As filed with the Securities and Exchange Commission on April 18, 1997.
File No. 33-73738
File No. 811-8260
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |_|
Pre-Effective Amendment No. |_|
Post-Effective Amendment No. 6 |X|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |_|
Amendment No. 7 |X|
CUNA MUTUAL LIFE VARIABLE ANNUITY ACCOUNT
(Exact Name of Registrant)
CUNA MUTUAL LIFE INSURANCE COMPANY
(Name of Depositor)
2000 Heritage Way
Waverly, Iowa 50677
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number: (319) 352-4090
Barbara L. Secor, Esquire
2000 Heritage Way
Waverly, Iowa 50677
(Name and Address of Agent for Service of Process)
It is proposed that this filing will become effective (check appropriate box)
|_| immediately upon filing pursuant to paragraph (b) of Rule 485
|X| on May 1, 1997 pursuant to paragraph (b) of Rule 485
|_| 60 days after filing pursuant to paragraph (a)(i) of Rule 485
|_| on pursuant to paragraph (a)(i) of Rule 485
|_| 75 days after filing pursuant to paragraph (a)(ii)
|_| on pursuant to paragraph (a)(ii) of Rule 485
Pursuant to Rule 24f-2, Registrant registered an indefinite amount of securities
under the Securities Act of 1933. The Rule 24f-2 Notice for Registrant's most
recent fiscal year was filed on February 18 , 1997.
The index to attached exhibits is found following the signature pages after page
C-12.
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<PAGE>
Cross Reference Sheet
Pursuant to Rules 481(a) and 495(a)
Showing location in Part A (prospectus) and Part B (statement of additional
information) of registration statement of information required by Form N-4
<TABLE>
<CAPTION>
PART A
Item of Form N-4 Prospectus Caption
<S> <C>
1. Cover Page Cover Page
2. Definitions DEFINITIONS
3. Synopsis EXPENSE TABLES; SUMMARY
4. Condensed Financial Information CONDENSED FINANCIAL INFORMATION; YIELDS AND TOTAL RETURNS
5. General
(a) Depositor CUNA MUTUAL LIFE INSURANCE COMPANY
(b) Registrant CUNA MUTUAL LIFE VARIABLE ANNUITY ACCOUNT
(c) Portfolio Company Ultra Series Fund; T. Rowe Price International Series, Inc.; MFS(R)
Variable Insurance TrustSM; Oppenheimer Variable Account Funds,
Templeton Variable Products Series Fund, Availability of Funds
(d) Fund Prospectus Ultra Series Fund; T. Rowe Price International Series, Inc.; MFS(R)
Variable Insurance TrustSM; Oppenheimer Variable Account Funds,
Templeton Variable Products Series Fund ,Availability of Funds
(e) Voting Rights VOTING RIGHTS
(f) Administrators N/A
6. Deductions and Expenses
(a) General CHARGES AND DEDUCTIONS
(b) Sales Load CHARGES AND DEDUCTIONS; SUMMARY
(c) Special Purchase Plan DESCRIPTION OF THE CONTRACT: Purchase Payments; Transfer Privileges
(d) Commissions DISTRIBUTION OF THE CONTRACTS
(e) Expenses - Registrant CHARGES AND DEDUCTIONS
(f) Fund Expenses CHARGES AND DEDUCTIONS
(g) Organizational Expenses N/A
7. Contracts
(a) Persons with Rights SUMMARY; Addition, Deletion
or Substitution of
Investments; DESCRIPTION OF
THE CONTRACT; Payment
Options; VOTING RIGHTS;
Death Benefit Before the
Annuity Date; Death Benefit
After the Annuity Date;
Modification; Election of
Annuity Payment Options
(b)(i)Allocation of Purchase Payments SUMMARY; Purchase Payments; Free-Look Period; Allocation of Purchase
Payments
(ii)Transfers SUMMARY; Transfer Privileges
(iii)Exchanges Transfers, Assignments or Exchange of a Contract
(c) Changes Additions, Deletions or Substitutions of Investments; DESCRIPTION OF THE
CONTRACT; Modification
(d) Inquiries Cover page; Inquiries
8. Annuity Period SUMMARY; ANNUITY PAYMENT OPTIONS
9. Death Benefit Death Benefit Before the Annuity Date; Death Benefit After the Annuity
Date
10. Purchases and Contract Value
(a) Purchases SUMMARY; Issuance of a Contract; Purchase Payments; Free Look Period;
Allocation of Purchase Payments; Variable Contract Value; Transfer
Privileges
(b) Valuation DEFINITIONS; Variable Contract Value
(c) Daily Calculation DEFINITIONS; Variable Contract Value
(d) Underwriter Issuance of a Contract; Distribution of the Contracts
11. Redemptions
(a) By Owners SUMMARY; Transfer Privilege; Surrenders and Partial Withdrawals; Partial
Withdrawals; Annuity
Payments on the Annuity
Date; Payments; ANNUITY
PAYMENT OPTIONS; FEDERAL
TAX MATTERS
By Annuitant SUMMARY; Transfer Privilege; Surrenders and Partial Withdrawals;
Proceeds on the Annuity Date; Payments; ANNUITY PAYMENT OPTIONS; FEDERAL
TAX MATTERS
(b) Texas ORP N/A
(c) Check Delay Payments
(d) Lapse Contract Loans
(e) Free Look SUMMARY; Free Look Period
12. Taxes SUMMARY; FEDERAL TAX MATTERS
13. Legal Proceedings LEGAL PROCEEDINGS
14. Table of Contents for the
Statement of Additional Information Statement of Additional Information Table of Contents
<PAGE>
PART B
Item of Form N-4 Part B Caption
15. Cover Page Cover Page
16. Table of Contents Table of Contents
17. General Information and History N/A
18. Services
(a) Fees and Expenses of Registrant CHARGES AND DEDUCTIONS (prospectus)
(b) Management Contracts Termination of Participation Agreements
(c) Custodian N/A
Independent Public Accountant Experts
(d) Assets of Registrant CUNA Mutual Life Variable Annuity Account (prospectus)
(e) Affiliated Persons CUNA MUTUAL LIFE INSURANCE COMPANY (prospectus)
(f) Principal Underwriter Distribution of the Contracts (prospectus)
19. Purchase of Securities Being Offered Distribution of the Contracts (prospectus)
Offering Sales Load N/A
20. Underwriters Distribution of the Contracts (prospectus)
21. Calculation of Performance Data Calculation of Yields and Total Returns; YIELDS AND TOTAL RETURNS
(prospectus)
22. Annuity Payments Variable Annuity Payments; ANNUITY PAYMENT OPTIONS (prospectus)
23. Financial Statements FINANCIAL STATEMENTS
<PAGE>
PART C -- OTHER INFORMATION
Item of Form N-4 Part C Caption
24. Financial Statements and Exhibits Financial Statements and Exhibits
(a) Financial Statements (a) Financial Statements
(b) Exhibits (b) Exhibits
25. Directors and Officers of the Depositor Directors and Officers of CUNA Mutual Life Insurance Company
26. Persons Controlled By or Under Common
Control with the Depositor or Registrant Persons Controlled By or Under Common Control with the Depositor or
Registrant
27. Number of Contractowners Number of Owners
28. Indemnification Indemnification
29. Principal Underwriters Principal Underwriter
30. Location of Accounts and Records Location of Books and Records
31. Management Services Management Services
32. Undertakings Undertakings and Representations
Signature Page Signatures
</TABLE>
<PAGE>
PART A
PROSPECTUS
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY PROSPECTUS
2000 Heritage Way, Waverly, Iowa 50677
(319) 352-4090 (800) 798-5500 May 1, 1997
This Prospectus describes the individual flexible premium deferred variable
annuity contract, (the "Contract") being offered by CUNA Mutual Life Insurance
Company (the "Company"). The Contract may be sold to or in connection with
retirement plans, including those that qualify for special federal tax treatment
under the Internal Revenue Code of 1986, as amended (the "Code").
Purchase payments and Contract Values are allocated, as designated by the Owner,
to one or more of the Subaccounts of the CUNA Mutual Life Variable Annuity
Account (the "Variable Account"), or to the Guaranteed Interest Option, or to
both. The assets of each Subaccount will be invested solely in a corresponding
portfolio of Ultra Series Fund, T. Rowe Price International Series, Inc., MFS(R)
Variable Insurance TrustSM ("MFS Variable Insurance Trust"), Oppenheimer
Variable Account Funds or Templeton Variable Products Series Fund. The
accompanying prospectus for the Ultra Series Fund describes its portfolios or
Funds -- the Capital Appreciation Stock Fund, the Growth and Income Stock Fund,
the Balanced Fund, the Bond Fund and the Money Market Fund. The accompanying
prospectus for T. Rowe Price International Series, Inc. describes its
International Stock Portfolio. The accompanying prospectus for MFS Variable
Insurance Trust describes its MFS(R) World Governments SeriesSM ("MFS World
Governments Series") and MFS(R) Emerging Growth Series SM ("MFS Emerging Growth
Series"). The accompanying prospectus for Oppenheimer Variable Account Funds
describes its Oppenheimer High Income Fund. The accompanying prospectus for
Templeton Variable Products Series Fund describes its Templeton Developing
Markets Fund: Class 2. The Contract Value of the Contracts prior to the Annuity
Date, except for amounts in the Guaranteed Interest Option, will vary according
to the investment performance of the portfolios or Funds in which the selected
Subaccounts are invested. The Owner bears the entire investment risk on amounts
allocated to the Variable Account.
This Prospectus sets forth basic information about the Contract and the Variable
Account that a prospective investor should know before investing. Additional
information about the Contract and the Variable Account is contained in the
Statement of Additional Information which has been filed with the Securities and
Exchange Commission and is incorporated herein by reference. The table of
contents for the Statement of Additional information is on page 37 of this
Prospectus. You may obtain a copy of the Statement of Additional Information
(dated May 1, 1997, as supplemented from time to time) free of charge by writing
to or calling the Company at the address or telephone number shown above.
PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. THIS
PROSPECTUS MUST BE ACCOMPANIED BY A CURRENT PROSPECTUS FOR THE ULTRA SERIES
FUND, T. ROWE PRICE INTERNATIONAL SERIES, INC., MFS VARIABLE INSURANCE TRUST,
OPPENHEIMER VARIABLE ACCOUNT FUNDS, AND TEMPLETON VARIABLE PRODUCTS SERIES FUND.
UNLIKE CREDIT UNION AND BANK ACCOUNTS, CONTRACT VALUE INVESTED IN THE VARIABLE
ACCOUNT IS NOT INSURED. INVESTMENT OF CONTRACT VALUE IN THE VARIABLE ACCOUNT
INVOLVES CERTAIN RISKS INCLUDING LOSS OF PURCHASE PAYMENTS (PRINCIPAL). VARIABLE
CONTRACT VALUE IS NOT DEPOSITED IN OR GUARANTEED BY ANY CREDIT UNION OR BANK AND
IS NOT GUARANTEED BY ANY GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
EXPENSE TABLES............................................................1
DEFINITIONS...............................................................4
SUMMARY...................................................................6
The Contract...........................................................6
Charges and Deductions.................................................6
Annuity Provisions.....................................................7
Federal Tax Status.....................................................7
CONDENSED FINANCIAL INFORMATION...........................................8
CUNA MUTUAL LIFE INSURANCE COMPANY, THE CUNA MUTUAL
LIFE VARIABLE ANNUITY ACCOUNT, AND THE UNDERLYING FUNDS.........9
CUNA Mutual Life Insurance Company.....................................9
CUNA Mutual Life Variable Annuity Account..............................9
The Underlying Funds..................................................10
The Ultra Series Fund.................................................10
Capital Appreciation Stock Fund.....................................10
Growth and Income Stock Fund........................................10
Balanced Fund.......................................................10
Bond Fund...........................................................10
Money Market Fund...................................................10
T. Rowe Price International Series, Inc...............................11
International Stock Portfolio.......................................11
MFS Variable Insurance Trust..........................................11
MFS World Governments Series........................................11
MFS Emerging Growth Series..........................................11
Oppenheimer Variable Account Funds....................................11
Oppenheimer High Income Fund........................................11
Templeton Variable Products Series Fund...............................11
Templeton Developing Markets Fund: Class 2..........................11
Availability of the Funds.............................................12
Resolving Material Conflicts..........................................12
Addition, Deletion or Substitution of Investments.....................13
DESCRIPTION OF THE CONTRACT..............................................13
Issuance of a Contract................................................13
Purchase Payments.....................................................13
Free-Look Period......................................................14
Allocation of Purchase Payments.......................................14
Variable Contract Value...............................................15
Transfer Privileges...................................................16
Surrenders and Partial Withdrawals....................................17
Contract Loans........................................................18
Death Benefit Before the Annuity Date.................................19
Death Benefit After the Annuity Date..................................20
Annuity Payments on the Annuity Date..................................20
Payments..............................................................21
Modification..........................................................21
Reports to Owners.....................................................21
Inquiries.............................................................21
THE GUARANTEED INTEREST OPTION...........................................22
Category 1............................................................22
Guaranteed Interest Option Value....................................22
Guarantee Periods...................................................23
Net Purchase Payment Preservation Program...........................23
Interest Adjustment.................................................23
Category 2............................................................24
Guaranteed Interest Option Value....................................25
Guarantee Periods...................................................25
Net Purchase Payment Preservation Program...........................25
Category 3............................................................25
CHARGES AND DEDUCTIONS...................................................26
Surrender Charge (Contingent Deferred Sales Charge)...................26
Annual Contract Fee...................................................26
Asset-Based Administration Charge.....................................27
Transfer Processing Fee...............................................27
Lost Contract Request.................................................27
Mortality and Expense Risk Charge.....................................27
Fund Expenses.........................................................27
Premium Taxes.........................................................27
Other Taxes...........................................................28
ANNUITY PAYMENT OPTIONS..................................................28
Election of Annuity Payment Options...................................28
Fixed Annuity Payments................................................28
Variable Annuity Payments.............................................28
Description of Annuity Payment Options................................29
YIELDS AND TOTAL RETURNS.................................................30
FEDERAL TAX MATTERS......................................................31
Introduction..........................................................31
Tax Status of the Contract............................................31
Taxation of Annuities.................................................32
Transfers, Assignments or Exchanges of a Contract.....................34
Withholding...........................................................34
Multiple Contracts....................................................34
Taxation of Qualified Plans...........................................34
Possible Charge for the Company's Taxes...............................35
Other Tax Consequences................................................35
DISTRIBUTION OF THE CONTRACTS............................................35
LEGAL PROCEEDINGS........................................................36
VOTING RIGHTS............................................................36
COMPANY HOLIDAYS.........................................................36
FINANCIAL STATEMENTS.....................................................36
<PAGE>
EXPENSE TABLES
The following expense information assumes that the entire Contract Value is
Variable Contract Value.
Owner Transaction Expenses
Sales Charge Imposed on Purchase Payments None
Maximum Surrender Charge (contingent
deferred sales charge) as a percentage
of purchase payments 7%
Transfer Processing Fee None*
Annual Contract Fee $30**
Variable Account Annual Expenses
(as a percentage of net assets)
Mortality and Expense Risk Charge 1.25%
Other Variable Account Expenses 0.15%
Total Variable Account Expenses 1.40%
Annual Fund Expenses
(as percentage of average net assets)
Capital Appreciation Stock Fund
Management Fees (investment advisory fees) 0.80%
Other Expenses 0.01%
Total Annual Fund Expenses 0.81%
Growth and Income Stock Fund
Management Fees (investment advisory fees) 0.60%
Other Expenses 0.01%
Total Annual Fund Expenses 0.61%
Balanced Fund
Management Fees (investment advisory fees) 0.70%
Other Expenses 0.01%
Total Annual Fund Expenses 0.71%
Bond Fund
Management Fees (investment advisory fees) 0.55%
Other Expenses 0.01%
Total Annual Fund Expenses 0.56%
Money Market Fund
Management Fees (investment advisory fees) 0.45%
Other Expenses 0.01%
Total Annual Fund Expenses 0.46%
*The Company reserves the right to charge a $10 transfer fee on each
transfer after the first 12 transfers in any Contract Year. (See SUMMARY,
Charges and Deductions.)
**The Company does not deduct the annual Contract fee if the Contract Value
is $25,000 or more. (See SUMMARY, Annual Contract Fee.)
<PAGE>
International Stock Portfolio
Management Fees (investment advisory fees) 1.05%
Other Expenses .00%
Total Annual Fund Expenses 1.05%
MFS World Governments Series
Management Fees (investment advisory fees) 0.75%
Other Expenses (after reimbursements) 0.25%
Total Annual Fund Expenses 1.00%
(after reimbursements)
MFS Emerging Growth Series
Management Fees (investment advisory fees) 0.75%
Other Expenses (after reimbursements) 0.25%
Total Annual Fund Expenses 1.00%
(after reimbursements)
Oppenheimer High Income Fund
Management Fees (investment advisory fees) 0.75%
Other Expenses 0.06%
Total Annual Fund Expenses 0.81%
Templeton Developing Markets Fund*: Class 2**
Management Fees(investment advisory fees) 1.25%***
Other Expenses 0.53%
12b-1 Fee**** 0.25%
Total Annual Fund Expenses 2.03%***
*Figures are estimates for 1997 based on annualized 1996 figures. The fund
began operation in March 1996.
**Because Class 2 shares were not offered until May 1, 1997, the figures
for "Management Fees" and "Other Expenses" are based on the historical
expenses of the Fund's Class 1 shares for the fiscal year ended December
31, 1996, except as otherwise noted.
***Figures do not reflect the Investment Manager's agreement in advance to
waive a portion of its fees during 1996. After the waiver, actual
management fees and total operating expenses of the portfolio in 1996 were
1.17% and 1.95% of net assets, respectively. This waiver agreement has been
terminated.
****Class 2 of the Fund has a distribution plan or "Rule 12b-1 plan" which
is described in the Fund's prospectus.
Premium taxes may be applicable, depending on the laws of various
jurisdictions.
Expense information for these underlying funds was provided to the Company
by each underlying fund's management, and Company has not independently
verified such information.
The above tables are intended to assist the Owner in understanding the
costs and expenses that he or she will bear directly or indirectly. The
tables reflect the expenses anticipated for the Variable Account and for
each of the underlying Funds available as investment options for the 1997
fiscal year. For a more complete description of the various costs and
expenses see "Charges and Deductions" and the prospectuses for the Ultra
Series Fund, the T. Rowe Price International Series, Inc., the MFS Variable
Insurance Trust, the Oppenheimer Variable Account Funds, and the Templeton
Variable Products Series Fund which accompany this Prospectus.
The annual expenses listed for the MFS World Governments Series are net of
certain reimbursements by its investment adviser. The investment adviser
has agreed to bear, subject to reimbursement, until December 31, 2004,
expenses of the World Governments Series such that the Series' aggregate
operating expenses do not exceed 1.00%, on an annualized basis, of its
average daily net assets. See "Information Concerning Shares of The Series
Expenses" in the prospectus of the MFS World Governments Series. For the
1996 fiscal year, absent this expense arrangement, the "Other Expenses" and
the "Total Annual Fund Expenses" shown above would be 1.28% and 2.03%,
respectively.
The annual expenses listed for the MFS Emerging Growth Series are net of
certain reimbursements by its investment adviser. The investment adviser
has agreed to bear, subject to reimbursement, until December 31, 2004,
expenses of the Emerging Growth Series such that the Series' aggregate
operating expenses shall not exceed on an annualized basis, 1.00% of its
average daily net assets. See "Information Concerning Shares of The Series
Expenses" in the prospectus of the MFS Emerging Growth Series. For the 1996
fiscal year, absent this expense arrangement, the "Other Expenses" and the
"Total Annual Fund Expenses" shown above would be 0.41% and 1.16%,
respectively.
Examples
An Owner would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on assets:
1. If the Contract is surrendered (or annuitized under annuity option 1) at the
end of the applicable time period:
Subaccount 1 Year 3 Years 5 Years 10 Years
Capital Appreciation $ 88 $123 $161 $285
Growth and Income $ 86 $117 $151 $265
Balanced $ 87 $120 $156 $275
Bond $ 86 $116 $148 $260
Money Market $ 85 $113 $143 $249
International Stock $ 91 $130 $172 $308
MFS World Governments $ 90 $129 $170 $303
MFS Emerging Growth $ 90 $129 $170 $303
Oppenheimer High Income $ 88 $123 $161 $285
Templeton Developing Markets $101 $159 $220 $398
2. If the Contract is not surrendered (or annuitized under annuity options 2 -
4) at the end of the applicable time period:
Subaccount 1 Year 3 Years 5 Years 10 Years
Capital Appreciation $25 $ 78 $134 $285
Growth and Income $23 $ 72 $124 $265
Balanced $24 $ 75 $129 $275
Bond $23 $ 71 $121 $260
Money Market $22 $ 68 $116 $249
International Stock $28 $ 85 $145 $308
MFS World Governments $27 $ 84 $143 $303
MFS Emerging Growth $27 $ 84 $143 $303
Oppenheimer High Income $25 $ 78 $134 $285
Templeton Developing Markets $38 $114 $193 $398
The examples provided above assume that no transfer charges or premium taxes
have been assessed. The examples also assume that the annual Contract fee is $30
and that the average Contract Value is $10,000, which translates the Contract
fee into an assumed .30% charge for the purposes of the examples based on a
$1,000 investment.
The examples should not be considered a representation of past or future
expenses. The assumed 5% annual rate of return is hypothetical and should not be
considered a representation of past or future annual returns, which may be
greater or less than this assumed rate.
<PAGE>
DEFINITIONS
Accumulation Unit A unit of measure used to calculate Variable Contract Value.
Annuitant The person or persons whose life (or lives) determines the annuity
payment benefits payable under the Contract and whose death determines the death
benefit. The maximum number of joint Annuitants is two and provisions referring
to the death of an Annuitant mean the death of the last surviving Annuitant.
Annuity Date The date when the adjusted Contract Value will be applied under an
annuity payment option, if the Annuitant is still living.
Annuity Unit A unit of measure used to calculate variable annuity payments.
Beneficiary The person to whom the proceeds payable on the death of an Annuitant
will be paid.
Code The Internal Revenue Code of 1986, as amended.
Company CUNA Mutual Life Insurance Company.
Contract The same date in each Contract Year as the Contract Date. Anniversary
Contract Date The date set forth on the specifications page of the Contract
which is used to determine Contract Years and Contract Anniversaries.
Contract Year A twelve-month period beginning on the Contract Date or on a
Contract Anniversary.
Contract Value The total amount invested under the Contract. It is the sum of
the Variable Contract Value, the Guaranteed Interest Option Value and the
balance of the Loan Account.
DCA One Year A Dollar Cost Averaging One Year Guarantee Period described in the
Section entitled THE Guarantee Period GUARANTEED INTEREST OPTION.
Due Proof of Death Proof of death satisfactory to the Company. Such proof may
consist of the following if acceptable to the Company:
(a) a certified copy of the death record;
(b) a certified copy of a court decree reciting a finding of death;
(c) any other proof satisfactory to the Company.
Fund An investment portfolio (sometimes called a "Series") of Ultra Series Fund,
T. Rowe Price International Series, Inc., MFS Variable Insurance Trust,
Oppenheimer Variable Account Funds, Templeton Variable Products Series Fund or
any other open-end management investment company or unit investment trust in
which a Subaccount invests.
General Account The assets of the Company other than those allocated to the
Variable Account or any other separate account of the Company.
Guarantee Amount Any portion of Guaranteed Interest Option Value allocated to a
particular Guarantee Period with a particular expiration date (including
interest thereon) less any withdrawals therefrom.
Guarantee Period A choice under the Guaranteed Interest Option of a specific
number of years for which the Company agrees to credit a particular effective
annual interest rate.
Guaranteed Interest Otion An allocation option under the Contract funded by the
Company's General Account. It is not part of nor dependent upon the investment
performance of the Variable Account.
Guaranteed Interest The value of the Contract in the Guaranteed Interest Option.
Option Value
Home Office The Company's principal office at 2000 Heritage Way, Waverly, Iowa
50677.
Loan Account For any Contract, a portion of the Company's General Account to
which Contract Value is transferred to provide collateral for any loan taken
under the Contract.
Loan Amount At any time other than a Contract Anniversary, the Contract Value in
the Loan Account plus any interest charges accrued on such Contract Value up to
that time.
Net Purchase A purchase payment less any premium taxes deducted from purchase
payments. Payment
Non-Qualified Contract A contract that is not a "Qualified Contract."
Owner The person(s) who owns the Contract and who is entitled to exercise all
rights and privileges provided in the Contract.
Payee The Annuitant(s) during the annuity period.
Qualified Contract A contract that is issued in connection with retirement plans
that qualify for special federal income tax treatment under Sections 401,
403(b), 408, or 457 of the Code.
SEC The U.S. Securities and Exchange Commission.
Series An investment portfolio (sometimes called a "Fund") of Ultra Series Fund,
T. Rowe Price International Series, Inc., MFS Variable Insurance Trust,
Oppenheimer Variable Account Funds, Templeton Variable Products Series Fund, or
any other open-end management investment company or unit investment trust in
which a Subaccount invests.
Subaccount A subdivision of the Variable Account, the assets of which are
invested in a corresponding underlying Fund.
Surrender Value The Contract Value plus the value of any paid up annuity
additions plus or minus any applicable interest adjustment, less any applicable
surrender charges, premium taxes not previously deducted, and the annual
Contract fee and Loan Amount.
Valuation Day For each Subaccount, each day on which the New York Stock Exchange
is open for business except for the holidays listed in the Prospectus under
"Holidays" and any day that a Subaccount's corresponding Fund does not value its
shares.
Valuation Period The period that starts at 3:00 p.m. central time on one
Valuation Day and ends at 3:00 p.m. on the next succeeding Valuation Day.
Variable Account CUNA Mutual Life Variable Annuity Account.
Variable Contract The value of the Contract in the Variable Account. Value
Written Notice A Written Notice or request in a form satisfactory to the Company
which is signed by the Owner and received at the Home Office.
<PAGE>
SUMMARY
The Contract
Issuance of a Contract. Contracts may be issued in connection with retirement
plans that may or may not qualify for special federal tax treatment under the
Code. (See DESCRIPTION OF THE CONTRACT, Issuance of a Contract.) Neither the
Owner nor the Annuitant may be older than 85 (age 78 in Pennsylvania) on the
Contract Date.
Free-Look Period. The Owner has the right to return the Contract within 10 days
after he or she receives it. The returned Contract will become void. The Company
will return to the Owner an amount equal to the Contract Value on the date the
Contract is received at the Home Office (or by the sales representative who sold
it) plus any premium taxes deducted. Where required, the Company will instead
return the purchase payment(s). (See DESCRIPTION OF THE CONTRACT.)
Purchase Payments. The minimum amount required to purchase a Contract depends
upon several factors. In general, $5,000 is the minimum purchase amount the
Company must receive within the first 12 months of the Contract. However,
certain Qualified Contracts, Section 1035 contracts, and Contracts sold to
employees have lower minimum purchase amounts, as explained in the "Purchase
Payments" subsection in the DESCRIPTION OF THE CONTRACT section of this
Prospectus. Unless the minimum purchase amount is paid in full at the time of
application, an automatic purchase payment plan must be established and regular
payments scheduled to pay the minimum purchase amount before the first Contract
Anniversary. The minimum size of a purchase payment is $100, unless the payment
is made through an automatic purchase payment plan in which case the minimum
size is $25. (See DESCRIPTION OF THE CONTRACT, Purchase Payments.)
Allocation of Purchase Payments. Purchase payments under a Contract will be
allocated, as designated by the Owner, to one or more of the Subaccounts of the
Variable Account or to the Guaranteed Interest Option or to both. An allocation
to a Subaccount must be in whole percentages and be at least 5% of the purchase
payment. An allocation to the Guaranteed Interest Option must be at least $1,000
(lesser amounts received will be allocated to the Money Market Subaccount). In
states where the Company must refund purchase payments in the event the Owner
exercises the free-look right, any portion of the initial Net Purchase Payment
to be allocated to a Subaccount will be allocated to the Money Market Subaccount
for a 20-day period following the Contract Date. At the end of that period, the
amount in the Money Market Subaccount will be allocated to the Subaccounts as
selected by the Owner. The assets of each Subaccount will be invested solely in
a corresponding underlying Fund. The Contract Value, except for amounts in the
Guaranteed Interest Option, will vary according to the investment performance of
the Fund(s) in which the selected Subaccount(s) is invested. Interest will be
credited to amounts in the Guaranteed Interest Option at a guaranteed minimum
rate of 3% per year, or a higher current interest rate declared by the Company.
(See DESCRIPTION OF THE CONTRACT, Allocation of Purchase Payments.)
Transfers. On or before the Annuity Date, the Owner may transfer all or part of
the amount in a Subaccount or the Guaranteed Interest Option to another
Subaccount or the Guaranteed Interest Option subject to certain restrictions.
Transfers to the Guaranteed Interest Option must be at least $1,000 (lesser
amounts received will be allocated to the Money Market Subaccount). Transfers
are not allowed to the DCA One Year Guarantee Period. Except for the DCA One
Year Guarantee Period, transfers out of the Guaranteed Interest Option are only
permitted during the 30-day period prior to the expiration of a Guarantee
Period. Transfers from the DCA One Year Guarantee Period may be made throughout
its Guarantee Period. No fee is charged for transfers but the Company reserves
the right to charge $10 for the 13th and each subsequent transfer during a
Contract Year. (See DESCRIPTION OF THE CONTRACT, Transfer Privilege.)
Partial Withdrawal. The Owner may, by Written Notice, withdraw part of the
Surrender Value subject to certain limitations. (See DESCRIPTION OF THE
CONTRACT, Surrender and Partial Withdrawals.)
Surrender. Upon Written Notice on or before the Annuity Date, the Owner may
surrender the Contract and receive its Surrender Value. (See DESCRIPTION OF THE
CONTRACT, Surrender and Partial Withdrawals.)
Charges and Deductions
The following charges and deductions are assessed under the Contract:
Surrender Charge (Contingent Deferred Sales Charge). No charge for sales
expenses is deducted from purchase payments at the time purchase payments are
paid. However, a surrender charge is deducted upon surrender or partial
withdrawal of purchase payments within seven years of their being paid and, in
certain circumstances, upon payment of a death benefit or the election of
certain annuity payment options.
For purchase payments withdrawn or surrendered within one year of having been
paid, the charge is 7% of the amount of the payment withdrawn or surrendered.
For each purchase payment, the surrender charge decreases by 1% for each full
year that has elapsed since the payment was made. No surrender charge is
assessed upon the withdrawal or surrender of Contract Value in excess of
aggregate purchase payments or on purchase payments made more than seven years
prior to the withdrawal or surrender. (See CHARGES AND DEDUCTIONS, Surrender
Charge (Contingent Deferred Sales Charge).)
Subject to certain restrictions, for the first partial withdrawal (or surrender)
in each Contract Year, an amount equal to 10% of aggregate purchase payments
subject to a surrender charge (as of the time of withdrawal or surrender) may be
surrendered without a surrender charge. (See CHARGES AND DEDUCTIONS, Surrender
Charge.) The surrender charge also may be waived in certain circumstances as
provided in the Contracts.
Annual Contract Fee. The Company deducts an annual Contract fee of $30. (This
fee is waived if the Contract Value exceeds $25,000.) Prior to the Annuity Date,
the Company deducts this fee from the Contract Value on each Contract
Anniversary (or upon surrender of the Contract). After the Annuity Date, the
Company deducts this fee from variable annuity payments. A pro-rated portion of
the fee is deducted upon annuitization of a Contract except on a Contract
Anniversary. (See CHARGES AND DEDUCTIONS, Annual Contract Fee.)
Mortality and Expense Risk Charge. The Company deducts a daily mortality and
expense risk charge to compensate it for assuming certain mortality and expense
risks. The charge is deducted from the assets of the Variable Account at a rate
of 0.003425% per day which is an annual rate of 1.25% (approximately 0.85% for
mortality risk and 0.40% for expense risk). (See CHARGES AND DEDUCTIONS,
Mortality and Expense Risk Charge.)
Asset-Based Administration Charge. The Company deducts a daily administration
charge to compensate it for certain expenses it incurs in administration of the
Contract. The charge is deducted from the assets of the Variable Account at an
annual rate of 0.15%. (See CHARGES AND DEDUCTIONS, Asset-Based Administration
Charge.)
Premium Taxes. If state or other premium taxes are applicable to a Contract,
they will be deducted: (a) from purchase payments as they are received, (b) from
Contract Value upon surrender or partial withdrawal, (c) upon application of
adjusted Contract Value to an annuity payment option, or (d) upon payment of a
death benefit. The Company, however, reserves the right to deduct premium taxes
at the time it pays such taxes. (See CHARGES AND DEDUCTIONS, Premium Taxes.)
Annuity Provisions
The Owner selects the Annuity Date. For Non-Qualified Contracts, the Annuity
Date may not be after the later of the Contract Anniversary following the
Annuitant's 85th birthday or 10 years after the Contract Date. For Qualified
Contracts, the Annuity Date must be no later than the Annuitant's age 70 1/2 or
any other date meeting the requirements of the Code. The Owner may change the
Annuity Date as described in DESCRIPTION OF THE CONTRACT, Annuity Payments on
the Annuity Date.
On the Annuity Date, the Contract Value (adjusted as described below) will be
applied to an annuity payment option, unless the Owner chooses to receive the
Surrender Value in a lump sum. Adjusted Contract Value is Contract Value less
applicable premium tax not yet deducted, less a pro-rated portion of the annual
Contract fee, plus or minus any applicable interest adjustment, and (for annuity
option 1) less any applicable surrender charge. (See ANNUITY PAYMENT OPTIONS.)
Federal Tax Status
Generally, a distribution (including a surrender, partial withdrawal or death
benefit payment) may result in taxable income. In certain circumstances, a 10%
penalty tax may apply. For a further discussion of the federal income status of
variable annuity contracts, see Federal Tax Matters.
<PAGE>
CONDENSED FINANCIAL INFORMATION
The following information is a part of the financial statements of the Variable
Account. The financial statements have been examined by KPMG Peat Marwick LLP
and are included in the Statement of Additional Information. The table below
gives per unit information about the financial history of each Subaccount for
the fiscal year ended December 31, 1994, 1995, and 1996.
<TABLE>
<CAPTION>
Capital Appreciation Growth and Income
Stock Subaccount Stock Subaccount
1996* 1995 1994 1996* 1995 1994
---- ---- ---- ---- ---- ----
Net asset value:
<S> <C> <C> <C> <C> <C> <C>
Beginning of period $12.90 $10.00 $10.00 $12.76 $9.82 $10.00
End of period 15.45 12.90 10.00 15.36 12.76 9.82
Percentage increase in
unit value during period 19.77% 29.00% 0.00% 20.38% 29.90% (1.80)%
Number of units outstanding at
end of period 4,495,720 2,024,589 324,922 8,541,383 2,807,876 593,599
Balanced Subaccount Bond Subaccount
1996* 1995 1994 1996* 1995 1994
---- ---- ---- ---- ---- ----
Net asset value:
Beginning of period $11.92 $9.89 $10.00 $11.36 $9.89 $10.00
End of period 13.03 11.92 9.89 11.52 11.36 9.89
Percentage increase in
unit value during period 9.31% 20.5% (1.10)% 1.41% 14.9% (1.10)%
Number of units outstanding at
end of period 7,783,833 2,698,049 664,679 1,686,539 556,749 127,666
Money Market Subaccount International Subaccount
1996* 1995 1994 1996* 1995 1994
---- ---- ---- ---- ---- ----
Net asset value:
Beginning of period $10.55 $10.16 $10.00 $10.96 $9.99 $10.00
End of period 10.91 10.55 10.16 12.40 10.96 9.99
Percentage increase in
unit value during period 3.41% 3.8% 1.60% 13.14% 9.71% (0.10)%
Number of units outstanding
at end of period 1,492,704 637,911 257,622 2,683,277 1,090,681 326,923
World Governments Emerging Growth
Subaccount Subaccount
1996* 1995 1994 1996**
---- ---- ---- ----
Net asset value:
Beginning of period $11.29 $10.01 $10.00 $10.00
End of period 11.58 11.29 10.01 10.08
Percentage increase in
unit value during period 2.57% 12.8% 0.10% 0.80%
Number of units outstanding at
end of period 1,033,483 505,990 186,155 1,650,627
<FN>
*1996 data is for the year ended December 31, 1996.
**1996 data is for the eight-month period ended December 31, 1996.
</FN>
</TABLE>
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY,
THE CUNA MUTUAL LIFE VARIABLE ANNUITY ACCOUNT, AND
THE UNDERLYING FUNDS
CUNA Mutual Life Insurance Company, the Company, is the insurer. CUNA Mutual
Life Variable Annuity Account, the Variable Account, is a separate account of
the Company. Five registered investment companies of the series type serve as
underlying investment options for the Variable Account.
CUNA Mutual Life Insurance Company
CUNA Mutual Life Insurance Company is a mutual life insurance company organized
under the laws of Iowa in 1879 and incorporated on June 21, 1882. The Home
Office of the Company is located at 2000 Heritage Way, Waverly, Iowa 50677. The
Company organized as a fraternal benefit society with the name "Mutual Aid
Society of the Evangelical Lutheran Synod of Iowa and Other States," changed its
name to "Lutheran Mutual Aid Society" in 1911, and reorganized as a mutual life
insurance company called "Lutheran Mutual Life Insurance Company" on January 1,
1938. On December 28, 1984, the Company changed its name to "Century Life of
America" and on December 31, 1996 the Company changed its name again to "CUNA
Mutual Life Insurance Company."
On July 1, 1990, the Company entered into a permanent affiliation with CUNA
Mutual Insurance Society ("CUNA Mutual"), 5910 Mineral Point Road, Madison WI
53705. The terms of an Agreement of Permanent Affiliation provide for extensive
financial sharing between the Company and CUNA Mutual of individual life
insurance business through reinsurance arrangements, the joint development of
business plans and distribution systems for individual insurance and other
financial service products within the credit union system, and the sharing of
certain resources and facilities. At the current time, all of the directors of
the Company are also directors of CUNA Mutual and many of the senior executive
officers of the Company hold similar positions with CUNA Mutual. The
affiliation, however, is not a merger or consolidation. Both companies remain
separate corporate entities and their respective Owners retain their voting
rights. The Company and CUNA Mutual along with their subsidiaries are referred
to as the "CUNA Mutual Group"
As of December 31, 1996, the Company had more than $3 billion in assets and $13
billion of life insurance in force. Effective March 17, 1997 and through the
date of this Prospectus, A.M. Best rated the Company A (Excellent). Effective
February 11, 1997 and through the date of this Prospectus, Duff & Phelps rated
the Company AA. These are the most recent ratings available as of the date of
this Prospectus. Periodically, the rating agencies issue new ratings. To obtain
updated ratings, contact the Company at the address or telephone number shown on
the first page of this Prospectus.
The objective of Best's rating system is to evaluate the factors affecting
overall performance of an insurance company and then provide an opinion of a
company's financial strength and ability to meet its contractual obligations
relative to other companies in the industry. The evaluation includes both
quantitative and qualitative analysis of a company's financial and operating
performance.
Duff & Phelps Credit Rating Co. rates insurance companies on their claims paying
abilities. It bases these ratings on its assessment of the economic fundamentals
of the company's principal lines of business, the company's competitive
position, the company's management capability, the relationship of the company
to its affiliates and the company's asset and liability management practices.
The Company owns a one-half interest in CIMCO Inc. (the Investment Adviser to
the Ultra Series Fund). CUNA Mutual owns CUNA Mutual Investment Corporation,
5910 Mineral Point Road, Madison, Wisconsin, 53705. CUNA Mutual Investment
Corporation owns CUNA Brokerage Services, Inc. (the principal underwriter for
the Variable Account) and owns a one-half interest in CIMCO Inc. (the Investment
Adviser to the Ultra Series Fund).
CUNA Mutual Life Variable Annuity Account
The Variable Account was established by the Company as a separate account on
December 14, 1993. The Variable Account will receive and invest Net Purchase
Payments made under the Contracts. In addition, the Variable Account may receive
and invest purchase payments for other variable annuity contracts issued in the
future by the Company.
Although the assets in the Variable Account are the property of the Company, the
assets in the Variable Account attributable to the Contracts are not chargeable
with liabilities arising out of any other business which the Company may
conduct. The assets of the Variable Account are available to cover the general
liabilities of the Company only to the extent that the Variable Account's assets
exceed its liabilities arising under the Contracts and any other contracts
supported by the Variable Account. The Company has the right to transfer to the
General Account any assets of the Variable Account which are in excess of
reserves and other Contract liabilities. All obligations arising under the
Contracts are general corporate obligations of the Company.
The Variable Account is divided into Subaccounts. In the future, the number of
Subaccounts may change. Each Subaccount invests exclusively in shares of a
single corresponding Fund. The income, gains and losses, realized or unrealized,
from the assets allocated to each Subaccount are credited to or charged against
that Subaccount without regard to income, gains or losses from any other
Subaccount.
The Variable Account has been registered with the SEC as a unit investment trust
under the Investment Company Act of 1940 (the "1940 Act") and meets the
definition of a separate account under the federal securities laws. Registration
with the SEC does not involve supervision of the management or investment
practices or policies of the Variable Account or of the Company by the SEC. The
Variable Account is also subject to the laws of the State of Iowa which regulate
the operations of insurance companies domiciled in Iowa.
The Underlying Funds
The Variable Account invests in the Ultra Series Fund (Class Z shares), the T.
Rowe Price International Series, Inc., the MFS Variable Insurance Trust, the
Oppenheimer Variable Account Funds, and the Templeton Variable Products Series
Fund. Each is a management investment company of the series type with one or
more investment portfolios or Funds. Each is registered with the SEC as an
open-end, management investment company. Such registration does not involve
supervision of the management or investment practices or policies of the
companies or their Funds by the SEC.
The Ultra Series Fund currently has five Funds available as investment options
under the Contracts, the T. Rowe Price International Series, Inc. has one Fund
available as an investment option under the Contracts, the MFS Variable
Insurance Trust has two Funds available as investment options under the
Contracts, the Oppenheimer Variable Account Funds has one fund available as an
investment option under the Contracts and the Templeton Variable Products Series
Fund has one fund available as an investment option under the Contracts. The
Ultra Series Fund, MFS Variable Insurance Trust, Oppenheimer Variable Account
Funds, and Templeton Variable Products Series Fund also have other Funds that
are not available under the Contracts. All five investment companies may, in the
future, create additional Funds or classes that may or may not be available as
investment options under the Contracts. Each Fund has its own investment
objective and the income, gains and losses for each Fund are determined
separately for that Fund or class.
The investment objectives and policies of each Fund are summarized below. There
is no assurance that any Fund will achieve its stated objectives. More detailed
information, including a description of risks and expenses, may be found in the
prospectuses for the Ultra Series Fund, the T. Rowe Price International Series,
Inc., the MFS Variable Insurance Trust, the Oppenheimer Variable Account Funds,
and the Templeton Variable Products Series Fund which must accompany or precede
this Prospectus and which should be read carefully and retained for future
reference.
The Ultra Series Fund
The Ultra Series Fund currently has five Funds available as investment options
under the Contracts.
Capital Appreciation Stock Fund. This Fund seeks a high level of long-term
growth of capital. It pursues this objective by investing in common stocks,
including those of smaller companies and of companies undergoing significant
change.
Growth and Income Stock Fund. This Fund seeks long-term growth of capital with
income as a secondary consideration. It pursues this objective by investing in
common stocks of companies with financial and market strengths and long-term
records of performance.
Balanced Fund. This Fund seeks a high total return through the combination of
income and capital growth. It pursues this objective by investing in the types
of common stocks owned by the Capital Appreciation Stock Fund and the Growth and
Income Stock Fund, the type of bonds owned by the Bond Fund, and the type of
money market instruments owned by the Money Market Fund.
Bond Fund. This Fund seeks a high level of current income, consistent with the
prudent limitation of investment risk, through investment in a diversified
portfolio of fixed-income securities with maturities of up to 30 years. It
principally invests in securities of intermediate term maturities.
Money Market Fund. This Fund seeks high current income from money market
instruments consistent with preservation of capital and liquidity. An investment
in the Money Market Fund is neither insured nor guaranteed by the U.S.
Government. There can be no assurance that the Money Market Fund will be able to
maintain a stable net asset value of $1.00 per share.
CIMCO Inc. ("CIMCO") serves as Investment Adviser to the Ultra Series Fund and
manages its assets in accordance with general policies and guidelines
established by the trustees of the Ultra Series Fund.
T. Rowe Price International Series, Inc.
T. Rowe Price International Series, Inc. currently has one investment portfolio
or Fund available as an investment option under the Contracts.
International Stock Portfolio. This Fund seeks long-term growth of capital
through investments primarily in common stocks of established, non-U.S.
companies.
Rowe Price-Fleming International, Inc. ("RPFI") serves as the investment adviser
to the International Stock Portfolio and manages its assets in accordance with
general policies and guidelines established by the board of directors of the T.
Rowe Price International Series, Inc. RPFI was founded in 1979 as a joint
venture between T. Rowe Price Associates, Inc. and Robert Fleming Holdings
Limited.
MFS Variable Insurance Trust
The MFS Variable Insurance Trust currently has two investment series or Funds
available as investment options under the Contracts.
MFS World Governments Series. This Fund seeks not only preservation but also
growth of capital, together with moderate current income.
MFS Emerging Growth SeriesMFSEmergingGrowthSeriesSM""3". This Fund seeks
long-term growth of capital through investments primarily in equity common stock
of emerging growth companies.
Massachusetts Financial Services Company ("MFS") serves as the investment
adviser to the MFS World Governments Series and MFS Emerging Growth Series and
manages its assets in accordance with general policies and guidelines
established by the board of trustees of the MFS Variable Insurance Trust. MFS is
a subsidiary of Sun Life Assurance Company of Canada (U.S.) which, in turn, is a
wholly owned subsidiary of Sun Life Assurance Company of Canada.
Oppenheimer Variable Account Funds
The Oppenheimer Variable Account Funds currently has one investment series or
Fund available as an investment options under the Contracts.
Oppenheimer High Income Fund. This Fund seeks a high level of current income
from investments in high yield fixed-income securities. High Income Fund's
investments include unrated securities or high risk securities in the lower
rating categories, commonly known as "junk bonds," which are subject to a
greater risk of loss of principal and nonpayment of interest than higher-rated
securities.
OppenheimerFunds, Inc. serves as the investment adviser to the Oppenheimer High
Income Fund and manages its assets in accordance with general policies and
guideline established by the board of trustees of the Oppenheimer Variable
Account Funds. The Manager is owned by Oppenheimer Acquisition Corp., a holding
company that is owned in part by senior officers of the Manager and controlled
by Massachusetts Mutual Life Insurance Company.
Templeton Variable Products Series Fund
Templeton Developing Markets Fund: Class 2. This Fund seeks long-term capital
appreciation by investing primarily in equity securities of issuers in countries
having developing markets.
Class 2 of the Templeton Developing Markets Fund pays 0.25% of the average daily
net assets of the Fund annually under a distribution plan adopted pursuant to
Rule 12b-1 under the 1940 Act. Amounts paid under the 12b-1 Plan to the Company
may be used for furnishing certain contract owner services or distribution
activities.
Templeton Asset Management Ltd. serves as the investment adviser to the
Templeton Developing Markets Fund: Class 2 and manages its assets and makes its
investment decisions. Templeton Asset Management Ltd. is a Singapore corporation
wholly owned by Franklin Resources, Inc., a publicly owned company. Resources'
principal shareholders are Charles B. Johnson and Rupert H. Johnson Jr.
Availability of the Funds
The Variable Account purchases shares of the International Stock Portfolio, the
MFS World Governments Series and the MFS Emerging Growth Series, the Oppenheimer
High Income Fund, and the Templeton Developing Markets Fund: Class 2 in
accordance with four participation agreements. One agreement is between the
Company and the T. Rowe Price International Series, Inc. One agreement is
between the Company and MFS Variable Insurance Trust. One agreement is between
the Company and Oppenheimer Variable Account Funds. One agreement is between the
Company, Templeton Variable Products Series Fund and the Fund's distributor. The
termination provisions of these agreements vary. A summary of the termination
provisions of these agreements may be found in the Statement of Additional
Information.
If a participation agreement terminates, the Variable Account may not be able to
purchase additional shares of the Fund(s) covered by that agreement. Likewise,
in certain circumstances, it is possible that shares of a Fund may not be
available to the Variable Account even if the participation agreement relating
to that Fund has not been terminated. In either event, Owners will no longer be
able to allocate purchase payments or transfer Contract Value to the Subaccount
investing in that Fund.
Resolving Material Conflicts
The Ultra Series Fund. Because Class Z shares of the Ultra Series Fund are sold
to the CUNA Mutual Group separate accounts to fund individual and group variable
annuity contracts as well as individual variable life insurance contracts and
qualified retirement plans sponsored by CUNA Mutual Group, and Class C shares of
the Ultra Series Fund may be sold to unaffiliated insurance company separate
accounts and qualified retirement plans, it is possible that material conflicts
could arise because the Ultra Series Fund offers shares to (1) variable annuity
contract owners (or participants under group variable annuity contracts) and
variable life insurance contract owners, or (2) to support variable annuity and
variable life insurance contracts of affiliated and unaffiliated insurance
companies and (3) to support affiliated and unaffiliated qualified retirement
plans. Such material conflicts could include, for example, differences in
federal tax treatment of variable annuity contracts versus variable life
insurance contracts. The Ultra Series Fund does not currently foresee any
disadvantage to one category of investors vis-a-vis another arising from the
fact that the Ultra Series Fund's shares support different types of variable
insurance contracts. However, the Ultra Series Fund's Board of Trustees will
continuously monitor events to identify any potential material conflicts that
may arise between the interests of different categories or Classes of investors
and to determine what action, if any, should be taken to resolve such conflicts.
Such action may include redeeming shares of the Ultra Series Fund held by one or
more of the separate accounts or qualified retirement plans involved in any
material irreconcilable conflict.
The T. Rowe Price International Series, Inc., the MFS Variable Insurance Trust,
the Oppenheimer Variable Account Funds, and the Templeton Variable Products
Series Fund. The T. Rowe Price International Series, Inc. currently sells shares
of the International Stock Portfolio to the Variable Account and to separate
accounts of life insurance companies not affiliated with the Company to support
other variable annuity contracts. The MFS Variable Insurance Trust currently
sells shares of its MFS World Governments Series and its MFS Emerging Growth
Series to the separate accounts of the Company for variable annuity Contracts
and for variable universal life insurance Contracts, and to separate accounts of
life insurance companies not affiliated with the Company to support other
variable annuity contracts (and to MFS as a seed money investment). The
Oppenheimer Variable Account Funds currently sells shares of its Oppenheimer
High Income Fund to the separate accounts of the Company for variable annuity
Contracts and for variable universal life insurance Contracts, and to separate
accounts of life insurance companies not affiliated with the Company to support
other variable annuity contracts. The Templeton Variable Products Series Fund.
currently sells shares of its Templeton Developing Markets Fund: Class 2 to the
separate accounts of the Company for variable annuity Contracts and for variable
universal life insurance Contracts, and to separate accounts of life insurance
companies not affiliated with the Company to support other variable annuity and
variable life contracts. Shares of the International Stock Portfolio, the MFS
World Governments Series, the MFS Emerging Growth Series, the Oppenheimer High
Income Fund, and the Templeton Developing Markets Fund: Class 2 may in the
future be sold to other separate accounts of the Company and to separate
accounts of other affiliated or unaffiliated life insurance companies to support
other variable annuity or variable life insurance contracts. Shares of the MFS
World Governments Series, the MFS Emerging Growth Series, the Oppenheimer High
Income Fund and the Templeton Developing Markets Fund: Class 2 also may in the
future be sold to qualified retirement plans.
Currently, the Company does not foresee any disadvantages to Owners arising from
the sale of such shares to support variable life insurance contracts or variable
annuity contracts of other companies or to qualified retirement plans. However,
the management of the T. Rowe Price International Series, Inc., the MFS Variable
Insurance Trust, the Oppenheimer Variable Account Funds, and the Templeton
Variable Products Series Fund will each monitor events related to their Funds in
order to identify any material irreconcilable conflicts that might possibly
arise as a result of the Fund's offering its shares to (1) support both variable
life insurance Contracts and variable annuity Contracts, or (2) support the
variable life insurance contracts and/or variable annuity contracts issued by
various unaffiliated insurance companies. In addition, the management of the MFS
Variable Insurance Trust, the Oppenheimer Variable Account Funds, and the
Templeton Variable Products Series Fund will monitor the Trusts in order to
identify any material irreconcilable conflicts that might possibly arise as a
result of the sale of its shares to qualified retirement plans. In the event of
such a conflict, the management of the appropriate Fund would determine what
action, if any, should be taken in response to the conflict. In addition, if the
Company believes that the response of the T. Rowe Price International Series,
Inc., the MFS Variable Insurance Trust, the Oppenheimer Variable Account Funds,
or the Templeton Variable Products Series Fund to any such conflict
insufficiently protects Owners, it will take appropriate action on its own,
including withdrawing the Variable Account's investment in the International
Stock Portfolio, the MFS World Governments Series, the MFS Emerging Growth
Series, the Oppenheimer High Income Fund or the Templeton Developing Markets
Fund: Class 2 as appropriate. (The prospectuses for the T. Rowe Price
International Series, Inc., the MFS Variable Insurance Trust, the Oppenheimer
Variable Account Funds, and the Templeton Variable Products Series Fund also
address the material conflict issue.)
Addition, Deletion or Substitution of Investments
The Company reserves the right, subject to applicable law, to make additions to,
deletions from, or substitutions for the shares of a Fund that are held in the
Variable Account or that the Variable Account may purchase. If the shares of a
Fund are no longer available for investment or if, in the Company's judgment,
further investment in any Fund should become inappropriate, the Company may
redeem the shares, if any, of that Fund and substitute shares of another Fund.
The Company will not substitute any shares attributable to a Contract's interest
in a Subaccount without notice and prior approval of the SEC and state insurance
authorities, to the extent required by the 1940 Act or other applicable law.
The Company also reserves the right to establish additional Subaccounts of the
Variable Account, each of which would invest in shares of a new corresponding
Fund having a specified investment objective. The Company may, in its sole
discretion, establish new Subaccounts or eliminate or combine one or more
Subaccounts if marketing needs, tax considerations or investment conditions
warrant. Any new Subaccounts may be made available to existing Owners on a basis
to be determined by the Company. Subject to obtaining any approvals or consents
required by applicable law, the assets of one or more Subaccounts may be
transferred to any other Subaccount if, in the sole discretion of the Company,
marketing, tax, or investment conditions warrant.
In the event of any such substitution or change, the Company (by appropriate
endorsement, if necessary) may change the Contract to reflect the substitution
or change.
If the Company considers it to be in the best interest of Owners and Annuitants,
and subject to any approvals that may be required under applicable law, the
Variable Account may be operated as a management investment company under the
1940 Act, it may be deregistered under the 1940 Act if registration is no longer
required, it may be combined with other Company separate accounts, or its assets
may be transferred to another separate account of the Company. In addition, the
Company may, when permitted by law, restrict or eliminate any voting rights of
Owners or other persons who have such rights under the Contracts.
DESCRIPTION OF THE CONTRACT
Issuance of a Contractt
In order to purchase a Contract, application must be made to the Company through
a licensed representative of the Company, who is also a registered
representative of CUNA Brokerage Services, Inc. ("CUNA Brokerage") or a
broker-dealer having a selling agreement with CUNA Brokerage or a broker-dealer
having a selling agreement with such broker-dealer. Contracts may be sold to or
in connection with retirement plans that do not qualify for special tax
treatment as well as retirement plans that qualify for special tax treatment
under the Code. Neither the Owner nor the Annuitant may be older than age 85
(age 78 in Pennsylvania) on the Contract Date.
Purchase Payments
The minimum amount required to purchase a Contract depends upon several factors.
The minimum purchase amount the Company must receive during the first 12 months
of the Contract is:
o $5,000 for a Contract other than those specified below.
o $2,000 for Contracts that qualify for special federal income tax
treatment under Sections 401, 408, or 457 of the Code. This category
includes qualified pension plans, individual retirement accounts, and
certain deferred compensation plans.
o $300 for Contracts that qualify for special federal income tax
treatment under Section 403(b) of the Code. This category includes
tax-sheltered annuities.
o The value of a Contract exchanged pursuant to Section 1035 of the
Code, if the Company had approved the transaction prior to the
exchange.
o $600 for a Contract sold to employees of the Company and its
subsidiaries, to employees of CUNA Mutual and its subsidiaries, and to
registered representatives and other persons associated with CUNA
Brokerage. This category includes both individual retirement accounts
and non-individual retirement accounts.
Unless the minimum purchase amount specified above already has been paid in full
at the time of application, an automatic purchase payment plan must be
established to schedule regular payments during the first 12 months of the
Contract. Under the Company's automatic purchase payment plan, the Owner can
select a monthly payment schedule pursuant to which purchase payments will be
automatically deducted from a credit union or bank account or other source.
The regular payment schedule established under the automatic purchase plan must
total at least the amount shown above as a minimum purchase amount. For example,
if $5,000 is the required minimum purchase amount, a $2,000 payment at the time
of application and an automatic payment plan amount of $272.73 a month for the
next 11 months would be sufficient. Similarly, if $2,000 is the required minimum
purchase amount, an initial purchase payment of $166.74 and an automatic payment
plan amount of $166.66 for each of the next 11 months would be sufficient. (Tax
law does not permit the Company to accept more than $2,000.00 for an individual
retirement account, except in the case of a rollover or transfer.)
The minimum size for an initial purchase payment and subsequent purchase payment
is $100, unless the payment is made through an automatic purchase payment plan
in which case the minimum size is $25. Purchase payments may be made at any time
during the Annuitant's lifetime and before the Annuity Date. Additional purchase
payments after the initial purchase payment are not required.
The Company reserves the right not to accept (1) purchase payments received
after the Contract Anniversary following the Annuitant's 85th birthday (78th
birthday in Pennsylvania), (2) purchase payments of less than $100, and (3)
purchase payments in excess of $1 million. Also, the Company reserves the right
to change the size of minimum payments and, with respect to Contracts not yet
issued, the size of the minimum purchase amounts.
The Company reserves the right, if allowed by state law, to terminate a Contract
and pay the Contract Value to the Owner if: (1) no purchase payments have been
received during the prior 24 months, and (2) aggregate purchase payments up to
the time of termination total less than $2,000, and (3) Contract Value is less
than $2,000. Since the charges imposed on such a Contract will be significant,
only those with the financial capability to keep an annuity in place for a
substantial period should purchase an annuity.
Free-Look Period
The Contract provides for an initial "free-look" period. The Owner has the right
to return the Contract within 10 days of receiving it. In some jurisdictions,
this period may be longer than 10 days. When the Company receives the returned
Contract at the Home Office or when the sales representative who sold the
Contract receives it before the end of this period, the Company will cancel the
Contract and refund to the Owner an amount equal to the Contract Value as of the
date the returned Contract is received plus any premium taxes deducted. This
amount may be more or less than the aggregate amount of purchase payments made
up to that time. In certain jurisdictions, the Company is required instead to
return aggregate purchase payments to Owners who exercise their free-look right.
Allocation of Purchase Payments
At the time of application, the Owner selects how the initial Net Purchase
Payment is to be allocated among the Subaccounts and the Guaranteed Interest
Option. An allocation to a Subaccount must be for at least 5% of a purchase
payment and be in whole percentages. An allocation to the Guaranteed Interest
Option must be for at least $1,000.
If the application for a Contract is properly completed and is accompanied by
all the information necessary to process it, including payment of the initial
purchase payment, the initial Net Purchase Payment will be allocated, as
designated by the Owner, to one or more of the Subaccounts or to the Guaranteed
Interest Option within two Valuation Days of receipt of such purchase payment by
the Company at its Home Office. If the application is not properly completed,
the Company reserves the right to retain the purchase payment for up to five
Valuation Days while it attempts to complete the application. If the application
is not complete at the end of the 5-day period, the Company will inform the
applicant of the reason for the delay and the initial purchase payment will be
returned immediately, unless the applicant specifically consents to the Company
retaining the purchase payment until the application is complete. Once the
application is complete, the initial Net Purchase Payment will be allocated as
designated by the Owner within two Valuation Days.
Notwithstanding the foregoing, in jurisdictions where the Company must refund
aggregate purchase payments in the event the Owner exercises the free-look
right, any portion of the initial Net Purchase Payment to be allocated to a
Subaccount will be allocated to the Money Market Subaccount for a 20-day period
following the Contract Date. At the end of that period, the amount in the Money
Market Subaccount will be allocated to the Subaccounts as designated by the
Owner based on the proportion that the allocation percentage for each such
Subaccount bears to the sum of the allocation percentages.
Any subsequent Net Purchase Payments will be allocated as of the end of the
Valuation Period in which the subsequent Net Purchase Payment is received by the
Company and will be allocated in accordance with the allocation schedule in
effect at the time the purchase payment is received. However, Owners may direct
individual payments to a specific Subaccount or to the Guaranteed Interest
Option (or any combination thereof) without changing the existing allocation
schedule. The allocation schedule may be changed by the Owner at any time by
Written Notice. Changing the purchase payment allocation schedule will not
change the allocation of existing Contract Value among the Subaccounts or the
Guaranteed Interest Option.
The Contract Values allocated to a Subaccount will vary with that Subaccount's
investment experience, and the Owner bears the entire investment risk. Owners
should periodically review their purchase payment allocation schedule in light
of market conditions and their overall financial objectives.
Variable Contract Value
The Variable Contract Value will reflect the investment experience of the
selected Subaccounts, any Net Purchase Payments paid, any surrenders or partial
withdrawals, any transfers, and any charges assessed in connection with the
Contract. There is no guaranteed minimum Variable Contract Value, and, because a
Contract's Variable Contract Value on any future date depends upon a number of
variables, it cannot be predetermined.
Calculation of Variable Contract Value. The Variable Contract Value is
determined at the end of each Valuation Period. The value will be the aggregate
of the values attributable to the Contract in each of the Subaccounts,
determined for each Subaccount by multiplying that Subaccount's unit value for
the relevant Valuation Period by the number of Accumulation Units of that
Subaccount allocated to the Contract.
Determination of Number of Accumulation Units. Any amounts allocated or
transferred to the Subaccounts will be converted into Subaccount Accumulation
Units. The number of Accumulation Units to be credited to a Contract is
determined by dividing the dollar amount being allocated or transferred to a
Subaccount by the Accumulation Unit value for that Subaccount at the end of the
Valuation Period during which the amount was allocated or transferred. The
number of Accumulation Units in any Subaccount will be increased at the end of
the Valuation Period by any Net Purchase Payments allocated to the Subaccount
during the current Valuation Period and by any amounts transferred to the
Subaccount from another Subaccount or from the Guaranteed Interest Option during
the current Valuation Period.
Any amounts transferred, surrendered or deducted from a Subaccount will be
processed by canceling or liquidating Accumulation Units. The number of
Accumulation Units to be canceled is determined by dividing the dollar amount
being removed from a Subaccount by the Accumulation Unit value for that
Subaccount at the end of the Valuation Period during which the amount was
removed. The number of Accumulation Units in any Subaccount will be decreased at
the end of the Valuation Period by: (a) any amounts transferred (including any
applicable transfer fee) from that Subaccount to another Subaccount or to the
Guaranteed Interest Option, (b) any amounts withdrawn or surrendered during that
Valuation Period, (c) any surrender charge, annual Contract fee or premium tax
assessed upon a partial withdrawal or surrender, and (d) the annual Contract
fee, if assessed during that Valuation Period.
Determination of Accumulation Unit Value. The Accumulation Unit value for each
Subaccount's first Valuation Period was set at $10. The Accumulation Unit value
for a Subaccount is calculated for each subsequent Valuation Period by
subtracting (2) from (1) and dividing the result by (3), where:
(1) Is the result of:
(a) the net assets of the Subaccount (i.e., the aggregate
value of underlying Fund shares or units held by the
Subaccount) as of the end of the Valuation Period;
(b) plus or minus the net charge or credit with respect to
any taxes paid or any amount set aside as a provision
for taxes during the Valuation Period that the Company
determines to be attributable to the operations of the
Subaccount.
(2)
The cumulative unpaid daily charge for mortality and expense
risks and for administration multiplied by the number of days
in the Valuation Period.
(3)
The number of Accumulation Units outstanding as of the end of
the Valuation Period.
Transfer Privileges
General. Before the Annuity Date and subject to the restrictions described
below, the Owner may transfer all or part of the amount in a Subaccount or the
Guaranteed Interest Option to another Subaccount or the Guaranteed Interest
Option.
Transfers to the Guaranteed Interest Option must be at least $1,000 (lesser
amounts received will be allocated to the Money Market Subaccount). Transfers
are not allowed to the DCA One Year Guarantee Period. Except for the DCA One
Year Guarantee Period, transfers out of the Guaranteed Interest Option are only
permitted during the 30-day period prior to the expiration of a Guarantee
Period. Transfers from the DCA One Year Guarantee Period may be made throughout
its Guarantee Period Transfers will be made as of the Valuation Day on which
Written Notice requesting such transfer is received by the Company if received
before 3:00 p.m. Central Time. Transfers will be made as of the Valuation Day
next following the day on which Written Notice requesting such transfer is
received if received after 3:00 p.m. Central Time. Subject to the foregoing
restrictions, there currently is no limit on the number of transfers that can be
made among or between Subaccounts or to or from the Guaranteed Interest Option.
