<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 28, 1998
FILE NO. 33-77496
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 6
TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
--------------
A. EXACT NAME OF TRUST:
JPF SEPARATE ACCOUNT B
B. NAME OF DEPOSITOR:
JEFFERSON PILOT LIFEAMERICA INSURANCE COMPANY
C. COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES:
ONE GRANITE PLACE
CONCORD, NH 03301
D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
RONALD R. ANGARELLA
PRESIDENT
JEFFERSON PILOT SECURITIES CORPORATION
ONE GRANITE PLACE
CONCORD, NH 03301
COPIES TO:
CHARLENE GRANT ESQ. JOAN E. BOROS, ESQ.
JEFFERSON PILOT LIFEAMERICA JORDEN, BURT, BOROS, CICCHETTI,
INSURANCE COMPANY BERENSON & JOHNSON LLP
ONE GRANITE PLACE 1025 THOMAS JEFFERSON STREET, N.W.
CONCORD, NH 03301 SUITE 400 EAST
WASHINGTON, DC 20007-0805
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It is proposed that this filing will become effective (check appropriate box)
[_] immediately upon filing pursuant to paragraph (b)
[X] on May 1, 1998 pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a)(i)
[_] 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, 1997 ON MARCH 31, 1998.
H. APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after the effective date.
Registrant elects to be governed by Rule 6e-3(T)(b)(13)(i)(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....... Jefferson Pilot LifeAmerica Insurance Company; JPF Separate
Account B
6....... JPF Separate Account B
7....... Not Required
8....... Not Required
9....... Legal Proceedings
10....... Summary, JPF Separate Account B; The Policy; Policy
Benefits and Rights; Calculation of Accumulation Value; Cash Value
Benefits; Other Matters; Federal Tax Matters
11....... JPF Separate Account B, Jefferson Pilot Variable Fund, Inc.
12....... Jefferson Pilot Variable Fund, Inc.; Distribution of the Policy
13....... Jefferson Pilot Variable Fund, Inc.; General; Charges and
Deductions; Optional Insurance Benefits; Distribution of the
Policy
14....... The Policy
15....... The Policy
16....... JPF Separate Account B, Jefferson Pilot Variable Fund, Inc.
17....... Transfers; Loans and Reallocations; Policy Lapse; Reinstatement;
Policy "Free Look", Optional Insurance Benefits; Cash Value
Benefits
18....... JPF Separate Account B
19....... Annual Report; Confirmation
20....... Not Applicable
21....... Policy Loans
22....... JPF Separate Account B, Telephone Transfers, Loans and
Reallocations
23....... Management of JP LifeAmerica
24....... Not Applicable
25....... Jefferson Pilot LifeAmerica Insurance Company
26....... Not Applicable
27....... Jefferson Pilot LifeAmerica Insurance Company
28....... Jefferson Pilot LifeAmerica Insurance Company; Management of
Chubb Colonial
29....... Jefferson Pilot LifeAmerica Insurance Company
30....... Not Applicable
31....... Not Applicable
32....... Not Applicable
33....... Not Applicable
34....... Not Applicable
35....... Jefferson Pilot LifeAmerica Insurance Company
36....... Not Applicable
37....... Not Applicable
38-41.... Distribution of the Policy
42....... Not Applicable
43....... Not Applicable
44....... Jefferson Pilot Variable Fund, Inc.; The Policy; Charges and
Deductions; Calculation of Accumulation Value; Cash Value
Benefits; Distribution of the Policy
45....... Not Applicable
46....... Jefferson Pilot Variable Fund, Inc.; The Policy; Charges and
Deductions; Calculation of Accumulation Value; Cash Value Benefits
47....... Not Applicable
48....... Not Applicable
49....... Not Applicable
50....... JPF 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....... Jefferson Pilot Variable 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
JPF SEPARATE ACCOUNT B
INDIVIDUAL FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
ISSUED BY
JEFFERSON PILOT LIFEAMERICA INSURANCE COMPANY
ONE GRANITE PLACE
CONCORD, NEW HAMPSHIRE 03301
(603) 226-5000
The Flexible Premium Variable Life Insurance Policy ("Policy") currently
offered by Jefferson Pilot LifeAmerica Insurance Company ("JP LifeAmerica")
(formerly "Chubb Colonial Life Insurance Company") 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 JPF 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 JP LifeAmerica's General Account on the allocation
date. Each division of Separate Account B will invest solely in a
corresponding portfolio (a "Portfolio") of Jefferson Pilot Variable Fund,
Inc., Templeton Variable Products Series Fund, Fidelity Variable Insurance
Products Fund, Fidelity Variable Insurer Products Fund II, Oppenheimer
Variable Account Fund or MFS Variable Insurance Trust (collectively, the
"Funds"). Prior to the allocation date the net premiums paid will be deposited
in JP LifeAmerica'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, JP LifeAmerica will reimburse, within seven
days from the date the Policy is surrendered to JP LifeAmerica, 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 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 JP LifeAmerica'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. ENSEMBLE
II VARIABLE UNIVERSAL LIFE INSURANCE POLICIES AND SHARES OF THE FUNDS ARE NOT
DEPOSITS OR OBLIGATIONS OF OR GUARANTEED BY ANY BANK. THEY ARE NOT FEDERALLY
INSURED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY. INVESTING IN THE CONTRACTS
INVOLVES CERTAIN INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL
INVESTED.
PLEASE READ THIS PROSPECTUS CAREFULLY AND RETAIN IT FOR FUTURE REFERENCE.
THE DATE OF THIS PROSPECTUS IS MAY 1, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
DEFINITIONS.......................................................... 3
SUMMARY.............................................................. 5
JEFFERSON PILOT LIFEAMERICA INSURANCE COMPANY........................ 11
JPF SEPARATE ACCOUNT B............................................... 11
THE FUNDS............................................................ 11
THE POLICY........................................................... 17
General............................................................ 17
Payment of Premiums................................................ 17
Premium Limitations................................................ 17
Allocation of Premiums............................................. 17
Transfers.......................................................... 18
Telephone Transfers, Loans and Reallocations....................... 19
Policy Lapse....................................................... 20
Reinstatement...................................................... 20
Policy "Free Look"................................................. 20
CHARGES AND DEDUCTIONS............................................... 20
Premium Charges.................................................... 20
Monthly Deduction.................................................. 20
Risk Charge........................................................ 21
Surrender Charge................................................... 21
Administrative Fees................................................ 22
Other Charges...................................................... 23
POLICY BENEFITS AND RIGHTS........................................... 23
Death Benefits..................................................... 23
Guaranteed Death Benefit........................................... 24
Combined Requests.................................................. 24
Maturity of the Policy............................................. 24
Optional Insurance Benefits........................................ 24
Settlement Options................................................. 25
CALCULATION OF ACCUMULATION VALUE.................................... 26
Unit Values........................................................ 27
Net Investment Factor.............................................. 27
CASH VALUE BENEFITS.................................................. 27
Surrender Privileges............................................... 27
Policy Loans....................................................... 28
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
OTHER MATTERS........................................................ 29
Voting Rights...................................................... 29
Additions, Deletions or Substitutions of Investments............... 30
Annual Summary..................................................... 30
Confirmation....................................................... 30
Limitation on Right to Contest..................................... 31
Misstatements...................................................... 31
Suicide............................................................ 31
Beneficiaries...................................................... 31
Postponement of Payments........................................... 31
Assignment......................................................... 31
Illustration of Benefits and Values................................ 31
Non-Participating Policy........................................... 31
THE GENERAL ACCOUNT.................................................. 32
General Description................................................ 32
The Policy......................................................... 33
General Account Benefits........................................... 33
General Account Accumulation Value................................. 33
Determination of Charges........................................... 33
Premium Deposit Fund............................................... 33
DISTRIBUTION OF THE POLICY........................................... 33
MANAGEMENT OF JP LIFEAMERICA......................................... 35
Executive Officers and Directors of JP LifeAmerica................. 35
STATE REGULATION OF JP LIFEAMERICA................................... 36
FEDERAL TAX MATTERS.................................................. 36
Tax Considerations................................................. 36
Policy Proceeds.................................................... 36
Charge for JP LifeAmerica Income Taxes............................. 39
EMPLOYEE BENEFIT PLANS............................................... 39
LEGAL PROCEEDINGS.................................................... 39
EXPERTS.............................................................. 40
REGISTRATION STATEMENT............................................... 40
FINANCIAL STATEMENTS................................................. 40
ILLUSTRATIONS........................................................ Appendix A
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. JP LIFEAMERICA DOES NOT AUTHORIZE ANY
INFORMATION OR REPRESENTATIONS REGARDING THE OFFERING DESCRIBED IN THIS PRO-
SPECTUS 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
Prospectus, the following words and phrases shall have the indicated meanings:
Accumulation value--The total amount that a Policy provides for investment at
any time plus the amount held as collateral for policy debt.
Age--The Insured's age at his 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 JP LifeAmerica 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 JP LifeAmerica of
all items necessary under its administrative 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
application. If changed, the beneficiary is as shown in the latest change
filed with JP LifeAmerica. 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
surrender of the Policy or the maturity date.
Date of Receipt--Any business day of JP LifeAmerica, prior to 4:00 P.M. New
York City time, on which a notice or premium payment is received at JP
LifeAmerica'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--Jefferson Pilot Variable Fund, Inc., Oppenheimer Variable Account
Funds, MFS Variable Insurance Trust, 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 JP LifeAmerica 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 JP LifeAmerica. The
contestable 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
policy 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
subsequently changed.
Planned Periodic Premiums--Schedule of intended premium payments that the
policyowner may establish.
Policy date--The date set forth in the Policy. If money is received, it is
the later of the date of application or the date of any required medical
examination. If no money is received, the Policy Date is the Issue Date. 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 JP LifeAmerica.
Separate Account B--JPF Separate Account B, a separate investment account
created by JP LifeAmerica to
3
<PAGE>
receive and invest net premiums paid under the Policy and other flexible
premium variable life insurance policies offered by JP LifeAmerica.
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 that the Company and the New York Stock Exchange are
open for business, as of the close of regular trading on the New York Stock
Exchange, which is currently 4:00 P.M. New York City time. In addition to
being closed on all federal holidays, the Company will also be closed on Good
Friday, the Friday following Thanksgiving and the day before or following
Christmas.
Valuation period--The period between two successive valuation dates,
commencing at the close of regular trading on the New York Stock Exchange on
each valuation date and ending at the close of regular trading on the New York
Stock Exchange on the next succeeding valuation date.
4
<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
ENDORSEMENTS TO THE POLICY. 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 Jefferson Pilot LifeAmerica Insurance Company ("JP
LifeAmerica"), 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 JPF
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."
JPF Separate Account B. Separate Account B is a separate account established
by JP LifeAmerica 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 nineteen divisions, each of which buys
shares at net asset value of the corresponding portfolio (a "Portfolio") of
Jefferson Pilot Variable Fund, Inc., Templeton Variable Products Series Fund,
Fidelity Variable Insurance Products Fund, Fidelity Variable Insurance Products
Fund II, MFS Variable Insurance Trust or Oppenheimer Variable Account Funds
(the "Funds"). Separate Account B is administered and accounted for as part of
the general business of JP LifeAmerica, 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 JP LifeAmerica conducts. The assets of Separate
Account B are not chargeable with liabilities arising out of any other business
conducted by JP LifeAmerica. 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.
Over the life of the Ensemble II contract net premium payments may be allocated
among a total of seventeen divisions of Separate Account B.
5
<PAGE>
If the Date of Receipt of the initial premium is prior to the date JP
LifeAmerica 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 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 JP LifeAmerica
issues the Policy or the applicant refuses JP LifeAmerica'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 JP LifeAmerica
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. JP LifeAmerica will retain any
interest earned on the initial net premium. Prior to the allocation date the
initial net premium will be deposited in JP LifeAmerica's General Account. See
"The Policy--Policy "Free Look" ".
Variations from the information contained in this prospectus due to individual
state regulations are described in supplements attached to this prospectus or
in endorsements to the policy, as appropriate. Policyowners should consult
their policies for definitive information.
The Funds. Jefferson Pilot Variable Fund, Inc., formerly 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 JP LifeAmerica and its affiliated life
insurance companies to fund variable life insurance policies and variable
annuity contracts.
Jefferson Pilot Variable Fund, Inc. presently has eleven classes of stock,
each representing a Portfolio having a specific investment objective. The
present Portfolios of Jefferson Pilot Variable Fund, Inc. are the World Growth
Stock Portfolio, the International Equity Portfolio, the Money Market
Portfolio, the Hard Assets Portfolio, the High Yield Bond Portfolio, the
Domestic Growth Stock Portfolio, the Growth Portfolio, the Growth and Income
Portfolio, the Capital Growth Portfolio, the Balanced Portfolio and the
Emerging Growth Portfolio. Ten of the eleven Portfolios are offered to a
corresponding division of Separate Account B. In the future Jefferson Pilot
Variable Fund, Inc. may add or delete Portfolios. The investment manager to
Jefferson Pilot Variable Fund, Inc. is Jefferson Pilot Investment Advisory
Corporation ("JP Investment Advisory"), formerly Chubb Investment Advisory
Corporation, a wholly-owned subsidiary of JP LifeAmerica's parent, Jefferson
Pilot Financial Insurance Company.
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 JP LifeAmerica, 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, two of which (Equity Income Portfolio and Growth Portfolio)
offer their 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 JP LifeAmerica, 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.
MFS Variable Insurance Trust is an open-end management investment company,
currently consisting of twelve separate mutual fund series, two of which, MFS
Research and MFS Utilities, offer their shares to a corresponding division of
Separate Account B. MFS Variable Insurance Trust offers its shares to separate
accounts of insurance companies, including companies not affiliated with JP
LifeAmerica, as an investment vehicle for variable life and variable annuity
contracts. Massachusetts Financial Services Company ("MFS") is the investment
manager of the MFS Research Series and the MFS Utilities Series.
The Oppenheimer Variable Account Funds is an open-end, diversified management
investment company consisting of nine separate funds, two of which, the
Oppenheimer Strategic Bond Fund and the Oppenheimer Bond Fund, offer their
shares to a corresponding division of Separate Account B. The Oppenheimer
Variable Account Funds offer shares to separate accounts
6
<PAGE>
of insurance companies, including companies not affiliated with JP LifeAmerica,
as an investment vehicle for variable life and variable annuity contracts.
Oppenheimer Funds, Inc. is the investment manager of the Oppenheimer Strategic
Income Fund and the Oppenheimer Bond Fund.
Over the life of an Ensemble II contract, policyowners may allocate net
premiums to a total of seventeen divisions of Separate Account B.
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, JP LifeAmerica 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. JP LifeAmerica will return
any excess premiums if the total of all premiums, scheduled and unscheduled,
will exceed these limits. JP LifeAmerica will notify policyowners if any
premiums, scheduled or unscheduled, 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".
JP LifeAmerica 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".
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 subject to
the following conditions:
1. Any requested decrease in Specified Amount, which may only be made after
a Policy has been in force for one year, 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, which may be made at
anytime after the Policy has been issued, must be applied for, by a
supplemental application, prior to attained age 85, and shall be subject to
evidence of insurability satisfactory to JP LifeAmerica. The minimum increase
in Specified Amount is $25,000.
3. Any change approved by JP LifeAmerica 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 JP
LifeAmerica will be required for change from Option I to Option II. The
effective date of the change from Option I to Option II will be the monthly
anniversary date that coincides with or next follows the date of underwriter
approval. If the request is to change from Option II to Option I, the Specified
7
<PAGE>
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 the change from
Option II to Option I will be the monthly anniversary date that coincides with
or next follows the date that coincides with or next follows the Date of
Receipt of the request for change. 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.
