<PAGE>
File Number 33-79534
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment Number
Post-Effective Amendment Number 2
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment Number 2
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
-----------------------------------------------
(Exact Name of Registrant)
The Minnesota Mutual Life Insurance Company
-------------------------------------------
(Name of Depositor)
400 Robert Street North, St. Paul, Minnesota 55101-2098
-------------------------------------------------------
(Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, Including Area Code: (612) 298-3500
Dennis E. Prohofsky Copy to:
Vice President, General Counsel and Secretary J. Sumner Jones, Esq.
The Minnesota Mutual Life Insurance Company Jones & Blouch L.L.P.
400 Robert Street North 2100 Pennsylvania Avenue, N.W.
St. Paul, Minnesota 55101-2098 Washington, D.C. 20037
(Name and Address of Agent for Service)
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (check appropriate box)
immediately upon filing pursuant to paragraph (b)
---
on May 1, 1995, pursuant to paragraph (b)
---
X 60 days after filing pursuant to paragraph (a)(1) of Rule 485
---
on (date), pursuant to paragraph (a)(1) of Rule 485
---
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
___ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE>
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
CROSS REFERENCE SHEET TO PROSPECTUS
Form N-4
Item
Number Caption in prospectus
- -------- ---------------------
1. Cover Page
2. Definitions
3. Synopsis
4. Condensed Financial Information
5. General Descriptions
6. Contract Deductions
7. Description of the Contracts
8. Annuity Period
9. Death Benefit
10. Crediting Accumulation Units
11. Withdrawals and Surrender
12. Federal Tax Status
13. Legal Proceedings
14. Table of Contents of the Statement of Additional Information
<PAGE>
GROUP VARIABLE ANNUITY PROSPECTUS
MINNESOTA MUTUAL
GROUP VARIABLE ANNUITY PROSPECTUS
The group deferred variable annuity contracts (hereinafter "Contracts"), which
are more fully described in this Prospectus, are designed to provide benefits
under certain retirement programs or plans which qualify for special federal
income tax treatment. The Contracts are specifically designed for deferred
compensation plans of state and local governments and other tax-exempt
organizations as provided in Sections 457 and 403 of the Internal Revenue Code
(hereinafter "Code").
The contract may also be used in other situations where a group annuity
contract is desired but where the benefit structure does not require a contract
which is recognized as an "annuity" for federal income tax purposes.
The owner of a Contract or a Participant under a Contract may elect to have
contract values accumulated on a completely variable basis, on a completely
fixed basis (as part of Minnesota Mutual's General Account and in which the
safety of principal and interest are guaranteed) or on a combination fixed and
variable basis. To the extent that contract values are accumulated on a variable
basis, they will be a part of the Group Variable Annuity Account. The Group
Variable Annuity Account invests its assets in shares of the Portfolios of
MIMLIC Series Fund, Inc. (the "Series Fund") or in shares of other registered
investment companies or portfolios of such companies (hereinafter "Underlying
Funds"). The Underlying Funds which are available under the Contract include the
Long-Term Corporate Portfolio of Vanguard Fixed Income Securities Fund, Inc.;
the Vanguard/Wellington Fund, Inc.; the Fidelity Contrafund; the Scudder
International Fund, a series of Scudder International Fund, Inc.; and the Janus
Twenty Fund, a series of the Janus Investment Fund. The variable accumulation
value of the Contract and the amount of each variable annuity payment will vary
in accordance with the performance of the Portfolio or Portfolios of the Series
Fund or such other Underlying Funds selected by the Contract Owner or
Participant. The Contract Owner or Participant bears the entire investment risk
for any amounts allocated to the Group Variable Annuity Account. The Contract
and all interests under it are usually subject to the general interests of
creditors of the owner of the Contract (usually the employer).
The amount of annuity payments may also be variable based upon the experience
of the Group Variable Annuity Account or the payments may be fixed. They may
also be a combination of both.
This Prospectus sets forth information that a prospective investor should know
before investing in the Group Variable Annuity Account, and it should be read
and kept for future reference. A Statement of Additional Information, bearing
the same date, which contains further Contract and Group Variable Annuity
Account information, has been filed with the Securities and Exchange Commission
and is incorporated by reference into this Prospectus. A copy of the Statement
of Additional Information may be obtained without charge by calling (612)
298-3500, or by writing the Group Variable Annuity Account at its principal
office at Minnesota Mutual Life Center, 400 Robert Street North, St. Paul,
Minnesota 55101-2098. A Table of Contents for the Statement of Additional
Information appears in this Prospectus on page 27.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS SHOULD BE READ CAREFULLY AND RETAINED FOR FUTURE REFERENCE.
[LOGO]
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
400 ROBERT STREET NORTH
ST. PAUL, MINNESOTA 55101-2098
TELEPHONE: (612) 298-3500
The date of this document and the Statement of Additional Information is:
January 6, 1996
F.47496 Rev. 12-95
<PAGE>
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
Definitions....................................................................... 3
Synopsis.......................................................................... 4
Expense Table..................................................................... 5
Condensed Financial Information................................................... 9
Financial Statements.............................................................. 9
Performance Data.................................................................. 9
General Descriptions.............................................................. 10
Contract Charges.................................................................. 13
Sales Charges................................................................. 13
Mortality and Expense Risk Charges............................................ 13
Contract Administrative Charge................................................ 13
Premium Taxes................................................................. 14
Contract Fee.................................................................. 14
Series Fund and Underlying Fund Expenses.......................................... 14
Description of the Contracts...................................................... 15
Voting Rights..................................................................... 17
Annuity Period.................................................................... 17
Death Benefit..................................................................... 20
Crediting Accumulation Units...................................................... 20
Withdrawals and Surrender......................................................... 22
Distribution...................................................................... 23
Federal Tax Status................................................................ 23
Legal Proceedings................................................................. 27
Registration Statement............................................................ 27
Statement of Additional Information............................................... 27
</TABLE>
2
<PAGE>
DEFINITIONS
As used in this Prospectus, the following terms have the indicated meanings:
ACCUMULATION UNIT: an accounting device used to determine the value of a
Contract before annuity payments begin.
ACCUMULATION VALUE: the sum of the values under a Contract in the General
Account and in the Group Variable Annuity Account. Accumulation values may also
be determined with respect to each Participant's interest in the Contract.
ANNUITY: a series of payments for life; for life with a minimum number of
payments guaranteed; for the joint lifetime of the annuitant and another person
and thereafter during the lifetime of the survivor; or for a period certain.
ANNUITY UNIT: an accounting device used to determine the amount of annuity
payments.
CERTIFICATE: a Participant's evidence of Contract rights and privileges or of
the amount and terms of annuity payments.
CODE: the Internal Revenue Code of 1986, as amended.
CONTRACT OWNER: the owner of the Contract, which could be a state, a local
government or other tax-exempt employer eligible to contract for a
tax-advantaged plan or any other suitable group owner.
CONTRACT YEAR: a period of one year beginning with the Contract date or a
Contract anniversary.
FIXED ANNUITY: an annuity providing for payments of guaranteed amounts
throughout the payment period.
FUND: the mutual fund or separate investment portfolio within a series mutual
fund which has been designated as an eligible investment for the Group Variable
Annuity Account, which shall be in addition to the MIMLIC Series Fund, Inc. and
its Portfolios.
GENERAL ACCOUNT: all of our assets other than those in the Group Variable
Annuity Account or in other separate accounts established by us.
GROUP VARIABLE ANNUITY ACCOUNT: a separate investment account called the
Minnesota Mutual Group Variable Annuity Account, where the investment experience
of its assets is kept separate from our other assets. This Group Variable
Annuity Account has several sub-accounts.
PARTICIPANT: a person for whom an interest is maintained under a group variable
annuity Contract, prior to the time that annuity payments begin.
PLAN: a tax-qualified plan of state and local governments and other tax-exempt
organizations, or a plan sponsored by any other suitable group owner, under
which benefits are to be provided by the group variable annuity Contracts
described herein.
PURCHASE PAYMENTS: amounts paid to us under a Contract.
SERIES FUND: the MIMLIC Series Fund, Inc., a mutual fund of the series type
which is an investment alternative for the Group Variable Annuity Account.
UNDERLYING FUND: one of a number of named mutual funds which are investment
alternatives for the Group Variable Annuity Account.
UNDERLYING FUND PORTFOLIO: a securities portfolio of an Underlying Fund where it
is a mutual fund of the series type.
VALUATION DATE: each date on which a Fund Portfolio is valued.
VARIABLE ANNUITY: an annuity providing for payments varying in amount in
accordance with the investment experience of the Group Variable Annuity Account.
WE, US, OUR: The Minnesota Mutual Life Insurance Company.
YOU, YOUR: a Participant under the Contract.
3
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE VARIABLE ANNUITY CONTRACTS
THIS SYNOPSIS CONTAINS A BRIEF SUMMARY OF SOME OF THE IMPORTANT FEATURES OF THE
VARIABLE ANNUITY CONTRACTS DESCRIBED IN THIS PROSPECTUS. YOU MAY FIND IT HELPFUL
TO RE-READ THIS SUMMARY AFTER READING THE PROSPECTUS, WHICH SHOULD BE RETAINED
FOR FUTURE REFERENCE. A GLOSSARY OF SPECIAL TERMS USED IN THIS PROSPECTUS MAY BE
FOUND UNDER THE HEADING "DEFINITIONS" IN THIS PROSPECTUS ON PAGE 3.
WHAT IS AN ANNUITY?
An annuity is a series of payments for life; for life with a minimum number of
payments guaranteed; for the joint lifetime of the annuitant and another person
and thereafter during the lifetime of the survivor; or for a period certain. An
annuity with payments which are guaranteed as to amount during the payment
period is a fixed annuity. An annuity with payments which vary during the
payment or accumulation period in accordance with the investment experience of a
separate account is called a variable annuity.
WHAT ARE THE CONTRACTS OFFERED BY THIS PROSPECTUS?
The Contracts are combination fixed and variable annuity contracts issued by us
which provide for monthly annuity payments. These payments may begin immediately
or at a future date elected by you. Purchase payments received by us under a
Contract are allocated either to our General Account or Group Variable Annuity
Account, as specified by you. Purchase payments and other values allocated to
the General Account will be guaranteed and will accumulate at a rate of interest
guaranteed to be no less than 3%. Purchase payments and other values allocated
to the Group Variable Annuity Account are invested according to your
instructions in one or more Underlying Fund Portfolios and there is no guarantee
of investment return or even against investment loss on such allocations.
This Prospectus describes only the variable aspects of the Contracts, except
where fixed aspects are specifically mentioned. Please look to the language of
the Contracts for a description of the fixed portion of the Contracts. For more
information on the Contracts, see the heading "Description of the Contracts" in
this Prospectus.
WHAT TYPES OF VARIABLE ANNUITY CONTRACTS ARE AVAILABLE?
This Prospectus offers only one type of Contract, a group deferred variable
annuity contract (herein "Contract"), designed primarily to be used in
tax-advantaged plans of state and local governments and other tax-exempt
organizations. These governments or organizations are the owners of the
Contracts. The Contract and all interests under it are subject to the general
interests of creditors of the owner of the Contract (usually the employer).
HOW DOES A PERSON OBTAIN COVERAGE UNDER THE CONTRACT?
After purchasing a Contract, the Contract Owner will submit an application to us
for any employee who desires coverage under the Contract, is eligible to
participate in the underlying retirement program and who completes an
application. Such a person is then covered by the Contract and its terms, herein
a "Participant". A person's employer or the Contract Owner should be consulted
for additional information regarding the plan.
HOW IS THE AMOUNT OF PURCHASE PAYMENTS DETERMINED?
As a general matter, the Contract Owner, normally an employer, will report to us
the amount of purchase payments by or on behalf of each Participant. There are
no minimum amounts or number of purchase payments that are required under the
Contract. For deferred compensation programs, the employer or Contract Owner
will make purchase payments by or on behalf of a Participant pursuant to the
provisions of the underlying deferred compensation plan.
WHAT INVESTMENT OPTIONS ARE AVAILABLE FOR THE GROUP VARIABLE ANNUITY ACCOUNT?
Currently purchase payments may be allocated to one or more of the sub-accounts
of the Group Variable Annuity Account that invest respectively in the following
Series Fund or Underlying Fund Portfolios:
Growth Portfolio of MIMLIC Series Fund, Inc.,
Bond Portfolio of MIMLIC Series Fund, Inc.,
Money Market Portfolio of MIMLIC Series Fund, Inc.,
Asset Allocation Portfolio of MIMLIC Series Fund, Inc.,
4
<PAGE>
Mortgage Securities Portfolio of MIMLIC Series Fund, Inc.,
Index 500 Portfolio of MIMLIC Series Fund, Inc.,
Capital Appreciation Portfolio of MIMLIC Series Fund, Inc.,
International Stock Portfolio of MIMLIC Series Fund, Inc.,
Value Stock Portfolio of MIMLIC Series Fund, Inc.,
Small Company Portfolio of MIMLIC Series Fund, Inc.,
Maturing Government Bond Portfolios of MIMLIC Series Fund, Inc. (of which
four are available),
Long-Term Corporate Portfolio of Vanguard Fixed Income Securities Fund,
Inc.,
Vanguard/Wellington Fund, Inc.,
Fidelity Contrafund,
Scudder International Fund, a series of Scudder International Fund, Inc.,
and
Janus Twenty Fund, a series of the Janus Investment Fund
Additional information concerning the investment objectives and policies of
the Series Fund Portfolios can be found in the current prospectus for the MIMLIC
Series Fund, Inc., which is attached to this Prospectus. The Contracts offer
additional Underlying Fund alternatives for investment by the sub-accounts of
the Group Variable Annuity Account which are in addition to those options
available in the Series Fund. Additional information concerning the investment
objectives and policies of these choices, including expenses, are contained in
the prospectuses for each such option. Some of these fund alternatives may also
be part of a
series fund arrangement where not all of an existing fund's investment options
are available to the Contract.
There is no assurance that any Series Fund Portfolio or Underlying Fund will
meet its objectives.
CAN YOU CHANGE THE PORTFOLIO SELECTED?
Yes, provided that the Contract Owner and the underlying plan permit it. A
Participant may change the allocation of future purchase payments by giving us
written notice or a telephone call notifying us of the change. Before annuity
payments begin, a Participant may transfer all or a part of the accumulation
value from one Portfolio to another or among the Portfolios. After variable
annuity payments begin, transfers of annuity reserves may be made among the
sub-accounts of the Group Variable Annuity Account and from those sub-accounts
to the General Account. However, once fixed annuity payments begin, no annuity
reserves may be transferred out of the General Account.
WHAT CHARGES ARE ASSOCIATED WITH THE CONTRACTS?
The following Contract expense information is intended to illustrate the
expenses of the Contract as applied to the Contract and Participant interests
thereunder. All expenses are rounded to the nearest dollar. The information
contained in the tables must be considered with the narrative information which
immediately follows them.
- ------------------------------------------------------------------------
EXPENSE TABLE
PARTICIPANT TRANSACTION EXPENSES
<TABLE>
<S> <C>
Deferred Sales Load (as a percentage of amount
surrendered).............................................. 6.0%
decreasing uniformly
by .0833% for each of
the first 72 months
from the contract
date
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and Expense Risk Charges.......................... 0.85%**
Contract Administrative Charge.............................. 0.15%**
-----
Total Separate Account Annual Expenses.................. 1.00%
-----
-----
**Separate account annual expenses may be increased. See
narrative information following these tables.
</TABLE>
SERIES FUND AND UNDERLYING FUNDS ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE
NET ASSETS FOR THE DESCRIBED SERIES FUND AND UNDERLYING FUNDS)
5
<PAGE>
<TABLE>
<S> <C>
MIMLIC SERIES FUND, INC. ANNUAL EXPENSES (as a percentage of
MIMLIC Series Fund average net assets for the described
Portfolio)
GROWTH PORTFOLIO
Management Fees.......................................... .50%
Other Expenses........................................... .06%
-----
Total Growth Portfolio Annual Expenses............... .56%
-----
-----
EXAMPLE--For contracts using the Growth Portfolio:
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
If you surrender your contract at the end of the
applicable time period:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets.... $62 $79 $96 $186
If you annuitize at the end of the applicable time
period:*
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets.... $16 $49 $85 $186
</TABLE>
<TABLE>
<S> <C>
MIMLIC SERIES FUND, INC. ANNUAL EXPENSES (as a percentage of
MIMLIC Series Fund average net assets for the described
Portfolio)
BOND PORTFOLIO
Management Fees.......................................... .50%
Other Expenses........................................... .11%
-----
Total Bond Portfolio Annual Expenses................. .61%
-----
-----
EXAMPLE--For contracts using the Bond Portfolio:
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
If you surrender your contract at the end of the
applicable time period:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets.... $63 $81 $98 $191
If you annuitize at the end of the applicable time
period:*
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets.... $16 $51 $88 $191
</TABLE>
<TABLE>
<S> <C>
MIMLIC SERIES FUND, INC. ANNUAL EXPENSES (as a percentage of
MIMLIC Series Fund average net assets for the described
Portfolio)
MONEY MARKET PORTFOLIO
Management Fees.......................................... .50%
Other Expenses (after expense reimbursement)............. .15%
-----
Total Money Market Portfolio Annual Expenses......... .65%
-----
-----
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
EXAMPLE--For contracts using the Money Market Portfolio:
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
If you surrender your contract at the end of the
applicable time period:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets.... $63 $82 $100 $195
If you annuitize at the end of the applicable time
period:*
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:... $17 $52 $90 $195
</TABLE>
<TABLE>
<S> <C>
MIMLIC SERIES FUND, INC. ANNUAL EXPENSES (as a percentage of
MIMLIC Series Fund average net assets for the described
Portfolio)
ASSET ALLOCATION PORTFOLIO
Management Fees.......................................... .50%
Other Expenses........................................... .06%
-----
Total Asset Allocation Portfolio Annual Expenses..... .56%
-----
-----
EXAMPLE--For contracts using the Asset Allocation Portfolio:
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
If you surrender your contract at the end of the
applicable time period:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets.... $62 $79 $96 $186
If you annuitize at the end of the applicable time
period:*
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets.... $16 $49 $85 $186
</TABLE>
<TABLE>
<S> <C>
MIMLIC SERIES FUND, INC. ANNUAL EXPENSS (as a percentage of
MIMLIC Series Fund average net assets for the described
Portfolio)
MORTGAGE SECURITIES PORTFOLIO
Management Fees.......................................... .50%
Other Expenses........................................... .10%
-----
Total Mortgage Securities Portfolio Annual .60%
Expenses...........................................
-----
-----
EXAMPLE--For contracts using the Mortgage Securities
Portfolio:
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
If you surrender your contract at the end of the
applicable time period:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:... $63 $80 $98 $190
If you annuitize at the end of the applicable time
period:*
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:... $16 $50 $87 $190
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
MIMLIC SERIES FUND, INC. ANNUAL EXPENSES (as a percentage of
MIMLIC Series Fund average net assets for the described
Portfolio)
INDEX 500 PORTFOLIO
Management Fees.......................................... .40%
Other Expenses........................................... .10%
-----
Total Index 500 Portfolio Annual Expenses............ .50%
-----
-----
EXAMPLE--For contracts using the Index 500 Portfolio:
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
If you surrender your contract at the end of the
applicable time period:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:... $62 $77 $93 $179
If you annuitize at the end of the applicable time
period:*
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:... $15 $47 $82 $179
</TABLE>
<TABLE>
<S> <C>
MIMLIC SERIES FUND, INC. ANNUAL EXPENSES (as a percentage of
MIMLIC Series Fund average net assets for the described
Portfolio)
CAPITAL APPRECIATION PORTFOLIO
Management Fees.......................................... .75%
Other Expenses........................................... .08%
-----
Total Capital Appreciation Portfolio Annual .83%
Expenses...........................................
-----
-----
EXAMPLE--For contracts using the Capital Appreciation
Portfolio:
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
If you surrender your contract at the end of the
applicable time period:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:... $65 $87 $110 $215
If you annuitize at the end of the applicable time
period:*
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:... $19 $58 $99 $215
</TABLE>
<TABLE>
<S> <C>
MIMLIC SERIES FUND, INC. ANNUAL EXPENSES (as a percentage of
MIMLIC Series Fund average net assets for the described
Portfolio)
INTERNATIONAL STOCK PORTFOLIO
Management Fees.......................................... .82%
Other Expenses........................................... .42%
-----
Total International Stock Portfolio Annual 1.24%
Expenses...........................................
-----
-----
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
EXAMPLE--For contracts using the International Stock
Portfolio:
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
If you surrender your contract at the end of the
applicable time period:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:... $69 $99 $130 $257
If you annuitize at the end of the applicable time
period:*
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:... $23 $70 $120 $257
</TABLE>
<TABLE>
<S> <C>
MIMLIC SERIES FUND, INC. ANNUAL EXPENSES (as a percentage of
MIMLIC Series Fund average net assets for the described
Portfolio)
VALUE STOCK PORTFOLIO
Management Fees.......................................... .75%
Other Expenses (after expense reimbursement)............. .15%
-----
Total Value Stock Portfolio Annual Expenses.......... .90%
-----
-----
EXAMPLE--For contracts using the Value Stock Portfolio:
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
If you surrender your contract at the end of the
applicable time period:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:... $66 $89 $113 $222
If you annuitize at the end of the applicable time
period:*
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:... $19 $60 $103 $222
</TABLE>
<TABLE>
<S> <C>
MIMLIC SERIES FUND, INC. ANNUAL EXPENSES (as a percentage of
MIMLIC Series Fund average net assets for the described
Portfolio)
SMALL COMPANY PORTFOLIO
Management Fees.......................................... .75%
Other Expenses (after expense reimbursement)............. .14%
-----
Total Small Company Portfolio Annual Expenses........ .89%
-----
-----
EXAMPLE--For contracts using the Small Company Portfolio:
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
If you surrender your contract at the end of the
applicable time period:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:... $66 $89 $113 $221
If you annuitize at the end of the applicable time
period:*
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:... $19 $59 $102 $221
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
MIMLIC SERIES FUND, INC. ANNUAL EXPENSES (as a percentage of
MIMLIC Series Fund average net assets for the described
Portfolios)
MATURING GOVERNMENT BOND 1998 AND MATURING GOVERNMENT BOND
2002 PORTFOLIOS
Management Fees (.05% until April 30, 1998 and .25% .05%
thereafter)............................................
Other Expenses (after expense reimbursement)............. .15%
-----
Total Portfolio Annual Expenses...................... .20%
-----
-----
EXAMPLE--For contracts using these two Portfolios:
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
If you surrender your contract at the end of the
applicable time period:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:... $59 $68 $77 $145
If you annuitize at the end of the applicable time
period:*
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:... $12 $38 $66 $145
</TABLE>
<TABLE>
<S> <C>
MIMLIC SERIES FUND, INC. ANNUAL EXPENSES (as a percentage of
MIMLIC Series Fund average net assets for the described
Portfolios)
MATURING GOVERNMENT BOND 2006 AND MATURING GOVERNMENT BOND
2010 PORTFOLIOS
Management Fees.......................................... .25%
Other Expenses (after expense reimbursement)............. .15%
-----
Total Portfolio Annual Expenses...................... .40%
-----
-----
EXAMPLE--For contracts using these two Portfolios:
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
If you surrender your contract at the end of the
applicable time period:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:... $61 $74 $87 $168
If you annuitize at the end of the applicable time
period:*
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:... $14 $44 $77 $168
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
VANGUARD FIXED INCOME SECURITIES FUND, INC.--LONG-TERM
CORPORATE PORTFOLIO
Investment Advisory Fees................................. 0.04%
Management Expenses...................................... 0.24%
Other Expenses........................................... 0.04%
-----
Total Vanguard Fixed Income Securities Fund,
Inc.--Long-
Term Corporate Portfolio Annual Expenses........... 0.32%
-----
-----
EXAMPLE--for Contracts using the Vanguard Fixed Income
Securities Fund, Inc.--Long-Term Corporate Portfolio:
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
If you surrender your Certificate at the end of the
applicable time period:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets.... $60 $71 $82 $157
If you annuitize at the end of the applicable time period
or if you do not surrender your Certificate:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets.... $13 $41 $71 $157
</TABLE>
<TABLE>
<S> <C>
VANGUARD/WELLINGTON FUND, INC.
Investment Advisory Fees................................. 0.06%
Management and Administrative Expenses................... 0.26%
Other Expenses........................................... 0.03%
-----
Total Vanguard/Wellington Fund, Inc. Annual
Expenses........................................... 0.35%
-----
-----
EXAMPLE--for Contracts using the Vanguard/Wellington Fund,
Inc.:
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
If you surrender your Certificate at the end of the
applicable time period:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets.... $60 $73 $85 $162
If you annuitize at the end of the applicable time period
or if you do not surrender your Certificate:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets.... $14 $43 $74 $162
</TABLE>
<TABLE>
<S> <C>
FIDELITY CONTRAFUND
Investment Advisory Fees................................. 0.70%
Other Expenses (after expense reimbursement)............. 0.30%
-----
Fidelity Contrafund Annual Expenses.................. 1.00%
-----
-----
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
EXAMPLE--for Contracts using the Fidelity Contrafund:
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
If you surrender your Certificate at the end of the
applicable time period:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets.... $67 $92 $118 $233
If you annuitize at the end of the applicable time period
or if you do not surrender your Certificate:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets.... $20 $63 $108 $233
</TABLE>
<TABLE>
<S> <C>
SCUDDER INTERNATIONAL FUND
Investment Advisory Fees................................. 0.83%
Other Expenses........................................... 0.36%
-----
Scudder International Fund Annual Expenses........... 1.19%
-----
-----
EXAMPLE--for Contracts using the Scudder International Fund:
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
If you surrender your Certificate at the end of the
applicable time period:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets.... $69 $98 $129 $254
If you annuitize at the end of the applicable time period
or if you do not surrender your Certificate:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets.... $22 $69 $118 $254
</TABLE>
<TABLE>
<S> <C>
JANUS TWENTY FUND
Management Fee........................................... 0.67%
Other Expenses........................................... 0.35%
-----
Janus Twenty Fund Annual Expenses.................... 1.02%
-----
-----
EXAMPLE--for Contracts using the Janus Twenty Fund:
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
If you surrender your Certificate at the end of the
applicable time period:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets.... $67 $93 $119 $235
If you annuitize at the end of the applicable time period
or if you do not surrender your Certificate:
You would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets.... $21 $63 $109 $235
</TABLE>
The tables shown above are to assist a Contract Owner or Participant in
understanding the costs and expenses that a Participant's interest in the
Contract will bear directly or indirectly. For more information on Contract
costs and expenses, see the Prospectus heading "Contract Charges" and the
information immediately following. We reserve the right to increase the
mortality and expense risk charge to 1.25%. We also reserve the right to
increase the administrative charge to .40% if, and to the extent that, the costs
of
12
<PAGE>
administering the Contracts exceed .15%. However, no such increases are
anticipated. The table does not reflect deductions for any applicable premium
taxes which may be made from each purchase payment depending upon the applicable
law. Surrender amounts in years shown reflect the Participant's ability to
withdraw an amount equal to ten percent of the accumulation value at the end of
the previous calendar year without the imposition of the deferred sales charge.
The tables show the expenses of the Series Fund and Underlying Funds after
expense reimbursement, if any. Had the Money Market Portfolio paid all fees and
expenses for the year ending December 31, 1994, the ratio of expenses to average
daily net assets would have been .72%. A portion of brokerage commissions that
Fidelity Contrafund paid was used to reduce fund expenses. Without this
reduction, the total Fidelity Contrafund annual expenses would have been 1.03%.
The examples contained in these tables should not be considered a
representation of past or future expenses. Actual expenses may be greater or
less than those shown.
IS THERE A GUARANTEED DEATH BENEFIT?
Yes. The Contract has a guaranteed death benefit if a Participant dies before
annuity payments have started. The death benefit shall be equal to the greater
of: (1) the amount of the Participant's accumulation value payable at death; or
(2) the amount of the total purchase payments paid to us by or on behalf of a
Participant, less all prior Participant Contract withdrawals or transfers. A
transfer for this purpose is the application of an amount from this Contract to
another investment alternative available in the Contract Owner's underlying
plan.
WHAT ANNUITY OPTIONS ARE AVAILABLE?
The Contracts specify several annuity options. Each annuity option may be
elected on either a variable annuity or fixed annuity basis or a combination of
the two. Other annuity options may be available from us on request. The
specified annuity options are a life annuity; a life annuity with a period
certain of either 120 months, 180 months or 240 months; a joint and last
survivor annuity and a period certain annuity.
WHAT IF A CONTRACT PARTICIPANT DIES?
If a Participant dies before payments begin, we will pay the Participant's
guaranteed death benefit of the Contract as a death benefit to the named
beneficiary. If the annuitant dies after annuity payments have begun, we will
pay whatever death benefit may be called for by the terms of the annuity option
selected.
WHAT VOTING RIGHTS DO YOU HAVE?
Participants and annuitants will be able to direct us as to how to vote shares
of the Series Fund held for their Certificates.
13
<PAGE>
CONDENSED FINANCIAL INFORMATION
The financial statements of The Minnesota Mutual Life Insurance Company and
Minnesota Mutual Group Variable Annuity Account may be found in the Statement of
Additional Information.
The table below gives per unit information about the financial history of each
sub-
account for period from September 2,
1994, commencement of operations, to December 31, 1994. This information should
be read in conjunction with the financial statements and related notes of
Minnesota Mutual Group Variable Annuity Account included in the Statement of
Additional Information.
<TABLE>
<S> <C>
MIMLIC Money Market Sub-Account:
Unit value at beginning of period......................................... $1.000
Unit value at end of period............................................... $1.011
Number of units outstanding at end of period.............................. 318,636
Vanguard Long-Term Corporate Sub-Account:
Unit value at beginning of period......................................... $1.000
Unit value at end of period............................................... $0.989
Number of units outstanding at end of period.............................. 275,796
Vanguard Wellington Sub-Account:
Unit value at beginning of period......................................... $1.000
Unit value at end of period............................................... $0.977
Number of units outstanding at end of period.............................. 1,363,274
MIMLIC Index 500 Sub-Account:
Unit value at beginning of period......................................... $1.000
Unit value at end of period............................................... $0.979
Number of units outstanding at end of period.............................. 261,150
Fidelity Contrafund Sub-Account:
Unit value at beginning of period......................................... $1.000
Unit value at end of period............................................... $0.981
Number of units outstanding at end of period.............................. 4,870,232
Scudder International Sub-Account:
Unit value at beginning of period......................................... $1.000
Unit value at end of period............................................... $0.934
Number of units outstanding at end of period.............................. 1,807,445
Janus Twenty Sub-Account:
Unit value at beginning of period......................................... $1.000
Unit value at end of period............................................... $0.959
Number of units outstanding at end of period.............................. 444,821
</TABLE>
- ------------------------------------------------------------------------
FINANCIAL STATEMENTS
The financial statements of Minnesota Mutual Group Variable Annuity Account and
The Minnesota Mutual Life Insurance Company's financial statements are included
in the Statement of Additional Information.
- ------------------------------------------------------------------------
PERFORMANCE DATA
From time to time the Group Variable Annuity Account may publish advertisements
containing performance data relating to its sub-accounts. In the case of the
Money Market sub-account, the Group Variable Annuity Account will publish yield
or effective yield quotations for a seven-day or other specified period. In the
case of the other sub-accounts, performance data will consist of average annual
total return quotations for a one-year period and for the period since the
sub-account became available pursuant to the Group Variable Annuity Account's
registration statement, and may also include cumulative total return quotations
for the period since the sub-account became available pursuant to such
registration statement. The Money Market sub-account may also quote such average
annual and cumulative total return figures. Performance figures used by the
Group Variable Annuity Account are
14
<PAGE>
based on historical information of the sub-accounts for specified periods, and
the figures are not intended to suggest that such performance will continue in
the future. Performance figures of the Group Variable Annuity Account will
reflect charges made pursuant to the terms of the Contracts offered by this
Prospectus and charges of the Series Fund or Underlying Funds. The various
performance figures used in Group Variable Annuity Account advertisements
relating to the contracts described in this Prospectus are summarized below.
More detailed information on the computations is set forth in the Statement of
Additional Information.
MONEY MARKET SUB-ACCOUNT YIELD. Yield quotations for the Money Market
sub-account are based on the income generated by an investment in the
sub-account over a specified period, usually seven days. The figures are
"annualized," that is, the amount of income generated by the investment during
the period is assumed to be generated over a 52-week period and is shown as a
percentage of the investment. Effective yield quotations are calculated
similarly, but when annualized the income earned by an investment in the sub-
account is assumed to be reinvested. Effective yield quotations will be slightly
higher than yield quotations because of the compounding effect of this assumed
reinvestment. Yield and effective yield figures quoted by the sub-account will
not reflect the deduction of any applicable deferred sales charges.
TOTAL RETURN FIGURES. Cumulative total return figures may also be quoted for
all sub-accounts. Cumulative total return is based on a hypothetical $1,000
investment in the sub-account at the beginning of the advertised period, and is
equal to the percentage change between the $1,000 net asset value of that
investment at the beginning of the period and the net asset value of that
investment at the end of the period. Cumulative total return figures quoted by
the sub-account will not reflect the deduction of any applicable deferred sales
charges.
All cumulative total return figures published for sub-accounts will be
accompanied by average annual total return figures for a one-year period,
five-year period and for the period since the sub-account became available
pursuant to the Group Variable Annuity Account's registration statement. Average
annual total return figures will show for the specified period the average
annual rate of return required for an initial investment of $1,000 to equal the
surrender value of that investment at the end of the period. The surrender value
will reflect the deduction of the deferred sales charge applicable to the
contract and to the length of the period advertised. Such average annual total
return figures may also be accompanied by average annual total return figures,
for the same or other periods, which do not reflect the deduction of any
applicable deferred sales charges.
- ------------------------------------------------------------------------
GENERAL DESCRIPTIONS
A. THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
The Minnesota Mutual Life Insurance Company is a mutual life insurance company
organized in 1880 under the laws of Minnesota. Its home office is at 400 Robert
Street North, St. Paul, Minnesota 55101-2098 (612 298-3500). It is licensed to
do a life insurance business in all states of the United States (except New
York, where it is an authorized reinsurer), the District of Columbia, Canada,
and Puerto Rico.
B. MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
On June 14, 1993, the Board of Trustees of Minnesota Mutual established the
Minnesota Mutual Group Variable Annuity Account (the "Group Variable Annuity
Account") in accordance with Minnesota Insurance Law. The Group Variable Annuity
Account is registered as a unit investment trust under the Investment Company
Act of 1940, as amended (the "1940 Act") and meets the definition of a "separate
account" under the federal securities laws.
The Minnesota law under which the Group Variable Annuity Account was
established provides that the assets of the Group Variable Annuity Account shall
not be chargeable with liabilities arising out of any other business which
Minnesota Mutual may conduct, but shall be held and applied exclusively for the
benefit of the holders of those variable annuity Contracts for which the
separate account was established. The investment performance of the Group
Variable Annuity Account is entirely independent of both the investment
performance of our General Account and of any other separate accounts which we
may have established or may later establish. All obligations under the Contracts
are general corporate obligations of Minnesota Mutual.
15
<PAGE>
The Group Variable Annuity Account currently has sub-accounts to which
Contract Owners and Participants may allocate purchase payments. Each
sub-account invests in shares of a corresponding Portfolio of the Fund or an
underlying Fund. Additional sub-accounts may be added at our discretion.
C. MIMLIC SERIES FUND, INC.
The Group Variable Annuity Account may invest in MIMLIC Series Fund, Inc. (the
"Series Fund"), a mutual fund of the series type. The Series Fund is registered
with the Securities and Exchange Commission as a diversified, open-end
management investment company, but such registration does not signify that the
Commission supervises the management, or the investment practices or policies,
of the Series Fund. The Series Fund issues its shares, continually and without
sales charge, only to our separate accounts. Shares are sold and redeemed at net
asset value. In the case of a newly issued Contract or interest under it,
purchases of shares of the Portfolios of the Series Fund in connection with the
first purchase payment will be based on the values next determined after
issuance of the Contract by us. Redemptions of shares of the Portfolios of the
Series Fund are made at the net asset value next determined following the day we
receive a request for transfer, partial withdrawal or surrender at our home
office. In the case of outstanding Contracts, purchases of shares of the
Portfolio of the Series Fund for the Group Variable Annuity Account are made at
the net asset value of such shares next determined after receipt by us of
Contract purchase payments.
The Series Fund's investment adviser is MIMLIC Asset Management Company
("MIMLIC Management"). It acts as an investment adviser to the Series Fund
pursuant to an advisory agreement. MIMLIC Management is a subsidiary of
Minnesota Mutual.
Shares of the Portfolios of the Series Fund are also sold to other Minnesota
Mutual separate accounts, which are used to receive and invest premiums paid
under variable life policies and variable annuity contracts. It is conceivable
that in the future it may be disadvantageous for variable life insurance
separate accounts and variable annuity separate accounts to invest in the Series
Fund simultaneously. Although Minnesota Mutual does not currently foresee any
such disadvantages either to variable life insurance policy owners or to
variable annuity contract owners, the Series Fund's Board of Directors intends
to monitor events in order to identify any material conflicts between such
policy owners and contract owners and to determine what action, if any, should
be taken in response thereto. Such action could include the sale of Series Fund
shares by one or more of the separate accounts, which could have adverse
consequences. Material conflicts could result from, for example, (1) changes in
state insurance law, (2) changes in Federal income tax laws, (3) changes in the
investment management of any of the Portfolios of the Series Fund, or (4)
differences in voting instructions between those given by policy owners and
those given by contract owners.
The investment objectives and certain policies of the Portfolios of the Series
Fund available in the Contract are as follows:
The Growth Portfolio seeks the long-term accumulation of capital. Current
income, while a factor in portfolio selection, is a secondary objective. The
Growth Portfolio will invest primarily in common stocks and other equity
securities. Common stocks are more volatile than debt securities and involve
greater investment risk.
The Bond Portfolio seeks as high a level of long-term total rate of return
as is consistent with prudent investment risk. A secondary objective is to
seek preservation of capital. The Bond Portfolio will invest primarily in
long-term, fixed-income, high-quality debt instruments. The value of debt
securities will tend to rise and fall inversely with the rise and fall of
interest rates.
The Money Market Portfolio seeks maximum current income to the extent
consistent with liquidity and the stability of capital. The Money Market
Portfolio will invest in money market instruments and other debt securities
with maturities not exceeding one year. The return produced by these
securities will reflect fluctuation in short-term interest rates.
The Asset Allocation Portfolio seeks as high a level of long-term total rate
of return as is consistent with prudent investment risk. The Asset
Allocation Portfolio will invest in common stocks and other equity
securities, bonds and money market instruments. The Asset Allocation
Portfolio involves the risks inherent in stocks and debt securities of
varying maturities and the risk that the Portfolio may invest too much
16
<PAGE>
or too little of its assets in each type of security at any particular time.
The Mortgage Securities Portfolio seeks a high level of current income
consistent with prudent investment risk. In pursuit of this objective the
Mortgage Securities Portfolio will follow a policy of investment primarily
in mortgage-related securities. Prices of mortgage-related securities will
tend to rise and fall inversely with the rise and fall of the general level
of interest rates.
The Index 500 Portfolio seeks investment results that correspond generally
to the price and yield performance of the common stocks included in the
Standard & Poor's Corporation 500 Composite Stock Price Index (the "Index").
It is designed to provide an economical and convenient means of maintaining
a broad position in the equity market as part of an overall investment
strategy. All common stocks, including those in the Index, involve greater
investment risk than debt securities. The fact that a stock has been
included in the Index affords no assurance against declines in the price or
yield performance of that stock.
The Capital Appreciation Portfolio seeks growth of capital. Investments will
be made based upon their potential for capital appreciation. Therefore,
current income will be incidental to the objective of capital growth.
Because of the market risks inherent in any equity investment, the selection
of securities on the basis of their appreciation possibilities cannot ensure
against possible loss in value.
The International Stock Portfolio seeks long-term capital growth. In pursuit
of this objective the International Stock Portfolio will follow a policy of
investing in stocks issued by companies, large and small, and debt
obligations of companies and governments outside the United States. Current
income will be incidental to the objective of capital growth. The Portfolio
is designed for persons seeking international diversification. Investors
should consider carefully the substantial risks involved in investing in
securities issued by companies and governments of foreign nations, which are
in addition to the usual risks inherent in domestic investments.
The Small Company Portfolio seeks long-term accumulation of capital. In
pursuit of this objective, the Small Company Portfolio will follow a policy
of investing primarily in common or preferred stocks issued by small
companies, defined in terms of either market capitalization or gross
revenues. Investments in small companies usually involve greater investment
risks than fixed income securities or corporate equity securities generally.
Small companies will typically have a market capitalization of less than
$1.5 billion or annual gross revenues of less than $1.5 billion.
The Value Stock Portfolio seeks the long-term accumulation of capital. In
pursuit of this objective, the Value Stock Portfolio will follow a policy of
investing primarily in the equity securities of companies which, in the
opinion of the adviser, have market values which appear low relative to
their underlying value or future earnings and growth potential. As it is
anticipated that the Portfolio will consist in large part of dividend-paying
common stocks, the production of income will be a secondary objective of the
Portfolio.
The Maturing Government Bond Portfolios seek to provide as high an
investment return as is consistent with prudent investment risk for a
specified period of time ending on a specified liquidation date. In pursuit
of this objective each of the four Maturing Government Bond Portfolios seek
to return a reasonably assured targeted dollar amount, predictable at the
time of investment, on a specific target date in the future through
investment in a portfolio composed primarily of zero coupon securities.
These are securities that pay no cash income and are sold at a discount from
their par value at maturity. The current target dates for the maturities of
these Portfolios are 1998, 2002, 2006 and 2010, respectively. On maturity
the Portfolio will be converted to cash and reinvested at the direction of
the contract owner. In the absence of instructions, liquidation proceeds
will be allocated to the Money Market Portfolio.
A prospectus for the Series Fund is attached to this Prospectus and
prospectuses for the other Underlying Funds are distributed with this Prospectus
or are available upon request. A person should carefully read this Prospectus
and the prospectus for any Underlying Fund Portfolio to which payments are to be
allocated before investing in the Contracts.
17
<PAGE>
D. UNDERLYING FUNDS
In addition to the investment made by the Group Variable Annuity Account in
shares of the Series Fund, the Contracts also provide for sub-accounts of the
Group Variable Annuity Account which invest in shares of other registered
investment companies. These Underlying Fund options may not be available in all
Contracts issued by us and Participants should consult with their employer and
plan sponsor to determine the availability of these options under the Contract
available to them. As of the date of this Prospectus, sub-accounts have been
established which allow for investment in shares of the following:
Long-Term Corporate Portfolio of Vanguard Fixed Income Securities Fund,
Inc., (a corporate and government bond fund); Vanguard/Wellington Fund,
Inc., a balanced equity fund; Fidelity Contrafund, a growth equity fund;
Scudder International Fund, an international stock fund; and Janus Twenty
Fund, a growth equity fund.
The investment objectives and certain policies of the Underlying Funds
available under the Contract are as follows:
The Vanguard Long-Term Corporate Portfolio, part of the Vanguard Fixed
Income Securities Fund, Inc., seeks to provide investors with a high level
of income consistent with the maintenance of principal and liquidity. This
Portfolio invests in a diversified portfolio of investment grade corporate
and government bonds. This Portfolio is exposed to substantial interest rate
risk because of the length of its average maturity and it may exhibit high
to very high price fluctuations due to changing interest rates. The
possibility that corporate bonds held by the Portfolio will be repaid prior
to maturity is an additional risk associated with this Portfolio.
The Vanguard/Wellington Fund, Inc. seeks to provide conservation of
principal, a reasonable income return, and profits without undue risk. This
Fund invests in a diversified portfolio of common stocks and bonds, with
common stocks expected to represent 60% to 70% of the Fund's total assets.
Fidelity Contrafund seeks long-term growth by investing in stocks. This Fund
invests in companies that are currently "out of favor" with the public but
show potential for capital appreciation. The Fund invests in both well-known
and lesser-known companies believed to be undervalued due to overly
pessimistic appraisals by the market. The Fund invests primarily in common
stock and convertible securities, with a bias toward medium- and smaller-
capitalization companies.
The Scudder International Fund, a series of Scudder International Fund,
Inc., seeks long-term growth of capital primarily through a diversified
portfolio of marketable foreign equity securities. It generally invests in
equity securities of established companies that are listed on foreign
exchanges which the Adviser believes have favorable characteristics, but may
also invest up to 20% of its total assets in debt securities of foreign
governments, supranational organizations and private issuers. The Fund seeks
to diversify investments among several countries and to have represented in
the portfolio, in substantial proportions, business activities in not less
than three different countries. The Fund does not intend to concentrate
investments in any particular industry. Foreign investing involves exposure
to special risks, including economic or political instability and currency
fluctuation.
The Janus Twenty Fund, a series of the Janus Investment Fund, seeks growth
of capital in a manner consistent with the preservation of capital. This
nondiversified Fund seeks to invest in companies that the portfolio manager
believes offer rapid growth potential. Under normal circumstances, this
account will concentrate its holdings--owning stock in as few as 20 to 30
companies. The risk of loss may be greater than would exist with a more
diversified account.
Some of these shares are available not only to insurance company separate
accounts, but may also be available to the public generally, which may have a
bearing on the question of whether the Contracts may be considered annuity
contracts for tax purposes. For more information, please see the heading
"Federal Tax Status" in this Prospectus on page 23. Persons considering
sub-account investments in these Funds should obtain a current prospectus for
those Funds from the Funds or the Contract Owners before investing in those
sub-accounts.
18
<PAGE>
E. ADDITIONS, DELETIONS OR SUBSTITUTIONS
We retain the right, subject to any applicable law, to make substitutions with
respect to the investments of the sub-accounts of the Group Variable Annuity
Account. If investment in a fund should no longer be possible or if we determine
it becomes inappropriate for Contracts of this class, we may substitute another
fund for a sub-account. Substitution may be with respect to existing
accumulation values, future purchase payments and future annuity payments.
Investment in all Series Fund or Underlying Fund options may not be available,
and may be restricted by the Contract Owner. For example, the Contract held by
the Chuch of the Nazarene Tax- Sheltered Annuity Plan makes available the
Underlying Fund options and the Money Market, Growth, Asset Allocation, and
Index 500 Portfolios of the Series Fund. The Contract held by the Minnesota
State Deferred Compensation Plan makes available the Underlying Fund options and
the Money Market and Index 500 Portfolios of the Series Fund. The Minnesota
State Colleges and University 403(b) Program makes available all of the
portfolios of the Series Fund.
We may also establish additional sub-accounts in the Group Variable Annuity
Account and we reserve the right to add, combine or remove any sub-accounts of
the Group Variable Annuity Account. Each additional sub-account will purchase
shares in a new portfolio or mutual fund. Such sub-accounts may be established
when, in our sole discretion, marketing, tax, investment or other conditions
warrant such action. Similar considerations will be used by us should there be a
determination to eliminate one or more of the sub-accounts of the Group Variable
Annuity Account. The basis of offering additional investment options to existing
Contract Owners is subject to our discretion.
We also reserve the right, when permitted by law, to de-register the Group
Variable Annuity Account under the Investment Company Act of 1940, to restrict
or eliminate any voting rights of the Contract Owners, and to combine the Group
Variable Annuity Account with one or more of our other separate accounts.
- ------------------------------------------------------------------------
CONTRACT CHARGES
A. SALES CHARGES
No sales charge is deducted from the purchase payments for these Contracts.
However, when a Participant's accumulation value is reduced by a withdrawal or
surrender, a deferred sales charge may be deducted for expenses relating to the
sale of the Contracts.
