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PROSPECTUS SUPPLEMENT
GROUP VEL
SUPPLEMENT TO PROSPECTUS DATED MAY 1, 1995
Federal tax law requires a minimum death benefit in relation to cash value
for a Policy to qualify as life insurance. Under current Federal tax law,
either the Guideline Premium test or the Cash Value Accumulation test can be
used to determine if a Policy complies with the definition of life insurance
in Section 7702 of the Internal Revenue Code ("Code"). Where approved by
state insurance departments, for Policies issued on and after February 1,
1996, the Employer may elect either of the tests. If the Guideline Premium
test is chosen, Certificate Owners may choose between two death benefit
options.
THE GUIDELINE PREMIUM test limits the amount of premiums payable under a
policy to a certain amount for an insured of a particular age and sex. Under
the Guideline Premium test, the Certificate Owner may choose from two Death
Benefit options. Under Option One, the Death Benefit remains fixed. Under
Option 2, the Death Benefit includes the Certificate Value in addition to a
fixed insurance amount. A Minimum Death benefit, equivalent to a percentage
of the Certificate Value, will apply if it is greater than the Death Benefit
otherwise payable under Option 1 or Option 2. For more information about the
Guideline Premium Test and Option 1 and Option 2, see "DEATH BENEFIT OPTIONS"
beginning on page 28 of the Prospectus.
THE CASH VALUE ACCUMULATION test requires that the death benefit must be
sufficient so that the cash surrender value, as defined in section 7702, does
not at any time exceed the net single premium required to fund the future
benefits under the policy. If the Certificate Value is at any time greater
than the net single premium at the insured's age, sex, and underwriting
classification for the proposed Death Benefit, the Death Benefit will be
increased automatically by multiplying the Certificate Value by a "Death
Benefit Factor" computed in compliance with the Code. Death Benefits Option
1 and Option 2, as described under the captions DEATH BENEFIT OPTIONS and
CHANGE IN DEATH BENEFIT OPTIONS in the Prospectus, are not available under
the Cash Value Accumulation test.
COMPARISON OF GUIDELINE PREMIUM test and the cash value accumulation test.
There are two main differences between the Guideline Premium test and the
Cash Value Accumulation test. First, the Guideline Premium test limits the
amount of premium that may be paid into a Policy, while no such limits apply
under the Cash Value Accumulation test. (However, any premium above the
maximum level premium is subject to evidence of insurability satisfactory to
the Company). Second, the factors that determine the minimum Death Benefit
relative to the Policy's Certificate Value are different. Required increases
in the minimum death benefit due to a growth in Certificate Value will
generally be greater under the Cash Value Accumulation test than under the
Guideline Premium test.
APPLICANTS FOR A POLICY SHOULD CONSULT A QUALIFIED TAX ADVISER IN CHOOSING A
DEATH BENEFIT ELECTION.
PROSPECTUS SUPPLEMENT DATED FEBRUARY 1, 1996
