<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 22, 1996
FILE NO. 33-77496
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 2
TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
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A. EXACT NAME OF TRUST:
COLONIAL SEPARATE ACCOUNT B
B. NAME OF DEPOSITOR:
CHUBB COLONIAL LIFE INSURANCE COMPANY
C. COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES:
ONE GRANITE PLACE
CONCORD, NH 03301
D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
RONALD R. ANGARELLA
PRESIDENT
CHUBB SECURITIES CORPORATION
ONE GRANITE PLACE
CONCORD, NH 03301
COPIES TO:
JOAN E. BOROS, ESQ.
CHARLENE GRANT ESQ.
KATTEN MUCHIN & ZAVIS
CHUBB COLONIAL LIFE INSURANCE COMPANY 1025 THOMAS JEFFERSON STREET, N.W.
ONE GRANITE PLACE EAST LOBBY, SUITE 700
CONCORD, NH 03301 WASHINGTON, DC 20007
--------------
It is proposed that this filing will become effective (check appropriate box)
[_] immediately upon filing pursuant to paragraph (b)
[X] on May 1, 1996 pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a)(i)
[_] on (date) pursuant to paragraph (a)(i) of rule (485)
[_] this post-effective amendment desginates a new effective date for a
previously filed post-effective amendment.
E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:
UNITS OF INTEREST IN THE SEPARATE ACCOUNT UNDER INDIVIDUAL FLEXIBLE PRE-
MIUM VARIABLE LIFE INSURANCE POLICIES.
F. PROPOSED MAXIMUM AGGREGATE OFFERING PRICE TO THE PUBLIC OF THE SECURITIES
BEING REGISTERED:
REGISTRATION OF INDEFINITE AMOUNT OF SECURITIES UNDER THE SECURITIES ACT
OF 1933 PURSUANT TO RULE 24F-2 UNDER THE INVESTMENT COMPANY ACT OF 1940.
G. AMOUNT OF FILING FEE:
AN INDEFINITE AMOUNT OF THE REGISTRANT'S SECURITIES HAS BEEN REGISTERED
PURSUANT TO A DECLARATION, UNDER RULE 24F-2 UNDER THE INVESTMENT COMPANY
ACT OF 1940, SET OUT IN THE REGISTRANT'S INITIAL FORM S-6 REGISTRATION
STATEMENT. REGISTRANT FILED A RULE 24F-2 NOTICE FOR THE FISCAL YEAR END-
ING DECEMBER 31, 1995 ON FEBRUARY 27, 1996.
H. APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after the effective date.
Registrant elects to be governed by Rule 6e-3(T)(b)(13)(i)(A) under the In-
vestment Company Act of 1940, with respect to the policy described in the Pro-
spectus.
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<PAGE>
RECONCILIATION AND TIE BETWEEN ITEMS
IN FORM N-8B-2 AND THE PROSPECTUS
<TABLE>
<CAPTION>
ITEM NO. OF
FORM N-8B-2 CAPTION OF PROSPECTUS
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<S> <C>
1....... Cover Page
2....... Cover Page
3....... Not Applicable
4....... Distribution of the Policy
5....... Chubb Colonial Life Insurance Company; Colonial Separate
Account B
6....... Colonial Separate Account B
7....... Not Required
8....... Not Required
9....... Legal Proceedings
10....... Summary, Colonial Separate Account B; The Policy; Policy
Benefits and Rights; Calculation of Accumulation Value; Cash Value
Benefits; Other Matters; Federal Tax Matters
11....... Colonial Separate Account B, Chubb America Fund, Inc.
12....... Chubb America Fund, Inc.; Distribution of the Policy
13....... Chubb America Fund, Inc.; General; Charges and Deductions; Optional
Insurance Benefits; Distribution of the Policy
14....... The Policy
15....... The Policy
16....... Colonial Separate Account B, Chubb America Fund, Inc.
17....... Transfers; Loans and Reallocations; Policy Lapse; Reinstatement;
Policy "Free Look", Optional Insurance Benefits; Cash Value
Benefits
18....... Colonial Separate Account B
19....... Annual Report; Confirmation
20....... Not Applicable
21....... Policy Loans
22....... Colonial Separate Account B, Telephone Transfers, Loans and
Reallocations
23....... Management of Chubb Colonial
24....... Not Applicable
25....... Chubb Colonial Life Insurance Company
26....... Not Applicable
27....... Chubb Colonial Life Insurance Company
28....... Chubb Colonial Life Insurance Company; Management of Chubb Colonial
29....... Chubb Colonial Life Insurance Company
30....... Not Applicable
31....... Not Applicable
32....... Not Applicable
33....... Not Applicable
34....... Not Applicable
35....... Chubb Colonial Life Insurance Company
36....... Not Applicable
37....... Not Applicable
38-41.... Distribution of the Policy
42....... Not Applicable
43....... Not Applicable
44....... Chubb America Fund, Inc.; The Policy; Charges and Deductions;
Calculation of Accumulation Value; Cash Value Benefits;
Distribution of the Policy
45....... Not Applicable
46....... Chubb America Fund, Inc.; The Policy; Charges and Deductions;
Calculation of Accumulation Value; Cash Value Benefits
47....... Not Applicable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITEM NO.
OF
FORM N-
8B-2 CAPTION OF PROSPECTUS
-------- ---------------------
<S> <C>
48....... Not Applicable
49....... Not Applicable
50....... Colonial Separate Account B
51....... Cover Page; The Policy; Charges and Deductions; Policy Benefits and
Rights; Calculation of Accumulation Value; Cash Value Benefits;
Other Matters
52....... Chubb America Fund, Inc.; Other Matters
53....... Federal Tax Matters
54....... Not Applicable
55....... Not Applicable
56....... Not Applicable
57....... Not Applicable
58....... Not Applicable
59....... Financial Statements
</TABLE>
<PAGE>
ENSEMBLE II
COLONIAL SEPARATE ACCOUNT B
INDIVIDUAL FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
ISSUED BY
CHUBB COLONIAL LIFE INSURANCE COMPANY
ONE GRANITE PLACE
CONCORD, NEW HAMPSHIRE 03301
(603) 226-5000
The Flexible Premium Variable Life Insurance Policy ("Policy") currently
offered by Chubb Colonial Life Insurance Company ("Chubb Colonial") (formerly
"The Colonial Life Insurance Company of America") and described in this
Prospectus is designed to provide a policyowner with both lifetime insurance
protection and maximum flexibility in connection with premium payments and death
benefits. Although each Policy contains a schedule of intended premium payments
("Planned Periodic Premiums"), and an intended frequency of premium payments
("Premium Frequency"), a policyowner may, subject to certain restrictions, vary
the frequency and amount of the premium payments and increase or decrease the
level of life insurance benefits payable under the Policy. This flexibility
allows a policyowner to provide for changing insurance needs within the
framework of a single insurance policy. Unlike traditional lifetime insurance
protection, the policyowner participates in the investment experience of
Colonial Separate Account B ("Separate Account B"). Accumulation value under the
Policy will increase with positive investment experience and decrease with
negative investment experience. Accumulation value in Separate Account B is not
guaranteed and could decline to zero.
The Policy provides for a death benefit payable at the Insured's death. If
net premiums are allocated to Separate Account B, the amount of the death
benefit may reflect the investment experience of the chosen division of
Separate Account B, as well as the frequency and amount of premiums, any
withdrawals of cash value ("withdrawal"), and the charges assessed in
connection with the Policy. As long as the Policy remains in force, the death
benefit will not be less than the current Specified Amount of the Policy,
reduced by any outstanding indebtedness and any due and unpaid charges. The
minimum initial Specified Amount of a Policy is $25,000. The Specified Amount
may not be reduced to less than $25,000, except when required by a withdrawal.
The Specified Amount may not be reduced to less than $10,000 after a
withdrawal.
The Policy provides two death benefit options which may be chosen by the
policyowner. Under Option I, the death benefit payable under the Policy is
equal to the greater of (i) the Specified Amount or (ii) the Policy's
accumulation value on the date of death multiplied by the "corridor
percentage". The corridor percentage is a tax law concept pertaining to the
relationship between accumulation value and death benefit, based on the
Insured's attained age. Under Option II, the death benefit equals the
Specified Amount plus the accumulation value of the Policy on the date of
death, but not less than the Policy's accumulation value multiplied by the
corridor percentage. The policyowner may, subject to certain restrictions,
change from one death benefit option to the other after the Policy has been
issued.
The initial premium payment must be sufficient to keep the Policy in force
for at least three months. No premium payment may be less than $25. The total
of all premiums paid may never exceed the current maximum premium limitations
set forth in the Internal Revenue Code of 1986 (the "Code"). The limitation on
total premiums paid is imposed in order to comply with present requirements
for the definition of life insurance to obtain favorable federal income tax
treatment of the Policy and its death benefit.
The Policy will remain in force so long as cash value exceeds indebtedness
and cash value less indebtedness is sufficient to pay certain monthly charges
imposed in connection with the Policy. The cash value equals the accumulation
value less any surrender charge. Accumulation value in Separate Account B will
reflect the investment experience of the chosen divisions of Separate Account
B, the amount and frequency of premium payments, any withdrawals, and charges
imposed in connection with the Policy. Adherence to the schedule of Planned
Periodic Premiums will not assure the Policy will remain in force. The
policyowner bears the entire investment risk for all amounts allocated to
Separate Account B; no minimum accumulation value is guaranteed and the
accumulation value could decline to zero. So long as cash value exceeds
indebtedness and subject to certain conditions described in this Prospectus, a
policyowner may obtain policy loans at any time after the first policy
anniversary and may make withdrawals at any time. Both withdrawals and policy
loans must be made prior to the Policy's maturity date.
The policyowner may allocate net premiums to one or more of the divisions of
Separate Account B or to Chubb Colonial's General Account on the allocation
date. Each division of Separate Account B will invest solely in a corresponding
portfolio (a "Portfolio") of Chubb America Fund, Inc., Templeton Variable
Products Series Fund, Fidelity Variable Insurance Products Fund, or Fidelity
Variable Insurer Products Fund II (collectively, the "Funds"). Prior to the
allocation date the net premiums paid will be deposited in Chubb Colonial's
General Account. There is a period during which the policyowner may cancel the
Policy. If the policyowner elects during this "free look" period to cancel the
Policy, Chubb Colonial will reimburse, within seven days from the date the
Policy is surrendered to Chubb Colonial, the full amount of premium paid. The
accompanying Prospectuses for the Funds and the Statements of Additional
Information, available on request, describe the investment objectives and risks
of the thirteen Portfolios.
Prospective purchasers of this Policy are advised that replacement of
existing insurance coverage may not be financially advantageous and should
consult with their financial advisers with respect to the Policy. It may also
not be advantageous to purchase this Policy, if the prospective purchaser
already owns a flexible premium variable life insurance policy.
This Prospectus generally describes only the portion of the Policy involving
Separate Account B. For a brief summary of Chubb Colonial's General Account,
see "THE GENERAL ACCOUNT."
THIS PROSPECTUS IS VALID ONLY IF ACCOMPANIED OR PRECEDED BY A CURRENT
PROSPECTUS FOR THE FUNDS
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
DIVISION, NOR HAS THE COMMISSION OR ANY STATE SECURITIES
DIVISION, PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PLEASE READ THIS PROSPECTUS CAREFULLY AND RETAIN IT FOR FUTURE REFERENCE.
THE DATE OF THIS PROSPECTUS IS MAY 1, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DEFINITIONS.............................. 3
SUMMARY.................................. 4
CHUBB COLONIAL LIFE INSURANCE COMPANY.... 9
COLONIAL SEPARATE ACCOUNT B.............. 9
THE FUNDS................................ 9
THE POLICY............................... 12
General................................ 12
Payment of Premiums.................... 12
Premium Limitations.................... 12
Allocation of Premiums................. 12
Transfers.............................. 13
Telephone Transfers, Loans and
Reallocations......................... 14
Policy Lapse........................... 14
Reinstatement.......................... 15
Policy "Free Look"..................... 15
CHARGES AND DEDUCTIONS................... 15
Premium Charges........................ 15
Monthly Deduction...................... 15
Risk Charge............................ 16
Surrender Charge....................... 16
Administrative Fees.................... 17
Other Charges.......................... 17
POLICY BENEFITS AND RIGHTS............... 18
Death Benefits......................... 18
Guaranteed Death Benefit............... 19
Combined Requests...................... 19
Maturity of the Policy................. 19
Optional Insurance Benefits............ 19
Settlement Options..................... 20
CALCULATION OF ACCUMULATION
VALUE................................... 21
Unit Values............................ 22
Net Investment Factor.................. 22
CASH VALUE BENEFITS...................... 22
Surrender Privileges................... 22
Policy Loans........................... 23
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
OTHER MATTERS........................................................ 24
Voting Rights...................................................... 24
Additions, Deletions or Substitutions of Investments............... 25
Annual Summary..................................................... 25
Confirmation....................................................... 25
Limitation on Right to Contest..................................... 25
Misstatements...................................................... 25
Suicide............................................................ 26
Beneficiaries...................................................... 26
Postponement of Payments........................................... 26
Assignment......................................................... 26
Illustration of Benefits and Values................................ 26
Non-Participating Policy........................................... 26
THE GENERAL ACCOUNT.................................................. 26
General Description................................................ 26
The Policy......................................................... 27
General Account Benefits........................................... 27
General Account Accumulation Value................................. 27
Determination of Charges........................................... 27
Premium Deposit Fund............................................... 27
DISTRIBUTION OF THE POLICY........................................... 28
MANAGEMENT OF CHUBB COLONIAL......................................... 29
Executive Officers and Directors of Chubb Colonial................. 29
STATE REGULATION OF CHUBB COLONIAL................................... 31
FEDERAL TAX MATTERS.................................................. 31
Tax Considerations................................................. 31
Policy Proceeds.................................................... 31
Charge for Chubb Colonial Income Taxes............................. 33
EMPLOYEE BENEFIT PLANS............................................... 34
LEGAL PROCEEDINGS.................................................... 34
EXPERTS.............................................................. 34
REGISTRATION STATEMENT............................................... 34
FINANCIAL STATEMENTS................................................. F-1
ILLUSTRATIONS........................................................ Appendix A
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. CHUBB COLONIAL DOES NOT AUTHORIZE ANY
INFOR-MATION OR REPRESENTATIONS REGARDING THE OFFERING DESCRIBED IN THIS
PROSPECTUS OTHER THAN AS CONTAINED IN THIS PROSPECTUS, THE PROSPECTUSES OF THE
FUNDS OR THE STATEMENTS OF ADDITIONAL INFORMATION OF THE FUNDS.
2
<PAGE>
DEFINITIONS
In addition to the capitalized terms which are defined elsewhere in this Pro-
spectus, the following words and phrases shall have the indicated meanings:
Accumulation value--The total amount that a Policy provides for investment at
any time plus the amount held as collateral for policy debt.
Age--The Insured's age at his nearest birthday.
Allocation date--The date when the initial premium is placed in divisions of
Separate Account B and the General Account in accordance with the policyowner's
allocation instructions in the application. The allocation date is 25 days from
the date Chubb Colonial mails the Policy to the agent for delivery to the
policyowner. However, if the insured is in a substandard risk class, the
Allocation Date will be the date of receipt by Chubb Colonial of all items
necessary under its administative and underwriting procedures to release the
Policy to active status in its processing system.
Attained Age--The age of the Insured at the last policy anniversary.
Beneficiary---The beneficiary designated by the policyowner in the applica-
tion. If changed, the beneficiary is as shown in the latest change filed with
Chubb Colonial. If no beneficiary survives the Insured, the policyowner or the
policyowner's estate will be the beneficiary. The interest of any beneficiary
is subject to that of any assignee.
Cash value--The accumulation value less the surrender charge. This amount less
the amount of policy debt is payable to the policyowner on the earlier of sur-
render of the Policy or the maturity date.
Date of Receipt--Any business day of Chubb Colonial, prior to 4:00 P.M. New
York City time, on which a notice or premium payment is received at Chubb Colo-
nial's service center.
Death benefit--The amount, less the amount of policy debt, which is payable to
the beneficiary under the Policy upon the death of the Insured.
Division--A division of Separate Account B which invests exclusively in the
shares of a specified Portfolio of the Funds.
Ensemble II--The name of the Flexible Premium Variable Life Insurance Policy
described in this Prospectus.
Funds--Chubb America Fund, Inc., Templeton Variable Products Series Fund,
Fidelity Variable Insurance Products Fund and Fidelity Variable Insurance
Products Fund II, series mutual funds.
General Account--The assets of Chubb Colonial other than those allocated to
Separate Account B or any other separate account.
Insured--The person upon whose life the Policy is issued.
Issue Age--The Insured's age at his nearest birthday on the Policy Date.
Issue Date--This is the date the policy is issued by Chubb Colonial. The con-
testable and suicide periods are measured from the Issue Date.
Loan value--Generally, 90% of a Policy's cash value on the date of a loan.
Maturity date--Unless otherwise specified, the maturity date will be the pol-
icy anniversary nearest to the Insured's 95th birthday.
Minimum Initial Premium--The minimum premium which is due and payable
on the Policy Date. The Minimum Initial Premium must be sufficient to
cover monthly deductions and keep the Policy in force for at least three months.
Monthly anniversary date--The same date in each month as the policy date.
Net premium--The gross premium less a 2.0% premium tax charge.
Owner (Policyowner)--The person so designated in the application or as subse-
quently changed.
Planned Periodic Premiums--Schedule of intended premium payments that the
policyowner may establish.
Policy date--The date set forth in the Policy, which is the date of
underwriting approval, unless otherwise requested by the Owner. The policy date
is the date from which policy years, policy months, and policy anniversaries
will be determined. If the policy date should fall on the 29th, 30th or 31st of
a month, the policy date will be the 28th of such month.
Policy debt--The sum of all unpaid policy loans and accrued interest thereon.
Portfolio--A separate investment Portfolio of the Funds.
Proof of death--One or more of the following:
(a) A copy of a certified death certificate.
(b) A copy of a certified decree of a court of competent jurisdiction as to
the finding of death.
(c) A written statement by a medical doctor who attended the Insured.
(d) Any other proof satisfactory to Chubb Colonial.
Separate Account B--Chubb Colonial Separate Account B, a separate investment
account created by Chubb Colonial to receive and invest net premiums paid under
the Policy and other flexible premium variable life insurance policies offered
by Chubb Colonial.
Specified Amount--The face amount of the Policy which is the minimum death
benefit payable under the Policy.
Surrender Charge--A sales charge assessed only upon surrender or withdrawal.
Valuation date--Each day, as of the close of regular trading on the New York
Stock Exchange, which is currently 4:00 P.M. New York City time.
Valuation period--The period between two successive valuation dates, commenc-
ing at the close of regular trading on the New York Stock Exchange on each val-
uation date and ending at the close of regular trading on the New York Stock
Exchange on the next succeeding valuation date.
3
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY OF PROSPECTUS INFORMATION SHOULD BE READ IN CONJUNCTION
WITH THE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS. ANY
SIGNIFICANT VARIATIONS FROM THE INFORMATION APPEARING IN THIS PROSPECTUS WHICH
MAY BE REQUIRED DUE TO INDIVIDUAL STATE REQUIREMENTS ARE CONTAINED IN
SUPPLEMENTS WHICH ARE ATTACHED TO THIS PROSPECTUS, OR IN ENDORSEMENTS TO THE
POLICY, AS APPROPRIATE. UNLESS OTHERWISE INDICATED, THE DESCRIPTION OF THE
POLICY CONTAINED IN THIS PROSPECTUS ASSUMES THE POLICY IS IN EFFECT, THERE IS
NO OUTSTANDING POLICY DEBT AND THE DEATH BENEFIT IS NOT SUBJECT TO ADJUSTMENT
BY THE CORRIDOR PERCENTAGE.
The Policy. Under the flexible premium variable life insurance policy (the
"Policy") issued by Chubb Colonial Life Insurance Company ("Chubb Colonial"),
the policyowner may, subject to certain limitations, make premium payments in
any amount at any frequency. The Policy is a life insurance contract with death
benefits, cash values, and other features traditionally associated with life
insurance. It is called "flexible premium" because, unlike many insurance
contracts, there is no fixed schedule for premium payments, although each
policyowner may establish a schedule of premium payments ("Planned Periodic
Premiums"). This flexibility permits a policyowner to provide for evolving
insurance needs within a single insurance product. The minimum initial Specified
Amount is $25,000. A policyowner under attained age 85 may increase or decrease
coverage. Increasing coverage under the Policy, rather than purchasing another
policy, may save additional administrative costs. Increasing coverage under the
Policy or purchasing another policy may require new evidence of insurability.
Increasing coverage may have certain tax consequences. See "Federal Tax
Matters."
The Policy is called "variable" because, unlike the fixed benefits of an
ordinary whole life insurance contract, the accumulation value, the cash value
and, under certain circumstances, the death benefit of the Policy may increase
or decrease depending upon the investment experience of the divisions of
Colonial Separate Account B ("Separate Account B") to which premium payments
have been allocated. So long as the Policy's cash value continues to be
sufficient to pay the monthly deduction, all policyowners are guaranteed a
minimum death benefit equal to the face amount of the Policy (the "Specified
Amount"), less any outstanding policy debt.
The death benefit is payable under two options. Under Option I, the death
benefit is equal to the greater of the Specified Amount or the accumulation
value of the Policy on the date of death multiplied by the corridor percentage.
Under Option II, the death benefit is equal to the sum of the Specified Amount
and the Policy's accumulation value on the date of death, subject to adjustment
by the corridor percentage. The corridor percentage is a tax law concept
pertaining to the relationship between accumulation value and the death
benefit, based on the Insured's attained age. Prospective policyowners should
be aware that there is no guarantee of accumulation value in Separate Account
B. See "POLICY BENEFITS AND RIGHTS--Death Benefits."
Colonial Separate Account B. Separate Account B is a separate account
established by Chubb Colonial pursuant to the insurance laws of the State of
New Jersey and organized as a registered unit investment trust under the
Investment Company Act of 1940 (the "1940 Act"). Such registration does not
involve any supervision by the Securities and Exchange Commission (the
"Commission") of the management or investment practices or policies of Separate
Account B. Separate Account B is presently comprised of thirteen divisions, each
of which buys shares at net asset value of the corresponding portfolio (a
"Portfolio") of Chubb America Fund, Inc., Templeton Variable Products Series
Fund, Fidelity Variable Insurance Products Fund or Fidelity Variable Insurance
Products Fund II (the "Funds"). Separate Account B is administered and accounted
for as part of the general business of Chubb Colonial, but the income, capital
gains, or capital losses of Separate Account B are credited to or charged
against the assets held in the account in accordance with the terms of the
Policy, without regard to other income or capital gains or losses of any other
account arising out of any other business Chubb Colonial conducts. The assets of
Separate Account B are not chargeable with liabilities arising out of any other
business conducted by Chubb Colonial. The income and both realized and
unrealized gains or losses on the assets of each division are separate and are
credited or charged against each division without regard to income, gains or
losses from any other division. See "CALCULATION OF ACCUMULATION VALUE--Unit
Values."
A policyowner may allocate net premium payments among the General Account and
the divisions of Separate Account B which invest in Portfolios of the Funds.
If the Date of Receipt of the initial premium is prior to the date Chubb
Colonial either issues the Policy or offers to issue the Policy on a basis
other than as applied for, and that initial premium exceeds $500, the net
premium, less any monthly deductions, will be credited with interest at the
rate currently being credited to the General Account. This
4
<PAGE>
amount will be credited with interest for the period between the Date of
Receipt of the premium (or the policy date, whichever is later) and the date
Chubb Colonial issues the Policy or the applicant refuses Chubb Colonial's offer
to issue the Policy on a basis other than as applied for. If the initial premium
is $500 or less, no interest will be credited. In those instances when Chubb
Colonial declines to issue a Policy, the entire premium paid will be returned.
If the initial premium exceeds $500 it will be returned with interest. Interest
will be credited from the Date of Receipt to the date the application is
rejected. If the Policy issued as applied for is not accepted or the "free look"
is exercised, no interest will be credited. Chubb Colonial will retain any
interest earned on the initial net premium. Prior to the allocation date the
initial net premium will be deposited in Chubb Colonial's General Account. See
"The Policy--Policy "Free Look" ".
The Funds. The Chubb America Fund, Inc. is registered as an open-end
diversified management company under the 1940 Act. Its shares are offered to
divisions of separate accounts, whether now in existence or to be established by
Chubb Colonial and its affiliated life insurance companies to fund variable life
insurance policies and variable annuity contracts.
Chubb America Fund, Inc. presently has nine classes of stock, each
representing a Portfolio having a specific investment objective. The present
Portfolios of the Chubb America Fund, Inc. are the World Growth Stock
Portfolio, the Money Market Portfolio, the Gold Stock Portfolio, the Bond
Portfolio, the Domestic Growth Stock Portfolio, the Growth and Income
Portfolio, the Capital Growth Portfolio, the Balanced Portfolio and the
Emerging Growth Portfolio. In the future, the Chubb America Fund, Inc. may add
or delete Portfolios. The investment adviser to the Chubb America Fund, Inc. is
Chubb Investment Advisory Corporation ("Chubb Investment Advisory"), an
affiliate of Chubb Colonial.
Templeton Variable Products Series Fund is an open-end, diversified
management investment company currently consisting of five separate series, one
of which (Templeton International Fund) offers its shares to a corresponding
division of Separate Account B. Templeton Variable Series Fund offers its
shares solely to separate accounts of insurance companies, including companies
not affiliated with Chubb Colonial, as an investment vehicle for variable life
insurance policies and variable annuity contracts. The investment manager of
Templeton International Fund is Templeton Investment Counsel, Inc. ("TICI").
Fidelity Variable Insurance Products Fund (Fidelity VIP) and Fidelity
Variable Insurance Products Fund II (Fidelity VIPII) are open-end, diversified
management investment companies. Fidelity VIP currently consists of four
separate series, one of which (High Income Portfolio) offers its shares to a
corresponding division of Separate Account B. Fidelity VIPII currently consists
of five separate series, two of which (Contrafund Portfolio and Index 500
Portfolio) offer their shares to corresponding divisions of Separate Account B.
Fidelity VIP and Fidelity VIPII offer their shares solely to separate accounts
of insurance companies, including companies not affiliated with Chubb Colonial,
as investment vehicles for variable life insurance policies and variable
annuity contracts. Fidelity Management & Research is the investment manager of
Fidelity VIP and Fidelity VIPII.
Policyowners should be aware that there can be no assurance that any
Portfolio will in fact achieve its stated objectives. Policyowners should read
and retain the prospectuses for the Funds which accompanies this Prospectus for
detailed information. See "THE FUNDS".
Premiums. The first premium is due on the policy date. Premiums are paid in
advance, generally one year at a time; however, Chubb Colonial permits semi-
annual, quarterly and monthly premium payments. Changes in frequency and
increases or decreases in the amount of Planned Periodic Premiums may be made by
the policyowner provided that the total of all premiums, scheduled and
unscheduled, cannot exceed the current maximum premium limitations for the
definition of life insurance, set forth in the Code. Chubb Colonial will return
any excess premiums if the total of all premiums, scheduled and unscheduled,
will exceed these limits. Chubb Colonial will notify policyowners annually if
any premiums would cause the Policy to be deemed a modified endowment contract
and allow for a refund of the excess premium. See "FEDERAL TAX MATTERS--Policy
Proceeds".
Chubb Colonial reserves the right to limit the amount of any increase in
premium payment. No premium payment may be less than $25. Subject to the
foregoing limitations, a policyowner may make additional premium payments at any
time prior to the maturity date of the Policy. See "THE POLICY--Payment of
Premiums".
Failure to pay premiums in accordance with the schedule of Planned Periodic
Premiums will not automatically cause the Policy to lapse. It will lapse only
when the cash value less outstanding policy debt is insufficient to pay the
monthly deduction and a grace period expires without a sufficient payment by
the policyowner. Conversely, payment of premiums in accordance with the
schedule of Planned Periodic Premiums does not necessarily mean that the Policy
will remain in force. See "THE POLICY--Policy Lapse".
5
<PAGE>
Death Benefit. The death benefit under the Policy is the amount payable to the
named beneficiary when the person insured under the Policy dies. All or part of
the death benefit may be paid in cash or applied under one or more of the
payment options available under the Policy. See "POLICY BENEFITS AND RIGHTS--
Settlement Options". The death benefit will be reduced by the amount of any
outstanding policy debt or unpaid monthly deduction.
Under Option I, the death benefit will be equal to the greater of the
Specified Amount or the accumulation value of the Policy on the date of death
multiplied by the corridor percentage. Under Option II, the death benefit is
equal to the Specified Amount plus the accumulation value of the Policy on the
date of death; provided, however, that under Option II, the death benefit can
never be less than the accumulation value on the date of death multiplied by
the corridor percentage. See "POLICY BENEFITS AND RIGHTS--Death Benefits".
A policyowner may, by written request, change the Specified Amount at any time
after the first policy anniversary. Any change is subject to the following
conditions:
1. Any requested decrease in Specified Amount will become effective on the
monthly anniversary date that coincides with, or next follows, receipt of
such request. The minimum decrease in Specified Amount is $25,000. No
decrease may reduce the Specified Amount below $25,000.
2. Any request for an increase in Specified Amount must be applied for, by a
supplemental application, prior to attained age 85, and shall be subject to
evidence of insurability satisfactory to Chubb Colonial. The minimum increase
in Specified Amount is $25,000.
3. Any change approved by Chubb Colonial will become effective on the date
shown in the Supplemental Policy Specification Page of the Policy, subject to
deduction of the first month's cost of insurance from the accumulation value of
the Policy.
By written request, a policyowner may also change the death benefit option. If
the request is to change from Option I to Option II, the Specified Amount will
be decreased by the amount of the accumulation value of the Policy on the
effective date of the change. Evidence of insurability satisfactory to Chubb
Colonial will be required for change from Option I to Option II. If the request
is to change from Option II to Option I, the Specified Amount will be increased
by the amount of the accumulation value of the Policy on the effective date of
the change. No evidence of insurability is required for a change from Option II
to Option I. The effective date of either change shall be the monthly
anniversary date that coincides with or next follows the Date of Receipt of the
request for change. See "POLICY BENEFITS AND RIGHTS--Death Benefits".
Policyowners may combine a request for a change in the Specified Amount with a
request for a change in the death benefit option. Combined requests will be
subject to the requirements and limitations of each of the requests. See "POLICY
BENEFITS AND RIGHTS--Combined Requests."
Value of Policy. The Policy provides for accumulation value equal to the total
of accumulation value in the General Account and the Policy's accumulation
value in divisions of Separate Account B. The Policy's accumulation value will
reflect the amount and frequency of premium payments, the value of net premiums
(net premiums plus credited interest), if any, allocated to the General
Account, the investment experience of Separate Account B, policy loans, any
withdrawals, and any charges imposed in connection with the Policy. There is no
minimum guaranteed accumulation value.
The accumulation value of each division in Separate Account B on the
allocation date is equal to the net premiums, plus interest earned prior to the
allocation date, which have been paid and allocated to that division less the
portion of the first monthly deduction allocated to the Policy's accumulation
value in that division. Thereafter, at the end of each valuation period after
the initial allocation, the Policy's accumulation value in a division is equal
to the sum of (a) the accumulation value in the division on the preceding
valuation date multiplied by the net investment factor (See "CALCULATION OF
ACCUMULATION VALUE--Net Investment Factor") for the current valuation period,
plus (b) any net premium received during the current valuation period which is
allocated to the division, plus (c) all accumulation values transferred to the
division from another division or the General Account, including loan
repayments, during the current valuation period, minus (d) accumulation values
transferred from the division to another division or the General Account and
accumulation values transferred to secure a policy debt during the current
valuation period, and minus (e) all withdrawals from the division during the
current valuation period, and minus (f) a pro-rata portion of monthly
deductions, whenever a valuation period includes the monthly anniversary date.
6
<PAGE>
The Policy's total accumulation value in Separate Account B equals the sum of
the Policy's accumulation value in each division. The Policy's accumulation
value in Separate Account B is expressed in terms of the number of units and
unit values of each division. See "CALCULATION OF ACCUMULATION VALUE--Unit
Values."
Charges and Deductions.
(a) Chubb Colonial deducts 2.0% of each premium payment received to compensate
Chubb Colonial for state premium taxes, franchise taxes and other local taxes
imposed on premiums by New York State and local jurisdictions. The actual taxes
imposed on Colonial may fall between 1.7% and 2.5% of premiums received. As a
result, the 2.0% charge may at times be higher or lower than the actual tax
incurred by Colonial. Colonial reserves the right to increase this charge to
Policyowners up to a maximum of 2.50%. Colonial does not expect to realize a
profit as a result of this charge.
(b) There is a monthly deduction from each Policy's accumulation value in the
General Account and/or the divisions of Separate Account B equal to the sum of
(i) the cost of insurance, described below, and the cost of additional benefits
provided by rider attached to the Policy; and (ii) a monthly administrative
charge of $6.00. The cost of insurance charge is calculated on each monthly
anniversary date. It is based on the sex, issue age, policy year, rating class
of the Insured, and Specified Amount of the Policy. Monthly cost of insurance
rates will be determined by Chubb Colonial based upon its expectations as to
future mortality experience. Cost of insurance rates are guaranteed not to
exceed or be increased above the maximum charge based upon the Commissioner's
1980 Standard Ordinary Mortality Table.
(c) A mortality and expense risk charge, not to exceed .0024657% on a daily
basis (.90% on an annual basis) will be imposed on the assets of each division.
Chubb Colonial will realize a gain from this charge to the extent it is not
needed to provide benefits and pay expenses under the Policy.
(d) Upon surrender or withdrawal, Chubb Colonial will assess a surrender
charge. The surrender charge for the initial Specified Amount is determined by
multiplying a surrender factor by the lesser of (1) the premiums actually
received in policy year one, or (2) the "Guideline Annual Premium" as defined in
the rules under the 1940 Act. Subject to other considerations, the surrender
charges may be reduced by paying less premium in policy year one. The surrender
factor depends on the length of time the Policy has been in force and ranges
between 0% and 30% of the premium paid in policy year one. The surrender charge
for increases in the Specified Amount is determined in a similar manner. The
surrender charge is more fully described under "CHARGES AND DEDUCTIONS--
Surrender Charge".
(e) Chubb Colonial charges an administrative fee equal to the lesser of $25 or
2% of the amount of the withdrawal for each withdrawal and the lesser of $25 or
10% of the amount of a transfer for each transfer between divisions of Separate
Account B or the General Account. Chubb Colonial reserves the right to assess a
charge, not to exceed $25, for each request by a policyowner for an illustration
of benefits and values after the policy date.
(f) Chubb Colonial reserves the right to charge the assets of each division of
Separate Account B to provide for any income taxes payable by Chubb Colonial on
the assets of such divisions. In addition, an investment advisory fee is imposed
against the assets of each Portfolio to compensate the Funds' investment manager
and sub-investment managers. See "THE FUNDS".
Policy Loans. After the first policy anniversary, a policyowner may borrow
against the cash value of his Policy. Generally, the maximum loan amount is 90%
of the cash value of the Policy on the date of the loan. Loan interest is
payable at the end of each policy year and all policy debt outstanding will be
deducted from proceeds payable at the Insured's death, upon maturity, or upon
surrender.
A policyowner may allocate a policy loan among the General Account and the
various divisions of Separate Account B. Accumulation value in each division
equal to the policy debt so allocated will be transferred to the General
Account. If loan interest is not paid when due, it becomes loan principal. An
amount equal to the unpaid loan interest will be transferred to the General
Account pro-rata from the accumulation value of the General Account and the
divisions of Separate Account B. If no accumulation value is available in any
of the divisions of Separate Account B, accumulation value held in the General
Account will be set aside as loan collateral. Accumulation value held in the
General Account for loan collateral earns interest daily at an annual rate of
6%.
Chubb Colonial will charge interest on any outstanding policy loan with such
interest compounded annually. There are two types of loans available. A Type A
loan is charged the same interest rate as the interest credited to the amount
of
7
<PAGE>
accumulation value which is held in the General Account to secure loans. The
amount available at any time for a Type A loan equals the maximum loan amount
less the DEFRA Guideline Single Premium, as set forth in the Code, less any
outstanding Type A loans. All other loans are Type B loans; a Type B loan is
charged an interest rate of 8%. It is possible for one loan request to result
in both a Type A and Type B loan. Interest accrues on a daily basis from the
date of the loan and is compounded annually. A policy loan may be prepaid in
whole or in part at any time while the Policy is in force. When a loan
repayment is made, accumulation value securing the policy debt in the General
Account equal to the loan repayment will be allocated among the General Account
and divisions of Separate Account B using the same percentages as used to
allocate net premiums. See "CASH VALUE BENEFITS--Policy Loans".
If a policyowner elects to surrender the policy or allows the policy to lapse,
the policyowner may be taxed on a portion of any amounts paid to the
policyowner which may include prior loans cancelled in the transaction. See
"FEDERAL TAX MATTERS".
Policy Cancellation, Surrender and Lapse. The policyowner has the limited right
to return a Policy for cancellation and full refund of all premiums paid. Chubb
Colonial will cancel the Policy if it is returned by mail or personal delivery
to Chubb Colonial or to the agent who sold the Policy, within 20 days after the
delivery of the Policy to the policyowner, within 45 days of the date of the
execution of the application for insurance, or within 20 days after mailing or
personal delivery of a Notice of the Right of Withdrawal, whichever is later.
Chubb Colonial will return to the policyowner, within seven days, all payments
received on the Policy. Prior to the allocation date, the initial net premium
will be deposited in Chubb Colonial's General Account; Chubb Colonial will
retain any interest earned if the "free look" right is exercised.
So long as the Policy is in force, a policyowner may elect, subject to the
consent of any irrevocable beneficiary or assignee of the Policy, to surrender
the Policy and receive its cash value, i.e., the cash value of the Policy
determined as of the day Chubb Colonial receives the policyowner's written
request, less any outstanding policy debt secured by the Policy. A policyowner
may also request a withdrawal, subject to the consent of any irrevocable
beneficiary, of the cash value of the Policy. Normally, a withdrawal reduces the
death benefit payable under the Policy by an amount equal to the reduction in
the Policy's accumulation value plus a pro-rata portion of the surrender charge.
Failure to make any premium payment on a Policy will not necessarily cause the
Policy to lapse. The duration of a Policy depends upon the cash value. The Pol-
icy will remain in force so long as the cash value less any outstanding policy
debt is sufficient to pay the monthly deduction. In the event the cash value,
less any outstanding policy debt, is insufficient to pay the monthly deduction
and a sixty-one day grace period expires without an adequate payment by the
policyowner, the Policy will lapse and terminate without value. See "THE POLI-
CY--Policy Lapse."
Once a Policy has lapsed, the policyowner may request reinstatement of the
Policy anytime within five years of lapse. Satisfactory proof of insurability
and payment of a reinstatement premium are required for reinstatement. See "THE
POLICY--Reinstatement."
Distribution of the Policy. Chubb Colonial will offer the Policy only in New
York. The Policy will be sold by agents who represent Chubb Colonial and are
registered representatives of Chubb Securities Corporation or other registered
broker-dealers.
Tax Consequences of the Policy. All death benefits paid under the Policy will
generally be fully excludable from the gross income of the policy beneficiary
for federal income tax purposes. Treasury regulations require that investments
underlying the Policy be adequately diversified. Chubb Colonial believes it is
presently in compliance with the regulations and intends to remain in
compliance with such regulations and other federal tax law requirements.
Chubb Colonial may charge each division in Separate Account B for its portion
of any income tax charged to Chubb Colonial on the division or its assets. The
charge, if imposed, will reduce the investment return of Separate Account B.
If a policyowner elects to make certain transactions, including a partial
withdrawal, surrender or exchange of the Policy, or receipt of accelerated ben-
efits pursuant to the Terminal Illness Accelerated Benefit Rider, or allows the
policy to lapse, the policyowner may be taxed on a portion of any amounts paid
to the policyowner (which may include any prior policy loans cancelled in the
transaction). Also, if premiums paid by a policyowner exceed certain limits and
the Policy is deemed a modified endowment contract, then any pre-death distri-
butions, including loans, surrenders and partial withdrawals, may be treated as
income taxable to the policyowner and may also cause the policyowner to incur a
penalty tax of 10%. Policyowners are advised to consult with their own tax ad-
visers with regard to the tax consequences of the Policy. See "FEDERAL TAX MAT-
TERS".
8
<PAGE>
CHUBB COLONIAL LIFE INSURANCE COMPANY
Chubb Colonial is a stock life insurance company chartered in 1897 in New
Jersey and has been continuously engaged in the insurance business since that
time. Prior to March 1, 1996 Chubb Colonial was known as "The Colonial Life
Insurance Company of America". It is licensed to do life insurance business in
fifty states of the United States, Puerto Rico, the U.S. Virgin Islands, and in
the District of Columbia. Chubb Colonial is a wholly-owned subsidiary of Chubb
Life Insurance Company of America, ("Chubb Life") a New Hampshire life insurance
company, which in turn is a wholly owned subsidiary of The Chubb Corporation, a
New Jersey Corporation. The principal offices of The Chubb Corporation are
located at 15 Mountain View Road, Warren, New Jersey. Its telephone number is
908/580-2000. Chubb Life's home office and Chubb Colonial's service center are
located at One Granite Place, Concord, New Hampshire 03301, telephone number
(800) 258-3648. Chubb Colonial's home office is located at Eight Sylvan Way,
Parsippany, New Jersey 17054, telephone number (201) 455-1400. Chubb Colonial's
total assets at December 31, 1995 were $643,303,000.
Chubb Colonial writes life and health insurance and annuities. It is subject to
New Jersey law governing insurance, and is regulated and supervised by the New
Jersey Insurance Commissioner. Chubb Colonial is also subject to the insurance
laws of New York. Chubb Colonial is currently rated AAA (Superior) by Standard &
Poors's Corporation and A Excellent by A.M. Best and Company. These ratings
merely reflect the opinion of the rating company as to the relative financial
strength of Chubb Colonial and Chubb Colonial's ability to meet its contractual
obligations to its policyowners. Even though assets in Separate Account B are
held separately from Chubb Colonial's other assets, ratings of Chubb Colonial
may still be relevant to policyowners since not all of Chubb Colonial's
contractual obligations relate to payments based on those segregated assets.
COLONIAL SEPARATE ACCOUNT B
Separate Account B is a separate account of Chubb Colonial established on March
2, 1994 and governed by the insurance laws of the State of New Jersey. Separate
Account B is organized as a unit investment trust registered with the Commission
under the 1940 Act and is subject to that Act's requirements. Such registration
does not involve supervision of the management or investment policies of
Separate Account B or Chubb Colonial by the Commission. Chubb Colonial is the
depositor of Separate Account B. Under New Jersey law, the assets of Separate
Account B are held exclusively for the benefit of policyowners and persons
entitled to payments under this Policy and other variable life insurance
policies funded by Separate Account B. The assets of Separate Account B are not
chargeable with liabilities arising out of any other business which Chubb
Colonial may conduct.
Chubb Colonial holds the assets of Separate Account B. These assets are kept
physically segregated and held separate and apart from the General Account.
Chubb Colonial maintains records of all purchases and redemptions of Funds
shares by each of the divisions.
Divisions. Separate Account B presently has thirteen investment divisions but
may, in the future, add or delete investment divisions. Each investment
division will invest exclusively in shares representing an interest in a
Portfolio of the Funds.
Investment income and other distributions to each division of Separate Account
B arising from the applicable underlying Portfolio of the Funds increases the
assets of the corresponding division of Separate Account B. The income and both
realized and unrealized gains or losses on the assets of each division of
Separate Account B are credited to or charged against that division without
regard to income, gains or losses from any other division. Under certain
unusual circumstances, the liabilities of one division, arising from claims
against that division, could be attributed to another division.
THE FUNDS
Separate Account B invests in shares of the Chubb America Fund, Inc., the
Templeton International Fund of Templeton Variable Products Series Fund, the
High Income Portfolio of the Fidelity Variable Insurance Products Fund, the
ContraFund Portfolio of the Fidelity Variable Insurance Products Fund II, or the
Index 500 Portfolio of the Fidelity Variable Insurance Products Fund II.
Chubb America Fund, Inc. Chubb America Fund, Inc. is organized as a Maryland
corporation and is registered as an open-end diversified management company
under the 1940 Act. The Chubb America Fund, Inc. currently has nine Portfolios
each of which has different objectives. The shares of each series of Chubb
America Fund, Inc. stock are presently offered only to the divisions of separate
accounts of Chubb Colonial and its affiliated life insurance companies. The
assets of each Portfolio are maintained separately from the assets of the other
Portfolios and each Portfolio has investment objectives and policies which are
different from those of the other Portfolios. Thus, each Portfolio operates as
9
<PAGE>
a separate investment fund, and the income, gains or losses of one Portfolio
generally has no effect on the investment performance of any other Portfolio.
Under certain unusual circumstances, the liabilities of one Portfolio, arising
from claims against that Portfolio, could be attributed to another Portfolio.
The investment adviser to the Chubb America Fund, Inc. is Chubb Investment
Advisory Corporation ("Chubb Investment Advisory") which is an affiliate of
Chubb Colonial. Chubb Investment Advisory has in turn retained Templeton Global
Advisors, Inc. (formerly known as Templeton, Galbraith & Hansberger Ltd.)
("Templeton") to provide investment advisory services for the World Growth Stock
Portfolio, Chubb Asset Managers, Inc. ("Chubb Asset") to provide investment
advisory services for the Money Market, Bond and Growth and Income Portfolios,
Van Eck Associates Corporation ("Van Eck Associates") to provide investment
advisory services for the Gold Stock Portfolio, Pioneering Management
Corporation ("Pioneer") to provide investment advisory services for the Domestic
Growth Stock Portfolio, Janus Capital Corporation ("Janus") to provide
investment advisory services for the Capital Growth Portfolio, Phoenix
Investment Counsel, Inc. ("Phoenix") to provide investment advisory services for
the Balanced Portfolio, and Massachusetts Financial Serices Corporation ("MFS")
to provide investment advisory services for the Emerging Growth Portfolio.
Investment management fees are paid to Chubb Investment Advisory monthly at an
annual rate based on a percentage of the average daily net assets of each
Portfolio of Chubb America Fund, Inc. as shown below:
<TABLE>
<CAPTION>
WORLD GROWTH STOCK,
GOLD STOCK,
DOMESTIC GROWTH STOCK,
MONEY MARKET GROWTH AND INCOME, CAPITAL EMERGING
AVERAGE DAILY NET ASSETS AND BOND AND BALANCED GROWTH GROWTH
- ------------------------ ------------ ---------------------- ------- --------
<S> <C> <C> <C> <C>
First $200 Million....... .50% .75% 1.00% .80%
Next $1.1 Billion........ .45% .70% .95% .75%
Over $1.3 Billion........ .40% .65% .90% .70%
</TABLE>
The compensation of the Sub-Investment Managers is paid directly from the
investment management fees of Chubb Investment Advisory and is set forth in the
table below as an annual percentage of the average daily net assets of the
Portfolio managed:
<TABLE>
<CAPTION>
SUB-INVESTMENT MANAGER
------------------------------------------------------------------------
CHUBB ASSET
CHUBB ASSET FOR THE
FOR THE BOND AND
GROWTH AND MONEY MARKET VAN ECK
AVERAGE DAILY NET ASSETS INCOME PORTFOLIO JANUS PHOENIX TEMPLETON PORTFOLIOS ASSOCIATES PIONEER MFS
- ------------------------ ---------------- ----- ------- --------- ------------ ---------- ------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
First $200 Million...... .50% .75% .50% .50% .35% .50% .50% .50%
Next $1.1 Billion....... .45% .70% .45% .45% .30% .45% .45% .45%
Over $1.3 Billion....... .40% .65% .40% .40% .25% .40% .40% .40%
</TABLE>
The investment objectives of each Portfolio of Chubb America Fund, Inc. are
set forth below.
World Growth Stock Portfolio: to achieve long-term capital growth through a
policy of investing primarily in stocks of companies of any nation. A portion
of the Portfolio may also be invested in debt obligations of companies and
governments of any nation. Any income realized from such investments will be
incidental. Such companies will be those considered by the sub-investment
manager to be undervalued or which are well-managed and have good growth
potential.
Money Market Portfolio: to achieve the highest possible current income,
consistent with preservation of capital and maintenance of liquidity, by
investing primarily in short-term money market instruments other than
commercial paper. AN INVESTMENT IN THE MONEY MARKET PORTFOLIO IS NEITHER
INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT.
Gold Stock Portfolio: to realize long-term capital appreciation, while
retaining the option to take current income into account, by investing
primarily, and sometimes exclusively, in common stocks of gold mining
companies.
Bond Portfolio: to provide a stable level of income, consistent with limiting
risk to principal, by investing primarily in high quality corporate debt
securities and U.S. Government debt obligations.
Domestic Growth Stock Portfolio: to achieve reasonable income and growth of
capital by investing primarily in a diversified portfolio of equity securities
issued by companies organized in the U.S. and considered by the sub-investment
manager to be undervalued in light of the company's earning power and growth
potential.
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<PAGE>
Growth and Income Portfolio: to seek long-term growth of capital by investing
primarily in a wide range of equity issues that may offer capital appreciation
and, secondarily, to seek a reasonable level of current income.
Capital Growth Portfolio: to seek capital growth. Realization of income is not
a significant investment consideration and any income realized will be
incidental. The Capital Growth Portfolio will invest primarily in common
stocks.
Balanced Portfolio: to seek reasonable current income and long-term capital
growth, consistent with conservation of capital, by investing primarily in
common stocks and fixed income securities.
Emerging Growth Portfolio: to seek long-term growth of capital by investing
primarily in common stocks of small and medium-sized companies. THE PORTFOLIO
IS INTENDED FOR INVESTORS WHO UNDERSTAND AND ARE WILLING TO ACCEPT RISKS
ENTAILED IN SEEKING LONG-TERM GROWTH OF CAPITAL.
Chubb America Fund, Inc. may find it necessary to take action to assure that
the Policy continues to qualify as a life insurance policy under federal tax
laws. Chubb America Fund, Inc., for example, may alter the investment
objectives of any Portfolio or take other appropriate actions. See "OTHER
MATTERS--Additions, Deletions or Substitutions of Investments" and "FEDERAL TAX
MATTERS".
Templeton Variable Products Series Fund. Templeton Variable Products Series
Fund is an open-end, diversified management investment company organized under
the laws of Massachusetts. Templeton Variable Products Series Fund currently
consists of five separate series; however, only one of the series, the
Templeton International Fund, offers its shares to a corresponding division of
Separate Account B. Templeton Variable Products Series Fund offers its shares
solely to separate accounts of insurance companies, including companies not
affiliated with Chubb Colonial, as an investment vehicle for variable life
insurance policies and variable annuity contracts.
The investment manager of Templeton International Fund is Templeton Investment
Counsel, Inc. ("TICI"). TICI is an indirect wholly owned subsidiary of Franklin
Resources, Inc. ("Franklin"). Through its subsidiaries, Franklin is engaged in
various aspects of the financial services industry. As compensation for its
services, TICI is paid a fee which, during the most recent fiscal year,
represented .50% of the average daily net assets of the Templeton International
Fund.
The investment objective of the Templeton International Fund is set forth
below.
Templeton International Fund: to seek long-term capital growth through a
flexible policy of investing in stocks and debt obligations of companies and
governments outside the United States. Any income realized will be incidental.
Although the Templeton International Fund generally invests in common stock, it
may also invest in preferred stocks and certain debt securities such as
convertible bonds which are rated in any category by Standard & Poor's
Corporation or Moody's Investors Service, Inc. or which are unrated by any
rating agency.
Although Chubb Colonial does not currently foresee any disadvantages to the
policyowners arising out of variable life insurance separate accounts and
variable annuity separate accounts investing in the Templeton Variable Products
Series Funds simultaneously, there is a possibility that a material conflict
may arise between the interest of Separate Account B and one or more of the
other separate accounts investing in the Templeton Variable Products Series
Fund. The Trustees of the Templeton Variable Products Series Fund intend to
monitor events in order to identify any material conflicts and to determine
what action, if any, should be taken in response thereto. Material conflicts
could result from, for example, (i) changes in state insurance laws, (ii)
changes in Federal income tax laws, (iii) changes in the investment management
of any portfolio of Templeton Variable Products Series Fund, or (iv)
differences in voting instructions between those given by variable life
insurance policyowners and those given by variable annuity contract owners.
Fidelity Variable Insurance Products Fund and Fidelity Variable Insurance
Products Fund II. Fidelity Variable Insurance Products Fund ("Fidelity VIP")
and Fidelity Variable Insurance Products Fund II ("Fidelity VIPII") are open-
end, diversified management investment companies organized as Massachusetts
business trusts on November 13, 1981 and March 21, 1988, respectively. Fidelity
VIP currently consists of four separate series; however, only one of the
series, High Income Portfolio, offers its shares to a corresponding division of
Separate Account B. Fidelity VIPII currently consists of five separate series;
however, only two of the series, Contrafund Portfolio and Index 500 Portfolio,
offer their shares to corresponding divisions of Separate Account B. Fidelity
VIP and Fidelity VIPII offer their shares solely to separate accounts of
insurance companies, including companies not affiliated with Chubb Life, as
investment vehicles for variable life insurance policies and variable annuity
contracts.
Fidelity Management & Research Company ("FMR") is the investment manager of
Fidelity VIP and Fidelity VIPII. FMR is the management arm of Fidelity
Investments, a Massachusetts corporation established in 1946. FMR is a wholly-
owned subsidiary of FMR Corp. Through its subsidiaries, FMR is engaged in
various aspects of the Financial services industry. Each fund pays a management
fee to FMR for managing its investments and business affairs. Each fund's
management fee is calculated and paid to FMR every month. The fee for each fund
(excluding Money Market and Index 500 Portfolios) is calculated by adding a
group fee rate to an individual fund fee rate, and multiplying the result by
each fund's average net assets. The group fee rate is based on the average net
assets of all the mutual funds advised by FMR. This rate cannot rise above
0.52% for the Contrafund Portfolio and 0.37% for the High Income Portfolio, and
it drops as total assets under management increase. Index 500 Portfolio pays a
monthly management fee to FMR at the annual rate of 0.28% of the Fund's average
net assets.
