<PAGE>
As filed with the Securities and Exchange Commission on April 23, 1996
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
Post-Effective Amendment No. 1
and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 3
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)
<TABLE>
<CAPTION>
<S> <C>
Copy to:
EUGENE L. COPELAND KURT W. BERNLOHR
First ING Life Insurance Company of New York First ING Life Insurance Company of New York
1290 Broadway 1290 Broadway
Denver, Colorado 80203-5699 Denver, Colorado 80203-5699
(Name and Address of Agent for Service) (303) 894-4923
</TABLE>
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practical after the
effective date.
________________
It is proposed that this filing will become effective (check appropriate box)
___ immediately upon filing pursuant to paragraph (b) of Rule 485
X on May 1, 1996 pursuant to paragraph (b) of Rule 485
---
___ 60 days after filing pursuant to paragraph (a)(i) of Rule 485
___ on (date) pursuant to paragraph (a)(i) of Rule 485
___ 75 days after filing pursuant to paragraph (a)(ii)
___ on (date) pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box:
___ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
DECLARATION PURSUANT TO RULE 24F-2
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
elected to register an indefinite amount of securities under the Securities Act
of 1933. That election was originally filed as part of Registrant's initial
Registration Statement filed on August 16, 1994. Pursuant to paragraph (b)(2) of
Rule 24f-2, Registrant need not file a Form 24f-2 for its fiscal year ended
December 31, 1995 because it did not sell any securities during that time.
- --------------------------------------------------------------------------------
<PAGE>
FIRST ING OF NEW YORK SEPARATE ACCOUNT A1 (File No. 33-88794)
Cross-Reference Sheet
Pursuant to Rule 495(a) Under the Securities Act of 1933
<TABLE>
<CAPTION>
Form N-4 Item No. Caption in Prospectus
- ----------------- ---------------------
<S> <C>
1. Cover Page Cover Page
2. Definitions Glossary of Terms
3. Synopsis Summary of The Fulcrum Fund/SM/ Variable
Annuity
4. Condensed Financial Information Condensed Financial Information
5. General Description of Registrant, Facts about First ING Life and the Variable
Depositor and Portfolio Companies Account; The Guaranteed Interest Division
6. Deductions and Expenses Fee Table; Summary of The Fulcrum Fund/SM/
Variable Annuity; Certificate Charges and Fees
7. General Description of Variable Annuity Facts about the Contract and the Certificates
Contracts
8. Annuity Period Choosing an Annuity Option
9. Death Benefit Summary of The Fulcrum Fund/SM/ Variable
Annuity; Values under the Certificate
10. Purchases and Contract Value Summary of The Fulcrum Fund/SM/ Variable
Annuity; Facts about the Contact and the
Certificates; Values under the Certificate
11. Redemptions Summary of The Fulcrum Fund/SM/ Variable
Annuity; Certificate Charges and Fees; Values
under the Certificate, Choosing an Annuity
Option
12. Taxes Summary of The Fulcrum Fund/SM/ Variable
Annuity; Certificate Charges and Fees; Federal
Tax Considerations
13. Legal Proceedings Regulatory Information
14. Table of Contents of Statement of Table of Contents of Statement of Additional
Additional Information Information
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
Caption in Statement of Additional
----------------------------------
Form N-4 Item No. Information (or Prospectus, Where Indicated)
- ----------------- --------------------------------------------
<S> <C>
15. Cover Page Cover Page
16. Table of Contents Table of Contents
17. General Information and History First ING Life; Prospectus -- Facts about First
ING Life and the Variable Account
18. Services First ING Life; The Administrator
19. Purchase of Securities Being Offered Prospectus -- Facts About the Contract and the
Certificates
20. Underwriters First ING Life
21. Calculation of Performance Data Performance Information; Prospectus -
Appendix A, Performance Information
22. Annuity Payouts Performance Information; Prospectus --
Choosing an Annuity Option
23. Financial Statements Financial Statements of First ING Life
Separate Account A1 of First ING Life
Insurance Company of New York; Prospectus -
Condensed Financial Information
</TABLE>
Part C - Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Registration Statement.
(iii)
<PAGE>
THE FULCRUM FUND(SM) VARIABLE ANNUITY
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(SM) 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 any
investment earnings 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"). Five 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") as indicated below.
<TABLE>
<CAPTION>
Portfolio Portfolio Managers
--------- ------------------
<S> <C>
The Value Portfolio GAMCO Investors, Inc.
The Growth Portfolio Stonehill Capital Management, Inc.
The International Growth Portfolio Bee & Associates Incorporated
The Global Strategic Income Portfolio Fischer Francis Trees & Watts, Inc.
The Global Interactive/Telecomm Portfolio GAMCO Investors, Inc.
</TABLE>
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.
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.
Prospectus Date: May 1, 1996
<PAGE>
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 May 1, 1996, 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 41 of this prospectus. The Statement of Additional Information is
incorporated herein by reference.
<TABLE>
<S> <C> <C>
ISSUED BY: DISTRIBUTED BY: CUSTOMER SERVICE CENTER:
First ING Life Insurance Company ING America Equities, Inc. P.O. Box 173778
of New York 1290 Broadway, Attn: Variable Denver, CO 80217-3778
1290 Broadway Denver, CO 80203-5699 1-800-249-9099
Denver, CO 80203-5699
1-800-525-9852
</TABLE>
Date of Prospectus: May 1, 1996
- --------------------------------------------------------------------------------
2
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<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
GLOSSARY OF TERMS.............................................................6
FEE TABLE.....................................................................9
SUMMARY OF THE FULCRUM FUND/SM/ VARIABLE ANNUITY.............................11
General Description..........................................................11
Purchase Payments............................................................12
Guaranteed Death Benefit.....................................................12
Partial Withdrawals..........................................................12
Surrendering Your Certificate................................................12
Your Right to Cancel the Certificate.........................................12
Certificate Charges and Fees.................................................13
CONDENSED FINANCIAL INFORMATION..............................................14
FACTS ABOUT FIRST ING LIFE AND THE VARIABLE ACCOUNT..........................14
First ING Life...............................................................14
customer service center......................................................14
The Variable Account.........................................................14
The Palladian Trust..........................................................15
Changes Within the Variable Account..........................................16
FACTS ABOUT THE CONTRACT AND THE CERTIFICATES................................17
Your Right to Cancel the Certificates........................................17
Purchase Payments............................................................17
Initial Purchase Payment...................................................17
Additional Purchase Payments...............................................17
Where to Make Payments.....................................................17
Crediting and Allocation of Purchase Payments..............................17
Dollar Cost Averaging........................................................18
Automatic Rebalancing........................................................18
Reports to Owners............................................................19
Group or Sponsored Arrangements..............................................19
Offering the Certificate.....................................................20
VALUES UNDER THE CERTIFICATE.................................................20
Guaranteed Death Benefit.....................................................20
Death Benefit Proceeds.......................................................21
How to Claim Payouts to Beneficiary........................................21
Your Accumulation Value......................................................21
Measurement of Investment Experience for the Divisions of the Variable
Account.....................................................................21
Accumulation Unit Value....................................................21
How We Determine the Accumulation Experience Factor........................22
Net Rate of Return for a Division of the Variable Account..................22
Division Accumulation Value of each Division of the Variable Account.........22
Division Accumulation Value of the Guaranteed Interest Division..............22
Your Right to Transfer Among Divisions.......................................23
Partial Withdrawals..........................................................24
Demand Withdrawal Option...................................................24
Systematic Income Program..................................................25
IRA Income Program - IRA Certificates Only.................................25
</TABLE>
- --------------------------------------------------------------------------------
3
The Fulcrum Fund/SM/
<PAGE>
<TABLE>
<S> <C>
The Amount You May Withdraw Without a Surrender Charge.....................26
Tax Consequences of Partial Withdrawals....................................26
Surrendering to Receive the Cash Surrender Value.............................26
When We Make Payouts.........................................................27
THE GUARANTEED INTEREST DIVISION.............................................27
OTHER INFORMATION............................................................28
The Owner....................................................................28
The Annuitant................................................................28
The Beneficiary..............................................................28
Change of Owner, Beneficiary or Annuitant....................................29
Other Certificate Provisions.................................................29
In Case of Errors on the Certificate Application or Enrollment Form........29
Procedures.................................................................29
Telephone Privileges.......................................................29
Assigning the Certificate as Collateral....................................30
Non-Participating..........................................................30
Authority to Change Contract and Certificate Terms...........................30
Certificate Changes - Applicable Tax law...................................30
CERTIFICATE CHARGES AND FEES.................................................30
Deduction of Charges.........................................................30
Charges Deducted from the Accumulation Value.................................30
Surrender Charge...........................................................30
Administrative Charge......................................................31
Excess Transfer Charge.....................................................31
Taxes on Purchase Payments.................................................31
Charges Deducted From the Divisions of the Variable Account..................32
Mortality and Expense Risk Charge..........................................32
Asset-based Administrative Charge..........................................32
Portfolio Expenses...........................................................32
CHOOSING AN ANNUITY OPTION...................................................32
General Provisions...........................................................32
Supplementary Contract.....................................................32
Election and Changes of Annuity Date.......................................32
Election and Changes of Annuity Option.....................................33
Payout Options...............................................................33
Variable Annuity Payout...................................................33
Fixed Annuity Payout.......................................................33
Combination Annuity Payout.................................................34
Frequency and Amount of Annuity Payouts....................................34
Payout Period Options........................................................34
Payouts Other Than Monthly.................................................35
Commuting Provisions.......................................................35
REGULATORY INFORMATION.......................................................35
Voting Privileges............................................................35
State Regulation.............................................................36
Legal Proceedings............................................................36
Legal Matters................................................................36
Experts......................................................................37
</TABLE>
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4
The Fulcrum Fund/SM/
<PAGE>
<TABLE>
<S> <C>
FEDERAL TAX CONSIDERATIONS...................................................37
Introduction.................................................................37
First ING Life Tax Status....................................................37
Taxation of Annuities........................................................37
1. Withdrawals Prior to the Annuity Commencement Date......................37
2. Annuity Payouts After the Annuity Date..................................38
3. Penalty Tax on Certain Withdrawals or Distributions.....................38
Taxation of Individual Retirement Annuities..................................39
Distribution-at-Death Rules..................................................39
Taxation of Death Benefit Proceeds...........................................40
Certificates Owned by Non-Natural Persons....................................40
Section 1035 Exchanges.......................................................40
Assignments..................................................................40
Multiple Certificates Rule...................................................40
Diversification Standards....................................................41
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION.....................41
APPENDIX A...................................................................42
APPENDIX B...................................................................45
Performance Information......................................................45
</TABLE>
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.
- --------------------------------------------------------------------------------
5
The Fulcrum Fund/SM/
<PAGE>
GLOSSARY OF TERMS
AS USED IN THE PROSPECTUS, THE FOLLOWING TERMS HAVE THE INDICATED MEANINGS.
THERE ARE OTHER CAPITALIZED TERMS WHICH ARE EXPLAINED OR DEFINED IN OTHER PARTS
OF THIS PROSPECTUS.
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 consisting 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 Annuity 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.
- --------------------------------------------------------------------------------
6
The Fulcrum Fund/SM/
<PAGE>
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 (OR BENEFICIARIES) -- The person (or persons) 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 page 2.
DEATH BENEFIT -- The amount actually payable due to the death of the Owner
during the Accumulation Period.
DIVISION -- A sub-account of the Variable Account, the assets of which are
invested in a corresponding Portfolio, or the Guaranteed Interest Division.
DIVISION ACCUMULATION VALUE -- The value under a Contract in a particular
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.
NASD -- The National Association of Securities Dealers, Inc.
NET PURCHASE PAYMENTS -- Total Purchase Payments made less Gross Partial
Withdrawals taken.
OWNER -- The person or persons who own the Certificate and who 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.
- --------------------------------------------------------------------------------
7
The Fulcrum Fund/SM/
<PAGE>
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.
SEC -- The United States Securities and Exchange Commission.
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 net asset value of the shares of any
of the Portfolios and unit values of the Divisions are determined. Valuation
Dates currently occur on each day on which the New York Stock Exchange and First
ING Life's Customer Service Center are open for business, except for days on
which a Division's corresponding Portfolio does not value its shares.
VALUATION PERIOD -- The period that starts at 4 p.m. Eastern Time on a Valuation
Date and ends at 4 p.m. 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 and the Certificates from the assets in our General Account.
- --------------------------------------------------------------------------------
8
The Fulcrum Fund/SM/
<PAGE>
FEE TABLE
The purpose of the following tables is to assist you in understanding the
various costs and expenses that you may bear directly or indirectly. The tables
reflect charges under the Certificates, expenses of the Divisions and expenses
of the Portfolios. In addition to the expenses and charges described below, we
may 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
31. We may reduce certain charges under certain group or sponsored arrangements.
See Group or Sponsored Arrangements, page 19.
TRANSACTION EXPENSES
Sales Load Imposed on Purchase Payments............................0%
Surrender Charge/1/
<TABLE>
<CAPTION>
Anniversaries Since Surrender Charge as a Percentage of
Purchase Payment Was Made Purchase Payment Withdrawn
<S> <C>
0.....................................7%
1.....................................6%
2.....................................5%
3.....................................4%
4.....................................3%
5.....................................2%
6+....................................0%
</TABLE>
Excess Transfer Charge (does not apply to the first 12 transfers
in a Certificate Year)/2/........................................$25
ANNUAL CERTIFICATE FEES
Administrative Charge (does not apply after the Annuity Date)/3/
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..........................1.40%
____________________
/1/ Up to certain limits, partial withdrawals may be taken without incurring a
surrender charge. See Charges Deducted from the Accumulation Value, page 30.
/2/ Any allocation under the Dollar Cost Averaging Option is not considered a
transfer for this purpose. See Dollar Cost Averaging, page 18. After the
Annuity Date, transfers are limited to four each Certificate Year, and no
transfer charge applies. See Excess Transfer Charge, page 31.
/3/ The administrative charge is deducted as of each Anniversary or upon
surrender. See Administrative Charge, page 31.