The deferred sales charge is deducted from the Participant's remaining
accumulation value except in the case of a surrender, where it reduces the
amount distributed. We will
deduct the deferred sales charge proportionally from the Participant's fixed and
variable accumulation value.
The amount of the deferred sales charge, expressed as a percentage of the
Participant's accumulation value withdrawn, is shown in the following table.
Percentages are shown as of the Participant's date of initial Contract
participation and the end of each of the first six years of participation. The
percentages decrease uniformly each month for 72 months from the initial date.
In no event will the sum of the deferred sales charges exceed 9% of the purchase
payments made by or on behalf of that Participant under a Contract.
<TABLE>
<CAPTION>
END OF DEFERRED
PARTICIPATION YEAR SALES CHARGE
- ------------------------------------- -----------------
<S> <C>
Participation Date 6%
1 5%
2 4%
3 3%
4 2%
5 1%
6 0%
</TABLE>
These sales charges may be waived in certain circumstances where sales expenses
are not paid at the time of sale to registered representatives and
broker-dealers responsible for the sales of the Contracts on the basis of
purchase payments made under the Contract and where the Contract is sold in
anticipation of reduced expenses.
B. MORTALITY AND EXPENSE RISK CHARGES
We assume the mortality risk under the Contracts by our obligation to continue
to make monthly annuity payments, determined in accordance with the annuity rate
tables and other provisions contained in the Contract, to each annuitant
regardless of how long that annuitant lives or all annuitants as a group live.
This assures an annuitant that neither the annuitant's own longevity nor an
improvement
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in life expectancy generally will have an adverse effect on the monthly annuity
payments received under the Contract. In addition, we assume mortality risk in
the formulation of death benefit provided by the Contract. See the heading
"Death Benefit" herein.
We assume an expense risk by assuming the risk that deductions provided for in
the Contracts for the sales and administrative expenses will be adequate to
cover the expenses incurred.
For assuming these risks, we currently make a deduction from the Group
Variable Annuity Account at the annual rate of .40% for the mortality risk and
.45% for the expense risk. We reserve the right to increase the charge for the
assumption of mortality risks to not more than .60% and the expense risks to not
more than .65%. If this charge is increased to this maximum amount, then the
total of the mortality risk charge and expense risk charge would be 1.25% on an
annual basis.
If these deductions prove to be insufficient to cover the actual cost of the
expense and mortality risks assumed by us, then we will absorb the resulting
losses and make sufficient transfers to the Group Variable Annuity Account from
our general account, where appropriate. Conversely, if these deductions prove to
be more than sufficient after the establishment of any contingency reserves
deemed prudent or required by law, any excess will be profit (or "surplus") to
us. Some or all of such profit may be used to cover any distribution costs not
recovered through the deferred sales charge.
C. CONTRACT ADMINISTRATIVE CHARGE
We perform all administrative services relative to the Contract. These services
may include the review of the applications for compliance with our issue
criteria, the preparation and issue of contracts and certificates, the receipt
of purchase payments, forwarding them to the Series Fund or other fund managers
for investment, the preparation and mailing of periodic reports and the
performance of other services.
As consideration for providing these services we currently make a deduction
from the Group Variable Annuity Account at the annual rate of .15% for contract
administration. We reserve the right to increase this administrative charge to
not more than .40%.
The administrative charge is designed to cover the administrative expenses
incurred by us under the Contract. We do not expect to recover from the charge
any amount in excess of our accumulated expenses associated with the
administration of the Contract.
D. PREMIUM TAXES
Deduction for any applicable state premium taxes may be made from each purchase
payment or at the commencement of annuity payments. There are currently no
premium taxes which are applicable to the Contracts, but we reserve the right to
make such a deduction should they become applicable to this Contract in the
future.
E. CONTRACT FEE
For Participants who elect a fixed annuity, there is a charge of $200 which is
taken as a contract fee whenever fixed annuity payments are elected and
purchased at rates guaranteed by the Contract. This fee will also be deducted
when amounts are transferred for additional fixed annuity income once fixed
annuity payments have begun.
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SERIES FUND AND UNDERLYING FUND EXPENSES
MIMLIC Management, one of our subsidiaries, acts as the investment adviser to
the Series Fund and deducts from the net asset value of each Portfolio of the
Series Fund a fee for its services which are provided under an investment
advisory agreement. In addition, MIMLIC Asset Management Company, one of our
subsidiaries, acts as the investment adviser to the Fund and deducts from the
net asset value of each Portfolio of the Fund a fee for its services which are
provided under an investment advisory agreement. The investment advisory
agreements provide that the fee shall be computed at the annual rate which may
not exceed .4% of the Index 500 Portfolio, .75% of the Capital Appreciation,
Value Stock and Small Company Portfolios, 1% for the International Stock
Portfolio and .5% of each of the remaining Portfolio's average daily net assets
other than the Maturing Government Bond Portfolios. The Maturing Government Bond
Portfolios pay an advisory fee equal to an annual rate of .25% of average daily
net assets, however, the Portfolio which matures in 1998 will pay a rate of .05%
from its inception to April 20, 1998, and .25% thereafter and the Portfolio
which matures in 2002 will pay a rate of .05% from its inception to April 30,
1998, and .25% thereafter of average daily net assets.
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The Underlying Funds available to the sub-accounts of the Group Variable
Annuity Account will also have advisory fees and expenses associated with the
management of the assets in those alternatives according to the agreement that
each has with its investment adviser. The adviser for each and a brief summary
of the advisory arrangement for each is as follows:
The Vanguard Fixed Income Securities Fund, Inc. has the Wellington
Management Company as the investment adviser for the Long-Term Corporate
Portfolio. It pays the adviser a fee at the end of each fiscal quarter,
calculated by applying a rate, based on the following percentages, to the
Fund's average month-end assets for the quarter: for the first $2.5 billion,
at a rate of .125%; for the next $2.5 billion, at a rate of .100%; for the
next $2.5 billion, at a rate of .075% and over $7.5 billion, at a rate of
.050%. The advisory fee is apportioned among the three Portfolios of the
Fund according to a formula and pursuant to that allocation formula, the fee
to the Long-Term Corporate Portfolio is reduced by 50% from that applicable
to the Fund.
The Vanguard/Wellington Fund, Inc. has as its adviser the Wellington
Management Company. It pays the adviser a fee at the end of each fiscal
quarter, calculated by applying a rate, based on the following percentages,
to the Fund's average month-end assets for the quarter: For the first $500
million, at a rate of .125%; for the next $500 million, at a rate of .100%;
for the next $1 billion, at a rate of .075%; for the next $1 billion, at a
rate of .050%; over $3 billion, at a rate of .040%.
The Fidelity Contrafund has as its adviser Fidelity Management & Research
Company ("FMR"), a subsidiary of FMR Corp. The management fee paid to FMR is
determined by taking a basic fee and then applying a performance adjustment
which, in turn, depends on how well the Fund has performed relative to the
S&P 500. The basic fee is calculated by adding an aggregated fund fee rate
to an individual fund fee rate and multiplying that amount by the Fund's
average net assets. The aggregated fund fee rate cannot rise above .52% and
it drops as total assets under management increases. As of December, 1994,
the basic fee rate was .62%. After applying the performance adjustment, the
total management fee for fiscal 1994 was .70%. The maximum annualized
performance adjustment rate is plus or minus .20%.
The Scudder International Fund has as its adviser Scudder, Stevens & Clark,
Inc. For the fiscal year ended March 31, 1995, the adviser received an
investment management fee of 0.83% of the Fund's average daily nets assets
on an annual basis. The fee is graduated so that increases in the Fund's net
assets may result in a lower fee and decreases in the Fund's net assets may
result in a higher fee.
The Janus Twenty Fund has as its adviser Janus Capital Corporation. The
advisory fee paid to the adviser for the fiscal period ended on October 31,
1994 amounted to .67%.
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DESCRIPTION OF THE CONTRACTS
The following material is intended to provide a general description of the terms
of the Contracts. In the event that there are questions concerning the Contracts
which are not discussed or should you desire additional information, then
inquires may be addressed to us at: Minnesota Mutual Life Center, 400 Robert
Street North, St. Paul, Minnesota 55101-2098. Our phone number is: (612)
298-3500.
1. TYPE OF CONTRACT OFFERED
GROUP DEFERRED VARIABLE ANNUITY CONTRACT
The Contract is a group deferred variable annuity contract which is offered to
employers and plan sponsors which are eligible to purchase group contracts which
are to be used in connection with tax-advantaged plans of state and local
governments and other tax-exempt organizations. The type of plans for which the
Contract is suitable are described in Sections 457 and 403 of the Internal
Revenue Code. The Contract provides rights and options to individuals who
participate under such plans; the Contracts may not be purchased directly by
individuals. The contract may also be used in other situations where a group
annuity contract is desired but where the benefit structure does not require a
contract which is recognized as an "annuity" for federal income tax purposes.
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2. ISSUANCE OF CONTRACTS
The Contracts are issued by us to sponsors of eligible plans upon their
application. In a typical plan, the sponsor or eligible governmental unit is the
owner of the Contract and will designate individuals eligible to participate in
the Contract as a Participant. The Contract and all interests under it are
usually subject to the general interests of creditors of the owner of the
Contract (usually the employer).
3. MODIFICATION OF CONTRACTS
The Contract may be modified at any time by written agreement between us and the
owner of the Contract. However, no such modification will adversely affect the
rights of a Participant under the Contract unless the modification is made to
comply with a law or government regulation.
4. ANNUITY PAYMENTS
Variable annuity payments are determined on the basis of: (a) the mortality
table specified in the Contract, which reflects the age of the annuitant; (b)
the type of annuity payment option selected; and (c) the investment performance
of the Group Variable Annuity Account and its sub-accounts. The amount of the
variable annuity payments will not be affected by adverse mortality experience
or by an increase in an expense in excess of the expense deduction provided for
in the Contract. The annuitant electing to receive all or a part of his or her
payments as a variable annuity will receive the value of a fixed number of
annuity units each month. The value of such units and thus the amounts of the
monthly annuity payments will, however, reflect investment gains and losses and
investment income of the Group Variable Annuity Account, and thus the annuity
payments will vary with the investment experience of the assets of the
applicable Group Variable Annuity Account.
5. ASSIGNMENT
A Participant's accumulation value may not be assigned, sold, transferred,
discounted or pledged as collateral for a loan or as security for the
performance of an obligation or for any other purpose, and to the maximum extent
permitted by law, that value and benefits payable under the Contract shall be
exempt from the claims of creditors. The assets of the plan are, however,
subject to the claims of the general creditors of the Contract Owner (usually
the employer).
6. LIMITATIONS ON PURCHASE PAYMENTS
The amount of purchase payments to be paid by the Contract Owner by or on behalf
of a Participant shall be determined by the Contract Owner in accordance with
the provisions of the underlying plan. All purchase payments are payable at our
Home Office which is located at: 400 Robert Street North, St. Paul, Minnesota
55101-2098.
7. SUSPENSION AND TERMINATION OF PURCHASE PAYMENTS
A Contract Owner may suspend making purchase payments by giving 60 days' written
notice to us. The suspension may be with respect to all Participants or only as
to such class or classes of Participants as may be specified by the Contract
Owner. Purchase payments may be resumed as to those suspended Participants by
written notice to us.
Under some contracts, the Contract Owner may at any time terminate the
Contract should we fail to perform under the Contract and not cure any found
deficiency or should our activities be classified as misfeasance, malfeasance or
fraud. Some Contracts may also be terminated should we have a material change in
our financial condition as measured by the standard insurance company rating
agencies.
We may terminate the Contract at any date by written notice to the Contract
Owner in the event that the Contract is no longer part of a qualified Section
457 or Section 403 plan or if we determine that a Contract amendment is
necessary and the Contract Owner does not assent to such an amendment.
After termination of the Contract, we will accept no further purchase
payments. Termination will have no effect on Participants as to whom annuity
payments have begun. As to Participants with a current accumulation value, those
values will continue to be maintained under the Contract until: (a) withdrawn to
provide plan benefits, (b) applied to provide annuity payments or (c)
transferred to the Contract Owner. So long as Participant Accumulation Values
are maintained under the Contract, the withdrawal and transfer provisions
continue to apply to those values on the same basis as prior to Contract
termination.
If amounts are to be transferred to the Contract Owner on termination of the
Contract, those accumulation values attributable to the Group Variable Annuity
Account will be transferred within seven days after the Contract termination.
However, Minnesota Mutual reserves the right to defer payment for any period
during which the New York Stock Exchange is closed for trading or when the
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Securities and Exchange Commission has determined that a state of emergency
exists which may make such determination and payment impractical.
General Account values payable to the Contract Owner on termination are
subject to current valuation procedures and payment of the General Account
accumulation value or market value to the Contract Owner, as may be either in a
lump sum or in installments over a five year period as the Contract Owner may
elect. However, in any event we guarantee that on the termination of the
Contract, Participant General Account market values will not be less than the
sum of all allocations made to the General Account by or on behalf of each
Participant, accumulated at 3% per annum, less any Participant withdrawal, any
applicable deferred sales charge and less any transfers of General Account
accumulation values to the Group Variable Annuity Account.
8. CONTRACT SETTLEMENT
Whenever any payment of an amount under the Contract attributable to the Group
Variable Annuity Account is to be made in a single sum, payment will be made
within seven days after the date such payment is called for by the terms of the
Contract, except as payment may be subject for postponement for:
(a) any period during which the New York Stock Exchange is closed other than
customary weekend and holiday closings, or during which trading on the
New York Stock Exchange is restricted, as determined by the Securities
and Exchange Commission;
(b) any period during which an emergency exists as determined by the
Commission as a result of which it is not reasonably practical to
dispose of securities in the Group Variable Annuity Account or to fairly
determine the value of the assets of the Group Variable Annuity Account;
or
(c) such other periods as the Commission may by order permit for the
protection of the Contract Owners.
9. PARTICIPATION IN DIVISIBLE SURPLUS
The Contract is a participating Contract. The portion, if any, of our divisible
surplus accruing on this Contract shall be determined annually by us and shall
be credited to the Contract on such a basis as we may determine. We do not
anticipate any divisible surplus and do not anticipate making dividend payments
to Contract Owners under the Contract.
10. CONTRACT LOANS
A Participant under a Contract which satisfies the requirements of Code Section
403 as a tax-sheltered annuity (a "TSA Contract") and under a plan which
provides for loans may take a loan from us with the Contract as security for the
loan, to the extent that such loans are permitted by applicable state law. The
maximum loan available is the lesser of (a) or (b), where (a) is $50,000 and (b)
is the greater of (i) one-half of the Participant's Accumulation Value less any
applicable deferred sales charge or (ii) the Participant's Accumulation Value up
to the amount of $10,000, less the amount of interest that would be charged
during the first quarter that the loan would be outstanding and less any
applicable deferred sales charge. Such a loan taken from, or secured by, a TSA
Contract may have federal income tax consequences. See "Federal Tax Status" on
Page below. The maximum loan amount is determined as of the date we receive a
Participant's request for a loan. This minimum loan amount is $1,000.
Upon receiving a written request for a loan, we will send the Participant a
loan application and agreement for his or her signature. We will charge interest
in arrears. Restrictions other than the maximum loan amount which apply to loans
are:
(a) Only one loan may be outstanding at any time;
(b) A period of at least three months is required between the repayment of a
loan and the application for a new loan;
(c) If there is an outstanding loan on the Contract, then any withdrawals
will be limited to the Accumulation Value, less the outstanding loan
principal, less any interest due, and less any applicable deferred sales
charge;
(d) A loan is not available if annuity payments have begun; and
(e) The TSA loan account portion of a Participant's interest in the Contract
may not be transferred to the Group Variable Annuity Account when a loan
is outstanding, provided, however, that a single transfer from the TSA
loan account will be allowed each calendar year in an amount no more
than the TSA loan account value less the outstanding loan principal,
less the
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outstanding interest, and less any applicable deferred sales charge.
The loan amount requested, plus the first quarter's interest, plus any
applicable deferred sales charge, will be transferred from the portion of the
Participant's Accumulation Value allocated to the Group Variable Annuity Account
to the General Account on the date the loan application is approved. Unless the
Participant directs us otherwise, amounts will be transferred from sub-accounts
of the Group Variable Annuity Account in the same proportion that the
Participant's allocations to each sub-account bears to his or her total
allocations to the Group Variable Annuity Account prior to the loan.
LOAN INTEREST AND TSA LOAN ACCOUNT INTEREST
The interest rate charged on a loan is variable and will be set on the first
day of each calendar quarter. It will apply to the outstanding loan principal in
that calendar quarter. The loan interest rate will not exceed the greater of the
"published monthly average" for the calendar month ending two months before the
beginning of the calendar quarter or the "interest rate in effect on the
Contract" plus 1%. The "published monthly average" means the Moody's Composite
Average of Yields on Bonds as published by the Moody's Investors Service. The
"interest rate in effect on the Contract" is the interest rate credited on
portions of Accumulation Value allocated to the General Account, including
amounts held in the TSA loan account.
The interest rate credited to allocations of Accumulation Value to the General
Account will also be credited to the TSA loan account, which will have the
effect of reducing the effective interest rate to be paid on the loan to the
difference between the interest rate paid on the loan and that credited on the
TSA loan account. A loan will have a permanent effect on the Participant's
Accumulation Value. The effect could be either positive or negative, depending
upon whether the investment results of the sub-accounts are greater or lesser
than the interest rate credited on the TSA loan account.
LOAN REPAYMENT
Repayment must be made in substantially equal payments over a period of five
years or less. Early repayment may be made without penalty at any time. When the
loan is repaid, then the TSA loan account terminates, and the amounts remain in
the General Account. A Participant may reallocate these amounts among the
General Account and the sub-account of the Separate Account by exercising his or
her Contract's transfer rights.
If a Participant withdraws all of his or her Accumulation Value while a loan
is outstanding, then the loan is due at the time of the withdrawal. If the loan
is not repaid prior to the complete withdrawal, the payment on withdrawal will
be the Participant's Accumulation Value, less the outstanding loan principal,
less any interest due, and less any applicable deferred sales charges. In
addition, depending upon the Participant's circumstances, such a withdrawal may
result in income taxation, tax penalties and disqualification of the
Participant's interest in the Contract as a tax-sheltered annuity.
Failure to meet the requirements of the loan agreement will result in its
termination. Loan amounts will then be treated as distributions under the
contract. Treatment of a loan as a distribution will result in taxable income
under applicable tax rules. In addition, depending upon the Participant's
circumstances, it may result in income taxation, tax penalties, and
disqualification of the Participant's interest in the contract as a
tax-sheltered annuity. If there is a distribution, the Participant's
Accumulation Value will be reduced by the amount of the outstanding loan
principal, reduced by any interest due, and reduced by any applicable deferred
sales charge on that amount.
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VOTING RIGHTS
We will vote in our discretion shares of Underlying Funds other than Portfolios
of the Series Fund held in the Group Variable Annuity Account. We also will vote
the Series Fund Portfolio shares held in the Group Variable Annuity Account, but
will do so in accordance with instructions received from Participants with
values allocated to sub-accounts investing in shares of those Series Fund
Portfolios. We will vote all shares of a Series Fund Portfolio held by the Group
Variable Annuity Account for which no voting instructions are received from
Participants in the same proportion as shares held by the Group Variable Annuity
Account for which such instructions have been received. If, however, the 1940
Act or any regulation thereunder should change so that we may be allowed to vote
such shares in our own right, then we may elect to do so.
Voting instructions for votes of Series Fund Portfolio shares are to be
provided during the accumulation period by Participants with values allocated to
sub-accounts investing in those Portfolios and during the annuity period by
annuitants with annuity reserves allocated to those sub-accounts. In each case,
the value of the amounts so allocated on behalf of a Participant or annuitant
will be divided by net asset value per share of the applicable Series Fund
Portfolio shares to determine the number of shares for which voting instructions
may be provided by the Participant or annuitant. In either case, instructions
for voting fractional shares will be recognized. We shall notify Participants or
annuitants who are entitled to provide such voting instructions and will provide
them with proxy materials and forms necessary for providing voting instructions.
During the accumulation period of each Certificate, the Participant holds the
voting interest in each Certificate. The number of votes will be determined by
dividing the accumulation value of the Contract as to the accumulation value of
each Participant attributable to each sub-account by the net asset value per
share of the underlying Series Fund shares held by that sub-account.
During the annuity period of each Certificate, the annuitant holds the voting
interest in each Certificate. The number of votes will be determined by dividing
the reserve for each annuitant allocated to each sub-account by the net asset
value per share of the underlying Series Fund shares held by that sub-account.
After an annuity begins, the votes attributable to any particular annuitant will
decrease as the reserves decrease. In determining any voting interest,
fractional shares will be recognized.
We shall notify each Participant or annuitant of a Series Fund shareholders'
meeting if the shares held for the Participant may be voted at such meeting. We
will also send proxy materials and a form of instruction so that you can
instruct us with respect to voting.
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ANNUITY PERIOD
1. ELECTING THE RETIREMENT DATE AND FORM OF ANNUITY
The Contracts provide for four annuity payment options, any one of which may be
elected if permitted by law. Each annuity payment option may be elected on
either a variable annuity or a fixed annuity basis, or a combination thereof.
Other annuity payment options may be available as agreed to between a
Participant and us and upon request to us.
If an election has not been made otherwise, and the plan does not specify to
the contrary, the Participant's retirement date shall be April 1 of the calendar
year next following the calendar year in which the Participant attains age
70 1/2. The annuity payment option shall be Option 2A, a life annuity with a
period certain of 120 months. Unless notified in writing by the Contract Owner
or Participant at least 30 days prior to the Annuity Commencement Date, a fixed
annuity will be provided by any General Account accumulation value and a
variable annuity will be provided by any Group Variable Annuity Account
accumulation value. The minimum first monthly annuity payment on either a
variable or fixed dollar basis is $20 imposed separately for the portion of the
annuity payments payable as a fixed annuity and the portion payable as a
variable annuity under each of the sub-accounts of the Group Variable Annuity
Account. If such first monthly payment would be less than $20, we may fulfill
our obligation by paying in a single sum the value of a Participant's interest
in the Contract which would otherwise have been applied to provide annuity
payments.
Once annuity payments have commenced, the annuitant cannot surrender his or
her annuity benefit and receive a single sum settlement in lieu thereof. In the
event that a beneficiary elects to receive the commuted value of the remaining
guaranteed payments in a lump sum, that value will be based on the then current
dollar amount of one payment and the same interest rate which served as a basis
for the annuity.
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The mortality and expense risks charges continue to be deducted throughout the
annuity period, even under each of the available variable annuity payment
options, including Option 4, under which there is no mortality risk to Minnesota
Mutual.
2. ANNUITY PAYMENT OPTIONS
OPTION 1--LIFE ANNUITY
This is an annuity payable monthly during the lifetime of the annuitant and
terminating with the last monthly payment preceding the death of the annuitant.
This option usually offers the largest monthly payments (of those options
involving life contingencies) since there is no guarantee of a minimum number of
payments or provision for a death benefit for beneficiaries. It would be
possible under this option for the annuitant to receive only one annuity payment
if he or she died prior to the due date of the second annuity payment, two if he
or she died before the due date of the third annuity payment, etc.
OPTION 2--LIFE ANNUITY WITH A PERIOD CERTAIN OF 120 MONTHS (OPTION 2A), 180
MONTHS (OPTION 2B), OR 240 MONTHS
(OPTION 2C)
This is an annuity payable monthly during the lifetime of the annuitant, with
the guarantee that if the annuitant dies before payments have been made for the
period certain elected, payments will continue to the beneficiary during the
remainder of the period certain; or if the beneficiary so elects at any time
during the remainder of the period certain, the present value of the remaining
guaranteed number of payments, based on the then current dollar amount of one
such payment shall be paid in a single sum to the beneficiary.
OPTION 3--JOINT AND LAST SURVIVOR ANNUITY
This is an annuity payable monthly during the joint lifetime of the annuitant
and a designated joint annuitant and continuing thereafter during the remaining
lifetime of the survivor. Under this option there is no guarantee of a minimum
number of payments or provision for a death benefit for beneficiaries.
OPTION 4--PERIOD CERTAIN ANNUITY
This is an annuity payable monthly for a period certain of from 5 to 20 years,
as elected. If the annuitant dies before payments have been made for the period
certain elected, payments will continue to the beneficiary during the remainder
of such period certain.
By written notice to us from the Contract Owner or a Participant at least 30
days prior to a Participant's Annuity Commencement Date, a lump sum settlement
of a Participant's accumulation value may be elected in lieu of the application
of that amount to an Annuity Payment Option. After the payment of such a lump
sum settlement to the Participant, the Participant shall have no further rights
under the Contract.
3. VALUE OF THE ANNUITY UNIT
The value of an annuity unit is determined monthly as of the first day of each
month. The value of the annuity unit on the first day of each month is
determined by multiplying the value on the first day of the preceding month by
the product of (a) .996338, and (b) the ratio of the value of the accumulation
unit for the valuation date next following the fourteenth day of the preceding
month to the value of the accumulation unit for the valuation date next
following the fourteenth day of the second preceding month. (The factor of
.996338 is used to neutralize the assumed net investment rate, discussed in
Section 4 below, of 4.5% per annum built into the first payment calculation and
which is not applicable because the actual net investment rate is credited
instead.) The value of an annuity unit as of any date other than the first day
of a month is equal to its value as of the first day of the next succeeding
month.
4. DETERMINATION OF AMOUNT OF FIRST MONTHLY ANNUITY PAYMENT
Under the Contract described in this Prospectus, the first monthly annuity
payment is determined by applying the value of the Participant's individual
accumulation value at retirement. State premium taxes, if applicable and not
previously deducted from purchase payments, may be deducted from the
Participant's accumulation value before the first payment is determined. These
taxes currently range from 0 to 3.5%, depending upon the state of issue and type
of plan involved.
The amount of the first monthly payment depends on the annuity payment option
elected, the form of annuity, and the adjusted age of the annuitant. A table
used to determine the adjusted age of the annuitant and joint annuitant is
contained in the Contract. For both fixed and variable annuity payments, the
adjusted age of the annuitant and joint annuitant, if any, is used to determine
the first payment.
For a fixed annuity, the Contract contains tables indicating the dollar amount
of the
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monthly payment under each annuity payment option for each $1,000 of value
applied. The tables are determined from the Progressive Annuity Table with
interest at the rate of 3% per annum, assuming births in the year 1900 and an
age setback of six years. A $200 fee may be deducted from the Participant's
General Account accumulation value before applying the rates found in the
tables.
The dollar amount of the first monthly variable annuity payment is determined
by applying the available value (after deduction of any applicable premium taxes
not previously deducted) to a rate which is based on the Progressive Annuity
Table with interest at the rate of 4.5% per annum, assuming births in the year
1900 and with an age setback of six years. A number of units is then determined
by dividing this dollar amount by the then current annuity unit value.
Thereafter, the number of annuity units remains unchanged during the period of
annuity payments. This determination is made separately for each sub-account of
the separate account. The number of annuity units is based upon the available
value in each sub-account as of the date annuity payments are to begin. The
dollar amount determined for each sub-account will then be aggregated for
purposes of making payment.
The 4.5% interest rate assumed in the annuity rate would produce level annuity
payments if the net investment rate remained constant at 4.5% per year.
Subsequent payments will be less than, equal to, or greater than the first
payment depending upon whether the actual net investment rate is less than,
equal to, or greater than 4.5%. A higher interest rate would mean a higher
initial payment, but a more slowly rising (or more rapidly falling) series of
subsequent payments. A lower assumption would have the opposite effect.
If, when annuity payments are elected, we are using annuity rates for
Contracts of this class which result in larger annuity payments, we will use
those rates instead of those guaranteed in the Contract.
5. AMOUNT OF SECOND AND SUBSEQUENT MONTHLY VARIABLE ANNUITY PAYMENTS
The dollar amount of the second and later variable annuity payments is equal to
the number of annuity units determined for each applicable sub-account of the
Group Variable Annuity Account multiplied by the annuity unit value for that
sub-account as of the due date of the payment. This amount may increase or
decrease from month to month.
The dollar amounts for variable annuity payments determined for each
applicable sub-account of the Group Variable Annuity Account will be aggregated
for purposes of making the monthly variable annuity payment to the Participant.
6. TRANSFER OF ANNUITY RESERVES
Amounts held as annuity reserves may be transferred among the variable annuity
sub-accounts during the annuity period. Annuity reserves may also be transferred
from a variable annuity to a fixed annuity during this time. The change must be
made by a written request. The annuitant and joint annuitant, if any, must make
such an election.
There are restrictions to such a transfer. The transfer of an annuity reserve
amount from any sub-account must be at least equal to $5,000 or the entire
amount of the reserve remaining in that sub-account. In addition, annuity
payments must have been in effect for a period of 12 months before a change may
be made. Such transfers can be made only once every 12 months. The written
request for an annuity transfer must be received by us more than 30 days in
advance of the due date of the annuity payment subject to the transfer. Upon
request, we will make available to you annuity reserve amount sub-account
information.
A transfer will be made on the basis of annuity unit values. The number of
annuity units from the sub-account being transferred will be converted to a
number of annuity units in the new sub-account. The annuity payment option will
remain the same and cannot be changed. After this conversion, a number of
annuity units in the new sub-account will be payable under the elected option.
The first payment after conversion will be of the same amount as it would have
been without the transfer. The number of annuity units will be set at that
number of units which are needed to pay that same amount on the transfer date.
When we receive a request for the transfer of variable annuity reserves, it
will be effective for future annuity payments. The transfer will be effective
and funds actually transferred in the middle of the month prior to the next
annuity payment affected by your request. We will use the same valuation
procedures to determine your variable annuity payment that we used initially.
Amounts held as reserves to pay a variable annuity may also be transferred to
a fixed annuity during the annuity period. However, the restrictions which apply
to annuity sub-account
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transfers will apply as well. The amount transferred will then be applied to
provide a fixed annuity amount. This amount will be based upon the adjusted age
of the annuitant and any joint annuitant at the time of the transfer. The
annuity payment option will remain the same. Amounts paid as a fixed annuity may
not be transferred to a variable annuity.
When we receive a request to make such a transfer to a fixed annuity, it will
be effective for future annuity payments. The transfer will be effective and
funds actually transferred in the middle of the month prior to the next annuity
payment. We will use the same fixed annuity pricing method at the time of
transfer that we used to determine an initial fixed annuity payment.
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DEATH BENEFIT
Death benefits, if any, payable under Contracts shall be in such amount as is
determined by the provisions of the applicable qualified trust or plan. The
Contracts provide that in the event of the death of the Participant prior to the
commencement of annuity payments, the death proceeds payable to the named
beneficiary will be the greater of: a) the Participant's accumulation value
determined as of the valuation date coincident with or next following the date
due proof of death is received by us, or b) the total of the purchase payments
made by or on behalf of a Participant received by us less any prior Participant
withdrawals or transfers to another investment alternative available in the
Contract Owner's underlying plan. Death proceeds will be paid in a single sum to
the beneficiary designated by the Participant, unless an annuity option is
elected by the beneficiary. Payment will be made within seven days after we
receive due proof of death of the Participant. Except as noted below, a
Participant's entire interest in the Contract must be distributed within five
years of the Participant's death. If the annuitant dies after annuity payments
have begun, Minnesota Mutual will pay to the beneficiary any death benefit
provided by the annuity option selected. The person selected by the Participant
as the beneficiary of any remaining interest after the death of the annuitant
under the annuity option may be a person different from that person designated
as the beneficiary of the Participant's interest in the Contract prior to the
annuity commencement date.
The beneficiary will be the person or persons named in the Contract
application unless the Participant, or annuitant if annuity payments have
commenced, subsequently changes the beneficiary. In that event, we will pay the
amount payable at death to the beneficiary named in the last change of
beneficiary request. The Participant's or annuitant's written request to change
the beneficiary will not be effective until it is recorded in Minnesota Mutual's
home office records. After it has been recorded, it will take effect as of the
date the Participant or annuitant signed the request. However, if the
Participant or annuitant dies before the request has been recorded, the request
will not be effective as to those death proceeds we have paid before the request
was recorded in our home office records.
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CREDITING ACCUMULATION UNITS
During the accumulation period--the period before the commencement of annuity
payments--the purchase payment (on receipt of a completed application or
subsequently) is credited to a Participant's accumulation value on the valuation
date coincident with or next following the date such purchase payment is
received. If the initial purchase payment is accompanied by an incomplete
application, the purchase payment will not be credited until the valuation date
coincident with or next following the date a completed application is received.
We will offer to return the initial purchase payment accompanying an incomplete
application if it appears that the application cannot be completed within five
business days. Purchase payments will be credited to the Contract in the form of
accumulation units. The number of accumulation units credited with respect to
each purchase payment is determined by dividing the portion of the purchase
payment allocated to each sub-account by the then current accumulation unit
value for that sub-account. The total of these separate account accumulation
values in the sub-accounts will be the separate account accumulation value.
Interests in the sub-accounts will be valued separately.
The number of accumulation units so determined shall not be changed by any
subsequent change in the value of an accumulation unit, but the value of an
accumulation unit will vary from valuation date to valuation date to reflect the
investment
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experience of the Portfolios of the Series Fund and those other Underlying Funds
which may be held by the sub-accounts of the Group Variable Annuity Account.
Minnesota Mutual will determine the value of accumulation units on each day on
which the Portfolios of the Series Fund and such other Underlying Funds are
valued. The net asset value of the Series Fund and Underlying Fund shares are
computed once daily, as of the primary closing time for business on the New York
Stock Exchange (as of the date hereof the primary close of trading is 3:00 p.m.
(Central Time), but this time may be changed) on each day, Monday through
Friday, except (i) days on which changes in the value of such Fund's securities
will not materially affect the current net asset value of such Fund's shares,
(ii) days during which no such Series Fund's shares are tendered for redemption
and no order to purchase or sell such Fund's shares is received by such Fund and
(iii) customary national business holidays on which the New York Stock Exchange
is closed for trading (as of the date hereof, New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day).
Accordingly, the value of accumulation units will be determined daily, and
such determinations will be applicable to all purchase payments received by
Minnesota Mutual at its home office on that day prior to the close of business
of the Exchange. The value of accumulation units applicable to purchase payments
received subsequent to the close of business of the Exchange on that day will be
the value determined as of the close of business on the next day the Exchange is
open for trading.
In addition to providing for the allocation of purchase payments to the
sub-accounts of the separate account, the Contracts also provide for allocation
of purchase payments to Minnesota Mutual's General Account for accumulation at a
guaranteed interest rate.
TRANSFER OF VALUES
Upon a Participant's written or telephone request, values under the Contract may
be transferred between the General Account and the Group Variable Annuity
Account or among the sub-accounts of the Group Variable Annuity Account. We will
make the transfer on the basis of accumulation unit values on the valuation date
coincident with or next following the day we receive the request at our home
office. No deferred sales charge will be imposed on such transfers. Transfers
between the sub-accounts of the Group Variable Annuity Account are unlimited as
to amount and frequency.
The Contracts permit us to limit the frequency and amount of transfers from
the General Account to the separate accounts and the sub-accounts of the Group
Variable Annuity Account. The Contracts provide that such transfers from a
Participant's Accumulation Value in our General Account will be on a first-in,
first-out (FIFO) basis and they provide that Participants may transfer the
greater of $1,000 or 10% of their General Account accumulation value annually or
in 12 monthly installments. Currently, we limit such transfers during any
calendar year to the greater of $1,000 or an amount which is no more than 20% of
the General Account accumulation value at the time of the transfer.
Transfer arrangements may be established to begin on the 10th or 20th of any
month and if a transfer cannot be completed it will be made on the next
available transfer date.
Also, in addition to requests for transfer which are by written request, you
or persons authorized by you may effect transfers, or a change in the allocation
of future premiums, by means of a telephone call. Transfers and requests made
pursuant to such a call are subject to the same conditions and procedures as are
outlined above for written transfer requests. During periods of marked economic
or market changes, Contract Owners may experience difficulty in implementing a
telephone transfer due to a heavy volume of telephone calls. In such a
circumstance, Participants should consider submitting a written transfer request
while continuing to attempt a telephone transfer. We reserve the right to
restrict the frequency of--or otherwise modify, condition, terminate or impose
charges upon--telephone transfer privileges. For more information on telephone
transfers, contact Minnesota Mutual.
We will employ reasonable procedures to satisfy ourselves that instructions
received from Participants are genuine and, to the extent that we do not, we may
be liable for any losses due to unauthorized or fraudulent instructions. We
require Participants to identify themselves in those telephone conversations
through such information as we may deem to be reasonable. We record telephone
transfer and change of allocation instruction conversations and we provide
Participants with a written confirmation of the telephone transfer.
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The interests of Contract Owners and Participants arising from the allocation
of purchase payments or the transfer of contract values to the General Account
of Minnesota Mutual, and thereby to its general assets, are not registered under
the Securities Act of 1933, and Minnesota Mutual is not registered as an
investment company under the Investment Company Act of 1940. Accordingly, such
interests and Minnesota Mutual are not subject to the provisions of those acts
that would apply if registration under such acts were required.
PORTABILITY
In addition to provisions which allow a transfer of Participant accumulation
values under the Contract between the General Account of Minnesota Mutual and
the Group Variable Annuity Account and transfers among the sub-accounts of the
Group Variable Annuity Account, withdrawals are also allowed from the
Participant accumulation values of the Contract to transfer amounts to other
investment alternatives offered by the Contract Owner in its underlying plan.
Withdrawals for this purpose other than those relating to the timing of
payments, are subject to the same limitations and restrictions as described in
the heading "Transfer of Values" immediately above and the same dollar
limitations on such transfers similarly apply.
VALUE OF THE CONTRACT
The value of the Contract at any time prior to the commencement of annuity
payments can be determined by multiplying the total number of accumulation units
credited to the Contract by the current value of an accumulation unit in each
sub-account of the Group Variable Annuity Account and adding to this amount the
sum of General Account values. There is no assurance that such value will equal
or exceed the purchase payments made, except with respect to amounts allocated
to the General Account. The Contract Owner and, where applicable, each
Participant will be advised periodically of the number of accumulation units
credited to the Contract or to the Participant's individual account, the current
value of each accumulation unit, and the total value of the Contract or the
individual account.
ACCUMULATION UNIT VALUE
The value of an accumulation unit in each sub-account of the Group Variable
Annuity Account was set at $1.000000 on the first valuation date of the Group
Variable Annuity Account. The value of an accumulation unit on any subsequent
valuation date is determined by multiplying the value of an accumulation unit on
the immediately preceding valuation date by the net investment factor (described
below) for the valuation period just ended. The value of an accumulation unit as
of any date other than a valuation date is equal to its value on the next
succeeding valuation date.
NET INVESTMENT FACTOR
The net investment factor is an index used to measure the investment performance
of a sub-account from one valuation period to the next. For any sub-account, the
net investment factor for a valuation period is the gross investment rate for
such sub-account for the valuation period, less a deduction for the mortality
risk, expense risk and administrative charge at the current rate of 1.00% per
annum.
The gross investment rate is equal to: (1) the net asset value per share of a
Series Fund or Underlying Fund share held in a sub-account of the Group Variable
Annuity Account determined at the end of the current valuation period; plus (2)
the per share amount of any dividend or capital gain distribution by that Series
Fund or Underlying Fund if the "ex-dividend" date occurs during the current
valuation period; divided by (3) the net asset value per share of that Series
Fund or Underlying Fund share determined at the end of the preceding valuation
period. The gross investment rate may be positive or negative.
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WITHDRAWALS AND SURRENDER
Under certain circumstances a Participant may have the right to surrender his or
her interest in the Contract in whole or in part, subject to possible adverse
tax consequences. (See discussion under heading "Federal Tax Status" on pages
23-26.)
Withdrawals may be made only for the purpose of providing plan benefits,
making transfers to the Contract Owner, making transfers to plan investment
alternatives available in the Contract Owner's underlying plan other than those
provided for in this Contract, or allowing other withdrawals as allowed in the
plan and mutually agreed upon by Minnesota Mutual and the Contract Owner. The
amount available for withdrawal shall be the Participant accumulation value less
any applicable deferred sales charge. If withdrawals during the first calendar
year of participation are equal to or less than 10% of the total purchase
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payments made on behalf of the Participant, the charge will not apply. In
subsequent calendar years there will be no charge for withdrawals equal to or
less than 10% of the prior calendar year Participant accumulation value. If a
Participant's withdrawals in any calendar year exceed this amount, the deferred
sales charge will apply to the excess.
Withdrawal amounts shall be deducted from the Participant's General Account
accumulation value on a first in, first out (FIFO) basis. Unless otherwise
instructed by the Participant or the Contract Owner, withdrawal amounts will be
made from a Participant's interest in the General Account and each sub-account
of the Group Variable Annuity Account in the same proportion that the value of
that Participant's interest in the General Account and any sub-account bears to
that Participant's total accumulation value.
Withdrawals are made upon written request from the Participant or Contract
Owner to Minnesota Mutual. The withdrawal date will be the valuation date
coincident with or next following the receipt of the request by Minnesota Mutual
at its home office.
We will waive the applicable dollar amount limitation on withdrawals where a
systematic withdrawal program is in place and such a smaller amount satisfies
the minimum distribution requirements of the Code.
Once annuity payments have commenced for a Participant, the Participant cannot
surrender his or her annuity benefit and receive a single sum settlement in lieu
thereof. For a discussion of commutation rights of payees and beneficiaries
subsequent to the annuity commencement date, see heading "Annuity Payment
Options" on page 18.
Contract Owners or plan administrators of the Contract Owner's underlying plan
may also submit signed written withdrawal or surrender requests to us by
facsimile (FAX) transmission. Our FAX number is (612) 298-7942. Transfer
instructions or changes as to future allocations of purchase payments may be
communicated to us by the same means.
The surrender of a Certificate or a partial withdrawal thereunder may result
in a credit against Minnesota Mutual's premium tax liability. In such event,
Minnesota Mutual will pay in addition to the cash value paid in connection with
the surrender or withdrawal, the lesser of (1) the amount by which Minnesota
Mutual's premium tax liability is reduced, or (2) the amount previously deducted
from purchase payments for premium taxes. No representation can be made that
upon any such surrender or withdrawal any such payment will be made, since
applicable tax laws at the time of surrender or withdrawal would be
determinative.
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DISTRIBUTION
The Contracts will be sold by Minnesota Mutual life insurance agents who are
also registered representatives of MIMLIC Sales Corporation or other
broker-dealers who have entered into selling agreements with MIMLIC Sales
Corporation. MIMLIC Sales Corporation ("MIMLIC Sales") acts as the principal
underwriter of the Contracts. MIMLIC Sales is a wholly-owned subsidiary of
MIMLIC Asset Management Company, a wholly-owned subsidiary of Minnesota Mutual,
the investment adviser for the Series Fund. MIMLIC Sales is registered as a
broker-dealer under the Securities Exchange Act of 1934 and is a member of the
National Association of Securities Dealers, Inc.
Commissions to dealers, paid in connection with the sale of the Contracts, may
not exceed an amount which is equal to 6% of the purchase payments received for
the Contracts. Commissions on group cases may vary.
In addition, MIMLIC Sales or Minnesota Mutual will provide credits which allow
registered representatives (Agents) who are responsible for sales of the
Contracts to attend conventions and other meetings sponsored by Minnesota Mutual
or its affiliates for the purpose of promoting the sale of insurance and/or
investment products offered by Minnesota Mutual and its affiliates. Such credits
may cover the registered representatives' transportation, hotel accommodations,
meals, registration fees and the like. Minnesota Mutual may also pay registered
representatives additional amounts based upon their production and the
persistency of life insurance and annuity business placed with Minnesota Mutual.
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FEDERAL TAX STATUS
INTRODUCTION
The discussion contained herein is general in nature and is not intended as tax
advice for either Contract Owners or Participants. Each person concerned should
consult a competent tax adviser. No attempt is made to consider any
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applicable state or other tax laws. In addition, this discussion is based on our
understanding of federal income tax laws as they are currently interpreted. No
representation is made regarding the likelihood of continuation of current
income tax laws or the current interpretations of the Internal Revenue Service.
Minnesota Mutual is taxed as a "life insurance company" under the Internal
Revenue Code. The operations of the Group Variable Annuity Account form a part
of, and are taxed with, our other business activities. Currently, no federal
income tax is payable by us on income dividends received by the Group Variable
Annuity Account or on capital gains arising from its investment activities.
TAXATION OF ANNUITY CONTRACTS IN GENERAL
Section 72 of the Internal Revenue Code governs taxation of nonqualified
annuities in general and some aspects of tax qualified programs. No taxes are
imposed on increases in the value of an annuity contract until distribution
occurs, either as a withdrawal, a series of withdrawals or as annuity payments
under the annuity option elected.
As a general rule, deferred annuity contracts held by a corporation, trust or
other similar entity, as opposed to a natural person, are not treated as annuity
contracts for federal tax purposes. The investment income on such contracts is
taxed as ordinary income that is received or accrued by the owner of the
contract during the taxable year.
For payments made in the event of a full surrender of an annuity not part of a
qualified program, the taxable portion is generally the amount in excess of the
cost basis of the contract. Amounts withdrawn from the variable annuity
contracts are treated first as taxable income to the extent of the excess of the
contract value over the purchase payments made under the contract. Such taxable
portion is taxed at ordinary income tax rates. For some types of distributions
an excise tax penalty may also apply.
In the case of a withdrawal under an annuity that is part of a qualified
program, a portion of the amount received is taxable based on the ratio of the
"investment in the contract" to the individual's balance in the retirement plan,
generally the value of the annuity. The "investment in the contract" generally
equals the portion of any deposits made by or on behalf of an individual under
an annuity which was not excluded from the gross income of the individual. For
annuities issued in connection with qualified plans, the "investment in the
contract" can be zero.
For annuity payments, the taxable portion is generally determined by a formula
that establishes the ratio that the cost basis of the contract bears to the
expected return under the contract. Such taxable part is taxed at ordinary
income rates.
DIVERSIFICATION REQUIREMENTS
Section 817(h) of the Code authorizes the Treasury to set standards, by
regulation or otherwise for the investments of the Group Variable Annuity
Account to be "adequately diversified" in order for the Contract to be treated
as an annuity for Federal tax purposes. Group Variable Annuity Account, through
the Series Fund, intends to comply with the diversification requirements
prescribed in Regulations Section 1.817-5, which affect how the Series Fund's
assets may be invested. Although the investment adviser is an affiliate of
Minnesota Mutual, Minnesota Mutual does not have control over the Series Fund or
its investments. Nonetheless, Minnesota Mutual believes that each Portfolio of
the Series Fund in which the Group Variable Annuity Account owns shares will be
operated in compliance with the requirements prescribed by the Treasury.
In certain circumstances, owners of variable annuity contracts may be
considered the owners, for federal income tax purposes, of the assets of the
separate account used to support their contracts. In those circumstances, income
and gains from the separate account assets would be includible in the variable
annuity contract owner's gross income. The IRS has stated in published rulings
that a variable contract owner will be considered the owner of separate account
assets if the contract owner possesses incidents of ownership in those assets,
such as the ability to exercise investment control over the assets. The Treasury
Department has also announced, in connection with the issuance of regulations
concerning investment diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor control of the
investments of a segregated asset account may cause the investor (i.e., the
contract owner), rather than the insurance company, to be treated as the owner
of the assets in the account." This announcement also states that guidance would
be issued by way of regulations or rulings on the "extent to
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which policyholders may direct their investments to particular subaccounts
without being treated as owners of the underlying assets." As of the date of
this Prospectus, no such guidance has been issued.