Transfers may be made based upon instructions given by written request or by
telephone. The Company will only honor telephone transfer requests if it has a
currently valid telephone transfer authorization form on file signed by the
Owner(s). A telephone transfer authorization form received by the Company at the
Home Office is valid until it is rescinded or revoked in writing by the Owner(s)
or until a subsequently dated form signed by the Owner(s) is received at the
Home Office. If a currently valid telephone transfer authorization form is on
file, the Company may act upon the instructions of any one Owner. The Company is
not responsible for inability to receive an Owner's instructions because of busy
telephone lines or malfunctioning telephone equipment.
The Company will send a written confirmation of all transfers made pursuant to
telephone instructions. The Company may also require a form of personal
identification prior to acting on instructions received by telephone and tape
record instructions received by telephone. If the Company follows these
procedures, it will not be liable for any losses to Owners due to unauthorized
or fraudulent instructions.
The Company reserves the right to modify, restrict, suspend or eliminate the
transfer privileges (including the telephone transfer facility) at any time, for
any class of Contracts, for any reason. In particular, the Company reserves the
right to not honor transfers requested by a third party holding a power of
attorney from an Owner where that third party requests simultaneous transfers on
behalf of the Owners of two or more Contracts.
Transfer Fee. No charge is made for transfers, however, the Company reserves the
right to charge $10 for the 13th and each subsequent transfer during a Contract
Year. (See CHARGES AND DEDUCTIONS.)
Dollar-Cost Averaging. If elected at the time of the application or at any time
thereafter by written request, an Owner may systematically or automatically
transfer (on a monthly, quarterly, semi-annual or annual basis) specified dollar
amounts from the Money Market Subaccount or the DCA One Year Guarantee Period to
other Subaccounts. This is known as the dollar-cost averaging method of
investment. The fixed dollar amount will purchase more Accumulation Units of a
Subaccount when their value is lower and fewer units when their value is higher.
Over time, the cost per unit averages out to be less than if all purchases had
been made at the highest value and greater than if all purchases had been made
at the lowest value. The dollar-cost averaging method of investment reduces the
risk of making purchases only when the price of Accumulation Units is high. It
does not assure a profit or protect against a loss in declining markets.
The minimum transfer amount for dollar-cost averaging is the equivalent of $100
per month. If less than $100 remains in the Money Market or DCA One Year
Guarantee Period, the entire amount will be transferred. The amount transferred
to a Subaccount must be at least 5% of the amount transferred and must be stated
in whole percentages. An amount transferred to the Guaranteed Interest Option
must be at least $1,000 (lesser amounts received will be transferred to the
Money Market Subaccount).
Once elected, dollar-cost averaging remains in effect until the earliest of
these events: (1) the Variable Contract Value in the Money Market Subaccount or
the value in the DCA One Year Guarantee Period is depleted to zero; (2) the
Owner cancels the election (by Written Notice or by telephone if the Company has
the Owner's telephone authorization form on file); or (3) for three successive
months, the Variable Contract Value in the Money Market Subaccount or the value
in the DCA One Year Guarantee Period has been insufficient to implement the
dollar-cost averaging instructions the Owner has given to the Company. The
Company will notify the Owner when dollar-cost averaging is no longer in effect.
There is no additional charge for using dollar-cost averaging. The Company
reserves the right to discontinue offering the dollar-cost averaging facility at
any time and for any reason.
Other Types of Automatic Transfers. If elected at the time of the application or
at any time thereafter by written request, an Owner may systematically or
automatically transfer (on a monthly, quarterly, semi-annual or annual basis)
Variable Contract Value from one Subaccount to another. Amounts may also be
automatically transferred from the DCA One Year Guarantee Period to one or more
Subaccounts. Such automatic transfers may be requested on the following basis:
(1) as a specified dollar amount, (2) as a specified number of Accumulation
Units, (3) as a specified percent of Variable Contract Value in a particular
Subaccount, or (4) in an amount equal to the excess of a specified amount of
Variable Contract Value in a particular Subaccount.
The minimum automatic transfer amount is the equivalent of $100 per month. If
less than $100 remains in the Subaccount or DCA One Year Guarantee Period from
which transfers are being made, the entire amount will be transferred. The
amount transferred to a Subaccount must be at least 5% of the amount transferred
and must be stated in whole percentages. An amount transferred to the Guaranteed
Interest Option must be at least $1,000. Once elected, automatic transfers
remain in effect until the earliest of these events: (1) the Variable Contract
Value in the Subaccount or DCA One Year Guarantee Period from which transfers
are being made is depleted to zero; (2) the Owner cancels the election (by
Written Notice or by telephone if the Company has the Owner's telephone
authorization form on file); or (3) for three successive months, the Variable
Contract Value in the Subaccount from which transfers are being made has been
insufficient to implement the automatic transfer instructions the Owner has
given to the Company. The Company will notify the Owner when automatic transfer
instructions are no longer in effect. There is no additional charge for using
automatic transfers. The Company reserves the right to discontinue offering the
automatic transfer facility at any time and for any reason.
Automatic Personal Portfolio Rebalancing Service. If elected at the time of the
application or requested at any time thereafter by Written Notice, an Owner may
instruct the Company to automatically transfer (on a monthly, quarterly,
semi-annual or annual basis) Variable Contract Value between and among specified
Subaccounts in order to achieve a particular percentage allocation of Variable
Contract Value among such Subaccounts. Such percentage allocations must be in
whole percentages and be at least 5% per allocation. Owners may start and stop
automatic Variable Contract Value rebalancing at any time and may specify any
percentage allocation of Contract Value between or among as many Subaccounts as
are available at the time the rebalancing is elected. (If an Owner elects
automatic Variable Contract Value rebalancing without specifying such percentage
allocation(s), the Company will allocate Variable Contract Value in accordance
with the Owner's currently effective purchase payment allocation schedule.)
There is no additional charge for using Variable Contract Value rebalancing.
Surrenders and Partial Withdrawals
Surrender. At any time before the Annuity Date, the Owner may surrender the
Contract for its Surrender Value. The Surrender Value will be determined as of
the Valuation Day on the date Written Notice requesting surrender and the
Contract are received at the Company's Home Office. The Surrender Value will be
paid in a lump sum unless the Owner requests payment under an annuity payment
option. A surrender may have adverse federal income tax consequences, including
a penalty tax. (See FEDERAL TAX MATTERS, Taxation of Annuities.)
Partial Withdrawals. At any time before the Annuity Date, an Owner may make
withdrawals of the Surrender Value in any Contract Year. There is no minimum
amount which may be withdrawn but the maximum amount is that which would leave
the remaining Surrender Value equal to $2,000. A partial withdrawal request that
would reduce the Surrender Value to less than $2,000 is treated as a request for
a full surrender of the Contract. The Company will withdraw the amount requested
from the Contract Value as of the Valuation Day Written Notice requesting the
partial withdrawal is received. Any applicable interest adjustment will be
deducted from the remaining Contract Value. (See THE GUARANTEED INTEREST OPTION,
Interest Adjustment.) Any applicable surrender charge also will be deducted from
the remaining Contract Value. (See CHARGES AND DEDUCTIONS, Surrender Charge.)
The Owner may specify the amount of the partial withdrawal to be made from
Subaccounts or Guarantee Amounts. If the Owner does not so specify, or if the
amount in the designated Subaccounts or Guarantee Amount is inadequate to comply
with the request, the partial withdrawal will be made from each Subaccount and
each Guarantee Amount based on the proportion that the value in such Subaccount
or Guarantee Amount bears to the total Contract Value immediately prior to the
partial withdrawal.
A partial withdrawal may have adverse federal income tax consequences, including
a penalty tax. (See FEDERAL TAX MATTERS, Taxation of Annuities.)
Surrender and Partial Withdrawal Restrictions. The Owner's right to make
surrenders and partial withdrawals is subject to any restrictions imposed by
applicable law or employee benefit plan.
Restrictions on Distributions from Certain Types of Contracts. There are certain
restrictions on surrenders of and partial withdrawals from Contracts used as
funding vehicles for Code Section 403(b) retirement programs. Section 403(b)(11)
of the Code restricts the distribution under Section 403(b) annuity contracts
of: (i) elective contributions made in years beginning after December 31, 1988;
(ii) earnings on those contributions; and (iii) earnings in such years on
amounts held as of the last year beginning before January 1, 1989. Distributions
of those amounts may only occur upon the death of the employee, attainment of
age 59 1/2, separation from service, disability, or financial hardship. In
addition, income attributable to elective contributions may not be distributed
in the case of hardship.
Other restrictions with respect to the election, commencement, or distribution
of benefits may apply under Qualified Contracts or under the terms of the plans
in respect of which Qualified Contracts are issued.
Systematic Withdrawals. If elected at the time of the application or requested
at any time thereafter by Written Notice, an Owner may elect to receive periodic
partial withdrawals under the Company's systematic withdrawal plan. Under the
systematic withdrawal plan, the Company will make partial withdrawals (on a
monthly, quarterly, semi-annual or annual basis) from designated Subaccounts as
specified by the Owner. Such withdrawals must be at least $100 each and may only
be made from Variable Contract Value. Generally, owners must be at least age 59
1/2 to participate in the systematic withdrawal plan unless they elect to
receive substantially equal periodic payments.
The withdrawals may be requested on the following basis: (1) as a specified
dollar amount, (2) as a specified whole number of Accumulation Units, (3) as a
specified whole percent of Variable Contract Value in a particular Subaccount,
(4) in an amount equal to the excess of a specified amount of Variable Contract
Value in a particular Subaccount, and (5) in an amount equal to an Owner's
required minimum distribution under the Code.
Participation in the systematic withdrawal plan will terminate on the earliest
of the following events: (1) the Variable Contract Value in a Subaccount from
which partial withdrawals are being made becomes zero, (2) a termination date
specified by the Owner is reached, (3) the Owner requests that his or her
participation in the plan cease, or (4) a surrender charge would be applicable
to amounts being withdrawn (i.e., partial withdrawals under the systematic
withdrawal plan may not include amounts subject to the surrender charge). With
regard to (4), an Owner may, by Written Notice, request that systematic
withdrawals continue even though a surrender charge is deducted in connection
with such withdrawals. Also with regard to (4), if necessary to meet the
required minimum distribution under the Code or if necessary to make
substantially equal payments as required under the Code, the Company will
continue systematic withdrawals even though a surrender charge is deducted.
There are federal income tax consequences to partial withdrawals through the
systematic withdrawal plan and Owners should, therefore, consult with their tax
adviser before electing to participate in the plan. The Company reserves the
right to discontinue offering the systematic withdrawal plan at any time.
Contract Loans
Owners of Contracts issued in connection with retirement programs meeting the
requirements of Section 403(b) of the Code (other than those programs subject to
Title 1 of the Employee Retirement Income Security Act of 1974) may borrow from
the Company using their Contracts as collateral. Loans such as these are subject
to the provisions of any applicable retirement program and to the Code. Owners
should, therefore, consult their tax and retirement plan advisers prior to
taking a Contract loan.
At any time, Owners may borrow the lesser of (1) the maximum loan amount
permitted under the Code, or (2) 90% of the Surrender Value of their Contract.
Loans in excess of the maximum amount permitted under the Code may be treated as
a taxable distribution rather than a loan. The Company will only make Contract
loans after approving a written application by the Owner. The written consent of
all assignees and irrevocable beneficiaries must be obtained before a loan will
be given.
When a loan is made, the Company transfers an amount equal to the amount
borrowed from Variable Contract Value or Guaranteed Interest Option value to the
Loan Account. The Loan Account is part of the Company's General Account and
Contract Value in the Loan Account does not participate in the investment
experience of any Subaccount or Guarantee Account. The Owner must indicate in
the loan application from which Subaccounts or Guarantee Amounts, and in what
amounts, Contract Value is to be transferred to the Loan Account. In the absence
of any such instructions from the Owner, the transfer(s) are made pro-rata from
all Subaccounts having Variable Contract Value and from all Guarantee Amounts.
Loans may be repaid by the Owner at any time before the Annuity Date. Upon the
repayment of any portion of a loan, an amount equal to the repayment will be
transferred from the Loan Account to the Subaccount(s) or Guarantee Accounts
designated by the Owner or according to the Owner's current purchase payment
allocation instructions. Loan repayments may not be allocated to the DCA One
Year Guarantee Period Account.
The Company charges interest on Contract loans at an effective annual rate of
6.5%. The Company pays interest on the Contract Value in the Loan Account at
rates it determines from time to time but never less than an effective annual
rate of 3.0%. Consequently, the net cost of a loan is the difference between
6.5% and the rate being paid from time to time on the Contract Value in the Loan
Account. Interest on Contract loans accrues on a daily basis from the date of
the loan and is due and payable at the end of each Contract Year. If the Owner
does not pay the interest due at that time, an amount equal to such interest
less interest earned on the Contract Value in the Loan Account is transferred
from his or her Variable Contract Value or Guaranteed Interest Option Value (as
described above for the loan itself) to the Loan Account. This transfer will
therefore increase the loan amount.
If at any time, the loan amount causes the Surrender Value to be equal to or
less than zero, the Contract will be in default. In this event, the Company will
send a Written Notice of default to the Owner stating the amount of loan
repayment needed to reinstate the Contract and the Owner will have 60 days, from
the day the notice is mailed, to pay the stated amount. If the Company does not
receive the required loan repayment within 60 days, it will terminate the
Contract without value. Principal and interest must be repaid in substantially
level payments made no less frequently than quarterly over a five-year period
(or, if the loan is used to acquire the Owner's principal residence, a 10, 15 or
20-year period but not beyond the year the Owner attains age 70 1/2). The Owner
is allowed a 60-day grace period from the end of quarter installment due date.
If the amount due by the end of the quarter is not received within the grace
period, a deemed distribution of the entire amount of the outstanding principal,
interest due, and any applicable charges under this Contract, including any
withdrawal charge, will be made. This deemed distribution may be subject to
income and penalty tax under the Code and may adversely affect the treatment of
the Contract under Code Section 403(b).
Any loan amount outstanding upon the death of the Owner or Annuitant is deducted
from any death benefit paid. In addition, a Contract loan, whether or not
repaid, will have a permanent effect on the Contract Value because the
investment experience of the Variable Account and the interest rates applicable
to Guarantee Accounts do not apply to the portion of Contract Value transferred
to the Loan Account. The longer the loan remains outstanding, the greater this
effect is likely to be.
Death Benefit Before the Annuity Date
Death of an Owner. If any Owner dies prior to the Annuity Date, any surviving
Owner becomes the sole Owner. If there is no surviving Owner, the Annuitant
becomes the new Owner unless the deceased Owner was also the Annuitant. If the
sole deceased Owner was also the Annuitant, then the provisions relating to the
death of an Annuitant (described below) will govern unless the deceased Owner
was one of two joint Annuitants. In the latter event, the surviving Annuitant
becomes the Owner.
The following options are available to sole surviving Owners or new Owners:
(1) If the Owner is the spouse of the deceased Owner, he or she may
continue the Contract as the new Owner.
(2) If the Owner is not the spouse of the deceased Owner:
(a) he or she may elect, within 60 days of the date the Company
receives Due Proof of Death, to receive the Surrender Value in a
single sum within 5 years of the deceased Owner's death; or
(b) he or she may elect, within 60 days of the date the Company
receives Due Proof of Death, to receive the Surrender Value paid
out under one of the annuity payment options;
If he or she does not elect one of the above options, the Company will pay the
Surrender Value five years from the date of the deceased Owner's death.
Under any of these options, sole surviving Owners or new Owners may exercise all
Ownership rights and privileges from the date of the deceased Owner's death
until the date that the Surrender Value is paid.
Death of the Annuitant. If the Annuitant dies before the Annuity Date, the
Company will pay the death benefit described below to the Beneficiary named by
the Owner in a lump sum. (Owners and Beneficiaries also may name successor
Beneficiaries.) If there is no surviving Beneficiary, the Company will pay the
death benefit to the Owner or the Owner's estate. In lieu of a lump sum payment,
the Beneficiary may elect, within 60 days of the date the Company receives due
proof of the Annuitant's death, to apply the death benefit to an annuity payment
option, provided that the Annuity Date selected by the Beneficiary is at least
two years after the Contract Date. The Company is currently waiving this two
year requirement for Annuity Payment Options 3 and 4. (See ANNUITY PAYMENT
OPTIONS, Description of Annuity Payment Options.)
If the Annuitant who is also an Owner dies, the provisions described immediately
above apply except that the Beneficiary may only apply the death benefit payment
to an annuity payment option if:
(1) payments under the option begin within 1 year of the Annuitant's
death; and
(2) payments under the option are payable over the Beneficiary's life or
over a period not greater than the Beneficiary's life expectancy.
Death Benefit. If the Annuitant is age 75 or younger on the Contract Date, the
death benefit is an amount equal to the greater of:
(1) aggregate Net Purchase Payments made under the Contract less partial
withdrawals as of the date the Company receives Due Proof of Death of
the deceased;
(2) Contract Value as of the date the Company receives Due Proof of Death
of the deceased's death; or
(3) the death benefit floor amount as of the date of the deceased's death
plus any Net Purchase Payments made and less any partial withdrawals
made since the most recent death benefit floor computation anniversary
prior to death.;
less any applicable premium taxes not previously deducted and any outstanding
loan amount on the date the death benefit is paid. For Contracts issued after
the Annuitant's 76th birthday, the death benefit is always equal to the Contract
Value as of the date the Company receives due proof of the Annuitant's death
less any outstanding loan amount and any applicable premium taxes not previously
deducted.
The death benefit floor amount is the Contract Value on the most recent death
benefit floor computation anniversary. In states other than Texas, death benefit
floor computation anniversaries are the 7th Contract Anniversary and each
subsequent 7th Contract Anniversary (for example, the 14th Contract Anniversary,
the 21st Contract Anniversary, etc.) (In Texas, the death benefit floor
computation anniversaries are the 6th Contract Anniversary and each subsequent
6th Contract Anniversary.)
Death Benefit After the Annuity Date
If an Owner dies after the Annuity Date, any surviving Owner becomes the sole
Owner. If there is no surviving Owner, the Payee receiving annuity payments
becomes the new Owner. Such Owners will have the rights of Owners during the
annuity period, including the right to name successor Payees if the deceased
Owner had not previously done so. The death of an Annuitant after the Annuity
Date will have the effect stated in the annuity payment option pursuant to which
annuity payments are being made.
Annuity Payments on the Annuity Date
The Owner selects the Annuity Date. For Non-Qualified Contracts, the Annuity
Date may not be after the later of the Contract Anniversary following the
Annuitant's 85th birthday or 10 years after the Contract Date. For Qualified
Contracts, the Annuity Date must be no later than the Annuitant's age 70 1/2 or
any other date meeting the requirements of the Code.
The Owner may change the Annuity Date subject to the following limitations: (1)
the Owner's Written Notice must be received at the Home Office at least 30 days
before the current Annuity Date, and (2) the requested Annuity Date must be a
date that is at least 30 days after receipt of the Written Notice, and (3) the
requested Annuity Date must be at least two years after the Contract Date (the
Company is currently waiving this limitation for Annuity Payment Options 3 and
4.) (See ANNUITY PAYMENT OPTIONS, Description of Annuity Payment Options.)
Prior to the Annuity Date, partial withdrawals may be made. (See Surrenders and
Partial Withdrawals.)
On the Annuity Date, the adjusted Contract Value will be applied under the life
income annuity payment option with ten years guaranteed, unless the Owner elects
to have the proceeds paid under another payment option or to receive the
Surrender Value in a lump sum. (See ANNUITY PAYMENT OPTIONS.) In certain states,
the Surrender Value will be applied to the annuity payment option rather than
the adjusted Contract Value. Unless the Owner instructs the Company otherwise,
amounts in the Guaranteed Interest Option will be used to provide a
fixed-annuity payment option and amounts in the Variable Account will be used to
provide a variable annuity payment option.
The adjusted Contract Value is the Contract Value:
(1) plus or minus any applicable interest adjustment;
(2) minus any applicable surrender charge if annuity payment option 1 is
selected;
(3) minus the pro-rated portion of the annual Contract fee (unless the
Annuity Date falls on the Contract Anniversary);
(4) minus any applicable loan amount; and
(5) minus any applicable premium taxes not yet deducted.
Payments
Any surrender, partial withdrawal, Contract loan or death benefit usually will
be paid within seven days of receipt of a Written Notice, any information or
documentation reasonably necessary to process the request, and (in the case of a
death benefit) receipt and filing of Due Proof of Death. However, payments may
be postponed if:
(1) the New York Stock Exchange is closed, other than customary weekend
and holiday closings, or trading on the exchange is restricted as
determined by the SEC; or
(2) the SEC permits by an order the postponement for the protection of
Owners; or
(3) the SEC determines that an emergency exists that would make the
disposal of securities held in the Variable Account or the
determination of the value of the Variable Account's net assets not
reasonably practicable.
If a recent check or draft has been submitted, the Company has the right to
delay payment until it has assured itself that the check or draft has been
honored.
The Company has the right to defer payment of any surrender or partial
withdrawal or transfer from the Guaranteed Interest Option for up to six months
from the date of receipt of Written Notice for such a surrender or transfer. If
payment is not made within 30 days after receipt of documentation necessary to
complete the transaction, or such shorter period required by a particular
jurisdiction, interest will be added to the amount paid from the date of receipt
of documentation at 3% or such higher rate required for a particular
jurisdiction.
Modification
Upon notice to the Owner, the Company may modify the Contract if:
(1) necessary to permit the Contract or the Variable Account to comply
with any applicable law or regulation issued by a government agency;
or
(2) necessary to assure continued qualification of the Contract under the
Code or other federal or state laws relating to retirement annuities
or variable annuity contracts; or
(3) necessary to reflect a change in the operation of the Variable
Account; or
(4) the modification provides for the addition or substitution of
investment options.
In the event of most such modifications, the Company will make appropriate
endorsement to the Contract.
Reports to Owners
At least annually, the Company will mail to each Owner, at such Owner's last
known address of record, a report setting forth the Contract Value (including
the Contract Value in each Subaccount and each Guarantee Amount) of the
Contract, purchase payments paid and charges deducted since the last report,
partial withdrawals made since the last report and any further information
required by any applicable law or regulation.
Inquiries
Inquiries regarding a Contract may be made by writing to the Company at its Home
Office.
THE GUARANTEED INTEREST OPTION
THE GUARANTEED INTEREST OPTION VARIES ACCORDING TO THE STATE IN WHICH THE
CONTRACT IS ISSUED. SOLELY FOR THE SAKE OF CONVENIENT REFERENCE, STATES HAVE
BEEN DIVIDED INTO THREE CATEGORIES. IN CATEGORY ONE, THE COMPANY OFFERS
GUARANTEE PERIODS VARYING IN DURATION FROM ONE YEAR TO 10 YEARS AND THE COMPANY
MAY IMPOSE AN INTEREST ADJUSTMENT ON GUARANTEE AMOUNTS WITHDRAWN PRIOR TO THE
EXPIRATION OF A GUARANTEE PERIOD. IN CATEGORY TWO, THE COMPANY OFFERS A
GUARANTEE PERIOD OF ONE YEAR AND NO INTEREST ADJUSTMENT IS IMPOSED IF GUARANTEE
AMOUNTS ARE WITHDRAWN PRIOR TO THE EXPIRATION OF THAT YEAR. IN CATEGORY THREE,
THE COMPANY DOES NOT INTEND TO OFFER A GUARANTEED INTEREST OPTION. TO DETERMINE
THE GUARANTEED INTEREST OPTION AVAILABLE IN YOUR STATE, FIND THE NAME OF YOUR
STATE IN THE LISTS OF STATES BELOW. THEN READ ABOUT THE GUARANTEED INTEREST
OPTION AVAILABLE IN THAT STATE.
Category 1
THE COMPANY, IN CATEGORY ONE STATES, OFFERS GUARANTEE PERIODS VARYING IN
DURATION FROM ONE YEAR TO 10 YEARS AND THE COMPANY MAY IMPOSE AN INTEREST
ADJUSTMENT ON GUARANTEE AMOUNTS WITHDRAWN PRIOR TO THE EXPIRATION OF A GUARANTEE
PERIOD. CATEGORY ONE STATES ARE: ALABAMA, ALASKA, ARIZONA, ARKANSAS, CALIFORNIA,
COLORADO, CONNECTICUT, DELAWARE, DISTRICT OF COLUMBIA, FLORIDA, GEORGIA, HAWAII,
IDAHO, ILLINOIS, INDIANA, IOWA, KANSAS, KENTUCKY, LOUISIANA, MAINE,
MASSACHUSETTS, MICHIGAN, MINNESOTA, MISSISSIPPI, MISSOURI, MONTANA, NEBRASKA,
NEVADA, NEW HAMPSHIRE, NEW MEXICO, NORTH CAROLINA, NORTH DAKOTA, OHIO, OKLAHOMA,
RHODE ISLAND, SOUTH CAROLINA, SOUTH DAKOTA, TENNESSEE, VERMONT, VIRGINIA, WEST
VIRGINIA, AND WYOMING.
In Category 1 states an Owner may allocate some or all of the Net Purchase
Payments and transfer some or all of the Contract Value to the Guaranteed
Interest Option for selected periods of time from one to ten years. The Company
also intends to offer a special one year Guarantee Period that allows transfers
to other Subaccounts throughout the Guarantee Period (the "DCA One Year
Guarantee Period"). Purchase Payments may be allocated to this DCA One Year
Guarantee Period, but transfers are not allowed into it. The DCA One Year
Guarantee Period has not yet been approved in all states and the Guaranteed
Interest Options may not be available in all states. Contact the Company for
information on its availability in your state.
The Guaranteed Interest Option is part of the Company's General Account and pays
interest at declared rates guaranteed for the selected period of time from one
to ten years. The principal, after deductions, is also guaranteed, The Company's
General Account supports its insurance and annuity obligations. Since the
Guaranteed Interest Option is part of the General Account, the Company assumes
the risk of investment gain or loss on this amount. All assets in the General
Account are subject to the Company's general liabilities from business
operations.
The Guaranteed Interest Option has not been, and is not required to be,
registered with the SEC under the Securities Act of 1933, and neither the
Guaranteed Interest Option nor the Company's General Account has been registered
as an investment company under the 1933 Act. Therefore, neither the Company's
General Account, the Guaranteed Interest Option, nor any interests therein are
generally subject to regulation under the 1933 Act or the 1940 Act. The
disclosures relating to the Guaranteed Interest Option which are included in
this Prospectus are for the Owner's information and have not been reviewed by
the SEC. However, such disclosures may be subject to certain generally
applicable provisions of federal securities laws relating to the accuracy and
completeness of statements made in prospectuses.
Guaranteed Interest Option Value
The portion of the Contract Value allocated to the Guaranteed Interest Option is
the Guaranteed Interest Option value which is credited with interest, as
described below. The Guaranteed Interest Option value reflects interest credited
to Contract Value in Guarantee Periods, Net Purchase Payments allocated to or
Contract Value transferred to Guarantee Periods, transfers of Contract Value out
of Guarantee Periods, surrenders and partial withdrawals from Guarantee Periods
(including related interest adjustments) and charges assessed in connection with
the Contract. The Guaranteed Interest Option value is the sum of Guarantee
Amounts under the Contract. The Guaranteed Interest Option value is guaranteed
to accumulate at a minimum effective annual interest rate of 3%.
Guarantee Periods
From time to time the Company will offer to credit Guaranteed Interest Option
value with interest at specific guaranteed rates for specific periods of time.
These periods of time are known as Guarantee Periods. The Company may offer one
or more Guarantee Periods of one to ten years' duration at any time but will
always offer a Guarantee Period of one year. The Company will publish an
effective annual interest rate applicable to each Guarantee Period being offered
at that time. Net Purchase Payments allocated or Contract Value transferred to a
Guarantee Period are guaranteed to earn that rate of interest for each year of
the period (provided that such payments and Contract Value are not withdrawn
from the Guarantee Period or surrendered). The interest rates available at any
time will vary with the number of years in the Guarantee Period but will always
be equal to or greater than an effective annual rate of 3%.
Guarantee Periods begin as of the date Net Purchase Payments or transfers of
Contract Value are made to them and end when the number of years in the
Guarantee Period have elapsed. Transfers of Contract Value to the DCA One Year
Guarantee Period are not permitted. The last day of the Guarantee Period is the
expiration date for the Guarantee Period. Owners may not select Guarantee
Periods with expiration dates later than the Contract's current Annuity Date.
During the 30-day period prior to the expiration of a Guarantee Period, the
Owner may transfer the Guarantee Amount related to that Guarantee Period to any
new Guarantee Period or Subaccount available at that time. Such transfers may be
made at any time from the DCA One Year Guarantee Period. At the expiration of
the DCA One Year Guarantee Period, any amount remaining in the account will be
transferred to the Money Market Subaccount if other instructions are not
received from the Owner. If, at the expiration of a Guarantee Period, less than
one year remains until the Annuity Date, the Company will credit interest to the
Guarantee Amount at the guaranteed rate then applicable to a one year Guarantee
Period. For Guarantee Periods other than the DCA One Year Guarantee Period, the
Company will notify Owners of the available Guarantee Periods and Subaccounts 30
days prior to the expiration of a Guarantee Period.
If an Owner does not respond to the notice with instructions as to how to
reinvest the Guarantee Amount, then on the expiration date the Company will
invest the Guarantee Amount in another Guarantee Period of the same duration as
the expiring period. If no Guarantee Period of equal duration is available at
that time, the Company will reinvest the Guarantee Amount in the next shortest
Guarantee Period available. If either of such default Guarantee Periods would
extend beyond the Annuity Date of the Contract, the Company will reinvest the
Guarantee Amount in the Guarantee Period of the longest duration that expires
before the Annuity Date.
The Company intends to credit Guarantee Amounts with interest at current rates
in excess of the minimum guaranteed rate but is not obligated to do so. These
current interest rates are influenced by, but do not necessarily correspond to,
prevailing general market interest rates. Any interest credited on Guarantee
Amounts in excess of the minimum guaranteed effective rate of 3% per year will
be determined in the sole discretion of the Company. The Owner therefore assumes
the risk that interest credited may not exceed the minimum guaranteed rate.
Net Purchase Payment Preservation Program
An Owner may elect to allocate the initial Net Purchase Payment under a Contract
between the Guaranteed Interest Option, other than the DCA One Year Guarantee
Period, and the Variable Account in such a manner that the portion of the
initial Net Purchase Payment, when allocated to the appropriate Guarantee
Period, will earn a guaranteed return (if left in that Guarantee Period until
the expiration of the period) such that, at the end of the Guarantee Period, the
Guarantee Amount equals the initial Net Purchase Payment. This would permit the
Owner to allocate the remaining portion of the initial Net Purchase Payment to
one or more Subaccounts and still be certain of having a Contract Value at the
end of the Guarantee Period at least equal to the initial Net Purchase Payment.
Upon request, the Company will inform an Owner of the portion of any Net
Purchase Payment that must be allocated to a particular Guarantee Period to
achieve this result.
Interest Adjustment
The Company will impose an interest adjustment on Guarantee Amounts withdrawn or
surrendered or applied to an annuity payment option from a Guarantee Period
(other than the DCA One Year Guarantee Period) prior to the expiration of the
period except when such a withdrawal, surrender or annuitization occurs during
the 30-day period prior to the expiration of the period. The interest adjustment
is calculated by multiplying the amount surrendered, withdrawn or annuitized by
the following factor:
0.70 x (I - J) x n/12
Where:
I = the guaranteed interest rate then being offered for a
new Guarantee Period equal in duration and type to
the period from which the Guarantee Amount is being
withdrawn, surrendered or annuitized. If a Guarantee
Period of such duration is not being offered, "I"
equals the linear interpolation of the guaranteed
rates for periods then available. If the Guarantee
Periods needed to perform the interpolation are not
being offered, "I" equals the interest rate being
paid on the Treasury Constant Maturity Series
published by the Federal Reserve Board for Treasury
securities with remaining maturities equal to the
duration of the appropriate Guarantee Period plus the
interest adjustment reference factor shown on the
Contract data page. If no published rates are
available for maturities equal to the duration of the
appropriate Guarantee Period, linear interpolation of
other published rates will be used.
J = the guaranteed interest rate then being credited to
the Guarantee Amount being withdrawn, surrendered or
annuitized.
n = the number of complete months remaining until the
expiration of the Guarantee Period.
The interest adjustment will reflect the relationship between I, J and n. At a
time when I exceeds J, the interest adjustment will reduce the portion of any
Guarantee Amount available for withdrawal, surrender or annuitization. At a time
when J exceeds I, the interest adjustment will increase the portion of any
Guarantee Amount available for withdrawal, surrender or annuitization. Moreover,
the interest adjustment will only operate to increase or reduce credited
interest in an amount equal to the excess of 3% per year on a Guarantee Amount
at the beginning of any Guarantee Period.
The interest adjustment is calculated separately for each Guarantee Amount and
is applied before any surrender charge. Owners must instruct the Company as to
which Guarantee Periods should be withdrawn or surrendered. Within any Guarantee
Period, Guarantee Amounts are withdrawn or surrendered on a first-in-first-out
basis. The adjustment does not apply to the calculation of a death benefit or to
amounts deducted from Guaranteed Interest Option value by the Company as fees or
charges. In addition, the sum of the surrender charge and interest adjustment
for a Guarantee Amount withdrawn or surrendered will not exceed 10% of the
Guarantee Amount withdrawn or surrendered.
Any applicable interest adjustment(s) will be deducted from or added to the
remaining Guarantee Amount(s), if any, or from all remaining Guarantee Amounts
on a pro-rata basis. If, at the time a partial withdrawal is requested from a
Guarantee Amount, the Guaranteed Interest Option value would be insufficient to
permit the deduction of the interest adjustment from any remaining Guarantee
Amounts, then the Company will not permit the partial withdrawal.
The imposition of an interest adjustment may have significant federal income tax
consequences. (See FEDERAL TAX MATTERS, Taxation of Annuities.)
Category 2
THE COMPANY, IN CATEGORY TWO STATES, OFFERS GUARANTEE PERIODS OF ONE YEAR AND NO
INTEREST ADJUSTMENT IS IMPOSED. CATEGORY TWO STATES ARE: PENNSYLVANIA, TEXAS,
UTAH AND WISCONSIN.
In Category 2 states an Owner may allocate some or all of the Net Purchase
Payments and transfer some or all of the Contract Value to the Guaranteed
Interest Option for one year periods. The Company also intends to offer a
special one year Guarantee Period that allows transfers to other Subaccounts
throughout the Guarantee Period (the "DCA One Year Guarantee Period"). Purchase
Payments may be allocated to this DCA One Year Guarantee Period, but transfers
are not allowed into it. The DCA One Year Guarantee Period has not yet been
approved in all states and the Guaranteed Interest Options may not be available
in all states. Contact the Company for information on its availability in your
state.
The Guaranteed Interest Option is part of the Company's General Account and pays
interest at declared rates guaranteed for one year. The principal, after
deductions, is also guaranteed, The Company's General Account supports its
insurance and annuity obligations. Since the Guaranteed Interest Option is part
of the General Account, the Company assumes the risk of investment gain or loss
on this amount. All assets in the General Account are subject to the Company's
general liabilities from business operations.
The Guaranteed Interest Option has not been, and is not required to be,
registered with the SEC under the Securities Act of 1933, and neither the
Guaranteed Interest Option nor the Company's General Account has been registered
as an investment company under the 1940 Act. Therefore, neither the Company's
General Account, the Guaranteed Interest Option, nor any interests therein are
generally subject to regulation under the 1933 Act or the 1940 Act. The
disclosures relating to the Guaranteed Interest Option which are included in
this Prospectus are for the Owner's information and have not been reviewed by
the SEC. However, such disclosures may be subject to certain generally
applicable provisions of federal securities laws relating to the accuracy and
completeness of statements made in prospectuses.
Guaranteed Interest Option Value
The Guaranteed Interest Option value is the portion of the Contract Value
allocated to the Guaranteed Interest Option. The Guaranteed Interest Option
value reflects Net Purchase Payments allocated to and Contract Value transferred
to Guarantee Periods, interest credited to Contract Value in Guarantee Periods,
transfers of Contract Value out of Guarantee Periods, surrenders and partial
withdrawals from Guarantee Periods and charges assessed in connection with the
Contract. Guarantee Amounts are withdrawn or surrendered on a first-in-first-out
basis. The Guaranteed Interest Option value is the sum of Guarantee Amounts
under the Contract. The Guaranteed Interest Option value is guaranteed to
accumulate at a minimum effective annual interest rate of 3%.
Guarantee Periods
From time to time the Company will offer to credit Guaranteed Interest Option
value with interest at a specific rate guaranteed for the following one year
period. The one year period is known as a Guarantee Period. The Company will
publish the effective annual interest rate applicable to each Guarantee Period.
Net Purchase Payments allocated and Contract Value transferred to a Guarantee
Period are guaranteed to earn that rate of interest during the period (provided
that such payments and Contract Value are not withdrawn from the Guarantee
Period or surrendered). The interest rate will always be equal to or greater
than an effective annual rate of 3%.
A Guarantee Period begins as of the date Net Purchase Payments or transfers of
Contract Value are made to the Guarantee Account and ends when 365 days have
passed. Transfers of Contract Value to the DCA One Year Guarantee Period are not
permitted. The last day of the 365 day period is the expiration date for the
Guarantee Period. During the 30-day period prior to the expiration date, the
Owner may transfer the Guarantee Amount related to that Guarantee Period to a
new one year Guarantee Period or to any Subaccount available at that time. Such
transfers may be made at any time from the DCA One Year Guarantee Period. At the
expiration of a DCA One Year Guarantee Period, any amount remaining will be
transferred to the Money Market Subaccount. For Guarantee Periods other than the
DCA One Year Guarantee Period, thirty days prior to the expiration of a
Guarantee Period, the Company will notify Owners of the interest rates
applicable to the upcoming Guarantee Period. If an Owner does not respond to the
notice with instructions as to how to reinvest the Guarantee Amount, then on the
expiration date the Company will invest the Guarantee Amount in another one year
Guarantee Period at the guaranteed rate then offered. If less than one year
remains until the Annuity Date, the Company will credit interest to the
Guarantee Amount at the guaranteed rate then applicable to a one year Guarantee
Period.
The Company intends to credit Guarantee Amounts with interest at current rates
in excess of the minimum guaranteed rate but is not obligated to do so. Current
interest rates are influenced by, but do not necessarily correspond to,
prevailing general market interest rates. Any interest credited on Guarantee
Amounts in excess of the minimum guaranteed effective rate of 3% per year will
be determined in the sole discretion of the Company. The Owner therefore assumes
the risk that interest credited may not exceed the minimum guaranteed rate.
The Company will not impose an interest adjustment on Guarantee Amounts
withdrawn or surrendered or applied to an annuity payment option from the
Guaranteed Interest Option.
Net Purchase Payment Preservation Program
An Owner may elect to allocate the initial Net Purchase Payment under a Contract
between the one year Guaranteed Period and the Variable Account in such a manner
that the portion of the initial Net Purchase Payment allocated to the Guarantee
Period will earn a guaranteed return (if left in the Guarantee Period until the
expiration date) such that, at the end of the Guarantee Period, the Guarantee
Amount will equal the initial Net Purchase Payment. Transfers of Contract Value
to the DCA One Year Guarantee Period are not permitted. This permits the Owner
to allocate the remaining portion of the initial Net Purchase Payment to one or
more Subaccounts and still be certain of having a Contract Value at the end of
the Guarantee Period at least equal to the initial Net Purchase Payment. Upon
request, the Company will inform an Owner of the portion of any initial Net
Purchase Payment that must be allocated to a one year Guarantee Period to
achieve this result.
Category 3
THE COMPANY DOES NOT INTEND TO OFFER A GUARANTEED INTEREST OPTION IN CATEGORY
THREE STATES. CATEGORY THREE STATES ARE: MARYLAND, NEW JERSEY, OREGON AND
WASHINGTON.
CHARGES AND DEDUCTIONS
Surrender Charge (Contingent Deferred Sales Charge)
General. No charge for sales expenses is deducted from purchase payments at the
time purchase payments are paid. However, within certain time limits described
below, a surrender charge (contingent deferred sales charge) is deducted from
the Contract Value if a partial withdrawal or surrender is made before the
Annuity Date. Also, a surrender charge is deducted from amounts applied to
annuity payment option 1. (See DESCRIPTION OF THE CONTRACT, Annuity Payments on
the Annuity Date.)
In the event surrender charges are not sufficient to cover sales expenses, the
loss will be borne by the Company; conversely, if the amount of such charges
proves more than enough to cover such expenses, the excess will be retained by
the Company.
Charge for Partial Withdrawal or Surrender. A charge is imposed on the partial
withdrawal or surrender of purchase payments within seven years of their having
been received by the Company. The surrender charge is the percentage of each
such purchase payment specified in the table below and is separately calculated
and applied to each purchase payment at any time when that purchase payment is
withdrawn or surrendered. No surrender charge applies to Contract Value in
excess of aggregate purchase payments. The surrender charge is calculated using
the assumption that all Contract Value in excess of aggregate purchase payments
is surrendered before any purchase payments and that purchase payments are
surrendered on a first-in-first-out basis.
Number of Full Years Between
Date of Purchase Payment and Charge as Percentage
Date of Surrender of Purchase Payment
0 7%
1 6%
2 5%
3 4%
4 3%
5 2%
6 1%
7 + 0%
Any applicable surrender charge is deducted pro-rata from the remaining Variable
Contract Value in the Subaccounts from which the withdrawal is made or the
remaining Guaranteed Interest Option value from the Guarantee Amounts from which
the withdrawal is made. If such remaining Variable Contract Value or Guaranteed
Interest Option value is insufficient for this purpose, the surrender charge is
deducted pro-rata from all Subaccounts and Guarantee Amounts under the Contract.
Amounts Not Subject to Surrender Charge. In each Contract Year, up to 10% of an
amount equal to the aggregate purchase payments still subject to a surrender
charge (computed at the time of the withdrawal or surrender) may be withdrawn or
surrendered during that year without a surrender charge. Any amounts surrendered
or withdrawn in excess of this 10% will be assessed a surrender charge. This
right is not cumulative from Contract Year to Contract Year.
Waiver of Surrender Charge. In most states, the Contract provides that, upon
Written Notice from the Owner before the Annuity Date, the surrender charge will
be waived on any partial withdrawal or surrender if the Annuitant is confined to
a nursing home or hospital (as described in the Contract) or becomes terminally
ill (as described in the Contract). This waiver is not available in some states,
and, therefore, is not described in Contracts issued in those states. As of May
1, 1997, those states include Kansas, New Jersey, Pennsylvania, and Texas.
Annual Contract Fee
On each Contract Anniversary prior to the Annuity Date, the Company deducts from
the Variable Contract Value an annual Contract fee of $30 to reimburse it for
administrative expenses relating to the Contract. The fee is deducted from each
Subaccount and from the Guaranteed Interest Option based on the proportion that
the value of the Subaccount and the Guaranteed Interest Option bear to the total
Contract Value. (In Texas and South Carolina, the fee is deducted from each
Subaccount based on the proportion that the value of the Subaccount bears to the
total Variable Contract Value.) The annual Contract fee also is deducted upon
surrender of a Contract on a date other than a Contract Anniversary. A pro-rated
portion of the fee is deducted upon annuitization. After the Annuity Date, the
annual Contract fee is deducted from variable annuity payments. The Company does
not deduct the annual Contract fee on Contracts with a Contract Value of $25,000
or more on the Contract Anniversary. The Contract fee will not be charged after
the Annuity Date when a Contract with a Contract Value of $25,000 or more has
been annuitized.
Asset-Based Administration Charge
The Company deducts a daily administration charge to compensate it for certain
expenses it incurs in administration of the Contract. The charge is deducted
from the assets of the Variable Account at an annual rate of 0.15%.
Transfer Processing Fee
Currently no fee is charged for transfers. However, the Company reserves the
right to charge $10 for the 13th and each subsequent transfer during a Contract
Year. For the purpose of assessing such a transfer fee, each written request
would be considered to be one transfer, regardless of the number of Subaccounts
or Guarantee Amounts affected by the transfer. The transfer fee would be
deducted from the Subaccount or Guarantee Amount from which the transfer is
made. If a transfer is made from more than one Subaccount or Guarantee Amount at
the same time, the transfer fee would be deducted pro-rata from the remaining
Variable Contract Value in such Subaccount(s) or from the remaining Guarantee
Amount.
Lost Contract Request
You can obtain a certification of your contract at no charge. There will be a
$30 charge for a duplicate contract.
Mortality and Expense Risk Charge
To compensate the Company for assuming mortality and expense risks, the Company
deducts a daily mortality and expense risk charge from the assets of the
Variable Account. The charge is at a daily rate of 0.003425%. On an annual
basis, this equates to 1.25% (approximately 0.85% for mortality risk and 0.40%
for expense risk).
The mortality risk the Company assumes is that Annuitants may live for a longer
period of time than estimated when the guarantees in the Contract were
established. Because of these guarantees, each Payee is assured that longevity
will not have an adverse effect on the annuity payments received. The mortality
risk that the Company assumes also includes a guarantee to pay a death benefit
if the Annuitant dies before the Annuity Date. The expense risk that the Company
assumes is the risk that the administrative fees and transfer fees (if imposed)
may be insufficient to cover actual future expenses.
If the mortality and expense risk charge is insufficient to cover the actual
cost of the mortality and expense risks undertaken by the Company, the Company
will bear the shortfall. Conversely, if the charge proves more than sufficient,
the excess will be profit to the Company and will be available for any proper
corporate purpose including, among other things, payment of sales expenses. Fund
Expenses
Because the Variable Account purchases shares or units of the various Funds, the
net assets of the Variable Account will reflect the investment management fees
and other operating expenses incurred by such Funds. (See EXPENSE TABLES and the
accompanying current prospectuses for Ultra Series Fund, T. Rowe Price
International Series, Inc., MFS Variable Insurance Trust, Oppenheimer Variable
Account Funds, and Templeton Variable Products Series Fund.)
Premium Taxes
Various states and other governmental entities levy a premium tax on annuity
contracts issued by insurance companies. Premium tax rates are subject to change
from time to time by legislative and other governmental action. In addition,
other government units within a state may levy such taxes. The timing of tax
levies varies from one taxing authority to another. If premium taxes are
applicable to a Contract, the jurisdiction may require payment (a) from purchase
payments as they are received, (b) from Contract Value upon withdrawal or
surrender, (c) from adjusted Contract Value upon application to an annuity
payment option, or (d) upon payment of a death benefit. The Company will forward
payment to the taxing jurisdiction when required by law. Although the Company
reserves the right to deduct premium taxes at the time such taxes are paid to
the taxing authority, currently the Company does not deduct premium tax from the
Owner's Contract Value until the Contract is annuitized. (In Pennsylvania,
premium tax is also deducted when the Contract is terminated by surrender or
death.)
The Company, upon request, will provide current premium tax rates. To obtain
this information, contact the Company at the address and telephone number shown
on the first page of this prospectus. As of January 1, 1997, the Contracts
offered by this Prospectus were subject to tax in the states shown below:
============================= ------------- =============
Non-Qualified
State Qualified
============================= ============= =============
California 2.35% 0.50%
District of Columbia 2.25% 2.25%
Kansas 2.00% 0.00%
Kentucky 2.00% 2.00%
Nevada 3.50% 0.00%
South Dakota 1.25% 0.00%
West Virginia 1.00% 1.00%
Wyoming 1.00% 0.00%
============================= ============= =============
Other Taxes
Currently, no charge is made against the Variable Account for any federal, state
or local taxes (other than premium taxes) that the Company incurs or that may be
attributable to the Variable Account or the Contracts. The Company may, however,
make such a charge in the future from Surrender Value, death benefits or annuity
payments, as appropriate. Such taxes may include taxes (levied by any government
entity) which the Company determines to have resulted from: (1) the
establishment or maintenance of the Variable Account, (2) receipt by the Company
of purchase payments, (3) issuance of the Contracts, or (4) the payment of
annuity payments.
ANNUITY PAYMENT OPTIONS
Election of Annuity Payment Options
On the Annuity Date, the adjusted Contract Value will be applied under an
annuity payment option, unless the Owner elects to receive the Surrender Value
in a single sum. (See DESCRIPTION OF THE CONTRACT, Annuity Payments on the
Annuity Date.) If an election of an annuity payment option is not on file at the
Company's Home Office on the Annuity Date, the proceeds will be paid as a life
income annuity with payments for ten years guaranteed. An annuity payment option
may be elected, revoked, or changed by the Owner at any time before the Annuity
Date while the Annuitant is living. The election of an option and any revocation
or change must be made by Written Notice signed by the Owner and/or Beneficiary,
as appropriate. The Owner may elect to apply any portion of the adjusted
Contract Value to provide either variable annuity payments or fixed annuity
payments or a combination of both.
Prior to the Annuity Date, the Owner can apply the entire Surrender Value under
an annuity payment option, or a Beneficiary can apply the death benefit under an
annuity payment option. The annuity payment options available are described
below.
The Company reserves the right to refuse the election of an annuity payment
option other than paying the adjusted Contract Value in a lump sum if the total
amount applied to an annuity payment option would be less than $2,500, or each
annuity payment would be less than $25.00.
Fixed Annuity Payments
Fixed annuity payments are periodic payments from the Company to the designated
Payee, the amount of which is fixed and guaranteed by the Company. The amount of
each payment depends only on the form and duration of the annuity payment option
chosen, the age of the Annuitant, the sex of the Annuitant (if applicable), the
amount applied to purchase the annuity payments and the applicable annuity
purchase rates in the Contract. The annuity purchase rates in the Contract are
based on a minimum guaranteed interest rate of 3.5%. The Company may, in its
sole discretion, make annuity payments in an amount based on a higher interest
rate.
Variable Annuity Payments
The dollar amount of the first variable annuity payment is determined in the
same manner as that of a fixed annuity payment. Therefore, for any particular
amount applied to a particular annuity payment option, the dollar amount of the
first variable annuity payment and the first fixed annuity payment (assuming
such fixed payment is based on the minimum guaranteed 3.5% interest rate) would
be the same. Variable annuity payments after the first payment are similar to
fixed annuity payments except that the amount of each payment varies to reflect
the net investment performance of the Subaccount(s) selected by the Owner or
Payee.
The net investment performance of a Subaccount is translated into a variation in
the amount of variable annuity payments through the use of Annuity Units. The
amount of the first variable annuity payment associated with each Subaccount is
applied to purchase Annuity Units at the Annuity Unit value for the Subaccount
on the Annuity Date. The number of Annuity Units of each Subaccount attributable
to a Contract then remains fixed unless an exchange of Annuity Units is made as
described below. Each Subaccount has a separate Annuity Unit value that changes
with each Valuation Period in substantially the same manner as do Accumulation
Units of the Subaccount.
The dollar value of each variable annuity payment after the first is equal to
the sum of the amounts determined by multiplying the number of Annuity Units
under a Contract of a particular Subaccount by the Annuity Unit value for the
Subaccount for the Valuation Period which ends immediately preceding the date of
each such payment. If the net investment return of the Subaccount for a payment
period is equal to the pro-rated portion of the 3.5% annual assumed investment
rate, the variable annuity payment attributable to that Subaccount for that
period will equal the payment for the prior period. To the extent that such net
investment return exceeds an annualized rate of 3.5% for a payment period, the
payment for that period will be greater than the payment for the prior period
and to the extent that such return for a period falls short of an annualized
rate of 3.5%, the payment for that period will be less than the payment for the
prior period.
After the Annuity Date, a Payee may change the selected Subaccount(s) by Written
Notice up to four times per Contract Year. Such a change will be made by
exchanging Annuity Units of one Subaccount for another on an equivalent dollar
value basis. See the Statement of Additional Information for examples of Annuity
Unit value calculations and variable annuity payment calculations.
Description of Annuity Payment Options
Option 1 - Interest Income. (Fixed Annuity Payments Only) The proceeds are left
with the Company to earn interest at a compound annual rate to be determined by
the Company but not less than 3.5%. Interest will be paid every month or every
12 months as the Owner or Payee selects. Under this option, the Payee may
withdraw part or all of the proceeds at any time. This option may not be
available in all states.
Option 2 - Income For a Fixed Term. (Fixed Annuity Payments Only) The proceeds
are paid out in equal monthly installments for a fixed number of years between 5
and 30. In the event of the Payee's death, a successor Payee may receive the
payments or may elect to receive the present value of the remaining payments
(computed as described in the Contract) in a lump sum. If there is no successor
Payee or if the successor Payee dies, the present value of the remaining
payments will be paid to the estate of the last surviving Payee.
Option 3A - Life Income With Specified Number of Years Guaranteed. The proceeds
are paid in monthly installments during the Payee's lifetime with the guarantee
that payments will be made for a period of ten years or twenty years. In the
event of the Payee's death before the expiration of the specified number of
years, a successor Payee may receive the remaining payments or may elect to
receive the present value of the remaining payments (computed as described in
the Contract) in a lump sum. If there is no successor Payee or if the successor
Payee dies, the present value of the remaining payments will be paid to the
estate of the last surviving Payee.
Option 3B - Life Income With Special Specified Number of Years Guaranteed.
(Fixed Annuity Payments Only) The same as Option 3A except that the specified
number of years selected is at least that which is necessary for the total of
all guaranteed payments to equal the amount of proceed applied under this
option.
Option 3C - Life Income. The same as Option 3A except that payments are not
guaranteed for a specific number of years but only for the lifetime of the
Payee. Under this option, a Payee could receive only one payment if the
Annuitant dies after the first payment, two payments if the Annuitant dies after
the second payment, etc.
Option 4 - Joint and Survivor Life Income - 10 Year Guaranteed Period Certain.
The proceeds are paid out in monthly installments for as long as either of two
joint Payees (Annuitants) remain alive. If after the second Payee dies, payments
have been made for fewer than 10 years, payments will be made to any successor
Payee who was not a joint Annuitant or such successor Payee may elect to receive
the present value of the remaining payments (computed as described in the
Contract) in a lump sum. If there is no such successor Payee or if the successor
Payee dies, the present value of the remaining payments will be paid to the
estate of the last surviving Payee.
The amount of each payment will be determined from the tables in the Contract
that apply to the particular option using the Payee's age (and if applicable,
sex). Age will be determined from the last birthday at the due date of the first
payment.
Alternate Payment Option. In lieu of one of the above options, the adjusted
Contract Value or death benefit, as applicable, may be applied to any other
payment option made available by the Company or requested and agreed to by the
Company.
YIELDS AND TOTAL RETURNS
From time to time, the Company may advertise or include in sales literature
yields, effective yields and total returns for the Subaccounts. These figures
are based on historical earnings and do not indicate or project future
performance. The Company also may, from time to time, advertise or include in
sales literature Subaccount performance relative to certain performance rankings
and indices compiled by independent organizations. More detailed information as
to the calculation of performance appears in the Statement of Additional
Information.
Effective yields and total returns for the Subaccounts are based on the
investment performance of the corresponding Fund. The performance of a Fund in
part reflects its expenses. See the prospectuses for the Funds.
The yield of the Money Market Subaccount refers to the annualized income
generated by an investment in the Subaccount over a specified seven-day period.
The yield is calculated by assuming that the income generated for that seven-day
period is generated each seven-day period over a 52-week period and is shown as
a percentage of the investment. The effective yield is calculated similarly but,
when annualized, the income earned by an investment in the Subaccount is assumed
to be reinvested. The effective yield will be slightly higher than the yield
because of the compounding effect of this assumed reinvestment.
The yield of a Subaccount (except the Money Market Subaccount) refers to the
annualized income generated by an investment in the Subaccount over a specified
30-day or one-month period. The yield is calculated by assuming that the income
generated by the investment during that 30-day or one-month period is generated
each month over a 12-month period and is shown as a percentage of the
investment.
The total return of a Subaccount refers to return quotations assuming an
investment under a Contract has been held in the Subaccount for various periods
of time. For periods prior to the date the Variable Account commenced
operations, performance information will be calculated based on the performance
of the various Funds and the assumption that the Subaccounts were in existence
for the same periods as those indicated for the Funds, with the level of
Contract charges that were in effect at the inception of the Subaccounts for the
Contracts. When a Subaccount or Fund has been in operation for one, five, and
ten years, respectively, the total returns for these periods will be provided.
The average annual total return quotations represent the average annual
compounded rates of return that would equate an initial investment of $1,000
under a Contract to the redemption value of that investment as of the last day
of each of the periods for which total return quotations are provided. Average
annual total return information shows the average annual percentage change in
the value of an investment in the Subaccount from the beginning date of the
measuring period to the end of that period. This standardized version of average
annual total return reflects all historical investment results, less all charges
and deductions applied against the Subaccount (including any surrender charge
that would apply if an Owner terminated the Contract at the end of each period
indicated, but excluding any deductions for premium taxes).
In addition to the standard version described above, total return performance
information computed on two different non-standard bases may be used in
advertisements or sales literature. Average annual total return information may
be presented, computed on the same basis as described above, except deductions
will not include the surrender charge. In addition, the Company may from time to
time disclose cumulative total returns for Contracts funded by Subaccounts.
From time to time, yields, standard average annual total returns, and
non-standard total returns for the Funds may be disclosed, including such
disclosures for periods prior to the date the Variable Account commenced
operations.
Non-standard performance data will only be disclosed if the standard performance
data for the required periods is also disclosed. For additional information
regarding the calculation of other performance data, please refer to the
Statement of Additional Information.
In advertising and sales literature, the performance of each Subaccount may be
compared with the performance of other variable annuity issuers in general or to
the performance of particular types of variable annuities investing in mutual
funds, or investment portfolios of mutual funds with investment objectives
similar to the Subaccount. Lipper Analytical Services, Inc. ("Lipper"), Variable
Annuity Research Data Service ("VARDS") and Morningstar, Inc. ("Morningstar")
are independent services which monitor and rank the performance of variable
annuity issuers in each of the major categories of investment objectives on an
industry-wide basis.
Lipper's and Morningstar's rankings include variable life insurance issuers as
well as variable annuity issuers. VARDS's rankings compare only variable annuity
issuers. The performance analyses prepared by Lipper, VARDS and Morningstar each
rank such issuers on the basis of total return, assuming reinvestment of
distributions, but do not take sales charges, redemption fees, or certain
expense deductions at the separate account level into consideration. In
addition, VARDS prepares risk rankings, which consider the effects of market
risk on total return performance. This type of ranking provides data as to which
Funds provide the highest total return within various categories of funds
defined by the degree of risk inherent in their investment objectives.
Advertising and sales literature may also compare the performance of each
Subaccount to the Standard & Poor's Index of 500 Common Stocks, a widely used
measure of stock performance. This unmanaged index assumes the reinvestment of
dividends but does not reflect any "deduction" for transaction costs or expenses
of operating and managing an investment portfolio. The Lehman Bond Indexes
represent unmanaged groups of securities of various issuers and terms to
maturity which are representative of bond market performance. The Consumer Price
Index is a statistical measure of changes in the prices of goods and services
over time published by the U.S. Bureau of Labor Statistics. Lipper Performance
Summary Averages represent the average annual total return of all the funds
(within a specified investment category) that are covered by the Lipper
Analytical Services Variable Insurance Products Performance Analysis Service.
Other independent ranking services and indices may also be used for performance
comparisons.
The Company may also report other information including the effect of
tax-deferred compounding on a Subaccount's investment returns, or returns in
general, which may be illustrated by tables, graphs, or charts. All income and
capital gains derived from Subaccount investments are reinvested on a
tax-deferred basis which can lead to substantial long-term accumulation of
assets, provided that the Subaccount investment experience is positive.
FEDERAL TAX MATTERS
The Following Discussion is General and
Is Not Intended as Tax Advice
Introduction
This discussion is not intended to address the tax consequences resulting from
all of the situations in which a person may be entitled to or may receive a
distribution under the annuity Contract issued by the Company. Any person
concerned about these tax implications should consult a competent tax adviser
before initiating any transaction. This discussion is based upon the Company's
understanding of the present federal income tax laws, as they are currently
interpreted by the Internal Revenue Service ("IRS"). No representation is made
as to the likelihood of the continuation of the present federal income tax laws
or of the current interpretation by the IRS. Moreover, no attempt has been made
to consider any applicable state or other tax laws.
The Contract may be purchased on a non-qualified basis or purchased and used in
connection with plans qualifying for favorable tax treatment. The Qualified
Contract is designed for use by individuals whose purchase payments are
comprised solely of proceeds from and/or contributions under retirement plans
which are intended to qualify as plans entitled to special income tax treatment
under Sections 401(a), 403(b), 408, or 457 of the Code. The ultimate effect of
federal income taxes on the amounts held under a Contract, or annuity payments,
and on the economic benefit to the Owner, the Annuitant, or the Beneficiary
depends on the type of retirement plan, on the tax and employment status of the
individual concerned, and on the Company's tax status. In addition, certain
requirements must be satisfied in purchasing a Qualified Contract with proceeds
from a tax-qualified plan and receiving distributions from a Qualified Contract
in order to continue receiving favorable tax treatment. Therefore, purchasers of
Qualified Contracts should seek competent legal and tax advice regarding the
suitability of a Contract for their situation, the applicable requirements, and
the tax treatment of the rights and benefits of a Contract. The following
discussion assumes that Qualified Contracts are purchased with proceeds from
and/or contributions under retirement plans that qualify for the intended
special federal income tax treatment.
Tax Status of the Contract
Diversification Requirements. Section 817(h) of the Code provides that separate
account investment underlying a contract must be "adequately diversified" in
accordance with Treasury regulations in order for the contract to qualify as an
annuity contract under Section 72 of the Code. The Variable Account, through
each underlying Fund, intends to comply with the diversification requirements
prescribed in regulations under Section 817(h) of the Code, which affect how the
assets in the various Subaccounts may be invested. Although the Company does not
have direct control over the Funds in which the Variable Account invests, we
believe that each Fund in which the Variable Account owns shares will meet the
diversification requirements, and therefore, the Contract will be treated as an
annuity contract under the Code.
In certain circumstances, owners of variable annuity contracts may be considered
the owners, for federal income tax purposes, of the assets of the separate
account used to support their contracts. In those circumstances, income and
gains from the separate account assets would be includible in the variable
annuity contract owner's gross income. The IRS has stated in published rulings
that a variable contractowner will be considered the owner of separate account
assets if the contractowner possesses incidents of ownership in those assets,
such as the ability to exercise investment control over the assets. The Treasury
Department has also announced, in connection with the issuance of regulations
concerning investment diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor control of the
investments of a segregated asset account may cause the investor (i.e., the
contractowner), rather than the insurance company, to be treated as the owner of
the assets in the account." This announcement also states that guidance would be
issued by way of regulations or rulings on the "extent to which policyholders
may direct their investments to particular subaccounts without being treated as
owners of the underlying assets."
The ownership rights under the Contracts are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that contractowners were not owners of separate account assets. For
example, the Owner of a Contract has the choice of one or more Subaccounts in
which to allocate Net Purchase Payments and Contract Values, and may be able to
transfer among Subaccounts more frequently than in such rulings. These
differences could result in an Owner being treated as the Owner of the assets of
the Variable Account. In addition, the Company does not know what standards will
be set forth, if any, in the regulations or rulings which the Treasury
Department has stated it expects to issue. The Company therefore reserves the
right to modify the Contract as necessary to attempt to prevent the
contractowner from being considered the Owner of the assets of the Variable
Account.
Required Distributions. In order to be treated as an annuity contract for
federal income tax purposes, Section 72(s) of the Code requires any
Non-Qualified Contract to provide that: (a) if any owner dies on or after the
annuity date but prior to the time the entire interest in the contract has been
distributed, the remaining portion of such interest will be distributed at least
as rapidly as under the method of distribution being used as of the date of that
owner's death; and (b) if any owner dies prior to the annuity date, the entire
interest in the contract will be distributed within five years after the date of
the owner's death. These requirements will be considered satisfied as to any
portion of the owner's interest which is payable to or for the benefit of a
"designated annuitant" and which is distributed over the life of such annuitant
or over a period not extending beyond the life expectancy of that annuitant,
provided that such distributions begin within one year of that owner's death.
The owner's "designated annuitant" is the person designated by such owner as an
annuitant and to whom ownership of the contract passes by reason of death and
must be a natural person. However, if the owner's "designated annuitant" is the
surviving spouse of the owner, the contract may be continued with the surviving
spouse as the new owner.
The Non-Qualified Contracts contain provisions which are intended to comply with
the requirements of Section 72(s) of the Code, although no regulations
interpreting these requirements have yet been issued. The Company intends to
review such provisions and modify them if necessary to assure that they comply
with the requirements of Code Section 72(s) when clarified by regulation or
otherwise.
Other rules may apply to Qualified Contracts.
Taxation of Annuities
The following discussion assumes that the Contracts will qualify as annuity
contracts for federal income tax purposes.
In General. Section 72 of the Code governs taxation of annuities in general. The
Company believes that an Owner who is a natural person is not taxed on increases
in the value of a Contract until distribution occurs by withdrawing all or part
of the Contract Value (e.g., partial withdrawals and surrenders) or as annuity
payments under the payment option elected. For this purpose, the assignment,
pledge, or agreement to assign or pledge any portion of the Contract Value (and
in the case of a Qualified Contract, any portion of an interest in the qualified
plan) generally will be treated as a distribution. The taxable portion of a
distribution (in the form of a single sum payment or payment option) is taxable
as ordinary income.