11
<PAGE>
The investment objectives of each Portfolio of Fidelity VIP and Fidelity
VIPII in which Separate Account B invests are set forth below:
High Income Portfolio: seeks a high level of current income by investing
primarily in high yielding, lower-quality fixed income securities, while also
considering growth of capital.
Contrafund Portfolio: seeks long term capital appreciation.
Index 500 Portfolio: seeks investment results that correspond to the total
return of common stocks publicly traded in the United States, as represented by
the S&P 500.
Although Chubb Colonial does not currently foresee any disadvantages to its
policy and certificate owners arising out of variable life insurance separate
accounts and variable annuity separate accounts investing in the Fidelity VIP
and VIPII Funds simultaneously, there is a possibility that a material conflict
may arise between the interest of Separate Account B and one or more of the
other separate accounts investing in the Fidelity VIP and VIPII Funds. The
Trustees of the VIP and VIPII Funds intend to monitor events in order to
identify any material conflicts and to determine what action, if any, should be
taken in response thereto. Material conflicts could result from, for example,
(i) changes in state insurance laws, (ii) changes in Federal income tax laws,
(iii) changes in the investment management of any portfolio of Fidelity VIP and
VIPII Funds, or (iv) differences in voting instructions between those given by
variable life insurance policy and certificate owners and those given by
variable annuity contract owners.
There can be no assurance that any of the Portfolios will achieve its stated
objectives. The specialized nature of each Portfolio gives rise to significant
differences in the relative investment potential and market and financial risks
of each Portfolio. Policyowners should consider the unique features of each
Portfolio before investing in any Portfolio. For more detailed information
concerning each Portfolio, including a description of the investment risks,
reference is made to the prospectuses for the Funds which accompanies this
Prospectus, or the Statements of Additional Information for the Funds,
available on request.
Separate Account B will purchase shares of the Funds at net asset value in
connection with premium payments allocated to the divisions in accordance with
the policyowner's directions and will redeem shares of the Funds to process
transfers, policy loans, surrenders or withdrawals and generally to meet
contract obligations or make adjustments in reserves. The Funds will sell and
redeem its shares at net asset value as of the Date of Receipt by Separate
Account B of premium payments or notifications by a policyowner.
12
<PAGE>
THE POLICY
General. The Policy is designed to provide the policyowner with lifetime in-
surance protection and flexibility in connection with the amount and frequency
of premium payments and the level of life insurance proceeds payable under the
Policy. The policyowner is not required to pay scheduled premiums to keep the
Policy in force but may, subject to certain limitations, vary the frequency and
amount of premium payments. Moreover, subject to certain limitations, the Pol-
icy allows a policyowner to adjust the level of life insurance payable under
the Policy without having to purchase a new Policy by increasing or decreasing
the Specified Amount. Thus, as insurance needs or financial conditions change,
the policyowner has the flexibility to adjust life insurance proceeds and vary
the premium payments. Death benefits are payable under two options as described
in "POLICY BENEFITS AND RIGHTS--Death Benefits".
To purchase a Policy, a completed application must be submitted to Chubb
Colonial through the agent selling the Policy. Chubb Colonial will generally not
issue Policies to insure persons older than age 80. Applicants for insurance
must furnish satisfactory evidence of insurability. Distinctions between smokers
and nonsmokers are only made for Insureds age 15 and over. The minimum Specified
Amount for a Policy at issue is $25,000. Chubb Colonial reserves the right to
revise its rules from time to time to specify a different minimum Specified
Amount at issue. If the Specified Amount applied for plus all other insurance in
force which is underwritten by Chubb Colonial or its affiliates exceeds
$1,250,000, Chubb Colonial will reinsure all or a portion of the Policy.
Acceptance of an application or revocation of a Policy during the contestable
period is subject to Chubb Colonial's insurance underwriting rules and Chubb
Colonial may, in its sole discretion, reject any application or related premium
for any good reason or contest a Policy.
Payment of Premiums. Premiums must be paid to Chubb Colonial or through an
authorized agent of Chubb Colonial for forwarding to Chubb Colonial. In
addition, Chubb Colonial has instituted administrative procedures whereby
premium payments in response to billing notices are sent directly to Chubb
Colonial's bank. Unlike traditional insurance contracts, there is no fixed
schedule of premium payments on a Policy either as to the amount or the timing
of the payment. A policyowner may determine, within specified limits, his or her
own premium payment schedule. These limits will be set forth by Chubb Colonial
and will include a minimum initial premium payment sufficient to keep the policy
in force for three months and may also include limits on the total amount and
frequency of payments in each policy year. No premium payment may be less than
$25. In order to help the policyowner obtain the insurance benefits desired, a
Planned Periodic Premium and Premium Frequency will be stated in each Policy.
This premium will usually be based upon the policyowner's insurance needs, the
policyowner's financial abilities and the current financial climate, in general,
as well as on the Specified Amount of the Policy and the Insured's age, sex and
risk class. The policyowner is not required to pay such premiums and failure to
make any premium payment will not necessarily result in lapse of the Policy,
provided the Policy's cash value, less policy debt, if any, is sufficient to pay
monthly deductions. Conversely, adherence to the schedule of Planned Periodic
Premiums will not assure that the Policy will remain in force. See "THE POLICY--
Policy Lapse."
Premium Limitations. In no event can the total of all premiums paid, both
scheduled and unscheduled, exceed the current maximum premium limitations re-
quired by the Code. The premium limitations under the Policy are imposed in or-
der to comply with present requirements to obtain favorable federal income tax
treatment of the Policy and its death benefit. If at any time a premium is paid
which would result in total premiums exceeding the current maximum premium lim-
itation, Chubb Colonial will only accept that portion of the premium which will
make total premiums equal the maximum. Any part of the premium in excess of that
amount will be returned and no further premiums will be accepted until allowed
by the current maximum premium limitations required by the Code. Also, if, at
any time during the year, a premium has been paid which would result in the
Policy being deemed a modified endowment contract, Chubb Colonial will so notify
the policyowner and allow the policyowner to request a refund of the excess
premium, or other action, in order to avoid having the Policy be deemed a
modified endowment contract. A policyowner, however, may choose to have the
Policy be deemed a modified endowment contract, and, in that case, Chubb
Colonial will not refund the premiums. See "FEDERAL TAX MATTERS--Policy
Proceeds." Premium payments less than the minimum amount of $25 will be returned
to the policyowner.
Allocation of Premiums. Premium payments, net of the premium tax charge, plus
interest earned prior to the Allocation Date, will be allocated on the Alloca-
tion Date among the General Account and the divisions of Separate Account B in
accordance with the directions of the policyowner, as contained in the applica-
tion. Prior to the Allocation Date the initial net premium will be deposited in
Chubb Colonial's General Account. Any other premiums received prior to the
Allocation Date will also be deposited in the General Account. The minimum
percentage of any net premium payment allocated to any division or the General
Account is 5%. Allocation percentages must be in whole numbers only; no
fractional percentages will be accepted. The policyowner may change his or her
allocation of future
13
<PAGE>
premium payments among the General Account and the divisions of Separate Ac-
count B by written notice to Chubb Colonial or by telephone, provided that the
proper telephone authorization is on file with Chubb Colonial, without payment
of any fee or penalty. See "THE POLICY--Telephone Transfers, Loans and
Reallocations".
The allocation of each net premium payment to a division will be determined
first by multiplying the net premium payment by the fraction to be allocated to
each division as the policyowner directs to determine the portion to be
invested in the division. Each portion to be invested in each division is then
divided by the unit value of that particular division. The unit value of each
division will vary to reflect the investment performance of the applicable
underlying Portfolio shares. The unit value will be determined on each
valuation date by multiplying the net asset value of the shares of the
underlying Portfolio held by the division on the preceding valuation date by
the net investment factor for that division for the valuation period then
ended. The net investment factor for each of the divisions is equal to (i) the
asset value per share of the corresponding Portfolio at the end of the
preceding valuation period plus the per share amount of any investment income
and capital gains, realized or unrealized, credited to such assets in the
valuation period for which the net investment factor is being determined, less
capital losses, realized or unrealized, charged against such assets during such
valuation period and less any amount set aside by Chubb Colonial during the
period as a reserve for taxes attributable to the operation or maintenance of
each division, (ii) divided by the asset value per share of the corresponding
Portfolio at the end of the preceding valuation period and (iii) less a charge
not to exceed .0024657% on a daily basis (.90% on an annual basis) of the value
of the division to compensate Chubb Colonial for assumption of certain mortality
and expense risks. See "CALCULATION OF ACCUMULATION VALUE--Unit Values".
Applicants should refer to the prospectus for the Fund which accompanies this
Prospectus for a description of how the assets of each Portfolio are valued
since that determination directly affects the unit value of a division and,
therefore, the accumulation value of a Policy.
All valuations in connection with the Policy, e.g., with respect to
determining cash value in connection with policy loans or withdrawals, with
respect to determining accumulation value in connection with transfers or
payment of death benefits, and with respect to determining the value of a
division to be credited to a Policy with each net premium payment, will be made
on the Date of Receipt of the premium or the request for payment, loan,
withdrawal or transfer if such date is a valuation date; otherwise, such
determination will be made on the next succeeding day which is a valuation
date. The date of receipt of a premium payment sent directly to Chubb Colonial's
bank pursuant to a billing notice will be the date the payment is received at
the bank and the value of any division to which the payment is allocated will be
determined as of such date provided such date is a valuation date; otherwise,
such determination will be made on the next succeeding day which is a valuation
date.
Transfers. Accumulation value may be transferred between the General Account
and the divisions of Separate Account B and among the divisions of Separate
Account B. Transfer requests may be made in writing or by telephone with
appropriate telephone authorization on file with Chubb Colonial. See "THE
POLICY--Telephone Transfers, Loans and Reallocations". The total amount
transferred each time must be at least $250 unless a lesser amount constitutes
the entire accumulation value in the General Account or in a division.
Accumulation value transferred from one division or from the General Account
into more than one division, and/or into the General Account, counts as one
transfer. Similarly, transferring accumulation value from more than one
division, and/or the General Account, into one other division or the General
Account, counts as one transfer.
A transfer charge to cover administrative costs will be imposed each time
amounts are transferred and will be deducted on a pro-rata basis from the
division or divisions of Separate Account B or the General Account into which
the amount is transferred. However, no transfer charge will be imposed on the
transfer of the initial net premium payments, plus interest earned, from the
General Account to the divisions of Separate Account B on the allocation date
or on loan repayments. In addition, Chubb Colonial currently permits 12
transfers per policy year without imposing a transfer charge. The charge will be
the lesser of $25 or 10% of the amount transferred. Currently, a policyowner may
make up to 20 transfers per policy year.
As long as any portion of the Policy's accumulation value is allocated to a
division of Separate Account B, the Policy's accumulation value and cash value
will reflect the investment experience of the chosen division(s) of Separate
Account B. The death benefit may also reflect the experience of the chosen
division(s) of Separate Account B.
At any time the policyowner may transfer 100% of the Policy's accumulation
value to the General Account and elect to have all future premium payments
allocated to the General Account. While 100% of the Policy's accumulation value
and all future premium payments are allocated to the General Account, the
minimum period the Policy will be in force will be fixed and guaranteed. The
minimum period will depend on the amount of accumulation value, the Specified
Amount, the sex, the attained age, and rating class of the Insured. The minimum
period will decrease if the policyowner
14
<PAGE>
subsequently elects to increase the Specified Amount, elects to surrender the
Policy, or elects to make a withdrawal. The minimum period will increase if the
policyowner elects to decrease the Specified Amount, additional premium
payments are received, or Chubb Colonial credits a higher interest rate or
charges a lower cost of insurance rate than those guaranteed for the General
Account.
No transfer charge will be imposed for a transfer of all accumulation value in
Separate Account B to the General Account. However, any transfer from the
General Account to the division(s) of Separate Account B will be subject to the
transfer charge, unless it is one of the first 12 transfers in a policy year
and except for the transfer of the initial net premium payments, plus interest
earned, from the General Account and loan repayments.
Chubb Colonial reserves the right to refuse to accept or to place certain
restrictions on transfers made by third-party agents acting on behalf of
multiple policyowners or made pursuant to market timing services when Chubb
Colonial determines, in its sole discretion, that such transfers will be
detrimental to the Portfolios and the policyowners as a whole. Such transfers
may cause increased trading and transaction costs, disruption of planned
investment strategies, forced and unplanned portfolio turnover, and lost
opportunity costs, and may subject the Portfolio to large asset swings that
diminishes the Portfolio's ability to provide maximum investment return to all
policyowners.
A feature called Dollar Cost Averaging is available to policyowners under
which a policyowner deposits an amount, subject to a minimum of $3,000, in the
Money Market Division or the General Account and elects to have a specified
dollar amount (the "Periodic Transfer Amount") automatically transferred to one
or more of the divisions on a monthly, quarterly, or semi-annual basis. This
feature allows policyowners to systematically invest in the divisions at
various prices which may be higher or lower than the price a policyowner would
pay when investing the entire amount at one time and at one price. Each
Periodic Transfer Amount is subject to a minimum of $250. A minimum of 5% of
the Periodic Transfer Amount must be transferred to any specified division.
These amounts are subject to change at Chubb Colonial's discretion. If a
transfer would reduce accumulation value in the Money Market Division or the
General Account to less than the Periodic Transfer Amount, Chubb Colonial
reserves the right to include such remaining accumulation value in the amount
transferred. At the time a policyowners elects the Dollar Cost Averaging
feature, an election is made between Fixed Amount Dollar Cost Averaging or
Continuous Mode Dollar Cost Averaging.
Under Fixed Amount Dollar Cost Averaging, the feature will continue until the
Designated Amount has been transferred or the policyowner gives notification
of cancellation of the feature prior to transfer of the entire Designated
Amount. Once the Designated Amount has been transferred, a new Dollar Cost
Averaging election form must be completed if the Policyowner wishes to have
additional money dollar cost averaged. Under Continuous Mode Dollar Cost
Averaging, the feature will continue until the policyowner gives notification
of cancellation of the feature. If the policyowner elects Continuous Mode
Dollar Cost Averaging, any amounts deposited into the Repository Account, and
not just the Designated Amount, will be transferred. Dollar Cost Averaging is
currently available at no charge to policyowners. Although Chubb Colonial
reserves the right to assess a charge, no greater than cost and with 30 days
advance notice to policyowners, it has no present intention to do so.
An Automatic Portfolio Re-Balancing feature is also available to policyowners.
This feature provides a method for re-establishing fixed proportions between
various types of investments on a systematic basis. Under this feature, the
allocation between divisions and the General Account will be automatically re-
adjusted to the desired allocation, subject to a minimum of 5% per division or
General Account, on a quarterly, semi-annual or annual basis. Although Chubb
Colonial reserves the right to assess a charge no greater than cost and with 30
days advance notice to the policyowners for this feature, it has no present
intention to do so.
A policyowner may not elect to have Dollar Cost Averaging and Automatic
Portfolio Re-Balancing at the same time. Transfers and adjustments pursuant to
these features will occur on a Policy's monthly anniversary date in the month
in which the transaction is to take place or the next succeeding business day
if the monthly anniversary date falls on a holiday or a weekend. The applicable
authorization form must be on file at Chubb Colonial before either feature may
begin. Neither feature guarantees profits nor protects against losses. Transfers
under these features do not count towards the twelve free transfers or the
twenty transfers currently allowed per year. Chubb Colonial reserves the right
to modify the terms and conditions of these features upon 30 days advance notice
to policyowners.
Telephone Transfers, Loans and Reallocations. Policyowners and their
authorized representatives may request by telephone transfers of accumulation
value or reallocation of premiums (including allocation changes pursuant to
existing Dollar Cost Averaging and Automatic Portfolio Re-Balancing programs),
provided that the appropriate authorization
15
<PAGE>
form is on file with Chubb Colonial. Chubb Colonial may also, in its discretion,
permit loans to be made by telephone, provided that the proper authorization
form is on file with Chubb Colonial. Only the Policyowner may request loans by
telephone. Procedures have been established that are reasonably designed to
reduce the risk of unauthorized telephone transfers, loan requests or allocation
changes. These procedures include requiring personal identification information
at the time of such request for verification purposes, such as the policyowner's
social security number and date of birth. In addition, Chubb Colonial also tape
records calls and provides written confirmations to policyowners.
Policy Lapse. Failure to make a premium payment on a Policy will not
necessarily cause the Policy to lapse. The duration of a Policy depends upon
its cash value. The Policy will remain in force so long as the cash value, less
any outstanding policy debt, is sufficient to pay the monthly deduction. In the
event the cash value, less any outstanding policy debt, is insufficient to pay
the monthly deduction, the policyowner will be given a sixty-one day period
("grace period") within which to make a premium payment to avoid lapse. The
premium required to avoid lapse must be sufficient in amount, after the
deduction of the premium tax charge, to cover the monthly deductions for at
least three policy months. This required premium will be set forth in a written
notice which Chubb Colonial will send to the policyowner at the beginning of the
grace period. The Policy will continue in force through the grace period, but
if no payment is forthcoming, the Policy will terminate without value at the
end of the grace period. If the Insured under the Policy dies during the grace
period, the death benefit payable under the Policy will be reduced by the
amount of the monthly deduction due and unpaid and the amount of any
outstanding policy debt. In addition, if the cash value of the Policy at any
time should decrease so the aggregate amount of an outstanding policy debt
secured by the Policy exceeds the cash value shown in the Policy and an
additional payment is not made within sixty-one days of notification by
Chubb Colonial, the Policy will lapse.
Reinstatement. If the Policy lapses, the policyowner may reinstate the Policy.
The terms of the original contract will apply upon reinstatement. The
accumulation value, before payment of the required reinstatement premium, will
equal the accumulation value on the date of termination. The policy year on
reinstatement will be measured from the policy date. An application for
reinstatement may be made any time within five years of lapse, but satisfactory
proof of insurability and payment of a reinstatement premium is required. The
reinstatement premium, after deduction of the premium tax charge, must be
sufficient to cover monthly deductions for three policy months following the
effective date of reinstatement. If a loan was outstanding at the time of
lapse, Chubb Colonial will require, at the election of the policyowner,
repayment or reinstatement of the loan before permitting reinstatement of the
Policy. The effective date will be the date of approval of the reinstatement
application.
Policy "Free Look". The policyowner has a limited right to return a Policy for
cancellation and a full refund of all premiums paid. Chubb Colonial will cancel
the Policy if it is returned by mail or personal delivery to Chubb Colonial or
to the agent who sold the Policy, within 20 days after the delivery of the
Policy to the policyowner, within 45 days of the date of the execution of the
application for insurance, or within 20 days after mailing or personal delivery
of a Notice of the Right of Withdrawal, whichever is later. Chubb Colonial will
return to the policyowner within seven days all payments received on the Policy.
Prior to the allocation date the initial net premium will be deposited in Chubb
Colonial's General Account; Chubb Colonial will retain any interest earned if
the "free look" right is exercised.
CHARGES AND DEDUCTIONS
Premium Charges. Upon receipt of each premium payment and before allocation of
the payment among the General Account and divisions of Separate Account B,
Chubb Colonial will deduct a premium tax charge of 2.0% to compensate Chubb
Colonial for state premium, franchise and other local taxes imposed by New York
and local jurisdictions. The actual taxes imposed on Chubb Colonial may fall
between 1.7% and 2.5% of premiums received. As a result, the 2.0% charge may at
times be higher or lower than the actual tax incurred by Chubb Colonial. Chubb
Colonial reserves the right to increase this charge to policyowners up to a
maximum of 2.5%. Chubb Colonial does not expect to receive a profit as a result
of this charge.
Monthly Deduction. On the first day of each policy month beginning on the
policy date, Chubb Colonial will deduct from the accumulation value of a Policy
an amount to cover certain charges and expenses incurred in connection with the
Policy. The monthly deduction is intended to compensate Chubb Colonial for
underwriting and start-up expenses incurred in connection with the issuance of a
Policy, certain administrative expenses, the cost of insurance for the Policy
and any optional benefits added by rider. The amount deducted will be deducted
pro-rata from each of the divisions and the General Account.
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<PAGE>
The amount of the monthly deduction is equal to (i) the cost of insurance for
the Policy, as described below, and the cost of additional benefits provided by
rider, plus (ii) a monthly administrative charge of $6.00. The monthly
administrative charge may not be increased.
The cost of insurance for the Insured is determined on a monthly basis, and is
determined separately for the initial Specified Amount and each subsequent
increase in the Specified Amount. The monthly current cost of insurance rate is
based on the sex, issue age, policy year, rating class of the Insured, and the
Specified Amount of the Policy. If we assume two Insureds differ only with
regard to one of the above bases, the effect of each of these bases on their
monthly cost of insurance rates would be as follows:
Sex: The cost of insurance rates for males will be greater than or equal
to those for females.
Issue Age: The cost of insurance rate for the younger Insured will be
less than or equal to that for the older Insured.
Policy Year: The current cost of insurance rate will increase as the
policy year increases. For two Insureds with the same sex, rating class,
and attained age the cost of insurance rate for the Insured with the
younger issue age will never exceed, and in some cases will be less than
that for the Insured with the older issue age.
Rating Class: The cost of insurance rates for nonsmokers will be less
than or equal to those for smokers. Cost of insurance rates may also differ
due to the Insured's medical condition, occupation, or avocation.
Specified Amount: The current cost of insurance rates will vary by
Specified Amount, with different rates applying to Specified Amounts under
$100,000, between $100,000 and $249,999, between $250,000 and $999,999 and
$1,000,000 and over. Current cost of insurance rates are highest for
Specified Amounts under $100,000, decreasing for each successive Specified
Amount range as noted above.
The cost of insurance is calculated as (i) multiplied by the result of (ii)
minus (iii) where:
(i) is the cost of insurance rate as described in the Cost of Insurance
Rates provision contained in the Policy.
(ii) is the death benefit at the beginning of the policy month divided by
1.0036748, to arrive at the proper values for the beginning of the month
assuming the guaranteed interest rate of 4.5% that is applicable to the
General Account portion of the Policy; and
(iii) is the accumulation value at the beginning of the policy month.
If the corridor percentage is applicable, the death benefit used in the
foregoing calculation will reflect the corridor percentage.
A guaranteed monthly accumulation value adjustment will be calculated on the
first policy anniversary for the second policy year, and on each policy
anniversary thereafter for each respective policy year that follows. The monthly
accumulation value adjustment will not apply to the first policy year. The
adjustment will be an amount that is added to the accumulation value for each
month of the policy year during which the adjustment is in effect. The
adjustment results from a reduction in Chubb Colonial's margin for profit and
expenses. The adjustment is calculated as (i) multiplied by the result of (ii)
plus (iii) minus (iv), but not less than zero, where:
(i) is .000375;
(ii) is the sum of the Policy's accumulation value in each division of
Separate Account B at the beginning of the policy year;
(iii) is the outstanding Type B loan balance at the beginning of the
policy year, and;
(iv) is the Guideline Single Premium at issue, under Section 7702 of the
Internal Revenue Code of 1986, as amended, entitled "Life Insurance
Contract Defined", increased on a pro rata basis for any increase in
Specified Amount.
The adjustment will be allocated among the general account and divisions of
Separate Account B using the same percentages used to allocate net premiums.
The monthly cost of the insurance rate will be determined by Chubb Colonial
based upon expectations as to future mortality experience, but can never exceed
the rates shown in the table of Monthly Guaranteed Cost of Insurance Rates set
forth in the Policy. Such guaranteed maximum rates are based on the
Commissioner's 1980 Standard Ordinary Mortality Table.
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<PAGE>
Risk Charge. Chubb Colonial will also assess a charge on a daily basis against
each division of Separate Account B equal to .90% (on an annual basis) of the
value of the division to compensate Chubb Colonial for its assumption of certain
mortality and expense risks in connection with the Policy. Specifically, Chubb
Colonial bears the risk that the total amount of death benefit payable under the
Policy will be greater than anticipated and Chubb Colonial also assumes the risk
that the actual cost incurred by it to administer the Policy will not be covered
by charges assessed under the Policy.
Surrender Charge. Upon surrender or withdrawal, Chubb Colonial will assess a
surrender charge. The surrender charge for the initial Specified Amount is
determined by multiplying a surrender factor by the lesser of (1) the premiums
actually received in policy year one; or (2) the "Guideline Annual Premium" as
defined in the rules and regulations under the 1940 Act. The surrender factor
depends on the length of time the policy has been in force, as follows:
<TABLE>
<CAPTION>
POLICY YEAR SURRENDER FACTOR
----------- ----------------
<S> <C>
1-5 .30
6 .25
7 .20
8 .15
9 .10
10 .05
11 and after 0
</TABLE>
Paying less premium in policy year one generally will have the effect of
reducing the surrender charge. However, depending on investment experience,
paying less premium in policy year one may result in an increase in cost of
insurance charges, a reduction in accumulation value and an increased risk that
the Policy will lapse.
An additional surrender charge will be assessed for any increase in the
Specified Amount, other than an increase caused by a change from death benefit
Option I to death benefit Option II. The additional surrender charge is
determined by multiplying a surrender factor by the lesser of (1) or (2),
where:
(1) is A times B divided by C, where:
A is the amount of the increase in the Specified Amount
B is the sum of the cash value just prior to the increase in the
Specified Amount and the total premiums received in the twelve months
just following the increase in the Specified Amount
C is the Specified Amount in effect after the increase in the
Specified Amount
(2) is the "Guideline Annual Premium" for the increase at the attained
age of the Insured on the effective date of the increase in the Specified
Amount.
The surrender factor depends on the length of time the increase has been in
force, as follows:
<TABLE>
<CAPTION>
INCREASE YEAR SURRENDER FACTOR
------------- ----------------
<S> <C>
1-5 .15
6 .125
7 .10
8 .075
9 .05
10 .025
11 and after 0
</TABLE>
The surrender charge in effect at any time is the sum of the surrender charge
for the initial Specified Amount plus the surrender charge for any increase in
the Specified Amount. If the Specified Amount is decreased, the surrender
charge will not decrease.
For a withdrawal, the charge will be proportionately the same as for
surrenders. The charge will be calculated by dividing (a) by (b) and
multiplying the result by (c) where:
(a) is the amount of the cash value withdrawn
(b) is the cash value; and
(c) is the amount of the surrender charge on a surrender.
The surrender charge helps to compensate Chubb Colonial for the cost of selling
the Policy. The cost includes advertising and the printing of the Prospectus and
sales literature. Also, Chubb Colonial reimburses Chubb Securities Corporation
for all commissions Chubb Securities Corporation pays to agents. Chubb Colonial
expects to recover total sales expenses of the Policy
18
<PAGE>
over the life of the Policy. To the extent sales expenses in any one policy
year are not recovered by the sales charge, Chubb Colonial will cover such
expenses from its surplus, which may include profits, if any, from the mortality
and expense risk charge.
Administrative Fees. An administrative fee equal to the lesser of $25 or 10%
of the amount of the transfer is imposed for each transfer among the divisions
of Separate Account B or the General Account, after the first 12 transfers in a
policy year and except for the transfer of the initial net premium payments,
plus interest, from the General Account on the allocation date and loan
repayments. For withdrawals, an administrative fee equal to the lesser of $25 or
2% of the amount withdrawn will be charged. After the policy date, a policyowner
may request illustrations of benefits and values. Such illustrations are
currently available to policyowners at no charge. Although Chubb Life reserves
the right to assess a charge, no greater than $25 and with advance notice to
policyowners, it has no present intention to do so. All administrative fees,
including those which are part of the monthly deduction, are no greater than the
anticipated expenses of providing such services.
Other Charges. Chubb Colonial also reserves the right to charge the assets of
each division to provide for any income taxes or other taxes payable by Chubb
Colonial on the assets attributable to that division. An investment advisory fee
is also imposed against the assets of each Portfolio for services provided by
the Fund's investment manager and sub-investment managers.
POLICY BENEFITS AND RIGHTS
Death Benefits. So long as it remains in force, the Policy provides for the
payment of life insurance proceeds upon the death of the Insured. Proceeds will
be paid to a named beneficiary or contingent beneficiary. One or more
beneficiaries or contingent beneficiaries may be named. Life insurance proceeds
may be paid in a lump sum or under an optional payment plan. (See "Settlement
Options" below.) Proceeds of the Policy will be reduced by any outstanding
policy debt and any due and unpaid charges and increased by any benefits added
by rider. Proceeds that are payable in a lump sum at the death of the Insured
will be increased to include interest as required by applicable state law.
Proceeds will ordinarily be paid within seven days after Chubb Colonial receives
due proof of death. Also see "Optional Insurance Benefits--Terminal Illness
Accelerated Benefit Rider."
Policyowners designate in the initial application one of two death benefit
options offered under the Policy. The amount of life insurance proceeds payable
under a Policy will depend upon the option in effect at the time of the
Insured's death. Option I emphasizes the impact of investment experience on
accumulation value rather than insurance coverage because the Specified Amount
and the death benefit, generally, remain stable. Under Option I, as
accumulation value increases and the death benefit does not increase, the
amount at risk decreases. Thus, the cost of insurance charges are imposed on a
decreasing amount. Option II emphasizes insurance coverage because favorable
investment experience adds to the accumulation value that provides an addition
to the total death benefit. Under Option II, favorable investment experience
does not reduce the amount at risk upon which cost of insurance charges are
based.
Under Option I, life insurance proceeds will be equal to the greater of the
Specified Amount, or the accumulation value of the Policy at the date of death
multiplied by the corridor percentage, as described below. Under Option II,
life insurance proceeds will be the Specified Amount plus the accumulation
value of the Policy on the date of death. Under Option II, the death benefit
can never be less than the accumulation value on the date of death multiplied
by the corridor percentage.
The corridor percentage depends upon the attained age of the Insured on the
date of death. The corridor percentage for each age is set forth in the
following table:
<TABLE>
<CAPTION>
ATTAINED CORRIDOR ATTAINED CORRIDOR ATTAINED CORRIDOR ATTAINED CORRIDOR
AGE PERCENTAGE AGE PERCENTAGE AGE PERCENTAGE AGE PERCENTAGE
-------- ---------- -------- ---------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
40 &
below 250% 52 171% 64 122% 91 104%
41 243 53 164 65 120 92 103
42 236 54 157 66 119 93 102
43 229 55 150 67 118 94 101
44 222 56 146 68 117 95 100
45 215 57 142 69 116
46 209 58 138 70 115
47 203 59 134 71 113
48 197 60 130 72 111
49 191 61 128 73 109
50 185 62 126 74 107
51 178 63 124 75-90 105
</TABLE>
19
<PAGE>
The death benefit option in effect may be changed by sending Chubb Colonial a
written request for change. If the death benefit option is changed from Option
II to Option 1, the Specified Amount will be increased by the Policy's
accumulation value; the effective date of the change will be the date of Chubb
Colonial's receipt of such request for change. Conversely, if the death benefit
option is changed from Option I to Option II, the Specified Amount will be
decreased by the Policy's accumulation value; the effective date of the change
will be the date of Chubb Colonial's approval of such request for change.
Evidence of insurability satisfactory to Chubb Colonial will be required on a
change from Option I to Option II. A change in the benefit option may not be
made if it would result in a Specified Amount which is less than the minimum
Specified Amount of $25,000. A change in benefit options will affect the cost of
insurance.
After a Policy has been in force for one year, the policyowner, under
attained age 85, may adjust the existing insurance coverage by increasing or
decreasing the Specified Amount. The increase or decrease must be at least
$25,000. To make a change, the policyowner must send a written request and the
Policy to Chubb Colonial. Any change in the Specified Amount will affect a
policyowner's cost of insurance charge. An increase in the Specified Amount
will affect the determination of the amount available for a Type A loan;
decreases in the Specified Amount will not have any such effect. Any increase
in the Specified Amount will become effective on the monthly anniversary date
after the Date of Receipt for the request. Any decrease in Specified Amount
will first apply to coverage provided by the most recent Specified Amount
increase, then to the next most recent increases successively and finally to
the coverage under the original application. By applying decreases in this
manner, savings, generally, may be realized by a policyowner since additional
costs and limitations associated with increases in Specified Amounts would be
eliminated first. To apply for an increase in the Specified Amount, a
supplemental application must be completed and evidence satisfactory to
Chubb Colonial that the Insured is insurable must be submitted. Any approved
increase in the Specified Amount will become effective on the date shown in the
Supplemental Policy Specifications Page. Such increase will not become
effective, however, if the Policy's cash value is insufficient to cover the
deduction for the cost of the increased insurance for the policy month following
the increase. Such an increase may require a payment or future increased Planned
Periodic Premiums. Policyowners should consult their insurance advisers
regarding the availability of the Primary Insured Term Rider described below as
an alternative way of increasing coverage. See "CHARGES AND DEDUCTIONS."
Guaranteed Death Benefit. The policyowner may add a Guaranteed Death Benefit
Rider to the Policy under which the death benefit is guaranteed to never be
less than the Specified Amount provided that a cumulative minimum premium
requirement is met. The premium requirement is based on issue age, sex, smoking
status, underwriting class, Specified Amount and death benefit option. If the
Specified Amount is increased, an additional premium, based on attained age,
will be required for such increase. There is a monthly charge for this rider.
See "Optional Insurance Benefits."
Combined Requests. Policyowners may combine requests for changes in the
Specified Amount and the death benefit option and requests for withdrawals. The
requirements and limitations that apply to each change will apply to the
combined transactions, including any required evidence of insurability,
Specified Amount and premium limitations, effectiveness on the monthly
anniversary date following the Date of Receipt of the request, and the
sufficiency of cash value to keep the Policy in force for the month following
the transaction.
The effect of a combined transaction on the cost of insurance, the amount of
the death benefit proceeds and the premium limitations will be the net result
of such effects for each such transaction considered separately. For example,
combining a request for a withdrawal under Option I with a request for an
increase in the Specified Amount will result in a greater amount at risk, an
increase in the cost of insurance and a requirement of evidence of
insurability. Policyowners should consider the net result of a combined
transaction in light of insurance needs, financial circumstances and tax
consequences.
Maturity of the Policy. As long as the Policy remains in force, Chubb Colonial
will pay the Policy's cash value, less outstanding policy debt, if any, on the
maturity date. Benefits at maturity may be paid in a lump sum or under an
optional payment plan. The maturity date is the date shown in the Policy. To
change the maturity date, a written request and the Policy must be sent to Chubb
Colonial at its service center. The Date of Receipt for any request must be
before the maturity date then in effect. The requested maturity date must be (i)
on a policy anniversary, (ii) at least one year from the Date of Receipt of the
request, (iii) after the tenth policy year and (iv) on or before the policy
anniversary nearest to the Insured's 95th birthday.
Optional Insurance Benefits. Subject to certain requirements, one or more of
the following optional insurance benefits may be added to a Policy by rider.
More detailed information concerning such riders may be obtained from the agent
selling the Policy. Additional riders, developed after the effective date of
this Prospectus, may also be available as optional insurance benefits to the
Policy. The agent selling the Policy should be consulted regarding the
availability of
20
<PAGE>
any such additional riders. The cost of any optional insurance benefits will be
deducted as part of the monthly deduction. See "CHARGES AND DEDUCTIONS."
(a) Children's Term Insurance Rider. This benefit provides increments of
level term insurance on the Insured's children, as defined in the rider. Under
the terms of this rider, Chubb Colonial will pay the death benefit set forth in
the rider to the proper beneficiary upon receipt of proof of death of the
insured child. Upon receipt of proof of death of the Insured, the Children's
Term Insurance Rider will continue in force under its terms without additional
monthly charges.
(b) Guaranteed Insurability Rider. This benefit provides that the Insured can
purchase additional insurance at certain future dates without evidence of
insurability. Under the terms of the rider, the Insured may, without evidence
of insurability, increase the Specified Amount of the Policy on an option date,
as defined in the rider.
(c) Accidental Death Benefit Rider. This benefit provides additional
insurance if the Insured's death results from an accident, as defined in the
rider.
(d) Exchange of Insured Rider. This benefit provides that the Policy may be
exchanged for a reissued policy on the life of a substitute insured, subject to
the conditions stated in the rider. See "FEDERAL TAX MATTERS."
(e) Terminal Illness Accelerated Benefit Rider. This benefit advances up to
50% of a policy's eligible death benefit, subject to a $250,000 maximum per
insured, if it is medically determined that the insured is terminally ill and
has a life expectancy of six months or less, as defined in the rider. Upon the
payment of the accelerated benefit payment, the amount of the death benefit,
the Specified Amount, the cash value and the accumulation value are reduced by
the same ratio as the requested portion of the death benefit bears to the
original death benefit. Such reduction will be allocated among the General
Account and the divisions of Separate Account B on a pro rata basis. While this
benefit is offered at no additional premium cost or surrender charge, an
actuarial discount as described in the rider, which reflects the early payment
of amounts held under the Policy, will be deducted from the requested portion
of the death benefit. In addition, Chubb Colonial imposes an administrative
expense charge not to exceed the lesser of the actual cost of administering the
exercise of the rider or $300. Chubb Colonial will deduct from the requested
portion of the death benefit a prorated portion of any outstanding policy loans
and any premiums which are unpaid within the grace period. Cost of insurance
charges are adjusted to reflect the reduction in the death benefit. Future
charges under the Policy will depend on whether a Waiver of Premium Disability
Rider is in force. The addition of this Rider, or receipt of benefits under it,
may result in certain tax consequences to a Policyowner. See "FEDERAL TAX
MATTERS."
(f) Other Insured Term Rider. This benefit provides increments of level term
insurance on the life of an insured other than the Insured under the Policy.
(g) Primary Insured Term Rider. This benefit provides increments of level
term insurance on the life of the Insured under the terms set forth in the
rider. See "FEDERAL TAX MATTERS".
(h) Waiver of Specified Premium Rider. This benefit provides for the payment
by Chubb Colonial of a specified monthly premium into the Policy while the
Insured is totally disabled, as defined in the rider; the minimum monthly
benefit will be at least enough to maintain the base policy and all
supplementary coverages in force.
(i) Guaranteed Death Benefit Rider. This benefit guarantees that the Policy
will stay in force with a death benefit equal to the Specified Amount, even if
the cash value less policy debt is not sufficient to pay the monthly deduction,
provided that cumulative premiums paid, less loans and withdrawals, are greater
than or equal to the guaranteed death benefit premium multiplied by the number
of months the policy has been in force. This cumulative premium requirement
must be met at all times for the rider to stay in force. A monthly charge of
$.01 per $1,000 of Specified Amount will be deducted from the Policy's
accumulation value.
(j) Automatic Increase Rider. This rider allows for scheduled annual
increases in Specified Amount of from 1% to 7%, subject to certain limitations
set forth in the rider.
Settlement Options. In addition to a lump sum payment of benefits under the
Policy, any proceeds to be paid under the Policy may be paid in any of four
methods. A settlement option may be designated by notifying Chubb Colonial in
writing. A lump sum payment of proceeds under the Policy will be made if a
settlement option is not designated. Any amount left with Chubb Colonial for
payment under an optional payment plan will be transferred to the account of the
beneficiary in
21
<PAGE>
the General Account on the date Chubb Colonial receives written instructions.
During the life of the Insured, the policyowner may select a plan. If a payment
plan has not been chosen at the Insured's death, a beneficiary can choose a
plan. If a beneficiary is changed, the payment plan selection will no longer be
in effect unless the policyowner requests that it continue. An option may be
elected only if the amount of the proceeds is $2,000 or more. Chubb Colonial
reserves the right to change the interval of payments to 3, 6 or 12 months, if
necessary, to increase the guaranteed payments to at least $20 each.
OPTION A.
Installments of a specified amount. Payments of an agreed amount to be made
each month until the proceeds and interest are exhausted.
OPTION B.
Installments for a specified period. Payments to be made each month for an
agreed number of years.
OPTION C.
Life income. Payments to be made each month for the lifetime of the payee.
It is guaranteed that payments will be made for a minimum of 10, 15 or 20
years, as agreed upon. No election will default to payments made for 20 years.
Where there is a payment of the same amount at some ages for different periods
certain, it will be assumed that the longest period certain which could have
been elected for such age and amount was the period certain actually chosen.
OPTION D.
Interest. Payment of interest on the proceeds held by Chubb Colonial
calculated at the compound rate of 3% per year. Interest payments will be made
at 12, 6, 3 or 1 month intervals, as agreed upon.
The interest rate for Options A, B, and D will not be less than 3% per year.
The interest rate for Option C will not be less than 2 1/2% per year. Interest
in addition to that stated may be paid or credited from time to time under any
option, but only in the sole discretion of Chubb Colonial.
Unless otherwise stated in the election of an option, the payee of policy
benefits shall have the right to receive the withdrawal value under that
option. For Options A and D, the withdrawal value shall be any unpaid balance
of proceeds plus accrued interest. For Option B, the withdrawal value shall be
the commuted value of the remaining payments. Such value will be calculated on
the same basis as the original payments. For Option C, the withdrawal value
will be the commuted value of the remaining payments. Such value will be
calculated on the same basis as the original payments. To receive this value,
the payee must submit evidence of insurability acceptable to Chubb Colonial.
Otherwise, the withdrawal value shall be the commuted value of any remaining
guaranteed payments. If the payee should be alive at the end of the guaranteed
period, the payment will be resumed on that date. The payment will then
continue for the lifetime of the payee.
If a payee of policy benefits dies before the proceeds are exhausted or the
prescribed payments made, a final payment will be made in one sum to the
estate of the last surviving payee. The amount to be paid will be calculated
as described for the applicable option in the Withdrawal Value provision of
the Policy.
CALCULATION OF ACCUMULATION VALUE
The Policy provides for an accumulation value, which will be determined on a
daily basis. Accumulation value is the sum of the values in the divisions of
Separate Account B plus the value in the General Account. The Policy's
accumulation value in the divisions of Separate Account B is calculated by
units and unit values under the Policies, as described below. The Policy's
accumulation value will reflect a number of factors, including the investment
experience of the divisions of Separate Account B that are invested in the
Portfolios, any additional net premiums paid, any withdrawals, any policy
loans, and any charges assessed in connection with the Policy. Accumulation
values in Separate Account B are not guaranteed as to dollar amount.
On the allocation date, the accumulation value in Separate Account B is the
initial premium payments, reduced by the premium tax charge, plus interest
earned prior to the allocation date, and less the monthly deduction for the
first policy month. On the allocation date, the initial number of units
credited to Separate Account B for the Policy will be established. At the end
of each valuation period thereafter, the accumulation value in a division of
Separate Account B is (i) plus (ii) plus (iii) minus (iv) minus (v) where:
(i) is the accumulation value in the division on the preceding valuation
date multiplied by the net investment factor, as described below, for the
current valuation period,
22
<PAGE>
(ii) is any net premium received during the current valuation period
which is allocated to the division,
(iii) is all accumulation values transferred to the division from another
division or the General Account during the current valuation period,
(iv) is all accumulation values transferred from the division to another
division or the General Account and accumulation values transferred to
secure a policy debt during the current valuation period, and
(v) is all withdrawals from the division during the current valuation
period.
In addition, whenever a valuation period includes the monthly anniversary
date, the accumulation value at the end of such period is reduced by the
portion of the monthly deduction allocated to the division.
The Policy's total accumulation value in Separate Account B equals the sum of
the Policy's accumulation value in each divison thereof.
Unit Values. Units are credited to a policyowner upon allocation of net
premiums to a division. Each net premium payment allocated to a division will
increase the number of units in that division. Both full and fractional units
are credited. The number of units and fractional units is determined by
dividing the net premium payment by the unit value of the division to which the
payment has been allocated. The unit value of each division is determined on
each valuation date. The number of units credited will not change because of
subsequent changes in unit value. The dollar value of each division's units
will vary depending upon the investment performance of the corresponding
Portfolio of the Fund.
Certain transactions affect the number of units in a division under a Policy.
Loans, surrenders and withdrawals, withdrawal and transfer fees and charges,
the surrender charge, and monthly deductions involve the redemption of units
and will decrease the number of units. Transfers of accumulation value among
divisions will reduce or increase the number of units in a division, as
appropriate.
The unit value of a division on any valuation date is calculated by
multiplying (1) by (2) where:
(1) is the division's unit value on the previous valuation date; and
(2) is the net investment factor for the valuation period then ended.
The unit value of each division's units on any day other than a valuation
date is the unit value as of the next valuation date and is used for the
purpose of processing transactions.
Net Investment Factor. The net investment factor measures the investment
experience of each division of Separate Account B and is used to determine
changes in unit value from one valuation period to the next valuation period.
The net investment factor for a valuation period is (i) divided by (ii) minus
(iii) where:
(i) is (a) the value of the assets of the division at the end of the
preceding valuation period, plus (b) the investment income and capital
gains, realized or unrealized, credited to the assets of the division
during the valuation period for which the net investment factor is being
determined, minus (c) capital losses, realized or unrealized, charged
against those assets during the valuation period, minus (d) any amount
charged against the division for taxes or any amount set aside during the
valuation period by Chubb Colonial to provide for taxes attributable to the
operation or maintenance of that division, and
(ii) is the value of the assets of the division at the end of the
preceding valuation period, and
(iii) is a charge no greater than .0024657% on a daily basis. This
corresponds to .90% on an annual basis for mortality and expense risks.
CASH VALUE BENEFITS
So long as it remains in force, the Policy provides for certain benefits
prior to the maturity date. Subject to certain limitations, the policyowner may
at any time obtain cash value by surrendering the Policy or making withdrawals
from the Policy. The cash value equals the accumulation value less any surren-
der charge. In addition, the policyowner has certain policy loan privileges un-
der the Policy.
Surrender Privileges. As long as the Policy is in force, a policyowner may
surrender the Policy or make a withdrawal from the Policy at any time by send-
ing a written request to Chubb Colonial. See "FEDERAL TAX MATTERS--Policy
Proceeds."
23
<PAGE>
The surrender value of the Policy equals the cash value less any outstanding
policy debt. The surrender value will be determined at the end of the valuation
period during which the request for a surrender or withdrawal is received. Pro-
ceeds will generally be paid within seven days of the Date of Receipt of a re-
quest for surrender or withdrawal.
The amount payable upon surrender of the Policy is the surrender value at the
end of the valuation period during which the request is received. The surrender
value may be paid in a lump sum, within seven days of the Date of Receipt of
the request, or under one of the optional payment plans specified in the Poli-
cy. See "POLICY BENEFITS AND RIGHTS--Settlement Options."
A policyowner can obtain a portion of the Policy's cash value by withdrawal
of cash value from the Policy. A withdrawal from a Policy is subject to the
following conditions:
A. The amount withdrawn may not exceed the cash value less any
outstanding debt.
B. The minimum amount that may be withdrawn is $500.
C. A charge equal to the lesser of $25 or 2% of the amount of the
withdrawal will be deducted from the amount of each withdrawal.
Withdrawals generally will affect the Policy's accumulation value, cash value
and the life insurance proceeds payable under the Policy. The Policy's cash
value will be reduced by the amount of the withdrawal. The Policy's accumula-
tion value will be reduced by the amount of the withdrawal plus a pro-rata sur-
render charge. Life insurance proceeds payable under the Policy will generally
be reduced by the amount of the withdrawal plus a pro-rata surrender charge,
unless the withdrawal is combined with a request to maintain or increase the
Specified Amount. See "POLICY BENEFITS AND RIGHTS--Combined Requests."
Under Option I, which provides for life insurance proceeds equal to the
greater of the Specified Amount or the accumulation value of the Policy at the
date of death multiplied by the corridor percentage provided by the Code, the
Specified Amount will be reduced by the amount of the withdrawal plus the pro-
rata surrender charge. The Specified Amount remaining after a withdrawal may
not be less than $10,000. As a result, Chubb Colonial will not effectuate any
withdrawal that would reduce the Specified Amount below this minimum. If
increases in Specified Amount previously have occurred, a withdrawal will first
reduce the Specified Amount of the most recent increase, then the most recent
increases successively, then the coverage under the original application. If the
life insurance proceeds payable under either death benefit option, both before
and after the withdrawal, is the accumulation value multiplied by the corridor
percentage, a withdrawal generally will result in a reduction in life insurance
proceeds equal to the amount paid upon withdrawal, multiplied by the corridor
percentage then in effect.
Under Option II, which provides for life insurance proceeds equal to the
Specified Amount plus accumulation value, a reduction in accumulation value as
a result of a withdrawal will typically result in a dollar per dollar reduction
in the life insurance proceeds payable under the Policy.
A policyowner may allocate a withdrawal among the General Account and the di-
visions of Separate Account B. If no such allocation is made, a withdrawal will
be allocated among the General Account and the divisions of Separate Account B
in the same proportion that the accumulation value in the General Account, less
any policy debt, and the accumulation value in each division bears to the total
accumulation value of the Policy, less any policy debt, on the date of with-
drawal. See "FEDERAL TAX MATTERS--Policy Proceeds."
Policy Loans. So long as the Policy remains in force, a policyowner may
borrow money from Chubb Colonial at any time after the first policy anniversary
using the Policy as the only security for the loan. Loans have priority over the
claims of any assignee or any other person. Generally, the maximum loan amount
is 90% of the cash value at the end of the valuation period during which the
loan request is received. The maximum amount which may be borrowed at any given
time is the maximum loan amount reduced by any outstanding policy debt.
Proceeds of policy loans ordinarily will be disbursed within seven days from
the Date of Receipt of a request for a loan by Chubb Colonial, although payments
may be postponed under certain circumstances. See "OTHER MATTERS--Postponement
of Payments". Chubb Colonial may, in its discretion, permit loans to be made by
telephone if the proper authorization form is on file with Chubb Colonial. See
"THE POLICY--Telephone Transfers, Loans and Reallocations". So long as the
Policy remains in force, the loan may be repaid in whole or in part without
penalty at any time while the Insured is living.
24
<PAGE>
When a policy loan is made, a portion of the Policy's accumulation value
sufficient to secure the loan will be transferred to the General Account. A
policy loan removes the proceeds from the investment experience of Separate
Account B which will have a permanent effect on the accumulation value and
death benefit even if the loan is repaid. Any loan interest that is due and
unpaid will also be so transferred. Accumulation value equal to policy debt in
the General Account will accrue interest daily at an annual rate of 6%. The
policyowner may allocate a policy loan among the General Account and the
divisions of Separate Account B. If no such allocation is made the loan will be
allocated among the General Account and divisions of Separate Account B in the
same proportion that the accumulation value in the General Account less policy
debt and the accumulation value in each division bears to the total
accumulation value of the Policy, less policy debt, on the date of the loan.
Chubb Colonial will charge interest on any outstanding policy loan. There are
two types of loans available. A Type A loan is charged the same interest rate as
the interest credited to the amount of accumulation value held in the General
Account to secure loans. The amount available at any time for a Type A loan
equals the maximum loan amount less the DEFRA Guideline Single Premium ("DGSP"),
as set forth in the Code, less any outstanding Type A loans. Any other loans are
Type B loans; a Type B loan is charged an interest rate of 8%. It is possible
for one loan request to result in both a Type A and a Type B loan. A request for
a loan will be granted first as a Type A loan, to the extent available, and then
as a Type B loan. Once a policy loan is granted, it remains a Type A or Type B
until it is repaid. Increases in the Specified Amount will affect the
determination of the amount available for a Type A loan; however, decreases in
the Specified Amount will not have any such effect.
Where applicable, loans are subject to conditions and requirements of the
Employee Retirement Income Security Act of 1974 ("ERISA"), as well as the terms
of any retirement plan in connection with which the Policy has been purchased.
The ERISA rules relating to loans are complex and vary depending on the
individual circumstances of each Policy. Employers and policyowners should
consult with qualified advisers before exercising the loan privileges.
Policy debt equals the total of all outstanding policy loans and accrued
interest on policy loans. If policy debt exceeds cash value, Chubb Colonial will
notify the policyowner and any assignee of record. A payment at least equal to
the amount of excess policy debt above the cash value must be made to Chubb
Colonial within 61 days from the date the notice is mailed, otherwise, the
Policy will lapse and terminate without value. The Policy may, however, later be
reinstated, subject to satisfactory proof of insurability and the payment of a
reinstatement premium. See "THE POLICY--Reinstatement".
So long as the Policy remains in force, policy debt may be repaid in whole or
in part at any time during the Insured's life. If there is any existing policy
debt, premium payments in the amount of the Planned Periodic Premium, received
at the Premium Frequency, will be applied as premium. Premium payments in
excess of the Planned Periodic Premium or premium payments received other than
at the Premium Frequency, will first be applied as policy loan repayments, then
as premium when the policy debt is repaid. For policyowners with both Type A
and Type B loans, repayments of the loan will be applied first to Type B loans
and then to Type A loans. Upon repayment, the Policy's accumulation value
securing the repaid portion of the debt in the General Account will be
transferred to the General Account and the divisions of Separate Account B
using the same percentages used to allocate net premiums. A policyowner may
make loan repayments on a pre-authorized check basis. Any outstanding policy
debt is subtracted from life insurance proceeds payable at the Insured's death,
from accumulation value upon surrender, and from cash value payable at
maturity. In the event that the Policy lapses due to insufficient cash value
resulting from loans, the policyowner may be taxed on the total appreciation
under the Policy. In addition, if the policy is surrendered or allowed to
lapse, the policyholder may be taxed on amounts received as loans that are
cancelled in the transaction. See "FEDERAL TAX MATTERS".
