As filed with the Securities and Exchange Commission on July 31, 1995
Registration No. 33-88794
811-8700
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM N-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. 1
and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 2
FIRST ING OF NEW YORK SEPARATE ACCOUNT A1
(Exact Name of Registrant)
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
(Name of Depositor)
225 Broadway
Suite 1901
New York, New York 10007
(Address of Depositor's Principal Executive Offices)
(303) 860-1290
(Depositor's Telephone Number, including Area Code)
STEPHEN B. MOSES
Security Life of Denver
Insurance Company
1290 Broadway
Denver, Colorado 80203-5699
(Name and Address of Agent for Service)
Copy to:
DIANE E. AMBLER
Mayer, Brown & Platt
2000 Pennsylvania Avenue
Washington, D.C. 20006
(202) 778-0641
Approximate Date of Proposed Public Offering: As soon after the effective
date of this Registration Statement as is practicable.
Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until Registrant shall file
a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section
8(a) of the Securities Act of 1933 or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to
said Section 8(a), may determine.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant
has elected to register an indefinite number or amount of securities under
the Securities Act of 1933. That election was originally filed as part of
Registrant's registration statement on August 16, 1994. Pursuant to
paragraph (b)(2) of Rule 24f-2, Registrant need not file a Rule 24f-2
Notice for its fiscal year ended December 31, 1994, because it did not sell
any securities during that time.
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
Cross-Reference Sheet
Pursuant to Rule 495(a)
Under the Securities Act of 1933
Form N-4
Item No. Caption in Prospectus
_________ _____________________
1. Cover Page Cover Page
2. Definitions Glossary of Terms
3. Synopsis or Highlights Summary of the Fulcrum Fund
Variable Annuity
4. Condensed Financial Information Condensed Financial
Information
5. General Description of Registrant, Facts about First ING Life
Depositor and Portfolio Companies and the Variable Account
6. Deductions and Expenses Fee Table; Summary of the
Fulcrum Fund Variable Annuity;
Certificate Charges and Fees
7. General Description of Variable Facts about the Contract and
Annuity Contracts the Certificate
8. Annuity Period Choosing an Annuity Option
9. Death Benefit Summary of the Fulcrum Fund
Variable Annuity; Values under
the Certificate
10. Purchase and Contract Values Summary of the Fulcrum Fund
Variable Annuity; Facts about
the Contract and the
Certificate; Values under the
Certificate
11. Redemptions Summary of the Fulcrum Fund
Variable Annuity; Certificate
Charges and Fees; Values under
the Certificate; Choosing an
Annuity Option
12. Taxes Summary of the Fulcrum Fund
Variable Annuity; Certificate
Charges and Fees; Federal Tax
Considerations
13. Legal Proceedings Regulatory Information
14. Table of Contents of Statement Table of Contents of Statement
of Additional Information of Additional Information
15. Cover Page Statement of Additional
Information -- Cover Page
16. Table of Contents Statement of Additional
Information -- Table of Contents
17. General Information and History Statement of Additional
Information -- First ING Life;
Prospectus -- Facts about First
ING Life and the Variable
Account
18. Services Statement of Additional
Information --
First ING Life; Statement of
Additional Information -- The
Administrator
19. Purchase of Securities Prospectus -- Facts About the
Contract and the Certificate
20. Underwriters Statement of Additional
Information -- First ING Life
21. Calculation of Yield Quotations of Statement of Additional
Money Market Sub-Accounts Information -- Performance
Information
22. Annuity Payments Prospectus -- Choosing
an Annuity Option
23. Financial Statements Statement of Additional
Information --
Financial Statements of
First ING Life
Insurance Company of
New York
The Fulcrum Fund Variable Annuity Prospectus
A Group Flexible Premium Deferred Combination Fixed and Variable
Annuity Contract
issued by
First ING Life Insurance Company of New York
and
First ING of New York Separate Account A1
This prospectus describes The Fulcrum Fund Variable Annuity, a
group flexible premium deferred combination fixed and variable
annuity contract (the "Contract") offered by First ING Life
Insurance Company of New York ("First ING Life," "we," "our" or
"us"). The Contract is issued to the Contract Holder, who is the
group Contract owner. The group Contract Holder holds legal
title to the group Contract and retains possession of the group
Contract while it is in force. The Owner ("you" or "your")
purchases a Certificate (the "Certificate") under the Contract
with an initial Purchase Payment and is permitted to make
additional Purchase Payments. The Certificate is designed to aid
in long-term financial planning and provides automatic
reinvestment and compounding of interest, dividends and capital
gains on a tax-deferred basis for retirement or other long-term
purposes. Certificates are issued to those persons who apply for
coverage under the group Contract through a Certificate
application and are accepted by us. In the following, all
references to rights and benefits under the Contract apply to
each Certificate issued under the Contract.
The Certificate is funded by First ING of New York Separate
Account A1 (the "Variable Account"). Six Divisions of the
Variable Account are currently available under the Certificate.
The investments available through the Divisions of the Variable
Account include mutual fund Portfolios of The Palladian Trust
(the "Trust"). A Guaranteed Interest Division, which guarantees
a minimum fixed rate of interest, is also available. Investors
may utilize both the Variable Account and the Guaranteed Interest
Division simultaneously.
You may allocate your Purchase Payments among the Divisions
available under the Certificate in any way you choose, subject to
certain restrictions. During the Accumulation Period, you may
change the allocation of your Accumulation Value up to 12 times
per Certificate Year free of charge.
You may surrender the Certificate for its Cash Surrender Value at
any time prior to the Annuity Date. The Cash Surrender Value
will vary daily with the investment results of the Divisions of
the Variable Account and any interest credited to the Guaranteed
Interest Division. We do not guarantee any minimum Cash
Surrender Value for amounts allocated to the Divisions of the
Variable Account. You may withdraw some of your Cash Surrender
Value by making partial withdrawals, subject to certain
restrictions. Surrenders and withdrawals may be subject to a
surrender charge and a 10% tax penalty.
We will pay a Death Benefit to the Beneficiary if the Owner dies
prior to the Annuity Date.
This prospectus describes the Contract, the Certificates issued
under it, and your principal rights and limitations and sets
forth the information concerning the Variable Account that
investors should know before investing. The prospectus for the
Trust, which must accompany this prospectus, provides information
regarding investment activities and objectives of the Trust and
should be read in conjunction with this prospectus. A Statement
of Additional Information, dated August 14, 1995, about the
Variable Account has been filed with the Securities and Exchange
Commission ("SEC") and is available without charge. To obtain a
copy of this document, call or write our Customer Service Center.
The Table of Contents of the Statement of Additional Information
may be found on the last page of this prospectus. The Statement
of Additional Information is incorporated herein by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE. IT
IS NOT VALID UNLESS ACCOMPANIED BY THE CURRENT PROSPECTUS FOR THE
PALLADIAN TRUST.
Issued by: Distributed by: Customer
First ING Life Insurance ING America Service Center:
Company of New York Equities, Inc. P.O. Box 173778
P.O. Box 173778 1290 Broadway, Denver, CO
Denver, CO 80217-3778 Attn: Variable 80217-3778
Denver, CO 80203 1-800-249-9099
Date of Prospectus: August 14, 1995
TABLE OF CONTENTS
GLOSSARY OF TERMS 4
FEE TABLE 7
SUMMARY OF THE FULCRUM FUND VARIABLE ANNUITY 11
GENERAL DESCRIPTION 11
PURCHASE PAYMENTS 12
THE VARIABLE ACCOUNT 12
GUARANTEED DEATH BENEFIT 13
PARTIAL WITHDRAWALS 13
SURRENDERING YOUR CERTIFICATE 13
YOUR RIGHT TO CANCEL THE CERTIFICATE 14
CERTIFICATE CHARGES AND FEES 14
PERFORMANCE INFORMATION 15
CONDENSED FINANCIAL INFORMATION 16
FACTS ABOUT FIRST ING LIFE AND THE VARIABLE ACCOUNT 16
FIRST ING LIFE 16
THE ADMINISTRATOR 16
THE VARIABLE ACCOUNT 16
THE PALLADIAN TRUST 17
CHANGES WITHIN THE VARIABLE ACCOUNT 18
THE GUARANTEED INTEREST DIVISION 19
FACTS ABOUT THE CONTRACT AND THE CERTIFICATES 19
PURCHASE PAYMENTS 19
DOLLAR COST AVERAGING OPTION 20
AUTOMATIC REBALANCING 21
REPORTS TO OWNERS 22
GROUP OR SPONSORED ARRANGEMENTS 22
OFFERING THE CERTIFICATE 22
VALUES UNDER THE CERTIFICATE 23
GUARANTEED DEATH BENEFIT 23
DEATH BENEFIT PROCEEDS 23
YOUR ACCUMULATION VALUE 24
MEASUREMENT OF INVESTMENT EXPERIENCE FOR THE DIVISIONS OF THE
VARIABLE ACCOUNT 24
ACCUMULATION VALUE OF EACH DIVISION OF THE VARIABLE ACCOUNT 25
ACCUMULATION VALUE OF THE GUARANTEED INTEREST DIVISION 25
YOUR RIGHT TO TRANSFER AMONG DIVISIONS 26
PARTIAL WITHDRAWALS 27
SURRENDERING TO RECEIVE THE CASH SURRENDER VALUE 29
YOUR RIGHT TO CANCEL THE CERTIFICATE 30
WHEN WE MAKE PAYOUTS 30
OTHER INFORMATION 30
THE OWNER 30
THE ANNUITANT 31
THE BENEFICIARY 31
CHANGE OF OWNER, BENEFICIARY OR ANNUITANT 31
OTHER CERTIFICATE PROVISIONS 32
AUTHORITY TO CHANGE CONTRACT AND CERTIFICATE TERMS 33
CERTIFICATE CHARGES AND FEES 33
DEDUCTION OF CHARGES 33
CHARGES DEDUCTED FROM THE ACCUMULATION VALUE 33
CHARGES DEDUCTED FROM THE DIVISIONS OF THE VARIABLE ACCOUNT 35
PORTFOLIO EXPENSES 35
CHOOSING AN ANNUITY OPTION 35
GENERAL PROVISIONS 35
PAYOUT OPTIONS 36
PAYOUT PERIOD OPTIONS 37
REGULATORY INFORMATION 39
VOTING PRIVILEGES 39
STATE REGULATION 40
LEGAL PROCEEDINGS 40
LEGAL MATTERS 40
EXPERTS 40
FEDERAL TAX CONSIDERATIONS 40
INTRODUCTION 40
FIRST ING LIFE TAX STATUS 41
TAXATION OF ANNUITIES 41
TAXATION OF INDIVIDUAL RETIREMENT ANNUITIES 42
DISTRIBUTION-AT-DEATH RULES 43
TAXATION OF DEATH BENEFIT PROCEEDS 44
EXCHANGE OF ANNUITY CERTIFICATES 44
CERTIFICATES OWNED BY NON-NATURAL PERSONS 44
SECTION 1035 EXCHANGES 44
ASSIGNMENTS 44
MULTIPLE CERTIFICATES RULE 44
DIVERSIFICATION STANDARDS 45
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION 45
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY
JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
NO PERSON IS AUTHORIZED TO MAKE ANY REPRESENTATIONS IN
CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS.
GLOSSARY OF TERMS
Accumulation Experience Factor _ The factor which reflects the
investment experience of the Portfolio in which a Division of
the Variable Account invests as well as the charges assessed
against that Division for a Valuation Period during the
Accumulation Period.
Accumulation Period _ The period of time from the Certificate
Date to the Annuity Date.
Accumulation Unit _ A unit of measurement which we use to
calculate the Accumulation Value during the Accumulation
Period.
Accumulation Unit Value _ The value of the Accumulation Units
of the Divisions of the Variable Account. The Accumulation
Unit Value is determined as of each Valuation Date.
Accumulation Value _ The amount that your Certificate provides
which is available for investment at any time prior to the
Annuity Date. Initially, this amount is equal to the initial
Purchase Payment. Thereafter, the Accumulation Value will
reflect additional Purchase Payments made, investment
experience of the Divisions of the Variable Account you
select, interest credited to the Guaranteed Interest Division,
charges deducted and partial withdrawals taken.
Age _ The Age on the birthday prior to any date for which Age
is to be determined.
Anniversary _ The anniversary of the Certificate Date.
Annuitant _ The person designated by the Owner to receive the
Annuity Payouts and on whose life Annuity Payouts are based.
Annuity Date _ The date as of which Annuity Payouts begin.
Annuity Experience Factor _ The factor which reflects the
investment experience of the Portfolio in which a Division of
the Variable Account invests as well as the asset-based
charges assessed against that Division for a Valuation Period
during the Annuity Period.
Annuity Options _ Options the Owner elects composed of both
the Payout Option and the Payout Period Option that determine
the Annuity Payout.
Annuity Payout _ The periodic payouts an Annuitant receives.
They may be either a fixed or a variable amount, or a
combination of fixed and variable, based on the Payout Option
elected.
Annuity Period _ The period of time from the Annuity Date
until the last Annuity Payout is made to the Annuitant.
Annuity Unit _ A unit of measurement which we use to calculate
Annuity Payouts during the Annuity Period.
Annuity Unit Value _ The value of the Annuity Units of the
Divisions of the Variable Account. The Annuity Unit Value is
determined as of each Valuation Date.
Beneficiary (or Beneficiaries) _ The person (or persons)
designated to receive the Death Benefit in the case of the
death of the Owner during the Accumulation Period.
Benchmark Total Return _ The interest rate assumed for the
purposes of calculating the payout amount upon annuitization.
Business Day _ Any day which is a Valuation Date.
Cash Surrender Value _ The amount the Owner receives upon
surrendering the Certificate.
Certificate _ The part of the entire Contract which provides
the provisions of the Contract that apply to you.
Certificate Date _ The date as of which we have received and
accepted the initial Purchase Payment for the Certificate and
as of which we begin determining the Certificate values. The
Certificate Date is used to determine Certificate Processing
Dates, Certificate Years and Anniversaries.
Certificate Processing Date _ The day when we deduct the
annual administration charge from the Accumulation Value.
Current practice is that the Certificate Processing Date will
be as of each Anniversary. Any Certificate Processing Date
that is not a Valuation Date will be deemed to occur as of the
next succeeding Valuation Date.
Certificate Year _ A period of 12 months commencing with the
Certificate Date or any Anniversary.
Code _ Internal Revenue Code of 1986, as amended.
Contingent Annuitant _ The person designated by the Owner who
becomes the Annuitant upon the Annuitant's death.
Contingent Beneficiary _ The person designated by the Owner
who, upon the Beneficiary's death, becomes the Beneficiary.
Contract _ The entire Contract consisting of the basic
Contract, the Certificate, any applications, the Certificate
application, and any Riders or Endorsements.
Contract Date _ The date as of which the Contract was issued
to the Contract Holder.
Contract Holder _ The person or trust who is the group
Contract owner, and who holds legal title to the group
Contract and retains possession of the group Contract while it
is in force.
Customer Service Center _ Where service is provided to Owners.
The mailing address and telephone number of the Customer
Service Center are shown on the cover.
Death Benefit _ The amount actually payable due to the death
of the Owner during the Accumulation Period.
Division _ A division of the Variable Account or the
Guaranteed Interest Division.
Earnings _ For purposes of calculating surrender charges, an
amount equal to the Accumulation Value less Purchase Payments
not previously withdrawn.
Endorsements _ An Endorsement changes or adds provisions to
the Certificate.
Free Look Period _ The period of time within which an Owner
may examine the Certificate and return it for a refund.
General Account _ The account which contains all of our assets
other than those held in our separate accounts.
Gross Partial Withdrawal _ A partial withdrawal plus any
applicable surrender charges.
Guaranteed Interest Division _ Part of our General Account to
which a portion of your Accumulation Value may be allocated
and which provides guarantees of principal and interest.
IRA Certificate _ An Individual Retirement Annuity, an IRA
Rollover or an IRA Transfer offered to an individual for use
in connection with Sections 408(a) and (b) of the Code.
Net Purchase Payments _ Purchase Payments made less Gross
Partial Withdrawals taken.
Owner _ The person or persons who own the Certificate and are
entitled to exercise all rights under the Certificate. This
person's death during the Accumulation Period usually
initiates payout of the Death Benefit.
Payout Option _ Specifies the type of annuity to be paid and
may be either fixed, variable or a combination of fixed and
variable.
Payout Period Option _ Determines how long the annuity will be
paid and the amount of the first payout.
Portfolios _ The investment options available to the Divisions
of the Variable Account. Each Portfolio has a defined
investment objective.
Proceeds _ The amount to be paid as of the Annuity Date to
provide Annuity Payouts, upon surrender of the Certificate
prior to the Annuity Date, or as a Death Benefit prior to the
Annuity Date.
Purchase Payments _ The initial Purchase Payment and any
future payments made with respect to your Certificate.
Rider _ A Rider adds benefits to the Certificate.
Supplementary Contract _ The Election and Supplementary
Agreement for a Settlement Option amends the entire
Certificate when an Annuity Option becomes effective. The
Supplementary Contract describes the manner of settlement and
the rights of the Annuitant.
Supplementary Contract Effective Date _ The Annuity Date or
the date of other settlement, whenever the Annuity Option
becomes effective.
Valuation Date _ Each date as of which the Variable Account is
valued, which currently includes each day that the New York
Stock Exchange is open for trading and on which First ING
Life's Customer Service Center is open. The New York Stock
Exchange is currently closed on weekends and on the following
holidays: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, July Fourth, Labor Day, Thanksgiving Day, and
Christmas Day. First ING Life's Customer Service Center is
normally not open on the following days: the Monday before New
Year's Day, July Fourth, or Christmas Day if any of these
holidays falls on a Tuesday; the Monday after New Year's Day,
July Fourth, or Christmas Day if any of these holidays falls
on a Sunday; the Friday after New Year's Day, July Fourth, or
Christmas Day if any of these holidays falls on a Thursday;
the Friday before New Year's Day, July Fourth, or Christmas
Day if any of these holidays falls on a Saturday; and the
Friday after Thanksgiving.
Valuation Period _ The period that starts at 4 pm Eastern Time
on a Valuation Date and ends at 4 pm Eastern Time on the next
succeeding Valuation Date.
Variable Account _First ING of New York Separate Account A1
established by First ING Life to segregate the assets funding
the variable benefits provided by the Contract from the assets
in our General Account.
FEE TABLE
Transaction Expenses <F1>
Sales Load Imposed on Purchase Payments...............0%
Surrender Charge <F2>
Anniversaries Since Surrender Charge as a Percentage of
Purchase Payment Was Made Purchase Payment Withdrawn
0............................7%
1............................6%
2............................5%
3............................4%
4............................3%
5............................2%
6+............................0%
Excess Transfer Charge (does not apply to the first 12
transfers in a Certificate Year) <F3>.............................. $25
Annual Certificate Fees
Administrative Charge (does not apply after the Annuity Date)<F4>
If Net Purchase Payments made are less than $100,000............ $30
If Net Purchase Payments made are $100,000 or more ..............$ 0
Variable Account Annual Expenses (as a percentage of assets in
each Division of the Variable Account)
Mortality and Expense Risk Charge.................................1.25%
Asset-based Administrative Charge.................................0.15%
Total Variable Account Annual Expenses<F5>........................1.40%
________________________
<F1> We also deduct from the Proceeds taxes incurred but not paid to cover the
state or local tax charge on Purchase Payments. See Taxes on Purchase
Payments, page 33.
<F2> Up to certain limits, partial withdrawals may be taken without incurring
a surrender charge. See Charges Deducted from the Accumulation Value,
page 32.
<F3> Any allocation under the dollar cost averaging option is not considered a
transfer for this purpose. See Dollar Cost Averaging Option, page 20.
After the Annuity Date, transfers are limited to four each Certificate
Year, and no transfer charge applies. See Excess Transfer Charge,
page 33.
<F4> The administrative charge is deducted as of each Anniversary or upon
surrender. See Administrative Charge, page 33.
<F5> We may reduce certain charges under certain group or sponsored
arrangements. See Group or Sponsored Arrangements, page 21.
<TABLE>
Portfolio Annual Expenses (as a percentage of Portfolio average net assets) and Total Expenses
<CAPTION>
Total
Administration Total Variable
Management and Other Annual Account Grand
Advisory Expenses Expenses Expenses Total
Fees <F6> <F7> <F7> <F6>
<S> <C> <C> <C> <C> <C>
The Value Portfolio 0.80% 0.85% 1.65% 1.40% 3.05%
The Growth Portfolio 0.80% 1.10% 1.90% 1.40% 3.30%
The Balanced Opportunity
Portfolio 0.80% 1.23% 2.03% 1.40% 3.43%
The International Growth
Portfolio 0.80% 1.23% 2.03% 1.40% 3.43%
The Global Strategic Income
Portfolio 0.80% 1.23% 2.03% 1.40% 3.43%
The Global Interactive/Telecomm
Portfolio 0.80% 0.96% 1.76% 1.40% 3.16%
</TABLE>
_____________________________
<F6> The total advisory fee for PAI, the Portfolio Adviser and the Portfolio
Managers for the first 12 months of operations is, for each Portfolio,
0.80% of average daily net assets. After the time, the Management and
Advisory fee schedule provides for an incentive performance fee in excess
of the listed fee for superior performance; it also provides for a lower
fee for sub-par performance. The base fee will be 2.00%, but it may vary
from 0.00% to 4.00% depending on the Portfolio's performance. See the
prospectus of the Trust for more details.
<F7> Other Expenses, and therefore Total Annual Expenses, have been estimated
and are annualized. See the prospectus for the Trust for complete
details.
Fee Examples
If you surrender your Certificate at the end of the
applicable time period, you would pay the following
expenses on a $1,000 initial Purchase Payment assuming a
5% annual rate of return on assets:
One Three Five Ten
Year Years Years Years
The Value Division $ 100.72 $ 143.86 $ 189.31 $ 333.70
The Growth Division 103.13 150.97 200.97 355.90
The Balanced Opportunity
Division 104.38 154.65 206.98 367.24
The International Growth
Division 104.38 154.65 206.98 367.24
The Global Strategic Income
Division 104.38 154.65 206.98 367.24
The Global Interactive/Telecomm
Division 101.78 146.99 194.46 343.53
If you do not surrender your Certificate or if you
annuitize, you would pay the following expenses on a
$1,000 initial Purchase Payment assuming a 5% annual rate
of return on assets:
One Three Five Ten
Year Years Years Years
The Value Division $ 30.72 93.86 159.31 333.70
The Growth Division 33.13 100.97 170.97 355.90
The Balanced Opportunity
Division 34.38 104.65 176.98 367.24
The International Growth
Division 34.38 104.65 176.98 367.24
The Global Strategic Income
Division 34.38 104.65 176.98 367.24
The Global Interactive/Telecomm
Division 31.78 96.99 164.46 343.53
The dollar amounts shown in the examples each are based on
an initial Purchase Payment of $50,000 allocated to that
Division. Other expenses of the Portfolios are estimated
since the Portfolios have recently commenced operations.
Actual Portfolio expenses may be greater or less than
those on which these examples were based. Taxes on
Purchase Payments may also be applicable. See Taxes on
Purchase Payments, page 34. The annual administrative
charge does not apply during the Annuity Period.
The purpose of the fee table is to assist you in
understanding the various costs and expenses that you may
bear directly or indirectly. The examples in the fee
table reflect expenses of the Variable Account as well as
the Portfolios. For a complete description of Certificate
costs and expenses, see CERTIFICATE CHARGES AND FEES, page
33. For a more complete description of the Portfolios'
costs and expenses, see the prospectus for the Trust.
THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN, SUBJECT TO THE
GUARANTEES UNDER THE CONTRACT.
SUMMARY OF THE FULCRUM FUND VARIABLE ANNUITY
General Description
This prospectus has been designed to provide you with the
necessary information to make a decision on purchasing the
Fulcrum Fund Variable Annuity offered by First ING Life and
funded by the Variable Account as well as by our General Account.
This summary is intended to provide a brief overview of the more
significant aspects of the Contract and the Certificates issued
under it. Further detail is provided in this prospectus, the
related Statement of Additional Information, the Certificate, and
the prospectus for the Trust. The Contract and the Certificate,
together with any applications, the Certificate application and
any Riders or Endorsements, constitutes the entire agreement
between you and us and should be retained. For further
information about your Certificate, contact the First ING Life
Customer Service Center.
An investment in the Certificate gives you a choice of
investments. The Portfolios of the Trust are managed by
unaffiliated professional money managers. Each money manager is
paid on an incentive fee basis, which could result in either
higher than average advisory fees or, possibly, no advisory fee
at all, depending on how well each money manager performs for
you. Each money manager has also agreed to invest $1 million in
the Portfolio it manages, so it is managing a portion of its
money along with your money. These Portfolios are available only
to serve as the underlying investment for variable annuity and
variable life insurance contracts issued through separate
accounts of First ING Life as well as other life insurance
companies, and to certain qualified pension and retirement plans.
They are not available to individual investors.
The Certificate also offers a Guaranteed Interest Division where
you may allocate all or a portion of your Purchase Payments and
transfer your Accumulation Value. The Guaranteed Interest
Division is a part of our General Account and guarantees
principal and a minimum interest rate of 3%. This interest will
be paid regardless of the actual investment experience of the
General Account; we bear the full amount of the investment risk
for any amounts allocated to the Guaranteed Interest Division.
We do not promise that your Accumulation Value will increase.
Depending on the Certificate's investment experience for funds
invested in the Divisions of the Variable Account and interest
credited to the Guaranteed Interest Division, the Accumulation
Value, Cash Surrender Value and Death Benefit may increase or
decrease on any day. You bear the investment risk for funds
invested in the Divisions of the Variable Account but also enjoy
the potential rewards.
You have the opportunity to benefit from growth of the
Accumulation Value based on investment results of the Divisions
of the Variable Account and interest credited to the Guaranteed
Interest Division. Furthermore, all dividends, interest and
capital gains accumulate free from annual taxation under current
tax law until distributed. The Certificate also offers a choice
of Annuity Options to which you may apply the Accumulation Value
less taxes incurred but not deducted as of the Annuity Date.
These Annuity Options are also available to the Beneficiary to
apply the Death Benefit as of the Supplementary Contract
Effective Date. You have the option to change the Annuity Date
within certain limits.
The Certificate may be used as an Individual Retirement Annuity,
an IRA Rollover, or an IRA Transfer ("IRA Certificates"). IRA
Certificates are offered to individuals for use in connection
with Sections 408(a) and (b) of the Code. See your tax adviser
concerning these matters.
We can issue a Certificate if the Owner and Annuitant are not
older than Age 80, and we can accept additional Purchase Payments
prior to the Annuity Date. For an IRA Certificate, you may not
make Purchase Payments after March 31 of the year following the
year in which you reach Age 70-1/2.
The ultimate effect of federal income taxes on the amounts held
under a Certificate, on Annuity Payouts and on the economic
benefits to the Owner, Annuitant or Beneficiary depends on First
ING Life's tax status and upon the tax status of the parties
concerned. In general, an Owner is not taxed on increases in
value under an annuity Certificate until some form of
distribution is made under it. There may be tax penalties if you
make a partial withdrawal or surrender the Certificate before
reaching Age 59-1/2. See FEDERAL TAX CONSIDERATIONS, page 40.
Purchase Payments
The minimum initial Purchase Payment is $25,000 ($1,000 for an
IRA Certificate). The minimum additional Purchase Payment we
will accept is $500 ($250 for an IRA Certificate or $90 if you
have set up your IRA on a monthly program of Purchase Payments).
We will take under consideration and may refuse to accept a
Purchase Payment if it would cause the sum of all Net Purchase
Payments under the Certificate to exceed $1,500,000.
The initial Purchase Payment is allocated to each Division
according to your most recent written instructions. All
percentage allocations must be in whole numbers. We allocate any
additional Purchase Payments among the Divisions in the same
proportion that the amount of Accumulation Value in each Division
bears to the total Accumulation Value as of the date we receive
that additional Purchase Payment at our Customer Service Center,
or as otherwise instructed by you. You may designate a different
allocation with respect to any Purchase Payment by sending us a
written notice with the Purchase Payment. See Crediting and
Allocation of Purchase Payments, page 19.
You may choose to have a specified dollar amount transferred from
the Global Strategic Income Division to the other Divisions of
the Variable Account on a monthly basis during the Accumulation
Period with the objective of shielding your investment from short-
term price fluctuations. See Dollar Cost Averaging Option, page 20.
You may transfer or reallocate your Accumulation Value among the
Divisions of the Variable Account any time after the end of the
Free Look period. There is no charge for the first 12 transfers
per Certificate Year during the Accumulation Period. A $25
charge will be assessed for each transfer in excess of 12 during
a Certificate Year. If you elect a Variable Annuity Payout
Option, you may make up to four transfers per Certificate Year
during the Annuity Period, and no transfer charge will be
assessed.
The Variable Account
The Variable Account is a separate account of First ING Life.
Each of the Divisions of the Variable Account offered under this
prospectus has its own distinct investment objectives. Each
Division invests in The Palladian Trust, managed by Palladian
Advisors, Inc. ("PAI"). The Trust and PAI have retained several
Portfolio Managers to manage the assets of each Portfolio as
indicated below. PAI has also retained Tremont Advisors, Inc.,
as Portfolio Advisor, to research, evaluate, recommend and
monitor the Portfolio Managers.
Portfolio Portfolio Managers
The Value Portfolio Gabelli Asset Management Co.
The Growth Portfolio Stonehill Capital Management, Inc.
The Balanced Opportunity Portfolio Maverick Capital, Ltd.
The International Growth Portfolio Bee & Associates Incorporated
The Global Strategic Income Portfolio Fischer Francis Trees & Watts, Inc.
The Global Interactive/Telecomm Gabelli Asset Management Co.
Portfolio
For more information regarding the Variable Account and its
Divisions, see The Palladian Trust, page 17.
The Accumulation Value varies each day based on the investment
experience of the Divisions of the Variable Account you select.
It also reflects Purchase Payments, any interest credited to the
Guaranteed Interest Division, charges deducted and partial
withdrawals. For amounts allocated to the Divisions of the
Variable Account, you receive the benefits from favorable
investment experience, and you bear the risk of poor investment
experience. See Measurement of Investment Experience for the
Divisions of the Variable Account, page 24.
Guaranteed Death Benefit
The Certificate provides a Guaranteed Death Benefit to the
Beneficiary if the Owner dies prior to the Annuity Date. The
Guaranteed Death Benefit is the greater of the following amounts
as of the Valuation Date we receive due proof of death and all
information necessary to process the claim:
1.The Accumulation Value; or
2.The Step-Up Benefit plus Net Purchase Payments since the
last step-up anniversary.
The Step-Up Benefit at issue is the initial Purchase
Payment. As of each step-up anniversary, the current
Accumulation Value is compared to the prior determination
of the Step-Up Benefit increased by Net Purchase Payments
made since the last step-up anniversary. The greater of
these becomes the new Step-Up Benefit.
The step-up anniversaries are every 6th Anniversary for
the duration of the Certificate (i.e., the 6th, 12th,
18th, etc.).
The Death Benefit payable to the Beneficiary is the Guaranteed
Death Benefit as calculated above minus taxes incurred but not
deducted. For more details, see Guaranteed Death Benefit, page
22, and Death Benefit Proceeds, page 22.
Partial Withdrawals
After the Free Look period, prior to the Annuity Date and while
the Certificate is in effect, you may take partial withdrawals
each year under any of three options: the Demand Withdrawal
Option, the Systematic Income Program or the IRA Income Program.
The Certificate provides an enhanced Demand Withdrawal Option
which allows you in each Certificate Year to withdraw, without a
surrender charge, 15% of the Accumulation Value as of the last
Anniversary (less any Gross Partial Withdrawals already made
during the Certificate Year which are not considered to be
withdrawals of Purchase Payments) or the Earnings, if greater, as
well as Purchase Payments held for at least five full Certificate
Years since the Anniversary at the end of the Certificate Year in
which the Purchase Payment was made. If a Purchase Payment is
made as of the first day of a Certificate Year, a surrender
charge will apply against this Purchase Payment for six full
years. Additional amounts withdrawn in a Certificate Year,
including any remaining withdrawals under the Systematic Income
Program, will be subject to a surrender charge. See Partial
Withdrawals, page 25, and Surrender Charge, page 32.
A penalty tax may be assessed upon partial withdrawals. See
Taxation of Annuities, page 41.
Surrendering Your Certificate
You may surrender the Certificate at any time prior to the
Annuity Date and receive its Cash Surrender Value. No Annuity
Options are available upon surrender. No surrender may be made
on or after the Annuity Date or with respect to any amounts
applied under an Annuity Option. The Cash Surrender Value equals
the Accumulation Value less any surrender charge for Purchase
Payments held less than five full Certificate Years since the
Anniversary at the end of the Certificate Year in which the
Purchase Payment was made, less taxes incurred but not deducted,
and less the administrative charge, if any, due at the end of the
Certificate Year. If a Purchase Payment is made as of the first
day of a Certificate Year, a surrender charge will apply against
this Purchase Payment for six full years.
The Cash Surrender Value, as is true with all mutual fund type
investments, varies daily depending on investment experience,
Purchase Payments, interest credited to the Guaranteed Interest
Division, charges deducted and partial withdrawals. We do not
guarantee any minimum Cash Surrender Value for amounts allocated
to the Divisions of the Variable Account. The principal and a
minimum interest rate are guaranteed for amounts allocated to the
Guaranteed Interest Division. Surrenders may be subject to a
surrender charge. See Surrender Charge, page 32. A penalty tax
may be assessed upon surrender. See Taxation of Annuities, page
40.
Your Right to Cancel the Certificate
At any time during the Free Look Period, you may cancel your
Certificate and receive a refund equal to your Accumulation Value
plus charges deducted. The Free Look period is a ten day period
of time beginning when the Certificate is delivered to you. We
deem this period as ending 15 days after the Certificate is
mailed from our Customer Service Center.
Certificate Charges and Fees
We deduct charges for certain transactions and make deductions
from the Divisions of the Variable Account and the Guaranteed
Interest Division in the same proportion that the Accumulation
Value of each Division bears to the total Accumulation Value. We
may reduce certain charges for certain group or sponsored
arrangements. See Group or Sponsored Arrangements, page 21. A
description of the charges we deduct follows.
If a Purchase Payment is withdrawn or surrendered within five
full Certificate Years since the Anniversary at the end of the
Certificate Year in which the Purchase Payment was made, a
surrender charge is assessed. If a Purchase Payment is made as
of the first day of a Certificate Year, a surrender charge will
apply against this Purchase Payment for six full years. For
purposes of determining the amount of Purchase Payments withdrawn
and the surrender charge, withdrawals will be allocated first to
the Earnings, then to Purchase Payments held for at least five
full Certificate Years since the Anniversary at the end of the
Certificate Year in which the Purchase Payment was made, then to
the amount by which 15% of the Accumulation Value as of the last
Anniversary (less any Gross Partial Withdrawals already made
during the Certificate Year which are not considered to be
withdrawals of Purchase Payments) exceeds the Earnings in the
Certificate, if any, and finally to Purchase Payments to which
the lowest surrender charge applies. The surrender charge is 7%
of the Purchase Payment if withdrawn in the Certificate Year
during which the Purchase Payment was made, reduces by 1% each
year for the next five Certificate Years and is 0% in the sixth
Certificate Year following the Certificate Year in which the
Purchase Payment was made. See Surrender Charge, page 32.
We charge each Division of the Variable Account with a daily
asset-based charge equivalent to an annual rate of 1.25% for
mortality and expense risks. See, Mortality and Expense Risk
Charge, page 33.
We charge each Division of the Variable Account with a daily
asset-based charge equivalent to an annual rate of 0.15% to cover
a portion of Certificate administration costs. See Asset-based
Administrative Charge, page 34.
During the Accumulation Period, we deduct an Administrative
charge of $30 per Certificate Year if Net Purchase Payments are
less than $100,000. If Net Purchase Payments equal $100,000 or
more, the charge is zero. See Administrative Charge, page 33.
A $25 charge will be assessed for each transfer in excess of 12
during a Certificate Year during the Accumulation Period. See
Excess Transfer Charge, page 33.
Generally, taxes on Purchase Payments are incurred as of the
Annuity Date, and a charge for taxes on Purchase Payments is
deducted from the Accumulation Value as of that date. Some
jurisdictions impose a tax on Purchase Payments at the time a
Purchase Payment is paid. In these jurisdictions, our current
practice is to pay the tax on Purchase Payments for you and then
deduct the charge for these taxes from the payout of Proceeds.
See Taxes on Purchase Payments, page 33.
There are fees and expenses deducted from the Portfolios. The
investment experience of the Portfolios and deductions for fees
and expenses from the Portfolios underlying the Divisions of the
Variable Account in which you are invested will affect your
Accumulation Value. Please read the prospectus for the Trust for
details.
Performance Information
Performance Data for Divisions of the Variable Account
The Variable Account may advertise certain performance related
information for the Divisions of the Variable Account, including
yields and average annual total return.
Performance information for a Division of the Variable Account
may be compared, in reports and promotional literature, to: (i)
the Standard & Poor's 500 Index ("S & P 500"), the Dow Jones
Industrial Average ("DJIA"), or other indices measuring
performance of a pertinent group of securities so that investors
may compare that Division's results with those of a group of
securities widely regarded by investors as representative of the
securities markets in general; (ii) other variable annuity
separate accounts or other investment products tracked by Lipper
Analytical Services or Morningstar, Inc. _ two widely used
independent research firms which rank mutual funds and other
investment companies by overall performance, investment
objectives, and assets _ or tracked by other ratings services,
companies, publications, or persons who rank separate accounts or
other investment products on overall performance or other
criteria; and (iii) the Consumer Price Index (as a measure for
inflation) to assess the real rate of return from an investment
in the Certificate. Unmanaged indices may assume the
reinvestment of dividends but generally do not reflect deductions
for administrative and management costs and expenses.
Performance information for any Division of the Variable Account
will reflect only the performance of a hypothetical Certificate
under which the Accumulation Value is allocated to that Division
during the particular time period on which the calculations are
based. The performance information will be based on historical
results and is not intended to indicate past or future
performance under an actual Certificate.
Quotations of the average annual total returns will be based on
the average percentage change in value of a hypothetical
investment in the specific Division over a given period of time.
They will reflect the deduction of the surrender charge that
would apply if an Owner terminated the Certificate at the end of
the period indicated, the administrative charge, the mortality
and expense risk charge and the asset-based administrative charge
as well as fees and charges of the respective Portfolio. Average
annual total return will be calculated as shown in the Statement
of Additional Information.
Performance information should be considered in light of the
investment objectives, characteristics and quality of the
Portfolios in which that Division invests, and the market
conditions during the given time period, and should not be
considered as a representation of what may be achieved in the
future. For a description of the methods used to determine yield
and total return for the Divisions of the Variable Account, see
the Statement of Additional Information.
Reports and promotional literature may also contain other
information including the ranking of any Division derived from
rankings of variable annuity separate accounts or other
investment products tracked by Lipper Analytical Services,
Morningstar, Inc., or by ratings services, companies,
publications, or other persons who rank separate accounts or
other investment products on overall performance or other
criteria.
CONDENSED FINANCIAL INFORMATION
The audited financial statements of First ING Life at December 31, 1994 and
1993, and for each of the two years in the period ended December 31, 1994, (as
well as the auditors' reports thereon) are in the Statement of Additional
Information. These financial statements have been prepared according to
generally accepted accounting principles. The Statement of Additional
Information also includes audited financial statements at December 31, 1993 and
1992, and for each of the two years in the period ended December 31, 1993, (as
well as the auditors' reports thereon) in accordance with accounting practices
prescribed or permitted by the Insurance Department of the State of New York.
The unaudited financial statements at March 31, 1995 and 1994, and for the
periods then ended are also included in the Statement of Additional Information.
There are no financial statements included for the Variable Account because, as
of December 31, 1994, the Divisions of the Variable Account offered by this
prospectus had not yet commenced operations.
FACTS ABOUT FIRST ING LIFE AND THE VARIABLE ACCOUNT
First ING Life
First ING Life is a stock life insurance company originally
organized under the laws of the State of New York in 1973 as The
Urbaine Life Reinsurance Company. Our headquarters are located
at 225 Broadway, Suite 1901, New York, NY 10007. Until 1994,
the company's only business was life reinsurance. In 1993, the
Company was purchased and became a wholly-owned indirect
subsidiary of International Nederlanden Group, N.V. ("ING"), and
in 1994 the name of the Company was changed to First ING Life
Insurance Company of New York. Since its purchase, the Company
has ceased the active marketing of life reinsurance. The
Company's primary current focus is the marketing of direct life
insurance and annuity business. Our total assets exceeded $23.0
million, and our shareholder's equity exceeded $10.9 million, on a
generally accepted accounting priniciples basis as of
December 31, 1994.
ING is one of the world's three largest diversified financial
services organizations. ING is headquartered in Amsterdam,
Netherlands, and has consolidated assets exceeding $206.7
billion.
The principal underwriter and distributor of the contracts is ING
America Equities, Inc., an affiliate of First ING Life. ING
America Equities, Inc., is registered as a broker-dealer with the
SEC and is a member of the National Association of Securities
Dealers, Inc. ("NASD").
The Administrator
Financial Administrative Services Corporation provides
administrative services for First ING Life at our Customer
Service Center at P.O. Box 173778, Denver, CO 80217-3778. The
administrative services include processing Purchase Payments,
Annuity Payouts, Death Benefits, surrenders, partial withdrawals
and transfers; preparing confirmation notices and periodic
reports; calculating mortality and expense risk charges;
calculating Accumulation and Annuity Unit Values and distributing
voting materials and tax reports.
The Variable Account
All obligations under the Contract and the Certificates issued
under it are general obligations of First ING Life. The Variable
Account is a separate investment account used to support our
variable annuity contracts and for other purposes as permitted by
applicable laws and regulations. The assets of the Variable
Account are our property, but are kept separate from our General
Account and our other variable accounts. We may offer other
variable annuity contracts investing in the Variable Account
which are not discussed in this prospectus. The Variable Account
may also invest in other portfolios which are not available to
the Certificate described in this prospectus.
We own all the assets in the Variable Account. Income and
realized and unrealized gains or losses from assets in the
Variable Account are credited to or charged against the Variable
Account without regard to other income, gains or losses in our
other investment accounts. That portion of the assets of the
Variable Account which is equal to the reserves and other
contract liabilities with respect to the Variable Account is not
subject to creditor claims against us. It may, however, be
subject to liabilities arising from Divisions of the Variable
Account whose assets are attributable to other variable annuity
contracts offered by the Variable Account. If the assets exceed
the required reserves and other contract liabilities, we may
transfer the excess to our General Account. The assets in the
Variable Account will at all times equal or exceed the sum of the
accumulation values of all contracts funded by this Variable
Account.
The Variable Account was established on March 15, 1994, and it
may invest in mutual funds or other investment portfolios which
we determine to be suitable for the contracts' purposes. The
Variable Account is treated as a unit investment trust under
federal securities laws. It is registered with the SEC under the
Investment Company Act of 1940 (the "1940 Act") as an investment
company. Such registration does not involve any supervision by
the SEC of the management of the Variable Account or First ING
Life. It is governed by the laws of New York, our state of
domicile, and may also be governed by laws of other states in
which we do business.
The Variable Account has several Divisions, each of which invests
in shares of a corresponding Portfolio of the Palladian Trust.
Therefore the investment experience of your Certificate depends
on the experience of the Divisions you select. For example, the
Value Division invests solely in shares of the Palladian Trust
Value Portfolio. These Portfolios are available only to serve as
the underlying investment for variable annuity and variable life
insurance contracts issued through separate accounts of First ING
Life as well as other life insurance companies. They are not
available directly to individual investors.
The Palladian Trust
Currently, each Division of the Variable Account offered pursuant
to this prospectus invests in a Portfolio of The Palladian Trust.
PAI serves as the manager to each Portfolio of the Trust. See
the Trust prospectus for details. The Trust and PAI have
retained several Portfolio Managers to manage the assets of the
Portfolios as indicated below. PAI has also retained Tremont
Advisors, Inc., as Portfolio Advisor to research, evaluate,
recommend and monitor the Portfolio Managers for each Portfolio.
The Trust pays PAI and the Portfolio Managers a monthly fee (the
"advisory fee") based on the average daily net assets of each
Portfolio. There are two components to the advisory fee: the
basic fee and the incentive fee. The advisory fee is structured
to vary based upon the Portfolio's performance (after expenses)
compared to that of an appropriate market benchmark selected for
that Portfolio. PAI is responsible for paying the fee of the
Portfolio Advisor, which is structured to vary based on how well
the Portfolio Managers perform.
The Trust is an open-end management investment company, more
commonly called a mutual fund. The Trust's shares may also be
sold to separate accounts of insurance companies, which may or
may not be affiliated with First ING Life or each other, a
practice known as "shared funding". These shares may also be
sold to separate accounts funding both variable annuity contracts
and variable life insurance policies, a practice known as "mixed
funding". As a result, there is a possibility that a material
conflict may arise between the interests of Owners of
Certificates in which Accumulation Values are allocated to the
Variable Account and of owners of contracts in which accumulation
values are allocated to one or more other separate accounts
investing in any one of the Portfolios. Shares of these
Portfolios may also be sold to certain qualified pension and
retirement plans qualifying under Section 401 of the Code that
include cash or deferred arrangements under Section 401(k) of the
Code. As a result, there is a possibility that a material
conflict may arise between the interests of owners generally, or
certain classes of owners, and such retirement plans or
participants in such retirement plans. In the event of a material
conflict, First ING Life will consider what action may be
appropriate, including removing the Portfolio from the Variable
Account. There are certain risks associated with mixed and
shared funding and with the sale of shares to qualified pension
and retirement plans, as disclosed in the Trust prospectus.
The Portfolios as well as their investment objectives are
described below. There is no guarantee that any Portfolio will
meet its investment objectives. Meeting objectives depends on
various factors, including, in certain cases, how well the
Portfolio Manager anticipates changing economic and market
conditions.
Please refer to the Trust's prospectus for more information.
Value Division _ seeks to make money for investors by
investing primarily in companies that the Portfolio Manager
believes are undervalued and that by virtue of anticipated
developments may, in the Portfolio Manager's judgment, achieve
significant capital appreciation.
Growth Division _ seeks to make money for investors by
investing primarily in securities selected for their long-term
growth prospects.
Balanced Opportunity Division _ seeks to make money for
investors through equity and income investments that provide
the potential for high total returns, whether through income
or capital appreciation or both. The Portfolio Manager
pursues such opportunities in both domestic and international
markets.
International Growth Division _ seeks to make money for
investors by investing internationally for long-term capital
appreciation, primarily in equity securities.
Global Strategic Income Division _ seeks to make money for
investors by investing for high current income and capital
appreciation in a variety of domestic and foreign fixed-income
securities.
Global Interactive/Telecomm Division _ seeks to make money for
investors primarily by investing globally in equity securities
of companies engaged in the development, manufacture or sale
of interactive and/or telecommunications services and
products.
Changes Within The Variable Account
We may from time to time make the following changes to the
Variable Account:
1. Make additional Divisions available. These Divisions will
invest in Portfolios we find suitable for the Contract.
2. Eliminate Divisions from the Variable Account, combine two or
more Divisions, or substitute a new Portfolio for the Portfolio
in which a Division invests. A substitution may become necessary
if, in our judgment, a Portfolio no longer suits the purposes of
the Contract. This may also happen due to a change in laws or
regulations, or a change in a Portfolio's investment objectives
or restrictions, or because the Portfolio is no longer available
for investment, or for some other reason, such as a declining
asset base.
3. Transfer assets of the Variable Account, which we determine to
be associated with the class of contracts to which the Contract
belongs, to another variable account.
4. Withdraw the Variable Account from registration under the 1940
Act.
5. Operate the Variable Account as a management investment
company under the 1940 Act.
6. Cause one or more Divisions to invest in a mutual fund other
than or in addition to the Portfolios of the Palladian Trust.
7. Discontinue the sale of Contracts and Certificates.
8. Terminate any employer or plan trustee agreement with us
pursuant to its terms.
9. Restrict or eliminate any voting rights as to the Variable
Account.
10. Make any changes required by the 1940 Act or the rules or
regulations thereunder.
No such changes will be made without any necessary approval of
the SEC and applicable state insurance departments. Owners will
be notified of any changes.
The Guaranteed Interest Division
You may allocate all or a portion of your Purchase Payments and
transfer your Accumulation Value to or from the Guaranteed
Interest Division, subject to certain restrictions. The
Guaranteed Interest Division is part of our General Account and
pays interest at a declared rate. See Your Right to Transfer
Among Divisions, page 31. The General Account supports our non-
variable insurance and annuity obligations. Because of exemptive
and exclusionary provisions, interests in the Guaranteed Interest
Division have not been registered under the Securities Act of
1933, and neither the Guaranteed Interest Division nor the
General Account has been registered as an investment company
under the Investment Company Act of 1940. Accordingly, neither
the General Account, the Guaranteed Interest Division nor any
interests therein are generally subject to regulation under these
Acts. As a result, the staff of the SEC has not reviewed the
disclosures which are included in this prospectus which relate to
the General Account and the Guaranteed Interest Division. These
disclosures, however, may be subject to certain provisions of the
federal securities laws relating to the accuracy and completeness
of statements made in this prospectus. For more details
regarding the General Account, see the Certificate.
Accumulation Value of the Guaranteed Interest Division
You may accumulate amounts in the Guaranteed Interest Division by
(i) allocating Purchase Payments, (ii) transferring amounts from
the Divisions of the Variable Account, and (iii) earning interest
on amounts you already have in the Guaranteed Interest Division.
The amount you have in the Guaranteed Interest Division at any
time is the sum of all Purchase Payments allocated to this
Division, all transfers, and earned interest. This amount is
reduced by amounts transferred out of or withdrawn from the
Guaranteed Interest Division and deductions allocated to the
Guaranteed Interest Division.
We pay a declared interest rate on all amounts that you have in
the Guaranteed Interest Division. These interest rates will
never be less than the minimum guaranteed interest rate of 3%.
We may declare rates higher than the guaranteed minimum that will
apply to amounts in the Guaranteed Interest Division. Any higher
rate is guaranteed to be in effect for at least 12 months.
Interest is compounded daily at an effective annual rate that
equals this declared rate. The interest is credited as of each
Valuation Date to the amount you have in the Guaranteed Interest
Division. This interest will be paid regardless of the actual
investment experience of the General Account; we bear the full
amount of the investment risk for the amount allocated to the
Guaranteed Interest Division.
FACTS ABOUT THE CONTRACT AND THE CERTIFICATES
Purchase Payments
Initial Purchase Payment
You purchase the Certificate with an initial Purchase Payment.
The minimum initial Purchase Payment is $25,000 ($1,000 for an
IRA). We may reduce the minimum initial Purchase Payment
requirements for certain group or sponsored arrangements. See
Group or Sponsored Arrangements, page 22. We may not accept an
initial Purchase Payment in excess of $1,500,000.
Additional Purchase Payments
We can accept additional Purchase Payments until the Annuity
Date. The minimum additional Purchase Payment we will accept is
$500 ($250 for an IRA or $90 if you have set up your IRA on a
monthly program of Purchase Payments). We may reduce the minimum
additional Purchase Payment requirements for certain group or
sponsored arrangements. We may refuse to accept a Purchase
Payment if it would cause the sum of all Net Purchase Payments to
exceed $1,500,000.
We will accept rollover contributions to IRA rollover
Certificates. The IRA maximums for annual contributions to an
IRA do not apply to any Purchase Payment which is the result of a
rollover or transfer from another qualified plan. For individual
IRA Certificates, the Purchase Payment in any year on behalf of
an individual Certificate may not exceed $2,000. A working
spouse may contribute to a separate individual IRA in the same
manner. If your spouse is not working, or if your spouse is
working but does not contribute to an IRA, you may contribute up
to an amount equal to the lesser of $2,250 or 100% of your
compensation. This amount may be contributed in any combination,
to your own IRA and a spousal IRA, provided that the contribution
to either IRA does not exceed $2,000 for the year, and the total
contribution to both your IRA and the spousal IRA does not exceed
$2,250. For example, $1,750 may go to your IRA and $500 to your
spouse's IRA.
Where to Make Payments
Send Purchase Payments to our Customer Service Center at the
address shown on the cover. We will send you a confirmation
notice upon receipt. Make checks payable to The Fulcrum Fund
Annuity/First ING Life.
Crediting and Allocation of Purchase Payments
We will credit the initial Purchase Payment within two business
days of receipt of a completed Certificate application at our
Customer Service Center. We may retain the initial Purchase
Payment for up to five business days while attempting to complete
an incomplete Certificate application. If the Certificate
application cannot be made complete within five business days,
the applicant will be informed of the reasons for the delay and
the initial Purchase Payment will be returned immediately unless
the applicant specifically consents to our retaining the initial
Purchase Payment until the Certificate application is made
complete. The initial Purchase Payment will then be credited
within two business days of the proper completion of the
Certificate application.
We will credit additional Purchase Payments that are accepted by
us as of the Valuation Date of receipt at our Customer Service
Center.
The initial Purchase Payment is allocated among any or all the
available Divisions according to your most recent written
instructions. All percentage allocations must be in whole
numbers.
We allocate any additional Purchase Payments among the Divisions
in the same proportion that the amount of Accumulation Value in
each Division bears to the total Accumulation Value as of the
date we receive that additional Purchase Payment at our Customer
Service Center, or as otherwise instructed by you. You may
designate a different allocation with respect to any Purchase
Payment by sending us a written notice with the Purchase Payment.
Dollar Cost Averaging Option
The main objective of Dollar Cost Averaging is to protect your
investment from short-term price fluctuations. Since the same
dollar amount is transferred to a Division each month, more units
are purchased in a Division if the value per unit that month is
low, and fewer units are purchased if the value per unit that
month is high. This plan of investing keeps you from investing
too much when the price of shares is high and too little when the
price of shares is low.
During the Accumulation Period only, if you have at least $10,000
of Accumulation Value in the Global Strategic Income Division,
you may choose to transfer a specified dollar amount each month
from this Division to other Divisions of the Variable Account.
Dollar cost averaging transfers may not be made to the Guaranteed
Interest Division. The minimum amount that you may elect to
transfer each month under this option is $100. The maximum
amount that you may transfer under this option is equal to the
Accumulation Value of the Global Strategic Income Division when
the election is made, divided by 12. Percentage allocations of
the transfer amount must be designated as whole number
percentages; no specific dollar designation may be made to the
Divisions of the Variable Account. You may specify a date for
Dollar Cost Averaging to terminate. You may also specify a
dollar amount so that when the Accumulation Value of the Global
Strategic Income Division reaches this dollar amount, Dollar Cost
Averaging will terminate.
The transfer date will be the same calendar day each month as the
Certificate Date. If this calendar day is not a Valuation Date,
the next Valuation Date will be used. If, on any transfer date,
the Accumulation Value in the Global Strategic Income Division is
equal to or less than the amount you have elected to have
transferred, the entire amount will be transferred, and this
option will end.
You may change the transfer amount or the Divisions to which
transfers are to be made once each Certificate Year, subject to
the above limitations. You may cancel this election by sending
us written notice to our Customer Service Center at least seven
days before the next transfer date. Any transfer under this
option will not be included for the purposes of the excess
transfer charge.
Dollar cost averaging will end as of the Valuation Date
immediately preceding the Annuity Date.
If you elect both Dollar Cost Averaging and Automatic
Rebalancing, Dollar Cost Averaging will take place first. As of
the first Valuation Date of the next calendar quarter after
Dollar Cost Averaging has terminated, Automatic Rebalancing will
begin. Dollar Cost Averaging is available without charge.
Automatic Rebalancing
Automatic Rebalancing provides a method for maintaining a
balanced approach to investing your Accumulation Values and to
simplify the process of asset allocation over time. There is no
charge for this feature and any transfers as a result of the
operation of this feature are not counted toward the limit of 12
transfers per Certificate Year without an additional transfer
charge. If you wish to transfer among the Divisions during the
operation of Automatic Rebalancing, you must change your
allocations to achieve the transfer.
When you apply for the Certificate, or at any subsequent time,
you may elect Automatic Rebalancing by electing this feature on
the Certificate application or completing the client service
application. Automatic Rebalancing allows you to match your
Accumulation Value allocations over time with the allocation
percentages you have selected. As of the first Valuation Date of
each calendar quarter, we will automatically rebalance the
amounts in each of the Divisions into which you allocate Purchase
Payments to match your allocation percentages. This will
rebalance your Accumulation Values that may be out of line with
the allocation percentages you initially indicated, which may
result, for example, from Divisions which underperform the other
Divisions in certain months.
If you elect this feature, as of the first Valuation Date of the
next calendar quarter we will transfer amounts among the
Divisions so that the ratio of your Accumulation Value in each
Division to your total Accumulation Value matches your selected
allocation percentage for that Division.
If you elect Automatic Rebalancing with your Certificate
application, the first transfer will occur as of the first
Valuation Date of the next calendar quarter following the end of
the Free-Look Period. If you elect this feature after the
Certificate Date, the first transfer will be processed as of the
first Valuation Date of the next calendar quarter after we
receive written notification at our Customer Service Center and
the Free-Look Period has ended.
You may change the allocation percentages for Automatic
Rebalancing. We will adjust your Automatic Rebalancing
percentages accordingly, and your Accumulation Value will be
reallocated as of the Valuation Date that we receive your written
allocation instructions at our Customer Service Center.
Automatic Rebalancing may be terminated at any time, so long as
we receive notice of the termination at least seven days prior to
the first Valuation Date of the next calendar quarter. Unless
you specify otherwise, the percentage allocations will match your
initial Purchase Payment allocations. If Automatic Rebalancing
is active on your Certificate and you request an allocation which
does not meet the requirements, we will notify you that your
allocation must be changed. We will not process such a request
unless you also request that Automatic Rebalancing be
discontinued.
If you elect both Dollar Cost Averaging and Automatic
Rebalancing, Dollar Cost Averaging will take place first. As of
the first Valuation Date of the next calendar quarter after
Dollar Cost Averaging has terminated, Automatic Rebalancing will
begin.
Reports to Owners
During the Accumulation Period, we will send you a report within
31 days after the end of each calendar quarter. This report will
show the current Accumulation Value in each Division, the total
Accumulation Value, the Cash Surrender Value and the Death
Benefit, as of the end of the calendar quarter, as well as
activity under the Certificate since the last report. During the
Annuity Period, we will send you a report within 31 days after
the end of each calendar year showing any information required by
law. The reports will include any information that may be
required by the SEC or the insurance supervisory official of the
jurisdiction in which the Certificate is delivered.
We will also send you copies of any shareholder reports of the
Portfolios in which the Divisions of the Variable Account invest,
as well as any other reports, notices or documents required by
law to be furnished to Owners.
Group or Sponsored Arrangements
For certain group or sponsored arrangements, we may reduce or
eliminate the surrender charge, the length of time a surrender
charge applies, the administrative charge, the minimum initial
Purchase Payment and the minimum additional Purchase Payment
requirements, as well as other fees or charges. See CERTIFICATE
CHARGES AND FEES, page 33. We may also increase the amount of
partial withdrawals which may be withdrawn without surrender
charge. Group arrangements include those in which a trustee, an
employer or an association, for example, purchases Certificates
covering a group of individuals on a group basis. Sponsored
arrangements include those in which an employer or association
allows us to offer Certificates to its employees or members on an
individual basis.
Our costs for sales, administration, and mortality generally vary
with the size and stability of the group, among other factors.
We take all these factors into account when reducing charges. To
qualify for reduced charges, a group or sponsored arrangement
must meet certain requirements. We will make any reductions
according to our rules in effect when an application form for a
Contract is approved. We may change these rules from time to
time. Any variation in the surrender charge, administrative
charge or other charges, fees and privileges will reflect
differences in costs or services and will not be unfairly
discriminatory.
Offering the Certificate
ING America Equities, Inc., is the principal underwriter and
distributor of the Certificate as well as of other contracts and
certificates issued through the Variable Account and other
variable accounts of First ING Life. ING America Equities,
Inc., is an affiliate of First ING Life. It is registered with
the SEC as a broker-dealer and is a member of the NASD. We pay
ING America Equities, Inc., for acting as principal underwriter
under a distribution agreement. The offering of the Certificate
will be continuous.
ING America Equities, Inc., will enter into sales agreements with
broker-dealers to solicit for the sale of the Certificate through
registered representatives who are licensed to sell securities
and variable insurance products including variable annuities.
The broker-dealer involved will generally receive commissions
based on a percent of Purchase Payments made (up to a maximum of
5.5%). The writing agent will receive a percentage of these
commissions from the respective broker-dealer, depending on the
practice of that broker-dealer. These commissions will be paid
to the broker-dealer by ING America Equities, Inc., and will not
be charged to the Owner.
VALUES UNDER THE CERTIFICATE
Guaranteed Death Benefit
The Death Benefit payable under the Certificate provides for a
Guaranteed Death Benefit amount which is greater than the
traditional basic death benefit payable under annuity contracts.
The Guaranteed Death Benefit is the greater of the following
amounts as of the Valuation Date Death Benefit Proceeds are
determined:
1.The Accumulation Value; or
2.The Step-Up Benefit, plus Net Purchase Payments since the
last step-up anniversary.
The Step-Up Benefit at issue is the initial Purchase
Payment. As of each step-up anniversary, the current
Accumulation Value is compared to the prior determination
of the Step-Up Benefit increased by Net Purchase Payments
made since the last step-up anniversary. The greater of
these becomes the new Step-Up Benefit.
The step-up anniversaries are every 6th Anniversary for
the duration of the Certificate (i.e., the 6th, 12th,
18th, etc.).
The Death Benefit payable to the Beneficiary is the Guaranteed
Death Benefit as calculated above minus taxes incurred but not
deducted.
Death Benefit Proceeds
Proceeds payable to the Beneficiary upon the death of the Owner
before the Annuity Date will be the Death Benefit and will be
paid according to the provisions in Distribution-at-Death Rules,
page 43. If the Owner is not an individual, Proceeds are payable
upon the death of the Annuitant.
The Death Benefit will be determined as of the Valuation Date we
receive both due proof of death and all information needed to
process the claim including designation of a Beneficiary and the
election of a one sum payout or election under an Annuity Option.
We will pay the Proceeds in one lump sum unless the Beneficiary
elects an Annuity Option within 60 days of our receipt of due
proof of death but prior to the date on which we pay the
Proceeds. See CHOOSING AN ANNUITY OPTION, page 35. If a one sum
payout is elected, the Proceeds will usually be paid within 7
days of determination of the amount of the Death Benefit
described above. Interest will be paid on the Proceeds from the
date of determination of the Death Benefit to the date of payout.
Interest is at the rate we declare, or any higher rate required
by law, but not less than 3% per year. If the Proceeds are paid
under an Annuity Option, the Beneficiary becomes the Annuitant,
and the Contingent Beneficiary becomes the Contingent Annuitant.
Contact our Customer Service Center or your agent for more
information.
How to Claim Payouts to Beneficiary
Before we will make any payouts to the Beneficiary, we must
receive due proof of the death of the Owner in the form of a
certified death certificate and all information needed to process
the claim including designation of a Beneficiary and the election
of a one sum payout or election under an Annuity Option. The
Beneficiary should contact our Customer Service Center for
instructions. For information on tax matters relating to death
benefit proceeds, see FEDERAL TAX CONSIDERATIONS, page 40.
Your Accumulation Value
The Accumulation Value of your Certificate is the sum of the
Accumulation Values of all the Divisions of the Variable Account
in which your Certificate is invested, plus any Accumulation
Value of the Guaranteed Interest Division. Your Accumulation
Value of a Division of the Variable Account as of any day is
determined by multiplying the number of your Accumulation Units
in that Division by the Accumulation Unit Value as of that day
for that Division. We adjust your Accumulation Value as of each
Valuation Date to reflect Purchase Payments and transfers made,
partial withdrawals taken, deduction of certain charges, earned
interest of the Guaranteed Interest Division, and the investment
experience of the Divisions of the Variable Account. The
Accumulation Value, less applicable taxes, is applied under the
elected Annuity Option as of the Annuity Date. See CHOOSING AN
ANNUITY OPTION, page 35.
You may allocate your Accumulation Value among all the Divisions
available, subject to the restrictions on the percentages and
amounts allocated from a Purchase Payment or a transfer to or
from any Division.
Measurement of Investment Experience for the Divisions of the
Variable Account
Accumulation Unit Value
The investment experience of a Division of the Variable Account
is determined as of each Valuation Date. We use an Accumulation
Unit Value to measure the experience of each of the Divisions of
the Variable Account during a Valuation Period. The Accumulation
Unit Value for a Valuation Period equals the Accumulation Unit
Value for the preceding Valuation Period multiplied by the
Accumulation Experience Factor for the Valuation Period.
We determine the number of Accumulation Units related to a given
transaction in a Division of the Variable Account as of a
Valuation Date by dividing the dollar value of that transaction
in that Division by that Division's Accumulation Unit Value for
that date.
How We Determine the Accumulation Experience Factor
For each Division of the Variable Account, the Accumulation
Experience Factor reflects the investment experience of the
Portfolio in which that Division invests and the charges assessed
against that Division for a Valuation Period. The Accumulation
Experience Factor is calculated as follows:
a) The net asset value of the Portfolio in which that Division
invests as of the end of the current Valuation Period; plus
b) The amount of any dividend or capital gains distribution
declared and reinvested in that Portfolio during the current
Valuation Period; minus
c) A charge for taxes, if any.
d) The result of (a), (b), and (c), divided by the net asset
value of that Portfolio as of the end of the preceding Valuation
Period; minus
e) The daily mortality and expense risk charge for that Division
for each day in the Valuation Period; minus
f) The daily asset-based administrative charge for that Division
for each day in the Valuation Period.
Net Rate of Return for a Division of the Variable Account
The Net Rate of Return for a Division of the Variable Account
during a Valuation Period is the Accumulation Experience Factor
for that Valuation Period minus one.
Accumulation Value of Each Division of the Variable Account
The Accumulation Value of each Division of the Variable Account
as of the Certificate Date is equal to the amount of the initial
Purchase Payment allocated to that Division.
On subsequent Valuation Dates, the amount of Accumulation Value
of each Division of the Variable Account is calculated as
follows:
1) The number of Accumulation Units in that Division of the
Variable Account as of the end of the preceding Valuation Period
multiplied by that Division's Accumulation Unit Value for the
current Valuation Period; plus
2) Any additional Purchase Payments allocated to that Division
during the current Valuation Period; plus
3) Any Accumulation Value transferred to such Division during the
current Valuation Period; minus
4) Any Accumulation Value transferred from such Division during
the current Valuation Period; minus
5) Any excess transfer charge allocated to such Division during
the current Valuation Period; minus
6) Any Gross Partial Withdrawals allocated to that Division
during the current Valuation Period; minus
7) The portion of the administrative charge applicable to that
Division if an Anniversary occurs during the Valuation Period.
Accumulation Value of the Guaranteed Interest Division
The Accumulation Value of the Guaranteed Interest Division as of
the Certificate Date is equal to the amount of the initial
Purchase Payment allocated to that Division.
On subsequent Valuation Dates, the Accumulation Value of the
Guaranteed Interest Division is calculated as follows:
1) The Accumulation Value of the Guaranteed Interest Division as
of the end of the preceding Valuation Period plus earned interest
during the Valuation Period; plus
2) Any additional Purchase Payments allocated to the Guaranteed
Interest Division during the current Valuation Period; plus
3) Any Accumulation Value transferred to the Guaranteed Interest
Division during the current Valuation Period; minus
4) Any Accumulation Value transferred from the Guaranteed
Interest Division during the current Valuation Period; minus
5) Any excess transfer charge allocated to the Guaranteed
Interest Division during the current Valuation Period; minus
6) Any Gross Partial Withdrawals allocated to the Guaranteed
Interest Division during the current Valuation Period; minus
7) The portion of the administrative charge applicable to the
Guaranteed Interest Division if an Anniversary occurs during the
current Valuation Period.
Your Right to Transfer Among Divisions
Prior to the Annuity Date, while the Certificate is in effect and
after the Free Look period, you may transfer your Accumulation
Value among the Divisions of the Variable Account and the
Guaranteed Interest Division. The minimum amount that may be
transferred from each Division is the lesser of $100 or the
balance of a Division. Percentages must be in whole numbers.
Transfers due to the operation of Dollar Cost Averaging or
Automatic Rebalancing are not included in determining the limit
on transfers without a charge. Each request to transfer for your
Certificate is considered one transfer regardless of how many
Divisions are affected by the transfer. The table below
summarizes the number of transfers available and any associated
charges during any Certificate Year:
Accumulation Annuity
Period Period
Free Transfers 12 4
Total Number of Unlimited 4
Transfers Permitted
Excess Transfer Charge $25 for each Not
transfer in Applicable
excess of 12
during any
Certificate Year
We reserve the right to limit the number of transfers per
Certificate Year to 12 and to limit excessive trading activity
which can disrupt Portfolio management strategy and increase
Portfolio expenses.
Once during the first 30 days of each Certificate Year, you may
transfer amounts from the Guaranteed Interest Division. Transfer
requests received within 30 days prior to the Anniversary will be
deemed to occur as of the Anniversary. Transfer requests
received on the Anniversary or within the following 30 days will
be processed; transfer requests received at any other time will
not be processed. Transfers of your Accumulation Value to the
Guaranteed Interest Division are not limited to this 30-day
period.
The maximum transfer amount from the Guaranteed Interest Division
to the Divisions of the Variable Account in any Certificate Year
is the greatest of:
(a) 25% of the balance in the Guaranteed Interest Division
immediately prior to the transfer;
(b) $100; or
(c) the total of all transfers and partial withdrawals
(including Systematic Income Program partial withdrawals) from
the Guaranteed Interest Division in the prior Certificate
Year.
When a transfer is made involving the Divisions of the Variable
Account, we redeem Accumulation Units in the Divisions you are
transferring from, and purchase Accumulation Units in the
Divisions you are transferring to, at their values next computed
after receipt of your request at our Customer Service Center.
If you have elected telephone privileges by sending written
notice to our Customer Service Center requesting this privilege,
you may make transfers by telephoning our Customer Service
Center. See Telephone Privileges, page 32.
Partial Withdrawals
Prior to the Annuity Date, while the Certificate is in effect and
after the Free Look period, you may withdraw in cash all or a
part of the Cash Surrender Value of your Certificate. Partial
withdrawals may be subject to a 10% tax penalty. See Tax
Consequences of Partial Withdrawals, page 29.
Partial withdrawals from the Divisions of the Variable Account
will be made by redeeming Accumulation Units in the affected
Divisions at their values next computed after we receive your
written request at our Customer Service Center. A partial
withdrawal will result in a decrease in the Accumulation Value of
your Certificate. The decrease is equal to the amount of the
Gross Partial Withdrawal. A surrender charge could be incurred
for withdrawals in excess of certain amounts. See Surrender
Charge, page 33, and The Amount You May Withdraw Without a
Surrender Charge, page 34.
Certain plans or programs sold on a group or sponsored basis to
employee or professional groups may have different withdrawal
privileges. See Group or Sponsored Arrangements, page 22.
Withholding of Federal income taxes on all distributions may be
required unless you elect not to have any such amounts withheld
and properly notify First ING Life of that election. Even if you
elect no withholding, special "back-up withholding" rules may
require First ING Life to disregard your election if you fail to
supply First ING Life with a "TIN" or taxpayer identification
number (social security number for individuals) or if the
Internal Revenue Service notifies First ING Life that the TIN
provided by you is incorrect. In addition, withholding is
required for all payees with addresses outside the United States.
Some states also impose withholding requirements.