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) JP LifeAmerica deducts 2.0% of each premium payment received to compensate
JP LifeAmerica 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 JP LifeAmerica 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 JP LifeAmerica. JP LifeAmerica reserves the right to increase
this charge to Policyowners up to a maximum of 2.50%. JP LifeAmerica 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 one or more 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 JP LifeAmerica 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) for policy years one through ten and .0017808%
on a daily basis (.65% on an annual basis) for policy years eleven and
thereafter will be imposed on the assets of each division. JP LifeAmerica 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, JP LifeAmerica 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
8
<PAGE>
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) JP LifeAmerica 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. JP LifeAmerica 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) JP LifeAmerica reserves the right to charge the assets of each division of
Separate Account B to provide for any income taxes payable by JP LifeAmerica 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%.
JP LifeAmerica will charge interest on any outstanding policy loan with such
interest compounded annually. There are two types of loans available. A Type A
loan is charged the same interest rate as the interest credited to the amount
of accumulation value 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.
JP LifeAmerica will cancel the Policy if it is returned by mail or personal
delivery to JP LifeAmerica 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. JP LifeAmerica 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 JP LifeAmerica's General Account; JP LifeAmerica
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 JP LifeAmerica 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
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<PAGE>
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
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 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
POLICY--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. JP LifeAmerica will offer the Policy only in New
York. The Policy will be sold by agents who represent JP LifeAmerica and are
registered representatives of 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. JP LifeAmerica believes it is
presently in compliance with the regulations and intends to remain in
compliance with such regulations and other federal tax law requirements.
JP LifeAmerica may charge each division in Separate Account B for its portion
of any income tax charged to JP LifeAmerica 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
benefits 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
distributions, including loans, surrenders and partial withdrawals, may be
treated as income taxable to the policyowner and may also cause the policyowner
to incur a penalty tax of 10%. Policyowners are advised to consult with their
own tax advisers with regard to the tax consequences of the Policy. See
"FEDERAL TAX MATTERS".
10
<PAGE>
JEFFERSON PILOT LIFEAMERICA INSURANCE COMPANY
JP LifeAmerica 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 May 1, 1998 JP LifeAmerica was known as "Chubb Colonial Life
Insurance Company". 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. Jefferson Pilot Financial Insurance Company, ("JP
Financial") a New Hampshire life insurance company which, effective April 30,
1997, is a wholly-owned subsidiary of Jefferson-Pilot Corporation, a North
Carolina Corporation. The principal offices of Jefferson-Pilot Corporation are
located at 100 North Greene Street, Greensboro, North Carolina 27401. Its
telephone number is 910-691-3000. JP Financial's home office and JP
LifeAmerica's service center are located at One Granite Place, Concord, New
Hampshire 03301, telephone number (800) 258-3648. JP LifeAmerica's home office
is located at Eight Sylvan Way, Parsippany, New Jersey 17054, telephone number
(201) 455-1400. JP LifeAmerica's total assets at December 31, 1996 were
$602,728,000.
JP LifeAmerica writes life insurance and annuities. It is subject to New
Jersey law governing insurance, and is regulated and supervised by the New
Jersey Insurance Commissioner. JP LifeAmerica is also subject to the insurance
laws of New York. JP LifeAmerica is currently rated AAA by Duff & Phelps, AA
(Excellent) by Standard & Poors's Corporation and A+ by A.M. Best and Company.
These ratings merely reflect the opinion of the rating company as to the
relative financial strength of JP LifeAmerica and JP LifeAmerica's ability to
meet its contractual obligations to its policyowners. Even though assets in
Separate Account B are held separately from JP LifeAmerica's other assets,
ratings of JP LifeAmerica may still be relevant to policyowners since not all
of JP LifeAmerica's contractual obligations relate to payments based on those
segregated assets.
JPF SEPARATE ACCOUNT B
Separate Account B is a separate account of JP LifeAmerica 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 JP LifeAmerica by the Commission. JP
LifeAmerica 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 JP LifeAmerica may conduct.
JP LifeAmerica holds the assets of Separate Account B. These assets are kept
physically segregated and held separate and apart from the General Account. JP
LifeAmerica maintains records of all purchases and redemptions of Funds shares
by each of the divisions.
Divisions. Separate Account B presently has nineteen 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 Jefferson Pilot Variable Fund,
Inc. (Global Hard Assets Portfolio is not available), the Templeton
International Fund of Templeton Variable Products Series Fund, the Equity
Income Portfolio and the Growth Portfolio of the Fidelity Variable Insurance
Products Fund, the Contrafund Portfolio of the Fidelity Variable Insurance
Products Fund II, the Index 500 Portfolio of the Fidelity Variable Insurance
Products Fund II, the Research Portfolio of the MFS Variable Insurance Trust,
the Utilities Portfolio of the MFS Variable Insurance Trust, the Strategic
Income Portfolio of the Oppenheimer Variable Account Funds, or the Bond
Portfolio of the Oppenheimer Variable Account Funds.
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<PAGE>
Jefferson Pilot Variable Fund, Inc., (formerly The Chubb America Fund, Inc.)
Jefferson Pilot Variable Fund, Inc. is organized as a Maryland corporation and
is registered as an open-end diversified management company under the 1940
Act. The Jefferson Pilot Variable Fund, Inc. currently has eleven Portfolios,
each of which has different objectives and ten of which are offered to a
corresponding division of Separate Account B (Global Hard Assets Portfolio is
not available). The shares of each series of Jefferson Pilot Variable Fund,
Inc. stock are presently offered only to the divisions of separate accounts of
JP LifeAmerica 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 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 manager to Jefferson Pilot Variable Funds, Inc., is Jefferson
Pilot Investment Advisory Corporation ("JP Investment Advisory") which is an
affiliate of JP LifeAmerica. JP Investment Advisory and the Fund have
contracted with ten unaffiliated companies, Templeton Global Advisors, Inc.
("Templeton"), Lombard Odier International Portfolio Management Limited
("Lombard Odier"), Van Eck Associates Corporation ("Van Eck Associates"),
Pioneering Management Corporation ("Pioneer"), Janus Capital Corporation
("Janus"), J.P. Morgan Investment Management, Inc. ("Morgan"), Massachusetts
Financial Services Company ("MFS"), Strong Capital Management, Inc.
("Strong"), and Warburg Pincus Asset Management, Inc., formerly Warburg Pincus
Counsellors, Inc. ("Warburg") (collectively the "Sub-Investment Managers") to
act as sub-investment managers or advisers to the World Growth Stock,
International Equity, Global Hard Assets (not yet available), Domestic Growth
Stock, Capital Growth, Balanced, High Yield Bond, Emerging Growth and Money
Market, Growth, and Growth and Income Portfolios, respectively. The fees of
the Sub-Investment Managers are paid directly by the Investment Manager.
Investment management fees are paid to JP Investment Advisory monthly at an
annual rate based on a percentage of the average daily net assets of each
Portfolio of Jefferson Pilot Variable Fund, Inc. as shown below:
<TABLE>
<CAPTION>
WORLD GROWTH STOCK,
DOMESTIC GROWTH STOCK, HIGH YIELD
GROWTH AND INCOME, CAPITAL EMERGING BOND AND INTERNATIONAL
AVERAGE DAILY NET ASSETS MONEY MARKET AND BALANCED GROWTH GROWTH GROWTH EQUITY
- ------------------------ ------------ ---------------------- ------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
First $200 Million...... .50% .75% 1.00% .80% .75% 1.00%
Next $1.1 Billion....... .45% .70% .95% .75% .75% 1.00%
Over $1.3 Billion....... .40% .65% .90% .70% .75% 1.00%
</TABLE>
The compensation of the Sub-Investment Managers is paid directly from the
investment management fees of JP 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
-----------------------------------------------
AVERAGE DAILY NET ASSETS JANUS TEMPLETON VAN ECK PIONEER
- ------------------------ ------- --------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
First $200 Million...... .75% .50% .50% .50%
Next $1.1 Billion....... .70% .45% .45% .45%
Over $1.3 Billion....... .65% .40% .40% .40%
<CAPTION>
MFS MFS MFS
NET ASSETS WARBURG EMERGING GROWTH MONEY MARKET HIGH YIELD MORGAN
---------- ------- --------------- ------------ ---------- ------
<S> <C> <C> <C> <C> <C>
First $100 Million...... .50% .40% .30% .40% .45%
Next $100 Million....... .50% .40% .30% .40% .40%
Next $200 Million....... .50% .40% .25% .40% .35%
Over $400 Million....... .50% .40% .25% .40% .30%
<CAPTION>
NET ASSETS STRONG LOMBARD ODIER
---------- ------- ---------------
<S> <C> <C> <C> <C> <C>
First $25 Million....... .60% .50%
Next $75 Million........ .50% .50%
Next $50 Million........ .40% .50%
Over $150 Million....... .30% .50%
</TABLE>
12
<PAGE>
The investment objectives of each Portfolio of Jefferson Pilot Variable Fund,
Inc. which offer their shares to a corresponding division of Separate Account
B are set forth below.
World Growth Stock Portfolio: to achieve long-term capital growth through a
policy of investing primarily in stocks of companies organized in the United
States or in any foreign nation. A portion of the Portfolio may also be
invested in debt obligations of companies and governments of any nation. Such
companies will be those considered by the sub-investment manager to be
undervalued or which are well-managed and have good growth potential. Any
income realized from such investments will be incidental.
International Equity Portfolio: to achieve long-term capital appreciation by
investing substantially all of its total assets in equity and equity-related
securities of companies from countries outside of the United States.
Money Market Portfolio: to achieve the highest possible level of current
income, consistent with preservation of capital and maintenance of liquidity,
by investing primarily in short-term money market instruments. An investment
in the Money Market Portfolio is neither insured nor guaranteed by the U.S.
Government.
Global Hard Assets Portfolio: seeks long-term capital appreciation by
investing globally, primarily in "Hard Asset Securities." Income is a
secondary consideration.
High Yield Bond Portfolio: to achieve a high level of current income by
investing primarily in corporate obligations with emphasis on higher-yielding,
higher risk, lower-rated or unrated securities.
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.
Growth Portfolio: to achieve capital growth by investing primarily in equity
securities believed by the Portfolio's sub-adviser to have above-average
growth prospects.
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.
Jefferson Pilot Variable 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. Jefferson Pilot Variable 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 JP LifeAmerica, 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, on an annual basis,
represents .75% of the average daily net assets of the Fund up to $200
million, .675% of such assets from $200 million up to $1.3 billion, and .60%
of such assets in excess of $1.3 billion of the average daily net assets of
the Templeton International Fund.
13
<PAGE>
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 JP LifeAmerica 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 two of
the series, Equity Income Portfolio and Growth Portfolio, offer their 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 JP LifeAmerica, 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, Growth Portfolio and Equity
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.
The investment objectives of each Portfolio of Fidelity VIP and Fidelity
VIPII in which Separate Account B invests are set forth below:
Equity Income Portfolio: seeks reasonable income by investing primarily in
income-producing equity securities.
Growth Portfolio: seeks capital appreciation by investing primarily in common
stocks.
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 JP LifeAmerica 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,
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(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.
MFS Variable Insurance Trust (the "MFS Trust") is an open-end management
investment company organized as a business trust under the laws of The
Commonwealth of Massachusetts by a Declaration of Trust dated February 1,
1994. The Trust offers insurance company separate accounts a selection of
investment vehicles for variable annuity and variable life insurance
contracts. Currently the Trust offers shares of beneficial interest of twelve
separate mutual fund series, two of which, MFS Research Series and MFS
Utilities Series, offer their shares to a corresponding division of Separate
Account B.
The Trust's Board of Trustees, as part of its overall management
responsibility, oversees various organizations responsible for each Series'
day-to-day management. Massachusetts Financial Services company ("MFS" or the
"Adviser"), a Delaware corporation, is the investment adviser to each Series.
For its services and facilities, MFS receives a management fee computed and
paid monthly, in an amount equal to the following annual rates of the average
daily net assets of each Series:
<TABLE>
<CAPTION>
PERCENTAGE OF THE AVERAGE
DAILY NET ASSETS
SERIES OF EACH SERIES
------ -------------------------
<S> <C>
Research Series............................... 0.75%
Utilities Series.............................. 0.75%
</TABLE>
MFS or its affiliates will pay a fee to JP LifeAmerica equal, on an
annualized basis, to 0.15% of the aggregate net assets of each Series,
attributable to Contracts offered by separate accounts of JP LifeAmerica or
its affiliates. Such fees will not be paid by the Series, its shareholders or
by the Contract holders.
The investment objectives of each Series of the Trust are set forth below:
Research Series: seeks to provide long-term growth of capital and future
income by investing a substantial proportion of its assets in equity
securities of companies believed to possess better than average prospects for
long-term growth.
Utilities Series: seeks capital growth and current income (incomes above that
available from a portfolio invested entirely in equity securities) by
investing, under normal circumstances, at least 65% (but up to 100% at the
discretion of the Adviser) of its assets in equity and debt securities of both
domestic and foreign companies in the utilities industry.
Oppenheimer Variable Account Funds (the "Oppenheimer Trust") is an open-end
diversified management investment company organized in 1984 as a Massachusetts
business trust. The Oppenheimer Trust consists of nine separate funds, two of
which, the Bond Fund and the Strategic Bond Fund, offer their shares to a
corresponding division of Separate Account B.
The Oppenheimer Variable Account Funds are managed by OppenheimerFunds, Inc.,
which is responsible for selecting the Funds' investments and handling its
day-to-day business.
The monthly management fee payable to the Manager is computed separately on
the net assets of each Fund as of the close of business each day. The
management fee rates for the Bond Fund and the Strategic Bond Fund are as
follows: 0.75% of the first $200 million of average annual net assets, 0.72%
of the next $200 million, 0.69% of the next $200 million, 0.66% of the next
$200 million, 0.60% of the next $200 million and 0.50% of average annual net
assets over $1 billion.
Oppenheimer or its affiliates will pay a fee to JP LifeAmerica equal, on an
annualized basis, to 0.10% of the aggregate net assets of the Bond Fund and
0.15% for the Strategic Bond Fund attributable to contracts offered by JP
LifeAmerica or its affiliates. Such fees will not be payable by the Funds,
their shareholders or by the Contract holders.
The investment objectives of each Portfolio of the Oppenheimer Variable
Account Funds in which Separate Account B invests are set forth below:
Bond Fund: primarily seeks a high level of current income from investment in
high yield fixed-income securities rated "Baa" or better by Moody's or "BBB"
or better by Standard & Poor's. Secondarily, this Fund seeks capital growth
when consistent with its primary objective.
15
<PAGE>
Strategic Bond Fund: seeks a high level of current income principally derived
from interest on debt securities and seeks to enhance such income by writing
covered call options on debt securities.
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.
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THE POLICY
General. The Policy is designed to provide the policyowner with lifetime
insurance protection and flexibility in connection with the amount and
frequency of premium payments and the level of life insurance proceeds payable
under the Policy. 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 Policy allows a policyowner to adjust the level of life
insurance payable under the Policy without having to purchase a new Policy by
increasing or decreasing the Specified Amount. Thus, as insurance needs or
financial conditions change, the policyowner has the flexibility to adjust
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 JP
LifeAmerica through the agent selling the Policy. JP LifeAmerica 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. JP LifeAmerica
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 JP LifeAmerica
or its affiliates exceeds $1,250,000, JP LifeAmerica will reinsure all or a
portion of the Policy. Acceptance of an application or revocation of a Policy
during the contestable period is subject to JP LifeAmerica's insurance
underwriting rules and JP LifeAmerica may, in its sole discretion, reject any
application or related premium for any good reason or contest a Policy.