The ownership rights of a Participant under the Contract are similar to, but
different in certain respects from, those described by the IRS in rulings in
which it was determined that contract owners were not owners of separate account
assets. For example, a Participant has the choice of one or more sub-accounts in
which to allocate net purchase payments and contract values, and may be able to
transfer among sub-accounts more frequently than in such rulings. These
differences could result in a Contract Owner and thus the Participant as being
treated as the owner of the assets of the Group Variable Annuity Account. In
addition, Minnesota Mutual does not know what standards will be set forth, if
any, in the regulations or rulings which the Treasury Department has stated it
expects to issue. Minnesota Mutual therefore reserves the right to modify the
Contract as necessary to attempt to prevent a Contract Owner or Participant from
being considered the owner of a pro rata share of the assets of the Group
Variable Annuity Account.
TAXATION OF DEATH BENEFIT PROCEEDS
Amounts may be distributed from a Contract because of the death of the owner.
Generally, such amounts are includable in the income of the recipient as
follows: (1) if distributed in a lump sum, they are taxed in the same manner as
a full surrender of the Contract, as described above, or (2) if distributed
under an annuity option, they are taxed in the same manner as annuity payments,
as described above.
TAX QUALIFIED PROGRAMS
The tax rules applicable to Participants and beneficiaries in tax-qualified
programs vary according to the type of plan and the terms and conditions of the
plan. Special favorable tax treatment may be available for certain types of
purchase payments and distributions. Adverse tax consequences may result from
purchase payments in excess of specified limits; distributions prior to age
59 1/2 (subject to certain exceptions); distributions that do not conform to
specified minimum distribution rules; aggregate distributions in excess of a
specified annual amount; and in other specified circumstances.
We make no attempt to provide more than general information about use of
annuities with the various types of retirement plans. Some retirement plans are
subject to distribution and other requirements that are not incorporated in the
annuity. Owners and Participants under retirement plans as well as annuitants
and beneficiaries are cautioned that the rights of any person to any benefits
under annuities purchased in connection with these plans may be subject to the
terms and conditions of the plans themselves, regardless of the terms and
conditions of the annuity issued in connection with such a plan. The contract
may also be used in other situations where a group annuity contract is desired
for funding but where the benefit structure does not require a contract which is
recognized as an "annuity" for federal income tax purposes. As with deferred
compensation plans, the availability of public funds within the contract may
present additional considerations as to whether that contract is qualified as an
annuity contract for tax purposes.
Purchasers of annuities for use with any retirement plan should consult their
legal counsel and tax adviser regarding the suitability of the Contract.
DEFERRED COMPENSATION PLANS
Code Section 457 provides for certain deferred compensation plans. These plans
may be offered with respect to service for state governments, local governments,
political subdivisions, agencies, instrumentalities and certain affiliates of
such agencies, and tax-exempt organizations. The plans may permit Participants
to specify the form of investment for their deferred compensation account.
All assets of the plan are owned by the sponsoring employer and are subject to
the claims of the general creditors of the employer.
Any amount deferred under an eligible deferred compensation plan, and any
income attributable to the amounts so deferred, are currently excluded from the
Participant's income. Generally, the maximum amount of compensation that may be
deferred is the lesser of $7,500 or 33 1/3% of includable compensation (taxable
earnings). Different rules may apply for Participants covered by private
deferred compensation plans under this section and those Participants should
consult a competent tax adviser concerning the operation of such a plan. A
Participant who participates in a deferred compensation plan sponsored by an
employer and who also participates in a Section 403(b) retirement program,
Section 401(k) plan or a Simplified Employee Pension (SEP) amounts excludable
from gross
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income pursuant to that program, plan or pension reduce the amount of
compensation which may be deferred under a Section 457 deferred compensation
plan.
The diversification requirements of Section 817(h) of the Code, previously
described in this section, may present additional considerations for purchasers
or Participants of the Contracts. Code Section 817(h) applies to a variable
annuity contract other than a pension plan contract. Section 818 of the Code
defines pension plan contracts as contracts issued under a Section 401(a) plan,
Section 401(k) plan, Section 403(b) program, or a Section 457 retirement program
as maintained by the United States government, the government of any state or
political subdivision thereof, or by any agency or instrumentality of the
foregoing.
Notwithstanding this exemption, an existing Revenue Ruling, Revenue Ruling
81-225, may provide a legal theory that suggests that contracts which utilize a
public fund, that is to say a fund available not only to separate accounts of
insurance companies but to members of the public generally, may present
additional considerations as to whether that contract is qualified as an annuity
contract for tax purposes because of the existence of the availability of the
public funds in that contract. We believe that if the Service were to make such
a determination providing that result, that the existence of a Section 457
deferred compensation plan would, nevertheless, protect Participants in that
plan from current income taxation.
Additionally, should a contract make a public fund available to its
Participants, it is believed that additional contracts funded by the separate
account could participate in the separate account and, so long as they omitted
the use of non-public funds, that they could continue to obtain tax treatment as
an annuity under existing regulations and revenue rulings.
PUBLIC SCHOOL SYSTEMS AND CERTAIN TAX EXEMPT ORGANIZATIONS
Under Code Section 403(b), payments made by public school systems and certain
tax exempt organizations to purchase annuity contracts for their employees are
excludable from the gross income of the employee, subject to certain
limitations. However, these payments may be subject to FICA (Social Security)
taxes.
Code Section 403(b)(11) restricts the distribution under Code Section 403(b)
annuity contracts of: (1) elective contributions made in years beginning after
December 31, 1988; (2) earnings on those contributions; and (3) earnings in such
years on amounts held as of the last year beginning before January 1, 1989.
Distribution of those amounts may only occur upon death of the employee,
attainment of age 59 1/2, separation from service, disability, or financial
hardship. In addition, income attributable to elective contributions may not be
distributed in the case of hardship.
WITHHOLDING
In general, distributions from annuities are subject to federal income tax
withholding unless the recipient elects not to have tax withheld. Different
rules may apply to payments delivered outside the United States. Some states
have enacted similar rules.
Recent changes to the Code allow the rollover of most distributions from
tax-qualified plans and Section 403(b) annuities directly to other tax-qualified
plans that will accept such distributions and to individual retirement accounts
and individual retirement annuities. Distributions which may not be rolled over
are those which are: (1) one of a series of substantially equal annual (or more
frequent) payments made (a) over the life or life expectancy of the employee,
(b) the joint lives or joint expectancies of the employee and the employee's
designated beneficiary, or (c) for a specified period of ten years or more; (2)
a required minimum distribution; or (3) the non-taxable portion of a
distribution.
Any distribution eligible for rollover, which may include payment to an
employee, an employee's surviving spouse or an ex-spouse who is an alternate
payee, will be subject to federal tax withholding at a 20% rate unless the
distribution is made as a direct rollover to a tax-qualified plan or to an
individual retirement account or annuity. It may be noted that amounts received
by individuals which are eligible for rollover may still be placed in another
tax-qualified plan or individual retirement account or individual retirement
annuity if the transaction is completed within 60 days after the distribution
has been received. Such a taxpayer must replace withheld amounts with other
funds to avoid taxation on the amount previously withheld.
LOANS
Generally, interest paid on any loan under an annuity Contract which is owned by
an individual is not deductible. A Participant should consult a competent tax
adviser before deducting any loan interest.
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SEE YOUR OWN TAX ADVISER
It should be understood that the foregoing description of the federal income tax
consequences under these Contracts is not exhaustive and that special rules are
provided with respect to situations not discussed herein. It should also be
understood that should a plan lose its qualified status, employees will lose
some of the tax benefits described. Statutory changes in the Internal Revenue
Code with varying effective dates, and regulations adopted thereunder may also
alter the tax consequences of specific factual situations. Due to the complexity
of the applicable laws, tax advice may be needed by a person contemplating
becoming a Participant under the Contract or exercising elections under such a
Contract. For further information a qualified tax adviser should be consulted.
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LEGAL PROCEEDINGS
There are no pending legal proceedings in which the Group Variable Annuity
Account is a party. There are no material pending legal proceedings, other than
ordinary routine litigation incidental to their business, in which Minnesota
Mutual, MIMLIC Asset Management Company or MIMLIC Sales is a party.
- ------------------------------------------------------------------------
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
Contracts offered hereby. This Prospectus does not contain all the information
set forth in the Registration Statement and amendments thereto and exhibits
filed as a part thereof, to all of which reference is hereby made for further
information concerning the Group Variable Annuity Account and the Contracts.
Statements contained in this Prospectus as to the content of Contracts and other
legal instruments are summaries. For a complete statement of the terms thereof
reference is made to such instruments as filed.
- ------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
A Statement of Additional Information, which contains additional Contract and
Group Variable Annuity Account information, including financial statements, is
available from the offices of the Group Variable Annuity Account at your
request. The Table of Contents for that Statement of Additional Information is
as follows:
Group Variable Annuity Account
Trustees and Principal Management Officers of Minnesota Mutual
Other Contracts
Distribution of Contracts
Annuity Payments
Auditors
Financial Statements
Appendix A--Calculation of Unit Values
35
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT
OF ADDITIONAL INFORMATION
<PAGE>
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
CROSS REFERENCE SHEET TO STATEMENT OF ADDITIONAL INFORMATION
Form N-4
Item Number Caption in Statement of Additional Information
15. Cover Page
16. Table of Contents
17. The Fund
18. Custodian
19. Not Applicable
20. Distribution of Contracts
21. Performance Data
22. Annuity Payments
23. Financial Statements
<PAGE>
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
Statement of Additional Information
The date of this document and the Prospectus is: January 6, 1996
This Statement of Additional Information is not a prospectus. Much of the
information contained in this Statement of Additional Information expands upon
subjects discussed in the Prospectus. Therefore, this Statement should be read
in conjunction with the Group Variable Annuity Account's current Prospectus,
bearing the same date, which may be obtained by calling Minnesota Mutual at
(612) 298-3500, or writing the Group Variable Annuity Account at Minnesota
Mutual Life Center, 400 Robert Street North, St. Paul, Minnesota 55101-2098.
TABLE OF CONTENTS
Separate Account
Trustees and Principal Management Officers of Minnesota Mutual
Other Contracts
Distribution of Contracts
Annuity Payments
Auditors
Financial Statements
Appendix A - Calculation of Unit Values
1
<PAGE>
GROUP VARIABLE ANNUITY ACCOUNT
Minnesota Mutual Group Variable Annuity Account is a separate account of The
Minnesota Mutual Life Insurance Company ("Minnesota Mutual"). The Group
Variable Account is registered as a unit investment trust.
TRUSTEES AND PRINCIPAL MANAGEMENT OFFICERS OF MINNESOTA MUTUAL
TRUSTEES PRINCIPAL OCCUPATION
Anthony L. Andersen Chair-Board of Directors and Chief Executive
Officer, H. B. Fuller Company, St. Paul,
Minnesota (Adhesive Products)
Harold V. Haverty Chairman, of the Board,
Deluxe Corporation, Shoreview,
Minnesota (Check Printing)
John F. Grundhofer Chairman of the Board, President and Chief
Executive Officer, First Bank System, Inc.,
Minneapolis, Minnesota (Banking)
Lloyd P. Johnson Retired Chairman, Norwest Corporation,
Minneapolis, Minnesota (Banking)
David S. Kidwell, Ph.D. Dean and Professor of Finance, The Curtis L.
Carlson School of Management, University of
Minnesota, since August 1991; prior thereto,
Dean of the School and Professor, University
of Connecticut, School of Business
Administration from 1988 to July 1991
Reatha C. King, Ph.D. President and Executive Director, General
Mills Foundation, Minneapolis, Minnesota
Thomas E. Rohricht Member, Doherty, Rumble & Butler Professional
Association, St. Paul, Minnesota (Attorneys)
Terry N. Saario, Ph.D. President, Northwest Area Foundation, St.
Paul, Minnesota (Private Regional Foundation)
Robert L. Senkler Chairman of the Board, Chief Executive
Officer and President, The Minnesota Mutual
Life Insurance Company since July 1994;
prior thereto for more than five years Vice
President and Actuary, The Minnesota Mutual
Life Insurance Company
Michael E. Shannon Vice Chairman, CFO and Chief Administrative
Officer, Ecolab, Inc., St. Paul, Minnesota
(Specialty Chemical Company)
2
<PAGE>
Frederick T. Weyerhaeuser Chairman, Clearwater Management Company, St.
Paul, Minnesota (Financial Management)
PRINCIPAL OFFICERS (OTHER THAN TRUSTEES)
NAME POSITION
John F. Bruder Senior Vice President
Keith M. Campbell Vice President
Paul H. Gooding Vice President and Treasurer
Robert E. Hunstad Executive Vice President
James E. Johnson Senior Vice President and Actuary
Joel W. Mahle Vice President
Dennis E. Prohofsky Vice President, General Counsel and
Secretary
Gregory S. Strong Vice President and Actuary
Terrence M. Sullivan Senior Vice President
Randy F. Wallake Senior Vice President
All Trustees who are not also officers of Minnesota Mutual have had the
principal occupation (or employers) shown for at least five years with the
exception of Dr. Kidwell, whose prior employment is as indicated above. All
officers of Minnesota Mutual have been employed by Minnesota Mutual for at least
five years.
DISTRIBUTION OF CONTRACTS
The Contracts will be continuously sold by Minnesota Mutual life insurance
agents who are also registered representatives of MIMLIC Sales Corporation or
other broker-dealers who have entered into selling agreements with MIMLIC Sales.
MIMLIC Sales acts as the principal underwriter of the contracts. MIMLIC Sales
Corporation is a wholly-owned subsidiary of MIMLIC Asset Management Company,
which in turn is a wholly-owned subsidiary of Minnesota Mutual and the
investment adviser to the Series Fund. MIMLIC Sales is registered as a
broker-dealer under the Securities Exchange Act of 1934 and is a member of the
National Association of Securities Dealers, Inc.
3
<PAGE>
ANNUITY PAYMENTS
Please see Appendix A to this Statement of Additional Information for an
illustration of the calculation of annuity unit values and of a variable annuity
payment, showing the method used for the calculation of both the initial and
subsequent payments.
AUDITORS
The financial statements of the Group Variable Annuity Account and The Minnesota
Mutual Life Insurance Company included in this Statement of Additional
Information have been audited by KPMG Peat Marwick LLP, 4200 Norwest Center, 90
South Seventh Street, Minneapolis, Minnesota 55402, independent auditors, as
indicated in their reports in this Statement of Additional Information, and are
included herein in reliance upon such reports and upon the authority of such
firm as experts in accounting and auditing.
4
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees of The Minnesota Mutual Life Insurance Company and
Contract Owners of Minnesota Mutual Group Variable Annuity Account:
We have audited the accompanying statements of assets and liabilities of the
MIMLIC Money Market, Vanguard Long-Term Corporate, Vanguard Wellington,
MIMLIC Index 500, Fidelity Contrafund, Scudder International and Janus Twenty
Segregated Sub-Accounts of Minnesota Mutual Group Variable Annuity Account as
of December 31, 1994 and the related statements of operations, changes in net
assets and the financial highlights for the period from September 2, 1994 to
December 31, 1994. These financial statements and the financial highlights are
the responsibility of the Account's management. Our responsibility is to
express an opinion on these financial statements and the financial highlights
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Investments owned at December 31, 1994 were confirmed to us by the
respective Sub-Account mutual fund group, or, for MIMLIC Series Fund, Inc.,
verified by examination of the underlying portfolios. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
MIMLIC Money Market, Vanguard Long-Term Corporate, Vanguard Wellington, MIMLIC
Index 500, Fidelity Contrafund, Scudder International and Janus Twenty
Segregated Sub-Accounts of Minnesota Mutual Group Variable Annuity Account as
of December 31, 1994 and the related statements of operations, changes in net
assets and financial highlights, for the period stated in the first paragraph,
in conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Minneapolis, Minnesota
February 10, 1995
<PAGE>
<TABLE>
<CAPTION>
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1994
SEGREGATED SUB-ACCOUNTS
------------------------------------------------------------------------------
MIMLIC VANGUARD MIMLIC
MONEY LONG-TERM VANGUARD INDEX FIDELITY SCUDDER JANUS
ASSETS MARKET CORPORATE WELLINGTON 500 CONTRAFUND INTERNATIONAL TWENTY
------ -------- ----------- ------------ -------- ------------ ------------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Investments in shares of underlying mutual funds:
MIMLIC Series Fund - Money Market Portfolio,
322,182 shares at net asset value fo $1.00
per share (cost $322,182).................. $ 322,182 - - - - - -
Vanguard Fixed Income Securities Fund
Long-Term Corporate Portfolio, 33,600 shares
at net asset value of $8.05 per share
(cost $270,245) ............................. - 270,477 - - - - -
Vanguard Wellington, 68,226 shares at net asset
value of $19.39 per share
(cost $1,349,691) .......................... - - 1,322,905 - - - -
MIMLIC Series Fund - Index 500 Portfolio,
168,373 shares at net asset value of $1.52
per share (cost $255,853) ................. - - - 255,662 - - -
Fidelity Contrafund, 156,674 shares at net
asset value of $30.28 per share
(cost $4,794,127) ......................... - - - - 4,744,091 - -
Scudder International Fund, 38,098 shares at
net asset value of $40.37 per share
(cost $1,648,434) ......................... - - - - - 1,538,011 -
Janus Twenty Fund, 18,772 shares at net asset
value of $22.71 per share
(cost $436,012) ........................... - - - - - - 426,308
---------- ---------- ----------- --------- ---------- ---------- --------
322,182 270,477 1,322,905 255,662 4,744,091 1,538,011 426,308
Receivable for investments sold ................. 2,726 - - 10 - - -
Receivable from Minnesota Mutual for contract
purchase payments ............................... 142 2,391 9,578 634 34,039 151,112 708
Dividends receivable ............................ 46 - - - - - -
---------- ---------- ----------- --------- ---------- ---------- --------
Total assets ................................ 325,096 272,868 1,332,483 256,306 4,778,130 1,689,123 427,016
---------- ---------- ----------- --------- ---------- ---------- --------
LIABILITIES
-----------
Payable for investments purchased ............... 142 - - 634 - - -
Payable to Minnesota Mutual for contract
terminations and mortality and expense charges... 2,726 9 52 10 189 61 17
---------- ---------- ----------- --------- ---------- ---------- --------
Total liabilities............................ 2,868 9 52 644 189 61 17
---------- ---------- ----------- --------- ---------- ---------- --------
NET ASSETS APPLICABLE TO CONTRACT OWNERS ........ $ 322,228 272,859 1,332,431 255,662 4,777,941 1,689,062 426,999
---------- ---------- ----------- --------- ---------- ---------- --------
---------- ---------- ----------- --------- ---------- ---------- --------
ACCUMULATION UNITS OUTSTANDING .................. 318,636 275,796 1,363,274 261,150 4,870,232 1,807,445 444,821
---------- ---------- ----------- --------- ---------- ---------- --------
---------- ---------- ----------- --------- ---------- ---------- --------
NET ASSET VALUE PER ACCUMULATION UNIT ........... $ 1.011 0.989 0.977 0.979 0.981 0.934 0.959
---------- ---------- ----------- --------- ---------- ---------- --------
---------- ---------- ----------- --------- ---------- ---------- --------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
STATEMENTS OF OPERATIONS
PERIOD FROM SEPTEMBER 2, 1994 TO DECEMBER 31, 1994
SEGREGATED SUB-ACCOUNTS
---------------------------------------------------------------------------------
MIMLIC VANGUARD MIMLIC
MONEY LONG-TERM VANGUARD INDEX FIDELITY SCUDDER JANUS
MARKET CORPORATE WELLINGTON 500 CONTRAFUND INTERNATIONAL TWENTY
--------- ------------ ------------ -------- ------------ ------------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss):
Investment income distributions from
underlying mutual fund ..................... $ 2,705 3,091 18,519 - - - 1,256
Mortality and expense risk charges
(note 3) ................................... (470) (401) (1,878) (371) (7,042) (2,302) (570)
Administrative charges (note 3) ............ (83) (71) (331) (66) (1,243) (406) (101)
-------- ----------- ---------- ---------- ---------- ---------- -----------
Investment income (loss) - net ........... 2,152 2,619 16,310 (437) (8,285) (2,708) 585
-------- ----------- ---------- ---------- ---------- ---------- -----------
Realized and unrealized gains
(losses) on investments - net:
Realized gain distributions from
underlying mutual fund ..................... - - 1,788 - - 45,570 -
-------- ----------- ---------- ---------- ---------- ---------- -----------
Realized gains (losses) on sales of
investments (note 4):
Proceeds from sales ...................... 307,515 9,824 44,450 40,178 102,643 167,538 55,081
Cost of investments sold ................. (307,515) (9,855) (45,423) (40,364) (105,907) (176,039) (55,900)
-------- ----------- ---------- ---------- ---------- ---------- -----------
- (31) (973) (186) (3,264) (8,501) (819)
-------- ----------- ---------- ---------- ---------- ---------- -----------
Net realized gains (losses) on
investments .............................. - (31) 815 (186) (3,264) 37,069 (819)
-------- ----------- ---------- ---------- ---------- ---------- -----------
Net change in unrealized appreciation
or depreciation of investments ............. - 232 (26,786) (191) (50,036) (110,423) (9,704)
-------- ----------- ---------- ---------- ---------- ---------- -----------
Net gains (losses) on investments ........ - 201 (25,971) (377) (53,300) (73,354) (10,523)
-------- ----------- ---------- ---------- ---------- ---------- -----------
Net increase (decrease) in net assets
resulting from operations .................. $ 2,152 2,820 (9,661) (814) (61,585) (76,062) (9,938)
-------- ----------- ---------- ---------- ---------- ---------- -----------
-------- ----------- ---------- ---------- ---------- ---------- -----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
PERIOD FROM SEPTEMBER 2, 1994 TO DECEMBER 31, 1994
SEGREGATED SUB-ACCOUNTS
------------------------------------------------------------------------------------
MIMLIC VANGUARD MIMLIC
MONEY LONG-TERM VANGUARD INDEX FIDELITY SCUDDER JANUS
MARKET CORPORATE WELLINGTON 500 CONTRAFUND INTERNATIONAL TWENTY
--------- ------------ ------------- --------- ------------ ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Operations:
Investment income (loss) - net ............ $ 2,152 2,619 16,310 (437) (8,285) (2,708) 585
Net realized gains (losses) on
investments .............................. - (31) 815 (186) (3,264) 37,069 (819)
Net change in unrealized appreciation or
depreciation of investments .............. - 232 (26,786) (191) (50,036) (110,423) (9,704)
--------- ----------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets resulting
from operations ........................... 2,152 2,820 (9,661) (814) (61,585) (76,062) (9,938)
--------- ----------- ---------- ---------- ---------- ---------- ----------
Contract transactions (notes 3 and 5):
Contract purchase payments ................ 627,037 279,861 1,366,325 296,217 4,988,769 1,958,703 509,011
Contract terminations, withdrawals
and charges .............................. (306,962) (9,822) (24,234) (39,741) (149,243) (193,579) (72,074)
--------- ----------- ---------- ---------- ---------- ---------- ----------
Increase in net assets from contract
transactions ............................... 320,075 270,039 1,342,091 256,476 4,839,526 1,765,124 436,937
--------- ----------- ---------- ---------- ---------- ---------- ----------
Increase in net assets ...................... 322,228 272,859 1,332,431 255,662 4,777,941 1,689,062 426,999
Net assets at the beginning
of period .................................. - - - - - - -
--------- ----------- ---------- ---------- ---------- ---------- ----------
Net assets at the end of period ............. $ 322,228 272,859 1,332,431 255,662 4,777,941 1,689,062 426,999
--------- ----------- ---------- ---------- ---------- ---------- ----------
--------- ----------- ---------- ---------- ---------- ---------- ----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION AND BASIS OF PRESENTATION
The Minnesota Mutual Group Variable Annuity Account (the Account) was
established on June 14, 1993 as a segregated asset account of The Minnesota
Mutual Life Insurance Company (Minnesota Mutual) under Minnesota law and is
registered as a unit investment trust under the Investment Company Act of
1940 (as amended). The Account commenced operations September 2, 1994.
The Account currently has seven segregated sub-accounts to which variable
annuity contract owners may allocate their purchase payments.
The assets of each segregated sub-account are held for the exclusive
benefit of the variable annuity contract owners and are not chargeable with
liabilities arising out of the business conducted by any other account or
by Minnesota Mutual. Contract owners allocate their variable purchase
payments to one or more of the seven segregated sub-accounts. Payments
allocated to the MIMLIC Money Market, Vanguard Fixed Income Securities Fund
Long-Term Corporate, Vanguard Wellington, MIMLIC Index 500, Fidelity
Contrafund, Scudder International and Janus Twenty segregated sub-accounts
are invested in shares of the Money Market Portfolio of the MIMLIC Series
Fund, Inc., Long-Term Corporate Portfolio of the Vanguard Fixed Income
Securities Fund, Inc., Vanguard/Wellington Fund, Inc., Index 500 Portfolio
of the MIMLIC Series Fund, Inc., Fidelity Contrafund, Scudder International
Fund and Janus Twenty Fund (Underlying Funds), respectively. Each of the
Underlying Funds is registered under the Investment Company Act of 1940 as
an open-end management investment company, or a series thereof.
MIMLIC Sales Corporation acts as the underwriter for the Account. MIMLIC
Asset Management Company acts as the investment adviser for the MIMLIC
Series Fund, Inc. MIMLIC Sales Corporation and MIMLIC Asset Management
Company are wholly-owned subsidiaries of Minnesota Mutual.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENTS IN UNDERLYING MUTUAL FUNDS
Investments in shares of the Underlying Funds are stated at market value
which is the net asset value per share as determined daily by each of the
Underlying Funds. Investment transactions are accounted for on the date the
shares are purchased or sold. The cost of investments sold is determined on
the average cost method. All dividend distributions received from the
Underlying Funds are reinvested in additional shares of the Underlying
Funds and are recorded by the segregated sub-accounts on the ex-dividend
date.
FEDERAL INCOME TAXES
The Account is treated as part of Minnesota Mutual for federal income tax
purposes. Under current interpretations of existing federal income tax
law, no income taxes are payable on investment income or capital gain
distributions received by the Account from the Underlying Funds.
(3) MORTALITY AND RISK EXPENSE AND ADMINISTRATIVE CHARGES
The mortality and expense risk charge paid to Minnesota Mutual is computed
daily and is equal, on an annual basis, to .85% of the average daily net
assets of the Account. Under certain conditions, the mortality and expense
risk charge may be increased to 1.25% of the average daily net assets of
the Account.
<PAGE>
2
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
(3) MORTALITY AND RISK EXPENSE AND ADMINISTRATIVE CHARGES - CONTINUED
The contract adminstrative charge paid to Minnesota Mutual is computed
daily and is equal, on an annual basis, to .15% of the average daily net
assets of the Account. Under certain conditions, the contract
administrative charge may be increased to not more than .40% of the average
daily net assets of the Account.
A contingent deferred sales charge may be imposed on a contract owner
during the first six years if a contract's accumulation value is reduced by
withdrawal or surrender. This sales charge is currently being waived by
Minnesota Mutual.
(4) INVESTMENT TRANSACTIONS
The Account's purchases of Underlying Fund shares, including reinvestment
of dividend distributions, were as follows during the period from September
2, 1994 to December 31, 1994:
Money Market Portfolio of the MIMLIC Series Fund, Inc.......... $ 629,697
Long-Term Corporate Portfolio of the Vanguard Fixed Income
Securities Fund, Inc......................................... 280,100
Vanguard/Wellington Fund, Inc. ................................. 1,395,114
Index 500 Portfolio of the MIMLIC Series Fund, Inc.............. 296,217
Fidelity Contrafund ............................................ 4,900,034
Scudder International Fund ..................................... 1,824,473
Janus Twenty Fund .............................................. 491,912
(5) UNIT ACTIVITY FROM CONTRACT TRANSACTIONS
Transactions in units for each segregated sub-accounts for the period from
September 2, 1994 to December 31, 1994 were as follows:
<TABLE>
<CAPTION>
SEGREGATED SUB-ACCOUNTS
--------------------------------------------------
MIMLIC VANGUARD
MONEY LONG-TERM VANGUARD MIMLIC
MARKET CORPORATE WELLINGTON INDEX 500
----------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
Units outstanding at
September 2, 1994 .......... - - - -
Contract purchase
payments .............. 623,855 285,876 1,388,151 301,640
Deductions for contract
terminations and
withdrawal payments ... (305,219) (10,080) (24,877) (40,490)
----------- ---------- ----------- ----------
Units outstanding at
December 31, 1994 .......... 318,636 275,796 1,363,274 261,150
----------- ---------- ----------- ----------
----------- ---------- ----------- ----------
</TABLE>
<PAGE>
3
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
(5) UNIT ACTIVITY FROM CONTRACT TRANSACTIONS - CONTINUED
<TABLE>
<CAPTION>
SEGREGATED SUB-ACCOUNTS
--------------------------------
FIDELITY SCUDDER JANUS
CONTRAFUND INTERNATIONAL TWENTY
---------- ------------- ------
<S> <C> <C> <C>
Units outstanding at
September 2, 1994 ......................... - - -
Contract purchase payments ............. 5,025,027 2,012,896 519,373
Deductions for contract terminations
and withdrawal payments .............. (154,795) (205,451) (74,552)
--------- ----------- ----------
Units outstanding at
December 31, 1994 ......................... 4,870,232 1,807,445 444,821
---------- ----------- ----------
---------- ----------- ----------
</TABLE>
<PAGE>
4
MINNESOTA MUTUAL GROUP VARIABLE ANNUITY ACCOUNT
(6) FINANCIAL HIGHLIGHTS
The following table for each segregated sub-account show certain data for
an accumulation unit outstanding during the period from September 2, 1994,
commencement of operations, to December 31, 1994:
<TABLE>
<CAPTION>
MIMLIC VANGUARD
MONEY LONG-TERM VANGUARD MIMLIC FIDELITY SCUDDER JANUS
MARKET CORPORATE WELLINGTON INDEX 500 CONTRAFUND INTERNATIONAL TWENTY
------ --------- ---------- --------- ---------- ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of period . . . . . . $ 1.000 1.000 1.000 1.000 1.000 1.000 1.000
---------- --------- ---------- --------- ---------- ----------- -------
Income from investment operations:
Net investment income (loss) . . . . . . .011 .020 .022 (.003) (.003) (.003) .003
Net gains or losses on securities
(both realized and unrealized) . . . . - (.031) (.045) (.018) (.016) (.063) (.044)
---------- --------- ---------- --------- ---------- ----------- -------
Total from investment operations . . . .011 (.011) (.023) (.021) (.019) (.066) (.041)
---------- --------- ---------- --------- ---------- ----------- -------
Unit value, end of period . . . . . . . . . $ 1.011 .989 .977 .979 .981 .934 .959
---------- --------- ---------- --------- ---------- ----------- -------
---------- --------- ---------- --------- ---------- ----------- -------
</TABLE>
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
INDEX TO FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
Independent Auditors' Report............................................. 1
Balance Sheets........................................................... 2
Statements of Operations and Policyowners'Surplus........................ 3
Statements of Cash Flows................................................. 4
Notes to Financial Statements............................................ 5
Financial Statement Schedules:
I. Summary of Investments--Other than Investments in Related Parties 17
V. Supplementary Insurance Information.............................. 18
VI. Reinsurance..................................................... 19
<PAGE>
[LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
The Board of Trustees
The Minnesota Mutual Life Insurance Company:
We have audited the accompanying balance sheets of The Minnesota Mutual Life
Insurance Company as of December 31, 1994 and 1993 and the related statements of
operations and policyowners' surplus and cash flows for each of the years in the
three-year period ended December 31, 1994. In connection with our audits of the
financial statements, we also have audited the financial statement schedules as
listed in the accompanying index. These financial statements and financial
statement schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 The Minnesota Mutual Life
Insurance Company as of December 31, 1994 and 1993, and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 1994, in conformity with generally accepted accounting
principles (notes 1 and 10). Also in our opinion, the related financial
statement schedules, when considered in relation to the basic financial
statements taken as a whole, present fairly, in all material respects, the
information set forth therein.
/s/ KPMG Peat Marwick LLP
Minneapolis, Minnesota
February 9, 1995
1
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
1993 1994
---------- ----------
ASSETS
<S> <C> <C>
Bonds $5,134,554 $4,985,026
Common stocks 209,958 211,792
Mortgage loans 598,186 542,356
Real estate, including Home Office property 76,346 80,655
Other invested assets 60,604 49,599
Policy loans 185,599 177,820
Investments in subsidiary companies 155,404 125,865
Cash and short-term securities 112,869 90,266
Premiums deferred and uncollected 125,422 186,978
Other assets 134,594 118,596
---------- ----------
Total assets, excluding separate
accounts 6,793,536 6,568,953
Separate account assets 1,750,680 1,235,157
---------- ----------
Total assets $8,544,216 $7,804,110
---------- ----------
---------- ----------
LIABILITIES AND POLICYOWNERS' SURPLUS
Liabilities:
Policy reserves:
Life insurance $1,981,469 $1,875,570
Annuities and other fund deposits 3,179,279 3,166,944
Accident and health 343,241 317,825
Policy claims in process of
settlement 53,670 98,351
Dividends payable to policyowners 100,287 94,224
Other policy liabilities 388,538 371,333
Asset valuation reserve 165,341 135,936
Interest maintenance reserve 19,922 24,349
Federal income taxes 35,050 15,644
Other liabilities 186,575 162,934
---------- ----------
Total liabilities, excluding separate accounts 6,453,372 6,263,110
Separate account liabilities 1,708,529 1,193,100
---------- ----------
Total liabilities 8,161,901 7,456,210
Policyowners' surplus 382,315 347,900
---------- ----------
Total liabilities and policyowners' surplus $8,544,216 $7,804,110
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS AND POLICYOWNERS' SURPLUS
YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
(IN THOUSANDS)
<TABLE>
<CAPTION>
1994 1993 1992
---------- ----------- -----------
STATEMENTS OF OPERATIONS
<S> <C> <C> <C>
Revenues:
Premiums, annuity considerations and fund deposits $ 1,424,352 $ 1,289,954 $ 1,234,413
Net investment income 488,813 493,011 485,284
---------- ---------- ----------
Total revenues 1,913,165 1,782,965 1,719,697
---------- ---------- ----------
Benefits and expenses:
Policyowner benefits 1,259,685 1,131,638 968,539
Increase in policy reserves 94,116 122,280 243,014
General insurance expenses and taxes 279,022 268,041 249,943
Commissions 75,443 70,899 65,088
Federal income taxes 49,626 36,656 39,845
---------- ---------- ----------
Total benefits and expenses 1,757,892 1,629,514 1,566,429
---------- ---------- ----------
Gain from operations before net
realized capital gains (losses) and dividends 155,273 153,451 153,268
Realized capital gains (losses), net of tax 18,559 2,907 (23,311)
---------- ---------- ----------
Gain from operations before dividends 173,832 156,358 129,957
Dividends to policyowners 108,709 97,937 98,116
---------- ---------- ----------
Net income $ 65,123 $ 58,421 $ 31,841
---------- ---------- ----------
---------- ---------- ----------
STATEMENTS OF POLICYOWNERS' SURPLUS
Policyowners' surplus, beginning of year $ 347,900 $ 264,542 $ 219,488
Net income 65,123 58,421 31,841
Net change in unrealized capital gains and losses (317) 3,286 8,294
Change in policy reserve bases 1,463 -- (2,790)
Change in asset valuation reserve (29,405) (17,002) 2,217
Change in prior year federal income tax liability (512) 857 2,814
Guaranty fund certificate redemption (contribution) -- 19,171 (4,500)
Change in separate account surplus (3,764) 5,623 7,910
Business combination -- 16,684 --
Other, net 1,827 (3,682) (732)
---------- ---------- ----------
Policyowners' surplus, end of year $ 382,315 $ 347,900 $ 264,542
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
(IN THOUSANDS)
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
CASH PROVIDED:
- --------------
<S> <C> <C> <C>
From operations:
Revenues:
Premiums, annuity considerations and fund deposits $ 1,474,471 $1,252,183 $1,258,050
Net investment income 468,927 473,487 466,199
---------- ---------- ----------
Total receipts 1,943,398 1,725,670 1,724,249
---------- ---------- ----------
Benefits and expenses paid:
Policyowner benefits 1,301,060 1,069,090 957,013
Dividends to policyowners 103,634 97,697 93,087
Commissions and expenses 360,150 348,397 320,394
Federal income taxes 40,482 50,994 37,698
---------- ---------- ----------
Total payments 1,805,326 1,566,178 1,408,192
---------- ---------- ----------
Cash provided from operations 138,072 159,492 316,057
Proceeds from investments sold, matured or repaid:
Bonds 1,031,279 1,631,215 1,080,940
Common stocks 113,228 113,945 113,503
Mortgage loans 152,418 265,356 272,337
Real estate 17,571 10,100 46,142
Other invested assets 16,831 17,266 6,414
Separate account redemption 14,519 -- --
Business combination -- 24,628 --
Other sources, net 58,072 53,531 --
---------- ---------- ----------
Total cash provided 1,541,990 2,275,533 1,835,393
---------- ---------- ----------
CASH APPLIED:
Cost of investments acquired:
Bonds 1,146,117 1,966,653 1,678,256
Common stocks 132,301 123,185 94,724
Mortgage loans 203,803 109,559 69,587
Real estate 11,904 16,572 13,312
Other invested assets 12,732 9,800 8,079
Guaranty fund certificate contribution -- -- 4,500
Separate account investment 12,530 3,365 10,000
Other applications, net -- -- 6,051
---------- ---------- ----------
Total cash applied 1,519,387 2,229,134 1,884,509
---------- ---------- ----------
Net change in cash and short-term securities 22,603 46,399 (49,116)
Cash and short-term securities, beginning of year 90,266 43,867 92,983
---------- ---------- ----------
Cash and short-term securities, end of year $ 112,869 $ 90,266 $ 43,867
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements of The Minnesota Mutual Life Insurance
Company (the Company) have been prepared in accordance with accounting
practices prescribed or permitted by the Commerce Department of the State of
Minnesota (Department of Commerce), which are currently considered generally
accepted accounting principles for mutual life insurance companies (note 10).
The significant accounting policies follow:
REVENUES AND EXPENSES
Premiums are credited to revenue over the premium paying period of the
policies. Annuity considerations and fund deposits are recognized as revenue
when received. Expenses, including acquisition costs related to acquiring new
business, are charged to operations as incurred. Investment income is
recognized as earned, net of related investment expenses.
VALUATION OF INVESTMENTS
Bonds and stocks are valued as prescribed by the National Association of
Insurance Commissioners (NAIC). Bonds are generally carried at cost, adjusted
for the amortization of premiums and discounts, and common stocks at market
value. Premiums and discounts are amortized over the estimated lives of the
bonds based on the interest yield method.
Mortgage loans are generally stated at the outstanding principal balances,
net of unamortized premiums and discounts. Premiums and discounts are
amortized over the terms of the related mortgage loans based on the interest
yield method.
Real estate, exclusive of properties acquired through foreclosure, is carried
at cost less accumulated depreciation of $35,707,000 and $34,723,000 at
December 31, 1994 and 1993, respectively. Depreciation is computed
principally on a straight-line basis. Properties acquired through foreclosure
are carried at the lower of cost or market.
In 1992, the Company transferred $31,770,000 of its investment in oil and gas
limited partnerships to Robert Street Energy, Incorporated (Robert Street), a
wholly-owned subsidiary. The carrying value of oil and gas investments is
reflected in investments in subsidiary companies. The oil and gas investments
are carried at the lower of cost or market value and accounted for on a
pooled investment basis. Cost represents the original cost of the investment
adjusted for depletion, and market value represents discounted values based
on estimates of the remaining oil and gas reserves at oil and gas prices as
of the valuation date. Depletion is computed on the unit-of-production
method.
As permitted by the Department of Commerce, changes in carrying values of oil
and gas investments, related to market value changes incurred prior to
January 1, 1992, the date of transfer to Robert Street, were reflected as
unrealized losses and charged to policyowners' surplus. The unrealized losses
incurred prior to January 1, 1992 were evaluated on a pooled basis to
determine if such losses are other than temporary. Realized losses of
$1,717,000, $9,257,000, and $8,362,000 were recognized in 1994, 1993, and
1992, respectively, based upon such valuation. Changes in unrealized losses
on oil and gas investments of $1,717,000, $4,757,000, and $8,362,000 were
credited to surplus in 1994, 1993, and 1992, respectively. As of December 31,
1994, Robert Street holds no oil and gas investments.
Policy loans are carried at the unpaid principal balance.
5
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
VALUATION OF INVESTMENTS (CONTINUED)
Investments in subsidiary companies are accounted for using the equity
method. The Company records its equity in the earnings of its subsidiaries as
investment income and its equity in other changes in its subsidiaries'
surplus as credits (charges) to policyowners' surplus. These investments
include $74,154,000 and $28,026,000 at December 31, 1994 and 1993,
respectively, in registered investment funds managed by a subsidiary of the
Company which are carried at the market value of the underlying net assets.
All significant subsidiaries are wholly-owned.
Short-term securities at December 31, 1994 and 1993 amounted to $103,203,000
and $64,947,000, respectively, and are included in the caption cash and
short-term securities.
The Asset Valuation Reserve (AVR) is a formula reserve for possible losses on
bonds, stocks, mortgage loans, real estate, and other invested assets.
Changes in the reserve are reflected as direct charges or credits to
policyowners' surplus and are included in the change in asset valuation
reserve line.
INTEREST MAINTENANCE RESERVE
The Company separates realized capital gains and losses, net of tax, on fixed
income investments between those due to changes in interest rates and those
due to changes in credit quality. The net capital gains and losses due to
interest rate changes are amortized into investment income over the original
remaining life of the related bond or mortgage sold. Realized capital gains
and losses that are due to credit deterioration are recognized immediately as
realized capital gains and losses, net of applicable taxes.
CAPITAL GAINS AND LOSSES
Unrealized capital gains and losses are accounted for as a direct increase or
decrease to policyowner's surplus. Realized capital gains and losses, net of
related taxes and amounts transferred to the Interest Maintenance Reserves
(IMR), if any, are reflected as a component of net income. Both unrealized
and realized capital gains and losses are determined using the specific
identification method.
NON-ADMITTED ASSETS
Certain assets, designated as "non-admitted assets" (principally furniture,
equipment and certain receivables), amounting to $26,123,000 and $32,352,000
at December 31, 1994 and 1993, respectively, have been charged to
policyowners' surplus.
SEPARATE ACCOUNT BUSINESS
Separate account business represents funds administered and invested by the
Company for the exclusive benefit of certain pension and variable life policy
and annuity contract holders. The Company receives administrative and
investment advisory fees for services rendered on behalf of these funds.
Separate account assets are carried at market value.
The Company periodically invests money in its separate accounts. The
appreciation or depreciation on the investment is reflected as a direct
charge or credit to policyowners' surplus. In 1994, the Company made a
contribution to its separate accounts in the amount of $12,530,000. The
Company also redeemed a portion of its investment in its separate accounts in
the amount of $14,518,730. A realized capital gain of $3,018,000 was
recognized as a result of this redemption.
6
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
POLICY RESERVES
Policy reserves for life insurance and annuities are based on mortality and
interest assumptions without consideration for lapses and withdrawals.
Mortality assumptions for life insurance and annuities are based on various
mortality tables including American Experience, 1941 Commissioners Standard
Ordinary (CSO), 1958 CSO, 1980 CSO, Progressive Annuity and 1960
Commissioners Standard Group. Interest assumptions range from 2.0% to 6.0%
for ordinary policy reserves and from 2.25% to 12.0% for group policy and
annuity reserves. An unearned premium reserve is held for credit life
policies.
Approximately 16% of the ordinary life reserves are calculated on a net level
reserve basis and 84% on a modified reserve basis. The use of a modified
reserve basis partially offsets the effect of immediately expensing
acquisition costs by providing a policy reserve increase in the first policy
year which is less than the reserve increase in renewal years. Policy
reserves for group mortgage life are computed on a mid-terminal basis.
Policy reserves for individual deferred annuities are generally equal to the
total contract holders' account balance, less applicable surrender charges,
calculated according to the Commissioners Annuity Reserve Valuation Method.
Policy reserves for immediate annuities and supplementary contracts are equal
to the present value of future benefit payments based on the purchase
interest rate and the Progressive Annuity tables. Group annuity reserves are
equal to the account value plus expected interest strengthening.
Policy reserves for individual accident and health contracts include reserves
for active lives based on various morbidity tables including the 1964
Commissioners Disability Table (CDT) and the 1985 Commissioners Disability
Table A, modified for actual morbidity experience discounted at 7% interest.
Disabled reserves on individual policies are based on company morbidity
experience at interest rates varying from 5.15% to 7%. Group mortgage
disability reserves are equal to the present value of future benefits at 3%
interest and the 1964 CDT modified for Company experience. An unearned
premium reserve is held for credit disability policies.
The Company issues certain life and annuity products which are considered
financial instruments. The estimated fair value of these liabilities as of
the respective years ended December 31 are as follows:
<TABLE>
<CAPTION>
1994 1993
---------------------------- ----------------------------
CARRYING CARRYING
(IN THOUSANDS) VALUE FAIR VALUE VALUE FAIR VALUE
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Deferred annuities $ 2,042,383 $ 2,042,060 $ 1,970,037 $ 1,978,374
Annuity certain contracts 41,934 41,828 38,431 41,940
Other fund deposits 798,509 791,732 736,467 765,875
Guaranteed investment contracts 68,568 69,353 204,663 212,308
Supplementary contracts without
life contingencies 43,205 42,433 42,587 44,301
------------- ------------- ------------- -------------
Total financial liabilities $ 2,994,599 $ 2,987,406 $ 2,992,185 $ 3,042,798
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
(CONTINUED)
7
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
POLICY RESERVES (CONTINUED)
The fair value of deferred annuities, annuity certain contracts, and other
fund deposits, which have guaranteed interest rates and surrender charges,
were calculated using Commissioners' Annuity Reserve Valuation Method
calculation procedures and current market interest rates. Contracts without
guaranteed interest rates and surrender charges have fair values equal to
their accumulation values plus applicable market value adjustments. The fair
value of guaranteed investment contracts and supplementary contracts without
life contingencies were calculated using discounted cash flows, based on
interest rates currently offered for similar products with maturities
consistent with those remaining for the contracts being valued. The use of
different market assumptions and/or estimation methodologies may have a
material effect on the estimated fair value amounts.
The fair value estimates presented herein are based on pertinent information
available to management as of December 31, 1994 and 1993. Although management
is not aware of any factors that would significantly affect the estimated
fair values, such amounts have not been comprehensively revalued since those
dates and therefore, estimates of fair value subsequent to the valuation
dates may differ significantly from the amounts presented herein.
PARTICIPATING BUSINESS
Substantially all of the Company's premium revenues are derived from
participating policies. Dividends and other discretionary payments are
declared by the Board of Trustees based upon actuarial determinations which
take into consideration current mortality, interest earnings and expense
factors, including federal income tax expense, attributable to the policies.
Dividends are generally recognized as expense consistent with the recognition
of premiums and contract considerations.
FEDERAL INCOME TAXES
Federal income taxes are based on income that is currently taxable. Deferred
federal income taxes are not provided for differences between financial
statement and taxable income.
RECLASSIFICATIONS
Certain 1993 financial statement balances have been reclassified to conform
with the 1994 presentation.
(2) ACCOUNTING CHANGES
CAPITAL GAINS AND LOSSES
Prior to 1993, the Company generally recorded credit deterioration by
reducing the carrying value of the related asset and recording a realized
capital loss. Beginning in 1993, the Company continues to reduce the carrying
value of its assets for credit deterioration but records a realized capital
loss only if the underlying asset has been converted to another asset of
lesser value. Otherwise, losses due to credit deterioration are included in
unrealized capital losses. The effect of the accounting change resulted in an
increase in income of $10,761,000 in 1993.
SEPARATE ACCOUNT BUSINESS
Effective January 1, 1992, the Company changed its basis for computing
statutory reserves for deferred variable annuities from full accumulation
value to cash value, net of surrender charges. The change resulted in an
increase in earnings of $6,577,000 for the year ended December 31, 1992.