There are three options available for selecting partial
withdrawals: the Demand Withdrawal Option, the Systematic Income
Program and the IRA Income Program. All three options are
described below.
Demand Withdrawal Option
Partial withdrawals may be subject to a 10% tax penalty. See Tax
Consequences of Partial Withdrawals, page 29.
The minimum amount you may withdraw under this option is $100,
and the maximum demand withdrawal amount is the Cash Surrender
Value minus $500. If the amount of the demand withdrawal you
specify exceeds the maximum level, the amount of the demand
withdrawal will automatically be adjusted to leave $500 remaining
as Cash Surrender Value. See Surrendering to Receive the Cash
Surrender Value, page 29.
Unless you specify otherwise, the amount of the partial
withdrawal will be taken from each Division in the same
proportion that the amount of Accumulation Value in that Division
bears to the Accumulation Value in all of the Divisions
immediately before the withdrawal.
You may not withdraw from the Guaranteed Interest Division an
amount that is greater than the total demand withdrawal
multiplied by the ratio of the Accumulation Value in the
Guaranteed Interest Division to the total Accumulation Value
immediately before the withdrawal.
If you have elected telephone privileges by sending written
notice to our Customer Service Center requesting this privilege,
you may make demand withdrawals by telephoning our Customer
Service Center. Any telephone request for a demand withdrawal
must be for an amount less than $25,000. See Telephone
Privileges, page 32.
Systematic Income Program
Partial withdrawals may be subject to a 10% tax penalty. See Tax
Consequences of Partial Withdrawals, page 29.
You may choose to receive Systematic Income Program partial
withdrawals on a monthly or quarterly basis from the Accumulation
Value. Withdrawals will be taken from each Division of the
Variable Account and the Guaranteed Interest Division in the same
proportion that the Accumulation Value of that Division bears to
the total Accumulation Value. The payouts under this option may
not start sooner than one month after the Certificate Date.
You may select the day of the month when the withdrawals will be
made. If no day is selected, the withdrawals will be made on the
same calendar day of the month as the Certificate Date. If this
calendar day is not a Valuation Date, the next Valuation Date
will be used. You may select a dollar amount or a percentage
amount for your withdrawal subject to the following maximums:
Frequency Maximum Income Payment Percentage
Monthly 1.25% of Accumulation Value
Quarterly 3.75% of Accumulation Value
Except as described in the following sections, in no event will a
payout be less than $100.
If a dollar amount is selected and the amount to be
systematically withdrawn would exceed the applicable maximum
percentage as of the withdrawal date, the amount withdrawn will
be reduced to equal such percentage. If the amount to be
withdrawn is then less than $100, the withdrawal will be made,
the Systematic Income Program will be canceled, and any remaining
Cash Surrender Value will be paid to you. This will result in
the termination of the Certificate.
If a percentage is selected and the amount to be systematically
withdrawn based on that percentage would be less than $100, the
amount withdrawn will be increased to the lesser of $100 or the
maximum percentage. If this amount to be withdrawn is then less
than $100, the withdrawal will be made, the Systematic Income
Program will be canceled, and any remaining Cash Surrender Value
will be paid to you. This will result in the termination of the
Certificate.
Systematic Income Program partial withdrawals may be subject to a
surrender charge if a demand withdrawal is taken in the same
Certificate Year. See The Amount You May Withdraw Without a
Surrender Charge, page 28.
You may change the amount or percentage of your Systematic Income
Program partial withdrawal once each Certificate Year. You may
cancel your election at any time by sending written notice to our
Customer Service Center at least seven days prior to the next
scheduled withdrawal date.
In no event will you be allowed to withdraw more than the Cash
Surrender Value.
IRA Income Program _ IRA Certificates Only
If you have an IRA Certificate, we will provide payout of amounts
required to be distributed by the Internal Revenue Service. See
Taxation of Individual Retirement Annuities, page 42.
We will determine the amount that is required to be distributed
from your Certificate each year based on the information you give
us and various choices you make. For information regarding the
calculation and choices you must make, see the Statement of
Additional Information. The minimum dollar amount of each
distribution is $100. At any time while minimum distributions
are being made, if your Cash Surrender Value falls below $2,000,
we will cancel the Certificate and send you the amount of your
Cash Surrender Value.
In no event will you be allowed to withdraw more than the Cash
Surrender Value.
The Amount You May Withdraw Without a Surrender Charge
You may withdraw each Certificate Year without a surrender charge
the greater of Earnings (as of the date of the written request)
or 15% of the Accumulation Value as of the last Anniversary (less
any Gross Partial Withdrawals already made during the Certificate
Year which are not considered to be withdrawals of Purchase
Payments) as well as Purchase Payments held beyond the surrender
charge period.
Demand withdrawals and any Systematic Income Program partial
withdrawals which occur in the same Certificate Year as a demand
withdrawal are deemed to withdraw first the Earnings in the
Certificate; followed by Purchase Payments held for at least five
full Certificate Years since the Anniversary at the end of the
Certificate Year in which the Purchase Payment was made. Then
the amount by which 15% of the Accumulation Value as of the last
Anniversary (less any Gross Partial Withdrawals already made
during the Certificate Year which are not considered to be
withdrawals of Purchase Payments) exceeds the Earnings in the
Certificate, if any, is withdrawn. Finally, any Purchase
Payments remaining, on a first-in, first-out basis are withdrawn.
During any Certificate Year, if a demand withdrawal is made while
the Systematic Income Program is in effect, the remaining payouts
to be made under the Systematic Income Program for that
Certificate Year will be considered demand withdrawals for
purposes of calculating any applicable surrender charges. If a
demand withdrawal is not made in the same Certificate Year,
Systematic Income Program partial withdrawals will not be
assessed a surrender charge. IRA Income Program partial
withdrawals will not be assessed a surrender charge. However,
the amount available for Systematic Income Program partial
withdrawals and IRA Income Program partial withdrawals is never
greater than the Cash Surrender Value.
A surrender charge applies only to the withdrawal of Purchase
Payments held less than five full Certificate Years since the
Anniversary at the end of the Certificate Year in which the
Purchase Payment was made. If a Purchase Payment is made as of
the first day of a Certificate Year, a surrender charge will
apply against this Purchase Payment for six full years. See
Surrender Charge, page 33.
Certain plans or programs sold on a group or sponsored basis to
employee or professional groups may have different withdrawal
privileges. See Group or Sponsored Arrangements, page 22.
Tax Consequences of Partial Withdrawals
CONSULT YOUR TAX ADVISER REGARDING THE TAX CONSEQUENCES
ASSOCIATED WITH TAKING PARTIAL WITHDRAWALS. A partial withdrawal
made before the taxpayer reaches Age 59-1/2 may result in
imposition of a tax penalty of 10% of the taxable portion
withdrawn. Please refer to FEDERAL TAX CONSIDERATIONS, page 40,
for more details.
Surrendering to Receive the Cash Surrender Value
You may surrender the Certificate for its Cash Surrender Value at
any time prior to the Annuity Date.
Your Certificate's Cash Surrender Value fluctuates daily with the
investment experience of the Divisions of the Variable Account in
which you are invested and any interest credited to amounts you
have invested in the Guaranteed Interest Division. We do not
guarantee any minimum Cash Surrender Value for amounts invested
in the Divisions of the Variable Account. The amount allocated
to the Guaranteed Interest Division and a minimum interest rate
are guaranteed for amounts allocated to the Guaranteed Interest
Division. As of any Valuation Date while the Certificate is in
effect, the Cash Surrender Value is calculated as follows:
1) We take the Certificate's Accumulation Value as of that date
less any taxes incurred but not deducted (see Taxes on Purchase
Payments, page 34);
2) We deduct any surrender charge (see Surrender Charge, page
33);
3) We deduct the $30 administrative charge, if any, due at the
end of the Certificate Year (see Administrative Charge, page 34).
When a Certificate is surrendered, we redeem Accumulation Units
in the Divisions of the Variable Account at their value next
computed after we receive at our Customer Service Center your
written request along with the Certificate. All benefits under
the Certificate are then terminated. We will normally pay the
Cash Surrender Value within seven days, but we may delay payout
as described in When We Make Payouts, page 36.
Withholding of Federal income taxes on all distributions may be
required unless you elect not to have any such amounts withheld
and properly notify First ING Life of that election. Even if you
elect no withholding, special "back-up withholding" rules may
require First ING Life to disregard your election if you fail to
supply First ING Life with a "TIN" or taxpayer identification
number (social security number for individuals) or if the
Internal Revenue Service notifies First ING Life that the TIN
provided by you is incorrect. In addition, withholding is
required for all payees with addresses outside the United States.
Some states also impose withholding requirements.
If you do not wish to receive your Cash Surrender Value in a
single sum payout and you are also the Annuitant, you may avoid a
surrender charge by applying the Accumulation Value, less any
taxes incurred but not deducted, to Payout Period Options II or
III by accelerating the Annuity Date under the Certificate. See
CHOOSING AN ANNUITY OPTION, page 35.
Your Right to Cancel the Certificate
Canceling your Certificate
You may cancel the Certificate within your Free Look period which
is ten days after you receive your Certificate. We deem this
period to expire 15 days after the Certificate is mailed from our
Customer Service Center. If you decide to cancel, you may mail or
deliver the Certificate to us at our Customer Service Center. We
will refund the Accumulation Value plus any charges we deducted.
When We Make Payouts
Partial withdrawals or payout of Proceeds from the Divisions of
the Variable Account will usually be processed within seven days
of receipt of the request at our Customer Service Center.
However, we may postpone the processing of any such transactions
for any of the following reasons:
a) When the New York Stock Exchange ("NYSE") is closed for
trading;
b) When trading on the NYSE is restricted by the SEC;
c) When an emergency exists such that it is not reasonably
practical to dispose of securities in the applicable Division of
the Variable Account or to determine the value of its assets; or
d) When a governmental body having jurisdiction over the Variable
Account permits such suspension by order.
Rules and regulations of the SEC are applicable and will govern
as to whether conditions described in (b), (c), or (d) exist.
We may defer up to six months the payout of any partial
withdrawal or Proceeds other than death benefits from the
Guaranteed Interest Division.
OTHER INFORMATION
The Owner
You are the Owner. You are also the Annuitant unless another
Annuitant is named in the Certificate application. You have the
rights and options described in the Certificate. You and your
spouse may be joint Owners; no other joint ownership is allowed.
You (and your spouse, in the case of joint ownership) must be
younger than Age 81 as of the Certificate Date.
Subject to the applicable provisions of Distribution-at-Death
Rules, page 43, if the Owner (or a Deemed Owner as defined in
Distribution-at-Death Rules) dies prior to the Annuity Date, and:
1.If the Owner's spouse is the Joint Owner, then the spouse
becomes the new Owner and no Death Benefit is payable; or
2.If the Owner's spouse is the Beneficiary, then the spouse
may elect to become the Owner (in which case there is no
Death Benefit payable) by so electing within 60 days of our
receipt of due proof of death and prior to the distribution
of Proceeds; if there is no such election, the Death
Benefit is payable to the Beneficiary; or
3.If the Owner's spouse is not the Joint Owner or the
Beneficiary, then the Death Benefit is payable to the
Beneficiary.
See Guaranteed Death Benefit, page 23.
The Annuitant
The Annuitant will receive the annuity benefits of the
Certificate as of the Annuity Date if the Annuitant is living and
the Certificate is then in force. If the Annuitant dies before
the Annuity Date and a Contingent Annuitant is named, the
Contingent Annuitant becomes the Annuitant (unless the Owner is
not an individual, in which case the Proceeds become payable).
If no Contingent Annuitant has been named, the Owner must
designate a new Annuitant. If no designation is made within 30
days of the Annuitant's death, the Owner will become the
Annuitant.
Upon the death of the Annuitant after the Annuity Date, any
remaining designated period payouts will be continued to any
Contingent Annuitant. Upon the death of both the Annuitant and
all Contingent Annuitants, any remaining designated period
payouts will be paid to the estate of the last to die of the
Annuitant and Contingent Annuitants. Amounts may be released in
one sum if the Owner's election allows. See CHOOSING AN ANNUITY
OPTION, page 35.
The Beneficiary
The Beneficiary is the person to whom we pay Proceeds upon the
death of the Owner (or of the Annuitant, if the Owner is not an
individual) prior to the Annuity Date.
The original Beneficiary and any Contingent Beneficiaries are
named in the Certificate application. Surviving Contingent
Beneficiaries are paid Death Benefit Proceeds only if no
Beneficiary survives. If more than one Beneficiary in a class
survives, they will share the Proceeds equally, unless the
Owner's designation provides otherwise. If there is no
designated Beneficiary or Contingent Beneficiary surviving, we
will pay the Proceeds to the Owner's estate. The Beneficiary
designation will be on file with us or at a location designated
by us. We will pay Proceeds to the most recent Beneficiary
designation on file.
Change of Owner, Beneficiary or Annuitant
Prior to the Annuity Date and while the Certificate is in effect
after the Free Look period, you may transfer Ownership of the
Certificate (unless the Certificate is an IRA Certificate)
subject to our published rules at the time of the change. A new
Owner must be less than Age 81.
You may name a new Annuitant prior to the Annuity Date. Any
Annuitant or Contingent Annuitant must be younger than Age 86
when named. An Annuitant or Contingent Annuitant that is not an
individual may not be named without our consent. If the Owner is
not an individual, the Annuitant may not be changed without our
consent.
The Owner may name a new Beneficiary unless an irrevocable
Beneficiary has been named. When an irrevocable Beneficiary has
been designated, the Owner and the irrevocable Beneficiary must
act together to make any Beneficiary changes. If the Certificate
is an IRA Certificate and a Beneficiary change is being made, the
Owner's spouse must sign a statement agreeing to this
designation.
To make any of these changes, you must send us written notice of
the change to our Customer Service Center. The change will take
effect as of the day the notice is signed and dated provided that
the request was received at our Customer Service Center prior to
any payout. The change will not affect any payout made or action
taken by us before recording the change at our Customer Service
Center. There may be tax consequences. See FEDERAL TAX
CONSIDERATIONS, page 40.
Other Certificate Provisions
In Case of Errors on the Certificate Application or Enrollment
Form
If an Age or sex given in the Certificate application is
misstated, the amounts payable or benefits provided by the
Certificate will be those that the Purchase Payment would have
bought at the correct Age or sex, with interest at 6% per year on
any overpayments or underpayments previously made.
Procedures
We must receive any election, designation, change, assignment, or
any other change request you make in writing, except those you
have chosen to request by telephone. We may require a return of
your Certificate for any Certificate change or for paying
Proceeds. We may require proof of age, death, or survival of an
Annuitant or Beneficiary when such proof is relevant to the
payout of a benefit, claim, or settlement under the Certificate.
If your Certificate has been lost, we will require that you
complete and return a Certificate Replacement Form. The
effective date of any change in provisions of the Certificate
will be the date the request was signed. Any change will not
affect payouts made or action taken by us before the change is
recorded at our Customer Service Center.
In the event of the Owner's death prior to the Annuity Date, we
should be informed as soon as possible. Claim procedure
instructions will be sent to your Beneficiary immediately. We
require a certified copy of the death certificate and may require
proof of the Owner's Age. We may require the Beneficiary and the
Owner's next of kin to sign all authorizations as part of due
proof.
Telephone Privileges
If you have elected this privilege in a form required by us, you
may make transfers or request partial withdrawals by telephoning
our Customer Service Center.
Our Customer Service Center will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine.
Such procedures may include, among others, requiring some form of
personal identification prior to acting upon instructions
received by telephone, providing written confirmation of such
transactions, and/or tape recording of telephone instructions.
Your request for telephone privileges authorizes us to record
telephone calls. If reasonable procedures are not used in
confirming instructions, we may be liable for any losses due to
unauthorized or fraudulent instructions. We reserve the right to
discontinue this privilege at any time.
Assigning the Certificate as Collateral
You may assign this Certificate as collateral security upon
written notice to us. Once it is recorded with us, the rights of
the Owner and Beneficiary are subject to the assignment. It is
your responsibility to make sure the assignment is valid. See
Exchange of Annuity Certificates, page 44, and Assignments, page
44.
Non-Participating
The Certificate does not participate in First ING Life's surplus
earnings.
Authority to Change Contract and Certificate Terms
All agreements made by us must be signed by our president or an
officer and by our secretary or assistant secretary. No other
person, including an insurance agent or broker, can change any of
the Contract's or Certificate's terms or make any agreements
binding on us.
Certificate Changes - Applicable Tax Law
The Certificate is intended to qualify as an annuity contract
under the Code. To that end, all terms and provisions of the
Certificate shall be interpreted to ensure or maintain such
qualification. Payouts and distributions under the Certificate
shall be made in the time and manner necessary to maintain such
qualification under the applicable provisions of the Code in
existence at the time the Certificate is issued.
We reserve the right to amend the Certificate, to reflect any
clarifications or changes that may be needed or are appropriate,
or to conform it to any applicable changes in the tax
requirements to qualify the Certificate as an annuity. Any such
changes will apply uniformly to all Contracts and Certificates
that are affected. We will send you written notice of such
changes.
CERTIFICATE CHARGES AND FEES
Deduction of Charges
We invest the entire amount of the initial and any additional
Purchase Payments in the Divisions of the Variable Account and
the Guaranteed Interest Division. We then periodically deduct
certain amounts from your Accumulation Value invested in the
Divisions of the Variable Account and the Guaranteed Interest
Division. We may reduce certain charges under certain group or
sponsored arrangements. See Group or Sponsored Arrangements,
page 22. A description of the charges we deduct follows.
Charges Deducted from the Accumulation Value
Surrender Charge
The withdrawal of Purchase Payments held less than five full
Certificate Years since the Anniversary at the end of the
Certificate Year in which the Purchase Payment was made, either
by surrender or partial withdrawal, is subject to a surrender
charge. If a Purchase Payment is made as of the first day of a
Certificate Year, a surrender charge will apply against this
Purchase Payment for six full years. The surrender charge that
applies is calculated as follows.
Anniversaries Surrender Charge as a
Since Purchase Percentage of
Payment Was Made Purchase Payment
Withdrawn
0 7%
1 6%
2 5%
3 4%
4 3%
5 2%
6+ 0%
Up to certain limits, partial withdrawals may be taken without
surrender charge. See The Amount You May Withdraw Without a
Surrender Charge, page 28.
Any applicable surrender charges will reduce the Accumulation
Value of each Division in the same proportion that the
Accumulation Value in that Division bears to the total
Accumulation Value immediately after the withdrawal.
Proceeds from the surrender charge may not cover the expected
costs of distributing the Certificates. Any shortfall will be
recovered from First ING Life's general assets, which may include
revenues from the mortality and expense risk charge deducted from
the Variable Account.
Administrative Charge
The administrative charge is deducted each year during the
Accumulation Period as of the Certificate Processing Date. We
deduct this charge when determining the Cash Surrender Value
payable if you surrender the Certificate prior to the end of a
Certificate Year. The amount deducted is $30 per Certificate
Year if Net Purchase Payments are less than $100,000. If Net
Purchase Payments equal $100,000 or more, the charge is zero.
This charge is to cover a portion of our administrative expenses.
The administrative charge is allocated to a Division in the same
proportion that the amount of Accumulation Value in that Division
bears to the total Accumulation Value.
Excess Transfer Charge
We allow you 12 free transfers among Divisions per Certificate
Year during the Accumulation Period. For each additional
transfer, we will charge you $25 at the time each transfer is
processed. The charge will be deducted from each of the
Divisions in which you are invested in the same proportion that
the amount of Accumulation Value in that Division bears to the
total Accumulation Value of all the Divisions immediately after
the transfer. We do not expect that the total revenues from the
excess transfer charge will be greater than the total expected
cost of administering transfers, on average, over the period that
the Certificates are in force. Any transfer(s) due to the
election of Dollar Cost Averaging, Automatic Rebalancing and/or
pursuant to Changes Within The Variable Account, page 18, will
not be included in determining if the excess transfer charge
should apply.
After the Annuity Date, only four transfers each Certificate Year
are allowed, and no transfer charge will be deducted.
Taxes on Purchase Payments
We make a charge for state and local taxes on Purchase Payments
in certain states, which currently ranges from 0% to 3.5% of the
Purchase Payment (5% for the Virgin Islands). The charge depends
on the Annuitant's state of residence.
Taxes on Purchase Payments are generally incurred as of the
Annuity Date, and we deduct the charge for taxes on Purchase
Payments from your Accumulation Value as of the Annuity Date.
Some jurisdictions impose a tax on Purchase Payments at the time
the Purchase Payments are paid, regardless of the Annuity Date.
In those states, our current practice is to advance the payment
of your taxes on Purchase Payments and charge it against your
Accumulation Value either upon surrender of the Certificate,
payout of Death Benefit Proceeds, or upon the Annuity Date. We
reserve the right to deduct any state and local taxes on Purchase
Payments from your Accumulation Value at the time such tax is
due.
Charges Deducted From The Divisions of the Variable Account
Mortality and Expense Risk Charge
We will deduct a daily charge from the assets in the Divisions of
the Variable Account to compensate First ING Life for mortality
and expense risks we assume under the Certificate. The daily
charge is at the rate of 0.003425% (equivalent to an annual rate
of 1.25%) on the assets in the Divisions of the Variable Account.
Approximately .90% of this annual charge is allocated to the
mortality risk and 0.35% is allocated to the expense risk. This
charge is not deducted from the Guaranteed Interest Division. We
will realize a gain from this charge to the extent it is not
needed to provide for benefits and expenses under the
Certificate.
The mortality risk assumed is the risk that Annuitants as a group
will live for a longer time than our actuarial tables predict.
As a result, we would be paying more in annuity income than we
planned. First ING Life also assumes a risk for paying a
Guaranteed Death Benefit, which in periods of declining value and
higher mortality rates, could result in a loss for First ING
Life. The expense risk assumed is the risk that it will cost us
more to issue and administer the Certificate than we expected in
setting the charge levels guaranteed in the Certificate.
Asset-based Administrative Charge
We will deduct a daily charge from the assets in each Division of
the Variable Account to compensate First ING Life for a portion
of the administrative expenses under the Certificate. The daily
charge is at a rate of 0.000411% (equivalent to an annual rate of
0.15%) on the assets in each Division of the Variable Account.
This charge is not deducted from the Guaranteed Interest
Division.
We do not expect that the total revenues from the administrative
charges will be greater than the total expected cost of
administering the Certificates, on average, excluding costs that
are properly categorized as distribution expenses, over the
period that the Certificates are in force.
Portfolio Expenses
There are fees and charges deducted from the Portfolios. Please
read the Trust prospectus for complete details.
CHOOSING AN ANNUITY OPTION
General Provisions
Supplementary Contract
When an Annuity Option becomes effective, your Certificate will
be amended to include a Supplementary Contract which will put the
Annuity Option elected into effect. The Supplementary Contract
Effective Date will be the date the Annuity Option becomes
effective. The computation of the first payout will be made as
of the Supplementary Contract Effective Date. The first payout
will be paid within 10 days of this date.
Election and Changes of Annuity Date
The Annuity Date is the date as of which Annuity Payouts begin.
It may be elected on your Certificate application. You may elect
any Annuity Date following the second Anniversary but no later
than the Annuitant's 85th birthday. If no Annuity Date is
elected in the Certificate application, the Annuity Date will be
the first day of the month following the Annuitant's 85th
birthday. For an IRA Certificate, distribution must commence no
later than April 1st of the calendar year following the calendar
year in which you attain Age 70-1/2. Consult your tax adviser. You
may change the Annuity Date by sending a written request to our
Customer Service Center at least 60 days prior to the currently
elected Annuity Date of the Certificate.
Election and Changes of Annuity Option
The Annuity Option is composed of both the Payout Option which
specifies the type of annuity to be paid and the Payout Period
Option which determines how long the annuity will be paid, the
frequency, and the amount of the first payout. The Owner elects
the Annuity Option that applies upon annuitization. The Owner
may change that Annuity Option at any time prior to the Annuity
Date. The Beneficiary may select an Annuity Option for any
payouts to be made pursuant to death benefit Proceeds. Any death
benefit Proceeds to be applied under a Payout Option will be
allocated to each of the Divisions of the Variable Account or the
Guaranteed Interest Division as instructed by the Beneficiary.
Commutation rights are provided to an Annuitant or Contingent
Annuitant as provided in Commuting Provisions, page 38. The
available options are described in the Annuity Option provisions
of the Certificate.
The various methods of settlement are shown below.
Payout Options
Proceeds applied as of the Annuity Date to provide an annuity
under an Annuity Option will be the Accumulation Value minus
taxes incurred but not deducted. The taxes will be taken from
each of the Divisions in the same proportion that the
Accumulation Value in that Division bears to the Accumulation
Value in all Divisions immediately prior to the Annuity Date.
If no Annuity Option has been chosen upon annuitization, we will
apply Proceeds to Payout Period Option II for a Variable Annuity
Payout, using a Benchmark Total Return of 3%, with a designated
period of 20 years.
Variable Annuity Payout
A Variable Annuity Payout is an annuity with payouts which: (1)
are not pre-determined or guaranteed as to dollar amount; and (2)
vary in amount with the investment experience of the Divisions of
the Variable Account in which you invest.
As of the Annuity Date, any Accumulation Value invested in the
Guaranteed Interest Division will be allocated among the
Divisions of the Variable Account in the same proportion that the
Accumulation Value of each Division bears to the total
Accumulation Value of all the Divisions of the Variable Account.
The first Variable Annuity Payout for each Division of the
Variable Account will be the amount that the Proceeds will
provide as of the close of business on the Valuation Date
immediately preceding the Supplementary Contract Effective Date
at the Benchmark Total Return elected. If you have elected to
have payouts made less frequently than monthly, the payout amount
is then adjusted according to the factors in Payouts Other Than
Monthly, page 38.
Variable Annuity Payouts, after the first payout, vary in amount
with the investment experience of the Divisions of the Variable
Account. The dollar amount of each Variable Annuity Payout after
the first payout is calculated by adding the amount due for each
Division of the Variable Account.
The Annuitant or Beneficiary may transfer all or a portion of the
Annuity Units in a Division of the Variable Account to another
Division of the Variable Account.
For a description of the method for determining the amount of
Annuity Payouts, the Annuity Unit Value and transfer provisions
during the Annuity Period, see the Statement of Additional
Information.
Fixed Annuity Payout
A Fixed Annuity Payout is an annuity with payouts which remain
fixed as to dollar amount throughout the Payout Period. As of
the Annuity Date, any Accumulation Value invested in the
Divisions of the Variable Account will be allocated to the
Guaranteed Interest Division. The Fixed Annuity Payout will be
that amount that the Proceeds will provide as of the
Supplementary Contract Effective Date at the Benchmark Total
Return of 3%. If the Fixed Annuity Payout is credited at an
interest rate above the guaranteed minimum, the installment
dollar amount will be greater than the determined installment
dollar amount for the time period that the higher rate is
declared. If you have elected to have payouts made less
frequently than monthly, the payout amount is adjusted according
to the factors in Payouts Other Than Monthly, page 38.
For Fixed Annuity Payouts, First ING Life guarantees that, after
the Supplementary Contract Effective Date, monies held under an
Annuity Option will be credited with interest at a minimum
guaranteed effective rate of 3%. We may declare that Fixed
Annuity Payouts are to be credited at an interest rate above the
guaranteed minimum. We guarantee that any higher rate will be in
effect for at least 12 months.
Combination Annuity Payout
A Combination Annuity Payout is an annuity where a portion of the
payout is variable and a portion of the payout is fixed as to
dollar amount throughout the Payout Period. You can split the
Proceeds among Fixed and Variable Annuity Payouts in any
proportion you choose, with the exception that a minimum of 25%
must be allocated to either option you elect as of the
Supplementary Contract Effective Date. As of the Supplementary
Contract Effective Date, we will allocate Accumulation Value
between the Guaranteed Interest Division and the Divisions of the
Variable Account to meet the proportions selected.
The potential benefit of splitting the Proceeds between a Fixed
and a Variable Annuity Payout is that you will have a portion of
your Annuity Payout fixed and guaranteed and a portion which may
increase over time, helping to offset inflation. Of course, the
payouts attributable to the Variable Annuity Payout are not
guaranteed and could decrease since their value is determined by
the investment experience of the Divisions of the Variable
Account you select. Once you elect your Combination Annuity
Payout, you may subsequently increase your allocation to a Fixed
Annuity Payout, but you may not increase your allocation to the
Variable Annuity Payout.
Frequency and Amount of Annuity Payouts
Annuity Payouts will be made to the Annuitant based on the
Annuity Option and frequency elected. They may be made monthly,
quarterly, semiannually or annually. If we do not receive
written notice from you, the Annuity Payouts will be made
monthly. There may be certain restrictions on minimum payouts
that we will allow. We may require that a one sum payout be made
if the Proceeds to be applied is less than $2,000 or, if the
payouts to the Annuitant are ever less than $20, we may change
the frequency of payouts to result in payouts of at least that
amount or require a one sum payout.
Payout Period Options
Under each Payout Option, the Payout Period is elected from one
of the following options:
OPTION I. Payouts for a Designated Period. Payouts will be made
in 1, 2, 4, or 12 installments per year as elected for a
designated period, which may be 5 to 30 years. If a Fixed
Annuity Payout is elected, the installment dollar amounts will be
equal except for any excess interest as described in Fixed
Annuity Payout, page 37. If a Variable Annuity Payout is
elected, the number of Annuity Units of each installment will be
equal, but the dollar amounts of each installment will vary based
on the Annuity Unit Values of the Divisions chosen. If the
Annuitant dies before the end of the designated period, payouts
will be continued to the Contingent Annuitant, if one has been
named, until the end of the designated period. The amount of each
payout will depend upon the designated period elected and, if a
Variable Annuity Payout is elected, the investment experience of
the Divisions of the Variable Account selected. The amount of the
first monthly payout for each $1,000 of Accumulation Value
applied is shown in Payout Option Table I in the Certificate.
OPTION II. Life Income With Payouts for a Designated Period.
Payouts will be made in 1, 2, 4, or 12 installments per year
throughout the Annuitant's lifetime or, if longer, for a period
of 5, 10, 15, or 20 years as elected. If a Fixed Annuity Payout
is elected, the installment dollar amounts will be equal except
for any excess interest as described in Fixed Annuity Payout,
page 37. If a Variable Annuity Payout is elected, the number of
Annuity Units of each installment will be equal, but the dollar
amounts of each installment will vary based on the Annuity Unit
Values of the Divisions chosen. If the Annuitant dies before the
end of the designated period, payouts will be continued to the
Contingent Annuitant, if one has been named, until the end of the
designated period. The amount of each payout will depend upon
the Annuitant's sex, Age at the time the first payout is due, the
designated period elected and, if a Variable Annuity Payout is
elected, the investment experience of the Divisions of the
Variable Account selected. The amount of the first monthly
payout for each $1,000 of Accumulation Value applied is shown in
Payout Option Table II in the Certificate. This option is only
available for Ages shown in these tables.
OPTION III. Joint and Last Survivor. Payouts will be made in
1, 2, 4, or 12 installments per year while both Annuitants are
living. Upon the death of one Annuitant, the Survivor's Annuity
Payout will be paid throughout the lifetime of the Surviving
Annuitant.
If a Fixed Annuity Payout is elected, the installment dollar
amount will be equal while both Annuitants are living and, upon
the death of one Annuitant, will be reduced to 2/3rds of the
installment dollar amount while both Annuitants were living
excluding any excess interest as described in Fixed Annuity
Payout, page 37.
If a Variable Annuity Payout is elected, the number of Annuity
Units applied to each installment will be level while both
Annuitants are living and, upon the death of one Annuitant, will
be reduced to 2/3rds of the number of Annuity Units applied to
each installment while both Annuitants were living. The dollar
amounts of each installment will vary based on the Annuity Unit
Values of the Divisions chosen.
The amount of each payout will depend upon the Age and sex of
each Annuitant at the time the first payout is due and, if a
Variable Annuity Payout is elected, the investment experience of
the Divisions of the Variable Account selected.
A description of how the first monthly installment for Payout
Period Option III is calculated is provided in your Certificate.
OPTION IV. Other. Payouts will be made in any other manner as
agreed upon in writing between you or the Beneficiary and us.
Payouts Other Than Monthly
The Payout Option Tables in your Certificate show the first
monthly installments for Payout Period Options I and II. To
arrive at the first annual, semiannual or quarterly payouts,
multiply the appropriate figures by 11.837, 5.962 or 2.992 if the
Benchmark Total Return is 3%, and by 11.730, 5.909 or 2.966 if
the Benchmark Total Return is 5%. Factors for other designated
periods or for other options that may be provided by mutual
agreement will be provided upon reasonable request.
Commuting Provisions
The Annuitant may commute remaining designated period
installments under Payout Period Option I. The Contingent
Annuitant may commute remaining designated period installments
after the death of the Annuitant under Payout Period Options I or
II. If no Contingent Annuitant is named, any remaining
designated period installments may be commuted by the estate.
Any computation shall be at the appropriate Benchmark Total
Return rate.
REGULATORY INFORMATION
Voting Privileges
We invest the assets in the Divisions of the Variable Account in
shares of the corresponding Portfolios. See The Palladian Trust,
page 17. First ING Life is the legal owner of the shares held in
the Variable Account and, as such, has the right to vote on
certain matters. Among other things, we may vote on any matters
described in the Trust's current prospectus or requiring a vote
by shareholders under the Investment Company Act of 1940.
Even though we own the shares, to the extent required by the
interpretations of the SEC, we give you the opportunity to tell
us how to vote the number of shares that are attributable to your
Certificate. We will vote those shares at meetings of Portfolio
shareholders according to your instructions. We will also vote
any Portfolio shares that are not attributable to the
Certificates and shares for which instructions from Owners were
not received in the same proportion that Owners vote. If the
Federal securities laws or regulations or interpretations of them
change so that we are permitted to vote shares of a Portfolio in
our own right or to restrict Owner voting, we reserve the right
to do so.
You may participate in voting only on matters affecting the
Portfolios in which your assets have been invested. We determine
the number of Portfolio shares in each Division that are
attributable to your Certificate by dividing the amount of your
Accumulation Value allocated to that Division by the net asset
value of one share of the corresponding Portfolio. The number of
shares as to which you may give instructions will be determined
as of the record date set by the Portfolio's Board for the
Portfolio's shareholders meeting. We count fractional shares.
If you have a voting interest, we will send you proxy material
and a form for giving us voting instructions.
All Portfolio shares are entitled to one vote. The votes of all
Portfolios are cast together on an aggregate basis, except on
matters where the interests of the Portfolios differ. In such
cases, voting is on a portfolio-by-portfolio basis. In these
cases, the approval of the shareholders in one Portfolio is not
needed in order to make a decision in another Portfolio.
Examples of matters that would require a portfolio-by-portfolio
vote are changes in the fundamental investment policy of a
particular Portfolio or approval of an investment advisory
agreement. Shareholders in a Portfolio not affected by a
particular matter generally would not be entitled to vote on it.
The Boards of the Portfolios and First ING Life and any other
insurance companies participating in the Portfolios are required
to monitor events to identify any material conflicts that may
arise from the use of the Portfolios for variable life and
variable annuity separate accounts. Conflict might arise as a
result of changes in state insurance law or Federal income tax
law, changes in investment management of any Portfolio, or
differences in voting instructions given by owners of variable
life insurance policies and variable annuity contracts. Shares
of these Portfolios may also be sold to certain pension and
retirement plans qualifying under Section 401 of the Code and
plans that include cash or deferred arrangements under Section
401(k) of the Code. As a result, there is a possibility that a
material conflict may arise between the interests of owners
generally, or certain classes of owners, and such retirement
plans or participants in such retirement plans. If there is a
material conflict, First ING Life will have an obligation to
determine what action should be taken including the removal of
the affected Portfolios from eligibility for investment by the
Variable Account. First ING Life will consider taking other
action to protect Owners. However, there could be unavoidable
delays or interruptions of operations of the Variable Account
that First ING Life may be unable to remedy.
In certain cases, when required by state insurance regulatory
authorities, we may disregard instructions relating to changes in
the Portfolio's adviser or the investment policies of the
Portfolios. In the event we do disregard voting instructions, we
will include a summary of our actions and give our reasons in the
next semiannual report to Owners.
Under the Investment Company Act of 1940, certain actions
affecting the Variable Account (such as some of those described
under Changes Within The Variable Account, page 18) may require
Owner approval. In that case, you will be entitled to one vote
for every $100 of value you have in the Divisions of the Variable
Account. We will cast votes attributable to amounts in the
Divisions not attributable to Certificates in the same
proportions as votes cast by Owners.
State Regulation
We are regulated and supervised by the Insurance Department of
the State of New York, which periodically examines our financial
condition and operations. We are also subject to the insurance
laws and regulations of all jurisdictions in which we do
business. The Certificate has been approved by the Insurance
Department of the State of New York and by the Insurance
Departments of other jurisdictions. We are required to submit
annual statements of our operations, including financial
statements, to the Insurance Departments of the various
jurisdictions in which we do business to determine solvency and
compliance with state insurance laws and regulations.
Legal Proceedings
First ING Life, as an insurance company, is ordinarily involved
in litigation. We do not believe that any current litigation is
material to First ING Life's ability to meet its obligations
under the Certificate or to the Variable Account, and we do not
expect to incur significant losses from such actions.
Legal Matters
The legality of the Certificate described in this prospectus has
been passed on by Eugene L. Copeland, General Counsel and
Secretary of First ING Life. Mayer, Brown & Platt of Washington,
D.C., has passed on certain matters relating to federal
securities laws.
Experts
The financial statements of First ING Life at December 31, 1994
and 1993, and for each of the two years in the period ended
December 31, 1994, have been audited by Ernst & Young LLP,
independent auditors. The statutory-basis financial statements
at December 31, 1992, and for the year then ended, have been
audited by KPMG Peat Marwick LLP, independent auditors.
The financial statements appearing in the Statement
of Additional Information and in the Registration Statement,
including the auditors' reports thereon, are included in reliance
upon such reports given upon the authority of such firms as
experts in accounting and auditing.
FEDERAL TAX CONSIDERATIONS
Introduction
The ultimate effect of federal income taxes on the amounts paid
for a Certificate, on the investment return on assets held under
a Certificate, on Annuity Payouts and on the economic benefits to
the Owner, Annuitant or Beneficiary depends upon the terms of the
Certificate, upon First ING Life's tax status and upon the tax
status of the parties concerned.
The following discussion is general in nature and is not intended
as tax advice. Each party concerned should consult a competent
tax adviser. The discussion below is based upon First ING Life's
understanding of the federal income tax laws as they are
currently interpreted and does not include state or local tax
issues. No representation is made regarding the likelihood of
continuation of the federal income tax laws, the Treasury
Regulations, or the current interpretations by the Internal
Revenue Service. For a discussion of federal income taxes as
they relate to the Portfolios, please see the accompanying
prospectus for the Trust.
First ING Life Tax Status
First ING Life is taxed as a life insurance company under Part I
of Subchapter L of the Code. Since the Variable Account is not a
separate entity from First ING Life and its operations form a
part of First ING Life, it will not be taxed separately as a
"regulated investment company" under Subchapter M of the Code.
Investment income and realized capital gains on the assets of the
Variable Account are reinvested and taken into account in
determining the Certificate's Accumulation Value. Under existing
federal income tax laws, the Variable Account's investment
income, including realized net capital gains, is not taxed to
First ING Life. First ING Life reserves the right to make a
deduction for taxes should they be imposed with respect to such
items in the future.
Taxation of Annuities
Section 72 of the Code governs taxation of annuities. In
general, the Owner of an annuity Certificate will not be taxed on
increases in value under the Certificate until some form of
distribution occurs. (For purposes of this rule, the amount of
any indebtedness that is secured by a pledge or assignment of a
Certificate is treated as a payout received on account of a
partial withdrawal from the Certificate.) Under certain
circumstances, however, the amount of any increase in the value
of a Certificate may be subject to current federal income tax.
See Certificates Owned by Non-Natural Persons, page 44, and
Diversification Standards, page 45.
1. Withdrawals Prior to the Annuity Commencement Date.
Section 72 of the Code provides, in effect, that the Proceeds
from a surrender of the Certificate or a partial withdrawal from
the Certificate prior to the Annuity Date will be treated as
taxable income to the extent that the amount held under the
Certificate immediately prior to the distribution exceeds the
"investment in the Certificate". The "investment in the
Certificate" is defined in the Code as that portion, if any, of
Purchase Payments by or on behalf of a taxpayer under the
Certificate which was not excluded from the taxpayer's gross
income at the time of such payment less any amounts previously
received under the Certificate which were excluded from the
taxpayer's gross income at the time of their receipt. The
taxable portion of any distribution received prior to the Annuity
Date will be subject to tax at ordinary income tax rates. For
purposes of this rule, a pledge or assignment of a Certificate is
treated as a payout received on account of a partial withdrawal
of a Certificate.
2. Annuity Payouts after the Annuity Date.
Upon receipt of the Proceeds of a surrender of the Certificate
after the Annuity Date, the recipient is taxed to the extent the
Proceeds exceed the investment in the Certificate. Upon receipt
of an Annuity Payout under the Certificate, the recipient will be
taxed on a portion of each payout received if the value of the
Certificate exceeds the investment in the Certificate. The
taxable portion of a payout received after the Annuity Date will
be subject to tax at ordinary income tax rates.
For Fixed Annuity Payouts, the taxable portion of each payout is
determined by using a formula known as the "exclusion ratio,"
which establishes the ratio that the investment in the
Certificate bears to the total expected amount of Annuity Payouts
for the term of the Certificate. That ratio is then applied to
each payout to determine the non-taxable portion of the payout.
The remaining portion of each payout is taxed at ordinary income
rates. For Variable Annuity Payouts, in general, the taxable
portion is determined by a formula which establishes a specific
dollar amount of each payout that is not taxed. The dollar
amount is determined by dividing the investment in the
Certificate by the total number of expected periodic payouts.
The remaining portion of each payout is taxed at ordinary income
rates. For Certificates with Annuity Dates after December 31,
1986, once the excludable portion of Annuity Payouts to date
equals the investment in the Certificate, the balance of the
Annuity Payouts will be fully taxable. Withholding of federal
income taxes on all distributions may be required unless the
recipient elects not to have any amounts withheld and properly
notifies First ING Life of that election.
3. Penalty Tax on Certain Withdrawals or Distributions.
With respect to amounts withdrawn or distributed before the
taxpayer reaches Age 59-1/2, a penalty tax is imposed equal to
10% of the taxable portion of amounts withdrawn or distributed.
However, the penalty tax will not apply to withdrawals:
(i) made on or after the death of the Owner or, where the
Owner is not an individual, the death of the "primary
Annuitant". The primary Annuitant is defined as the
individual the events in whose life are of primary
importance in affecting the timing and amount of the payout
under the Certificate;
(ii) attributable to the taxpayer's becoming totally disabled
within the meaning of Code Section 72(m)(7);
(iii) which are part of a series of substantially equal
periodic payouts made at least annually for the life (or
life expectancy) of the taxpayer, or the joint lives (or
joint life expectancies) of the taxpayer and his
Beneficiary;
(iv) from an IRA;
(v) allocable to investment in the Certificate prior to
August 14, 1982;
(vi) under a qualified funding asset (as defined in Code
Section 130(d));
(vii) under an immediate annuity contract, or
(viii) which are purchased by an employer on termination of
certain types of qualified plans and which are held by the
employer until the employee separates from service.
Other tax penalties may apply to certain distributions as well as
to certain contributions and other transactions under a qualified
plan.
If the penalty tax does not apply to a withdrawal as a result of
the application of item (iii) above, and the series of payouts
are subsequently modified (other than by reason of death or
disability), the tax for the year when the modification occurs
will be increased by an amount (as determined by the regulations)
equal to the tax that would have been imposed but for item (iii)
above, plus interest for the deferral period, if the modification
takes place (a) before the close of the period which is five
years from the date of the first payout and after the taxpayer
attains Age 59-1/2, or (b) before the taxpayer reaches Age 59-1/2.
Taxation of Individual Retirement Annuities
Code Section 408 permits individuals or their employers to
contribute to an individual retirement program known as an IRA.
In addition, distributions from certain other types of qualified
plans may be placed into an IRA on a tax deferred basis. IRAs
are subject to limitations on the amount which may be contributed
and the time when distributions may commence. Tax penalties may
apply to contributions in excess of specified limits, loans or
assignments, distributions in excess of a specified amount
annually or that do not meet specified requirements, and in
certain other circumstances.
Under the Code, distributions from IRAs generally must begin no
later than April 1st of the calendar year following the calendar
year in which the Owner attains Age 70-1/2. If the required
minimum distribution is not withdrawn, there may be a penalty tax
in an amount equal to 50% of the difference between the amount
required to be withdrawn and the amount actually withdrawn. See
the Statement of Additional Information for a discussion of the
various special rules concerning the minimum distribution
requirements.
Under amendments to the Code which became effective in 1993,
distributions from a qualified plan (other than non-taxable
distributions representing a return of capital, distributions
meeting the minimum distribution requirement, distributions for
the life or life expectancy of the recipient(s) or distributions
that are made over a period of more than ten years) are eligible
for tax-free rollover within 60 days of the date of distribution,
but are also subject to federal income tax withholding at a 20%
rate unless paid directly to another qualified plan. If the
recipient is unable to take full advantage of the tax-free
rollover provisions, there may be taxable income, and the
imposition of a 10% penalty tax if the recipient is under Age
59-1/2.
It is important that you consult your tax adviser before
purchasing an IRA.
Distribution-at-Death Rules
The following required distribution rules shall apply if and to
the extent required under Section 72(s) of the Internal Revenue
Code:
1. Subject to the alternative election or spouse beneficiary
provisions in subsection (2) or (3) below,
a) If any Owner dies on or after the annuity starting
date and before the entire interest in the Certificate
has been distributed, the remaining portion of such
interest shall be distributed at least as rapidly as
under the method of distribution being used as of the
date of such death;
b) If any Owner dies before the annuity starting date,
the entire interest in the Certificate will be
distributed within 5 years after such death; and
c) If any Owner is not an individual, then for purposes
of this subsection (1), the primary Annuitant under
the Certificate shall be treated as the Owner (the
"Deemed Owner"), and any change in the primary
Annuitant shall be treated as the death of the Owner.
The primary Annuitant is the individual, the events in
the life of whom are of primary importance in
affecting the timing or amount of the payout under the
Certificate.
2. If any portion of the interest of an Owner (or a Deemed
Owner) in subsection (1) is payable to or for the benefit
of a designated beneficiary, and such beneficiary elects
within 60 days of receipt of due proof of death but prior
to the distribution of Proceeds to have such portion
distributed in an Annuity Option over a period that: A)
does not extend beyond such beneficiary's life or life
expectancy, and B) starts within 1 year after such death
(a "Qualifying Distribution Period"); then for purposes
of satisfying the requirements of subsection (1), such
portion shall be treated as distributed entirely on the
date such periodic distributions begin. Such beneficiary
may elect any Payout Period Option for a Qualifying
Distribution Period, subject to any restrictions imposed
by any regulations under Section 72(s) of the Internal
Revenue Code.
3. If any portion of the interest of an Owner (or a Deemed
Owner) described in subsection (1) is payable to or for
the benefit of such Owner's spouse, or is co-owned by
such spouse, then such spouse shall be treated as the
Owner of such portion for purposes of the requirements of
subsection (1).
Our Certificate complies with these rules. See the Required
Distribution section of your Certificate.
Taxation of Death Benefit Proceeds
Amounts may be distributed from a non-qualified Certificate
because of the death of the Owner. Generally, such amounts are
includible in the income of the recipient as follows: (a) if
distributed in a lump sum, they are taxed in the same manner as a
full surrender of the Certificate, as described above, or (b) if
distributed under an Annuity Option, they are taxed in the same
manner as Annuity Payouts, as described above.
Exchange of Annuity Certificates
Exchanges of non-qualified annuity Certificates prior to the
Annuity Date for less than the full and adequate consideration
will trigger tax on the gain in the Certificate, at the time of
such transfer, with the transferee getting a step-up in basis for
the amount included in the Owner's income. This provision does
not apply to transfers between spouses or incident to a divorce.
Certificates Owned by Non-Natural Persons
For contributions to Certificates where the Certificate is held
by a non-natural person (for example, a corporation) the income
on that Certificate (generally the increase in the Cash Surrender
Value less the Purchase Payments) is includible in taxable income
each year. The rule does not apply where the non-natural person
is the nominal Owner of a Certificate and the Beneficiary is a
natural person. The rule also does not apply where the
Certificate is acquired by the estate of a decedent, where the
Certificate is an IRA Certificate, where the Certificate is a
qualified funding asset for structured settlements or where the
Certificate is purchased on behalf of an employee upon
termination of a qualified plan.
Section 1035 Exchanges
Section 1035 of the Code provides that no gain or loss shall be
recognized on the exchange of an annuity contract for another.
(For this purpose, your Certificate is considered an annuity
contract.) If the exchanged contract was issued prior to August
14, 1982, the new contract retains some of the exchanged
contract's tax attributes. The pre-August 14, 1982, cost
recovery rules will continue to apply to distributions
characterized as amounts not received as an annuity with respect
to such distributions allocable to investments made before August
14, 1982. Under the cost recovery rule, such amounts are
received tax-free until the taxpayer has received amounts equal
to the pre-August 14, 1982, investments. Amounts allocable to
post-August 13, 1982, investments are subject to the interest
first rule. In contrast, a new contract issued in exchange for a
contract issued before January 18, 1985, does not retain the
exchanged contract's grandfathering for purposes of the penalty
and distribution-at-death rules. Special rules and procedures
apply to Section 1035 transactions. Prospective Owners wishing
to take advantage of Section 1035 should consult their tax
advisers.
Assignments
A transfer of Ownership, a collateral assignment or the
designation of an Annuitant or other Beneficiary who is not also
the Owner may result in tax consequences to the Owner, Annuitant
or Beneficiary that are not discussed herein. An Owner
contemplating such a transfer or assignment of a Certificate
should contact a competent tax adviser with respect to the
potential tax effects of such a transaction.
Multiple Certificates Rule
The Technical and Miscellaneous Revenue Act of 1988 (the "1988
Act") provides that, for Certificates entered into on or after
October 21, 1988, for purposes of determining the amount of any
distribution under Section 72(e) (amounts not received as
annuities) that is includible in gross income, all non-qualified
deferred annuity Certificates issued by the same (or an
affiliated) insurer to the same Owner during any calendar year
are to be aggregated and treated as one Certificate. Thus, any
amount received under any such Certificate prior to the
Certificate's annuity starting date, such as a partial
withdrawal, dividend, or loan, will be taxable (and possibly
subject to the 10% penalty tax) to the extent of the combined
income in all such Certificates. The Treasury Department has
specific authority to issue regulations that prevent the
avoidance of Section 72(e) income through the serial purchase of
annuity Certificates or otherwise. In addition, there may be
other situations in which the Treasury Department may conclude
that it would be appropriate to aggregate two or more
Certificates purchased by the same Owner. Accordingly, an Owner
should consult a competent tax adviser before purchasing more
than one annuity Certificate.
Diversification Standards
To comply with the diversification regulations ("Regulations")
issued under Code Section 817(h), the Divisions of the Variable
Account will be required to diversify their investments. The
Regulations generally require that on the last day of each
quarter of a calendar year (i) no more than 55% of the value of
each Division is represented by any one investment; (ii) no more
than 70% is represented by any two investments; (iii) no more
than 80% is represented by any three investments; and (iv) no
more than 90% is represented by any four investments. With
respect to each Division, a "look-through" rule applies which
suggests that each Division of the Variable Account will be
tested for compliance with the percentage limitations by looking
through to the assets of the Portfolio in which that Division
invests. All securities of the same issuer are treated as one
investment. As a result of the 1988 Act, each government agency
or instrumentality will be treated as a separate issuer for the
purposes of these limitations.
In connection with the issuance of the temporary diversification
regulations in 1986, the Treasury Department announced that such
regulations did not provide guidance concerning the extent to
which Owners may direct their investments to particular divisions
of a separate account without being considered the Owners of the
assets of the account. It is possible that regulations or
revenue rulings may be issued in this area at some time in the
future. It is not clear at this time what these regulations or
rulings would provide. It is possible that if such regulations
or rulings are issued, the Certificate may need to be modified in
order to remain in compliance. For these reasons, First ING Life
reserves the right to modify the Certificate, as necessary, to
prevent the Owner from being considered the Owner of the assets
of the Variable Account.
The Trust has committed to comply with the Regulations to assure
that the Certificate continues to be treated as an annuity
Certificate for federal income tax purposes.
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
FIRST ING LIFE 3
THE ADMINISTRATOR 3
PERFORMANCE INFORMATION 3
SEC STANDARD AVERAGE ANNUAL TOTAL RETURN FOR NON-MONEY MARKET
DIVISIONS 4
ACCUMULATION UNIT VALUE 4
ILLUSTRATION OF CALCULATION OF ACCUMULATION UNIT VALUE 4
ILLUSTRATION OF PURCHASE OF UNITS (ASSUMING NO STATE TAX ON
PURCHASE PAYMENTS) 5
DETERMINATION OF ANNUITY PAYOUTS 5
IRA INCOME PROGRAM 7
OTHER INFORMATION 8
FINANCIAL STATEMENTS OF FIRST ING LIFE INSURANCE COMPANY OF
NEW YORK 8
STATEMENT OF ADDITIONAL INFORMATION
The Fulcrum Fund Variable Annuity
A Flexible Premium Deferred Combination Fixed And Variable
Annuity Contract
Issued By
First ING Life Insurance Company of New York
and
First ING of New York Separate Account A1
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS.
THE INFORMATION CONTAINED HEREIN SHOULD BE READ IN CONJUNCTION
WITH THE PROSPECTUS FOR THE FIRST ING LIFE INSURANCE COMPANY
OF NEW YORK FULCRUM FUND DEFERRED COMBINATION FIXED AND
VARIABLE ANNUITY CONTRACT WHICH IS REFERRED TO HEREIN.
THE PROSPECTUS SETS FORTH INFORMATION THAT A PROSPECTIVE
INVESTOR OUGHT TO KNOW BEFORE INVESTING. FOR A COPY OF THE
PROSPECTUS, SEND A WRITTEN REQUEST TO FIRST ING LIFE INSURANCE
COMPANY OF NEW Y0RK, CUSTOMER SERVICE CENTER, OR TELEPHONE
1-800-249-9099.
Date of Prospectus: August 14, 1995
Date of Statement of Additional Information: August 14, 1995
TABLE OF CONTENTS
FIRST ING LIFE 3
THE ADMINISTRATOR 3
PERFORMANCE INFORMATION 3
SEC STANDARD AVERAGE ANNUAL TOTAL RETURN FOR
NON-MONEY MARKET DIVISIONS 4
ACCUMULATION UNIT VALUE 5
ILLUSTRATION OF CALCULATION OF ACCUMULATION UNIT VALUE 5
ILLUSTRATION OF PURCHASE OF UNITS (ASSUMING NO STATE
TAX ON PURCHASE PAYMENTS) 5
DETERMINATION OF ANNUITY PAYOUTS 5
IRA INCOME PROGRAM OPTION 7
OTHER INFORMATION 8
FINANCIAL STATEMENTS OF FIRST ING LIFE INSURANCE COMPANY
OF NEW YORK 8
FIRST ING LIFE
First ING Life's parents include Internationale-Nederlanden US
Insurance Holdings, Inc., a Delaware corporation whose
principal business is to act as the holding company for
Internationale-Nederlanden, N.V.'s U.S. insurance companies.
First ING Life's indirect intermediate parents, Nationale-
Nederlanden International B.V. and Internationale Nederlanden
Verzekeringen N.V. are Dutch insurance and financial
corporations.
First ING Life's ultimate parent, Internationale Nederlanden
Groep, N.V., is a Dutch insurance and financial corporation
primarily engaged in banking and insurance services which
include life and non-life insurance, life reinsurance, funds
transfer services, savings plans, investments in securities
and other capital market instruments, lending, mortgages,
leasing, investment banking, debtor finance, debt conversion
and international project management, property development,
finance and management.
First ING Life acts as its own custodian for the Variable
Account, and its affiliate, ING America Equities, Inc., is the
principal underwriter and distributor of the Contracts in a
continuous offering.
THE ADMINISTRATOR
Financial Administrative Services Corporation and its
affiliate Great-West Life & Annuity Insurance Company have an
Administrative Services Agreement with First ING Life.
Financial Administrative Services Corporation or its affiliate
Great-West Life & Annuity Insurance Company provide
administrative services for all of First ING Life's variable
annuity Certificates, such as Certificate underwriting and
issue, Owner service and the administration of the Variable
Account.
PERFORMANCE INFORMATION
Performance information for the Divisions of the Variable
Account, including the total return of the Divisions, may
appear in reports or promotional literature to current or
prospective Owners. Negative values are denoted by
parentheses. Performance information for measures other than
total return do not reflect surrender charges which can have a
maximum level of 7% of Purchase Payments, and any applicable
tax on Purchase Payments that currently ranges from 0% to 3.5%
(5% in the Virgin Islands).
See Performance Information in the Prospectus for a discussion
of the types of performance information that may be published
for the Divisions.
SEC Standard Average Annual Total Return for Non-Money Market
Divisions
Quotations of average annual total return for the Divisions of
the Variable Account are expressed in terms of the average
annual compounded rate of return of a hypothetical investment
in a Certificate over a period of 1, 3, 5 and 10 years (or, if
less, up to the life of the Division), calculated pursuant to
the following formula:
P(1+T)N=ERV
Where:
[P] equals a hypothetical initial Purchase Payment of
$1,000
[T] equals the average annual total return
[n] equals the number of years
[ERV] equals the ending redeemable value of a
hypothetical $1,000 Purchase Payment made at
the beginning of the period (or fractional
portion thereof).
Fees that vary with the size of the account are included
assuming an account size equal to the Division's mean (or
median) account size. The SEC requires that an assumption be
made that the Owner surrenders the entire Certificate at the
end of the 1, 3, 5 and 10 year periods (or, if less, up to the
life of the Division) for which performance is required to be
calculated. This assumption may not be consistent with the
typical Owner's intentions in purchasing a Certificate and may
adversely affect advertised or quoted returns.
Accumulation Unit Value
The calculation of the Accumulation Unit Value ("AUV") is
discussed in the Prospectus under Accumulation Value of each
Division of the Variable Account. The following illustrations
show a calculation of a new AUV and the purchase of
Accumulation Units (using hypothetical examples):
Illustration of Calculation of Accumulation Unit Value
1. AUV, beginning of period $5.00000000
2. Value of Portfolio share, $25.00
beginning of period
3. Change in value of Portfolio $1.00
share
4. Gross investment return [(3) .04000000
divided by (2)]
5. Less daily mortality and .00003425
expense risk charge
5a.Less asset-based administrative .00000411
charge
6. Net investment return [(4) .03996164
minus (5) minus (5a)]
7. Net investment factor 1.03996164
[1.000000 plus (6)]
8. AUV, end of period 5.19980820
[(1) multiplied by (7)]
Illustration of Purchase of Units (Assuming No State Tax on
Purchase Payments)
1. Initial Purchase Payment $100.00
2. AUV on effective date of purchase $5.00
(see Example 1)
3. Number of Accumulation Units 20.00000
purchased [(1) divided by (2)]
4. AUV for Valuation Date following $5.19980820
purchase (see Example 1)
5. Accumulation Value in account for $104.00
Valuation Date following purchase
[(3) multiplied by (4)]
Determination of Annuity Payouts
For Variable Annuity Payouts, you have the option of electing
either a 3% or 5% Benchmark Total Return. The rate is elected
at the same time the Variable Annuity Payout is elected and
may not be changed after the Annuity Date. Compared to a 3%
Benchmark Total Return, electing the 5% Benchmark Total Return
would mean a higher initial payment but more slowly rising or
more rapidly falling subsequent payments if actual investment
experience varied from 5%. If the actual investment rate is
at the annual rate of 3% or 5%, the Annuity Payouts will be
level if you elected either 3% or 5% respectively.
As of the Annuity Date, any Accumulation Value invested in the
Guaranteed Interest Division will be allocated among the
Divisions of the Variable Account in the same proportion that
the Accumulation Value of each Division of the Variable
Account bears to the total Accumulation Value of all the
Divisions of the Variable Account.
The first Variable Annuity Payout for each Division of the
Variable Account will be the amount that the Proceeds will
provide as of the close of business on the Valuation Date
immediately preceding the Supplementary Contract Effective
Date at the Benchmark Total Return chosen. If you have
elected to have payouts made less frequently than monthly, the
payout amount is then adjusted according to the factors in the
Payouts Other Than Monthly section in the prospectus.
The initial number of Annuity Units for a Division of the
Variable Account is calculated by dividing the payout amount
of that Division by the Annuity Unit Value of that Division as
of the Supplementary Contract Effective Date. The number of
Annuity Units for a Division of the Variable Account does not
change throughout the Annuity Period unless a transfer is made
between Divisions of the Variable Account or, if a Combination
Annuity Payout is selected, an increase in allocation from the
Variable Annuity Payout to the Fixed Annuity Payout is made.
The total Variable Annuity Payment is the sum of the Variable
Annuity Payouts from all Divisions of the Variable Account.
Variable Annuity Payouts, after the first payout, vary in
amount with the investment experience of the Divisions of the
Variable Account. The dollar amount of each Variable Annuity
Payout after the first payout is calculated by adding the
amount due for each Division of the Variable Account. The
amount due for each Division equals:
1.The number of Annuity Units for that Division;
multiplied by,
2.The Annuity Unit Value for that Division for the
Valuation Period for which each payout is due.
The dollar amount of each Annuity Payout after the first
payout will not be affected by variations in our expenses or
mortality experience.
The Annuitant or Beneficiary may transfer all or a portion of
the Annuity Units in a Division of the Variable Account to
another Division of the Variable Account. After the transfer,
the number of Annuity Units in the Division of the Variable
Account from which you are transferring will be reduced by the
number of Annuity Units transferred. The number of Annuity
Units in the Division of the Variable Account to which the
transfer is made will be increased by the number of Annuity
Units transferred multiplied by:
(a) the value of an Annuity Unit in the Division of
the Variable Account from which the transfer is made,
divided by
(b) the value of an Annuity Unit in the Division of
the Variable Account to which the transfer is made.
Annuity Unit Value
We use an Annuity Unit Value to calculate the Variable Annuity
Payouts. The Annuity Unit Value for any later Valuation
Period is:
a) The Annuity Unit Value for each Division as of the last
prior Valuation Period multiplied by the Annuity Experience
Factor for that Division for the Valuation Period for which
the Annuity Unit Value is being calculated; divided by
b) An interest factor based on the Benchmark Total Return
selected. (This is done to neutralize the Benchmark Total
Return.)
Annuity Experience Factor
For each Division of the Variable Account, the Annuity
Experience Factor reflects the investment experience of the
Portfolio in which that Division invests and the charges
assessed against that Division for a Valuation Period. The
Annuity Experience Factor is calculated as follows:
(a) The net asset value of the Portfolio in which
that Division invests as of the end of the current
Valuation Period; plus
(b) The amount of any dividend or capital gains
distribution declared and reinvested in that Portfolio
during the current Valuation Period; minus
(c) A charge for taxes, if any.
(d) The result of (a), (b) and (c), divided by the
net asset value of that Portfolio as of the end of the
preceding Valuation Period; minus
(e) The daily equivalent of the Variable Account
Annual Expenses shown in the Certificate Schedule for
each day in the current Valuation Period.
IRA INCOME PROGRAM OPTION
If the Owner has an IRA Certificate, we will provide payout of
amounts required to be distributed by the Internal Revenue
Service.
We will determine the amount that is required to be
distributed from your Certificate each year based on the
information you give us and various choices you make. The
minimum dollar amount of each distribution is $100. For
purposes of calculating the minimum distribution amount, all
demand withdrawals, Systematic Income Program partial
withdrawals, and Annuity Payouts must be summed between IRA
required distribution payout dates to determine if the minimum
distribution amount has been met through these other
distributions. If there have been sufficient distributions
made from the Certificate during the calendar year, no further
distributions will be made for that year. If there have not
been sufficient distributions made from the Certificate during
the calendar year, the remaining minimum distribution amount
will be paid to the Owner. At any time while minimum
distributions are being made, if your Cash Surrender Value
falls below $2,000, we will cancel the Certificate and send
you the amount of the Cash Surrender Value.
First ING Life notifies the Owner of the current IRA
regulations in the IRA Disclosure Statement which you will
receive during the application process. The Owner specifies
whether the withdrawal amount will be based on a life
expectancy calculated on a single life basis (Owner's life
only) or, if the Owner is married, on a joint life basis
(Owner's and spouse's life combined).
First ING Life calculates a required distribution amount each
year based on the Code's minimum distribution rules. We do
this by dividing the Accumulation Value as of December 31 of
the prior year by the life expectancy. The life expectancy is
recalculated each year. Special minimum distribution rules
govern payouts if the Beneficiary is other than the Owner's
spouse and the Beneficiary is more than ten years younger than
the Owner.
OTHER INFORMATION
Registration statements have been filed with the Securities
and Exchange Commission, with respect to the Certificates
discussed in this Statement of Additional Information. Not all
of the information set forth in the registration statements,
amendments and exhibits thereto has been included in this
Statement of Additional Information. Statements contained in
this Statement of Additional Information concerning the
content of the Certificates and other legal instruments are
intended to be summaries. For a complete statement of the
terms of these documents, reference should be made to the
instruments filed with the Securities and Exchange Commission.
FINANCIAL STATEMENTS OF FIRST ING LIFE INSURANCE COMPANY OF
NEW YORK
Ernst & Young LLP, independent auditors, 4300 Republic Plaza,
Denver, CO 80202, will perform annual audits of the financial
statements of First ING Life and the financial statements of
Separate Account A1.
The financial statements of First ING Life, which are included
in this Statement of Additional Information, should be
considered only as bearing on the ability of First ING Life to
meet its obligations under the Certificate.
Unaudited Financial Statements
FIRST ING LIFE INSURANCE COMPANY OF
NEW YORK
(formerly the Urbaine Life Reinsurance Company)
Three Months ended March 31, 1995
Contents
Unaudited Financial Statements
Unaudited Balance Sheets...................................................2
Unaudited Statements of Operations.........................................4
Unaudited Statements of Stockholder's Equity...............................5
Unaudited Statements of Cash Flows.........................................6
Notes to Unaudited Condensed Financial Statements..........................7
First ING Life Insurance Company of New York
Unaudited Balance Sheets
March 31
1995 1994
______________________
(Dollars in Thousands)
Assets
Investments (Note 3):
Fixed maturities $10,471 $10,780
Cash 1,459 1,029
Accrued investment income 197 144
Reinsurance recoverable (Note 4);
Paid benefits 336 224
Unpaid benefits and IBNR 1,656 1,145
Prepaid reinsurance premiums (Note 4) 8,945 8,871
Deferred federal income taxes (Note 5) 3 145
Other assets 0 13
____________________
Total assets $23,067 $22,351
====================
See accompanying notes.
First ING Life Insurance Company of New York
Unaudited Balance Sheets (continued)
March 31
1995 1994
______________________
(Dollars in Thousands)
Liabilities and stockholder's equity
Liabilities:
Future policy benefits (Note 4):
Life and annuity reserves $ 9,025 $ 8,871
Unpaid claims 1,656 1,152
__________________
Total future policy benefits 10,681 10,023
Accounts payable and accrued expenses 235 625
Indebtedness to related parties 414 132
Amounts due to reinsurers (Note 4) 128 16
Federal income taxes payable 0 23
____________________
Total liabilities 11,458 10,819
Commitments and contingent liabilities
(Notes 4 and 9)
Stockholder's equity (Notes 6 and 7):
Common stock, $110 par value:
Authorized - 10,000 shares
Issued and outstanding - 10,000 shares 1,100 1,100
Additional paid-in capital 14,330 14,330
Net unrealized losses (294) ( 9)
Retained earnings (deficit) (3,527) (3,889)
_____________________
Total stockholder's equity 11,609 11,532
_____________________
Total liabilities and stockholder's equity $23,067 $22,351
=====================
See accompanying notes.
First ING Life Insurance Company of New York
Unaudited Statements of Operations
Three Months ended March 31
1995 1994
______________________
(Dollars in Thousands)
Revenues:
Reinsurance assumed premiums $ 1,938 $ 1,757
Reinsurance ceded premiums (1,938) (1,757)
______________________
0 0
Net investment income 199 122
Net realized losses on investments 0 (116)
______________________
Total revenues 199 6
Benefits and expenses:
Insurance claims and benefits incurred:
Death benefits 1,594 1,984
Other benefits 140 19
Increase in policy reserves and other funds 0 0
Reinsurance recoveries (1,734) (2,003)
______________________
0 0
Commissions ( 78) (91)
Insurance operating expenses 193 110
Miscellaneous expenses 0 2
______________________
Total expenses 115 21
______________________
Income (loss) before federal income taxes 84 (15)
Federal income tax benefit (Note 5) (421) ( 6)
______________________
Net income (loss) $ 505 $ ( 9)
=======================
See accompanying notes.
First ING Life Insurance Company of New York
Unaudited Statements of Stockholder's Equity
Three Months ended March 31
1995 1994
______________________
(Dollars in Thousands)
Common stock:
Balance at beginning and end of period $ 1,100 $ 1,100
======================
Additional paid-in capital:
Balance at beginning and end of period $14,330 $14,330
=======================
Net unrealized (losses) gains on
investments:
Balance at beginning of year $ (491) $ -
Adjustment to beginning balance for change
in accounting method used for investments. - 18
net of $10 tax benefit (Note 1)
Net change in unrealized gain (loss) on
investments 197 (27)
______________________
Balance at end of year (294) ( 9)
Retained earnings (deficit):
Balance at beginning of year (4,032) (3,880)
Net (loss) income 505 ( 9)
_______________________
Balance at end of year $(3,527) $(3,889)
=======================
Total stockholder's equity $11,609 $11,532
=======================
See accompanying notes.
First ING Life Insurance Company of New York
Unaudited Statements of Cash Flows
Three Months ended March 31
1995 1994
______________________
(Dollars in Thousands)
Operating Activities
Net income $ 505 $( 9)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Decrease in future policy benefits (336) ( 617)
Net decrease (increase) in deferred
federal income taxes 373 ( 6)
(Decrease) increase in accounts payable and
accrued expenses (512) 158
(Increase) decrease in accrued investment income (102) 55
Decrease in reinsurance recoverable 0 306
Decrease in prepaid reinsurance premiums 80 247
Loss on sale of investments 0 116
Other, net 16 23
___________________
Net cash provided by operating activities 24 273
Investing activities
Sale of fixed maturity
investments, available for sale 0 6,775
Purchase or issuance of fixed maturity investments,
available for sale (1,442) (6,295)
____________________
Net cash (used) provided by investing activities (1,442) 480
Financing activities
Increase in indebtedness to related parties 115 90
____________________
Net cash provided by financing activities 115 90
Net (decrease) increase in cash (1,303) 843
Cash at beginning of year 2,762 186
_____________________
Cash at end of period $1,459 $ 1,029
=====================
See accompanying notes.
First ING Life Insurance Company of New York
Notes to Unaudited Condensed Financial Statements
1. Organization and Accounting Policies
Basis of Presentation
The significant accounting policies followed by First ING Life Insurance
Company of New York (the Company), formerly known as The Urbaine Life
Reinsurance Company, a wholly-owned subsidiary of Security Life of Denver
Insurance Company, that materially affect financial reporting are summarized
below. The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles (GAAP) which differ
from statutory accounting practices prescribed or permitted by state insurance
regulatory authorities.