OTHER MATTERS
Voting Rights. To the extent required by law, Chubb Colonial will vote the
Funds' shares held in the various divisions of Separate Account B at regular and
special shareholder meetings of the Funds in accordance with instructions
received from persons having voting interests in Separate Account B. If,
however, the 1940 Act or any regulation thereunder should be amended or if the
present interpretation thereof should change and, as a result, Chubb Colonial
determines that it is permissible to vote the Funds' shares in its own right, it
may elect to do so. The number of votes on which each policyowner has the right
to instruct will be determined by dividing the Policy's accumulation value in a
division of Separate Account B by the net asset value per share of the
corresponding Portfolio in which the division invests, or as otherwise required
by law. Fractional shares will be counted. The number of votes on which the
policyowner has the right to instruct will be determined as of the date
coincident with the date established by the Funds for determining
25
<PAGE>
shareholders eligible to vote at the meeting of the Funds. Voting instructions
will be solicited by written communications prior to such meeting in accordance
with procedures established by the Funds. Chubb Colonial will vote the Funds'
shares as to which no instructions are received in proportion to the voting
instructions which are received with respect to all Policies participating in
the Funds in accordance with applicable law. Each person having a voting
interest will receive proxy material, reports and other materials relating to
the Funds. The shares held by Chubb Colonial, including shares for which no
voting instructions have been received, shares held in Separate Account B
representing charges imposed by Chubb Colonial against Separate Account B under
the Policies and shares held by Chubb Colonial that are not otherwise
attributable to Policies, will also be voted by Chubb Colonial in proportion to
instructions received from the owners of variable life insurance policies funded
through Separate Account B. Chubb Colonial reserves the right to vote any or all
such shares at its discretion to the extent consistent with then current
interpretations of the 1940 Act and rules thereunder.
Chubb Colonial may, when required by state insurance regulatory authorities,
disregard voting instructions if the instructions require that shares be voted
so as to cause a change in subclassification or investment objective of the
Funds or disapprove an investment advisory contract of the Funds. In addition,
Chubb Colonial may disregard voting instructions in favor of changes initiated
by a policyowner in the investment policy or the investment adviser of the Funds
if Chubb Colonial reasonably disapproves of such changes. A change would be
disapproved only if the proposed change is contrary to state law or prohibited
by state regulatory authorities or Chubb Colonial determined that the change
would be inconsistent with the investment objectives of Separate Account B or
would result in the purchase of securities for Separate Account B which vary
from the general quality and nature of investments and investment techniques
utilized by other separate accounts created by Chubb Colonial or any affiliate
of Chubb Colonial which have similar investment objectives. In the event that
Chubb Colonial does disregard voting instructions, a summary of that action and
the reason for such actions will be included in the next semi-annual report to
the policyowner.
Additions, Deletions or Substitutions of Investments. Chubb Colonial reserves
the right, subject to compliance with applicable law, to make additions to,
deletions from, or substitutions for the shares held by any division or which
any division may purchase. If shares of the Funds should no longer be available
for investment or if, in the judgment of Chubb Colonial's management, further
investment in shares of the Funds should become inappropriate in view of the
purposes of the Policy, Chubb Colonial may substitute shares of any other
investment company for shares already purchased, or to be purchased in the
future under the Policies. No substitution of securities will take place without
notice to and consent of policyowners and without prior approval of the
Commission, all to the extent required by the 1940 Act. Any surrender due to a
change in the Portfolio's investment policy will incur any applicable surrender
charges.
Each class of the Funds' stock is subject to certain investment restrictions
which may not be changed without the approval of the majority of the holders of
such series. See the accompanying prospectuses for the Funds.
Any action taken by Chubb Colonial, pursuant to this provision, is subject to
the approval of the New York State Insurance Department.
Annual Summary. Each year a summary will be sent to the policyowner which
shows the current accumulation value, cash value, premiums paid and all charges
since the last annual summary as well as the balance of outstanding policy
loans. Chubb Colonial will also send to the policyowner the reports required by
the 1940 Act.
Confirmation. Confirmation notices (or other appropriate notification) will
be mailed promptly at the time of the following transactions:
(1) policy issue;
(2) receipt of premium payments;
(3) initial allocation among divisions on the allocation date;
(4) transfers among divisions;
(5) change of premium allocation;
(6) change between Option I and Option II;
(7) increases or decreases in Specified Amount;
(8) withdrawals;
(9) receipt of loan repayments; and
(10) reinstatements.
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<PAGE>
Limitation on Right to Contest. Chubb Colonial will not contest or revoke the
insurance coverage provided under the Policy, except for any applied for
increase in Specified Amount, after the Policy has been in force during the
lifetime of the Insured for a period of two years from the Issue Date. This
provision does not apply to any benefits provided by a rider which grants
disability benefits or an added benefit in the event that death results from an
accident. Any increase in the Specified Amount will not be contested after such
increase has been in force during the lifetime of the Insured for two years
following the effective date of the increase.Within the two year period
following an increase in Specified Amount, only statements in the application
for such increase will be subject to contestability.
Misstatements. If the age or sex of the Insured has been misstated in an
application, including a reinstatement application, the amount payable under
the Policy by reason of the death of the Insured will be equal to the sum of
the following:
1. The accumulation value on the date of death less any policy debt; and
2. The death benefit, less the accumulation value on the date of death,
multiplied by the ratio of (a) the cost of insurance actually deducted at
the beginning of the policy month in which the death occurs to (b) the cost
of insurance that should have been deducted at the Insured's true age or
sex.
Suicide. The Policy does not cover the risk of suicide within two years from
the Issue Date or two years from the date of any increase in Specified Amount
with respect to such increase, unless otherwise specified by state law. In the
event of suicide within two years of the Issue Date, the only liability of Chubb
Colonial will be a refund of premiums paid, without interest, less any policy
debt and less any withdrawal. In the event of suicide within two years of an
increase in Specified Amount, the only liability of Chubb Colonial will be a
refund of the cost of insurance for such increase, plus death benefits payable
without regard to suicide, if any.
Beneficiaries. The original beneficiaries and contingent beneficiaries are
designated by the policyowner on the application. If changed, the primary
beneficiary or contingent beneficiary is as shown in the latest change filed
with Chubb Colonial. One or more primary or contingent beneficiaries may be
named in the application. In such case, the proceeds of the Policy will be paid
in equal shares to the survivors in the appropriate beneficiary class unless
requested otherwise by the policyowner.
Postponement of Payments. Payment of any amount upon surrender, withdrawal,
policy loan, or benefits payable at death or maturity may be postponed
whenever: (i) the New York Stock Exchange is closed other than customary week-
end and holiday closings, or trading on the New York Stock Exchange is
restricted as determined by the Commission or (ii) an emergency exists, as
determined by the Commission, as a result of which disposal of securities is
not reasonably practicable or it is not reasonably practicable to determine the
value of net assets in Separate Account B.
Assignment. The Policy can be assigned as collateral security. Chubb Colonial
must be notified in writing if the Policy has been assigned. Each assignment
will be subject to any payments made or action taken by Chubb Colonial prior to
its notification of such assignment. Chubb Colonial is not responsible for the
validity of an assignment. A policyowner's rights and the rights of the
beneficiary may be affected by an assignment.
Illustration of Benefits and Values. After the policy date, the policyowner
may request illustrations of death benefits, accumulation values and cash values
at any time after the policy date. Illustrations will be based on the existing
accumulation value and cash value at the time of the request and both the
maximum and the then current costs of insurance rates. Such illustrations are
currently available to policyowners at no charge. Although Chubb Colonial
reserves the right to assess a charge, no greater than $25 and with advance
notice to policyowners, it has no present intention to do so. See "CHARGES AND
DEDUCTIONS--Administrative Fees."
Non-Participating Policy. The Policy does not share in any surplus
distributions of Chubb Colonial. No dividends are payable with respect to the
Policy.
27
<PAGE>
THE GENERAL ACCOUNT
POLICYOWNERS MAY ALLOCATE NET PREMIUMS AND TRANSFER ACCUMULATION VALUE TO THE
GENERAL ACCOUNT. BECAUSE OF EXEMPTIVE AND EXCLUSIONARY PROVISIONS, INTERESTS
IN THE GENERAL ACCOUNT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 AND THE GENERAL ACCOUNT HAS NOT BEEN REGISTERED AS AN INVESTMENT COMPANY
UNDER THE 1940 ACT. ACCORDINGLY, NEITHER THE GENERAL ACCOUNT NOR ANY INTERESTS
THEREIN ARE SUBJECT TO THE PROVISIONS OF THESE ACTS, AND COLONIAL HAS BEEN
ADVISED THAT THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
REVIEWED THE DISCLOSURES IN THIS PROSPECTUS RELATING TO THE GENERAL ACCOUNT.
DISCLOSURES REGARDING THE GENERAL ACCOUNT MAY, HOWEVER, BE SUBJECT TO CERTAIN
GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS RELATING TO THE
ACCURACY AND COMPLETENESS OF STATEMENTS MADE IN PROSPECTUSES.
General Description. The General Account consists of all assets owned by
Chubb Colonial other than those in Separate Account B and other separate
accounts which may be established by Chubb Colonial. Subject to applicable law,
Chubb Colonial has sole discretion over the investment of the assets of the
General Account.
A policyowner may elect to allocate net premiums to the General Account or
to transfer accumulation value to or from the divisions of Separate Account B
and the General Account. The allocation or transfer of funds to the General
Account does not entitle a policyowner to share in the investment experience
of the General Account. Instead, Chubb Colonial guarantees that accumulation
value in the General Account will accrue interest daily at an effective annual
rate of at least 4 1/2%, independent of the actual investment experience of the
General Account. Chubb Colonial is not obligated to credit interest at any
higher rate, although Chubb Colonial may, in its sole discretion, do so.
If the Date of Receipt of the initial premium is prior to the date Chubb
Colonial either issues the Policy or offers to issue the Policy on a basis other
than as applied for, that initial net premium, less any monthly deductions, will
be credited with interest at the rate currently being credited to the General
Account. This amount will be credited with interest for the period between the
date the premium is received (or the policy date, whichever is later) and the
date Chubb Colonial issues the Policy or the applicant refuses Chubb Colonial's
offer to issue the Policy on a basis other than as applied for. No interest will
be credited for the above period if the initial premium is less than $500. In
those instances when Chubb Colonial declines to issue a Policy, the entire
premium paid will be returned. If the premium is greater than $500, the premium
will be returned with interest. Interest will be credited from the Date of
Receipt to the date the application is rejected. No interest will be credited
for such initial premiums if the Policy issued as applied for is not accepted or
the "free look" is exercised; Chubb Colonial will retain any interest earned.
See "The Policy--Policy "Free Look" ".
The Policy. This Prospectus describes a flexible premium variable life in-
surance policy. Net premiums may be allocated to the General Account or to
Separate Account B or to both. This Prospectus is generally intended to serve
as a disclosure document for the aspects of the Policy involving Separate Ac-
count B. For more information regarding the General Account, see the Policy
itself, or discuss the Policy with your insurance agent.
General Account Benefits. If the policyowner pays the same premiums as
scheduled, allocates all net premiums only to the General Account and makes no
transfers, withdrawals, or policy loans, the minimum amount and duration of
the death benefit will be fixed and guaranteed. The policyowner may select ei-
ther death benefit Option I or II under the Policy and may change the Policy's
Specified Amount subject to satisfactory evidence of insurability, if re-
quired.
General Account Accumulation Value. Net premiums allocated to the General
Account are credited to the Policy. Prior to the allocation date, the initial
net premium is deposited in the General Account, and those net premiums are
credited to the Policy. On the allocation date the initial net premium pay-
ments deposited in the General Account, plus interest earned, will be allo-
cated among the divisions of Separate Account B and the General Account as in-
structed by the policyowner in the application. The accumulation value in the
General Account on the allocation date is equal to the portion of the net pre-
mium payments, plus interest earned, which have been paid and allocated to the
General Account, less the portion of the first monthly deduction allocated to
the General Account.
Chubb Colonial guarantees that interest credited to each policyowner's
accumulation value in the General Account will not be less than an effective
annual rate of at least 4 1/2% per year. Chubb Colonial may, IN ITS SOLE
DISCRETION, credit a higher rate of interest, although it is not obligated to
credit interest in excess of 4 1/2% per year, and might not do so. ANY INTEREST
CREDITED ON THE POLICY'S ACCUMULATION VALUE IN THE GENERAL ACCOUNT IN EXCESS OF
THE GUARANTEED RATE OF 4 1/2% PER YEAR WILL BE DETERMINED IN THE SOLE DISCRETION
OF CHUBB COLONIAL. THE POLICYOWNER ASSUMES THE RISK THAT INTEREST CREDITED MAY
NOT EXCEED THE GUARANTEED MINIMUM RATE OF 4 1/2% PER YEAR. Accumulation value in
the
28
<PAGE>
General Account that equals indebtedness will be credited interest daily at
annual rate of 6%. The accumulation value in the General Account will be cal-
culated on each monthly anniversary date of the Policy, or on any other date
with consistent adjustments.
Chubb Colonial guarantees that, at any time prior to the maturity date, the
accumulation value in the General Account will not be less than the amount of
the net premiums allocated or accumulation value transferred to the General Ac-
count, plus interest at the rate of 4 1/2% per year, plus any excess interest
which Chubb Colonial credits and any amounts transferred into the General
Account, less the sum of all charges allocable to the General Account and any
amounts deducted from the General Account in connection with withdrawals or
transfers to Separate Account B.
Determination of Charges. The portion of the monthly deduction attributable
to the General Account will be determined as of the actual monthly anniversary
date, even if the monthly anniversary date does not fall on a valuation date.
Premium Deposit Fund. As a convenience to policyowners, Chubb Colonial permits
policyowners to deposit funds in a premium deposit fund ("PDF"), subject to
the terms and conditions of the appropriate agreement. Funds deposited in the
PDF earn interest at a minimum annual rate of 4%, with interest credited on
each monthly anniversary date. Interest on these funds is not tax deferred and
will be annually reported on Form 1099 to the policyowner. An amount equal to
the Planned Periodic Premium will be transferred on the policy date to pay
premiums on the policy. Policyowners may withdraw all or part of the funds
from the PDF at any time. No commissions are earned or paid until premium
payments are made pursuant to transfers from the PDF.
DISTRIBUTION OF THE POLICY
The Policy will be sold by individuals who, in addition to being licensed as
life insurance agents for Chubb Colonial, are also registered representatives of
Chubb Securities Corporation, the principal underwriter of the policies, or of
broker-dealers who have entered into written sales agreements with the princi-
pal underwriter. Chubb Securities Corporation is a New Hampshire corporation
organized in 1969. Chubb Securities Corporation is registered with the Securi-
ties and Exchange Commission under the Securities and Exchange Act of 1934 as
a broker-dealer and is a member of the National Association of Securities
Dealers, Inc. Commissions can range up to 80% of first year gross premiums and
up to 6% of gross premiums for the second through fifteenth policy years. No
commissions are paid after the fifteenth policy year. These commissions in-
clude amounts paid to agents writing the Policy and district managers.
The Distribution Agreement with Chubb Securities Corporation took effect on
August 31, 1994, and continues until terminated by either party on 60 days no-
tice. Chubb Securities Corporation is not obligated to sell any specified
amount of Policies and may not assign its responsibilities under the Distribu-
tion Agreement.
Chubb Securities Corporation is engaged in the sale and distribution of var-
ious other securities, including other flexible premium variable life poli-
cies. It acts as principal underwriter for other flexible premium variable
life policies and variable annuity contracts issued by Chubb Colonial (and its
affiliated insurance companies), and for Chubb America Fund, Inc. and the Chubb
Investment Funds, Inc. mutual funds. It sells a number of mutual fund shares as
well as shares of other securities and limited partnership interests in both
public and private limited partnerships. Mutual fund shares available for sale
by Chubb Securities Corporation are sold pursuant to non-exclusive selling
agreements with the distributors of the mutual funds.
The Policies may also be sold through other broker-dealers that enter into
agreements with Chubb Securities Corporation for this purpose. Any such bro-
ker-dealers will be registered under the Securities Exchange Act of 1934 and
their representatives selling the Policies will be authorized under applicable
insurance laws and regulations to sell insurance products of this type. It is
not expected that the compensation paid by Chubb Colonial in connection with
such sales will exceed that described above for sales by Chubb Securities
Corpora-tion's registered representatives.
29
<PAGE>
MANAGEMENT OF CHUBB COLONIAL
EXECUTIVE OFFICERS AND DIRECTORS OF CHUBB COLONIAL
DIRECTORS
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND
NAME BUSINESS ADDRESS
- ---- ------------------------
<S> <C>
*Percy Chubb, III....... Vice Chairman
The Chubb Corporation
(also serves as Vice Chairman of Chubb Colonial Life Insurance
Company)
15 Moutain View Road
P.O. Box 1615
Warren, New Jersey 07061-1615
*Frederick H. Condon.... Senior Vice President, General Counsel and Secretary
Chubb Life Insurance Company of America
(also serves as Senior Vice President, General Counsel and
Secretary of Chubb Colonial Life Insurance Company)
One Granite Place
Concord, NH 03301
*Randall G. Craig....... Executive Vice President and Chief Operating Offer
Chubb Life Insurance Company of America
(also serves as Executive Vice President and Chief Operating
Officer of Chubb Colonial Life Insurance Company)
One Granite Place
Concord, NH 03301
*David S. Fowler........ Senior Vice President
The Chubb Corporation
(also serves as Vice Chairman of Chubb Colonial Life Insurance
Company)
15 Mountain View Road
P.O. Box 1615
Warren, New Jersey 07061-1615
*Dean R. O'Hare......... Chairman and President
The Chubb Corporation
(also serves as Chairman of Chubb Colonial Life Insurance
Company)
15 Mountain View Road
P.O. Box 1615
Warren, NJ 07061-1615
*Theresa M. Stone....... President and Chief Executive Officer
Chubb Life Insurance Company of America
(also serves as President and Chief Executive Officer of Chubb
Colonial Life Insurance Company)
One Granite Place
Concord, NH 03301
*Richard V. Werner...... Executive Vice President and Chief Financial Officer
Chubb Life Insurance Company of America
(also serves as Executive Vice President and Chief Financial
Officer of Chubb Colonial Life Insurance Company)
One Granite Place
Concord, NH 03301
</TABLE>
- -------
* Executive Officer of Chubb Colonial
30
<PAGE>
EXECUTIVE OFFICERS (OTHER THAN DIRECTORS)
<TABLE>
<CAPTION>
NAME POSITION
- ---- --------
<S> <C>
Ronald R. Angarella..... Senior Vice President
Charles C. Cornelio..... Senior Vice President, Chief Administrative Officer and
Assistant Secretary
Ronald H. Emery......... Senior Vice President and Controller
Vincent G. Mace, Jr. ... Senior Vice President and Group Actuary
Warren L. Reynolds...... Senior Vice President
Arthur V. Anderson...... Vice President
Douglas H. Blampied..... Vice President
Thomas M. Bodrogi....... Vice President
Edwin E. Creter......... Vice President
Ned I. Gerstman......... Vice President
Glenn Hilsinger......... Vice President
J. Michael Gannon....... Vice President and Counsel
Donald M. Kane.......... Vice President
Patrick A. Lang......... Vice President
Deborah A. Leitch....... Vice President
Sandra M. MacIntyre..... Vice President
Edward C. Mackenzie..... Vice President
Justin J. Manjorin...... Vice President
Thomas E. Murphy, Jr.,
MD..................... Vice President
Herbert B. Olson........ Vice President and Group Actuary
Robert R. Rodgers....... Vice President
Russell C. Simpson...... Vice President and Treasurer
James S. Smith.......... Vice President
William A. Spencer...... Vice President
John A. Thomas.......... Vice President
Ernest J. Tsouros....... Vice President
David G. Underwood, II,
MD..................... Vice President
John W. Wells........... Vice President
</TABLE>
The officers and employees of Chubb Colonial who have access to the assets of
Separate Account B are covered by a fidelity bond issued by Aetna Casualty and
Surety Company in the amount of $35,000,000.
31
<PAGE>
STATE REGULATION OF CHUBB COLONIAL
Chubb Colonial Life Insurance Company is governed under the laws of the state
of New Jersey and is subject to regulation by the Insurance Commissioner of New
Jersey. An annual statement is filed with the New Jersey Insurance Commissioner
on or before March 1 of each year covering the operations and reporting on the
financial condition of Chubb Colonial as of December 31 of the preceding year.
Periodically, the Commissioner examines the assets and liabilities of Chubb
Colonial and Separate Account B and verifies their adequacy and a full
examination of Chubb Colonial's operations is conducted by the Commissioner at
least every five years.
In addition, Chubb Colonial is subject to the insurance laws and regulations
of other states within which it is licensed to operate. Generally, the insurance
department of any other state applies the laws of the state of domicile in
determining permissible investments.
FEDERAL TAX MATTERS
Tax Considerations. The following description is a brief summary of some of
the tax rules, primarily related to federal income taxes under the Code, which,
in the opinion of Chubb Colonial, are currently in effect.
Policy Proceeds. The Policy contains provisions not found in traditional life
insurance policies providing only for fixed benefits. However, under the Code,
the Policy should qualify as a life insurance contract for federal income tax
purposes, with the result that all death benefits paid under the Policy will
generally be fully excludable from the gross income of the Policy's beneficiary
for federal income tax purposes. Policyowners should consult with their own tax
advisers in this regard.
The federal income tax treatment of a distribution from the Policy will depend
on whether a Policy is a life insurance policy and also if it is determined to
be a "modified endowment contract," as defined by the Code. Chubb Colonial will
notify a policyowner if the amount of premiums paid in would cause a Policy to
be a modified endowment contract and will allow a refund of the excess premium.
Thus, the policyowner may choose to have the Policy treated as a modified
endowment contract.
A modified endowment contract is a life insurance policy which fails to meet
a "seven-pay" test. In general, a policy will fail the seven-pay test if the
cumulative amount of premiums paid under the policy at any time during the
first seven policy years exceeds a calculated premium level. The calculated
seven-pay premium level is based on a hypothetical policy issued on the same
insured persons and for the same initial death benefit which, under specified
conditions (which include the absence of expense and administrative charges),
would be fully paid for after seven years. Your policy will be treated as a
modified endowment unless the cumulative premiums paid under your policy, at
all times during the first seven policy years, are less than or equal to the
cumulative seven-pay premiums which would have been paid under the hypothetical
policy on or before such times.
Whenever there is a "material change" under a policy, it will generally be
treated as a new contract for purposes of determining whether the policy is a
modified endowment, and subject to a new seven-pay premium period and a new
seven-pay limit. The new seven-pay limit would be determined taking into
account, under a downward adjustment formula, the Policy Account Value of the
policy at the time of such change. A materially changed policy would be
considered a modified endowment if it failed to satisfy the new seven-pay
limit. A material change could occur as a result of a change in death benefit
option, the selection of additional benefits, the restoration of a terminated
policy and certain other changes.
If the benefits under your policy are reduced, for example, by requesting a
decrease in Face Amount, or in some cases by making partial withdrawals,
terminating additional benefits under a rider, changing the death benefit
option, or as a result of policy termination, the calculated seven-pay premium
level will be redetermined based on the reduced level of benefits and applied
retroactively for purposes of the seven-pay test. If the premiums previously
paid are greater than the recalculated seven-pay premium level limit, the
policy will become a modified endowment. Generally, a life insurance policy
which is received in exchange for a modified endowment or a modified endowment
which terminates and is restored, will also be considered a modified endowment.
If a policy is deemed to be a modified endowment contract, any distribution
from the policy will be taxed in a manner comparable to distributions from
annuities (i.e., on an "income-first" basis); distributions for this purpose
include a loan
32
<PAGE>
or partial withdrawal. Any such distributions will be considered taxable income
to the extent accumulated value under the policy exceeds investment in the
policy.
A 10% penalty tax will apply to the taxable portion of such a distribution.
No penalty will apply to distributions (i) to taxpayers 59 1/2 years of age or
older, (ii) in the case of a disability which can be expected to result in
death or to be of indefinite duration or (iii) received as part of a series of
substantially equal periodic payments for the life (or life expectancy) of the
taxpayer or the joint lives (or joint life expectancies) of the taxpayer and
his beneficiary.
To the extent a policy becomes a modified endowment contract, any
distribution, including any loan, which occurs in the policy year it becomes a
modified endowment contract and in any year thereafter will be taxable income to
the policyowner. Also, any distributions within two years before a policy
becomes a modified endowment contract will also be income taxable to the
policyowner. The Secretary of the Treasury has been authorized to prescribe
rules which would similarly treat other distributions made in anticipation of a
policy becoming a modified endowment contract. For purposes of determining the
amount of any distribution includible in income, all modified endowment contract
policies that fail the above-described tests which are issued by the same
insurer, or its affiliates, to the same policyowner during any calendar year are
treated as one contract. The Secretary of the Treasury is also authorized to
issue regulations in this connection.
In addition to the distribution rules for modified endowment contracts, the
Code and proposed regulations thereunder require that, for policies entered
into on or after October 21, 1988, reasonable mortality and other charges be
used in satisfying the definition of life insurance. The death benefit under a
policy which meets this definition will continue to be excluded from the
beneficiary's gross income. Chubb Colonial believes that the Policies meet this
definition. As long as a Policy does not violate the tests prescribed under the
Code, it will not fail to meet the tests of the Code and the general tax
provisions described herein still apply.
The foregoing summary does not purport to be complete or to cover all
situations, and, as always, there is some degree of uncertainty with respect to
the application of the current tax laws. In addition to the provisions
discussed above, the United States Congress may consider other legislation
which, if enacted, could adversely affect the tax treatment of life insurance
policies. Also, the Treasury Department may amend current regulations or adopt
new regulations with respect to this and other Code provisions. Therefore,
policyowners are advised to consult a tax adviser or attorney for more complete
tax information, specifically regarding the applicability of the Code
provisions to an individual policyowner's situation.
Under normal circumstances, if the Policy is not a modified endowment
contract, loans received under the Policy will be construed as indebtedness of
the policyowner. Policyholders are advised to consult a tax adviser or attorney
regarding the deduction of interest paid on loans.
Even if the Policy is not a modified endowment contract, a partial withdrawal
together with a reduction in death benefits during the first 15 policy years
may create taxable income for the policyowner. The amount of that taxable
income is determined under a complex formula and it may be equal to part or all
of, but not greater than, the income on the contract. A partial withdrawal made
after the first 15 policy years will be taxed on a recovery of premium-first
basis, and will only be subject to federal income tax to the extent such
proceeds exceed the total amount of premiums the policyowner has paid that have
not been previously withdrawn.
If a policyowner makes a partial withdrawal, surrender, loan or exchange of
the Policy, Chubb Colonial may be required to withhold federal income tax from
the portion of the money received by the policyowner that is includible in the
policyowner's federal gross income. A policyowner who is not a corporation may
elect not to have such tax withheld; however, such election must be made before
Chubb Colonial makes the payment. In addition, if a policyowner fails to provide
Chubb Colonial with a correct taxpayer identification number (usually a social
security number) or if the Treasury notifies Chubb Colonial that the taxpayer
identification number which has been provided is not correct, the election not
to have such taxes withheld will not be effective. In any case, a policyowner is
liable for payment of the federal income tax on the taxable portion of money
received, whether or not an election to have federal income tax withheld is
made. If a policyowner elects not to have federal income tax withheld, or if the
amount withheld is insufficient, then the policyowner may be responsible for
payment of estimated tax. A policyowner may also incur penalties under the
estimated tax rules if the withholding and estimated tax payments are
insufficient. Chubb Colonial suggests that policyowners consult with a tax
adviser or attorney as to the tax implications of these matters.
33
<PAGE>
In the event that a Policy is owned by the trustee under a pension or profit
sharing plan, or similar deferred compensation arrangement, the tax
consequences of ownership or receipt of proceeds under the Policy could differ
from those stated herein. However, if ownership of such a Policy is transferred
from the plan to a plan participant (upon termination of employment, for
example), the Policy will be subject to all of the federal tax rules described
above. A Policy owned by a trustee under such a plan may be subject to
restrictions under ERISA and a tax adviser should be consulted regarding any
applicable ERISA requirements.
The Policy may also be used in various arrangements, including nonqualified
deferred compensation or salary continuation plans, split dollar insurance
plans, executive bonus plans and others, where the tax consequences may vary
depending on the particular facts and circumstances of each individual
arrangement. A tax adviser should be consulted regarding the tax attributes of
any particular arrangement where the value of it depends in part on its tax
consequences.
Federal estate and local estate, inheritance and other tax consequences of
ownership or receipt of policy proceeds depend upon the circumstances of each
policyowner and beneficiary.
Current Treasury regulations set standards for diversification of the
investments underlying variable life insurance policies in order for such
policies to be treated as life insurance. Chubb Colonial believes it presently
is in compliance with the diversification requirements as set forth in the
regulations and intends to remain in compliance with such diversification
requirements. If the diversification requirements are not satisfied, the Policy
would not be treated as a life insurance contract. As a consequence to the
policyowner, income earned on a Policy would be taxable to the policyowner for
any calendar quarter in which the diversification requirements were not
satisfied, and for all subsequent calendar quarters.
The Secretary of the Treasury may issue a regulation or a ruling which will
prescribe the circumstances in which a policyowner's control of the investments
of a segregated asset account may cause the policyowner, rather than the
insurance company, to be treated as the owner of the assets of the account. The
regulation or ruling could impose requirements that are not reflected in the
Policy, relating, for example, to such elements of policyowner control as
premium allocation, transfer privileges and investment in a division focusing
on a particular investment sector. Failure to comply with any such regulation
or ruling presumably would cause earnings on a policyowner's interest in
Separate Account B to be includible in the policyowner's gross income in the
year earned. Chubb Colonial, however, has reserved certain rights to alter the
Policy and investment alternatives so as to comply with such regulation or
ruling. Chubb Colonial believes that any such regulation or ruling would apply
prospectively. Since the regulation or ruling has not been issued, there can be
no assurance as to the content of such regulation or ruling or even whether
application of the regulation or ruling will be prospective. For these reasons,
policyowners are urged to consult with their own tax advisers.
Policyowners are advised that the exercise of an Exchange of Insured Rider
will give rise to tax consequences and are urged to consult with a tax adviser
prior to exercising such rider.
Policyowners are advised that the federal income tax status of the Terminal
Illness Accelerated Benefit Rider is uncertain at this time. Benefit proceeds
are not specifically excluded from taxable income under Section 101 of the
Code. Under regulations proposed by the Internal Revenue Service on December
14, 1992, terminal illness benefit proceeds will be treated as excludable from
taxable income under Section 101 of the Code. As currently proposed, tax-free
treatment will only be accorded to benefit proceeds received on or after the
date that these regulations become final. In addition, while only important for
a premium paid rider, rider benefits are not expressly included as "Qualified
Additional Benefits" in Section 7702(f)(5) of the Code. Also, there is a
question as to whether or not the addition of an accelerated benefit rider
constitutes a Section 7702A(c)(3)(A) "material change" in benefit, thereby
causing the contract to be treated as a new contract and subjected to a new
seven-pay test, with appropriate adjustments to take into account the cash
surrender values under the contract. It is likely, but not entirely certain,
that the final regulations, when adopted, will not produce a different tax
result.
Policyowners are also advised that there is some uncertainty as to whether
the Primary Insured Term Rider will be treated as a "Qualified Additional
Benefit" under Section 7702(f)(5)(A)(iii) of the Code rather than as a death
benefit under the Policy. However, Chubb Colonial believes that this rider, as
structured and implemented by Chubb Colonial, would be considered as part of the
death benefit under the Policy and therefore not give rise to any adverse tax
consequences. The policyowner should consult a tax adviser before adding the
Primary Insured Term Rider to the Policy.
The foregoing summary does not purport to be complete or to cover all
situations, including the possible tax consequences of changes in ownership.
Counsel and other competent advisers should be consulted for more complete
information.
34
<PAGE>
Charge for Chubb Colonial Income Taxes. Chubb Colonial is presently taxed as a
life insurance company under the provisions of the Code. The Code specifically
provides for adjustments in reserves for variable policies, and Chubb Colonial
will include flexible premium life insurance operations in its tax return in
accordance with these rules.
Currently, no charge is made against Separate Account B for Chubb Colonial's
federal income taxes, or provisions for such taxes, that may be attributable to
Separate Account B. Chubb Colonial may charge each division in Separate Account
B for its portion of any income tax charged to Chubb Colonial on the division or
its assets. Under present laws, Chubb Colonial may incur state and local taxes
(in addition to premium taxes) in several states. At present, these taxes are
not significant. If they increase, however, Chubb Colonial may decide to make
charges for such taxes or provisions for such taxes against Separate Account B.
Chubb Colonial would retain any investment earnings on any tax charges
accumulated in a division. Any such charges against Separate Account B or its
divisions could have an adverse effect on the investment experience of such
division.
EMPLOYEE BENEFIT PLANS
Employers and employee organizations should consider, in consultation with
counsel, the impact of Title VII of the Civil Rights Act of 1964 on the
purchase of a Policy in connection with an employment-related insurance or
benefit plan. The United States Supreme Court held, in a 1983 decision, that,
under Title VII, optional annuity benefits under a deferred compensation plan
could not vary on the basis of sex.
LEGAL PROCEEDINGS
There are no legal proceedings to which Separate Account B is a party or to
which the assets of any of the divisions thereof are subject. Chubb Colonial is
not involved in any litigation that is of material importance in relation to its
total assets or that relate to Separate Account B.
EXPERTS
The financial statements of Chubb Colonial as of December 31, 1995 and for the
year then ended, appearing in this Prospectus and Registration Statement have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon appearing elsewhere herein and in the Registration Statement, and
are included in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.
Actuarial matters included in this Prospectus have been examined by Michael
J. LeBoeuf, FSA, MAAA as stated in the opinion filed as an exhibit to the
registration statement.
REGISTRATION STATEMENT
A registration statement has been filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, with respect to the
Policy offered hereby. This Prospectus does not contain all the information set
forth in the registration statement and the amendments and exhibits to the
registration statement to all of which reference is made for further
information concerning Separate Account B, Chubb Colonial and the Policy offered
hereby. Statements contained in this Prospectus as to the contents of the
Policy and other legal instruments are summaries. For a complete statement of
the terms thereof reference is made to such instruments as filed.
FINANCIAL STATEMENTS
The financial statements of Chubb Colonial which are included in this
Prospectus should be considered only as bearing on the ability of Chubb Colonial
to meet its obligations under the Policy. They should not be considered as
bearing on the investment experience of the assets held in Separate Account B.
No financial statements of Separate Account B are included in this Prospectus
because, as of December 31, 1995, the end of Separate Account B's most recent
fiscal year, Separate Account B had no assets or liabilities and had not yet
commenced operations.
35
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors
Chubb Colonial Life Insurance Company
We have audited the accompanying balance sheet of Chubb Colonial Life Insurance
Company (formerly "The Colonial Life Insurance Company of America") as of
December 31, 1995, and the related statements of operations, shareholder's
equity, and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Chubb Colonial Life Insurance
Company at December 31, 1995, and the results of its operations and its cash
flows for the year then ended, in conformity with generally accepted accounting
principles.
Ernst & Young LLP
Boston, Massachusetts
February 5, 1996
F-1
<PAGE>
CHUBB COLONIAL LIFE INSURANCE COMPANY
BALANCE SHEET
December 31, 1995
(In thousands)
<TABLE>
<S> <C>
ASSETS
Invested assets (Note 2)
Fixed maturities, held-to-maturity, at amortized cost $ 137,069
Fixed maturities, available-for-sale, at market 377,402
Equity securities, at market 6,282
Short term investments, at cost 8,600
Policy loans 23,106
Mortgage loans on real estate 4,853
---------
Total invested assets 557,312
Accrued investment income 9,394
Uncollected premiums 5,658
Reinsurance recoverable on life and health policy liabilities 3,433
Deferred policy acquisition costs (Note 3) 27,138
Note receivable (Note 6) 26,000
Separate account assets 328
Other assets (Note 4) 14,040
---------
Total assets $ 643,303
=========
LIABILITIES
Policy liabilities
Policy fund balances $ 103,455
Future policy benefits 218,709
Policy and contract claims 61,762
Premiums paid in advance 1,696
Other policyholders' funds 14,711
---------
400,333
Notes payable to Chubb Capital Corporation (Note 10) 26,000
Federal income tax payable (Note 5) 2,474
Deferred federal income tax (Note 5) 1,523
Separate account liabilities 328
Accrued expenses and other liabilities 23,331
---------
Total liabilities 453,989
---------
Commitments and contingent liabilities (Note 6, 8, and 12)
SHAREHOLDER'S EQUITY
Common stock--$20 par value, 132,000 shares authorized,
issued and outstanding 2,640
Paid-in capital 26,460
Unrealized appreciation of investments, net (Note 2) 9,890
Retained earnings 150,324
---------
Total shareholder's equity 189,314
---------
Total liabilities and shareholder's equity $ 643,303
=========
</TABLE>
See accompanying notes.
F-2
<PAGE>
CHUBB COLONIAL LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
Year Ended December 31, 1995
(In thousands)
<TABLE>
<S> <C>
REVENUES
Premiums and policy charges $ 320,038
Net investment income 46,736
Realized investment gains 4,747
---------
Total revenues 371,521
BENEFITS, CLAIMS AND EXPENSES
Policy benefits and claims 264,199
Change in reserves for future policy benefits 2,213
---------
266,412
EXPENSES
Commissions and other operating expenses 87,968
Amortization of deferred policy acquisition costs 3,099
---------
91,067
---------
Total benefits, claims and expenses 357,479
---------
Income before federal income tax 14,042
Federal income tax (benefit)
Current 7,509
Deferred (3,252)
---------
4,257
---------
Net income $ 9,785
=========
</TABLE>
See accompanying notes.
F-3
<PAGE>
CHUBB COLONIAL LIFE INSURANCE COMPANY
STATEMENT OF SHAREHOLDER'S EQUITY
Year Ended December 31, 1995
(In thousands)
<TABLE>
<S> <C>
Common stock
Balance, beginning and end of year $ 2,640
--------
Paid-in capital
Balance, beginning and end of year 26,460
--------
Unrealized appreciation (depreciation) of investments, net
Balance, beginning of year (7,286)
Change, net (Note 2) 17,176
--------
Balance, end of year 9,890
--------
Retained earnings
Balance, beginning of year 140,539
Net income 9,785
--------
Balance, end of year 150,324
--------
Total shareholder's equity $189,314
========
</TABLE>
See accompanying notes.
F-4
<PAGE>
CHUBB COLONIAL LIFE INSURANCE COMPANY
STATEMENT OF CASH FLOWS
Year Ended December 31, 1995
(In thousands)
<TABLE>
<S> <C>
OPERATING ACTIVITIES
Net income $ 9,785
Adjustments to reconcile net income to net cash
used in operating activities:
Decrease in future policy benefits, policy and contract claims and
premiums paid in advance, net (49,298)
Decrease in uncollected premiums 5,551
Increase in policy acquisition costs deferred, net of amortization (739)
Increase in accrued investment income (562)
Realized investment gains (4,747)
Accretion of investment discounts (1,414)
Provision for deferred income tax (3,252)
Increase in federal income tax payable 4,888
Other, net (650)
---------
Net cash used in operating activities (40,438)
INVESTING ACTIVITIES
Proceeds from sales of fixed maturities 117,716
Proceeds from maturities of fixed maturities 30,534
Proceeds from sales of equity securities 43,132
Purchases of fixed maturities (169,439)
Purchases of equity securities (11,582)
Decrease in short term investments, net 24,176
Policy loans issued, net of repayments (386)
Mortgage loans, net 1,377
Other, net 2
---------
Net cash provided by investing activities 35,530
FINANCING ACTIVITIES
Deposits credited to policyholders' funds 16,064
Withdrawals from policyholders' funds (4,798)
Decrease in cash overdraft (6,358)
---------
Net cash provided by financing activities 4,908
Increase (decrease) in cash 0
---------
Cash, beginning and end of year (Note 1) $ 0
=========
</TABLE>
See accompanying notes
F-5
<PAGE>
CHUBB COLONIAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
Chubb Colonial Life Insurance Company (formerly "The Colonial Life Insurance
Company of America") (the Company) is wholly-owned by Chubb Life Insurance
Company of America (Chubb Life). Chubb Life is a wholly-owned subsidiary of The
Chubb Corporation (the Parent). Affiliates of the Company include Chubb
Sovereign Life Insurance Company (Sovereign), Chubb America Service Corporation
(Chubb Service) and ChubbHealth Holdings, Inc. (ChubbHealth).
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles (GAAP). The financial statements
reflect estimates and judgments made by management which affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
RECOGNITION OF REVENUES, BENEFITS, CLAIMS AND EXPENSES:
UNIVERSAL LIFE PRODUCTS
Universal life products include universal life insurance and other
interest-sensitive life insurance policies. Revenues for universal life
products consist of policy charges for the cost of insurance, policy
administration and surrenders that have been assessed against policy
account balances during the period.
Policy fund liabilities for universal life and other interest-sensitive
life insurance policies are computed in accordance with the
retrospective deposit method and represent policy account balances
before surrender charges. Policy fund assets and liabilities for
variable universal life insurance are segregated and recorded as
separate account assets and liabilities. Separate account assets are
carried at market values as of the balance sheet date and are invested
by the company at the direction of the policyholder. Investments are
made in one or more of ten portfolios in a series fund. Each of the
portfolios has specific investment objectives and the investment income
and investment gains and losses accrue directly to, and investment risk
is borne by, the policyholders. Accordingly, operating results of the
separate account are not included in the statement of income.
F-6
<PAGE>
CHUBB COLONIAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Policy claims that are charged to expense include claims incurred in the
period in excess of related policy account balances. Other policy
benefits include interest credited to universal life and other interest-
sensitive life insurance policies. Interest crediting rates ranged from
5 1/2% to 7 1/4%.
INVESTMENT PRODUCTS
Investment products include structured settlement annuities and other
supplementary contracts without life contingencies. Revenues for
investment products consist of policy charges for the cost of insurance,
policy administration and surrenders that have been assessed against
policy account balances during the period. Deposits for these products
are recorded as policy fund liabilities, which are increased by interest
credited to the liabilities and decreased by withdrawals and
administrative charges assessed against the contract holders. Interest
crediting rates ranged from 3 1/2% to 8%.
TRADITIONAL LIFE INSURANCE PRODUCTS
Traditional life insurance products include those products with fixed
and guaranteed premiums and benefits. Premium revenues for traditional
life insurance are recognized as revenues when due. The liabilities for
future policy benefits are computed by the net level premium method
based on estimated future investment yield, mortality and withdrawal
experience. Interest rate assumptions ranged from 3% to 9%. Mortality is
calculated principally on an experience multiple applied to select and
ultimate tables in common usage in the industry. Estimated withdrawals
are determined principally based on industry tables. Policy benefits and
claims are charged to expense as incurred.
ACCIDENT AND HEALTH INSURANCE
Accident and health insurance premiums are earned on a monthly pro rata
basis over the terms of the policies. Benefits include paid claims plus
an estimate for known claims and claims incurred but not reported as of
the balance sheet date.
REINSURANCE
In the ordinary course of business, the Company assumes and cedes
reinsurance with other insurance companies. These arrangements minimize
the maximum net loss potential arising from large risks. Reinsurance
contracts do not relieve the Company from its obligation to
policyholders. The Company evaluates the financial condition of its
reinsurers and monitors concentrations of credit risk arising from
similar activities or economic characteristics of the reinsurers to
minimize its exposure to significant losses from reinsurer insolvencies.
F-7
<PAGE>
CHUBB COLONIAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Reinsurance recoverable on life and health policy liabilities represent
estimates of the portion of such liabilities that will be recovered from
reinsurers, determined in a manner consistent with the liabilities
associated with the reinsured policies.
DEFERRED POLICY ACQUISITION COSTS
Certain costs of acquiring insurance contracts, principally commissions,
underwriting costs and certain variable field office expenses are
deferred. Deferred policy acquisition costs for universal life and
investment contracts are amortized over the lives of the contracts in
relation to the present value of estimated gross profits expected to be
realized. Beginning in 1994, deferred policy acquisition costs related
to universal life and investment contracts are also adjusted to reflect
the effect that the unrealized gains or losses on investments classified
as available-for-sale would have had on the present value of estimated
gross profits had such gains or losses actually been realized. This
adjustment is excluded from income and charged or credited directly to
the unrealized appreciation or depreciation of the investments component
of shareholder's equity, net of applicable deferred income tax.
Traditional life insurance deferred policy acquisition costs are being
amortized over the premium-payment period of the related policies using
assumptions consistent with those used in computing policy benefit
reserves.
INVESTED ASSETS
Short term investments, which have an original maturity of one year or less, are
carried at amortized cost.
Fixed maturities, which include bonds and redeemable preferred stocks, are
purchased to support the investment strategies of the Company. These strategies
are developed based on many factors, including rate of return, maturity, credit
risk, tax considerations and regulatory requirements. Those fixed maturities
which the Company has the ability and positive intent to hold to maturity are
considered held-to-maturity and carried at amortized cost. Fixed maturities
which may be sold prior to maturity to support the investment strategies of the
Company are considered available-for-sale and carried at market value as of the
balance sheet date.
Equity securities, which include common stocks and non-redeemable preferred
stocks, are carried at market value as of the balance sheet date.
F-8
<PAGE>
CHUBB COLONIAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Policy loans are carried at the unpaid balances. Mortgage loans on real estate
are carried at the unpaid balances, adjusted for amortization of premium or
discount.
Realized gains and losses on the sale of investments are determined on the basis
of the cost of the specific investments sold and are credited or charged to
income. Unrealized appreciation or depreciation on those investments which are
carried at market value is excluded from income and credited or charged directly
to a separate component of shareholder's equity.
PROPERTY AND EQUIPMENT
Property and equipment used in operations are carried at cost less accumulated
depreciation. Depreciation is calculated using the straight-line method over the
estimated useful lives of the assets.
FEDERAL INCOME TAXES
The Company participates in the filing of a consolidated federal income tax
return with Chubb Life. Chubb Life joins in the filing of a consolidated federal
income tax return with its parent. Federal income tax is allocated as if the
Company and Chubb Life filed separate income tax returns. Deferred income tax
assets and liabilities are recognized for the expected future tax effects
attributable to temporary differences between the financial reporting and tax
bases of assets and liabilities, based on enacted tax rates and other provisions
of tax law.
Deferred income taxes related to unrealized appreciation or depreciation of
investments carried at market value are charged or credited directly to the
applicable component of shareholder's equity.
FAIR VALUES OF FINANCIAL INSTRUMENTS
Fair values of financial instruments are based on quoted market prices where
available. Fair values of financial instruments for which quoted market prices
are not available are based on estimates using present value or other valuation
techniques. Those techniques are significantly affected by the assumptions used,
including the discount rates and the estimates of future cash flows.
Accordingly, the derived fair value estimates cannot be substantiated by
comparison to independent markets and are not necessarily indicative of the
amounts that could be realized in immediate settlement of the instrument.
Certain financial instruments, particularly insurance contracts, are excluded
from fair value disclosure requirements.
F-9
<PAGE>
CHUBB COLONIAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The methods and assumptions used to estimate the fair value of certain financial
instruments are as follows:
[_] Fair values of fixed maturities with active markets are based on quoted
market prices. For fixed maturities that trade in less active markets, fair
values are obtained from independent pricing services. Fair values of fixed
maturities are principally a function of current interest rates. Care
should be used in evaluating the significance of these estimated market
values.
[_] Fair values of equity securities are based on quoted market prices.
[_] The carrying value of short term investments approximates fair value due to
the short maturities of these investments.
[_] Fair values of policy loans and mortgage loans are estimated using
discounted cash flow analyses and approximate carrying values.
[_] The carrying value of short term debt approximates fair value due to the
short maturities of the debt.
The carrying value and fair value of financial instruments at December 31, 1995,
are as follows:
<TABLE>
<CAPTION>
CARRYING FAIR
VALUE VALUE
----------------------
<S> <C> <C>
(In thousands)
Assets
Fixed maturities
Held-to-maturity $137,069 $146,493
Available-for-sale 377,402 377,402
Equity securities 6,282 6,282
Short term investments 8,600 8,600
Policy loans 23,106 23,106
Mortgage loans on real estate 4,853 4,853
Liabilities
Note payable 26,000 26,000
</TABLE>
CASH FLOW INFORMATION
In the statement of cash flows, short term investments are not considered to be
cash equivalents. Cash overdrafts included in accrued expenses and other
liabilities were $5,028,000 at December 31, 1995.
F-10
<PAGE>
CHUBB COLONIAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. INVESTED ASSETS
The sources of net investment income for the year ended December 31, 1995 were
as follows:
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
Fixed maturities $ 42,972
Equity securities 992
Short term investments 1,533
Policy loans 1,492
Mortgage loans 537
Other 133
-------------
Gross investment income 47,659
Investment expenses 923
-------------
Net investment income $ 46,736
=============
</TABLE>
Realized investment gains and losses for the year ended December 31, 1995 were
as follows:
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
Gross realized investment gains
Fixed maturities $ 2,253
Equity securities 4,646
-------------
$ 6,899
=============
Gross realized investment losses
Fixed maturities $ 1,235
Equity securities 917
-------------
$ 2,152
=============
Net realized investment gains
Fixed maturities $ 1,018
Equity securities 3,729
-------------
$ 4,747
=============
</TABLE>
Proceeds from sales of fixed maturities considered available-for-sale were
$117,716,000 in 1995. Gross gains of $2,253,000 and gross losses of $1,235,000
were realized on such sales.
F-11
<PAGE>
CHUBB COLONIAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. INVESTED ASSETS (CONTINUED)
The components of net unrealized appreciation (depreciation) of investments
carried at market value as of December 31, 1995 were as follows:
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
Equity securities
Gross unrealized appreciation $ 1,185
Gross unrealized depreciation 6
-------------
1,179
-------------
Fixed maturities
Gross unrealized appreciation 16,511
Gross unrealized depreciation 521
-------------
15,990
-------------
17,169
Deferred policy acquisition costs
adjustment (1,953)
-------------
15,216
Deferred tax liability, net 5,326
-------------
$ 9,890
=============
</TABLE>
The change in unrealized appreciation or depreciation of investments carried at
market value for the year ended December 31, 1995 were as follows:
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
Change in unrealized appreciation of equity securities $ (81)
Change in unrealized depreciation of fixed maturities 25,154
Change in deferred policy acquisition costs adjustment (2,904)
-------------
22,169
Deferred income tax 7,760
Decrease in tax valuation allowance (2,767)
-------------
$ 17,176
=============
</TABLE>
The cost of equity securities was $5,103,000 at December 31, 1995.
F-12
<PAGE>
CHUBB COLONIAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. INVESTED ASSETS (CONTINUED)
The amortized cost and estimated market value of fixed maturities at December
31, 1995, were as follows:
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
----------------------------------------------
(In thousands)
<S> <C> <C> <C> <C>
Held-to-maturity
Taxable
U. S. Government and government
agency and authority obligations $ 4,227 $ 557 $ 4,784
Corporate bonds 75,926 7,915 83,841
Foreign bonds 3,000 450 3,450
Mortgage-backed securities 53,916 524 $ 22 54,418
---------------------------------------------
Total held-to-maturity 137,069 9,446 22 146,493
----------------------------------------------
Available-for-sale
Taxable
U. S. Government and government
agency and authority obligations 2,629 100 2 2,727
Corporate bonds 174,972 9,223 475 183,720
Foreign bonds 23,903 1,368 5 25,266
Mortgage-backed securities 158,214 5,820 31 164,003
Redeemable preferred stocks 1,694 8 1,686
----------------------------------------------
Total available-for-sale 361,412 16,511 521 377,402
----------------------------------------------
Total fixed maturities $498,481 $25,957 $543 $523,895
==============================================
</TABLE>
At December 31, 1995, fixed maturities classified as held-to-maturity were
carried at amortized cost while fixed maturities classified as available-for-
sale were carried at market value. The unrealized appreciation or depreciation
of fixed maturities carried at amortized cost is not reflected in the financial
statements. The change in unrealized appreciation or depreciation of such fixed
maturities was an increase of $13,260,000 for the year ended December 31, 1995.
In December 1995, fixed maturities classified as held-to-maturity with an
aggregate amortized cost of $35,151,000 and unrealized appreciation of
$1,175,000 were reclassified as available-for-sale. Such reclassifications
resulted from the Company's reassessment of its classifications of fixed
maturities as permitted under Statement of Financial Accounting Standards (SFAS)
No. 115 implementation guidance issued by the Financial Accounting Standards
Board (FASB) in November 1995.
F-13
<PAGE>
CHUBB COLONIAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. INVESTED ASSETS (CONTINUED)
The amortized cost and estimated market value of fixed maturities at December
31, 1995 by contractual maturity were as follows:
<TABLE>
<CAPTION>
HELD-TO-MATURITY AVAILABLE-FOR-SALE
--------------------------------------------
ESTIMATED ESTIMATED
AMORTIZED MARKET AMORTIZED MARKET
COST VALUE COST VALUE
--------------------------------------------
(In thousands)
<S> <C> <C> <C> <C>
Due in one year or less $ 7,883 $ 8,170 $ 8,896 $ 9,133
Due after one year through five years 22,074 24,318 30,996 33,746
Due after five years through ten years 24,299 27,660 69,406 73,642
Due after ten years 28,897 31,927 93,900 96,878
--------------------------------------------
Subtotal 83,153 92,075 203,198 213,399
Mortgage-backed securities 53,916 54,418 158,214 164,003
--------------------------------------------
$137,069 $146,493 $361,412 $377,402
============================================
</TABLE>
Actual maturities could differ from contractual maturities because borrowers may
have the right to call or prepay obligations with or without call or prepayment
penalties.
3. DEFERRED POLICY ACQUISITION COSTS
Policy acquisition costs deferred and the related amortization charged to income
were as follows:
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
Balance, beginning of year $ 29,303
Costs deferred during year 3,838
Amortization during year (3,099)
Change in adjustment to reflect the
effects of unrealized appreciation
of investments (2,904)
-------------
Balance, end of year $ 27,138
=============
</TABLE>
F-14
<PAGE>
CHUBB COLONIAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. PROPERTY AND EQUIPMENT
Property and equipment included in other assets were as follows:
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
Cost $38,590
Less accumulated depreciation 36,170
-------------
$ 2,420
=============
</TABLE>
Depreciation expense related to property and equipment was $932,000 for 1995.
