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PANORAMA PREMIER
SUPPLEMENT DATED SEPTEMBER 1, 1998
TO THE PROSPECTUS DATED MAY 1, 1998
THE INFORMATION CONTAINED IN THIS SUPPLEMENT SUPERSEDES ANY CONFLICTING
INFORMATION CONTAINED IN THE MAY 1, 1998 PROSPECTUS. PLEASE PLACE THIS
PROSPECTUS SUPPLEMENT WITH THE CURRENT FUND PROSPECTUSES AND RETAIN IT FOR
FUTURE REFERENCE.
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C.M. MULTI-ACCOUNT A AND C.M. LIFE INSURANCE COMPANY
PROSPECTUS - MAY 1, 1998, SUPPLEMENTED SEPTEMBER 1, 1998
INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACTS WITH FLEXIBLE PURCHASE PAYMENTS
(the "Contracts" or "Panorama Premier Contracts") described in this Prospectus
provide for accumulation of Contract Values and payment of annuity payments on a
fixed and variable basis. The Contracts are designed for use by individuals on
a Qualified or Non-Qualified basis. The minimum initial Purchase Payment is
$5,000 for Non-Qualified Contracts and $2,000 for Qualified Contracts.
Purchase Payments for the Contracts will be allocated as specified by the
Contract Holder, to the Fixed Accounts (subject to state availability) and/or to
a separate account designated C.M. Multi-Account A (the "Separate Account") of
C.M. Life Insurance Company (the "Company"). The Company may allocate initial
Purchase Payments to the Money Market Sub-Account of the Separate Account during
the Right to Examine Contract Period. (See Highlights.) The Separate Account
invests in shares of Panorama Series Fund, Inc. ("Panorama Fund") and
Oppenheimer Variable Account Funds ("Oppenheimer Funds"), and subject to state
availability, Variable Insurance Products Fund II ("VIP Fund II"), American
Century Variable Portfolios, Inc. ("American Century VP"), T. Rowe Price Equity
Series, Inc. ("T. Rowe Price Equity Series"), and MML Series Investment Fund
("MML Trust"). The Panorama Fund is a series fund with six (6) of its
Portfolios currently available to Contract Owners: LifeSpan Diversified Income
Portfolio, Total Return Portfolio, LifeSpan Balanced Portfolio, LifeSpan Capital
Appreciation Portfolio, Growth Portfolio, and International Equity Portfolio.
Oppenheimer Funds is a series fund with two (2) of its Funds currently available
to Contract Owners: Oppenheimer Money Fund and Oppenheimer Bond Fund. VIP Fund
II is a series fund with one (1) of its Portfolios available to Contract Owners
(subject to state availability): Contrafund Portfolio. American Century VP is a
series fund with one (1) of its Portfolios available to Contract Owners (subject
to state availability): VP Income & Growth Portfolio. T. Rowe Price Equity
Series is a series fund with one (1) of its Portfolios available to Contract
Owners (subject to state availability): Mid-Cap Growth Portfolio. MML Trust is
a series fund with one (1) of its Funds available to Contract Owners (subject to
state availability): MML Small Cap Value Equity Fund.
This Prospectus concisely sets forth the information a prospective investor
should know before investing and should be kept for future reference.
Additional information about the Contracts is contained in the Statement of
Additional Information which is available at no charge. The Statement of
Additional Information has been filed with the Securities and Exchange
Commission and is incorporated herein by reference. For the Statement of
Additional Information, call (800) 569-6576 or write to: Panorama Premier,
Annuity Products, H565, P.O. Box 9067, Springfield, Massachusetts 01102-9067.
The Securities and Exchange Commission (SEC) maintains a Web site
(http://www.sec.gov) that contains the Statement of Additional Information,
material incorporated by reference and other information regarding registrants
that is filed with the SEC electronically.
ANY INQUIRIES CAN BE MADE BY TELEPHONE OR IN WRITING TO C.M. LIFE INSURANCE
COMPANY AT ITS ANNUITY SERVICE CENTER.
THIS PROSPECTUS IS ONLY VALID WHEN ACCOMPANIED BY THE PROSPECTUSES FOR PANORAMA
FUND, OPPENHEIMER FUNDS, VIP FUND II CONTRAFUND PORTFOLIO, AND AMERICAN CENTURY
VP INCOME & GROWTH PORTFOLIO, T. ROWE PRICE MID-CAP GROWTH PORTFOLIO, AND MML
SMALL CAP VALUE EQUITY FUND.
- --------------------------------------------------------------------------------
The Contracts are not deposits or obligations of, or guaranteed or endorsed by,
any financial institution and are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency.
Investment in the Contracts is subject to risk that may cause the value of the
Contract Owner's investment to fluctuate, and when the contracts are
surrendered, the value may be higher or lower than the purchase payment.
- --------------------------------------------------------------------------------
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.
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Table of Contents
Page
Definitions............................................................. 5
Highlights.............................................................. 7
Table of Fees and Expenses.............................................. 9
Condensed Financial Information......................................... 11
The Company............................................................. 12
The Separate Account.................................................... 12
Eligible Investments................................................ 12
Panorama Series Fund, Inc........................................... 12
Oppenheimer Variable Account Funds.................................. 13
Variable Insurance Products Fund II................................. 13
American Century Variable Portfolios, Inc........................... 14
T. Rowe Price Equity Series, Inc.................................... 14
MML Series Investment Fund.......................................... 14
Voting Rights....................................................... 15
Substitution of Securities.......................................... 15
The Fixed Accounts...................................................... 15
DCA Fixed Account................................................... 15
The Fixed Account................................................... 16
Charges and Deductions.................................................. 16
Deduction for Mortality and Expense Risk Charge..................... 16
Deduction for Administrative Charge................................. 17
Deduction for Annual Contract Maintenance Charge.................... 17
Deduction for Premium and Other Taxes............................... 17
Deduction for Fund Expenses......................................... 17
Deduction for Transfer Fee.......................................... 17
Deduction for Contingent Deferred Sales Charge...................... 18
Free Withdrawals.................................................... 19
The Contracts........................................................... 19
Contract Owner...................................................... 19
Joint Contract Owners............................................... 19
Annuitant........................................................... 19
Assignment.......................................................... 19
Purchase Payments and Contract Value.................................... 19
Purchase Payments................................................... 19
Allocation of Purchase Payments..................................... 20
Contract Value...................................................... 20
Accumulation Units.................................................. 20
Accumulation Unit Value............................................. 20
Transfers............................................................... 21
Transfers During the Accumulation Period............................ 21
Transfers During the Annuity Period................................. 21
Dollar Cost Averaging............................................... 22
Rebalancing Program................................................. 23
Withdrawals............................................................. 23
Systematic Withdrawals.............................................. 23
Suspension or Deferral of Payments.................................. 24
Terminal Illness Benefit............................................ 24
Proceeds Payable on Death............................................... 24
Death of Contract Owner During the Accumulation Period.............. 24
Death Benefit Amount During the Accumulation Period................. 25
Death Benefit Options During the Accumulation Period................ 25
Death of Contract Owner During the Annuity Period................... 25
Death of Annuitant.................................................. 25
Payment of Death Benefit............................................ 26
Beneficiary......................................................... 26
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Change of Beneficiary............................................... 26
Annuity Provisions...................................................... 26
Annuity Guidelines.................................................. 26
Annuity Payments.................................................... 26
Fixed Annuity....................................................... 27
Variable Annuity.................................................... 27
Annuity Units and Payments.......................................... 27
Annuity Unit Value.................................................. 27
Annuity Options..................................................... 27
Distribution............................................................ 28
Performance Measures.................................................... 28
Standardized Average Annual Total Return............................ 28
Additional Performance Measures..................................... 29
Tax Status.............................................................. 29
General............................................................. 29
Diversification..................................................... 30
Multiple Contracts.................................................. 31
Tax Treatment of Assignments........................................ 31
Income Tax Withholding.............................................. 31
Tax Treatment of Withdrawals - Non-Qualified Contracts.............. 31
Penalty Tax......................................................... 31
Qualified Plans..................................................... 31
H.R. 10 Plans....................................................... 32
Individual Retirement Annuities..................................... 32
Roth IRAs........................................................... 32
Corporate Pension and Profit-Sharing Plans.......................... 32
Section 457 Deferred Compensation ("Section 457") Plans............. 33
Tax Treatment of Withdrawals - Qualified Contracts.................. 33
Contracts Owned by Other Than Natural Persons....................... 34
IRA Disclosure Statement - Appendix A................................... 35
Additional Information.................................................. 38
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Definitions
Accumulation Period: The period prior to the commencement of Annuity Payments
during which Purchase Payments may be made.
Accumulation Unit: A unit of measure used to determine the value of the Contract
Owner's interest in a Sub-Account of the Separate Account during the
Accumulation Period.
Annuitant: The primary person upon whose life Annuity Payments are to be made.
For purposes of applicable Contract provisions, on or after the Annuity Date,
reference to the Annuitant also includes any joint Annuitant.
Annuity Date: The date on which Annuity Payments begin.
Annuity Options: Options available for Annuity Payments.
Annuity Payments: The series of payments that will begin on the Annuity Date.
Annuity Period: The period which begins on the Annuity Date and ends with the
last Annuity Payment.
Annuity Reserve: The assets which support a variable Annuity Option during the
Annuity Period.
Annuity Service Center: The office at which the administration of the contract
occurs. Please direct all requests and/or inquiries to Annuity Service Center,
H565, P. O. Box 9067, Springfield, MA 01102-9067 (800) 569-6576.
Annuity Unit: A unit of measure used to determine the amount of each Variable
Annuity Payment after the Annuity Date.
Beneficiary: The person(s) or entity(ies) designated to receive the death
benefit provided by the Contract.
Contract Anniversary: An anniversary of the Issue Date of the Contract.
Contract Owner: The person(s) or entity(ies) entitled to the ownership rights
stated in the Contract.
Contract Value: The sum of the Contract Owner's interest in the Fixed Account
and/or the Sub-Accounts of the Separate Account during the Accumulation Period.
Contract Year: The first Contract Year is the annual period which begins on the
Issue Date. Subsequent Contract Years begin on each anniversary of the Issue
Date.
Eligible Investment: An investment entity into which assets of the Separate
Account will be invested.
Fixed Accounts: Investment options within the General Account which may be
selected during the Accumulation Period. Subject to state availability, the
following two Fixed Accounts are available to Contract Owners: the Dollar Cost
Averaging Fixed Account (the "DCA Fixed Account") and the Fixed Account ("the
Fixed Account").
Fixed Annuity: A series of payments made during the Annuity Period which are
guaranteed as to dollar amount by the Company.
General Account: The Company's general investment account which contains all the
assets of the Company with the exception of the Separate Account and other
segregated asset accounts.
Issue Date: The date on which the Contract became effective.
Non-Qualified Contracts: Contracts other than Qualified Contracts which do not
receive favorable tax treatment under Sections 401, 408 or 457 of the Internal
Revenue Code of 1986, as amended (the "Code").
Premium Tax: A tax imposed by certain states and other jurisdictions when a
Purchase Payment is made, when Annuity Payments begin, or when a Contract is
surrendered.
Purchase Payment: During the Accumulation Period, a payment made by or on behalf
of a Contract Owner with respect to the Contract.
Qualified Contracts: Contracts issued under Qualified Plans.
Qualified Plans: Plans which receive favorable tax treatment under Sections 401,
408, or 457 of the Code.
Separate Account: The Company's Separate Account designated as C.M. Multi-
Account A.
Sub-Account: Separate Account assets are divided into Sub-Accounts. Assets of
each Sub-Account will be invested in shares of an available Eligible Investment
or a Portfolio or Fund of an Eligible Investment. Currently the Eligible
Investments are the six Portfolios of Panorama Fund, two Funds of Oppenheimer
Funds, and subject to state availability, VIP Fund II Contrafund Portfolio,
American Century VP Income & Growth Portfolio, T. Rowe Price Mid-Cap Growth
Portfolio and MML Small Cap Value Equity Fund.
Valuation Date: Each day on which the Company, the
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New York Stock Exchange ("NYSE") and the Fund are open for business. See the
Prospectuses for the Panorama Fund, Oppenheimer Funds, VIP Fund II Contrafund
Portfolio, American Century VP Income & Growth Portfolio, T. Rowe Price Mid-Cap
Growth Portfolio and MML Small Cap Value Equity Fund.
Valuation Period: The period of time beginning at the close of business of the
NYSE on each Valuation Date and ending at the close of business for the next
succeeding Valuation Date.
Variable Annuity: An annuity with payments which vary as to dollar amount in
relation to the investment performance of specified Sub-Accounts of the Separate
Account.
Written Request: A request or notice in writing, in a form satisfactory to the
Company, which is received by the Annuity Service Center.
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Highlights
General
A Contract Owner may elect to have Purchase Payments allocated to a segregated
investment account of C.M. Life Insurance Company (the "Company") which account
has been designated C.M. Multi-Account A (the "Separate Account") or to the
Fixed Accounts of the Company. The Company guarantees that it will credit a
specified minimum interest rate on amounts allocated to the Fixed Accounts.
Under certain circumstances, however, Purchase Payments may initially be
allocated to the Money Sub-Account of the Separate Account (see below). The
Separate Account invests in shares of certain Portfolios of the Panorama Fund,
in shares of certain Funds of Oppenheimer Funds, and subject to state
availability, in the shares of one Portfolio of VIP Fund II, one Portfolio of
American Century VP, one Portfolio of T. Rowe Price Equity Series and one Fund
of MML Trust. (See Eligible Investments.) Contract Owner(s) bear the investment
risk for all amounts allocated to the Separate Account.
Right to Examine Contract
The Contract may be returned to the Company for any reason within ten (10)
calendar days (or twenty (20) calendar days of the date of receipt with respect
to the circumstances described in (c) below) after its receipt by the Contract
Owner ("Right to Examine Contract"). It may be returned to the Company at its
Annuity Service Center. The Contract must be accompanied by a written request
signed by the Contract Owner that indicates the Contract Owner wishes to return
the Contract. When the Contract is received at the Annuity Service Center, it
will be voided as if it had never been in force. Upon its return, the Company
will refund the Contract Value next computed after receipt of the Contract by
the Company at its Annuity Service Center except in the following circumstances
in which the Company will refund the greater of Purchase Payments, less any
withdrawals, or the Contract Value: (a) where the Contract is purchased pursuant
to an Individual Retirement Annuity; (b) in those states which require the
Company to refund Purchase Payments, less withdrawals; or (c) in the case of
Contracts (including Contracts purchased pursuant to an Individual Retirement
Annuity) which are deemed by certain states to be replacing an existing annuity
or insurance contract and which require the Company to refund Purchase Payments,
less withdrawals.
With respect to the circumstances described in (a) and (b) above, the Company
will allocate initial Purchase Payments to the Money Sub-Account until the
expiration of fifteen (15) days from the Issue Date. With respect to the
circumstances described in (c) above, the Company will allocate initial Purchase
Payments to the Money Sub-Account until the expiration of twenty-five (25) days
from the Issue Date. Upon the expiration of such fifteen (15) day period (or
twenty-five (25) day period respectively), the Sub-Account value of the Money
Sub-Account will be allocated to the Separate Account and/or Fixed Account in
accordance with any previous election made by the Contract Owner.
Charges and Deductions
Mortality and Expense Risk Charge. Each Valuation Period, the Company deducts a
Mortality and Expense Risk Charge which is equal, on an annual basis, to 1.25%
of the average daily net asset value of the Separate Account. This charge
compensates the Company for assuming the mortality and expense risks under the
Contracts. (See Charges and Deductions - Deduction for Mortality and Expense
Risk Charge.)
Administrative Charge. Each Valuation Period, the Company deducts an
Administrative Charge which is currently equal, on an annual basis, to 0.15% of
the average daily net asset value of the Separate Account. This charge may be
increased but it cannot exceed 0.25% of the average daily net asset value of the
Separate Account. This charge compensates the Company for costs associated with
the administration of the Contracts and the Separate Account. (See Charges and
Deductions - Deduction for Administrative Charge.)
Withdrawals. During the Accumulation Period, the Contract Owner may, upon
Written Request, make a total or partial withdrawal of Contract Value.
Withdrawals may be subject to a Contingent Deferred Sales Charge. (See
Withdrawals.)
Contingent Deferred Sales Charge. The Company does not deduct a sales charge
when it receives a Purchase Payment. However, if any part of Contract Value is
withdrawn, a Contingent Deferred Sales Charge may be assessed by the Company.
Subject to the Free Withdrawal Amount and the Additional Free Withdrawal Amount
described below, Contract withdrawals derived from a Purchase Payment deposited
with the Company for a period of seven years or less will be subject to a
Contingent Deferred Sale Charge ranging from 7% to 1%.
Free Withdrawal Amount. The Contract Owner may withdraw, without incurring a
Contingent Deferred Sales Charge, the greater of:
(a) the portion of the Contract Value attributable to positive investment
results, if any, on the date of withdrawal; or
(b) 10% of Purchase Payments remaining in the Contract on the withdrawal date
reduced by any Free Withdrawal(s) previously taken during the current
Contract Year.
Annual Contract Maintenance Charge. Currently, there is an Annual Contract
Maintenance Charge of $30 deducted on the last day of the Contract Year. This
charge may be increased but it cannot exceed $60 per Contract Year. In the
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event of an increase, the Company will give Contract Owners 90 days prior notice
of the increase. However, if the Contract Value on the last day of the Contract
Year is at least $100,000, then no Annual Contract Maintenance Charge will be
deducted. If a total withdrawal is made on other than the last day of the
Contract Year and the Contract Value for the Valuation Period during which the
total withdrawal is made is less than $100,000, the full Annual Contract
Maintenance Charge will be deducted at the time of the total withdrawal. Subject
to state regulation, the Annual Contract Maintenance Charge will be deducted
from the Sub-Accounts and the Fixed Accounts in the same proportion that the
amount of the Contract Value in each Sub-Account and the Fixed Accounts bears to
the total Contract Value. If the Annuity Date is not the last day of the
Contract Year, then a pro-rata portion of the Annual Contract Maintenance Charge
will be deducted on the Annuity Date. During the Annuity Period, the Annual
Contract Maintenance Charge will be deducted pro-rata from Annuity Payments
regardless of Contract size and will result in a reduction of each Annuity
Payment.