- --------------------------------------------------------------------------------
9
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<PAGE>
PORTFOLIO ANNUAL EXPENSES (AS A PERCENTAGE OF PORTFOLIO AVERAGE NET ASSETS)/4/
<TABLE>
<CAPTION>
Administration,
Management and Other Total Annual
Portfolio Advisory Fees/5/ Expenses/6/ Expenses/6/
--------- ---------------- ----------- -----------
<S> <C> <C> <C>
The Value Portfolio 0.80% 0.85% 1.65%
The Growth Portfolio 0.80% 1.10% 1.90%
The International Growth Portfolio 0.80% 1.23% 2.03%
The Global Strategic Income Portfolio 0.80% 1.23% 2.03%
The Global Interactive/Telecomm Portfolio 0.90% 0.96% 1.76%
</TABLE>
FEE EXAMPLES
The following examples depict the dollar amount of expenses that would be
incurred under this Certificate assuming a $1,000 initial Purchase Payment and
5% annual return on assets. The expense amounts presented are derived from a
formula which allows the maximum $30 annual administrative charge to be
expressed as a percentage of the estimated average Certificate account size.
Since the estimated average Certificate account size for Certificates issued
under this prospectus is greater than $1,000, the expense effect of the annual
administrative charge is reduced accordingly. Other expenses of the Portfolios
are estimated because the Portfolios have recently begun 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 but are not
reflected in the expenses below. See Taxes on Purchase Payments, page 31. The
annual administrative charge does not apply during the Annuity Period.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
IF YOU SURRENDER YOUR CONTRACT AT IF YOU DO NOT SURRENDER YOUR
----------------
THE END OF THE APPLICABLE TIME CONTRACT OR IF YOU ANNUITIZE AT THE
PERIOD. END OF THE APPLICABLE TIME PERIOD.
- ----------------------------------------------------------------------------------------------------------------------
1 3 5 10 1 3 5 10
DIVISION INVESTING IN: Year Years Years Years Year Years Years Years
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
The Value Portfolio $101 $144 $189 $334 $ 31 $ 94 $159 $334
- ----------------------------------------------------------------------------------------------------------------------
The Growth Portfolio 103 151 201 356 33 101 171 356
- ----------------------------------------------------------------------------------------------------------------------
The International Growth Portfolio 104 155 207 367 34 105 177 367
- ----------------------------------------------------------------------------------------------------------------------
The Global Strategic Income 104 155 207 367 34 105 177 367
Portfolio
- ----------------------------------------------------------------------------------------------------------------------
The Global Interactive/Telecomm 102 147 194 344 32 97 164 344
Portfolio
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
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.
____________________
/4/ The preceding Portfolio expense information was provided to us by the
Portfolios, and we have not independently verified such information. These
Portfolio expenses are not direct charges against Division assets or
reductions from Certificate values; rather, these Portfolio expenses are
taken into consideration in computing each underlying Portfolio's net asset
value, which is the share price used to calculate the unit values of the
Divisions. For a more complete description of the Portfolios' costs and
expenses, see the prospectus for the Trust.
/5/ For the first 12 months of operation, the total advisory fee for Palladian
Advisors, Inc. ("PAI"), the Portfolio Adviser and the Portfolio Managers is
0.80% of average daily net assets for each Portfolio. After that 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.
/6/ Other Expenses and, therefore Total Annual Expenses, have been estimated and
are annualized. See the prospectus for the Trust for complete details.
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SUMMARY OF THE FULCRUM FUND/SM/ VARIABLE ANNUITY
GENERAL DESCRIPTION
This prospectus provides you with the necessary information to make a decision
on purchasing the Fulcrum Fund/SM/ Variable Annuity offered by First ING Life
and funded by the Variable Account as well as by our General Account.
This summary provides 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, constitute 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.
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 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.
Purchase Payments or Accumulation Value may be allocated among one or more of
five Divisions of the Variable Account, a separate account of First ING Life, or
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. Furthermore, all dividends,
interest and capital gains generally accumulate free from annual taxation under
current tax law until distributed.
Each Division of the Variable Account invests its assets without sales charge in
a corresponding mutual fund Portfolio of The Palladian Trust (the "Trust"). The
Portfolios have their own distinct investment objectives and are managed by
Palladian Advisors, Inc. ("PAI"). The Trust and PAI have retained several
Portfolio Managers to manage the assets of each Portfolio. PAI has also retained
Tremont Advisors, Inc., as Portfolio Advisor, to research, evaluate, recommend
and monitor the Portfolio Managers. Each Portfolio 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 Portfolio
Manager performs for you. Each Portfolio Manager has also invested $1 million in
the Portfolio it manages, so it is managing a portion of its money along with
your money. You bear the investment risk for funds invested in the Divisions of
the Variable Account; you receive the benefits from favorable experience but
also bear the risk of poor investment experience. These Portfolios are available
only to serve as the underlying investment for variable annuity and variable
life insurance companies and to certain qualified pension and retirement plans.
They are not directly available to individual investors. For more information
regarding the Variable Account, the Divisions and Portfolios, see The Variable
Account, page 14, and The Palladian Trust, page 15.
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. For more information about the Guaranteed Interest
Division, see THE GUARANTEED INTEREST DIVISION, page 27.
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 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
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The Fulcrum Fund(SM)
<PAGE>
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 37.
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 allocation instructions. All percentage allocations must be in whole
numbers. We allocate any additional Purchase Payments among the Divisions in
accordance with your most recent allocation instructions, 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 or by
telephone, if the proper telephone authorization form is on file with us. See
Crediting and Allocation of Purchase Payments, page 17.
You may choose to have a specified dollar amount transferred from the Division
investing in the Global Strategic Income Portfolio 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, page 18.
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, and no transfer charge will be assessed.
GUARANTEED DEATH BENEFIT
The Certificate provides a Guaranteed Death Benefit to the Beneficiary if the
Owner dies prior to the Annuity Date. For more details, See Guaranteed Death
Benefit, page 20, and Death Benefit Proceeds, page 21.
PARTIAL WITHDRAWALS
After the Free Look period, prior to the Annuity Date and while the Certificate
is in effect, you may take partial withdrawals under any of three options: the
Demand Withdrawal Option, the Systematic Income Program or the IRA Income
Program. See Partial Withdrawals, page 24.
A penalty tax may be assessed upon partial withdrawals. See Taxation of
Annuities, page 37.
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. See Surrendering to Receive the
Cash Surrender Value, page 26.
A penalty tax may be assessed upon surrender. See Taxation of Annuities, page
37.
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.
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<PAGE>
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 Division 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 19. 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,
reduced 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 30.
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 32.
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 32.
During the Accumulation Period, we deduct an annual 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. We also deduct
this charge when determining the Cash Surrender Value payable if you surrender
the Certificate prior to the end of a Certificate Year. See Administrative
Charge, page 31.
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 31.
Generally, taxes on Purchase Payments, if any, 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 31.
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.
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<PAGE>
CONDENSED FINANCIAL INFORMATION
The audited financial statements of First ING Life at December 31, 1995 and
1994, and for each of the two years in the period ended December 31, 1995, (as
well as the auditor's 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, 1994 and
1993, and for each of the two years in the period ended December 31, 1994, (as
well as the auditors' reports thereon) prepared in accordance with accounting
practices prescribed or permitted by the Insurance Department of the State of
New York. There are no financial statements included for the Variable Account
because, as of December 31, 1995, 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.
The name of the company was changed in 1994 to First ING Life Insurance Company
of New York. Our headquarters are located at 225 Broadway, Suite 1901, New York,
NY 10007. Our total assets exceeded $33 million, and our shareholder's equity
exceeded $21 million, on a generally accepted accounting principles basis as of
December 31, 1995. We are admitted to do business in twenty states and the
District of Columbia. Our primary current focus is the marketing of direct life
insurance and annuity business.
First ING Life actively manages its General Account investment portfolio to meet
both long-term and short-term contractual obligations. The General Account
portfolio invests primarily in investment-grade bonds and low-risk policy
loans.
In 1993, the company was purchased and became a wholly owned indirect subsidiary
of ING Groep, N.V. ("ING"), one of the world's three largest diversified
financial services organizations. ING is headquartered in Amsterdam,
Netherlands, and had consolidated assets exceeding $247 billion on a Dutch
(modified U.S.) generally accepted accounting principles basis as of December
31, 1995.
The principal underwriter and distributor of the Contract and Certificates is
ING America Equities, Inc. ("ING America Equities"), an affiliate of First ING
Life. ING America Equities is registered as a broker-dealer with the SEC and is
a member of the NASD. The current address for ING America Equities is 1290
Broadway, Attn: Variable, Denver, Colorado 80203-5699.
CUSTOMER SERVICE CENTER
Financial Administrative Services Corporation provides administrative services
for First ING Life at our Customer Service Center at P.O. Box 173763, Denver, CO
80217-3763 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.
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The Fulcrum Fund(SM)
<PAGE>
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 chargeable with liabilities
arising out of any other business we may conduct. 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. Before making
any such transfer, First ING Life will consider any possible adverse effect the
transfer might have on the Variable 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. 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 directly to individual investors.
THE PALLADIAN TRUST
Currently, each Division of the Variable Account offered pursuant to this
prospectus invests in a corresponding 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. 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 that 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. 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 Division 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
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The Fulcrum Fund/SM/
<PAGE>
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 Portfolio -- 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 Portfolio -- seeks to make money for investors by investing
primarily in securities selected for their long-term growth prospects.
International Growth Portfolio -- seeks to make money for investors by
investing internationally for long-term capital appreciation, primarily in
equity securities.
Global Strategic Income Portfolio -- 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 Portfolio -- 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.
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<PAGE>
FACTS ABOUT THE CONTRACT AND THE CERTIFICATES
YOUR RIGHT TO CANCEL THE 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 form 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. See
CERTIFICATE CHARGES AND FEES, page 30.
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 19. 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
page 2. We will send you a confirmation notice upon receipt. Make checks payable
to The Fulcrum Fund/SM/ 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 Period of receipt at our Customer Service Center.
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The initial Purchase Payment is allocated among any or all the available
Divisions according to your most recent allocation instructions. All percentage
allocations must be in whole numbers.
We allocate any additional Purchase Payments among the Divisions in accordance
with your most recent allocation instructions, 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 or by
telephone, if the proper telephone authorization form is on file with us.
DOLLAR COST AVERAGING
The main objective of Dollar Cost Averaging is to protect your investment from
short-term price fluctuations. Because 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. While it may not achieve its intended results, this plan of
investing attempts to 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 Division
Accumulation Value in the Divisions investing in the Global Strategic Income
Portfolio, 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 Division
Accumulation Value of the Division investing in the Global Strategic Income
Portfolio 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 Division Accumulation Value of the Division
investing in the Global Strategic Income Portfolio 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 notifying 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.
If you elect telephone privileges in an application or send written notice to
our Customer Service Center requesting this privilege, you may make changes to
your Dollar Cost Averaging options by telephoning our Customer Service Center.
See Telephone Privileges, page 29.
AUTOMATIC REBALANCING
Automatic Rebalancing provides a method for maintaining a balanced approach to
investing your Accumulation Value and simplifying the process of asset
allocation over time. However, it may not achieve its intended results. 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
Automatic Rebalancing allocation instructions to achieve the transfer.
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When you apply for the Certificate, or at any subsequent time during the
Accumulation Period, you may elect Automatic Rebalancing by electing this
feature on the Certificate application, completing the client service
application, notifying us in writing or by telephoning us, if the proper
telephone authorization is on file with us. Automatic Rebalancing allows you to
match your Division 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 any Division 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
Division 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 notification at our Customer
Service Center and the Free Look Period has ended.
You may change the allocation percentages for Automatic Rebalancing at any time
and your Accumulation Value will be reallocated as of the Valuation Date that we
receive your allocation instructions at our Customer Service Center. Any
reduction in your allocation to the Guaranteed Interest Division, however, will
be considered a transfer from that Division and, therefore, must comply with the
maximum transfer amount and time limitations on transfers from the Guaranteed
Interest Division, as described in Your Right to Transfer Among Divisions, page
23. We will not process an Automatic Rebalancing allocation request which is in
conflict with these provisions.
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.
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.
If you have elected telephone privileges in an application or sent written
notice to our Customer Service Center requesting this privilege, you may make
changes to your Automatic Rebalancing option by telephoning our Customer Service
Center. See Telephone, page 29.
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 Division
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 30. 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
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The Fulcrum Fund(SM)
<PAGE>
covering a group of individuals on a group basis or special exchange programs
First ING Life may offer, including to officers, directors and employees (or
their families) of First ING Life and its affiliates. 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, and any such reductions will apply uniformly to all
Certificates issued under that Contract. 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 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 and its
affiliates. ING America Equities is an affiliate of First ING Life. It is
registered with the SEC as a broker-dealer and is a member of the NASD. First
ING Life pays ING America Equities for acting as principal underwriter under a
distribution agreement. The offering of the Certificate will be continuous.
ING America Equities 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
6.0%). Compensation arrangements may vary among broker-dealers. In addition, we
may also pay override payments, wholesaler fees and training allowances. The
writing registered representative 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 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 Guaranteed 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 6/th/ Anniversary for the duration
of the Certificate (i.e., the 6/th/, 12/th/, 18/th/, etc.).
The Death Benefit payable to the Beneficiary is the Guaranteed Death Benefit as
calculated above minus taxes incurred but not deducted.
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<PAGE>
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 39. 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 AND ANNUITY, page 32. 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 37.
YOUR ACCUMULATION VALUE
The Accumulation Value of your Certificate is the sum of the Division
Accumulation Values of all the Divisions of the Variable Account in which your
Certificate is invested, plus any Division Accumulation Value of the Guaranteed
Interest Division. Your Division Accumulation Value in 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 32.
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.
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<PAGE>
For a description of the method of calculating the Accumulation Unit Value, see
the Statement of Additional Information.
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:
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 mortality and expense risk charge for that Division for each
day in the Valuation Period; minus
6) 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.
DIVISION ACCUMULATION VALUE OF EACH DIVISION OF THE VARIABLE ACCOUNT
The Division 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 Division 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 Division Accumulation Value transferred to such Division during the
current Valuation Period; minus
4) Any Division 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 annual annual administrative charge applicable to
that Division if an Anniversary occurs during the Valuation Period.