Payment of Premiums. Premiums must be paid to JP LifeAmerica or through an
authorized agent of JP LifeAmerica for forwarding to JP LifeAmerica. In
addition, JP LifeAmerica has instituted administrative procedures whereby
premium payments in response to billing notices are sent directly to JP
LifeAmerica's bank. Unlike traditional insurance contracts, there is no fixed
schedule of premium payments on a Policy either as to the amount or the timing
of the payment. A policyowner may determine, within specified limits, his or
her own premium payment schedule. These limits will be set forth by JP
LifeAmerica 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
required by the Code. The premium limitations under the Policy are imposed in
order 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 limitation, JP LifeAmerica 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,
JP LifeAmerica 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, JP LifeAmerica 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
Allocation Date among the General Account and the divisions of Separate
Account B in accordance with the directions of the policyowner, as contained
in the application. Prior to the Allocation Date the initial net premium will
be deposited in JP LifeAmerica'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
17
<PAGE>
will be accepted. The policyowner may change his or her allocation of future
premium payments among the General Account and the divisions of Separate
Account B by written notice to JP LifeAmerica or by telephone, provided that
the proper telephone authorization is on file with JP LifeAmerica, 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 JP LifeAmerica 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) for policy years one through ten and .0017808% on a daily basis (.65%
on an annual basis) for policy years eleven and thereafter of the value of the
division to compensate JP LifeAmerica 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 JP
LifeAmerica'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 JP LifeAmerica. 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, JP LifeAmerica 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
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<PAGE>
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 subsequently elects to increase the Specified
Amount, elects to surrender the Policy, or elects to make a withdrawal. The
minimum period will increase if the policyowner elects to decrease the
Specified Amount, additional premium payments are received, or JP LifeAmerica
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.
JP LifeAmerica 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 JP
LifeAmerica 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 JP LifeAmerica'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, JP LifeAmerica
reserves the right to include such remaining accumulation value in the amount
transferred.
Dollar Cost Averaging will continue until the policyowner gives notification
of cancellation of the feature. Any amounts deposited into the Repository
Account will be transferred. Dollar Cost Averaging is currently available at
no charge to policyowners. Although JP LifeAmerica reserves the right to
assess a charge, no greater than cost and with 30 days advance notice to
policyowners, it has no present intention to do so.
An Automatic Portfolio ReBalancing feature is also available to policyowners.
This feature provides a method for re-establishing fixed proportions between
various types of investments on a systematic basis. Under this feature, the
allocation between divisions and the General Account will be automatically
readjusted to the desired allocation, subject to a minimum of 5% per division
or General Account, on a quarterly, semi-annual or annual basis. Although JP
LifeAmerica 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 ReBalancing 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 JP LifeAmerica 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. JP LifeAmerica
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 form is on file with JP
LifeAmerica. JP LifeAmerica may also, in its discretion, permit loans to be
made by telephone, provided that the proper authorization form is on file with
JP LifeAmerica. Only the Policyowner may request loans by telephone.
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<PAGE>
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, JP LifeAmerica also
tape records calls and provides written confirmations to policyowners.
Notwithstanding these procedures, there still exists some risk. Neither JP
LifeAmerica, Jefferson Pilot Variable Corporation, nor any of their affiliates
are liable for any loss resulting from unauthorized telephone transfers, loan
requests or premium allocation changes of its procedures have been followed,
and a policyowner bears the risk of loss in such situation.
Policy Lapse. Failure to make a premium payment on a Policy will not
necessarily cause the Policy to lapse. The duration of a Policy depends upon
its cash value. The Policy will remain in force so long as the cash value,
less any outstanding policy debt, is sufficient to 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 JP LifeAmerica 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
JP LifeAmerica, 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, JP LifeAmerica 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. JP LifeAmerica will
cancel the Policy if it is returned by mail or personal delivery to JP
LifeAmerica 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.
JP LifeAmerica 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 JP LifeAmerica's General Account; JP LifeAmerica 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,
JP LifeAmerica will deduct a premium tax charge of 2.0% to compensate JP
LifeAmerica for state premium, franchise and other local taxes imposed by New
York and local jurisdictions. The actual taxes imposed on JP LifeAmerica 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 JP
LifeAmerica. JP LifeAmerica reserves the right to increase this charge to
policyowners up to a maximum of 2.5%. JP LifeAmerica 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, JP LifeAmerica 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 JP
LifeAmerica for underwriting and start-up expenses incurred in
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<PAGE>
connection with the issuance of a Policy, certain administrative expenses, the
cost of insurance for the Policy and any optional benefits added by rider. At
the option of the policyowner the amount deducted can be deducted from any one
of the divisions of Separate Account B or pro-rata from each of the divisions
and the General Account. If the policyowner does not designate one division,
then the monthly deduction will be deducted pro-rata from each of the
divisions and the General Account.
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.
The monthly cost of the insurance rate will be determined by JP LifeAmerica
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.
Risk Charge. JP LifeAmerica will also assess a charge on a daily basis
against each division of Separate Account B equal to .0024657% on a daily
basis (.90% on an annual basis) for policy years one through ten and .0017808%
on a daily basis (.65% on an annual basis) for policy years eleven and
thereafter of the value of the division to compensate JP LifeAmerica for its
assumption of certain mortality and expense risks in connection with the
Policy. Specifically, JP LifeAmerica bears the risk that the total amount of
death benefit payable under the Policy will be greater than anticipated and JP
LifeAmerica 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, JP LifeAmerica 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:
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<PAGE>
<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 JP LifeAmerica for the cost of
selling the Policy. The cost includes advertising and the printing of the
Prospectus and sales literature. Also, JP LifeAmerica reimburses Jefferson
Pilot Variable Corporation for all commissions Jefferson Pilot Variable
Corporation pays to agents. JP LifeAmerica expects to recover total sales
expenses of the Policy over the life of the Policy. To the extent sales
expenses in any one policy year are not recovered by the sales charge, JP
LifeAmerica 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
22
<PAGE>
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 JP LifeAmerica 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. JP LifeAmerica also reserves the right to charge the assets of
each division to provide for any income taxes or other taxes payable by JP
LifeAmerica 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 JP
LifeAmerica 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>
23
<PAGE>
The death benefit option in effect may be changed by sending JP LifeAmerica 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 JP
LifeAmerica'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 JP LifeAmerica's underwriting approval of such
request for change. Evidence of insurability satisfactory to JP LifeAmerica
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.
The policyowner, under attained age 85, may adjust the existing insurance
coverage by increasing the Specified Amount at any time after the Policy has
been issued. After a Policy has been in force for one year, the policyowner,
under attained age 85, may adjust the existing insurance coverage by
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 JP LifeAmerica. 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 JP
LifeAmerica 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, JP
LifeAmerica will pay the Policy's cash value, less outstanding policy debt, if
any, on the maturity date. Benefits at maturity may be paid in a lump sum or
under an optional payment plan. The maturity date is the date shown in the
Policy. To change the maturity date, a written request and the Policy must be
sent to JP LifeAmerica 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
24
<PAGE>
benefits to the Policy. The agent selling the Policy should be consulted
regarding the availability of any such additional riders. The cost of any
optional insurance benefits will be deducted as part of the monthly deduction.
See "CHARGES AND DEDUCTIONS."
(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, JP LifeAmerica 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, JP LifeAmerica imposes an administrative
expense charge not to exceed the lesser of the actual cost of administering
the exercise of the rider or $300. JP LifeAmerica 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. 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 JP LifeAmerica 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.
Settlement Options. In addition to a lump sum payment of benefits under the
Policy, any proceeds to be paid under the Policy may be paid in any of four
methods. A settlement option may be designated by notifying JP LifeAmerica in
writing. A lump sum payment of proceeds under the Policy will be made if a
settlement option is not designated. Any amount left with JP LifeAmerica for
payment under an optional payment plan will be transferred to the account of
the beneficiary in the General Account on the date JP LifeAmerica 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.
25
<PAGE>
An option may be elected only if the amount of the proceeds is $2,000 or more.
JP LifeAmerica 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 JP LifeAmerica
calculated at the compound rate of 3% per year. Interest payments will be made
at 12, 6, 3 or 1 month intervals, as agreed upon.
The interest rate for Options A, B, and D will not be less than 3% per year.
The interest rate for Option C will not be less than 2 1/2% per year. Interest
in addition to that stated may be paid or credited from time to time under any
option, but only in the sole discretion of JP LifeAmerica.
Unless otherwise stated in the election of an option, the payee of policy
benefits shall have the right to receive the withdrawal value under that
option. For Options A and D, the withdrawal value shall be any unpaid balance
of proceeds plus accrued interest. For Option B, the withdrawal value shall be
the commuted value of the remaining payments. Such value will be calculated on
the same basis as the original payments. For Option C, the withdrawal value
will be the commuted value of the remaining payments. Such value will be
calculated on the same basis as the original payments. To receive this value,
the payee must submit evidence of insurability acceptable to JP LifeAmerica.
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,
(ii) is any net premium received during the current valuation period which
is allocated to the division,
26
<PAGE>
(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 division thereof.
Unit Values. Units are credited to a policyowner upon allocation of net
premiums to a division. Each net premium payment allocated to a division will
increase the number of units in that division. Both full and fractional units
are credited. The number of units and fractional units is determined by
dividing the net premium payment by the unit value of the division to which
the payment has been allocated. The unit value of each division is determined
on each valuation date. The number of units credited will not change because
of subsequent changes in unit value. The dollar value of each division's units
will vary depending upon the investment performance of the corresponding
Portfolio of the 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 JP LifeAmerica 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 for policy
years one through ten and .0017808% on a daily basis for policy years
eleven and thereafter. This corresponds to .90% on an annual basis for
policy years one through ten and .65% on an annual basis for policy years
eleven and thereafter for mortality and expense risks.
CASH VALUE BENEFITS
So long as it remains in force, the Policy provides for certain benefits
prior to the maturity date. Subject to certain limitations, the policyowner
may at any time obtain cash value by surrendering the Policy or making
withdrawals from the Policy. The cash value equals the accumulation value less
any surrender charge. In addition, the policyowner has certain policy loan
privileges under the Policy.
Surrender Privileges. As long as the Policy is in force, a policyowner may
surrender the Policy or make a withdrawal from the Policy at any time by
sending a written request to JP LifeAmerica. See "FEDERAL TAX MATTERS--Policy
Proceeds."
27
<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. Proceeds will generally be paid within seven days of the Date of
Receipt of a request 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 Policy. 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
accumulation value will be reduced by the amount of the withdrawal plus a pro-
rata surrender 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, JP LifeAmerica 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
divisions 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 withdrawal. See "FEDERAL TAX MATTERS--Policy Proceeds."
Policy Loans. So long as the Policy remains in force, a policyowner may
borrow money from JP LifeAmerica 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 JP LifeAmerica, although
payments may be postponed under certain circumstances. See "OTHER MATTERS--
Postponement of Payments". JP LifeAmerica may, in its discretion, permit loans
to be made by telephone if the proper authorization form is on file with JP
LifeAmerica. 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.
28
<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.
JP LifeAmerica 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, JP LifeAmerica
will notify the policyowner and any assignee of record. A payment at least
equal to the amount of excess policy debt above the cash value must be made to
JP LifeAmerica 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, JP LifeAmerica 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, JP LifeAmerica
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
shareholders eligible to vote at the meeting
29
<PAGE>
of the Funds. Voting instructions will be solicited by written communications
prior to such meeting in accordance with procedures established by the Funds.
JP LifeAmerica 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 JP LifeAmerica, including shares for which no voting instructions have been
received, shares held in Separate Account B representing charges imposed by JP
LifeAmerica against Separate Account B under the Policies and shares held by
JP LifeAmerica that are not otherwise attributable to Policies, will also be
voted by JP LifeAmerica in proportion to instructions received from the owners
of variable life insurance policies funded through Separate Account B. JP
LifeAmerica reserves the right to vote any or all such shares at its
discretion to the extent consistent with then current interpretations of the
1940 Act and rules thereunder.
JP LifeAmerica 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,
JP LifeAmerica may disregard voting instructions in favor of changes initiated
by a policyowner in the investment policy or the investment adviser of the
Funds if JP LifeAmerica reasonably disapproves of such changes. A change would
be disapproved only if the proposed change is contrary to state law or
prohibited by state regulatory authorities or JP LifeAmerica 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 JP LifeAmerica or
any affiliate of JP LifeAmerica which have similar investment objectives. In
the event that JP LifeAmerica does disregard voting instructions, a summary of
that action and the reason for such actions will be included in the next semi-
annual report to the policyowner.
Additions, Deletions or Substitutions of Investments. JP LifeAmerica 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 JP LifeAmerica's
management, further investment in shares of the Funds should become
inappropriate in view of the purposes of the Policy, JP LifeAmerica 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 JP LifeAmerica, 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. JP LifeAmerica 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. JP LifeAmerica 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 JP
LifeAmerica 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 JP LifeAmerica 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 JP LifeAmerica. 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. JP LifeAmerica
must be notified in writing if the Policy has been assigned. Each assignment
will be subject to any payments made or action taken by JP LifeAmerica prior
to its notification of such assignment. JP LifeAmerica 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. See "Federal Tax Matters."
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 JP LifeAmerica
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 JP LifeAmerica. No dividends are payable with respect to the
Policy.
Year 2000 Matter. Certain computer programs have been written using two
digits rather than four to define the applicable year. As a result, any of
Jefferson-Pilot Corporation's computer programs that have time-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000 (the "Year 2000 Matter"). This could result in a system failure which may
disrupt operations, including an inability to accurately process or calculate
new or in-force business.
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<PAGE>
Jefferson-Pilot Corporation (the Company's parent company) has completed an
assessment and has determined that it will have to modify or replace portions
of the software and hardware utilized by Jefferson-Pilot Corporation
affiliates, including the Company, so that the computer systems will function
properly with respect to dates in the year 2000 and thereafter.
Jefferson-Pilot Corporation will utilize both internal and external resources
to reprogram, replace, convert and test software and hardware for any
necessary Year 2000 modifications. The project is estimated to be completed
not later than the third quarter of 1999. Jefferson-Pilot Corporation believes
that with modifications to its existing software and hardware and conversions
to new software, the Year 2000 Matter will not pose significant operational
problems for its computer systems. However, if such modifications and
conversions are not made, or are not completed on a timely basis, the Year
2000 Matter could have a material impact on operations of the Company.
Jefferson-Pilot Corporation has initiated formal communications with all of
its significant suppliers to determine the extent to which the Company's
systems, policies, procedures and contracts are vulnerable to those third
parties' failure to remediate their own Year 2000 issues. There is no
guarantee that the systems of other companies on which the Company relies will
be in compliance on a timely basis; nor is there any guarantee that non-
compliance would not have an adverse affect on the Company's systems and
business.
The costs of the project and the date on which the Jefferson-Pilot
Corporation believes it will be compliant are based on management's best
estimates, which were derived utilizing various assumptions of future events,
including the continued availability of certain resources and other factors.
However, there can be no guarantee that these estimates will be achieved.
Jefferson-Pilot Corporation has not yet allocated the costs of compliance
among its subsidiaries, including the Company. To the best of Jefferson-Pilot
Corporation and the Company's knowledge, it is currently anticipated that any
future allocation is unlikely to have a material financial impact on the
Company.
THE GENERAL ACCOUNT
POLICYOWNERS MAY ALLOCATE NET PREMIUMS AND TRANSFER ACCUMULATION VALUE TO THE
GENERAL ACCOUNT. BECAUSE OF EXEMPTIVE AND EXCLUSIONARY PROVISIONS, INTERESTS
IN THE GENERAL ACCOUNT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 AND THE GENERAL ACCOUNT HAS NOT BEEN REGISTERED AS AN INVESTMENT COMPANY
UNDER THE 1940 ACT. ACCORDINGLY, NEITHER THE GENERAL ACCOUNT NOR ANY INTERESTS
THEREIN ARE SUBJECT TO THE PROVISIONS OF THESE ACTS, AND JP LIFEAMERICA HAS
BEEN ADVISED THAT THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
REVIEWED THE DISCLOSURES IN THIS PROSPECTUS RELATING TO THE GENERAL ACCOUNT.
DISCLOSURES REGARDING THE GENERAL ACCOUNT MAY, HOWEVER, BE SUBJECT TO CERTAIN
GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS RELATING TO THE
ACCURACY AND COMPLETENESS OF STATEMENTS MADE IN PROSPECTUSES.