Premium Taxes. Premium Taxes may be charged against Purchase Payments or
Contract Values. (See Charges and Deductions - Deduction for Premium and Other
Taxes.) The Company currently intends to advance any Premium Taxes that may be
due at the time Purchase Payments are made and then deduct a charge for such
Premium Taxes from a Contract Owner's Contract Value at the time Annuity
Payments begin or upon a total withdrawal if the Company is unable to obtain a
refund. Premium taxes generally range from 0% to 3.5%.
Transfer Fee. Under certain circumstances, a Transfer Fee may be assessed during
the Accumulation Period when a Contract Owner makes a transfer from the Fixed
Account or any Sub-Account to another Sub-Account or the Fixed Account. In
addition, a Transfer Fee may be assessed during the Annuity Period when a
Contract Owner makes a transfer from one Sub-Account to another Sub-Account or
from a Sub-Account to the Fixed Account. The Transfer Fee is the lesser of $20
or 2% of the amount transferred. (See Charges and Deductions - Deduction for
Transfer Fee.)
Federal Income Tax Penalty. There is a ten percent (10%) federal income tax
penalty applied to the income portion of any distribution from Non-Qualified
Contracts. However, the penalty is not imposed on amounts received: (a) after
the taxpayer reaches age 59 1/2; (b) after the death of the Contract Owner; (c)
if the taxpayer is totally disabled (for this purpose disability is as defined
in Section 72(m)(7) of the Code); (d) in a series of substantially equal
periodic payments made not less frequently than annually for the life (or life
expectancy) of the taxpayer or the joint lives (or joint life expectancies) of
the taxpayer and his or her Beneficiary; (e) under an immediate annuity; or (f)
which are allocable to purchase payments made prior to August 14, 1982. For
federal income tax purposes, withdrawals are deemed to be on a last-in, first-
out basis. (See Tax Status - Tax Treatment of Withdrawals - Non-Qualified
Contracts.) Separate tax withdrawal penalties and restrictions apply to
Qualified Contracts. For a further discussion of the taxation of the Contracts,
see Tax Status.
See Tax Status - Diversification for a discussion of owner control of the
underlying investments in a variable annuity contract.
The Contract
Transfers. Subject to certain conditions, Contract Owners may make unlimited
transfers between Sub-Accounts and/or the Fixed Account during the Accumulation
Period and 6 transfers per calendar year during the Annuity Period. A transfer
from the Fixed Account is limited each Contract Year to the greater of thirty
percent (30%) of the Contract Owner's Contract Value determined as of the last
day of the previous Contract Year allocated to the Fixed Account or $30,000. In
addition, a ninety (90) day restriction exists for certain types of transfers
involving the Fixed Account or the Money Market Sub-Account. The Company
reserves the right to further limit the number of transfers in the future. The
Contract provides for twelve (12) free transfers per calendar year during the
Accumulation Period and six (6) free transfers per calendar year during the
Annuity Period. Transfers made in excess of the number of free transfers will
result in the imposition of the Transfer fee. During the Annuity Period, the
Contract Owner may, once each Contract Year, make a transfer from one or more
Sub-Accounts to the General Account. However, transfers cannot be made from the
General Account to the Separate Account during the Annuity Period. (See
Transfers.) The rules and restrictions related to transfers involving the Fixed
Account described in this provision do not apply to the DCA Fixed Account. (See
DCA Fixed Account.)
Death Benefit. Prior to the Contract Owner, or the oldest Joint Contract Owner,
or the Annuitant, if the Owner is a non-natural person, attaining age 75, the
death benefit during the Accumulation Period will be at least equal to the
Purchase Payments, less any withdrawals including any applicable charges. (See
Proceeds Payable on Death for an additional discussion.)
Annuity Options. There are six (6) Annuity Options available for the Contract
Owner to choose from. The Contract Owner may elect to have the Contract Value
applied to provide a Variable Annuity, a Fixed Annuity, or a combination Fixed
and Variable Annuity. (See Annuity Provisions for a further discussion.)
Maximum Issue Ages. The maximum issue age is Attained Age 85. This restriction
applies at the time of Contract issue and upon any change in Contract Owner or
Annuitant during the Accumulation Period and applies to both the Contract Owner
and the Annuitant. For Joint Owners all provisions
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which are based upon age, including the maximum issue age, are based on the age
of the older of the Joint Owners. If the Contract is owned by a non-natural
person, the Contract Owner shall mean Annuitant.
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C.M. Multi-Account A
Table of Fees and Expenses
(see Note 1)
Contract Owner Transaction Expenses
Transfer Fee No charge is imposed for the first 12 transfers in a calendar
(see Note 3) year during the Accumulation Period; thereafter the fee is the
lesser of $20 or 2% of the amount transferred. Only 6
transfers in a calendar year are permitted during the Annuity
Period and there is no fee for those 6 transfers.
Sales Load on Purchases.......................................0%
Maximum Contingent Deferred Sales Charge Computed on Amounts
Withdrawn (as a percentage of Contract Owner's Purchase
Payment)(see Note 2) 7%
Annual Contract Maintenance Charge (see Note 4)..............$30 per Contract
per Contract Year.
Separate Account Annual Expenses
(as a percentage of average account value)
Mortality and Expense Risk Charge.............................1.25%
Administrative Charge (see Note 5)............................0.15%
Total Separate Account Annual Expenses........................1.40%
ELIGIBLE INVESTMENTS' ANNUAL EXPENSES FOR 1997
(as a percentage of the average net assets of a Portfolio)
Management Other Total Operating
Fees Expenses Expenses
Oppenheimer Money Fund 0.44% 0.04% 0.48%
Oppenheimer Bond Fund 0.73% 0.05% 0.78%
Panorama LifeSpan Diversified Income
Portfolio 0.75% 0.09% 0.84%
Panorama Total Return Portfolio 0.54% 0.01% 0.55%
Panorama LifeSpan Balanced Portfolio 0.85% 0.12% 0.97%
Panorama LifeSpan Capital
Appreciation Portfolio 0.85% 0.14% 0.99%
Panorama Growth Portfolio 0.53% 0.01% 0.54%
Panorama International Equity
Portfolio 1.00% 0.12% 1.12%
VIP Fund II Contrafund Portfolio* 0.60% 0.11% 0.71%
American Century VP Income & Growth
Portfolio* 0.70% ---- 0.70%
T. Rowe Price Mid-Cap Growth
Portfolio* 0.85% ---- 0.85%
MML Small Cap Value Equity Fund* 0.65% 0.11%*** 0.76%**
*Subject to state availability
**The MML Small Cap Value Equity Fund had no operating expenses in 1997 since it
had not yet commenced operations. These figures represent MassMutual's estimate
of the total operating expenses for the MML Small Cap Value Equity Fund.
***C.M. Life has agreed to bear expenses of the MML Small Cap Value Equity Fund
(other than management fee, interest, taxes, brokerage commissions and
extraordinary expenses) in excess of .11% of the average daily net asset value
through April 30, 1999. C.M. Life estimates that these expenses will be 0.39% in
1998.
(See the Prospectuses for Panorama Fund, Oppenheimer Funds, VIP Fund II
Contrafund Portfolio, American Century VP Income
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& Growth Portfolio, T. Rowe Price Mid-Cap Growth Portfolio and MML Small Cap
Value Equity Fund for more information.)
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Examples (See Note 6)
A Contract Owner would pay the following expenses on a $1,000 investment,
assuming the entire Contract Value is allocated to the Separate Account,
assuming a 5% annual return on assets, assuming that the same Portfolio and Fund
expenses as shown above remain the same for the periods shown in the examples,
and assuming the Contract is fully surrendered at the end of each time period.
Year 1 3 5 10
Oppenheimer Money Fund $85 $112 $137 $231
Oppenheimer Bond Fund 88 121 153 262
Panorama LifeSpan Diversified Income Portfolio 89 122 156 269
Panorama Total Return Portfolio 86 114 141 238
Panorama LifeSpan Balanced Portfolio 90 126 162 282
Panorama LifeSpan Capital Appreciation Portfolio 90 127 163 284
Panorama Growth Portfolio 86 114 140 237
Panorama International Equity Portfolio 91 131 170 297
VIP Fund II Contrafund Portfolio* 87 118 149 255
American Century VP Income & Growth Portfolio* 87 118 148 254
T. Rowe Price Mid-Cap Growth Portfolio* 89 123 156 270
MML Small Cap Value Equity Fund* 88 120 151 260
* Subject to state availability.
A Contract Owner would pay the following expenses assuming either 1) the
Contract is not surrendered at the end of each time period, or 2) the Contract
is annuitized at the end of each time period.
Year 1 3 5 10
Oppenheimer Money Fund $20 $62 $107 $231
Oppenheimer Bond Fund 23 72 123 262
Panorama LifeSpan Diversified Income Portfolio 24 73 126 269
Panorama Total Return Portfolio 21 64 111 238
Panorama LifeSpan Balanced Portfolio 25 77 132 282
Panorama LifeSpan Capital Appreciation Portfolio 25 78 133 284
Panorama Growth Portfolio 21 64 110 237
Panorama International Equity Portfolio 27 82 140 297
VIP Fund II Contrafund Portfolio* 23 69 119 255
American Century VP Income & Growth Portfolio* 22 69 118 254
T. Rowe Price Mid-Cap Growth Portfolio* 24 74 126 270
MML Small Cap Value Equity Fund* 23 71 121 260
* Subject to state availability.
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Condensed Financial Information
ACCUMULATION UNIT VALUES
Sub-Account Dec. 31, 1997 Dec. 31, 1996 1996(a)
------------- ------------- -------
Money 10.741883 10.342534 10.00
Bond 11.133260 10.333908 10.00
LifeSpan Diversified Income 11.648276 10.498529 10.00
Total Return 12.689528 10.831420 10.00
LifeSpan Balanced 12.401154 11.208195 10.00
LifeSpan Capital Appreciation 12.970161 11.688219 10.00
Growth 14.655753 11.761149 10.00
International Equity 11.858034 11.123558 10.00
ACCUMULATION UNITS OUTSTANDING
Sub-Account Dec. 31, 1997 Dec. 31, 1996
------------- -------------
Money 1,270,662 526,970
Bond 577,928 245,238
LifeSpan Diversified Income 750,520 250,228
Total Return 3,810,237 1,416,956
LifeSpan Balanced 1,882,142 990,137
LifeSpan Capital Appreciation 1,988,330 910,038
Growth 3,900,882 1,258,381
International Equity 1,128,689 320,578
(a) Commencement of public offering was January 23, 1996.
Financial Statements
For audited financial statements and other information concerning the financial
condition of C.M. Multi-Account A and the Company, see the Statement of
Additional Information.
Notes to Table Of Fees and Expenses and Examples
1. The purpose of the Fee Table is to assist Contract Owners in understanding
the various costs and expenses that a Contract Owner will incur directly or
indirectly. The Fee Table reflects expenses of the Separate Account as well
as the Portfolios of Panorama Fund, VIP Fund II, American Century VP, T.
Rowe Price Equity Series, and the Funds of Oppenheimer Funds and MML Trust.
For additional information, see "Charges and Deductions" in this Prospectus
and the Prospectuses for Panorama Fund, VIP Fund II Contrafund Portfolio,
American Century VP Income & Growth Portfolio, T. Rowe Price Mid-Cap Growth
Portfolio, MML Small Cap Value Equity Fund, and Oppenheimer Funds.
2. A portion of a Contract Owner's Contract Value may be withdrawn each
Contract Year without the assessment of a Contingent Deferred Sales Charge
(see Free Withdrawal Amount). After a Purchase Payment has been held by the
Company for seven years such Purchase Payment, may be withdrawn without
assessment of the Contingent Deferred Sales Charge. Under certain
circumstances, in the event of a terminal illness Contract Value may be
withdrawn without the assessment of a Contingent Deferred Sales Charge (see
Terminal Illness Benefit). In addition, a Contingent Deferred Sales Charge
is not assessed against the payment of a death benefit.
3. Transfers made by the Company at the end of the Right to Examine Contract
period will not be counted in determining the application of the Transfer
Fee. The Transfer Fee is the lesser of $20 or 2% of the amount transferred.
All transfers made during a Valuation Period are deemed to be one transfer.
Currently, transfers made under the following circumstances will not be
counted in determining the application of the Transfer Fee: (i) transfers
made in conjunction with an approved dollar cost averaging program; and (ii)
transfers made in conjunction with the Rebalancing Program. (See Charges and
Deductions - Deduction for Transfer Fee and Dollar Cost Averaging and
Rebalancing Program.)
4. Currently, the Annual Contract Maintenance Charge is $30 each Contract Year
and is deducted on the last day of the Contract Year. This charge may be
increased but it will not exceed $60 per Contract Year. In the event of an
increase, the Company will give Contract Owners 90 days prior notice of the
increase. However, if the Contract Value on the last day of the Contract
Year is at least $100,000, then no Annual Contract Maintenance Charge will
be deducted. If a total withdrawal is made on other than the last day of the
Contract Year and the Contract Value for the Valuation Period during which
the total withdrawal is made is less than $100,000, the full Annual Contract
Maintenance Charge will be deducted at the time of the total withdrawal.
Subject to state regulation, the Annual Contract Maintenance Charge will be
deducted from the Fixed Accounts and Sub-Accounts in the same proportion
that the amount of the Contract Value in each Sub-Account and the Fixed
Accounts bears to the total Contract Value. If the Annuity Date is not the
last day of the Contract Year and the Contract Value on the Annuity Date is
less than $100,000, then a pro-rata portion of the Annual Contract
Maintenance Charge will be deducted on the Annuity Date. During the Annuity
Period, the Annual Contract Maintenance Charge will be deducted pro-rata
from Annuity Payments regardless of Contract size and will result in a
reduction of each Annuity Payment. (See Charges and Deductions - Deduction
for Annual Contract Maintenance Charge.) The examples reflect
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the $30 Annual Contract Maintenance Fee as an annual charge of 0.09% of
assets, based on an anticipated average Contract Value of $35,000.
5. The current Administrative Charge is equal on an annual basis to 0.15% of
the average daily net asset value of the Separate Account. The Company may
increase this charge to an amount not to exceed 0.25% of the average daily
net asset value of the Separate Account.
6. The Examples assume an average Contract Value of $35,000. Premium Taxes are
not reflected. Premium taxes may apply. (See Charges and Deductions -
Deduction for Premium and Other Taxes.) The examples should not be
considered a representation of past or future expenses. Actual expenses may
be greater or less than those shown.
The Company
C.M. Life Insurance Company (the "Company"), 140 Garden Street, Hartford,
Connecticut 06154, is a stock life insurance company. It was chartered by a
special Act of the Connecticut General Assembly on April 25, 1980. It is
principally engaged in the sale of life insurance and annuities, and is licensed
in all states except New York.
Prior to February 29, 1996, the Company was a wholly-owned subsidiary of
Connecticut Mutual Life Insurance company ("CML"). On February 29, 1996, CML
merged with and into Massachusetts Mutual Life Insurance Company ("MassMutual").
The Company is now a wholly-owned subsidiary of MassMutual. The merger did not
affect any provision of, or rights or obligations under, the Contracts issued by
the Company.
MassMutual is a mutual life insurance company specially chartered by the
Commonwealth of Massachusetts on May 14, 1851. It is currently licensed to
transact life, accident, and health insurance business in all states, the
District of Columbia, Puerto Rico and certain provinces of Canada. MassMutual
had estimated unconsolidated statutory assets in excess of $57 billion, and
estimated total assets under management in excess of $152 billion as of December
31, 1997.
The Separate Account
The Board of Directors of the Company adopted a resolution to establish a
segregated asset account pursuant to Connecticut insurance law on August 3, 1994
designated as C.M. Multi-Account A (the "Separate Account"). The Separate
Account is registered with the Securities and Exchange Commission as a unit
investment trust pursuant to the provisions of the Investment Company Act of
1940, as amended.
The assets of the Separate Account are the property of the Company. However, the
assets of the Separate Account, equal to the reserves and other contract
liabilities with respect to the Separate Account, are not chargeable with
liabilities arising out of any other business the Company may conduct. Income,
gains and losses, whether or not realized, are, in accordance with the
Contracts, credited to or charged against the Separate Account without regard to
other income, gains or losses of the Company. The Company's obligations arising
under the Contracts are general obligations. The Separate Account meets the
definition of a "separate account" under federal securities laws.
The Separate Account currently is divided into three segments, one of which
relates to the Contracts. This segment is divided into Sub-Accounts, with the
assets of each Sub-Account invested in one Portfolio of the Panorama Series
Fund, Inc. (LifeSpan Diversified Income Portfolio, LifeSpan Balanced Portfolio,
LifeSpan Capital Appreciation Portfolio, Total Return Portfolio, Growth
Portfolio, and International Equity Portfolio), one Fund of the Oppenheimer
Variable Account Funds (Money Fund and Bond Fund), and subject to state
availability, one Portfolio of VIP Fund II (Contrafund Portfolio), one Portfolio
of American Century VP (VP Income & Growth), one Portfolio of T. Rowe Price
Equity Series (Mid-Cap Growth Portfolio) and one Fund of MML Trust (MML Small
Cap Value Equity Fund). There is no assurance that the investment objectives of
any of the Portfolios will be met. Contract Owners bear the complete investment
risk for Purchase Payments allocated to a Sub-Account. Contract Values will
fluctuate in accordance with the investment performance of the Sub-Accounts to
which Purchase Payments are allocated, and in accordance with the imposition of
the fees and charges assessed under the Contracts.
