AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 28, 1999
FILE NO. 33-72830
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 7
TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES OF UNIT
INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
------------------
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
------------------
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
[ ] IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (B)
[X] ON MAY 1, 1999 PURSUANT TO PARAGRAPH (B)
[ ] 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(I)
[ ] 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 SURVIVORSHIP
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICIES.
F. PROPOSED MAXIMUM OFFERING PRICE TO THE PUBLIC OF THE SECURITIES BEING
REGISTERED:
REGISTRANT 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, 1998 ON FEBRUARY
26, 1999.
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
Investment Company Act of 1940, with respect to the policy described in the
Prospectus.
================================================================================
<PAGE>
Prospectus: May 1, 1999
The JP Financial Heritage Series
JPF 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 ("We" or
"JP Financial" or "the Company"): an individual flexible premium variable life
insurance policy form ("JPF Heritage I") and a survivorship flexible premium
variable life insurance policy form ("JPF Heritage II") (collectively the
"Policy" or "Policies"). The Policies provide life insurance and pay a benefit,
as described in this Prospectus, upon surrender or death with JPF Heritage I
and upon surrender or Second Death with JPF Heritage II. The Policies allow
flexible premium payments, Policy Loans, Withdrawals, and a choice of two Death
Benefit Options. You may invest your account values on either a fixed or
variable or combination of fixed and variable basis. You may allocate Your Net
Premiums to JPF Separate Account C (the "Separate Account"), and/or the General
Account, or both Accounts. The Divisions of Separate Account C support the
benefits provided by the variable portion of the Policies. The Accumulation
Value allocated to each Division is not guaranteed and will vary with the
investment performance of the associated Fund. Net Premiums allocated to the
General Account will accumulate at rates of interest We determine; such rates
will not be less than 4% per year. Your Policy may lapse if the Cash Value is
insufficient to pay a Monthly Deduction. We will send premium reminder notices
for Planned Periodic Premiums and for premiums required to continue the Policy
in force. If the Policy lapses, You may reinstate it.
The Policies have a free look period during which You may return the Policies.
We will refund Your Premium (See "Right of Policy Examination").
This Prospectus also describes the Divisions used to fund the Policies through
the Separate Account. Each Division invests exclusively in one of the following
Portfolios:
J.P. Morgan Treasury Money
Market Portfolio
J.P. Morgan Bond Portfolio
J.P. Morgan Equity Portfolio
J.P. Morgan Small Company Portfolio
J.P. Morgan International
Opportunities Portfolio
Not all Divisions may be available under all Policies or in all jurisdictions.
You may obtain the current Prospectus and Statement of Additional Information
("SAI") for any of the Portfolios by calling (800) 258-3648 x7719.
Replacing existing insurance or supplementing an existing flexible premium
variable life insurance policy with the Policies may not be to your advantage.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES FOR
THE FUNDS. BOTH THIS PROSPECTUS AND THE UNDERLYING FUND PROSPECTUS SHOULD BE
READ AND RETAINED FOR FUTURE REFERENCE.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The 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.
This prospectus and other information about JPF Separate Account C required to
be filed with the Securities and Exchange Commission can be found in the SEC's
web site at http://www.sec.gov.
<PAGE>
table of contents
- --------------------------------------------------------------------
<TABLE>
<CAPTION>
Page
-----
<S> <C>
DEFINITIONS ...................................... 3
POLICY SUMMARY ................................... 4
THE SEPARATE ACCOUNT ............................. 5
CHARGES & FEES ................................... 6
Charges & Fees Assessed Against
Premiums ....................................... 6
Charges & Fees Assessed Against
Accumulation Value ............................. 6
Charges & Fees Assessed Against the
Separate Account ............................... 7
Charges & Fees Assessed Against the
Underlying Funds ............................... 7
Charges Deducted Upon Surrender ................. 7
Other Charges ................................... 8
ALLOCATION OF PREMIUMS ........................... 8
The Portfolios .................................. 8
Investment Adviser for the Fund ................. 8
Mixed and Shared Funding; Conflicts of
Interest ....................................... 8
Fund Additions, Deletions or Substitutions ...... 9
General Account ................................. 9
POLICY CHOICES ................................... 10
General ......................................... 10
Premium Payments ................................ 10
Guaranteed Death Benefit Premium ................ 10
Modified Endowment .............................. 10
Compliance with the Internal Revenue Code 11
Death Benefit Options ........................... 11
Maturity of the Policy .......................... 14
Transfers and Allocations to Funding
Options ........................................ 14
Telephone Transfers, Loans and
Reallocations .................................. 14
Automated Transfers (Dollar Cost
Averaging and Portfolio Rebalancing) ........... 15
Combined Requests ............................... 16
POLICY VALUES .................................... 16
Accumulation Value .............................. 16
Unit Values ..................................... 16
Net Investment Factor ........................... 17
Surrender Value ................................. 17
POLICY RIGHTS .................................... 17
Surrenders ...................................... 17
Withdrawals ..................................... 17
Policy Lapse and Grace Period ................... 18
Reinstatement of a Lapsed Policy ................ 18
Right to Defer Payment .......................... 18
Policy Loans .................................... 19
POLICY CHANGES ................................... 20
<CAPTION>
Page
-----
<S> <C>
Increase or Decrease in Specified Amount ........ 20
Change in Death Benefit Option .................. 20
RIGHT OF POLICY EXAMINATION ...................... 20
SUPPLEMENTAL BENEFITS ............................ 21
DEATH BENEFIT .................................... 21
POLICY SETTLEMENT ................................ 22
Settlement Options .............................. 22
Calculation of Settlement Option Values ......... 22
THE COMPANY ...................................... 22
DIRECTORS AND OFFICERS ........................... 23
ADDITIONAL INFORMATION ........................... 24
Reports to Policyowners ......................... 24
Right to Instruct Voting of Fund Shares ......... 25
Disregard of Voting Instructions ................ 25
State Regulation ................................ 25
Legal Matters ................................... 25
The Registration Statement ...................... 26
Financial Statements ............................ 26
Employee Benefit Plans .......................... 26
Distribution of the Policy ...................... 26
Independent Auditors ............................ 26
Year 2000 ....................................... 26
Group or Sponsored Arrangements ................. 27
TAX MATTERS ...................................... 28
General ......................................... 28
Federal Tax Status of the Company ............... 28
Life Insurance Qualification .................... 28
Charges for JP Financial Income Taxes ........... 31
MISCELLANEOUS POLICY PROVISIONS .................. 31
The Policy ...................................... 31
Payment of Benefits ............................. 31
Changes in Owner and Beneficiary;
Assignment ..................................... 31
Illustration of Benefits and Values ............. 32
Protection of Proceeds .......................... 32
Nonparticipation ................................ 32
Additions, Deletion or Substitution of
Investments .................................... 32
Premium Deposit Fund ............................ 32
Suicide and Incontestability .................... 32
Misstatements ................................... 32
Determination of Charges ........................ 32
ILLUSTRATIONS OF ACCUMULATION
VALUES, CASH VALUES AND DEATH
BENEFITS ........................................ A-1
FINANCIAL STATEMENTS OF THE
COMPANY ......................................... F-1
FINANCIAL STATEMENTS OF THE
SEPARATE ACCOUNT ................................ F-19
</TABLE>
- --------------------------------------------------------------------------------
This Prospectus does not constitute an offering in any state 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 prospectuses of the
funds or the Statements of Additional Information of the funds.
- --------------------------------------------------------------------------------
2
<PAGE>
definitions
- --------------------------------------------------------------------------------
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(s') age(s) at his or her nearest birthday.
Allocation Date--The date when the initial Net Premium is placed in the
Divisions and the General Account as instructed by the Policyowner in the
application. The Allocation Date is 25 days from the date the Company mails the
Policy to the agent for delivery to the Policyowner. However, if the insured is
in a substandard risk class, the Allocation Date will be the date the Company
receives from You all administrative items needed to activate the Policy.
Attained Age(s)--The age(s) of the Insured(s) at the last Policy anniversary.
Beneficiary--The person you designate in the application to receive the Death
Benefit proceeds. If changed, the Beneficiary is as shown in the latest change
filed with the Company. If no Beneficiary survives the Insured, You or Your
estate will be the Beneficiary. The Beneficiary's interest may be subject to
that of any assignee.
Cash Value--The Accumulation Value less any Surrender Charge. This amount less
any Policy Debt is payable to You on the earlier of surrender of the Policy or
the Maturity Date.
Code--The Internal Revenue Code of 1986, as amended.
Company--Jefferson Pilot Financial Insurance Company.
Cost of Insurance--A charge related to the Company's expected mortality cost
for Your basic insurance coverage under the Policy, not including any
supplemental benefit provision that You may elect through a Policy rider.
Date of Receipt--Any Company business day prior to 4:00 P.M. Eastern time, on
which a notice or premium payment is received at the Company's home office.
Death Benefit--The amount which is payable upon the death of the Insured under
JP Financial Heritage I and the death of the last surviving Insured under JP
Financial Heritage II, adjusted as provided in the Policy.
Death Benefit Options--Either of the two methods of determining the Death
Benefit.
Division--A separate division of Separate Account C which invests only in the
shares of a specified Portfolio of a Fund.
Fund--An open-end management investment company (mutual fund) whose shares are
purchased by the Separate Account to fund the benefits provided by the Policy.
General Account--A non-variable funding option available in the Policy that
guarantees a minimum interest rate of 4% per year.
Grace Period--The 61-day period beginning on the Monthly Anniversary Day on
which the Policy's Cash Value less any Policy Debt is insufficient to cover the
current monthly deduction, unless the cumulative minimum premium requirement
has been met. The Policy will lapse without value at the end of the 61-day
period unless a sufficient payment is received by the Company.
Home Office--The Company's principal executive offices at One Granite Place,
Concord, New Hampshire 03301.
Insured(s)--The person(s) upon whose life the Policy is issued.
Issue Age(s)--The Insured's(s') age(s) at his or her nearest birthday on the
Policy Date.
Issue Date--The effective date on which coverage begins under the Policy.
Joint Equal Age--A calculation pursuant to a formula which converts the
specific age, gender and underwriting classifications of the two Insureds into
one age. On JP Financial Heritage II, 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 JP Financial Heritage I
and the younger Insured's 100th birthday for JP Financial Heritage II.
3
<PAGE>
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 DAC Tax Charge and a 3% Sales Charge, plus interest earned prior to the
Allocation Date.
Policy Date--The date set forth in the Policy and 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
28th of such month. You may request the Policy Date. If You do not request a
date, it is the date the Policy is issued.
Policy Debt--The sum of all unpaid policy loans and accrued interest thereon.
Policyowner--The person or entity so designated in the application or as
subsequently changed who may exercise all rights under the Policy.
Portfolio--A separate investment series of one of the Funds.
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; or (d) any other proof satisfactory to JP
Financial.
Second Death--Death of the Surviving Insured.
SEC--The United States Securities and Exchange Commission.
Separate Account C--JPF Separate Account C, a separate investment account
established by the Company for the purpose of funding the Policy.
Specified Amount--The amount chosen by the Policyowner, which is the minimum
death benefit payable under the Policy.
State--"State" means any State of the United States, the District of Columbia,
Puerto Rico, Guam, the Virgin Islands or any other possession of the United
States.
Surrender Charge--An amount retained by the Company upon surrender or
withdrawal of the Policy.
Surrender Value--Cash value less any Policy Debt.
Surviving Insured--The Insured living after one of the Insureds dies.
Valuation Date--The date and time at which the Accumulation Value of a variable
investment option is calculated. Currently, this calculation occurs after the
close of business of the New York Stock Exchange on any normal business day,
Monday through Friday, that the Company and the New York Stock Exchange are
open. In addition to being closed on all federal holidays, the Company will
also 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, beginning
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.
We, Our, Us, Company--Jefferson Pilot Financial Insurance Company, its
successors or assigns.
You, Your--Policyowner.
policy summary
- --------------------------------------------------------------------------------
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 and pays a Death
Benefit (subject to adjustment under the Policy's Age and/or Sex, Suicide and
Incontestability, and Grace Period provisions) upon the Insured's death. JP
Financial Heritage II provides life insurance on the lives of two Insureds,
with the benefit payable upon surrender or Second Death. The Policy allows
flexible premium payments, Policy Loans, Withdrawals and a choice of two Death
Benefit Options. Account values may be either fixed or variable or a
combination of fixed and variable.
Charges and fees will be assessed against premium payments, Accumulation Value,
the Separate Account, the underlying Funds and upon surrender, increase or
decrease in Specified Amount.
You must purchase Your variable life insurance policy from a registered
representative. The Policy,
4
<PAGE>
the initial application on the Insureds, any subsequent application and any
riders constitute the entire contract.
At the time of application, You must choose one of two Death Benefit Options,
one of two Death Benefit qualification tests, decide on the amount of premium
and determine how to allocate Net Premiums. You may elect to supplement the
benefits afforded by the Policy through the addition of riders We make
available.
The proceeds payable upon death depend on the Death Benefit Option chosen.
Under Option 1 the Death Benefit equals the current Specified Amount. Under
Option 2, the Death Benefit equals the current Specified Amount plus the
Accumulation Value on the date of death. The Death Benefit proceeds will be
reduced by repayment of any outstanding Policy Debt.
Although the Policy is designed to allow flexible premiums, You must pay
sufficient premiums to continue the Policy in force. You must pay an initial
premium, based on Issue Age(s), underwriting class and Specified Amount, at
issue. No premium payment may be less than $500. You may establish a schedule
of premium payments ("Planned Periodic Premiums"). Premium reminder notices
will be sent for Planned Periodic Premiums and for premiums required to
continue the Policy in force. Should Your Policy lapse, You may reinstate it.
You may allocate Your Net Premiums to the Separate Account, the General Account
or both Accounts. Net Premiums allocated to the Separate Account must be
allocated to one or more of the Divisions of the Separate Account and
allocations must be in whole percentages. The variable portion of the Policy is
supported by the Divisions You choose and will vary with the investment
performance of the associated Portfolios. Net Premiums allocated to the General
Account will accumulate at rates of interest We determine. The effective rate
of interest will not be less than 4% per year.
State variations to the information in this Prospectus will be covered by
Policy endorsements.
the separate account
- --------------------------------------------------------------------------------
The Separate Account underlying the Policy is JPF Separate Account C. Amounts
allocated to the Separate Account are invested in the Portfolios. Each
Portfolio is a series of an open-end management investment company whose shares
are purchased by the Separate Account to fund the benefits provided by the
Policy. The Portfolios, including their investment objectives and their
investment advisers, are described in this Prospectus. Complete descriptions of
the Portfolios' investment objectives and restrictions and other material
information relating to the Portfolios are contained in the Portfolios'
prospectuses, which are delivered with this Prospectus.
Separate Account C was established under New Hampshire law on August 4, 1993.
Under New Hampshire Insurance Law, the income, gains or losses of the Separate
Account are credited without regard to the other income, gains or losses of the
Company. These assets are held for the Company's variable life insurance
policies. Any and all distributions made by the Portfolios with respect to
shares held by the Separate Account will be reinvested in additional shares at
net asset value. The assets maintained in the Separate Account will not be
charged with any liabilities arising out of any other business conducted by the
Company. The Company is, however, responsible for meeting the obligations of
the Policy to the Policyowner.
No stock certificates are issued to the Separate Account for shares of the
Portfolios held in the Separate Account. Ownership of Portfolio shares is
documented on the books and records of the Portfolios and of the Company for
the Separate Account.
The Separate Account is registered with the SEC as a unit investment trust
under the Investment Company Act of 1940 and meets the definition of separate
account under the federal securities laws. Such registration does not involve
any approval or disapproval by the Commission of the Separate Account or the
Company's management or investment practices or policies. The Company does not
guarantee the Separate Account's investment performance.
Divisions. The Policies presently offer five Divisions but may add or delete
Divisions. Each Division will invest exclusively in shares of a single
Portfolio.
5
<PAGE>
charges & fees
- --------------------------------------------------------------------------------
> CHARGES & FEES ASSESSED AGAINST
PREMIUMS
Premium Charges
Before We allocate a premium to any of the Divisions of the Separate Account
and the General Account, We 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 (2.35% in California). We may impose the premium tax
charge in states which do not themselves impose a premium tax. The state
premium tax charge reimburses the Company for taxes it pays to states and
municipalities in which the Policy is sold. The amount of tax assessed by a
state or municipality may be more or less than the charge. We will also deduct
a federal income tax charge of 1.25% ("Federal DAC Tax Charge") which
reimburses Us for our increased federal tax liability under federal tax laws.
We have determined that these state and federal tax charges are reasonable in
relation to Our tax liability, but subject to state law, We reserve the right
to increase these tax charges due to changes in the state or federal laws that
increase Our tax liability.
We will also deduct a sales charge of 3% from each premium payment for the cost
of selling the Policy. This cost includes, among other things, agents'
commissions, commission overrides, advertising and printing of prospectuses and
sales literature.
> CHARGES & FEES ASSESSED AGAINST
ACCUMULATION VALUE
Charges and fees assessed against the Policy's Accumulation Value are deducted
pro rata from each of the Divisions and the General Account.
Monthly Deduction
On each Monthly Anniversary Date and on the Policy Date, We will deduct from
the Policy's Accumulation Value an amount to cover certain expenses associated
with start-up and maintenance of the Policy and any optional benefits added by
rider. The monthly deduction equals the cost of insurance for the Policy and
the cost of any optional benefits added by rider.
Cost of Insurance. We calculate the Cost of Insurance charge monthly and We
determine it separately for the initial Specified Amount and each increase in
the Specified Amount thereafter. The Cost of Insurance rate is based on the
sex, Issue Age(s), policy year, smoking status and rating class of the
Insured(s), Specified Amount, Death Benefit option and applicable corridor
percentage.
The cost of insurance equals (i) multiplied by the result of (ii) minus (iii)
where:
(i) is the current Cost of Insurance Rate as described in the Policy;
(ii) is the Death Benefit at the beginning of the Policy month divided by
1.00327374; and
(iii) is the Accumulation Value at the beginning of the policy month.
If the corridor percentage is applicable, the Death Benefit will reflect the
corridor percentage. The cost of insurance charge is not affected by the death
of the first Insured to die under JP Financial Heritage II.
We determine the monthly cost of insurance rate based on expectations as to
future mortality experience, and will never exceed the Monthly Guaranteed Cost
of Insurance Rates set forth in the Policy. Those rates are based on the 1980
Commissioners Standard Ordinary Mortality Tables Male and Female (1980 Tables).
We will calculate a guaranteed Monthly Deduction Adjustment at the beginning of
each policy year. We will allocate the Monthly Deduction Adjustment between the
Divisions and the General Account in the same proportion as premium payments.
The Adjustment 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
6
<PAGE>
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 pro rata basis for any increase in Specified Amount; and
(iv) is the outstanding Type A loan balance at the beginning of the policy year
See "POLICY RIGHTS--Policy Loans" for a description of Type A loans.
We use the Monthly Deduction Adjustment to annually evaluate Our mortality risk
exposure on individual Policies based on several factors, including the
proceeds from all mortality charges, including the cost of insurance charge and
the mortality risk portion of the Risk Charge. We set the insurance charges to
cover total anticipated mortality experience. As the amount at risk under a
Policy decreases, resulting in an increase in Accumulation Value, Our exposure
on that Policy is reduced. Our risk also decreases as the Specified Amount
increases. Because the Monthly Deduction Adjustment formula factors in
Accumulation Value and Specified Amount, the Monthly Deduction Adjustment can
be translated into a net reduction of the Risk Charge. This amount is applied
to the Accumulation Value. The Monthly Deduction Adjustment can be expressed as
a reduction in the mortality portion of the Risk Charge as shown in the
following table.
<TABLE>
<CAPTION>
Mortality Mortality
Risk Risk
Mortality Monthly Charge Charge Effective
Risk Deduction Below Above Mortality
Specified Amount Charge Adjustment 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").
> CHARGES & FEES ASSESSED AGAINST THE
SEPARATE ACCOUNT
Risk Charge
We will assess a charge on a daily basis against each Division at an annual
rate of .65% of the Division's value to compensate Us for mortality and expense
risks in connection with the Policy. We bear the risk that the total amount of
Death Benefit payable under the Policy will be greater than anticipated and We
also assume the risk that the actual cost We incur to administer the Policy
will not be covered by charges We assess under the Policy.
Administrative Fees
We will impose an administrative fee of $100 for each transfer among the
Division 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 Portfolio Rebalancing features.
We will assess an $100 administrative fee for withdrawals.
> CHARGES & FEES ASSESSED AGAINST THE
UNDERLYING FUNDS
Following are the management fees, paid by the Fund as a percentage of average
net assets, and charged monthly against each Portfolio at the annual rates
indicated.
J.P. Morgan Series Trust II
<TABLE>
<S> <C>
J.P. Morgan Treasury Money Market
Portfolio ....................................................... .20%
J.P. Morgan Bond Portfolio ........................................ .30%
J.P. Morgan Equity Portfolio ...................................... .40%
J.P. Morgan Small Company Portfolio ............................... .50%
J.P. Morgan International
Opportunities Portfolio .......................................... .60%
</TABLE>
> CHARGES DEDUCTED UPON SURRENDER
If You surrender Your Policy in the first five policy years, We will assess a
contingent deferred sales charge. The charge will be 5% of first year premi-
7
<PAGE>
ums for surrender in the first policy year, 4% of first year premiums for
surrender in the second policy year, 3% of first year premiums for surrender in
the third policy year, 2% of first year premiums for surrender in the fourth
policy year and 1% of first year premiums for surrender in the fifth policy
year. We will not assess a Surrender Charge after the fifth policy year. We
will assess a pro rata portion of any Surrender Charge on a withdrawal. We will
reduce Your Policy's Accumulation Value by the amount of any withdrawal plus
any applicable pro rata Surrender Charge.
> OTHER CHARGES
We reserve the right to charge the assets of each Division to provide for any
income taxes or other taxes payable by Us on the assets attributable to that
Division.
allocation of premiums
- --------------------------------------------------------------------------------
You may allocate all or a part of Your Net Premiums to the Divisions currently
available under Your Policy or to the General Account.
> THE PORTFOLIOS
The Separate Account currently invests in shares of the Portfolios listed
below. Net Premiums applied to the Separate Account will be invested in the
Portfolios in accordance with Your selection. We may add or withdraw Portfolios
as permitted by applicable law. Shares of the Portfolios are not sold directly
to the general public. Each of the Portfolios is available only through the
purchase of variable annuities or variable life insurance policies. (See Mixed
and Shared Funding)
The investment results of the Portfolios, whose investment objectives are
described below, are likely to differ significantly. There is no assurance that
any of the Portfolios will achieve their respective investment objectives.
Investment income of the Portfolios involves special risks, which are described
in their respective prospectuses. You should read the prospectuses for the
Portfolios and consider carefully, and on a continuing basis, which portfolio
or combination of Portfolios is best suited to Your long-term investment
objectives. Except where otherwise noted, all of the Portfolios are
diversified, as defined in the Investment Company Act of 1940.
[DIAMOND] J.P. Morgan Treasury Money Market Portfolio seeks to provide current
income, maintain a high level of liquidity and preserve capital.
[DIAMOND] J.P. Morgan Bond Portfolio seeks to provide a high total return
consistent with moderate risk of capital and maintenance of liquidity.
[DIAMOND] J.P. Morgan Equity Portfolio seeks to provide a high total return from
a portfolio comprised of selected equity securities.
[DIAMOND] J.P. Morgan Small Company Portfolio seeks to provide a high total
return from a portfolio of equity securities of small companies.
[DIAMOND] J.P. Morgan International Opportunities Portfolio seeks to provide a
high total return from a portfolio of equity securities of foreign
corporations.
> INVESTMENT ADVISER FOR THE FUND
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").
> MIXED AND SHARED FUNDING; CONFLICTS
OF INTEREST
Shares of the Fund are available to insurance company separate accounts which
fund variable annuity contracts and variable life insurance policies, including
the Policy described in this Prospectus. Because Fund shares are offered to
separate accounts of both affiliated and unaffiliated insurance companies, it
is conceivable that, in the future, it may not be advantageous for variable
life insurance separate accounts and variable annuity separate accounts to
invest in these Funds simultaneously, since the interests of such Policyowners
or contractholders may differ. Although neither the Company nor the Fund
currently foresees any such disadvantages either to variable life insurance or
to variable annuity Policyowners, the Fund's Board of Trustees/
Directors has agreed to monitor events in order to identify any material
irreconcilable conflicts which may possible arise and to determine what action,
if any, should be taken in response thereto. If such a conflict were to occur,
one of the separate accounts might withdraw its investment in a Fund. This
might force that Fund to sell portfolio securities at disadvantageous prices.