5. FEDERAL INCOME TAXES
The federal income tax provision for the year ended December 31, 1995 has been
computed using the tax rates and regulations in effect during the year. The
provision for federal income tax gives effect to permanent differences between
financial and taxable income. Accordingly, the effective tax rate is lower than
the statutory federal corporate tax rate. The reasons for the lower effective
tax rate were as follows:
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
Tax at statutory federal income tax rate
(35%) $4,914
Dividends received deduction and tax
exempt income (710)
Other 53
-------------
Federal income tax expense $4,257
=============
</TABLE>
The tax effects of temporary differences that gave rise to deferred income tax
assets and liabilities at December 31, 1995 were as follows:
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
Deferred income tax liabilities:
Deferred policy acquisition costs $ 6,475
Unrealized appreciation on investments 7,327
-------------
Total deferred tax liabilities 13,802
Deferred income tax assets:
Future policy benefits 5,615
Other 6,664
-------------
Total deferred tax assets 12,279
-------------
Net deferred income tax liability $ 1,523
=============
</TABLE>
F-15
<PAGE>
CHUBB COLONIAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. FEDERAL INCOME TAXES (CONTINUED)
Prior to 1984, life insurance companies were allowed certain special deductions
for federal income tax purposes which could become subject to tax at normal
rates under certain circumstances, including distribution to shareholders. These
special deductions were set aside in a Policyholders' Surplus Account. Under the
1984 Act, no further additions to this account are permitted. At December 31,
1995, approximately $4,664,000 of untaxed retained earnings remained. No income
taxes have been provided since management does not anticipate any transaction
that would cause this remaining amount to become taxable. The unrecognized
deferred tax related to the Policyholders' Surplus Account is $1,632,000.
Federal income taxes paid in 1995 were $2,621,000.
6. RELATED-PARTY TRANSACTIONS
SERVICE AGREEMENT
The Company entered into an agreement with Chubb Service, whereby Chubb Service
agrees to furnish to the Company, Chubb Life and other affiliated companies,
employee and administrative services and joint operations as may be mutually-
agreed upon. The net reimbursements paid to Chubb Service during 1995 were
$52,724,000. Amounts payable to Chubb Service, included in other liabilities, at
December 31, 1995 were $11,105,000.
The Company, with Chubb Life and its affiliates, participates in a defined
benefit noncontributory pension plan covering substantially all employees.
Pension costs allocated to the Company for the year ended December 31, 1995 were
$962,000. The costs were offset by a curtailment gain of $1,543,000 resulting
from workforce reductions.
The Company, with Chubb Life and its affiliates, provides certain other
postretirement benefits, principally health care and life insurance, to retired
employees and their beneficiaries and covered dependents. Substantially all
employees may become eligible for these benefits upon retirement if they meet
minimum age and years of service requirements. Postretirement benefit costs
allocated to the Company for the year ended December 31, 1995 were $931,000. The
costs were offset by a curtailment gain of $514,000 resulting from workforce
reductions.
Substantially all of the Company's employees are eligible to participate in the
stock ownership and incentive plans of The Chubb Corporation. The aggregate
costs associated with the plans were approximately $1,779,000 for the year ended
December 31, 1995.
F-16
<PAGE>
CHUBB COLONIAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. RELATED-PARTY TRANSACTIONS (CONTINUED)
REINSURANCE
The Company assumes from Chubb Life, under a modified-coinsurance agreement,
premiums and benefits related to interest-sensitive whole life and single
premium whole life contracts. The net reimbursements paid to Chubb Life during
1995 were $3,954,000. At December 31, 1995, the net payable to Chubb Life was
$693,000.
The Company assumes premiums and benefits from ChubbHealth under a stop-loss
reinsurance agreement. The net premiums assumed from ChubbHealth during 1995
were $510,000. There were no benefits assumed. At December 31, 1995, the net
receivable from ChubbHealth was $101,000.
JOINT MARKETING AGREEMENT
The Company has entered into an agreement with ChubbHealth to jointly create,
market and service managed care point-of-service products in the State of New
York. Net reimbursements from ChubbHealth during 1995 were $2,164,000. At
December 31, 1995 the net receivable from ChubbHealth was $7,232,000.
NOTE RECEIVABLE
The Company has a loan agreement with an affiliate providing a $29,000,000
revolving line of credit. The interest rate is variable and is based on the
Company's cost of short term funds. At December 31, 1995, the Company had a note
receivable of $26,000,000 under this agreement. Interest earned on this loan in
1995 was $1,257,000.
MORTGAGE GUARANTEE
The Company entered into an agreement, whereby it guaranteed a $10,000,000 first
mortgage obtained by Chubb Life on December 9, 1985. The first mortgage loan is
secured by a home office building, located at One Granite Place, Concord, NH.
The outstanding balance of the loan at December 31, 1995 was $5,212,000.
F-17
<PAGE>
CHUBB COLONIAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. REINSURANCE
The Company is involved in both the cession and assumption of reinsurance with
other insurance companies. Risks are reinsured with other companies to permit
the recovery of a portion of the direct losses. The Company's reinsurance
activity is primarily with Chubb Life. The maximum amount of individual life
insurance retained on any one life, including accidental death benefits, is
$1,400,000.
Selected data regarding reinsurance amounts appearing in the financial
statements for 1995 were as follows:
<TABLE>
<CAPTION>
CEDED TO ASSUMED
DIRECT OTHER FROM OTHER NET
AMOUNT COMPANIES COMPANIES AMOUNT
---------------------------------------------
(In thousands)
<S> <C> <C> <C> <C>
Premiums earned and policy charges
for the year:
Life insurance $ 34,841 $1,131 $43,109 $ 76,819
Accident and health insurance 243,983 1,274 510 243,219
---------------------------------------------
Total premiums and policy charges $278,824 $2,405 $43,619 $320,038
=============================================
</TABLE>
Reinsurance recoveries of the Company which have been deducted from benefits,
claims and expenses in the income statement were $1,759,000 in 1995.
F-18
<PAGE>
CHUBB COLONIAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. ACCIDENT AND HEALTH UNPAID CLAIMS
The process of estimating loss reserves is an imprecise science and reflects
significant judgmental factors. Management considers facts currently known and
the present state of health care markets in which it operates when establishing
accident and health claim reserves. Management believes that the aggregate claim
liabilities at December 31, 1995 are adequate to cover claims for losses which
have occurred, including both those known and those yet to be reported. However,
changes in market conditions may require additional increases in claim reserves
which may adversely affect results in future periods. This emergence cannot be
precisely estimated.
A reconciliation of the beginning and ending liability for accident and health
unpaid claims, net of reinsurance recoverable, and a reconciliation of the net
liability to the corresponding liability on a gross basis at December 31, 1995,
is as follows:
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
Gross liability at beginning of year $105,075
Less: reinsurance recoverable 1,545
-------------
Net liability at beginning of year 103,530
Incurred:
Current year 185,890
Prior years (12,160)
-------------
Total incurred 173,730
Paid:
Current year 147,613
Prior years 78,384
-------------
Total paid 225,997
-------------
Net liability at end of year 51,263
Plus: reinsurance recoverable 1,650
-------------
Gross liability at end of year $ 52,913
=============
</TABLE>
During 1995, the accident and health business experienced overall favorable
development of $12,160,000 on claim reserves established as of the previous year
end. This difference has been reflected in operating results. Claims settlement
costs are not developed as part of the claim liability and are reflected in
operating results in the years the claims are paid.
F-19
<PAGE>
CHUBB COLONIAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
9. DIVIDEND RESTRICTIONS
The Company is required to file annual statements with state insurance
regulatory authorities prepared on an accounting basis prescribed or permitted
by such authorities (statutory basis). GAAP differs in certain respects from
statutory accounting practices.
A comparison of shareholder's equity on a GAAP basis and policyholders' surplus
on a statutory basis as of December 31, 1995 is as follows:
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
GAAP $189,314
Statutory 120,443
</TABLE>
A comparison of GAAP and statutory net income for the year ended December 31,
1995 is as follows:
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
GAAP $ 9,785
Statutory 14,398
</TABLE>
The Company may pay dividends from statutory earned surplus as determined in
accordance with accounting practices prescribed or permitted by regulatory
authorities and the State of New Jersey. Dividend distributions exceeding the
greater of 10% of policyholders' surplus or statutory net income during the
preceding year are considered "extraordinary" and are subject to the prior
approval of the State of New Jersey Department of Insurance. The maximum
ordinary dividend distribution that may be made by the Company to Chubb Life
during 1996 is approximately $14,300,000.
10. DEBT AND CREDIT ARRANGEMENTS
The Company has borrowed in the short term commercial paper market during 1995.
These notes were issued by Chubb Capital Corporation, a subsidiary of The Chubb
Corporation. The interest rate is variable and based on Chubb Capital
Corporation's cost of funds. Interest paid on the borrowings in 1995 was
$1,559,000. In addition, the Company has a loan agreement with a bank providing
for a line of credit of $26,000,000 at a variable interest rate. At December 31,
1995, there were no borrowings against this line of credit.
F-20
<PAGE>
CHUBB COLONIAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
11. BUSINESS SEGMENTS
The Company is principally engaged in the sale of individual and group life and
health insurance products. These products are marketed primarily through
personal producing general agents and brokers throughout the United States.
Insurance revenues, net investment income and earnings before federal income
taxes for each class of business for the year ended December 31, 1995 were as
follows:
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
Revenues:
Individual insurance:
Premiums and policy charges $ 67,373
Investment income 41,222
Group insurance:
Premiums 252,665
Investment income 5,514
Earnings (loss) before federal income taxes:
Individual insurance 12,669
Group insurance (3,374)
Realized gains 4,747
-------------
$ 14,042
=============
</TABLE>
It is not practicable to determine identifiable assets and capital expenditures
applicable to the foregoing classes of business.
Earnings before federal income taxes by class of business reflect allocations of
investment income and significant expenses using allocation methods deemed to be
reasonable. Other acceptable allocation methods could produce different results
by groupings of classes of business.
12. LITIGATION
The Company is involved in pending or threatened lawsuits arising from the
normal conduct of its insurance business. Several suits have been brought
against the Company seeking both punitive and compensatory damages. Management
is of the opinion that these suits are substantially without merit, that valid
defenses exist, and that such litigation will not have a material effect on the
financial statements.
F-21
<PAGE>
PART II
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore, or hereafter duly adopted pursuant to
authority conferred in that section
UNDERTAKING REGARDING INDEMNIFICATION
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant, the registrant has been advised that in 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 expense incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer of controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The cover sheet.
The Prospectus consisting of 58 pages.
The undertaking to file reports.
The undertaking pursuant to Rule 484(b)(1) under the Securities Act of
1933.
The signatures.
Written consents of the following persons:
(a) Michael J. LeBoeuf, FSA, MAAA, contained in Exhibit 6 below.
(b) Ernst & Young LLP, contained in Exhibit 7 below.
The following exhibits:
1. The following exhibits correspond to those required by paragraph A of the
instructions as to exhibits in Form N-8B-2:
(a) Certified copy of Resolution of Board of Directors of Chubb Colonial
Life Insurance Company, adopted at a meeting held on March 2, 1994 (in lieu
of indenture or trust creating unit investment trust).
(b) Not applicable.
(c)(i) Form of Underwriting Agreement between Chubb Colonial Life
Insurance Company, Chubb Colonial Separate Account B and Chubb Securities
Corporation.
(ii) Specimen District Manager's Agreement of Chubb Securities
Corporation.
(iii) Specimen Sales Representative's Agreement of Chubb Securities
Corporation.
(iv) Schedule of Commissions.
(d) Not applicable.
(e)(i) Specimen Policy.
(ii) Form of Riders.
(f)(i) Amended and Restated Charter (with all amendments) of Chubb
Colonial Life Insurance Company.
(ii) By-Laws of Chubb Colonial Life Insurance Company.
(g) Not applicable.
(h)(i) Fund Distribution Agreement between Chubb America Fund, Inc., and
Chubb Securities Corporation (incorporated by reference to Exhibit 6(b) of
Post-Effective Amendment No. 7 to Form N-1A of Chubb America Fund, Inc.,
filed on April 11, 1990, Registration No. 2-94479).
(ii) Amendment to Fund Distribution Agreement between Chubb America Fund,
Inc. and Chubb Securities Corporation (incorporated by reference to Exhibit
6(a) of Post-Effective Amendment No. 7 to Form N-1A of Chubb America Fund,
Inc., filed on April 11, 1990, Registration No. 2-94479).
(iii) Amended and Restated Investment Management Agreement between Chubb
America Fund, Inc., and Chubb Investment Advisory Corporation (incorporated
by reference to Exhibit 5(a) of Post-Effective Amendment No. 7 to Form N-1A
of Chubb America Fund, Inc., filed on April 11, 1990, Registration No.
2-94479).
(iv) Sub-Investment Management Agreement by, between and among Chubb
America Fund, Inc., Chubb Investment Advisory Corporation and Templeton,
Galbraith & Hansberger Ltd. (incorporated by reference to Exhibit 5(e) of
Post-Effective Amendment No. 11 to Form N-1A of Chubb America Fund, Inc.,
filed April 14, 1993, Registration No. 2-94479).
II-1
<PAGE>
(vii) Sub-Investment Management Agreement by, between and among Chubb
America Fund, Inc., Chubb Investment Advisory Corporation and Van Eck
Associates Corporation (incorporated by reference to Exhibit 5(f) of
Post-Effective Amendment No. 7 to Form N-1A of Chubb America Fund, Inc.,
filed on April 11, 1990, Registration No. 2-94479).
(viii) Sub-Investment Management Agreement by, between and among Chubb
America Fund, Inc., Chubb Investment Advisory Corporation and Chubb
Asset Managers, Inc. (incorporated by reference to Exhibit 5(e) of Post-
Effective Amendment No. 7 to Form N-1A of Chubb America Fund, Inc.,
filed on April 11, 1990, Registration No. 2-94479).
(ix) Sub-Investment Management Agreement among Chubb America Fund,
Inc., Chubb Investment Advisory Corporation and Pioneering Management
Corporation (incorporated by reference to Exhibit 5(g) of Post-Effective
Amendment No. 7 to Form N-1A of Chubb America Fund, Inc., filed on April
11, 1990, Registration No. 2-94479).
(x) Sub-Investment Management Agreement by, between and among Chubb
America Fund, Inc., Chubb Investment Advisory Corporation and Chubb
Asset Managers, Inc. (incorporated by reference to Exhibit 5(h) of Post-
Effective Amendment No. 9 to Form N-1A of Chubb America Fund, Inc.,
filed February 28, 1992, Registration No. 2-94479).
(xi) Custodian Agreement between Chubb America Fund, Inc., and
Citibank, N.A. (incorporated by reference to Exhibit 8 of Post-Effective
Amendment No. 8 to Form N-1A of Chubb America Fund, Inc., filed on
February 21, 1991, Registration No. 2-94479).
(xii) Amendment to the Custodial Services Agreement between Chubb
America Fund, Inc. and Citibank, N.A. (incorporated by reference to
Exhibit 8(b) of Post-Effective Amendment No. 11 to Form N-1A of Chubb
America Fund, Inc. filed on April 14, 1993, Registration No. 2-94479).
(xiii) Amendment No. 2 to Custodial Services Agreement between Chubb
America Fund, Inc. and Citibank, N.A. (incorporated by reference to
Exhibit 8(c) of Post-Effective Amendment No. 11 to Form N-1A of Chubb
America Fund, Inc. filed on April 14, 1993, Registration No. 2-94479).
(xiv) Investment Management Agreement between Chubb America Fund, Inc.
and Chubb Investment Advisory Corporation for the Growth and Income
Portfolio (incorporated by reference to Exhibit 5(i) of Post-Effective
Amendment No. 9 to Form N-1A of Chubb America Fund, Inc. filed on
February 28, 1992, Registration No. 2-94479).
(xv) Investment Management Agreement between Chubb America Fund, Inc.
and Chubb Investment Advisory Corporation for the Capital Growth
Portfolio (incorporated by reference to Exhibit 5(j) of Post-Effective
Amendment No. 9 to Form N-1A of Chubb America Fund, Inc. filed on
February 28, 1992, Registration No. 2-94479).
(xvi) Investment Management Agreement between Chubb America Fund, Inc.
and Chubb Investment Advisory Corporation for the Balanced Portfolio
(incorporated by reference to Exhibit 5(k) of Post-Effective Amendment
No. 9 to Form N-1A of Chubb America Fund, Inc. filed on February 28,
1992, Registration No. 2-94479).
(xvii) Sub-Investment Management Agreement by, between and among Chubb
America Fund, Inc., Chubb Investment Advisory Corporation and Chubb
Asset Managers, Inc. (incorporated by reference to Exhibit 5(l) of Post-
Effective Amendment No. 11 to Form N-1A of Chubb America Fund, Inc.
filed on April 14, 1993, Registration No. 2-94479).
(xviii) Sub-Investment Management Agreement by, between and among
Chubb America Fund, Inc., Chubb Investment Advisory Corporation and
Janus Capital Corporation (incorporated by reference to Exhibit 5(m) of
Post-Effective Amendment No. 11 to Form N-1A of Chubb America Fund, Inc.
filed on April 14, 1993, Registration No. 2-94479).
(xix) Sub-Investment Management Agreement by, between and among Chubb
America Fund, Inc., Chubb Investment Advisory Corporation and Phoenix
Investment Counsel, Inc. (incorporated by reference to Exhibit 5(n) of
Post-Effective Amendment No. 11 to Form N-1A of Chubb America Fund, Inc.
filed on April 14, 1993, Registration No. 2-94479).
(xx) Form of Investment Management Agreement between Chubb America
Fund, Inc. and Chubb Investment Advisory Corporation with respect to the
Emerging Growth Portfolio (incorporated by reference to Exhibit 5(p) of
Post-Effective Amendment No. 12 to Form N-1A of Chubb America Fund, Inc.
filed on February 14, 1995, Registration No. 2-94479).
II-2
<PAGE>
(xxi) Form of Sub-Investment Management Agreement between Chubb
America Fund, Inc., Chubb Investment Advisory Corporation and
Massachusetts Financial Services Company with respect to the Emerging
Growth Portfolio (incorporated by reference to Exhibit 5(q) of Post-
Effective Amendment No. 12 to Form N-1A of Chubb America Fund, Inc.
filed on February 14, 1995, Registration No. 2-94479).
(i) Not Applicable.
(j) Application.
2.Specimen Policy (same as 1(e)).
3.Opinion and Consent of counsel as to securities being registered./2/
4.Not applicable.
5.Not applicable.
6.Actuarial opinion and consent of Michael J. LeBoeuf, FSA, MAAA.
7.Consent of Ernst & Young LLP.
8. Procedures Memorandum, as amended, pursuant to Rule 6e-3(T)(b)(12)(iii)
under the 1940 Act. To be filed by Amendment.
9.Specimen Notice of Right of Withdrawal, pursuant to Rule 6e-
3(T)(b)(13)(viii).
10.Representations, description and undertakings regarding mortality and
expense risk charge, pursuant to Rule 6e-3(T)(b)(13)(iii)(F).
11. (a) Undertaking to Guarantee Obligations of Principal Underwriters,
pursuant to Rule 6e-3(T)(b)(13)(vi).
(b) Statement of Chubb Colonial Life Insurance Company pursuant to Rule
27d-2 under the Investment Company Act of 1940.
12. Form of Reinsurance Agreement.
13. Not Applicable.
14. Powers of Attorney.
- -------
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT,
CHUBB COLONIAL SEPARATE ACCOUNT B, CERTIFIES THAT IT MEETS THE REQUIREMENTS OF
SECURITIES ACT RULE 485(B) FOR EFFECTIVENESS OF THIS POST-EFFECTIVE AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT AND HAS DULY CAUSED THIS POST-EFFECTIVE
AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED, AND ITS SEAL TO BE HEREUNTO AFFIXED AND
ATTESTED, ALL IN CONCORD, NEW HAMPSHIRE, ON THE 12TH DAY OF APRIL, 1996.
Chubb Colonial Separate Account B
(Registrant)
(Seal)
Chubb Colonial Life Insurance Company
(Depositor)
/s/ Frederick H. Condon
By: _____________________________________
FREDERICK H. CONDON
Senior Vice President, General
Counsel and Secretary
Title: __________________________________
Attest:
/s/ Charles C. Cornelio
__________________________________
CHARLES C. CORNELIO, ASSISTANT
SECRETARY
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, CHUBB COLONIAL
LIFE INSURANCE COMPANY CERTIFIES THAT IT MEETS THE REQUIREMENTS OF SECURITIES
ACT RULE 485(B) FOR EFFECTIVENESS OF THIS POST-EFFECTIVE AMENDMENT NO. 1 TO THE
REGISTRATION STATEMENT AND HAS DULY CAUSED THIS POST-EFFECTIVE AMENDMENT NO. 1
TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED
THEREUNTO DULY AUTHORIZED, AND ITS SEAL TO BE HEREUNTO AFFIXED AND ATTESTED,
ALL IN CONCORD, NEW HAMPSHIRE ON THE 12TH DAY OF APRIL, 1996.
Chubb Colonial Life Insurance Company
(Seal) /s/ Frederick H. Condon
By:
--------------------------------------
FREDERICK H. CONDON
Title: Senior Vice President, General
Counsel and Secretary
--------------------------------------
Attest:
/s/ Charles C. Cornelio
_________________________________
CHARLES C. CORNELIO, ASSISTANT
SECRETARY
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND
ON THE DATE INDICATED.
SIGNATURES TITLE
* Director and Vice
- --------------------------------- Chairman
PERCY CHUBB, III
/s/ Frederick H. Condon Director, Senior
- --------------------------------- Vice President,
FREDERICK H. CONDON General Counsel
and Secretary
* Director,
- --------------------------------- Executive Vice
RANDELL G. CRAIG President and
Chief Operating
Officer
* Director and Vice
- --------------------------------- Chairman
DAVID S. FOWLER
II-5
<PAGE>
SIGNATURES TITLE
* Vice President and
- ---------------------------------- Treasurer
RUSSELL C. SIMPSON
* Director and
- ---------------------------------- Chairman
DEAN R. O'HARE
* Director,
- ---------------------------------- President and
THERESA M. STONE Chief Executive
Officer
* Executive Vice
- ---------------------------------- President, Chief
RICHARD V. WERNER Financial
Officer, and
Director
*By: /s/ Frederick H. Condon
------------------------------
FREDERICK H. CONDON
Frederick H. Condon, Attorney-in-Fact, executed on the 12th day of April,
1996, pursuant to Powers of Attorney filed as Exhibit 14 hereto.
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
PAGES*
------------
<C> <S> <C>
1.(c)(i) Underwriting Agreement Between Chubb Colonial Life
Insurance Company, Chubb Colonial Separate Account B
and Chubb Securities Corporation....................
1.(e)(i) Specimen Policy.....................................
1.(e)(ii) Form of Riders
Children's Term Insurance Rider....................
Guaranteed Insurability Rider......................
Accidental Death Benefit Rider.....................
Waiver of Premium Disability Rider.................
Exchange of Insured Rider..........................
Terminal Illness Accelerated Benefit Rider.........
Other Insured Term Rider...........................
Primary Insured Term Rider.........................
Waiver of Specified Premium Rider..................
Guaranteed Death Benefit Rider.....................
1.(j) Application.........................................to be filed by amendment
3. Opinion and Consent of counsel as to securities
being offered.......................................
6. Actuarial opinion and consent of Michael J. LeBoeuf,
FSA, MAAA...........................................
7. Consent of Ernst & Young LLP........................
8. Procedures Memorandum pursuant to Rule 6e-
3(T)(b)(12)(iii) under the 1940 Act.................to be filed by amendment
9. Specimen Notice and of Right of Withdrawal..........
</TABLE>
- -------
*In original only
<PAGE>
Exhibit 1(a)
RESOLUTION OF BOARD OF DIRECTORS
OF
THE COLONIAL LIFE INSURANCE COMPANY OF AMERICA
<PAGE>
SEPARATE ACCOUNT FOR VARIABLE
UNIVERSAL LIFE
--------------
THE COLONIAL LIFE INSURANCE COMPANY OF AMERICA
I, Charles C. Cornelio, Assistant Secretary of The Colonial Life Insurance
Company of America, do hereby certify that the following resolutions were
adopted at a meeting of the Board of Directors on March 2, 1994:
RESOLVED: That pursuant to the provision of Sections 17B:28-7 of the New Jersey
Statutes Annotated, and any regulations promulgated thereunder by the New
Jersey Commissioner of Insurance, the Board of Directors of The Colonial Life
Insurance Company of America ("the Company") does hereby establish a separate
account to be known as "Colonial Separate Account B" for the purpose of
allocating thereto any amounts paid to or held by the Company in connection with
the issuance of variable life insurance policies (the "Policies"), including,
but not limited to, amounts held under optional settlement modes;
FURTHER RESOLVED: That the Chairman, the Vice Chairman, the President, any
Senior Vice President and the Treasurer, or any of them, (herein "Officers") be,
and they each hereby are, severally authorized and directed, in conjunction with
the Company's independent certified public accountants, legal counsel,
independent consultants and/or such others as they may deem appropriate, to take
such actions as they may deem necessary or appropriate to receive approval of
the operation of Colonial Separate Account B by the New Jersey Commissioner of
Insurance.
FURTHER RESOLVED: That the income, gains and losses, realized or unrealized, in
Colonial Separate Account B shall be credited to or charged against the amounts
allocated to the Colonial Separate Account B in accordance with the terms of the
Policies, without regard to other income, gains or losses of the Company;
FURTHER RESOLVED: That Separate Account B shall be legally segregated and the
assets and contract liabilities shall not be chargeable with liabilities arising
out of any other business which the Company may conduct and such assets shall
not be available to general creditors of the Company in the event of insolvency
of the Company to the full extent permitted by applicable law;
FURTHER RESOLVED: That Colonial Separate Account B shall be divided into
divisions and subdivisions so that each division or subdivision may invest in
the shares of designated investment companies with the net premiums received
under the Policies as directed by the owners of said Policies;
<PAGE>
-2-
FURTHER RESOLVED: That the Executive Committee of the Board of Directors be,
and it hereby is, expressly authorized in its discretion and as it may deem
appropriate from time to time in accordance with applicable laws and regulations
(a) to divide Colonial Separate Account B into one or more divisions or
subdivisions, (b) to modify, consolidate, or eliminate any such divisions or
subdivisions, (c) to change the designation of Colonial Separate Account B to
another designation (d) to further designate any divisions or subdivisions
thereof, and (e) to take such other action as may be required to further
Colonial Separate Account B's compliance with applicable state and federal laws;
FURTHER RESOLVED: That amounts allocated to Colonial Separate Account B and any
accumulations thereon, or to any division of Colonial Separate Account B, may be
invested or reinvested in any class of investments which may be authorized in
the Policies, including, but not limited to, shares of an investment company or
companies established pursuant to the Investment Company Act of 1940 and
regulations promulgated thereunder, without regard to any requirements or
limitations prescribed by the laws of the State of New Jersey governing the
investments of life insurance companies; provided, that no assets held in
Colonial Separate Account B will be invested in any investments prohibited by
Section 17B:28-9 of the New Jersey Statutes Annotated:
FURTHER RESOLVED: That the officers be, and they each hereby are, authorized
and directed to execute such agreement or agreements as they deem necessary or
appropriate with one or more investment companies established pursuant to the
Investment Company Act of 1940 and regulations promulgated thereunder.
Further RESOLVED: That the following binding Standards of Conduct applicable to
the Company, its officers, directors, employees, and affiliates ("Persons") with
respect to the purchase and sale of investments of Colonial Separate Account B
be adopted:
(1) No person shall engage in any action or activity which the Person has
reason to believe could in any way conflict with Colonial Separate
Account B's interest.
(2) No person, directly or indirectly, shall, in connection with any
transaction, (a) employ any device, scheme or artifice to defraud
Colonial Separate Account B; (b) make to Colonial Separate Account B
any untrue statement of a material fact or omit to state to Colonial
Separate Account B a material fact necessary in order to make the
<PAGE>
-3-
statements made, in light of the circumstances under which they are
made, not misleading; (c) engage in any act, practice or course of
business which operates or would operate as a fraud or deceit upon
Colonial Separate Account B, or (d) engage in any manipulative
practice with respect to the Colonial Separate Account B.
(3) No person shall accept, directly or indirectly, any gift, favor,
service, or anything of value from any broker, dealer or other person
which could be construed as being compensation for causing Colonial
Separate Account B to engage in any transaction with such broker,
dealer or other person.
(4) Each Person shall keep confidential all information regarding past or
future transactions, investment programs and studies of Colonial
Separate Account B, except as may be required by applicable law or as
approved by the Company's Board of Directors.
FURTHER RESOLVED: That the Officers of the Company be, and they each hereby
are, severally authorized to invest cash in Colonial Separate Account B or in
any division thereof as may be deemed necessary or appropriate to facilitate the
commencement of Colonial Separate Account B's operations, including but not
limited to compliance with applicable tax laws, or to meet any minimum capital
requirements under the Investment Company Act of 1940 and to transfer cash or
securities from time to time between the Company's general account and Colonial
Separate Account B as deemed necessary or appropriate so long as such transfers
are not prohibited by law and are consistent with the terms of the Policies;
FURTHER RESOLVED: That the Officers be, and they each hereby are, authorized
and directed, in conjunction with the Company's independent certified public
accountants, legal counsel, independent consultants or such others as they deem
appropriate, to take such action as they deem necessary or appropriate to:
(a) Register Colonial Separate Account B as a unit investment trust under
the Investment Company Act of 1940, as amended;
(b) Register the Policies in such amounts, which may be indefinite
amounts, as the Officers shall from time to time deem appropriate
under the Securities Act of 1933; and
(c) Take all other action on behalf of Chubb Separate Account B and on
behalf of the Company as sponsor
<PAGE>
-4-
and depositor which in their judgment may be necessary or appropriate
in connection with the offering of said Policies for sale and the
operation of Colonial Separate Account B in order to comply with the
Investment Company Act of 1940, the Securities Exchange Act of 1934,
the Securities Act of 1933 and all other applicable federal laws and
regulations, including the filing of any registration statements,
amendments to registration statements, notification of registration
statements, any undertakings, and any applications for exemptions from
the Investment Company Act of 1940, the Securities Act of 1933 or
other applicable federal laws and regulations;
FURTHER RESOLVED: That the President of the Company, and any Senior Vice
President of the Company, are duly appointed as agents for service of process
under such registration statements and duly authorized to receive communications
and notices from the Securities and Exchange Commission with respect thereto and
exercise any powers given to such agents by the rules and regulations under the
Securities Act of 1933;
FURTHER RESOLVED: That the Officers be, and they each hereby are, authorized
and directed on behalf of Colonial Separate Account B and on behalf of the
Company to take any and all actions that any of them may deem necessary or
advisable in order to offer and sell the Policies, including any registrations,
filings and qualifications both of the Company, its officers, agents and
employees, and of the Policies, under the insurance and securities laws of any
state or any other jurisdiction, and in connection therewith to prepare,
execute, deliver and file all such applications, reports, covenants,
resolutions, applications for exemptions, consents to service of process and
other papers and instruments as may be required under such laws, and to take any
and all further actions which said Officers or legal counsel for the Company may
deem necessary or desirable in order to maintain such registrations or
qualifications for as long as said Officers or legal counsel deem it to be in
the best interest of Colonial Separate Account B and the Company;
FURTHER RESOLVED: That any form of corporate resolution required by any State
or other jurisdiction in connection with any filing, registration, or approval
as contemplated in these resolutions is hereby adopted and the Officers be, and
they each hereby are, authorized to certify to the adoption thereof by this
Board;
FURTHER RESOLVED: That the Officers be, and they each hereby are, authorized in
the names and on behalf of Colonial Separate Account B and the Company to
execute and file
<PAGE>
-5-
irrevocable written consents to be used in such States and other jurisdictions
wherein such consents to service of process may be requisite under the insurance
or securities laws thereof in connection with such registration or qualification
of the Policies or Colonial Separate Account B and to appoint the appropriate
State or public official, or such other person that may be specified by said
insurance or securities laws, as agents of Colonial Separate Account B and of
the Company for the purpose of receiving and accepting process;
FURTHER RESOLVED: That the Officers be, and they each hereby are, authorized to
establish procedures to the extent required or deemed appropriate and subject to
the limitations of applicable law, for providing a pass-through of voting rights
for owners of the Policies with respect to the shares of an investment company
or companies, attributable to them, owned by Colonial Separate Account B;
FURTHER RESOLVED: That the following general Standard of Suitability, which
expresses the policy of the Company with respect to determining the suitability
for applicants be adopted: No recommendations shall be made to a potential
applicant to purchase a variable life insurance product and no variable life
insurance product shall be issued in the absence of reasonable grounds to
believe that the purchase of same is not unsuitable for such applicant on the
basis of information furnished after reasonable inquiry of such applicant
concerning the applicant's insurance and investment objective, financial
situation and needs, and any other information known to the company or to the
sales representative making the recommendations;
FURTHER RESOLVED: That the Officers be, and they each hereby are, authorized
and directed to execute such agreement or agreements as they deem necessary or
appropriate:
(a) With Chubb Securities Corporation, or any other qualified entity,
under which Chubb Securities Corporation or such other entity will be
appointed principal underwriter and distributor for the Policies; and
(b) With one or more qualified banks or other qualified entities including
the Company or any of its affiliates to provide administrative and/or
custodial service in connection with the establishment and maintenance
of Colonial Separate Account B and the design, issuance and
administration of the Policies;
FURTHER RESOLVED: That the Officers be, and they each hereby are, authorized
and directed on behalf of the Company to
<PAGE>
-6-
execute and deliver such agreements and other documents and to do such acts and
things as each of them may in their sole discretion deem necessary or desirable
to carry out the foregoing resolutions and the intent and purposes thereof.
Date: /s/ Charles C. Cornelio
-------------- -------------------------
Charles C. Cornelio
Assistant Secretary
<PAGE>
Exhibit 1 (c) (i)
FORM
OF
DISTRIBUTION AGREEMENT
AMONG
THE COLONIAL LIFE INSURANCE COMPANY OF AMERICA,
COLONIAL SEPARATE ACCOUNT B
AND
CHUBB SECURITIES CORPORATION
<PAGE>
SEPARATE ACCOUNT DISTRIBUTION AGREEMENT
---------------------------------------
AMONG
-----
CHUBB SECURITIES CORPORATION,
-----------------------------
THE COLONIAL LIFE INSURANCE COMPANY OF AMERICA
----------------------------------------------
AND
---
COLONIAL SEPARATE ACCOUNT B
---------------------------
<PAGE>
SEPARATE ACCOUNT
----------------
DISTRIBUTION AGREEMENT
----------------------
AGREEMENT made this __________ day of ______________, 1994, by and between
CHUBB SECURITIES CORPORATION, a corporation organized and existing under the
laws of the State of New Hampshire with its principal place of business in
Concord, New Hampshire (herein the "DISTRIBUTOR"), THE COLONIAL LIFE INSURANCE
COMPANY OF AMERICA, an insurance company organized and existing under the laws
of the State of New Jersey with its home office in Parsippany, New Jersey
(herein the "COMPANY"), and COLONIAL SEPARATE ACCOUNT B, a separate account
established pursuant to the provisions of Section 17B:28-7 of the New Jersey
Statutes Annotated and a registered investment company under the Investment
Company Act of 1940 (the "1940 Act") (herein the "Separate Account").
W I T N E S S E T H:
WHEREAS, the Company and the Separate Account propose to offer for sale
certain variable life insurance policies (together with any riders, the
"Policies") which may be deemed to be securities under the Securities Act of
1933 (the "1933 Act") and the laws of some states; and
WHEREAS, the Distributor, a wholly-owned subsidiary of Chubb Life Insurance
Company of America, and an affiliate of the Company, is registered as a broker-
dealer with the Securities and Exchange Commission (the "SEC") under the
Securities Exchange Act of 1934 (the "1934 Act") and is a member of the National
Association of Securities Dealers,
<PAGE>
Inc. (the "NASD"); and
WHEREAS, the parties desire to have the Distributor act as principal
underwriter for the Separate Account and assume full responsibility for the
securities activities of any "person associated" (as that term is defined in
Section 3(a)(18) of the 1934 Act) with the Distributor and engaged directly or
indirectly in the variable life insurance operation (the "Associated Persons");
and
WHEREAS, the parties desire to have the Company perform certain services in
connection with the sale of the Policies;
NOW, THEREFORE, in consideration of the covenants and mutual promises
herein contained and of other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, the Distributor and the
company agree as follows:
1. The Distributor will act as the exclusive principal underwriter during
the term of this Agreement in each state or other jurisdiction where the
Policies may legally be sold. The Distributor shall at all times function as and
be deemed to be an independent contractor and will be under no obligation to
effectuate any particular amount of sales of Policies or to promote or make
sales, except to the extent the Distributor deems advisable. Anything in this
Agreement to the contrary notwithstanding, the Company retains the ultimate
right to control the sale of the Policies, including the right to suspend sales
in any jurisdiction or jurisdictions, to appoint and discharge agents of the
-2-
<PAGE>
Company, or to refuse to sell a Policy to any applicant for any reason
whatsoever.
2. The Distributor will assume full responsibility for the securities
activities of, and for securities law compliance by, the Associated Persons,
including, as applicable, compliance with the NASD Rules of Fair Practice and
Federal and state laws and regulations. The Distributor, directly or through the
Company as its agent, will (a) make timely filings with the SEC, NASD, and any
other securities regulatory authorities of any sales literature or materials
relating to the Separate Account, as required by law to be filed, (b) make
available to the Company copies of any agreements or plans intended for use in
connection with the sale of the Policies in sufficient number and in adequate
time for clearance by the appropriate regulatory authorities before they are
used, and (c) train the Associated Persons, use its best efforts to prepare them
to complete satisfactorily any and all applicable NASD and state qualification
examinations, register the Associated Persons as its registered representatives
before they engage in securities activities, and supervise and control them in
the performance of such activities. In connection with the clearance by
appropriate regulatory authorities, the parties agree to use their best efforts
to obtain such clearance by the appropriate regulatory authorities as
expeditiously as reasonably possible and shall not use any materials, plan or
agreement in any jurisdiction unless all filings have been
-3-
<PAGE>
made and approvals obtained that are necessary to make said use proper and legal
therein.
3. The Company shall undertake to appoint the Distributor's qualified
representatives as life insurance agents of the Company, and shall be
responsible for ensuring that only agents properly qualified under the insurance
laws of all relevant jurisdictions will engage in the offer and sale of
Policies. Completed applications for the Policy shall be transmitted directly to
the Company for acceptance or rejection in accordance with insurance
underwriting and selection rules established by the Company. Initial and
subsequent premium payments under the Policies shall be made payable to the
Company and shall be held in a fiduciary capacity for and forwarded to the
Company promptly (and, in any event, within not more than 30 days).
4. The Distributor shall take reasonable steps to ensure that the various
representatives appointed by it shall not make recommendations to an applicant
to purchase a Policy in the absence of reasonable grounds to believe that the
purchase of the Policy is suitable for said applicant. While not limited to the
following, a determination of suitability shall be based on information
furnished to a representative after reasonable inquiry of such applicant (and
any other information known about the applicant) concerning the applicant's
insurance and investment objectives and financial situation and needs, including
the likelihood that the applicant will make sufficient premium payments to
derive the
-4-
<PAGE>
benefits thereof.
No person shall use any sales aids, promotional material, or sales
literature which has not been specifically approved in advance by the Company,
and the Company will be responsible for filing such items, as necessary, with
any insurance regulatory authorities and, where necessary, obtaining approvals
of said authorities. No person shall, in connection with the offer or sale of
the Policies, make any representations or communicate any information regarding
the Policies or the Company, which are not contained in materials approved by
the Company as aforesaid or in the then-effective Registration Statement of the
Separate Account under the Securities Act of 1933.
5. As between the Company and the Distributor, the Company will, except as
otherwise provided in this Agreement, bear and/or reimburse the Distributor for
the cost of all services and expenses, including direct legal services and
expenses and registration, filing and other fees, in connection with (a)
registering and qualifying the Separate Account, the Policies, and (to the
extent requested by the Distributor) the Associated Persons with Federal and
state regulatory authorities and the NASD (including the training of Associated
Persons for this purpose), (b) printing, filing and distributing all
registration statements and prospectuses (including amendments), Policies,
notices, periodic reports, proxy solicitation material, sales literature and
advertising filed or distributed in connection with the sale of the
-5-
<PAGE>
Policies, (c) complying with the requirements of Section 7 below, and (d)
performing its obligations under its Distribution Agreement with Chubb America
Fund, Inc., including, without limitation, the Distributor's obligations
thereunder to pay said fund's distribution expenses.
6. The Company will, in connection with the sale of the Policies,
reimburse the Distributor for all amounts (including the sales commissions and
managers' overrides described in the prospectus for the Policies) paid to the
sales representatives, managers, or to other broker-dealers who have entered
into selling agreements with the Distributor.
7. The Distributor, directly or through the Company as its agent, will (a)
maintain and preserve in accordance with Rules 17a-3 and 17a-4 under the 1934
Act all books and records required to be maintained in connection with the offer
and sale of the Policies being distributed pursuant to this Agreement, which
books and records shall remain the property of the Distributor and shall be
subject to inspection by the Securities and Exchange Commission in accordance
with Section 17(a) of the Act, and (b) upon or prior to completion of each
transaction for which a confirmation is legally required, send a written
confirmation for each such transaction reflecting the facts of the transaction.
All records maintained hereunder will be available to properly-constituted
governmental authorities, should the same be required to be filed with or
reviewed by
-6-
<PAGE>
said authorities. The Company shall have access to all records maintained
hereunder and, upon reasonable request, copies shall be furnished to the
Company.
8. The Distributor will execute such papers and do such acts and things as
shall from time to time be reasonably requested by the Company for the purpose
of (a) maintaining the registration of the Policies under the 1933 Act and the
Separate Account under the 1940 Act, and (b) qualifying and maintaining
qualification of the Policies for sale under the applicable laws of any state.
9. Each party hereto shall advise the other promptly of (a) any action of
the SEC or any authorities of any state or territory, of which it has knowledge,
affecting registration or qualification of the Separate Account or the Policies,
or the right to offer the Policies for sale, and (b) the happening of any event
which makes untrue any statement or which requires the making of any change, in
the registration statement or prospectus in order to make the statements therein
not misleading.
10. Neither party hereto shall be liable to the other for any action taken
or omitted by it, or any of its officers, agents or employees, in performing
their responsibilities under this Agreement in good faith and without
negligence, willful misfeasance or reckless disregard of such responsibilities.
11. As compensation for the Distributor's assuming the expenses and
performing the services to be assumed and
-7-
<PAGE>
performed by it pursuant to this Agreement, the Distributor shall receive from
the Company such amounts and at such times as may from time to time be agreed
upon by the Distributor and the Company.
12. As compensation for its services performed and expenses incurred under
this Agreement, the Company will receive all amounts charged as "Sales Charges"
under the Policies. It is understood that the Company assumes the risk that the
above compensation for its services may not prove sufficient to cover its actual
expenses in connection therewith.
13. It is understood that any Policyholder or agent of the Separate
Account may be a policyholder, shareholder, director, officer, employee or agent
of, or be otherwise interested in, the Distributor, any affiliated person of the
Distributor, any organization in which the Distributor may have an interest or
any organization which may have an interest in the Distributor; that the
Distributor, any such affiliated person or any such organization may have an
interest in the Separate Account; and that the existence of any such dual
interest shall not affect the validity hereof or of any transaction hereunder
except as may otherwise be provided in the articles of organization or by-laws
of the Distributor or by specific provisions of applicable law. For the purpose
of this Agreement, the term "affiliated persons" shall have its respective
meaning defined in the 1940 Act subject, however, to such exemptions as may be
granted by or
-8-
<PAGE>
pursuant to that Act.
14. This Agreement shall become effective as of the date of its execution,
shall continue in full force and effect until terminated, may be amended at any
time by mutual agreement of the parties hereto, and may be terminated at any
time without penalty on sixty days' written notice by any party to the others.
15. The Distributor will not assign or delegate its responsibilities under
this Agreement, except with the written consent of the Company.
16. This Agreement shall be construed in accordance with the laws of the
State of New Hampshire.
17. The Distributor shall keep confidential any information obtained
pursuant to this Agreement, and shall disclose such information only if the
Company has authorized such disclosure, or if such disclosure is expressly
required by applicable Federal or state authorities.
18. The Distributor, the Company and the Separate Account agree to
cooperate fully in any insurance regulatory examination, investigation, or
proceeding or any juridical proceeding arising in connection with the Policies.
The Distributor, the Company and the Separate Account further agree to cooperate
fully in any securities regulatory examination, investigation or proceeding or
any judicial Proceeding with respect to the Company, the Separate Account, the
Distributor, their affiliates and their agents or representatives, to the extent
that such examination,
-9-
<PAGE>
investigation or proceeding is in connection with Policies distributed under
this Agreement. The Distributor shall furnish applicable Federal and state
regulatory authorities with any information or reports in connection with its
services under this Agreement, which authorities may request in order to
ascertain whether the Company's operations are being conducted in a manner
consistent with any applicable law or regulations.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
CHUBB SECURITIES CORPORATION
BY:
---------------------------------
TITLE:
------------------------------
THE COLONIAL LIFE INSURANCE COMPANY OF
AMERICA
BY:
---------------------------------
TITLE:
------------------------------
COLONIAL SEPARATE ACCOUNT B
BY: THE COLONIAL LIFE INSURANCE COMPANY OF
AMERICA
BY:
---------------------------------
TITLE:
------------------------------
-10-
<PAGE>
Exhibit 1(c) (ii)
SPECIMEN
DISTRICT MANAGER'S AGREEMENT
OF
CHUBB SECURITIES CORPORATION
<PAGE>
[LOGO APPEARS HERE]
Chubb Securities Corporation
One Granite Place, PO Box 2005
Concord, New Hampshire 03302
(603) 226-5000
DISTRICT MANAGER'S
AGREEMENT
This AGREEMENT is made by and between CHUBB SECURITIES CORPORATION, a
corporation organized and existing under the laws of the State of New Hampshire
with its principal place of business in Concord, New Hampshire (hereinafter
called the Company) and ______________________________________________________
___________________ of ________________________ (hereinafter called the District
Manager).
In consideration of the premises and the mutual agreements herein made. it is
agreed as follows:
Effective Date
The agreement shall be effective as of ___________________________, 19______.
Territory
It is agreed that the District Manager will represent the Company in the
State(s) of _________________________________________________________ and any
other state in which the District Manager becomes registered hereafter.
Terms
1. The Company, subject to the terms and conditions contained herein, hereby
authorizes the District Manager, as an independent contractor, to represent it
in the sale of securities for which the Company may now or hereafter act as
principal, dealer, wholesaler or underwriter. The District Manager agrees to
direct the sales activities of each Sales Representative assigned to the
District Manager's agency and further to enforce the Supervisory Procedures (and
any amendments thereto) issued by the Company from time to time in regard to
such Sales Representatives. The District Manager shall at all times act in
strict compliance with all state and federal securities laws. Including but not
limited to the Federal Securities Act of 1933, as amended, and with the rules
and regulations of the National Association of Securities Dealers, Inc.
2. The Company reserves the right to accept or reject any or all business
submitted to it by the District Manager. In all cases in which the question of
credit for business, confirmation of orders, or compensation is not definitely
stipulated herein, the decision of the Company shall be final.
3. The District Manager agrees to use his/her best efforts on behalf of the
Company while so representing it, and will not engage in any employment by, or
representation of, any issuer of or dealer in securities other than those
offered by the Company without the written consent of the Company. The District
Manager agrees to promptly report and remit to the Company all checks, drafts or
funds of any kind received from customers without commingling same with the
District Manager's own funds, and in the event of failure to do so, all rights
hereunder, including all accrued and accruing commissions, shall immediately
terminate. If and when requested by the Company, the District Manager shall
furnish a surety bond satisfactory to the Company. This Agreement shall be
immediately and automatically cancelled upon cancellation of coverage by the
surety under said bond.
4. The District Manager shall be free to exercise his/her own judgment as to
whom to solicit and the time, place and manner of solicitation. The District
Manager shall pay all expenses in connection with conducting business as a Sales
Representative and shall comply with all federal and state laws, ordinances and
regulations relating thereto.
1
<PAGE>
The District Manager shall make no solicitation for any securities until he/she
has been duly registered under the applicable state and federal laws, and until
any license or permit required by law has been obtained, and unless such
registration is then in effect.
5. The District Manager agrees that, in connection with all solicitations,
he/she will not take or recommend any action which they may have reason to
believe is not in the best interests of each client or customer. The District
Manager agrees not to make any untrue statement or misrepresentations, or omit
any material facts concerning the securities involved. The District Manager also
agrees to comply in all respects with the Rules of Fair Practice, and other
applicable rules of the National Association of Securities Dealers, Inc. and all
applicable federal and state laws.
6. The District Manager hereby assigns to the Company and all commissions or
other monies owed to the District Manager under any contracts he/she may have
with the Chubb Life Insurance Company of America or any subsidiary or affiliate
thereof, as security for the repayment of any loan or extensions of credit made
to the customers of the District Manager at the District Manager's request or
for any losses incurred by the Company in any transaction. The District Manager
hereby authorizes Chubb Life Insurance Company of America, or any of its
subsidiaries or affiliates to pay such monies to the Company to the extent of
the Company's interest therein upon receipt of written demand by the Company.
7. If the District Manager's contract with Chubb Securities Corporation has not
been terminated, the District Manager shall be entitled to commissions with
respect to all sales the District Manager shall make in accordance with the
Commission Schedules issued from time to time by the Company and incorporated by
reference herein. All commissions are payable subject to receipt of full payment
for the securities sold. The District Manager hereby expressly waives all rights
to such earned commissions or other payments until such time as the Company is
in actual receipt of the concession due in respect to such sale. The amount of
any such excess shall be refunded to the Company in the event of termination of
this Agreement, to the extent that such commissions have not been earned prior
to such termination. Any indebtedness from the District Manager to the Company
shall be a first lien upon any amount due the District Manager hereunder.
8. The Company agrees that, if any Sales Representative assigned to the
District Manager's agency is terminated under any conditions or circumstances
which preclude the payment of commissions thereafter, then pursuant to Paragraph
8 of such Sales Representative's Agreement with the Company, the Company shall
pay to the District Manager the Sales Representative's commissions which become
due thereafter as personal production. The Company shall, then treat such
commissions as business personally produced by the District Manager.
9. If the District Manager either dies or retires after attaining the age of 55
or is permanently and totally disabled and terminates his license with the
National Association of Securities Dealers, Inc., the Company will continue to
pay commissions subject to the following conditions and limitations. If this
Agreement is terminated for any reason other than death, retirement or permanent
and total disability, then no commissions or other compensation shall be paid;
provided however, that if this Agreement is terminated for any reason other than
the National Association of Securities Dealers, Inc. disqualification, then
commissions will continue to be paid in accordance with the Supplemental
Commission Schedule (or any replacement thereof) on all premium payments
received by the Company on variable life insurance products.
Other than in the event of death, the District Manager must agree to the
continuance of this Agreement and must agree in writing not to solicit any new
securities business or to attempt to obtain a securities license through any
other entity.
If the District Manager so agrees, or in the event of death, the Company will
continue to pay to the District Manager or his/her estate, all commissions due
the District Manager totalling in excess of $100 per annum on business
personally produced by the District Manager. Commissions payable will be
determined based on New Customer Account forms executed prior to the termination
of his license. Commissions will be payable for a period not to exceed 10 years
from the date of termination or death. Commissions will be paid for the balance
of the calendar year at the rate currently in effect at the time of termination.
Thereafter, commissions will be paid at the appropriate commission level as
determined pursuant to the terms of the District Manager's Commission Schedule.
The Company will not pay commissions to any District Manager who is
disqualified from association with any member of the National Association of
Securities Dealers, Inc. because of revocation, expulsion, suspension, or any
other reason, nor will the Company pay commissions in violation of any
applicable laws or regulations.
10. The Company will, each month, furnish to the District Manager a statement
of the District Manager's account showing all earnings and payments made to
his/her account and the balance due from the Company and the amount of any
indebtedness due from the District Manager to the Company. The District Manager
agrees to notify the Company, in writing,
2
<PAGE>
within 30 days, of any discrepancy or disagreement with such statement in any
respect. In the absence of such notice, such statement shall be conclusively
presumed to be correct unless the parties mutually agree to an adjustment in
writing.
11. The Company may offset against any commissions or other monies accruing to
the account of the District Manager under the terms of this Agreement any debts.
liabilities, or other obligations of the District Manager due to the Company or
any affiliate of the Company. This right of offset shall apply both during the
existence of this Agreement and upon its termination.
12. Any commissions or other compensation due to a Sales Representative
assigned to the District Manager's agency will be included in the commission
paid to the District Manager for payment to the Sales Representative, unless the
District Manager informs the Company in writing to pay commissions or other
compensation directly to the Sales Representative. The District Manager agrees
to pay commissions or other compensation to the Sales Representative in
accordance with the Commission Schedules issued by the Company.
13. The District Manager shall obtain and maintain for the term of this
Agreement errors and omissions insurance, satisfactory to the Company, and shall
provide proof of such coverage to the Company.
14. This Agreement may be terminated at any time by either party upon thirty
(30) days written notice to the other, and may be terminated immediately by the
Company for cause or breach of this Agreement by the District Manager. Notice of
such termination shall be deemed to be given on the day mailed or delivered. If
mailed to the Company, such notice shall be addressed to the principal office of
the Company at One Granite Place, Concord. New Hampshire 03301. If mailed to the
District Manager, notice shall be addressed to the last known address as shown
on the records of the Company.
