First Cova Life Insurance Company
May 1, 1997, as amended September 8, 1997
PROFILE OF THE FIXED AND VARIABLE ANNUITY CONTRACT
This Profile is a summary of some of the more important points that you should
consider and know before purchasing the Contract. The Contract is more fully
described in the prospectus which accompanies this Profile. Please read the
prospectus carefully.
1. THE ANNUITY CONTRACT: The fixed and variable annuity contract offered by
First Cova is a contract between you, the owner, and First Cova, an insurance
company. The Contract provides a means for investing on a tax-deferred basis in
a fixed account of First Cova and 11 investment portfolios. The Contract is
intended for retirement savings or other long-term investment purposes and
provides for a death benefit and guaranteed income options.
The fixed account offers an interest rate that is guaranteed by the insurance
company, First Cova. This interest rate is set once each year. While your money
is in the fixed account, the interest your money will earn as well as your
principal is guaranteed by First Cova.
This Contract also offers 11 investment portfolios which are listed in Section
4. These portfolios are designed to offer a better return than the fixed
account. However, this is NOT guaranteed. You can also lose your money.
You can put money into any or all of the investment portfolios and the fixed
account. You can transfer between accounts up to 12 times a year without charge
or tax implications. After 12 transfers, the charge is $25 or 2% of the amount
transferred, whichever is less.
The Contract, like all deferred annuity contracts, has two phases: the
accumulation phase and the income phase. During the accumulation phase, earnings
accumulate on a tax-deferred basis and are taxed as income when you make a
withdrawal. The income phase occurs when you begin receiving regular payments
from your Contract.
The amount of money you are able to accumulate in your account during the
accumulation phase will determine the amount of income payments during the
income phase.
2. ANNUITY PAYMENTS (THE INCOME PHASE): If you want to receive regular income
from your annuity, you can choose one of three options: (1) monthly payments for
your life (assuming you are the annuitant); (2) monthly payments for your life,
but with payments continuing to the beneficiary for 5, 10 or 20 years (as you
select) if you die before the end of the selected period; and (3) monthly
payments for your life and for the life of another person (usually your spouse)
selected by you. Once you begin receiving regular payments, you cannot change
your payment plan.
During the income phase, you have the same investment choices you had during the
accumulation phase. You can choose to have payments come from the fixed account,
the investment portfolios or both. If you choose to have any part of your
payments come from the investment portfolios, the dollar amount of your payments
may go up or down.
3. PURCHASE: You can buy this Contract with $5,000 or more under most
circumstances. You can add $2,000 or more any time you like during the
accumulation phase. Your registered representative can help you fill out the
proper forms.
4. INVESTMENT OPTIONS: You can put your money in any or all of these investment
portfolios which are described in the prospectuses for the funds:
<TABLE>
<CAPTION>
<S> <C> <C>
MANAGED BY J.P. MORGAN INVESTMENT MANAGED BY LORD, ABBETT & CO. MANAGED BY CONNING ASSET
MANAGEMENT INC. Bond Debenture MANAGEMENT COMPANY
Select Equity Growth and Income Money Market
Large Cap Stock Mid-Cap Value
Small Cap Stock Large Cap Research
International Equity Developing Growth
Quality Bond
</TABLE>
Depending upon market conditions, you can make or lose money in any of these
portfolios.
5. EXPENSES: The Contract has insurance features and investment features, and
there are costs related to each.
Each year First Cova deducts a $30 contract maintenance charge from your
Contract. First Cova currently waives this charge if the value of your Contract
is at least $50,000. First Cova also deducts for its insurance charges which
total 1.40% of the average daily value of your Contract allocated to the
investment portfolios.
There are also investment charges which range from 0.205% to 1.10% of the
average daily value of the investment portfolio depending upon the investment
portfolio.
If you take your money out, First Cova may assess a withdrawal charge which is
equal to 7% of each payment you take out in the first and second years after
First Cova receives the payment, 5% of each payment you take out in the third,
fourth and fifth years, and 3% of each payment you take out in the sixth and
seventh years.
The following chart is designed to help you to understand the expenses in the
Contract. The column "Total Annual Expenses" shows the total of the $30 contract
maintenance charge (which is represented as .10% below), the 1.40% insurance
charges and the investment expenses for each investment portfolio. The next two
columns show you two examples of the expenses, in dollars, you would pay under a
Contract. The examples assume that you invested $1,000 in a Contract which earns
5% annually and that you withdraw your money: (1) at the end of year 1, and (2)
at the end of year 10. For year 1, the Total Annual Expenses are assessed as
well as the withdrawal charges. For year 10, the example shows the aggregate of
all the annual expenses assessed for the 10 years, but there is no withdrawal
charge.
The premium tax is assumed to be 0% in both examples.
<TABLE>
<CAPTION>
EXAMPLES:
Total Annual
Total Annual Total Annual Total Expenses At End of:
Insurance Portfolio Annual (1) (2)
Portfolio Charges Expenses Expenses 1 Year 10 Years
- -------------------------- ------------- ------------- --------- -------------- ----------
<S> <C> <C> <C> <C> <C>
MANAGED BY J.P. MORGAN
INVESTMENT MANAGEMENT INC.
Select Equity 1.50% 0.85% 2.35% $ 93.80 $ 266.24
Large Cap Stock 1.50% 0.75% 2.25% $ 92.80 $ 256.13
Small Cap Stock 1.50% 0.95% 2.45% $ 94.80 $ 276.23
International Equity 1.50% 0.95% 2.45% $ 94.80 $ 276.23
Quality Bond 1.50% 0.65% 2.15% $ 91.79 $ 245.92
MANAGED BY LORD, ABBETT
& CO.
Bond Debenture 1.50% 0.85% 2.35% $ 93.80 $ 266.24
Growth and Income 1.50% 0.59% 2.09% $ 91.19 $ 239.74
Mid-Cap Value 1.50% 1.10% 2.60% $ 76.30 $ 291.02
Large Cap Research 1.50% 1.10% 2.60% $ 76.30 $ 291.02
Developing Growth 1.50% 1.00% 2.50% $ 75.30 $ 281.19
MANAGED BY CONNING ASSET
MANAGEMENT COMPANY
Money Market 1.50% 0.205% 1.705% $ 87.31 $ 199.08
</TABLE>
The expenses reflect any expense reimbursement or fee waiver. For more detailed
information, see the Fee Table in the prospectus for the Contract.
6. TAXES: Your earnings are not taxed until you take them out. If you take money
out, earnings come out first and are taxed as income. If you are younger than 59
1/2 when you take money out, you may be charged a 10% federal tax penalty on the
earnings. Payments during the income phase are considered partly a return of
your original investment. That part of each payment is not taxable as income.
7. ACCESS TO YOUR MONEY: You can take money out at any time during the
accumulation phase. After the first year, you can take up to 10% of your total
purchase payments each year without charge from First Cova. Withdrawals in
excess of that will be charged 7% of each payment you take out in the first and
second years after First Cova receives the payment, 5% of each payment you take
out in the third, fourth and fifth years, and 3% of each payment you take out in
the sixth and seventh years. After First Cova has had a payment for 7 years,
there is no charge for withdrawals. Of course, you may also have to pay income
tax and a tax penalty on any money you take out. Each purchase payment you add
to your Contract has its own 7 year withdrawal charge period.
