits".
All persons insured must meet specified age limits and certain health and
other standards called "Underwriting Standards". The smoking status of the
Insureds is generally reflected in the cost of insurance rates. However, for JP
Financial Heritage I, distinctions between smokers and nonsmokers are only made
for Insureds age 15 and over. Policies issued in certain jurisdictions will not
directly reflect the sexes of the Insureds in either the premium rates or the
charges and values under the Policy.
Variations from the information contained in this Prospectus due to
individual state regulations are described in endorsements to the policy.
Policyowners should consult their policies for definitive information.
4
<PAGE>
What is the amount of the Premiums?
Premiums are flexible and the Policyowner may choose the amount and
frequency of premium payments provided each premium is at least $500. JP
Financial reserves the right to limit the amount of any increase in premium
payment.
The first premium is due on the Policy Date. The amount of the first
premium must be sufficient to keep the policy in force for three months.
Premiums are paid in advance, generally one year at a time; however, JP
Financial permits semi-annual, quarterly and monthly premium payments. Changes
in Premium Frequency and increases or decreases in the amount of Planned
Periodic Premiums may be made by the Policyowner. JP Financial will notify
Policyowners if any premiums, scheduled or unscheduled, would cause their
Policies to be deemed to be modified endowment contracts and allow for a refund
of the excess premium. See "FEDERAL TAX MATTERS--Policy Proceeds".
Failure to pay premiums in accordance with the schedule of Planned Periodic
Premiums will not automatically cause the Policy to lapse. Unless the Guaranteed
Death Benefit Rider is in force and the conditions under the Rider satisfied, it
will lapse when the Cash Value less outstanding Policy Debt is insufficient to
pay the monthly deduction for certain charges ("monthly deduction") and a grace
period expires without a sufficient payment by the Policyowner. Conversely,
payment of premiums in accordance with the schedule of Planned Periodic Premiums
does not necessarily mean that the Policy will remain in force. See "THE
POLICIES--Policy Lapse".
The Guaranteed Death Benefit Rider guarantees that the Death Benefit will
never be less than the Specified Amount provided that a cumulative minimum
premium requirement is met.
What is JPF Separate Account C?
Separate Account C is a separate account established by JP Financial
pursuant to the insurance laws of the State of New Hampshire and organized as a
registered unit investment trust under the Investment Company Act of 1940 (the
"1940 Act"). Such registration does not involve any supervision by the
Securities and Exchange Commission (the "Commission") of the management or
investment practices or policies of Separate Account C. Separate Account C is
presently comprised of five Divisions, each of which buys shares at net asset
value of the corresponding portfolio (a "Portfolio") of J.P. Morgan Series Trust
II (the "Trust").
What is J.P. Morgan Series Trust II?
The Trust is registered as an open-end diversified management company under
the 1940 Act. Its shares are offered to the Divisions, whether now in existence
or to be established by JP Financial. The Trust's shares may also be offered to
other separate accounts which may be established by JP Financial, its affiliated
insurance companies, or other insurance companies and to qualified pension and
retirement plans outside of the separate account context.
The Trust presently has five classes of shares, each representing a
Portfolio having a specific investment objective. The present Portfolios of the
Trust are the J.P. Morgan Treasury Money Market Portfolio, the J.P. Morgan Bond
Portfolio, the J.P. Morgan Equity Portfolio, the J.P. Morgan Small Company
Portfolio and the J.P. Morgan International Opportunities Portfolio.
The investment manager to the Trust is J.P. Morgan Investment Management,
Inc. ("JPMIM"), an affiliate of Morgan Guaranty Trust Company of New York
("Morgan Guaranty"). JPMIM receives fees from the Trust for providing investment
management services. The fees range from .20 percent to .60 percent of average
daily net assets of the Portfolios. See "J.P. MORGAN SERIES TRUST II".
What are the charges made by JP Financial?
State Premium Tax Charge and Federal DAC Tax Charge. These charges are
deducted from each premium payment, currently 2.5% for state premium taxes and
1.25% as a Federal deferred acquisition cost ("DAC") tax charge.
Sales Charge. A 3% sales charge is deducted from each premium payment. Also
see below "Surrender or Withdrawal Charges".
5
<PAGE>
Cost of Insurance Charge. This charge is calculated on each Monthly
Anniversary Date and deducted from each Policy's Accumulation Value. The charge
is based on the sex, Issue Age, policy year, rating class of the Insured(s),
Specified Amount, Death Benefit option and applicable corridor percentage.
Monthly cost of insurance rates will be determined by JP Financial based upon
its expectations as to future mortality experience. Cost of insurance rates are
guaranteed not to exceed or be increased above the maximum charge based upon the
Commissioner's 1980 Standard Ordinary Mortality Table.
Charge for Mortality and Expense Risks. This charge is imposed daily at an
annual rate of .65% on the assets of each Division. JP Financial will realize
income from this charge to the extent it is not needed to provide benefits and
pay expenses under the Policies.
Surrender or Withdrawal Charges. This sales charge is imposed at the time
of surrender or withdrawal during the first five policy years. It declines
annually from 5% to 0% of premiums paid in the first policy year.
Administrative Charge for Withdrawal or Transfer. JP Financial charges $100
for each withdrawal and for certain transfers between Divisions or between the
Divisions and the General Account. See "THE POLICIES--Transfers" for a
description of situations in which the transfer charge will be imposed.
Guaranteed Death Benefit Charge. If the Guaranteed Death Benefit Rider is
added to the Policy, a monthly charge of $.01 per $1,000 of Specified Amount
will be deducted each month from the Accumulation Value of the Policy.
Charge for Optional Rider Benefits. An additional charge is required if the
Policyowner elects to purchase certain optional insurance benefits by rider.
Charges are deducted monthly from a Policy's Accumulation Value. See "POLICY
BENEFITS AND RIGHTS--Optional Insurance Benefits".
See "CHARGES AND EXPENSES" for a fuller description of charges under the
Policies.
Is there a charge against Separate Account C for Federal income tax?
Currently no charge is made against any Division for Federal income taxes.
However, if JP Financial incurs, or expects to incur, income taxes attributable
to any Division of this class of Policies in future years, it reserves the right
to make a charge. See the discussion of the Federal DAC tax charge under
"CHARGES AND DEDUCTIONS--Premium Charges".
How are amounts allocated to each Division or the General Account?
The Policyowner indicates in the application the allocation of Net Premium
payments among the Divisions and the General Account. The initial Net Premium is
allocated on the Allocation Date and Net Premiums received after the Allocation
Date are allocated generally on the Date of Receipt. The minimum percentage of
any Net Premium payment allocated to any Division or the General Account is 1%.
The Policyowner may change his or her allocation of future premium payments by
written notice to JP Financial or by telephone, if the proper telephone
authorization is on file, without payment of any fee or penalty.
What is the relationship between the premium and the amount allocated to the
Divisions?
The initial Net Premium is allocated by JP Financial on the Allocation Date
among the Divisions and the General Account as directed by the Policyowner.
Prior to the Allocation Date the initial Net Premium is held in JP Financial's
General Account. The initial Net Premium is the initial gross premium, plus any
additional premium paid prior to the Allocation Date, less the state premium tax
charge, the Federal DAC tax charge and the sales charge. These charges also
apply to subsequent premium payments.
What commissions are paid to agents?
The Policies are sold by agents who represent JP Financial and are
registered representatives of Jefferson Pilot Securities Corporation or other
registered broker-dealers. Commissions payable to agents are described under
"DISTRIBUTION OF THE POLICY".
6
<PAGE>
What is the Death Benefit?
The Death Benefit under JP Financial Heritage I is the amount payable to
the named Beneficiary when the person insured under the Policy dies. The Death
Benefit under JP Financial Heritage II is the amount payable to the named
Beneficiary when the last surviving Insured dies. The Death Benefit proceeds
will equal the Death Benefit of the Policy, plus any additional rider benefits
included and then due, minus any outstanding Policy Debt or unpaid cost of
insurance charges or charges for riders.
Under Option I, the Death Benefit will be equal to the greater of the
Specified Amount or the Accumulation Value of the Policy on the date of death
multiplied by the corridor percentage. Under Option II, the Death Benefit is
equal to the Specified Amount plus the Accumulation Value of the Policy on the
date of death; provided, however, that under Option II, the Death Benefit can
never be less than the Accumulation Value on the date of death multiplied by the
corridor percentage. See "POLICY BENEFITS AND RIGHTS-Death Benefits". Under the
Guaranteed Death Benefit Rider the Death Benefit is guaranteed to never be less
than the Specified Amount provided that a cumulative minimum premium requirement
is met.
How does the Accumulation Value of a Policy vary in relation to the Divisions'
investment experience?
The Policy provides for Accumulation Value equal to the total of the
Policy's Accumulation Value in the Divisions and Accumulation Value in the
General Account. The Policy's Accumulation Value will reflect the amount and
frequency of premium payments, the investment experience of the Divisions, the
value of Net Premiums (Net Premiums plus credited interest), if any, allocated
to the General Account, policy loans, any withdrawals, and any charges imposed
in connection with the Policy. There is no minimum guaranteed Accumulation
Value.
What is the loan provision and how does a loan affect the Death Benefit,
Accumulation Value and Cash Value?
After the first policy anniversary, a Policyowner may borrow against the
Cash Value of his or her Policy. Generally, the maximum loan amount is 90% of
the Cash Value of the Policy on the date of the loan. Loan interest is payable
at the end of each policy year and all Policy Debt outstanding will be deducted
from proceeds payable at the Insured's death for JP Financial Heritage I and at
the death of the last surviving Insured for JP Financial Heritage II, upon
maturity, or upon surrender.
When a policy loan is made, a portion of the Policy's Accumulation Value
sufficient to secure the loan will be transferred to the General Account. A
policy loan removes the proceeds from the investment experience of Separate
Account C which will have a permanent effect on the Accumulation Value, the Cash
Value and the Death Benefit even if the loan is repaid.
There are two types of loans available. See "CASH VALUE BENEFITS--Policy
Loans" for a description of the two types of loans and their applicable interest
rates.
Is there a short-term cancellation right?
The Policyowner has the limited right to return a Policy for cancellation
and full refund of all premiums paid. JP Financial will cancel the Policy if it
is returned by mail or personal delivery to JP Financial, or to the agent who
sold the Policy, within 20 days after the delivery of the Policy to the
Policyowner. JP Financial will return to the Policyowner, within seven days, all
payments received on the Policy.
What transfers is a Policyowner allowed?
A Policyowner may transfer Accumulation Value among the Divisions and among
the Divisions and the General Account. However, transfers out of the General
Account are subject to restrictions. JP Financial currently permits up to 24
transfers per policy year, twelve of which will not incur a transfer charge. See
"THE POLICIES--Transfers" for a more complete description of the terms and
conditions of the transfer privileges under the Policies.
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Are the benefits under the Policies subject to Federal income tax?
Under current interpretations of the tax laws, all Death Benefits paid
under the Policies will generally be fully excludable from the gross income of
the Beneficiary for Federal income tax purposes. Treasury regulations require
that investments underlying the Policies be adequately diversified. JP Financial
believes it is presently in compliance with the regulations and intends to
remain in compliance with such regulations and other Federal tax law
requirements.
If a Policyowner elects to make certain transactions, including a
withdrawal, surrender or exchange of the Policy, the Policyowner may be taxed on
a portion of any amounts paid to the Policyowner (which may include any prior
policy loans cancelled in the transaction). Also, if premiums paid by a
Policyowner exceed certain limits and the Policy is deemed a modified endowment
contract, then any pre-death distributions, including loans, surrenders and
partial withdrawals, may be treated as income taxable to the Policyowner and may
also cause the Policyowner to incur a penalty tax of 10%. Policyowners are
advised to consult with their own tax advisers with regard to the tax
consequences of the Policy. See "FEDERAL TAX MATTERS".
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JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
JP Financial (formerly Chubb Life Insurance Company of America) is a stock
life insurance company originally chartered in Tennessee and redomesticated to
the State of New Hampshire in 1991. It has been continuously engaged in the
insurance business since 1903. It is licensed to do life insurance business in
forty-nine states of the United States, Puerto Rico, the U.S. Virgin Islands,
Guam and in the District of Columbia. JP Financial is a wholly-owned subsidiary
of Jefferson-Pilot Corporation, a North Carolina corporation. The principal
offices of Jefferson-Pilot Corporation are located at 100 North Greene Street,
Greensboro, North Carolina 27401. Its telephone number is 910-691-3000. JP
Financial's home office is located at One Granite Place, Concord, New Hampshire
03301, telephone number 603/226-5000.
JP Financial and its subsidiaries had total assets, at December 31, 1997, of
$4,919,934 and had over $64 billion of insurance in force, while total assets of
Jefferson-Pilot Corporation, as of the same date, were approximately $23
billion.
JP Financial writes individual insurance. It is subject to New Hampshire law
governing insurance, and is regulated and supervised by the New Hampshire
Insurance Commissioner. JP Financial is currently rated AAA by Duff &Phelps, AA
(Excellent) by Standard & Poor's Corporation and A+ (Superior) by A.M. Best and
Company. These ratings do not apply to Separate Account C, but reflect the
opinion of the rating company as to JP Financial's ability to meet its
contractual obligations to its policyowners and its relative financial strength.
Even though assets in Separate Account C are held separately from JP Financial's
other assets, ratings of JP Financial may still be relevant to Policyowners
since not all of JP Financial's contractual obligations relate to payments based
on those segregated assets.
JPF SEPARATE ACCOUNT C
Separate Account C is a separate account of JP Financial established under New
Hampshire law on August 4, 1993. Separate Account C is registered as a unit
investment trust with the Commission under the 1940 Act and is subject to that
Act's requirements. Such registration does not involve supervision of the
management or investment policies of Separate Account C or JP Financial by the
Commission. JP Financial is the depositor of Separate Account C. Under New
Hampshire law, the assets of Separate Account C are held exclusively for the
benefit of Policyowners and persons entitled to payments under this Policy and
other variable life insurance policies funded by Separate Account C. The income,
realized or unrealized capital gains, or capital losses of Separate Account C
are credited to or charged against the assets held in Separate Account C in
accordance with the terms of the Policy, without regard to other income or
capital gains or losses of any other account arising out of any other business
JP Financial conducts. Separate Account C is administered and accounted for as a
part of the general business of JP Financial, but the assets of Separate Account
C are not chargeable with liabilities arising out of any other business which JP
Financial may conduct.
JP Financial holds the assets of Separate Account C physically segregated and
separate and apart from the General Account. JP Financial maintains records of
all purchases and redemptions of Trust shares by each of the Divisions.
Divisions. Separate Account C presently has five Divisions but may, in the
future, add or delete Divisions. Each Division will invest exclusively in shares
representing an interest in a Portfolio of the Trust.
Investment income and other distributions to each Division arising from the
applicable underlying Portfolio of the Trust increase the assets of the
corresponding Division. The income and both realized and unrealized gains or
losses on the assets of each Division are credited to or charged against that
Division without regard to income, gains or losses from any other Division.
J.P. MORGAN SERIES TRUST II
Separate Account C invests in shares of the Trust which is organized as a
Delaware business trust and is registered as an open-end diversified management
company under the 1940 Act. The Trust currently has five Portfolios, each of
which has different objectives. The shares of each Portfolio are presently
offered to the Divisions, and may also be offered to other separate accounts
that fund variable life policies or variable annuities which are established by
JP Financial or other insurance companies and to qualified pension and
retirement plans outside of the separate account context. The assets of each
Portfolio are maintained separately from the assets of the other Portfolios and
each Portfolio has investment objectives and policies which are different from
those of the other Portfolios. Thus, each Portfolio operates as a separate
investment fund, and the income, gains or losses of one Portfolio has no effect
on the investment performance of any other Portfolio.
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The investment manager to the Trust is J.P. Morgan Investment Management, Inc.
("JPMIM"), which is an affiliate of Morgan Guaranty Trust Company of New York
("Morgan Guaranty").
An investment management fee is charged monthly against each Portfolio by
JPMIM at the annual rate of .20 percent of the average daily net asset value of
the J.P. Morgan Treasury Money Market Portfolio, .30 percent of the average
daily net asset value of the J.P. Morgan Bond Portfolio, .40 percent of the
average daily net asset value of the J.P. Morgan Equity Portfolio, .60 percent
of the average daily net asset value of the J.P. Morgan Small Company Portfolio
and the J.P. Morgan International Opportunities Portfolio.
The investment objectives of each Portfolio are set forth below. There can be
no assurance that any of the Portfolios will achieve its stated objectives. The
specialized nature of each Portfolio gives rise to significant differences in
the relative investment potential and market and financial risks of each
Portfolio. Policyowners should consider the unique features of each Portfolio
before investing in any corresponding Division. For more detailed information
concerning each Portfolio, including a description of the investment risks,
reference is made to the Prospectus for the Trust which accompanies this
Prospectus, or the Statement of Additional Information for the Trust, available
upon request.
J.P. Morgan Treasury Money Market Portfolio seeks to provide current income,
maintain a high level of liquidity and preserve capital.
J.P. Morgan Bond Portfolio seeks to provide a high total return consistent
with moderate risk of capital and maintenance of liquidity.
J.P. Morgan Equity Portfolio seeks to provide a high total return from a
portfolio comprised of selected equity securities.
J.P. Morgan Small Company Portfolio seeks to provide a high total return from
a portfolio of equity securities of small companies.
J.P. Morgan International Opportunities Portfolio seeks to provide a high
total return from a portfolio of equity securities of foreign corporations.
The Trust may find it necessary to take action to assure that the Policy
continues to qualify as a life insurance policy under federal tax laws. The
Trust, for example, may alter the investment objectives of any Portfolio or take
other appropriate actions. See "OTHER MATTERS--Additions, Deletions or
Substitutions of Investments" and "FEDERAL TAX MATTERS".
Separate Account C will purchase shares of the Trust at net asset value in
connection with premium payments, transfers and loan repayments allocated to the
Divisions in accordance with the Policyowner's directions and will redeem shares
of the Trust to process transfers, policy loans, surrenders or withdrawals and
generally to meet contract obligations or make adjustments in reserves. The
Trust will sell and redeem its shares at net asset value as of the Date of
Receipt by Separate Account C of premium payments or notifications by a
Policyowner.
THE POLICIES
General. Each form of the Policy is designed to provide the Policyowner with
lifetime insurance protection and flexibility in connection with the amount and
frequency of premium payments and the level of life insurance proceeds payable
under the Policy. JP Financial Heritage I is an individual flexible premium
variable life insurance policy which provides life insurance coverage on one
Insured, with the Death Benefit payable upon the death of such Insured. JP
Financial Heritage II is a flexible premium survivorship variable life insurance
policy which provides life insurance coverage on two Insureds, with a Death
Benefit payable only when the last surviving Insured dies. The Policyowner is
not required to pay scheduled premiums to keep a Policy in force but may,
subject to certain limitations, vary the frequency and amount of premium
payments. Moreover, subject to certain limitations, a Policy allows a
Policyowner to adjust the level of life insurance payable under the Policy
without having to purchase a new Policy by increasing or decreasing the
Specified Amount. Thus, as insurance needs or financial conditions change, the
policyowner has the flexibility to adjust coverage and vary the premium
payments. Death Benefits are payable under two options as described in "POLICY
BENEFITS AND RIGHTS--Death Benefits".
To purchase a Policy, a completed application must be submitted to JP
Financial through the agent selling the Policy. Applicants for insurance must
furnish satisfactory evidence of insurability. An Insured under JP Financial
Heritage I must generally be between the ages of 0 and 80 and the Insureds under
JP Financial Heritage II must generally be between 20 and 85 with only one
Insured over the age of 80.
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The Joint Equal Age of the Insureds under JP Financial Heritage II cannot be
over age 80. The smoking status of each Insured is reflected in the cost of
insurance rates; provided, however, that under JP Financial Heritage I
distinctions between smokers and nonsmokers are only made for Insureds age 15
and over. Policies issued in certain jurisdictions will not directly reflect the
sex of the Insured in either the premium rates or the charges or values under
the Policy. Accordingly, illustrations set forth in this Prospectus may differ
for such Policies.
The minimum Specified Amount at issue is $500,000 for JP Financial Heritage I
and $2,000,000 for JP Financial Heritage II. JP Financial reserves the right to
revise its rules from time to time to specify different minimum Specified
Amounts at issue. The Specified Amounts for multiple trusts owning policies
covering the same insureds may be combined in order to reach the minimum
Specified Amount. If the Specified Amount applied for plus all other insurance
in force which is underwritten by JP Financial or its affiliates exceeds an
amount which varies between $300,000 and $2,000,000 based on various factors, JP
Financial will reinsure all or a portion of the Policy. Acceptance of an
application or revocation of a Policy during the contestable period is subject
to JP Financial's insurance underwriting rules and JP Financial may, in its sole
discretion, reject any application or related premium for any good reason or
contest a Policy.
Payment of Premiums. Premiums must be paid to JP Financial at its home office
or through an authorized agent of JP Financial for forwarding to JP Financial's
home office. The initial premium may be wired to JP Financial's bank upon
notification that the application has been approved by JP Financial. Subsequent
premium payments may also be wired to JP Financial's bank. The financial
institution transmitting the wired funds may impose a charge for this service.
In addition, JP Financial has administrative procedures whereby premium payments
in response to billing notices are sent directly to JP Financial's bank. Unlike
traditional insurance contracts, there is no fixed schedule of premium payments
on a Policy either as to the amount or the timing of the payment. A Policyowner
may determine, within specified limits, his or her own premium payment schedule.
These limits will be set forth by JP Financial and will include an initial
premium payment sufficient to keep the Policy in force for at least three
months, and may also include limits on the total amount and frequency of
payments in each policy year. No premium payment may be less than $500. In order
to help the Policyowner obtain the insurance benefits desired, a Planned
Periodic Premium and Premium Frequency will be stated in each Policy. This
premium will usually be based upon the Policyowner's insurance needs and
financial abilities, the current financial climate, the Specified Amount of the
Policy, and the Insured's age, sex and risk class, as discussed with the agent.
The Policyowner is not required to pay such premiums and failure to make any
premium payment will not necessarily result in lapse of the Policy, provided the
Policy's Cash Value, less Policy Debt, if any, is sufficient to pay monthly
deductions. Conversely, adherence to the schedule of Planned Periodic Premiums
will not assure that the Policy will remain in force. See "THE POLICIES--Policy
Lapse".
Guaranteed Death Benefit Premiums. If the Guaranteed Death Benefit Rider is
added to the Policy, the Death Benefit is guaranteed to never be less than the
Specified Amount, provided the Policyowner pays a cumulative minimum premium.
This cumulative minimum premium is based on Issue Age, sex, smoking status and
underwriting class of the Insured(s) as well as the Specified Amount and Death
Benefit option. The premium is increased for increases in the Specified Amount.
See "POLICY BENEFITS AND RIGHTS--Optional Insurance Benefits".
Premium Limitations. If, at any time during the year, a premium has been paid
which would result in a Policy being deemed a modified endowment contract, JP
Financial will so notify the Policyowner and allow the Policyowner to request a
refund of the excess premium, or other action, in order to avoid having the
Policy be deemed to be a modified endowment contract. A Policyowner, however,
may choose to have the Policy be deemed a modified endowment contract, and, in
that case, JP Financial will not refund the premiums. See "FEDERAL TAX MATTERS--
Policy Proceeds". Premium payments less than the minimum amount of $500 will be
returned to the Policyowner.
Allocation of Premiums. Premium payments, net of the state premium tax charge,
the Federal DAC tax charge and the sales charge plus interest earned prior to
the Allocation Date, will be allocated on the Allocation Date among the
Divisions and the General Account in accordance with the directions of the
Policyowner, as contained in the application. Prior to the Allocation Date the
initial Net Premium will be held in JP Financial's General Account. Any other
premiums received prior to the Allocation Date will also be held in the General
Account. If the Policy issued as applied for is not accepted or the "free look"
is exercised, no interest will be credited and JP Financial will retain any
interest earned on the initial Net Premium. The minimum percentage of any Net
Premium payment allocated to any Division or the General Account is 1%. The
Policyowner may change his or her allocation of future premium payments among
the Divisions and the General Account by written notice to JP Financial or by
telephone without payment of any fee or penalty.
The allocation of each Net Premium payment to a Division will be determined
first by multiplying the Net Premium payment by the fraction to be allocated to
each Division as the Policyowner directs to determine the portion to be invested
in the Division. Each portion to be invested in each Division is then divided by
the unit value of that particular Division to determine the number of units to
be credited to a Policyowner. The unit value of each Division will vary to
reflect the investment experience of the
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corresponding underlying Portfolio shares. For a description of the method of
determining unit values see "CALCULATION OF ACCUMULATION VALUE--Unit Values".
Applicants should refer to the Prospectus for the Trust which accompanies this
Prospectus for a description of how the assets of each Portfolio are valued.
All valuations in connection with the Policy, e.g., with respect to
determining Cash Value in connection with policy loans or withdrawals, with
respect to determining Accumulation Value in connection with transfers or
payment of Death Benefits, and with respect to determining a Division's unit
value at the time of each Net Premium payment, will be made on the Date of
Receipt of the premium or the request for payment, loan, withdrawal or transfer
if such date is a Valuation Date; otherwise, such determination will be made on
the next succeeding day which is a Valuation Date. The Date of Receipt of a
premium payment sent directly to JP Financial's bank pursuant to a billing
notice will be the date the payment is received at the bank and the value of any
Division to which the payment is allocated will be determined as of such date
provided such date is a Valuation Date; otherwise, such determination will be
made on the next succeeding day which is a Valuation Date.
Transfers. Accumulation Value may be transferred among the Divisions and
between the Divisions and the General Account. In addition to individual
transfer requests, Policyowners may elect either a Dollar Cost Averaging feature
or an Automatic Portfolio Rebalancing feature which provides for systematic
transfers as described below. Transfer requests may be made in writing or by
telephone. The total amount transferred each time must be at least $1,000 unless
a lesser amount constitutes the entire Accumulation Value in a Division or in
the General Account. Accumulation Value transferred from one Division or from
the General Account into more than one Division, and/or into the General
Account, counts as one transfer. Similarly, transferring Accumulation Value from
more than one Division, and/or the General Account, into one other Division or
the General Account, counts as one transfer.
JP Financial currently permits 12 transfers per policy year without imposing a
transfer charge. For transfers in excess of 12 in any Policy year, a transfer
charge of $100 to cover administrative costs will be imposed each time amounts
are transferred and will be deducted on a pro rata basis from the Division or
Divisions or the General Account into which the amount is transferred. However,
no transfer charge will be imposed on the transfer of the initial Net Premium
payments, plus interest earned, from the General Account to the Divisions on the
Allocation Date or on loan repayments. No transfer charge will be imposed for
transfers pursuant to the Dollar Cost Averaging or Automatic Portfolio
Rebalancing features. Currently, a Policyowner may make up to 24 transfers per
policy year. JP Financial reserves the right to revoke or modify transfer
privileges and charges.
At any time the Policyowner may transfer 100% of the Policy's Accumulation
Value to the General Account and elect to have all future premium payments
allocated to the General Account. While 100% of the Policy's Accumulation Value
and all future premium payments are allocated to the General Account, the
minimum period the Policy will be in force will be fixed and guaranteed. The
minimum period will depend on the amount of Accumulation Value, the Specified
Amount, the sex, the Attained Age, and rating class of the Insured at the time
of transfer. The minimum period will decrease if the Policyowner subsequently
elects to increase the Specified Amount, elects to surrender the Policy, or
elects to make a withdrawal. The minimum period will increase if the Policyowner
elects to decrease the Specified Amount, additional premium payments are
received, or JP Financial credits a higher interest rate or charges a lower cost
of insurance rate than those guaranteed for the General Account.
Except for transfers in connection with Dollar Cost Averaging, Automatic
Portfolio Rebalancing and loan repayments, transfers out of the General Account
to the Divisions are permitted only once every 180 days and are limited in
amount to the lesser of (a) 25% of the Accumulation Value in the General Account
not being held as loan collateral or (b) $100,000. In addition, any other
transfer rules, including minimum transfer amounts, also apply. JP Financial
reserves the right to modify these restrictions.
No transfer charge will be imposed for a transfer of all Accumulation Value in
Separate Account C to the General Account. However, any transfer from the
General Account to the Division(s) will be subject to the transfer charge,
unless it is one of the first 12 transfers in a policy year and except for the
transfer of the initial Net Premium payments, plus interest earned, from the
General Account, loan repayments, and transfers pursuant to the Dollar Cost
Averaging or Automatic Portfolio Rebalancing features.
A feature called Dollar Cost Averaging is available to Policyowners under
which a Policyowner deposits or designates an amount, subject to a minimum of
$6,000, in the J.P. Morgan Treasury Money Market Division or the General Account
and elects to have a specified dollar amount (the "Periodic Transfer Amount")
automatically transferred to one or more of the Divisions on a monthly,
quarterly, or semi-annual basis. This feature allows Policyowners to
systematically invest in the Divisions at various prices which may be higher or
lower than the price a Policyowner would pay when investing the entire amount at
one time and at one price. Each Periodic Transfer Amount is subject to a minimum
amount of $500. A minimum of 1% of the Periodic Transfer Amount must be
transferred to any specified Division. These amounts are subject to change at JP
Financial's discretion. If a transfer would reduce Accumulation Value in the
J.P. Morgan Treasury Money Market Division or the General Account to less than
the Periodic Transfer Amount, JP Financial reserves the right to include such
remaining Accumulation Value in the amount transferred. Dollar Cost Averaging
will continue until the policyowner gives notification of cancellation of the
feature. Any amounts deposited into the
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Repository Account will be transferred. Dollar Cost Averaging is currently
available to policyowners at no charge. Although JP Financial reserves the right
to assess a charge, no greater than cost and with 30 days advance notice to
Policyowners, it has no present intention to do so.
An Automatic Portfolio Rebalancing feature is also available to Policyowners.
This feature provides a method for re establishing fixed proportions between
various types of investments on a systematic basis. Under this feature, the
allocation between Divisions and the General Account will be automatically
readjusted to the desired allocation, subject to a minimum of 1% per Division or
General Account, on a quarterly, semi-annual or annual basis.
A Policyowner may choose one of the two features. Transfers and adjustments
pursuant to these features will occur on a Policy's Monthly Anniversary Date in
the month in which the transaction is to take place or the next succeeding
business day if the Monthly Anniversary Date falls on a holiday or a weekend.
The applicable authorization form must be on file at JP Financial before either
feature may begin. Neither feature guarantees profits nor protects against
losses. Transfers under these features do not count toward the 12 free transfers
or the 24 transfers currently allowed per year. JP Financial reserves the right
to modify the terms and conditions of these features upon 30 days advance notice
to Policyowners.
Telephone Transfers, Loans and Reallocations. Policyowners and their
authorized representatives may request by telephone transfers of Accumulation
Value or reallocation of premiums (including allocation changes pursuant to
existing Dollar Cost Averaging and Automatic Portfolio Rebalancing programs),
provided that the appropriate authorization form is on file with JP Financial.
JP Financial may also, in its discretion, permit loans to be made by telephone,
provided that the proper authorization form is on file with JP Financial. During
periods of heavy telephone transfers, implementing a telephone transfer may be
difficult. If a Policyowner is unable to reach JP Financial via telephone, the
Policyowner should send a written request to JP Financial via an express mailing
service or via the JP Financial telecopier machine at (603) 226-5155. (Any
transfer requests received via telecopier are considered telephone transfers and
are bound by the conditions outlined in the signed authorization form.) JP
Financial reserves the right to discontinue telephone transfers at any time
without notice to the Policyowners. Procedures have been established that are
reasonably designed to reduce the risk of unauthorized telephone transfers, loan
requests or allocation changes. These procedures include requiring personal
identification information, tape recording calls and providing written
confirmations to Policyowners. However, there still exists some risk. Neither JP
Financial, Jefferson Pilot Securities Corporation, nor any of their affiliates
are liable for any loss resulting from unauthorized telephone transfers, loan
requests or premium allocation changes if its procedures have been followed, and
a Policyowner bears the risk of loss in such situation.
Policy Lapse. Failure to make a premium payment on a Policy will not
necessarily cause the Policy to lapse. The duration of a Policy depends upon its
Cash Value. The Policy will remain in force so long as the Cash Value, less any
outstanding Policy Debt, is sufficient to cover cost of insurance and any rider
charges. In the event the Cash Value, less any outstanding Policy Debt, is
insufficient to pay these monthly cost of insurance and rider charges ("monthly
deduction") the Policyowner will be given a sixty-one day period ("grace
period") within which to make a premium payment to avoid lapse.
The premium required to avoid lapse must be sufficient in amount, after the
deduction of the state premium tax charge, the Federal DAC tax charge and the
sales charge, to cover the monthly deduction for at least three policy months.