General Description. The General Account consists of all assets owned by JP
LifeAmerica other than those in Separate Account B and other separate accounts
which may be established by JP LifeAmerica. Subject to applicable law, JP
LifeAmerica 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, JP LifeAmerica 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. JP LifeAmerica is not obligated to credit interest at any
higher rate, although JP LifeAmerica may, in its sole discretion, do so.
If the Date of Receipt of the initial premium is prior to the date JP
LifeAmerica 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 JP LifeAmerica issues the Policy or the
applicant refuses JP LifeAmerica'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 JP LifeAmerica
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;
JP LifeAmerica will retain any interest earned. See "The Policy--Policy "Free
Look" ".
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<PAGE>
The Policy. This Prospectus describes a flexible premium variable life
insurance 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
Account 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
either death benefit Option I or II under the Policy and may change the
Policy's Specified Amount subject to satisfactory evidence of insurability, if
required.
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
payments deposited in the General Account, plus interest earned, will be
allocated among the divisions of Separate Account B and the General Account as
instructed 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
premium payments, plus interest earned, which have been paid and allocated to
the General Account, less the portion of the first monthly deduction allocated
to the General Account.
JP LifeAmerica 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. JP LifeAmerica 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 JP LIFEAMERICA. 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 General Account that equals indebtedness will
be credited interest daily at annual rate of 6%. The accumulation value in the
General Account will be calculated on each monthly anniversary date of the
Policy, or on any other date with consistent adjustments.
JP LifeAmerica guarantees that, at any time prior to the maturity date, the
accumulation value in the General Account will not be less than the amount of
the net premiums allocated or accumulation value transferred to the General
Account, plus interest at the rate of 4 1/2% per year, plus any excess
interest which JP LifeAmerica 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, JP LifeAmerica
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 JP LifeAmerica, are also registered representatives
of broker-dealers who have entered into written sales agreement with the
principal underwriter, Jefferson Pilot Variable Corporation. Any such broker-
dealers will be registered under the Securities Exchange Act of 1934 and their
representatives selling the Policies will be authorized under applicable
insurance laws and regulations to sell insurance products of this type.
Commissions are payable under various schedules and accordingly will vary from
the form of commissions schedule selected. In any event, commissions to
registered representatives are not expected to exceed 90% of first year target
premium and 4% of first year excess premium, and 4% of target premium for both
renewals and excess premium in the second through fifteenth policy years.
Compensation arrangements vary among broker-dealers. Alternative commission
schedules will reflect differences in up-front commissions versus ongoing
asset-based compensation. In addition, override payments, expense allowances
and bonuses based on specific production levels may be paid. No separate
deductions from premiums are made to pay sales commissions or sales expenses.
33
<PAGE>
The Distribution Agreement with Jefferson Pilot Variable Corporation took
effect on January 1, 1998 and continues until terminated by either party on 60
days notice. Jefferson Pilot Variable Corporation is not obligated to sell any
specified amount of Policies and may not assign its responsibilities under the
Distribution Agreement. JP LifeAmerica will reimburse Jefferson Pilot Variable
Corporation for its expenses under the Distribution Agreement.
Jefferson Pilot Variable Corporation is engaged in the sale and distribution
of various other securities, including other flexible premium variable life
policies. It acts as principal underwriter for other flexible premium variable
life policies and variable annuity contracts issued by JP LifeAmerica (and its
affiliated companies), and for the Jefferson Pilot Variable Fund, Inc.
(formerly the Chubb America Fund, Inc.).
The Policies may also be sold through other broker-dealers that enter into
agreements with Jefferson Pilot Securities Corporation for this purpose. Any
such broker-dealers will be registered under the Securities Exchange Act of
1934 and their representatives selling the Policies will be authorized under
applicable insurance laws and regulations to sell insurance products of this
type. It is not expected that the compensation paid by JP LifeAmerica in
connection with such sales will exceed that described above for sales by
Jefferson Pilot Securities Corporation's registered representatives.
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<PAGE>
MANAGEMENT OF JEFFERSON PILOT LIFEAMERICA
Executive Officers and Directors of JP LifeAmerica
DIRECTORS
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND
NAME BUSINESS ADDRESS
- ---- ------------------------
<S> <C>
*Ronald R. Angarella.... Senior Vice President
Jefferson Pilot Financial Insurance Company
(also serves as Senior Vice President of
Jefferson Pilot LifeAmerica Insurance Company)
One Granite Place
Concord, NH 03301
*Charles C. Cornelio.... Executive Vice President, Chief Administrative Officer, Assistant Secretary
Jefferson Pilot Financial Insurance Company
(also serves as Executive Vice President, Chief Administrative Officer
and Assistant Secretary of Jefferson Pilot LifeAmerica Insurance Company)
One Granite Place
Concord, NH 03301
*Dennis R. Glass........ Executive Vice President
Insurance Company
(also serves as Chairman of Jefferson Pilot LifeAmerica Insurance Company)
One Granite Place
Concord, NH 03301
*Kenneth C. Mlekush..... Executive Vice President
Jefferson Pilot Financial Insurance Company
(also serves as Executive Vice President of
Jefferson Pilot LifeAmerica Insurance Company)
One Granite Place
Concord, NH 03301
*David A. Stonecipher... President and Chairman
Jefferson Pilot Financial Insurance Company
(also serves as President and Chairman of
Jefferson Pilot LifeAmerica Insurance Company)
One Granite Place
Concord, NH 03301
*E. Jay Yelton.......... Executive Vice President
Jefferson Pilot Financial Insurance Company
(also serves as Executive Vice President of
Jefferson Pilot LifeAmerica Insurance Company)
One Granite Place
Concord, NH 03301
</TABLE>
- -------
* Executive Officer of Jefferson Pilot LifeAmerica
35
<PAGE>
EXECUTIVE OFFICERS (OTHER THAN DIRECTORS)
<TABLE>
<CAPTION>
NAME POSITION
- ---- --------
<S> <C>
Reggie D. Adamson..................... Senior Vice President
John C. Ingram........................ Senior Vice President
Hal B. Phillips, Jr................... Senior Vice President, Chief Life Actuary
Warren L. Reynolds.................... Senior Vice President
Paul J. Strong........................ Senior Vice President
John W. Wells......................... Senior Vice President
James R. Abernathy.................... Vice President
Thomas M. Bodrogi..................... Vice President
Margaret O. Cain...................... Vice President
Rebecca M. Clark...................... Vice President
Kenneth S. Dwyer...................... Vice President
Ronald H. Emery....................... Vice President
Donald M. Kane........................ Vice President
Patrick A. Lang....................... Vice President
Shari J. Lease........................ Vice President
Donna L. Metcalf...................... Vice President
Thomas E. Murphy, Jr., MD............. Vice President, Medical Director
Robert A. Reed........................ Vice President
Kenneth L. Robinson, Jr............... Vice President
James M. Sandelli..................... Vice President
Russell C. Simpson.................... Vice President and Treasurer
William A. Spencer.................... Vice President
John A. Thomas........................ Vice President
</TABLE>
STATE REGULATION OF JEFFERSON PILOT LIFEAMERICA
Jefferson Pilot LifeAmerica 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 JP LifeAmerica as of
December 31 of the preceding year. Periodically, the Commissioner examines the
assets and liabilities of JP LifeAmerica and Separate Account B and verifies
their adequacy and a full examination of JP LifeAmerica's operations is
conducted by the Commissioner at least every five years.
In addition, JP LifeAmerica is subject to the insurance laws and regulations
of other states within which it is licensed to operate. Generally, the
insurance department of any other state applies the laws of the state of
domicile in determining permissible investments.
FEDERAL TAX MATTERS
Tax Considerations. The following description is a brief summary of some of
the tax rules, primarily related to federal income taxes under the Code,
which, in the opinion of JP LifeAmerica, 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.
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<PAGE>
The federal income tax treatment of a distribution from the Policy will
depend on whether a Policy is a life insurance policy and also if it is
determined to be a "modified endowment contract," as defined by the Code. JP
LifeAmerica 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 prospective adjustment formula, the Policy Account Value of
the policy at the time of such change. A materially changed policy would be
considered a modified endowment if it failed to satisfy the new seven-pay
limit. A material change could occur as a result of a change in death benefit
option, the selection of additional benefits, the restoration of a terminated
policy and certain other changes.
If the benefits under your policy are reduced, for example, by requesting a
decrease in Face Amount, or in some cases by making partial withdrawals,
terminating additional benefits under a rider, changing the death benefit
option, or as a result of policy termination, the calculated seven-pay premium
level will be redetermined based on the reduced level of benefits and applied
retroactively for purposes of the seven-pay test. If the premiums previously
paid are greater than the recalculated seven-pay premium level limit, the
policy will become a modified endowment. Generally, a life insurance policy
which is received in exchange for a modified endowment or a modified endowment
which terminates and is restored, will also be considered a modified
endowment.
If a policy is deemed to be a modified endowment contract, any distribution
from the policy will be taxed in a manner comparable to distributions from
annuities (i.e., on an "income-first" basis); distributions for this purpose
include a loan, pledge, assignment or partial withdrawal. Any such
distributions will be considered taxable income to the extent 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, as defined above, which occurs in the policy year it becomes a
modified endowment contract and in any year thereafter will be taxable income
to the policyowner to the extent that accumulation value exceeds investment in
the policy, as described above. Also, any distributions within two years
before a policy becomes a modified endowment contract will also be income
taxable to the policyowner. 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. JP LifeAmerica believes that the Policies meet
this definition. As long as a
37
<PAGE>
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, JP LifeAmerica 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 JP LifeAmerica makes the payment. In addition, if a policyowner fails
to provide JP LifeAmerica with a correct taxpayer identification number
(usually a social security number) or if the Treasury notifies JP LifeAmerica
that the taxpayer identification number which has been provided is not
correct, the election not to have such taxes withheld will not be effective.
In any case, a policyowner is liable for payment of the federal income tax on
the taxable portion of money received, whether or not an election to have
federal income tax withheld is made. If a policyowner elects not to have
federal income tax withheld, or if the amount withheld is insufficient, then
the policyowner may be responsible for payment of estimated tax. A policyowner
may also incur penalties under the estimated tax rules if the withholding and
estimated tax payments are insufficient. JP LifeAmerica suggests that
policyowners consult with a tax adviser or attorney as to the tax implications
of these matters.
In the event that a Policy is owned by the trustee under a pension or profit
sharing plan, or similar deferred compensation arrangement, the tax
consequences of ownership or receipt of proceeds under the Policy could differ
from those stated herein. However, if ownership of such a Policy is
transferred from the plan to a plan participant (upon termination of
employment, for example), the Policy will be subject to all of the federal tax
rules described above. A Policy owned by a trustee under such a plan may be
subject to restrictions under ERISA and a tax adviser should be consulted
regarding any applicable ERISA requirements.
The Policy may also be used in various arrangements, including nonqualified
deferred compensation or salary continuation plans, split dollar insurance
plans, executive bonus plans and others, where the tax consequences may vary
depending on the particular facts and circumstances of each individual
arrangement. A tax adviser should be consulted regarding the tax attributes of
any particular arrangement where the value of it depends in part on its tax
consequences.
Federal estate and local estate, inheritance and other tax consequences of
ownership or receipt of policy proceeds depend upon the circumstances of each
policyowner and beneficiary.
Current Treasury regulations set standards for diversification of the
investments underlying variable life insurance policies in order for such
policies to be treated as life insurance. JP LifeAmerica 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.
38
<PAGE>
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. JP LifeAmerica, however, has
reserved certain rights to alter the Policy and investment alternatives so as
to comply with such regulation or ruling. JP LifeAmerica 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.
In 1996 Congress amended the Code to clarify the tax treatment of accelerated
benefits. Effective January 1, 1997, Section 101(g) of the Code now provides
that accelerated death benefits may be excluded from gross income provided
that certain conditions are met. Chubb believes that the Terminal Illness
Accelerated Benefit Rider meets those conditions. In addition, the legislation
clarified the status of such riders under Section 7702 of the Code, including
that the inclusion or conformance of any rider to the law's requirements does
not constitute a material change for purposes of the definition of life
insurance or modified endowment contracts.
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, JP LifeAmerica believes that this rider, as
structured and implemented by JP LifeAmerica, 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.
Charge for JP LifeAmerica Income Taxes. JP LifeAmerica is presently taxed as
a life insurance company under the provisions of the Code. The Code
specifically provides for adjustments in reserves for variable policies, and
JP LifeAmerica 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 JP LifeAmerica's
federal income taxes, or provisions for such taxes, that may be attributable
to Separate Account B. JP LifeAmerica may charge each division in Separate
Account B for its portion of any income tax charged to JP LifeAmerica on the
division or its assets. Under present laws, JP LifeAmerica may incur state and
local taxes (in addition to premium taxes) in several states. At present,
these taxes are not significant. If they increase, however, JP LifeAmerica may
decide to make charges for such taxes or provisions for such taxes against
Separate Account B. JP LifeAmerica 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. JP LifeAmerica
is not involved in any litigation that is of material importance in relation
to its total assets or that relate to Separate Account B.
39
<PAGE>
EXPERTS
The financial statements of Chubb Colonial Life Insurance Company as of
December 31, 1997 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 Richard
C. Dielensnyder, FSA, MAAA as stated in the opinion filed as an exhibit to the
registration statement.
REGISTRATION STATEMENT
A registration statement has been filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, with respect to the
Policy offered hereby. This Prospectus does not contain all the information
set forth in the registration statement and the amendments and exhibits to the
registration statement to all of which reference is made for further
information concerning Separate Account B, JP LifeAmerica 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 Life Insurance Company which are
included in this Prospectus should be considered only as bearing on the
ability of Chubb Colonial Life Insurance Company (renamed JP LifeAmerica
effective May 1, 1998) 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, 1997, 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.
40
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Chubb Colonial Life Insurance Company
We have audited the accompanying balance sheet of Chubb Colonial Life
Insurance Company (a wholly-owned subsidiary of Chubb Life Insurance Company
of America which became a wholly-owned subsidiary of Jefferson-Pilot
Corporation as of April 30, 1997--see Note 1) as of December 31, 1997 on a
purchase accounting basis (Successor), and the related statements of income,
stockholder's equity, and cash flows for the eight month period ended December
31, 1997 on a purchase accounting basis (Successor), and for the four month
period ended April 30, 1997 on a historical cost basis (Predecessor). These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Chubb Colonial Life
Insurance Company at December 31, 1997 on a purchase accounting basis
(Successor), and the results of its operations and its cash flows for the
eight month period ended December 31, 1997 on a purchase accounting basis
(Successor), and for the four month period ended April 30, 1997 on a
historical cost basis (Predecessor), in conformity with generally accepted
accounting principles.
February 9, 1998
F-1
<PAGE>
BALANCE SHEET
CHUBB COLONIAL LIFE INSURANCE COMPANY
DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT FOR SHARE AMOUNTS)
<TABLE>
<S> <C>
ASSETS
Invested assets:
Debt securities, available-for-sale, at fair value (amortized cost--
$453,321).......................................................... $470,222
Equity securities, available for sale, at fair value (cost--$6,221). 8,546
Policy loans........................................................ 24,365
Mortgage loans on real estate....................................... 8,158
--------
Total investments..................................................... 511,291
--------
Cash and cash equivalents............................................. 2,845
Accrued investment income............................................. 8,480
Uncollected premiums.................................................. 1,884
Due from reinsurers................................................... 5,470
Deferred policy acquisition costs..................................... 383
Value of business acquired............................................ 3,567
Cost in excess of net assets acquired, net of accumulated amortiza-
tion................................................................. 21,473
Federal income taxes receivable....................................... 6,006
Other assets.......................................................... 15,640
--------
$577,039
========
LIABILITIES
Policy liabilities:
Policyholder contract deposits...................................... $122,293
Future policy benefits.............................................. 211,986
Policy and contract claims.......................................... 35,649
Premiums paid in advance............................................ 1,025
Other policyholders' funds.......................................... 12,404
--------
Total policy liabilities.............................................. 383,357
Accrued expenses and other liabilities................................ 40,815
Deferred federal income taxes......................................... 4,158
--------
428,330
--------
Commitments and contingent liabilities................................