Eligible Investments
The following are the current Separate Account Eligible Investments that can be
selected as the underlying investments of the Contract. While a brief summary of
the various investment objects is set forth below, more comprehensive
information, including a discussion of potential risk, is found in the current
Prospectus for each of the Eligible Investments which are included with this
Prospectus.
Panorama Series Fund, Inc.
Panorama Series Fund, Inc. ("Panorama Fund") is an open-end management
investment company. OppenheimerFunds, Inc. ("OFI"), an investment adviser
registered with the SEC under the Investment Advisers Act of 1940, as amended,
("Investment Advisers Act") is the investment adviser to the Panorama Fund, and
performs sales and administrative functions relative to the Panorama Fund,
including the keeping of all records not maintained by the custodian. OFI
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has operated as an investment adviser since 1959 and, together with a
subsidiary, manages companies with $75 billion in assets and 3.5 million
shareholder accounts as of December 31, 1997. OFI is owned by Oppenheimer
Acquisition Corporation, a holding company that is owned in part by senior
officers for OFI and controlled by MassMutual. The address of OFI is Two World
Trade Center, New York, NY 10048-0203.
OFI has engaged three Subadvisers to assist in the selection of portfolio
investments for the International Equity Portfolio, the LifeSpan Diversified
Income Portfolio, the LifeSpan Balanced Portfolio, and the LifeSpan Capital
Appreciation Portfolio. Babson-Stewart Ivory International ("Babson-Stewart"),
One Memorial Drive, Cambridge, MA 02142, is the Subadviser to the International
Equity Portfolio and the international stock components of the LifeSpan Balanced
Portfolio and the LifeSpan Capital Appreciation Portfolio. Babson-Stewart is a
partnership formed in 1987 between David L. Babson & Co., Inc., a subsidiary of
MassMutual and Stewart Ivory & Co., Ltd., located in Edinburgh, Scotland. BEA
Associates, 599 Lexington Avenue, 36th Floor, New York, NY 10022, is the
Subadviser to the high yield bond components of the three LifeSpan Portfolios.
Pilgrim, Baxter & Associates ("Pilgrim Baxter"), 1255 Drummers Lane, Wayne, PA
19087, is the Subadviser to the small cap components of the LifeSpan Balanced
Portfolio and the LifeSpan Capital Appreciation Portfolio.
Panorama Fund LifeSpan Diversified Income Portfolio
(Diversified Income Portfolio)
The Diversified Income Portfolio is designed for the investor with a relatively
low tolerance for risk who is seeking current income with some long-term
inflation protection. The Diversified Income Portfolio seeks high current
income, with opportunities for capital appreciation through a strategically
allocated portfolio consisting primarily of bonds.
Panorama Fund Total Return Portfolio
The investment objective of the Total Return Portfolio is to maximize the total
investment return (including capital appreciation and income) by allocating its
assets among stocks, corporate bonds, securities issued by the U.S. Government
and its instrumentalities, and money market instruments according to changing
market conditions.
Panorama Fund LifeSpan Balanced Portfolio
(Balanced Portfolio)
The Balanced Portfolio is designed for the investor seeking a blend of capital
appreciation and income. The Balanced Portfolio seeks a blend of capital
appreciation and income through a strategically allocated portfolio of stocks
and bonds with a slightly stronger emphasis on stocks.
Panorama Fund LifeSpan Capital Appreciation Portfolio
(Capital Appreciation Portfolio)
The Capital Appreciation Portfolio is designed for the investor seeking capital
appreciation. The Capital Appreciation Portfolio seeks long-term capital
appreciation through a strategically allocated portfolio consisting primarily of
stocks. Current income is not a primary consideration.
Panorama Fund Growth Portfolio
The investment objective of the Growth Portfolio is to achieve long-term growth
of capital by investing primarily in common stocks with low price-earnings
ratios and better than anticipated earnings. Realization of current income is a
secondary consideration.
Panorama Fund International Equity Portfolio
The investment objective of the International Equity Portfolio is to achieve
long-term growth of capital by investing primarily in equity securities (such as
common stocks) of non-U.S. issuers trading for the most part in non-U.S.
markets.
Oppenheimer Variable Account Funds
Oppenheimer Variable Account Funds ("Oppenheimer Funds") is an open-end
management investment company. The Oppenheimer Funds are also advised by OFI.
Oppenheimer Money Fund. The Money Fund seeks the maximum current income from
investments in "money market" securities consistent with low capital risk and
the maintenance of liquidity. Its shares are neither insured nor guaranteed by
the U.S. government, and there is no assurance that this Fund will be able to
maintain a stable net asset value of $1.00 per share.
Oppenheimer Bond Fund. The Bond Fund primarily seeks a high level of current
income by investing primarily in debt securities. Secondarily, this Fund seeks
capital growth when consistent with its primary objective.
Variable Insurance Product Fund II
Variable Insurance Product Fund II ("VIP Fund II") is an open-end management
investment company organized as a Massachusetts business trust on March 21,
1988. Fidelity Management & Research Company ("FMR") is the investment adviser
to VIP Fund II. FMR is the management arm of Fidelity Investments which was
established in 1946. Fidelity Investments has its principal business address at
82 Devonshire Street, Boston, Massachusetts 02109. FMR has engaged two
affiliates Fidelity Management & Research
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(U.K.) Inc. and Fidelity Management & Research (Far East) Inc. to serve as
subadvisers to the Contrafund Portfolio.
VIP Fund II Contrafund Portfolio*
The investment objective of the Contrafund Portfolio is to seek capital
appreciation by investing mainly in equity securities of companies that FMR
believes to by undervalued due to an overly pessimistic appraisal by the public.
The Contrafund Portfolio usually invests primarily in common stock and
securities convertible into common stock, but it has the flexibility to invest
in any type of security that may produce capital appreciation.
*Subject to state availability
American Century Variable Portfolios, Inc.
American Century Variable Portfolios, Inc. ("American Century VP") was organized
as a Maryland corporation in 1987 and is a diversified, open-end management
investment company. American Century Investment Management, Inc. ("American
Century") is the investment manager of American Century VP. American Century
has been providing investment advisory services to investment companies and
institutional investors since it was founded in 1958. American Century's address
is American Century Tower, 4500 Main Street, Kansas City Missouri 64111.
American Century VP Income & Growth Portfolio*
American Century VP Income & Growth Portfolio seeks long-term growth of capital
as well as current income. The fund pursues a total return and dividend yield
that exceeds those of the S&P 500 by investing in stocks of companies with
strong dividend growth potential.
*Subject to state availability
T. Rowe Price Equity Series, Inc.
T. Rowe Price Equity Series, Inc. ("T. Rowe Price Equity Series") was
incorporated in Maryland in 1994 and is a diversified, open-end investment
company. T. Rowe Price Associates, Inc. ("T. Rowe Price") is the investment
manager of T. Rowe Price Equity Series. T. Rowe Price and its affiliates
managed over $124 billion for more than six million individual and institutional
investor accounts as of December 31, 1997.
T. Rowe Price Mid-Cap Growth Portfolio*
The investment objective of the Mid-Cap Growth Portfolio is to provide long-term
capital appreciation by investing primarily in common stocks of medium-sized
(mid-cap) growth companies. This Portfolio will focus on companies with
superior earnings growth potential that are no longer considered new or emerging
but may still be in the dynamic phase of their life cycles.
* Subject to state availability.
MML Series Investment Fund
MML Series Investment Fund ("MML Trust") is a no-load, open-end, management
investment company having six series of shares each of which has different
investment objectives designed to meet different investment needs. The Company
serves as the investment adviser to the MML Trust. The Company has entered into
a subadvisory agreement with David L. Babson and Company, Inc. ("Babson"), a
controlled subsidiary of the Company, whereby Babson manages the investment of
the assets of the MML Small Cap Value Equity Fund.
MML Small Cap Value Equity Fund*
The investment objective of the MML Small Cap Value Equity Fund is to achieve
long-term growth of capital and income by investing primarily in a diversified
portfolio of equity securities of smaller companies. The Fund will invest
primarily in common stocks, securities convertible into common stocks and other
equity securities (such as warrants and stock rights) which are issued by
companies with a market capitalization, at the time of purchase, of $750 million
or less and which are listed on a national securities exchange or traded in the
over-the-counter market.
* Subject to state availability.
Some of the Portfolios/Funds available to Participants are substantially
identical to or are "clones" of mutual funds offered in the retail marketplace.
These "clone" funds have the same investment objectives, policies, and
portfolio managers as the retail mutual funds and usually were formed after the
retail mutual funds. For example, the VIP Fund II Contrafund is a clone of
Fidelity's Contrafund; the American Century VP Income & Growth Portfolio is a
clone of the American Century Income & Growth Fund and the T. Rowe Price Mid-Cap
Growth Portfolio is a clone of the T. Rowe Price Mid-Cap Growth Fund. While the
clone funds generally have identical investment objectives, policies and
portfolio managers, they are separate and distinct from the retail mutual funds.
In fact, the performance of the clone funds may be dramatically different from
the performance of the retail mutual funds due to differences in the funds'
sizes, dates shares of stock are purchased and sold, cash flows and expenses.
Thus, while the performance of the retail mutual funds may be informative, you
should remember that such performance is not the performance of the
Portfolios/Funds that are available to Participants and is not an indication of
future performance of such Portfolios/Funds.
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THERE IS NO ASSURANCE THAT ANY PORTFOLIO/ FUND WILL ACHIEVE ITS STATED
OBJECTIVE. More detailed information, including a description of each
Portfolio's/Fund's investment objective and policies, and a description of risks
involved in investing in each of the Portfolios/Funds and each
Portfolio's/Fund's fees and expenses, is contained in the prospectuses for
Panorama Fund, Oppenheimer Funds, VIP Fund II Contrafund Portfolio, American
Century VP Income & Growth Portfolio, T. Rowe Price Mid-Cap Growth Portfolio and
MML Small Cap Value Equity Fund, current copies of which are attached to this
Prospectus. Information contained in the Panorama Fund, Oppenheimer Funds, VIP
Fund II Contrafund Portfolio, American Century VP Income & Growth Portfolio, T.
Rowe Price Mid-Cap Growth Portfolio, and MML Small Cap Value Equity Fund
prospectuses should be read carefully before making allocation to any Sub-
Account of the Separate Account.
Voting Rights
As long as the Separate Account continues to operate as a unit investment trust
under the Investment Company Act of 1940, the Contract Owner during the lifetime
of the Annuitant, or the beneficiary after the Annuitant's death, will be
entitled to give instructions as to how the shares of the Funds held in the
Separate Account (or other securities held in lieu of such shares) deemed
attributable to the Contract should be voted at meetings of shareholders of the
Funds or the Trusts. Those persons entitled to give voting instructions will be
determined as of the record date for the meeting.
The number of Fund shares held in the Separate Account deemed attributable to a
Contract prior to its Maturity Date and during the lifetime of the Annuitant
will be determined by dividing the Contract's value held in each Sub-Account of
the Separate Account, if any, by $100. Fractional votes are counted. After the
Maturity Date or after the death of the Annuitant, the number of Fund shares
deemed attributable to the Contract will be based on the liability for future
Variable Monthly Annuity payments under the Contract as of the record date and
thus the voting rights will decrease as payments are made.
Contact Owners or beneficiaries will receive proxy material and a form with
which voting instructions may be given. Fund shares held by the Separate Account
as to which no effective instructions have been received or which are
attributable to assets transferred from the Company's general account will be
voted for or against any proposition in the same proportion as the shares as to
which instructions have been received.
In situations where the Annuitant is not the Contract Owner, the Annuitant will
have the right to instruct the Contract Owner with respect to the votes
attributable to any vested interest the Contract Owner has in the Contract. The
Company's obligation in this instance will be to make available to the Contract
Owner copies of the proxy material for distribution to the Annuitant. Votes
representing interests as to which the Contract Owner is not instructed may, in
turn, be voted by the Contract Owner in his discretion.
Substitution of Securities
If the shares of the Eligible Investments (or any Portfolio or Fund within an
Eligible Investment or any other funding vehicle made available under the
Contracts), are no longer available for investment by the Separate Account or,
if in the judgment of the Company's Board of Directors, further investment in
the shares should become inappropriate in view of the purpose of the Contracts,
the Company may limit further purchase of such shares or may substitute shares
of another funding vehicle for shares already purchased under the Contracts. No
substitution of securities may take place without prior approval of the
Securities and Exchange Commission and under the requirements it may impose.
The Fixed Accounts
Subject to state availability, two Fixed Accounts, the Fixed Account for Dollar
Cost Averaging (the "DCA Fixed Account") and the Fixed Account (collectively,
the "Fixed Accounts"), are available as investment options to Contract Owners.
The Fixed Accounts are investment options within the General Account of the
Company. Because of applicable exemptive and exclusionary provisions, interests
in the Fixed Accounts have not been registered under the Securities Act of 1933
(the "1933 Act") nor have the Fixed Accounts been registered under the
Investment Company Act of 1940 (the "1940 Act"). Therefore, neither the Fixed
Accounts nor any interest therein are generally subject to regulation under the
provisions of the 1933 Act or the 1940 Act. Accordingly, the Company has been
advised that the staff of the Securities and Exchange Commission has not
reviewed the disclosure in this Prospectus related to the Fixed Accounts.
Assets supporting amounts allocated to the Fixed Accounts become part of the
Company's General Account assets and are available to fund the claims of all
creditors of the Company. All of the Company's General Account assets will be
available to fund benefits under the Contracts.
DCA Fixed Account
Subject to state availability, upon written request and during the Accumulation
Period, the Contract Owner may elect to have net Purchase Payments allocated to
the DCA Fixed Account for a DCA Fixed Account term. For each DCA
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Fixed Account term, the Company will only accept a purchase payment as of the
beginning of the DCA Fixed Account term. A purchase payment includes any
purchase payment assigned to and accepted by the Company from a financial
institution as of the request of the DCA Fixed Account term. Purchase payments
which originate from annuity contracts issued by MassMutual or any of its
affiliates are not eligible to be allocated to the DCA Fixed Account. The
Company reserves the right to reject purchase payments. Only a new net purchase
payment may be designated for allocation to the DCA Fixed Account at the
beginning of a DCA Fixed Account term. No transfers may be made to the DCA Fixed
Account from any other account or sub-account maintained under the Contract.
Currently, the term for the DCA Fixed Account will be a period not to exceed 12
months beginning with receipt of a new purchase payment. To the extent
permitted by law, the Company reserves the right to change the duration of the
DCA Fixed Account term in the future. Only one DCA Fixed Account term may be
operative at a time. If a Contract Owner elects to make an allocation to the
DCA Fixed Account at a time when the Contract Owner's Annuity Date would be less
than the currently offered DCA Fixed Account term, the expiration of the DCA
Fixed Account term would be the Contract Owner's Annuity Date. No amounts will
remain under the DCA Fixed Account after the expiration of the DCA Fixed Account
term.
The interest rate credited to the DCA Fixed Account will be set periodically by
the Company and will never be less than 3%. The interest rate will be
guaranteed for the DCA Fixed Account term.
Scheduled monthly transfer payments will be made from the DCA Fixed Account to
Sub-Accounts in accordance with the Dollar Cost Averaging rules. (See Dollar
Cost Averaging.) Except for scheduled DCA Fixed Account transfer payments, no
transfers may be made from the DCA Fixed Account before the expiration of the
DCA Fixed Account term. DCA Fixed Account transfer payments will be made on the
scheduled transfer payment dates. If a scheduled transfer payment date is not a
Valuation Date, the transfer will be made on the next Valuation Date.
No partial withdrawals may be made from the DCA Fixed Account. If a total
withdrawal is made during a DCA Fixed Account term, such withdrawal will be made
in accordance with the withdrawal provisions of the Contract.
The Company reserves the right to assess a fee or charge for processing
transactions under the DCA Fixed Account. The Company reserves the right to
postpone payments for a withdrawal or transfer from the DCA Fixed Account for a
period of up to six months. Unless specified otherwise, that portion of the
Contract Value attributable to the DCA Fixed Account shall be used to provide a
Fixed Annuity to the Annuitant (Option B with 10 years of payments guaranteed)
if no Annuity option has been chosen at least 30 calendar days before the
Annuity Date. If the amount applied under an Annuity option is less than
$2,000, the Company reserves the right to pay the amount in a lump sum.
The Fixed Account
Purchase Payments may be allocated to the Fixed Account to the extent elected by
the Contract Owner at the time such payment is made. In addition, all or part
of the Contract Owner's Contract Value may be transferred to the Fixed Account
as described under "Transfers." The Contract Owner does not participate in the
investment performance of the assets of the Company's Fixed Account. Instead, a
specified rate of interest, declared in advance, is credited to amounts
allocated to the Fixed Account. This rate is guaranteed to be at least 3% per
year ("Guaranteed Minimum Rate"). The Company may, at its sole discretion,
credit a higher rate of interest ("excess interest") for any period specified in
advance by the Company. However, the Company is not obligated to credit
interest in excess of the 3% Guaranteed Minimum Rate per year, and might not do
so. The Contract Owner assumes the risk that interest credited may not exceed
the guaranteed minimum rate.