8. PERFORMANCE: The value of the Contract will vary up or down depending upon
the investment performance of the investment portfolios you choose. First Cova
may provide total return figures for each investment portfolio.
9. DEATH BENEFIT: If you die before moving to the income phase, the person you
have chosen as your beneficiary will receive a death benefit. This death benefit
will be the greater of three amounts: 1) the money you've put in less any money
you've taken out, and the related withdrawal charges, or 2) the current value of
your Contract, or 3) the value of your Contract at the most recent
7th-year-anniversary plus any money you've added since that anniversary minus
any money you've taken out since that anniversary, and the related withdrawal
charges. If you die after age 80, slightly different rules apply.
10. OTHER INFORMATION: Free Look. If you cancel the Contract within 10 days
after receiving it we will send you whatever your Contract is worth on the day
we receive your request (this may be more or less than your original payment)
without assessing a withdrawal charge. If you have purchased the Contract as an
Individual Retirement Annuity (IRA) you will receive back your purchase payment.
(Currently, the Contract is not available under an IRA until the IRA Endorsement
is approved by the State of New York Insurance Department.)
No Probate. In most cases, when you die, the person you choose as your
beneficiary will receive the death benefit without going through probate.
However, the avoidance of probate does not mean that the beneficiary will not
have tax liability as a result of receiving the death benefit.
Who should purchase the Contract? This Contract is designed for people seeking
long-term tax-deferred accumulation of assets, generally for retirement or other
long-term purposes. The tax-deferred feature is most attractive to people in
high federal and state tax brackets. You should not buy this Contract if you are
looking for a short-term investment or if you cannot take the risk of getting
back less money than you put in.
Additional Features. This Contract has additional features you might be
interested in. These include:
* You can arrange to have money automatically sent to you each month while
your Contract is still in the accumulation phase. Of course, you'll have to pay
taxes on money you receive. We call this feature the Systematic Withdrawal
Program.
* You can arrange to have a regular amount of money automatically invested
in investment portfolios each month, theoretically giving you a lower average
cost per unit over time than a single one time purchase. We call this feature
Dollar Cost Averaging.
* First Cova will automatically readjust the money between investment
portfolios periodically to keep the blend you select. We call this feature
Automatic Rebalancing.
11. INQUIRIES: If you need more information about buying a Contract, please
contact us at:
Cova Life Sales Company
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181
800-523-1661
If you have any other questions, please contact us at our Home Office:
120 Broadway
New York, NY 10271
(800) 469-4545
(212) 766-0012
THE FIXED
AND VARIABLE ANNUITY
ISSUED BY
FIRST COVA VARIABLE ANNUITY ACCOUNT ONE
AND
FIRST COVA LIFE
INSURANCE COMPANY
This prospectus describes the Fixed and Variable Annuity Contract offered by
First Cova Life Insurance Company (First Cova).
The annuity contract has 12 investment choices - a fixed account which offers an
interest rate which is guaranteed by First Cova, and 11 investment portfolios
listed below. The 11 investment portfolios are part of the Cova Series Trust,
the Lord Abbett Series Fund, Inc. or the General American Capital Company. You
can put your money in the fixed account and/or any of these investment
portfolios.
Cova Series Trust:
Managed by J.P. Morgan
Investment Management Inc.:
Select Equity
Large Cap Stock
Small Cap Stock
International Equity
Quality Bond
Managed by Lord, Abbett & Co.:
Bond Debenture
Mid-Cap Value
Large Cap Research
Developing Growth
Lord Abbett Series Fund, Inc.:
Managed by Lord, Abbett & Co.:
Growth and Income
General American Capital Company:
Managed by Conning Asset
Management Company:
Money Market
Please read this prospectus before investing and keep it on file for future
reference. It contains important information about the First Cova Fixed and
Variable Annuity Contract.
To learn more about the First Cova Fixed and Variable Annuity Contract, you can
obtain a copy of the Statement of Additional Information (SAI) dated May 1,
1997. The SAI has been filed with the Securities and Exchange Commission (SEC)
and is legally a part of the prospectus. The Table of Contents of the SAI is on
Page 13 of this prospectus. For a free copy of the SAI, call us at (800)
831-5433 or write us at: One Tower Lane, Suite 3000, Oakbrook Terrace, Illinois
60181-4644.
INVESTMENT IN A VARIABLE ANNUITY CONTRACT IS SUBJECT TO RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL. THE CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION AND ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
May 1, 1997, as amended September 8, 1997.
TABLE OF CONTENTS Page
INDEX OF SPECIAL TERMS
FEE TABLE
EXAMPLES
1. THE ANNUITY CONTRACT
2. ANNUITY PAYMENTS (THE INCOME PHASE)
3. PURCHASE
Purchase Payments
Allocation of Purchase Payments
Accumulation Units
4. INVESTMENT OPTIONS
Cova Series Trust
Lord Abbett Series Fund, Inc.
General American Capital Company
Transfers
Dollar Cost Averaging Program
Automatic Rebalancing Program
Voting Rights
Substitution
5. EXPENSES
Insurance Charges
Contract Maintenance Charge
Withdrawal Charge
Reduction or Elimination of the
Withdrawal Charge
Transfer Fee
Income Taxes
Investment Portfolio Expenses
6. TAXES
Annuity Contracts in General
Qualified and Non-Qualified Contracts
Withdrawals - Non-Qualified Contracts
Withdrawals - Qualified Contracts
Diversification
7. ACCESS TO YOUR MONEY
Systematic Withdrawal Program
8. PERFORMANCE
9. DEATH BENEFIT
Upon Your Death
Death of Annuitant
10. OTHER INFORMATION
First Cova
The Separate Account
Distributor
Ownership
Beneficiary
Assignment
Suspension of Payments or Transfers
Financial Statements
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION
APPENDIX A
Performance Information
INDEX OF SPECIAL TERMS
We have tried to make this prospectus as readable and understandable for you as
possible. By the very nature of the contract, however, certain technical words
or terms are unavoidable. We have identified the following as some of these
words or terms. They are identified in the text in italic and the page that is
indicated here is where we believe you will find the best explanation for the
word or term.
Page
Accumulation Phase
Accumulation Unit
Annuitant
Annuity Date
Annuity Options
Annuity Payments
Annuity Unit
Beneficiary
Fixed Account
Income Phase
Investment Portfolios
Joint Owner
Non-Qualified
Owner
Purchase Payment
Qualified
Tax Deferral
<TABLE>
<CAPTION>
FEE TABLE
<S> <C> <C>
OWNER TRANSACTION EXPENSES
Withdrawal Charge (as a percentage of Years Since
purchase payments) (see Note 2 below) Payment Charge
----------- ------
1 7%
2 7%
3 5%
4 5%
5 5%
6 3%
7 3%
8+ 0%
</TABLE>
Transfer Fee (see Note 3 below)
No charge for first 12 transfers in a contract year; thereafter, the fee is $25
per transfer or, if less, 2% of the amount transferred.