(CONTINUED)
8
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(3) INVESTMENTS
Net investment income for the respective years ended December 31, is as
follows:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Bonds $ 412,873 $ 404,353 $ 382,890
Common stocks--unaffiliated 3,188 3,390 3,960
Common stocks--affiliated 8,526 9,562 8,674
Mortgage loans 49,882 63,881 78,837
Real estate, including Home Office property 11,337 11,554 11,938
Policy loans 11,800 10,866 10,021
Short-term securities 4,026 2,067 2,652
Other, net 1,717 2,868 2,237
----------- ----------- -----------
503,349 508,541 501,209
Amortization of interest maintenance reserve 3,741 3,458 1,728
Investment expenses (18,277) (18,988) (17,653)
----------- ----------- -----------
Total $ 488,813 $ 493,011 $ 485,284
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
Changes in unrealized capital gains (losses) for the respective years ended
December 31, are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Bonds $ 4,039 $ (3,753) $ 5,392
Common stocks--unaffiliated (5,465) 2,854 (1,840)
Common stocks--affiliated (997) (1,305) (2,387)
Mortgage loans (71) 1,361 (580)
Real estate 2,270 4,211 8,072
Other, net (93) (82) (363)
--------- --------- ---------
Total $ (317) $ 3,286 $ 8,294
--------- --------- ---------
--------- --------- ---------
</TABLE>
(CONTINUED)
9
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(3) INVESTMENTS (CONTINUED)
The cost and gross unrealized gains (losses) on unaffiliated common stocks
at December 31, are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Cost $ 159,511 $ 155,881 $ 128,342
Gross unrealized gains 56,813 58,440 55,172
Gross unrealized losses (6,366) (2,529) (2,159)
----------- ----------- -----------
Admitted asset value $ 209,958 $ 211,792 $ 181,355
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
Net realized capital gains (losses) for the respective years ended December
31 are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1994 1993 1992
--------- --------- ----------
<S> <C> <C> <C>
Bonds $ (3,511) $ 31,234 $ (5,012)
Common stocks--unaffiliated 11,268 9,651 11,599
Mortgage loans (46) (741) 1,025
Real estate 2,041 (8,496) (13,420)
Other 15,872 7,837 (378)
--------- --------- ----------
25,624 39,485 (6,186)
Less: Amount transferred to the interest maintenance reserve, net of taxes (685) 20,336 9,199
Income tax expense 7,750 16,242 7,926
--------- --------- ----------
Total $ 18,559 $ 2,907 $ (23,311)
--------- --------- ----------
--------- --------- ----------
</TABLE>
Gross realized gains (losses) on sales of bonds for the respective years
ended December 31, are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1994 1993 1992
---------- --------- ----------
<S> <C> <C> <C>
Gross realized gains $ 13,249 $ 38,443 $ 20,092
Gross realized losses (16,760) (7,209) (11,547)
</TABLE>
Proceeds from the sale of bonds amounted to $638,420,000, $1,058,684,000 and
$522,546,000 for the years ended December 31, 1994, 1993, and 1992,
respectively.
Bonds and mortgage loans held at December 31, 1994 and 1993 for which no
income was recorded for the previous twelve months totaled $88,000 and
$847,000, respectively.
At December 31, 1994, bonds with a carrying value of $2,497,000 were on
deposit with various regulatory authorities as required by law.
(CONTINUED)
10
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(3) INVESTMENTS (CONTINUED)
The estimated fair value of the Company's financial instruments has been
determined using available market information as of December 31, 1994 and
1993 and appropriate valuation methodologies. Considerable judgment, however,
is required to interpret market data to develop the estimates of fair value.
Accordingly, the estimates presented herein are not necessarily indicative of
the amounts the Company could realize in a current market exchange. The use
of different market assumptions and/or estimation methodologies may have a
material effect on the estimated fair value amounts. The admitted asset value
and estimated fair value for financial instruments as of December 31, are as
follows:
<TABLE>
<CAPTION>
1994 1993
---------------------------- ----------------------------
ADMITTED FAIR ADMITTED FAIR
(IN THOUSANDS) ASSET VALUE VALUE ASSET VALUE VALUE
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Bonds $ 5,134,554 $ 4,919,495 $ 4,985,026 $ 5,358,573
Common stocks 209,958 209,958 211,792 211,792
Commercial mortgages 342,205 341,195 287,932 298,698
Residential mortgages 255,981 255,449 254,424 268,783
Policy loans 185,599 185,599 177,820 177,820
Cash and short-term securities 112,869 112,869 90,266 90,266
Other assets 157,138 157,109 137,841 137,841
------------- ------------- ------------- -------------
Total financial instruments $ 6,398,304 $ 6,181,674 $ 6,145,101 $ 6,543,773
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
Fair values for bonds and commercial and residential mortgages are based on
quoted market prices, where available. If quoted market prices are not
available, fair values are estimated using values obtained from independent
pricing services which specialize in matrix pricing and modeling techniques
for estimating fair values. The admitted asset value approximates fair value
for common stock, policy loans, cash and short-term securities, and other
assets.
The fair value estimates presented herein are based on pertinent information
available to management as of December 31, 1994 and 1993. Although management
is not aware of any factors that would significantly affect the estimated
fair value amounts, such amounts have not been comprehensively revalued for
purposes of the financial statements since the original valuation dates and
therefore, subsequent estimates of fair value may differ significantly from
the amounts presented herein.
(CONTINUED)
11
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(3) INVESTMENTS (CONTINUED)
The admitted asset value, gross unrealized appreciation and depreciation,
and estimated fair value of investments in bonds are as follows:
<TABLE>
<CAPTION>
GROSS UNREALIZED
IN THOUSANDS ADMITTED ------------------------------ FAIR
DECEMBER 31, 1994 ASSET VALUE APPRECIATION DEPRECIATION VALUE
- -------------------------------------------------------------- ------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Federal government $ 210,335 $ 19 $ 9,983 $ 200,371
State and local government 26,493 10 1,171 25,332
Foreign government 17,691 413 20 18,084
Corporate bonds 3,325,331 41,167 167,404 3,199,094
Mortgage-backed securities 1,554,704 11,110 89,200 1,476,614
------------- -------------- -------------- -------------
Total $ 5,134,554 $ 52,719 $ 267,778 $ 4,919,495
------------- -------------- -------------- -------------
------------- -------------- -------------- -------------
</TABLE>
<TABLE>
<CAPTION>
GROSS UNREALIZED
IN THOUSANDS ADMITTED ------------------------------- FAIR
DECEMBER 31, 1993 ASSET VALUE APPRECIATION DEPRECIATION VALUE
- -------------------------------------------------------------- ------------- -------------- --------------- -------------
<S> <C> <C> <C> <C>
Federal government $ 99,240 $ 569 $ 586 $ 99,223
State and local government 5,295 817 -- 6,112
Foreign government 2,721 126 94 2,753
Corporate bonds 3,246,373 289,746 4,606 3,531,513
Mortgage-backed securities 1,631,397 90,437 2,862 1,718,972
------------- -------------- ------- -------------
Total $ 4,985,026 $ 381,695 $ 8,148 $ 5,358,573
------------- -------------- ------- -------------
------------- -------------- ------- -------------
</TABLE>
The amortized cost and estimated fair value of bonds at December 31, 1994, by
contractual maturity, are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
ADMITTED FAIR
IN THOUSANDS ASSET VALUE VALUE
------------- -------------
<S> <C> <C>
Due in one year or less $ 81,762 $ 80,250
Due after one year through five years 802,900 793,430
Due after five years through ten years 1,433,303 1,363,187
Due after ten years 1,261,885 1,206,014
------------- -------------
3,579,850 3,442,881
Mortgage-backed securities 1,554,704 1,476,614
------------- -------------
Total $ 5,134,554 $ 4,919,495
------------- -------------
------------- -------------
</TABLE>
(CONTINUED)
12
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(4) FEDERAL INCOME TAXES
The federal income tax expense varies from amounts computed by applying the
federal income tax rates of 35% for 1994 and 1993, and 34% for 1992, to the
gain from operations after dividends to policyowners and before federal
income taxes and realized capital gains (losses). The reasons for this
difference, and the tax effects thereof, are as follows:
<TABLE>
<CAPTION>
IN THOUSANDS 1994 1993 1992
- ------------ --------- --------- ---------
<S> <C> <C> <C>
Computed tax expense $ 33,666 $ 32,260 $ 32,299
Difference between statutory and tax basis:
Investment income (5,853) (7,204) (7,409)
Policy reserves (767) (2,079) (700)
Dividends to policyowners 593 (1,907) (77)
Acquisition expense 9,013 8,393 8,592
Other expenses 2,137 3,739 750
Special tax on mutual life insurance companies 15,466 3,396 4,667
Other, net (4,629) 58 1,723
--------- --------- ---------
Tax expense $ 49,626 $ 36,656 $ 39,845
--------- --------- ---------
--------- --------- ---------
</TABLE>
The Company's tax returns for 1991 through 1992 are under examination by the
Internal Revenue Service. The Company believes additional taxes, if any,
assessed as a result of these examinations will not have a material effect on
its financial position.
(5) ACCIDENT AND HEALTH CLAIM LIABILITY
Activity in the liability for unpaid claims and claim adjustment expenses are
summarized as follows:
<TABLE>
<CAPTION>
IN THOUSANDS 1994 1993 1992
- ------------ ----------- ----------- -----------
<S> <C> <C> <C>
Balance at January 1 $ 274,253 $ 246,777 $ 227,548
Less: reinsurance recoverable 38,418 29,622 21,227
----------- ----------- -----------
Net balance at January 1 235,835 217,155 206,321
----------- ----------- -----------
Incurred related to:
Current year 91,573 85,112 87,268
Prior years (308) 7,121 125
----------- ----------- -----------
Total incurred 91,265 92,233 87,393
----------- ----------- -----------
Paid related to:
Current year 23,019 22,002 24,380
Prior years 50,380 51,551 52,179
----------- ----------- -----------
Total paid 73,399 73,553 76,559
----------- ----------- -----------
Net Balance at December 31 253,701 235,835 217,155
Plus: reinsurance recoverable 47,651 38,418 29,622
----------- ----------- -----------
Balance at December 31 $ 301,352 $ 274,253 $ 246,777
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
Incurred claims related to prior years are due to the difference between
actual and estimated claims incurred as of the prior year end.
(CONTINUED)
13
<PAGE>
(6) BUSINESS COMBINATION
On July 1, 1993, the Company entered into an "Agreement and Plan of
Reorganization" that combined all of the assets, liabilities, and surplus of
Ministers Life--A Mutual Life Insurance Company (Ministers Life) into the
Company. Ministers Life sold life and health insurance products to religious
professionals in the continental United States. The business combination
increased the Company's assets by $272,649,000, liabilities by $255,965,000 and
policyowners' surplus by $16,684,000.
(7) RELATED PARTY TRANSACTIONS
In 1993, the Company received 2,375,000 shares of common stock of the Minnesota
Fire and Casualty Company (the Casualty Company) in return for the surrender of
outstanding guaranty fund certificates totalling $21,800,000 which had
previously been charged to surplus. The surrender of the certificates and
concurrent issuance of stock were part of the Casualty Company's
"Demutualization and Stock Conversion Plan" (the Plan) approved by the
Department of Commerce. Pursuant to the Plan, the Casualty Company became a
subsidiary of the Company on December 31, 1993. The effect of the transaction
was an increase to investments in subsidiary companies and an increase to
policyowners' surplus as of December 31, 1993 of $19,171,000.
The Company has an agreement with two of its subsidiaries which requires the
Company to invest additional capital, as needed, for repayment of any debt
outstanding to the Company. As of December 31, 1994 and 1993, $41,050,000 of
subsidiary debt owed the Company was subject to this agreement.
(8) PENSION PLANS AND OTHER RETIREMENT PLANS
PENSION PLANS
The Company has self-insured, noncontributory, defined benefit retirement plans
covering substantially all employees. The Company's funding policy is to
contribute annually the maximum amount that may be deducted for federal income
tax purposes. The Company expenses amounts as contributed. The Company made a
contribution of $1,714,200 in 1994. No contributions were made in 1993 or 1992.
Information for these plans as of the beginning of the plan year is as follows:
<TABLE>
<CAPTION>
IN THOUSANDS 1994 1993 1992
- ------------ --------- --------- ---------
<S> <C> <C> <C>
Actuarial present value of accumulated benefits:
Vested $ 42,849 $ 36,281 $ 33,761
Nonvested 12,033 12,996 10,556
--------- --------- ---------
Total $ 54,882 $ 49,277 $ 44,317
--------- --------- ---------
--------- --------- ---------
Net assets available for benefits $ 85,651 $ 78,952 $ 74,735
--------- --------- ---------
--------- --------- ---------
</TABLE>
In determining the actuarial present value of accumulated benefits, a
weighted average assumed rate of return of 8.4% was used in 1994, 1993, and
1992.
(CONTINUED)
14
<PAGE>
PROFIT SHARING PLANS
The Company also has profit sharing plans covering substantially all employees
and agents. The Company's contribution rate to the employee plan is determined
annually by the Trustees of the Company and is applied to each participant's
prior year earnings. The Company's contribution to the agent plan is made as a
certain percentage, based upon years of service, applied to each agent's total
annual compensation. The Company recognized contributions to the plans during
1994, 1993, and 1992 of $6,866,000, $6,753,000 and $4,630,000, respectively.
Participants may elect to receive a portion of their contributions in cash.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company also has postretirement plans that provide certain health care and
life insurance benefits ("postretirement benefits") to substantially all retired
employees and agents. These plans are unfunded.
In 1993, the Company changed its method of accounting for the costs of its
postretirement benefit plans to the accrual method, and elected to amortize its
transition obligation for retirees and fully eligible employees and agents over
20 years. The unamortized transition obligation was $13,000,000 and $15,085,000
at December 31, 1994 and 1993, respectively.
The net postretirement benefit cost for the years ended December 31, 1994
and 1993, was $3,202,000 and $3,832,000, respectively. This amount includes the
expected cost of such benefits for newly eligible employees, interest cost, and
amortization of the transition obligation. The Company made payments under the
plans of $526,000 and $555,000 in 1994 and 1993, respectively, as claims were
incurred.
At December 31, 1994 and 1993, the postretirement benefit obligation for
retirees and other fully eligible participants was $19,635,000 and $18,362,000,
respectively. The estimated cost of the benefit obligation for active employees
and agents who are not yet fully eligible was $13,065,000 and $12,270,000 for
1994 and 1993, respectively. The discount rate used in determining the
accumulated postretirement benefit obligation for 1994 and 1993 were 7.5% and
8.0%, respectively. The 1994 net health care cost trend rate was 11.5%, graded
to 5.5% over 12 years, and the 1993 rate was 12.5%, graded to 6% over 13 years.
The health care cost trend rate assumption has a significant effect on the
amounts reported. To illustrate, increasing the assumed health care cost trend
rates by one percentage point in each year would increase the postretirement
benefit obligation as of December 31, 1994 by $2,182,000 and the estimated
eligibility cost and interest cost components of net periodic postretirement
benefit costs for 1994 by $337,000.
(9) COMMITMENTS AND CONTINGENCIES
The Company reinsures certain individual and group business. At December 31,
1994, policy reserves in the accompanying balance sheet are reflected net of
reinsurance ceded of $49,564,000. To the extent that an assuming reinsurer is
unable to meet its obligation under its agreement, the Company remains liable.
(CONTINUED)
15
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(9) COMMITMENTS AND CONTINGENCIES (CONTINUED)
The Company has long-term commitments to fund venture capital and real
estate investments totaling $78,000,000 as of December 31, 1994. The Company
estimates that $18,000,000 of these commitments will be paid in 1995 with the
remaining $60,000,000 paid over the next five years.
At December 31, 1994, the Company had guaranteed the payment of $58,400,000
in policyowner dividends payable in 1995. The Company has pledged bonds, valued
at $62,809,000, to secure this guarantee.
The Company is contingently liable under state regulatory requirements for
possible assessment pertaining to future insolvencies and impairments of
unaffiliated companies.
(10) MUTUAL LIFE INSURANCE COMPANY ACCOUNTING POLICIES
In April 1993 the Financial Accounting Standards Board (FASB) issued
Interpretation No. 40, "Applicability of Generally Accepted Accounting
Principles to Mutual Life Insurance and Other Enterprises." In January 1995 the
FASB issued Statement of Financial Accounting Standards No. 120 (Statement),
"Accounting and Reporting by Mutual Life Insurance Enterprises and by Insurance
Enterprises for Certain Long-Duration Participating Contracts" and, jointly with
the American Institute of Certified Public Accountants, issued a Statement of
Position (SOP), "Accounting for Certain Insurance Activities of Mutual Insurance
Enterprises." Under Interpretation No. 40, the Statement and SOP, mutual life
insurance companies that report their financial statements in conformity with
generally accepted accounting principles (GAAP) will be required to apply all
related authoritative accounting pronouncements.
Interpretation No. 40, the Statement and SOP apply to years beginning after
December 15, 1995. All of the guidance will require restatement of prior year
balances. Applying the provisions of Interpretation No. 40, the Statement and
SOP may result in policyholders' surplus and net income (loss) amounts differing
from the amounts reported under existing practices. Management has not yet
determined the impact of the adoption of GAAP.
Alternatively, the Company may continue to prepare its financial statements
in accordance with statutory accounting practices prescribed or permitted by the
Department of Commerce, which will no longer be considered generally accepted
accounting principles after December 31, 1995.
16
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
SCHEDULE I--
SUMMARY OF INVESTMENTS--OTHER THAN
INVESTMENTS IN RELATED PARTIES
DECEMBER 31, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
AMOUNT AT WHICH
SHOWN IN THE
BALANCE
TYPE OF INVESTMENT COST(4) MARKET VALUE SHEET(1)(3)
------------- --------------- -------------------
<S> <C> <C> <C>
Bonds:
United States government and government agencies and authorities $ 210,335 $ 200,371 $ 210,335
States, municipalities and political subdivisions 26,493 25,332 26,493
Foreign governments 17,691 18,084 17,691
Public utilities 568,271 547,165 568,271
Mortgage-backed securities 1,554,704 1,476,614 1,554,704
All other corporate bonds 2,725,055 2,614,705 2,716,010
------------- --------------- -------------------
Total bonds 5,102,549 4,882,271 5,093,504
------------- --------------- -------------------
Equity securities:
Common stocks:
Public utilities 19,766 21,233 21,233
Banks, trusts and insurance companies 18,247 25,393 25,393
Industrial, miscellaneous and all other 121,499 163,332 163,332
------------- --------------- -------------------
Total equity securities 159,512 209,958 209,958
------------- --------------- -------------------
Mortgage loans on real estate 598,186 xxxxxx 598,186
Real estate (2) 76,346 xxxxxx 76,346
Policy loans 185,599 xxxxxx 185,599
Other long-term investments 60,604 xxxxxx 60,604
Short-term investments 92,363 xxxxxx 92,550
------------- -------------------
Total $ 1,013,098 xxxxxx $ 1,013,285
------------- -------------------
Total investments $ 6,275,159 xxxxxx $ 6,316,747
------------- -------------------
------------- -------------------
</TABLE>
- ---------
(1) Debt securities are carried at amortized cost or investment values
prescribed by the National Association of Insurance Commissioners.
(2) The carrying value of real estate acquired in satisfaction of indebtedness
is $4,192. Real estate includes property occupied by the Company.
(3) Differences between cost and amounts shown in the balance sheet for
investments, other than equity securities and bonds, represent non-admitted
investments.
(4) Original cost for equity securities and original cost reduced by repayments
and adjusted for amortization of premiums or accrual of discounts for
bonds.
17
<PAGE>
- --------------------------------------------------------------------------------
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
SCHEDULE V--
SUPPLEMENTARY INSURANCE INFORMATION
(IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
---------------------------------------------------------
FUTURE POLICY
DEFERRED BENEFITS, OTHER POLICY
POLICY LOSSES, CLAIMS CLAIMS AND
ACQUISITION AND SETTLEMENT UNEARNED BENEFITS
SEGMENT COSTS(1) EXPENSES(3) PREMIUMS(3) PAYABLE
- ----------------------------------- ----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
1994:
Life insurance $1,981,469 $37,909
Accident and health insurance 343,241 15,754
Annuity considerations 3,179,279 7
----------- -------------- ----------- ------------
Total -- 5,503,989 -- 53,670
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
1993:
Life insurance $1,875,570 $83,365
Accident and health insurance 317,825 14,979
Annuity considerations 3,166,944 7
----------- -------------- ----------- ------------
Total -- $5,360,339 -- $98,351
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
1992:
Life insurance $1,686,676 $39,643
Accident and health insurance 292,703 13,971
Annuity considerations 3,011,272 3
----------- -------------- ----------- ------------
Total -- $4,990,651 -- $53,617
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------------
AMORTIZATION
PREMIUMS AND BENEFITS, OF DEFERRED
ANNUITY AND NET CLAIMS, LOSSES POLICY OTHER
OTHER FUND INVESTMENT AND SETTLEMENT ACQUISITION OPERATING PREMIUMS
SEGMENT DEPOSITS INCOME EXPENSES COSTS(1) EXPENSES WRITTEN(2)
- ----------------------------------- ------------ ---------- -------------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1994:
Life insurance $ 802,265 $196,877 $ 608,091 $230,327
Accident and health insurance 142,032 32,724 93,634 71,958
Annuity considerations 480,055 259,212 652,076 52,180
------------ ---------- -------------- ------------ --------- ----------
Total 1,424,352 488,813 1,353,801 -- 354,465 --
------------ ---------- -------------- ------------ --------- ----------
------------ ---------- -------------- ------------ --------- ----------
1993:
Life insurance $ 718,232 $193,724 $ 538,880 $220,861
Accident and health insurance 138,690 31,452 88,857 72,616
Annuity considerations 433,032 267,835 626,181 45,463
------------ ---------- -------------- ------------ --------- ----------
Total $1,289,954 $493,011 $1,253,918 -- $338,940 --
------------ ---------- -------------- ------------ --------- ----------
------------ ---------- -------------- ------------ --------- ----------
1992:
Life insurance $ 672,004 $209,325 $ 507,921 $204,283
Accident and health insurance 135,176 16,927 85,555 71,190
Annuity considerations 427,233 259,032 618,077 39,558
------------ ---------- -------------- ------------ --------- ----------
Total $1,234,413 $485,284 $1,211,553 -- $315,031 --
------------ ---------- -------------- ------------ --------- ----------
------------ ---------- -------------- ------------ --------- ----------
</TABLE>
- -------------
(1) Does not apply to financial statements of mutual life insurance companies
which are prepared on a statutory basis.
(2) Does not apply to life insurance.
(3) Unearned premiums and other deposit funds are included in future policy
benefits, losses, claims and settlement expenses.
18
<PAGE>
- --------------------------------------------------------------------------------
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
SCHEDULE VI--
REINSURANCE
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERCENTAGE
CEDED TO ASSUMED OF AMOUNT
GROSS OTHER FROM OTHER ASSUMED TO
AMOUNT COMPANIES COMPANIES NET AMOUNT NET
----------- ----------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C>
1994:
Life insurance in force $97,181,118 $13,314,267 $20,555,910 $104,422,761 19.7%
----------- ----------- ----------- ------------ ---
----------- ----------- ----------- ------------ ---
Premiums, annuity
considerations and fund
deposits:
Life insurance $ 792,087 $ 48,773 $ 58,951 $ 802,265 7.3%
Accident and health
insurance 150,876 10,145 1,301 142,032 0.9%
Annuity 480,055 -- -- 480,055 --
----------- ----------- ----------- ------------ ---
Total premiums*,
annuity
considerations
and fund
deposits $ 1,423,018 $ 58,918 $ 60,252 $ 1,424,352 4.2%
----------- ----------- ----------- ------------ ---
----------- ----------- ----------- ------------ ---
1993:
Life insurance in force $93,206,579 $11,674,202 $19,758,935 $101,291,312 19.5%
----------- ----------- ----------- ------------ ---
----------- ----------- ----------- ------------ ---
Premiums, annuity
considerations and fund
deposits:
Life insurance $ 704,172 $ 43,313 $ 57,373 $ 718,232 8.0%
Accident and health
insurance 147,229 9,699 1,160 138,690 0.8%
Annuity 433,032 -- -- 433,032 --
----------- ----------- ----------- ------------ ---
Total premiums*,
annuity
considerations
and fund
deposits $ 1,284,433 $ 53,012 $ 58,533 $ 1,289,954 4.5%
----------- ----------- ----------- ------------ ---
----------- ----------- ----------- ------------ ---
1992:
Life insurance in force $89,317,556 $8,962,842 $17,182,599 $ 97,537,313 17.6%
----------- ----------- ----------- ------------ ---
----------- ----------- ----------- ------------ ---
Premiums, annuity
considerations and fund
deposits:
Life insurance $ 661,835 $ 37,038 $ 47,207 $ 672,004 7.0%
Accident and health
insurance 143,432 9,424 1,168 135,176 0.9%
Annuity 427,233 -- -- 427,233 --
----------- ----------- ----------- ------------ ---
Total premiums*,
annuity
considerations
and fund
deposits $ 1,232,500 $ 46,462 $ 48,375 $ 1,234,413 3.9%
----------- ----------- ----------- ------------ ---
----------- ----------- ----------- ------------ ---
</TABLE>
- ------------
* There are no premiums related to either property and liability or title
insurance.
19
<PAGE>
APPENDIX A
Calculation of Accumulation Unit Values
Calculation of the net investment factor and the accumulation unit value may be
illustrated by the following hypothetical example. Assume the accumulation unit
value of the Index 500 Sub-Account on the immediately preceding valuation period
was $1.000000. Assume the following about the Series Fund Index 500 Portfolio:
(a) the net asset value per share of the Index 500 Portfolio was $1.394438 at
the end of the current valuation period; (2) the Index 500 Portfolio declared a
per share dividend and capital gain distribution in the amount of $.037162
during the current valuation period; and (3) the net asset value per share of
the Index 500 Portfolio was $1.426879 at the end of the preceding valuation
period.
The gross investment rate for the valuation period would be equal to 1.003300
(1.394438 plus .037162 divided by 1.426879). The net investment rate for the
valuation period is determined by deducting the total Index 500 Sub-Account
expenses from the gross investment rate. Total Index 500 Sub-Account expenses
of .000040 is equal to .000034 for mortality and risk expense charge (the daily
equivalent of .85% assuming 252 valuation dates per year) plus .000006 for
contract administrative charge (the daily equivalent of .15% assuming 252
valuation dates per year). The net investment rate equals 1.003269 (1.003309
minus .000040).
The accumulation unit value at the end of the valuation period would be equal to
the value on the immediately preceding valuation date ($1.00000) multiplied by
the net investment factor for the current valuation period (1.003269), which
produces $1.003269.
Calculation of Annuity Unit Values and Variable Annuity Payment
The determination of the annuity unit value and the annuity payment may be
illustrated by the following hypothetical example. Assume that the contract has
been in force for more than six years so that no deferred sales charge will
apply and that there is no deduction for annuity premium taxes. Assume further
that at the date of his or her retirement, the annuitant has credited to his or
her account 30,000 accumulation units, and that the value of an accumulation
unit on the valuation date next following the fourteenth day of the preceding
month was $1.150000, producing a total value of $34,500. Assume also that the
annuitant elects an option for which the table in the contract indicates the
first monthly payment is $6.57 per $1,000 of value applied; the annuitant's
first monthly payment would thus be 34.500 multiplied by $6.57, or $226.67.
Assume that the annuity unit value on the due date of the first payment was
$1.100000. When this is divided into the first monthly payment, the number of
annuity units represented by that payment is determined to be 206.064. The
value of this same number of annuity units will be paid in each subsequent
month.
Assume further that the accumulation unit value on the valuation date next
following the fourteenth day of the succeeding month is $1.160000. This is
divided by the accumulation unit value on the preceding monthly valuation date
($1.150000) to produce a ratio of 1.008696. Multiplying this ratio by .996338
to neutralize the assumed investment rate of 4.5% per annum
5
<PAGE>
already taken into account in determining annuity units as described above,
produces a result of 1.005002. This is then multiplied by the preceding annuity
unit value ($1.100000) to produce a current annuity value of $1.105502.
The second monthly payment is then determined by multiplying the fixed number of
annuity units (206.064) by the current annuity unit value ($1.105502), which
produces a second monthly annuity payment of $227.80.
6
<PAGE>
PART C
OTHER INFORMATION
<PAGE>
Minnesota Mutual Group Variable Annuity Account
Cross Reference Sheet to Other Information
Form N-4
Item
Number
- ------
24. Financial Statements and Exhibits
25. Directors and Officers of the Depositor
26. Persons Controlled by or Under Common Control with
the Depositor or Registrant
27. Number of Contract Owners
28. Indemnification
29. Principal Underwriters
30. Location of Accounts and Records
31. Management Services
32. Undertakings
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Audited Financial Statements of Minnesota Mutual Group
Variable Annuity Account for the period ended December 31,
1994, are included in Part B of this filing and consist of
the following:
1. Independent Auditors' Report - Minnesota Mutual Group
Variable Annuity Account
2. Statement of Assets and Liabilities - Minnesota Mutual
Group Variable Annuity Account
3. Statements of Operations - Minnesota Mutual Group
Variable Annuity Account
4. Statements of Changes in Net Assets - Minnesota
Mutual Group Variable Annuity Account
5. Notes to Financial Statements - Minnesota Mutual
Group Variable Annuity Account
(b) Audited Financial Statements of The Minnesota Mutual Life
Insurance Company for the period ended December 31, 1994,
are included in Part B of this filing and consist of the
following:
1. Independent Auditors' Report - The Minnesota Mutual
Life Insurance Company
2. Balance Sheets - The Minnesota Mutual Life Insurance Company
3. Statements of Operations and Policyowners' Surplus -
The Minnesota Mutual Life Insurance Company
4. Statements of Cash Flows - The Minnesota Mutual Life
Insurance Company
5. Notes to Financial Statements - The Minnesota Mutual
Life Insurance Company
6. Summary of Investments - Other than Investments in
Related Parties - The Minnesota Mutual Life Insurance
Company
7. Supplementary Insurance Information - The Minnesota
Mutual Life Insurance Company
8. Reinsurance - The Minnesota Mutual Life Insurance Company
9. Short-term Borrowings - The Minnesota Mutual Life
Insurance Company
<PAGE>
(c) Exhibits
1. The Resolution of The Minnesota Mutual Life Insurance
Company's Board of Trustees establishing Minnesota
Mutual Group Variable Annuity Account, previously filed
on May 31, 1994, as this Exhibit to Registrant's Form N-4,
File Number 33-79534, is hereby incorporated by reference.
2. Not applicable.
3. (a) Form of Distribution Agreement, previously
filed on May 31, 1994, as this Exhibit to
Registrant's Form N-4, File Number 33-79534, is
hereby incorporated by reference.
(b) Form of Broker-Dealer Sales Agreement,
previously filed on May 31, 1994, as this Exhibit to
Registrant's Form N-4, File Number 33-79534, is
hereby incorporated by reference.
4. (a) The specimen copy of the Group Deferred
Variable Annuity Contract, form number 94-9310,
previously filed on May 31, 1994, as this Exhibit to
Registrant's Form N-4, File Number 33-79534, is
hereby incorporated by reference.
(b) The specimen copy of the Participant's
Certificate of Insurance, form number 94-9311,
previously filed on May 31, 1994, as this Exhibit to
Registrant's Form N-4, File Number 33-79534, is
hereby incorporated by reference.
(c) The specimen copy of the Annuitization
Endorsement, form number 94-9312, previously filed
on May 31, 1994, as this Exhibit to Registrant's
Form N-4, File Number 33-79534, is hereby
incorporated by reference.
(d) The specimen copy of the Group Deferred Variable
Annuity Contract, form number 95-9330.
(e) The specimen copy of the Group Deferred Variable Annuity
Certificate, form number 95-9331.
(f) The specimen copy of the Group Deferred Variable Annuity
Contract, form number 95-9332.
(g) The specimen copy of the Group Deferred Variable Annuity
Certificate, form number 95-9333.
(h) The specimen copy of the Group Deferred Variable Annuity
Certificate, form number 95-9338.
5. (a) Application, form number F. 18210 Rev. 12-81,
Contract Owner Application, previously filed on May
31, 1994, as this Exhibit to Registrant's Form N-4,
File Number 33-79534, is hereby incorporated by reference.
(b) Application, form number MSRS 240 Rev. 9-94,
Participant Application, previously filed as this
Exhibit to Registrant's Form N-4, Pre-Effective
Amendment Number 1, File Number 33-79534, is hereby
incorporated by reference.
(c) Annuity Application, form number 95-9325.
(d) Group TSA Variable Annuity Application, form number
95-9329.
6. (a) The Articles of Re-Incorporation of The
Minnesota Mutual Life Insurance Company, previously
filed on August 25, 1995, as this Exhibit 6(a) to
Form N-4, File Number 33-62147, is hereby
incorporated by reference.
(b) The By-Laws of The Minnesota Mutual Life Insurance Company,
previously filed on August 25, 1995, as this Exhibit 6(b)
to Form N-4, File Number 33-62147, is hereby incorporated by
reference.
7. Not applicable.
<PAGE>
8. Deferred Compensation Business Plan Agreement,
previously filed on May 31, 1994, as this Exhibit to
Registrant's Form N-4, File Number 33-79534, is hereby
incorporated by reference.
9. Opinion and Consent of Donald F. Gruber, Esq.
10. (a) Consent of KPMG Peat Marwick LLP.
(b) The Minnesota Mutual Life Insurance Company
Board of Trustees' Power of Attorney to Sign
Registration Statement.
11. Not applicable.
12. Not applicable.
13. Schedule for Computation of Performance Quotations.
(a) Money Market Segregated Sub-Account
Performance Calculations, previously filed on May
31, 1994, as this Exhibit to Registrant's Form N-4,
File Number 33-79534, is hereby incorporated by reference.
(b) Index 500 Segregated Sub-Account Performance
Calculations, previously filed on May 31, 1994, as
this Exhibit to Registrant's Form N-4, File Number
33-79534, is hereby incorporated by reference.
(c) Long-Term Corporate Segregated Sub-Account
Performance Calculations, previously filed on May
31, 1994, as this Exhibit to Registrant's Form N-4,
File Number 33-79534, is hereby incorporated by reference.
(d) Vanguard/Wellington Segregated Sub-Account
Performance Calculations, previously filed on May
31, 1994, as this Exhibit to Registrant's Form N-4,
File Number 33-79534, is hereby incorporated by reference.
(e) Fidelity Contrafund Segregated Sub-Account
Performance Calculations, previously filed on May
31, 1994, as this Exhibit to Registrant's Form N-4,
File Number 33-79534, is hereby incorporated by reference.
(f) Scudder International Segregated Sub-Account
Performance Calculations, previously filed on May
31, 1994, as this Exhibit to Registrant's Form N-4,
File Number 33-79534, is hereby incorporated by reference.
(g) Janus Twenty Segregated Sub-Account
Performance Calculations, previously filed on May
31, 1994, as this Exhibit to Registrant's Form N-4,
File Number 33-79534, is hereby incorporated by reference.
<PAGE>
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
Name and Principal Positions and Offices Positions and Offices
Business Address with Insurance Company with Registrant
- ------------------ ---------------------- ----------------------
Anthony L. Andersen Trustee None
H. B. Fuller Company
2400 Energy Park Drive
St. Paul, MN 55108
John F. Grundhofer Trustee None
First Bank System, Inc.
601 2nd Avenue South
Suite 2900
Minneapolis, MN 55402-4302
Lloyd P. Johnson Trustee None
Norwest Corporation
4900 IDS Ctr.
80 S. 8th Street
Minneapolis, MN 55479
Harold V. Haverty Trustee None
Deluxe Corporation
1080 West County Road F
Shoreview, MN 55126-8201
David S. Kidwell, Ph.D. Trustee None
The Curtis L. Carlson
School of Management
University of Minnesota
271 19th Avenue South
Minneapolis, MN 55455
Reatha C. King, Ph.D. Trustee None
General Mills Foundation
P.O. Box 1113
Minneapolis, MN 55440
<PAGE>
Thomas E. Rohricht Trustee None
Doherty, Rumble & Butler
Professional Association
2800 Minnesota World
Trade Center
30 East Seventh Street
St. Paul, MN 55101-4999
Terry N. Saario, Ph.D. Trustee None
Northwest Area Foundation
E-1201 First National
Bank Bldg
332 Minnesota Street
St. Paul, MN 55101-1373
Robert L. Senkler Chairman, None
The Minnesota Mutual President and Chief
Life Insurance Executive Officer
Company
400 Robert Street North
St. Paul, MN 55101
Michael E. Shannon Trustee None
Ecolab, Inc.
Ecolab Center
St. Paul, MN 55102
Frederick T. Weyerhaeuser Trustee None
Clearwater Management
Company
2090 First National Bank
Building
St. Paul, MN 55101
John F. Bruder Senior Vice President None
400 Robert Street North
St. Paul, MN 55101
Keith M. Campbell Vice President None
400 Robert Street North
St. Paul, MN 55101
Paul H. Gooding Vice President and None
400 Robert Street North Treasurer
St. Paul, MN 55101
Robert E. Hunstad Executive Vice President None
400 Robert Street North
St. Paul, MN 55101
<PAGE>
James E. Johnson Senior Vice President None
400 Robert Street North and Actuary
St. Paul, MN 55101
Joel W. Mahle Vice President None
400 Robert Street North
St. Paul, MN 55101
Dennis E. Prohofsky Vice President, General None
400 Robert Street North Counsel and Secretary
St. Paul, MN 55101
Gregory S. Strong Vice President and None
400 Robert Street North Actuary
St. Paul, MN 55101
Terrence M. Sullivan Senior Vice President None
400 Robert Street North
St. Paul, MN 55101
Randy F. Wallake Senior Vice President None
400 Robert Street North
St. Paul, MN 55101
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE
DEPOSITOR OR REGISTRANT
Wholly-owned subsidiaries of The Minnesota Mutual Life Insurance Company:
MIMLIC Asset Management Company
The Ministers Life Insurance Company
MIMLIC Corporation
Minnesota Fire and Casualty Company
Northstar Life Insurance Company (New York)
Robert Street Energy, Inc.
Open-end registered investment company offering shares solely to
separate accounts of The Minnesota Mutual Life Insurance Company:
MIMLIC Series Fund, Inc.
Wholly-owned subsidiary of MIMLIC Asset Management Company:
MIMILIC Sales Corporation
Advantus Capital Management, Inc.
<PAGE>
Wholly-owned subsidiaries of MIMLIC Corporation:
DataPlan Securities, Inc. (Ohio)
MIMLIC Imperial Corporation
MIMLIC Funding, Inc.
MIMLIC Venture Corporation
Personal Finance Company (Delaware)
Wedgewood Valley Golf, Inc.
Ministers Life Resources, Inc.
Enterprise Holding Corporation
Wholly-owned subsidiaries of Enterprise Holding Corporation:
Oakleaf Service Corporation
Lafayette Litho, Inc.
Financial Ink Corporation
Concepts in Marketing Research Corporation
Concepts in Marketing Services Corporation
Wholly-owned subsidiaries of Minnesota Fire and Casualty Company:
Viking Fire Insurance Company (New York)
HomePlus Insurance Company
HomePlus Agency, Inc.
Majority-owned subsidiary of MIMLIC Imperial Corporation:
J. H. Shoemaker Advisory Corporation
Fifty percent-owned subsidiary of MIMLIC Imperial Corporation:
C.R.I. Securities, Inc.
Wholly-owned subsidiary of Oakleaf Service Corporation:
New West Agency, Inc. (Oregon)
Majority-owned subsidiaries of The Minnesota Mutual Life
Insurance Company:
MIMLIC Life Insurance Company (Arizona)
MIMLIC Cash Fund, Inc.
Advantus Cornerstone Fund, Inc.
Advantus Enterprise Fund, Inc.
Advantus International Balanced Fund, Inc.
<PAGE>
Less than majority owned, but greater than 25% owned,
subsidiaries of The Minnesota Mutual Life Insurance Company:
Advantus Horizon Fund, Inc.
Advantus Bond Fund, Inc.
Less than 25% owned subsidiaries of The Minnesota Mutual Life
Insurance Company:
Advantus Money Market Fund, Inc.
Advantus Spectrum Fund, Inc.
Advantus Mortgage Securities Fund, Inc.
Unless indicated otherwise parenthetically, each of the
above corporations is a Minnesota corporation.
ITEM 27. NUMBER OF CONTRACT OWNERS
As of September 29, 1995, the number of Contract Participants for
this Registration Statement were as follows:
Number of Record
Title of Class Holders
Group Variable Annuity Contracts 18,695
ITEM 28. INDEMNIFICATION
The State of Minnesota has an indemnification statute, found at
Minnesota Statutes 300.083, as amended, effective January 1,
1984, which requires indemnification of individuals only under
the circumstances described by the statute. Expenses incurred in
the defense of any action, including attorneys' fees, may be
advanced to the individual after written request by the board of
directors upon receiving an undertaking from the individual to
repay any amount advanced unless it is ultimately determined that
he or she is entitled to be indemnified by the corporation as
authorized by the statute and after a determination that the
facts then known to those making the determination would not
preclude indemnification.
Indemnification is required for persons made a part to a
proceeding by reason of their official capacity so long as they
acted in good faith, received no improper personal benefit and
have not been indemnified by another organization. In the case
of a criminal proceeding, they must also have had no reasonable
cause to believe the conduct was unlawful. In respect to other
acts arising out of official capacity: (1) where the person is
acting directly for the corporation there must be a reasonable
belief by the person that his or her conduct was in the best
interests of the corporation or; (2) where the person is serving
another organization or plan at the request of the corporation,
the person must have reasonably believed that his or her conduct
was not opposed to the best interests of the corporation. In the
case of persons not directors, officers or policy-making
employees, determination of eligibility for indemnification may
be made by a board-
<PAGE>
appointed committee of which a director is a
member. For other employees, directors and officers, the
determination of eligibility is made by the Board or a committee
of the Board, special legal counsel, the shareholder of the
corporation or pursuant to a judicial proceeding.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of The Minnesota Mutual Life Insurance
Company and Minnesota Mutual Group Variable Annuity Account
pursuant to the foregoing provisions, or otherwise, The Minnesota
Mutual Life Insurance Company and Minnesota Mutual Group Variable
Annuity Account have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by The Minnesota
Mutual Life Insurance Company and Minnesota Mutual Group Variable
Annuity Account of expenses incurred or paid by a director,
officer or controlling person of The Minnesota Mutual Life
Insurance Company and Minnesota Mutual Group Variable Annuity
Account 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
Minnesota Mutual Life Insurance Company and Minnesota Mutual
Group Variable Annuity Account will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issue.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) The principal underwriter is MIMLIC Sales Corporation. MIMLIC
Sales Corporation also is the principal underwriter for ten
other organized mutual funds (Advantus Spectrum Fund, Inc.,
MIMLIC Cash Fund, Inc., Advantus Bond Fund, Inc., Advantus Horizon
Fund, Inc., Advantus Money Market Fund, Inc., Advantus
Mortgage Securities Fund, Inc., Advantus Cornerstone Fund, Inc., Advantus
Enterprise Fund, Inc., Advantus International Balanced Fund, Inc., MIMLIC
Series Fund, Inc.) and for four additional separate accounts of The
Minnesota Mutual Life Insurance Company, all which offer contracts on a
variable basis.
(b) Directors and officers of the Underwriter.
DIRECTORS AND OFFICERS
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
- ------------------ ---------------------- ----------------------
Robert E. Hunstad Chairman of the Board None
400 Robert Street North and Director
St. Paul, Minnesota 55101
<PAGE>
Bardea C. Huppert President and Chief None
400 Robert Street North Operating and
St. Paul, Minnesota 55101 Compliance Officer
Derick R. Black Vice President and None
400 Robert Street North Chief Compliance
St. Paul, Minnesota 55101 Officer
Margaret Milosevich Vice President, Chief None
400 Robert Street North Operations Officer
St. Paul, Minnesota 55101 and Treasurer
Dennis E. Prohofsky Secretary and None
400 Robert Street North Director
St. Paul, Minnesota 55101
Thomas L. Clark Assistant Secretary None
400 Robert Street North
St. Paul, Minnesota 55101
Kevin Collier Assistant Secretary None
400 Robert Street North
St. Paul, Minnesota 55101
(c) All commission and other compensation received by each
principal underwriter, directly or indirectly, from the
Registrant during the Registrant's last fiscal year:
Name of Net Underwriting Compensation on
Principal Discounts and Redemption or Brokerage Other
Underwriter Commissions Annuitization Commissions Compensation
- ----------- ---------------- --------------- ----------- ------------
MIMLIC Sales
Corporation $0*
*Note: This figure does not include compensation paid to
registered representatives of MIMLIC Sales Corporation who are
also licensed sales representatives of Minnesota Mutual. These
registered representatives are paid directly by Minnesota Mutual
on behalf of MIMLIC Sales Corporation.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The accounts, books and other documents required to be maintained
by Section 31(a) of the 1940 Act and the Rules promulgated
thereunder are in the physical possession of The Minnesota Mutual
Life Insurance Company, St. Paul, Minnesota 55101-2098.
ITEM 31. MANAGEMENT SERVICES
None.
<PAGE>
ITEM 32. UNDERTAKINGS
(a) The Registrant hereby undertakes to file a post-effective
amendment to this registration statement as frequently as is
necessary to ensure that the audited financial statements in
the registration statement are never more than 16 months old
for so long as payments under the Contracts may be accepted.
(b) The Registrant hereby undertakes to include as part of any
application to purchase a contract offered by the prospectus
a space that an applicant can check to request a Statement
of Additional Information.
(c) The Registrant hereby undertakes to deliver any Statement of
Additional Information and any financial statements required
to be made available under this form promptly upon written
or oral request.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and
the Investment Company Act of 1940, the Registrant, Minnesota
Mutual Group Variable Annuity Account, certifies that it meets
the requirements of Securities Act Rule 485(a) for effectiveness
of this Registration Statement and has duly caused this Post-
Effective Amendment to its Registration Statement to be signed on
its behalf by the Undersigned, thereunto duly authorized, in the
City of Saint Paul, and State of Minnesota, on the 1st day of
November, 1995.
MINNESOTA MUTUAL GROUP
VARIABLE ANNUITY ACCOUNT
(Registrant)
By: THE MINNESOTA MUTUAL LIFE
INSURANCE COMPANY
(Depositor)
By /s/ Robert L. Senkler
-------------------------
Robert L. Senkler
Chairman, President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, the
Depositor, The Minnesota Mutual Life Insurance Company, certifies
that it meets the requirements of Securities Act Rule 485(a) for
effectiveness of this Registration Statement and has duly caused
this Post-Effective Amendment to its Registration Statement to be
signed on its behalf by the Undersigned, thereunto duly
authorized, in the City of Saint Paul, and State of Minnesota, on
the 1st day of November, 1995.
THE MINNESOTA MUTUAL LIFE
INSURANCE COMPANY
By /s/ Robert L. Senkler
-------------------------
Robert L. Senkler
Chairman, President and Chief
Executive Officer
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been
signed below by the following persons in their capacities with
the Depositor and on the date indicated.