8
<PAGE>
> FUND ADDITIONS, DELETIONS OR
SUBSTITUTIONS
We reserve the right, subject to compliance with appropriate state and federal
laws, to add, delete or substitute shares of another Portfolio or Fund for
Portfolio shares already purchased or to be purchased in the future for the
Division in connection with the Policy. We may substitute shares of one
Portfolio for shares of another Portfolio if, among other things, (a) it is
determined that a Portfolio no longer suits the purpose of the Policy due to a
change in its investment objectives or restrictions; (b) the shares of a
Portfolio are no longer available for investment; or (c) in our view it has
become inappropriate to continue investing in the shares of the Portfolio. We
may make substitutions with respect to both existing investments and the
investment of any future premium payments. However, We will not make any
substitution of securities without prior notice to Policyowners, and without
prior approval of the SEC or such other regulatory authorities as may be
necessary, all to the extent required and permitted by the Investment Company
Act of 1940 or other applicable law.
We also reserve the right to make the following changes in the operation of the
Separate Account and the Divisions:
(a) to operate the Separate Account in any form permitted by law;
(b) to take any action necessary to comply with applicable law or obtain and
continue any exemption from applicable laws;
(c) to transfer assets from one Division to another or from any Division to our
general account;
(d) to add, combine, or remove Divisions in the Separate Account;
(e) to assess a charge for taxes attributable to the operation of the Separate
Account or for other taxes, described in "Charges and Fees--Other Charges" on
page above; and
(f) to change the way We assess other charges, as long as the total other
charges do not exceed the amount currently charged the Separate Account and the
Portfolios in connection with the Policies.
Portfolio shares are subject to certain investment restrictions which may not
be changed without the approval of the majority of the Portfolios'
shareholders. See accompanying Prospectus for the Portfolios.
> GENERAL ACCOUNT
Interests in the General Account have not been registered with the SEC in
reliance upon exemptions under the Securities Act of 1933, as amended, and the
General Account has not been registered as an investment company under the 1940
Act. However, disclosure in this Prospectus regarding the General Account may
be subject to certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of the statements. Disclosure in
this Prospectus relating to the Fixed Account has not been reviewed by the SEC.
The General Account is a fixed funding option available under the Policy. We
guarantee a minimum interest rate of 4% on amounts in the General Account and
We assume the risk of investment gain or loss. The investment gain or loss of
the Separate Account or any of the Portfolios does not affect the General
Account value.
If You do not accept the Policy issued as applied for or Your exercise the
"free look", We will credit no interest and We will retain any interest earned
on the initial Net Premium.
The General Account is secured by Our general assets. Our general assets
include all Company assets other than those held in separate accounts sponsored
by Us or Our affiliates. We will invest the assets of the General Account in
those investments We choose, as allowed by applicable law. We will allocate
investment income of such General Account assets between Us and those policies
participating in the General Account.
We guarantee that, at any time before the Maturity Date, the General Account
value of Your Policy will not be less than the amount of Net Premiums allocated
to the General Account, plus any monthly deduction adjustment, plus interest at
an annual rate of not less than 4%, less the amount of any Withdrawals, Policy
Loans or Monthly Deductions.
9
<PAGE>
policy choices
- --------------------------------------------------------------------------------
> GENERAL
Each form of the Policy is designed to provide the Insureds with lifetime
insurance protection and to provide the Policyowner with flexibility in amount
and frequency of premium payments and level of life insurance proceeds payable
under the Policy. JPF 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 the Insured. JPF 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 on Second Death. You are not required to pay scheduled premiums to keep
the Policy in force and You may, subject to certain limitations, vary the
frequency and amount of premium payments. Subject to certain limitations, You
may also adjust the level of life insurance payable under the Policy without
having to purchase a new Policy by increasing or decreasing the Specified
Amount. Death Benefits are payable under two options.
To purchase a Policy, You must complete an application and submit it to Us
through the agent selling the Policy. You must furnish satisfactory evidence of
insurability. An Insured under JPF Heritage I must generally be between ages 0
and 80 and the Insureds under JPF Heritage II must generally be between 20 and
85 with only one Insured over the age of 80. The Joint Equal Age of the
Insureds under JPF Heritage II cannot be over age 80. For ages 15 and over,
each Insured's smoking status is reflected in the cost of insurance rates.
Policies issued in certain States will not directly reflect the Insured's sex
in either the premium rates or the charges or values under the Policy. We may
reject an application for any good reason or contest a Policy during the
contestable period.
The minimum Specified Amount at issue is $500,000 for JPF Heritage I and
$2,000,000 for JPF Heritage II. We reserve the right to revise Our rules from
time to time to specify different minimum Specified Amounts at issue. We may
reinsure all or a portion of the Policy.
> PREMIUM PAYMENTS
Because the Policy is a flexible premium life insurance policy, You may decide
when to make premium payments and in what amounts. You must pay your premiums
to Us at Our home office or through one of Our authorized agents for forwarding
to Us. You may wire the initial premium to Our bank when We notify You that We
have approved Your application. You may also wire subsequent premium payments
to Our bank. The bank wiring the funds may impose a charge for this service.
There is no fixed schedule of premium payments on the Policy either as to
amount or frequency. You may determine, within certain limits, Your own premium
payment schedule. These limits 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 year. No premium payment
may be less than $500. We will return to You any premium payments less than the
minimum amount of $500. In order to help You get the insurance benefits You
want, We will state a Planned Periodic Premium and Premium Frequency in each
Policy. This premium will usually be based upon Your insurance needs and
financial abilities, the current financial climate, the Specified Amount of the
Policy, and the Insureds' ages, sex and risk classes. You are not required to
pay such premiums and failure to make any premium payment will not necessarily
result in lapse of the Policy, so long as the Policy's Surrender Value is
sufficient to pay monthly deductions. Payment of the Planned Periodic Premiums
will not guarantee that Your Policy will remain in force. See "POLICY
RIGHTS--Grace Period".
> GUARANTEED DEATH BENEFIT PREMIUMS
If You add the Guaranteed Death Benefit Rider to the Policy, the Death Benefit
is guaranteed to never be less than the Specified Amount, provided You pay a
cumulative minimum premium. This cumulative minimum premium is based on Issue
Age(s), sex, smoking status and underwriting class(es) of the Insured(s) as
well as the Specified Amount and Death Benefit option. We increase the premium
for increases in the Specified Amount. See "POLICY RIGHTS--Policy Changes".
> MODIFIED ENDOWMENT
We will only allow the Policy to become a modified endowment contract under the
Internal Revenue Code with Your consent. Otherwise, if at any time the premiums
You pay under the Policy exceed the
10
<PAGE>
limit for avoiding modified endowment contract status, We will refund of the
excess premium to You with interest within 60 days after the end of the Policy
Year in which the premium was received. If, for any reason, We do not refund
the excess premium within the 60-day period, the excess premium will be held in
a separate deposit fund and credited with interest until refunded to You. The
interest rate used on any refund, or credited to the separate deposit fund
created by this provision, will be the excess premium's pro rata rate of return
on the contract until the date We notify You that the excess premium and the
earnings on such excess premium have been removed from the Policy. After the
date of such notice, the interest rate paid on the separate deposit fund will
be such rate as We may declare from time to time on advance premium deposit
funds. We may also notify You of other options available to You to keep Your
Policy in compliance.
> COMPLIANCE WITH THE INTERNAL
REVENUE CODE
The Policy is intended to qualify as life insurance under the Internal Revenue
Code. The Policy's Death Benefit is intended to qualify for the federal income
tax exclusion. If at any time the premium paid under the Policy exceeds the
amount allowable for such qualification, We will refund the premium to You with
interest within 60 days after the end of the Policy Year in which We received
the premium. If, for any reason, We do not refund the excess premium within the
60-day period, the excess premium will be held in a separate deposit fund and
credited with interest until refunded to You. The interest rate used on any
refund, or credited to the separate deposit fund created by this provision,
will be the excess premium's pro rata rate of return on the contract until the
date We notify You that the excess premium and the earnings on such excess
premium have been removed from the Policy. After the date of such notice, the
interest rate paid on the separate deposit fund will be such rate as We may
declare from time to time on advance premium deposit funds.We may notify You of
other options available to You to keep Your Policy in compliance. We also
reserve the right to refuse to make any change in the Specified Amount or the
Death Benefit Option or any other change if such change would cause the Policy
to fail to qualify as life insurance under the Code.
Under limited circumstances, We may backdate a Policy, upon request, by
assigning an Issue Date earlier than the date the application is signed but no
earlier than six months prior to state approval of the Policy. Backdating may
be desirable, for example, so that You can purchase a particular Policy
Specified Amount for a lower Cost of Insurance rate based on a younger
insurance age. For a backdated Policy, You must pay the premium for the period
between the Issue Date and the date the application is received at the Home
Office. Backdating of Your Policy will not affect the date on which Your
premium payments are credited to the Separate Account.
We will allocate premium payments, net of the premium tax charge, the Federal
DAC tax charge and the sales charge, plus interest earned prior to the
Allocation Date, among the General Account and the Divisions of the Separate
Account in accordance with Your directions to Us. The minimum percentage of any
net premium payment You may allocate to any Division or the General Account is
1% and allocations must be whole numbers only. Your initial premiums (including
any interest) will be allocated, as You instructed, on the Allocation Date.
Your subsequent premiums will be allocated as of the date they are received in
Our Home Office. Prior to the Allocation Date, the initial net premium, and any
other premiums received, will be allocated to the General Account. (See "Right
of Policy Examination")
You may change Your premium allocation instructions a any time. Your request
may be written or by telephone, so long as the proper telephone authorization
is on file with Us. Allocations must be changed in whole percentages. The
change will be effective as of the date of the next premium payment after You
notify us. We will send You confirmation of the change. (See "Transfers and
Allocations to Funding Options")
> DEATH BENEFIT OPTIONS
At the time of purchase, You must makes two choices. First You must choose
between the two available Death Benefit Options. The amount payable upon the
death of the Insured for JPF Heritage I and upon the Second Death for JPF
Heritage II depends upon which Death Benefit Option You choose. Second, You
must choose the Death Benefit qualification test, which is the method for
qualifying the Policy as life insurance for federal tax purposes. If You do not
choose a Death Benefit qualification test or Death Benefit Option, We will
assume that You selected the guideline premium test under Death Benefit Option
I.
11
<PAGE>
The amount of Death Benefit proceeds payable under Your Policy will depend upon
the Option You selected, 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
Policy's Accumulation Value 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.
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 used to determine a minimum ratio of Death Benefit
to Accumulation Value. This is required to qualify the Policy as life insurance
under the federal tax laws. You may select either the minimum corridor
percentage under the Code or an alternative corridor percentage that produces a
higher corridor percentage beginning in policy year 25 and grades back to the
minimum corridor percentage at the Maturity Date. Selection of the alternative
corridor percentage will result in a higher ratio of Death Benefit to
Accumulation Value beginning in policy year 25 than will selection of the
minimum corridor percentage. The higher ratio will gradually reduce until it is
equal to the ratio produced by use of the minimum corridor percentage by the
Maturity Date. Although use of the alternative corridor percentage will result
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 will reduce the Accumulation Value and future Death Benefits.
You must also choose one of two available Death Benefit qualification tests:
the cash value accumulation test or the guideline premium test. Once You have
made Your choice, You may not change the Death Benefit qualification test.
The cash value accumulation test requires that the Death Benefit must be
sufficient so that the cash surrender value, as defined in the Code, never
exceeds the net single premium required to fund the future benefits under the
Policy. If the Accumulation Value is ever greater than the net single premium
at the Insured's age and sex for the proposed Death Benefit, the Death Benefit
will be automatically increased by multiplying the Accumulation Value by the
corridor percentage computed in compliance with the Code. The corridor
percentages under the Policy vary according to the Age(s), sex and underwriting
classification(s) 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 the Code. The corridor
percentage is calculated using a 4% 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 We issue the
Policy.
The guideline premium test limits the amount of premiums You can pay under Your
Policy given Your age and sex. The test also applies a prescribed corridor
percentage to determine a minimum ratio of Death Benefit to Accumulation Value.
Following is a complete list of the corridor percentages applied in the
guideline premium test.
12
<PAGE>
Corridor Percentages (Attained as of the Younger Insured at the Beginning of
the Contract Year)
<TABLE>
<CAPTION>
Age % Age % Age % Age %
--- --- --- --- --- --- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C>
0-40 250% 50 185% 60 130% 70 115%
41 243 51 178 61 128 71 113
42 236 52 171 62 126 72 111
43 229 53 164 63 124 73 109
44 222 54 157 64 122 74 107
45 215 55 150 65 120 75-90 105
46 209 56 146 66 119 91 104
47 203 57 142 67 118 92 103
48 197 58 138 68 117 93 102
49 191 59 134 69 116 94 101
95+ 100
</TABLE>
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 can be paid into a Policy. No such limits apply under the cash
value accumulation test, although We may require evidence of insurability for
any premium that would increase the net amount at risk. 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. If You wish to pay
premiums in excess of the guideline premium test limitations, You should elect
the cash value accumulation test. If You do not wish to pay premiums in excess
of the guideline premium test limitations, You should consider the guideline
premium test. You should consult a qualified tax adviser for help in making a
Death Benefit election.
The following examples demonstrate the determination of Death Benefit under
Options I and II for both tests. The examples show a JPF Heritage I policy and
a JPF Heritage II policy with the same Specified Amounts and Accumulation
Values. The JPF 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 JPF 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>
13
<PAGE>
Under both Option I and Option II, the Death Benefit will be reduced by a
Withdrawal (See "Withdrawals"). The Death Benefit payable under either Option
will also be reduced by the amount necessary to repay the Policy Debt in full
and, if the Policy is within the Grace Period, any payment required to keep the
Policy in force.
> MATURITY OF THE POLICY
As long as Your Policy remains in force, We will pay the Policy's Surrender
Value on the Maturity Date. Benefits 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, You must send a written request and the Policy to Us.
The Date of Receipt for any request must be before the Maturity Date then in
effect. The Maturity Date You request 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 JPF Heritage I and the younger Insured's 100th
birthday for JPF Heritage II.
> TRANSFERS AND ALLOCATIONS TO
FUNDING OPTIONS
You may transfer all or part of the Accumulation Value to any other Division or
to the General Account at any time. Funds may be transferred between the
Divisions or from the Divisions to the General Account. You may request
transfers in writing or by telephone. Each transfer 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 the General
Account, into one other Division or the General Account, counts as one
transfer.
We currently permit 12 transfers per year without imposing any transfer charge.
For transfers in excess of 12 in a Policy year, We will impose a transfer
charge of $100 per transfer to cover administrative costs. We will deduct the
transfer charge pro rata from the Divisions and/or the General Account into
which the amounts are transferred. However, we will not impose a transfer
charge on the transfer of the initial Net Premium, plus interest earned, from
the General Account to the Divisions on the Allocation Date, or on loan
repayments. We will not impose a transfer charge for transfers pursuant to
either the Dollar Cost Averaging or Automatic Portfolio Rebalancing features.
You may make up to 24 transfers per policy year. We reserve the right to revoke
or modify transfer privileges and charges.
You 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 You are doing this, 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(s), the Attained Age and
rating class of the Insured(s) at the time of the transfer. The minimum period
will decrease if You surrender the Policy or make a withdrawal. The minimum
period will increase if You decrease the Specified Amount, make additional
premium payments, or We credit a higher interest rate than that guaranteed for
the General Account or charge a lower cost of insurance rate than that
guaranteed in the Contract.
Except for transfers in connection with Dollar Cost Averaging, Automatic
Portfolio Rebalancing and loan repayments, We allow transfers out of the
General Account to the Divisions only once in every 180 days and limit their
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. Any other transfer
rules, including minimum transfer amounts, also apply. We reserve the right to
modify these restrictions.
We will not impose a transfer charge for a transfer of all Accumulation Value
in the Separate Account to the General Account. A transfer from the General
Account to the Divisions of the Separate Account 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 any New Premium payments received prior to the
Allocation Date, plus interest earned, from the General Account and loan
repayments, and transfers pursuant to the Dollar Cost Averaging or Automatic
Portfolio Rebalancing features.
> TELEPHONE TRANSFERS, LOANS AND
REALLOCATIONS
You, Your authorized representatives or members of their administrative staffs
may request a transfer of Accumulation Value or reallocation of premiums
(including allocation changes relating to existing Dollar Cost Averaging and
Automatic Portfolio
14
<PAGE>
Rebalancing programs) either in writing or by telephone. In order to make
telephone transfers, You must complete a written telephone transfer
authorization form and return it to Us at Our Home Office. If You are unable to
reach Us by telephone, You may send Us a written request via Our telecopier
machine at (603) 226-5155. Transfer requests received via telecopier are
considered telephone transfers and are bound by the conditions outlined in the
authorization form You signed. All transfers must be in accordance with the
terms of the Policy. If the transfer instructions are not in good order, We
will not execute the transfer and You will be notified.
We may also permit You to make loans by telephone, provided that Your
authorization form is on file with Us. Only You may request loans by telephone.
We will use reasonable procedures, such as requiring identifying information
from callers, recording telephone instructions, and providing written
confirmation of transactions, in order to confirm that telephone instructions
are genuine. Any telephone instructions which We reasonably believe to be
genuine will be Your responsibility, including losses arising from any errors
in the communication of instructions. As a result of this procedure, You will
bear the risk of loss. If We do not use reasonable procedures, as described
above, We may be liable for losses due to unauthorized instructions.
We reserve the right to discontinue telephone transfers at any time without
notice to You.
> AUTOMATED TRANSFERS (DOLLAR COST
AVERAGING AND PORTFOLIO REBALANCING)
Dollar Cost Averaging is a system of investing a uniform sum of money at
regular intervals over an extended period of time. Dollar Cost Averaging is
based on the economic fact that buying a security with a constant sum of money
at fixed intervals results in acquiring more of the item when prices are low
and less of it when prices are high.
You may establish automated transfers of a specific dollar amount (the
"Periodic Transfer Amount") on a monthly, quarterly or semi-annual basis from
the J.P. Morgan Treasury Money Market Division or the General Account to any
other Division or to the General Account. You must have a minimum of $6,000
allocated to either the J.P. Money Market Division or the General Account in
order to enroll in the Dollar Cost Averaging program. The minimum Periodic
Transfer Amount is $500. A minimum of 1% of the Periodic Transfer Amount must
be transferred to any specified Division. These amounts are subject to change
at Our discretion. If a transfer would reduce the Accumulation Value in the
J.P. Morgan Money Market Division or the General Account to less than the
Periodic Transfer Amount, We reserve the right to include such remaining
Accumulation Value in the amount transferred. Dollar Cost Averaging will
continue until You notify Us that You wish to cancel the feature. We will
transfer any amounts deposited into the Repository Account. There is currently
no additional charge for the program, although We reserve the right to assess a
charge, no greater than cost and with 30 days advance notice to You.
An Automatic Portfolio Rebalancing feature is also available to You. This
feature provides a method for reestablishing 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.
You may not elect Dollar Cost Averaging and Automatic Portfolio Rebalancing at
the same time. We will make transfers and adjustments pursuant to these
features on the 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 weekend. We must have an authorization
form on file before either feature may begin. Transfers under these features
are not subject to the transfer fee and do not count toward the 12 free
transfers or the 24 transfer maximum currently allowed per year.
Before participating in the Dollar Cost Averaging or Automatic Portfolio
Rebalancing programs, You should consider the risks involved in switching
between investments available under the Policy. Dollar Cost Averaging requires
regular investments regardless of fluctuating price levels, and does not
guarantee profits or prevent losses. Automatic Portfolio Rebalancing is
consistent with maintaining your allocation of investments among market
segments, although it is accomplished by reducing your Accumulation Value
allocated to the better performing segments. Therefore, You should carefully
consider market conditions and each Fund's investment policies and related
risks before electing to partici-
15
<PAGE>
pate in the Dollar Cost Averaging or Automatic Portfolio Rebalancing programs.
> COMBINED REQUESTS
You 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. You should
consider the net result of a combined transaction in light of insurance needs,
financial circumstances and tax consequences.
policy values
- --------------------------------------------------------------------------------
> ACCUMULATION VALUE
The Accumulation Value of Your Policy is determined on a daily basis.
Accumulation Value is the sum of the values in the Divisions plus the value in
the General Account. We calculate Your Policy's Accumulation Value in the
Divisions by units and unit values under the Policies. Your Policy's
Accumulation Value will reflect the investment experience of the Divisions
investing in the Portfolios, any additional net premiums paid, any withdrawals,
any policy loans and any charges assessed in connection with the Policy. We do
not guarantee Accumulation Values in the Separate Account as to dollar amount.
On the Allocation Date, the Accumulation Value in the Separate Account (the
"Separate Account Value") equals the initial premium payment, less 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. We will establish the initial number of units
credited to the Separate Account for Your Policy on the Allocation Date. At the
end of each Valuation Period thereafter, the Accumulation Value in a Division
is
(i) 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, PLUS
(ii) any Net Premium We receive during the current Valuation Period which is
allocated to the Division, PLUS
(iii) all Accumulation Value transferred to the Division from another Division
or the General Account during the current Valuation Period, MINUS
(iv) the Accumulation Value transferred from the Division to another Division
or the General Account and Accumulation Value transferred to secure a Policy
Debt during the current Valuation Period, MINUS
(v) all withdrawals from the Division during the current Valuation Period.
Whenever a Valuation Period includes the Monthly Anniversary Date, the Separate
Account 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 the Separate Account equals the sum of
the Policy's Accumulation Value in each Division thereof.
> UNIT VALUES
We credit Units to You upon allocation of Net Premiums to a Division. Each Net
Premium payment You allocate to a Division will increase the number of units in
that Division. We credit both full and fractional units. We determine the
number of units and fractional units by dividing the Net Premium Payment by the
unit value of the Division to which You have allocated the payment. We
determine each Division's unit value on each Valuation Date. The number of
units credited will not change because of subsequent changes in unit value. The
number is increased by subsequent contributions or transfers allocated to a
Division, and decreased by charges and withdrawals from that Division. The
dollar value of each Division's units will vary depending upon the investment
performance of the corresponding Portfolio of the Trust.
The initial unit value of each Division's units was $10.00. Thereafter, the
unit value of a Division on
16
<PAGE>
any Valuation Date is calculated by multiplying the Division's unit value on
the previous Valuation Date by the net investment factor for the Valuation
Period then ended.
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 each Division's investment experience and is
used to determine changes in unit value from one Valuation Period to the next.
We calculate the net investment factor by dividing (1) by (2) and subtracting
(3) from the result, where:
(1) is the sum of:
(a) the Net Asset Value of a Fund share held in the Separate Account for
that Division determined at the end of the current Valuation Period; plus
(b) the per share amount of any dividend or capital gain distributions made
for shares held in the Separate Account for that Division if the ex-
dividend date occurs during the Valuation Period;
(2) is the Net Asset Value of a Fund share held in the Separate Account for
that Division determined as of the end of the preceding Valuation Period; and
(3) is the daily charge no greater than .0017808% representing the Mortality &
Expense Risk Charge.
This charge is equal, on an annual basis, to .65% of the daily Net Asset Value
shares held in the Separate Account for that Division.
Because the Net Investment Factor may be greater than, less than or equal to 1,
values in a Division may increase or decrease from Valuation Period to
Valuation Period.
The General Account Value reflects amounts allocated to the General Account
through payment of premiums or transfers from the Separate Account, plus
interest credited to those amounts. Amounts allocated to the General Account,
and interest thereon, are guaranteed; however there is no assurance that the
Separate Account Value of the Policy will equal or exceed the Net Premiums paid
and allocated to the Separate Account.
You will be advised at least annually as to the number of Units which remain
credited to the Policy, the current Unit Values, the Separate Account Value,
the General Account Value, and the Accumulation Value.