DIVISION ACCUMULATION VALUE OF THE GUARANTEED INTEREST DIVISION
The Division 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 Division Accumulation Value of the Guaranteed
Interest Division is calculated as follows:
1) The Division Accumulation Value of the Guaranteed Interest Division as
of the end of the preceding Valuation Period plus earned interest
during the Valuation Period; plus
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22
The Fulcrum Fund(SM)
<PAGE>
2) Any additional Purchase Payments allocated to the Guaranteed Interest
Division during the current Valuation Period; plus
3) Any Division Accumulation Value transferred to the Guaranteed Interest
Division during the current Valuation Period; minus
4) Any Division 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 annual annual 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:
<TABLE>
<CAPTION>
Accumulation Period Annuity Period
------------------- --------------
<S> <C> <C>
Free Transfers 12 4
Total Number of Transfers Permitted Unlimited 4
Excess Transfer Charge $25 for each transfer in excess of 12 Not Applicable
</TABLE>
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. For example, we may refuse to accept
or to place certain restrictions on transfers made by third-party agents acting
on behalf of multiple Owners or made pursuant to market timing services when we
determine, at our sole discretion, that such transfers will be detrimental to
the Portfolios and the Owners as a whole. Such transfers may cause increased
trading and transaction costs, disruption of planned investment strategies,
forced and unplanned portfolio turnover, and lost opportunity costs and may
subject the Portfolios to large asset swings that diminish the Portfolios'
ability to provide maximum investment return to all Owners.
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:
1) 25% of the balance in the Guaranteed Interest Division immediately
prior to the transfer;
2) $100; or
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The Fulcrum Fund(SM)
<PAGE>
3) 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 involving the Divisions of the Variable Account is made, 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 29.
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 Partials Withdrawals, page 26.
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 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 30, and The Amount You May Withdraw
Without a Surrender Charge, page 26.
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 19.
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 taxpayer identification number ("TIN") or
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 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 29.
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
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 26.
Unless you specify otherwise, the amount of the partial withdrawal will be taken
from each Division in the same proportion that the amount of Division
Accumulation Value in that Division bears to the Accumulation Value in all of
the Divisions immediately before the withdrawal.
A surrender charge could be incurred for demand withdrawals in excess of certain
amounts. See Charges Deducted from the Accumulation Value, page 30, The Amount
You May Withdraw Without a Surrender Charge, page 26, and Appendix A, page
42.
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 value in
the Guaranteed Interest Division to the total Accumulation Value immediately
before the withdrawal.
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<PAGE>
SYSTEMATIC INCOME PROGRAM
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 Division 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:
<TABLE>
<CAPTION>
Frequency Maximum Income Payment Percentage
--------- ---------------------------------
<S> <C>
Monthly..............................1.25% of Accumulation Value
Quarterly............................3.75% of Accumulation Value
</TABLE>
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. See Appendix A, page 42.
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.
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.
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 notifying 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 unless the minimum distributions are
otherwise satisfied. See Taxation of Individual Retirement Annuities, page 39.
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.
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<PAGE>
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 receipt 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. Any unused portion of a partial withdrawal amount
not subject to a surrender charge is non-cumulative and does not apply to a
partial withdrawal made in subsequent Certificate years.
Demand withdrawals and any Systematic Income Program partial withdrawals which
occur in the same Certificate Year as a demand withdrawal are deemed to be made
in the following order:
1) Any Earnings in the Certificate;
2) 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;
3) 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;
4) Any Purchase Payments remaining on a first-in, first-out basis.
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
30.
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 19.
For an example illustrating how we determine the surrender charge (and the
amounts that may be withdrawn without a surrender charge) for a hypothetical
series of demand withdrawals, see Appendix A, page 42.
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 an imposition of a tax penalty of 10% of the taxable
portion withdrawn. Please refer to FEDERAL TAX CONSIDERATIONS, page 37, 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
31);
2) We deduct any surrender charge (see Surrender Charge, page 30);
3) We deduct the $30 annual administrative charge, if any, due at the end
of the Certificate Year (see Administrative Charge, page 31).
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<PAGE>
For an example illustrating how we determine the Cash Surrender Value, see
Appendix A, page 42.
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 Make Payouts, page 27.
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 taxpayer identification number ("TIN") or
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 32.
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 in
proper form at our Customer Service Center. However, we may postpone the
processing of any such transactions for any of the following reasons:
1) When the New York Stock Exchange ("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 for up to six months the payout of any partial withdrawal or
Proceeds other than death benefits from the Guaranteed Interest Division
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 interests at a declared rate. See Your Right to Transfer Anong
Divisions, page 23. 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 related 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 your
Certificate.
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.
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<PAGE>
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.
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 39, 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 20.
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 32.
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.
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<PAGE>
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. We will pay
Proceeds according 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 FERERAL TAX CONSIDERATIONS,
page 37.
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 at the address shown on the cover.
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, change your Dollar Cost Averaging and Automatic Rebalancing options,
or request partial withdrawals by telephoning our Customer Service Center.
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The Fulcrum Fund(SM)
<PAGE>
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 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, and we will provide you notice if we do
so.
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. There may be tax consequences for an assignment. IRA Certificates may
not be assigned. See Assignments, page 40.
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 19. 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.
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<PAGE>
<TABLE>
<CAPTION>
Anniversaries Since Purchase Surrender Charge as a Percentage of
--
Payment Was Made Purchase Payment Withdrawn
----------------- --------------------------
<S> <C>
0 7%
1 6%
2 5%
3 4%
4 3%
5 2%
6+ 0%
</TABLE>
Up to certain limits, partial withdrawals may be taken without a surrender
charge. See The Amount You May Withdraw Without a Surrender Charge, page 26.
Any applicable surrender charges will reduce the Division Accumulation Value of
each Division in the same proportion that the Division 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 covers a portion of our
administrative expenses.
The administrative charge is allocated to a Division in the same proportion that
the amount of Division Accumulation Value in that Division bears to the total
Accumulation Value immediately after the withdrawal.
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
Division 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 16, 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, if any, 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
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<PAGE>
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 0.90% 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, as described in the Fee
Table on page 9. 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. Your elected Annuity Date must follow
the second Anniversary but may not be later than the Annuitant's 85/th/
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 85/th/
birthday. For an IRA Certificate, distribution must commence no later than April
1/st/ of the calendar year following the calendar year in which you attain Age
70 1/2 unless these minimum distributions are otherwise satisfied. 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.
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<PAGE>
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 35. 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
Division 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 Division Accumulation Value invested in the
Guaranteed Interest Division will be allocated among the Divisions of the
Variable Account in the same proportion that the Division Accumulation Value of
each Division bears to the total Division 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 receive payouts
less frequently than monthly, the payout amount is then adjusted according to
the factors in Payouts Other Than Monthly, page 35.
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 Owner may transfer, up to four times each Certificate Year, 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 Division
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 receive
payouts less frequently than monthly, the payout amount is adjusted according to
the factors in Payouts Other Than Monthly, page 35.
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<PAGE>
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 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.
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 33. 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 33. 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.
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<PAGE>
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 2/3 of the installment dollar amount while both Annuitants
were living, excluding any excess interest as described in Fixed Annuity Payout,
page 33.
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 2/3 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 11.839, 5.963 or 2.993 if
the Benchmark Total Return is 3%, and by 11.736, 5.939 or 2.988 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 15. 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 1940 Act.
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 Division 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
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The Fulcrum Fund(SM)
<PAGE>
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,
possibly 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 semi-annual report to Owners.
Under the 1940 Act, certain actions affecting the Variable Account (such as some
of those described under Changes Within The Variable Account, page 16) may
require Owner approval. In that case, you will be entitled to one vote for every
$100 of Division Accumulation 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 proportion 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. ING
America Equities, the principal underwriter and distributor of the contracts, is
not engaged in any litigation of any material nature.
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.
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<PAGE>
EXPERTS
The financial statements of First ING Life at December 31, 1995 and 1994, and
for each of the three years in the period ended December 31, 1995, have been
audited by Ernst & Young 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 report given upon the authority of such firm 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 40, and Diversification
Standards, page 41.
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 payments less any amounts previously received under
the Certificate which were excluded from the taxpayer's gross income at the time
of their receipt. For these purposes, the "investment in the Certificate" is not
affected by the Owner's or Annuitant's death. That is, the investment in the
Certificate remains the amount of any Purchase Payments made which were not
excluded from
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<PAGE>
gross income. 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:
1) 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;
2) attributable to the taxpayer's becoming totally disabled within the
meaning of Code Section 72(m)(7);
3) 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;
4) from an IRA;
5) allocable to investment in the Certificate prior to August 14, 1982;
6) under a qualified funding asset (as defined in Code Section 130(d));
7) under an immediate annuity contract; or
8) 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 3) 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 3) 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.
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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
1/st/ 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 receive such
portion 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.
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<PAGE>
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.
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.
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<PAGE>
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 ensure that the
Certificate continues to be treated as an annuity Certificate for Federal income
tax purposes.
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
<S> <C>
FIRST ING LIFE.................................................................. 2
THE ADMINISTRATOR............................................................... 2
PERFORMANCE INFORMATION......................................................... 2
SEC Standard Average Annual Total Return for Non-Money Market Divisions......... 2
Accumulation Unit Value......................................................... 3
Illustration of Calculation of Accumulation Unit Value.......................... 3
Illustration of Purchase of Units (Assuming No State Tax on Purchase Payments).. 3
Determination of Annuity Payouts................................................ 3
IRA INCOME PROGRAM.............................................................. 6
OTHER INFORMATION............................................................... 6
FINANCIAL STATEMENTS OF FIRST ING LIFE INSURANCE COMPANY OF NEW YORK............ 6
</TABLE>
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<PAGE>
APPENDIX A
EXAMPLE 1: HYPOTHETICAL ILLUSTRATION OF SYSTEMATIC INCOME PROGRAM WITHDRAWALS
The following example illustrates how Systematic Income Program partial
withdrawals would work if you elected a monthly withdrawal program with the
maximum monthly income payment percentage of 1.25% of Accumulation Value, based
on hypothetical Accumulation Values as shown:
<TABLE>
<CAPTION>
Accumulation Value Systematic Income
Month At Time of Withdrawal Program Withdrawal Amount
----- --------------------- -------------------------
<S> <C> <C>
1 $8,500.00 $106.25
2 $8,425.00 $105.31
3 $8,700.00 $108.75
4 $8,150.00 $101.87
5 $7,900.00 $ 98.75
</TABLE>
Because the fifth monthly Systematic Income Program withdrawal amount would be
less than $100 (and is based on the maximum monthly percentage of 1.25%), the
Systematic Income Program would be canceled after this withdrawal and no
withdrawal would be made for the sixth and subsequent months.
For additional information about the Systematic Income Program, see Systematic
Income Program, page 25.
EXAMPLE 2: HYPOTHETICAL ILLUSTRATION OF A SERIES OF DEMAND WITHDRAWALS
The following example illustrates how we would determine the surrender charge
and the amounts that could be withdrawn without a surrender charge for a
hypothetical series of three demand withdrawals made in the third Certificate
Year.
For example, assume that:
1) An Owner has made an initial Purchase Payment of $30,000 to a
Certificate;
2) The Owner has not subsequently made any additional Purchase Payments to
the Certificate;
3) The Owner has not taken any partial withdrawals during the first two
Certificate Years; and
4. The Accumulation Value of the Certificate as of the second Certificate
Anniversary is $34,000.
The surrender charges associated with each of the following three hypothetical
demand withdrawals would therefore be as follows. For more information, see
Demand Withdrawal Option, page 24, and The Amount You May Withdraw Without a
Surrender Charge, page 26.
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<PAGE>
<TABLE>
<CAPTION>
First Gross Second Gross Third Gross
Demand Withdrawal Demand Withdrawal Demand Withdrawal
----------------- ----------------- -----------------
<S> <C> <C> <C>
1) Hypothetical Accumulation $34,200 $33,000/1/ $29,400/2/
Value Before Demand Withdrawal
2) 15% Of The Accumulation Value As Of $ 5,100 $ 3,100/3/ $ 0/4/
The Last Certificate Anniversary
(Less Any Gross Partial
Withdrawals Already Made
During The Certificate Year
That Are Not Considered To
Be Withdrawals Of Purchase
Payments
3) Amount Of Accumulation $ 4,200/5/ $ 3,000/6/ $ 400/7/
Value Attributable To Earnings
4) Gross Demand Withdrawal $ 2,000 $ 4,000 $ 3,000
Requested/8/
5) Amount Withdrawn Attributable To $ 2,000 $ 3,000 $ 400
Any Earnings In The Certificate
6) Amount Withdrawn Attributable To $ 0 $ 0 $ 0
Purchase Payments Held For At Least
Five Full Certificate Years Since The
Certificate Anniversary At The End Of
The Certificate Year In Which The
Purchase Payment Was Made
7) Amount Withdrawn Attributable To The $ 0 $ 100 $ 0
Amount By Which 2) Exceeds 3)
8) Amount Withdrawn Attributable To $ 0 $ 900 $ 2,600
Any Purchase Payments Remaining On
A First-In, First-Out Basis
9) Surrender Charge $ 0 $ 45 $ 130
[8) Multiplied By 5%, The Applicable
Surrender Charge Percentage For
Surrenders Of Purchase Payments
Made During The Third Certificate
Year.]
10) Amount Of Net Demand Withdrawal $ 2,000 $ 3,930 $ 2,845
[4) minus 9)]
</TABLE>
_______________________
/1/ Accumulation Value after the first Net Demand Withdrawal ($32,200) plus any
Earnings since that time, assumed to be $800.
/2/ Accumulation Value after the second Net Demand Withdrawal ($29,000) plus any
Earnings since that time, assumed to be $400.
/3/ $5,100 minus $2,000, the amount of Gross Partial Withdrawals already made
during the Certificate Year that are not considered to be withdrawals of
Purchase Payments.
/4/ $5,100 minus $2,000 minus $3,100, the amount of Gross Partial Withdrawals
already made during the Certificate Year that are not considered to be
withdrawals of Purchase Payments.
/5/ Current Accumulation Value ($34,200) minus amount of initial Purchase
Payment ($30,000).
/6/ Cumulative Earnings remaining after the first Demand Withdrawal ($2,200)
plus the Earnings since that time, assumed to be $800.
/7/ Cumulative Earnings remaining after the first and second Demand Withdrawals
($0) plus the Earnings since that time, assumed to be $400.