Any annuity contract Owner who is not a natural person generally must include in
income any increase in the excess of the Contract Value over the "investment in
the contract" during the taxable year. There are some exceptions to this rule,
and a prospective Owner that is not a natural person may wish to discuss these
with a competent tax adviser.
The following discussion generally applies to Contracts owned by natural
persons.
Partial Withdrawals. In the case of a partial withdrawal from a Qualified
Contract, under Section 72(e) of the Code, a ratable portion of the amount
received is taxable, generally based on the ratio of the "investment in the
contract" to the participant's total accrued benefit or balance under the
retirement plan. The "investment in the contract" generally equals the portion,
if any, of any purchase payments paid by or on behalf of the individual under a
Contract which were not excluded from the individual's gross income. For
Contracts issued in connection with qualified plans, the "investment in the
contract" can be zero. Special tax rules may be available for certain
distributions from Qualified Contracts.
In the case of a partial withdrawal (including systematic withdrawals) from a
Non-Qualified Contract, under Section 72(e), any amounts received are generally
first treated as taxable income to the extent that the Contract Value
immediately before the partial withdrawal exceeds the "investment in the
contract" at that time. Any additional amount withdrawn is not taxable. With
respect to a Non-Qualified Contract, partial withdrawals are generally treated
as taxable income to the extent that the Contract Value immediately before the
withdrawal exceeds the "investment in the contract" at that time. The Contract
Value immediately before a partial withdrawal may have to be increased by any
positive interest adjustment which results from such a withdrawal. There is,
however, no definitive guidance on the proper tax treatment of interest
adjustments, and the Owner should contact a competent tax adviser with respect
to the potential tax consequences of an interest adjustment. Surrenders are
treated as taxable income to the extent that the amount received exceeds the
investment in the contract.
In the case of a full surrender under a Qualified or Non-Qualified Contract, the
amount received generally will be taxable only to the extent it exceeds the
"investment in the contract."
Section 1035 of the Code generally provides that no gain or loss shall be
recognized on the exchange of one annuity contract for another. Special rules
and procedures apply to Section 1035 transactions. Prospective Owners wishing to
take advantage of Section 1035 should consult their tax adviser.
Annuity Payments. Tax consequences may vary depending on the payment option
elected under an annuity contract. Generally, under Code Section 72(b), (prior
to recovery of the investment in the Contract) taxable income does not include
that part of any amount received as an annuity under an annuity contract that
bears the same ratio to such amount as the investment in the contract bears to
the expected return at the annuity starting date. For variable annuity payments,
the taxable portion is generally determined by an equation that establishes a
specific dollar amount of each payment that is not taxed. The dollar amount is
determined by dividing the "investment in the contract" by the total number of
expected periodic payments. However, the entire distribution will be taxable
once the recipient has recovered the dollar amount of his or her "investment in
the contract." For fixed annuity payments, in general, there is no tax on the
portion of each payment which represents the same ratio that the "investment in
the contract" bears to the total expected value of the annuity payments for the
term of the payments; however, the remainder of each annuity payment is taxable
until the recovery of the investment in the contract, and thereafter the full
amount of each annuity payment is taxable. If death occurs before full recovery
of the investment in the contract, the unrecovered amount may be deducted on the
Annuitant's final tax return.
Taxation of Death Benefit Proceeds. Amounts may be distributed from a Contract
because of the death of the Owner or Annuitant. Generally, such amounts are
includible in the income of the recipient as follows: (i) if distributed in a
lump sum, they are taxed in the same manner as a full surrender of the contract
or (ii) if distributed under a payment option, they are taxed in the same way as
annuity payments.
Penalty Tax on Certain Withdrawals. In the case of a distribution pursuant to a
Non-Qualified Contract, there may be imposed a federal penalty tax equal to 10%
of the amount treated as taxable income. In general, however, there is no
penalty on distributions:
(1) made on or after the taxpayer reaches age 59 1/2;
(2) made on or after the death of the holder (or if the holder is
not an individual, the death of the primary Annuitant);
(3) attributable to the taxpayer's becoming disabled;
(4) as part of a series of substantially equal periodic payments
not less frequently than annually for the life (or life
expectancy) of the taxpayer or the joint lives (or joint life
expectancies) of the taxpayer and the designated Beneficiary;
(5) made under certain annuities issued in connection with
structured settlement agreements; and
(6) made under an annuity contract that is purchased with a single
purchase payment when the Annuity Date is no later than a year
from purchase of the annuity and substantially equal periodic
payments are made not less frequently than annually during the
annuity payment period.
Other tax penalties may apply to certain distributions under a Qualified
Contract.
Possible Changes in Taxation. In past years, legislation has been proposed that
would have adversely modified the federal taxation of certain annuities. For
example, one such proposal would have changed the tax treatment of non-qualified
annuities that did not have "substantial life contingencies" by taxing income as
it is credited to the annuity. Congress may consider more proposed legislation
regarding taxation of annuities. There is always the possibility that the tax
treatment of annuities could change by legislation or other means (such as IRS
regulations, revenue rulings, judicial decisions, etc.). Moreover, it is also
possible that any change could be retroactive (that is, effective prior to the
date of the change).
Transfers, Assignments or Exchanges of a Contract
A transfer of ownership of a Contract, the designation of an Annuitant, Payee or
other Beneficiary who is not also the Owner, the selection of certain Annuity
Dates or the exchange of a Contract may result in certain tax consequences to
the Owner that are not discussed herein. An Owner contemplating any such actions
should contact a competent tax adviser with respect to the potential tax
effects.
Withholding
Pension and annuity distributions generally are subject to withholding for the
recipient's federal income tax liability at rates that vary according to the
type of distribution and the recipient's tax status. Recipients, however,
generally may elect not to have tax withheld from distributions. Effective
January 1, 1993, distributions from certain qualified plans are generally
subject to mandatory withholding. Certain states also require withholding of
state income tax whenever federal income tax is withheld.
Multiple Contracts
All non-qualified deferred annuity Contracts entered into after October 21, 1988
that are issued by the Company (or its affiliates) to the same Owner during any
calendar year are treated as one annuity Contract for purposes of determining
the amount includible in gross income under Section 72(e). The effects of this
rule are not yet clear; however, it could affect the point where income is
taxable and the amount that might be subject to the 10% penalty tax described
above. In addition, the Treasury Department has specific authority to issue
regulations that prevent the avoidance of Section 72(e) through the serial
purchase of annuity contracts or otherwise. There may also be other situations
in which the Treasury may conclude that it would be appropriate to aggregate two
or more annuity Contracts purchased by the same Owner. Accordingly, a
contractowner should consult a competent tax adviser before purchasing more than
one annuity Contract.
Taxation of Qualified Plans
The Contracts are designed for use with several types of qualified plans. The
tax rules applicable to participants in these qualified plans vary according to
the type of plan and the terms and conditions of the plan itself. Special
favorable tax treatment may be available for certain types of contributions and
distributions. Adverse tax consequences may result from contributions in excess
of specified limits; distributions prior to age 59 1/2 (subject to certain
exceptions); distributions that do not conform to specified commencement and
minimum distribution rules; aggregate distributions in excess of a specified
annual amount; and in other specified circumstances. Therefore, no attempt is
made to provide more than general information about the use of the Contracts
with the various types of qualified retirement plans. Contractowners, the
Annuitants, and Beneficiaries are cautioned that the rights of any person to any
benefits under these qualified retirement plans may be subject to the terms and
conditions of the plans themselves, regardless of the terms and conditions of
the Contract, but the Company shall not be bound by the terms and conditions of
such plans to the extent such terms contradict the Contract, unless the Company
consents. Some retirement plans are subject to distribution and other
requirements that are not incorporated into the Company's Contract
administration procedures. Brief descriptions follow of the various types of
qualified retirement plans in connection with a Contract. The Company will amend
the Contract as necessary to conform it to the requirements of such plans.
Corporate Pension and Profit Sharing Plans and H.R. 10 Plans. Section 401(a) of
the Code permits corporate employers to establish various types of retirement
plans for employees, and permits self-employed individuals to establish these
plans for themselves and their employees. These retirement plans may permit the
purchase of the Contracts to accumulate retirement savings under the plans.
Adverse tax or other legal consequences to the plan, to the participant or to
both may result if this Contract is assigned or transferred to any individual as
a means to provide benefit payments, unless the plan complies with all legal
requirements applicable to such benefits prior to transfer of the Contract.
Employers intending to use the Contract with such plans should seek competent
advice.
Individual Retirement Annuities. Section 408 of the Code permits eligible
individuals to contribute to an individual retirement program known as an
"Individual Retirement Annuity" or "IRA." These IRAs are subject to limits on
the amount that may be contributed, the persons who may be eligible, and the
time when distributions may commence. Also, distributions from certain other
types of qualified retirement plans may be "rolled over" on a tax-deferred basis
into an IRA. Sales of the Contract for use with IRAs may be subject to special
requirements of the Internal Revenue Service. Employers may establish Simplified
Employee Pension (SEP) Plans to provide IRA contributions on behalf of their
employees. The Internal Revenue Service has not reviewed the Contract for
qualification as an IRA, and has not addressed in a ruling of general
applicability whether a death benefit provision such as the provision in the
Contract comports with IRA qualifications requirements.
Tax Sheltered Annuities. Section 403(b) of the Code allows employees of certain
Section 501(c)(3) organizations and public schools to exclude from their gross
income the purchase payments paid, within certain limits, on a Contract that
will provide an annuity for the employee's retirement. These purchase payments
may be subject to FICA (social security) tax. Owners of certain Section 403(b)
annuities may receive Contract loans. Contract loans that satisfy certain
requirements with respect to loan amount and repayment are not treated as
taxable distributions. If these requirements are not satisfied, or if the
Contract terminates while a loan is outstanding, the loan balance will be
treated as a taxable distribution and may be subject to penalty tax, and the
treatment of the Contract under Section 403(b) may be adversely affected. Owners
should seek competent advice before requesting a Contract loan.
Certain Deferred Compensation Plans. Code Section 457 provides for certain
deferred compensation plans. These plans may be offered with respect to service
for state governments, local governments, political subdivisions, agencies,
instrumentalities and certain affiliates of such entities, and tax-exempt
organizations. These plans are subject to various restrictions on contributions
and distributions. The plans may permit participants to specify the form of
investment for their deferred compensation account. In general, all investments
are owned by the sponsoring employer and are subject to the claims of the
general creditors of the employer. Depending on the terms of the particular
plan, the employer may be entitled to draw on deferred amounts for purposes
unrelated to its Section 457 plan obligations. In general, all amounts
distributed under a Section 457 plan are taxable and are subject to federal
income tax withholding as wages.
Possible Charge for the Company's Taxes
At the present time, the Company makes no charge to the Subaccounts for any
Federal, state, or local taxes that the Company incurs which may be attributable
to such Subaccounts or the Contracts. The Company, however, reserves the right
in the future to make a charge for any such tax or other economic burden
resulting from the application of the tax laws that it determines to be properly
attributable to the Subaccounts or to the Contracts.
Other Tax Consequences
As noted above, the foregoing comments about the Federal tax consequences under
these Contracts are not exhaustive, and special rules are provided with respect
to other tax situations not discussed in this Prospectus. Further, the Federal
income tax consequences discussed herein reflect the Company's understanding of
current law and the law may change. Federal estate and state and local estate,
inheritance and other tax consequences of ownership or receipt of distributions
under a Contract depend on the individual circumstances of each Owner or
recipient of the distribution. A competent tax adviser should be consulted for
further information.
DISTRIBUTION OF THE CONTRACTS
The Contracts will be offered to the public on a continuous basis. The Company
does not anticipate discontinuing the offering of the Contracts, but reserves
the right to discontinue the offering. Applications for Contracts are solicited
by agents who are licensed by applicable state insurance authorities to sell the
Company's variable annuity Contracts and who are also registered representatives
of CUNA Brokerage or broker-dealers having selling agreements with CUNA
Brokerage or broker-dealers having selling agreements with such broker-dealers.
CUNA Brokerage is an indirect wholly-owned subsidiary of CUNA Mutual and is
registered with the SEC under the Securities Exchange Act of 1934 as a
broker-dealer and is a member of the National Association of Securities Dealers,
Inc.
CUNA Brokerage acts as the principal underwriter, as defined in the Act, of the
Contracts for the Variable Account pursuant to an underwriting agreement between
the Company and CUNA Brokerage. CUNA Brokerage is not obligated to sell any
specific number of Contracts. CUNA Brokerage maintains an Office of Supervisory
Jurisdiction at the same address as the Company. CUNA Brokerage's principal
business address is the same as that of CUNA Mutual.
The Company may pay sales commissions to broker-dealers up to an amount equal to
6% of the purchase payments paid under a Contract. These broker-dealers are
expected to compensate sales representatives in varying amounts from these
commissions. The Company also may pay other distribution expenses such as
agents' insurance and pension benefits, agency expense allowances, and overhead
attributable to distribution. In addition, the Company may from time to time pay
or allow additional promotional incentives in the form of cash or other
compensation. These distribution expenses do not result in any additional
charges under the Contracts that are not described under CHARGES AND DEDUCTIONS.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account is a party or the
assets of the Variable Account are subject. The Company is not involved in any
litigation that is of material importance in relation to its total assets or
that relates to the Variable Account.
VOTING RIGHTS
In accordance with its view of current applicable law, the Company will vote
Fund shares held in the Variable Account at regular and special shareholder
meetings of the Funds in accordance with instructions received from persons
having voting interests in the corresponding Subaccounts. If, however, the 1940
Act or any regulation thereunder should be amended, or if the present
interpretation thereof should change, or the Company otherwise determines that
it is allowed to vote the shares in its own right, it may elect to do so.
The number of votes that an Owner or Annuitant has the right to instruct will be
calculated separately for each Subaccount of the Variable Account, and may
include fractional votes. Prior to the Annuity Date, an Owner holds a voting
interest in each Subaccount to which the Contract Value is allocated. After the
Annuity Date, the Annuitant has a voting interest in each Subaccount from which
variable annuity payments are made.
For each Owner, the number of votes attributable to a Subaccount will be
determined by dividing the Contract Value attributable to that Owner's Contract
in that Subaccount by the net asset value per share of the Fund in which that
Subaccount invests. For each Annuitant, the number of votes attributable to a
Subaccount will be determined by dividing the liability for future variable
annuity payments to be paid from that Subaccount by the net asset value per
share of the Fund in which that Subaccount invests. This liability for future
payments is calculated on the basis of the mortality assumptions, the 3.5%
assumed investment rate used in determining the number of Annuity Units of that
Subaccount credited to the Annuitant's Contract and the Annuity Unit value of
that Subaccount on the date that the number of votes is determined. As variable
annuity payments are made to the Annuitant, the liability for future payments
decreases as does the number of votes.
The number of votes available to an Owner or Annuitant will be determined as of
the date coincident with the date established by the Fund for determining
shareholders eligible to vote at the relevant meeting of the Fund's
shareholders. Voting instructions will be solicited by written communication
prior to such meeting in accordance with procedures established for the Fund.
Each Owner or Annuitant having a voting interest in a Subaccount will receive
proxy materials and reports relating to any meeting of shareholders of the Fund
in which that Subaccount invests.
Fund shares for which no timely instructions are received and shares held by the
Company in a Subaccount for which no Owner or Annuitant has a beneficial
interest will be voted in proportion to the voting instructions which are
received with respect to all Contracts participating in that Subaccount. Voting
instructions to abstain on any item to be voted upon will be applied to reduce
the total number of votes eligible to be cast on a matter.
COMPANY HOLIDAYS
The Company is closed on the following holidays: (1) for Thanksgiving, the day
immediately following; (2) for Christmas, the final scheduled work day
preceding; and (3) for New Year's Day and Independence Day, the day itself if
those days fall Monday through Friday, the day immediately preceding if those
days fall on a Saturday, and the day immediately following if those days fall on
a Sunday.
FINANCIAL STATEMENTS
The audited financial statements of the Variable Account as of December 31,
1996, including a statement of assets and liabilities, a statement of operations
for the year then ended, a statement of changes in net assets for the year ended
12/31/96 and for the year ended 12/31/95, and accompanying notes, are included
in the Statement of Additional Information.
The audited balance sheets for the Company as of December 31, 1996 and 1995 and
the related statutory basis statements of operations, changes in net worth, and
cash flows for the years ended December 31, 1996, 1995, and 1994 as well as the
Independent Auditors' Report are contained in the Statement of Additional
Information.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
ADDITIONAL CONTRACT PROVISIONS...........................................1
The Contract..........................................................1
Incontestability......................................................1
Misstatement of Age or Sex............................................1
Participation.........................................................1
CALCULATION OF YIELDS AND TOTAL RETURNS..................................1
Money Market Subaccount Yields........................................1
Other Subaccount Yields...............................................2
Average Annual Total Returns..........................................3
Other Total Returns...................................................4
Effect of the Annual Contract Fee on Performance Data.................5
VARIABLE ANNUITY PAYMENTS................................................5
Assumed Investment Rate...............................................5
Amount of Variable Annuity Payments...................................5
Annuity Unit Value....................................................6
TERMINATION OF PARTICIPATION AGREEMENTS..................................6
T. Rowe Price International Series, Inc...............................7
MFS Variable Insurance Trust..........................................7
Oppenheimer Variable Account Funds....................................7
Templeton Variable Products Series Fund...............................7
LEGAL MATTERS............................................................7
EXPERTS..................................................................7
OTHER INFORMATION........................................................8
FINANCIAL STATEMENTS.....................................................8
CUNA Mutual Life Variable Annuity Account.............................9
CUNA Mutual Life Insurance Company....................................9
You may obtain a copy of the Statement of Additional Information free of charge
by writing to or calling the Company at the address or telephone number shown at
the beginning of this Prospectus.
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
CUNA Mutual Life Insurance Company
2000 Heritage Way
Waverly, Iowa 50677
(800)-798-5500
CUNA MUTUAL LIFE VARIABLE ANNUITY ACCOUNT
Individual Flexible Premium Deferred Variable Annuity Contract
This Statement of Additional Information contains information in addition to the
information described in the Prospectus for the individual flexible premium
deferred variable annuity contract (the "Contract") offered by CUNA Mutual Life
Insurance Company (the "Company"). This Statement of Additional Information is
not a Prospectus, and it should be read only in conjunction with the
Prospectuses for the Contract and Ultra Series Fund, T. Rowe Price International
Series, Inc., MFS(R) Variable Insurance TrustSM ("MFS Variable Insurance Trust")
Oppenheimer Variable Account Funds and Templeton Variable Products Series Fund.
The Prospectus for the Contract is dated the same as this Statement of
Additional Information. You may obtain a copy of the Prospectuses by writing or
calling us at our address or phone number shown above.
May 1, 1997
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
ADDITIONAL CONTRACT PROVISIONS............................................1
The Contract..............................................................1
Incontestability..........................................................1
Misstatement of Age or Sex................................................1
Participation.............................................................1
CALCULATION OF YIELDS AND TOTAL RETURNS...................................1
Money Market Subaccount Yields............................................1
Other Subaccount Yields...................................................2
Average Annual Total Returns..............................................3
Other Total Returns.......................................................4
Effect of the Annual Contract Fee on Performance Data.....................5
VARIABLE ANNUITY PAYMENTS.................................................5
Assumed Investment Rate...................................................5
Amount of Variable Annuity Payments.......................................5
Annuity Unit Value........................................................6
TERMINATION OF PARTICIPATION AGREEMENTS...................................6
T. Rowe Price International Series, Inc...................................7
MFS Variable Insurance Trust..............................................7
Oppenheimer Variable Account Funds........................................7
Templeton Variable Products Series Fund...................................7
LEGAL MATTERS.............................................................7
EXPERTS...................................................................7
OTHER INFORMATION.........................................................8
FINANCIAL STATEMENTS......................................................8
CUNA MUTUAL LIFE VARIABLE ANNUITY ACCOUNT.................................9
CUNA MUTUAL LIFE INSURANCE COMPANY.......................................19
<PAGE>
ADDITIONAL CONTRACT PROVISIONS
The Contract
The application, endorsements and all other attached papers are part of the
Contract. The statements made in the application are deemed representations and
not warranties. The Company will not use any statement in defense of a claim or
to void the Contract unless it is contained in the application.
Incontestability
The Company will not contest the Contract.
Misstatement of Age or Sex
If the age or sex (if applicable) of the Annuitant has been misstated, the
amount which will be paid is that which the proceeds would have purchased at the
correct age and sex (if applicable).
Participation
The Contract may participate in the Company's divisible surpluses but no
dividends are expected to be paid. Any dividends paid after the Annuity Date
would be paid with each annuity payment.
CALCULATION OF YIELDS AND TOTAL RETURNS
From time to time, the Company may disclose yields, total returns, and other
performance data pertaining to the Contracts for a Subaccount. Such performance
data will be computed, or accompanied by performance data computed, in
accordance with the standards defined by the SEC.
Money Market Subaccount Yields
From time to time, advertisements and sales literature may quote the current
annualized yield of the Money Market Subaccount for a seven-day period in a
manner which does not take into consideration any realized or unrealized gains
or losses on shares of the Ultra Series Fund's Money Market Fund or on that
Fund's portfolio securities.
This current annualized yield is computed by determining the net change
(exclusive of realized gains and losses on the sale of securities and unrealized
appreciation and depreciation) at the end of the seven-day period in the value
of a hypothetical account under a Contract having a balance of 1 unit of the
Money Market Subaccount at the beginning of the period, dividing such net change
in account value by the value of the hypothetical account at the beginning of
the period to determine the base period return, and annualizing this quotient on
a 365-day basis. The net change in account value reflects: 1) net income from
the Fund attributable to the hypothetical account; and 2) charges and deductions
imposed under the Contract which are attributable to the hypothetical account.
The charges and deductions include the per unit charges for the hypothetical
account for: 1) the annual Contract fee; 2) the mortality and expense risk
charge; and (3) the asset-based administration charge. For purposes of
calculating current yields for a Contract, an average per unit Contract fee is
used based on the $30 annual Contract fee deducted at the end of each Contract
Year. Current Yield is calculated according to the following formula:
Current Yield = ((NCS - ES)/UV) X (365/7)
Where:
NCS = the net change in the value of the Money Market
Fund (exclusive of realized gains or losses on the
sale of securities and unrealized appreciation and
depreciation) for the seven-day period attributable
to a hypothetical account having a balance of 1
Subaccount unit.
ES = per unit expenses attributable to the hypothetical
account for the seven-day period.
UV = the unit value for the first day of the seven-day period.
Effective yield = (1 + ((NCS-ES)/UV)) 365/7 - 1
Where:
NCS = the net change in the value of the Money Market Fund
(exclusive of realized gains or losses on the sale of
securities and unrealized appreciation and depreciation) for
the seven-day period attributable to a hypothetical account
having a balance of 1 Subaccount unit.
ES = per unit expenses attributable to the hypothetical account for
the seven-day period.
UV = the unit value for the first day of the seven-day period.
Because of the charges and deductions imposed under the Contract, the yield for
the Money Market Subaccount is lower than the yield for the Money Market Fund.
The current and effective yields on amounts held in the Money Market Subaccount
normally fluctuate on a daily basis. Therefore, the disclosed yield for any
given past period is not an indication or representation of future yields or
rates of return. The Money Market Subaccount's actual yield is affected by
changes in interest rates on money market securities, average portfolio maturity
of the Money Market Fund, the types and quality of portfolio securities held by
the Money Market Fund and the Money Market Fund's operating expenses. Yields on
amounts held in the Money Market Subaccount may also be presented for periods
other than a seven-day period.
Yield calculations do not take into account the surrender charge under the
Contract equal to 1% to 7% of certain purchase payments during the seven years
subsequent to each payment being made. A surrender charge will not be imposed
upon surrender or partial withdrawal in any Contract Year on an amount equal to
10% of the aggregate purchase payments subject to the surrender charge as of the
time of the first withdrawal or surrender in that Contract Year.
Other Subaccount Yields
From time to time, sales literature or advertisements may quote the current
annualized yield of one or more of the Subaccounts (except the Money Market
Subaccount) for a Contract for 30-day or one-month periods. The annualized yield
of a Subaccount refers to income generated by the Subaccount during a 30-day or
one-month period and is assumed to be generated each period over a 12-month
period.
The yield is computed by: 1) dividing the net investment income of the Fund
attributable to the Subaccount units less Subaccount expenses for the period; by
2) the maximum offering price per unit on the last day of the period times the
daily average number of units outstanding for the period; by 3) compounding that
yield for a six-month period; and by 4) multiplying that result by 2. Expenses
attributable to the Subaccount include the annual contract fee, the asset-based
administration charge and the mortality and expense risk charge. The yield
calculation assumes a contract fee of $30 per year per Contract deducted at the
end of each Contract Year. For purposes of calculating the 30-day or one-month
yield, an average contract fee based on the average Contract Value in the
Variable Account is used to determine the amount of the charge attributable to
the Subaccount for the 30-day or one-month period. The 30-day or one-month yield
is calculated according to the following formula:
Yield = 2 X (((NI - ES)/(U X UV) + 1)6 - 1)
Where:
NI = net income of the portfolio for the 30-day or one-month period
attributable to the Subaccount's units.
ES = expenses of the Subaccount for the 30-day or one-month period.
U = the average number of units outstanding.
UV = the unit value at the close (highest) of the last day in the
30-day or one-month period.
Because of the charges and deductions imposed under the Contracts, the yield for
the Subaccount is lower than the yield for the corresponding Fund.
The yield on the amounts held in the Subaccounts normally fluctuates over time.
Therefore, the disclosed yield for any given past period is not an indication or
representation of future yields or rates of return. A Subaccount's actual yield
is affected by the types and quality of portfolio securities held by the
corresponding Fund and that Fund's operating expenses.
Yield calculations do not take into account the surrender charge under the
Contract equal to 1% to 7% of certain purchase payments during the seven years
subsequent to each payment being made. A surrender charge will not be imposed
upon surrender or partial withdrawal in any Contract Year on an amount equal to
10% of the aggregate purchase payments subject to the surrender charge as of the
time of the first withdrawal or surrender in that Contract Year.
Average Annual Total Returns
From time to time, sales literature or advertisements may also quote average
annual total returns for one or more of the Subaccounts for various periods of
time.
When a Subaccount or Fund has been in operation for 1, 5, and 10 years,
respectively, the average annual total return for these periods will be
provided. Average annual total returns for other periods of time may, from time
to time, also be disclosed.
Standard average annual total returns represent the average annual compounded
rates of return that would equate an initial investment of $1,000 under a
Contract to the redemption value of that investment as of the last day of each
of the periods. The ending date for each period for which total return
quotations are provided will be for the most recent calendar quarter-end
practicable, considering the type of the communication and the media through
which it is communicated.
Standard average annual total returns are calculated using Subaccount unit
values which the Company calculates on each Valuation Day based on the
performance of the Subaccount's underlying Fund, the deductions for the
mortality and expense risk charge, the deductions for the asset-based
administration charge and the annual Contract fee. The calculation assumes that
the Contract fee is $30 per year per Contract deducted at the end of each
Contract year. For purposes of calculating average annual total return, an
average per-dollar per-day Contract fee attributable to the hypothetical account
for the period is used. The calculation also assumes surrender of the Contract
at the end of the period for the return quotation. Total returns will therefore
reflect a deduction of the surrender charge for any period less than eight
years. The total return is calculated according to the following formula:
TR = ((ERV/P)1/N) - 1
Where:
TR = the average annual total return net of Subaccount
recurring charges.
ERV = the ending redeemable value (net of any applicable
surrender charge) of the hypothetical account at the
end of the period.
P = a hypothetical initial payment of $1,000.
N = the number of years in the period.
Such average annual total return information for the Subaccounts is as follows:
Period Since Inception
Subaccount 6/30/94 to 12/31/96 12/31/95 to 12/31/96
Capital Appreciation 16.83% 13.32%
Growth and Income 16.56% 13.93%
Balanced 9.14% 2.88%
Bond 3.88% (5.01)%
Money Market 1.63% (3.01)%
International Stock 7.00% 6.70%
World Governments 4.10% (3.86)%
Emerging Growth* (8.23)% (8.23)%
* For the period 05/01/96 through 12/31/96
From time to time, sales literature or advertisements may quote average annual
total returns for periods prior to the date the Variable Account or any
Subaccount commenced operations. The Growth & Income, Balanced, Bond, and Money
Market Funds commenced operations in January 1985. The Capital Appreciation Fund
commenced operations in January 1994. The International Stock Portfolio of the
T. Rowe Price International Series, Inc. commenced operations in March of 1994.
The MFS(R) World Governments SeriesSM ("MFS World Governments Series") and
MFS(R) Emerging Growth SeriesSM ("MFS Emerging Growth Series") of the MFS
Variable Insurance Trust commenced operations in June of 1994 and July of 1995,
respectively. The Oppenheimer High Income Fund ("Oppenheimer High Income Fund")
commenced operations in 1986. The Templeton Developing Markets Fund: Class 2
(Templeton Developing Markets Fund: Class 2") commenced operations in 1997.
Performance information for the Subaccounts for periods prior to the inception
of the Variable Account is calculated according to the formula shown on the
previous page, based on the performance of the Funds and the assumption that the
corresponding Subaccounts were in existence for the same periods as those
indicated for the Funds, with the level of Contract charges that were in effect
at the inception of the Subaccounts.
Such average annual total return information for the Subaccounts is as follows:
<TABLE>
<CAPTION>
For the For the For the For the period
1-year 5-year 10-Year from date
period period period of inception
ended ended ended of fund to
Subaccount 12/31/96 12/31/96 12/31/96 12/31/96
---------- -------- -------- --------- ----------
<S> <C> <C> <C> <C>
Capital Appreciation 13.32 N/A N/A 15.85
Growth and Income 13.93 12.74 11.99 12.77
Balanced 2.88 7.66 8.80 9.81
Bond (5.01) 4.02 5.88 7.09
Money Market (3.01) 1.80 3.89 4.13
</TABLE>
Other Total Returns
From time to time, sales literature or advertisements may also quote average
annual total returns that do not reflect the surrender charge. These are
calculated in exactly the same way as average annual total returns described
above, except that the ending redeemable value of the hypothetical account for
the period is replaced with an ending value for the period that does not take
into account any charges on amounts surrendered or withdrawn.
Such average annual total return information for the Subaccounts is as follows:
Period Since Inception
Subaccount 6/30/94 to 12/31/96 12/31/95 to 12/31/96
Capital Appreciation 18.18% 19.62%
Growth and Income 17.91% 20.23%
Balanced 10.64% 9.18%
Bond 5.50% 1.29%
Money Market 3.30% 3.29%
International Stock 8.54% 13.00%
World Governments 5.71% 2.44%
Emerging Growth* 1.08% 1.08%
*For the period 05/01/96 through 12/31/96.
The chart below corresponds to the chart on the previous page showing returns
for periods prior to the date the Variable Account commenced operations, except
that the chart below does not reflect the surrender charge. Such average annual
total return information for the Subaccounts is as follows:
For the For the For the For the period
1-year 5-year 10-Year from date
period period period of inception
ended ended ended of fund to
12/31/96 12/31/96 12/31/96 12/31/96
---------- -------- -------- ---------
Capital Appreciation 19.62 N/A N/A 16.96
Growth and Income 20.23 13.07 11.99 12.77
Balanced 9.18 8.06 8.80 9.81
Bond 1.29 4.47 5.88 7.09
Money Market 3.29 2.30 3.89 4.13
The Company may disclose cumulative total returns in conjunction with the
standard formats described above. The cumulative total returns will be
calculated using the following formula:
CTR = (ERV/P) - 1
Where:
CTR = The cumulative total return net of Subaccount
recurring charges for the period.
ERV = The ending redeemable value of the hypothetical
investment at the end of the period.
P = A hypothetical single payment of $1,000.
Effect of the Annual Contract Fee on Performance Data
The Contract provides for a $30 annual Contract fee to be deducted annually at
the end of each Contract Year, from the Subaccounts based on the proportion of
the Variable Contract Value invested in each such Subaccount. For purposes of
reflecting the Contract fee in yield and total return quotations, the annual
charge is converted into a per-dollar per-day charge based on the average
Variable Contract Value in the Variable Account of all Contracts on the last day
of the period for which quotations are provided. The per-dollar per-day average
charge will then be adjusted to reflect the basis upon which the particular
quotation is calculated.
VARIABLE ANNUITY PAYMENTS
Assumed Investment Rate
The discussion concerning the amount of variable annuity payments which follows
this section is based on an assumed investment rate of 3.5% per year. The
assumed investment rate is used merely in order to determine the first monthly
payment per thousand dollars of applied value. This rate does not bear any
relationship to the actual net investment experience of the Variable Account or
of any Subaccount.
Amount of Variable Annuity Payments
The amount of the first variable annuity payment to a Payee will depend on the
amount (i.e., the adjusted Contract Value, the Surrender Value, the death
benefit) applied to effect the variable annuity payment as of the Annuity Date,
the annuity payment option selected, and the age and sex (if, applicable) of the
Annuitant. The Contracts contain tables indicating the dollar amount of the
first annuity payment under each annuity payment option for each $1,000 applied
at various ages. These tables are based upon the 1983 Table A (promulgated by
the Society of Actuaries) and an assumed investment rate of 3.5% per year.
The portion of the first monthly variable annuity payment derived from a
Subaccount is divided by the Annuity Unit value for that Subaccount (calculated
as of the date of the first monthly payment). The number of such units will
remain fixed during the annuity period, assuming the Payee makes no exchanges of
Annuity Units for Annuity Units of another Subaccount.
In any subsequent month, for any Contract, the dollar amount of the variable
annuity payment derived from each Subaccount is determined by multiplying the
number of Annuity Units of that Subaccount attributable to that Contract by the
value of such Annuity Unit at the end of the Valuation Period immediately
preceding the date of such payment.
The Annuity Unit value will increase or decrease from one payment to the next in
proportion to the net investment return of the Subaccount or Subaccounts
supporting the variable annuity payments, less an adjustment to neutralize the
3.5% assumed investment rate referred to above. Therefore, the dollar amount of
annuity payments after the first will vary with the amount by which the net
investment return of the appropriate Subaccounts is greater or less than 3.5%
per year. For example, for a Contract using only one Subaccount to generate
variable annuity payments, if that Subaccount has a cumulative net investment
return of 5% over a one year period, the first annuity payment in the next year
will be approximately 1 1/2% greater than the payment on the same date in the
preceding year. If such net investment return is 1% over a one year period, the
first annuity payment in the next year will be approximately 2 1/2 percentage
points less than the payment on the same date in the preceding year. (See also
"Variable Annuity Payments" in the Prospectus.)
Annuity Unit Value
The value of an Annuity Unit is calculated at the same time that the value of an
Accumulation Unit is calculated and is based on the same values for Fund shares
and other assets and liabilities. (See "Variable Contract Value" in the
Prospectus.) The Annuity Unit value for each Subaccount's first Valuation Period
was set at $100. The Annuity Unit value for a Subaccount is calculated for each
subsequent Valuation Period by dividing (1) by (2), then multiplying this
quotient by (3) and then multiplying the result by (4), where:
(1) is the Accumulation Unit value for the current Valuation
Period;
(2) is the Accumulation Unit value for the immediately preceding
Valuation Period;
(3) is the Annuity Unit value for the immediately preceding
Valuation Period; and
(4) is a special factor designed to compensate for the assumed
investment rate of 3.5% built into the table used to compute
the first variable annuity payment.
The following illustrations show, by use of hypothetical examples, the method of
determining the Annuity Unit value and the amount of several variable annuity
payments based on one Subaccount.
<TABLE>
<CAPTION>
Illustration of Calculation of Annuity Unit Value
<S> <C>
1. Accumulation Unit value for current Valuation Period 12.56
2. Accumulation Unit value for immediately preceding Valuation Period 12.55
3. Annuity Unit value for immediately preceding Valuation Period 103.41
4. Factor to compensate for the assumed investment rate of 3.5% 0.99990575
5. Annuity Unit value of current Valuation Period ((1) / (2)) x (3) x (4) 103.48
Illustration of Variable Annuity Payments
1. Number of Accumulation Units at Annuity Date 1,000.00
2. Accumulation Unit value $18.00
3. Adjusted Contract Value (1)x(2) $18,000.00
4. First monthly annuity payment per $1,000 of adjusted Contract Value $5.63
5. First monthly annuity payment (3)x(4)1,000 $101.34
6. Annuity Unit value $98.00
7. Number of Annuity Units (5),(6) 1.034
8. Assume Annuity Unit value for second month equal to $99.70
9. Second monthly annuity payment (7)x(8) $103.09
10. Assume Annuity Unit value for third month equal to $95.30
11. Third monthly annuity payment (7)x(10) $98.54
</TABLE>
TERMINATION OF PARTICIPATION AGREEMENTS
The participation agreements pursuant to which the Funds sell their shares to
the Variable Account contain varying provisions regarding termination. The
following summarizes those provisions:
T. Rowe Price International Series, Inc.
The agreement between the Company and T. Rowe Price International Series, Inc.
(and its principal underwriter) provides for termination as it applies to any
Fund covered by the agreement: (1) by any party upon six months prior written
notice to the other parties or in the event that (subject to certain conditions)
formal proceedings are initiated against any other party by the SEC or another
regulator or in the event that any other party suffers a material adverse change
in its business, operations, financial condition or prospects or suffers
material adverse publicity, (2) by the Company upon Written Notice to the other
parties if shares of the Fund are not reasonably available to meet the
requirements of the Contracts or are not registered, issued or sold in
conformity with applicable laws or such laws preclude the use of such shares as
investment media for the Contracts, (3) by the Company upon Written Notice to
the other parties in the event that the Fund fails to meet certain Code
requirements described in the agreement, (4) by T. Rowe Price International
Series, Inc. or its principal underwriter upon 45 days written notice to the
Company, and (5) by T. Rowe Price International Series, Inc. or its principal
underwriter upon written notice to the Company in the event that the Contracts
fail to meet certain Code requirements described in the agreement.
MFS Variable Insurance Trust
The agreement between the Company and MFS Variable Insurance Trust (and its
investment adviser) provides for termination as it applies to any Fund covered
by the agreement: (1) by any party upon six months prior written notice to the
other parties, or in the event that (subject to certain conditions) formal
proceedings are initiated against any other party by the SEC or another
regulator, or (subject to certain conditions) in the event that the Company
should substitute shares of another Fund for the Fund, (2) by any party upon
written notice to the other parties in the event that any other party suffers a
material adverse change in its business, operations, financial condition or
prospects or suffers material adverse publicity, or in the event that another
party materially breaches any provision of the agreement, (3) by the Company
upon prompt written notice to the other parties if shares of the Fund are not
reasonably available to meet the requirements of the Contracts or are not
appropriate funding vehicles for the Contracts, and (4) upon assignment of the
agreement by any party unless the other parties agree in writing to the
assignment.
Oppenheimer Variable Account Funds
The agreement between the Company and Oppenheimer Variable Account Funds (and
its investment adviser) provides for termination as it applies to any Fund
covered by the agreement: (1) by any party upon six months prior written notice
to the other parties, or in the event that (subject to certain conditions)
formal proceedings are initiated against any other party, (2) by the Company
upon prompt written notice to the other parties if shares of the Fund are not
reasonably available to meet the requirements of the Contracts or are not
appropriate funding vehicles for the Contracts, and (3) by Oppenheimer Variable
Account Funds upon six months written notice if it determines an irreconcilable
material conflict cannot be remedied.
Templeton Variable Products Series Fund
Generally, the agreement between the Company and Templeton Variable Products
Series Fund (and its principal underwriter) provides for termination as it
applies to any Fund covered by the agreement: (1) by any party in its entirety
or with respect to one, some or all portfolios or any reason by sixty (60) days
advance written notice delivered to the other parties, (2) by any party upon
written notice to the other parties in the event that any other party suffers a
material adverse change in its business, operations, financial condition or
prospects or suffers material adverse publicity, or in the event that another
party materially breaches any provision of the agreement, (3) by Templeton
Variable Products Series Fund or its principal underwriter upon 45 days written
notice to the Company, and (4) upon assignment of the agreement by any party
unless the other parties agree in writing to the assignment. This is a summary
only; other provisions and conditions may apply.
LEGAL MATTERS
All matters relating to Iowa law pertaining to the Contracts, including the
validity of the Contracts and the Company's authority to issue the Contracts,
have been passed upon by Barbara L. Secor, Esquire, Assistant Vice President and
Associate General Counsel of the Company.
EXPERTS
The financial statements of the Variable Account as of December 31, 1996,
including a statement of assets and liabilities, a statement of operations, a
statement of changes in net assets, and accompanying notes, which are included
in this Statement of Additional Information and in the registration statement,
have been audited by KPMG Peat Marwick LLP, independent auditors, as set forth
in their report herein, and are included herein in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
The balance sheets of the Company as of December 31, 1996 and 1995 and the
related statements of operations, changes in capital and surplus, and cash flows
for the years ended December 31, 1996, 1995 and 1994, which are included in this
Statement of Additional Information and in the registration statement, have been
audited by KPMG Peat Marwick LLP, independent auditors, as set forth in their
report herein, and are included herein in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.
The report of KPMG Peat Marwick LLP covering the December 31, 1996, financial
statements contains an explanatory paragraph that states that the Company
prepared the financial statements using accounting practices prescribed or
permitted by the Insurance Division, Department of Commerce, of the State of
Iowa, which practices differ from generally accepted accounting principles. Also
as discussed in note 1 to the financial statements, the Company changed its
method of accounting for mortgage loan foreclosure losses in 1995.
OTHER INFORMATION
A registration statement has been filed with the SEC under the Securities Act of
1933, as amended, with respect to the Contracts discussed in this Statement of
Additional Information. Not all the information set forth in the registration
statement, amendments and exhibits thereto has been included in this Statement
of Additional Information. Statements contained in this Statement of Additional
Information concerning the content of the Contracts and other legal instruments
are intended to be summaries. For a complete statement of the terms of these
documents, reference should be made to the instruments filed with the SEC.
FINANCIAL STATEMENTS
The audited financial statements of the Variable Account as of December 31,
1996, including a statement of assets and liabilities, a statement of
operations, a statement of changes in net assets, and accompanying notes, are
included in this Statement of Additional Information.
The Company's balance sheets as of December 31, 1996 and 1995, and the related
statutory basis statements of operations, changes in capital and surplus, and
cash flows for the years ended December 31, 1996, 1995, and 1994, as well as the
Independent Auditor's Reports, which are included in this Statement of
Additional Information, should be considered only as bearing on the Company's
ability to meet its obligations under the Contracts. They should not be
considered as bearing on the investment performance of the assets held in the
Variable Account.
<PAGE>
<TABLE>
<CAPTION>
CUNA MUTUAL LIFE VARIABLE ANNUITY ACCOUNT
Statement of Assets and Liabilities
December 31, 1996
Capital
Appreciation Growth and Money
Stock Income Stock Balanced Bond Market
Assets: Subaccount Subaccount Subaccount Subaccount Subaccount
<S> <C> <C> <C> <C> <C>
Investments in Ultra Series Fund:
(note 2)
Capital Appreciation Stock Fund,
4,757,746 shares at net asset
value of $14.60 per share
(cost $61,156,372) $69,455,056 $ -- $ -- $ -- $ --
Growth and Income Stock Fund,
6,153,543 shares at net asset
value of $21.32 per share
(cost $116,294,147) -- 131,212,651 -- -- --
Balanced Fund, 6,634,711 shares
at net asset value of $15.29
per share (cost $97,730,147) -- -- 101,428,944 -- --
Bond Fund, 1,881,581 shares
at net asset value of $10.33
per share (cost $19,515,665) -- -- -- 19,430,968 --
Money Market Fund, 16,285,312
shares at net asset value of
$1.00 per share
(cost $16,285,312) -- -- -- -- 16,285,312
---------- ---------- ---------- ---------- ----------
Total assets 69,455,056 131,212,651 101,428,944 19,430,968 16,285,312
---------- ---------- ---------- ---------- ----------
Liabilities:
Accrued adverse mortality and
expense charges 11,912 22,579 17,404 3,296 2,826
Other accrued expenses 1,429 2,709 2,088 396 339
---------- ---------- ---------- ---------- ----------
Total liabilities 13,341 25,288 19,492 3,692 3,165
---------- ---------- ---------- ---------- ----------
Net assets $69,441,715 $131,187,363 $101,409,452 $19,427,276 $16,282,147
========== ========== ========== ========== ==========
Units outstanding
(note 5 and note 6) 4,495,720 8,541,383 7,783,833 1,686,539 1,492,704
========== ========== ========== ========== ==========
Net asset value per unit $15.45 $15.36 $13.03 $11.52 $10.91
========== ========== ========== ========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CUNA MUTUAL LIFE VARIABLE ANNUITY ACCOUNT
Statement of Assets and Liabilities
December 31, 1996
International World Emerging
Stock Governments Growth
Assets: Subaccount Subaccount Subaccount*
<S> <C> <C> <C>
Investments in Ultra Series Fund:
(note 2)
Investments in T. Rowe Price
International Fund, Inc.:
International Stock Portfolio,
2,632,817 shares at net asset
value of $12.64 per share
(cost $30,014,815) $33,278,810 $ -- $ --
Investments in MFSAE Variable
Insurance TrustSM:
World Governments Series,
1,131,677 shares at net asset
value of $10.58 per share
(cost $11,673,106) -- 11,973,140 --
Investments in MFSAE Variable
Insurance TrustSM:
Emerging Growth Series,
1,256,485 shares at net asset
value of $13.24 per share
(cost $16,525,193) -- -- 16,635,864
---------- ----------- -----------
Total assets 33,278,810 11,973,140 16,635,864
---------- ----------- -----------
Liabilities
Accrued adverse mortality and
expense charges 5,641 2,029 2,792
Other accrued expenses 677 244 335
---------- ----------- -----------
Total liabilities 6,318 2,273 3,127
---------- ----------- -----------
Net assets $33,272,492 $11,970,867 $16,632,737
========== =========== ===========
Units outstanding
(note 5 and note 6) 2,683,277 1,033,483 1,650,627
========== =========== ===========
Net asset value per unit $12.40 $11.58 $10.08
========== =========== ===========
See accompanying notes to financial statements.
<FN>
*The data is for the period beginning May 1, 1996 (date of initial activity).
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CUNA MUTUAL LIFE VARIABLE ANNUITY ACCOUNT
Statement of Operations
December 31, 1996
Capital
Appreciation Growth and Money
Stock Income Stock Balanced Bond Market
Investment income (loss): Subaccount Subaccount Subaccount Subaccount Subaccount
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Dividend income $2,616,414 $4,614,675 $5,018,706 $886,717 $604,948
Adverse mortality and expense
charges(note 3) (586,069) (992,029) (833,237) (162,630) (160,532)
Administrative charges (70,328) (119,043) (99,988) (19,516) (19,264)
-------- -------- -------- -------- --------
Net investment income (loss) 1,960,017 3,503,603 4,085,481 704,571 425,152
-------- -------- -------- -------- --------
Realized and unrealized gain (loss)
on investments:
Realized gain (loss) on security
transactions:
Proceeds from sale of securities 1,560,118 206,568 183,878 342,674 21,549,070
Cost of securities sold (1,375,699) (175,373) (170,464) (344,619) (21,549,070)
--------- --------- -------- -------- --------
Net realized gain (loss) on
security transactions 184,419 31,195 13,414 (1,945) --
Net change in unrealized
appreciation or depreciation
on investments 6,603,942 13,287,638 2,775,771 (263,632) --
--------- --------- -------- -------- --------
Net gain (loss) on investments 6,788,361 13,318,833 2,789,185 (265,577) --
--------- --------- -------- -------- --------
Net increase (decrease) in net
assets resulting from operations $8,748,378 $16,822,436 $6,874,666 $438,994 $425,152
========= ========= ======== ======== ========
International World Emerging
Stock Governments Growth
Investment income (loss): Subaccount Subaccount Subaccount*
---------- ---------- -----------
Dividend income $529,876 $ -- $137,706
Adverse mortality and expense
charges (note 3) (274,789) (112,193) (74,180)
Administrative charges (32,975) (13,463) (8,902)
-------- -------- --------
Net investment income (loss) 222,112 (125,656) 54,624
-------- -------- --------
Realized and unrealized gain (loss)
on investments:
Realized gain (loss) on security
transactions:
Proceeds from sale of securities 14,375 353,101 --
Cost of securities sold (13,251) (355,865) --
-------- -------- --------
Net realized gain (loss) on
security transactions 1,124 (2,764) --
Net change in unrealized
appreciation or depreciation
on investments 2,489,462 448,184 110,671
--------- --------- --------
Net gain (loss) on investments 2,490,586 445,420 110,671
--------- --------- --------
Net increase (decrease) in net
assets resulting from operations $2,712,698 $319,764 $165,295
========= ========= =========
See accompanying notes to financial statements.
<FN>
*The data is for the period beginning May 1, 1996 (date of initial activity).
</FN>
</TABLE>
<TABLE>
<CAPTION>
CUNA MUTUAL LIFE VARIABLE ANNUITY ACCOUNT
Statement of Changes in Net Assets
Years Ended December 31, 1996 and 1995
CAPITAL APPRECIATION STOCK SUBACCOUNT GROWTH AND INCOME STOCK SUBACCOUNT
Operations: 1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net investment income (loss) $1,960,017 $748,689 $3,503,603 $2,445,983
Net realized gain (loss) on
security transactions 184,419 1,478 31,195 6,948
Net change in unrealized appreciation
or depreciation on investments 6,603,942 1,856,614 13,287,638 1,848,620
---------- ---------- ---------- ----------
Change in net assets from operations 8,748,378 2,606,781 16,822,436 4,301,551
---------- ---------- ---------- ----------
Capital unit transactions (note 5):
Proceeds from sales of units 66,511,107 26,775,941 112,789,079 34,898,103
Cost of units repurchased (31,925,414) (6,523,112) (34,256,064) (9,194,950)
---------- ---------- ---------- ----------
Change in net assets from capital
unit transactions 34,585,693 20,252,829 78,533,015 25,703,153
---------- ---------- ---------- ----------
Increase (decrease) in net assets 43,334,071 22,859,610 95,355,451 30,004,704
Net assets:
Beginning of period 26,107,644 3,248,034 35,831,912 5,827,208
---------- ---------- ---------- ----------
End of period $69,441,715 $26,107,644 $131,187,363 $35,831,912
========== ========== ========== ==========
BALANCED SUBACCOUNT BOND SUBACCOUNT
Operations: 1996 1995 1996 1995
---- ---- ---- ----
Net investment income (loss) $4,085,481 $1,717,682 $704,571 $195,183
Net realized gain (loss) on
security transactions 13,414 4,302 (1,945) 3,149
Net change in unrealized appreciation
or depreciation on investments 2,775,771 1,148,835 (263,632) 216,889
---------- ---------- --------- ---------
Change in net assets from operations 6,874,666 2,870,819 438,994 415,221
---------- ---------- --------- ---------
Capital unit transactions (note 5):
Proceeds from sale of units 91,579,338 32,100,084 20,883,364 7,330,321
Cost of units repurchased (29,216,779) (9,369,392) (8,218,653) (2,685,189)
---------- ---------- ---------- ---------
Change in net assets from capital
unit transactions 62,362,559 22,730,692 12,664,711 4,645,132
---------- ---------- ---------- ---------
Increase (decrease) in net assets 69,237,225 25,601,511 13,103,705 5,060,353
Net assets:
Beginning of period 32,172,227 6,570,716 6,323,571 1,263,218
---------- ---------- ---------- ---------
End of period $101,409,452 $32,172,227 $19,427,276 $6,323,571
========== ========== ========== =========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CUNA MUTUAL LIFE VARIABLE ANNUITY ACCOUNT
Statement of Changes in Net Assets
Years Ended December 31, 1996 and 1995
MONEY MARKET SUBACCOUNT INTERNATIONAL STOCK SUBACCOUNT
Operations: 1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net investment income (loss) $425,152 $192,649 $222,112 $(80,827)
Net realized gain (loss) on
security transactions -- -- 1,124 3,124
Net change in unrealized appreciation
or depreciation on investments -- -- 2,489,462 873,668
---------- ---------- ---------- ----------
Change in net assets from operations 425,152 192,649 2,712,698 795,965
---------- ---------- ---------- ----------
Capital unit transactions (note 5):
Proceeds from sales of units 71,914,632 26,622,937 37,340,833 13,898,714
Cost of units repurchased (62,787,600) (22,701,986) (18,736,774) (6,004,541)
---------- ---------- ---------- ----------
Change in net assets from capital
unit transactions 9,127,032 3,920,951 18,604,059 7,894,173
---------- ---------- ---------- ----------
Increase (decrease) in net assets 9,552,184 4,113,600 21,316,757 8,690,138
Net assets:
Beginning of period 6,729,963 2,616,363 11,955,735 3,265,597
---------- ---------- ---------- ----------
End of period $16,282,147 $6,729,963 $33,272,492 $11,955,735
========== ========== ========== ==========
WORLD GOVERNMENTS SUBACCOUNT EMERGING GROWTH SUBACCOUNT*
Operations: 1996 1995 1996
---- ---- ----
Net investment income (loss) $(125,656) $486,265 $54,624
Net realized gain (loss) on
security transactions (2,764) 12,038 --
Net change in unrealized appreciation
or depreciation on investments 448,184 (114,274) 110,671
--------- --------- ---------
Change in net assets from operations 319,764 384,029 165,295
--------- --------- ---------
Capital unit transactions (note 5):
Proceeds from sale of units 14,413,481 7,213,831 21,632,015
Cost of units repurchased (8,476,180) (3,747,086) (5,164,573)
--------- --------- ---------
Change in net assets from capital
unit transactions 5,937,301 3,466,745 16,467,442
--------- --------- ---------
Increase (decrease) in net assets 6,257,065 3,850,774 16,632,737
Net assets:
Beginning of period 5,713,802 1,863,028 --
--------- --------- ---------
End of period $11,970,867 $5,713,802 $16,632,737
========= ========= =========
See accompanying notes to financial statements.
<FN>
*The data is for the period beginning May 1, 1996 (date of initial activity).
</FN>
</TABLE>
<PAGE>
CUNA MUTUAL LIFE VARIABLE ANNUITY ACCOUNT
Notes to Financial Statements
(1) Organization
The CUNA Mutual Life Variable Annuity Account (the Variable Account) is a
unit investment trust registered under the Investment Company Act of 1940
with the Securities and Exchange Commission. The Variable Account was
established as a separate investment account within CUNA Mutual Life
Insurance Company (the Company) formerly known as Century Life of America,
to receive and invest net premiums paid under variable annuity contracts
(Contracts).
Although the assets in the Variable Account are the property of the
Company, the assets in the Variable Account attributable to the Contracts
are not chargeable with liabilities arising out of any other business which
the Company may conduct. The assets of the Variable Account are available
to cover the general liabilities of the Company only to the extent that the
Variable Account's assets exceed its liabilities arising under the
Contracts. The Company has the right to transfer to the general account any
assets of the Variable Account which are in excess of reserves and other
contract liabilities. All obligations arising under the Contracts are
general corporate obligations of the Company.
(2) Significant Accounting Policies
Investments
The Variable Account currently is divided into eight subaccounts but may,
in the future, include additional subaccounts. Each subaccount invests
exclusively in shares of a single underlying fund. (The term fund is used
to mean an investment portfolio sometimes called a fund, i.e., Ultra Series
Fund, T. Rowe Price International Fund, Inc., MFSAE Variable Insurance
TrustSM, or any other open-end management investment company or unit
investment trust in which a subaccount invests.) The income, gains and
losses, realized or unrealized, from the assets allocated to each
subaccount are credited to or charged against that subaccount without
regard to income, gains or losses from any other subaccount.
The Variable Account invests in shares of Ultra Series Fund, T. Rowe Price
International Fund, Inc., and MFSAE Variable Insurance TrustSM. Each is a
management investment company of the series type with one or more funds.
Each is registered with the SEC as an open-end, management investment
company. Such registration does not involve supervision of the management
or investment practices or policies of the companies or their funds by the
SEC.
Ultra Series Fund currently has five funds available as investment options
under the Contracts while T. Rowe Price International Fund, Inc. has one
and MFSAE Variable Insurance TrustSM has two funds available as an
investment option under the Contracts. Ultra Series Fund and MFSAE Variable
Insurance TrustSM also have other funds that are not available under the
Contracts. All three companies may, in the future, create additional funds
that may or may not be available as investment options under the Contracts.
Each fund has its own investment objectives and the income, gains and
losses for each fund are determined separately for that fund.
CIMCO Inc. (CIMCO) serves as the Investment Adviser to the Ultra Series
Fund and manages its assets in accordance with general policies and
guidelines established by the board of trustees of the Ultra Series Fund.
The Company owns one half of CIMCO's outstanding stock and one half is
owned indirectly by CUNA Mutual Insurance Society.
Rowe Price-Fleming International, Inc. (RPFI) serves as the Investment
Adviser to the International Stock Portfolio and manages its assets in
accordance with general policies and guidelines established by the board of
directors of T. Rowe Price International Fund, Inc. RPFI was founded in
1979 as a joint venture between T. Rowe Price Associates, Inc. and Robert
Fleming Holdings Limited.
Massachusetts Financial Services Company (MFS) serves as the Investment
Adviser to the MFS World Governments Series and Emerging Growth Series and
manages its assets in accordance with general policies and guidelines
established by the board of trustees of MFSAE Variable Insurance TrustSM.
MFS is a subsidiary of Sun Life Assurance Company of Canada (U.S.) which,
in turn, is a subsidiary of Sun Life Assurance Company of Canada.
The assets of each fund are held separate from the assets of the other
funds, and each fund is offered at a price equal to its respective net
asset value per share, without sales charge. Dividends and capital gain
distributions from each fund are reinvested in that fund. Investments in
shares of the funds are stated at market value which is the net asset value
per share as determined by the funds. Realized gains and losses from
security transactions are reported on an average cost basis. Dividend
income is recorded on the ex-dividend date.
Federal Income Taxes
Currently, no charge is made against the Variable Account for any federal,
state or local taxes (other than premium taxes) that the Company incurs or
that may be attributable to the Variable Account or the Contracts. The
Company may, however, make such a charge in the future from surrender
value, death benefits or annuity payments, as appropriate. Such taxes may
include taxes (levied by any government entity) which the Company
determines to have resulted from: (1) the establishment or maintenance of
the Variable Account, (2) receipt by the Company of purchase payments, (3)
issuance of the Contracts, or (4) the payment of annuity payments.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increase and decrease in
net assets from operations during the period. Actual results could differ
from those estimates.
(3) Fees and Charges
Organization Costs
CUNA Mutual Life Insurance Company absorbed all organization expenses of
the Variable Account.
Contract Charges
Surrender Charge (Contingent Deferred Sales Charge). No charge for sales
expenses is deducted from purchase payments at the time purchase payments
are paid. However, a surrender charge is deducted upon surrender or partial
withdrawal of purchase payments within 7 years of their being paid and, in
certain circumstances, upon payment of a death benefit or the election of
certain annuity payment options.
For purchase payments withdrawn or surrendered within one year of having
been paid, the charge is 7% of the amount of the payment withdrawn or
surrendered. For each purchase payment, the surrender charge decreases by
1% for each full year that has elapsed since the payment was made. No
surrender charge is assessed upon the withdrawal or surrender of the
contract value in excess of aggregate purchase payments or on purchase
payments made more than 7 years prior to the withdrawal or surrender.
Subject to certain restrictions. for the first partial withdrawal (or
surrender) in each contract year, an amount equal to 10% of aggregate
purchase payments subject to a surrender charge (as of the time of
withdrawal or surrender) may be surrendered without a surrender charge. The
surrender charge also may be waived in certain circumstances as provided in
the Contracts.
Annual Contract Fee. On each contract anniversary (or upon surrender of the
Contract) prior to the annuity date, the Company deducts an annual contract
fee of $30 from the variable contract value. After the annuity date, the
Company deducts this fee from variable annuity payments. A pro-rated
portion of the fee is deducted upon annuitization of a Contract except on a
contract anniversary.
Transfer Fee. No charge is made for transfers, however, the Company
reserves the right to charge $10 for the 13th and each subsequent transfer
during a Contract year.
Premium Taxes. If state or other premium taxes are applicable to a
Contract, they will be deducted either: (a) from purchase payments as they
are received, (b) from contract value upon surrender or partial withdrawal,
(c) upon application of adjusted contract value to an annuity payment
option, or (d) upon payment of a death benefit. The Company, however,
reserves the right to deduct premium taxes at the time it pays such taxes.
Variable Account Charges
Mortality and Expense Risk Charge. The Company deducts a daily mortality
and expense risk charge to compensate it for assuming certain mortality and
expense risks. The charge is deducted from the assets of the Variable
Account at an annual rate of 1.25% (approximately 0.85% for mortality risk
and 0.40% for expense risks).
Asset-Based Administration Charge. The Company deducts a daily
administration charge to compensate it for certain expenses it incurs in
administration of the Contract. The charge is deducted from the assets of
the Variable Account at an annual rate of 0.15%.
(4) Investment Transactions
The cost of shares purchased, including reinvestment of dividend
distributions, during the year ended December 31, 1996, was as follows:
Capital Appreciation Stock Fund............................ $38,116,184
Growth and Income Stock Fund............................... 82,264,387
Balanced Fund.............................................. 66,647,750
Bond Fund.................................................. 13,714,928
Money Market Fund.......................................... 31,103,634
International Stock Portfolio.............................. 18,845,494
World Governments Series................................... 6,166,365
Emerging Growth............................................ 16,525,193
-----------
$273,383,935
===========
(5) Unit Activity from Contract Transactions
Transactions in units of each subaccount of the Variable Account for the
years ended December 31, 1995 and 1996, were as follows:
<TABLE>
<CAPTION>
Capital
Appreciation Growth and Money
Stock Income Stock Balanced Bond Market
Subaccount Subaccount Subaccount Subaccount Subaccount
<S> <C> <C> <C> <C> <C>
Units outstanding at December 31, 1994 324,922 593,599 664,679 127,666 257,622
Units sold 2,250,573 2,997,868 2,868,364 676,502 2,565,795
Units repurchased (550,906) (783,591) (834,994) (247,419) (2,185,506)
-------- -------- -------- -------- --------
Units outstanding at December 31, 1995 2,024,589 2,807,876 2,698,049 556,749 637,911
-------- -------- -------- -------- --------
Units sold 4,725,115 8,201,765 7,449,013 1,861,200 6,697,714
Units repurchased (2,253,984) (2,468,258) (2,363,229) (731,410) (5,842,921)
-------- -------- -------- -------- --------
Units outstanding at December 31, 1996 4,495,720 8,541,383 7,783,833 1,686,539 1,492,704
======== ======== ======== ======== ========
International World Emerging
Stock Governments Growth
Subaccount Subaccount Subaccount*
<S> <C> <C> <C>
Units outstanding at December 31, 1994 326,923 186,155 --
Units sold 1,336,544 663,603
Units repurchased (572,786) (343,768) --
-------- -------- --------
Units outstanding at December 31, 1995 1,090,681 505,990 --
-------- -------- --------
Units sold 3,189,527 1,277,826 2,162,251
Units repurchased (1,596,931) (750,333) (511,624)
-------- -------- --------
Units outstanding at December 31, 1996 2,683,277 1,033,483 1,650,627
======== ======== ========
<FN>
*The data is for the period beginning May 1, 1996 (date of initial activity).
</FN>
</TABLE>
(6) Annuitization
As of December 31, 1996, there were no annuitized contracts.
(7) Condensed Financial Information
The table below gives per unit information about the financial history of
each subaccount for each period.
<TABLE>
<CAPTION>
Capital Appreciation Growth and Income Balanced Bond
Stock Subaccount Stock Subaccount Subaccount Subaccount
Net asset value: 1996* 1995 1996* 1995 1996* 1995 1996* 1995
----- ---- ----- ---- ----- ---- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of period $12.90 $10.00 $12.76 $9.82 $11.92 $9.89 $11.36 $9.89
End of period 15.45 12.90 15.36 12.76 13.03 11.92 11.52 11.36
Percentage increase in unit
value during period 19.77% 29.0% 20.38% 29.9% 9.31% 20.5% 1.41% 14.9%
Number of units outstanding
at end of period 4,495,720 2,024,589 8,541,383 2,807,876 7,783,833 2,698,049 1,686,539 556,749
Money Market International World Governments Emerging Growth
Subaccount Stock Subaccount Subaccount Subaccount
Net asset value: 1996* 1995 1996* 1995 1996* 1995 1996**
----- ---- ----- ---- ----- ---- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Beginning of period $10.55 $10.16 $10.96 $9.99 $11.29 $10.01 $10.00
End of period 10.91 10.55 12.40 10.96 11.58 11.29 10.08
Percentage increase in unit
value during period 3.41% 3.8% 13.14% 9.7% 2.57% 12.8% 0.80%
Number of units outstanding
at end of period 1,492,704 637,911 2,683,277 1,090,681 1,033,483 505,990 1,650,627
For the Money Market Subaccount, the "seven-day average yield" for the seven
days ended December 31, 1996, was 3.3% and the "effective yield" for that period
was 3.4%.
<FN>
* 1996 data is for the year ended December 31, 1996.