15. With respect to any concession which the Company may receive as a residual
concession at the termination of a direct participation program, it being
understood that any such residual concession to the Company is contingent in
nature and there is no guarantee that the Company will ever actually receive
such payment, the Company will, upon receipt of such residual concession, pay
out a commission to the District Manager in accordance with the vesting schedule
as follows:
(i) If the District Manager has been under agreement with the Company for no
less than one nor more than five years, then he/she shall be vested to receive
any residual concession three years or more after the program sale is made:
(ii) If the District Manager has been under agreement with the Company for no
less than five nor more than ten years, he/she shall be vested to receive
any residual concession two years or more after the program sale is made;
and
(iii) If the District Manager has been under agreement with the Company for more
than ten years, then he/she shall be vested to receive any residual concession
one year or more after the program sale is made:
provided, however, that the District Manager must continue to be under agreement
with the Company for the number of years set forth in the applicable portion of
the above vesting schedule after a program sale is made. If the District Manager
does not remain under agreement for the applicable number of years after a
program sale is made, then no residual concession shall be paid. The amount of
the residual concession commission paid shall be as set forth in the Commission
Schedule in effect at the time of the payment, but in no event will the
commission be less than 75% of the concession which the Company actually
receives.
Payment of a commission to the District Manager out of any residual concessions
received by the Company will be considered as any other commission and all
provisions of this Agreement which relate to commissions will also apply to
these commissions. specifically including but not limited to the terms of
paragraphs 8 and 9.
16. This Agreement is made in the State of New Hampshire and all questions
concerning its validity, construction or otherwise shall be determined under the
laws of New Hampshire.
IN WITNESS WHEREOF, the parties hereto have executed this agreement in
duplicate as of the date first written below.
Chubb Securities Corporation District Manager
--------------------
by:
------------------------------------ -------------------------------------
Date: Date:
---------------------------------- --------------------------------
Date:
---------------------------
3
<PAGE>
[LOGO APPEARS HERE]
Chubb Securities Corporation
One Granite Place, PO Box 2005
Concord, New Hampshire 03302
(603) 226-5000
DISTRICT MANAGER COMMISSION SCHEDULE
This Commission Schedule is a part of the District Manager's Agreement entered
into by the District Manager and the Company, is incorporated by reference
therein, and supersedes any prior schedule.
Commissions will be a percentage of total dealer concession actually paid to the
Company on all business produced personally by the District Manager or by any
and all Sales Representatives assigned to the District Manager for supervision.
Commissions will be paid on the following transactions:
1. Variable or Fixed Annuity and Mutual Fund Contractual Sales - Commissions
will be paid on first year and subsequent payments.
2. Private Placements - Commissions will be paid for all staged-in payments as
well as any residual benefits available to the District Manager. For the
purposes of computing commissions on private placements, the Company shall
retain one-third of any marketing or due diligence expense allowance (or
other terminology generally accepted to mean such a concept) paid on a per
unit basis in excess of 9%, and will pay commissions out of the balance.
3. General Securities Sales of Any Other Type - No commissions are payable on
the Execution fee collected from the customer. The company will pay
commissions in accordance with the schedule below, based on 80% of the dealer
concession generated from the general securities transactions, net of ticket
and administrative charges.
4 Mutual Funds, Public Limited Partnerships, Unit Investment Trusts.
5. Any Other Sales Made Available Through the Company's Facilities -- In
accordance with Supplemental Commission Schedules.
During the first contract year (12 months following the date of full
registration with the Company), the District Manager will receive 40% of Dealer
Concession. A level in excess of 40% can be established during the first
contract year if the District Manager provides the Company with proof of
earnings from Securities Sales for a period immediately preceding registration
with the Company. This higher level of commission must be authorized in writing
by a Principal of the Company.
After the first contract year, a commission level will be established for future
commission payments on the basis of the Dealer Concession achieved by the
District Manager during the first contract year. The commission level for each
subsequent year will be established thereafter in January, based on the previous
calendar year's Dealer Concession. Overriding commission has been incorporated
in the below commission levels. Any reference to overriding commissions in the
District Manager's Agreement is superseded by this Commission Schedule.
The Dealer Concession levels to establish commission rates are as follows:
<TABLE>
<CAPTION>
Dealer Concession Commission Level
----------------- ----------------
<S> <C>
Up to $10,000 40%
$10,000 to $24,999 60%
$25,000 to $49,999 75%
$50,000 to $74,999 77%
$75,000 to $124,999 80%
$125,000 to $199,999 82%
$200,000 to $499,999 85%
$500,000 to $749,999 87%
$750,000 and above 90%
</TABLE>
The above commission levels are retroactive to all Dealer Concession earned
after January 1 of the then current year if a new commission level is attained
during any given calendar year.
4
<PAGE>
Dealer Concession earned will be monitored to effect the change in commission
level as the District Manager becomes eligible for it. Once a higher commission
level has been achieved, it will be credited and paid on the following
commission statement.
Each District Manager's Dealer Concession production will be subject to review
on June 30th of each year. If the District Manager has not produced dealer
concession above 80% of the prorated minimum for the attained commission level,
the commission rate will be reduced on subsequent commissions earned to the
appropriate level. If the District Manager is still in the first contract year,
no reduction will take effect.
The District Manager shall be responsible for the payment of the Sales
Representative's commission from the commission paid to the District Manager.
Payment to the Sales Representative in excess of the standard commission set
forth in the Sales Representative's contract shall be permissible. Factors such
as sales ability, potential, and other factors may be taken into account in
making such payments to Sales Representatives assigned to the District Manager.
This Commission Schedule rescinds and replaces all prior commission Schedules
issued by the Company as of its effective date and will continue in effect until
such time as a new Schedule is issued by the Company.
Effective date of this Schedule: February 1, 1991.
5
<PAGE>
Exhibit 1(c) (iii)
SPECIMEN
REGISTERED REPRESENTATIVE'S AGREEMENT
OF
CHUBB SECURITIES CORPORATION
<PAGE>
[LOGO APPEARS HERE]
Chubb Securities Corporation
One Granite Place, PO Box 2005
Concord, New Hampshire 03302
(603) 226-5000
SALES REPRESENTATIVE'S
AGREEMENT
This AGREEMENT is made by and between CHUBB SECURITIES CORPORATION, a
corporation organized and existing under the laws of the State of New Hampshire
with its principal place of business in Concord, New Hampshire (hereinafter
called the Company) and ______________________________________________________
___________________ of _____________________ (hereinafter called the Sales
Representative).
In consideration of the premises and the mutual agreements herein made, it is
agreed as follows:
Effective Date
The agreement shall be effective as of ________________________, 19_______.
Territory
It is agreed that the Sales Representative will represent the Company in the
State(s) of _______________________________ and any other state in which the
Sales Representative becomes registered hereafter.
Terms
1. The Company, subject to the terms and conditions contained herein, hereby
authorizes the Sales Representative, as an independent contractor, to represent
it in the sale of securities for which the Company may now or hereafter act as
principal, dealer, wholesaler or underwriter. The Sales Representative shall at
all times act in strict compliance with the state and federal securities laws,
including but not limited to the Federal Securities Act of 1933, as amended, and
with the rules and regulations of the National Association of Securities
Dealers, Inc.
2. The Company reserves the right to accept or reject any or all business
submitted to it by the Sales Representative. In all cases in which the question
of credit for business, confirmation of orders, or compensation is not
definitely stipulated herein, the decision of the Company shall be final.
3. The Sales Representatives agrees to use his/her best efforts on behalf of
the Company while so representing it, and will not engage in any employment by,
or representation of, any issuer of or dealer in securities other than those
offered by the Company without the written consent of the Company. The Sales
Representative agrees to promptly report and remit to the Company all checks,
drafts or funds of any kind received from customers without commingling same
with the Sales Representative's own funds and, in the event of failure to do so,
all rights hereunder, including all accrued and accruing commissions, shall
immediately terminate. If and when requested by the Company, the Sales
Representative shall furnish a surety bond satisfactory to the Company. This
Agreement shall be immediately and automatically cancelled upon cancellation of
coverage by the surety under said bond.
4. The Sales Representative shall be free to exercise his/her own judgment as
to whom to solicit and the time, place and manner of solicitation, subject to
the vesting provisions of this Agreement. The Sales Representative shall pay all
expenses in connection with conducting business as a Sales Representative and
shall comply with all federal and state laws, ordinances and regulations
relating thereto. The Sales Representative shall make no solicitation for any
securities until he/she have been duly registered under the applicable state and
federal laws, and until any license or permit required by law have been
obtained, and unless such registration is then in effect.
5. The Sales Representative agrees that, in connection with all solicitations,
he/she will not take or recommend any action which they may have reason to
believe is not in the best interest of each client or customer. The Sales
Representative agrees not to make any untrue statement or misrepresentations, or
omit any material facts concerning the securities involved, and will also comply
in all respects with the Rules of Fair Practice, and other applicable rules of
the National Association of Securities Dealers, Inc. and all applicable federal
and state laws.
6. The Sales Representative hereby assigns to the Company any and all
commissions or other monies owed to the Sales Representative or which hereafter
accrue to the Sales Representative under any contracts he/she may have with the
Chubb Life Insurance Company of America or any subsidiary or affiliate thereof,
as security for the repayment of any loan or extensions of credit made to the
customers of
<PAGE>
the Sales Representative at the Representative's request by the Company or for
any losses incurred by the Company in such transaction. The Sales Representative
hereby authorizes Chubb Life Insurance Company of America, or applicable
subsidiary or affiliate, upon receipt of written demand by the Company, to pay
such monies to the Company to the extent of the Company's interest therein.
7. The Sales Representative shall be entitled to commissions with respect to
all sales the Sales Representative shall make in accordance with the Commission
Schedules issued from time to time by the Company and incorporated by reference
herein. Any commission will be paid by the Company to the Sales Representative's
District Manager, who will then pay the commission over to the Sales
Representative, unless the District Manager specifies in writing to the Company
that commissions shall be paid directly to the Sales Representative or as
otherwise required by law. All commissions are payable subject to receipt of
full payment for the securities sold and the Sales Representative hereby
expressly waives all rights to such earned commissions or other payments until
such time as the Company is in actual receipt of the concession due in respect
to such sale. Payments, if any, made to the Sales Representative or for the
Sales Representative's account in excess of commissions earned by the Sales
Representative in accordance with said Commission Schedules as amended or
supplemented shall be deemed advances against future commissions and the amount
of any such excess shall be refunded to the Company in the event of termination
of this Agreement, to the extent that such commissions have not been earned
prior to such termination. Any indebtedness from the Sales Representative to the
Company shall be a first lien upon any amount due the Sales Representative
hereunder.
8. If the Sales Representative's license with the National Association of
Securities Dealers, Inc. is terminated as a result of retirement, after
attaining the age of 55, or as a result of sustaining a total and permanent
disability, and if the Sales Representative agrees in the case of such
retirement or disability to the continuance of this Agreement and executes a
form agreeing not to Solicit any new securities business or attempt to obtain
licensing with the National Association of Securities Dealers, Inc. through any
other entity, or if this Agreement is terminated as a result of the death of the
Sales Representative then, in any such case, the Company will continue to pay to
the Sales Representative, successors or assigns, all commissions totalling in
excess of $100 per annum, on business which was personally produced by the Sales
Representative, which would otherwise be due the Sales Representative under the
applicable Commissions Schedules, on all accounts which continue to be credited
to the Sales Representative as personal production pursuant to the New Customer
Account forms executed under this Agreement prior to such termination or death
and not resulting from any solicitation after termination, for a period not to
exceed five (5) years from the date of such termination or death. All vested
payments, as detailed above, shall relate solely to business of the Sales
Representative which remains credited to the Sales Representative pursuant to
New Customer Account forms executed prior to such termination or death and which
remain in force during the term of such vesting. The Company reserves the right
not to pay any commissions after termination if the Sales Representative refuses
to execute written acknowledgment of the continuance of this Agreement, or if
the Company receives proof of further securities solicitation or licensing with
the National Association of Securities Dealers, Inc. by the former Sales
Representative.
If this Agreement is terminated for any reason other than death, retirement or
permanent and total disability, then no commissions or other compensation shall
be paid: provided, however, that if this Agreement is terminated for any reason
other than the National Association of Securities Dealers, Inc.
disqualification, then commissions will continue to be paid in accordance with
the Supplemental Commission Schedule (or any replacement thereof) on all premium
payments received by the Company on variable life insurance products.
The Company will not pay commissions to any Sales Representative who is
disqualified from association with any member of the National Association of
Securities Dealers, Inc. because of revocation, expulsion, suspension, or any
other reason, nor will the Company pay commissions in violation of any
applicable laws or regulations.
9. The Company will, each month, furnish to the Sales Representative a
statement of the Sales Representative's account showing all earnings and
payments made to his/her account and the balance due from the Company and the
amount of any indebtedness due from the Sales Representative to the Company. The
Sales Representative agrees to notify the Company, in writing, within 30 day's,
of any discrepancy or disagreement with such statement in any respect, and in
the absence of such notice, the statement shall be conclusively presumed to be
correct unless the parties mutually agree to an adjustment in writing.
10. The Company may offset against any commissions or other monies accruing to
the account of the Sales Representative any debts, liabilities, or other
obligations of the Sales Representative due to the Company or any affiliate of
the Company'. The Company may also in its sole discretion offset against any
commissions or other monies accruing to the account of the Sales Representative
any debts or liabilities of the Sales Representative due to his/her District
Manager.
11. Should the Sales Representative transfer to a new District Manager's
agency, any override commissions shall then be paid to the new District Manager.
Should
<PAGE>
the Sales Representative become a District Manager, the Sales Representative
shall then be entitled to both commissions and override commissions due under
the terms of this Agreement and the District Manager's Agreement.
12. The Sales Representative shall obtain and maintain for the term of this
Agreement errors and omissions insurance satisfactory to the Company, and shall
provide proof of such coverage to the Company.
13. With respect to any concession which the Company may receive as a residual
concession at the termination of a direct participation program, it being
understood that any such residual concession to the Company is contingent in
nature and there is no guarantee that the Company will ever actually receive
such payment, the Company will, upon receipt of such residual concession, pay
out a commission to the Sales Representative in accordance with the vesting
schedule as follows: (i) If the Sales Representative has been under agreement
with the Company for no less than one nor more than five years, then he/she
shall be vested to receive any residual concession three years or more after the
program sale is made:
(ii) If the Sales Representative has been under agreement with the Company for
no less than six nor more than ten years, he/she shall be vested to receive
any residual concession two years or more after the program sale is made:
and
(iii) If the Sales Representative has been under agreement with the Company for
more than ten years, then he/she shall be vested to receive any residual
concession one year or more after the program sale is made:
provided, however, that the Sales Representative must continue to be under
agreement with the Company for the number of years set forth in applicable
portion of the above vesting schedule after a program sale is made. If the Sales
Representative does not remain under agreement for the applicable number of
years after a program sale is made, then no residual concession shall be paid.
The amount of the residual concession commission paid shall be as set forth in
the Commission Schedule in effect at the time of the payment.
Payment of a commission to the Sales Representative out of any residual
concessions received by the Company will be considered as any other commission
and all provisions of this Agreement which relate to commissions will also apply
to these commissions, specifically including but not limited to the terms of
paragraphs 8 and 9.
14. This Agreement may be terminated at any time by either party upon thirty
(30) days written notice to the other, and may be terminated immediately by the
Company for cause. Notice of such termination shall be deemed to be given on the
day mailed or delivered. If mailed to the Company, it shall be addressed to the
principal office of the Company at One Granite Place, Concord, New Hampshire and
if mailed to the Representative shall be addressed to their last known address
as shown on the records of the Company. If this Agreement is terminated for any
reason other than those set forth in Paragraph 8, above, then pay commissions
generated by the Sales Representative and not paid prior to the termination date
shall be paid to the Sales Representative's District Manager.
15. This Agreement is made in the State of New Hampshire and all questions
concerning its validity, construction or otherwise shall be determined under the
laws of New Hampshire.
IN WITNESS WHEREOF, the parties hereto have executed this agreement in
duplicate as of the date first written below.
CHUBB Securities Corporation District Manager
--------------------
by: Date:
------------------------------------ ---------------------
Date: Sales Representative:
---------------------------------- ----------------
Date:
---------------------
<PAGE>
[LOGO APPEARS HERE]
Chubb Securities Corporation
One Granite Place, P0 Box 2005
Concord, New Hampshire 03302
(603) 226-5000
CHUBB SECURITIES CORPORATION
COMMISSION SCHEDULE
This Commission Schedule is a part of the Sales Representative Agreement entered
into by the Sales Representative and the Company and is incorporated by
reference therein.
Commissions on sales made and concession received by the Company will be paid in
accordance with the Agreement and the following schedule:
______% of dealer concession for: (40% unless otherwise indicated and not to
exceed percentage paid to District Manager)
1. Mutual Fund Cash Sales.
2. Variable or Fixed Annuity and Mutual Fund Contractual Sales on first year and
subsequent payments.
3. Private Placements - as received for all staged-in payments. For the purposes
of computing commissions on private placements, the Company shall retain one-
third of any marketing or due diligence expense allowance (or other
terminology generally accepted to mean such a concept) paid on a per unit
basis in excess of 9%, and will pay commissions out of the balance.
4. General Securities Sales of any other type based on 80% of the dealer
concession generated from the general securities transactions, net of ticket
and administrative charges.
5. Public Limited Partnerships, Unit Investment Trusts.
Any other securities made available through the Company's facilities - in
accordance with Supplemental Commission Schedules.
This Commission Schedule rescinds and replaces all prior commission schedules
issued by the Company as of its effective date and will continue in effect until
such time as a new Schedule of Commissions may be established by the Company.
District/Branch Manager Name
---------------------------------------
Signature
---------------------------------------
Name
Sales Representative ---------------------------------------
Signature
---------------------------------------
Date
---------------------------------------
<PAGE>
Exhibit 1(c) (iv)
SCHEDULE OF COMMISSIONS
<PAGE>
SCHEDULE OF SALES COMMISSIONS
-----------------------------
<TABLE>
<CAPTION>
Writing District Total
Agent Manager Payment
------- -------- -------
<S> <C> <C> <C>
First Year 45% 35% 80%
(Up to Target Premium)
First Year 2% 1% 3%
(In excess of Target
Premium)
Renewal Years 2-15 3% 3% 6%
Renewal Years 16 & Later 0% 0% 0%
</TABLE>
<PAGE>
Exhibit 1(e)(i)
SPECIMEN POLICY
<PAGE>
[LOGO OF CHUBB LIFEAMERICA APPEARS HERE]
- --------------------------------------------------------------------------------
The Colonial Life Insurance Company of America
Home Office: 8 Sylvan Way, Parsippany, N.J. 07054
Service Office: P.O. Box 515, Concord, New Hampshire 03302
The Colonial Life Insurance Company of America (A stock company, herein called
the Company), will pay the Death Benefit specified on page 6 to the Beneficiary
on receipt of due proof of the Insured's death, subject to the provisions of
this and the following pages, all of which are a part of this policy.
This is a Flexible Premium Variable Life Insurance Policy. The Specified Amount
may be increased or decreased by the Owner. Net Premiums will be allocated to
the General Account or to one or more divisions of The Colonial Separate Account
B (herein called Separate Account B) as determined by the Owner.
THE POLICY'S ACCUMULATION VALUE IN EACH DIVISION OF SEPARATE ACCOUNT B IS BASED
ON THE INVESTMENT EXPERIENCE OF THAT DIVISION AND MAY INCREASE OR DECREASE
DAILY. THE ACCUMULATION VALUE IS NOT GUARANTEED AS TO DOLLAR AMOUNT.
The policy's accumulation value in the General Account will earn interest daily
at a minimum guaranteed effective rate of 4 1/2%. Interest in excess of the
guaranteed rate may be applied in the calculation of the accumulation value at
such increased rates as the Company may determine.
THE AMOUNT OF DEATH BENEFIT OR THE DURATION OF THE DEATH BENEFIT MAY INCREASE OR
DECREASE UNDER THE CONDITIONS DESCRIBED ON PAGES 6 AND 7.
This policy is a legal contract between the Owner and The Colonial Life
Insurance Company of America.
READ YOUR POLICY CAREFULLY
RIGHT TO CANCEL - Please examine this policy carefully. The Owner may cancel
this policy by returning it to the Service Office or to the agent through whom
it was purchased within 20 days after the date the Owner receives the policy,
within 45 days of the date of the execution of the application for insurance, or
within 10 days after mailing or personal delivery of a Notice of the Right of
Withdrawal, whichever is later. If the policy is returned, it will be deemed
void from the beginning and any premium paid for it will be refunded within 7
days.
Executed for the Company at its Service Office in Concord, New Hampshire, as of
the policy date.
/s/ /s/
President Secretary
Insured: DOE, JOHN
Policy Number: 000000000
Flexible Premium Variable Life Insurance Policy. Flexible Premiums Payable
Until the Maturity Date or Until Prior Death. Adjustable Death Benefit.
Insurance Payable at Death. Some Benefits Reflect Investment Results.
Additional Benefits, if any, as indicated on Page 3.
Non-Participating. No Dividends.
<PAGE>
GUIDE TO POLICY PROVISIONS
Page
Administrative Charges................................................ 3
Age at Issue.......................................................... 3
Beneficiary........................................................... 3
Death Benefit Option.................................................. 3
Death Benefit Provisions:
Death Benefit........................................................ 6
Changes in Existing Insurance Coverage............................... 7
General Provisions:
Contract............................................................. 8
Ownership............................................................ 8
Incontestability..................................................... 8
Suicide.............................................................. 8
Misstatement of Age.................................................. 8
Beneficiary.......................................................... 9
Assignment........................................................... 9
Proceeds............................................................. 9
Payment of Proceeds.................................................. 9
Postponement of Payments............................................. 9
Age.................................................................. 10
Modification......................................................... 10
Policy Date.......................................................... 10
Effective Date of Coverage........................................... 10
Termination.......................................................... 10
Maturity Date........................................................ 10
Change of Maturity Date.............................................. 10
Annual Report........................................................ 10
Non-Participating.................................................... 10
Guaranteed Monthly Cost of Insurance Rates............................ 4
Initial Specified Amount.............................................. 3
Insured............................................................... 3
Nonforfeiture Values:
Accumulation Value................................................... 14
Cash Value........................................................... 14
Surrender Charge..................................................... 14
Separate Account Accumulation Values................................. 14
Net Investment Factor................................................ 15
General Account Accumulation Value................................... 15
General Account Interest Rate........................................ 15
Monthly Deduction.................................................... 16
Cost of Insurance.................................................... 16
Cost of insurance Rates.............................................. 16
Insufficient Cash Value.............................................. 16
Continuation of Insurance............................................ 16
Surrender............................................................ 16
Withdrawal of Cash Value (Withdrawal)................................ 17
Basis of Computations................................................ 17
Illustration of Benefits and Values.................................. 17
Owner................................................................. 3
Policy Date........................................................... 3
Policy Loans:
Policy Loans......................................................... 11
Types of Policy Loans................................................ 11
Policy Loan Interest................................................. 11
Debt................................................................. 11
Policy Loan Repayment................................................ 12
Premiums and Reinstatements:
Premium Payments..................................................... 5
Planned Periodic Premiums............................................ 5
Net Premiums......................................................... 5
Allocation of Net Premiums........................................... 5
Unscheduled Premiums................................................. 5
Grace Period......................................................... 5
Reinstatement........................................................ 6
Separate Account Provisions:
Separate Account..................................................... 12
Divisions............................................................ 12
Transfers............................................................ 12,13
Addition, Deletion, or Substitution of Investments................... 13
Settlement Options.................................................... 18,19
Right to Cancel....................................................... 1
A copy of the application will be found after page 18. Any other benefit
agreements will also be found after Page 18.
Page 2
<PAGE>
INSURED: DOE, JOHN MATURITY DATE: 12-21-2052
OWNER: INSURED POLICY NUMBER: 6550001
POLICY DATE: 12/21/92 PREMIUM FREQUENCY: ANNUAL
ISSUE DATE: 12/21/92 DEATH BENEFIT: OPTION I
AGE AT ISSUE: 35 M
RATING CLASS: NON-SMOKER STANDARD
BENEFICIARY: AS STATED IN APPLICATION OR ENDORSEMENT ATTACHED.
PLANNED
PERIODIC
LIFE INSURANCE PREMIUM
$100,000 INITIAL SPECIFIED AMOUNT 1,000.00
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
IT IS POSSIBLE THAT COVERAGE WILL EXPIRE PRIOR TO THE MATURITY DATE CHOSEN
WHEN EITHER NO PREMIUMS ARE PAID FOLLOWING PAYMENT OF THE INITIAL PREMIUM
OR SUBSEQUENT PREMIUMS ARE INSUFFICIENT TO CONTINUE COVERAGE TO SUCH DATE.
IF CURRENT VALUES CHANGE, THIS WILL ALSO AFFECT COVERAGE. SEE CONTINUATION
OF INSURANCE PROVISION ON PAGE 16.
THE POLICY'S ACCUMULATION VALUE IN THE GENERAL ACCOUNT WILL EARN INTEREST
DAILY AT A MINIMUM GUARANTEED EFFECTIVE RATE OF 4-1/2%. THE POLICY'S
ACCUMULATION VALUE HELD IN THE GENERAL ACCOUNT FOR POLICY LOAN COLLATERAL
WILL EARN INTEREST DAILY AT THE LESSER OF AN EFFECTIVE RATE OF 6% OR THE
INTEREST RATE CURRENTLY CREDITED.
ALLOCATIONS OF NET PREMIUM: 50.0% GROWTH STOCK DIVISION II
50.0% DOMESTIC GROWTH STOCK FUND II
SELECTED EXPENSE CHARGES:
1) 2.5% OF EACH PREMIUM PAID.
2) A MONTHLY ADMINISTRATIVE CHARGE. THIS CHARGE IS EQUAL TO $6.00 PER
MONTH IN EACH POLICY YEAR.
3) COST OF INSURANCE CHARGES - SEE PAGES 4 AND 16.
4) MORTALITY AND EXPENSE RISK CHARGE - SEE PAGE 15.
5) SURRENDER CHARGE ON WITHDRAWAL OR SURRENDER - SEE PAGES 3A AND 14.
GUIDELINE LEVEL PREMIUM: $ 1,153.60
GUIDELINE SINGLE PREMIUM: $ 14,114.96
PAGE 3
<PAGE>
MAXIMUM SURRENDER PREMIUMS
PER $1,000 INITIAL SPECIFIED AMOUNT OR
PER $1,000 OF INCREASE IN THE SPECIFIED AMOUNT
<TABLE>
<CAPTION>
ISSUE AGE ISSUE AGE ISSUE AGE
OR AGE AT PREMIUM OR AGE AT PREMIUM OR AGE AT PREMIUM
INCREASE INCREASE INCREASE
<S> <C> <C> <C> <C> <C>
00 2.59 25 6.19 50 21.23
01 2.51 26 6.45 51 22.43
02 2.59 27 6.74 52 23.72
03 2.67 28 7.04 53 25.09
04 2.76 29 7.36 54 26.55
05 2.86 30 7.71 55 28.10
06 2.97 31 8.07 56 29.76
07 3.08 32 8.46 57 31.53
08 3.20 33 8.88 58 33.42
09 3.33 34 9.31 59 35.44
10 3.47 35 9.78 60 37.61
11 3.62 36 10.27 61 39.93
12 3.77 37 10.79 62 42.43
13 3.93 38 11.34 63 45.10
14 4.09 39 11.93 64 47.96
15 4.25 40 12.55 65 51.02
16 4.41 41 13.20 66 54.29
17 4.57 42 13.89 67 57.80
18 4.74 43 14.63 68 61.58
19 4.92 44 15.41 69 65.65
20 5.10 45 16.24 70 70.04
21 5.29 46 17.12 71 74.78
22 5.49 47 18.05 72 79.82
23 5.71 48 19.04 73 85.31
24 5.94 49 20.10 74 91.17
75 97.40
</TABLE>
PAGE 3A.
<PAGE>
TABLE OF MONTHLY GUARANTEED COST OF
INSURANCE RATES PER $1000
POLICY NUMBER 650001
<TABLE>
<CAPTION>
MONTHLY MONTHLY MONTHLY
AGE RATE AGE RATE AGE RATE
<S> <C> <C> <C> <C> <C>
00 .34845 35 .14085 70 2.89419
01 .08917 36 .14752 71 3.25305
02 .08251 37 .15669 72 3.55929
03 .08167 38 .16669 73 3.96902
04 .07917 39 .17837 74 4.42953
05 .07501 40 .19087 75 4.92413
06 .07167 41 .20588 76 5.44617
07 .06667 42 .22088 77 6.00585
08 .06334 43 .23839 78 6.58221
09 .06167 44 .25590 79 7.19473
10 .06084 45 .27674 80 7.86724
11 .06417 46 .29926 81 8.61695
12 .07084 47 .32344 82 9.46542
13 .08251 48 .34929 83 10.42336
14 .09584 49 .37848 84 11.47263
15 .10751 50 .40933 85 12.58987
16 .11918 51 .44603 86 13.75325
17 .12835 52 .48857 87 14.95279
18 .13335 53 .53612 88 16.16464
19 .13835 54 .59118 89 17.40526
20 .14002 55 .65209 90 18.69215
21 .13919 56 .71968 91 20.04733
22 .13669 57 .79146 92 21.51567
23 .13418 58 .86909 93 23.16008
24 .13085 59 .95675 94 25.25984
25 .12668 60 1.05444
26 .12335 61 1.16302
27 .12168 62 1.28665
28 .12001 63 1.42787
29 .12001 64 1.58752
30 .12001 65 1.76394
31 .12252 66 1.95381
32 .12502 67 2.15965
33 .12918 68 2.38065
34 .13418 69 2.62186
</TABLE>
M-NS
PAGE 4
<PAGE>
PREMIUMS AND REINSTATEMENTS
Premium Payments - The Initial Minimum Premium is due and payable on the policy
date. The Initial Minimum Premium is the greater of:
(1) The Initial Minimum Premium shown on page 3: or
(2) The amount large enough, after the deduction of the premium expense charge
to cover monthly deductions for at least three months.
All premiums are payable in advance at the Service Office of the Company or to
an authorized agent of the Company in exchange for a receipt. This receipt must
be signed by an elected officer of the Company and countersigned by such agent.
The Company will not accept a premium payment less than $25.
Planned Periodic Premium and Premium Frequency - The Planned Periodic Premium
and Premium Frequency, as shown on page 3, are selected by the Owner. The
Planned Periodic Premium is the amount of premium the Owner intends to pay. The
Premium Frequency is how often the Owner intends to pay the Planned Periodic
Premium. Payment of the Planned Periodic Premium is at the option of the Owner.
The Company will send Planned Periodic Premium payment reminder notices. If the
mode of premium payment is preauthorized check, government allotment or payroll
deduction, notice of any Planned Periodic Premium due will not be sent.
Changes in Premium Frequency and increases or decreases in the Planned Periodic
Premium may be made by the Owner by providing written notification to the
Company. The Company reserves the right to limit the amount of any increase.
Payment of a Planned Periodic Premium may not prevent this policy from
terminating. Failure to pay a Planned Periodic Premium will not, in itself,
cause this Policy to terminate. This policy will terminate only if the
conditions described in the Grace Period Subsection occur.
Net Premium - The net premium is equal to the premium paid multiplied by 97.5%.
The deduction of 2.5% is a premium tax charge.
Allocation of Net Premiums - The Owner will determine the allocation of the net
premiums among the General Account and the divisions of Separate Account B. The
minimum percentage that may be allocated to any of these accounts is 10%.
Unscheduled Premiums - Premium payments in addition to the Planned Periodic
Premium may be made at any time prior to the Maturity Date. The Company reserves
the right to limit the number of times that unscheduled premiums may be paid in
a policy year to one per month, except with our approval. The total of all
premiums may never exceed the current maximum premium limitations set forth in
the Internal Revenue Code of 1985, as amended.
If there is an existing policy loan, premium payments in the amount of the
Planned Periodic Premium, received at the Premium Frequency, will be applied as
premium. Premium payments in excess of the Planned Periodic Premium or premium
payments received other than at the Premium Frequency, will first be applied as
policy loan repayments, then as premium when the policy loan is repaid.
Grace Period - The policy enters the Grace Period if the cash value less any
policy debt on a monthly Anniversary Day is not enough to cover the monthly
deduction for the month following such Monthly Anniversary Day. A Grace Period
of 61 days shall be allowed for the payment of a premium sufficient to cover
monthly deductions for at least three months. If such premium is not paid within
the Grace Period, this policy will lapse without value. However, coverage will
not end sooner than 31 days alter the Company has mailed a premium notice to the
Owner, and any assignee of record, at the last known address.
If the Insured dies during the Grace Period, the Company will deduct any overdue
monthly deduction, which is applicable to the Grace Period, from the proceeds of
the policy.
<PAGE>
Reinstatement - If this policy terminates as provided in the Grace Period
provision, it may be reinstated by the Owner at any time within five years after
the date of termination. Reinstatement must occur before the maturity date.
Reinstatement is subject to the following requirements:
(1) Receipt of satisfactory evidence of insurability by the Company.
(2) Payment of a premium large enough, after the deduction of the premium
expense charge, to cover:
(a) Monthly deductions for at least three policy months following the
effective date of reinstatement.
(b) Any due and unpaid monthly administrative charges.
(3) Payment or reinstatement of any debt against the policy which existed on the
date of termination.
The effective date of a reinstated policy shall be the date the Company approves
the application for reinstatement. Prior to receipt of the required premium for
reinstatement, the accumulation value of the policy on the date of reinstatement
shall be the accumulation value on the date of termination. The surrender factor
in effect on reinstatement shall be as defined in the Surrender Charge
subsection of the Nonforfeiture Values section based on the original Policy
Date.
DEATH BENEFIT PROVISIONS
Death Benefit - The death benefit provided by this policy depends on the Death
Benefit Option in effect on the date of death. The Death Benefit Option for this
policy is shown on page 3.
Option I - Under Option I, the death benefit shall be the greater of:
(1) The Specified Amount, or
(2) The accumulation value on the date of death multiplied by the corridor
percentage.
Option II - Under Option II, the death benefit shall be equal to the Specified
Amount plus the accumulation value on the date of death. However, the death
benefit can never be less than the accumulation value on the date of death
multiplied by the corridor percentage.
The corridor percentage depends on the attained age of the Insured on the date
of death.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Attained Corridor Attained Corridor Attained Corridor Attained Corridor
Age Percentage Age Percentage Age Percentage Age Percentage
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
40 & below 250% 52 171% 64 122% 91 104%
41 243 53 164 65 120 92 103
42 236 54 157 66 119 93 102
43 229 55 150 67 118 94 101
44 222 56 146 68 117 95 100
45 215 57 142 69 116
46 209 58 138 70 115
47 203 59 134 71 113
48 197 60 130 72 111
49 191 61 128 73 109
50 185 62 126 74 107
51 178 63 124 75-90 105
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Changes in Existing Coverage - The Initial Specified Amount is shown on page 3.
At any time after the first policy anniversary, the Owner may, by written
request, increase or decrease the Specified Amount. Any change is subject to the
following conditions:
(1) Any decrease will become effective on the Monthly Anniversary Day that
coincides with or next follows receipt of the request. Any such decrease
will be deducted in the following order:
(a) From the most recent Specified Amount increase, if any:
(b) Successively from the next most recent Specified Amount increase, if
any:
(c) From the Initial Specified Amount.
(2) Any request for an increase must be applied for on a supplemental
application and shall be subject to evidence of insurability satisfactory to
the Company. The minimum increase in Specified Amount is $25,000.
(3) Any change approved by the Company will become effective on the effective
date shown in the Supplemental Policy Specifications page, subject to
deduction of the first month's cost of insurance therefor from the
accumulation value of this policy.
(4) The Owner may request in writing to change the Death Benefit Option. If the
request is to change from Option I to Option II, the Specified Amount will
be decreased by the amount of the accumulation value. Evidence of
insurability satisfactory to the Company will be required on a change from
Option I to Option II. If the request is to change from Option II to Option
I, the Specified Amount will be increased by the amount of the accumulation
value. The effective date of either change shall be the Monthly Anniversary
Day that coincides with or next follows the day the request for change is
received.
(5) The minimum decrease in Specified Amount, by the Owner, is $25,000. No such
decrease may reduce the Specified Amount below $100,000.
<PAGE>
GENERAL PROVISIONS
The Contract - This contract is made in consideration of the application and the
payment of the Initial Premium. A copy of the application is attached as a part
of this policy. The entire contract consists of this policy and the application
(and any supplemental applications for additional Specified Amounts). All
statements in an application shall be deemed representations and not warranties.
No statement shall be used to avoid this policy or to defend against a claim
unless it is contained in the application or in a supplemental application, and
a copy of such application is attached to the policy when issued or made a part
of the policy when changes in the Specified Amount become effective.
Ownership of Policy - The Insured shall be the Owner of the policy unless stated
otherwise in the contract or changed at a later date. During the lifetime of the
Insured all rights under this policy will be exercised by the Owner if the Owner
has reserved the right to change the beneficiary. The Owner may name a new Owner
or name a Contingent Owner. The Owner may change a Contingent Owner. If the
Owner does not survive the Insured, the Contingent Owner will, if living, become
the Owner. Upon proper written notice of the Owner any prior revocable
designation of a Contingent Owner or beneficiary will be voided. Unless
otherwise stated, all rights under this policy are vested in the Owner or in the
Owner's assigns.
Incontestability - The Company will not contest this policy, except for any
increase in the Specified Amount, after it has been in force during the lifetime
of the Insured for a period of two years from its policy date. This provision
does not apply to any benefits provided by a rider which grants disability
benefits or an added benefit in the event death results from an accident. Any
increase in the Specified Amount will not be contested after such increase has
been in force during the lifetime of the Insured for two years following the
effective date of such increase. Any increase will be contestable, within the
two year period, only with regard to statements concerning the increase.
If this policy is reinstated, the incontestability will start over again
beginning on the reinstatement date, but only for statements made in the
application for reinstatement.
Suicide - This policy does not cover the risk of suicide within two years from
the policy date. In such event, the only liability of the Company will be a
refund of premiums paid without interest less any policy loan and less any
partial surrender.
This policy does not cover the risk of suicide within two years from the
effective date of any increase in the Specified Amount with respect to such
increase. In such event, the only liability of the Company will be a refund of
the cost of insurance for such increase.
Misstatement of Age or Sex - If the age or sex of the Insured has been
misstated, the amount payable under this policy by reason of the death of the
Insured shall be equal to the sum of the following:
(1) The accumulation value on the date of death, less any debt.
(2) The death benefit, less the accumulation value on the date of death,
multiplied by the ratio of (a) the cost of insurance actually deducted at
the beginning of the policy month in which death occurs, to (b) the cost of
insurance that should have been deducted at the Insured's true age or sex.
<PAGE>
Beneficiary - At any time prior to the death of the Insured, the Owner may name
or change a revocable beneficiary. If no beneficiary has been named, the Owner
will be the beneficiary. A change of the Owner or beneficiary must be made in
writing. To be binding on the Company, the change must be signed by the Owner
and any irrevocable beneficiary and must be filed at the Service Office. Any
such change shall take effect as of the date it was signed, subject to any
payment made or other action taken by the Company before the change was filed.
Unless otherwise provided, the proceeds to be paid at the death of the Insured
shall be paid in equal shares to those named beneficiaries who survive the
Insured. Payment will be made in the following order: (1) the primary
beneficiaries, (2) any secondary beneficiaries, if no primary beneficiary
survives the Insured, (3) any tertiary beneficiaries, if no primary or secondary
beneficiary survives the Insured, (4) Owner, (5) the executors, administrators,
or assigns of the Owner, if no named beneficiary survives the Insured. The terms
"children" or "lawful children" of a person, when used to name beneficiaries,
shall include only lawful children born to or legally adopted by that person.
Assignment - No assignment of this policy will be binding upon the Company until
it has been filed at its Home Office. Each assignment will be subject to any
payments made or action taken by the Company before it was filed. The Company
will not be responsible for any assignment being valid or sufficient.
Proceeds - Proceeds means the amount payable on the maturity date, on the
surrender of this policy before the maturity date or upon the death of the
Insured.
The proceeds payable on the death of the Insured shall be the death benefit,
less any debt. If the policy is surrendered, the proceeds shall be the cash
value, less any debt. On the maturity date the proceeds shall be the cash value,
less any debt. The proceeds are subject to the adjustment provided in the
Misstatement of Age, Incontestability and Suicide provisions of this policy.
Payment of Proceeds - Unless an optional mode of settlement is elected, the
proceeds payable on the death of the Insured shall be paid in one sum to the
beneficiary.
Unless an optional mode of settlement is elected, any proceeds payable on the
maturity date or upon surrender of this policy shall be paid in one sum to the
Owner.
If the death benefit proceeds are not paid in one sum or applied under a payment
option, we will pay interest from the date of the death of the Insured until
paid at the rate of 4% per year. If State law requires payment of a greater
amount we will pay that amount.
Postponement of Payments - The Company will usually pay any amounts payable on
surrender, withdrawal, or policy loan allocated to Separate Account B within
seven days after written notice is received. Payment of any amount payable on
surrender, withdrawal or policy loan, or any part of the death benefit
attributable to Separate Account B, may be postponed whenever:
(1) The New York Stock Exchange is closed other than customary week-end and
holiday closings, or trading on the New York Stock Exchange is restricted as
determined by the Securities and Exchange Commission;
(2) The Securities and Exchange Commission, by order, permits postponement for
the protection of policyowners; or
(3) An emergency exists as determined by the Securities and Exchange Commission,
as a result of which disposal of securities is not reasonably practicable or
it is not reasonably practicable to determine the value of the net assets of
Separate Account B.
Transfers may also be postponed under these circumstances.
The Company may postpone the payment of death benefit proceeds for not more than
two months after the Company receives due proof of death.
The Company may defer the portion of any transfer, amount payable on surrender,
withdrawal or policy loan from the General Account for not more than six months.
However, no payment from the General Account to pay premiums on policies with
the Company will be deferred.
The Company may defer payment of any part of the death benefit attributed to
funds in the General Account for a period of not more than six months.
<PAGE>
Age - Age of the Insured, as used herein, refers to the age nearest birthday on
the policy date. Attained age of the Insured means the age nearest birthday on
the last policy anniversary.
Modification - Only an elected officer of the Company can, on behalf of the
Company, change or modify this policy or waive any of the Company's rights or
requirements. Any such changes must be made in writing.
Policy Date - The date shown on page 3, which is the date requested by the Owner
or the later of the date of application or the date of any required medical
examination. The policy date is the date from which policy years, policy months,
and policy anniversaries will be determined.
Effective Date of Coverage - The effective date of coverage under this policy
shall be as follows:
(1) For all coverage requested in the original application, except as provided
pursuant to the terms of a conditional receipt, the coverage begins on the
Policy Date, provided that the initial minimum premium has been paid, and
the policy has been delivered while there has been no change since the date
of the application in the health of the Insured or the answers to the health
questions contained in the application.
(2) For any increase or addition to coverage, the effective date shall be the
date shown on the Supplemental Policy Specifications page. The effective
date for such coverage shall begin on the policy Monthly Anniversary Day
that coincides with or next follows the date the application for the
increase or addition is approved by the Company.
Termination - All coverage under this policy shall terminate when any one of the
following events occurs:
(1) The Owner requests that coverage terminate. (Such request will -require a
surrender of this policy.)
(2) The Insured dies.
(3) The policy matures.
(4) The grace period ends.
Maturity Date - Unless otherwise specified, the maturity date will be the policy
anniversary nearest the Insured's 95th birthday. Coverage may expire before the
maturity date if no premiums are paid after the initial premium or future
premiums are not enough to continue coverage to such date.
Change of Maturity Date - The Maturity Date may be changed upon written request
by the Owner. The new Maturity Date may be any policy anniversary after the end
of the tenth policy year, and before the policy anniversary nearest the
Insured's 95th birthday. However, the new Maturity Date must be at least twelve
months from the date the Company receives a written request therefor from the
Owner.
Annual Report - Each year a report will be sent to the Owner which shows the
current cash value, premiums paid and all charges since the last report,
outstanding policy loans, and any other information required by the
Superintendent of Insurance.
Non-Participating - This policy is a nonparticipating contract, which means the
following:
(1) Cost of insurance rates and interest rates in excess of guaranteed are
determined and redetermined on a prospective basis only.
(2) The Company will not recoup prior losses by means of a change in either the
Cost of Insurance rates or a change of interest rates.
(3) The Insured is not entitled to participate in Company profits.
Specified Amount - The face amount of the policy, which is the minimum death
benefit payable under the policy.
<PAGE>
POLICY LOANS
Policy Loans - After the first policy anniversary, a loan will be granted upon
the sole security and assignment of this policy to the Company. The maximum loan
amount is 90% of the cash value on the date of the loan; less any debt. Cash
Value is defined under Non-Forfeiture Values on page 14. Any debt will be
deducted from the proceeds payable at the Insured's death, on maturity, or on
surrender.
The Owner may allocate the policy loan among the General Account and the
divisions of Separate Account B. If the Owner does not specify the allocation,
then the policy loan will be allocated among the General Account and the
divisions of Separate Account B in the same proportion that the accumulation
value in the General Account, less any debt, and the accumulation value in each
division bears to the total accumulation value of the policy, less any debt, on
the date of the policy loan. Accumulation value in each division equal to the
policy loan allocated to each division will be transferred to the General
Account and reduce the accumulation value in that division. If loan interest is
not paid when due, an amount of accumulation value equal to the loan interest
will also be transferred.
If the policy debt exceeds the policy's accumulation value in the General
Account, the Company will transfer accumulation value equal to the excess debt
from the divisions of Separate Account B to the General Account as security for
the excess debt. The amount transferred will be allocated among the divisions in
the same proportion that the accumulation value in each division bears to the
policy's total accumulation value in all divisions of Separate Account B.
Types of Policy Loans - Type A and Type B - There are two (2) types of policy
loans which the Company will grant to the Owner - Type A and Type B. The type of
loan which the Company will grant depends upon the amount of unloaned Type A
balance available at the time the loan is taken. The unloaned Type A balance is
90% of the cash value, less the threshold, and less the sum of any outstanding
Type A loans as defined below. The threshold is the Guideline Single Premium for
this policy at issue as defined in Section 7702 of the Internal Revenue Code of
1986 entitled "Life Insurance Contract Defined". If the Specified Amount as
defined on Page 10 of this policy increases, the threshold will be increased to
the threshold at issue times the ratio of the largest Specified Amount ever
existing on the Policy to the Initial Specified Amount. If the Specified Amount
decreases, the threshold will not change.
A Type A Loan is a policy loan granted by the Company when the unloaned Type A
balance before the loan is taken exceeds the loan requested.
A Type B Loan is a policy loan granted by the Company when the unloaned Type A
balance before the loan is taken is less than or equal to zero.
When the unloaned Type A balance before the loan is taken exceeds zero, but is
less than the loan requested, a Type A Loan equal to the unloaned Type A balance
will be granted by the Company. The remainder of the requested loan will be a
Type B Loan.
The Company will grant a Type A Loan first before a Type B Loan. Once a policy
loan is granted, it remains a Type A or a Type B until it is repaid.
Policy Loan Interest - The interest charged by the Company on a policy loan
depends upon the type of loan granted. On a Type A Loan the Company will charge
an effective interest rate of two (2) percentage points lower than the effective
interest rate charged at the time by the Company for a Type B Loan.
On a Type B Loan the Company will charge interest at the effective maximum rate
of 8%, or at any lower rate established by the Company for any period during
which the loan is outstanding.
Loan interest accrues on a daily basis from the date of the loan and is payable
at the end of each policy year. Loan interest unpaid on a policy anniversary
becomes loan principal. The Company shall provide at least 30 days written
notice to the Owner (or any other party designated by the Owner to receive
notice under this policy) and any assignee recorded at the Service Office of any
increase in the interest rate on loans outstanding 40 or more days prior to the
effective date of the increase. As to loans made during the 40 days before the
effective date of the policy loan interest rate increase, the Company shall
notify the Owner and any assignee at the time the loan is made.
The effective date of any increase in such interest rate shall not be less than
twelve months after the effective date of the establishment of the previous
rate. If the interest rate is increased, the amount of such increase shall not
exceed one percent per year.
Interest accrues on a daily basis from the date of the loan and is compounded
annually. Interest unpaid on a policy anniversary becomes loan principal.
Debt - As used in this policy, debt means the principal of any loan outstanding
against this policy, plus any accrued loan interest.
If the policy debt exceeds the accumulation value during or prior to the third
policy year, or, for the third policy year and thereafter, if the policy debt
exceeds the cash value the policy will enter the grace period (See Grace Period
- - page 5).
<PAGE>
Policy Loan Repayment - Any debt may be repaid, in whole or in part, at any time
while this policy is in force. When a loan repayment is made, accumulation value
securing the debt in the General Account equal to the loan repayment will be
allocated among the General Account and divisions of Separate Account B using
the same percentages used to allocate net premiums. Repayments will be used to
reduce policy loans until fully paid in the following order:
(1) Any or all Type B Loans: then
(2) Any or all Type A Loans.
SEPARATE ACCOUNT PROVISIONS
Separate Account - The variable benefits under this policy are provided through
investments in Separate Account B. The Company established Separate Account B as
a separate investment account to support variable life insurance contracts. The
Company will not allocate assets to Separate Account B to support the operation
of any contracts or policies that are not variable life insurance.
The assets of Separate Account B are owned by the Company. However, these assets
are not part of the Company's General Account. Income, gains and losses, whether
or not realized, from assets allocated to Separate Account B will be credited to
or charged against the account without regard to the Company's other income,
gains or losses.
Assets equal to the reserves and other liabilities of Separate Account B will
not be charged with liabilities that arise from any other business the Company
may conduct. The Company shall have the right to transfer to its General Account
any assets of Separate Account B which are in excess of such reserves and other
policy liabilities.
Separate Account B is registered with the Securities and Exchange Commission as
a unit investment trust under the Investment Company Act of 1940. Separate
Account B is also subject to the laws of the State of New Jersey which regulate
the operations of insurance companies incorporated in New Jersey. The investment
policy of Separate Account B will not be changed without the approval of the
Insurance Commissioner of the State of New Jersey. The approval process is on
file with the Insurance Commissioner of the state in which this policy was
delivered.
Divisions - Separate Account B has several divisions. Each division will buy
shares of a separate series of Chubb America Fund, Inc. Each series represents a
separate investment portfolio of Chubb America Fund, Inc. All divisions of
Separate Account B are shown on page 3. The Owner will determine the percentage
of net premiums which will be allocated to each division.
Income, gains and losses, whether or not realized, from the assets of each
division of Separate Account B are credited to or charged against that division
without regard to income, gains or losses in other divisions of Separate Account
B or in the General Account.
The Company will value the assets of each division of Separate Account B at the
end of each valuation period. A valuation period is the period between two
successive valuation dates. A valuation date is each day that the New York Stock
Exchange is open for business or any other day in which there is material change
in the value of the assets in Separate Account B.
Transfers - The Owner may transfer amounts between the General Account and the
divisions of Separate Account B or among the divisions of Separate Account B by
sending a written request to the Company. The total amount transferred must be
at least $250. No amounts under $250 may be transferred out of any division of
Separate Account B or the General Account unless such lesser amount constitutes
the entire balance. A transfer charge equal to the lesser of $25 or 10% of the
amount transferred will be imposed each time amounts are transferred, except
with respect to policy loans. The transfer charge will be deducted from the
amount that is transferred. The Company will make transfers so that the
accumulation value on the date of transfer will not be affected by the transfer
except to the extent of the transfer charge. The Company may revoke or modify
the transfer privilege at any time, including the minimum amount transferable
and the transfer charge.
<PAGE>
Transfers (continued) -
As long as any portion of the policy's accumulation value is allocated to a
division of Separate Account B, the policy's accumulation value and cash value
will reflect the investment performance of the chosen division(s) of Separate
Account B. The death benefit may also reflect the performance of the chosen
division(s) of Separate Account B.
At any time, the Owner may transfer 100% of the policy's accumulation value to
the General Account. While 100% of the policy's accumulation value is allocated
to the General Account, minimum benefits for the policy will be fixed and
guaranteed.
No transfer charge will be imposed for a transfer of all accumulation value in
Separate Account B to the General Account. However, any transfer from the
General Account to the division(s) of Separate Account B will be subject to the
transfer charge.
Addition, Deletion, or Substitution of Investments - The Company reserves the
right, subject to compliance with applicable law, to make additions to,
deletions from, or substitutions for the shares of a series that are held by
Separate Account B or that Separate Account B may purchase. The Company reserves
the right to eliminate the shares of any of the series of Chubb America Fund,
Inc. and to substitute shares of another series of Chubb America Fund, Inc. or
of another open-end, registered investment company, if the shares or series are
no longer available for investment or if in the Company's judgement, further
investment in any eligible series should become inappropriate in view of the
purposes of the policy. The Company will not substitute any shares attributable
to the Owner's interest in a division of Separate Account B without notice to
the Owner and prior approval of the Securities and Exchange Commission, to the
extent required by the Investment Company Act of 1940. This shall not prevent
Separate Account B from purchasing other securities for other series or classes
of policies, or from permitting conversion between series or classes of policies
or contracts on the basis of requests made by owners.
The Company reserves the right to establish additional divisions of Separate
Account B, each of which would invest in a new series of Chubb America Fund,
Inc. or in shares of another open-end investment company. The Company also
reserves the right to eliminate existing divisions of Separate Account B.
If the Company considers it to be in the best interest of persons having voting
privileges under the policies, Separate Account B may be operated as a
management company under the Investment Company Act of 1940; or it may be
deregistered under that Act in the event registration is no longer required or
it may be combined with other separate accounts.
<PAGE>
NONFORFEITURE VALUES
Accumulation Value - The accumulation value of the policy is equal to the total
of the policy's accumulation value in the General Account and the policy's
accumulation value in divisions of Separate Account B.
Cash Value - The cash value is equal to the accumulation value less a surrender
charge.
Surrender Charge - The surrender charge for the Initial Specified Amount is
calculated by multiplying the surrender factor (shown below) by the lesser of
(1) or (2), where;
(1) is the total premiums paid in the first policy year;
(2) is the Maximum Surrender Premium for the issue age, as shown in the table on
page 3A, multiplied by the Initial Specified Amount.