STOCKHOLDER'S EQUITY:
Common stock par value $20 per share, 132,000 shares authorized, is-
sued and outstanding............................................... 2,640
Paid in capital..................................................... 137,911
Retained earnings................................................... 1,897
Net unrealized gains on securities, net of deferred income taxes of
$3,371............................................................. 6,261
--------
148,709
--------
$577,039
========
</TABLE>
See accompanying notes.
F-2
<PAGE>
STATEMENTS OF INCOME
CHUBB COLONIAL LIFE INSURANCE COMPANY
(IN THOUSANDS)
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR
------------ -----------
EIGHT MONTHS FOUR MONTHS
ENDED ENDED
DECEMBER 31, APRIL 30,
1997 1997
------------ -----------
<S> <C> <C>
REVENUES
Premiums and policy charges......................... $35,974 $17,205
Net investment income............................... 23,720 13,564
Realized investment gains (losses).................. 1,227 (64)
Other income (expense).............................. 426 (26)
------- -------
Total revenues........................................ 61,347 30,679
BENEFITS AND EXPENSES
Policy benefits and claims.......................... 46,042 19,421
Commissions and other operating expenses............ 13,872 (3,597)
Amortization of intangibles, net of deferrals....... (444) (197)
------- -------
Total benefits and expenses........................... 59,470 15,627
------- -------
Income from continuing operations before federal in-
come tax............................................. 1,877 15,052
Federal income tax (benefit):
Current............................................. (1,338) 2,722
Deferred............................................ 1,318 2,370
------- -------
(20) 5,092
------- -------
Income from continuing operations..................... 1,897 9,960
Discontinued operations:
Adjustment to reduce estimated losses during phase-
out period, net of taxes of $3,206................. -- 5,954
------- -------
Net income............................................ $ 1,897 $15,914
======= =======
</TABLE>
See accompanying notes.
F-3
<PAGE>
STATEMENTS OF STOCKHOLDER'S EQUITY
CHUBB COLONIAL LIFE INSURANCE COMPANY
(IN THOUSANDS)
<TABLE>
<CAPTION>
NET
UNREALIZED TOTAL
COMMON PAID IN RETAINED GAINS ON STOCKHOLDER'S
STOCK CAPITAL EARNINGS SECURITIES EQUITY
------ -------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Predecessor balances, De-
cember 31, 1996........... $2,640 $ 26,460 $ 143,793 $ 4,120 $177,013
Net income................. -- -- 15,914 -- 15,914
Dividends declared......... -- -- (50,000) -- (50,000)
Net change in unrealized
gains on available-for-
sale securities........... -- -- -- (2,376) (2,376)
------ -------- --------- ------- --------
Predecessor balances, April
30, 1997.................. 2,640 26,460 109,707 1,744 140,551
Purchase accounting adjust-
ments..................... -- 111,451 (109,707) (1,744) --
------ -------- --------- ------- --------
Successor balances, May 1,
1997...................... 2,640 137,911 -- -- 140,551
Net income................. -- -- 1,897 -- 1,897
Net change in unrealized
gains on available-for-
sale securities........... -- -- -- 6,261 6,261
------ -------- --------- ------- --------
Successor balances, Decem-
ber 31, 1997.............. $2,640 $137,911 $ 1,897 $ 6,261 $148,709
====== ======== ========= ======= ========
</TABLE>
See accompanying notes.
F-4
<PAGE>
STATEMENTS OF CASH FLOWS
CHUBB COLONIAL LIFE INSURANCE COMPANY
(IN THOUSANDS)
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR
------------ -----------
EIGHT MONTHS FOUR MONTHS
ENDED ENDED
DECEMBER 31, APRIL 30,
1997 1997
------------ -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income............................................ $ 1,897 $ 15,914
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.. (7,748) (9,766)
Credits to policyholder accounts, net............... (1,174) (632)
Decrease (increase) in uncollected premiums......... 1,531 (163)
Increase in policy acquisition costs deferred, net
of amortization.................................... (383) (197)
Net amortization of value of business acquired...... (61) --
(Increase) decrease in accrued investment income.... (530) 1,337
Realized investment (gains) losses.................. (1,227) 64
Amortization (accretion) of investment premiums
(discounts)........................................ 1,076 111
Provision for deferred income tax................... (3,026) 2,370
Decrease in federal income tax payable.............. (348) (1,440)
Other operating activities, net..................... (2,557) 858
Change in receivables and asset accruals............ 678 4,934
Change in payables and expense accruals............. 10,173 (15,772)
-------- --------
Net cash used in operating activities................. (1,699) (2,382)
INVESTING ACTIVITIES
Proceeds from sales of debt securities................ 46,027 53,305
Proceeds from maturities of debt securities........... 16,114 4,319
Proceeds from sales of equity securities.............. 250 3,124
Purchases of debt securities.......................... (61,039) (13,143)
Purchases of equity securities........................ (250) (2,696)
Policy loans issued, net of repayments................ (579) 206
Mortgage loans, net of repayments..................... (4,186) 656
Other investing activities, net....................... -- 86
-------- --------
Net cash (used in) provided by investing activities... (3,663) 45,857
FINANCING ACTIVITIES
Deposits credited to policyholders' funds............. 10,856 6,105
Withdrawals from policyholders' funds................. (6,125) (3,134)
Dividends paid........................................ (50,000) --
-------- --------
Net cash (used in) provided by financing activities... (45,269) 2,971
-------- --------
Net (decrease) increase in cash and cash equivalents.. (50,631) 46,446
Cash and cash equivalents, beginning of period........ 53,476 7,030
-------- --------
Cash and cash equivalents, end of period.............. $ 2,845 $ 53,476
======== ========
</TABLE>
See accompanying notes.
F-5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
CHUBB COLONIAL LIFE INSURANCE COMPANY
DECEMBER 31, 1997
1. BASIS OF PRESENTATION
NATURE OF OPERATIONS
Chubb Colonial Life Insurance Company (the Company), is wholly-owned by
Chubb Life Insurance Company of America ("Chubb Life"). Affiliates of the
Company include Chubb Sovereign Life Insurance Company (Sovereign) and Chubb
America Service Corporation (Chubb Service). The Company is principally
engaged in the sale of individual life insurance and investment products.
These products are marketed primarily through personal producing general
agents throughout the United States.
ACQUISITION
Jefferson-Pilot Corporation (Jefferson-Pilot) acquired Chubb Life on May 13,
1997, with an effective date of April 30, 1997. The acquisition was accounted
for as a purchase, utilizing "push-down" accounting, and the assets and
liabilities were recorded at fair value as of April 30, 1997. For purposes of
these financial statements, the statements of income, stockholder's equity,
and cash flows for the four months ended April 30, 1997 represent the results
of operations of the "Predecessor", and are presented on the historical basis
of accounting. The statements of income, stockholder's equity, and cash flows
for the eight months ended December 31, 1997 represent the results of
operations of the "Successor" and are presented on a purchase accounting
basis. As a result, the financial statements subsequent to the acquisition
date (Successor) are not comparable to the financial statements prior to the
acquisition date (Predecessor).
Immediately prior to the acquisition, the Company declared a $50 million
dividend to Chubb Life. The preliminary adjustments as a result of allocation
of the pushed down purchase price of $140,551,000 resulted principally in the
addition of accrued expense and other liabilities of $8,800,000, value of
business acquired of $13,100,000 and the cost in excess of assets acquired of
$21,473,000.
DISCONTINUED OPERATIONS
In 1996, the Predecessor adopted a plan to exit the group insurance
business. Accordingly, the group health insurance business was accounted for
as a discontinued operation in the income statement for the four months ended
April 30, 1997. As a result of the decision by the Predecessor in 1996 to
discontinue the group health insurance business, a liability was established
to cover any future losses from operations and costs to exit the business
including severance for employees. The amount reflected in the statement of
income for the Predecessor reflects an adjustment to the future estimated
losses, net of taxes during the phase-out period.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FINANCIAL STATEMENT BASIS
The accompanying financial statements have been prepared in accordance with
generally accepted accouting principles ("GAAP").
USE OF ESTIMATES
The preparation of financial statements requires management to make
estimates and assumptions affecting the reported amounts of assets and
liabilities, the disclosures of contingent assets and liabilities as of the
date of the financial statements, and the reported amounts of revenue and
expenses for the reporting period. Those estimates are inherently subject to
change and actual results could differ from those estimates. Included among
the material (or potentially material) reported amounts and disclosures that
require extensive use of estimates are asset valuation allowances, policy
liabilities, deferred policy acquisition costs, value of business acquired and
the potential effects of resolving litigated matters.
CASH AND CASH EQUIVALENTS
The Company includes with cash and cash equivalents its holdings of short
term investments which are highly liquid investments that mature within three
months of the date of acquisition.
INVESTED ASSETS
Debt securities, which include bonds and redeemable preferred stocks, are
purchased to support the investment strategies of the Company. These
strategies are developed based on many factors including rate of return,
maturity, credit
F-6
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
CHUBB COLONIAL LIFE INSURANCE COMPANY
DECEMBER 31, 1997
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
risk, tax considerations and regulatory requirements. Debt securities which
may be sold prior to maturity to support the investment strategies of the
Company are considered available-for-sale and carried at market value as of
the balance sheet date.
Equity securities, which include common stocks and non-redeemable preferred
stocks, are considered available-for-sale and are carried at market values as
of the balance sheet date.
Policy loans are carried at the unpaid balances.
Mortgage loans on real estate are stated at the unpaid balances, net of
allowances for unrecoverable amounts. Mortgage loan underwriting standards
emphasize the credit status of a prospective borrower, quality of the
underlying collateral and conservative loan-to-value relationships.
Realized gains and losses on dispositions of securities are determined by
the specific identification method. Unrealized appreciation or depreciation of
investments classified as available-for-sale, net of the deferred policy
acquisition costs and value of business acquired adjustments and the
applicable deferred income tax, is excluded from income and credited or
charged directly to a separate component of stockholder's equity.
RECOGNITION OF REVENUES, BENEFITS, CLAIMS AND EXPENSES
Universal Life Products
Universal life products include universal life insurance 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 claims that are charged to expense include claims incurred in the
period in excess of related policy account balances. Other policy benefits
include interest credited to universal life and other interest-sensitive life
insurance policies. Interest crediting rates ranged from 4% to 6.5%.
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 3.5% to 6.75%.
Traditional Life Insurance Products
Traditional life insurance products include those products with fixed and
guaranteed premiums and benefits. Premium revenues for traditional life
insurance are recognized as revenues when due. The liabilities for future
policy benefits are computed by the net level premium method based on
estimated future investment yield, mortality and withdrawal experience.
Interest rate assumptions ranged from 3% to 9%. Mortality is calculated
principally on an experience multiple applied to select and ultimate tables in
common usage in the industry. Estimated withdrawals are determined principally
based on industry tables. Policy benefits and claims are charged to expense as
incurred.
F-7
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
CHUBB COLONIAL LIFE INSURANCE COMPANY
DECEMBER 31, 1997
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
POLICY AND CONTRACT CLAIMS
The liability for policy and contract claims consists of the estimated
amount payable for claims reported but not yet settled, and an estimate of
claims incurred but not reported, which is based on historical experience,
adjusted for trends and circumstances. Management believes that the recorded
liability is sufficient to provide for the associated claims adjustment
expenses.
REINSURANCE
Reinsurance receivables include amounts recoverable from reinsurers related
to paid benefits and estimated amounts related to unpaid policy and contract
claims, future policy benefits and policyholder contract deposits. The cost of
reinsurance is accounted for over the terms of the underlying reinsured
policies using assumptions consistent with those used to account for the
policies.
DEFERRED POLICY ACQUISITION COSTS
Costs related to obtaining new business, including commissions, certain
costs of underwriting and issuing policies and certain agency office expenses,
all of which vary with and are primarily related to the production of new
business, have been deferred.
Deferred policy acquisition costs for traditional life insurance policies
are amortized over the premium paying periods of the related contracts using
the same assumptions for anticipated premium revenue that are used to compute
liabilities for future policy benefits. For universal life and investment
products, these costs are amortized at a constant rate based on the present
value of the estimated future gross profits to be realized over the terms of
the contracts, not to exceed 25 years.
The carrying amount of deferred policy acquisition costs is adjusted for the
effect of realized gains and losses and the effects of unrealized gains or
losses on investments classified as available-for-sale. Deferred policy
acquisition costs are reviewed periodically to determine that the unamortized
portion does not exceed expected recoverable amounts. No impairment
adjustments have been reflected in earnings for any period presented.
VALUE OF BUSINESS ACQUIRED
Value of business acquired represents the actuarially determined present
value of anticipated profits to be realized from life insurance and annuity
business purchased, using the same assumptions used to value the related
liabilities. Amortization of the value of business acquired occurs over the
related contract periods, using current crediting rates to accrete and a
constant amortization rate based on the present value of expected future
profits.
Value of business acquired related to universal life and investment
contracts also is adjusted to reflect the effects that the unrealized gains or
losses on investments classified as available-for-sale would have had on the
present value of estimated gross profits had such gains or losses actually
been realized. This adjustment is excluded from income and charged or credited
directly to the net unrealized gains on securities component of stockholder's
equity, net of applicable deferred income tax.
COST IN EXCESS OF ASSETS ACQUIRED
The preliminary excess of Jefferson-Pilot's purchase price over the fair
value of assets acquired, which has been "pushed down" to the Company level
for financial reporting purposes, is being amortized on a straight-line basis
over 35 years.
F-8
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
CHUBB COLONIAL LIFE INSURANCE COMPANY
DECEMBER 31, 1997
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment used in operations are carried at cost, less
accumulated depreciation. Depreciation is calculated using the straight-line
method over the estimated remaining useful lives of the assets.
FEDERAL INCOME TAXES
The 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 former parent for the four months ended
April 30, 1997. For the eight months ended December 31, 1997, Chubb Life will
file a consolidated federal income tax return with only the members of the
Chubb Life consolidated group. Federal income tax is allocated as if the
Company and Chubb Life filed separate income tax returns.
Deferred income tax assets are recorded on the difference between the tax
bases of assets and liabilities and the amounts at which they are reported in
the financial statements. Recorded amounts are adjusted to reflect changes in
income tax rates and other tax law provisions as they become enacted.
NEW ACCOUNTING PRONOUNCEMENT
In June 1997, the Financial Accounting Standards Board (FASB) issued SFAS
130, "Reporting Comprehensive Income", which is effective for fiscal years
beginning after December 15, 1997. SFAS 130 sets standards for the reporting
and display of comprehensive income and its components in financial
statements. Application of the new rule will not impact the Company's
financial position or net income. The Company expects to adopt this
pronouncement in the first quarter of 1998, which will include the
presentation of comprehensive income for prior periods presented for
comparative purposes, as required by SFAS 130. The primary element of
comprehensive income applicable to the Company is changes in unrealized gains
and losses on securities classified as available-for-sale.
3. INVESTED ASSETS
Aggregate amortized cost, aggregate fair value and gross unrealized gains
and losses of debt securities available-for-sale at December 31, 1997 were as
follows (in thousands):
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- --------
<S> <C> <C> <C> <C>
AVAILABLE-FOR-SALE CARRIED AT FAIR
VALUE
U.S. Treasury obligations and direct
obligations of U.S. government
agencies............................. $ 16,697 $ 1,212 -- $ 17,909
Corporate bonds....................... 337,383 14,950 $(2,544) 349,789
Mortgage-backed securities............ 98,114 3,374 -- 101,488
Redeemable preferred stocks........... 1,127 -- (91) 1,036
-------- ------- ------- --------
Total debt securities................. $453,321 $19,536 $(2,635) $470,222
======== ======= ======= ========
</TABLE>
F-9
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
CHUBB COLONIAL LIFE INSURANCE COMPANY
DECEMBER 31, 1997
3. INVESTED ASSETS (CONTINUED)
The amortized cost and aggregate fair value of debt securities at December
31, 1997 by contractual maturity were as follows (in thousands):
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
--------- --------
<S> <C> <C>
Due in one year or less..................................... $ 6,252 $ 6,269
Due after one year through five years....................... 39,113 40,028
Due after five years through ten years...................... 105,855 109,522
Due after ten years......................................... 61,886 66,514
Amounts not due at a single maturity date................... 240,215 247,889
-------- --------
$453,321 $470,222
======== ========
</TABLE>
Actual future maturities will differ from the contractual maturities shown
because the issuers of certain debt securities have the right to call or
prepay the amounts due to the Company, with or without penalty.