Contract Maintenance Charge (see Note 4 below)
$30 per contract per year
<TABLE>
<CAPTION>
<S> <C>
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and Expense Risk Premium 1.25%
Administrative Expense Charge .15%
-----
TOTAL SEPARATE ACCOUNT
ANNUAL EXPENSES 1.40%
</TABLE>
INVESTMENT PORTFOLIO EXPENSES
(as a percentage of the average daily net assets of an investment portfolio)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Other Expenses
(after expense
reimbursement for
Management 12b-1 certain Portfolios - Total Annual
Fees Fees see Note 5 below) Portfolio Expenses
---------- ----- -------------------- ------------------
COVA SERIES TRUST
Managed by J.P. Morgan
Investment Management Inc.
Select Equity* .75% - - .10% .85%
Large Cap Stock* .65% - - .10% .75%
Small Cap Stock* .85% - - .10% .95%
International Equity* .85% - - .10% .95%
Quality Bond* .55% - - .10% .65%
Managed by Lord, Abbett & Co.
Bond Debenture* .75% - - .10% .85%
Mid Cap Value** 1.00% - - .10% 1.10%
Large Cap Research** 1.00% - - .10% 1.10%
Developing Growth** .90% - - .10% 1.00%
LORD ABBETT SERIES FUND, INC.
Managed by Lord, Abbett & Co.
Growth and Income# .50% .07% .02% .59%
GENERAL AMERICAN CAPITAL COMPANY
Managed by Conning Asset
Management Company
Money Market .205% - - .00% .205%
<FN>
* Annualized. The Portfolio commenced regular investment operations on April
2, 1996.
** The Portfolio has not yet commenced regular investment operations.
# The Growth and Income Portfolio of Lord Abbett Series Fund, Inc. has a
12b-1 plan which provides for payments to Lord, Abbett & Co. for remittance
to a life insurance company for certain distribution expenses (see the Fund
Prospectus). The 12b-1 plan provides that such remittances, in the
aggregate, will not exceed .15%, on an annual basis, of the daily net asset
value of shares of the Growth and Income Portfolio. As of May 1, 1997, no
payments have been made under the 12b-1 plan. For the year ending December
31, 1997, the 12b-1 fees are estimated to be .07%. The examples below for
this Portfolio reflect the estimated 12b-1 fees.
</FN>
</TABLE>
EXAMPLES
You would pay the following expenses on a $1,000 investment, assuming a
5% annual return on assets:
(a) upon surrender at the end of each time period;
(b) if the contract is not surrendered or is annuitized.
<TABLE>
<CAPTION>
Time Periods
<S> <C> <C>
1 year 3 years
------ -------
COVA SERIES TRUST
Managed by J.P. Morgan
Investment Management Inc.
Select Equity (a)$93.80 (a)$118.16
(b)$23.80 (b) 73.16
Large Cap Stock (a)$92.80 (a)$115.15
(b)$22.80 (b)$ 70.15
Small Cap Stock (a)$94.80 (a)$121.17
(b)$24.80 (b)$ 76.17
International Equity (a)$94.80 (a)$121.17
(b)$24.80 (b)$ 76.17
Quality Bond (a)$91.79 (a)$112.12
(b)$21.79 (b)$ 67.12
Managed by Lord, Abbett & Co.
Bond Debenture (a)$93.80 (a)$118.16
(b)$23.80 (b)$ 73.16
Mid-Cap Value (a)$96.30 (a)$125.66
(b)$26.30 (b)$ 80.66
Large Cap Research (a)$96.30 (a)$125.66
(b)$26.30 (b)$ 80.66
Developing Growth (a)$95.30 (a)$122.67
(b)$25.30 (b)$ 77.67
LORD ABBETT SERIES FUND, INC.
Managed by Lord, Abbett & Co.
Growth and Income (a)$91.19 (a)$110.30
(b)$21.19 (b)$ 65.30
GENERAL AMERICAN CAPITAL COMPANY
Managed by Conning Asset
Management Company
Money Market (a)$87.31 (a)$ 98.54
(b)$17.31 (b)$ 53.54
</TABLE>
Explanation of Fee Table and Examples
1. The purpose of the Fee Table is to show you the various expenses you will
incur directly or indirectly with the contract. The Fee Table reflects expenses
of the Separate Account as well as of the investment portfolios.
2. The withdrawal charge is 7% of each payment you take out in the first and
second years after First Cova receives the payment, 5% of each payment you take
out in the third, fourth and fifth years, and 3% of each payment you take out in
the sixth and seventh years. After First Cova has had a purchase payment for 7
years, there is no charge by First Cova for a withdrawal of that purchase
payment. You may also have to pay income tax and a tax penalty on any money you
take out. After the first year, you can take up to 10% of your total purchase
payments each year without a charge from First Cova.
3. First Cova will not charge you the transfer fee even if there are more than
12 transfers in a year if the transfer is for the Dollar Cost Averaging or
Automatic Rebalancing Programs.
4. First Cova will not charge the contract maintenance charge if the value of
your contract is $50,000 or more, although, if you make a complete withdrawal,
First Cova will charge the contract maintenance charge.
5. An affiliate of First Cova currently reimburses the investment portfolios of
Cova Series Trust for all operating expenses (exclusive of the management fees)
in excess of approximately .10%. Absent this expense reimbursement, the expenses
(on an annualized basis) for the period ended December 31, 1996 would have been:
1.70% for the Select Equity Portfolio, 2.68% for the Small Cap Stock Portfolio,
3.80% for the International Equity Portfolio, 1.52% for the Quality Bond
Portfolio, 1.23% for the Large Cap Stock Portfolio and 2.05% for the Bond
Debenture Portfolio.
6. Premium taxes are not reflected. New York does not assess premium taxes.
7. The assumed average contract size is $30,000.
8. THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
1. THE ANNUITY CONTRACT
This Prospectus describes the Fixed and Variable Annuity Contract offered by
First Cova.
An annuity is a contract between you, the owner, and an insurance company (in
this case First Cova), where the insurance company promises to pay you an
income, in the form of annuity payments, beginning on a designated date that's
at least one year after we issue your contract. Until you decide to begin
receiving annuity payments, your annuity is in the accumulation phase. Once you
begin receiving annuity payments, your contract switches to the income phase.
The contract benefits from tax deferral.
Tax deferral means that you are not taxed on earnings or appreciation on the
assets in your contract until you take money out of your contract.
The contract is called a variable annuity because you can choose among 11
investment portfolios. Depending upon market conditions, you can make or lose
money in any of these portfolios. If you select the variable annuity portion of
the contract, the amount of money you are able to accumulate in your contract
during the accumulation phase depends upon the investment performance of the
investment portfolio(s) you select. The amount of the annuity payments you
receive during the income phase from the variable annuity portion of the
contract also depends upon the investment performance of the investment
portfolios you select for the income phase.
The contract also contains a fixed account. The fixed account offers an interest
rate that is guaranteed by First Cova. This interest rate is set once each year.
First Cova guarantees that the interest credited to the fixed account will not
be less than 3% per year. If you select the fixed account, your money will be
placed with the other general assets of First Cova. If you select the fixed
account, the amount of money you are able to accumulate in your contract during
the accumulation phase depends upon the total interest credited to your
contract. The amount of the annuity payments you receive during the income phase
from the fixed account portion of the contract will remain level for the entire
income phase.