The surrender factor will vary by policy year according to the following table:
Policy Year 1-5 6 7 8 9 10 11 and later
Surrender Factor .30 .25 .20 .15 .10 .05 0
The surrender factor will not be altered by lapse and subsequent reinstatement
of the policy. An additional surrender charge will be assessed for any increase
in the Specified Amount. The additional charge is calculated by multiplying the
surrender factor (shown below) by the lesser of (1) or (2), where:
(1) is (a) times (b) divided by (c), where;
(a) is the increase in the Specified Amount;
(b) is the sum of the accumulation value just prior to the increase in the
Specified Amount and the total premiums received in the twelve months
just following the increase in the Specified Amount;
(c) is the Specified Amount after the increase in the Specified Amount;
(2) is the Maximum Surrender Premium for the attained age of the Insured on the
effective date of the increase in the Specified Amount, as
shown on page 3A, multiplied by the increase in the Specified Amount.
The surrender factor is based on how long the increase has been in effect
according to the following table:
Increase Year 1-5 6 7 8 9 10 11 and later
Surrender Factor .15 .125 .10 .075 .05 .025 0
The surrender charge in effect at any time is the sum of the surrender charge
for the Initial Specified Amount plus the additional surrender charge for any
increase in the Specified Amount. If the Specified Amount is decreased, the
surrender charge will not decrease.
Separate Account Accumulation Values - The accumulation value in each division
on the policy date is equal to the portion of the net premium which has been
paid and allocated to that division, less the portion of the first monthly
deduction allocated to the policy's accumulation value in that division.
At the end of each valuation period after the policy date, the policy's
accumulation value in a division is equal to (1) plus (2) plus (3) minus (4)
minus (5) where:
(1) is the accumulation value in the division on the preceding valuation date
multiplied by the Net Investment Factor for the current valuation period.
(2) is any net premium received during the current valuation period which is
allocated to the division.
(3) is all accumulation values transferred to the division from another division
or the General Account during the current valuation period.
(4) is all accumulation values transferred from the division to another division
or the General Account and accumulation values transferred to secure a
policy debt during the current valuation period.
(5) is all withdrawals from the division during the current valuation period.
In addition, whenever a valuation period includes the Monthly Anniversary Day,
the accumulation value at the end of such period is reduced by the portion of
the monthly deduction allocated to the division.
<PAGE>
Net Investment Factor - The Net Investment Factor measures the investment
performance of a division during a valuation period. The Net Investment Factor
for each division for a valuation period is calculated as (a) divided by (b),
minus (c) where:
(a) is (1) the value of the assets in the division at the end of the preceding
valuation period, plus (2) the investment income and capital gains, realized
or unrealized, credited to the assets in the valuation period for which the
net investment factor is being determined, minus (3) the capital losses,
realized or unrealized, charged against those assets during the valuation
period, minus (4) any amount charged against each division for taxes, or any
amount the Company sets aside during the valuation period as a reserve for
taxes attributable to the operation or maintenance of each division.
(b) is the value of the assets in the division at the end of the preceding
valuation period.
(c) is a charge not to exceed .0024657% for each day in the valuation period.
This corresponds to .9% per year for mortality and expense risks. An
investment advisory fee is considered in calculating item (a).
Expense and mortality results of this plan shall not adversely affect the
net investment factor to be used in computing the dollar amount of variable
benefits or other contractual payments or values of this policy.
General Account Accumulation Value - The accumulation value in the General
Account on the policy date is equal to the portion of the net premium which has
been paid and allocated to the General Account, less the portion of the first
monthly deduction allocated to the General Account.
On each Monthly Anniversary Day, the accumulation value in the General Account
is equal to (1) plus (2) Plus (3) plus (4) minus (5) minus (A6) minus (7) where:
(1) is the accumulation value in the General Account on the preceding Monthly
Anniversary Day.
(2) is one month's interest on item (1).
(3) is any net premium received since the preceding Monthly Anniversary Day plus
interest from the date the net premium is received to the Monthly
Anniversary Day.
(4) is the sum of all accumulation values transferred to the General Account
division of Separate Account B since the preceding Monthly Anniversary Day
and interest from the date the accumulation value is transferred to the
Monthly Anniversary Day.
(5) is the sum of all accumulation values transferred from the General Account
to a division of Separate Account B since the preceding Monthly Anniversary
Day and interest from the date the accumulation value is transferred to the
Monthly Anniversary Day.
(6) is all withdrawals from the General Account since the preceding Monthly
Anniversary Day plus interest from the date of the withdrawal to the Monthly
Anniversary Day.
(7) is the portion of the monthly deduction allocated to the accumulation value
in the General Account, to cover the policy month following the Monthly
Anniversary Day.
On any date other than a Monthly Anniversary Day, the accumulation value will be
calculated on a consistent basis.
General Account Interest Rate - The policy's accumulation value in the General
Account will earn interest daily at a minimum guaranteed effective rate of
4 1/2%. Interest in excess of the guaranteed rate may be applied in the
calculation of the accumulation value at such increased rates as the Company may
determine. Interest rates will be established by class of Insured's based on
future expectations and on rules and standards on file with the Insurance
Department, but not less than two percentage points below the loan interest
rate. The current interest rate reflects the prevailing average rate on the
current portfolio and rates obtained on new investments, adjusted for
contingencies and expenses. The policy's accumulation value held in the General
Account for policy loan collateral will earn interest daily at the lesser of an
effective rate of 6% or the interest rate currently credited.
<PAGE>
Monthly Deduction - The monthly deduction for a policy month shall be equal to
(1) plus (2), where:
(1) is the cost of insurance (as described below) and the cost of additional
benefits provided by rider for the policy month.
(2) is a monthly administrative charge. This charge is equal to $6.00 per month
in each policy year.
The monthly deduction for a policy month will be allocated among the General
Account and the divisions of Separate Account A in the same proportion that the
accumulation value in the General Account less any debt and the accumulation
value in each division bears to the total accumulation value of the policy,
less any debt, at the beginning of the policy month.
Cost of Insurance - The cost of insurance for the Insured is determined on a
monthly basis. The cost of insurance is determined separately for the Initial
Specified Amount and each subsequent increase in Specified Amount. The cost of
insurance is calculated as (1), multiplied by the result of (2) minus (3),
where:
(1) is the cost of insurance rate as described in the Cost of Insurance Rates
provision.
(2) is the death benefit at the beginning of the policy month, divided by
1.0036748.
(3) is the accumulation value at the beginning of the policy month, prior to the
monthly deduction for the cost of insurance.
If the Death Benefit Option is Option I and there have been increases in the
Specified Amount then the accumulation value shall be first considered a part of
the Initial Specified Amount. If the accumulation value exceeds the Initial
Specified Amount, it shall then be considered a part of the additional Specified
Amounts resulting from increases in the order of such increases.
Cost of Insurance Rates - The monthly cost of insurance rate is based on the
sex, issue age, policy year, and rating class of the Insured. Monthly cost of
insurance rates will be determined by the Company based upon future
expectations, including charges for mortality experience, amortization of sales
charges and other administrative charges, and on rules and standards on file
with the Department of Insurance. Changes in the monthly Cost of Insurance rates
will be based upon changes in future expectations as to investment earnings,
mortality experience, persistency, expenses and on rules and standards on file
with the Insurance Department. The rating class will be determined separately
for the Initial Specified Amount and for any increase in Specified Amount that
requires evidence of insurability. However, the cost of insurance rates can
never be greater than those shown in the Table of Monthly Guaranteed Cost of
Insurance Rates. For issue ages 15 and above, such guaranteed maximum rates are
based on the 1980 CSO Male and Female Smoker and Nonsmoker Mortality Tables. For
issue ages 14 and below, such guaranteed maximum rates are based on the 1980 CSO
Male and Female Nonsmoker Mortality Tables.
Insufficient Cash Value - If the accumulated value less any debt on a Monthly
Anniversary Day is insufficient to cover the monthly deduction for the month
following such Monthly Anniversary Day, the policy shall terminate as provided
in the Grace Period provision.
Continuation of Insurance - In the event Planned Periodic Premium payments are
not continued, insurance coverage under this policy and any benefits provided by
rider will be continued until the accumulated value, less any debt, is
insufficient to cover the monthly deduction, as provided in the Grace Period
provision. This provision shall not continue the policy beyond the Maturity Date
nor continue any rider beyond the date for its termination, as provided in the
rider. If the cash value is sufficient to continue this policy to the Maturity
Date, then any remaining cash value will be paid to the Owner if the Insured is
then living.
Surrender - Upon written request the Owner may surrender this policy at any time
during the lifetime of the Insured and before the Maturity Date. The amount
payable on surrender of this policy shall be the cash value on the date the
Company receives the request for surrender, less any debt.
<PAGE>
Withdrawal of Cash Value (Withdrawal) - Upon written request the Owner may make
a withdrawal from this policy. Any withdrawal is subject to the following
conditions:
(1) The amount withdrawn may not exceed the cash value less any outstanding
debt.
(2) The minimum amount that may be withdrawn is $750.
(3) A charge equal to the lesser of $25 or 2% of the amount of the withdrawal
will be deducted from the amount of each withdrawal.
(4) The accumulation value will be reduced by the sum of the withdrawal and a
pro-rata portion of the surrender charge in effect on the date of the
withdrawal. The remaining accumulation value and schedule of surrender
charges will be determined by multiplying each of these values by a
numerical factor. This numerical factor is equal to
++ ++
1 -+ +
+ Amount of Withdrawal +
+ -------------------------------------------- +
+ Cash Value Immediately Before Withdrawal +
++ ++
(5) The Death Benefit will be reduced by an amount equal to the reduction in the
accumulation value. This will result in a reduction of the Specified Amount
if the Death Benefit is Option I by an amount equal to the reduction in the
accumulation value. The Specified Amount remaining in force after any
withdrawal must be at least $10,000.
The Owner may allocate the withdrawal among the General Account and the
divisions of Separate Account B. If the Owner does not specify the allocation,
then the withdrawal will be allocated among the General Account and the
divisions of Separate Account B in the same proportion that the accumulation
value in the General Account, less any debt, and the accumulation value in each
division bears to the total accumulation value of the policy, less any debt, on
the date of the withdrawal.
Basis of Computations - For issue ages 15 and above, minimum cash values and
reserves in the General Account are based on the 1980 CSO Smoker and Nonsmoker
Mortality Tables with interest at 4 1/2% per year. For issue ages 14 and below,
minimum cash values and reserves in the General Account are based on the 1980
050 Table with interest at 4 1/2% per year.
The method used in computing cash values and reserves in Separate Account B is
in accordance with actuarial procedures that recognize the variable nature of
Separate Account B. The method used is such that if the Net Investment Factor,
less one, for all divisions of Separate Account B, at all times from the policy
date, is equal to an effective annual interest rate of 4 1/2%, then the cash
values and reserves in Separate Account B will be at least equal to the minimum
cash values and reserves, which would have been required by the law of the state
in which this policy is delivered, of an equivalent policy in which all net
premiums have been allocated to the General Account.
All values under this policy are not less than the values required by the state
in which this policy was delivered. A detailed statement of the method of
computation of cash values under this policy has been filed with the insurance
department of the state in which this policy was delivered.
Illustration of Benefits and Values - The Company will provide illustrations of
death benefits and cash values at any time after the policy date upon written
request by the Owner and payment of a nominal fee. The fee payable will be the
one then in effect for this service; however, such fee can never exceed $25.
This illustration will be based on the existing cash value at the time of
request and maximum cost of insurance rates. Additional illustrations will be
made based on the existing cash value and current mortality assumptions.
<PAGE>
SETTLEMENT OPTIONS
Election of an Option - Any proceeds to be paid under this policy may be paid as
an income under any one of the options stated below. The election of an option
or change of prior election must be made in writing to the Company at its
Service Office. If an option is not chosen by the Owner prior to the death of
the Insured, the primary beneficiary may make such election.
Unless the Company agrees otherwise any such payments will be made only to a
natural person taking in his own right. An option may be elected only if the
amount of the proceeds is $2,000 or more. The Company may change the interval of
payments to 3, 6 or 12 months, if necessary to increase the guaranteed payments
to at least $20.00 each.
Option A - Installments of a Specified Amount - Payments of an agreed amount to
be made each month until the proceeds and interest are exhausted.
Option B - Installments for a Specified Period - Payments to be made each month
for an agreed number of years.
Option C - Life Income - Payments to be made each month for the lifetime of the
payee. It is guaranteed that payments will be made for a minimum of 10, 15, or
20 years as agreed upon. No election will default to payments made for 20 years.
Option D - Interest - Payment of interest on the proceeds held by the Company.
The amount of interest payment is calculated at the compound rate of 3% per
year. Interest payments will be made in 12-, 6-, 3-, or 1-month intervals as
agreed upon.
Supplementary Contract - When the proceeds of this policy become payable, a
supplementary contract setting forth the terms of the option chosen will be
issued to the payee. The first payment under Option A, B, or C shall be payable
on the effective date of such Option. The first payment under Option D shall be
payable at the end of the first agreed payment interval.
Interest - The interest rate for Options A, B, and D will not be less than 3%
per year. The interest rate for Option C will not be less than 2 1/2% per year.
Interest in addition to that stated may be paid or credited from time to time
under any option but only at the sole discretion of the Company.
Withdrawal Value - Unless otherwise stated in the election of an option, the
payee shall have the right to receive the withdrawal value under that option.
For Options A and D the withdrawal value shall be any unpaid balance of proceeds
plus accrued interest.
For Option B the withdrawal value shall be the commuted value of the remaining
payments. Such value will be calculated on the same basis as the original
payments.
For Option C the withdrawal value shall be the commuted value of the remaining
payments. Such value will be calculated on the same basis as the original
payments. To receive this value, the payee must submit evidence of insurability.
Such evidence must be satisfactory to the Company. Otherwise, the withdrawal
value shall be the commuted value of any remaining guaranteed payments. In this
event the payments will be resumed at the end of the guaranteed period if the
payee should be alive on that date. The payments will then continue for the
lifetime of the payee.
Under any of these options, the payee shall have the right to receive the
withdrawal value in partial amounts. However, the partial amounts shall not be
less than the smaller of the withdrawal value or $100.
Death of Payee - If the payee dies before the proceeds are exhausted or the
prescribed payments made, a final payment will be made in one sum to the estate
of the last surviving payee. The amount to be paid will be calculated as
described for the applicable option in the Withdrawal Value Provision.
Limitation on Rights of Payee and Claims of Creditors - Neither the amount
retained under an option nor any payment made under an option can be assigned or
pledged. To the extent permitted by law such amounts or payments shall not be
subject to claims of creditors or legal process.
<PAGE>
SETTLEMENT OPTIONS
TABLES OF MONTHLY INSTALLMENTS UNDER OPTION B OR C
Monthly installments are shown for each $1,000 of net proceeds applied. The ages
shown are ages nearest birthday when the first monthly installment is payable.
OPTION B TABLE
INSTALLMENTS FOR A SPECIFIED PERIOD
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Years Monthly Years Monthly Years Monthly Years Monthly Years Monthly
Installment Installment Installment Installment Installment
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $84.47 7 $13.16 13 $7.71 19 $5.73 25 $4.71
2 42.86 8 11.68 14 7.26 20 5.51 26 4.59
3 28.99 9 10.53 15 6.87 21 5.32 27 4.48
4 22.06 10 9.61 16 6.53 22 5.15 28 4.37
5 17.91 11 8.86 17 6.23 23 4.99 29 4.27
6 15.14 12 8.24 18 5.96 24 4.84 30 4.18
</TABLE>
Multiply the monthly installment by 11.84 for annual, by 5.96 for semi-annual
or by 2.99 for quarterly installments.
- --------------------------------------------------------------------------------
OPTION C TABLE
LIFE INCOME
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Attained Attained
Age of Payee MONTHLY INSTALLMENTS Age of Payee MONTHLY INSTALLMENTS
- --------------------------------------------------------------------------------------------------------------------------------
GUARANTEED GUARANTEED
------------------------------------ ------------------------------------
Male Female 10 Years 15 Years 20 Years Male Female 10 Years 15 Years 20 Years
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 or 21 or
Under Under $2.83 $2.82 $2.81 51 56 $4.60 $4.44 $4.24
17 22 2.85 2.84 2.84 52 57 4.69 4.52 4.30
18 23 2.88 2.87 2.86 53 58 4.79 4.60 4.36
19 24 2.90 2.89 2.88 54 59 4.90 4.69 4.41
20 25 2.93 2.92 2.91 55 60 5.01 4.77 4.47
21 26 2.95 2.95 2.93 56 61 5.12 4.86 4.53
22 27 2.98 2.97 2.96 57 62 5.23 4.94 4.59
23 28 3.01 3.00 2.99 58 63 5.35 5.03 4.64
24 29 3.04 3.03 3.02 59 64 5.48 5.12 4.70
25 30 3.08 3.07 3.05 60 65 5.61 5.21 4.75
26 31 3.11 3.10 3.08 61 66 5.74 5.30 4.80
27 32 3.14 3.13 3.11 62 67 5.87 5.39 4.85
28 33 3.18 3.17 3.15 63 68 6.01 5.48 4.90
29 34 3.22 3.20 3.18 64 69 6.16 5.56 4.94
30 35 3.26 3.24 3.22 65 70 6.30 5.65 4.98
31 36 3.30 3.28 3.25 66 71 6.45 5.73 5.02
32 37 3.34 3.32 3.29 67 72 6.60 5.82 5.05
33 38 3.39 3.36 3.33 68 73 6.76 5.90 5.09
34 39 3.43 3.41 3.37 69 74 6.91 5.97 5.12
35 40 3.48 3.45 3.41 70 75 7.07 6.05 5.14
36 41 3.53 3.50 3.45 71 76 7.23 6.12 5.17
37 42 3.59 3.55 3.50 72 77 7.38 6.18 5.19
38 43 3.64 3.60 3.54 73 78 7.54 6.24 5.20
39 44 3.70 3.65 3.59 74 79 7.69 6.30 5.22
40 45 3.76 3.71 3.64 75 80 7.84 6.35 5.23
41 46 3.82 3.77 3.69 76 81 7.98 6.39 5.24
42 47 3.88 3.82 3.74 77 82 8.13 6.43 5.25
43 48 3.95 3.88 3.79 78 83 8.26 6.47 5.26
44 49 4.02 3.95 3.84 79 84 8.39 6.50 5.26
45 50 4.09 4.01 3.90 80 or 85 or 8.51 6.53 5.27
46 51 4.17 4.08 3.95 Over Over
47 52 4.25 4.15 4.01
48 53 4.33 4.22 4.07
49 54 4.42 4.29 4.12
50 55 4.50 4.37 4.18
</TABLE>
Multiply the monthly installment by 11.80 for annual, by 5.93 for semi-annual
or by 2.98 for quarterly installments.
<PAGE>
ENDORSEMENTS:
Flexible Premium Variable Life Insurance Policy - Flexible Premiums Payable
Until The Maturity Date Or Until Prior Death. Adjustable Death Benefit.
Insurance Payable At Death. Some Benefits Reflect Investment Results.
Additional Benefits, If Any, As Indicated On Page 3.
Non-Participating. No Dividends.
<PAGE>
Exhibit 1(e) (ii)
FORM OF RIDERS
<PAGE>
[LOGO OF CHUBB LIFEAMERICA APPEARS HERE]
- --------------------------------------------------------------------------------
The Colonial Life Insurance Company of America
Home Office: 8 Sylvan Way, Parsippany, N.J. 07054
Service Office: P.O. Box 1369, Chattanooga, TN 37401
CHILDREN'S TERM INSURANCE RIDER
READ CAREFULLY - TERM INSURANCE ON DEPENDENTS
EFFECTIVE DATE _____________
This Rider is part of the policy to which it is attached. It takes effect on the
Policy Date of the policy unless a later effective date is shown above. In this
rider, "we", "us", or "our" means The Colonial Life Insurance Company of
America, "you" means the owner of the policy; and "Insured" means the person
named on Page 3 of the policy as Insured under this rider. If more than one
Insured is named as Insured under this rider, this rider applies separately to
each Insured.
Consideration - In return for the payment of the monthly deductions and receipt
of any application for this rider, we will provide the benefit described in this
rider.
Benefit - We will pay to the proper Beneficiary on due proof of death of any
Insured Child a lump sum payment of $1,000 multiplied by the number of units
shown on page three of the policy of which this Rider is a part, herein called
"The Policy". Such payment will be made subject to the provisions of this Rider
and those of The Policy. This benefit is to be paid in the event the death of an
Insured Child occurs:
(1) After such child has attained the age of 15 days;
(2) Before the policy anniversary nearest the child's 25th birthday; and
(3) Before the Expiry Date.
Insured Child - As used herein, "Insured Child" means:
(1) Each of the Insured's children, after acquired stepchildren or legally
adopted children who is named in the application for this Rider and who, on
the date of the application, has not attained the age of 18 years;
(2) Any child who is born to the Insured after the date of the application; and
(3) Any child who, prior to attaining the age of 18 years, is legally adopted
by the Insured.
Beneficiaries of This Rider - Proceeds to be paid due to the death of an Insured
Child will be paid to the Insured, if then living. Otherwise, the proceeds will
be paid to the Insured's Spouse, if then living. If neither the Insured nor the
Insured's Spouse is then living, the proceeds will be paid to the executors,
administrators, or assigns of the Insured Child.
While the Insured is living, you may name or change a revocable beneficiary at
any time. A change of the Owner or beneficiary must be made in writing. To be
binding on us, the change must be signed by you and any irrevocable beneficiary
and must be filed at the Service Office. Any such change will take effect as of
the date it was signed, subject to any payment made or action taken by us before
the change was filed.
Expiry Date - The Expiry Date of this Rider shall be the earlier of:
(1) The policy anniversary nearest the 25th birthday of the youngest child; or
(2) The policy anniversary nearest the 65th birthday of the Insured.
CHILDREN'S TERM INSURANCE RIDER
READ CAREFULLY - TERM INSURANCE ON DEPENDENTS
<PAGE>
Termination - This Rider will cease as soon as one of the following occurs:
(1) The Policy terminates.
(2) The Expiry Date of this Rider is attained.
(3) We receive a proper request to terminate this Rider.
Waiver of Cost of Insurance - The cost of insurance for this Rider shall be
waived only if and when the monthly deduction under The Policy is waived under
any Rider which is a part of The Policy.
CONVERSION PRIVILEGE
Insured Child's Benefit - The Insurance under this Rider on an Insured Child may
be converted to a new policy on the earlier of:
(1) The Expiry Date, or
(2) The policy anniversary nearest the Insured Child's 25th birthday, or
(3) The death of the Insured.
The amount converted is not to exceed $5,000 multiplied by the number of units
shown on page three of The Policy. The new policy will be issued without
evidence of insurability. Issue will be governed by all the conditions set forth
below.
Conversion Conditions - Conversion to a new policy shall be subject to the
following conditions:
(1) Proper written application for the new policy must be made to us at our
Service Office. The first premium for the new policy shall be paid to us
not later than the termination date of the insurance to be converted. The
first premium must also be paid during the lifetime of the person to be
insured under the new policy.
(2) The effective date of the new policy shall be the date of termination of
the insurance to be converted.
(3) Subject to our minimum policy rules, the new policy will be issued on any
plan of non-participating whole life or endowment insurance offered by us
on the effective date of the new policy.
(4) The new policy will be issued on a form and at premium rates in use by us
on the effective date of conversion. Such rates will be based on the then
attained age at the nearest birthday to the person to be insured. The new
policy will not include disability or accidental death benefits unless
evidence satisfactory to us of the insurability of the person to be insured
is furnished.
(5) The application for a new policy on an Insured Child shall be made by you.
(6) The suicide and contestable periods of the new policy will be measured from
the effective date of the insurance provided by this Rider.
PAID UP INSURANCE AT DEATH OF INSURED
Benefit - Any term insurance in force under this rider on any Insured Child on
the date of the Insured's death will become fully paid up on that date. Upon the
death of the Insured we shall have the right to require surrender of this Rider
in exchange for any fully paid up term insurance. Such paid up term insurance
may be surrendered at any time for its cash value, the then net single premium
for the remaining term insurance. The net single premium will be computed on the
basis of the 1980 CSO Mortality Tables, without the ten year select mortality
factors, and four and one-half percent interest. The cash value payable within
30 days of a policy anniversary shall not be less than the cash value on the
anniversary.
/s/ John F. Swope /s/ Frederick H. Condon
President Secretary
<PAGE>
INSURED: DOE, JOHN MATURITY DATE: 12-21-2052
OWNER: INSURED POLICY NUMBER: 6550001
POLICY DATE: 12/21/92 PREMIUM FREQUENCY: ANNUAL
ISSUE DATE: 12/21/92 DEATH BENEFIT: OPTION I
AGE AT ISSUE: 35 M
RATING CLASS: NON-SMOKER STANDARD
BENEFICIARY: AS STATED IN APPLICATION OR ENDORSEMENT ATTACHED.
PLANNED
PERIODIC
LIFE INSURANCE PREMIUM
$100,000 INITIAL SPECIFIED AMOUNT 1,000.00
5.000 UNITS CHILDREN'S TERM
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
IT IS POSSIBLE THAT COVERAGE WILL EXPIRE PRIOR TO THE MATURITY DATE CHOSEN WHEN
EITHER NO PREMIUMS ARE PAID FOLLOWING PAYMENT OF THE INITIAL PREMIUM OR
SUBSEQUENT PREMIUMS ARE INSUFFICIENT TO CONTINUE COVERAGE TO SUCH DATE. IF
CURRENT VALUES CHANGE, THIS WILL ALSO AFFECT COVERAGE. SEE CONTINUATION OF
INSURANCE PROVISION ON PAGE 16.
THE POLICY'S ACCUMULATION VALUE IN THE GENERAL ACCOUNT WILL EARN INTEREST DAILY
AT A MINIMUM GUARANTEED EFFECTIVE RATE OF 4-1/2%. THE POLICY'S ACCUMULATION
VALUE HELD IN THE GENERAL ACCOUNT FOR POLICY LOAN COLLATERAL WILL EARN INTEREST
DAILY AT THE LESSER OF AN EFFECTIVE RATE OF 6% OR THE INTEREST RATE CURRENTLY
CREDITED.
ALLOCATIONS OF NET PREMIUM: 50.0% GROWTH STOCK DIVISION II
50.0% DOMESTIC GROWTH STOCK FUND II
SELECTED EXPENSE CHARGES:
1) 2.5% OF EACH PREMIUM PAID.
2) A MONTHLY ADMINISTRATIVE CHARGE. THIS CHARGE IS EQUAL TO $6.00 PER MONTH IN
EACH POLICY YEAR.
3) COST OF INSURANCE CHARGES - SEE PAGES 4 AND 16.
4) MORTALITY AND EXPENSE RISK CHARGE - SEE PAGE 15.
5) SURRENDER CHARGE ON WITHDRAWAL OR SURRENDER - SEE PAGES 3A AND 14.
GUIDELINE LEVEL PREMIUM: $ 1,153.60
GUIDELINE SINGLE PREMIUM: $ 14,114.96
PAGE 3
<PAGE>
[LOGO OF CHUBB LIFEAMERICA APPEARS HERE]
- --------------------------------------------------------------------------------
The Colonial Life Insurance Company of America
Home Office: 8 Sylvan Way, Parsippany, N.J. 07054
Service Office: P.O. Box 1369, Chattanooga, TN 37401
GUARANTEED INSURABILITY OPTION RIDER
An Option to Purchase Additional Life Insurance
This rider is part of the policy to which it is attached. It takes effect on the
Policy date of the policy unless a later effective date is shown above. In this
rider, "we", "us", or "our" means The Colonial Life Insurance Company of
America; "you" means the Owner of the policy; and "Insured" means the person
named on Page 3 of the policy as Insured under this rider. If more than one
Insured is named as Insured under this rider, this rider applies separately to
each Insured.
Consideration - In return for the payment of the monthly deductions and receipt
of any application for this rider, we will provide the benefit described in this
rider.
Benefit - We agree, at the option of the Insured, to permit the purchase of an
increase in the Specified Amount of the policy. Such purchase must be made
during an Option Period. Evidence of insurability is not required. Each increase
purchased must be for an amount equal to or less than the applicable Schedule
Amount shown below.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SCHEDULE AMOUNT
- --------------------------------------------------------------------------------
Age at Issue First Option Subsequent
of the Policy Date Option Dates
- --------------------------------------------------------------------------------
<S> <C> <C>
0-35 Twice the Amount of The Amount of Guaranteed
Guaranteed Insurability Insurability Benefit*
Benefit*
- --------------------------------------------------------------------------------
36-40 The Amount of Guaranteed
Insurability Benefit* NONE
- --------------------------------------------------------------------------------
</TABLE>
*As shown on page 3 of the policy.
Conditions - This Rider is subject to the following conditions:
(1) Proper written application must be received by us at our Service Office
during the Option Period. The application must be in such form as may be
required by us.
(2) If this option is exercised during a Regular Option Period, then the
effective date of the increase will be the Regular Option Date.
If this option is exercised during a Substitute Option Period, then the
effective date of the increase will be the next monthly anniversary day
after written request.
(3) The minimum increase is $10,000.
(4) The cost of the increase will be based on the same premium class as the
original amount of insurance.
(5) The cost of the increase shall be that in effect by us on the effective
date of the increase. Such cost shall be based on the then attained age of
the Insured at nearest birthday.
(6) The total number of options that may be exercised cannot be greater than
the number of Regular Option Dates available.
(7) If the basic policy does not contain a benefit to waive monthly deductions
in the event of total and permanent disability, then increases to the
Specified Amount will not include such a waiver benefit.
If the basic policy does contain a benefit to waive monthly deductions in
the event of total and permanent disability, then increases to the
Specified Amount may include such a waiver benefit. Satisfactory evidence
of insurability will be required to include this waiver benefit for the
increase.
(8) The right to purchase an increase during an Option Period shall expire at
the end of such Option Period. This right cannot be carried forward to be
exercised on any future date. However, such expiry dates shall not affect
the right to purchase an increase during a subsequent Option Period, if
any.
<PAGE>
OPTION PERIODS
Regular Option Period - A Regular Option Period shall be the 60 day period which
ends on a Regular Option Date.
Substitute Option Period - A Substitute Option Period shall be the 90 day period
immediately following a Substitute Option Date. If an increase is purchased
during a Substitute Option Period, then the next Regular Option Date will be
cancelled.
OPTION DATES
Regular Option Dates - Regular Option Dates shall be the policy anniversaries
nearest the Attained Ages shown below.
<TABLE>
<CAPTION>
------------------------------------------
Age at Issue Regular Option Dates
of the Policy (Attained Ages)
------------------------------------------
<S> <C>
0-23 24, 28, 32, 36, 40
24-27 28, 32, 36, 40
28-31 32, 36, 40
32-35 36, 40
36 40
37 41
38 42
39 43
40 44
------------------------------------------
</TABLE>
Substitute Option Dates - The Substitute Option Dates will be those dates of:
(1) The Insured's marriage; and
(2) The birth or legal adoption of the children of the Insured.
Substitute Option Dates must occur before the last Regular Option Date.
TERMINATION
Termination - This Rider will cease as soon as one of
the following occurs:
(1) The basic policy terminates.
(2) The last Regular Option Date shown in the table has passed.
(3) The maturity date of the basic policy is attained.
(4) We receive a proper written request to terminate this rider. In this case
we reserve the right to require the policy for endorsement.
/s/ John F. Swope /s/ Frederick H. Condon
President Secretary
<PAGE>
INSURED: DOE, JOHN MATURITY DATE: 12-21-2052
OWNER: INSURED POLICY NUMBER: 6550001
POLICY DATE: 12/21/92 PREMIUM FREQUENCY: ANNUAL
ISSUE DATE: 12/21/92 DEATH BENEFIT: OPTION I
AGE AT ISSUE: 35 M
RATING CLASS: NON-SMOKER STANDARD
BENEFICIARY: AS STATED IN APPLICATION OR ENDORSEMENT ATTACHED.
PLANNED
PERIODIC
LIFE INSURANCE PREMIUM
$100,000 INITIAL SPECIFIED AMOUNT 1,000.00
$50,000 GUARANTEED INSURABILITY PAYABLE TO AGE 40
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
IT IS POSSIBLE THAT COVERAGE WILL EXPIRE PRIOR TO THE MATURITY DATE CHOSEN WHEN
EITHER NO PREMIUMS ARE PAID FOLLOWING PAYMENT OF THE INITIAL PREMIUM OR
SUBSEQUENT PREMIUMS ARE INSUFFICIENT TO CONTINUE COVERAGE TO SUCH DATE. IF
CURRENT VALUES CHANGE, THIS WILL ALSO AFFECT COVERAGE. SEE CONTINUATION OF
INSURANCE PROVISION ON PAGE 16.
THE POLICY'S ACCUMULATION VALUE IN THE GENERAL ACCOUNT WILL EARN INTEREST DAILY
AT A MINIMUM GUARANTEED EFFECTIVE RATE OF 4-1/2%. THE POLICY'S ACCUMULATION
VALUE HELD IN THE GENERAL ACCOUNT FOR POLICY LOAN COLLATERAL WILL EARN INTEREST
DAILY AT THE LESSER OF AN EFFECTIVE RATE OF 6% OR THE INTEREST RATE CURRENTLY
CREDITED.
ALLOCATIONS OF NET PREMIUM: 50.0% GROWTH STOCK DIVISION II
50.0% DOMESTIC GROWTH STOCK FUND II
SELECTED EXPENSE CHARGES:
1) 2.5% OF EACH PREMIUM PAID.
2) A MONTHLY ADMINISTRATIVE CHARGE. THIS CHARGE IS EQUAL TO $6.00 PER MONTH IN
EACH POLICY YEAR.
3) COST OF INSURANCE CHARGES - SEE PAGES 4 AND 16.
4) MORTALITY AND EXPENSE RISK CHARGE - SEE PAGE 15.
5) SURRENDER CHARGE ON WITHDRAWAL OR SURRENDER - SEE PAGES 3A AND 14.
GUIDELINE LEVEL PREMIUM: $ 1,153.60
GUIDELINE SINGLE PREMIUM: $ 14,114.96
PAGE 3
<PAGE>
[LOGO OF CHUBB LIFEAMERICA APPEARS HERE]
- --------------------------------------------------------------------------------
The Colonial Life Insurance Company of America
Home Office: 8 Sylvan Way, Parsippany, N.J. 07054
Service Office: P.O. Box 1369, Chattanooga, TN 37401
ACCIDENTAL DEATH BENEFIT RIDER
for death by accidental means
The Colonial Life Insurance Company of America has issued this Rider as a part
of the policy to which it is attached.
Benefit - The Company will pay to the beneficiary subject to the provisions of
this policy, the Accidental Death Benefit upon receipt of due proof of both of
the following:
(1) The death of the Insured occurred while this Rider was in force.
(2) The death of the Insured occurred as a result of bodily injuries effected
solely and independently of all other causes through accidental means.
The amount of this Benefit is shown on page three of this policy.
Risks Not Assumed - This Accidental Death Benefit will not be paid if:
(1) The Insured dies more than 90 days after the accident causing death.
(2) The death of the Insured is caused by suicide.
(3) The death of the Insured results from travel or flight in or descent from
any kind of aircraft, unless:
(a) The Insured was a fare paying passenger on a commercial airline; and
(b) The flight was a regularly scheduled flight between definitely
established airports.
(4) The death of the Insured results, directly or indirectly, from any war
declared or undeclared, any act of war, or any hostile action by a foreign
power.
(5) The death of the Insured results from committing or attempting to commit a
felony by Insured.
(6) The death of the Insured is caused or contributed to, directly or
indirectly, by:
(a) Disease or bodily or mental infirmity, or
(b) Infection other than a bacterial infection which occurs through and
with an accidental cut or wound.
(7) The death of the Insured is caused by the voluntary taking, inhaling, or
absorbing of any drug (unless taken as prescribed by a physician), poison,
gas or fumes.
(8) The death of the Insured results directly or indirectly from medical or
surgical treatment, unless such treatment is necessitated by an injury
covered in this Rider.
Termination - This Rider will cease as soon as one of the following occurs:
(1) The Accidental Death Benefit cost remains unpaid at the end of the grace
period.
(2) The policy is terminated.
(3) The policy anniversary nearest age 70 of the Insured is attained.
(4) The maturity date of this policy, if it has one, is attained.
(5) The Company receives a proper written request to terminate this Rider.
Consideration - This Rider is issued in consideration of the application. The
accidental death benefit cost is to be paid on the same dates and under the same
conditions as the cost of insurance for the policy. The payment of any
accidental death benefit cost under this Rider after it has ceased shall not
extend the term hereof. Any such accidental death benefit cost shall be returned
by the Company within a reasonable time.
<PAGE>
Table of Monthly Accidental Death Benefit Cost Rates Per $1,000
The monthly accidental death benefit cost rate is based on the attained age and
rating class of the Insured. Attained age means age nearest birthday on the
prior policy anniversary.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ADB ADB ADB
Attained Cost Attained Cost Attained Cost
Age Rate Age Rate Age Rate
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
10 .07 29 .07 47 .09
11 .07 30 .07 48 .09
12 .07 31 .07 49 .09
13 .07 32 .07 50 .09
14 .07 33 .07 51 .09
15 .07 34 .07 52 .09
16 .07 35 .07 53 .09
17 .07 36 .07 54 .09
18 .07 37 .07 55 .10
19 .07 38 .07 56 .10
20 .07 39 .07 57 .10
21 .07 40 .07 58 .12
22 .07 41 .08 59 .12
23 .07 42 .08 60 .12
24 .07 43 .08 61 .13
25 .07 44 .08 62 .13
26 .07 45 .08 63 .14
27 .07 46 .09 64 .15
28 .07 47 .09 65 .15
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
INSURED: DOE, JOHN MATURITY DATE: 12-21-2052
OWNER: INSURED POLICY NUMBER: 6550001
POLICY DATE: 12/21/92 PREMIUM FREQUENCY: ANNUAL
ISSUE DATE: 12/21/92 DEATH BENEFIT: OPTION I
AGE AT ISSUE: 35 M
RATING CLASS: NON-SMOKER STANDARD
BENEFICIARY: AS STATED IN APPLICATION OR ENDORSEMENT ATTACHED.
PLANNED
PERIODIC
LIFE INSURANCE PREMIUM
$100,000 INITIAL SPECIFIED AMOUNT 1,000.00
$100,000 ACCIDENTAL DEATH
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
IT IS POSSIBLE THAT COVERAGE WILL EXPIRE PRIOR TO THE MATURITY DATE CHOSEN WHEN
EITHER NO PREMIUMS ARE PAID FOLLOWING PAYMENT OF THE INITIAL PREMIUM OR
SUBSEQUENT PREMIUMS ARE INSUFFICIENT TO CONTINUE COVERAGE TO SUCH DATE. IF
CURRENT VALUES CHANGE, THIS WILL ALSO AFFECT COVERAGE. SEE CONTINUATION OF
INSURANCE PROVISION ON PAGE 16.
THE POLICY'S ACCUMULATION VALUE IN THE GENERAL ACCOUNT WILL EARN INTEREST DAILY
AT A MINIMUM GUARANTEED EFFECTIVE RATE OF 4-1/2%. THE POLICY'S ACCUMULATION
VALUE HELD IN THE GENERAL ACCOUNT FOR POLICY LOAN COLLATERAL WILL EARN INTEREST
DAILY AT THE LESSER OF AN EFFECTIVE RATE OF 6% OR THE INTEREST RATE CURRENTLY
CREDITED.
ALLOCATIONS OF NET PREMIUM: 50.0% GROWTH STOCK DIVISION II
50.0% DOMESTIC GROWTH STOCK FUND II
SELECTED EXPENSE CHARGES:
1) 2.5% OF EACH PREMIUM PAID.
2) A MONTHLY ADMINISTRATIVE CHARGE. THIS CHARGE IS EQUAL TO $6.00 PER
MONTH IN EACH POLICY YEAR.
3) COST OF INSURANCE CHARGES - SEE PAGES 4 AND 16.
4) MORTALITY AND EXPENSE RISK CHARGE - SEE PAGE 15.
5) SURRENDER CHARGE ON WITHDRAWAL OR SURRENDER - SEE PAGES 3A AND 14.
GUIDELINE LEVEL PREMIUM: $ 1,153.60
GUIDELINE SINGLE PREMIUM: $ 14,114.96
PAGE 3
<PAGE>
[LOGO OF CHUBB LIFEAMERICA APPEARS HERE]
- --------------------------------------------------------------------------------
The Colonial Life Insurance Company of America
Home Office: 8 Sylvan Way, Parsippany, N.J. 07054
Service Office: P.O. Box 1369, Chattanooga, TN 37401
WAIVER OF PREMIUM DISABILITY BENEFIT
RIDER
The Colonial Life Insurance Company of America has issued this rider as a part
of the policy to which it is attached.
Benefit - Subject to the provisions of the basic policy, the Company will waive
the monthly deduction (as defined in the basic policy) each month while the
Insured is totally disabled. The Company must be furnished with due proof of the
Insured's Total Disability along with proof that it has continued with no
interruption for at least six months.
Total Disability - Total Disability means the complete incapacity of the Insured
to engage in an occupation for remuneration or profit. Such incapacity must be
the result of bodily injury or disease. During the first two years of total
disability, "occupation" means the regular occupation of the Insured.
Thereafter, it means any occupation, for which the Insured is qualified due to
education, training or experience, in which the Insured may be engaged for
remuneration or profit. The total and irrecoverable loss by the Insured of the
following shall be deemed Total Disability:
(1) The sight of both eyes,
(2) The use of both hands
(3) The use of both feet, or
(4) The use of one hand and one foot.
Risks Not Assumed - The monthly deduction shall not be waived or refunded if:
(1) Totally disabled on the date this rider takes effect.
(2) Total Disability began after the grace period.
(3) Total Disability is a direct result of willful and intentional self
inflicted injury.
(4) Total Disability is the result of an act of war while the Insured is serving
in the military, naval or air forces of any country at war, declared or
undeclared.
If Total Disability begins within the grace period, as defined in the basic
policy, the monthly deduction due at the time the policy entered the grace
period will not be waived.
Consideration - This rider is issued in consideration of the application. The
waiver of premium cost is payable on the same dates and under the same
conditions as the cost of insurance for the basic policy. The payment of any
waiver of premium cost after this rider has ceased shall not extend the term of
the rider. Any such waiver of premium cost shall be returned by the Company
within a reasonable time.
Monthly Deductions Not Deducted - Any monthly deduction waived under this
benefit will not reduce the proceeds to be paid under the basic policy. The
Insured will remain liable to pay interest on any debt to the Company.
<PAGE>
Waiver of Premium Cost - The waiver of premium cost for the Insured is
determined on a monthly basis. The waiver of premium cost is calculated as
(1), multiplied by the result of (2) minus (3), where:
(1) is the waiver of premium cost rate as shown on page 3 of this rider.
(2) is the basic policy's death benefit at the beginning of the policy month,
divided by 1.0036748.
(3) is the basic policy's cash value at the beginning of the month.
Notice of Claim - Written notice of claim and proof of Total Disability must be
given to the Company at its Home Office. Such notice and proof must be given
during the lifetime of the Insured and during the period of Total Disability.
Failure to furnish proof of disability within the time required shall not
invalidate or reduce any claim if it was not reasonably possible to give proof
within such time, provided such proof is furnished as soon as reasonably
possible and in no event, except in the absence of legal capacity, later than
one year from the time proof is otherwise required.
Proof of Disability - At reasonable intervals the Company will have the right to
require due proof of the continuance of Total Disability. As a part of such
proof, the Insured may be required to be examined by a physician chosen by the
Company. After the first two years of Total Disability, proof will not be
required more than once a year.
Monthly deductions as described in the terms of this policy are to be resumed
when:
(1) Total Disability ceases.
(2) Proof of the continuance of Total Disability is not furnished as required.
Termination - This rider will cease as soon as one of the following occurs:
(1) The Waiver of Premium cost remains unpaid at the end of the grace period.
(2) The basic policy is terminated.
(3) The policy anniversary nearest age 60 of the Insured is attained.
(4) The maturity date of the basic policy is attained.
(5) The Company receives a proper written request to terminate this rider.
Termination of this rider will not invalidate or diminish any benefit for which
the Insured has qualified.
<PAGE>
Table of Monthly Waiver of Premium Cost Rates Per $1,000
The monthly waiver of premium cost rate is based on the attained age and rating
class of the Insured Attained age means age nearest birthday on the prior policy
anniversary.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
WP WP WP
Attained Cost Attained Cost Attained Cost
Age Rate Age Rate Age Rate
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
15 .01 30 .02 45 .04
16 .01 31 .02 46 .05
17 .01 32 .02 47 .06
18 .01 33 .02 48 .07
19 .01 34 .02 49 .08
20 .01 35 .02 50 .09
21 .01 36 .02 51 .11
22 .01 37 .02 52 .12
23 .01 38 .02 53 .14
24 .01 39 .02 54 .17
25 .01 40 .02 55 .19
26 .01 41 .03 56 * .22
27 .01 42 .03 57 * .24
28 .02 43 .03 58 * .27
29 .02 44 .04 59 * .29
- --------------------------------------------------------------------------------
</TABLE>
*Renewal only
<PAGE>
INSURED: DOE, JOHN MATURITY DATE: 12-21-2052
OWNER: INSURED POLICY NUMBER: 6550001
POLICY DATE: 12/21/92 PREMIUM FREQUENCY: ANNUAL
ISSUE DATE: 12/21/92 DEATH BENEFIT: OPTION I
AGE AT ISSUE: 35 M
RATING CLASS: NON-SMOKER STANDARD
BENEFICIARY: AS STATED IN APPLICATION OR ENDORSEMENT ATTACHED.
PLANNED
PERIODIC
LIFE INSURANCE PREMIUM
$100,000 INITIAL SPECIFIED AMOUNT 1,000.00
WAIVER OF PREMIUM
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
IT IS POSSIBLE THAT COVERAGE WILL EXPIRE PRIOR TO THE MATURITY DATE CHOSEN
WHEN EITHER NO PREMIUMS ARE PAID FOLLOWING PAYMENT OF THE INITIAL PREMIUM
OR SUBSEQUENT PREMIUMS ARE INSUFFICIENT TO CONTINUE COVERAGE TO SUCH DATE -
IF CURRENT VALUES CHANGE, THIS WILL ALSO AFFECT COVERAGE. SEE CONTINUATION
OF INSURANCE PROVISION ON PAGE 16.
THE POLICY'S ACCUMULATION VALUE IN THE GENERAL ACCOUNT WILL EARN INTEREST
DAILY AT A MINIMUM GUARANTEED EFFECTIVE RATE OF 4-1/2%. THE POLICY'S
ACCUMULATION VALUE HELD IN THE GENERAL ACCOUNT FOR POLICY LOAN COLLATERAL
WILL EARN INTEREST DAILY AT THE LESSER OF AN EFFECTIVE RATE OF 6% OR THE
INTEREST RATE CURRENTLY CREDITED.
ALLOCATIONS OF NET PREMIUM: 50.0% GROWTH STOCK DIVISION II
50.0% DOMESTIC GROWTH STOCK FUND II
SELECTED EXPENSE CHARGES:
1) 2.5% OF EACH PREMIUM PAID.
2) A MONTHLY ADMINISTRATIVE CHARGE. THIS CHARGE IS EQUAL TO $6.00 PER MONTH IN
EACH POLICY YEAR.
3) COST OF INSURANCE CHARGES - SEE PAGES 4 AND 16.
4) MORTALITY AND EXPENSE RISK CHARGE - SEE PAGE 15.
5) SURRENDER CHARGE ON WITHDRAWAL OR SURRENDER - SEE PAGES 3A AND 14.
GUIDELINE LEVEL PREMIUM: $ 1,153.60
GUIDELINE SINGLE PREMIUM: $ 14,114.96
PAGE 3
<PAGE>
[LOGO OF CHUBB LIFEAMERICA APPEARS HERE]
- --------------------------------------------------------------------------------
The Colonial Life Insurance Company of America
Home Office: 8 Sylvan Way, Parsippany, N.J. 07054
Service Office: P.O. Box 1369, Chattanooga, TN 37401
EXCHANGE OF INSURED RIDER
Effective Date -
This rider is part of this policy to which it is attached. It takes effect on
the Policy Date of this policy unless a later effective date is shown above. In
this rider, "we", "us" or "our" means The Colonial Life Insurance Company of
America; "you" means the owner of this policy; and "Insured" means the person
named on Page 3 of this policy.
Benefit - This policy may be exchanged for a reissued policy on the life of a
substitute Insured, subject to the conditions stated in this rider. This rider
has no cash or loan value.
Conditions for Exchange - The Exchange of Insureds will be subject to the
following conditions:
(1) You and the substitute Insured must sign the application for the reissued
policy.
(2) This policy and this rider must be in force and not within the Grace
Period.
(3) You must have an insurable interest in the life of the substitute Insured.
(4) We must receive the Charge for Exchange as described below.
(5) This policy must be returned to us before the Exchange Date.
(6) The exchange is subject to proof of insurability of the substitute Insured
which satisfies us.
(7) Any assignee of this policy must agree in writing to the exchange.
The Exchange Date will be the Monthly Anniversary Day on or following the date
all the Conditions for Exchange are satisfied. On the Exchange Date, coverage
on the substitute Insured will become effective and coverage on the previous
Insured will terminate. In no event will coverage on the previous Insured and
the substitute Insured be effective at the same time.
Charge for Exchange - A charge for exchange of $1.00 per $1,000 of Specified
Amount, but not more than $150, must be paid to us. If we do not accept the
substitute Insured, the charge will be refunded.
<PAGE>
TERMINAL ILLNESS ACCELERATED
[LOGO OF CHUBB LIFEAMERICA APPEARS HERE] BENEFIT RIDER
- --------------------------------------------------------------------------------
The Colonial Life Insurance Company of America
Home Office: Eight Sylvan Way, Parsippany, New Jersey 07054
Service Office: One Granite Place, Concord, New Hampshire 03301
NOTICE. Death benefits and policy cash values, if any, will be reduced if an
accelerated benefit is paid. Benefits paid under this Rider may or may not be
taxable. Consult your personal tax advisor to assess the tax consequences of the
benefit.
This Rider is part of the Policy to which it is attached. The effective date of
this Rider will be the later of its date of issue or the Policy Date of the
policy to which it is attached. In this Rider, "we", "us", or "our" means The
Colonial Life Insurance Company of America; "you" and "your" means the Owner of
the Policy; and "Insured" means the person named on the data page of the Policy.
CONSIDERATION - This Rider is issued in consideration of the application. There
is no charge for this Rider prior to the time you request Rider benefits.
CANCELLATION - We will not cancel this Rider, unless you request termination of
this Rider. It will remain in force as long as this Policy remains in force or
until benefits are paid under this Rider.
DEFINITIONS
Accelerated Benefit Payment - The Accelerated Benefit Payment is the requested
portion of the Eligible Death Benefit less the adjustments and deductions as
explained in the Benefits section. The Accelerated Benefit payment amount will
be set at the time we receive your request.
Administrative Expense Charge - An Administrative Expense Charge of $300.00 will
be deducted from the requested portion of the Eligible Death Benefit upon
payment of the Accelerated Benefit.
Benefit Ratio - The Benefit Ratio is the result of dividing (a) by (b) where:
(a) is the requested portion of the Eligible Death Benefit; and
(b) is the Death Benefit or current Face Amount of insurance under the
policy to which this Rider is attached.
Eligible Death Benefit - The Eligible Death Benefit for the Insured is the Death
Benefit or current Face Amount of insurance on the life of the Insured provided
by this Policy.
Immediate Family - Immediate Family means the spouse, child, brother, sister,
parent, or grandparent of the Insured or the Owner.
Physician - Physician means an individual who is licensed to practice medicine
and treat illness or injury in the state in which treatment is received and who
is acting within the scope of that license. Physician does not include:
1. the Insured;
2. you;
3. a person who lives with the Insured or you; or
4. a person who is part of the Insured's or your Immediate Family.
Physician Statement - A Physician Statement means a written statement acceptable
to us, signed by a Physician which:
1. gives the Physician's diagnosis of the Insured's terminal illness; and
2. states that, with reasonable medical certainty, the terminal illness will
result in the death of the Insured within 6 months or less from the date of
the Physician Statement.
Terminal Illness - Terminal Illness is a medical condition, which will result in
the death of the Insured within 6 months or less from the date of the Physician
Statement.
BENEFITS
If the Insured develops a Terminal Illness, you may request an acceleration of a
portion of the Eligible Death Benefit. The Eligible Death Benefit will be
determined as of the date the Notice of Claim is received at our Service Office.
The minimum amount of eligible death benefit which you may request from the
policy is the lower of $50,000, or twenty five percent (25%) of the Death
Benefit or current Face Amount. The maximum amount of Eligible Death Benefit
which you may request from this Policy is fifty percent (50%) of the Death
Benefit or current Face Amount exclusive of any and all riders. The maximum
amount available on all policies with this Rider attached in force with us
<PAGE>
is $250,000 per Insured. In the event of remission or cure of your Terminal
Illness, no attempt will be made by us to recover any Accelerated Benefit
payments made.
Adjustments and Deductions - The requested portion of the Eligible Death Benefit
will be subject to the following adjustments and deduction:
1. An actuarial discount will be deducted from the requested portion of the
Eligible Death Benefit. This discount reflects the early payment of amounts
held under the Policy. It will be based on mortality assumption and an
annual interest rate which has been declared by us and the then current
premium or cost of insurance rate, both of which are in effect as of the
date your Notice of Claim is received at our Service Office. The maximum
interest rate used shall not be greater than the greater of:
a. the then current yield on 90 day Treasury Bills available on the date of
your request; and
b. the then current maximum adjustable policy loan interest rate based on
the greater of:
i. Moody's Corporate Bond Yield Averages - Monthly Average
Corporate's - published by Moody's Investors Service, Inc., or any
successor thereto for the calendar month ending two months prior to
your request; and
ii. the policy guaranteed cash value interest rate plus one percent per
annum.