/8/ We would deem the Gross Demand Withdrawal to be made in the following order
-- 5), 6), 7) and 8) -- for purposes of determining the amount of any
surrender charge. Withdrawals deemed to be taken from 5), 6) or 7) are not
subject to a surrender charge.
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<PAGE>
EXAMPLE 3: HYPOTHETICAL ILLUSTRATION OF A FULL SURRENDER
The following example illustrates how we impose the surrender charge and
administrative charge on full surrenders to arrive at the Cash Surrender Value.
For example, assuming that:
1) An Owner has made an initial Purchase Payment of $30,000 to a Certificate;
and
2) The Owner has not made any additional Purchase Payments to the
Certificate;
the Owner's Cash Surrender Value would be as follows, based on hypothetical
Accumulation Values, if the Certificate was surrendered at the end of the
applicable time periods.
<TABLE>
<CAPTION>
If You
Surrender Your Hypothetical Purchase Surrender Cash
Certificate in Accumulation Earnings Payment Charge Surrender Administrative Surrender
Certificate Year Value Withdrawn Withdrawn Percentage Charge Charge Value
- ---------------- ----- --------- --------- ---------- ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
1 $31,000 $ 1,000 $30,000 7% $2,100 $30 $28,870
2 $40,000 $10,000 $30,000 6% $1,500 $30 $38,470
6 $60,000 $30,000 $30,000 2% $ 600 $30 $59,370
8 $70,000 $40,000 $30,000 $0% $ 0 $30 $69,970
</TABLE>
For more information, see Surrender Charge, page 30, and Administrative Charge,
page 31.
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APPENDIX B
PERFORMANCE INFORMATION
We 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"), the Shearson/Lehman
Intermediate Government/Corporate Bond Index, the Shearson/Lehman Long-Term
Government/Corporate Bond Index; the Donoghue Money Fund Average, the U.S.
Treasury Note Index, 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, Variable
Annuity Research Data Service ("VARDS") or Morningstar, Inc. -- three 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.
Normally these rankings and ratings are published by independent tracking
services and publications of general interest including, but not limited to:
Lipper, VARDS, Morningstar, Donoghue, magazines such as Money, Forbes,
Kiplinger's Personal Finance Magazine, Financial World, Consumer Reports,
Business Week, Time, Newsweek, National Underwriter, U.S. News and World
Report, On Wall Street, Smart Money, Investment Advisor, Securities Industry
Management, Life Insurance Selling, Financial Planning; rating services such
as LIMRA, Value, Best's Agent Guide, Western Annuity Guide, Comparative Annuity
Reports, and other publications such as The Wall Street Journal,
Barron's, Investor's Daily, and Standard & Poor's Outlook.
Performance information for any Division of the Variable Account will reflect
only the performance of a hypothetical Certificate under which the Division
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 one, five or ten years (or, if less, up to the life
of the Division). 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. In addition, average annual total return quotation may
also be accompanied by total return quotation, computed on the same basis as
described above, except deductions will not include the surrender charge.
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.
The Variable Account may also report other information,including the
effect of tax-deferred compounding on a Division's investment returns, or
returns in general, which may be illustrated by tables, graphs, or charts. All
income
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<PAGE>
and capital gains derived from Division investments are reinvested and can lead
to substantial long-term accumulation of assets, provided that the Division
investment experience exceeds 1.40% on an annual basis over many years.
First ING Life is also ranked and rated by independent financial rating
services, which may include A. M. Best, Duff & Phelps, Moody's, Standard &
Poor's and Weiss Research, Inc. The purpose of these ratings is to reflect the
financial strength or claims-paying ability of First ING Life. The ratings
are not intended to reflect the investment experience or financial strength of
the Variable Account.
- --------------------------------------------------------------------------------
46
The Fulcrum Fund(SM)
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE FULCRUM FUND(SM) 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(SM) 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 YORK, CUSTOMER SERVICE CENTER, OR TELEPHONE
1-800-249-9099.
TABLE OF CONTENTS
<TABLE>
<S> <C>
FIRST ING LIFE.................................................................. 2
THE ADMINISTRATOR............................................................... 2
PERFORMANCE INFORMATION 2
SEC Standard Average Annual Total Return for Non-Money Market Divisions......... 2
Accumulation Unit Value......................................................... 3
Illustration of Calculation of Accumulation Unit Value.......................... 3
Illustration of Purchase of Units (Assuming No State Tax on Purchase Payments).. 3
Determination of Annuity Payouts 3
IRA INCOME PROGRAM OPTION....................................................... 6
OTHER INFORMATION............................................................... 6
FINANCIAL STATEMENTS OF FIRST ING LIFE INSURANCE COMPANY OF NEW YORK............ 6
</TABLE>
Date of Prospectus: May 1, 1996
Date of Statement of Additional Information: May 1, 1996
<PAGE>
FIRST ING LIFE
First ING Life's parents include ING America Insurance Holdings, Inc., a
Delaware corporation whose principal business is to act as the holding company
for ING Groep, N.V.'s U.S. insurance companies.
First ING Life's indirect intermediate parents, ING Insurance International B.V.
and ING Verzekeringen N.V., are Dutch insurance and financial corporations.
First ING Life's ultimate parent, ING 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, currently ranging from 0% to 3.5%
(5% in the Virgin Islands).
See Appendix B, 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, 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, 5 and 10 year periods (or, if less, up to the life of the
Division) for which performance is required to be
- --------------------------------------------------------------------------------
2
<PAGE>
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 Division 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):
<TABLE>
<CAPTION>
ILLUSTRATION OF CALCULATION OF ACCUMULATION UNIT VALUE
<S> <C> <C>
1) AUV for the Division at the end of the preceding Valuation Period $5.00000000
2) Net asset value per share of the Portfolio at the end of preceding Valuation Period $ 25.00
3) Net asset value per share of the Portfolio at the end of current Valuation Period $ 25.50
4) Dividends and capital gains declared and reinvested in the Portfolio during the current Valuation Period $ 0.55
5) Charge for taxes per share in the Portfolio during the current Valuation Period $ 0.05
6) Gross investment return factor = [3) plus 4) minus 5)] divided by 2) 1.04000000
7) Less daily mortality and expense risk charge 0.00003425
8) Less daily asset based administrative charge 0.00000411
9) Accumulation Experience Factor for the current Valuation Period = 6) minus 7) minus 8) 1.03996164
10) AUV for the Division at the end of the current Valuation Period = [1) times 9)] $5.19980822
11) Net Rate of Return for the Division during the current Valuation
Period = [9) minus 1) times 100] 3.996164%
</TABLE>
<TABLE>
<CAPTION>
ILLUSTRATION OF PURCHASE OF UNITS (ASSUMING NO STATE TAX ON PURCHASE PAYMENTS)
<S> <C> <C>
1) Purchase Payment $ 100.00
2) AUV for the Division on the effective date of purchase (see above example) $5.00000000
3) Number of Accumulation Units purchased = [1) divided by 2)] 20.000000
4) AUV for the Division on the Valuation Date following purchase (see above example) $5.19980822
5) Value of the Accumulation Units in the Division for the Valuation Date
following purchase = [3) times 4)] $104.00
</TABLE>
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 Division Accumulation Value invested in the
Guaranteed Interest Division will be allocated among the Divisions of the
Variable Account in the same proportion that the Division Accumulation Value of
- --------------------------------------------------------------------------------
3
<PAGE>
each Division of the Variable Account bears to the total Division 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 receive payouts
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:
1) The value of an Annuity Unit in the Division of the Variable Account from
which the transfer is made; divided by
2) 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:
1) 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
2) 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:
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
<PAGE>
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.
HYPOTHETICAL EXAMPLES
The following illustrations show, by use of hypothetical examples, the
method of determining the Annuity Unit Value and the amount of several variable
Annuity Payments based on one Division.
ILLUSTRATION OF CALCULATION OF ANNUITY UNIT VALUE
<TABLE>
<S> <C>
1) Annuity Unit Value for the Division at the end of the preceding Valuation Period $10.00000000
2) Net asset value per share of the Portfolio at the end of preceding Valuation Period $25.00
3) Net asset value per share of the Portfolio at the end of current Valuation Period $25.50
4) Dividends and capital gains declared and reinvested in the Portfolio during the current Valuation Period $0.55
5) Charge for taxes per share in the Portfolio during the current Valuation Period $0.05
6) GROSS investment return factor = [3) plus 4) minus 5)] divided 2) 1.04000000
7) Less daily mortality and expense risk charge 0.00003425
8) Less daily asset based administrative charge 0.00000411
9) Annuity Experience Factor for the current Valuation Period = [6) minus 7) minus 8)] 1.03996164
10) Daily factor to compensate for Benchmark Total Return of 3% 1.00008099
11) Adjusted Annuity Experience Factor for the current Valuation Period = [9) divided by 10)] 1.03987743
12) Annuity Unit Value at the end of the current Valuation period = [1) times 11)] 10.39877428
</TABLE>
ILLUSTRATION OF VARIABLE ANNUITY PAYMENTS (ASSUMING NO PREMIUM
TAX IS APPLICABLE)
<TABLE>
<S> <C>
1) Number of Accumulation Units at Annuity Date 1,000.00
2) Accumulation Unit Value 12.55548000
3) Adjusted Certificate value [1) times 2)] $12,555.48
4) First monthly annuity payment per $1,000 of adjusted Certificate Value $9.63
5) First monthly annuity payment 3) times 4) divided by 1,000] $120.91
6) Annuity Unit Value 10.39877428
7) Number of Annuity Units = [5) divided by 6)] 11.62726194
8) Assume Annuity Unit Value for second month payment equals 10.50000000
9) Second monthly annuity payment=[7) times 8)] $122.09
10) Assume Annuity Unit Value for third month payment equals 10.60000000
</TABLE>
- --------------------------------------------------------------------------------
5
<PAGE>
<TABLE>
<S> <C> <C>
11) Third monthly annuity payment = [7) times10)] $123.25
</TABLE>
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 unless the minimum
distributions are otherwise satisfied.
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 the First ING Life 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.
- --------------------------------------------------------------------------------
6
<PAGE>
FINANCIAL STATEMENTS
FIRST ING LIFE INSURANCE
COMPANY OF NEW YORK
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
WITH REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
7
<PAGE>
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
CONTENTS
<S> <C>
REPORT OF INDEPENDENT AUDITORS..............................9
AUDITED FINANCIAL STATEMENTS
BALANCE SHEETS..............................................10
STATEMENTS OF OPERATIONS....................................12
STATEMENTS OF STOCKHOLDER'S EQUITY..........................13
STATEMENTS OF CASH FLOWS....................................14
NOTES TO FINANCIAL STATEMENTS...............................15
</TABLE>
- --------------------------------------------------------------------------------
8
<PAGE>
[LETTERHEAD OF ERNST & YOUNG LLP APPEARS HERE]
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, 1995 and 1994, and the related statements
of operations, stockholder's equity, and cash flows for each of the three years
in the period ended December 31, 1995. 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 amount 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, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
As discussed in Note 1 to the financial statements, the Company made certain
accounting changes in 1994 and 1993.
[SIGNATURE OF ERNST & YOUNG APPEARS HERE]
-----------------------------------------
ERNST & YOUNG LLP
Denver, Colorado
April 5, 1996
<PAGE>
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31
1995 1994
----------------
<S> <C> <C>
ASSETS
Fixed maturity investments (Note 3) $19,002 $8,741
Cash 1,010 2,762
Accrued investment income 324 95
Reinsurance recoverable (Note 4):
Paid benefits 2,569 80
Unpaid benefits 1,584 1,912
Prepaid reinsurance premiums (Note 4 and 5) 8,838 9,025
Deferred federal income taxes (Note 6) - 421
Federal income taxes recoverable (Note 6) 9 61
----------------
Total assets $33,336 $23,097
================
</TABLE>
- -------------------------------------------------------------------------------
10
<PAGE>
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31
1995 1994
------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Future policy benefits (Note 4):
Life and annuity reserves $ 8,921 $ 9,105
Unpaid claims 1,583 1,912
-----------------
Total future policy benefits 10,504 11,017
Accounts payable and accrued expenses 895 118
Indebtedness to related parties 156 298
Amounts due to reinsurers (Note 4) 10 757
Deferred federal income taxes (Note 6) 421 -
-----------------
Total liabilities 11,986 12,190
Commitments and contingent liabilities
(Notes 4 and 8)
Stockholder's equity (Note 7):
Common stock, $110 par value:
Authorized - 10,000 shares
Issued and outstanding - 10,000 shares 1,100 1,100
Additional paid-in capital 23,330 14,330
Net unrealized gain (loss) on investments 198 (491)
Retained earnings deficit (3,278) (4,032)
-----------------
Total stockholder's equity 21,350 10,907
-----------------
Total liabilities and stockholder's equity $33,336 $23,097
=================
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
11
<PAGE>
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
YEAR ENDED DECEMBER 31
1995 1994 1993
--------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Revenues:
Reinsurance assumed premiums $ 7,426 $ 7,696 $ 7,497
Reinsurance ceded premiums (7,426) (7,616) (6,159)
---------------------------
0 80 1,338
Net investment income 789 567 294
Net realized (gains) losses on investments 83 (412) (48)
---------------------------
Total revenues 872 235 1,584
Benefits and expenses:
Death benefits 6,765 7,917 6,657
Other benefits 206 163 72
Increase in policy reserves and other funds 3 80 87
Reinsurance recoveries (6,970) (8,080) (5,146)
---------------------------
4 80 1,670
Expenses:
Commissions (344) (402) (327)
Insurance operating expenses 714 753 634
Miscellaneous expense (2) 2 11
---------------------------
Total benefits and expenses 372 433 1,988
Income (loss) before federal income taxes 500 (198) (404)
Federal income tax benefit (expense) (Note 6) 254 46 (82)
---------------------------
Net income (loss) before cumulative effect
of accounting change 754 (152) (486)
Cumulative effect of accounting change
for income tax (Note 1) - - (40)
---------------------------
Net income (loss) $ 754 $ (152) $ (526)
===========================
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
12
<PAGE>
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF STOCKHOLDER'S EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1995 1994 1993
--------------------------
<S> <C> <C> <C>
Common stock:
Balance at beginning and end of year $ 1,100 $ 1,100 $ 1,100
-----------------------------
Additional paid-in capital:
Balance at beginning of year $14,330 $14,330 $12,330
Capital contribution 9,000 - 2,000
-----------------------------
Balance at end of year $23,330 $14,330 $14,330
=============================
Net unrealized gain (loss) on investments:
Balance at beginning of year $ (491) $ - $ -
Adjustment to beginning balance for change
in accounting method used for investments
net of $10 tax benefit (Note 1) - 18 -
Net change in unrealized gain (loss) on
investments, net of tax 689 (509) -
-----------------------------
Balance at end of year $ 198 $ (491) $ -
=============================
Retained earnings (deficit):
Balance at beginning of year $(4,032) $(3,880) $(3,354)
Net income (loss) 754 (152) (526)
-----------------------------
Balance at end of year $(3,278) $(4,032) $(3,880)
=============================
Total stockholder's equity $21,350 $10,907 $11,550
=============================
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
13
<PAGE>
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
STATEMENT OF CASH FLOW
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1995 1994 1993
------------------------------
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income (loss) $ 754 $ (152) $ (526)
Adjustment to reconcile net income (loss) to net cash
provided (used) by operating activities
Increase (decrease) in future policy benefits (513) 423 (2,568)
Net (decrease) increase in federal income taxes 524 (107) 226
Increase in accounts payable, accrued expenses,
and amounts due to reinsurers 29 392 48
Decrease (increase) in accrued investment income (229) 103 (150)
Increase in reinsurance recoverable (2,160) (316) (985)
Decrease (increase) in prepaid reinsurance
premiums 188 47 (5,193)
Net realized (gain) loss on sale of investments (83) 412 43
Other, net 57 97 (140)
-----------------------------
Net cash provided (used) by operating activities (1,433) 899 (9,245)
INVESTING ACTIVITIES
Sales of fixed maturity investments, available for sale 1,075 9,698 -
Maturities of fixed maturity investments, available
for sale 750 - -
Purchase of fixed maturity investments, available
for sale (11,002) (8,277) -
Sale, maturity or repayment of fixed maturity
investments - - 69,562
Purchase of fixed maturity investments - - (62,858)
------------------------------
Net cash provided (used) by investing activities (9,177) 1,421 6,704
FINANCING ACTIVITIES
Increase (decrease) in indebtedness to related parties (142) 256 42
Capital contribution 9,000 - 2,000
-----------------------------
Net cash provided by financing activities 8,858 256 2,042
-----------------------------
Net increase (decrease) in cash (1,752) $ 2,576 (499)
Cash at beginning of year 2,762 186 685
-----------------------------
Cash at end of year $1,010 $ 2,762 $ 186
=============================
</TABLE>
See accompanying notes
- --------------------------------------------------------------------------------
14
<PAGE>
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. SIGNIFICANT AND ACCOUNTING POLICIES
NATURE OF OPERATIONS
First ING Life Insurance Company of New York (the Company, formerly known as the
Urbaine Life Reinsurance Company) is a wholly-owned subsidiary of Security Life
of Denver Insurance Company and is ultimately a part of the ING Groep, N.V.