Signature Title Date
--------- ----- ----
Robert L. Senkler* Chairman, )
- --------------------- President and Chief)
Robert L. Senkler Executive Officer )
)
Anthony L. Andersen* Trustee)
- --------------------- )
Anthony L. Andersen )
)
John F. Grundhofer* Trustee)
- --------------------- )
John F. Grundhofer )
)
Harold V. Haverty* Trustee)
- --------------------- )
Harold V. Haverty )
)
Lloyd P. Johnson* Trustee)
- --------------------- ) By /s/ Dennis E Prohofsky
Lloyd P. Johnson ) ------------------------
) Dennis E. Prohofsky
David S. Kidwell, Ph.D.* Trustee) Attorney-in-Fact
- --------------------- )
David S. Kidwell, Ph.D. ) Dated: November 1, 1995
)
Reatha C. King, Ph.D.* Trustee)
- --------------------- )
Reatha C. King, Ph.D. )
)
Thomas E. Rohricht* Trustee)
- --------------------- )
Thomas E. Rohricht )
)
- --------------------- Trustee)
Terry N. Saario, Ph.D. )
)
- --------------------- Trustee)
Michael E. Shannon )
)
Frederick T. Weyerhaeuser* Trustee)
- --------------------- )
Frederick T. Weyerhaeuser )
- ------------------
*Registrant's Officer and Trustee executing power of attorney
dated February 13, 1995, a copy of which is filed herewith.
<PAGE>
EXHIBIT INDEX
Exhibit Number Description of Exhibit
- --------------- ----------------------
4(d) The specimen copy of the
Group Deferred Variable
Annuity Contract, form
number 95-9330.
4(e) The specimen copy of the
Group Deferred Variable
Annuity Certificate, form
number 95-9331.
4(f) The specimen copy of the
Group Deferred Variable
Annuity Contract, form
number 95-9332.
4(g) The specimen copy of the
Group Deferred Variable
Annuity Certificate, form
number 95-9333.
4(h) The specimen copy of the
Group Deferred Variable
Annuity Certificate, form
number 95-9338.
5(c) Annuity Application, form
number 95-9325.
5(d) Group TSA Variable Annuity
Application, form number
95-9329
9 Opinion and Consent of
Donald F. Gruber, Esq.
10(a) Consent of KPMG Peat Marwick LLP
10(b) The Minnesota Mutual Life
Insurance Company Board of
Trustees' Power of Attorney to
Sign Registration Statement
<PAGE>
[Minnesota Mutual Letterhead]
CONTRACT OWNER:
CONTRACT NUMBER:
EFFECTIVE DATE:
CONTRACT ANNIVERSARY:
JURISDICTION: MINNESOTA
PLAN:
The Minnesota Mutual Life Insurance Company (herein called Minnesota Mutual)
agrees to accept purchase payments hereunder from the Contract Owner, to account
for such purchase payments in the manner provided herein, and to pay contract
benefits in such amounts and to such persons as are designated in writing by the
Contract Owner or its designee.
This contract is issued in consideration of the application by the Contract
Owner, a copy of which is attached to, and made a part of this contract, and the
tender of purchase payments under this contract by the Contract Owner.
Minnesota Mutual agrees to make annuity and other payments in accordance with
the provisions on this and the subsequent pages, all of which are a part of this
contract.
This contract shall be governed by the laws of the jurisdiction indicated above.
This contract is executed by Minnesota Mutual at its Home Office in Saint Paul,
Minnesota, to take effect as of the Effective Date.
Secretary President
Registrar
GROUP DEFERRED VARIABLE ANNUITY CONTRACT
ALLOCATED
PROVISION FOR FIXED AND VARIABLE ANNUITY PAYMENTS
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN
BASED ON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT,
ARE VARIABLE AND NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT
95-9330
1
<PAGE>
TABLE OF CONTENTS
SECTION 1. DEFINITIONS PAGE
1.01 Plan . . . . . . . . . . . . . . . . . . . . . . . . 2
1.02 Participant. . . . . . . . . . . . . . . . . . . . . 2
1.03 Annuitant. . . . . . . . . . . . . . . . . . . . . . 2
1.04 Annuity Payments . . . . . . . . . . . . . . . . . . 2
1.05 Fixed Annuity. . . . . . . . . . . . . . . . . . . . 2
1.06 Variable Annuity . . . . . . . . . . . . . . . . . . 2
1.07 Annuity Commencement Date. . . . . . . . . . . . . . 2
1.08 General Account. . . . . . . . . . . . . . . . . . . 2
1.09 Separate Account . . . . . . . . . . . . . . . . . . 3
1.10 Participant's Accumulation Value . . . . . . . . . . 3
1.11 Fund . . . . . . . . . . . . . . . . . . . . . . . . 3
1.12 Valuation Date . . . . . . . . . . . . . . . . . . . 3
1.13 Valuation Period . . . . . . . . . . . . . . . . . . 3
1.14 Participation Year . . . . . . . . . . . . . . . . . 3
1.15 Unit . . . . . . . . . . . . . . . . . . . . . . . . 3
1.16 1940 Act . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2. PURCHASE PAYMENTS
2.01 Amount of Purchase Payments . . . . . . . . . . . . 5
2.02 Application of Purchase Payments . . . . . . . . . . 5
2.03 Allocation of Purchase Payments . . . . . . . . . . 5
2.04 Separate Account Allocation . . . . . . . . . . . . 5
2.05 Changes to the Separate Account . . . . . . . . . . 6
SECTION 3. CONTRACT CHARGES
3.01 Deferred Sales Charge . . . . . . . . . . . . . . . 7
3.02 Separate Account Charges . . . . . . . . . . . . . . 7
SECTION 4. VALUATION
4.01 Participant's Accumulation Value . . . . . . . . . . 9
4.02 Accumulation Unit Value . . . . . . . . . . . . . . 9
4.03 Net Investment Factor . . . . . . . . . . . . . . . 9
4.04 Annuity Unit Value . . . . . . . . . . . . . . . . . 10
4.05 General Account Interest . . . . . . . . . . . . . . 10
1A
<PAGE>
SECTION 5. WITHDRAWALS AND TRANSFERS
5.01 Withdrawal Provisions . . . . . . . . . . . . . . . 11
5.02 Transfer of Participant's Accumulation Value . . . . 12
5.03 Transfers of the General Account . . . . . . . . . . 12
5.04 Transfers from the Separate Account. . . . . . . . . 12
SECTION 6. BENEFIT PROVISIONS
6.01 Death Benefits. . . . . . . . . . . . . . . . . . . 13
6.02 Annuity Commencement Date . . . . . . . . . . . . . 13
6.03 Election of Annuity Option. . . . . . . . . . . . . 13
6.04 Application of Accumulation Value . . . . . . . . . 13
6.05 Annuity Payment Options . . . . . . . . . . . . . . 14
6.06 Election of Annuity Form. . . . . . . . . . . . . . 14
6.07 Determination of Fixed Annuity Payment. . . . . . . 15
6.08 Determination of Variable Annuity Payments. . . . . 17
6.09 Transfers During the Annuity Period . . . . . . . . 17
6.10 Lump Sum Settlement . . . . . . . . . . . . . . . . 18
SECTION 7. SUSPENSION AND TERMINATION
7.01 Suspension of Purchase Payments . . . . . . . . . . 19
7.02 Termination of Contract . . . . . . . . . . . . . . 19
7.03 Effect of Termination . . . . . . . . . . . . . . . 20
7.04 Lump Sum Termination Value. . . . . . . . . . . . . 20
7.05 Installment Termination Value . . . . . . . . . . . 21
7.06 Final Termination . . . . . . . . . . . . . . . . . 22
SECTION 8. GENERAL PROVISIONS
8.01 Contract. . . . . . . . . . . . . . . . . . . . . . 23
8.02 Modification of Contract. . . . . . . . . . . . . . 23
8.03 Beneficiary . . . . . . . . . . . . . . . . . . . . 23
8.04 Participation in Divisible Surplus. . . . . . . . . 23
8.05 Certificates and Statements . . . . . . . . . . . . 24
8.06 Misstatement of Age . . . . . . . . . . . . . . . . 24
8.07 Assignment. . . . . . . . . . . . . . . . . . . . . 24
8.08 Contract Values . . . . . . . . . . . . . . . . . . 24
8.09 Annuity Reserves. . . . . . . . . . . . . . . . . . 24
1B
<PAGE>
SECTION 1. DEFINITIONS
1.01 PLAN
"Plan" means the Plan specified on Page 1 of this contract.
1.02 PARTICIPANT
A person eligible to participate under the Plan, and on whose behalf
purchase payments have been or are being made under this contract.
1.03 ANNUITANT
A person eligible to receive lifetime benefits under this contract.
Joint annuitants will be considered a single entity.
1.04 ANNUITY PAYMENTS
A series of payments made at regular intervals to the Annuitant or any
other payee. Annuity Payments will be due and payable only on the first
day of a calendar month.
1.05 FIXED ANNUITY
An annuity payable from the General Account, with payments which remain
fixed as to dollar amount throughout the period of Annuity Payments.
1.06 VARIABLE ANNUITY
An annuity payable from the Separate Account with payments which
increase or decrease in dollar amount to reflect the investment
experience of the sub-accounts of the Separate Account.
1.07 ANNUITY COMMENCEMENT DATE
The date upon which Annuity Payments begin, as determined in accordance
with the Plan.
1.08 GENERAL ACCOUNT
All assets of Minnesota Mutual other than those in Separate Accounts
established by Minnesota Mutual.
2
<PAGE>
1.09 SEPARATE ACCOUNT
A separate investment account titled Minnesota Mutual Group Variable
Annuity Account. This Separate Account was established by Minnesota
Mutual for this class of contract under Minnesota law. The Separate
Account is composed of several sub-accounts. The assets of the Separate
Account belong to Minnesota Mutual and shall be held and applied
exclusively for the holders of those contracts on a variable basis for
which the Separate Account has been established. Those assets are not
subject to claims arising out of any other business which Minnesota
Mutual may conduct.
1.10 PARTICIPANT'S ACCUMULATION VALUE
The sum of the individual Participant's values under this contract in
the General Account and/or the Separate Account. In the General
Account, this is the General Account Accumulation Value. In the
Separate Account, this is the Separate Account Accumulation Value. The
Separate Account portion is composed of the Participant's interests in
one or more sub-accounts of the Separate Account. The total of these
shall be the Participant's Separate Account Accumulation Value.
Interests in the sub-accounts shall be valued separately.
1.11 FUND
The mutual fund or separate investment portfolio within a series mutual
fund which is designated as an eligible investment for the Separate
Account.
1.12 VALUATION DATE
Any date on which a Fund is valued.
1.13 VALUATION PERIOD
The period between successive valuation dates measured from the time of
one determination to the next.
1.14 PARTICIPATION YEAR
A period of one year beginning on the first day of the month in which
purchase payments were first received under this contract on behalf of a
Participant, or on an anniversary of that date.
1.15 UNIT
A measure of a Participant's interest in the Separate Account or sub-
account of the Separate Account.
3
<PAGE>
1.16 1940 ACT
The Investment Company Act of 1940, as amended, or any similar successor
federal legislation.
4
<PAGE>
SECTION 2. PURCHASE PAYMENTS
2.01 AMOUNT OF PURCHASE PAYMENTS
The amount of purchase payments to be paid by the Contract Owner by or
on behalf of a Participant shall be determined by the Contract Owner in
accordance with the provisions of the Plan. All purchase payments are
payable at the Home Office of Minnesota Mutual. The Home Office is at
400 Robert Street North, St. Paul, Minnesota 55101-2098.
2.02 APPLICATION OF PURCHASE PAYMENTS
There are usually no deductions made from purchase payments. However,
Minnesota Mutual reserves the right to make a deduction from purchase
payments for state premium taxes, where applicable.
2.03 ALLOCATION OF PURCHASE PAYMENTS
Purchase payments may be allocated to the General Account or to the sub-
accounts of the Separate Account. Purchase payments for each
Participant shall be allocated to the General Account or to the sub-
accounts of the Separate Account in accordance with the instructions of
the Participant or the Contract Owner. The initial allocation is
established as specified in the application for participation under this
contract which must be signed by the Participant. The allocation may be
changed as to future purchase payments by written or telephone notice to
Minnesota Mutual from the Participant or Contract Owner. That notice
must be received by Minnesota Mutual at its Home Office on or prior to
the date of receipt of those future purchase payments.
2.04 SEPARATE ACCOUNT ALLOCATION
Amounts allocated to the sub-accounts of the Separate Account will be
applied by Minnesota Mutual to provide accumulation units. Minnesota
Mutual will determine the number of accumulation units by dividing the
purchase payment by the then current accumulation unit value. That
determination will be made as of the Valuation Date coincident with or
next following the date on which such purchase payment is received by
Minnesota Mutual at its Home Office, and shall be made separately for
purchase payments allocated to each of the sub-accounts. The number of
accumulation units so determined shall not be affected by any subsequent
change in the accumulation unit value.
The Separate Account is divided into sub-accounts. For each sub-account
there is a Fund for the investment of that sub-account's assets.
Amounts are invested in the Funds at their net asset value. Purchase
payments may be applied to one or more of the sub-accounts. Minnesota
Mutual reserves the right to add, combine or remove any sub-accounts of
the Separate Account.
5
<PAGE>
If investment in a Fund should no longer be possible or if Minnesota
Mutual determines it to be inappropriate for contracts of this class,
another Fund may be substituted. Substitution may be with respect to
existing Accumulation Values, future purchase payments and future
Annuity Payments.
2.05 CHANGES TO THE SEPARATE ACCOUNT
Minnesota Mutual reserves the right to transfer assets of the Separate
Account to another Separate Account. The transfer will be of assets
associated with this class of contracts, as determined by Minnesota
Mutual. If this type of transfer is made, the term "Separate Account",
as used in this contract, shall then mean the Separate Account to which
the assets were transferred.
Minnesota Mutual reserves the right, when permitted by law, to:
(a) de-register the Separate Account under the Investment Company Act of
1940;
(b) restrict or eliminate any voting rights of contract owners or other
persons who have voting rights as to the Separate Account; and
(c) combine the Separate Account with one or more other Separate
Accounts.
7
<PAGE>
SECTION 3. CONTRACT CHARGES
3.01 DEFERRED SALES CHARGE
The deferred sales charge is the charge made on Participant withdrawals
during the first six Participation Years. The amount withdrawn plus any
deferred sales charge is deducted from the Participant's Accumulation
Value. In the Separate Account, accumulation units will be canceled of
a value equal to the charge and withdrawal.
The charge is indicated in the table shown below. These percentages
decrease uniformly by .083% for each of the first 72 months of
participation.
End of
Participation Year Charge
(Participation Date) 6.0%
1 5.0%
2 4.0%
3 3.0%
4 2.0%
5 1.0%
6 0%
In no event will the amount of deferred sales charge exceed 9% of the
total purchase payments made on behalf of each Participant.
3.02 SEPARATE ACCOUNT CHARGES
There are three charges which are imposed by Minnesota Mutual on the
assets of the Separate Account. They are the mortality risk charge, the
expense risk charge and the administrative charge. These charges are
deducted on each Valuation Date from the assets of the Separate Account.
The mortality risk charge is for the mortality guarantees Minnesota
Mutual makes under the contract. Actual mortality results incurred by
Minnesota Mutual shall not adversely affect any payments or values under
this contract. On an annual basis, this charge shall not exceed .60% of
the net asset value of the Separate Account.
The expense risk charge is for the guarantee that the deductions provided
in this contract will be sufficient to cover its expenses. Actual
expense results incurred by Minnesota Mutual shall not adversely affect
any payments or values under this contract. On an annual basis, this
charge shall not exceed .65% of the net asset value of the Separate
Account.
7
<PAGE>
The administrative charge is designed to cover the administrative
expenses incurred by Minnesota Mutual under this contract. On an annual
basis, this charge shall not exceed .40% of the net asset value of the
Separate Account.
8
<PAGE>
SECTION 4. VALUATION
4.01 PARTICIPANT'S ACCUMULATION VALUE
A Participant's General Account Accumulation Value as of any date is the
sum of the following transactions made on behalf of a Participant: all
purchase payments allocated to the General Account plus interest,
dividends and transfers into the General Account, less any transfers out
of the General Account, any previous withdrawals and any applicable
deferred sales charge.
A Participant's Separate Account Accumulation Value is the sum of the
Participant's interest in each sub-account of the Separate Account which
is equal to the number of accumulation units held on behalf of the
Participant multiplied by the accumulation unit value for the appropriate
sub-account of the Separate Account.
4.02 ACCUMULATION UNIT VALUE
The accumulation unit value for each sub-account of the Separate Account
will be valued on each Valuation Date according to the net investment
experience of that sub-account. The value of an accumulation unit for
each sub-account was originally set at $1.00 on the first Valuation Date.
For any subsequent Valuation Date, its value is equal to its value on the
preceding Valuation Date multiplied by the net investment factor for that
sub-account for the valuation period ending on the subsequent Valuation
Date.
4.03 NET INVESTMENT FACTOR
The net investment factor for a valuation period is the gross investment
rate for such valuation period, less a deduction for the charges
associated with the Separate Account at a rate of no more than 1.65% per
annum.
The gross investment rate is equal to:
(a) the net asset value per share of a Fund share held in the sub-
account of the Separate Account determined at the end of the current
valuation period; plus
(b) the per-share amount of any dividend or capital gain distributions
by the Fund if the "ex-dividend" date occurs during the current
valuation period; divided by
(c) the net asset value per share of that Fund share held in the sub-
account determined at the end of the preceding valuation period.
9
<PAGE>
4.04 ANNUITY UNIT VALUE
The value of an annuity unit for a sub-account is determined monthly as
of the first day of the month. The value is equal to the annuity unit
value for that sub-account as of the first day of the preceding month
multiplied by the product of (a) .996338; and (b) a sub-account
investment factor. This investment factor is the accumulation unit value
for that sub-account on the Valuation Date next following the fourteenth
day of the preceding month divided by the accumulation unit value for
that sub-account on the Valuation Date next following the fourteenth day
of the second preceding month. For any date other than the first of a
month, the annuity unit value is that value on the first day of the next
month.
4.05 GENERAL ACCOUNT INTEREST
Interest will be credited to amounts allocated to the General Account at
such interest rate as may be declared from time to time by Minnesota
Mutual for this contract, in accordance with its usual practices for
contracts of this class. Interest will be credited at a rate of no less
than 3% per year, compounded annually.
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SECTION 5. WITHDRAWALS AND TRANSFERS
5.01 WITHDRAWAL PROVISIONS
Withdrawals may be made only for the purpose of:
(a) providing Plan benefits in accordance with Section 6,
(b) transfers to the Contract Owner in accordance with Section 7.03,
(c) transfers to Plan options available to Participants other than those
provided for in this Contract, or
(d) other withdrawals as allowed in the Plan and mutually agreed upon by
Minnesota Mutual and the Contract Owner.
The amount available for withdrawal shall be the Participant Accumulation
Value less any applicable deferred sales charge. If withdrawals during
the first calendar year of participation are equal to or less than 10% of
the total purchase payments made on behalf of the Participant, the charge
will not apply. In subsequent calendar years there will be no charge for
withdrawals equal to or less than 10% of the prior calendar year
Participant Accumulation Value. If a Participant's withdrawals in any
calendar year end exceed this amount, the deferred sales charge will
apply to the excess.
Withdrawal amounts shall be deducted from the Participant's General
Account Accumulation Value on a first in, first out (FIFO) basis. Unless
otherwise instructed by the Participant or the Contract Owner, withdrawal
amounts will be made from a Participant's interest in the General Account
and each sub-account of the Separate Account in the same proportion that
the value of that Participant's interest in the General Account and any
sub-account bears to that Participant's total Accumulation Value.
Withdrawals are made upon written request from the Participant or
Contract Owner to Minnesota Mutual. The withdrawal date will be the
Valuation Date coincident with or next following the receipt of the
request by Minnesota Mutual at its Home Office.
From the General Account, withdrawals as described in (c) above, in
combination with transfers as described in 5.03, will be limited to the
greater of $1,000 or 10% of the Participant's General Account
Accumulation Value in each calendar year. From the sub-accounts of the
Separate Account, withdrawals as described in (c) above will not be
limited as to amount. Such withdrawals may be taken once per year or in
12 monthly installments.
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5.02 TRANSFER OF PARTICIPANT'S ACCUMULATION VALUE
Transfers of a Participant's Accumulation Value may be made among the
Participant's General Account and the sub-accounts of the Separate
Account. Such a transfer is made upon the written request from the
Participant or Contract Owner to Minnesota Mutual. The transfer date
will be the Valuation Date coincident with or next following the receipt
of the transfer request by Minnesota Mutual at its Home Office.
5.03 TRANSFERS OF THE GENERAL ACCOUNT
All transfers of General Account Accumulation Value of the Participant's
Account shall be on a first in, first out (FIFO) basis. In each calendar
year, amounts withdrawn by Participants for transfer to other Plan
options, as described in 5.01(c), combined with amounts transferred from
the Participant's General Account Accumulation Value to the sub-accounts
of the Separate Account, may not exceed the greater of $1,000 or 10% of
their General Account Accumulation Value. Transfers are permitted once
per year or in 12 monthly installments.
5.04 TRANSFERS FROM THE SEPARATE ACCOUNT
For transfers from the sub-accounts of the Separate Account, a number of
Accumulation Units will be surrendered such that the Accumulation Value
of the surrendered Accumulation Units equals the amount transferred.
Transfers between the sub-accounts of the Separate Account are unlimited
as to amount and frequency.
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SECTION 6. BENEFIT PROVISIONS
6.01 DEATH BENEFITS
In the event of the death of a Participant prior to the Annuity
Commencement Date, the beneficiary of that Participant will receive as a
death benefit the greater of: (a) the Participant's Accumulation Value,
determined as of the Valuation Date coincident with or next following the
date due proof of death is received by Minnesota Mutual at its Home
Office; or (b) the total of the Participant's purchase payments received
by Minnesota Mutual less any prior Participant withdrawals. The death
benefit will be paid in a single sum; or at the option of the beneficiary
the death benefit may be applied under Option 2, or Option 4 of the
Annuity Payment Options specified in Section 6.05, subject to the minimum
payment requirements of Section 6.04.
6.02 ANNUITY COMMENCEMENT DATE
The Contract Owner or the Participant shall notify Minnesota Mutual in
writing at its Home Office to begin Annuity Payments for a Participant,
specifying the date such Annuity Payments are to commence. The election
shall be accompanied by a verification signed by the plan administrator
which states that the elected form of benefit distribution satisfies the
terms of the Plan. Unless otherwise permitted by the Plan, such date may
be the first day of any calendar month provided that it may not be
earlier than 30 days following the date such notice is given and provided
further that it may not be later than April 1st of the calendar year
following the calendar year in which the Participant attains age 70 1/2.
6.03 ELECTION OF ANNUITY OPTION
The Contract Owner or the Participant may elect to have Annuity Payments
made under any of the Annuity Payment Options described in Section 6.05,
provided such election is received in writing by Minnesota Mutual at its
Home Office at least 30 days prior to the Annuity Commencement Date. If
no such election is received by Minnesota Mutual, Annuity Payments will
be made in accordance with Option 2A, a life income with a period certain
of 120 months.
6.04 APPLICATION OF ACCUMULATION VALUE
As of the Annuity Commencement Date, Minnesota Mutual shall apply the
Participant's Accumulation Value to provide Annuity Payments under the
Annuity Payment Option determined in accordance with Section 6.03;
provided, however, that the first monthly payment under such Annuity
Payment Option must be at least $20.00 in amount. If such first monthly
payment would be less than $20.00 in amount, the Participant's
Accumulation Value will be paid to the Participant in a lump sum as of
his Annuity Commencement Date, and the Participant shall thereafter have
no further rights under this contract. The
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<PAGE>
requirement that the first monthly payment be at least $20.00 shall be
imposed separately for the portion of the Annuity Payments payable as a
Fixed Annuity and the portion payable as a Variable Annuity under each of
the sub-accounts of the Separate Account.
6.05 ANNUITY PAYMENT OPTIONS
Option 1 - Life Annuity - An annuity payable monthly during the lifetime
of the Annuitant and terminating with the last monthly payment preceding
the death of the Annuitant.
Option 2 - Life Annuity with a Period Certain of 120 months (Option 2A),
180 months (Option 2B), or 240 months (Option 2C) - An annuity payable
monthly during the lifetime of the Annuitant, with the guarantee that if
the Annuitant dies before payments have been made for the Period Certain
elected, payments will continue to the beneficiary during the remainder
of such Period Certain. The beneficiary may elect to receive the
commuted value of the remaining guaranteed payments in a lump sum. The
value will be based on the then current dollar amount of one payment and
the same interest rate which served as a basis for the annuity.
Option 3 - Joint and Last Survivor Annuity - An annuity payable monthly
during the joint lifetime of the Annuitant and a designated joint
annuitant and continuing thereafter during the remaining lifetime of the
survivor.
Option 4 - Period Certain Annuity - An annuity payable monthly for a
Period Certain of from 5 to 20 years, as elected. If the Annuitant dies
before payments have been made for the Period Certain elected, payments
will continue to the beneficiary during the remainder of such Period
Certain. The beneficiary may elect to receive the commuted value of the
remaining guaranteed payments in a lump sum. The value will be based on
the then current dollar amount of one payment and the same interest rate
which served as a basis for the annuity.
Payments under any of these Annuity Payment Options will be determined in
accordance with Section 6.07 for a Fixed Annuity and with Section 6.08
for a Variable Annuity. If, when Annuity Payments are elected, Minnesota
Mutual is using annuity purchase rates for this class of contract which
would result in larger Annuity Payments, they will be used instead of
those guaranteed in this contract.
Minnesota Mutual reserves the right to require proof satisfactory to it
of the age of a Annuitant and any joint annuitant prior to making the
first payment under any Annuity Payment Option. Once Annuity Payments
begin, the Annuity Payment Option may not be changed.
6.06 ELECTION OF ANNUITY FORM
Unless Minnesota Mutual shall be notified in writing to the contrary by
the Contract Owner or Participant at least 30 days prior to the Annuity
Commencement Date, General Account
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Accumulation Value will be applied to provide a Fixed Annuity and
Separate Account accumulation units will be applied to provide a Variable
Annuity.
6.07 DETERMINATION OF FIXED ANNUITY PAYMENT
The tables contained in this contract are used to determine the amount of
guaranteed fixed monthly Annuity Payments. They show the dollar amount
of the monthly payment which can be purchased with each $1,000 of
Participant Accumulation Value, after deduction of any applicable premium
taxes not previously deducted under the provisions of Section 2.03 and a
fee of $200. Amounts shown in the tables are based on the Progressive
Annuity Table with interest at the rate of 3.0% per annum, assuming
births in the year 1900, with an age setback of six years. The amount of
each payment depends upon the adjusted age of the Participant and any
joint annuitant. The adjusted age is determined from the actual age
nearest birthday at the time the first payment is due in the following
manner:
Calendar Year
of Birth Adjusted Age is Equal to -
------------- --------------------------
1900-1919 Actual Age
1920-1939 Actual Age Minus 1
1940-1959 Actual Age Minus 2
1960-1979 Actual Age Minus 3
1980 and Later Actual Age Minus 4
GUARANTEED MINIMUM DOLLAR AMOUNT OF FIXED MONTHLY PAYMENT WHICH IS PURCHASED
WITH EACH $1,000 OF VALUE APPLIED
<TABLE>
<CAPTION>
Adjusted Age
of Annuitant Single Life Annuities
------------ -------------------------------------------------
Option 1 Option 2A Option 2B Option 2C
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
50 $3.99 $3.97 $3.94 $3.89
51 4.05 4.03 4.00 3.95
52 4.13 4.10 4.06 4.00
53 4.20 4.17 4.13 4.06
54 4.28 4.25 4.20 4.12
55 4.37 4.33 4.27 4.18
56 4.46 4.41 4.35 4.25
57 4.55 4.50 4.42 4.31
58 4.65 4.59 4.51 4.38
59 4.76 4.69 4.59 4.44
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<PAGE>
60 4.87 4.79 4.68 4.51
61 4.99 4.90 4.77 4.58
62 5.12 5.01 4.86 4.65
63 5.26 5.13 4.96 4.72
64 5.40 5.25 5.06 4.79
65 5.56 5.39 5.16 4.85
66 5.72 5.52 5.27 4.92
67 5.90 5.67 5.37 4.99
68 6.09 5.82 5.48 5.05
69 6.29 5.97 5.59 5.11
70 6.51 6.13 5.69 5.16
71 6.74 6.30 5.80 5.21
72 6.99 6.48 5.90 5.26
73 7.26 6.66 6.01 5.31
74 7.54 6.84 6.11 5.34
75 7.86 7.03 6.20 5.38
</TABLE>
Option 3 -- Joint and Last Survivor Life Annuity
Adjusted
Age of
Joint
Annuitant* Adjusted Age of Annuitant*
- -----------------------------------------------------------------------
55 60 62 65 67 70 75
----- ----- ----- ----- ----- ----- -----
54 $3.80 $3.93 $3.98 $4.04 $4.08 $4.13 $4.19
59 3.95 4.14 4.21 4.32 4.38 4.46 4.57
61 4.00 4.22 4.31 4.43 4.50 4.61 4.75
64 4.07 4.34 4.44 4.60 4.70 4.83 5.03
66 4.12 4.41 4.53 4.71 4.82 4.99 5.23
69 4.17 4.50 4.65 4.86 5.01 5.23 5.56
74 4.25 4.64 4.81 5.09 5.29 5.60 6.11
* Dollar amounts of the monthly payments for ages not shown in this table will
be calculated on the same basis as those shown and may be obtained from us upon
request.
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Option 4 -- Fixed Period Annuity
Fixed Period Dollar Amount Fixed Period Dollar Amount
(Years) of Payment (Years) of Payment
------ ---------- ------ ----------
5 $17.91 13 $7.71
6 15.14 14 7.26
7 13.16 15 6.87
8 11.68 16 6.53
9 10.53 17 6.23
10 9.61 18 5.96
11 8.86 19 5.73
12 8.24 20 5.51
6.08 DETERMINATION OF VARIABLE ANNUITY PAYMENTS
The dollar amount of the first monthly variable Annuity Payment is
determined by applying the Participant's Separate Account Accumulation
Value (after deduction of any premium taxes not previously deducted) to a
rate per $1,000 which is based on the Progressive Annuity Table with
interest at the rate of 4.5% per annum, assuming births in the year 1900,
with an age setback of six years. The amount of the first payment
depends upon the annuity payment option selected and the adjusted age of
the annuitant and any joint annuitant. The adjusted ages shall be
determined using the same table as illustrated in Section 6.06 for
determination of fixed Annuity Payments. A number of annuity units is
then determined by dividing this dollar amount by the then current
annuity unit value. Thereafter, the number of annuity units remains
unchanged during the period of Annuity Payments. This determination is
made separately for each sub-account of the Separate Account. The number
of annuity units is based upon the available value in each sub-account as
of the date Annuity Payments are to begin.
The dollar amount of the second and later variable Annuity Payments is
equal to the number of annuity units determined for each sub-account
multiplied by the annuity unit value for that sub-account as of the due
date of the payment. This amount may increase or decrease from month to
month.
The dollar amounts determined for each sub-account will be aggregated for
purposes of making payment.
6.09 TRANSFERS DURING THE ANNUITY PERIOD
Participant amounts held as annuity reserves may be transferred among the
Variable Annuity sub-accounts during the annuity period. The change must
be made by written request. The annuitant and joint annuitant, if any,
must make such an election.
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A transfer will be made on the basis of annuity unit values. The
transfer will be effective for future Annuity Payments and will occur the
middle of the month preceding the next Annuity Payment affected by the
transfer request. The number of annuity units from the sub-account being
transferred will be converted to a number of annuity units in a new sub-
account. The Annuity Payment option will not change. The first Annuity
Payment after the transfer will be for the same amount as it would have
been without the transfer. The number of annuity units will be set at
that number of units which are needed to pay that same amount on the
transfer date.
Transfers of annuity reserves from any sub-account must be at least equal
to: 1) $5,000; or 2) the entire amount of reserve remaining in that sub-
account. In addition, Annuity Payments must have been in effect for a
period of 12 months before a change may be made. Such transfers are
allowed only once every 12 months. The written request for transfer must
be received by Minnesota Mutual at least 30 days in advance of the due
date of the Annuity Payment subject to the transfer.
Amounts held as reserves to pay a Variable Annuity may also be
transferred to provide a Fixed Annuity from the General Account, subject
to the dollar amount and frequency limitations described above. The
amount transferred will be applied to provide a Fixed Annuity amount of
the same annuity option based upon the adjusted age of the annuitant and
any joint annuitant at the time of the transfer. Once fixed Annuity
Payments begin, the annuity reserves may not be transferred back to
provide a Variable Annuity.
6.10 LUMP SUM SETTLEMENT
By written notice to Minnesota Mutual by the Contract Owner at least 30
days prior to the Annuity Commencement Date, a lump sum settlement of a
Participant's Accumulation Value may be elected in lieu of the
application of such value to provide Annuity Payments for the Participant
under an Annuity Payment Option. After such lump sum settlement has been
made, the Participant shall have no further rights under this contract.
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SECTION 7. SUSPENSION AND TERMINATION
7.01 SUSPENSION OF PURCHASE PAYMENTS
The Contract Owner may suspend purchase payments at any time by giving 60
days written notice to Minnesota Mutual of such suspension. The
suspension may be with respect to all Participants, or only with respect
to those Participants in such class or classes as are specified by the
Contract Owner.
Except as to those Participants for whom purchase payments are suspended,
the contract shall continue to operate during a period of suspension as
if such suspension had not occurred. Purchase payments may be resumed at
any time upon written notice to Minnesota Mutual by the Contract Owner.
7.02 TERMINATION OF CONTRACT
With 30 days written notice to Minnesota Mutual, the Contract Owner may
terminate this contract at any time due to the existence of any of the
following circumstances:
(a) Malfeasance, misfeasance or fraud on the part of Minnesota Mutual.
(b) Failure by Minnesota Mutual to perform any provision of this
contract, subject to Minnesota Mutual having 90 days to cure any
failure of contract performance.
(c) A material change in Minnesota Mutual's financial position,
defined as the occurrence of two or more of the following:
- Minnesota Mutual's Standard & Poor's rating falls to A+ or
lower.
- Minnesota Mutual's Moody's rating falls to A3 or lower.
- Minnesota Mutual's Duff & Phelps rating falls to A+ or lower.
- Minnesota Mutual's A.M. Best rating falls to A- or lower.
However, in the event of any drop in ratings that is a result of a
recalibration of the life insurance industry by any of the
aforementioned rating agencies Minnesota Mutual and the Contract
Owner will use their best efforts to amend this provision
consistent with any such recalibration.
Minnesota Mutual may terminate this contract as of a date specified by
written notice to the Contract Owner in the event that Minnesota Mutual
reasonably determines that it is necessary to amend or modify this
contract to be consistent with law or regulation changes; or to ensure
the financial soundness of the Contract; and the Contract Owner does not
assent to the amendment or modification.
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The contract will automatically be terminated in the event of
termination of the Plan, as of the effective date of such termination.
7.03 EFFECT OF TERMINATION
After termination, no further purchase payments will be accepted by
Minnesota Mutual under this contract.
Termination of the contract will have no effect on Participants as to
whom Annuity Payments have commenced. As to other Participants,
Participant Accumulation Values shall continue to be maintained under the
contract until: (a) withdrawn to provide benefits under the conditions of
Section 5.01; (b) applied to provide Annuity Payments; or (c) transferred
to the Contract Owner as provided in Section 7.04 or Section 7.05. While
Participant Accumulation Values are maintained under this contract, the
withdrawal and transfer provisions will continue to apply on the same
basis as prior to termination.
If the Participant Accumulation Values are to be transferred to the
Contract Owner, Minnesota Mutual shall determine a liquidation date which
shall be a Valuation Date not later than 180 days after the date of
termination.
7.04 LUMP SUM TERMINATION VALUE
The lump sum termination value will be equal to the sum of all
Participant's Separate Account Accumulation Values plus the lesser of:
a) The sum of all Participant's General Account Accumulation Values;
or
b) The sum of all Participant's General Account Market Values.
A market value will be determined in aggregate for Participant General
Account Accumulation Values based on the following formula:
<TABLE>
<S> <C>
Market value = (Participant General Account x (1 + G) to the power of 6
---------------------------------
Accumulation Value) (1 + C + .0025) to the power of 6
</TABLE>
where G = the greater of:
(a) the weighted interest crediting rate in effect on all Participant
General Account Accumulation Values under this contract
as of the liquidation date; or
(b) the weighted interest crediting rate in effect on all Participant
General Account Accumulation Values at any time during the six month
period preceding the liquidation date.
C = the lesser of:
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<PAGE>
(a) the current interest crediting rate in effect for new purchase
payments to this contract as of the liquidation date; or
(b) the interest crediting rate in effect for new purchase payments to
this contract as of six months prior to the liquidation date,
adjusted by the interest yield on a 10 year U.S. Treasury note as of
the liquidation date, less the yield six months prior to the
liquidation date.
However, Minnesota Mutual guarantees that the Participant General Account
Market Value will not be less than the sum of all allocations made to the
General Account by or on behalf of each Participant, accumulated at 3%
per annum, less any Participant withdrawals, any applicable deferred
sales charge and less any transfers of General Account accumulation
values to the Group Variable Annuity Account.
Within seven days after the termination of the contract, Minnesota Mutual
will make payment to the Contract Owner of the Separate Account
Accumulation Value held on behalf of each Participant. However,
Minnesota Mutual reserves the right to defer payment for any period
during which the New York Stock Exchange is closed for trading or when
the Securities and Exchange Commission has determined that a state of
emergency exists which may make such determination and payment
impractical.
Minnesota Mutual will make payment to the Contract Owner of the General
Account portion of the lump sum termination value on the liquidation
date.
7.05 INSTALLMENT TERMINATION VALUE
Under the installment method of liquidation, Minnesota Mutual will make
payment to the Contract Owner of the Separate Account Accumulation Value
held on behalf of each Participant within seven days following the
termination of the contract. However, Minnesota Mutual reserves the
right to defer payment for any period during which the New York Stock
Exchange is closed for trading or when the Securities and Exchange
Commission has determined that a state of emergency exists which may make
such determination and payment impractical.
The General Account portion of each Participant's Accumulation Value will
be paid to the Contract Owner in substantially equal installments over a
five year period. The Contract Owner may elect annual or quarterly
installments with the first installment due as of the liquidation date
and the last installment due at the end of the five year period. The
amount of each installment will be determined by dividing the total
Participant General Account Accumulation Values as of each installment
date by the number of remaining installments including the installment
which is being calculated. During the installment period, Participant
General Account Accumulation Values will continue to earn interest at a
rate determined by using the same methodology for determining such rate
in effect immediately prior to termination. The gross yield on assets,
before reduction for expense margin, assumed in employing the
methodology will be determined in the same way as immediately
21
<PAGE>
This rate shall prior to termination. not be less than the hypothetical
yield for a portfolio of five-year treasuries would be under the same
historical cash flow for the General Account. The expense margin assumed
in employing the methodology will be no greater than the expense margin
used immediately prior to termination plus .25%.
7.06 FINAL TERMINATION
This contract shall finally terminate when each Participant's
Accumulation Value is reduced to zero and Minnesota Mutual shall have
completed all payments due hereunder.
22
<PAGE>
SECTION 8. GENERAL PROVISIONS
8.01 CONTRACT
This contract is delivered in, and shall be construed according to the
laws of the jurisdiction specified on Page 1 hereof. With respect to all
transactions regarding this contract, except as may be otherwise
specifically provided, Minnesota Mutual may deal with the Contract Owner
on the basis that the Contract Owner has full ownership and control of
the contract. No obligation under the Plan is assumed by Minnesota
Mutual, nor shall the Plan or any amendment thereto be construed to amend
or modify this contract in any way except with the express written
consent of Minnesota Mutual.
8.02 MODIFICATION OF CONTRACT
This contract may be modified at any time by written agreement between
Minnesota Mutual and the Contract Owner. However, no such modification
will adversely affect the rights of any Participant unless the
modification is made to comply with a law or government regulation.
No person except the President, a Vice President, the Secretary, or an
Assistant Secretary of Minnesota Mutual has authority on behalf of
Minnesota Mutual to modify the contract or to waive any requirement of
the contract. Minnesota Mutual shall not be bound by any promise or
representation made by or to any agent or person other than as above.
8.03 BENEFICIARY
A Participant, or Annuitant if Annuity Payments have commenced, may
designate a beneficiary to receive any amount which may become payable to
such beneficiary under the terms of the Plan. The designation may be
made or changed by the Participant or Annuitant at any time during his
lifetime by filing satisfactory written notice with Minnesota Mutual at
its Home Office. The new designation shall take effect only upon being
recorded by Minnesota Mutual at its Home Office. When so recorded, even
if the Participant or Annuitant is not then living, it shall take effect
as of the date the notice was signed, subject to any payment made by
Minnesota Mutual before recording the change.
The interest of any beneficiary who dies before the Participant or
Annuitant shall terminate at the death of that beneficiary. If the
interest of all designated beneficiaries has terminated, any proceeds
payable at the Participant's or Annuitant's death shall be paid to the
Participant's or Annuitant's estate.
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8.04 PARTICIPATION IN DIVISIBLE SURPLUS
This is a participating contract. The portion, if any, of the divisible
surplus of Minnesota Mutual accruing upon this contract shall be
determined annually by Minnesota Mutual and shall be credited to the
contract on such basis as is determined by Minnesota Mutual.
8.05 CERTIFICATES AND STATEMENTS
Minnesota Mutual shall make available to each Participant a certificate
which describes the Participant's rights and privileges under this
contract. Minnesota Mutual shall issue to each Participant or Annuitant
as to whom Annuity Payments are provided hereunder an individual
certificate setting forth the amount and terms of such Annuity Payments.
Before Annuity Payments have commenced, at least once in each Contract
Year, Minnesota Mutual will furnish to the Participant a statement of
each Participant's Individual Account, the current accumulation unit
value, and each Participant's Accumulation Value. Such statement shall
be as of a date within two months of the mailing of the statement.
8.06 MISSTATEMENT OF AGE
If a person's age has been misstated, the amount payable under this
contract as an annuity will be that amount which would have been paid
based upon that person's correct age. In the case of an overpayment,
Minnesota Mutual may either deduct the required amount from that person's
future annuity payments under this contract; or, require the person to
pay Minnesota Mutual in cash; or both may be done until Minnesota Mutual
has been fully repaid. In the case of an underpayment, Minnesota Mutual
will pay the required amount with the next payment.
8.07 ASSIGNMENT
The Participant's Accumulation Value may not be assigned, sold,
transferred, discounted or pledged by the Participant as collateral for a
loan or as security for the performance of an obligation or for any other
purpose. To the maximum extent permitted by law, the Participant's
Accumulation Value and any benefits payable under this contract shall be
exempt from the claims of creditors of the Participant.
8.08 CONTRACT VALUES
Amounts payable at death, withdrawal benefits, Accumulation Values and
the annuity benefit described in this contract are not less than the
minimum benefits required by any statute of the state in which this
contract is delivered.
8.09 ANNUITY RESERVES
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Reserves held by Minnesota Mutual for Annuity Payments under this
contract shall not be less than those reserves required by the law in the
state in which this contract is delivered.
25
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[Minnesota Mutual Letterhead]
CONTRACT OWNER:
CONTRACT NUMBER:
PARTICIPANT:
CERTIFICATE NUMBER:
ANNUITY COMMENCEMENT DATE:
ISSUE DATE:
We have issued a group annuity contract to the Contract Owner. This certificate
is evidence of your coverage under the group annuity contract. You became a
participant under that contract when we first received purchase payments on your
behalf.
In this certificate, we will summarize the principal provisions of the group
annuity contract. This certificate is not an insurance contract. It does not
amend, extend or change the coverage under the group annuity contract.
All rights and benefits are determined solely by that contract and its terms.
You may examine the group annuity contract at a place designated by the Contract
Owner.
Secretary President
Registrar
GROUP DEFERRED VARIABLE ANNUITY CERTIFICATE
ALLOCATED
PROVISION FOR FIXED AND VARIABLE ANNUITY PAYMENTS
ALL PAYMENTS AND VALUES PROVIDED BY THIS CERTIFICATE, WHEN
BASED ON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT,
ARE VARIABLE AND NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT
95-9331 Minnesota Mutual 1
<PAGE>
DEFINITIONS
- ------------------------------
When we use the following words, this is what we mean:
THE PARTICIPANT, YOU, YOUR
The person named as the proposed participant in the application for
participation.
WE, OUR, US
The Minnesota Mutual Life Insurance Company.
ANNUITANT
The person who may receive lifetime benefits under this certificate. Joint
annuitants will be considered a single entity.
BENEFICIARY
The person, persons or entity designated to receive death benefits payable under
this certificate.
PARTICIPATION YEAR
A period of one year starting on the first day of the month in which we first
receive purchase payments on your behalf, or on an anniversary of that date.
PURCHASE PAYMENTS
Amounts paid to us for credit to your participant account, as consideration for
the benefits provided by the group annuity contract.
DEFERRED COMPENSATION
A program of retirement savings.
PLAN
A deferred compensation plan established by the Contract Owner and funded by the
contract under which this certificate is issued. No obligation under the plan
is assumed by us, nor shall the plan or any amendment thereto be construed to
amend or modify the contract in any way except with our express written consent.
FUND
The mutual fund or separate investment portfolio within a series mutual fund
which is designated as an eligible investment for the separate account.
VALUATION DATE
Any date on which a fund is valued.
VALUATION PERIOD
The period between successive valuation dates measured from the time of one
determination to the next.
ACCUMULATION VALUE
The sum of your values in the general account and/or separate account. In the
general account, this is the general account accumulation value. In the
separate account, this is the separate account accumulation value. The separate
account portion is composed of your interest in one or more sub-accounts of the
separate account. Your interest in the sub-accounts shall be valued separately.
The total of those values will be the separate account accumulation value.
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WITHDRAWAL VALUE
The value of your participant account which is available for withdrawal. This
value equals the accumulation value, subject to the deferred sales charge during
the first six participation years. However, if withdrawals during the first
calendar year are equal to or less than 10% of the purchase payments made during
the first year of participation and, if in subsequent calendar years they are
equal to or less than 10% of the accumulation value at the end of the previous
calendar year, the charge will not apply. If withdrawals in any calendar year
exceed that amount, the deferred sales charge will apply to the excess.
GENERAL ACCOUNT
All assets of Minnesota Mutual other than those in the separate accounts
established by Minnesota Mutual.
SEPARATE ACCOUNT
A separate investment account titled Minnesota Mutual Group Variable Annuity
Account. This separate account was established by us for this class of contract
under Minnesota law. The separate account is composed of several sub-accounts.
The assets of the separate account are ours. Those assets are not subject to
claims arising out of any other business of ours.
WRITTEN REQUEST
A request in writing signed by you. We may also require that this certificate
be sent in with your written request.
ANNUITY PAYMENTS
Payments made at regular intervals to you or to any other payee. Annuity
payments will be due and payable only on the first day of a calendar month.
FIXED ANNUITY
An annuity payable from the general account, with equal payments which remain
fixed during the payment period.
VARIABLE ANNUITY
An annuity payable from the separate account with payments which increase or
decrease in amount to reflect the investment experience of the separate account
and its sub-accounts.
AGE
Age of a person at nearest birthday.
PURCHASE PAYMENTS
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WHERE DO YOU MAKE PURCHASE PAYMENTS?
All purchase payments must be made to us, by the Contract Owner, at our home
office.
HOW OFTEN DO YOU MAKE PURCHASE PAYMENTS?
You may make purchase payments as agreed upon between you and the Contract
Owner.
MAY YOU STOP MAKING PURCHASE PAYMENTS?
Yes. You may stop making purchase payments at anytime. You may begin again at
anytime before annuity payments start unless you have taken a lump sum benefit
payment of your entire account.
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WHAT DEDUCTIONS ARE MADE FROM PURCHASE PAYMENTS?
There are usually no deductions made from the purchase payments. However, we do
reserve the right to make a deduction from purchase payments for state premium
taxes, where applicable.
HOW ARE PURCHASE PAYMENTS ALLOCATED?