2. If, on the date we approve your request, there is a Policy loan outstanding
on this Policy, a reduction to the requested portion of the Eligible Death
Benefit will apply. This reduction serves to repay a portion of the Policy
loan and is determined as follows: (Outstanding Policy Loan) X (Benefit
Ratio).
3. A deduction will be made for any premiums due within the Policy's grace
period and are unpaid at the time we approve your request.
4. A deduction will be made for the Administrative Expense Charge.
Waiver of Premiums or Cost of Insurance - If all of the following occur:
1. a Waiver of Premium Rider or a Waiver of Monthly Deduction Rider on the
Insured is attached to this Policy;
2. that Rider is in force at the time of the claim for this Rider's benefits;
and
3. Proof of Terminal Illness is submitted and approved;
then for purposes of any Waiver of Premium Rider or Waiver of Monthly Deduction
Rider that is in force, the Insured will be deemed to be Totally Disabled and
have satisfied the initial waiting period required by the applicable Rider.
Conditions for the Accelerated Benefit Payment - The Accelerated Benefit Payment
is subject to the following conditions:
1. If the policy is under Extended Term Insurance the Accelerated Benefit
Payment must be applied for at least one year prior to the termination date.
2. During the lifetime of the Insured, we must receive Proof of Terminal
Illness that is acceptable to us.
3. No prior request for an Accelerated Benefit Payment may have been made under
this or any other Terminal Illness Accelerated Benefit Rider issued by us
with respect to the Insured. If more than one request is received at the
same time, we will determine which request is deemed to have been received
first and the other requests will be returned.
4. We must receive a consent form from all irrevocable beneficiaries, if any,
and all assignees, if any.
5. This Rider provides for the advance of a portion of the Eligible Death
Benefit of this Policy. This is not meant to cause involuntary access to
proceeds ultimately payable to the beneficiary. Therefore, this benefit is
not available:
a. if either you or the Insured is required by law to use this benefit to
meet the claims of creditors, whether in bankruptcy or otherwise; or
b. if either you or the Insured is required by a government agency to use
this benefit in order to apply for, obtain or otherwise keep a
government benefit or entitlement.
Limitations - No benefit will be provided by this Rider if Terminal Illness
results from intentionally self-inflicted injuries within 2 years of the
effective date of this Rider.
ADJUSTMENTS TO THE POLICY
After an Accelerated Benefit Payment is made, the Policy and all riders will
remain in force subject to the following adjustments:
1. The Policy's Death Benefit or current Face Amount, its current and
Guaranteed Cash Value, if any, its Fund Account or Accumulation Value, if
any, and its required Premium, if any, will be reduced by the Benefit Ratio.
<PAGE>
[LOGO OF CHUBB LIFEAMERICA APPEARS HERE]
- --------------------------------------------------------------------------------
The Colonial Life Insurance Company of America
Home Office: 8 Sylvan Way, Parsippany, N.J. 07054
Service Office: P.O. Box 515, Concord, New Hampshire 03302
OTHER INSURED TERM RIDER
The Colonial Life Insurance Company of America has issued this rider as a part
of the policy to which it is attached.
Consideration - This rider is issued in consideration of the application
therefor and payment of the cost for this rider. The cost for this rider will be
included in the monthly deduction, as defined in the policy. The monthly
deduction for the policy after this rider has ceased will be reduced by the cost
for this rider. The deduction of any cost for this rider after it has ceased
shall not extend the term of this rider. Any such deduction will be refunded.
Insured - As used herein, "Insured" means the primary Insured in the policy.
Owner - As used herein, "Owner" means the Owner of the policy.
Other Insured - As used herein, "Other Insured" means the Other Insured who is
named in the application for this rider, and on Data Page 3 of the policy.
Benefit - The Company will pay to the named Beneficiary on due proof of death of
the Other Insured, a lump sum payment equal to $1,000 multiplied by the number
of units shown on Data Page 3 of the policy. This benefit is to be paid in the
event the death of the Other Insured occurs while this rider is in force and
before the Expiry Date. Such payment will be made subject to the provisions of
this rider and those of the policy of which this rider is a part.
Beneficiary - Any proceeds to be paid under this rider will be paid to the
Beneficiary named in the application for this rider.
While the Insured is living, the Owner may name or change a revocable
Beneficiary at any time. A change of the Owner or Beneficiary must be made in
writing. To be binding on the Company, the change must be signed by the Owner
and any irrevocable Beneficiary and must be filed at the Home Office. Any change
will take effect as of the date it was signed, subject to any payment made or
action taken by the Company before the change was filed.
CONVERSION PRIVILEGE
Other Insured's Benefit - The insurance under this rider on the Other Insured
may be converted to a new policy at any time while this rider is in force before
the policy anniversary nearest the 70th birthday of the Other Insured, or upon
the death of the Insured. The amount converted is not to exceed $1,000
multiplied by the number of units shown on Data Page 3 of the policy. The new
policy will be issued without evidence of insurability. Issue will be governed
by all the conditions set forth below.
<PAGE>
CONVERSION PRIVILEGE (CONTINUED)
Conversion Conditions - Conversion to a new policy
shall be subject to the following conditions:
(1) Proper written application for the policy must be made to the Company at
its Service Office. The first premium for the new policy shall be paid to
the Company not later than the termination date of the insurance to be
converted. The first premium must also be paid during the lifetime of the
person to be insured under the new policy.
(2) The effective date of the new policy shall be the date of termination of
the insurance to be converted.
(3) Subject to the Company's minimum policy rules, the new policy will be
issued on any plan of non-participating whole life or endowment insurance
offered by the Company on the effective date of the new policy.
(4) The new policy will be issued on a form and at premium rates in use by the
Company on the effective date of the conversion. Such rates will be based
on the then attained age to the nearest birthday of the person to be
insured. For conversion of insurance on the Other Insured, the premium
shall be that for the risk classification of such Other Insured at the
effective date of this rider. The new policy will not include disability
waiver or accidental death benefits unless evidence satisfactory to the
Company of the insurability of the person to be insured is furnished.
(5) The application for a new policy on the Other Insured must be made by the
Owner of the policy to which this rider is attached.
(6) The suicide and contestable periods of the new policy will be measured from
the effective date of the insurance provided by this rider.
COST OF INSURANCE RATES
Cost of Insurance Rates - The monthly cost of insurance rate for this rider is
based on the sex, attained age, and rating class of the Other Insured. Attained
age means the age nearest birthday on the prior policy anniversary. Monthly cost
of insurance rates will be determined by the Company based upon expectations as
to future mortality experience. Any change in cost of insurance rates will apply
to all individuals of the same class as the Other Insured. However, the cost of
insurance rates can never be greater than those shown in the Table of Monthly
Guaranteed Cost of Insurance Rates on page 4A of the policy. Such guaranteed
maximum rates are based on the 1980 Standard Ordinary Smoker or Nonsmoker
Mortality Table.
Waiver of Cost of Insurance - The cost of insurance for this rider shall be
waived only if and when the monthly deduction under the policy is waived under
any disability rider which is a part of the policy.
Expiry Date - The Expiry Date of this rider shall be the policy anniversary
nearest the 95th birthday of the Other Insured, or the Maturity Date of the
policy, whichever occurs first.
Termination - This rider will cease as soon as one of the following first
occurs:
(1) The policy terminates;
(2) The Expiry Date of this rider is attained;
(3) The date this rider is converted
(4) The Company receives a proper request, from the Owner to terminate this
rider.
/s/ John F. Swope /s/ Frederick H. Condon
President Secretary
<PAGE>
INSURED: DOE, JOHN MATURITY DATE: 12-21-2052
OWNER: INSURED POLICY NUMBER: 6550001
POLICY DATE: 12/21/92 PREMIUM FREQUENCY: ANNUAL
ISSUE DATE: 12/21/92 DEATH BENEFIT: OPTION I
AGE AT ISSUE: 35 M
RATING CLASS: NON-SMOKER STANDARD
BENEFICIARY: AS STATED IN APPLICATION OR ENDORSEMENT ATTACHED.
PLANNED
PERIODIC
LIFE INSURANCE PREMIUM
$100,000 INITIAL SPECIFIED AMOUNT 1,000.00
OTHER INSURED TERM RIDER
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
IT IS POSSIBLE THAT COVERAGE WILL EXPIRE PRIOR TO THE MATURITY DATE CHOSEN
WHEN EITHER NO PREMIUMS ARE PAID FOLLOWING PAYMENT OF THE INITIAL PREMIUM
OR SUBSEQUENT PREMIUMS ARE INSUFFICIENT TO CONTINUE COVERAGE TO SUCH DATE.
IF CURRENT VALUES CHANGE, THIS WILL ALSO AFFECT COVERAGE. SEE CONTINUATION
OF INSURANCE PROVISION ON PAGE 16.
THE POLICYS ACCUMULATION VALUE IN THE GENERAL ACCOUNT WILL EARN INTEREST
DAILY AT A MINIMUM GUARANTEED EFFECTIVE RATE OF 4-1/2%. THE POLICY'S
ACCUMULATION VALUE HELD IN THE GENERAL ACCOUNT FOR POLICY LOAN COLLATERAL
WILL EARN INTEREST DAILY AT THE LESSER OF AN EFFECTIVE RATE OF 6% OR THE
INTEREST RATE CURRENTLY CREDITED.
ALLOCATIONS OF NET PREMIUM: 50.0% GROWTH STOCK DIVISION II
50.0% DOMESTIC GROWTH STOCK FUND II
SELECTED EXPENSE CHARGES:
1) 2.5% OF EACH PREMIUM PAID.
2) A MONTHLY ADMINISTRATIVE CHARGE. THIS CHARGE IS EQUAL TO $6.00 PER
MONTH IN EACH POLICY YEAR.
3) COST OF INSURANCE CHARGES - SEE PAGES 4 AND 16.
4) MORTALITY AND EXPENSE RISK CHARGE - SEE PAGE 15.
5) SURRENDER CHARGE ON WITHDRAWAL OR SURRENDER - SEE PAGES 3A AND 14.
GUIDELINE LEVEL PREMIUM: $ 1,153.60
GUIDELINE SINGLE PREMIUM: $ 14,114.96
PAGE 3
<PAGE>
2. Any outstanding Policy loan will be reduced by the portion of the Policy
loan repaid as specified in the Benefits provision of this Rider.
3. We will mail to you, for attachment to the Policy, a new policy data page
showing the decrease in policy values and any required premiums, resulting
from the Accelerated Benefit Payment.
The payment of this benefit will not in itself affect any Accidental Death
Benefit provisions
CLAIMS
Notice of Claim - Written Notice of Claim may be given to us any time after the
date the Insured develops a Terminal Illness as defined in this Rider. Notice of
Claim must identify the Insured and be sent to us at our Service Office.
Claim Forms - We will send claim forms to the Owner when Notice of Claim is
received. If we do not mail the claim form within 15 days, the Owner will be
considered to have complied with the Proof of Terminal Illness requirements by
giving us a Physician Statement acceptable to us and a written statement of the
nature and extent of the Terminal Illness.
Proof of Terminal Illness - Written proof of the Insured's Terminal Illness must
be received by us before we will make a Benefit payment. This proof will include
a properly completed claim form and a Physician Statement acceptable to us. We
may request additional medical information from the Physician submitting the
statement or any Physician or institution deemed necessary. We will not
unreasonably withhold our acceptance of Proof of Terminal Illness.
Physical Examination - At our expense, we reserve the right to have a Physician
of our choosing examine the Insured prior to making an Accelerated Benefit
payment. In the event that the Physician we choose provides a different
diagnosis of the Insured's medical conditions, we reserve the right to rely on
the statement from the Physician of our choosing for claim purposes.
Time of Payment of Claims - All benefits described in this Rider will be
available as soon as we receive satisfactory Proof of Terminal Illness.
Payment of Claims - All Rider benefits will be paid in a lump sum to the Owner
as of the date of benefit payment. Upon the death of the Owner, we will pay the
benefits to the estate of the Owner, or contingent Owner, if applicable.
GENERAL PROVISIONS
Representations and Contestability - All statements made in the application for
this Rider, or the policy to which it is attached, by or on behalf of the
Insured will be deemed representations and not warranties. The validity of the
Rider with respect to the Insured will not be contestable after it has been in
force for 2 years from the date of issue or Policy Date or reinstatement of the
policy to which this Rider is attached during which time the Insured was living.
Reinstatement - If this Policy is reinstated, this Rider will also be reinstated
provided a benefit has not been paid under this rider.
Incorrect Age or Sex - If there is an error in the age or sex of the Insured,
the benefits available under this Rider will be the amount that would be
available based on the Death Benefit or Face Amount that this Policy would have
provided at the correct age or sex.
Termination of Rider - This Rider terminates:
1. on the day we receive written request of the Owner; or
2. upon termination of this Policy; or
3. when this Policy reaches its Maturity Date, if any; or
4. upon payment of the Accelerated Benefit provided by this Rider; or
5. upon the death of the Insured.
/s/ Frederick H. Condon /s/ John F. Swope
Secretary President
<PAGE>
[LOGO OF CHUBB LIFEAMERICA APPEARS HERE]
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The Colonial Life Insurance Company of America
Home Office: 8 Sylvan Way, Parsippany, N.J. 07054
Service Office: P.O. Box 515, Concord, New Hampshire 03302
PRIMARY INSURED TERM RIDER
Effective Date -
This Rider is part of the policy to which it is attached. It takes effect on the
effective date of the policy unless a later effective date is shown above. In
this rider, "we", "us", or "our" means the Colonial Life Insurance Company of
America; "you" means the Owner of the policy; and "Insured" means the person
named on Page 3 of the policy.
Consideration - In return for the payment of the monthly deductions and receipt
of an application for this rider, we will provide the benefit described in this
rider.
Benefit - Upon receipt of proof of death of the Insured, while this rider is in
force and before the Expiry Date, we will pay the named beneficiary the Rider
Death Benefit on the date of death. In addition, this rider modifies the Death
Benefit of the policy as stated below.
Total Death Benefit - The Total Death Benefit payable under this rider and the
policy to which it is attached depends on the Death Benefit Option for the
policy in effect on the date of death. The Death Benefit Option for the policy
is shown on Page 3.
Option I - Under Option I, the Total Death Benefit shall be the greater of:
(1) The Specified Amount of the policy, plus the Specified Amount of this
rider; or
(2) The Accumulated Value on the date of death multiplied by the corridor
percentage shown in the policy to which this rider is attached.
Option II - Under Option II, the Total Death Benefit shall be the greater of:
(1) The Specified Amount of the policy, plus the Specified Amount of this
rider, plus the Accumulated Value of the policy on the date of death; or
(2) The Accumulated Value on the date of death multiplied by the corridor
percentage shown in the policy to which this rider is attached.
Total Amount at Risk - The Total Amount at Risk for the policy and this rider is
equal to the Total Death Benefit less the Accumulated Value of the policy.
Rider Death Benefit - The Specified Amount of this rider is shown on Page 3 of
the policy. The initial Rider Death Benefit is equal to the Specified Amount of
this rider. On any later date, the Rider Death Benefit will be the lesser of:
(1) The Specified Amount of this rider; or
(2) The Total Amount at Risk for the policy and this rider,
but not less than zero.
Policy Death Benefit - The Policy Death Benefit is equal to the Total Death
Benefit less the Rider Death Benefit.
Monthly Deduction - The monthly deduction for this rider will be (a) multiplied
by (b), divided by $1,000, where:
(a) is the monthly cost of insurance rate for this rider; and
(b) is the Rider Death Benefit.
<PAGE>
Expiry Date - The Expiry Date of this rider is shown on Page 3 of the policy.
Conversion Privilege - The amount of Rider Death Benefit may be converted to an
increase of the Specified Amount in the policy at any time prior to the
Insured's age 85, while this rider is in force. The amount converted is not to
exceed the Specified Amount of this rider as shown on Page 3 of the policy. The
increase will be issued without evidence of insurability. Issue will be subject
to the conditions set forth below.
Conversion Conditions - Conversion to an increase of the Specified Amount in the
policy shall be subject to the following conditions:
(1) Proper written application for the increase must be made by you to our
Service Office.
(2) The Accumulated Value of the policy must be sufficient to cover the
additional monthly deduction for the increase.
(3) The effective date of the increase shall be the date of termination of this
rider.
(4) The rates for the increase will be the current cost of insurance rates for
the policy at the Insured's attained age and rating class at the time of
the increase.
(5) The suicide and contestability period of the increase will begin on the
effective date of the policy or the effective date of this rider, if later.
Cost of Insurance Rates - The monthly cost of insurance rate for this rider is
based on the policy year and the sex and rating class of the Insured. Monthly
cost of insurance rates, which are determined by us based upon future
expectations, include charges for mortality experience, amortized sales charges,
and other administrative charges. Any change in cost of insurance rates will
apply to all individuals of the same rating class as the Insured. We will
consider changes in the cost of insurance rates at least every five years and
when cost of insurance rates for new issues change. However, the cost of
insurance rates can never be greater than those shown in the Table of Monthly
Guaranteed Cost of Insurance rates on Page 4 of the policy. Such guaranteed
maximum rates are based on the 1980 CSO Smoker or Nonsmoker Mortality Table,
with appropriate increases for rated risks.
Termination - This rider will cease as soon as one of the following occurs:
(1) The monthly deduction for this rider remains unpaid at the end of the Grace
Period; or
(2) The policy is surrendered, exchanged, or lapsed; or
(3) The Expiry Date of this rider is attained; or
(4) The date of this rider is converted; or
(5) We receive a proper written request to terminate this rider.
/s/ John F. Swope /s/ Frederick H. Condon
President Secretary
<PAGE>
INSURED: DOE, JOHN MATURITY DATE: 12-21-2052
OWNER: INSURED POLICY NUMBER: 6550001
POLICY DATE: 12/21/92 PREMIUM FREQUENCY: ANNUAL
ISSUE DATE: 12/21/92 DEATH BENEFIT: OPTION I
AGE AT ISSUE: 35 M
RATING CLASS: NON-SMOKER STANDARD
BENEFICIARY: AS STATED IN APPLICATION OR ENDORSEMENT ATTACHED.
PLANNED
PERIODIC
LIFE INSURANCE PREMIUM
$100,000 INITIAL SPECIFIED AMOUNT 1,000.00
PRIMARY INSURED TERM RIDER
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
IT IS POSSIBLE THAT COVERAGE WILL EXPIRE PRIOR TO THE MATURITY DATE CHOSEN
WHEN EITHER NO PREMIUMS ARE PAID FOLLOWING PAYMENT OF THE INITIAL PREMIUM
OR SUBSEQUENT PREMIUMS ARE INSUFFICIENT TO CONTINUE COVERAGE TO SUCH DATE.
IF CURRENT VALUES CHANGE, THIS WILL ALSO AFFECT COVERAGE. SEE CONTINUATION
OF INSURANCE PROVISION ON PAGE 16.
THE POLICYS ACCUMULATION VALUE IN THE GENERAL ACCOUNT WILL EARN INTEREST
DAILY AT A MINIMUM GUARANTEED EFFECTIVE RATE OF 4-1/2% - THE POLICY 'S
ACCUMULATION VALUE HELD IN THE GENERAL ACCOUNT FOR POLICY LOAN COLLATERAL
WILL EARN INTEREST DAILY AT THE LESSER OF AN EFFECTIVE RATE OF 6% OR THE
INTEREST RATE CURRENTLY CREDITED.
ALLOCATIONS OF NET PREMIUM: 50.0% GROWTH STOCK DIVISION II
50.0% DOMESTIC GROWTH STOCK FUND II
SELECTED EXPENSE CHARGES:
1) 2.5% OF EACH PREMIUM PAID.
2) A MONTHLY ADMINISTRATIVE CHARGE. THIS CHARGE IS EQUAL TO $6.00 PER MONTH IN
EACH POLICY YEAR.
3) COST OF INSURANCE CHARGES - SEE PAGES 4 AND 16.
4) MORTALITY AND EXPENSE RISK CHARGE - SEE PAGE 15.
5) SURRENDER CHARGE ON WITHDRAWAL OR SURRENDER - SEE PAGES 3A AND 14.
GUIDELINE LEVEL PREMIUM: $ 1,153.60
GUIDELINE SINGLE PREMIUM: $ 14,114.96
PAGE 3
<PAGE>
[LOGO OF CHUBB LIFEAMERICA APPEARS HERE]
- --------------------------------------------------------------------------------
The Colonial Life Insurance Company of America
Home Office: 8 Sylvan Way, Parsippany, N.J. 07054
Service Office: P.O. Box 515, Concord, New Hampshire 03302
WAIVER OF SPECIFIED PREMIUM RIDER
Effective Date -
This rider is part of the policy to which it is attached. It takes effect on the
effective date of the policy unless a later effective date is shown above. In
this rider, "we", "us", or "our" means The Colonial Life Insurance Company of
America; "you" means the Owner of the policy; and "Insured" means the person
named on Page 3 of the policy as Insured under this rider.
Consideration - In return for the payment of the monthly deductions and receipt
of an application for this rider, we will provide the benefit described in this
rider.
Benefit - We will pay the specified monthly premium (as applied for by the
policyowner, as shown on Page 3 of the policy) for the policy to which this
rider is attached, starting with the monthly anniversary day following
commencement of Total Disability, while the Insured under this rider is totally
disabled. We must receive due proof of the Insured's Total Disability commencing
prior to the policy anniversary nearest the Insured's attained age 60 while this
rider is in force, and that Total Disability has continued with no interruption
for at least six months.
Total Disability - Disability is total in the first two years if the Insured is
wholly unable to do any of the main tasks of his or her regular job at the time
of commencement of Total Disability, and is not working at any other job. After
two years, disability is total if the Insured is wholly unable to do any work
for which he or she is fitted by knowledge, training, or prior skill, and is not
working at any other job.
Total disability will be deemed to commence from the date it starts when it has
gone on without a break for six months.
Disability will be deemed total whether he or she can work or not, upon the loss
of the Insured of the following:
(1) The sight of both eyes;
(2) The use of both hands;
(3) The use of both feet; or
(4) The use of one hand and one foot.
These losses must not have existed prior to the effective date of the policy or
the effective date of this rider, if later.
Risks Not Assumed - We will not pay the specified monthly premium for the policy
to which this rider is attached if:
(1) Total Disability commenced prior to the effective date of the policy.
(2) Total Disability commenced during the Grace Period, as defined in the
policy, and the policy subsequently lapsed.
(3) Total Disability is a direct result of intentional self inflicted injury,
whether the Insured is sane or insane.
(4) Total Disability is the result of an act of war while the Insured is
serving in the military, naval, or air forces of any country at war,
declared or undeclared.
<PAGE>
Monthly Deduction - The monthly deduction for this rider will be (a), multiplied
by (b) where:
(a) is the waiver of specified premium rate shown on the attached table;
(b) is the specified monthly premium (as shown on Data Page 3).
The waiver of specified premium rate is based on the attained age of the Insured
and the rating class for this rider. Waiver of specified premium rates for
standard rider issues are shown on the attached table. Appropriate increases
will be made to these rates for rated risks.
Monthly Deductions Not Deducted - Any specified monthly premium paid for the
policy to which this rider is attached will not reduce the proceeds to be paid
under the policy. You will remain liable to pay interest on any debt to us.
Notice of Claim - Written notice of claim and proof of Total Disability must be
given to us at our Service Office. Such notice and proof must be given during
the lifetime of the Insured during the period of Total Disability. Such notice
and proof must be furnished not later than one year after the policy anniversary
nearest the Insured's attained age 60 while this rider is in force.
Failure to give such notice and proof will not invalidate or diminish any claim
if it is shown that notice and proof were given as soon as was reasonably
possible. Subject to this condition, no specified monthly premium, the due date
of which is more than twelve months prior to the date of receipt at the Service
Office of written notice of claim, will be paid for the policy to which this
rider is attached.
Proof of Disability - At reasonable intervals we will have the right to require
due proof of the continuance of Total Disability. Proof must be furnished to us
on our forms. As a part of such proof, the disabled Insured may be required to
be examined by a physician chosen us. After the first two years of Total
Disability, proof will not be required more than once a year.
Specified monthly premium payments for the policy to which this rider is
attached cease when:
(1) Total Disability ceases;
(2) Proof of the continuance of Total Disability is not furnished as required;
or
(3) The Insured will not submit to an examination.
Termination - This rider will cease as soon as one of the following occurs:
(1) The monthly deduction for this rider remains unpaid at the end of the Grace
Period.
(2) The policy is surrendered, exchanged, or lapsed.
(3) We receive a proper written request to terminate this rider.
(4) The policy anniversary nearest attained age 60 of the Insured is attained.
(5) The maturity date of the policy is attained.
(6) The death of the Insured.
/s/ John F. Swope /s/ Frederick H. Condon
President Secretary
<PAGE>
INSURED: DOE, JOHN MATURITY DATE: 12-21-2052
OWNER: INSURED POLICY NUMBER: 6550001
POLICY DATE: 12/21/92 PREMIUM FREQUENCY: ANNUAL
ISSUE DATE: 12/21/92 DEATH BENEFIT: OPTION I
AGE AT ISSUE: 35 M
RATING CLASS: NON-SMOKER STANDARD
BENEFICIARY: AS STATED IN APPLICATION OR ENDORSEMENT ATTACHED.
PLANNED
PERIODIC
LIFE INSURANCE PREMIUM
$100,000 INITIAL SPECIFIED AMOUNT 1,000.00
WAIVER OF SPECIFIED PREMIUM
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
IT IS POSSIBLE THAT COVERAGE WILL EXPIRE PRIOR TO THE MATURITY DATE CHOSEN
WHEN EITHER NO PREMIUMS ARE PAID FOLLOWING PAYMENT OF THE INITIAL PREMIUM
OR SUBSEQUENT PREMIUMS ARE INSUFFICIENT TO CONTINUE COVERAGE TO SUCH DATE.
IF CURRENT VALUES CHANGE, THIS WILL ALSO AFFECT COVERAGE. SEE CONTINUATION
OF INSURANCE PROVISION ON PAGE 16.
THE POLICY'S ACCUMULATION VALUE IN THE GENERAL ACCOUNT WILL EARN INTEREST
DAILY AT A MINIMUM GUARANTEED EFFECTIVE RATE OF 4-1/2%. THE POLICY'S
ACCUMULATION VALUE HELD IN THE GENERAL ACCOUNT FOR POLICY LOAN COLLATERAL
WILL EARN INTEREST DAILY AT THE LESSER OF AN EFFECTIVE RATE OF 6% OR THE
INTEREST RATE CURRENTLY CREDITED.
ALLOCATIONS OF NET PREMIUM: 50.0% GROWTH STOCK DIVISION II
50.0% DOMESTIC GROWTH STOCK FUND II
SELECTED EXPENSE CHARGES:
1) 2.5% OF EACH PREMIUM PAID.
2) A MONTHLY ADMINISTRATIVE CHARGE. THIS CHARGE IS EQUAL TO $6.00 PER MONTH IN
EACH POLICY YEAR.
3) COST OF INSURANCE CHARGES - SEE PAGES 4 AND 16.
4) MORTALITY AND EXPENSE RISK CHARGE - SEE PAGE 15.
5) SURRENDER CHARGE ON WITHDRAWAL OR SURRENDER - SEE PAGES 3A AND 14.
GUIDELINE LEVEL PREMIUM: $ 1,153.60
GUIDELINE SINGLE PREMIUM: $ 14,114.96
PAGE 3
<PAGE>
[LOGO OF CHUBB LIFEAMERICA APPEARS HERE]
- --------------------------------------------------------------------------------
The Colonial Life Insurance Company of America
Home Office: 8 Sylvan Way, Parsippany, N.J. 07054
Service Office: P.O. Box 515, Concord, New Hampshire 03302
GUARANTEED DEATH BENEFIT RIDER
Effective Date -
This Rider is part of the policy to which it is attached. It takes effect on the
Policy Date of the policy unless a later effective date is shown above. In this
rider, "we", "us", or "our" means the Colonial Life Insurance Company of
America; "you" means the Owner of the policy; and "Insured" means the person
named on Page 3 of the policy.
Consideration - In return for the payment of the monthly deductions and receipt
of any application for this rider, we will provide the benefit described in this
rider.
Benefit - We guarantee that the death benefit of the policy will be no less than
the Specified Amount, regardless of the investment experience of the divisions
within the Separate Account, provided that the cumulative minimum premium
requirements have been satisfied.
This Rider has no loan value and no surrender value.
Cumulative Minimum Premium Requirement - On each monthly anniversary day, we
will determine if the cumulative minimum premium requirement for this rider has
been met. The cumulative minimum premium requirement is met provided that (a)
is greater than or equal to (b), where:
(a) is the sum of all previous premium payments under the policy less any
policy loans or withdrawals; and
(b) is the minimum premium, as shown on Page 3 of the policy, divided by
twelve, multiplied by the number of completed policy months.
If this requirement has been met, the policy is guaranteed to remain in force
during the next policy month. If this requirement is not met, we will notify you
of the premium payments required in order to continue benefits under this rider.
A grace period of 61 days will be provided. If the necessary premiums are not
received during this grace period, this rider will terminate without value.
Any increase in the Specified Amount will require an increase in the minimum
premium. The cumulative minimum premium requirement will be the sum of the
minimum premium requirements for the Initial Specified Amount and each
respective increase to the Specified Amount. The portion of the minimum premium
associated with any increase in the Specified Amount will be based on the
attained age of the Insured as of the date of increase.
Monthly Deduction - The monthly deduction for this rider will be (a), multiplied
by (b), divided by $1,000, where:
(a) is the Specified Amount of the policy; and
(b) is $0.01.
Termination - This Rider will cease as soon as one of the following occurs:
(1) The cumulative minimum premium requirement remains unsatisfied at the end
of the Grace Period.
(2) The policy is surrendered, exchanged, or lapsed.
(3) The Maturity Date of the policy is attained.
(4) We receive a proper written request to terminate this rider.
/s/ John F. Swope /s/ Frederick H. Condon
President Secretary
<PAGE>
Exhibit 1(f)(i)
AMENDED AND RESTATED CHARTER
OF
THE COLONIAL LIFE INSURANCE COMPANY OF AMERICA
<PAGE>
(105)
INS 17-70
State of New Jersey
[SEAL OF THE STATE OF NEW JERSEY APPEARS HERE]
DEPARTMENT OF INSURANCE
I, ***Kenneth D. Merin*** Commissioner of
............................................................
Insurance of the State of New Jersey do hereby Certify that the annexed is a
true copy of ***Certificate of Amendment and Restatement of Charter of the
..............................................................
Colonial Life Insurance Company of America, dated February 28, 1989***
...........................................................................
...........................................................................
...........................................................................
...........................................................................
as taken from and compared with the original. ***(Filed July 24, 1989)***
..............................
now remaining on
...............................................................
file in this Department.
In Testimony Whereof, I have hereunto set my
[SEAL APPEARS hand and affixed my Official Seal, at Trenton
HERE] this ***31st*** day
....................................
of ***July*** A. D. 1989
.............................
/s/
.............................
Commissioner of Insurance
<PAGE>
[STAMP APPEARS CERTIFICATE OF AMENDMENT
HERE]
AND
RESTATEMENT OF CHARTER
Pursuant to the provisions of Section 18-56 of Title 17B of the Revised Statutes
of New Jersey, The Colonial Life Insurance Company of America certifies as
follows:
1. On February 21, 1989 the Board of Directors duly adopted resolutions
declaring it advisable: (a) that Article FIFTH of the Charter of the Company as
amended be further amended to provide that the par value of each share of
common stock of the Company be increased from ten dollars ($10) to twenty
dollars ($20), effective January 1, 1989; (b) that Article SEVENTH of the
Charter of the Company as amended be further amended to provide for the election
of not less than seven nor more than twenty-five directors; (c) that the Charter
of the Company as amended be restated; and (d) that a meeting of the
stockholders of the Company be held to take action on said proposals.
2. A meeting of the stockholders of the Company was held on February 21,
1989 at which all of the outstanding shares of capital stock of the Company were
present by proxy and all such shares were voted in favor of the amendments
declared to be advisable by the Board of Directors and in favor of the adoption
and ratification of a restated charter in the form presented to such meeting.
3. This certificate is annexed to a true and complete copy of the
Restated Charter so adopted and ratified by the stockholders.
IN WITNESS WHEREOF, The Colonial Life Insurance Company of America has
caused this certificate to be signed by its President and its Secretary, and its
corporate seal to be affixed, this 28th day of February, 1989.
/s/ John F. Swope
--------------------------
John F. Swope
President
Attest:
/s/ Frederick H. Condon [STAMP APPEARS HERE]
- ----------------------------
Frederick H. Condon
Secretary
<PAGE>
STATE OF NEW HAMPSHIRE)
)ss.:
COUNTY OF MERRIMACK )
BE IT REMEMBERED, that on the 28th day of February, 1989, before me, the
Subscriber, a Notary Public, personally appeared JOHN F. SWOPE, President of THE
COLONIAL LIFE INSURANCE COMPANY OF AMERICA, the corporation named in and which
executed the foregoing certificate, who being by me duly sworn according to law,
does depose and say and make proof to my satisfaction that he is the President
of said corporation; that as such President he signed said certificate and
caused the seal of the corporation to be affixed thereto and delivered said
certificate as the voluntary act and deed of said corporation, by its order and
by authority of its Board of Directors and by the vote, either in person or by
proxy, duly constituted and thereunto duly authorized, of more than two-thirds
in interest of the stockholders of said corporation, for the uses and purposes
therein expressed.
Subscribed and sworn to before me the day and year aforesaid.
/s/ PATRICIA S. WHEELER
-------------------------------
Notary Public
PATRICIA S. WHEELER, Notary Public
(Notarial Seal) My Commission Expires March 16, 1993
<PAGE>
RESTATED CHARTER
OF
THE COLONIAL LIFE INSURANCE COMPANY OF AMERICA
Incorporated Under The Laws of The State of New Jersey
As Amended and Restated February 21, 1989
Adopted and Ratified by Its Stockholders February 21, 1989 Pursuant to
Section 17B:18-56 of the Revised Statutes of New Jersey.
FIRST: The name which we have selected to designate said Company and to
be used by it in its business and dealings is "The Colonial Life Insurance
Company of America".
SECOND: The principal office of the Company in the State of New Jersey,
which shall also be its registered office, is at 8 Sylvan Way, Parsippany,
County of Morris and State of New Jersey.
THIRD: The kinds of insurance business the Company proposes to transact
shall be as provided by Revised Statutes of New Jersey, Title 17:17-1 (C) (D),
to wit: Insurance upon the lives or health of persons and every insurance
appertaining thereto, and to grant, purchase or dispose of annuities and
insurance against bodily injury or death by accident.
FOURTH: The said Company is to be a joint stock insurance company.
FIFTH: The aggregate number of shares which the Company shall have
authority to issue is one hundred thirty-two thousand (132,000) shares of common
stock. Effective January 1, 1989, the par value of each such share shall be
twenty dollars ($20).
SIXTH: The period limited for the duration of said Company is perpetual.
SEVENTH: The number of directors elected by the Stockholders shall be
not less than seven nor more than twenty-five. All directors elected at any
Annual Meeting shall hold office for one year and until their successors in
office are elected and qualify.
The Board of Directors shall have concurrent authority with the
Stockholders to make and alter By-Laws of the Company, but any By-Laws made by
the Directors may be altered or repealed by the Stockholders.
EIGHTH: Section A. A director or officer of the Company shall not be
personally liable to the Company or its Stockholders for damages for breach of
any duty owed to the Company or its Stockholders, except for liability for any
breach of duty based upon an act or omission (i) in breach of such director's or
officer's
<PAGE>
-2-
duty of loyalty to the Company or Stockholders, (ii) not in good faith or
involving a knowing violation of law or (iii) resulting in receipt by such
director or officer of an improper personal benefit. The provisions of this
section shall be effective as and to the fullest extent that, in whole or in
part, they shall be authorized or permitted by the laws of the State of New
Jersey. No repeal or modification of the foregoing provisions of this Section A
nor, to the fullest extent permitted by law, any modification of law shall
adversely affect any right or protection of a director or officer of the Company
which exists at the time of such repeal or modification.
Section B.
1. As used in this Section B:
(a) "corporate agent" means any person who is or was a
director, officer or employee of the Company and any person who is or was a
director, officer, trustee or employee of any other enterprise, serving, or
continuing to serve, as such at the written request of the Company, signed by
the Chairman or the President or pursuant to a resolution of the Board of
Directors, or the legal representative of any such person;
(b) "other enterprise" means any domestic or foreign
corporation, other than the Company, and any partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other enterprise, whether or not
for profit, served by a corporate agent;
(c) "expenses" means reasonable costs, disbursements and
counsel fees;
(d) "liabilities" means amounts paid or incurred in
satisfaction of settlements, judgments, fines and penalties;
(e) "proceeding" means any pending, threatened or completed
civil, criminal, administrative or arbitrative action, suit or proceeding, and
any appeal therein and any inquiry or investigation which could lead to such
action, suit or proceeding, and shall include any proceeding as so defined
existing at or before, and any proceedings relating to facts occurring or
circumstances existing at or before, the adoption of this Section B.
2. Each corporate agent shall be indemnified by the Company
against his expenses and liabilities in connection with any proceeding involving
the corporate agent by reason of his having been such corporate agent to the
fullest extent permitted by applicable law as the same exists or may hereafter
be amended or modified. The right to indemnification conferred by this paragraph
2 shall also include the right to be paid by the Company the expenses incurred
in connection with any such proceeding in advance of its final disposition to
the fullest extent authorized by applicable law as the same exists or may
hereafter be amended or modified. The right to indemnification conferred in this
paragraph 2 shall be a contract right.
<PAGE>
-3-
3. The Company may purchase and maintain insurance on behalf of
any corporate agent against any expenses incurred by reason of his having been a
corporate agent, whether or not the corporation would have the power to
indemnify him against such expenses and liabilities under applicable law as the
same exists or may hereafter be amended or modified. The Company may purchase
such insurance from, or such insurance may be reinsured in whole or in part by,
an insurer owned by or otherwise affiliated with the Company, whether or not
such insurer does business with other insureds.
The rights and authority conferred in this Section B shall not
exclude any other right to which any person may be entitled under this Restated
Charter, the By-Laws, any agreement, vote of Stockholders or otherwise. No
repeal or modification of the foregoing provisions of this Section B nor, to the
fullest extent permitted by law, any modification of law, shall adversely affect
any right or protection of a corporate agent which exists at the time of such
repeal or modification.
/cc
<PAGE>
I Kenneth D. Merin, Commissioner of Insurance of the State of New Jersey,
hereby certify that the foregoing Certificate of Amendment and Restatement of
Charter of The Colonial Life Insurance Company of America, dated February 28,
1989 has been submitted to and examined by me, and I find that the Certificate
of Amendment and Restatement of Charter is in accordance with the provisions of
N.J.S.A. 17B:18-56 and not inconsistent with the Constitution and laws of this
- --------
State.
Date: May 25, 1989 /s/
------------- --------------------------
Commissioner of Insurance
<PAGE>
Exhibit 1(f)(ii)
BY-LAWS
OF
THE COLONIAL LIFE INSURANCE COMPANY OF AMERICA
<PAGE>
As Amended September 23, 1988
BY-LAWS
OF
THE COLONIAL LIFE INSURANCE COMPANY OF AMERICA
Incorporated under the laws of the State of New Jersey
ARTICLE I
Offices
-------
The corporation shall maintain a registered office in the State of New Jersey as
required by law. The corporation may also have offices in such other places as
the Board of Directors may from time to time appoint or as the business of the
corporation may require.
ARTICLE II
Corporate Seal
--------------
The seal of the corporation shall consist of a flat-faced circular die with the
words and figures, "The Colonial Life Insurance Company of America,
Incorporated, New Jersey, 1897" cut or engraved thereon.
ARTICLE III
Meetings of Stockholders
------------------------
Section 1. Place of Meeting. All meetings of the stockholders shall be held at
- ----------
the office of the corporation in Parsippany, New Jersey, unless some other
place, which may be either within or outside of the State of New Jersey, is
stated in the call thereof.
Section 2. Annual Meeting. An annual meeting of the stockholders shall be held
- ----------
on the first Monday in May each year if not a legal holiday, and if a legal
holiday then on the next secular day following, at 2:15 p.m., at which meeting
the stockholders shall elect by a requisite vote as hereinafter provided, a
Board of Directors and transact such other business as may properly be brought
before the meeting. In the event that such annual meeting be omitted by
oversight or otherwise on the date herein provided, a subsequent meeting may be
held in place thereof, and any business transacted, votes had, or elections held
at such meeting shall be of the same force and effect as if transacted, had, or
held at such annual meeting.
<PAGE>
-2-
Section 3. Special Meetings. Special meetings of the stockholders for any
- ----------
purpose or purposes shall be called by the Secretary upon the request of the
Chairman, of a majority of the Board of Directors or holders of two-fifths or
more of the issued and outstanding stock having voting rights. All such requests
to the Secretary for the calling of stockholders' meetings shall state the time,
place and purpose of the meeting which is requested.
Section 4. Notice of Meetings of Stockholders. Written notice of all meetings,
- ----------
annual and special, of the stockholders stating the place, day and hour thereof
and in case of special meetings, the purpose or purposes for which the meeting
is called, shall be delivered not less than ten (10) nor more than fifty (50)
days before the date of the meeting, either personally or by mail to each
stockholder of record entitled to vote at said meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail
addressed to the stockholder at his address as it appears on the stock transfer
books of the corporation, first class postage prepaid. Meetings may be held
without notice provided all stockholders entitled to vote shall sign, either
before or after the time stated in the notice, a written waiver of notice.
Section 5. Matters Considered at Special Meetings. Business transacted at such
- ----------
special meetings shall be confined to the objects stated in the call and matters
reasonably incident thereto unless all stockholders entitled to vote thereat are
present in person or by proxy and vote in favor of the action taken, or, if not
present, sign a written consent to the action taken.
Section 6. Quorum. The holders of a majority of the outstanding stock entitled
- ----------
to vote at any meeting who are present in person or represented by proxy shall
be requisite to and shall constitute a quorum at all meetings of the
stockholders for the transaction of business, except as otherwise provided for
by statute, by the charter documents or by these By-laws. If, however, such
quorum shall not be present at any meeting of the stockholders, the stockholders
entitled to vote thereat present in person or represented by proxy shall have
power to adjourn the meeting from time to time without notice, other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting at which a quorum shall be present or represented all
business may be transacted which might have been transacted at the meeting as
originally notified.
Section 7. Vote Necessary to Take Action. When a quorum is present at any
- ----------
meeting, a vote of the holders of a majority of the stock, present at the
meeting in person or represented by proxy and having voting power, shall decide
any question brought before such meeting unless the question is one on which by
statute or the charter documents or these By-laws a different vote is required,
in which case such express provision will govern the decision of such question.
<PAGE>
-3-
Section 8. Vote by Proxy. Stockholders of record when entitled to vote may
- ----------
vote at any meeting either in person or by written proxy filed with the
Secretary before voted. Proxies to be valid must be dated not more than eleven
months before the meeting named therein and executed in writing by the
stockholder or his attorney-in-fact. No such proxy shall be valid after the
final adjournment of such meeting.
Section 9. Action by Consent. Any action required or permitted to be taken at
- ----------
any meeting of the stockholders may be taken without a meeting and without
notice or waiver thereof if a consent in writing, which may be contained in a
single document or may be contained in more than one document so long as the
documents in the aggregate contain the required signatures, setting forth the
action so taken, is signed by all the stockholders entitled to vote with respect
to the subject matter thereof, and is filed with the Secretary of the
corporation as part of the corporate records. Such written consent shall have
the same effect as a unanimous vote of the stockholders and may be stated as
such in any document required or permitted to be filed with the Commissioner of
Insurance and in any certificate or document prepared or certified by any
officer of the corporation for any purposes.
ARTICLE IV
Directors
---------
Section 1. Constitution and Election of the Board. The number of directors,
- ----------
none of whom need be a stockholder, which shall constitute the whole Board shall
be such number, not less that seven nor more than twenty-five, as shall be fixed
from time to time by the Board of Directors. At each annual meeting the
stockholders shall elect the number of directors as fixed by the Board of
Directors and such directors shall hold office until the next annual meeting,
and until their successors are elected and qualify.
Section 2. Vacancies. Whenever any vacancy shall occur in the Board of
- ----------
Directors, by reason of death, resignation or increase in the number of
directors or otherwise, it may be filled by a majority of the remaining
directors, though less than a quorum, for the balance of the term.
Section 3. Resignation; Removal. Any director may resign at any time. The
- ----------
Board of Directors may, by majority vote of all directors then in office, remove
a director for cause. The stockholders may, by majority vote, remove any
director or directors, with or without cause.
<PAGE>
-4-
Section 4. Powers and Duties of Directors. The Board of Directors shall have
- ----------
general charge and supervision of all the business and affairs of the
corporation and shall have and exercise all such powers possessed by the
corporation and do all such lawful acts and things on behalf of the corporation
except those which are by statute, the charter documents or these By-laws,
directed or required to be exercised or done by the stockholders.
Section 5. Regular Meetings. Regular meetings of the Board of Directors may be
- ----------
held a such times and at such places as the Board may from time to time
determine and if so determined no notice thereof need be given.
Section 6. Special Meetings. Special meetings of the Board of
- ----------
Directors shall be held at any time or place whenever called by the
Secretary upon request of the Chairman or of two directors at the
time in office.
Section 7. Notice of Special Meetings. The Secretary shall give notice of each
- ----------
special meeting by mailing the same at least two days before the meeting or by
telephoning or telegraphing the same at least one day before the meeting to each
Director.
Any such special meeting of the Board of Directors may be held without such
notice providing all of the directors are present or those not present have
waived notice thereof.
Such special meetings shall be held at the time and place specified in the
notice and business transacted thereat shall be confined to the specific purpose
or purposes stated in the notice of the meeting and matters reasonably incident
thereto unless all directors are present and vote in favor of the action taken,
or, if not present, sign a written Consent to the action taken.
The attendance of a Director at a meeting shall constitute a waiver of notice of
such meeting, except a Director who attends a meeting for the express purpose of
objecting to the transaction of any business because the meeting is not lawfully
called for or convened.
Section 8. Quorum. At any meetings of the Board of Directors a majority of the
- ----------
directors, but in no case less than five directors, shall be necessary to
constitute a quorum for the transaction of business, but a lesser number may
adjourn any meeting from time to time without notice, other than announcement at
the meeting, until a quorum shall be present; and such quorum shall then be able
to vote on all matters that could have been voted on at the original meeting.
<PAGE>
-5-
Section 9. Votes. Each director shall have one vote on all matters to be
- ----------
considered by the Board of Directors, and the vote of a majority of the
directors present at any properly constituted meeting shall be necessary to
adopt proposals except as provided by statute, the charter documents, or these
By-laws.
Section 10. Removal of Officers. The Board of Directors may, by a vote of the
- -----------
majority of directors present in person at any meeting thereof called for the
purpose, or by action by consent as hereinafter provided, remove from office any
officer or agent, whether elected or appointed by the Board of Directors or not,
whenever in its judgment the best interests of the corporation will be served
thereby, but such removal shall be without prejudice to the contract rights, if
any, of the person so removed.
Section 11. Action by Consent. Any action required or permitted to be taken at
- -----------
a meeting of the Directors of this corporation may be taken without a meeting
and without notice or waiver thereof if a consent in writing, which may be
contained in a single document or may be contained in more than one document so
long as the documents in the aggregate contain the required signatures, setting
forth the action taken or to be taken, shall be signed by all of the Directors'
at any time before or after the intended effective date of such action. Such
consent shall be filed with the minutes of Directors meetings and shall have the
same effect as a unanimous vote of the Directors and may be stated as such in
any document required or permitted to be filed with the Commissioner of
Insurance and in any certificate or document prepared or certified by any
officer of the corporation for any purposes.
Section 12. Director Assent. A Director of the corporation who is present at a
- -----------
meeting of the Board of Directors at which action on any corporate matter is
taken shall be presumed to have assented to the action taken unless his dissent
shall be entered in the minutes of the meeting or unless he shall file his
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 the corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a Director
who voted in favor of such action.
ARTICLE V
Standing Committees
-------------------
Section 1. There shall be an Executive Committee consisting of the Chairman and
- ----------
not less than two, nor more than four other directors, to be appointed annually
by the Board of Directors who shall appoint one of the members of such committee
as Chairman.
The Executive Committee shall meet at the call of its Chairman or of any member
thereof and shall have authority to exercise, so far as may be permitted by law,
all the powers of the Board of Directors in
<PAGE>
-6-
the management of the business, property and affairs of the corporation during
the intervals between the meetings of the Board of Directors. A majority of the
members of such committee shall constitute a quorum. The Executive Committee or
a quorum thereof may act from time to time on the basis of written approval of
proposals without formal meeting.
Section 2. There shall be a Finance Committee consisting of the Chairman and
- ----------
not less than two, nor more than four other directors, to be appointed annually
by the Board of Directors who shall appoint one of the members of such committee
as Chairman.
The Finance Committee shall have authority to direct and control the investment
of funds and the purchase and sale of securities by the corporation. A majority
of the members of such committee shall constitute a quorum. The Finance
Committee or a quorum thereof may act from time to time on the basis of written
approval of proposals without formal meeting. Regular meetings of the committee
shall be held quarterly at dates set by vote of the committee. Special meetings
may be called at any time at the request of any member.
Section 3. The Board of Directors may appoint other committees which shall have
- ----------
such powers and perform such duties as from time to time may be prescribed by
the Board. The Board shall have the power at any time to fill vacancies in, to
change the membership of, or to dissolve any committee. Action taken by any
committee shall be reported at the meeting of the Board next succeeding such
action. The Chairman may appoint any member of the Board of Directors as an
alternate member of any committee appointed by the Board of Directors. Such
alternate members shall act in the absence or disability of members of any such
committee with all the powers of such absent or disabled members.
The designation of any committees and the delegation of authority thereto shall
not operate to relieve the Board of Directors, or any member thereof, of any
responsibility imposed by law.
ARTICLE VI
Officers
--------
Section 1. Elected Officers. The elected officers of the corporation shall be
- ----------
a Chairman, a President, one or more Vice Presidents, a Treasurer, and a
Secretary. The Board of Directors may also elect one or more Vice Chairmen and
may designate Vice Presidents as Executive or Senior Vice Presidents and may
elect from time to time, such other officers as it considers necessary, each of
whom shall hold office for such period, have such authority, and perform such
duties as the Board may from time to time determine. The aforementioned officers
of the corporation shall be elected by the Board of Directors at the first
meeting of the Board following the stockholders annual meeting, or as soon
thereafter as is conveniently possible, to hold office for one year, or until
their
<PAGE>
-7-
respective successors are duly elected and qualify. Any elected officer may be
removed, with or without cause, at any time by the Board. Any vacancy may be
filled for the unexpired portion of the term by the Board of Directors. The
Board may elect new officers, officers to replace any officer who has retired,
resigned, died, become disabled or has been removed from office. Two or more
offices may be held by the same person, but the same person shall not hold the
offices of both President and Secretary, nor shall the same person hold the
offices of Treasurer and Controller. The Chairman shall be chosen from among the
Directors.
Section 2. Appointed Officers. The Chairman or the President may appoint as
- ----------
officers of the corporation for an indeterminate term such assistant, associate
and other subordinate officers as he may deem proper, and shall specify the
authority of and the duties to be performed by such officers, and may remove
them at any time with or without cause.
Section 3. Resignations. Any officer may resign his office at any time by
- ----------
delivering his resignation in writing to the corporation, and the acceptance of
such resignation, unless required by the terms thereof, shall not be necessary
to make such resignation effective.
Section 4. The Chairman. The Chairman, who shall be the Chief Executive
- ----------
Officer of the corporation, shall, when present, preside at all meetings of the
stockholders and the Board of Directors. He shall perform such other duties and
have such other powers as the Board of Directors may from time to time
designate.
Section 5. The Vice Chairmen. The Vice Chairmen, if any, shall perform such
- ----------
duties and have such powers as the Chairman or the Board of Directors may from
time to time designate.
Section 6. The President. The President shall be the Chief Operating Officer
- ----------
of the corporation. He shall perform such other duties and have such other
powers as the Board of Directors or the Chairman may from time to time
designate, and in the absence of the Chairman, shall exercise the functions and
duties of the Chairman.
Section 7. Vice Presidents. The Vice Presidents, some of whom may be
- ----------
designated Senior Vice Presidents or Executive Vice Presidents, shall perform
such duties and have such powers as the Board of Directors or the Chairman may
from time to time prescribe. The Vice Presidents, in the order of priority
designated by the Chairman or the Board of Directors, shall exercise the
functions of the President in his absence.
Section 8. The Treasurer. The Treasurer shall be the principal fiscal officer
- ----------
of the corporation. He shall have the care and custody of funds and securities
of the corporation and shall have and exercise under the supervision of the
Board of Directors all the powers and duties commonly incident to his office. He
may be required by the Board of Directors to give bond for the faithful
discharge of his duties in such sum and with such sureties as may be
<PAGE>
-8-
satisfactory to the Board. He shall deposit or cause to be deposited all the
funds of the corporation in such bank or banks, trust company or companies, or
with such other firm or firms doing a banking business as the Board of Directors
may from time to time designate. He shall keep or cause to be kept accurate
books of account of all corporation transactions, which books shall be the
property of the corporation and together with all other of its property in his
possession shall be subject at all times to the inspection and control of the
Board of Directors. The Treasurer shall perform such other duties and have such
other powers as the Board of Directors or the Chairman may from time to time
designate.
Section 9. The Secretary. The Secretary shall: (a) keep the minutes of the
- ----------
proceedings of the stockholders and of the Board of Directors in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these By-laws or as required by law; (c) be
custodian of the corporate minutes and of the seal of the corporation and see
that the seal of the corporation is affixed to all documents, the execution of
which on behalf of the corporation under its seal is duly authorized;
(d) sign certificates for shares of the corporation, the issuance of which shall
have been authorized by resolution of the Board of Directors; and (e) in general
perform all duties incident to the office of Secretary and such other duties as
from time to time may be assigned to him by the Chairman or by the Board of
Directors. He shall have custody of the stock registers and transfer books of
the corporation.