> SURRENDER VALUE
The Surrender Value of the Policy is the amount You can receive in cash by
surrendering the Policy. The Surrender Value will equal (a) the Accumulation
Value on the date of surrender; less (b) the Surrender Charge; less (c) the
Loan Value plus any accrued interest. (See "Charges Deducted Upon Surrender")
policy rights
- --------------------------------------------------------------------------------
> SURRENDERS
You may surrender the Policy for its Surrender Value at any time while one or
both Insureds is alive by sending Us a written request and the Policy. All
insurance coverage under the Policy will end on the date of the Surrender. All
or part of the Surrender Value may be applied to one or more of the Settlement
Options described in the Prospectus or in any manner to which We agree and that
We make available.
> WITHDRAWALS
Subject to the following conditions, You may make withdrawals from the Policy
at any time after the expiration of the Free Look Period.
[DIAMOND] Your request for a withdrawal must be in writing.
[DIAMOND] The amount You withdraw may not exceed the Surrender Value.
[DIAMOND] A $100 charge will be deducted from the amount of the Cash Value You
withdraw.
[DIAMOND] We will also deduct a pro rata Surrender Charge.
[DIAMOND] The minimum amount You may withdraw is $5,000.
[DIAMOND] The Policy's Cash Value will be reduced by the amount of the
withdrawal.
[DIAMOND] The Policy's Accumulation Value will be reduced by the amount of the
withdrawal plus any applicable pro rata Surrender Charge.
17
<PAGE>
[DIAMOND] The life insurance proceeds payable under the Policy will generally
be reduced by the amount of the withdrawal plus any applicable pro
rata Surrender Charge.
See "Charges Deducted Upon Surrender"
If You have chosen Death Benefit Option I, a withdrawal will reduce the
Specified Amount. However, We will not allow a withdrawal if the Specified
Amount remaining after the withdrawal would be less than $250,000 for JPF
Heritage I and $500,000 for JPF Heritage II. If You previously increased the
Specified Amount under Your Policy, 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.
If You have chosen Death Benefit Option II, a reduction in Accumulation Value
as the result of a withdrawal will typically result in a dollar for dollar
reduction in the life insurance proceeds payable under the Policy.
You may allocate a withdrawal among the Divisions and the General Account. If
You do not make such an allocation, We will allocate the withdrawal 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 the withdrawal.
> POLICY LAPSE AND GRACE PERIOD
If Your Policy's Surrender Value is insufficient to satisfy the cost of
insurance and any rider charges, Your Policy will go into "lapse pending
status". We will allow You 61 days of grace for payment of an amount sufficient
to continue coverage. The premium required to avoid lapse must be enough to
cover the monthly deduction for at least three policy months, after deduction
of the state premium tax charge, the federal DAC tax charge and the sales
charge.
We will mail written notice to Your last known address thirty-one days prior to
the end of the grace period. We will also send this notice to the last known
address of any assignee of record.
The Policy will stay in force during the grace period. If the Insured (under
JPF Heritage I) or the last surviving Insured (under JPF Heritage II) dies
during the grace period, we will reduce the Death Benefit by the amount of any
monthly deduction due and the amount of any outstanding Policy Debt. If You do
not make a payment within 61 days after the Monthly Anniversary Date, the
Policy will terminate without value at the end of the grace period.
If the Policy Debt ever exceeds the Cash Value and You do not make an
additional payment within sixty-one days, the Policy will lapse.
> REINSTATEMENT OF A LAPSED OR TERMINATED POLICY
If the Policy terminates as provided in its grace period benefit, You may
reinstate it. To reinstate the Policy, the following conditions must be met:
[DIAMOND] The Policy has not been fully surrendered.
[DIAMOND] The terms of the original contract will apply upon reinstatement.
[DIAMOND] The Policy Year on reinstatement will be measured from the Policy
Date.
[DIAMOND] You must apply for reinstatement within 5 years after the date of
termination and before the Maturity Date.
[DIAMOND] We must receive evidence of insurability of the Insured under JPF
Heritage I or the Insureds or Surviving Insured under JPF Heritage
II.
[DIAMOND] We must receive a premium payment which is sufficient to cover the
monthly deduction for three policy months, after deduction of the
state premium tax, the federal DAC tax and the sales charge.
[DIAMOND] If a loan was outstanding at the time of lapse, We will require that
You repay or reinstate the loan before we reinstate the Policy.
[DIAMOND] Supplemental Benefits will be reinstated only with Our consent (See
"Grace Period" and "Premium Payments").
> RIGHT TO DEFER PAYMENT
Payments of any Separate Account value will be made within 7 days after Our
receipt of Your written request. However, We reserve the right to suspend or
postpone the date of any payment or any benefit or values for any Valuation
Period (1) when the
18
<PAGE>
New York Stock Exchange is closed (except holidays or weekends); (2) when
trading on the Exchange is restricted; (3) when an emergency exists as
determined by the SEC so that disposal of the securities held in the funds is
not reasonably practicable or it is not reasonably practicable to determine the
value of the Funds' net assets; or (4) during any other period when the SEC, by
order, so permits for the protection of security holders. For payment from the
Separate Account in such instances, We may defer payment of Surrender and
Withdrawal Values, any Death Benefit in excess of the current Specified Amount,
transfers and any portion of the Loan Value.
Payment of any General Account Value may be deferred for up to six months,
except when used to pay amounts due Us.
> POLICY LOANS
We will grant loans at any time after the expiration of the Right of Policy
Examination using the Policy as security for the loan. The amount of the loan
will not be more than the Loan Value. Unless otherwise required by state law,
the Loan Value for this Policy is 90% of Cash Value at the end of the Valuation
Period during which the loan request is received. The maximum amount You can
borrow at any time is the Loan Value reduced by any outstanding Policy Debt.
Loans have priority over the claims of any assignee or any other person.
We will usually disburse loan proceeds within 7 days from the Date of Receipt
of a loan request, although we reserve the right to postpone payments under
certain circumstances. See "Right to Defer Payment". We may, in Our sole
discretion, allow You to make loans by telephone if You have filed a proper
telephone authorization with Us. So long as Your Policy is in force and an
Insured is living, You may repay Your loan in whole or in part at any time
without penalty.
Accumulation Value equal to the loan amount will be maintained in the General
Account to secure the loan. Any unpaid loan interest due will also be
transferred. You may allocate a policy loan among the Divisions and the General
Account value that is not already allocated to secure a Policy Loan and We will
transfer Separate Account Value as You have indicated. If You do not make this
allocation, 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. We will make a similar allocation for unpaid loan interest due. A policy
loan removes Accumulation Value from the investment experience of the Separate
Account which will have a permanent effect on the Accumulation Value and Death
Benefit even if the loan is repaid. General Account Value equal to Policy Debt
will accrue interest daily at the lesser of an annual rate of 6% or the
interest rate currently credited to the General Account.
We will charge interest on any outstanding Policy Debt with the 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 adjusted for increases as defined in Section 7702 of the
Code. 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. Any unpaid
interest due becomes loan principal.
If Policy Debt exceeds Cash Value, We will notify You and any assignee of
record. You must make a payment within 61 days from the date Policy Debt
exceeds Cash Value or the Policy will lapse and terminate without value (See
"Policy Lapse and Grace Period"). If this happens, You may be taxed on the
total appreciation under the Policy. However, You may reinstate the Policy,
subject to proof of insurability and payment of a reinstatement premium (See
"Reinstatement of a Lapsed Policy").
You may repay the Policy Debt, in whole or in part, at any time during an
Insured's life, so long as the Policy is in force. The amount necessary to
repay all Policy Debt in full will include any accrued interest. If there is
any Policy Debt, We will apply payments
19
<PAGE>
received from you as follows: We will apply payments in the amount of the
Planned Periodic Premium, received at the Premium Frequency, as premium unless
You specifically designate the payment as a loan repayment. We will apply
premium payments in excess of the Planned Periodic Premium or premium payments
received other than at the Premium Frequency, first as policy loan repayments,
then as premium when you have repaid the Policy Debt. If You have both a Type A
and a Type B loan, we will apply repayments first to the Type B loan and then
to the Type A loan. Upon repayment of all or part of the Policy Debt, We will
transfer the Policy's Accumulation Value securing the repaid portion of the
debt in the General Account to the Divisions and the General Account in the
same proportion in which the loan was taken.
An outstanding loan amount will decrease the Surrender Value available under
the Policy. For example, if a Policy has a Surrender Value of $10,000, You may
take a loan of 90% or $9,000, leaving a new Surrender Value of $1,000. If a
loan is not repaid, the decrease in the Surrender Value could cause the Policy
to lapse. In addition, the Death Benefit will be decreased because of an
outstanding Policy Loan. Furthermore, even if You repay the loan, the amount of
the Death Benefit and the Policy's Surrender Value may be permanently affected
since the Loan Value is not credited with the investment experience of the
Funds.
policy changes
- --------------------------------------------------------------------------------
You may make changes to Your Policy, as described below, by submitting a
written request to Our Home Office. Supplemental Policy Specification pages
and/or a notice confirming the change will be sent to You once the change is
completed.
> INCREASE OR DECREASE IN SPECIFIED
AMOUNT
You may increase or decrease the Specified Amount of Your Policy after the
first Policy Year so long as You are under attained age 80 by sending a written
request and the Policy to Our Home Office. However:
[DIAMOND] Any increase or decrease must be at least $250,000 on JPF Heritage I
and $500,000 on JPF Heritage II.
[DIAMOND] Any increase or decrease will affect Your cost of insurance charge.
[DIAMOND] Any increase will affect the Monthly Deduction Adjustment and the
amount available for a Type A loan.
[DIAMOND] To apply for an increase, a supplemental application must be
completed and evidence of insurability must be submitted.
[DIAMOND] Any approved increase will become effective on the date shown in the
Supplemental Policy Specifications page, so long as the Policy's Cash
Value is sufficient to cover the deduction for the cost of the
increased insurance for the policy month following the increase.
[DIAMOND] An increase may require a payment or future increased planned
Periodic Premiums.
[DIAMOND] Any decrease may affect the Monthly Deduction Adjustment but will
have no effect on the amount available for a Type A loan.
[DIAMOND] Any decrease will become effective on the Monthly Anniversary Date
after the date We receive the request.
[DIAMOND] Any decrease will first apply to coverage provided by the most recent
increase in Specified Amount, then to the next most recent increases
successively and finally to the coverage provided under the original
application.
[DIAMOND] Any increases or decreases may result in federal tax implications
(See "Federal Tax Matters").
[DIAMOND] No decrease may decrease the Specified Amount below $250,000 for JPF
Heritage I or below $500,000 for JPF Heritage II.
> CHANGE IN DEATH BENEFIT OPTION
Any change in the Death Benefit Option is subject to the following conditions:
[DIAMOND] You must send a written request for change.
[DIAMOND] The change will take effect on the first Monthly Anniversary Date
coinciding with or next following the date We receive Your written
request.
[DIAMOND] Evidence of insurability may be required.
20
<PAGE>
[DIAMOND] 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.
[DIAMOND] If the Death Benefit 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.
[DIAMOND] We may not make a change in the Death Benefit option if the change
would result in a Specified amount which is less than a minimum
Specified Amount of $250,000 for JPF Heritage I and $500,000 for JPF
Heritage II.
[DIAMOND] The cost of insurance will be affected by the change.
right of policy examination ("free look period")
- --------------------------------------------------------------------------------
The Policy has a free look period during which You may examine the Policy. If
for any reason You are dissatisfied, You may return the Policy to Us at Our
Home Office or to Our representative within 20 days of delivery of the Policy
to You (or within a different period if required by state law). Return the
Policy to Jefferson Pilot Financial Insurance Company, One Granite Place,
Concord, New Hampshire 03301. Upon its return, the Policy will be deemed void
from its beginning. Within seven days, We will return to You all payments We
received on the Policy. Prior to the Allocation Date, We will hold the initial
Net Premium and any other premiums we receive in Our General Account. We will
retain any interest earned if You exercise the Free Look right, unless
otherwise required by state law.
supplemental benefits
- --------------------------------------------------------------------------------
The supplemental benefits currently available as riders to the Policy include
the following:
[DIAMOND] Guaranteed Death Benefit Rider--guarantees that the Policy will stay
in force during the guarantee period specified in the rider with a
Death Benefit equal to the Specified Amount, subject to the terms of
the rider.
[DIAMOND] Automatic Increase Rider--allows for scheduled annual increases in
Specified Amount, subject to the terms of the rider.
[DIAMOND] Policy Exchange Option Rider--allows You to exchange JPF Heritage II
for two individual policies, one on each Insured named in the Policy,
subject to the terms in the rider.
[DIAMOND] Extension of Maturity Date Rider--allows You to extend the original
Maturity Date of the Policy, subject to the terms of the rider.
[DIAMOND] Exchange of Insured Rider--available under JPF Heritage I and allows
You to exchange the Policy for a reissued policy on the life of a
substitute insured, subject to the terms of the rider.
death benefit
- --------------------------------------------------------------------------------
We will pay the Death Benefit under the Policy in a lump sum unless You or the
beneficiary have elected that it be paid under one or more of the available
Settlement Options. We will reduce the Death Benefit by any outstanding Policy
Debt and any charges due and We will increase the Death Benefit by any benefits
You add by rider.
Payment of the Death Benefit may be delayed if the Policy is being contested.
You may elect a Settlement Option for a beneficiary and deem it irrevocable.
You may revoke or change a prior election. The beneficiary under JPF Heritage
II may make or change an election within 90 days of the Second Death, unless
You have made an irrevocable election.
All or part of the Death Benefit may be applied under one of the Settlement
Options, or such options as We may choose to make available in the future.
If the Policy is assigned as collateral security, We will pay any amount due
the assignee in a lump sum. Any excess Death Benefit due will be paid as
elected. (See "Right to Defer Payment" and "Policy Settlement")
21
<PAGE>
policy settlement
- --------------------------------------------------------------------------------
We will pay proceeds in whole or in part in the form of a lump sum or in one of
the Settlement Options available under the Policy upon the death of the Insured
for JPF Heritage I, upon Second Death for JPF Heritage II or upon maturity.
You may make a written request to elect, change or revoke a Settlement Option
before payments begin under any Settlement Option. This request will take
effect upon its filing at our Home Office. If You have not elected a Settlement
Option when the Death Benefit becomes payable to the beneficiary, the
beneficiary may make the election.
> SETTLEMENT OPTIONS
The following Settlement Options are available under the Policy:
Option A--Installments of a specified amount. Payments of an agreed amount to
be made monthly until the proceeds and interest are exhausted.
Option B--Installments for a specified period. Payments to be made monthly for
an agreed number of years.
Option C--Life Income. Payments to be made each month for the lifetime of the
payee. We guarantee that payments will be made for a minimum of 10, 15 or 20
years, as agreed upon.
Option D--Interest. We will pay interest on the proceeds We hold, calculated at
the compound rate of 3% per year. We will make interest payments at 12, 6, 3 or
1 month intervals.
Option E--Interest: Retained Asset Account (Performance Plus Account). We will
pay interest on the proceeds We hold, based on the floating 13-week U.S.
Treasury Bill rate fixed quarterly. The payee can write checks against such
account at any time and in any amount up to the total in the account. The
checks must be for a minimum of $250.
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 2.5% per year. The interest
rate for Option E will not be less than 2% per year.
Unless otherwise stated in the election of any option, the payee of the policy
benefits shall have the right to receive the withdrawal value under that
option. For Options A, D and E, 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. We will calculate this
withdrawal value on the same basis as the original payments. For Option C, the
withdrawal value will be the commuted value of any remaining guaranteed
payments. If the payee is alive at the end of the guarantee period, We will
resume the payment on that date. The payment will then continue for the
lifetime of the payee.
If the payee of the 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 SETTLEMENT OPTION
VALUES
We will calculate the value of the Settlement Options as set forth in the
Policy.
the company
- --------------------------------------------------------------------------------
Jefferson Pilot Financial Insurance Company ("JP Financial") is a stock life
insurance company originally chartered in 1903 in Tennessee and has been
continuously engaged in the insurance business since that time. Prior to May 1,
1998, JP Financial was known as Chubb Life Insurance Company of America ("Chubb
Life"). Prior to July 1, 1991, Chubb Life was known as The Volunteer State Life
Insurance Company. On July 1, 1991, Chubb Life redomesticated from the State of
Tennessee to the State of New Hampshire and is now a New Hampshire life
insurance company. Effective April 30, 1997, Chubb Life, formerly a
wholly-owned subsidiary of The Chubb Corporation, became 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
336-691-3000.
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<PAGE>
JP Financial's home office and service center are located at One Granite Place,
Concord, New Hampshire 03301; its telephone number is 800-258-3648.
JP Financial 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 and its subsidiaries had total assets, at December 31, 1998, of
$5.5 billion and had over $68 billion of insurance in force, while total assets
of Jefferson-Pilot Corporation and its subsidiaries (including JP Financial), as
of the same date, were approximately $24 billion.
JP Financial writes individual life insurance and annuities. 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
(Superior) by Duff & Phelps, AAA (Superior) 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.
directors and officers
- --------------------------------------------------------------------------------
MANAGEMENT OF JP FINANCIAL
Executive Officers and Directors of JP Financial
Directors
<TABLE>
<CAPTION>
Principal Occupation and
Name Business Address
- -------------------------------------------------------------------------------------------
<S> <C>
Dennis R. Glass .............. Executive Vice President
(also serves as Executive Vice President, Chief Financial
Officer and Treasurer of Jefferson-Pilot Corporation and
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 ........... President
(also serves as Executive Vice President of Jefferson-Pilot
Life Insurance Company)
100 North Greene Street
Greensboro, North Carolina 27401
David A. Stonecipher ......... 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
(also serves as Executive Vice President of Jefferson-Pilot
Life Insurance Company)
100 North Greene Street
Greensboro, North Carolina 27401
</TABLE>
23
<PAGE>
Executive Officers (Other Than Directors)
<TABLE>
<CAPTION>
Name Position
- ---- --------
<S> <C>
Charles C. Cornelio ................. Executive Vice President
Leslie L. Durland ................... Executive Vice President
John D. Hopkins ..................... Executive Vice President, General Counsel
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, Chief Life Actuary
Richard T. Stange ................... Senior Vice President, Deputy General Counsel
Paul J. Strong ...................... Senior Vice President
John W. Wells ....................... Senior Vice President
James R. Abernathy .................. Vice President
Margaret O. Cain .................... Vice President
Rebecca M. Clark .................... Vice President
Richard C. Dielensnyder ............. Vice President
Kenneth S. Dwyer .................... Vice President
Ronald H. 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 and Medical Director
Robert A. Reed ...................... Vice President, Secretary
James M. Sandelli ................... Vice President
Russell C. Simpson .................. Vice President and Treasurer
William A. Spencer .................. Vice President
Francis A. Sutherland, Jr. .......... Vice President
John A. Thomas ...................... Vice President
John A. Weston ...................... Vice President
</TABLE>
The officers and employees of JP Financial who have access to the assets of
Separate Account C are covered by a fidelity bond issued by American
International Group in the amount of $20,000,000.
additional information
- --------------------------------------------------------------------------------
> REPORTS TO POLICYOWNERS
We will maintain all records relating to the Separate Account. At least once in
each Policy Year, We will send You an Annual Summary containing the following
information:
1. A statement of the current Accumulation Value and Cash Value since the
prior report or since the Issue Date, if there has been no prior report;
2. A statement of all premiums paid and all charges incurred;
3. The balance of outstanding Policy Loans for the previous calendar year;
4. Any reports required by the 1940 Act.
We will promptly mail confirmation notices at the time of the following
transactions:
1. policy issue;
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 Death Benefit Option 1 and Option 2;
7. increases or decreases in Specified Amount;
8. withdrawals, surrenders or loans;
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9. receipt of loan repayments;
10. reinstatements; and
11. redemptions due to insufficient funds.
> RIGHT TO INSTRUCT VOTING OF FUND SHARES
In accordance with our view of present applicable law, We will vote the shares
of the Funds held in the Separate Account in accordance with instructions
received from Policyowners having a voting interest in the Funds. Policyowners
having such an interest will receive periodic reports relating to the Fund,
proxy material and a form for giving voting instructions. The number of shares
You have a right to vote will be determined as of a record date established by
the Fund. The number of votes that You are entitled to direct with respect to a
Fund will be determined by dividing Your Policy's Accumulation Value in a
Division by the net asset value per share of the corresponding Portfolio in
which the Division invests. We will solicit Your voting instructions by mail at
least 14 days before any shareholders meeting.
We will cast the votes at meetings of the shareholders of the Fund and the
votes will be based on instructions received from Policyowners. However, if the
Investment Company Act of 1940 or any regulations thereunder should be amended
or if the present interpretation should change and, as a result, We determine
that We are permitted to vote the shares in Our own right, We may elect to do
so.
We will solicit voting instructions by written communication prior to such
meeting. We will vote Fund shares for which We do not receive timely
instructions and Fund shares which are not otherwise attributable to
Policyowners in the same proportion as the voting instruction We receive for
all Policies participating in each Fund through the Separate Account. We
reserve the right to vote any or all such shares at Our discretion to the
extent consistent with then current interpretations of the 1940 Act and rules
thereunder.
> DISREGARD OF VOTING INSTRUCTIONS
When required by state insurance regulatory authorities, We may disregard
voting instructions if the instructions require that shares be voted so as to
cause a change in sub-classification or investment objectives of the Fund or to
approve or disapprove an investment advisory contract for the Fund. We may also
disregard voting instructions initiated by a Policyowner in favor of changes in
the investment policy or the investment adviser of the Fund if We reasonably
disapprove of such changes.
We only disapprove a change if the proposed change is contrary to state law or
prohibited by state regulatory authorities or if We determine that the change
would have an adverse effect on the Separate Account if the proposed investment
policy for a fund would result in overly speculative or unsound investments. In
the event that We do disregard voting instructions, a summary of that action
and the reasons for such action will be included in the next annual report to
Policyowners.
> STATE REGULATION
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.
We will offer the Policy for sale in all jurisdictions where We are authorized
to do business and where the Policy has been approved by the appropriate
insurance department or regulatory authorities. Any significant variations from
the information appearing in this Prospectus which are required due to
individual state requirements are contained in endorsements to the Policy.
> LEGAL MATTERS
We know of no pending material proceedings to which either the Separate Account
or the Company is a party or which would materially affect the Separate
Account. The legal validity of the securities described in the prospectus has
been passed on by Our Counsel. The law firm of Jorden Burt Boros Cicchetti
Berenson & Johnson, 1025 Thomas Jefferson Street, Suite 400, East Lobby,
Washington, DC
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20007-5201, serve as Our Special Counsel with regard to federal securities
laws.
> THE REGISTRATION STATEMENT
We have filed a Registration Statement under the Securities Act of 1933
relating to the offering described in this Prospectus. This Prospectus does not
include all of the information set forth in the Registration Statement, certain
portions of which have been omitted pursuant to SEC rules and regulations. You
should refer to the instrument as filed to obtain any omitted information.
> FINANCIAL STATEMENTS
Our financial statements which are included in the Prospectus should be
considered only as bearing on Our ability to meet Our obligations under the
Policy. They should not be considered as bearing on the investment experience
of the assets held in the Separate Account.
> EMPLOYMENT BENEFIT PLANS
Employers and employee organizations should consider, in connection with
counsel, the impact of Title VII of the Civil Rights Act of 1964 on the
purchase of this policy in connection with an employment-related insurance or
benefit plan. The U.S. 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.
> DISTRIBUTION OF THE POLICY
Jefferson Pilot Variable Corporation (JPVC), a North Carolina corporation
incorporated on January 13, 1970, will serve as principal underwriter of the
securities offered under the Policy as defined by the federal securities laws.
The Policy will be sold by individuals who, in addition to being licensed as
life insurance agents for Us, are also registered representatives of
broker-dealers who have entered into written sales agreements with JPVC. Each
such broker-dealer will receive as a commission the full charge of 3% imposed
on premiums. Any such broker-dealers will be registered with the SEC and will
be members of the National Association of Securities Dealers, Inc. We may also
offer and sell policies directly.
Jefferson Pilot Variable 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.
> INDEPENDENT AUDITORS
Ernst & Young LLP, 200 Clarendon Street, Boston, Massachusetts, are the
independent auditors of the Separate Account and Ernst & Young LLP, 100 North
Greene Street, Greensboro, North Carolina, are the independent auditors for the
Company. The services provided to the Separate Account include primarily the
audits of the Separate Account's financial statements.