Charges and Deductions
Various charges and deductions are made from the Contract Value and the Separate
Account. These charges and deductions are:
Deduction for Mortality and Expense Risk Charge
Each Valuation Period, the Company deducts a Mortality and Expense Risk Charge
which is equal, on an annual basis, to 1.25% of the average daily net asset
value of the Separate Account. The mortality risks assumed by the Company arise
from its contractual obligation to make Annuity Payments after the Annuity Date
(determined in accordance with the Annuity Option chosen by the Contract Owner)
regardless of how long all Annuitants live. This assures that neither an
Annuitant's own longevity, nor an improvement in life expectancy greater than
expected, will have any adverse effect on the Annuity Payments the Annuitant
will receive under the Contract. Further, the Company bears a mortality risk in
that it guarantees the annuity purchase rates for the Annuity Options under the
Contract whether for a Fixed Annuity or a Variable Annuity. Also, there is a
mortality risk borne by the Company with respect to the death benefit and to the
waiver of the Contingent Deferred Sales Charge upon the death of the Owner. The
expense risk assumed by the Company is that all actual expenses involved in
administering the Contracts, including
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Contract maintenance costs, administrative costs, mailing costs, data processing
costs, legal fees, accounting fees, filing fees and the costs of other services
may exceed the amount recovered from the Annual Contract Maintenance Charge and
the Administrative Charge.
If the Mortality and Expense Risk Charge is insufficient to cover the actual
costs, the loss will be borne by the Company. Conversely, if the amount deducted
proves more than sufficient, the excess will be a profit to the Company. The
Company expects a profit from this charge. Mortality and Expense Risk Charge is
guaranteed by the Company and cannot be increased.
Deduction for Administrative Charge
Each Valuation Period, the Company deducts an Administrative Charge which is
currently equal, on an annual basis, to 0.15% of the average daily net asset
value of the Separate Account. This charge, together with the Annual Contract
Maintenance Charge, is to reimburse the Company for the expenses it incurs in
the establishment and maintenance of the Contracts and the Separate Account.
These expenses include but are not limited to: preparation of the Contracts,
confirmation statements, annual and periodic reports and statements, maintenance
of Contract Owner records, maintenance of Separate Account records,
administrative personnel costs, mailing costs, data processing costs, legal
fees, accounting fees, filing fees, the costs of other services necessary for
Contract Owner servicing and all accounting, valuation, regulatory and reporting
requirements. Since this charge is an asset-based charge, the amount of the
charge attributable to a particular Contract may have no relationship to the
administrative costs actually incurred by that Contract. The Company does not
intend to profit from this charge. This charge will be reduced to the extent
that the amount of this charge is in excess of that necessary to reimburse the
Company for its administrative expenses. Should this charge prove to be
insufficient, the Company may increase this charge but guarantees that it will
never exceed 0.25% of the average daily net asset value of the Separate Account.
If this Charge is increased, Contract Owners will be given 90 days prior notice.
Deduction for Annual Contract Maintenance Charge
Currently, the Annual Contract Maintenance Charge is $30 each Contract Year and
is deducted on the last day of the Contract Year. This charge may be increased
but it will not exceed $60 per Contract Year. However, if the Contract Value on
the last day of the Contract Year is at least $100,000, then no Annual Contract
Maintenance Charge will be deducted. If a total withdrawal is made on other than
the last day of the Contract Year and the Contract Value for the Valuation
Period during which the total withdrawal is made is less than $100,000, the full
Annual Contract Maintenance Charge will be deducted at the time of the total
withdrawal. Subject to state regulation, the Annual Contract Maintenance Charge
will be deducted from the Fixed Accounts and the Sub-Accounts in the same
proportion that the amount of the Contract Value in each Sub-Account and the
Fixed Accounts bears to the total Contract Value. If the Annuity Date is not the
last day of the Contract Year and the Contract Value on the Annuity Date is less
than $100,000, then a pro-rata portion of the Annual Contract Maintenance Charge
will be deducted on the Annuity Date. During the Annuity Period, the Annual
Contract Maintenance Charge will be deducted pro-rata from Annuity Payments
regardless of Contract size and will result in a reduction of each Annuity
Payment. The Company has set this charge at a level so that, when considered in
conjunction with the Administrative Charge (see above), it will not make a
profit from the charges assessed for administration. If this Charge is
increased, Contract Owners will be given 90 days prior notice.
Deduction for Premium and Other Taxes
Any Premium Taxes relating to the Contracts may be deducted from the Purchase
Payments or Contract Value when incurred. The Company currently intends to
advance any Premium Taxes that may be due at the time Purchase Payments are made
but not deduct such Premium Taxes from Contract Value until the time Annuity
Payments begin, or upon a total withdrawal if the Company is unable to obtain a
refund. The Company will, in its sole discretion, determine when Premium Taxes
have resulted from: the investment experience of the Separate Account; receipt
by the Company of the Purchase Payments; or commencement of Annuity Payments.
The Company may, at its sole discretion, pay such Premium Taxes when due and
deduct that amount from the Contract Value at a later date. Payment at an
earlier date does not waive any right the Company may have to deduct amounts at
a later date. Premium Taxes generally range from 0% to 3.5%. The Company will
deduct any withholding taxes required by applicable law.
The Company reserves the right to establish a provision for federal income taxes
if it determines, in its sole discretion, that it will incur a tax as a result
of the operation of the Separate Account. The Company will deduct for any income
taxes incurred by it as a result of the operation of the Separate Account
whether or not there was a provision for taxes and whether or not it was
sufficient. The Company is not currently making any provision for federal income
taxes.
Deduction for Fund Expenses
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There are other deductions from and expenses paid out of the assets of the
Panorama Fund, Oppenheimer Funds, VIP Fund II Contrafund Portfolio, American
Century VP Income & Growth Portfolio, T. Rowe Price Mid-Cap Growth Portfolio and
MML Small Cap Value Equity Fund, including amounts paid for advisory and
management fees, which are described in the accompanying fund prospectuses.
Deduction for Transfer Fee
Subject to certain conditions (see Transfers), Contract Owners may transfer all
or part of the Contract Owner's interests among the Sub-Accounts and/or the
Fixed Account during the Accumulation Period or during the Annuity Period
transfer interests from a Sub-Account to the General Account without the
imposition of any fee or charge if there have been no more than the number of
free transfers permitted. Contract Owners are currently not limited to any
number of transfers during the Accumulation Period and are limited to six (6)
transfers per calendar year during the Annuity Period. If, during the
Accumulation Period, more than the number of free transfers per Contract Year
(currently 12 per year) have been made, the Company will deduct a Transfer Fee
for each subsequent transfer permitted. The Transfer Fee is the lesser of $20 or
2% of the amount transferred. The Transfer Fee will be deducted from the Sub-
Account(s) and/or Fixed Accounts (collectively "Account(s)") from which the
transfer occurred. If the entire Account balance is transferred, the Transfer
Fee will be deducted from the amount transferred. All transfers made during a
Valuation Period are deemed to be one transfer. Currently, transfers made under
the following circumstances will not be counted in determining the application
of the Transfer Fee: (i) transfers made by the Company at the end of the Right
to Examine Contract period; (ii) transfers made in conjunction with an approved
dollar cost averaging program; (see Dollar Cost Averaging) and (iii) transfers
made under the Rebalancing Program. (See Rebalancing Program.)
Deduction for Contingent Deferred Sales Charge
No deduction for sales charges is made from a Purchase Payment. However, if a
withdrawal is made, a Contingent Deferred Sales Charge may be assessed by the
Company. The length of time between the Company's acceptance of a Purchase
Payment and the making of a withdrawal determines the Contingent Deferred Sales
Charge, if any. Each Purchase Payment has its own time period for purposes of
assessing a Contingent Deferred Sales Charge. This Charge will be used to cover
certain expenses relating to the sale of the Contracts including commissions
paid to sales personnel, the costs of preparation of sales literature, other
promotional costs and acquisition expenses. A withdrawal shall be deemed to
first withdraw any positive investment results and thereafter Purchase Payments
on a first-in-first-out basis for purposes of computing the Contingent Deferred
Sales Charge.
Subject to the Free Withdrawal Amount described below, the following table shows
Contingent Deferred Sales Charges:
Contingent
Deferred
Sales Charge
Against
Amount
Withdrawn Year Applicable
- ---------- ---------------
7% During 1st Year since Purchase Payment Accepted
6% During 2nd Year since Purchase Payment Accepted
5% During 3rd Year since Purchase Payment Accepted
4% During 4th Year since Purchase Payment Accepted
3% During 5th Year since Purchase Payment Accepted
2% During 6th Year since Purchase Payment Accepted
1% During 7th Year since Purchase Payment Accepted
0% Thereafter
The Contingent Deferred Sales Charge is assessed against the amounts remaining
in the Sub-Account from which the withdrawal occurred. If a withdrawal is made
from more than one Sub-Account, the Contingent Deferred Sales Charge is assessed
against the amounts remaining in such Sub-Accounts in the same proportion to
which the withdrawal amount bears to the total value of such Sub-Accounts. If a
withdrawal causes the entire Sub-Account value to be withdrawn, then the
Contingent Deferred Sales Charge will be assessed against the amounts remaining
in the Sub-Accounts in the same proportion in which their value bears to
Contract Value. If a withdrawal causes the entire Contract Value to be
withdrawn, then the Contingent Deferred Sales Charge will be assessed against
the Contract Value withdrawn. The Contingent Deferred Sales Charge is not
imposed on a Purchase Payment after the end of the seventh year of the Company's
acceptance of such Purchase Payment, nor is the Contingent Deferred Sales Charge
imposed upon payment of the death benefit or upon amounts applied to purchase an
annuity.
Until April 30, 1999, no Contingent Deferred Sales Charge will be imposed upon
surrender of a Contract where the proceeds of such surrender are applied to the
purchase of a new group annuity Contract issued by Massachusetts Mutual Life
Insurance Company. This does not eliminate charges under the particular group
contract, and upon surrender of the group contract, charges may apply.
No Contingent Deferred Sales Charge will be imposed on the redemption of "excess
contributions" to a plan qualifying for special income tax treatment ("Qualified
Plan"), TSAs or IRAs. "Excess Contributions" (including excess aggregate
contributions) will be defined as provided in the
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Internal Revenue Code and applicable regulations.
Owners of certain IRA or non-qualified Flex Extra variable annuity contracts
issued by MassMutual that are beyond the sales charge period may exchange such
contracts for a Contract (the "Flex Extra exchange program"). When an eligible
Flex Extra contract is exchanged for a Contract, no Contingent Deferred Sales
Charge shall apply to initial purchase payments made pursuant to the exchange
but all subsequent purchase payments shall be subject to Contingent Deferred
Sales Charges.
Owners of IRA or non-qualified Account A, Account B and Account E variable
annuity contracts previously issued by Connecticut Mutual Life Insurance Company
may exchange such contracts for a Contract. When eligible Account A, B and E
contracts are exchanged for a Contract, no Contingent Deferred Sales Charge
shall apply to initial purchase payments made pursuant to the exchange, but any
subsequent purchase payments will be subject to the Contingent Deferred Sales
Charge.
The Flex Extra exchange program and the Accounts A, B and E exchange programs
are subject to state availability. The Company may terminate these exchange
programs at any time at its sole discretion. See the Statement of Additional
Information for further information about the Flex Extra exchange program or
contact your registered representative or call the Service Center at (800) 569-
6576.
Free Withdrawals
The Contract Owner may withdraw, without incurring a Contingent Deferred Sales
Charge, the greater of:
(a) the portion of the Contract Value attributable to positive investment
results, if any, on the date of withdrawal; or
(b) 10% of Purchase Payments remaining in the Contract on the withdrawal date
reduced by any Free Withdrawal(s) previously taken during the current
Contract Year.
Withdrawals must be taken first from investment earnings, if any, and next from
Purchase Payments. Withdrawals which are not attributable to investment earnings
will reduce the amount of Purchase Payments remaining in the Contract on a
first-in-first-out basis for purposes of computing any remaining Contingent
Deferred Sales Charge.
The Contracts
Contract Owner
The Contract Owner is the person(s) or entity(ies) entitled to ownership rights
stated in the Contract. The Contract Owner is the person designated as such on
the Issue Date, unless changed. The Company will not issue a Contract to a
person who has Attained Age 85 or older on the proposed Issue Date ("Maximum
Issue Age"). If the Contract is proposed to be issued to Joint Contract Owners,
the Company will apply the Maximum Issue Age to the eldest proposed Joint
Contract Owner.
The Contract Owner may change owners at any time prior to the Annuity Date by
Written Request. A change of Contract Owner will automatically revoke any prior
designation of Contract Owner. The change will become effective as of the date
the Written Request is received. A new designation of Contract Owner will not
apply to any payment made or action taken by the Company prior to the time it
was received. Any change of Contract Owner is subject to the Company's
underwriting rules then in effect. A change in Contract Owner may trigger
income tax consequences. (See Tax Status - General.)
Joint Contract Owners
The Contract can be owned by Joint Contract Owners. If Joint Contract Owners are
named, any Joint Contract Owner must be the spouse of the other Contract Owner
unless prohibited by applicable law or regulations. Upon the death of either
Contract Owner, the surviving spouse will be the Primary Beneficiary. Any other
Beneficiary designation on record at the time of death will be treated as a
Contingent Beneficiary unless otherwise indicated in a Written Request. Unless
otherwise specified in the application for the Contract, if there are Joint
Contract Owners both signatures will be required for all Contract Owner
transactions except telephone transfers. If the telephone transfer option is
elected and there are Joint Contract Owners, either Joint Contract Owner can
give telephone instructions.
Annuitant
The Annuitant is the person on whose life Annuity Payments are based. The
Annuitant is the person designated by the Contract Owner at the Issue Date,
unless changed prior to the Annuity Date.
The Annuitant may not be changed in a Contract which is owned by a non-natural
person. Any change of Annuitant is subject to the Company's underwriting rules
then in effect. In the case of certain Qualified Contracts the Contract Owner
must be the Annuitant. The Company will not issue a Contract where the proposed
Annuitant is a person who has Attained Age 85 or older on the proposed Issue
Date ("Maximum Issue Age").
Assignment
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A Written Request specifying the terms of an assignment of the Contract must be
provided to the Annuity Service Center. Until the Written Request is received,
the Company will not be required to take notice of or be responsible for any
transfer of interest in the Contract by assignment, agreement, or otherwise.
The Company will not be responsible for the validity or tax consequences of any
assignment. Any assignment made after the death benefit has become payable will
be valid only with the Company's consent.
If the Contract is assigned, the Contract Owner's rights may only be exercised
with the consent of the assignee of record. The consent of any Irrevocable
Beneficiaries is required before assignment of proceeds can happen.
Purchase Payments and Contract Value
Purchase Payments
The initial Purchase Payment is due on the Issue Date. The minimum initial
Purchase Payment the Company will accept is $5,000 for Non-Qualified Contracts
and $2,000 for Qualified Contracts. The minimum subsequent Purchase Payment the
Company will accept is $250, unless the Contract Owner has elected the automatic
investment plan option in which case the Company will accept a minimum of $100.
For Contract Owners up to Age 75 on the Issue Date, the maximum cumulative
Purchase Payments without prior consent of the Company is $1 million. For
Contract Owners over Age 75 on the Issue Date, the maximum total Purchase
Payments without prior consent of the Company is $500,000. For contracts issued
to non-natural persons, the maximum Purchase Payment limits will apply to the
Annuitant's age. Purchase Payments above these amounts must be pre-approved by
the Company. For Joint Contract Owners, Age refers to the oldest Joint Contract
Owner. The Company reserves the right to reject any Application or Purchase
Payment.
Allocation of Purchase Payments
The allocation of the initial Purchase Payment is made in accordance with the
selection made by the Contract Owner at the time the Contract is issued, except
in the circumstances described under Right to Examine Contract. In those
circumstances, the Company will allocate initial Purchase Payments to the Money
Market Sub-Account until the expiration of the Right to Examine Contract period.
Upon expiration, the Contract Value will be reallocated in accordance with the
Contract Owner's selection. Unless otherwise changed by Written Request by the
Contract Owner, subsequent Purchase Payments are allocated in accordance with
the same selection as the initial Purchase Payment. Allocation changes can be
made over the telephone if requested at the time of a telephone transfer.
There are currently no limitations on the number of Sub-Accounts that can be
selected by a Contract Owner. If allocations are made in percentages, whole
numbers must be used.
If the Purchase Payments and forms required to issue a Contract are in good
order, the initial Purchase Payment will be credited to the Contract within two
(2) business days after receipt at the Annuity Service Center. Additional
Purchase Payments will be credited to the Contract as of the Valuation Period
when they are received. If the forms required to issue a Contract are not in
good order the Company will attempt to get them in good order or the Company
will return the forms and the Purchase Payment within five (5) business days,
unless it has been authorized otherwise by the purchaser.
Contract Value
The Contract Value is the sum of the Contract Owner's interest in the Fixed
Account and the Sub-Accounts of the Separate Account for any Valuation Date
during the Accumulation Period. It will fluctuate from one Valuation Period to
the next, and may be more or less than Purchase Payments made. The Contract
Owner's interest in a Sub-Account is determined by multiplying the number of
Accumulation Units credited to the Contract by the Accumulation Unit Value for
that Sub-Account as of the Valuation Date. The Contract Owner's interest in the
Fixed Account, if any, for any Valuation Date is equal to the sum of the values
of all Fixed Account amounts credited to the Contract on such Valuation Date.
Accumulation Units
During the Accumulation Period, Accumulation Units shall be used to account for
all amounts allocated to or withdrawn from the Sub-Accounts of the Separate
Account as a result of Purchase Payments, withdrawals, transfers, or fees and
charges. The Company will determine the number of Accumulation Units of a Sub-
Account purchased or canceled. This will be done by dividing the amount
allocated to (or the amount withdrawn from) the Sub-Account by the dollar value
of one Accumulation Unit of the Sub-Account as of the end of the Valuation
Period during which the transaction is received at the Annuity Service Center.