This required premium will be set forth in a written notice which JP Financial
will send to the Policyowner thirty-one days prior to the end of the grace
period. The Policy will continue in force through the grace period, but if no
payment is forthcoming, the Policy will terminate without value at the end of
the grace period. If the Insured under JP Financial Heritage I or the last
surviving Insured under JP Financial Heritage II dies during the grace period,
the Death Benefit payable under the Policy will be reduced by the amount of the
monthly deduction due and unpaid and the amount of any outstanding Policy Debt.
In addition, if the Cash Value of the Policy at any time should decrease so the
aggregate amount of outstanding Policy Debt secured by the Policy exceeds the
Cash Value shown in the Policy and an additional payment is not made within
sixty-one days the Policy will lapse.
Reinstatement. If the Policy lapses, the Policyowner may reinstate the Policy.
The terms of the original contract will apply upon reinstatement. The
Accumulation Value, before payment of the required reinstatement premium, will
equal the Accumulation Value on the date of termination. The policy year on
reinstatement will be measured from the Policy Date. An application for
reinstatement may be made any time within five years of lapse and before the
Maturity Date, but satisfactory proof of insurability of the Insured under JP
Financial Heritage I or the Insureds or surviving Insured under JP Financial
Heritage II and payment of a reinstatement premium is required. The
reinstatement premium, after deduction of the state premium tax charge, the
Federal DAC tax charge and the sales charge, must be sufficient to cover the
monthly deduction for three policy months following the effective date of
reinstatement. If a loan was outstanding at the time of lapse, JP Financial will
require, at the election of the Policyowner, repayment or reinstatement of the
loan before permitting reinstatement of the Policy. The effective date will be
the date of approval of the reinstatement application, which will be as of a
Monthly Anniversary Date.
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Policy "Free Look". The Policyowner has a limited right to return a Policy for
cancellation and a full refund of all premiums paid. JP Financial will cancel
the Policy if it is returned by mail or personal delivery to JP Financial, or to
the agent who sold the Policy, within 20 days after the delivery of the Policy
to the Policyowner. JP Financial will return to the Policyowner within seven
days all payments received on the Policy. Prior to the Allocation Date the
initial Net Premium will be held in JP Financial's General Account; JP Financial
will retain any interest earned if the "free look" right is exercised.
CHARGES AND DEDUCTIONS
Premium Charges. Upon receipt of each premium payment and before allocation
of payment among the Divisions and the General Account, JP Financial will deduct
a state premium tax charge of 2.5% (which represents an average of actual
premium taxes imposed), unless otherwise required by state law. Currently, the
taxes imposed by states on premiums range up to 4% of premiums paid, while some
states do not impose a premium tax. The 2.5% state premium tax charge may
therefore be higher or lower than the actual premium tax imposed by states in
which a particular Policyholder resides. JP Financial will not increase this
charge under outstanding Policies, but reserves the right to change this charge
for Policies not yet issued in order to correspond with changes in the state
premium tax levels. JP Financial does not expect to derive a profit from this
charge.
JP Financial will also deduct from each premium a charge currently equal to
1.25% to cover the estimated cost to JP Financial of the Federal income tax
treatment of the Policies' deferred acquisition costs ("Federal DAC tax
charge"). JP Financial has determined that this charge is reasonable in relation
to JP Financial's increased Federal income tax burden under the Code resulting
from the receipt of premiums. JP Financial will not increase this charge under
outstanding Policies, but reserves the right, subject to any required regulatory
approval, to change this charge for Policies not yet issued in order to
correspond with changes in the DAC tax.
JP Financial will deduct a sales charge of 3% from each premium payment to
compensate JP Financial for the cost of selling the Policy. The cost of selling
the Policy includes, among other things, agents' commissions, commission
overrides, advertising and the printing of prospectuses and sales literature.
Under normal circumstances, the amount of this charge, plus the Surrender Charge
discussed below, are expected to compensate JP Financial for total sales
expenses for that year. To the extent sales expenses in any one policy year are
not recovered by this 3% sales charge and the sales charge imposed upon
surrenders or withdrawals during the first five policy years, the sales expenses
may be recovered from other sources, including surplus, which may include
profits, if any, from the mortality and expense risk charge.
Monthly Deduction. On each Monthly Anniversary Date and on the Policy Date, JP
Financial will deduct from the Accumulation Value of a Policy an amount to cover
certain charges and expenses incurred in connection with the Policy. The amount
of the monthly deduction is equal to the cost of insurance for the Policy as
described below, and the cost of any optional benefits added by rider. The
amount deducted will be deducted pro rata from each of the Divisions and the
General Account, excluding the amount held in the General Account as loan
collateral, in which the Policyowner is invested.
The cost of insurance is determined on a monthly basis, and is determined
separately for the initial Specified Amount and each subsequent increase in the
Specified Amount. The monthly current cost of insurance rate is based on the
sex, Issue Age, policy year, smoking status and rating class of the Insured(s),
Specified Amount, Death Benefit option and applicable corridor percentage.
The cost of insurance is calculated as (i) multiplied by the result of (ii)
minus (iii) where:
(i) is the cost of insurance rate as described in the Cost of Insurance Rates
provision contained in the Policy.
(ii) is the Death Benefit at the beginning of the policy month divided by
1.00327374, to arrive at the proper values for the beginning of the month
assuming the guaranteed interest rate of 4% that is applicable to the General
Account portion of the Policy; and
(iii) is the Accumulation Value at the beginning of the policy month.
If the corridor percentage is applicable, the Death Benefit used in the
foregoing calculation will reflect the corridor percentage. The cost of
insurance charge is not affected by the death of the first Insured to die under
JPF Heritage II.
The monthly cost of insurance rate will be determined by JP Financial based
upon expectations as to future mortality experience, but can never exceed the
rates shown in the table of Monthly Guaranteed Cost of Insurance Rates set forth
in the Policy. Such guaranteed maximum rates are based on the Commissioner's
1980 Standard Ordinary Mortality Table.
14
<PAGE>
A guaranteed Monthly Deduction Adjustment will be calculated at the
beginning of each policy year. The Monthly Deduction Adjustment will be
allocated between the Divisions and the General Account in the same proportion
as premium payments. The discount is calculated as (i) multiplied by the result
of (ii) minus (iii) minus (iv), but not less than zero, where:
(i) is a factor that varies by Specified Amount as follows:
<TABLE>
<S> <C>
Under $5,000,000 .0001250
$5,000,000 to $9,999,999 .0002500
$10,000,000 to $14,999,999 .0003750
$15,000,000 and Above .0004583
</TABLE>
(ii) is an amount no greater than the Accumulation Value at the beginning
of the policy year, and guaranteed to be at least the Accumulation Value at
the beginning of the policy year less any unloaned funds in the General
Account;
(iii) is the Guideline Single Premium at issue under Section 7702 of the
Code, increased on a prorata basis for any increase in Specified Amount;
and
(iv) is the outstanding Type A loan balance at the beginning of the policy
year. See "CASH VALUE BENEFITS--Policy Loans" for a description of Type A
loans.
The Monthly Deduction Adjustment is the mechanism whereby JP Financial
annually evaluates its mortality risk exposure on individual Policies based on,
among other factors, the proceeds from all mortality charges, including the cost
of insurance charge and the mortality risk portion of the Risk Charge. The
insurance charges are set at rates designed to cover total anticipated mortality
experience, i.e., Death Benefit payments, taking into consideration the risk
that actual experience may exceed JP Financial's expectation. Of course, as the
amount at risk under any one Policy decreases, i.e., Accumulation Value
increases, JP Financial's exposure on such Policy will be reduced. Moreover, JP
Financial's risk decreases as the Specified Amount increases. The Monthly
Deduction Adjustment formula factors in Accumulation Value and Specified Amount.
Thus, the Monthly Deduction Adjustment may be translated into a net reduction of
the Risk Charge which is applied to the Accumulation Value. As shown in the
following table, the Monthly Deduction Adjustment may be expressed as a
reduction in the mortality portion of the Risk Charge.
<TABLE>
<CAPTION>
Mortality Mortality
Monthly Risk Risk
Mortality Deduction Charge Charge Effective
Specified Risk Adjust- Below Above Mortality
Amount Charge ment GSP GSP Risk Charge*
--------- --------- ------- ------- --------- ------------
<S> <C> <C> <C> <C> <C>
$ 500,000--$4,999,999........ .55% .15% .55% .40% .475%
$ 5,000,000--$9,999,999........ .55% .30% .55% .25% .40%
$10,000,000--$14,999,999....... .55% .45% .55% .10% .325%
$15,000,000 and Above.......... .55% .55% .55% .0% .275%
</TABLE>
* Assumes that Accumulation Value, less any Type A loans, at the beginning of
the policy year is twice the Guideline Single Premium ("GSP").
Risk Charge. JP Financial will also assess a charge on a daily basis
against each Division at an annual rate of .65% of the value of the Division to
compensate JP Financial for its assumption of certain mortality and expense
risks in connection with the Policy. Specifically, JP Financial bears the risk
that the total amount of Death Benefit payable under the Policy will be greater
than anticipated and JP Financial also assumes the risk that the actual cost
incurred by it to administer the Policy will not be covered by charges assessed
under the Policy.
Surrender Charge. Upon surrender during the first five policy years, JP
Financial will assess a contingent deferred sales charge. This contingent
deferred sales charge will be 5% of first year premiums for surrender during the
first policy year, 4% of first year premiums for surrender during the second
policy year, 3% of first year premiums for surrender during the third policy
year, 2% of first year premiums for surrender during the fourth policy year and
1% of first year premiums for surrender during the fifth policy year. There is
no Surrender Charge assessed for surrender after the fifth policy year. A pro
rata portion of any Surrender Charge will be assessed upon a withdrawal. The
Policy's Accumulation Value will be reduced by the amount of any withdrawal plus
any applicable prorata Surrender Charge.
The Surrender Charge helps to compensate JP Financial for the cost of
selling the Policy, including the cost of advertising and the printing of the
Prospectus and sales literature.
15
<PAGE>
Administrative Fees. An administrative fee equal to $100 is imposed for
each transfer among the Divisions or the General Account, after the first 12
transfers in a policy year and except for the transfer of the initial Net
Premium payments, plus interest, from the General Account on the Allocation
Date, loan repayments and transfers pursuant to the Dollar Cost Averaging and
Automatic Portfolio Rebalancing features. For withdrawals, an administrative fee
equal to $100 will be charged. All administrative fees are no greater than the
anticipated expenses of providing such services.
Other Charges. JP Financial also reserves the right to charge the assets of
each Division to provide for any income taxes or other taxes payable by JP
Financial on the assets attributable to that Division. An investment advisory
fee for services provided by the Trust's investment manager and sub-investment
adviser and certain other operating expenses are deducted from the assets of
each Portfolio of the Trust. See "JPM SERIES TRUST II".
POLICY BENEFITS AND RIGHTS
Death Benefits. So long as it remains in force, JP Financial Heritage I
provides for the payment of life insurance proceeds upon the death of the
Insured and JP Financial Heritage II provides for a Death Benefit payable upon
the death of the last surviving Insured. Proceeds will be paid to a named
Beneficiary or contingent Beneficiary. One or more Beneficiaries or contingent
Beneficiaries may be named. Life insurance proceeds may be paid in a lump sum or
under an optional payment plan. (See "SETTLEMENT OPTIONS" below.) Proceeds of
the Policy will be reduced by any outstanding Policy Debt and any due and unpaid
charges and increased by any benefits added by rider. Proceeds that are payable
in a lump sum will be increased to include interest as required by applicable
state law. Proceeds will ordinarily be paid within seven days after JP Financial
receives due Proof of Death. Under JP Financial Heritage II, due Proof of Death
must also be submitted at the time of the first death.
A Policyowner will make in the initial application two elections to
determine the Death Benefit under the Policy. First, the Policyowner will choose
one of two Death Benefit options offered under the Policies. Second, the
Policyowner will choose the Death Benefit qualification test, which is the
method for qualifying the Policy as a life insurance contract for purposes of
Federal tax law. If no Death Benefit qualification test or option is designated,
the guideline premium test under Option I, as described below, will be assumed
by JP Financial to have been selected.
The amount of life insurance proceeds payable under a Policy will depend
upon the option in effect, as follows:
Option I: For Policies issued pursuant to the cash value accumulation test,
the Death Benefit equals the greater of the current Specified Amount or the
Accumulation Value of the Policy at the date of death multiplied by the corridor
percentage, as described below. For Policies issued pursuant to the guideline
premium test, the Death Benefit equals the greater of the current Specified
Amount or the Accumulation Value of the Policy at the date of death multiplied
by the corridor percentage, as described below.
Option II: The Death Benefit equals the current Specified Amount plus the
Accumulation Value of the Policy on the date of death. For Policies issued
pursuant to the cash value accumulation test, the Death Benefit will not be less
than the Accumulation Value on the date of death multiplied by the corridor
percentage, as described below. For Policies issued pursuant to the guideline
premium test, the Death Benefit will not be less than the Accumulation Value
multiplied by the corridor percentage, as described below.
Option I emphasizes the impact of investment experience on Accumulation
Value rather than insurance coverage because the Specified Amount and the Death
Benefit, generally, remain stable. Under Option I, as Accumulation Value
increases and Death Benefit does not increase, the amount at risk decreases.
Thus, the cost of insurance charges are imposed on a decreasing amount. Option
II emphasizes insurance coverage because favorable investment experience adds to
the Accumulation Value that provides an addition to the total Death Benefit.
Under Option II, favorable investment experience does not reduce the amount at
risk upon which cost of insurance charges are based.
The corridor percentage is a minimum ratio of Death Benefit to Accumulation
Value required pursuant to the cash value corridor test under Section 7702 of
the Code. The Policyowner has the option to select this minimum corridor
percentage under the Code or an alternative corridor percentage that produces a
higher corridor percentage beginning in policy year 25 which grades back to the
minimum corridor percentage at the Maturity Date. Use of the alternative
corridor percentage results in a higher ratio of Death Benefit to Accumulation
Value than that resulting from the use of the minimum corridor percentage
beginning in policy year 25. This higher ratio then gradually reduces until, by
the Maturity Date, it is equal to the ratio produced by use of the minimum
corridor percentage. Although use of the alternative corridor percentage results
in a higher Death Benefit than the minimum corridor percentage beginning in
policy year 25, this higher Death Benefit results in higher cost of insurance
charges which has the effect of reducing Accumulation Value and consequently
future Death Benefits.
16
<PAGE>
The Policyowner will also choose from two Death Benefit qualification tests
available under a Policy. Once elected, the Death Benefit qualification test
cannot be changed for the duration of the Policy. The available Death Benefit
qualification tests are the cash value accumulation test and the guideline
premium test.
Generally, the cash value accumulation test requires that under the terms
of a Policy, the Death Benefit must be sufficient so that the cash surrender
value, as defined in Section 7702 of the Internal Revenue Code, does not at any
time exceed the net single premium required to fund the future benefits under
the Policy. If the Accumulation Value under a Policy is at any time greater than
the net single premium at the Insured's age and sex for the proposed Death
Benefit, the Death Benefit will be increased automatically by multiplying the
Accumulation Value by the corridor percentage computed in compliance with the
Code. A list of representative corridor percentages is set forth in Appendix A
to this Prospectus. The corridor percentages under the Policy vary according to
the Age, sex, and underwriting classification of the Insured(s), and the
resulting Death Benefit determined by using the corridor percentage will be at
least equal to the amount required for the Policy to be deemed life insurance
under Section 7702. The corridor percentage is calculated using a four percent
interest rate or, if higher, the contractually guaranteed interest rate and
using mortality charges specified in the prevailing Commissioner's standard
table as of the time the Policy is issued.
The guideline premium test limits the amount of premiums payable under a
Policy to a certain amount for an Insured of a particular age and sex. The test
also applies a prescribed corridor percentage to determine a minimum ratio of
Death Benefit to Accumulation Value. A complete list of corridor percentages is
set forth in Appendix B to this Prospectus.
There are two main differences between the guideline premium test and the
cash value accumulation test. First, the guideline premium test limits the
amount of premium that may be paid into a Policy. No such limits apply under the
cash value accumulation test. (However, any premium that would increase the net
amount at risk is subject to evidence of insurability satisfactory to JP
Financial.) Second, the factors that determine the minimum Death Benefit
relative to the Policy's Accumulation Value are different. Required increases in
the minimum Death Benefit due to growth in Accumulation Value will generally be
greater under the cash value accumulation test than under the guideline premium
test. Policyowners who desire to pay premiums in excess of the guideline premium
test limitations should elect the cash value accumulation test. Policyowners who
do not desire to pay premiums in excess of the guideline premium test
limitations should consider the guideline premium test. Applicants for a Policy
should consult a qualified tax adviser in choosing a Death Benefit election.
The following examples demonstrate the determination of Death Benefits
under Options I and II for the cash value accumulation test and the guideline
premium test. The examples show a JP Financial Heritage I policy and a JP
Financial Heritage II policy, with the same Specified Amounts and Accumulations
Values. The JP Financial Heritage I example assumes a Policy was issued to a
male, non-smoker Insured, Age 45 at the time of calculation of the Death Benefit
and that there is no outstanding Policy Debt. The JP Financial Heritage II
example considers a Policy issued to one male and one female, both non-smokers,
and both Age 45. The policy is in its tenth policy year without any outstanding
Policy Debt and with both insureds having attained age 55.
JP Financial Heritage I
<TABLE>
<CAPTION>
Cash Value Accumulation Guideline Premium
Test Test
----------------------- -----------------
<S> <C> <C>
Specified Amount.................... 1,000,000 1,000,000
Accumulation Value.................. 500,000 500,000
Corridor Percentage................. 314% 215%
Death Benefit Option I.............. 1,570,000 1,075,000
Death Benefit Option II............. 1,570,000 1,500,000
</TABLE>
JP Financial Heritage II
<TABLE>
<CAPTION>
Cash Value Accumulation Guideline Premium
Test Test
----------------------- -----------------
<S> <C> <C>
Specified Amount.................... 2,000,000 2,000,000
Accumulation Value.................. 1,000,000 1,000,000
Corridor Percentage................. 306% 150%
Death Benefit Option I.............. 3,060,000 2,000,000
Death Benefit Option II............. 3,060,000 3,000,000
</TABLE>
17
<PAGE>
The Death Benefit option in effect may be changed by sending JP Financial a
written request for change. The effective date of the change will be the first
Monthly Anniversary Date that coincides with or next follows the Date of Receipt
of such request. If the Death Benefit option is changed from Option II to Option
I, the Specified Amount will be increased by the Policy's Accumulation Value on
the effective date of the change. Conversely, if the Death Benefit option is
changed from Option I to Option II, the Specified Amount will be decreased by
the Policy's Accumulation Value on the effective date of the change. Evidence of
insurability satisfactory to JP Financial will be required on a change from
Option I to Option II. A change in the Death Benefit option may not be made if
it would result in a Specified Amount which is less than a minimum Specified
Amount of $250,000 on JP Financial Heritage I and $500,000 on JP Financial
Heritage II. A change in Death Benefit options will affect the cost of
insurance.
After a Policy has been in force for one year, the Policyowner may adjust the
existing insurance coverage by increasing or decreasing the Specified Amount.
The increase or decrease must be at least $250,000 on JP Financial Heritage I
and $500,000 on JP Financial Heritage II. To make a change, the Policyowner must
send a written request and the Policy to JP Financial's home office. Any change
in the Specified Amount will affect a Policyowner's cost of insurance charge. An
increase in the Specified Amount will affect the determination of the amount
available for a Type A loan, as explained below, and will affect the Monthly
Deduction Adjustment discount, if any. Decreases in the Specified Amount may
affect the Monthly Deduction Adjustment but will have no effect on the
determination of the amount available for a Type A loan. Any decrease in the
Specified Amount will become effective on the Monthly Anniversary Date after the
Date of Receipt of the request. Any decrease in Specified Amount will first
apply to coverage provided by the most recent Specified Amount increase, then to
the next most recent increases successively and finally to the coverage under
the original application. By applying decreases in this manner, savings,
generally, may be realized by a Policyowner since additional costs and
limitations associated with increases in Specified Amounts would be eliminated
first. To apply for an increase in the Specified Amount, a supplemental
application must be completed and evidence satisfactory to JP Financial that
each Insured is insurable must be submitted.
Any approved increase in the Specified Amount will become effective on the
date shown in the Supplemental Policy Specifications Page. Such increase will
not become effective, however, if the Policy's Cash Value is insufficient to
cover the deduction for the cost of the increased insurance for the policy month
following the increase. Such an increase may require a payment or future
increased Planned Periodic Premiums.
Guaranteed Death Benefit. The Policyowner may add a Guaranteed Death Benefit
Rider to the Policy under which the Death Benefit is guaranteed to never be less
than the Specified Amount provided that a cumulative minimum premium requirement
is met. The premium requirement is based on Issue Age, sex, smoking status,
underwriting class, Specified Amount and Death Benefit Option. If the Specified
Amount is increased, an additional premium, based on Attained Age, will be
required for such increase. There is a monthly charge for this Death Benefit
Rider. See "Optional Insurance Benefits".
Combined Requests. Policyowners may combine requests for changes in the
Specified Amount and the Death Benefit option and requests for withdrawals. The
requirements and limitations that apply to each change will apply to the
combined transactions, including any required evidence of insurability,
Specified Amount and premium limitations, effectiveness on the Monthly
Anniversary Date following the Date of Receipt of the request, and the
sufficiency of Cash Value to keep the Policy in force for the month following
the transaction.
The effect of a combined transaction on the cost of insurance, the amount of
the Death Benefit proceeds and the premium limitations will be the net result of
such effects for each such transaction considered separately. Policyowners
should consider the net result of a combined transaction in light of insurance
needs, financial circumstances and tax consequences.
Maturity of the Policy. As long as the Policy remains in force, JP Financial
will pay the Policy's Cash Value, less outstanding Policy Debt, if any, on the
Maturity Date. Benefits at maturity may be paid in a lump sum or under an
optional payment plan. The Maturity Date is the date shown in the Policy. To
change the Maturity Date, a written request and the Policy must be sent to JP
Financial. The Date of Receipt for any request must be before the Maturity Date
then in effect. The requested Maturity Date must be (i) on a policy anniversary,
(ii) at least one year from the Date of Receipt of the request, (iii) after the
tenth policy year and (iv) on or before the policy anniversary nearest to the
Insured's 100th birthday for JP Financial Heritage I and the younger Insured's
100th birthday for JP Financial Heritage II.
Optional Insurance Benefits. Subject to certain requirements, one or more of
the following optional insurance benefits may be added to a Policy by rider.
More detailed information concerning such riders may be obtained from the agent
selling the Policy. Additional riders, developed after the effective date of
this Prospectus, may also be available as optional insurance benefits to the
Policy. The agent selling the Policy should be consulted regarding the
availability of any such additional riders. The cost of any optional insurance
benefits will be deducted as part of the monthly deduction. See "CHARGES AND
DEDUCTIONS."
18
<PAGE>
(a) Guaranteed Death Benefit Rider. This rider guarantees that the Policy will
stay in force with a Death Benefit equal to the Specified Amount, even if the
Cash Value less Policy Debt is not sufficient to pay the monthly deduction,
provided that cumulative premiums paid, less loans and withdrawals, are greater
than or equal to the guaranteed death benefit premium multiplied by the number
of months the policy has been in force. This cumulative premium requirement must
be met at all times for the rider to stay in force. A monthly charge of $.01 per
$1,000 of Specified Amount will be deducted from the Policy's Accumulation
Value.
(b) Automatic Increase Rider. This rider allows for scheduled annual increases
in Specified Amount of from 1% to 7%, subject to certain limitations set forth
in the rider. There is an annual charge per unit of Specified Amount which
varies by Issue Age on JP Financial Heritage I and by Joint Equal Age at issue
on JP Financial Heritage II.
(c) Policy Exchange Option Rider. This rider is available on JP Financial
Heritage II provided both Insureds are insurable. It allows JP Financial
Heritage II to be exchanged for two individual JP Financial Heritage I policies,
without evidence of insurability, each with a face amount equal to one half of
the Death Benefit under JP Financial Heritage II at the time of exchange, upon
the Insureds' divorce or the occurrence of certain Federal tax law changes as
specified in the rider. There is no charge for this rider.
(d) Extension of Maturity Date Rider. This rider allows the Policyowner to
extend the original Maturity Date of the Policy under the terms set forth in the
rider. See "FEDERAL TAX MATTERS."
(e) Exchange of Insured Rider. This benefit is available under JP Financial
Heritage I, and provides that the Policy may be exchanged for a reissued policy
on the life of a substitute insured, subject to the conditions stated in the
rider. A charge of $150 will be assessed for exercising the option. See "FEDERAL
TAX MATTERS."
Settlement Options. In addition to a lump sum payment of benefits under the
Policy, any proceeds to be paid under the Policy may be paid in any of four
methods. A settlement option may be designated by notifying JP Financial in
writing. A lump sum payment of proceeds under the Policy will be made if a
settlement option is not designated. Any amount left with JP Financial for
payment under an optional payment plan will be transferred to the account of the
Beneficiary in the General Account on the date JP Financial receives written
instructions. During the life of the Insured, the Policyowner may select a plan.
If a payment plan has not been chosen at the time the Death Benefit becomes
payable, a Beneficiary can choose a plan. If a Beneficiary is changed, the
payment plan selection will no longer be in effect unless the Policyowner
requests that it continue. An option may be elected only if the amount of the
proceeds is $2,000 or more. JP Financial reserves the right to change the
interval of payments to 3, 6 or 12 months, if necessary, to increase the
guaranteed payments to at least $20 each.
Option A.
Installments of a specified amount. Payments of an agreed amount to be made
each month until the proceeds and interest are exhausted.
Option B.
Installments for a specified period. Payments to be made each month for an
agreed number of years.
Option C.
Life income. Payments to be made each month for the lifetime of the payee. It
is guaranteed that payments will be made for a minimum of 10, 15, or 20 years,
as agreed upon.
Option D.
Interest. Payment of interest on the proceeds held by JP Financial calculated
at the compound rate of 3% per year. Interest payments will be made at 12, 6, 3
or 1 month intervals, as agreed upon.
The interest rate for Options A, B, and D will not be less than 3% per year.
The interest rate for Option C will not be less than 2 1/2 % per year. Interest
in addition to that stated may be paid or credited from time to time under any
option, but only in the sole discretion of JP Financial.
Unless otherwise stated in the election of an option, the payee of policy
benefits shall have the right to receive the withdrawal value under that option.
For Options A and D, the withdrawal value shall be any unpaid balance of
proceeds plus accrued interest. For Option B, the withdrawal value shall be the
commuted value of the remaining payments. Such value will be calculated on the
same basis as the original payments. For Option C, the withdrawal value will be
the commuted value of the remaining payments. Such value will be calculated on
the same basis as the original payments. To receive this value, the payee must
submit evidence of insurability acceptable to JP Financial. Otherwise, the
withdrawal value shall be the commuted value of any remaining guaranteed
payments. If the payee should be alive at the end of the guaranteed period, the
payment will be resumed on that date. The payment will then continue for the
lifetime of the payee.
19
<PAGE>
If a payee of policy benefits dies before the proceeds are exhausted or the
prescribed payments made, a final payment will be made in one sum to the estate
of the last surviving payee. The amount to be paid will be calculated as
described for the applicable option in the Withdrawal Value provision of the
Policy.
CALCULATION OF ACCUMULATION VALUE
The Policy provides for an Accumulation Value, which will be determined on a
daily basis. Accumulation Value is the sum of the values in the Divisions plus
the value in the General Account. The Policy's Accumulation Value in the
Divisions is calculated by units and unit values under the Policies, as
described below. The Policy's Accumulation Value will reflect a number of
factors, including the investment experience of the Divisions that are invested
in the Portfolios, any additional net premiums paid, any withdrawals, any policy
loans, and any charges assessed in connection with the Policy. Accumulation
Values in Separate Account C are not guaranteed as to dollar amount.
On the Allocation Date, the Accumulation Value in Separate Account C is the
initial premium payments, reduced by the state premium tax charge, the Federal
DAC tax charge and the sales charge, plus interest earned prior to the
Allocation Date, and less the monthly deduction for the first policy month. On
the Allocation Date, the initial number of units credited to Separate Account C
for the Policy will be established. At the end of each Valuation Period
thereafter, the Accumulation Value in a Division is (i) plus (ii) plus (iii)
minus (iv) minus (v) where:
(i) is the Accumulation Value in the Division on the preceding Valuation Date
multiplied by the net investment factor, as described below, for the current
Valuation Period,
(ii) is any Net Premium received during the current Valuation Period which is
allocated to the Division,
(iii) is all Accumulation Values transferred to the Division from another
Division or the General Account during the current Valuation Period,
(iv) is the Accumulation Values transferred from the Division to another
Division or the General Account and Accumulation Values transferred to secure
a Policy Debt during the current Valuation Period, and
(v) is all withdrawals from the Division during the current Valuation Period.
In addition, whenever a Valuation Period includes the Monthly Anniversary
Date, the Accumulation Value at the end of such period is reduced by the portion
of the monthly deduction allocated to the Division.
The Policy's total Accumulation Value in Separate Account C equals the sum of
the Policy's Accumulation Value in each Division thereof.
Unit Values. Units are credited to a Policyowner upon allocation of Net
Premiums to a Division. Each Net Premium payment allocated to a Division will
increase the number of units in that Division. Both full and fractional units
are credited. The number of units and fractional units is determined by dividing
the Net Premium payment by the unit value of the Division to which the payment
has been allocated. The unit value of each Division is determined on each
Valuation Date. The number of units credited will not change because of
subsequent changes in unit value. The dollar value of each Division's units will
vary depending upon the investment performance of the corresponding Portfolio of
the Trust.
Certain transactions affect the number of units in a Division under a Policy.
Loans, surrenders and withdrawals, withdrawal and transfer fees and charges, the
Surrender Charge, and monthly deductions involve the redemption of units and
will decrease the number of units. Transfers of Accumulation Value among
Divisions will reduce or increase the number of units in a Division, as
appropriate.
The unit value of each Division's units initially under the Policies was
$10.00. Thereafter, the unit value of a Division on any Valuation Date is
calculated by multiplying (1) by (2) where:
(1) is the Division's unit value on the previous Valuation Date; and
(2) is the net investment factor for the Valuation Period then ended.
20
<PAGE>
The unit value of each Division's units on any day other than a Valuation Date
is the unit value as of the next Valuation Date and is used for the purpose of
processing transactions.
Net Investment Factor. The net investment factor measures the investment
experience of each Division and is used to determine changes in unit value from
one Valuation Period to the next Valuation Period. The net investment factor for
a Valuation Period is (i) divided by (ii) minus (iii) where:
(i) is (a) the value of the assets of the Division at the end of the preceding
Valuation Period, plus (b) the investment income and capital gains, realized or
unrealized, credited to the assets of the Division during the Valuation Period
for which the net investment factor is being determined, minus (c) capital
losses, realized or unrealized, charged against those assets during the
Valuation Period, minus (d) any amount charged against the Division for taxes or
any amount set aside during the Valuation Period by JP Financial to provide for
taxes attributable to the operation or maintenance of that Division, and
(ii) is the value of the assets of the Division at the end of the preceding
Valuation Period, and
(iii) is a charge no greater than .0017808% on a daily basis. This
corresponds to .65% on an annual basis for mortality and expense risks.
CASH VALUE BENEFITS
So long as it remains in force, the Policy provides for certain benefits prior
to the Maturity Date. Subject to certain limitations, the Policyowner may at any
time obtain Cash Value by surrendering the Policy or making withdrawals from the
Policy. The Cash Value equals the Accumulation Value less any Surrender Charge.
In addition, the Policyowner has certain policy loan privileges under the
Policy.
Surrender Privileges. As long as the Policy is in force, a Policyowner may
surrender the Policy or make a withdrawal from the Policy at any time by sending
a written request along with the Policy to JP Financial. See "FEDERAL TAX
MATTERS--Policy Proceeds."
The surrender value of the Policy equals the Cash Value less any outstanding
Policy Debt. The amount payable upon surrender of the Policy is the surrender
value at the end of the Valuation Period during which the request is received.
The surrender value may be paid in a lump sum or under one of the optional
payment plans specified in the Policy. Proceeds will generally be paid within
seven days of the Date of Receipt of a request for surrender or withdrawal. See
"POLICY BENEFITS AND RIGHTS--Settlement Options."
A Policyowner can obtain a portion of the Policy's Cash Value by withdrawal of
Cash Value from the Policy. A withdrawal from a Policy is subject to the
following conditions:
A. The amount withdrawn may not exceed the Cash Value less any
outstanding debt.
B. The minimum amount that may be withdrawn is $5,000.
C. A charge equal to $100 will be deducted from the amount of each
withdrawal.
Withdrawals generally will affect the Policy's Accumulation Value, Cash Value
and the life insurance proceeds payable under the Policy. The Policy's Cash
Value will be reduced by the amount of the withdrawal. The Policy's Accumulation
Value will be reduced by the amount of the withdrawal plus any applicable pro
rata Surrender Charge. Life insurance proceeds payable under the Policy will
generally be reduced by the amount of the withdrawal plus any applicable pro
rata Surrender Charge, unless the withdrawal is combined with a request to
maintain or increase the Specified Amount. See "POLICY BENEFITS AND RIGHTS--
Combined Requests".