> YEAR 2000
Year 2000 Issue:
The year 2000 issue relates to the way computer systems and programs define
calendar dates. By using only two digit dates, they could fail or make
miscalculations due to the inability to distinguish between dates in the 1900's
and in the 2000's. The potential problem also exists in some systems and
equipment not typically thought of as "computer-related" (referred to as
"non-IT") which contain hardware or software that must handle dates.
In 1995, Our parent, Jefferson-Pilot Corporation (the "Company"), began work on
a project to ensure the Year 2000 compliance of all systems, non-IT embedded
software equipment, and all Company key vendors and service providers. The
target completion date for the project is September 30, 1999.
The Company has completed the assessment and strategy phases for mainframe
applications, operating systems and hardware. The Company's new business and
policyholder administration systems and the general ledger are on the
mainframe. Currently, the majority of all mainframe systems have been tested to
confirm that their performance will not be affected by dates extending after
1999 and are compliant. With respect to significant policyholder systems, the
majority of the testing has been completed. For other mainframe systems the
project is on schedule.
For the majority of its non-IT related systems and equipment, the Company has
been advised by vendors that systems and equipment are currently Year
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2000 compliant. The Company is obtaining written documentation regarding
compliance. Completion for non-IT systems and equipment is scheduled for
September 1999.
The most significant category of key business partners is financial
institutions. Their critical functions include safeguarding and managing
investment portfolios, processing of the Company's operating bank accounts, and
sales/distribution. Other partner categories include insurance agents and
marketing organizations, suppliers of communication services, utilities,
materials and supplies. The Company has conducted surveys of all its software
and hardware vendors and testing is underway. Critical business partners have
been identified and surveys initiated. Results of these surveys are being
analyzed and appropriate testing or other due diligence conducted in the second
and third quarters of 1999.
The Company expects its critical policyholder systems to be compliant by the
end of the second quarter of 1999.
From Year 2000 problems, the Company could experience an interruption in its
ability to collect and process premiums, process claim payments, safeguard and
manage its invested assets and operating cash accounts, accurately maintain
policyholder information, accurately maintain accounting records, issue new
policies and/or perform adequate customer service. While the Company believes
the occurrence of such a situation is unlikely, a possible worst case scenario
might include one or more of the Company's significant policyholder systems
being non-compliant, resulting in a material disruption to the Company's
operations.
Although the Company plans completion of certification of all internal systems
and non-IT equipment well in advance of 2000, the Company recognizes the need
to plan for unanticipated problems resulting from failure of internal systems
or equipment or from failures of the Company's business partners, providers,
suppliers or other critical third parties. The Company began work on
contingency plans for all mission critical functions in the first quarter of
1999.
> GROUP OR SPONSORED ARRANGEMENTS
Policies may be purchased under group or sponsored arrangements. 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. 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.
We may reduce the following types of charges for Policies issued in connection
with group or sponsored arrangements: the cost of insurance charge, surrender
or withdrawal charges, administrative charges, charges for withdrawal or
transfer, the guaranteed death benefit charge and charges for optional rider
benefits. We may also issue Policies in connection with group or sponsored
arrangements on a "non-medical" or 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. We may also
specify different minimum Specified Amounts at issue for Policies issued in
connection with group or sponsored arrangements.
We may also reduce or eliminate certain charges or underwriting requirements
for Policies issued in connection with an exchange of another JP Financial
policy or a policy of any JP Financial affiliate.
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. Reductions and
modifications will not be made where prohibited by applicable law and will not
be unfairly discriminatory.
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tax matters
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> GENERAL
Following is a discussion of the federal income tax considerations relating to
the Policy. This discussion is based on Our understanding of federal income tax
laws as they now exist and are currently interpreted by the Internal Revenue
Service. These laws are complex and tax results may vary among individuals.
Anyone contemplating the purchase of or the exercise of elections under the
Policy should seek competent tax advice.
> FEDERAL TAX STATUS OF THE COMPANY
We are taxed as a life insurance company in accordance with the Internal
Revenue Code of 1986, as amended (the "Code"). For federal income tax purposes,
the operations of each Separate Account form a part of Our total operations and
are not taxed separately, although operations of each Separate Account are
treated separately for accounting and financial statement purposes.
Both investment income and realized capital gains of the Separate Account are
reinvested without tax since the Code does not impose a tax on the Separate
Account for these amounts. However, we reserve the right to make a deduction
for such tax should it be imposed in the future.
> LIFE INSURANCE QUALIFICATION
The Policy contains provisions not found in traditional life insurance
policies. Moreover, the Code does not directly address how it applies to
survivorship policies. In the absence of final regulations or other guidance
under the Code regarding this form of contract, there is necessarily some
uncertainty as to whether a survivorship policy will meet the Code's definition
of life insurance contract. However, We believe that it 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. Policyowners should consult with their own tax advisers in this
regard.
Section 7702 of the Code includes a definition of life insurance for tax
purposes. The definition provides limitations on the relationship between the
death benefit and the account value. If necessary, We will increase your Death
Benefit to maintain compliance with Section 7702.
The Policy is intended to qualify as life insurance under the Code. The Death
Benefit provided by the Policy is intended to qualify for federal income tax
exclusion. If at any time the premium paid under the Policy exceeds the amount
allowable for such qualification, We will refund the premium to You with
interest within 60 days after the end of the Policy Year in which We received
the premium. If, for any reason, We do not refund the excess premium within
that 60-day period, the excess premium will be held in a separate deposit fund
and credited with interest until refunded to You. The interest rate used on any
refund, or credited to the separate deposit fund created by this provision,
will be the excess premium's pro rata rate of return on the contract until the
date We notify You that the excess premium and the earnings on such excess
premium have been removed from the Policy. After the date of such notice, the
interest rate paid on the separate deposit fund will be such rate as We may
declare from time to time on advance premium deposit funds. You may be notified
of other options available to You to keep Your policy in compliance with the
Code. You may also choose to have the Policy become a modified endowment
contract. We also reserve the right to refuse to make any change in the
Specified Amount or the Death Benefit Option or any other change if such change
would cause the Policy to fail to qualify as life insurance uner the Code.
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.
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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 prospective 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.
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 You request 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,
as defined above, which occurs in the policy year it becomes a modified
endowment contract and in any year thereafter, will be taxable income to You.
Also, any distributions within two years before a Policy becomes a modified
endowment contract will also be income taxable to You to the extent that
accumulation value exceeds investment in the Policy, 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. We believe that the Policies meet this
definition. 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 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, You
are advised to consult a tax adviser or attorney for more complete tax
information, specifically regarding the applicability of the Code provisions to
Your situation.
Under normal circumstances, the Policy is not a modified endowment contract and
loans received under the Policy will be construed as Your indebtedness. You are
advised to consult a tax adviser or
29
<PAGE>
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 You. 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 You have paid that have not been previously
withdrawn.
If You make a partial withdrawal, surrender, loan or exchange of the Policy, We
may be required to withhold federal income tax from the portion of the money
You receive that is includable in Your 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 We make the payment. In addition, if You fail to
provide Us with a correct taxpayer identification number (usually a social
security number) or if the Treasury notifies Us 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, You are 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 You
elect not to have federal income tax withheld, or if the amount withheld is
insufficient, then You may be responsible for payment of estimated tax. You may
also incur penalties under the estimated tax rules if the withholding and
estimated tax payments are insufficient. We suggest that You 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 non-qualified
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. If the Policyowner is the last surviving insured,
the Death Benefit proceeds will generally be includable in the Policyowner's
estate on his or her death for purposes of the federal estate tax. If the
Policyowner dies and was not the last surviving Insured, the fair market value
of the Policy may be included in the Policyowner's estate. In general, Death
Benefit proceeds are not included in the last surviving Insured's estate if he
or she neither retained incidents of ownership at death nor had given up
ownership within three years before death.
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. We believe We presently are in
compliance with the diversification requirements as set forth in the
regulations and intend 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, income
earned on a Policy would be taxable to You 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
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<PAGE>
privileges and investments in a division focusing on a particular investment
sector. 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. However, We
have reserved certain rights to alter the Policy and investment alternatives so
as to comply with such regulation or ruling. We believe 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.
Policyowners are advised that the exercise of an Exchange of Insured Rider will
give rise to tax consequences and are urged to consult with a tax adviser prior
to exercising such rider.
The foregoing summary does not purport to be complete or to cover all
situations, including the possible tax consequence of changes in ownership.
Counsel and other competent advisers should be consulted for more complete
information.
> CHARGES FOR JP FINANCIAL INCOME TAXES
We are 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 We will include flexible premium life insurance operations in Our
tax return in accordance with these rules.
Currently no charge is made against the Separate Account for Our federal income
taxes, or provisions for such taxes, that may be attributable to the Separate
Account. We may charge each Division for its portion of any income tax charged
to JP Financial on the Division or its assets. Under present laws, We 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, We may
decide to make charges for such taxes or provisions for such taxes against the
Separate Account. We would retain any investment earnings on any tax charges
accumulated in a Division. Any such charges against the Separate Account or its
Divisions could have an adverse effect on the investment experience of such
Division.
miscellaneous policy provisions
- --------------------------------------------------------------------------------
> THE POLICY
The Policy You receive, the application You make when You purchase the Policy,
any applications for any changes approved by Us and any riders constitute the
whole contract. Copies of all applications are attached to and made part of the
Policy.
Application forms are completed by the applicants and forwarded to Us for
acceptance. Upon acceptance, the Policy is prepared, executed by duly
authorized officers of the Company and forwarded to You.
We reserve the right to make a change in the Policy; however, We will not
change any terms of the Policy beneficial to You.
> PAYMENT OF BENEFITS
All benefits are payable at Our Home Office. We may require submission of the
Policy before We grant Policy Loans, make changes or pay benefits.
> CHANGES IN OWNER AND BENEFICIARY;
ASSIGNMENT
You designate the original and contingent Beneficiaries on the application.
Unless otherwise stated in the Policy, You may change the Policyowner and the
Beneficiary at any time while the Policy is in force. A request for such change
must be made in writing and sent to Us at Our Home Office. After We have agreed
to the change, in writing, it will take effect as of the date on which Your
written request was signed.
The Policy may also be assigned. We must be notified in writing if the Policy
has been assigned. Each assignment will be subject to any payments made or
action taken by Us prior to Our notification of such assignment. We are not
responsible for the validity of an assignment. Your rights and the rights of
the Beneficiary will be subject to the rights of any assignee of record.
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<PAGE>
> ILLUSTRATION OF BENEFITS AND VALUES
You 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 We do not
currently charge a fee for such illustrations, We reserve the right to charge
an administrative fee, not to exceed $25, to cover the cost of preparing the
illustrations.
> PROTECTION OF PROCEEDS
To the extent provided by law, the Policy proceeds are not subject to claims by
a Beneficiary's creditors or to any legal process against any Beneficiary.
> NONPARTICIPATION
The Policy is not entitled to share in Our divisible surplus. No dividends are
payable.
> ADDITIONS, DELETIONS OR SUBSTITUTIONS OF INVESTMENTS
We reserve 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 a Portfolio should no
longer be available for investment or if, in the judgment of Our management,
further investment in shares of a Portfolio should become inappropriate in view
of the purposes of the Policy, We 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 SEC, all to the
extent required by the 1940 Act. Any surrender by a Policyowner due to a change
in a Portfolio's investment policy will incur any applicable Surrender Charges.
Portfolio shares are subject to certain investment restrictions which may not
be changed without the approval of the majority of the holders of such
Portfolio. See the accompanying Prospectuses for the Funds.
> PREMIUM DEPOSIT FUND
As a convenience to You, We allow You 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 rate of 4%, with
interest credited on each monthly anniversary date. Interest on these funds is
not tax deferred and will be reported annually on Form 1099. An amount equal to
the Planned Periodic Premium will be transferred on the Policy Date to pay
premiums on the Policy. You may withdraw all or part of the funds from the PDF
at any time. Commissions are not earned or paid until premium payments are made
pursuant to transfers from the PDF.
> SUICIDE AND INCONTESTABILITY
Suicide Exclusion--In most states, if one or both Insureds die by suicide,
while sane or insane, within 2 years from the Issue Date of this Policy, this
Policy will end and We will refund premiums paid, without interest, less any
Policy Debt and less any withdrawal. For JPF Heritage II, if the first death is
by suicide and We classify the surviving Insured as insurable on the Policy
Date, upon request of the Policyowner and without evidence of insurability, We
will issue 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.
Incontestability--We 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 two years
from the date of issue or reinstatement. We will not contest or revoke any
increase in the Specified Amount 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, We will adjust the benefits payable to reflect the
correct age or sex.
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.
32
<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-14 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-15 through A-26 illustrate a JPF Heritage
II Policy issued to a male, age 35, 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. 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
Portfolios, as a result of expenses paid by the Portfolios 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 plus an assumed charge of .52% of the aggregate
average daily net assets to cover expenses incurred by the Portfolios. The .42%
investment advisory fee is an average of the individual investment advisory
fees of the five Portfolios. The policy values also take into account a daily
charge to each Division of Separate Account C for the Mortality Risk Charge,
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 -1.59%, 4.41%, and 10.41%, 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.
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
A-1
<PAGE>
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
JPF 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: 12% (10.41% net)
$1,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1): $12,000
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED --------------------------------------------- ------------------------------------------
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 11,887 11,287 1,000,000 10,596 9,996 1,000,000
2 25,830 24,935 24,455 1,000,000 22,233 21,753 1,000,000
3 39,721 39,207 38,847 1,000,000 34,992 34,632 1,000,000
4 54,308 54,876 54,636 1,000,000 48,986 48,746 1,000,000
5 69,623 72,111 71,991 1,000,000 64,329 64,209 1,000,000
6 85,704 91,079 91,079 1,000,000 81,160 81,160 1,000,000
7 102,589 111,957 111,957 1,000,000 99,614 99,614 1,000,000
8 120,319 134,940 134,940 1,000,000 119,871 119,871 1,000,000
9 138,935 160,255 160,255 1,000,000 142,106 142,106 1,000,000
10 158,481 188,174 188,174 1,000,000 166,550 166,550 1,000,000
11 179,006 218,994 218,994 1,000,000 193,446 193,446 1,000,000
12 200,556 252,992 252,992 1,000,000 223,059 223,059 1,000,000
13 223,184 290,514 290,514 1,000,000 255,689 255,689 1,000,000
14 246,943 331,932 331,932 1,000,000 291,671 291,671 1,000,000
15 271,890 377,669 377,669 1,000,000 331,371 331,371 1,000,000
16 298,084 428,214 428,214 1,000,000 375,216 375,216 1,000,000
17 325,589 484,077 484,077 1,000,000 423,656 423,656 1,000,000
18 354,468 545,844 545,844 1,000,000 477,209 477,209 1,000,000
19 384,791 614,196 614,196 1,007,281(3) 536,476 536,476 1,000,000
20 416,631 689,766 689,766 1,082,932(3) 602,132 602,132 1,000,000
25 601,361 1,202,027 1,202,027 1,610,716(3) 1,049,393 1,049,393 1,406,186(3)
30 837,129 2,037,067 2,037,067 2,485,222(3) 1,774,411 1,774,411 2,164,781(3)
35 1,138,036 3,391,906 3,391,906 3,934,611(3) 2,940,394 2,940,394 3,410,857(3)
40 1,522,077 5,598,239 5,598,239 5,990,116(3) 4,826,817 4,826,817 5,164,694(3)
45 2,012,222 9,224,332 9,224,332 9,685,549(3) 7,918,247 7,918,247 8,314,160(3)
50 2,637,785 15,047,454 15,047,454 15,799,827(3) 12,817,105 12,817,105 13,457,960(3)
55 3,436,179 24,251,940 24,251,940 25,464,537(3) 20,398,878 20,398,878 21,418,822(3)
60 4,455,155 39,257,567 39,257,567 39,650,143(3) 32,718,327 32,718,327 33,045,510(3)
65 5,755,655 64,949,924 64,949,924 64,949,924(3) 54,143,523 54,143,523 54,143,523(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
JPF 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: 12% (10.41% net)
$1,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1): $12,000
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED ------------------------------------------ ------------------------------------------
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 11,887 11,287 1,000,000 10,596 9,996 1,000,000
2 25,830 24,935 24,455 1,000,000 22,233 21,753 1,000,000
3 39,721 39,207 38,847 1,000,000 34,992 34,632 1,000,000
4 54,308 54,876 54,636 1,000,000 48,986 48,746 1,000,000
5 69,623 72,111 71,991 1,000,000 64,329 64,209 1,000,000
6 85,704 91,079 91,079 1,000,000 81,160 81,160 1,000,000
7 102,589 111,957 111,957 1,000,000 99,614 99,614 1,000,000