organization based in the Netherlands. Currently, the Company's operations are
primarily limited to assuming existing closed blocks of business from various
insurance companies and retroceding the business to certain other reinsurers.
The Company receives compensation for administering these reinsurance contracts.
The reinsurance contracts are comprised of traditional life and accident and
health products. The Company intends to enter the direct variable insurance
market in the state of New York in the near future.
The significant accounting policies followed by the Company that materially
affect the financial statements are summarized below:
BASIS OF PRESENTATION
The accompanying consolidated 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.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
ACCOUNTING CHANGES
In May 1993, the Financial Accounting Standards Board (FASB) 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 FASB 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.
- --------------------------------------------------------------------------------
15
<PAGE>
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ACCOUNTING CHANGES (CONTINUED)
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.
INVESTMENTS
Investments are presented on the following bases:
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 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
investment 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.
- --------------------------------------------------------------------------------
16
<PAGE>
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECOGNITION OF PREMIUM REVENUES
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 over the premium-paying
period.
FUTURE POLICY BENEFITS
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% at both December 31, 1995 and 1994. The liabi lities
calculated using this method are not materially different than liabilities
calculated using generally accepted accounting principles.
UNPAID CLAIMS
The liabilities for unpaid claims include estimates of amounts due on reported
claims and claims that have been incurred but were not reported as 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 1995, $0 in 1994 and $182,000 in
1993.
- --------------------------------------------------------------------------------
17
<PAGE>
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. FAIR VALUE OF FINANCIAL INSTRUMENTS
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.
Accordingly, the aggregate fair value amounts presented do not represent the
underlying value of the Company.
Life insurance liabilities that contain mortality risk and all nonfinancial
instruments are excluded from the disclosure requirements. However, the fair
value 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 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.
LETTERS OF CREDIT: The Company is the beneficiary of two separate renewable
------------------
letters of credit totaling $11,615,000. These letters of credit have a
market value to the Company of $0 (see Note 9).
The carrying value of all other assets and liabilities approximate their
fair values.
- --------------------------------------------------------------------------------
18
<PAGE>
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. INVESTMENTS
The amortized cost and fair value of investments in fixed maturities are as
follows at December 31, 1995 and 1994:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
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 $12,105 $252 $ 1 $12,356
Corporate securities 3,300 23 6 3,317
Mortgage-backed securities 3,293 36 - 3,329
-----------------------------------------
$18,698 $311 $ 7 $19,002
=========================================
1994 Available for Sale:
U.S. Treasury securities and
obligations of U.S.
government corporations
and agencies $ 2,865 $ 12 $ 75 $ 2,802
Corporate securities 3,335 - 330 3,005
Mortgage-backed securities 3,298 - 364 2,934
-----------------------------------------
$ 9,498 $ 12 $769 $ 8,741
=========================================
</TABLE>
The amortized cost and fair value of investments in fixed maturities at December
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.
- --------------------------------------------------------------------------------
19
<PAGE>
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
-------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Available for Sale:
Due in one year or less $ $
- -
Due after one year through five years 15,395 15,663
Due after five years through ten years 10 10
Mortgage-backed securities 3,293 3,329
-----------------------
$18,698 $19,002
=======================
</TABLE>
Changes in unrealized gains (losses) on investments in fixed maturities for the
years ended December 31 are summarized as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-----------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Gross unrealized gains $ 311 $ 12 $ 26
Gross unrealized losses (7) (769) (58)
-----------------------------
Net unrealized gains (losses) 304 (757) (32)
Deferred income tax (expense) benefit (106) 266 11
-----------------------------
Net unrealized gains (losses) after taxes 198 (491) (21)
Less:
Balance at beginning of year (491) - 57
Adjustment for change in accounting method - 18 -
-----------------------------
Change in net unrealized gains (losses)
on fixed maturities $ 689 $(509) $(78)
=============================
</TABLE>
Major categories of investment income for the years ended December 31, are
summarized as follows.
<TABLE>
<CAPTION>
1995 1994 1993
-----------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Fixed maturities $797 $578 $484
Other investments - - 11
----------------------------
797 578 495
Investment expenses (8) (11) (201)
----------------------------
Net investment income $789 $567 $294
============================
</TABLE>
- --------------------------------------------------------------------------------
20
<PAGE>
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. INVESTMENTS (CONTINUED)
Included as a component of investment expenses is interest expense of $0 in
1995, $0 in 1994 and $182,000 in 1993.
At December 31, 1995, 1994 and 1993 net realized gains (losses) on investments
of $83,000, ($412,000), and ($48,000) respectively were recognized on the sale
of fixed maturities.
Debt and marketable equity securities available-for-sale with fair value at the
date of sale of $1,075,000 and $9,698,000 were sold during 1995 and 1994
respectively. Gross gains of $83,000 and $0 and gross losses of $0 and $412,000
were realized on those sales during 1995 and 1994, respectively.
Proceeds from the sale of investments in fixed maturities during 1993 were
$69,562,000. 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,
1995 and 1994.
At December 31, 1995 and 1994, bonds with an amortized cost of $1,679,000 and
$1,697,000, respectively, were on deposit with various state insurance
departments to meet regulatory requirements.
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 December 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 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.
- --------------------------------------------------------------------------------
21
<PAGE>
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. REINSURANCE (CONTINUED)
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, 1995:
Life insurance in force $ - $ 797,106 $ 797,204 $ 98 N/A
==============================================
Premiums:
Life insurance $ - $ 7,426 $ 7,426 $ 0 N/A
Accident & health insurance - - - - N/A
----------------------------------------------
Total premiums $ - $ 7,426 $ 7,426 $ 0 N/A
==============================================
As of December 31, 1994:
Life insurance in force $ - $ 942,722 $ 942,819 $ 97 N/A
==============================================
Premiums:
Life insurance $ - $ 7,618 $ 7,698 $ 80 9,623%
Accident & health insurance - (2) (2) - N/A
----------------------------------------------
Total premiums $ - $ 7,616 $ 7,696 $ 80 9,620%
==============================================
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 insurance - 29 (3) (32) 10%
----------------------------------------------
Total premiums $ - $ 6,159 $ 7,497 $1,338 561%
==============================================
</TABLE>
5. CONCENTRATIONS OF CREDIT RISK:
At both December 31, 1995 and 1994, the Company held no less-than investment-
grade bonds in its portfolio.
At December 31, 1995 and 1994, $8,600,000 and $8,700,000, respectively, of the
Company's prepaid reinsurance premiums were retroceded to one reinsurer. The
amounts represent 97% of the total prepaid reinsurance premiums at both December
31, 1995 and 1994.
- --------------------------------------------------------------------------------
22
<PAGE>
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. 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 December 31, are as
follows:
<TABLE>
<CAPTION>
1995 1994
------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Deferred tax liabilities:
Cession adjustment $(1,250) $ -
Other (102) (246)
---------------------
Total deferred tax liabilities (1,352) (246)
---------------------
Deferred tax assets:
Tax-basis deferred acquisition costs 581 683
Net operating loss carryforward 350 422
---------------------
Total deferred tax assets 931 1,105
Valuation allowance - (438)
---------------------
Net deferred tax assets 931 667
---------------------
Net deferred tax (liabilities) assets $ (421) $ 421
=====================
</TABLE>
Prior to 1995, 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, a change in judgement about the realization of the deferred tax asset
occurred and the valuation allowance was removed.
The Policyholder's 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, 1995, 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
Policyholder's Surplus Account exceed certain limits or if distributions to the
shareholders exceed amounts in the Shareholder's Surplus Account, to the extent
of such excess amount or excess distributions as determined for income tax
purposes, amounts in the Policyholder's 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 at the current tax rate is $65,800. The Company does not
anticipate any such action or foresee any events which would result in such tax.
- --------------------------------------------------------------------------------
23
<PAGE>
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. INCOME TAXES (CONTINUED)
For financial reporting purposes, federal income tax benefit (expense) consists
of the following:
<TABLE>
<CAPTION>
1995 1994 1993
-----------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Current $ 726 $ 44 $ (43)
Deferred (910) 2 184
Current year change in
valuation allowance 438 - (223)
-----------------------------
Federal income tax (benefit) expense $ 254 $ 46 $ (82)
=============================
</TABLE>
In 1995 and 1993, the Company's effective income tax rate varies from the
statutory federal income tax rate due to changes in the valuation allowance. In
1994, the Company's effective income tax rate does not vary significantly from
the statutory federal income tax rate.
As of December 31, 1995, the Company had a net operating loss (NOL) carryforward
for tax purposes of $1,001,000 which is available to offset future taxable
income until it expires in the year 2008.
The Company had net income tax payments of ($778,000), $61,000 and $303,000
during 1995, 1994 and 1993, respectively, for current income tax payments and
settlements of prior year returns.
7. STATUTORY ACCOUNTING INFORMATION AND PRACTICES
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
- --------------------------------------------------------------------------------
24
<PAGE>
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. STATUTORY ACCOUNTING INFORMATION AND PRACTICES (CONTINUED)
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, 1995 and 1994, the Company had no significant permitted accounting
practices.
The NAIC prescribes Risk-Based Capital (RBC) requirements for life/health
insurance companies. At December 31, 1995 the Company met RBC requirements.
Stockholder's equity, determined in accordance with statutory accounting
practices (SAP), was $21,441,000 and $11,197,000 at December 31, 1995 and 1994,
respectively. Net income (loss), determined in accordance with SAP was
$1,154,000, $126,000 and ($617,000) for the years ended December 31, 1995, 1994
and 1993, respectively.
The Company is required to maintain statutory paid-in capital of at least
$1,000,000 and paid-in surplus of at least 50% of the paid-in capital in its
state of domicile. The Company exceeded its minimum statutory capital and
surplus requirements at December 31, 1995. 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.
8. COMMITMENTS AND CONTINGENT LIABILITIES
The Company is not currently a party to any pending or threatened lawsuits and
is not aware of any material contingent liabilities.
9. FINANCING ARRANGEMENT
The Company is the beneficiary of two separate renewable letters of credit
totaling $11,615,000, that were established in accordance with the terms of
certain reinsurance agreements. These letters of credit expired on December 31,
1995 and were renewed in 1996. The letters of credit were unused during both
1995 and 1994.
- --------------------------------------------------------------------------------
25
<PAGE>
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
10. RELATED PARTY TRANSACTIONS
Beginning in 1993, the Company obtained administrative, investment and other
operating services from its parent. Amounts expensed for these services were
$41,000, $362,000 and $66,000 during 1995, and 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, 1995 and 1994 was $0 and $80,000 respectively.
- --------------------------------------------------------------------------------
26
<PAGE>
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.
Consolidated Balance Sheets at December 31, 1995 and 1994
Consolidated Statements of Income for Years Ended December
31,1995, 1994 and 1993
Consolidated Statements of Stockholder's Equity for Years Ended
December 31,1995, 1994 and 1993
Consolidated Statements of Cash Flows for Years Ended December
31,1995, 1994 and 1993
Notes to Financial Statements
(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. 1/
-
2. Not applicable.
3. (a) First ING Life Insurance Company of New York
Distribution Agreement.
(b) Specimen Broker-Dealer Supervisory and Selling Agreement for
Variable Contracts.1/
-
(c) Marketing Services Agreement
4. (a) Variable Annuity Contract.
(b) Variable Annuity Certificate.
(c) Supplementary Variable Annuity Contract.