Under Option I, which provides for life insurance proceeds equal to the
greater of the Specified Amount or the Accumulation Value of the Policy at the
date of death multiplied by the corridor percentage, the Specified Amount will
be reduced by the amount of the withdrawal plus any applicable pro rata
Surrender Charge. The Specified Amount remaining after a withdrawal may not be
less than $250,000 for JP Financial Heritage I and $500,000 for JP Financial
Heritage II. As a result, JP Financial will not effectuate any withdrawal that
would reduce the Specified Amount below these minimums. If increases in
Specified Amount previously have occurred, a withdrawal will first reduce the
Specified Amount of the most recent increase, then the most recent increases
successively, then the coverage under the original application. If the life
insurance proceeds payable under either Death Benefit option, both before and
after the withdrawal, is the Accumulation Value multiplied by the corridor
percentage, a withdrawal generally will result in a reduction in life insurance
proceeds equal to the amount paid upon withdrawal, multiplied by the corridor
percentage then in effect.
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Under Option II, which provides for life insurance proceeds equal to the
Specified Amount plus Accumulation Value, a reduction in Accumulation Value as a
result of a withdrawal will typically result in a dollar per dollar reduction in
the life insurance proceeds payable under the Policy.
A Policyowner may allocate a withdrawal among the Divisions and the General
Account. If no such allocation is made, a withdrawal will be allocated among the
Divisions and the General Account in the same proportion that the Accumulation
Value in each Division and the Accumulation Value in the General Account, less
any Policy Debt bears to the total Accumulation Value of the Policy, less any
Policy Debt, on the date of withdrawal. See "FEDERAL TAX MATTERS--Policy
Proceeds".
Policy Loans. So long as the Policy remains in force, a Policyowner may borrow
money from JP Financial at any time after the first policy anniversary using the
Policy as the only security for the loan. Loans have priority over the claims of
any assignee or any other person. Generally, the maximum loan amount is 90% of
the Policy's Cash Value at the end of the Valuation Period during which the loan
request is received. The maximum amount which may be borrowed at any given time
is the maximum loan amount reduced by any outstanding Policy Debt.
Proceeds of policy loans ordinarily will be disbursed within seven days from
the Date of Receipt of a request for a loan by JP Financial, although payments
may be postponed under certain circumstances. See "OTHER MATTERS--Postponement
of Payments". JP Financial may, in its discretion, permit loans to be made by
telephone if the proper authorization form is on file with JP Financial. So long
as the Policy remains in force, the loan may be repaid in whole or in part
without penalty at any time while an Insured is living.
When a policy loan is made, a portion of the Policy's Accumulation Value
sufficient to secure the loan will be transferred to the General Account. A
policy loan removes the proceeds from the investment experience of Separate
Account C which will have a permanent effect on the Accumulation Value and Death
Benefit even if the loan is repaid. Any loan interest that is due and unpaid
will also be so transferred. Accumulation Value equal to Policy Debt in the
General Account will accrue interest daily at an annual rate of 6%. The
Policyowner may allocate a policy loan among the Divisions and the General
Account. If no such allocation is made the loan will be allocated among the
Divisions and the General Account in the same proportion that the Accumulation
Value in each Division and the Accumulation Value in the General Account less
Policy Debt bears to the total Accumulation Value of the Policy, less Policy
Debt, on the date of the loan.
JP Financial will charge interest on any outstanding policy loan with such
interest compounded annually. There are two types of loans available. A Type A
loan is charged the same interest rate as the interest credited to the amount of
Accumulation Value held in the General Account to secure loans. The unloaned
Type A balance is the Cash Value, less the threshold, and less the sum of any
outstanding Type A loans. The threshold is the Guideline Single Premium for this
policy at issue as defined in Section 7702 of the Internal Revenue Code of 1986
entitled "Life Insurance Contract Defined." Any other loans are Type B loans. A
Type B loan is charged an interest rate of 6.85%. It is possible for one loan
request to result in both a Type A and a Type B loan. A request for a loan will
be granted first as a Type A loan, to the extent available, and then as a Type B
loan. Once a policy loan is granted, it remains a Type A or Type B until it is
repaid. Increases in the Specified Amount will affect the determination of the
amount available for a Type A loan; however, decreases in the Specified Amount
will not have any such effect. Interest is due and payable at the end of each
policy year, and any interest not paid when due becomes loan principal.
Where applicable, loans are subject to conditions and requirements of the
Employee Retirement Income Security Act of 1974 ("ERISA"), as well as the terms
of any retirement plan in connection with which the Policy has been purchased.
The ERISA rules relating to loans are complex and vary depending on the
individual circumstances of each Policy. Employers and Policyowners should
consult with qualified advisers before exercising the loan privileges.
Policy Debt equals the total of all outstanding policy loans and accrued
interest on policy loans. If Policy Debt exceeds Cash Value, JP Financial will
notify the Policyowner and any assignee of record. A payment at least equal to
the amount of excess Policy Debt above the Cash Value must be made to JP
Financial within 61 days from the date Policy Debt exceeds Cash Value,
otherwise, the Policy will lapse and terminate without value. In such event, the
Policyowner may be taxed on the total appreciation under the Policy. The Policy
may, however, later be reinstated, subject to satisfactory proof of insurability
and the payment of a reinstatement premium. See "THE POLICIES--Reinstatement".
So long as the Policy remains in force, Policy Debt may be repaid in whole or
in part at any time during an Insured's life. If there is any existing Policy
Debt, premium payments in the amount of the Planned Periodic Premium, received
at the Premium Frequency, will be applied as premium. Premium payments in excess
of the Planned Periodic Premium or premium payments received other than at the
Premium Frequency, will first be applied as policy loan repayments, then as
premium when the Policy
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Debt is repaid. For Policyowners with both Type A and Type B loans, repayments
of the loan will be applied first to Type B loans and then to Type A loans. Upon
repayment, the Policy's Accumulation Value securing the repaid portion of the
debt in the General Account will be transferred to the Divisions and the General
Account using the same percentages used to allocate Net Premiums. Any
outstanding Policy Debt is subtracted from life insurance proceeds payable at
the Insured's or last surviving Insured's death, from Accumulation Value upon
surrender, and from Cash Value payable at maturity.
OTHER MATTERS
Voting Rights. To the extent required by law, JP Financial will vote the
Trust shares held in the various Divisions at regular and special shareholder
meetings of the Trust in accordance with instructions received from persons
having voting interests in Separate Account C. If, however, the 1940 Act or any
regulation thereunder should be amended or if the present interpretation thereof
should change and, as a result, JP Financial determines that it is permissible
to vote the Trust shares in its own right, it may elect to do so. The number of
votes on which each Policyowner has the right to instruct will be determined by
dividing the Policy's Accumulation Value in a Division by the net asset value
per share of the corresponding Portfolio in which the Division invests, or as
otherwise required by law. Fractional shares will be counted. The number of
votes on which the Policyowner has the right to instruct will be determined as
of the date coincident with the date established by the Trust for determining
shareholders eligible to vote at the meeting of the Trust. Voting instructions
will be solicited by written communications prior to such meeting in accordance
with procedures established by the Trust. JP Financial will vote Trust shares as
to which no instructions are received in proportion to the voting instructions
which are received with respect to all Policies participating in the Trust in
accordance with applicable law. Each person having a voting interest will
receive proxy material, reports and other materials relating to the Trust. The
shares held by JP Financial, including shares for which no voting instructions
have been received, shares held in Separate Account C representing charges
imposed by JP Financial against Separate Account C under the Policies and shares
held by JP Financial that are not otherwise attributable to Policies, will also
be voted by JP Financial in proportion to instructions received from the owners
of variable life insurance policies funded through Separate Account C. JP
Financial reserves the right to vote any or all such shares at its discretion to
the extent consistent with then current interpretations of the 1940 Act and
rules thereunder.
JP Financial may, when required by state insurance regulatory authorities,
disregard voting instructions if the instructions require that shares be voted
so as to cause a change in subclassification or investment objective of the
Trust or disapprove an investment advisory contract of the Trust. In addition,
JP Financial may disregard voting instructions in favor of changes initiated by
a Policyowner in the investment policy or the investment adviser of the Trust if
JP Financial 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 JP Financial determined that the change would
be inconsistent with the investment objectives of Separate Account C or would
result in the purchase of securities for Separate Account C which vary from the
general quality and nature of investments and investment techniques utilized by
other separate accounts created by JP Financial or any affiliate of JP Financial
which have similar investment objectives. In the event that JP Financial does
disregard voting instructions, a summary of that action and the reason for such
actions will be included in the next semi-annual report to the Policyowner.
Additions, Deletions or Substitutions of Investments. JP Financial reserves
the right, subject to compliance with applicable law, to make additions to,
deletions from, or substitutions for the shares held by any Division or which
any Division may purchase. If shares of the Trust should no longer be available
for investment or if, in the judgment of JP Financial's management, further
investment in shares of the Trust should become inappropriate in view of the
purposes of the Policy, JP Financial may substitute shares of any other
investment company for shares already purchased, or to be purchased in the
future under the Policies. No substitution of securities will take place without
notice to and consent of Policyowners and without prior approval of the
Commission, all to the extent required by the 1940 Act. Any surrender due to a
change in a Portfolio's investment policy will incur any applicable Surrender
Charges.
Each class of Trust shares is subject to certain investment restrictions
which may not be changed without the approval of the majority of the holders of
such class. See the accompanying Prospectus for the Trust.
Annual Report. Each year a report will be sent to the Policyowner which
shows the current Accumulation Value, Cash Value, premiums paid and all charges
since the last annual report as well as the balance of outstanding policy loans.
JP Financial will also send to the Policyowner the reports required by the 1940
Act.
Confirmation. Confirmation notices (or other appropriate notification) will
be mailed promptly at the time of the following transactions:
(1) policy issue;
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(2) receipt of premium payments;
(3) initial allocation among Divisions on the Allocation Date;
(4) transfers among Divisions;
(5) change of premium allocation;
(6) change between Option I and Option II;
(7) increases or decreases in Specified Amount;
(8) withdrawals, surrenders or loans;
(9) receipt of loan repayments;
(10) reinstatements; and
(11) redemptions due to insufficient funds.
Limitation on Right to Contest. JP Financial will not contest or revoke the
insurance coverage provided under the Policy, except for any subsequent increase
in Specified Amount, after the Policy has been in force during the lifetime of
each Insured for a period of two years from the date it is issued. Any increase
in the Specified Amount will not be contested after such increase has been in
force during the lifetime of each Insured for two years following the effective
date of the increase. Any increase will be contestable within the two year
period only with regard to statements concerning this increase.
Misstatements. If the age or sex of an Insured has been misstated in an
application, including a reinstatement application, JP Financial will adjust the
benefits payable to reflect the correct age or sex.
Suicide. The Policy does not cover the risk of suicide within two years
from the date the Policy is issued or two years from the date of any increase in
Specified Amount with respect to such increase, whether the Insured is sane or
insane, unless otherwise specified by state law. In the event of suicide of any
Insured within two years of the date the Policy is issued, the only liability of
JP Financial will be a refund of premiums paid, without interest, less any
Policy Debt and less any withdrawal. In the event of suicide by any Insured
within two years of an increase in Specified Amount, the only liability of JP
Financial with respect to the increase will be a refund of the cost of insurance
for such increase.
Under JP Financial Heritage II, if the first death is by suicide and the
surviving Insured is classified by JP Financial as insurable on the Policy Date,
JP Financial will issue, upon request of the Policyowner and without evidence of
insurability, an individual policy providing coverage on the life of the
surviving Insured equal to the coverage on the Insureds for which premiums or
cost of insurance was refunded.
Beneficiaries. The original Beneficiaries and contingent Beneficiaries are
designated by the Policyowner on the application. If changed, the primary
Beneficiary or contingent Beneficiary is as shown in the latest change filed
with JP Financial. One or more primary or contingent Beneficiaries may be named
in the application. In such case, the proceeds of the Policy will be paid in
equal shares to the survivors in the appropriate beneficiary class unless
requested otherwise by the Policyowner.
Postponement of Payments. Payment of any amount upon surrender, withdrawal,
policy loan, or benefits payable at death or maturity may be postponed whenever:
(i) the New York Stock Exchange is closed other than customary week-end and
holiday closings, or trading on the New York Stock Exchange is restricted as
determined by the Commission; (ii) the Commission by order permits postponement
for the protection of Policyowners; or (iii) an emergency exists, as determined
by the Commission, as a result of which disposal of securities is not reasonably
practical or it is not reasonably practicable to determine the value of net
assets in Separate Account C.
Assignment. Ownership of the Policy can be assigned or the Policy can be
assigned as collateral security. JP Financial must be notified in writing if the
Policy has been assigned. Each assignment will be subject to any payments made
or action taken by JP Financial prior to its notification of such assignment. JP
Financial is not responsible for the validity of an assignment. A Policyowner's
rights and the rights of the Beneficiary may be affected by an assignment.
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Illustration of Benefits and Values. The Policyowner may request
illustrations of Death Benefits, Accumulation Values and Cash Values at any time
after the Policy Date. Illustrations will be based on the existing Accumulation
Value and Cash Value at the time of the request and both the maximum and the
then current costs of insurance rates. Although JP Financial does not currently
charge a fee for such illustrations, it reserves the right to charge an
administrative fee, not to exceed $25, to cover the cost of preparing the
illustrations.
Non-Participating Policy. The Policy does not share in any surplus
distributions of JP Financial. No dividends are payable with respect to the
Policy.
Year 2000 Matter. Certain computer programs have been written using two
digits rather than four to define the applicable year. As a result, any of
Jefferson-Pilot Corporation's computer programs that have time-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000 (the "Year 2000 Matter"). This could result in a system failure which may
disrupt operations, including an inability to accurately process or calculate
new or in-force business.
Jefferson-Pilot Corporation (the Company's parent company) has completed an
assessment and has determined that it will have to modify or replace portions of
the software and hardware utilized by Jefferson-Pilot Corporation affiliates,
including the Company, so that the computer systems will function properly with
respect to dates in the year 2000 and thereafter.
Jefferson-Pilot Corporation will utilize both internal and external
resources to reprogram, replace, convert and test software and hardware for any
necessary Year 2000 modifications. The project is estimated to be completed not
later than the third quarter of 1999. Jefferson-Pilot Corporation believes that
with modifications to its existing software and hardware and conversions to new
software, the Year 2000 Matter will not pose significant operational problems
for its computer systems. However, if such modifications and conversions are not
made, or are not completed on a timely basis, the Year 2000 Matter could have a
material impact on operations of the Company.
Jefferson-Pilot Corporation has initiated formal communications with all of
its significant suppliers to determine the extent to which the Company's
systems, policies, procedures and contracts are vulnerable to those third
parties' failure to remediate their own Year 2000 issues. There is no guarantee
that the systems of other companies on which the Company relies will be in
compliance on a timely basis; nor is there any guarantee that non-compliance
would not have an adverse affect on the Company's systems and business.
The costs of the project and the date on which the Jefferson-Pilot
Corporation believes it will be compliant are based on management's best
estimates, which were derived utilizing various assumptions of future events,
including the continued availability of certain resources and other factors.
However, there can be no guarantee that these estimates will be achieved.
Jefferson-Pilot Corporation has not yet allocated the costs of compliance
among its subsidiaries, including the Company. To the best of Jefferson-Pilot
Corporation and the Company's knowledge, it is currently anticipated that any
future allocation is unlikely to have a material financial impact on the
Company.
THE GENERAL ACCOUNT
Policyowners may allocate Net Premiums and transfer Accumulation Value to
the General Account. Because of exemptive and exclusionary provisions, interests
in the General Account have not been registered under the Securities Act of 1933
and the General Account has not been registered as an investment company under
the 1940 Act. Accordingly, neither the General Account nor any interests therein
are subject to the provisions of these Acts, and JP Financial has been advised
that the staff of the Securities and Exchange Commission has not reviewed the
disclosures in this Prospectus relating to the General Account. Disclosures
regarding the General Account may, however, be subject to certain generally
applicable provisions of the federal securities laws relating to the accuracy
and completeness of statements made in prospectuses.
General Description. The General Account consists of all assets owned by JP
Financial other than those in Separate Account C and other separate accounts
which have been or may be established by JP Financial. Subject to applicable
law, JP Financial has sole discretion over the investment of the assets of the
General Account.
A Policyowner may elect to allocate Net Premiums to the General Account or
to transfer Accumulation Value to or from the Divisions and the General Account.
The allocation or transfer of funds to the General Account does not entitle a
Policyowner to share in the investment experience of the General Account.
Instead, JP Financial guarantees that Accumulation Value in the General Account
will accrue interest daily at an effective annual rate of at least 4%,
independent of the actual investment experience of the General Account. JP
Financial is not obligated to credit interest at any higher rate, although JP
Financial may, in its sole discretion, do so.
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If the Policy issued as applied for is not accepted or the "free look" is
exercised, no interest will be credited and JP Financial will retain any
interest earned on the initial Net Premium.
General Account Accumulation Value. The Accumulation Value in the General
Account on the Allocation Date is equal to the portion of the Net Premium
payments, plus interest earned, which have been paid and allocated to the
General Account, less the portion of the first monthly deduction allocated to
the General Account.
JP Financial guarantees that interest credited to each Policyowner's
Accumulation Value in the General Account will not be less than an effective
annual rate of at least 4%. JP Financial may, IN ITS SOLE DISCRETION, credit a
higher rate of interest, although it is not obligated to credit interest in
excess of 4% per year, and might not do so. ANY INTEREST CREDITED ON THE
POLICY'S ACCUMULATION VALUE IN THE GENERAL ACCOUNT IN EXCESS OF THE GUARANTEED
RATE OF 4% PER YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF JP FINANCIAL.
THE POLICYOWNER ASSUMES THE RISK THAT INTEREST CREDITED MAY NOT EXCEED THE
GUARANTEED MINIMUM RATE OF 4% PER YEAR. Accumulation Value in the General
Account that equals indebtedness will be credited interest daily at an effective
annual rate of 6%. The Accumulation Value in the General Account will be
calculated on each Monthly Anniversary Date of the Policy, or on any other date
with consistent adjustments.
JP Financial guarantees that, at any time prior to the Maturity Date, the
Accumulation Value in the General Account will not be less than the amount of
the Net Premiums allocated or Accumulation Value transferred to the General
Account, plus interest at the rate of 4% per year, plus any excess interest
which JP Financial credits and any amounts transferred into the General Account,
less the sum of all charges allocable to the General Account and any amounts
deducted from the General Account in connection with withdrawals or transfers to
Separate Account C.
Determination of Charges. The portion of the monthly deduction attributable
to the General Account will be determined as of the actual Monthly Anniversary
Date, even if the Monthly Anniversary Date does not fall on a Valuation Date.
Premium Deposit Fund. As a convenience to Policyowners, JP Financial
permits Policyowners to deposit funds in a premium deposit fund ("PDF"), subject
to the terms and conditions of the appropriate agreement. Funds deposited in the
PDF earn interest at a minimum annual rates of 4%, with interest credited on
each monthly anniversary date. Interest on these funds is not tax deferred and
will be annually reported on Form 1099 to the Policyowner. An amount equal to
the Planned Periodic Premium will be transferred on the Policy date to pay
premiums on the Policy. Policyowners may withdraw all or part of the funds from
the PDF at any time. No commissions are earned or paid until premium payments
are made pursuant to transfers from the PDF.
DISTRIBUTION OF THE POLICY
The Policy will be sold by individuals who, in addition to being licensed
as life insurance agents for JP Financial, are also registered representatives
of broker-dealers who have entered into written sales agreements with the
principal underwriter, Jefferson Pilot Variable Corporation. Each broker-dealer
with whom Jefferson Pilot Variable Corporation has executed a selling agreement
will receive as a commission the full charge of 3% imposed on premiums. Any such
broker-dealers will be registered under the Securities Exchange Act of 1934 and
their representatives selling the Policies will be authorized under applicable
insurance laws and regulations to sell insurance products of this type. It is
not expected that the compensation paid by JP Financial in connection with such
sales will exceed that described above.
The Distribution Agreement with Jefferson Pilot Variable Corporation took
effect on January 1, 1998 and continues until terminated by any party on 60 days
notice. Jefferson Pilot Variable Corporation is not obligated to sell any
specified amount of Policies and may not assign its responsibilities under the
Distribution Agreement. JP Financial reimburses Jefferson Pilot Variable
Corporation for its expenses under the Distribution Agreement.
Prior to January 1, 1998, a Distribution Agreement with Jefferson Pilot
Securities Corporation ("JPSecurities") (formerly Chubb Securities Corporation)
was in effect. The aggregate amounts paid to Chubb Securities Corporation under
the prior Distribution Agreement were $25,959,043 in 1997, $22,502,715 in 1996
and $15,333,468 in 1995. JP Financial reimbursed JP Securities for its expenses
under the prior Distribution Agreement.
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JP Securities Corporation is engaged in the sale and distribution of
various other securities. including other flexible premium variable life
policies. It acts as principal underwriter for other flexible premium variable
life policies and variable annuity contracts issued by JP Financial (and its
affiliated insurance companies) and for the Jefferson Pilot Variable Fund, Inc.
mutual funds. It sells a number of mutual fund shares as well as shares of other
securities and limited partnership interests in both public and private limited
partnerships. Mutual fund shares available for sale by JP Securities are sold
pursuant to non-exclusive selling agreements with the distributors of the mutual
funds.
Group or Sponsored Arrangements. Policies may be purchased under group or
sponsored arrangements, as well as on an individual basis. A "group arrangement"
includes a program under which a trustee, employer or similar entity purchases
individual Policies covering a group of individuals on a group basis. Examples
of such arrangements are employer-sponsored benefit plans and deferred
compensation plans. A "sponsored arrangement" includes a program under which an
employer permits group solicitation of its employees or an association permits
group solicitation of its members for the purchase of Policies on an individual
basis.
JP Financial may reduce the following types of charges for Policies issued
in connection with group or sponsored arrangements: the sales charge, the cost
of insurance charge, surrender or withdrawal charges, administrative charges for
withdrawal or transfer, the guaranteed death benefit charge and charges for
optional rider benefits. JP Financial may also issue Policies in connection with
group or sponsored arrangements on a "non-medical" or guaranteed issue basis.
Due to the underwriting criteria established for Policies issued on a non-
medical, guaranteed issue basis, actual monthly cost of insurance charges may be
higher than the current cost of insurance charges under otherwise identical
Policies that are medically underwritten. In addition, JP Financial may also
specify different minimum Specified Amounts at issue for Policies issued in
connection with group or sponsored arrangements.
Certain charges or underwriting requirements set forth in this Prospectus
may also be reduced or eliminated for Policies issued in connection with an
exchange of another JP Financial policy or contract or policies or contracts of
any affiliates of JP Financial.
The amounts of any reduction, the charges to be reduced, the elimination or
modification of underwriting requirements, and the criteria for applying a
reduction or modification will generally reflect the reduced sales and
administrative effort, costs and differing mortality experience appropriate to
the circumstances giving rise to the reduction or modification. The charges will
be reduced in accordance with JP Financial's company practice in effect when the
Policy is issued. The elimination or modification of underwriting requirements
will be done in accordance with JP Financial's administrative procedures with
respect to underwriting when the Policy is issued. Reductions and modifications
will not be made where prohibited by applicable law and will not be unfairly
discriminatory against any person including the purchasers to whom the reduction
or modification applies and all other Owners of the Policy.
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MANAGEMENT OF JEFFERSON PILOT FINANCIAL
Executive Officers and Directors of Jefferson Pilot Financial
Directors
Principal Occupation and
Name Business Address
- ---- ------------------------
Dennis R. Glass.............. Senior Vice President
Chief Financial Officer and Treasurer
Jefferson-Pilot Corporation
(also serves as Executive Vice President, Chief
Financial Officer and Treasurer of
Jefferson-Pilot Life Insurance Company)
100 North Greene Street
Greensboro, North Carolina 27401
Kenneth C. Mlekush........... Senior Vice President
(also serves as Executive Vice President of
Jefferson-Pilot Life Insurance Company)
100 North Greene Street
Greensboro, North Carolina 27401
David A. Stonecipher......... President, Chairman and Chief Executive Officer
(also serves as President and Chief Executive
Officer of Jefferson-Pilot Life Insurance
Company)
100 North Greene Street
Greensboro, North Carolina 27401
E. Jay Yelton................ Executive Vice President
Jefferson-Pilot Life Insurance Company
100 North Greene Street
Greensboro, North Carolina 27401
Executive Officers (Other Than Directors)
Name
- ----
Charles C. Cornelio.......... Executive Vice President
Reggie D. Adamson............ Senior Vice President
Ronald R. Angarella.......... Senior Vice President
John C. Ingram............... Senior Vice President
Hal B. Phillips, Jr.......... Senior Vice President
Warren L. Reynolds........... Senior Vice President
Paul J. Strong............... Senior Vice President
John W. Wells................ Senior Vice President
James R. Abernathy........... Vice President
Thomas M. Bodrogi............ Vice President
Margaret Cain................ Vice President
Rebecca M. Clark............. Vice President
Kenneth S. Dwyer............. Vice President
Ronald B. Emery.............. Vice President
Donald M. Kane............... Vice President
Patrick A. Lang.............. Vice President
Shari J. Lease............... Vice President
Donna L. Metcalf............. Vice President
Thomas E. Murphy, Jr. M.D.... Vice President, Associate Medical Director
Robert A. Reed............... Vice President
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Kenneth L. Robinson, Jr., Vice President
James M. Sandelli Vice President
Russell C. Simpson Vice President and Treasurer
William A. Spencer Vice President
John A. Thomas Vice President
STATE REGULATION OF JP FINANCIAL
Jefferson Pilot Financial Insurance Company is governed under the laws of the
state of New Hampshire and is subject to regulation by the Insurance
Commissioner of New Hampshire. An annual statement is filed with the New
Hampshire Insurance Commissioner on or before March 1 of each year covering the
operations and reporting on the financial condition of JP Financial as of
December 31 of the preceding year. Periodically, the Commissioner examines the
assets and liabilities of JP Financial and Separate Account C and verifies their
adequacy and a full examination of JP Financial's operations is conducted by the
Commissioner at least every five years.
In addition, JP Financial is subject to the insurance laws and regulations of
other states within which it is licensed to operate. Generally, the insurance
department of any other state applies the laws of the state of domicile in
determining permissible investments.
FEDERAL TAX MATTERS
Tax Considerations. The following description is a brief summary of some of
the tax rules, primarily related to federal income taxes under the Code, which,
in the opinion of JP Financial, are currently in effect and is not intended as
tax advice. JP Financial believes that, as discussed below, the Policy will in
general receive favorable tax treatment under the Code. Because there are issues
as to which the law is still developing or may change, however, and because this
information is not intended as tax advice, JP Financial recommends that the
Policyowner or prospective Policyowner rely only on the advice of a qualified
tax adviser.
Policy Proceeds. The Policy contains provisions not found in traditional life
insurance policies providing only for fixed benefits. However, under the Code,
the Policy should qualify as a life insurance contract for federal income tax
purposes, with the result that all Death Benefits paid under the Policy will
generally be fully excludable from the gross income of the Policy's Beneficiary
for federal income tax purposes and, as long as the Policy remains in force,
income earned on the Policy will not be subject to federal income tax unless and
until there is a distribution from the Policy. Policyowners should consult with
their own tax advisers in this regard.
The federal income tax treatment of a distribution from the Policy will depend
on whether a Policy is a life insurance policy and also if it is determined to
be a "modified endowment contract," as defined by the Code. JP Financial will
notify a Policyowner if the amount of premiums paid in would cause a Policy to
be a modified endowment contract and will allow a refund of the excess premium.
The Policyowner may also choose to have the Policy treated as a modified
endowment contract.
A modified endowment contract is a life insurance policy which fails to meet a
"seven-pay" test. In general, a policy will fail the seven-pay test if the
cumulative amount of premiums paid under the policy at any time during the first
seven policy years exceeds a calculated premium level. The calculated seven-pay
premium level is based on a hypothetical policy issued on the same insured
persons and for the same initial death benefit which, under specified conditions
(which include the absence of expense and administrative charges), would be
fully paid for after seven years. Your policy will be treated as a modified
endowment unless the cumulative premiums paid under your policy, at all times
during the first seven policy years, are less than or equal to the cumulative
seven-pay premiums which would have been paid under the hypothetical policy on
or before such times.
Whenever there is a "material change" under a policy, it will generally be
treated as a new contract for purposes of determining whether the policy is a
modified endowment, and subject to a new seven-pay premium period and a new
seven -pay limit. The new seven-pay limit would be determined taking into
account, under a downward adjustment formula, the Policy Account Value of the
policy at the time of such change. A materially changed policy would be
considered a modified endowment if it failed to satisfy the new seven-pay limit.
A material change could occur as a result of a change in death benefit option,
the selection of additional benefits, the restoration of a terminated policy and
certain other changes.
29
<PAGE>
If the benefits under your policy are reduced, for example, by requesting a
decrease in Face Amount, or in some cases by making partial withdrawals,
terminating additional benefits under a rider, changing the death benefit
option, or as a result of policy termination, the calculated seven-pay premium
level will be redetermined based on the reduced level of benefits and applied
retroactively for purposes of the seven-pay test. If the premiums previously
paid are greater than the recalculated seven-pay premium level limit, the policy
will become a modified endowment unless the policyowner requests a refund of the
excess premium, as outlined above. Generally, a life insurance policy which is
received in exchange for a modified endowment or a modified endowment which
terminates and is restored, will also be considered a modified endowment.
If a policy is deemed to be a modified endowment contract, any distribution
from the policy will be taxed in a manner comparable to distributions from
annuities (i.e., on an "income-first" basis); distributions for this purpose
include a loan, pledge, assignment or partial withdrawal. Any such distributions
will be considered taxable income to the extent accumulation value under the
policy exceeds investment in the policy.
A 10% penalty tax will apply to the taxable portion of such a distribution. No
penalty will apply to distributions (i) to taxpayers 59 1/2 years of age or
older, (ii) in the case of a disability which can be expected to result in death
or to be of indefinite duration or (iii) received as part of a series of
substantially equal periodic annuity payments for the life (or life expectancy)
of the taxpayer or the joint lives (or joint life expectancies) of the taxpayer
and his beneficiary.
To the extent a policy becomes a modified endowment contract, any
distribution, including any loan, which occurs in the policy year it becomes a
modified endowment contract and in any year thereafter, will be taxable income
to the policyowner to the extent accumulation value exceeds investment as
described above. Also, any distributions within two years before a policy
becomes a modified endowment contract will also be income taxable to the
policyowner, as described above. The Secretary of the Treasury has been
authorized to prescribe rules which would similarly treat other distributions
made in anticipation of a policy becoming a modified endowment contract. For
purposes of determining the amount of any distribution includable in income, all
modified endowment contract policies that fail the above-described tests which
are issued by the same insurer, or its affiliates, to the same policyowner
during any calendar year are treated as one contract. The Secretary of the
Treasury is also authorized to issue regulations in this connection.
In addition to the distribution rules for modified endowment contracts, the
Code and proposed regulations thereunder require that reasonable mortality and
other charges be used in satisfying the definition of life insurance. The death
benefit under a policy which meets this definition will continue to be excluded
from the beneficiary's gross income. JP Financial believes that the Policies
meet this definition. However, there is uncertainty as to the meaning of
"reasonable mortality charges" and resultant uncertainties as to JP Financial
Heritage II's qualification if a different definition is adopted by the Treasury
Department. As long as a Policy does not violate the tests described above, it
will not fail to meet the tests of the Code and the general tax provisions
described herein still apply.
The foregoing summary does not purport to be complete or to cover all
situations, and, as always, there is some degree of uncertainty with respect to
the application of the current tax laws. In particular, prior to the issuance of
final regulations or other clarifications under certain sections of the Code,
there may be some uncertainties about the tax treatment of the Policy with
respect to the mortality charges, substandard risks and any extension of the
Maturity Date. In addition to the provisions discussed above, the United States
Congress may consider other legislation which, if enacted, could adversely
affect the tax treatment of life insurance policies. Also, the Treasury
Department may amend current regulations or adopt new regulations with respect
to this and other Code provisions. Therefore, Policyowners are advised to
consult a tax adviser or attorney for more complete tax information,
specifically regarding the applicability of the Code provisions to an individual
Policyowner's situation.
Under normal circumstances, the Policy is not a modified endowment contract
and loans received under the Policy will be construed as indebtedness of the
Policyowner in the same manner as loans under a fixed benefit life insurance
policy and no part of any loan under the Policy is expected to constitute income
to the Policyowner. Policyholders are advised to consult a tax adviser or
attorney regarding the deduction of interest paid on loans.