As owner of the contract, you exercise all rights under the contract. You can
change the owner at any time by notifying First Cova in writing. You and another
person can be named joint owners. We have described more information on this in
Section 10 - Other Information.
2. ANNUITY PAYMENTS (THE INCOME PHASE)
Under the contract you can receive regular income payments. You can choose the
month and year in which those payments begin. We call that date the annuity
date. Your annuity date must be the first day of a calendar month. You can also
choose among income plans. We call those annuity options.
We ask you to choose your annuity date and annuity option when you purchase the
contract. You can change either at any time before the annuity date with 30 days
notice to us. Your annuity date cannot be any earlier than one year after we
issue the contract. Annuity payments must begin by the annuitant's 90th
birthday. The annuitant is the person whose life we look to when we make annuity
payments.
If you do not choose an annuity option at the time you purchase the contract, we
will assume that you selected Option 2 which provides a life annuity with 10
years of guaranteed payments.
During the income phase, you have the same investment choices you had just
before the start of the income phase. At the annuity date, you can choose
whether payments will come from the fixed account, the investment portfolio(s)
or a combination of both. If you don't tell us otherwise, your annuity payments
will be based on the investment allocations that were in place on the annuity
date.
If you choose to have any portion of your annuity payments come from the
investment portfolio(s), the dollar amount of your payment will depend upon 3
things: 1) the value of your contract in the investment portfolio(s) on the
annuity date, 2) the 3% assumed investment rate used in the annuity table for
the contract, and 3) the performance of the investment portfolios you selected.
If the actual performance exceeds the 3% assumed rate, your annuity payments
will increase. Similarly, if the actual rate is less than 3%, your annuity
payments will decrease.
You can choose one of the following annuity options. After annuity payments
begin, you cannot change the annuity option.
OPTION 1. LIFE ANNUITY. Under this option, we will make an annuity payment each
month so long as the annuitant is alive. After the annuitant dies, we stop
making annuity payments.
OPTION 2. LIFE ANNUITY WITH 5, 10 OR 20 YEARS GUARANTEED. Under this option, we
will make an annuity payment each month so long as the annuitant is alive.
However, if, when the annuitant dies, we have made annuity payments for less
than the selected guaranteed period, we will then continue to make annuity
payments for the rest of the guaranteed period to the beneficiary. If the
beneficiary does not want to receive annuity payments, he or she can ask us for
a single lump sum.
OPTION 3. JOINT AND LAST SURVIVOR ANNUITY. Under this option, we will make
annuity payments each month so long as the annuitant and a second person are
both alive. When either of these people dies, we will continue to make annuity
payments, so long as the survivor continues to live. The amount of the annuity
payments we will make to the survivor can be equal to 100%, 66-2/3% or 50% of
the amount that we would have paid if both were alive.
Annuity payments are made monthly unless you have less than $2,000 to apply
toward a payment. In that case, First Cova may provide your annuity payment in a
single lump sum. Likewise, if your annuity payments would be less than $20 a
month, First Cova has the right to change the frequency of payments so that your
annuity payments are at least $20.
3. PURCHASE
PURCHASE PAYMENTS
A purchase payment is the money you give us to buy the contract. The minimum we
will accept is $5,000 when the contract is bought as a non-qualified contract.
If you are buying the contract as part of an IRA (Individual Retirement Annuity)
the minimum we will accept is $2,000. (Currently, the contract is not available
under an IRA until the IRA Endorsement is approved by the State of New York
Insurance Department.) The maximum we accept is $1 million without our prior
approval. You can make additional purchase payments of $2,000 or more to either
type of contract.
ALLOCATION OF PURCHASE PAYMENTS
When you purchase a contract, we will allocate your purchase payment to the
fixed account and/or one or more of the investment portfolios you have selected.
If you make additional purchase payments, we will allocate them in the same way
as your first purchase payment unless you tell us otherwise. There is a $500
minimum balance requirement for the fixed account and for each investment
portfolio.
If you change your mind about owning this contract, you can cancel it within 10
days after receiving it. When you cancel the contract within this time period,
First Cova will not assess a withdrawal charge. You will receive back whatever
your contract is worth on the day we receive your request. If you have purchased
the contract as an IRA, we are required to give you back your purchase payment
if you decide to cancel your contract within 10 days after receiving it.
Once we receive your purchase payment and the necessary information, we will
issue your contract and allocate your first purchase payment within 2 business
days. If you do not give us all of the information we need, we will contact you
to get it. If for some reason we are unable to complete this process within 5
business days, we will either send back your money or get your permission to
keep it until we get all of the necessary information. If you add more money to
your contract by making additional purchase payments, we will credit these
amounts to your contract within one business day. Our business day closes when
the New York Stock Exchange closes, usually 4:00 P.M. Eastern time.
ACCUMULATION UNITS
The value of the variable annuity portion of your contract will go up or down
depending upon the investment performance of the investment portfolio(s) you
choose. In order to keep track of the value of your contract, we use a unit of
measure we call an accumulation unit. (An accumulation unit works like a share
of a mutual fund.) During the income phase of the contract we call the unit an
annuity unit.
Every day we determine the value of an accumulation unit for each of the
investment portfolios. We do this by:
1. determining the total amount of money invested in the particular investment
portfolio;
2. subtracting from that amount any insurance charges and any other charges such
as taxes we have deducted; and
3. dividing this amount by the number of outstanding accumulation units.
The value of an accumulation unit may go up or down from day to day.
When you make a purchase payment, we credit your contract with accumulation
units. The number of accumulation units credited is determined by dividing the
amount of the purchase payment allocated to an investment portfolio divided by
the value of the accumulation unit for that investment portfolio.
We calculate the value of an accumulation unit for each investment portfolio
after the New York Stock Exchange closes each day and then credit your contract.
EXAMPLE:
On Monday we receive an additional purchase payment of $5,000 from you. You have
told us you want this to go to the Quality Bond Portfolio. When the New York
Stock Exchange closes on that Monday, we determine that the value of an
accumulation unit for the Quality Bond Portfolio is $13.90. We then divide
$5,000 by $13.90 and credit your contract on Monday night with 359.71
accumulation units for the Quality Bond Portfolio.
4. INVESTMENT OPTIONS
The Contract offers 11 investment portfolios which are described below.
Additional investment portfolios may be available in the future.
YOU SHOULD READ THE PROSPECTUSES FOR THESE FUNDS CAREFULLY BEFORE INVESTING.
COPIES OF THESE PROSPECTUSES ARE ATTACHED TO THIS PROSPECTUS.
COVA SERIES TRUST
Cova Series Trust is managed by Cova Advisory, which is an affiliate of First
Cova. Cova Series Trust is a mutual fund with multiple portfolios. Each
investment portfolio has a different investment objective. Cova Advisory has
engaged sub-advisers to provide investment advice for the individual investment
portfolios. The following investment portfolios are available under the
contract:
J.P. MORGAN INVESTMENT MANAGEMENT INC. IS THE SUB-ADVISER TO THE FOLLOWING
PORTFOLIOS:
Select Equity Portfolio
Large Cap Stock Portfolio
Small Cap Stock Portfolio
International Equity Portfolio
Quality Bond Portfolio
LORD, ABBETT & CO. IS THE SUB-ADVISER TO THE FOLLOWING PORTFOLIOS:
Bond Debenture Portfolio
Mid-Cap Value Portfolio
Large Cap Research Portfolio
Developing Growth Portfolio
LORD ABBETT SERIES FUND, INC.