Accumulation Unit Value
The Accumulation Unit Value for each Sub-Account was arbitrarily set initially
at $10. Subsequent Accumulation Unit Values for each Sub-Account are determined
for each Valuation Period by multiplying the Accumulation Unit
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Value for the immediately preceding Valuation Period by the Net Investment
Factor for the Sub-Account for the current Valuation Period.
The Net Investment Factor for each Sub-Account is determined by dividing A by B
and subtracting C where:
A is (i) the net asset value per share of the funding vehicle or portfolio of a
funding vehicle held by the Sub-Account for the current Valuation Period; plus
(ii) any dividend per share declared on behalf of such funding vehicle or
portfolio of a funding vehicle that has an ex-dividend date within the current
Valuation Period; less (iii) the cumulative charge or credit for taxes reserved
which is determined by the Company to have resulted from the operation or
maintenance of the Sub-Account.
B is the net asset value per share of the funding vehicle or portfolio held by
the Sub-Account for the immediately preceding Valuation Period.
C is the cumulative charge for the Mortality and Expense Risk Charge and for the
Administrative Charge.
The Accumulation Unit Value may increase or decrease from Valuation Period to
Valuation Period.
Transfers
Transfers During the Accumulation Period
Subject to certain limitations, the Contract Owner may transfer all or part of
the Contract Owner's interest in a Sub-Account or the Fixed Account (each an
"Account" or collectively "Accounts") by Written Request. No fee or charge will
be imposed if there have been no more than the number of free transfers allowed
(currently, twelve (12) per calendar year). All transfers are subject to the
following:
1. If more than the number of free transfers have been made, the Company will
deduct a Transfer Fee for each subsequent transfer permitted. (see Charges
and Deductions - Deduction for Transfer Fee) The Transfer Fee will be
deducted from the Contract Owner's interest in the Account from which the
transfer is made. However, if the Contract Owner's entire interest in an
Account is being transferred, the Transfer Fee will be deducted from the
amount which is transferred. If Contract Values are being transferred from
more than one Account, any Transfer Fee will be allocated to those Accounts
on a pro-rata basis in proportion to the amount transferred from each
Account.
2. The minimum amount which can be transferred is $1,000 (from one or multiple
Accounts) or the Contract Owner's entire interest in the Account, if less.
This requirement is waived if the transfer is made in connection with the
Rebalancing Program. The minimum amount which must remain in a Sub-Account
after a transfer is $1,000 or $0 if the entire amount in the Sub-Account is
transferred. The current minimum amount which may be transferred as part of
a Dollar Cost Averaging program is $250.
3. Transfers out of the Fixed Account during any Contract Year are limited in
amount to the greater of $30,000 or thirty percent (30%) of the Contract
Owner's Contract Value allocated to the Fixed Account determined as of the
end of the previous Contract Year. Transfers out of the Fixed Account are
done on a first-in first out basis; i.e., amounts attributed to the oldest
Purchase Payment are transferred first; then amounts attributed to the next
oldest Purchase Payment are transferred; and so on.
4. Transfers between Competing Accounts are not allowed. For purposes of
transfer, the Fixed Account and the Money Sub-Account are considered
"Competing Accounts."
5. Other transfers involving any Competing Account are restricted for certain
periods. For a period of ninety (90) days following a transfer out of a
Competing Account, no transfers (i.e., from any Account) may be made into
the other Competing Account. In addition, for a period of ninety (90) days
following a transfer into a Competing Account, no transfers (i.e. to any
Account) may be made out of the other Competing Account.
6. The Contract provides that the Company reserves the right, at any time and
without prior notice to any party, to terminate, suspend or modify the
transfer privilege described above.
Contract Owners can elect to make transfers by telephone (except if he/she is
participating in the Rebalancing Program). To do so, Contract Owners must submit
a completed Written Request electing the telephone transfer privilege. The
Company will use reasonable procedures to confirm that instructions communicated
by telephone are genuine. If it does not, the Company may be liable for any
losses due to unauthorized or fraudulent instructions. The Company may tape
record all telephone instructions. The Company will not be liable for any loss,
liability, cost or expense incurred by the Contract Owner for acting in
accordance with such telephone instructions believed to be genuine. The
telephone transfer privilege may be discontinued at any time by the Company.
If there are Joint Contract Owners, unless the Company is
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informed to the contrary, telephone instructions will be accepted from either of
the Joint Contract Owners.
Transfers During the Annuity Period
During the Annuity Period, the Contract Owner may make transfers (currently, six
(6) per calendar year), by Written Request, as follows:
1. The Contract Owner may make transfers of Annuity Reserves between Sub-
Accounts, subject to any limitations imposed by the Company on the number
of transfers (currently, six (6) transfers per calendar year) that can be
made during the Annuity Period. Currently, six (6) transfers permitted per
calendar year during the Annuity Period are free (no Transfer Fee will be
imposed.) If Annuity Reserves are being transferred from more than one Sub-
Account, any Transfer Fee will be allocated to those Sub-Accounts on a pro-
rata basis in proportion to the amount transferred from each Sub-Account.
2. The Contract Owner may, once each Contract Year, make a transfer from one
or more Sub-Accounts to the General Account. The Contract Owner may not
make a transfer from the General Account to the Separate Account.
3. Transfers of Annuity Reserves between Sub-Accounts will be made by
converting the number of Annuity Units attributable to the Annuity Reserves
being transferred to the number of Annuity Units of the Sub-Account to
which the transfer is made, so that the next Annuity Payment if it were
made at that time would be the same amount that it would have been with out
the transfer. Thereafter, Annuity Payments will reflect changes in the
value of the new Annuity Units.
The amount transferred to the General Account from a Sub-Account will be
based on the Annuity Reserves for the Contract Owner in that Sub-Account.
Transfers to the General Account will be made by converting the Annuity
Units being transferred to purchase fixed Annuity Payments under the
Annuity Option in effect and based on the Age of the Annuitant at the time
of the transfer.
4. The minimum amount which can be transferred is $1,000 or the Contract
Owner's entire interest in the Sub-Account, if less. The minimum amount
which must remain in a Sub-Account after a transfer is $1,000 or $0 if the
entire amount in the Sub-Account is transferred.
5. The Contract provides that the Company reserves the right, at any time and
without prior notice to any party, to terminate, suspend or modify the
transfer privilege described above.
Contract Owners can elect to make transfers by telephone. To do so, Contract
Owners must complete a prior Written Request electing the telephone transfer
privilege. The Company will use reasonable procedures to confirm that
instructions communicated by telephone are genuine. If it does not, the Company
may be liable for any losses due to unauthorized or fraudulent instructions. The
Company may tape record all telephone instructions. The Company will not be
liable for any loss, liability, cost or expense incurred by the Contract Owner
for acting in accordance with such telephone instructions believed to be
genuine. The telephone transfer privilege may be discontinued at any time by the
Company.
If there are Joint Contract Owners, unless the Company is informed to the
contrary, telephone instructions will be accepted from either of the Joint
Contract Owners.
Dollar Cost Averaging
Dollar Cost Averaging is a program which, if elected, permits a Contract Owner
to systematically transfer on a periodic basis amounts from a selected Sub-
Account or the DCA Fixed Account to any of the other Sub-Accounts. By allocating
amounts on a regularly scheduled basis as opposed to allocating the total amount
at one particular time, a Contract Owner may be less susceptible to the impact
of market fluctuations. The current minimum amount which may be transferred is
$250. The minimum duration of participation in any Dollar Cost Averaging program
is currently six (6) months. In order to participate in the Dollar Cost
Averaging program, a Contract Owner must have Contract Value of at least $5,000
to complete the Contract Owner's designated program. Dollar Cost Averaging is
subject to all contract restrictions regarding transfers.
If the Contract Owner is participating in the Dollar Cost Averaging program,
such transfers are not currently taken into account in determining any Transfer
Fee. However, the Company reserves the right in the future to count Dollar Cost
Averaging transfers when determining the number of transfers in a year and
impose any applicable Transfer Fees. A Contract Owner participating in the
Dollar Cost Averaging program may not also be participating in the Rebalancing
Program. (See Rebalancing Program below.) A Contract Owner participating in the
Dollar Cost Averaging program may not also make withdrawals pursuant to the
Systematic Withdrawal Plan. (See Withdrawal - Systematic Withdrawals.)
Contract Owners can choose the frequency at which the Dollar Cost Averaging
transfers will be made, i.e. monthly, quarterly, semi-annually or annually.
Contract Owners will
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also choose the specific date when the first Dollar Cost Averaging transfer will
be made. If the date selected is less than five (5) business days from the date
the election form is received at the Annuity Service Center, the Company may
defer the first Dollar Cost Averaging transfer for one month. If no start date
has been selected, the Company will automatically start Dollar Cost Averaging
within five (5) business days after the Written Request is received. Changes to
the selections made by the Contract Owner may be made by Written Request. The
Dollar Cost Averaging option will terminate if: (i) the total Contract Value is
withdrawn; (ii) the last transfer as selected by the Contract Owner has been
made; (iii) there is insufficient Contract Value to make the transfer; or (iv)
except for the DCA Fixed Account, a Written Request from the Contract Owner to
terminate the option has been received at the Annuity Service Center at least
five (5) business days prior to the next transfer date.
Except as otherwise provided, Dollar Cost Averaging is subject to the transfer
provisions of the Contract.
Dollar Cost Averaging does not assure a profit and does not protect against loss
in declining markets. Since Dollar Cost Averaging involves continuous investment
in securities regardless of fluctuating price levels of such securities,
Contract Owners should consider their financial ability to continue a Dollar
Cost Averaging program through periods of fluctuating price levels.
There is currently no charge for participating in the Dollar Cost Averaging
program. However, the Company reserves the right to charge for this option in
the future.
Dollar Cost Averaging is not available to or from Competing Accounts. The
Company considers the DCA Fixed Account to be a Dollar Cost Averaging program.
A Contract Owner may participate in only one Dollar Cost Averaging program at a
time.
Rebalancing Program
From time to time the Company may make available a program during the
Accumulation Period which provides for periodic pre-authorized automatic
transfers among certain Sub-Accounts pursuant to written allocation instructions
from the Owner. Contract Owners may not participate in the Rebalancing Program
if they currently have any Purchase Payments allocated to the Fixed Accounts.
Transfers can be scheduled on a monthly, quarterly, semi-annual or annual basis.
All transfers must be expressed in whole percentages. Participants in the Dollar
Cost Averaging program cannot participate in the Rebalancing Program. The Owner
can terminate the Rebalancing Program at anytime by Written Notice to the
Company. Any unscheduled transfer request will automatically terminate the
Rebalancing Program election.
Withdrawals
During the Accumulation Period, the Contract Owner may, upon a Written Request,
make a total or partial withdrawal of the Contract Withdrawal Value. The
Contract Withdrawal Value is:
1. The Contract Value as of the end of the Valuation Period during which a
Written Request for a withdrawal is received; less
2. Any applicable Premium Taxes not previously deducted; less
3. The Annual Contract Maintenance Charge, if any; less
4. Any Purchase Payments credited to the Contract when based upon checks that
have not cleared the drawer bank; less
5. Any applicable Contingent Deferred Sales Charge.
A withdrawal will result in the cancellation of Accumulation Units from each
applicable Sub-Account and/or cancellation of values in the Fixed Account. If
the Contract Owner makes a total withdrawal, all of the Contract Owner's rights
and interests in the Contract will terminate. The amount will be withdrawn
proportionately from the Fixed Account and each Sub-Account held under the
Contract unless otherwise directed by the Contract Owner. A Contract Owner may
not make a partial withdrawal from the DCA Fixed Account. (See DCA Fixed
Account.) If the Contract Owner makes a total withdrawal, all of the Contract
Owner's rights and interests in the Contract will terminate.
The Company will pay the amount of any withdrawal within seven (7) days of
receipt of a request in good order unless the Suspension or Deferral of Payments
provision is in effect (or unless a shorter period is required under applicable
law or regulation).
Each partial withdrawal must be for at least $250 or the Contract Owner's entire
interest in the Fixed Account or applicable Sub-Account, if less. The minimum
Contract Value which must remain in the Contract after a partial withdrawal is
$5,000 for Non-Qualified Contracts and $2,000 for Qualified Contracts. The
Company reserves the right to limit the number of partial withdrawals that can
be made from a Contract. Currently, there are no limitations on the number of
partial withdrawals. Certain tax penalties and restrictions may apply to
withdrawals from Contracts. (See Tax Status.)
Systematic Withdrawals
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The Company permits a Systematic Withdrawal Plan which enables a Contract Owner
to pre-authorize a periodic exercise of the contractual withdrawal rights.
Systematic withdrawals are made on any monthly date specified by the Contract
Owner (or the next following Valuation Date if the monthly date is not a
Valuation Date). If no start date is selected, the Company will automatically
begin systematic withdrawals within five (5) business days after the Written
Request is received. Contract Owners must have a Contract Value of at least
$25,000 to initiate the withdrawal plan. Certain tax penalties and restrictions
may apply to withdrawals from the Contracts (see Tax Status). Contract Owners
can choose the frequency at which withdrawals will be made, i.e., monthly,
quarterly, semi-annually or annually.
Changes to selections made by the Contract Owner may be made by Written Request.
The Systematic Withdrawal Option will terminate if: (i) the total Contract Value
is withdrawn; (ii) the last withdrawal as selected by the Contract Owner has
been made; (iii) there is insufficient Contract Value in the Fixed Account
and/or Sub-Account to complete the withdrawal; (iv) Annuity Payments have
commenced; or (v) a Written Request from the Contract Owner to terminate the
option has been received at the Annuity Service Center at least five (5)
business days prior to the next withdrawal request.
All the provisions relating to withdrawals contained in the Contract are
applicable to the Systematic Withdrawal Plan, including the minimum withdrawal
amount of $250. The Systematic Withdrawal Plan is not available to Contract
Owners who are currently utilizing the Automatic Investment Plan Option, the
Rebalancing Program or a Dollar Cost Averaging Program. If a Contract Owner
terminates a Systematic Withdrawal Plan from the Fixed Account, a new Plan
involving withdrawals from the Fixed Account may not be elected during the six
(6) month period immediately following such election.
Suspension or Deferral of Payments
The Company reserves the right to suspend or postpone payments for a withdrawal
or transfer for any period when:
1. The New York Stock Exchange is closed (other than customary weekend and
holiday closings);
2. Trading on the New York Stock Exchange is restricted;
3. An emergency exists as a result of which disposal of securities held in the
Separate Account is not reasonably practicable or it is not reasonably
practicable to determine the value of the Separate Account's net assets; or
4. During any other period when the Securities and Exchange Commission, by
order, so permits for the protection of Contract Owners;
provided that applicable rules and regulations of the Securities and Exchange
Commission will govern as to whether the conditions described in (2) and (3)
exist.
The Company reserves the right to defer the payment of amounts withdrawn from
the Fixed Account for a period not to exceed six (6) months from the date
written request for such withdrawal is received by the Company.
Terminal Illness Benefit
If the Endorsement for Terminal Illness has been attached to the Contract, upon
Written Request, the Contract Owner may elect a Terminal Illness Benefit. The
Company will require proof that the Contract Owner is terminally ill and not
expected to live more than 12 months. This proof will include, but is not
limited to, certification by a licensed medical practitioner performing within
the scope of his/her license. The licensed medical practitioner must not be the
Contract Owner, or the parent, spouse or child of the Contract Owner.
The Terminal Illness Benefit will be paid only to the Contract Owner upon
Written Request. Payment of the Terminal Illness Benefit is determined as of the
end of the Valuation Period during which the Company receives at its Annuity
Service Center the Written Request. Prior to the Contact Owner, or Joint Owner
reaching age 75, the Terminal Illness Benefit shall be the greater of:
1. The Purchase Payments, less any withdrawals including any applicable
charges; or
2. The Contract Value determined as of the end of the Valuation Period during
which the Company receives at its Annuity Service Center the Written
Request; or
3. The Contract Value on the most recent three (3) year Contract Anniversary
plus any subsequent Purchase Payments less any subsequent withdrawals and
any applicable charges.
After the Contract Owner or oldest Joint Contract Owner attains age 75, the
Terminal Illness Benefit shall be the greater of:
1. The Purchase Payments, less any withdrawals including any applicable
charges; or
2. The Contract Value determined as of the end of the Valuation Period during
which the Company receives at its Annuity Service Center the Written
Request; or
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3. The Contract Value on the most recent three (3) year Contract Anniversary
prior to the Contract Owner, or the oldest Joint Contract Owner reaching
age 75, plus any subsequent Purchase Payments less any subsequent
withdrawals, including any applicable charges.
No Contingent Deferred Sales Charge shall apply with respect to any Terminal
Illness Benefit. Payment of the Terminal Illness Benefit is in full settlement
of the Company's liability under the Contract and the Contract will terminate.
If Joint Owners are named, the Age of the oldest will be used to determine the
Terminal Illness Benefit. If the Contract is owned by a non-natural person, then
Contract Owner shall mean Annuitant.
Proceeds Payable on Death
Death of Contract Owner During the Accumulation Period
Upon the death of the Contract Owner or a Joint Contract Owner during the
Accumulation Period, the death benefit will be paid to the Primary Beneficiary
designated by the Contract Owner. Upon the death of a Joint Contract Owner, the
surviving Joint Contract Owner, if any, will be treated as the Primary
Beneficiary. Any other Beneficiary designation on record at the time of death
will be treated as a Contingent Beneficiary unless previously changed by Written
Request.
A Beneficiary may request that the death benefit be paid under one of the Death
Benefit Options below. If the Beneficiary is the spouse of the Contract Owner he
or she may elect to continue the Contract at the then current Contract Value
(which may be less than the Death Benefit) in his or her own name and exercise
all the Contract Owner's rights under the Contract. In the event of the
simultaneous death of Joint Contract Owners, death benefits will become payable.