Even if the Policy is not a modified endowment contract, a partial withdrawal
together with a reduction in death benefits during the first 15 policy years may
create taxable income for the Policyowner. The amount of that taxable income is
determined under a complex formula and it may be equal to part or all of, but
not greater than, the income on the contract. A partial withdrawal made after
the first 15 policy years will be taxed on a recovery of premium-first basis,
and will only be subject to federal income tax to the extent such proceeds
exceed the total amount of premiums the Policyowner has paid that have not been
previously withdrawn.
30
<PAGE>
If a Policyowner makes a partial withdrawal, surrender, loan or exchange of
the Policy, JP Financial may be required to withhold federal income tax from the
portion of the money received by the Policyowner that is includable in the
Policyowner's federal gross income. A Policyowner who is not a corporation may
elect not to have such tax withheld; however, such election must be made before
JP Financial makes the payment. In addition, if a Policyowner fails to provide
JP Financial with a correct taxpayer identification number (usually a social
security number) or if the Treasury notifies JP Financial that the taxpayer
identification number which has been provided is not correct, the election not
to have such taxes withheld will not be effective. In any case, a Policyowner is
liable for payment of the federal income tax on the taxable portion of money
received, whether or not an election to have federal income tax withheld is
made. If a Policyowner elects not to have federal income tax withheld, or if the
amount withheld is insufficient, then the Policyowner may be responsible for
payment of estimated tax. A Policyowner may also incur penalties under the
estimated tax rules if the withholding and estimated tax payments are
insufficient. JP Financial suggests that Policyowners consult with a tax adviser
or attorney as to the tax implications of these matters.
In the event that a Policy is owned by the trustee under a pension or profit
sharing plan, or similar deferred compensation arrangement, the tax consequences
of ownership or receipt of proceeds under the Policy could differ from those
stated herein. However, if ownership of such a Policy is transferred from the
plan to a plan participant (upon termination of employment, for example), the
Policy will be subject to all of the federal tax rules described above. A Policy
owned by a trustee under such a plan may be subject to restrictions under ERISA
and a tax adviser should be consulted regarding any applicable ERISA
requirements.
The Policy may also be used in various arrangements, including nonqualified
deferred compensation or salary continuation plans, split dollar insurance
plans, executive bonus plans and others, where the tax consequences may vary
depending on the particular facts and circumstances of each individual
arrangement. A tax adviser should be consulted regarding the tax attributes of
any particular arrangement where the value of it depends in part on its tax
consequences.
Federal estate and local estate, inheritance and other tax consequences of
ownership or receipt of policy proceeds depend upon the circumstances of each
Policyowner and Beneficiary.
Current Treasury regulations set standards for diversification of the
investments underlying variable life insurance policies in order for such
policies to be treated as life insurance. JP Financial believes it presently is
in compliance with the diversification requirements as set forth in the
regulations and intends to remain in compliance with such diversification
requirements. If the diversification requirements are not satisfied, the Policy
would not be treated as a life insurance contract. As a consequence to the
Policyowner, income earned on a Policy would be taxable to the Policyowner in
the calendar quarter in which the diversification requirements were not
satisfied, and for all subsequent calendar quarters.
The Secretary of the Treasury may issue a regulation or a ruling which will
prescribe the circumstances in which a policyowner's control of the investments
of a segregated asset account may cause the policyowner, rather than the
insurance company, to be treated as the owner of the assets of the account. The
regulation or ruling could impose requirements that are not reflected in the
Policy, relating, for example, to such elements of policyowner control as
premium allocation, investment selection, transfer privileges and investments in
a division focusing on a particular investment sector. It has also been
suggested that, in certain circumstances, control over the investment adviser
might constitute prohibited policyowner control. JP Financial believes that
policyowner control will not exist under the Policy. Because failure to comply
with any such regulation or ruling presumably would cause earnings on a
Policyowner's interest in Separate Account C to be includable in the
Policyowner's gross income in the year earned, JP Financial has reserved certain
rights to alter the Policy and investment alternatives so as to comply with such
regulation or ruling. JP Financial believes that any such regulation or ruling
would apply prospectively. Since the regulation or ruling has not been issued,
there can be no assurance as to the content of such regulation or ruling or even
whether application of the regulation or ruling will be prospective. For these
reasons, Policyowners are urged to consult with their own tax advisers.
A Policyowner may elect to exchange JP Financial Heritage II for two
individual JP Financial Heritage I policies provided the conditions under the
Policy Exchange Option Rider are met. This could have adverse tax consequences
including, but not limited to, the recognition of taxable income in an amount up
to any taxable gain in the Policy at the time of the exchange.
Charge for JP Financial Income Taxes. JP Financial is presently taxed as a
life insurance company under the provisions of the Code. The Code specifically
provides for adjustments in reserves for variable policies, and JP Financial
will include flexible premium life insurance operations in its tax return in
accordance with these rules.
Currently no charge is made against Separate Account C for JP Financial's
federal income taxes, or provisions for such taxes, that may be attributable to
Separate Account C. JP Financial may charge each Division for its portion of any
income tax charged to JP Financial on the Division or its assets. See "CHARGES
AND DEDUCTIONS--Premium Charges" for a description of the
31
<PAGE>
Federal DAC tax charge deducted from premium payments. Under present laws, JP
Financial may incur state and local taxes (in addition to premium taxes) in
several states. At present, these taxes are not significant. If they increase,
however, JP Financial may decide to make charges for such taxes or provisions
for such taxes against Separate Account C. JP Financial would retain any
investment earnings on any tax charges accumulated in a Division. Any such
charges against Separate Account C or its Divisions could have an adverse effect
on the investment experience of such Division.
EMPLOYMENT BENEFIT PLANS
Employers and employee organizations should consider, in consultation with
counsel, the impact of Title VII of the Civil Rights Act of 1964 on the purchase
of a Policy in connection with an employment-related insurance or benefit plan.
The United States Supreme Court held, in a 1983 decision, that, under Title VII,
optional annuity benefits under a deferred compensation plan could not vary on
the basis of sex.
LEGAL PROCEEDINGS
There are no legal proceedings to which Separate Account C is a party or to
which the assets of any of the Divisions are subject. JP Financial is not
involved in any litigation that is of material importance in relation to its
total assets or that relate to Separate Account C.
EXPERTS
The consolidated financial statements of Chubb Life Insurance Company of
America and the financial statements of Separate Account C at December 31, 1997
and for the related periods, appearing in this Prospectus and Registration
Statement have been audited by Ernst & Young LLP, independent auditors, as set
forth in their reports thereon appearing elsewhere herein and in the
Registration Statement, and are included in reliance upon such reports given
upon the authority of such firm as experts in accounting and auditing.
Actuarial matters included in this Prospectus have been examined by Richard
Dielensnyder, FSA, MAAA as stated in the opinion filed as an exhibit to the
Registration Statement.
REGISTRATION STATEMENT
A Registration Statement has been filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, with respect to the
Policy offered hereby. This Prospectus does not contain all the information set
forth in the Registration Statement and the amendments and exhibits to the
Registration Statement to all of which reference is made for further information
concerning Separate Account C, JP Financial and the Policy offered hereby.
Statements contained in this Prospectus as to the contents of the Policy and
other legal instruments are summaries. For a complete statement of the terms
thereof reference is made to such instruments as filed.
FINANCIAL STATEMENTS
The consolidated financial statements of Chubb Life Insurance Company of
America and subsidiaries which are included in the Prospectus should be
considered only as bearing on the ability of Chubb Life (effective May 1, 1998,
"Jefferson Pilot Financial Insurance Company") to meet its obligations under the
Policy. They should not be considered as bearing on the investment experience of
the assets held in Separate Account C.
32
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Chubb Life Insurance Company of America
We have audited the accompanying consolidated balance sheet of Chubb Life
Insurance Company of America (a wholly-owned subsidiary of Jefferson Pilot
Corporation as of April 30, 1997--see Note 1) and subsidiaries as of December
31, 1997 on a purchase accounting basis (Successor), and the related
consolidated statement of income, stockholder's equity, and cash flows for the
eight month period ended December 31, 1997 on a purchase accounting basis
(Successor) and for the four month period ended April 30, 1997 on a historical
cost basis (Predecessor). These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Chubb Life
Insurance Company of America and subsidiaries at December 31, 1997 on a
purchase accounting basis (Successor), and the consolidated results of their
operations and their cash flows for the eight month period ended December 31,
1997 on a purchase accounting basis (Successor), and for the four month period
ended April 30, 1997 on a historical cost basis (Predecessor), in conformity
with generally accepted accounting principles.
February 9, 1998
F-1
<PAGE>
CONSOLIDATED BALANCE SHEET
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT FOR SHARE AMOUNTS)
<TABLE>
<S> <C>
ASSETS
Invested assets
Debt securities, available-for-sale, at fair value (amortized
cost--$2,878,984)................................................ $2,993,384
Equity securities, available-for-sale, at fair value (cost--
$15,087)......................................................... 18,984
Policy loans...................................................... 236,729
Mortgage loans on real estate..................................... 125,067
----------
Total investments................................................... 3,374,164
----------
Cash and cash equivalents........................................... 28,288
Accrued investment income........................................... 50,724
Uncollected premiums................................................ 4,475
Due from reinsurers................................................. 219,131
Deferred policy acquisition costs................................... 38,200
Value of business acquired.......................................... 418,665
Cost in excess of net assets acquired, net of accumulated amortiza-
tion of $2,852..................................................... 146,893
Property and equipment, net of accumulated depreciation of $1,111... 17,845
Federal income taxes receivable..................................... 7,952
Deferred federal income taxes....................................... 39,184
Assets held in separate accounts.................................... 598,039
Other assets........................................................ 39,312
----------
1,608,708
----------
$4,982,872
==========
LIABILITIES
Policy liabilities
Policyholder contract deposits.................................... $2,634,029
Future policy benefits............................................ 615,976
Policy and contract claims........................................ 64,716
Premiums paid in advance.......................................... 1,436
Other policyholders' funds........................................ 107,578
----------
Total policy liabilities............................................ 3,423,735
Liabilities related to separate accounts............................ 598,039
Accrued expenses and other liabilities.............................. 87,949
----------
4,109,723
Commitments and contingent liabilities
STOCKHOLDER'S EQUITY:
Common stock, par value $5 per share, 600,000 shares authorized,
issued and outstanding........................................... 3,000
Paid in capital................................................... 782,500
Retained earnings................................................. 53,717
Net unrealized gains on securities, net of deferred income taxes
of $18,271....................................................... 33,932
----------
873,149
----------
$4,982,872
==========
</TABLE>
See accompanying notes.
F-2
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
(IN THOUSANDS)
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR
------------ -----------
EIGHT MONTHS FOUR MONTHS
ENDED ENDED
DECEMBER 31, APRIL 30,
1997 1997
------------ -----------
<S> <C> <C>
REVENUES
Premiums and policy charges..................... $235,247 $117,385
Net investment income........................... 158,181 82,056
Realized investment gains....................... 4,788 3,473
Other income.................................... 3,303 1,087
-------- --------
Total revenues.................................... 401,519 204,001
BENEFITS AND EXPENSES
Policy benefits and claims...................... 217,622 108,274
Commissions and operating expenses, net of
deferrals...................................... 65,344 10,098
Amortization of intangibles..................... 35,842 38,206
-------- --------
Total benefits and expenses....................... 318,808 156,578
Income from continuing operations before federal
income tax....................................... 82,711 47,423
Federal income tax (benefit):
Current......................................... 14,422 20,596
Deferred........................................ 14,572 (7,926)
-------- --------
28,994 12,670
-------- --------
Income from continuing operations................. 53,717 34,753
Discontinued operations:
Adjustment to reduce estimated losses during
phase-out period, net of taxes of $3,206....... -- 6,006
-------- --------
Net income........................................ $ 53,717 $ 40,759
======== ========
</TABLE>
See accompanying notes.
F-3
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
(IN THOUSANDS)
<TABLE>
<CAPTION>
NET
UNREALIZED TOTAL
COMMON PAID IN RETAINED GAINS ON STOCKHOLDER'S
STOCK CAPITAL EARNINGS SECURITIES EQUITY
------ -------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Predecessor balances, Decem-
ber 31, 1996............... $3,000 $249,872 $595,536 $17,622 $866,030
Net income.................. -- -- 40,759 -- 40,759
Dividends declared.......... -- -- (103,008) -- (103,008)
Net change in unrealized
gains on available-for-sale
securities................. -- -- -- (10,708) (10,708)
------ -------- -------- ------- --------
Predecessor balances, April
30, 1997................... 3,000 249,872 533,287 6,914 793,073
Purchase accounting adjust-
ments...................... -- 532,628 (533,287) (6,914) (7,573)
------ -------- -------- ------- --------
Successor balances, May 1,
1997....................... 3,000 782,500 -- -- 785,500
Net income.................. -- -- 53,717 -- 53,717
Net change in unrealized
gains on available-for-sale
securities................. -- -- -- 33,932 33,932
------ -------- -------- ------- --------
Successor balances, December
31, 1997................... $3,000 $782,500 $ 53,717 $33,932 $873,149
====== ======== ======== ======= ========
</TABLE>
See accompanying notes.
F-4
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
(IN THOUSANDS)
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR
------------ -----------
EIGHT MONTHS FOUR MONTHS
ENDED ENDED
DECEMBER 31, APRIL 30,
1997 1997
------------ -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income............................................ $ 53,717 $ 40,759
Adjustments to reconcile net income to net cash pro-
vided by (used in) operating activities:
Decrease in future policy benefits, policy and
contract claims and premiums paid in advance, net.. (11,066) 6,070
Credits to policyholders accounts................... (65,949) (36,595)
Decrease (increase) in uncollected premiums......... 4,297 (2,990)
Increase in policy acquisition costs deferred, net
of amortization.................................... (38,200) (7,907)
Net (capitalization) amortization of value of
business acquired.................................. (3,159) 1,284
Decrease in accrued investment income............... 704 1,045
Realized investment gains........................... (4,788) (3,473)
Amortization (accretion) of investment premiums
(discounts) ....................................... 5,719 (277)
Provision for depreciation.......................... 1,210 2,485
Provision for deferred income tax................... 14,572 (7,926)
Increase (decrease) in federal income tax payable... (10,332) (10,988)
Change in receivables and asset accruals............ 48,461 (6,880)
Change in payables and expense accruals............. 9,313 (46,398)
Other operating activities, net..................... 570 (6,865)
--------- ---------
Net cash provided by (used in) operating activities... 5,069 (78,656)
INVESTING ACTIVITIES
Proceeds from sales of debt securities................ 205,590 199,970
Proceeds from maturities of debt securities........... 98,301 40,743
Proceeds from sales of equity securities.............. 10,386 18,343
Purchases of debt securities.......................... (379,041) (203,214)
Purchases of equity securities........................ (322) (6,284)
Policy loans issued, net of repayments................ (14,652) (4,219)
Mortgage loans, net of repayments..................... (117,136) 1,016
Other investing activities, net....................... 4,185 28,254
--------- ---------
Net cash (used in) provided by investing activities... (192,689) 74,609
FINANCING ACTIVITIES
Deposits credited to policyholders' funds............. 343,754 139,658
Withdrawals from policyholders' funds................. (108,331) (49,006)
Dividends paid........................................ (101,004) (2,004)
Decrease in loans payable............................. (51,142) (303)
--------- ---------
Net cash provided by financing activities............. 83,277 88,345
--------- ---------
Net (decrease) increase in cash and cash equivalents.. (104,343) 84,298
Cash and cash equivalents, beginning of period........ 132,631 48,333
--------- ---------
Cash and cash equivalents, end of period.............. $ 28,288 $ 132,631
========= =========
</TABLE>
See accompanying notes.
F-5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
DECEMBER 31, 1997
1.BASIS OF PRESENTATION
NATURE OF OPERATIONS
Chubb Life Insurance Company of America (the Company) is a wholly-owned
subsidiary of Jefferson-Pilot Corporation (Jefferson-Pilot) and is principally
engaged in the sale of individual life insurance and investment products.
These products are marketed primarily through personal producing general
agents throughout the United States.
ACQUISITION
Jefferson-Pilot acquired the Company from Chubb Corporation on May 13, 1997,
with an effective date of April 30, 1997. The acquisition was accounted for as
a purchase, utilizing "pushdown" accounting, and the assets and liabilities
were recorded at fair value as of April 30, 1997. For purposes of these
financial statements, the consolidated statements of income, stockholder's
equity, and cash flows for the four months ended April 30, 1997 represent the
results of operations of the "Predecessor", and are presented on the
historical basis of accounting. The consolidated statements of income,
stockholder's equity, and cash flows for the eight months ended December 31,
1997 represent the results of operations of the "Successor" and are presented
on a purchase accounting basis. As a result, the consolidated financial
statements subsequent to the acquisition date (Successor) are not comparable
to the consolidated financial statements prior to the acquisition date
(Predecessor).
The cost of the acquisition by Jefferson-Pilot was $785,500,000, including
all acquisition costs. The final purchase price is subject to post-closing
adjustments, none of which is expected to be material. In addition,
immediately prior to the acquisition, the Company declared a $103,000,000
dividend to the Chubb Corporation.
The preliminary adjustments as a result of allocation of the pushed down
purchase price and the determination of the cost in excess of net assets
acquired is as follows:
<TABLE>
<S> <C>
Stockholder's equity as reported by Predecessor................ $ 793,073
Fair value adjustments:
Debt securities--available-for-sale.......................... (899)
Property and equipment....................................... (14,285)
Deferred policy acquisition costs............................ (667,865)
Value of business acquired................................... 447,344
Deferred federal income tax.................................. 108,669
Cost in excess of net assets acquired........................ 87,274
Other assets................................................. (329)
Policy liabilities........................................... 49,577
Accrued expenses and other liabilities....................... (17,059)
---------
Total.......................................................... $ 785,500
=========
</TABLE>
The following proforma results of operations for the year ended December 31,
1997, assume that the acquisition occurred as of January 1, 1997. The proforma
results have been prepared for comparative purposes only and do not purport to
indicate the results of operations which would have actually been reported had
the acquisition occurred on January 1, 1997, or which may occur in the future
(in thousands):
<TABLE>
<S> <C>
Net revenues.................................................... $496,530
Net income before realized investment gains (net of taxes)...... 70,658
Net income...................................................... 26,713
</TABLE>
F-6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
DECEMBER 31, 1997
1.BASIS OF PRESENTATION (CONTINUED)
DISCONTINUED OPERATIONS
In 1996, the Predecessor adopted a plan to exit the group insurance
business. Accordingly, the group health insurance business was accounted for
as a discontinued operation in the consolidated income statement for the four
months ended April 30, 1997. As a result of the decision by the Predecessor in
1996 to discontinue the group health insurance business, a liability was
established to cover any future losses from operations and costs to exit the
business including severance for employees. The amount reflected in the
statement of income for the Predecessor reflects an adjustment to the future
estimated losses, net of taxes during the phase-out period.
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles (GAAP) and include
the accounts of Chubb Life Insurance Company of America (the Company) and its
subsidiaries. Principal subsidiaries include Chubb Colonial Life Insurance
Company (Colonial), Chubb Sovereign Life Insurance Company (Sovereign), and
Chubb America Service Corporation. Significant intercompany transactions have
been eliminated in consolidation.
USE OF ESTIMATES
The preparation of financial statements requires management to make
estimates and assumptions affecting the reported amounts of assets and
liabilities, the disclosures of contingent assets and liabilities as of the
date of the financial statements, and the reported amounts of revenues and
expenses for the reporting period. Those estimates are inherently subject to
change and actual results could differ from those estimates. Included among
the material (or potentially material) reported amounts and disclosures that
require extensive use of estimates are asset valuation allowances, policy
liabilities, deferred policy acquisition costs, value of business acquired and
the potential effects of resolving litigated matters.
CASH AND CASH EQUIVALENTS
The Company includes with cash and cash equivalents its holdings of short
term investments which are highly liquid investments that mature within three
months of the date of acquisition.
INVESTED ASSETS
Debt securities, which include bonds and redeemable preferred stocks, are
purchased to support the investment strategies of the Company. These
strategies are developed based on many factors including rate of return,
maturity, credit risk, tax considerations and regulatory requirements. Debt
securities which may be sold prior to maturity to support the investment
strategies of the Company are considered available-for-sale and carried at
market value as of the balance sheet date.
Equity securities, which include common stocks and non-redeemable preferred
stocks, are considered available-for-sale and are carried at market values as
of the balance sheet date.
Policy loans are carried at the unpaid balances.
Mortgage loans on real estate are stated at the unpaid balances, net of
allowances for unrecoverable amounts. The Company's mortgage loan portfolio is
comprised primarily of conventional real estate mortgages collateralized by
retail (13%), apartment (41%), industrial (9%), hotel (29%) and office (8%)
properties.
F-7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
DECEMBER 31, 1997
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Mortgage loan underwriting standards emphasize the credit status of a
prospective borrower, quality of the underlying collateral and conservative
loan-to-value relationships. Of stated mortgage loan balances as of December
31, 1997, 30% are due from borrowers in West South Central states, 22% are due
from borrowers in South Atlantic states, 18% are due from borrowers in Pacific
states, 12% are due from borrowers in East North Central states and 12% are
due from borrowers in Mountain states. No other geographic region represents
as much as 10% of December 31, 1997 mortgage loans.
Realized gains and losses on dispositions of securities are determined by
the specific identification method. Unrealized appreciation or depreciation of
investments classified as available-for-sale, net of the deferred policy
acquisition costs and value of business acquired adjustments and the
applicable deferred income tax, is excluded from income and credited or
charged directly to a separate component of stockholder's equity.
RECOGNITION OF REVENUES, BENEFITS, CLAIMS AND EXPENSES:
Universal Life Products
Universal life products include universal life insurance, variable universal
life insurance, and other interest-sensitive life insurance policies. Revenues
for universal life products consist of policy charges for the cost of
insurance, policy administration and surrenders that have been assessed
against policy account balances during the period.
Policy fund liabilities for universal life and other interest-sensitive life
insurance policies are computed in accordance with the retrospective deposit
method and represent policy account balances before surrender charges. Policy
fund assets and liabilities for variable universal life insurance are
segregated and recorded as separate account assets and liabilities. Separate
account assets are carried at market values as of the balance sheet date and
are invested by the Company at the direction of the policyholder. Investments
are made in different portfolios in a series fund. Each of the portfolios has
specific investment objectives and the investment income and investment gains
and losses accrue directly to, and investment risk is borne by, the
policyholders. Accordingly, operating results of the separate account are not
included in the consolidated statements of income.
Policy claims that are charged to expense include claims incurred in the
period in excess of related policy account balances. Other policy benefits
include interest credited to universal life and other interest-sensitive life
insurance policies. Interest crediting rates ranged from 4% to 6.875%.
Investment Products
Investment products include flexible premium annuities, structured
settlement annuities and other supplementary contracts without life
contingencies. Revenues for investment products consist of policy charges for
the cost of insurance, policy administration and surrenders that have been
assessed against policy account balances during the period. Deposits for these
products are recorded as policy fund liabilities, which are increased by
interest credited to the liabilities and decreased by withdrawals and policy
charges assessed against the contract holders. Interest crediting rates ranged
from 3.5% to 6.75%.
Traditional Life Insurance Products
Traditional life insurance products include those products with fixed and
guaranteed premiums and benefits. Premium revenues for traditional life
insurance are recognized as revenues when due. The liabilities for future
policy benefits are computed by the net level premium method based on
estimated future investment yield, mortality and withdrawal experience.
Interest rate assumptions ranged from 3% to 9%. Mortality is calculated
principally on an experience multiple applied to select and ultimate tables in
common usage in the industry. Estimated withdrawals are determined principally
based on industry tables. Policy benefits and claims are charged to expense as
incurred.
Accident and Health Insurance
Accident and health insurance premiums are earned on a monthly pro rata
basis over the terms of the policies. Benefits include paid claims plus an
estimate for known claims and claims incurred but not reported as of the
balance sheet date.
F-8
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
DECEMBER 31, 1997
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
POLICY AND CONTRACT CLAIMS
The liability for policy and contract claims consists of the estimated
amount payable for claims reported but not yet settled, and an estimate of
claims incurred but not reported, which is based on historical experience,
adjusted for trends and circumstances. Management believes that the recorded
liability is sufficient to provide for the associated claims adjustment
expenses.
REINSURANCE
Reinsurance receivables include amounts recoverable from reinsurers related
to paid benefits and estimated amounts related to unpaid policy and contract
claims, future policy benefits and policyholder contract deposits. The cost of
reinsurance is accounted for over the terms of the underlying reinsured
policies using assumptions consistent with those used to account for the
policies.
DEFERRED POLICY ACQUISITION COSTS
Costs related to obtaining new business, including commissions, certain
costs of underwriting and issuing policies and certain agency office expenses,
all of which vary with and are primarily related to the production of new
business, have been deferred.
Deferred policy acquisition costs for traditional life insurance polices are
amortized over the premium paying periods of the related contracts using the
same assumptions for anticipated premium revenue that are used to compute
liabilities for future policy benefits. For universal life and investment
products, these costs are amortized at a constant rate based on the present
value of the estimated future gross profits to be realized over the terms of
the contracts, not to exceed 25 years.
The carrying amount of deferred policy acquisition costs is adjusted for the
effect of realized gains and losses and the effects of unrealized gains or
losses on debt securities classified as available-for-sale. Deferred policy
acquisition costs are reviewed periodically to determine that the unamortized
portion does not exceed expected recoverable amounts. No impairment
adjustments have been reflected in earnings for any period presented.
VALUE OF BUSINESS ACQUIRED
Value of business acquired represents the actuarially determined present
value of anticipated profits to be realized from life insurance and annuity
business purchased, using the same assumptions used to value the related
liabilities. Amortization of the value of business acquired occurs over the
related contract periods, using current crediting rates to accrete and a
constant amortization rate based on the present value of expected future
profits.
Value of business acquired related to universal life and investment
contracts also is adjusted to reflect the effects that the unrealized gains or
losses on investments classified as available-for-sale would have had on the
present value of estimated gross profits had such gains or losses actually
been realized. This adjustment is excluded from income and charged or credited
directly to the net unrealized gains on securities component of stockholder's
equity, net of applicable deferred income tax.
COST IN EXCESS OF ASSETS ACQUIRED
The preliminary excess of Jefferson-Pilot's purchase price over the fair
value of assets acquired, which has been "pushed down" to the Chubb Life level
for financial reporting purposes, is being amortized on a straight-line basis
over 35 years.
F-9
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
DECEMBER 31, 1997
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment used in operations are carried at cost, less
accumulated depreciation. Depreciation is calculated using the straight-line
method over the estimated remaining useful lives of the assets.
FEDERAL INCOME TAXES
The Predecessor will file a consolidated federal income tax return with its
parent for the four months ended April 30, 1997. Federal income tax for the
Predecessor is allocated as if the Company and its subsidiaries filed a
separate consolidated income tax return. The Successor will file a separate
consolidated income tax return for the eight months ended December 31, 1997
and include only the Company and its subsidiaries.
Deferred income tax assets are recorded on the differences between the tax
bases of assets and liabilities and the amounts at which they are reported in
the financial statements. Recorded amounts are adjusted to reflect changes in
income tax rates and other tax law provisions as they become enacted.
NEW ACCOUNTING PRONOUNCEMENT
In June 1997, the Financial Accounting Standards Board (FASB) issued SFAS
130, "Reporting Comprehensive Income", which is effective for fiscal years
beginning after December 15, 1997. SFAS 130 sets standards for the reporting
and display of comprehensive income and its components in financial
statements. Application of the new rule will not impact the Company's
financial position or net income. The Company expects to adopt this
pronouncement in the first quarter of 1998, which will include the
presentation of comprehensive income for prior periods presented for
comparative purposes, as required by SFAS 130. The primary element of
comprehensive income applicable to the Company is changes in unrealized gains
and losses on securities classified as available-for-sale.
3.DERIVATIVES
USE OF DERIVATIVES
The Company's investment policy permits the use of derivative financial
instruments such as interest rate swaps in certain circumstances. At December
31, 1997, ten such interest rate swaps are held to modify specific floating-
rate direct investments. The notional amount is $50 million, with the Company
receiving an average fixed rate of 7.36% and paying a floating rate based on
the 3 month or 6 month LIBOR rates (5.81% and 5.84%, respectively, on December
31, 1997).
The interest rate swaps are used to reduce the impact of interest rate
fluctuations on specific floating-rate direct investments. Interest is
exchanged periodically on the notional value, with the Company receiving a
fixed rate and paying a short-term LIBOR rate on a net exchange basis. The net
amount received or paid under this swap is reflected as an adjustment to
investment income. All of the hedges are of investments classified as
available-for-sale, and net unrealized gains and losses, net of the effects of
income taxes and the impact on deferred policy acquisition costs and the value
of business acquired, are not significant and are included in net unrealized
gains on securities in stockholder's equity as of December 31, 1997.
CREDIT AND MARKET RISK
The Company is exposed to credit risk in the event of non-performance by
counterparties to swap agreements. The Company limits this exposure by
entering into swap agreements with counterparties having high credit ratings
and by regularly monitoring the ratings.
The Company's credit exposure on swaps is limited to the fair value of swap
agreements that are favorable to the Company. The Company does not expect any
counterparty to fail to meet its obligation; however, non-performance would
not have a material adverse effect on the Company's financial position or
results of operations.
F-10
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
DECEMBER 31, 1997
3.DERIVATIVES (CONTINUED)
The Company's exposure to market risk is mitigated by the offsetting effects
of changes in the value of swap agreements and the related direct investments.
The Company routinely monitors correlation between hedged items and hedging
instruments. In the event a hedge relationship was terminated, any related
hedging instrument that remained would be marked-to-market.
4.INVESTED ASSETS
Aggregate amortized cost, aggregate fair value and gross unrealized gains
and losses of debt securities available-for-sale at December 31, 1997 were as
follows (in thousands):
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury obligations and di-
rect obligations of U.S. govern-
ment agencies..................... $ 190,938 $ 5,146 $ -- $ 196,084
Corporate bonds.................... 1,955,816 94,941 (7,030) 2,043,727
Foreign bonds...................... 637 -- (29) 608
Mortgage-backed securities......... 729,671 21,831 (419) 751,083
Redeemable preferred stocks........ 1,922 50 (90) 1,882
---------- -------- ------- ----------
Total debt securities.............. $2,878,984 $121,968 $(7,568) $2,993,384
========== ======== ======= ==========
</TABLE>
Aggregate amortized cost and aggregate fair value of debt securities at
December 31, 1997 by contractual maturity were as follows (in thousands):
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
---------- ----------
<S> <C> <C>
Due in one year or less.................................. $ 85,421 $ 85,637
Due after one year through five years.................... 236,911 241,483
Due after five years through ten years................... 547,657 570,656
Due after ten years...................................... 595,626 639,796
Amounts not due at a single maturity date................ 1,413,369 1,455,812
---------- ----------
$2,878,984 $2,993,384
========== ==========
</TABLE>
Actual future maturities will differ from the contractual maturities shown
because the issuers of certain debt securities have the right to call or
prepay the amounts due to the Company, with or without penalty.