They are allocated either to the general account or to the separate account and
its sub-accounts. Initially, you indicate your allocation in the application.
Later, you may change your allocation for future purchase payments by giving us
written or telephone notice. Applications received without allocation
instructions will be treated as incomplete.
WHAT SEPARATE ACCOUNT OPTIONS ARE AVAILABLE?
The separate account is divided into several sub-accounts. Purchase payments
may be applied to one or more of the sub-accounts. We reserve the right to add,
combine or remove any sub-accounts of the separate account.
WHAT ARE THE INVESTMENTS OF THE SEPARATE ACCOUNT?
For each sub-account, there is a fund for the investment of that sub-account's
assets. Purchase payments are invested in the funds at their net asset value.
The net asset value per share for each fund is determined by adding the current
value of securities and all other assets held by such fund, subtracting
liabilities, and dividing the remainder by the number of shares outstanding.
If investment in a fund should no longer be possible or if we determine it
becomes inappropriate for contracts of this class, we may substitute another
fund. Substitution may be with respect to existing accumulation values, future
purchase payments and future annuity payments.
MAY WE MAKE CHANGES TO THE SEPARATE ACCOUNT?
Yes. We reserve the right to transfer assets of the separate account to another
separate account. The transfer will be of assets associated with this class of
contracts, as determined by us. If this type of transfer is made, the term
"separate account", as used in this contract, shall then mean the separate
account to which the assets were transferred.
We reserve the right, when permitted by law, to:
(a) de-register the separate account under the Investment Company Act of 1940;
(b) restrict or eliminate voting rights of contract owners or other persons who
have voting rights as to the separate account; and
(c) combine the separate account with one or more other separate accounts.
CONTRACT CHARGES
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ARE THERE CHARGES UNDER THIS CONTRACT?
Yes. There may be a deferred sales charge. Also, there are certain charges
which are made directly to the separate account.
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WHAT IS THE DEFERRED SALES CHARGE?
The deferred sales charge is the charge made on withdrawals during your first
six participation years. The amount withdrawn plus any deferred sales charge is
deducted from the accumulation value. In the separate account, accumulation
units will be canceled of a value equal to the charge and the withdrawal.
WHAT IS THE AMOUNT OF THE DEFERRED SALES CHARGE?
The charge is indicated in the table shown below. These percentages decrease
uniformly by .083% for each of the first 72 months of participation.
<TABLE>
<CAPTION>
<S> <C>
End of
Participation Year Charge
- ------------------ ------
(Participation Date) 6.0%
1 5.0%
2 4.0%
3 3.0%
4 2.0%
5 1.0%
6 0%
</TABLE>
In no event will the amount of deferred sales charge exceed 9% of the total
purchase payments made on your behalf.
WHAT CHARGES ARE ASSOCIATED WITH THE SEPARATE ACCOUNT?
There are three charges associated with the separate account. They are the
mortality risk charge, the expense risk charge and the administrative charge.
These charges are deducted on each valuation date from the assets of the
separate account. On an annual basis, they may be as much as 1.65% of the net
asset value of the separate account.
WHAT IS THE MORTALITY RISK CHARGE?
This is a charge to compensate us for the mortality guarantees we make under the
contract. Actual mortality results incurred by us shall not adversely affect
any payments or values under this contract. On an annual basis, it shall not
exceed .60% of the net asset value of the separate account.
WHAT IS THE EXPENSE RISK CHARGE?
This charge compensates us for the guarantee that the deductions provided in
this contract will be sufficient to cover our actual expenses. Actual expense
results incurred by us shall not adversely affect any payments or values under
this contract. On an annual basis, it shall not exceed .65% of the net asset
value of the separate account.
WHAT IS THE ADMINISTRATIVE CHARGE?
The administrative charge is to compensate us for the administrative expenses
incurred by us. On an annual basis, it shall not exceed .40% of the net asset
value of the separate account.
VALUATION
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HOW IS YOUR ACCUMULATION VALUE DETERMINED?
Your accumulation value is determined separately for the general account and the
separate account. The separate account value will include all sub-accounts of
the separate account.
For the general account, it is the sum of purchase payments allocated to the
general account on your behalf plus interest, dividends and transfers into the
general account, less any
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transfers out of the general account, the deferred sales charge and any previous
withdrawals.
For each sub-account of the separate account, it is equal to the number of
accumulation units held on your behalf multiplied by the accumulation unit
value.
WHAT IS AN ACCUMULATION UNIT AND HOW IS ITS VALUE DETERMINED?
An accumulation unit is a measure of your interest in each sub-account of the
separate account. The number of accumulation units credited with respect to
each purchase payment is determined by dividing the portion of the purchase
payment allocated to each sub-account by the then current accumulation unit
value for that sub-account. This determination is made as of the valuation date
coincident with or next following the date on which we receive your purchase
payment at our home office. Once determined, the number of accumulation units
will not be affected by changes in the accumulation unit value. However, the
total number of accumulation units will be affected by future contract
transactions. In addition, the units of each sub-account will be increased by
subsequent purchase payments and transfers to that sub-account. The units of
each sub-account will be decreased by transfers or withdrawals from that sub-
account and any applicable deferred sales charge.
The accumulation unit value will increase or decrease on each valuation date.
The amount of any increase or decrease will depend on the net investment
experience of the sub-account of the separate account. The value of an
accumulation unit for each sub-account was originally set at $1.00 on the first
valuation date. For any subsequent valuation date, its value is equal to its
value on the preceding valuation date multiplied by the net investment factor
for that sub-account for the valuation period ending on the subsequent valuation
date.
WHAT IS THE NET INVESTMENT FACTOR FOR EACH SUB-ACCOUNT?
The net investment factor for a valuation period is the gross investment rate
for such valuation period, less a deduction for the charges associated with the
separate account at a rate of no more than 1.65% per annum.
The gross investment rate is equal to:
(a) the net asset value per share of a fund share held in the sub-account of
the separate account determined at the end of the current valuation period;
plus
(b) the per-share amount of any dividend or capital gain distributions by the
fund if the "ex-dividend" date occurs during the current valuation period;
divided by
(c) the net asset value per share of that fund share held in the sub-account
determined at the end of the preceding valuation period.
HOW IS THE ANNUITY UNIT VALUE DETERMINED?
The value of an annuity unit for a sub-account is determined monthly as of the
first day of the month. The value is equal to the annuity unit value for that
sub-account as of the first day of the preceding month multiplied by the product
of (a) .996338; and (b) the sub-account investment factor. This investment
factor is the accumulation unit value for that sub-account on the valuation date
next following the fourteenth day of the preceding month divided by the
accumulation unit value for that sub-account on the valuation date next
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following the fourteenth day of the second preceding month. For any date other
than the first of a month, the annuity unit value is that value on the first day
of the next month.
WHAT INTEREST IS CREDITED ON THE GENERAL ACCOUNT?
Interest is credited on the general account accumulation value. Interest is
credited at a rate of at least 3% per year, compounded annually. As conditions
permit, we will credit additional amounts of interest to the general account
accumulation values.
WITHDRAWAL BENEFITS
- ------------------------------
MAY I WITHDRAW FUNDS FROM MY ACCOUNT?
Yes. However, withdrawals may be made only for the purpose of providing benefit
payments in accordance with the provisions of the plan and contract; or such
other circumstances as may be agreed to by us and the contract owner. All
withdrawals will be on a first in, first out (FIFO) basis.
MAY I WITHDRAW FUNDS FROM MY ACCOUNT FOR TRANSFER TO OTHER OPTIONS AVAILABLE IN
THE PLAN?
Yes. From the general account, such withdrawals, combined with any transfers to
the sub-accounts of the separate account, are limited to the greater of $1,000
or 10% of your general account accumulation value in each calendar year.
Amounts withdrawn from the sub-accounts of the separate account are not limited.
Such withdrawals may be taken once per year or in 12 monthly installments.
WHAT AMOUNT IS AVAILABLE FOR WITHDRAWAL?
The amount available for withdrawal shall be the accumulation value less any
applicable deferred sales charge. If withdrawals during the first calendar year
of participation year are equal to or less than 10% of the total purchase
payments made on your behalf, the charge shall not apply. In subsequent
calendar years, there will be no charge for withdrawals equal to or less than
10% of your prior calendar year end accumulation value. If withdrawals in any
calendar year exceed 10% of that accumulation value, the deferred sales charge
will apply to the excess.
TRANSFER PROVISIONS
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WHAT IS A TRANSFER?
A transfer is a reallocation of funds within this contract. It may be between
the general account and the separate account or among the sub-accounts of the
separate account.
MAY YOU MAKE TRANSFERS OF AMOUNTS UNDER THE CONTRACT?
Yes. Transfers may be made by your written request. For transfers from the
sub-accounts of the separate account we will make the transfer on the basis of
the sub-account accumulation unit value on the valuation date coincident with or
next following the day we receive the request at our home office.
DO ANY RESTRICTIONS APPLY?
Yes. In any calendar year, transfers of general account accumulation values,
together with any withdrawals for transfer to other plan options, are limited to
the greater of $1000 or 10% of your general account accumulation value at the
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time of transfer. Transfers from the general account may be made once each
calendar year or in 12 monthly installments.
Transfers from the sub-accounts of the separate account are not limited as to
amount or frequency.
All transfers shall be on a first in, first out (FIFO) basis.
AMOUNT PAYABLE AT DEATH
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WHAT AMOUNT IS PAYABLE AT DEATH?
If you die before annuity payments have started, the death benefit shall be
equal to the greater of: (1) the accumulation value, determined as of the
valuation date coincident with or next following the day due proof of death is
received by us; or (2) the total of purchase payments received by us on your
behalf, less any prior withdrawals.
If the annuitant dies after annuity payments have started, we will pay whatever
amount may be called for by the terms of the annuity payment option selected.
The remaining interest in the contract must be distributed at least as rapidly
as under the option in effect at the annuitant's death.
TO WHOM WILL WE PAY THOSE BENEFITS?
When we receive due proof of death, satisfactory to us, we will pay the amount
payable at death under this contract to the beneficiary or beneficiaries.
HOW WILL THE AMOUNT PAYABLE AT DEATH BE PAID?
We will pay that amount in a single sum unless another form of settlement has
been requested and agreed to by us. All payments by us are payable at our home
office. Proof of any claim under this contract must be submitted in writing to
us at our home office.
WHEN WILL WE PAY DEATH BENEFITS?
We will pay death benefits in a single sum to the designated beneficiary, unless
the beneficiary has elected an annuity payment option. Payment will be made
within seven days after we receive due proof of death of the participant.
WHAT HAPPENS IF ONE OR ALL OF THE BENEFICIARIES DIE BEFORE YOU?
If a beneficiary dies before you, that beneficiary's interest in the participant
account ends with that beneficiary's death. Only those beneficiaries who
survive you will be eligible to share in the accumulation value. If no
beneficiary survives you, we will pay the accumulation value to the executors or
administrators of your estate.
CAN YOU CHANGE THE BENEFICIARY?
Yes. You, or the annuitant if annuity payments have begun, can file a written
request with us to change the beneficiary.
A written request will not be effective until it is recorded in our home office
records. After it has been recorded, it will take effect as of the date the
request was signed. However, if you or the annuitant die before the request has
been recorded, the request will not be effective as to those death proceeds we
have paid before the
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request was recorded in our home office records.
ANNUITY PROVISIONS
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WHEN DO ANNUITY PAYMENTS BEGIN?
You must notify us or the contract owner in writing that annuity payments are to
be made, when these payments are to begin, and what annuity form and option has
been selected. This notice must be accompanied by a verification signed by the
plan administrator which states that the elected form of benefit distribution
satisfies the terms of the plan. We must receive this notice at least 30 days
in advance of the date annuity payments are to begin. Annuity payments are made
on the first day of the month. Once annuity payments commence, you may not
change the annuity payment option or cancel future annuity payments to receive a
lump sum.
WHAT VALUE IS AVAILABLE TO BE APPLIED TO PROVIDE ANNUITY PAYMENTS?
When an annuity is to begin, we use your accumulation value to provide an
annuity under the options selected. We require that each monthly annuity
payment be at least $20. If the first monthly annuity payment would be less
than $20, we reserve the right to pay you the accumulation value in a lump sum
in lieu of all other rights under this contract. The requirement that the first
monthly payment be at least $20 shall be imposed separately for the portion
payable as a fixed annuity and for the portion payable as a variable annuity
under each of the sub-accounts of the separate account.
MAY WE REQUIRE INFORMATION BEFORE MAKING ANNUITY PAYMENTS?
Yes. We reserve the right to require proof satisfactory to us of the age of the
annuitant and of any joint annuitant before payments begin.
IF YOU MAKE NO ELECTION, WHEN DOES THE ANNUITY BEGIN?
If you do not elect another date, annuity payments will begin on April 1st of
the calendar year following the calendar year in which you attain age 70 1/2.
IF YOU FAIL TO ELECT AN ANNUITY OPTION, IS THERE AN OPTION UNDER WHICH ANNUITY
PAYMENTS WILL BE MADE?
Yes. If you do not elect an annuity payment option, we will make monthly
payments on the basis of a life annuity with period certain of 120 months.
IF YOU FAIL TO ELECT AN ANNUITY FORM, IS THERE A FORM UNDER WHICH ANNUITY
PAYMENTS WILL BE MADE?
Yes. If you do not elect an annuity payment form, general account accumulation
values will be applied to provide a fixed annuity and separate account
accumulation units will be applied to provide a variable annuity.
WHAT ANNUITY PAYMENT OPTIONS ARE AVAILABLE?
Both fixed and variable annuity payments are available under the following
options:
Option 1 - Life Annuity - annuity payments payable monthly for the lifetime of
the annuitant, ending with the last payment due prior to the annuitant's death.
Option 2 - Life Annuity with a Period Certain - annuity payments payable monthly
for the
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lifetime of the annuitant; provided, if the annuitant dies before payments have
been made for the entire period certain, those remaining certain payments will
be made to the beneficiary.
The period certain may be for 120 months; 180 months; or for 240 months.
Option 3 - Joint and Last Survivor Annuity - annuity payments payable monthly
for the joint lifetimes of the annuitant and a designated joint annuitant. The
payments end with the last payment due before the survivor's death.
Option 4 - Fixed Period Annuity - annuity payments payable monthly for a fixed
period of from five to twenty years. If the annuitant dies before all payments
for the fixed period are received, payments will continue for the remainder of
the fixed period to the beneficiary.
ARE OTHER ANNUITY PAYMENT OPTIONS AVAILABLE?
Yes. Other options may be available. They will be as agreed upon between you
and us.
MAY THE BENEFICIARY RECEIVE A LUMP SUM PAYMENT INSTEAD OF THE REMAINING ANNUITY
PAYMENTS?
Yes. The beneficiary may elect to have the present value of the remaining
payments paid in a lump sum. This right exists under Options 2 and 4.
The lump sum payment will be the commuted value of the remaining payments. It
will be based on the then current dollar amount of one payment, using the same
interest rate which served as a basis for the annuity.
HOW IS THE AMOUNT OF A FIXED ANNUITY PAYMENT DETERMINED?
We have included tables of guaranteed annuity rates in the group annuity
contract. Those rates are guaranteed for your use as long as you are a
participant.
HOW IS THE AMOUNT OF A VARIABLE ANNUITY PAYMENT DETERMINED?
The method for determining the first and subsequent variable annuity payments is
described in the group annuity contract. We guarantee that the mortality
assumptions and method of determining payments will be guaranteed for as long as
you are a participant.
WILL THESE RATES ALWAYS BE USED?
No. If, when you elect your annuity option, we are using annuity rates for this
class of contract which are more favorable than the guaranteed rates, we will
use the more favorable rates.
ARE TRANSFERS PERMITTED DURING THE ANNUITY PERIOD?
Yes. Amounts held as annuity reserves for a variable annuity may be transferred
among the sub-accounts during the annuity period. Amounts held as annuity
reserves for a variable annuity may also be transferred to provide a fixed
annuity under the general account. Transfers must be made by written request
and received by us at least 30 days in advance of the due date of the annuity
payment subject to the request. The annuitant and joint annuitant, if any, must
make such an election. Transfers of annuity reserves from any sub-account must
be at least equal to: 1) $5,000; or 2) the entire amount of reserve remaining in
that sub-account. In addition, annuity payments must have been in effect for at
least 12 months before a change may be made.
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Such transfers are allowed only once every 12 months. Once fixed annuity
payments begin, reserves may not be transferred back to provide a variable
annuity.
MUST AN ANNUITY PAYMENT OPTION BE ELECTED?
No. You may elect a lump sum payment of accumulation value in lieu of the
application of accumulation value to provide annuity payments. We must receive
your written request at least 30 days prior to the annuity commencement date.
After such lump sum settlement has been made, you shall have no further rights
under this contract.
TERMINATION PROVISIONS
- ------------------------------
WHO CAN TERMINATE THE CONTRACT?
The group annuity contract may be terminated by us or by the contract owner. We
may terminate the contract only if we need to amend the contract and the
contract owner does not consent to such amendment.
WHAT HAPPENS IF THE CONTRACT TERMINATES?
Suspension of purchase payments or termination of the contract will have no
effect on you if annuity payments have begun. Otherwise, your accumulation
values will continue to be maintained under the contract until: (a) withdrawn to
provide benefits; (b) applied to provide annuity payments; or (c) transferred to
the contract owner in accordance with the provisions of the group annuity
contract.
GENERAL PROVISIONS
- ------------------------------
CAN THE CONTRACT BE MODIFIED?
Yes. It may be modified by written agreement between us and the contract owner.
No such modification shall adversely affect your rights unless the modification
is made to comply with a law or government regulation. No change or waiver of
any of the provisions of the contract will be valid unless made in writing by us
and signed by our president, a vice president, our secretary or an assistant
secretary. No agent or other person has the authority to change or waive any
provision of the contract.
WILL YOU RECEIVE DIVIDENDS?
Each year we will determine if this contract will share in our divisible
surplus. We call your share a dividend. Dividends, if received, will be
credited as determined by us.
HOW WILL YOU KNOW THE VALUE OF YOUR PARTICIPANT ACCOUNT?
Before annuity payments commence, at least annually, you will receive a report.
This report will summarize transactions for the period covered by the report.
It will show the current accumulation value and the current separate account
accumulation unit values. The report will be as of a date within two months of
its mailing.
WHAT IF A PERSON'S AGE IS MISSTATED?
If a person's age has been misstated, the amount payable under the contract as
an annuity will be that amount which would have been paid based upon the
person's correct age. In the case of an overpayment, we may either deduct the
required amount from that person's future annuity payments; or, require the
person
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to pay us in cash; or both may be done until we are repaid. In the case of an
underpayment, we will pay the required amount with the next payment.
CAN YOU ASSIGN YOUR PARTICIPANT ACCOUNT?
No. Your accumulation value may not be assigned, sold, transferred, discounted
or pledged as collateral for a loan or as security for the performance of an
obligation or for any other purpose. To the maximum extent permitted by law,
your accumulation value and any benefits payable under the contract shall be
exempt from the claims of your creditors.
MAY YOU BE ASKED TO PROVIDE US WITH ADDITIONAL INFORMATION?
Yes. You must provide any other information we need to administer the contract
and your participant account. If you cannot do so, we may ask the person
concerned for that information. We shall not be liable for any payment based
upon information given to us in error or not given to us.
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[Minnesota Mutual Letterhead]
CONTRACT OWNER:
CONTRACT NUMBER:
EFFECTIVE DATE:
CONTRACT ANNIVERSARY:
JURISDICTION: MINNESOTA
PLAN:
The Minnesota Mutual Life Insurance Company (herein called Minnesota Mutual)
agrees to accept purchase payments hereunder from the Contract Owner, to account
for such purchase payments in the manner provided herein, and to pay contract
benefits in such amounts and to such persons as are designated in writing by the
Contract Owner or its designee.
This contract is issued in consideration of the application by the Contract
Owner, a copy of which is attached to, and made a part of this contract, and the
tender of purchase payments under this contract by the Contract Owner.
Minnesota Mutual agrees to make annuity and other payments in accordance with
the provisions on this and the subsequent pages, all of which are a part of this
contract.
This contract shall be governed by the laws of the jurisdiction indicated
above. This contract is executed by Minnesota Mutual at its Home Office in
Saint Paul, Minnesota, to take effect as of the Effective Date.
Secretary President
Registrar
GROUP DEFERRED VARIABLE ANNUITY CONTRACT
ALLOCATED
PROVISION FOR FIXED AND VARIABLE ANNUITY PAYMENTS
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN
BASED ON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT,
ARE VARIABLE AND NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT
95-9332
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TABLE OF CONTENTS
SECTION 1. DEFINITIONS PAGE
1.01 Plan. . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.02 Participant . . . . . . . . . . . . . . . . . . . . . . 2
1.03 Annuitant . . . . . . . . . . . . . . . . . . . . . . . 2
1.04 Annuity Payments. . . . . . . . . . . . . . . . . . . . 2
1.05 Fixed Annuity . . . . . . . . . . . . . . . . . . . . . 2
1.06 Variable Annuity. . . . . . . . . . . . . . . . . . . . 2
1.07 Annuity Commencement Date . . . . . . . . . . . . . . . 2
1.08 General Account . . . . . . . . . . . . . . . . . . . . 2
1.09 Separate Account. . . . . . . . . . . . . . . . . . . . 3
1.10 Participant's Accumulation Value. . . . . . . . . . . . 3
1.11 Fund. . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.12 Valuation Date. . . . . . . . . . . . . . . . . . . . . 3
1.13 Valuation Period. . . . . . . . . . . . . . . . . . . . 3
1.14 Participation Year. . . . . . . . . . . . . . . . . . . 3
1.15 Unit. . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.16 1940 Act. . . . . . . . . . . . . . . . . . . . . . . . 4
1.17 Code. . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.18 TSA Loan Account. . . . . . . . . . . . . . . . . . . . 4
SECTION 2. PURCHASE PAYMENTS
2.01 Amount of Purchase Payments . . . . . . . . . . . . . . 5
2.02 Limitation of Purchase Payments . . . . . . . . . . . . 5
2.03 Application of Purchase Payments. . . . . . . . . . . . 5
2.04 Allocation of Purchase Payments . . . . . . . . . . . . 5
2.05 Separate Account Allocation . . . . . . . . . . . . . . 6
2.06 Changes to the Separate Account . . . . . . . . . . . . 6
SECTION 3. CONTRACT CHARGES
3.01 Deferred Sales Charge . . . . . . . . . . . . . . . . . 7
3.02 Separate Account Charges . . . . . . . . . . . . . . . 7
SECTION 4. VALUATION
4.01 Participant's Accumulation Value . . . . . . . . . . . 9
4.02 Accumulation Unit Value . . . . . . . . . . . . . . . . 9
4.03 Net Investment Factor . . . . . . . . . . . . . . . . . 9
4.04 Annuity Unit Value . . . . . . . . . . . . . . . . . . 10
4.05 General Account Interest . . . . . . . . . . . . . . . 10
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SECTION 5. WITHDRAWALS AND TRANSFERS
5.01 Withdrawal Provisions . . . . . . . . . . . . . . . . 11
5.02 Withdrawal Restrictions . . . . . . . . . . . . . . . 12
5.03 Hardship Withdrawal Provisions . . . . . . . . . . . . 12
5.04 Tax Penalties . . . . . . . . . . . . . . . . . . . . 12
5.05 Transfer of Participant's Accumulation Value . . . . . 13
5.06 Transfers of the General Account . . . . . . . . . . . 13
5.07 Transfers from the Separate Account . . . . . . . . . . 13
SECTION 6. CONTRACT LOANS
6.01 Loan Provisions . . . . . . . . . . . . . . . . . . . 14
6.02 Loan Restrictions . . . . . . . . . . . . . . . . . . . 14
6.03 Loan Interest Rate . . . . . . . . . . . . . . . . . . 15
6.04 Loan Repayment . . . . . . . . . . . . . . . . . . . . 15
6.05 Impact of Withdrawal on Loan . . . . . . . . . . . . . 16
SECTION 7. BENEFIT PROVISIONS
7.01 Death Benefits . . . . . . . . . . . . . . . . . . . . 17
7.02 Annuity Commencement Date . . . . . . . . . . . . . . . 17
7.03 Election of Annuity Option . . . . . . . . . . . . . . 17
7.04 Application of Accumulation Value . . . . . . . . . . . 17
7.05 Annuity Payment Options . . . . . . . . . . . . . . . . 18
7.06 Election of Annuity Form . . . . . . . . . . . . . . . 18
7.07 Determination of Fixed Annuity Payment . . . . . . . . 19
7.08 Determination of Variable Annuity Payments . . . . . . 21
7.09 Transfers During the Annuity Period . . . . . . . . . . 21
7.10 Lump Sum Settlement . . . . . . . . . . . . . . . . . . 22
SECTION 8. SUSPENSION AND TERMINATION
8.01 Suspension of Purchase Payments . . . . . . . . . . . . 23
8.02 Termination of Contract . . . . . . . . . . . . . . . . 23
8.03 Effect of Termination . . . . . . . . . . . . . . . . . 23
8.04 Lump Sum Termination Value . . . . . . . . . . . . . . 24
8.05 Installment Termination Value . . . . . . . . . . . . . 25
8.06 Final Termination . . . . . . . . . . . . . . . . . . . 25
SECTION 9. GENERAL PROVISIONS
9.01 Contract . . . . . . . . . . . . . . . . . . . . . . . 26
9.02 Modification of Contract . . . . . . . . . . . . . . . 26
9.03 Beneficiary . . . . . . . . . . . . . . . . . . . . . . 26
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9.04 Participation in Divisible Surplus . . . . . . . . . . 27
9.05 Certificates and Statements . . . . . . . . . . . . . . 27
9.06 Misstatement of Age . . . . . . . . . . . . . . . . . 27
9.07 Assignment . . . . . . . . . . . . . . . . . . . . . . 27
9.08 Contract Values . . . . . . . . . . . . . . . . . . . . 27
9.09 Annuity Reserves . . . . . . . . . . . . . . . . . . . 28
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SECTION 1. DEFINITIONS
1.01 PLAN
"Plan" means the Plan specified on Page 1 of this contract. The Plan
must meet the requirements for qualification under Section 403(b) of the
Internal Revenue Code, as amended, or other section of the Code allowing
similar tax treatment.
1.02 PARTICIPANT
A person eligible to participate under the Plan, and on whose behalf
purchase payments have been or are being made under this contract.
1.03 ANNUITANT
A person eligible to receive lifetime benefits under this contract.
Joint annuitants will be considered a single entity.
1.04 ANNUITY PAYMENTS
A series of payments made at regular intervals to the Annuitant or any
other payee. Annuity Payments will be due and payable only on the first
day of a calendar month.
1.05 FIXED ANNUITY
An annuity payable from the General Account, with payments which remain
fixed as to dollar amount throughout the period of Annuity Payments.
1.06 VARIABLE ANNUITY
An annuity payable from the Separate Account with payments which increase
or decrease in dollar amount to reflect the investment experience of the
sub-accounts of the Separate Account.
1.07 ANNUITY COMMENCEMENT DATE
The date upon which Annuity Payments begin, as determined in accordance
with the Plan.
1.08 GENERAL ACCOUNT
All assets of Minnesota Mutual other than those in Separate Accounts
established by Minnesota Mutual.
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1.09 SEPARATE ACCOUNT
A separate investment account titled Minnesota Mutual Group Variable
Annuity Account. This Separate Account was established by Minnesota
Mutual for this class of contract under Minnesota law. The Separate
Account is composed of several sub-accounts. The assets of the Separate
Account belong to Minnesota Mutual and shall be held and applied
exclusively for the holders of those contracts on a variable basis for
which the Separate Account has been established. Those assets are not
subject to claims arising out of any other business which Minnesota
Mutual may conduct.
1.10 PARTICIPANT'S ACCUMULATION VALUE
The sum of the individual Participant's values under this contract in the
General Account and/or the Separate Account. In the General Account,
this is the General Account Accumulation Value. In the Separate Account,
this is the Separate Account Accumulation Value. The Separate Account
portion is composed of the Participant's interests in one or more sub-
accounts of the Separate Account. The total of these shall be the
Participant's Separate Account Accumulation Value. Interests in the sub-
accounts shall be valued separately.
1.11 FUND
The mutual fund or separate investment portfolio within a series mutual
fund which is designated as an eligible investment for the Separate
Account.
1.12 VALUATION DATE
Any date on which a Fund is valued.
1.13 VALUATION PERIOD
The period between successive valuation dates measured from the time of
one determination to the next.
1.14 PARTICIPATION YEAR
A period of one year beginning on the first day of the month in which
purchase payments were first received under this contract on behalf of a
Participant, or on an anniversary of that date.
1.15 UNIT
A measure of a Participant's interest in the Separate Account or sub-
account of the Separate Account.
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1.16 1940 ACT
The Investment Company Act of 1940, as amended, or any similar successor
federal legislation.
1.17 CODE
The Internal Revenue Code of 1986, as amended.
1.18 TSA LOAN ACCOUNT
A portion of our general account, created for accounting purposes only,
to which contract amounts are transferred as security for an outstanding
loan under a tax-sheltered annuity contract.
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SECTION 2. PURCHASE PAYMENTS
2.01 AMOUNT OF PURCHASE PAYMENTS
The amount of purchase payments to be paid by the Contract Owner by or on
behalf of a Participant shall be determined by the Contract Owner in
accordance with the provisions of the Plan. All purchase payments are
payable at the Home Office of Minnesota Mutual. The Home Office is at
400 Robert Street North, St. Paul, Minnesota 55101-2098.
2.02 LIMITATIONS ON PURCHASE PAYMENTS
Where the annuitant has a tax sheltered annuity, purchase payments may be
limited. Elective deferrals which are purchase payments made by salary
reduction are limited to: (a) $9,500; or (b) an indexed amount, if
greater.
A special increased limit in the case of an annuitant who has completed
15 years of service with an educational organization, a hospital, a home
health service organization, a church, a convention or association of
churches, or a health and welfare service agency may be available. The
limit for any one year is increased by the lesser of:
(a) $3,000;
(b) $15,000 reduced by amounts already excluded for prior taxable years
by reason of this special exception; or
(c) the excess of $5,000 multiplied by the number of years of service
the annuitant has with the employer less all prior elective
deferrals.
The amount of salary reduction excludable from an annuitant's gross
income may actually be less than the amount permitted under this limit on
elective deferrals. This may be true if the annuitant's exclusion
allowance described in Section 403(b)(2) of the Code, or the overall
limit as described in Section 415(c) of the Code is less.
2.03 APPLICATION OF PURCHASE PAYMENTS
There are usually no deductions made from purchase payments. However,
Minnesota Mutual reserves the right to make a deduction from purchase
payments for state premium taxes, where applicable.
2.04 ALLOCATION OF PURCHASE PAYMENTS
Purchase payments may be allocated to the General Account or to the sub-
accounts of the Separate Account. Purchase payments for each Participant
shall be allocated to the General Account or to the sub-accounts of the
Separate Account in accordance with the instructions
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of the Participant or the Contract Owner. The initial allocation is
established as specified in the application for participation under this
contract which must be signed by the Participant. The allocation may be
changed as to future purchase payments by written or telephone notice to
Minnesota Mutual from the Participant or Contract Owner. That notice
must be received by Minnesota Mutual at its Home Office on or prior to
the date of receipt of those future purchase payments.
2.05 SEPARATE ACCOUNT ALLOCATION
Amounts allocated to the sub-accounts of the Separate Account will be
applied by Minnesota Mutual to provide accumulation units. Minnesota
Mutual will determine the number of accumulation units by dividing the
purchase payment by the then current accumulation unit value. That
determination will be made as of the Valuation Date coincident with or
next following the date on which such purchase payment is received by
Minnesota Mutual at its Home Office, and shall be made separately for
purchase payments allocated to each of the sub-accounts. The number of
accumulation units so determined shall not be affected by any subsequent
change in the accumulation unit value.
The Separate Account is divided into sub-accounts. For each sub-account
there is a Fund for the investment of that sub-account's assets. Amounts
are invested in the Funds at their net asset value. Purchase payments
may be applied to one or more of the sub-accounts. Minnesota Mutual
reserves the right to add, combine or remove any sub-accounts of the
Separate Account.
If investment in a Fund should no longer be possible or if Minnesota
Mutual determines it to be inappropriate for contracts of this class,
another Fund may be substituted. Substitution may be with respect to
existing Accumulation Values, future purchase payments and future Annuity
Payments.
2.06 CHANGES TO THE SEPARATE ACCOUNT
Minnesota Mutual reserves the right to transfer assets of the Separate
Account to another Separate Account. The transfer will be of assets
associated with this class of contracts, as determined by Minnesota
Mutual. If this type of transfer is made, the term "Separate Account",
as used in this contract, shall then mean the Separate Account to which
the assets were transferred.
Minnesota Mutual reserves the right, when permitted by law, to:
(a) de-register the Separate Account under the Investment Company Act of
1940;
(b) restrict or eliminate any voting rights of contract owners or other
persons who have voting rights as to the Separate Account; and
(c) combine the Separate Account with one or more other Separate
Accounts.
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SECTION 3. CONTRACT CHARGES
3.01 DEFERRED SALES CHARGE
The deferred sales charge is the charge made on Participant withdrawals
during the first six Participation Years. The amount withdrawn plus any
deferred sales charge is deducted from the Participant's Accumulation
Value. In the Separate Account, accumulation units will be canceled of a
value equal to the charge and withdrawal.
The charge is indicated in the table shown below. These percentages
decrease uniformly by .083% for each of the first 72 months of
participation.
End of
Participation Year Charge
------------------ ------
(Participation Date) 6.0%
1 5.0%
2 4.0%
3 3.0%
4 2.0%
5 1.0%
6 0%
In no event will the amount of deferred sales charge exceed 9% of the
total purchase payments made on behalf of each Participant.
3.02 SEPARATE ACCOUNT CHARGES
There are three charges which are imposed by Minnesota Mutual on the
assets of the Separate Account. They are the mortality risk charge, the
expense risk charge and the administrative charge. These charges are
deducted on each Valuation Date from the assets of the Separate Account.
The mortality risk charge is for the mortality guarantees Minnesota
Mutual makes under the contract. Actual mortality results incurred by
Minnesota Mutual shall not adversely affect any payments or values under
this contract. On an annual basis, this charge shall not exceed .60% of
the net asset value of the Separate Account.
The expense risk charge is for the guarantee that the deductions provided
in this contract will be sufficient to cover its expenses. Actual
expense results incurred by Minnesota Mutual shall not adversely affect
any payments or values under this contract. On an annual basis, this
charge shall not exceed .65% of the net asset value of the Separate
Account.
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The administrative charge is designed to cover the administrative
expenses incurred by Minnesota Mutual under this contract. On an annual
basis, this charge shall not exceed .40% of the net asset value of the
Separate Account.
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SECTION 4. VALUATION
4.01 PARTICIPANT'S ACCUMULATION VALUE
A Participant's General Account Accumulation Value as of any date is the
sum of the following transactions made on behalf of a Participant: all
purchase payments allocated to the General Account plus interest,
dividends and transfers into the General Account, less any transfers out
of the General Account, any previous withdrawals and any applicable
deferred sales charge.
A Participant's Separate Account Accumulation Value is the sum of the
Participant's interest in each sub-account of the Separate Account which
is equal to the number of accumulation units held on behalf of the
Participant multiplied by the accumulation unit value for the appropriate
sub-account of the Separate Account.
4.02 ACCUMULATION UNIT VALUE
The accumulation unit value for each sub-account of the Separate Account
will be valued on each Valuation Date according to the net investment
experience of that sub-account. The value of an accumulation unit for
each sub-account was originally set at $1.00 on the first Valuation
Date. For any subsequent Valuation Date, its value is equal to its
value on the preceding Valuation Date multiplied by the net investment
factor for that sub-account for the valuation period ending on the
subsequent Valuation Date.
4.03 NET INVESTMENT FACTOR
The net investment factor for a valuation period is the gross investment
rate for such valuation period, less a deduction for the charges
associated with the Separate Account at a rate of no more than 1.65% per
annum.
The gross investment rate is equal to:
(a) the net asset value per share of a Fund share held in the sub-
account of the Separate Account determined at the end of the current
valuation period; plus
(b) the per-share amount of any dividend or capital gain distributions
by the Fund if the "ex-dividend" date occurs during the current
valuation period; divided by
(c) the net asset value per share of that Fund share held in the sub-
account determined at the end of the preceding valuation period.
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4.04 ANNUITY UNIT VALUE
The value of an annuity unit for a sub-account is determined monthly as
of the first day of the month. The value is equal to the annuity unit
value for that sub-account as of the first day of the preceding month
multiplied by the product of (a) .996338; and (b) a sub-account
investment factor. This investment factor is the accumulation unit value
for that sub-account on the Valuation Date next following the fourteenth
day of the preceding month divided by the accumulation unit value for
that sub-account on the Valuation Date next following the fourteenth day
of the second preceding month. For any date other than the first of a
month, the annuity unit value is that value on the first day of the next
month.
4.05 GENERAL ACCOUNT INTEREST
Interest will be credited to amounts allocated to the General Account at
such interest rate as may be declared from time to time by Minnesota
Mutual for this contract, in accordance with its usual practices for
contracts of this class. Interest will be credited at a rate of no less
than 3% per year, compounded annually.
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SECTION 5. WITHDRAWALS AND TRANSFERS
5.01 WITHDRAWAL PROVISIONS
Withdrawals may be made only for the purpose of:
(a) providing Plan benefits in accordance with Section 7,
(b) transfers to the Contract Owner in accordance with Section 8.03,
(c) transfers to Plan options available to Participants other than those
provided for in this Contract, or
(d) other withdrawals as allowed in the Plan and mutually agreed upon by
Minnesota Mutual and the Contract Owner.
The amount available for withdrawal shall be the Participant Accumulation
Value less any applicable deferred sales charge. If withdrawals during
the first calendar year of participation are equal to or less than 10% of
the total purchase payments made on behalf of the Participant, the charge
will not apply. In subsequent calendar years there will be no charge for
withdrawals equal to or less than 10% of the prior calendar year
Participant Accumulation Value. If a Participant's withdrawals in any
calendar year exceed this amount, the deferred sales charge will apply to
the excess.
Withdrawal amounts shall be deducted from the Participant's General
Account Accumulation Value on a first in, first out (FIFO) basis. Unless
otherwise instructed by the Participant or the Contract Owner, withdrawal
amounts will be made from a Participant's interest in the General Account
and each sub-account of the Separate Account in the same proportion that
the value of that Participant's interest in the General Account and any
sub-account bears to that Participant's total Accumulation Value.
Withdrawals are made upon written request from the Participant or
Contract Owner to Minnesota Mutual. The withdrawal date will be the
Valuation Date coincident with or next following the receipt of the
request by Minnesota Mutual at its Home Office.
From the General Account, withdrawals as described in (c) above, in
combination with transfers as described in 5.06, will be limited to the
greater of $1,000 or 10% of the Participant's General Account
Accumulation Value in each calendar year. From the sub-accounts of the
Separate Account, withdrawals as described in (c) above will not be
limited as to amount. Such withdrawals may be taken once per year or in
12 monthly installments.
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5.02 WITHDRAWAL RESTRICTIONS
Contracts issued to fund 403(b) tax sheltered annuity programs must
restrict certain withdrawals. Any purchase payment pursuant to a salary
reduction agreement between a Participant and his or her employer may be
paid only when:
(a) the Participant attains age 59 1/2;
(b) when the Participant separates from service from his or her
employer;
(c) when the Participant dies;
(d) when the Participant becomes disabled; or
(e) if the Participant qualifies for a hardship withdrawal.
5.03 HARDSHIP WITHDRAWAL PROVISIONS
A hardship withdrawal is one that is made on account of an immediate and
heavy financial need and a withdrawal is necessary to satisfy that
financial need. The Participant may be required to provide Minnesota
Mutual with information to substantiate that the hardship is one
described in the Code and its regulations.
A Participant may withdraw only the amount represented by his or her
salary reduction contributions. Any earnings attributable to such
contributions may not be withdrawn.
5.04 TAX PENALTIES
If a withdrawal or surrender occurs before the annuitant is age 59 1/2,
the annuitant may be subject to tax penalties. These penalties are
imposed under the Code. The annuitant may not be subject to tax penalties
on amounts received before age 59 1/2 if:
(a) the annuitant becomes disabled as defined by the Code;
(b) the amount received is in excess of the allowed elective deferral
and returned to the annuitant before the required tax return filing
date for that year, together with any earned interest; or
(c) if the entire amount in the contract is received and reinvested in a
similar plan entitled to similar tax treatment.
Minnesota Mutual will not be liable for any tax penalties on amounts
received or paid by us under this contract. Minnesota Mutual also
retains the right to treat any transaction treated by law as a contract
distribution as a complete contract surrender.
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5.05 TRANSFER OF PARTICIPANT'S ACCUMULATION VALUE
Transfers of a Participant's Accumulation Value may be made among the
Participant's General Account and the sub-accounts of the Separate
Account. Such a transfer is made upon the written request from the
Participant or Contract Owner to Minnesota Mutual. The transfer date
will be the Valuation Date coincident with or next following the receipt
of the transfer request by Minnesota Mutual at its Home Office.
5.06 TRANSFERS OF THE GENERAL ACCOUNT
All transfers of General Account Accumulation Value of the Participant's
Account shall be on a first in, first out (FIFO) basis. In each calendar
year, amounts withdrawn by Participants for transfer to other Plan
options, as described in 5.01(c), combined with amounts transferred from
the Participant's General Account Accumulation Value to the sub-accounts
of the Separate Account, may not exceed the greater of $1,000 or 10% of
their General Account Accumulation Value. Transfers are permitted once
per year or in 12 monthly installments.
5.07 TRANSFERS FROM THE SEPARATE ACCOUNT
For transfers from the sub-accounts of the Separate Account, a number of
Accumulation Units will be surrendered such that the Accumulation Value
of the surrendered Accumulation Units equals the amount transferred.
Transfers between the sub-accounts of the Separate Account are unlimited
as to amount and frequency.
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SECTION 6. CONTRACT LOANS
6.01 LOAN PROVISIONS
Loans may be taken upon written request from the Participant to Minnesota
Mutual. Upon receipt of the loan request, Minnesota Mutual will send the
Participant a loan application and agreement. The loan application and
agreement must be executed by the Participant. The contract and the
Participant's Accumulation Value are the only security required for the
loan. Minnesota Mutual will charge interest on the loan in arrears.
The Participant must indicate the Separate Account sub-accounts that will
be transferred to the TSA Loan Account. If no instruction is received
from the Participant, transfers of amounts to the TSA Loan Account will
be made from amounts in each sub-account of the Separate Account in the
same proportion that the value of an amount in any sub-account bears to
the total Participant's Accumulation Value prior to the loan.
At the time a Participant requests a loan, the amount requested as a loan
plus the interest that will be charged during the first quarter that the
loan is outstanding, plus any applicable deferred sales charge, will be
transferred from the Participant's Separate Account Accumulation Value
into the General Account on the date the Participant's loan application
is approved. This TSA Loan Account will then be the source of the loan
and the succeeding loan transactions.
Failure to meet the requirements of the loan agreement will result in its
termination. Loan amounts will then be treated as distributions under
the contract. Treatment of a loan as a distribution will result in
taxable income under applicable tax rules. In addition, depending upon
the Participant's circumstances, it may result in income taxation, tax
penalties, and disqualification of the Participant's interest in the
contract as a tax-sheltered annuity. If there is a distribution, the
Participant's Accumulation Value will be reduced by the amount of the
outstanding loan principle, reduced by any interest due, and reduced by
any applicable deferred sales charge on that amount.
6.02 LOAN RESTRICTIONS
The minimum loan amount is $1,000.
The maximum loan amount is the lesser of:
(a) $50,000; or
(b) one-half of the Participant's Accumulation Value less any applicable
deferred sales charge or, if greater, the Participant's Accumulation
Value up to the amount of $10,000, less the amount of interest that
would be charged during the first quarter that such loan would be
outstanding and less any applicable deferred sales charge.
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In addition, loans are subject to the follow additional restrictions:
(a) Only one loan may be outstanding at any time,
(b) A period of at least three months is required between the repayment
of a loan and the application for a new loan,
(c) If there is an outstanding loan on the contract, then any
withdrawals will be limited to the Accumulation Value less the
outstanding loan principle, less any interest due, and less any
applicable deferred sales charge,
(d) A loan is not available if annuity payments have begun, and
(e) The TSA Loan Account portion of a Participant's contract in the
General Account may not be transferred to the Separate Account when
the loan is outstanding, provided, however, that a single transfer
from the TSA Loan Account to the Separate Account will be allowed
each calendar year. The amount remaining in the TSA Loan Account
must be equal to the amount of the loan outstanding plus the amount
of interest that would be charged during the next calendar quarter
on such loan plus any applicable deferred sales charge.
6.03 LOAN INTEREST RATE
The loan interest rate is variable and will be set quarterly on the first
day of each calendar quarter. It will apply to the outstanding loan
principal in that calendar quarter. This rate will not exceed the
greater of the "published monthly average" for the calendar month ending
two months before the beginning of the calendar quarter, or the "interest
rate in effect on the contract" plus 1%. The "published monthly average"
means the Moody's Composite Average of Yields on Bonds as published by
the Moody's Investors Service. The "interest rate in effect on the
contract" is the interest rate credited on portions of the Accumulation
Value allocated to the General Account.
The interest rate credited to allocations of Accumulation Value to the
General Account will also be credited to the TSA loan account, which will
have the effect of reducing the effective interest rate to be paid on the
loan to the difference between the interest rate paid on the loan and
that credited on the TSA loan account. A loan will have a permanent
effect on the Participant's Accumulation Value. The effect could be
either positive or negative, depending upon whether the investment
results of the sub-accounts are greater or lesser than the interest rate
credited on the TSA loan account.
6.04 LOAN REPAYMENT
Repayment must be made over a period of five years or less. Repayment
must be made in substantially equal payments. The loan repayment
schedule will require the level
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amortization of the loan over the repayment period. Early repayment may
be made without penalty at any time.
As TSA loan amounts are repaid, those amounts are used to reduce the
loan. When the loan is repaid in full through early repayment or the
completion of the loan payments over the scheduled repayment period, then
the TSA Loan Account terminates, and the amounts remain in the General
Account. A Participant may reallocate these amounts among the General
Account and the sub-accounts of the Separate Account by exercising his or
her contract rights of transfer.
6.05 IMPACT OF WITHDRAWAL ON LOAN
If there is a loan and the total Participant's Accumulation Value is
withdrawn, the loan is due. If it is not repaid prior to the complete
withdrawal, the payment on withdrawal will be the Participant's
Accumulation Value less the outstanding loan principle, less any interest
due, and less any applicable deferred sales charges. In addition,
depending upon the Participant's circumstances, such a withdrawal may
result in income taxation, tax penalties, and disqualification of the
Participant's interest in the contract as a tax-sheltered annuity.
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SECTION 7. BENEFIT PROVISIONS
7.01 DEATH BENEFITS
In the event of the death of a Participant prior to the Annuity
Commencement Date, the beneficiary of that Participant will receive as a
death benefit the greater of: (a) the Participant's Accumulation Value,
determined as of the Valuation Date coincident with or next following the
date due proof of death is received by Minnesota Mutual at its Home
Office; or (b) the total of the Participant's purchase payments received
by Minnesota Mutual less any prior Participant withdrawals. The death
benefit will be paid in a single sum; or at the option of the beneficiary
the death benefit may be applied under Option 2, or Option 4 of the
Annuity Payment Options specified in Section 7.05, subject to the minimum
payment requirements of Section 7.04.