Death Benefit Amount During the Accumulation Period
Prior to the Contract Owner, the oldest Joint Contract Owner or the Annuitant
attaining age 75, the death benefit during the Accumulation Period will be the
greater of:
1. The Purchase Payments, less any withdrawals including any applicable
charges; or
2. The Contract Value determined as of the end of the Valuation Period during
which the Company receives at its Annuity Service Center both due proof of
death and an election of the payment method; or
3. The Contract Value on the most recent three (3) year Contract Anniversary
plus any subsequent Purchase Payments less any subsequent withdrawals
including any applicable charges.
After the Contract Owner, the oldest Joint Contract Owner, or the Annuitant
attains age 75, the death benefit during the Accumulation Period will be the
greater of:
1. The Purchase Payments, less any withdrawals including any applicable
charges; or
2. The Contract Value determined as of the end of the Valuation Period during
which the Company receives at its Annuity Service Center both due proof of
death and an election of the payment method; or
3. The Contract Value on the most recent three (3) year Contract Anniversary
prior to the Contract Owner, or the oldest Joint Contract Owner, or the
Annuitant reaching age 75, plus any subsequent Purchase Payments less any
subsequent withdrawals, including any applicable charges.
In certain states, the death benefit during the Accumulation Period will be the
Contract Value determined and paid as of the end of the Valuation Period during
which the Company receives both due proof of death and an election of the
payment method.
Contract Owners should consult their Contract for the applicable death benefit
provision.
Death Benefit Options During the Accumulation Period
A Beneficiary who is not the surviving spouse of the Contract Owner must elect
the death benefit to be paid under one of the following options in the event of
the death of the Contract Owner during the Accumulation Period:
Option 1 - lump sum payment of the death benefit; or
Option 2 - the payment of the entire death benefit within five (5) years of the
date of the death of the Contract Owner; or
Option 3 - payment of the death benefit under an Annuity Option over the
lifetime of the Beneficiary or over a period not extending beyond the life
expectancy of the Beneficiary with distribution beginning within one (1) year of
the date of death of the Contract Owner or any Joint Contract Owner.
Any portion of the death benefit not applied under Option 3 within one (1) year
of the date of the Contract Owner's death, must be distributed within five (5)
years of the date of death.
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A Beneficiary who is the surviving spouse of the Contract Owner may elect to
continue the Contract in his or her own name, elect a lump sum payment of the
death benefit or apply the death benefit to an Annuity Option.
If a lump sum payment is requested, the amount will be paid within seven (7)
days of receipt of proof of death and the election, unless the Suspension or
Deferral of Payments Provision is in effect.
Payment to the Beneficiary, in any form other than a lump sum, may only be
elected during the sixty-day period beginning with the date of receipt by the
Company of proof of death.
Death of Contract Owner During the Annuity Period
If the Contract Owner or a Joint Contract Owner, who is not the Annuitant, dies
during the Annuity Period, any remaining payments under the Annuity Option
elected will continue to be made at least as rapidly as under the method of
distribution in effect at such Contract Owner's death. Upon the death of a
Contract Owner during the Annuity Period, the Beneficiary becomes the Contract
Owner.
Death of Annuitant
Upon the death of the Annuitant, who is not a Contract Owner, during the
Accumulation Period, the Contract Owner may designate a new Annuitant, subject
to the Company's underwriting rules then in effect. If no designation is made
within 30 days of the death of the Annuitant, the Contract Owner will become the
Annuitant. If the Contract Owner is a non-natural person, the death of the
Annuitant will be treated as the death of the Contract Owner and a new Annuitant
may not be designated. (See Death of Contract Owner During the Accumulation
Period.)
Upon the death of the Annuitant on or after the Annuity Date, the death benefit,
if any, will be as specified in the Annuity Option elected. Death benefits will
be paid at least as rapidly as under the method of distribution in effect at the
Annuitant's death.
Payment of Death Benefit
The Company will require due proof of death before any death benefit is paid.
Due proof of death will be:
1. a certified death certificate;
2. a certified decree of a court of competent jurisdiction as to the finding
of death; or
3. any other proof satisfactory to the Company.
All death benefits will be paid in accordance with applicable law or regulations
governing death benefit payments.
Beneficiary
The Beneficiary designation in effect on the Issue Date will remain in effect
until changed. Unless the Contract Owner provides otherwise, the death benefit
will be paid in equal shares to the Beneficiary(ies) as follows:
1. to the Primary Beneficiary(ies) who survive the Contract Owner's and/or the
Annuitant's death, as applicable; or if there are none
2. to the Contingent Beneficiary(ies) who survive the Contract Owner's and/or
the Annuitant's death, as applicable; or if there are none
3. to the estate of the Contract Owner.
Beneficiaries may be named irrevocably. In that case a change of Beneficiary
requires the consent of any irrevocable Beneficiary. If an irrevocable
Beneficiary is named, the Contract Owner retains all other contractual rights.
Change of Beneficiary
Subject to the rights of any irrevocable Beneficiary(ies), the Contract Owner
may change the Primary Beneficiary(ies) or Contingent Beneficiary(ies). A change
must be made by Written Request. The change will take effect as of the date the
notice is signed. The Company will not be liable for any payment made or action
taken before it records the change.
Annuity Provisions
Annuity Guidelines
Once the Contract reaches the Annuity Date, the following guidelines apply:
1. The Contract Owner may elect to have the Contract Value applied to provide
a Variable Annuity, a Fixed Annuity, or a combination Fixed and Variable
Annuity. If a combination is elected, the Contract Owner must specify what
part of the Contract Value is to be applied to the Fixed and Variable
options.
2. The amount applied to an Annuity Option on the Annuity Date, excluding any
death benefit proceeds applied to an Annuity Option, is equal to the
Contract Value minus any applicable Premium Tax and Annual Contract
Maintenance Charge.
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3. If the amount to be applied under an Annuity Option is less than $2,000,
the Company reserves the right to pay the amount in a lump sum. If any
Annuity Payment is less than $100, the Company reserves the right to change
the payment basis to equivalent quarterly, semi-annual or annual payments.
4. Contract Owners select an Annuity Date at the Issue Date. Contract Owners
may change the Annuity Date at any time prior to the Annuity Date by
Written Request 30 days prior to the new Annuity Date. The Annuity Date
must be the first day of a calendar month. The Annuity Date cannot be
earlier than five years after the Issue Date. The latest permitted Annuity
Date is the earlier of: (i) the 90th birthday of the Annuitant or the
oldest Joint Annuitant; (ii) the 90th birthday of the Contract Owner or the
oldest Joint Contract Owner, or (iii) the latest date permitted under state
law.
5. If no Annuity Option has been chosen at least thirty (30) calendar days
before the Annuity Date, the Company will make payments to the Annuitant
under Option B, with ten (10) years of payments guaranteed. Unless
specified otherwise, the then current Contract Value allocation shall
determine whether a Fixed Annuity or Variable Annuity, or combination Fixed
and Variable Annuity will be provided. Therefore, any amounts in the
Separate Account will be applied to a Variable Annuity, and any amounts in
the Fixed Account will be applied to a Fixed Annuity. Variable Annuity
payments will be based on the Sub-Account(s) selected by the Contract
Owner, or on the then current allocation of Contract Value among the Sub-
Accounts.
Annuity Payments
The Company will make Annuity Payments beginning on the Annuity Date, provided
no death benefit has become payable and the Contract Owner has by Written
Request selected an available Annuity Option and payment schedule. Except as
otherwise agreed to by the Contract Owner and the Company, Annuity Payments will
be payable monthly. The Annuity Option and frequency of Annuity Payments may not
be changed by the Contract Owner after Annuity Payments begin. Unless the
Contract Owner specifies otherwise, the payee of the Annuity Payments shall be
the Annuitant.
If the amount of the Annuity Payment will depend on the Age or sex of the
Annuitant, the Company reserves the right to ask for satisfactory proof of the
Annuitant's (or Joint Annuitant's, if any) Age and sex. The Company reserves the
right to delay Annuity Payments until acceptable proof is received.
The Mortality and Expense Risk Charge is assessed during both the Accumulation
Period and the Annuity Period. The Company will continue to assess the Mortality
and Expense Risk Charge during payment of an Annuity Option that does not
involve life contingency even though the Company no longer bears any mortality
risk on such payment obligation.
Fixed Annuity
A Fixed Annuity provides for payments which do not fluctuate based on investment
performance.
Fixed Annuity payments shall be determined by applying the guaranteed Annuity
Purchase Rates set forth in the Fixed Annuity Rate Tables contained in the
Contract to the portion of the Contract Value allocated to the Fixed Annuity
Option selected by the Contract Owner.
Variable Annuity
A Variable Annuity provides for payments which may fluctuate based on the
investment performance of the Sub-Accounts of the Separate Account. Variable
Annuity Payments will be based on the Sub-Accounts Annuity Units credited to the
Variable Annuity Option.
Annuity Units and Payments
The dollar amount of each Variable Annuity payment depends on the number of
Annuity Units credited to that Annuity Option, and the value of those Units. The
number of Annuity Units is determined as follows:
1. The number of Annuity Units credited in each Sub-Account will be determined
by dividing the product of the portion of the Contract Value to be applied
to the Sub-Account and the Annuity Purchase Rate by the value of one
Annuity Unit in that Sub-Account on the Annuity Date. The purchase rates
are set forth in the Variable Annuity Rate Tables in the Contract.
2. For each Sub-Account, the amount of each Annuity Payment equals the product
of the Annuitant's number of Annuity Units and the Annuity Unit Value on
the payment date. The amount of each payment may vary.
Annuity Unit Value
The value of any Annuity Unit for each Sub-Account of the Separate Account was
arbitrarily set initially at $10.
The Sub-Account Annuity Unit Value at the end of any subsequent Valuation Period
is determined as follows:
1. The Net Investment Factor for the current Valuation Period is multiplied by
the value of the Annuity Unit for the Sub-Account for the immediately
preceding
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Valuation Period.
2. The result in (1) is then divided by an assumed investment rate factor. The
assumed investment rate factor equals 1.00 plus the assumed investment rate
for the number of days since the preceding Valuation Date. The assumed
investment rate is based on an effective annual rate of 4%.
The value of an Annuity Unit may increase or decrease from Valuation Period to
Valuation Period.
Annuity Options
The Contract Owner may choose periodic Fixed and/or Variable Annuity Payments
under any one of the Annuity Options described below. The Company may consent to
other plans of payment before the Annuity Date.
The following Annuity Options are available:
Annuity Option A - Life Income.
Periodic payments will be made as long as the Annuitant lives. Under this option
it would be possible for only one (1) Annuity Payment to be made if the
Annuitant were to die before the due date of the second Annuity Payment; only
two (2) Annuity Payments if the Annuitant were to die before the due date of the
third Annuity Payment; and so forth.
Annuity Option B - Life Income with Period Certain.
Periodic payments will be made for a guaranteed period, or as long as the
Annuitant lives, whichever is longer. The guaranteed period may be five (5), ten
(10) or twenty (20) years. If the Beneficiary does not desire payments to
continue for the remainder of the guaranteed period, he/she may elect to have
the present value of the guaranteed Annuity Payments remaining commuted and paid
in a lump sum.
Annuity Option C - Joint and Last Survivor Payments.
Periodic payments will be made during the joint lifetime of two Annuitants
continuing in the same amount during the lifetime of the surviving Annuitant.
Under this option it would be possible for only one (1) Annuity Payment to be
made if both Annuitants were to die before the due date of the second Annuity
Payment; only two (2) Annuity Payments if both Annuitants were to die before the
due date of the third Annuity Payment; and so forth.
Annuity Option D - Joint and 2/3 Survivor Annuity.
Periodic payments will be made during the joint lifetime of two Annuitants.
Payments will continue during the lifetime of the surviving Annuitant and will
be computed on the basis of two-thirds of the Annuity Payment (or Units) in
effect during the joint lifetime. Under this option it would be possible for
only one (1) Annuity Payment to be made if both Annuitants were to die before
the due date of the second Annuity Payment; only two (2) Annuity Payments if
both Annuitants were to die before the due date of the third Annuity Payment;
and so forth.
Annuity Option E - Period Certain.
Periodic payments will be made for a specified period. The specified period must
be at least five (5) years and cannot be more than thirty (30) years. If the
Contract Owner does not desire payments to continue for the remainder of the
guaranteed period, he/she may elect to have the present value of the remaining
payments commuted and paid in a lump sum or as an Annuity Option purchased at
the date of such election (subject to state availability).
Annuity Option F - Special Income Settlement Agreement.
The Company will pay the proceeds in accordance with terms agreed upon in
writing by the Contract Owner and the Company.
Distribution
The Contracts will be sold by licensed insurance agents in those states where
the Contracts may be lawfully sold. Such agents will be registered
representatives of broker-dealers registered under the Securities Exchange Act
of 1934 who are members of the National Association of Securities Dealers, Inc.
and who have entered into distribution agreements with the Company and the
principal underwriter for the Contract. MML Distributors, LLC ("MML
Distributors"), an ultimate subsidiary of MassMutual serves as a principal
underwriter for the Contracts. MML Distributors is located at 1414 Main Street,
Springfield, MA 01144-1013. MML Investors Services, Inc. ("MMLISI"), an ultimate
subsidiary of Massachusetts Mutual Life Insurance Company serves as a co-
underwriter for the Contracts. MMLISI is located at 1414 Main Street,
Springfield, MA 01144-1013. The principal underwriter and the co-underwriter are
registered with the Securities and Exchange Commission as a broker-dealers and
are members of the National Association of Securities Dealer, Inc. Commissions
and other distribution compensation will be paid by the Company on behalf of the
Distributor to selling broker-dealers up to an amount currently equal to 7.00%
of Purchase Payments. The Company may, by agreement with the broker/dealer, pay
commissions as a trail commission (up to 1.20% of Contract Values beginning in
the first Contract Year) or as a combination of commission at the time of the
sale and a trail commission. These alternatives could exceed 7.0% of the
Purchase Payments.
The Company will accept, by agreement with a limited number of broker-dealers,
electronic data transmissions of
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Application information, along with wire transmittals of initial Purchase
Payments from the broker-dealers to the Annuity Service Center for purchase of
the Contract. Please contact your broker-dealer representative to receive more
information about electronic data transmission of Application information.
It is anticipated that the offering of the Contracts will be continuous.
Performance Measures
The Company may show the performance under the Contracts in the following ways:
Standardized Average Annual Total Return
The Company will show the Standardized Average Annual Total Return for the Sub-
Accounts of the Separate Account which have been in existence for more than one
year. As prescribed by the rules of the SEC, the Standardized Average Annual
Total Return is the effective annual compounded rate of return that would have
produced the cash redemption value over the stated period had the performance
remained constant throughout. The Standardized Average Annual Total Return
assumes a single $1000 payment made at the beginning of the period and full
redemption at the end of the period. It reflects a deduction for the contingent
deferred sales charge, the annual contract maintenance charge and all other
Fund, Separate Account, and Contract level charges except premium taxes, if any.
The annual contract maintenance charge is apportioned among the Sub-Accounts
based upon the percentages of inforce Contracts investing in each of the Sub-
Accounts.
For sub-accounts of the Separate Account which have been in existence for less
than one year, the Company will show the aggregate total return as permitted by
the SEC. The aggregate total return assumes a single one thousand dollar payment
made at the beginning of the period and full redemption at the end of the
period. It reflects the change in unit value and a deduction of the contingent
deferred sales charge.
Additional Performance Measures
The Company may choose to show Average Annual Total Returns based on the
inception of the underlying Fund. The performance figures discussed in this
section are calculated on the basis of the historical performance of the Funds,
and may assume the Contracts were in existence prior to January 23, 1996 (which
they were not). Beginning January 23, 1996 (inception date), actual Accumulation
Unit values are used for the calculations. The difference between the first set
of additional performance measures, PERCENTAGE CHANGE and NON-STANDARDIZED
ANNUALIZED RETURNS on Accumulation Unit Values, and the second set, the NON-
STANDARDIZED ANNUAL and AVERAGE ANNUAL TOTAL RETURNS, is that the second set
includes the deduction of the Annual Contract Maintenance Charge, the first set
does not. Additional details follow.
ACCUMULATION UNIT VALUES; PERCENTAGE CHANGE AND ANNUALIZED RETURNS. The Company
will show the PERCENTAGE CHANGE in the value of an Accumulation Unit for a Sub-
Account with respect to one or more periods. The NON-STANDARDIZED ANNUALIZED
RETURN, or average annual change in Accumulation Unit Values, may also be shown
with respect to one or more periods. For a one year period, the PERCENTAGE
CHANGE and the NON-STANDARDIZED ANNUALIZED RETURN are effective annual rates of
return and are equal. For periods greater than one year, the NON-STANDARDIZED
ANNUALIZED RETURN is the effective annual compounded rate of return for the
periods stated. Since the value of an Accumulation Unit reflects the Separate
Account and subject to state availability, the underlying fund expenses (See
Table of Fees and Expenses), the PERCENTAGE CHANGE and NON-STANDARDIZED
ANNUALIZED RETURN also reflect these expenses. These percentages, however, do
not reflect the Contract Maintenance Charge and the contingent deferred sales
charge or premium taxes (if any), which if included would reduce the percentages
reported.
The NON-STANDARDIZED ANNUAL TOTAL RETURN for a Sub-Account is the effective
annual rate of return that would have produced the ending Accumulated Value of
the stated one year period.
The NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN for a Sub-Account is the
effective annual compounded rate of return that would have produced the ending
Accumulated Value over the stated period had the performance remained constant
throughout.
Note: The NON-STANDARDIZED ANNUAL TOTAL RETURN will be less than the NON-
STANDARDIZED ANNUALIZED RETURN on Accumulation Unit values for the same period
due to the effect of the Annual Contract Maintenance Charge. Additionally, the
magnitude of this difference will depend on the size of the Accumulated Value
from which the Annual Contract Maintenance Charge is deducted.