New Financial Accounting Standards
In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 115, Accounting for Certain Investments in
Debt and Equity Securities. The Company adopted the provisions of the new
standard for investments held as of or acquired after January 1, 1994. The
cumulative effect as of January 1, 1994 of adopting Statement 115 had no impact
on income. The opening balance of stockholder's equity was increased by $18,000
(net of $10,000 in deferred income taxes) to reflect the net unrealized holding
gains on securities classified as available-for-sale previously carried at
amortized cost.
Interim Financial Statements
The accompanying unaudited financial statements for the three months ended
March 31, 1995 and 1994 reflect all adjustments which are of a normal recurring
nature, and in the opinion of management are necessary for a fair presentation
of the results for the periods presented. Results of operations for the three
months ended March 31, 1995 and 1994 are not indicative of results of operations
to be expected for the full year. Amounts disclosed in the notes to the
financial statements for the three months ended March 31, 1995 and 1994 are not
audited.
Investments
The carrying value of fixed maturities depends on the classification of the
security: held to maturity, securities available-for-sale, and trading
securities. Management determines the appropriate classification of debt
securities at the time of purchases and reevaluates such designation as of each
balance sheet date. Debt securities are classified as held-to-maturity when the
Company has the positive intent and ability to hold the securities to maturity.
Held-to-maturity securities are stated at amortized cost.
Debt securities not classified as held-to-maturity or trading are classified as
available-for-sale. Available-for-sale securities are stated at fair value,
with the unrealized gain or loss net of tax, reported in a separate component
of stockholder's equity.
The Company does not hold trading securities or securities held to maturity.
The amortized cost of debt securities is adjusted for amortization of premiums
and accretion of discounts to maturity, or in the case of mortgage-backed
securities, over the estimated life of the security. Such amortization is
included in interest income from investments. Interest is included in net
investments income as earned.
Realized gains and losses, and declines in value judged to be
other-than-temporary are recognized in net income. The cost of securities sold
is based on the specific identification method.
Recognition of Revenue
Premiums for traditional life insurance products,which include those products
with fixed and guaranteed premiums and benefits and consist principally of whole
life insurance policies, are recognized as revenue when due.
Future Policy Benefits and Expenses
The liabilities for life and accident and health benefits and expenses are
developed by actuarial methods and are determined based on published tables
using statutorily specified interest rates and valuation methods that will
provide, in the aggregate, reserves that are greater than or equal to the
minimum or guaranteed policy cash value or the amounts required by law.
Interest rates range from 3% to 6%. The liabilities calculated using this
method are not materially different than liabilities calculated using generally
accepted accounting principles.
Claim Liabilities
The liabilities for unpaid claims include estimates of amounts due on reported
claims and claims that have been incurred but were not reported as of March 31.
Such estimates are based on actuarial projections applied to historical claim
payment data. Such liabilities are reasonable and adequate to discharge the
Company's obligations for claims incurred but unpaid as of March 31.
Reinsurance
FASB Statement No. 113, Accounting and Reporting for Reinsurance of
Short-Duration and Long-Duration Contracts eliminates the practice of reporting
amounts for reinsured contracts net of the effect of reinsurance. The statement
requires that reinsurance receivables and prepaid reinsurance premiums are to
be reported as assets. The statement establishes conditions required for a
contract with a reinsurer to qualify for reinsurance accounting. Contracts that
do not result in the possibility that the reinsurer may realize significant gain
or loss from the insurance risk assumed would be accounted for as deposits.
Federal Income Taxes
Deferred federal income taxes have been provided or credited to reflect
significant temporary differences between income reported for tax and financial
reporting purposes.
Cash Flow Information
Cash includes cash on hand and demand deposits. Included as a component of
operating activities is interest paid of $0 as of March 31, 1995 and 1994.
2. Fair Values of Financial Instruments
FASB Statement No. 107, "Disclosures about Fair Value of Financial Instruments",
requires disclosure of fair value information about financial instruments,
whether or not recognized in the balance sheet, for which it is practicable to
estimate that value. In cases where quoted market prices are not available,
fair values are based on estimates using present value or other valuation
techniques. Those techniques are significantly affected by the assumptions
used, including the discount rate and estimates of future cash flows. In that
regard, the derived fair value estimates cannot be substantiated by comparison
to independent markets and, in many cases, could not be realized in immediate
settlement of the instrument. FASB Statement No. 107 excludes life insurance
liabilities that contain mortality risk and all nonfinancial instruments from
its disclosure requirements.
Accordingly, the aggregate fair value amounts presented do not represent the
underlying value of the Company.
The following methods and assumptions were used by the Company in estimating the
"fair value" disclosures for financial instruments:
Fixed Maturities: The fair values for fixed maturities are based on
quoted market prices, where available. For fixed maturities not actively
traded, fair values are estimated using values obtained from independent
pricing services or, in the case of collateralized mortgage obligations,
are estimated by discounting expected future cash flows using a current
market rate applicable to the yield, credit quality, and maturity of the
investments. The estimated market value of fixed maturities as of
March 31, 1995 and 1994 were $10,471,000 and $10,780,000 respectively.
Cash: The carrying amounts reported in the balance sheet for this
financial instrument approximates its fair value.
Letters of Credit: The Company is the beneficiary of two separate
renewable letters of credit for $12,077,000 and $250,000, respectively.
These letters of credit have a market value to the Company of $0 (see
Note 10).
The fair values for the Company's insurance contracts other than investment
contracts are not required to be disclosed. However, the fair values of
liabilities under all insurance contracts are taken into consideration in the
Company's overall management of interest rate risk, such that the Company's
exposure to changing interest rates is minimized through the matching of
investment maturities with amounts due under insurance contracts.
The carrying value of all other assets and liabilities approximate their
fair values.
3. Investments
The amortized cost and estimated market value of investments in fixed
maturities are as follows at March 31, 1995 and 1994:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
______________________________________________
(Dollars in thousands)
<S> <C> <C> <C> <C>
1995 Available-for-Sale:
U.S. Treasury securities and
obligations of U.S.
government corporations
and agencies $ 4,301 $ 30 $ 14 $ 4,317
Corporate securities 3,326 - 220 3,106
Mortgage-backed securities 3,297 - 249 3,048
_______________________________________________
$10,924 $ 30 $ 483 $10,471
===============================================
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
_______________________________________________
(Dollars in Thousands)
<S> <C> <C> <C> <C>
1994 Available-for-Sale:
U.S. Treasury securities and
obligations of U.S.
government corporations
and agencies $ 4,136 $ 18 $ 50 $ 4,104
Corporate securities 3,301 1 0 3,302
Mortgage-backed securities 3,359 15 0 3,374
_______________________________________________
$10,796 $ 34 $ 50 $10,780
================================================
</TABLE>
The amortized cost and estimated market value of investments in fixed maturities
at March 31, 1995, by contractual maturity, are shown in the following table.
Expected maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call or
prepayment penalties.
Estimated
Amortized Market
Cost Value
_________________________
(Dollars in Thousands)
Available for Sale:
Due in one year or less $ 883 $ 875
Due after one year through five years 4,580 4,528
Due after five years through ten years 2,164 2,020
Mortgage-backed securities 3,297 3,048
_________________________
$ 10,924 $ 10,471
=========================
At March 31, 1995, the Company held no less-than-investment-grade bonds in its
portfolio.
Changes in unrealized gains (losses) on investments in fixed maturities for the
three months ended March 31, 1995 and 1994 are summarized as follows:
Changes in Unrealized Gains (Losses):
1995 1994
______________________
(Dollars in Thousands)
Gross Unrealized Gains 30 34
Gross Unrealized Losses (483) (50)
_____________________
Net Unrealized Losses (453) (16)
Tax Benefit (Expense) 159 7
_____________________
Net Unrealized Gains after Taxes (294) ( 9)
Balance at beginning of year (491) 0
Adjustment for Accounting change (Note 1) 0 18
_____________________
Change in Unrealized Gains (Losses) 197 (27)
=====================
Major categories of investments income are summarized as follows:
Three Months Ended March 31
1995 1994
___________________________
(Dollars in Thousands)
Fixed Maturities $201 $126
Investment expenses (2) (4)
___________________________
Net investment income $199 $122
===========================
During the three months ended March 31, 1995, no debt securities were sold.
During the three months ended March 31, 1994, debt securities available for sale
with a fair value of $6,776,000 at the date of sale were sold. Gross gains of
$0 and gross losses of $116,000 were realized on those sales.
The Company has not entered into any agreements to purchase or sell securities
as of March 31, 1995.
4. Reinsurance
The Company is involved in both ceded and assumed reinsurance with other
companies for the purpose of diversifying risk and limiting exposure on larger
risks. As of March 31, 1995, the Company's retention limit for acceptance of
risk on life insurance policies had been set at various levels up to $150,000.
Reinsurance premiums, commissions, expense reimbursements, and reserves related
to reinsurance business are accounted for on bases consistent with those used
in accounting for the original policies issued and the terms of the reinsurance
contracts.
To the extent that the assuming companies become unable to meet their
obligations under these treaties, the Company remains contingently liable to is
policyholders for the portion reinsured. Consequently, allowances are
established for amounts deemed uncollectible. To minimize its exposure to
significant losses from reinsurer insolvencies, the Company evaluates the
financial condition of its reinsurers.
A summary of the reinsured premiums are as follows:
<TABLE>
<CAPTION>
Ceded to Assumed
Gross Other From Other Net
Amount Companies Companies Amount
___________________________________________
(Dollars in Thousands)
<S> <C> <C> <C> <C>
As of March 31, 1995
Life insurance in Force 0 922,058 922,155 97
============================================
Premiums:
Life insurance 0 1,938 1,938 0
Accident & Health Ins. 0 0 0 0
_________________________________________
Total premiums 0 1,938 1,938 0
===========================================
<CAPTION>
Ceded to Assumed
Gross Other From Other Net
Amount Companies Companies Amount
____________________________________________
(Dollars in Thousands)
<S> <C> <C> <C> <C>
As of March 31, 1994
Life insurance in Force 0 1,017,862 1,017,862 0
==============================================
Premiums:
Life insurance 0 1,757 1,757 0
Accident & Health Ins. 0 0 0 0
_____________________________________________
Total premiums 0 1,757 1,757 0
===============================================
</TABLE>
At March 31, 1995, $8,593,000 of the Company's prepaid reinsurance premiums were
retroceded to one reinsurer. The amount represents 96% of the total prepaid
reinsurance premiums.
5. Income Taxes
Effective January 1, 1993, the Company changed its method of accounting for
income taxes from the deferred method to the liability method required by FASB
Statement No. 109, "Accounting for Income Taxes"
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's deferred tax assets and liabilities as of March 31, 1995 and
1994 are as follows:
1995 1994
____________________
Dollars in Thousands
Deferred tax assets:
Tax-basis deferred acquisition cost $ 708 $602
Net operating loss carryforward 365 -
Other (1,070) (19)
____________________
Total deferred tax assets 3 583
Valuation allowance for deferred
tax assets 0 (438)
____________________
Net deferred tax assets $ 3 $145
=====================
A valuation allowance had been established by the Company to account for the
fact that the full benefit of the deferred tax asset for tax-basis deferred
acquisition costs more than likely would not be fully realized. In 1995, change
in judgement about the realizability of the deferred tax asset has occurred and
the valuation allowance has been removed.
For financial reporting purposes, federal income tax benefit consists of the
following:
1995 1994
______________________
(Dollars in Thousands)
Current $(733) $( 21)
Deferred 750 15
Current year change in
valuation allowance (438)
_____________________
Federal income tax (benefit) expense $(421) $( 6)
=====================
The Company's effective income tax rate does not significantly vary from the
statutory federal income tax rate.
As of December 31, 1994, the Company had a net operating loss ("NOL") carry
forward for tax purposes of $3,582,000. In January 1995, an application for
refund was filed to carry back $2,215,000 of the NOL against 1990, 1991 and 1992
taxable income. The remaining $1,367,000 NOL is available to offset future
taxable income, until it expires in the year 2008.
The Company had no net income tax payments during the three months ended March
31, 1995 and 1994, and received a refund of $794,700 for current income tax due
and settlements of prior year returns.
6. Statutory Accounting Practices
Stockholder's equity, determined in accordance with statutory accounting
practices (SAP), was $12,010,000 and $11,350,000 at March 31, 1995 and 1994.
Net income, determined in accordance with SAP, was $818,000 and $110,000 for the
three months ended March 31, 1995 and 1994.
The Company is required to maintain a minimum statutory capital and surplus in
its state of domicile of $1,550,000. The Company exceeded its minimum statutory
capital and surplus requirements at March 31, 1995. Additionally, the amount
of dividends which can be paid by the Company to its stockholder is subject to
prior approval by the New York state insurance department based on its review
of the Company's financial condition.
7. Risk Based Capital
At December 31, 1994, the Company had regulatory total adjusted capital of
$11,214,000 and authorized control level risk-based capital of $66,000.
9. Commitments and Contingent Liabilities
The Company is a party to pending or threatened lawsuits arising from the normal
conduct of its business. Due to the climate in insurance and business
litigation, suits against the Company sometimes include substantial additional
claims for consequential damages, punitive damages and other similar types of
relief. While it is not possible to forecast the outcome of such litigation,
it is the opinion of management that the disposition of such lawsuits will not
have a materially adverse effect on the Company's financial position or
interfere with its operations.
10. Financing Arrangements
The Company is the beneficiary of two separate renewable letters of credit for
$12,077,000 and $250,000 respectively. The letters of credit were established
in accordance with the terms of certain reinsurance agreements. These letters
of credit expire on December 31, 1995. The letters of credit were unused during
the three months ended March 31, 1995 and 1994.
Financial Statements
First ING Life Insurance
Company of New York
Years ended December 31, 1994 and 1993
with Report of Independent Auditors
First ING Life Insurance Company of New York
Financial Statements
Years ended December 31, 1994 and 1993
Contents
Report of Independent Auditors.........................................1
Audited Financial Statements
Balance Sheets.........................................................2
Statements of Operations...............................................4
Statements of Stockholder's Equity.....................................5
Statements of Cash Flows...............................................6
Notes to Financial Statements..........................................7
Report of Independent Auditors
Board of Directors and Stockholder
First ING Life Insurance Company of New York
We have audited the accompanying balance sheets of First ING Life Insurance
Company of New York (a wholly-owned subsidiary of Security Life of Denver
Insurance Company) as of December 31, 1994 and 1993, and the related
statements of operations, stockholder's equity, and cash flows for the
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of First ING Life
Insurance Company of New York at December 31, 1994 and 1993, and the
results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.
As discussed in Notes 1 and 6 to the financial statements, the Company made
certain accounting changes in 1994 and 1993.
ERNST & YOUNG LLP
April 5, 1995
First ING Life Insurance Company of New York
Balance Sheets
(Dollars in Thousands)
December 31
1994 1993
Assets
Fixed maturity investments (Note 4) $ 8,741 $11,416
Cash 2,762 186
Accrued investment income 95 198
Reinsurance recoverable (Note 5):
Paid benefits 80 157
Unpaid benefits and IBNR 1,912 1,519
Prepaid reinsurance premiums (Note 5) 9,025 9,072
Deferred federal income taxes (Note 6) 421 153
Federal income taxes recoverable 61 -
Other assets - 12
______________________
Total assets $23,097 $22,713
======================
December 31
1994 1993
Liabilities and stockholder's equity
Liabilities:
Future policy benefits (Note 5):
Life and annuity reserves $ 9,105 $ 9,072
Unpaid claims 1,912 1,522
___________________
Total future policy benefits 11,017 10,594
Accounts payable and accrued expenses 118 180
Indebtedness to related parties 298 42
Amounts due to reinsurers (Note 5) 757 303
Federal income taxes payable (Note 6) - 44
__________________
Total liabilities 12,190 11,163
Commitments and contingent liabilities
(Notes 5 and 9)
Stockholder's equity (Notes 7 and 8):
Common stock, $110 par value:
Authorized - 10,000 shares
Issued and outstanding - 10,000 shares 1,100 1,100
Additional paid-in capital 14,330 14,330
Net unrealized depreciation on investments (491) -
Retained earnings deficit (4,032) (3,880)
____________________
Total stockholder's equity 10,907 11,550
____________________
Total liabilities and stockholder's equity $23,097 $22,713
====================
See accompanying notes.
First ING Life Insurance Company of New York
Statements of Operations
(Dollars in Thousands)
Year ended December 31
1994 1993
Revenues:
Reinsurance assumed premiums $7,696 $7,497
Reinsurance ceded premiums (7,616) (6,159)
______________________
80 1,338
Net investment income 567 294
Net realized losses on investments (412) (48)
______________________
Total revenues 235 1,584
Benefits and expenses:
Insurance claims and benefits incurred:
Death benefits 7,917 6,657
Other benefits 163 72
Increase in policy reserves and other funds 80 87
Reinsurance recoveries (8,080) (5,146)
_____________________
80 1,670
Commissions (402) (327)
Insurance operating expenses 753 634
Miscellaneous expense 2 11
___________________
Total benefits and expenses 433 1,988
___________________
Loss before federal income taxes (198) (404)
Federal income tax (benefit) expense
(Note 6) (46) 82
____________________
Net loss before cumulative effect of
accounting change (152) (486)
Cumulative effect of accounting change
for income taxes (Note 6) - (40)
____________________
Net loss $ (152) $ (526)
====================
See accompanying notes.
First ING Life Insurance Company of New York
Statements of Stockholder's Equity
(Dollars in Thousands)
Year ended December 31
1994 1993
Common stock:
Balance at beginning and end of year $ 1,100 $ 1,100
======================
Additional paid-in capital:
Balance at beginning of year $14,330 $12,330
Capital contribution - 2,000
_____________________
Balance at end of year $14,330 $14,330
=====================
Net unrealized (depreciation) appreciation
of investments:
Balance at beginning of year $ - $ -
Adjustment to beginning balance for
change in accounting method used
for investments, net of $10 tax
benefit (Note 1) 18 -
Net change in unrealized depreciation
of investments (509)
______________________
Balance at end of year $ (491) $ -
======================
Retained earnings (deficit):
Balance at beginning of year $(3,880) $(3,354)
Net loss (152) (526)
______________________
Balance at end of year $(4,032) $(3,880)
======================
Total stockholder's equity $10,907 $11,550
======================
See accompanying notes.
First ING Life Insurance Company of New York
Statements of Cash Flows
(Dollars in Thousands)
Year ended December 31
1994 1993
Operating activities
Net loss $ (152) $ (526)
Adjustments to reconcile net loss
to net cash provided (used) by
operating activities:
Increase (decrease) in future
policy benefits 423 (2,568)
Net (decrease) in federal
income taxes (107) 226
Increase in accounts payable,
accrued expenses,
and amounts due to reinsurers 392 48
Decrease (increase) in accrued
investment income 103 (150)
Decrease in reinsurance recoverable (316) (985)
Decrease (increase) in prepaid
reinsurance premiums 47 (5,193)
Realized loss on sale of investments 412 43
Other, net 97 (140)
______________________
Net cash provided (used) by operating
activities 899 (9,245)
Investing activities
Sale of fixed maturity investments,
available for sale 9,698 -
Purchase of fixed maturity investments,
available for sale (8,277) -
Sale, maturity or repayment of fixed
maturity investments - 69,562
Purchase of fixed maturity investments - (62,858)
_______________________
Net cash provided by investing activities 1,421 6,704
Financing activities
Decrease in indebtedness to related parties 256 42
Capital contribution - 2,000
______________________
Net cash provided by financing activities 256 2,042
______________________
Net increase (decrease) in cash 2,576 (499)
Cash at beginning of year 186 685
______________________
Cash at end of year $2,762 $ 186
======================
See accompanying notes.
First ING Life Insurance Company of New York
Notes to Financial Statements
December 31, 1994 and 1993
I. Organization and Accounting Policies
Basis of Presentation
The significant accounting policies followed by First ING Life Insurance
Company of New York (the Company, formerly known as The Urbaine Life
Reinsurance Company), a wholly-owned subsidiary of Security Life of Denver
Insurance Company, that materially affect financial reporting are
summarized below. The accompanying financial statements have been prepared
in accordance with generally accepted accounting principles (GAAP), which
differ from statutory accounting practices prescribed or permitted by state
insurance regulatory authorities.
New Financial Accounting Standards
In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 115, Accounting for Certain Investments
in Debt and Equity Securities. The Company adopted the provisions of the
new standard for investments held as of or acquired after January 1, 1994.
In accordance with the statement, prior period financial statements have
not been restated to reflect the change in accounting principle. The
cumulative effect as of January 1, 1994 of adopting Statement 115 had no
impact on income. The opening balance of stockholder's equity was
increased by $18,000 (net of $10,000 in deferred income taxes) to reflect
the net unrealized holding gains on securities classified as
available-for-sale previously carried at amortized cost.
In 1993 the Company adopted FASB Statement No. 109, Accounting for Income
Taxes (see Note 6).
In 1993 the Company adopted FASB Statement No. 113, Accounting and
Reporting for Reinsurance of Short-Duration and Long-Duration Contracts.
This statement eliminates the practice of reporting amounts for reinsured
contracts net of the effects of reinsurance. The statement requires that
reinsurance receivables and prepaid reinsurance premiums be reported as
assets. The statement establishes conditions required for a contract with
a reinsurer to qualify for reinsurance accounting. Contracts that do not
result in the possibility that the reinsurer may realize significant gain
or loss from the insurance risk assumed would be accounted for as deposits.
Investments
In 1994, the carrying value of fixed maturities depends on the
classification of the security: securities held to maturity, securities
available for sale, and trading securities. Management determines the
appropriate classification of debt securities at the time of purchase and
reevaluates such designation as of each balance sheet date. Debt
securities are classified as held-to-maturity when the Company has the
positive intent and ability to hold the securities to maturity.
Held-to-maturity securities are stated at amortized cost.
Debt securities not classified as held-to-maturity or trading are
classified as available-for-sale. Available-for-sale securities are stated
at fair value, with the unrealized appreciation or depreciation, net of
tax, reported in a separate component of stockholder's equity.
The Company does not hold trading securities or securities held to
maturity.
The amortized cost of debt securities is adjusted for amortization of
premiums and accretion of discounts to maturity, or in the case of
mortgage-backed securities, over the estimated life of the security. Such
amortization is included in interest income from investments. Interest is
included in net investments income as earned.
In 1993, all investments in fixed maturities are presented at amortized
cost.
Realized gains and losses, and declines in value judged to be
other-than-temporary are recognized in net income. The cost of securities
sold is based on the specific identification method.
Recognition of Revenue
Premiums for traditional life insurance products, which include those
products with fixed and guaranteed premiums and benefits and consist
principally of whole life insurance policies, are recognized as revenue
when due.
Future Policy Benefits and Expenses
The liabilities for life and accident and health benefits and expenses are
developed by actuarial methods and are determined based on published tables
using statutorily specified interest rates and valuation methods that will
provide, in the aggregate, reserves that are greater than or equal to the
minimum or guaranteed policy cash value or the amounts required by law.
Interest rates range from 3% to 6%. The liabilities calculated using this
method are not materially different than liabilities calculated using
generally accepted accounting principles.
Claim Liabilities
The liabilities for unpaid claims include estimates of amounts due on
reported claims and claims that have been incurred but were not reported as
of December 31. Such estimates are based on actuarial projections applied
to historical claim payment data. Such liabilities are reasonable and
adequate to discharge the Company's obligations for claims incurred but
unpaid as of December 31.
Federal Income Taxes
Deferred federal income taxes have been provided or credited to reflect
significant temporary differences between income reported for tax and
financial reporting purposes.
Cash Flow Information
Cash includes cash on hand and demand deposits. Included as a component of
operating activities is interest paid of $0 in 1994 and $182,000 in 1993.
2. Fair Values of Financial Instruments
FASB Statement No. 107, Disclosures about Fair Value of Financial
Instruments, requires disclosure of fair value information about financial
instruments, whether or not recognized in the balance sheet, for which it
is practicable to estimate that value. In cases where quoted market prices
are not available, fair values are based on estimates using present value
or other valuation techniques. Those techniques are significantly affected
by the assumptions used, including the discount rate and estimates of
future cash flows. In that regard, the derived fair value estimates cannot
be substantiated by comparison to independent markets and, in many cases,
could not be realized in immediate settlement of the instrument. FASB
Statement No. 107 excludes life insurance liabilities that contain
mortality risk and all nonfinancial instruments from its disclosure
requirements.
Accordingly, the aggregate fair value amounts presented do not represent
the underlying value of the Company.
The following methods and assumptions were used by the Company in
estimating the "fair value" disclosures for financial instruments:
Fixed Maturities: The fair values for fixed maturities are based on
quoted market prices, where available. For fixed maturities not
actively traded, fair values are estimated using values obtained from
independent pricing services or, in the case of collateralized
mortgage obligations, are estimated by discounting expected future
cash flows using a current market rate applicable to the yield, credit
quality, and maturity of the investments. The carrying amount and
estimated market value of fixed maturities as of December 31, 1994
were $8,741,000. The carrying amount and estimated market value of
fixed maturities as of December 31, 1993 were $11,416,000 and
$11,384,000, respectively.
Cash: The carrying amount reported in the balance sheet for this
financial instrument approximates its fair value.
Letters of Credit: The Company is the beneficiary of separate
renewable letters of credit for $12,077,000 and $250,000,
respectively. These letters of credit have a market value to the
Company of $0 (see Note 10).
The fair values for the Company's insurance contracts other than
investment contracts are not required to be disclosed. However, the
fair values of liabilities under all insurance contracts are taken
into consideration in the Company's overall management of interest
rate risk, such that the Company's exposure to changing interest rates
is minimized through the matching of investment maturities with
amounts due under insurance contracts.
The carrying values of all other assets and liabilities approximate
their fair values.
3. Acquisition
Effective March 31, 1993, 100% of the stock of the Company was acquired by
Security Life of Denver Insurance Company for a total cash consideration of
$9,563,000 (including $354,000 of fees and miscellaneous expenses). The
acquisition was accounted for using the purchase method of accounting, The
fair market value of assets acquired totaled $19,108,000 (primarily
investment securities), and liabilities assumed totaled $9,899,000. The
purchase price equals the fair market value of net assets acquired; thus,
no goodwill was generated from this transaction.
4. Investments
The amortized cost and estimated market value of investments in fixed
maturities are as follows at December 31, 1994 and 1993:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Market Carrying
Cost Gains Losses Value Value
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
1994 Available for Sale:
U.S. Treasury securities and
obligations of U.S.
government corporations
and agencies $ 2,865 $12 $ 75 $2,802 $2,802
Corporate securities 3,335 - 330 3,005 3,005
Mortgage-backed securities 3,298 - 364 2,934 2,934
_____________________________________________________
$ 9,498 $12 $769 $8,741 $8,741
=====================================================
1993 Actively Managed:
U.S. Treasury securities and
obligations of U.S.
government corporations
and agencies $ 8,049 $19 $ 58 $ 8,010 $8,049
Corporate securities 3,367 7 - 3,374 3,367
_____________________________________________________
$11,416 $26 $ 58 11,384 $11,416
=====================================================
</TABLE>
The amortized cost and estimated market value of investments in fixed
maturities at December 31, 1994, by contractual maturity, are shown in the
following table. Expected maturities will differ from contractual
maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.
Estimated
Amortized Market
Cost Value
(Dollars in Thousands)
Available for Sale:
Due in one year or less $ 862 $ 875
Due after one year through five years 3,167 2,984
Due after five years through ten years 2,171 1,948
Mortgage-backed securities 3,298 2,934
$97,498 $87,741
At December 31, 1994, the Company held no less-than-investment-grade bonds
in its portfolio.
Changes in unrealized gains (losses) on investments in fixed maturities for
the years ended December 31 are summarized as follows:
1994 1993
(Dollars in Thousands)
Gross unrealized gains $ 12 $ 26
Gross unrealized losses (769) (58)
___________________
Net unrealized gains (757) (32)
Deferred income tax benefit 266 11
___________________
Net unrealized losses after taxes (491) (21)
Balance at beginning of year - (57)
Adjustment for change in accounting method (18) -
____________________
Change in net unrealized gains (losses)
on fixed maturities $(509) $(78)
======================
Major categories of investment income for the years ended December 31, 1994
and 1993 are summarized as follows:
1994 1993
(Dollars in Thousands)
Fixed maturities $578 $484
Other investments - 11
______________________
578 495
Investment expenses (11) (201)
______________________
Net investment income $567 $294
======================
Included as a component of investment expenses is interest expense of $0 in
1994 and $182,000 in 1993.
At December 31, 1994 and 1993, net realized losses on investments of
$412,000 and $48,000, respectively, were recognized on the sale of fixed
maturities.
Gross gains of $0 and gross losses of $412,000 were realized on those sales
of debt securities available-for-sale during 1994. Gross gains of $0 and
gross losses of $48,000 were realized on sales of investments in fixed
maturities during 1993.
As part of its overall investment management strategy, the Company had not
entered into any agreements to purchase or sell securities as of December
31, 1994 and 1993.
5. Reinsurance
The Company is involved in both ceded and assumed reinsurance with other
companies for the purpose of diversifying risk and limiting exposure on
larger risks. As of December 31, 1994, the Company's retention limit for
acceptance of risk on life insurance policies had been set at various
levels up to $150,000. Reinsurance premiums, commissions, expense
reimbursements, and reserves related to reinsured business are accounted
for on bases consistent with those used in accounting for the original
policies issued and the terms of the reinsurance contracts.
To the extent that the assuming companies become unable to meet their
obligations under these treaties, the Company remains contingently liable
to its policyholders for the portion reinsured. Consequently, allowances
are established for amounts deemed uncollectible. To minimize its exposure
to significant losses from reinsurer insolvencies, the Company evaluates
the financial condition of its reinsurers.
A summary of the reinsured premiums is as follows:
<TABLE>
<CAPTION>
Ceded to Assumed Percentage
Gross Other From Other Net of Amount
Amount Companies Companies Amount Assumed to Net
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
As of December 31, 1994:
Life insurance in force $- $942,722 $942,819 $ 97 9720%
=====================================
Premiums:
Life insurance $- $7,618 $7,698 $ 80 9623%
Accident & Health Ins - (2) (2) - N/A
____________________________________
Total premiums $- $7,616 $7,696 $ 80 9620%
=====================================
As of December 31, 1993:
Life insurance in force $- $1,130,621 $1,130,621 $ - N/A
=====================================
Premiums:
Life insurance $- $ 6,130 $7,500 $1,370 548%
Accident & Health Ins. - 29 (3) (32) 10%
______________________________________
Total premiums $- $ 6,159 $7,497 $1,338 561%
======================================
</TABLE>
At December 31, 1994, $8,700,000 of the Company's prepaid reinsurance
premiums were retroceded to one reinsurer. The amount represents 97% of
the total prepaid reinsurance premiums.
6. Income Taxes and Policyholders' Surplus Account
Effective January 1, 1993, the Company changed its method of accounting for
income taxes from the deferred method to the liability method required by
FASB Statement No. 109, Accounting for Income Taxes (see Note 1,
"Accounting Policies"). The cumulative effect of adopting FASB Statement
No. 109 as of January 1, 1993 was to decrease net income by $40,000.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred tax assets and liabilities
as of December 31, 1994 and 1993 are as follows:
1994 1993
(Dollars in Thousands)
Deferred tax assets:
Tax-basis deferred acquisition costs $683 $576
Net operating loss carryforward 422 -
Other (246) 15
_____________________
Total deferred tax assets 859 591
Valuation allowance for deferred tax assets(438)(438)
____________________
Net deferred tax assets $421 $153
===================
A valuation allowance has been established by the Company to account for
the fact that the full benefit of the deferred tax asset for tax-basis
deferred acquisition costs more than likely will not be fully realized.
The Policyholders' Surplus Account is an accumulation of certain special
deductions for income tax purposes and a portion of the "gains from
operations" which were not subject to current taxation under the Life
Insurance Tax Act of 1959. At December 31, 1994, the balance in this
account for tax return purposes was approximately $188,000. The Tax Reform
Act of 1984 provides that no further accumulations will be made in this
account. If amounts accumulated in the Policyholders' Surplus Account
exceed certain limits, or if distributions to the shareholder exceed
amounts in the Shareholders' Surplus Account, to the extent of such excess
amount or excess distributions, as determined for income tax purposes,
amounts in the Policyholders' Surplus Account would become subject to
income tax at rates in effect at that time. Should this occur, the maximum
tax which would be paid is $65,800. The Company does not anticipate any
such action or foresee any events which would result in such tax. FASB
Statement No. 109 provides that a deferred tax liability associated with
the Policyholders' Surplus Account must be provided only for any future
increases in the. Account in fiscal years beginning after December 15,
1992. As no further accumulations can be made to the Account, and the
Company does not anticipate any events which would result in amounts in the
Policyholders' Surplus Account becoming taxed, a related deferred tax
liability has not been established.
For financial reporting purposes, federal income tax (benefit) expense
consists of the following:
1994 1993
(Dollars in Thousands)
Current $(44) $ 43
Deferred (2) (184)
Current year change in
valuation allowance - 223
___________________
Federal income tax (benefit) expense $(46) $ 82
===================
In 1994, the Company's effective income tax rate does not significantly
vary from the statutory federal income tax rate. In 1993, the Company's
effective income tax rate varies from the statutory federal income tax rate
due to the establishment of a valuation allowance against the deferred tax
asset.
As of December 31, 1994, the Company had a net operating loss (NOL)
carryforward for tax purposes of $3,582,000. In January 1995, an
application for refund was filed to carry back $2,215,000 of the NOL
against 1990, 1991 and 1992 taxable income. The remaining $1,367,000 NOL
is available to offset future taxable income until it expires in the year
2008.
The Company had net income tax payments of $61,000 and $303,000 during 1994
and 1993, respectively, for current income tax payments and settlements of
prior year returns.
7. Statutory Accounting Practices
Stockholder's equity, determined in accordance with statutory accounting
practices (SAP), was $11,197,000 and $11,323,000 at December 31, 1994 and
1993, respectively. Net income (loss), determined in accordance with SAP,
was $126,000 and ($617,000) for the years ended December 31, 1994 and 1993,
respectively.
The Company is required to maintain a minimum statutory capital and surplus
in its state of domicile of $1,550,000. The Company exceeded its minimum
statutory capital and surplus requirements at December 31, 1994.
Additionally, the amount of dividends which can be paid by the Company to
its stockholder is subject to prior approval by the Insurance Department of
the State of New York based on its review of the Company's financial
condition.
The Company prepares its statutory-basis financial statements in accordance
with accounting practices prescribed or permitted by its state of domicile.
"Prescribed" statutory accounting practices include state laws, regulations
and general administrative rules, as well as a variety of publications of
the National Association of Insurance Commissioners (NAIC). "Permitted"
statutory accounting practices encompass all accounting practices that are
not prescribed; such practices may differ from state to state, from company
to company within the state, and may change in the future. The NAIC is
currently in the process of codifying statutory accounting practices, the
result of which is expected to constitute the only source of "prescribed"
statutory accounting practices. Accordingly, that project, which is
expected to be completed in 1996, will likely change, to some extent,
prescribed statutory accounting practices, and may result in changes to the
accounting practices that insurance companies use to prepare their
statutory-basis financial statements.
Effective in 1994, the Company is required to identify those significant
accounting practices that are permitted and obtain written approval of the
practice from the Insurance Department of the State of New York. As of
December 31, 1994, the Company had no such significant permitted accounting
practices.
8. Regulatory Risk-Based Capital
The NAIC has developed a risk-based capital program that would replace
minimum capital and surplus requirements with dynamic surplus requirements
based on formulas similar to target surplus formulas used by commercial
rating agencies. The formulas specify various weighting factors that are
applied to financial balances or various levels of activity based on the
perceived degree of risk.
Regulatory compliance is determined by a ratio of the enterprise's
regulatory total adjusted capital to its authorized control level
risk-based capital, both as defined in the NAIC Life Risk-Based Capital
Report Instructions dated November 15, 1993. Enterprises below specific
trigger points or ratios are classified within certain levels and may be
subjected to corrective action. The levels and ratios are as follows:
Ratio of Total Adjusted Capital to
Authorized Control Level Risk-Based Capital
Level (less than or equal to)
________________________________________________________________________
Company Action Level 2 or 2.5 with negative trends, as defined
Regulatory Action Level 1.5 or unsatisfactory comprehensive plan
Authorized Control Level 1
Mandatory Control Level 0.7
The NAIC established a number of corrective actions for each risk-based
capital level. Enterprises that are in the "company action level" are
required to submit a detailed comprehensive financial plan to the state
insurance department. In the "regulatory action level," in addition to
submitting the comprehensive financial plan, an enterprise may be subjected
to a detailed regulatory investigation. The state insurance department is
permitted but not required to place the life insurance enterprise under
regulatory control when it falls to the "authorized control level";
regulatory control is required at the "mandatory control level."
At December 31, 1994, the Company had regulatory total adjusted capital of
$11,214,000 and authorized control level risk-based capital of $66,000.
9. Commitments and Contingent Liabilities
The Company is a party to pending or threatened lawsuits arising from the
normal conduct of its business. Due to the climate in insurance and
business litigation, suits against the Company sometimes include
substantial additional claims for consequential damages, punitive damages
and other similar types of relief. While it is not possible to forecast
the outcome of such litigation, it is the opinion of management that the
disposition of such lawsuits will not have a materially adverse effect on
the Company's financial position or interfere with its operations.
10. Financing Arrangements
The Company is the beneficiary of two separate renewable letters of credit
for $12,077,000 and $250,000. These letters of credit were established in
accordance with the terms of certain reinsurance agreements. These letters
of credit expired on December 31, 1994 and were renewed in 1995. The
letters of credit were unused during 1994 and 1993.
11. Related Party Transactions
Beginning in 1993, the Company obtained administrative, investment and
other operating services from its parent. Amounts expensed for these
services were $362,000 and $66,000 during 1994 and 1993, respectively.
In 1994, the Company entered into a reinsurance contract with its parent to
assume the reserves on a block of whole life insurance policies. The
initial premium to be received and reserves assumed were $80,000. The net
reinsurance receivable at December 31, 1994 was $80,000.
Financial Statements_Statutory Basis
The Urbaine Life Reinsurance Company
Years ended December 31, 1993 and 1992
with Report of Independent Auditors
The Urbaine Life Reinsurance Company
Financial Statements_Statutory Basis
Years ended December 31, 1993 and 1992
Contents
Report of Independent Auditors........................................... 1
Audited Financial Statements_Statutory Basis
Balance Sheets_Statutory Basis ...........................................2
Statements of Operations_Statutory Basis .................................4
Statements of Changes in Capital and Surplus_Statutory Basis .............5
Statements of Cash Flows_Statutory Basis .................................6
Notes to Statutory-Basis Financial Statements ............................7
Report of Independent Auditors
Board of Directors and Stockholder
The Urbaine Life Reinsurance Company
We have audited the accompanying statutory-basis balance sheet of The Urbaine
Life Reinsurance Company (a wholly-owned subsidiary of Security Life of Denver
Insurance Company) as of December 31, 1993, and the related statutory-basis
statements of operations, changes in capital and surplus, and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit. The financial statements of The
Urbaine Life Reinsurance Company for the year ended December 31, 1992, were
audited by other auditors whose report dated March 1, 1993, expressed an
adverse opinion on those financial statements as to their presentation in
conformity with generally accepted accounting principles and expressed an
unqualified opinion on those financial statements as to their presentation in
conformity with accounting practices prescribed or permitted by the Insurance
Department of the State of New York.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The Company presents its financial statements in conformity with accounting
practices prescribed or permitted by the Insurance Department of the State of
New York. The variances between such practices and generally accepted
accounting principles and the effects on the accompanying financial statements
at December 31, 1993 and for the year then ended are not material.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Urbaine Life Reinsurance
Company at December 31, 1993, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
practices.
Also, in our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Urbaine Life Reinsurance
Company at December 31, 1993, and the results of its operations and its cash
flows for the year then ended in conformity with accounting practices prescribed
or permitted by the Insurance Department of the State of New York.
ERNST & YOUNG LLP
February 28, 1994
The Urbaine Life Reinsurance Company
Balance Sheets_Statutory Basis
December 31
1993 1992
____________________________
(In Thousands)
Admitted assets
Cash and investments (Note 3):
Bonds $10,158 $ 967
Short-term investments 1,198 16,869
Cash 186 685
_______________________
Total cash and investments 11,542 18,521
Accrued investment income 198 48
Reinsurance balances receivable 156 -
Other admitted assets - 508
Modified coinsurance reserve adjustment - 387
_______________________
Total admitted assets $11,896 $19,464
=======================
December 31
1993 1992
______________________
(In Thousands)
Liabilities and capital and surplus
Liabilities:
Policy and contract liabilities:
Life reserves (Note 4) $ - $ 4,933
Policyholders' funds 138 197
Unpaid claims 4 572
________________________
Total policy and contract liabilities 142 5,702
Accounts payable and accrued expenses 71 297
Reinsurance balances - 3,270
Indebtedness to related parties 42 -
Federal income taxes payable 43 100
Asset valuation reserve (Note 2) 1 2
Interest maintenance reserve (Note 2) - 15
Other liabilities 274 147
_______________________
Total liabilities 573 9,533
Commitments and contingent liabilities (Note 7)
Capital and surplus (Note 6):
Common stock, $110 par value:
Authorized - 10,000 shares
Issued and outstanding - 10,000 shares 1,100 1,100
Additional paid-in capital 14,330 12,330
Unassigned surplus (4,107) (3,499)
_______________________
Total capital and surplus 11,323 9,931
_______________________
Total liabilities and capital and surplus $11,896 $19,464
=======================
See accompanying notes.
The Urbaine Life Reinsurance Company
Statements of Operations - Statutory Basis
Year ended December 31
1993 1992
________________________
(In Thousands)
Premiums and other revenues:
Life premiums (Note 4) $1,339 $5,973
Net investment income (Note 3) 317 484
Amortization of interest maintenance
reserve 12 27
Commission and expense allowance on
reinsurance ceded 1,164 (1)
Miscellaneous income (10) -
__________________________
Total premiums and other revenues 2,822 6,483
Benefits paid or provided:
Death benefits 1,603 3,452
Surrender benefits 7 283
Accident and health benefits (26) 76
Increase in life reserves 112 57
__________________________
Total benefits paid or provided 1,696 3,868
Insurance expenses:
Commissions 837 1,468
General expenses (Note 8) 479 552
Insurance taxes 129 182
_________________________
Total insurance expenses 1,445 2,202
_________________________
Gain (loss) from operations before
income taxes and net realized capital
gains (Losses) (319) 413
Federal income taxes (Note 5) 291 128
________________________
Gain (loss) from operations before net
realized capital gains (losses) (610) 285
Net realized capital gains (losses), net
of income taxes (1993-($15); 1992-$-0-)
and excluding net transfers to interest
maintenance reserves (1993-($21);
1992-$42) (Notes 3 and 5) (7) 42
___________________________
Net income (loss) $ (617) $ 327
===========================
See accompanying notes.
The Urbaine Life Reinsurance Company
Statements of Changes in Capital and Surplus_Statutory-Basis
Year ended December 31
1993 1992
______________________
(In Thousands)
Capital and surplus at beginning
of year $ 9,931 $ 9,588
Net income (loss) (617) 327
Decrease in nonadmitted assets 8 16
Decrease in asset valuation reserve 1 -
Capital contribution 2,000 -
_________________________
Capital and surplus at end of year $11,323 $9,931
=========================
See accompanying notes.
The Urbaine Life Reinsurance Company
Statements of Cash Flows_Statutory-Basis
Year ended December 31
1993 1992
_________________________
(In Thousands)
Operating activities
Premiums, policy proceeds, and other
considerations received $ 1,784 $ 5,772
Net investment income received 365 709
Commission and expense allowances on
reinsurance ceded 1,157 35
Benefits paid (2,153) (4,358)
Insurance expenses paid (1,908) (2,729)
Federal income taxes paid (303) (7)
Other, net (7,847) -
___________________________
Net cash used in operating activities (8,905) (578)
Investing activities
Sale, maturity, or repayment of
investments 2,760 2,580
Purchase of investments (12,025) -
__________________________
Net cash (used in) provided by
investing activities (9,265) 2,580
Financing activities
Contribution to additional paid-in-capital 2,000 -
__________________________
Net cash provided by financing activities 2,000 -
__________________________
Net (decrease) increase in cash and
short-term investments (16,170) 2,002
Cash and short-term investments at
beginning of year 17,554 15,552
___________________________
Cash and short-term investments at
end of year $ 1,384 $ 17,554
===========================
See accompanying notes.
<PAGE>
The Urbaine Life Reinsurance Company
Notes to Statutory-Basis Financial Statements
December 31, 1993
1. Accounting Policies
Organization
The Urbaine Life Reinsurance Company (the "Company") is domiciled in New York.
The Company was formerly a wholly-owned subsidiary of L'Union des Assurance de
Paris (L'UAP). Effective March 31, 1993, the Company was sold to Security Life
of Denver Insurance Company ("Security Life") for a total cash consideration of
$9,563,001. During 1993, Security Life made a capital contribution to the
Company in the amount of $2,000,000. Security Life is ultimately owned by
Internationale-Nederlanden Groep N.V. of the Netherlands. The Company's
principal business is to assume life, credit life, and credit accident and
health reinsurance ceded by other companies.
Basis of Presentation
The accompanying financial statements of the Company have been prepared in
conformity with accounting practices prescribed or permitted ("statutory
accounting practices") by the Insurance Department of the State of New York.
Such practices vary from generally accepted accounting principles ("GAAP"); the
more significant variances from GAAP are as follows:
Investments
Realized gains and losses on investments are reported in income net of tax
rather than on a pre-tax basis.
Benefit Reserves
Life policy and contract reserves under GAAP and statutory accounting
practices are calculated based upon both the net level premium and
Commissioners' Reserve Valuation methods using statutory rates for
mortality and interest.
Premiums
Under statutory accounting practices, premiums are recognized as revenue
when due. For GAAP purposes, premiums for traditional life insurance
products, which include those products with fixed and guaranteed premiums
and benefits and consist principally of whole life insurance policies, are
recognized as revenue when due. Revenue for universal life insurance
policies and for investment products consists of policy charges for the
cost of insurance, policy administration charges, and surrender charges
assessed against policyholder account balances during the year.
Valuation Allowances
The Asset Valuation Reserve is determined by National Association of
Insurance Commissioners ("NAIC") prescribed formulas and reported as a
liability rather than as a valuation allowance or appropriation of
surplus. Beginning in 1992, under a formula prescribed by the NAIC, the
Company defers the portion of realized gains and losses on sales of fixed
income investments, principally bonds, attributable to changes in the
general level of interest rates and amortizes those deferrals over the
remaining period to maturity based on groupings of individual securities
sold in five-year bands. The net deferral is reported as the "interest
maintenance reserve" in the accompanying balance sheets.
Nonadmitted Assets
Certain assets designated as "nonadmitted," principally prepaid expenses
and deposits and furniture and equipment, are excluded from the balance
sheet and are charged directly to unassigned surplus.
Income Taxes
Deferred income taxes are not provided for differences between financial
reporting and taxable income.
Stockholder's equity, determined in accordance with GAAP, was $11,474,000 and
$9,987,000 at December 31, 1993 and 1992, respectively. Net income, determined
in accordance with GAAP, was $267,000 and $301,000 for the years ended December
31, 1993 and 1992, respectively.
Other significant accounting practices are as follows:
Investments
Bonds and short-term investments are stated at values prescribed by the NAIC,
as follows:
Bonds are reported at cost, adjusted for amortization of premium or
discount. Discount or premium on bonds is amortized using the interest
method.
Short-term investments are reported at cost, which approximates market
value. Short-term investments include investments with maturities of less
than one year at the date of acquisition.
Realized investment gains and losses are determined using the specific
identification basis.
Fair Value of Financial Instruments
The following methods and assumptions were used by the Company in estimating the
"fair value" disclosures for financial instruments:
Bonds: The fair values for bonds are based on quoted market prices, where
available. For bonds not actively traded, fair values are estimated using
values obtained from independent pricing services.
Cash and short-term investments: The carrying amounts reported in the
balance sheet for these financial instruments approximate their fair
values.
The carrying value of other assets, including accrued investment income,
reinsurance balances receivable and other admitted assets and the carrying value
of policy and contract liabilities, approximate their fair value.
Aggregate Reserve for Life Policies and Contracts
Life and accident and health reserves are developed by actuarial methods and are
determined based on published tables using statutorily specified interest rates
and valuation methods that will provide, in the aggregate, reserves that are
greater than or equal to the minimum or guaranteed policy cash value or the
amounts required by law. Interest rates range from 3% to 6%.
Reinsurance
Reinsurance premiums, commissions, expense reimbursements, and reserves related
to reinsured business are accounted for on bases consistent with those used in
accounting for the original policies issued and the terms of the reinsurance
contracts. Premiums ceded to other companies have been reported as a reduction
of premium revenue. Amounts applicable to reinsurance ceded for reserves and
unpaid claim liabilities have been reported as reductions of these items, and
expense allowances received in connection with reinsurance ceded have been
reflected in operations.
Nonadmitted Assets
Nonadmitted assets are summarized as follows:
December 31
1993 1992
____________________
(In Thousands)
Interest maintenance reserve $17 $ -
Rent deposit 13 13
Furniture and equipment - 10
Other - 15
____________________
$30 $38
====================
Benefits Expenses
Benefits expenses represent the estimated ultimate net cost of all reported and
unreported claims incurred through December 31. Such estimates are based on
actual projections applied to historical claim payment data. Such liabilities
are reasonable and adequate to discharge the Company's obligations for claims
incurred but unpaid as of December 31.
Reclassifications
Certain amounts in the 1992 financial statements have been reclassified to
conform to the 1993 presentation.
2. Asset Valuation Reserve and Interest Maintenance Reserve
As prescribed by the NAIC, the Asset Valuation Reserve ("AVR") is computed in
accordance with prescribed formulas and represents a provision for possible
fluctuations in the value of bonds, equity securities, mortgage loans, real
estate, and other invested assets. Changes to the AVR are charged or credited
directly to unassigned surplus.
As also prescribed by the NAIC, the Company reported an Interest Maintenance
Reserve ("IMR") that represents the net accumulated unamortized realized capital
gains and losses attributable to changes in the general level of interest rates
on sales of fixed income investments, principally bonds. Such gains or losses
are initially deferred and then amortized into income on a straight-line basis
over the remaining period to maturity based on groupings of individual
securities sold in five-year bands.
3. Investments
The amortized cost and estimated market value of investments in bonds are as
follows:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
________________________________________
(In Thousands)
At December 31, 1993:
U.S. Treasury securities
and obligations of U.S.
government corporations
and agencies $ 6,791 $21 $- $6,812
Corporate securities 3,367 7 - 3,374
_________________________________________
$10,158 $28 $- $10,186
=========================================
At December 31, 1992:
U.S. Treasury securities
and obligations of U.S.
government corporations
and agencies $ 857 $88 $- $ 945
Corporate securities 110 - - 110
________________________________________
$ 967 $88 $- $1,055
========================================
At December 31, 1993, the Company held no less-than-investment grade corporate
bonds.
The amortized cost and fair value of investments in bonds at December 31, 1993,
by contractual maturity, are shown in the following table. Expected maturities
may differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.
Amortized Fair
Cost Value
______________________
(In Thousands)
Maturity:
In 1999-2003 $ 2,028 $ 2,033
After 2003 8,130 8,153
_______________________
$10,158 $10,186
=======================
At December 31, 1993, investments in certificates of deposit and bonds, with an
admitted asset value of $967,000, were on deposit with state insurance
departments to satisfy regulatory requirements.
Proceeds from sales of investments in bonds were $2,760,000 and $2,580,000 in
1993 and 1992, respectively. Gross gains of $-0- and $84 and gross losses of
$43 and $-0- were realized on those sales. Net capital gains (losses) before
tax and IMR transfers were ($43) and $84 in 1993 and 1992, respectively.
Major categories of investment income are summarized as follows:
Year ended December 31
1993 1992
_______________________
(In Thousands)
Bonds $192 $ 95
Short-term investments 315 512
Other 11 21
_______________________
518 628
Investment expenses (201) (144)
_______________________
Net investment income $317 $484
=======================
4. Reinsurance
The Company is involved in both ceded and assumed reinsurance with other
companies. Risks are reinsured with other companies to permit the recovery of
a portion of the direct losses. Policy liabilities and accruals, including
incurred but not reported claims, are reported in the accompanying financial
statements net of reinsurance ceded. The Company remains contingently liable
in the event that the reinsuring companies do not meet their obligations under
these reinsurance contracts.
The aggregate reserves for life and accident and health policies and contracts
were reduced by $8,988,000 and $3,730,000 at December 31, 1993 and 1992,
respectively, for estimated recoveries under reinsurance treaties. Premiums
ceded under these agreements were $6,158,000 and $3,352,000 for 1993 and 1992,
respectively. Reinsurance ceded has reduced benefits paid or provided by
$5,088,000 and $3,439,000 in 1993 and 1992, respectively.
5. Federal Income Taxes
Federal income tax expense (benefit) consists of the following:
1993 1992
______________________
(In Thousands)
Current:
Operations $291 $128
Capital gains (15) -
_______________________
Federal income tax expense $276 $128
=======================
Income before income taxes differs from taxable income principally due to policy
acquisition costs, and differences in policy and contract liabilities and due
and deferred premiums for tax and financial reporting purposes.
The Company paid $303,000 and $7,000 for 1993 and 1992, respectively, for
current income tax payments and settlements under the tax-sharing agreement
(described above).
6. Capital and Surplus
Under State of New York insurance regulations, the Company is required to
maintain minimum capital of $1,000,000 and minimum surplus of 50% of capital.
Additionally, the amount of dividends which can be declared or distributed by
the Company to its stockholder in any 12-month period is limited to the lesser
of 10% of statutory surplus or the cumulative excess of net investment income
over dividends declared or distributed during the preceding 3-year period.
7. Commitments and Contingencies
The Company is a party to pending or threatened lawsuits arising from the normal
conduct of its business. Due to the climate in insurance and business
litigation, suits against the Company sometimes include substantial additional
claims for consequential damages, punitive damages and other similar types of
relief. While it is not possible to forecast the outcome of such litigation,
it is the opinion of management that the disposition of such lawsuits will not
have a materially adverse effect on the Company's financial position or
interfere with its operations.
8. Related Party Transactions
Beginning in 1993, the Company obtained administrative, investment and other
operating services from an affiliate. Amounts expensed for these services were
$66,000 during 1993.
9. Recent Statutory Accounting Requirements
During 1992, the NAIC approved certain Risk-Based Capital ("RBC") requirements
for life/health insurance companies. Those requirements are effective in 1993
and require that the amount of capital maintained by an insurance company is to
be determined based on the various risk factors related to it. At December 31,
1993, the Company meets the RBC requirements.
10. Financing Arrangements
The Company is the beneficiary of two separate renewable letters of credit for
$10,800,000 and $350,000, respectively. These letters of credit were
established in accordance with the terms of certain reinsurance agreements.
These letters of credit expired on December 31, 1993. Both letters of credit
were unused during 1993.
THE URBAINE LIFE
REINSURANCE COMPANY
Statutory Financial Statements
December 31, 1992
(With Independent Auditors' Report thereon)
Independent Auditors' Report
The Board of Directors
The Urbaine Life Reinsurance Company:
We have audited the accompanying statutory statement of admitted
assets, liabilities, and surplus of The Urbaine Life Reinsurance
Company (now known as First ING Life Insurance Company of New
York) as of December 31, 1992 and the related statutory
statements of operations and surplus, and cash flow for the year
then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
As described in note 1, the accompanying financial statements
have been prepared in conformity with accounting practices
prescribed or permitted by the Insurance Department of the State
of New York. These practices differ in some respects from
generally accepted accounting principles. Accordingly, the
financial statements referred to above are not intended to
present, and in our opinion do not present fairly, the financial
position, results of operation and cash flow in conformity with
generally accepted accounting principles.
Also, in our opinion, the financial statements referred to above
present fairly, in all material respects, the admitted assets,
liabilities, and surplus of The Urbaine Life Reinsurance Company
as of December 31, 1992 and the results of its operations and its
cash flow for the year then ended, on the basis of accounting
described in note 1.
KPMG PEAT MARWICK LLP
March 1, 1993
THE URBAINE LIFE
REINSURANCE COMPANY
Statutory Statement of Admitted Assets,
Liabilities and Surplus
December 31, 1992
Admitted Assets 1992
Investments (notes 1 and 2):
Bonds $966,768
Short-term investments 16,868,926
Cash 685,285
Interest due and accrued 48,511
Due and unpaid premiums 479,805
Modified coinsurance reserve adjustment 386,923
Federal income taxes recoverable 28,388
__________
Total admitted assets $ 19,464,606
__________
Liabilities and Surplus
Policy reserves (notes 1, 3, and 5) 4,933,446
Policy claims (note 5) 572,347
Commissions payable 145,546
Federal income taxes payable 100,019
Net funds held under reinsurance treaties
with an affiliated company (note 3) 3,270,380
Mandatory securities valuation reserve -
Asset valuation reserve 2,200
Interest maintenance reserve 15,485
Other 492,828
___________
Total liabilities 9,533,251
___________
Surplus:
Capital Stock, $110 par value;
10,000 shares authorized, issued and
outstanding 1,100,000
Paid-in and contributed surplus 12,329,976
Accumulated deficit (3,498,621)
___________
Total surplus 9,931,355
___________
Total liabilities and surplus $ 19,464,606
___________
See accompanying notes to statutory financial statements.
THE URBAINE LIFE
REINSURANCE COMPANY
Statutory Statement of Operations And Surplus
Year ended December 31, 1992
1992
Premiums and annuity considerations
(notes 3 and 5) $ 5,973,116
Investment income (net of $143,794
of expenses) 483,820
Commission income (expense) (notes 3 and 5) (403)
Amortization of interest maintenance reserve 26,823
___________
Total income 6,483,356
___________
Death and other benefits (notes 3 and 5) 3,528,364
Change in policy reserves (notes 3 and 5) 56,639
General insurance expenses and commissions 2,871,856
Modified coinsurance reserve adjustments (386,923)
___________
Total benefits and other deductions 6,069,936
___________
Net operating income (loss) before
realized capital gains and
Federal income taxes 413,420
Net realized capital gains (excluding
$42,308 transfered to the IMR) 42,308
___________
Income (loss) before Federal
income taxes 455,728
Federal income taxes 128,388
___________
Net income (loss) 327,340
Other surplus additions (deductions):
Change in mandatory securities valuation
reserve/asset valuation reserve -
Change in non-admitted assets 15,789
Surplus, beginning of year 9,588,226
___________
Surplus, end of year $ 9,931,355
___________
See accompanying notes to statutory financial statements.
THE URBAINE LIFE
REINSURANCE COMPANY
Statutory Statement of Cash Flow
Year ended December 31, 1992
1992
Premiums collected net of reinsurance $ 5,700,610
Allowance received on reinsurance ceded 34,821
Death and other benefits paid (4,075,547)
General insurance expenses and commissions paid (2,648,787)
Modified coinsurance settlements 182,682
Other operating expenses paid and change in funds held (473,946)
Net investment income received 709,102
Federal income taxes paid (7,113)
Net cash used in operations (578,088)
Proceeds from investments sold, matured or repaid 2,580,125
Other sources, net -
Total cash provided 2,002,037
Cost of investment acquired -
Net change in cash and
short-term investment 2,002,037
Cash and short-term investments,
beginning of year 15,552,174
Cash and short-term investments,
end of year $ 17,554,211
See accompanying notes to statutory financial statements.
THE URBAINE LIFE
REINSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1992
(1) Summary of Significant Accounting Policies
(a) General
The Urbaine Life Reinsurance Company (the Company) is
wholly-owned by L'Union des Assurance de Paris (L'UAP).
The Company's principal business is to write life, credit
life, and credit accident and health reinsurance ceded by
other companies.
(b) Basis of Presentation
The accompanying financial statements have been prepared
in conformity with accounting practices prescribed or
permitted by the Insurance Department of the State of New
York which practices vary from generally accepted
accounting principles in the following respects:
. Costs of acquiring new business are charged to income
as incurred; under generally accepted accounting
principles, such costs are deferred and amortized over
the premium-paying period of the related policies.
. Certain assets designated as "non-admitted" assets are
charged to surplus; under generally accepted accounting
principles such assets are carried in the balance sheet
with appropriate valuation allowances.
. An asset valuation reserve has been established for the
purpose of stabilizing the surplus of the Company
against fluctuations in the value of security
investments and is recorded through a direct charge to
surplus; under generally accepted accounting
principles, such a reserve is not established.
. The interest maintenance reserve has been established
for the purpose of stabilizing the surplus of the
Company against fluctuations in the interest rates of
securities and is recorded as a liability with the
amortization recorded as a component of net investment
income; under generally accepted accounting principles,
such a reserve is not established.
. Taxes are provided on the basis of current taxable
income. Under generally accepted accounting
principles, a provision is made for deferred Federal
income taxes relating to timing differences between
financial reporting and taxable income.
. Policy reserves for life insurance are computed
primarily by using net level premium methods based
upon statutory mortality requirements and interest
assumptions ranging from 3 percent to 6 percent.
Under generally accepted accounting principles, such
reserves are computed by the net level premium method
based on anticipated investment yields, mortality and
withdrawals.
The effects of such variances have not been determined.
(c) Investments
Investments are valued in accordance with the valuation
procedures of the National Association of Insurance
Commissioners (NAIC). Bonds are carried at amortized
cost and short-term investments are carried at cost which
approximates market value. Realized gains and losses on
dispositions are computed by the specific identification
method and included in either the interest maintenance
reserve or net income.
Effective December 31, 1992, the NAIC replaced the
Mandatory Securities Valuation Reserve (MSVR) with the
Asset Valuation Reserve (AVR) and the Interest
Maintenance Reserve (IMR). This was done to stabilize
unassigned surplus against credit and interest
fluctuations, respectively. The AVR and IMR are recorded
as liabilities, with the change in the AVR recorded
directly to unassigned surplus, and the amortization of
the IMR recorded as a component of net investment income.
(2) Investments
The NAIC provides insurers with a source of uniform prices
and quality ratings for their securities holdings. These
prices and ratings are intended only for promoting uniformity
among insurance companies and are not necessarily indicative
of the price at which a security may be bought or sold.
The amortized cost and NAIC market value, which approximates
actual market value, of investments in bonds at December 31,
1992 are as follows:
<TABLE>
<CAPTION>
1992
Gross Gross NAIC
Amortized unrealized unrealized market
cost losses gains value
<S> <C> <C> <C> <C>
U.S. Treasury Securities
and obligations of U.S.
government corporations and
agencies $856,768 - 88,232 945,000
Corporate debt securities 110,000 - - 110,000
Totals $966,768 - 88,232 l,055,000
</TABLE>
The amortized cost and NAIC market value of bonds at December 31,
1992 by contractual maturity, are shown below. Expected maturities
will differ from contractual maturities because borrowers may have
the right to call or prepay obligations with or without call
or prepayment penalties.
Amortized NAIC
cost market value
Due in one year or less $100,008 105,000
Due after one year through five years 866,760 950,000
$966,768 1,055,000
Proceeds from sales of investments in bonds during 1992 were
$2,580,125. Gross gains of $84,616 were realized on those sales.
At December 31, 1992, bonds carried at approximately $966,768
were deposited with state regulatory authorities as required
by law.
(3) Related Party Transactions
For the year ended December 31, 1992, the Company reimbursed
SCOR U.S. Corporation expenses of approximately $18,417 for
services provided in accordance with the terms of a service
agreement. The Company also reimbursed SCOR U.S. Corporation
$126,946 in accordance with a data processing agreement.
The Company and Scor Vie, an affiliate of the Company's
former parent, participate in certain reinsurance agreements.
Under the terms of the agreements, the Company has assumed no
business and has ceded the following business:
1992
Premiums and annuity considerations $ 2,907,000
Death and other benefits 2,105,000
Decrease in policy reserves (157,000)
Commission income 46,000
$ 913,000
Policy reserves $ 2,480,000
The net balance due Scor Vie under these agreements was
approximately $551,000 at December 31, 1992.
In accordance with the reinsurance agreement with Scor Vie,
the Company also has a funds held liability due to Scor Vie
of $3,270,380 as of December 31, 1992.
(4) Federal Income Taxes
Under the Tax Reform Act of 1986 (the Act), the Company
computes its U.S. Federal income tax provision at 34 percent
of income, less certain life insurance company special
deductions. In addition, the Act requires life insurance
companies to recalculate policy reserves using prescribed
assumptions for tax purposes.
(5) Reinsurance Ceded
In the ordinary course of business, the Company reinsures
certain risks with other insurance companies. Such
arrangements serve to limit the Company's maximum loss.
There is a contingent liability relating to such reinsurance
which would become the Company's ultimate liability in the
event that the reinsuring companies become unable to meet
their obligations to the Company under the terms of the
reinsurance agreements.
At December 31, 1992, the Company had letters of credit
outstanding aggregating approximately $437,000 in favor of
certain insurance companies under terms of reinsurance
agreements.
Amounts deducted for reinsurance ceded to other companies,
including the cessions to Scor Vie as described in note 3,
were as follows:
1992
Premiums and annuity considerations $ 3,352,000
Commission income (expense) (400)
Death and other benefits 2,742,000
Decrease in policy reserves (741,000)
Policy reserves 3,879,000
Policy claims 697,000
(6) Simplified Employee Pension Plan
The Company has adopted a Simplified Employee Pension Plan
for the benefit of active employees. Individuals are
eligible upon attaining age 21 at the end of the calendar
year. Each year the Company will make a contribution of a
flat percentage of compensation to each employee's Individual
Retirement Account. This percentage was 5% at December 31,
1992 and the total expense to the Company was $13,823.
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements included in Part B:
First ING Life Insurance Company of New York.
Report of Independent Accountants.
(b) Exhibits:
The following exhibits are filed herewith:
1. Resolutions of the Executive Committee of the Board
of Directors of First ING Life Insurance Company of
New York ("First ING Life") authorizing the
establishment of the Registrant.
2. Not applicable.
3. (a) Form of First ING Life Insurance Company of
New York
Distribution Agreement.
(b) Specimen Broker-Dealer Supervisory and Selling
Agreement for Variable Contracts.
4. (a) Form of Variable Annuity Contract.
(b) Form of Variable Annuity Certificate.
(c) Form of Suppplementary Variable Annuity
Contract.
5. (a) Form of Contract Application.
(b) Form of Fulcrum Fund Certificate Application.
6. (a) Articles of Amendment to the Articles of
Incorporation, dated March 7, 1994.
Incorporated herein by reference to the Form
N-4 Registration Statement of First ING Life
and its Separate Account A1, filed with the
Commission on August 16, 1994 (File Nos. 33-
82890 and 811-8700).
(b) Articles of Amendment to the Articles of
Incorporation, dated
May 21, 1993. Incorporated herein by reference
to the Form N-4 Registration Statement of
First ING Life and its Separate Account A1,
filed with the Commission on August 16, 1994
(File Nos. 33-82890 and 811-8700).
(c) Articles of Amendment to the Articles of
Incorporation, dated
June 21, 1977. Incorporated herein by
reference to the Form N-4 Registration
Statement of First ING Life and its Separate
Account A1, filed with the Commission on
August 16, 1994 (File Nos. 33-82890 and 811-
8700).
(d) Articles of Incorporation, dated February 7,
1973. Incorporated herein by reference to the
Form N-4 Registration Statement of First ING
Life and its Separate Account A1, filed with
the Commission on August 16, 1994 (File Nos.
33-82890 and 811-8700).
(e) First ING Life By-Laws.
7. Not Applicable.
8. (a) Form of Participation Agreement.
(b) Form of Administration Services Agreement
between Security Life of Denver Insurance
Company and Financial Administrative Services
Corporation.
9. Opinion and consent of Eugene L. Copeland as to the
legality of the securities being registered.
10. (a) Consent of Independent Auditors.
(b) Consent of Mayer, Brown & Platt.
11. None.
12. None.
13. (a) Power of Attorney for Robert J. St. Jacques
(b) Powers of Attorney. Incorporated herein by
reference to the Form N-4 Registration Statement of
First ING Life and its Separate Account A1, filed
with the Commission on August 16, 1994 (File Nos.
33-82890 and 811-8700).
Item 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
Set forth below is information regarding the directors and principal
officers of First ING Life Insurance Company of New York. First ING's
address, and the business address of each person named, except as otherwise
noted, is Security Life Center, 1290 Broadway, Denver, Colorado 80203-5699
Name and Principal Position and Offices
Business and Address with First ING
____________________ ____________________
R. Glenn Hilliard Chairman
Internationale Nederlanden
US Insurance Holdings, Inc.
5780 Powers Ferry Rd. NW
Atlanta, GA 30327-4390
Robert J. St. Jacques Vice-Chairman and Chief Executive
Internationale Nederlanden Officer
US Insurance Holdings, Inc.
5780 Powers Ferry Rd. NW
Atlanta, GA 30327-4390
Evelyn A. Bentz Director
Wayne D. Bidelman Director
Keith T. Glover Director and Executive Vice-
President- Operations
Thomas F. Conroy Director and Executive Vice President
- Reinsurance & Institutional Markets
Eugene L. Copeland Director and Senior Vice President,
General Counsel, and Corporate
Secretary
Fred A. Deering Director
Weaver H. Gaines Director
528 Bayberry
Ocean Beach, NY 11770
Kevin Ahern Director and Second Vice-President
-Sr. Portfolio Manager
William S. Lutter Director and Vice President -
First ING Life Insurance Company Administration
of New York
225 Broadway, Suite 1901
New York, NY 10007
Roger D. Roenfeldt Director
President and CEO
R. E. Lee Group Insurance
One Penn Plaza, Suite 2407
New York, NY 11021
Stephen K. West Director
Senior Partner
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
Stephen M. Christopher President and Chief
Operations Officer
Jeffery W. Seel Senior Vice President - Chief
Investment Officer
Gregory A. Boyko Senior Vice President - Finance,
Controller/Chief Accounting Officer
Jess A. Skriletz Second Vice President - Portfolio and
GIC Manager
T. Kirby Brown Second Vice-President - Senior
Portfolio Manager
John G. Grant Second Vice-President - Senior
Portfolio Manager
John H. Kerper Second Vice-President - Actuary
Lyndon E. Oliver Treasurer
Jerry Strop Finance Officer
Amy L. Winsor Finance and Tax Officer
Cheryl A. Wilson Assistant Treasurer
Irene M. Colorosa Assistant Secretary
Item 26. Persons Controlled by or Under Common Control with
First ING Life Insurance Company of New York or
Registrant
First ING Life Insurance Company of New York, the depositor
of First ING of New York Separate Account A1, is an indirect
wholly-owned subsidiary of Internationale-Nederlanden Groep, N.W.
("ING"). ING is a holding company made up of two sub-holding
companies, Internationale Nederlanden Verzekeringen N.V. ("ING
Insurance") and Internationale Nederlanden Bank N.V. ("ING
Bank"). The ING Address is:
Post Office Box 810
1000 AV Amsterdam
The Netherlands
The voting shares of ING are registered in the name of a
Trustee, which under a trust agreement with ING has issued
against these shares not-voting bearer depository receipts which
are listed on the stock exchanges of Amsterdam, Antwerp, Basel,
Brussels, Frankfurt, Geneva, Paris and Zurich. This kind of
trust arrangement is not uncommon among public companies in the
Netherlands and the ING Trustee's principal business is the
administration of such trust arrangements with respect to the
shares of ING and the shares of other Dutch corporations. The
bearer depository receipts can be exchanged for voting shares on
an extremely limited basis under which no one share holder may
ever hold more than 1% of any class of voting shares.