7.02 ANNUITY COMMENCEMENT DATE
The Contract Owner or the Participant shall notify Minnesota Mutual in
writing at its Home Office to begin Annuity Payments for a Participant,
specifying the date such Annuity Payments are to commence. Unless
otherwise permitted by the Plan, such date may be the first day of any
calendar month provided that it may not be earlier than 30 days following
the date such notice is given and provided further that it may not be
later than April 1st of the calendar year following the calendar year in
which the Participant attains age 70 1/2. In order to avoid tax
penalties, the Participant will have to meet certain minimum distribution
requirements.
7.03 ELECTION OF ANNUITY OPTION
The Contract Owner or the Participant may elect to have Annuity Payments
made under any of the Annuity Payment Options described in Section 7.05,
provided such election is received in writing by Minnesota Mutual at its
Home Office at least 30 days prior to the Annuity Commencement Date. If
no such election is received by Minnesota Mutual, Annuity Payments will
be made in accordance with Option 2A, a life income with a period certain
of 120 months.
7.04 APPLICATION OF ACCUMULATION VALUE
As of the Annuity Commencement Date, Minnesota Mutual shall apply the
Participant's Accumulation Value to provide Annuity Payments under the
Annuity Payment Option determined in accordance with Section 7.03;
provided, however, that the first payment under such Annuity Payment
Option must be at least $20.00 in amount. If such first payment would be
less than $20.00 in amount, the Participant's Accumulation Value will be
paid to the Participant in a lump sum as of his or her Annuity
Commencement Date, and the Participant shall thereafter have no further
rights under this contract. The requirement
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that the first payment be at least $20.00 shall be imposed separately for
the portion of the Annuity Payments payable as a Fixed Annuity and the
portion payable as a Variable Annuity under each of the sub-accounts of
the Separate Account.
7.05 ANNUITY PAYMENT OPTIONS
Option 1 - Life Annuity - An annuity payable during the lifetime of the
Annuitant and terminating with the last monthly payment preceding the
death of the Annuitant.
Option 2 - Life Annuity with a Period Certain of 120 months (Option 2A),
180 months (Option 2B), or 240 months (Option 2C) - An annuity payable
during the lifetime of the Annuitant, with the guarantee that if the
Annuitant dies before payments have been made for the Period Certain
elected, payments will continue to the beneficiary during the remainder
of such Period Certain. The beneficiary may elect to receive the
commuted value of the remaining guaranteed payments in a lump sum. The
value will be based on the then current dollar amount of one payment and
the same interest rate which served as a basis for the annuity.
Option 3 - Joint and Last Survivor Annuity - An annuity payable during
the joint lifetime of the Annuitant and a designated joint annuitant and
continuing thereafter during the remaining lifetime of the survivor.
Option 4 - Period Certain Annuity - An annuity payable for a Period
Certain of from 5 to 20 years, as elected. If the Annuitant dies before
payments have been made for the Period Certain elected, payments will
continue to the beneficiary during the remainder of such Period Certain.
The beneficiary may elect to receive the commuted value of the remaining
guaranteed payments in a lump sum. The value will be based on the then
current dollar amount of one payment and the same interest rate which
served as a basis for the annuity.
Payments under any of these Annuity Payment Options will be determined in
accordance with Section 7.07 for a Fixed Annuity and with Section 7.08
for a Variable Annuity. If, when Annuity Payments are elected, Minnesota
Mutual is using annuity purchase rates for this class of contract which
would result in larger Annuity Payments, they will be used instead of
those guaranteed in this contract.
Minnesota Mutual reserves the right to require proof satisfactory to it
of the age of a Annuitant and any joint annuitant prior to making the
first payment under any Annuity Payment Option. Once Annuity Payments
begin, the Annuity Payment Option may not be changed.
7.06 ELECTION OF ANNUITY FORM
Unless Minnesota Mutual shall be notified in writing to the contrary by
the Contract Owner or Participant at least 30 days prior to the Annuity
Commencement Date, General Account
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Accumulation Value will be applied to provide a Fixed Annuity and
Separate Account accumulation units will be applied to provide a Variable
Annuity.
7.07 DETERMINATION OF FIXED ANNUITY PAYMENT
The tables contained in this contract are used to determine the amount of
guaranteed fixed monthly Annuity Payments. They show the dollar amount
of the monthly payment which can be purchased with each $1,000 of
Participant Accumulation Value, after deduction of any applicable premium
taxes not previously deducted under the provisions of Section 2.03 and a
fee of $200. Amounts shown in the tables are based on the Progressive
Annuity Table with interest at the rate of 3.0% per annum, assuming
births in the year 1900, with an age setback of six years. The amount of
each payment depends upon the adjusted age of the Participant and any
joint annuitant. The adjusted age is determined from the actual age
nearest birthday at the time the first payment is due in the following
manner:
Calendar Year
of Birth Adjusted Age is Equal to -
-------------- ------------------
1900-1919 Actual Age
1920-1939 Actual Age Minus 1
1940-1959 Actual Age Minus 2
1960-1979 Actual Age Minus 3
1980 and Later Actual Age Minus 4
GUARANTEED MINIMUM DOLLAR AMOUNT OF FIXED MONTHLY PAYMENT WHICH IS PURCHASED
WITH EACH $1,000 OF VALUE APPLIED
Adjusted Age
of Annuitant Single Life Annuities
------------ -----------------------------------------------
Option 1 Option 2A Option 2B Option 2C
-------- --------- --------- ---------
50 $3.99 $3.97 $3.94 $3.89
51 4.05 4.03 4.00 3.95
52 4.13 4.10 4.06 4.00
53 4.20 4.17 4.13 4.06
54 4.28 4.25 4.20 4.12
55 4.37 4.33 4.27 4.18
56 4.46 4.41 4.35 4.25
57 4.55 4.50 4.42 4.31
58 4.65 4.59 4.51 4.38
59 4.76 4.69 4.59 4.44
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60 4.87 4.79 4.68 4.51
61 4.99 4.90 4.77 4.58
62 5.12 5.01 4.86 4.65
63 5.26 5.13 4.96 4.72
64 5.40 5.25 5.06 4.79
65 5.56 5.39 5.16 4.85
66 5.72 5.52 5.27 4.92
67 5.90 5.67 5.37 4.99
68 6.09 5.82 5.48 5.05
69 6.29 5.97 5.59 5.11
70 6.51 6.13 5.69 5.16
71 6.74 6.30 5.80 5.21
72 6.99 6.48 5.90 5.26
73 7.26 6.66 6.01 5.31
74 7.54 6.84 6.11 5.34
75 7.86 7.03 6.20 5.38
Option 3 -- Joint and Last Survivor Life Annuity
<TABLE>
<CAPTION>
Adjusted Age of
Joint Annuitant* Adjusted Age of Annuitant*
- ---------------- ------------------------------------------------------------------
55 60 62 65 67 70 75
----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
54 $3.80 $3.93 $3.98 $4.04 $4.08 $4.13 $4.19
59 3.95 4.14 4.21 4.32 4.38 4.46 4.57
61 4.00 4.22 4.31 4.43 4.50 4.61 4.75
64 4.07 4.34 4.44 4.60 4.70 4.83 5.03
66 4.12 4.41 4.53 4.71 4.82 4.99 5.23
69 4.17 4.50 4.65 4.86 5.01 5.23 5.56
74 4.25 4.64 4.81 5.09 5.29 5.60 6.11
</TABLE>
* Dollar amounts of the monthly payments for ages not shown in this table will
be calculated on the same basis as those shown and may be obtained from us upon
request.
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Option 4 -- Fixed Period Annuity
Fixed Period Dollar Amount Fixed Period Dollar Amount
(Years) of Payment (Years) of Payment
------- ---------- ------- ----------
5 $17.91 13 $7.71
6 15.14 14 7.26
7 13.16 15 6.87
8 11.68 16 6.53
9 10.53 17 6.23
10 9.61 18 5.96
11 8.86 19 5.73
12 8.24 20 5.51
7.08 DETERMINATION OF VARIABLE ANNUITY PAYMENTS
The dollar amount of the first monthly variable Annuity Payment is
determined by applying the Participant's Separate Account Accumulation
Value (after deduction of any premium taxes not previously deducted) to a
rate per $1,000 which is based on the Progressive Annuity Table with
interest at the rate of 4.5% per annum, assuming births in the year 1900,
with an age setback of six years. The amount of the first payment
depends upon the annuity payment option selected and the adjusted age of
the annuitant and any joint annuitant. The adjusted ages shall be
determined using the same table as illustrated in Section 7.06 for
determination of fixed Annuity Payments. A number of annuity units is
then determined by dividing this dollar amount by the then current
annuity unit value. Thereafter, the number of annuity units remains
unchanged during the period of Annuity Payments. This determination is
made separately for each sub-account of the Separate Account. The number
of annuity units is based upon the available value in each sub-account as
of the date Annuity Payments are to begin.
The dollar amount of the second and later variable Annuity Payments is
equal to the number of annuity units determined for each sub-account
multiplied by the annuity unit value for that sub-account as of the due
date of the payment. This amount may increase or decrease from month to
month.
The dollar amounts determined for each sub-account will be aggregated for
purposes of making payment.
7.09 TRANSFERS DURING THE ANNUITY PERIOD
Participant amounts held as annuity reserves may be transferred among the
Variable Annuity sub-accounts during the annuity period. The change must
be made by written request. The annuitant and joint annuitant, if any,
must make such an election.
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A transfer will be made on the basis of annuity unit values. The
transfer will be effective for future Annuity Payments and will occur the
middle of the month preceding the next Annuity Payment affected by the
transfer request. The number of annuity units from the sub-account being
transferred will be converted to a number of annuity units in a new sub-
account. The Annuity Payment option will not change. The first Annuity
Payment after the transfer will be for the same amount as it would have
been without the transfer. The number of annuity units will be set at
that number of units which are needed to pay that same amount on the
transfer date.
Transfers of annuity reserves from any sub-account must be at least equal
to: 1) $5,000; or 2) the entire amount of reserve remaining in that sub-
account. In addition, Annuity Payments must have been in effect for a
period of 12 months before a change may be made. Such transfers are
allowed only once every 12 months. The written request for transfer must
be received by Minnesota Mutual at least 30 days in advance of the due
date of the Annuity Payment subject to the transfer.
Amounts held as reserves to pay a Variable Annuity may also be
transferred to provide a Fixed Annuity from the General Account, subject
to the dollar amount and frequency limitations described above. The
amount transferred will be applied to provide a Fixed Annuity amount of
the same annuity option based upon the adjusted age of the annuitant and
any joint annuitant at the time of the transfer. Once fixed Annuity
Payments begin, the annuity reserves may not be transferred back to
provide a Variable Annuity.
7.10 LUMP SUM SETTLEMENT
By written notice to Minnesota Mutual by the Contract Owner at least 30
days prior to the Annuity Commencement Date, a lump sum settlement of a
Participant's Accumulation Value may be elected in lieu of the
application of such value to provide Annuity Payments for the Participant
under an Annuity Payment Option. After such lump sum settlement has been
made, the Participant shall have no further rights under this contract.
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SECTION 8. SUSPENSION AND TERMINATION
8.01 SUSPENSION OF PURCHASE PAYMENTS
The Contract Owner may suspend purchase payments at any time by giving 60
days written notice to Minnesota Mutual of such suspension. The
suspension may be with respect to all Participants, or only with respect
to those Participants in such class or classes as are specified by the
Contract Owner.
Except as to those Participants for whom purchase payments are suspended,
the contract shall continue to operate during a period of suspension as
if such suspension had not occurred. Purchase payments may be resumed at
any time upon written notice to Minnesota Mutual by the Contract Owner.
8.02 TERMINATION OF CONTRACT
The contract may be terminated by the Contract Owner as of a date
specified in a written notice to Minnesota Mutual, provided that the date
of termination specified by the Contract Owner may not be earlier than
the day Minnesota Mutual receives the notice at its home office and,
provided further, if no date is specified, the date of termination shall
be the Valuation Date next following the date Minnesota Mutual receives
the written notice at its home office.
The contract may be terminated by Minnesota Mutual as of a date specified
in a written notice to the Contract Owner in the event that:
(a) The Plan is no longer deemed to be a "qualified plan" under Section
403(b) of the Internal Revenue Code or other section of the Code
allowing similar tax treatment; or
(b) The Plan is terminated; or
(c) Minnesota Mutual determines that because of a change in the Plan or
in the benefits to be provided thereunder, it is necessary to amend
or modify this contract, and the Contract Owner does not assent to
the amendment or modification.
8.03 EFFECT OF TERMINATION
After termination, no further purchase payments will be accepted by
Minnesota Mutual under this contract.
Termination of the contract will have no effect on Participants as to
whom Annuity Payments have commenced. As to other Participants,
Participant Accumulation Values shall continue to be maintained under the
contract until: (a) withdrawn to provide benefits
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under the conditions of Section 5.01; (b) applied to provide Annuity
Payments; or (c) transferred to the Contract Owner as provided in Section
8.04 or Section 8.05. While Participant Accumulation Values are
maintained under this contract, the withdrawal and transfer provisions
will continue to apply on the same basis as prior to termination.
If the Participant Accumulation Values are to be transferred to the
Contract Owner, Minnesota Mutual shall determine a liquidation date which
shall be a Valuation Date not later than 180 days after the date of
termination.
8.04 LUMP SUM TERMINATION VALUE
The lump sum termination value will be equal to the sum of all
Participant's Separate Account Accumulation Values plus the lesser of:
a) The sum of all Participant's General Account Accumulation Values; or
b) The sum of all Participant's General Account Market Values.
A market value will be determined in aggregate for Participant General
Account Accumulation Values based on the following formula:
Market value = (Participant General Account x (1 + G)to the power 6
---------------------------------
Accumulation Value) (1 + C + .0025) to the power of 6
where G = the greater of:
(a) the weighted interest crediting rate in effect on all Participant
General Account Accumulation Values under this contract as of the
liquidation date; or
(b) the weighted interest crediting rate in effect on all Participant
General Account Accumulation Values at any time during the six month
period preceding the liquidation date.
C = the lesser of:
(a) the current interest crediting rate in effect for new purchase
payments to this contract as of the liquidation date; or
(b) the interest crediting rate in effect for new purchase payments to
this contract as of six months prior to the liquidation date,
adjusted by the interest yield on a 10 year U.S. Treasury note as of
the liquidation date, less the yield six months prior to the
liquidation date.
However, Minnesota Mutual guarantees that the Participant General
Account Market Value will not be less than the sum of all
allocations made to the General Account by or on behalf of each
Participant, accumulated at 3% per annum, less any Participant
withdrawals, any
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<PAGE>
applicable deferred sales charge and less any transfers of General
Account accumulation values to the Group Variable Annuity Account.
Within seven days after the termination of the contract, Minnesota Mutual
will make payment to the Contract Owner of the Separate Account
Accumulation Value held on behalf of each Participant. However,
Minnesota Mutual reserves the right to defer payment for any period
during which the New York Stock Exchange is closed for trading or when
the Securities and Exchange Commission has determined that a state of
emergency exists which may make such determination and payment
impractical.
Minnesota Mutual will make payment to the Contract Owner of the General
Account portion of the lump sum termination value on the liquidation
date.
8.05 INSTALLMENT TERMINATION VALUE
Under the installment method of liquidation, Minnesota Mutual will make
payment to the Contract Owner of the Separate Account Accumulation Value
held on behalf of each Participant within seven days following the
termination of the contract. However, Minnesota Mutual reserves the
right to defer payment for any period during which the New York Stock
Exchange is closed for trading or when the Securities and Exchange
Commission has determined that a state of emergency exists which may make
such determination and payment impractical.
The General Account portion of each Participant's Accumulation Value will
be paid to the Contract Owner in substantially equal installments over a
five year period. The Contract Owner may elect annual or quarterly
installments with the first installment due as of the liquidation date
and the last installment due at the end of the five year period. The
amount of each installment will be determined by dividing the total
Participant General Account Accumulation Values as of each installment
date by the number of remaining installments including the installment
which is being calculated. During the installment period, Participant
General Account Accumulation Values will continue to earn interest at a
rate determined by using the same methodology for determining such rate
in effect immediately prior to termination. The gross yield on assets,
before reduction for expense margin, assumed in employing the methodology
will be determined in the same way as immediately prior to termination.
This rate shall not be less than the hypothetical yield for a portfolio
of five-year treasuries would be under the same historical cash flow for
the General Account. The expense margin assumed in employing the
methodology will be no greater than the expense margin used immediately
prior to termination plus .25%.
8.06 FINAL TERMINATION
This contract shall finally terminate when each Participant's
Accumulation Value is reduced to zero and Minnesota Mutual shall have
completed all payments due hereunder.
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<PAGE>
SECTION 9. GENERAL PROVISIONS
9.01 CONTRACT
This contract is delivered in, and shall be construed according to the
laws of the jurisdiction specified on Page 1 hereof. With respect to all
transactions regarding this contract, except as may be otherwise
specifically provided, Minnesota Mutual may deal with the Contract Owner
on the basis that the Contract Owner has full ownership and control of
the contract. No obligation under the Plan is assumed by Minnesota
Mutual, nor shall the Plan or any amendment thereto be construed to amend
or modify this contract in any way except with the express written
consent of Minnesota Mutual.
9.02 MODIFICATION OF CONTRACT
This contract may be modified at any time by written agreement between
Minnesota Mutual and the Contract Owner. However, no such modification
will adversely affect the rights of any Participant unless the
modification is made to comply with a law or government regulation.
No person except the President, a Vice President, the Secretary, or an
Assistant Secretary of Minnesota Mutual has authority on behalf of
Minnesota Mutual to modify the contract or to waive any requirement of
the contract. Minnesota Mutual shall not be bound by any promise or
representation made by or to any agent or person other than as above.
9.03 BENEFICIARY
A Participant, or Annuitant where Annuity Payments have commenced, may
designate a beneficiary to receive any amount which may become payable to
such beneficiary under the terms of the Plan. The designation may be
made or changed by the Participant or Annuitant at any time during his or
her lifetime by filing satisfactory written notice with Minnesota Mutual
at its Home Office. The new designation shall take effect only upon
being recorded by Minnesota Mutual at its Home Office. When so recorded,
even if the Participant or Annuitant is not then living, it shall take
effect as of the date the notice was signed, subject to any payment made
by Minnesota Mutual before recording the change.
The interest of any beneficiary who dies before the Participant or
Annuitant shall terminate at the death of that beneficiary. If the
interest of all designated beneficiaries has terminated, any proceeds
payable at the Participant's or Annuitant's death shall be paid to the
Participant's or Annuitant's estate.
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<PAGE>
9.04 PARTICIPATION IN DIVISIBLE SURPLUS
This is a participating contract. The portion, if any, of the divisible
surplus of Minnesota Mutual accruing upon this contract shall be
determined annually by Minnesota Mutual and shall be credited to the
contract on such basis as is determined by Minnesota Mutual.
9.05 CERTIFICATES AND STATEMENTS
Minnesota Mutual shall make available to each Participant a certificate
which describes the Participant's rights and privileges under this
contract. Minnesota Mutual shall issue to each Participant or Annuitant
as to whom Annuity Payments are provided hereunder an individual
certificate setting forth the amount and terms of such Annuity Payments.
Before annuity payments have commenced, at least once in each Contract
Year, Minnesota Mutual will furnish to the Participant a statement of
each Participant's Individual Account, the current accumulation unit
value, and each Participant's Accumulation Value. Such statement shall
be as of a date within two months of the mailing of the statement.
9.06 MISSTATEMENT OF AGE
If a person's age has been misstated, the amount payable under this
contract as an annuity will be that amount which would have been paid
based upon that person's correct age. In the case of an overpayment,
Minnesota Mutual may either deduct the required amount from that person's
future annuity payments under this contract; or, require the person to
pay Minnesota Mutual in cash; or both may be done until Minnesota Mutual
has been fully repaid. In the case of an underpayment, Minnesota Mutual
will pay the required amount with the next payment.
9.07 ASSIGNMENT
This contract may not be assigned, sold, transferred, discounted or
pledged by the Participant as collateral for a loan or as security for
the performance of an obligation or for any other purpose. In addition,
any Accumulation Value attributable to this contract is non-forfeitable.
To the maximum extent permitted by law, the Participant's Accumulation
Value and any benefits payable under this contract shall be exempt from
the claims of creditors of the Participant.
9.08 CONTRACT VALUES
Amounts payable at death, withdrawal benefits, Accumulation Values and
the annuity benefit described in this contract are not less than the
minimum benefits required by any statute of the state in which this
contract is delivered.
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9.09 ANNUITY RESERVES
Reserves held by Minnesota Mutual for Annuity Payments under this
contract shall not be less than those reserves required by the law in the
state in which this contract is delivered.
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[Minnesota Mutual Letterhead]
CONTRACT OWNER:
CONTRACT NUMBER:
PARTICIPANT:
FILE NUMBER:
ANNUITY COMMENCEMENT DATE:
ISSUE DATE:
We have issued a group annuity contract to the Contract Owner. This certificate
is evidence of your coverage under the group annuity contract. You became a
participant under that contract when we first received purchase payments on your
behalf.
In this certificate, we will summarize the principal provisions of the group
annuity contract. This certificate is not an insurance contract. It does not
amend, extend or change the coverage under the group annuity contract.
All rights and benefits are determined solely by that contract and its terms.
You may examine the group annuity contract at a place designated by the Contract
Owner.
Secretary President
Registrar
GROUP DEFERRED VARIABLE ANNUITY CERTIFICATE
ALLOCATED
PROVISION FOR FIXED AND VARIABLE ANNUITY PAYMENTS
ALL PAYMENTS AND VALUES PROVIDED BY THIS CERTIFICATE, WHEN
BASED ON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT,
ARE VARIABLE AND NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT
95-9333 Minnesota Mutual 1
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DEFINITIONS
- ------------------------------
When we use the following words, this is what we mean:
THE PARTICIPANT, YOU, YOUR
The person named as the proposed participant in the application for
participation.
WE, OUR, US
The Minnesota Mutual Life Insurance Company.
ANNUITANT
The person who may receive lifetime benefits under this certificate. Joint
annuitants will be considered a single entity.
BENEFICIARY
The person, persons or entity designated to receive death benefits payable under
this certificate.
PARTICIPATION YEAR
A period of one year starting on the first day of the month in which we first
receive purchase payments on your behalf, or on an anniversary of that date.
PURCHASE PAYMENTS
Amounts paid to us for credit to your participant account, as consideration for
the benefits provided by the group annuity contract.
TAX SHELTERED ANNUITY (TSA)
A program of retirement savings as described in Section 403(b) of the Internal
Revenue Code or other provision of the code providing for similar tax treatment.
PLAN
A 403(b) deferred compensation plan established by the Contract Owner and funded
by the contract under which this certificate is issued. No obligation under the
plan is assumed by us, nor shall the plan or any amendment thereto be construed
to amend or modify the contract in any way except with our express written
consent.
FUND
The mutual fund or separate investment portfolio within a series mutual fund
which is designated as an eligible investment for the separate account.
VALUATION DATE
Any date on which a fund is valued.
VALUATION PERIOD
The period between successive valuation dates measured from the time of one
determination to the next.
ACCUMULATION VALUE
The sum of your values in the general account and/or separate account. In the
general account, this is the general account accumulation value. In the
separate account, this is the separate account accumulation value. The separate
account portion is composed of your interest in one or more sub-accounts of the
separate account. Your interest in the sub-
95-9333 Minnesota Mutual 2
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accounts shall be valued separately. The total of those values will be the
separate account accumulation value.
WITHDRAWAL VALUE
The value of your participant account which is available for withdrawal. This
value equals the accumulation value, subject to the deferred sales charge during
the first six participation years. However, if withdrawals during the first
calendar year are equal to or less than 10% of the purchase payments made during
the first year of participation and, if in subsequent calendar years they are
equal to or less than 10% of the accumulation value at the end of the previous
calendar year, the charge will not apply. If withdrawals in any calendar year
exceed that amount, the deferred sales charge will apply to the excess.
GENERAL ACCOUNT
All assets of Minnesota Mutual other than those in the separate accounts
established by Minnesota Mutual.
SEPARATE ACCOUNT
A separate investment account titled Minnesota Mutual Group Variable Annuity
Account. This separate account was established by us for this class of contract
under Minnesota law. The separate account is composed of several sub-accounts.
The assets of the separate account are ours. Those assets are not subject to
claims arising out of any other business of ours.
WRITTEN REQUEST
A request in writing signed by you. We may also require that this certificate
be sent in with your written request.
ANNUITY PAYMENTS
Payments made at regular intervals to you or to any other payee. Annuity
payments will be due and payable only on the first day of a calendar month.
FIXED ANNUITY
An annuity payable from the general account, with equal payments which remain
fixed during the payment period.
VARIABLE ANNUITY
An annuity payable from the separate account with payments which increase or
decrease in amount to reflect the investment experience of the separate account
and its sub-accounts.
AGE
Age of a person at nearest birthday.
TSA LOAN ACCOUNT
A portion of our general account, created for accounting purposes only, to which
contract amounts are transferred as security for an outstanding loan under a
tax-sheltered annuity contract.
PURCHASE PAYMENTS
- ------------------------------
WHERE DO YOU MAKE PURCHASE PAYMENTS?
All purchase payments must be made to us, by the Contract Owner, at our home
office.
95-9333 Minnesota Mutual 3
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HOW OFTEN DO YOU MAKE PURCHASE PAYMENTS?
You may make purchase payments as agreed upon between you and the Contract
Owner.
MAY YOU STOP MAKING PURCHASE PAYMENTS?
Yes. You may stop making purchase payments at anytime. You may begin again at
anytime before annuity payments start unless you have taken a lump sum benefit
payment of your entire account.
WHAT DEDUCTIONS ARE MADE FROM PURCHASE PAYMENTS?
There are usually no deductions made from the purchase payments. However, we do
reserve the right to make a deduction from purchase payments for state premium
taxes, where applicable.
HOW ARE PURCHASE PAYMENTS ALLOCATED?
They are allocated either to the general account or to the separate account and
its sub-accounts. Initially, you indicate your allocation in the application.
Later, you may change your allocation for future purchase payments by giving us
written or telephone notice. Applications received without allocation
instructions will be treated as incomplete.
WHAT SEPARATE ACCOUNT OPTIONS ARE AVAILABLE?
The separate account is divided into several sub-accounts. Purchase payments
may be applied to one or more of the sub-accounts. We reserve the right to add,
combine or remove any sub-accounts of the separate account.
WHAT ARE THE INVESTMENTS OF THE SEPARATE ACCOUNT?
For each sub-account, there is a fund for the investment of that sub-account's
assets. Purchase payments are invested in the funds at their net asset value.
The net asset value per share for each fund is determined by adding the current
value of securities and all other assets held by such fund, subtracting
liabilities, and dividing the remainder by the number of shares outstanding.
If investment in a fund should no longer be possible or if we determine it
becomes inappropriate for contracts of this class, we may substitute another
fund. Substitution may be with respect to existing accumulation values, future
purchase payments and future annuity payments.
MAY WE MAKE CHANGES TO THE SEPARATE ACCOUNT?
Yes. We reserve the right to transfer assets of the separate account to another
separate account. The transfer will be of assets associated with this class of
contracts, as determined by us. If this type of transfer is made, the term
"separate account", as used in this contract, shall then mean the separate
account to which the assets were transferred.
We reserve the right, when permitted by law, to:
(a) de-register the separate account under the Investment Company Act of 1940;
(b) restrict or eliminate voting rights of contract owners or other persons who
have voting rights as to the separate account; and
95-9333 Minnesota Mutual 4
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(c) combine the separate account with one or more other separate accounts.
ARE PURCHASE PAYMENTS LIMITED?
Yes. Where the annuitant has a tax sheltered annuity, purchase payments may be
limited. Elective deferrals which are purchase payments made by salary
reduction are limited to: (a) $9,500; or (b) an indexed amount, if greater.
A special increased limit in the case of an annuitant who has completed 15 years
of service with an educational organization, a hospital, a home health service
organization, a church, a convention or association of churches, or a health and
welfare service agency may be available. The limit for any one year is
increased by the lesser of:
(a) $3,000;
(b) $15,000 reduced by amounts already excluded for prior taxable years by
reason of this special exception; or
(c) the excess of $5,000 multiplied by the number of years of service the
annuitant has with the employer less all prior elective deferrals.
The amount of salary reduction excludable from an annuitant's gross income may
actually be less than the amount permitted under this limit on elective
deferrals. This may be true if the annuitant's exclusion allowance described in
Section 403(b)(2) of the Code, or the overall limit as described in Section
415(c) of the Code is less.
CONTRACT CHARGES
- ------------------------------
ARE THERE CHARGES UNDER THIS CONTRACT?
Yes. There may be a deferred sales charge. Also, there are certain charges
which are made directly to the separate account.
WHAT IS THE DEFERRED SALES CHARGE?
The deferred sales charge is the charge made on withdrawals during your first
six participation years. The amount withdrawn plus any deferred sales charge is
deducted from the accumulation value. In the separate account, accumulation
units will be canceled of a value equal to the charge and the withdrawal.
WHAT IS THE AMOUNT OF THE DEFERRED SALES CHARGE?
The charge is indicated in the table shown below. These percentages decrease
uniformly by .083% for each of the first 72 months of participation.
<TABLE>
<CAPTION>
<S> <C>
End of
Participation Year Charge
- ------------------ ------
(Participation Date) 6.0%
1 5.0%
2 4.0%
3 3.0%
4 2.0%
5 1.0%
6 0%
</TABLE>
In no event will the amount of deferred sales charge exceed 9% of the total
purchase payments made on your behalf.
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WHAT CHARGES ARE ASSOCIATED WITH THE SEPARATE ACCOUNT?
There are three charges associated with the separate account. They are the
mortality risk charge, the expense risk charge and the administrative charge.
These charges are deducted on each valuation date from the assets of the
separate account. On an annual basis, they may be as much as 1.65% of the net
asset value of the separate account.
WHAT IS THE MORTALITY RISK CHARGE?
This is a charge to compensate us for the mortality guarantees we make under the
contract. Actual mortality results incurred by us shall not adversely affect
any payments or values under this contract. On an annual basis, it shall not
exceed .60% of the net asset value of the separate account.
WHAT IS THE EXPENSE RISK CHARGE?
This charge compensates us for the guarantee that the deductions provided in
this contract will be sufficient to cover our actual expenses. Actual expense
results incurred by us shall not adversely affect any payments or values under
this contract. On an annual basis, it shall not exceed .65% of the net asset
value of the separate account.
WHAT IS THE ADMINISTRATIVE CHARGE?
The administrative charge is to compensate us for the administrative expenses
incurred by us. On an annual basis, it shall not exceed .40% of the net asset
value of the separate account.
VALUATION
- ------------------------------
HOW IS YOUR ACCUMULATION VALUE DETERMINED?
Your accumulation value is determined separately for the general account and the
separate account. The separate account value will include all sub-accounts of
the separate account.
For the general account, it is the sum of purchase payments allocated to the
general account on your behalf plus interest, dividends and transfers into the
general account, less any transfers out of the general account, the deferred
sales charge and any previous withdrawals.
For each sub-account of the separate account, it is equal to the number of
accumulation units held on your behalf multiplied by the accumulation unit
value.
WHAT IS AN ACCUMULATION UNIT AND HOW IS ITS VALUE DETERMINED?
An accumulation unit is a measure of your interest in each sub-account of the
separate account. The number of accumulation units credited with respect to
each purchase payment is determined by dividing the portion of the purchase
payment allocated to each sub-account by the then current accumulation unit
value for that sub-account. This determination is made as of the valuation date
coincident with or next following the date on which we receive your purchase
payment at our home office. Once determined, the number of accumulation units
will not be affected by changes in the accumulation unit value. However, the
total number of accumulation units will be affected by future contract
transactions. In addition, the units of each sub-
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account will be increased by subsequent purchase payments and transfers to
that sub-account. The units of each sub-account will be decreased by
transfers or withdrawals from that sub-account and any applicable deferred
sales charge.
The accumulation unit value will increase or decrease on each valuation date.
The amount of any increase or decrease will depend on the net investment
experience of the sub-account of the separate account. The value of an
accumulation unit for each sub-account was originally set at $1.00 on the first
valuation date. For any subsequent valuation date, its value is equal to its
value on the preceding valuation date multiplied by the net investment factor
for that sub-account for the valuation period ending on the subsequent valuation
date.
WHAT IS THE NET INVESTMENT FACTOR FOR EACH SUB-ACCOUNT?
The net investment factor for a valuation period is the gross investment rate
for such valuation period, less a deduction for the charges associated with the
separate account at a rate of no more than 1.65% per annum.
The gross investment rate is equal to:
(a) the net asset value per share of a fund share held in the sub-account of
the separate account determined at the end of the current valuation period;
plus
(b) the per-share amount of any dividend or capital gain distributions by the
fund if the "ex-dividend" date occurs during the current valuation period;
divided by
(c) the net asset value per share of that fund share held in the sub-account
determined at the end of the preceding valuation period.
HOW IS THE ANNUITY UNIT VALUE DETERMINED?
The value of an annuity unit for a sub-account is determined monthly as of the
first day of the month. The value is equal to the annuity unit value for that
sub-account as of the first day of the preceding month multiplied by the product
of (a) .996338; and (b) the sub-account investment factor. This investment
factor is the accumulation unit value for that sub-account on the valuation date
next following the fourteenth day of the preceding month divided by the
accumulation unit value for that sub-account on the valuation date next
following the fourteenth day of the second preceding month. For any date other
than the first of a month, the annuity unit value is that value on the first day
of the next month.
WHAT INTEREST IS CREDITED ON THE GENERAL ACCOUNT?
Interest is credited on the general account accumulation value. Interest is
credited at a rate of at least 3% per year, compounded annually. As conditions
permit, we will credit additional amounts of interest to the general account
accumulation values.
WITHDRAWAL BENEFITS
- ------------------------------
MAY I WITHDRAW FUNDS FROM MY ACCOUNT?
Yes. However, withdrawals may be made only for the purpose of providing benefit
payments in accordance with the provisions of the plan and contract; or such
other circumstances as may be agreed to by us and the contract owner. All
withdrawals will be on a first in, first out (FIFO) basis.
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ARE THERE RESTRICTIONS ON WHEN WITHDRAWALS FROM THIS CONTRACT MAY BE MADE?
Contracts issued to fund 403(b) tax sheltered annuity programs must restrict
certain withdrawals. Any purchase payment pursuant to a salary reduction
agreement between you and your employer may be paid only when:
(a) you attain age 59 1/2;
(b) when you separate from service from your employer;
(c) when you die;
(d) when you become disabled; or
(e) if you qualify for a hardship withdrawal.
WHAT IS MEANT BY HARDSHIP WITHDRAWAL?
A hardship withdrawal is one that is made on account of an immediate and heavy
financial need and a withdrawal is necessary to satisfy that financial need.
You may be required to provide Minnesota Mutual with information to substantiate
that the hardship is one described in the Code and its regulations.
WHAT AMOUNT MAY BE WITHDRAWN UNDER THE HARDSHIP PROVISION?
You may withdraw only the amount represented by your salary reduction
contributions. Any earnings attributable to such contributions may not be
withdrawn.
MAY TAX PENALTIES APPLY?
Yes. If a withdrawal or surrender occurs before the annuitant is age 59 1/2,
the annuitant may be subject to tax penalties. These penalties are imposed
under the Code. The annuitant may not be subject to tax penalties on amounts
received before age 59 1/2 if:
(a) the annuitant becomes disabled as defined by the Code;
(b) the amount received is in excess of the allowed elective deferral and
returned to the annuitant before the required tax return filing date for
that year, together with any earned interest; or
(c) if the entire amount in the contract is received and reinvested in a
similar plan entitled to similar tax treatment.
Minnesota Mutual will not be liable for any tax penalties on amounts received or
paid by us under this contract. Minnesota Mutual also retains the right to
treat any transaction treated by law as a contract distribution as a complete
contract surrender.
MAY I WITHDRAW FUNDS FROM MY ACCOUNT FOR TRANSFER TO OTHER OPTIONS AVAILABLE IN
THE PLAN?
Yes. From the general account, such withdrawals, combined with any transfers to
the sub-accounts of the separate account, are limited to the greater of $1,000
or 10% of your general account accumulation value in each calendar year.
Amounts withdrawn from the sub-accounts of the separate account are not limited.
Such withdrawals may be taken once per year or in 12 monthly installments.
WHAT AMOUNT IS AVAILABLE FOR WITHDRAWAL?
The amount available for withdrawal shall be the accumulation value less any
applicable deferred sales charge. If withdrawals during the first calendar year
of participation year are equal to or less than 10% of the total purchase
payments made on your behalf, the charge shall
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not apply. In subsequent calendar years, there will be no charge for
withdrawals equal to or less than 10% of your prior calendar year end
accumulation value. If withdrawals in any calendar year exceed 10% of that
accumulation value, the deferred sales charge will apply to the excess.
TRANSFER PROVISIONS
- ------------------------------
WHAT IS A TRANSFER?
A transfer is a reallocation of funds within this contract. It may be between
the general account and the separate account or among the sub-accounts of the
separate account.
MAY YOU MAKE TRANSFERS OF AMOUNTS UNDER THE CONTRACT?
Yes. Transfers may be made by your written request. For transfers from the
sub-accounts of the separate account we will make the transfer on the basis of
the sub-account accumulation unit value on the valuation date coincident with or
next following the day we receive the request at our home office.
DO ANY RESTRICTIONS APPLY?
Yes. In any calendar year, transfers of general account accumulation values,
together with any withdrawals for transfer to other plan options, are limited to
the greater of $1000 or 10% of your general account accumulation value at the
time of transfer. Transfers from the general account may be made once each
calendar year or in 12 monthly installments.
Transfers from the sub-accounts of the separate account are not limited as to
amount or frequency.
All transfers shall be on a first in, first out (FIFO) basis.
CONTRACT LOANS
- ------------------------------
CAN YOU BORROW MONEY ON YOUR CONTRACT?
Yes. You may borrow up to the maximum loan amount determined as of the date we
receive your request for a loan. We will require your written request for a
contract loan. We will send you a loan application and agreement for your
signature. We will charge interest on the loan in arrears. The contract and
your interest in the contract are the only security required for your loan.
ARE THERE LIMITATIONS ON THE AMOUNT WHICH MAY BE BORROWED?
Yes. There is both a minimum loan amount and a maximum loan amount.
WHAT IS THE MINIMUM LOAN AMOUNT?
The minimum loan amount is $1,000.
WHAT IS THE MAXIMUM LOAN AMOUNT?
The maximum loan amount is the lesser of: a) $50,000; or (b) one-half of your
contract's accumulation value less any applicable deferred sales charge, or, if
greater, your accumulation value up to the amount of $10,000, less the amount of
interest that would be charged during the first quarter that such a loan would
be outstanding, and less any applicable deferred sales charge.
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<PAGE>
WHAT ARE THE CONDITIONS OF THE LOAN REPAYMENT?
You must execute a loan agreement. The loan agreement will call for the
repayment of the loan over a period of five years or less. Repayment must be
made in substantially equal payments. The loan repayment schedule will require
the level amortization of the loan over the repayment period. Early repayment
may be made without penalty. You may repay the balance of the loan at any time.
Failure to meet the requirements of the loan agreement will result in its
termination. Loan amounts will then be treated as distributions under the
contract. Treatment of a loan as a distribution will result in taxable income
under applicable tax rules. In addition, depending upon your circumstances, it
may result in income taxation, tax penalties, and disqualification of your
interest in the contract as a tax-sheltered annuity.
If there is a distribution, your accumulation value will be reduced. The
accumulation value will be reduced by the amount of the outstanding loan
principle, reduced by any interest due, and reduced by any applicable deferred
sales charge on that amount.
We will not be liable for any taxes or tax penalties on amounts received or paid
by us under the contract.
HOW ARE LOAN AMOUNTS SHOWN IN THE CONTRACT?
At the time that you make application for a loan, the amount requested as a loan
plus the interest that will be charged during the first quarter that the loan is
outstanding, plus any applicable deferred sales charge, will be transferred from
your separate account accumulation value into the general account on the date
your application is approved. This TSA loan account will then be the source of
the loan and the succeeding loan transactions.
ARE THERE ANY OTHER CONDITIONS?
Yes. You must indicate the separate account sub-accounts that will be
transferred to the TSA loan account. Unless instructed by you, transfers of
amounts to the TSA loan account will be made from amounts in each sub-account of
the separate account in the same proportion that the value of an amount in any
sub-account bears to your total accumulation value prior to the loan.
WHAT INTEREST RATE DO YOU HAVE TO PAY?
The loan interest rate will be set quarterly on the first day of each calendar
quarter. It will apply to the outstanding loan principle in that calendar
quarter. This rate will not exceed the greater of the "published monthly
average" for the calendar month ending two months before the beginning of the
calendar quarter, or the "interest rate in effect on the contract" plus 1%. The
"published monthly average" means the Moody's Composite Average of Yields on
Bonds as published by the Moody's Investors Service. The "interest rate in
effect on the contract" is the interest rate credited on portions of
accumulation value allocated to the general account, including amounts held in
the TSA loan account.
The interest rate credited to allocations of accumulation value to the general
account will also be credited to the TSA loan account, which will have the
effect of reducing the effective rate to be paid on the loan to the difference
between the interest rate paid on the loan and that credited on the TSA loan
account. A loan will have a permanent effect on your accumulation value. The
effect could be either positive or negative, depending upon
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<PAGE>
whether the investment results of the sub-accounts are greater or lesser than
the interest rate credited on the TSA loan account.
HOW ARE TSA LOAN REPAYMENTS ALLOCATED?
As TSA loan amounts are repaid, those amounts are used to reduce the loan. When
the loan is repaid in full through early repayment or the completion of the loan
payments over the scheduled payment period, then the TSA loan account
terminates, and the amounts remain in the general account. You may reallocate
these amounts among the general account and the sub-accounts of the separate
account by exercising your contract rights of transfer.
ARE THERE OTHER LIMITATIONS ON CONTRACT LOANS?
Yes. Those additional limitations are:
a) Only one loan may be outstanding at any time,
b) A period of at least three months is required between the repayment of a
loan and the application for a new loan,
c) If there is an outstanding loan on the contract, then any withdrawals will
be limited to the accumulation value less the outstanding loan principle,
less any interest due, and less any applicable deferred sales charge,
d) A loan is not available if annuity payments have begun, and
e) The TSA loan account portion of your contract in the general account may
not be transferred to the separate account when the loan is outstanding,
provided, however, that a single transfer from the TSA loan account to the
separate account will be allowed each calendar year. The amount remaining
in the TSA loan account must be equal to the amount of the loan outstanding
plus the amount of interest that would be charged during the next calendar
quarter on such loan plus any applicable deferred sales charge.
MAY THE ACCUMULATION VALUE BE WITHDRAWN WHILE THERE IS A LOAN?
Yes. If there is a loan and your total accumulation value is withdrawn, the
loan is due. If it is not repaid prior to the complete withdrawal, the payment
on withdrawal will be your accumulation value less the outstanding loan
principle, less any interest due, and less any applicable deferred sales charge.
In addition, depending upon your circumstances, such a withdrawal may result in
income taxation, tax penalties, and disqualification of your interest in the
contract as a tax-sheltered annuity.
AMOUNT PAYABLE AT DEATH
- ------------------------------
WHAT AMOUNT IS PAYABLE AT DEATH?
If you die before annuity payments have started, the death benefit shall be
equal to the greater of: (1) the accumulation value, determined as of the
valuation date coincident with or next following the day due proof of death is
received by us; or (2) the total of purchase payments received by us on your
behalf, less any prior withdrawals.
If the annuitant dies after annuity payments have started, we will pay whatever
amount may be called for by the terms of the annuity payment option selected.
The remaining interest in the contract must be distributed at
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least as rapidly as under the option in effect at the annuitant's death.
TO WHOM WILL WE PAY THOSE BENEFITS?
When we receive due proof of death, satisfactory to us, we will pay the amount
payable at death under this contract to the beneficiary or beneficiaries.
HOW WILL THE AMOUNT PAYABLE AT DEATH BE PAID?
We will pay that amount in a single sum unless another form of settlement has
been requested and agreed to by us. All payments by us are payable at our home
office. Proof of any claim under this contract must be submitted in writing to
us at our home office.
WHEN WILL WE PAY DEATH BENEFITS?
We will pay death benefits in a single sum to the designated beneficiary, unless
the beneficiary has elected an annuity payment option. Payment will be made
within seven days after we receive due proof of death of the participant.
WHAT HAPPENS IF ONE OR ALL OF THE BENEFICIARIES DIE BEFORE YOU?
If a beneficiary dies before you, or the annuitant where annuity payments have
started, that beneficiary's interest in the participant account ends with that
beneficiary's death. Only those beneficiaries who survive you, or the annuitant
where benefit payments have started, will be eligible to share in the
accumulation value. If no beneficiary survives you, we will pay the
accumulation value to the executors or administrators of your estate, or the
annuitant's estate, if applicable.
CAN YOU CHANGE THE BENEFICIARY?
Yes. You, or the annuitant where annuity payments have started, can file a
written request with us to change the beneficiary.
Your written request, or that of the annuitant, will not be effective until it
is recorded in our home office records. After the request has been recorded, it
will take effect as of the date it was signed by you or by the annuitant, as
applicable. However, if you, or the annuitant, die before the request has been
recorded, the request will not be effective as to those death proceeds we have
paid before the request was recorded in our home office records.
ANNUITY PROVISIONS
- ------------------------------
WHEN DO ANNUITY PAYMENTS BEGIN?
You must notify us or the contract owner in writing that annuity payments are to
be made, when these payments are to begin, and what annuity form and option has
been selected. We must receive this notice at least 30 days in advance of the
date annuity payments are to begin. Annuity payments are made on the first day
of the month. Once annuity payments commence, you may not change the annuity
payment option or cancel future annuity payments to receive a lump sum.
WHAT VALUE IS AVAILABLE TO BE APPLIED TO PROVIDE ANNUITY PAYMENTS?
When an annuity is to begin, we use your accumulation value to provide an
annuity under the options selected. We require that each annuity payment be at
least $20. If the first annuity payment would be less than $20, we reserve the
right to pay you the accumulation value in a lump sum in lieu of all
95-9333 Minnesota Mutual 12
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other rights under this contract. The requirement that the first payment be at
least $20 shall be imposed separately for the portion payable as a fixed annuity
and for the portion payable as a variable annuity under each of the sub-accounts
of the separate account.
MAY WE REQUIRE INFORMATION BEFORE MAKING ANNUITY PAYMENTS?
Yes. We reserve the right to require proof satisfactory to us of the age of the
annuitant and of any joint annuitant before payments begin.
IF YOU MAKE NO ELECTION, WHEN DOES THE ANNUITY BEGIN?
If you do not elect another date, annuity payments will begin on April 1st of
the calendar year following the calendar year in which you attain age 70 1/2.
In order to avoid tax penalties, you will have to meet certain minimum
distribution requirements.
IF YOU FAIL TO ELECT AN ANNUITY OPTION, IS THERE AN OPTION UNDER WHICH ANNUITY
PAYMENTS WILL BE MADE?
Yes. If you do not elect an annuity payment option, we will make monthly
payments on the basis of a life annuity with period certain of 120 months.
IF YOU FAIL TO ELECT AN ANNUITY FORM, IS THERE A FORM UNDER WHICH ANNUITY
PAYMENTS WILL BE MADE?
Yes. If you do not elect an annuity payment form, general account accumulation
values will be applied to provide a fixed annuity and separate account
accumulation units will be applied to provide a variable annuity.
WHAT ANNUITY PAYMENT OPTIONS ARE AVAILABLE?
Both fixed and variable annuity payments are available under the following
options:
Option 1 - Life Annuity - annuity payments payable for the lifetime of the
annuitant, ending with the last payment due prior to the annuitant's death.
Option 2 - Life Annuity with a Period Certain - annuity payments payable for the
lifetime of the annuitant; provided, if the annuitant dies before payments have
been made for the entire period certain, those remaining certain payments will
be made to the beneficiary.