Lord Abbett Series Fund, Inc. is a mutual fund with multiple portfolios. Each
portfolio is managed by Lord, Abbett & Co. The following portfolio is available
under the contract:
Growth and Income Portfolio
GENERAL AMERICAN CAPITAL COMPANY
General American Capital Company is a mutual fund with multiple portfolios. Each
portfolio is managed by Conning Asset Management Company. The following
portfolio is available under the contract:
Money Market Fund
TRANSFERS
You can transfer money among the fixed account and the 11 investment portfolios.
TRANSFERS DURING THE ACCUMULATION PHASE.
You can make 12 transfers every year during the accumulation phase without
charge. We measure a year from the anniversary of the day we issued your
contract. You can make a transfer to or from the fixed account and to or from
any investment portfolio. If you make more than 12 transfers in a year, there is
a transfer fee deducted. The fee is $25 per transfer or, if less, 2% of the
amount transferred. The following apply to any transfer during the accumulation
phase:
1. The minimum amount which you can transfer is $500 or your entire value in the
investment portfolio or fixed account.
2. Your request for transfer must clearly state which investment portfolio(s) or
the fixed account are involved in the transfer.
3. Your request for transfer must clearly state how much the transfer is for.
4. You cannot make any transfers within 7 calendar days of the annuity date.
TRANSFERS DURING THE INCOME PHASE.
You can only make transfers between the investment portfolios once each year. We
measure a year from the anniversary of the day we issued your contract. You
cannot transfer from the fixed account to an investment portfolio, but you can
transfer from one or more investment portfolios to the fixed account at any
time. If you make more than 12 transfers in a year, a transfer fee will be
charged.
You can make transfers by telephone. If you own the contract with a joint owner,
unless First Cova is instructed otherwise, First Cova will accept instructions
from either you or the other owner. First Cova will use reasonable procedures to
confirm that instructions given us by telephone are genuine. If First Cova fails
to use such procedures, we may be liable for any losses due to unauthorized or
fraudulent instructions. First Cova tape records all telephone instructions.
DOLLAR COST AVERAGING PROGRAM
The Dollar Cost Averaging Program allows you to systematically transfer a set
amount each month from the Money Market Fund of General American Capital Company
or the fixed account to any of the other investment portfolio(s). By allocating
amounts on a regular schedule as opposed to allocating the total amount at one
particular time, you may be less susceptible to the impact of market
fluctuations.
The minimum amount which can be transferred each month is $500. You must have at
least $6,000 in the Money Market Fund of General American Capital Company or the
fixed account, (or the amount required to complete your program, if less) in
order to participate in the Dollar Cost Averaging Program.
If you participate in the Dollar Cost Averaging Program, the transfers made
under the program are not taken into account in determining any transfer fee.
AUTOMATIC REBALANCING PROGRAM
Once your money has been allocated among the investment portfolios, the
performance of each portfolio may cause your allocation to shift. You can direct
us to automatically rebalance your contract to return to your original
percentage allocations by selecting our Automatic Rebalancing Program. You can
tell us whether to rebalance quarterly, semi-annually or annually. We will
measure these periods from the anniversary of the date we issued your contract.
The transfer date will be the 1st day after the end of the period you selected.
If you participate in the Automatic Rebalancing Program, the transfers made
under the program are not taken into account in determining any transfer fee.
EXAMPLE:
Assume that you want your initial purchase payment split between 2 investment
portfolios. You want 40% to be in the Quality Bond Portfolio and 60% to be in
the Select Equity Portfolio. Over the next 2-1 2 months the bond market does
very well while the stock market performs poorly. At the end of the first
quarter, the Quality Bond Portfolio now represents 50% of your holdings because
of its increase in value. If you had chosen to have your holdings rebalanced
quarterly, on the first day of the next quarter, First Cova would sell some of
your units in the Quality Bond Portfolio to bring its value back to 40% and use
the money to buy more units in the Select Equity Portfolio to increase those
holdings to 60%.
VOTING RIGHTS
First Cova is the legal owner of the investment portfolio shares. However, First
Cova believes that when an investment portfolio solicits proxies in conjunction
with a vote of shareholders, it is required to obtain from you and other owners
instructions as to how to vote those shares. When we receive those instructions,
we will vote all of the shares we own in proportion to those instructions. This
will also include any shares that First Cova owns on its own behalf. Should
First Cova determine that it is no longer required to comply with the above, we
will vote the shares in our own right.
SUBSTITUTION
First Cova may be required to substitute one of the investment portfolios you
have selected with another portfolio. We would not do this without the prior
approval of the Securities and Exchange Commission. We will give you notice of
our intent to do this.
5. EXPENSES
There are charges and other expenses associated with the contracts that reduce
the return on your investment in the contract. These charges and expenses are:
INSURANCE CHARGES
Each day, First Cova makes a deduction for its insurance charges. First Cova
does this as part of its calculation of the value of the accumulation units and
the annuity units. The insurance charge has two parts: 1) the mortality and
expense risk premium and 2) the administrative expense charge.
MORTALITY AND EXPENSE RISK PREMIUM. This charge is equal, on an annual basis, to
1.25% of the daily value of the contracts invested in an investment portfolio,
after expenses have been deducted. This charge is for all the insurance benefits
e.g., guarantee of annuity rates, the death benefits, for certain expenses of
the contract, and for assuming the risk (expense risk) that the current charges
will be sufficient in the future to cover the cost of administering the
contract. If the charges under the contract are not sufficient, then First Cova
will bear the loss. First Cova does, however, expect to profit from this charge.
The mortality and expense risk premium cannot be increased. First Cova may use
any profits we make from this charge to pay for the costs of distributing the
contract.
ADMINISTRATIVE EXPENSE CHARGE. This charge is equal, on an annual basis, to .15%
of the daily value of the contracts invested in an investment portfolio, after
expenses have been deducted. This charge, together with the contract maintenance
charge (see below) is for all the expenses associated with the administration of
the contract. Some of these expenses are: preparation of the contract,
confirmations, annual reports and statements, maintenance of contract records,
personnel costs, legal and accounting fees, filing fees, and computer and
systems costs. Because this charge is taken out of every unit value, you may pay
more in administrative costs than those that are associated solely with your
contract. First Cova does not intend to profit from this charge. However, if
this charge and the contract maintenance charge are not enough to cover the
costs of the contracts in the future, First Cova will bear the loss.
CONTRACT MAINTENANCE CHARGE
During the accumulation phase, every year on the anniversary of the date when
your contract was issued, First Cova deducts $30 from your contract as a
contract maintenance charge. This charge is for administrative expenses (see
above). This charge can not be increased.
First Cova will not deduct this charge, if when the deduction is to be made, the
value of your contract is $50,000 or more. First Cova may some time in the
future discontinue this practice and deduct the charge.