F-11
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
DECEMBER 31, 1997
4.INVESTED ASSETS (CONTINUED)
The sources of net investment income for the Successor and Predecessor for
1997 were as follows: (in thousands):
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR
----------- -----------
EIGHT
MONTHS FOUR MONTHS
ENDED ENDED
DECEMBER 31 APRIL 30
1997 1997
----------- -----------
<S> <C> <C>
Debt securities......................................... $144,632 $75,964
Equity securities....................................... 778 379
Policy loans............................................ 11,115 5,281
Mortgage loans.......................................... 1,818 267
Other................................................... 2,242 1,095
-------- -------
Gross investment income................................. 160,585 82,986
Investment expenses..................................... 2,404 930
-------- -------
Net investment income................................... $158,181 $82,056
======== =======
</TABLE>
Realized investment gains and losses on available-for-sale securities were
as follows (in thousands):
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR
----------- -----------
EIGHT
MONTHS FOUR MONTHS
ENDED ENDED
DECEMBER 31 APRIL 30
1997 1997
----------- -----------
<S> <C> <C>
Debt securities......................................... $4,788 $3,658
Equity securities....................................... -- (185)
------ ------
$4,788 $3,473
====== ======
</TABLE>
The changes in unrealized gains on securities classified as available-for-
sale for the Successor and Predecessor for 1997 were as follows (in
thousands):
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR
----------- -----------
EIGHT
MONTHS FOUR MONTHS
ENDED ENDED
DECEMBER 31 APRIL 30
1997 1997
----------- -----------
<S> <C> <C>
Change in unrealized appreciation of equity securi-
ties.................................................. $ 3,897 $ (3,488)
Change in unrealized appreciation of debt securities... 114,400 (29,369)
Change in deferred policy acquisition costs adjust-
ment.................................................. -- 15,305
Change in value of business acquired adjustment........ (66,094) 1,080
-------- --------
52,203 (16,472)
Deferred income taxes.................................. (18,271) 5,764
-------- --------
$ 33,932 $(10,708)
======== ========
</TABLE>
F-12
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
DECEMBER 31, 1997
5.DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED
Policy acquisition costs deferred and the related amortization charged to
income for both the Successor and Predecessor were as follows (in thousands):
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR
----------- -----------
EIGHT
MONTHS FOUR MONTHS
ENDED ENDED
DECEMBER 31 APRIL 30
1997 1997
----------- -----------
<S> <C> <C>
Beginning balance...................................... $ -- $644,653
Deferral:
Commissions.......................................... 26,240 37,512
Other................................................ 13,179 6,589
------- --------
39,419 44,101
Amortization........................................... (1,219) (36,194)
Change in adjustment to reflect the effects of
unrealized gains on securities........................ -- 15,305
------- --------
Ending balance......................................... $38,200 $667,865
======= ========
</TABLE>
Changes in the value of business acquired for both the Successor and
Predecessor were as follows (in thousands):
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR
----------- -----------
EIGHT
MONTHS FOUR MONTHS
ENDED ENDED
DECEMBER 31 APRIL 30
1997 1997
----------- -----------
<S> <C> <C>
Beginning balance...................................... $481,600 $34,460
Capitalized cost....................................... 34,929 --
Amortization........................................... (31,770) (1,284)
Change in adjustment to reflect the effects of
unrealized gains on securities........................ (66,094) 1,080
-------- -------
Ending balance......................................... $418,665 $34,256
======== =======
</TABLE>
Expected approximate amortization percentages of the value of business
acquired as of December 31, 1997 over the next five years are as follows (in
thousands):
<TABLE>
<CAPTION>
AMORTIZATION
PERCENTAGE
------------
<S> <C>
Year Ending December 31:
1998............................................................. 11.6%
1999............................................................. 11.3
2000............................................................. 10.2
2001............................................................. 9.1
2002............................................................. 8.4
</TABLE>
6.FEDERAL INCOME TAXES
Federal income tax provisions for both the Successor and the Predecessor
have been computed using the tax rates and regulations in effect during the
year. The provision for federal income tax gives effect to permanent
differences between financial and taxable income. The statutory federal
corporate tax rate was equal to the effective tax rate for the Successor, as
there were minimal permanent differences. The statutory federal corporate tax
rate differed from the effective tax rate for the Predecessor due to a change
in estimate of the tax liability.
F-13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
DECEMBER 31, 1997
6.FEDERAL INCOME TAXES (CONTINUED)
The tax effects of temporary differences that gave rise to deferred income
tax liabilities and assets at December 31, 1997 were as follows (in
thousands):
<TABLE>
<S> <C>
Deferred income tax liabilities:
Value of business acquired.......................................... $157,695
Net unrealized gains on securities.................................. 18,271
Other............................................................... 2,406
--------
Total................................................................. 178,372
Deferred income tax assets:
Future policy benefits and policy fund balances..................... 133,839
Deferred policy acquisition costs................................... 61,466
Other assets........................................................ 12,578
Group contingency reserve........................................... 3,080
Due and deferred premiums........................................... 2,232
Severance and relocation............................................ 2,089
Other............................................................... 2,272
--------
Total................................................................. 217,556
--------
Net deferred income tax asset......................................... $ 39,184
========
</TABLE>
Under prior federal income tax law, one-half of the excess of a life
insurance company's income from operations over its taxable investment income
was not taxed, but was set aside in a special tax account designated as
"Policyholders' Surplus". The Company has approximately $13.5 million of
untaxed "Policyholders' Surplus" on which no payment of federal income taxes
will be required unless it is distributed as a dividend, or under other
specified conditions. The Company does not believe that any significant
portion of the account will be taxed in the foreseeable future and no related
deferred tax liability has been recognized. If the entire balance of the
account became taxable under the current federal rate, the tax would
approximate $4.7 million.
Federal income taxes paid in 1997, including amounts remitted to the
Predecessor's parent for its share of income taxes were $30,694,000 for the
Successor and $24,081,000 for the Predecessor.
7.PENSIONS
The Company's defined benefit pension plan for both the Successor and the
Predecessor have been included with the respective pension plans of their
Parents. The respective plans cover substantially all employees. Pension costs
allocated to the Company for the eight months ended December 31, 1997, for the
Successor were $1,739,000. Terms of the acquisition agreement between
Jefferson-Pilot and the Chubb Corporation specified that the Chubb Corporation
would assume all responsibilities for pension costs through the acquisition.
As such, the Company paid the Chubb Corporation approximately $3,500,000
representing the present value of all future pension costs as of April 30,
1997. The difference between the amount remitted to the Chubb Corporation and
the liability recorded at April 30, 1997, was recorded as a settlement gain
for the Predecessor of approximately $300,000.
F-14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
DECEMBER 31, 1997
8.OTHER POSTRETIREMENT BENEFITS
The Company provides certain other postretirement benefits, principally
health care and life insurance, to retired employees and their beneficiaries
and covered dependents. Prior to the acquisition, the Company had recorded a
postretirement benefit obligation of approximately $24,185,000, representing
all of the expected costs of retirees, vested active plan participants, and
other non-vested plan participants. As part of the acquisition, the Chubb
Corporation assumed all liabilities relating to these postretirement benefits
without any cash transferring to the Chubb Corporation. The result of this
assumption of the liabilities was a settlement gain of approximately
$23,916,000 for the Predecessor. This gain is included in the statement of
income as a reduction to commissions and operating expenses, net of deferrals.
Postretirement costs of the Successor that were allocated from Jefferson-Pilot
amounted to approximately $455,000 for the eight month period ended December
31, 1997.
9.RENT EXPENSE AND COMMITMENTS
The Company occupies office facilities under lease agreements which expire
at various dates through 2009; such leases generally are renewed or replaced
by other leases. In addition, the Company leases office and transportation
equipment.
Total rent expense charged to operations amounted to approximately
$1,937,000 for the Successor and $979,000 for the Predecessor, respectively.
All leases are operating leases and generally contain renewal options. At
December 31, 1997, future minimum rental payments required under
noncancellable operating leases were as follows (in thousands):
<TABLE>
<S> <C>
Year ending December 31:
1998............................................................ $ 2,560
1999............................................................ 1,916
2000............................................................ 1,449
2001............................................................ 1,334
2002............................................................ 1,124
Subsequent to 2002.............................................. 4,591
-------
$12,974
=======
</TABLE>
The Company routinely enters into commitments to extend credit in the form
of mortgage loans and to purchase certain debt securities for its investment
portfolio in private placement transactions. The fair value of outstanding
commitments to fund mortgage loans and to acquire debt securities in private
placement transactions, which are not reflected in the consolidated balance
sheet, approximates $78,000,000 as of December 31, 1997.
10.REINSURANCE
The Company attempts to reduce its exposure to significant individual claims
by reinsuring portions of certain life insurance contracts written. The
maximum amount of individual life insurance retained on any one life,
including accidental death benefits, is $1,400,000.
Sovereign had a reinsurance recoverable resulting from a reinsurance
agreement with a single reinsurer of $96,740,000 at December 31, 1997.
Sovereign coinsured fifty percent of a block of single premium whole life
policies under this agreement. Sovereign and the reinsurer are joint and equal
owners in securities and short term investments of $194,659,000 at December
31, 1997. The remaining reinsurance recoverables were associated with numerous
other reinsurers.
F-15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
DECEMBER 31, 1997
10.REINSURANCE (CONTINUED)
The effect of reinsurance on the premiums and policy charges in the
consolidated statement of income for both the Successor and Predecessor was as
follows (in thousands):
<TABLE>
<CAPTION>
CEDED TO ASSUMED
SUCCESSOR, EIGHT MONTHS ENDED DECEMBER DIRECT OTHER FROM OTHER NET
31, 1997 AMOUNT COMPANIES COMPANIES AMOUNT
-------------------------------------- -------- --------- ---------- --------
<S> <C> <C> <C> <C>
Total premiums and policy charges.... $248,903 $14,976 $1,320 $235,247
======== ======= ====== ========
<CAPTION>
CEDED TO ASSUMED
PREDECESSOR, FOUR MONTHS ENDED APRIL DIRECT OTHER FROM OTHER NET
30, 1997 AMOUNT COMPANIES COMPANIES AMOUNT
------------------------------------ -------- --------- ---------- --------
<S> <C> <C> <C> <C>
Total premiums and policy charges.... $124,039 $ 7,063 $ 409 $117,385
======== ======= ====== ========
</TABLE>
Reinsurance recoveries which have been deducted from benefits, claims and
expenses in the consolidated statements of income for the Successor and
Predecessor were $26,329,000 and $11,929,000, respectively .
Reinsurance contracts do not relieve the Company from its primary obligation
to policyholders. Therefore, the failure of a reinsurer to discharge its
reinsurance obligations could result in a loss to the Company. The Company
regularly evaluates the financial condition of its reinsurers and monitors
concentrations of credit risk related to reinsurance activities. No
significant credit losses resulted from the Company's reinsurance activities
during the year ended December 31, 1997.
11.STATUTORY FINANCIAL INFORMATION
The Company prepares financial statements on the basis of statutory
accounting practices (SAP) prescribed or permitted by the New Hampshire
Department of Insurance. Prescribed SAP include a variety of publications of
the National Association of Insurance Commissioners (NAIC) as well as state
laws, regulations and administrative rules. Permitted SAP encompass all
accounting practices not so prescribed. The impact of permitted accounting
practices on statutory capital and surplus is not significant for the Company.
The principal differences between SAP and generally accepted accounting
principles (GAAP) as they relate to the financial statements of the Company
are (1) policy acquisition costs are expensed as incurred under SAP, whereas
they are deferred and amortized under GAAP, (2) amounts collected from holders
of universal life-type and investment products are recognized as premiums when
collected under SAP, but are initially recorded as contract deposits under
GAAP, with cost of insurance recognized as revenue when assessed and other
contract charges recognized over the periods for which services are provided,
(3) the classification and carrying amounts of investments in certain
securities are different under SAP than under GAAP, (4) the criteria for
providing asset valuation allowances, and the methodologies used to determine
the amounts thereof, are different under SAP than under GAAP, (5) the timing
of establishing certain reserves, and the methodologies used to determine the
amounts thereof, are different under SAP than under GAAP, (6) no provision is
made for deferred income taxes under SAP, and (7) certain assets are not
admitted for purposes of determining surplus under SAP.
Reported capital and surplus on a statutory basis at December 31, 1997 was
$364,707,000. Reported statutory net income for the year ended December 31,
1997 was $151,357,000. Purchase accounting adjustments are not made for
statutory accounting purposes.
The amount of GAAP equity in excess of statutory surplus is unavailable for
distribution. In addition, various state insurance laws restrict the Company
and its insurance subsidiaries as to the amount of dividends from statutory
surplus they may pay without the prior approval of regulatory authorities. The
restrictions generally are based on net gains from operations and on certain
levels of surplus as determined in accordance with statutory accounting
practices. Dividends in excess of such thresholds are considered
"extraordinary" and require prior regulatory approval. Because of the special
dividends paid in connection with the acquisition, all dividends paid in 1998
will require prior regulatory approval.
F-16
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
DECEMBER 31, 1997
11.STATUTORY FINANCIAL INFORMATION (CONTINUED)
Risk-Based Capital ("RBC") requirements promulgated by the NAIC require life
insurers to maintain minimum capitalization levels that are determined based
on formulas incorporating credit risk pertaining to its investments, insurance
risk, interest rate risk and general business risk. As of December 31, 1997,
the Company's adjusted capital and surplus exceeded its authorized control
level RBC.
12.TRANSACTIONS WITH AFFILIATED COMPANIES
During 1997, the Successor and Predecessor entered into agreements with
their respective parent companies for general management services, investment
management services and transportation services. The Successor accrued $2.8
million for general management and investment services payable to its parent,
Jefferson-Pilot Corporation, for the eight months ended December 31, 1997, and
this amount remained payable at December 31, 1997. The Predecessor paid its
parent, The Chubb Corporation, $2.0 million for general management services
and investment services for the four months ended April 30, 1997.
13.FAIR VALUES OF FINANCIAL INSTRUMENTS
Fair values of financial instruments are based on quoted market prices where
available. Fair values of financial instruments for which quoted market prices
are not available are based on estimates using present value or other
valuation techniques. Those techniques are significantly affected by the
assumptions used, including the discount rates and the estimates of future
cash flows. Certain financial instruments, particularly insurance contracts,
are excluded from fair value disclosure requirements.
The methods and assumptions used to estimate the fair value of financial
instruments are as follows:
. Fair values of debt securities with active markets are based on quoted
market prices. For debt securities that trade in less active markets,
fair values are obtained from independent pricing services. Fair values
of debt securities are principally a function of current interest rates.
. Fair values of equity securities are based on quoted market prices.
. The carrying value of cash and cash equivalents approximates fair value
due to the short maturities of these assets.
. Fair values of policy loans and mortgage loans are estimated using
discounted cash flow analyses and approximate carrying values.
The carrying value and fair value of financial instruments at December 31,
1997 were as follows (in thousands):
<TABLE>
<CAPTION>
CARRYING FAIR
VALUE VALUE
---------- ----------
<S> <C> <C>
ASSETS
Debt securities available-for-sale................ $2,993,384 $2,993,384
Equity securities available-for-sale.............. 18,984 18,984
Cash and cash equivalents......................... 28,288 28,288
Policy loans...................................... 236,729 236,729
Mortgage loans on real estate..................... 125,067 123,637
</TABLE>
14.LITIGATION
In the normal course of business, the Company is involved in various
lawsuits. Management is of the opinion that these suits are substantially
without merit, that valid defenses exist, and that such litigation will not
have a material effect on the consolidated financial statements.
F-17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CHUBB LIFE INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES
DECEMBER 31, 1997
15.YEAR 2000 CONVERSION COSTS (UNAUDITED)
The Company's parent has been analyzing the Year 2000 computer systems
problem since 1995. During the course of this analysis, the Company's parent
has ascertained that failure to alleviate Year 2000 systems problems could
result in a material disruption to the Company's operations in the year 2000.
A centralized oversight and project management process has been put into place
to facilitate compliance of all information systems prior to the end of 1999.
The oversight process includes communications with significant suppliers to
the extent systems are vulnerable to those third parties failure to remedy
year 2000 issues. The assessment phase of the Year 2000 effort (including
mainframe and alternative systems) is complete for the majority of systems and
several have been brought into Year 2000 compliance. To date, the Company's
parent has incurred external costs of approximately $3 million. The remainder
of this effort is expected to be completed by the third quarter of 1999
utilizing internal and external resources, with remaining external costs
estimated at approximately $9 million. However, there can be no guarantee that
these results will be achieved and actual results could differ materially. All
costs associated with this effort are being expensed as incurred.
F-18
<PAGE>
REPORT OF ERNST & YOUNG LLP INDEPENDENT AUDITORS
Contractholders
Separate Account C
We have audited the accompanying statements of assets and liabilities of the
Separate Account C (the "Separate Account", comprising respectively, the JPM
Treasury Money Market Division, JPM Bond Division, JPM Equity Division, JPM
Small Company Division, and JPM International Equity Division) as of December
31, 1997, and the related statements of operations and changes in net assets for
the years ended December 31, 1997 and 1996. These financial statements are the
responsibility of the Separate Account's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of investments owned as of December 31, 1997, by correspondence
with JPM Series Trust II. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the respective
divisions constituting the Separate Account C at December 31, 1997, the results
of their operations and the changes in their net assets for each of the periods
indicated above, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Boston, Massachusetts
March 13, 1998
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
Chubb Separate Account C
December 31, 1997
<TABLE>
<CAPTION>
JPM JPM
TREASURY JPM JPM JPM INTERNATIONAL
MONEY MARKET BOND EQUITY SMALL COMPANY EQUITY
DIVISION DIVISION DIVISION DIVISION DIVISION
---------- ---------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in JPM Series
Trust II at cost $ 456,739 $ 5,706,281 $ 8,314,692 $ 4,246,324 $ 6,674,886
========= ============= ============== ============= =============
Investments in JPM Series
Trust II at market value $ 466,536 $ 6,028,073 $ 8,889,907 $ 4,553,534 $ 6,341,666
Expenses payable (17) (215) (317) (162) (226)
---------- --------------- --------------- -------------- --------------
TOTAL NET ASSETS $ 466,519 $ 6,027,858 $ 8,889,590 $ 4,553,372 $ 6,341,440
========== =============== =============== ============== ==============
UNITS OUTSTANDING 41,245 470,677 438,055 234,144 482,055
NET ASSET VALUE PER UNIT $ 11.311 $ 12.807 $ 20.293 $ 19.447 $ 13.155
</TABLE>
See notes to financial statements
<PAGE>
STATEMENTS OF OPERATIONS
CHUBB SEPARATE ACCOUNT C
<TABLE>
<CAPTION>
JPM
TREASURY JPM
MONEY MARKET BOND
DIVISION DIVISION
----------------------------------------------------- --------------------------------
Period from
January 3,
Year Ended to Year Ended
December 31, December 31, December 31,
-------------------------------- --------------------------------
1997 1996 1995 1997 1996
-------------- --------------- --------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Dividend income $ 135 $ 14,528 $ 11,800 $ 140,731 $ 72,416
Distributions of realized gains 1 16 16 41,158 531
-------------- --------------- --------------- ------------- -------------
136 14,544 11,816 181,889 72,947
Expenses:
Mortality and expense risk charge 2,578 1,603 746 34,460 6,172
-------------- --------------- --------------- ------------- -------------
Net Investment Income (2,442) 12,941 11,070 147,429 66,775
Gain (loss) on investments
Net realized gain (loss) on
investments (1,080) (1,817) 1,747 4,420 (870)
Net unrealized gain (loss) on
investments 18,936 (1,756) (7,383) 322,800 (4,624)
-------------- --------------- --------------- ------------- -------------
Net gain (loss) on investments 17,856 (3,573) (5,636) 327,220 (5,494)
-------------- --------------- --------------- ------------- -------------
Increase in Net Assets
from Operations $ 15,414 $ 9,368 $ 5,434 $ 474,649 $ 61,281
============== =============== =============== ============= =============
<CAPTION>
JPM
EQUITY
DIVISION
-------------------- ----------------------------------------------------
Period from Period from
January 3, January 3,
to Year Ended to
December 31, December 31, December 31,
-----------------------------------
1995 1997 1996 1995
----------------- ---------------- ---------------- --------------
<S> <C> <C> <C> <C>
Investment Income:
Dividend income $ 17,294 $ 56,988 $ 55,925 $ 28,445
Distributions of realized gains 6,011 1,467,366 392,202 144,358
----------------- ---------------- ---------------- --------------
23,305 1,524,354 448,127 172,803
Expenses:
Mortality and expense risk charge 1,070 53,370 24,143 9,552
----------------- ---------------- ---------------- --------------
Net Investment Income 22,235 1,470,984 423,984 163,251
Gain (loss) on investments
Net realized gain (loss) on
investments 1,371 20,069 67,265 1,177
Net unrealized gain (loss) on
investments 3,616 204,260 176,276 194,679
----------------- ---------------- ---------------- --------------
Net gain (loss) on investments 4,987 224,329 243,541 195,856
----------------- ---------------- ---------------- --------------
Increase in Net Assets
from Operations $ 27,222 $ 1,695,313 $ 667,525 $ 359,107
================= ================ ================ ==============
</TABLE>
<PAGE>
STATEMENTS OF OPERATIONS
CHUBB SEPARATE ACCOUNT C
<TABLE>
<CAPTION>
JPM
JPM INTERNATIONAL
SMALL COMPANY EQUITY
DIVISION DIVISION
---------------------------------------- -----------------------------------------
Period from Period from
January 3, January 3,
Year Ended to Year Ended to
December 31, December 31, December 31, December 31,
------------------------ ------------------------
1997 1996 1995 1997 1996 1995
------------ ----------- ------------- ----------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividend income $ 11,006 $ 9,360 $ 1,591 $ 217,676 $ 29,908 $ 32,329
Distributions of realized gains 579,516 211,193 19,285 685,191 152,279 30,752
------------ ----------- -------------- ----------- ------------ ---------------
590,522 220,553 20,876 902,867 182,187 63,081
Expenses:
Mortality and expense risk charge 26,511 6,703 566 42,648 18,798 6,145
------------ ----------- -------------- ----------- ------------ ---------------
Net Investment Income 564,011 213,850 20,310 860,219 163,389 56,936
Gain (loss) on investments
Net realized gain (loss) on
investments 4,007 3,521 1,039 42,615 15,389 (448)
Net unrealized gain on
investments 221,164 82,854 3,191 (613,175) 206,175 73,767
------------ ----------- -------------- ----------- ------------ ----------------
Net gain on investments 225,171 86,375 4,230 (570,560) 221,564 73,319
------------- ---------- -------------- ----------- ------------ ----------------
Increase in Net Assets
from Operations $ 789,182 $300,225 $ 24,540 $ 289,659 $ 384,953 $ 130,255
============= ========== ============== =========== ============ ================
</TABLE>
See notes to financial statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
CHUBB SEPARATE ACCOUNT C
<TABLE>
<CAPTION>
TREASURY JMP
MONEY MARKET BOND
DIVISION DIVISION
------------------------------------- ------------------------------------------
Period from Period from
January 3, January 3,
Year Ended to Year Ended to
December 31, December 31, December 31, December 31,
----------------------- -----------------------
1997 1996 1995 1997 1996 1995
------------------------------------- ------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) $ (2,442) $ 12,941 $ 11,070 $ 147,429 $ 66,775 $ 22,235
Net realized gain (loss) on
investments (1,080) (1,817) 1,747 4,420 (870) 1,371
Net unrealized gain (loss) on
investments 18,936 (1,756) (7,383) 322,800 (4,624) 3,616
------------------------------------- -----------------------------------------
Increase in net assets from operations 15,414 9,368 5,434 474,649 61,281 27,222
Contractholder transactions--Note D:
Transfers of net premiums 171,335 277,045 (37,059) 354,690 251,428 19,429
Transfers from/to General Account
and within Separate Account, net (64,645) (208,924) 310,772 3,566,167 1,057,013 305,525
Transfers of cost of insurance (2,632) (1,590) (661) (78,877) (9,537) (2,770)
Transfers on account of other
terminations 26 (7,323) (41) (745) 2,425 (42)
------------------------------------- -----------------------------------------
Net increase in net assets derived from
contractholder transactions 104,084 59,208 273,011 3,841,235 1,301,329 322,142
------------------------------------- -----------------------------------------
Net increase in net assets 119,498 68,576 278,445 4,315,884 1,362,610 349,364
Balance at beginning of period 347,021 278,445 - 1,711,974 349,364 -
------------------------------------- -----------------------------------------
Balance at end of period $ 466,519 $ 347,021 $ 278,445 $6,027,858 $ 1,711,974 $ 349,364
===================================== =========================================
<CAPTION>
JPM
EQUITY
DIVISION
--------------------------------------------------------
Period from
January 3,
Year Ended to
December 31, December 31,
----------------------------
1997 1996 1995
--------------------------------------------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) $ 1,470,984 $ 423,984 $ 163,251
Net realized gain (loss) on
investments 20,069 67,265 1,177
Net unrealized gain (loss) on
investments 204,260 176,276 194,679
--------------------------------------------------------
Increase in net assets from operations 1,695,313 667,525 359,107
Contractholder transactions--Note D:
Transfers of net premiums 765,854 387,274 99,189
Transfers from/to General Account
and within Separate Account, net 2,227,022 172,368 2,596,988
Transfers of cost of insurance (57,566) (13,001) (5,338)
Transfers on account of other
terminations (4,631) (834) 320
---------------------------------------------------------
Net increase in net assets derived from
contractholder transactions 2,930,679 545,807 2,691,159
---------------------------------------------------------
Net increase in net assets 4,625,992 1,213,332 3,050,266
Balance at beginning of period 4,263,598 3,050,266 -
---------------------------------------------------------
Balance at end of period $ 8,889,590 $4,263,598 $3,060,266
=========================================================
</TABLE>
See notes to financial statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
CHUBB SEPARATE ACCOUNT C
<TABLE>
<CAPTION>
JPM
JPM INTERNATIONAL
SMALL COMPANY EQUITY
DIVISION DIVISION
----------------------------------------- -------------------------------------------
Period from Period from
January 3, January 3,
Year Ended to Year Ended to
December 31, December 31, December 31, December 31,
-------------------------- --------------------------
1997 1996 1995 1997 1996 1995
----------------------------------------- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income $ 564,011 $ 213,850 $ 20,310 $ 860,219 $ 163,389 $ 56,936
Net realized gain (loss) on
investments 4,007 3,521 1,039 42,615 15,389 (448)
Net unrealized gain (loss) on
investments 221,164 82,854 3,191 (613,175) 206,175 73,767
------------------------------------------ --------------------------------------------
Increase in net assets from operations 789,182 300,225 24,540 289,659 384,953 130,255
Contractholder transactions--Note D:
Transfers of net premiums 463,334 193,946 16,998 509,514 365,133 12,554
Transfers from/to General Account
and within Separate Account, net 1,237,752 1,403,000 150,812 1,597,555 1,380,915 1,744,480
Transfers of cost of insurance (27,349) (5,933) (1,986) (54,916) (11,500) (4,478)
Transfers on account of other
terminations 2,389 6,464 (2) (5,439) 2,685 70
------------------------------------------ ---------------------------------------------
Net increase in net assets derived from
contractholder transactions 1,676,126 1,597,477 165,822 2,046,714 1,737,233 1,752,626
------------------------------------------ ---------------------------------------------
Net increase in net assets 2,465,308 1,897,702 190,362 2,336,373 2,122,186 1,882,881
Balance at beginning of period 2,088,064 190,362 - 4,005,067 1,882,881 -
------------------------------------------ ---------------------------------------------
Balance at end of period $ 4,553,372 $2,088,064 $ 190,362 $ 6,341,440 $ 4,005,067 $ 1,882,881
========================================== =============================================
</TABLE>
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Chubb Separate Account C
December 31, 1997
NOTE A--ORGANIZATION OF ACCOUNT
Chubb Separate Account C (the "Separate Account") is a separate account of Chubb
Life Insurance Company of America ("Chubb Life"). Effective April 30, 1997,
Chubb Life and its subsidiaries were acquired by Jefferson-Pilot Corporation.
The Separate Account is organized as a unit investment trust registered under
the Investment Company Act of 1940 as amended. It was established for the
purpose of funding flexible premium variable life insurance policies issued by
Chubb Life and is presently comprised of five investment divisions, each of
which invests exclusively in the corresponding portfolio of the JPM Series Trust
II (the "Trust") an open-end diversified Series Management Investment Company.
NOTE B--SIGNIFICANT ACCOUNTING POLICIES
Valuation of Investments: Investments in shares of the Trust are valued at the
net asset value per share which is calculated each day the New York Stock
Exchange is open for trading.
Investment Income: Dividend income and distributions of realized gains are
recorded on the ex-dividend date.
Investment Transactions: Purchases and sales of shares of the Trust are recorded
as of the trade date, the date the transaction is executed.
Federal Income Taxes: The operations of the Separate Account are included in the
federal income tax return of Chubb Life which is taxed as a life insurance
company under the Internal Revenue Code. Under current law, no federal income
taxes are payable with respect to the Separate Account.
Expenses: A mortality and expense risk charge is accrued daily which will not
exceed 65% of the average net asset value of each division of the Separate
Account on an annual basis.
NOTE C-AFFILIATED COMPANY TRANSACTIONS
Administrative services necessary for the operation of the Separate Account are
provided by Chubb America Service Corporation, an affiliate of Chubb Life. Chubb
Life is the principal underwriter of the variable insurance contracts that
utilize the Separate Account. Jefferson Pilot Securities Corporation, an
affiliate of the Company, is the distributor.
NOTE D-DIVERSIFICATION REQUIREMENTS
Under the provisions of Section 817(h) of the Internal Revenue Code, a variable
life insurance contract will be subject to federal income taxes on the income
earned on the contract for any period for which the investments of the
segregated assets account, on which the contract is based, are not adequately
diversified. The code provides that the "adequately diversified" requirement may
be met if the underlying investments satisfy either a statutory safe harbor test
or diversification requirements set forth in regulations issued by the Secretary
of Treasury.
The Internal Revenue Service has issued regulations under Section 817(h) of the
Code. The Company believes that the segregated asset account satisfies the
current requirements of the regulations, and it intends that the segregated
asset account will continue to meet such requirements.
<PAGE>
CHUBB SEPARATE ACCOUNT C
DECEMBER 31, 1997
NOTE E - INVESTMENTS
In determining the net realized gain or loss on sales of shares of the Trust,
the cost of shares sold has been determined on an average cost basis. For
federal income tax purposes, the cost of shares owned at December 31, 1997 is
the same as for financial reporting purposes.
Following is a summary of shares of each portfolio of the Trust owned by the
respective divisions of the Separate Account and the related net asset values at
December 31, 1997.
NET ASSET
VALUE
SHARES PER SHARE
------- -----------
JPM Treasury Money Market Portfolio 44,180 $ 10.560000
JPM Bond Portfolio 533,930 11.290000
JPM Equity Portfolio 620,370 14.330000
JPM Small Company Portfolio 347,864 13.090000
JPM International Equity Portfolio 598,270 10.600000
NOTE F - CONTRACTHOLDER TRANSACTIONS
<TABLE>
<CAPTION>
For the Period January 3, 1995
Year Ended Year Ended (commencement of operations)
December 31, 1997 December 31, 1996 to December 31, 1995
-------------------------- --------------------------- -----------------------
Units Amount Units Amount Units Amount
---------- ----------- ---------- ------------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
JPM Treasury Money Market Division
Issuance of units 16,293 $ 180,290 231,052 $ 2,480,672 56,145 $ 578,342
Redemptions of units 6,950 76,206 225,769 2,421,464 29,526 305,331
--------- ----------- ---------- ------------- --------- -----------
Net Increase 9,343 $ 104,084 5,283 $ 59,208 26,619 $273,011
========= =========== ========== ============= ========= ===========
JPM Bond Division
Issuance of units 333,164 $3,936,415 170,414 $ 1,931,269 35,064 $ 376,748
Redemptions of units 7,769 95,180 55,202 629,940 4,994 54,606
--------- ----------- ---------- ------------- --------- -----------
Net Increase 325,395 $3,841,235 115,212 $ 1,301,329 30,070 $ 322,142
========= =========== ========== ============= ========= ===========
JPM Equity Division
Issuance of units 248,888 $4,443,329 182,200 $ 2,590,095 237,990 $2,797,257
Redemptions of units 76,883 1,512,650 145,517 2,044,287 8,623 106,098
--------- ----------- ---------- ------------- --------- -----------
Net Increase 172,005 $2,930,679 36,683 $ 545,808 229,367 $2,691,159
========= =========== ========== ============= ========= ===========
JPM Small Company Division
Issuance of units 169,487 $2,966,326 158,843 $ 2,217,721 17,337 $ 201,457
Redemptions of units 65,988 1,290,200 42,603 620,244 2,932 35,635
--------- ----------- ---------- ------------- --------- -----------
Net Increase 103,499 $1,676,126 116,240 $ 1,597,477 14,405 $ 165,822
========= =========== ========== ============= ========= ===========
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
CHUBB SEPARATE ACCOUNT C
DECEMBER 31, 1997
NOTE F - CONTRACTHOLDER TRANSACTIONS (CONTINUED)
<TABLE>
<CAPTION>
For the Period January 3, 1995
Year Ended Year Ended (commencement of operations)
December 31, 1997 December 31, 1996 to December 31, 1995
------------------------- ----------------------- -------------------------------
Units Amount Units Amount Units Amount
--------- ------------ --------- ----------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
JPM International Equity Division
Issuance of units 233,614 $ 2,947,905 251,694 $ 2,918,223 175,045 $ 1,819,776
Redemptions of units 70,489 901,191 101,276 1,180,990 6,533 67,150
-------- ----------- -------- ----------- -------- -----------
Net Increase 163,125 $ 2,046,714 150,418 $ 1,737,233 168,512 $ 1,752,626
======== =========== ======== =========== ======== ===========
</TABLE>
NOTE G - YEAR 2000 CONVERSION (UNAUDITED)
Jefferson-Pilot Corporation, the Company's parent has developed a
centralized oversight and project management process to facilitate the
conversion of all information systems to be ready for the year 2000 and has been
converting critical data processing systems. The parent Company currently
expects the project to be substantially completed be early 1999. Although some
projects may be delayed due to resource constraints, the Company does not expect
this project to have a significant effect on operations.
<PAGE>
APPENDIX A
ILLUSTRATIONS OF ACCUMULATION VALUES
CASH VALUES AND DEATH BENEFITS
Following are a series of tables that illustrate how the accumulation
values, cash values and death benefits of a policy change with the investment
performance of the Trust. The tables show how the accumulation values, cash
values and death benefits of a Policy issued to an insured(s) of a given age(s)
and given premium would vary over time if the return on the assets held in each
Portfolio of the Trust were a constant gross annual rate of 0%, 6%, and 12%. The
tables on pages A-2 through A-7 illustrate a JPF Heritage I Policy issued to a
male, age 35, under a standard rate non-smoker underwriting risk classification.