**1996 data is for the eight-month period ended December 31, 1996.
</FN>
</TABLE>
<PAGE>
CUNA MUTUAL LIFE VARIABLE ANNUITY ACCOUNT
INDEPENDENT AUDITORS' REPORT
The Board of Directors
CUNA Mutual Life Insurance Company and Contract Owners of CUNA Mutual Life
Variable Annuity Account:
We have audited the statements of assets and liabilities of the Capital
Appreciation Stock Subaccount, Growth and Income Stock Subaccount, Balanced
Subaccount, Bond Subaccount, Money Market Subaccount, International Stock
Subaccount, World Governments Subaccount, and the Emerging Growth Subaccount of
the CUNA Mutual Life Variable Annuity Account as of December 31, 1996, the
related statements of operations for the year then ended; changes in net assets
and the condensed financial information for each of the years in the two-year
(eight months for Emerging Growth Subaccount) period then ended. These financial
statements and condensed financial information are the responsibility of the
Account's management. Our responsibility is to express an opinion on these
financial statements and condensed financial information 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 and condensed
financial information are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Investments owned at December 31, 1996 were verified
by audit of the statements of assets and liabilities of the underlying fund of
Ultra Series Fund and confirmation with MFS Variable Insurance Trust and T. Rowe
Price. 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 and condensed financial information
referred to above present fairly, in all material respects, the financial
position of the Capital Appreciation Stock Subaccount, Growth and Income Stock
Subaccount, Balanced Subaccount, Bond Subaccount, Money Market Subaccount,
International Stock Subaccount, World Governments Subaccount, and the Emerging
Growth Subaccount of the CUNA Mutual Life Variable Annuity Account as of
December 31, 1996, the results of their operations for the year then ended;
changes in their net assets and the condensed financial information for each of
the years in the two-year (eight months for Emerging Growth Subaccount) period
then ended, in conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Des Moines, Iowa
February 7, 1997
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
(Formerly CENTURY LIFE OF AMERICA)
Financial Statements and Supplementary Information
December 31, 1996
(With Independent Auditors' Report Thereon)
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Statutory Statements of Admitted Assets, Liabilities, and Surplus
December 31, 1996 and 1995
(In Thousands)
<TABLE>
<CAPTION>
Admitted Assets 1996 1995
--------------- ---- ----
Investments:
<S> <C> <C>
Bonds $1,652,375 1,636,574
Stocks:
Preferred 132 357
Common 33,256 43,685
Mortgage loans on real estate 405,017 428,594
Real estate 72,857 66,374
Policy loans 101,544 100,880
Other invested assets 22,255 21,721
Cash and short-term investments 33,290 15,300
--------- ---------
Total investments 2,320,726 2,313,485
Premiums receivable 11,820 10,483
Accrued investment income 33,299 33,106
Electronic data processing equipment 2,294 2,391
Due from affiliates and related parties 9,523 2,239
Federal income tax recoverable 2,865 -
Other assets 3,607 5,822
Separate accounts 645,710 296,874
--------- ---------
Total admitted assets $3,029,844 2,664,400
========= =========
Liabilities and Surplus
Liabilities:
Policy reserves:
Life insurance and annuity contracts $1,828,528 1,847,156
Accident and health insurance 11,342 10,620
Supplementary contracts without life contingencies 67,588 60,324
Policyholders' dividend accumulations 152,053 150,989
Policy and contract claims 5,868 6,223
Other policyholders' funds:
Dividends payable to policyholders 23,270 22,470
Premiums and other deposit funds 4,958 5,533
Interest maintenance reserve 2,343 1,301
Liabilities for employees' and agents' retirement plans 42,617 40,807
Amounts held for others 19,731 22,591
Due to affiliates and related parties 7,245 743
Commissions, expenses, taxes, licenses, and fees accrued 10,084 11,600
Federal income tax payable - 3,945
Separate accounts 625,414 287,915
Other liabilities 15,236 2,416
Asset valuation reserve 42,013 32,202
Loss contingency reserve for real estate 4,350 451
Loss contingency reserve for mortgage loans on real estate 3,900 845
--------- ---------
Total liabilities 2,866,540 2,508,131
--------- ---------
Surplus:
Assigned for contingencies - 1,841
Assigned for permanent guaranty fund - 400
Unassigned surplus 163,304 154,028
--------- ---------
Total surplus 163,304 156,269
Commitments and contingencies
--------- ---------
Total liabilities and surplus $3,029,844 2,664,400
========= =========
See accompanying notes to statutory financial statements.
</TABLE>
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Statutory Statements of Operations
Years Ended December 31, 1996, 1995, and 1994
(In Thousands)
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
Income:
Premiums and other considerations:
<S> <C> <C> <C>
Life and annuity $346,584 262,326 244,160
Accident and health 12,007 10,504 8,968
Supplementary contracts and dividend accumulations 46,303 48,633 50,173
Annuity and other fund deposits 51,322 22,734 21,098
Net investment income 174,573 173,355 167,545
Reinsurance commissions 9,962 18,523 21,614
Other income 3,761 7,026 7,263
------- ------- -------
Total income 644,512 543,101 520,821
------- ------- -------
Benefits and expenses:
Death benefits 33,592 31,807 28,044
Annuity benefits 39,086 39,948 33,455
Surrender benefits 143,867 101,456 103,107
Payments on supplementary contracts without life
contingencies and dividend accumulations 48,896 50,478 46,549
Other benefits to policyholders and beneficiaries 12,703 11,013 9,888
(Decrease) increase in policy reserves - life and annuity
contracts and accident and health insurance (54,954) 63,573 104,895
Increase in liabilities for supplementary contracts without life
contingencies and policyholders' dividend accumulations 8,328 5,935 9,936
Decrease in group annuity reserves (233) (7,276) (6,509)
Increase in benefit funds 4,075 4,103 4,112
Commissions 37,529 25,232 21,289
General insurance expenses, including cost of
collection in excess of loading on due and deferred
premiums and other expenses 51,004 59,633 63,556
Insurance taxes, licenses, and fees 6,199 5,585 7,366
Net transfers to separate accounts 267,145 101,369 45,469
------- ------- -------
Total benefits and expenses 597,237 492,856 471,157
------- ------- -------
Income before dividends to policyholders, federal
income taxes, and net realized capital gains (losses) 47,275 50,245 49,664
Dividends to policyholders 23,286 22,004 19,954
------- ------- -------
Income before federal income taxes and net
realized capital gains (losses) 23,989 28,241 29,710
Federal income taxes 7,713 13,321 8,660
------- ------- -------
Income before net realized capital gains (losses) 16,276 14,920 21,050
Net realized capital gains (losses), less federal income taxes
and transfers to the interest maintenance reserve 171 (567) (993)
------- ------- -------
Net income $ 16,447 14,353 20,057
======= ======= =======
See accompanying notes to statutory financial statements.
</TABLE>
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Statutory Statements of Changes in Unassigned Surplus
Years Ended December 31, 1996, 1995, and 1994
(In Thousands)
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Balance at beginning of year $154,028 141,677 128,467
------- ------- -------
Increase (decrease) in unassigned surplus:
Net income 16,447 14,353 20,057
Change in net unrealized losses (7,135) (558) (8,650)
Change in asset valuation reserve (9,811) (3,386) (1,365)
Change in nonadmitted assets 2,695 497 726
Change in surplus of separate accounts (2,071) (2,500) 1,954
Change in separate account seed money 2,232 2,593 (2,071)
Subsidiary surplus distribution 13,858 - -
Change in loss contingency reserve for real estate (3,899) - (168)
Change in voluntary mortgage loan reserve (3,055) 365 3,000
Other miscellaneous changes 15 987 (273)
------- ------- -------
Net increase in unassigned surplus 9,276 12,351 13,210
------- ------- -------
Balance at end of year $163,304 154,028 141,677
======= ======= =======
See accompanying notes to statutory financial statements.
</TABLE>
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Statutory Statements of Cash Flows
Years Ended December 31, 1996, 1995, and 1994
(In Thousands)
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
Cash from operations Premiums and other considerations:
<S> <C> <C> <C>
Life, annuity, and accident and health $408,328 294,530 273,115
Supplementary contracts and dividend accumulations 46,303 48,633 50,173
Investment income received 176,394 176,990 168,812
Reinsurance commissions 13,210 17,735 20,333
Other income 57,268 9,369 8,978
------- ------- -------
Total provided from operations 701,503 547,257 521,411
------- ------- -------
Life and accident and health claims paid 38,809 36,192 30,183
Surrender benefits paid 143,867 101,456 103,107
Other benefits to policyholders paid 95,785 96,571 86,056
Commissions, other expenses, and taxes paid,
excluding federal income taxes 89,017 92,812 89,306
Dividends to policyholders paid 22,542 21,634 22,654
Federal income taxes paid 15,804 7,145 1,318
Net transfers to separate accounts 280,523 106,508 46,934
Interest paid on defined benefit plans 4,104 4,074 6,183
Other 684 - -
------- ------- -------
Total used in operations 691,135 466,392 385,741
------- ------- -------
Net cash from operations 10,368 80,865 135,670
------- ------- -------
Cash from investments
Proceeds from investments sold, matured, or repaid:
Bonds 226,919 217,833 338,250
Stocks 29,960 22,194 16,162
Mortgage loans 52,773 38,861 34,613
Other invested assets 831 1,594 924
Net gain on cash and short-term investments - - 12
Real estate sold 700 2,315 2,476
------- ------- -------
Total investment proceeds 311,183 282,797 392,437
------- ------- -------
Cost of investments acquired:
Bonds 237,191 236,607 488,593
Stocks 26,235 22,063 18,364
Mortgage loans 31,025 67,942 47,401
Real estate 10,060 6,933 7,731
Other invested assets - 13,227 368
Other cash used 2,148 4,907 2,715
------- ------- -------
Total investments acquired 306,659 351,679 565,172
Increase in policy loans 664 398 1,308
------- ------- -------
Net cash from (used in) investments 3,860 (69,280) (174,043)
------- ------- -------
Cash from financing and miscellaneous sources
Other cash provided, net 3,762 254 2,657
------- ------- -------
Reconciliation of cash and short-term investments:
Net change in cash and short-term investments 17,990 11,839 (35,716)
Cash and short-term investments at beginning of year 15,300 3,461 39,177
------- ------- -------
Cash and short-term investments at end of year $ 33,290 15,300 3,461
======= ======= =======
See accompanying notes to statutory financial statements.
</TABLE>
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1996, 1995, and 1994
(1) Summary of Significant Accounting Policies
Company Operations
Effective December 31, 1996, Century Life of America changed its name to
CUNA Mutual Life Insurance Company (the Company). The Company offers a full
range of ordinary life and health insurance products through face-to-face
and direct response distribution systems. The Company's operations are
conducted in 49 states and the District of Columbia. The Company is subject
to regulation by the Insurance Departments of states in which it is
licensed, and undergoes periodic examinations by those departments.
On September 30, 1996, the Company sold its wholly owned subsidiary, Century
Life Insurance Company (CLIC) to an unrelated party. The sale resulted in
realized gains of $3,900,000. In anticipation of the sale, substantially all
of the assets, liabilities, and equity of CLIC were transferred to and
assumed by the Company through an assumption reinsurance agreement that was
approved in all states where the Company is licensed. Transferred to the
Company under the assumption reinsurance transaction were assets and
liabilities with fair values of $37,200,000. Prior to the sale, net assets
in the amount of $14,900,000 were distributed from CLIC to the Company,
leaving CLIC with capital and surplus of $5,200,000, the minimum required by
state law.
On December 17, 1996, the Company dissolved its wholly owned subsidiary,
Century Financial Services Corp. (CFS), by retiring 100 percent of CFS's
outstanding common stock, resulting in a realized loss of $288,000.
Basis of Presentation
The accompanying financial statements have been prepared in conformity with
accounting practices prescribed or permitted by the Insurance Division,
Department of Commerce, of the State of Iowa (statutory accounting
practices), which practices differ from generally accepted accounting
principles (GAAP). The more significant of these differences are as follows:
The costs related to acquiring business are charged to income in the
year incurred and, thus, are not amortized over the periods benefited,
whereas the premium income is recorded into earnings on a pro rata basis
over the premium-paying periods covered by the policies;
Adjustments reflecting the revaluation of investments at statement date
and equity in earnings of subsidiary companies are carried to the
statements of changes in unassigned surplus as "net unrealized gains or
losses," without providing for income taxes, or income tax reductions,
with respect to net unrealized gains or losses;
Majority owned subsidiaries are not consolidated and are carried at
their underlying book value using the equity method of accounting;
Policy reserves are based on statutory mortality and interest
requirements, without consideration for withdrawals, which may differ
from reserves based on reasonably conservative estimates of mortality,
interest, and withdrawals;
Deferred federal income taxes are not provided for unrealized gains or
losses and the temporary differences between the statutory and tax basis
of assets and liabilities;
"Nonadmitted assets" (principally, the airplane, prepaid insurance and
expenses, furniture, equipment, and certain receivables) are excluded
from the balance sheets through a direct charge to surplus;
The asset valuation reserve is recorded as a liability by a direct
charge to surplus;
The interest maintenance reserve defers recognition of interest-related
gains and losses from the disposal of investment securities and
amortizes them into income over the remaining lives of those securities;
The loss contingency reserves for real estate and mortgage loans are
recorded as liabilities by direct charges to surplus;
Effective in 1996, changes in federal income tax of prior years are
included in operations. Prior to 1996, these changes were charged or
credited to surplus;
Pension expense reflects the amount funded during the year, and
disclosures related to the pension plan are in accordance with ERISA
requirements;
Effective in 1995, write-downs of the carrying value of outstanding
mortgage loans to the fair value of the real estate acquired through
foreclosure are charged to income as realized losses;
Assets and liabilities are recorded net of ceded reinsurance balances;
and
Deposits, surrenders, and benefits on universal life and annuity
contracts are recorded in the statements of operations.
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(1) Summary of Significant Accounting Policies, Continued
Basis of Presentation, Continued
In January 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 120, "Accounting and Reporting
by Mutual Life Insurance Enterprises and by Insurance Enterprises for
Certain Long-Duration Participating Contracts." This pronouncement removes
the exemption of mutual life insurance enterprises from SFAS Statements Nos.
60, 97, and 113. Also in January 1995, the American Institute of Certified
Public Accountants issued Statement of Position (SOP) No. 95-1, "Accounting
for Certain Insurance Activities of Mutual Life Insurance Enterprises,"
which provides accounting guidance for long-duration participating life
insurance contracts. Both of the pronouncements were effective for periods
beginning after December 15, 1995. These pronouncements require mutual life
insurance companies to apply all authoritative accounting pronouncements in
preparing their financial statements if they are to be reported in
conformity with generally accepted accounting principles (GAAP). Therefore,
the financial statements of the Company prepared on the basis of statutory
accounting practices are no longer described as prepared in conformity with
GAAP. The effects of applying the provisions of these pronouncements causes
total surplus and net income to differ from amounts as reported under the
existing accounting practices. A reconciliation of net income and surplus
between amounts presented herein and amounts stated in conformity with GAAP
as of December 31 are as follows (000s omitted):
Net Income 1995 1994
---------- ---- ----
Statutory net income $14,353 20,057
CLIC dividend to CMLIC - (5,500)
------ ------
Consolidated statutory net income 14,353 14,557
Adjustments:
Non-admitted assets (1,197) (242)
Federal income taxes 6,154 1,907
Deferred policy acquisition costs 151 321
Insurance reserves (5,416) 2,590
Investments (5,435) (5,160)
Other (1,599) (5,935)
------ ------
GAAP net income $ 7,011 8,038
====== ======
Surplus 1995
Statutory surplus $156,269
Adjustments:
Non-admitted assets 15,341
Federal income taxes 24,511
Deferred policy acquisition costs 106,405
Insurance reserves (64,291)
Investments 48,359
Employee benefits (18,805)
Other (19,696)
-------
GAAP Surplus $248,093
=======
The effects of these variances on net income and surplus at December 31,
1996, although not reasonably determinable as of this date, are presumed to
be material.
Valuation of Investments
Investments are valued as prescribed by the National Association of
Insurance Commissioners (NAIC). Bonds and short-term investments are
generally carried at amortized cost, preferred stocks at cost, common stocks
of unaffiliated companies at fair value, and mortgage loans at the amount of
outstanding principal adjusted for premiums and discounts. Bonds that the
NAIC has determined are impaired in value are carried at estimated fair
value. Real estate acquired in satisfaction of debt is valued at the lower
of the carrying value of the outstanding mortgage loans or fair value of the
acquired real estate at time of foreclosure. The adjusted basis is
subsequently depreciated. Investments in limited partnerships are included
in other invested assets, and investments in unconsolidated subsidiaries are
carried at the Company's share of the underlying net equity of the
investment. Home office real estate is carried at depreciated cost.
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(1) Summary of Significant Accounting Policies, Continued
Valuation of Investments, Continued
Realized gains and losses on the sale of investments are determined on a
specific identification basis. The net unrealized gains and losses
attributable to the adjustment from book value to carrying value for all
investments, except for the equity in earnings of limited partnerships, are
reflected in surplus. Net unrealized gains for bonds and stocks [composed of
unrealized gains of $6,032,674 ($18,404,841 in 1995), reduced by unrealized
losses of $2,391,200 ($8,538,442 in 1995)] amounted to $3,641,474 at
December 31, 1996 ($9,866,399 at December 31, 1995). Effective in 1995, the
Company changed its method for recording the write-downs of outstanding
mortgage loans to fair value of the real estate acquired through foreclosure
as realized losses. Realized losses from the write-down of the carrying
amount of foreclosed mortgage loans were $937,622 in 1996 and $722,905 in
1995. Prior to 1995, the Company recorded these losses as unrealized losses
and as a direct charge to surplus. Unrealized losses related to such
write-downs were $3,751,137 in 1994. Earnings from its investments in
limited partnerships amounted to $2,527,164 during 1996 ($164,747 and
$1,051,075 in 1995 and 1994, respectively) and was credited to income.
Policy Reserves
During 1988, the Company began using the 1980 Commissioners' Standard
Ordinary (C.S.O.) Mortality Table. Prior to the adoption of the 1980 C.S.O.
table, reserves were recorded using the 1958 C.S.O. table. The 1958 C.S.O.
table is used with interest rate assumptions ranging from 2.5 percent to 5.0
percent. The 1980 C.S.O. table is used with interest rate assumptions
ranging from 3.5 percent to 5.5 percent. With respect to older policies, the
mortality table and interest assumptions vary from the American Experience
table with 3 to 4 percent interest to the 1941 C.S.O. table with 2.5 percent
interest. Approximately 23 percent of the reserves are calculated on a net
level reserve basis and 77 percent on a modified reserve basis. The effect
of the use of a modified reserve basis is to partially offset the effect of
immediately expensing acquisition costs by providing a policy reserve
increase in the first policy year which is less than the reserve increase in
renewal years. Fixed deferred annuity reserves are calculated using
continuous Commissioners' Annuity Reserve Valuation Method (CARVM) with
interest assumptions ranging from 2.5 percent to 7.0 percent.
Provision for Participating Policy Dividends
The provision for participating policy dividends is based on the board of
directors' determination and declaration of an equitable current dividend
plus a provision for such dividend expected to be paid in the following
year, rather than being provided for ratably over the premium-paying period
in accordance with dividend scales contemplated at the time the policies
were issued. Participating business comprised 100 percent of ordinary life
insurance in force and premiums received during 1996.
Asset Valuation Reserve (AVR) and Interest Maintenance Reserve (IMR)
An AVR is maintained as prescribed by the NAIC for the purpose of
stabilizing the surplus of the Company against fluctuations in the market
value of assets.
An IMR is maintained as prescribed by the NAIC for the purpose of
stabilizing the surplus of the Company against gains and losses on sales of
fixed income investments that are primarily attributable to changing
interest rates. The interest-related gains and losses are deferred and
amortized into income over the remaining lives of the securities.
Electronic Data Processing Equipment
Electronic data processing equipment is carried at cost less accumulated
depreciation of $5,628,340 and $4,751,205 at December 31, 1996 and 1995,
respectively. The equipment is being depreciated using the straight-line
method over a five-year period.
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(1) Summary of Significant Accounting Policies, Continued
Pension Costs
Pension costs relating to the Company's pension plans are computed on the
basis of accepted actuarial methods. The annual contributions are computed
according to the aggregate funding method, which produces an annual normal
cost at each valuation date. Such annual normal cost provides for spreading
the excess of the present value of future benefits over the value of the
assets of the plan as a level percentage of payroll over the remaining
period of service of active employees on the valuation date based upon the
actuarial assumptions adopted. Gains and losses which arise on each
valuation date as the result of differences between the actual experience
and that expected by the actuarial assumptions are spread over the remaining
period of service of active employees. The Company's policy is to fund
pension costs accrued.
Risks and Uncertainties
In preparing the financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the balance sheets and revenues and expenses
for the period. Actual results could differ significantly from those
estimates. The following elements of the financial statements are most
affected by the use of estimates and assumptions:
Investment valuations
Insurance reserves
The Company is subject to the risk that interest rates will change and cause
a decrease in the value of its investments. To the extent that fluctuations
in interest rates cause the duration of assets and liabilities to differ,
the Company may have to sell assets prior to their maturity and realize
losses. Interest rate exposure for the investment portfolio is managed
through asset/liability management techniques which attempt to match the
duration of the assets with the estimated duration of the liabilities. The
Company has derivative financial instruments at December 31, 1996, which are
discussed in note 2.
The Company is subject to the risk that issuers of securities owned by the
Company will default or other parties, including reinsurers which owe the
Company money, will not pay. The Company minimizes this risk by adhering to
a conservative investment strategy, by maintaining strong reinsurance and
credit and collection policies, and by providing allowances or reserves for
any amounts deemed uncollectible.
The Company is subject to the risk that the legal or regulatory environment
in which the Company operates will change and create additional costs and
expenses not anticipated by the Company in pricing its products. In other
words, regulatory initiatives designed to reduce insurer profits or new
legal theories may create costs for the insurer beyond those recorded in the
financial statements. The Company mitigates this risk by operating in a
geographically diverse area, thus reducing its exposure to any single
jurisdiction; closely monitoring the regulatory environment to anticipate
changes; and by using underwriting practices which identify and minimize the
potential adverse impact of this risk.
Disclosures About Fair Value of Financial Instruments
SFAS No. 107, "Disclosures About Fair Value of Financial Instruments,"
requires disclosure of fair value information about existing on and off
balance sheet financial instruments. In cases where quoted market prices are
not available, fair values are based on estimates using present value or
other valuation techniques. These techniques are significantly affected by
the assumptions used, including the discount rate and estimates of future
cash flows. Although fair value estimates are calculated using assumptions
that management believes are appropriate, changes in assumptions could cause
these estimates to vary materially. In that regard, the derived fair value
estimates cannot be substantiated by comparison to independent markets and,
in many cases, could not be realized in the immediate settlement of the
instruments. Certain financial instruments and all nonfinancial instruments
are excluded from disclosure requirements. Accordingly, the aggregate fair
value amounts presented do not represent the underlying value of the
Company. In addition, the tax ramifications of the related unrealized gains
and losses can have a significant effect on fair value estimates and have
not been considered in the estimates.
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(1) Summary of Significant Accounting Policies, Continued
Disclosures About Fair Value of Financial Instruments, Continued
The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:
Cash, short-term investments, accrued investment income, and policy
loans: The carrying amounts reported for these instruments approximate
their fair values because of the short-term nature of these instruments.
Bonds and stocks: Fair values for bonds are based on quoted market prices
where available. For bonds not actively traded, fair values are estimated
using values obtained from independent pricing services or, in the case
of private placements, are estimated by discounting expected future cash
flows using a current market rate applicable to the yield, credit
quality, and maturity of the investments. The fair values for
unaffiliated preferred and common stocks are based on quoted market
prices.
Derivative financial instruments: The carrying value and fair value for
these instruments is discussed in note 2.
Mortgage loans: The fair values for mortgage loans are estimated using
discounted cash flow analyses, at interest rates currently being offered
for similar loans to borrowers with similar credit ratings. Loans with
similar characteristics are aggregated for purposes of the calculations.
Fair values for mortgages in default are reported at the estimated fair
value of the underlying collateral.
Separate account assets and liabilities: The fair value of assets held in
separate accounts is based on quoted market prices. The fair value of
liabilities related to separate accounts is the amount payable on demand.
Investment contracts: The fair values of the Company's liabilities under
investment type insurance contracts are estimated using the cash
surrender value of the contracts.
The carrying and estimated fair values as of December 31 are as follows
(000s omitted):
<TABLE>
<CAPTION>
1996 1995
Carrying Estimated Carrying Estimated
value fair value value fair value
Investments:
<S> <C> <C> <C> <C>
Bonds $1,652,375 1,693,757 1,636,574 1,728,572
Preferred stocks 132 195 357 366
Common stocks of nonaffiliates 32,606 32,606 25,678 25,678
Mortgage loans on real estate 405,017 423,368 428,594 462,167
Policy loans 101,544 101,544 100,880 100,880
Short-term investments 37,595 37,595 18,256 18,256
Cash(4,305) (4,305) (2,956) (2,956)
Assets held in separate accounts 645,710 645,710 296,874 296,874
Liabilities related to separate accounts 625,414 625,414 287,915 287,915
Liabilities related to investment type
insurance contracts 1,384,744 1,439,661 1,350,109 1,417,951
======== ======== ======== ========
</TABLE>
Derivative Financial Instruments
The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. The Company enters
into derivatives, primarily interest rate swaps and caps, to reduce interest
rate exposure for long-term assets and to exchange fixed rates for floating
interest rates. See note 2 for additional information related to these
agreements.
Net interest receivable or payable on those contracts that hedge risks
associated with interest rate fluctuations are recognized in the period
incurred as an adjustment to investment income. Realized capital gains and
losses on equity swaps are recognized in the period incurred as an
adjustment to net realized capital gains and losses. Unrealized capital
gains and losses on equity swaps are charged or credited to surplus.
Interest rate cap agreements entitle the Company to receive from the
counter-parties the amounts, if any, by which the selected market interest
rates exceed the strike rates stated in the agreements. The amount paid to
purchase the interest rate caps is included in other invested assets and
amortized over the term of the agreements as an adjustment to investment
income.
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(1) Summary of Significant Accounting Policies, Continued
Separate Accounts
Separate account assets are funds of separate account contractholders and
the Company, segregated into accounts with specific investment objectives.
The assets are generally carried at fair value. An offsetting liability is
maintained to the extent of contractholders' interests in the assets.
Appreciation or depreciation of the Company's interest in the separate
accounts, including undistributed net investment income, is reflected in
policyholders' surplus. Contractholders' interests in net investment income
and realized and unrealized capital gains and losses on separate account
assets are not reflected in operations.
Reclassifications
Certain amounts previously reported in prior years' financial statements
have been reclassified to conform to the current year presentation.
(2) Investments
Bonds
The carrying value and estimated fair value of investments in bonds as of
December 31, 1996 and 1995, are as follows (000s omitted):
<TABLE>
<CAPTION>
Gross Gross
Carrying unrealized unrealized Estimated
Description value gains losses fair value
1996:
<S> <C> <C> <C> <C>
United States treasury
and government securities $ 62,930 1,331 293 63,968
States and political
subdivisions securities 56 - - 56
Foreign government securities 17,902 924 - 18,826
Corporate securities 1,130,062 40,087 6,934 1,163,215
Mortgage-backed securities 356,859 5,961 2,081 360,739
Other debt securities 84,566 2,473 86 86,953
--------- ------ ----- --------
$1,652,375 50,776 9,394 1,693,757
========= ====== ===== ========
1995:
United States treasury
and government securities $ 79,778 2,599 106 82,271
States and political
subdivisions securities 64 - - 64
Foreign government securities 20,614 1,675 - 22,289
Corporate securities 1,143,456 77,281 4,541 1,216,196
Mortgage-backed securities 332,394 11,937 210 344,121
Other debt securities 60,268 3,404 41 63,631
--------- ------ ----- --------
$1,636,574 96,896 4,898 1,728,572
========= ====== ===== ========
</TABLE>
A provision of $63,846 and $7,234,079 at December 31, 1996 and 1995,
respectively, has been provided for bonds that have been determined by the
NAIC to have an impairment in value. No further provision, except for the
asset valuation reserve, is made for possible losses resulting when
statement value exceeds estimated fair value, as the Company has the ability
and intent to hold these investments until maturity and does not expect to
realize any significant losses.
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(2) Investments, Continued
Bonds, Continued
The carrying value and estimated fair value of investments in bonds as of
December 31, 1996, are shown below by contractual maturity (000s omitted).
Expected maturities will differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or without
call or prepayment penalties.
Carrying Estimated
value fair value
Due in 1 year or less $ 110,261 111,041
Due after 1 year through 5 years 357,962 369,106
Due after 5 years through 10 years 615,744 633,119
Due after 10 years 157,416 164,612
--------- --------
1,241,383 1,277,878
Mortgage-backed securities 356,859 360,739
Other structured securities 54,133 55,140
--------- --------
$1,652,375 1,693,757
========= ========
The average duration until maturity for the above bonds, excluding
mortgage-backed securities, is 3.5 years.
Proceeds from sales, calls, redemptions, and maturities of investments in
bonds were $226,918,773, $217,833,188, and $338,250,247 during 1996, 1995,
and 1994 respectively. Gross gains of $1,509,336, $3,455,815, and $2,698,682
and gross losses of $4,702,885, $2,559,251, and $11,985,605 were realized on
those sales in 1996, 1995, and 1994, respectively. Net realized capital
gains (losses), less applicable income taxes, of $974,141, $1,412,534, and
($4,448,743) were transferred to the IMR in 1996, 1995, and 1994,
respectively.
Equity Securities
The gross unrealized gains and losses on nonaffiliated equity securities as
of December 31, 1996 and 1995, are as follows (000s omitted):
Gross Gross Estimated
unrealized unrealized fair
Cost gains losses value
1996 $29,196 5,666 2,061 32,801
1995 $23,502 3,692 1,150 26,044
Mortgage Loans on Real Estate
The Company's mortgage portfolio consists mainly of commercial mortgage
loans made to customers throughout the United States. The Company limits its
concentrations of credit risk by diversifying its mortgage loan portfolio so
that loans made in any one state are not greater than 20 percent (15 percent
in California) of the aggregate mortgage loan portfolio balance and loans of
no more than 2 percent of the aggregate mortgage loan portfolio balance are
made to any one borrower. All outstanding commercial mortgage loans are
secured by completed, income-producing properties. At December 31, 1996, the
commercial mortgage portfolio had an average remaining life of approximately
5.1 years. In addition to the asset valuation reserve provision, a loss
contingency reserve of $3,900,000 and $845,000 at December 31, 1996 and
1995, respectively, has been provided for mortgage loans on real estate.
Assets Designated
The carrying values of assets designated for regulatory authorities as of
December 31 are as follows (000s omitted):
1996 1995
---- ----
Bonds and short-term investments $1,641,398 1,636,599
Mortgage loans on real estate 405,017 428,594
Policy loans 101,544 100,880
--------- ---------
$2,147,959 2,166,073
========= =========
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(2) Investments, Continued
Net Investment Income
Components of net investment income as of December 31 are as follows (000s
omitted):
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Bonds $124,778 127,056 121,725
Preferred stocks 23 73 105
Common stocks 1,721 2,393 5,844
Short-term investments 2,222 1,447 1,214
Derivative financial instruments (360) 742 -
Mortgage loans on real estate 37,968 37,835 36,992
Real estate 11,456 10,422 10,070
Policy loans 6,513 6,392 6,276
Other invested assets 4,390 192 (541)
Other 79 85 (1,038)
------- ------- -------
Gross investment income 188,790 186,637 180,647
Less investment expenses 14,217 13,282 13,102
------- ------- -------
Net investment income $174,573 173,355 167,545
======== ======= =======
</TABLE>
Realized Gains and Losses
Net realized investment gains and losses (before taxes and transfer to
interest maintenance reserve) as of December 31 are summarized as follows
(000s omitted):
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Debt securities $ (3,194) 896 (9,287)
Equity securities 6,466 3,322 1,420
Mortgage loans on real estate (433) 76 (530)
Real estate 428 180 (223)
Short-term investments and other - - 248
Derivative financial instruments (3,068) (3,174) -
------ ------ ------
Net realized investment gains (losses) $ 199 1,300 (8,372)
====== ====== ======
</TABLE>
Derivative Financial Instruments
As of December 31, 1996, the Company had an interest rate swap agreement
with a major financial institution, having a notional amount of $100
million. Under the agreement, the Company receives interest payments at a
floating rate based on an interest rate index, which was 6.15 percent as of
December 31, 1996, and pays interest on the same notional amount at a fixed
rate, which was 6.96 percent as of December 31, 1996. Amounts exchanged as a
part of the interest rate differential are accounted for as adjustments to
investment income. This interest rate swap agreement is scheduled to
terminate in the year 2000. As of December 31, 1996, the carrying value of
the interest rate swap agreement was -0- and the fair value was
($2,170,000). This negative fair value represents the estimated amount the
Company would have to pay at December 31, 1996, to cancel the contract or
transfer it to another party.
The Company participated in a total return swap with CUMIS Insurance
Society, a wholly owned subsidiary of CUNA Mutual Investment Corporation,
for the period from January 1, 1995, through December 31, 1996. Under this
arrangement, the Company agreed to swap the total return (investment income
and realized and unrealized gains/losses) on a $19.4 million portfolio of
the Company's common stock in exchange for the return on a portfolio of the
same size of CUMIS Insurance Society's bonds. This swap was entered into in
order to minimize the Company's exposure to market risk in its common stock
portfolio. In 1996, the financial statement impact of the swap was to reduce
the Company's total return on investments by $3,299,864 ($1,641,136 in
1995). The Company recorded the following income (loss) in 1996 from this
transaction: investment income of $798,963 ($1,171,120 in 1995); realized
losses of ($3,067,966) [($3,173,747) in 1995]; and unrealized losses of
($1,030,861) (unrealized gains of $361,491 in 1995).
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(2) Investments, Continued
Derivative Financial Instruments, Continued
As of December 31, 1996, the Company had three interest rate cap agreements
with two major financial institutions, having a total notional amount of
$500,000,000. The Company paid $2,280,000 for these agreements, which
terminate in 1999. As of December 31, 1996, the carrying value of the caps
was $2,017,870. As of December 31, 1996, the fair value of the interest rate
cap agreements was $1,481,000. The fair value represents the estimated
amount the Company would receive at December 31, 1996, if it transferred the
agreements to another party.
The Company is exposed to credit losses in the event of nonperformance by
the counterparties to its interest rate swap agreements. The Company
anticipates, however, that counterparties will be able to fully satisfy
their obligations under the contracts. The Company does not obtain
collateral to support financial instruments, but monitors the credit
standing of the counterparties.
(3) Real Estate
A summary of real estate held as of December 31 is as follows (000s
omitted):
1996 1995
---- ----
Cost:
Investment real estate $91,618 80,999
Home office 15,236 15,205
-------- --------
106,854 96,204
Less accumulated depreciation 33,997 29,830
-------- --------
$72,857 66,374
======== ========
Investment real estate and the home office buildings are being depreciated
using the straight-line basis over the useful lives of these assets. In
addition to the asset valuation reserve provision, a loss contingency
reserve of $4,350,000 and $450,735 at December 31, 1996 and 1995,
respectively, has been provided for investment real estate.
(4) Affiliation and Transactions with Affiliates and Related Parties
The Company has entered into an agreement of permanent affiliation with CUNA
Mutual Insurance Society (CMIS). The agreement is not a merger or
consolidation, in that both companies remain separate corporate entities,
and both continue to be separately owned and ultimately controlled by their
respective policyholder groups, who retain their voting rights without
change. The agreement terms include a provision for a majority of the
Company's board of directors to be nominated for election by CMIS, a
provision for extensive financial reinsurance of each company's individual
life and health business, joint development of business plans and
distribution systems for the sale of individual insurance and financial
service products within the credit union market, and a provision for the
sharing of certain resources and facilities. Expenses relating to shared
resources and facilities are allocated between the companies and their
subsidiaries under a cost-sharing agreement. Expenses are allocated based on
specific identification or, if undeterminable, generally on the basis of
usage or benefit derived. These transactions give rise to intercompany
account balances which are settled at least annually. Subsequent to each
year-end, the expense allocation process is subject to review by each
company. Based on these reviews, allocated expenses to each company may be
adjusted, if determined necessary. These expenses were adjusted by
($478,504) (net of taxes of $297,656), and by $214,524 (net of taxes of
$115,513) during 1996 and 1995, respectively.
Common stock investments on December 31, 1996, include the Company's wholly
owned subsidiary, Red Fox Motor Hotel Corporation and 50 percent ownership
of CIMCO Inc. (formerly known as Century Investment Management Company). As
discussed in note 1, CLIC was sold during 1996, and Century Financial
Services Corp. was dissolved. The carrying value of the subsidiary
investments on the Company's books amounted to $650,050 and $18,007,296 at
December 31, 1996 and 1995, respectively. Included in net investment income
(see note 2) was dividend income of $1,328,364 from CLIC for the year ended
December 31, 1996 ($2,000,000 for 1995 and $5,500,000 for 1994).
Expenses are allocated by the Company to its subsidiaries. These expenses,
such as salaries, rents, depreciation, and other operating expenses,
represent the subsidiaries' share of expenses and are allocated based on
specific identification or, if undeterminable, generally on the basis of
usage or benefit derived. These transactions give rise to intercompany
account balances which are settled monthly.
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(4) Affiliation and Transactions with Affiliates and Related Parties, Continued
In 1995, the Company funded the purchase of 50 percent of CUNA Mortgage
Corporation by CUNA Mutual Investment Corporation (CMIC) by providing cash
of $13.2 million to CMIC. In return, the Company received a note with a
stated maturity date of January 15, 2011. The effective yield on the date of
the agreement was 10.62 percent. The yield will vary over the life of the
note, as both the yield and the payment stream will be determined based on
the paydown activity of an underlying notional pool of Federal National
Mortgage Association mortgages. The structure of this arrangement will
provide a hedge against the Company's bond holdings, as the return will vary
inversely with the return on the bond portfolio. The carrying value of the
note is $9.8 million at December 31, 1996, ($12.9 million at December 31,
1995) and is included in other invested assets on the statutory statements
of admitted assets, liabilities, and surplus.
The Company has entered into an agreement with CIMCO Inc., for investment
advisory services. CIMCO Inc. provides an investment program which complies
with policies, directives, and guidelines established by the Company. For
these services, the Company paid fees to CIMCO Inc. totaling $2,582,800,
$2,598,000, and $2,352,000 for 1996, 1995, and 1994, respectively.
(5) Separate Accounts
The Company has three separate account components. The first component is
used for the investment of premiums on flexible premium variable universal
life insurance policies and has nine subaccounts, which invest exclusively
in shares of a single corresponding fund. The funds consist of the
following: Capital Appreciation Stock, Growth and Income Stock, Balanced
(combination of common stock and bond), Bond, Money Market, Treasury 2000,
International Stock, World Governments, and Emerging Growth. The second
component is used for the investment of group annuity premium deposits and
has eight subaccounts, which invest in all but the Treasury 2000 fund. The
third component is used for the investment of premiums received on variable
annuity contracts and has eight subaccounts, which invest in all but the
Treasury 2000 fund.
Investments of the money market fund and money market instruments in the
other funds are stated on an amortized cost basis, which approximates fair
value. Investments other than money market instruments are stated at fair
value.
(6) Annuity Reserves and Deposit Liabilities
The withdrawal characteristics of the Company's annuity contracts and
deposit funds as of December 31 are as follows (000s omitted):
1996 1995
---- ----
Subject to discretionary withdrawal:
With market value adjustments $ 411,145 305,288
At book value, less surrender charge 634,606 807,349
At market value 379,682 118,247
At book value, no charge or adjustment 694,893 629,107
--------- ---------
2,120,326 1,859,991
Not subject to discretionary withdrawal 33,170 26,177
--------- ---------
2,153,496 1,886,168
Reinsurance ceded 475,913 477,831
--------- ---------
$1,677,583 1,408,337
========= =========
(7) Reinsurance
As a result of the permanent affiliation (see note 4), the Company and
affiliated parent, CMIS, and affiliated subsidiary, MEMBERS Life Insurance
Company (ML), began sharing through reinsurance a majority of the individual
life, annuity, and health insurance business issued by each company after
July 1, 1990. The Company ceded 35 percent of the career agency business
written July 1, 1990, until December 31, 1993, to ML. With career agency
business issued January 1, 1994, the Company began ceding 50 percent to ML.
The majority of business written through PLAN AMERICA, one of the Company's
face-to-face distribution systems, has been ceded at 50 percent to ML.
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(7) Reinsurance, Continued
Prior to January 1, 1996, the Company assumed 50 percent of CMIS's portion
of the direct business originated by a CMIS joint venture. The joint venture
agreement was terminated for business marketed after December 31, 1995.
Effective January 1, 1996, the Company assumes 50 percent of the direct
business marketed solely by CMIS. The Company follows the policy of
reinsuring that portion of risk in excess of $500,000 on the life of any
individual with unaffiliated companies. Reinsurance under this policy is
effective prior to sharing under the affiliation agreement.
The following amounts represent the deductions for reinsurance ceded to
affiliated and unaffiliated companies. The Company is liable for these
amounts in the event such companies are unable to pay their portion of the
claims (000s omitted):
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Premiums and other considerations $ 43,382 75,362 105,283
========= ========= =========
Policy reserves and claim liabilities $ 534,173 529,827 459,902
========= ========= =========
Insurance in force $1,593,020 1,375,434 1,302,561
========= ========= =========
Included in the balances above are the following amounts relating to
activity with ML (000s omitted):
1996 1995 1994
---- ---- ----
Premiums and other considerations $ 40,853 73,249 103,588
========= ========= =========
Policy reserves and claim liabilities $ 530,958 527,150 457,619
========= ========= =========
Insurance in force $1,081,201 1,066,331 986,998
========= ========= =========
Assumed reinsurance activity from CMIS and ML are as follows (000s omitted):
1996 1995 1994
---- ---- ----
Premiums and other considerations $ 30,943 25,264 20,393
========= ========= =========
Policy reserves and claim liabilities $ 24,074 17,460 12,527
========= ========= =========
Insurance in force $1,950,127 1,411,590 1,002,639
========= ========= =========
</TABLE>
The above intercompany transactions give rise to intercompany account
balances which are settled monthly.
(8) Federal Income Taxes
The Company files a consolidated life/nonlife federal income tax return with
its subsidiaries. The Company's policy is to collect from or refund to its
subsidiaries the amount of taxes applicable to its operations had it filed a
separate return. Net federal income taxes payable or recoverable reflect
balances payable to or due from subsidiaries and the Internal Revenue
Service (IRS) as follows (000s omitted):
1996 1995
---- ----
Due from subsidiaries $ - 1,461
Due from (to) IRS 2,865 (5,406)
------ ------
$2,865 (3,945)
====== ======
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(8) Federal Income Taxes, Continued
The actual federal income tax expense differs from "expected" tax expense
computed by applying the statutory federal income tax rate of 35 percent to
the earnings before federal income taxes and net realized capital gains
(losses) for the following reasons (000s omitted):
<TABLE>
<CAPTION>
1996 1995 1994
Amount Percent Amount Percent Amount Percent
<S> <C> <C> <C> <C> <C> <C>
Computed "expected" tax expense $8,396 35.0% 9,884 35.0% 10,398 35.0%
Nontaxable investment income (4,159) (17.3) (3,650) (12.9) (3,860) (12.6)
Mutual life insurance company
differential earnings adjustment 2,599 10.8 3,259 11.5 666 2.2
Nondeductible deferred acquisition costs 614 2.6 860 3.1 1,485 4.9
Change in book and tax reserves 1,400 5.8 802 2.8 1,055 3.4
Miscellaneous book/tax capital gain
adjustment - - 2,138 7.6 989 3.4
Prior year over/under accrual (1,500) (6.3) - - - -
Other, net 363 1.6 28 0.1 (2,073) (7.0)
------ ---- ------ ---- ----- ----
$7,713 32.2% 13,321 47.2% 8,660 29.3%
====== ==== ====== ==== ===== ====
</TABLE>
The Company's consolidated federal income tax returns have been examined by
the IRS through 1994. The Company has incurred no additional tax liability
in the three years ended December 31, 1996, in relation to these
examinations.
The Company has claimed the benefit of the negative differential earnings
rate (DER) through 1993. The permissibility of the negative DER is currently
the subject of litigation between the IRS and the mutual segment of the life
insurance industry. The Company has established a reserve for its potential
exposure with respect to this issue.
Income taxes on net realized capital gains (losses) amounted to ($946,308),
$455,130, and ($2,930,359) for 1996, 1995, and 1994, respectively. Of these
amounts $524,540, $760,595, and ($2,395,477) were transferred to the IMR in
1996, 1995, and 1994, respectively. Net income taxes paid were $16,000,000,
$11,700,000, and $12,300,000 in 1996, 1995, and 1994, respectively.
(9) Retirement Plans
The Company has two noncontributory defined benefit retirement plans which
cover substantially all employees and agents who meet eligibility
requirements. The defined benefit plan contracts provide that the Company
will function as the insurer. The total pension expense for 1996, 1995, and
1994 was $673,542, $1,992,599, and $2,717,207, respectively.
The actuarial present value of accumulated plan benefits and plan net
assets available for benefits for the Company's retirement plans as of
January 1, 1996 and 1995 are as follows (000s omitted):
1996 1995
---- ----
Actuarial present value of accumulated plan benefits
Vested $30,586 28,628
Nonvested 1,035 1,271
------- -------
$31,621 29,899
======= =======
Net assets available for benefits $43,659 40,081
======= =======
The discount rate used in determining the actuarial present value of
accumulated plan benefits on the two plans was 7 percent for 1996 and 1995.
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
(9) Retirement Plans, Continued
The Company provides certain medical and life insurance benefits for
retirees and their beneficiaries and covered dependents. The Company's
medical benefit plan provides subsidized coverage after retirement for
eligible full-time employees and agents, their spouses, and dependents, up
to age 65. Starting at age 65, retirees pay the full cost of their
coverage. Additionally, the Company provides group term life insurance for
its retirees, the face amount of which is based on the individual's salary
at retirement. The cost of postretirement benefits other than pensions is
recognized by the Company during the employee's active working careers. The
Company adopted this policy as of January 1, 1992, and is amortizing the
related initial impact over twenty years. Postretirement benefit costs
amounted to $989,243 in 1996 ($825,705 in 1995 and $769,590 in 1994) and
include the expected cost of such benefits for newly eligible or vested
employees, interest cost, amortization of gains and losses arising from
differences between actuarial assumptions and actual experience, and
amortization of the transition obligation. The unfunded postretirement
benefit obligation was $6,326,374 and $4,560,541 at December 31, 1996 and
1995, respectively. The accrued postretirement benefit liability at
December 31, 1996 and 1995, was $2,407,239 and $1,754,484, respectively.
The discount rate used in determining the postretirement benefit obligation
at December 31, 1996 and 1995, was 8 percent, and the initial health care
cost trend rate was 10 percent, trending down to an ultimate rate of 5.5
percent. The health care cost trend rate assumption has a significant
effect on the amounts reported. To illustrate, increasing the assumed
health care cost trend rates by one percentage point in each year would
increase the postretirement benefit obligation as of December 31, 1996, by
$566,110 and the estimated eligibility cost and interest cost components of
net periodic postretirement benefit cost for 1996 by $89,916.
The Company has two defined contribution plans (401[k] and thrift) which
cover all regular full-time employees and agents who meet certain
eligibility requirements. Under the plans, the Company contributes an
amount equal to 50 percent of the employees' contributions, up to a maximum
of 3 percent of the employees' salaries. The Company contributions were
approximately $1,141,000, $960,000, and $998,000 for the years ended
December 31, 1996, 1995, and 1994, respectively.
(10) Commitments and Contingencies
The Company participates in a securities lending program. All securities
loaned are fully collateralized with cash, U.S. government securities, or
irrevocable bank letters of credit. At December 31, 1996, the par value of
securities loaned by the Company totaled $11 million.
The Company had no assigned surplus in 1996 and $1.8 million in 1995 for
contingency reserves. Contingency reserves were designated by the Company
as special surplus funds.
The Company had outstanding loan commitments of approximately $4.2 million
at December 31, 1996.
The Company is a defendant in various legal actions arising out of the
conduct of its business. In the opinion of management and in-house legal
counsel, the ultimate liability, if any, resulting from all such pending
actions will not materially affect the financial position or results of
operations of the Company.
The Company has been sued by a party to an agreement with the Company which
terminated as of December 31, 1995. The lawsuit alleges various complaints
and seeks various remedies and damages. The suit, which was filed in March
of 1996, was settled in November 1996, having an immaterial impact on the
Company's financial position.
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Schedule I - Summary of Investments -
Other than Investments in Related Parties
December 31, 1996
<TABLE>
<CAPTION>
Amount at which
shown in the
Statutory Statement
of Admitted Assets,
Cost Value Liabilities, and Surplus
Fixed maturities:
Bonds:
<S> <C> <C> <C>
United States government and government
agencies and authorities $ 62,929,973 63,968,476 62,929,973
States, municipalities and political subdivisions 55,570 55,707 55,570
Foreign governments 17,902,160 18,826,195 17,902,160
Public utilities 1,130,062,282 1,163,215,318 1,130,062,282
All other corporate bonds 84,566,681 86,951,962 84,566,681
Mortgage-backed securities 356,858,744 360,739,372 356,858,744
------------ ------------ ------------
Total fixed maturities 1,652,375,410 1,693,757,030 1,652,375,410
============ ============ ============
Equity securities:
Common stocks:
Public utilities 2,917,037 3,000,301 3,000,301
Banks, trust, and insurance companies 1,843,560 2,408,116 2,408,116
Industrial, miscellaneous, and all other 24,302,879 27,197,961 27,197,961
Nonredeemable preferred stocks 132,269 195,000 132,269
------------ ------------ ------------
Total equity securities 29,195,745 32,801,378 32,738,647
------------ ============ ------------
Mortgage loans on real estate 405,016,700 405,016,700
Real estate 14,259,551 14,259,551
Real estate acquired in satisfaction of debt 58,597,816 58,597,816
Policy loans 101,543,942 101,543,942
Other long-term investments 22,254,357 22,254,357
Short-term investments 37,594,889 37,594,889
------------ ------------
Total investments $2,320,838,410 2,324,381,312
============ ============
</TABLE>
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Schedule III - Supplementary Insurance Information
Years Ended December 31, 1996, 1995, and 1994
<TABLE>
<CAPTION>
Future
policy Other
benefits, policy
Deferred losses, claims
policy claims and
acquisition and loss Unearned benefits Premium
Segment costs expenses premiums payable revenue
Year ended December 31, 1996:
<S> <C> <C> <C> <C> <C>
Life insurance $ - 1,911,927,116 - 5,816,767 456,216,468
========= ============ ======== ========= ===========
Year ended December 31, 1995:
Life insurance $ - 1,923,141,658 - 6,165,455 344,197,150
========= ============ ======== ========= ===========
Year ended December 31, 1994:
Life insurance $ - 1,861,749,841 - 5,193,850 324,398,752
========= ============ ======== ========= ===========
Benefits Amortization
claims of deferred
Net losses and policy Other
investment settlement acquisition operating Premium
income expenses costs expenses written
Year ended December 31, 1996:
Life insurance $174,573,265 268,333,774 - 61,758,217 -
=========== =========== ======== ========== ========
Year ended December 31, 1995:
Life insurance $173,355,504 296,934,768 - 94,552,148 -
=========== =========== ======== ========== ========
Year ended December 31, 1994:
Life insurance $167,544,704 329,365,217 - 96,322,195 -
=========== =========== ======== ========== ========
</TABLE>
<PAGE>
CUNA MUTUAL LIFE INSURANCE COMPANY
Schedule IV - Reinsurance
Years Ended December 31, 1996, 1995, and 1994
<TABLE>
<CAPTION>
Assumed Percentage
Ceded to other from other of amount
Gross amount companies companies Net amount assumed to net
Year ended December 31, 1996:
<S> <C> <C> <C> <C> <C>
Life insurance in force $11,034,287,601 1,593,020,119 1,950,126,518 11,391,394,000 17.1%
============== ============ ============ ============= ======
Premiums
Life insurance $ 369,320,913 42,927,795 20,190,933 346,584,051
Accident and health insurance 1,709,891 454,396 10,751,785 12,007,280
-------------- ------------ ------------ -------------
Total premiums $ 371,030,804 43,382,191 30,942,718 358,591,331 8.6%
============== ============ ============ ============= ======
Year ended December 31, 1995:
Life insurance in force $10,930,404,549 1,375,434,224 1,411,589,675 10,966,560,000 12.9%
============== ============ ============ ============= ======
Premiums
Life insurance $ 321,231,937 74,971,145 16,065,694 262,326,486
Accident and health insurance 1,696,238 391,181 9,198,546 10,503,603
-------------- ------------ ------------ -------------
Total premiums $ 322,928,175 75,362,326 25,264,240 272,830,089 9.3%
============== ============ ============ ============= ======
Year ended December 31, 1994:
Life insurance in force $10,720,495,714 1,302,560,973 1,002,639,259 10,420,574,000 9.6%
============== ============ ============ ============= ======
Premiums
Life insurance $ 336,480,036 105,061,586 12,741,704 244,160,154
Accident and health insurance 1,538,764 221,904 7,651,114 8,967,974
-------------- ------------ ------------ -------------
Total premiums $ 338,018,800 105,283,490 20,392,818 253,128,128 8.1%
============== ============ ============ ============= ======
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
CUNA Mutual Life Insurance Company:
We have audited the accompanying statutory statements of admitted assets,
liabilities, and surplus of CUNA Mutual Life Insurance Company (formerly Century
Life of America) as of December 31, 1996 and 1995, and the related statutory
statements of operations, changes in unassigned surplus, and cash flows for each
of the years in the three year period ended December 31, 1996. In connection
with our audits of the financial statements, we also have audited the financial
statement schedules I, III, and IV. These financial statements and financial
statement schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described more fully in note 1 to the financial statements, the Company
prepared these financial statements using accounting practices prescribed or
permitted by the Insurance Division, Department of Commerce, of the State of
Iowa, which practices differ from generally accepted accounting principles. The
effects of the variances between the statutory basis of accounting and generally
accepted accounting principles on the 1995 and 1994 financial statements are
also described in note 1. The effects of such variances on the 1996 financial
statements, although not reasonably determinable as of this date, are presumed
to be material.
In our report dated March 26, 1996, we expressed an opinion that the 1995 and
1994 financial statements, prepared using accounting practices prescribed or
permitted by the Insurance Division, Department of Commerce, of the State of
Iowa, presented fairly, in all material respects, the financial position of CUNA
Mutual Life Insurance Company as of December 31, 1995 and 1994, and the results
of its operations, and its cash flows for the three year period ended December
31, 1995, in conformity with generally accepted accounting principles. As
described in note 1 to the financial statements, pursuant to pronouncements of
the Financial Accounting Standards Board, financial statements of mutual life
insurance companies for periods before the effective date of such pronouncements
prepared using accounting practices prescribed or permitted by insurance
regulators (statutory financial statements) are not considered presentations in
conformity with generally accepted accounting principles when presented for
comparative purposes with the Company's financial statements for periods
beginning after December 15, 1995. Accordingly, our present opinion on the
presentation of the 1995 and 1994 financial statements in accordance with
generally accepted accounting principles, as presented herein, is different from
that expressed in our previous report.
In our opinion, because of the effects of the matters discussed in the third
paragraph of this report, the financial statements referred to above do not
present fairly, in conformity with generally accepted accounting principles, the
financial position of CUNA Mutual Life Insurance Company as of December 31, 1996
and 1995, or the results of its operations or its cash flows for each of the
years in the three year period ended December 31, 1996.
Also, in our opinion, the financial statements referred to above present fairly,
in all material respects, the admitted assets, liabilities and surplus of CUNA
Mutual Life Insurance Company as of December 31, 1996 and 1995, and the results
of its operations and its cash flows for each of the years in the three year
period ended December 31, 1996, on the basis of accounting described in note 1.
Also, in our opinion, the related financial statement schedules, when considered
in relation to the basic financial statements, taken as a whole, present fairly,
in all material respects, the information set forth therein.
As discussed in note 1 to the financial statements, the Company changed its
method of accounting for mortgage loan foreclosure losses in 1995.
KPMG PEAT MARWICK LLP
Des Moines, Iowa
March 26, 1997
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
All required financial statements are included in Part B.
(b) Exhibits
1. Certified resolution of the board of directors of Century Life
of America (the "Company") establishing Century Variable
Annuity Account (the "Account"). Incorporated herein by
reference to post-effective amendment number 5 to this Form
N-4 registration statement (File No. 33-73738) filed with the
Commission on April 19, 1996.
2. Not Applicable
3. (a) Distribution Agreement Between CUNA Mutual Life Insurance
Company and CUNA Brokerage Services, Inc. for Variable Annuity
Contracts dated January 1, 1997.
(b) Servicing Agreement Related to the Distribution Agreement
between CUNA Mutual Life Insurance Company and CUNA Brokerage
Services, Inc. for Variable Annuity Contracts dated January 1,
1997.
4. (a) Variable Annuity Contract.
(b) TSA Endorsement. Incorporated herein by reference to
post-effective amendment number 5 to this Form N-4
registration statement (File No. 33-73738) filed with the
Commission on April 19, 1996.
(c) State Variations.
5. (a) Variable Annuity Application.
(b) IRA Endorsement
(c) State Variations.
6.(a) Certificate of Existence of the Company. Incorporated herein
by reference to post-effective amendment number 5 to this Form
N-4 registration statement (File No. 33-73738) filed with the
Commission on April 19, 1996.
(b) Articles of Incorporation of the Company
(c) Bylaws of the Company
7. Not Applicable
8. (a) Participation Agreement between T. Rowe Price International
Series, Inc. and the Company dated April 22, 1994. Amendment
to Participation Agreement dated November 1994. Incorporated
herein by reference to post-effective amendment number 5 to
this Form N-4 registration statement (File No. 33-73738) filed
with the Commission on April 19, 1996.
(b) Participation Agreement between MFS Variable Insurance Trust
and the Company dated April 29, 1994. Amendment to
Participation Agreement dated November 1994. Amendment to
Participation Agreement effective May 1, 1996. Incorporated
herein by reference to post-effective amendment number 5 to
this Form N-4 registration statement (File No. 33-73738) filed
with the Commission on April 19, 1996.
(c) Participation Agreement between Oppenheimer and the Company.
(d) Participation Agreement between Templeton and the Company.
9. Opinion of Counsel from Barbara L. Secor, Esquire.
13. Schedules of Performance Data Computation.
14. Financial Data Schedule electronic submission (Exhibit 27)
Also, pursuant to Rule 483(b) copies of powers of attorney are filed as an
exhibit.
Item 25. Directors and Officers of the Company
Name Occupation
<TABLE>
<CAPTION>
Directors
<S> <C> <C>
James C. Barbre 1994-Present ACT Technologies, Inc.
Secretary-Treasurer
1985-1993 Self-employed consultant in carpet
manufacturing and distribution in Dalton,
Georgia
Robert W. Bream 1991-Present United Airlines Employees Credit Union
President/CEO
Wilfred F. Broxterman 1997-Present Retired
1989-1997 Hughes Aircraft Employees Federal
Credit Union
President and Chief Executive Officer
James L. Bryan 1974-Present Texins Credit Union
President/CEO
Loretta M. Burd 1987-Present Centra Federal Credit Union
President/CEO
Ralph B. Canterbury 1965-Present US
Air Airways Federal Credit Union
President
Joseph N. Cugini 1959-Present Westerly Community Credit Union
President & General Manager
James A. Halls 1990-Present Retired
1957-1989 Faegre & Benson - Attorney-at-Law
Jerald R. Hinrichs 1990-Present Hinrichs & Associates
Insurance Marketing Consultants
Owner/President
Michael B. Kitchen 1995-Present CUNA Mutual Life Insurance Company*
President and Chief Executive Officer
1992-1995 The CUMIS Group Limited
President and Chief Executive Officer
Robert T. Lynch 1996-Present Retired
1970-1996 Detroit Teachers Credit Union
Treasurer/General Manager
Omer K. Reed 1959-Present Self-employed dentist
Gerald J. Ring 1968-Present Park Towne Corporation
President
Richard C. Robertson 1959-Present Arizona State Savings & Credit Union
President
Donald F. Roby 1990-Present Retired
1986-1989 Farm and Home Savings
President and Chief Executive Officer
Rosemarie M. Shultz 1976-Present Public Employees Credit Union
President and Chief Executive Officer
Neil A. Springer 1994-Present Springer Souder & Associates, L.L.C.
Managing Director
1992-1994 Slayton International, Inc.
Senior Vice President
Farouk D.G. Wang 1987-Present University of Hawaii at Manoa
Director of Buildings and Grounds Management
Larry T. Wilson 1974-Present Coastal Federal Credit Union
President/CEO
Executive Officers
Michael S. Daubs 1973-Present CUNA Mutual Life Insurance Company*
Chief Investment Officer
CIMCO Inc.
President
Harry N. Frenchak 1991-Present CUNA Mutual Life Insurance Company*
Chief Officer, Corporate Services
John A. Gibson 1988-Present CUNA Mutual Life Insurance Company*
Chief Marketing Officer
Richard J. Keintz 1979-Present CUNA Mutual Life Insurance Company*
Chief Officer, Finance and Information Services
Michael B. Kitchen 1995-Present CUNA Mutual Life Insurance Company*
President and Chief Executive Officer
1992-1995 The CUMIS Group Limited
President and Chief Executive Officer
Kevin T. Lentz 1983-Present CUNA Mutual Life Insurance Company
Chief Operating Officer
Daniel E. Meylink, Sr. 1983-Present CUNA Mutual Life Insurance Company*
Chief Officer, Member Services
Thomas O. Olson 1988-Present CUNA Mutual Life Insurance Company*
Chief Officer, International Markets
Kevin G. Shea 1976-Present CUNA Mutual Life Insurance Company*
Chief Officer, Lending Services
John M. Waggoner 1977-Present CUNA Mutual Life Insurance Company*
Chief Legal Officer
<FN>
* CUNA Mutual Life Insurance Company entered into a permanent affiliation with
the CUNA Mutual Insurance Society on July 1, 1990. Those persons marked with
an "*" hold identical titles with CUNA Mutual Insurance Society. The most
recent position has been given for those persons who have held more than one
position with CUNA Mutual Life Insurance Company or CUNA Mutual Insurance
Society during the last five year period. Each person has business addresses
at both 2000 Heritage Way, Waverly, Iowa 50677, and 5910 Mineral Point Road,
Madison, Wisconsin 53705.
</FN>
</TABLE>
Item 26. Persons Controlled by or Under Common Control With the Depositor or
Registrant.
The registrant is a segregated asset account of the Company and is therefore
owned and controlled by the Company. The Company is a mutual life insurance
company and therefore is controlled by its contractowners. Nonetheless, various
companies and other entities are controlled by the Company and may be considered
to be under common control with the registrant or the Company. Such other
companies and entities, together with the identity of their controlling persons
(where applicable), are set forth on the following organization charts.
In addition, as described in the prospectus under the caption "CUNA Mutual Life
Insurance Company," by virtue of an Agreement of Permanent Affiliation with CUNA
Mutual Insurance Society ("CUNA Mutual"), the Company and the registrant could
be considered to be affiliated persons of CUNA Mutual. Likewise, CUNA Mutual and
its affiliates, together with the identity of their controlling persons (where
applicable), are set forth on the following organization charts.
See organization charts on following page.
<PAGE>
CUNA Mutual Life Insurance Company
ORGANIZATIONAL CHART AS OF DECEMBER 31, 1996
CUNA Mutual Life Insurance Company
An Iowa mutual life insurance company
Fiscal Year End: December 31
CUNA Mutual Life Insurance Company is the controlling company for the
following subsidiaries:
1. Red Fox Motor Hotel Corporation
An Iowa Business Act Corporation.
100% ownership by CUNA Mutual Life Insurance Company
Business: Operation of Red Fox Inn, a motel
Classes of Stock: Common only
Authorized Shares: 1,000 nonpar
Issued Shares: 242.7821
Capital Structure:
Stated capital: $242,782
Add. paid-in: $0
Ret. earn: ($14,447)
Total Equity: $257,229
Sole Shareholder: CUNA Mutual Life Insurance Company
Fiscal Year End: December 31
2. CIMCO Inc.
An Iowa Business Act Corporation
50% ownership by CUNA Mutual Life Insurance Company
50% ownership by CUNA Mutual Investment Corporation
Business: Registered Investment Advisor
Classes of Stock: Non-assessable
Authorized Shares: 500,000 nonpar
Issued Shares: 100
Capital Structure:
Stated capital: $10,000
Add. paid-in: $520,000
Ret. earn.: $435,660
Total Equity: $965,660
Equal Shareholders: CUNA Mutual Life Insurance Company &
CUNA Mutual Investment Corporation
Fiscal Year End: December 31
CIMCO Inc. is the investment adviser of:
a. The Ultra Series Fund
A Massachusetts Business Trust
Domiciled in Iowa
Business:Open-end diversified management investment
company offered through insurance contracts
Shareholders: Three separate accounts of CUNA Mutual
Life Insurance Company hold legal title for
the benefit of policyowners.
Principal Underwriter: CUNA Brokerage Services, Inc.