The period certain may be for 120 months; 180 months; or for 240 months.
Option 3 - Joint and Last Survivor Annuity - annuity payments payable for the
joint lifetimes of the annuitant and a designated joint annuitant. The payments
end with the last payment due before the survivor's death.
Option 4 - Fixed Period Annuity - annuity payments payable for a fixed period of
from five to twenty years. If the annuitant dies before all payments for the
fixed period are received, payments will continue for the remainder of the fixed
period to the beneficiary.
ARE OTHER ANNUITY PAYMENT OPTIONS AVAILABLE?
Yes. Other options may be available. They will be as agreed upon between you
and us.
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MAY THE BENEFICIARY RECEIVE A LUMP SUM PAYMENT INSTEAD OF THE REMAINING ANNUITY
PAYMENTS?
Yes. The beneficiary may elect to have the present value of the remaining
payments paid in a lump sum. This right exists under Options 2 and 4.
The lump sum payment will be the commuted value of the remaining payments. It
will be based on the then current dollar amount of one payment, using the same
interest rate which served as a basis for the annuity.
HOW IS THE AMOUNT OF A FIXED ANNUITY PAYMENT DETERMINED?
We have included tables of guaranteed annuity rates in the group annuity
contract. Those rates are guaranteed for your use as long as you are a
participant.
HOW IS THE AMOUNT OF A VARIABLE ANNUITY PAYMENT DETERMINED?
The method for determining the first and subsequent variable annuity payments is
described in the group annuity contract. We guarantee that the mortality
assumptions and method of determining payments will be guaranteed for as long as
you are a participant.
WILL THESE RATES ALWAYS BE USED?
No. If, when you elect your annuity option, we are using annuity rates for this
class of contract which are more favorable than the guaranteed rates, we will
use the more favorable rates.
ARE TRANSFERS PERMITTED DURING THE ANNUITY PERIOD?
Yes. Amounts held as annuity reserves for a variable annuity may be transferred
among the sub-accounts during the annuity period. Amounts held as annuity
reserves for a variable annuity may also be transferred to provide a fixed
annuity under the general account. Transfers must be made by written request
and received by us at least 30 days in advance of the due date of the annuity
payment subject to the request. The annuitant and joint annuitant, if any, must
make such an election. Transfers of annuity reserves from any sub-account must
be at least equal to: 1) $5,000; or 2) the entire amount of reserve remaining in
that sub-account. In addition, annuity payments must have been in effect for at
least 12 months before a change may be made. Such transfers are allowed only
once every 12 months. Once fixed annuity payments begin, reserves may not be
transferred back to provide a variable annuity.
MUST AN ANNUITY PAYMENT OPTION BE ELECTED?
No. You may elect a lump sum payment of accumulation value in lieu of the
application of accumulation value to provide annuity payments. We must receive
your written request at least 30 days prior to the annuity commencement date.
After such lump sum settlement has been made, you shall have no further rights
under this contract.
TERMINATION PROVISIONS
- ------------------------------
WHO CAN TERMINATE THE CONTRACT?
The group annuity contract may be terminated by us or by the contract owner. We
may terminate the contract only if the contract no longer qualifies under
Section 403(b) of the Internal Revenue Code or if we need to amend the contract
and the contract owner does not consent to such amendment.
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WHAT HAPPENS IF THE CONTRACT TERMINATES?
Suspension of purchase payments or termination of the contract will have no
effect on you if annuity payments have begun. Otherwise, your accumulation
values will continue to be maintained under the contract until: (a) withdrawn to
provide benefits; (b) applied to provide annuity payments; or (c) transferred to
the contract owner in accordance with the provisions of the group annuity
contract.
GENERAL PROVISIONS
- ------------------------------
CAN THE CONTRACT BE MODIFIED?
Yes. It may be modified by written agreement between us and the contract owner.
No such modification shall adversely affect your rights unless the modification
is made to comply with a law or government regulation. No change or waiver of
any of the provisions of the contract will be valid unless made in writing by us
and signed by our president, a vice president, our secretary or an assistant
secretary. No agent or other person has the authority to change or waive any
provision of the contract.
WILL YOU RECEIVE DIVIDENDS?
Each year we will determine if this contract will share in our divisible
surplus. We call your share a dividend. Dividends, if received, will be
credited as determined by us.
HOW WILL YOU KNOW THE VALUE OF YOUR PARTICIPANT ACCOUNT?
Before annuity payments begin, at least annually, you will receive a report.
This report will summarize transactions for the period covered by the report.
It will show the current accumulation value and the current separate account
accumulation unit values. The report will be as of a date within two months of
its mailing.
WHAT IF A PERSON'S AGE IS MISSTATED?
If a person's age has been misstated, the amount payable under the contract as
an annuity will be that amount which would have been paid based upon the
person's correct age. In the case of an overpayment, we may either deduct the
required amount from that person's future annuity payments; or, require the
person to pay us in cash; or both may be done until we are repaid. In the case
of an underpayment, we will pay the required amount with the next payment.
CAN YOU ASSIGN YOUR PARTICIPANT ACCOUNT?
No. Your accumulation value may not be assigned, sold, transferred, discounted
or pledged as collateral for a loan or as security for the performance of an
obligation or for any other purpose. In addition, your accumulation value is
non-forfeitable. To the maximum extent permitted by law, your accumulation
value and any benefits payable under the contract shall be exempt from the
claims of your creditors.
MAY YOU BE ASKED TO PROVIDE US WITH ADDITIONAL INFORMATION?
Yes. You must provide any other information we need to administer the contract
and your participant account. If you cannot do so, we may ask the person
concerned for that information. We shall not be liable for any payment based
upon information given to us in error or not given to us.
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(Minnesota Mutual Letterhead)
CONTRACT OWNER:
CONTRACT NUMBER:
PARTICIPANT:
CERTIFICATE NUMBER:
ANNUITY COMMENCEMENT DATE:
ISSUE DATE:
We have issued a group annuity contract to the Contract Owner. This certificate
is evidence of your coverage under the group annuity contract. You became a
participant under that contract when we first received purchase payments on your
behalf.
In this certificate, we will summarize the principal provisions of the group
annuity contract. This certificate is not an insurance contract. It does not
amend, extend or change the coverage under the group annuity contract.
All rights and benefits are determined solely by that contract and its terms.
You may examine the group annuity contract at a place designated by the Contract
Owner.
Secretary President
Registrar
GROUP DEFERRED VARIABLE ANNUITY CERTIFICATE
ALLOCATED
PROVISION FOR FIXED AND VARIABLE ANNUITY PAYMENTS
ALL PAYMENTS AND VALUES PROVIDED BY THIS CERTIFICATE, WHEN
BASED ON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT,
ARE VARIABLE AND NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT
95-9338
Minnesota Mutual 1
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DEFINITIONS
- ------------------------------
When we use the following words, this is what we mean:
THE PARTICIPANT, YOU, YOUR
The person named as the proposed participant in the application for
participation.
WE, OUR, US
The Minnesota Mutual Life Insurance Company.
ANNUITANT
The person who may receive lifetime benefits under this certificate. Joint
annuitants will be considered a single entity.
BENEFICIARY
The person, persons or entity designated to receive death benefits payable under
this certificate.
PARTICIPATION YEAR
A period of one year starting on the first day of the month in which we first
receive purchase payments on your behalf, or on an anniversary of that date.
PURCHASE PAYMENTS
Amounts paid to us for credit to your participant account, as consideration for
the benefits provided by the group annuity contract.
DEFERRED COMPENSATION
A program of retirement savings.
PLAN
A deferred compensation plan established by the Contract Owner and funded by the
contract under which this certificate is issued. No obligation under the plan
is assumed by us, nor shall the plan or any amendment thereto be construed to
amend or modify the contract in any way except with our express written consent.
FUND
The mutual fund or separate investment portfolio within a series mutual fund
which is designated as an eligible investment for the separate account.
VALUATION DATE
Any date on which a fund is valued.
VALUATION PERIOD
The period between successive valuation dates measured from the time of one
determination to the next.
ACCUMULATION VALUE
The sum of your values in the separate account. It is composed of your interest
in one or more sub-accounts of the separate account. Your interest in the sub-
accounts shall be valued separately. The total of those values will be the
separate account accumulation value.
95-9338 Minnesota Mutual 2
<PAGE>
WITHDRAWAL VALUE
The value of your participant account which is available for withdrawal. This
value equals the accumulation value, subject to the deferred sales charge during
the first six participation years. However, if withdrawals during the first
calendar year are equal to or less than 10% of the purchase payments made during
the first year of participation and, if in subsequent calendar years they are
equal to or less than 10% of the accumulation value at the end of the previous
calendar year, the charge will not apply. If withdrawals in any calendar year
exceed that amount, the deferred sales charge will apply to the excess.
SEPARATE ACCOUNT
A separate investment account titled Minnesota Mutual Group Variable Annuity
Account. This separate account was established by us for this class of contract
under Minnesota law. The separate account is composed of several sub-accounts.
The assets of the separate account are ours. Those assets are not subject to
claims arising out of any other business of ours.
WRITTEN REQUEST
A request in writing signed by you. We may also require that this certificate
be sent in with your written request.
ANNUITY PAYMENTS
Payments made at regular intervals to you or to any other payee. Annuity
payments will be due and payable only on the first day of a calendar month.
FIXED ANNUITY
An annuity with equal payments which remain fixed during the payment period.
VARIABLE ANNUITY
An annuity payable from the separate account with payments which increase or
decrease in amount to reflect the investment experience of the separate account
and its sub-accounts.
AGE
Age of a person at nearest birthday.
PURCHASE PAYMENTS
- ------------------------------
WHERE DO YOU MAKE PURCHASE PAYMENTS?
All purchase payments must be made to us, by the Contract Owner, at our home
office.
HOW OFTEN DO YOU MAKE PURCHASE PAYMENTS?
You may make purchase payments as agreed upon between you and the Contract
Owner.
MAY YOU STOP MAKING PURCHASE PAYMENTS?
Yes. You may stop making purchase payments at anytime. You may begin again at
anytime before annuity payments start unless you have taken a lump sum benefit
payment of your entire account.
WHAT DEDUCTIONS ARE MADE FROM PURCHASE PAYMENTS?
There are usually no deductions made from the purchase payments. However, we do
reserve the right to make a deduction from purchase
95-9338 Minnesota Mutual 3
<PAGE>
payments for state premium taxes, where applicable.
HOW ARE PURCHASE PAYMENTS ALLOCATED?
They are allocated to the separate account and its sub-accounts. Initially, you
indicate your allocation in the application. Later, you may change your
allocation for future purchase payments by giving us written or telephone
notice. Applications received without allocation instructions will be treated
as incomplete.
WHAT SEPARATE ACCOUNT OPTIONS ARE AVAILABLE?
The separate account is divided into several sub-accounts. Purchase payments
may be applied to one or more of the sub-accounts. We reserve the right to add,
combine or remove any sub-accounts of the separate account.
WHAT ARE THE INVESTMENTS OF THE SEPARATE ACCOUNT?
For each sub-account, there is a fund for the investment of that sub-account's
assets. Purchase payments are invested in the funds at their net asset value.
The net asset value per share for each fund is determined by adding the current
value of securities and all other assets held by such fund, subtracting
liabilities, and dividing the remainder by the number of shares outstanding.
If investment in a fund should no longer be possible or if we determine it
becomes inappropriate for contracts of this class, we may substitute another
fund. Substitution may be with respect to existing accumulation values, future
purchase payments and future annuity payments.
MAY WE MAKE CHANGES TO THE SEPARATE ACCOUNT?
Yes. We reserve the right to transfer assets of the separate account to another
separate account. The transfer will be of assets associated with this class of
contracts, as determined by us. If this type of transfer is made, the term
"separate account", as used in this contract, shall then mean the separate
account to which the assets were transferred.
We reserve the right, when permitted by law, to:
(a) de-register the separate account under the Investment Company Act of 1940;
(b) restrict or eliminate voting rights of contract owners or other persons who
have voting rights as to the separate account; and
(c) combine the separate account with one or more other separate accounts.
CONTRACT CHARGES
- ------------------------------
ARE THERE CHARGES UNDER THIS CONTRACT?
Yes. There may be a deferred sales charge. Also, there are certain charges
which are made directly to the separate account.
WHAT IS THE DEFERRED SALES CHARGE?
The deferred sales charge is the charge made on withdrawals during your first
six participation years. The amount withdrawn plus any deferred sales charge is
deducted from the accumulation value. In the separate account, accumulation
units will be canceled
95-9338 Minnesota Mutual 4
<PAGE>
of a value equal to the charge and the withdrawal.
WHAT IS THE AMOUNT OF THE DEFERRED SALES CHARGE?
The charge is indicated in the table shown below. These percentages decrease
uniformly by .083% for each of the first 72 months of participation.
<TABLE>
<CAPTION>
End of
Participation Year Charge
- ------------------------ ------
<S> <C>
(Participation Date) 6.0%
1 5.0%
2 4.0%
3 3.0%
4 2.0%
5 1.0%
6 0%
</TABLE>
In no event will the amount of deferred sales charge exceed 9% of the total
purchase payments made on your behalf.
WHAT CHARGES ARE ASSOCIATED WITH THE SEPARATE ACCOUNT?
There are three charges associated with the separate account. They are the
mortality risk charge, the expense risk charge and the administrative charge.
These charges are deducted on each valuation date from the assets of the
separate account. On an annual basis, they may be as much as 1.65% of the net
asset value of the separate account.
WHAT IS THE MORTALITY RISK CHARGE?
This is a charge to compensate us for the mortality guarantees we make under the
contract. Actual mortality results incurred by us shall not adversely affect
any payments or values under this contract. On an annual basis, it shall not
exceed .60% of the net asset value of the separate account.
WHAT IS THE EXPENSE RISK CHARGE?
This charge compensates us for the guarantee that the deductions provided in
this contract will be sufficient to cover our actual expenses. Actual expense
results incurred by us shall not adversely affect any payments or values under
this contract. On an annual basis, it shall not exceed .65% of the net asset
value of the separate account.
WHAT IS THE ADMINISTRATIVE CHARGE?
The administrative charge is to compensate us for the administrative expenses
incurred by us. On an annual basis, it shall not exceed .40% of the net asset
value of the separate account.
VALUATION
- ------------------------------
HOW IS YOUR ACCUMULATION VALUE DETERMINED?
The separate account value will include all sub-accounts of the separate
account. For each sub-account of the separate account, it is equal to the
number of accumulation units held on your behalf multiplied by the accumulation
unit value.
WHAT IS AN ACCUMULATION UNIT AND HOW IS ITS VALUE DETERMINED?
An accumulation unit is a measure of your interest in each sub-account of the
separate account. The number of accumulation units credited with respect to
each purchase payment is determined by dividing the portion of the purchase
payment allocated to each sub-account by the then current accumulation unit
95-9338 Minnesota Mutual 5
<PAGE>
value for that sub-account. This determination is made as of the valuation date
coincident with or next following the date on which we receive your purchase
payment at our home office. Once determined, the number of accumulation units
will not be affected by changes in the accumulation unit value. However, the
total number of accumulation units will be affected by future contract
transactions. In addition, the units of each sub-account will be increased by
subsequent purchase payments and transfers to that sub-account. The units of
each sub-account will be decreased by transfers or withdrawals from that sub-
account and any applicable deferred sales charge.
The accumulation unit value will increase or decrease on each valuation date.
The amount of any increase or decrease will depend on the net investment
experience of the sub-account of the separate account. The value of an
accumulation unit for each sub-account was originally set at $1.00 on the first
valuation date. For any subsequent valuation date, its value is equal to its
value on the preceding valuation date multiplied by the net investment factor
for that sub-account for the valuation period ending on the subsequent valuation
date.
WHAT IS THE NET INVESTMENT FACTOR FOR EACH SUB-ACCOUNT?
The net investment factor for a valuation period is the gross investment rate
for such valuation period, less a deduction for the charges associated with the
separate account at a rate of no more than 1.65% per annum.
The gross investment rate is equal to:
(a) the net asset value per share of a fund share held in the sub-account of
the separate account determined at the end of the current valuation period;
plus
(b) the per-share amount of any dividend or capital gain distributions by the
fund if the "ex-dividend" date occurs during the current valuation period;
divided by
(c) the net asset value per share of that fund share held in the sub-account
determined at the end of the preceding valuation period.
HOW IS THE ANNUITY UNIT VALUE DETERMINED?
The value of an annuity unit for a sub-account is determined monthly as of the
first day of the month. The value is equal to the annuity unit value for that
sub-account as of the first day of the preceding month multiplied by the product
of (a) .996338; and (b) the sub-account investment factor. This investment
factor is the accumulation unit value for that sub-account on the valuation date
next following the fourteenth day of the preceding month divided by the
accumulation unit value for that sub-account on the valuation date next
following the fourteenth day of the second preceding month. For any date other
than the first of a month, the annuity unit value is that value on the first day
of the next month.
WITHDRAWAL BENEFITS
- ------------------------------
MAY I WITHDRAW FUNDS FROM MY ACCOUNT?
Yes. However, withdrawals may be made only for the purpose of providing benefit
payments in accordance with the provisions of the plan and contract; or such
other circumstances as may be agreed to by us and the contract owner. All
withdrawals will be on a first in, first out (FIFO) basis.
95-9338 Minnesota Mutual 6
<PAGE>
MAY I WITHDRAW FUNDS FROM MY ACCOUNT FOR TRANSFER TO OTHER OPTIONS AVAILABLE IN
THE PLAN?
Yes. Amounts withdrawn from the sub-accounts of the separate account are not
limited. Such withdrawals may be taken once per year or in 12 monthly
installments.
WHAT AMOUNT IS AVAILABLE FOR WITHDRAWAL?
The amount available for withdrawal shall be the accumulation value less any
applicable deferred sales charge. If withdrawals during the first calendar year
of participation year are equal to or less than 10% of the total purchase
payments made on your behalf, the charge shall not apply. In subsequent
calendar years, there will be no charge for withdrawals equal to or less than
10% of your prior calendar year end accumulation value. If withdrawals in any
calendar year exceed 10% of that accumulation value, the deferred sales charge
will apply to the excess.
TRANSFER PROVISIONS
- ------------------------------
WHAT IS A TRANSFER?
A transfer is a reallocation of funds within this contract. It may be between
the sub-accounts of the separate account.
MAY YOU MAKE TRANSFERS OF AMOUNTS UNDER THE CONTRACT?
Yes. Transfers may be made by your written request. For transfers from the
sub-accounts of the separate account we will make the transfer on the basis of
the sub-account accumulation unit value on the valuation date coincident with or
next following the day we receive the request at our home office.
DO ANY RESTRICTIONS APPLY?
No. Transfers from the sub-accounts of the separate account are not limited as
to amount or frequency.
All transfers shall be on a first in, first out (FIFO) basis.
AMOUNT PAYABLE AT DEATH
- ------------------------------
WHAT AMOUNT IS PAYABLE AT DEATH?
If you die before annuity payments have started, the death benefit shall be
equal to the greater of: (1) the accumulation value, determined as of the
valuation date coincident with or next following the day due proof of death is
received by us; or (2) the total of purchase payments received by us on your
behalf, less any prior withdrawals.
If the annuitant dies after annuity payments have started, we will pay whatever
amount may be called for by the terms of the annuity payment option selected.
The remaining interest in the contract must be distributed at least as rapidly
as under the option in effect at the annuitant's death.
TO WHOM WILL WE PAY THOSE BENEFITS?
When we receive due proof of death, satisfactory to us, we will pay the amount
payable at death under this contract to the beneficiary or beneficiaries.
HOW WILL THE AMOUNT PAYABLE AT DEATH BE PAID?
We will pay that amount in a single sum unless another form of settlement has
been requested and agreed to by us. All payments by us are
95-9338 Minnesota Mutual 7
<PAGE>
payable at our home office. Proof of any claim under this contract must be
submitted in writing to us at our home office.
WHEN WILL WE PAY DEATH BENEFITS?
We will pay death benefits in a single sum to the designated beneficiary, unless
the beneficiary has elected an annuity payment option. Payment will be made
within seven days after we receive due proof of death of the participant.
WHAT HAPPENS IF ONE OR ALL OF THE BENEFICIARIES DIE BEFORE YOU?
If a beneficiary dies before you, that beneficiary's interest in the participant
account ends with that beneficiary's death. Only those beneficiaries who
survive you will be eligible to share in the accumulation value. If no
beneficiary survives you, we will pay the accumulation value to the executors or
administrators of your estate.
CAN YOU CHANGE THE BENEFICIARY?
Yes. You, or the annuitant if annuity payments have begun, can file a written
request with us to change the beneficiary.
A written request will not be effective until it is recorded in our home office
records. After it has been recorded, it will take effect as of the date the
request was signed. However, if you or the annuitant die before the request has
been recorded, the request will not be effective as to those death proceeds we
have paid before the request was recorded in our home office records.
ANNUITY PROVISIONS
- ------------------------------
WHEN DO ANNUITY PAYMENTS BEGIN?
You must notify us or the contract owner in writing that annuity payments are to
be made, when these payments are to begin, and what annuity form and option has
been selected. This notice must be accompanied by a verification signed by the
plan administrator which states that the elected form of benefit distribution
satisfies the terms of the plan. We must receive this notice at least 30 days
in advance of the date annuity payments are to begin. Annuity payments are made
on the first day of the month. Once annuity payments commence, you may not
change the annuity payment option or cancel future annuity payments to receive a
lump sum.
WHAT VALUE IS AVAILABLE TO BE APPLIED TO PROVIDE ANNUITY PAYMENTS?
When an annuity is to begin, we use your accumulation value to provide an
annuity under the options selected. We require that each monthly annuity
payment be at least $20. If the first monthly annuity payment would be less
than $20, we reserve the right to pay you the accumulation value in a lump sum
in lieu of all other rights under this contract. The requirement that the first
monthly payment be at least $20 shall be imposed separately for the portion
payable as a fixed annuity and for the portion payable as a variable annuity
under each of the sub-accounts of the separate account.
MAY WE REQUIRE INFORMATION BEFORE MAKING ANNUITY PAYMENTS?
Yes. We reserve the right to require proof satisfactory to us of the age of the
annuitant
95-9338 Minnesota Mutual 8
<PAGE>
and of any joint annuitant before payments begin.
IF YOU MAKE NO ELECTION, WHEN DOES THE ANNUITY BEGIN?
If you do not elect another date, annuity payments will begin on the later of
the April 1st of the calendar year following the calendar year in which you
attain age 70 1/2 or, the April 1st of the calendar year following the
calendar year in which you retire.
IF YOU FAIL TO ELECT AN ANNUITY OPTION, IS THERE AN OPTION UNDER WHICH ANNUITY
PAYMENTS WILL BE MADE?
Yes. If you do not elect an annuity payment option, we will make monthly
payments on the basis of a life annuity with period certain of 120 months.
IF YOU FAIL TO ELECT AN ANNUITY FORM, IS THERE A FORM UNDER WHICH ANNUITY
PAYMENTS WILL BE MADE?
Yes. Separate account accumulation units will be applied to provide a variable
annuity.
WHAT ANNUITY PAYMENT OPTIONS ARE AVAILABLE?
Both fixed and variable annuity payments are available under the following
options:
Option 1 - Life Annuity - annuity payments payable monthly for the lifetime of
the annuitant, ending with the last payment due prior to the annuitant's death.
Option 2 - Life Annuity with a Period Certain - annuity payments payable monthly
for the lifetime of the annuitant; provided, if the annuitant dies before
payments have been made for the entire period certain, those remaining certain
payments will be made to the beneficiary.
The period certain may be for 120 months; 180 months; or for 240 months.
Option 3 - Joint and Last Survivor Annuity - annuity payments payable monthly
for the joint lifetimes of the annuitant and a designated joint annuitant. The
payments end with the last payment due before the survivor's death.
Option 4 - Fixed Period Annuity - annuity payments payable monthly for a fixed
period of from five to twenty years. If the annuitant dies before all payments
for the fixed period are received, payments will continue for the remainder of
the fixed period to the beneficiary.
ARE OTHER ANNUITY PAYMENT OPTIONS AVAILABLE?
Yes. Other options may be available. They will be as agreed upon between you
and us.
MAY THE BENEFICIARY RECEIVE A LUMP SUM PAYMENT INSTEAD OF THE REMAINING ANNUITY
PAYMENTS?
Yes. The beneficiary may elect to have the present value of the remaining
payments paid in a lump sum. This right exists under Options 2 and 4.
The lump sum payment will be the commuted value of the remaining payments. It
will be based on the then current dollar amount of one payment, using the same
interest rate which served as a basis for the annuity.
HOW IS THE AMOUNT OF A FIXED ANNUITY PAYMENT DETERMINED?
We have included tables of guaranteed annuity rates in the group annuity
contract. Those rates are guaranteed for your use as long as you are a
95-9338 Minnesota Mutual 9
<PAGE>
participant.
HOW IS THE AMOUNT OF A VARIABLE ANNUITY PAYMENT DETERMINED?
The method for determining the first and subsequent variable annuity payments is
described in the group annuity contract. We guarantee that the mortality
assumptions and method of determining payments will be guaranteed for as long as
you are a participant.
WILL THESE RATES ALWAYS BE USED?
No. If, when you elect your annuity option, we are using annuity rates for this
class of contract which are more favorable than the guaranteed rates, we will
use the more favorable rates.
ARE TRANSFERS PERMITTED DURING THE ANNUITY PERIOD?
Yes. Amounts held as annuity reserves for a variable annuity may be transferred
among the sub-accounts during the annuity period. Amounts held as annuity
reserves for a variable annuity may also be transferred to provide a fixed
annuity. Transfers must be made by written request and received by us at least
30 days in advance of the due date of the annuity payment subject to the
request. The annuitant and joint annuitant, if any, must make such an election.
Transfers of annuity reserves from any sub-account must be at least equal to: 1)
$5,000; or 2) the entire amount of reserve remaining in that sub-account. In
addition, annuity payments must have been in effect for at least 12 months
before a change may be made. Such transfers are allowed only once every 12
months. Once fixed annuity payments begin, reserves may not be transferred back
to provide a variable annuity.
MUST AN ANNUITY PAYMENT OPTION BE ELECTED?
No. You may elect a lump sum payment of accumulation value in lieu of the
application of accumulation value to provide annuity payments. We must receive
your written request at least 30 days prior to the annuity commencement date.
After such lump sum settlement has been made, you shall have no further rights
under this contract.
TERMINATION PROVISIONS
- ------------------------------
WHO CAN TERMINATE THE CONTRACT?
The group annuity contract may be terminated by us or by the contract owner. We
may terminate the contract only if we need to amend the contract and the
contract owner does not consent to such amendment.
WHAT HAPPENS IF THE CONTRACT TERMINATES?
Suspension of purchase payments or termination of the contract will have no
effect on you if annuity payments have begun. Otherwise, your accumulation
values will continue to be maintained under the contract until: (a) withdrawn to
provide benefits; (b) applied to provide annuity payments; or (c) transferred to
the contract owner in accordance with the provisions of the group annuity
contract.
GENERAL PROVISIONS
- ------------------------------
CAN THE CONTRACT BE MODIFIED?
Yes. It may be modified by written agreement between us and the contract owner.
No such modification shall adversely affect your rights
95-9338 Minnesota Mutual 10
<PAGE>
unless the modification is made to comply with a law or government regulation.
No change or waiver of any of the provisions of the contract will be valid
unless made in writing by us and signed by our president, a vice president, our
secretary or an assistant secretary. No agent or other person has the authority
to change or waive any provision of the contract.
WILL YOU RECEIVE DIVIDENDS?
Each year we will determine if this contract will share in our divisible
surplus. We call your share a dividend. Dividends, if received, will be
credited as determined by us.
HOW WILL YOU KNOW THE VALUE OF YOUR PARTICIPANT ACCOUNT?
Before annuity payments commence, at least annually, you will receive a report.
This report will summarize transactions for the period covered by the report.
It will show the current accumulation value and the current separate account
accumulation unit values. The report will be as of a date within two months of
its mailing.
WHAT IF A PERSON'S AGE IS MISSTATED?
If a person's age has been misstated, the amount payable under the contract as
an annuity will be that amount which would have been paid based upon the
person's correct age. In the case of an overpayment, we may either deduct the
required amount from that person's future annuity payments; or, require the
person to pay us in cash; or both may be done until we are repaid. In the case
of an underpayment, we will pay the required amount with the next payment.
CAN YOU ASSIGN YOUR PARTICIPANT ACCOUNT?
No. Your accumulation value may not be assigned, sold, transferred, discounted
or pledged as collateral for a loan or as security for the performance of an
obligation or for any other purpose. To the maximum extent permitted by law,
your accumulation value and any benefits payable under the contract shall be
exempt from the claims of your creditors.
MAY YOU BE ASKED TO PROVIDE US WITH ADDITIONAL INFORMATION?
Yes. You must provide any other information we need to administer the contract
and your participant account. If you cannot do so, we may ask the person
concerned for that information. We shall not be liable for any payment based
upon information given to us in error or not given to us.
95-9338 Minnesota Mutual 11
<PAGE>
MINNESOTA MUTUAL ANNUITY APPLICATION
<TABLE>
<CAPTION>
<S><C>
- -----------------------------------------------------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company * Annuity Services * 400 Robert Street North * St. Paul, Minnesota 55101-2098
- -----------------------------------------------------------------------------------------------------------------------------
For Group, Flexible Contributions, Deferred Annuity Under Group 403(b) Contracts issued to the
Church of the Nazarene, Board of Pensions and Benefits USA and for a Group Variable Annuity
Contract issued to the Church of the Nazarene Tax Sheltered Annuity Plan Trust
-------------------------------------------------------
A. Full Name of Participant (Employee) H. Check annuity contract options for which you are
------------------------------------------------------- applying:
Sex Age Date of Birth Place of Birth
(MO.,DAY,YEAR) (CITY, STATE) / / Option A - Flexible Benefit Options Account
/ /M/ /F
------------------------------------------------------- / / Option B - Limited Benefit Options Account
Residence No. Street
/ / Option D - Group Variable Annuity Account WITH
------------------------------------------------------- a purchase payment account allocation of:
City State Zip
% MIMLIC Money Market
------------------------------------------------------- ----
Occupation % MIMLIC Growth
----
------------------------------------------------------- % MIMLIC Asset Allocation
Participant's Social Security Number ----
% MIMLIC Index 500
------------------------------------------------------- ----
B. Name of Employer % Vanguard Long Term Corporate
----
------------------------------------------------------- % Vanguard Wellington
Address of Employer ----
No. Street % Fidelity Contrafund
------------------------------------------------------- ----
City State Zip % Scudder International
----
------------------------------------------------------- % Janus Twenty
----
C. District Affiliation (if any) 100 % TOTAL MUST EQUAL 100%
------------------------------------------------------- FOR OPTION D, COMPLETE THE DISCLOSURE FORM ON THE
D. Spouse's Name REVERSE SIDE.
------------------------------------------------------- The Prospectuses for the Group Variable Annuity
E. Date of Birth Spouse's Social Security Number Account and the MIMLIC Series Fund, Inc. each refer
to a Statement of Additional Information. Would you
------------------------------------------------------- like us to send you a copy? / / Yes / / No
F. Name of Beneficiary Date of Birth S.S. Number
I. I represent that the statements and answers in this
------------------------------------------------------- application are full, complete, and true to the best of
Relationship my knowledge. I agree that they are to be considered
the basis of any annuity issued.
-------------------------------------------------------
If living, otherwise to: -------------------------------------------------------
SIGNATURE OF PARTICIPANT DATE
------------------------------------------------------- -------------------------------------------------------
------------------------------------------------------- X
------------------------------------------------------- -------------------------------------------- ----------
Unless otherwise stated, the designation is revocable EMPLOYER
and beneficiaries of like class shall share equally with ----------------------------------------------
right of survivorship. per X
---------------------------------------------------
G. Special Instructions or Remarks (TREASURER OR SECRETARY OF BOARD)
------------------------
------------------------------------------------------- signed at Date
------------------------------------------------------- ------------------------ ---------------
- -----------------------------------------------------------------------------------------------------------------------------
TO BE COMPLETED FOR OPTION D BY AUTHORIZED REPRESENTATIVE
- -----------------------------------------------------------------------------------------------------------------------------
To the best of my knowledge, this contract / / will / / will not replace or change an existing insurance or annuity contract.
I certify that a current Prospectus was delivered. No written sales materials were used other than those approved by the
Home Office. I have determined this to be a suitable investment based on my knowledge of the participant's investment
objectives and financial circumstances.
- -----------------------------------------------------------------------------------------------------------------------------
SIGNATURE OF AUTHORIZED REPRESENTATIVE AGENCY CODE AGENT CODE
X 2064 421
- -----------------------------------------------------------------------------------------------------------------------------
APPLICATION FOR OPTION D BECOMES EFFECTIVE ONLY UPON ACCEPTANCE BY MIMLIC SALES CORPORATION
- -----------------------------------------------------------------------------------------------------------------------------
ACCEPTED BY DATE CASE NUMBER
X 2856424-
- -----------------------------------------------------------------------------------------------------------------------------
----------------------------------------
FOR OPTION D, ALSO COMPLETE REVERSE SIDE CERTIFICATE #
----------------------------------------
95-9325
</TABLE>
<PAGE>
GROUP VARIABLE ANNUITY ACCOUNT DISCLOSURE
(Must be completed for Option D - Group Variable Annuity Applications)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- -------------------------------------------------------------------------------------------------------------------
OCCUPATION NUMBER OF DEPENDENTS AGES
- -------------------------------------------------------------------------------------------------------------------
FINANCIAL PROFILE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
APPROXIMATE ANNUAL INCOME $ RANK YOUR INVESTMENT OBJECTIVES FROM 1 TO 5
-------- (1 is of greatest importance, 5 is of least importance)
APPROXIMATE NET WORTH $ Conservative Income/Capital Preservation
-------- -----
TAX BRACKET % Current Income
-------- -----
ASSET BREAKDOWN APPROXIMATE Conservative Growth/Total Return
-----
SAVINGS (MONEY MARKET FUNDS) $ Growth
-------- -----
INSURANCE ($ FACE AMOUNT) $ Aggressive Growth
----- -------- -----
(CASH VALUE)
STOCKS/BONDS/MUTUAL FUNDS $ -------------------------------------------------
--------
REAL ESTATE $ RISK TOLERANCE (check one box)
--------
BUSINESS INTERESTS $ / / Low Risk
--------
RETIREMENT FUNDS $ / / Moderate Risk
--------
/ / High Risk
- -------------------------------------------------------------------------------------------------------------------
SIGNATURE
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
In connection with your investment, please read the following:
* I understand that provisions of Section 403(b)(11) of the Internal Revenue
Code restrict the timing of distributions from the tax sheltered annuity
contracts such as that described in this application. Distributions are
restricted to certain stated events such as: attainment of age 59-1/2,
separation from service, disability, death, or hardship. I understand that
the restrictions do not alter my contractual ability to transfer the
accumulation values among the sub-accounts available under the contract or
to exchange my TSA contract for another, provided that the transaction
meets the requirements of the Code and that any required agreements,
including those requiring the consent of the employer, are executed prior
to the transfer.
* I have received and had an opportunity to read a current copy of the
prospectus for this investment prior to investing.
* I have been informed of all charges and expenses associated with this
investment.
* I realize that this may be a long-term investment which should be held for
a number of years. Surrendering in the short term may result in a loss.
* I am aware there is no assurance that the initial objective(s) of this
investment will be achieved. Thus, when I ultimately surrender the
investment, I may receive more or less than the amount I invested.
* I realize that the element of risk is inherent in any investment - what
varies is the degree of risk. Generally, the greater the expected return,
the greater the risk I must be willing to assume.
* Given my personal circumstances, this is a suitable investment.
I believe the information provided on this form is true and accurate to the best
of my knowledge. I have read and agree with the above statements.
- -------------------------------------------------------------------------------
SIGNATURE OF PARTICIPANT DATE
X
- -------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
MINNESOTA MUTUAL GROUP TSA
VARIABLE ANNUITY APPLICATION
- -------------------------------------------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company * Annuity Services * 400 Robert Street North * St. Paul, Minnesota
55101-2098 * Toll Free 1-800-362-3141
- -------------------------------------------------------------------------------------------------------------------
PARTICIPANT (PLEASE PRINT)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NAME DATE OF BIRTH SEX SOCIAL SECURITY NUMBER
/ /M/ /F
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ADDRESS CITY STATE ZIP CODE
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BENEFICIARY
- -------------------------------------------------------------------------------------------------------------------
CLASS NAME RELATIONSHIP DATE OF BIRTH SEX SOCIAL SECURITY NUMBER
- -------------------------------------------------------------------------------------------------------------------
/ /M/ /F
- -------------------------------------------------------------------------------------------------------------------
/ /M/ /F
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/ /M/ /F
- -------------------------------------------------------------------------------------------------------------------
/ /M/ /F
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EMPLOYER
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NAME ADDRESS CITY STATE ZIP CODE
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AMOUNT OF PERIODIC PURCHASE PAYMENT REPLACEMENT
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$ per pay period Will this contract applied for replace or change an
------------ existing insurance or annuity contract?
- -------------------------------------------------- / / Yes * / / No
PURCHASE PAYMENT ACCOUNT ALLOCATION * If yes, please provide your contract number and the
- -------------------------------------------------- name of the insurance company under Special Instructions.
% General % Bond ------------------------------------------------------------
- ---- ---- STATEMENT OF ADDITIONAL INFORMATION
% Growth % Money Market ------------------------------------------------------------
- ---- ----
% Asset Allocation % Mortgage Securities The Prospectuses for the Group Variable Annuity Account
- ---- ---- and the Fund each refer to a Statement of Additional
% Maturing Govern- % Index 500 Information.
- ---- ment Bond-1998 ----
% Capital Appreciation Would you like us to send you a copy?
% Maturing Govern- ----
- ---- ment Bond-2002 % International Stock / / Yes / / No
----
% Maturing Govern- % Small Company ------------------------------------------------------------
- ---- ment Bond-2006 ----
% Value Stock
% Maturing Govern- ----
- ---- ment Bond-2010 TOTAL MUST EQUAL 100%
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SPECIAL INSTRUCTIONS
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PARTICIPANT SIGNATURE
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I represent that the statements and answers in this application are full, complete and true to the best of my
knowledge. I ACKNOWLEDGE RECEIPT OF A CURRENT GROUP VARIABLE ANNUITY ACCOUNT PROSPECTUS AND A CURRENT PROSPECTUS
FOR THE MIMLIC SERIES FUND, INC. I UNDERSTAND THAT ALL PAYMENTS AND VALUES OF ANY CONTRACT ISSUED, WHEN BASED
UPON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO A FIXED DOLLAR
AMOUNT.
- -------------------------------------------------------------------------------------------------------------------
PARTICIPANT SIGNATURE DATE
X
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TO BE COMPLETED BY REPRESENTATIVE
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To the best of my knowledge, this contract / / will / / will not replace or change an existing insurance or
annuity contract. I certify that a current Prospectus was delivered. No written sales materials were used
other than those approved by the Home Office. I have determined this to be a suitable investment based on my
knowledge of the participant's investment objectives and financial circumstances.
- -------------------------------------------------------------------------------------------------------------------
REPRESENTATIVE NAME REPRESENTATIVE SIGNATURE AGENCY CODE AGENT CODE DATE
X
- -------------------------------------------------------------------------------------------------------------------
This application becomes effective only upon its acceptance by MIMLIC Sales Corporation
- -------------------------------------------------------------------------------------------------------------------
ACCEPTED BY DATE CONTRACT NUMBER
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</TABLE>
PLEASE COMPLETE REVERSE SIDE
95-9329
<PAGE>
GROUP VARIABLE ANNUITY ACCOUNT DISCLOSURE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- -------------------------------------------------------------------------------------------------------------------
OCCUPATION NUMBER OF DEPENDENTS AGES
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FINANCIAL PROFILE
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<S> <C> <C>
APPROXIMATE ANNUAL INCOME $ RANK YOUR INVESTMENT OBJECTIVES FROM 1 TO 5
-------- (1 is of greatest importance, 5 is of least importance)
APPROXIMATE NET WORTH $ Conservative Income/Capital Preservation
-------- -----
TAX BRACKET % Current Income
-------- -----
ASSET BREAKDOWN APPROXIMATE Conservative Growth/Total Return
-----
SAVINGS (MONEY MARKET FUNDS) $ Growth
-------- -----
INSURANCE ($ FACE AMOUNT) $ Aggressive Growth
----- -------- -----
(Cash Value)
STOCKS/BONDS/MUTUAL FUNDS $ -------------------------------------------------
--------
REAL ESTATE $ RISK TOLERANCE (check one box)
--------
BUSINESS INTERESTS $ / / Low Risk
--------
RETIREMENT FUNDS $ / / Moderate Risk
--------
/ / High Risk
- -------------------------------------------------------------------------------------------------------------------
SIGNATURE
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</TABLE>
In connection with your investment, please read the following:
* I understand that provisions of Section 403(b)(11) of the Internal Revenue
Code restrict the timing of distributions from the tax sheltered annuity
contracts such as that described in this application. Distributions are
restricted to certain stated events such as: attainment of age 59-1/2,
separation from service, disability, death, or hardship. I understand that
the restrictions do not alter my contractual ability to transfer the
accumulation values among the sub-accounts available under the contract or
to exchange my TSA contract for another, provided that the transaction
meets the requirements of the Code and that any required agreements,
including those requiring the consent of the employer, are executed prior
to the transfer.
* I have received and had an opportunity to read a current copy of the
prospectus for this investment prior to investing.
* I have been informed of all charges and expenses associated with this
investment.
* I realize that this may be a long-term investment which should be held for
a number of years. Surrendering in the short term may result in a loss.
* I am aware there is no assurance that the initial objective(s) of this
investment will be achieved. Thus, when I ultimately surrender the
investment, I may receive more or less than the amount I invested.
* I realize that the element of risk is inherent in any investment - what
varies is the degree of risk. Generally, the greater the expected return,
the greater the risk I must be willing to assume.
* Given my personal circumstances, this is a suitable investment.
I believe the information provided on this form is true and accurate to the best
of my knowledge. I have read and agree with the above statements.
- -------------------------------------------------------------------------------
SIGNATURE OF PARTICIPANT DATE
X
- -------------------------------------------------------------------------------
<PAGE>
[Minnesota Mutual Letterhead]
October 25, 1995
The Minnesota Mutual Life Insurance Company
Minnesota Mutual Life Center
400 Robert Street North
St. Paul, Minnesota 55101
Gentlepersons:
In my capacity as counsel for The Minnesota Mutual Life Insurance Company (the
"Company"), I have reviewed certain legal matters relating to the Company's
Separate Account entitled Minnesota Mutual Group Variable Annuity Account (the
"Account") in connection with Post-Effective Amendment No. 2 to its Registration
Statement on Form N-4. This Post-Effective Amendment is to be filed by the
Company and the Account with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, with respect to certain variable annuity
contracts (Securities and Exchange Commission File No. 33-79534.
Based upon that review, I am of the following opinion:
1. The Account is a separate account of the Company duly created and
validly existing pursuant to the laws of the State of Minnesota; and
2. The issuance and sale of the variable annuity contracts funded by the
Account have been duly authorized by the Company and such contracts, when
issued in accordance with and as described in the current Prospectus
contained in the Registration Statement, and upon compliance with
applicable local and federal laws, will be legal and binding obligations of
the Company in accordance with their terms.
I hereby consent to the filing of this option as an exhibit to the Registration
Statement.
Sincerely,
/s/ Donald F. Gruber
Donald F. Gruber
Senior Counsel
<PAGE>
(KPMG Peat Marwick LLP Letterhead)
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
The Minnesota Mutual Life Insurance Company and
Contract Owners of Minnesota Mutual Group Variable Annuity Account:
We consent to the use of our reports included herein and to the reference to
our Firm under the heading "AUDITORS" in Part B of the Registration
Statement.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Minneapolis, Minnesota
October 30, 1995
<PAGE>
The Minnesota Mutual Life Insurance Company
Power of Attorney
To Sign Registration Statements
WHEREAS, The Minnesota Mutual Life Insurance Company ("Minnesota
Mutual") has established certain separate accounts to fund certain variable
annuity and variable life insurance contracts, and
WHEREAS, Minnesota Mutual Variable Fund D ("Fund D") is a separate
account of Minnesota Mutual registered as a unit investment trust under the
Investment Company Act of 1940 offering variable annuity contracts registered
under the Securities Act of 1933, and
WHEREAS, Minnesota Mutual Variable Annuity Account ("Variable Annuity
Account") is a separate account of Minnesota Mutual registered as a unit
investment trust under the Investment Company Act of 1940 offering variable
annuity contracts registered under the Securities Act of 1933, and
WHEREAS, Minnesota Mutual Variable Life Account ("Variable Life
Account") is a separate account of Minnesota Mutual registered as a unit
investment trust under the Investment Company Act of 1940 offering variable
adjustable life insurance policies registered under the Securities Act of
1933,
WHEREAS, Minnesota Mutual Group Variable Annuity Account ("Group
Variable Annuity Account") is a separate account of Minnesota Mutual which
has been established for the purpose of issuing group annuity contracts on a
variable basis and which is to be registered as a unit investment trust under
the Investment Company Act of 1940 offering group variable annuity contracts
and certificates to be registered under the Securities Act of 1933;
WHEREAS, Minnesota Mutual Variable Universal Life Account ("Variable
Universal Life Account") is a separate account of Minnesota Mutual which has
been established for the purpose of issuing group and individual variable
universal life insurance policies on a variable basis and which is to be
registered as a unit investment trust under the Investment Company Act of
1940 offering group and individual variable universal life insurance policies
to be registered under the Securities Act of 1933;
NOW THEREFORE, We, the undersigned Trustees of Minnesota Mutual, do
hereby appoint Dennis E. Prohofsky and Garold M. Felland, and each of them
individually, as attorney in fact for the purpose of signing in their names
and on their behalf as Trustees of Minnesota Mutual and filing with the
Securities and Exchange Commission Registration Statements, or any amendment
thereto, for the purpose of: a) registering contracts and policies of Fund
D, the Variable Annuity Account, the Variable Life Account, the Group
Variable Annuity Account and the Variable Universal Life Account for sale by
those entities and Minnesota Mutual under the Securities Act of 1933; and b)
registering Fund D, the Variable Annuity Account, the Variable Life Account,
the Group Variable Annuity Account and the Variable Universal Life Account as
unit investment trusts under the Investment Company Act of 1940.
Signature Title Date
/s/ Coleman Bloomfield Chairman of the Board February 13, 1995
- ---------------------------
Coleman Bloomfield
<PAGE>
Signature Title Date
--------- ----- ----
/s/ Robert L. Senkler President and Chief February 13, 1995
- ------------------------------ Executive Officer
Robert L. Senkler
/s/ Anthony L. Andersen Trustee February 13, 1995
- ------------------------------
Anthony L. Andersen
/s/ John F. Grundhofer Trustee February 13, 1995
- -------------------------------
John F. Grundhofer
/s/ Harold V. Haverty Trustee February 13, 1995
- -------------------------------
Harold V. Haverty
/s/ Lloyd P. Johnson Trustee February 13, 1995
- -------------------------------
Lloyd P. Johnson
/s/ David S. Kidwell Trustee February 13, 1995
- -------------------------------
David S. Kidwell, Ph.D.
/s/ Reatha C. King Trustee February 13, 1995
- -------------------------------
Reatha C. King, Ph.D.
/s/ Thomas e. Rohricht Trustee February 13, 1995
- -------------------------------
Thomas E. Rohricht
- ------------------------------- Trustee
Terry N. Saario, Ph.D.
/s/ Frederick T. Weyerhaeuser Trustee February 13, 1995
- -------------------------------
Frederick T. Weyerhaeuser