The tables on pages A-8 through A-13 illustrate a JPF Heritage II Policy issued
to a male, age 40, under a standard rate non-smoker underwriting risk
classification and a female, age 35, under a standard rate non-smoker
underwriting risk classification. The accumulation values, cash values and death
benefits would be different from those shown if the returns averaged 0%, 6%, and
12% over a period of years, but fluctuated above and below those averages for
individual policy years.
The amount of the accumulation value exceeds the cash value during the
first five policy years due to the surrender charge. For policy years six and
after, the accumulation value and cash value are equal, since the surrender
charge has been reduced to zero.
The second column shows the accumulation value of the premiums paid at the
stated interest rate. The third and sixth columns illustrate the accumulation
values and the fourth and seventh columns illustrate the cash values of the
Policy over the designated period. The accumulation values shown in the third
column and the cash values shown in the fourth column assume the monthly charge
for cost of insurance is based upon the current cost of insurance rates and
assume a monthly deduction adjustment which varies based on the Specified Amount
of the Policy. The current cost of insurance rates, which may be modified at any
time, are based on the sex, issue age, policy year, and rating class of the
Insured(s). The accumulation values shown in the sixth column and the cash
values shown in the seventh column assume the monthly charge for cost of
insurance is based upon the maximum cost of insurance rates allowable, which are
based on the Commissioner's 1980 Standard Ordinary Mortality Table. The fifth
and eighth columns illustrate the death benefit of a Policy over the designated
period. The illustrations of death benefits reflect the same assumptions as the
accumulation values and cash values. The death benefit values also vary between
tables, depending upon whether Option I or Option II death benefits are
illustrated.
The amounts shown for the death benefit, accumulation values, and cash
values reflect the fact that the net investment return of the Divisions of
Separate Account C is lower than the gross rates of return on the assets in the
Trust, as a result of expenses paid by the Trust and charges levied against the
Divisions of Separate Account C.
The policy values shown take into account a daily investment advisory fee
equivalent to the maximum annual rate of .42% of the aggregate average daily net
assets of the Portfolios of the Trust plus an assumed charge of .53% of the
aggregate average daily net assets to cover expenses incurred by the Trust. The
.42% investment advisory fee is an average of the individual investment advisory
fees of the five Portfolios. See the attached Prospectus for the Trust for a
description of the assumption of expenses of the Trust in excess of specified
annual rates averaging .95%. The policy values also take into account a daily
charge to each Division of Separate Account C for assuming mortality and expense
risks which is equivalent to a charge at an annual rate of .65% of the average
net assets of the Divisions of Separate Account C. After deduction of these
amounts, the illustrated gross investment rates of 0%, 6%, and 12% correspond to
approximate net annual rates of -1.60%, 4.40%, and 10.40%, respectively.
The hypothetical values shown in the tables do not reflect any charges for
federal income taxes or other taxes other than the DAC tax. However, if, in the
future, any additional charges are made, the gross annual investment rate of
return would have to exceed the stated investment rates by a sufficient amount
to cover the tax charges in order to produce the accumulation values, cash
values and death benefits illustrated.
A-1
<PAGE>
The tables illustrate the policy values that would result based on
hypothetical investment rates of return if premiums are paid in full at the
beginning of each year, if all net premiums are allocated to Separate Account C,
and if no policy loans have been made. The values would vary from those shown if
the assumed annual premium payments were paid in installments during a year. The
values would also vary if the Policyowner varied the amount or frequency of
premium payments. The tables also assume that the Policyowner has not requested
an increase or decrease in Specified Amount, that no withdrawals have been made
and no surrender charges imposed, and that no transfers have been made and no
transfer charges imposed.
Upon request, JP Financial will provide, without charge, a comparable
illustration based upon the proposed insured's age, sex and rating class, the
Specified Amount requested, the proposed frequency and amount of premium
payments and any available riders requested. Existing policyowners may request
illustrations based on existing cash value at the time of request. JP Financial
has reserved the right to charge an administrative fee of up to $25 for such
illustrations.
A-2
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
JP FINANCIAL HERITAGE I FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
<TABLE>
<S> <C> <C>
DEATH BENEFIT OPTION I;
GUIDELINE PREMIUM TEST ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 12% (10.40% net)
$1,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1) $12,000
</TABLE>
<TABLE>
<CAPTION>
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
---------------------------------------- -----------------------------------------------
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
---- -------- -------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 12,600 11,886 11,286 1,000,000 10,595 9,995 1,000,000
2 25,830 24,931 24,451 1,000,000 22,230 21,750 1,000,000
3 39,721 39,200 38,840 1,000,000 34,985 34,625 1,000,000
4 54,308 54,863 54,623 1,000,000 48,974 48,734 1,000,000
5 69,623 72,090 71,970 1,000,000 64,309 64,189 1,000,000
6 85,704 91,047 91,047 1,000,000 81,131 81,131 1,000,000
7 102,589 111,912 111,912 1,000,000 99,573 99,573 1,000,000
8 120,319 134,878 134,878 1,000,000 119,815 119,815 1,000,000
9 138,935 160,171 160,171 1,000,000 142,031 142,031 1,000,000
10 158,481 188,065 188,065 1,000,000 166,452 166,452 1,000,000
11 179,006 218,853 218,853 1,000,000 193,319 193,319 1,000,000
12 200,556 252,813 252,813 1,000,000 222,898 222,898 1,000,000
13 223,184 290,290 290,290 1,000,000 255,486 255,486 1,000,000
14 246,943 331,653 331,653 1,000,000 291,420 291,420 1,000,000
15 271,890 377,326 377,326 1,000,000 331,062 331,062 1,000,000
16 298,084 427,795 427,795 1,000,000 374,838 374,838 1,000,000
17 325,589 483,568 483,568 1,000,000 423,197 423,197 1,000,000
18 354,468 545,229 545,229 1,000,000 476,656 476,656 1,000,000
19 384,791 613,459 613,459 1,006,072 (3) 535,811 535,811 1,000,000
20 416,631 688,889 688,889 1,081,556 (3) 601,337 601,337 1,000,000
25 601,361 1,200,062 1,200,062 1,608,084 (3) 1,047,628 1,047,628 1,403,821 (3)
30 837,129 2,032,952 2,032,952 2,480,201 (3) 1,770,761 1,770,761 2,160,328 (3)
35 1,138,036 3,383,683 3,383,683 3,925,073 (3) 2,933,181 2,933,181 3,402,491 (3)
40 1,522,077 5,582,333 5,582,333 5,973,097 (3) 4,812,992 4,812,992 5,149,902 (3)
45 2,012,222 9,194,185 9,194,185 9,653,894 (3) 7,892,220 7,892,220 8,286,831 (3)
50 2,637,785 14,991,743 14,991,743 15,741,330 (3) 12,769,449 12,769,449 13,407,921 (3)
55 3,436,179 24,151,501 24,151,501 25,359,076 (3) 20,314,120 20,314,120 21,329,826 (3)
60 4,455,155 39,077,612 39,077,612 39,468,388 (3) 32,567,955 32,567,955 32,893,635 (3)
65 5,755,655 64,623,297 64,623,297 64,623,297 (3) 53,870,652 53,870,652 53,870,652 (3)
</TABLE>
____________________
(1) Assumes a $12,000 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
(3) Increase is due to adjustment by the corridor percentage. See "Death
Benefits".
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR J.P. MORGAN SERIES TRUST II. THE ACCUMULATION VALUE, CASH
VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE
ACTUAL INVESTMENT RATES OF RETURN AVERAGED 12% OVER A PERIOD OF YEARS, BUT
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY JP FINANCIAL SEPARATE ACCOUNT C, OR J.P. MORGAN
TRUST II THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A - 3
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
JP FINANCIAL HERITAGE I FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
<TABLE>
<S> <C> <C>
DEATH BENEFIT OPTION I;
CASH VALUE ACCUMULATION TEST ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 12% (10.40% net)
$1,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1) $12,000
</TABLE>
<TABLE>
<CAPTION>
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
---------------------------------------- -----------------------------------------------
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
---- -------- -------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 12,600 11,886 11,286 1,000,000 10,595 9,995 1,000,000
2 25,830 24,931 24,451 1,000,000 22,230 21,750 1,000,000
3 39,721 39,200 38,840 1,000,000 34,985 34,625 1,000,000
4 54,308 54,863 54,623 1,000,000 48,974 48,734 1,000,000
5 69,623 72,090 71,970 1,000,000 64,309 64,189 1,000,000
6 85,704 91,047 91,047 1,000,000 81,131 81,131 1,000,000
7 102,589 111,912 111,912 1,000,000 99,573 99,573 1,000,000
8 120,319 134,878 134,878 1,000,000 119,815 119,815 1,000,000
9 138,935 160,171 160,171 1,000,000 142,031 142,031 1,000,000
10 158,481 188,065 188,065 1,000,000 166,452 166,452 1,000,000
11 179,006 218,853 218,853 1,000,000 193,319 193,319 1,000,000
12 200,556 252,813 252,813 1,000,000 222,898 222,898 1,000,000
13 223,184 290,290 290,290 1,000,000 255,486 255,486 1,000,000
14 246,943 331,653 331,653 1,000,000 291,420 291,420 1,000,000
15 271,890 377,310 377,310 1,041,376 (3) 331,062 331,062 1,000,000
16 298,084 427,565 427,565 1,141,598 (3) 374,838 374,838 1,000,816 (3)
17 325,589 482,782 482,782 1,250,405 (3) 422,959 422,959 1,095,465 (3)
18 354,468 543,417 543,417 1,363,976 (3) 475,553 475,553 1,193,637 (3)
19 384,791 610,002 610,002 1,482,305 (3) 533,006 533,006 1,295,206 (3)
20 416,631 683,057 683,057 1,612,014 (3) 595,684 595,684 1,405,814 (3)
25 601,361 1,167,914 1,167,914 2,382,544 (3) 1,003,906 1,003,906 2,047,968 (3)
30 837,129 1,924,182 1,924,182 3,425,044 (3) 1,621,754 1,621,754 2,886,721 (3)
35 1,138,036 3,084,822 3,084,822 4,874,019 (3) 2,535,247 2,535,247 4,005,691 (3)
40 1,522,077 4,836,767 4,836,767 6,868,209 (3) 3,853,594 3,853,594 5,472,104 (3)
45 2,012,222 7,436,738 7,436,738 9,742,127 (3) 5,694,652 5,694,652 7,459,995 (3)
50 2,637,785 11,242,932 11,242,932 13,716,377 (3) 8,243,012 8,243,012 10,056,475 (3)
55 3,436,179 16,770,292 16,770,292 19,453,539 (3) 11,716,244 11,716,244 13,590,842 (3)
60 4,455,155 24,842,026 24,842,026 27,574,649 (3) 16,568,904 16,568,904 18,391,484 (3)
65 5,755,655 38,057,808 38,057,808 39,580,120 (3) 23,377,751 23,377,751 24,312,861 (3)
</TABLE>
_________________
(1) Assumes a $12,000 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
(3) Increase is due to adjustment by the corridor percentage. See "Death
Benefits".
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR J.P. MORGAN SERIES TRUST II. THE ACCUMULATION VALUE, CASH
VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE
ACTUAL INVESTMENT RATES OF RETURN AVERAGED 12% OVER A PERIOD OF YEARS, BUT
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY JP FINANCIAL SEPARATE ACCOUNT C, OR J.P. MORGAN
TRUST II THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A - 4
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
JP FINANCIAL HERITAGE I FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
<TABLE>
<CAPTION>
DEATH BENEFIT OPTION I;
GUIDELINE PREMIUM TEST ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 6% (4.40% net)
$1,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1) $12,000
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
------------------------------------ --------------------------------------
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
---- -------- -------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 12,600 11,228 10,628 1,000,000 9,976 9,376 1,000,000
2 25,830 22,876 22,396 1,000,000 20,329 19,849 1,000,000
3 39,721 34,905 34,545 1,000,000 31,048 30,688 1,000,000
4 54,308 47,374 47,134 1,000,000 42,142 41,902 1,000,000
5 69,623 60,326 60,206 1,000,000 53,613 53,493 1,000,000
6 85,704 73,783 73,783 1,000,000 65,470 65,470 1,000,000
7 102,589 87,761 87,761 1,000,000 77,708 77,708 1,000,000
8 120,319 102,277 102,277 1,000,000 90,349 90,349 1,000,000
9 138,935 117,358 117,358 1,000,000 103,388 103,388 1,000,000
10 158,481 133,016 133,016 1,000,000 116,850 116,850 1,000,000
11 179,006 149,290 149,290 1,000,000 130,726 130,726 1,000,000
12 200,556 166,187 166,187 1,000,000 145,024 145,024 1,000,000
13 223,184 183,741 183,741 1,000,000 159,769 159,769 1,000,000
14 246,943 201,963 201,963 1,000,000 174,984 174,984 1,000,000
15 271,890 220,876 220,876 1,000,000 190,668 190,668 1,000,000
16 298,084 240,523 240,523 1,000,000 206,840 206,840 1,000,000
17 325,589 260,901 260,901 1,000,000 223,481 223,481 1,000,000
18 354,468 282,022 282,022 1,000,000 240,576 240,576 1,000,000
19 384,791 303,927 303,927 1,000,000 258,120 258,120 1,000,000
20 416,631 326,630 326,630 1,000,000 276,090 276,090 1,000,000
25 601,361 453,154 453,154 1,000,000 372,351 372,351 1,000,000
30 837,129 604,525 604,525 1,000,000 479,062 479,062 1,000,000
35 1,138,036 790,823 790,823 1,000,000 595,811 595,811 1,000,000
40 11,522,077 1,033,445 1,033,445 1,105,786 (3) 728,262 728,262 1,000,000
45 12,012,222 1,339,393 1,339,393 1,406,362 (3) 900,696 900,696 1,000,000
50 12,637,785 1,705,848 1,705,848 1,791,140 (3) 1,154,733 1,154,733 1,212,470 (3)
55 23,436,179 2,133,960 2,133,960 2,240,658 (3) 1,445,649 1,445,649 1,517,931 (3)
60 24,455,155 2,668,795 2,668,795 2,695,483 (3) 1,810,926 1,810,926 1,829,035 (3)
65 35,755,655 3,397,172 3,397,172 3,397,172 (3) 2,325,369 2,325,369 2,325,369 (3)
</TABLE>
- ----------------
(1) Assumes a $12,000 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
(3) Increase is due to adjustment by the corridor percentage. See "Death
Benefits".
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR J.P. MORGAN SERIES TRUST II. THE ACCUMULATION VALUE, CASH
VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE
ACTUAL INVESTMENT RATES OF RETURN AVERAGED 6% OVER A PERIOD OF YEARS, BUT
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY JP FINANCIAL SEPARATE ACCOUNT C, OR J.P. MORGAN
TRUST II THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-5
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
JP FINANCIAL HERITAGE I FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
<TABLE>
<CAPTION>
DEATH BENEFIT OPTION I;
CASH VALUE ACCUMULATION TEST ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 6% (4.40% net)
$1,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1) $12,000
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
-------------------------------------- ------------------------------------------
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
- ---- -------- ------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 12,600 11,228 10,628 1,000,000 9,976 9,376 1,000,000
2 25,830 22,876 22,396 1,000,000 20,329 19,849 1,000,000
3 39,721 34,905 34,545 1,000,000 31,048 30,688 1,000,000
4 54,308 47,374 47,134 1,000,000 42,142 41,902 1,000,000
5 69,623 60,326 60,206 1,000,000 53,613 53,493 1,000,000
6 85,704 73,783 73,783 1,000,000 65,470 65,470 1,000,000
7 102,589 87,761 87,761 1,000,000 77,708 77,708 1,000,000
8 120,319 102,277 102,277 1,000,000 90,349 90,349 1,000,000
9 138,935 117,358 117,358 1,000,000 103,388 103,388 1,000,000
10 158,481 133,016 133,016 1,000,000 116,850 116,850 1,000,000
11 179,006 149,290 149,290 1,000,000 130,726 130,726 1,000,000
12 200,556 166,187 166,187 1,000,000 145,024 145,024 1,000,000
13 223,184 183,741 183,741 1,000,000 159,769 159,769 1,000,000
14 246,943 201,963 201,963 1,000,000 174,984 174,984 1,000,000
15 271,890 220,876 220,876 1,000,000 190,668 190,668 1,000,000
16 298,084 240,523 240,523 1,000,000 206,840 206,840 1,000,000
17 325,589 260,901 260,901 1,000,000 223,481 223,481 1,000,000
18 354,468 282,022 282,022 1,000,000 240,576 240,576 1,000,000
19 384,791 303,927 303,927 1,000,000 258,120 258,120 1,000,000
20 416,631 326,630 326,630 1,000,000 276,090 276,090 1,000,000
25 601,361 453,154 453,154 1,000,000 372,351 372,351 1,000,000
30 837,129 603,535 603,535 1,074,293 (3) 479,062 479,062 1,000,000
35 1,138,036 775,420 775,420 1,225,163 (3) 595,811 595,811 1,000,000
40 1,522,077 966,192 966,192 1,371,993 (3) 726,955 726,955 1,032,276 (3)
45 2,012,222 1,172,600 1,172,600 1,536,106 (3) 860,826 860,826 1,127,683 (3)
50 2,637,785 1,391,676 1,391,676 1,697,845 (3) 992,220 992,220 1,210,508 (3)
55 3,436,179 1,622,394 1,622,394 1,881,977 (3) 1,117,595 1,117,595 1,296,411 (3)
60 4,455,155 1,871,353 1,871,353 2,077,201 (3) 1,247,560 1,247,560 1,384,792 (3)
65 5,755,655 2,224,610 2,224,610 2,313,594 (3) 1,384,379 1,384,379 1,439,754 (3)
</TABLE>
_____________________________
(1) Assumes a $12,000 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
(3) Increase is due to adjustment by the corridor percentage. See "Death
Benefits".
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN MAY
BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT RATES
OF RETURN FOR J.P. MORGAN SERIES TRUST II. THE ACCUMULATION VALUE, CASH VALUE
AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
INVESTMENT RATES OF RETURN AVERAGED 6% OVER A PERIOD OF YEARS, BUT FLUCTUATED
ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN
BE MADE BY JP FINANCIAL SEPARATE ACCOUNT C, OR J.P. MORGAN TRUST II THAT THIS
ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A - 6
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
JP FINANCIAL HERITAGE I FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
<TABLE>
<CAPTION>
DEATH BENEFIT OPTION I;
GUIDELINE PREMIUM TEST ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 0% (-1.60% net)
$1,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1) $12,000
END PREMIUMS
ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
OF -------------------------------------- --------------------------------------
AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
- ---- -------- -------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 12,600 10,571 9,971 1,000,000 9,358 8,758 1,000,000
2 25,830 20,901 20,421 1,000,000 18,505 18,025 1,000,000
3 39,721 30,936 30,576 1,000,000 27,416 27,056 1,000,000
4 54,308 40,723 40,483 1,000,000 36,086 35,846 1,000,000
5 69,623 50,286 50,166 1,000,000 44,503 44,383 1,000,000
6 85,704 59,629 59,629 1,000,000 52,662 52,662 1,000,000
7 102,589 68,749 68,749 1,000,000 60,543 60,543 1,000,000
8 120,319 77,641 77,641 1,000,000 68,151 68,151 1,000,000
9 138,935 86,310 86,310 1,000,000 75,465 75,465 1,000,000
10 158,481 94,744 94,744 1,000,000 82,493 82,493 1,000,000
11 179,006 102,956 102,956 1,000,000 89,206 89,206 1,000,000
12 200,556 110,909 110,909 1,000,000 95,591 95,591 1,000,000
13 223,184 118,599 118,599 1,000,000 101,641 101,641 1,000,000
14 246,943 126,007 126,007 1,000,000 107,344 107,344 1,000,000
15 271,890 133,124 133,124 1,000,000 112,673 112,673 1,000,000
16 298,084 139,955 139,955 1,000,000 117,618 117,618 1,000,000
17 325,589 146,464 146,464 1,000,000 122,128 122,128 1,000,000
18 354,468 152,620 152,620 1,000,000 126,150 126,150 1,000,000
19 384,791 158,423 158,423 1,000,000 129,642 129,642 1,000,000
20 416,631 163,832 163,832 1,000,000 132,536 132,536 1,000,000
25 601,361 183,783 183,783 1,000,000 136,228 136,228 1,000,000
30 837,129 186,196 186,196 1,000,000 113,994 113,994 1,000,000
35 1,138,036 159,528 159,528 1,000,000 44,415 44,415 1,000,000
40 1,522,077 80,997 80,997 1,000,000 0 0 0
45 0 0 0 0 0 0 0
50 0 0 0 0 0 0 0
55 0 0 0 0 0 0 0
60 0 0 0 0 0 0 0
65 0 0 0 0 0 0 0
</TABLE>
_________________
(1) Assumes a $12,000 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR J.P. MORGAN SERIES TRUST II. THE ACCUMULATION VALUE, CASH
VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE
ACTUAL INVESTMENT RATES OF RETURN AVERAGED 0% OVER A PERIOD OF YEARS, BUT
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY JP FINANCIAL SEPARATE ACCOUNT C, OR J.P. MORGAN
TRUST II THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A - 7
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
JP FINANCIAL HERITAGE I FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
<TABLE>
<CAPTION>
DEATH BENEFIT OPTION I;
CASH VALUE ACCUMULATION TEST ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 0% (-1.60% net)
$1,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1) $12,000
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
--------------------------------- ----------------------------------------
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
- ---- -------- -------- -------- --------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 12,600 10,571 9,971 1,000,000 9,358 8,758 1,000,000
2 25,830 20,901 20,421 1,000,000 18,505 18,025 1,000,000
3 39,721 30,936 30,576 1,000,000 27,416 27,056 1,000,000
4 54,308 40,723 40,483 1,000,000 36,086 35,846 1,000,000
5 69,623 50,286 50,166 1,000,000 44,503 44,383 1,000,000
6 85,704 59,629 59,629 1,000,000 52,662 52,662 1,000,000
7 102,589 68,749 68,749 1,000,000 60,543 60,543 1,000,000
8 120,319 77,641 77,641 1,000,000 68,151 68,151 1,000,000
9 138,935 86,310 86,310 1,000,000 75,465 75,465 1,000,000
10 158,481 94,744 94,744 1,000,000 82,493 82,493 1,000,000
11 179,006 102,956 102,956 1,000,000 89,206 89,206 1,000,000
12 200,556 110,909 110,909 1,000,000 95,591 95,591 1,000,000
13 223,184 118,599 118,599 1,000,000 101,641 101,641 1,000,000
14 246,943 126,007 126,007 1,000,000 107,344 107,344 1,000,000
15 271,890 133,124 133,124 1,000,000 112,673 112,673 1,000,000
16 298,084 139,955 139,955 1,000,000 117,618 117,618 1,000,000
17 325,589 146,464 146,464 1,000,000 122,128 122,128 1,000,000
18 354,468 152,620 152,620 1,000,000 126,150 126,150 1,000,000
19 384,791 158,423 158,423 1,000,000 129,642 129,642 1,000,000
20 416,631 163,832 163,832 1,000,000 132,536 132,536 1,000,000
25 601,361 183,783 183,783 1,000,000 136,228 136,228 1,000,000
30 837,129 186,196 186,196 1,000,000 113,994 113,994 1,000,000
35 1,138,036 159,528 159,528 1,000,000 44,415 44,415 1,000,000
40 1,522,077 80,997 80,997 1,000,000 0 0 0
45 0 0 0 0 0 0 0
50 0 0 0 0 0 0 0
55 0 0 0 0 0 0 0
60 0 0 0 0 0 0 0
65 0 0 0 0 0 0 0
</TABLE>
__________________
(1) Assumes a $12,000 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR J.P. MORGAN SERIES TRUST II. THE ACCUMULATION VALUE, CASH
VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 0% OVER A PERIOD OF YEARS, BUT
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY JP FINANCIAL SEPARATE ACCOUNT C, OR J.P. MORGAN
TRUST II THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME .
A - 8
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
JP FINANCIAL HERITAGE I FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
<TABLE>
<CAPTION>
DEATH BENEFIT OPTION II;
GUIDELINE PREMIUM TEST ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 12% (10.40% net)
$1,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1) $12,000
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
----------------------------------------- ----------------------------------------------------
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
- ---- -------- -------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 12,600 11,880 11,280 1,011,880 10,576 9,976 1,010,576
2 25,830 24,912 24,432 1,024,912 22,168 21,688 1,022,168
3 39,721 39,152 38,792 1,039,152 34,849 34,489 1,034,849
4 54,308 54,768 54,528 1,054,768 48,723 48,483 1,048,723
5 69,623 71,923 71,803 1,071,923 63,894 63,774 1,063,894
6 85,704 90,779 90,779 1,090,779 80,484 80,484 1,080,484
7 102,589 111,501 111,501 1,111,501 98,610 98,610 1,098,610
8 120,319 134,273 134,273 1,134,273 118,432 118,432 1,118,432
9 138,935 159,308 159,308 1,159,308 140,096 140,096 1,140,096
10 158,481 186,858 186,858 1,186,858 163,798 163,798 1,163,798
11 179,006 217,202 217,202 1,217,202 189,741 189,741 1,189,741
12 200,556 250,581 250,581 1,250,581 218,139 218,139 1,218,139
13 223,184 287,306 287,306 1,287,306 249,231 249,231 1,249,231
14 246,943 327,699 327,699 1,327,699 283,280 283,280 1,283,280
15 271,890 372,125 372,125 1,372,125 320,557 320,557 1,320,557
16 298,084 421,011 421,011 1,421,011 361,381 361,381 1,361,381
17 325,589 474,766 474,766 1,474,766 406,054 406,054 1,406,054
18 354,468 533,849 533,849 1,533,849 454,910 454,910 1,454,910
19 384,791 598,815 598,815 1,598,815 508,325 508,325 1,508,325
20 416,631 670,221 670,221 1,670,221 566,689 566,689 1,566,689
25 601,361 1,148,245 1,148,245 2,148,245 950,191 950,191 1,950,191
30 837,129 1,911,224 1,911,224 2,911,224 1,545,436 1,545,436 2,545,436
35 1,138,036 3,126,295 3,126,295 4,126,295 2,462,859 2,462,859 3,462,859
40 1,522,077 5,059,400 5,059,400 6,059,400 3,870,559 3,870,559 4,870,559
45 2,012,222 8,136,917 8,136,917 9,136,917 6,017,191 6,017,191 7,017,191
50 2,637,785 13,042,062 13,042,062 14,042,062 9,307,098 9,307,098 10,307,098
55 3,436,179 20,888,665 20,888,665 21,933,098 (3) 14,359,916 14,359,916 15,359,916
60 4,455,155 33,510,513 33,510,513 34,510,513 22,256,727 22,256,727 23,256,727
65 5,755,655 54,068,415 54,068,415 55,068,415 33,665,063 33,665,063 34,665,063
</TABLE>
_________________
(1) Assumes a $12,000 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different
frequency or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
(3) Increase is due to adjustment by the corridor percentage. See "Death
Benefits".
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR J.P. MORGAN SERIES TRUST II. THE ACCUMULATION VALUE, CASH
VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 12% OVER A PERIOD OF YEARS,
BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY JP FINANCIAL SEPARATE ACCOUNT C, OR J.P. MORGAN
TRUST II THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A - 9
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
JP FINANCIAL HERITAGE I FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
<TABLE>
<CAPTION>
DEATH BENEFIT OPTION II;
CASH VALUE ACCUMULATION TEST ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 12% (10.40% net)
$1,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1) $12,000
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
----------------------------------------- -----------------------------------------------
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
- ---- -------- -------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 12,600 11,880 11,280 1,011,880 10,576 9,976 1,010,576
2 25,830 24,912 24,432 1,024,912 22,168 21,688 1,022,168
3 39,721 39,152 38,792 1,039,152 34,849 34,489 1,034,849
4 54,308 54,768 54,528 1,054,768 48,723 48,483 1,048,723
5 69,623 71,923 71,803 1,071,923 63,894 63,774 1,063,894
6 85,704 90,779 90,779 1,090,779 80,484 80,484 1,080,484
7 102,589 111,501 111,501 1,111,501 98,610 98,610 1,098,610
8 120,319 134,273 134,273 1,134,273 118,432 118,432 1,118,432
9 138,935 159,308 159,308 1,159,308 140,096 140,096 1,140,096
10 158,481 186,858 186,858 1,186,858 163,798 163,798 1,163,798
11 179,006 217,202 217,202 1,217,202 189,741 189,741 1,189,741
12 200,556 250,581 250,581 1,250,581 218,139 218,139 1,218,139
13 223,184 287,306 287,306 1,287,306 249,231 249,231 1,249,231
14 246,943 327,699 327,699 1,327,699 283,280 283,280 1,283,280
15 271,890 372,125 372,125 1,372,125 320,557 320,557 1,320,557
16 298,084 421,011 421,011 1,421,011 361,381 361,381 1,361,381
17 325,589 474,766 474,766 1,474,766 406,054 406,054 1,406,054
18 354,468 533,849 533,849 1,533,849 454,910 454,910 1,454,910
19 384,791 598,815 598,815 1,598,815 508,325 508,325 1,508,325
20 416,631 670,221 670,221 1,670,221 566,689 566,689 1,566,689
25 601,361 1,146,578 1,146,578 2,339,020 (3) 950,191 950,191 1,950,191
30 837,129 1,890,363 1,890,363 3,364,847 (3) 1,538,356 1,538,356 2,738,273 (3)
35 1,138,036 3,031,876 3,031,876 4,790,364 (3) 2,408,523 2,408,523 3,805,466 (3)
40 1,522,077 4,754,982 4,754,982 6,752,075 (3) 3,664,477 3,664,477 5,203,557 (3)
45 2,012,222 7,312,192 7,312,192 9,578,972 (3) 5,418,579 5,418,579 7,098,338 (3)
50 2,637,785 11,055,822 11,055,822 13,488,103 (3) 7,846,713 7,846,713 9,572,990 (3)
55 3,436,179 16,492,359 16,492,359 19,131,136 (3) 11,156,222 11,156,222 12,941,217 (3)
60 4,455,155 24,431,476 24,431,476 27,118,939 (3) 15,780,170 15,780,170 17,515,988 (3)
65 5,755,655 37,430,034 37,430,034 38,927,236 (3) 22,115,986 22,115,986 23,115,986
</TABLE>
__________________
(1) Assumes a $12,000 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different
frequency or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
(3) Increase is due to adjustment by the corridor percentage. See "Death
Benefits".