8 120,319 134,940 134,940 1,000,000 119,871 119,871 1,000,000
9 138,935 160,255 160,255 1,000,000 142,106 142,106 1,000,000
10 158,481 188,174 188,174 1,000,000 166,550 166,550 1,000,000
11 179,006 218,994 218,994 1,000,000 193,446 193,446 1,000,000
12 200,556 252,992 252,992 1,000,000 223,059 223,059 1,000,000
13 223,184 290,514 290,514 1,000,000 255,689 255,689 1,000,000
14 246,943 331,932 331,932 1,000,000 291,671 291,671 1,000,000
15 271,890 377,653 377,653 1,042,322(3) 331,371 331,371 1,000,000
16 298,084 427,981 427,981 1,142,709(3) 375,216 375,216 1,001,826(3)
17 325,589 483,284 483,284 1,251,705(3) 423,412 423,412 1,096,638(3)
18 354,468 544,018 544,018 1,365,486(3) 476,092 476,092 1,194,991(3)
19 384,791 610,719 610,719 1,484,048(3) 533,646 533,646 1,296,759(3)
20 416,631 683,908 683,908 1,614,022(3) 596,438 596,438 1,407,594(3)
25 601,361 1,169,794 1,169,794 2,386,380(3) 1,005,528 1,005,528 2,051,278(3)
30 837,129 1,928,023 1,928,023 3,431,882(3) 1,624,982 1,624,982 2,892,468(3)
35 1,138,036 3,092,223 3,092,223 4,885,713(3) 2,541,291 2,541,291 4,015,240(3)
40 1,522,077 4,850,383 4,850,383 6,887,543(3) 3,864,351 3,864,351 5,487,378(3)
45 2,012,222 7,460,837 7,460,837 9,773,697(3) 5,712,928 5,712,928 7,483,936(3)
50 2,637,785 11,284,230 11,284,230 13,766,761(3) 8,272,979 8,272,979 10,093,034(3)
55 3,436,179 16,839,245 16,839,245 19,533,524(3) 11,763,902 11,763,902 13,646,126(3)
60 4,455,155 24,955,159 24,955,159 27,700,227(3) 16,643,546 16,643,546 18,474,336(3)
65 5,755,655 38,248,096 38,248,096 39,778,019(3) 23,493,381 23,493,381 24,433,116(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
JPF 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% (4.41% net)
$1,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1): $12,000
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED ------------------------------------------ ------------------------------------------
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 11,229 10,629 1,000,000 9,977 9,377 1,000,000
2 25,830 22,880 22,400 1,000,000 20,333 19,853 1,000,000
3 39,721 34,912 34,552 1,000,000 31,055 30,695 1,000,000
4 54,308 47,386 47,146 1,000,000 42,153 41,913 1,000,000
5 69,623 60,344 60,224 1,000,000 53,629 53,509 1,000,000
6 85,704 73,809 73,809 1,000,000 65,494 65,494 1,000,000
7 102,589 87,796 87,796 1,000,000 77,740 77,740 1,000,000
8 120,319 102,324 102,324 1,000,000 90,391 90,391 1,000,000
9 138,935 117,419 117,419 1,000,000 103,442 103,442 1,000,000
10 158,481 133,093 133,093 1,000,000 116,919 116,919 1,000,000
11 179,006 149,383 149,383 1,000,000 130,810 130,810 1,000,000
12 200,556 166,302 166,302 1,000,000 145,126 145,126 1,000,000
13 223,184 183,878 183,878 1,000,000 159,892 159,892 1,000,000
14 246,943 202,126 202,126 1,000,000 175,130 175,130 1,000,000
15 271,890 221,069 221,069 1,000,000 190,840 190,840 1,000,000
16 298,084 240,748 240,748 1,000,000 207,041 207,041 1,000,000
17 325,589 261,162 261,162 1,000,000 223,714 223,714 1,000,000
18 354,468 282,323 282,323 1,000,000 240,844 240,844 1,000,000
19 384,791 304,272 304,272 1,000,000 258,427 258,427 1,000,000
20 416,631 327,024 327,024 1,000,000 276,440 276,440 1,000,000
25 601,361 453,871 453,871 1,000,000 372,990 372,990 1,000,000
30 837,129 605,757 605,757 1,000,000 480,165 480,165 1,000,000
35 1,138,036 792,888 792,888 1,000,000 597,691 597,691 1,000,000
40 1,522,077 1,036,646 1,036,646 1,109,211(3) 731,578 731,578 1,000,000
45 2,012,222 1,343,979 1,343,979 1,411,178(3) 907,155 907,155 1,000,000
50 2,637,785 1,712,284 1,712,284 1,797,899(3) 1,163,948 1,163,948 1,222,145(3)
55 3,436,179 2,142,794 2,142,794 2,249,933(3) 1,457,382 1,457,382 1,530,251(3)
60 4,455,155 2,680,857 2,680,857 2,707,665(3) 1,825,984 1,825,984 1,844,244(3)
65 5,755,655 3,413,863 3,413,863 3,413,863(3) 2,345,293 2,345,293 2,345,293(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
JPF 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% (4.41% net)
$1,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1): $12,000
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED ------------------------------------------ ------------------------------------------
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 11,229 10,629 1,000,000 9,977 9,377 1,000,000
2 25,830 22,880 22,400 1,000,000 20,333 19,853 1,000,000
3 39,721 34,912 34,552 1,000,000 31,055 30,695 1,000,000
4 54,308 47,386 47,146 1,000,000 42,153 41,913 1,000,000
5 69,623 60,344 60,224 1,000,000 53,629 53,509 1,000,000
6 85,704 73,809 73,809 1,000,000 65,494 65,494 1,000,000
7 102,589 87,796 87,796 1,000,000 77,740 77,740 1,000,000
8 120,319 102,324 102,324 1,000,000 90,391 90,391 1,000,000
9 138,935 117,419 117,419 1,000,000 103,442 103,442 1,000,000
10 158,481 133,093 133,093 1,000,000 116,919 116,919 1,000,000
11 179,006 149,383 149,383 1,000,000 130,810 130,810 1,000,000
12 200,556 166,302 166,302 1,000,000 145,126 145,126 1,000,000
13 223,184 183,878 183,878 1,000,000 159,892 159,892 1,000,000
14 246,943 202,126 202,126 1,000,000 175,130 175,130 1,000,000
15 271,890 221,069 221,069 1,000,000 190,840 190,840 1,000,000
16 298,084 240,748 240,748 1,000,000 207,041 207,041 1,000,000
17 325,589 261,162 261,162 1,000,000 223,714 223,714 1,000,000
18 354,468 282,323 282,323 1,000,000 240,844 240,844 1,000,000
19 384,791 304,272 304,272 1,000,000 258,427 258,427 1,000,000
20 416,631 327,024 327,024 1,000,000 276,440 276,440 1,000,000
25 601,361 453,871 453,871 1,000,000 372,990 372,990 1,000,000
30 837,129 604,713 604,713 1,076,390(3) 480,165 480,165 1,000,000
35 1,138,036 777,175 777,175 1,227,937(3) 597,691 597,691 1,000,000
40 1,522,077 968,696 968,696 1,375,548(3) 729,900 729,900 1,036,458(3)
45 2,012,222 1,176,036 1,176,036 1,540,607(3) 864,481 864,481 1,132,470(3)
50 2,637,785 1,396,237 1,396,237 1,703,409(3) 996,654 996,654 1,215,917(3)
55 3,436,179 1,628,287 1,628,287 1,888,812(3) 1,122,861 1,122,861 1,302,519(3)
60 4,455,155 1,878,824 1,878,824 2,085,495(3) 1,253,759 1,253,759 1,391,672(3)
65 5,755,655 2,234,309 2,234,309 2,323,681(3) 1,391,630 1,391,630 1,447,295(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
JPF 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% (-1.59% net)
$1,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1): $12,000
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED ------------------------------------ ------------------------------------
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 10,572 9,972 1,000,000 9,360 8,760 1,000,000
2 25,830 20,904 20,424 1,000,000 18,508 18,028 1,000,000
3 39,721 30,942 30,582 1,000,000 27,422 27,062 1,000,000
4 54,308 40,733 40,493 1,000,000 36,096 35,856 1,000,000
5 69,623 50,301 50,181 1,000,000 44,517 44,397 1,000,000
6 85,704 59,650 59,650 1,000,000 52,682 52,682 1,000,000
7 102,589 68,777 68,777 1,000,000 60,568 60,568 1,000,000
8 120,319 77,676 77,676 1,000,000 68,183 68,183 1,000,000
9 138,935 86,354 86,354 1,000,000 75,505 75,505 1,000,000
10 158,481 94,796 94,796 1,000,000 82,541 82,541 1,000,000
11 179,006 103,019 103,019 1,000,000 89,262 89,262 1,000,000
12 200,556 110,982 110,982 1,000,000 95,657 95,657 1,000,000
13 223,184 118,683 118,683 1,000,000 101,716 101,716 1,000,000
14 246,943 126,103 126,103 1,000,000 107,429 107,429 1,000,000
15 271,890 133,232 133,232 1,000,000 112,768 112,768 1,000,000
16 298,084 140,076 140,076 1,000,000 117,725 117,725 1,000,000
17 325,589 146,598 146,598 1,000,000 122,246 122,246 1,000,000
18 354,468 152,769 152,769 1,000,000 126,280 126,280 1,000,000
19 384,791 158,586 158,586 1,000,000 129,785 129,785 1,000,000
20 416,631 164,010 164,010 1,000,000 132,691 132,691 1,000,000
25 601,361 184,043 184,043 1,000,000 136,450 136,450 1,000,000
30 837,129 186,546 186,546 1,000,000 114,283 114,283 1,000,000
35 1,138,036 159,974 159,974 1,000,000 44,766 44,766 1,000,000
40 1,522,077 81,543 81,543 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
JPF 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% (-1.59% net)
$1,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1): $12,000
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED ------------------------------------ ------------------------------------
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 10,572 9,972 1,000,000 9,360 8,760 1,000,000
2 25,830 20,904 20,424 1,000,000 18,508 18,028 1,000,000
3 39,721 30,942 30,582 1,000,000 27,422 27,062 1,000,000
4 54,308 40,733 40,493 1,000,000 36,096 35,856 1,000,000
5 69,623 50,301 50,181 1,000,000 44,517 44,397 1,000,000
6 85,704 59,650 59,650 1,000,000 52,682 52,682 1,000,000
7 102,589 68,777 68,777 1,000,000 60,568 60,568 1,000,000
8 120,319 77,676 77,676 1,000,000 68,183 68,183 1,000,000
9 138,935 86,354 86,354 1,000,000 75,505 75,505 1,000,000
10 158,481 94,796 94,796 1,000,000 82,541 82,541 1,000,000
11 179,006 103,019 103,019 1,000,000 89,262 89,262 1,000,000
12 200,556 110,982 110,982 1,000,000 95,657 95,657 1,000,000
13 223,184 118,683 118,683 1,000,000 101,716 101,716 1,000,000
14 246,943 126,103 126,103 1,000,000 107,429 107,429 1,000,000
15 271,890 133,232 133,232 1,000,000 112,768 112,768 1,000,000
16 298,084 140,076 140,076 1,000,000 117,725 117,725 1,000,000
17 325,589 146,598 146,598 1,000,000 122,246 122,246 1,000,000
18 354,468 152,769 152,769 1,000,000 126,280 126,280 1,000,000
19 384,791 158,586 158,586 1,000,000 129,785 129,785 1,000,000
20 416,631 164,010 164,010 1,000,000 132,691 132,691 1,000,000
25 601,361 184,043 184,043 1,000,000 136,450 136,450 1,000,000
30 837,129 186,546 186,546 1,000,000 114,283 114,283 1,000,000
35 1,138,036 159,974 159,974 1,000,000 44,766 44,766 1,000,000
40 1,522,077 81,543 81,543 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
JPF 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% (10.41% net)
$1,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1): $12,000
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED -------------------------------------- ---------------------------------------
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 11,881 11,281 1,011,881 10,577 9,977 1,010,577
2 25,830 24,916 24,436 1,024,916 22,171 21,691 1,022,171
3 39,721 39,159 38,799 1,039,159 34,856 34,496 1,034,856
4 54,308 54,781 54,541 1,054,781 48,735 48,495 1,048,735
5 69,623 71,944 71,824 1,071,944 63,913 63,793 1,063,913
6 85,704 90,810 90,810 1,090,810 80,512 80,512 1,080,512
7 102,589 111,546 111,546 1,111,546 98,651 98,651 1,098,651
8 120,319 134,335 134,335 1,134,335 118,488 118,488 1,118,488
9 138,935 159,391 159,391 1,159,391 140,170 140,170 1,140,170
10 158,481 186,967 186,967 1,186,967 163,895 163,895 1,163,895
11 179,006 217,342 217,342 1,217,342 189,865 189,865 1,189,865
12 200,556 250,758 250,758 1,250,758 218,296 218,296 1,218,296
13 223,184 287,528 287,528 1,287,528 249,428 249,428 1,249,428
14 246,943 327,974 327,974 1,327,974 283,523 283,523 1,283,523
15 271,890 372,463 372,463 1,372,463 320,855 320,855 1,320,855
16 298,084 421,424 421,424 1,421,424 361,744 361,744 1,361,744
17 325,589 475,265 475,265 1,475,265 406,493 406,493 1,406,493
18 354,468 534,450 534,450 1,534,450 455,436 455,436 1,455,436
19 384,791 599,533 599,533 1,599,533 508,954 508,954 1,508,954
20 416,631 671,075 671,075 1,671,075 567,435 567,435 1,567,435
25 601,361 1,150,173 1,150,173 2,150,173 951,856 951,856 1,951,856
30 837,129 1,915,276 1,915,276 2,915,276 1,548,897 1,548,897 2,548,897
35 1,138,036 3,134,421 3,134,421 4,134,421 2,469,722 2,469,722 3,469,722
40 1,522,077 5,075,153 5,075,153 6,075,153 3,883,709 3,883,709 4,883,709
45 2,012,222 8,166,709 8,166,709 9,166,709 6,041,760 6,041,760 7,041,760
50 2,637,785 13,097,356 13,097,356 14,097,356 9,352,137 9,352,137 10,352,137
55 3,436,179 20,989,520 20,989,520 22,038,996 14,441,294 14,441,294 15,441,294
60 4,455,155 33,691,692 33,691,692 34,691,692 22,402,187 22,402,187 23,402,187
65 5,755,655 54,393,827 54,393,827 55,393,827 33,923,812 33,923,812 34,923,812
</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
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: 12% (10.41% net)
$1,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1): $12,000
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED -------------------------------------- ---------------------------------------
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 11,881 11,281 1,011,881 10,577 9,977 1,010,577
2 25,830 24,916 24,436 1,024,916 22,171 21,691 1,022,171
3 39,721 39,159 38,799 1,039,159 34,856 34,496 1,034,856
4 54,308 54,781 54,541 1,054,781 48,735 48,495 1,048,735
5 69,623 71,944 71,824 1,071,944 63,913 63,793 1,063,913
6 85,704 90,810 90,810 1,090,810 80,512 80,512 1,080,512
7 102,589 111,546 111,546 1,111,546 98,651 98,651 1,098,651
8 120,319 134,335 134,335 1,134,335 118,488 118,488 1,118,488
9 138,935 159,391 159,391 1,159,391 140,170 140,170 1,140,170
10 158,481 186,967 186,967 1,186,967 163,895 163,895 1,163,895
11 179,006 217,342 217,342 1,217,342 189,865 189,865 1,189,865
12 200,556 250,758 250,758 1,250,758 218,296 218,296 1,218,296
13 223,184 287,528 287,528 1,287,528 249,428 249,428 1,249,428
14 246,943 327,974 327,974 1,327,974 283,523 283,523 1,283,523
15 271,890 372,463 372,463 1,372,463 320,855 320,855 1,320,855
16 298,084 421,424 421,424 1,421,424 361,744 361,744 1,361,744
17 325,589 475,265 475,265 1,475,265 406,493 406,493 1,406,493
18 354,468 534,450 534,450 1,534,450 455,436 455,436 1,455,436
19 384,791 599,533 599,533 1,599,533 508,954 508,954 1,508,954
20 416,631 671,075 671,075 1,671,075 567,435 567,435 1,567,435
25 601,361 1,148,473 1,148,473 2,342,884 951,856 951,856 1,951,856
30 837,129 1,894,211 1,894,211 3,371,696 1,541,642 1,541,642 2,744,122
35 1,138,036 3,039,264 3,039,264 4,802,036 2,414,597 2,414,597 3,815,063
40 1,522,077 4,768,540 4,768,540 6,771,327 3,675,193 3,675,193 5,218,774
45 2,012,222 7,336,146 7,336,146 9,610,352 5,436,670 5,436,670 7,122,038
50 2,637,785 11,096,818 11,096,818 13,538,118 7,876,235 7,876,235 9,609,007
55 3,436,179 16,560,736 16,560,736 19,210,454 11,202,998 11,202,998 12,995,478
60 4,455,155 24,543,574 24,543,574 27,243,368 15,853,211 15,853,211 17,597,065
65 5,755,655 37,618,454 37,618,454 39,123,192 22,234,873 22,234,873 23,234,873
</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
JPF 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% (4.41% net)
$1,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1): $12,000
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED ------------------------------------ ------------------------------------
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 11,224 10,624 1,011,224 9,959 9,359 1,009,959
2 25,830 22,862 22,382 1,022,862 20,276 19,796 1,020,276
3 39,721 34,870 34,510 1,035,870 30,935 30,575 1,030,935
4 54,308 47,306 47,066 1,047,306 41,942 41,702 1,041,942
5 69,623 60,208 60,088 1,060,208 53,292 53,172 1,053,292
6 85,704 73,598 73,598 1,073,598 64,990 64,990 1,064,990
7 102,589 87,487 87,487 1,087,487 77,020 77,020 1,077,020
8 120,319 101,886 101,886 1,101,886 89,397 89,397 1,089,397
9 138,935 116,818 116,818 1,116,818 102,105 102,105 1,102,105
10 158,481 132,287 132,287 1,132,287 115,160 115,160 1,115,160
11 179,006 148,325 148,325 1,148,325 128,536 128,536 1,128,536
12 200,556 164,927 164,927 1,164,927 142,226 142,226 1,142,226
13 223,184 182,113 182,113 1,182,113 156,235 156,235 1,156,235
14 246,943 199,880 199,880 1,199,880 170,566 170,566 1,170,566
15 271,890 218,234 218,234 1,218,234 185,196 185,196 1,185,196
16 298,084 237,200 237,200 1,237,200 200,115 200,115 1,200,115
17 325,589 256,747 256,747 1,256,747 215,267 215,267 1,215,267
18 354,468 276,850 276,850 1,276,850 230,591 230,591 1,230,591
19 384,791 297,524 297,524 1,297,524 246,033 246,033 1,246,033
20 416,631 318,734 318,734 1,318,734 261,508 261,508 1,261,508
25 601,361 431,790 431,790 1,431,790 336,773 336,773 1,336,773
30 837,129 549,770 549,770 1,549,770 397,374 397,374 1,397,374
35 1,138,036 657,489 657,489 1,657,489 415,411 415,411 1,415,411
40 1,522,077 726,690 726,690 1,726,690 342,689 342,689 1,342,689
45 2,012,222 709,434 709,434 1,709,434 92,855 92,855 1,092,855
50 2,637,785 524,448 524,448 1,524,448 0 0 0
55 3,436,179 50,297 50,297 1,050,297 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.
(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-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% (4.41% net)
$1,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1): $12,000
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED -------------------------------------- --------------------------------------
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 11,224 10,624 1,011,224 9,959 9,359 1,009,959
2 25,830 22,862 22,382 1,022,862 20,276 19,796 1,020,276
3 39,721 34,870 34,510 1,034,870 30,935 30,575 1,030,935
4 54,308 47,306 47,066 1,047,306 41,942 41,702 1,041,942
5 69,623 60,208 60,088 1,060,208 53,292 53,172 1,053,292
6 85,704 73,598 73,598 1,073,598 64,990 64,990 1,064,990
7 102,589 87,487 87,487 1,087,487 77,020 77,020 1,077,020
8 120,319 101,886 101,886 1,101,886 89,397 89,397 1,089,397
9 138,935 116,818 116,818 1,116,818 102,105 102,105 1,102,105
10 158,481 132,287 132,287 1,132,287 115,160 115,160 1,115,160
11 179,006 148,325 148,325 1,148,325 128,536 128,536 1,128,536
12 200,556 164,927 164,927 1,164,927 142,226 142,226 1,142,226
13 223,184 182,113 182,113 1,182,113 156,235 156,235 1,156,235
14 246,943 199,880 199,880 1,199,880 170,566 170,566 1,170,566
15 271,890 218,234 218,234 1,218,234 185,196 185,196 1,185,196
16 298,084 237,200 237,200 1,237,200 200,115 200,115 1,200,115
17 325,589 256,747 256,747 1,256,747 215,267 215,267 1,215,267
18 354,468 276,850 276,850 1,276,850 230,591 230,591 1,230,591
19 384,791 297,524 297,524 1,297,524 246,033 246,033 1,246,033
20 416,631 318,734 318,734 1,318,734 261,508 261,508 1,261,508
25 601,361 431,790 431,790 1,431,790 336,773 336,773 1,336,773
30 837,129 549,770 549,770 1,549,770 397,374 397,374 1,397,374
35 1,138,036 657,489 657,489 1,657,489 415,411 415,411 1,415,411
40 1,522,077 726,690 726,690 1,726,690 342,689 342,689 1,342,689
45 2,012,222 709,434 709,434 1,709,434 92,855 92,855 1,092,855
50 2,637,785 524,448 524,448 1,524,448 0 0 0
55 3,436,179 50,297 50,297 1,050,297 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.
(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-12
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
JPF 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% (-1.59% net)
$1,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1): $12,000
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED -------------------------------------- --------------------------------------
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 10,567 9,967 1,010,567 9,342 8,742 1,009,342
2 25,830 20,888 20,408 1,020,888 18,457 17,977 1,018,457
3 39,721 30,906 30,546 1,030,906 27,318 26,958 1,027,318
4 54,308 40,666 40,426 1,040,666 35,920 35,680 1,035,920
5 69,623 50,191 50,071 1,050,191 44,246 44,126 1,044,246
6 85,704 59,487 59,487 1,059,487 52,293 52,293 1,052,293
7 102,589 68,545 68,545 1,068,545 60,033 60,033 1,060,033
8 120,319 77,361 77,361 1,077,361 67,473 67,473 1,067,473
9 138,935 85,938 85,938 1,085,938 74,587 74,587 1,074,587
10 158,481 94,260 94,260 1,094,260 81,380 81,380 1,081,380
11 179,006 102,341 102,341 1,102,341 87,819 87,819 1,087,819
12 200,556 110,135 110,135 1,110,135 93,888 93,888 1,093,888
13 223,184 117,638 117,638 1,117,638 99,575 99,575 1,099,575
14 246,943 124,824 124,824 1,124,824 104,865 104,865 1,104,865
15 271,890 131,679 131,679 1,131,679 109,725 109,725 1,109,725
16 298,084 138,207 138,207 1,138,207 114,142 114,142 1,114,142
17 325,589 144,358 144,358 1,144,358 118,055 118,055 1,118,055
18 354,468 150,095 150,095 1,150,095 121,402 121,402 1,121,402
19 384,791 155,414 155,414 1,155,414 124,133 124,133 1,124,133
20 416,631 160,261 160,261 1,160,261 126,169 126,169 1,126,169
25 601,361 175,881 175,881 1,175,881 123,887 123,887 1,123,887
30 837,129 170,055 170,055 1,170,055 92,681 92,681 1,092,681
35 1,138,036 130,006 130,006 1,130,006 13,817 13,817 1,013,817
40 1,522,077 36,062 36,062 1,036,062 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.
(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 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>
<CAPTION>
DEATH BENEFIT OPTION II;
CASH VALUE ACCUMULATION TEST ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 0% (-1.59% net)
$1,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1): $12,000
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED ------------------------------------ ------------------------------------
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 10,567 9,967 1,010,567 9,342 8,742 1,009,342
2 25,830 20,888 20,408 1,020,888 18,457 17,977 1,018,457
3 39,721 30,906 30,546 1,030,906 27,318 26,958 1,027,318
4 54,308 40,666 40,426 1,040,666 35,920 35,680 1,035,920
5 69,623 50,191 50,071 1,050,191 44,246 44,126 1,044,246
6 85,704 59,487 59,487 1,059,487 52,293 52,293 1,052,293
7 102,589 68,545 68,545 1,068,545 60,033 60,033 1,060,033
8 120,319 77,361 77,361 1,077,361 67,473 67,473 1,067,473
9 138,935 85,938 85,938 1,085,938 74,587 74,587 1,074,587
10 158,481 94,260 94,260 1,094,260 81,380 81,380 1,081,380
11 179,006 102,341 102,341 1,102,341 87,819 87,819 1,087,819
12 200,556 110,135 110,135 1,110,135 93,888 93,888 1,093,888
13 223,184 117,638 117,638 1,117,638 99,575 99,575 1,099,575
14 246,943 124,824 124,824 1,124,824 104,865 104,865 1,104,865
15 271,890 131,679 131,679 1,131,679 109,725 109,725 1,109,725
16 298,084 138,207 138,207 1,138,207 114,142 114,142 1,114,142
17 325,589 144,358 144,358 1,144,358 118,055 118,055 1,118,055
18 354,468 150,095 150,095 1,150,095 121,402 121,402 1,121,402
19 384,791 155,414 155,414 1,155,414 124,133 124,133 1,124,133
20 416,631 160,261 160,261 1,160,261 126,169 126,169 1,126,169
25 601,361 175,881 175,881 1,175,881 123,887 123,887 1,123,887
30 837,129 170,055 170,055 1,170,055 92,681 92,681 1,092,681
35 1,138,036 130,006 130,006 1,130,006 13,817 13,817 1,013,817
40 1,522,077 36,062 36,062 1,036,062 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.