Although trustees formally have and exercise voting rights,
these rights are limited. For example, trustees do not have the
right to elect directors. Also, it is the general policy of the
Netherlands that these trustees follow the recommendations of the
Boards of Directors and the management of corporations and will
not exercise voting rights to influence the operations of these
corporations in the normal course of events.
ING Insurance is one of the largest insurance operations in
the world. More than half of its total consolidated premium
income is derived from life insurance underwriting, ING
Insurance also participates in underwriting fire, marine and
aviation, motor vehicle, accident and sickness insurance, and
professional reinsurance. ING Insurance subsidiaries are engaged
in the insurance underwriting business in Europe, North America,
Latin America, Australia, the Caribbean and Asia.
Although First ING Life Insurance Company of New York's
ultimate parent company is ING, one hundred percent of the issued
and outstanding stock is owned directly by Security Life of
Denver Insurance Company ("SLD"), an insurance company
incorporated in the state of Colorado. SLD is wholly-owned by
Internationale Nederlanden US Insurance Holdings, Inc. ("ING US
Holdings"), a holding company incorporated in the state of
Delaware. ING US Holdings is wholly-owned by Nationale-
Nederlanden International B.V., which is in turn wholly-owned by
ING Insurance. SLD's subsidiary organizations are composed of
the following:
a) Wilderness Associates, a Colorado partnership in which SLD
is a 49% partner.
b) Camvest Co. No. 3, a wholly-owned Colorado subsidiary
corporation.
c) United Protective Company, a wholly-owned Colorado
subsidiary corporation.
d) First Secured Mortgage Deposit Corp., a wholly-owned
Colorado subsidiary corporation.
e) Midwestern United Life Insurance Company, a wholly-owned
Indiana subsidiary corporation.
f) ING America Equities, Inc., a wholly-owned Colorado
subsidiary corporation.
The organizational chart that shows the USA branch of ING as of
February 10, 1995 is hereby incorporated by reference to the Form
N-4 Registration Statement filed by Security Life of Denver and
its Separate Account A1, on April 28, 1995 (File Nos.: 33-78444
and 811-8196).
The list showing ING world-wide holdings as of December, 1993 is hereby
incorporated by reference to the Form N-4 Registration Statement filed
by Security Life of Denver and its Separate Account A1 on February 21,
1995 (File Nos.: 33-72564 and 811-8196).
Item 27. Number of Contract Owners
None.
Item 28. Indemnification
First ING Life Insurance Company of New York's (the
"Corporation") Charter provides that no director of the
Corporation shall be personally liable to the Corporation or any
of its shareholders for damages for any breach of duty as a
director. However, such indemnification shall not eliminate or
limit the liability of a director if a judgment or other final
adjudication adverse to such director establishes that his or her
such acts or omissions were in bad faith or involved intentional
misconduct or were acts or omissions which (a) he or she knew or
reasonably should have known violated the New York Insurance Law
or (b) violated a specific standard of care imposed on directors
directly, and not by reference, by a provision of the New York
Insurance Law (or any regulations promulgated thereunder) or (c)
constituted a knowing violation of any other law, or establishes
that the director personally gained in fact a financial profit or
other advantage to which the director was not legally entitled.
Under New York Law a corporation may indemnify any person, made a
party to an action by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he,
his testator or intestate, is or was a director or officer of the
corporation, against the reasonable expenses, including
attorneys' fees, actually and necessarily incurred by him in
connection with the defense of such action, or in connection with
an appeal therein, except in relation to matters as to which such
director or officer is adjudged to have breached his statutory
duty to the corporation. However, such indemnification shall in
no case include amounts paid in settling or otherwise disposing
of a threatened action, or a pending action with or without court
approval, or expenses incurred in defending a threatened action,
or a pending action which is settled or otherwise disposed of
without court approval. A corporation is required in certain
statutorily defined circumstances to indemnify directors,
officers, employees and agents against expense actually and
reasonably incurred in connection with actions where such persons
have been successful on the merits or otherwise in defense of
such actions.
Consistent with applicable law, the corporation's bylaws
provide as follows:
Article V. Indemnification of Directors and Officers
Section 1. The company shall indemnify any person made, or
threatened to be made, a party to an action by or in the right of
the company to procure a judgment in its favor by reason of the
fact that he, his testator, or intestate, is or was serving at
the request of the company as a director or officer of any other
company of any type or kind, domestic or foreign, of any
partnership, joint venture, trust, employee benefit plan or other
enterprise, against amounts paid in settlement and reasonable
expenses, including attorneys' fees, actually and necessarily
incurred by him in connection with the defense or settlement of
such action, or in connection with an appeal therein, if such
director or officer acted, in good faith, for a purpose which he
reasonably believed to be in, or, in the case of service for any
other company or any partnership, joint venture, trust, employee
benefit plan or other enterprise, not opposed to, the best
interests of the company, except that no indemnification under
this Section shall be made in respect of (1) a threatened action,
or a pending action which is settled or is otherwise disposed of,
or (2) any claim, issue or matter as to which such person shall
have been adjudged to be liable to the company, unless and only
to the extent that the court in which the action was brought, or,
if no action was brought, any court of competent jurisdiction,
determines upon application that, in view of all the
circumstances of the case, the person is fairly and reasonably
entitled to indemnity for such portion of the settlement amount
and expenses as the court deems proper.
The company shall indemnify any person made, or threatened
to be made, a party to an action or proceeding (other than one by
or in the right of the company to procure a judgment in its
favor), whether civil or criminal, including an action by or in
the right of any other company of any type or kind, domestic or
foreign, or any partnership, joint venture, trust, employee
benefit plan or other enterprise, which any director or officer
of the company served in any capacity at the request of the
company, by reason of the fact that he, his testator, or
intestate, was a director or officer of the company, or served
such other company, partnership, joint venture, trust, employee
benefit plan or other enterprise in any capacity, against
judgments, fines, amounts paid in settlement and reasonable
expenses, including attorneys' fees actually and necessarily
incurred as a result of such action or proceeding, or any appeal
therein, if such director or officer acted, in good faith, for a
purpose which he or she reasonably believed to be in, or, in the
case of service for any other company or any partnership, joint
venture, trust, employee benefit plan or other enterprise, not
opposed to, the best interests of the company and, in criminal
actions or proceedings, in addition, had no reasonable cause to
believe that his conduct was unlawful.
The termination of any such civil or criminal action or
proceeding by judgment, settlement, conviction or upon a plea of
nolo contendere, or its equivalent, shall not in itself create a
presumption that any such director or officer did not act, in
good faith, for a purpose which he reasonably believed to be in,
or, in the case of service for any other company or any
partnership, joint venture, trust, employee benefit plan or other
enterprise, not opposed to, the best interest of the company or
that he had reasonable cause to believe that his conduct was
unlawful.
A person who has been successful, on the merits or
otherwise, in the defense of a civil or criminal action or
proceeding of the character described in the first two paragraphs
of this Article V, shall be entitled to indemnification as
authorized in such paragraphs. Except as provided in the
preceding sentence and unless ordered by a court, any
indemnification under such paragraphs shall be made by the
company, only if authorized in the specific case:
(1) By the board of directors acting by a quorum
consisting of directors who are not parties to such action
or proceeding upon a finding that the director, officer or
employee has met the standard of conduct set forth in the
first two paragraphs of this Article V, as the case may be;
or
(2) If such a quorum in not obtainable with due
diligence or, even if obtainable, a quorum of disinterested
directors so directs,
(a) By the board of directors upon the
opinion in writing of independent legal counsel that
indemnification is proper in the circumstances because
the applicable standard of conduct set forth in the
first two paragraphs of this Article V has been met by
such director, officer or employee, or
(b) By the stockholders upon a finding that
the director, officer or employee has met the
applicable standard of conduct set forth in such
paragraphs.
Expenses, including attorneys' fees, incurred in defending a
civil or criminal action or a proceeding may be paid by the
company in advance of the final disposition of such action or
proceeding, if authorized in accordance with the preceding
paragraph, subject to repayment to the company in case the person
receiving such advancement is ultimately found, under the
procedure set forth in this Article V, not to be entitled to
indemnification or, where indemnification is granted, to the
extent the expenses so advanced by the company exceed the
indemnification to which he or she is entitled.
Nothing herein shall affect the right of any person to be
awarded indemnification or, during the pendency of litigation, an
allowance of expenses, including attorneys' fees, by a court in
accordance with law.
If any expenses or other amounts are paid by way of
indemnification, otherwise than by court order or action by the
stockholders, the company shall, not later than the next annual
meeting of stockholders unless such meeting is held within three
months from the date of such payment, and in any event, within
fifteen months from the date of such payment, mail to its
stockholders of record at the time entitled to vote for the
election of directors a statement specifying the persons paid,
the amounts paid, and the nature and status at the time of such
payment of the litigation or threatened litigation.
The company shall have the power, in furtherance of the
provisions of this Article V, to apply for, purchase and maintain
insurance of the type and in such amounts as is or may hereafter
be permitted by Section 726 of the Business Corporation Law.
No payments of indemnification, advancement or allowance
under Sections 721 to 726, inclusive, of the Business Corporation
Law shall be made unless a notice has been filed with the
Superintendent of Insurance of the State of New York, not less
than thirty days prior to such payment, specifying the persons to
be paid, the amounts to be paid, the manner in which such payment
is authorized and the nature and status, at the time of such
notice, of the litigation or threatened litigation.
Item 29. Principal Underwriters
a) None
b) The following table sets forth certain information
regarding the officers and directors of ING America
Equities, Inc. The business address of each person
named below is that of Security Life of Denver,
Security Life Center, 1290 Broadway, Attn: Variable,
Denver, Colorado 80203-5699
Name and Principal Position and Offices
Business and Address with Underwriter
_____________________ ______________________
Vacant Director and President
Edward K. Campbell Director and Vice President
Eugene L. Copeland Secretary
Bonnie C. Dailey Vice President and Chief
Legal Officer
Jan C. Gaston Chief Financial
Officer and Treasurer
Frank T. Wright Director and Vice President
c) None
Item 30. Location of Accounts and Records
The records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and Rules 31a-1 and 31a-3
thereunder are maintained by First ING Life Insurance Company of
New York, at 225 Broadway, Suite 1901, New York, New York 10007,
Security Life of Denver at Security Life Center, 1290 Broadway,
Denver, Colorado 80203-5699, and at Financial Administrative
Services Corporation, 8515 East Orchard Road, Englewood,
Colorado 80111.
Item 31. Management Services
Not applicable
Item 32. Undertakings
The Registrant hereby undertakes:
(a) to file a post-effective amendment to this registration statement as
frequently as is necessary to ensure that the audited financial statements in
the registration statement are never more than 16 months old for so long as
payments under the variable annuity contracts may be accepted;
(b) to include either (1) as part of any application to purchase a
certificate offered by the prospectus, a space that an applicant can check to
request a Statement of Additional Information, or (2) a postcard or similar
written communication affixed to or included in the prospectus that the
applicant can remove to send for a Statement of Additional Information;
(c) to deliver any Statement of Additional Information and any
financial statements required to be made available under this Form promptly
upon written or oral request.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
and the Investment Company Act of 1940, the Registrant, First
ING of New York Separate Account A1, has duly caused this
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, and its seal to be hereunto
fixed and attested, all in the City and County of Denver
and the State of Colorado on the _____ day of _________, 1995.
FIRST ING OF NEW YORK SEPARATE ACCOUNT A1
(Registrant)
By: FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
(Depositor)
(SEAL)
By: /s/ Stephen M. Christopher
Stephen M. Christopher
President
ATTEST:
/s/ Eugene L. Copeland
Eugene L. Copeland
Secretary
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
and the Investment Company Act of 1940, First ING Life
Insurance Company of New York has duly caused this Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, and its seal to be hereunto fixed and
attested, all in the City and County of Denver and the State of
Colorado on the _______ day of _____________, 1995.
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
(Depositor)
BY: /s/ Stephen M. Christopher
(SEAL) Stephen M. Christopher
President
ATTEST:
/s/ Eugene L. Copeland
Eugene L. Copeland
Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following
persons in the capacities with First ING Life Insurance Company of
New York and on the date indicated.
PRINCIPAL EXECUTIVE OFFICERS:
/s/ Robert J. St. Jacques
Robert J. St. Jacques
Chief Executive Officer
/s/ Stephen M. Christopher
Stephen M. Christopher
President
PRINCIPAL FINANCIAL OFFICER:
PRINCIPAL ACCOUNTING OFFICER:
/s/ Gregory A. Boyko
Gregory A. Boyko
Chief Accounting Officer and Controller
DIRECTORS:
R. Glenn Hilliard (Chairman) *
Name
Robert J. St. Jacques *
Name
Thomas F. Conroy *
Name
Evelyn A. Bentz *
Name
Wayne D. Bidelman *
Name
Keith T. Glover
Name
Eugene L. Copeland *
Name
Fred A. Deering *
Name
Weaver H. Gaines *
Name
William S. Lutter *
Name
Roger D. Roenfeldt *
Name
Stephen K. West *
Name
* By: /s/ Edward K. Campbell
Edward K. Campbell
Attorney-in-fact
July 26, 1995
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION SEQUENTIALLY
NUMBERED PAGE
1. Resolutions of the Executive Committee
of the Board of Directors of First ING
Life Insurance Company of New York
("First ING Life") authorizing the
establishment of the Registrant.
2. Not applicable.
3. (a) Form of First ING Life Insurance Company
of New York Distribution Agreement.
(b) Specimen Broker-Dealer Supervisory and
Selling Agreement for Variable Contracts.
4. (a) Form of Variable Annuity Contract.
(b) Form of Variable Annuity Certificate.
(c) Form of Supplementary Variable Annuity
Conract.
5. (a) Form of Contract Application.
(b) Form of Fulcrum Fund Certificate
Application.
8. (a) Form of Participation Agreement.
(b) Form of Administration Services
Agreement between Security
Life of Denver Insurance Company and
Financial Administrative Services
Corporation.
9. Opinion and consent of Eugene L. Copeland
as to the legality of the securities being
registered.
10. (a) Consent of Independent Auditors.
(b) Consent of Mayer, Brown & Platt.
13. (a) Power of Attorney for Robert J.
St. Jacques
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
Denver, Colorado 80203-5699
C E R T I F I C A T E
I, Irene M. Colorosa, a duly elected and qualified Assistant
Secretary of First ING Life Insurance Company of New York hereby
certify that the following resolutions were unanimously adopted by
the Board of Directors on 15th day of March, 1994 and that they are
now in full force and effect without amendment or modification:
BE IT RESOLVED, that the Board of Directors of First ING
Life Insurance Company of New York ("Company"), pursuant to
the provisions of Section 4240 of the New York Insurance
Laws, hereby authorizes and directs the establishment of
First ING of New York Separate Account A1 ("Separate
Account A1") for the following use and purposes, and
subject to such conditions as hereinafter set forth:
BE IT FURTHER RESOLVED, that Separate Account A1 is
established for the purpose of providing a funding medium
to support reserves under flexible premium deferred
variable annuity contracts, or other annuity contracts as
may be issued by the Company and as the President, any
Senior Vice President, any Vice President, or the Treasurer
(such persons hereinafter referred to as the "Officers")
may designate for such purpose ("Contracts"), and shall
constitute a separate account into which are allocated
amounts paid to or held by the Company under such
contracts.
BE IT FURTHER RESOLVED, that the income, gains and losses,
realized or unrealized from assets allocated to Separate
Account A1 shall, in accordance with the Contracts, be
credited to or charged against such account without regard
to other income, gains, or losses of the Company; and
BE IT FURTHER RESOLVED, that the fundamental investment
policy of Separate Account A1 shall be to invest or
reinvest the assets of the Separate Account A1 in
securities issued by investment companies registered under
the Investment Company Act of 1940, as amended, as the
Officers may designate pursuant to the provisions of the
Contracts; and
BE IT FURTHER RESOLVED, that Separate Account A1 shall be
divided into Investment Subdivisions, each Investment
Subdivision in Separate Account A1 shall invest in the
shares of a designated mutual fund portfolio, and net
premiums under the Contracts shall be allocated to the
eligible Portfolios set forth in the Contracts in
accordance with instructions received from owners of the
Contracts; and
BE IT FURTHER RESOLVED, that the Board of Directors
expressly reserves the right to add or remove any
Investment Subdivision of Separate Account A1 as it may
hereafter deem necessary or appropriate; and
BE IT FURTHER RESOLVED, that the President, any Senior Vice
President, or the Treasurer, and each of them, with full
power to act without the others, be, and they hereby are,
severally authorized to invest such amount or amounts of
the Company's cash in Separate Account A1 or in any
Investment Subdivision thereof as may be deemed necessary
or appropriate to facilitate the commencement of Separate
Account A1's operations and/or to meet any minimum capital
requirements under the Investment Company Act of 1940; and
BE IT FURTHER RESOLVED, that the Officers, and each of
them, with full power to act without the others, be, and
they hereby are, severally authorized to transfer cash from
time to time between the Company's general account and
Separate Account A1 as deemed necessary or appropriate and
consistent with the terms of the Contracts; and
BE IT FURTHER RESOLVED, that the Officers, and each of
them, with full power to act without the others, with such
assistance from the Company's independent certified public
accountants, legal counsel and independent consultants or
others as they may require, be, and they hereby are,
severally authorized and directed to take all action
necessary to: (a) Register Separate Account A1 as a unit
investment trust under the Investment Company Act of 1940,
as amended; (b) Register interests in the Contracts in such
amounts, which may be an indefinite amount, as the Officers
of the Company shall from time to time deem appropriate
under the Securities Act of 1933; (c) Take all other
actions which are necessary in connection with the offering
of said Contracts for sale and the operation of Separate
Account A1 in order to comply with the Investment Company
Act of 1940, the Securities Exchange Act of 1934, the
Securities Act of 1933, and other applicable federal laws,
including the filing of any registration statements and
amendments thereto, any undertakings, and any applications
for exemptions, including any amendments thereto, from the
Investment Company Act of 1940 or other applicable federal
laws as the officers of the Company shall deem necessary or
appropriate; and
BE IT FURTHER RESOLVED, that the Officers, and each of
them, with full power to act without the other, hereby are
severally authorized and empowered to prepare, execute and
cause to be filed with the Securities and Exchange
Commission on behalf of Separate Account A1, and by the
Company as sponsor and depositor a Form of Notification of
Registration Statement under the Securities Act of 1933
registering the Contracts, and any and all amendments to
the foregoing on behalf of Separate Account A1 and the
Company and on behalf of and as attorneys-in-fact for the
principal executive officer and/or the principal financial
officer and/or the principal accounting officer and/or any
other officer of the Company; and
BE IT FURTHER RESOLVED, that Stephan M. Largent, Vice
President, Variable Life and Product Research and
Development, is duly appointed as agent for service of
process for the Company to receive communications and
notices from the Securities and Exchange Commission; and
BE IT FURTHER RESOLVED, that the Officers, and each of
them, with full power to act without the others, hereby is
severally authorized on behalf of Separate Account A1 and
on behalf of the Company to take any and all action that
each of them may deem necessary or advisable in order to
offer and sell the Contracts, including any registrations,
filings and qualifications both of the Company, its
officers, agents and employees, and of the policies, under
the insurance and securities laws of any of the states of
the United States of America or other jurisdictions, and in
connection therewith to prepare, execute, deliver and file
all such applications, reports, covenants, resolutions,
applications for exemptions, consents to service of process
and other papers and instruments as may be required under
such laws, and to take any and all further action which the
Officers or legal counsel of the Company may deem necessary
or desirable (including entering into whatever agreements
and contracts may be necessary) in order to maintain such
registrations or qualifications for as long as the Officers
or legal counsel deem it to be in the best interests of
Separate Account A1 and the Company; and
BE IT FURTHER RESOLVED, that the Officers, and each of
them, with full power to act without the others, be and
they hereby are, severally authorized in the names and on
behalf of Separate Account A1 and the Company to execute
and file irrevocable written consents on the part of
Separate Account A1 and of the Company to be used in such
states wherein such consents to service of process may be
requisite under the insurance or securities laws therein in
connection with said registration or qualification of the
Contracts and to appoint the appropriate state official, or
such other person as may be allowed by said insurance or
securities laws, agent of Separate Account A1 and of the
Company for the purpose of receiving and accepting process;
and
BE IT FURTHER RESOLVED, that the Officers, and each of
them, with full power to act without the others, be, and
hereby are, severally authorized to establish procedures
under which the Company will institute procedures for
providing a pass-through of voting rights for owners of the
Contracts as required by applicable laws with respect to
the shares of any investment companies which are held in
Separate Account A1; and
BE IT FURTHER RESOLVED, that the Officers, and each of
them, with full power to act without the others, are hereby
severally authorized to execute such agreement or
agreements as deemed necessary and appropriate (i) with SLD
Equities, Inc. ("SLD Equities") or other qualified entity
under which SLD Equities or such other entity will be
appointed principal underwriter and distributor for the
Contracts and (ii) with one or more qualified banks or
other qualified entities to provide administrative and/or
custodial services in connection with the establishment and
maintenance of Separate Account A1 and the design,
issuance, and administration of the Contracts; and
BE IT FURTHER RESOLVED, that the Officers, and each of
them, with full power to act without the others, are hereby
severally authorized to execute and deliver such agreements
and other documents and do such acts and things as each of
them may deem necessary or desirable to carry out the
foregoing resolutions and the intent and purposes thereof.
Dated this 23 day of June, 1994.
/s/ __________________________
Irene M. Colorosa
Assistant Secretary
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
DISTRIBUTION AGREEMENT
This AGREEMENT made this ________ day of ________________,
1995, by and between First ING Life Insurance Company of New York,
a New York domestic insurance company ("First ING") on its own
behalf and on behalf of First ING of New York Separate Account A1
("Separate Account A1") and First ING of New York Separate Account
L1 ("Separate Account L1") (both of which are collectively referred
to herein as the "Separate Accounts"), and ING America Equities,
Inc., a Colorado corporation, ("ING America Equities").
WHEREAS, First ING has established and maintains Separate
Account A1 and Separate Account L1, which are separate investment
accounts, for the purpose of selling variable annuity contracts and
variable life contracts ("Contracts") to commence after the
effectiveness of the Registration Statements relating thereto filed
with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended (the "1933 Act"), through ING
America Equities, acting as general agent of First ING;
WHEREAS, the Separate Accounts are registered as unit
investment trusts under the Investment Company Act of 1940 (the
"1940 Act");
WHEREAS, ING America Equities is registered as a broker-dealer
under the Securities Exchange Act of 1934 (the "Securities Exchange
Act") and is a member of the National Association of Securities
Dealers, Inc. ("NASD"); and
WHEREAS, First ING desires to retain ING America Equities as
the Distributor and Principal Underwriter to provide for the sale
and distribution to the public of the Contracts issued by First ING
and funded by interests in the General Account of First ING and in
Separate Account A1 or Separate Account L1, and ING America
Equities is willing to render such services:
NOW THEREFORE, in consideration of the mutual promises and
covenants hereinafter set forth, the parties agree as follows:
1. Principal Underwriter. First ING hereby appoints ING
America Equities, during the term of this Agreement, subject to the
registration requirements of the 1933 Act and the 1940 Act and the
provisions of the Securities Exchange Act, to be the Distributor
and Principal Underwriter for the sale of Contracts to the public
in each state and other jurisdictions in which the Contracts may be
lawfully sold. First ING also appoints ING America Equities as its
independent General Agent for sale of its Contracts (including any
riders which First ING may make available in connection therewith
or any contracts for which the Contracts may be exchanged or
converted) and for sale of such other insurance contracts or
annuity contracts as First ING may, from time to time, authorize in
writing by amendment thereto. ING America Equities shall offer the
Contracts for sale and distribution at premium rates set by First
ING.
2. Selling Agreements. ING America Equities is hereby
authorized to enter into separate written agreements, on such terms
and conditions as ING America Equities determines are not
inconsistent with this Agreement, with such organizations which
agree to participate as a general agent and/or broker-dealer in the
distribution of the Contracts and to use their best efforts to
solicit applications for Contracts. Any such broker-dealer
(hereinafter "Broker") shall be both registered as a broker-dealer
under the Securities Exchange Act and a member of the NASD. ING
America Equities shall be responsible for ensuring that Broker and
its agents or representatives and general agent and its sub-agents
soliciting applications for Contracts shall be duly and
appropriately licensed, registered and otherwise qualified for the
sale of the Contracts (and the riders and other contracts offered
in connection therewith) under the insurance laws and any
applicable blue sky laws of each state or other jurisdiction in
which such policies may be lawfully sold and in which First ING is
licensed to sell such Contracts. First ING shall undertake to
appoint Broker's qualified agents or representatives and general
agent's sub-agents as life insurance agents of First ING, provided
that First ING reserves the right to refuse to appoint any proposed
representative, agent, or sub-agent, or once appointed, to
terminate such appointment. ING America Equities shall be
responsible for ensuring that Broker and general agent supervise
its agents, representatives, or sub-agents.
ING America Equities is also authorized to enter into separate
written agreements, on such terms and conditions as ING America
Equities determines are not inconsistent with this Agreement, with
such organizations ("Wholesalers") that agree to participate in the
distribution of the Contracts and to use their best efforts to
solicit Brokers and general agents that, in turn, will solicit
applications of the Contracts.
3. Life Insurance Agents. First ING shall be responsible
for ensuring that Broker and its agents or representatives and
general agent and its sub-agents meet all qualifications and hold
any licenses or authorizations that may be required for the
solicitation or sale of the Contracts under the insurance laws of
the applicable jurisdictions.
4. Suitability. First ING desires to ensure that Contracts
will be sold to purchasers for whom the Contract will be suitable.
ING America Equities shall take reasonable steps to ensure that the
various representatives of Broker and sub-agents of general agents
shall not make recommendations to an applicant to purchase a
contract in the absence of reasonable grounds to believe the
purchase of the Contract is suitable for such applicant. While not
limited to the following, a determination of suitability shall be
based on information furnished to a representative or sub-agent
after reasonable inquiry of such applicant concerning the
applicant's other security holdings, insurance and investment
objectives, financial situation and needs, and the likelihood that
the applicant will continue to make any premium payments
contemplated by the Contracts and will keep the Policy in force for
a sufficient period of time so that First ING's acquisition costs
are amortized over a reasonable period of time.
5. Conformity With Registration Statement and Approved Sales
Materials. In performing its duties as Distributor, ING America
Equities will act in conformity with the Prospectus and with the
instructions and directions of First ING, the requirements of the
1933 Act, the 1940 Act, the Securities Exchange Act, and all other
applicable federal and state laws and regulations. ING America
Equities shall not give any information nor make any
representations, concerning any aspect of the Contract or of First
ING's operations to any persons or entity unless such information
or representations are contained in the Registration Statement and
the pertinent prospectus filed with the Securities and Exchange
Commission, or are contained in sales or promotional literature
approved by First ING. ING America Equities will not use and will
take reasonable steps to ensure Broker will not use any sales
promotion material and advertising which has not been previously
approved by First ING.
6. Expenses. During the term of this Agreement, ING America
Equities will bear all of its expenses in complying with this
Agreement, including the following expenses:
(a) costs of sales presentations, mailings, sales
promotion materials, advertising, and any other marketing
efforts by ING America Equities in connection with the
distribution or sale of the Contracts; and
(b) any compensation paid to employees of ING America
Equities and to Wholesalers, Brokers and general agents
in connection with the distribution or sale of the
Contracts.
Notwithstanding any other provision of this Agreement, it is
understood and agreed that First ING shall at all times retain the
ultimate responsibility for and control of all functions performed
pursuant to this Agreement, and for marketing the Contract, and
reserves the right to action hereunder taken on its behalf by ING
America Equities.
7. Applications. Completed applications for Contracts
solicited by such Broker through its agents or representatives or
by general agent through its sub-agents shall be transmitted
directly to First ING. All payments under the Contracts shall be
made by check to First ING, or by other method acceptable to First
ING, and if received by ING America Equities, shall be held at all
times in a fiduciary capacity and remitted promptly to First ING.
All such payments will be the property of First ING. First ING has
the sole authority to approve or reject such applications or
payments and maintains ultimate responsibility for underwriting.
Anything in this Agreement to the contrary notwithstanding, First
ING retains the ultimate right to control the sale of the Contracts
and to appoint and discharge life insurance agents of First ING.
8. Standard of Care. ING America Equities shall be
responsible for exercising reasonable care in carrying out the
provisions of this Agreement.
9. Reports. ING America Equities shall be responsible for
maintaining the records of Broker and general agent and their
agents, representatives or sub-agents who are licensed, registered
and otherwise qualified to sell the Contracts; calculating and
furnishing the fees payable to Brokers or general agents; and for
furnishing periodic reports to First ING as to the sale of
Contracts made pursuant to this Agreement.
10. Records. ING America Equities shall maintain and
preserve such records as are required of it by applicable laws and
regulations. The books, accounts and records of First ING, the
Separate Accounts and ING America Equities shall be maintained so
as to clearly and accurately disclose the nature and details of the
transactions, including such accounting information as necessary to
support the reasonableness of the amounts to be paid by First ING
hereunder.
11. Compensation. For the service rendered and product
development in the initial sales efforts and continuing obligations
under this Agreement, First ING shall pay ING America Equities in
the amounts set forth in Schedule A, which schedule is incorporated
herein. First ING shall arrange for the payment of commissions,
through ING America Equities to those Brokers and general agents
that sell Contracts under agreements entered into pursuant to
Section 2 hereof, and to Wholesalers that solicit brokers and
general agents to sell Contracts under agreements entered into
pursuant to Section 2 hereof, in amounts as may be agreed to by
First ING and ING America Equities specified in such written
agreements.
12. Investigation and Proceedings. ING America Equities and
First ING agree to cooperate fully in any insurance regulatory
investigation or proceeding or judicial proceeding arising in
connection with the Contracts distributed under this Agreement. ING
America Equities further agrees to furnish regulatory authorities
with any information or reports in connection with such services
which may be requested in order to ascertain whether the operations
of First ING and the Separate Account are being conducted in a
manner consistent with applicable laws and regulations. ING America
Equities and First ING further agree to cooperate fully in any
securities regulatory investigation or proceeding with respect to
First ING, ING America Equities, their affiliates and their agents
or representatives to the extent that such investigation or
proceeding is in connection with Contracts distributed under this
Agreement. Without limiting the foregoing:
(a) ING America Equities will be notified promptly of any
customer complaint or notice of any regulatory
investigation or proceeding or judicial proceeding
received by First ING with respect to ING America
Equities or any agent, representative, or sub-agent of a
Broker or general agent or which may affect First ING's
issuance of any Contract sold under this Agreement; and
(b) ING America Equities will promptly notify First ING
of any customer complaint or notice of any regulatory
investigation or proceeding received by ING America
Equities or its affiliates with respect to First ING or
any agent, representative, or sub-agent of a Broker or
general agent in connection with any Contract distributed
under this Agreement or any activity in connection with
any such Contract.
In the case of a meritorious customer complaint, ING America
Equities and First ING will cooperate in investigating such
complaint and any response will be sent to the other party to this
Agreement for approval not less than five business days prior to
its being sent to the customer or regulatory authority, except that
if a more prompt response is required, the proposed response shall
be communicated by telephone or telegraph.
13. Indemnification. First ING hereby agrees to indemnify
and hold harmless ING America Equities and its officers and
directors, and employees for any expenses (including legal
expenses), losses, claims, damages, or liabilities incurred by
reason of any untrue or alleged untrue statement or representation
of a material fact or any omission or alleged omission to state a
material fact required to be stated to make other statements not
misleading, if made in reliance on any prospectus, registration
statement, post-effective amendment thereof, or sales materials
supplied or approved by First ING or the Separate Accounts. First
ING shall reimburse each such person for any legal or other
expenses reasonably incurred in connection with investigating or
defending any such loss, liability, damage, or claim. However, in
no case shall First ING be required to indemnify for any expenses,
losses, claims, damages, or liabilities which have resulted from
the willful misfeasance, bad faith, negligence, misconduct, or
wrongful act of ING America Equities.
ING America Equities hereby agrees to indemnify and hold
harmless First ING, its officers, directors, and employees, and the
Separate Accounts for any expenses, losses, claims, damages, or
liabilities arising out of or based upon any of the following in
connection with the offer or sale of the contracts: 1) except for
such statements made in reliance on any prospectus, registration
statement or sales material supplied or approved by First ING or
the Separate Accounts, any untrue or alleged untrue statement or
representation made; 2) any failure to deliver a currently
effective prospectus; 3) the use of any unauthorized sales
literature by any officer, employee, agent, or sub-agent of ING
America Equities, Broker or general agent; or 4) any willful
misfeasance, bad faith, negligence, misconduct or wrongful act. ING
America Equities shall reimburse each such person for any legal or
other expenses reasonably incurred in connection with investigating
or defending any such loss, liability, damage, or claim.
Promptly after receipt by a party entitled to indemnification
("Indemnified Party") of notice of the commencement of any action,
if a claim for indemnification in respect thereof is to be made
against First ING or ING America Equities ("Indemnifying Party")
such Indemnified Party will notify Indemnifying Party in writing of
the commencement thereof, but failure to notify the Indemnifying
Party of any claim shall not relieve it from any liability which it
may have to the person against whom such action is brought
otherwise than on account of this agreement contained in this
Section 13. The Indemnifying Party will be entitled to participate
in the defense of the Indemnified Party and such participation will
not relieve such Indemnifying Party of the obligation to reimburse
the Indemnified Party, for reasonable legal and other expenses
incurred by such Indemnified Party in defending himself.
14. Agent of First ING or Separate Accounts. Any person,
even though also an officer, director, employee, or agent of ING
America Equities, who may be or become an officer, director,
employee, or agent of First ING or the Separate Accounts shall be
deemed, when rendering services to First ING or the Separate
Accounts or acting in any business of First ING or the Separate
Accounts, to be rendering such services to or acting solely for
First ING or the Separate Accounts and not as an officer, director,
employee, or agent or one under the control or direction of ING
America Equities even though paid by ING America Equities.
Likewise, any person, even though also an officer, director,
employee, or agent of First ING or the Separate Accounts, who may
be or become an officer, director, employee, or agent of ING
America Equities shall be deemed, when rendering services to ING
America Equities or acting in any business of ING America Equities
to be rendering such services to or acting solely for ING America
Equities and not as an officer, director, employee, or agent or one
under the control or direction of First ING or the Separate
Accounts even though paid by First ING or the Separate Accounts.
15. Books and Records. It is expressly understood and agreed
that all documents, reports, records, books, files and other
materials relating to this Agreement and the services to be
performed hereunder shall be the sole property of First ING and the
Separate Accounts and that such property shall be held by ING
America Equities as agent, during the effective term of this
Agreement. This material shall be delivered to First ING upon the
termination of this Agreement free from any claim or retention of
rights by ING America Equities. During the term of this Agreement
and for a period of three years from the date of termination of
this Agreement, ING America Equities will not disclose or use any
records or information and will regard and preserve as confidential
all information related to the business of First ING or the
Separate Accounts that may be obtained by ING America Equities from
any source as a result of this Agreement and will disclose such
information only if First ING or the Separate Accounts have
authorized such disclosure, or if such disclosure is expressly
required by applicable federal or state regulatory authorities. ING
America Equities further acknowledges and agrees that, in the event
of a breach or threatened breach by it of the provisions of this
article, First ING will have no adequate remedy in moneys or
damages and, accordingly, First ING shall be entitled in its
discretion to seek an injunction against such breach. However, no
specification in this Agreement of a specific legal or equitable
remedy shall be construed as a waiver or prohibition against any
other legal or equitable remedy in the event of a breach of a
provision of this Agreement.
16. Employees. ING America Equities will not employ, except
with the prior written approval of the Commissioner of Insurance of
the state of Colorado, in any material connection with the handling
of the Separate Accounts' assets any person who, to the knowledge
of ING America Equities:
(a) in the last 10 years has been convicted of any felony
or misdemeanor arising out of conduct involving
embezzlement, fraudulent conversion, or misappropriation
of funds or securities, or involving violations of
Sections 1341, 1342, or 1343 of Title 18, United States
Code; or
(b) within the last 10 years has been found by any state
regulatory authority to have violated or has acknowledged
violation of any provision of any state insurance law
involving fraud, deceit, or knowing misrepresentation; or
(c) within the last 10 years has been found by any
federal or state regulatory authorities to have violated
or have acknowledged violation of any provision of
federal or state securities laws involving fraud, deceit,
or knowing misrepresentation.
17. Termination. This Agreement shall terminate
automatically upon its assignment without the prior written consent
of both parties. This Agreement may be terminated at any time, for
any reason, by either party on 60 days' written notice to the other
party, without the payment of any penalty. Upon termination of this
Agreement, all authorizations, rights and obligations shall cease
except the obligation to settle accounts hereunder, including
commissions on premiums subsequently received for Contracts in
effect at time of termination, and the agreements contained in
Sections 12 and 13 hereof.
18. Regulation. This Agreement shall be subject to the
provisions of the 1940 Act and the Securities Exchange Act and the
rules, regulations and rulings thereunder, and of the applicable
rules and regulations of the NASD, and applicable state insurance
law and other applicable law, from time to time in effect, and the
terms hereof shall be interpreted and construed in accordance
therewith.
19. Independent Contractor. ING America Equities shall act
as an independent contractor and nothing herein contained shall
constitute ING America Equities or its agents, officers or
employees as agents, officers, or employees of First ING in
connection with the sale of the Contacts.
20. Notices. Notices of any kind to be given to ING America
Equities by First ING or the Separate Accounts shall be in writing
and shall be duly given if mailed, first class postage prepaid, or
delivered to ING America Equities at 1290 Broadway, Denver,
Colorado 80203, or at such other address or to such individual as
shall be specified by ING America Equities. Notices of any kind to
be given to First ING or the Separate Accounts shall be in writing
and shall be duly given if mailed, first class postage prepaid, or
delivered to them at 1290 Broadway, Denver, Colorado 80203, or at
such other address or to such individual as shall be specified by
First ING.
If any provisions of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
21. Governing Law. This Agreement shall be construed and
enforced in accordance with and governed by the laws of the State
of Colorado.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
By: ___________________________________
President
Attest:
___________________________________
Secretary
ING AMERICA EQUITIES, INC.
By: ___________________________________
President
Witness:
___________________________________
Vice President
SCHEDULE "A"
COMPENSATION SCHEDULE
This Schedule "A" to the Distribution Agreement between First ING
Life Insurance Company of New York ("First ING Life") and ING
America Equities, Inc. ("ING America Equities"), dated _____,
1995, sets forth the compensation to be paid to ING America
Equities for its services as underwriter and distributor of the
following product, as follows:
FULCRUM FUND ANNUITY
A Group Flexible Premium Deferred Combination Fixed and Variable
Annuity Certificate Form 1194 (VA) (Cert.) issued under Contract
Form 1194 (VA)
Total Gross Dealer Concessions earned in the first certificate
year by Selling Broker-Dealer pursuant to its Selling Agreement
with First ING Life and ING America Equities will be as follows:
Commission as a Percentage
Owner's Age at Issue of Each Purchase Payment
____________________ ________________________
0-70 7.0%
71+ 6.0%
All commissions shall be paid only on an earned basis, as
calculated on the next commission cycle.
BROKER-DEALER SUPERVISORY AND SELLING AGREEMENT
FOR VARIABLE CONTRACTS
This Broker-Dealer Supervisory and Selling Agreement (the
"Agreement") is made this _____ day of _________________, 19___,
by and among the "Insurer" (either SECURITY LIFE OF DENVER
INSURANCE COMPANY "Security Life" or FIRST ING LIFE INSURANCE
COMPANY OF NEW YORK "First ING", whichever is the issuer of the
Contracts), ING AMERICA EQUITIES, INC. ("ING America Equities"),
a broker-dealer registered with the Securities and Exchange
Commission ("SEC") under the Securities Act of 1934 (the "1934
Act") and a member of the National Association of Securities
Dealers, Inc. ("NASD"), _______________________________________
("Selling Broker-Dealer"), also a broker-dealer registered with
the SEC under the 1934 Act and a member of the NASD, and any
insurance Agency subsidiaries or affiliates ("Agency or
Agencies") of Selling Broker-Dealer, as listed on the signature
pages of this Agreement.
RECITALS
WHEREAS, the Insurer issues certain variable life insurance
policies and variable annuity contracts (the "Contracts") and
offers for sale such Contracts in accordance with federal
securities laws and the applicable laws of those states in which
the Contracts have been qualified for sale; and
WHEREAS, the Insurer has authorized ING America Equities, as
principal underwriter and distributor of the Contracts, to enter
into agreements, subject to the consent of the Insurer, with
Selling Broker-Dealers and the Agencies for the distribution of
the Contracts; and
WHEREAS, Selling Broker-Dealer and the Agencies wish to
participate in the distribution of the Contracts, which are
deemed to be securities under the Securities Act of 1933 (the
"1933 Act"); and
WHEREAS, Selling Broker-Dealer has registered
representatives ("Representatives") who are also licensed and
appointed as life insurance agents of the Insurer, who will
solicit and sell the Contracts; and
WHEREAS, Selling Broker-Dealer proposes to undertake certain
supervisory and administrative obligations described below in
connection with the distribution of the Contracts.
AGREEMENTS
NOW THEREFORE, in consideration of the mutual covenants
contained herein, the parties agree as follows:
1. Relationship of Parties. The Insurer is the Insurer and
issuer of Contracts covered by this Agreement. ING America
Equities is the principal underwriter and distributor of the
Contracts. Selling Broker-Dealer represents that it is a
registered broker-dealer under the 1934 Act and a member of
the NASD. The Insurer hereby appoints the Agencies under
the insurance laws and the Insurer and ING America Equities
authorize the Selling Broker-Dealer under the securities
laws to distribute the Contracts. Selling Broker-Dealer
agrees to supervise the Representatives in connection with
the distribution, solicitation and sale of the Contracts and
to perform other services as described below.
2. Authority and Duties of Selling Broker-Dealer. Selling
Broker-Dealer agrees that it shall, at all times when
performing its functions under this Agreement, be registered
as a securities broker-dealer with the SEC and will maintain
its membership with the NASD, and shall be licensed or
registered as a securities broker-dealer in the states that
require such licensing or registration in connection with
supervision and other services pertaining to Contract sales
activities. Selling Broker-Dealer shall distribute the
Contracts and agrees that it shall have all the attendant
duties, responsibilities and liabilities associated with
that function, for compliance, supervision and servicing
purposes. Selling Broker-Dealer agrees to use its best
efforts to find suitable purchasers for the Contracts.
a) Selection and Supervision of Representatives. Selling
Broker-Dealer shall select and employ Representatives
and shall have full responsibility for the training,
supervision and control of such Representatives as
contemplated by Section 15(b)(4)(E) of the 1934 Act and
applicable NASD Rules. Such Representatives shall be
subject to the control of Selling Broker-Dealer with
respect to such persons' securities-regulated
activities in connection with the Contracts. Selling
Broker-Dealer shall cause such Representatives to be
NASD registered representatives and appropriately
licensed with Selling Broker-Dealer before such
Representatives engage in the solicitation of
applications for the Contracts and shall cause such
Representatives to limit solicitation of applications
for the Contracts to jurisdictions where such
Representatives are licensed and where the Insurer has
authorized solicitations of its Contracts. Selling
Broker-Dealer agrees that it will permit only its
Representatives who are appointed with the Insurer to
solicit and sell the Contracts.
The Insurer and ING America Equities shall not have any
responsibility for the supervision of any
Representative or any other associated person or
affiliate of Selling Broker-Dealer. If the act or
omission of a Representative or any other associated
person or affiliate of Selling Broker-Dealer is the
proximate cause of any claim, damage or liability
(including reasonable attorneys' fees) to the Insurer
or ING America Equities, Selling Broker-Dealer shall be
entirely responsible and liable therefor.
b) Notice of Representative's Noncompliance. In the event
a Representative fails or refuses to submit to
supervision of Selling Broker-Dealer, ceases to be a
Representative of Selling Broker-Dealer, or fails to
meet the rules and standards imposed by Selling
Broker-Dealer on its Representatives, Selling
Broker-Dealer shall certify such fact to the Insurer in
writing immediately, and shall immediately notify such
Representative that he or she is no longer authorized
to sell the Contracts.
c) Compliance with NASD Rules of Fair Practice and Federal
and State Securities Laws. Selling Broker-Dealer shall
fully comply with the requirements of the 1934 Act and
all other applicable federal or state laws and with the
rules of the NASD and shall establish such rules and
procedures as may be necessary to cause diligent
supervision of the securities activities of
Representatives. Selling Broker-Dealer agrees to
maintain appropriate books, records and supervisory
procedures as are required by the SEC, NASD and other
regulatory Agencies having jurisdiction.
d) Purchaser Suitability. Selling Broker-Dealer shall be
responsible for suitability and shall take reasonable
steps to ensure that its Representatives shall not make
recommendations to applicants to purchase Contracts in
the absence of reasonable grounds to believe the
purchase of each Contract is suitable for the
applicant. The procedure shall include review of all
proposals and applications for Contracts for
suitability and completeness and correctness as to form
as well as review and endorsement on an internal record
of Selling Broker-Dealer of the transactions. Selling
Broker-Dealer shall promptly forward to the Insurer's
Customer Service Center all applications found
suitable, together with any payments received with the
applications, without deduction or reduction. The
Insurer reserves the right to reject any Contract
application and return any payment made in connection
with an application which is rejected. Unless
otherwise agreed, Contracts issued on applications
accepted by the Insurer shall be forwarded to the
Representative of Selling Broker-Dealer for delivery to
the Contract owner.
e) Prospectus and Statement of Additional Information.
ING America Equities shall provide Selling
Broker-Dealer with prospectuses and any supplements or
amendments thereto, and the Statement of Additional
Information ("SAI") describing the Contracts subject to
this Agreement. The Insurer is responsible for
maintaining in effect, in accordance with the
requirements of the SEC, each Registration Statement of
which the prospectus is part. The Insurer shall
immediately notify Selling Broker-Dealer of the
issuance of any stop order or any federal or state
regulatory proceeding which would prevent the sale of
their respective Contracts in any state or
jurisdiction. Selling Broker-Dealer shall ensure
compliance with the prospectus delivery requirements of
the 1933 Act. Selling Broker-Dealer agrees to deliver
a copy of the SAI concurrently with a copy of the
prospectus to all California Contract applicants and to
Contract applicants in other jurisdictions where such
delivery may be required.
f) Advertising and Sales Promotion Materials. Selling
Broker-Dealer shall perform the selling functions
required by this Agreement only in accordance with the
terms and conditions of the then current prospectus
applicable to the Contracts and shall make no
representations not included in the prospectus or in
any authorized supplemental material, including
illustrations. Selling Broker-Dealer warrants that
only advertising and sales materials, including
illustrations, approved by the Insurer and ING America
Equities will be used by its Representatives in the
solicitation and sale of the Contracts.
g) Securing Application. Each application for a Contract
shall be made on an application form provided by the
Insurer and all payments collected by Selling
Broker-Dealer or any of its Representatives shall be
remitted promptly in full, together with such
application form and any other required documentation
directly to the Insurer at the address indicated on
such application or to such other address as may be
designated by the Insurer. All such payments and
documents shall be the property of the Insurer.
Selling Broker-Dealer shall review all such
applications for completeness and for compliance with
the conditions herein including the suitability and
prospectus delivery requirements set forth above under
Sections 2(d) and (e). Check or money order in payment
of such Contracts should be made payable to the order
of Security Life or First ING, whichever is the issuer
of the Contracts. All applications are subject to
acceptance or rejection by the Insurer in its sole
discretion.
3. Authority and Duties of Agency.
a. Responsibilities Of The Agency.
(i) The Agency agrees to procure applications for
the
Insurer's Contracts. Production must be through the
Selling Broker-Dealer and subagents appointed by the
Agency, who are duly appointed by the Insurer.
(ii) The Agency warrants that it and all of its
subagents appointed pursuant to this Agreement
shall not solicit nor aid, directly or indirectly,
in the solicitation of any application for any
Contract until they are fully licensed by the
proper authorities under the applicable insurance
laws within the applicable jurisdictions where the
Agency and subagents propose to offer the
Contracts, where the Insurer is authorized to
conduct business and where the Contracts may be
lawfully sold.
(iii) The Agency shall periodically provide the
Insurer with a list of all subagents appointed by
the Agency and the jurisdictions where such
subagents are licensed to solicit sales of the
Contracts.
(iv) The Agency shall prepare and transmit the
appropriate appointment forms to the Insurer. The
Agency shall pay all fees to state insurance
regulatory authorities, all initial appointment
and renewal fees in connection with obtaining
necessary licenses and authorizations for Agency
and subagents to solicit and sell the Contracts.
The Insurer may refuse for any reason to apply for
the appointment of a subagent and may cancel any
existing appointment at any time.
(v) The Agency shall supervise all subagents appointed
pursuant to this Agreement to solicit sales of the
Contracts and bear responsibility for all acts and
omissions of each subagent. The Agency shall
comply with and exercise all responsibilities
required by applicable federal and state law and
regulations. The Agency shall train and supervise
its subagents to ensure that purchase of a
Contract is not recommended to an applicant in the
absence of reasonable grounds to believe the
purchase of the Contract is suitable for that
applicant. While not limited to the following, a
determination of suitability shall be based on
information furnished to a subagent after
reasonable inquiry of such applicant concerning
the applicant's insurance and investment
objectives, financial situation and needs, and the
likelihood that the applicant will continue to
make any premium payments contemplated by the
Contracts and will keep the Contract in force.
(vi) The Agency and Selling Broker-Dealer hereby
warrant and represent that before a subagent is
permitted to sell the Contracts, the Agency,
Selling Broker-Dealer and subagent shall have
entered into a written agreement pursuant to
which: (i) subagent is appointed a subagent of the
Agency and a Representative of Selling
Broker-Dealer (ii) subagent agrees that his or
her selling activities relating to the Contracts
shall be under the supervision and control of
Selling Broker-Dealer; and (iii) that subagent's
right to continue to sell such Contracts is
subject to his or her continued compliance with
such agreement and any procedures, rules or
regulations implemented by Selling Broker-Dealer
and the Agency.
(vii) The Agency agrees to treat money received or
collected for the Insurer as property held in
trust, and to remit such money promptly in full,
together with the application form and any other
required documentation, to the Insurer's Customer
Service Center at the address shown on the
application form for the Contract. All such
payment and documents shall be the property of the
Insurer.
(viii) The Agency agrees to adhere to the "cash with
application" requirements as set forth in the
Insurer's rules and regulations, a copy of which
the Agency acknowledges it has received. The
Agency further agrees, when applicable, to provide
the proper form of interim coverage and inform the
applicant of the specific conditions of the
coverage.
(ix) The Agency agrees to comply with the
underwriting and issue requirements of the Insurer
and the applicable insurance laws and regulations
of the state or states in which the Agency
operates. Such laws and regulations include, but
are not limited to, those pertaining to client
funds, privacy and confidentiality, licensing,
rebating, replacements, solicitation and
advertising.
(x) The Agency agrees to inform the Insurer of all
material facts of which the Agency is aware relating
to insurance of insureds or proposed insureds.
(xi) The Agency agrees to train and exercise
general supervision over subagents.
b. Rejection of Subagent.
The Insurer may refuse for any reason, by written
notice to the Agency, to permit any subagent the right
to solicit applications for the sale of any of the
Contracts. Upon receipt of such notice, Agency
immediately shall cause such subagent to cease such
solicitations of sales and cancel the appointment of
any subagent under this Agreement.
c. Limitation of Authority.
(i) The Agency shall have no authority and agrees not
to bind the Insurer by any promise or agreement; incur
any debt, expense, or liability whatever in its name
or account; or receive any money due or to become due
to the Insurer except first premiums on applications
or Contracts and except where the Insurer otherwise
agrees in writing.
(ii) The Agency shall have no authority and agrees
not to deliver any policy or allow any policy to
be delivered until the first premium has been paid
in full. No delivery shall take place if, after an
inquiry, the Agency or subagent is aware that any
person proposed for insurance is not in the same
condition of health, habits, occupation and other
facts as are represented in the application.
(iii) The Agency shall have no authority and agrees
not to make, modify or discharge any Contract, or
bind the Insurer by making any promises respecting
any Contract, except when authorized in writing to
do so by an authorized officer of the Insurer.
(iv) The Agency shall have no authority and agrees
not to authorize or allow a subagent to do any act
prohibited under this contract.
d. General Provisions.
(i) The Agency may not assign the rights to procure
applications or be relieved of the obligations of the
Agency under this Agreement without the Insurer's
prior written consent.
(ii) The Agency shall be solely responsible for
hiring any staff the Agency may desire and for
maintaining office space and meeting necessary
expenses without reimbursement from the Insurer.
(iii) The Agency and its subagents shall be free to
exercise independent judgment as to the time,
place and means of performing all acts under this
Agreement, and the relationship of the Agency and
its subagents to the Insurer shall be that of an
independent contractor. Nothing in this Agreement
shall be construed to create the relationship of
employer and employee between the Agency (or any
of its subagents) and the Insurer.
(iv) The Insurer and the Agency recognize and
respect each other's interest in providing
continuing service to those who purchase
Contracts. Each party agrees to provide the
others relevant information regarding the
Contracts on a reasonable basis, as done in the
normal course of business.
(v) Failure of the Agency or the Insurer to insist
upon strict compliance with any of the conditions
of this agreement shall not be construed as a
waiver of any such conditions.
(vi) No oral promises or representations shall be
binding nor shall this Agreement be modified
except by agreement in writing, executed on behalf
of the Insurer and ING America Equities by a duly
authorized officer of each of them.
(vii) This Agreement supersedes all previous
contracts and agreements between the Agency and
the Insurer made for the procurement of variable
products; but it shall not affect any contract or
agreement between the Agency and the Insurer made
for the procurement of non-variable insurance
products, or the economic obligations of either
party on existing policies which exist under any
such previous or continuing contracts or
agreements.
(viii) The provisions under this Section shall
survive any termination of this Agreement.
(ix) The Agency hereby grants a limited Power of
Attorney to the Selling Broker-Dealer, to execute
any amendments, modifications or waivers with
respect to this Agreement.
4. Property of Insurer. All money payable in connection with
any of the Contracts, whether as premium, purchase payment
or otherwise and whether paid by or on behalf of any
contract owner or anyone else having an interest in the
Contracts, is the property of the Insurer and shall be
transmitted immediately in accordance with the
administrative procedures of the Insurer without any
deduction or offset for any reason including, but not
limited to, any deduction or offset for compensation claimed
by Selling Broker-Dealer or the Agency.
5. Compensation. While this Agreement is in force, ING America
Equities shall arrange for payment to Selling Broker-Dealer
of compensation payable on sales of the Contracts solicited
in accordance with the compensation schedules attached
hereto as Exhibits A and B, as in effect at the time the
Contract premiums or purchase payments (both referred to as
"Premiums") are received by the Insurer. Compensation to
the Agency and the Representative for Contracts solicited
and sold by the Representative shall be governed by an
agreement between Selling Broker-Dealer and its
Representative, and to the extent deemed necessary by the
Selling Broker-Dealer, by an agreement between the Selling
Broker-Dealer and the Agency.
Upon termination of this Agreement, all compensation to
Selling Broker-Dealer hereunder shall cease. However,
Selling Broker-Dealer shall be entitled to receive
compensation for all new and additional premium payments
which are in process at the time of termination, and shall
continue to be liable for any charge-backs pursuant to the
provisions of Exhibit A or B and for any other amount
advanced by or otherwise due the Insurer or ING America
Equities.
Selling Broker-Dealer represents that no commissions or
other compensation based upon a percentage of premiums or
based upon a percentage of assets or other valuable
consideration will be paid for services rendered in
soliciting the purchase of the Contracts by any person or
entity which is not duly licensed and registered by the
required authority and appointed by the Insurer to sell the
Contracts in the state of such solicitation or sale;
provided, however, that this representation shall not
prohibit the payment of compensation to the surviving spouse
or other beneficiary of a person entitled to receive such
compensation pursuant to a bona fide written contract that
calls for such payment. Selling Broker-Dealer agrees that no
compensation of any kind other than described in this
Section 5 of this Agreement is payable by the Insurer or ING
America Equities to Selling Broker-Dealer.
The amount of compensation, if any, and its time of payment for
replacements, changes, conversions, exchanges, term renewals,
term conversions, premiums paid in advance, policies issued on a
"guaranteed issue" basis, or other special cases and programs,
shall be governed by the Insurer's underwriting and
administrative rules then in effect.
a. Compensation For Variable Life Contracts. In the case
of variable life Contracts, Selling Broker-Dealer
agrees that in the event a Representative ceases to be
an associated person of Selling Broker-Dealer or ceases
to be validly licensed or registered, Selling
Broker-Dealer shall not receive any compensation based
on any Contract or on premiums or purchase payments
thereafter received by the Insurer from such former
Representative's customers. Provided however,
(i) if the former Representative becomes
registered and licensed with another Selling
Broker-Dealer which has a valid Selling Agreement
with the Insurer and ING America Equities, the
Representative is appointed by the Insurer for the
sale of Contracts, and a Contract owner files a
written request (change of dealer authorization)
with ING America Equities that such owner's
Contracts be serviced through the Representative's
new Selling Broker-Dealer, then such Contracts may
be transferred by the Insurer to the
Representative's new Selling Broker-Dealer, the
compensation not paid shall be payable to the new
Selling Broker-Dealer and the commission portion
thereof shall be passed on to the Representative;
(ii) if within 60 days after the former
Representative's retirement, disability or death,
Selling Broker-Dealer notifies the Insurer and ING
America Equities that a bona fide written contract
exists between the Representative and Selling
Broker-Dealer which calls for the payment of
compensation to the retired Representative,
surviving spouse or other beneficiary, and Selling
Broker-Dealer agrees to continue to service each
affected account, then compensation shall continue
to be paid to the Selling Broker-Dealer as it
would have been if the Representative were still
licensed with the Selling Broker-Dealer; and
(iii) if within 180 days after the former
Representative ceases to be a Representative of
Selling Broker-Dealer, if neither (i) nor (ii) has
occurred, and Selling Broker-Dealer designates
another Representative of Selling Broker-Dealer
who is assigned by Selling Broker-Dealer to
service the former Representative's business, and
such assigned Representative is licensed with and
approved by the Insurer, then the compensation not
paid shall be payable to Selling Broker-Dealer and
the commission portion thereof shall be passed on
to the assigned Representative who is servicing
the former Representative's customers. If an
assigned Representative is not designated within
such 180 day period, Selling Broker-Dealer may not
thereafter designate a replacement Representative
for such Contracts and shall not be entitled to
such compensation.
If a Contract owner files a written request (change of
dealer authorization) with ING America Equities that
such owner's Contracts be serviced through a new
Selling Broker-Dealer which has a valid Selling
Agreement with the Insurer, the owner's request will be
honored in all cases, for purposes of servicing only.
Compensation based on any Contract sold through the
original Selling Broker-Dealer shall continue to be
paid to the original Selling Broker-Dealer, including
compensation due to an increase in coverage, as long as
the Representative remains with the original Selling
Broker-Dealer. Any compensation already paid pursuant
to subparagraphs (i), (ii) or (iii) prior to ING
America Equities' receipt and acceptance of such
written request shall not be affected. Compensation
shall continue to be paid pursuant to subparagraph (i)
and (ii), if applicable, regardless of any such change
or additional change of broker-dealer.
b. Compensation for Variable Annuities. In the case of
variable annuity Contracts, the Insurer recognizes the
Contract owners' right on issued Contracts to terminate
Selling Broker-Dealer and/or change a Selling
Broker-Dealer provided that the Contract owner
notifies ING America Equities in writing. When a
Contract owner terminates Selling Broker-Dealer, no
further compensation on any payments due or received
shall be payable to that Selling Broker-Dealer after
the notice of termination is received and accepted by
ING America Equities. However,
(i) when a Contract owner designates a Selling
Broker-Dealer other than the Selling Broker-Dealer
of record, compensation on any payments due or
received shall be payable to the new Selling
Broker-Dealer in accordance with the Compensation
Schedule in effect at the time of issuance of the
Contract;
(ii) A change of dealer authorization shall be
honored only if there exists a valid Selling
Agreement between the Insurer, ING America
Equities and the new Selling Broker-Dealer and (A)
the Contract owner(s) requests in writing that the
subagent remains as representative of record, or
(B) both the former and future Selling
Broker-Dealers direct the Insurer and ING America
Equities in a joint writing to transfer all
policies and future compensation to the new
Selling Broker-Dealer, or (C) the NASD approves
and effects a bulk transfer of all representatives
to a new Selling Broker-Dealer.
6. Trail Commissions. For any Contracts for which a trail
commission is paid, such commission shall be credited on an
annualized basis. Such commissions shall be computed
monthly as of the end of each policy month on the Contract's
Accumulated Value less policy debt. The trail commission
shall be payable as specified in the applicable Compensation
Schedule, on each Contract anniversary at the end of the
Contract year. Trail commission shall be paid only if the
Contract is in force on the date the trail commission
becomes payable. No trail commissions whatsoever may be
earned, paid, credited or accrued in any way with respect to
sales in the State of New York.
7. Refund of Compensation. No compensation shall be payable,
and Selling Broker-Dealer and Agency jointly and severally
agree to reimburse ING America Equities promptly, and in any
event within 30 days, for any compensation paid to Selling
Broker-Dealer or its Representatives under each of the
following conditions: a) if the Insurer, in its sole
discretion, determines not to issue the Contract applied
for; b) if the Insurer refunds the premiums or purchase
payments upon the applicant's surrender or withdrawal
pursuant to any "free-look" privilege; c) if the Insurer
refunds the premiums or purchase payments paid by applicant
as a result of a complaint by applicant, recognizing that
the Insurer has sole discretion to refund premiums or
purchase payments; d) if the Insurer determines that any
person signing an application who is required to be licensed
or any other person or entity receiving compensation for
soliciting purchase of the Contracts is not duly licensed to
sell the Contracts in the jurisdiction of such sale or
attempted sale; e) if a Contract is surrendered, lapsed or
exchanged within six months of the date it was issued by the
Insurer; and f) as may be otherwise provided in the
Compensation Schedule.
8. Indebtedness and Right of Setoff. Nothing contained herein
shall be construed as giving Selling Broker-Dealer or
Representative the right to incur any indebtedness on behalf
of the Insurer or ING America Equities. Selling
Broker-Dealer hereby authorizes the Insurer and ING America
Equities to set off liabilities, however created, of Selling
Broker-Dealer and Representative to the Insurer and ING
America Equities against any and all amounts otherwise
payable to Selling Broker-Dealer.
9. Termination. This Agreement may not be assigned except by
written mutual consent and shall continue for an indefinite
term, subject to the termination by any party upon ten-days'
advance written notice to the other parties, except that in
the event ING America Equities or Selling Broker-Dealer
ceases to be a registered broker-dealer or a member of the
NASD, this Agreement shall immediately terminate. Upon its
termination, all authorizations, rights and obligations
shall cease, except the agreements in Sections 3, 7, 8, 12
and 13 and the payment of any accrued but unpaid
compensation to Selling Broker-Dealer or refund of
compensation due to ING America Equities and the Insurer.
10. Non-employee Relationship. For the purpose of compliance
with any applicable federal or state securities laws or
regulations, Selling Broker-Dealer acknowledges and agrees
that in performing the services covered by this Agreement,
it is acting in the capacity of an independent "broker" or
"dealer" as defined in the By-Laws of the NASD and not as an
agent or employee of the Insurer or ING America Equities or
any registered investment company. In furtherance of its
responsibilities as a broker or dealer, Selling
Broker-Dealer acknowledges that it is responsible for
statutory and regulatory compliance in securities
transactions involving any business produced by its
Representatives concerning the Contracts.
11. Non-exclusivity. Selling Broker-Dealer agrees that no
territory or product is assigned exclusively hereunder and
that the Insurer and ING America Equities reserve the right
in their discretion to enter into Selling Agreements with
other broker-dealers, and to contract with or establish one
or more insurance Agencies in any jurisdiction in which
Selling Broker-Dealer transacts business hereunder.
12. Co-operation in Investigation. Selling Broker-Dealer,
Agency, ING America Equities, and the Insurer jointly agree
to cooperate fully in any insurance, securities or other
regulatory investigation or proceeding or judicial
proceeding arising in connection with any Contract. Without
limiting the foregoing:
a. Selling Broker-Dealer shall promptly notify the Insurer
and ING America Equities of any customer complaint or
notice of any regulatory authority investigation or
proceeding or judicial proceeding which it might
receive with respect to any Contract.
b. In the case of a substantive customer complaint, the
parties shall cooperate in investigating and responding
to such complaint. Any response shall be sent to the
other parties to this Agreement for approval not less
than five business days prior to its being sent to the
customer or regulatory authority, except that if a more
prompt response is required, the proposed response
shall be communicated by telephone and facsimile
transmission.
13. Indemnification.
a. The Insurer and ING America Equities (referred to
jointly in this Section 13 as "SLD") agree to indemnify
and hold harmless Selling Broker-Dealer and Agencies
(referred to jointly in this Section 13 as the "Selling
Group") and such associated persons as its officers,
directors, agents and employees, against any losses,
claims, damages or liabilities, joint or several, to
which Selling Group or such associated persons may
become subject under the 1933 Act, the 1934 Act or
other federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses,
claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material
fact required to be stated therein or necessary to make
the statements therein not misleading contained (i) in
any Registration Statement, any prospectus or any
document executed by SLD specifically for the purpose
of qualifying a Contract for sale under the laws of any
jurisdiction or (ii) in any written information or
sales material authorized for and supplied or furnished
to Selling Group and its agents or representatives by
SLD, their employees or agents, in connection with the
sale of the Contract. SLD shall reimburse Selling Group
and each such associated person for legal or other
expenses reasonably incurred by Selling Group or such
associated person in connection with investigating or
defending any such loss, claim, damage, liability or
action.
b. The Selling Group jointly and severally agree to
indemnify and hold harmless SLD, and their affiliates
and such associated persons as their officers,
directors, agents and employees, against any losses,
claims, damages or liabilities to which SLD and any
such associated person may become subject under the
1933 Act, the 1934 Act or other federal or state
statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out
of or are based upon:
(i) any unauthorized use of sales materials or any
oral or written misrepresentations or any unlawful
sales practices concerning a Contract by the
Selling Group, its officers, directors, employees,
agents, Representatives or associated persons; and
(ii) claims by agents or Representatives or
employees of the Selling Group for commissions or
other compensation or remuneration of any type;
and
(iii) failure by agents, Representatives or
employees of the Selling Group to comply with all
applicable state insurance laws and regulations
including but not limited to state licensing
requirements, rebate statutes and replacement
regulations, and the provisions of this Agreement;
and
(iv) telephone instructions by a Representative to
SLD in connection with any Contracts.
The Selling Group shall reimburse SLD and any director,
officer, employee or agent for any legal or other
expenses reasonably incurred by SLD or such associated
person in connection with investigating or defending
any such loss, claim, damage, liability or action. This
indemnity provision shall be in addition to any
liability which the Selling Group may otherwise have.
c. After a party entitled to indemnification receives
notice of the commencement of any action, if a claim in
respect thereof is to be made against any person
obligated to provide indemnification, such indemnified
party shall notify the indemnifying party in writing of
the commencement thereof as soon as practicable
thereafter. However, the omission to so notify the
indemnifying party shall not relieve it from any
liability except to the extent that the omission
results in a failure of actual notice to the
indemnifying party, and such indemnifying party is
damaged solely as a result of the failure to give such
notice.
14. Fidelity Bond and Errors and Omissions Insurance. Selling
Broker-Dealer shall secure and maintain a fidelity bond
(including coverage for larceny and embezzlement), issued by
a reputable bonding company, covering all of its directors,
officers, agents, Representatives, associated persons and
employees who have access to funds of the Insurer or ING
America Equities. This bond shall be maintained at Selling
Broker-Dealer's expense in at least the amount prescribed
under Article III, Section 32 of the NASD Rules of Fair
Practice or future amendments thereto. Selling
Broker-Dealer shall provide ING America Equities with a copy
of said bond or verification of an applicable exception
before executing this Agreement. Selling Broker-Dealer
shall also secure and maintain errors and omissions
insurance acceptable to the Insurer and covering Selling
Broker-Dealer and Representatives. Selling Broker-Dealer
hereby assigns any proceeds received from a fidelity bonding
company, errors and omissions or other liability coverage,
to the Insurer or ING America Equities as their interest may
appear, to the extent of their loss due to activities
covered by the bond, policy or other liability coverage. If
there is any deficiency amount, whether due to a deductible
or otherwise, Selling Broker-Dealer shall promptly pay such
amounts on demand. Selling Broker-Dealer hereby indemnifies
and holds harmless the Insurer and ING America Equities from
any such deficiency and from the costs of collection
thereof, including reasonable attorneys' fees.
15. Notices. All notices to the Insurer or ING America Equities
should be mailed to:
ING America Equities, Inc.
Attn: Chief Compliance Officer
1290 Broadway
Denver, CO 80203-5699
All notices to Selling Broker-Dealer and Agencies shall be
duly given if mailed to:
__________________________________________________
__________________________________________________
__________________________________________________
__________________________________________________
16. Governing Law and Venue. This Agreement shall be governed
by and construed in accordance with the laws of the State
of Colorado. The parties agree that the District Court for
the City and County of Denver, Colorado shall have
jurisdiction and be the appropriate venue for any required
judicial interpretation and enforcement of this Agreement.
17. Amendment of Agreement. The Insurer or ING America
Equities may amend this Agreement, including any Exhibit
hereto, upon at least ten (10) days' prior written notice
to Selling Broker-Dealer. The submission of an application
for the Contracts by Selling Broker-Dealer after the
effective date of any such amendment shall constitute
agreement to such amendment. Additional Agencies may be
added as parties to this Agreement at any time by a written
amendment signed by the Insurer, ING America Equities,
Selling Broker-Dealer and such additional Agencies. All
Agencies which are parties to this Agreement at the time of
such amendment hereby consent and agree in advance to the
addition of such additional Agencies.
18. Binding Effect. This Agreement shall be binding on and
shall inure to the benefit of the parties to it and their
respective successors in interest. If any provision of the
Agreement conflicts with any other provision, or if any
provision shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
19. Effective Date and Merger. This Agreement shall be
effective as of the date it is fully executed by all
parties. This Agreement, including all Exhibits hereto,
constitutes the entire Agreement between the parties and
supersedes in its entirety any and all previous agreements
among the parties with respect to the Contracts.
20. Execution in Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which
taken together will constitute one and the same instrument.
In reliance on the representations set forth and in consideration
of the undertakings described, the parties represented below do
hereby contract and agree.
Security Life of Denver ING America Equities, Inc.
Insurance Company
By: _____________________________ By: __________________________
Frank T. Wright, Vice President
Date: ___________________________ Date: ________________________
(or)
FIRST ING LIFE INSURANCE COMPANY
OF NEW YORK
By: _____________________________
Date: ___________________________
_________________________________ _______________________________
Selling Broker-Dealer Agency
By: _____________________________ By: ____________________________
Name: ___________________________ Name:___________________________
Title: __________________________ Title:__________________________
Date: ___________________________ Date:___________________________
SCHEDULE C - First ING NY
COMPENSATION SCHEDULE
TO ING AMERICA EQUITIES SELLING AGREEMENT FOR
FIRST ING LIFE FULCRUM FUND ANNUITY
A GROUP FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED & VARIABLE
ANNUITY
CERTIFICATE FORM 1194 (VA)(Cert.)
issued under
CONTRACT FORM 1194 (VA)
This Schedule is an amendment to the Broker-Dealer Supervisory
and Selling Agreement for Variable Contracts ("Selling
Agreement") among ING AMERICA EQUITIES, INC. ("ING America
Equities"), FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
("First ING Life") and the broker-dealer and agency(s) signatory
thereto, pursuant to paragraph 17 of that Selling Agreement, is
effective as of September 1, 1995, or as set forth below.