If you make a complete withdrawal from your contract, the contract maintenance
charge will also be deducted. A prorata portion of the charge will be deducted
if the annuity date is other than an anniversary. After the annuity date, the
charge will be collected monthly out of the annuity payment.
WITHDRAWAL CHARGE
During the accumulation phase, you can make withdrawals from your contract.
First Cova keeps track of each purchase payment. Once a year after the first
year, you can withdraw up to 10% of your total purchase payments and no
withdrawal charge will be assessed on the 10%, if on the day you make your
withdrawal the value of your contract is $5,000 or more. Otherwise, the charge
is 7% of each payment you take out in the first and second years after First
Cova receives the payment, 5% of each payment you take out in the third, fourth
and fifth years, and 3% of each payment you take out in the sixth and seventh
years. After First Cova has had a purchase payment for 7 years, there is no
charge when you withdraw that purchase payment. For purposes of the withdrawal
charge, First Cova treats withdrawals as coming from the oldest purchase payment
first. When the withdrawal is for only part of the value of your contract, the
withdrawal charge is deducted from the remaining value in your contract.
NOTE: For tax purposes, withdrawals are considered to have come from the last
money into the contract. Thus, for tax purposes, earnings are considered to come
out first.
First Cova does not assess the withdrawal charge on any payments paid out as
annuity payments or as death benefits.
REDUCTION OR ELIMINATION OF THE WITHDRAWAL CHARGE
First Cova will reduce or eliminate the amount of the withdrawal charge when the
contract is sold to an officer, director or employee of First Cova. In no event
will elimination of the Withdrawal Charge be permitted where elimination will be
unfairly discriminatory to any person.
TRANSFER FEE
You can make 12 free transfers every year. We measure a year from the day we
issue your contract. If you make more than 12 transfers a year, we will deduct a
transfer fee of $25 or 2% of the amount that is transferred whichever is less.
If the transfer is part of the Dollar Cost Averaging Program or the Automatic
Rebalancing Program it will not count in determining the transfer fee.
INCOME TAXES
First Cova will deduct from the contract for any income taxes which it incurs
because of the contract. At the present time, we are not making any such
deductions.
INVESTMENT PORTFOLIO EXPENSES
There are deductions from and expenses paid out of the assets of the various
investment portfolios, which are described in the attached fund prospectuses.
6. TAXES
NOTE: First Cova has prepared the following information on taxes as a general
discussion of the subject. It is not intended as tax advice to any individual.
You should consult your own tax adviser about your own circumstances. First Cova
has included in the Statement of Additional Information an additional discussion
regarding taxes.
ANNUITY CONTRACTS IN GENERAL
Annuity contracts are a means of setting aside money for future needs - usually
retirement. Congress recognized how important saving for retirement was and
provided special rules in the Internal Revenue Code (Code) for annuities.
Simply stated these rules provide that you will not be taxed on the earnings on
the money held in your annuity contract until you take the money out. This is
referred to as tax deferral. There are different rules as to how you will be
taxed depending on how you take the money out and the type of contract -
qualified or non-qualified (see following sections).
You, as the owner, will not be taxed on increases in the value of your contract
until a distribution occurs - either as a withdrawal or as annuity payments.
When you make a withdrawal you are taxed on the amount of the withdrawal that is
earnings. For annuity payments, different rules apply. A portion of each annuity
payment is treated as a partial return of your purchase payments and will not be
taxed. The remaining portion of the annuity payment will be treated as ordinary
income. How the annuity payment is divided between taxable and non-taxable
portions depends upon the period over which the annuity payments are expected to
be made. Annuity payments received after you have received all of your purchase
payments are fully includible in income.
When a non-qualified contract is owned by a non-natural person (e.g.,
corporation or certain other entities other than tax-qualified trusts), the
contract will generally not be treated as an annuity for tax purposes.
QUALIFIED AND NON-QUALIFIED CONTRACTS
If you purchase the contract as an individual and not under an Individual
Retirement Annuity (IRA), your contract is referred to as a non-qualified
contract.
If you purchase the contract under an IRA, your contract is referred to as a
qualified contract. Currently, the contract is not available under an IRA until
the IRA Endorsement is approved by the State of New York Insurance Department.
WITHDRAWALS - NON-QUALIFIED CONTRACTS
If you make a withdrawal from your contract, the Code treats such a withdrawal
as first coming from earnings and then from your purchase payments. Such
withdrawn earnings are includible in income.
The Code also provides that any amount received under an annuity contract which
is included in income may be subject to a penalty. The amount of the penalty is
equal to 10% of the amount that is includible in income. Some withdrawals will
be exempt from the penalty. They include any amounts: (1) paid on or after the
taxpayer reaches age 59-1/2; (2) paid after you die; (3) paid if the taxpayer
becomes totally disabled (as that term is defined in the Code); (4) paid in a
series of substantially equal payments made annually (or more frequently) under
a lifetime annuity, (5) paid under an immediate annuity; or (6) which come from
purchase payments made prior to August 14, 1982.
WITHDRAWALS - QUALIFIED CONTRACTS
The above information describing the taxation of non-qualified contracts does
not apply to qualified contracts. There are special rules that govern with
respect to qualified contracts. We have provided a more complete discussion in
the Statement of Additional Information.
DIVERSIFICATION
The Code provides that the underlying investments for a variable annuity must
satisfy certain diversification requirements in order to be treated as an
annuity contract. First Cova believes that the investment portfolios are being
managed so as to comply with the requirements.
Neither the Code nor the Internal Revenue Service Regulations issued to date
provide guidance as to the circumstances under which you, because of the degree
of control you exercise over the underlying investments, and not First Cova
would be considered the owner of the shares of the investment portfolios. If
this occurs, it will result in the loss of the favorable tax treatment for the
contract. It is unknown to what extent under federal tax law owners are
permitted to select investment portfolios, to make transfers among the
investment portfolios or the number and type of investment portfolios owners may
select from. If any guidance is provided which is considered a new position,
then the guidance would generally be applied prospectively. However, if such
guidance is considered not to be a new position, it may be applied
retroactively. This would mean that you, as the owner of the contract, could be
treated as the owner of the investment portfolios.
Due to the uncertainty in this area, First Cova reserves the right to modify the
contract in an attempt to maintain favorable tax treatment.
7. ACCESS TO YOUR MONEY
You can have access to the money in your contract: (1) by making a withdrawal
(either a partial or a complete withdrawal); (2) by electing to receive annuity
payments; or (3) when a death benefit is paid to your beneficiary. Withdrawals
can only be made during the accumulation phase.
When you make a complete withdrawal you will receive the value of the contract
on the day you made the withdrawal less any applicable withdrawal charge, less
any premium tax and less any contract maintenance charge. (See Section 5.
Expenses for a discussion of the charges.)
Unless you instruct First Cova otherwise, any partial withdrawal will be made
pro-rata from all the investment portfolios and the fixed account you selected.
Under most circumstances the amount of any partial withdrawal must be for at
least $500. First Cova requires that after a partial withdrawal is made you keep
at least $1,000 in your contract.
INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS MAY APPLY TO ANY WITHDRAWAL
YOU MAKE.