The sources of net investment income for the Successor and Predecessor for
1997 were as follows (in thousands):
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR
------------ -----------
EIGHT MONTHS FOUR MONTHS
ENDED ENDED
DECEMBER 31, APRIL 30,
1997 1997
------------ -----------
<S> <C> <C>
Debt securities........................................ $22,053 $12,620
Equity securities...................................... 290 133
Policy loans........................................... 1,045 577
Mortgage loans......................................... 318 142
Other.................................................. 547 310
------- -------
Gross investment income................................ 24,253 13,782
Investment expenses.................................... 533 218
------- -------
Net investment income.................................. $23,720 $13,564
======= =======
Realized investment gains and losses on available-for-sale securities were as
follows (in thousands):
<CAPTION>
SUCCESSOR PREDECESSOR
------------ -----------
EIGHT MONTHS FOUR MONTHS
ENDED ENDED
DECEMBER 31, APRIL 30,
1997 1997
------------ -----------
<S> <C> <C>
Gross realized investment gains:
Debt securities...................................... $ 1,224 $ 32
Equity securities.................................... 3 --
------- -------
$ 1,227 $ 32
======= =======
Gross realized investment losses:
Debt securities...................................... $ -- $ --
Equity securities.................................... -- 96
------- -------
$ -- $ 96
======= =======
Net realized investment gains:
Debt securities...................................... $ 1,224 $ 32
Equity securities.................................... 3 (96)
------- -------
$ 1,227 $ (64)
======= =======
</TABLE>
F-10
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
CHUBB COLONIAL LIFE INSURANCE COMPANY
DECEMBER 31, 1997
3. INVESTED ASSETS (CONTINUED)
The changes in unrealized gains on securities classified as available-for-
sale for the Successor and Predecessor for 1997 were as follows (in
thousands):
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR
------------ -----------
EIGHT MONTHS FOUR MONTHS
ENDED ENDED
DECEMBER 31, APRIL 30,
1997 1997
------------ -----------
<S> <C> <C>
Change in unrealized appreciation of equity securi-
ties................................................. $ 2,325 $ (399)
Change in unrealized appreciation of debt securities.. 16,901 (3,756)
Change in deferred policy acquisition costs adjust-
ment................................................. -- 500
Change in value of business acquired adjustment....... (9,594) --
------- -------
9,632 (3,655)
Deferred income taxes................................. (3,371) 1,279
------- -------
$ 6,261 $(2,376)
======= =======
</TABLE>
4. DERIVATIVES
USE OF DERIVATIVES
The Company's investment policy permits the use of derivative financial
instruments such as interest rate swaps in certain circumstances. At December
31, 1997, three such interest rate swaps are held to modify specific floating-
rate direct investments. The notional amount is $6 million, with the Company
receiving an average fixed rate of 7.35% and paying a floating rate based on
the 3 month or 6 month LIBOR rates (5.81% and 5.84%, respectively, on December
31, 1997).
The interest rate swaps are used to reduce the impact of interest rate
fluctuations on specific floating-rate direct investments. Interest is
exchanged periodically on the notional value, with the Company receiving a
fixed rate and paying a short-term LIBOR rate on a net exchange basis. The net
amount received or paid under this swap is reflected as an adjustment to
investment income. All of the hedges are of investments classified as
available-for-sale, and net unrealized gains and losses, net of the effects of
income taxes and the impact on deferred policy acquisition costs and the value
of business acquired, are not significant and are included in net unrealized
gains on securities in stockholder's equity as of December 31, 1997.
CREDIT AND MARKET RISK
The Company is exposed to credit risk in the event of non-performance by
counterparties to swap agreements. The Company limits this exposure by
entering into swap agreements with counterparties having high credit ratings
and by regularly monitoring the ratings.
The Company's credit exposure on swaps is limited to the fair value of swap
agreements that are favorable to the Company. The Company does not expect any
counterparty to fail to meet its obligation; however, non-performance would
not have a material adverse effect on the Company's financial position or
results of operations.
The Company's exposure to market risk is mitigated by the offsetting effects
of changes in the value of swap agreements and the related direct investments.
The Company routinely monitors correlation between hedged items and hedging
instruments. In the event a hedge relationship was terminated, any related
hedging instrument that remained would be marked-to-market.
F-11
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
CHUBB COLONIAL LIFE INSURANCE COMPANY
DECEMBER 31, 1997
5. DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED
Policy acquisition costs deferred and the related amortization charged to
income for both the Successor and Predecessor were as follows (in thousands):
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR
------------ -----------
EIGHT MONTHS FOUR MONTHS
ENDED ENDED
DECEMBER 31, APRIL 30,
1997 1997
------------ -----------
<S> <C> <C>
Beginning balance...................................... $ -- $28,753
Deferrals.............................................. 395 1,018
Amortization........................................... (12) (821)
---- -------
Ending balance......................................... $383 $28,950
==== =======
</TABLE>
In connection with the push down accounting related to the acquisition, the
Successor recorded $13,100,000 related to the value of business acquired.
Additional deferrals for the eight months ended December 31, 1997 totaled
$729,000. The amount is shown on the balance sheet net of an adjustment of
$9,594,000 related to the effects of unrealized gains on securities and
amortization of $668,000 for the eight months ended December 31, 1997.
Expected approximate amortization percentages of the value of business
acquired as of December 31, 1997 over the next five years are as follows (in
thousands):
<TABLE>
<CAPTION>
AMORTIZATION
PERCENTAGE
------------
<S> <C>
Year Ending December 31:
1998............................................................. 11.6%
1999............................................................. 11.3
2000............................................................. 10.2
2001............................................................. 9.1
2002............................................................. 8.4
</TABLE>
6. FEDERAL INCOME TAXES
Federal income tax provisions for both the Successor and the Predecessor
have been computed using the tax rates and regulations in effect during the
year. The provision for federal income tax gives effect to permanent
differences between financial and taxable income. The statutory federal
corporate tax rate differed from the effective tax rate for the Successor due
primarily to tax-advantaged securities. The statutory federal corporate tax
rate was equal to the effective tax rate for the Predecessor, as there were
minimal permanent differences.
The tax effects of temporary differences that gave rise to deferred income
tax assets at December 31, 1997, included primarily future policy benefits and
deferred policy acquisition costs decreased by the tax effect of the value of
business acquired and unrealized gains on securities.
Under prior federal income tax law, one-half of the excess of a life
insurance company's income from operations over its taxable investment income
was not taxed, but was set aside in a special tax account designated as
"Policyholders' Surplus". The Company has approximately $4.7 million of
untaxed "Policyholders' Surplus" on which no payment of federal income taxes
will be required unless it is distributed as a dividend, or under other
specified conditions. The Company does not believe that any significant
portion of the account will be taxed in the foreseeable future and no related
deferred tax liability has been recognized. If the entire balance of the
account became taxable under the current federal rate, the tax would
approximate $1.6 million.
Federal income taxes paid in 1997, including amounts remitted to the
Predecessor's parent for its share of income taxes were $0 for the Successor
and $5,092,000 for the Predecessor.
F-12
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
CHUBB COLONIAL LIFE INSURANCE COMPANY
DECEMBER 31, 1997
7. RELATED-PARTY TRANSACTIONS
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 1997
for the Successor and Predecessor were $17,672,000 and $10,986,000 million,
respectively.
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 by the
Successor and Predecessor were $10,761,000 and $10,564,000, respectively. At
December 31, 1997, the net receivable from Chubb Life was $3,324,000.
The Company entered into an agreement, whereby it guaranteed a 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, 1997 was $3,424,000.
8. PENSIONS
The Company's defined benefit pension plan for both the Successor and the
Predecessor have been included with the respective pension plans of their
Parents. The respective plans cover substantially all employees. Pension costs
allocated to the Company for the eight months ended December 31, 1997, for the
Successor were $435,000. Terms of the acquisition agreement between Jefferson-
Pilot and the Chubb Corporation specified that the Chubb Corporation would
assume all responsibilities for pension costs through the acquisition. As
such, there were no costs allocated to the Predecessor for the four months
ended April 30, 1997.
9. OTHER POSTRETIREMENT BENEFITS
The Company's health care and life insurance benefit plans for both the
Successor and the Predecessor have been included with the respective plans of
their parents. Prior to the acquisition, Chubb Life had recorded a
postretirement benefit obligation, representing all of the expected costs of
retirees, vested active plan participants, and other non-vested plan
participants. As part of the acquisition, the Chubb Corporation assumed all
liabilities relating to these postretirement benefits without any cash
transferring to the Chubb Corporation. The result of this assumption of the
liabilities was a settlement gain of $10,576,000 that was allocated to the
Company. This gain is included in the statement of income as a reduction to
commissions and operating expenses, net of deferrals. Postretirement costs of
the Successor that were allocated from Jefferson-Pilot amounted to
approximately $114,000 for the eight month period ended December 31, 1997.
10. REINSURANCE
The Company attempts to reduce its exposure to significant individual claims
by reinsuring portions of certain life insurance contracts written. The
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.
The effect of reinsurance on the premiums and policy charges in the
statement of income for both the Successor and Predecessor was as follows (in
thousands):
<TABLE>
<CAPTION>
CEDED TO ASSUMED
SUCCESSOR, EIGHT MONTHS ENDED DIRECT OTHER FROM OTHER NET
DECEMBER 31, 1997 AMOUNT COMPANIES COMPANIES AMOUNT
----------------------------- ------- --------- ---------- -------
<S> <C> <C> <C> <C>
Total premiums and policy charges.... $13,851 $722 $22,845 $35,974
======= ==== ======= =======
<CAPTION>
CEDED TO ASSUMED
PREDECESSOR, FOUR MONTHS ENDED APRIL DIRECT OTHER FROM OTHER NET
30, 1997 AMOUNT COMPANIES COMPANIES AMOUNT
------------------------------------ ------- --------- ---------- -------
<S> <C> <C> <C> <C>
Total premiums and policy charges.... $ 7,158 $458 $10,505 $17,205
======= ==== ======= =======
</TABLE>
F-13
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
CHUBB COLONIAL LIFE INSURANCE COMPANY
DECEMBER 31, 1997
10. REINSURANCE (CONTINUED)
Reinsurance recoveries which have been deducted from benefits and expenses
in the statement of income for the Successor and Predecessor were $2,242,000
and $97,000, respectively.
Reinsurance contracts do not relieve the Company from its primary obligation
to policyholders. Therefore, the failure of a reinsurer to discharge its
reinsurance obligations could result in a loss to the Company. The Company
regularly evaluates the financial condition of its reinsurers and monitors
concentrations of credit risk related to reinsurance activities. No
significant credit losses resulted from the Company's reinsurance activities
during the year ended December 31, 1997.
11. STATUTORY FINANCIAL INFORMATION
The Company prepares financial statements on the basis of statutory
accounting practices (SAP) prescribed or permitted by the New Jersey
Department of Insurance. Prescribed SAP include a variety of publications of
the National Association of Insurance Commissioners (NAIC) as well as state
laws, regulations and administrative rules. Permitted SAP encompass all
accounting practices not so prescribed. The impact of permitted accounting
practices on statutory capital and surplus is not significant for the Company.
The principal differences between SAP and generally accepted accounting
principles (GAAP) as they relate to the financial statements of the Company
are (1) policy acquisition costs are expensed as incurred under SAP, whereas
they are deferred and amortized under GAAP, (2) amounts collected from holders
of universal life-type and investment products are recognized as premiums when
collected under SAP, but are initially recorded as contract deposits under
GAAP, with cost of insurance recognized as revenue when assessed and other
contract charges recognized over the periods for which services are provided,
(3) the classification and carrying amounts of investments in certain
securities are different under SAP than under GAAP, (4) the criteria for
providing asset valuation allowances, and the methodologies used to determine
the amounts thereof, are different under SAP than under GAAP, (5) the timing
of establishing certain reserves, and the methodologies used to determine the
amounts thereof, are different under SAP than under GAAP, (6) no provision is
made for deferred income taxes under SAP, and (7) certain assets are not
admitted for purposes of determining surplus under SAP.
Reported capital and surplus on a statutory basis at December 31, 1997 was
$91,509,000. Reported statutory net income for the year ended December 31,
1997 was $14,129,000. Purchase accounting adjustments are not made for
statutory accounting purposes.
The amount of GAAP equity in excess of statutory surplus is unavailable for
distribution. In addition, various state insurance laws restrict the Company
and its insurance subsidiaries as to the amount of dividends from statutory
surplus they may pay without the prior approval of regulatory authorities. The
restrictions generally are based on net gains from operations and on certain
levels of surplus as determined in accordance with statutory accounting
practices. Dividends in excess of such thresholds are considered
"extraordinary" and require prior regulatory approval. Because of the special
dividends paid in connection with the acquisition, all dividends paid in 1998
will require prior regulatory approval.
Risk-Based Capital ("RBC") requirements promulgated by the NAIC require life
insurers to maintain minimum capitalization levels that are determined based
on formulas incorporating credit risk pertaining to its investments, insurance
risk, interest rate risk and general business risk. As of December 31, 1997,
the Company's adjusted capital and surplus exceeded its authorized control
level RBC.
12. FAIR VALUES OF FINANCIAL INSTRUMENTS
Fair values of financial instruments are based on quoted market prices where
available. Fair values of financial instruments for which quoted market prices
are not available are based on estimates using present value or other
valuation techniques. Those techniques are significantly affected by the
assumptions used, including the discount rates and the estimates of future
cash flows. Certain financial instruments, particularly insurance contracts,
are excluded from fair value disclosure requirements.
F-14
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
CHUBB COLONIAL LIFE INSURANCE COMPANY
DECEMBER 31, 1997
12. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)
The methods and assumptions used to estimate the fair value of certain
financial instruments are as follows:
. Fair values of debt securities with active markets are based on quoted
market prices. For debt securities that trade in less active markets,
fair values are obtained from independent pricing services. Fair values
of debt securities are principally a function of current interest rates.
. Fair values of equity securities are based on quoted market prices.
. The carrying value of cash and cash equivalents approximates fair value
due to the short maturities of these assets.
. Fair values of policy loans and mortgage loans are estimated using
discounted cash flow analyses and approximate carrying values.
The carrying value and fair value of financial instruments at December 31,
1997, were as follows:
<TABLE>
<CAPTION>
CARRYING FAIR
VALUE VALUE
-------- --------
(IN THOUSANDS)
<S> <C> <C>
ASSETS:
Debt securities available-for-sale.................... $470,222 $470,222
Equity securities available-for-sale.................. 8,546 8,546
Cash and cash equivalents............................. 2,845 2,845
Policy loans.......................................... 24,365 24,365
Mortgage loans on real estate......................... 8,158 8,098
</TABLE>
13. LITIGATION
In the normal course of business, the Company is involved in various
lawsuits. Management is of the opinion that these suits are substantially
without merit, that valid defenses exist, and that such litigation will not
have a material effect on the financial statements.
14. YEAR 2000 CONVERSION COSTS (UNAUDITED)
Jefferson-Pilot has been analyzing the Year 2000 computer systems problem
since 1995. During the course of this analysis, Jefferson-Pilot has
ascertained that failure to alleviate Year 2000 systems problems could result
in a material disruption to its operations in the year 2000. A centralized
oversight and project management process has been put into place to facilitate
compliance of all information systems prior to the end of 1999. The oversight
process includes communications with significant suppliers to the extent
systems are vulnerable to those third parties failure to remedy Year 2000
issues. The assessment phase of the Year 2000 effort (including mainframe and
alternative systems) is complete for the majority of systems and several have
been brought into Year 2000 compliance. To date, Jefferson-Pilot has incurred
external costs of approximately $3 million. The remainder of this effort is
expected to be completed by the third quarter of 1999 utilizing internal and
external resources, with remaining external costs estimated at approximately
$9 million. However, there can be no guarantee that these results will be
achieved and actual results could differ materially. All costs associated with
this effort are being expensed as incurred.