The provisions of this Schedule will apply only to First ING
Life Group Flexible Premium Deferred Combination Fixed and
Variable Annuity Certificate Form 1194 (VA) (Cert.) ("Certificate")
issued under Contracts Form 1194 (VA) ("Contract"), solicited
and issued while this Schedule is in effect. All compensation
payable under this Schedule will be subject to the terms and
conditions contained herein at the time of issue on the Certificate
by First ING Life.
ELECTION OF SCHEDULE
Selling Broker-Dealer shall be paid compensation as follows:
Commission as a Percentage
Owner's Age at Issue of Each Purchase Payment
0-70 5.5%
71+ 4.5%
1. Commission Calculation: Commissions based on purchase
payments will be calculated only on funds actually received and
accepted by First ING Life. Commissions will be paid only on an
earned basis.
2. Compensation Payments: Compensation on initial purchase
payment will be due to the Selling Broker-Dealer at the time of
issuance of the Certificate and for all other purchase
payments at the time of the receipt and acceptance of the
purchase payments by First ING Life. The amount, if
any, and the time of payment of compensation on replacements,
changes, exchanges and other special cases and programs will be
governed by First ING Life underwriting and
administrative rules then in effect.
3. Commission Chargeback: In the event that a
Certificate for which a commission has been paid is surrendered
by the Owner, is returned to First ING Life during the Free
Look Period as described in the Certificate or upon payout
of Death Benefit Proceeds, First ING Life and ING America
Equities will require reimbursement from Selling Broker-Dealer
as follows:
. 100% of commissions paid if the event occurs during the
first six months of the Certificate.
. 50% of commissions paid if the event occurs during the
second six months of the Certificate.
If a purchase payment for which a commission has been paid is
refunded by First ING Life, a reimbursement of the
commissions paid on the amount refunded will be due from the
Selling Broker-Dealer.
The reimbursement may be deducted by ING America Equities from
the next, or any subsequent, commission payment to Selling Broker-
Dealer.
If the amount to be reimbursed exceeds compensation otherwise
due, Selling Broker-Dealer shall promptly reimburse ING America
Equities before the next commission cycle.
4. Termination and Amendment: First ING Life and ING
America Equities reserve the right to terminate or amend this
Schedule by providing written notification to the Selling Broker-
Dealer in accordance with Sections 9, 15 and 17 of the Selling
Agreement. With the exception of the terms changed by any such
Amendment, all other terms and conditions of the original
Schedule shall remain in full force and effect.
This Schedule shall be effective as of September 1, 1995, or the
date the operative Selling Agreement is accepted and executed by
First ING Life, whichever is later.
FIRST ING LIFE
NEW YORK, NEW YORK
CONTRACT HOLDER: Norwest Bank
CONTRACT DATE: September 5, 1994
CONTRACT NUMBER: 001-000028
This is a group annuity Contract issued to and owned by the Contract Holder.
This group Contract is governed by the laws of the state where it was delivered.
The Certificates issued under it are governed by the laws of the state where the
Certificate was delivered.
WE AGREE TO PAY the annuity benefit to the Annuitants covered under this
Contract beginning on each Certificate's Annuity Date, subject to the provisions
of this Contract. The Annuitant for any Certificate is named in the Certificate
Schedule included in each Certificate issued as evidence of coverage under this
group Contract.
WE ALSO AGREE to provide the other rights and benefits of this group Contract.
These agreements are subject to the provisions of this group Contract.
In this Contract, "Owner",refers to the owner of a Certificate issued under this
group Contract. "We", "us" and "our" refer to First ING Life Insurance Company
of New York.
Secretary President
This Contract is a GROUP FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED AND
VARIABLE ANNUITY CONTRACT.
Annuity Payouts and other values provided by this Contract, when based on the
investment experience of a separate account, are variable. These values may
increase or decrease based on investment experience and are not guaranteed as
to fixed dollar amount. The amount of any Annuity Payouts which are based on the
investment experience of a separate account will increase or decrease depending
on whether the investment experience, net of Variable Account Annual Expenses,
is higher or lower than the Benchmark Total Return. For each Certificate,
Annuity Payouts begin as of the Annuity Date. Purchase Payments are flexible
and may be made until the Annuity Date. The Guaranteed Death Benefit will be
paid if an Owner dies prior to the Annuity Date.
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
A Stock Company
Customer Service Center
[P.O. Box 173778, Denver, Colorado 80217-3778]
[Toll-free Telephone Number: 1(800)249-9099]
TABLE OF CONTENTS
This Contract is a legal Contract between the Owner and us. READ IT CAREFULLY.
GUIDE TO KEY PROVISIONS
SCHEDULE 5
CERTIFICATE EXPENSE PROVISIONS 7
BENEFIT PROVISIONS 8
APPLICATION AND ELIGIBILITY 8
EFFECTIVE DATE OF COVERAGE 8
ELECTION AND CHANGES OF ANNUITY DATE 8
ELECTION AND CHANGES OF ANNUITY OPTION 8
PAYOUT OF PROCEEDS 9
AS OF THE ANNUITY DATE, TO PROVIDE ANNUITY PAYOUTS 9
UPON SURRENDER OF A CERTIFICATE PRIOR TO THE ANNUITY DATE 9
AS A DEATH BENEFIT PRIOR TO THE ANNUITY DATE 9
OWNERS AND DEATH OF THE OWNERS 10
REQUIRED DISTRIBUTIONS 10
GUARANTEED DEATH BENEFIT 11
ANNUITANTS AND DEATH OF ANNUITANTS 11
BENEFICIARIES AND DEATH OF BENEFICIARIES 12
PURCHASE PAYMENT PROVISIONS 12
PURCHASE PAYMENTS 12
PURCHASE PAYMENT ALLOCATION 12
VARIABLE ACCOUNT PROVISIONS 12
THE VARIABLE ACCOUNT 12
VARIABLE ACCOUNT DIVISIONS 13
CHANGES WITHIN THE VARIABLE ACCOUNT 13
GENERAL ACCOUNT PROVISIONS 14
THE GENERAL ACCOUNT 14
GUARANTEED INTEREST DIVISION 14
TRANSFER PROVISIONS 14
TRANSFERS TO OR FROM THE GUARANTEED INTEREST DIVISION 14
EXCESS TRANSFER CHARGE 15
DOLLAR COST AVERAGING TRANSFER OPTION 15
AUTOMATIC REBALANCING 16
ACCUMULATION VALUE PROVISIONS 16
VALUATION DATE 16
VALUATION PERIOD 16
ACCUMULATION UNIT VALUE 17
ACCUMULATION EXPERIENCE FACTOR 17
ACCUMULATION VALUE OF THE DIVISIONS OF THE VARIABLE ACCOUNT 17
ACCUMULATION VALUE OF THE GUARANTEED INTEREST DIVISION 18
PARTIAL WITHDRAWAL PROVISIONS 18
DEMAND WITHDRAWAL OPTION 19
SYSTEMATIC INCOME PROGRAM 19
IRA INCOME PROGRAM 20
SURRENDER PROVISIONS 20
CASH SURRENDER VALUE 20
GENERAL CONTRACT PROVISIONS 21
THE CONTRACT 21
TERMINATION OF CONTRACT 21
AGE 21
PROCEDURES 21
DEFERRAL OF PAYOUT 22
TAX QUALIFICATION 22
CONTRACT CHANGES 22
COLLATERAL ASSIGNMENT 22
INCONTESTABILITY 22
MISSTATEMENT OF AGE OR SEX 22
PERIODIC REPORTS 23
BASIS OF COMPUTATIONS 23
TAXES 23
NON PARTICIPATING 23
CUSTOMER SERVICE CENTER 23
ANNUITY OPTION PROVISIONS 23
SUPPLEMENTARY CONTRACT 23
PAYOUT OPTIONS 24
VARIABLE ANNUITY PAYOUT 24
FIXED ANNUITY PAYOUT 25
COMBINATION ANNUITY PAYOUT 26
PAYOUT PERIOD OPTIONS 26
COMMUTING 27
EXCESS INTEREST 27
MINIMUM AMOUNTS 27
INCOME PROTECTION 27
PAYOUTS OTHER THAN MONTHLY 27
PAYOUT PERIOD OPTION TABLES 28
ADDITIONAL BENEFITS OR RIDERS FOR A CERTIFICATE, IF ANY, WILL BE SHOWN IN THE
CERTIFICATE SCHEDULE. THE ADDITIONAL PROVISIONS WILL BE INSERTED IN THE
CERTIFICATE.
SCHEDULE
Contract Holder: Norwest Bank
Contract Number: 001-000028
Contract Date: September 5, 1994
Minimum Initial Purchase Payment For a Certificate: [$25,000]
Minimum for Each Additional Purchase Payment [$500]
For a Certificate:
Maximum Cumulative Net Purchase Payment For a [$1,500,000]
Certificate:
Customer Service Center: [P.O. Box 173778,
Denver, Colorado
80217-3778]
ELIGIBLE DIVISIONS
[Value Division]
[Growth Division]
[Balanced Opportunity Division]
[International Growth Division]
[Global Strategic Income Division]
[Global Interactive/Telecomm Division]
Guaranteed Interest Division
All percentage allocations must be in whole numbers.
CERTIFICATE EXPENSE PROVISIONS
Owner Transaction Expenses (Deducted from the Accumulation Value)
1. Excess Transfer Charges: Refer to the Transfer Provisions section for
details.
2. Surrender Charge: For any Certificate, this charge is deducted upon
Surrender or Partial Withdrawal of Purchase Payments held less than 5 full
Certificate Years since the Anniversary at the end of the Certificate Year
in which the Purchase Payment was made. It is calculated as a percentage
of the Purchase Payments withdrawn or surrendered. The percentage is
based on the number of Anniversaries since the Certificate Year in which
each Purchase Payment was made.
ANNIVERSARIES SINCE 0 1 2 3 4 5 6 and
PURCHASE PAYMENT WAS more
MADE:
PERCENTAGE: 7% 6% 5% 4% 3% 2% 0%
Annual Administrative Charge (Deducted from the Accumulation Value)
For any Certificate, this charge is based on Net Purchase Payments. If Net
Purchase Payments received are:
less than $100,000: $ 30 per year
$100,000 or more: $ 0 per year
Variable Account Annual Expenses (Based on the percentage of assets in each
Variable Account Division)
Mortality And Expense Risk Charge: 1.25%
Asset Based Administrative Charge: 0.15%
Guaranteed Interest Rate
The Guaranteed Interest Rate for the Guaranteed Interest 3.00% per year
Division is:
BENEFIT PROVISIONS
APPLICATION AND ELIGIBILITY
The application includes the eligibility requirements for coverage provided
under this Contract and the eligible Variable Account Divisions. Those persons
eligible for coverage are those eligible under the classes set forth in the
application which is approved by us.
EFFECTIVE DATE OF COVERAGE
The Contract Holder applies for this group Contract through an application.
Once the Contract Holder's application is approved by us, the group Contract is
issued to the Contract Holder, who is the group Contract owner. The group
Contract Holder holds legal title to the group Contract. The Contract Holder
retains possession of the group Contract while it is in force. This group
Contract is governed by the laws of the state where it was delivered. The
Certificates issued under it are governed by the laws of the state where the
Certificate was delivered. Certificates will be issued to those persons who
apply for coverage under this group Contract through a Certificate application
and are accepted by us.
Each Certificate will have its own Owner, Annuitant (and any Contingent
Annuitant), Beneficiary (and any Contingent Beneficiaries) and elections. Each
Certificate will also have its own Proceeds, including Accumulation Value, Cash
Surrender Value and Guaranteed Death Benefit, and which also includes having its
own Accumulation Value in each of the Divisions in which the Owner of the
Certificate invests. In this Contract, unless a reference is specifically to
the Contract, that reference will be to the Certificate.
The Contract Date shown in the Schedule is the date the Contract was issued to
the Contract Holder. For any Certificate, the Certificate Date shown in the
Certificate Schedule is the effective date for all coverage provided under that
Certificate. The Certificate Date is the date from which we measure
Anniversaries. An Anniversary occurs each Certificate Year on the same month
and day as the Certificate Date. If the Certificate Date is February 29th, the
Anniversary will be February 28th in Certificate Years in which there is not a
February 29th.
ELECTION AND CHANGES OF ANNUITY DATE
For any Certificate, the Annuity Date is the date as of which Annuity Payouts
begin. It may be elected on the Certificate application, but may not be earlier
than the second Anniversary. If no Annuity Date is elected in the Certificate
application, the Annuity Date will be the first day of the month following the
Annuitant's 85th birthday. The Owner may change the Annuity Date at any time
prior to 60 days before the Annuity Date currently elected by sending written
notice to our Customer Service Center. The Annuity Date may not be later than
the first day of the month following the Annuitant's 85th birthday.
ELECTION AND CHANGES OF ANNUITY OPTION
The Annuity Option is composed of both the Payout Option which specifies the
type of annuity to be paid and the Payout Period Option which determines how
long the annuity will be paid, the frequency and the amount of each payout. The
Owner elects the Annuity Option. The Owner may change the Annuity Option at any
time prior to the Annuity Date. The Beneficiary may select an Annuity Option
for any Payouts to be made pursuant to death Proceeds. Any death benefit
Proceeds to be applied under an Annuity Option will be allocated to each of the
Divisions of the Variable Account or the Guaranteed Interest Division as
instructed by the Beneficiary. The available options are described in the
Annuity Option Provisions section. Commutation rights are provided to an
Annuitant or Contingent Annuitant as described in the Commuting section of this
Contract.
PAYOUT OF PROCEEDS
Proceeds are paid or applied under the following circumstances:
1. As of the Annuity Date, to provide Annuity Payouts;
2. Upon surrender of a Certificate prior to the Annuity Date; or
3. As a death benefit prior to the Annuity Date.
The amount and method of payout under each circumstance is described below. The
payout of Proceeds is subject to the Required Distributions section. We may
delay payout of the Proceeds for reasons listed in the Deferral of Payout
section.
As of the Annuity Date, to Provide Annuity Payouts
For any Certificate, Proceeds applied as of the Annuity Date to provide an
annuity under an Annuity Option will be the Accumulation Value minus taxes
incurred but not deducted. This deduction will be allocated to each of the
Divisions in the same proportion that the Accumulation Value in each Division
bears to the Accumulation Value in all Divisions immediately prior to the
Annuity Date. We will provide an annuity under the Annuity Option then in
effect. If no Annuity Option is in effect, we will apply proceeds to Payout
Period Option II for a Variable Annuity Payout, using a Benchmark Total
Return of 3%, with a designated period of 20 years. The available options
are described in the Annuity Option Provisions section. The annuity benefits
at the time of their commencement will not be less than those that would be
provided by the application of the Proceeds to purchase any single premium
immediate annuity contract offered by us at that time to the same class of
annuitants.
Upon Surrender of a Certificate Prior to the Annuity Date
Proceeds payable upon the surrender of a Certificate prior to the Annuity
Date will be the Cash Surrender Value. No Annuity Options are available upon
surrender; however, the Owner may accelerate the Annuity Date under the
Contract as described in the Surrender Provisions section of this Contract.
As a Death Benefit Prior to the Annuity Date
Proceeds payable upon the death of an Owner prior to the Annuity Date will be
the Guaranteed Death Benefit and will be paid according to the provisions in
the Owners and Death of Owners and the Required Distributions sections. We
will pay the Proceeds in one lump sum unless the Beneficiary elects an
Annuity Option within 60 days after the determination of the Guaranteed Death
Benefit but prior to the date on which we pay the Proceeds. If a one sum
payout is elected, the Proceeds will usually be paid within 7 days of
determination of the amount of the Guaranteed Death Benefit. Interest will
be paid on the Proceeds from the date of determination of the Guaranteed
Death Benefit to the date of payout. Interest is at the rate we declare, or
any higher rate required by law, but not less than 3% per year. If the
Proceeds are paid under an Annuity Option, the Beneficiary becomes the
Annuitant and the Contingent Beneficiary becomes the Contingent Annuitant.
The available options are described in the Annuity Option Provisions section.
The annuity benefits at the time of their commencement will not be less than
those that would be provided by the application of the Proceeds to purchase
any single premium immediate annuity contract offered by us at that time to
the same class of annuitants.
OWNERS AND DEATH OF THE OWNERS
The original Owner of a Certificate is the person named as the Owner in the
Certificate application. Consistent with the terms of any Beneficiary
designation and any assignment, the Owner may, prior to the Annuity Date:
1. Assign the Certificate or surrender it in whole or in part;
2. Amend or change the Certificate with the consent of the Company;
3. Exercise any right and receive any benefit under the Certificate; or
4. Change the ownership of the Certificate.
Subject to the applicable provisions of the Required Distributions section, if
an Owner (or Deemed Owner as defined in the Required Distributions section) dies
prior to the Annuity Date, and:
1. If the Owner's spouse is the Joint Owner, then the spouse becomes the new
Owner and no death benefit is payable; or
2. If the Owner's spouse is the Beneficiary, then the spouse may elect to
become the Owner (in which case there is no death benefit payable) by so
electing within 60 days of our receipt of due proof of death and prior to
the distribution of Proceeds; if there is no such election, the Guaranteed
Death Benefit is payable to the Beneficiary; or
3. If the Owner's spouse is not the Joint Owner or the Beneficiary, then the
Guaranteed Death Benefit is payable to the Beneficiary.
REQUIRED DISTRIBUTIONS
The following required distribution rules shall apply if and to the extent
required under Section 72(s) of the Internal Revenue Code:
1. Subject to the alternative election or spouse beneficiary provisions in
subsection (2) or (3) below, for any Certificate,
a) If any Owner dies on or after the annuity starting date and before
the entire interest in that Certificate has been distributed, the
remaining portion of such interest shall be distributed at least as
rapidly as under the method of distribution being used as of the
date of such death;
b) If any Owner dies before the annuity starting date, the entire
interest in that Certificate will be distributed within 5 years
after such death; and
c) If any Owner is not an individual, then for purposes of this
subsection (1), the primary Annuitant under that Certificate shall
be treated as the Owner (the "Deemed Owner"), and any change in the
primary Annuitant shall be treated as the death of the Owner.
The primary Annuitant is the individual, the events in the life of
whom are of primary importance in affecting the timing or amount
of the payout under that Certificate.
2. If any portion of the interest of an Owner (or a Deemed Owner) in
subsection (1) is payable to or for the benefit of a designated
beneficiary, and such beneficiary elects within 60 days after our
receipt of due proof of death but prior to the distribution of Proceeds
to have such portion distributed in an Annuity Option over a period
that: A) does not extend beyond such beneficiary's life or
life expectancy and B) starts within 1 year after such death
(a "Qualifying Distribution Period"); then for purposes
of satisfying the requirements of subsection (1), such
portion shall be treated as distributed entirely on the date
such periodic distributions begin. Such beneficiary may elect
any Payout Period Option for a Qualifying Distribution Period,
subject to any restrictions imposed by any regulations
under Section 72(s) of the Internal Revenue Code.
3. If any portion of the interest of an Owner (or a Deemed Owner)
described in subsection (1) is payable to or for the benefit of such
Owner's spouse, or is co-owned by such spouse, then such spouse shall
be treated as the Owner of such portion for purposes of the
requirements of subsection (1).
GUARANTEED DEATH BENEFIT
For any Certificate, the Guaranteed Death Benefit is the greater of the
following amounts. These amounts are calculated as of the Valuation Date we
receive due proof of death and all information necessary to process the claim
including the election of a one sum payout or election under an Annuity Option:
1. The Accumulation Value; or
2. The Step-Up Benefit, plus Net Purchase Payments since the last step-up
anniversary.
The Step-Up Benefit at issue is the initial Purchase Payment for the
Certificate. As of each step-up anniversary, the current Accumulation
Value is compared to the prior Step-Up Benefit increased by Net Purchase
Payments since the last step-up anniversary. The greater of these becomes
the new Step-Up Benefit.
The Step-Up Anniversaries are every 6th Anniversary for the duration of
the Certificate (i.e., the 6th, 12th, 18th, etc.).
The Guaranteed Death Benefit payable to the Beneficiary is the Guaranteed Death
Benefit as calculated above minus taxes incurred but not deducted.
ANNUITANTS AND DEATH OF ANNUITANTS
For any Certificate, the original Annuitant and any Contingent Annuitant are
named in the Certificate application. The Annuitant will receive the annuity
benefits of the Certificate if, on the Annuity Date, the Annuitant is living and
the Certificate is then in force. The Owner may name a new Annuitant prior to
the Annuity Date. Any Annuitant or Contingent Annuitant must be younger than
age 86 when named. Any Annuitant or Contingent Annuitant that is not an
individual may not be named without our consent. If the Owner is not an
individual, the Annuitant may not be changed without our consent.
If the Annuitant dies before the Annuity Date, and a Contingent Annuitant has
been named, the Contingent Annuitant becomes the Annuitant. If no Contingent
Annuitant has been named, the Owner must designate a new Annuitant. If no
designation is made within 30 days of the Annuitant's death, the Owner will
become the Annuitant.
If any Owner is not an individual, the death of the Annuitant will be treated as
the death of the Owner.
Upon the death of the Annuitant after the Annuity Date, any remaining Designated
Period payouts will be continued to any Contingent Annuitant. Upon the death of
both the Annuitant and all Contingent Annuitants, any remaining Designated
Period payouts will be paid to the estate of the last to die of the Annuitant
and Contingent Annuitants. Amounts may be released in one sum if the Owner's
election allows. See the Annuity Option Provisions section.
BENEFICIARIES AND DEATH OF BENEFICIARIES
For any Certificate, the original Beneficiary and any Contingent Beneficiaries
are named in the Certificate application. Surviving Contingent Beneficiaries
are paid death Proceeds only if no Beneficiary survives. If more than one
Beneficiary in a class survives, they will share the Proceeds equally, unless
the Owner's designation provides otherwise. If there is no designated
Beneficiary or Contingent Beneficiary surviving, we will pay the Proceeds to the
Owner's estate. The Beneficiary designation will be on file with us or at a
location designated by us. We will pay Proceeds to the most recent Beneficiary
designation on file. The Owner may name a new Beneficiary unless an irrevocable
Beneficiary has been named. When an irrevocable Beneficiary has been
designated, the Owner and the irrevocable Beneficiary must act together to make
any Beneficiary changes.
PURCHASE PAYMENT PROVISIONS
PURCHASE PAYMENTS
A Certificate will not be effective until the initial Purchase Payment for it is
received by us and accepted at our Customer Service Center. Any subsequent
Purchase Payments for the Certificate may be made at any time prior to the
Annuity Date, subject to the Minimum for Each Additional Purchase Payment For a
Certificate amount shown in the Schedule. No Purchase Payment will be allocated
until it is received by us at our Customer Service Center. We reserve the right
to refuse to accept, without our prior approval, any Purchase Payment when the
sum of Net Purchase Payments to date for the Certificate exceeds the Maximum
Cumulative Net Purchase Payment For a Certificate shown in the Schedule. Net
Purchase Payments are Purchase Payments made minus Gross Partial Withdrawals
taken. A Gross Partial Withdrawal is a Partial Withdrawal plus any applicable
Surrender Charge. In this Contract, all references to Purchase Payments, Gross
Partial Withdrawals and Surrender Charges pertain to the Certificate.
PURCHASE PAYMENT ALLOCATION
For any Certificate, the initial Purchase Payment will be allocated to the
Guaranteed Interest Division and the Divisions of the Variable Account according
to the Owner's most recent written instructions. Any Purchase Payments
thereafter will be allocated to each Division in the same proportion that the
Accumulation Value in each Division bears to the total Accumulation Value as of
the date we receive that additional Purchase Payment at our Customer Service
Center, or as otherwise instructed bythe Owner The Owner may designate a
different allocation with respect to any Purchase Payments by sending us a
written notice with the Purchase Payment.
VARIABLE ACCOUNT PROVISIONS
THE VARIABLE ACCOUNT
The Variable Account is an account established by us, pursuant to the laws of
the State of New York, to separate the assets funding the variable benefits for
the class of policies to which this Contract belongs from the other assets of
First ING Life of New York.
The Variable Account is registered as a unit investment trust under the
Investment Company Act of 1940. All income, gains and losses, whether or not
realized, from assets allocated to the Variable Account are credited to or
charged against the Variable Account without regard to income, gains or losses
of our General Account. The assets of the Variable Account are our property,
but are separate from our General Account and our other Variable Accounts. That
portion of the assets of the Variable Account which is equal to the reserves and
other contract liabilities with respect to the Variable Account is not subject
to creditor claims against us.
VARIABLE ACCOUNT DIVISIONS
The Variable Account is divided into Divisions, each of which invests in a
series fund Portfolio designed to meet the objectives of the Division. The
current eligible Divisions are shown in the Schedule. We may, from time to
time, add additional Divisions. If we do, the Owner may be permitted to select
from these other Divisions subject to the terms and conditions we may impose on
those allocations.
We reserve the right to limit the number of Divisions in which the Owner may
invest.
CHANGES WITHIN THE VARIABLE ACCOUNT
When permitted by law, and subject to any required notice to the Owner and
approval of the Securities and Exchange Commission ("SEC"), state regulatory
authorities or Owners, we may from time to time make the following changes to
the Variable Account:
. Make additional Divisions available. These Divisions will invest in
investment Portfolios we find suitable for the Contract.
. Eliminate Divisions from the Variable Account, combine 2 or more Divisions,
or substitute a new Portfolio for the Portfolio in which a Division invests.
A substitution may become necessary if, in our judgment, a Portfolio no longer
suits the purposes of the Contract. This may happen due to a change in laws
or regulations, or a change in a Portfolio's investment objectives or
restrictions. This may also happen if the Portfolio is no longer available
for investment, or for some other reason, such as a declining asset base.
. Transfer assets of the Variable Account, which we determine to be associated
with the class of contracts to which this Contract belongs, to another
Variable Account.
. Withdraw the Variable Account from registration under the Investment Company
Act of 1940.
. Operate the Variable Account as a management investment company under the
Investment Company Act of 1940.
. Cause one or more Divisions to invest in a mutual fund other than or in
addition to the Portfolios.
. Discontinue the sale of Contracts and Certificates.
. Terminate any employer or plan trustee agreement with us pursuant to its
terms.
. Restrict or eliminate any voting rights as to the Variable Account.
. Make any changes required by the Investment Company Act of 1940 or the rules
or regulations thereunder.
GENERAL ACCOUNT PROVISIONS
THE GENERAL ACCOUNT
The General Account holds all of our assets other than those held in the
Variable Account or our other separate accounts. The Guaranteed Interest
Division is a part of our General Account.
GUARANTEED INTEREST DIVISION
The Guaranteed Interest Division is another Division to which the Owner may
allocate Purchase Payments or make transfers. The Accumulation Value of the
Guaranteed Interest Division is equal to the Net Purchase Payments allocated to
this Division plus any earned interest minus deductions taken from this
Division. Interest is credited at the guaranteed rate shown in the Schedule or
may be credited at a higher rate. Any higher rate is guaranteed to be in effect
for at least 12 months.
TRANSFER PROVISIONS
After the Certificate Examination Period, the Accumulation Value in each
Division may be transferred, upon request, to any other Division subject to the
limitations on transfers involving the Guaranteed Interest Division as detailed
in the following section. Any transfers made due to the operation of Dollar
Cost Averaging or Automatic Rebalancing will not count toward the limit on the
number of transfers allowed free of charge. The minimum amount that may be
transferred from each Division is the lesser of $100 or the Certificate's
balance of a Division.
The following table summarizes the number of transfers available and the
associated charges during any Certificate year:
Accumulation Period Annuity Period
Free Transfers 12 4
Total Number of Transfers Unlimited 4
Permitted
Excess Transfer Charge $25 for each Not Applicable
transfer in excess
of 12 during any
Certificate Year
We reserve the right to limit the number of transfers per Certificate Year to 12
and to limit excessive trading activity.
TRANSFERS TO OR FROM THE GUARANTEED INTEREST DIVISION
Once during the first 30 days of each Certificate Year, the Owner may transfer
amounts to or from the Guaranteed Interest Division. Transfer requests received
within 30 days before the Anniversary will be deemed to occur as of the
Anniversary. Transfer requests received on the Anniversary or during the next
30 days will be processed. Transfer requests received at any other time will
not be processed.
The maximum transfer amount from the Guaranteed Interest Division in any
Certificate Year is the greatest of:
1. 25% of the Accumulation Value in the Guaranteed Interest Division at the
time of the first transfer or withdrawal in a Certificate Year;
2. The minimum transfer amount; or
3. The total amount transferred or withdrawn from the Guaranteed Interest
Division in the prior Certificate Year, including Systematic Income
Partial Withdrawals.
EXCESS TRANSFER CHARGE
If the Owner exceeds the number of free transfers allowed, the Owner will be
assessed an Excess Transfer Charge. This charge will be deducted from each of
the Divisions in which the Owner is invested in the same proportion that the
amount of Accumulation Value in that Division bears to the total Accumulation
Value immediately after the transfer.
DOLLAR COST AVERAGING TRANSFER OPTION
During the Accumulation Period only, if the Owner has at least $10,000 of
Accumulation Value in the [Global Strategic Income Division], the Owner may
choose to transfer a specified dollar amount each month from this Division to
other Divisions of the Variable Account. Dollar Cost Averaging transfers may
not be made to the Guaranteed Interest Division. The Owner may elect the Dollar
Cost Averaging transfer option at any time prior to the Certificate's Annuity
Date.
The minimum amount that the Owner may elect to transfer each month is $100. The
maximum amount that the Owner may transfer is equal to the Accumulation Value in
the [Global Strategic Income Division] when the election is made, divided by 12.
Dollar Cost Averaging may be elected to end on a specified date or when a
specific balance remains in the [Global Strategic Income Division].
Allocations of the transfer amount must be designated as whole number
percentages; no specific dollar designation may be made to the Divisions of the
Variable Account. If the Owner elects to transfer to a particular Division, the
minimum percentage that may be transferred to that Division is 1% of the total
amount transferred. The transfer date will be the same calendar day each month
as the Certificate Date. If this calendar day is not a Valuation Date, the next
Valuation Date will be used. If, on any transfer date, the Certificate's
Accumulation Value in the [Global Strategic Income Division] is equal to or less
than the amount the Owner has elected to have transferred, the entire amount
will be transferred, and this option will end. Dollar Cost Averaging will end
as of the Valuation Date immediately preceding the Certificate's Annuity Date.
The Owner may change the transfer amount or the Divisions to which transfers are
to be made once each Certificate Year. The Owner may cancel this election by
sending us written notice at our Customer Service Center at least 7 days before
the next transfer date. Any transfer under this option will not be included for
purposes of the Excess Transfer Charge.
If the Owner elects both Dollar Cost Averaging and Automatic Rebalancing, Dollar
Cost Averaging will occur first. On the first Valuation Date of the next
calendar quarter after Dollar Cost Averaging has terminated, Automatic
Rebalancing will begin.
AUTOMATIC REBALANCING
Automatic Rebalancing allows the Owner to match the Accumulation Value in each
Division to the allocation percentages. Automatic Rebalancing can be elected in
the Certificate application or by completing the client service application and
returning it to our Customer Service Center. As of the first Valuation Date of
each calendar quarter thereafter we will reallocate the Accumulation Value so
that the amount in each Division matches the allocation percentages. Automatic
Rebalancing may not begin until the end of the Certificate Examination Period.
When the Owner requests a change in the allocation percentages, the Accumulation
Value will be reallocated as of the Valuation Date that we receive the written
allocation instructions.
The Owner may cancel this election by sending us written notice at our Customer
Service Center at least 7 days before the next transfer date. Any transfer
under this option will not be included for purposes of the Excess Transfer
Charge.
The Owner may not transfer among Divisions while the Automatic Rebalancing
feature is in effect. If the Owner elects both Dollar Cost Averaging and
Automatic Rebalancing, Dollar Cost Averaging will occur first. On the first
Valuation Date of the next calendar quarter after Dollar Cost Averaging has
terminated, Automatic Rebalancing will begin.
ACCUMULATION VALUE PROVISIONS
The Accumulation Value of any Certificate is the sum of the Accumulation Values
of all the Divisions of the Variable Account in which that Certificate is
invested, plus any Accumulation Value of the Guaranteed Interest Division. In
this Contract, all references to Accumulation Value pertain to the Accumulation
Value of the Certificate.
The Accumulation Values are based on the Purchase Payments and transfers made,
Partial Withdrawals, the Certificate charges, earned interest of the Guaranteed
Interest Division and the investment experience of the Divisions of the Variable
Account.
All Certificate processing occurs as of a Valuation Date. If a transaction
occurs on a day other than a Valuation Date, the transaction will be processed
as of the next Valuation Date.
VALUATION DATE
A Valuation Date is any day:
1. The New York Stock Exchange ("NYSE") is open for trading and on which
First ING Life's Customer Service Center is open; or
2. As may be required by law.
VALUATION PERIOD
A Valuation Period begins at 4 p.m. Eastern time on a Valuation Date. It ends
at 4 p.m. Eastern time on the next succeeding Valuation Date.
All Contract processing for a Valuation Period takes place as of the end of the
Valuation Period.
ACCUMULATION UNIT VALUE
The investment experience of a Division of the Variable Account is determined as
of each Valuation Date. We use an Accumulation Unit Value to measure the
experience of each of the Divisions of the Variable Account during a Valuation
Period. The Accumulation Unit Value for a Valuation Period equals the
Accumulation Unit Value for the preceding Valuation Period multiplied by the
Accumulation Experience Factor for the Valuation Period.
The number of units for a given transaction related to a Division of the
Variable Account as of a Valuation Date is determined by dividing the dollar
value of that transaction by that Division's Accumulation Unit Value for that
date.
ACCUMULATION EXPERIENCE FACTOR
For each Division of the Variable Account, the Accumulation Experience Factor
reflects the investment experience of the Portfolio in which that Division
invests and the charges assessed against that Division for a Valuation Period.
The Accumulation Experience Factor is calculated as follows:
1. The net asset value of the Portfolio in which that Division invests as of
the end of the current Valuation Period; plus
2. The amount of any dividend or capital gains distribution declared and
reinvested in that Portfolio during the current Valuation Period; minus
3. A charge for taxes, if any.
4. The result of (1), (2) and (3), divided by the net asset value of that
Portfolio as of the end of the preceding Valuation Period; minus
5. The daily equivalent of the Variable Account Annual Expenses shown in the
Schedule for each day in the current Valuation Period.
ACCUMULATION VALUE OF THE DIVISIONS OF THE VARIABLE ACCOUNT
The Accumulation Value of each Division of the Variable Account as of the
Certificate Date is equal to the amount of the initial Purchase Payment for the
Certificate allocated to that Division.
On subsequent Valuation Dates, the Accumulation Value of each Division of the
Variable Account is calculated as follows:
1. The number of Accumulation Units in that Division as of the end of the
preceding Valuation Period multiplied by that Division's Accumulation Unit
value for the current Valuation Period; plus
2. Any additional Purchase Payments allocated to that Division during the
current Valuation Period; plus
3. Any Accumulation Value transferred to such Division during the current
Valuation Period; minus
4. Any Accumulation Value transferred from such Division during the current
Valuation Period; minus
5. Any Excess Transfer Charge allocated to such Division during the current
Valuation Period; minus
6. Any Gross Partial Withdrawals allocated to that Division during the
current Valuation Period; minus
7. The portion of the Administrative Charge applicable to that Division if an
Anniversary occurs during the Valuation Period.
The Administrative Charge for a Certificate is allocated to each of the
Divisions of the Variable Account and the Guaranteed Interest Division in the
same proportion that the Accumulation Value in that Division bears to the
Accumulation Value in all of the Divisions.
ACCUMULATION VALUE OF THE GUARANTEED INTEREST DIVISION
The Accumulation Value of the Guaranteed Interest Division as of the Certificate
Date is equal to the amount of the initial Purchase Payment for the Certificate
allocated to that Division.
On subsequent Valuation Dates, the Accumulation Value of the Guaranteed Interest
Division is calculated as follows:
1. The Accumulation Value of the Guaranteed Interest Division as of the end
of the preceding Valuation Period plus any earned interest during the
Valuation Period; plus
2. Any additional Purchase Payments allocated to the Guaranteed Interest
Division during the current Valuation Period; plus
3. Any Accumulation Value transferred to the Guaranteed Interest Division
during the current Valuation Period; minus
4. Any Accumulation Value transferred from the Guaranteed Interest Division
during the current Valuation Period; minus
5. Any Excess Transfer Charge allocated to the Guaranteed Interest Division
during the current Valuation Period; minus
6. Any Gross Partial Withdrawals allocated to the Guaranteed Interest
Division during the current Valuation Period; minus
7. The portion of the Administrative Charge applicable to the
Guaranteed Interest Division if an Anniversary occurs during the current
Valuation Period.
The Administrative Charge for a Certificate is allocated to each of the
Divisions of the Variable Account and the Guaranteed Interest Division in the
same proportion that the Accumulation Value in that Division bears to the
Accumulation Value in all of the Divisions.
PARTIAL WITHDRAWAL PROVISIONS
For any Certificate, after the Certificate Examination Period and prior to the
Annuity Date, the Owner may withdraw, in cash, all or part of the Cash Surrender
Value of the Certificate. A Partial Withdrawal may incur Surrender Charges.
Withdrawals may be subject to a 10% penalty tax. A Gross Partial Withdrawal is
a Partial Withdrawal plus any applicable Surrender Charges.
In no case will the Owner be allowed to withdraw more than Cash Surrender Value
of the Certificate.
A Partial Withdrawal will result in a decrease in the Accumulation Value of the
Certificate. The decrease is equal to the amount of the Gross Partial
Withdrawal. Partial Withdrawals from the Divisions of the Variable Account will
be made by redeeming Accumulation Units in the affected Divisions at their value
as next computed after we receive the Owner's written request at our Customer
Service Center. Any applicable Surrender Charge will reduce the Accumulation
Value of each Division in the same proportion that the Accumulation Value in
each Division bears to the total Accumulation Value immediately after the
withdrawal.
There are 3 Partial Withdrawal options available:
1. Demand Withdrawal Option
2. Systematic Income Program
3. IRA Income Program.
DEMAND WITHDRAWAL OPTION
For any Certificate, after the Certificate Examination Period and prior to the
Annuity Date, the Owner may make a Demand Withdrawal. The minimum Demand
Withdrawal amount is $100. The maximum Demand Withdrawal amount is the Cash
Surrender Value minus $500. If the amount of Demand Withdrawal The Owner
specifies exceeds the maximum level, the amount of the withdrawal will
automatically be adjusted.
Demand Withdrawals are deemed to be withdrawn in the following order:
1. Earnings in the Certificate;
2. Purchase Payments for the Certificate held more than 5 full Certificate
Years since the Anniversary immediately following the end of the
Certificate Year in which the Purchase Payment was made;
3. The amount by which 15% of the Accumulation Value as of the last
Anniversary (minus any Gross Partial Withdrawals already made during the
Certificate Year which are not considered withdrawals of Purchase
Payments) exceeds earnings, if any;
4. Purchase Payments held less than 5 full Certificate Years since the
Anniversary at the end of the Certificate Year in which the Purchase
Payment was made, withdrawn on a first-in, first-out basis.
Unless the Owner specifies otherwise, the amount of the Partial Withdrawal will
be taken from each Division in the same proportion that the amount of
Accumulation Value in that Division bears to the Accumulation Value in all of
the Divisions immediately prior to the withdrawal. The Owner may not withdraw
from the Guaranteed Interest Division an amount that is greater than the total
withdrawal multiplied by the ratio of the Accumulation Value in the Guaranteed
Interest Division to the total Accumulation Value immediately prior to the
withdrawal.
Earnings in the Certificate, for the purpose of calculating Surrender Charges,
equal the current Accumulation Value minus any Purchase Payments not previously
withdrawn for that Certificate.
SYSTEMATIC INCOME PROGRAM
The Owner may elect this option at any time prior to the Annuity Date. The
Owner may choose to receive Systematic Income Partial Withdrawals on a monthly
or quarterly basis from the Accumulation Value. Withdrawals will be taken from
each Division of the Variable Account and the Guaranteed Interest Division in
the same proportion that the Accumulation Value of that Division bears to the
total Accumulation Value. The payouts under this option may not start sooner
than one month after the Certificate Date. The Owner may select the day of the
month when the withdrawals will be made. If no day is selected, the withdrawals
will be made on the same calendar day of the month as the Certificate Date. If
this calendar day is not a Valuation Date, the next Valuation Date will be used.
The Owner may select a dollar amount or a percentage amount for the withdrawal
subject to the following maximums:
MONTHLY: 1.25% of the Accumulation Value
QUARTERLY: 3.75% of the Accumulation Value
Except as described in the following sections, in no event will a payout be less
than $100.
If a dollar amount is selected and the amount to be systematically
withdrawn would exceed the applicable maximum percentage listed above on the
withdrawal date, the amount withdrawn will be reduced to equal such percentage.
If the amount to be withdrawn is then less than $100, the withdrawal will be
made and the Systematic Income Program will be canceled.
If a percentage is selected and the amount to be systematically withdrawn based
on that percentage would be less than $100, the amount will be increased to the
lesser of $100 or the maximum percentage. If the amount to be withdrawn is then
less than $100, the withdrawal will be made and the Systematic Income Program
will be canceled.
If the Systematic Income Program is canceled due to an insufficient Accumulation
Value, any remaining Cash Surrender Value will be paid to the Owner. This will
result in the termination of the Certificate.
The Owner may change the amount or percentage of the Systematic Income Partial
Withdrawal once each Certificate Year. The Owner may cancel the election at any
time by sending written notice to us at our Customer Service Center at least 7
days prior to the next scheduled withdrawal date.
During any Certificate Year, if a Demand Withdrawal is made while the Systematic
Income Program is in effect, the remaining payouts to be made under the
Systematic Income Program for that Certificate Year will be considered Demand
Withdrawals for purposes of calculating any applicable Surrender Charges. If a
Demand Withdrawal is not made in the same Certificate Year, Systematic Income
Partial Withdrawals will not be assessed a Surrender Charge. However, the
amount available for Systematic Income Partial Withdrawals is never greater than
the Cash Surrender Value.
IRA INCOME PROGRAM
If the Owner has an IRA certificate, we will send the Owner Partial Withdrawals
to accommodate IRS required minimum distribution rules. These Partial
Withdrawals will begin automatically if the minimum distributions are not
otherwise satisfied. If the Certificate is intended as an Individual Retirement
Annuity, notwithstanding any provisions of this Contract, the Certificate shall
meet all requirements of section 408(b) of the Internal Revenue Code and any
other sections as required and as related to the sale and marketing of the
product.
SURRENDER PROVISIONS
CASH SURRENDER VALUE
For any Certificate, the Cash Surrender Value is the Accumulation Value minus
any Surrender Charges, taxes incurred but not deducted and the Administrative
Charge, if any, due at the end of the Certificate Year. The applicable
Surrender and Administrative Charges are shown in the Schedule. In this
Contract, all references to Cash Surrender Value, taxes incurred but not
deducted and Administrative Charge pertain to the Certificate.
Surrenders may be subject to a 10% penalty tax.
The Owner may surrender the Certificate for its Cash Surrender Value at any time
prior to the Annuity Date. The Surrender Charge shown in the Schedule will be
deducted on surrender. A Surrender Charge is applicable only to the Surrender
or Partial Withdrawal of the Certificate's Purchase Payments held less than 5
full Certificate Years since the Anniversary at the end of the Certificate Year
in which the Purchase Payment was made.
If the Owner does not wish to receive the Cash Surrender Value in a one sum
payout and the Owner is also the Annuitant, the Owner may avoid a Surrender
Charge by applying the Proceeds to Payout Period Options II or III by
accelerating the Annuity Date under the Contract, subject to the limitations in
the Election and Changes of Annuity Date section. No surrender may be made on
or after the Annuity Date or with respect to any amounts applied under an
Annuity Option.
GENERAL CONTRACT PROVISIONS
THE CONTRACT
This Contract, the Certificate, any applications, Certificate applications,
riders and endorsements, make up the entire Contract between the Owner and us.
A copy of the initial application will be attached to this Contract at issue. A
copy of the initial Certificate application will be attached to the Certificate
at issue of the Certificate. All statements made in an application will be
considered representations and not warranties. No statement will be used to
deny a claim unless it is in an application.
TERMINATION OF CONTRACT
This Contract will not be terminated until all Certificates issued under it are
no longer in force. However, we may stop issuing new Certificates or accepting
applications under this Contract at any time.
AGE
Each Certificate is issued at the Owner's Age shown in the Certificate Schedule.
This is the Owner's Age as of last birthday on the Certificate Date. The
Annuitant's attained age on any date for which age is to be determined is the
Annuitant's age as of last birthday.
PROCEDURES
For any Certificate, we must receive any election, designation, assignment or
any other change request in writing, except those specified on the Certificate
application. We may require a return of the Certificate for any such change or
for paying its Cash Surrender Value. The effective date of any change in
provisions of the Certificate will be the date the request was signed. Any
change will not affect payouts made or action taken by us before the change is
recorded at our Customer Service Center.
We may require due proof of age, death or survival of an Annuitant or any
Beneficiary when such proof is relevant to the payout of a benefit, claim, or
settlement under the Contract.
In the event of the Owner's death before the Annuity Date, we should be informed
as soon as possible. Claim procedure instructions will be sent to the
Beneficiary immediately. We require a certified copy of the death certificate
and may require proof of the Owner's Age. We may require the Beneficiary and
the Owner's next of kin to sign authorizations as part of due proof.
DEFERRAL OF PAYOUT
Partial Withdrawals or payout of Proceeds from Divisions of the Variable Account
will usually be processed within 7 days of receipt of the request at our
Customer Service Center. However, we may postpone the processing of any such
transactions for any of the following reasons:
1. When the NYSE is closed for trading;
2. When trading on the NYSE is restricted by the SEC;
3. When an emergency exists such that it is not reasonably practical to dispose
of securities in the applicable Division of the Variable Account or to determine
the value of its assets; or
4. When a governmental body having jurisdiction over the Variable Account
permits such suspension by order.
Rules and regulations of the SEC are applicable and will govern as to whether
conditions described in (2), (3), or (4) exist.
We may defer up to 6 months the payout of any Partial Withdrawal or Proceeds
other than death benefits from the Guaranteed Interest Division.
TAX QUALIFICATION
This Contract and the Certificates issued under it are intended to qualify as
annuity contracts under the Internal Revenue Code. To that end, all terms and
provisions of the Contract and Certificates will be interpreted to ensure or
maintain such qualification. Payouts and distributions under this Contract and
all Certificates will be made in the time and manner necessary to maintain such
qualification under the applicable provisions of the Internal Revenue Code. We
reserve the right to amend this Contract and Certificates to reflect any
clarifications or changes that may be needed or are appropriate or to conform it
to any applicable changes in the tax requirements. Such changes will apply
uniformly to all Contracts and Certificates that are affected. We will send the
Contract Holder and each Owner written notice of any such changes.
CONTRACT CHANGES
All changes made by us must be signed by our president or an officer and by our
secretary or assistant secretary. No other person can change any of the terms
and conditions of this Contract or any Certificate issued under it.
COLLATERAL ASSIGNMENT
The Owner may assign the Certificate as collateral security upon written notice
to us. Once it is recorded with us, the rights of the Owner and Beneficiary are
subject to the assignment. It is the Owner's responsibility to make sure the
assignment is valid.
INCONTESTABILITY
We will not contest the statements in an application for this Contract after the
Contract Date, nor for any Certificate after the Certificate Date.
MISSTATEMENT OF AGE OR SEX
If the Age or sex has been misstated in an application, the amounts payable or
benefits provided by a Certificate will be those that the Purchase Payouts made
would have purchased at the actual Age or sex, with interest at 6% per year on
any overpayments or underpayments previously made.
PERIODIC REPORTS
During the Accumulation Period, we will send the Owner a report within 90 days
after the end of each calendar quarter. This report will show the current
Accumulation Value, Cash Surrender Value, Guaranteed Death Benefit and activity
under the Certificate since the last report. During the Annuity Period, we will
send the Owner a report within 90 days after the end of each calendar year
showing any information required by law. The reports will also include any
other information that may be required by the SEC or the insurance supervisory
official of the jurisdiction in which this Contract is delivered.
BASIS OF COMPUTATIONS
The Cash Surrender Values under this Contract are not less than the minimums
required on the Contract Date by the state in which this Contract was delivered.
A detailed statement of the method of computation of Accumulation Values under
this Contract has been filed with the insurance department of the state in which
this Contract was delivered, if requested by that state.
TAXES
Taxes relating to any Certificate paid by us to any governmental entity will be
deducted from the Purchase Payments or Accumulation Value. We will, at our sole
discretion, determine when taxes have resulted from: the investment experience
of the Divisions of the Variable Account; receipt by us of the Purchase
Payments; Surrenders and Partial Withdrawals; or the start of an Annuity Option.
We may, at our sole discretion, pay taxes when incurred and deduct that amount
from the Accumulation Value at a later date. Payment at an earlier date does
not waive any right we may have to deduct amounts at this later date. We will
deduct any withholding taxes required by applicable law.
NON PARTICIPATING
This Contract does not participate in our surplus earnings.
CUSTOMER SERVICE CENTER
Our Customer Service Center is at the address shown in the Schedule. Unless the
Owner is otherwise notified:
1. All requests and payments should be sent to us at our Customer Service
Center; and
2. All transactions are effective as of the date the required information is
received at our Customer Service Center.
ANNUITY OPTION PROVISIONS
The Annuity Option is composed of both the Payout Option which specifies the
type of annuity to be paid and the Payout Period Option which determines how
long the annuity will be paid, the frequency and the amount of the first payout.
SUPPLEMENTARY CONTRACT
When an Annuity Option becomes effective, the Certificate will be amended to
include a Supplementary Contract. The Supplementary Contract will provide for
the manner of settlement and rights of the Annuitant. The Supplementary
Contract Effective Date will be the Annuity Date or the date of other
settlement, whenever the Annuity Option becomes effective. The first payout
will be payable as of the Supplementary Contract Effective Date.
PAYOUT OPTIONS
Annuity Payouts can be made under a Variable Annuity Payout, a Fixed Annuity
Payout, or a Combination Annuity Payout, each under various Payout Period
Options. Each of these options is described below.
Variable Annuity Payout
A Variable Annuity is an annuity with payouts which:
1. Are not pre-determined or guaranteed as to dollar amount; and
2. Vary in amount with the investment experience of the Divisions of the
Variable Account in which the Owner invests.
As of the Annuity Date, any Accumulation Value invested in the Guaranteed
Interest Division will be allocated among the Divisions of the Variable Account
in the same proportion that the Accumulation Value of each Division bears to the
total Accumulation Value of all the Divisions of the Variable Account.
The first Variable Annuity Payout for each Division of the Variable Account will
be the amount that the Proceeds will provide as of the close of business on the
Valuation Date immediately preceding the Supplementary Contract Effective Date
at the Benchmark Total Return elected. If the Owner has elected to have payouts
made less frequently than monthly, the payout amount is then adjusted according
to the factors in the Payouts Other Than Monthly section. The initial number of
Annuity Units for a Division of the Variable Account is calculated by dividing
the payout amount of that Division by the Annuity Unit Value of that Division as
of the Supplementary Contract Effective Date. The total Variable Annuity Payout
is the sum of the Variable Annuity Payouts from all Divisions of the Variable
Account.
Variable Annuity Payouts, after the first payout, vary in amount with the
investment experience of the Divisions of the Variable Account. The dollar
amount of each Variable Annuity Payout after the first payout is calculated by
adding the amount due for each Division of the Variable Account. The amount due
for each Division equals:
1. The number of Annuity Units for that Division; multiplied by,
2. The Annuity Unit Value for that Division for the Valuation Period for
which each payout is due.
The dollar amount of each Annuity Payout after the first will not be affected by
variations in our expenses or mortality experience.
Benchmark Total Return
The Owner must elect either a 3% or 5% Benchmark Total Return. The election
may not be changed after the Annuity Date. Compared to a 3% Benchmark Total
Return, electing the 5% Benchmark Total Return would mean a higher initial
payout but more slowly rising or more rapidly falling subsequent payouts if
actual investment experience varied from 5%. If the actual investment rate
is at the annual rate of 3% or 5%, the Annuity Payouts will be level if the
Owner elected either the 3% or 5% respectively.
Annuity Unit Value
We use an Annuity Unit Value to calculate the value of Variable Annuity
Payouts. The Annuity Unit Value for a Valuation Period is:
a) The Annuity Unit Value for each Division as of the last prior Valuation
Period multiplied by the Annuity Experience Factor for that Division
for the Valuation Period for which the Annuity Unit Value is being
calculated; divided by
b) An interest factor based on the Benchmark Total Return selected. (This
is done to neutralize the Benchmark Total Return.)
Annuity Experience Factor
For each Division of the Variable Account, the Annuity Experience Factor
reflects the investment experience of the Portfolio in which that Division
invests and the charges assessed against that Division for a Valuation
Period. The Annuity Experience Factor is calculated as follows:
a) The net asset value of the Portfolio in which that Division invests as
of the end of the current Valuation Period; plus
b) The amount of any dividend or capital gains distribution declared and
reinvested in that Portfolio during the current Valuation Period; minus
c) A charge for taxes, if any.
d) The result of (a), (b) and (c), divided by the net asset value of that
Portfolio as of the end of the preceding Valuation Period; minus
e) The daily equivalent of the Variable Account Annual Expenses shown in
the Schedule for each day in the current Valuation Period.
Transfer of Annuity Units
The Annuitant may transfer all or a portion of the Annuity Units in a
Division of the Variable Account to another Division of the Variable Account.
The limit on transfers is shown in the table in the Transfer Provisions
section. After the transfer, the number of Annuity Units in the Division of
the Variable Account from which the transfer is made will be reduced by the
number of Annuity Units transferred. The number of Annuity Units in the
Division to which the transfer is made will be increased by the number of
Annuity Units transferred multiplied by:
a) The value of an Annuity Unit in the Division of the Variable Account
from which the transfer is made, divided by
b) The value of an Annuity Unit in the Division of the Variable Account
to which the transfer is made.
Fixed Annuity Payout
A Fixed Annuity Payout is an annuity with payouts which remain fixed as to
dollar amount throughout the Payout Period. As of the Supplementary Contract
Effective Date, any Proceeds invested in the Divisions of the Variable Account
will be allocated to the Guaranteed Interest Division. The Fixed Annuity Payout
will be that amount that the Proceeds will provide as of the Supplementary
Contract Effective Date at the Benchmark Total Return of 3%. If the Fixed
Annuity Payout is credited at an interest rate above the guaranteed minimum, the
installment dollar amount will be greater than the determined installment dollar
amount for the time period that the higher rate is declared. If the Owner has
elected to have payouts made less frequently than monthly, the payout amount is
adjusted according to the factors in the Payouts Other Than Monthly section.
Combination Annuity Payout
A Combination Annuity Payout is an annuity where a portion of the payout is
variable and a portion of the payout is fixed as to dollar amount throughout the
Payout Period. At least 25% of the Proceeds must be allocated to each selected
option as of the Supplementary Contract Effective Date. As of the Supplementary
Contract Effective Date, we will allocate Accumulation Value between the
Guaranteed Interest Division and the Divisions of the Variable Account to meet
the proportions selected. Once a Combination Annuity Payout is selected, the
Annuitant may subsequently increase the allocation to a Fixed Annuity Payout,
but may not increase the allocation to the Variable Annuity Payout.
PAYOUT PERIOD OPTIONS
Under each Payout Option, the Payout Period is elected from one of the
following:
OPTION I. Payouts for a Designated Period. Payouts will be made in 1, 2, 4,
or 12 installments per year as elected for a designated period, which may be 5
to 30 years. If a Fixed Annuity Payout is elected, the installment dollar
amounts will be equal except for any Excess Interest as described below. If a
Variable Annuity Payout is elected, the number of Annuity Units of each
installment will be equal, but the dollar amount of each installment will vary
based on the Annuity Unit Values of the selected Divisions. If the Annuitant
dies before the end of the designated period, payouts will be continued to the
Contingent Annuitant, if one has been named, until the end of the designated
period. The amount of each payout will depend upon the designated period
elected, and if a Variable Annuity Payout is elected, the investment experience
of the Divisions of the Variable Account selected. The amount of the first
monthly payout for each $1,000 of Accumulation Value applied is shown in Payout
Option Table I.
OPTION II. Life Income With Payouts for a Designated Period. Payouts will be
made in 1, 2, 4, or 12 installments per year throughout the Annuitant's
lifetime, or if longer, for a period of 5, 10, 15 or 20 years as elected. If a
Fixed Annuity Payout is elected, the installment dollar amounts will be equal
except for any Excess Interest, as described below. If a Variable Annuity
Payout is elected, the number of Annuity Units of each installment will be
equal, but the dollar amounts of each installment will vary based on the Annuity
Unit Values of the selected Divisions. If the Annuitant dies before the end of
the designated period, payouts will be continued to the Contingent Annuitant, if
one has been named, until the end of the designated period. The amount of each
payout will depend upon the Annuitant's sex, age at the time the first payout is
due, the designated period elected and, if a Variable Annuity Payout is elected,
the investment experience of the Divisions of the Variable Account selected.
The amount of the first monthly payout for each $1,000 of Accumulation Value
applied is shown in Payout Period Option Table II. This option is only
available for ages shown in these Tables.
OPTION III. Joint and Last Survivor. Payouts will be made in 1, 2, 4, or 12
installments per year as elected while both Annuitants are living. Upon the
death of one Annuitant, the Survivor's Annuity Payout will be paid throughout
the lifetime of the Surviving Annuitant.
If a Fixed Annuity Payout is elected, the installment dollar amount will be
level while both Annuitants are living and upon the death of one Annuitant will
be reduced to 2/3rds of the installment dollar amount (excluding any Excess
Interest paid) while both Annuitants were living.
If a Variable Annuity Payout is elected, the number of Annuity Units applied to
each installment will be level while both Annuitants are living and upon the
death of one Annuitant will be reduced to 2/3rds of the number of Annuity Units
applied to each installment while both Annuitants were living. The dollar
amounts of each installment will vary based on the Annuity Unit Values of the
selected Divisions.
The amount of each payout will depend upon the age last birthday and sex of each
Annuitant at the time the first payout is due and, if a Variable Annuity Payout
is elected, the investment experience of the Divisions of the Variable Account
selected.
Payouts for Payout Period Option III will be determined by using the 1983A
Individual Annuity Mortality Table. Contact our Customer Service Center to
determine the amount of the first monthly installment for each $1,000 of
Accumulation Value applied.
OPTION IV. Other. Payouts will be made in any other manner as agreed upon in
writing between the Owner or the Beneficiary and us.
COMMUTING
The Annuitant may commute remaining designated period installments under Payout
Period Option I. The Contingent Annuitant may commute remaining designated
period installments after the death of the Annuitant under Payout Period Options
I or II. If no Contingent Annuitant is named, any remaining designated period
installments after the death of the Annuitant may be commuted by the estate.
Any computation shall be at the appropriate Benchmark Total Return rate.
EXCESS INTEREST
We may declare that Fixed Annuity Payouts will be credited at an interest rate
above the guaranteed minimum. We guarantee that any higher rate will be in
effect for at least 12 months.
MINIMUM AMOUNTS
The minimum amount that may be applied under any Annuity Option is $2,000. If
the Proceeds to be applied are less than $2,000, or if the payouts to an
Annuitant are ever less than $20, we may change the frequency of payouts to
result in payouts of at least that amount or require a one sum payout.
INCOME PROTECTION
Unless otherwise provided in the election, an Annuitant or Contingent Annuitant
has the right to assign, transfer to a third party or encumber amounts held or
installments to become payable pursuant to this Contract. To the extent
provided by law, the Proceeds, amount retained, and installments are not subject
to any Annuitant's debts, contracts, or engagements.
PAYOUTS OTHER THAN MONTHLY
The following tables show initial monthly installments for Payout Period Options
I and II. To arrive at annual, semiannual, or quarterly payouts, multiply the
appropriate figures by 11.837, 5.962, or 2.992 if the Benchmark Total Return is
3%, and by 11.730, 5.909 or 2.966 if the Benchmark Total Return is 5%. Factors
for other designated periods or for other options that may be provided by mutual
agreement will be provided upon reasonable request.