5. (a) Contract Application.
(b) Fulcrum Fund Certificate Application.
6. (a) Articles of Incorporation of First ING Life Insurance
Company of New York.
(b) By-Laws of First ING Life Insurance Company of New York.
- --------------------------------------------------------------------------------
C-1
<PAGE>
7. Not Applicable.
8. (a) Participation Agreement.
(b) Administration Services Agreement between First ING Life
Insurance Company of New York and Financial Administrative
Services Corporation.
(c) License Agreement.
(d) Service Agreement.
9. Opinion and Consent of Eugene L. Copeland as to the legality of
the securities being registered.1/
-
10. Consent of Independent Auditors.
11. None.
12. None.
13. None.
14. Financial Data Schedules.
15. (a) Powers of Attorney.2/
-
(b) Power of Attorney for Michael W. Cunningham.
1/ Incorporated herein by reference to Pre-Effective Amendment No. 1 to the
- -
Form N-4 Registration Statement of First ING Life Insurance Company of New
York and its First ING Life Separate Account A1, filed with the Securities
and Exchange Commission on July 31, 1995 (File Nos. 33-88794 and 811-8700).
2/ Incorporated herein by reference to the Form N-4 Registration Statement of
- -
First ING Life and its First ING Life Separate Account A1, filed with the
Securities and Exchange Commission on August 16, 1994 (File Nos. 33-82890
and 811-8700).
- --------------------------------------------------------------------------------
C-2
<PAGE>
Item 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
Set forth below is information regarding the directors and 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.
<TABLE>
<CAPTION>
Name and Principal Business Address Position and Offices with First ING
- ----------------------------------- -----------------------------------
<S> <C>
R. Glenn Hilliard Chairman of the Board
ING
North America Insurance Corporation
5780 Powers Ferry Road
Atlanta, GA 30327-4390
Robert J. St. Jacques Vice Chairman and Chief Executive Officer
ING
North America Insurance Corporation
5780 Powers Ferry Road
Atlanta, GA 30327-4390
Stephen M. Christopher Director, President and Chief Operating Officer
Kevin W. Ahern Director
Evelyn A. Bentz Director
Wayne D. Bidelman Director
Thomas F. Conroy Director, President - Reinsurance
and Institutional Markets
Eugene L. Copeland Director, Senior Vice President
General Counsel and Corporate Secretary
Fred A. Deering Director
Weaver H. Gaines Director
528 Bayberry
Ocean City, NY 11770
</TABLE>
- --------------------------------------------------------------------------------
C-3
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Business Address Position and Offices with First ING
- ----------------------------------- -----------------------------------
<S> <C>
William S. Lutter
First ING Life Insurance Company of
New York Director
225 Broadway
New York, NY 10004
Roger D. Roenfeldt Director
R. E. Lee Group Insurance
One Penn Plaza, Suite 2407
New York, NY 11021
Stephen K. West Director
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
Ben Currier Executive Vice President - Operations
Jeffrey W. Seel Senior Vice President, Chief Investment Officer
ING
North America Insurance Corporation
5780 Powers Ferry Road
Atlanta, GA 30327-4390
William S. Lutter Vice President - Administration
First ING Life Insurance Company of
New York
225 Broadway
New York, NY 10004
Jess A. Skriletz Senior Vice President - Institutional Markets
Frank Wright Vice President - Variable Products
Lyndon E. Oliver Treasurer
ING
North America Insurance Corporation
5780 Powers Ferry Road
Atlanta, GA 30327-4390
Kevin W. Ahern Second Vice President - Sr. Portfolio Manager
</TABLE>
- --------------------------------------------------------------------------------
C-4
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Business Address Position and Offices with First ING
- ----------------------------------- -----------------------------------
<S> <C>
John G. Grant Second Vice President - Sr. Portfolio Manager
T. Kirby Brown, Jr. Second Vice President - Sr. Portfolio Manager
Amy L. Winsor Finance and Tax Officer
Jerry M. Strop Finance Officer
Irene M. Colorosa Assistant Secretary
John H. Kerper Actuary
Shirley Knarr Actuary Officer
</TABLE>
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
ING Groep, N.W. ("ING"). ING is a holding company made up of two sub-holding
companies, ING Verzekeringen N.V. ("ING Insurance") and ING 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
never 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
- --------------------------------------------------------------------------------
C-5
<PAGE>
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. Security Life of
Denver Insurance Company is wholly owned by ING America Insurance Holdings, Inc.
("ING America Holdings"), a holding company incorporated in the state of
Delaware. ING America Holdings is wholly owned by ING Insurance International
B.V., which is in turn wholly owned by ING Insurance. SLD's subsidiary
organizations are composed of the following:
1) Wilderness Associates, a Colorado partnership in which SLD is a
49% partner.
2) CAMVEST Company No. 3, a wholly owned Colorado subsidiary.
3) United Protective Company, a wholly owned Colorado subsidiary
corporation.
4) First Secured Mortgage Deposit Corp., a wholly owned Colorado
subsidiary corporation.
5) Midwestern United Life Insurance Company, a wholly owned Indiana
subsidiary corporation.
6) ING America Equities, Inc., a wholly owned Colorado subsidiary
corporation
The list showing the U.S. holdings of ING America Holdings and the
world-wide holdings of ING as of December, 1995 is hereby incorporated by
reference to Post-Effective Amendment No. 3 to the Form N-4 Registration
Statement filed by Security Life of Denver and its Security Life Separate
Account A1 on April 23, 1996 (File Nos. 33-78444 and 811-8196).
Items 27. Number of Contract Owners
As of March 1, 1996, a date within 90 days prior to the date of
filing, there were 0 owners of the certificates offered by the prospectus filed
as part of the Registrant's Registration Statement (File No. 33-88794).
Item 28. Indemnification
Incorporated herein by reference to the Form N-4 Pre-Effective
Amendment No. 1 to the Registration Statement of First ING Life Insurance
Company of New York and Its First ING Life Separate Account A1, filed with the
Securities and Exchange Commission on July 31, 1995 (File Nos. 33-88794 and
811-8700).
Item 29. Principal Underwriters
----------------------
a) None
- --------------------------------------------------------------------------------
C-6
<PAGE>
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 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
- -------------------- ---------------------
Edward K. Campbell Director and President
Eugene L. Copeland Secretary
Debra Bell Chief Financial Officer
Shari A. Enger Treasurer
Frank T. Wright Director and Vice President
Irene M. Colorosa Assistant Secretary
Melodie A. Maxwell-Jones Director and Chief Compliance Officer
Jerrianne Smith Chief Operating Officer
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 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
------------
Incorporated herein by reference to Pre-Effective Amendment No. 1 to
the Form N-4 Registration Statement of First ING Life Insurance Company of New
York and its First ING Life Separate Account A1 filed with the Securities and
Exchange Commission on July 31, 1995 (File Nos. 33-88794 and 811-8700).
- --------------------------------------------------------------------------------
C-7
<PAGE>
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 certifies that
it meets the requirements of Securities Act Rule 485(b) for effectiveness of
Post-Effective Amendment No. 1 to the Registration Statement, and has duly
caused this Post-Effective Amendment No. 1 to the 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 23rd day of April, 1996.
FIRST ING INSURANCE COMPANY OF NEW YORK
(Depositor)
By: /s/: Stephen M. Christopher*
-----------------------------
Stephen M. Christopher
President and Chief Operating Officer
FIRST ING LIFE SEPARATE ACCOUNT A1
(Registrant)
By: FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
(Depositor)
By: /s/: Stephen M. Christopher*
-----------------------------
Stephen M. Christopher
President and Chief Operating Officer
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 1 to the 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
- --------------------------------------------------------------------------------
C-8
<PAGE>
/s/: Stephen M. Christopher*
- -----------------------------
Stephen M. Christopher
President and Chief Operating Officer
PRINCIPAL FINANCIAL OFFICER AND
PRINCIPAL ACCOUNTING OFFICER:
/s/: Michael E. Cunningham*
- ----------------------------
Michael E. Cunningham
Acting Chief Financial Officer and Acting Principal Accounting Officer
DIRECTORS:
/s/: R. Glenn Hilliard (Chairman)*
- -----------------------------------
R. Glenn Hilliard
/s/: Robert J. St. Jacques (Vice Chairman)*
- --------------------------------------------
Robert J. St. Jacques
/s/: Kevin W. Ahern*
- ---------------------
Kevin W. Ahern
/s/: Evelyn A. Bentz*
- ----------------------
Evelyn A. Bentz
/s/: Wayne D. Bidelman*
- ------------------------
Wayne D. Bidelman
/s/: Stephen M. Christopher*
- -----------------------------
Stephen M. Christopher
/s/: Thomas F. Conroy*
- -----------------------
Thomas F. Conroy
/s/: Eugene L. Copeland*
- -------------------------
Eugene L. Copeland
/s/: Fred A. Deering*
- ----------------------
Fred A. Deering
- --------------------------------------------------------------------------------
C-9
<PAGE>
/s/: Weaver H. Gaines*
- ------------------------
Weaver H. Gaines
/s/: William S. Lutter*
- -------------------------
William S. Lutter
/s/: Roger D. Roenfeldt*
- -------------------------
Roger D. Roenfeldt
/s/: Stephen K. West*
- ----------------------
Stephen K. West
* By: /s/: Edward K. Campbell
------------------------
Edward K. Campbell
Attorney-in-fact
April 23, 1996
- --------------------------------------------------------------------------------
C-10
<PAGE>
EXHIBIT INDEX
First ING Life Separate Account A1
(File No. 33-88794)
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -----------
<S> <C>
3.(a) First ING Life Insurance Company of New
York Distribution Agreement
3.(c) Marketing Services Agreement
4.(a) Variable Annuity Contract
4.(b) Variable Annuity Certificate
5.(a) Contract Application
5.(b) Fulcrum Fund Certificate Application
6.(a) Articles of Incorporation of First ING Life
Insurance Company of New York
6.(b) By-Laws of First ING Life
Insurance Company of New York
8.(a) Participation Agreement
8.(b) Administrative Services Agreement between
First ING Life Insurance Company of New
York and Financial Administrative Services
Corporation
8.(c) License Agreement
8.(d) Service Agreement
10. Consent of Independent Auditors
14. Financial Data Schedule
15.(b) Power of Attorney for Michael W.
Cunningham
</TABLE>
<PAGE>
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
1
<PAGE>
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.
2
<PAGE>
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
3
<PAGE>
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.
4
<PAGE>
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.
5
<PAGE>
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.
6
<PAGE>
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
7
<PAGE>
MARKETING SERVICES AGREEMENT
----------------------------
This Agreement is entered into effective February 8th, 1996 , 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 Equities"), a broker-
dealer registered with the Securities and Exchange Commission ("SEC") and a
member of the National Association of Securities Dealers ("NASD"), Palladian
Marketing Group, Inc. ("PMG"), an insurance agency licensed in Connecticut and
New York, and Western Capital Financial Group, a broker-dealer registered with
the SEC and a member of the NASD (PMG and Western Capital Financial Group are
collectively referred to herein as "Palladian").
This Agreement gives Palladian the exclusive right to represent the Insurer and
ING Equities in the distribution of the Contracts (as defined below). Subject
to the limitations of Section 3.1, Palladian may represent the Insurer in the
distribution of the Contracts through Designated Broker-Dealers in accordance
with the requirements set forth in Section 2.0 below.
1. DEFINITIONS
-----------
1.1 "Affiliate" means, with respect to a Designated Broker-Dealer, the
Insurer or Palladian, any person, corporation, partnership or other
entity, effective control of which may be exercised directly or
indirectly by the Broker-Dealer, the Insurer or Palladian,
respectively, or any of the principal shareholders of the Designated
Broker-Dealer, the Insurer or Palladian.
1.2 "Contracts" means the contracts issued by the Insurer or its
Affiliates listed in Schedule A to this Agreement and any subsequent
versions of such contracts.
1.3 "Designated Broker-Dealer" means any Broker-Dealer appointed by the
Insurer to sell the Contracts as listed in Schedule "C".
2. REQUIREMENTS AND RESTRICTIONS
-----------------------------
2.1 Each Designated Broker-Dealer shall sell the Contracts through a
registered broker-dealer and a licensed insurance agency.
2.2 Each Designated Broker-Dealer shall have either (1) received an SEC
"no-action" letter stating that the staff of the SEC would not
recommend enforcement proceedings if commissions on the sale of the
Contracts are paid to the insurance agency instead of to the
Designated Broker-Dealer, or (2) obtained an opinion of counsel
satisfactory to the Insurer in scope, form and substance that such a
no-action letter, if requested, would be granted.
Page 1 of 13 Pages
<PAGE>
3. MARKETING AND ADMINISTRATIVE SERVICES
-------------------------------------
3.1 Palladian will negotiate with broker-dealers to sell the Contracts.
The Insurer, at its discretion, may accept or reject any such broker-
dealer and, where accepted through the execution of a Selling
Agreement between such broker-dealer and the Insurer, add such broker-
dealer to Schedule C, the list of Designated Broker-Dealers covered
under this Agreement. Palladian is not authorized to provide
marketing services related to the Contracts to Broker-Dealers which
have not been designated by the Insurer and/or which do not have
Selling Agreements with the Insurer, except on a referral basis.
3.2 Palladian will provide certain marketing and administrative services
for the Insurer to promote the sale of the Contracts through
Designated Broker-Dealers.
3.2.1 Such services shall include assistance in the appointment
and contracting of agents; distribution of sales materials,
newsletters and field service bulletins, provided that all
such materials shall be approved by the Insurer prior to
use; assistance with sales promotional activities and
Designated Broker-Dealers; and the training of sales staff
and registered representatives of Designated Broker-Dealers
with respect to the features of the Contracts. Compensation
for such services shall be as set forth in Schedule B
hereto.
3.2.2 In addition, Palladian may offer the Insurer additional
services such as certain contract owner services, for no
additional compensation.
3.3 In conjunction with marketing and sales promotion efforts, either the
Insurer or the party designated in the Participation Agreement between
the Insurer and Palladian Advisors, Inc., will be responsible for the
costs of producing and printing all policy forms, related prospectuses
and whatever basic sales promotional literature it deems appropriate
(e.g. client brochure, product specifications sheet).