F-15
<PAGE>
APPENDIX A
ILLUSTRATIONS OF ACCUMULATION VALUES
CASH VALUES AND DEATH BENEFITS
Following are a series of tables that illustrate how the accumulation
values, cash values and death benefits of a policy change with the investment
performance of the Portfolios. The tables show how the accumulation values,
cash values and death benefits of a Policy issued to an insured of a given age
and given premium would vary over time if the return on the assets held in
each Portfolio were a constant gross, after tax annual rate of 0%, 4%, and
12%. The tables on pages A-2 through A-7 illustrate a Policy issued to a male,
age 40, under a standard rate non-smoker underwriting risk classification. The
accumulation values, cash values and death benefits would be different from
those shown if the returns averaged 0%, 4%, and 12% over a period of years,
but fluctuated above and below those averages for individual policy years.
The amount of the accumulation value exceeds the cash value during the first
ten policy years due to the surrender charge. For policy years eleven and
after, the accumulation value and cash value are equal, since the surrender
charge has been reduced to zero.
The second column shows the accumulation value of the premiums paid at the
stated interest rate. The third and sixth columns illustrate the accumulation
values and the fourth and seventh columns illustrate the cash values of the
Policy over the designated period. The accumulation values shown in the third
column and the cash values shown in the fourth column assume the monthly
charge for cost of insurance is based upon the current cost of insurance rates
as discounted. The current cost of insurance rates are based on the sex, issue
age, policy year, rating class of the Insured, and the Specified Amount of the
Policy. The accumulation values shown in the sixth column and the cash values
shown in the seventh column assume the monthly charge for cost of insurance is
based upon the maximum cost of insurance rates allowable, which are based on
the Commissioner's 1980 Standard Ordinary Mortality Table. The current cost of
insurance rates are different for Specified Amounts below $100,000 and above
$249,999; therefore, the values shown would change for Specified Amounts below
$100,000 and above $249,999. The fifth and eighth columns illustrate the death
benefit of a Policy over the designated period. The illustrations of death
benefits reflect the same assumptions as the accumulation values and cash
values. The death benefit values also vary between tables, depending upon
whether Option I or Option II death benefits are illustrated.
The amounts shown for the death benefit, accumulation values, and cash
values reflect the fact that the net investment return of the divisions of
Separate Account B is lower than the gross return on the assets in the
Portfolios, as a result of expenses paid by the Portfolios and charges levied
against the divisions of Separate Account B.
The policy values shown take into account a daily investment advisory fee
equivalent to the maximum annual rate of .70% of the aggregate average daily
net assets of the Portfolios, plus a charge of .14% of the aggregate average
daily net assets to cover expenses incurred by the Portfolios for the twelve
months ended December 31, 1997. The .70% investment advisory fee is the
average of the individual investment advisory fees of the nineteen Portfolios.
The .14% expense figure is based on a weighted average utilizing average net
assets for the nine available Jefferson Pilot Variable Fund Portfolios, the
Templeton International Fund, the Fidelity VIP and VIP II Portfolios, the
Oppenheimer Portfolios and the MFS Portfolios. Expenses for the Templeton
International Fund: Class 1, the Fidelity Equity Income, Growth, Contrafund
and Index 500 Portfolios, the MFS Research and Utilities Series, and the
Oppenheimer Bond and Strategic Bond Portfolios were provided by the investment
managers for these portfolios and JP LifeAmerica has not independently
verified such information. The policy values also take into account a daily
charge to each division of Separate Account B for assuming mortality and
expense risks which is equivalent to a charge at an annual rate of .90% of the
average net assets of the divisions of Separate Account B for policy year one
through ten, and .65% of the average net assets of the divisions of Separate
Account B for policy years eleven and thereafter. After deduction of these
amounts, the illustrated gross investment rates of 0%, 4%, and 12% correspond
to approximate net annual rates of -1.74%, 2.28% and 10.28%, respectively.
The hypothetical values shown in the tables do not reflect any charges for
federal income taxes or other taxes against Separate Account B since JP
LifeAmerica is not currently making such charges. However, if, in the future,
such charges are made, the gross annual investment rate of return would have
to exceed the stated investment rates by a sufficient amount to cover the tax
charges in order to produce the accumulation values, cash values and death
benefits illustrated.
The tables illustrate the policy values that would result based on
hypothetical investment rates of return if premiums are paid in full at the
beginning of each year, if all net premiums are allocated to Separate Account
B, and if no policy loans have been made. The values would vary from those
shown if the assumed annual premium payments were paid in installments during
a year. The values would also vary if the policyowner varied the amount or
frequency of premium payments. The tables also assume that the policyowner has
not requested an increase or decrease in Specified Amount, that no withdrawals
have been made and no surrender charges imposed, and that no transfers have
been made and no transfer charges imposed.
Upon request, JP LifeAmerica will provide, without charge, a comparable
illustration based upon the proposed insured's age, sex and rating class, the
face amount requested, the proposed frequency and amount of premium payments
and any available riders requested. Existing policyowners may request
illustrations based on existing cash value at the time of request. JP
LifeAmerica has reserved the right to charge an administrative fee up to $25
for such illustrations.
A-1
<PAGE>
JEFFERSON PILOT LIFEAMERICA INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION I ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 40 ANNUAL RATE OF RETURN(1):
$100,000 INITIAL SPECIFIED AMOUNT 0% (-1.74% NET)
ASSUMED ANNUAL PREMIUM(2): $1,425
<TABLE>
<CAPTION>
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED -------------------------------- --------------------------------
OF AT 4% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(3) VALUE(3) BENEFIT(3) VALUE(3) VALUE(3) BENEFIT(3)
---- -------------- ------------ -------- ---------- ------------ -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,482 1,079 702 100,000 1,071 694 100,000
2 3,023 2,124 1,747 100,000 2,108 1,731 100,000
3 4,626 3,136 2,759 100,000 3,112 2,736 100,000
4 6,293 4,122 3,745 100,000 4,082 3,705 100,000
5 8,027 5,093 4,716 100,000 5,018 4,641 100,000
6 9,830 6,050 5,736 100,000 5,917 5,603 100,000
7 11,705 6,993 6,742 100,000 6,779 6,528 100,000
8 13,655 7,911 7,723 100,000 7,602 7,414 100,000
9 15,684 8,816 8,691 100,000 8,386 8,261 100,000
10 17,793 9,708 9,645 100,000 9,129 9,066 100,000
11 19,987 10,633 10,633 100,000 9,854 9,854 100,000
12 22,268 11,520 11,520 100,000 10,534 10,534 100,000
13 24,641 12,365 12,365 100,000 11,162 11,162 100,000
14 27,109 13,168 13,168 100,000 11,735 11,735 100,000
15 29,675 13,925 13,925 100,000 12,247 12,247 100,000
16 32,344 14,634 14,634 100,000 12,691 12,691 100,000
17 35,120 15,290 15,290 100,000 13,063 13,063 100,000
18 38,007 15,889 15,889 100,000 13,359 13,359 100,000
19 41,009 16,424 16,424 100,000 13,574 13,574 100,000
20 44,131 16,889 16,889 100,000 13,699 13,699 100,000
21 47,378 17,274 17,274 100,000 13,724 13,724 100,000
22 50,755 17,573 17,573 100,000 13,639 13,639 100,000
23 54,268 17,778 17,778 100,000 13,427 13,427 100,000
24 57,920 17,880 17,880 100,000 13,071 13,071 100,000
25 61,719 17,869 17,869 100,000 12,550 12,550 100,000
30 83,118 15,616 15,616 100,000 6,747 6,747 100,000
35 109,153 7,608 7,608 100,000 0 0 0
40 140,828 0 0 0 0 0 0
</TABLE>
- -------
(1) For policy years 11 and thereafter, the illustrated net annual rate of
return equals -1.49%.
(2) Assumes a $1,425 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(3) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN
THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT
RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A
NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND
DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUNDS' SERIES. THE ACCUMULATION
VALUE, CASH VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 0% OVER A PERIOD OF
YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATION CAN BE MADE BY JP LIFEAMERICA, THE SEPARATE ACCOUNT,
OR THE FUNDS THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR
ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-2
<PAGE>
JEFFERSON PILOT LIFEAMERICA INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION I ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 40 ANNUAL RATE OF RETURN:(1)
$100,000 INITIAL SPECIFIED AMOUNT 4% (2.28% NET)
ASSUMED ANNUAL PREMIUM (2): $1,425
<TABLE>
<CAPTION>
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED -------------------------------- --------------------------------
OF AT 4% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(3) VALUE(3) BENEFIT(3) VALUE(3) VALUE(3) BENEFIT(3)
---- -------------- ------------ -------- ---------- ------------ -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,482 1,128 752 100,000 1,120 743 100,000
2 3,023 2,267 1,890 100,000 2,250 1,873 100,000
3 4,626 3,416 3,040 100,000 3,391 3,014 100,000
4 6,293 4,584 4,207 100,000 4,541 4,164 100,000
5 8,027 5,780 5,404 100,000 5,699 5,323 100,000
6 9,830 7,008 6,694 100,000 6,865 6,551 100,000
7 11,705 8,266 8,015 100,000 8,035 7,784 100,000
8 13,655 9,546 9,358 100,000 9,210 9,022 100,000
9 15,684 10,858 10,733 100,000 10,388 10,263 100,000
10 17,793 12,204 12,141 100,000 11,567 11,504 100,000
11 19,987 13,636 13,636 100,000 12,777 12,777 100,000
12 22,268 15,082 15,082 100,000 13,985 13,985 100,000
13 24,641 16,539 16,539 100,000 15,186 15,186 100,000
14 27,109 18,005 18,005 100,000 16,376 16,376 100,000
15 29,675 19,479 19,479 100,000 17,550 17,550 100,000
16 32,344 20,958 20,958 100,000 18,701 18,701 100,000
17 35,120 22,438 22,438 100,000 19,825 19,825 100,000
18 38,007 23,916 23,916 100,000 20,918 20,918 100,000
19 41,009 25,387 25,387 100,000 21,976 21,976 100,000
20 44,131 26,844 26,844 100,000 22,990 22,990 100,000
21 47,378 28,282 28,282 100,000 23,952 23,952 100,000
22 50,755 29,694 29,694 100,000 24,851 24,851 100,000
23 54,268 31,076 31,076 100,000 25,675 25,675 100,000
24 57,920 32,420 32,420 100,000 26,407 26,407 100,000
25 61,719 33,721 33,721 100,000 27,030 27,030 100,000
30 83,118 39,248 39,248 100,000 27,884 27,884 100,000
35 109,153 41,911 41,911 100,000 21,841 21,841 100,000
40 140,828 38,562 38,562 100,000 0 0 0
</TABLE>
- -------
(1) For policy years 11 and thereafter, the illustrated net annual rate of
return equals 2.51%.
(2) Assumes a $1,425 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(3) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN
THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT
RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A
NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND
DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUNDS' SERIES. THE ACCUMULATION
VALUE, CASH VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACUTAL INVESTMENT RATES OF RETURN AVERAGED 4% OVER A PERIOD OF
YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATION CAN BE MADE BY JP LIFEAMERICA, THE SEPARATE ACCOUNT,
OR THE FUNDS THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR
ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-3
<PAGE>
JEFFERSON PILOT LIFEAMERICA INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION I ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 40 ANNUAL RATE OF RETURN(1):
$100,000 INITIAL SPECIFIED AMOUNT 12% (10.28% NET)
ASSUMED ANNUAL PREMIUM(2): $1,425
<TABLE>
<CAPTION>
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED -------------------------------- --------------------------------
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(3) VALUE(3) BENEFIT(3) VALUE(3) VALUE(3) BENEFIT(3)
---- -------------- ------------ -------- ---------- ------------ -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,496 1,227 851 100,000 1,218 842 100,000
2 3,067 2,565 2,189 100,000 2,547 2,170 100,000
3 4,717 4,026 3,650 100,000 3,996 3,620 100,000
4 6,449 5,629 5,252 100,000 5,578 5,202 100,000
5 8,268 7,401 7,025 100,000 7,307 6,931 100,000
6 10,177 9,361 9,047 100,000 9,195 8,881 100,000
7 12,182 11,527 11,276 100,000 11,258 11,007 100,000
8 14,288 13,912 13,723 100,000 13,515 13,327 100,000
9 16,498 16,548 16,423 100,000 15,985 15,860 100,000
10 18,820 19,464 19,401 100,000 18,690 18,628 100,000
11 21,257 22,757 22,757 100,000 21,705 21,705 100,000
12 23,816 26,383 26,383 100,000 25,018 25,018 100,000
13 26,503 30,374 30,374 100,000 28,660 28,660 100,000
14 29,324 34,773 34,773 100,000 32,667 32,667 100,000
15 32,287 39,624 39,624 100,000 37,078 37,078 100,000
16 35,398 44,978 44,978 100,000 41,942 41,942 100,000
17 38,664 50,892 50,892 100,000 47,312 47,312 100,000
18 42,093 57,433 57,433 100,000 53,254 53,254 100,000
19 45,694 64,675 64,675 100,000 59,840 59,840 100,000
20 49,475 72,704 72,704 100,000 67,155 67,155 100,000
21 53,445 81,606 81,606 106,087(4) 75,297 75,297 100,000
22 57,613 91,418 91,418 117,015(4) 84,342 84,342 107,957(4)
23 61,990 102,223 102,223 128,801(4) 94,295 94,295 118,812(4)
24 66,586 114,121 114,121 141,511(4) 105,243 105,243 130,501(4)
25 71,412 127,226 127,226 155,216(4) 117,284 117,284 143,086(4)
30 99,409 215,336 215,336 249,790(4) 197,869 197,869 229,528(4)
35 135,142 358,260 358,260 383,339(4) 327,934 327,934 350,889(4)
40 180,747 592,439 592,439 622,060(4) 540,551 540,551 567,579(4)
</TABLE>
- -------
(1) For policy years 11 and thereafter, the illustrated net annual rate of
return equals 10.51%.
(2) Assumes a $1,425 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(3) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
(4) Increase is due to adjustment by the corridor percentage. See "Death
Benefits".