SYSTEMATIC WITHDRAWAL PROGRAM
If you are 59-1/2 or older, you may use the Systematic Withdrawal Program. This
program provides an automatic monthly payment to you of up to 10% of your total
purchase payments each year. No withdrawal charge will be deducted for these
payments. First Cova does not have any charge for this program. If you use this
program, you may not also make a single 10% free withdrawal. For a discussion of
the withdrawal charge and the 10% free withdrawal, see Section 5. Expenses.
INCOME TAXES MAY APPLY TO SYSTEMATIC WITHDRAWALS.
8. PERFORMANCE
First Cova periodically advertises performance of the various investment
portfolios. First Cova will calculate performance by determining the percentage
change in the value of an accumulation unit by dividing the increase (decrease)
for that unit by the value of the accumulation unit at the beginning of the
period. This performance number reflects the deduction of the insurance charges.
It does not reflect the deduction of any applicable contract maintenance charge
and withdrawal charge. The deduction of any applicable contract maintenance
charge and withdrawal charges would reduce the percentage increase or make
greater any percentage decrease. Any advertisement will also include total
return figures which reflect the deduction of the insurance charges, contract
maintenance charges, and withdrawal charges.
First Cova may, from time to time, include in its advertising and sales
materials, tax deferred compounding charts and other hypothetical illustrations,
which may include comparisons of currently taxable and tax deferred investment
programs, based on selected tax brackets.
Appendix A contains performance information that you may find informative. It is
divided into various parts, depending upon the type of performance information
shown. Future performance will vary and the results shown are not necessarily
representative of future results.
9. DEATH BENEFIT
UPON YOUR DEATH
If you die before annuity payments begin, First Cova will pay a death benefit to
your beneficiary (see below). If you have a joint owner, the death benefit will
be paid when the first of you dies. The surviving joint owner will be treated as
the beneficiary.
The amount of the death benefit depends on how old you or your joint owner is.
Prior to you, or your joint owner, reaching age 80, the death benefit will be
the greater of:
1. Total purchase payments, less withdrawals (and any withdrawal charges paid on
the withdrawals);
2. The value of your contract at the time the death benefit is to be paid; or
3. The value of your contract on the most recent seven year anniversary before
the date of death, plus any subsequent purchase payments, less any withdrawals
(and any withdrawal charges paid on the withdrawals.)
After you, or your joint owner, reaches age 80, the death benefit will be the
greater of:
1. Total purchase payments, less any withdrawals (and any withdrawal charges
paid on the withdrawals);
2. The value of your contract at the time the death benefit is to be paid; or 3.
The value of your contract on the most recent seven year anniversary on or
before you or your joint owner reaches age 80, plus any subsequent purchase
payments, less any withdrawals (and any withdrawal charges paid on the
withdrawals).
The entire death benefit must be paid within 5 years of the date of death unless
the beneficiary elects to have the death benefit payable under an annuity
option. The death benefit payable under an annuity option must be paid over the
beneficiary's lifetime or for a period not extending beyond the beneficiary's
life expectancy. Payment must begin within one year of the date of death. If the
beneficiary is the spouse of the owner, he/she can continue the contract in
his/her own name at the then current value. If a lump sum payment is elected and
all the necessary requirements are met, the payment will be made within 7 days.
DEATH OF ANNUITANT
If the annuitant, not an owner or joint owner, dies before annuity payments
begin, you can name a new annuitant. If no annuitant is named within 30 days of
the death of the annuitant, you will become the annuitant. However, if the owner
is a non-natural person (for example, a corporation), then the death or change
of annuitant will be treated as the death of the owner, and a new annuitant may
not be named.
Upon the death of the annuitant after annuity payments begin, the death benefit,
if any, will be as provided for in the annuity option selected.
10. OTHER INFORMATION
FIRST COVA
First Cova Life Insurance Company (First Cova) was organized under the laws of
the State of New York on December 31, 1992. First Cova is a wholly-owned
subsidiary of Cova Financial Services Life Insurance Company, a Missouri
insurance company. On June 1, 1995, a wholly-owned subsidiary of General
American Life Insurance Company purchased First Cova which on that date changed
its name to First Cova Life Insurance Company.
First Cova is licensed to do business only in the state of New York.
THE SEPARATE ACCOUNT
First Cova has established a separate account, First Cova Variable Annuity
Account One (Separate Account), to hold the assets that underlie the contracts.
The Board of Directors of First Cova adopted a resolution to establish the
Separate Account under New York insurance law on December 31, 1992. We have
registered the Separate Account with the Securities and Exchange Commission as a
unit investment trust under the Investment Company Act of 1940.
The assets of the Separate Account are held in First Cova's name on behalf of
the Separate Account and legally belong to First Cova. However, those assets
that underlie the contracts, are not chargeable with liabilities arising out of
any other business First Cova may conduct. All the income, gains and losses
(realized or unrealized) resulting from these assets are credited to or charged
against the contracts and not against any other contracts First Cova may issue.
DISTRIBUTOR
Cova Life Sales Company (Life Sales), One Tower Lane, Suite 3000, Oakbrook
Terrace, Illinois 60181-4644, acts as the distributor of the contracts. Life
Sales is an affiliate of First Cova.
Commissions will be paid to broker-dealers who sell the contracts.
Broker-dealers will be paid commissions of up to 3.5% of purchase payments. In
addition, under certain circumstances, an expense allowance of up to 2.75% of
purchase payments may be payable. The New York Insurance Department has ruled
that asset based compensation is permissible under certain circumstances. First
Cova may, in the future, adopt an asset based compensation program in addition
to, or in lieu of, the present compensation program. To the extent that the
withdrawal charge is insufficient to cover the actual cost of distribution,
First Cova may use any of its corporate assets, including any profit from the
mortality and expense risk premium, to make up any difference.
OWNERSHIP
OWNER. You, as the owner of the contract, have all the rights under the
contract. Prior to the annuity date, the owner is as designated at the time the
contract is issued, unless changed. On and after the annuity date, the annuitant
is the owner. The beneficiary becomes the owner when a death benefit is payable.
JOINT OWNER. The contract can be owned by joint owners. Upon the death of either
joint owner, the surviving owner will be the designated beneficiary. Any other
beneficiary designation at the time the contract was issued or as may have been
later changed will be treated as a contingent beneficiary unless otherwise
indicated.
BENEFICIARY
The beneficiary is the person(s) or entity you name to receive any death
benefit. The beneficiary is named at the time the contract is issued unless
changed at a later date. Unless an irrevocable beneficiary has been named, you
can change the beneficiary at any time before you die.
ASSIGNMENT
You can assign the contract at any time during your lifetime. First Cova will
not be bound by the assignment until it receives the written notice of the
assignment. First Cova will not be liable for any payment or other action we
take in accordance with the contract before we receive notice of the assignment.
AN ASSIGNMENT MAY BE A TAXABLE EVENT.
If the contract is issued pursuant to a qualified plan, there may be limitations
on your ability to assign the contract.
SUSPENSION OF PAYMENTS OR TRANSFERS
First Cova may be required to suspend or postpone payments for withdrawal or
transfers for any period when:
1. the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of shares of the investment
portfolios is not reasonably practicable or First Cova cannot reasonably value
the shares of the investment portfolios;
4. during any other period when the Securities and Exchange Commission, by
order, so permits for the protection of owners.