YIELD AND EFFECTIVE YIELD. The Company may also show yield and effective yield
figures for the Money Market Sub-Account over a seven-day period, which is then
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"annualized". That is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in the Money
Market Sub-Account is assumed to be re-invested. Therefore the effective yield
will be slightly higher than the yield because of the compounding effect of this
assumed reinvestment. These figures do not reflect the contingent deferred sales
charge or premium taxes (if any), which if included would reduce the yields
reported.
The performance measures discussed above reflect results of the Funds and are
not intended to indicate or predict future performance. For more detailed
information see the Statement of Additional Information.
Performance information for the Separate Account Sub-Accounts may be: (a)
compared to other variable annuity separate accounts or other investment
products surveyed by Lipper Analytical Services, a nationally recognized
independent reporting service or similar services that rank mutual funds and
other investment companies by overall performance, investment objectives and
assets; (b) tracked by other ratings services, companies, publications or
persons who rank separate accounts or other investment products on overall
performance or other criteria; and (c) included in data bases that produce
reports and illustrations by organizations such as CDA Weisenberger. Performance
figures will be calculated in accordance with standardized methods established
by each reporting service.
The Company may also show the application of general mathematical principles in
connection with the Contracts.
Tax Status
General
Note: the following description is based upon the Company's understanding of
current federal income tax law applicable to annuities in general. The Company
cannot predict the probability that any changes in such laws will be made.
Purchasers are cautioned to seek competent tax advice regarding the possibility
of such changes. This discussion is based upon The Company's understanding of
the present Federal income tax laws as they are currently interpreted by the
Internal Revenue Service. No representation is made as to the likelihood of the
continuation of the present Federal income tax laws, or of the current
interpretation by the Internal Revenue Service. It should be further understood
that the following discussion is not exhaustive and that special rules not
described in this prospectus may be applicable in certain situations. Moreover,
no attempt has been made to consider any applicable state or other tax laws.
Section 72 of the Code governs taxation of annuities in general. A Contract
Owner is generally not taxed on increases in the value of a Contract until
distribution occurs, either in the form of a lump sum payment or other non-
periodic distribution or as Annuity Payments under the Annuity Option selected.
For a lump sum payment received as a total withdrawal (total surrender), the
recipient is taxed on the portion of the payment that exceeds the cost basis of
the Contract. For Non-Qualified Contracts, this cost basis is generally the
Purchase Payments, while for Qualified Contracts there may be no cost basis. The
taxable portion of the lump sum payment is taxed at ordinary income tax rates.
For Annuity Payments, a portion of each payment in excess of an exclusion amount
is includable in taxable income. The exclusion amount for payments based on a
fixed Annuity Option is determined by multiplying the payment by the ratio that
the cost basis of the Contract (adjusted for any period certain or refund
feature) bears to the expected return under the Contract. The exclusion amount
for payments based on a variable Annuity Option is determined by dividing the
cost basis of the Contract (adjusted for any period certain or refund guarantee)
by the number of years over which the annuity is expected to be paid. Payments
received after the investment in the Contract has been recovered (i.e., when the
total of the excludable amounts received equal the investment in the Contract)
are fully taxable. The taxable portion is taxed at ordinary income tax rates.
For certain types of Qualified Plans there may be no cost basis in the Contract
within the meaning of Section 72 of the Code. Contract Owners, Annuitants, and
Beneficiaries under the Contracts should seek competent financial advice about
the tax consequences of any distributions.
The Company is taxed as a life insurance company under the Code. For federal
income tax purposes, the Separate Account is not a separate entity from the
Company and its operations form a part of the Company.
Diversification
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not, in
accordance with regulations prescribed by the United States Treasury Department
("Treasury Department"), adequately diversified. Disqualification of the
Contract as an annuity contract would result in the imposition of federal income
tax to the Contract Owner with respect to earnings allocable to the Contract
prior to the receipt of payments under the Contract. The Code contains a safe
harbor provision which
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provides that annuity contracts such as the Contract meet the diversification
requirements if, as of the end of each quarter, the underlying assets meet the
diversification standards for a regulated investment company and no more than
55% of the total assets consist of cash, cash items, U.S. Government securities
and securities of other regulated investment companies.
On March 2, 1989, the Treasury Department issued Regulations (Treas. Reg. 1.817-
5), which established diversification requirements for the investment portfolios
underlying variable contracts such as the Contract. The Regulations amplify the
diversification requirements for variable contracts set forth in the Code and
provide an alternative to the safe harbor provision described above. Under the
Regulations, an investment portfolio will be deemed adequately diversified if:
(1) no more than 55% of the value of the total assets of the portfolio is
represented by any one investment; (2) no more than 70% of the value of the
total assets of the portfolio is represented by any two investments; (3) no more
than 80% of the value of the total assets of the portfolio is represented by any
three investments; and (4) no more than 90% of the value of the total assets of
the portfolio is represented by any four investments.
The Code provides that, for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable contracts
by Section 817(h) of the Code have been met, "each United States Government
agency or instrumentality shall be treated as a separate issuer."
The Company intends that all Portfolios of the Funds underlying the Contracts
will be managed by the Investment Adviser for the Funds in such a manner as to
comply with these diversification requirements.
The Treasury Department has indicated that the diversification Regulations do
not provide guidance regarding the circumstances in which Contract Owner control
of the investments of the Separate Account will cause the Contract Owner to be
treated as the owner of the assets of the Separate Account, thereby resulting in
the loss of favorable tax treatment for the Contract. At this time it cannot be
determined whether additional guidance will be provided and what standards may
be contained in such guidance.
The amount of Contract Owner control which may be exercised under the Contract
is different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of the separate account. It is unknown
whether these differences, such as the Contract Owner's ability to transfer
among investment choices or the number and type of investment choices available,
would cause the Contract Owner to be considered as the owner of the assets of
the Separate Account resulting in the imposition of federal income tax to the
Contract Owner with respect to earnings allocable to the Contract prior to
receipt of payments under the Contract.
In the event any forthcoming guidance or ruling is considered to set forth a new
position, such guidance or ruling would generally be applied only prospectively.
However, if such ruling or guidance was not considered to set forth a new
position, it may be applied retroactively resulting in the Contract Owner being
retroactively determined to be the owner of the assets of the Separate Account.
Due to the uncertainty in this area, the Company reserves the right to modify
the Contract in an attempt to maintain favorable tax treatment.
Multiple Contracts
The Code provides that multiple Non-Qualified annuity contracts which are issued
within a calendar year to the same contract owner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences including more rapid taxation of the distributed amounts from such
combination of contracts. Contract Owners should consult a tax adviser prior to
purchasing more than one Non-Qualified annuity Contract in any calendar year.
Tax Treatment of Assignments
A transfer of ownership, assignment or pledge of a Contract may be a taxable
event. Contract Owners should therefore consult competent tax advisers should
they wish to transfer, assign or pledge their Contracts.
Income Tax Withholding
All distributions or the portion thereof which is includable in the gross income
of a payee are subject to federal income tax withholding. Generally, amounts are
withheld from periodic payments at the same rate as wages and at the rate of 10%
from non-periodic payments. However, the payee, in most cases, may elect not to
have taxes withheld or to have withholding done at a different rate. Special
rules limit the ability of a payee to elect no withholding where the payee fails
to provide a U.S. residence address or federal taxpayer identification number.
Effective January 1, 1993, certain distributions from Qualified Plans under
Section 401, which are not directly rolled over to another eligible retirement
plan or individual retirement account or individual retirement annuity, are
subject to a mandatory 20% withholding for federal income tax. The 20%
withholding requirement does not apply to: a) distributions for the life or life
expectancy of the participant or
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joint lives or joint life expectancies of the participant and a designated
beneficiary; or b) distributions for a specified period of ten (10) years or
more; or c) distributions which are required minimum distributions. Payments
that are not eligible for rollover remain subject to the withholding rules
described in the preceding paragraph.
Tax Treatment of Withdrawals -
Non-Qualified Contracts
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the Contract Value exceeds the aggregate purchase
payments made, any amount withdrawn will be treated as coming first from the
earnings and then, only after the income portion is exhausted, as coming from
the principal. Withdrawn earnings are includible in gross income.
Penalty Tax
A 10% penalty will apply to the income portion of any distribution. However, the
penalty is not imposed on amounts received: (a) after the taxpayer reaches age
59 1/2 ; (b) after the death of the Contract Owner; (c) if the taxpayer has
become totally disabled (for this purpose disability is as defined in Section
72(m)(7) of the Code); (d) in a series of substantially equal periodic payments
made not less frequently than annually for the life (or life expectancy) of the
taxpayer or for the joint lives (or joint life expectancies) of the taxpayer and
his or her Beneficiary; (e) under an immediate annuity; or (f) which are
allocable to purchase payments made prior to August 14, 1982.
The above information does not apply to Qualified Contracts. However, separate
tax withdrawal penalties and restrictions may apply to such Qualified Contracts.
(See Tax Treatment of Withdrawals - Qualified Contracts.)
Qualified Plans
The Contracts offered by this Prospectus are designed to be suitable for use
under various types of Qualified Plans. Taxation of participants in each
Qualified Plan varies with the type of plan and terms and conditions of each
specific plan. Contract Owners, Annuitants and Beneficiaries are cautioned that
benefits under a Qualified Plan may be subject to the terms and conditions of
the plan regardless of the terms and conditions of the Contracts issued pursuant
to the plan. Some retirement plans are subject to distribution and other
requirements that are not incorporated into the Contract's administrative
procedures. Owners, participants and Beneficiaries are responsible for
determining that contributions, distributions and other transactions with
respect to the Contracts comply with applicable law. Following are general
descriptions of the types of Qualified Plans with which the Contracts may be
used. Such descriptions are not exhaustive and are for general informational
purposes only. The tax rules regarding Qualified Plans are very complex and will
have differing applications depending on individual facts and circumstances.
Each purchaser should obtain competent tax advice prior to purchasing a Contract
issued under a Qualified Plan.
Contracts issued pursuant to Qualified Plans include special provisions
restricting Contract rights that may otherwise be available as described in this
Prospectus. Generally, Contracts issued pursuant to Qualified Plans are not
transferable except upon surrender or annuitization. Various penalty and excise
taxes may apply to contributions or distributions made in violation of
applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from Qualified Contracts. (See Tax
Treatment of Withdrawals - Qualified Contracts.)
On July 6, 1983, the Supreme Court decided in Arizona Governing Committee v.
Norris that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. The Contracts sold by the Company in connection with
certain Qualified Plans will utilize annuity tables which do not differentiate
on the basis of sex. Such annuity tables will also be available for use in
connection with certain non-qualified deferred compensation plans.
H.R. 10 Plans
Section 401 of the Code permits self-employed individuals to establish Qualified
Plans for themselves and their employees, commonly referred to as "H.R. 10" or
"Keogh" plans. Contributions made to the Plan for the benefit of the employees
will not be included in the gross income of the employees until distributed from
the Plan. The tax consequences to participants may vary depending upon the
particular plan design. However, the Code places limitations and restrictions on
all Plans including on such items as: amount of allowable contributions; form,
manner and timing of distributions; transferability of benefits; vesting and
nonforfeitability of interests; nondiscrimination in eligibility and
participation; and the tax treatment of distributions, withdrawals and
surrenders. (See Tax Treatment of Withdrawals - Qualified Contracts.) These
retirement plans may permit the purchase of the Contracts to accumulate
retirement savings under the plans. Adverse tax or other legal consequences to
the Plan, to the participant or to both may result if the Contract is assigned
or transferred to any individual as a means to provide benefit payments, unless
the Plan complies with all legal requirements applicable to such benefits prior
to the transfer of the Contract. Purchasers of Contracts for use with an H.R. 10
Plan should obtain competent tax advice as to the tax treatment and suitability
of such an investment.
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Individual Retirement Annuities
Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity"
("IRA"). Under applicable limitations, certain amounts may be contributed to an
IRA which will be deductible from the individual's gross income. These IRAs are
subject to limitations on eligibility, contributions, transferability and
distributions. (See Tax Treatment of Withdrawals - Qualified Contracts.) Under
certain conditions, distributions from other IRAs and other Qualified Plans may
be rolled over or transferred on a tax-deferred basis into an IRA. Sales of
Contracts for use with IRAs are subject to special requirements imposed by the
Code, including the requirement that certain informational disclosure be given
to persons desiring to establish an IRA. The Internal Revenue Service has not
reviewed the Contract for qualification as an IRA, and has not addressed in a
ruling of general applicability whether a death benefit provision such as the
provision in the Contract comports with IRA qualification requirements.
Purchasers of Contracts to be qualified as Individual Retirement Annuities
should obtain competent tax advice as to the tax treatment and suitability of
such an investment.
Roth IRAs
Section 408A of the Code establishes the specially designated Roth IRA to which
eligible individuals may contribute. Contributions to a Roth IRA are not
deductible and are limited based on modified adjusted gross income. Qualified
distributions from Roth IRAs are not included in income. Distributions that are
not qualified distributions are treated first as a return of investment to the
extent of the individual's contributions to Roth IRAs and as a taxable
distribution to the extent of any excess. An individual (other that a married
individual filing separately) with an adjusted gross income of $100,000 or less
may roll over distributions within 60 days from a regular IRA to a Roth IRA or
may convert a regular IRA into a Roth IRA. The rollover would be subject to tax;
however, it would not be subject to the 10% premature distribution penalty tax.
If the rollover occurs during 1998, the income will be spread out over four
years.
Corporate Pension and Profit-Sharing Plans
Sections 401(a) and 401(k) of the Code permit corporate employers to establish
various types of retirement plans for employees. These retirement plans may
permit the purchase of the Contracts to provide benefits under the Plan.
Contributions to the Plan for the benefit of employees will not be includible in
the gross income of the employees until distributed from the Plan. The tax
consequences to participants may vary depending upon the particular plan design.
However, the Code places limitations and restrictions on all plans including on
such items as: amount of allowable contributions; form, manner and timing of
distributions; transferability of benefits; vesting and nonforfeitability of
interests; nondiscrimination in eligibility and participation; and the tax
treatment of distributions, withdrawals and surrenders. (See Tax Treatment of
Withdrawals - Qualified Contracts.) These retirement plans may permit the
purchaser of the Contracts to accumulate retirement savings under the plans.
Adverse tax or other legal consequences to the plan, to the participant, or to
both may result if the Contract is assigned or transferred to any individual as
a means to provide benefit payments, unless the plan complies with all legal
requirements applicable to such benefits prior to transfer of the Contract.
Purchasers of Contracts for use with Corporate Pension or Profit-Sharing Plans
should obtain competent tax advice as to the tax treatment and suitability of
such an investment.
Section 457 Deferred Compensation ("Section 457") Plans
Under Section 457 of the Code, employees of (and independent contractors who
perform services for) certain state and local governmental units, or certain
tax-exempt employers, may participate in a Section 457 plan of the employer,
allowing them to defer part of their salary or other compensations. The amount
deferred, and any income on such amount, will not be taxable until paid or
otherwise made available to the employee.
The maximum amount that can be deferred under a Section 457 plan in any tax year
is ordinarily one-third of the employee's includible compensation, up to $7,500.
Includible compensation means earnings for services rendered to the employer
which is includible in the employee's gross income, but excluding any
contributions under the Section 457 plan, or a Tax-Sheltered Annuity. During the
last three (3) years before an individual attains normal retirement age,
additional "catch-up" deferrals are permitted. The deferred amounts will be used
by the employer to purchase the Contract. The Contract will be issued to the
employer, but all Contract Values must be held for the exclusive benefit of the
employees under it. The employee has no rights or vested interest in the
Contract, and is only entitled to payment in accordance with the Section 457
plan provisions. Present federal income tax law does not allow tax-free
transfers or rollovers for amounts accumulated in a Section 457 plan, except for
transfers to other Section 457 plans in certain limited cases.
Tax Treatment of Withdrawals - Qualified Contracts
In the case of a withdrawal under a Qualified Contract, a ratable portion of the
amount received is taxable, generally based on the ratio of the individual's
cost basis to the individual's total accrued benefit under the retirement plan.
Special tax rules may be available for certain distributions from a Qualified
Contract. Section 72(t) of the Code im-
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poses a 10% penalty tax on the taxable portion of any distribution from
qualified retirement plans, including Contracts issued and qualified under Code
Sections 401 (H.R. 10 and Corporate Pension and Profit-Sharing Plans), 408(b)
(Individual Retirement Annuities) and 408A (Roth IRAs). To the extent amounts
are not includible in gross income because they have been rolled over to an IRA
or to another eligible Qualified Plan, no tax penalty will be imposed. The
penalty tax will not apply to a rollover from a conversion of a traditional IRA
into a Roth IRA. The tax penalty will not apply to the following distributions:
(a) if distribution is made on or after the date on which the Contract Owner or
Annuitant (as applicable) reaches age 59 1/2; (b) distributions following the
death or disability of the Contract Owner or Annuitant (as applicable) (for this
purpose disability is as defined in Section 72(m)(7) of the Code); (c) after
separation from service, distributions that are part of substantially equal
periodic payments made not less frequently than annually for the life (or life
expectancy) of the Contract Owner or Annuitant (as applicable) or the joint
lives (or joint life expectancies) of such Contract Owner or Annuitant (as
applicable) and his or her designated Beneficiary; (d) distributions to a
Contract Owner or Annuitant (as applicable) who has separated from service after
he/she has attained age 55; (e) distributions made to the Contract Owner or
Annuitant (as applicable) to the extent such distributions do not exceed the
amount allowable as a deduction under Code Section 213 to the Contract Owner or
Annuitant (as applicable) for amounts paid during the taxable year for medical
care; (f) distributions made to an alternate payee pursuant to a qualified
domestic relations order; (g) beginning in 1998, distributions made for
qualified higher education expenses, and (h) beginning in 1998, distributions
made for a qualified "first-home" purchase, subject to a $10,000 lifetime cap.