3.4 Palladian will have responsibility for all other marketing and sales
promotional costs including, but not limited to:
3.4.1 All travel of Palladian and its agents;
3.4.2 Any meetings held at the offices of Designated Broker-
Dealers.
3.4.3 All additional Sales Promotional Literature.
Page 2 of 13 Pages
<PAGE>
4. COMPENSATION
------------
4.1 Compensation to Palladian for the marketing and initial administrative
services performed by Palladian in accordance with Section 3.0 above,
will be as follows:
4.1.1 A percentage, as determined under Schedule B, of purchase
payments made to the Insurer on account of Contracts issued
upon applications procured through Designated Broker-Dealers
in accordance with this Agreement.
4.2 Compensation, pursuant to Schedule B, is subject to change by the
Insurer at any time, but effective upon 3 days prior written notice to
Palladian. No such change shall be effective for Contracts issued
upon applications received by the Insurer prior to the effective date
of such change.
4.3 In the event Western Capital Financial Group is disqualified for
continued registration with the NASD, the Insurer shall not be
obligated to pay any commission, service fee, or additional
compensation pursuant to this Agreement, the payment of which could
represent a violation of NASD rules.
4.3.1 In such event, the Insurer shall hold any compensation
otherwise due in "escrow" from the date of such
disqualification until the termination of any litigation or
administrative proceedings relating to such
disqualification, provided Western Capital Financial Group
commences an appeal to the NASD within 180 days following
the disqualification notice and actively pursues such
appeal. Should Western Capital Financial Group's
registration be reinstated, all compensation due or becoming
due Western Capital Financial Group during the period of
disqualification shall be immediately paid, provided that
such payment does not violate any NASD rules or regulations
or other federal securities laws in effect at such time;
and,
4.3.2 In such event, Western Capital Financial Group hereby
authorizes PMG to designate a replacement broker-dealer (the
"Successor B/D"), subject to the prior written approval of
the Insurer, which approval shall not be unreasonably
withheld. The Successor B/D, upon the effective date of its
execution of a Marketing Services Agreement substantially
similar to this Agreement, shall be entitled to receive
compensation under this Agreement from that date forward.
Western Capital Financial Group hereby assigns any
Page 3 of 13 Pages
<PAGE>
compensation held in "escrow" pursuant to paragraph 4.3.1
above, to the Successor B/D.
4.4 Compensation will be earned by Palladian or Designated Broker-Dealers
only for those applications accepted by the Insurer, as the case may
be, and only after receipt by the Insurer at its Variable Annuity
Service Center in Denver, Colorado, of the required purchase payment.
4.5 Should the Insurer for any reason return any purchase payment, decline
any application, make an erroneous payment, or should any Contract be
surrendered pursuant to a "cancellation", Palladian agrees to repay
the Insurer the total amount of any compensation which may have been
paid to Western Capital thereon within seven (7) business days of
notice of such return, declination, error or cancellation. For
purposes of this paragraph 4.5, "cancellation" means any return of
premium or market value for which the Insurer would reverse
commissions.
5. GENERAL PROVISIONS
------------------
5.1 Western Capital Financial Group hereby represents and warrants that it
is a member in good standing of the NASD, is familiar with and will
observe the NASD Rules of Fair Practice, and that, wherever state
insurance or securities law requires, it or its affiliated agency,
PMG, is or will be duly licensed and authorized to provide marketing
services relating to the Contracts. PMG and Western Capital Financial
Group each also hereby represent and warrant that they are thoroughly
familiar with the statutes, rules and regulations of the United
States, and of the state(s) in which they are licensed or in which
they are, or will be, or will be deemed to be doing business, and that
they shall transact all authorized the Insurer business in strict
accordance therewith.
5.2 Each party shall cooperate with the other in the investigation and
settlement of all claims against either or all of them. Each party
shall promptly forward to the other, notice of claim or other relevant
information which may come into its possession.
5.3 Palladian and the Insurer each shall keep full and accurate records of
the business transacted by it under this Agreement. Each party will
allow the other reasonable access to conduct any audit or inspection
of said books and records.
5.4 All applications for purchase of the Contracts shall be subject to
acceptance by the Insurer. The Insurer reserves the right in its sole
discretion to modify, change or discontinue the offering of any form
of Contract at any time. Palladian shall have no greater authority
than is herein expressly granted and no such greater authority shall
be implied.
Page 4 of 13 Pages
<PAGE>
5.5 The Insurer shall furnish Palladian with information regarding states
in which the Contracts (and which version thereof) may be sold, and
warrants that such information is correct.
5.6 Except as is otherwise explicitly provided herein, Palladian and the
Insurer shall each bear their own expenses incurred in the performance
of this Agreement.
5.7 The Insurer represents and warrants that all Contracts issued by the
Insurer will be in full compliance with all applicable state and
federal insurance and securities statutes, rules and regulations and
that all disclosure material (including prospectuses) delivered by the
Insurer to Palladian or Palladian's customers will be full and
adequate disclosure of all material facts.
6.0 LIMITATIONS OF AUTHORITY
------------------------
6.1 Palladian may not produce, use or authorize Designated Broker-Dealers,
their insurance agencies or their Affiliates, to use any sales,
advertising or promotional materials unless such materials are
furnished, or approved in advance, in writing, by the Insurer. Where
necessary, the Insurer will submit such advertising material to the
NASD (or other regulatory agency) for review.
6.1.1 Use of unapproved sales or advertising material by Palladian
shall be deemed grounds for immediate termination of this
Agreement if, after written notice to Palladian by the
Insurer that Palladian has produced, used or authorized the
use of unapproved advertising or promotional materials,
Palladian does not promptly take adequate steps to remedy
the situation and assure further compliance.
6.2 Neither Palladian nor the Insurer is authorized, and each is expressly
forbidden, to act as agent for or otherwise on behalf of each other,
to incur any indebtedness or liability, or to make, alter or discharge
agreements, or to waive forfeitures, extend the time of payment of any
purchase payment, waive payment in cash, or to receive any money due
or to become due to the other party, as the case may be, except as
herein provided.
6.3 In the event any legal process or notice is served on Palladian in a
suit or proceeding against the Insurer, Palladian shall forward
forthwith such process or notice to the offices of the Insurer, in
Denver, Colorado, by registered mail. Notwithstanding the above,
Palladian is not authorized to act as Agent for Service of Process of
the Insurer.
Page 5 of 13 Pages
<PAGE>
6.4 In the event any legal process or notice is served on the Insurer in a
suit or proceeding against either PMG or Western Capital Financial
Group, the Insurer shall forward forthwith such process or notice to
the offices of Palladian in Stamford, Connecticut, by registered mail.
Notwithstanding the above, the Insurer is not authorized to act as
Agent for Service of Process of either PMG or Western Capital
Financial Group.
6.5 Palladian shall indemnify and hold the Insurer harmless from any loss
or expense on account of any unauthorized act or transaction by
Palladian or persons employed by Palladian which was not authorized by
the Insurer and which adversely affects the Insurer. Palladian shall
make any such payments to the Insurer within 60 days of receipt of
appropriate documentation of the loss or expense.
6.6 The Insurer shall indemnify and hold Palladian harmless from any loss
or expense on account of an unauthorized act or transaction by the
Insurer or persons employed or appointed by the Insurer which was not
authorized by Palladian and which adversely affects Palladian. The
Insurer shall make any payments to Palladian within 60 days of receipt
of appropriate documentation of the loss or expense.
6.7 The Insurer and Palladian shall not offer or pay, or encourage others
to offer or pay, any illegal rebate of purchase payments or make any
offer of any other inducement not specified in the Contract, to the
extent any such payment, inducement or offer thereof is prohibited by
applicable law, to any persons to insure with the Insurer. The
Insurer and Palladian shall not make or encourage others to make any
misrepresentation or incomplete comparison for the purpose of inducing
a policyholder in any other company to lapse, forfeit or surrender its
insurance therein.
6.8 PMG and Western Capital Financial Group each agree that they will not
solicit or sell the Contracts in any state in which they are not
properly licensed and registered to do so, and in furtherance thereof,
that they will not have any direct contact with any client of the
Designated Broker-Dealers or other members of the public in connection
with the solicitation and sale of the Contracts.
7.0 INDEBTEDNESS; RIGHT OF SETOFF
-----------------------------
7.1 The Insurer may at any time deduct from any monies due Palladian under
this Agreement, every indebtedness or monetary obligation of Palladian
to Security Life. On termination of this Agreement any outstanding
indebtedness to the Insurer shall become immediately due and payable.
Page 6 of 13 Pages
<PAGE>
7.2 Palladian may, at any time, deduct from any monies due the Insurer
under this Agreement, every indebtedness or monetary obligation of the
Insurer to Palladian. On termination of this Agreement, any
outstanding indebtedness to Palladian shall become immediately due and
payable.
8.0 ASSIGNMENT
----------
8.1 No assignment of this Agreement or of compensation payable hereunder
shall be valid unless authorized in writing by the Insurer. In any
event, every assignment shall be subject to: (a) the payment in full
of any indebtedness and monetary obligation of Palladian that may be
due or become due to the Insurer and (b) any applicable NASD, SEC, or
state insurance or securities statutes, rules and regulations
pertaining to such assignments.
9.0 RELATIONSHIP
------------
9.1 Nothing contained herein is intended to create the relation of
employer and employee between the parties hereto. Palladian and the
agents appointed by or assigned to Palladian shall be independent
contractors and free to exercise their own judgment as to the time,
place and means of performing all acts hereunder, but to the extent
such do not unreasonably interfere with such freedom of action or
judgment, Palladian and the agents shall conform to all regulations of
the Insurer of which Palladian has knowledge.
10.0 TERMINATION
-----------
10.1 This Agreement may be terminated by any party effective two hundred
seventy (270) days after written notice to the other parties.
10.2 Notwithstanding any provision in this Agreement to the contrary, this
Agreement shall automatically terminate without notice upon the
occurrence of any of the events set forth below:
10.2.1 When and if Western Capital Financial Group is disqualified
for continued membership in the NASD or for continued
registration with the SEC, or the effectiveness of its
registration or its ability to conduct business is suspended
or limited, or upon execution of a Marketing Services
Agreement by a Successor B/D approved in writing by the
Insurer pursuant to paragraph 4.3.2 hereof, whichever occurs
first.
Page 7 of 13 Pages
<PAGE>
10.2.2 When and if Palladian commits fraud or malfeasance in the
performance of any duties imposed upon it by this Agreement
or wrongfully withholds or misappropriates for its own use
funds of the Insurer, its policyholders or applicants.
10.2.3 If Palladian breaches this Agreement, has been notified of
such breach in writing by the Insurer and has not remedied
such breach within 60 days of receipt of such notice, or
sooner if required by law, rule or regulation.
10.2.4 When and if either Western Capital Financial Group or PMG
violates the insurance or securities laws of a state in
which it transacts business and as a result of such
violation fails to maintain or is unable to obtain a
necessary license.
11.0 NOTICES
-------
11.1 Where notice is required it shall be in writing and mailed to:
Palladian Marketing Group, Inc.
470 West Avenue
Stamford, Connecticut 06902
or the last known address of PMG appearing on the Insurer's records,
or, in the event of termination of this Agreement by PMG, to:
The Office of Chief Counsel
Security Life of Denver Insurance Company
1290 Broadway
Denver, Colorado, 80203
and shall be effective as of the time the notice is deposited in the
United States mail provided such notice is actually received, or the
time of actual receipt of such notice if delivered by means other than
mail.
12.0 WAIVER
------
12.1 No waiver or modification of this Agreement or any Schedule hereto
shall be effective unless it is in writing and signed by a duly
authorized officer of each party.
12.2 The failure of the Insurer to enforce any provisions of this Agreement
shall not constitute a waiver of any such provision. The past waiver
of a provision by the
Page 8 of 13 Pages
<PAGE>
Insurer shall not constitute a course of conduct or a waiver in the
future of that same provision.
13.0 SUPPLEMENTS AND SCHEDULES
-------------------------
13.1 This Agreement, as of its effective date, includes the following
supplements and schedules:
Schedule A - Contracts Covered by the Agreement
Schedule B - Compensation Schedule
Schedule C - List of Designated Broker-Dealers
Page 9 of 13 Pages
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have executed this Agreement.
WESTERN CAPITAL FINANCIAL GROUP SECURITY LIFE OF DENVER INSURANCE
COMPANY
By: [SIGNATURE NOT LEGIBLE] By: [SIGNATURE NOT LEGIBLE]
---------------------------- -----------------------------
Title: PRESIDENT Title: VICE PRESIDENT
------------------------- --------------------------
Date: 2/7/96 Date: FEBRUARY 7, 1996
-------------------------- ---------------------------
PALLADIAN MARKETING GROUP, INC. ING AMERICA EQUITIES, INC.
By: [SIGNATURE NOT LEGIBLE] By: [SIGNATURE NOT LEGIBLE]
---------------------------- -----------------------------
Title: CHAIRMAN Title: VICE PRESIDENT
------------------------- --------------------------
Date: FEBRUARY 9, 1996 Date: FEBRUARY 7, 1996
-------------------------- ---------------------------
FIRST ING LIFE INSURANCE COMPANY
OF NEW YORK
By: [SIGNATURE NOT LEGIBLE]
----------------------------------
Title: PRESIDENT
-------------------------------
Date: FEBRUARY 7, 1996
--------------------------------
Page 10 of 13 Pages
<PAGE>
SCHEDULE A
----------
Contracts Covered by the Agreement
----------------------------------
Palladian is authorized to assist in the marketing of the following contracts or
the subsequent versions thereof:
1. "Fulcrum" - A Variable Annuity contract issued by Security Life.
2. "Fulcrum" - A Variable Annuity contract issued by First ING.