(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 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
MALE NON-SMOKER ISSUE AGE 35 ASSUMED HYPOTHETICAL GROSS
FEMALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 12% (10.41% net)
$2,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1): $14,900
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED ----------------------------------------- -----------------------------------------
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 15,338 14,593 2,000,000 15,335 14,590 2,000,000
2 32,072 32,269 31,673 2,000,000 32,256 31,660 2,000,000
3 49,321 50,956 50,509 2,000,000 50,924 50,477 2,000,000
4 67,432 71,582 71,284 2,000,000 71,521 71,223 2,000,000
5 86,449 94,347 94,198 2,000,000 94,243 94,094 2,000,000
6 106,416 119,473 119,473 2,000,000 119,308 119,308 2,000,000
7 127,382 147,203 147,203 2,000,000 146,957 146,957 2,000,000
8 149,396 177,819 177,819 2,000,000 177,465 177,465 2,000,000
9 172,511 211,655 211,655 2,000,000 211,163 211,163 2,000,000
10 196,781 249,051 249,051 2,000,000 248,384 248,384 2,000,000
11 222,265 290,380 290,380 2,000,000 289,495 289,495 2,000,000
12 249,023 336,057 336,057 2,000,000 334,903 334,903 2,000,000
13 277,120 386,537 386,537 2,000,000 385,055 385,055 2,000,000
14 306,621 442,326 442,326 2,000,000 440,447 440,447 2,000,000
15 337,597 503,983 503,983 2,000,000 501,629 501,629 2,000,000
16 370,121 572,126 572,126 2,000,000 569,207 569,207 2,000,000
17 404,273 647,437 647,437 2,000,000 643,850 643,850 2,000,000
18 440,131 730,671 730,671 2,000,000 726,300 726,300 2,000,000
19 477,783 822,665 822,665 2,000,000 817,379 817,379 2,000,000
20 517,317 924,345 924,345 2,000,000 918,001 918,001 2,000,000
25 746,690 1,618,242 1,618,242 2,168,444(3) 1,604,337 1,604,337 2,149,812(3)
30 1,039,436 2,763,091 2,763,091 3,370,971(3) 2,734,714 2,734,714 3,336,351(3)
35 1,413,061 4,646,941 4,646,941 5,390,452(3) 4,585,213 4,585,213 5,318,847(3)
40 1,889,912 7,743,840 7,743,840 8,285,909(3) 7,610,857 7,610,857 8,143,617(3)
45 2,498,509 12,837,068 12,837,068 13,478,922(3) 12,565,112 12,565,112 13,193,367(3)
50 3,275,249 21,107,458 21,107,458 22,162,831(3) 20,499,509 20,499,509 21,524,484(3)
55 4,266,589 34,323,587 34,323,587 36,039,766(3) 32,863,953 32,863,953 34,507,151(3)
60 5,531,817 55,851,543 55,851,543 56,410,058(3) 52,833,569 52,833,569 53,361,905(3)
65 7,146,605 92,390,638 92,390,638 92,390,638(3) 87,403,295 87,403,295 87,403,295(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
MALE NON-SMOKER ISSUE AGE 35 ASSUMED HYPOTHETICAL GROSS
FEMALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 12% (10.41% net)
$2,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1): $14,900
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED ----------------------------------------- -----------------------------------------
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 15,338 14,593 2,000,000 15,335 14,590 2,000,000
2 32,072 32,269 31,673 2,000,000 32,256 31,660 2,000,000
3 49,321 50,956 50,509 2,000,000 50,924 50,477 2,000,000
4 67,432 71,582 71,284 2,000,000 71,521 71,223 2,000,000
5 86,449 94,347 94,198 2,000,000 94,243 94,094 2,000,000
6 106,416 119,473 119,473 2,000,000 119,308 119,308 2,000,000
7 127,382 147,203 147,203 2,000,000 146,957 146,957 2,000,000
8 149,396 177,819 177,819 2,000,000 177,465 177,465 2,000,000
9 172,511 211,655 211,655 2,000,000 211,163 211,163 2,000,000
10 196,781 249,051 249,051 2,000,000 248,384 248,384 2,000,000
11 222,265 290,380 290,380 2,000,000 289,495 289,495 2,000,000
12 249,023 336,057 336,057 2,000,000 334,903 334,903 2,000,000
13 277,120 386,537 386,537 2,000,000 385,055 385,055 2,000,000
14 306,621 442,326 442,326 2,000,000 440,447 440,447 2,000,000
15 337,597 503,983 503,983 2,000,000 501,629 501,629 2,000,000
16 370,121 572,123 572,123 2,093,971(3) 569,202 569,202 2,083,279(3)
17 404,273 647,401 647,401 2,285,326(3) 643,775 643,775 2,272,526(3)
18 440,131 730,551 730,551 2,476,567(3) 726,037 726,037 2,461,264(3)
19 477,783 822,377 822,377 2,689,171(3) 816,741 816,741 2,670,743(3)
20 517,317 923,772 923,772 2,900,643(3) 916,727 916,727 2,878,522(3)
25 746,690 1,612,046 1,612,046 4,207,441(3) 1,590,549 1,590,549 4,151,332(3)
30 1,039,436 2,733,933 2,733,933 5,959,975(3) 2,670,674 2,670,674 5,822,070(3)
35 1,413,061 4,544,075 4,544,075 8,361,098(3) 4,362,946 4,362,946 8,027,821(3)
40 1,889,912 7,418,424 7,418,424 11,721,110(3) 6,935,682 6,935,682 10,958,378(3)
45 2,498,509 11,871,088 11,871,088 16,500,813(3) 10,661,605 10,661,605 14,819,631(3)
50 3,275,249 18,564,636 18,564,636 23,391,441(3) 15,860,398 15,860,398 19,984,101(3)
55 4,266,589 28,382,572 28,382,572 33,491,435(3) 22,806,311 22,806,311 26,911,447(3)
60 5,531,817 42,968,842 42,968,842 47,695,414(3) 32,392,355 32,392,355 35,955,514(3)
65 7,146,605 66,682,915 66,682,915 69,350,231(3) 45,556,367 45,556,367 47,378,622(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
MALE NON-SMOKER ISSUE AGE 35 ASSUMED HYPOTHETICAL GROSS
FEMALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 6% (4.41% net)
$2,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1): $14,900
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED ----------------------------------------- -----------------------------------------
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 14,505 13,760 2,000,000 14,502 13,757 2,000,000
2 32,072 29,645 29,049 2,000,000 29,632 29,036 2,000,000
3 49,321 45,447 45,000 2,000,000 45,417 44,970 2,000,000
4 67,432 61,639 61,641 2,000,000 61,883 61,585 2,000,000
5 86,449 79,151 79,002 2,000,000 79,056 78,907 2,000,000
6 106,416 97,113 97,113 2,000,000 96,966 96,966 2,000,000
7 127,382 115,856 115,856 2,000,000 115,639 115,639 2,000,000
8 149,396 135,413 135,413 2,000,000 135,105 135,105 2,000,000
9 172,511 155,817 155,817 2,000,000 155,395 155,395 2,000,000
10 196,781 177,127 177,127 2,000,000 176,563 176,563 2,000,000
11 222,265 199,391 199,391 2,000,000 198,651 198,651 2,000,000
12 249,023 222,648 222,648 2,000,000 221,694 221,694 2,000,000
13 277,120 246,939 246,939 2,000,000 245,726 245,726 2,000,000
14 306,621 272,309 272,309 2,000,000 270,785 270,785 2,000,000
15 337,597 298,801 298,801 2,000,000 296,907 296,907 2,000,000
16 370,121 326,462 326,462 2,000,000 324,127 324,127 2,000,000
17 404,273 355,337 355,337 2,000,000 352,481 352,481 2,000,000
18 440,131 385,474 385,474 2,000,000 382,001 382,001 2,000,000
19 477,783 416,920 416,920 2,000,000 412,716 412,716 2,000,000
20 517,317 449,725 449,725 2,000,000 444,659 444,659 2,000,000
25 746,690 635,972 635,972 2,000,000 623,896 623,896 2,000,000
30 1,039,436 864,294 864,294 2,000,000 837,930 837,930 2,000,000
35 1,413,061 1,141,688 1,141,688 2,000,000 1,086,694 1,086,694 2,000,000
40 1,889,912 1,477,736 1,477,736 2,000,000 1,371,411 1,371,411 2,000,000
45 2,498,509 1,896,819 1,896,819 2,000,000 1,704,312 1,704,312 2,000,000
50 3,275,249 2,426,510 2,426,510 2,547,836(3) 2,153,879 2,153,879 2,261,573(3)
55 4,266,589 3,053,904 3,053,904 3,206,600(3) 2,681,170 2,681,170 2,815,229(3)
60 5,531,817 3,830,166 3,830,166 3,868,468(3) 3,331,815 3,331,815 3,365,133(3)
65 7,146,605 4,865,904 4,865,904 4,865,904(3) 4,242,976 4,242,976 4,242,976(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>
<CAPTION>
DEATH BENEFIT OPTION I;
CASH VALUE ACCUMULATION TEST
MALE NON-SMOKER ISSUE AGE 35 ASSUMED HYPOTHETICAL GROSS
FEMALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 6% (4.41% net)
$2,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1): $14,900
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED ----------------------------------------- -----------------------------------------
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 14,505 13,760 2,000,000 14,502 13,757 2,000,000
2 32,072 29,645 29,049 2,000,000 29,632 29,036 2,000,000
3 49,321 45,447 45,000 2,000,000 45,417 44,970 2,000,000
4 67,432 61,939 61,641 2,000,000 61,883 61,585 2,000,000
5 86,449 79,151 79,002 2,000,000 79,056 78,907 2,000,000
6 106,416 97,113 97,113 2,000,000 96,966 96,966 2,000,000
7 127,382 115,856 115,856 2,000,000 115,639 115,639 2,000,000
8 149,396 135,413 135,413 2,000,000 135,105 135,105 2,000,000
9 172,511 155,817 155,817 2,000,000 155,395 155,395 2,000,000
10 196,781 177,127 177,127 2,000,000 176,563 176,563 2,000,000
11 222,265 199,391 199,391 2,000,000 198,651 198,651 2,000,000
12 249,023 222,648 222,648 2,000,000 221,694 221,694 2,000,000
13 277,120 246,939 246,939 2,000,000 245,726 245,726 2,000,000
14 306,621 272,309 272,309 2,000,000 270,785 270,785 2,000,000
15 337,597 298,801 298,801 2,000,000 296,907 296,907 2,000,000
16 370,121 326,462 326,462 2,000,000 324,127 324,127 2,000,000
17 404,273 355,337 355,337 2,000,000 352,481 352,481 2,000,000
18 440,131 285,474 385,474 2,000,000 382,001 382,001 2,000,000
19 477,783 416,920 416,920 2,000,000 412,716 412,716 2,000,000
20 517,317 449,725 449,725 2,000,000 444,659 444,659 2,000,000
25 746,690 635,972 635,972 2,000,000 623,896 623,896 2,000,000
30 1,039,436 864,294 864,294 2,000,000 837,930 837,930 2,000,000
35 1,413,061 1,141,385 1,141,385 2,100,148(3) 1,086,694 1,086,694 2,000,000
40 1,889,912 1,469,027 1,469,027 2,321,063(3) 1,365,180 1,365,180 2,156,985(3)
45 2,498,509 1,840,764 1,840,764 2,558,662(3) 1,648,492 1,648,492 2,291,404(3)
50 3,275,249 2,242,217 2,242,217 2,825,193(3) 1,917,727 1,917,727 2,416,336(3)
55 4,266,589 2,659,206 2,659,206 3,137,863(3) 2,149,590 2,149,590 2,536,516(3)
60 5,531,817 3,112,957 3,112,957 3,455,382(3) 2,374,567 2,374,567 2,635,769(3)
65 7,146,605 3,724,754 3,724,754 3,873,745(3) 2,592,045 2,592,045 2,695,726(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>
<CAPTION>
DEATH BENEFIT OPTION I;
GUIDELINE PREMIUM TEST
MALE NON-SMOKER ISSUE AGE 35 ASSUMED HYPOTHETICAL GROSS
FEMALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 0% (-1.59% net)
$2,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1): $14,900
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED ------------------------------------ ------------------------------------
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 13,671 12,926 2,000,000 13,668 12,923 2,000,000
2 32,072 27,121 26,525 2,000,000 27,109 26,513 2,000,000
3 49,321 40,351 39,904 2,000,000 40,323 39,876 2,000,000
4 67,432 53,364 53,066 2,000,000 53,312 53,014 2,000,000
5 86,449 66,164 66,015 2,000,000 66,077 65,928 2,000,000
6 106,416 78,750 78,750 2,000,000 78,618 78,618 2,000,000
7 127,382 91,125 91,125 2,000,000 90,933 90,933 2,000,000
8 149,396 103,291 103,291 2,000,000 103,023 103,023 2,000,000
9 172,511 115,248 115,248 2,000,000 114,885 114,885 2,000,000
10 196,781 126,998 126,998 2,000,000 126,518 126,518 2,000,000
11 222,265 138,541 138,541 2,000,000 137,919 137,919 2,000,000
12 249,023 149,876 149,876 2,000,000 149,083 149,083 2,000,000
13 277,120 161,018 161,018 2,000,000 160,018 160,018 2,000,000
14 306,621 171,967 171,967 2,000,000 170,721 170,721 2,000,000
15 337,597 182,720 182,720 2,000,000 181,182 181,182 2,000,000
16 370,121 193,274 193,274 2,000,000 191,391 191,391 2,000,000
17 404,273 203,622 203,622 2,000,000 201,330 201,330 2,000,000
18 440,131 213,757 213,757 2,000,000 210,981 210,981 2,000,000
19 477,783 223,670 223,670 2,000,000 220,316 220,316 2,000,000
20 517,317 233,348 233,348 2,000,000 229,310 229,310 2,000,000
25 746,690 277,732 277,732 2,000,000 267,964 267,964 2,000,000
30 1,039,436 312,938 312,938 2,000,000 290,453 290,453 2,000,000
35 1,413,061 331,170 331,170 2,000,000 278,524 278,524 2,000,000
40 1,889,912 313,141 313,141 2,000,000 191,034 191,034 2,000,000
45 2,498,509 207,817 207,817 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.
(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 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
MALE NON-SMOKER ISSUE AGE 35 ASSUMED HYPOTHETICAL GROSS
FEMALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 0% (-1.59% net)
$2,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1): $14,900
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED ------------------------------------ ------------------------------------
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 13,671 12,926 2,000,000 13,668 12,923 2,000,000
2 32,072 27,121 26,525 2,000,000 27,109 26,513 2,000,000
3 49,321 40,351 39,904 2,000,000 40,323 39,876 2,000,000
4 67,432 53,364 53,066 2,000,000 53,312 53,014 2,000,000
5 86,449 66,164 66,015 2,000,000 66,077 65,928 2,000,000
6 106,416 78,750 78,750 2,000,000 78,618 78,618 2,000,000
7 127,382 91,125 91,125 2,000,000 90,933 90,933 2,000,000
8 149,396 103,291 103,291 2,000,000 103,023 103,023 2,000,000
9 172,511 115,248 115,248 2,000,000 114,885 114,885 2,000,000
10 196,781 126,998 126,998 2,000,000 126,518 126,518 2,000,000
11 222,265 138,541 138,541 2,000,000 137,919 137,919 2,000,000
12 249,023 149,876 149,876 2,000,000 149,083 149,083 2,000,000
13 277,120 161,018 161,018 2,000,000 160,018 160,018 2,000,000
14 306,621 171,967 171,967 2,000,000 170,721 170,721 2,000,000
15 337,597 182,720 182,720 2,000,000 181,182 181,182 2,000,000
16 370,121 193,274 193,274 2,000,000 191,391 191,391 2,000,000
17 404,273 203,622 203,622 2,000,000 201,330 201,330 2,000,000
18 440,131 213,757 213,757 2,000,000 210,981 210,981 2,000,000
19 477,783 223,670 223,670 2,000,000 220,316 220,316 2,000,000
20 517,317 233,348 233,348 2,000,000 229,310 229,310 2,000,000
25 746,690 277,732 277,732 2,000,000 267,964 267,964 2,000,000
30 1,039,436 312,938 312,938 2,000,000 290,453 290,453 2,000,000
35 1,413,061 331,170 331,170 2,000,000 278,524 278,524 2,000,000
40 1,889,912 313,141 313,141 2,000,000 191,034 191,034 2,000,000
45 2,498,509 207,817 207,817 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.
(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 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
MALE NON-SMOKER ISSUE AGE 35 ASSUMED HYPOTHETICAL GROSS
FEMALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 12% (10.41% net)
$2,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1): $14,900
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED -------------------------------------- ---------------------------------------
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 15,338 14,593 2,015,338 15,335 14,590 2,015,335
2 32,072 32,269 31,673 2,032,269 32,255 31,659 2,032,255
3 49,321 50,956 50,509 2,050,956 50,923 50,476 2,050,923
4 67,432 71,581 71,283 2,071,581 71,518 71,220 2,071,518
5 86,449 94,345 94,196 2,094,345 94,237 94,088 2,094,237
6 106,416 119,468 119,468 2,119,468 119,296 119,296 2,119,296
7 127,382 147,194 147,194 2,147,194 146,936 146,936 2,146,936
8 149,396 177,803 177,803 2,177,803 177,429 177,429 2,177,429
9 172,511 211,629 211,629 2,211,629 211,103 211,103 2,211,103
10 196,781 249,010 249,010 2,249,010 248,289 248,289 2,248,289
11 222,265 290,318 290,318 2,290,318 289,349 289,349 2,289,349
12 249,023 335,963 335,963 2,335,963 334,683 334,683 2,334,683
13 277,120 386,399 386,399 2,386,399 384,732 384,732 2,384,732
14 306,621 442,126 442,126 2,442,126 439,979 439,979 2,439,979
15 337,597 503,696 503,696 2,503,696 500,960 500,960 2,500,960
16 370,121 571,720 571,720 2,571,720 568,262 568,262 2,568,262
17 404,273 646,867 646,867 2,646,867 642,528 642,528 2,642,528
18 440,131 729,878 729,878 2,729,878 724,464 724,464 2,724,464
19 477,783 821,567 821,567 2,821,567 814,844 814,844 2,814,844
20 517,317 922,833 922,833 2,922,833 914,519 914,519 2,914,519
25 746,690 1,611,344 1,611,344 3,611,344 1,588,635 1,588,635 3,588,635
30 1,039,436 2,739,711 2,739,711 4,739,711 2,681,994 2,681,994 4,681,994
35 1,413,061 4,581,616 4,581,616 6,581,616 4,438,771 4,438,771 6,438,771
40 1,889,912 7,571,538 7,571,538 9,571,538 7,232,378 7,232,378 9,232,378
45 2,498,509 12,385,178 12,385,178 14,385,178 11,598,329 11,598,329 13,598,329
50 3,275,249 20,063,149 20,063,149 22,063,149 18,341,462 18,341,462 20,341,462
55 4,266,589 32,268,035 32,268,035 34,268,035 28,664,837 28,664,837 30,664,837
60 5,531,817 51,775,234 51,775,234 53,775,234 44,617,462 44,617,462 46,617,462
65 7,146,605 83,302,408 83,302,408 85,302,408 67,368,319 67,368,319 69,368,319
</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-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 VLAUE ACCUMULATION TEST
MALE NON-SMOKER ISSUE AGE 35 ASSUMED HYPOTHETICAL GROSS
FEMALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 12% (10.41% net)
$2,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1): $14,900
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED -------------------------------------- ---------------------------------------
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 15,338 14,593 2,015,338 15,335 14,590 2,015,335
2 32,072 32,269 31,673 2,032,269 32,255 31,659 2,032,255
3 49,321 50,956 50,509 2,050,956 50,923 50,476 2,050,923
4 67,432 71,581 71,283 2,071,581 71,518 71,220 2,071,518
5 86,449 94,345 94,196 2,094,345 94,237 94,088 2,094,237
6 106,416 119,468 119,468 2,119,468 119,296 119,296 2,119,296
7 127,382 147,194 147,194 2,147,194 146,936 146,936 2,146,936
8 149,396 177,803 177,803 2,177,803 177,429 177,429 2,177,429
9 172,511 211,629 211,629 2,211,629 211,103 211,103 2,211,103
10 196,781 249,010 249,010 2,249,010 248,289 248,289 2,248,289
11 222,265 290,318 290,318 2,290,318 289,349 289,349 2,289,349
12 249,023 335,963 335,963 2,335,963 334,683 334,683 2,334,683
13 277,120 386,399 386,399 2,386,399 384,732 384,732 2,384,732
14 306,621 442,126 442,126 2,442,126 439,979 439,979 2,439,979
15 337,597 503,696 503,696 2,503,696 500,960 500,960 2,500,960
16 370,121 571,720 571,720 2,571,720 568,262 568,262 2,568,262
17 404,273 646,867 646,867 2,646,867 642,528 642,528 2,642,528
18 440,131 729,878 729,878 2,729,878 724,464 724,464 2,724,464
19 477,783 821,567 821,567 2,821,567 814,844 814,844 2,814,844
20 517,317 922,833 922,833 2,922,833 914,519 914,519 2,914,519
25 746,690 1,610,485 1,610,485 4,203,367 1,586,883 1,586,883 4,141,766
30 1,039,436 2,731,376 2,731,376 5,954,399 2,664,732 2,664,732 5,809,116
35 1,413,061 4,539,910 4,539,910 8,353,435 4,353,442 4,353,442 8,010,334
40 1,889,912 7,411,709 7,411,709 11,710,500 6,920,770 6,920,770 10,934,817
45 2,498,509 11,860,425 11,860,425 16,485,991 10,638,872 10,638,872 14,788,032
50 3,275,249 18,548,041 18,548,041 23,370,531 15,826,765 15,826,765 19,941,724
55 4,266,589 28,357,279 28,357,279 33,461,590 22,758,129 22,758,129 26,854,593
60 5,531,817 42,930,630 42,930,630 47,652,999 32,324,100 32,324,100 35,879,751
65 7,146,605 66,623,694 66,623,694 69,288,642 45,202,870 45,202,870 47,202,870
</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
MALE NON-SMOKER ISSUE AGE 35 ASSUMED HYPOTHETICAL GROSS
FEMALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 6% (4.41% net)
$2,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1): $14,900
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED -------------------------------------- --------------------------------------
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 14,505 13,760 2,014,505 14,502 13,757 2,014,502
2 32,072 29,645 29,049 2,029,645 29,632 29,036 2,029,632
3 49,321 45,446 44,999 2,045,446 45,416 44,969 2,045,416
4 67,432 61,938 61,640 2,061,938 61,880 61,582 2,061,880
5 86,449 79,149 79,000 2,079,149 79,051 78,902 2,079,051
6 106,416 97,109 97,109 2,097,109 96,956 96,956 2,096,956
7 127,382 115,849 115,849 2,115,849 115,622 115,622 2,115,622
8 149,396 135,401 135,401 2,135,401 135,078 135,078 2,135,078
9 172,511 155,798 155,798 2,155,798 155,352 155,352 2,155,352
10 196,781 177,100 177,100 2,177,100 176,498 176,498 2,176,498
11 222,265 199,350 199,350 2,199,350 198,555 198,555 2,198,555
12 249,023 222,589 222,589 2,222,589 221,555 221,555 2,221,555
13 277,120 246,855 246,855 2,246,855 245,530 245,530 2,245,530
14 306,621 272,192 272,192 2,272,192 270,511 270,511 2,270,511
15 337,597 298,639 298,639 2,298,639 296,531 296,531 2,296,531
16 370,121 326,242 326,242 2,326,242 323,618 323,618 2,323,618
17 404,273 355,041 355,041 2,355,041 351,796 351,796 2,351,796
18 440,131 385,079 385,079 2,385,079 381,088 381,088 2,381,088
19 477,783 416,395 416,395 2,416,395 411,506 411,506 2,411,506
20 517,317 449,031 449,031 2,449,031 443,064 443,064 2,443,064
25 746,690 633,390 633,390 2,633,390 618,066 618,066 2,618,066
30 1,039,436 855,528 855,528 2,855,528 818,631 818,631 2,818,631
35 1,413,061 1,113,119 1,113,119 3,113,119 1,025,255 1,025,255 3,025,255
40 1,889,912 1,387,310 1,387,310 3,387,310 1,186,440 1,186,440 3,186,440
45 2,498,509 1,616,289 1,616,289 3,616,289 1,164,877 1,164,877 3,164,877
50 3,275,249 1,652,877 1,652,877 3,652,877 712,726 712,726 2,712,726
55 4,266,589 1,253,454 1,253,454 3,253,454 0 0 0
60 5,531,817 116,268 116,268 2,116,268 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.
(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-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
MALE NON-SMOKER ISSUE AGE 35 ASSUMED HYPOTHETICAL GROSS
FEMALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 6% (4.41% net)
$2,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1): $14,900
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED -------------------------------------- --------------------------------------
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 14,505 13,760 2,014,505 14,502 13,757 2,014,502
2 32,072 29,645 29,049 2,029,645 29,632 29,036 2,029,632
3 49,321 45,446 44,999 2,045,446 45,416 44,969 2,045,416
4 67,432 61,938 61,640 2,061,938 61,880 61,582 2,061,880
5 86,449 79,149 79,000 2,079,149 79,051 78,902 2,079,051
6 106,416 97,109 97,109 2,097,109 96,956 96,956 2,096,956
7 127,382 115,849 115,849 2,115,849 115,622 115,622 2,115,622
8 149,396 135,401 135,401 2,135,401 135,078 135,078 2,135,078
9 172,511 155,798 155,798 2,155,798 155,352 155,352 2,155,352
10 196,781 177,100 177,100 2,177,100 176,498 176,498 2,176,498
11 222,265 199,350 199,350 2,199,350 198,555 198,555 2,198,555
12 249,023 222,589 222,589 2,222,589 221,555 221,555 2,221,555
13 277,120 246,855 246,855 2,246,855 245,530 245,530 2,245,530
14 306,621 272,192 272,192 2,272,192 270,511 270,511 2,270,511
15 337,597 298,639 298,639 2,298,639 296,531 296,531 2,296,531
16 370,121 326,242 326,242 2,326,242 323,618 323,618 2,323,618
17 404,273 355,041 355,041 2,355,041 351,796 351,796 2,351,796
18 440,131 385,079 385,079 2,385,079 381,088 381,088 2,381,088
19 477,783 416,395 416,395 2,416,395 411,506 411,506 2,411,506
20 517,317 449,031 449,031 2,449,031 443,064 443,064 2,443,064
25 746,690 633,390 633,390 2,633,390 618,066 618,066 2,618,066
30 1,039,436 855,528 855,528 2,855,528 818,631 818,631 2,818,631
35 1,413,061 1,113,119 1,113,119 3,113,119 1,025,255 1,025,255 3,025,255
40 1,889,912 1,387,310 1,387,310 3,387,310 1,186,440 1,186,440 3,186,440
45 2,498,509 1,616,289 1,616,289 3,616,289 1,164,877 1,164,877 3,164,877
50 3,275,249 1,652,877 1,652,877 3,652,877 712,726 712,726 2,712,726
55 4,266,589 1,253,454 1,253,454 3,253,454 0 0 0
60 5,531,817 116,268 116,268 2,116,268 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.
(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-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
MALE NON-SMOKER ISSUE AGE 35 ASSUMED HYPOTHETICAL GROSS
FEMALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 0% (-1.59% net)
$2,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1): $14,900
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED ------------------------------------ ------------------------------------
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 13,671 12,926 2,013,671 13,668 12,923 2,013,668
2 32,072 27,121 26,525 2,027,121 27,108 26,512 2,027,108
3 49,321 40,351 39,904 2,040,351 40,322 39,875 2,040,322
4 67,432 53,364 53,066 2,053,364 53,310 53,012 2,053,310
5 86,449 66,162 66,013 2,066,162 66,073 65,924 2,066,073
6 106,416 78,747 78,747 2,078,747 78,610 78,610 2,078,610
7 127,382 91,120 91,120 2,091,120 90,921 90,921 2,090,921
8 149,396 103,283 103,283 2,103,283 103,003 103,003 2,103,003
9 172,511 115,236 115,236 2,115,236 114,855 114,855 2,114,855
10 196,781 126,979 126,979 2,126,979 126,474 126,474 2,126,474
11 222,265 138,514 138,514 2,138,514 137,856 137,856 2,137,856
12 249,023 149,839 149,839 2,149,839 148,995 148,995 2,148,995
13 277,120 160,967 160,967 2,160,967 159,898 159,898 2,159,898
14 306,621 171,898 171,898 2,171,898 170,560 170,560 2,170,560
15 337,597 182,628 182,628 2,182,628 180,969 180,969 2,180,969
16 370,121 193,153 193,153 2,193,153 191,111 191,111 2,191,111
17 404,273 203,465 203,465 2,203,465 200,968 200,968 2,200,968
18 440,131 213,555 213,555 2,213,555 210,514 210,514 2,210,514
19 477,783 223,410 223,410 2,223,410 219,720 219,720 2,219,720
20 517,317 233,017 233,017 2,233,017 228,552 228,552 2,228,552
25 746,690 276,703 276,703 2,276,703 265,662 265,662 2,265,662
30 1,039,436 310,034 310,034 2,310,034 284,213 284,213 2,284,213
35 1,413,061 323,426 323,426 2,323,426 262,849 262,849 2,262,849
40 1,889,912 293,906 293,906 2,293,906 157,735 157,735 2,157,735
45 2,498,509 166,508 166,508 2,166,508 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.