PAYOUT PERIOD OPTION TABLES
PAYOUT PERIOD OPTION TABLE I
(Benchmark Total Return is 3% _ Per $1,000 of Net Proceeds)
No. of Monthly No. of Monthly
Years Install- Years Install-
Payable ments Payable ments
5 $17.92 20 $ 5.53
6 15.16 21 5.34
7 13.18 22 5.17
8 11.70 23 5.01
9 10.55 24 4.86
10 9.63 25 4.73
11 8.88 26 4.61
12 8.26 27 4.50
13 7.73 28 4.39
14 7.28 29 4.30
15 6.89 30 4.21
16 6.55
17 6.25
18 5.98
19 5.75
PAYOUT PERIOD OPTION TABLE I _ VARIABLE ANNUITY ONLY
(Benchmark Total Return is 5% _ Per $1,000 of Net Proceeds)
No. of Monthly No. of Monthly
Years Install- Years Install-
Payable ments Payable ments
5 $18.79 20 $ 6.57
6 16.04 21 6.39
7 14.08 22 6.23
8 12.61 23 6.08
9 11.47 24 5.94
10 10.56 25 5.82
11 9.82 26 5.71
12 9.21 27 5.61
13 8.69 28 5.51
14 8.25 29 5.43
15 7.88 30 5.35
16 7.55
17 7.26
18 7.00
19 6.77
<TABLE>
PAYOUT PERIOD OPTION TABLE II
(Benchmark Total Return is 3% _ Per $1,000 of Net Proceeds)
<CAPTION>
Age of Age of
Annuitant Annuitant
Last Birthday Monthly Installment Last Monthly Installment
When First Birthday
Installment When First
is Payable Installment
is Payable
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 10 15 20 5 10 15 20
Male Years Years Years Years Male Years Years Years Years
Certain Certain Certain Certain Certain Certain Certain Certain
15 2.94 2.94 2.94 2.93 40 3.63 3.62 3.61 3.58
16 2.96 2.95 2.95 2.95 41 3.68 3.67 3.65 3.62
17 2.97 2.97 2.97 2.96 42 3.73 3.72 3.70 3.66
18 2.99 2.99 2.99 2.98 43 3.78 3.77 3.74 3.71
19 3.01 3.01 3.00 3.00 44 3.84 3.82 3.79 3.75
20 3.03 3.02 3.02 3.02 45 3.89 3.88 3.84 3.80
21 3.05 3.04 3.04 3.04 46 3.95 3.93 3.90 3.85
22 3.07 3.06 3.06 3.06 47 4.01 3.99 3.95 3.90
23 3.09 3.08 3.08 3.08 48 4.08 4.05 4.01 3.95
24 3.11 3.11 3.10 3.10 49 4.15 4.12 4.07 4.00
25 3.13 3.13 3.13 3.12 50 4.22 4.19 4.13 4.06
26 3.16 3.15 3.15 3.14 51 4.29 4.26 4.20 4.11
27 3.18 3.18 3.17 3.17 52 4.37 4.33 4.27 4.17
28 3.21 3.20 3.20 3.19 53 4.45 4.41 4.34 4.23
29 3.23 3.23 3.23 3.22 54 4.54 4.49 4.41 4.29
30 3.26 3.26 3.25 3.25 55 4.63 4.58 4.49 4.36
31 3.29 3.29 3.28 3.27 56 4.73 4.67 4.57 4.42
32 3.32 3.32 3.31 3.30 57 4.83 4.76 4.65 4.48
33 3.36 3.35 3.34 3.33 58 4.94 4.87 4.74 4.55
34 3.39 3.39 3.38 3.36 59 5.05 4.97 4.82 4.61
35 3.43 3.42 3.41 3.40 60 5.18 5.08 4.92 4.68
36 3.46 3.46 3.45 3.43 61 5.31 5.20 5.01 4.75
37 3.50 3.50 3.48 3.47 62 5.45 5.32 5.11 4.81
38 3.54 3.54 3.52 3.50 63 5.60 5.45 5.21 4.87
39 3.59 3.58 3.56 3.54 64 5.76 5.59 5.31 4.94
<CAPTION>
PAYOUT PERIOD OPTION TABLE II
(Benchmark Total Return is 3% _ Per $1,000 of Net Proceeds)
Age of Age of
Annuitant Annuitant
Last Birthday Monthly Installment Last Monthly Installment
When First Birthday
Installment When First
is Payable Installment
is Payable
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 10 15 20 5 10 15 20
Male Years Years Years Years Male Years Years Years Years
Certain Certain Certain Certain Certain Certain Certain Certain
65 5.92 5.73 5.41 5.00 75 8.24 7.39 6.34 5.41
66 6.10 5.88 5.51 5.05 76 8.55 7.57 6.42 5.43
67 6.29 6.03 5.61 5.11 77 8.87 7.74 6.48 5.45
68 6.49 6.19 5.71 5.16 78 9.20 7.91 6.54 5.46
69 6.70 6.35 5.81 5.21 79 9.54 8.08 6.59 5.47
70 6.93 6.52 5.91 5.25 80 9.90 8.24 6.64 5.48
71 7.16 6.69 6.01 5.29 81 10.27 8.39 6.68 5.49
72 7.41 6.86 6.10 5.33 82 10.64 8.53 6.72 5.50
73 7.67 7.04 6.19 5.36 83 11.02 8.66 6.75 5.50
74 7.95 7.22 6.27 5.38 84 11.41 8.79 6.77 5.51
85 11.79 8.90 6.80 5.51
<CAPTION>
PAYOUT PERIOD OPTION TABLE II _ VARIABLE ANNUITY ONLY
(Benchmark Total Return is 5% _ Per $1,000 of Net Proceeds)
Age of Age of
Annuitant Annuitant
Last Birthday Monthly Installment Last Monthly Installment
When First Birthday
Installment When First
is Payable Installment
is Payable
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 10 15 20 5 10 15 20
Male Years Years Years Years Male Years Years Years Years
Certain Certain Certain Certain Certain Certain Certain Certain
15 4.27 4.27 4.26 4.26 40 4.84 4.83 4.80 4.77
16 4.28 4.28 4.27 4.27 41 4.88 4.87 4.84 4.80
17 4.29 4.29 4.29 4.28 42 4.93 4.91 4.88 4.84
18 4.31 4.30 4.30 4.29 43 4.97 4.95 4.92 4.87
19 4.32 4.32 4.31 4.31 44 5.02 5.00 4.96 4.91
20 4.33 4.33 4.33 4.32 45 5.08 5.05 5.01 4.95
21 4.35 4.34 4.34 4.33 46 5.13 5.10 5.06 4.99
22 4.36 4.36 4.35 4.35 47 5.19 5.16 5.11 5.04
23 4.38 4.38 4.37 4.36 48 5.25 5.21 5.16 5.08
24 4.40 4.39 4.39 4.38 49 5.31 5.27 5.21 5.13
25 4.41 4.41 4.40 4.40 50 5.38 5.33 5.27 5.18
26 4.43 4.43 4.42 4.41 51 5.45 5.40 5.32 5.23
27 4.45 4.45 4.44 4.43 52 5.52 5.47 5.39 5.28
28 4.47 4.47 4.46 4.45 53 5.60 5.54 5.45 5.33
29 4.50 4.49 4.48 4.47 54 5.68 5.61 5.52 5.38
30 4.52 4.51 4.51 4.49 55 5.76 5.69 5.58 5.44
31 4.54 4.54 4.53 4.52 56 5.86 5.78 5.66 5.49
32 4.57 4.56 4.55 4.54 57 5.95 5.87 5.73 5.55
33 4.60 4.59 4.58 4.56 58 6.06 5.96 5.81 5.61
34 4.63 4.62 4.61 4.59 59 6.17 6.06 5.89 5.66
35 4.66 4.65 4.64 4.62 60 6.29 6.17 5.97 5.72
36 4.69 4.68 4.67 4.64 61 6.42 6.28 6.06 5.78
37 4.72 4.71 4.70 4.67 62 6.55 6.40 6.15 5.84
38 4.76 4.75 4.73 4.70 63 6.70 6.52 6.24 5.89
39 4.80 4.79 4.77 4.73 64 6.85 6.65 6.33 5.95
<CAPTION>
PAYOUT PERIOD OPTION TABLE II _ VARIABLE ANNUITY ONLY
(Benchmark Total Return is 5% _ Per $1,000 of Net Proceeds)
Age of Age of
Annuitant Annuitant
Last Birthday Monthly Installment Last Monthly Installment
When First Birthday
Installment When First
is Payable Installment
is Payable
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 10 15 20 5 10 15 20
Male Years Years Years Years Male Years Years Years Years
Certain Certain Certain Certain Certain Certain Certain Certain
65 7.02 6.78 6.42 6.00 75 9.29 8.35 7.27 6.36
66 7.19 6.92 6.52 6.05 76 9.59 8.51 7.34 6.38
67 7.38 7.06 6.61 6.10 77 9.90 8.67 7.40 6.40
68 7.57 7.21 6.70 6.14 78 10.22 8.83 7.45 6.41
69 7.78 7.37 6.79 6.18 79 10.56 8.99 7.50 6.42
70 8.00 7.52 6.88 6.22 80 10.91 9.13 7.54 6.43
71 8.23 7.69 6.97 6.26 81 11.26 9.27 7.58 6.44
72 8.47 7.85 7.05 6.29 82 11.62 9.41 7.61 6.44
73 8.73 8.01 7.13 6.32 83 11.99 9.53 7.64 6.45
74 9.00 8.18 7.20 6.34 84 12.36 9.64 7.66 6.45
85 12.73 9.75 7.68 6.45
<CAPTION>
PAYOUT PERIOD OPTION TABLE II
(Benchmark Total Return is 3% _ Per $1,000 of Net Proceeds)
Age of Age of
Annuitant Annuitant
Last Birthday Monthly Installment Last Monthly Installment
When First Birthday
Installment When First
is Payable Installment
is Payable
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 10 15 20 5 10 15 20
Female Years Years Years Years Female Years Years Years Years
Certain Certain Certain Certain Certain Certain CertainCertain
15 2.85 2.85 2.85 2.85 40 3.41 3.40 3.40 3.38
16 2.87 2.87 2.86 2.86 41 3.44 3.44 3.43 3.42
17 2.88 2.88 2.88 2.88 42 3.48 3.48 3.47 3.45
18 2.89 2.89 2.89 2.89 43 3.52 3.52 3.51 3.49
19 2.91 2.91 2.91 2.91 44 3.57 3.56 3.55 3.53
20 2.92 2.92 2.92 2.92 45 3.61 3.60 3.59 3.57
21 2.94 2.94 2.94 2.94 46 3.66 3.65 3.64 3.61
22 2.96 2.96 2.95 2.95 47 3.71 3.70 3.68 3.66
23 2.97 2.97 2.97 2.97 48 3.76 3.75 3.73 3.70
24 2.99 2.99 2.99 2.99 49 3.81 3.80 3.78 3.75
25 3.01 3.01 3.01 3.00 50 3.87 3.86 3.84 3.80
26 3.03 3.03 3.03 3.02 51 3.93 3.92 3.89 3.85
27 3.05 3.05 3.05 3.04 52 4.00 3.98 3.95 3.90
28 3.07 3.07 3.07 3.06 53 4.06 4.04 4.01 3.96
29 3.09 3.09 3.09 3.08 54 4.13 4.11 4.08 4.02
30 3.12 3.11 3.11 3.11 55 4.21 4.18 4.14 4.08
31 3.14 3.14 3.13 3.13 56 4.29 4.26 4.21 4.14
32 3.16 3.16 3.16 3.15 57 4.37 4.34 4.29 4.20
33 3.19 3.19 3.18 3.18 58 4.46 4.42 4.36 4.27
34 3.22 3.21 3.21 3.20 59 4.55 4.51 4.44 4.33
35 3.24 3.24 3.24 3.23 60 4.65 4.61 4.53 4.40
36 3.27 3.27 3.27 3.26 61 4.76 4.71 4.61 4.47
37 3.30 3.30 3.30 3.29 62 4.87 4.81 4.71 4.54
38 3.34 3.33 3.33 3.32 63 4.99 4.92 4.80 4.62
39 3.37 3.37 3.36 3.35 64 5.11 5.04 4.90 4.69
<CAPTION>
PAYOUT PERIOD OPTION TABLE II
(Benchmark Total Return is 3% _ Per $1,000 of Net Proceeds)
Age of Age of
Annuitant Annuitant
Last Birthday Monthly Installment Last Monthly Installment
When First Birthday
Installment When First
is Payable Installment
is Payable
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 10 15 20 5 10 15 20
Female Years Years Years Years Female Years Years Years Years
Certain Certain Certain Certain Certain Certain Certain Certain
65 5.25 5.16 5.00 4.76 75 7.23 6.78 6.09 5.34
66 5.39 5.29 5.10 4.83 76 7.52 6.98 6.19 5.37
67 5.54 5.43 5.21 4.90 77 7.82 7.18 6.29 5.40
68 5.71 5.57 5.32 4.97 78 8.14 7.38 6.37 5.42
69 5.88 5.72 5.43 5.03 79 8.48 7.58 6.45 5.44
70 6.07 5.88 5.55 5.10 80 8.83 7.78 6.52 5.46
71 6.27 6.05 5.66 5.15 81 9.21 7.98 6.58 5.47
72 6.49 6.22 5.77 5.21 82 9.61 8.16 6.63 5.48
73 6.72 6.40 5.88 5.26 83 10.02 8.34 6.68 5.49
74 6.97 6.59 5.99 5.30 84 10.44 8.50 6.72 5.50
85 10.88 8.65 6.75 5.50
<CAPTION>
PAYOUT PERIOD OPTION TABLE II _ VARIABLE ANNUITY ONLY
(Benchmark Total Return is 5% _ Per $1,000 of Net Proceeds)
Age of Age of
Annuitant Annuitant
Last Birthday Monthly Installment Last Monthly Installment
When First Birthday
Installment When First
is Payable Installment
is Payable
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 10 15 20 5 10 15 20
Female Years Years Years Years Female Years Years Years Years
Certain Certain Certain Certain Certain Certain Certain Certain
15 4.20 4.20 4.20 4.20 40 4.63 4.62 4.61 4.60
16 4.21 4.21 4.21 4.21 41 4.66 4.65 4.64 4.62
17 4.22 4.22 4.22 4.22 42 4.69 4.69 4.67 4.65
18 4.23 4.23 4.23 4.23 43 4.73 4.72 4.71 4.69
19 4.24 4.24 4.24 4.23 44 4.77 4.76 4.74 4.72
20 4.25 4.25 4.25 4.25 45 4.81 4.80 4.78 4.75
21 4.26 4.26 4.26 4.26 46 4.85 4.84 4.82 4.79
22 4.28 4.27 4.27 4.27 47 4.89 4.88 4.86 4.82
23 4.29 4.29 4.28 4.28 48 4.94 4.92 4.90 4.86
24 4.30 4.30 4.29 4.29 49 4.99 4.97 4.94 4.90
25 4.31 4.31 4.31 4.30 50 5.04 5.02 4.99 4.95
26 4.33 4.33 4.32 4.32 51 5.09 5.07 5.04 4.99
27 4.34 4.34 4.34 4.33 52 5.15 5.13 5.09 5.04
28 4.36 4.36 4.35 4.35 53 5.21 5.19 5.14 5.08
29 4.37 4.37 4.37 4.36 54 5.28 5.25 5.20 5.13
30 4.39 4.39 4.38 4.38 55 5.35 5.32 5.26 5.19
31 4.41 4.41 4.40 4.40 56 5.42 5.39 5.32 5.24
32 4.43 4.43 4.42 4.41 57 5.50 5.46 5.39 5.29
33 4.45 4.45 4.44 4.43 58 5.58 5.54 5.46 5.35
34 4.47 4.47 4.46 4.45 59 5.67 5.62 5.53 5.41
35 4.49 4.49 4.48 4.47 60 5.76 5.71 5.61 5.47
36 4.52 4.51 4.51 4.50 61 5.86 5.80 5.69 5.53
37 4.54 4.54 4.53 4.52 62 5.97 5.90 5.77 5.60
38 4.57 4.57 4.56 4.54 63 6.09 6.00 5.86 5.66
39 4.60 4.59 4.58 4.57 64 6.21 6.11 5.95 5.72
<CAPTION>
PAYOUT PERIOD OPTION TABLE II _ VARIABLE ANNUITY ONLY
(Benchmark Total Return is 5% _ Per $1,000 of Net Proceeds)
Age of Age of
Annuitant Annuitant
Last Birthday Monthly Installment Last Monthly Installment
When First Birthday
Installment When First
is Payable Installment
is Payable
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 10 15 20 5 10 15 20
Female Years Years Years Years Female Years Years Years Years
Certain Certain Certain Certain Certain Certain Certain Certain
65 6.34 6.23 6.04 5.79 75 8.28 7.76 7.04 6.30
66 6.48 6.35 6.14 5.85 76 8.55 7.95 7.13 6.33
67 6.62 6.48 6.23 5.91 77 8.85 8.14 7.22 6.36
68 6.78 6.61 6.33 5.97 78 9.16 8.33 7.30 6.38
69 6.95 6.76 6.44 6.03 79 9.49 8.52 7.37 6.39
70 7.14 6.91 6.54 6.08 80 9.85 8.71 7.43 6.41
71 7.33 7.07 6.64 6.14 81 10.22 8.89 7.49 6.42
72 7.54 7.23 6.75 6.18 82 10.60 9.06 7.53 6.43
73 7.77 7.40 6.85 6.23 83 11.00 9.23 7.58 6.44
74 8.02 7.58 6.95 6.27 84 11.42 9.38 7.61 6.44
85 11.84 9.52 7.64 6.45
<CAPTION>
PAYOUT PERIOD OPTION TABLE II
(Benchmark Total Return is 3% _ Per $1,000 of Net Proceeds)
Age of Age of
Annuitant Annuitant
Last Birthday Monthly Installment Last Monthly Installment
When First Birthday
Installment When First
is Payable Installment
is Payable
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 10 15 20 5 10 15 20
Unisex Years Years Years Years Unisex Years Years Years Years
Certain Certain Certain Certain Certain Certain Certain Certain
20 2.98 2.98 2.97 2.97 45 3.75 3.74 3.72 3.69
21 2.99 2.99 2.99 2.99 46 3.81 3.79 3.77 3.73
22 3.01 3.01 3.01 3.01 47 3.86 3.85 3.82 3.78
23 3.03 3.03 3.03 3.02 48 3.92 3.91 3.88 3.83
24 3.05 3.05 3.05 3.04 49 3.98 3.96 3.93 3.88
25 3.07 3.07 3.07 3.06 50 4.05 4.03 3.99 3.93
26 3.09 3.09 3.09 3.09 51 4.11 4.09 4.05 3.99
27 3.12 3.12 3.11 3.11 52 4.19 4.16 4.11 4.04
28 3.14 3.14 3.14 3.13 53 4.26 4.23 4.18 4.10
29 3.17 3.16 3.16 3.15 54 4.34 4.31 4.25 4.16
30 3.19 3.19 3.18 3.18 55 4.42 4.39 4.32 4.22
31 3.22 3.22 3.21 3.20 56 4.51 4.47 4.40 4.29
32 3.25 3.24 3.24 3.23 57 4.60 4.56 4.47 4.35
33 3.27 3.27 3.27 3.26 58 4.70 4.65 4.56 4.42
34 3.31 3.30 3.30 3.29 59 4.81 4.75 4.64 4.48
35 3.34 3.33 3.33 3.32 60 4.92 4.85 4.73 4.55
36 3.37 3.37 3.36 3.35 61 5.04 4.96 4.82 4.62
37 3.41 3.40 1.39 3.38 62 5.16 5.07 4.91 4.69
38 3.44 3.44 3.43 3.41 63 5.30 5.19 5.01 4.75
39 3.48 3.48 3.47 3.45 64 5.44 5.32 5.11 4.82
40 3.52 3.52 3.50 3.49 65 5.59 5.45 5.21 4.89
41 3.56 3.56 3.54 3.52 66 5.75 5.59 5.32 4.95
42 3.61 3.60 3.59 3.56 67 5.92 5.73 5.42 5.01
43 3.66 3.65 3.63 3 60 68 6.10 5.89 5.53 5.07
44 3.70 3.69 3.67 3.65 69 6.29 6.04 5.63 5.13
<CAPTION>
PAYOUT PERIOD OPTION TABLE II
(Benchmark Total Return is 3% _ Per $1,000 of Net Proceeds)
Age of Age of
Annuitant Annuitant
Last Birthday Monthly Installment Last Monthly Installment
When First Birthday
Installment When First
is Payable Installment
is Payable
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 10 15 20 5 10 15 20
Unisex Years Years Years Years Unisex Years Years Years Years
Certain Certain Certain Certain Certain Certain CertainCertain
70 6.50 6.21 5.74 5.18 80 9.37 8.02 6.59 5.47
71 6.72 6.38 5.84 5.23 81 9.74 8.19 6.64 5.48
72 6.95 6.55 5.95 5.27 82 10.12 8.35 6.68 5.49
73 7.20 6.73 6.04 5.31 83 10.52 8.51 6.72 5.50
74 7.46 6.91 6.14 5.35 84 10.92 8.65 6.75 5.50
75 7.74 7.10 6.23 5.38 85 11.33 8.78 6.78 5.51
76 8.03 7.29 6.31 5.40
77 8.34 7.47 6.39 5.43
78 8.67 7.66 6.46 5.45
79 9.01 7.84 6.53 5.46
<CAPTION>
PAYOUT PERIOD OPTION TABLE II _ VARIABLE ANNUITY ONLY
(Benchmark Total Return is 5% _ Per $1,000 of Net Proceeds)
Age of Age of
Annuitant Annuitant
Last Monthly Installment Last Monthly Installment
Birthday Birthday
When First When First
Installment Installment
is Payable is Payable
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 10 15 20 5 10 15 20
Unisex Years Years Years Years Unisex Years Years Years Years
Certain Certain Certain Certain Certain Certain Certain Certain
20 4.29 4.29 4.29 4.28 45 4.94 4.93 4.90 4.86
21 4.31 4.30 4.30 4.30 46 4.99 4.97 4.94 4.90
22 4.32 4.32 4.31 4.31 47 5.04 5.02 4.98 4.94
23 4.33 4.33 4.33 4.32 48 5.10 5.07 5.03 4.98
24 4.35 4.35 4.34 4.34 49 5.15 5.12 5.08 5.02
25 4.37 4.36 4.36 4.35 50 5.21 5.18 5.13 5.07
26 4.38 4.38 4.37 4.37 51 5.27 5.24 5.19 5.11
27 4.40 4.40 4.39 4.38 52 5.34 5.30 5.24 5.16
28 4.42 4.41 4.41 4.40 53 5.41 5.37 5.30 5.21
29 4.44 4.43 4.43 4.42 54 5.48 5.44 5.36 5.26
30 4.46 4.45 4.45 4.44 55 5.56 5.51 5.43 5.32
31 4.48 4.47 4.47 4.46 56 5.64 5.59 5.50 5.37
32 4.50 4.50 4.49 4.48 57 5.73 5.67 5.57 5.43
33 4.53 4.52 4.51 4.50 58 5.82 5.76 5.64 5.49
34 4.55 4.55 4-54 4.52 59 5.92 5.85 5.72 5.54
35 4.58 4.57 4.56 4.55 60 6.03 5.94 5.80 5.60
36 4.61 4.60 4.59 4.57 61 6.14 6.05 5.88 5.66
37 4.64 4.63 4.62 4.60 62 6.27 6.15 5.97 5.72
38 4.67 4.66 4.65 4.63 63 6.40 6.27 6.06 5.78
39 4.70 4.69 4.68 4.66 64 6.53 6.39 6.15 5.84
40 4.74 4.73 4.71 4.69 65 6.68 6.51 6.24 5.90
41 4.77 4.76 4.74 4.72 66 6.84 6.64 6.34 5.96
42 4.81 4.80 4.78 4.75 67 7.00 6.78 6.43 6.01
43 4.85 4.84 4.82 4.78 68 7.18 6.92 6.53 6.06
44 4.90 4.88 4.86 4.82 69 7.37 7.07 6.63 6.11
<CAPTION>
PAYOUT PERIOD OPTION TABLE II _ VARIABLE ANNUITY ONLY
(Benchmark Total Return is 5% _ Per $1,000 of Net Proceeds)
Age of Age of
Annuitant Annuitant
Last Birthday Monthly Installment Last Monthly Installment
When First Birthday
Installment When First
is Payable Installment
is Payable
5 10 15 20 5 10 15 20
Unisex Years Years Years Years Unisex Years Years Years Years
Certain Certain Certain Certain Certain Certain CertainCertain
70 7.57 7.23 6.72 6.16 75 8.78 8.07 7.17 6.34
71 7.78 7.39 6.82 6.20 76 9.07 8.24 7.24 6.36
72 8.01 7.55 6.91 6.24 77 9.37 8.42 7.31 6.38
73 8.25 7.72 7.00 6.28 78 9.69 8.59 7.38 6.40
74 8.51 7.89 7.08 6.31 79 10.03 8.76 7.44 6.41
85 12.28 9.64 7.66 6.45
</TABLE>
This Contract is a GROUP FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED AND
VARIABLE ANNUITY CONTRACT.
Annuity Payouts and other values provided by this Contract, when based on the
investment experience of a separate account, are variable. These values may
increase or decrease based on investment experience and are not guaranteed as to
fixed dollar amount. The amount of any Annuity Payouts which are based on the
investment experience of a separate account will increase or decrease depending
on whether the investment experience, net of Variable Account Annual Expenses,
is higher or lower than the Benchmark Total Return. For each Certificate,
Annuity Payouts begin as of the Annuity Date. Purchase Payments are flexible
and may be made until the Annuity Date. The Guaranteed Death Benefit will be
paid if an Owner dies prior to the Annuity Date.
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
A Stock Company
Customer Service Center
[P.O. Box 173778, Denver, Colorado 80217-3778]
[Toll-free Telephone Number: 1(800)249-9099]
FIRST ING LIFE
NEW YORK, NEW YORK
CONTRACT HOLDER: Norwest Bank OWNER: Mr. John Doe
CONTRACT DATE: September 5, 1994 CERTIFICATE DATE: September 5, 1994
CONTRACT NUMBER: 001-000028 CERTIFICATE NUMBER: 001-000028
This is a group annuity Certificate issued under a group annuity contract issued
to and owned by the Contract Holder. It is governed by the laws of the state
where the group Contract Certificate was delivered.
WE AGREE TO PAY the annuity benefit to the Annuitant beginning on the Annuity
Date, subject to the provisions of this Certificate. We also agree to provide
the other rights and benefits of this Certificate. These agreements are subject
to the provisions of the Contract. This Certificate contains the provisions of
the Contract applicable to you.
10 DAY CERTIFICATE EXAMINATION PERIOD. You have the right to examine and return
this Certificate within 10 days after receipt. It may be returned by delivering
or mailing it to us at our Customer Service Center. Immediately upon return, it
will be deemed void as of the Certificate Date. Upon return of the Certificate,
we will refund the Accumulation Value, in addition to any charges deducted, as
of the date the returned Certificate is delivered to us at our Customer Service
Center, or, if mailed through the United States Postal Service, as of the date
the returned Certificate is mailed to us. This 10 day period ends 15 days after
the Certificate is mailed from our Customer Service Center.
In this Certificate, "Owner", "you" and "your" refer to the Owner of this
Certificate. "We", "us" and "our" refer to First ING Life Insurance Company of
New York.
Secretary President
This Certificate is a GROUP FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED AND
VARIABLE ANNUITY CERTIFICATE.
Annuity Payouts and other values provided by this Certificate, when based on the
investment experience of a separate account, are variable. These values may
increase or decrease based on investment experience and are not guaranteed as to
fixed dollar amount. The amount of any Annuity Payouts which are based on the
investment experience of a separate account will increase or decrease depending
on whether the investment experience, net of Variable Account Annual Expenses,
is higher or lower than the Benchmark Total Return. Annuity Payouts begin as of
the Annuity Date. Purchase Payments are flexible and may be made until the
Annuity Date. The Guaranteed Death Benefit will be paid if the Owner dies prior
to the Annuity Date.
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
A Stock Company
Customer Service Center
[P.O. Box 173778, Denver, Colorado 80217-3778]
[Toll-free Telephone Number: 1(800)249-9099]
TABLE OF CONTENTS
This Certificate contains the provisions of the Contract as they apply to you.
READ IT CAREFULLY.
GUIDE TO KEY PROVISIONS
CERTIFICATE SCHEDULE..........................................................5
CERTIFICATE EXPENSE PROVISIONS................................................7
BENEFIT PROVISIONS............................................................8
EFFECTIVE DATE OF COVERAGE....................................................8
ELECTION AND CHANGES OF ANNUITY DATE..........................................8
ELECTION AND CHANGES OF ANNUITY OPTION........................................8
PAYOUT OF PROCEEDS............................................................9
As of the Annuity Date, to Provide Annuity Payouts...........................9
Upon Surrender of this Certificate Prior to the Annuity Date.................9
As a Death Benefit Prior to the Annuity Date.................................9
OWNERS AND DEATH OF THE OWNERS...............................................10
REQUIRED DISTRIBUTIONS.......................................................10
GUARANTEED DEATH BENEFIT.....................................................11
ANNUITANTS AND DEATH OF ANNUITANTS...........................................11
BENEFICIARIES AND DEATH OF BENEFICIARIES.....................................12
PURCHASE PAYMENT PROVISIONS..................................................12
PURCHASE PAYMENTS............................................................12
PURCHASE PAYMENT ALLOCATION..................................................12
VARIABLE ACCOUNT PROVISIONS..................................................13
THE VARIABLE ACCOUNT.........................................................13
VARIABLE ACCOUNT DIVISIONS...................................................13
CHANGES WITHIN THE VARIABLE ACCOUNT..........................................13
GENERAL ACCOUNT PROVISIONS...................................................14
THE GENERAL ACCOUNT..........................................................14
GUARANTEED INTEREST DIVISION.................................................14
TRANSFER PROVISIONS..........................................................14
TRANSFERS TO OR FROM THE GUARANTEED INTEREST DIVISION........................14
EXCESS TRANSFER CHARGE.......................................................15
DOLLAR COST AVERAGING TRANSFER OPTION........................................15
AUTOMATIC REBALANCING........................................................16
ACCUMULATION VALUE PROVISIONS................................................16
VALUATION DATE...............................................................16
VALUATION PERIOD.............................................................16
ACCUMULATION UNIT VALUE......................................................16
ACCUMULATION EXPERIENCE FACTOR...............................................17
ACCUMULATION VALUE OF THE DIVISIONS OF THE VARIABLE ACCOUNT..................17
ACCUMULATION VALUE OF THE GUARANTEED INTEREST DIVISION.......................18
PARTIAL WITHDRAWAL PROVISIONS................................................18
DEMAND WITHDRAWAL OPTION.....................................................19
SYSTEMATIC INCOME PROGRAM....................................................19
IRA INCOME PROGRAM...........................................................20
SURRENDER PROVISIONS.........................................................20
CASH SURRENDER VALUE.........................................................20
GENERAL CONTRACT PROVISIONS..................................................21
THE CONTRACT.................................................................21
TERMINATION OF CONTRACT......................................................21
AGE..........................................................................21
PROCEDURES...................................................................21
DEFERRAL OF PAYOUT...........................................................22
TAX QUALIFICATION............................................................22
CONTRACT CHANGES.............................................................22
COLLATERAL ASSIGNMENT........................................................22
INCONTESTABILITY.............................................................22
MISSTATEMENT OF AGE OR SEX...................................................22
PERIODIC REPORTS.............................................................23
BASIS OF COMPUTATIONS........................................................23
TAXES........................................................................23
NON PARTICIPATING............................................................23
CUSTOMER SERVICE CENTER......................................................23
ANNUITY OPTION PROVISIONS....................................................23
SUPPLEMENTARY CONTRACT.......................................................23
PAYOUT OPTIONS...............................................................24
Variable Annuity Payout.....................................................24
Fixed Annuity Payout........................................................25
Combination Annuity Payout..................................................26
PAYOUT PERIOD OPTIONS........................................................26
COMMUTING....................................................................27
EXCESS INTEREST..............................................................27
MINIMUM AMOUNTS..............................................................27
INCOME PROTECTION............................................................27
PAYOUTS OTHER THAN MONTHLY...................................................27
PAYOUT PERIOD OPTION TABLES..................................................28
Additional benefits or riders for this Certificate, if any, will be shown in the
Certificate Schedule. The additional provisions will be inserted in this
Certificate.
CERTIFICATE SCHEDULE
Owner: Mr. John Doe Age and Sex: 43, Male
Annuitant: Mr. John Doe Age and Sex: 43, Male
Certificate Number: 001-000028
Certificate Date: September 5, 1994
Annuity Date: December 12, 2035
Initial Purchase Payment: [$25,000]
Minimum for Each Additional Purchase Payment: [$500]
Maximum Cumulative Net Purchase Payment: [$1,500,000]
Customer Service Center: [P.O. Box 173778,
Denver, Colorado
80217-3778]
ALLOCATION OF INITIAL PURCHASE PAYMENTS AS SHOWN ON CERTIFICATE APPLICATION
[Value Division] 0 %
[Growth Division] 25 %
[Balanced Opportunity Division] 25 %
[International Growth Division] 25 %
[Global Strategic Income Division] 0 %
[Global Interactive/Telecomm Division] 25 %
Guaranteed Interest Division 0 %
All percentage allocations must be in whole numbers.
CERTIFICATE EXPENSE PROVISIONS
Owner Transaction Expenses (Deducted from the Accumulation Value)
1. Excess Transfer Charges: Refer to the Transfer Provisions section for
details.
2. Surrender Charge: This charge is deducted upon Surrender or Partial
Withdrawal of Purchase Payments held less than 5 full Certificate Years since
the Anniversary at the end of the Certificate Year in which the Purchase
Payment was made. It is calculated as a percentage of the Purchase Payments
withdrawn or surrendered. The percentage is based on the number of
Anniversaries since the Certificate Year in which each Purchase Payment was
made.
ANNIVERSARIES SINCE PURCHASE 0 1 2 3 4 5 6 and
PAYMENT WAS MADE: more
PERCENTAGE: 7% 6% 5% 4% 3% 2% 0%
Annual Administrative Charge (Deducted from the Accumulation Value)
This charge is based on Net Purchase Payments. If Net Purchase Payments
received are:
less than $100,000: $ 30 per year
$100,000 or more: $ 0 per year
Variable Account Annual Expenses (Based on the percentage of assets in each
Variable Account Division)
Mortality And Expense Risk Charge: 1.25%
Asset Based Administrative Charge: 0.15%
Guaranteed Interest Rate
The Guaranteed Interest Rate for the Guaranteed
Interest Division is: 3.00% per year
BENEFIT PROVISIONS
EFFECTIVE DATE OF COVERAGE
The Contract Holder applies for the group Contract through an application. Once
the Contract Holder's application is approved by us, the group Contract is
issued to the Contract Holder, who is the group Contract owner. The group
Contract Holder holds legal title to the group Contract. The Contract Holder
retains possession of the group Contract while it is in force. The laws of the
state where the group Contract was delivered govern the Contract. Certificates
will be issued to those persons who apply for coverage under this group
Contract through a Certificate application and are accepted by us. This
Certificate is governed by the laws of the state where the Certificate was
delivered.
Each Certificate will have its own Owner, Annuitant (and any Contingent
Annuitant), Beneficiary (and any Contingent Beneficiaries) and elections. Each
Certificate will also have its own Proceeds, including Accumulation Value, Cash
Surrender Value and Guaranteed Death Benefit, and which also includes having its
own Accumulation Value in each of the Divisions in which the Owner of the
Certificate invests. Throughout this Certificate, unless a reference is
specifically to the Contract, that reference will be to the Certificate.
The Contract Date shown on the first page is the date the Contract was issued to
the Contract Holder. The Certificate Date shown in the Certificate Schedule is
the effective date for all coverage provided under this Certificate. This is
subject to our receipt of the initial Purchase Payment. The Certificate Date is
the date from which we measure Anniversaries. An Anniversary occurs each
Certificate Year on the same month and day as the Certificate Date. If the
Certificate Date is February 29th, the Anniversary will be February 28th in
Certificate Years in which there is not a February 29th.
ELECTION AND CHANGES OF ANNUITY DATE
The Annuity Date is the date as of which Annuity Payouts begin. It may be
elected on your Certificate application, but may not be earlier than the second
Anniversary. If no Annuity Date is elected in the Certificate application, the
Annuity Date will be the first day of the month following the Annuitant's 85th
birthday. You may change the Annuity Date at any time prior to 60 days before
the Annuity Date currently elected by sending written notice to our Customer
Service Center. The Annuity Date may not be later than the first day of the
month following the Annuitant's 85th birthday.
ELECTION AND CHANGES OF ANNUITY OPTION
The Annuity Option is composed of both the Payout Option which specifies the
type of annuity to be paid and the Payout Period Option which determines how
long the annuity will be paid, the frequency and the amount of each payout. The
Owner elects the Annuity Option. The Owner may change the Annuity Option at any
time prior to the Annuity Date. The Beneficiary may select an Annuity Option
for any Payouts to be made pursuant to death Proceeds. Any death benefit
Proceeds to be applied under an Payout Annuity Option will be allocated to each
of the Divisions of the Variable Account or the Guaranteed Interest Division as
instructed by the Beneficiary. The available options are described in the
Annuity Option Provisions section. Commutation rights are provided to an
Annuitant or Contingent Annuitant as described in the Commuting section of this
Certificate.
PAYOUT OF PROCEEDS
Proceeds are paid or applied under the following circumstances:
1. As of the Annuity Date, to provide Annuity Payouts;
2. Upon surrender of this Certificate prior to the Annuity Date; or
3. As a death benefit prior to the Annuity Date.
The amount and method of payout under each circumstance is described below. The
payout of Proceeds is subject to the Required Distributions section in this
Certificate. We may delay payout of the Proceeds for reasons listed in the
Deferral of Payout section.
As of the Annuity Date, to Provide Annuity Payouts
Proceeds applied as of the Annuity Date to provide an annuity under an
Annuity Option will be the Accumulation Value minus taxes incurred but not
deducted. This deduction will be allocated to each of the Divisions in the
same proportion that the Accumulation Value in each Division bears to the
Accumulation Value in all Divisions immediately prior to the Annuity Date.
We will provide an annuity under the Annuity Option then in effect. If no
Annuity Option is in effect, the Annuity Option default will be we will apply
proceeds to Payout Period Option II for a Variable Annuity Payout, using a
Benchmark Total Return of 3%, with a designated period of 20 years. The
available options are described in the Annuity Option Provisions section.
The annuity benefits at the time of their commencement will not be less than
those that would be provided by the application of the Proceeds to purchase
any single premium immediate annuity contract offered by us at that time to
the same class of annuitants. Contact our Customer Service Center or your
agent for more information.
Upon Surrender of this Certificate Prior to the Annuity Date
Proceeds payable upon the surrender of this Certificate prior to the Annuity
Date will be the Cash Surrender Value. No Annuity Options are available upon
surrender; however, you may accelerate the Annuity Date under the Certificate
as described in the Surrender Provisions section of this Certificate.
As a Death Benefit Prior to the Annuity Date
Proceeds payable upon the death of the Owner prior to the Annuity Date will
be the Guaranteed Death Benefit and will be paid according to the provisions
in the Owners and Death of Owners and the Required Distributions sections.
We will pay the Proceeds in one lump sum unless the Beneficiary elects an
Annuity Option within 60 days after the determination of the Guaranteed Death
Benefit but prior to the date on which we pay the Proceeds. If a one sum
payout is elected, the Proceeds will usually be paid within 7 days of
determination of the amount of the Guaranteed Death Benefit. Interest will
be paid on the Proceeds from the date of determination of the Guaranteed
Death Benefit to the date of payout, or until an Annuity Option is selected.
Interest is at the rate we declare, or any higher rate required by law, but
not less than 3% per year. If the Proceeds are paid under an Annuity Option,
the Beneficiary becomes the Annuitant and the Contingent Beneficiary becomes
the Contingent Annuitant. The available options are described in the Annuity
Option Provisions section. The annuity benefits at the time of their
commencement will not be less than those that would be provided by the
application of the Proceeds to purchase any single premium immediate annuity
contract offered by us at that time to the same class of annuitants. Contact
our Customer Service Center or your agent for more information.
OWNERS AND DEATH OF THE OWNERS
The original Owner of this Certificate is the person named as the Owner in the
Certificate application. Consistent with the terms of any Beneficiary
designation and any assignment, the Owner may, prior to the Annuity Date:
1. Assign this Certificate or surrender it in whole or in part;
2. Amend or change this Certificate with the consent of the Company;
3. Exercise any right and receive any benefit; or
4. Change the ownership.
Subject to the applicable provisions of the Required Distributions section, if
the Owner (or Deemed Owner as defined in the Required Distributions section)
dies prior to the Annuity Date, and:
1. If the Owner's spouse is the Joint Owner, then the spouse becomes the
new Owner and no death benefit is payable; or
2. If the Owner's spouse is the Beneficiary, then the spouse may elect to
become the Owner (in which case there is no death benefit payable) by so
electing within 60 days of the our receipt of due proof of death and prior
to the distribution of Proceeds; if there is no such election, the
Guaranteed Death Benefit is payable to the Beneficiary; or
3. If the Owner's spouse is not the Joint Owner or the Beneficiary, then
the Guaranteed Death Benefit is payable to the Beneficiary.
REQUIRED DISTRIBUTIONS
The following required distribution rules shall apply if and to the extent
required under Section 72(s) of the Internal Revenue Code:
1. Subject to the alternative election or spouse beneficiary provisions in
subsection (2) or (3) below,
a) If any Owner dies on or after the annuity starting date and
before the entire interest in this Certificate has been
distributed, the remaining portion of such interest shall be
distributed at least as rapidly as under the method of
distribution being used as of the date of such death;
b) If any Owner dies before the annuity starting date, the entire
interest in this Certificate will be distributed within 5 years
after such death; and
c) If any Owner is not an individual, then for purposes of this
subsection (1), the primary Annuitant under this Certificate
shall be treated as the Owner (the "Deemed Owner"), and any
change in the primary Annuitant shall be treated as the death of
the Owner. The primary Annuitant is the individual, the
events in the life of whom are of primary importance in
affecting the timing or amount of the payout under the
Certificate.
2. If any portion of the interest of an Owner (or a Deemed Owner) in
subsection (1) is payable to or for the benefit of a designated
beneficiary, and such beneficiary elects within 60 days after our
receipt of due proof of death but prior to the distribution of Proceeds
to have such portion distributed in an Annuity Option over a period
that: A) does not extend beyond such beneficiary's life or life
expectancy and B) starts within 1 year after such death
(a "Qualifying Distribution Period"); then for purposes of satisfying
the requirements of subsection (1), such portion shall be treated as
distributed entirely on the date such periodic distributions begin.
Such beneficiary may elect any Payout Period Option for a Qualifying
Distribution Period, subject to any restrictions imposed by any
regulations under Section 72(s) of the Internal Revenue Code.
3. If any portion of the interest of an Owner (or a Deemed Owner) described
in subsection (1) is payable to or for the benefit of such Owner's
spouse, or is co-owned by such spouse, then such spouse shall be treated
as the Owner of such portion for purposes of the requirements of
subsection (1).
GUARANTEED DEATH BENEFIT
The Guaranteed Death Benefit is the greater of the following amounts. These
amounts are calculated as of the Valuation Date we receive due proof of death
and all information necessary to process the claim including the election of a
one sum payout or election under an Payout Annuity Option:
1. The Accumulation Value; or
2. The Step-Up Benefit, plus Net Purchase Payments since the last step-up
anniversary.
The Step-Up Benefit at issue is the initial Purchase Payment. As of each
Step-Up Anniversary, the current Accumulation Value is compared to the
prior Step-Up Benefit increased by Net Purchase Payments since the last
step-up anniversary. The greater of these becomes the new Step-Up
Benefit.
The Step-Up Anniversaries are every 6th Anniversary for the duration of
the Certificate (i.e., the 6th, 12th, 18th, etc.).
ANNUITANTS AND DEATH OF ANNUITANTS
The original Annuitant and any Contingent Annuitant are named in the Certificate
application. The Annuitant will receive the annuity benefits of the Certificate
if, on the Annuity Date, the Annuitant is living and the Certificate is then in
force. You may name a new Annuitant prior to the Annuity Date. Any Annuitant
or Contingent Annuitant must be younger than age 86 when named. Any Annuitant
or Contingent Annuitant that is not an individual may not be named without our
consent. If the Owner is not an individual, the Annuitant may not be changed
without our consent.
If the Annuitant dies before the Annuity Date, and a Contingent Annuitant has
been named, the Contingent Annuitant becomes the Annuitant. If no Contingent
Annuitant has been named, you must designate a new Annuitant. If no designation
is made within 30 days of the Annuitant's death, the Owner will become the
Annuitant.
If any Owner is not an individual, the death of the Annuitant will be treated as
the death of the Owner.
Upon the death of the Annuitant after the Annuity Date, any remaining Designated
Period payouts will be continued to any Contingent Annuitant. Upon the death of
both the Annuitant and all Contingent Annuitants, any remaining Designated
Period payouts will be paid to the estate of the last to die of the Annuitant
and Contingent Annuitants. Amounts may be released in one sum if the Owner's
election allows. See the Annuity Option Provisions section.
BENEFICIARIES AND DEATH OF BENEFICIARIES
The original Beneficiary and any Contingent Beneficiaries are named in the
Certificate application. Surviving Contingent Beneficiaries are paid death
Proceeds only if no Beneficiary survives. If more than one Beneficiary in
a
class survives, they will share the Proceeds equally, unless the Owner's
designation provides otherwise. If there is no designated Beneficiary or
Contingent Beneficiary surviving, we will pay the Proceeds to the Owner's
estate. The Beneficiary designation will be on file with us or at a location
designated by us. We will pay Proceeds to the most recent Beneficiary
designation on file. The Owner may name a new Beneficiary unless an irrevocable
Beneficiary has been named. When an irrevocable Beneficiary has been
designated, the Owner and the irrevocable Beneficiary must act together to make
any Beneficiary changes.
PURCHASE PAYMENT PROVISIONS
PURCHASE PAYMENTS
This Certificate will not be effective until the initial Purchase Payment is
received by us and accepted at our Customer Service Center. Any subsequent
Purchase Payments may be made at any time prior to the Annuity Date, subject to
the Minimum for Each Additional Purchase Payment amount shown in the Certificate
Schedule. No Purchase Payment will be allocated until it is received by us at
our Customer Service Center. We reserve the right to refuse to accept, without
our prior approval, any Purchase Payment when the sum of Net Purchase Payments
to date exceeds the Maximum Cumulative Net Purchase Payment shown in the
Certificate Schedule. Net Purchase Payments are Purchase Payments made minus
Gross Partial Withdrawals taken. A Gross Partial Withdrawal is a Partial
Withdrawal plus any applicable Surrender Charge.
PURCHASE PAYMENT ALLOCATION
The initial Purchase Payment will be allocated to the Guaranteed Interest
Division and the Divisions of the Variable Account according to your most recent
written instructions. Any Purchase Payments thereafter will be allocated to
each Division in the same proportion that the Accumulation Value in each
Division bears to the total Accumulation Value as of the date we receive that
additional Purchase Payment at our Customer Service Center, or as otherwise
instructed by you. You may designate a different allocation with respect to any
Purchase Payments by sending us a written notice with the Purchase Payment.
VARIABLE ACCOUNT PROVISIONS
THE VARIABLE ACCOUNT
The Variable Account is an account established by us, pursuant to the laws of
the State of New York, to separate the assets funding the variable benefits for
the class of policies to which the Contract and this Certificate belong from the
other assets of First ING Life of New York.
The Variable Account is registered as a unit investment trust under the
Investment Company Act of 1940. All income, gains and losses, whether or not
realized, from assets allocated to the Variable Account are credited to or
charged against the Variable Account without regard to income, gains or losses
of our General Account. The assets of the Variable Account are our property,
but are separate from our General Account and our other Variable Accounts. That
portion of the assets of the Variable Account which is equal to the reserves and
other contract liabilities with respect to the Variable Account is not subject
to creditor claims against us.
VARIABLE ACCOUNT DIVISIONS
The Variable Account is divided into Divisions, each of which invests in a
series fund Portfolio designed to meet the objectives of the Division. The
current eligible Divisions are shown in the Certificate Schedule. We may, from
time to time, add additional Divisions. If we do, you may be permitted to
select from these other Divisions subject to the terms and conditions we may
impose on those allocations.
We reserve the right to limit the number of Divisions in which you may invest.
CHANGES WITHIN THE VARIABLE ACCOUNT
When permitted by law, and subject to any required notice to you and approval of
the Securities and Exchange Commission ("SEC"), state regulatory authorities,
Contract Holders or Owners, we may from time to time make the following changes
to the Variable Account:
. Make additional Divisions available. These Divisions will invest in
investment Portfolios we find suitable for the Contract.
. Eliminate Divisions from the Variable Account, combine 2 or more Divisions,
or substitute a new Portfolio for the Portfolio in which a Division invests.
A substitution may become necessary if, in our judgment, a Portfolio no
longer suits the purposes of the Contract. This may happen due to a change
in laws or regulations, or a change in a Portfolio's investment objectives or
restrictions. This may also happen if the Portfolio is no longer available
for investment, or for some other reason, such as a declining asset base.
. Transfer assets of the Variable Account, which we determine to be associated
with the class of contracts to which the Contract belongs, to another Variable
Account.
. Withdraw the Variable Account from registration under the Investment Company
Act of 1940.
. Operate the Variable Account as a management investment company under the
Investment Company Act of 1940.
. Cause one or more Divisions to invest in a mutual fund other than or in
addition to the Portfolios.
. Discontinue the sale of Contracts and Certificates.
. Terminate any employer or plan trustee agreement with us pursuant to its
terms.
. Restrict or eliminate any voting rights as to the Variable Account.
. Make any changes required by the Investment Company Act of 1940 or the rules
or regulations thereunder.
GENERAL ACCOUNT PROVISIONS
THE GENERAL ACCOUNT
The General Account holds all of our assets other than those held in the
Variable Account or our other separate accounts. The Guaranteed Interest
Division is a part of our General Account.
GUARANTEED INTEREST DIVISION
The Guaranteed Interest Division is another Division to which you may allocate
Purchase Payments or make transfers. The Accumulation Value of the Guaranteed
Interest Division is equal to the Net Purchase Payments allocated to this
Division plus any earned interest minus deductions taken from this Division.
Interest is credited at the guaranteed rate shown in the Certificate Schedule or
may be credited at a higher rate. Any higher rate is guaranteed to be in effect
for at least 12 months.
TRANSFER PROVISIONS
After the Certificate Examination Period, the Accumulation Value in each
Division may be transferred, upon request, to any other Division subject to the
limitations on transfers involving the Guaranteed Interest Division as detailed
in the following section. Any transfers made due to the operation of Dollar
Cost Averaging or Automatic Rebalancing will not count toward the limit on the
number of transfers allowed free of charge. The minimum amount that may be
transferred from each Division is the lesser of $100 or the balance of a
Division.
The following table summarizes the number of transfers available and the
associated charges during any Certificate year:
Accumulation Period Annuity Period
Free Transfers 12 4
Total Number of Transfers Permitted Unlimited 4
Excess Transfer Charge $25 for each Not Applicable
transfer in excess
of 12 during any
Certificate Year
We reserve the right to limit the number of transfers per Certificate Year to 12
and to limit excessive trading activity.
TRANSFERS TO OR FROM THE GUARANTEED INTEREST DIVISION
Once during the first 30 days of each Certificate Year, you may transfer amounts
to or from the Guaranteed Interest Division. Transfer requests received within
30 days before the Anniversary will be deemed to occur as of the Anniversary.
Transfer requests received on the Anniversary or during the next 30 days will be
processed. Transfer requests received at any other time will not be processed.
The maximum transfer amount from the Guaranteed Interest Division in any
Certificate Year is the greatest of:
1. 25% of the Accumulation Value in the Guaranteed Interest Division at the
time of the first transfer or withdrawal in a Certificate Year;
2. The minimum transfer amount; or
3. The total amount transferred or withdrawn from the Guaranteed Interest
Division in the prior Certificate Year, including Systematic Income
Partial Withdrawals.
EXCESS TRANSFER CHARGE
If you exceed the number of free transfers allowed, you will be assessed an
Excess Transfer Charge. This charge will be deducted from each of the Divisions
in which you are invested in the same proportion that the amount of Accumulation
Value in that Division bears to the total Accumulation Value immediately after
the transfer.
DOLLAR COST AVERAGING TRANSFER OPTION
During the Accumulation Period only, if you have at least $10,000 of
Accumulation Value in the [Global Strategic Income Division], you may choose to
transfer a specified dollar amount each month from this Division to other
Divisions of the Variable Account. Dollar Cost Averaging transfers may not be
made to the Guaranteed Interest Division. You may elect the Dollar Cost
Averaging transfer option at any time prior to the Annuity Date.
The minimum amount that you may elect to transfer each month is $100. The
maximum amount that you may transfer is equal to the Accumulation Value in the
[Global Strategic Income Division] when the election is made, divided by 12.
Dollar Cost Averaging may be elected to end on a specified date or when a
specific balance remains in the [Global Strategic Income Division].
Allocations of the transfer amount must be designated as whole number
percentages; no specific dollar designation may be made to the Divisions of the
Variable Account. If you elect to transfer to a particular Division, the
minimum percentage that may be transferred to that Division is 1% of the total
amount transferred. The transfer date will be the same calendar day each month
as the Certificate Date. If this calendar day is not a Valuation Date, the next
Valuation Date will be used. If, on any transfer date, the Accumulation Value
in the [Global Strategic Income Division] is equal to or less than the amount
you have elected to have transferred, the entire amount will be transferred, and
this option will end. Dollar Cost Averaging will end as of the Valuation Date
immediately preceding the Annuity Date.
You may change the transfer amount or the Divisions to which transfers are to be
made once each Certificate Year. You may cancel this election by sending us
written notice at our Customer Service Center at least 7 days before the next
transfer date. Any transfer under this option will not be included for purposes
of the Excess Transfer Charge.
If you elect both Dollar Cost Averaging and Automatic Rebalancing, Dollar Cost
Averaging will occur first. On the first Valuation Date of the next calendar
quarter after Dollar Cost Averaging has terminated, Automatic Rebalancing will
begin.
AUTOMATIC REBALANCING
Automatic Rebalancing allows you to match your Accumulation Value in each
Division to your allocation percentages. Automatic Rebalancing can be elected
in your Certificate application or by completing the client service application
and returning it to our Customer Service Center. As of the first Valuation Date
of each calendar quarter thereafter we will reallocate your Accumulation Value
so that the amount in each Division matches your allocation percentages.
Automatic Rebalancing may not begin until the end of the Certificate Examination
Period.
When you request a change in your allocation percentages, your Accumulation
Value will be reallocated as of the Valuation Date that we receive your written
allocation instructions.
You may cancel this election by sending us written notice at our Customer
Service Center at least 7 days before the next transfer date. Any transfer
under this option will not be included for purposes of the Excess Transfer
Charge.
You may not transfer among Divisions while the Automatic Rebalancing feature is
in effect. If you elect both Dollar Cost Averaging and Automatic Rebalancing,
Dollar Cost Averaging will occur first. On the first Valuation Date of the next
calendar quarter after Dollar Cost Averaging has terminated, Automatic
Rebalancing will begin.
ACCUMULATION VALUE PROVISIONS
The Accumulation Value of this Certificate is the sum of the Accumulation Values
of all the Divisions of the Variable Account in which your Certificate is
invested, plus any Accumulation Value of the Guaranteed Interest Division.
The Accumulation Values are based on the Purchase Payments and transfers made,
Partial Withdrawals, the Certificate charges, earned interest of the Guaranteed
Interest Division and the investment experience of the Divisions of the Variable
Account.
All Certificate processing occurs as of a Valuation Date. If a transaction
occurs on a day other than a Valuation Date, the transaction will be processed
as of the next Valuation Date.
VALUATION DATE
A Valuation Date is any day:
1. The New York Stock Exchange ("NYSE") is open for trading and on which
First ING Life's Customer Service Center is open; or
2. As may be required by law.
VALUATION PERIOD
A Valuation Period begins at 4 p.m. Eastern time on a Valuation Date. It ends
at 4 p.m. Eastern time on the next succeeding Valuation Date.
All Contract processing for a Valuation Period takes place as of the end of the
Valuation Period.
ACCUMULATION UNIT VALUE
The investment experience of a Division of the Variable Account is determined as
of each Valuation Date. We use an Accumulation Unit Value to measure the
experience of each of the Divisions of the Variable Account during a Valuation
Period. The Accumulation Unit Value for a Valuation Period equals the
Accumulation Unit Value for the preceding Valuation Period multiplied by the
Accumulation Experience Factor for the Valuation Period.
The number of units for a given transaction related to a Division of the
Variable Account as of a Valuation Date is determined by dividing the dollar
value of that transaction by that Division's Accumulation Unit Value for that
date.
ACCUMULATION EXPERIENCE FACTOR
For each Division of the Variable Account, the Accumulation Experience Factor
reflects the investment experience of the Portfolio in which that Division
invests and the charges assessed against that Division for a Valuation Period.
The Accumulation Experience Factor is calculated as follows:
1. The net asset value of the Portfolio in which that Division invests as of
the end of the current Valuation Period; plus
2. The amount of any dividend or capital gains distribution declared and
reinvested in that Portfolio during the current Valuation Period; minus
3. A charge for taxes, if any.
4. The result of (1), (2) and (3), divided by the net asset value of that
Portfolio as of the end of the preceding Valuation Period; minus
5. The daily equivalent of the Variable Account Annual Expenses shown in the
Certificate Schedule for each day in the current Valuation Period.
ACCUMULATION VALUE OF THE DIVISIONS OF THE VARIABLE ACCOUNT
The Accumulation Value of each Division of the Variable Account as of the
Certificate Date is equal to the amount of the initial Purchase Payment
allocated to that Division.
On subsequent Valuation Dates, the Accumulation Value of each Division of the
Variable Account is calculated as follows:
1. The number of Accumulation Units in that Division as of the end of the
preceding Valuation Period multiplied by that Division's Accumulation Unit
Value for the current Valuation Period; plus
2. Any additional Purchase Payments allocated to that Division during the
current Valuation Period; plus
3. Any Accumulation Value transferred to such Division during the current
Valuation Period; minus
4. Any Accumulation Value transferred from such Division during the current
Valuation Period; minus
5. Any Excess Transfer Charge allocated to such Division during the current
Valuation Period; minus
6. Any Gross Partial Withdrawals allocated to that Division during the
current Valuation Period; minus
7. The portion of the Administrative Charge applicable to that Division if an
Anniversary occurs during the Valuation Period.
The Administrative Charge is allocated to each of the Divisions of the Variable
Account and the Guaranteed Interest Division in the same proportion that the
Accumulation Value in that Division bears to the Accumulation Value in all of
the Divisions.
ACCUMULATION VALUE OF THE GUARANTEED INTEREST DIVISION
Your Accumulation Value of the Guaranteed Interest Division as of the
Certificate Date is equal to the amount of the initial Purchase Payment
allocated to that Division.
On subsequent Valuation Dates, the Accumulation Value of the Guaranteed Interest
Division is calculated as follows:
1. The Accumulation Value of the Guaranteed Interest Division as of the end
of the preceding Valuation Period plus any earned interest during the
Valuation Period; plus
2. Any additional Purchase Payments allocated to the Guaranteed Interest
Division during the current Valuation Period; plus
3. Any Accumulation Value transferred to the Guaranteed Interest Division
during the current Valuation Period; minus
4. Any Accumulation Value transferred from the Guaranteed Interest Division
during the current Valuation Period; minus
5. Any Excess Transfer Charge allocated to the Guaranteed Interest Division
during the current Valuation Period; minus
6. Any Gross Partial Withdrawals allocated to the Guaranteed Interest
Division during the current Valuation Period; minus
7. The portion of the Administrative Charge applicable to the Guaranteed
Interest Division if an Anniversary occurs during the current Valuation
Period.
The Administrative Charge is allocated to each of the Divisions of the Variable
Account and the Guaranteed Interest Division in the same proportion that the
Accumulation Value in that Division bears to the Accumulation Value in all of
the Divisions.
PARTIAL WITHDRAWAL PROVISIONS
After the Certificate Examination Period and prior to the Annuity Date, you may
withdraw, in cash, all or part of the Cash Surrender Value of this Certificate.
A Partial Withdrawal may incur Surrender Charges. Withdrawals may be subject to
a 10% penalty tax. A Gross Partial Withdrawal is a Partial Withdrawal plus any
applicable Surrender Charges.
In no case will you be allowed to withdraw more than your Cash Surrender Value.
A Partial Withdrawal will result in a decrease in the Accumulation Value of this
Certificate. The decrease is equal to the amount of the Gross Partial
Withdrawal. Partial Withdrawals from the Divisions of the Variable Account will
be made by redeeming Accumulation Units in the affected Divisions at their value
as next computed after we receive your written request at our Customer Service
Center. Any applicable Surrender Charge will reduce the Accumulation Value of
each Division in the same proportion that the Accumulation Value in each
Division bears to the total Accumulation Value immediately after the withdrawal.
There are 3 Partial Withdrawal options available:
1. Demand Withdrawal Option
2. Systematic Income Program
3. IRA Income Program.
DEMAND WITHDRAWAL OPTION
After the Certificate Examination Period and prior to the Annuity Date, you may
make a Demand Withdrawal. The minimum Demand Withdrawal amount is $100. The
maximum Demand Withdrawal amount is the Cash Surrender Value minus $500. If the
amount of Demand Withdrawal you specify exceeds the maximum level, the amount of
the withdrawal will automatically be adjusted.
Demand Withdrawals are deemed to be withdrawn in the following order:
1. Earnings in the Certificate;
2. Purchase Payments held more than 5 full Certificate Years since the
Anniversary immediately following the end of the Certificate Year in which
the Purchase Payment was made;
3. The amount by which 15% of the Accumulation Value as of the last
Anniversary (minus any Gross Partial Withdrawals already made during the
Certificate Year which are not considered withdrawals of Purchase
Payments) exceeds earnings, if any;
4. Purchase Payments held less than 5 full Certificate Years since the
Anniversary at the end of the Certificate Year in which the Purchase
Payment was made, withdrawn on a first-in, first-out basis.
Unless you specify otherwise, the amount of the Partial Withdrawal will be taken
from each Division in the same proportion that the amount of Accumulation Value
in that Division bears to the Accumulation Value in all of the Divisions
immediately prior to the withdrawal. You may not withdraw from the Guaranteed
Interest Division an amount that is greater than the total withdrawal multiplied
by the ratio of the Accumulation Value in the Guaranteed Interest Division to
the total Accumulation Value immediately prior to the withdrawal.
Earnings in the Certificate, for the purpose of calculating Surrender Charges,
equal the current Accumulation Value minus any Purchase Payments not previously
withdrawn.
SYSTEMATIC INCOME PROGRAM
You may elect this option at any time prior to the Annuity Date. You may choose
to receive Systematic Income Partial Withdrawals on a monthly or quarterly basis
from the Accumulation Value. Withdrawals will be taken from each Division of
the Variable Account and the Guaranteed Interest Division in the same proportion
that the Accumulation Value of that Division bears to the total Accumulation
Value. The payouts under this option may not start sooner than one month after
the Certificate Date. You may select the day of the month when the withdrawals
will be made. If no day is selected, the withdrawals will be made on the same
calendar day of the month as the Certificate Date. If this calendar day is not
a Valuation Date, the next Valuation Date will be used. You may select a dollar
amount or a percentage amount for your withdrawal subject to the following
maximums:
MONTHLY: 1.25% of the Accumulation Value
QUARTERLY: 3.75% of the Accumulation Value
Except as described in the following sections, in no event will a payout be less
than $100.
If a dollar amount is selected and the amount to be systematically withdrawn
would exceed the applicable maximum percentage listed above on the withdrawal
date, the amount withdrawn will be reduced to equal such percentage. If the
amount to be withdrawn is then less than $100, the withdrawal will be made and
the Systematic Income Program will be canceled.
If a percentage is selected and the amount to be systematically withdrawn based
on that percentage would be less than $100, the amount will be increased to the
lesser of $100 or the maximum percentage. If the amount to be withdrawn is then
less than $100, the withdrawal will be made and the Systematic Income Program
will be canceled.
If the Systematic Income Program is canceled due to an insufficient Accumulation
Value, any remaining Cash Surrender Value will be paid to you. This will result
in the termination of the Certificate.
You may change the amount or percentage of your Systematic Income Partial
Withdrawal once each Certificate Year. You may cancel your election at any time
by sending written notice to us at our Customer Service Center at least 7 days
prior to the next scheduled withdrawal date.
During any Certificate Year, if a Demand Withdrawal is made while the Systematic
Income Program is in effect, the remaining payouts to be made under the
Systematic Income Program for that Certificate Year will be considered Demand
Withdrawals for purposes of calculating any applicable Surrender Charges. If a
Demand Withdrawal is not made in the same Certificate Year, Systematic Income
Partial Withdrawals will not be assessed a Surrender Charge. However, the
amount available for Systematic Income Partial Withdrawals is never greater than
the Cash Surrender Value.
IRA INCOME PROGRAM
If you have an IRA Certificate, we will send you Partial Withdrawals to
accommodate IRS required minimum distribution rules. These Partial Withdrawals
will begin automatically if the minimum distributions are not otherwise
satisfied. If this Certificate is intended as an Individual Retirement Annuity,
notwithstanding any provisions of this Certificate, this Certificate shall meet
all requirements of section 408(b) of the Internal Revenue Code and any other
sections as required and as related to the sale and marketing of this product.
SURRENDER PROVISIONS
CASH SURRENDER VALUE
The Cash Surrender Value of this Certificate is the Accumulation Value minus any
Surrender Charges, taxes incurred but not deducted and the Administrative
Charge, if any, due at the end of the Certificate Year. The applicable
Surrender and Administrative Charges are shown in the Certificate Schedule.
Surrenders may be subject to a 10% penalty tax.
You may surrender this Certificate for its Cash Surrender Value at any time
prior to the Annuity Date. The Surrender Charge shown in the Certificate
Schedule will be deducted on surrender. A Surrender Charge is applicable only
to the Surrender or Partial Withdrawal of Purchase Payments held less than 5
full Certificate Years since the Anniversary at the end of the Certificate Year
in which the Purchase Payment was made.
If you do not wish to receive your Cash Surrender Value in a one sum payout and
you are also the Annuitant, you may avoid a Surrender Charge by applying the
Proceeds to Payout Period Options II or III by accelerating the Annuity Date
under the Certificate, subject to the limitations in the Election and Changes of
Annuity Date section. No surrender may be made on or after the Annuity Date or
with respect to any amounts applied under an Annuity Option.
GENERAL CONTRACT PROVISIONS
THE CONTRACT
The Contract, this Certificate, any applications, the Certificate application,
riders and endorsements, make up the entire Contract between you and us. A copy
of the initial Certificate application will be attached to this Certificate at
issue. All statements made in an application will be considered representations
and not warranties. No statement will be used to deny a claim unless it is in
an application.
TERMINATION OF CONTRACT
The Contract will not be terminated until all Certificates issued under it are
no longer in force. However, we may stop issuing new Certificates or accepting
applications under the Contract at any time.
AGE
This Certificate is issued at the Owner's Age shown in the Certificate Schedule.
This is the Owner's Age as of last birthday on the Certificate Date. The
Annuitant's attained age on any date for which age is to be determined is the
Annuitant's age as of last birthday.
PROCEDURES
We must receive any election, designation, assignment or any other change
request you make in writing, except those specified on the Certificate
application. We may require a return of this Certificate for any such change or
for paying its Cash Surrender Value. The effective date of any change in
provisions of the Certificate will be the date the request was signed. Any
change will not affect payouts made or action taken by us before the change is
recorded at our Customer Service Center.
We may require due proof of age, death or survival of an Annuitant or any
Beneficiary when such proof is relevant to the payout of a benefit, claim, or
settlement under the Certificate.
In the event of the Owner's death before the Annuity Date, we should be informed
as soon as possible. Claim procedure instructions will be sent to your
Beneficiary immediately. We require a certified copy of the death certificate
and may require proof of the Owner's Age. We may require the Beneficiary and
the Owner's next of kin to sign authorizations as part of due proof.
DEFERRAL OF PAYOUT
Partial Withdrawals or payout of Proceeds from Divisions of the Variable Account
will usually be processed within 7 days of receipt of the request at our
Customer Service Center. However, we may postpone the processing of any such
transactions for any of the following reasons:
1. When the NYSE is closed for trading;
2. When trading on the NYSE is restricted by the SEC;
3. When an emergency exists such that it is not reasonably practical to
dispose of securities in the applicable Division of the Variable Account
or to determine the value of its assets; or
4. When a governmental body having jurisdiction over the Variable Account
permits such suspension by order.
Rules and regulations of the SEC are applicable and will govern as to whether
conditions described in (2), (3), or (4) exist.
We may defer up to 6 months the payout of any Partial Withdrawal or Proceeds
other than death benefits from the Guaranteed Interest Division.
TAX QUALIFICATION
The Contract and this Certificate are intended to qualify as annuity contracts
under the Internal Revenue Code. To that end, all terms and provisions of the
Contract will be interpreted to ensure or maintain such qualification. Payouts
and distributions under this Certificate will be made in the time and manner
necessary to maintain such qualification under the applicable provisions of the
Internal Revenue Code. We reserve the right to amend the Contract and this
Certificate to reflect any clarifications or changes that may be needed or are
appropriate or to conform it to any applicable changes in the tax requirements.
Such changes will apply uniformly to all Contracts and Certificates that are
affected. We will send you written notice of any such changes.
CONTRACT CHANGES
All changes made by us must be signed by our president or an officer and by our
secretary or assistant secretary. No other person can change any of the terms
and conditions of the Contract or any Certificate issued under it.
COLLATERAL ASSIGNMENT
The Owner may assign this Certificate as collateral security upon written notice
to us. Once it is recorded with us, the rights of the Owner and Beneficiary are
subject to the assignment. It is your responsibility to make sure the
assignment is valid.
INCONTESTABILITY
We will not contest the statements in a Certificate application for this
Certificate after the Certificate Date.
MISSTATEMENT OF AGE OR SEX
If the Age or sex has been misstated in an application, the amounts payable or
benefits provided by this Certificate will be those that the Purchase Payouts
made would have purchased at the actual Age or sex, with interest at 6% per year
on any overpayments or underpayments previously made.
PERIODIC REPORTS
During the Accumulation Period, we will send you a report within 90 days after
the end of each calendar quarter. This report will show the current
Accumulation Value, Cash Surrender Value, Guaranteed Death Benefit and activity
under the Certificate since the last report. During the Annuity Period, we will
send you a report within 90 days after the end of each calendar year showing any
information required by law. The reports will also include any other
information that may be required by the SEC or the insurance supervisory
official of the jurisdiction in which the Contract is delivered.
BASIS OF COMPUTATIONS
The Cash Surrender Values under this Certificate are not less than the minimums
required on the Certificate Date by the state in which the Contract was
delivered. A detailed statement of the method of computation of Accumulation
Values under this Certificate has been filed with the insurance department of
the state in which the Contract was delivered, if requested by that state.
TAXES
Taxes relating to this Certificate paid by us to any governmental entity will be
deducted from your Purchase Payments or Accumulation Value. We will, at our
sole discretion, determine when taxes have resulted from: the investment
experience of the Divisions of the Variable Account; receipt by us of the
Purchase Payments; Surrenders and Partial Withdrawals; or the start of an
Annuity Option. We may, at our sole discretion, pay taxes when incurred and
deduct that amount from the Accumulation Value at a later date. Payment at an
earlier date does not waive any right we may have to deduct amounts at this
later date. We will deduct any withholding taxes required by applicable law.
NON PARTICIPATING
This Certificate does not participate in our surplus earnings.
CUSTOMER SERVICE CENTER
Our Customer Service Center is at the address shown in the Certificate Schedule.
Unless you are otherwise notified:
1. All requests and payments should be sent to us at our Customer Service
Center; and
2. All transactions are effective as of the date the required information is
received at our Customer Service Center.
ANNUITY OPTION PROVISIONS
The Annuity Option is composed of both the Payout Option which specifies the
type of annuity to be paid and the Payout Period Option which determines how
long the annuity will be paid, the frequency and the amount of the first payout.
SUPPLEMENTARY CONTRACT
When an Annuity Option becomes effective, this Certificate will be amended to
include a Supplementary Contract. The Supplementary Contract will provide for
the manner of settlement and rights of the Annuitant. The Supplementary
Contract Effective Date will be the Annuity Date or the date of other
settlement, whenever the Annuity Option becomes effective. The first payout
will be payable as of the Supplementary Contract Effective Date.
PAYOUT OPTIONS
Annuity Payouts can be made under a Variable Annuity Payout, a Fixed Annuity
Payout, or a Combination Annuity Payout, each under various Payout Period
Options. Each of these options is described below.
Variable Annuity Payout
A Variable Annuity is an annuity with payouts which:
1. Are not pre-determined or guaranteed as to dollar amount; and
2. Vary in amount with the investment experience of the Divisions of the
Variable Account in which you invest.
As of the Annuity Date, any Accumulation Value invested in the Guaranteed
Interest Division will be allocated among the Divisions of the Variable
Account in the same proportion that the Accumulation Value of each
Division bears to the total Accumulation Value of all the Divisions of the
Variable Account.
The first Variable Annuity Payout for each Division of the Variable Account will
be the amount that the Proceeds will provide as of the close of business on the
Valuation Date immediately preceding the Supplementary Contract Effective Date
at the Benchmark Total Return elected. If you have elected to have payouts made
less frequently than monthly, the payout amount is then adjusted according to
the factors in the Payouts Other Than Monthly section. The initial number of
Annuity Units for a Division of the Variable Account is calculated by dividing
the payout amount of that Division by the Annuity Unit Value of that Division as
of the Supplementary Contract Date. The total Variable Annuity Payout is the
sum of the Variable Annuity Payouts from all Divisions of the Variable Account.
Variable Annuity Payouts, after the first payout, vary in amount with the
investment experience of the Divisions of the Variable Account. The dollar
amount of each Variable Annuity Payout after the first payout is calculated by
adding the amount due for each Division of the Variable Account. The amount due
for each Division equals:
1. The number of Annuity Units for that Division; multiplied by,
2. The Annuity Unit Value for that Division for the Valuation Period for
which each payout is due.
The dollar amount of each Annuity Payout after the first will not be affected by
variations in our expenses or mortality experience.
Benchmark Total Return
You must elect either a 3% or 5% Benchmark Total Return. Your election may
not be changed after the Annuity Date. Compared to a 3% Benchmark Total
Return, electing the 5% Benchmark Total Return would mean a higher initial
payout but more slowly rising or more rapidly falling subsequent payouts if
actual investment experience varied from 5%. If the actual investment rate
is at the annual rate of 3% or 5%, the Annuity Payouts will be level if you
elected either the 3% or 5% respectively.
Annuity Unit Value
We use an Annuity Unit Value to calculate the value of Variable Annuity
Payouts. The Annuity Unit Value for a Valuation Period is:
a) The Annuity Unit Value for each Division as of the last prior Valuation
Period multiplied by the Annuity Experience Factor for that Division
for the Valuation Period for which the Annuity Unit Value is being
calculated; divided by
b) An interest factor based on the Benchmark Total Return selected.
(This is done to neutralize the Benchmark Total Return.)
Annuity Experience Factor
For each Division of the Variable Account, the Annuity Experience Factor
reflects the investment experience of the Portfolio in which that Division
invests and the charges assessed against that Division for a Valuation
Period. The Annuity Experience Factor is calculated as follows:
a) The net asset value of the Portfolio in which that Division invests as
of the end of the current Valuation Period; plus
b) The amount of any dividend or capital gains distribution declared and
reinvested in that Portfolio during the current Valuation Period; minus
c) A charge for taxes, if any.
d) The result of (a), (b) and (c), divided by the net asset value of that
Portfolio as of the end of the preceding Valuation Period; minus
e) The daily equivalent of the Variable Account Annual Expenses shown in
the Certificate Schedule for each day in the current Valuation Period.
Transfer of Annuity Units
The Annuitant may transfer all or a portion of the Annuity Units in a
Division of the Variable Account to another Division of the Variable Account.
The limit on transfers is shown in the table in the Transfer Provisions
section. After the transfer, the number of Annuity Units in the Division of
the Variable Account from which you are transferring will be reduced by the
number of Annuity Units transferred. The number of Annuity Units in the
Division to which the transfer is made will be increased by the number of
Annuity Units transferred multiplied by:
a) The value of an Annuity Unit in the Division of the Variable Account
from which the transfer is made, divided by
b) The value of an Annuity Unit in the Division of the Variable Account to
which the transfer is made.
Fixed Annuity Payout
A Fixed Annuity Payout is an annuity with payouts which remain fixed as to
dollar amount throughout the Payout Period. As of the Supplementary Contract
Effective Date, any Proceeds invested in the Divisions of the Variable Account
will be allocated to the Guaranteed Interest Division. The Fixed Annuity Payout
will be that amount that the Proceeds will provide as of the Supplementary
Contract Effective Date at the Benchmark Total Return of 3%. If the Fixed
Annuity Payout is credited at an interest rate above the guaranteed minimum, the
installment dollar amount will be greater than the determined installment dollar
amount for the time period that the higher rate is declared. If you have
elected to have payouts made less frequently than monthly, the payout amount is
adjusted according to the factors in the Payouts Other Than Monthly section.
Combination Annuity Payout
A Combination Annuity Payout is an annuity where a portion of the payout is
variable and a portion of the payout is fixed as to dollar amount throughout the
Payout Period. At least 25% of the Proceeds must be allocated to each selected
option as of the Supplementary Contract Effective Date. As of the Supplementary
Contract Effective Date, we will allocate Accumulation Value between the
Guaranteed Interest Division and the Divisions of the Variable Account to meet
the proportions selected. Once a Combination Annuity Payout is selected, the
Annuitant may subsequently increase the allocation to a Fixed Annuity Payout,
but may not increase the allocation to the Variable Annuity Payout.
PAYOUT PERIOD OPTIONS
Under each Payout Option, the Payout Period is elected from one of the
following:
OPTION I. Payouts for a Designated Period. Payouts will be made in 1, 2, 4,
or 12 installments per year as elected for a designated period, which may be 5
to 30 years. If a Fixed Annuity Payout is elected, the installment dollar
amounts will be equal except for any Excess Interest as described below. If a
Variable Annuity Payout is elected, the number of Annuity Units of each
installment will be equal, but the dollar amount of each installment will vary
based on the Annuity Unit Values of the selected Divisions. If the Annuitant
dies before the end of the designated period, payouts will be continued to the
Contingent Annuitant, if one has been named, until the end of the designated
period. The amount of each payout will depend upon the designated period
elected, and if a Variable Annuity Payout is elected, the investment experience
of the Divisions of the Variable Account selected. The amount of the first
monthly payout for each $1,000 of Accumulation Value applied is shown in Payout
Option Table I.
OPTION II. Life Income With Payouts for a Designated Period. Payouts will be
made in 1, 2, 4, or 12 installments per year throughout the Annuitant's
lifetime, or if longer, for a period of 5, 10, 15 or 20 years as elected. If a
Fixed Annuity Payout is elected, the installment dollar amounts will be equal
except for any Excess Interest, as described below. If a Variable Annuity
Payout is elected, the number of Annuity Units of each installment will be
equal, but the dollar amounts of each installment will vary based on the Annuity
Unit Values of the selected Divisions. If the Annuitant dies before the end of
the designated period, payouts will be continued to the Contingent Annuitant, if
one has been named, until the end of the designated period. The amount of each
payout will depend upon the Annuitant's sex, age at the time the first payout is
due, the designated period elected and, if a Variable Annuity Payout is elected,
the investment experience of the Divisions of the Variable Account selected.
The amount of the first monthly payout for each $1,000 of Accumulation Value
applied is shown in Payout Period Option Table II. This option is only
available for ages shown in these Tables.
OPTION III. Joint and Last Survivor. Payouts will be made in 1, 2, 4, or 12
installments per year as elected while both Annuitants are living. Upon the
death of one Annuitant, the Survivor's Annuity Payout will be paid throughout
the lifetime of the Surviving Annuitant.
If a Fixed Annuity Payout is elected, the installment dollar amount will be
level while both Annuitants are living and upon the death of one Annuitant will
be reduced to 2/3rds of the installment dollar amount (excluding any Excess
Interest paid) while both Annuitants were living.
If a Variable Annuity Payout is elected, the number of Annuity Units applied to
each installment will be level while both Annuitants are living and upon the
death of one Annuitant will be reduced to 2/3rds of the number of Annuity Units
applied to each installment while both Annuitants were living. The dollar
amounts of each installment will vary based on the Annuity Unit Values of the
selected Divisions.
The amount of each payout will depend upon the age last birthday and sex of each
Annuitant at the time the first payout is due and, if a Variable Annuity Payout
is elected, the investment experience of the Divisions of the Variable Account
selected.
Payouts for Payout Period Option III will be determined by using the 1983A
Individual Annuity Mortality Table. Contact our Customer Service Center to
determine the amount of the first monthly installment for each $1,000 of
Accumulation Value applied.
OPTION IV. Other. Payouts will be made in any other manner as agreed upon in
writing between you or the Beneficiary and us.
COMMUTING
The Annuitant may commute remaining designated period installments under Payout
Period Option I. The Contingent Annuitant may commute remaining designated
period installments after the death of the Annuitant under Payout Period Options
I or II. If no Contingent Annuitant is named, any remaining designated period
installments after the death of the Annuitant may be commuted by the estate.
Any computation shall be at the appropriate Benchmark Total Return rate.
EXCESS INTEREST
We may declare that Fixed Annuity Payouts will be credited at an interest rate
above the guaranteed minimum. We guarantee that any higher rate will be in
effect for at least 12 months.
MINIMUM AMOUNTS
The minimum amount that may be applied under any Annuity Option is $2,000. If
the Proceeds to be applied are less than $2,000, or if the payouts to the
Annuitant are ever less than $20, we may change the frequency of payouts to
result in payouts of at least that amount or require a one sum payout.
INCOME PROTECTION
Unless otherwise provided in the election, an Annuitant or Contingent Annuitant
has the right to assign, transfer to a third party or encumber amounts held or
installments to become payable pursuant to this Certificate. To the extent
provided by law, the Proceeds, amount retained, and installments are not subject
to any Annuitant's debts, contracts, or engagements.