Fiscal Year End: December 31
3. Plan America Program, Inc.
A Maine Business Act Corporation
100% ownership by CUNA Mutual Life Insurance Company
Business:Quasi-public corporation, operating an insurance
business
Classes of Stock: Voting common only
Authorized Shares: 5,000 of $1.00 par
Issued Shares: 100
Capital Structure:
Stated capital: $500
Sole Shareholder: CUNA Mutual Life Insurance Company
Fiscal Year End: December 31
<PAGE>
CUNA Mutual Insurance Society
ORGANIZATIONAL CHART
AS OF DECEMBER 31, 1996
CUNA Mutual Insurance Society
Business: Life Health & Disability Insurance
May 20, 1935*
State of domicile: Wisconsin
CUNA Mutual Insurance Society, either directly or indirectly is the
controlling company of the following wholly-owned subsidiaries:
1. CUNA Mutual Investment Corporation
Business: Holding Company
September 15, 1972*
State of domicile: Wisconsin
CUNA Mutual Investment Corporation is the owner of the
following subsidiaries:
a. CUMIS Insurance Society, Inc.
Business: Corporate Property/Casualty
May 23, 1960*
State of domicile: Wisconsin
CUMIS Insurance Society, Inc. is the 100% owner of
the following subsidiary:
(1) Credit Union Mutual Insurance Society New
Zealand Ltd.
Business: Fidelity Bond Coverages
November 1, 1990*
State of domicile: Wisconsin
b. League General Insurance Company
Business: Individual Property/Casualty
January 1, 1983*
State of domicile: Michigan
c. CUNA Brokerage Services, Inc.
Business: Brokerage
July 19, 1985*
State of domicile: Wisconsin
d. General Agency of Texas, Inc.A Mutual
Business: Managing General Agent
August 14, 1991*
State of domicile: Texas
e. Members Life Insurance Company
Business: Credit Disability/Life/Health
February 27, 1976*
State of domicile: Wisconsin
Formerly CUMIS Life & CUDIS
f. International Commons, Inc.
Business: Special Events
January 13, 1981*
State of domicile: Wisconsin
g. CUNA Mortgage Corporation
Business: Mortgage Servicing
November 20, 1978*
State of domicile: Wisconsin
h. Investors Equity Insurance Company, Inc.
Business: Private Mortgage Insurance
April 14, 1994*
State of Domicile: California
i. CUNA Mutual Insurance Agency, Inc.
Business: Leasing/Brokerage
March 1, 1974*
State of domicile: Wisconsin
Formerly CMCI Corporation
CUNA Mutual Insurance Agency, Inc. is the 100% owner
of the following subsidiaries:
(1) CM Field Services, Inc.
Business: Serves Agency Field Staff
January 26, 1994*
State of domicile: Wisconsin
(2) CUNA Mutual Insurance Agency of Alabama, Inc.
Business: Property & Casualty Agency
May 27, 1993*
State of domicile: Alabama
(3) CUNA Mutual Insurance Agency of New Mexico, Inc.
Business:Brokerage of Corporate & Personal Lines
June 10, 1993*
State of domicile: New Mexico
(4) CUNA Mutual Insurance Agency of Hawaii, Inc.
Business: Property & Casualty Agency
June 10, 1993*
State of domicile: Hawaii
(5) CUNA Mutual Casualty Insurance Agency of
Mississippi, Inc.
Business: Property & Casualty Agency
June 24, 1993*
State of domicile: Mississippi
(6) CUNA Mutual Insurance Agency of Kentucky, Inc.
Business:Brokerage of Corporate &Personal Lines
October 5, 1994*
State of domicile: Kentucky
(7) CUNA Mutual Insurance Agency of
Massachusetts, Inc.
Business:Brokerage of Corporate &Personal Lines
January 27, 1995*
State of domicile: Massachusetts
2. C.U.I.B.S. Pty. Ltd.
Business: Brokerage
February 18, 1981*
Country of domicile: Australia
*Dates shown are dates of acquisition, control or organization.
CUNA Mutual Insurance Society, either directly or through a wholly-owned
subsidiary, has a partial ownership interest in the following:
1. C. U. Family Insurance Services, Inc./Colorado
50% ownership by CUNA Mutual Insurance Agency, Inc.
50% ownership by Colleague Services Corporation
September 1, 1981
2. C. U. Insurance Services, Inc./Oregon
50% ownership by CUNA Mutual Insurance Agency, Inc.
50% ownership by Oregon Credit Union League
December 27, 1989
3. CUFIS of New York, Inc.
50% ownership by CUNA Mutual Insurance Agency, Inc.
50% ownership by CUC Services, Inc.
March 28, 1991
4. The CUMIS Group Limited
63.4% ownership by CUNA Mutual Insurance Society (as of 12-31-96)
5. CIMCO Inc. (CIMCO)
50% ownership by CUNA Mutual Investment Corporation
50% ownership by CUNA Mutual Life Insurance Company
January 1, 1992
6. Cooperative Savings and Credit Unions Insurance Society
"Benefit" SA (Poland)
70.9% ownership by CUNA Mutual Insurance Society
15.3% ownership by CUMIS Insurance Society, Inc.
13.8% ownership by Foundation for Polish Credit Unions
September 1, 1992
7. GWARANT, Ltd.
50% ownership by CUNA Mutual Insurance Society
50% ownership by Foundation for Polish Credit Unions
February 18, 1994
8. CUNA Mutual Insurance Agency of Ohio, Inc.
1% of value owned by Michael Corcoran (CUNA Mutual Employee) subject to a
voting trust agreement, Michael B. Kitchen as Voting Trustee.
99% of value owned by CUNA Mutual Insurance Agency, Inc. Due to Ohio
regulations, CUNA Mutual Insurance Agency, Inc. holds no voting stock in
this corporation. June 14, 1993
9. SECURITY Management Company, Ltd. (Hungary)
90% ownership by CUNA Mutual Insurance Society
10% ownership by: Federation of Savings Cooperatives
Savings Cooperative of Szoreg
Savings Cooperative of Szekkutas
(collectively called Hungarian Associates)
September 5, 1992
10. CMG Mortgage Insurance Company
55% ownership by CUNA Mutual Investment Corporation 45% ownership by PMI
Mortgage Insurance Co.
April 14, 1994
Limited Liability Companies
"Sofia LTD." (Ukraine)
99.96% CUNA Mutual Insurance Society
.04% CUMIS Insurance Society, Inc.
March 6, 1996
a. `FORTRESS' (Ukraine)
80% "Sofia LTD."
19% The Ukrainian National Association of Savings and Credit
Unions
1% Service Center by UNASCU
September 25, 1996
2. CUNA Mortgage Assistance, L.L.C.
50% interest by CUNA Mortgage Corporation
50% interest by CUNA Service Group, Inc.
November 7, 1995
Stock Corporation - CUNA Mutual Group owns less than 50%
1. Cooperators Life Assurance Society Limited (Jamaica)
CUNA Mutual Insurance Society owns 122,500 shares
Jamaica Co-op Credit Union League owns 127,500 shares
(NOTE: Awaiting authority to write business)
May 10, 1990
2. CUNA Caribbean Insurance Society Limited (Trinidad and Tobago, W.I.)
47.96% ownership by CUNA Mutual Insurance Society
July 4, 1985
3. CU Interchange Group, Inc.
Owned by CUNA Mutual Investment Corporation, CUNA Service Group and
various state league organizations December 15, 1993 - CUNA Mutual
Investment Corporation purchased 100 shares stock
4. CUNA Service Group, Inc.
April 22, 1974 - CUNA Mutual Insurance Society purchased 200.71 shares
5. "Benevita LKS" (Russia)
49% CUNA Mutual Insurance Society
51% League of Credit Unions
December 7, 1995
6. Credit Union Service Corporation
Owned by CUNA Mutual Investment Corporation, Credit Union National
Association, Inc. and 18 state league organizations March 29, 1996 - CUNA
Mutual Investment Corporation purchased 1,300,000 shares of stock
Partnerships
1. PLAN AMERICA(R) Financial Services, a Wisconsin partnership
CUNA Mutual Insurance Society - 50% Partner
CUNA Mutual Life Insurance Company - 50% Partner
December 17, 1987
2. LeaSo Partners, a California partnership
CUNA Mutual Insurance Society - 50% Partner
California Credit Union League - 50% Partner
December 29, 1981
3. CM CUSO Limited Partnership, a Washington Partnership
CUMIS Insurance Society, Inc. - General Partner
Credit Unions in Washington - Limited Partners
June 14, 1993
Affiliated (Nonstock)
1. NARCUP, Inc.
August 8, 1978
2. CUNA Mutual Group Foundation, Inc.
July 5, 1967
3. CUNA Mutual Life Insurance Company
July 1, 1990
4. Aseguradora Solidaria de Colombia (formerly Seguros UCONAL Limitada)
17.2% membership by CUNA Mutual Insurance Society
July 2, 1985
<PAGE>
Item 27. Number of Contractowners
As of February 28, 1997, 8,709 persons owned non-qualified contracts
and 5,440 persons owned qualified contracts offered by Registrant.
Item 28. Indemnification.
Section 10 of the Bylaws of the Company and Article VIII, Section 4 of
the Company's charter together provide for indemnification of officers
and directors of the Company against claims and liabilities that such
officers and/or directors become subject to by reason of having served
as an officer or director of the Company or any subsidiary or affiliate
of the Company. Such indemnification covers liability for all actions
alleged to have been taken, omitted, or neglected by such officers or
directors in the line of duty as an officer or director, except
liability arising out of an officer's or a director's willful
misconduct.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
Item 29. Principal Underwriter
(a) CUNA Brokerage is the registrant's principal underwriter. CUNA
Brokerage is also the principal underwriter for certain
variable life insurance contracts issued by CUNA Mutual Life
Variable Account and principal underwriter for the Ultra
Series Fund, an underlying Fund for the Company's variable
products.
(b) Officers and Directors of CUNA Brokerage.
Name and Principal Positions and Offices
Business Address With the Underwriter
Lawrence R. Halverson* Director and President
Marc A. Krasnick* Director and Vice President
Steven A. Goldberg* Director and Secretary
Michael G. Joneson** Director and Treasurer
Gary L. Cutler* Director
Sandra K. Steffeney* Vice President
John M. Waggoner* Chief Legal Officer
Campbell D. McHugh* Compliance Officer
Brian C. Lasko** Managing Principal
Mary Houston** Operations Principal
*The principal business address of these persons is: 5910 Mineral Point Road,
Madison, Wisconsin 53705.
**The principal business address of these persons is: 2000 Heritage Way,
Waverly, Iowa 50677
(c) CUNA Brokerage Services is the only principal underwriter. The
Distribution Agreement between the Company and CUNA Brokerage Services
and the Related Servicing Agreement between the Company and CUNA
Brokerage Services specify the services provided by each party. Those
contracts have been filed as exhibits under Item 24(b)(3). The Company
pays a dealer concession of approximately six percent, as more fully
described in Schedule A of the Servicing Agreement. The total dealer's
concession for the year ended December 31, 1996, was $15,144,129. The
contracts provide that the Company performs certain functions on
behalf of the distributor. For example, the Company sends confirmation
statements to Owners and the Company maintains payroll records for the
registered representatives. Some of the dealer concession is used to
reimburse the Company for the services it performs on behalf of the
distributor.
Item 30. Location Books and Records
All of the accounts, books, records or other documents required to be
kept by Section 31(a) of the Investment Company Act of 1940 and rules
thereunder, are maintained by the Company at 2000 Heritage Way, Waverly, Iowa
50677 or at CIMCO Inc. or CUNA Mutual Group, both at 5910 Mineral Point Road,
Madison, Wisconsin 53705.
Item 31. Management Services
All management contracts are discussed in Part A or Part B of this
registration statement.
Item 32. Undertakings and Representations
(a) The registrant undertakes that it will file a post-effective
amendment to this registration statement as frequently as is
necessary to ensure that the audited financial statements in
the registration statement are never more than 16 months old
for as long as purchase payments under the Contracts offered
herein are being accepted.
(b) The registrant undertakes that it will include either (1) as
part of any application to purchase a Contract offered by the
Prospectus, a space that an applicant can check to request a
statement of additional information, or (2) a postcard or
similar written communication affixed to or included in the
Prospectus that the applicant can remove and send to the
Company for a statement of additional information.
(c) The registrant undertakes to deliver any statement of
additional information and any financial statements required
to be made available under this Form N-4 promptly upon written
or oral request to the Company at the address or phone number
listed in the Prospectus.
(d) The Company represents that in connection with its offering of
the Contracts as funding vehicles for retirement plans meeting
the requirements of Section 403(b) of the Internal Revenue
Code of 1986, it is relying on a no-action letter dated
November 28, 1988, to the American Council of Life Insurance
(Ref. No. IP-6-88) regarding Sections 22(e), 27(c)(1), and
27(d) of the Investment Company Act of 1940, and that
paragraphs numbered (1) through (4) of that letter will be
complied with.
(e) The Company represents that the fees and charges deducted
under the Contracts, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by CUNA Mutual Life Insurance
Company.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets the requirements of Securities Act
Rule 485 for effectiveness of this Registration Statement and has caused this
Registration Statement to be signed on its behalf, in the City of Madison, and
State of Wisconsin on this 18th day of April, 1997.
CUNA Mutual Life Variable Annuity Account (Registrant)
By: /s/ Michael B. Kitchen
Michael B. Kitchen
President and Chief Executive Officer
CUNA Mutual Life Insurance Company (Depositor)
By: /s/ Michael B. Kitchen
Michael B. Kitchen
President and Chief Executive Officer
<PAGE>
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES AND TITLE DATE SIGNATURES AND TITLE DATE
<S> <C> <C> <C> <C> <C>
James C. Barbre * Richard C. Robertson *
James C. Barbre, Director Richard C. Robertson, Director
Robert W. Bream * Donald F. Roby *
Robert W. Bream, Director Donald F. Roby, Director
Wilfred F. Broxterman * Rosemarie M. Shultz *
Wilfred F. Broxterman, Director Rosemarie M. Shultz, Director
James L. Bryan * Neil A. Springer *
James L. Bryan, Director Neil A. Springer, Director
Loretta M. Burd * Farouk D. G. Wang *
Loretta M. Burd, Director Farouk D. G. Wang, Director
Ralph B. Canterbury * Larry T. Wilson *
Ralph B. Canterbury, Director Larry T. Wilson, Director
Joseph N. Cugini * /s/ Linda L. Lilledahl 04/18/97
Joseph N. Cugini, Director Linda L. Lilledahl, Attorney-In-Fact
James A. Halls *
James A. Halls, Director
Jerald R. Hinrichs *
Jerald R. Hinrichs, Director
/s/ Michael B. Kitchen 04/18/97
Michael B. Kitchen, Director
Robert T. Lynch *
Robert T. Lynch, Director
Omer K. Reed *
Omer K. Reed, Director
Gerald J. Ring *
Gerald J. Ring, Director
* Pursuant to Powers of Attorney filed herewith
</TABLE>
<PAGE>
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities and on the dates indicated.
SIGNATURES AND TITLE DATE
/s/ Michael G. Joneson 04/18/97
Michael G. Joneson
Chief Accounting Officer
/s/ Richard J. Keintz 04/18/97
Richard J. Keintz
Chief Officer - Finance &
Information Service
/s/ Michael B. Kitchen 04/18/97
Michael B. Kitchen
President
<PAGE>
EXHIBIT INDEX
3.(a) Distribution Agreement Between CUNA Mutual Life Insurance Company and
CUNA Brokerage Services, Inc. for Variable Annuity Contracts dated
January 1, 1997.
(b) Servicing Agreement Related to the Distribution Agreement between CUNA
Mutual Life Insurance Company and CUNA Brokerage Services, Inc. for
Variable Annuity Contracts dated January 1, 1997.
4. (a) Variable Annuity Contract.
(c) State Variations.
5. (a) Variable Annuity Application.
(b) IRA Endorsement
(c) State Variations.
6. (b) Articles of Incorporation of the Company
(c) Bylaws of the Company
8. (c) Participation Agreement between Oppenheimer and the Company.
(d) Participation Agreement between Templeton and the Company.
9. Opinion of Counsel from Barbara L. Secor, Esquire
10. KPMG Peat Marwick LLP Consent
13. Schedules of Performance Data Computation.
14. Financial Data Schedule electronic submission (Exhibit 27)
Powers of Attorney
<PAGE>
EXHIBIT 3 (a)
DISTRIBUTION AGREEMENT
BETWEEN CUNA MUTUAL LIFE INSURANCE COMPANY AND
CUNA BROKERAGE SERVICES, INC. FOR VARIABLE ANNUITY CONTRACTS
THIS AGREEMENT is made effective the 1st day of January 1997 by and between CUNA
Mutual Life Insurance Company (CUNA Mutual Life), a mutual life insurance
company domiciled in the State of Iowa with its principal office located in
Waverly, Iowa, and CUNA Brokerage Services, Inc. (CUNA Brokerage), a registered
broker/dealer domiciled in the State of Wisconsin with its principal office
located in Madison, Wisconsin.
WHEREAS, Certain variable annuity contracts of CUNA Mutual Life require
distribution under the auspices of a registered broker/dealer; and
WHEREAS, CUNA Brokerage is a registered broker/dealer and desires to distribute
CUNA Mutual Life's variable annuity contracts;
NOW, THEREFORE, for good and valuable consideration, the parties agree as
follows:
ARTICLE 1
APPOINTMENT
1.1 CUNA Mutual Life appoints CUNA Brokerage to be the principal
underwriter and distributor for all of CUNA Mutual Life's variable
annuity contracts which require distribution under the auspices of a
registered broker/dealer.
ARTICLE 2
DUTIES OF CUNA BROKERAGE
2.1 REGISTRATION UNDER THE 1934 ACT
CUNA Brokerage is registered as a broker/dealer under the provisions of
the 1934 Act (1934 Act) and has secured and will maintain
authorizations, licenses, qualifications, and permits necessary to
perform its obligations under this agreement in those states requested
by CUNA Mutual Life.
2.2 MEMBERSHIP IN THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.
CUNA Brokerage currently holds and shall maintain a membership in the
National Association of Securities Dealers, Inc. (NASD).
2.3 RESPONSIBILITY FOR SECURITIES ACTIVITIES
CUNA Brokerage shall assume full responsibility for the securities
activities of all persons engaged directly or indirectly in the CUNA
Mutual Life operations for CUNA Mutual Life variable annuity products,
including but not limited to training, supervision, and control as
contemplated under appropriate provisions of the 1934 Act and
regulations thereunder and by the rules of the NASD. All persons
directly or indirectly involved in such variable annuity securities
activities shall be registered representatives or registered principals
of CUNA Brokerage as appropriate to their activities.
Also, each registered representative selling the product and at least
one registered principal shall be properly licensed as an insurance
agent of CUNA Mutual Life.
2.4 APPOINTMENT OF REGISTERED PERSONS AND MAINTENANCE OF PERSONNEL RECORDS
CUNA Brokerage shall have the authority and responsibility for the
appointment and registration of those persons who will be registered
representatives and registered principals. CUNA Brokerage shall direct
the maintenance of all personnel records of such persons.
2.5 MAINTENANCE OF NET CAPITAL
CUNA Brokerage shall maintain required net capital at levels which will
comply with maximum aggregate indebtedness provisions under the
provisions of the 1934 Act, any regulation thereunder, and any NASD
rules.
2.6 REQUIRED REPORTS
CUNA Brokerage shall have the responsibility for preparation and
submission of any reports or other materials required by any regulatory
authority having proper jurisdiction.
2.7 LIMITATIONS ON AUTHORITY
CUNA Brokerage is not authorized to give any information or to make any
representations concerning the variable annuity contracts other than
the statements contained in the current registration statement filed
with the Securities and Exchange Commission or such sales literature as
may be authorized by CUNA Mutual Life.
ARTICLE 3
DUTIES OF CUNA MUTUAL LIFE
3.1 MAINTENANCE OF ACCOUNTING RECORDS
CUNA Mutual Life shall maintain and hold, on behalf of and as agent for
CUNA Brokerage, those records pertaining to variable annuity contracts
required to be maintained and preserved by the 1934 Act, any
regulations thereunder, and any applicable NASD rules. All such books
and records are, and shall at all times remain, the property of CUNA
Brokerage and shall at all times be subject to inspection by duly
authorized officers, auditors, and representatives of CUNA Brokerage
and by the Securities and Exchange Commission, the NASD, and other
regulatory authorities having proper jurisdiction.
3.2 CONFIRMATION OF TRANSACTIONS
On behalf of CUNA Brokerage and acting as agent for CUNA Brokerage,
CUNA Mutual Life shall confirm all transactions required to be
confirmed in the form and manner required by the 1934 Act, any
regulations thereunder, and any NASD rules.
3.3 FURNISHING MATERIALS
CUNA Mutual Life shall furnish to CUNA Brokerage copies of
prospectuses, financial statements and other documents which CUNA
Brokerage reasonably requests for use in connection with the
solicitation, sale and distribution of CUNA Mutual Life's variable
annuity contracts.
ARTICLE 4
COMPENSATION
4.1 As compensation for services to be performed pursuant to this
agreement, CUNA Mutual Life shall pay a dealer concession to and on
behalf of CUNA Brokerage. The amount of the dealer concession and the
manner in which it will be paid is specified in Schedule A to a related
contract titled "Servicing Agreement Related to the Distribution
Agreement between CUNA Mutual Life Insurance Company and CUNA Brokerage
Services, Inc. for Variable Annuity Contracts."
ARTICLE 5
TERMINATION
5.1 This Agreement may be terminated at any time by either party upon
written notice to the other stating the date when such termination
shall be effective, provided that this Agreement may not be terminated
or modified by either party if the effect would be to put CUNA
Brokerage out of compliance with the "net-capital" requirements of the
1934 Act. Default of any kind shall not have the effect of terminating
this Agreement.
5.2 This Agreement supersedes any and all agreements previously made
between CUNA Mutual Life Insurance Company (formerly known as Century
Life of America) and CUNA Brokerage relating to the subject matter of
this Agreement and there are no understanding of agreements other than
those incorporated in this Agreement.
IN WITNESS WHEREOF, the undersigned, as duly authorized officers, have caused
this instrument to be executed, in duplicate, on behalf of their respective
companies.
CUNA MUTUAL LIFE INSURANCE COMPANY
BY: /s/ Michael B. Kitchen
Michael B. Kitchen
President and Chief Executive Officer LLL
CUNA BROKERAGE SERVICES, INC.
BY: /s/ Lawrence R. Halverson
Lawrence R. Halverson
President
<PAGE>
EXHIBIT 3(b)
SERVICING AGREEMENT RELATED TO THE DISTRIBUTION AGREEMENT BETWEEN
CUNA MUTUAL LIFE INSURANCE COMPANY AND
CUNA BROKERAGE SERVICES, INC. FOR VARIABLE ANNUITY CONTRACTS
THIS SERVICING AGREEMENT is made effective the 1st day of January 1997 by and
between CUNA Mutual Life Insurance Company (CUNA Mutual Life), a mutual life
insurance company domiciled in the State of Iowa with its principal office
located in Waverly, Iowa, and CUNA Brokerage Services, Inc. (CUNA Brokerage), a
registered broker/dealer domiciled in the State of Wisconsin with its principal
office located in Madison, Wisconsin.
WHEREAS, Certain variable annuity contracts of CUNA Mutual Life require
distribution under the auspices of a registered broker/dealer; and
WHEREAS, CUNA Brokerage is a registered broker/dealer and desires to distribute
CUNA Mutual Life's variable annuity contracts; and
WHEREAS, CUNA Mutual Life appointed CUNA Brokerage to be the principal
underwriter and distributor for all of CUNA Mutual Life's variable annuity
contracts which require distribution under the auspices of a registered
broker/dealer, under the terms of a Distribution Agreement between CUNA Mutual
Life Insurance Company and CUNA Brokerage Services, Inc. dated January 1, 1997.
WHEREAS, The Distribution Agreement provided that compensation for the services
would be specified in this Servicing Agreement;
NOW, THEREFORE, for good and valuable consideration, the parties agree as
follows:
1. Payments to and on behalf of CUNA Brokerage shall be properly reflected
on the books and records maintained on behalf of CUNA Brokerage by CUNA
Mutual Life, so as to be in compliance with applicable law and
regulation.
2. CUNA Mutual Life shall maintain payroll records (for the benefit of
CUNA Brokerage) which are consistent with its own payroll records kept
in the ordinary course of business. CUNA Mutual Life shall remit
directly to the proper taxing authorities all applicable payroll taxes
and other applicable sums to be deducted from compensation payable to
registered representatives of CUNA Brokerage. CUNA Mutual Life shall
pay such compensation and taxes out of the dealer concession described
in Schedule A.
3. Schedule A is incorporated by reference into this Servicing Agreement
for all purposes as though set out in its entirety herein. When and if
the Schedule is amended, the amendments will be incorporated by
reference into this Servicing Agreement for all purposes, provided,
however, that in the event of a conflict between the provisions
contained in the Schedule and the provisions of this Servicing
Agreement, the provisions of this Servicing Agreement shall control.
IN WITNESS WHEREOF, the parties have caused this Servicing Agreement to be
executed, in duplicate, by their respective officers duly authorized to do so.
CUNA MUTUAL LIFE INSURANCE COMPANY
BY: /s/ Michael B. Kitchen
Michael B. Kitchen
President and Chief Executive Officer LLL
CUNA BROKERAGE SERVICES, INC.
BY: /s/ Lawrence R. Halverson
Lawrence R. Halverson
President
SCHEDULE A
1. CUNA Mutual Life shall pay to and on behalf of CUNA Brokerage, from the
gross premium CUNA Mutual Life receives from MEMBERS(R) Variable
Annuity, as a dealer concession: six percent (6%) if the purchaser of
an annuity is between the ages of zero (0) and seventy (70) years, five
percent (5%) if the purchaser is between the ages of seventy-one (71)
and eighty (80) years, and three and five-tenths percent (3.5%) if the
purchaser is age eighty-one (81) or older.
2. CUNA Mutual Life shall pay to CUNA Brokerage three percent (3%) of that
dealer concession.
3. CUNA Mutual Life, on behalf of CUNA Brokerage, shall pay to registered
representatives of CUNA Brokerage the compensation specified in these
contracts:
(1) PLAN AMERICA(R) General Agents Agreement (for PLAN AMERICA I
representatives)
(2) PLAN AMERICA(R) Representative's Contract with CUNA Mutual
Life Insurance Company (for PLAN AMERICA II representatives)
(3) CUNA Mutual Life Insurance Company Career Representative's
Full Time Contract (for CUNA Mutual Career Representatives)
4. CUNA Mutual Life will use any remaining dealer concession on behalf of
CUNA Brokerage by:
o maintaining payroll records as described in paragraph 1 of
this Servicing Agreement;
o performing the services described in Article 3 of the
Distribution Agreement between CUNA Mutual Life and CUNA
Brokerage for Variable Annuity Contracts; and
o providing overhead support related to the distribution systems
specified in Section 3 of this schedule.
This Schedule A is approved, effective this 1st day of January, 1997.
CUNA MUTUAL LIFE INSURANCE COMPANY
BY: /s/ Michael B. Kitchen
Michael B. Kitchen
President and Chief Executive Officer LLL
CUNA BROKERAGE SERVICES, INC.
BY: /s/ Lawrence R. Halverson
Lawrence R. Halverson
President
<PAGE>
EXHIBIT 4(a)
FLEXIBLE PREMIUM DEFERRED
VARIABLE AND FIXED ANNUITY
Flexible Purchase Payments as described herein.
Annuity Payments starting on the Annuity Date.
Death benefit payable at death prior to the Annuity Date.
Participating.
READ YOUR CONTRACT CAREFULLY. This is a legal contract between the Owner and
CUNA Mutual Life Insurance Company, and hereafter will be referred to as the
Contract.
This Contract is issued to the Owner in consideration of the application and the
initial purchase payment. CUNA Mutual Life Insurance Company will pay the
benefits of this Contract, subject to its terms and conditions, which will never
be less than the amount required by state law.
RIGHT TO EXAMINE THIS CONTRACT. If for any reason You decide not to keep this
Contract, You may return it to Us within ten (10) days after You receive it. You
may return it to either Our Home Office or to the agent who sold it to You. We
will consider it void from the beginning and will pay a refund within 7 days of
receipt of the Contract in the Home Office. We will refund any Net Purchase
Payments allocated to the Guaranteed Interest Option; plus any Net Purchase
Payments allocated to the Variable Account adjusted to reflect investment gain
or loss from the date of allocation to the date of cancellation; plus any
applicable premium taxes which have been deducted prior to allocation. If
required by state law, We will, instead of the foregoing, refund any purchase
payments received by Us.
ANNUITY PAYMENTS AND OTHER VALUES PROVIDED BY THIS CONTRACT WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SUBACCOUNT ARE VARIABLE AND NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT. THE VARIABLE PROVISIONS ARE DESCRIBED IN SECTION 5.
THIS CONTRACT CONTAINS AN INTEREST ADJUSTMENT PROVISION. THE AMOUNT PAYABLE UPON
SURRENDER OR PARTIAL WITHDRAWAL OF THE GUARANTEED INTEREST OPTION VALUE MAY BE
ADJUSTED UPWARD OR DOWNWARD BASED ON AN INTEREST ADJUSTMENT FORMULA. SEE SECTION
7.5.
Signed for CUNA Mutual Life Insurance Company, Waverly, Iowa, on the Contract
Date.
/s/ Michael B. Kitchen /s/ Barbara L. Secor
President Secretary
Countersigned by:
Duly Licensed Resident Agent
<PAGE>
GUIDE TO CONTRACT PROVISIONS
DATA PAGE
DEFINITIONS
GENERAL
SECTION 1. THE ANNUITY CONTRACT
1.1 What is the entire Contract?
1.2 When will the Contract become incontestable?
1.3 What if the Annuitant's date of birth or sex has been misstated?
1.4 What is the annual contract fee?
1.5 What taxes may be deducted?
1.6 Will annual reports be sent?
1.7 Can We modify the Contract?
SECTION 2. OWNER AND BENEFICIARY
2.1 What are Your rights as Owner of this Contract?
2.2 How can You change the Owner or Beneficiary of this Contract?
ACCUMULATION PERIOD
SECTION 3. ACCUMULATION PERIOD DEFINED
3.1 What is the accumulation period?
SECTION 4. PURCHASE PAYMENTS
4.1 When can purchase payments be made?
4.2 Are additional purchase payments required?
4.3 How will Net Purchase Payments be allocated?
SECTION 5. VARIABLE ACCOUNT
5.1 What is the Variable Account?
5.2 Can the Variable Account be modified?
5.3 How is Your Variable Contract Value determined?
5.4 How are Accumulation Unit values determined?
SECTION 6. GUARANTEED INTEREST OPTION
6.1 What is the Guaranteed Interest Option?
6.2 How is Your Guaranteed Interest Option Value determined?
6.3 What happens when a Guarantee Period ends?
SECTION 7. TRANSFER PRIVILEGE AND WITHDRAWAL PROVISION
7.1 Can You transfer values among and between Subaccounts and Guarantee Periods?
7.2 What are the rules for a partial withdrawal of the Surrender Value?
7.3 What are the rules for a full surrender of the Contract?
7.4 When will a surrender charge be applied and how is it calculated?
7.5 When will an interest adjustment be applied and how is it calculated?
7.6 Are there any restrictions on payment of partial withdrawals or surrenders?
SECTION 8. DEATH OF OWNER AND/OR ANNUITANT AND DEATH PROVISIONS 8.1 What if the
Annuitant dies during the accumulation period? 8.2 What if any Owner dies during
the accumulation period? 8.3 What amount will be paid as a death benefit during
the accumulation period?
SECTION 9. LOANS AND DIVIDENDS
9.1 Are loans available?
9.2 Will dividends be paid?
<PAGE>
ANNUITY PERIOD
SECTION 10. ANNUITY PERIOD DEFINED
10.1 What is the annuity period?
SECTION 11. ANNUITY PAYMENTS
11.1 When will annuity payments begin?
11.2 What annuity payment options are available?
11.3 What are the requirements for choosing an annuity payment option?
11.4 How will fixed annuity payment values be determined?
11.5 How will variable annuity payment values be determined?
11.6 Can variable Annuity Units be exchanged?
SECTION 12. DEATH OF OWNER 12.1 What if You die during the annuity period?
SECTION 13. OPTION TABLES
13.1 What rates will be used to determine fixed annuity payment values for
Option 2? 13.2 What rates will be used to determine annuity payment values for
Options 3 and 4?
<PAGE>
DATA PAGE
FLEXIBLE PREMIUM DEFERRED
VARIABLE AND FIXED ANNUITY
ANNUITANT: John Doe CONTRACT NUMBER: 123456
CO-ANNUITANT: Jane Doe CONTRACT DATE: May 1, 1994
ANNUITY DATE: May 1, 2044 LIFE INCOME RATES: Type A
ANNUITY OPTION: 10 C&L LOAN AVAILABLE: No
OWNER(S): John Doe Jane Doe
INITIAL PURCHASE PAYMENT: $20,000
MINIMUM ADDITIONAL PURCHASE PAYMENT: $1,000
INTEREST ADJUSTMENT REFERENCE RATE FACTOR: -.15% for 1 year Guarantee Period
-.15% for 3 year Guarantee Period
-.15% for 5 year Guarantee Period
-.15% for 7 year Guarantee Period
.65% for 10 year Guarantee Period
CHARGES AND FEES:
Variable Account Mortality and Expense Risk Charge: 1.25% Per Yr
Variable Account Administrative Charge: .15% Per Year
Maximum Annual Contract Fee: $30
Maximum Transfer Fee: $10 after 1st 12 transfers in a Contract Year
Premium Tax Rate on the Contract Date: 0.00%
INITIAL ALLOCATION OF NET PURCHASE PAYMENTS:
VARIABLE ACCOUNT: CUNA Mutual Life Variable Account
Net Purchase
Subaccounts Fund Percentage Payment
C A Stock Ultra Series 0.00% 0.00
G & I Stock Ultra Series 0.00% 0.00
Balanced Ultra Series 15.00% $3,000.00
Bond Ultra Series 25.00% $5,000.00
Money Market Ultra Series 10.00% $2,000.00
World Govern MFS Variable Insurance Trust 0.00% 0.00
Intl Stock T. Rowe Price Intl Series, Inc. 0.00% 0.00
Emerging Gro MFS Variable Insurance Trust 0.00% 0.00
Hi Income Oppenheimer Variable Acct Funds 0.00% 0.00
Devlp Mkts Templeton Var Prod Series Funds 0.00% 0.00
GUARANTEED INTEREST OPTION:
Guarantee Current Guaranteed
Period Interest Rate
DCA 1 year
1 year 5.00% 25% $5,000.00
3 year
5 year
7 year
10 year 3.75% 25% $5,000.00
<PAGE>
DEFINITIONS
The following words are used often in this Contract. When We use these words,
this is what We mean:
Accumulation Unit. A unit of measure used to calculate Variable Contract Value.
Age. Age as of last birthday.
Annuitant. The person (or persons) whose life (or lives) determines the annuity
payment benefits payable under the Contract and whose death determines the death
benefit. No more than two Annuitants may be named. Provisions referring to the
death of an Annuitant mean the last surviving Annuitant.
Annuity Date. The date when annuity payments will begin, if the Annuitant is
still living. This date is shown on the Data Page.
Annuity Unit. A unit of measure used to calculate variable annuity payments.
Beneficiary. The person (or persons) named by the Owner to whom the proceeds
payable on the death of the Annuitant will be paid. Prior to the Annuity Date,
if no Beneficiary survives the Annuitant, You or Your estate will be the
Beneficiary.
The Code. The Internal Revenue Code of 1986, as amended.
Contract Anniversary. The same date in each Contract Year as the Contract Date.
Contract Date. The date shown on the Data Page of the Contract which is used to
determine Contract Years and Contract Anniversaries.
Contract Year. A twelve-month period beginning on the Contract Date or on a
Contract Anniversary.
Contract Value. The total amount invested under the Contract. It is the sum of
the Variable Contract Value, the Guaranteed Interest Option Value and the
balance of the Loan Account.
Due Proof of Death. Proof of death satisfactory to Us. Such proof may consist of
a certified copy of the death record, a certified copy of a court decree
reciting a finding of death, or any other proof satisfactory to Us.
Fund. Each investment portfolio (sometimes called a Series) of the Ultra Series
Fund or any other open-end management investment company or unit investment
trust in which a subaccount invests.
General Account. Our assets other than those allocated to the Variable Account
or any other separate account of CUNA Mutual Life Insurance Company.
Guarantee Amount. Any portion of Guaranteed Interest Option Value allocated to a
particular Guarantee Period with a particular expiration date (including
interest thereon).
Guarantee Period. A choice under the Guaranteed Interest Option with a specific
number of years for which We agree to credit a particular effective annual
interest rate.
Guaranteed Interest Option. An option under the Contract funded by Our General
Account. It is not part of nor dependent upon the investment performance of the
Variable Account.
Guaranteed Interest Option Value. The value of the Contract in the Guaranteed
Interest Option.
Home Office. CUNA Mutual Life Insurance Company, 2000 Heritage Way, Waverly Iowa
50677.
Loan Account. For any Contract, a portion of Our General Account to which
Variable Contract Value or Guaranteed Interest Option Value is transferred to
provide collateral for any loan taken under the Contract.
Loan Amount. The Contract Value in the Loan Account plus any loan interest
accrued on the Contract Value in the Loan Account.
Net Purchase Payment. A purchase payment less any deduction for applicable
premium taxes.
New Purchase Payment. At the time of determination, a purchase payment that We
received within the prior seven (7) years.
Non-Qualified Contract. A Contract that is not a "Qualified Contract."
Old Purchase Payment. Any purchase payment other than a New Purchase Payment.
Owner. The person (or persons) who own(s) the Contract and who is entitled to
exercise all rights and privileges provided in the Contract.
Payee. The person receiving annuity payments upon whose life payments are based.
Qualified Contract. A Contract that is issued in connection with plans that
qualify for special federal income tax treatment under Sections 401, 403(b), or
408 of the Code.
SEC. U.S. Securities and Exchange Commission.
Subaccount. A subdivision of the Variable Account, the assets of which are
invested in a corresponding Fund.
Surrender Value. The Contract Value less any applicable surrender charges,
interest adjustment, premium taxes not previously deducted, the annual contract
fee and Loan Amount.
Valuation Day. Each day on which valuation of the assets of a Subaccount is
required by applicable law.
Valuation Period. The period that starts at 3:00 p.m. central time on one
Valuation Day and ends at 3:00 p.m. on the next succeeding Valuation Day.
Variable Account. The CUNA Mutual Life Variable Annuity Account. A segregated
investment account of CUNA Mutual Life Insurance Company into which Net Purchase
Payments may be allocated.
Variable Contract Value. The value of the Contract in the Variable Account.
We, Our, Us. CUNA Mutual Life Insurance Company.
Written Notice. A signed Written Notice in a form satisfactory to Us and
received at the Home Office.
You, Your. The Owner or Owners of this Contract.
<PAGE>
GENERAL
SECTION 1. THE ANNUITY CONTRACT
1.1 WHAT IS THE ENTIRE CONTRACT?
This Contract form, the Data Page, any attached endorsements, and a copy of the
application, if attached to it, are the entire Contract between You and Us. No
one except Our President or Secretary can change or waive any of Our rights or
requirements under this Contract. Any change must be in writing.
1.2 WHEN WILL THE CONTRACT BECOME INCONTESTABLE?
This Contract is incontestable from its Contract Date. The statements contained
in the application (in the absence of fraud) are considered representations and
not warranties.
1.3 WHAT IF THE ANNUITANT'S DATE OF BIRTH OR SEX HAS BEEN MISSTATED?
If the Annuitant's date of birth has been misstated, We will adjust the payments
under this Contract, based on the correct date of birth. If the Annuitant's sex
has been misstated and the Type A life income rates apply (see the Data Page and
Section 13), We will adjust the payments under this Contract based on the
correct sex. Any underpayment will be added to the next payment. Any overpayment
will be subtracted from future payments.
1.4 WHAT IS THE ANNUAL CONTRACT FEE?
The maximum annual contract fee is shown on the Data Page. The annual contract
fee We charge will never be greater than the maximum. During the accumulation
period, the contract fee will be deducted pro-rata from Your Contract Value in
the Subaccounts and Guarantee Amounts on each Contract Anniversary. This
contract fee will also be deducted on the date of any full surrender, if not on
a Contract Anniversary. During the annuity period it will be deducted in equal
amounts from any variable annuity payments made during a Contract Year. This fee
is to reimburse Us for the expense of maintaining this Contract.
1.5 WHAT TAXES MAY BE DEDUCTED?
We will deduct applicable premium tax from Surrender Value, death benefit amount
or the amount applied to an annuity payment option. However, we reserve the
right to charge for the premium tax when it is incurred. The premium tax rate
for Your state as of the Contract Date is shown on the Data Page.
In addition, We reserve the right to deduct certain other taxes from Surrender
Value, death benefit amount or annuity payments, as appropriate. Such taxes may
include taxes levied by any government entity which we, in our sole discretion,
determine have resulted from the establishment or maintenance of the Variable
Account, or from the receipt by Us of purchase payments, or from the issuance or
termination of this Contract, or from the commencement or continuance of annuity
payments under this Contract.
1.6 WILL ANNUAL REPORTS BE SENT?
We will send You a report at least annually which provides information about
Your Contract required by any applicable law.
1.7 CAN WE MODIFY THE CONTRACT?
Upon notice to You, We may modify the Contract if:
a) necessary to permit the Contract or the Variable Account to comply with
any applicable law or regulation issued by a government agency; or
b) necessary to assure continued qualification of the Contract under the
Code or other federal or state laws relating to retirement annuities or
variable annuity contracts; or
c) necessary to reflect a change in the operation of the Variable Account;
or
d) the modification provides additional investment options.
In the event of most such modifications, the Company will make appropriate
endorsement to the Contract.
SECTION 2. OWNER AND BENEFICIARY
2.1 WHAT ARE YOUR RIGHT'S AS OWNER OF THIS CONTRACT?
The Owner has all rights, title and interest in this Contract during the
accumulation period while the Annuitant is living. You may exercise all rights
and options stated in this Contract, subject to the rights of any irrevocable
Beneficiary.
2.2 HOW CAN YOU CHANGE THE OWNER OR BENEFICIARY OF THIS CONTRACT?
You may change the Owner or Beneficiary of this Contract by Written Notice at
any time while the Annuitant is alive. The change will take effect as of the
date You signed it. We are not liable for any payment We make or action We take
before receiving any such Written Notice.
If the Owner is more than one person, the Written Notice for change must be
signed by all persons named as Owner. A request for change of Beneficiary must
also be signed by any irrevocable Beneficiary.
ACCUMULATION PERIOD
SECTION 3. ACCUMULATION PERIOD DEFINED
3.1 WHAT IS THE ACCUMULATION PERIOD?
The accumulation period is the first of two periods of Your Contract. The
accumulation period begins on the Contract Date stated on the Data Page. This
period will continue until the Annuity Date unless the Contract is terminated
before that date.
SECTION 4. PURCHASE PAYMENTS
4.1 WHEN CAN PURCHASE PAYMENTS BE MADE?
The initial purchase payment made is shown on the Data Page.
Additional purchase payments may be made to the Home Office at any time during
the accumulation period. The minimum additional purchase payment is shown on the
Data Page.
We may not accept purchase payments beyond the Contract Anniversary following
the Annuitant's 85th birthday.
4.2 ARE ADDITIONAL PURCHASE PAYMENTS REQUIRED?
Additional purchase payments after the initial purchase payment are not
required. However, We reserve the right to terminate the Contract and pay the
Contract Value to the Owner if:
a) no purchase payments have been received for two years; and
b) purchase payments total less than $2,000; and
c) the Contract Value is less than $2,000.
4.3 HOW WILL NET PURCHASE PAYMENTS BE ALLOCATED?
Net Purchase Payments will be allocated as You initially designated. Your
initial allocation percentage is shown on the Data Page. This Contract allows
You to allocate Net Purchase Payments to any available Subaccount of the
Variable Account and any available Guarantee Period of the Guaranteed Interest
Option.
However, for Contracts issued in jurisdictions where We must refund Net Purchase
Payments during the "Right to Examine Period," the portion of the initial Net
Purchase Payment allocated to the Variable Account will be allocated to the
Money Market Subaccount for twenty (20) days. After twenty (20) days, We will
reallocate the amount in the Money Market Subaccount to any other Subaccounts
You designated for the initial Net Purchase Payment. This reallocation will be
in proportion to Your initial Variable Account allocation designation.
Net Purchase Payments allocated to a Subaccount become part of the Variable
Contract Value which fluctuates according to the investment performance of the
selected Subaccount(s). Net Purchase Payments allocated to a Guarantee Period of
the Guaranteed Interest Option become part of the Guaranteed Interest Option
Value and earn interest at the rate(s) declared for the selected option(s).
You may change the allocation of subsequent Net Purchase Payments at any time,
without charge, by Written Notice. The allocation may be 100% to any available
Subaccount or Guarantee Period, or may be divided among any of the Subaccounts
or Guarantee Periods in whole percentage points totaling 100%. The minimum
allocation to any Subaccount or Guarantee Period is 5%. The minimum Net Purchase
Payment allocated to a Guarantee Period is $1,000. If you request an allocation
of less than $1,000 to a Guarantee Period, the Net Purchase Payment will
automatically be allocated to the Money Market Subaccount. Any change will be
effective at the time We receive Your Written Notice.
SECTION 5. VARIABLE ACCOUNT
5.1 WHAT IS THE VARIABLE ACCOUNT?
The Variable Account is a segregated investment account to which We allocate
certain assets and liabilities related to the Contracts and to other variable
annuity contracts. The Variable Account is registered with the SEC as a unit
investment trust under the Investment Company Act of 1940 (the "1940 Act"). We
own the assets of the Variable Account. We value the assets of the Variable
Account each Valuation Day.
That portion of the assets of the Variable Account equal to the reserves and
other contract liabilities of the contracts supported by the Variable Account
will not be charged with liabilities arising from any other business that We may
conduct. We have the right to transfer to Our General Account any assets of the
Variable Account that are in excess of such reserves and other contract
liabilities. The income, gains and losses, realized or unrealized, from the
assets allocated to the Variable Account will be credited to or charged against
the Variable Account, without regard to Our other income, gains or losses.
The Variable Account is divided into Subaccounts. The Subaccounts as of the
Contract Date are shown on the Data Page. Each Subaccount invests its assets
solely in the shares or units of designated Funds of underlying investment
companies. The Funds corresponding to the Subaccounts available as of the
Contract Date are shown on the Data Page. Net Purchase Payments allocated and
transfers to a Subaccount are invested in the Fund supporting that Subaccount.
5.2 CAN THE VARIABLE ACCOUNT BE MODIFIED?
Subject to obtaining approval or consent required by applicable law, We reserve
the right to:
a) combine the Variable Account with any of Our other separate accounts;
b) eliminate or combine any Subaccounts and transfer the assets of any
Subaccount to any other Subaccount;
c) add new Subaccounts and make such Subaccounts available to any class of
Contracts as We deem appropriate;
d) add new Funds or remove existing Funds;
e) substitute a different Fund for any existing Fund, if shares or units
of a Fund are no longer available for investment or if We determine
that investment in a Fund is no longer appropriate;
f) deregister the Variable Account under the 1940 Act if such registration
is no longer required;
g) operate the Variable Account as a management investment company under
the 1940 Act (including managing the Variable Account under the
direction of a committee) or in any other form permitted by law;
h) restrict or eliminate any voting rights of Owners or other persons
having such rights as to the Variable Account; and
i) make any other changes to the Variable Account or its operations as may
be required by the 1940 Act or other applicable law or regulations.
In the event of any such substitution or other change, We may make changes to
this and other Contracts as may be necessary or appropriate to reflect such
substitution or other changes.
5.3 HOW IS YOUR VARIABLE CONTRACT VALUE DETERMINED?
Your Variable Contract Value for any Valuation Period is the total of Your
Subaccount values. Your value for each Subaccount is equal to:
a) The number of that Subaccount's Accumulation Units credited to You;
b) multiplied by the Accumulation Unit value for that Subaccount at the
end of the Valuation Period for which the determination is being made.
5.4 HOW ARE ACCUMULATION UNIT VALUES DETERMINED?
The Accumulation Unit value for each Subaccount was arbitrarily set initially at
$10. Thereafter, the Accumulation Unit value for each Subaccount at the end of
every Valuation Period is determined by subtracting (b) from (a) and dividing
the result by (c) (i.e., (a-b)/c), where:
a) is the net result of:
1) the net assets of the Subaccount attributable to the
Accumulation Units (i.e., the aggregate value of the
underlying Fund shares held by the Subaccounts) as of the end
of such Valuation Period;
2) plus or minus the cumulative credit or charge with respect to
any taxes reserved for by Us during the Valuation Period which
We determine to be attributable to the operation of the
Subaccount.
b) is the cumulative unpaid charge for the Mortality and Expense Risk
Charge and Administrative Expense Charge. The charge for a Valuation
Period is equal to the daily charge for the Mortality and Expense Risk
Charge and Administrative Expense Charge multiplied by the number of
days in the Valuation Period.
c) is the number of Accumulation Units outstanding at the end of such
Valuation Period.
For each Subaccount, Net Purchase Payments or transferred amounts are converted
into Accumulation Units. The number of Accumulation Units credited is determined
by dividing the dollar amount directed to each Subaccount by the value of the
Accumulation Unit for that Subaccount at the end of the Valuation Period in
which the Net Purchase Payment or amount is received.
Surrenders, partial withdrawals or transfers from a Subaccount will result in
the cancellation of the appropriate number of Accumulation Units of that
Subaccount. The following events will also result in the cancellation of an
appropriate number of Accumulation Units of a Subaccount:
a) payment of the death benefit;
b) the Annuity Date;
c) the deduction of the annual contract fee; and
d) imposition of any transfer charge.
Accumulation Units will be cancelled as of the end of the Valuation Period in
which We receive notice of or instructions regarding the event.
SECTION 6. GUARANTEED INTEREST OPTION
6.1 WHAT IS THE GUARANTEED INTEREST OPTION?
The Guaranteed Interest Option is an allocation option supported by assets in
Our General Account. The Guaranteed Interest Option does not depend on the
investment performance of the Variable Account. Subject to applicable law, We
have sole discretion over the investment of assets supporting the Guaranteed
Interest Option.
You may allocate Net Purchase Payments or transfer amounts to one or more of the
Guarantee Periods that We make available. However, transfers will not be allowed
to the DCA one year Guarantee Period. The minimum Net Purchase Payment or
transfer amount to a Guarantee Period is $1,000. The Guarantee Period selected
will determine the guaranteed interest rate. A Guarantee Period will begin on
the date the Net Purchase Payment or transfer amount is applied and will end
when the number of years in the Guarantee Period selected has elapsed. The last
day of a Guarantee Period is the expiration date.
6.2 HOW IS YOUR GUARANTEED INTEREST OPTION VALUE DETERMINED?
Your Guaranteed Interest Option Value at any time is the sum of all Guarantee
Amounts. Each Guarantee Amount is equal to:
a) the amount initially allocated or transferred to a Guarantee Period
with a specified expiration date; plus the interest subsequently
earned;
b) less any prior withdrawal or amount borrowed;
c) less any amounts transferred to any Subaccount or Guarantee Period.
As a result of any additional purchase payments or transfer of any portion of
Your Contract Value, Guarantee Amounts allocated to Guarantee Periods of the
same duration may have different expiration dates. Each Guarantee Amount will be
treated separately for purposes of determining any interest adjustment described
in Section 7.5. An interest adjustment is not applicable to any Guarantee Amount
allocated to the DCA one year Guarantee Period.
We will periodically establish an applicable guaranteed interest rate for each
Guarantee Period made available. Once an interest rate is declared for a
Guarantee Amount, it is guaranteed for the duration of the Guarantee Period. The
guaranteed effective annual interest rate(s) will never be less than 3%.
6.3 WHAT HAPPENS WHEN A GUARANTEE PERIOD ENDS?
The DCA one year Guarantee Period. Any remaining Guarantee Amount will be
transferred to the Money Market Subaccount. Alternatively, any remaining
Guarantee Amount may be transferred as You have previously designated. Transfers
are not allowed to the DCA one year Guarantee Period.
All other Guarantee Periods. We will notify You prior to the expiration date for
the Guarantee Amount. You may exercise one of the following options by Written
Notice at any time during the thirty (30) day time period prior to the
expiration date:
a) You may transfer the Guarantee Amount to any available Guarantee Period
at the current guaranteed interest rate. You may only choose Guarantee
Periods other than the DCA one year Guarantee Period. The Guarantee
Period selected cannot extend past the Annuity Date.
b) You may transfer the Guarantee Amount to any available Subaccount.
c) If there is less than one (1) year to the Annuity Date, You may continue
to accumulate interest on the Guarantee Amount at the current guaranteed
interest rate available for the one year Guarantee Period.
If We are not notified during the thirty (30) day time period prior to the
expiration date, a new Guarantee Period will begin automatically on the day
following the expiration date. The new Guarantee Period will be the same
duration as the previous Guarantee Period. If the new Guarantee Period would
extend beyond the Annuity Date, it will automatically be the longest duration
that does not extend beyond the Annuity Date. If there is less than one (1) year
to the Annuity Date, We will continue to credit interest at the current
guaranteed interest rate available for the one year Guarantee Period.
SECTION 7. TRANSFER PRIVILEGE AND WITHDRAWAL PROVISION
7.1 CAN YOU TRANSFER VALUES AMONG AND BETWEEN SUBACCOUNTS AND GUARANTEE PERIODS?
Your Variable Contract Value may be transferred among the Subaccounts or to an
available Guarantee Period other than the DCA one year Guarantee Period.
Transfers from the DCA one year Guarantee Period are allowed at any time prior
to the expiration date of that Guarantee Period. Transfers from any other
Guarantee Period will be allowed only during the thirty (30) day period prior to
the expiration date of that Guarantee Period. Transfers are subject to the
following:
a) the transfer request must be by Written Notice;
b) the transfer request must be received in Our Home Office prior to the
Annuity Date;
c) the amount transferred to a Guarantee Period must be at least $1,000,
or it will be transferred automatically to the Money Market Subaccount;
d) the transfer is to a Subaccount or Guarantee Period other than the DCA
one year Guarantee Period; and
e) the deduction of any transfer fees that We may impose.
You may make 12 transfers per Contract Year without charge. Each transfer after
the 12th transfer will be assessed a $10 transfer fee. The transfer fee, if any,
will be deducted from the Subaccount(s) or Guarantee Period(s) from which the
transfer is made. If a transfer is made from more than one Subaccount or
Guarantee Period at the same time, the transfer fee will be deducted pro-rata
from the remaining Variable Contract Value in such Subaccount(s) or from the
remaining Guarantee Amount for such Guarantee Period(s). We reserve the right to
waive the transfer fees and to modify or eliminate the transfer privilege.
7.2 WHAT ARE THE RULES FOR A PARTIAL WITHDRAWAL OF THE SURRENDER VALUE?
You have the right to make up to two partial withdrawals per Contract Year
during the accumulation period by Written Notice. You must specify the
Subaccount(s) or Guarantee Amount(s) from which the partial withdrawal is to be
made.
We will pay You the amount You request in connection with a partial withdrawal
by cancelling Accumulation Units from appropriate Subaccounts and/or reducing
appropriate Guarantee Amounts. Partial withdrawals generally will be effective
as of the date We receive Written Notice.
Any applicable interest adjustment will affect the amount available for
withdrawal from a Guarantee Amount. If, at the time a partial withdrawal is
requested from a Guarantee Amount, the Guarantee Amount would be insufficient to
permit the deduction of an interest adjustment, then We will not permit the
partial withdrawal.
Any applicable surrender charge will be deducted from the remaining value in the
Subaccount(s) or the remaining Guarantee Amount(s) from which the withdrawal is
being made. If such remaining Subaccount value(s) or Guarantee Amount(s) are
insufficient for this purpose, the surrender charge will be deducted pro-rata
from all Subaccount(s) and Guarantee Amount(s) under the Contract based on the
remaining Contract Value in each Subaccount or Guarantee Amount.
If a partial withdrawal would cause the Surrender Value to be less than $2,000,
We will treat Your request as a full surrender.
7.3 WHAT ARE THE RULES FOR A FULL SURRENDER OF THE CONTRACT?
You have the right to surrender this Contract during the accumulation period by
Written Notice. You will be paid the Surrender Value. The Surrender Value is
equal to:
a) The Contract Value at the end of the Valuation Period in which We
receive Your request;
b) minus any interest adjustment;
c) minus any applicable surrender charge;
d) minus the annual contract fee if the surrender does not occur on a
Contract Anniversary;
e) minus any Loan Amount;
f) minus any applicable premium taxes not previously deducted.
The Surrender Value will not be less than the amount required by state law.
Upon payment of the above Surrender Value, this Contract is terminated and We
have no further obligation under this Contract. We may require that this
Contract be returned to Our Home Office prior to making payment.
7.4 WHEN WILL A SURRENDER CHARGE BE APPLIED AND HOW IS IT CALCULATED?
A surrender charge is imposed on the withdrawal of any New Purchase Payment(s)
in excess of the free withdrawal amount. The amount of the surrender charge is
determined separately for each purchase payment and is expressed as a percentage
of the purchase payment as follows:
Number of Years Since Surrender Charge
Purchase Payment was Credited Percent
Less than 1 7%
At least 1 but less than 2 6%
At least 2 but less than 3 5%
At least 3 but less than 4 4%
At least 4 but less than 5 3%
At least 5 but less than 6 2%
At least 6 but less than 7 1%
7 or more 0%
These percentages apply to partial withdrawals and full surrender of New
Purchase Payments in excess of the free withdrawal amount.
Your annual free withdrawal amount is equal to 10% of New Purchase Payments at
the time of withdrawal less free withdrawal amounts previously withdrawn in the
current Contract Year. Your free withdrawal amount will never be less than zero.
Free withdrawal amounts not withdrawn in a Contract Year are not carried over to
increase the free withdrawal amount in a subsequent Contract Year.
For purposes of assessing a surrender charge, Contract Value is considered
withdrawn as follows:
a) Earnings not previously withdrawn;
b) Old Purchase Payments beginning with the oldest payment not previously
withdrawn;
c) New Purchase Payments beginning with the oldest payment not previously
withdrawn.
We will waive the surrender charge described previously, subject to Your
providing satisfactory proof to Us that either of the following conditions has
first occurred after the Contract Date:
a) The Annuitant has been admitted to a nursing home or hospital and has
been confined to such nursing home or hospital for at least 180
consecutive days; or
b) The Annuitant has been determined to be terminally ill. Terminally ill
means that due to illness or accident the Annuitant's life expectancy is
12 months or less.
7.5 WHEN WILL AN INTEREST ADJUSTMENT BE APPLIED AND HOW IS IT CALCULATED?
An interest adjustment will not be applied at any time to a Guarantee Amount
allocated to the DCA one year Guarantee Period. An interest adjustment will be
imposed on any other Guarantee Amount withdrawn (which includes partial
withdrawals, full surrender and amounts borrowed) prior to the end of the
Guarantee Period. An interest adjustment will not be imposed on a withdrawal
during the thirty (30) day period prior to the expiration date of a Guarantee
Period. The interest rate being credited to the DCA one year Guarantee Period
will not be used as a factor in any interest adjustment calculation.
The amount of the interest adjustment will be calculated by multiplying the
amount being withdrawn from the Guarantee Amount (before deduction of any
applicable surrender charge) by the following factor:
0.70 x (I - J) x N/12
where:
I = the guaranteed interest rate being offered for new Guarantee Periods
equal in duration to the period related to the Guarantee Amount being
withdrawn. If the applicable Guarantee Period is no longer offered, "I"
will be the rate determined by linear interpolation of the guaranteed
interest rates for the Guaranteed Periods that are available. If the
Guarantee Periods needed to perform the linear interpolation are not
available, "I" will be the rate payable on the Treasury Constant Maturity
Series published by the Federal Reserve for a security with time to
maturity equal to the applicable Guarantee Period, plus the Interest
Adjustment Reference Rate Factor shown on the Data Page. Linear
interpolation will be used if this period of time to maturity is not
quoted.
J = the interest rate being credited to the Guarantee Amount being
withdrawn.
N = the number of complete months remaining to the end of the Guarantee
Period.
In situations where "I" is greater than "J" the interest adjustment will have
the effect of reducing the amount available for withdrawal. Alternatively, if
"J" is greater than "I", the interest adjustment will have the effect of
increasing the amount available for withdrawal.
No interest adjustment will be assessed for amounts withdrawn in the following
situations:
a) calculation of the death benefit upon death of the Annuitant;
b) amounts withdrawn to pay fees or charges related to Your Contract; and
c) amounts withdrawn during the thirty (30) day period prior to the
expiration date of the Guarantee Period.
In no event will:
a) the interest adjustment exceed an amount equal to the interest earned in
excess of an effective annual rate of 3% on Guarantee Amounts;
b) the sum of any surrender charges and interest adjustment for a Guarantee
Amount be greater than 10% of the amount withdrawn;
c) the interest adjustment reduce the amounts withdrawn or transferred
below the amount required under the nonforfeiture laws of the state with
jurisdiction over the Contract.
The total amount withdrawn or surrendered could be less than the total purchase
payment(s) because of the cumulative effect of the interest adjustment and
surrender charge.
7.6 ARE THERE ANY RESTRICTIONS ON PAYMENT OF PARTIAL WITHDRAWALS OR SURRENDERS?
Generally, the amount of any surrender or partial withdrawal will be paid to You
within seven days of Our receipt of Your Written Notice.
In accordance with state law, We reserve the right to postpone payment of
surrenders and partial withdrawal of Guaranteed Interest Option Value for up to
six months after We receive Written Notice. If payment is postponed for more
than 29 days, We will pay interest at the effective annual rate of 3% for the
period of postponement.
We reserve the right to postpone payment of surrenders and partial withdrawals
from the Variable Account for any period when:
a) the New York Stock Exchange is closed other than customary weekend and
holiday closing;
b) trading on the Exchange is restricted;
c) an emergency exists as a result of which it is not reasonable or practicable
to dispose of securities held in the Variable Account or determine their
value; or d) the SEC permits delay for the protection of security holders.
The applicable rules of the SEC shall govern as to whether the conditions in (b)
and (c) exist.
SECTION 8. DEATH OF ANNUITANT AND/OR OWNER AND DEATH PROVISIONS
8.1 WHAT IF THE ANNUITANT DIES DURING THE ACCUMULATION PERIOD?
If the sole Annuitant dies during the accumulation period and the Annuitant is
not an Owner, We will pay the death benefit to the Beneficiary. The Beneficiary
may elect (within 60 days of the date We receive Due Proof of Death) to apply
this sum under one of the annuity payment options as Payee, provided the Annuity
Date is at least two years after the Contract Date. See Section 8.2 if You are
the Annuitant. We reserve the right to waive the requirement that the Annuity
Date be at least two years after the contract date. Any waiver of this
requirement will be administered in a nondiscriminatory manner.
8.2 WHAT IF ANY OWNER DIES DURING THE ACCUMULATION PERIOD?
If any Owner dies prior to the Annuity Date and the deceased Owner is the sole
Annuitant, We will pay the death benefit to the Beneficiary in one sum within
five (5) years of the deceased Owner's death. The Beneficiary may elect (within
60 days of the date We receive Due Proof of Death) to apply this sum under one
of the annuity payment options as Payee, provided:
a) payment under the annuity payment option begin not later than one (1) year
after the Owner's death; and
b) payment will be payable for the life of the Beneficiary, or over a period
not greater than the Beneficiary's life expectancy.
If any Owner dies and the deceased Owner is not the Annuitant (or a co-annuitant
survives the deceased Owner/Annuitant), the new Owner will be the surviving
Owner if any. The new Owner will be the Annuitant (unless otherwise provided) if
there are no surviving Owners. If the sole new Owner is the deceased Owner's
spouse, the Contract may be continued. If the new Owner is someone other than
the deceased Owner's spouse, the Surrender Value of the Contract must be
distributed within five (5) years of the deceased Owner's death.
8.3 WHAT AMOUNT WILL BE PAID AS A DEATH BENEFIT DURING THE ACCUMULATION PERIOD?
The death benefit will be determined based on the Annuitant's Age on Your
Contract Date. If there is more than one Annuitant, We will use the Age of the
last surviving Annuitant.
If the Annuitant's Age on Your Contract Date is:
a. less than 76, the death benefit is equal to the greater of:
1. the sum of the Net Purchase Payments made less any partial
withdrawals, as of the date Due Proof of Death is received;
2. the Contract Value as of the date Due Proof of Death is received;
3. the death benefit anniversary amount as of the date of death, plus
any Net Purchase Payments made and less any partial withdrawals
since the most recent death benefit anniversary, prior to death.
Death benefit anniversaries are the 7th Contract Anniversary and each 7th
subsequent Contract Anniversary thereafter.
b. 76 or greater, the death benefit is equal to the Contract Value.
The death benefit described above will be reduced by any Loan Amount and any
applicable premium taxes not previously deducted.
SECTION 9. LOANS AND DIVIDENDS
9.1 ARE LOANS AVAILABLE?
Loans will be available only to certain Qualified Contracts. The Data Page
indicates if loans are available. The maximum loan value is 90% of the Surrender
Value.
You must specify the Subaccount(s) or Guarantee Period(s) from which the loan
will be made. The amount borrowed from such Subaccount(s) or Guarantee Period(s)
in connection with the loan will be transferred to the Loan Account. Any amount
borrowed from a Guarantee Amount will be subject to an interest adjustment, if
applicable, as described in Section 7.5.