(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 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
MALE NON-SMOKER ISSUE AGE 35 ASSUMED HYPOTHETICAL GROSS
FEMALE NON-SMOKER ISSUE AGE 35 ANNUAL RATE OF RETURN: 0% (-1.59% net)
$2,000,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (1): $14,900
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED ------------------------------------ ------------------------------------
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 13,671 12,926 2,013,671 13,668 12,923 2,013,668
2 32,072 27,121 26,525 2,027,121 27,108 26,512 2,027,108
3 49,321 40,351 39,904 2,040,351 40,322 39,875 2,040,322
4 67,432 53,364 53,066 2,053,364 53,310 53,012 2,053,310
5 86,449 66,162 66,013 2,066,162 66,073 65,924 2,066,073
6 106,416 78,747 78,747 2,078,747 78,610 78,610 2,078,610
7 127,382 91,120 91,120 2,091,120 90,921 90,921 2,090,921
8 149,396 103,283 103,283 2,103,283 103,003 103,003 2,103,003
9 172,511 115,236 115,236 2,115,236 114,855 114,855 2,114,855
10 196,781 126,979 126,979 2,126,979 126,474 126,474 2,126,474
11 222,265 138,514 138,514 2,138,514 137,856 137,856 2,137,856
12 249,023 149,839 149,839 2,149,839 148,995 148,995 2,148,995
13 277,120 160,967 160,967 2,160,967 159,898 159,898 2,159,898
14 306,621 171,898 171,898 2,171,898 170,560 170,560 2,170,560
15 337,597 182,628 182,628 2,182,628 180,969 180,969 2,180,969
16 370,121 193,153 193,153 2,193,153 191,111 191,111 2,191,111
17 404,273 203,465 203,465 2,203,465 200,968 200,968 2,200,968
18 440,131 213,555 213,555 2,213,555 210,514 210,514 2,210,514
19 477,783 223,410 223,410 2,223,410 219,720 219,720 2,219,720
20 517,317 233,017 233,017 2,233,017 228,552 228,552 2,228,552
25 746,690 276,703 276,703 2,276,703 265,662 265,662 2,265,662
30 1,039,436 310,034 310,034 2,310,034 284,213 284,213 2,284,213
35 1,413,061 323,426 323,426 2,323,426 262,849 262,849 2,262,849
40 1,889,912 293,906 293,906 2,293,906 157,735 157,735 2,157,735
45 2,498,509 166,508 166,508 2,166,508 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.
(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 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>
Jefferson Pilot Financial Insurance Company and Subsidiaries
Audited Consolidated Financial Statements
As of December 31, 1998 and for the year then ended
Contents
<TABLE>
<S> <C>
Report of Independent Auditors .......................... F-1
Consolidated Balance Sheet .............................. F-2
Consolidated Statement of Income ........................ F-3
Consolidated Statement of Stockholder's Equity .......... F-4
Consolidated Statement of Cash Flows .................... F-5
Notes to Consolidated Financial Statements .............. F-6
</TABLE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Jefferson Pilot Financial Insurance Company and Subsidiaries
We have audited the accompanying consolidated balance sheet of Jefferson
Pilot Financial Insurance Company (a wholly-owned subsidiary of Jefferson Pilot
Corporation and formerly known as Chubb Life Insurance Company of America) and
subsidiaries as of December 31, 1998, and the related consolidated statements
of income, stockholder's equity, and cash flows for the year then ended. 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 audit.
We conducted our audit 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 audit provides 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 Jefferson
Pilot Financial Insurance Company and subsidiaries at December 31, 1998, and
the consolidated results of their operations and their cash flows for the year
then ended, in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Greensboro, North Carolina
February 8, 1999
F-1
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY AND SUBSIDIARIES
Consolidated Balance Sheet
December 31, 1998
(In Thousands, except for Share Amounts)
<TABLE>
<S> <C>
Assets
Invested assets
Debt securities available-for-sale, at fair value (amortized cost--$2,962,335) .......... $3,099,405
Equity securities available-for-sale, at fair value (cost--$8,350) ...................... 10,668
Policy loans ............................................................................ 246,290
Mortgage loans on real estate ........................................................... 282,355
----------
Total investments ........................................................................ 3,638,718
Cash and cash equivalents ................................................................ 6,514
Accrued investment income ................................................................ 53,626
Due from reinsurers ...................................................................... 245,759
Deferred policy acquisition costs ........................................................ 112,959
Value of business acquired ............................................................... 402,176
Cost in excess of net assets acquired, net of accumulated amortization of $7,490 ......... 155,293
Property and equipment, net of accumulated depreciation of $11,629 ....................... 15,560
Assets held in separate accounts ......................................................... 833,239
Deferred income taxes .................................................................... 2,814
Other assets ............................................................................. 17,128
----------
$5,483,786
==========
Liabilities
Policy liabilities
Policyholder contract deposits .......................................................... $2,721,645
Future policy benefits .................................................................. 632,672
Policy and contract claims .............................................................. 51,089
Premiums paid in advance ................................................................ 2,851
Other policyholders' funds .............................................................. 96,711
----------
Total policy liabilities ................................................................. 3,504,968
Payable to affiliates .................................................................... 57,585
Liabilities related to separate accounts ................................................. 833,239
Securities sold under repurchase agreements .............................................. 102,130
Accrued expenses and other liabilities ................................................... 50,688
----------
4,548,610
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 ......................................................................... 756,066
Retained earnings ....................................................................... 134,007
Accumulated other comprehensive income--net unrealized gains on securities .............. 42,103
----------
935,176
----------
$5,483,786
==========
</TABLE>
See notes to consolidated financial statements.
F-2
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY AND SUBSIDIARIES
Consolidated Statement of Income
Year Ended December 31, 1998
(In Thousands)
<TABLE>
<S> <C>
Revenues
Premiums and policy charges .................................. $315,937
Net investment income ........................................ 246,306
Realized investment gains .................................... 1,276
Other income ................................................. 508
--------
Total revenues ............................................... 564,027
--------
Benefits and expenses
Policy benefits and claims ................................... 293,709
Commissions and operating expenses, net of deferrals ......... 63,172
Amortization of intangibles .................................. 61,971
Taxes, licenses, and fees .................................... 19,799
--------
Total benefits and expenses .................................. 438,651
--------
Income before federal income tax ............................. 125,376
--------
Federal income tax
Current ..................................................... 35,260
Deferred .................................................... 9,826
--------
45,086
--------
Net income ................................................... $ 80,290
========
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY AND SUBSIDIARIES
Consolidated Statement of Stockholder's Equity
(In Thousands)
<TABLE>
<CAPTION>
Accumulated Other
Comprehensive Income-- Total
Common Paid in Retained Net Unrealized Gains Stockholder's
Stock Capital Earnings on Securities Equity
------ ------- -------- ---------------------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997 ......... $3,000 $ 782,500 $ 53,717 $33,932 $873,149
Net income ......................... -- -- 80,290 -- 80,290
Other comprehensive income ......... -- -- -- 8,171 8,171
--------
Comprehensive income .............. 88,461
Purchase price adjustment .......... -- (26,434) -- -- (26,434)
--------------------------------------------------------------------------
Balance, December 31, 1998 ......... $3,000 $ 756,066 $134,007 $42,103 $935,176
==========================================================================
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY AND SUBSIDIARIES
Consolidated Statement of Cash Flows
Year Ended December 31, 1998
(In Thousands)
<TABLE>
<S> <C>
Operating activities
Net income ............................................................................... $ 80,290
Adjustments to reconcile net income to net cash used in operating activities:
Decrease in future policy benefits, policy and contract claims and premiums paid in (109,284)
advance, net
Credits to policyholder accounts, net ................................................... (111,916)
Policy acquisition costs deferred, net of amortization .................................. (74,759)
Net amortization of value of business acquired .......................................... 18,335
Increase in accrued investment income ................................................... (2,902)
Realized investment gains ............................................................... (1,276)
Amortization of investment premiums ..................................................... 6,131
Provision for depreciation .............................................................. 10,737
Provision for deferred income tax ....................................................... 9,826
Change in receivables and asset accruals ................................................ (47,170)
Change in payables and expense accruals ................................................. 62,357
Other operating activities, net ......................................................... (7,817)
----------
Net cash used in operating activities .................................................... (167,448)
Investing activities
Proceeds from sales of debt securities ................................................... 91,131
Proceeds from maturities of debt securities .............................................. 313,234
Proceeds from sales of equity securities ................................................. 11,294
Purchases of debt securities ............................................................. (491,995)
Purchases of equity securities ........................................................... (2,738)
Repayment of mortgage loans .............................................................. 6,101
Mortgage loans originated ................................................................ (166,989)
Policy loans issued, net of repayments ................................................... (9,561)
Other investing activities, net .......................................................... 179
----------
Net cash used in investing activities .................................................... (249,344)
Financing activities
Deposits credited to policyholders' funds ................................................ 523,980
Withdrawals from policyholders' funds .................................................... (230,256)
Short term borrowings, net of repayments ................................................. 221
Proceeds from securities sold under repurchase agreements ................................ 102,130
Decrease in loans payable ................................................................ (1,057)
----------
Net cash provided by financing activities ................................................ 395,018
----------
Net decrease in cash and cash equivalents ................................................ (21,774)
Cash and cash equivalents, beginning of period ........................................... 28,288
----------
Cash and cash equivalents, end of period ................................................. $ 6,514
==========
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Jefferson Pilot Financial Insurance Company and Subsidiaries
December 31, 1998
1. Basis of Presentation
Nature of Operations
Jefferson Pilot Financial Insurance Company (formerly known as Chubb Life
Insurance Company of America) 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 The 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. The initial cost
of the acquisition by Jefferson-Pilot in 1997 was $785.5 million. This initial
purchase price was adjusted by $26.4 million in the first quarter of 1998 by
mutual agreement between Jefferson-Pilot and the seller, primarily to reflect
tax strategies not anticipated at the original acquisition date. Accordingly,
adjustments to certain assets and liabilities assigned values at the original
acquisition date were made in 1998 to reflect the difference in the final
purchase price. The cost in excess of net assets acquired was increased by
$13.0 million in 1998 as a result of this adjustment. Amortization expense
relating to the cost in excess of net assets acquired amounted to $4.6 million
in 1998.
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 Jefferson Pilot Financial Insurance Company (the Company) and its
subsidiaries. Principal subsidiaries include Jefferson Pilot LifeAmerica
Insurance Company and Jefferson Pilot 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 and equity securities are classified as securities available-for-sale,
stated at fair value with net unrealized gains and losses included in
accumulated other comprehensive income, net of deferred income taxes and
adjustments to deferred policy acquisition costs and value of business
acquired.
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 (28%), apartment (21%), industrial (12%), hotel (26%) and office (13%)
properties.
F-6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiaries
December 31, 1998
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, 1998, 25% are due from borrowers in West South Central states, 24% are due
from borrowers in South Atlantic states, 14% are due from borrowers in West
North Central states, 12% are due from borrowers in Mountain states and 11% are
due from borrowers in Pacific states. No other geographic region represents as
much as 10% of December 31, 1998 mortgage loans.
Amortization of premiums and accrual of discounts on investments in debt
securities are reflected in earnings over the contractual terms of the
investments in a manner that produces a constant effective yield. Realized
gains and losses on dispositions of securities are determined by the specific
identification method.
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 statement 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 4.2% to 6.85% in 1998.
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 4% to 8.15%
in 1998.
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 2% to 6% at December 31, 1998. 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.
F-7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiaries
December 31, 1998
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 interest 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 accumulated other comprehensive income, net of applicable deferred
income tax.
Cost in Excess of Assets Acquired
The excess of Jefferson-Pilot's purchase price over the fair value of assets
acquired, which has been "pushed down" to the Company level for financial
reporting purposes, is being amortized on a straight-line basis over 35 years.
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.
F-8
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiaries
December 31, 1998
2. Summary of Significant Accounting Policies--Continued
Federal Income Taxes
The Company is not included in Jefferson-Pilot's consolidated tax return, but
instead files its own return with its wholly-owned subsidiaries.
Deferred income tax assets and liabilities 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
As of January 1, 1998, the Company adopted SFAS 130, "Reporting Comprehensive
Income", which sets standards for the reporting and display of comprehensive
income and its components in financial statements. Adoption had no impact on
the Company's net income or stockholder's equity. Comprehensive income consists
of net income plus other comprehensive income.
During 1998, the Company adopted SOP 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use", which requires
capitalization of certain costs incurred in connection with developing or
obtaining internal use software. The impact of adoption was not material.
In June 1998, the FASB issued SFAS 133, "Accounting for Derivative Instruments
and for Hedging Activities". This pronouncement is effective for annual periods
beginning after June 15, 1999. SFAS 133 requires all derivatives to be recorded
on the balance sheet and establishes accounting rules for hedging activities.
The effect of the hedge accounting rules is to offset changes in value or cash
flows of both the hedge and hedged item in earnings in the same period. Changes
in the fair value of derivatives that do not qualify for hedge accounting are
reported in earnings in the period of the change. Based on the limited nature
of the Company's use of derivatives and hedging activities, adoption of this
pronouncement is not expected to have a material impact on the Company's
financial position or results of operations.
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, 1998, such interest rate swaps are held to modify specific floating-rate
direct investments. The notional amount is $60 million, with the Company
receiving an average fixed rate of 7.45% and paying an average floating rate of
5.32% based primarily on the 3 month and 6 month LIBOR rates.
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 swaps 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 accumulated other comprehensive income
in stockholder's equity as of December 31, 1998.
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-9
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiaries
December 31, 1998
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 is terminated or loses
correlation, any related hedging instrument that remained would be
marked-to-market through income. If the hedging instrument is terminated, any
gain or loss is deferred and amortized over the remaining life of the hedged
asset.
4. Invested Assets
Aggregate amortized cost, aggregate fair value and gross unrealized gains
and losses of debt securities available-for-sale at December 31, 1998 were as
follows (in thousands):
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury obligations and direct obligations
of U.S. government agencies ............................. $ 107,222 $ 5,675 $ -- $ 112,897
Corporate bonds .......................................... 1,885,666 116,685 13,787 1,988,564
Obligations of states and political subdivisions ......... 9,451 43 62 9,432
Mortgage-backed securities ............................... 958,472 33,684 5,226 986,930
Redeemable preferred stocks .............................. 1,524 58 -- 1,582
---------- -------- ------- ----------
Total debt securities .................................... $2,962,335 $156,145 $19,075 $3,099,405
========== ======== ======= ==========
</TABLE>
Aggregate amortized cost and aggregate fair value of debt securities at
December 31, 1998 by contractual maturity were as follows (in thousands):
<TABLE>
<CAPTION>
Amortized Fair
Cost Value
------------- ------------
<S> <C> <C>
Due in one year or less ........................... $ 65,922 $ 66,107
Due after one year through five years ............. 248,065 257,652
Due after five years through ten years ............ 660,347 701,474
Due after ten years ............................... 517,531 559,019
Amounts not due at a single maturity date ......... 1,470,470 1,515,153
---------- ----------
$2,962,335 $3,099,405
========== ==========
</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.
The sources of net investment income for the year ended December 31, 1998
were as follows (in thousands):
<TABLE>
<S> <C>
Debt securities ................. $220,435
Equity securities ............... 863
Policy loans .................... 17,369
Mortgage loans .................. 14,354
Other ........................... 3,544
--------
Gross investment income ......... 256,565
Investment expenses ............. 10,259
--------
Net investment income ........... $246,306
========
</TABLE>
F-10
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiaries
December 31, 1998
4. Invested Assets--Continued
Realized investment gains and (losses) for the year ended December 31, 1998
were as follows
(in thousands):
<TABLE>
<S> <C>
Debt securities ...................................................... $ 1,897
Equity securities .................................................... 2,893
Real estate .......................................................... 984
Increase in mortgage loan valuation allowance ........................ (3,600)
Amortization of value of business acquired ........................... (898)
--------
$ 1,276
========
</TABLE>
Gross realized gains and losses on available-for-sale securities were $5.9
million and $1.1 million, respectively, for the year ended December 31, 1998.
The changes in amounts affecting net unrealized gains included in other
comprehensive income, reduced by deferred income taxes, for the year ended
December 31, 1998 are as follows (in thousands):
<TABLE>
<S> <C>
Decrease in unrealized appreciation of equity securities ......... $ (1,593)
Increase in unrealized appreciation of debt securities ........... 22,682
Decrease in value of business acquired ........................... (8,519)
--------
12,570
Decrease in deferred income taxes ................................ (4,399)
--------
Increase in net unrealized gains on securities ................... $ 8,171
========
</TABLE>
The allowance for credit losses on mortgage loans increased from $0 at December
31, 1997 to $3.6 million at December 31, 1998.
Securities Lending
The Company participates in a securities lending program. The Company
generally receives cash collateral in an amount that is in excess of the market
value of the securities loaned. Market values of securities loaned and
collateral are monitored daily, and additional collateral is obtained as
necessary. At December 31, 1998, the market value of securities loaned and
collateral received amounted to $56.9 million and $58.8 million, respectively.
5. Deferred Policy Acquisition Costs and Value of Business Acquired
Policy acquisition costs deferred and the related amortization charged to
income for the year ended
December 31, 1998 were as follows (in thousands):
<TABLE>
<S> <C>
Beginning balance ..................................................... $ 38,200
Deferral:
Commissions .......................................................... 58,374
Other ................................................................ 21,766
--------
80,140
Amortization .......................................................... (5,381)
--------
Ending balance ........................................................ $112,959
========
</TABLE>
F-11
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiaries
December 31, 1998
5. Deferred Policy Acquisition Costs and Value of Business Acquired--Continued
Changes in the value of business acquired for the year ended December 31, 1998
were as follows (in thousands):
<TABLE>
<S> <C>
Beginning balance ........................................................... $ 418,665
Deferral of commissions and accretion of interest ........................... 33,617
Amortization ................................................................ (51,952)
---------
Net amortization reflected in expenses ...................................... (18,335)
---------
Adjustment related to purchase accounting ................................... 11,263
Adjustment related to realized gains on debt securities ..................... (898)
Adjustment related to unrealized gains on debt securities available-for-sale (8,519)
---------
Ending balance .............................................................. $ 402,176
=========
</TABLE>
Expected approximate amortization percentages of the value of business acquired
as of
December 31, 1998 over the next five years were as follows:
<TABLE>
<S> <C>
Year Ending December 31:
1999 ................................................................. 9.7%
2000 ................................................................. 8.5%
2001 ................................................................. 7.4%
2002 ................................................................. 6.7%
2003 ................................................................. 6.2%
</TABLE>
6.. Federal Income Taxes
The tax effects of temporary differences that gave rise to deferred income
tax liabilities and assets at December 31, 1998 were as follows (in thousands):
<TABLE>
<S> <C>
Deferred income tax liabilities:
Value of business acquired ............................................ $141,847
Net unrealized gains on securities .................................... 22,671
Other ................................................................. 24,205
--------
Total .................................................................. 188,723
Deferred income tax assets:
Future policy benefits and policy fund balances ....................... 138,869
Deferred policy acquisition costs ..................................... 26,771
Other ................................................................. 25,897
--------
Total .................................................................. 191,537
--------
Net deferred income tax asset .......................................... $ 2,814
========
</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 current administration has proposed to tax, as part
of its 1999 budget initiative, the "Policyholders' Surplus" over a ten year
period. No related deferred tax liability has been recognized for the potential
tax which would approximate $4.7 million under current proposed rates.
Federal income taxes paid in 1998 were $29 million.
F-12
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiaries
December 31, 1998
7. Pensions
The Company's employees participate in the Jefferson-Pilot defined benefit
pension plans covering substantially all employees. The plans are
noncontributory and are funded through group annuity contracts issued by
Jefferson-Pilot Life Insurance Company, an affiliate. The assets of the plan
are those of the related contracts, primarily held in the separate accounts of
Jefferson-Pilot Life Insurance Company. The plans provide benefits based on
annual compensation and years of service. The funding policy is to contribute
annually no more than the maximum amount deductible for federal income tax
purposes. The plans are administered by Jefferson-Pilot.
Pension costs allocated to the Company for the year ended December 31,
1998, were $2,152,000.
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. Postretirement costs of the Company that were allocated
from Jefferson-Pilot amounted to approximately $200,000 for the year ended
December 31, 1998.
9. Commitments and Contingent Liabilities
The Company leases electronic data processing equipment and field office
space under noncancelable operating lease agreements. The lease terms generally
range from three to five years. Neither annual rent nor future rental
commitments are significant.
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 $52.8 million as of December 31, 1998.
In the normal course of business, the Company and its subsidiaries are
parties to various lawsuits. Because of the considerable uncertainties that
exist, the Company cannot predict the outcome of pending or future litigation.
However, management believes that the resolution of pending legal proceedings
will not have a material adverse effect on the Company's financial position or
results of operations.
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 $1.5 million.
The effect of reinsurance on the premiums and policy charges in the
consolidated statement of income for the year ended December 31, 1998 was as
follows (in thousands):
<TABLE>
<CAPTION>
Ceded to Assumed
Direct Other from Other Net
Amount Companies Companies Amount
-------- --------- ---------- --------
<S> <C> <C> <C> <C>
Total premiums and policy charges ......... $372,244 $86,575 $30,268 $315,937
======== ======= ======= ========
</TABLE>
Reinsurance recoveries which have been deducted from benefits, claims and
expenses in the consolidated statement of income for the Company were $105.6
million.
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, 1998.
F-13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiaries
December 31, 1998
10. Reinsurance--Continued
As of December 31, 1998, the Company had a reinsurance recoverable of $95
million from a single reinsurer, pursuant to a 50% coinsurance agreement. The
Company and the reinsurer are joint and equal owners in $191 million of
securities and short-term investments as of December 31, 1998, 50% of which is
included in investments in the accompanying consolidated balance sheet.
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, 1998 was
$350.9 million. Reported statutory net income for the year ended December 31,
1998 was $90.7 million. 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.
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, 1998,
the Company's adjusted capital and surplus exceeded its authorized control
level RBC.
The NAIC Codification of Statutory Accounting Principles (Codification) has
been completed. The purpose of Codification is to create uniformity in
statutory financial reporting across states. Codification must be adopted by
individual states before it will have any bearing on the statutory reporting
requirements of companies domiciled in a particular state. The NAIC is
encouraging the states to adopt Codification as soon as possible, with an
implementation date of January 1, 2001. The Company does not expect
implementation to have a material impact on its statutory surplus; however,
implementation is expected to result in a net reduction of statutory surplus
and RBC throughout the insurance industry.
F-14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiaries
December 31, 1998
12. Transactions with Affiliated Companies
During 1998, the Company entered into service agreements with
Jefferson-Pilot and other subsidiaries of Jefferson-Pilot for personnel and
facilities usage, general management services and investment management
services. The Company expensed $69.9 million for general management and
investment services provided by Jefferson-Pilot Life Insurance Company, another
wholly-owned subsidiary of Jefferson-Pilot. At December 31, 1998, $55.6 million
remained payable to Jefferson-Pilot Life Insurance Company related to these
service contracts. The remainder of the payable at year end was to other
affiliates.
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:
[DIAMOND] 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.
[DIAMOND] Fair values of equity securities are based on quoted market prices.
[DIAMOND] The carrying value of cash and cash equivalents approximates fair
value due to the short maturities of these assets.
[DIAMOND] Fair values of policy loans and mortgage loans are estimated using
discounted cash flow analyses and approximate carrying values.
[DIAMOND] Fair values of separate account assets and liabilities are reflected
in the consolidated balance sheets.
[DIAMOND] Fair values of securities sold under repurchase agreements
approximate carrying values, which include accrued interest.
The carrying value and fair value of financial instruments at December 31,
1998 were as follows
(in thousands):
<TABLE>
<CAPTION>
Carrying Fair
Value Value
---------- ----------
<S> <C> <C>
Financial Assets
Debt securities available-for-sale .................. $3,099,405 $3,099,405
Equity securities available-for-sale ................ 10,668 10,668
Cash and cash equivalents ........................... 6,514 6,514
Policy loans ........................................ 246,290 290,024
Mortgage loans on real estate ....................... 282,355 293,597
Financial Liabilities
Securities sold under repurchase agreements ......... 102,130 102,130
</TABLE>
F-15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiaries
December 31, 1998
14. Other Comprehensive Income
Comprehensive income and its components are displayed in the accompanying
statement of stockholder's equity. Currently, the only element of other
comprehensive income applicable to the Company is changes in unrealized gains
and losses on securities classified as available-for-sale, which are displayed
in the following table, along with related tax effects. See Note 4 for further
detail of changes in unrealized gains on securities available-for-sale for the
year ended December 31, 1998 (in thousands):
<TABLE>
<S> <C>
Unrealized holding gains arising during period, before taxes ......... $ 16,463
Income taxes ......................................................... (5,762)
--------
Unrealized holding gains arising during period, net of taxes ......... 10,701
--------
Less reclassification adjustment:
Gains realized in net income, before taxes .......................... 3,892
Income taxes ........................................................ (1,362)
--------
Reclassification adjustment for gains realized in net income ......... 2,530
--------
Other comprehensive income--net unrealized gains ..................... $ 8,171
========
</TABLE>
15. Year 2000 Conversion Costs (Unaudited)
The Company's administrative and financial reporting systems are shared
among numerous insurance affiliates within the consolidated Jefferson-Pilot
Corporation group (JP).