PAYOUTS OTHER THAN MONTHLY
The following tables show initial monthly installments for Payout Period Options
I and II. To arrive at annual, semiannual, or quarterly payouts, multiply the
appropriate figures by 11.837, 5.962, or 2.992 if the Benchmark Total Return is
3%, and by 11.730, 5.909 or 2.966 if the Benchmark Total Return is 5%. Factors
for other designated periods or for other options that may be provided by mutual
agreement will be provided upon reasonable request.
PAYOUT PERIOD OPTION TABLES
PAYOUT PERIOD OPTION TABLE I
(Benchmark Total Return is 3% _ Per $1,000 of Net Proceeds)
No. of Monthly No. of Monthly
Years Install- Years Install-
Payable ments Payable ments
5 $17.92 20 $5.53
6 15.16 21 5.34
7 13.18 22 5.17
8 11.70 23 5.01
9 10.55 24 4.86
10 9.63 25 4.73
11 8.88 26 4.61
12 8.26 27 4.50
13 7.73 28 4.39
14 7.28 29 4.30
15 6.89 30 4.21
16 6.55
17 6.25
18 5.98
19 5.75
PAYOUT PERIOD OPTION TABLE I _ VARIABLE ANNUITY ONLY
(Benchmark Total Return is 5% _ Per $1,000 of Net Proceeds)
No. of Monthly No. of Monthly
Years Install- Years Install-
Payable ments Payable ments
5 $18.79 20 $6.57
6 16.04 21 6.39
7 14.08 22 6.23
8 12.61 23 6.08
9 11.47 24 5.94
10 10.56 25 5.82
11 9.82 26 5.71
12 9.21 27 5.61
13 8.69 28 5.51
14 8.25 29 5.43
15 7.88 30 5.35
16 7.55
17 7.26
18 7.00
19 7.77
<TABLE>
PAYOUT PERIOD OPTION TABLE II
(Benchmark Total Return is 3% _ Per $1,000 of Net Proceeds)
<CAPTION>
Age of Age of
Annuitant Annuitant
Last Birthday Last Birthday
When First When First
Installment Installment
is Payable Monthly Installment is Payable Monthly Installment
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 10 15 20 5 10 15 20
Male Years Years Years Years Male Years Years Years Years
Certain Certain Certain Certain Certain Certain Certain Certain
15 2.94 2.94 2.94 2.93 40 3.63 3.62 3.61 3.58
16 2.96 2.95 2.95 2.95 41 3.68 3.67 3.65 3.62
17 2.97 2.97 2.97 2.96 42 3.73 3.72 3.70 3.66
18 2.99 2.99 2.99 2.98 43 3.78 3.77 3.74 3.71
19 3.01 3.01 3.00 3.00 44 3.84 3.82 3.79 3.75
20 3.03 3.02 3.02 3.02 45 3.89 3.88 3.84 3.80
21 3.05 3.04 3.04 3.04 46 3.95 3.93 3.90 3.85
22 3.07 3.06 3.06 3.06 47 4.01 3.99 3.95 3.90
23 3.09 3.08 3.08 3.08 48 4.08 4.05 4.01 3.95
24 3.11 3.11 3.10 3.10 49 4.15 4.12 4.07 4.00
25 3.13 3.13 3.13 3.12 50 4.22 4.19 4.13 4.06
26 3.16 3.15 3.15 3.14 51 4.29 4.26 4.20 4.11
27 3.18 3.18 3.17 3.17 52 4.37 4.33 4.27 4.17
28 3.21 3.20 3.20 3.19 53 4.45 4.41 4.34 4.23
29 3.23 3.23 3.23 3.22 54 4.54 4.49 4.41 4.29
30 3.26 3.26 3.25 3.25 55 4.63 4.58 4.49 4.36
31 3.29 3.29 3.28 3.27 56 4.73 4.67 4.57 4.42
32 3.32 3.32 3.31 3.30 57 4.83 4.76 4.65 4.48
33 3.36 3.35 3.34 3.33 58 4.94 4.87 4.74 4.55
34 3.39 3.39 3.38 3.36 59 5.05 4.97 4.82 4.61
35 3.43 3.42 3.41 3.40 60 5.18 5.08 4.92 4.68
36 3.46 3.46 3.45 3.43 61 5.31 5.20 5.01 4.75
37 3.50 3.50 3.48 3.47 62 5.45 5.32 5.11 4.81
38 3.54 3.54 3.52 3.50 63 5.60 5.45 5.21 4.87
39 3.59 3.58 3.56 3.54 64 5.76 5.59 5.31 4.94
</TABLE>
<TABLE>
PAYOUT PERIOD OPTION TABLE II
(Benchmark Total Return is 3% _ Per $1,000 of Net Proceeds)
<CAPTION>
Age of Age of
Annuitant Annuitant
Last Birthday Last Birthday
When First When First
Installment Installment
is Payable Monthly Installment is Payable Monthly Installment
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 10 15 20 5 10 15 20
Male Years Years Years Years Male Years Years Years Years
Certain Certain Certain Certain Certain Certain Certain Certain
65 5.92 5.73 5.41 5.00 75 8.24 7.39 6.34 5.41
66 6.10 5.88 5.51 5.05 76 8.55 7.57 6.42 5.43
67 6.29 6.03 5.61 5.11 77 8.87 7.74 6.48 5.45
68 6.49 6.19 5.71 5.16 78 9.20 7.91 6.54 5.46
69 6.70 6.35 5.81 5.21 79 9.54 8.08 6.59 5.47
70 6.93 6.52 5.91 5.25 80 9.90 8.24 6.64 5.48
71 7.16 6.69 6.01 5.29 81 10.27 8.39 6.68 5.49
72 7.41 6.86 6.10 5.33 82 10.64 8.53 6.72 5.50
73 7.67 7.04 6.19 5.36 83 11.02 8.66 6.75 5.50
74 7.95 7.22 6.27 5.38 84 11.41 8.79 6.77 5.51
85 11.79 8.90 6.80 5.51
</TABLE>
<TABLE>
PAYOUT PERIOD OPTION TABLE II _ VARIABLE ANNUITY ONLY
(Benchmark Total Return is 5% _ Per $1,000 of Net Proceeds)
<CAPTION>
Age of Age of
Annuitant Annuitant
Last Birthday Last Birthday
When First When First
Installment Installment
is Payable Monthly Installment is Payable Monthly Installment
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 10 15 20 5 10 15 20
Male Years Years Years Years Male Years Years Years Years
Certain Certain Certain Certain Certain Certain Certain Certain
15 4.27 4.27 4.26 4.26 40 4.84 4.83 4.80 4.77
16 4.28 4.28 4.27 4.27 41 4.88 4.87 4.84 4.80
17 4.29 4.29 4.29 4.28 42 4.93 4.91 4.88 4.84
18 4.31 4.30 4.30 4.29 43 4.97 4.95 4.92 4.87
19 4.32 4.32 4.31 4.31 44 5.02 5.00 4.96 4.91
20 4.33 4.33 4.33 4.32 45 5.08 5.05 5.01 4.95
21 4.35 4.34 4.34 4.33 46 5.13 5.10 5.06 4.99
22 4.36 4.36 4.35 4.35 47 5.19 5.16 5.11 5.04
23 4.38 4.38 4.37 4.36 48 5.25 5.21 5.16 5.08
24 4.40 4.39 4.39 4.38 49 5.31 5.27 5.21 5.13
25 4.41 4.41 4.40 4.40 50 5.38 5.33 5.27 5.18
26 4.43 4.43 4.42 4.41 51 5.45 5.40 5.32 5.23
27 4.45 4.45 4.44 4.43 52 5.52 5.47 5.39 5.28
28 4.47 4.47 4.46 4.45 53 5.60 5.54 5.45 5.33
29 4.50 4.49 4.48 4.47 54 5.68 5.61 5.52 5.38
30 4.52 4.51 4.51 4.49 55 5.76 5.69 5.58 5.44
31 4.54 4.54 4.53 4.52 56 5.86 5.78 5.66 5.49
32 4.57 4.56 4.55 4.54 57 5.95 5.87 5.73 5.55
33 4.60 4.59 4.58 4.56 58 6.06 5.96 5.81 5.61
34 4.63 4.62 4.61 4.59 59 6.17 6.06 5.89 5.66
35 4.66 4.65 4.64 4.62 60 6.29 6.17 5.97 5.72
36 4.69 4.68 4.67 4.64 61 6.42 6.28 6.06 5.78
37 4.72 4.71 4.70 4.67 62 6.55 6.40 6.15 5.84
38 4.76 4.75 4.73 4.70 63 6.70 6.52 6.24 5.89
39 4.80 4.79 4.77 4.73 64 6.85 6.65 6.33 5.95
</TABLE>
<TABLE>
PAYOUT PERIOD OPTION TABLE II _ VARIABLE ANNUITY ONLY
(Benchmark Total Return is 5% _ Per $1,000 of Net Proceeds)
<CAPTION>
Age of Age of
Annuitant Annuitant
Last Birthday Last Birthday
When First When First
Installment Installment
is Payable Monthly Installment is Payable Monthly Installment
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 10 15 20 5 10 15 20
Male Years Years Years Years Male Years Years Years Years
Certain Certain Certain Certain Certain Certain Certain Certain
65 7.02 6.78 6.42 6.00 75 9.29 8.35 7.27 6.36
66 7.19 6.92 6.52 6.05 76 9.59 8.51 7.34 6.38
67 7.38 7.06 6.61 6.10 77 9.90 8.67 7.40 6.40
68 7.57 7.21 6.70 6.14 78 10.22 8.83 7.45 6.41
69 7.78 7.37 6.79 6.18 79 10.56 8.99 7.50 6.42
70 8.00 7.52 6.88 6.22 80 10.91 9.13 7.54 6.43
71 8.23 7.69 6.97 6.26 81 11.26 9.27 7.58 6.44
72 8.47 7.85 7.05 6.29 82 11.62 9.41 7.61 6.44
73 8.73 8.01 7.13 6.32 83 11.99 9.53 7.64 6.45
74 9.00 8.18 7.20 6.34 84 12.36 9.64 7.66 6.45
85 12.73 9.75 7.68 6.45
</TABLE>
<TABLE>
PAYOUT PERIOD OPTION TABLE II
(Benchmark Total Return is 3% _ Per $1,000 of Net Proceeds)
<CAPTION>
Age of Age of
Annuitant Annuitant
Last Birthday Last Birthday
When First When First
Installment Installment
is Payable Monthly Installment is Payable Monthly Installment
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 10 15 20 5 10 15 20
Female Years Years Years Years Female Years Years Years Years
Certain Certain Certain Certain CertainCertain Certain Certain
15 2.85 2.85 2.85 2.85 40 3.41 3.40 3.40 3.38
16 2.87 2.87 2.86 2.86 41 3.44 3.44 3.43 3.42
17 2.88 2.88 2.88 2.88 42 3.48 3.48 3.47 3.45
18 2.89 2.89 2.89 2.89 43 3.52 3.52 3.51 3.49
19 2.91 2.91 2.91 2.91 44 3.57 3.56 3.55 3.53
20 2.92 2.92 2.92 2.92 45 3.61 3.60 3.59 3.57
21 2.94 2.94 2.94 2.94 46 3.66 3.65 3.64 3.61
22 2.96 2.96 2.95 2.95 47 3.71 3.70 3.68 3.66
23 2.97 2.97 2.97 2.97 48 3.76 3.75 3.73 3.70
24 2.99 2.99 2.99 2.99 49 3.81 3.80 3.78 3.75
25 3.01 3.01 3.01 3.00 50 3.87 3.86 3.84 3.80
26 3.03 3.03 3.03 3.02 51 3.93 3.92 3.89 3.85
27 3.05 3.05 3.05 3.04 52 4.00 3.98 3.95 3.90
28 3.07 3.07 3.07 3.06 53 4.06 4.04 4.01 3.96
29 3.09 3.09 3.09 3.08 54 4.13 4.11 4.08 4.02
30 3.12 3.11 3.11 3.11 55 4.21 4.18 4.14 4.08
31 3.14 3.14 3.13 3.13 56 4.29 4.26 4.21 4.14
32 3.16 3.16 3.16 3.15 57 4.37 4.34 4.29 4.20
33 3.19 3.19 3.18 3.18 58 4.46 4.42 4.36 4.27
34 3.22 3.21 3.21 3.20 59 4.55 4.51 4.44 4.33
35 3.24 3.24 3.24 3.23 60 4.65 4.61 4.53 4.40
36 3.27 3.27 3.27 3.26 61 4.76 4.71 4.61 4.47
37 3.30 3.30 3.30 3.29 62 4.87 4.81 4.71 4.54
38 3.34 3.33 3.33 3.32 63 4.99 4.92 4.80 4.62
39 3.37 3.37 3.36 3.35 64 5.11 5.04 4.90 4.69
</TABLE>
<TABLE>
PAYOUT PERIOD OPTION TABLE II
(Benchmark Total Return is 3% _ Per $1,000 of Net Proceeds)
<CAPTION>
Age of Age of
Annuitant Annuitant
Last Birthday Last Birthday
When First When First
Installment Installment
is Payable Monthly Installment is Payable Monthly Installment
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 10 15 20 5 10 15 20
Female Years Years Years Years Female Years Years Years Years
Certain Certain Certain Certain Certain Certain Certain Certain
65 5.25 5.16 5.00 4.76 75 7.23 6.78 6.09 5.34
66 5.39 5.29 5.10 4.83 76 7.52 6.98 6.19 5.37
67 5.54 5.43 5.21 4.90 77 7.82 7.18 6.29 5.40
68 5.71 5.57 5.32 4.97 78 8.14 7.38 6.37 5.42
69 5.88 5.72 5.43 5.03 79 8.48 7.58 6.45 5.44
70 6.07 5.88 5.55 5.10 80 8.83 7.78 6.52 5.46
71 6.27 6.05 5.66 5.15 81 9.21 7.98 6.58 5.47
72 6.49 6.22 5.77 5.21 82 9.61 8.16 6.63 5.48
73 6.72 6.40 5.88 5.26 83 10.02 8.34 6.68 5.49
74 6.97 6.59 5.99 5.30 84 10.44 8.50 6.72 5.50
85 10.88 8.65 6.75 5.50
</TABLE>
<TABLE>
PAYOUT PERIOD OPTION TABLE II _ VARIABLE ANNUITY ONLY
(Benchmark Total Return is 5% _ Per $1,000 of Net Proceeds)
<CAPTION>
Age of Age of
Annuitant Annuitant
Last Birthday Last Birthday
When First When First
Installment Installment
is Payable is Payable
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 10 15 20 5 10 15 20
Female Years Years Years Years Female Years Years Years Years
Certain Certain Certain Certain Certain Certain Certain Certain
15 4.20 4.20 4.20 4.20 40 4.63 4.62 4.61 4.60
16 4.21 4.21 4.21 4.21 41 4.66 4.65 4.64 4.62
17 4.22 4.22 4.22 4.22 42 4.69 4.69 4.67 4.65
18 4.23 4.23 4.23 4.23 43 4.73 4.72 4.71 4.69
19 4.24 4.24 4.24 4.23 44 4.77 4.76 4.74 4.72
20 4.25 4.25 4.25 4.25 45 4.81 4.80 4.78 4.75
21 4.26 4.26 4.26 4.26 46 4.85 4.84 4.82 4.79
22 4.28 4.27 4.27 4.27 47 4.89 4.88 4.86 4.82
23 4.29 4.29 4.28 4.28 48 4.94 4.92 4.90 4.86
24 4.30 4.30 4.29 4.29 49 4.99 4.97 4.94 4.90
25 4.31 4.31 4.31 4.30 50 5.04 5.02 4.99 4.95
26 4.33 4.33 4.32 4.32 51 5.09 5.07 5.04 4.99
27 4.34 4.34 4.34 4.33 52 5.15 5.13 5.09 5.04
28 4.36 4.36 4.35 4.35 53 5.21 5.19 5.14 5.08
29 4.37 4.37 4.37 4.36 54 5.28 5.25 5.20 5.13
30 4.39 4.39 4.38 4.38 55 5.35 5.32 5.26 5.19
31 4.41 4.41 4.40 4.40 56 5.42 5.39 5.32 5.24
32 4.43 4.43 4.42 4.41 57 5.50 5.46 5.39 5.29
33 4.45 4.45 4.44 4.43 58 5.58 5.54 5.46 5.35
34 4.47 4.47 4.46 4.45 59 5.67 5.62 5.53 5.41
35 4.49 4.49 4.48 4.47 60 5.76 5.71 5.61 5.47
36 4.52 4.51 4.51 4.50 61 5.86 5.80 5.69 5.53
37 4.54 4.54 4.53 4.52 62 5.97 5.90 5.77 5.60
38 4.57 4.57 4.56 4.54 63 6.09 6.00 5.86 5.66
39 4.60 4.59 4.58 4.57 64 6.21 6.11 5.95 5.72
</TABLE>
<TABLE>
PAYOUT PERIOD OPTION TABLE II _ VARIABLE ANNUITY ONLY
(Benchmark Total Return is 5% _ Per $1,000 of Net Proceeds)
<CAPTION>
Age of Age of
Annuitant Annuitant
Last Birthday Last Birthday
When First When First
Installment Installment
is Payable Monthly Installment is Payable Monthly Installment
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 10 15 20 5 10 15 20
Female Years Years Years Years Female Years Years Years Years
Certain Certain Certain Certain Certain Certain Certain Certain
65 6.34 6.23 6.04 5.79 75 8.28 7.76 7.04 6.30
66 6.48 6.35 6.14 5.85 76 8.55 7.95 7.13 6.33
67 6.62 6.48 6.23 5.91 77 8.85 8.14 7.22 6.36
68 6.78 6.61 6.33 5.97 78 9.16 8.33 7.30 6.38
69 6.95 6.76 6.44 6.03 79 9.49 8.52 7.37 6.39
70 7.14 6.91 6.54 6.08 80 9.85 8.71 7.43 6.41
71 7.33 7.07 6.64 6.14 81 10.22 8.89 7.49 6.42
72 7.54 7.23 6.75 6.18 82 10.60 9.06 7.53 6.43
73 7.77 7.40 6.85 6.23 83 11.00 9.23 7.58 6.44
74 8.02 7.58 6.95 6.27 84 11.42 9.38 7.61 6.44
85 11.84 9.52 7.64 6.45
</TABLE>
<TABLE>
PAYOUT PERIOD OPTION TABLE II
(Benchmark Total Return is 3% _ Per $1,000 of Net Proceeds)
<CAPTION>
Age of Age of
Annuitant Annuitant
Last Birthday Last Monthly
When First When First
Installment Installment
is Payable Monthly Installment is Payable Monthly Installment
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 10 15 20 5 10 15 20
Unisex Years Years Years Years Unisex Years Years Years Years
Certain Certain Certain Certain Certain Certain Certain Certain
20 2.98 2.98 2.97 2.97 45 3.75 3.74 3.72 3.69
21 2.99 2.99 2.99 2.99 46 3.81 3.79 3.77 3.73
22 3.01 3.01 3.01 3.01 47 3.86 3.85 3.82 3.78
23 3.03 3.03 3.03 3.02 48 3.92 3.91 3.88 3.83
24 3.05 3.05 3.05 3.04 49 3.98 3.96 3.93 3.88
25 3.07 3.07 3.07 3.06 50 4.05 4.03 3.99 3.93
26 3.09 3.09 3.09 3.09 51 4.11 4.09 4.05 3.99
27 3.12 3.12 3.11 3.11 52 4.19 4.16 4.11 4.04
28 3.14 3.14 3.14 3.13 53 4.26 4.23 4.18 4.10
29 3.17 3.16 3.16 3.15 54 4.34 4.31 4.25 4.16
30 3.19 3.19 3.18 3.18 55 4.42 4.39 4.32 4.22
31 3.22 3.22 3.21 3.20 56 4.51 4.47 4.40 4.29
32 3.25 3.24 3.24 3.23 57 4.60 4.56 4.47 4.35
33 3.27 3.27 3.27 3.26 58 4.70 4.65 4.56 4.42
34 3.31 3.30 3.30 3.29 59 4.81 4.75 4.64 4.48
35 3.34 3.33 3.33 3.32 60 4.92 4.85 4.73 4.55
36 3.37 3.37 3.36 3.35 61 5.04 4.96 4.82 4.62
37 3.41 3.40 1.39 3.38 62 5.16 5.07 4.91 4.69
38 3.44 3.44 3.43 3.41 63 5.30 5.19 5.01 4.75
39 3.48 3.48 3.47 3.45 64 5.44 5.32 5.11 4.82
40 3.52 3.52 3.50 3.49 65 5.59 5.45 5.21 4.89
41 3.56 3.56 3.54 3.52 66 5.75 5.59 5.32 4.95
42 3.61 3.60 3.59 3.56 67 5.92 5.73 5.42 5.01
43 3.66 3.65 3.63 3 60 68 6.10 5.89 5.53 5.07
44 3.70 3.69 3.67 3.65 69 6.29 6.04 5.63 5.13
</TABLE>
<TABLE>
PAYOUT PERIOD OPTION TABLE II
(Benchmark Total Return is 3% _ Per $1,000 of Net Proceeds)
<CAPTION>
Age of Age of
Annuitant Annuitant
Last Birthday Last Birthday
When First When First
Installment Installment
is Payable Monthly Installment is Payable Monthly Installment
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 10 15 20 5 10 15 20
Unisex Years Years Years Years Unisex Years Years Years Years
Certain Certain Certain Certain Certain Certain Certain Certain
70 6.50 6.21 5.74 5.18 80 9.37 8.02 6.59 5.47
71 6.72 6.38 5.84 5.23 81 9.74 8.19 6.64 5.48
72 6.95 6.55 5.95 5.27 82 10.12 8.35 6.68 5.49
73 7.20 6.73 6.04 5.31 83 10.52 8.51 6.72 5.50
74 7.46 6.91 6.14 5.35 84 10.92 8.65 6.75 5.50
75 7.74 7.10 6.23 5.38 85 11.33 8.78 6.78 5.51
76 8.03 7.29 6.31 5.40
77 8.34 7.47 6.39 5.43
78 8.67 7.66 6.46 5.45
79 9.01 7.84 6.53 5.46
</TABLE>
<TABLE>
PAYOUT PERIOD OPTION TABLE II _ VARIABLE ANNUITY ONLY
(Benchmark Total Return is 5% _ Per $1,000 of Net Proceeds)
<CAPTION>
Age of Age of
Annuitant Annuitant
Last Last
Birthday Birthday
When First When First
Installment Installment
is Payable Monthly Installment is Payable Monthly Installment
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 10 15 20 5 10 15 20
Unisex Years Years Years Years Unisex Years Years Years Years
Certain Certain Certain Certain Certain Certain Certain Certain
20 4.29 4.29 4.29 4.28 45 4.94 4.93 4.90 4.86
21 4.31 4.30 4.30 4.30 46 4.99 4.97 4.94 4.90
22 4.32 4.32 4.31 4.31 47 5.04 5.02 4.98 4.94
23 4.33 4.33 4.33 4.32 48 5.10 5.07 5.03 4.98
24 4.35 4.35 4.34 4.34 49 5.15 5.12 5.08 5.02
25 4.37 4.36 4.36 4.35 50 5.21 5.18 5.13 5.07
26 4.38 4.38 4.37 4.37 51 5.27 5.24 5.19 5.11
27 4.40 4.40 4.39 4.38 52 5.34 5.30 5.24 5.16
28 4.42 4.41 4.41 4.40 53 5.41 5.37 5.30 5.21
29 4.44 4.43 4.43 4.42 54 5.48 5.44 5.36 5.26
30 4.46 4.45 4.45 4.44 55 5.56 5.51 5.43 5.32
31 4.48 4.47 4.47 4.46 56 5.64 5.59 5.50 5.37
32 4.50 4.50 4.49 4.48 57 5.73 5.67 5.57 5.43
33 4.53 4.52 4.51 4.50 58 5.82 5.76 5.64 5.49
34 4.55 4.55 4-54 4.52 59 5.92 5.85 5.72 5.54
35 4.58 4.57 4.56 4.55 60 6.03 5.94 5.80 5.60
36 4.61 4.60 4.59 4.57 61 6.14 6.05 5.88 5.66
37 4.64 4.63 4.62 4.60 62 6.27 6.15 5.97 5.72
38 4.67 4.66 4.65 4.63 63 6.40 6.27 6.06 5.78
39 4.70 4.69 4.68 4.66 64 6.53 6.39 6.15 5.84
40 4.74 4.73 4.71 4.69 65 6.68 6.51 6.24 5.90
41 4.77 4.76 4.74 4.72 66 6.84 6.64 6.34 5.96
42 4.81 4.80 4.78 4.75 67 7.00 6.78 6.43 6.01
43 4.85 4.84 4.82 4.78 68 7.18 6.92 6.53 6.06
44 4.90 4.88 4.86 4.82 69 7.37 7.07 6.63 6.11
</TABLE>
<TABLE>
PAYOUT PERIOD OPTION TABLE II _ VARIABLE ANNUITY ONLY
(Benchmark Total Return is 5% _ Per $1,000 of Net Proceeds)
<CAPTION>
Age of Age of
Annuitant Annuitant
Last Birthday Monthly Installment Last Monthly Installment
When First Birthday
Installment When First
is Payable Installment
is Payable
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 10 15 20 5 10 15 20
Unisex Years Years Years Years Unisex Years Years Years Years
Certain Certain Certain Certain Certain Certain Certain Certain
70 7.57 7.23 6.72 6.16 75 8.78 8.07 7.17 6.34
71 7.78 7.39 6.82 6.20 76 9.07 8.24 7.24 6.36
72 8.01 7.55 6.91 6.24 77 9.37 8.42 7.31 6.38
73 8.25 7.72 7.00 6.28 78 9.69 8.59 7.38 6.40
74 8.51 7.89 7.08 6.31 79 10.03 8.76 7.44 6.41
85 12.28 9.64 7.66 6.45
</TABLE>
This Certificate is a GROUP FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED AND
VARIABLE ANNUITY CERTIFICATE.
Annuity Payouts and other values provided by this Certificate, when based on the
investment experience of a separate account, are variable. These values may
increase or decrease based on investment experience and are not guaranteed as to
fixed dollar amount. The amount of any Annuity Payouts which are based on the
investment experience of a separate account will increase or decrease depending
on whether the investment experience, net of Variable Account Annual Expenses,
is higher or lower than the Benchmark Total Return. Annuity Payouts begin as of
the Annuity Date. Purchase Payments are flexible and may be made until the
Annuity Date. The Guaranteed Death Benefit will be paid if the Owner dies prior
to the Annuity Date.
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
A Stock Company
Customer Service Center
[P.O. Box 173778, Denver, Colorado 80217-3778]
[Toll-free Telephone Number: 1(800)249-9099]
ELECTION AND SUPPLEMENTARY AGREEMENT FOR A SETTLEMENT OPTION
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
Customer Service Center:
Contract No.: Annuitant:
Supplementary Contract Effective Date: [Date]
First Payout Amount: [$X,XXX.XX]
FIRST ING LIFE, subject to the terms of the attached
certificate, hereby agrees to pay the net proceeds due in
the manner indicated below. If this certificate is part of
a qualified pension, profit-sharing, or HR-10 plan we may
require additional forms, and the law may restrict the form
of distribution.
Section I - Designation of Annuitants
Contingent Annuitants:
First Contingent Annuitant: [Name and Address]
Second Contingent Annuitant: [Name and Address]
Section II - How Payouts Will be Made
(Refer to the attached Certificate for description of
Annuity Options)
[Payouts for a Designated Period, Fixed Annuity Payout.
Monthly installments guaranteed for x years in an amount not
less than $xxx.xx.]
[Payouts for a Designated Period, Variable Annuity Payout.
Monthly installments for x years in an amount which will
vary in amount with the performance of the Divisions to
which the funds are invested. Initial payouts based upon a
benchmark total return of x%.]
[Life Income with Payouts for a Designated Period, Fixed
Annuity Payout. Monthly installments in an amount not less
than $xxx.xx payable throughout the Annuitant's lifetime.
If the Annuitant dies before the end of the Designated
Period of x years, payouts will be continued to the
Contingent Annuitant until the end of the Designated
Period.]
[Life Income with Payouts for a Designated Period, Variable
Annuity Payout. Monthly installments payable throughout the
Annuitant's lifetime in an amount which will vary in amount
with the performance of the Divisions to which the funds are
invested. If the Annuitant dies before the end of the
Designated Period of x years, payouts will be continued to
the Contingent Annuitant until the end of the Designated
Period. Initial payouts based upon a benchmark total return
of x%.]
[Joint and Last Survivor, Fixed Annuity Payout. Monthly
installments in an amount not less than $xxx.xx payable
while both Annuitants are living. Upon the Death of one
Annuitant, the Survivor's Annuity Payout in an amount not
less than $xxx.xx will be paid throughout the lifetime of
the Surviving Annuitant.]
[Joint and Last Survivor, Variable Annuity Payout. Monthly
installments payable while both Annuitants are living in an
amount which will vary in amount with the performance of the
Divisions to which the funds are invested. The number of
Annuity Units applied to each installment will be level
while both Annuitants are living and upon the death of one
Annuitant will be reduced to 2/3rds of the number of Annuity
Units applied to each installment while both Annuitants were
living. This Survivor's Annuity Payout will be paid
throughout the lifetime of the Surviving Annuitant.]
This Supplementary Contract may not be assigned, nor payouts
made to another without our consent.
Supplementary Contract Effective Date:
Date: FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
By:
FIRST ING LIFE OF NEW YORK First ING Life Insurance
Company of New York
1290 Broadway
Denver, CO 80203
Application for Group Flexible Premium Deferred Annuity Contract
Policyholder_____________________________________________________
Address__________________________________________________________
__________________________________________________________
Group Contract Number____________________________________________
issued according to the specifications agreed upon by the
Contract Holder and First ING Life Insurance Company of New York.
Such specifications are attached to this application.
This application is signed in duplicate. One copy is attached to
the Contract and the other returned to First ING Life Insurance
Company of New York.
___________________________________
___________________________________
Full Name of Applicant
By:________________________________
Title______________________________
Dated at __________________________
On________________________, 19_____
First ING Life Insurance
Company of New York______________________________________________
Representative
THE
FULCRUM
FUND
ANNUITY
CERTIFICATE
APPLICATION
_______________________
_______________________
_______________________
_______________________
_______________________
_______________________
_______________________
_______________________
_______________________
_______________________
_______________________
_______________________
_______________________
_______________________
First ING Life Of New York
ING GROUP
The Fulcrum Fund Annuity Certificate Application Instructions
If you need assistance completing this application, a First ING Life Customer
Service Representative will be happy to help you. Please call us toll-free
at [1-800-249-9099].
Initial Purchase Payment
Please indicate the amount of money you are initially investing in The
Fulcrum Fund Annuity. The minimum initial amount is [$25,000 ($1,000 for
IRAs)]. Make check(s) payable to: The Fulcrum Fund Annuity/First ING Life.
Annuity Date
On the annuity Date you select, The Fulcrum Fund Annuity will begin to make
Annuity Payouts to the Annuitant. You can elect any Annuity Date (but no
earlier than the second Anniversary up through the Annuitant's 85th
birthday. If this is a Qualified Certificate, distributions must begin no
later than the first day of April following the calendar year in which you
reach age 70-1/2.
Dollar Cost Averaging
You must have at least $10,000 of Accumulation Value in the [Global Strategic
Income Division] to exercise this option. The minimum transfer amount each
month is $100. The maximum transfer amount is equal to the Accumulation
Value in the [Global Strategic Income Division] when the election is made,
divided by 12. You may specify a date for Dollar Cost Averaging to
terminate. You may also specify a dollar amount so that when the
Accumulation Value reaches this dollar amount, Dollar Cost Average will
terminate.
Automatic Rebalancing
If you elect this feature, each quarter we will transfer amounts among the
Variable Account Divisions so that the percentages of your Accumulation Value
match your requested percentage allocations. Unless you specify otherwise,
these percentage allocations will match your initial Purchase Payment
allocations.
Systematic Income Program
The Fulcrum Fund Annuity allows for income to be withdrawn prior to the
Annuity Date. If you select a monthly withdrawal, the maximum amount is
1.25% of your Accumulation Value. The maximum amount for quarterly
withdrawals is 3.75% of your Accumulation Value. The minimum withdrawal
amount is $100. The Systematic Income Program will not be processed unless
Section 10 of this application is completed in its entirety.
_________________________________________________________________
What is the primary purpose of the annuity?
[] Retirement Funding [] Income Distribution-Life Proceeds
[] Business/Qualified [] Savings
[] Business/Non-Qualified [] Tax Deferral
[] Personal [] Competitive rates
[]Structured Settlement [] Creditor Proof
[] Safety/Guarantees [] Other________________
[] Relief From Management _____________________
of Funds _____________________
[] Avoid Probate _____________________
Who was the Primary Decision-Maker(s)
[] Annuitant [] Trustee
[] Annuitant and Spouse [] Account/Attorney
[] Child/Children [] Other ______________
[] Parent ____________________
Occupation of Annuitant
[] Professional [] Manager/Administrator [] Retired________
[] Business Owner [] Technical [] Other__________
Marital Status
[] Single [] Married [] Divorced []Separated [] Widowed
Who Is:
Annuitant Spouse Business Other (Specify)
Owner [] [] [] []___________
Beneficiary [] [] [] []___________
Premium Payor [] [] [] []___________
FIRST ING OF NEW YORK First ING Life Insurance Company of New York
ING GROUP [P.O. Box 173778, Denver, CO 80217-3778]
[1-800-249-9099]
Certificate Application
The Fulcrum Fund Annuity
Deferred Combination Fixed and Variable Annuity
1 Certificate Name____________________________________________
Owner(s) Address_________________________________________
________________________________________________
Telephone_______________________________________
Social Security Number__________________________
Date of Birth___/ ___/ ___ Sex [] Male [] Female
[] Joint Owner
Name____________________________________________
Address_________________________________________
________________________________________________
Social Security Number__________________________
Date of Birth ___/___/___ Sex [] Male [] Female
_________________________________________________________________
2 Annuitant Name____________________________________________
(If other Address_________________________________________
than Owner) ________________________________________________
Telephone_______________________________________
Social Security Number__________________________
Date of Birth ___/___/___ Sex [] Male [] Female
[] Joint or [] Contingent Annuitant
Name____________________________________________
Address_________________________________________
________________________________________________
Society Security Number_________________________
Date of Birth ___/___/___ Sex [] Male [] Female
_________________________________________________________________
3 Beneficiary PRIMARY BENEFICIARY(ies)
(ies) Print Full Name % Relationship
________________________________________________
________________________________________________
________________________________________________
________________________________________________
CONTINGENT BENEFICIARY(ies)
Print Full Name % Relationship
________________________________________________
________________________________________________
________________________________________________
________________________________________________
_________________________________________________________________
4 Initial Purchase
Payment/Annuity Initial Purchase Payment $_______________
Date (see instructions)
Annuity Date____________________________
(see instructions)
___________________________________________________________________
5 Initial Allocate your Initial Purchase Payment among the
Purchase Divisions listed below. Please use whole
Payment percentages. The total must equal 100%.
Allocation
[Value Division Gabelli Asset
Management Co.] _______%
[Growth Division Stonehill Capital
Management, Inc.] _______%
[Balanced Opportunity Division
Maverick Capital, Ltd.] _______%
[International Growth Division
Bee & Associates Incorporated] _______%
[Global Strategic Income Division
Fischer Francis Trees & Watts, Inc.] _______%
[Global Interactive/Telecomm Division
Gabelli Asset Management Co.] _______%
Guaranteed Interest Division _______%
TOTAL 100%
___________________________________________________________________
6 Dollar Cost Please transfer $________(minimum $100) from my
Averaging [Global Strategic Income Division] into the
Division(s) selected below. Please use whole
percentages. The total must equal 100%.
(see
instructions) [Value Division Gabelli Asset
Management Co.] _______%
[] Check if [Growth Division Stonehill Capital
you wish to Management, Inc.] _______%
select this [Balanced Division Maverick
option Capital, Ltd.] _______%
[International Growth Division
Bee & Associates Incorporated] _______%
[Global Interactive/Telecomm
Division Gabelli Asset Management Co.] _______%
TOTAL 100%
Please specify desired stop date and/or
stop dollar amount _______________________
_________________________________________________________________
7 Automatic [] Check if you wish to select this option
Rebalancing (see instructions)
_________________________________________________________________
8 Type of Plan Please indicate type of plan (If no plan is
selected, the type of plan will be issued as
Non-Qualified):
[] Non-Qualified [] Qualified If you are funding
a qualified plan, please specify what type:
[] IRA: (Tax year____) [] IRA Rollover
[] Other______________________________
_________________________________________________________________
9 Replacement Will the Certificate applied for replace any
existing annuity or life insurance? [] Yes [] No
If yes, please indicate the Company name,
amount, type of policy and termination date:
_________________________________________________________________
10 Systematic Frequency (select one)
Income [] Monthly [] Quarterly
Program
(see Payments to commence on ______ of ______________
instructions) Day Month
Income Desired (select one)
[]_____% of Accumulation Value; or [] $________
[] I do not want to have Federal income tax
withheld.
_________________________________________________________________
11 Agreements By signing below, I/we acknowledge receipt of
and the Prospectus for the Fulcrum Fund Annuity
Signatures dated ___________________ I/We also acknowledge
(see receipt of the Prospectuses for the Variable
instructions) Account Divisions of the Fulcrum Fund Annuity.
I/We understand that this Certificate's cash
Read the surrender value may increase or decrease on any
following day depending on the investment results. No
statements minimum cash surrender value is guaranteed.
carefully This Certificate is in accord with my/our
and sign anticipated financial needs.
below:
Any person who, with intend to defraud or
knowing that he/she is facilitation a fraud
against an insurer submits an application or
files a claim containing a false, incomplete, or
deceptive statement of material fact may be
guilty of insurance fraud.
I/We understand that, to the best of my/our
knowledge and belief, all statements and answers
in the application form are complete and true
and may be relied upon in determining whether to
issue the Certificate. My/Our answers will form
a part of any Certificate to be issued, and only
the Owner(s) and First ING Life have the
authority to modify this application. I/We
understand this application is for an Annuity
Certificate under the Group Annuity Contract
issued to First ING Life Insurance Company of
New York Trust for Variable Annuities and hereby
confirm my/our desire to participate in this
Trust.
If First ING Life amends the application as
indicated in the Amendment Section below, I/we
will approve of the change by accepting the
Certificate where permitted by state regulation.
I/We understand that any change in plan,
benefits applied for, or age at issue must be
agreed to in writing.
Under penalties of perjury, I/we certify (check
all that apply): 1) [] that the Social
Security/Tax Identification Number(s) shown in
this application is/are correct; and 2) [] I/we
are not subject to backup withholding.
X_______________________________________________
Signature of Owner
________________________________________________
Signed at (City, State) Date
________________________________________________
Signature of Joint Owner/Spouse (if applicable)
By signing above as a spouse, I acknowledge that
if this Certificate is a Qualified Certificate
and a Beneficiary other than myself has been
selected, I agree to this designation.
X_______________________________________________
Signature of Annuitant (if other than Owner)
Please make your check(s) payable to:
The Fulcrum Fund Annuity/First ING Life.
_________________________________________________________________
12 Statement of [] I hereby request a Statement of Additional
Additional Information for the Fulcrum Fund Annuity
Information
_________________________________________________________________
Representative's Do you have reason to believe that the
Report Certificate applied for will replace any
existing annuity or life insurance?
[] Yes [] No
X______________________________________________
Representative's Signature
_______________________________________________
Printed Name & Number of Representative
_______________________________________________
Name of Broker/Dealer/Branch
_______________________________________________
Address of Broker/Dealer/Branch
________________________________
Agent Number
_________________________________________________________________
HOME OFFICE
CORRECTIONS
For Home Office Use Only
_________________________________________________________________
AMENDED BY-LAWS
OF
FIRST ING Life Insurance Company of New York
(Originally The Urbaine Insurance Company)
(Subsequently The Urbaine Life Reinsurance Company)
By-Laws:
Amended - June 28, 1978
Filed N.Y. State - July 11, 1978
Amended - November 15, 1993
Filed N.Y. State -
Amended - March 7, 1994
Filed N.Y. State -
BY-LAWS
OF
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
Article I. Meetings of Stockholders
Section 1. Annual meetings of the stockholders shall be
held at the home office of the company, or at such other place
within or without the State of New York as may be designated in
the notice of the meeting, on the third Wednesday in April of
each year, unless such day is a legal holiday, in which event the
meeting shall be held on the following business day, or on such
other date in the month of April as the board of directors may
determine. The chairman of the board or, in his absence, the
president of the company shall act as chairman and the secretary,
or in his absence, any assistant secretary of the company shall
act as secretary of such meeting, unless the stockholders present
qualified to vote thereat shall determine otherwise. At each
annual meeting there shall be elected a full board of directors,
not less than thirteen (13), and additional directors may be
elected until the board consists of the maximum of twenty-one
(21) members. The directors so elected shall serve until the
next annual meeting and until their successors have been elected
and have qualified, or until his earlier death, resignation or
removal in the manner hereinafter provided. No election of
directors shall be valid unless a notice of the election shall
have been filed with the Superintendent of Insurance of the State
of New York at least ten days before the election.
Section 2. Special meetings of the stockholders, other than
those regulated by statute, may be called by the chairman of the
board, the president or, in the absence of both, by the vice
president, and shall be called by the chairman of the board or
the president whenever he is directed to call such a meeting by a
resolution of the board of directors or upon the written request
of one-third of the stockholders of record entitled to vote.
Business transacted at special meetings of the stockholders shall
be confined to the purposes stated in the notice of the meeting
and matters germane thereto. The chairman of the board or, in
his absence, the president of the company shall act as chairman
and the secretary, or in his absence, any assistant secretary of
the company shall act as secretary of all special meetings,
unless the stockholders qualified to vote thereat shall determine
otherwise. All special meetings shall be held at the home office
of the company, or at such other place, within or without the
state of New York, as may be designated by the president, at a
date and time to be fixed by the president, which date shall not
be later than thirty days from the receipt of such written
request.
Section 3. Notice of the time and place of holding annual
meetings of stockholders shall be given to each stockholder of
record by the secretary of the company, delivered personally or
by mail, not less than ten nor more than fifty days before the
meeting, but such notice need not be published. Notices of
special meetings of stockholders shall be given in the same way
and shall specify the purpose of such meetings. Any stockholder
may waive notice of any annual or special meeting of the
stockholders by filing with the secretary a written waiver and in
that event shall be deemed to have duly received such notice.
Section 4. Except as otherwise required by law, the Charter
or these By-Laws, at all meetings of stockholders, the holders of
a majority of the shares entitled to vote at such meeting,
present in person or represented by proxy, shall constitute a
quorum for the transaction of business. In the absence of a
quorum, any officer entitled to preside over or act as secretary
of such meeting may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a
quorum be present. At any such adjourned meeting at which a
quorum may be present, any business may be transacted which might
have been transacted at the meeting as originally notified. If
the adjournment is for more than thirty days or a new record date
is fixed, notice of adjournment of a meeting of stockholders to
another time or place shall be given to each stockholder of
record entitled to vote at such meeting.
Section 5. Stockholders entitled to vote shall have one
vote for each share of stock, and a proportionate vote for a
fractional share of stock, entitled to vote held by them of
record according to the records of the company. The company
shall not, directly or indirectly, vote any share of its own
stock. The vote upon any question shall be by ballot whenever
requested by any person entitled to vote but, unless such a
request is made, voting may be conducted in any way approved by
the meeting. In the absence of a higher standard required by
law, the Charter or these By-Laws, any matter properly brought
before a meeting of stockholders shall be decided by a majority
of the votes cast thereon.
Section 6. So far as permitted by law, any action required
or permitted to be taken at any meeting of stockholders may be
taken without a meeting if a written consent setting forth such
action is signed by all the stockholders entitled to vote thereon
and such written consent is filed with the records of the
company. Written consent thus given shall have the same effect
as a unanimous vote of stockholders.
Article II. Directors and Their Meetings
Section 1. The board of directors shall hold regular
meetings at the home office of the company, or at such other
place within or without the State of New York as may be
designated in the notice of meeting, on the third Wednesday in
the months of April, June, September and December, or on such
other dates as may be fixed from time to time by the chairman of
the board. The regular meeting in April of each year shall be
the annual meeting and shall be held immediately after the annual
meeting of the stockholders. If the time appointed for a regular
or the annual meeting shall fall upon a legal holiday, then such
meeting shall be held on the next business day.
Section 2. Special meetings of the board of directors may
be held at any time on written notice of the chairman of the
board, the president or the secretary or of any five directors,
such notice to specify the purposes of the meeting and the time
and place at which the same is to be held. Business transacted
at special meetings shall be confined to the purposes specified
in the notice and matters germane thereto.
Section 3. Notices of regular meetings shall be in writing
and be delivered or mailed to each director at least five days
before the date of the meeting. Notices of special meetings,
stating the purposes of the same, shall be delivered or mailed to
each director at least two days before the date of the meeting.
Any director may waive notice of any regular or special meeting
by filing with the secretary a written waiver, and in that event
shall be deemed to have received such notice. Special meetings
may be held without notice, provided every director is present.
Section 4. A majority of the entire board of directors, at
least one of whom shall be a director who is not an officer or
employee of the company or of any entity controlling, controlled
by, or under common control with such company and who is not a
beneficial owner of a controlling interest in the voting stock of
the company or any such entity, shall constitute a quorum for the
transaction of business at any meeting of the board of directors,
but a lesser number may adjourn from time to time until a quorum
be present. If by reason of one or more vacancies there is less
than the minimum number of directors, the board of directors
shall have the power to function legally prior to the filling of
the vacancy; provided, however, that there shall always be a
quorum.
Section 5. Any vacancy in the board of directors which
shall occur by reason of death, resignation, removal or otherwise
may be filled by a new incumbent elected for the balance of the
unexpired term of the outgoing director by the remaining members
of the board present at any regular meeting of the board or at a
special meeting called for that purpose.
Section 6. Any director may resign at any time by giving
written notice of such resignation to either the board of
directors, the president or the secretary. Unless otherwise
specified therein, such resignation shall take effect upon
receipt thereof by the board of directors or by the president or
secretary. Any director may be removed either with or without
cause at any time by the affirmative vote of the stockholders of
record holding a majority of the outstanding shares of the
company entitled to vote for the election of directors, given at
a meeting of the stockholders called for that purpose, or by the
holders of a majority of the outstanding shares entitled to vote
for the election of directors without holding a meeting or notice
but by merely presenting their majority to the secretary of the
company in writing from the removal of a director or directors
without cause. Any director may be removed with cause by a
majority of the total number of directors constituting the entire
board of directors at a meeting of the board of directors.
Section 7. So far as permitted by law, any action required
or permitted to be taken at any meeting of the board of directors
may be taken without a meeting if a written consent setting forth
such action is signed by all the directors entitled to vote
thereon and such written consent is filed with the records of the
company. Written consent thus given shall have the same effect
as a unanimous vote of the directors.
Section 8. Participation in Board of Directors Meetings by
Conference Telephone. Any one or more members of the board of
directors may participate in a meeting by means of a conference
telephone or similar communications equipment allowing all
persons participating in the meeting to hear each other at the
same time. Participation by such means shall constitute presence
in person at the meeting.
Article III. Officers and Their Duties
Section 1. The board of directors at the annual meeting
shall elect from their members a chairman of the board and a
president. They shall also elect one or more vice presidents and
assistant vice presidents and a secretary and, if necessary, one
or more assistant secretaries. All such elected persons shall be
deemed officers of the company. If any offices shall become
vacant, such vacancies may be filled by the board. Each elected
officer shall hold office for one year and until his successor is
elected. The board at any regular or special meeting, by a vote
of a majority of the directors then in office, may remove any
elected officer, provided that the notice of such meeting shall
contain a statement of such proposed action. The board of
directors also may, by resolution, provide for the creation of
other offices and may appoint persons to such other offices and
prescribe their duties and powers, and may remove such other
officers and abolish such duties, powers and offices. The
compensation of officers shall be fixed by the board of directors
and no officer shall be prevented from receiving such salary or
other compensation by reason of the fact that he or she is also a
director of the company; provided, however, that no director
shall be paid a fee, whether by retainer, for attendance, or
otherwise, if such director is also a salaried officer of the
company. The employees of the company other than officers shall
be selected and may be dismissed by the president, who shall fix
their compensation.
Section 2. The chairman of the board shall preside at
meetings of the stockholders and of the board of directors. In
addition, he shall have such powers and perform such duties as
the board of directors may from time to time determine.
Section 3. The president shall be the chief executive of
the company. Subject to the authority of the board of directors,
he shall have general supervision of the business and affairs of
the company and shall report thereon at each meeting of the board
and at such other times as the board may require. In the absence
or incapacity of the chairman of the board, the president shall
have the powers and perform the duties of the chairman of the
board.
Section 4. The vice presidents and assistant vice
presidents shall have such powers and duties as may be delegated
to them from time to time by the president, the board of
directors or the executive committee, and generally shall consult
and advise with the president and aid the president in the
discharge of his duties. In the absence or incapacity of the
president to perform his duties and except as may otherwise be
provided by resolution of the board of directors in specific
instances, the duties of the president shall devolve upon and be
exercised by the vice presidents in the order of their election.
Section 5. The secretary and assistant secretaries shall
have such powers and duties as may be given to them from time to
time by the president, the board of directors or the executive
committee. The secretary shall keep the minutes of the board of
directors, the executive committee and other committees. He
shall have the custody of the corporate seal with authority to
affix it to instruments, documents and contracts, the execution
of which may be authorized by the board of directors. He shall
perform the duties usually incidental to the office of secretary
and such other duties of that nature that may be assigned to him
from time to time by the board of directors.
Section 6. All policies of insurance, as well as all other
formal contracts, shall be signed by any two officers of the
company or by such person or persons and in such manner as the
board of directors or executive committee may authorize.
Section 7. Any officer may resign at any time by giving
written notice of such resignation to the board of directors or
to the president or the secretary. Unless otherwise specified
therein, such resignation shall take effect upon receipt thereof
by the board of directors, the president or the secretary. Any
officer may be removed, either with or without cause, by vote of
a majority of the total number of directors constituting the
entire board of directors, at a special meeting of the board of
directors called for that purpose.
Section 8. A vacancy in any office because of death,
resignation, removal or any other cause shall be filled for the
unexpired portion of the term in the manner prescribed by these
By-laws for the regular election or appointment of such office.
Article IV. Committees of Directors
Section 1. The board of directors, by resolution adopted by
a majority of the entire board, may designate from among its
members an executive committee consisting of five directors,
which committee shall have and may exercise all the authority of
the board, except that such committee shall not have authority as
to the following matters:
1. The submission to stockholders of any action that
needs stockholders' approval under the law.
2. The filling of vacancies in the board of directors
or in any committee.
3. The fixing of compensation of the directors for
serving on the board or on any committee.
4. The amendment or repeal of the by-laws, or the
adoption of new by-laws.
5. The amendment or repeal of any resolution of the
board of directors which by its terms shall not be so
amendable or repealable.
6. The declaration of dividends.
The board may designate one or more directors as alternate
members of the executive committee, who may replace any absent
member or members at any meeting of such committee. A majority
of the members of the executive committee, at least one of whom
shall be a director who is not an officer or employee of the
company or of any entity controlling, controlled by, or under
common control with such company and who is not a beneficial
owner of a controlling interest in the voting stock of the
company or any such entity, shall constitute a quorum. The
executive committee may appoint any person, including one of its
members, as secretary of such committee but, in the absence of
such appointment the secretary of the company shall act as
secretary of the executive committee. The executive committee
shall submit a report of its transactions since the last meeting
of the board of directors to the board at its next meeting. The
executive committee may adopt rules, not inconsistent herewith,
for the call and holding of its meetings and the conduct of
business by it.
Section 2. The board of directors shall appoint an
examination committee consisting of not less than five directors,
and may designate a chairman from among the members so appointed
to the committee. The examination committee shall consist solely
of directors who are not officers or employees of the company or
of any entity controlling, controlled by, or under common control
with such company and who are not beneficial owners of a
controlling interest in the voting stock of the company or any
such entity. The chairman of the examination committee shall
preside at all meetings of the examination committee at which he
is present. The examination committee shall keep a record of its
proceedings and shall adopt its own rules of procedure. The
examination committee shall submit a report of its activities to
the board of directors at the next meeting of the board of
directors. The examination committee shall have responsibility
for: (1) recommending the selection of independent certified
public accountants; (2) reviewing the company's financial
condition, the scope and results of the independent audit and any
internal audit; (3) nominating candidates for director for
election by stockholders; and (4) evaluating the performance of
the officers of the company, deemed principal officers, and
recommending to the board of directors the selection and
compensation of such principal officers.
Section 3. The board of directors shall appoint an
investment Committee consisting of not less than five directors,
and may designate a chairman from among the members so appointed
to the committee. The chairman of the investment committee shall
preside at all meetings of the investment committee at which he
is present. The investment committee shall keep a record of its
proceedings and shall adopt its own rules of procedure. The
investment committee shall submit a report of its activities to
the board of directors at the next meeting of the board of
directors.
Section 4. So far as permitted by law, any action required
or permitted to be taken at any meeting of any committee of the
board of directors may be taken without a meeting if a written
consent setting forth such action is signed by all the members of
the committee entitled to vote thereon and such written consent
is filed with the records of the company. Written consent thus
given shall have the same effect as a unanimous vote of the
members of the committee.
Section 5. Participation in Committee Meetings by
Conference Telephone. Any one or more members of any committee
of the board of directors may participate in a meeting of such
committee by means of a conference telephone or similar
communications equipment allowing all persons participating in
the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at the meeting.
Article V. Indemnification of Directors and Officers
Section 1. The company shall indemnify any person made, or
threatened to be made, a party to an action by or in the right of
the company to procure a judgment in its favor by reason of the
fact that he, his testator, or intestate, is or was serving at
the request of the company as a director or officer of any other
company of any type or kind, domestic or foreign, of any
partnership, joint venture, trust, employee benefit plan or other
enterprise, against amounts paid in settlement and reasonable
expenses, including attorneys' fees, actually and necessarily
incurred by him in connection with the defense or settlement of
such action, or in connection with an appeal therein, if such
director or officer acted, in good faith, for a purpose which he
reasonably believed to be in, or, in the case of service for any
other company or any partnership, joint venture, trust, employee
benefit plan or other enterprise, not opposed to, the best
interests of the company, except that no indemnification under
this Section shall be made in respect of (1) a threatened action,
or a pending action which is settled or is otherwise disposed of,
or (2) any claim, issue or matter as to which such person shall
have been adjudged to be liable to the company, unless and only
to the extent that the court in which the action was brought, or,
if no action was brought, any court of competent jurisdiction,
determines upon application that, in view of all the
circumstances of the case, the person is fairly and reasonably
entitled to indemnity for such portion of the settlement amount
and expenses as the court deems proper.
The company shall indemnify any person made, or threatened
to be made, a party to an action or proceeding (other than one by
or in the right of the company to procure a judgment in its
favor), whether civil or criminal, including an action by or in
the right of any other company of any type or kind, domestic or
foreign, or any partnership, joint venture, trust, employee
benefit plan or other enterprise, which any director or officer
of the company served in any capacity at the request of the
company, by reason of the fact that he, his testator, or
intestate, was a director or officer of the company, or served
such other company, partnership, joint venture, trust, employee
benefit plan or other enterprise in any capacity, against
judgments, fines, amounts paid in settlement and reasonable
expenses, including attorneys' fees actually and necessarily
incurred as a result of such action or proceeding, or any appeal
therein, if such director or officer acted, in good faith, for a
purpose which he or she reasonably believed to be in, or, in the
case of service for any other company or any partnership, joint
venture, trust, employee benefit plan or other enterprise, not
opposed to, the best interests of the company and, in criminal
actions or proceedings, in addition, had no reasonable cause to
believe that his conduct was unlawful.
The termination of any such civil or criminal action or
proceeding by judgment, settlement, conviction or upon a plea of
nolo contendere, or its equivalent, shall not in itself create a
presumption that any such director or officer did not act, in
good faith, for a purpose which he reasonably believed to be in,
or, in the case of service for any other company or any
partnership, joint venture, trust, employee benefit plan or other
enterprise, not opposed to, the best interest of the company or
that he had reasonable cause to believe that his conduct was
unlawful.
A person who has been successful, on the merits or
otherwise, in the defense of a civil or criminal action or
proceeding of the character described in the first two paragraphs
of this Article V, shall be entitled to indemnification as
authorized in such paragraphs. Except as provided in the
preceding sentence and unless ordered by a court, any
indemnification under such paragraphs shall be made by the
company, only if authorized in the specific case:
(1) By the board of directors acting by a quorum
consisting of directors who are not parties to such action
or proceeding upon a finding that the director, officer or
employee has met the standard of conduct set forth in the
first two paragraphs of this Article V, as the case may be;
or
(2) If such a quorum in not obtainable with due
diligence or, even if obtainable, a quorum of disinterested
directors so directs,
(a) By the board of directors upon the
opinion in writing of independent legal counsel that
indemnification is proper in the circumstances because
the applicable standard of conduct set forth in the
first two paragraphs of this Article V has been met by
such director, officer or employee, or
(b) By the stockholders upon a finding that
the director, officer or employee has met the
applicable standard of conduct set forth in such
paragraphs.
Expenses, including attorneys' fees, incurred in defending a
civil or criminal action or a proceeding may be paid by the
company in advance of the final disposition of such action or
proceeding, if authorized in accordance with the preceding
paragraph, subject to repayment to the company in case the person
receiving such advancement is ultimately found, under the
procedure set forth in this Article V, not to be entitled to
indemnification or, where indemnification is granted, to the
extent the expenses so advanced by the company exceed the
indemnification to which he or she is entitled.
Nothing herein shall affect the right of any person to be
awarded indemnification or, during the pendency of litigation, an
allowance of expenses, including attorneys' fees, by a court in
accordance with law.
If any expenses or other amounts are paid by way of
indemnification, otherwise than by court order or action by the
stockholders, the company shall, not later than the next annual
meeting of stockholders unless such meeting is held within three
months from the date of such payment, and in any event, within
fifteen months from the date of such payment, mail to its
stockholders of record at the time entitled to vote for the
election of directors a statement specifying the persons paid,
the amounts paid, and the nature and status at the time of such
payment of the litigation or threatened litigation.
The company shall have the power, in furtherance of the
provisions of this Article V, to apply for, purchase and maintain
insurance of the type and in such amounts as is or may hereafter
be permitted by Section 726 of the Business Corporation Law.
No payments of indemnification, advancement or allowance
under Sections 721 to 726, inclusive, of the Business Corporation
Law shall be made unless a notice has been filed with the
Superintendent of Insurance of the State of New York, not less
than thirty days prior to such payment, specifying the persons to
be paid, the amounts to be paid, the manner in which such payment
is authorized and the nature and status, at the time of such
notice, of the litigation or threatened litigation.
Article VI. Stocks and Certificates of Stock
Section 1. The board of directors shall cause suitable
books to be kept for the registry and transfer of the shares of
the capital stock of the company. No transfer of stock shall be
valid unless made upon the books of the company by authority of
the owner of such stock or of his or its duly authorized legal
representative and upon the surrender and cancellation of the
certificate or certificates so owned. No stock shall be
transferred on the books of the company in the interim between
the calling of any annual or special meeting of stockholders and
the date of the holding of such meeting, both dates inclusive.
Section 2. Certificates of stock, numbered in the order in
which they are issued, shall be issued to each holder of fully
paid stock and shall be signed by the president or chairman of
the board and one other elected officer and the corporate seal
shall be affixed thereto.
Section 3. If the holder of any stock shall lose the
certificate, or such certificate be mutilated, stolen or
destroyed, he shall immediately notify the company of the facts,
and the board of directors then may cause a new certificate to be
issued to him, subject to the deposit of a bond in such form and
amount and with such surety or sureties as the board may direct.
Such issuance of such new certificate shall be subject to such
further reasonable conditions as the board of directors may
impose.
Article VII. Audits
Section 1. The books and accounts of the company shall be
audited from time to time by an accountant or firm of accountants
appointed by the board of directors, and the scope of such audits
shall be as determined by such board.
Article VIII. Deposits, Checks, Drafts
Section 1. All funds of the company, except petty cash for
office expenses, shall be deposited in the name of the company
with such banks, bankers or trust companies as may be designated
by the board of directors.
Section 2. Withdrawals from the company's bank deposits
shall be made only by check or other written order signed and
countersigned by such persons as may be authorized by the board
of directors to sign and/or countersign such checks or other
written orders, but no person shall have authority to sign and
countersign the same such check or other written order except
that in the case of bank deposits in countries outside of the
continental United States withdrawals shall be made by checks or
other written orders signed by such person or persons as may be
authorized by the board of directors.
Article IX. Dividends
Section 1. The board of directors shall have power to
declare dividends subject to all applicable provisions of law.
Article X. Directors Fees
Section 1. The board of directors may fix and authorize the
payment of a reasonable and proper allowance for the attendance
(and traveling expenses) of directors at meetings of the board
and any committee of the board. The board of directors may also
authorize payment of a retainer fee to one or more of the
directors in instances where, in the discretion of the board,
such payment is deemed appropriate. Other than such payments, if
any, directors, as such, shall not be compensated for their
services. No director shall be paid a fee, whether by retainer,
for attendance, or otherwise, if such director is also a salaried
officer of the company. Nothing in these By-laws contained shall
prevent any director from serving the company in any other
capacity or receiving compensation therefore.
Article XI. Corporate Seal
Section 1. The corporate seal of the company shall consist
of two concentric circles, between which shall be the name of the
company and in the center of which shall be inscribed "Corporate
Seal, 1973, New York."
Article XII. Amendments
Section 1. These By-Laws may be repealed, altered or
modified and further By-Laws may be adopted by a majority vote at
any meeting of stockholders or of the board of directors, but no
repeal, alternation or amendments shall be effective nor any new
By-law by operative until such repeal, alteration or amendment or
such new By-law shall have received the approval of a majority of
all of the stockholders of record, which approval shall be in
writing and filed with the secretary of the company; nor shall
any action be taken by the board of directors looking to the
repeal, alteration or modification of these by-laws or the
adoption of any new By-laws unless notice of the proposed action
is incorporated in the notice of the meeting at which such
proposal is to be acted upon.
I, Irene M. Colorosa, Assistant Secretary of First ING Life
Insurance Company of New York, do hereby certify that the
foregoing is a true copy of the By-Laws of such company effective
as of ____________________.
________________________
Irene M. Colorosa
Assistant Secretary
DRAFT
July 27, 1995
PARTICIPATION AGREEMENT
THIS AGREEMENT is made by and between The Palladian Trust
("TRUST"), a Massachusetts business trust, Western Capital
Financial Group, Inc. ("DISTRIBUTOR") and FIRST ING LIFE
INSURANCE COMPANY OF NEW YORK ("LIFE COMPANY"), a life insurance
company organized under the laws of the State of New York, on its
own behalf and on behalf of each segregated asset account set
forth on Schedule A hereto as amended from time to time (each
such account hereinafter referred to as "ACCOUNT").
WHEREAS, TRUST is registered with the Securities and
Exchange Commission ("SEC") under the Investment Company Act of
1940 (the "1940 Act") as an open-end diversified management
investment company; and
WHEREAS, TRUST is organized as a series fund, currently
intends initially to issue shares of six separate series (each a
"Portfolio") which are listed on Schedule B hereto, and the Board
of Trustees of TRUST (the "Board") may in the future issue shares
of additional Portfolios; and
WHEREAS, TRUST was organized to act as the funding vehicle
for (1) certain variable life insurance and/or variable annuity
contracts ("variable contracts") offered by life insurance
companies through separate accounts of such life insurance
companies ("Participating Insurance Companies"), and (2) certain
qualified pension and retirement plans; and
WHEREAS, TRUST intends to select subadvisers to handle the
day-to-day investment management of the initial six Portfolios,
each of which will agree that either it or an affiliate will
invest at least $1,000,000 in the Portfolio it manages when that
Portfolio reaches $10,000,000 in assets; and
WHEREAS, DISTRIBUTOR is registered with the SEC as a broker-
dealer under the Securities Exchange Act of 1934, as amended (the
"1934 Act"), and has agreed to distribute shares of TRUST to LIFE
COMPANY and ACCOUNT; and
WHEREAS, LIFE COMPANY has established ACCOUNT to offer
variable contracts (the "Contracts") and is desirous of having
TRUST as the underlying funding vehicle for the Contracts; and
WHEREAS, to the extent permitted by applicable insurance
laws and regulations, LIFE COMPANY intends to purchase shares of
TRUST to fund the Contracts and TRUST is or will be authorized to
sell such shares to LIFE COMPANY at net asset value;
NOW, THEREFORE, in consideration of their mutual promises,
LIFE COMPANY, TRUST and DISTRIBUTOR agree as follows:
1. TRUST and DISTRIBUTOR agree to make TRUST shares
available for purchase by LIFE COMPANY and ACCOUNT at the
applicable net asset value per share on those days on which TRUST
calculates its net asset value pursuant to SEC rules. TRUST
shall use reasonable efforts to calculate such net asset value on
each day which the New York Stock Exchange is open for trading.
Notwithstanding the foregoing, the Board may refuse to sell
shares of any Portfolio to any person, or suspend or terminate
the offering of shares of any Portfolio, if such action is
required by law or by regulatory authorities having jurisdiction
or is, in the sole discretion of the Board acting in good faith
and in light of their fiduciary duties under federal and any
applicable state laws, necessary in the best interests of the
shareholders of such Portfolio.
2. Issuance and transfer of TRUST's shares will be by book
entry only. Stock certificates will not be issued to LIFE
COMPANY or ACCOUNT. Shares ordered from TRUST will be recorded
in an appropriate title for ACCOUNT or the appropriate subaccount
of ACCOUNT.
3. TRUST shall furnish same day notice (by wire,
telecopier, or telephone followed by written confirmation) to
LIFE COMPANY of any income, dividends or capital gain
distributions payable on TRUST's shares. LIFE COMPANY hereby
elects to receive all such income, dividends and capital gain
distributions of a Portfolio in the form of additional shares of
that Portfolio. LIFE COMPANY reserves the right to revoke this
election and to receive all such income, dividends and capital
gain distributions in cash. TRUST shall notify LIFE COMPANY of
the number of shares so issued as payment of such dividends and
distributions.
4. TRUST and DISTRIBUTOR agree that shares of TRUST will
be sold only to: (a) Participating Insurance Companies, their
affiliates and their separate accounts; (b) advisers to the
Portfolios or their affiliates; and (c) qualified pension or
retirement plans or other entities as permitted by Treasury
Regulation Section 1.817-5(f)(3) or its successor. No shares of any
Portfolio will be sold to the general public, unless Treasury
regulations are amended to permit such sales.
5. (a) TRUST agrees to sell to LIFE COMPANY those shares
of the selected Portfolios of TRUST which LIFE COMPANY orders,
executing such orders on a daily basis at the net asset value
next computed after receipt by TRUST or its designee of the order
for the shares of TRUST. For purposes of this Section 5(a), LIFE
COMPANY shall be the designee of TRUST for receipt of such orders
from LIFE COMPANY and receipt by such designee shall constitute
receipt by TRUST; provided that TRUST receives notice of such
order by 9:30 a.m. New York time on the next following Business
Day. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which TRUST calculates
its net asset value pursuant to the rules of the SEC.
(b) TRUST agrees to redeem for cash, on LIFE COMPANY's
request, any full or fractional shares of TRUST held by LIFE
COMPANY, executing such requests on a daily basis at the net
asset value next computed after receipt by TRUST or its designee
of the request for redemption. For purposes of this Section
5(b), LIFE COMPANY shall be the designee of TRUST for receipt of
requests for redemption from LIFE COMPANY and receipt by such
designee shall constitute receipt by TRUST; provided that TRUST
receives notice of such request for redemption by 9:30 a.m. New
York time on the next following Business Day.
(c) TRUST shall make the net asset value per share for
the selected Portfolio(s) available to LIFE COMPANY on a daily
basis as soon as reasonably practical after the net asset value
per share is calculated but shall use its best efforts to make
such net asset value available by 6:15 p.m. New York time.
(d) If LIFE COMPANY requests the purchase of TRUST
shares, LIFE COMPANY shall pay for such purchase by wiring
federal funds to TRUST or its designated custodial account on the
day the order is transmitted by LIFE COMPANY. If LIFE COMPANY
requests a net redemption resulting in a payment of redemption
proceeds to LIFE COMPANY, TRUST shall wire the redemption
proceeds to LIFE COMPANY by the next Business Day, unless doing
so would require TRUST to dispose of portfolio securities or
otherwise incur additional costs, but in such event, proceeds
shall be wired to LIFE COMPANY within seven days and TRUST shall
notify the person designated in writing by LIFE COMPANY as the
recipient for such notice of such delay by 3:00 p.m. New York
time the same Business Day that LIFE COMPANY transmits the
redemption order to Trust. If LIFE COMPANY's order requests the
application of redemption proceeds from the redemption of shares
of one Portfolio to the purchase of shares of another Portfolio,
TRUST shall so apply such proceeds the same Business Day that
LIFE COMPANY transmits such order to TRUST.
6. (a) TRUST or DISTRIBUTOR shall provide the LIFE
COMPANY (at LIFE COMPANY's expense) with as many copies of the
TRUST's current prospectus as the LIFE COMPANY may reasonably
request. If requested by the LIFE COMPANY in lieu thereof, the
TRUST shall provide such documentation (including a copy of the
new prospectus in computer form) and other assistance as is
reasonably necessary in order for the LIFE COMPANY once each year
(or more frequently if the prospectus for the TRUST is amended)
to have the prospectus for the Contracts and the TRUST's
prospectus printed together in one document (such printing to be
at LIFE COMPANY's expense). TRUST or DISTRIBUTOR shall provide
the LIFE COMPANY (at LIFE COMPANY's expense) with as many copies
of any prospectus supplement as the LIFE COMPANY may reasonably
request. LIFE COMPANY shall pay any costs of distributing TRUST
prospectuses or supplements to Contract owners.
(b) DISTRIBUTOR or TRUST (at their expense) shall
print and provide a copy of the TRUST's current Statement of
Additional Information ("SAI") to LIFE COMPANY and to any
Contract owner or prospective Contract owner who requests it from
the TRUST or the DISTRIBUTOR. LIFE COMPANY may order additional
copies of the SAI at its expense. LIFE COMPANY (at its expense)
shall provide a copy of the SAI to (1) any Contract owner or
prospective Contract owner who requests it from LIFE COMPANY; and
(2) any Contract owner or prospective Contract owner who is
required by law to receive it.
(c) TRUST or DISTRIBUTOR shall provide LIFE COMPANY
(at LIFE COMPANY's expense) with copies of its proxy materials,
reports to shareholders, and other communications to shareholders
in such quantity as LIFE COMPANY shall reasonably require for
distributing to Contract owners. LIFE COMPANY shall pay the
costs of distributing such information to Contract owners.
7. (a) LIFE COMPANY will furnish, or will cause to be
furnished, to TRUST or its designee, each piece of sales
literature or other promotional material in which TRUST or
DISTRIBUTOR is named at least fifteen days prior to its intended
use. No such material will be used if TRUST or its designee
objects to its use in writing within ten days after receipt of
such material.
(b) TRUST or its designee will furnish, or will cause
to be furnished, to LIFE COMPANY, each piece of sales literature
or other promotional material in which LIFE COMPANY is named at
least fifteen days prior to its intended use. No such material
will be used if LIFE COMPANY objects to its use in writing within
ten days after receipt of such material.