Your Loan Amount is equal to any amounts in Your Loan Account plus any accrued
loan interest. Interest on Your Loan Amount will accrue at an effective annual
rate of 6.50%.
Amounts in the Loan Account will be credited interest at an effective annual
rate determined at Our discretion, but not less than 3%.
On each Contract Anniversary and on the Annuity Date (if not on a Contract
Anniversary), any difference between the Loan Amount and the amount in the Loan
Account will be transferred pro-rata from Your values in the Subaccount(s) and
Guarantee Period(s) (as described above) to the Loan Account unless the
difference is paid in cash.
You may repay the Loan Amount in whole or in part while this Contract is in
force. An amount equal to the amount of the loan repayment will be transferred
from the Loan Account to Your Subaccount(s) and Guarantee Period(s) in the same
proportion as the Purchase Payments are currently allocated, unless You request
otherwise. Loan repayments are not allowed to the DCA one year Guarantee Period.
The Loan Amount will be deducted from any death benefit payable.
If, on any date, Your Loan Amount exceeds Your Surrender Value, the Contract
will be in default. In this case We will send You a notice of default and tell
You what payment is needed to bring Your Contract out of default. You will have
a 60 day grace period from the date of mailing such notice during which to pay
the default amount. If the required payment is not paid within the grace period,
the Contract will terminate without value.
9.2 WILL DIVIDENDS BE PAID?
We anticipate that no dividends will be payable on Your Contract. However, while
Your Contract is in force, We will annually determine Your Contract's share in
Our divisible surplus. Your Contract's share, if any, will be paid as a dividend
on Your Contract Anniversary.
You may select a dividend option listed below. If You do not select an option,
dividend option (a) will be used.
(a) Allocation to the Subaccount(s) of the Variable Account and the
Guaranteed Interest Option in the same proportion as designated for
purchase payments.
(b) Pay in Cash.
ANNUITY PERIOD
SECTION 10. ANNUITY PERIOD DEFINED
10.1 WHAT IS THE ANNUITY PERIOD?
The annuity period is the second of the two periods of Your Contract. The
annuity period begins on the Annuity Date. It continues until We make the last
payment as provided by the annuity payment option chosen.
On the first day of this period the Contract Value (adjusted as described below)
will be applied to the annuity payment option shown on the Data Page unless You
have previously elected another option. Monthly annuity payments will begin as
provided under that option.
The Contract Value applied to an annuity payment option will be adjusted as
follows:
a) Any applicable interest adjustment will be made.
b) Any applicable surrender charge will be deducted for amounts applied to
Option 1.
c) If the Annuity Date is not on the Contract Anniversary, the annual
contract fee will be deducted on a pro-rated basis. The balance of the
annual contract fee will be deducted from the remaining annuity payments
for that Contract Year.
d) Any Loan Amount will be deducted.
e) Any applicable premium taxes will be deducted.
SECTION 11. ANNUITY PAYMENTS
11.1 WHEN WILL ANNUITY PAYMENTS BEGIN?
The first annuity payment will be paid as of the Annuity Date. The Annuity Date
is shown on the Data Page. You may change the Annuity Date by Written Notice,
provided that the notice is received at Our Home Office at least 30 days prior
to the current Annuity Date. The Annuity Date must be at least two years after
the Contract Date. Unless otherwise restricted by law or regulation, the latest
Annuity Date is the later of the Contract Anniversary following the Annuitant's
85th birthday or 10 years after the Contract Date. We reserve the right to waive
the requirement that the Annuity Date be at least two years after the contract
date. Any waiver of this requirement will be administered in a nondiscriminatory
manner.
Unless changed as described above, We will use the Annuity Date shown on the
Data Page.
11.2 WHAT ANNUITY PAYMENT OPTIONS ARE AVAILABLE?
There are different ways to receive annuity payments. We call these annuity
payment options. Four annuity payment options are described below. Options 1 and
2 are available only as a fixed annuity. Options 3 and 4 are available in two
forms - as a variable annuity in connection with the Variable Account and as a
fixed annuity. Other annuity payment options may be available with Our consent.
Option 1 - Interest Option (Fixed Annuity Payments Only). We will pay interest
on the proceeds which We will hold as a principal sum during the lifetime of the
Payee. The Payee may choose to receive interest payments either once a year or
once a month. We will determine the effective rate of interest from time to
time, but it will not be less than an effective annual interest rate of 3.50%.
Option 2 - Installment Option (Fixed Annuity Payments Only). We will pay equal
monthly annuity payments for a chosen number of years, not less than 5 nor more
than 30. If the original Payee dies before annuity payments have been made for
the chosen number of years: (a) annuity payments will be continued for the
remainder of the period to the successor Payee; or (b) the present value of the
remaining annuity payments, computed at the interest rate used to create the
Option 2 rates, will be paid to the successor Payee or to the last surviving
Payee's estate, if there is no successor Payee.
The Option 2 rates shown in Section 13 are based on 3.50% interest per year.
Additional interest, if any, will be payable as We may determine from time to
time.
Option 3 - Life Income - Guaranteed Period Certain (Fixed or Variable Annuity
Payments). We will pay monthly annuity payments for as long as the Payee lives.
If the original Payee dies before all of the annuity payments have been made for
the guaranteed period certain: (a) annuity payments will be continued during the
remainder of the guaranteed period certain to the successor Payee; or (b) the
present value of the remaining annuity payments, computed at the interest rate
used to create the Option 3 rates, will be paid to the successor Payee or to the
last surviving Payee's estate, if there is no successor Payee.
The guaranteed period certain choices are:
(a) 0 years (life income only); or
(b) 10 years; or
(c) 20 years; or
(d) a period of years such that the total of all monthly annuity payments will
be no less than the amount of the proceeds applied under this option. This
choice is available only for fixed annuity payments.
Dividends, if any, will be payable as determined by Us.
Option 4 - Joint and Survivor Life Income - 10 Year guaranteed period certain
(Fixed or Variable Annuity Payments). We will pay monthly annuity payments for
as long as either of the original Payees is living. If at the death of the
second surviving Payee, annuity payments have been made for less than 10 years:
(a) annuity payments will be continued during the remainder of the guaranteed
period certain to the successor Payee; or (b) the present value of the remaining
annuity payments, computed at the interest rate used to create the Option 4
rates, will be paid to the successor Payee or to the last surviving Payee's
estate, if there is no successor Payee.
Dividends, if any, will be payable as determined by Us.
11.3 WHAT ARE THE REQUIREMENTS FOR CHOOSING AN ANNUITY PAYMENT OPTION?
We will automatically make annuity payments according to a Life Income Option
with a guaranteed period certain of 10 years, starting on the Annuity Date,
unless You choose another guaranteed period certain or annuity payment option.
We will apply Your adjusted Contract Value to purchase a variable and/or fixed
annuity in the same proportion as Your Contract Value is distributed among the
Subaccounts and the Guaranteed Interest Option. You may change the annuity
payment option by Written Notice on or prior to the Annuity Date to an annuity
payment option that is acceptable to Us.
The minimum adjusted Contract Value which can be applied under Option 1 is
$2,500. If the monthly interest payment for Option 1 is less than $25, We
reserve the right to pay interest annually.
The minimum adjusted Contract Value which can be applied under Options 2, 3 or 4
is the greater of $2,500 or the amount required to provide an initial monthly
annuity payment of $25.
We may require due proof of the Age of any Payee who is to receive a life
income. For Type A Life Income Rates, We may also require due proof of the sex
of any Payee who is to receive a life income.
The Payee may name a successor Payee to receive any remaining annuity payments
due after the Payee's death. The Payee may exercise any ownership rights that
continue after the Annuity Date.
11.4 HOW WILL FIXED ANNUITY PAYMENT VALUES BE DETERMINED?
The dollar amount of each fixed annuity payment will be determined by dividing
the amount applied by $1,000 and multiplying the result by the applicable option
rate shown in Section 13.
11.5 HOW WILL VARIABLE ANNUITY PAYMENT VALUES BE DETERMINED?
The dollar amount of the initial variable annuity payment attributable to each
Subaccount will be determined by dividing the amount applied by $1,000 and
multiplying the result by the applicable option rate shown in Section 13. The
total initial variable annuity payment is the sum of the initial variable
annuity payments attributable to the Subaccounts.
The dollar amount of the subsequent variable annuity payments attributable to a
Subaccount will be based on the number of Annuity Units credited to the Contract
for that Subaccount and is determined by multiplying (a) by (b), where:
a) is the number of Subaccount Annuity Units; and
b) is the Subaccount Annuity Unit value for the Valuation Period immediately
preceding the due date of the payment.
The number of Annuity Units attributable to each Subaccount remains fixed unless
there is an exchange of Annuity Units. The number of Annuity Units is derived by
dividing that portion of the initial variable annuity payment attributable to
the Subaccount by the Subaccount's Annuity Unit value for the Valuation Period
which ends immediately preceding the Annuity Date.
The Annuity Unit value for each Subaccount was arbitrarily set initially at
$100. Thereafter, the Annuity Unit value for each Subaccount in any Valuation
Period is determined by dividing (a) by (b), then multiplying by (c) and
adjusting the result to compensate for the assumed net investment rate of 3.50%,
where:
a) is the Accumulation Unit value for the current Valuation Period;
b) is the Accumulation Unit value for the immediately preceding Valuation
Period;
c) is the Annuity Unit value for the immediately preceding Valuation Period;
With an assumed net investment rate of 3.50% per year, payments after the
initial payment may increase, decrease or remain constant based on whether the
actual annualized investment return of the selected Subaccount(s) is greater or
less than the assumed 3.50% per year.
11.6 CAN VARIABLE ANNUITY UNITS BE EXCHANGED?
The Payee may exchange the dollar value of a designated number of Annuity Units
of a particular Subaccount for an equivalent dollar amount of Annuity Units of
another Subaccount by Written Notice. On the date of the exchange, the dollar
amount of an annuity payment would be unaffected by the fact of the exchange.
No more than 4 exchanges of Annuity Units may be made during any Contract Year.
SECTION 12. DEATH OF OWNER
12.1 WHAT IF YOU DIE DURING THE ANNUITY PERIOD?
If You die on or after the Annuity Date, any remaining proceeds will be
distributed at least as rapidly as provided by the annuity payment option in
effect.
SECTION 13. OPTION TABLES
13.1 WHAT RATES WILL BE USED TO DETERMINE FIXED ANNUITY PAYMENT VALUES FOR
OPTION 2?
The rates below will be used to determine the dollar amount of the monthly fixed
annuity payments for Option 2. The rates show the dollar amount of each monthly
fixed annuity payment for each $1,000 applied. Rates for years payable not
shown, if allowed by Us, will be calculated on an actuarially equivalent basis
and will be available upon request.
Option 2. Rates - First Payment Due at Beginning of Period.
Years Monthly Payment Payable Under
Payable Fixed Option 2 for each $1,000 Applied
10 9.83
15 7.10
20 5.75
25 4.96
30 4.45
13.2 WHAT RATES WILL BE USED TO DETERMINE ANNUITY PAYMENT VALUES FOR OPTIONS 3
AND 4?
The age adjustment table below and following rates will be used to determine the
dollar amount of the monthly fixed annuity payments and the initial variable
annuity payment for Options 3 and 4.
The Type A life income rates for Options 3 and 4 are based on the Payee's
adjusted age and sex. The Type B life income rates are based on the Payee's
adjusted age. The life income rates type for this Contract is shown on the Data
Page. The adjusted age is the Payee's Age last birthday plus the age adjustment
shown in the table below. The Contract Years elapsed are from the Contract Date
to the effective date of the Annuity Option. Any partial Contract Year is
considered as a full Contract Year.
Contract Years Elapsed Age Adjustment
1- 10 +3
11 - 20 +2
21 - 30 +1
+31 0
The following rates show the dollar amount of each monthly annuity payment for
each $1,000 applied. The rates are based on the 1983A Mortality Tables and with
compound interest at the effective rate of 3.50% per year. Rates for adjusted
ages and guaranteed periods certain not shown, if allowed by Us, will be
calculated on an actuarially equivalent basis and will be available upon
request.
<PAGE>
Option 3. Life Income Rates - Guaranteed Period Certain - First Payment
Due at
Beginning of Period.
<TABLE>
<CAPTION>
Type A Life Income Rates
Per $1,000 Applied
- --------------------------------------------------------------------------------------------------------------------
Adjusted Age - Male
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Years 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75
- --------------------------------------------------------------------------------------------------------------
0 4.99 5.09 5.20 5.32 5.44 5.57 5.71 5.86 6.02 6.20 6.38 6.58 6.79 7.02 7.26 7.52 7.80 8.09 8.41 8.75 9.12
10 4.91 5.00 5.10 5.20 5.31 5.42 5.54 5.67 5.80 5.94 6.08 6.23 6.38 6.54 6.71 6.87 7.05 7.22 7.40 7.57 7.75
20 4.66 4.72 4.78 4.85 4.91 4.97 5.04 5.10 5.16 5.22 5.28 5.33 5.38 5.43 5.48 5.52 5.55 5.59 5.62 5.64 5.66
--------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Adjusted Age - Female
- --------------------------------------------------------------------------------------------------------------------
Years 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 4.54 4.62 4.71 4.80 4.90 5.00 5.11 5.23 5.36 5.49 5.64 5.79 5.95 6.13 6.32 6.53 6.75 6.99 7.26 7.54 7.85
10 4.51 4.58 4.66 4.75 4.84 4.93 5.03 5.14 5.25 5.37 5.50 5.63 5.77 5.91 6.07 6.23 6.40 6.58 6.76 6.95 7.14
20 4.38 4.44 4.51 4.57 4.64 4.70 4.77 4.84 4.91 4.98 5.05 5.12 5.19 5.25 5.32 5.37 5.43 5.48 5.52 5.57 5.60
- --------------------------------------------------------------------------------------------------------------------
Type B Life Income Rates
Per $1,000 Applied
- --------------------------------------------------------------------------------------------------------------------
Adjusted Age - Unisex
- --------------------------------------------------------------------------------------------------------------------
Years 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75
- --------------------------------------------------------------------------------------------------------------------
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0 4.63 4.72 4.81 4.91 5.01 5.12 5.23 5.36 5.49 5.63 5.79 5.95 6.12 6.31 6.51 6.73 6.96 7.21 7.48 7.78 8.10
10 4.59 4.67 4.75 4.84 4.94 5.03 5.14 5.25 5.37 5.49 5.62 5.75 5.90 6.05 6.20 6.37 6.54 6.71 6.90 7.08 7.27
20 4.44 4.50 4.57 4.63 4.70 4.76 4.83 4.90 4.97 5.04 5.10 5.17 5.23 5.30 5.35 5.41 5.46 5.51 5.55 5.58 5.62
- --------------------------------------------------------------------------------------------------------------------
Option 4. Life Income Factors - Joint and Survivor - 10 Year Guaranteed Period Certain - First Payment Due at Beginning of Period.
Type A Life Income Rates Type B Life Income Rates
Per $1,000 Applied Per $,1000 Applied
- ------------------------------------------------------------- -----------------------------------------------------------------
Adjusted Adjusted
Age - Adjusted Age - Female Age - Adjusted Age - Unisex
------------------------------------------------ -----------------------------------------------
Male 55 60 65 70 75 Unisex 55 60 65 70 75
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
55 4.16 4.34 4.51 4.65 4.76 55 4.10 4.24 4.35 4.44 4.51
60 4.26 4.51 4.75 4.98 5.16 60 4.24 4.43 4.62 4.77 4.89
65 4.35 4.65 4.98 5.31 5.61 65 4.35 4.62 4.89 5.14 5.34
70 4.41 4.76 5.17 5.62 6.07 70 4.44 4.77 5.14 5.51 5.84
75 4.46 4.84 5.32 5.88 6.48 75 4.51 4.89 5.34 5.84 6.34
- ------------------------------------------------------------- -----------------------------------------------------------------
</TABLE>
<PAGE>
FLEXIBLE PREMIUM DEFERRED
VARIABLE AND FIXED ANNUITY
Flexible Purchase Payments as described herein.
Annuity Payments starting on the Annuity Date.
Death benefit payable at death prior to the Annuity Date.
Participating.
CUNA Mutual Life Insurance Company
2000 Heritage Way, Waverly, Iowa 50677
Telephone: (319) 352-4090
<PAGE>
EXHIBIT 4(c)
Flexible Premium Deferred Variable and Fixed Annuity Contract
State Variations
Contract Form No. 2800 attached as Exhibit 4 is a copy of the Contract language
used in the following states:
Alabama Maine
Alaska Minnesota
Arkansas Mississippi
Colorado Missouri
Connecticut Nebraska
Delaware Nevada
Georgia New Hampshire
Hawaii New Mexico
Illinois Ohio
Indiana Rhode Island
Iowa South Dakota
Kentucky Tennessee
Louisiana Vermont
Wyoming
The following state contract forms vary from the Form No. 2800 as indicated
below:
Arizona--Contract No. 2800 AZ adds language to Form No. 2800 stating, "Upon
written request, we will provide you with information regarding the benefits and
provisions of the Contract."
California-- Contract No. 2800 CA changes Form 2800 language to allow for a
10-day free look, except for ages 60 and above allowing for a 30-day free look.
District of Columbia--Contract No.2800 DC changes Form 2800 language in Sections
6.2 and 7.2 to include the word "partial" when describing withdrawals.
Florida -- Contract No. 2800 FL changes Form 2800 language on the cover page to
add "If you have a question, complaint or need information concerning your
contract, call 1-800-798-5500." Surrender Charge description added to Data Page.
Revises Section 1.7 without change in meaning. Adds table of values per $1,000
allocated to a Guarantee Period to Section 6.2.
Idaho -- Contract No. 2800 ID changes Form 2800 language to allow for a 20-day
free look and the return of purchase payments during the Right to Examine
Period. First paragraph in Section 4.3 changed to explain 20-day free look
provision. Changes Section 7.6 interest rate paid for deferral of payment of
partial withdrawal and surrenders as defined in Idaho Code.
Kansas -- Contract No. 2800 KS deletes nursing homes/terminal illness paragraph
from Section 7.4 of Form 2800.
Maryland -- Contract No. 2800 MD adds "Limited Participation as described
herein." Deletes "Fixed" from Form 2800 title on the cover page. Deletes
sentence saying, "we will refund any purchase payments received by us required
by state law" from the Right to Examine provision. There are no Fixed Accounts,
therefore, Section 7.5 from Form 2800 regarding fixed accounts and Section 6
from Form 2800 regarding Guaranteed Interest Option have been deleted. Deleted
all references to Guaranteed Interest Option throughout the Form 2800 Contract.
Massachusetts -- Contract Nos. 2800 SMA and UMA allowing for separate forms for
sex distinct and unisex. Also added Table of values to Section 6.2 in Form 2800.
Tables were changed on data page and misstatement of age and sex language was
revised from Form 2800.
Michigan -- Contract Nos. 2800 U and 2800 S allowing for separate forms for sex
distinct and unisex. Tables were changed on data page and misstatement of age
and sex language was revised from Form 2800.
Montana -- Contract No. 2800 MT 0294 is unisex only. Revises misstatement of age
and sex, tables etc. and adds Section 1.2 "Does the Contract Conform with
Montana Statutes?" to Form 2800.
North Carolina -- Contract No. 2800 NC deletes settlement options 1 & 2 from
Form 2800.
North Dakota -- Contract No. 2800 ND revises Form 2800 to allow for 20-day free
look (on the cover page). Tables were changed on data page and misstatement of
age and sex language was revised from Form 2800.
Oklahoma -- Contract No. 2800 OK revises Form 2800 to allow the return of
purchase payments during the Right to Examine Period and that interest will be
paid on refunds made more than thirty days from the date of cancellation. Also
revises Section 4.3 "How Net Purchase Payments Will be Allocated" to describe
the Right to Examine Period provision.
Oregon -- Contract No. 2800 OR revises Form 2800 to delete "Fixed" from the
title on the cover page. There are no Fixed Accounts, therefore, deletes Section
7.5 regarding Fixed Accounts. Deletes Section 6 regarding Guaranteed Interest
Option and deletes all references to Guaranteed Interest Option throughout the
contract Form 2800.
Pennsylvania -- Contract No. 2800 PA changes Form 2800 to allow for issue ages
0-78; revised Free-Look. Revised Section 1.3 related to misstatement of age and
sex adding "to be equal to the amount the contract value would have purchased
based on correct age/sex." Revised Section 4.3 regarding how the initial
purchase payment will be allocated. Section 5.2(i) added: "If such change
required endorsement of your contract, we will notify you and the endorsement
may then be either accepted or rejected." Only one fixed account guarantee
period with no interest adjustment. Therefore, all language referring to the
interest adjustment is deleted, including Section 7.5.
South Carolina -- Contract No. 2800 SC 0496 changes Form 2800 by deleting "in
the absence of fraud" from Section 1.2 regarding "When will the contract become
incontestable. "Contract fee deducted from subaccounts only, not fixed accounts.
Revised free-look language to allow the return of purchase payments and Section
4.3 to describe the return of purchase payments during the Right to Examine
Period.
Texas -- Contract No. 2800 TX revises Form 2800 to allow for a 6 year stepped up
death benefit in Section 8.3. Contract fee deducted from subaccounts only, not
fixed in Section 1.4. One fixed account/guarantee period, with no interest
adjustment. Therefore, all language regarding interest adjustment deleted
including Section 7.5. Section 11.2 "What Annuity Payment Options are
Available?" adds Option 3(d) "The rates for such period of years will be
calculated on an actuarially equivalent basis to those shown in Section 13.2.
Utah -- Contract No. 2800 UT revises Form 2800 free-look language to allow the
return of purchase payments and Section 4.3 How Will the Net Purchase Payments
be Allocated" to describe the return of purchase payments during the Right to
Examine Period. One fixed account/guarantee period with no interest adjustment.
Therefore, all language regarding interest adjustment deleted, including Section
7.5.
Virginia -- Contract No. 2800 VA revises Form 2800 to change interest adjustment
to "market value adjustment" throughout contract.
Washington -- Contract No. 2800 WA deletes "Fixed" from the title on the cover
page of the Form 2800. There are no Fixed Accounts, therefore, deletes Section
7.5 regarding Fixed Accounts, and Section 6, Guaranteed Interest Option. All
references to Guaranteed interest Option removed throughout the contract.
West Virginia -- Contract No. 2800 WV limits postponement of payment of partial
withdrawals and surrenders to 30 days in Section 7.6 of Form 2800.
Wisconsin -- Contract No. 2800 WI changes Form 2800 to allow one fixed
account/guarantee period with no interest adjustment. Therefore, all language
regarding interest adjustment deleted, including Section 7.5.
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 5 (a)
<S><C>
CUNA Mutual Life
Insurance Company VARIABLE ANNUITY APPLICATION Credit Union No.
A Mutual Insurance Company
2000 Heritage Way, Waverly, Iowa 50677
(Please Print Clearly)
1. ANNUITANT (OWNER) Sex: |_| Male |_|Female
Name SS No./Tax ID:
Address Date of Birth:
City State ZIP Daytime Phone ( )
2. CO-ANNUITANT (CO-OWNER Sex: |_|Male |_|Female
(Not available for QRP, IRA, SEP or 403(b) Plans)
Name SS No./Tax ID:
Address Date of Birth:
City State ZIP Daytime Phone ( )
3. OWNER
If Annuitant(s) are not also the Owner(s), then specify the Owner here. Sex: |_|Male |_|Female
Name SS No./Tax ID:
Address Date of Birth:
City State ZIP Daytime Phone ( )
4. BENEFICIARY (To list more beneficiaries, use Section 10.) Relationship to
Name Address
Annuitant
Primary
Contingent
5. PLAN TYPE (Check the appropriate boxes.)
|_| Non-qualified Qualified:(Check the appropriate plan description.) |_| IRA |_| SEP/IRA |_| 403(b) |_|Other
6. HOME OFFICE USE ONLY
7. PURCHASE PAYMENTS Please make checks payable to CUNA Mutual Life Insurance Company.
Single/Initial Purchase Payment $ Future Purchase Payments $
(Min. Total First Year: Non-qual. $5000, Qual. or 457 $2000, 403(b) $300) (Min.: $100 or $25 for Automatic & Salary Savings)
By: |_|Check |_|Automatic* |_|Transfer |_|Rollover |_|By: |_|Mo. Automatic* |_|Salary Savings
Year for which contribution applies
(If Qualified) |_|Quarterly |_|Semiannual |_|Annual
The Initial Purchase Payment applied will be equal to the actual amount received
by CUNA Mutual Life Insurance Company.
*You must complete the Authorization on the back for Automatic Purchase Payment Plans.
8. PURCHASE PAYMENT ALLOCATION %
(Whole %; Must total 100%; Minimum 5% per Subaccount or Guarantee Period.)
ALLOCATION % TO SUBACCOUNT(S) OF THE VARIABLE ACCOUNT:
% Cap. Appreciation Stock % Money Market % High Income
% Growth & Income Stock % World Governments % Developing Markets
% Balanced Account % International Stock % Other
% Bond % Emerging Growth % Other
ALLOCATION % TO GUARANTEE PERIOD(S) OF THE GUARANTEED INTEREST OPTION:
(NOTE-Min. amount is $1000 each payment)
%DCA 1 Year % 1 Year % 3 Year % 5 Year % 7Year % 10 Year
9. PRESERVATION PLUS PROGRAM |_| I will participate in the Preservation Plus
Program. I hereby authorize CUNA Mutual Life Insurance Company to allocate a
portion of the initial purchase payment to the Year Guarantee Period. This
portion will be the present value reflecting the guaranteed interest rate as
of the contract issue date for the Guarantee Period indicated. The
difference between the initial purchase payment and the portion allocated to
the Guarantee Period will be allocated as indicated in Section 8.
10. Special Instructions
11. Will this contract replace or change any existing life insurance or annuity in this or any other company? |_|Yes |_|No
If Yes:
What Company?
What Contract Number?
12. SUITABILITY Must be completed by Owner. Annual Earnings Estimated Net Worth
Occupation |_| $ 25,000-$ 49,999 |_| $ 25,000-$ 74,999
Employer |_| $ 50,000-$ 99,999 |_| $ 75,000-$124,999
Address |_| $100,000-$199,999 |_| $125,000-$249,999
City State ZIP |_| $200,000 plus |_| $250,000 plus
Other Inc. Other
Financial Objectives Please check one.
|_| Preservation of Capital |_| Income |_| Long Term Growth |_| Maximum Capital Appreciation
Initial Source of Funds: Check all that apply.
|_|CDs/Saving Acct. |_|Investments |_|Stocks/Bonds |_|Sale of Personal Property |_|Current Income
|_|Policy Cash Value, Dividend or Loan |_|Policy Surrender |_|Other
</TABLE>
13. AGREEMENT
a. I hereby represent my answers to the above questions to be correct and
true to the best of my knowledge and belief and are made as a basis for
my application.
b. I understand that no agent is authorized to make, modify or discharge
any annuity contract provision or waive any of the Company's rights or
requirements.
c. I, the proposed owner(s), certify under penalties of perjury, that the
taxpayer identification number(s) shown under Sections 1 and 2, or under
Section 3 (if Owner is other than the Annuitant), is my correct taxpayer
identification number unless I have marked the box below:
|_| I have been notified that I am subject to backup withholding
under Internal Revenue Section 3406(a)(1)(c) and the payor shall
withhold in accordance with withholding requirement imposed by
law.
d. I ACKNOWLEDGE RECEIPT OF A CURRENT VARIABLE ANNUITY PROSPECTUS DATED
I HEREBY REQUEST A STATEMENT OF ADDITIONAL INFORMATION |_|YES |_|NO
e. I UNDERSTAND THAT CONTRACT VALUES, WHEN BASED ON THE INVESTMENT
EXPERIENCE OF A VARIABLE ACCOUNT ARE VARIABLE AND NOT GUARANTEED AS TO
A FIXED DOLLAR AMOUNT.
f. I UNDERSTAND THAT AMOUNTS WITHDRAWN FROM THE GUARANTEED INTEREST
OPTION MAY BE ADJUSTED UPWARD OR DOWNWARD BASED ON AN INTEREST
ADJUSTMENT FORMULA.
Signature of Owner (if other than Proposed Annuitant) Date
Signature of Annuitant(s) Date
Witness or Agent Agent No. Date
AGENT
To the best of your knowledge, will this contract replace or change any existing
life insurance or annuity in this or any other company? |_| Yes |_| No If yes,
have all required documents been completed in compliance with applicable state
regulations?
|_| Yes |_| No If no, explain in Section 10.
Agents Signature
AUTHORIZATION PLEASE ATTACH A BLANK VOIDED CHECK (For Checking and Share Draft
Accounts Only.)
Initial Payment:
|_| I hereby authorize a debit entry to my financial institution account
indicated below to initiate the related credit entry to the CUNA Mutual Life
Insurance Company account in the amount of $ .
Future Payments:
|_| I authorize CUNA Mutual Life Insurance Company and the financial institution
named below to initiate variable entries to my account. I elect to receive
quarterly statements for my variable annuity. This authorization will remain in
effect until revoked by me in writing. A monthly debit in the amount of $ will
occur on the first of the month, unless another draft date is checked:
|_| 1 |_| 5 |_| 10 |_|15 |_|20 |_|25
Dollars allocated to a subaccount will purchase units at the next computed
accumulation unit value. There is no additional charge for purchasing units
through the automatic purchase payment plan.
Financial Institution: Account Number:
Address:
If this is a saving account, are electronic debits allowed?
|_| Yes |_| No
Account Signature of Payor(s)
<PAGE>
VARIABLE ANNUITY
OPTIONAL PROGRAMS
Instructions
The annuity owner may use this form to request services for a new or
existing annuity.
Check the appropriate box(es) and supply the information indicated. These
programs are described in more detail in the prospectus.
|_| Automatic Personal Portfolio Rebalancing Service: Automatically rebalance
the assets within my annuity. (Complete sections 1, 2, and 6.)
|_| Dollar Cost Averaging or Automatic Transfer Program: Automatically move
assets among investment choices. More information on the next page.
(Complete sections 1, 3, and 6.)
|_| Telephone/Fax Authorization. (Complete sections 1, 4, and 6.)
|_| Systematic Withdrawal: To request systematic withdrawals from my annuity.
(Complete sections 1, 5, and 6.)
1. Contract Information
|_| New Contract
|_| Existing Contract No.
Name of Contract Owner
Name of Joint Owner (if applicable)
Social Security Number of Owner
Address
City State Zip
2. Rebalancing Service
|_| Begin |_| Modify |_| Terminate
Frequency:
|_| Monthly |_| Quarterly |_| Semiannually |_| Annually
|_| Transfer amounts in proportion to my purchase payment allocation schedule.
Use whole percentages - not less than 10%
Must equal 100%
Indicate how you would like assets allocated:
% Capital Appreciation Stock
% Growth and Income
% Balanced
% Bond
% World Governments
% International Stock
% Other
100% Total
3. Dollar Cost Averaging or Automatic Transfer Program
Dollar Cost Averaging is simply the investing of equal dollar amounts at regular
intervals. This method of investing does not assure profit or protect against
loss in declining markets. Consider your financial ability to continue
purchasing at times when prices are low.
$5,000 minimum in Money Market Subaccount
Minimum transfer $100
|_| Begin |_| Modify |_| Terminate
Transfer:
|_| Fixed percent of % |_| Fixed dollar amount of $ |_| Fixed number of units
|_| Excess amount above a target remainder of $
Frequency:
|_| Monthly |_| Quarterly |_| Semiannually |_| Annually
Use whole percentages
Minimum of 10% or $100
Must equal 100%
Transfer to:
|_| % Capital Appreciation Stock
|_| % Growth and Income
|_| % Balanced
|_| % Bond
|_| % World Governments
|_| % International Stock
|_| % Other
100% Total
4. Telephone/Fax Authorization
|_| Check this box to authorize telephone/fax authorizations
I authorize CUNA Mutual Life Insurance Company (the Company) to act
pursuant to my telephone or fax instructions.
I authorize my CUNA Brokerage Services, Inc. representative (name) to call
the Home Office and perform transactions listed in the "By Phone" section
on the next page, based on my specific instructions for each transaction.
If the Company does not use reasonable procedures to determine that the
instructions are genuine, the Company is at risk for losses due to
unauthorized or fraudulent instructions. If the Company uses reasonable
procedures and believes the instructions are genuine, I am at risk for
losses caused by someone giving unauthorized or fraudulent information to
the Company.
5. Systematic Withdrawal
Be sure to complete the Income Tax Withholding sections Owner must be at least
59 1/2
Frequency:
|_| Monthly |_| Quarterly |_| Semiannually |_| Annually
Options: (Select ONE)
|_| Specified dollar amount
|_| Specified number of accumulation units |_|Specified percent of variable
contract value |_|Specified target remainder of variable contract value
$5,000 minimum contract value in subaccount chosen
Each withdrawal must be at least $100
Complete the appropriate section below to reflect the option you selected.
Dollar No. Of Per- Target
Amount Units centage Remain.
Capital Apprec. Stock $ %
Growth and Income $ %
Balanced $ %
Bond $ %
Money Market $ %
International Stock $ %
World Governments $ %
Begin on and terminate on
For Substantially Equal Payments use Form CLS-230 (VANN).
INCOME TAX WITHHOLDING AUTHORIZATION
WAIVING THE TERMINATION OF THE SYSTEMATIC WITHDRAWAL PLAN WHEN SURRENDER CHARGES
ARE ASSESSED
The Systematic Withdrawal Plan is scheduled to automatically terminate if
surrender charges would ever be applicable to an amount withdrawn. By marking
the section below, I am waiving this automatic termination.
|_| I authorize Century Companies of America to continue my Systematic
Withdrawal Plan even if surrender charges may be deducted. If I elect the
specified dollar amount option, my contract value will be reduced by my
specified dollar amount plus any applicable surrender charges. If I elect
the specified number of units, specified percentage, or specified target
remainder options, my check will be reduced by any surrender charge
amount.
INCOME TAX WITHHOLDING
I understand that:
1. The distributions or withdrawals I am to receive may be subject to Federal
income tax withholding (and State income tax in some states) unless I
elect not to have withholding apply. Withholding will only apply to the
taxable portion of my distribution or withdrawal.
2. If I elect not to have withholding apply or if I do not have enough
Federal income tax withheld, I may be responsible for payment of estimated
tax. I may incur penalties under the estimated tax rules if my withholding
and estimated tax payments are not sufficient.
3. If the election section below is not completed, the Company will
automatically withhold.
ELECTION
Please check the appropriate box. (If this is a Tax Sheltered Annuity, a
mandatory 20% Federal withholding is required. In addition, the 20%
Withholding Distribution Notice, Form CLS-180, must be completed.)
|_| I do not want to have Federal or State income tax withheld from this
disbursement.
|_| Withhold the amount as provided in the Federal and State withholding
guidelines. My check amount will be reduced by any withholding
amount.
4. My election will remain in effect until I revoke it by completing a new
Withholding Election form.
TAXPAYOR IDENTIFICATION NUMBER CERTIFICATION
Under penalties of perjury, I certify that the taxpayer identification number
shown below is my correct taxpayer identification number and that I am not
subject to backup withholding unless I have marked the following box:
|_| I have been notified that I am subject to backup withholding under the
Internal Revenue Code Section 3406(a)(1)(c) and the payor shall withhold in
accordance with withholding requirements imposed by law.
Taxpayor Identification/Social Security No.
Birth Date Date
6. Signatures
Signature of Owner
Signature of Co-owner(s) (if any)
Signature of Irrevocable Beneficiary(s) (if any)
Daytime Phone Number
Date
<PAGE>
EXHIBIT 5(b)
FLEXIBLE PREMIUM
DEFERRED VARIABLE AND FIXED ANNUITY
IRA ENDORSEMENT
Contract No. Endorsement Effective Date
Owner City & State
The contract is to be qualified as an Individual Retirement Annuity under
Section 408 of the Internal Revenue Code (Code). The terms and conditions listed
below will then form a part of the owner's contract effective as of the date
listed above. In any conflict between the terms of this Section and all or any
of the other Sections of the contract, this Section will govern.
INDIVIDUAL RETIREMENT ANNUITY
EXCLUSIVITY, NONFORFEITABLE, NONTRANSFERABLE AND NONASSIGNABLE
This contract is for the exclusive benefit of the owner or his or her
beneficiaries. The interest of the owner is nonforfeitable. The owner must be
the annuitant. A co-owner may not be designated. This contract is not
transferable except to the Company on surrender or settlement. It may not be
pledged as security for any purpose.
PURCHASE PAYMENTS
A. Maximum Payment. The maximum payment under this contract for any tax year
will be no more than the lesser of:
1. $2,000 as an aggregate amount of the purchase payments for this
contract and contributions to all other individual retirement
arrangements that the owner has or may create; or
2. 100 percent of compensation. Compensation means wages, salaries,
professional fees, or other amounts derived from or received for
personal service actually rendered (including, but not limited to,
commissions paid sales personnel, compensation for services on the
basis of a percentage of profits, commissions on insurance premiums,
tips and bonuses) and includes earned income, as defined in Code
Section 401(c)(2) (reduced by the deduction the self employed
individual takes for contributions made to a Keogh plan). For
purposes of this definition, Section 401(c)(2) will be applied as if
the term trade or business for purposes of Section 1402 included
service described in subsection (c)(6). Compensation does not
include amounts derived from or received as earnings or profits from
property (including, but not limited to, interest and dividends) or
amounts not includible in gross income. Compensation also does not
include any amount received as a pension or annuity or as deferred
compensation. The term "compensation" shall include any amount
includible in the individual's gross income under Code Section 71
with respect to a divorce or separation instrument described in
subparagraph (A) of Code Section 71(b)(2).
3. The above maximum purchase payment limitations do not apply to:
a. a transfer, direct rollover, rollover contributions as permitted by
Code Section 402(c), 403(a)(4), 403(b)(8) or 408(d)(3); or
b. a transfer to the owner of a distribution from a qualified employer
plan from a former spouse under a divorce decree or written
instrument incidental to such divorce.
B. SEP Contributions. The above maximum payment limitations do not apply to a
contribution made in accordance with the terms of a Simplified Employee
Pension Plan (SEP) as described in Code Section 408(k) as amended.
C. Refund of Excess Contributions. If the purchase payment received is in
excess of the maximum payment: (1) the excess amount is subject to an excise
tax for the year of the excess and for each year thereafter until corrected;
or (2) the owner may receive a refund of the excess amount plus any
investment gain resulting from allocation to the subaccount(s). Any
investment loss resulting from the allocation of the excess amount to the
subaccount(s) will be deducted proportionately from the remaining subaccount
value(s) and guarantee amount(s).
D. Refund of Purchase Payments. Any refund of purchase payments (other than
those attributable to excess contributions) will be applied, before the
close of the calendar year following the year of the refund, toward the
payment of future purchase payments or the purchase of additional benefits.
E. Payment. Payment under this contract must be in cash.
DISTRIBUTIONS.
A. Premature Distributions. Any distribution will be reported to the IRS as a
premature distribution and may be subject to an excise tax in addition to
income tax unless the Company is notified of one of the following
circumstances:
1. the distribution is a part of a series of substantially equal
periodic payments made no less frequently than annually over the
life expectancy of the owner or joint life expectancies of the owner
and the named beneficiary(ies);
2. the owner is over age 59 1/2;
3. distribution occurs following the disability (within the meaning of
Section 72(m)(7) of the Code) of the owner; or
4. the distribution to the beneficiary(ies) occurs following the death
of the owner.
5. the distribution occurs: a. to pay health insurance premiums, if the
owner receives state or federal unemployment compensation for at
least twelve (12) consecutive weeks; or b. to pay medical bills in
excess of 7 1/2% of the owner's adjusted gross income.
B. Payments to Owner. Payments of the owner's entire interest will be made to
the owner under this contract on or before April 1 of the year following
the calendar year in which the owner attains the age of 70 1/2 as follows:
1. as a single lump sum; 2.in equal or substantially equal payments: over
the lifetime of the owner; over the lives of the owner and his or her
beneficiary(ies); over a specified period that may not be longer than the
owner's life expectancy; or over a specified period that may not be longer
than the joint life and last survivor expectancy of the owner and his or
her named beneficiary(ies).
Periodic payments must be made in intervals of no longer than one year. In
addition, payments must be either nonincreasing or they may increase only
as provided in Q&A F-3 of Section1.401(a)(9)-1 of the Proposed Income Tax
Regulations.
Payment shall also be made to the owner at any time the owner requests it
in order to pay health insurance premiums (if the owner receives state or
federal unemployment compensation for at least twelve (12) consecutive
weeks), or to pay medical bills in excess of 7 1/2% of the owner's
adjusted gross income. However, any applicable charges outlined in the
contract will apply to the amount withdrawn to the extent allowed by
federal regulation.
All distributions made hereunder shall be made in accordance with the
requirement of Section401(a)(9) of the Code including: incidental death
benefit requirements of Section 401(a)(9)(G) of the Code, and the
regulations thereunder; including the minimum distribution incidental
benefit requirement of Section 1.401(a)(9)-2 of the Proposed Income Tax
Regulations.
C. Payments to Beneficiary(ies). If the owner dies, payments will be
distributed as follows:
1. If death occurs on or after the date annuity payments have begun; the
remaining payments will be distributed at least as rapidly as under the
payment method used prior to death.
2. If the death occurs before annuity payments have begun; the death benefit
must be distributed as elected. However, if an election has not been made;
the beneficiary(ies) has the following options for distribution:
a. the full amount to be paid by December 31st of the year containing
the fifth anniversary of the owner's death; or
b. in equal or substantially equal payments over the life or life
expectancy of the beneficiary(ies). Such payments must start by
December 31st of the year following the owner's death. However, for
a spouse beneficiary, payments are not required to begin until
December 31st of the year the owner would have turned 70 1/2. A
spouse beneficiary may also roll all or a portion of the death
benefit to their own individual retirement annuity.
3. If the designated beneficiary is the individual's surviving spouse, the
spouse may treat the contract as his or her own IRA. This election will be
deemed to have been made if such surviving spouse makes a regular IRA
contribution to the contract, makes a rollover to or from such contract, or
fails to elect any of the above provisions.
Payment under this Section is considered to have begun if payments are made
because:
a. an individual reaches his or her required beginning date; or
b. if prior to the required beginning date; payments have begun under
an irrevocable annuity payment option acceptable under and over a
period permitted by Section1.401(a)(9) of the Regulations.
D. Other Distribution Provisions.
1. The return multiples contained in Tables V and VI of 1.72-9 of the Income
Tax Regulations are used to calculate: Life expectancy; and joint and last
survivor expectancy.
The life expectancy of the owner or spouse beneficiary will be recalculated
annually for the purposes of payment, unless otherwise elected by: the
owner, prior to payments beginning; or by the spouse beneficiary, if the
owner dies before payments have begun.
If election has been made not to recalculate life expectancy annually; such
election is irrevocable and will apply to all subsequent years.
The life expectancy of a non-spouse beneficiary(ies) may not be
recalculated. Instead, life expectancy will be based on the age(s) of the
beneficiary(ies) in the year the owner attains age 70 1/2. Payments for
subsequent years will be based on such life expectancy; reduced by one year
which has elapsed since the calendar year life expectancy was first
calculated.
2. The payment amounts will be no less than the amount obtained by dividing the
owner's entire interest by: the life expectancy of the owner or beneficiary;
or the joint and last survivor expectancy of the owner and spouse
beneficiary.
3. For a non-spouse beneficiary; the payment amount will be no less than the
amount obtained by dividing the owner's entire interest by the lesser of:
the owner's life expectancy; or a divisor obtained from the tables available
in Section 1.401(a)(9)b2.
4. The beneficiary(ies) may increase the frequency or amount of payments; if
the payments are for a period certain.
5. If there are two or more individual retirement accounts or annuities
(IRA's); minimum distribution requirements of the Code may be satisfied out
of one of the IRA's. This is possible by receiving the combined required
minimum distribution amounts out of one IRA. This is the alternative method
described in Notice 88-38, 1988-1 C.B. 524.
GENERAL PROVISIONS.
A. Other Limitations.
1. No amount of life insurance is provided under this contract.
2. Commingling of funds of this contract with any other annuity is
prohibited.
3. The only values which may be held under this contract are those for the
separate interest of the owner.
4. Purchase Payments for this contract will not be invested in collectibles.
B. Minimum Purchase Payment Amount. The minimum total first-year purchase
payment amount required to purchase a contract is $2,000. The minimum
purchase payment size is $100, unless the payment is made through an
Automatic Purchase Payment Plan, in which case the minimum is $25.
C. Additional Purchase Payments. Additional purchase payments after the initial
purchase payment are not required.
D. Endorsements. The contract, including this Endorsement will be amended as
required by changes in: the Code; IRS Regulation; or published revenue
rulings. The Company will promptly furnish any endorsements which are
required to comply with such changes. Upon receipt of such endorsement, the
owner has thirty (30) days in which to contact the Company in order to reject
the endorsement. If the thirty (30) days elapse and the Company has not been
contacted, the endorsement is deemed accepted. Because this contract is
established with the intent to comply with federal regulation, rejection will
be deemed a request to remove this endorsement and will result in a taxable
event.
E. Reporting. The Company is required to report payments from this contract to
the IRS and, in some cases, to withhold certain amounts from taxable
distributions. The Company will furnish an annual report summarizing total
contributions and distributions under this contract.
F. Disclosure. The Company furnishes a disclosure statement describing IRA's
when the contract is delivered or endorsed.
G. Enabling Agreement. The owner, by signing the application requesting that the
contract be issued as an Individual Retirement Annuity, agrees to the terms
of this Section and requests that this Endorsement be attached to the
contract. The matters which the owner agrees to and accepts responsibility
for in the contract (including the Application and this Endorsement) will not
be the responsibility of CUNA Mutual Life Insurance Company (the Company).
The Company will not be liable for any direct or indirect damage or loss
including (without limitation) taxes suffered or incurred by the owner or the
beneficiary(ies) as a result of those matters.
Unless such damage or loss is caused by willful or negligent act or omission
of the Company in violation of the contract or applicable law, the Company
will not be liable for any direct or indirect damage or loss. This includes
(without limitation) taxes suffered or incurred by the owner when the
Company:
1. acts in accordance with or reliance upon any information furnished by the
owner or the beneficiary(ies);
2. is required to act without the benefit of information which the owner is
required to provide under the provisions of the contract or by law; or
3. administers any other matters arising under or relating to the contract.
CUNA MUTUAL LIFE INSURANCE COMPANY
A Mutual Insurance Company
Michael B. Kitchen
President
<PAGE>
TELEPHONE AND FAX AUTHORIZATION INFORMATION
Below is a list of transactions that can be performed by phone and by fax.
By Phone - I authorize the Company to accept telephone instructions from me.
Transferring amounts to and from the Subaccounts of the Separate Account and
to or from the General Account. A request received prior to 3:00 p.m. Central
Standard Time will be processed the day the request is received. Requests
received after that time will be processed the following Valuation Day.
Beginning, modifying, or terminating the Dollar Cost Averaging Program (DCA).
Beginning, modifying, or terminating the Automatic Transfer Program (ATP).
Beginning, modifying, or terminating the Automatic Personal Portfolio
Rebalancing Service. (APPRS)
Changing the Automatic Payment Plan by changing the bill day, changing the
amount, or stopping the draft.
By Fax - I authorize the Company to accept fax (facsimile) instructions on a
form prepared by the Company or on a document acceptable to the Company for all
the following programs available under my policy:
All transactions listed in the "By Phone" section above.
Taking out a loan for an amount not more than $5,000.
Making a partial withdrawal for an amount not more than $5,000.
Terminating this authorization.
RECEIPT
Received from this day of , 19,
in the amount of $ to be applied on the Variable Annuity
application dated this same date.
Agents Full Name Address of Agent
All checks must be made payable to:
CUNA Mutual Life Insurance Company
2000 Heritage Way, Waverly, Iowa 50677
<PAGE>
EXHIBIT 5(c)
Flexible Premium Deferred Variable and Fixed Annuity Application
State Variations
Application Form No. 1676 attached as Exhibit 5 is a copy of the Application
language used in the following states:
Alabama Maine
Arkansas Massachusetts
California Mississippi
Colorado Missouri
Connecticut Nebraska
Delaware New Mexico
Hawaii North Dakota
Illinois Rhode Island
Indiana South Dakota
Iowa Tennessee
Kansas Vermont
Louisiana West Virginia
Wyoming
The following application forms vary from the Form No. 1676 as indicated below:
Application Form No. 1676 AZ Section 13 added, "Upon written request, we will
provide the owner with information regarding benefits and provisions of the
contract. If you decide not to keep your contract, return it within 10 days
after you receive it for a refund of purchase payments, adjusted for any
investment gain or loss if allocated to the Subaccount(s) of the Variable
Account. You may return it to CUNA Mutual Life Insurance Company, 2000 Heritage
Way, Waverly, Iowa 50677, or to the agent who sold it to you." Form 1676 AZ
language is used in the following states:
Arizona
Application Form No. 1676 FL changes Section 13(e) to "I understand that
contract value placed in the subaccounts of the variable account will increase
or decreased based on the investment experience of the subaccount(s) selected;
adds agent license no line next to the witness or agent line. Form 1676 FL
language is used in the following states:
Florida
Application Form No. 1676(B) adds to Section 8 "the portion of the initial
Purchase Payment allocated to the subaccount(s) of the variable account will be
allocated to the Money Market subaccount for the first 20 days of your contract.
After 20 days, it will be allocated as shown above." Form 1676(B) language is
used in the following states:
Georgia
Idaho
Michigan
Nevada
North Carolina
South Carolina
Application Form No. 1676 KY adds to Section 13 "(g) - fraud statement". Also
changed signature lines to include: signed at: (city & state), on (date). Form
1676 KY language is used in the following states:
Kentucky
Application Form No. 1676(F) deletes from Section 8 the allocation percentage to
subaccount(s) of the variable account. Section 9, Preservation Plus Program is
deleted in its entirety. Section 12, Agreement Section deleted (f), "I
understand that amounts withdrawn from the guaranteed interest option may be
adjusted upward or downward based on an interest adjustment formula. Form
1676(F) language is used in the following states:
Maryland
Oregon
Application Form No. 1676 MN deletes subsection (c) from Section 13 related to
taxpayer identification. Application Form No. 1676 MN language is used in the
following states:
Minnesota
Application Form No. 1676 MT0294 adds a date in the form number. Application
Form No. 1676 MT0294 language is used in the following states:
Montana
Application Form No. 1676(D) includes only one year guarantee period percentage
allocation in Section 8. Section 13, Agreement (f) is deleted - "I understand
that amounts withdrawn from the guarantee interest option may be adjusted upward
or downward based on an interest adjustment formula." Application Form No.
1676(D) language is used in the following states:
Pennsylvania
Texas
Wisconsin
Application Form No. 1676(C) adds (g) fraud clause to Section 13, Agreement.
Application 1676(C) language is used in the following states:
Ohio
Application Form No. 1676 OK adds to Section 8 "The portion of the initial
Purchase Payment allocated to the Money Market Subaccount(s) of the Variable
Account will be allocated to the Money market Subaccount for the first 20 days
of your contract. After 20 days, it will be allocated as shown above. Question
13 adds fraud statement. Application Form No. 1676 OK language is used in the
following states:
Oklahoma
Application Form No. 1676(E) adds to Section 8 "The portion of the Initial
Purchase Payment allocated to Subaccount(s) of the Variable Account will be
allocated to the Money Market Subaccount for the first 20 days of your contract.
After 20 days, it will be allocated as shown above. Also, only 1 year guarantee
period % allocation. Section 13, Agreement, (f) is deleted "I understand that
amounts withdrawn from the guaranteed interest option may be adjusted upward or
downward based on an interest adjustment formula." Application Form No. 1676(E)
language is used in the following states:
Utah
Application Form No. 1676 VA changes Section 13, Agreement (f) "interest
adjustment" to "market Value". Application Form No. 1676 VA language is used in
the following states:
Virginia
Application Form No. 1676(G) adds to Section 8 "The portion of the initial
Purchase Payment allocated to the subaccount(s) of the Variable Account will be
allocated to the Money Market Subaccount for the first 20 days of your contract.
After 20 days, it will be allocated as shown above. Application Form No. 1676(G)
language is used in the following states:
Washington
<PAGE>
EXHIBIT 6(b)
CUNA Mutual Life Insurance Company
Waverly, Iowa
ARTICLES OF INCORPORATION
ARTICLE I
Name and Principal Office
Section 1. The name of this Corporation is CUNA Mutual Life Insurance Company
(hereinafter sometimes called the Company).
Section 2. The home office and principal place of business of the Company shall
be located in Bremer County, Iowa.
ARTICLE II
Nature of Business, Objects and Powers
Section 1. The general nature and purpose of the business of this Corporation
shall be that of engaging in, pursuing, maintaining and transacting on the
mutual plan as a legal reserve or level premium company,
(a) a general life and health and accident insurance business and
an annuity business, including all forms of life insurance,
endowments, annuities, accident insurance, disability and
health insurance, all relating to the life and health of
persons, and,
(b) any other type of insurance business which the Company may be
authorized and duly qualified to underwrite and transact under
and by virtue of Iowa Insurance Laws,
and in addition, engaging in, pursuing, maintaining and transacting any other
related or unrelated business which any corporation now or hereafter authorized
and empowered to do an insurance business in this State may now or hereafter
lawfully do, whether or not it be complementary, necessary, or incidental to the
business of writing insurance and otherwise transacting the business of an
insurer.
Section 2. More specifically, and without limitation as to any other right,
power, privilege, franchise, or authority which the corporation may be permitted
under the law of the state of Iowa, and in pursuance of the aforesaid corporate
purposes, the Company in its corporate or assumed name is empowered:
to sue, complain and defend; to have a corporate seal which may be
altered at pleasure, and to use the same by causing it, or a facsimile
thereof to be impressed or affixed or in any other manner reproduced;
to design, create, develop, offer, solicit, sell, write, underwrite,
insure, coinsure, reinsure, administer, settle and otherwise deal in
and with insurance policies and annuity contracts of all types whether
on a participating or nonparticipating basis, and on an individual or
group or blanket basis, providing for benefits on either a fixed or
variable basis; to enter into any lawful contract for the purpose of
ceding or accepting insurance risks, directly or indirectly, either
entirely in its own right or in a shared or multiple capacity with
other insurers; to enter into collateral or supplementary contracts and
otherwise deal contractually with respect to insurance policies or
annuity contracts or the proceeds of same; to act as trustee or advisor
in any capacity, and to offer all services, including those of a
financial, accounting, or data processing nature, directly or
indirectly, incidental to its business, and to form or otherwise
acquire other insurance or business corporations as subsidiaries, and
to invest in, and to establish or manage, one or more investment
companies; to purchase, take, receive, lease, or otherwise acquire,
own, hold, improve, use, or otherwise deal in and with real or personal
property of any kind and description, or any interest therein, wherever
situated; to sell, convey, mortgage, pledge, lease, exchange, transfer
and otherwise dispose of all or any part of its property and assets; to
compensate, or lend money to and otherwise to assist its employees,
agents, officers, and Directors; to purchase, take, receive, subscribe
for, or otherwise acquire, hold, vote, use, employ, sell, mortgage,
lend, pledge, or otherwise dispose of and otherwise use and deal in and
with, shares or other interests in, or obligations of, other domestic
or foreign corporations, associations, partnerships, joint ventures or
individuals, or direct or indirect obligations of the United States or
of any other government, state, territory, governmental district or
municipality, public or quasi-public corporation, or of any
instrumentality thereof; to make contracts and guarantees and incur
liabilities; to lend and borrow money and incur debts for its corporate
purposes; to invest and reinvest its funds, and take and hold real and
personal property as security for the payment of funds so loaned or
invested; to acquire or organize subsidiaries; to conduct its business,
carry on its operations, and have offices and exercise its powers under
authority granted in any state, territory, district, or possession of
the United States or in any foreign country; to make donations for
religious, charitable, scientific or educational purposes; to pay
pensions and establish pension plans, pension trusts, profit-sharing
plans and other incentive, insurance and welfare plans for any or all
of its Directors, officers, agents and employees, policyowners,
insurance policy or contract beneficiaries, or clients; to enter into
general partnerships, limited partnerships, whether the company be a
limited or general partner, joint ventures, syndicates, pools,
associations and other arrangements in pursuance of any or all of the
purposes for which the Company is organized; to indemnify officers,
Directors, employees and agents, possessing all the rights and powers
with respect thereto permitted to Iowa business corporations as
specified in Subsection 19 of Section 496A.4 of the Iowa Business
Corporation Act and all acts amendatory thereof or additional thereto;
and to engage in and carry on any other type of business which any
corporation now or hereafter authorized and empowered to do an
insurance business in the state of Iowa may now or hereafter lawfully
do,
and it shall have and exercise all powers, rights and privileges necessary or
convenient to effect any or all of the purposes for which the Company is
organized, and generally such additional powers not herein specified as are now
or may hereafter be conferred upon corporations similar to this Company by the
laws of the state of Iowa.
ARTICLE III
Continuation of Corporate Entity
This Corporation shall have no capital stock and is a continuation of the
original corporation doing business on the mutual plan, retaining all of its
original rights, powers, privileges, immunities, and franchises. All of the
contract rights of policyowners of the Company now holding contracts of
insurance or of annuity issued or assumed by the Company are and shall be
retained. Subject to the foregoing, these Articles shall be construed as a
substitute for all prior articles and amendments thereto.
ARTICLE IV
Period of Existence
This Corporation, as renewed, shall have perpetual existence.
ARTICLE V
Exemption from Corporate Debts
The private property of the Members of the Company shall in no case be liable
for corporate debts, but shall be exempt therefrom.
<PAGE>
ARTICLE VI
Members
Section 1. Each person who owns one or more life insurance policies, health and
accident insurance policies, or annuity contracts issued by the Company shall be
a Member of the Company, but only so long as at least one of said policies or
contracts remains in full force and effect and has not been surrendered or has
not expired or has not matured by death of the insured or annuitant, or
attainment of maturity date. In the case of multiple ownership of any insurance
policy or annuity contract, the persons owning such policy or contract shall be
deemed collectively to be the Member and the Bylaws may establish procedures for
the exercise of the voting right of such Member.
Section 2. Only those Members who meet such eligibility requirements, as may be
established by law, by these Articles, and the Bylaws as may be amended from
time to time, shall be Voting Members, provided however, that nothing herein
contained, and no Bylaws establishing additional eligibility requirements for
Voting Members shall have the effect of terminating a person's then existing
membership or voting right.
ARTICLE VII
Members Meetings
Section 1. Voting Members shall be entitled to vote in person or by proxy at any
meeting of the Members in accordance with procedures prescribed in the Bylaws.
Section 2. Unless the Board directs otherwise, the annual meeting of the Company
shall be held at the Company's home office and principal place of business on
the second Wednesday of May of each year for the election of Directors, and for
the transaction of any other business properly coming before such annual
meeting.
Section 3. Annual and all special meetings of the Members shall be called or
held as provided in the Bylaws. The Company may make reasonable expenditures in
support of a position or issue at any meeting, or in support of any or all
candidates to be nominated for election to the Board.
ARTICLE VIII
Board of Directors and Officers
Section 1. The corporate powers and business of the Company shall be directed
and controlled by a Board of Directors and by such officers and agents as the
Board of Directors may authorize, elect or appoint.
Section 2. The Board of Directors shall consist of not less than nine (9) nor
more than twenty (20) Members as prescribed from time to time in the Bylaws, and
shall be divided into classes, as nearly equal numerically as possible, so that
the terms of one class expire each year. Each Director shall serve a term of
approximately three (3) years except as otherwise provided in the Bylaws, or
except where it is necessary to fix a shorter term in order to preserve
classification. The Board of Directors shall have the power to fill any vacancy
in its number occurring for any reason at any time except where such vacancy
occurs due to the expiration of a Director's term of office as provided herein
or in the Bylaws.
Section 3. The Board of Directors shall have the power to adopt such bylaws,
rules and regulations for the transaction of business of the Company as are not
inconsistent with these Articles, or the laws of the state of Iowa, and to amend
or repeal such bylaws, rules and regulations. The Bylaws shall provide for the
election of Directors and establish procedures to accomplish the same.
Section 4. A Director of this Company shall not be personally liable to the
Company or its Members for monetary damages for breach of fiduciary duty as a
Director, except for liability (i) for any breach of the Director's duty of
loyalty to the Company or its Members, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law, or
(iii) for any transaction from which the Director derived an improper personal
benefit.
ARTICLE IX
Change of Articles
These Articles of Incorporation may be amended, substituted or changed at any
annual meeting of the Members, or at any special meeting called for that purpose
as hereinafter provided. The proposed substitution or amendment must be offered
in writing, and either signed by not less than one (1) percent of the Voting
Members, or offered by the Board of Directors.
Such proposed substitution or amendment when offered by a Member
(a) must contain the actual signatures as well as the printed
names and addresses of those Members subscribing to the
proposal,
(b) must have the notarized certification of the offering Member
authenticating the signatures of the other subscribing
Members, and
(c) must be filed with the Secretary of the Company at least
ninety (90) days prior to said annual or special meeting.
Such proposed substitution or amendment when offered by the Board of Directors
must be first adopted by two-thirds (2/3) of the total Board membership at a
regular meeting or at a special meeting called for such purpose, or it must be
approved by the unanimous written consent of all of the Directors, certified by
the Secretary, and filed at least thirty (30) days prior to said annual or
special meeting of the Members.
The Secretary shall furnish to each Voting Member a copy of such substitution or
amendment whether proposed by the Board or by Members together with a ballot
containing a suitable space wherein a Voting Member may vote for or against the
same, and a space for the Voting Member's signature and the date of the meeting.
Such material shall be mailed in the United States mail, addressed to the Voting
Members of the Company, or substantially all of them, at their last known post
office addresses, as the same then appear on the records of the Company, not
less than twenty (20) nor more than ninety (90) days prior to the date of the
meeting. The Board of Directors or persons designated by it may make such
statements or recommendations as it sees fit on all matters to be presented to
the Members. All substitutions or amendments when adopted by a majority of
Members voting thereon in person or by duly signed ballot shall be binding upon
all Members and they shall be governed thereby.
<PAGE>
EXHIBIT 6(c)
CUNA Mutual Life Insurance Company
Waverly, Iowa
Restated
BYLAWS
ARTICLE I
Definitions
Section 1.1. Terms. When used in these Bylaws, the terms hereinafter provided
shall have the meanings assigned to them unless another meaning is explicitly
indicated:
(a) Member: shall mean a Member of this Company as defined and described in
the Company's Articles.
(b) Policy: shall mean a life insurance policy, accident and health policy,
or annuity contract on an individual or group basis and shall not
include group insurance certificates, settlement contracts, depository
contracts, or certificates of any kind issued for the purpose of
managing or holding insurance or annuity contract proceeds when a life
policy, accident and health policy, or annuity contract terminates,
expires or otherwise matures by reason of death, surrender or maturity
in its ordinary course, or otherwise.
(c) Record Date: shall mean the last business day of any month immediately
preceding the date of any event or transaction for which it may be
useful or relevant to establish the identity of persons who are Members
or Voting Members, from data contained in the Company's records.
(d) Voting Member: shall mean a Member who meets all of the eligibility
requirements for voting as provided in Section 2.1.
ARTICLE II
Voting Rights of Members
Section 2.1. Eligibility to Vote. Only those Members who have attained age
sixteen (16) on or prior to the Record Date for any meeting shall be eligible to
vote at Members' Meetings. In the case of multiple ownership of any Policy, the
persons designated owners or co-owners on the Company's records as of such
Record Date shall be deemed collectively to be the Voting Member and shall
designate one of their number to cast their vote. In the case where ownership is
claimed by right of assignment, the assignee, if shown on the Company's records
to be the owner as of such Record Date, shall be deemed the Voting Member. In
the case of group policies, the holder of the master policy, and not those
persons holding certificates under the master policy, shall be deemed the Voting
Member.
Section 2.2. Exercise of Voting Rights. Each Voting Member shall be entitled to
cast one (1) vote on each matter to come before a meeting of the Members, either
in person or through an attorney-in-fact designated in a written proxy which
meets the requirements of Section 2.4, regardless of the number of policies or
the amount of insurance or the number of lives insured under any Policy or
Policies owned or controlled by the Voting Member. Except when electing
Directors, voting by Members at any regular or special meeting of the Members
may be by voice vote unless the vote is not all "yea" or "nay" in which case the
vote shall be by written ballot. Each ballot may contain more than one question
or proposition. Any attorney-in-fact holding the voting power of more than one
Member may cast all such votes on one ballot, provided that the ballot shows on
its face the number of votes being cast, and provided it is verified by the
Voting Inspectors as having been cast in accordance with the voting rights
acquired by proxy from the persons whose votes are being cast by proxy.
Section 2.3. Electing Directors. The vote for a Director or Directors at a
meeting of Members shall be by written ballot. Each Voting Member shall be
entitled to cast one (1) vote for each Director's office to be filled. Those
eligible Candidates receiving the highest number of votes cast at such meeting
shall be declared elected.
Section 2.4. Proxy Requirements. No proxy shall be valid unless it is evidenced
by a written form executed by a Voting Member or his or her legal representative
within two (2) months prior to the meeting for which such proxy was given.