In the absence of the Secretary from any meeting, a Secretary pro tempore may be
-----------
appointed.
Section 10. Execution of Documents. All written contracts and all conveyances
- -----------
of real and personal property made by the corporation shall be executed by the
Chairman, Vice Chairman, President or any Vice President, unless the Board of
Directors shall by vote specifically authorize the execution of a specific
contract or conveyance by a specific officer of the corporation.
Any person holding more than one office in the corporation shall sign any such
contract or conveyance in only one capacity.
All checks, drafts, bills of exchange, notes or other obligations or orders for
payment of money shall be executed by such officer or officers of the
corporation as the Board of Directors shall designate.
<PAGE>
-9-
ARTICLE VII
Certificate of Stock
--------------------
Every stockholder shall be entitled to a certificate or certificates of the
capital stock of the corporation, which shall be numbered and registered as
issued. Such certificate or certificates shall exhibit the holder's name and the
number of shares, and shall be signed by the President or a Vice President and
attested by the Secretary or an Assistant Secretary, and bear the corporate
seal.
ARTICLE VIII
Transfer of Stock
-----------------
Subject to the provisions of the charter documents as from time to time amended,
shares of stock may be transferred in the manner provided by law; and the
corporation by its officers or agents appointed for that purpose shall record
upon the books of the corporation a transfer of such shares upon surrender of
the certificate therefor accompanied either by a written assignment thereof or
by a written power of attorney to sell, assign, and transfer the same, or the
shares represented thereby, signed by the record holder of such certificate, or
by his legal representative. No transfer shall affect the right of the
corporation to treat such holder as the owner thereof until such transfer shall
have been recorded upon the books of the corporation or until a new certificate
shall have been so transferred. The corporation shall not be bound to take
notice of or recognize any trust, expressed, implied or constructive, or any
charge or equity affecting any of the shares of its capital stock or to
ascertain or inquire whether any sale or transfer of any such shares by any
stockholder or his personal representative is authorized by such trust, charge
or equity, or to recognize any persons as having an interest therein except the
person or persons in whom the legal title to such share or shares is vested for
the time being.
ARTICLE IX
Transfer Books and Record Dates
-------------------------------
For the purpose of determining stockholders entitled to notice or to vote at any
meeting of stockholders or any adjournment thereof, or stockholders entitled to
receive payment of any dividend, or in order to make a determination of
stockholders for any other proper purpose, the Board of Directors of the
corporation may provide that the stock transfer books shall be closed for a
stated period not to exceed fifty (50) days. If the stock transfer books shall
be closed for the purpose of determining stockholders entitled to notice of or
to vote at a meeting of stockholders, such books shall be closed for at least
ten (10) days immediately preceding such meeting. In lieu of closing the stock
transfer books, the Board of Directors may fix in advance a date as the record
date for any such determination of stockholders, Such date in any case to be not
more than fifty days and, in case of
<PAGE>
-10-
a meeting of stockholders, not less than ten days prior to the date on which the
particular action requiring such determination of stockholders is to be taken.
If the stock transfer books are not closed and no record date is fixed for the
determination of stockholders entitled to notice of or to vote at a meeting of
stockholders, or stockholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of stockholders.
When a determination of stockholders entitled to vote at any meeting of
stockholders has been made as provided in this section, such determination shall
apply to any adjournment thereof.
ARTICLE X
Fiscal Year
-----------
Except as from time to time otherwise provided by the Board of Directors, the
fiscal year of the corporation shall begin on the first day of January and end
on the last day of December in each year.
ARTICLE XI
Emergency Authority
-------------------
The Board of Directors, by resolution adopted by a majority of the whole Board,
may make advance provision for the continuity and authority of the Company's
management in the event of a major catastrophe, such as a nuclear attack,
resulting in the loss or unavailability of members of the Board of Directors,
whether by death, incapacity, isolation or otherwise, or in loss or
unavailability of officers of the Company, and, in the event of such a major
catastrophe, the terms of any such resolution shall have the same effect as if
included in these By-Laws and shall supersede the terms of these By-Laws to the
extent that they may be inconsistent therewith.
ARTICLE XII
Amendments
----------
Except as otherwise provided by law, these By-laws may be amended, added to,
altered, or repealed in whole or in part by the Board of Directors at any annual
or regular meeting or at any special meeting thereof called therefor. Any By-
laws approved by the Board of Directors under this Article may be altered,
amended or repealed by the stockholders.
Certified to be a true Copy.
--------------------------------------
Secretary
- -----------------------------
Date
<PAGE>
Exhibit 3
OPINION OF COUNSEL
AS TO
SECURITIES BEING REGISTERED
<PAGE>
April 9, 1996
Chubb Life Insurance Company
One Granite Place
Concord, New Hampshire
Gentlemen:
This opinion is furnished in connection with the filing by Chubb Colonial
Life Insurance Company ("Chubb Colonial") of Post-Effective Amendment No. 2 to
its Registration Statement on Form S-6 under the Securities act of 1933
(the "Act") of interests in Colonial Separate Account B (the "Separate
Account") under its variable life insurance policies (the "Policies"). This
opinion covers the individual flexible premium variable life insurance policy.
I am familiar with the terms of the Policies and the Post-Effective
Amendment No.2 to the Registration Statement and the Exhibits thereto. I have
also examined all such corporate records of Chubb Colonial and such other
documents and laws as I have considered appropriate as a basis for the opinion
hereinafter expressed. On the basis of such examination, it is my opinion that:
1. Chubb Colonial is a corporation duly organized and validly existing under
the laws of the State of New Jersey.
2. The Separate Account is a separate account of Chubb Colonial validly
established pursuant to a resolution of the Board of Directors of Chubb
Colonial, under which income, gains and losses, whether or not realized,
from assets allocated to the Separate Account, are, in accordance with the
Policies, credited to or charged against the Separate Account without
regard to other income, gains or losses of Chubb Colonial.
3. Assets allocated to the Separate Account will be owned by Chubb Colonial;
Chubb Colonial is not a trustee with respect thereto. The Policies provide
that the portion of the assets of the Separate Account equal to the
reserves and other Policy liabilities with respect to the Separate Account
will not be chargeable with liabilities arising out of any other business
Chubb Colonial may conduct. Chubb Colonial reserves the right to transfer
assets of the Separate Account in excess of such reserves and other Policy
<PAGE>
Exhibit 6
ACTUARIAL OPINION AND CONSENT
OF
MICHAEL J. LEBOEUF, FSA, MAAA
<PAGE>
March 20, 1996
Chubb Colonial Life Insurance Company
Post Office Box 515
Concord, New Hampshire 03301
Gentlemen:
This opinion is furnished in connection with the filing of the registration
statement of Chubb Colonial Life Insurance Company ("Colonial") on Form S-6,
("Registration Statement") of interests in Colonial Separate Account B
("Separate Account B") under its variable life insurance policies (the
"Policies"). This opinion covers both the individual flexible premium variable
life insurance policy, and the survivorship flexible premium variable life
insurance policy ("Colonial Ensemble II").
I am familiar with the terms of the Policies and the Registration Statement and
the Exhibits thereto. In my opinion:
1. The illustrations of death benefits, accumulation value, and cash value
for the Policies in Appendix A of the prospectus, based on the
assumptions stated in the illustrations, are consistent with the
provisions of the Policies.
The Policies have not been designed so as to make the relationship
between premiums and benefits, as shown in the illustrations, appear
disproportionately more favorable to prospective purchasers of Policies
for the age(s), gender(s), smoking status(es), and underwriting
class(es) illustrated in Appendix A than to prospective purchasers of
Policies for other age(s), gender(s), smoking status(es), and
underwriting class(es). The particular illustrations shown were not
selected for the purpose of making this relationship appear more
favorable. Generally, the rates for non-smokers are lower than for
smokers and the rates for females are lower than for males.
2. The illustrations of death benefits, accumulation value and cash value
for the Policies, set forth in Appendix A of the prospectus, based on
the net return of the five divisions of Separate Account B and the
assumptions stated within the examples, are consistent with the
provisions of the Policies.
The illustrations in Appendix A. have not been designed so as to make
the relationships between premiums and benefits appear
disproportionately more favorable to prospective purchasers of Policies
for age(s), gender(s), smoking status(es), and underwriting class(es)
illustrated in appendix A than to prospective purchasers of Policies
for other age(s), gender(s), smoking status(es), and underwriting
class(es). Generally, the rates for non-smokers are lower than for
smokers and the rates for females are lower than for males.
3. The illustrations set forth in Appendix A of the prospectus contain
both the current and guaranteed rates of cost of insurance charges to
be used for those Policies.
These rates have not been designed so as to make the relationships
between current and guaranteed rates appear disproportionately more
favorable to prospective purchasers of Policies for the age(s),
gender(s), smoking status(es), and underwriting class(es) illustrated
in Appendix A than to prospective purchasers of Policies for other
age(s), gender(s), smoking status(es), and underwriting class(es). The
particular illustrations shown were not selected for the purpose of
making this relationship appear more favorable. Generally, the rates
for non-smokers are lower than for smokers and the rates for females
are lower than for males.
I hereby consent to the use of this opinion as an Exhibit to the Registration
Statement and to the reference to my name under the heading "Experts" in the
prospectus.
Sincerely,
/s/ Michael J. LeBoeuf
Michael J. LeBoeuf, FA, MALA
Assistant Vice President
and Product Actuary
<PAGE>
EXHIBIT 7
CONSENT OF ERNST & YOUNG LLP
<PAGE>
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated February 5, 1996 for Chubb Colonial Life Insurance
Company (formerly "The Colonial Life Insurance Company of America") in Post-
Effective Amendment No. 2 to the Registration Statement (Form S-6 No. 33-77496)
and related Prospectus for the registration of units of interest in the Colonial
Separate Account B under individual flexible premium variable life insurance
policies offered by Chubb Colonial Life Insurance Company.
ERNST & YOUNG LLP
Boston, Massachusetts
April 18, 1996
<PAGE>
Exhibit 9
SPECIMEN NOTICE OF RIGHT OF WITHDRAWAL
<PAGE>
NOTICE OF THE RIGHT OF WITHDRAWAL
THE COLONIAL LIFE INSURANCE COMPANY OF AMERICA
ONE GRANITE PLACE
CONCORD, NEW HAMPSHIRE 03301
RE: POLICY NUMBER:
INSURED'S NAME:
PLAN NAME: ENSEMBLE II
PREMIUM FREQUENCY:
PLANNED PERIODIC PREMIUM:
THIS NOTICE IS SENT TO YOU IN ACCORDANCE WITH THE LAWS ADMINISTERED BY THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION ("SEC"). PLEASE READ IT
CAREFULLY AND RETAIN IT WITH YOUR IMPORTANT RECORDS.
YOU HAVE RECENTLY PURCHASED A VARIABLE LIFE INSURANCE POLICY FROM THE
COLONIAL LIFE INSURANCE COMPANY OF AMERICA UNDER WHICH BENEFITS DEPEND ON THE
INVESTMENT EXPERIENCE OF SEPARATE ACCOUNT B. YOU HAVE, PURSUANT TO REQUIREMENTS
OF THE SEC AND YOUR POLICY, THE RIGHT TO EXAMINE AND RETURN YOUR POLICY FOR
CANCELLATION, AND RECEIVE A FULL REFUND OF ALL PREMIUMS PAID, AT ANY TIME WITHIN
10 DAYS FROM DELIVERY OF THE POLICY OR 45 DAYS FROM THE DATE OF PART 1 OF THE
APPLICATION, WHICHEVER IS LATER, BUT IN ANY EVENT YOU HAVE UNTIL 10 DAYS FROM
THE DATE OF MAILING OF THIS NOTICE, AS DETERMINED BY ITS POSTMARK, OR PERSONAL
DELIVERY TO RETURN THE POLICY FOR CANCELLATION. ACCOMPANYING YOUR POLICY WILL BE
AN ILLUSTRATION OF THE WAY IN WHICH THE DEATH BENEFIT, ACCUMULATION VALUE AND
CASH VALUE UNDER YOUR POLICY WILL VARY TO REFLECT INVESTMENT EXPERIENCE BY
SEPARATE ACCOUNT B.
IN DETERMINING WHETHER OR NOT TO EXERCISE YOUR RIGHT, YOU SHOULD CONSIDER,
AMONG OTHER THINGS, THE PROJECTED COST OF YOUR POLICY AND YOUR ABILITY TO MAKE
PAYMENTS FOR LIFE AS THEY MAY BECOME NECESSARY. YOUR POLICY PROVIDES FOR
PAYMENTS AS STATED ABOVE. ALSO YOU HAVE ALREADY BEEN FURNISHED A PROSPECTUS
WHICH DESCRIBES THE CHARGES ASSESSED AGAINST YOUR POLICY. PLEASE SEE THE
ENCLOSED DOCUMENT THAT REFERS TO THESE CHARGES.
SHOULD YOU DECIDE TO EXERCISE THIS RIGHT OF CANCELLATION, COMPLETE THE
ENCLOSED FORM AND RETURN YOUR POLICY IN ACCORDANCE WITH THE ENCLOSED
INSTRUCTIONS, POSTMARKED ON OR BEFORE THE LATEST DATE PERMITTED FOR CANCELLATION
AS DESCRIBED ABOVE.
OFFICER
CUSTOMER SERVICE
<PAGE>
Exhibit 10
REPRESENTATIONS, DESCRIPTION AND UNDERTAKINGS
REGARDING MORTALITY AND EXPENSE RISK CHARGE
PURSUANT TO RULE 6e-3(T)(b)(13)(iii)(F)
<PAGE>
[LETTERHEAD OF CHUBB LIFEAMERICA APPEARS HERE]
REPRESENTATIONS, DESCRIPTION AND
UNDERTAKINGS PURSUANT TO
RULE 6e-3(T)(b)(13)(iii)(F) UNDER
THE INVESTMENT COMPANY ACT OF 1940
The Colonial Life Insurance Company of America ("Colonial"), on behalf of
Colonial Separate Account B, makes the following representations:
1. Section 6e-3(T)(b)(13)(iii)(F) is being relied upon.
2. The level of mortality and expense risk charge is reasonable in relation to
the risks assumed and is within the range of industry practice for comparable
contracts.
3. The methodology used to support the representation made in paragraph (2)
above is based on an analysis of the mortality and expense risk charges being
made in relation to the risks assumed, as well as those in comparable
flexible premium contracts filed with the Commission. Colonial undertakes to
keep and make available to the Commission on request the documents used to
support the representation in paragraph (2) above.
4. Colonial has concluded that there is a reasonable likelihood that the
distribution financing arrangement will benefit Separate Account B and
policyowners. Colonial undertakes to keep and make to the Commission on
request the memorandum setting forth the basis for this representation.
5. Colonial represents that Colonial Separate Account B will invest only in
management investment companies which have undertaken to have a board of
directors, a majority of whom are not interested persons of the company,
formulate and approve any plan under Rule 12b-l to finance distribution
expenses.
/s/ Michael J. LeBoeuf
-----------------------------
Michael J. LeBoeuf, FSA, MAAA
Assistant Vice President and
Product Actuary
<PAGE>
Exhibit 11(a)
UNDERTAKING TO GUARANTEE OBLIGATIONS
OF
PRINCIPAL UNDERWRITERS
PURSUANT TO RULE 6e-3(T)(b)(13)(iv)
<PAGE>
UNDERTAKING TO GUARANTEE
OBLIGATIONS OF PRINCIPAL UNDERWRITER
PURSUANT TO RULE 6e-3(T)(b)(13)(vi) UNDER THE
INVESTMENT COMPANY ACT OF 1940
UNDERTAKING, dated April 5, 1994, by The Colonial Life Insurance Company of
America, a stock life insurance company, ("Colonial").
Witnesseth:
WHEREAS, Chubb Securities Corporation may be regarded as a principal
underwriter for sale of flexible premium variable life insurance policies issued
by Colonial (the "Policies");
WHEREAS, the Policies provided for allocation of amounts to Separate Account
B of Colonial ("Separate Account B") and Separate Account B is registered as an
investment company under the Investment Company Act of 1940 and is a separate
account that meets the requirements of Rule 6e-3(T)(a) thereunder;
WHEREAS, each Policy also provides that the owner may examine the Policy and
at any time (a) within 10 days after receipt of the Policy, (b) within 45 days
of execution of the application therefor or (c) within 10 days after mailing or
personal delivery of a Notice of Right of Withdrawal, whichever is latest, may
return it with a written request for cancellation to Colonial (the "Cancellation
Right"); and
WHEREAS, Colonial will at all times have combined capital paid-up, gross
paid-in and contributed surplus and unassigned surplus, at least equal to the
larger of (a) $1,000,000 or (b) 200 percent of the amount of the total refund
obligation of the principal underwriter of the Policies less any liability
reserve established by Colonial to meet such obligations.
NOW THEREFORE, Colonial hereby undertakes to guarantee the performance of
all obligations to refund premiums to owners of Policies who have exercised the
Cancellation Right thereunder.
CHUBB SECURITIES CORPORATION THE COLONIAL LIFE INSURANCE
COMPANY OF AMERICA
By: By:
------------------------------- ---------------------------------
Title: President Title: President
---------------------------- ---------------------------------
<PAGE>
Exhibit 11(b)
STATEMENT OF
THE COLONIAL LIFE INSURANCE COMPANY OF AMERICA
PURSUANT TO RULE 27d-2
UNDER THE INVESTMENT COMPANY ACT OF 1940
<PAGE>
STATEMENT OF THE COLONIAL LIFE INSURANCE COMPANY OF AMERICA
PURSUANT TO RULE 27d-2 UNDER THE
INVESTMENT COMPANY ACT OF 1940
The undersigned hereby states that on a monthly basis throughout its fiscal
year ended December 31, 1993, it has met the requirements of Rule 27d-2(a)(1)
under the Investment Company Act of 1940.
THE COLONIAL LIFE INSURANCE
COMPANY OF AMERICA
By: /s/ Mary Ann Peltier
--------------------------------------
Title: Sr. Vice President & Corp Actuary
---------------------------------
April 5, 1994
SJL/jlf
<PAGE>
Exhibit 12
FORM OF REINSURANCE AGREEMENT
<PAGE>
REINSURANCE AGREEMENT
between
COLONIAL LIFE INSURANCE COMPANY OF AMERICA
of Parsippany, New Jersey,
hereinafter referred to as the "Ceding Company," and
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
ARTICLE TITLE PAGE
- ------- ----- ----
<C> <S> <C>
1 Effective Date 1.0
2 Automatic Reinsurance Coverage 2.0
3 Facultative Reinsurance Coverage 3.0
4 Procedure 4.0
5 Liability 5.0
6 Plans of Reinsurance 6.0
7 Premiums 7.0
8 Reinsurance Conditions 8.0
9 Premium Tax Reimbursement and DAC Tax 9.0
10 Adjustments 10.0
11 Reinstatement 11.0
12 Payments 12.0
13 Recapture 13.0
14 Administrative Oversights 14.0
15 Claims 15.0
16 Misstatement of Age or Sex 16.0
17 Insolvency 17.0
18 Inspection of Records 18.0
19 Arbitration 19.0
20 Parties to the Agreement 20.0
21 Duration of Agreement 21.0
22 Experience Refund 22.0
23 Reserves 23.0
24 Entire Agreement 24.0
25 Reports 25.0
26 Execution of the Agreement 26.0
</TABLE>
<PAGE>
ARTICLE 1: EFFECTIVE DATE
- --------------------------
This Treaty is an Agreement, effective September 7, 1993, by and between the
Ceding Company and the Reinsurer. In consideration of the mutual promises
contained herein the parties hereto agree to act in accordance with the
provisions of this Agreement.
<PAGE>
ARTICLE 2: AUTOMATIC REINSURANCE COVERAGE
- ------------------------------------------
1. The Ceding Company agrees to submit for reinsurance with the Reinsurer and
the Reinsurer agrees to accept for reinsurance 25% of the excess over the
Ceding Company's limits of retention, as shown in Exhibit A, attached hereto
and made a part hereof, of any and all standard and substandard individually
underwritten ordinary life insurance, as set forth in Exhibit B, attached
hereto and made a part hereof, which is written by the Ceding Company on any
resident of the United States, in accordance with the Ceding Company's
normal individual ordinary underwriting rules and practices. Minimum
cessions will be $10,000, and maximum total amounts on one life will be
equal to 25% of the amounts as set forth in Exhibit A.
For the purposes of this Agreement and in accordance with the Ceding
Company's ordinary underwriting rules, "resident" shall be defined as a
person whose primary domicile is the United States for at least 9 months in
a 12 consecutive month period, and who is either a U.S. citizen or has been
lawfully admitted for permanent residence in the United States. The phrase
"lawfully admitted for permanent residence" means the status of having been
lawfully accorded the privilege of residing permanently in the United States
and having been issued an alien registration receipt card by the United
States Immigration and Naturalization Service of the United States
Department of Justice.
Should the Ceding Company desire to change its issue limits or underwriting
guidelines, such changes shall be subject to approval by the Reinsurer.
Should the Ceding Company elect to participate in another arrangement or
other arrangements to secure additional automatic binding capacity, the
Reinsurer shall be notified thirty (30) days in advance of such action and
reserves the right to modify the binding limits currently set forth in this
Agreement.
It is further provided and agreed that life insurance amounts submitted in
accordance with this Article shall not include those constituting a "Jumbo
Risk". A "Jumbo Risk" for the purpose of this Agreement is defined as one
where the papers of the Ceding Company indicate that the proposed insured's
total life insurance inforce and applied for in all companies exceeds the
amounts shown in Exhibit A.
2. Automatic reinsurance coverage shall not apply to those situations where the
policy has been submitted on a facultative basis.
2.0
<PAGE>
3. Automatic reinsurance under this Agreement will include, if mutually agreed
upon in writing between the parties and referenced in Exhibit B or elsewhere
in this document, any supplementary benefits.
4. The Ceding Company shall at any time have the right to modify its retention
limits affecting reinsurance by advance notice in writing mailed to the
Reinsurer. The automatic binding limits specified in Exhibit A and referred
to in paragraph 1 of this Article shall be amended in writing by the Ceding
Company and the Reinsurer.
5. Automatic reinsurance shall not cover special programs, experimental or
limited retention programs, or replacement and conversion situations of the
Ceding Company unless prior approval has been received from the Reinsurer.
For the purposes of this Agreement, these situations are not intended to
mean contractual conversions or exchanges or continuations of the original
policy for reinsurance purposes.
2.1
<PAGE>
ARTICLE 3: FACULTATIVE REINSURANCE COVERAGE
- --------------------------------------------
1. Whenever the Ceding Company desires reinsurance on a standard or substandard
risk not covered by the automatic provisions of this Agreement as specified
in Article 2, or on any application on which the Ceding Company wishes the
advice of the Reinsurer, it must submit, and the Reinsurer agrees to
consider, such reinsurance on a facultative basis.
2. Facultative reinsurance under this Agreement may include supplementary
benefits as mutually agreed upon in writing by the Ceding Company and the
Reinsurer.
3. Any and all offers made by the Reinsurer to accept a risk as submitted or to
accept a risk under terms and conditions other than as submitted shall,
unless otherwise terminated by the Reinsurer, terminate automatically on the
earliest of:
a. The date the Reinsurer receives notice from the Ceding Company of its
withdrawal of its application, or
b. Ninety (90) days from the date the Reinsurer communicates its offer to
the Ceding Company
The Reinsurer's offer may remain open beyond the ninety day period provided
the Ceding Company submits a written request to the Reinsurer for an
extension of the offer and the Reinsurer approves such request. If an
extension is granted, the Reinsurer's offer shall terminate automatically on
the date the extension expires.
3.0
<PAGE>
ARTICLE 4: PROCEDURE
- ---------------------
1. Automatic Reinsurance
The plans covered under this Agreement shall be Self-Administered. Each
month, the Ceding Company shall submit to the Reinsurer a statement
containing the following information for each policy for which premium
payments or adjustments are due, along with the applicable premium payment
or adjustment:
1. Policy number
2. Issue Date
3. Insured's Name
4. Age and date of birth
5. Sex
6. Underwriting classification, smoking code, and table rating
7. Amount of risk for following year, less retention
8. Premiums due the Reinsurer
9. Policy Exhibit
10. Treaty code
11. Life or health indicator
12. Coinsurance or YRT indicator
13. Reinsurer's cession number
14. Valuation code
15. Premium duration
16. Automatic or facultative indicator
17. State code
18. Reinsurance premium paid-to date
19. Face amount of policy
20. Original amount of reinsurance
21. Commissions due Chubb
2. Facultative Reinsurance
When the Ceding Company desires to apply for facultative reinsurance, the
Ceding Company shall send to the Reinsurer copies of the original
application, medical examiners reports, inspection reports, and all other
information bearing on the insurability of the risk. Upon receipt of such
application, the Reinsurer shall examine the papers and promptly notify the
Ceding Company of its decision to either make an offer or reject the risk as
submitted, or advise the Ceding Company of additional evidence necessary to
underwrite the risk.
When a policy has been issued and paid for on which reinsurance has been
obtained from the Reinsurer, the Ceding Company shall promptly pay
reinsurance premiums on such policy on the next monthly statement. Payment
of said premium shall constitute acceptance of the Reinsurer's
4.0
<PAGE>
facultative offer.
If the reinsurance application on which the Reinsurer has made an offer is not
to be placed with the Reinsurer because the original policy has not been paid
for or because of some other reason, such offer shall expire in accordance with
the terms and conditions specified under Article 3, paragraph 3.
The reporting of facultative business shall be made in the same accord as
automatic reinsurance.
4.1
<PAGE>
ARTICLE 5: LIABILITY
- ---------------------
1. The liability of the Reinsurer on any reinsurance under this Agreement
shall commence simultaneously with the liability of the Ceding Company,
except that no liability shall attach to the Reinsurer hereunder with
respect to facultative reinsurance prior to acceptance during the
lifetime of the insured by the Ceding Company of the Reinsurer's offer.
In no event shall the liability of the Reinsurer commence prior to the
liability of the Ceding Company. The Reinsurer's liability thereunder
shall continue as long as the Ceding Company is liable under the policy,
subject to all provisions contained in this agreement, and shall cease
when the liability of the Ceding Company ceases.
2. Whenever the Ceding Company becomes liable for a loss under the terms of
a Conditional Receipt or Temporary Insurance Receipt, the Reinsurer
shall be liable to the Ceding Company for the amount over the Ceding
Company's standard retention as specified in the retention schedule in
Exhibit A, but not in excess of the automatic reinsurance limits
hereunder, and only if the policy would have qualified for automatic
reinsurance hereunder. In order for the Reinsurer to be liable in
accordance with the preceding qualifications on any Conditional Receipt
or Temporary Insurance Receipt, the Ceding Company must have submitted
to the Reinsurer a copy of the application and receipt it intends to use
with regard to risks reinsured hereunder and must have received written
acknowledgment from the Reinsurer that it intends to be bound on such
receipt as herein stated. The Ceding Company shall notify the Reinsurer
of proposed changes to its Conditional Receipt or Temporary Insurance
Receipt or in its practices in issuing Conditional Receipts or Temporary
Insurance Receipts. The Reinsurer shall not be liable for such revised
Conditional Receipt, Temporary Insurance Receipt or practices unless the
Ceding Company has received written acknowledgment from the Reinsurer
that it intends to be bound on such revision.
3. The Reinsurer shall not be liable for a loss incurred by the Ceding
Company under the terms of a Conditional Receipt or Temporary Insurance
Receipt where the Ceding Company has submitted the policy facultatively
to any reinsurer.
5.0
<PAGE>
ARTICLE 6: PLANS OF REINSURANCE
- --------------------------------
1. Life Reinsurance
Life Reinsurance under this Agreement shall be on the Yearly Renewable
Term plan for the amount at risk on the proportion of the original policy
reinsured in the Reinsurer. For the purpose of this Agreement the
reinsured net amount at risk will be calculated as (a) the number of $1000
units of reinsurance, less (b) the reserve per unit, if any, times (c) the
number of units reinsured.
For purposes of the preceding paragraph, reserve will mean accumulated
fund value for interest sensitive or universal life type products, and
will mean statutory reserves (excluding deficiency reserves) for all other
products.
2. Supplemental Benefits
All Supplemental Benefits reinsurance shall be on the Coinsurance plan.
3. Any Supplemental Benefits reinsured hereunder shall be independent of the
life reinsurance amount at risk.
6.0
<PAGE>
ARTICLE 7: PREMIUMS
- --------------------
1. Premiums for Life Reinsurance
The annual premiums for standard and substandard life reinsurance shall be
computed on the basis of the amount at risk at the rates shown in Exhibit C
attached hereto and made a part hereof. These rates are guaranteed for one
year. The Reinsurer guarantees that premium rates shall not exceed the rate
determined using the applicable 1980 CSO table at the maximum statutory
valuation rate approved in the Reinsurer's state of domicile.
2. Flat Extra Premiums
For reinsurance of substandard risks for which a flat extra premium is
charged, the Ceding Company shall pay to the Reinsurer the sum of:
a. The premiums for the amount at risk as determined in item 1. above, and
b. The flat extra premium collected by the Ceding Company on the portion of
the face amount reinsured in the Reinsurer, less allowances as
described in Exhibit C.
3. Supplemental Benefits
Premiums for reinsurance of Supplemental Benefits shall be paid during the
period that such coverage is inforce at the annual rates as are charged by
the Ceding Company under the policy or policies on which reinsurance in the
Reinsurer is based, less allowances as described in Exhibit D. If the Ceding
Company decreases the Supplemental Benefits rates subsequent to the
effective date of this Agreement, the Reinsurer reserves the right to review
the allowances.
7.0
<PAGE>
ARTICLE 8: REINSURANCE CONDITIONS
- ----------------------------------
1. Upon request, the Ceding Company shall furnish the Reinsurer with any and
all specimen copies of its applications, rate books, underwriting
requirements, policy and rider forms and any tables of rates and values
which may be required for the proper administration of the business
reinsured under this Agreement.
2. Each reinsurance cession shall be subject to all applicable general
conditions, limitations, exceptions or restrictions contained in the
respective policies of the Ceding Company, except, however, that the
reinsurance shall provide no loan or cash surrender values.
3 The Ceding Company shall bear the expense of all medical examinations,
inspection fees and other charges incurred in connection with the policy,
including but not limited to issue, reinstatement, or reentry.
8.0
<PAGE>
ARTICLE 9: PREMIUM TAX REIMBURSEMENT AND DAC TAX
- -------------------------------------------------
l Premium Taxes
The Reinsurer is not required to reimburse the Ceding Company for premium
taxes the latter may be required to pay with respect to that part of the
premiums received under the Ceding Company's policies which is remitted to
the Reinsurer as reinsurance premiums.
2. DAC Tax
The Ceding Company and the Reinsurer hereby enter into an election under
Treasury Regulations Section 1.848-2(g)(8) whereby:
a. For each taxable year under this Agreement, the party with net positive
consideration, as defined in the regulations promulgated under Treasury
Code Section 848, will capitalize specified policy acquisition expenses
with respect to this Agreement without regard to the general deductions
limitation of Section 848(c)(1);
b. The Ceding Company and the Reinsurer agree to exchange information
pertaining to the amount of net consideration under this Agreement each
year to ensure consistency or as otherwise required by the Internal
Revenue Service;
c. The Ceding Company will submit a schedule to the Reinsurer by May l of
each year of its calculation of the net consideration for the preceding
calendar year. This schedule of calculations will be accompanied by a
statement signed by an officer of the Ceding Company stating that the
Ceding Company will report such net consideration in its tax return for
the preceding calendar year;
d. The Reinsurer may contest such calculation by providing an alternative
calculation to the Ceding Company in writing by June 1st of the same
year. If the Reinsurer does not so notify the Ceding Company, the
Reinsurer will report the net consideration as determined by the Ceding
Company in the Reinsurer's tax return for the previous calendar year;
e. If the Reinsurer contests the Ceding Company's calculation of the net
consideration, the parties will act in good faith to reach an agreement
as to the correct amount by July 1st of the same year. If the
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<PAGE>
Ceding Company and the Reinsurer reach agreement on an amount of net
consideration, each party shall report such amount in their respective
tax returns for the previous calendar year.
9.1
<PAGE>
ARTICLE 10: ADJUSTMENTS
- ------------------------
1. Changes
If any change is made in the plan of the original policy reinsured in the
Reinsurer, including but not limited to any change in status caused by the
application of a nonforfeiture provision, a corresponding change shall be
made in the reinsurance. The Ceding Company shall promptly notify the
Reinsurer of any such change with the next monthly statement that is
completed. Increases in the face amount of the original policy reinsured
hereunder and changes in the underwriting classification of substandard
policies for facultative policies shall be subject to prior approval of the
Reinsurer.
2. Reductions and Terminations
If all or any part of any insurance coverage under any policy upon which
reinsurance is based shall be reduced or terminated, the amount of
reinsurance carried by the Reinsurer with respect to that coverage, shall
be:
a. in the case of a policy terminating, the reinsurance related to that
policy shall be terminated.
b. in the case of a policy reduction, the Ceding Company will maintain the
retention it possessed prior to the reduction and reduce or terminate
the reinsurance depending on the amount of the policy remaining after
the reduction.
3. Conversions or Continuations
Conversions or continuations will be reinsured by the Reinsurer only if the
original policy was reinsured by the Reinsurer. The amount of reinsurance
will not exceed the amount of the reinsurance on the original policy with
the Reinsurer immediately prior to the conversion or continuation. Premiums
and allowances will be determined at the rates covering the new plan at
point in scale based on the original policy that is being converted or
continued.
A continuation is defined as a policy not meeting all of the following
conditions:
1) complete new underwriting
2) new suicide clause and incontestable period
3) full first year commissions paid
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ARTICLE 11: REINSTATEMENT
- --------------------------
1. If a policy reinsured automatically under the provisions of Article 2
hereunder lapses and is later approved for reinstatement by the Ceding
Company in accordance with its usual and ordinary underwriting standards,
reinsurance for the amount reinsured with the Reinsurer at the time of lapse
shall be reinstated automatically. The notice of reinstatement shall appear
on the monthly statement. Reinsurance shall be effective as of the date of
reinstatement.
2. If a policy reinsured facultatively under the provisions of Article 3
lapses, reinstatement of the amount reinsured with the Reinsurer at the time
of the lapse shall require prior approval by the Reinsurer. Notice in
writing of such reinstatement shall be given promptly to the Reinsurer
together with copies of the reinstatement papers that are required. Such
reinsurance shall become effective as of the date of reinstatement.
3. In the event of a reinstatement in accordance with this Article, the Ceding
Company shall pay to the Reinsurer all reinsurance premiums and policy fees
in arrears from the reinstatement date. Thereafter, reinsurance premiums
shall be payable in accordance with Article 7 and 12.
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ARTICLE 12: PAYMENTS
- ---------------------
1. Reinsurance premiums shall be paid on an annual basis. Within thirty days
after the close of each calendar month, the Ceding Company shall forward to
the Reinsurer its statement of account along with its remittance for the
new amount due as shown therein. If the statement shows a balance due the
Ceding Company, the Reinsurer shall remit that amount to the Ceding Company
within 30 days of receipt of the statement of account.
2. For the purposes of this Agreement, the due date for the Reinsurer's receipt
of the statement of account and premiums due is the thirty-first day
following the close of any calendar month. The payment of reinsurance
premiums in accordance with the provisions herein shall be a condition
precedent to the liability of the Reinsurer for reinsurance covered by this
Agreement. In the event that reinsurance premiums are not paid as of the
thirty-first day following the close of the calendar month in which they
fall due, the Reinsurer shall have the right to give the Ceding Company
thirty days notice of the Reinsurer's intention to terminate reinsurance on
those policies for which reinsurance premiums have not been paid. At the
expiration of this thirty-day period the reinsurance shall terminate
automatically. Whether or not the Reinsurer exercises its right to terminate
the reinsurance as specified in the preceding paragraph, all such
outstanding premiums shall be subject to an annual interest charge on the
unpaid balance from the due date as specified in this Article to the date of
payment, at a rate coincident with the current rate of interest charged by
the Reinsurer for delinquent premiums in connection with its individual life
insurance policies.
3. If reinsurance is terminated as provided in paragraph 2, and if all
reinsurance premiums in default and any additional charge due in accordance
with paragraph 2, including such premiums and charges which may become in
default during the thirty-day notice period are not paid before the
expiration of such period, the Reinsurer shall thereupon be relieved
automatically of future liability under all reinsurance on those policies
for which premiums and other charges remain unpaid. Reinsurance under
cessions for which premiums subsequently fall due will terminate
automatically if reinsurance premiums are not paid when due as provided in
paragraph 2 of this Article. The reinsurance so terminated may be reinstated
at any time within sixty days of the date of termination upon payment of all
reinsurance premiums and other charges in arrears; but in the event of such
reinstatement, the Reinsurer shall have no liability in connection with any
claims incurred between the date of
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<PAGE>
termination and the date of reinstatement of the reinsurance.
4. The Ceding Company shall continue to be liable to the Reinsurer for all
unpaid reinsurance premiums earned by the Reinsurer during the time period
reinsurance coverage remains in effect under this Agreement. Such premiums
are subject to an annual interest charge as specified in paragraph 2 above.
12.1
<PAGE>
ARTICLE 13: RECAPTURE
- ----------------------
1. The limits of retention of the Ceding Company are shown in Exhibit A,
attached hereto and made a part hereof. The Ceding Company shall at any time
have the right to increase its retention limits affecting new reinsurance by
advance notice in writing mailed to the Reinsurer. If the Ceding Company
reduces its retention limits, such reduction shall not take effect for
reinsurance purposes until written approval has been received from the
Reinsurer.
2. If the Ceding Company increases its limits of retention as specified in
Exhibit A, a corresponding reduction may be made at the option of the Ceding
Company in the reinsurance inforce under this Agreement on all lives on
which the Ceding Company has maintained its maximum limit of retention for
age and mortality rating in effect at the time of issue. A reduction shall
not be made in the reinsurance of any policy until such reinsurance has been
inforce hereunder at least ten (10) full years.
3. If such reduction in reinsurance is elected and written notice thereof is
given to the Reinsurer within ninety days from the effective date of such
increase in retention for new issues, then:
a. All policies or reinsurance issued hereunder and eligible for recapture,
as provided in this Article, shall be similarly reduced;
b. Such reinsurance shall be reduced by an amount in each case as will
increase the total insurance to be retained by the Ceding Company to its
maximum limit of retention for the age and mortality rating in effect at
the time the reinsurance was ceded to the Reinsurer;
c. If there is reinsurance in other companies on any such life, the
reduction of the reinsurance in the Reinsurer shall be that proportion
of the total indicated reduction which the reinsurance in the Reinsurer
bears to the total reinsurance on that life;
d The reduction of reinsurance shall be effective upon the anniversary
date next following or the tenth (10th) policy anniversary for those
policies which have not been inforce at least ten (10) full years;
e. If, at the time of recapture, the reinsured is disabled and premiums
are being waived under a waiver of monthly deductions benefit, the life
reinsurance shall be considered eligible for recapture. However, the
waiver
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<PAGE>
of monthly deductions benefit reinsurance shall remain inforce until
such time as the policy is returned to a premium paying status, at which
time the waiver of monthly deductions benefit reinsurance shall be
eligible for recapture.
4. In the event the Ceding Company overlooks any reduction in the amount of
reinsurance which should have been made because of an increase in the Ceding
Company's limits of retention, the acceptance by the Reinsurer of
reinsurance premiums under such circumstances after the effective date of
the reduction shall not constitute or determine a liability on the part of
the Reinsurer for such reinsurance. The Reinsurer shall be liable only for a
refund of premiums so received without interest.
13.1
<PAGE>
ARTICLE 14: ADMINISTRATIVE OVERSIGHTS
- --------------------------------------
1. Should either party to this Agreement fail to comply with any of the terms
of this Agreement, and if said failure can be shown to be unintentional and
a result of an administrative oversight or misunderstanding on the part of
either party, then this Agreement shall not be deemed abrogated thereby, but
both parties shall be restored to the position they would have occupied had
no such administrative oversight occurred.
2. If the Ceding Company does discover that it did not cede reinsurance on a
policy it should have reinsured automatically under this Agreement, the
Ceding Company is required to do an audit of its records sufficient to
determine if automatic reinsurance was unreported on any other policies.
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<PAGE>
ARTICLE 15: CLAIMS
- -------------------
1. Notice of Claim.
Immediate notice of any claim submitted on a policy reinsured hereunder
shall be given to the Reinsurer after receipt of first information by the
Ceding Company. Copies of documents bearing on such claim and coverage shall
be furnished to the Reinsurer as requested. In addition, on any claim
occurring during the contestable period, the Ceding Company shall furnish
copies of the application and underwriting papers. Whenever the amount
reinsured by the Reinsurer exceeds the amount retained by the Ceding
Company, the Ceding Company shall consult with the Reinsurer prior to
conceding any liability or making any settlement with the claimant.
2. Settlement of Claims.
Except as otherwise hereinafter provided, the Reinsurer shall accept the
good faith decision of the Ceding Company in settling any claim. Upon
receipt of the proper proofs and, if requested by the Reinsurer, evidence of
the Ceding Company having settled with the claimant, the Reinsurer shall
make one lump sum payment of its net reinsurance liability regardless of the
method of settlement used by the Ceding Company under its policy or
policies. In settlement of reinsurance liability for waiver of monthly
deductions benefits, the Reinsurer shall pay the Ceding Company its
proportionate share of the gross premium waived annually.
3. Contested Claims.
The Ceding Company shall immediately notify the Reinsurer of its intention
to contest, compromise or litigate a claim involving the insurance. The
Reinsurer shall notify the Ceding Company of its decision to decline to be a
party to such contest within fifteen (15) days of the Reinsurer's receipt
of all documents requested by the Reinsurer in accordance with this
Article. In such case, the Reinsurer shall pay the full amount of the
reinsurance due the Ceding Company and shall not be liable for future costs
of legal and/or investigative expenses incurred subsequent to the date of
the Reinsurer's notice of declination.
When the Reinsurer agrees to participate in a contest, compromise or
litigation involving the insurance, the Ceding Company shall give prompt
notice of the commencement, or proposed commencement, of any legal
proceedings in connection therewith. Copies of all documents in connection
with a lawsuit or notice of intent
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<PAGE>
to file a lawsuit shall be furnished promptly to the Reinsurer. The
Reinsurer shall accept the Ceding Company's good faith decisions in
litigation, compromises, or contests.
The Reinsurer shall share in legal or investigative expenses related to such
proceedings in the same proportion as its reinsurance liability bears to the
Ceding Company's liability.
If the Ceding Company's contest, compromise or litigation results in a
reduction of its liability, the Reinsurer shall share in the reduction in
the proportion that the liability of the Reinsurer bore to the amount
payable under the terms of the policy on the date of death of the insured.
4. Claim Expense.
The Reinsurer shall pay its proportionate share of the following expenses
connected with the litigation or settlement of a claim, provided that such
expenses are reasonable:
a. Investigative expenses such as investigatory reports, attending
physician's statements, police reports;
b. Attorney's fees;
c. Penalties and interest imposed automatically by statute against the
Ceding Company and rising solely out of a judgement rendered against the
Ceding Company in a suit for policy benefits reinsured hereunder;
d. Interest paid to the claimant on death benefit proceeds in accordance
with the Ceding Company's practices. Reimbursement of interest in excess
of 9%, unless otherwise dictated by local legislation, shall require
approval by the Reinsurer.
The Reinsurer's share of such expenses shall be determined in accordance
with the same proportions described in paragraph 3 of this Article.
The following claim expenses shall not be considered items of "net
reinsurance liability", as referenced in paragraph 2 of this Article, and
such expenses shall be paid by the Ceding Company:
a. Routine administrative expenses, home office or elsewhere, including
salaries of employees of the Company.
15.1
<PAGE>
b. Expenses incurred in connection with any dispute or contest arising out
of conflict in claims of entitlement to policy proceeds or benefits
which the Ceding Company admits are payable.
5. Extra Contractual Damages.
The Reinsurer shall not be liable, nor shall any amounts be paid under this
Agreement or otherwise, for any extra-contractual damages, including but
not limited to consequential, compensatory, exemplary or punitive damages
awarded against the Ceding Company or the Ceding Company voluntarily pays in
settlement of a dispute or claim, where the damages actually awarded are the
direct or indirect result of any act, omission or course of conduct
undertaken by the Ceding Company, its agents or representatives in
connection with any aspect of the insurance reinsured under the Agreement.
The Reinsurer recognizes that special circumstances may arise under which
the Reinsurer, in equity, should participate to the extent permitted by law
in certain assessed damaged. These circumstances are difficult to define in
advance but could include those situations in which the Reinsurer was an
active party in the act, omission or course of conduct which directly
results in the assessment of such damages. The extent of such participation
is dependent upon a good-faith assessment of the relative culpability in
each case; but all factors being equal, the division of any such assessment
would generally be in the proportion of the net liability accepted by each
party.
15.2
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ARTICLE 16: MISSTATEMENT OF AGE OR SEX
- --------------------------------------
In the event of an increase or reduction in the amount of original insurance
under any policy reinsured hereunder because of an overstatement or
understatement of age or misstatement of sex established after the death of the
insured, the Ceding Company and the Reinsurer shall share in such increase or
reduction in proportion to their respective liabilities under such policy.
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ARTICLE 17: INSOLVENCY
- -----------------------
1. All reinsurance under this Agreement shall be payable by the Reinsurer
directly to the Ceding Company, its liquidator, receiver or statutory
successor on the basis of the liability of the Ceding Company under the
policy or policies reinsured without diminution because of the insolvency of
the Ceding Company. It is understood however, that in the event of such
insolvency the liquidator or receiver or statutory successor of the Ceding
Company shall give written notice of the pendency of a claim against the
insolvent Ceding Company on the policy reinsured within a reasonable time
after such claim is filed in the insolvency proceeding. During the pendency
of such claim, the Reinsurer may investigate such claim and interpose, at
its own expense, in the proceeding where such claim is to be adjudicated any
defense which it may deem available to the Ceding Company or its liquidator
or receiver or statutory successor.
2. It is further understood that the expense thus incurred by the Reinsurer
shall be chargeable, subject to court approval, against the insolvent Ceding
Company as part of the expense of liquidation to the extent of a
proportionate share of the benefit which may accrue to the Ceding Company
solely as a result of the defense undertaken by the Reinsurer. Where two or
more reinsurers are involved in the same claim and a majority in interest
elect to interpose defense to such claim, the expenses shall be apportioned
in accordance with the terms of the reinsurance agreement as though such
expense had been incurred by the Ceding Company.
3. Any debts or credits, matured or unmatured, liquidated or unliquidated, in
favor of or against either the Reinsurers or the Ceding Company with respect
to this agreement or with respect to any other claim of one party against
the other are deemed mutual debts or credits, as the case may be, and will
be offset, and only the balance will be allowed or paid.
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ARTICLE 18: INSPECTION OF RECORDS
- ----------------------------------
The Reinsurer shall have the right at any reasonable time to inspect at the
office of the Ceding Company the original papers, records, books, files and
other documents relating directly or indirectly to the insurance coverage
reinsured under this Agreement.
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ARTICLE 19: ARBITRATION
- ------------------------
It is understood by both parties hereunder that the wording and interpretation
of this Agreement is based on the usual customs and practices of the insurance
and reinsurance industry. While both parties agree to act in good faith in their
dealings with each other, it is understood and recognized that situations arise
in which an agreement cannot be reached.
In the event that any dispute cannot be resolved to the satisfaction of both
parties, such dispute shall first be subject to good-faith negotiations as
described below in an attempt to resolve such dispute without the need to
institute a formal arbitration proceeding.
1. Negotiation. Within ten days after the first written notification of the
specific dispute has been given to the other party, each party shall appoint
a designated officer to represent that party with the objective of resolving
the dispute. The parties shall meet at a mutually agreeable location as
early as practicable and as often as deemed necessary, in order to gather
and furnish to the other party all appropriate and relevant information with
respect to the matter at issue. The officers shall discuss the problem
and/or negotiate in good faith in an effort to resolve the dispute without
the necessity of any formal arbitration proceeding. During the course of the
negotiation, all reasonable requests made by one party to the other for
information shall be honored in order that each of the parties may be fully
advised. The specific format for such discussions shall be left to the
discretion of the designated officers.
The parties agree that they will submit the dispute to formal arbitration in
the event that such officers cannot resolve the dispute within thirty days
of their first meeting. The parties may agree in writing to extend this
period for an additional thirty days.
2. Arbitration. No later than fifteen days after the final meeting, in
accordance with the negotiation period above, the parties to the negotiation
process shall give written confirmation to the Ceding Company and the
Reinsurer of their inability to resolve the dispute and their recommendation
for establishment of formal arbitration.
An arbitration panel, consisting of three arbitrators, who must be past or
present officers of life insurance companies not affiliated in any way with
the Ceding Company or the Reinsurer, shall settle the dispute.
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<PAGE>
Selection of the panel shall be as follows: within thirty days of the written
recommendation of the establishment of formal arbitration procedures, the Ceding
Company and the Reinsurer shall each submit in writing to the other a list of
three candidates for the arbitration panel. The Ceding Company and the Reinsurer
shall each choose one candidate from the other party's list. Should any chosen
candidate decline to participate in the arbitration proceedings, the party which
had named such candidate shall add another name to the list, and the other party
shall again choose an arbitrator from the list. This procedure shall continue
until two arbitrators have been chosen and have agreed to serve.
The two chosen arbitrators shall choose a third from the remaining candidates
set forth on the lists described above. If the two arbitrators cannot agree on
the choice of a third, such choice shall be made by the Chairman of the
American Arbitration Association.
The date and location of the arbitration shall be set by the arbitration panel,
and shall be communicated in writing to the Ceding Company and to the Reinsurer.
In no event will the date of the arbitration occur later than six months after
the choice of the third arbitrator.
No later than thirty days before the date of the arbitration, the Ceding Company
and the Reinsurer shall supply the arbitration panel with a written statement
containing the facts of the dispute, along with any and all applicable evidence
pertaining to the case. The arbitrators shall consider all evidence which they
consider relevant and shall have the authority to request additional evidence or
statements from either party.
Within sixty days after the beginning of the arbitration proceedings, the
arbitrators shall issue a written decision regarding the dispute and a statement
of any award to be paid as a result of that decision. Their decision shall be
based on the terms and conditions of this Agreement as well as the usual
customs and practices of the insurance and reinsurance industry, rather than on
strict interpretation of the law. Their decision shall be final and binding on
both parties and there shall be no further appeal, except that either party may
petition any court having jurisdiction over the parties and the subject matter
as respects the award rendered by the arbitrators.
Unless otherwise decided by the arbitrators, all expenses resulting from the
arbitration, including the fees and expenses of the arbitrators, will be borne
jointly by
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each respective party to this Agreement, except that each party will be
responsible for its own attorneys' fees.
19.2
<PAGE>
ARTICLE 20: PARTIES TO THE AGREEMENT
- -------------------------------------
This is an Agreement for indemnity reinsurance solely between the Ceding Company
and the Reinsurer. The acceptance of reinsurance hereunder shall not create any
right or legal relationship whatever between the Reinsurer and the insured or
any beneficiary under any policies of the Ceding Company which may be reinsured
hereunder.
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ARTICLE 21: DURATION OF AGREEMENT
- ----------------------------------
The Agreement shall be unlimited in duration, but may be amended at any time by
the written agreement of the two (2) parties and may be terminated as to further
new reinsurance at any time by either party upon ninety (90) days notice in
writing. The Reinsurer shall continue to accept reinsurance during the ninety-
day period aforesaid subject to the payment of reinsurance premiums in
accordance with Article 12. Such termination as to new reinsurance shall not
affect existing reinsurance which shall remain inforce until the termination or
expiry of each reinsurance cession in accordance with the terms and conditions
of this Agreement. The Reinsurer shall not be liable under this Agreement for
any claims or premium refunds which are not reported to the Reinsurer within 180
days following the termination or expiry of all inforce individual cessions
reinsured hereunder.
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ARTICLE 22: EXPERIENCE REFUND
- ------------------------------
Reinsurance ceded under this Agreement shall not be eligible for an Experience
Refund.
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ARTICLE 23: RESERVES
- ---------------------
The Reinsurer shall maintain its proportionate share of reserves, excluding
deficiency reserves, if any, held by the Ceding Company which may be required by
state or other regulatory authority for the insurance reinsured under this
Agreement.
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ARTICLE 24: ENTIRE AGREEMENT
- -----------------------------
This Agreement represents the entire agreement between the Ceding Company and
the Reinsurer and supersedes, with respect to its Subject matter, any prior oral
or written agreements between the parties.
No modification or waiver of any provision of this Agreement shall be effective
unless set forth in a written amendment to this Agreement which is executed by
both parties. A waiver shall constitute a waiver only with respect to the
particular circumstances for which it is given and not a waiver of any future
circumstances.
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ARTICLE 25: REPORTS
- --------------------
1. Quarterly Policy Reserve Report. The Ceding Company shall provide the
Reinsurer with a listing of the mean reserves attributable to the reinsured
portion of each policy reinsured.
2. Annual Tax Reserve Report. Shortly after the close of the year, the Ceding
Company shall report to the Reinsurer the amount by which the Ceding Company
will reduce its tax reserve because of the reinsurance ceded under this
Agreement. The details of the report should conform to the current
requirements of Internal Revenue Code Section 807.
3. Annual Inforce Listing. Shortly after the close of the year, the Ceding
Company shall furnish the Reinsurer with a listing of all inforce reinsured
policies, similar in form to the listing shown in Article 4.
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ARTICLE 26: EXECUTION OF THE AGREEMENT
- ---------------------------------------
In witness whereof the Ceding Company and the Reinsurer have caused this
Agreement to be executed in duplicate by their respective officers duly
authorized to do so.
COLONIAL LIFE INSURANCE COMPANY OF AMERICA
- --------------------------- ---------------------------
Officer Signature Witness
- --------------------------- ---------------------------
Title Title
- --------------------------- ---------------------------
Date Date