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR J.P. MORGAN SERIES TRUST II. THE ACCUMULATION VALUE, CASH
VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 12% OVER A PERIOD OF YEARS,
BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY JP FINANCIAL SEPARATE ACCOUNT C, OR J.P. MORGAN
TRUST II THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A - 10
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
JP FINANCIAL HERITAGE I FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
<TABLE>
<CAPTION>
DEATH BENEFIT OPTION II;
GUIDELINE PREMIUM TEST ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 6% (4.40% net)
$1,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1) $12,000
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
-------------------------------------- -----------------------------------------
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
---- -------- -------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 12,600 11,223 10,623 1,011,223 9,958 9,358 1,009,958
2 25,830 22,859 22,379 1,022,859 20,273 19,793 1,020,273
3 39,721 34,863 34,503 1,034,863 30,929 30,569 1,030,929
4 54,308 47,294 47,054 1,047,294 41,932 41,692 1,041,932
5 69,623 60,190 60,070 1,060,190 53,276 53,156 1,053,276
6 85,704 73,572 73,572 1,073,572 64,967 64,967 1,064,967
7 102,589 87,451 87,451 1,087,451 76,988 76,988 1,076,988
8 120,319 101,839 101,839 1,101,839 89,355 89,355 1,089,355
9 138,935 116,758 116,758 1,116,758 102,051 102,051 1,102,051
10 158,481 132,211 132,211 1,132,211 115,093 115,093 1,115,093
11 179,006 148,232 148,232 1,148,232 128,453 128,453 1,128,453
12 200,556 164,814 164,814 1,164,814 142,126 142,126 1,142,126
13 223,184 181,977 181,977 1,181,977 156,115 156,115 1,156,115
14 246,943 199,719 199,719 1,199,719 170,425 170,425 1,170,425
15 271,890 218,044 218,044 1,218,044 185,029 185,029 1,185,029
16 298,084 236,979 236,979 1,236,979 199,922 199,922 1,199,922
17 325,589 256,491 256,491 1,256,491 215,044 215,044 1,215,044
18 354,468 276,556 276,556 1,276,556 230,336 230,336 1,230,336
19 384,791 297,188 297,188 1,297,188 245,743 245,743 1,245,743
20 416,631 318,351 318,351 1,318,351 261,179 261,179 1,261,179
25 601,361 431,110 431,110 1,431,110 336,198 336,198 1,336,198
30 837,129 548,655 548,655 1,548,655 396,456 396,456 1,396,456
35 1,138,036 655,770 655,770 1,655,770 414,041 414,041 1,414,041
40 1,522,077 724,166 724,166 1,724,166 340,766 340,766 1,340,766
45 2,012,222 705,886 705,886 1,705,886 90,318 90,318 1,090,318
50 2,637,785 519,665 519,665 1,519,665 0 0 0
55 3,436,179 44,135 44,135 1,044,135 0 0 0
60 0 0 0 0 0 0 0
65 0 0 0 0 0 0 0
</TABLE>
_____________________
(1) Assumes a $12,000 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN MAY
BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT RATES
OF RETURN FOR J.P. MORGAN SERIES TRUST II. THE ACCUMULATION VALUE, CASH VALUE
AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
INVESTMENT RATES OF RETURN AVERAGED 6% OVER A PERIOD OF YEARS, BUT FLUCTUATED
ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN
BE MADE BY JP FINANCIAL SEPARATE ACCOUNT C, OR J.P. MORGAN TRUST II THAT THIS
ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A - 11
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
JPF HERITAGE I FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
<TABLE>
<CAPTION>
DEATH BENEFIT OPTION II;
CASH VALUE ACCUMULATION TEST ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 6% (4.40% net)
$1,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1) $12,000
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
---------------------------------------- ----------------------------------------------
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
- ---- -------- -------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 12,600 11,223 10,623 1,011,223 9,958 9,358 1,009,958
2 25,830 22,859 22,379 1,022,859 20,273 19,793 1,020,273
3 39,721 34,863 34,503 1,034,863 30,929 30,569 1,030,929
4 54,308 47,294 47,054 1,047,294 41,932 41,692 1,041,932
5 69,623 60,190 60,070 1,060,190 53,276 53,156 1,053,276
6 85,704 73,572 73,572 1,073,572 64,967 64,967 1,064,967
7 102,589 87,451 87,451 1,087,451 76,988 76,988 1,076,988
8 120,319 101,839 101,839 1,101,839 89,355 89,355 1,089,355
9 138,935 116,758 116,758 1,116,758 102,051 102,051 1,102,051
10 158,481 132,211 132,211 1,132,211 115,093 115,093 1,115,093
11 179,006 148,232 148,232 1,148,232 128,453 128,453 1,128,453
12 200,556 164,814 164,814 1,164,814 142,126 142,126 1,142,126
13 223,184 181,977 181,977 1,181,977 156,115 156,115 1,156,115
14 246,943 199,719 199,719 1,199,719 170,425 170,425 1,170,425
15 271,890 218,044 218,044 1,218,044 185,029 185,029 1,185,029
16 298,084 236,979 236,979 1,236,979 199,922 199,922 1,199,922
17 325,589 256,491 256,491 1,256,491 215,044 215,044 1,215,044
18 354,468 276,556 276,556 1,276,556 230,336 230,336 1,230,336
19 384,791 297,188 297,188 1,297,188 245,743 245,743 1,245,743
20 416,631 318,351 318,351 1,318,351 261,179 261,179 1,261,179
25 601,361 431,110 431,110 1,431,110 336,198 336,198 1,336,198
30 837,129 548,655 548,655 1,548,655 396,456 396,456 1,396,456
35 1,138,036 655,770 655,770 1,655,770 414,041 414,041 1,414,041
40 1,522,077 724,166 724,166 1,724,166 340,766 340,766 1,340,766
45 2,012,222 705,886 705,886 1,705,886 90,318 90,318 1,090,318
50 2,637,785 519,665 519,665 1,519,665 0 0 0
55 3,436,179 44,135 44,135 1,044,135 0 0 0
60 0 0 0 0 0 0 0
65 0 0 0 0 0 0 0
</TABLE>
_____________________
(1) Assumes a $12,000 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different
frequency or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR J.P. MORGAN SERIES TRUST II. THE ACCUMULATION VALUE, CASH
VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 6% OVER A PERIOD OF YEARS, BUT
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY JP FINANCIAL SEPARATE ACCOUNT C, OR J.P. MORGAN
TRUST II THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A - 12
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
JP FINANCIAL HERITAGE I FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
<TABLE>
<CAPTION>
DEATH BENEFIT OPTION II;
GUIDELINE PREMIUM TEST ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 0% (-1.60% net)
$1,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1) $12,000
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
---------------------------------------- --------------------------------------------------
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
- ---- -------- -------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 12,600 10,566 9,966 1,010,566 9,341 8,741 1,009,341
2 25,830 20,885 20,405 1,020,885 18,454 17,974 1,018,454
3 39,721 30,899 30,539 1,030,899 27,312 26,952 1,027,312
4 54,308 40,655 40,415 1,040,655 35,910 35,670 1,035,910
5 69,623 50,176 50,056 1,050,176 44,232 44,112 1,044,232
6 85,704 59,465 59,465 1,059,465 52,273 52,273 1,052,273
7 102,589 68,517 68,517 1,068,517 60,008 60,008 1,060,008
8 120,319 77,326 77,326 1,077,326 67,441 67,441 1,067,441
9 138,935 85,894 85,894 1,085,894 74,548 74,548 1,074,548
10 158,481 94,207 94,207 1,094,207 81,333 81,333 1,081,333
11 179,006 102,279 102,279 1,102,279 87,764 87,764 1,087,764
12 200,556 110,063 110,063 1,110,063 93,824 93,824 1,093,824
13 223,184 117,555 117,555 1,117,555 99,502 99,502 1,099,502
14 246,943 124,729 124,729 1,124,729 104,782 104,782 1,104,782
15 271,890 131,572 131,572 1,131,572 109,632 109,632 1,109,632
16 298,084 138,088 138,088 1,138,088 114,039 114,039 1,114,039
17 325,589 144,226 144,226 1,144,226 117,942 117,942 1,117,942
18 354,468 149,950 149,950 1,149,950 121,278 121,278 1,121,278
19 384,791 155,254 155,254 1,155,254 123,998 123,998 1,123,998
20 416,631 160,087 160,087 1,160,087 126,022 126,022 1,126,022
25 601,361 175,634 175,634 1,175,634 123,687 123,687 1,123,687
30 837,129 169,737 169,737 1,169,737 92,440 92,440 1,092,440
35 1,138,036 129,633 129,633 1,129,633 13,565 13,565 1,013,565
40 1,522,077 35,673 35,673 1,035,673 0 0 0
45 0 0 0 0 0 0 0
50 0 0 0 0 0 0 0
55 0 0 0 0 0 0 0
60 0 0 0 0 0 0 0
65 0 0 0 0 0 0 0
</TABLE>
_______________________
(1) Assumes a $12,000 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different
frequency or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR J.P. MORGAN SERIES TRUST II. THE ACCUMULATION VALUE, CASH
VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 0% OVER A PERIOD OF YEARS, BUT
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY JP FINANCIAL SEPARATE ACCOUNT C, OR J.P. MORGAN
TRUST II THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A - 13
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
JPF HERITAGE I FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
<TABLE>
<S> <C> <C>
DEATH BENEFIT OPTION II;
CASH VALUE ACCUMULATION TEST ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 0% (-1.60% net)
$1,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1) $12,000
</TABLE>
<TABLE>
<CAPTION>
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
------------------------------------- ----------------------------------------
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
---- -------- -------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 12,600 10,566 9,966 1,010,566 9,341 8,741 1,009,341
2 25,830 20,885 20,405 1,020,885 18,454 17,974 1,018,454
3 39,721 30,899 30,539 1,030,899 27,312 26,952 1,027,312
4 54,308 40,655 40,415 1,040,655 35,910 35,670 1,035,910
5 69,623 50,176 50,056 1,050,176 44,232 44,112 1,044,232
6 85,704 59,465 59,465 1,059,465 52,273 52,273 1,052,273
7 102,589 68,517 68,517 1,068,517 60,008 60,008 1,060,008
8 120,319 77,326 77,326 1,077,326 67,441 67,441 1,067,441
9 138,935 85,894 85,894 1,085,894 74,548 74,548 1,074,548
10 158,481 94,207 94,207 1,094,207 81,333 81,333 1,081,333
11 179,006 102,279 102,279 1,102,279 87,764 87,764 1,087,764
12 200,556 110,063 110,063 1,110,063 93,824 93,824 1,093,824
13 223,184 117,555 117,555 1,117,555 99,502 99,502 1,099,502
14 246,943 124,729 124,729 1,124,729 104,782 104,782 1,104,782
15 271,890 131,572 131,572 1,131,572 109,632 109,632 1,109,632
16 298,084 138,088 138,088 1,138,088 114,039 114,039 1,114,039
17 325,589 144,226 144,226 1,144,226 117,942 117,942 1,117,942
18 354,468 149,950 149,950 1,149,950 121,278 121,278 1,121,278
19 384,791 155,254 155,254 1,155,254 123,998 123,998 1,123,998
20 416,631 160,087 160,087 1,160,087 126,022 126,022 1,126,022
25 601,361 175,634 175,634 1,175,634 123,687 123,687 1,123,687
30 837,129 169,737 169,737 1,169,737 92,440 92,440 1,092,440
35 1,138,036 129,633 129,633 1,129,633 13,565 13,565 1,013,565
40 1,522,077 35,673 35,673 1,035,673 0 0 0
45 0 0 0 0 0 0 0
50 0 0 0 0 0 0 0
55 0 0 0 0 0 0 0
60 0 0 0 0 0 0 0
65 0 0 0 0 0 0 0
</TABLE>
_____________________
(1) Assumes a $12,000 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR J.P. MORGAN SERIES TRUST II. THE ACCUMULATION VALUE, CASH
VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE
ACTUAL INVESTMENT RATES OF RETURN AVERAGED 0% OVER A PERIOD OF YEARS, BUT
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY JP FINANCIAL SEPARATE ACCOUNT C, OR J.P. MORGAN
TRUST II THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A - 14
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
JP FINANCIAL HERITAGE II JOINT AND LAST SURVIVOR
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
<TABLE>
<CAPTION>
DEATH BENEFIT OPTION I;
GUIDELINE PREMIUM TEST ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 12% (10.40% net)
FEMALE NON-SMOKER ISSUE AGE 35 ASSUMED ANNUAL PREMIUM (1) $14,900
$2,000,000 INITIAL SPECIFIED AMOUNT
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
------------------------------------- ------------------------------------
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
---- -------- -------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 15,645 15,337 14,592 2,000,000 15,334 14,589 2,000,000
2 32,072 32,264 31,668 2,000,000 32,251 31,655 2,000,000
3 49,321 50,947 50,500 2,000,000 50,915 50,468 2,000,000
4 67,432 71,565 71,267 2,000,000 71,504 71,206 2,000,000
5 86,449 94,320 94,171 2,000,000 94,215 94,066 2,000,000
6 106,416 119,432 119,432 2,000,000 119,267 119,267 2,000,000
7 127,382 147,145 147,145 2,000,000 146,899 146,899 2,000,000
8 149,396 177,738 177,738 2,000,000 177,384 177,384 2,000,000
9 172,511 211,546 211,546 2,000,000 211,055 211,055 2,000,000
10 196,781 248,908 248,908 2,000,000 248,242 248,242 2,000,000
11 222,265 290,196 290,196 2,000,000 289,312 289,312 2,000,000
12 249,023 335,823 335,823 2,000,000 334,669 334,669 2,000,000
13 277,120 386,243 386,243 2,000,000 384,762 384,762 2,000,000
14 306,621 441,962 441,962 2,000,000 440,083 440,083 2,000,000
15 337,597 503,534 503,534 2,000,000 501,181 501,181 2,000,000
16 370,121 571,578 571,578 2,000,000 568,660 568,660 2,000,000
17 404,273 646,772 646,772 2,000,000 643,187 643,187 2,000,000
18 440,131 729,870 729,870 2,000,000 725,501 725,501 2,000,000
19 477,783 821,704 821,704 2,000,000 816,420 816,420 2,000,000
20 517,317 923,198 923,198 2,000,000 916,857 916,857 2,000,000
25 746,690 1,615,627 1,615,627 2,164,940 (3) 1,601,725 1,601,725 2,146,312 (3)
30 1,039,436 2,757,543 2,757,543 3,364,203 (3) 2,729,193 2,729,193 3,329,615 (3)
35 1,413,061 4,635,715 4,635,715 5,377,429 (3) 4,574,088 4,574,088 5,305,942 (3)
40 1,889,912 7,721,876 7,721,876 8,262,408 (3) 7,589,196 7,589,196 8,120,439 (3)
45 2,498,509 12,795,145 12,795,145 13,434,902 (3) 12,523,960 12,523,960 13,150,158 (3)
50 3,275,249 21,029,324 21,029,324 22,080,790 (3) 20,423,444 20,423,444 21,444,616 (3)
55 4,266,589 34,181,413 34,181,413 35,890,483 (3) 32,727,546 32,727,546 34,363,924 (3)
60 5,531,817 55,595,426 55,595,426 56,151,381 (3) 52,590,865 52,590,865 53,116,773 (3)
65 7,146,605 91,925,795 91,925,795 91,925,795 (3) 86,962,863 86,962,863 86,962,863 (3)
</TABLE>
________________
(1) Assumes a $14,900 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
(3) Increase is due to adjustment by the corridor percentage. See "Death
Benefits".
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR J.P. MORGAN SERIES TRUST II. THE ACCUMULATION VALUE, CASH
VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE
ACTUAL INVESTMENT RATES OF RETURN AVERAGED 12% OVER A PERIOD OF YEARS, BUT
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY JP FINANCIAL SEPARATE ACCOUNT C, OR J.P. MORGAN
TRUST II THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-15
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
JP FINANCIAL HERITAGE II JOINT AND LAST SURVIVOR
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
<TABLE>
<CAPTION>
DEATH BENEFIT OPTION I;
CASH VALUE ACCUMULATION TEST ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 12% (10.40% net)
FEMALE NON-SMOKER ISSUE AGE 35 ASSUMED ANNUAL PREMIUM(1): $14,900
$2,000,000 INITIAL SPECIFIED AMOUNT
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
------------------------------------- --------------------------------------
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
- ---- -------- -------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 15,645 15,337 14,592 2,000,000 15,334 14,589 2,000,000
2 32,072 32,264 31,668 2,000,000 32,251 31,655 2,000,000
3 49,321 50,947 50,500 2,000,000 50,915 50,468 2,000,000
4 67,432 71,565 71,267 2,000,000 71,504 71,206 2,000,000
5 86,449 94,320 94,171 2,000,000 94,215 94,066 2,000,000
6 106,416 119,432 119,432 12,000,000 119,267 119,267 2,000,000
7 127,382 147,145 147,145 12,000,000 146,899 146,899 2,000,000
8 149,396 177,738 177,738 12,000,000 177,384 177,384 2,000,000
9 172,511 211,546 211,546 22,000,000 211,055 211,055 2,000,000
10 196,781 248,908 248,908 22,000,000 248,242 248,242 2,000,000
11 222,265 290,196 290,196 22,000,000 289,312 289,312 2,000,000
12 249,023 335,823 335,823 32,000,000 334,669 334,669 2,000,000
13 277,120 386,243 386,243 32,000,000 384,762 384,762 2,000,000
14 306,621 441,692 441,692 42,000,000 440,083 440,083 2,000,000
15 337,597 503,534 503,534 52,000,000 501,181 501,181 2,000,000
16 370,121 571,575 571,575 52,091,965(3) 568,655 568,655 2,081,277(3)
17 404,273 646,737 646,737 62,282,982(3) 643,113 643,113 2,270,188(3)
18 440,131 729,751 729,751 72,473,854(3) 725,240 725,240 2,458,562(3)
19 477,783 821,418 821,418 82,686,037(3) 815,787 815,787 2,667,624(3)
20 517,317 922,629 922,629 92,897,056(3) 915,591 915,591 2,874,955(3)
25 746,690 1,609,454 1,609,454 4,200,675(3) 1,587,989 1,587,989 4,144,652(3)
30 1,039,436 2,728,466 2,728,466 5,948,057(3) 2,665,333 2,665,333 5,810,426(3)
35 1,413,061 4,533,136 4,533,136 8,340,970(3) 4,352,448 4,352,448 8,008,504(3)
40 1,889,912 7,397,452 7,397,452 11,687,97(3) 6,916,094 6,916,094 10,927,429(3)
45 2,498,509 11,832,445 11,832,445 16,447,09(3) 10,626,948 10,626,948 14,771,457(3)
50 3,275,249 18,496,137 18,496,137 23,305,13(3) 15,801,984 15,801,984 19,910,500(3)
55 4,266,589 28,265,393 28,265,393 33,353,16(3) 22,712,362 22,712,362 26,800,587(3)
60 5,531,817 42,772,458 42,772,458 47,477,42(3) 32,244,683 32,244,683 35,791,598(3)
65 7,146,605 66,348,540 66,348,540 69,002,48(3) 45,328,559 45,328,559 47,141,702(3)
</TABLE>
________________
(1) Assumes a $14,900 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
(3) Increase is due to adjustment by the corridor percentage. See "Death
Benefits".
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN MAY
BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT RATES
OF RETURN FOR J.P. MORGAN SERIES TRUST II. THE ACCUMULATION VALUE, CASH VALUE
AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
INVESTMENT RATES OF RETURN AVERAGED 12% OVER A PERIOD OF YEARS, BUT FLUCTUATED
ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN
BE MADE BY JP FINANCIAL SEPARATE ACCOUNT C, OR J.P. MORGAN TRUST II THAT THIS
ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A - 16
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
JP FINANCIAL HERITAGE II JOINT AND LAST SURVIVOR
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
<TABLE>
<CAPTION>
DEATH BENEFIT OPTION I;
GUIDELINE PREMIUM TEST ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 6% (4.40% net)
FEMALE NON-SMOKER ISSUE AGE 35 ASSUMED ANNUAL PREMIUM (1) $14,900
$2,000,000 INITIAL SPECIFIED AMOUNT
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
------------------------------------ -------------------------------------------------
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
- ---- -------- -------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 15,645 14,503 13,758 2,000,000 14,500 13,755 2,000,000
2 32,072 29,640 29,044 2,000,000 29,628 29,032 2,000,000
3 49,321 45,438 44,991 2,000,000 45,408 44,961 2,000,000
4 67,432 61,924 61,626 2,000,000 61,868 61,570 2,000,000
5 86,449 79,128 78,979 2,000,000 79,033 78,884 2,000,000
6 106,416 97,080 97,080 2,000,000 96,932 96,932 2,000,000
7 127,382 115,810 115,810 2,000,000 115,592 115,592 2,000,000
8 149,396 135,351 135,351 2,000,000 135,044 135,044 2,000,000
9 172,511 155,738 155,738 2,000,000 155,316 155,316 2,000,000
10 196,781 177,028 177,028 2,000,000 176,464 176,464 2,000,000
11 222,265 199,268 199,268 2,000,000 198,528 198,528 2,000,000
12 249,023 222,498 222,498 2,000,000 221,544 221,544 2,000,000
13 277,120 246,759 246,759 2,000,000 245,546 245,546 2,000,000
14 306,621 272,094 272,094 2,000,000 270,571 270,571 2,000,000
15 337,597 298,548 298,548 2,000,000 296,654 296,654 2,000,000
16 370,121 326,166 326,166 2,000,000 323,832 323,832 2,000,000
17 404,273 354,993 354,993 2,000,000 352,139 352,139 2,000,000
18 440,131 385,078 385,078 2,000,000 381,606 381,606 2,000,000
19 477,783 416,466 416,466 2,000,000 412,263 412,263 2,000,000
20 517,317 449,206 449,206 2,000,000 444,142 444,142 2,000,000
25 746,690 635,030 635,030 2,000,000 622,958 622,958 2,000,000
30 1,039,436 862,707 862,707 2,000,000 836,346 836,346 2,000,000
35 1,413,061 1,139,133 1,139,133 2,000,000 1,084,120 1,084,120 2,000,000
40 1,889,912 1,473,708 1,473,708 2,000,000 1,367,245 1,367,245 2,000,000
45 2,498,509 1,890,373 1,890,373 2,000,000 1,697,174 1,697,174 2,000,000
50 3,275,249 2,417,383 2,417,383 2,538,252 (3) 2,142,593 2,142,593 2,249,722 (3)
55 4,266,589 3,041,266 3,041,266 3,193,330 (3) 2,666,260 2,666,260 2,799,573 (3)
60 5,531,817 3,812,826 3,812,826 3,850,954 (3) 3,312,144 3,312,144 3,345,266 (3)
65 7,146,605 4,841,925 4,841,925 4,841,925 (3) 4,216,384 4,216,384 4,216,384 (3)
</TABLE>
__________________
(1) Assumes a $14,900 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different
frequency or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
(3) Increase is due to adjustment by the corridor percentage. See "Death
Benefits".
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR J.P. MORGAN SERIES TRUST II. THE ACCUMULATION VALUE, CASH
VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 6% OVER A PERIOD OF YEARS, BUT
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY JP FINANCIAL SEPARATE ACCOUNT C, OR J.P. MORGAN
TRUST II THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A - 17
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
JP FINANCIAL HERITAGE II JOINT AND LAST SURVIVOR
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
<TABLE>
<S> <C> <C>
DEATH BENEFIT OPTION I;
CASH VALUE ACCUMULATION TEST ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 6% (4.40% net)
FEMALE NON-SMOKER ISSUE AGE 35 ASSUMED ANNUAL PREMIUM (1) $14,900
$2,000,000 INITIAL SPECIFIED AMOUNT
</TABLE>
<TABLE>
<CAPTION>
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
-------------------------------------------- -----------------------------------------------
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
---- -------- -------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 15,645 14,503 13,758 2,000,000 14,500 13,755 2,000,000
2 32,072 29,640 29,044 2,000,000 29,628 29,032 2,000,000
3 49,321 45,438 44,991 2,000,000 45,408 44,961 2,000,000
4 67,432 61,924 61,626 2,000,000 61,868 61,570 2,000,000
5 86,449 79,128 78,979 2,000,000 79,033 78,884 2,000,000
6 106,416 97,080 97,080 2,000,000 96,932 96,932 2,000,000
7 127,382 115,810 115,810 2,000,000 115,592 115,592 2,000,000
8 149,396 135,351 135,351 2,000,000 135,044 135,044 2,000,000
9 172,511 155,738 155,738 2,000,000 155,316 155,316 2,000,000
10 196,781 177,028 177,028 2,000,000 176,464 176,464 2,000,000
11 222,265 199,268 199,268 2,000,000 198,528 198,528 2,000,000
12 249,023 222,498 222,498 2,000,000 221,544 221,544 2,000,000
13 277,120 246,759 246,759 2,000,000 245,546 245,546 2,000,000
14 306,621 272,094 272,094 2,000,000 270,571 270,571 2,000,000
15 337,597 298,548 298,548 2,000,000 296,654 296,654 2,000,000
16 370,121 326,166 326,166 2,000,000 323,832 323,832 2,000,000
17 404,273 354,993 354,993 2,000,000 352,139 352,139 2,000,000
18 440,131 385,078 385,078 2,000,000 381,606 381,606 2,000,000
19 477,783 416,466 416,466 2,000,000 412,263 412,263 2,000,000
20 517,317 449,206 449,206 2,000,000 444,142 444,142 2,000,000
25 746,690 635,030 635,030 2,000,000 622,958 622,958 2,000,000
30 1,039,436 862,707 862,707 2,000,000 836,346 836,346 2,000,000
35 1,413,061 1,138,862 1,138,862 2,095,505 (3) 1,084,120 1,084,120 2,000,000
40 1,889,912 1,465,262 1,465,262 2,315,115 (3) 1,361,441 1,361,441 2,151,076 (3)
45 2,498,509 1,835,378 1,835,378 2,551,175 (3) 1,643,407 1,643,407 2,284,336 (3)
50 3,275,249 2,234,820 2,234,820 2,815,873 (3) 1,911,135 1,911,135 2,408,030 (3)
55 4,266,589 2,649,424 2,649,424 3,126,321 (3) 2,141,436 2,141,436 2,526,894 (3)
60 5,531,817 3,100,309 3,100,309 3,441,342 (3) 2,364,711 2,364,711 2,624,829 (3)
65 7,146,605 3,708,166 3,708,166 3,856,493 (3) 2,580,357 2,580,357 2,683,571 (3)
</TABLE>
___________________
(1) Assumes a $14,900 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
(3) Increase is due to adjustment by the corridor percentage. See "Death
Benefits".
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR J.P. MORGAN SERIES TRUST II. THE ACCUMULATION VALUE, CASH
VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 6% OVER A PERIOD OF YEARS, BUT
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY JP FINANCIAL SEPARATE ACCOUNT C, OR J.P. MORGAN
TRUST II THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A - 18
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
JP FINANCIAL HERITAGE II JOINT AND LAST SURVIVOR
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
<TABLE>
<S> <C> <C>
DEATH BENEFIT OPTION I;
GUIDELINE PREMIUM TEST ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 0% (-1.60% net)
FEMALE NON-SMOKER ISSUE AGE 35 ASSUMED ANNUAL PREMIUM (1) $14,900
$2,000,000 INITIAL SPECIFIED AMOUNT
</TABLE>
<TABLE>
<CAPTION>
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
----------------------------------------- ---------------------------------------------
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
---- -------- -------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 15,645 13,670 12,925 2,000,000 13,667 12,922 2,000,000
2 32,072 27,116 26,520 2,000,000 27,105 26,509 2,000,000
3 49,321 40,343 39,896 2,000,000 40,315 39,868 2,000,000
4 67,432 53,351 53,053 2,000,000 53,299 53,001 2,000,000
5 86,449 66,144 65,995 2,000,000 66,057 65,908 2,000,000
6 106,416 78,722 78,722 2,000,000 78,590 78,590 2,000,000
7 127,382 91,089 91,089 2,000,000 90,897 90,897 2,000,000
8 149,396 103,245 103,245 2,000,000 102,977 102,977 2,000,000
9 172,511 115,191 115,191 2,000,000 114,828 114,828 2,000,000
10 196,781 126,929 126,929 2,000,000 126,449 126,449 2,000,000
11 222,265 138,458 138,458 2,000,000 137,837 137,837 2,000,000
12 249,023 149,780 149,780 2,000,000 148,987 148,987 2,000,000
13 277,120 160,907 160,907 2,000,000 159,907 159,907 2,000,000
14 306,621 171,840 171,840 2,000,000 170,594 170,594 2,000,000
15 337,597 182,576 182,576 2,000,000 181,039 181,039 2,000,000
16 370,121 193,112 193,112 2,000,000 191,230 191,230 2,000,000
17 404,273 203,442 203,442 2,000,000 201,151 201,151 2,000,000
18 440,131 213,558 213,558 2,000,000 210,783 210,783 2,000,000
19 477,783 223,451 223,451 2,000,000 220,099 220,099 2,000,000
20 517,317 233,109 233,109 2,000,000 229,072 229,072 2,000,000
25 746,690 277,380 277,380 2,000,000 267,615 267,615 2,000,000
30 1,039,436 312,459 312,459 2,000,000 289,982 289,982 2,000,000
35 1,413,061 330,555 330,555 2,000,000 277,924 277,924 2,000,000
40 1,889,912 312,381 312,381 2,000,000 190,302 190,302 2,000,000
45 2,498,509 206,902 206,902 2,000,000 0 0 0
50 0 0 0 0 0 0 0
55 0 0 0 0 0 0 0
60 0 0 0 0 0 0 0
65 0 0 0 0 0 0 0
</TABLE>
______________________
(1) Assumes a $14,900 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR J.P. MORGAN SERIES TRUST II. THE ACCUMULATION VALUE, CASH
VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE
ACTUAL INVESTMENT RATES OF RETURN AVERAGED 0% OVER A PERIOD OF YEARS, BUT
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY JP FINANCIAL SEPARATE ACCOUNT C, OR J.P. MORGAN
TRUST II THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A - 19
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
JP FINANCIAL HERITAGE II JOINT AND LAST SURVIVOR
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
<TABLE>
<CAPTION>
DEATH BENEFIT OPTION I;
CASH VALUE ACCUMULATION TEST ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 0% (-1.60% net)
FEMALE NON-SMOKER ISSUE AGE 35 ASSUMED ANNUAL PREMIUM (1): $14,900
$2,000,000 INITIAL SPECIFIED AMOUNT
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
---------------------------------------- ---------------------------------------------
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
- ---- -------- -------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 15,645 13,670 12,925 2,000,000 13,667 12,922 2,000,000
2 32,072 27,116 26,520 2,000,000 27,105 26,509 2,000,000
3 49,321 40,343 39,896 2,000,000 40,315 39,868 2,000,000
4 67,432 53,351 53,053 2,000,000 53,299 53,001 2,000,000
5 86,449 66,144 65,995 2,000,000 66,057 65,908 2,000,000
6 106,416 78,722 78,722 2,000,000 78,590 78,590 2,000,000
7 127,382 91,089 91,089 2,000,000 90,897 90,897 2,000,000
8 149,396 103,245 103,245 2,000,000 102,977 102,977 2,000,000
9 172,511 115,191 115,191 2,000,000 114,828 114,828 2,000,000
10 196,781 126,929 126,929 2,000,000 126,449 126,449 2,000,000
11 222,265 138,458 138,458 2,000,000 137,837 137,837 2,000,000
12 249,023 149,780 149,780 2,000,000 148,987 148,987 2,000,000
13 277,120 160,907 160,907 2,000,000 159,907 159,907 2,000,000
14 306,621 171,840 171,840 2,000,000 170,594 170,594 2,000,000
15 337,597 182,576 182,576 2,000,000 181,039 181,039 2,000,000
16 370,121 193,112 193,112 2,000,000 191,230 191,230 2,000,000
17 404,273 203,442 203,442 2,000,000 201,151 201,151 2,000,000
18 440,131 213,558 213,558 2,000,000 210,783 210,783 2,000,000
19 477,783 223,451 223,451 2,000,000 220,099 220,099 2,000,000
20 517,317 233,109 233,109 2,000,000 229,072 229,072 2,000,000
25 746,690 277,380 277,380 2,000,000 267,615 267,615 2,000,000
30 1,039,436 312,459 312,459 2,000,000 289,982 289,982 2,000,000
35 1,413,061 330,555 330,555 2,000,000 277,924 277,924 2,000,000
40 1,889,912 312,381 312,381 2,000,000 190,302 190,302 2,000,000
45 2,498,509 206,902 206,902 2,000,000 0 0 0
50 0 0 0 0 0 0 0
55 0 0 0 0 0 0 0
60 0 0 0 0 0 0 0
65 0 0 0 0 0 0 0
</TABLE>
________________
(1) Assumes a $14,900 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR J.P. MORGAN SERIES TRUST II. THE ACCUMULATION VALUE, CASH
VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE
ACTUAL INVESTMENT RATES OF RETURN AVERAGED 0% OVER A PERIOD OF YEARS, BUT
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY JP FINANCIAL SEPARATE ACCOUNT C, OR J.P. MORGAN
TRUST II THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-20
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
JP FINANCIAL HERITAGE II JOINT AND LAST SURVIVOR
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
<TABLE>
<CAPTION>
DEATH BENEFIT OPTION II;
GUIDELINE PREMIUM TEST ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 12% (10.40% net)
FEMALE NON-SMOKER ISSUE AGE 35 ASSUMED ANNUAL PREMIUM (1): $14,900
$2,000,000 INITIAL SPECIFIED AMOUNT
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
------------------------------------ -------------------------------------
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
- ---- -------- -------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 15,645 15,337 14,592 2,015,337 15,334 14,589 2,015,334
2 32,072 32,264 31,668 2,032,264 32,251 31,655 2,032,251
3 49,321 50,946 50,499 2,050,946 50,914 50,467 2,050,914
4 67,432 71,564 71,266 2,071,564 71,501 71,203 2,071,501
5 86,449 94,317 94,168 2,094,317 94,209 94,060 2,094,209
6 106,416 119,427 119,427 2,119,427 119,256 119,256 2,119,256
7 127,382 147,135 147,135 2,147,135 146,877 146,877 2,146,877
8 149,396 177,722 177,722 2,177,722 177,348 177,348 2,177,348
9 172,511 211,521 211,521 2,211,521 210,995 210,995 2,210,995
10 196,781 248,868 248,868 2,248,868 248,147 248,147 2,248,147
11 222,265 290,134 290,134 2,290,134 289,166 289,166 2,289,166
12 249,023 335,729 335,729 2,335,729 334,450 334,450 2,334,450
13 277,120 386,105 386,105 2,386,105 384,439 384,439 2,384,439
14 306,621 441,761 441,761 2,441,761 439,616 439,616 2,439,616
15 337,597 503,247 503,247 2,503,247 500,513 500,513 2,500,513
16 370,121 571,172 571,172 2,571,172 567,716 567,716 2,567,716
17 404,273 646,203 646,203 2,646,203 641,866 641,866 2,641,866
18 440,131 729,078 729,078 2,729,078 723,667 723,667 2,723,667
19 477,783 820,608 820,608 2,820,608 813,888 813,888 2,813,888
20 517,317 921,689 921,689 2,921,689 913,380 913,380 2,913,380
25 746,690 1,608,738 1,608,738 3,608,738 1,586,046 1,586,046 3,586,046
30 1,039,436 2,734,179 2,734,179 4,734,179 2,676,510 2,676,510 4,676,510
35 1,413,061 4,570,410 4,570,410 6,570,410 4,427,697 4,427,697 6,427,697
40 1,889,912 7,549,593 7,549,593 9,549,593 7,210,778 7,210,778 9,210,778
45 2,498,509 12,343,277 12,343,277 14,343,277 11,557,292 11,557,292 13,557,292
50 3,275,249 19,984,710 19,984,710 21,984,710 18,265,095 18,265,095 20,265,095
55 4,266,589 32,123,482 32,123,482 34,123,482 28,525,040 28,525,040 30,525,040
60 5,531,817 51,512,123 51,512,123 53,512,123 44,364,807 44,364,807 46,364,807
65 7,146,605 82,828,095 82,828,095 84,828,095 66,914,721 66,914,721 68,914,721
</TABLE>
_________________
(1) Assumes a $14,900 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR J.P. MORGAN SERIES TRUST II. THE ACCUMULATION VALUE, CASH
VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE
ACTUAL INVESTMENT RATES OF RETURN AVERAGED 12% OVER A PERIOD OF YEARS, BUT
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY JP FINANCIAL SEPARATE ACCOUNT C, OR J.P. MORGAN
TRUST II THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-21
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
JP FINANCIAL HERITAGE II JOINT AND LAST SURVIVOR
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
<TABLE>
<CAPTION>
DEATH BENEFIT OPTION II;
CASH VALUE ACCUMULATION TEST ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 12% (10.40% net)
FEMALE NON-SMOKER ISSUE AGE 35 ASSUMED ANNUAL PREMIUM (1): $14,900
$2,000,000 INITIAL SPECIFIED AMOUNT
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
---------------------------------------- ---------------------------------------------
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
- ---- -------- -------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 15,645 15,337 14,592 2,015,337 15,334 14,589 2,015,334
2 32,072 32,264 31,668 2,032,264 32,251 31,655 2,032,251
3 49,321 50,946 50,499 2,050,946 50,914 50,467 2,050,914
4 67,432 71,564 71,266 2,071,564 71,501 71,203 2,071,501
5 86,449 94,317 94,168 2,094,317 94,209 94,060 2,094,209
6 106,416 119,427 119,427 2,119,427 119,256 119,256 2,119,256
7 127,382 147,135 147,135 2,147,135 146,877 146,877 2,146,877
8 149,396 177,722 177,722 2,177,722 177,348 177,348 2,177,348
9 172,511 211,521 211,521 2,211,521 210,995 210,995 2,210,995
10 196,781 248,868 248,868 2,248,868 248,147 248,147 2,248,147
11 222,265 290,134 290,134 2,290,134 289,166 289,166 2,289,166
12 249,023 335,729 335,729 2,335,729 334,450 334,450 2,334,450
13 277,120 386,105 386,105 2,386,105 384,439 384,439 2,384,439
14 306,621 441,761 441,761 2,441,761 439,616 439,616 2,439,616
15 337,597 503,247 503,247 2,503,247 500,513 500,513 2,500,513
16 370,121 571,172 571,172 2,571,172 567,716 567,716 2,567,716
17 404,273 646,203 646,203 2,646,203 641,866 641,866 2,641,866
18 440,131 729,078 729,078 2,729,078 723,667 723,667 2,723,667
19 477,783 820,608 820,608 2,820,608 813,888 813,888 2,813,888
20 517,317 921,689 921,689 2,921,689 913,380 913,380 2,913,380
25 746,690 1,607,890 1,607,890 4,196,594 (3) 1,584,317 1,584,317 4,135,068 (3)
30 1,039,436 2,725,905 2,725,905 5,942,474 (3) 2,659,383 2,659,383 5,797,455 (3)
35 1,413,061 4,528,968 4,528,968 8,333,301 (3) 4,342,935 4,342,935 7,991,001 (3)
40 1,889,912 7,390,735 7,390,735 11,677,361 (3) 6,901,176 6,901,176 10,903,858 (3)
45 2,498,509 11,821,783 11,821,783 16,432,278 (3) 10,604,215 10,604,215 14,739,859 (3)
50 3,275,249 18,479,551 18,479,551 23,284,234 (3) 15,768,367 15,768,367 19,868,143 (3)
55 4,266,589 28,240,125 28,240,125 33,323,348 (3) 22,664,225 22,664,225 26,743,785 (3)
60 5,531,817 42,734,301 42,734,301 47,435,075 (3) 32,176,523 32,176,523 35,715,940 (3)
65 7,146,605 66,289,432 66,289,432 68,941,009 (3) 44,964,944 44,964,944 46,964,944 (3)
</TABLE>
_____________________
(1) Assumes a $14,900 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different
frequency or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
(3) Increase is due to adjustment by the corridor percentage. See "Death
Benefits".