Whether or not the duration of such proxy is specified on the proxy form, all
such proxy authority shall be limited to thirty (30) days subsequent to the date
of such meeting or any adjournment thereof, and no proxy shall be valid beyond
the date of such limitation. Unless a Voting Member's proxy shall be received by
the Secretary at least one (1) day prior to the meeting or election at which it
is to be used, it shall not qualify to be voted on behalf of the Voting Member.
Any proxy may, by its terms, be limited as to its use, purpose, or manner in
which it is to be used at the meeting or election for which it is given. Any
such proxy authority shall be revocable by the Voting Member or his or her legal
representative at any time prior to such meeting and shall be deemed to have
been revoked when the person executing the proxy is present at the meeting and
elects to vote in person.
Section 2.5. Proxy Solicitation by this Company. This Company may solicit
proxies from Voting Members and provide such information as this Company deems
pertinent with respect to the Candidates for election as Directors of this
Company or matters being voted upon at the meeting. The fact that this Company,
by mail or otherwise, solicits a proxy from any person shall not constitute nor
be construed as an admission of the validity of any Policy or that such person
is a Member entitled to vote at the meeting; and such fact shall not be
competent evidence in any action or proceeding in which the validity of any
Policy or any claim under it is at issue.
ARTICLE III
Members' Meetings
Section 3.1. Annual Meeting. There shall be an annual meeting of Members for the
purpose of electing Directors and conducting such business as may properly come
before the meeting. Such annual meeting of Members shall be held on the second
Friday in May in the Principal Office of this Company on Heritage Way, Waverly,
Iowa, at the hour of 9:00 a.m. unless the Board otherwise directs. No notice of
such annual meeting need be given except as required by law, unless the Board
designates another date or time or place for the meeting.
Section 3.2. Special Voting and Special Meetings. A special voting of Members or
special meetings of Members may be called at any time pursuant to a duly adopted
Board resolution or upon a petition filed with the Secretary containing a
complete description of the proposition or propositions to be voted on, the
signatures, the printed names and addresses and the policy numbers of at least
one percent (1%) of the Voting Members. A written notice summarizing the purpose
shall be given.
Section 3.3. Presiding Officer. The Chairman of the Board, or in the absence of
the Chairman, the Vice Chairman, or in the absence of both, the President, or in
the absence of all three, the Chief Operating Officer shall preside over
meetings of the Members. The Secretary or any Assistant Secretary of this
Company shall act as secretary for the meetings.
Section 3.4. Place of Meetings. The place of all meetings of Members shall be
the Principal Office of this Company in Waverly, Iowa, unless another place is
designated by the Board, either within or without the state of Iowa, and is
specified in the notice of the meeting.
Section 3.5. Manner of Giving Notice. Whenever written notice is required, it
shall state the time, date and place of the meeting, and if for a special vote
or a special meeting, a summary of the purpose. Notice shall be given by mailing
a copy of the notice to Voting Members not more than ninety (90) nor less than
thirty (30) days prior to the day of the meeting. Notice shall be deemed to have
been given to a Voting Member when a copy of such notice has been deposited in
the United States mail, addressed to the owner or the legal representative of
the owner of any policy used to identify a Member as a Voting Member, at his or
her post office address as the same appears on this Company's records as of the
Record Date for the notice, with postage prepaid. Failure to provide notice to
all Voting Members when notice is required shall not invalidate a meeting unless
such failure was intended and such intentional failure can be shown to have been
caused by a willful or deliberate act. If the date or place of an annual meeting
of Members is changed by the Board after this Company has sent or commenced to
send notices, or if prior to the date of any meeting of Members or any
adjournment thereof the notice of such meeting shall be deficient, the Board may
order a notice by publication in at least two (2) newspapers of general
circulation, one of which shall be located in Des Moines, Iowa, and one in
Waterloo, Iowa, at least ten (10) days prior to the meeting, and no other notice
shall be required. Such other notice shall be given as may be required by the
laws of Iowa pertaining to notice of meetings.
Section 3.6. Quorum. Either twenty-five (25) Voting Members present in person or
one thousand (1000) Voting Members present by proxy shall constitute a quorum at
any meeting of Members. If a quorum is not present, a majority of the Voting
Members present in person or by proxy may only adjourn the meeting from time to
time without further notice.
Section 3.7. Required Majority. Except as otherwise expressly provided in the
Articles or Bylaws, or by law, a majority of the votes cast by Voting Members
present in person and by proxy at any meeting of the Members with a quorum
present shall be sufficient for the adoption of any matter to properly come
before the meeting.
Section 3.8. Appointment of Voting Inspectors. Prior to each meeting of Members,
the Board or its Executive Committee, if any, shall appoint, from among Members
who are not Directors, Candidates for the office of Director or Officers of this
Company, three (3) or more voting inspectors and one (1) or more alternate
inspectors, and shall fix their fees, if any. If an inspector so appointed is
unable or unwilling to act and no alternate is able or willing, or if the Board
or Executive Committee has failed to appoint voting inspectors prior to the
meeting, the President may appoint voting inspectors or alternates as required
from among Members eligible as aforesaid.
Section 3.9. Administration of Proxies and Ballots. All unexpired proxies
intended for use at a meeting of Members shall be delivered to the voting
inspectors prior to the meeting. The voting inspectors shall verify their
validity and tabulate them, certifying their findings and tabulation to the
Secretary. At all meetings of the Members, the voting inspectors shall
distribute, collect, and tabulate ballots and certify under oath the results of
any ballot vote cast by Members. All questions concerning the eligibility of
Members to vote and the validity of the vote cast shall be resolved by voting
inspectors on the basis of this Company's records. In the absence of challenge
before the tabulation of a ballot vote is completed, the inspectors may assume
that the signature appearing on a proxy or a ballot is the valid signature of a
person entitled to vote, that any person signing in a representative capacity is
duly authorized to do so, and that a proxy, if it meets the requirements of
Section 2.4, and otherwise appears to be regular on its face, is valid.
ARTICLE IV
Communications Between Members
Section 4.1. Procedure for Facilitating Communication. No Member who is not an
officer, Director, or employee of this Company acting in the ordinary course of
business shall have access to any of this Company's policyholder records, except
such information pertaining to his or her own Policy or Policies as this Company
may be reasonably required by law to provide. However, any Member desiring to
communicate with other Members in connection with a Members meeting shall no
less than sixty (60) days prior to the date of such meeting furnish a written
request addressed to the Secretary containing the following information:
(a) such Member's full name and address and the policy number of any policy
owned by the Member;
(b) such Member's reasons for desiring to communicate with other Members;
(c) a copy of the proposed communication;
(d) the date of the meeting at which such Member desires to present the
matter for consideration.
Within fifteen (15) days of receipt of such request, this Company shall furnish
the requesting Member with information indicating the number of Voting Members
this Company has as of the last day of the month immediately preceding and
provide an estimate of all costs and expenses for processing and mailing the
proposed communication to the membership; or this Company shall advise the
Member that this Company refuses to mail the proposed communication. This
Company shall not refuse to mail the proposed communication unless it has first
made a determination that the communication is "improper" in accordance with
standards provided in Section 4.3 and has followed the procedures provided in
Section 4.2. Within thirty (30) days (or upon a later date if specified by the
requesting Member) of receiving an amount equal to all of this Company's
estimated costs and expenses and a sufficient number of copies of the proposed
communication, this Company shall process and mail the communication to all of
the Voting Members by a class of mail specified by the requesting Member, unless
the communication has been determined to be improper.
Section 4.2. Determining Whether Communications are Proper. Each request to
communicate with other Members shall be reviewed by the Board. If the Board
determines that the communication is a proper one, it shall be processed as
provided in Section 4.1. If the Board determines the communication to be
improper, it shall instruct an appropriate officer to communicate a written
refusal specifying the reasons for the refusal.
Section 4.3. Improper Communication Defined. As used in this section, an
"improper communication" is one which contains material which:
(a) at the time and in the light of the circumstances under which it is made
(1) is false or misleading with respect to any material fact, or
(2) omits any material fact necessary to make the statements
therein not false or misleading or necessary to correct any
statement in an earlier communication on the same subject
matter which has become false or misleading; or
(b) relates to a personal claim or a personal grievance against this
Company, its management or any other party, or apparently seeks
personal gain or business advantage by or on behalf of any party; or
(c) relates to any matter of a general, economic, political, racial,
religious, social or other nature that is not significantly related to
the business of this Company or is not within the control of this
Company, in that it is not within the power of this Company to deal
with, alter or effectuate; or
(d) directly or indirectly, and without express factual foundation,
(1) impugns character, integrity or personal reputation, or
(2) makes charges concerning improper, illegal or immoral conduct.
ARTICLE V
Board of Directors
Section 5.1. General Powers. The business and affairs of this Company shall be
directed by the Board which from time to time shall delegate authority and
establish guidelines as it deems necessary or appropriate for the exercise of
corporate powers by officers and employees in the course of business.
Section 5.2. Number, Eligibility, and Tenure. The Board shall consist of at
least nine (9) and not more than twenty (20) persons as set by the Board from
time to time. Directors must be policyholders of this Company. The regular term
of office for a Director shall commence when a Director is elected by Members
and end at the third (3rd) succeeding annual meeting of the Members, except
where a shorter term is provided in order to preserve the Class of Directors.
The vacancies on the Board to be filled at each annual meeting of Members shall
be the offices of those Directors whose regular terms are scheduled to expire.
Directors shall be eligible for reelection. Unless a Director's regular term of
office is sooner terminated by resignation, retirement, legal incapacity or
death, each Director elected at an annual meeting of Members shall hold office
for the term for which elected and until a successor has been elected or
appointed and qualified.
Section 5.3. Classification. Directors shall be divided into three (3) Classes,
which shall be as nearly equal as possible, according to the expiration date of
the regular terms of office. The regular term of office of one of the Classes of
Directors shall expire at each annual meeting of Members.
Section 5.4. Nomination by Members. Any Member may nominate one or more
Candidates for the Directors' offices to be filled by election at any annual
meeting of Members by filing with the Secretary on behalf of each such
Candidate, on or before January 31 preceding such annual meeting, a Certificate
of Nomination which has been signed by at least one percent (1%) of the Voting
Members and which gives the names, occupations and addresses of their Candidate
or Candidates together with a statement signed by said Candidates that they will
accept office if elected. No signature on any such Certificate shall be counted
unless it is also accompanied by the printed name and address and the policy
number of a Policy owned by the signator.
Section 5.5. Board Sponsored Nominations. The Board may nominate one or more
Candidates for the Directors' offices to be filled by election at any annual
meeting of Members by nominating a Candidate or a slate of Candidates in a
resolution duly adopted at a regular or special meeting of the Board and causing
a Certificate of Nomination to be filed with the Secretary on behalf of each
such Candidate at least thirty (30) days prior to the date of the annual meeting
of Members. Such Certificate of Nomination shall give the names, occupations,
and addresses of their Candidate or Candidates together with a statement signed
by said Candidates that they will accept office if elected.
Section 5.6. Removal. A Director may be removed from office for cause by an
affirmative vote of three-fourths (3/4) of the full Board of Directors at a
meeting of the Board.
Section 5.7. Vacancies. Vacancies in the Board which occur prior to the
expiration of a Director's regular term of office by reason of resignation,
retirement, legal incapacity, or death, or other vacancies which may occur by a
reason of an increase in the number of Directors in between annual meetings of
Members, or vacancies which may occur by reason of any failure on the part of
the Voting Members to elect a sufficient number of Directors at an annual
meeting of Members, may be filled by appointment made in a duly adopted
resolution concurred in by a majority of the Board membership when voting at any
meeting of the Board, or by appointment made in a unanimous consent action taken
in lieu of meeting. A Director appointed to fill a vacancy shall hold office for
the unexpired portion of the term to which appointed. Unless a Director's
service is otherwise terminated by resignation, retirement, removal, legal
incapacity, or death, a Director, whether appointed or elected, shall serve
until a successor is elected or appointed and qualified.
Section 5.8. Nonattendance. Any Director absent from three consecutive regular
meetings shall forfeit his office and shall be ineligible for office for six
months.
Section 5.9. Compensation. Directors shall be compensated as established by the
Board and shall be reimbursed for reasonable expenses incurred in connection
with the discharge of their duties and responsibilities.
ARTICLE VI
Board Meetings
Section 6.1. Regular Meetings. A regular annual meeting of the Board of
Directors shall be held without other notice than this Bylaw on such date in the
months of April, May or June as the Board of Directors shall determine. At such
meetings, the Directors shall elect such officers of this Company as required or
permitted by these bylaws and transact such business as pertains to the annual
meetings of the Board. The Board of Directors may provide by resolution, or the
Chairman of the Board, Vice Chairman or President may designate, the time, date
and place, either within or without the state of Iowa, for the holding of
additional regular meetings by giving notice at a regular or special meeting of
Directors or by written notice as provided in this Article for special meetings.
Section 6.2. Special Meetings. Special meetings of the Board of Directors may be
called by the Chairman of the Board, Vice Chairman, President or Secretary, and
shall be called by the President upon written request of any three (3)
Directors. The person or persons authorized to call special meetings of the
Board of Directors may fix any place, either within or without the state of
Iowa, as the place for holding any such special meeting of the Board of
Directors.
Section 6.3. Notice. Notice of any special meeting shall be given at least
ninety-six (96) hours previously thereto by written notice delivered personally
or by U.S. mail, telegram or electronic mail transmission to each Director at
his or her home or business address. If mailed, such notice shall be deemed to
be delivered when deposited in the United States mail so addressed, with postage
thereon prepaid. If notice be given by telegram, such notice shall be deemed to
be delivered when the telegram is delivered to the telegraph company. Whenever
any notice whatever is required to be given to any Director of this Company
under the Articles of Incorporation or Bylaws or any provision of law, a waiver
thereof in writing, signed at any time, whether before or after the time of
meeting, by the Director entitled to such notice, shall be deemed equivalent to
the giving of such notice. The attendance of a Director at a meeting shall
constitute a waiver of notice of such meeting, except where a Director attends a
meeting and objects thereat to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the Board
of Directors need be specified in the notice or waiver of notice of such
meeting.
Section 6.4. Quorum. Except as otherwise provided by law or by the Articles of
Incorporation or these Bylaws, a majority of the number of Directors authorized
by the Articles of Incorporation and established in accordance with these
Bylaws, shall constitute a quorum for the transaction of business at any meeting
of the Board of Directors, but a majority of the Directors present (though less
than such quorum) may adjourn the meeting from time to time without further
notice.
Section 6.5. Manner of Acting. The act of the majority of the Directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors, unless the act of a greater number is required by law or by the
Articles of Incorporation or these Bylaws.
Section 6.6. Presumption of Assent. A Director of this Company who is present at
a meeting of the Board of Directors or a committee thereof at which action on
any corporate matter is taken shall be presumed to have assented to the action
taken unless his/her dissent shall be entered in the minutes of the meeting or
unless he/she shall file a written dissent to such action with the person acting
as the Secretary of the meeting before the adjournment thereof or shall forward
such dissent by registered mail to the Secretary of this Company immediately
after the adjournment of the meeting. Such right to dissent shall not apply to a
Director who voted in favor of such action.
Section 6.7. Informal Action Without Meeting. Any action required or permitted
by the Articles of Incorporation or these Bylaws or any provision of law to be
taken by the Board of Directors at a meeting, or by resolution may be taken
without a meeting if a consent resolution in writing, setting forth the action
so taken shall be signed by all of the Directors then in office. Such consent
shall have the same force and effect as a unanimous vote of the Board of
Directors.
Section 6.8. Meetings by Conference Telephone. Directors may participate in a
meeting of the Board of Directors or a committee thereof by means of conference
telephone or similar communications equipment through which all persons
participating in the meeting can hear each other. Such participation will
constitute presence in person at that meeting for the purpose of constituting a
quorum and for all other purposes. The place of any meeting held pursuant to
this section will be deemed to be the place stated in the minutes of such
meeting so long as at least one Director is present at that place at the time of
that meeting.
<PAGE>
ARTICLE VII
Committees
Section 7.1. Committees. The Chairman of the Board may appoint committees except
standing committees or any other committee required to be elected or appointed
by the Board of Directors. The Board of Directors by resolution adopted by the
affirmative vote of a majority of the number of Directors as established in
accordance with these Bylaws may designate one or more standing committees or
other committees required to be elected or appointed by the Board of Directors,
each committee to consist of three (3) or more Directors or employees of this
Company elected or appointed by the Board of Directors or appointed by the
Chairman of the Board, as provided in said resolution which to the extent
provided in said resolution as initially adopted, and as thereafter supplemented
or amended by further resolution adopted by a like vote, shall have when the
members thereof are exclusively members of the Board of Directors, and may
exercise when the Board of Directors is not in session, the powers of the Board
of Directors in the management of the business and affairs of this Company,
except action in respect to dividends to policyholders, election of the
principal officers or the filling of vacancies in the Board of Directors or
committees created pursuant to this Section or as otherwise restricted by law.
The Board of Directors or its Chairman may elect or appoint one (1) or more of
its members or employees of this Company as provided in said resolution, as
alternate members of any such committee who may take the place of any absent
member or members at any meeting of such committee, upon request by the
President or upon request by the Chairman of such meeting. Each such committee
shall fix its own rules governing the conduct of its activities and shall make
such reports to the Board of Directors of its activities as the Board of
Directors may request.
ARTICLE VIII
Officers
Section 8.1. Principal Officers. The principal officers of this Corporation
shall be Chairman of the Board, Vice Chairman of the Board, who may also be
designated as Vice President of the Board, Secretary and Treasurer, all of whom
shall be Directors, and the President, who need not be a Director. All principal
officers and Directors shall be policyholders of this Corporation. No two
offices may be held by the same person.
Section 8.2. Chairman of the Board. The Chairman of the Board shall preside at
all meetings of members of this Corporation and the Board of Directors. The
Chairman shall present an annual report to the members and appoint committees
which are not standing committees or other committees required to be elected or
appointed by the Board of Directors. The Chairman shall perform such other
duties as shall be assigned from time to time by the Board of Directors.
Section 8.3. Vice Chairman. The Vice Chairman shall, in the absence or
disability of the Chairman of the Board, perform the duties of that office. The
Vice Chairman elected by the Board of Directors may be designated as Vice
President of the Board.
Section 8.4. Secretary. The Secretary shall keep, or cause to be kept, a record
of the votes of all elections, minutes of all annual meetings and special
meetings of members of this Corporation, and all meetings of the Board of
Directors. He/She, or any of the Assistant Secretaries appointed by the Board,
shall have the custody of the corporate seal and affix the same to all
instruments required to be sealed. He/She shall perform, or cause to be
performed by an Assistant Secretary, such other duties as are required by law,
the Board of Directors, and the Bylaws of this Corporation.
Section 8.5. Treasurer. The Treasurer shall be the financial officer of the
Board of Directors. He/She shall be responsible for the custody of all funds and
securities of this Corporation in accordance with the authorization and
direction of the Board of Directors. He/She shall be responsible for reporting
to the Board of Directors at each regular annual meeting with respect to the
funds and securities of this Corporation. The Treasurer shall perform such other
duties as are assigned by the Board of Directors. He/She shall furnish to the
Directors, whenever required by them, such statements and abstracts or records
as are necessary for a full exhibit of the financial condition of this
Corporation.
Section 8.6. President. The President shall be the principal executive officer
of this Corporation and, subject to the control of the Board of Directors, shall
in general be responsible for the supervision and control of all of the business
and operations of this Corporation. He/She shall be responsible for
authorization of expenditure of all funds of this Corporation as have been
approved by the Board of Directors in the budget or are within the general
authority granted by the Board of Directors for expenditure of funds. He/She
shall have authority, subject to such rules as may be prescribed by the Board of
Directors, to appoint such agents and employees of this Corporation as shall be
deemed necessary, to prescribe their powers, duties and compensation, and to
delegate authority to them. Such agents and employees shall hold office at the
discretion of the President. He/She shall have authority to sign, execute and
acknowledge, on behalf of this Corporation, all deeds, mortgages, bonds,
contracts under seal, leases, and all other documents or instruments whether or
not under seal which are authorized by or under authority of the Board of
Directors provided that any such documents or instruments may, but need not, be
countersigned by the Secretary, or an Assistant Secretary, and except as
otherwise provided by law or the Board of Directors, may authorize any
administrative vice president or other officer or agent of this Corporation to
sign, execute and acknowledge such documents or instruments in his/her place and
stead. In general, the President shall perform all duties incident to the office
of President and such other duties as may be prescribed by the Board of
Directors from time to time. He/She shall prepare, or cause to be prepared, a
report of the business and operations of this Corporation, for the period since
the last regular annual meeting, for submission to the Board of Directors at
each regular annual meeting. He/She shall also prepare, or cause to be prepared,
an annual proposed budget for submission to the Board of Directors.
Section 8.7. Assistant Treasurer. An Assistant Treasurer shall be appointed by
the Board of Directors. He/She shall be responsible for the proper deposit and
disbursement of all funds of this Corporation. He/She shall keep, or cause to be
kept, regular books of account. He/She shall deposit, or cause to be deposited,
all funds of this Corporation in the name of this Corporation in such banks,
trust companies or other depositories as are designated for such purpose by the
Board of Directors from time to time. He/She shall be responsible for the proper
disbursement of funds of this Corporation, including responsibility that checks
of this Corporation drawn on any bank account are signed by such officer or
officers, agent or agents, employee or employees of this Corporation in such
manner, including the use of a facsimile signature where authorized, as the
Board of Directors has determined or authorized, and he/she shall perform all of
the duties incident to the office of Assistant Treasurer, and such other duties
as from time to time may be assigned by the Treasurer.
An Assistant Treasurer for Home Office Operations and one or more District
Assistant Treasurers may be appointed by the Board of Directors, or by the
President upon authorization of the Board of Directors, with authority and
responsibility to perform the duties of Assistant Treasurer in the separate
offices of this Corporation under the supervision of the Assistant Treasurer.
Section 8.8. Other Assistants and Acting Officers. The Board of Directors shall
have the power to appoint any person to act as assistant to any officer, or to
perform the duties of such officer whenever for any reason it is impracticable
for such officer to act personally, and such assistant or acting officer
appointed by the Board of Directors shall have the power to perform all the
duties of the officer to which he/she is so appointed to be assistant, or as to
which he is so appointed to act, except as such power may be otherwise defined
or restricted by the Board of Directors.
Section 8.9. Administrative Officers and Assistant Administrative Officers. The
President shall appoint administrative officers and assistant administrative
officers who shall be appointed as deemed appropriate for the conduct of the
affairs of this Corporation for such term of office as may be designated or
without designated term of office subject to removal at will or by appointment
of a successor in office. The administrative officers and assistant
administrative officers shall perform such duties and have such authority as may
be assigned from time to time by the President.
In the absence of the President or in the event of his/her death, inability or
refusal to act, the administrative officers in the order designated by the
President shall perform the duties of the President, and when so acting, shall
have all powers of and be subject to all the restrictions upon the President.
ARTICLE IX
Miscellaneous
Section 9.1. Principal Office. The location of the principal office of this
Company shall be in the CUNA Mutual Life Insurance Company Building on Heritage
Way, in the city of Waverly, county of Bremer, and state of Iowa. This Company
may have other offices at such locations as may be necessary or convenient for
the conduct of its business.
Section 9.2. Certification and Inspection of Articles and Bylaws. This Company
shall keep in its Principal Office the original or a certified copy of its
Articles and its Bylaws as amended or otherwise altered to date, both of which
shall be open for inspection by any Member or Members at all reasonable times
during office hours.
Section 9.3. Corporate Seal. The Board may adopt, use, and, at will, alter a
corporate seal. Failure to affix a seal does not affect the validity of any
instrument. This corporate seal may be used in facsimile form.
Section 9.4. Execution of Instruments and Policies. The President, Chief
Officers, Senior Vice Presidents, Vice Presidents, and such other persons as may
be designated pursuant to duly adopted Board resolutions, shall each have
authority to execute and acknowledge or attest on behalf of this Company all
instruments executed in the name of this Company. The Secretary and Assistant
Secretaries shall each have authority to attest and acknowledge all such
instruments.
Policies and endorsements thereon shall be executed by the President and, if
required or desired, by the Secretary or an Assistant Secretary, or in any other
manner prescribed by applicable law or regulation, or directed by the Board.
Such policies and endorsements may bear facsimile signatures of the President
and, if signing, the Secretary or an Assistant Secretary. Facsimile signatures
of the President, the Secretary, and the Treasurer may be used on other
instruments to the extent permitted by law and by any Board approved internal
control directives.
Section 9.5. Official Bonds. In addition to the bonds which law or regulation
require this Company to maintain on its officers, employees, and agents, the
Board may purchase insurance or other indemnification or require a special bond
or bonds from any Director, officer, employee or agent of this Company, in such
sum and with such sureties or insurance carriers as it may deem proper.
Section 9.6. Voting Stock in Other Corporations Stock held by this Company in
another corporation shall be voted by the Chairman of the Board, the President
and/or the Chief Executive Officer unless the Board of Directors shall by
resolution designate another officer to vote such stock, and, unless the Board
of Directors shall by resolution direct how such stock shall be voted, the
President or other designated officer shall vote the same in his or her
discretion for the best interests of this Company.
ARTICLE X
Indemnification of Company Officials
Section 10.1. Liability and Mandatory Indemnification. This Corporation shall
indemnify any person who was or is a party or threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (excluding an action by or in the
right of this Corporation) by reason of the fact that he/she is or was a
Director or officer of this Corporation, or is or was serving at the request of
this Corporation as a Director or officer of another corporation, partnership,
joint venture, trust or other enterprise, against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement, actually and reasonably
incurred by him/her in connection with such action, suit or proceeding;
provided, that there is a determination that such person acted in good faith and
in a manner he/she reasonably believed to be in or not opposed to the best
interests of this Corporation, did not improperly receive personal benefit and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his/her conduct was unlawful. If such determination is not made by final
adjudication in such action, suit or proceeding, it shall be made by arbitration
in Waverly, Iowa, in accordance with the rules then prevailing of the American
Arbitration Association by a panel of three (3) arbitrators. One of the
arbitrators will be selected by a committee of at least three (3) policyholders
appointed especially for such purposes by the Board of Directors by a majority
vote of a quorum consisting of Directors who were not parties to such action,
suit or proceeding (or, if such a quorum is not obtainable, by the Insurance
Commissioner for the state of Iowa), the second by the officers and Directors
who may be entitled to indemnification, and the third by the two arbitrators
selected by the parties. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he/she reasonably believed to be in
or not opposed to the best interests of this Corporation and, with respect to
any criminal action or proceeding, had reasonable cause to believe that his/her
conduct was unlawful.
No Director or officer shall be liable to this Corporation for any loss or
damage by it on account of any action taken or omitted to be taken by him/her as
a Director or officer of this Corporation in good faith and in a manner he/she
reasonably believed to be in and not opposed to the best interests of this
Corporation and had no reasonable cause to believe was unlawful, and a Director
or officer shall be entitled to rely on advice of legal counsel for this
Corporation if in good faith and upon financial statements of this Corporation
represented to be correct by the President or other officer having charge of the
corporate books of account or stated in a written report by a certified public
accountant or upon statements made or information furnished by other officers or
employees of this Corporation which he/she had reasonable grounds to believe
were true.
Section 10.2. Controlled Subsidiaries. All officers and Directors of controlled
subsidiaries of this Corporation shall be deemed for the purposes of this
Article to be serving as such officers and Directors at the request of this
Corporation. The right to indemnification granted to such officers and Directors
by this Article shall not be subject to any limitation or restriction imposed by
any provision of the Articles of Incorporation or Bylaws of a controlled
subsidiary. For purposes hereof, a "controlled subsidiary" means any corporation
in which at least fifty-one percent (51%) of the outstanding voting stock is
owned by this Corporation or another controlled subsidiary of this Corporation.
Section 10.3. Advance Payment. Expenses, including attorneys' fees, incurred in
defending a civil or criminal action, suit or proceeding, may be paid by this
Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the Director or
officer to repay such amount unless it shall ultimately be determined that
he/she is entitled to be indemnified by this Corporation in accordance with this
Article.
Section 10.4. Other Rights. The indemnification provided by this Article shall
not be deemed exclusive of any other rights to which any officer, Director,
employee or agent may be otherwise entitled, and shall continue as to a person
who has ceased to be a Director or officer and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Section 10.5. Insurance. This Corporation may, but shall not be required to,
purchase and maintain insurance on behalf of any person who is or was a
Director, officer, employee or agent of this Corporation, or is or was serving
at the request of this Corporation as a Director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him/her and incurred by him/her in any
such capacity or arising out of his/her status as such, whether or not this
Corporation would be obligated to indemnify him/her against such liability under
the provisions of this Article. Such insurance may, but need not, be for the
benefit of all Directors, officers, employees and agents.
ARTICLE XI
Emergency Provisions
Section 11.1. Special Bylaw Provisions During Emergencies. If as a result of a
declared, national or state, emergency resulting from actual or threatened enemy
action, or, as a result of a natural or man-made catastrophe, or other unusual
or emergency conditions, it is impossible to convene readily a quorum of the
Board of Directors Executive Committee or any other Committee of the Board, for
action within their respective jurisdictions, thus making it impossible, or
impractical, for this Company to conduct its business in strict accord with the
normal provisions of law, or of these Bylaws or of the Articles of
Incorporation, then, and in any of said events, to provide for continuity of
operations, these emergency Bylaws shall supervene and take effect if necessary
over all other Bylaws for the duration of the emergency period, and all the
powers and duties vested in any committee or committees or the Board of
Directors, so lacking a quorum shall vest automatically in the Emergency
Management Committee which shall consist of all readily available members of the
Board of Directors. Three (3) members of the Emergency Management Committee
shall constitute a quorum provided, however, that:
If there are only two (2) available Directors, they and the first one
of the following listed officials of this Company who is readily
available and accepts the responsibility (even though he/she is not a
Director) shall serve as the Emergency Management Committee or if there
is only one available Director, he/she and the first two of the
following listed officials of this Company who are readily available
and accept the responsibility (even though not Directors) shall serve
as the Emergency Management Committee:
(a) The Chief Executive Officer, if any, or
(b) The President, if any, or
(c) The Executive Vice Presidents in order of seniority based on
their period of service in such office, if any, or
(d) The Chief Officers in order of seniority based on their period
of service in such office, if any, or
(e) The Senior Vice Presidents in order of seniority based on
their period of service in such office, if any, or
(f) The administrative Vice Presidents in order of seniority based
on their period of service in such office, if any, or
(g) The Comptroller, if any, or
(h) The Department Managers in the order of seniority based on
length of their period of service in such position, if any, or
If there is no readily available Director the first three (3) of those
just previously listed in the above order (even though not Directors),
who are readily available and accept the responsibility, shall serve as
the Emergency Management Committee, provided, however, that an
Emergency Management Committee composed solely of officials who are not
Directors, shall not have the power to fill vacancies on the Board of
Directors but shall as soon as circumstances permit conduct an election
of Directors.
If there are no Directors, Chief Executive Officer, President, Executive Vice
President, Chief Officers, Senior Vice Presidents, Vice Presidents, Comptroller
or Department Managers readily available to form an Emergency Management
Committee, then the Commissioner of Insurance of the state of Iowa or the duly
designated person exercising the powers of the Commissioner of Insurance of the
state of Iowa shall appoint three (3) persons to act as the Emergency Management
Committee who shall be empowered to act in the manner and with the powers
hereinabove provided when the Emergency Management Committee is composed solely
of officials who are not Directors.
If the Emergency Management Committee takes an action in good faith, such action
shall be valid and binding as if taken by the Board of Directors, or as the case
may be, the Committee it represents, although it may subsequently develop that
at the time of such action conditions requisite for action by the Emergency
Management Committee did not in fact exist.
If the Emergency Management Committee in good faith elects someone to an office
which it believes to be vacant, the acts of such newly elected officer shall be
valid and binding although it may subsequently develop that such office was not
in fact vacant.
ARTICLE XII
Adoption, Amendment or Repeal of Bylaws
Section 12.1. Bylaw Amendment by Board of Directors. The Bylaws of this Company
may be amended by a two-thirds (2/3) vote of the Board of Directors at any
meeting of the Board of Directors in any manner not inconsistent with the
insurance laws of the state of Iowa and this Company's Articles of
Incorporation, subject to the power of the Members to alter or repeal any
amendment made by the Board of Directors. Any particular article or section of
these Bylaws may provide for amendment only upon vote of the Members. The Bylaws
of this Company may also be amended, altered, or repealed in any manner not
inconsistent with the insurance laws of the state of Iowa by a vote of
two-thirds (2/3) of the Members voting at an annual meeting or special vote or
meeting of the Members of this Company.
Section 12.2. Initiation of Bylaw Amendment by Members. An amendment to the
Bylaws may be initiated by the direct action of the Members as follows:
One percent (1%) or more of this Company's Members shall sign and file
with the Secretary, not later than ninety (90) days prior to the date
of the annual meeting of this Company, a copy of the proposed amendment
or amendments together with a brief statement of the purpose thereof
and a statement from this Company's General Counsel that the proposed
amendment is acceptable under Iowa law. Such a copy of the proposed
amendment and statement of purpose shall be on a form to be furnished
by the Secretary and shall be signed by the Member, if a natural
person, and by the president or treasurer or other authorized officer,
if a corporate member, such officer having been so authorized by
resolution duly adopted by the board of directors of such corporation.
Upon timely receipt of a proposed amendment to the Bylaws accompanied by the two
required statements, properly prepared and signed and arising by action of the
Members as herein provided, the Secretary shall send or cause to be sent a copy
of such proposed amendment to all Members not less than twenty (20) days prior
to the date of the next annual meeting. The Board of Directors may make a
recommendation to Members as to any such amendment as proposed.
RESTATED BYLAWS: The foregoing shall constitute Restated Bylaws of this Company
which shall supersede and take the place of the heretofore existing Bylaws and
amendments thereto.
<PAGE>
EXHIBIT 8 (c)
PARTICIPATION AGREEMENT
Among
OPPENHEIMER VARIABLE ACCOUNT FUNDS,
OPPENHEIMERFUNDS, INC.
and
CUNA MUTUAL LIFE INSURANCE COMPANY
THIS AGREEMENT (the "Agreement"), made and entered into as of
the 20th day of February, 1997 by and among CUNA Mutual Life Insurance Company
(hereinafter the "Company"), on its own behalf and on behalf of each separate
account of the Company named in Schedule 1 to this Agreement, as may be amended
from time to time by mutual consent (hereinafter collectively the "Accounts"),
Oppenheimer Variable Account Funds (hereinafter the "Fund") and
OppenheimerFunds, Inc. (hereinafter the "Adviser").
WHEREAS, the Fund is an open-end management investment company
and is available to act as the investment vehicle for separate accounts now in
existence or to be established at any date hereafter for variable life insurance
policies and variable annuity contracts (collectively, the "Variable Insurance
Products") offered by insurance companies (hereinafter "Participating Insurance
Company");
WHEREAS, the beneficial interest in the Fund is divided into
several series of shares, each designated a "Portfolio", and each representing
the interests in a particular managed pool of securities and other assets;
WHEREAS, the Fund has obtained an order from the Securities
and Exchange Commission, dated July 16, 1986 (File No. 812-6324) granting
Participating Insurance Company and variable annuity and variable life insurance
separate accounts exemptions from the provisions of sections 9(a), 13(a), 15(a),
and 15(b) of the Investment Company Act of 1940, as amended, (hereinafter the
"1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent
necessary to permit shares of the Fund to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated life insurance companies (hereinafter the "Mixed and Shared Funding
Exemptive Order")
WHEREAS, the Fund is registered as an open-end management
investment company under the 1940 Act and its shares are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act");
WHEREAS, the Adviser is duly registered as an investment adviser under
the federal Investment Advisers Act of 1940; WHEREAS, the Company has registered
or will register certain variable annuity and/or life insurance contracts under
the 1933 Act (hereinafter "Contracts") (unless an exemption from registration is
available);
WHEREAS, the Accounts are or will be duly organized, validly existing
segregated asset accounts, established by resolution of the Board of Directors
of the Company, to set aside and invest assets attributable to the aforesaid
variable contracts (the Contract(s) and the Account(s) covered by the Agreement
are specified in Schedule 2 attached hereto, as may be modified by mutual
consent from time to time);
WHEREAS, the Company have registered or will register the Accounts as
unit investment trusts under the 1940 Act (unless an exemption from registration
is available);
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intend to purchase shares in the Portfolios (the
Portfolios covered by this Agreement are specified in Schedule 3 attached hereto
as may be modified by mutual consent from time to time), on behalf of the
Accounts to fund the Contracts named in Schedule 2, as may be amended from time
to time by mutual consent, and the Fund is authorized to sell such shares to
unit investment trusts such as the Accounts at net asset value; and
NOW, THEREFORE, in consideration of their mutual promises, the Fund,
the Adviser and the Company agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Fund agrees to sell to the Company those shares of the Fund
which the Company orders on behalf of the Account, executing such orders on a
daily basis at the net asset value next computed after receipt by the Fund or
its designee of the order for the shares of the Fund. For purposes of this
Section 1.1, the Company shall be the designee of the Fund for receipt of such
orders from each Account and receipt by such designee shall constitute receipt
by the Fund; provided that the Fund receives written (or facsimile) notice of
such order by 9:30 a.m. New York time on the next following Business Day.
"Business Day" shall mean any day on which the New York Stock Exchange is open
for trading and on which the Fund calculates its net asset value pursuant to the
rules of the SEC.
1.2. The Company shall pay for Fund shares on the next Business Day
after it places an order to purchase Fund shares in accordance with Section 1.1
hereof. Payment shall be in federal funds transmitted by wire or by a credit for
any shares redeemed.
1.3. The Fund agrees to make Fund shares available for purchase at the
applicable net asset value per share by the Company for their separate Accounts
listed in Schedule 1 on those days on which the Fund calculates its net asset
value pursuant to rules of the SEC; provided, however, that the Board of
Trustees of the Fund (hereinafter the "Trustees") may refuse to sell shares of
any Portfolio to any person, or suspend or terminate the offering of shares of
any Portfolio if such action is required by law or by regulatory authorities
having jurisdiction or is, in the sole discretion of the Trustees, acting in
good faith and in light of their fiduciary duties under federal and any
applicable state laws, in the best interests of the shareholders of any
Portfolio.
1.4. The Fund agrees to redeem, upon the Company's request, any full or
fractional shares of the Fund held by the Company, executing such requests on a
daily basis at the net asset value next computed after receipt by the Fund or
its designee of the request for redemption. For purposes of this Section 1.6,
the Company shall be the designee of the Fund for receipt of requests for
redemption and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives written (or facsimile) notice of such request
for redemption by 9:30 a.m. New York time on the next following Business Day.
Payment shall be made within the time period specified in the Fund's prospectus
or statement of additional information, in federal funds transmitted by wire to
the Company's account as designated by the Company in writing from time to time.
1.5. The Company shall pay for the Fund shares on the next Business Day
after an order to purchase shares is made in accordance with the provisions of
Section 1.4 hereof. Payment shall be in federal funds transmitted by wire
pursuant to the instructions of the Fund's treasurer or by a credit for any
shares redeemed.
1.6. The Company agrees to purchase and redeem the shares of the
Portfolios named in Schedule A offered by the then current prospectus and
statement of additional information of the Fund in accordance with the
provisions of such prospectus and statement of additional information. The
Company shall not permit any person other than a Contract owner to give
instructions to the Company which would require the Company to redeem or
exchange shares of the Fund.
ARTICLE II. Sales Material, Prospectuses and Other Reports
2.1. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or the Adviser is named, at least ten Business Days
prior to its use. No such material shall be used if the Fund or its designee
reasonably object to such use within ten Business Days after receipt of such
material. "Business Day" shall mean any day in which the New York Stock Exchange
is open for trading and in which the Fund calculates its net asset value
pursuant to the rules of the Securities and Exchange Commission.
2.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sale literature or other promotional material approved by the Fund or its
designee, except with the permission of the Fund.
2.3. For purposes of this Article II, the phrase "sales literature or
other promotional material" means advertisements (such as material published, or
designed for use in, a newspaper, magazine, or other periodical, radio,
television, telephone or tape recording, videotape display, signs or billboard
or electronic media), and sales literature (such as brochures, circulars, market
letters and form letters), distributed or made generally available to customers
or the public.
2.4. The Fund shall provide a copy of its current prospectus within a
reasonable period of its filing date, and provide other assistance as is
reasonably necessary in order for the Company once each year (or more frequently
if the prospectus for the Fund is supplemented or amended) to have the
prospectus for the Contracts and the Fund's prospectus printed together in one
document (such printing to be at the Company's expense). The Adviser shall be
permitted to review and approve the typeset form of the Fund's Prospectus prior
to such printing.
2.5. The Fund or the Adviser shall provide the Company with either: (i)
a copy of the Fund's proxy material, reports to shareholders, other information
relating to the Fund necessary to prepare financial reports, and other
communications to shareholders for printing and distribution to Contract owners
at the Company's expense, or (ii) camera ready and/or printed copies, if
appropriate, of such material for distribution to Contract owners at the
Company' expense, within a reasonable period of the filing date for definitive
copies of such material. The Adviser shall be permitted to review and approve
the typeset form of such proxy material and shareholder reports prior to such
printing provided such materials have been provided within a reasonable period.
ARTICLE III. Fees and Expenses
3.1. The Fund and Adviser shall pay no fee or other compensation to the
Company under this agreement, and the Company shall pay no fee or other
compensation to the Fund or Adviser, except as provided herein.
3.2. All expenses incident to performance by each party of its
respective duties under this Agreement shall be paid by that party. The Fund
shall see to it that all its shares are registered and authorized for issuance
in accordance with applicable federal law and, if and to the extent advisable by
the Fund, in accordance with applicable state laws prior to their sale. The Fund
shall bear the expenses for the cost of registration and qualification of the
Fund's shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, and the preparation of all statements
and notices required by any federal or state law.
3.3. The Company shall bear the expenses of typesetting, printing and
distributing the Fund's prospectus, proxy materials and reports to owners of
Contracts issued by the Company.
3.4. In the event the Fund adds one or more additional Portfolios and
the parties desire to make such Portfolios available to the respective Contract
owners as an underlying investment medium, a new Schedule A or an amendment to
this Agreement shall be executed by the parties authorizing the issuance of
shares of the new Portfolios to the particular Account. The amendment may also
provide for the sharing of expenses for the establishment of new Portfolios
among Participating Insurance Company desiring to invest in such Portfolios and
the provision of funds as the initial investment in the new Portfolios.
ARTICLE IV. Potential Conflicts
4.1. The Board of Trustees of the Fund (the "Board") will monitor the
Fund for the existence of any material irreconcilable conflict between the
interests of the Contract owners of all separate accounts investing in the Fund.
An irreconcilable material conflict may arise for a variety of reasons,
including: (a) an action by any state insurance regulatory authority; (b) a
change in applicable federal or state insurance, tax, or securities laws or
regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar action by insurance, tax, or securities
regulatory authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investments of any Portfolio
are being managed; (e) a difference in voting instructions given by variable
annuity contract and variable life insurance contract owners; or (f) a decision
by an insurer to disregard the voting instructions of Contract owners. The Board
shall promptly inform the Company if it determines that an irreconcilable
material conflict exists and the implications thereof.
4.2. The Company has reviewed a copy of the Mixed and Shared Funding
Exemptive Order, and in particular, has reviewed the conditions to the requested
relief set forth therein. The Company agrees to be bound by the responsibilities
of a participating insurance company as set forth in the Mixed and Shared
Funding Exemptive Order, including without limitation the requirement that the
Company report any potential or existing conflicts of which it is aware to the
Board. The Company will assist the Board in carrying out its responsibilities in
monitoring such conflicts under the Mixed and Shared Funding Exemptive Order, by
providing the Board in a timely manner with all information reasonably necessary
for the Board to consider any issues raised. This includes, but is not limited
to, an obligation by the Company to inform the Board whenever Contract owner
voting instructions are disregarded and by confirming in writing, at the Fund's
request, that the Company are unaware of any such potential or existing material
irreconcilable conflicts.
4.3. If it is determined by a majority of the Board, or a majority of
its disinterested Trustees, that a material irreconcilable conflict exists, the
Company shall, at their expense and to the extent reasonably practicable (as
determined by a majority of the disinterested trustees), take whatever steps are
necessary to remedy or eliminate the irreconcilable material conflict, up to an
including: (1) withdrawing the assets allocable to some or all of the separate
accounts from the Fund or any Portfolio and reinvesting such assets in a
different investment medium, including (but not limited to) another Portfolio of
the Fund, or submitting the question whether such segregation should be
implemented to a vote of all affected Contract owners and, as appropriate,
segregating the assets of any appropriate group (i.e., annuity contract owners,
life insurance contract owners, or variable contract owners of one or more
Participating Insurance Company) that votes in favor of such segregation, or
offering to the affected Contract owners the option of making such a change; and
(2) establishing a new registered management investment company or managed
separate account.
4.4. If a material irreconcilable conflict arises because of a decision
by the Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the Account's investment in
the Fund and terminate this Agreement; provided, however, that such withdrawal
and termination shall be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board. Any such withdrawal and termination must
take place within six (6) months after the Fund gives written notice that this
provision is being implemented, and until the end of the six month period the
Fund shall continue to accept and implement orders by the Company for the
purchase and redemption of shares of the Fund.
4.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
Account's investment in the Fund and terminate this Agreement within six months
after the Board informs the Company in writing that it has determined that such
decision has created an irreconcilable material conflict; provided, however,
that such withdrawal and termination shall be limited to the extent required by
the foregoing material irreconcilable conflict as determined by a majority of
the disinterested members of the Board. Until the end of the foregoing six month
period, the Fund shall continue to accept and implement orders by the Company
for the purchase and redemption of shares of the Fund, subject to applicable
regulatory limitation.
4.6. For purposes of Sections 4.3 through 4.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 4.3 to establish a new
funding medium for Contracts if an offer to do so has been declined by vote of a
majority of Contract owners materially adversely affected by the irreconcilable
material conflict. In the event that the Board determines that any proposed
action does not adequately remedy any irreconcilable material conflict, then the
Company will withdraw the particular Account's investment in the Fund and
terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
ARTICLE V. Applicable Law
5.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York. 5.2.
This Agreement shall be subject to the provisions of the 1933, 1934 and 1940
Acts, and the rules and regulations and rulings thereunder, including such
exemptions from those statutes, rules and regulations as the Securities and
Exchange Commission may grant (including, but not limited to, the Mixed and
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE VI. Termination
6.1 This Agreement shall terminate with respect to some or all
Portfolios:
(a) at the option of any party upon six month's advance
written notice to the other parties;
(b) at the option of the Company to the extent that shares of
Portfolios are not reasonably available to meet the requirements of its
Contracts or are not appropriate funding vehicles for the Contracts, as
determined by the Company reasonably and in good faith. Prompt notice
of the election to terminate for such cause and an explanation of such
cause shall be furnished by the Company; or
(c) as provided in Article IV
6.2. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 6.1(a) may be exercised for cause
or for no cause.
ARTICLE VII.
Notices Any notice shall be sufficiently given when sent by registered
or certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify to
the other party.
If to the Fund:
Oppenheimer Variable Account Funds
c/o OppenheimerFunds, Inc.
2 World Trade Center New York, NY 10048-0203
Attn: Legal Department
If to the Adviser:
OppenheimerFunds, Inc.
2 World Trade Center
New York, NY 10048-0203
Attn: General Counsel
If to the Company:
CUNA Mutual Group
5910 Mineral Point Road
Madison, Wisconsin 53701
Attn: Legal Department
ARTICLE VIII. Miscellaneous
8.1. Subject to the requirements of legal process and
regulatory authority, each party hereto shall treat as confidential the names
and addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto and, except as
permitted by this Agreement, shall not disclose, disseminate or utilize such
names and addresses and other confidential information without the express
written consent of the affected party until such time as it may come into the
public domain.
8.2. The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
8.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
8.4. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
8.5. Each party hereto shall cooperate with, and promptly
notify each other party and all appropriate governmental authorities (including
without limitation the Securities and Exchange Commission, the NASD and state
insurance regulators) and shall permit such authorities reasonable access to its
books and records in connection with any investigation or inquiry relating to
this Agreement or the transactions contemplated hereby.
8.6. The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
8.7. It is understood by the parties that this Agreement is
not an exclusive arrangement in any respect.
8.8. The Company and the Adviser each understand and agree
that the obligations of the Fund under this Agreement are not binding upon any
shareholder of the Fund personally, but bind only the Fund and the Fund's
property; the Company and the Adviser each represent that it has notice of the
provisions of the Declaration of Trust of the Fund disclaiming shareholder
liability for acts or obligations of the Fund.
8.9. This Agreement shall not be assigned by any party hereto
without the prior written consent of all the parties.
8.10. This Agreement sets forth the entire agreement between
the parties and supercedes all prior communications, agreements and
understandings, oral or written, between the parties regarding the subject
matter hereof.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed as of the date specified
below.
CUNA MUTUAL LIFE INSURANCE COMPANY
By its authorized officer,
By: /s/ Michael B. Kitchen
---------------------------------
Michael B. Kitchen
Title: President and Chief Executive Officer
Date: February 26, 1997
OPPENHEIMER VARIABLE ACCOUNT
FUNDS
By: /s/ Andrew J. Donohue
-------------------------------
Andrew J. Donohue
Title: Secretary
Date: March 3, 1997
OPPENHEIMERFUNDS, INC.
By: /s/ Andrew J. Donohue
------------------------------
Andrew J. Donohue
Title: Vice President
Date: March 3, 1997
<PAGE>
SCHEDULE 1
CUNA Mutual Life Insurance Company Separate Accounts
CUNA Mutual Life Variable Annuity Account
CUNA Mutual Life Variable Account
CUNA Mutual Life Group Variable Annuity Account
<PAGE>
SCHEDULE 2
CUNA Mutual Life Insurance Company Contracts
Covered by Separate Accounts Listed in Schedule 1
CUNA Mutual Life Variable Annuity Account
MEMBERS Variable Annuity Product
CUNA Mutual Life Variable Account
MEMBERS Variable Universal Life Product
CUNA Mutual Life Group Variable Annuity Account
UltraSaver Group Annuity Product
CU Pension Saver Group Annuity Product
<PAGE>
SCHEDULE 3
Oppenheimer Variable Account Funds Portfolios
Oppenheimer High Income Fund
<PAGE>
EXHIBIT 8 (d)
PARTICIPATION AGREEMENT
AMONG TEMPLETON VARIABLE PRODUCTS SERIES FUND,
FRANKLIN TEMPLETON DISTRIBUTORS, INC. and
CUNA MUTUAL LIFE INSURANCE COMPANY
THIS AGREEMENT made as of March 31, 1997, among Templeton Variable
Products Series Fund (the "Trust"), an open-end management investment company
organized as a business trust under Massachusetts law, Franklin Templeton
Distributors, Inc., a California corporation, the Trust's principal underwriter
("Underwriter"), and CUNA Mutual Life Insurance Company, a life insurance
company organized as a corporation under Iowa law (the "Company"), on its own
behalf and on behalf of each segregated asset account of the Company set forth
in Schedule A, as may be amended from time to time (the "Accounts").
W I T N E S S E T H:
WHEREAS, the Trust is registered with the Securities and Exchange
Commission (the "Commission") as an open-end management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act"), and has an
effective registration statement relating to the offer and sale of the various
series of its shares under the Securities Act of 1933, as amended (the "1933
Act" ) ;
WHEREAS, the Trust and the Underwriter desire that Trust shares be
used as an investment vehicle for separate accounts established for variable
life insurance policies and variable annuity contracts to be offered by life
insurance companies which have entered into fund participation agreements with
the Trust (the "Participating Insurance Companies");
WHEREAS, the beneficial interest in the Trust is divided into several
series of shares, each series representing an interest in a particular managed
portfolio of securities and other assets, and certain of those series, named in
Schedule B, (the "Portfolios") are to be made available for purchase by the
Company for the Accounts; and
WHEREAS, the Trust has received an order from the Commission, dated
November 16, 1993 (File No. 812-8546), granting Participating Insurance
Companies and their separate accounts exemptions from the provisions of Sections
9(a), 13(a), 15(a) and 15(b) of the 1940 Act, and Rules 6e-2 (b) (15) and 6e-3
(T) (b) (15) thereunder, to the extent necessary to permit shares of the Trust
to be sold to and held by variable annuity and variable life insurance separate
accounts of both affiliated and unaffiliated life insurance companies and
certain qualified pension and retirement plans (the "Shared Funding Exemptive
Order");
WHEREAS, the Company has registered or will register under the 1933 Act
certain variable annuity contracts and variable life insurance policies with the
form number(s) which are listed on Schedule C attached hereto and incorporated
herein by this reference, as such Schedule C may be amended from time to time
hereafter by mutual written agreement of all parties hereto, under which the
Portfolios are to be made available as investment vehicles (the "Contracts");
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act unless an exemption from registration
under the 1940 Act is available and the Trust has been so advised;
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such account on Schedule A hereto, to set aside
and invest assets attributable to one or more Contracts; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and is a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, each investment adviser listed on Schedule B (each, an
"Adviser") is duly registered as an investment adviser under the Investment
Advisers Act of 1940, as amended ("Advisers Act") and any applicable state
securities laws;
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid Contracts and the Underwriter
is authorized to sell such shares to unit investment trusts such as each Account
at net asset value;
NOW THEREFORE, in consideration of their mutual promises, the parties
agree as follows:
ARTICLE I.
Purchase and Redemption of Trust Portfolio Shares
1.1. For purposes of this Article I, the Company shall be the Trust's
agent for receipt of purchase orders and requests for redemption relating to
each Portfolio from each Account, provided that the Company notifies the Trust
of such purchase orders and requests for redemption by 10:00 a.m. Eastern time
on the next following Business Day, as defined in Section 1.3.
1.2. The Trust agrees to make shares of the Portfolios available to the
Accounts for purchase at the net asset value per share next computed after
receipt of a purchase order by the Trust (or its agent), as established in
accordance with the provisions of the then current prospectus of the Trust
describing Portfolio purchase procedures on those days on which the Trust
calculates its net asset value pursuant to rules of the Commission, and the
Trust shall use its best efforts to calculate such net asset value on each day
on which the New York Stock Exchange ("NYSE") is open for trading. The Company
will transmit orders from time to time to the Trust for the purchase of shares
of the Portfolios. The Trustees of the Trust (the "Trustees") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or if, in the sole discretion of the Trustees
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, such action is deemed in the best interests of the
shareholders of such Portfolio.
1.3 The Company shall submit payment for the purchase of shares of a
Portfolio on behalf of an Account no later than the close of the Federal Reserve
Bank, which is 6:00 p.m. Eastern time, on the next Business Day after the Trust
receives the purchase order. If payment in federal funds for any purchase is not
received by the Trust or its designated custodian or is received after such
time, the Company shall promptly upon the Trust's written request, reimburse the
Trust for any charges, costs, fees, interest, or other expenses incurred by the
Trust in connection with any advances to, or borrowings or overdrafts by, the
Trust, or any similar expenses incurred by the Trust as a result of transactions
effected by the Trust based upon such purchase order. Payment shall be made in
federal funds transmitted by wire to the Trust. Upon receipt by the Trust of the
federal funds so wired, such funds shall cease to be the responsibility of the
Company and shall become the responsibility of the Trust for this purpose.
"Business Day" shall mean any day on which the New York Stock Exchange is open
for trading and on which the Trust calculates its net asset value pursuant to
the rules of the Commission.
1.4 The Trust will redeem for cash any full or fractional shares of any
Portfolio, when requested by the Company on behalf of an Account, at the net
asset value next computed after receipt by the Trust (or its agent) of the
request for redemption, as established in accordance with the provisions of the
then current prospectus of the Trust describing Portfolio redemption procedures.
The Trust shall make payment for such shares in the manner established from time
to time by the Trust. Redemption with respect to a Portfolio will normally be
paid to the Company for an Account in federal funds transmitted by wire to the
Company before the close of the Federal Reserve Bank, which is 6:00 p.m. Eastern
time on the next Business Day after the receipt of the request for redemption.
If payment in federal funds for any redemption request is received by the
Company after such time, the Trust shall promptly upon the Company's written
request, reimburse the Company for any charges, costs, fees, interest, or other
expenses incurred by the Company as a result of such failure to provide
redemption proceeds within the specified time. Notwithstanding the foregoing,
such payment may be delayed if, for example, the Portfolio's cash position so
requires or if extraordinary market conditions exist, but in no event shall
payment be delayed for a greater period than is permitted by the 1940 Act.
1.5 Payments for the purchase of shares of the Trust's Portfolios by
the Company under Section 1.3 and payments for the redemption of shares of the
Trust's Portfolios under Section 1.4 may be netted against one another on any
Business Day for the purpose of determining the amount of any wire transfer on
that Business Day.
1.6 Issuance and transfer of the Trust's Portfolio shares will be by
book entry only. Stock certificates will not be issued to the Company or the
Account. Portfolio Shares purchased from the Trust will be recorded in the
appropriate title for each Account or the appropriate subaccount of each
Account.
1.7 The Trust shall furnish, on or before the ex-dividend date, notice
to the Company of any income dividends or capital gain distributions payable on
the shares of any Portfolio of the Trust. The Company hereby elects to receive
all such income dividends and capital gain distributions as are payable on a
Portfolio's shares in additional shares of the Portfolio. The Trust shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.
1.8 The Trust shall calculate the net asset value of each Portfolio on
each Business Day, as defined in Section 1.3. The Trust shall make the net asset
value per share for each Portfolio available to the Company or its designated
agent on a daily basis as soon as reasonably practical after the net asset value
per share is calculated (normally by 6:30 p.m. Eastern time) and shall use
reasonable efforts to make such net asset value per share available by 7:00 p.m.
Eastern time each Business Day.
1.9 The Trust agrees that its Portfolio shares will be sold only to
Participating Insurance Companies and their separate accounts and to certain
qualified pension and retirement plans to the extent permitted by the Shared
Funding Exemptive Order. No shares of any Portfolio will be sold directly to the
general public. The Company agrees that it will use Trust shares only for the
purposes of funding the Contracts through the Accounts listed in Schedule A, as
amended from time to time.
1.10 The Company agrees that all net amounts available under the
Contracts shall be invested in the Trust, in such other Funds advised by an
Adviser or its affiliates as may be mutually agreed to in writing by the parties
hereto, or in the Company's general account, provided that such amounts may also
be invested in an investment company other than the Trust if: (a) such other
investment company, or series thereof, has investment objectives or policies
that are substantially different from the investment objectives and policies of
the Portfolios; or (b) the Company gives the Trust and the Underwriter 45 days
written notice of its intention to make such other investment company available
as a funding vehicle for the Contracts; or (c) such other investment company is
available as a funding vehicle for the Contracts at the date of this Agreement
and the Company so informs the Trust and the Underwriter prior to their signing
this Agreement (a list of such investment companies appearing on Schedule D to
this Agreement); or (d) the Trust or Underwriter consents to the use of such
other investment company.
1.11 The Trust agrees that all Participating Insurance Companies shall
have the obligations and responsibilities regarding pass-through voting and
conflicts of interest corresponding to those contained in Section 2.10 and
Article IV of this Agreement.
ARTICLE II.
Obligations of the Parties; Fees and Expenses
2.1 The Trust shall prepare and be responsible for filing with the
Commission and any state regulators requiring such filing all shareholder
reports, notices, proxy materials (or similar materials such as voting
instruction solicitation materials), prospectuses and statements of additional
information of the Trust. The Trust shall bear the costs of registration and
qualification of its shares of the Portfolios, preparation and filing of the
documents listed in this Section 2.1 and all taxes to which an issuer is subject
on the issuance and transfer of its shares.
2.2 At the option of the Company, the Trust or the Underwriter shall
either (a) provide the Company with as many copies of portions of the Trust's
current prospectus, annual report, semi-annual report and other shareholder
communications, including any amendments or supplements to any of the foregoing,
pertaining specifically to the Portfolios as the Company shall reasonably
request; or (b) provide the Company with a camera ready copy of such documents
in a form suitable for printing and from which information relating to series of
the Trust other than the Portfolios has been deleted to the extent practicable.
The Trust or the Underwriter shall provide the Company with a copy of its
current statement of additional information, including any amendments or
supplements, in a form suitable for duplication by the Company. Expenses of
furnishing such documents for marketing purposes shall be borne by the Company
and expenses of furnishing such documents for current contract owners invested
in the Trust shall be borne by the Trust or the Underwriter.
2.3 The Trust (at its expense) shall provide the Company with copies of
any Trust-sponsored proxy materials in such quantity as the Company shall
reasonably require for distribution to Contract owners. The Company shall bear
the costs of distributing proxy materials (or similar materials such as voting
solicitation instructions), prospectuses and statements of additional
information to Contract owners. The Company assumes sole responsibility for
ensuring that such materials are delivered to Contract owners in accordance with
applicable federal and state securities laws.
2.4 If and to the extent required by law, the Company shall: (i)
solicit voting instructions from Contract owners; (ii) vote the Trust shares in
accordance with the instructions received from Contract owners; and (iii) vote
Trust shares for which no instructions have been received in the same proportion
as Trust shares of such Portfolio for which instructions have been received; so
long as and to the extent that the Commission continues to interpret the 1940
Act to require pass-through voting privileges for variable contract owners. The
Company reserves the right to vote Trust shares held in any segregated asset
account in its own right, to the extent permitted by law.
2.5 Except as provided in section 2.6, the Company shall not use any
designation comprised in whole or part of the names or marks "Franklin" or
"Templeton" without prior written consent, and upon termination of this
Agreement for any reason, the Company shall cease all use of any such name or
mark as soon as reasonably practicable.
2.6 The Company shall furnish, or cause to be furnished to the Trust
or its designee, at least one complete copy of each registration statement,
prospectus, statement of additional information, report, solicitation for voting
instructions, sales literature and other promotional materials, and all
amendments to any of the above that relate to the Contracts or the Accounts
prior to its first use. The Company shall furnish, or shall cause to be
furnished, to the Trust or its designee each piece of sales literature or other
promotional material in which the Trust or an Adviser is named, at least 15
Business Days prior to its use. No such material shall be used if the Trust or
its designee reasonably objects to such use within five Business Days after
receipt of such material. For purposes of this paragraph, "sales literature or
other promotional material" includes, but is not limited to, portions of the
following that refer to the Trust or affiliates of the Trust: advertisements
(such as material published or designed for use in a newspaper, magazine or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures or electronic communication or
other public media), sales literature (i.e., any written communication
distributed or made generally available to customers or the public, including
brochures, circulars, research reports, market letters, form letters, seminar
texts, reprints or excerpts or any other advertisement, sales literature or
published article or electronic communication), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, and registration statements, prospectuses,
statements of additional information, reports and proxy materials.
2.7 The Company and its agents shall not give any information or make
any representations or statements on behalf of the Trust or concerning the
Trust, the Underwriter or an Adviser in connection with the sale of the
Contracts other than information or representations contained in and accurately
derived from the registration statement or prospectus for the Trust shares (as
such registration statement and prospectus may be amended or supplemented from
time to time), annual and semi-annual reports of the Trust, Trust-sponsored
proxy statements, or in sales literature or other promotional material approved
by the Trust or its designee, except as required by legal process or regulatory
authorities or with the written permission of the Trust or its designee.
2.8 The Trust shall use its best efforts to provide the Company, on a
timely basis, with such information about the Trust, the Portfolios and each
Adviser, in such form as the Company may reasonably require, as the Company
shall reasonably request in connection with the preparation of registration
statements, prospectuses and annual and semi-annual reports pertaining to the
Contracts.
2.9 The Trust shall not give any information or make any
representations or statements on behalf of the Company or concerning the
Company, the Accounts or the Contracts other than information or representations
contained in and accurately derived from the registration statement or
prospectus for the Contracts (as such registration statement and prospectus may
be amended or supplemented from time to time), or in materials approved by the
Company for distribution including sales literature or other promotional
materials, except as required by legal process or regulatory authorities or with
the written permission of the Company.
2.10 So long as, and to the extent that, the Commission interprets the
1940 Act to require pass-through voting privileges for Contract owners, the
Company will provide pass-through voting privileges to Contract owners whose
Contract values are invested, through the registered Accounts, in shares of one
or more Portfolios of the Trust. The Trust shall require all Participating
Insurance Companies to calculate voting privileges in the same manner and the
Company shall be responsible for assuring that the Accounts calculate voting
privileges in the manner established by the Trust. With respect to each
registered Account, the Company will vote shares of each Portfolio of the Trust
held by a registered Account and for which no timely voting instructions from
Contract owners are received in the same proportion as those shares held by that
registered Account for which voting instructions are received. The Company and
its agents will in no way recommend or oppose or interfere with the solicitation
of proxies for Portfolio shares held to fund the Contracts without the prior
written consent of the Trust, which consent may be withheld in the Trust's sole
discretion.
2.11 The Trust and Underwriter shall pay no fee or other compensation
to the Company under this Agreement except as provided on Schedule E, if
attached. Nevertheless, the Trust or the Underwriter or an affiliate may make
payments (other than pursuant to a Rule 12b-1 Plan) to the Company or its
affiliates or to the Contracts' underwriter in amounts agreed to by the
Underwriter in writing and such payments may be made out of fees otherwise
payable to the Underwriter or its affiliates, profits of the Underwriter or its
affiliates, or other resources available to the Underwriter or its affiliates.
ARTICLE III.