Like most if not all companies, JP faces certain risks associated with the
coming of the year 2000. The Year 2000 issue relates to the way computer
systems and programs define calendar dates. By using only two digit dates, they
could fail or make miscalculations due to the inability to distinguish between
dates in the 1900's and in the 2000's. Also, many systems and equipment that
are not typically thought of as "computer-related" (referred to as "non-IT")
contain embedded hardware or software that must handle dates and may not
properly perform with dates after 1999.
JP began work on the Year 2000 compliance issue in 1995. The scope of the
project includes: ensuring the compliance of all applications, operating
systems and hardware on mainframe, PC and LAN platforms; addressing issues
related to non-IT embedded software and equipment; and addressing the
compliance of key vendors and service providers to JP (business partners).
The project has four phases: assessment of systems and equipment affected
by the Year 2000 issue; definition of strategies to address affected systems
and equipment; remediation of affected systems and equipment; and certification
that each is Year 2000 compliant. To certify that all IT systems (internally
developed or purchased) are Year 2000 compliant, each system is tested using a
standard testing methodology which includes regression testing, millennium
testing, millennium leap year testing and cross over year testing.
Certification testing is performed on each system as soon as remediation is
completed.
The target for completion of all phases and categories is September 30,
1999. JP has completed the assessment and strategy phases for mainframe
applications, operating systems and hardware and is executing the remediation
and certification phases. JP's new business and policyholder administration
systems and the general ledger are on the mainframe. JP has determined that
approximately 62% of all mainframe systems are compliant. JP does not deem a
system to be compliant until the completion of remediation and certification to
confirm that its performance will not be affected by dates extending after
1999. With respect to significant policyholder systems, all required
remediation has been completed on all systems. The majority of these systems,
including all systems which support products JP is currently marketing, have
been certified as Year 2000 compliant. Completion of certification of remaining
systems for some closed blocks of business is expected by April 1999. Other
non-policyholder mainframe systems have either been certified or are on
schedule. For PC
F-16
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiaries
December 31, 1998
15. Year 2000 Conversion Costs (Unaudited)--Continued
and LAN systems, JP has completed the strategy phases and is executing the
assessment, remediation and certification phases concurrently and intends to
complete these phases during the third quarter of 1999.
For the majority of JP's non-IT related systems and equipment, JP has been
advised by vendors that the systems and equipment are currently Year 2000
compliant. Written documentation regarding compliance is being obtained. Where
feasible, certification testing will be conducted for systems and equipment
that are material to operations. Some systems and equipment, such as electrical
power supply, are not feasible for JP to certify. Completion for non-IT systems
and equipment is scheduled for September 1999.
The most significant category of key business partners is financial
institutions. Their critical functions include safeguarding and managing
investment portfolios, processing of JP's operating bank accounts, and sales/
distribution. All of JP's business partner financial institutions that have
responded to JP's inquiries have indicated they are on schedule for Year 2000
compliance. JP continues to follow up with business partner financial
institutions that have not yet responded. Other partner categories include
insurance agents and marketing organizations, and suppliers of communication
services, utilities, materials and supplies. JP has conducted surveys of all
its software and hardware vendors, and certification is underway. In addition
to financial institutions, other critical business partners have been
identified and surveys initiated. Results of these surveys are being analyzed
in the first quarter of 1999 and appropriate testing or other due diligence
will be conducted in the second and third quarters of 1999.
JP has not had an independent review of its Year 2000 risks or estimates.
However, experts have been engaged to assist in developing estimates and to
complete remediation work on specific portions of the project.
Since inception of the project, JP has incurred external costs of $7 million
and internal costs of $7 million. The current estimate, based on actual
experience to date, of total project expense is $24 million, with remaining
external costs of $5 million and internal costs of $5 million. Costs are
included in various budgets and expensed as incurred. Expected total costs are
less than earlier estimates due in part to refinements in estimates as more
projects near completion. In addition, remediation/certification costs on
projects completed to date have been lower than originally estimated. Total
1998 costs were $8 million. There has not been a material adverse impact on
JP's operations as a result of IT projects being deferred due to resource
constraints caused by the Year 2000 project.
JP has investments in publicly and privately placed securities and loans. JP
may be exposed to credit risk to the extent that related borrowers are
materially adversely impacted by the Year 2000 issue. Portfolio diversification
reduces the overall risk. JP is in compliance with the NAIC Securities
Valuation Office's Due Diligence Guidelines for analyzing these risks.
Although JP expects to certify that its critical policyholder systems are
compliant by the end of April 1999, there is no guarantee that these results
will be achieved. Specific factors that give rise to this uncertainty include a
possible loss of technical resources to perform the work (not yet encountered),
failure to identify all susceptible systems, non-compliance by third parties
whose systems and operations impact JP, and other similar uncertainties.
Specifically, from Year 2000 problems, JP could experience an interruption in
its ability to collect and process premiums, process claim payments, safeguard
and manage its invested assets and operating cash accounts, accurately maintain
policyholder information, accurately maintain accounting records, issue new
policies and/or perform adequate customer service.
While JP believes the occurrence of such a situation is unlikely, a possible
worst case scenario might include one or more of JP's significant policyholder
systems being non-compliant. Such an event could result in a material
disruption to JP's operations. Should the worst case scenario occur, it could,
depending on its duration, have a material impact on JP's results of operations
and liquidity and ultimately on its financial position. Although JP is on
schedule to complete certification of all internal systems and non-IT equipment
well in
F-17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiaries
December 31, 1998
15. Year 2000 Conversion Costs (Unaudited)--Continued
advance of January 1, 2000, JP recognizes the need to plan for unanticipated
problems resulting from failure of internal systems or equipment or from
failures by JP's business partners, providers, suppliers or other critical
third parties. JP has begun work on contingency plans for all mission critical
functions.
16. Subsequent Event
On January 1, 1999, Jefferson-Pilot Service Corporation was sold to
Jefferson-Pilot Life Insurance Company for $9.4 million. No gain was recognized
on the sale.
F-18
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Contractholders of JPF Separate Account C
JPF Separate Account C
The Board of Directors, JPF Separate Account C
We have audited the accompanying statement of assets and liabilities of JPF
Separate Account C as of December 31, 1998, and the related statements of
operations and the statements of changes in net assets for each of the three
years in the period then ended. 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. Our
procedures included confirmation of securities owned as of December 31, 1998,
by correspondence with the fund managers. 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 financial position of JPF Separate Account C at
December 31, 1998, and the results of its operations and the changes in its net
assets for each of the three years in the period then ended in conformity with
generally accepted accounting principles.
/S/ Ernst & Young LLP
Boston, Massachusetts
April 9, 1999
F-19
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
JPF SEPARATE ACCOUNT C
December 31, 1998
<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 ........ $948,444 $6,047,643 $10,412,735 $4,660,873 $7,090,043
======== ========== =========== ========== ==========
Investments in JPM Series Trust II at market value $890,873 $6,554,969 $11,963,669 $4,496,461 $6,703,775
Expenses payable .................................. (63) (467) (852) (320) (477)
-------- ---------- ----------- ---------- ----------
TOTAL NET ASSETS .............................. $890,810 $6,554,502 $11,962,817 $4,496,141 $6,703,298
======== ========== =========== ========== ==========
UNITS OUTSTANDING ................................. 75,941 476,962 481,253 246,280 489,705
NET ASSET VALUE PER UNIT .......................... $ 11.730 $ 13.742 $ 24.858 $ 18.256 $ 13.688
</TABLE>
F-20
<PAGE>
STATEMENTS OF OPERATIONS
JPF SEPARATE ACCOUNT C
<TABLE>
<CAPTION>
JPM
Treasury JPM
Money Market Bond
Division Division
--------------------------------- --------------------------------
Year Ended December 31, Year Ended December 31,
--------------------------------- --------------------------------
1998 1997 1996 1998 1997 1996
---------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividend income ............................... $ 92,675 $ 135 $ 14,528 $211,172 $140,731 $ 72,416
Distributions of realized gains ............... -- 1 16 70,719 41,158 531
---------- -------- -------- -------- -------- --------
92,675 136 14,544 281,891 181,889 72,947
Expenses:
Mortality and expense risk charge ............. 4,113 2,578 1,603 41,128 34,460 6,172
---------- -------- -------- -------- -------- --------
Net Investment Income ....................... 88,562 (2,442) 12,941 240,763 147,429 66,775
Gain (loss) on investments
Net realized gain (loss) on investments ....... (374) (1,080) (1,817) 16,946 4,420 (870)
Net unrealized gain (loss) on investments ..... (67,368) 18,936 (1,756) 185,534 322,800 (4,624)
---------- -------- -------- -------- -------- --------
Net gain (loss) on investments ................ (67,742) 17,856 (3,573) 202,480 327,220 (5,494)
---------- -------- -------- -------- -------- --------
Increase in Net Assets
from Operations ............................ $ 20,820 $ 15,414 $ 9,368 $443,243 $474,649 $ 61,281
========== ======== ======== ======== ======== ========
<CAPTION>
JPM
Equity
Division
----------------------------------
Year Ended December 31,
----------------------------------
1998 1997 1996
---------- ---------- --------
<S> <C> <C> <C>
Investment Income:
Dividend income ............................... $ 59,408 $ 56,988 $ 55,925
Distributions of realized gains ............... 1,122,918 1,467,366 392,202
---------- ---------- --------
1,182,326 1,524,354 448,127
Expenses:
Mortality and expense risk charge ............. 66,882 53,370 24,143
---------- ---------- --------
Net Investment Income ....................... 1,115,444 1,470,984 423,984
Gain (loss) on investments
Net realized gain (loss) on investments ....... 23,096 20,069 67,265
Net unrealized gain (loss) on investments ..... 975,719 204,260 176,276
---------- ---------- --------
Net gain (loss) on investments ................ 998,815 224,329 243,541
---------- ---------- --------
Increase in Net Assets
from Operations ............................ $2,114,259 $1,695,313 $667,525
========== ========== ========
</TABLE>
F-21
<PAGE>
STATEMENTS OF OPERATIONS
JPF SEPARATE ACCOUNT C
<TABLE>
<CAPTION>
JPM
JPM International
Small Company Equity
Division Division
--------------------------------- -----------------------------------
Year Ended December 31, Year Ended December 31,
1998 1997 1996 1998 1997 1996
---------- -------- -------- --------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividend income .................................. $ 6,349 $ 11,006 $ 9,360 $ 94,927 $ 217,676 $ 29,908
Distributions of realized gains .................. 183,024 579,516 211,193 271,211 685,191 152,279
---------- -------- -------- --------- ---------- --------
189,373 590,522 220,553 366,138 902,867 182,187
Expenses:
Mortality and expense risk charge ................ 29,939 26,511 6,703 43,148 42,648 18,798
---------- -------- -------- --------- ---------- --------
Net Investment Income .......................... 159,434 564,011 213,850 322,990 860,219 163,389
Gain (loss) on investments
Net realized gain (loss) on investments .......... (51,808) 4,007 3,521 (34,242) 42,615 15,389
Net unrealized gain on investments ............... (471,622) 221,164 82,854 (53,048) (613,175) 206,175
---------- -------- -------- --------- ---------- --------
Net gain on investments .......................... (523,430) 225,171 86,375 (87,290) (570,560) 221,564
---------- -------- -------- --------- ---------- --------
Increase in Net Assets from Operations ......... $ (363,996) $789,182 $300,225 $ 235,700 $ 289,659 $384,953
========== ======== ======== ========= ========== ========
</TABLE>
F-22
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
JPF SEPARATE ACCOUNT C
<TABLE>
<CAPTION>
JPM
Treasury
Market Money
Division
-------------------------------------
Year Ended December 31,
-------------------------------------
1998 1997 1996
---------- ---------- -----------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) ................. $ 88,562 $ (2,442) $ 12,941
Net realized gain (loss) on
investments ................................. (374) (1,080) (1,817)
Net unrealized gain (loss) on
investments ................................. (67,368) 18,936 (1,756)
--------- --------- -----------
Increase in net assets from operations ......... 20,820 15,414 9,368
Contractholder transactions--Note D:
Transfers of net premiums .................... 4,032 171,335 277,045
Transfers from/to General Account
and within Separate Account, net ............ 404,670 (64,645) (208,924)
Transfers of cost of insurance ............... (6,130) (2,632) (1,590)
Transfers on account of other
terminations ................................ 899 26 (7,323)
--------- --------- -----------
Net increase in net assets derived from
contractholder transactions ................... 403,471 104,084 59,208
--------- --------- -----------
Net increase in net assets ..................... 424,291 119,498 68,576
Balance at beginning of period ................. 466,519 347,021 278,445
--------- --------- -----------
Balance at end of period ....................... $ 890,810 $ 466,519 $ 347,021
========= ========= ===========
<CAPTION>
JPM JPM
Bond Equity
Division Division
--------------------------------------- ----------------------------------------
Year Ended December 31, Year Ended December 31,
--------------------------------------- ----------------------------------------
1998 1997 1996 1998 1997 1996
----------- ----------- ----------- ------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) ................. $ 240,763 $ 147,429 $ 66,775 $ 1,115,444 $1,470,984 $ 423,984
Net realized gain (loss) on
investments ................................. 16,946 4,420 (870) 23,096 20,069 67,265
Net unrealized gain (loss) on
investments ................................. 185,534 322,800 (4,624) 975,719 204,260 176,276
---------- ---------- ---------- ----------- ---------- ----------
Increase in net assets from operations ......... 443,243 474,649 61,281 2,114,259 1,695,313 667,525
Contractholder transactions--Note D:
Transfers of net premiums .................... 237,096 354,690 251,428 955,232 765,854 387,274
Transfers from/to General Account
and within Separate Account, net ............ (51,582) 3,566,167 1,057,013 114,046 2,227,022 172,368
Transfers of cost of insurance ............... (101,923) (78,877) (9,537) (85,488) (57,566) (13,001
Transfers on account of other
terminations ................................ (190) (745) 2,425 (24,822) (4,631) (834
---------- ---------- ---------- ----------- ---------- ----------
Net increase in net assets derived from
contractholder transactions ................... 83,401 3,841,235 1,301,329 958,968 2,930,679 545,807
---------- ---------- ---------- ----------- ---------- ----------
Net increase in net assets ..................... 526,644 4,315,884 1,362,610 3,073,227 4,625,992 1,213,332
Balance at beginning of period ................. 6,027,858 1,711,974 349,364 8,889,590 4,263,598 3,050,266
---------- ---------- ---------- ----------- ---------- ----------
Balance at end of period ....................... $6,554,502 $6,027,858 $1,711,974 $11,962,817 $8,889,590 $4,263,598
========== ========== ========== =========== ========== ==========
</TABLE>
F-23
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS--(Continued)
JPF SEPARATE ACCOUNT C
<TABLE>
<CAPTION>
JPM
Small Company
Division
--------------------------------------
Year Ended December 31,
--------------------------------------
1998 1997 1996
----------- ---------- ----------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income .......................... $ 159,434 $ 564,011 $ 213,850
Net realized gain (loss) on investments ........ (51,808) 4,007 3,521
Net unrealized gain (loss) on investments ...... (471,622) 221,164 82,854
---------- ---------- ----------
Increase in net assets from operations ........... (363,996) 789,182 300,225
Contractholder transactions--Note D:
Transfers of net premiums ...................... 457,027 463,334 193,946
Transfers from/to General Account
and within Separate Account, net .............. (116,427) 1,237,752 1,403,000
Transfers of cost of insurance ................. (34,671) (27,349) (5,933)
Transfers on account of other terminations ..... 836 2,389 6,464
---------- ---------- ----------
Net increase in net assets derived from
contractholder transactions ..................... 306,765 1,676,126 1,597,477
---------- ---------- ----------
Net increase in net assets ....................... (57,231) 2,465,308 1,897,702
Balance at beginning of period ................... 4,553,372 2,088,064 190,362
---------- ---------- ----------
Balance at end of period ......................... $4,496,141 $4,553,372 $2,088,064
========== ========== ==========
<CAPTION>
JPM
International
Equity
Division
--------------------------------------
Year Ended December 31,
--------------------------------------
1998 1997 1996
----------- ---------- ----------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income .......................... $ 322,990 $ 860,219 $ 163,389
Net realized gain (loss) on investments ........ (34,242) 42,615 15,389
Net unrealized gain (loss) on investments ...... (53,048) (613,175) 206,175
---------- ---------- ----------
Increase in net assets from operations ........... 235,700 289,659 384,953
Contractholder transactions--Note D:
Transfers of net premiums ...................... 375,553 509,514 365,133
Transfers from/to General Account
and within Separate Account, net .............. (190,570) 1,597,555 1,380,915
Transfers of cost of insurance ................. (61,094) (54,916) (11,500)
Transfers on account of other terminations ..... 2,269 (5,439) 2,685
---------- ---------- ----------
Net increase in net assets derived from
contractholder transactions ..................... 126,158 2,046,714 1,737,233
---------- ---------- ----------
Net increase in net assets ....................... 361,858 2,336,373 2,122,186
Balance at beginning of period ................... 6,341,440 4,005,067 1,882,881
---------- ---------- ----------
Balance at end of period ......................... $6,703,298 $6,341,440 $4,005,067
========== ========== ==========
</TABLE>
F-24
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JPF Separate Account C
December 31, 1998
NOTE A--ORGANIZATION OF ACCOUNT
JPF Separate Account C (the "Separate Account") is a separate account of
Jefferson Pilot Financial Financial Insurance Company ("JP Financial"). 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 JP
Financial and is presently comprised of five 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 JP Financial 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.
Use of Estimates: The accompanying financial statements of the Account have
been prepared in accordance with generally accepted accounting principles. The
preparation of financial statements requires management to make estimates that
affect amounts reported in the financial statements and accompanying notes.
Such estimates could change in the future as more information becomes known,
which could impact the amounts reported and disclosed herein.
NOTE C--AFFILIATED COMPANY TRANSACTIONS
Administrative services necessary for the operation of the Separate Account are
provided by Jefferson Pilot Service Corporation, an affiliate of JP Financial.
JP Financial is the principal underwriter of the variable insurance 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.
F-25
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(Continued)
JPF Separate Account C
December 31, 1998
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, 1998
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, 1998.
<TABLE>
<CAPTION>
Net Asset
Value
Shares Per Share
------ ---------
<S> <C> <C>
JPM Treasury Money Market Portfolio 96,834 $ 9.200000
JPM Bond Portfolio 561,694 11.670000
JPM Equity Portfolio 755,282 15.840000
JPM Small Company Portfolio 379,128 11.860000
JPM International Equity Portfolio 637,241 10.520000
</TABLE>
NOTE F--CONTRACTHOLDER TRANSACTIONS
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------------
1998 1997 1996
--------------------- ---------------------- ----------------------
Units Amount Units Amount Units Amount
------ ---------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
JPM Treasury Money Market Division
Issuance of units 35,828 $ 416,040 16,293 $ 180,290 231,052 $2,480,672
Redemptions of units 1,132 12,569 6,950 76,206 225,769 2,421,464
------ ---------- ------ ---------- ------- ----------
Net Increase 34,696 $ 403,471 9,343 $ 104,084 5,283 $ 59,208
====== ========== ====== ========== ======= ==========
JPM Bond Division
Issuance of units 20,177 $ 267,002 333,164 $3,936,415 170,414 $1,931,269
Redemptions of units 13,892 183,601 7,769 95,180 55,202 629,940
------ ---------- ------- ---------- ------- ----------
Net Increase 6,285 $ 83,401 325,395 $3,841,235 115,212 $1,301,329
====== ========== ======= ========== ======= ==========
JPM Equity Division
Issuance of units 57,919 $1,262,450 248,888 $4,443,329 182,200 $2,590,095
Redemptions of units 14,721 303,482 76,883 1,512,650 145,517 2,044,287
------ ---------- ------- ---------- ------- ----------
Net Increase 43,198 $ 958,968 172,005 $2,930,679 36,683 $ 545,808
====== ========== ======= ========== ======= ==========
JPM Small Company Division
Issuance of units 32,795 $ 639,061 169,487 $2,966,326 158,843 $2,217,721
Redemptions of units 20,659 332,296 65,988 1,290,200 42,603 620,244
------ ---------- ------- ---------- ------- ----------
Net Increase 12,136 $ 306,765 103,499 $1,676,126 116,240 $1,597,477
====== ========== ======= ========== ======= ==========
JPM International Equity Division
Issuance of units 31,575 $ 434,702 233,614 $2,947,905 251,694 $2,918,223
Redemptions of units 23,925 308,544 70,489 901,191 101,276 1,180,990
------ ---------- ------- ---------- ------- ----------
Net Increase 7,650 $ 126,158 163,125 $2,046,714 150,418 $1,737,233
====== ========== ======= ========== ======= ==========
</TABLE>
F-26
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(Continued)
JPF Separate Account C
December 31, 1998
NOTE G --YEAR 2000 CONVERSION (UNAUDITED)
The Company recognizes the need to ensure that its operations will not be
adversely impacted by Year 2000 systems failures. Year 2000 issues arise
because some computer software and hardware (systems) were designed to handle
only a two digit year, not a four digit year. By using two digits, they could
fail or make miscalculations due to the inability to distinguish between dates
in the 1900's and in the 2000's.
In order to minimize the impact of the year 2000 on the Company,
Jefferson-Pilot Corporation developed a centralized oversight and project
management process to facilitate the planning and conversion of all information
systems on behalf of the Company and its affiliates. The scope of the project
includes an assessment of the Company's material systems currently in place,
modification, testing and implementation of such systems as required, inquiry
to third-party providers with whom the Company has material business
relationships as to the state of their readiness, and the development of a
contingency plan in the event that material Year 2000 issues arise.
The target for completing all phases is September 30, 1999. The Company
has completed its assessment and modification phases of its plan and is
actively testing its systems and communicating with its business partners to
assess these companies' readiness. Although management does not anticipate a
material effect on its business operation as a result of the Year 2000 computer
systems issues, the Company is in the process of developing a contingency plan
in the event that material Year 2000 issues arise in the Company or third-party
computer systems.
F-27
<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 papers 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:
<PAGE>
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, Registration 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, Registration 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, Registration 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, Registration 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, Registration 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, Registration 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 on
February 23, 1996, Registration 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 on February 23, 1996, Registration 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, Registration No. 33-72830).
(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
<PAGE>
(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 between 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 between 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 York
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/
<PAGE>
(i) Not applicable
(j) Application /2/
2. Specimen Policy (Same as 1(e))./3/
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 Independent Auditors
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 it meets the requirements of Securities
Act Rule 485(b) for effectiveness of this Post-Effective Amendment No. 7 to the
Registration Statement and has duly caused this Post-Effective Amendment No. 7
to the Registration Statement to be signed on its behalf by the undersigned
thereunto fuly authorized, and its seal to be hereunto affixed and attested, all
in Concord, New Hampshire, on the 27th day of April, 1999.
(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. 7 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 27th day of April, 1999.
(Seal)
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.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Dennis R. Glass
- --------------------------- Director April 27, 1999
Dennis R. Glass
/s/ Kenneth C. Mlekush
- --------------------------- Director April 27, 1999
Kenneth C. Mlekush
/s/ David A. Stonecipher
- --------------------------- Director April 27, 1999
David A. Stonecipher
/s/ E. Jay Yelton
- --------------------------- Director April 27, 1999
E. Jay Yelton
</TABLE>
<PAGE>
EXHIBIT INDEX
7. Consent of Independent Auditors ...............................
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Independent
Auditors" and to the use of our reports dated February 8, 1999 for Jefferson
Pilot Financial Insurance Company and subsidiaries and April 9, 1999 for JPF
Separate Account C in Post-Effective Amendment No. 7 to the Registration
Statement (Form S-6 No. 33-72830) and related Prospectus for the registration of
units of interest in the JPF Separate Account C under individual and
survivorship flexible premium variable life insurance policies offered by
Jefferson Pilot Financial Insurance Company.
/s/ ERNST & YOUNG LLP
Greensboro, North Carolina
April 21, 1999