(c) TRUST and its affiliates and agents shall not give
any information or make any representations on behalf of LIFE
COMPANY or concerning LIFE COMPANY, ACCOUNT, or the Contracts
issued by LIFE COMPANY, other than the information or
representations contained in a registration statement or
prospectus for such Contracts, as such registration statement and
prospectus may be amended or supplemented from time to time, or
in reports for ACCOUNT or prepared for distribution to owners of
the Contracts, or in sales literature or other promotional
material approved by LIFE COMPANY or its designee, except with
the permission of LIFE COMPANY.
(d) LIFE COMPANY and its affiliates and agents shall
not give any information or make any representations on behalf of
TRUST or DISTRIBUTOR or concerning TRUST or DISTRIBUTOR other
than the information or representations contained in a
registration statement or prospectus for TRUST, as such
registration statement and prospectus may be amended or
supplemented from time to time, or in sales literature or other
promotional material approved by TRUST or its designee, except
with the permission of TRUST.
(e) For purposes of this Agreement, the phrase "sales
literature or other promotional material" or words of similar
import include, without limitation, advertisements (such as
material published, or designed for use, in a newspaper, magazine
or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion
pictures, computer facility or service including the internet,
or other public media), sales literature (such as any written
communication distributed or made generally available to
customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, or reprints
or excerpts or any other advertisement, sales literature, or
published article), educational or training materials or other
communications distributed or made generally available to some or
all agents or employees, registration statements, prospectuses,
statements of additional information, shareholder reports and
proxy materials, and any other material constituting sales
literature or advertising under National Association of
Securities Dealers, Inc. ("NASD") rules or the 1933 or 1940 Acts.
Notwithstanding the foregoing, the fifteen-day notice requirement
of this Section 7 does not apply to TRUST registration
statements, prospectuses, statements of additional information,
reports to shareholders, proxy materials, and any other document
filed with the SEC, provided that the reference to LIFE COMPANY
in those documents is limited to: (1) disclosing that LIFE
COMPANY and ACCOUNT are shareholders of TRUST; (2) information
about the amount of shares held by LIFE COMPANY and ACCOUNT; (3)
disclosing that LIFE COMPANY purchased seed money shares and
information about those shares; and (4) basic information about
LIFE COMPANY such as its address and state of organization.
8. Each Portfolio of TRUST will comply with Section 817(h)
of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or
life insurance contracts and any amendments or other
modifications to such Section or Regulations. In the event TRUST
becomes aware that any Portfolio of TRUST has failed to comply,
it will take all reasonable steps (a) to notify LIFE COMPANY of
such failure, and (b) to adequately diversify the Portfolio so as
to achieve compliance.
9. (a) Except as limited by and in accordance with the
provisions of Sections 9(b) and 9(c) hereof, LIFE COMPANY agrees
to indemnify and hold harmless TRUST and DISTRIBUTOR and each
trustee of the Board of TRUST and officers of TRUST and each
person, if any, who controls TRUST and each of the directors and
officers of DISTRIBUTOR and each person, if any, who controls
DISTRIBUTOR within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this
Section 9) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the
written consent of LIFE COMPANY) or litigation (including legal
and other expenses) to which the Indemnified Parties may become
subject under any statute, regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements are
related to the sale or acquisition of TRUST's shares or the
Contracts and:
(i) arise out of or are based upon any untrue
statements or alleged untrue statements of
any material fact contained in the
registration statement or prospectus or
sales literature for the Contracts or
contained in the Contracts (or any
amendment or supplement to any of the
foregoing), or arise out of or are based
upon the omission or the alleged omission
of a material fact required to be stated
therein or necessary to make the statements
therein not misleading, provided that this
agreement to indemnify shall not apply as
to any Indemnified Party if such statement
or omission or such alleged statement or
omission was made in reliance upon and in
conformity with information furnished to
LIFE COMPANY by or on behalf of TRUST for
use in the registration statement or
prospectus for the Contracts or in the
Contracts or sales literature (or any
amendment or supplement) or otherwise for
use in connection with the sale of the
Contracts or TRUST shares; or
(ii) arise out of or as a result of statements
or representations (other than statements
or representations contained in the
registration statement, prospectus or sales
literature of TRUST not supplied by LIFE
COMPANY, or persons under its control) or
wrongful conduct of LIFE COMPANY or persons
under its control, with respect to the sale
or distribution of the Contracts or TRUST
shares; or
(iii) arise out of any untrue statement or
alleged untrue statement of a material fact
contained in a registration statement,
prospectus, or sales literature of TRUST,
or any amendment thereof or supplement
thereto, or the omission or alleged
omission to state therein a material fact
required to be stated therein or necessary
to make the statements therein not
misleading if such statement or omission or
such alleged statement or omission was made
in reliance upon and in conformity with
information furnished to TRUST by or on
behalf of LIFE COMPANY; or
(iv) arise as a result of any failure by LIFE
COMPANY to substantially provide the
services and furnish the materials under
the terms of this Agreement; or
(v) arise out of or result from any material
breach of any representation and/or
warranty made by LIFE COMPANY in this
Agreement or arise out of or result from
any other material breach of this Agreement
by LIFE COMPANY.
(b) LIFE COMPANY shall not be liable under this
indemnification provision with respect to any losses, claims,
damages, liabilities or litigation to which an Indemnified Party
is subject by reason of such Indemnified Party's willful
misfeasance, bad faith, or gross negligence in the performance of
such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this
Agreement or to TRUST.
(c) LIFE COMPANY shall not be liable under this
indemnification provision with respect to any claim made against
an Indemnified Party unless such Indemnified Party shall have
notified LIFE COMPANY in writing within a reasonable time after
the summons or other first legal process giving information of
the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have
received notice of such service on any designated agent), but
failure to notify LIFE COMPANY of any such claim shall not
relieve LIFE COMPANY from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision. In case any
such action is brought against an Indemnified Party, LIFE COMPANY
shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from
LIFE COMPANY to such party of LIFE COMPANY's election to assume
the defense thereof, the Indemnified Party shall bear the fees
and expenses of any additional counsel retained by it, and LIFE
COMPANY will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than
reasonable costs of investigation.
10. (a) Except as limited by and in accordance with the
provisions of Sections 10(b) and 10(c), DISTRIBUTOR agrees to
indemnify and hold harmless LIFE COMPANY and each of its
directors and officers and each person, if any, who controls LIFE
COMPANY within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this
Section 10) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the
written consent of DISTRIBUTOR) or litigation (including legal
and other expenses) to which the Indemnified Parties may become
subject under any statute, regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements are
related to the sale or acquisition of TRUST's shares or the
Contracts and:
(i) arise out of or are based upon any untrue
statement or alleged untrue statement of
any material fact contained in the
registration statement or prospectus or
sales literature of TRUST (or any amendment
or supplement to any of the foregoing), or
arise out of or are based upon the omission
or the alleged omission to state therein a
material fact required to be stated therein
or necessary to make the statements therein
not misleading, provided that this
agreement to indemnify shall not apply as
to any Indemnified Party if such statement
or omission or such alleged statement or
omission was made in reliance upon and in
conformity with information furnished to
DISTRIBUTOR or TRUST or its adviser by or
on behalf of LIFE COMPANY for use in the
registration statement or prospectus for
TRUST or in sales literature (or any
amendment or supplement) or otherwise for
use in connection with the sale of the
Contracts or TRUST shares; or
(ii) arise out of or as a result of statements
or representations (other than statements
or representations contained in the
registration statement, prospectus or sales
literature for the Contracts not supplied
by DISTRIBUTOR or TRUST or its adviser or
persons under their control) or wrongful
conduct of TRUST or DISTRIBUTOR or persons
under their control, with respect to the
sale or distribution of the Contracts or
TRUST shares; or
(iii) arise out of any untrue statement or
alleged untrue statement of a material fact
contained in a registration statement,
prospectus, or sales literature covering
the Contracts, or any amendment thereof or
supplement thereto, or the omission or
alleged omission to state therein a
material fact required to be stated therein
or necessary to make the statements therein
not misleading, if such statement or
omission or such alleged statement or
omission was made in reliance upon and in
conformity with information furnished to
LIFE COMPANY by or on behalf of TRUST; or
(iv) arise as a result of (a) a failure by TRUST
to substantially provide the services and
furnish the materials under the terms of
this Agreement; (b) a failure by TRUST to
comply with the diversification
requirements of Section 817(h) of the Code;
(c) a failure by TRUST to qualify as a
Regulated Investment Company under
Subchapter M of the Code; or (d) a failure
by TRUST to register its shares as required
by the laws of the various states;
(v) arise out of or result from any material
breach of any representation and/or
warranty made by DISTRIBUTOR in this
Agreement or arise out of or result from
any other material breach of this Agreement
by DISTRIBUTOR.
(b) DISTRIBUTOR shall not be liable under this
indemnification provision with respect to any losses, claims,
damages, liabilities or litigation to which an Indemnified Party
is subject by reason of such Indemnified Party's willful
misfeasance, bad faith, or gross negligence in the performance of
such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this
Agreement or to LIFE COMPANY.
(c) DISTRIBUTOR shall not be liable under this
indemnification provision with respect to any claim made against
an Indemnified Party unless such Indemnified Party shall have
notified DISTRIBUTOR in writing within a reasonable time after
the summons or other first legal process giving information of
the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have
received notice of such service on any designated agent), but
failure to notify DISTRIBUTOR of any such claim shall not relieve
DISTRIBUTOR from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision. In case any
such action is brought against the Indemnified Parties,
DISTRIBUTOR shall be entitled to participate at its own expense
in the defense thereof. DISTRIBUTOR also shall be entitled to
assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from DISTRIBUTOR to such
party of DISTRIBUTOR's election to assume the defense thereof,
the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and DISTRIBUTOR will not be
liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs
of investigation.
11. TRUST represents and warrants that TRUST Shares sold
pursuant to this Agreement shall be registered under the 1933 Act
and duly authorized for issuance, and shall be issued, in
compliance in all material respects with applicable law, and that
TRUST is and shall remain registered under the 1940 Act for so
long as required thereunder. TRUST further represents and
warrants that TRUST will make every effort to qualify as a
Regulated Investment Company under Subchapter M of the Code, and
to maintain such qualification (under Subchapter M or any
successor or similar provisions), and that TRUST will notify LIFE
COMPANY immediately upon having a reasonable basis for believing
that it has ceased to so qualify or that it might not so qualify
in the future. TRUST will register and qualify its shares for
sale in accordance with the laws of the various states as may be
required by law.
12. LIFE COMPANY represents and warrants that it is an
insurance company duly organized and in good standing under
applicable law and that it has legally and validly established
ACCOUNT as a segregated asset account under New York law and has
registered ACCOUNT as a unit investment trust under the 1940 Act.
LIFE COMPANY represents and warrants that the Contracts are or
will be registered under the 1933 Act and that the Contracts will
be issued in compliance in all material respects with all
applicable federal and state laws.
13. TRUST will provide LIFE COMPANY with at least one
complete copy of all prospectuses, statements of additional
information, annual and semi-annual reports, proxy statements,
exemptive applications and all amendments or supplements to any
of the above that relate to the Portfolios promptly after the
filing of each such document with the SEC or other regulatory
authority. LIFE COMPANY will provide TRUST or its designee with
at least one complete copy of all prospectuses, statements of
additional information, annual and semi-annual reports, proxy
statements, exemptive applications and all amendments or
supplements to any of the above that relate to ACCOUNT promptly
after the filing of each such document with the SEC or other
regulatory authority.
14. Each party hereto shall cooperate with each other party
and all appropriate governmental authorities having jurisdiction
(including, without limitation, the SEC, the NASD, and state
insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any
investigation or inquiry relating to this Agreement or the
transactions contemplated hereby.
15. The Board will monitor TRUST for the existence of any
material irreconcilable conflict between the interests of the
contract owners of all separate accounts investing in TRUST and
of the interests of any trustees of qualified pension or
retirement plans investing in TRUST. A material irreconcilable
conflict may arise for a variety of reasons, including: (a) an
action by any state insurance regulatory authority; (b) a change
in applicable federal or state insurance, tax, or securities laws
or regulations, or a public ruling, private letter ruling,
no-action or interpretive letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an
administrative or judicial decision in any relevant proceeding;
(d) the manner in which the investments of any Portfolio are
being managed; (e) a difference in voting instructions given by
variable annuity contract owners, variable life insurance
contract owners and trustees of qualified plans; or (f) a
decision by an insurer to disregard the voting instructions of
contract owners.
16. LIFE COMPANY will report any potential or existing
conflicts to the Board. LIFE COMPANY will be responsible for
assisting the Board in carrying out its responsibilities by
providing the Board with all information reasonably necessary for
it to consider any issues raised by any potential or existing
conflicts with or between any Participating Insurance Companies
or qualified plans. This includes, but is not limited to, an
obligation by LIFE COMPANY to inform the Board whenever it has
determined to disregard contract owner voting instructions. The
responsibility to report such information and conflicts and to
assist the Board will be carried out with a view only to the
interests of the contract owners.
17. If it is determined by a majority of the Board, or by a
majority of the disinterested Trustees, that a material
irreconcilable conflict exists, the relevant Participating
Insurance Companies, including LIFE COMPANY, will, at their
expense and to the extent reasonably practicable (as determined
by a majority of the disinterested Trustees), take whatever steps
are necessary to remedy or eliminate the material irreconcilable
conflict, which steps could include: (a) withdrawing the assets
allocable to some or all of the separate accounts from TRUST or
any Portfolio and reinvesting such assets in a different
investment medium, including another Portfolio of TRUST, or
submitting the question as to whether such segregation should be
implemented to a vote of all affected contract owners and, as
appropriate, segregating the assets of any appropriate group
(i.e., variable annuity contract owners or variable life
insurance contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering
to the affected contract owners the option of making such a
change; and (b) establishing a new registered management
investment company or managed separate account. If a material
irreconcilable conflict arises because of a decision by LIFE
COMPANY to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a
majority vote, then LIFE COMPANY may be required, at TRUST's
election, to withdraw ACCOUNT's investment in TRUST and no charge
or penalty will be imposed as a result of such withdrawal. The
responsibility to take remedial action in the event of Board
determination of a material irreconcilable conflict and to bear
the cost of such remedial action will be carried out with a view
only to the interests of variable contract owners. A majority of
the disinterested Trustees will determine whether or not any
proposed action adequately remedies any material irreconcilable
conflict, but in no event will TRUST be required to establish a
new funding medium for any variable contract. LIFE COMPANY shall
not be required by this section to establish a new funding medium
for any variable contract if any offer to do so has been declined
by vote of a majority of the variable contract owners materially
and adversely affected by the material irreconcilable conflict.
18. The Board's determination of the existence of a
material irreconcilable conflict and its implications will be
made known in writing promptly to all Participating Insurance
Companies.
19. LIFE COMPANY will provide pass-through voting
privileges to all Contract owners so long as the Commission
continues to interpret the 1940 Act as requiring pass-through
voting privileges for variable contract owners. Accordingly,
LIFE COMPANY will vote shares of TRUST held in ACCOUNT in a
manner consistent with voting instructions timely-received from
Contract owners. LIFE COMPANY will vote shares of TRUST held in
ACCOUNT for which no voting instructions from Contract owners are
timely-received, as well as shares of TRUST which LIFE COMPANY
itself owns, in the same proportion as those shares of TRUST for
which voting instructions from Contract owners are
timely-received. Participating Insurance Companies will be
responsible for assuring that each of their separate accounts
participating in TRUST calculates voting privileges in a manner
consistent with other Participating Insurance Companies.
20. TRUST shall disclose in its prospectus that (a) TRUST
is intended to be a funding vehicle for variable annuity and
variable life insurance contracts offered by various insurance
companies and for qualified pension and retirement plans; (b)
material irreconcilable conflicts possibly may arise; and (c) the
Board will monitor events in order to identify the existence of
any material irreconcilable conflicts and to determine what
action, if any, should be taken in response to any such conflict.
TRUST hereby notifies LIFE COMPANY that separate account
prospectus disclosure regarding potential risks of mixed and
shared funding may be appropriate.
21. If and to the extent that Rule 6e-2 and Rule 6e-3(T)
under the 1940 Act are amended, or Rule 6e-3 under the 1940 Act
is adopted, to provide exemptive relief from any provision of the
1940 Act, or the rules promulgated thereunder, with respect to
mixed or shared funding, on terms and conditions materially
different from this Agreement or any exemptions granted, then
TRUST and/or Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules
6e-2 and 6e-3(T), or Rule 6e-3, as such rules are applicable.
22. LIFE COMPANY, at least annually, shall submit to the
Board such reports, materials, or data as the Board may
reasonably request so that the Board may fully carry out the
obligations imposed upon it by the conditions contained in any
SEC order of exemption, rule or statute. Such reports,
materials, and data will be submitted more frequently if deemed
appropriate by TRUST.
23. LIFE COMPANY agrees that all net amounts available for
investment under the Contracts shall be invested in TRUST or in
LIFE COMPANY's general account, unless otherwise agreed to by
TRUST in writing. LIFE COMPANY acknowledges that TRUST shares
may be purchased by other Participating Insurance Companies and
other entities, as described in Section 4 above.
24. (a) This Agreement shall be effective as of the date
hereof and shall continue in force until terminated in accordance
with the provisions herein.
(b) This Agreement shall terminate automatically in
the event of its assignment unless such assignment is made with
the written consent of LIFE COMPANY and TRUST.
(c) This Agreement shall terminate without penalty at
the option of the terminating party in accordance with the
following provisions:
(i) At the option of LIFE COMPANY or TRUST at
any time from the date hereof upon 180
days' advance written notice, unless a
shorter time is agreed to by the parties;
(ii) At the option of LIFE COMPANY if TRUST
shares are not reasonably available to meet
the requirements of the Contracts. Notice
of election to terminate shall be furnished
by LIFE COMPANY and termination shall be
effective ten days after TRUST's receipt of
said notice unless TRUST makes available a
sufficient number of shares to meet the
requirements of the Contracts within said
ten-day period;
(iii) At the option of LIFE COMPANY, upon the
institution of formal proceedings against
TRUST by the SEC, the NASD, or any other
regulatory body, the expected or
anticipated ruling, judgment or outcome of
which would, in LIFE COMPANY'S reasonable
judgment, materially impair TRUST'S ability
to meet and perform TRUST'S obligations and
duties hereunder. Prompt notice of
election to terminate under this paragraph
shall be furnished by LIFE COMPANY with
said termination to be effective upon
receipt of notice;
(iv) At the option of LIFE COMPANY, upon its
good faith determination, or at the option
of TRUST upon a determination by a majority
of the Board, or a majority of
disinterested Board members, that an
irreconcilable material conflict exists
among the interests of (i) owners of
variable contracts issued by Participating
Life Insurance Companies; or (ii) the
interest of Participating Life Insurance
Companies. Prompt notice of election to
terminate under this paragraph shall be
furnished by LIFE COMPANY with said
termination to be effective upon receipt of
notice;
(v) At the option of TRUST, upon the
institution of formal proceedings against
LIFE COMPANY by the SEC, the NASD, or any
other regulatory body, the expected or
anticipated ruling, judgement or outcome
which would, in TRUST'S reasonable
judgment, materially impair LIFE COMPANY'S
ability to meet and perform its obligations
and duties hereunder. Prompt notice of
election to terminate under this paragraph
shall be furnished by TRUST with said
termination to be effective upon receipt of
notice;
(vi) At the option of TRUST, if (1) TRUST shall
determine in its sole judgement reasonably
exercised in good faith, that LIFE COMPANY
has suffered a material adverse change in
its business or financial condition or is
the subject of material adverse publicity
and such material adverse change or
material adverse publicity is likely to
have a material adverse impact upon the
operation or business reputation of TRUST
and/or DISTRIBUTOR, (2) TRUST shall have
notified LIFE COMPANY in writing of such
determination and its intent to terminate
this Agreement, and, (3) after
consideration of the actions taken by LIFE
COMPANY and any other changes in
circumstances since the giving of such
notice, the determination of TRUST shall
continue to apply on the sixtieth (60th)
day since giving of such notice, then such
sixtieth day shall be the effective date of
termination;
(vii) At the option of LIFE COMPANY after having
been notified by TRUST of a termination or
proposed termination of the Investment
Advisory Agreement between TRUST and
Palladian Advisors, Inc. or its successors,
which notice TRUST shall provide promptly
to LIFE COMPANY, the effective date of
termination of the Agreement to be as
determined by LIFE COMPANY;
(viii) In the event TRUST's shares are not
registered, issued or sold in accordance
with applicable federal law, or such law
precludes the use of such shares of the
underlying investment medium of the
Contracts issued or to be issued by LIFE
COMPANY. Prompt notice of election to
terminate under this paragraph shall be
furnished by LIFE COMPANY with said
termination to be effective upon receipt of
notice;
(ix) At the option of TRUST upon a reasonable
determination by the Board in good faith
that it is no longer advisable and in the
best interests of shareholders for TRUST to
continue to operate pursuant to this
Agreement. Prompt notice of election to
terminate under this paragraph shall be
furnished by TRUST with said termination to
be effective upon receipt of notice;
(x) At the option of TRUST if the Contracts
cease to qualify as annuity contracts or
life insurance contracts, as applicable,
under the Code, or if TRUST reasonably
believes that the Contracts may fail to so
qualify. Prompt notice of election to
terminate under this paragraph shall be
furnished by TRUST with said termination to
be effective upon receipt of notice;
(xi) At the option of LIFE COMPANY, upon TRUST'S
breach of any material provision of this
Agreement, which breach has not been cured
to the satisfaction of LIFE COMPANY within
ten days after written notice of such
breach is delivered to TRUST;
(xii) At the option of TRUST, upon LIFE COMPANY's
breach of any material provision of this
Agreement, which breach has not been cured
to the satisfaction of TRUST within ten
days after written notice of such breach is
delivered to LIFE COMPANY;
(xiii) At the option of TRUST, if the variable
contracts are not registered, issued or
sold in accordance with applicable federal
and/or state law. Prompt notice of
election to terminate under this paragraph
shall be furnished by TRUST with said
termination to be effective upon receipt of
notice;
(xiv) At the option of LIFE COMPANY, if (1) LIFE
COMPANY shall determine, in its sole
judgment reasonably exercised in good
faith, that TRUST is the subject of
material adverse publicity and such
material adverse publicity is likely to
have a material adverse impact on the sale
of the Contracts and/or the operations or
business reputation of LIFE COMPANY, (2)
the LIFE COMPANY shall have notified TRUST
in writing of such determination and its
intent to terminate this Agreement, and,
(3) after consideration of the actions
taken by TRUST and any other changes in
circumstances since the giving of such
notice, the determination of the LIFE
COMPANY shall continue to apply on the
sixtieth (60th) day since giving of such
notice, then such sixtieth day shall be the
effective date of termination;
(xv) Upon requisite vote of the Contract owners
having an interest in the Separate Accounts
to substitute the shares of another
investment company for the corresponding
shares of TRUST in accordance with the
terms of the Contracts for which those
shares had been selected to serve as the
underlying investment media.
(d) No termination of this Agreement (except a
termination under Section 24(c)(xv) immediately above) shall be
effective unless and until the party terminating this Agreement
gives prior written notice to all other parties to this Agreement
of its intent to terminate which notice shall set forth the basis
for such termination.
(e) Notwithstanding any termination of this Agreement
pursuant to Section 24(c) hereof, at the election of LIFE
COMPANY, TRUST shall continue to make available additional TRUST
shares, as provided below, pursuant to the terms and conditions
of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as
"Existing Contracts"). Specifically, without limitation, if LIFE
COMPANY elects to have TRUST make additional shares available,
the owners of the Existing Contracts or LIFE COMPANY, whichever
shall have legal authority to do so, shall be permitted to
reallocate investments in TRUST, redeem investments in TRUST
and/or invest in TRUST upon the payment of additional premiums
under the Existing Contracts. In the event of a termination of
this Agreement pursuant to Section 24(c) hereof, LIFE COMPANY, as
promptly as is practicable under the circumstances, shall notify
TRUST whether LIFE COMPANY shall elect to continue to have TRUST
shares made available after such termination. If TRUST shares
continue to be made available after such termination, the
provisions of this Agreement shall remain in effect and
thereafter either TRUST or LIFE COMPANY may terminate the
Agreement, as so continued pursuant to this Section 24(d), upon
prior written notice to the other party such notice to be for a
period that is reasonable under the circumstances. In
determining whether to elect to continue to have additional TRUST
shares made available, LIFE COMPANY shall act in good faith,
giving due consideration to the interests of existing
shareholders, including holders of Existing Contracts.
Notwithstanding the foregoing, TRUST shall not be required to
make available additional TRUST shares if doing so would be
prohibited by law.
25. Any notice shall be sufficiently given when sent by
registered or certified mail (return receipt requested) to the
other party at the address of such party set forth below or at
such other address as such party may from time to time specify in
writing to the other party.
If to TRUST:
The Palladian Trust
4225 Executive Square
Suite 355
La Jolla, CA 92037
Attention: President
If to LIFE COMPANY:
First ING Life Insurance Company of New York
Security Life Center
1290 Broadway
Denver, CO 80203
Attention: Law Department
If to DISTRIBUTOR:
Western Capital Financial Group, Inc.
4225 Executive Square
Suite 325
La Jolla, CA 92037
Attention: President
26. This Agreement shall be subject to the provisions of
the 1940 Act and the rules and regulations thereunder, including
any exemptive relief therefrom and the orders of the SEC setting
forth such relief.
27. This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of the
State of New York.
28. This Agreement may be executed in two or more
counterparts, each of which taken together shall constitute one
instrument.
29. A copy of TRUST's Declaration of Trust is on file with
the Secretary of the Commonwealth of Massachusetts. The
Declaration of Trust has been executed on behalf of the TRUST by
certain Trustees in their capacity as Trustees of the Trust and
not individually. All persons dealing with TRUST must look
solely to the property of TRUST for the enforcement of any claims
against TRUST as neither the Board, officers, agents, or
shareholders assume any personal liability for obligations
entered into on behalf of TRUST.
Executed this ____ day of __________, 1995.
THE PALLADIAN TRUST
ATTEST:_________________________ BY:
FIRST ING LIFE INSURANCE
COMPANY OF NEW YORK
ATTEST:_________________________ BY:
WESTERN CAPITAL FINANCIAL
GROUP, INC.
ATTEST:_________________________ BY:
SCHEDULE A
First ING Separate Account A1, established March 15, 1994
* * * * *
SCHEDULE B
The Value Portfolio
The Growth Portfolio
The Balanced Opportunity Portfolio
The International Growth Portfolio
The Global Strategic Income Portfolio
The Global Interactive/Telecomm Portfolio
Financial Administrative Services Corporation
Confidential and Proprietary Information
ADMINISTRATION SERVICES AGREEMENT
between
First ING Life Insurance Company of New York
and
Financial Administrative Services Corporation
AGREEMENT made as of the ________ of ______, 1995 by and between
Financial Administrative Services Corporation ("FASCorp"), of
8515 East Orchard Road, Englewood, Colorado, 80111, and First ING
Life Insurance Company of New York ("First ING"), of 1290
Broadway, Denver, Colorado, 80203-5699.
WHEREAS, FASCorp shall provide data processing and other services
to First ING pursuant to the terms and conditions of this
Agreement and such other terms and conditions as First ING and
FASCorp may agree in written amendments to this Agreement,
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
SECTION 1 Terms of Appointment
1.01 Subject to the conditions set forth in
this Agreement, First ING hereby appoints FASCorp
as Administrative Services Agent.
1.02 FASCorp agrees to provide at its expense
the necessary facilities, equipment, and personnel
to perform its duties and obligations hereunder in
accordance with accepted industry practice, and in
full compliance with the rules and regulations of
state insurance departments, and other regulatory
bodies with jurisdiction over First ING, ING
America Equities, Inc. ("ING Equities") and
FASCorp.
1.03 Beacon Software Development Company
("Beacon") will provide the LifeCAD software
package ("LifeCAD") to First ING to support the
Contracts for which recordkeeping services will be
provided by FASCorp hereunder.
1.04 Security Life of Denver Insurance Company
("SLD"), the parent company of First ING, will
facilitate the delivery by Beacon
to FASCorp of LifeCAD and arrange for training by
Beacon of FASCorp on LifeCAD.
1.05 FASCorp will provide the Unit Value
Calculator software package (the "Unit Value
Calculator") and build a connection between
LifeCAD and the Unit Value Calculator to generate
all the unit values as well as the accounting in
support of the Contracts for which administrative
and recordkeeping services will be provided by
FASCorp hereunder.
1.06 First ING will provide necessary training
of FASCorp on First ING's Contracts.
1.07 FASCorp agrees that it will perform, at
the direction of First ING, those Administrative
Services as set forth in Exhibit B attached, which
may be amended by mutual agreement from time to
time, and which is incorporated into this
Agreement by this reference. FASCorp shall have
only the authority necessary or incident to the
performance of those services expressly set forth
in this Agreement or in Exhibit B and shall have
no other express or implied authority or right to
act on behalf of First ING or to bind First ING
with regard to any statement, representation or
undertaking. FASCorp shall have no authority to
alter, amend or waive any contractual provision on
behalf of First ING without First ING's express
written authorization. FASCorp shall be limited
to act only in the capacity in which it is
licensed.
SECTION 2 Term
2.01 Subject to termination as hereinafter
provided, this Agreement shall remain in full
force and effect for a period of approximately four
(4) years, terminating November 20, 1999,
concurrently with the end of
the initial term of the Administrative Services
Agreement between SLD and FASCorp. This Agreement
shall be renewed automatically for additional
successive terms of eighteen (18) months at the
end of the initial term and the end of each
renewal term, subject to the provisions of Section
9.02, unless terminated as herein provided.
SECTION 3 Fees and Expenses
3.01 First ING, in the capacity as "one
additional affiliate of SLD," shall pay to FASCorp
such fees and charges as are set forth in Exhibit
A attached hereto and incorporated herein by
reference.
3.02 First ING shall also reimburse FASCorp for
all reasonable out-of-pocket expenses listed in
the attached Exhibit A, as may be incurred by
FASCorp in the performance of this Agreement.
3.03 FASCorp may impose a 1.5% per month late
payment charge on balances of fees, charges or
expenses outstanding for over 45 days.
SECTION 4 Representations and Warranties of FASCorp
FASCorp represents and warrants to First ING as follows:
4.01 It is a corporation duly organized and in
good standing under the laws of the State of
Colorado.
4.02 It is empowered under applicable laws to
enter into and perform the services contemplated
in this Agreement.
4.03 All requisite corporate proceedings have
been taken to authorize it to enter into and
perform the services contemplated in the
Agreement.
4.04 It has and will continue to have and
maintain the necessary facilities, equipment and
personnel to perform its duties and obligations
under this Agreement.
4.05 It has and will maintain a minimum capital
and surplus of at least $50,000 during the term of
this Agreement. FASCorp will provide to First ING
within 30 days after execution of this Agreement,
and thereafter at First ING's request, a copy of
its most recent audited financial statement.
SECTION 5 Representations and Warranties of First ING
First ING represents and warrants to FASCorp as follows:
5.01 It is a corporation duly organized and in
good standing under the laws of the State of New
York.
5.02 It is empowered under the applicable laws
to enter into and perform this Agreement.
5.03 All requisite corporate proceedings have
been taken to authorize it to enter into and
perform this Agreement.
5.04 No policy or other form will be provided
by First ING to be administered by FASCorp unless
it has been duly filed as necessary and approved
by all applicable state insurance departments and
other regulatory bodies with jurisdiction over
First ING, and is in compliance with all federal
and state laws and regulations.
SECTION 6 Indemnification
6.01 FASCorp shall not be responsible for and
First ING shall indemnify and hold FASCorp
harmless from and against, any and all costs,
expenses, losses, damages, charges, reasonable
attorney's fees, payments and liability, which may
be asserted against FASCorp or for which it may be
held to be liable, arising out of or attributable
to:
a. First ING's refusal or failure to
comply with the terms of this Agreement, or
First ING's failure to act in a reasonable or
customary manner in connection with this
Agreement, or which arise out of First ING's
negligence or misconduct or which arise out
of the breach of any representation or
warranty of First ING hereunder;
b. Reliance on or use by FASCorp in
accordance with the terms of this Agreement
such information and materials provided by or
at the direction of First ING and
instructions or directions given by the
authorized individuals described in Exhibit
C; or
c. Reliance by FASCorp on LifeCAD to
function properly and to accurately support
First ING's Contracts.
d. Any failure by First ING to comply
with Federal, state or local laws or
regulations with respect to the offering
and/or sale of any insurance products or
securities.
e. Any matters associated with First ING
or its Contracts or the sale of such
Contracts subject to this Agreement which are
unrelated to the services provided by FASCorp
hereunder.
6.02 FASCorp shall be responsible for and shall
indemnify and hold First ING harmless from and
against any and all losses, damages, costs,
charges, reasonable attorney's fees, payments,
expenses and liability arising out of or
attributable to FASCorp's refusal or failure to
comply with the terms of this Agreement, FASCorp's
failure to act in a reasonable manner in
connection with this Agreement, any failure by
FASCorp to comply with federal, state or local
regulations with respect to the books and records
maintained by FASCorp, or which arise out of
FASCorp's negligence or misconduct or which arise
out of the breach of any representation or
warranty of FASCorp hereunder.
6.03 At any time FASCorp may apply to a person
indicated on First ING's "Schedule of Authorized
Personnel" set forth in Exhibit C attached hereto
and incorporated herein by reference as a person
authorized to give instructions under this section
with respect to any matter arising in connection
with this Agreement. FASCorp shall not be liable
for, and shall be indemnified by First ING,
against any action taken or omitted by FASCorp in
good faith and in the exercise of due care and
diligence in reliance upon such instructions.
6.04 In the event malfunction of any FASCorp
system causes an error or mistake in any record,
report, data, information or output under the
terms of this Agreement, FASCorp shall at its
expense correct and reprocess such records,
provided that First ING shall promptly notify
FASCorp in writing of such error or mistake in any
record, report, data, information, or output
received by First ING. Such writing may be hand-
delivered, sent by mail or courier or transmitted
by telefax.
6.05 If either party believes it is entitled to
indemnification hereunder, it shall, within five
business (5) days of the commencement of any
action or threat of any action, give written
notice to the other party of any claim for which
it believes it is entitled to indemnification;
provided, however, that the failure to provide
timely notice shall not relieve the indemnifying
party of any liability which it may have to the
other party as long as such notice is not
unreasonably withheld or delayed.
The parties shall cooperate with each other
concerning any defense and give each other all
information and assistance which either may
reasonably request in defending any matter
hereunder.
6.06 The provisions of this Section 6 shall
survive termination of this Agreement.
6.07 The provisions of this Section 6 shall not
be deemed to be a limitation upon a party's right
to injunction, specific performance or any other
legal or equitable remedy to which either party
may be entitled by virtue of this Agreement or to
prevent any breach or threatened breach of this
Agreement.
6.08 IN NO EVENT AND UNDER NO CIRCUMSTANCES,
HOWEVER, SHALL ANY PARTY UNDER THIS AGREEMENT BE
LIABLE TO THE OTHER PARTIES UNDER ANY PROVISION OF
THIS AGREEMENT FOR LOST PROFITS OR FOR EXEMPLARY,
SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES.
SECTION 7 Covenants of FASCorp
7.01 FASCorp shall establish and maintain
facilities and procedures for the safekeeping of
check forms and facsimile signature imprinting
devices, if any, and all other documents, reports,
records, books, files and other materials relative
to this Agreement.
7.02 It is expressly understood and agreed that
all documents, reports, records, books, files and
other materials relative to this Agreement shall
be the sole property of First ING and ING Equities
and that such property shall be held by FASCorp,
as agent, during the effective terms of this
Agreement.
7.03 FASCorp shall maintain back-up computer
files, as necessary, so long as LifeCAD currently
and continually allows FASCorp to maintain such
records. The purpose of back-up and recovery is
to permit file recovery in the event of
destruction of normal processing files. First ING
may review the procedures in effect and inspect
the storage facility upon demand. A copy of
FASCorp's current procedures is attached hereto as
Exhibit D.
7.04 All charges or premiums received by
FASCorp on behalf of First ING from First ING's
Lockbox Account shall be promptly remitted by
FASCorp to the person entitled to it or deposited
in a fiduciary account. Any payments received by
FASCorp for insurance on behalf of First ING shall
be deemed received by First ING, shall be held in
a separate First ING trust account and shall be
administered as set out in Exhibit B. Premium
bills shall direct premium payors to send premiums
to a lock box as set forth in Exhibit B.
7.05 No advertising or sales literature in
connection with the Contracts shall be utilized by
FASCorp unless it has been approved in writing by
First ING prior to such use.
7.06 Except as specifically provided to the
contrary in this Agreement, FASCorp shall be
responsible for providing all technical and
operational support, obtaining office space,
purchasing all equipment and paying all costs and
expenses associated with its provision of
administration services to First ING hereunder,
including, but not limited to, all rents, salaries
and other overhead expenditures.
7.07 If FASCorp receives any notice from any
source (including, but not limited to, the policy
owner or regulatory agency) of a lawsuit or other
legal or administrative hearing or proceeding
being brought against First ING and involving the
business administered for First ING by FASCorp, or
the threat of any such lawsuit, hearing or
proceeding, FASCorp shall immediately notify First
ING and send a copy of all legal documents,
correspondence and other material relevant thereto
which FASCorp reasonably has access to. FASCorp
agrees to cooperate fully with First ING in
connection with any suit, hearing or proceeding
and shall provide First ING with all books,
records, documents and data requested by First ING
in connection therewith; provided, however,
FASCorp shall be entitled to review such requests
with its counsel prior to furnishing First ING
with such materials so long as such review is done
in a timely manner.
7.08 FASCorp will conduct its business and
performance obligations in accordance with all
applicable federal and state laws, rules and
regulations and in a manner which will not put
First ING's or its affiliates' registrations and
licenses in any jeopardy of revocation or
suspension or cause First ING or any of its
affiliates to sustain any disciplinary action of
any nature, subject only to any limitations to
which FASCorp may be subject due to the use of the
LifeCAD system.
7.09 FASCorp acknowledges and agrees that all
books and records maintained by FASCorp in
connection with the Contracts shall be maintained
and preserved in conformity with the requirements
of Rules 17a-3 and 17a-4 of the Securities
Exchange Act of 1934 (the "1934 Act"), to the
extent that such requirements are applicable to
the Contracts; that all such books and records are
maintained and held by FASCorp on behalf of First
ING and ING Equities, whose property they are and
shall remain. FASCorp further acknowledges and
agrees that all such books and records are at all
times subject to inspection by the Securities and
Exchange Commission ("SEC") in accordance with
Section 17(a) of the 1934 Act, and undertakes to
permit examination of such books and records at
any time and from time to time during business
hours by representatives or designees of the SEC
or National Association of Securities Dealers,
Inc., true, correct, complete and current hard
copies of any or all or any part of such books and
records.
7.10 FASCorp acknowledges, covenants and agrees
that it shall issue payments, including commission
payments to retail broker-dealers, on behalf of
and on the account(s) of First ING, as a purely
ministerial services for and on behalf of ING
Equities, and that the records in respect of such
payments shall be properly reflected by FASCorp on
the books and records maintained by it for First
ING and ING Equities.
7.11 FASCorp acknowledges, covenants and agrees
that it will send a confirmation for each
transaction which constitutes the sale of a
security to the contract owner as required by
applicable law, regulation or rule in such form as
required by applicable law, regulation or rule.
7.12 FASCorp shall provide First ING with full
and free access as reasonably requested, during
ordinary business hours, to all documents,
records, reports, books, files and other materials
relative to this Agreement and maintained by
FASCorp.
7.13 FASCorp shall furnish to First ING any
information or reports in connection with its
services to First ING, which the Commissioner
of Insurance of any state may request in order to
ascertain whether the variable life insurance
operations of First ING are being conducted in a
manner consistent with applicable state law,
regulations and rules.
SECTION 8 Covenants of First ING
8.01 First ING shall, on a prompt basis,
provide FASCorp with current forms of policies,
prospectuses and applications, names and states of
license of all insurance and/or broker-dealer
agents and representatives authorized to sell the
Contracts.
8.02 All policies subject to the services
performed under this Agreement are underwritten by
First ING.
8.03 First ING shall immediately provide
FASCorp with written notice of any change of
authority of persons authorized and enumerated in
Exhibit C to provide FASCorp with instructions or
directions relating to services to be performed by
FASCorp under this Agreement.
SECTION 9 Termination of Agreement
9.01 a) Either party may terminate this
Agreement at the end of the initial term or
any renewal term by providing at least 180
days prior written notice to the other.
b) This Agreement may be terminated
at any time upon the mutual written consent of
the parties hereto.
c) This Agreement may be terminated
upon written notice of one party to the other
hereto in the event of bankruptcy or
insolvency of such party to which notice is
given.
d) This Agreement shall automatically
be terminated in the event of its assignment,
subject to the provisions of Section 10.01.
9.02 At least 180 days prior to the end of the
initial or any renewal term hereof, FASCorp shall
give First ING written notice if FASCorp desires
to increase its fees or charges to First ING or
to change the manner of payment. If FASCorp and
First ING do not agree to fees and charges before
the end of the term during which such notice is
given by FASCorp, this Agreement shall terminate
at the end of such term.
9.03 Additionally, this Agreement shall
terminate at First ING's option because of:
a) fraud, misrepresentation, conversion
or unlawful withholding of funds by FASCorp;
or
b) the dissolution or disqualification
of FASCorp to do business under any
applicable state or federal law; or
c) the suspension or revocation of any
material license or permit held by FASCorp by
the appropriate governmental agency or
authority; or
d) the sale (without the prior written
consent of First ING, which consent shall not
be unreasonably withheld) of FASCorp's
business to an unaffiliated person or entity,
whether by merger, consolidation, or sale of
substantially all of FASCorp's assets or
stock or otherwise, during the term of, and
any extension to, this Agreement.
9.04 At FASCorp's option because of fraud,
misrepresentation, conversion, or withholding of
funds belonging to FASCorp by First ING.
9.05 In order to act as administrative agent
for the Contracts, FASCorp will depend on the
correct operation and adequate functionality of
LifeCAD provided by Beacon. The parties therefore
agree that if during testing prior to initial
"production" implementation, LifeCAD does not meet
the requirements of FASCorp for Contract
administration and if Beacon is unable to provide
the necessary software modifications by the date
actual production must commence, the Agreement
will terminate automatically. Once production has
commenced, if LifeCAD is not capable of supporting
the Contract administration and if Beacon is
unable to make reasonable corrections in a timely
manner, the Agreement will terminate
automatically.
9.06 The parties acknowledge that regulatory
approval will be required for the policies and
contracts to be administered under this Agreement
and for their distribution by First ING's
broker-dealer. The parties agree that if
regulatory approval for First ING's broker-dealer
distribution procedure is not
received the Agreement will automatically
terminate so long as no Contracts are in force.
If there are in force Contracts, the termination
procedures set forth in Section 9.01 will apply.
Additionally, the parties agree that if all
regulatory approval necessary for First ING to
sell any one or more of the contracts to be
administered hereunder is not received, the
Agreement will automatically terminate, but only
as to that contract or contracts.
9.07 If either of the parties hereto shall
breach this Agreement or be in default in the
performance of any of its duties and obligations
hereunder ("the defaulting party"), the other
party hereto may give written notice thereof to
the defaulting party and if such default or breach
shall not have been remedied within ninety (90)
days after such written notice is given, then the
party giving such written notice may terminate
this Agreement by giving ninety (90) days written
notice of such termination to the defaulting
party, provided, however, that FASCorp will not be
deemed to be in default if its failure to perform
any of its duties and obligations hereunder is due
to a defect or flaw in LifeCAD.
9.08 Termination of this Agreement by default
or breach by First ING shall not constitute a
waiver of any rights of FASCorp in reference to
services performed prior to such termination of
rights of FASCorp to be reimbursed for out-of-
pocket expenditures and to collect fees;
termination of this Agreement by default or breach
by FASCorp shall not constitute a waiver by First
ING of any other rights it might have under this
Agreement.
9.09 In the event of a termination, FASCorp
will return LifeCAD to SLD, and
will make its computer record formats and other
relevant systems information available to First
ING and SLD for a machine conversion, subject to
reimbursement to FASCorp for such assistance at
its standard rates and fees in effect at that
time. Additionally, the Unit Value Calculator may
be purchased at FASCorp's standard rate and
applicable fees for the transition thereof shall
be assessed by FASCorp. FASCorp will provide any
required training in any such conversion or
transition at FAScorp's standard rate and
applicable fees. As described in Sections 7.02
and 7.09, all data contained in the computer files
is the exclusive property of First ING.
9.10 During the period between the date of any
notice of intention to terminate given pursuant to
this Section 9 and the date of actual termination
of the Agreement, each party shall continue to
perform its obligations under this Agreement.
9.11 During any transition period, FASCorp
agrees to cooperate with First ING to effectuate
an orderly transfer of all policy records and
materials to First ING or its designee. For
services performed during the transition period,
FASCorp shall be compensated for its services
pursuant to Exhibit A of this Agreement.
9.12 The parties agree that following a
termination of this Agreement, for a period
reasonable to effect an orderly transition, they
will continue to perform each and every obligation
hereunder.
SECTION 10 Assignment
10.01 Neither this Agreement nor any rights or
obligations hereunder may be assigned by either
party without the prior written consent of the
other.
10.02 This Agreement shall inure to the
benefit of and be binding upon the parties hereto,
ING Equities and their respective successors and
assigns, provided that any assignment is performed
in accordance with Section 10.01 above.
SECTION 11 Confidentiality
11.01 The parties hereto agree that all tapes,
books, reference manuals, instructions, records,
information and data pertaining to the business of
the other party, FASCorp's systems, and the
policyowners serviced by FASCorp hereunder, which
are exchanged or received pursuant to the
negotiation of and/or the carrying out of this
Agreement, shall remain confidential and shall not
be voluntarily disclosed to any other person,
except to the extent disclosure thereof may be
required by law. All such tapes, books, reference
manuals, instructions, records, information and
data in the possession of each of the parties
hereto shall be returned to the party from whom it
was obtained upon the termination or expiration of
this Agreement.
11.02 FASCorp shall maintain the
confidentiality of all trade secrets and other
confidential information obtained from SLD or its
affiliates, ING Equities, First ING and Southland
(collectively "SLD" for purposes of this Section
11). FASCorp will use all reasonable precautions
and take all necessary steps to prevent any
information obtained by FASCorp provided to it
hereunder from being acquired by any unauthorized
persons, including its parent company or any of
its affiliates. FASCorp acknowledges that such
information has been disclosed by SLD only
to enable FASCorp to provide the services
hereunder and that disclosure thereof would be
damaging to SLD if such information were
obtained by any competitor of SLD.
11.03 SLD shall maintain the
confidentiality of all trade secrets and other
confidential information obtained from FASCorp.
SLD will use all reasonable precautions and
take all necessary steps to prevent any
information obtained by SLD provided to it
hereunder from being acquired by any unauthorized
persons, including its affiliates other than SLD
or Southland. SLD acknowledges that such
information has been disclosed by FASCorp only to
enable FASCorp to provide the services hereunder
and that disclosure thereof would be damaging to
FASCorp if such information were obtained by any
competitor of FASCorp.
SECTION 12 Insurance
12.01 Errors and Omissions Insurance.
FASCorp, as a member of the Great-West Life family
of companies, is currently self insured for errors
and omissions coverage. Such coverage is for
amounts up to and in excess of one million dollars
per claim. Great-West has provided assurances to
First ING that FASCorp has the financial backing of
Great-West. See Exhibit E for a form of that
assurance.
12.02 Fidelity and Theft Insurance. For the
duration of this Agreement, FASCorp shall carry
fidelity and theft insurance from any insurer
rated "A" or better by A.M. Best Company. Such
insurance shall cover the theft, loss or
disappearance of any monies collected by FASCorp
on First ING's behalf and shall provide at least
$1,000,000 coverage per occurrence. The policy
shall not exclude any employee or principal of
FASCorp.
12.03 Approval and Evidence of Insurance.
FASCorp shall provide First ING with a copy of the
fidelity and theft insurance prior to the
effective date of this Service Agreement, with
evidence that policy is full force. Additionally,
FASCorp shall, on an annual basis, provide First
ING with written certification from the insurers
that the required insurance coverage has been
renewed.
12.04 Notice of Cancellation. All required
insurance contracts shall contain a clause which
requires the insurers issuing the fidelity and
theft insurance to provide First ING with thirty
(30) days prior written notice in the event any
required insurance coverage is cancelled or the
terms of the insurance are materially altered.
FASCorp shall give First ING written notice of any
change or cancellation of such insurance.
12.05 Review of Required Insurance. The
parties agree to review the amounts and terms of
all required insurance from time to time to
determine the adequacy of such insurance.
12.06 Survival. If this Service Agreement
terminates for any reason, FASCorp shall use its
best efforts to keep the insurance called for in
this section in force for 3 years following
termination. FASCorp shall give First ING at
least 30 days prior notice of any change or
cancellation of such insurance.
SECTION 13 Arbitration
13.01 Any dispute which arises between the
parties with respect to any of the terms of this
Agreement, whether such dispute arises during the
term of the Agreement or after the termination,
shall be resolved through binding arbitration.
Arbitration shall be conducted in accordance with
the commercial rules of the American Arbitration
Association ("AAA"). Each party agrees to waive
its right, if any, to a jury trial. Each party
shall bear its own cost in the arbitration
proceedings. The judgment of the AAA may be
entered in, and enforced by, any court of
competent jurisdiction.
SECTION 14 Miscellaneous
14.01 First ING or its duly authorized
independent auditors have the right under this
Agreement to perform on-site audits of records and
accounts directly pertaining to the Contracts
serviced by FASCorp at FASCorp's facilities in
accordance with reasonable procedures and at
mutually agreeable dates and times, but at least
once annually. At the request of First ING
FASCorp will make available to First ING's
auditors and representatives of the appropriate
regulatory agencies all reasonably requested
records and data.
14.02 This Agreement constitutes the entire
agreement between the parties hereto and may not
be modified except in written instrument executed
by both of the parties hereto and except that if
any section herein contained shall be found to be
unenforceable as contrary to the current law, that
section shall be severed and the remaining
sections of this Agreement shall continue to be
enforceable.
14.03 Neither party shall be liable for
damages due to delay or failure to perform any
obligation under this Agreement if such delay or
failure results directly or indirectly from
circumstances beyond the control and without the
fault or negligence of such party.
14.04 It is understood and agreed that all
services performed hereunder by FASCorp shall be
as an independent contractor and not as an
employee of First ING.
14.05 Beacon, through agreement with SLD, will
provide FASCorp with LifeCAD at no charge to
FASCorp.
14.06 FASCorp agrees not to use LifeCAD for
any other party including FASCorp without entering
into a separate agreement with Beacon.
14.07 This Agreement shall be governed by the
laws of the State of Colorado.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed in duplicate, in their names and on their behalf
by and through their duly authorized officers as of the day and
year first above written.
First ING Life Insurance Company of New York
By: ______________________________
Title:
Financial Administrative Services Corporation
By: _______________________________
Title:
Exhibit A
Fee Schedule
CONTRACTS:
Individual variable life and variable annuity products of First
ING Life Insurance Company of New York ("First ING").
FEES:
A. Basic one-time set up charge due upon the signing of this
Agreement:
$70,000 which consists of two variable annuity products and
one variable life product for Security Life of Denver ("SLD")
and one variable annuity product and one variable life product
for each of First ING and Southland.
If one additional affiliate of SLD contracts with FASCorp for
similar services, that affiliate shall pay FASCorp $45,000 as
a one-time set up charge, and FASCorp shall pay SLD $25,000 to
reimburse SLD for the affiliate's share of the one-time set up
charge.
If two additional affiliates of SLD contract with FASCorp for
similar services, the second affiliate shall pay FASCorp
$36,666 as a one-time set up charge, and FASCorp shall pay SLD
and the first affiliate each $8,333 to reimburse SLD and the
first affiliate for their respective shares of the one-time
set up charge.
B. Processing Charges
1. Policy Contract Processing Charges:
Variable Monthly Service Fee
Contract Volume Per Contract
_______________ ___________________
Variable Annuities
__________________
First 30,000 $2.50 per policy, per month
Over 30,000 $2.20 per policy, per month
Storage, all contracts .08 per policy, per month
Variable Life
______________
All $3.00 per policy, per month
Storage, all contracts .08 per policy, per month
The policy contract processing charges will be based on the
aggregate policy count for each company at the end of the
month.
2. Investment Option Unit Value Processing Charges:
For each daily unit value calculation, the processing charge
will be $70 per month.
C. Minimum Monthly Contract Service Fee:
The minimum monthly contract service fee schedule for SLD and
any subsidiary of SLD contracting with FASCorp for similar
services is:
$70 per month for each daily unit value calculation, PER
COMPANY, plus
1. For SLD alone - the greater of $10,000 per month or the
actual Policy Contract Processing Charges plus the Unit
Value Processing Charges.
2. For SLD and one affiliate - per company, the greater of
$6,000 per month or the companies' aggregate of the actual
Policy Contract Processing Charges plus the Unit Value
Processing Charges, with such Processing Charges prorated
between the companies according to Contract Volume.
3. For SLD and two affiliates - per company, the greater of
$4,667 per month or the companies' aggregate of the actual
Policy Contract Processing Charges plus the Unit Value
Processing Charges, with such Processing Charges prorated
among the companies according to Contract Volume.
Effective the end of the month in which the first application
is received, that company will be included in the above
calculations for the minimum Monthly Contract Services Fee,
and FASCorp will begin billing the greater of the Minimum
Monthly Contract Service Fee or the actual Policy Contract
Processing Charges plus the Unit Value Processing Charges.
D. Out-of-Pocket Expenses:
In addition to the fees set forth above, FASCorp will bill
out-of-pocket expenses as they are incurred. Out-of-pocket
expenses are expenditures for the items such those listed
below and any other items agreed to by the parties:
1. The cost of long distance telephone calls including
toll-free "800" lines and facsimile (fax) transmissions to
or from First ING, and to or from policyowners. Costs of
any lines installed for network communications between
FASCorp and First ING, including CRT's and related
minicomputer equipment. Costs of telecommunication lines
and equipment installed to provide primary and back-up
support for on-line access to the administrative system,
including transmission capabilities between FASCorp and
First ING.
2. Cost of equipment (including maintenance) which is provided
to or obtained by FASCorp for purposes of the Services
Agreement. First ING will be responsible for such costs
including costs under FASCorp leases and maintenance
agreements with third parties for such equipment,
including leases and maintenance agreements which may
extend beyond the termination or expiration of the
Services Agreement.
3. Cost of postage for mailing forms, reports, contracts,
bills, statements, prospectuses, and other materials to
policyowners or agents, and cost for postage and overnight
delivery for any other communication to policyowners or
FASCorp or First ING.
4. Cost of printing blank stock and the cost of set-up and
printing (including per impression costs) confirmation
statements, contract file folders, checks, tax reporting
forms, contract pages, specification pages, envelopes,
proxy or voting instruction cards, periodic policyowner
statements, separate account statements, individual and
list bills, and any other required formats or reports.
Cost of labor for folding, inserting and mailing
functions.
5. Cost of microfilm and microfiche equipment and supplies and
the cost of transferring all necessary information to
microfilm and/or microfiche.
6. Costs involved with on- or off-site storage for First ING
records, documents, correspondence and other items.
7. Custom programming and new product implementation at $75
per hour.
8. Normal and reasonable travel, meal and lodging expenses
incurred during FASCorp's performance of the Services
Agreement, if any.
Exhibit B
Administrative Services
A. Contract Issue
1. Reviews application, applies issue criteria developed by
First ING to application for annuity contract.
2. Verifies license status of brokers/agents based on
information supplied by First ING. First ING to provide
a written set of issue criteria to FASCorp.
3. Prepares contract data page, issues contract for paid
business and mails to contract owners or agents. System
will produce contract data pages.
4. Establishes and maintains annuitant and contract owner
records, as applicable, on computer and manual systems.
5. Notifies dealer/agent of any error or missing data needed
to establish annuitant or contract owner records.
6. Produces and mails required confirmation statements.
7. Deposits monies received with application into depository
account.
8. Maintains inventory of all issue-related forms, contracts
and endorsements based on updates provided by First ING.
9. For policies being exchanged from another company or IRA
funds being transferred, FASCorp will request the funds
from the other insurance company using forms supplied by
First ING. First ING will establish signing authority for
FASCorp personnel.
B. Collection procedures (after contract is in force)
1. Receives from lockbox the remittance information in
accordance with processing requirements.
2. Processes payments received to customer accounts.
3. Prepares and mails required confirmation of transactions.
4. Deposits cash received directly by FASCorp under the
policies into a designated bank account.
5. Transmits daily accounting and bank transfer authorization
summaries prepared for each valuation period.
6. Prepares and mails refunds as appropriate (declines, free
look).
C. Banking
1. Photocopies checks received directly by FASCorp and assigns
them a control number. Balances, edits, endorses and
prepares daily deposit. Reconciles bank lockbox deposits
to applications received.
2. Deposits are placed into a depository account.
3. Transfers funds from the depository account to one of the
following, as appropriate:
a. General Account of First ING
b. Mutual Fund Custodian Account(s)
c. Disbursement Account of First ING
d. Separate Accounts of First ING
4. Bank accounts and mutual fund accounts to be established by
First ING with appropriate signing and trading
authorizations established for FASCorp personnel.
5. Generates from the system daily cash journal summary
reports and maintains detail of activity.
6. Processes disbursement transactions for policyowner or
beneficiary, surrenders, withdrawals, loans, and death
claims. Death claims administered by First ING.
7. Produces checks for annuitants in payout phase.
8. First ING will maintain balances in the appropriate First
ING bank accounts necessary to meet administrative needs
identified in the contract.
9. First ING will obtain the appropriate authorizations to
allow FASCorp to transfer funds amongst First ING
accounts.
10. Reprocess dishonored items. Reverses associated
transactions, prepares reports and communicates with
policyowner. Reverses all ledger entries associated with
dishonored items.
11. Provides check production for systematic payouts.
D. Accounting/Auditing
1. Generates daily accounting extracts for policies maintained
on the system.
2. Generates accounting information necessary to post entries
to ledgers.
3. Retains systems generated reports in accordance with a
retention schedule as mutually agreed upon and as required
by regulatory authorities. Provides access to such
reports for internal and external auditing.
4. Determines the "Net Amount Available for Investment" in
mutual fund and places fund purchase/redemption orders
with the appropriate mutual funds. Receives confirmation
of mutual fund investments.
5. Maintains an inventory of all mutual fund shares owned,
including the date purchased and sold, cost, book value,
gain, loss, and other relevant information.
6. Reconciles inventory of mutual fund shares owned to reports
supplied by mutual funds of mutual fund shares owned.
7. Cooperates in annual audit of separate account financials
conducted for purposes of financial statement certification
and publication and accommodates First ING or regulatory
audits, as required.
E. Pricing/Valuation
1. Collects information needed in determining variable account
unit values from the mutual fund. This information
includes the daily net asset value of the underlying
mutual funds, any capital gains or dividend distribution
made by the mutual funds and the number of mutual fund
shares acquired or sold during the immediate preceding
valuation date.
2. Enters required information into system for unit value
calculation to be performed.
3. Generates separate account ledger activity associated with
unit valuation. First ING will specify the required
accounting entries based on information available from the
Unit Value Calculator.
F. Contract Owner Service/Record Maintenance
1. Maintain administrative records in the form specified by
First ING, and handles all general clerical and
administrative functions necessary for satisfactory
administration of the coverages and services to insureds
and owners. Maintains all files relative to these functions.
2. Handles all routine correspondence, including researching
contract owner inquiries using both data stored in the
system and manual records. Any correspondence which is not
routine will be forwarded promptly to First ING for a
response, as required in Section 7.07 of this Agreement.
Such non-routine correspondence will include all items
referred to in Section 7.07, as well as any correspondence
in which an insured objects to the handling or questions
the payment of a claim, and any insurance department or
other regulatory body complaint. FASCorp will also
promptly provide its answer to such correspondence in
writing to First ING in order for First ING to respond.
3. Generates a set of daily journals confirming financial
changes made to annuity or life accounts.
4. Address, name and contract changes will be coordinated
between First ING and FASCorp.
5. Produces tax reporting.
G. Disbursement (Surrenders, Loans)
1. Processes all surrender and loan requests against the
policyowner files. Retains and accounts for any contract
administrative charges. Generates related separate account
ledger accounting.
2. Provides check production for surrenders and loans and
forwards to contract owner in accordance with applicable
law.
3. Prepares and mails confirmation statements of disbursement
transactions to contract owners.
4. Generates a report on surrenders and loans.
5. Reviews, causes to have printed, and maintains adequate
supply of checks.
6. Contacts policyowner regarding tax withholding procedures,
if required.
7. Backup withholding will be coordinated between FASCorp and
First ING.
H. Claims
1. Will immediately notify First ING of request for
death claim received from contract owners and
beneficiaries. In addition, any notification received by
First ING regarding a policy administered by FASCorp will
immediately be communicated to FASCorp. This is necessary
to freeze the account.
2. If multiple policies are involved, First ING and FASCorp
will coordinate sending claim forms.
3. Respond to request from First ING for disbursement of
proceeds. Generate related separate account ledger
accounting.
4. Provides check production for disbursements as directed by
First ING.
5. Make changes to owner and/or annuitant information as
directed by First ING where no payout is required.
6. Generate report on death claims, if required.
7. Claims examination will be done by First ING.
I. Commissions
1. Verifies license status of brokers/agents based on
information supplied by First ING.
2. Produces detailed commission transactions for each policy
financial transaction processed including premium
application or reversal, cancellation, etc. for which a
commission is required.
3. Prepares commission statements for broker/dealer firms.
Provides check production extract file for any required
checks. Check production will be through a FASCorp
checkwriting system.
4. Creates tax reporting forms, if required.
J. Annuity Benefit Processing
1. Notifies owner of approaching annuitization approximately
90 days before annuitization date.
2. Receives information regarding annuitants going into the
annuity (payout) phase.
3. Calculates the amount of the initial annuity payment for
variable payout based on tables supplied by First ING.
Calculation of fixed payout based on information supplied
by First ING.
4. Deducts applicable premium taxes. Produces accounting
information. Premium tax reporting and payment will be
done by First ING.
5. Establishes and maintains annuitant records.
6. Withholds appropriate federal and state income tax;
generates journal entries for First ING general ledger.
7. Provides information for general account ledger
maintenance.
8. Maintains inventory of fixed and variable annuity units.
9. Provides check production or electronic fund transfer for
payment of amount due to annuitant in accordance with
applicable law.
10. Generates tax reporting data. First ING will make all
payments to the appropriate regulatory agencies for any
taxes withheld and will effect all necessary associated
reports.
K. Proxy Processing
1. Receives record date information from the underlying mutual
funds. Receives proxy solicitation material from
underlying mutual funds.
2. Prepares proxy cards, if applicable.
3. Mails solicitation and resolicitations, if necessary.
4. Maintains all proxy registers and other required proxy
material.
5. Tabulates returned proxy cards and transmits results to
underlying mutual funds.
L. Periodic Reports to Policyowners
1. Prepares and mails statement of account to each
policyowner. Mails on schedule supplied by First ING.
2. Inserts and mails semi-annual and annual reports to
policyowners, as required, both underlying mutual fund and
Separate Account reports. Filing of reports with NASD and
SEC will be done by First ING. Printing of reports will
be done by First ING.
M. Regulatory/Statement Reports
1. Prepares IRS reports for contract owners who received
annuity payments or distributions. Mails to contract
owners and transmits to IRS.
2. Prepares other IRS reports, as required.
3. Responds to requests for calculations applicable to annuity
payments as may be necessary to tax calculations.
N. Actuarial and Management Reports
1. Provides, on the time schedule mutually agreed upon by the
parties, extracts listed below:
a. Reserve Extracts
b. Production Extracts
c. Premium Tax Extracts
d. Loan Extracts
e. Surrender Extracts
Claims Report
EXHIBIT C
SCHEDULE OF AUTHORIZED PERSONNEL
The following individuals are authorized by First ING Life
Insurance Company of New York to give instructions or direction
to Financial Administrative Services Corporation with respect to
matters arising in connection with the servicing to be performed
under this Agreement:
Jerrianne Smith ______________________
Steve Moses ______________________
Debbie Bell ______________________
Bonnie Dailey ______________________
Melodie Jones ______________________
Exhibit D
Backup Procedures
Current backup practices and procedures are described herein and
may be changed upon mutual agreement of First ING Life Insurance
Company of New York ("First ING") and Financial Administrative
Services Corporation ("FASCorp").
First ING products are administered on the LifeCAD system that
resides on a PC network. Every night all LifeCAD data is copied
from the PC network to the UNIX system where data is backed up on
a corporate basis.
PC Network:
1. For daily on line processes, the hardware configuration
provides for all activity to be written to twin, redundant hard
drives.
2. Before the nightly batch processing takes place, an image copy
of the data is taken in case any batch problems require a rerun
of the cycle.
3. Every night, after the batch cycle, the LifeCAD data is copied
to the UNIX network where corporate backup procedures are
followed.
UNIX Network:
Every night the UNIX network back up process waits for the data
to be received from the LifeCAD PC network. At that time, the
backup process is done according to the following corporate
schedule:
Level 0 - Each UNIX machine is totally backed up. This takes
place every 3 to 4 months and the backup files are kept for 1
year.
Every year end a special Level 0 is done and the backup files
are kept for 7 years.
Level 1 - Everything that changed since the last Level 0 back
up is copied. This takes place every Friday night and the
backup files are kept for 120 days.
Level 5 - Everything that changed since the last Level 1 back
up is copied. This takes place every night and the backup
files are kept for 60 days.
The back up files are moved to off-site storage daily, on a
rotating basis.
Hardware Location
The hardware that stores and backs up the First ING data is
located in a separate computer operations building which has its
own emergency power supply.
EXHIBIT E
Great-West Life & Annuity Insurance Company
Statement of Support
(See Attached)
November 21, 1994
First ING Life Insurance
Company of New York
1290 Broadway
Denver, CO 80203-5699
Re: Financial Administrative Services Corporation ("FASCorp")
Dear Madam or Sir:
Please be advised that FASCorp is a member of the Great-West Life
family of companies. As such, FASCorp is entitled to coverage
through the self insurance arrangement for errors and omissions
coverage maintained by the Great-West family of companies.
Further, FASCorp is a wholly owned subsidiary of Great-West Life
& Annuity Insurance Company ("GWL&A") and, as such, has the full
financial backing of GWL&A.
Sincerely,
Dennis Low
Executive Vice President
Financial Services
Great-West Life & Annuity
Insurance Company
January 18, 1995
First ING Life Insurance Company of New York
Security Life Center
1290 Broadway
Denver, Colorado 80203-5699
Re: First ING N-4 Registration Statement
Dear Sirs:
This opinion is furnished in connection with the Form N-4
Registration Statement being filed by First ING Life Insurance
Company of New York ("First ING") under the Securities Act of
1933, as amended (the "Act"), for the offering of units of
interest ("Units") in Separate Account A1 under The Fulcrum Fund
individual deferred variable annuity contract ("Contract") to be
issued by First ING. The securities being registered under the
Act are to be offered in the manner described in the Registration
Statement.
I have supervised the examination of all such corporate records
of First ING and such other documents and such laws as I consider
appropriate as a basis for the opinion hereinafter expressed. On
the basis of such examination, it is my opinion that:
1. First ING is a corporation duly organized and validly
existing under the laws of the State of New York.
2. Separate Account A1 was duly created as a separate
investment account of First ING pursuant to the laws of the
State of New York.
3. The assets of Separate Account A1 will be owned by First
ING. Under New York law and the provisions of the Contract,
the income, gains and losses, whether or not realized, from
assets allocated to Separate Account A1 must be credited to
or charged against such Account, without regard to the other
income, gains or losses of First ING.
4. The Contract provides that the assets of Separate Account A1
may not be charged with liabilities arising out of any other
business First ING may conduct.
5. The Contract and the Units in Separate Account A1 to be
issued under the Contract have been duly authorized by the
corporation; and the Contract, including the Units
thereunder, when issued and delivered, will constitute
validly issued and binding obligations of First ING in
accordance with their terms.
I hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and to the use of my name under the
caption "Legal Matters" in the Prospectus contained in the
Registration Statement.
Very truly yours,
Eugene L. Copeland
Senior Vice President
Secretary and General Counsel
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts"
and to the use of our report on the statutory-basis financial
statements for the year ended December 31, 1993 dated February 28,
1994 and our report on the financial statements for the two years
in the period ended December 31, 1994 dated April 5, 1995 in the
Registration Statement (Form N-4 No. 33-88794 and 811-8700) and
related Prospectus of First ING Life Insurance Company of New York
dated July 28, 1995.
ERNST & YOUNG LLP
July 26, 1995
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
First ING Life Insurance Company of New York:
We consent to the inclusion in the Registration Statement No.
33-88794 on Form N-4 of our report dated March 1, 1993 relating to
the statutory financial statements of The Urbaine Life Reinsurance
Company, (now known as First ING Life Insurance Company of New
York), for the fiscal year ended December 31, 1992.
KPMG PEAT MARWICK LLP
New York, New York
July 26, 1995
CONSENT OF
MAYER, BROWN & PLATT
We hereby consent to the reference to our firm under the caption
"Legal Matters" in the prospectus comprising a part of the Form N-4
Registration Statement of First ING Life Insurance Company of New York
(File Nos. 33-88794 and 811-8700).
MAYER, BROWN & PLATT
Washington, DC
July 27, 1995
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer and/or
director of First ING Life Insurance Company of New York, a life
insurance corporation organized and existing under the laws of New York,
does hereby constitute and appoint Bonnie C. Dailey, Frank Wright, and
Edward K. Campbell, and each of them, with full power of substitution as
his true and lawful attorney and agent, to do any and all acts and things
and to execute any and all instruments which said attorney and agent may
deem necessary or advisable:
(i) to enable the said corporation to comply with the Securities Act of
1933, as amended, the Investment Company Act of 1940, as amended,
and any rules, regulations and requirements of the Securities and
Exchange Commission in respect hereof, in connection with the
Registration under the said Securities Act and the Investment
Company Act of variable life insurance contracts and variable
annuity contracts of the said corporation (hereinafter collectively
called "First ING Securities"), including specifically, but without
limiting the generality of the foregoing, the power and authority to
sign for and on behalf of the undersigned the name of the
undersigned as officer and/or director of the said corporation to a
registration statement or to any amendment thereto filed with the
Securities and Exchange Commission in respect to said First ING
Securities and to any instrument or document filed as part of, as an
exhibit to or in connection with, said registration statement or
amendment; and
(ii) to register or qualify said First ING Securities for sale and to
register or license said corporation or any affiliate thereof as a
broker or dealer in said First ING Securities under the securities
or Blue Sky Laws of all such States as may be necessary or
appropriate to permit therein the offering and sale of said First
ING Securities as contemplated by said registration statement,
including specifically, but without limiting the generality of the
foregoing, the power and authority to sign for and on behalf of the
undersigned the name of the undersigned as an officer and/or
director of said corporation to any application, statement,
petition, prospectus, notice or other instrument or document, or to
any amendment thereto, or to any exhibit filed as a part thereto or
in connection therewith, which is required to be signed by the
undersigned and to be filed with the public authority or authorities
administering said securities or Blue Sky Laws for the purpose of so
registering or licensing said corporation;
and the undersigned does hereby ratify and confirm as his own act and
deed all that said attorney and agent shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
______ day of ___________________________, 1995.
____________________________________
Robert J. St. Jacques
In the Presence of:
________________________________________