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN
THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT
RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A
NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND
DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUNDS' SERIES. THE ACCUMULATION
VALUE, CASH VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 12% OVER A PERIOD OF
YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATION CAN BE MADE BY JP LIFEAMERICA, THE SEPARATE ACCOUNT,
OR THE FUNDS THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR
ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-4
<PAGE>
JEFFERSON PILOT LIFEAMERICA INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION II ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 40 ANNUAL RATE OF RETURN: (1)
$100,000 INITIAL SPECIFIED AMOUNT 0% (-1.74% NET)
ASSUMED ANNUAL PREMIUM (2): $1,425
<TABLE>
<CAPTION>
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED -------------------------------- --------------------------------
OF AT 4% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(3) VALUE(3) BENEFIT(3) VALUE(3) VALUE(3) BENEFIT(3)
---- -------------- ------------ -------- ---------- ------------ -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,482 1,076 699 101,076 1,068 691 101,068
2 3,023 2,115 1,739 102,115 2,099 1,723 102,099
3 4,626 3,119 2,742 103,119 3,095 2,719 103,095
4 6,293 4,093 3,717 104,093 4,053 3,677 104,053
5 8,027 5,050 4,674 105,050 4,974 4,597 104,974
6 9,830 5,991 5,677 105,991 5,853 5,540 105,853
7 11,705 6,915 6,664 106,915 6,691 6,440 106,691
8 13,655 7,812 7,624 107,812 7,486 7,297 107,486
9 15,684 8,693 8,567 108,693 8,236 8,110 108,236
10 17,793 9,558 9,495 109,558 8,939 8,876 108,939
11 19,987 10,457 10,457 110,457 9,618 9,618 109,618
12 22,268 11,311 11,311 111,311 10,243 10,243 110,243
13 24,641 12,118 12,118 112,118 10,809 10,809 110,809
14 27,109 12,875 12,875 112,875 11,310 11,310 111,310
15 29,675 13,579 13,579 113,579 11,738 11,738 111,738
16 32,344 14,224 14,224 114,224 12,088 12,088 112,088
17 35,120 14,806 14,806 114,806 12,353 12,353 112,353
18 38,007 15,319 15,319 115,319 12,529 12,529 112,529
19 41,009 15,755 15,755 115,755 12,610 12,610 112,610
20 44,131 16,104 16,104 116,104 12,586 12,586 112,586
21 47,378 16,356 16,356 116,356 12,447 12,447 112,447
22 50,755 16,503 16,503 116,503 12,182 12,182 112,182
23 54,268 16,535 16,535 116,535 11,775 11,775 111,775
24 57,920 16,441 16,441 116,441 11,206 11,206 111,206
25 61,719 16,211 16,211 116,211 10,458 10,458 110,458
30 83,118 12,505 12,505 112,505 3,468 3,468 103,468
35 109,153 2,802 2,802 102,802 0 0 0
40 140,828 0 0 0 0 0 0
</TABLE>
- -------
(1) For policy years 11 and thereafter, the illustrated net annual rate of
return equals -1.49%.
(2) Assumes a $1,425 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(3) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN
THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT
RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A
NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND
DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUNDS' SERIES. THE ACCUMULATION
VALUE, CASH VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 0% OVER A PERIOD OF
YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATION CAN BE MADE BY JP LIFEAMERICA, THE SEPARATE ACCOUNT,
OR THE FUNDS THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR
ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-5
<PAGE>
JEFFERSON PILOT LIFEAMERICA INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION II ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 40 ANNUAL RATE OF RETURN (1):
$100,000 INITIAL SPECIFIED AMOUNT 4% (2.28% NET)
ASSUMED ANNUAL PREMIUM (2): $1,425
<TABLE>
<CAPTION>
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED -------------------------------- --------------------------------
OF AT 4% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(3) VALUE(3) BENEFIT(3) VALUE(3) VALUE(3) BENEFIT(3)
---- -------------- ------------ -------- ---------- ------------ -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,482 1,125 749 101,125 1,117 740 101,117
2 3,023 2,258 1,881 102,258 2,241 1,865 102,241
3 4,626 3,398 3,021 103,398 3,372 2,996 103,372
4 6,293 4,551 4,175 104,551 4,508 4,132 104,508
5 8,027 5,731 5,355 105,731 5,648 5,272 105,648
6 9,830 6,938 6,624 106,938 6,789 6,475 106,789
7 11,705 8,171 7,920 108,171 7,929 7,678 107,929
8 13,655 9,421 9,233 109,421 9,064 8,876 109,064
9 15,684 10,699 10,573 110,699 10,195 10,069 110,195
10 17,793 12,005 11,943 112,005 11,315 11,253 111,315
11 19,987 13,396 13,396 113,396 12,455 12,455 112,455
12 22,268 14,791 14,791 114,791 13,579 13,579 113,579
13 24,641 16,185 16,185 116,185 14,680 14,680 114,680
14 27,109 17,575 17,575 117,575 15,750 15,750 115,750
15 29,675 18,957 18,957 118,957 16,782 16,782 116,782
16 32,344 20,325 20,325 120,325 17,765 17,765 117,765
17 35,120 21,672 21,672 121,672 18,691 18,691 118,691
18 38,007 22,992 22,992 122,992 19,554 19,554 119,554
19 41,009 24,274 24,274 124,274 20,345 20,345 120,345
20 44,131 25,506 25,506 125,506 21,049 21,049 121,049
21 47,378 26,674 26,674 126,674 21,653 21,653 121,653
22 50,755 27,770 27,770 127,770 22,142 22,142 122,142
23 54,268 28,776 28,776 128,776 22,493 22,493 122,493
24 57,920 29,681 29,681 129,681 22,682 22,682 122,682
25 61,719 30,468 30,468 130,468 22,684 22,684 122,684
30 83,118 31,911 31,911 131,911 19,028 19,028 119,028
35 109,153 26,668 26,668 126,668 5,789 5,789 105,789
40 140,828 9,823 9,823 109,823 0 0 0
</TABLE>
- -------
(1) For policy years 11 and thereafter, the illustrated net annual rate of
return equals 2.51%.
(2) Assumes a $1,425 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(3) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN
THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT
RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A
NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND
DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUNDS' SERIES. THE ACCUMULATION
VALUE, CASH VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL INVESTMENT RATES OF RETURN AVERAGED 4% OVER A PERIOD OF
YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATION CAN BE MADE BY JP LIFEAMERICA, THE SEPARATE ACCOUNT,
OR THE FUNDS THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR
ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-6
<PAGE>
JEFFERSON PILOT LIFEAMERICA INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION II ASSUMED HYPOTHETICAL GROSS
MALE NON-SMOKER ISSUE AGE 40 ANNUAL RATE OF RETURN (1):
$100,000 INITIAL SPECIFIED AMOUNT ASSUMED ANNUAL PREMIUM (2): 12% (10.28%
NET)
$1,425
<TABLE>
<CAPTION>
PREMIUMS ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
END ACCUMULATED -------------------------------- --------------------------------
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(3) VALUE(3) BENEFIT(3) VALUE(3) VALUE(3) BENEFIT(3)
---- -------------- ------------ -------- ---------- ------------ -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,496 1,224 848 101,224 1,215 839 101,215
2 3,067 2,555 2,179 102,555 2,536 2,160 102,536
3 4,717 4,004 3,627 104,004 3,974 3,598 103,974
4 6,449 5,588 5,212 105,588 5,538 5,161 105,538
5 8,268 7,336 6,959 107,336 7,239 6,863 107,239
6 10,177 9,262 8,948 109,262 9,089 8,775 109,089
7 12,182 11,386 11,135 111,386 11,100 10,849 111,100
8 14,288 13,716 13,528 113,716 13,288 13,100 113,288
9 16,498 16,285 16,159 116,285 15,667 15,541 115,667
10 18,820 19,117 19,054 119,117 18,254 18,191 118,254
11 21,257 22,313 22,313 122,313 21,115 21,115 121,115
12 23,816 25,813 25,813 125,813 24,231 24,231 124,231
13 26,503 29,643 29,643 129,643 27,621 27,621 127,621
14 29,324 33,836 33,836 133,836 31,308 31,308 131,308
15 32,287 38,424 38,424 138,424 35,313 35,313 135,313
16 35,398 43,444 43,444 143,444 39,662 39,662 139,662
17 38,664 48,934 48,934 148,934 44,383 44,383 144,383
18 42,093 54,938 54,938 154,938 49,510 49,510 149,510
19 45,694 61,499 61,499 161,499 55,079 55,079 155,079
20 49,475 68,664 68,664 168,664 61,123 61,123 161,123
21 53,445 76,484 76,484 176,484 67,679 67,679 167,679
22 57,613 85,020 85,020 185,020 74,789 74,789 174,789
23 61,990 94,332 94,332 194,332 82,491 82,491 182,491
24 66,586 104,492 104,492 204,492 90,825 90,825 190,825
25 71,412 115,573 115,573 215,573 99,836 99,836 199,836
30 99,409 187,900 187,900 287,900 157,049 157,049 257,049
35 135,142 298,922 298,922 398,922 240,533 240,533 340,533
40 180,747 469,047 469,047 569,047 360,128 360,128 460,128
</TABLE>
- -------
(1) For policy years 11 and thereafter, the illustrated net annual rate of
return equals 10.51%.
(2) Assumes a $1,425 premium is paid at the beginning of each policy year.
Values would be different if premiums are paid with a different frequency
or in different amounts.
(3) Assumes that no policy loans or withdrawals have been made. Zero values
indicate lapse in the absence of an additional premium payment.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN
THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A
REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL INVESTMENT
RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A
NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY THE OWNER AND
DIFFERENT INVESTMENT RATES OF RETURN FOR THE FUNDS' SERIES. THE ACCUMULATION
VALUE, CASH VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACUTAL INVESTMENT RATES OF RETURN AVERAGED 12% OVER A PERIOD OF
YEARS, BUT FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATION CAN BE MADE BY JP LIFEAMERICA, THE SEPARATE ACCOUNT,
OR THE FUNDS THAT THIS ASSUMED INVESTMENT RATE OF RETURN CAN BE ACHIEVED FOR
ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-7
<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.
REPRESENTATIONS REGARDING FEES AND CHARGES
The fees and charges deducted under the contract, in the aggregate, are
reasonable in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by Chubb Colonial Life Insurance Company.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The cover sheet.
The Prospectus consisting of 62 pages.
The undertaking to file reports.
The undertaking pursuant to Rule 485(b)(1) under the Securities Act of 1933.
The representations regarding fees and charges.
The signatures.
Written consent
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), (incorporated by
reference to Exhibit 1(a) of Effective Amendment No. 2 of the
Registration Statement on Form S-6 of Colonial Separate Account B, filed on
April 22, 1996, Registration No. 33-77496).
(b) Not applicable.
(c)(i) Form of Underwriting Agreement between Chubb Colonial Life
Insurance Company, Chubb Colonial Separate Account B and Chubb Securities
Corporation (incorporated by reference to Exhibit 1(c)(i) of Post-Effective
Amendment No. 2 of the Registration Statement on Form S-6 of Colonial Separate
Account B, filed on April 22, 1996, Registration No. 33-77496).
(ii) Specimen District Manager's Agreement of Chubb Securities
Corporation (incorporated by reference to Exhibit 1(c)(ii) of Post-Effective
Amendment No. 2 of the Registration Statement on Form S-6 of Colonial
Separate Account B, filed on April 22, 1996, Registration No. 33-77496).
(iii) Specimen Sales Representative's Agreement of Chubb Securities
Corporation (incorporated by reference to Exhibit 1(c)(iii) of Post-
Effective Amendment No. 2 of the Registration Statement on Form S-6 of
Colonial Separate Account B, filed on April 22, 1996, Registration No. 33-
77496).
(iv) Schedule of Commissions (incorporated by reference to Exhibit
1(c)(iv) of Post-Effective Amendment No. 2 of the Registration Statement on
Form S-6 of Colonial Separate Account B, filed on April 22, 1996,
Registration No. 33-77496).
(d) Not applicable.
(e)(i) Specimen Policy (incorporated by reference to Exhibit 1(e)(i) of
Post-Effective Amendment No. 2 of the Registration Statement on Form S-6 of
Colonial Separate Account B, filed on April 22, 1996, Registration No. 33-
77496).
(ii) Form of Riders (incorporated by reference to Exhibit 1(e)(ii) of
Post-Effective Amendment No. 2 of the Registration Statement on Form S-6 of
Colonial Separate Account B, filed on April 22, 1996, Registration No. 33-
77496).
(f)(i) Amended and Restated Charter (with all amendments) of Chubb
Colonial Life Insurance Company (incorporated by reference to Exhibit 1(f)(i)
of Post-Effective Amendment No. 2 of the Registration Statement on Form S-6 of
Colonial Separate Account B, filed on April 22, 1996, Registration No. 33-
77496).
(ii) By-Laws of Chubb Colonial Life Insurance Company (incorporated by
reference to Exhibit 1(f)(ii) of Post-Effective Amendment No. 2 of the
Registration Statement on Form S-6 of Colonial Separate Account B, filed on
April 22, 1996, Registration No. 33-77496).
(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).
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(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).
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<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 (to be filed by Amendment).
2. Specimen Policy (same as 1(e)).
3. Opinion and Consent of counsel as to securities being registered.
Incorporated by reference to Exhibit 3 of Post-Effective Amendment No. 3 to the
Registration Statement on Form 5-6 of Colonial Separate Account B, filed on
December 17, 1996, Registration No. 33-77496.
4. Not applicable.
5. Not applicable.
6. Actuarial opinion and consent of Richard Dielen Snyder,FSA, MAAA.
(Incorporated by reference to Exhibit 6 of Post-Effective Amendment No. 5
to the Registration Statement on Form S-6 of Colonial Separate Account B,
filed on December 23, 1997, Registration No. 33-77496).
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) (Incorporated by reference to Exhibit 9 of
Post-Effective Amendment No. 2 of the Registration Statement on
Form S-6 of Colonial Separate Account B, filed on April 22, 1996,
Registration No. 33-77496.
10. Representations, description and undertakings regarding mortality and
expense risk charge, pursuant to Rule 6e-3(T)(b)(13)(iii)(F) (Incorporated
by reference to Exhibit 10 of Post-Effective Amendment No. 2 of the
Registration Statement on Form S-6 of Colonial Separate Account B, filed
on April 22, 1996, Registration No. 33-77496.
11. (a) Undertaking to Guarantee Obligations of Principal Underwriters,
pursuant to Rule 6e-3(T)(b)(13)(vi) (Incorporated by reference to Exhibit
11(a) of Post-Effective Amendment No. 2 of the Registration Statement on
Form S-6 of Colonial Separate Account B, filed on April 22, 1996,
Registration No. 33-77496.
(b) Statement of Chubb Colonial Life Insurance Company pursuant to Rule
27d-2 under the Investment Company Act of 1940 (Incorporated by reference
to Exhibit 11(b) of Post-Effective Amendment No. 2 of the Registration
Statement on Form S-6 of Colonial Separate Account B, filed on April 22,
1996, Registration No. 33-77496.
12. Form of Reinsurance Agreement (Incorporated by reference to Exhibit 12 of
Post-Effective Amendment No. 2 of the Registration Statement on Form S-6
of Colonial Separate Account B, filed on April 22, 1996, Registration No.
33-77496.
13. Not Applicable.
14. Not Applicable.
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<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, JEFFERSON PILOT
LIFEAMERCA INSURANCE COMPANY CERTIFIES THAT IT MEETS THE REQUIREMENTS OF
SECURITIES ACT RULE 485(B) FOR EFFECTIVENESS OF THIS POST-EFFECTIVE AMENDMENT
NO. 6 TO THE REGISTRATION STATEMENT AND HAS DULY CAUSED THIS POST-EFFECTIVE
AMENDMENT NO. 6 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED, AND ITS SEAL TO BE HEREUNTO AFFIXED AND
ATTESTED, ALL IN CONCORD, NEW HAMPSHIRE ON THE 28th DAY OF APRIL, 1998.
Jefferson Pilot LifeAmerica Insurance Company
(Seal) /s/
By:
--------------------------------------
Title:
--------------------------------------
Attest:
/s/ Ronald R. Angarella
_________________________________
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND
ON THE DATE INDICATED.
SIGNATURES TITLE DATE
/s/ Ronald R. Angarella Director April 28, 1998
- --------------------------------- Senior Vice
RONALD R. ANGARELLA President
/s/ Charles C. Cornelio Director and April 28, 1998
- --------------------------------- Executive Vice
CHARLES C. CORNELIO President
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<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
<S> <C> <C>
* Director and April 28, 1998
- ---------------------------------- Executive Vice
DENNIS R. GLASS President
* Director and April 28, 1998
- ---------------------------------- Executive Vice
KENNETH C. MLEKUSH President
*
- ---------------------------------- President and April 28, 1998
DAVID A. STONECIPHER Chairman
*
- ---------------------------------- Director and
E. JAY YELTON Executive Vice
President
</TABLE>
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EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
PAGES*
------------
<C> <S> <C>
7. Consent of Ernst & Young LLP.........................
</TABLE>
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*In original only
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated February 9, 1998 for Chubb Colonial Life Insurance
Company in Post-Effective Amendment No. 6 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
Greensboro, North Carolina
April 22, 1998