The exceptions stated in (d) and (f) above do not apply in the case of an
Individual Retirement Annuity. The exceptions stated in (g) and (h) above apply
to Individual Retirement Annuities. The exception stated in (c) above applies to
an Individual Retirement Annuity without the requirement that there be a
separation from service. In addition, for calendar years beginning January 1,
1997, withdrawals from IRAs by certain unemployed persons for payment of health
insurance premiums are not subject to the tax penalty. Exceptions applicable to
an Individual Retirement Annuity are applicable to a Roth IRA. Qualified
distributions from Roth IRAs are not subject to the penalty tax.
Generally, distributions from a Qualified Plan of a 5% owner or from an IRA must
commence no later than April 1 of the calendar year, following the year in which
the employee attains age 70 1/2 and from all others in Qualified Plans at the
later of age 70 1/2 or when the employee retires. Required distributions must
be over a period not exceeding the life expectancy of the individual or the
joint lives or life expectancies of the individual and his or her designated
beneficiary. If the required minimum distributions are not made, a 50% penalty
tax is imposed as to the amount not distributed. There are no required minimum
distributions for a Roth IRA.
Contracts Owned By Other Than
Natural Persons
Generally, investment earnings on premiums for Contracts will be taxed currently
to the Contract Owner if the Owner is a non-natural person, e.g., a corporation,
or certain other entities other than tax-qualified trusts. Such Contracts
generally will not be treated as annuities for federal income tax purposes.
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APPENDIX A
IRA DISCLOSURE STATEMENT
This statement is designed to assist you in understanding the requirements of
Federal tax law which apply to your Individual Retirement Annuity ("IRA"),
Spousal IRA , Roth IRA, or your Simplified Employee Pension IRA ("SEP-IRA") for
employer contributions. If you desire further information regarding your IRA, it
may be obtained either from your registered representative or from any district
office of the Internal Revenue Service.
The growth in value of the annuity is neither guaranteed nor projected.
Ten-Day Review Period
You have ten (10) days, unless a longer period is required by state law, after
you sign your application to review this statement and the Prospectus without
obligation. Please refer to the "Right to Examine Certificate" provision in this
prospectus if you do not wish to retain your Contract.
Annuity Service Center
H565
P.O. Box 9067
Springfield, MA 01102-9067
Eligibility Requirements
All persons with earned compensation are eligible for Individual Retirement
Annuities ("IRAs"). Additionally, if you have a spouse who has earned no
compensation (and you file a joint tax return), you may establish an IRA on
behalf of your spouse. Of course, if you have a working spouse who has earned
compensation, that spouse may establish his or her own IRA. Lastly, a divorced
or legally separated spouse may treat taxable alimony or separate maintenance
payments as compensation for purposes of establishing an IRA.
The Annuity as an IRA
When this Annuity is issued as an IRA, the contract is amended to provide that
the contract is both non-transferable and non-forfeitable.
Contributions and Deductions
As a result of significant changes made by the Tax Reform Act of 1986,
contributions to your IRA are limited at two levels. First, there are limits on
the amount of contributions which may be deducted for income tax purposes.
Second, there is a limit with respect to the amount of nondeductible
contributions which can be made. The Small Business Job Protection Act of 1996
and The Taxpayer Relief Act of 1997 may also affect IRA contributions and
withdrawals.
For tax years beginning after 1997, an individual who is not an active
participant in an employer-maintained retirement plan is eligible to make
deductible contributions to an IRA equal to the lesser of 100% of compensation
or $2,000. A spouse who is not an active participant in an employer-maintained
retirement plan during any part of a year but whose spouse is a plan participant
may made a deductible IRA contribution, subject to phase-out at adjusted gross
income between $150,000 and $160,000. Furthermore, an individual who files a
joint return and who has less taxable compensation than his spouse may
contribute to a spousal IRA and deduct the lesser of $2,000 or the sum of (a)
that individual's includable compensation for the tax year plus (b) includable
compensation of the individual's spouse reduced by the spouse's allowable IRA
deduction and Roth IRA contribution for the tax year.
However, if you or your spouse (if you file a joint return) is an active
participant in an employer-maintained retirement plan, your IRA deduction may be
reduced or eliminated entirely at certain levels of adjusted gross income. For
tax years beginning after 1997, phase-out ranges for deductible IRA
contributions increase annually until 2005 or 2007. Specifically, the adjusted
gross income phase-out range in 1998 for individuals with a single or head of
household filing status is $30,000 to $40,000, increasing annually to $50,000 to
$60,000 in 2005. For married individuals filing a joint return, the phase-out
range in 1998 is $50,000 to $60,000, increasing annually to $80,000 to $100,000
in 2007. The phase-out range in any year for a married individual filing
separately is $0 to $10,000. In all cases, the IRA deduction will be phased out
ratably within the respective ranges.
Nevertheless, you may still make designated nondeductible IRA contributions to
the extent of the excess of (1) the lesser of $2,000 ($4,000 in the case of a
Spousal IRA), or 100% of compensation annually, over (2) the applicable IRA
deduction limit. You may also choose to make a contribution nondeductible even
if you could have deducted part or all of the contribution. Interest or other
earnings on your IRA contribution, whether from deductible or nondeductible
contributions, will not be taxed until distributed to you.
For purposes of the above discussion, you are an "active participant" in an
employer-maintained retirement plan, if you are covered by such plan, even if
you are not yet vested in your retirement benefit. However, an individual who is
a participant in an eligible state deferred compensation plan, as defined in
Code section 457(b), is not considered to be an
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"active participant".
In order to qualify for a particular tax year, IRA contributions must be made
during such tax year or by the deadline for filing your income tax return for
that year (not including extensions). For calendar year taxpayers the deadline
is generally April 15.
If you make contributions to an IRA, Roth IRA or Education IRA in excess of the
combined deductible and nondeductible limits, you may be liable for a
nondeductible excise tax of 6% of the amount of the excess. You may withdraw an
excess contribution together with the net income attributable to the excess, on
or before the due date (including extensions of time) for filing your Federal
income tax return and the excess amount will be treated as if you never
contributed it, regardless of the size of the contribution. The accompanying
distribution of the net income, however, is includable in income for the year in
which the excess contribution is made. Excess amounts which are not withdrawn by
this method are subject to the 6% excise tax in the year of contribution and are
carried over and taxed each year until the year the excess is reduced.
No contribution may be made by you to your IRA during or after the tax year in
which you attain age 70 1/2, other than rollover distributions.
Special tax rules apply in the case of Roth IRAs.
Spousal IRAs
If your spouse has no compensation for the year and you file a joint return, you
may set up and make contributions to an IRA for your spouse, as well as for
yourself. Subject to the active participant rules discussed above, the maximum
amount that you can deduct for contributions to both IRAs is the lesser of
$4,000, or 100% of compensation reduced by the spouse's allowable IRA deduction
and Roth IRA contribution for the tax year. You may not deduct, however, more
than $2,000 to either IRA for any year.
SEP-IRAs
Under a SEP-IRA agreement, your employer may contribute 15% of your
compensation, up to $30,000, to your IRA each year. The contribution and
interest earned is excludable from your income until such time as it is
distributed to you.
You must withdraw any excess contribution made to your SEP-IRA by your employer
before the date for filing your return. If you do not, you are liable for the 6%
excise tax discussed above. SEP-IRAs are also generally subject to the other
requirements applicable to IRAs.
Roth IRAs
Roth IRAs are specially designated IRAs. Roth IRAs are subject to the same rules
as traditional IRAs except for certain special rules. Contributions to Roth IRAs
are not deductible and are limited based on modified adjusted gross income. You
may make a contribution to a Roth IRA even if you are an active participant in
an employer-maintained retirement plan. You may also make contributions to a
Roth IRA after age 70 1/2.
You may contribute a maximum of $2,000 per year to all IRAs (deductible, non
deductible and Roth IRAs). This $2,000 annual limit does not include rollover
contributions. The $2,000 maximum annual contribution to a Roth IRA phases out
for individuals with a single or head of household filing status with modified
adjusted gross income between $95,000 and $110,000. For married individuals
filing a joint return, the maximum annual contribution to a Roth IRA phases out
with modified adjusted gross income between $150,000 and $160,000.
Qualified distributions from Roth IRAs are not included in income and are not
subject to the 10% tax on premature distributions. To be qualified, a
distribution must not be made before the end of the five year tax period
beginning with the first tax year a contribution to a Roth IRA is made, and the
distribution must be made: (a) on or after the date on which you attain age 59
1/2; or (b) to your beneficiary or your estate after your death; or (c) as a
result of your being disabled; or (d) to pay for qualified first-time homebuyer
expenses.
Distributions that are not qualified distributions are treated first as a return
of investment to the extent of your contributions to Roth IRAs and as a taxable
distribution to the extent of any excess. Roth IRAs are not subject to required
minimum distribution rules or to incidental death benefit rules.
If you are not married filing separately and if your adjusted gross income for a
tax year does not exceed $100,000, you may roll over distributions within 60
days from a traditional IRA to a Roth IRA or you may convert a traditional IRA
into a Roth IRA. While the rollover would be subject to tax, it would not be
subject to the 10% premature distribution penalty tax. If the rollover occurs
during 1998, the taxable amount is included in gross income ratably over four
tax years.
Rollover Contributions and Transfers
You are permitted to withdraw any portion of the value of your IRA and reinvest
it in another individual retirement annuity or account, but not more frequently
than once in any one-year period. Such withdrawals may also be made from other
IRAs and contributed to this contract. Such a
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withdrawal of funds from one IRA and subsequent reinvestment in another IRA is
called a "rollover contribution". In order to qualify as a tax-free rollover
contribution, the entire portion of the withdrawal must be reinvested in another
IRA within 60 days after the date it is received. Of course, you will not be
allowed a tax deduction for the amount of any rollover contribution.
A similar type of rollover contribution can be made with the proceeds of an
eligible rollover distribution or a lump-sum distribution from a qualified
retirement plan. Such a distribution must also be invested in the IRA within 60
days of receipt. A lump sum distribution is one made from a Qualified Plan: (1)
because of your death; (2) after you reached age 59 1/2; (3) because you left
your job (unless you are self-employed); or (4) after you become permanently
disabled (but only if you are self-employed). To be considered a lump sum, the
distribution must also be made entirely in a single tax year and must represent
the entire value of your account in the retirement plan (and in all plans of a
similar type sponsored by the same employer). Properly made, such a distribution
will not be taxable until you receive payments from the IRA created with it.
Unless you were a self-employed participant in the distributing plan, you may
later roll over such a contribution to another qualified retirement plan as long
as you have not mixed it with any IRA contributions you have deducted from your
income.
Eligible rollover distributions are generally all taxable distributions from
Qualified Plans and Section 403(b) annuities except for: (1) amounts paid over
your life or life expectancy; or (2) installments for periods of years spanning
ten (10) years or more; or (3) required minimum distributions.
Also, if you receive a distribution on account of a plan termination you may
make a rollover contribution to an IRA.
In addition to rollover contributions, you may also have the assets of one IRA
directly transferred (without any distribution to you) to another IRA. Direct
IRA to IRA transfers are not subject to the one-year waiting period applicable
to IRA rollover contributions.
Special tax rules apply to rollover contributions to a Roth IRA.
Withdrawals
If you withdraw an amount from an IRA during a tax year and you have made both
deductible and nondeductible IRA contributions, the part of the withdrawal that
is from nondeductible contributions (not including interest) is excludable from
income. The amount excludable from income for the tax year is the portion of the
amount withdrawn that has the same ratio to the amount withdrawn as your total
nondeductible IRA contributions (of all your IRAs) have to the total balance of
all your IRAs, including rollover IRAs. The remaining portion of the amount
withdrawn for the tax year is includable in income. For purposes of this
calculation, all your IRAs are treated as one contract and all withdrawals you
make during a tax year are treated as one distribution and the value of the
contract (after adding back distributions made during the year), income on the
contract and investment in the contract are computed at the end of the year.
Special tax rules apply to distributions from Roth IRAs.
Premature Distributions
Premature distributions are amounts you withdraw from your IRA before you are
age 59 1/2 Premature distributions which do not qualify for rollover treatment
are subject to a penalty tax equal to 10% of the amount of the distribution
includable in gross income in the tax year, unless you are totally disabled or
receive the distributions in substantially equal payments (at least annually)
for your life or life expectancy or the joint lives or life expectancies of you
and your beneficiary or unless the distributions are made to your beneficiary on
account of your death. In addition, beginning January 1, 1997, withdrawals from
IRAs for payment of certain medical expenses and withdrawals by certain
unemployed persons for payment of health insurance premiums are not subject to
the 10% penalty tax. Furthermore, for calendar years beginning January 1, 1998,
withdrawals from IRAs for payment of certain qualified higher education expenses
and withdrawals for certain first time homebuyer expenses are not subject to the
penalty tax.
The penalty tax is also applicable to income taxable distributions deemed to
have been made upon disqualification of your IRA as a result of a prohibited
transaction (including, in general, the sale or assignment of your interest in
your IRA to anyone), or as a result of borrowing on your IRA, or using your IRA
as security for a loan.
Special tax rules apply to distributions from Roth IRAs.
Inadequate or Under distribution - 50% Tax
Your IRA is intended to provide retirement benefits over your lifetime. Thus,
Federal law requires that you either (1) receive a lump sum distribution from
your IRA not later than April 1st of the year after the year in which you attain
age 70 1/2 or (2) start to receive periodic payments by that date. If you elect
to receive periodic payments, those payments must be sufficient to pay out the
entire value of your IRA during your life or life expectancy (or over the life
or life expectancies of you and your beneficiary). If the payments are not
sufficient to meet these requirements, an excise tax of 50% will be imposed on
the amount of any underpayment.
Death Benefits
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If you should die before receiving any benefits from your IRA, your beneficiary
must either elect (1) to receive the balance of your account in a lump sum
within five (5) years of your death, or (2) have the balance applied to purchase
an immediate annuity payable over the life or life expectancy of the
beneficiary. Such annuity must commence within one year of your death. If your
spouse is your beneficiary, however, distributions are not required to be
distributed until the date you would have attained age 70 1/2, and if your
spouse dies before any distribution to him or her commences, your spouse is
treated as the owner of your IRA for purposes of any required distributions.
If you should die after benefits have commenced to you, the remaining portion of
your account must be distributed to your beneficiary as rapidly as under the
method of distribution in effect on the date of your death.
Prohibited Transactions
If you engage in certain prohibited transactions with your IRA, the IRA will
lose its exemption from taxation. Depending on the type of prohibited
transaction, you must include in income all or a portion of the fair market
value of the IRA account. Examples of prohibited transactions are: (1) any
borrowing from the account; (2) use of the account as security for a loan; (3)
receipt by you or certain family members of unreasonable compensation for
managing the IRA.
Prototype Status
The Internal Revenue Service currently has not been asked to review the format
of your Massachusetts Mutual Life Insurance Company ("MassMutual") Prototype IRA
or issue a determination letter regarding the qualification of the prototype
IRA. However, an opinion letter is a determination only as to the form of the
IRA, and does not represent a determination as to its merits.
Reporting to the IRS
If you make a designated nondeductible contribution to an IRA for a taxable year
or receive a distribution from an IRA during a taxable year, you are required to
provide such information as the IRS may prescribe on your tax return for the
taxable year, and, to the extent required, for succeeding taxable years. The
information that may be required includes, but is not limited to: (1) the amount
of designated nondeductible contributions for the taxable year; (2) the total
amount of designated nondeductible contributions for all preceding taxable years
that have not previously been withdrawn; (3) the total balance of all your IRAs
as of the close of the calendar year with or within which the taxable year ends;
and (4) the amount of distributions from your IRAs during the taxable year. If
the required information is not shown on your return, all traditional IRA
contributions are presumed to have been deductible. Therefore, they will be
taxable upon withdrawal from the IRA, unless it can be shown, with satisfactory
evidence, that the contributions were nondeductible when they were made.
Whenever you are liable for one of the penalty taxes discussed above (6% for
excess contributions, 10% for premature distributions, or 50% for
underpayments), you must file Form 5329 with the Internal Revenue Service. The
form is to be attached to your income tax return (Form 1040) for the tax year in
which the penalty applies.
Financial Disclosure
The charges which may be made against a contribution to your IRA include the
Custodian's fees (set forth in the Adoption Agreement), and the mortality and
expense risk fee, and other fees for the Separate Account contained in the Fee
Table of this Prospectus. The charges which may be made against a withdrawal are
also described in this Prospectus.
Additional Information
For further information about the Contract, you may obtain a Statement of
Additional Information prepared by the Company.
The Table of Contents of this Statement is as follows:
1. Company
2. Independent Accountants
3. Assignment of Contract
4. Distributors
5. Performance Measures
6. Yield and Effective Yield
7. Annuity Provisions
8. Financial Statements
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This Prospectus sets forth the information about C.M. Multi-Account A that a
prospective investor ought to know before investing. Certain additional
information about the Separate Account is contained in a Statement of Additional
Information dated May 1, 1998 which has been filed with the SEC and is
incorporated herein by reference. The Table of Contents for the Statement of
Additional Information appears on the last page of this Prospectus. To obtain a
copy, return this request form to the address shown below or telephone 1-800-
234-5606.
- --------------------------------------------------------------------------------
To: C.M. Life Insurance Company
Annuity Products, H565
P.O. Box 9067
Springfield, Massachusetts 01102-9067
Please send me a Statement of Additional Information for C.M. Life's Panorama
Premier.
Name
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Address
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City State Zip
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Telephone
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41