First Cova has reserved the right to defer payment for a withdrawal or transfer
from the fixed account for the period permitted by law but not for more than six
months.
FINANCIAL STATEMENTS
The financial statements of First Cova have been included in the Statement of
Additional Information. There are no financial statements for the Separate
Account included in the Statement of Additional Information because as of
December 31, 1996, the Separate Account had no assets.
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION
Company
Experts
Legal Opinions
Distribution
Performance Information
Tax Status
Annuity Provisions
Financial Statements
APPENDIX A
PERFORMANCE INFORMATION
Future performance will vary and the results shown are not necessarily
representative of future results.
PART 1 COVA SERIES TRUST, LORD ABBETT SERIES FUND, INC. AND GENERAL AMERICAN
CAPITAL COMPANY EXISTING PORTFOLIOS
J.P. Morgan Investment Management Inc. is the sub-adviser for the following
portfolios of Cova Series Trust: Select Equity, Small Cap Stock, International
Equity, Quality Bond and Large Cap Stock. Lord Abbett & Co. is the sub-adviser
for the Bond Debenture Portfolio of Cova Series Trust. Lord, Abbett & Co. is the
investment adviser for Lord Abbett Series Fund, Inc. which currently has one
operating portfolio: Growth and Income. Conning Asset Management Company is the
adviser for the Money Market Fund of General American Capital Company. All of
these portfolios began operations before May 1, 1997. As a result, performance
information is available for these portfolios as well as for the accumulation
unit values.
The performance figures shown for the portfolios in Column A in the chart below
reflect the actual fees and expenses paid by the portfolio. Column B presents
performance figures for the accumulation units which reflect the insurance
charges as well as the fees and expenses of the investment portfolio. Column C
presents performance figures for the accumulation units which reflect the
insurance charges, the contract maintenance charge, the fees and expenses of the
investment portfolio, and assume that you make a withdrawal at the end of the
period and therefore the withdrawal charge is reflected. For the Cova Series
Trust Portfolios, performance is shown from the dates shares were first offered
to the public as follows: May 1, 1996 for the Select Equity, Small Cap Stock,
International Equity, Quality Bond, Large Cap Stock and Bond Debenture
Portfolios. For the Lord Abbett Series Fund, Inc. Growth and Income Portfolio,
operations commenced on December 11, 1989. For the Money Market Fund of General
American Capital Company, performance is shown from June 3, 1996, the date on
which shares were first made available under the Contract.
The inception date for the accumulation units investing in the investment
portfolios was February 18, 1997. Accumulation unit performance prior to this
date, as shown in Columns B and C below, is therefore hypothetical.
<TABLE>
<CAPTION>
PART 1 COVA SERIES TRUST
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED 12/31/96
Column A Column B Column C
Portfolio Performance Accumulation Unit Performance
----------------------- -----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
since SINCE since
Portfolio 1 yr 5 yrs inception 1 YR 5 YRS INCEPTION 1 yr 5 yrs inception
- -------------------- ---- ----- --------- ---- ----- --------- ---- ----- ---------
Select Equity - - - - 8.52% - - - - 7.48% - - - - .86%
Small Cap Stock - - - - 8.65% - - - - 7.57% - - - - .94%
International Equity - - - - 8.44% - - - - 7.36% - - - - .74%
Quality Bond - - - - 5.68% - - - - 4.76% - - - - (1.85)%
Large Cap Stock - - - - 14.35% - - - - 13.32% - - - - 6.68%
Bond Debenture - - - - 12.89% - - - - 11.86% - - - - 5.22%
</TABLE>
<TABLE>
<CAPTION>
PART 1 LORD ABBETT SERIES FUND, INC.
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED 12/31/96
Column A Column B Column C
Portfolio Performance Accumulation Unit Performance
----------------------- --------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
since SINCE since
Portfolio 1 yr 5 yrs inception 1 YR 5 YRS INCEPTION 1 yr 5 yrs inception
- ----------------- ---- ----- --------- ---- ----- --------- ---- ----- ---------
Growth and Income 19.49% 16.16% 15.50% 17.76% 14.54% 13.92% 10.86% 13.50% 13.29%
</TABLE>
<TABLE>
<CAPTION>
PART 1 GENERAL AMERICAN CAPITAL COMPANY
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED 12/31/96
Column A Column B Column C
Portfolio Performance Accumulation Unit Performance
----------------------- --------------------------------
<S> <C> <C> <C>
since SINCE since
Portfolio inception INCEPTION inception
- ------------ --------- --------- ---------
Money Market 3.17% 2.34% -4.27%
</TABLE>
PART 2
GENERAL AMERICAN CAPITAL
COMPANY PERFORMANCE
Shares of the General American Capital Company Money Market Fund were first
offered under the Contract on June 3, 1996. However, the General American
Capital Company Money Market Fund has been in existence for sometime and
therefore has an investment performance history. In order to show how investment
performance of the General American Capital Company Money Market Fund affects
accumulation unit values, we have developed performance information.
The chart below shows the investment performance of the General American Capital
Company Money Market Fund and the accumulation unit performance calculated by
assuming that accumulation units were invested in the General American Capital
Company Money Market Fund for the same periods.
The performance figures in Column A for the General American Capital Company
Money Market Fund reflect the fees and expenses paid by the portfolio. Column B
presents performance figures for the accumulation units which reflect the
insurance charges as well as the fees and expenses of the General American
Capital Company Money Market Fund. Column C presents performance figures for the
accumulation units which reflect the insurance charges, the contract maintenance
charge, the fees and expenses of the General American Capital Company Money
Market Fund, and assumes that you make a withdrawal at the end of the period and
therefore the withdrawal charge is reflected.
<TABLE>
<CAPTION>
PART 2 GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED 12/31/96
Column A Column B Column C
Fund Performance Accumulation Unit Performance
----------------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Portfolio 1 yr 5 yrs 10 yrs 1 YR 5 YRS 10 YRS 1 yr 5 yrs 10 yrs
- ----------------- ---- ----- ------ ---- ----- ------ ---- ----- ------
Money Market Fund 5.51% 4.49% 6.01% 4.11% 3.09% 4.61% (2.99)% (1.51)% 4.51%
</TABLE>
- ---------------------------
- --------------------------- STAMP
- ---------------------------
First Cova Life
Insurance Company
Attn: Variable Products
120 Broadway, 10th Floor
New York, New York 10271
Please send me, at no charge, the Statement of Additional Information
dated May 1, 1997, for The Annuity Contract issued by First Cova.
(Please print or type and fill in all information)
---------------------------------------------------------------------------
Name
---------------------------------------------------------------------------
Address
---------------------------------------------------------------------------
City State Zip Code
CNY-1090(10/97) FIRST COVA VA
[Back Cover]
COVA
First Cova Life Insurance Company
Home Office
120 Broadway, 10th Floor
New York, NY 10271
800-469-4545
Annuity Service Office
P.O. Box 10366
Des Moines, IA 50306
515-243-5834
800-343-8496
CNY-1023(10/97) Policy Form Series CNY-672 21-VARI-NY (10/97)