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR J.P. MORGAN SERIES TRUST II. THE ACCUMULATION VALUE, CASH
VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF
THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 12% OVER A PERIOD OF YEARS,
BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY JP FINANCIAL SEPARATE ACCOUNT C, OR J.P. MORGAN
TRUST II THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A - 22
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
JP FINANCIAL HERITAGE II JOINT AND LAST SURVIVOR
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
<TABLE>
<CAPTION>
DEATH BENEFIT OPTION II;
GUIDELINE PREMIUM TEST ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 6% (4.40% net)
FEMALE NON-SMOKER ISSUE AGE 35 ASSUMED ANNUAL PREMIUM (1): $14,900
$2,000,000 INITIAL SPECIFIED AMOUNT
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
------------------------------------- -------------------------------------------
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
- ---- -------- -------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 15,645 14,503 13,758 2,014,503 14,500 13,755 2,014,500
2 32,072 29,640 29,044 2,029,640 29,628 29,032 2,029,628
3 49,321 45,438 44,991 2,045,438 45,407 44,960 2,045,407
4 67,432 61,923 61,625 2,061,923 61,865 61,567 2,061,865
5 86,449 79,126 78,977 2,079,126 79,028 78,879 2,079,028
6 106,416 97,076 97,076 2,097,076 96,922 96,922 2,096,922
7 127,382 115,803 115,803 2,115,803 115,576 115,576 2,115,576
8 149,396 135,340 135,340 2,135,340 135,017 135,017 2,135,017
9 172,511 155,720 155,720 2,155,720 155,274 155,274 2,155,274
10 196,781 177,000 177,000 2,177,000 176,399 176,399 2,176,399
11 222,265 199,227 199,227 2,199,227 198,432 198,432 2,198,432
12 249,023 222,439 222,439 2,222,439 221,405 221,405 2,221,405
13 277,120 246,675 246,675 2,246,675 245,350 245,350 2,245,350
14 306,621 271,977 271,977 2,271,977 270,297 270,297 2,270,297
15 337,597 298,386 298,386 2,298,386 296,279 296,279 2,296,279
16 370,121 325,946 325,946 2,325,946 323,323 323,323 2,323,323
17 404,273 354,698 354,698 2,354,698 351,454 351,454 2,351,454
18 440,131 384,683 384,683 2,384,683 380,693 380,693 2,380,693
19 477,783 415,941 415,941 2,415,941 411,055 411,055 2,411,055
20 517,317 448,513 448,513 2,448,513 442,549 442,549 2,442,549
25 746,690 632,453 632,453 2,632,453 617,138 617,138 2,617,138
30 1,039,436 853,958 853,958 2,853,958 817,086 817,086 2,817,086
35 1,413,061 1,110,630 1,110,630 3,110,630 1,022,828 1,022,828 3,022,828
40 1,889,912 1,383,529 1,383,529 3,383,529 1,182,809 1,182,809 3,182,809
45 2,498,509 1,610,755 1,610,755 3,610,755 1,159,693 1,159,693 3,159,693
50 3,275,249 1,645,067 1,645,067 3,645,067 705,706 705,706 2,705,706
55 4,266,589 1,242,874 1,242,874 3,242,874 0 0 0
60 5,531,817 102,605 102,605 2,102,605 0 0 0
65 0 0 0 0 0 0 0
</TABLE>
_________________
(1) Assumes a $14,900 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN MAY
BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT RATES
OF RETURN FOR J.P. MORGAN SERIES TRUST II. THE ACCUMULATION VALUE, CASH VALUE
AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
INVESTMENT RATES OF RETURN AVERAGED 6% OVER A PERIOD OF YEARS, BUT FLUCTUATED
ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN
BE MADE BY JP FINANCIAL SEPARATE ACCOUNT C, OR J.P. MORGAN TRUST II THAT THIS
ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
A - 23
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
JP FINANCIAL HERITAGE II JOINT AND LAST SURVIVOR
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
<TABLE>
<CAPTION>
DEATH BENEFIT OPTION II;
CASH VALUE ACCUMULATION TEST ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 6% (4.40% net)
FEMALE NON-SMOKER ISSUE AGE 35 ASSUMED ANNUAL PREMIUM (1): $14,900
$2,000,000 INITIAL SPECIFIED AMOUNT
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
---------------------------------------- ----------------------------------------
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
- ---- -------- -------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 15,645 14,503 13,758 2,014,503 14,500 13,755 2,014,500
2 32,072 29,640 29,044 2,029,640 29,628 29,032 2,029,628
3 49,321 45,438 44,991 2,045,438 45,407 44,960 2,045,407
4 67,432 61,923 61,625 2,061,923 61,865 61,567 2,061,865
5 86,449 79,126 78,977 2,079,126 79,028 78,879 2,079,028
6 106,416 97,076 97,076 2,097,076 96,922 96,922 2,096,922
7 127,382 115,803 115,803 2,115,803 115,576 115,576 2,115,576
8 149,396 135,340 135,340 2,135,340 135,017 135,017 2,135,017
9 172,511 155,720 155,720 2,155,720 155,274 155,274 2,155,274
10 196,781 177,000 177,000 2,177,000 176,399 176,399 2,176,399
11 222,265 199,227 199,227 2,199,227 198,432 198,432 2,198,432
12 249,023 222,439 222,439 2,222,439 221,405 221,405 2,221,405
13 277,120 246,675 246,675 2,246,675 245,350 245,350 2,245,350
14 306,621 271,977 271,977 2,271,977 270,297 270,297 2,270,297
15 337,597 298,386 298,386 2,298,386 296,279 296,279 2,296,279
16 370,121 325,946 325,946 2,325,946 323,323 323,323 2,323,323
17 404,273 354,698 354,698 2,354,698 351,454 351,454 2,351,454
18 440,131 384,683 384,683 2,384,683 380,693 380,693 2,380,693
19 477,783 415,941 415,941 2,415,941 411,055 411,055 2,411,055
20 517,317 448,513 448,513 2,448,513 442,549 442,549 2,442,549
25 746,690 632,453 632,453 2,632,453 617,138 617,138 2,617,138
30 1,039,436 853,958 853,958 2,853,958 817,086 817,086 2,817,086
35 1,413,061 1,110,630 1,110,630 3,110,630 1,022,828 1,022,828 3,022,828
40 1,889,912 1,383,529 1,383,529 3,383,529 1,182,809 1,182,809 3,182,809
45 2,498,509 1,610,755 1,610,755 3,610,755 1,159,693 1,159,693 3,159,693
50 3,275,249 1,645,067 1,645,067 3,645,067 705,706 705,706 2,705,706
55 4,266,589 1,242,874 1,242,874 3,242,874 0 0 0
60 5,531,817 102,605 102,605 2,102,605 0 0 0
65 0 0 0 0 0 0 0
</TABLE>
_________________
(1) Assumes a $14,900 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR J.P. MORGAN SERIES TRUST II. THE ACCUMULATION VALUE, CASH
VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE
ACTUAL INVESTMENT RATES OF RETURN AVERAGED 6% OVER A PERIOD OF YEARS, BUT
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY JP FINANCIAL SEPARATE ACCOUNT C, OR J.P. MORGAN
TRUST II THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-24
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
JP FINANCIAL HERITAGE II JOINT AND LAST SURVIVOR
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
<TABLE>
<CAPTION>
DEATH BENEFIT OPTION II;
GUIDELINE PREMIUM TEST ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 0% (-1.60% net)
FEMALE NON-SMOKER ISSUE AGE 35 ASSUMED ANNUAL PREMIUM (1): $14,900
$2,000,000 INITIAL SPECIFIED AMOUNT
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
-------------------------------------- ----------------------------------------
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
- ---- -------- -------- -------- --------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 15,645 13,670 12,925 2,013,670 13,667 12,922 2,013,667
2 32,072 27,116 26,520 2,027,116 27,104 26,508 2,027,104
3 49,321 40,342 39,895 2,040,342 40,314 39,867 2,040,314
4 67,432 53,350 53,052 2,053,350 53,297 52,999 2,053,297
5 86,449 66,142 65,993 2,066,142 66,053 65,904 2,066,053
6 106,416 78,719 78,719 2,078,719 78,583 78,583 2,078,583
7 127,382 91,084 91,084 2,091,084 90,884 90,884 2,090,884
8 149,396 103,236 103,236 2,103,236 102,957 102,957 2,102,957
9 172,511 115,178 115,178 2,115,178 114,798 114,798 2,114,798
10 196,781 126,910 126,910 2,126,910 126,405 126,405 2,126,405
11 222,265 138,432 138,432 2,138,432 137,774 137,774 2,137,774
12 249,023 149,743 149,743 2,149,743 148,899 148,899 2,148,899
13 277,120 160,855 160,855 2,160,855 159,787 159,787 2,159,787
14 306,621 171,771 171,771 2,171,771 170,433 170,433 2,170,433
15 337,597 182,484 182,484 2,182,484 180,825 180,825 2,180,825
16 370,121 192,992 192,992 2,192,992 190,950 190,950 2,190,950
17 404,273 203,285 203,285 2,203,285 200,789 200,789 2,200,789
18 440,131 213,356 213,356 2,213,356 210,317 210,317 2,210,317
19 477,783 223,192 223,192 2,223,192 219,503 219,503 2,219,503
20 517,317 232,778 232,778 2,232,778 228,315 228,315 2,228,315
25 746,690 276,352 276,352 2,276,352 265,317 265,317 2,265,317
30 1,039,436 309,560 309,560 2,309,560 283,753 283,753 2,283,753
35 1,413,061 322,826 322,826 2,322,826 262,283 262,283 2,262,283
40 1,889,912 293,192 293,192 2,293,192 157,097 157,097 2,157,097
45 2,498,509 165,723 165,723 2,165,723 0 0 0
50 0 0 0 0 0 0 0
55 0 0 0 0 0 0 0
60 0 0 0 0 0 0 0
65 0 0 0 0 0 0 0
</TABLE>
_________________
(1) Assumes a $14,900 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR J.P. MORGAN SERIES TRUST II. THE ACCUMULATION VALUE, CASH
VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE
ACTUAL INVESTMENT RATES OF RETURN AVERAGED 0% OVER A PERIOD OF YEARS, BUT
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY JP FINANCIAL SEPARATE ACCOUNT C, OR J.P. MORGAN
TRUST II THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-25
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
JP FINANCIAL HERITAGE II JOINT AND LAST SURVIVOR
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
<TABLE>
<CAPTION>
DEATH BENEFIT OPTION II;
CASH VALUE ACCUMULATION TEST ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 0% (-1.60% net)
FEMALE NON-SMOKER ISSUE AGE 35 ASSUMED ANNUAL PREMIUM (1) $14,900
$2,000,000 INITIAL SPECIFIED AMOUNT
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
-------------------------------------- --------------------------------------------
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2) VALUE(2) VALUE(2) BENEFIT(2)
- ----- --------- -------- -------- ---------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 15,645 13,670 12,925 2,013,670 13,667 12,922 2,013,667
2 32,072 27,116 26,520 2,027,116 27,104 26,508 2,027,104
3 49,321 40,342 39,895 2,040,342 40,314 39,867 2,040,314
4 67,432 53,350 53,052 2,053,350 53,297 52,999 2,053,297
5 86,449 66,142 65,993 2,066,142 66,053 65,904 2,066,053
6 106,416 78,719 78,719 2,078,719 78,583 78,583 2,078,583
7 127,382 91,084 91,084 2,091,084 90,884 90,884 2,090,884
8 149,396 103,236 103,236 2,103,236 102,957 102,957 2,102,957
9 172,511 115,178 115,178 2,115,178 114,798 114,798 2,114,798
10 196,781 126,910 126,910 2,126,910 126,405 126,405 2,126,405
11 222,265 138,432 138,432 2,138,432 137,774 137,774 2,137,774
12 249,023 149,743 149,743 2,149,743 148,899 148,899 2,148,899
13 277,120 160,855 160,855 2,160,855 159,787 159,787 2,159,787
14 306,621 171,771 171,771 2,171,771 170,433 170,433 2,170,433
15 337,597 182,484 182,484 2,182,484 180,825 180,825 2,180,825
16 370,121 192,992 192,992 2,192,992 190,950 190,950 2,190,950
17 404,273 203,285 203,285 2,203,285 200,789 200,789 2,200,789
18 440,131 213,356 213,356 2,213,356 210,317 210,317 2,210,317
19 477,783 223,192 223,192 2,223,192 219,503 219,503 2,219,503
20 517,317 232,778 232,778 2,232,778 228,315 228,315 2,228,315
25 746,690 276,352 276,352 2,276,352 265,317 265,317 2,265,317
30 1,039,436 309,560 309,560 2,309,560 283,753 283,753 2,283,753
35 1,413,061 322,826 322,826 2,322,826 262,283 262,283 2,262,283
40 1,889,912 293,192 293,192 2,293,192 157,097 157,097 2,157,097
45 2,498,509 165,723 165,723 2,165,723 0 0 0
50 0 0 0 0 0 0 0
55 0 0 0 0 0 0 0
60 0 0 0 0 0 0 0
65 0 0 0 0 0 0 0
</TABLE>
__________________
(1) Assumes a $14,900 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(2) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT RATES OF RETURN
MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND DIFFERENT INVESTMENT
RATES OF RETURN FOR J.P. MORGAN SERIES TRUST II. THE ACCUMULATION VALUE, CASH
VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE
ACTUAL INVESTMENT RATES OF RETURN AVERAGED 0% OVER A PERIOD OF YEARS, BUT
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY JP FINANCIAL SEPARATE ACCOUNT C, OR J.P. MORGAN
TRUST II THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-26
<PAGE>
PART II
UNDERTAKINGS TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned Registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore, or hereafter duly adopted pursuant to
authority conferred in that section.
UNDERTAKING REGARDING INDEMNIFICATION
Pursuant to Rule 484(b)(1) of the Securities Act of 1933, insofar as
indemnification for liability arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the Registrant, the
Registrant has been advised that in the option of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer of controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
REPRESENTATIONS REGARDING FEES AND CHARGES
The fees and charges deducted under the contract, in the aggregate, are
reasonable in relation to the services rendered, the expenses expected to be
incurred and the risks assumed by Chubb Life Insurance Company of America.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following pages and documents:
The facing sheet
The prospectus consisting of 84 pages
The undertaking to file reports
The undertaking pursuant to Rule 484(b)(1) under the Securities Act of 1933
regarding indemnification/2/
The representations regarding fees and charges
The signatures
Written consents of the following persons:
(a) Richard Dielensnyder, FSA, MAAA, contained in Exhibit 6 below.
(b) Ernst & Young LLP
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) Certified Copy of Resolution of the Executive Committee of the Board of
Directors of Chubb Life Insurance Company of America establishing Chubb Separate
Account C./3/ (Incorporated by reference to Exhibit 1(a) of Post-Effective
Amendment No. 2 to the Registration Statement on Form S-6 for Chubb Separate
Account C, filed February 23, 1996, Registation No. 33-72830).
(b) Not Applicable
(c) (i) Form of Distribution Agreement among Chubb Life Insurance Company
of America, Chubb Separate Account C, and Chubb Securities Corporation./3/
(Incorporated by reference to Exhibit 1(c)(i) of Post-Effective Amendment No. 2
to the Registration Statement on Form S-6 for Chubb Separate Account C, filed
February 23, 1996, Registation No. 33-72830).
(ii) Specimen Variable Contracts Selling Agreement between Chubb
Securities Corporation and Selling Broker-Dealers./3/ (Incorporated by reference
to Exhibit 1(c)(ii) of Post-Effective Amendment No. 2 to the Registration
Statement on Form S-6 for Chubb Separate Account C, filed February 23, 1996,
Registation No. 33-72830).
(iii) Specimen District Manager's Agreement of Chubb Securities
Corporation./3/ (Incorporated by reference to Exhibit 1(c)(iii) of Post-
Effective Amendment No. 2 to the Registration Statement on Form S-6 for Chubb
Separate Account C, filed February 23, 1996, Registation No. 33-72830).
(iv) Specimen Registered Representative's Agreement of Chubb Securities
Corporation./3/ (Incorporated by reference to Exhibit 1(c)(iv) of Post-Effective
Amendment No. 2 to the Registration Statement on Form S-6 for Chubb Separate
Account C, filed February 23, 1996, Registation No. 33-72830).
(v) Schedule of Commissions./3/ (Incorporated by reference to Exhibit
1(c)(v) of Post-Effective Amendment No. 2 to the Registration Statement on Form
S-6 for Chubb Separate Account C, filed February 23, 1996, Registation No. 33-
72830).
(d) Not Applicable
(e) (i) Specimen flexible premium variable life insurance policy./3/
(Incorporated by reference to Exhibit 1(e)(i) of Post-Effective Amendment No. 2
to the Registration Statement on Form S-6 for Chubb Separate Account C, filed
February 23, 1996, Registation No. 33-72830).
(ii) Specimen joint and last survivor flexible premium variable life
insurance policy./3/ (Incorporated by reference to Exhibit 1(e)(ii) of Post-
Effective Amendment No. 2 to the Registration Statement on Form S-6 for Chubb
Separate Account C, filed February 23, 1996, Registation No. 33-72830).
(iii) Forms of Riders/3/ (Incorporated by reference to Exhibit
1(e)(iii) of Post-Effective Amendment No. 2 to the Registration Statement on
Form S-6 for Chubb Separate Account C, filed February 23, 1996, Registation No.
33-72830).
<PAGE>
(f) (i) Amended and Restated Charter, with all amendments, of Chubb Life
Insurance Company of America (incorporated by reference to Exhibit 1(f)(i) of
Chubb Separate Account A's Post Effective Amendment No. 6 to the Registration
Statement on Form S-6, filed February 28, 1992, Registration No. 33-7734).
(ii) By-Laws of Chubb Life Insurance Company of America (incorporated
by reference to Exhibit 1(f)(ii) of Chubb Separate Account A's Post Effective
Amendment No. 6 to the Registration Statement on Form S-6, filed February 28,
1992, Registration No. 33-7734).
(g) Not Applicable
(h)
(i) Investment Management Agreement between Chubb Series Trust and
Chubb Investment Advisory Corporation with respect to the Resolute Treasury
Money Market Portfolio./1/
(ii) Investment Management Agreement tetween Chubb Series Trust and
Chubb Investment Advisory Corporation with respect to the Resolute Bond
Portfolio./1/
(iii) Investment Management Agreement between Chubb Series Trust and
Chubb Investment Advisory Corporation with respect to the Resolute Equity
Portfolio./1/
(iv) Investment Management Agreement tetween Chubb Series Trust and
Chubb Investment Advisory Corporation with respect to the Resolute Small Company
Portfolio./1/
(v) Form of Investment Management Agreement between Chubb Series Trust
and Chubb Investment Advisory Corporation with respect to the Resolute
International Equity Portfolio./1/
(vi) Sub-Investment Management Agreement among Chubb Series Trust,
Chubb Investment Advisory Corporation and Morgan Guaranty Trust Company of New
York with respect to the Resolute Treasury Money Market Portfolio./1/
(vii) Sub-Investment Management Agreement among Chubb Series Trust,
Chubb Investment Advisory Corporation and Morgan Guaranty Trust Company of New
York with respect to the Resolute Bond Portfolio./1/
(viii) Sub-Investment Management Agreement among Chubb Series Trust,
Chubb Investment Advisory Corporation and Morgan Guaranty Trust Company of New
York with respect to the Resolute Equity Portfolio./1/
(ix) Sub-Investment Management Agreement among Chubb Series Trust,
Chubb Investment Advisory Corporation and Morgan Guaranty Trust Company of New
York with respect to the Resolute Small Company Portfolio./1/
(x) Sub-Investment Management Agreement among Chubb Series Trust,
Chubb Investment Advisory Corporation and Morgan Guaranty Trust Company of New
Yoerk with respect to the Resolute International Equity Portfolio./1/
(xi) Custodial Services Agreement between Chubb Series Trust, and
Morgan Guaranty Trust Company of New York./2/
(i) Not applicable
(j) Application /2/
2. Specimen Policy (Same as 1(e))./3/
<PAGE>
3. Opinion of counsel as to securities being registered./3/
4. Not applicable.
5. Not applicable.
6. Actuarial opinions and consents of Michael J. LeBoeuf, FSA, MAAA./3/
7. Consent of Ernst & Young LLP
8. Procedures Memorandum pursuant to Rule 6e-3(T)(b)(12)(iii) under the
1940 Act (Incorporated by reference to Post-Effective Amendment No. 5 to
the Registration Statement on Form S-6 of Chubb Separate Account C,
filed April 29, 1997, File No. 33-72830).
9. Representations, description and undertakings regarding mortality and
expense risk charge, pursuant to Rule 6e-3(T)(b)(13)(iii)(F)./3/
10. Form of Reinsurance Agreement./3/
11. Powers of Attorney./3/
12. Memorandum regarding reliance on Order of the Commission./3/
- -------------
/1/ Incorporated by reference to Registrant's Pre-effective Amendment No. 2 to
the Registration Statement on Form N-1A, of Chubb Series Trust filed on
July 22, 1994, File No. 33-72834.
/2/ Incorporated by reference to the Registration Statement on Form N-1A of
Chubb Series Trust, filed on December 10, 1993, File No. 33-72834.
/3/ Incorporated by reference to Post-Effective Amendment No. 3 to the
Registration Statement on form S-6 of Chubb Separate Account C, filed
February 28, 1996, File No. 33-72830.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
JPF Separate Account C, certifies that is meets the requirements of Securities
Act Rule 485(b) for effectiveness of this Post-Effective Amendment No. 6 to the
Registration Statement and has duly caused this Post-Effective Amendment No. 6
to the Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, and its seal to be hereunto affixed and attested, all
in Concord, New Hampshire, on the 22nd day of April, 1998.
(Seal)
JPF Separate Account C
(Registrant)
Jefferson Pilot Financial
Life Insurance Company
(Depositor)
By: /s/ Charles C. Cornelio
---------------------------------
Charles C. Cornelio
Title: Executive Vice President
------------------------------
Attest:
/s/ Ronald R. Angarella
----------------------------------------
Ronald R. Angarella
Senior Vice President
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Jefferson
Pilot Life Insurance Company has duly caused this Post-Effective Amendment No. 6
to the Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, and its seal to be hereunto affixed and attested, all
in Concord, New Hampshire on the 22nd day of April, 1998.
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
By: /s/ Charles C. Cornelio
-----------------------------------------
Charles C. Cornelio
Title: Executive Vice President
-------------------------------------
ATTEST:
/s/ Ronald R. Angarella
- ------------------------------------------
Ronald R. Angarella
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
Signatures Title Date
---------- ----- ----
/s/ Dennis R. Glass
- ------------------------------------ Director April 22, 1998
Dennis R. Glass
/s/ Kenneth C. Mlekush
- ------------------------------------ Director April 22, 1998
Kenneth C. Mlekush
/s/ David A. Stonecipher
- ------------------------------------ Director April 22, 1998
David A. Stonecipher
/s/ E. Jay Yelton
- ------------------------------------ Director April 22, 1998
E. Jay Yelton
<PAGE>
EXHIBIT INDEX
7. Consent of Ernst & Young LLP
Independent Auditors.......................................
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<RESTATED>
<CIK> 0000916044
<NAME> CHUBB SEPARATE ACCOUNT C
<SERIES>
<NUMBER> 1
<NAME> JPM TREASURY MONEY MARKET DIVISION
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 456,739
<INVESTMENTS-AT-VALUE> 466,536
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 466,536
<PAYABLE-FOR-SECURITIES> 17
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 17
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 456,722
<SHARES-COMMON-STOCK> 41,245
<SHARES-COMMON-PRIOR> 31,902
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9,797
<NET-ASSETS> 466,519
<DIVIDEND-INCOME> 136
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 2,578
<NET-INVESTMENT-INCOME> (2,442)
<REALIZED-GAINS-CURRENT> (1,080)
<APPREC-INCREASE-CURRENT> 18,936
<NET-CHANGE-FROM-OPS> 15,414
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 16,293
<NUMBER-OF-SHARES-REDEEMED> 6,950
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 119,498
<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> 406,770
<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>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000916044
<NAME> CHUBB SEPARATE ACCOUNT C
<SERIES>
<NUMBER> 2
<NAME> JPM BOND DIVISION
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 5,706,281
<INVESTMENTS-AT-VALUE> 6,028,073
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,028,073
<PAYABLE-FOR-SECURITIES> 215
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 215
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,706,066
<SHARES-COMMON-STOCK> 470,677
<SHARES-COMMON-PRIOR> 145,282
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 321,792
<NET-ASSETS> 6,027,858
<DIVIDEND-INCOME> 181,889
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 34,460
<NET-INVESTMENT-INCOME> 147,429
<REALIZED-GAINS-CURRENT> 4,420
<APPREC-INCREASE-CURRENT> 322,800
<NET-CHANGE-FROM-OPS> 474,649
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 333,164
<NUMBER-OF-SHARES-REDEEMED> 7,769
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 4,315,884
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 3,369,916
<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>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000916044
<NAME> CHUBB SEPARATE ACCOUNT C
<SERIES>
<NUMBER> 3
<NAME> JPM EQUITY DIVISION
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 8,314,692
<INVESTMENTS-AT-VALUE> 8,889,907
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8,889,907
<PAYABLE-FOR-SECURITIES> 317
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 317
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 8,314,375
<SHARES-COMMON-STOCK> 438,055
<SHARES-COMMON-PRIOR> 266,050
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 575,215
<NET-ASSETS> 8,889,590
<DIVIDEND-INCOME> 1,524,354
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 53,370
<NET-INVESTMENT-INCOME> 1,470,984
<REALIZED-GAINS-CURRENT> 20,069
<APPREC-INCREASE-CURRENT> 204,260
<NET-CHANGE-FROM-OPS> 1,695,313
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 248,888
<NUMBER-OF-SHARES-REDEEMED> 76,883
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 4,625,992
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 6,576,595
<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>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000916044
<NAME> CHUBB SEPARATE ACCOUNT C
<SERIES>
<NUMBER> 4
<NAME> JPM SMALL COMPANY DIVISION
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 4,246,324
<INVESTMENTS-AT-VALUE> 4,553,534
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,553,534
<PAYABLE-FOR-SECURITIES> 162
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 162
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,246,162
<SHARES-COMMON-STOCK> 234,144
<SHARES-COMMON-PRIOR> 130,645
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 307,210
<NET-ASSETS> 4,553,372
<DIVIDEND-INCOME> 590,522
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 26,511
<NET-INVESTMENT-INCOME> 564,011
<REALIZED-GAINS-CURRENT> 4,007
<APPREC-INCREASE-CURRENT> 221,164
<NET-CHANGE-FROM-OPS> 789,182
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 169,487
<NUMBER-OF-SHARES-REDEEMED> 65,988
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,465,308
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 3,320,718
<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>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000916044
<NAME> CHUBB SEPARATE ACCOUNT C
<SERIES>
<NUMBER> 5
<NAME> JPM INTERNATIONAL EQUITY DIVISION
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 6,674,886
<INVESTMENTS-AT-VALUE> 6,341,666
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,341,666
<PAYABLE-FOR-SECURITIES> 226
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 226
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,674,660
<SHARES-COMMON-STOCK> 482,055
<SHARES-COMMON-PRIOR> 318,930
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (333,220)
<NET-ASSETS> 6,341,440
<DIVIDEND-INCOME> 902,867
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 42,648
<NET-INVESTMENT-INCOME> 860,219
<REALIZED-GAINS-CURRENT> 42,615
<APPREC-INCREASE-CURRENT> (613,175)
<NET-CHANGE-FROM-OPS> 289,659
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 233,614
<NUMBER-OF-SHARES-REDEEMED> 70,489
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,336,373
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 5,173,252
<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>
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our reports dated February 9, 1998, for Chubb Life Insurance Company of
America and subsidiaries and March 13, 1998 for Chubb Separate Account C in
Post-Effective Amendment No. 6 to the Registration Statement (Form S-6 No.
33-72830) and related Prospectus for the registration of units of interest in
the Chubb Separate Account C under individual and survivorship flexible premium
variable life insurance policies offered by Chubb Life Insurance Company of
America.
ERNST & YOUNG LLP
Greensboro, North Carolina
April 22, 1998