Representations and Warranties
3.1 The Company represents and warrants that it is an insurance company
duly organized and in good standing under the laws of the State of Iowa and that
it has legally and validly established each Account as a segregated asset
account under such law as of the date set forth in Schedule A.
3.2 The Company represents and warrants that it has registered or,
prior to any issuance or sale of the Contracts, will register each Account as a
unit investment trust in accordance with the provisions of the 1940 Act to serve
as a segregated asset account for the Contracts, unless an exemption from
registration is available.
3.3 The Company represents and warrants that the Contracts will be
registered under the 1933 Act unless an exemption from registration is available
prior to any issuance or sale of the Contracts; the Contracts will be issued and
sold in compliance in all material respects with all applicable federal and
state laws; and the sale of the Contracts shall comply in all material respects
with state insurance suitability requirements.
3.4 The Trust represents and warrants that it is duly organized and
validly existing under the laws of the State of Massachusetts and that it does
and will comply in all material respects with the 1940 Act and the rules and
regulations thereunder.
3.5 The Trust represents and warrants that the Portfolio shares offered
and sold pursuant to this Agreement will be registered under the 1933 Act and
the Trust shall be registered under the 1940 Act prior to and at the time of any
issuance or sale of such shares. The Trust shall amend its registration
statement under the 1933 Act and the 1940 Act from time to time as required in
order to effect the continuous offering of its shares. The Trust shall register
and qualify its shares for sale in accordance with the laws of the various
states only if and to the extent deemed advisable by the Trust or the
Underwriter.
3.6 The Trust represents and warrants that the investments of each
Portfolio will comply with the diversification requirements for variable
annuity, endowment or life insurance contracts set forth in Section 817(h) of
the Internal Revenue Code of 1986, as amended ("Code"), and the rules and
regulations thereunder, including without limitation Treasury Regulation
1.817-5, and will notify the Company immediately upon having a reasonable basis
for believing any Portfolio has ceased to comply or might not so comply and will
in that event immediately take all reasonable steps to adequately diversify the
Portfolio to achieve compliance within the grace period afforded by Regulation
1.817-5.
3.7 The Trust represents and warrants that it is currently qualified as
a "regulated investment company" under Subchapter M of the Code, that it will
make every effort to maintain such qualification and will notify the Company
immediately upon having a reasonable basis for believing it has ceased to so
qualify or might not so qualify in the future.
3.8 The Trust represents and warrants that should it ever desire to
make any payments to finance distribution expenses pursuant to Rule 12b-1 under
the 1940 Act, the Trustees, including a majority who are not "interested
persons" of the Trust under the 1940 Act ( "disinterested Trustees" ), will
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
3.9 The Trust represents and warrants that it, its directors, officers,
employees and others dealing with the money or securities, or both, of a
Portfolio shall at all times be covered by a blanket fidelity bond or similar
coverage for the benefit of the Trust in an amount not less that the minimum
coverage required by Rule 17g-1 or other regulations under the 1940 Act. Such
bond shall include coverage for larceny and embezzlement and be issued by a
reputable bonding company.
3.10 The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals or entities
dealing with the money and/or securities of the Trust are and shall be at all
times covered by a blanket fidelity bond or similar coverage which covers losses
to the Trust, in an amount not less than $5 million. The aforesaid bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company. The Company agrees to make all reasonable efforts to see that
this bond or another bond containing these provisions is always in effect, and
agrees to notify the Trust and the Underwriter in the event that such coverage
no longer applies.
3.11 The Underwriter represents that each Adviser is duly organized and
validly existing under applicable corporate law and that it is registered and
will during the term of this Agreement remain registered as an investment
adviser under the Advisers Act.
3.12 The Trust currently intends for one or more Classes to make
payments to finance its distribution expenses, including service fees, pursuant
to a Plan adopted under Rule 12b-1 under the 1940 Act ("Rule 12b-1"), although
it may determine to discontinue such practice in the future. To the extent that
any Class of the Trust finances its distribution expenses pursuant to a Plan
adopted under Rule 12b-1, the Trust undertakes to comply with any then current
SEC and SEC staff interpretations concerning Rule 12b-1 or any successor
provisions.
ARTICLE IV.
Potential Conflicts
4.1 The parties acknowledge that a Portfolio's shares may be made
available for investment to other Participating Insurance Companies. In such
event, the Trustees will monitor the Trust for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
Participating Insurance Companies. An irreconcilable material conflict may arise
for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract owners; or (f)
a decision by an insurer to disregard the voting instructions of contract
owners. The Trust shall promptly inform the Company of any determination by the
Trustees that an irreconcilable material conflict exists and of the implications
thereof.
4.2 The Company agrees to promptly report any potential or existing
conflicts of which it is aware to the Trustees. The Company will assist the
Trustees in carrying out their responsibilities under the Shared Funding
Exemptive Order by providing the Trustees with all information reasonably
necessary for the Trustees to consider any issues raised including, but not
limited to, information as to a decision by the Company to disregard Contract
owner voting instructions. All communications from the Company to the Trustees
may be made in care of the Trust.
4.3 If it is determined by a majority of the Trustees, or a majority of
the disinterested Trustees, that a material irreconcilable conflict exists that
affects the interests of Contract owners, the Company shall, in cooperation with
other Participating Insurance Companies whose contract owners are also affected,
at its own expense and to the extent reasonably practicable (as determined by
the Trustees) take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, which steps could include: (a) withdrawing the
assets allocable to some or all of the Accounts from the Trust or any Portfolio
and reinvesting such assets in a different investment medium, including (but not
limited to) another Portfolio of the Trust, or submitting the question of
whether or not such withdrawal should be implemented to a vote of all affected
Contract owners and, as appropriate, withdrawal of the assets of any appropriate
group (i.e. , annuity contract owners, life insurance policy owners, or variable
contract owners of one or more Participating Insurance Companies) that votes in
favor of such withdrawal, or offering to the affected Contract owners the option
of making such a change; and (b) establishing a new registered management
investment company or managed separate account.
4.4 If a material irreconcilable conflict arises because of a
decision by the Company to disregard Contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Trust's election, to withdraw the affected
Account's investment in the Trust and terminate this Agreement with respect to
such Account; provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested Trustees. Any such withdrawal
and termination must take place within six (6) months after the Trust gives
written notice that this provision is being implemented. Until the end of such
six (6) month period, the Trust shall continue to accept and implement orders by
the Company for the purchase and redemption of shares of the Trust.
4.5 If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with a
majority of other state regulators, then the Company will withdraw the affected
Account's investment in the Trust and terminate this Agreement with respect to
such Account within six (6) months after the Trustees inform the Company in
writing that it has determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and termination shall
be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested Trustees. Until the
end of such six (6) month period, the Trust shall continue to accept and
implement orders by the Company for the purchase and redemption of shares of the
Trust.
4.6 For purposes of Sections 4.3 through 4.6 of this Agreement, a
majority of the disinterested Trustees shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Trust be required to establish a new funding medium for the Contracts.
In the event that the Trustees determine that any proposed action does not
adequately remedy any irreconcilable material conflict, then the Company will
withdraw the Account's investment in the Trust and terminate this Agreement
within six (6) months after the Trustees inform the Company in writing of the
foregoing determination; provided, however, that such withdrawal and termination
shall be limited to the extent required by any such material irreconcilable
conflict as determined by a majority of the disinterested Trustees.
4.7 The Company shall at least annually submit to the Trustees such
reports, materials or data as the Trustees may reasonably request so that the
Trustees may fully carry out the duties imposed upon them by the Shared Funding
Exemptive Order, and said reports, materials and data shall be submitted more
frequently if reasonably deemed appropriate by the Trustees.
4.8 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then the Trust and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with Rules 6e-2
and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are
applicable.
ARTICLE V.
Indemnification
5.1 Indemnification By the Company
(a) The Company agrees to indemnify and hold harmless
the Trust and each of its Trustees, officers, employees and
agents and each person, if any, who controls the Trust within
the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" and individually the "Indemnified Party"
for purposes of this Article V) against any and all losses,
claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Company, which
consent shall not be unreasonably withheld) or expenses
(including the reasonable costs of investigating or defending
any alleged loss, claim, damage, liability or expense and
reasonable legal counsel fees incurred in connection
therewith) (collectively, "Losses"), to which the Indemnified
Parties may become subject under any statute or regulation, or
at common law or otherwise, insofar as such Losses are related
to the sale or acquisition of Trust Shares or the Contracts
and
(i) arise out of or are based upon any
untrue statements or alleged untrue statements of any
material fact contained in a registration statement
or prospectus for the Contracts or in the Contracts
themselves or in sales literature generated or
approved by the Company on behalf of the Contracts or
Accounts (or any amendment or supplement to any of
the foregoing) (collectively, "Company Documents" for
the purposes of this Article V), or arise out of or
are based upon the omission or the alleged omission
to state therein a material fact required to be
stated therein or necessary to make the statements
therein not misleading, provided that this indemnity
shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or
omission was made in reliance upon and was accurately
derived from written information furnished to the
Company by or on behalf of the Trust for use in
Company Documents or otherwise for use in connection
with the sale of the Contracts or Trust shares; or
(ii) arise out of or result from statements
or representations (other than statements or
representations contained in and accurately derived
from Trust Documents as defined in Section 5.2
(a)(i)) or wrongful conduct of the Company or persons
under its control, with respect to the sale or
acquisition of the Contracts or Trust shares; or
(iii) arise out of or result from any untrue
statement or alleged untrue statement of a material
fact contained in Trust Documents as defined in
Section 5.2(a)(i) or the omission or alleged omission
to state therein a material fact required to be
stated therein or necessary to make the statements
therein not misleading if such statement or omission
was made in reliance upon and accurately derived from
written information furnished to the Trust by or on
behalf of the Company; or
(iv) arise out of or result from any failure
by the Company to provide the services or furnish the
materials required under the terms of this Agreement;
or
(v) arise out of or result from any material
breach of any representation and/or warranty made by
the Company in this Agreement or arise out of or
result from any other material breach of this
Agreement by the Company.
(b) The Company shall not be liable under this
indemnification provision with respect to any Losses to which
an Indemnified Party would otherwise be subject by reason of
such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified
Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this
Agreement or to the Trust or Underwriter, whichever is
applicable. The Company shall also not be liable under this
indemnification provision with respect to any claim made
against an Indemnified Party unless such Indemnified Party
shall have notified the Company in writing within a reasonable
time after the summons or other first legal process giving
information of the nature of the claim shall have been served
upon such Indemnified Party (or after such Indemnified Party
shall have received notice of such service on any designated
agent), but failure to notify the Company of any such claim
shall not relieve the Company from any liability which it may
have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification
provision. In case any such action is brought against the
Indemnified Parties, the Company shall be entitled to
participate, at its own expense, in the defense of such
action. The Company also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named
in the action. After notice from the Company to such party of
the Company's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Company will not be
liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party
independently in connection with the defense thereof other
than reasonable costs of investigation.
(c) The Indemnified Parties will promptly notify the
Company of the commencement of any litigation or proceedings
against them in connection with the issuance or sale of the
Trust shares or the Contracts or the operation of the Trust.
5.2 Indemnification By The Underwriter
(a) The Underwriter agrees to indemnify and hold harmless the
Company, the underwriter of the Contracts and each of its directors and
officers and each person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" and individually an "Indemnified Party" for purposes of this
Section 5.2) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Underwriter, which consent shall not be unreasonably withheld) or
expenses (including the reasonable costs of investigating or defending
any alleged loss, claim, damage, liability or expense and reasonable
legal counsel fees incurred in connection therewith) (collectively,
"Losses") to which the Indemnified Parties may become subject under any
statute, at common law or otherwise, insofar as such Losses are related
to the sale or acquisition of the Trust's Shares or the Contracts and:
(i) arise out of or are based upon any untrue
statements or alleged untrue statements of any material fact
contained in the Registration Statement, prospectus or sales
literature of the Trust (or any amendment or supplement to any
of the foregoing) (collectively, the "Trust Documents") or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall
not apply as to any Indemnified Party if such statement or
omission of such alleged statement or omission was made in
reliance upon and in conformity with information furnished to
the Underwriter or Trust by or on behalf of the Company for
use in the Registration Statement or prospectus for the Trust
or in sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts
or Trust shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the registration statement, prospectus or sales
literature for the Contracts not supplied by the Underwriter
or persons under its control) or wrongful conduct of the
Trust, Adviser or Underwriter or persons under their control,
with respect to the sale or distribution of the Contracts or
Trust shares; or
(iii) arise out of any untrue statement or alleged
untrue statement of a material fact contained in a
registration statement, prospectus or sales literature
covering the Contracts, or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, if
such statement or omission was made in reliance upon
information furnished to the Company by or on behalf of the
Trust; or
(iv) arise as a result of any failure by the Trust to
provide the services and furnish the materials under the terms
of this Agreement (including a failure, whether unintentional
or in good faith or otherwise, to comply with the
qualification representation specified in Section 3.7 of this
Agreement and the diversification requirements specified in
Section 3.6 of this Agreement); or
(v) arise out of or result from any material breach
of any representation and/or warranty made by the Underwriter
in this Agreement or arise out of or result from any other
material breach of this Agreement by the Underwriter; as
limited by and in accordance with the provisions of Sections
5.2(b) and 5.2(c) hereof.
(b) The Underwriter shall not be liable under this
indemnification provision with respect to any Losses to which an
Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence
in the performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to each Company or the Account, whichever is
applicable.
(c) The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an
Indemnified Party unless such Indemnified Party shall have notified the
Underwriter in writing within a reasonable time after the summons or
other first legal process giving information of the nature of the claim
shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify the Underwriter of any such
claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case
any such action is brought against the Indemnified Parties, the
Underwriter will be entitled to participate, at its own expense, in the
defense thereof. The Underwriter also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Underwriter to such party of the
Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such
party independently in connection with the defense thereof other than
reasonable costs of investigation.
(d) The Company agrees promptly to notify the Underwriter of
the commencement of any litigation or proceedings against it or any of
its officers or directors in connection with the issuance or sale of
the Contracts or the operation of each Account.
5.3 Indemnification By The Trust
(a) The Trust agrees to indemnify and hold harmless the
Company, and each of its directors and officers and each person, if
any, who controls the Company within the meaning of Section 15 of the
1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 5.3) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Trust, which consent shall not be unreasonably withheld) or litigation
(including legal and other expenses) to which the Indemnified Parties
may become subject under any statute, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements result from the gross
negligence, bad faith or willful misconduct of the Board or any member
thereof, are related to the operations of the Trust, and arise out of
or result from any material breach of any representation and/or
warranty made by the Trust in this Agreement or arise out of or result
from any other material breach of this Agreement by the Trust; as
limited by and in accordance with the provisions of Section 5.3(b) and
5.3(c) hereof. It is understood and expressly stipulated that neither
the holders of shares of the Trust nor any Trustee, officer, agent or
employee of the Trust shall be personally liable hereunder, nor shall
any resort to be had to other private property for the satisfaction of
any claim or obligation hereunder, but the Trust only shall be liable.
(b) The Trust shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against any Indemnified Party as such
may arise from such Indemnified Party's willful misfeasance, bad faith,
or gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard of
obligations and duties under this Agreement or to the Company, the
Trust, the Underwriter or each Account, whichever is applicable.
(c) The Trust shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Trust in writing
within a reasonable time after the summons or other first legal process
giving information of the nature of the claims shall have been served
upon such Indemnified Party (or after such Indemnified Party shall have
received notice of such service on any designated agent), but failure
to notify the Trust of any such claim shall not relieve the Trust from
any liability which it may have to the Indemnified Party against whom
such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against
the Indemnified Parties, the Trust will be entitled to participate, at
its own expense, in the defense thereof. The Trust also shall be
entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Trust to such
party of the Trust's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it, and the Trust will not be liable to such party
under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
(d) The Company and the Underwriter agree promptly to notify
the Trust of the commencement of any litigation or proceedings against
it or any of its respective officers or directors in connection with
this Agreement, the issuance or sale of the Contracts, with respect to
the operation of either the Account, or the sale or acquisition of
share of the Trust.
ARTICLE VI.
Termination
6.1 This Agreement may be terminated by any party in its entirety or
with respect to one, some or all Portfolios or any reason by sixty (60) days
advance written notice delivered to the other parties, and shall terminate
immediately in the event of its assignment, as that term is used in the 1940
Act.
6.2 This Agreement may be terminated immediately by either the Trust or
the Underwriter following consultation with the Trustees upon written notice to
the Company if :
(a) either one or both of the Trust or the Underwriter
respectively, shall determine, in their sole judgment exercised in good
faith, that the Company has suffered a material adverse change in its
business, operations, financial condition or prospects since the date
of this Agreement or is the subject of material adverse publicity; or
(b) if the Company gives the Trust and the Underwriter the
written notice specified in Section 1.10 hereof and at the same time
such notice was given there was no notice of termination outstanding
under any other provision of this Agreement; provided, however, that
any termination under this Section 6.4(b) shall be effective forty-five
(45) days after the notice specified in Section 1.10 was given.
6.3 This Agreement may be terminated immediately by the Company upon
written notice to the Trust and the Underwriter, if the Company shall determine,
in its sole judgment exercised in good faith, that either the Trust or the
Underwriter has suffered a material adverse change in its business, operations,
financial conditions or prospects since the date of this Agreement or is the
subject of material adverse publicity.
6.4 If this Agreement is terminated for any reason, except under to
Article IV (Potential Conflicts) above, the Trust shall, at the option of the
Company, continue to make available additional shares of any Portfolio and
redeem shares of any Portfolio pursuant to all of the terms and conditions of
this Agreement for all Contracts in effect on the effective date of termination
of this Agreement. If this Agreement is terminated pursuant to Article IV, the
provisions of Article IV shall govern.
6.5 The provisions of Articles II (Representations and Warranties) and
V (Indemnification) shall survive the termination of this Agreement. All other
applicable provisions of this Agreement shall survive the termination of this
Agreement, as long as shares of the Trust are held on behalf of Contract owners
in accordance with Section 6.4, except that the Trust and the Underwriter shall
have no further obligation to sell Trust shares with respect to Contracts issued
after termination.
6.6 The Company shall not redeem Trust shares attributable to the
Contracts (as opposed to Trust shares attributable to the Company's assets held
in the Account) except (i) as necessary to implement Contract Owner initiated or
approved transactions, (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption"), or (iii) as
permitted by an order of the Commission pursuant to Section 26(b) of the 1940
Act. Upon request, the Company will promptly furnish to the Trust and the
Underwriter the opinion of counsel for the Company (which counsel shall be
reasonably satisfactory to the Trust and the Underwriter) to the effect that any
redemption pursuant to clause (ii) above is a Legally Required Redemption.
Furthermore, except in cases where permitted under the terms of the Contracts,
the Company shall not prevent Contract Owners from allocating payments to a
Portfolio that was otherwise available under the Contracts without first giving
the Trust or the Underwriter 90 days notice of its intention to do so.
ARTICLE VII.
Notices.
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Trust or the Underwriter:
Templeton Variable Products Series Fund or
Franklin Templeton Distributors, Inc.
500 E. Broward Boulevard
Fort Lauderdale, FL 33394-3091
Attention: Barbara J. Green, Trust Secretary
WITH A COPY TO
Franklin Resources, Inc.
777 Mariners Island Boulevard
San Mateo, CA 94404
Attention:Karen L. Skidmore, Senior Corporate Counsel
If to the Company:
CUNA Mutual Life Insurance Company
5910 Mineral Point Road
Madison, WI 53701-0391
Attention: Linda Lilledahl, Associate General Counsel
ARTICLE VIII.
Miscellaneous
8.1 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
8.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
8.3 If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
8.4 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Connecticut.
It shall also be subject to the provisions of the federal securities laws and
the rules and regulations thereunder and to any orders of the Commission
granting exemptive relief therefrom and the conditions of such orders. Copies of
any such orders shall be promptly forwarded by the Trust to the Company.
8.5 The parties to this Agreement acknowledge and agree that all
liabilities of the Trust arising, directly or indirectly, under this Agreement,
of any and every nature whatsoever, shall be satisfied solely out of the assets
of the Trust and that no Trustee, officer, agent or holder of shares of
beneficial interest of the Trust shall be personally liable for any such
liabilities.
8.6 Each party shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Commission, the National Association of Securities Dealers, Inc. and state
insurance regulators) and shall permit such authorities reasonable access to its
books and records in connection with any investigation or inquiry relating to
this Agreement or the transactions contemplated hereby.
8.7 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
8.8 The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any respect, except as provided in Section
1.10.
8.9 Neither this Agreement nor any rights or obligations hereunder may
be assigned by either party without the prior written approval of the other
party.
8.10 No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties.
IN WITNESS WHEREOF, the parties have caused their duly
authorized officers to execute this Participation Agreement as of the date and
year first above written.
The Company:
CUNA Mutual Life Insurance Company
By its authorized officer
By: /s/ Michael B. Kitchen
Name: Michael B. Kitchen
Title: President and Chief Executive Officer
The Trust:
Templeton Variable Products Series Fund
By its authorized officer
By: /s/ Karen L. Skidmore
Name: Karen L. Skidmore
Title: Assistant Vice President, Assistant Secretary
The Underwriter:
Franklin Templeton Distributors, Inc.
By its authorized officer
By: /s/ Deborah R. Gatzek
Name: Deborah R. Gatzek
Title: Senior Vice President, Assistant Secretary
<PAGE>
SCHEDULE A
Separate Accounts of CUNA Mutual Life Insurance Company
1. CUNA Mutual Life Variable Annuity Account (established December 14, 1993)
2. CUNA Mutual Life Group Variable Annuity Account(established August 16, 1983)
3. CUNA Mutual Life Variable Account (established August 16, 1983)
<PAGE>
SCHEDULE B
Trust Portfolios and Classes Available
Portfolio: Templeton Developing Markets Fund
Class: Class 2
Investment Adviser: Templeton Asset Management Ltd.
<PAGE>
SCHEDULE C
Variable Annuity and Variable Life Contracts
Issued by CUNA Mutual Life Insurance Company
1. MEMBERS Variable Annuity, Form No. 1676
2. UltraSaver Group Annuity, Form No. 01-GA-2-0390
3. CU Pension Saver Group Annuity, Form No. 01-GA-2-0390
4. MEMBERS Variable Universal Life, Form No. 190D
<PAGE>
SCHEDULE D
Portfolios Available in CUNA Contracts
1. Investment Company: CIMCO Ultra Series Fund
Portfolios: Money Market Fund
Bond Fund
Balanced Fund
Growth & Income Stock Fund
Capital Appreciation Stock Fund
2. Investment Company: MFS Variable Insurance Trust
Portfolios: World Governments Fund
Emerging Growth Fund
3. Investment Company: T. Rowe Price International Series, Inc.
Portfolio: International Stock Fund
4. Investment Company: Oppenheimer Variable Account Funds
Portfolio: High Income Fund
<PAGE>
SCHEDULE E
RULE 12B-1 PLANS
Compensation Schedule
Each Portfolio named below shall pay the following amounts pursuant to the terms
and conditions referenced below under its Class 2 Rule 12b-1 Distribution Plan,
stated as a percentage per year of Class 2's average daily net assets
represented by shares of Class 2.
Portfolio Name Maximum Annual Payment Rate
TEMPLETON DEVELOPING MARKETS FUND 0.25%
Agreement Provisions
If the Company, of behalf of any Account, purchases Trust Portfolio
shares ("Eligible Shares") which are subject to a Rule 12b-1 Plan adopted under
the 1940 Act (the "Plan"), the Company may participate in the Plan.
To the extent the Company or its affiliates, agents or designees
(collectively "you") provide administrative and other services which assist in
the promotion and distribution of Eligible Shares or Variable Contracts offering
Eligible Shares, the Underwriter, the Trust or their affiliates (collectively,
"we") may pay you a Rule 12b-1 fee. "Administrative and other services" may
include, but are not limited to, furnishing personal services to owners of
Contracts which may invest in Eligible Shares ("Contact Owners"), answering
routine inquiries regarding a Portfolio, coordinating responses to Contract
Owner inquiries regarding the Portfolios, maintaining such accounts or providing
such other enhanced services as a Trust Portfolio or Contract may require,
maintaining customer accounts and records, or providing other services eligible
for service fees as defined under NASD rules. Your acceptance of such
compensation is your acknowledgment that eligible services have been rendered.
All Rule 12b-1 fees, shall be based on the value of Eligible Shares owned by the
Company on behalf of its Accounts, and shall be calculated on the basis and at
the rates set forth in the Compensation Schedule stated above. The aggregate
annual fees paid pursuant to each Plan shall not exceed the amounts stated as
the "annual maximums" in the Portfolio's prospectus, unless an increase is
approved by shareholders as provided in the Plan. These maximums shall be a
specified percent of the value of a Portfolio's net assets attributable to
Eligible Shares owned by the Company on behalf of its Accounts (determined in
the same manner as the Portfolio uses to compute its net assets as set forth in
its effective Prospectus).
You shall furnish us with such information as shall reasonably be
requested by the Trust's Boards of Trustees ("Trustees") with respect to the
Rule 12b-1 fees paid to you pursuant to the Plans. We shall furnish to the
Trustees, for their review on a quarterly basis, a written report of the amounts
expended under the Plans and the purposes for which such expenditures were made.
The Plans and provisions of any agreement relating to such Plans must
be approved annually by a vote of the Trustees, including the Trustees who are
not interested persons of the Trust and who have no financial interest in the
Plans or any related agreement ("Disinterested Trustees"). Each Plan may be
terminated at any time by the vote of a majority of the Disinterested Trustees,
or by a vote of a majority of the outstanding shares as provided in the Plan, on
sixty (60) days' written notice, without payment of any penalty. The Plans may
also be terminated by any act that terminates the Underwriting Agreement between
the Underwriter and the Trust, and/or the management or administration agreement
between Franklin Advisers, Inc. or Templeton Investment Counsel, Inc. or their
affiliates and the Trust. Continuation of the Plans is also conditioned on
Disinterested Trustees being ultimately responsible for selecting and nominating
any new Disinterested Trustees. Under Rule 12b-1, the Trustees have a duty to
request and evaluate, and persons who are party to any agreement related to a
Plan have a duty to furnish, such information as may reasonably be necessary to
an informed determination of whether the Plan or any agreement should be
implemented or continued. Under Rule 12b-1, the Trust is permitted to implement
or continue Plans or the provisions of any agreement relating to such Plans from
year-to-year only if, based on certain legal considerations, the Trustees are
able to conclude that the Plans will benefit each affected Trust Portfolio and
class. Absent such yearly determination, the Plans must be terminated as set
forth above. In the event of the termination of the Plans for any reason, the
provisions of this Schedule E relating to the Plans will also terminate.
Any obligation assumed by the Trust pursuant to this Agreement shall be limited
in all cases to the assets of the Trust and no person shall seek satisfaction
thereof from shareholders of the Trust. You agree to waive payment of any
amounts payable to you by Underwriter under a Plan until such time as the
Underwriter has received such fee from the Fund.
The provisions of the Plans shall control over the provisions of the
Participation Agreement, including this Schedule E, in the event of any
inconsistency.
You agree to provide complete disclosure as required by all applicable statutes,
rules and regulations of all rule 12b-1 fees received from us in the prospectus
of the contracts.
<PAGE>
EXHIBIT 9
BARBARA L. SECOR
Assistant Vice President,
Associate General Counsel
Telephone:
(319) 352-1000, ext. 2157
FAX (319) 352-1272
April 15, 1997
CUNA MUTUAL LIFE INSURANCE COMPANY
2000 HERITAGE WAY
WAVERLY IA 50677
Ladies and Gentlemen:
With reference to the registration statement on Form N-4 to be filed by CUNA
Mutual Life Insurance Company (the "Company") and CUNA Mutual Life Variable
Annuity Account (the "Account") with the Securities and Exchange Commission for
the purpose of registering under the Securities Act of 1933, as amended,
deferred variable annuity contracts (the "Contracts"), I have examined such
documents and such law as I considered necessary and appropriate, and on the
basis of such examination, it is my opinion that:
1. The Company is a corporation duly organized and validly existing as a
mutual life insurance company under the laws of the State of Iowa and
is duly authorized by the Insurance Division of the Department of
Commerce of the State of Iowa to issue the Contracts.
2. The Account is a duly authorized and existing separate account
established pursuant to the provisions of Section 508A.1 of the Iowa
Code (1993).
3. Unless provided to the contrary under the contracts, that portion of
the assets of the Account equal to the reserves and other contracts
liabilities with respect to the Account will not be chargeable with
liabilities arising out of any other business that the Company may
conduct.
4. The Contracts, when issued as contemplated by the Form N-4 registration
statement, will constitute legal, validly issued and binding
obligations of the Company.
I hereby consent to the filing of this opinion as an exhibit to the Form N-4
registration statement for the Contracts and the Account and to the use of my
name under the caption "Legal Matters" in the statement of additional
information.
Sincerely,
/s/ Barbara L. Secor
Barbara L. Secor
Assistant Vice President & Associate General Counsel
CUNA MUTUAL LIFE INSURANCE COMPANY
<PAGE>
EXHIBIT 10
The Board of Directors of CUNA Mutual Life Insurance Company and Contract Owners
of CUNA Mutual Life Variable Annuity Account:
We consent to the use of our reports included herein and to the reference to our
Firm under the heading "Condensed Financial Information" in the Prospectus and
"Experts" in the Statement of Additional Information of the CUNA Mutual Life
Variable Annuity Account.
Our report dated March 26, 1997, contains an explanatory paragraph that states
that the Company prepared the financial statements using accounting practices
prescribed or permitted by the Insurance Division, Department of Commerce, of
the State of Iowa, which practices differ from generally accepted accounting
principles. Also, as discussed in note 1 to the financial statements, the
Company changed its method of accounting for mortgage loan foreclosure losses in
1995.
KPMG Peat Marwick LLP
Des Moines, Iowa
April 17, 1997
<PAGE>
EXHIBIT 13
<TABLE>
<CAPTION>
MEMBERS Variable Annuity - Hypothetical Performance - Capital Appreciation
Ending Date for Period 12/31/96 Inception Date 01/03/94
Avg Annual Charge 0.12%
Daily Equivalent 0.00000329
Initial Investment 1,000.00
Average Annual Returns
Year to Date 1 Year 3 Year 5 Year 10 Year Since Inceptio
<S> <C> <C> <C> <C> <C> <C>
Beginning Date 12/31/95 12/31/95 12/31/93 12/31/91 12/31/86 01/03/94
Beginning Units 77.519380 77.519380 ERR ERR ERR 103.842160
Beginning Price 12.90 12.90 ERR ERR ERR 9.63
Ending Date 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96
Days in Period 366 366 1,096 1,827 3,653 1,093
Units for Annual Charge 0.093288 0.093288 ERR ERR ERR 0.372743
Ending Units 77.426092 77.426092 ERR ERR ERR 103.469417
Ending Price 15.45 15.45 15.45 15.45 15.45 15.45
Contract Value 1,196.23 1,196.23 ERR ERR ERR 1,598.60
Return w/o Surr Chg 19.62% 19.62% ERR ERR ERR 16.96%
Surrender Charge 63.00 63.00 45.00 27.00 0.00 45.00
ERV 1,133.23 1,133.23 ERR ERR ERR 1,553.60
Return w Surr Chrg 13.32% 13.32% ERR ERR ERR 15.85%
Cummulative Returns
Year to Date 1 Year 3 Year 5 Year 10 Year Since Inceptio
Contract Value 1,196.23 1,196.23 ERR ERR ERR 1,598.60
Cumm Return w/o Surr Chg 19.62% 19.62% ERR ERR ERR 59.86%
ERV 1,133.23 1,133.23 ERR ERR ERR 1,553.60
Cumm Return w Surr Chg 13.32% 13.32% ERR ERR ERR 55.36%
MEMBERS Variable Annuity - Hypothetical Performance - Capital Appreciation
Ending Date for Period 12/31/96 Inception Date 06/01/94
Avg Annual Charge 0.12%
Daily Equivalent 0.00000329
Initial Investment 1,000.00
Average Annual Returns
Year to Date 1 Year 3 Year 5 Year 10 Year Since Inceptio
Beginning Date 12/31/95 12/31/95 12/31/93 12/31/91 12/31/86 06/01/94
Beginning Units 77.519380 77.519380 ERR ERR ERR 100.000000
Beginning Price 12.90 12.90 ERR ERR ERR 10.00
Ending Date 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96
Days in Period 366 366 1,096 1,827 3,653 944
Units for Annual Charge 0.093288 0.093288 ERR ERR ERR 0.310095
Ending Units 77.426092 77.426092 ERR ERR ERR 99.689905
Ending Price 15.45 15.45 15.45 15.45 15.45 15.45
Contract Value 1,196.23 1,196.23 ERR ERR ERR 1,540.21
Return w/o Surr Chg 19.62% 19.62% ERR ERR ERR 18.18%
Surrender Charge 63.00 63.00 45.00 27.00 0.00 45.00
ERV 1,133.23 1,133.23 ERR ERR ERR 1,495.21
Return w Surr Chrg 13.32% 13.32% ERR ERR ERR 16.83%
Cummulative Returns
Year to Date 1 Year 3 Year 5 Year 10 Year Since Inceptio
Contract Value 1,196.23 1,196.23 ERR ERR ERR 1,540.21
Cumm Return w/o Surr Chg 19.62% 19.62% ERR ERR ERR 54.02%
ERV 1,133.23 1,133.23 ERR ERR ERR 1,495.21
Cumm Return w Surr Chg 13.32% 13.32% ERR ERR ERR 49.52%
MEMBERS Variable Annuity - Hypothetical Performance - Growth and Income
Ending Date for Period 12/31/96 Inception Date 01/03/85
Avg Annual Charge 0.12%
Daily Equivalent 0.00000329
Initial Investment 1,000.00
Average Annual Returns
Year to Date 1 Year 3 Year 5 Year 10 Year Since Inceptio
Beginning Date 12/31/95 12/31/95 12/31/93 12/31/91 12/31/86 01/03/85
Beginning Units 78.369906 78.369906 101.626016 121.065375 204.498978 279.329609
Beginning Price 12.76 12.76 9.84 8.26 4.89 3.58
Ending Date 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96
Days in Period 366 366 1,096 1,827 3,653 4,380
Units for Annual Charge 0.094312 0.094312 0.365788 0.725522 2.443038 3.996339
Ending Units 78.275594 78.275594 101.260228 120.339853 202.055940 275.333270
Ending Price 15.36 15.36 15.36 15.36 15.36 15.36
Contract Value 1,202.31 1,202.31 1,555.36 1,848.42 3,103.58 4,229.12
Return w/o Surr Chg 20.23% 20.23% 15.86% 13.07% 11.99% 12.77%
Surrender Charge 63.00 63.00 45.00 27.00 0.00 0.00
ERV 1,139.31 1,139.31 1,510.36 1,821.42 3,103.58 4,229.12
Return w Surr Chrg 13.93% 13.93% 14.73% 12.74% 11.99% 12.77%
Cummulative Returns
Year to Date 1 Year 3 Year 5 Year 10 Year Since Inceptio
Contract Value 1,202.31 1,202.31 1,555.36 1,848.42 3,103.58 4,229.12
Cumm Return w/o Surr Chg 20.23% 20.23% 55.54% 84.84% 210.36% 322.91%
ERV 1,139.31 1,139.31 1,510.36 1,821.42 3,103.58 4,229.12
Cumm Return w Surr Chg 13.93% 13.93% 51.04% 82.14% 210.36% 322.91%
MEMBERS Variable Annuity - Hypothetical Performance - Growth and Income
Ending Date for Period 12/31/96 Inception Date 06/01/94
Avg Annual Charge 0.12%
Daily Equivalent 0.00000329
Initial Investment 1,000.00
Average Annual Returns
Year to Date 1 Year 3 Year 5 Year 10 Year Since Inceptio
Beginning Date 12/31/95 12/31/95 12/31/93 12/31/91 12/31/86 06/01/94
Beginning Units 78.369906 78.369906 ERR ERR ERR 100.000000
Beginning Price 12.76 12.76 ERR ERR ERR 10.00
Ending Date 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96
Days in Period 366 366 1,096 1,827 3,653 944
Units for Annual Charge 0.094312 0.094312 ERR ERR ERR 0.310095
Ending Units 78.275594 78.275594 ERR ERR ERR 99.689905
Ending Price 15.36 15.36 15.36 15.36 15.36 15.36
Contract Value 1,202.31 1,202.31 ERR ERR ERR 1,531.24
Return w/o Surr Chg 20.23% 20.23% ERR ERR ERR 17.91%
Surrender Charge 63.00 63.00 45.00 27.00 0.00 45.00
ERV 1,139.31 1,139.31 ERR ERR ERR 1,486.24
Return w Surr Chrg 13.93% 13.93% ERR ERR ERR 16.56%
Cummulative Returns
Year to Date 1 Year 3 Year 5 Year 10 Year Since Inceptio
Contract Value 1,202.31 1,202.31 ERR ERR ERR 1,531.24
Cumm Return w/o Surr Chg 20.23% 20.23% ERR ERR ERR 53.12%
ERV 1,139.31 1,139.31 ERR ERR ERR 1,486.24
Cumm Return w Surr Chg 13.93% 13.93% ERR ERR ERR 48.62%
MEMBERS Variable Annuity - Hypothetical Performance - Balanced
Ending Date for Period 12/31/96 Inception Date 01/03/85
Avg Annual Charge 0.12%
Daily Equivalent 0.00000329
Initial Investment 1,000.00
Average Annual Returns
Year to Date 1 Year 3 Year 5 Year 10 Year Since Inceptio
Beginning Date 12/31/95 12/31/95 12/31/93 12/31/91 12/31/86 01/03/85
Beginning Units 83.892617 83.892617 99.108028 113.765643 180.505415 239.234450
Beginning Price 11.92 11.92 10.09 8.79 5.54 4.18
Ending Date 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96
Days in Period 366 366 1,096 1,827 3,653 4,380
Units for Annual Charge 0.100958 0.100958 0.356725 0.681776 2.1564 3.422702
Ending Units 83.791659 83.791659 98.751303 113.083867 178.349015 235.811748
Ending Price 13.03 13.03 13.03 13.03 13.03 13.03
Contract Value 1,091.81 1,091.81 1,286.73 1,473.48 2,323.89 3,072.63
Return w/o Surr Chg 9.18% 9.18% 8.77% 8.06% 8.80% 9.81%
Surrender Charge 63.00 63.00 45.00 27.00 0.00 0.00
ERV 1,028.81 1,028.81 1,241.73 1,446.48 2,323.89 3,072.63
Return w Surr Chrg 2.88% 2.88% 7.48% 7.66% 8.80% 9.81%
Cummulative Returns
Year to Date 1 Year 3 Year 5 Year 10 Year Since Inceptio
Contract Value 1,091.81 1,091.81 1,286.73 1,473.48 2,323.89 3,072.63
Cumm Return w/o Surr Chg 9.18% 9.18% 28.67% 47.35% 132.39% 207.26%
ERV 1,028.81 1,028.81 1,241.73 1,446.48 2,323.89 3,072.63
Cumm Return w Surr Chg 2.88% 2.88% 24.17% 44.65% 132.39% 207.26%
MEMBERS Variable Annuity - Hypothetical Performance - Balanced
Ending Date for Period 12/31/96 Inception Date 06/01/94
Avg Annual Charge 0.12%
Daily Equivalent 0.00000329
Initial Investment 1,000.00
Average Annual Returns
Year to Date 1 Year 3 Year 5 Year 10 Year Since Inceptio
Beginning Date 12/31/95 12/31/95 12/31/93 12/31/91 12/31/86 06/01/94
Beginning Units 83.892617 83.892617 ERR ERR ERR 100.000000
Beginning Price 11.92 11.92 ERR ERR ERR 10.00
Ending Date 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96
Days in Period 366 366 1,096 1,827 3,653 944
Units for Annual Charge 0.100958 0.100958 ERR ERR ERR 0.310095
Ending Units 83.791659 83.791659 ERR ERR ERR 99.689905
Ending Price 13.03 13.03 13.03 13.03 13.03 13.03
Contract Value 1,091.81 1,091.81 ERR ERR ERR 1,298.96
Return w/o Surr Chg 9.18% 9.18% ERR ERR ERR 10.64%
Surrender Charge 63.00 63.00 45.00 27.00 0.00 45.00
ERV 1,028.81 1,028.81 ERR ERR ERR 1,253.96
Return w Surr Chrg 2.88% 2.88% ERR ERR ERR 9.14%
Cummulative Returns
Year to Date 1 Year 3 Year 5 Year 10 Year Since Inceptio
Contract Value 1,091.81 1,091.81 ERR ERR ERR 1,298.96
Cumm Return w/o Surr Chg 9.18% 9.18% ERR ERR ERR 29.90%
ERV 1,028.81 1,028.81 ERR ERR ERR 1,253.96
Cumm Return w Surr Chg 2.88% 2.88% ERR ERR ERR 25.40%
MEMBERS Variable Annuity - Hypothetical Performance - Bond
Ending Date for Period 12/31/96 Inception Date 01/03/85
Avg Annual Charge 0.12%
Daily Equivalent 0.00000329
Initial Investment 1,000.00
Average Annual Returns
Year to Date 1 Year 3 Year 5 Year 10 Year Since Inceptio
Beginning Date 12/31/95 12/31/95 12/31/93 12/31/91 12/31/86 01/03/85
Beginning Units 88.028169 88.028169 96.432015 108.695652 155.520995 200.400802
Beginning Price 11.36 11.36 10.37 9.20 6.43 4.99
Ending Date 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96
Days in Period 366 366 1,096 1,827 3,653 4,380
Units for Annual Charge 0.105935 0.105935 0.347093 0.651392 1.857925 2.867113
Ending Units 87.922234 87.922234 96.084922 108.044260 153.663070 197.533689
Ending Price 11.52 11.52 11.52 11.52 11.52 11.52
Contract Value 1,012.86 1,012.86 1,106.90 1,244.67 1,770.20 2,275.59
Return w/o Surr Chg 1.29% 1.29% 3.44% 4.47% 5.88% 7.09%
Surrender Charge 63.00 63.00 45.00 27.00 0.00 0.00
ERV 949.86 949.86 1,061.90 1,217.67 1,770.20 2,275.59
Return w Surr Chrg -5.01% -5.01% 2.02% 4.02% 5.88% 7.09%
Cummulative Returns
Year to Date 1 Year 3 Year 5 Year 10 Year Since Inceptio
Contract Value 1,012.86 1,012.86 1,106.90 1,244.67 1,770.20 2,275.59
Cumm Return w/o Surr Chg 1.29% 1.29% 10.69% 24.47% 77.02% 127.56%
ERV 949.86 949.86 1,061.90 1,217.67 1,770.20 2,275.59
Cumm Return w Surr Chg -5.01% -5.01% 6.19% 21.77% 77.02% 127.56%
MEMBERS Variable Annuity - Hypothetical Performance - Bond
Ending Date for Period 12/31/96 Inception Date 06/01/94
Avg Annual Charge 0.12%
Daily Equivalent 0.00000329
Initial Investment 1,000.00
Average Annual Returns
Year to Date 1 Year 3 Year 5 Year 10 Year Since Inceptio
Beginning Date 12/31/95 12/31/95 12/31/93 12/31/91 12/31/86 06/01/94
Beginning Units 88.028169 88.028169 ERR ERR ERR 100.000000
Beginning Price 11.36 11.36 ERR ERR ERR 10.00
Ending Date 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96
Days in Period 366 366 1,096 1,827 3,653 944
Units for Annual Charge 0.105935 0.105935 ERR ERR ERR 0.310095
Ending Units 87.922234 87.922234 ERR ERR ERR 99.689905
Ending Price 11.52 11.52 11.52 11.52 11.52 11.52
Contract Value 1,012.86 1,012.86 ERR ERR ERR 1,148.43
Return w/o Surr Chg 1.29% 1.29% ERR ERR ERR 5.50%
Surrender Charge 63.00 63.00 45.00 27.00 0.00 45.00
ERV 949.86 949.86 ERR ERR ERR 1,103.43
Return w Surr Chrg -5.01% -5.01% ERR ERR ERR 3.88%
Cummulative Returns
Year to Date 1 Year 3 Year 5 Year 10 Year Since Inceptio
Contract Value 1,012.86 1,012.86 ERR ERR ERR 1,148.43
Cumm Return w/o Surr Chg 1.29% 1.29% ERR ERR ERR 14.84%
ERV 949.86 949.86 ERR ERR ERR 1,103.43
Cumm Return w Surr Chg -5.01% -5.01% ERR ERR ERR 10.34%
MEMBERS Variable Annuity - Hypothetical Performance - Money Market
Ending Date for Period 12/31/96 Inception Date 01/03/85
Avg Annual Charge 0.12%
Daily Equivalent 0.00000329
Initial Investment 1,000.00
Average Annual Returns
Year to Date 1 Year 3 Year 5 Year 10 Year Since Inceptio
Beginning Date 12/31/95 12/31/95 12/31/93 12/31/91 12/31/86 01/03/85
Beginning Units 94.786730 94.786730 100.603622 103.305785 135.869565 151.057402
Beginning Price 10.55 10.55 9.94 9.68 7.36 6.62
Ending Date 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96
Days in Period 366 366 1,096 1,827 3,653 4,380
Units for Annual Charge 0.114068 0.114068 0.362108 0.619092 1.62316 2.161162
Ending Units 94.672662 94.672662 100.241514 102.686693 134.246405 148.896240
Ending Price 10.91 10.91 10.91 10.91 10.91 10.91
Contract Value 1,032.88 1,032.88 1,093.63 1,120.31 1,464.63 1,624.46
Return w/o Surr Chg 3.29% 3.29% 3.03% 2.30% 3.89% 4.13%
Surrender Charge 63.00 63.00 45.00 27.00 0.00 0.00
ERV 969.88 969.88 1,048.63 1,093.31 1,464.63 1,624.46
Return w Surr Chrg -3.01% -3.01% 1.60% 1.80% 3.89% 4.13%
Cummulative Returns
Year to Date 1 Year 3 Year 5 Year 10 Year Since Inceptio
Contract Value 1,032.88 1,032.88 1,093.63 1,120.31 1,464.63 1,624.46
Cumm Return w/o Surr Chg 3.29% 3.29% 9.36% 12.03% 46.46% 62.45%
ERV 969.88 969.88 1,048.63 1,093.31 1,464.63 1,624.46
Cumm Return w Surr Chg -3.01% -3.01% 4.86% 9.33% 46.46% 62.45%
MEMBERS Variable Annuity - Hypothetical Performance - Money Market
Ending Date for Period 12/31/96 Inception Date 06/01/94
Avg Annual Charge 0.12%
Daily Equivalent 0.00000329
Initial Investment 1,000.00
Average Annual Returns
Year to Date 1 Year 3 Year 5 Year 10 Year Since Inceptio
Beginning Date 12/31/95 12/31/95 12/31/93 12/31/91 12/31/86 06/01/94
Beginning Units 94.786730 94.786730 ERR ERR ERR 100.000000
Beginning Price 10.55 10.55 ERR ERR ERR 10.00
Ending Date 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96
Days in Period 366 366 1,096 1,827 3,653 944
Units for Annual Charge 0.114068 0.114068 ERR ERR ERR 0.310095
Ending Units 94.672662 94.672662 ERR ERR ERR 99.689905
Ending Price 10.91 10.91 10.91 10.91 10.91 10.91
Contract Value 1,032.88 1,032.88 ERR ERR ERR 1,087.62
Return w/o Surr Chg 3.29% 3.29% ERR ERR ERR 3.30%
Surrender Charge 63.00 63.00 45.00 27.00 0.00 45.00
ERV 969.88 969.88 ERR ERR ERR 1,042.62
Return w Surr Chrg -3.01% -3.01% ERR ERR ERR 1.63%
Cummulative Returns
Year to Date 1 Year 3 Year 5 Year 10 Year Since Inceptio
Contract Value 1,032.88 1,032.88 ERR ERR ERR 1,087.62
Cumm Return w/o Surr Chg 3.29% 3.29% ERR ERR ERR 8.76%
ERV 969.88 969.88 ERR ERR ERR 1,042.62
Cumm Return w Surr Chg -3.01% -3.01% ERR ERR ERR 4.26%
MEMBERS Variable Annuity - Hypothetical Performance - International Stock
Ending Date for Period 12/31/96 Inception Date 06/01/94
Avg Annual Charge 0.12%
Daily Equivalent 0.00000329
Initial Investment 1,000.00
Average Annual Returns
Year to Date 1 Year 3 Year 5 Year 10 Year Since Inceptio
Beginning Date 12/31/95 12/31/95 12/31/93 12/31/91 12/31/86 06/01/94
Beginning Units 91.240876 91.240876 ERR ERR ERR 100.000000
Beginning Price 10.96 10.96 ERR ERR ERR 10.00
Ending Date 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96
Days in Period 366 366 1,096 1,827 3,653 944
Units for Annual Charge 0.109801 0.109801 ERR ERR ERR 0.310095
Ending Units 91.131075 91.131075 ERR ERR ERR 99.689905
Ending Price 12.40 12.40 12.40 12.40 12.40 12.40
Contract Value 1,130.03 1,130.03 ERR ERR ERR 1,236.15
Return w/o Surr Chg 13.00% 13.00% ERR ERR ERR 8.54%
Surrender Charge 63.00 63.00 45.00 27.00 0.00 45.00
ERV 1,067.03 1,067.03 ERR ERR ERR 1,191.15
Return w Surr Chrg 6.70% 6.70% ERR ERR ERR 7.00%
Cummulative Returns
Year to Date 1 Year 3 Year 5 Year 10 Year Since Inceptio
Contract Value 1,130.03 1,130.03 ERR ERR ERR 1,236.15
Cumm Return w/o Surr Chg 13.00% 13.00% ERR ERR ERR 23.62%
ERV 1,067.03 1,067.03 ERR ERR ERR 1,191.15
Cumm Return w Surr Chg 6.70% 6.70% ERR ERR ERR 19.12%
MEMBERS Variable Annuity - Hypothetical Performance - World Governments
Ending Date for Period 12/31/96 Inception Date 06/01/94
Avg Annual Charge 0.12%
Daily Equivalent 0.00000329
Initial Investment 1,000.00
Average Annual Returns
Year to Date 1 Year 3 Year 5 Year 10 Year Since Inceptio
Beginning Date 12/31/95 12/31/95 12/31/93 12/31/91 12/31/86 06/01/94
Beginning Units 88.573959 88.573959 ERR ERR ERR 100.000000
Beginning Price 11.29 11.29 ERR ERR ERR 10.00
Ending Date 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96
Days in Period 366 366 1,096 1,827 3,653 944
Units for Annual Charge 0.106591 0.106591 ERR ERR ERR 0.310095
Ending Units 88.467368 88.467368 ERR ERR ERR 99.689905
Ending Price 11.58 11.58 11.58 11.58 11.58 11.58
Contract Value 1,024.45 1,024.45 ERR ERR ERR 1,154.41
Return w/o Surr Chg 2.44% 2.44% ERR ERR ERR 5.71%
Surrender Charge 63.00 63.00 45.00 27.00 0.00 45.00
ERV 961.45 961.45 ERR ERR ERR 1,109.41
Return w Surr Chrg -3.86% -3.86% ERR ERR ERR 4.10%
Cummulative Returns
Year to Date 1 Year 3 Year 5 Year 10 Year Since Inceptio
Contract Value 1,024.45 1,024.45 ERR ERR ERR 1,154.41
Cumm Return w/o Surr Chg 2.44% 2.44% ERR ERR ERR 15.44%
ERV 961.45 961.45 ERR ERR ERR 1,109.41
Cumm Return w Surr Chg -3.86% -3.86% ERR ERR ERR 10.94%
MEMBERS Variable Annuity - Hypothetical Performance - Emerging Growth
Ending Date for Period 12/31/96 Inception Date 05/01/96
Avg Annual Charge 0.12%
Daily Equivalent 0.00000329
Initial Investment 1,000.00
Average Annual Returns
Year to Date* 1 Year 3 Year 5 Year 10 Year Since Inceptio
Beginning Date 05/01/96 12/31/95 12/31/93 12/31/91 12/31/86 05/01/96
Beginning Units 100.000000 ERR ERR ERR ERR 100.000000
Beginning Price 10.00 ERR ERR ERR ERR 10.00
Ending Date 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96 12/31/96
Days in Period 244 366 1,096 1,827 3,653 244
Units for Annual Charge 0.080244 ERR ERR ERR ERR 0.080244
Ending Units 99.919756 ERR ERR ERR ERR 99.919756
Ending Price 10.08 10.08 10.08 10.08 10.08 10.08
Contract Value 1,007.19 ERR ERR ERR ERR 1,007.19
Return w/o Surr Chg 0.72% ERR ERR ERR ERR 1.08%
Surrender Charge 63.00 63.00 45.00 27.00 0.00 63.00
ERV 944.19 ERR ERR ERR ERR 944.19
Return w Surr Chrg -5.58% ERR ERR ERR ERR -8.23%
Cummulative Returns
Year to Date* 1 Year 3 Year 5 Year 10 Year Since Inceptio
Contract Value 1,007.19 ERR ERR ERR ERR 1,007.19
Cumm Return w/o Surr Chg 0.72% ERR ERR ERR ERR 0.72%
ERV 944.19 ERR ERR ERR ERR 944.19
Cumm Return w Surr Chg -5.58% ERR ERR ERR ERR -5.58%
*THIS FUND ONLY CONTAINS 8 MONTHS OF DATA STARTING MAY 1, 1996.
</TABLE>
VA--MONEY MARKET FUND
12/31/96 02/13/97
AB
<TABLE>
<CAPTION>
VA SEVEN-DAY AVERAGE YIELD:
DAILY
DIVIDEND
FACTOR, PER LESS ANNUAL CHARGE
DATE DISPLAY RATE TABLE & M&E CHARGES
<S> <C> <C> <C>
Dec 31, 1996 0.000129029 0.000041646 0.000087383
Dec 30, 1996 0.000129452 0.000041646 0.000087806
Dec 29, 1996 0.000128625 0.000041646 0.000086979
Dec 28, 1996 0.000132974 0.000041646 0.000091328
Dec 27, 1996 0.000125723 0.000041646 0.000084077
Dec 26, 1996 0.000125723 0.000041646 0.000084077
Dec 25, 1996 0.000125723 0.000041646 0.000084077
------------------------------------
SUM 0.000605726 BASE PERIOD RETURN
DIV BY # DAYS 7
------------
AVERAGE 0.000086532
TIMES # DAYS IN YR 365
SEVEN DAY YIELD 3.16%
VA SEVEN-DAY EFFECTIVE YIELD:
BASE PERIOD
RETURN (ABOVE) 0.0006057258
PLUS 1 1
------------
1.0006057258
COMPOUNDED:
TO 365/7 POWER: 1.032078484
LESS 1 -1
EFFECTIVE YIELD 3.21%
</TABLE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Robert W. Bream, a director of CUNA Mutual
Life Insurance Company, a life insurance company incorporated under the laws of
and domiciled in the State of Iowa, hereby appoint, authorize and empower Gerald
T. Conklin, Linda L. Lilledahl, or John M. Waggoner, severally, as my attorneys
and agents for me and in my name as director of CUNA Mutual Life Insurance
Company on behalf of CUNA Mutual Life Insurance Company and CUNA Mutual Life
Variable Annuity Account (or otherwise) with full power to prepare, review,
execute, deliver and file Post-Effective Amendments with the Securities and
Exchange Commission for the CUNA Mutual Life Variable Annuity Account,
Registration No. 33-73738. This Power of Attorney shall terminate at the end of
my appointed term as Director.
WITNESS MY HAND AND SEAL this 7th day of April, 1997.
/s/ Robert W. Bream
Robert W. Bream
Director, CUNA Mutual Life Insurance Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, James L. Bryan, a director of CUNA Mutual
Life Insurance Company, a life insurance company incorporated under the laws of
and domiciled in the State of Iowa, hereby appoint, authorize and empower Gerald
T. Conklin, Linda L. Lilledahl, or John M. Waggoner, severally, as my attorneys
and agents for me and in my name as director of CUNA Mutual Life Insurance
Company on behalf of CUNA Mutual Life Insurance Company and CUNA Mutual Life
Variable Annuity Account (or otherwise) with full power to prepare, review,
execute, deliver and file Post-Effective Amendments with the Securities and
Exchange Commission for the CUNA Mutual Life Variable Annuity Account,
Registration No. 33-73738. This Power of Attorney shall terminate at the end of
my appointed term as Director.
WITNESS MY HAND AND SEAL this 7th day of April, 1997.
/s/ James L. Bryan
James L. Bryan
Director, CUNA Mutual Life Insurance Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Loretta M. Burd, a director of CUNA Mutual
Life Insurance Company, a life insurance company incorporated under the laws of
and domiciled in the State of Iowa, hereby appoint, authorize and empower Gerald
T. Conklin, Linda L. Lilledahl, or John M. Waggoner, severally, as my attorneys
and agents for me and in my name as director of CUNA Mutual Life Insurance
Company on behalf of CUNA Mutual Life Insurance Company and CUNA Mutual Life
Variable Annuity Account (or otherwise) with full power to prepare, review,
execute, deliver and file Post-Effective Amendments with the Securities and
Exchange Commission for the CUNA Mutual Life Variable Annuity Account,
Registration No. 33-73738. This Power of Attorney shall terminate at the end of
my appointed term as Director.
WITNESS MY HAND AND SEAL this 8th day of April, 1997.
/s/ Loretta M. Burd
Loretta M. Burd
Director, CUNA Mutual Life Insurance Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Joseph N. Cugini, a director of CUNA Mutual
Life Insurance Company, a life insurance company incorporated under the laws of
and domiciled in the State of Iowa, hereby appoint, authorize and empower Gerald
T. Conklin, Linda L. Lilledahl, or John M. Waggoner, severally, as my attorneys
and agents for me and in my name as director of CUNA Mutual Life Insurance
Company on behalf of CUNA Mutual Life Insurance Company and CUNA Mutual Life
Variable Annuity Account (or otherwise) with full power to prepare, review,
execute, deliver and file Post-Effective Amendments with the Securities and
Exchange Commission for the CUNA Mutual Life Variable Annuity Account,
Registration No. 33-73738. This Power of Attorney shall terminate at the end of
my appointed term as Director.
WITNESS MY HAND AND SEAL this 4th day of April, 1997.
/s/ Joseph N. Cugini
Joseph N. Cugini
Director, CUNA Mutual Life Insurance Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Robert T. Lynch, a director of CUNA Mutual
Life Insurance Company, a life insurance company incorporated under the laws of
and domiciled in the State of Iowa, hereby appoint, authorize and empower Gerald
T. Conklin, Linda L. Lilledahl, or John M. Waggoner, severally, as my attorneys
and agents for me and in my name as director of CUNA Mutual Life Insurance
Company on behalf of CUNA Mutual Life Insurance Company and CUNA Mutual Life
Variable Annuity Account (or otherwise) with full power to prepare, review,
execute, deliver and file Post-Effective Amendments with the Securities and
Exchange Commission for the CUNA Mutual Life Variable Annuity Account,
Registration No. 33-73738. This Power of Attorney shall terminate at the end of
my appointed term as Director.
WITNESS MY HAND AND SEAL this 7th day of April, 1997.
/s/ Robert T. Lynch
Robert T. Lynch
Director, CUNA Mutual Life Insurance Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Omer K. Reed, a director of CUNA Mutual Life
Insurance Company, a life insurance company incorporated under the laws of and
domiciled in the State of Iowa, hereby appoint, authorize and empower Gerald T.
Conklin, Linda L. Lilledahl, or John M. Waggoner, severally, as my attorneys and
agents for me and in my name as director of CUNA Mutual Life Insurance Company
on behalf of CUNA Mutual Life Insurance Company and CUNA Mutual Life Variable
Annuity Account (or otherwise) with full power to prepare, review, execute,
deliver and file Post-Effective Amendments with the Securities and Exchange
Commission for the CUNA Mutual Life Variable Annuity Account, Registration No.
33-73738. This Power of Attorney shall terminate at the end of my appointed term
as Director.
WITNESS MY HAND AND SEAL this 4th day of April, 1997.
/s/ Omer K. Reed
Omer K. Reed
Director, CUNA Mutual Life Insurance Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Richard C. Robertson, a director of CUNA
Mutual Life Insurance Company, a life insurance company incorporated under the
laws of and domiciled in the State of Iowa, hereby appoint, authorize and
empower Gerald T. Conklin, Linda L. Lilledahl, or John M. Waggoner, severally,
as my attorneys and agents for me and in my name as director of CUNA Mutual Life
Insurance Company on behalf of CUNA Mutual Life Insurance Company and CUNA
Mutual Life Variable Annuity Account (or otherwise) with full power to prepare,
review, execute, deliver and file Post-Effective Amendments with the Securities
and Exchange Commission for the CUNA Mutual Life Variable Annuity Account,
Registration No. 33-73738. This Power of Attorney shall terminate at the end of
my appointed term as Director.
WITNESS MY HAND AND SEAL this 4th day of April, 1997.
/s/ Richard C. Robertson
Richard C. Robertson
Director, CUNA Mutual Life Insurance Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Donald F. Roby, a director of CUNA Mutual
Life Insurance Company, a life insurance company incorporated under the laws of
and domiciled in the State of Iowa, hereby appoint, authorize and empower Gerald
T. Conklin, Linda L. Lilledahl, or John M. Waggoner, severally, as my attorneys
and agents for me and in my name as director of CUNA Mutual Life Insurance
Company on behalf of CUNA Mutual Life Insurance Company and CUNA Mutual Life
Variable Annuity Account (or otherwise) with full power to prepare, review,
execute, deliver and file Post-Effective Amendments with the Securities and
Exchange Commission for the CUNA Mutual Life Variable Annuity Account,
Registration No. 33-73738. This Power of Attorney shall terminate at the end of
my appointed term as Director.
WITNESS MY HAND AND SEAL this 7th day of April, 1997.
/s/ Donald F. Roby
Donald F. Roby
Director, CUNA Mutual Life Insurance Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Neil A. Springer, a director of CUNA Mutual
Life Insurance Company, a life insurance company incorporated under the laws of
and domiciled in the State of Iowa, hereby appoint, authorize and empower Gerald
T. Conklin, Linda L. Lilledahl, or John M. Waggoner, severally, as my attorneys
and agents for me and in my name as director of CUNA Mutual Life Insurance
Company on behalf of CUNA Mutual Life Insurance Company and CUNA Mutual Life
Variable Annuity Account (or otherwise) with full power to prepare, review,
execute, deliver and file Post-Effective Amendments with the Securities and
Exchange Commission for the CUNA Mutual Life Variable Annuity Account,
Registration No. 33-73738. This Power of Attorney shall terminate at the end of
my appointed term as Director.
WITNESS MY HAND AND SEAL this 4th day of April, 1997.
/s/ Neil A. Springer
Neil A. Springer
Director, CUNA Mutual Life Insurance Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Farouk D. G. Wang, a director of CUNA Mutual
Life Insurance Company, a life insurance company incorporated under the laws of
and domiciled in the State of Iowa, hereby appoint, authorize and empower Gerald
T. Conklin, Linda L. Lilledahl, or John M. Waggoner, severally, as my attorneys
and agents for me and in my name as director of CUNA Mutual Life Insurance
Company on behalf of CUNA Mutual Life Insurance Company and CUNA Mutual Life
Variable Annuity Account (or otherwise) with full power to prepare, review,
execute, deliver and file Post-Effective Amendments with the Securities and
Exchange Commission for the CUNA Mutual Life Variable Annuity Account,
Registration No. 33-73738. This Power of Attorney shall terminate at the end of
my appointed term as Director.
WITNESS MY HAND AND SEAL this 8th day of April, 1997.
/s/ Farouk D. G. Wang
Farouk D. G. Wang
Director, CUNA Mutual Life Insurance Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that I, Larry T. Wilson, a director of CUNA Mutual
Life Insurance Company, a life insurance company incorporated under the laws of
and domiciled in the State of Iowa, hereby appoint, authorize and empower Gerald
T. Conklin, Linda L. Lilledahl, or John M. Waggoner, severally, as my attorneys
and agents for me and in my name as director of CUNA Mutual Life Insurance
Company on behalf of CUNA Mutual Life Insurance Company and CUNA Mutual Life
Variable Annuity Account (or otherwise) with full power to prepare, review,
execute, deliver and file Post-Effective Amendments with the Securities and
Exchange Commission for the CUNA Mutual Life Variable Annuity Account,
Registration No. 33-73738. This Power of Attorney shall terminate at the end of
my appointed term as Director.
WITNESS MY HAND AND SEAL this 10th day of April, 1997.
/s/ Larry T. Wilson
Larry T. Wilson
Director, CUNA Mutual Life Insurance Company
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 369,194,757
<INVESTMENTS-AT-VALUE> 399,700,745
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 399,700,745
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 76,696
<TOTAL-LIABILITIES> 76,696
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 29,367,566
<SHARES-COMMON-PRIOR> 10,321,845
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 399,624,049
<DIVIDEND-INCOME> 14,409,042
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 3,579,138
<NET-INVESTMENT-INCOME> 10,829,904
<REALIZED-GAINS-CURRENT> 225,443
<APPREC-INCREASE-CURRENT> 25,452,036
<NET-CHANGE-FROM-OPS> 36,507,383
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 35,564,411<F1>
<NUMBER-OF-SHARES-REDEEMED> 16,518,690<F1>
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 19,045,721<F1>
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1> Units Calculated
</FN>
</TABLE>