Page 11 of 13 Pages
<PAGE>
SCHEDULE B
----------
Compensation Schedule
---------------------
FOR FIRST ING LIFE FULCRUM FUND ANNUITY
A GROUP FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED & VARIABLE
ANNUITY
CERTIFICATE FORM 1194 (VA)(Certificate)
ISSUED UNDER
CONTRACT FORM 1194(VA)
The total gross compensation available under this Contract, as a percentage of
each purchase payment, is 7.0%, 5.5% of which is typically paid to the
Designated Broker-Dealer and 1.5% of which is paid to Palladian, in
consideration of the marketing and initial administrative services performed by
Palladian hereunder. To the extent Palladian negotiates a reduction or increase
in the Designated Broker-Dealer's compensation under the Compensation Schedule
to the Designated Broker-Dealer's Selling Agreement, then Palladian's
compensation shall increase or decrease accordingly by an amount proportionate
to the reduction or increase, so that the total compensation to Palladian and
Designated Broker-Dealer shall always be equal to a maximum 7.0%
Page 12 of 13 Pages
<PAGE>
SCHEDULE C
----------
List of Designated Broker-Dealers
---------------------------------
Page 13 of 13 Pages
<PAGE>
FIRST ING LIFE
NEW YORK, NEW YORK
CONTRACT HOLDER: NORWEST BANK IOWA, TRUSTEE
CONTRACT DATE: FEBRUARY 28, 1996
CONTRACT NUMBER: 0001
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 Certificate issued under this
group Contratct. "We", "us", and "our" refer to First ING Life Insurance Company
of New York.
[X] [X]
President Secretary
THIS CONTRACT IS A GROUP FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED AND
VARIABLE ANNUITY CERTIFICATE.
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 IF THE ANNUAL
INVESTMENT EXPERIENCE IS GREATER THAN 6.4% OR 4.4%, AND WILL DECREASE IF THE
ANNUAL INVESTMENT EXPERIENCE IS LESS THAN 6.4% OR 4.4%, DEPENDING ON WHETHER THE
BENCHMARK TOTAL RETURN IS 5% OR 3%, RESPECTIVELY. 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
Form 1194(VA)
Page 1
<PAGE>
[Toll-free Telephone Number: 1(800)249-9099]
Form 1194 (VA)
Page 2
<PAGE>
TABLE OF CONTENTS
This Contract is a legal Contract between the Owner and us. READ IT CAREFULLY.
GUIDE TO KEY PROVISIONS
<TABLE>
<S> <C>
SCHEDULE............................................................... 6
CERTIFICATE EXPENSE PROVISIONS......................................... 8
BENEFIT PROVISIONS..................................................... 9
APPLICATION AND ELIGIBILITY............................................ 9
EFFECTIVE DATE OF COVERAGE............................................. 9
ELECTION AND CHANGES OF ANNUITY DATE................................... 9
ELECTION AND CHANGES OF ANNUITY OPTION................................. 9
PAYOUT OF PROCEEDS..................................................... 10
As of the Annuity Date, to Provide Annuity Payouts.................... 10
Upon Surrender of this Certificate Prior to the Annuity Date.......... 10
As a Death Benefit Prior to the Annuity Date.......................... 10
OWNERS AND DEATH OF THE OWNERS......................................... 11
REQUIRED DISTRIBUTIONS................................................. 11
GUARANTEED DEATH BENEFIT............................................... 12
ANNUITANTS AND DEATH OF ANNUITANTS..................................... 12
BENEFICIARIES AND DEATH OF BENEFICIARIES............................... 13
PURCHASE PAYMENT PROVISIONS............................................ 13
PURCHASE PAYMENTS...................................................... 13
PURCHASE PAYMENT ALLOCATION............................................ 13
VARIABLE ACCOUNT PROVISIONS............................................ 14
THE VARIABLE ACCOUNT................................................... 14
VARIABLE ACCOUNT DIVISIONS............................................. 14
CHANGES WITHIN THE VARIABLE ACCOUNT.................................... 14
GENERAL ACCOUNT PROVISIONS............................................. 15
THE GENERAL ACCOUNT.................................................... 15
GUARANTEED INTEREST DIVISION........................................... 15
TRANSFER PROVISIONS.................................................... 15
</TABLE>
Form 1194 (VA)
Page 3
<PAGE>
TABLE OF CONTENTS (CONTINUED)
<TABLE>
<S> <C>
TRANSFERS TO OR FROM THE GUARANTEED INTEREST DIVISION.................. 16
EXCESS TRANSFER CHARGE................................................. 16
DOLLAR COST AVERAGING TRANSFER OPTION.................................. 16
AUTOMATIC REBALANCING.................................................. 17
ACCUMULATION VALUE PROVISIONS.......................................... 17
VALUATION DATE......................................................... 17
VALUATION PERIOD....................................................... 18
ACCUMULATION UNIT VALUE................................................ 18
ACCUMULATION EXPERIENCE FACTOR......................................... 18
ACCUMULATION VALUE OF THE DIVISIONS OF THE VARIABLE ACCOUNT............ 18
ACCUMULATION VALUE OF THE GUARANTEED INTEREST DIVISION................. 19
PARTIAL WITHDRAWAL PROVISIONS.......................................... 19
DEMAND WITHDRAWAL OPTION............................................... 20
SYSTEMATIC INCOME PROGRAM.............................................. 20
IRA INCOME PROGRAM..................................................... 21
SURRENDER PROVISIONS................................................... 21
CASH SURRENDER VALUE................................................... 21
GENERAL CONTRACT PROVISIONS............................................ 22
THE CONTRACT........................................................... 22
TERMINATION OF CONTRACT................................................ 22
AGE.................................................................... 22
PROCEDURES............................................................. 22
DEFERRAL OF PAYOUT..................................................... 23
TAX QUALIFICATION...................................................... 23
CONTRACT CHANGES....................................................... 23
COLLATERAL ASSIGNMENT.................................................. 23
INCONTESTABILITY....................................................... 23
MISSTATEMENT OF AGE OR SEX............................................. 24
PERIODIC REPORTS....................................................... 24
BASIS OF COMPUTATIONS.................................................. 24
TAXES.................................................................. 24
NON PARTICIPATING...................................................... 24
CUSTOMER SERVICE CENTER................................................ 24
ANNUITY OPTION PROVISIONS.............................................. 25
SUPPLEMENTARY CONTRACT................................................. 25
PAYOUT OPTIONS......................................................... 25
</TABLE>
Form 1194 (VA)
Page 4
<PAGE>
TABLE OF CONTENTS (CONTINUED)
<TABLE>
<S> <C>
Variable Annuity Payout............................................... 25
Fixed Annuity Payout.................................................. 26
Combination Annuity Payout............................................ 27
PAYOUT PERIOD OPTIONS.................................................. 27
COMMUTING.............................................................. 28
EXCESS INTEREST........................................................ 28
MINIMUM AMOUNTS........................................................ 28
INCOME PROTECTION...................................................... 28
PAYOUTS OTHER THAN MONTHLY............................................. 29
PAYOUT PERIOD OPTION TABLES............................................ 30
</TABLE>
Additional benefits or riders for a Certificate, if any, will be shown in the
Certificate Schedule. The additional provisions will be inserted in this
Certificate.
Form 1194 (VA)
Page 5
<PAGE>
SCHEDULE
<TABLE>
<S> <C>
CONTRACT HOLDER: NORWEST BANK IOWA, TRUSTEE
CONTRACT NUMBER: 0001
CONTRACT DATE: FEBRUARY 28, 1996
MINIMUM INITIAL PURCHASE PAYMENT FOR A CERTIFICATE: [$25,000]
MINIMUM FOR EACH ADDITIONAL PURCHASE PAYMENT FOR A CERTIFICATE: [$500]
MAXIMUM CUMULATIVE NET PURCHASE PAYMENT FOR A CERTIFICATE: [$1,500,000]
CUSTOMER SERVICE CENTER: [P.O. BOX 173778,
DENVER, COLORADO 80217-3778]
</TABLE>
Form 1194 (VA)
Page 6
<PAGE>
SCHEDULE (CONTINUED)
ELIGIBLE DIVISIONS
[Value Division]
[Growth Division]
[International Growth Division]
[Global Strategic Income Division]
[Global Interactive/Telecomm Division]
Guaranteed Interest Division
All percentage allocations must be in whole numbers.
Form 1194 (VA)
Page 7
<PAGE>
SCHEDULE (CONTINUED)
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.
<TABLE>
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ANNIVERSARIES SINCE 0 1 2 3 4 5 6 and
PURCHASE PAYMENT WAS MADE: more
- ------------------------------------------------------------------------------
PERCENTAGE: 7% 6% 5% 4% 3% 2% 0%
- ------------------------------------------------------------------------------
</TABLE>
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 Division is: 3.00% per year
Form 1194(VA)
Page 8
<PAGE>
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 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.
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 Annuitants 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 Annuitants 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
Form 1194(VA)
Page 9
<PAGE>
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
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 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 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 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. 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
Form 1194(VA)
Page 10
<PAGE>
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 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 Owners spouse is the Joint Owner, then the spouse becomes the new
Owner and no death benefit is payable; or
2. If the Owners 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 Owners 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 beneficiarys 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
<PAGE>
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 Owners 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. 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, you must designate a new Annuitant. If no designation
is made within 30 days of the Annuitants 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
Form 1194(VA)
Page 12
<PAGE>
to die of the Annuitant and Contingent Annuitants. Amounts may be released in
one sum if the Owners 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 Owners designation provides otherwise. If there is no designated Beneficiary
or Contingent Beneficiary surviving, we will pay the Proceeds to the Owners
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 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. 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 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.
Form 1194(VA)
Page 13
<PAGE>
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 Portfolios 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.
Form 1194(VA)
Page 14
<PAGE>
. 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:
<TABLE>
<CAPTION>
----------------------------------------------------
ACCUMULATION PERIOD ANNUITY PERIOD
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
FREE TRANSFERS 12 4
- --------------------------------------------------------------------------------------------------
TOTAL NUMBER OF TRANSFERS PERMITTED Unlimited 4
- --------------------------------------------------------------------------------------------------
EXCESS TRANSFER CHARGE $25 for each transfer in excess of Not Applicable
12 during any Certificate Year
- --------------------------------------------------------------------------------------------------
</TABLE>
We reserve the right to limit the number of transfers per Certificate Year to 12
and to limit excessive trading activity.
Form 1194(VA)
Page 15
<PAGE>
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 exceed 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 have 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 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 Certificate's
Accumulation Value in the [Global Strategic Income Division] is equal to or less
than the amount the Owner 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 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.
Form 1194 (VA)
Page 16
<PAGE>
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 request 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.
Form 1194 (VA)
Page 17
<PAGE>
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 Divisions 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 Divisions 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
Form 1194 (VA)
Page 18
<PAGE>
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.
Form 1194 (VA)
Page 19
<PAGE>
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
Form 1194 (VA)
Page 20
<PAGE>
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.
The Owner may change the amount or percentage of your Systematic Income Partial
Withdrawal once each Certificate Year. The Owner 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 the Owner have 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 this 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.
Form 1194 (VA)
Page 21
<PAGE>
Surrenders may be subject to a 10% penalty tax.
The Owner 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 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. A copy of the
initial Certificate application will be attached to the Certificate at issue of
the Cerificate. 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.
Form 1194 (VA)
Page 22
<PAGE>
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 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 will be interpreted to ensure or maintain such
qualification. Payouts and distributions under this Contract and all 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 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 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 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.
Form 1194(VA)
Page 23
<PAGE>
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 the 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 the 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
the 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 Certificate does not participate in our surplus earnings.
CUSTOMER SERVICE CENTER
Our Customer Service Center is at the address shown in the 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.
Form 1194(VA)
Page 24
<PAGE>
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 Owners 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's 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.
Form 1194(VA)
Page 25
<PAGE>
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
Form 1194(VA)
Page 26
<PAGE>
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.
Form 1194(VA)
Page 27
<PAGE>
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 Contract. To the extent provided
by law, the Proceeds, amount retained, and installments are not subject to any
Annuitant's debts, contracts, or engagements.
Form 1194(VA)
Page 28
<PAGE>
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 11.839, 5.963, or 2.993 if the Benchmark Total Return is
3%, and by 11.736, 5.939 or 2.988 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.
Form 1194(VA)
Page 29
<PAGE>
PAYOUT PERIOD OPTION TABLES
PAYOUT PERIOD OPTION TABLE I
(Benchmark Total Return is 3% -- Per $1,000 of Net Proceeds)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
No. of Years Monthly No. of Years Monthly
Payable Installments Payable Installments
-----------------------------------------------------------------------
<S> <C> <C> <C>
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
-----------------------------------------------------------------------
</TABLE>
Form 1194(VA)
Page 30
<PAGE>
PAYOUT PERIOD OPTION TABLE I -- VARIABLE ANNUITY ONLY
(Benchmark Total Return is 5% -- Per $1,000 of Net Proceeds)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
No. of Years Monthly No. of Years Monthly
Payable Installments Payable Installments
-----------------------------------------------------------------------
<S> <C> <C> <C>
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>
Form 1194(VA)
Page 31
<PAGE>
PAYOUT PERIOD OPTION TABLE II
(Benchmark Total Return is 3% -- Per $1,000 of Net Proceeds)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Age of Annuitant Age of Annuitant
Last Birthday When Last Birthday When
First Installment First Installment
is Payable Monthly Installment is Payable Monthly Installment
- ----------------------------------------------------------------------------------------------------------------------------------
5 Years 10 Years 15 Years 20 Years 5 Years 10 Years 15 Years 20 Years
Male Certain Certain Certain Certain Male Certain Certain Certain Certain
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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>
Form 1194 (VA)
Page 32
<PAGE>
PAYOUT PERIOD OPTION TABLE II
(Benchmark Total Return is 3% -- Per $1,000 of Net Proceeds)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Age of Annuitant Age of Annuitant
Last Birthday When Last Birthday When
First Installment First Installment
is Payable Monthly Installment is Payable Monthly Installment
- ----------------------------------------------------------------------------------------------------------------------------------
5 Years 10 Years 15 Years 20 Years 5 Years 10 Years 15 Years 20 Years
Male Certain Certain Certain Certain Male Certain Certain Certain Certain
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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>
Form 1194 (VA)
Page 33
<PAGE>
PAYOUT PERIOD OPTION TABLE II -- VARIABLE ANNUITY ONLY
(Benchmark Total Return is 5% -- Per $1,000 of Net Proceeds)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Age of Annuitant Age of Annuitant
Last Birthday When Last Birthday When
First Installment First Installment
is Payable Monthly Installment is Payable Monthly Installment
- ----------------------------------------------------------------------------------------------------------------------------------
5 Years 10 Years 15 Years 20 Years 5 Years 10 Years 15 Years 20 Years
Male Certain Certain Certain Certain Male Certain Certain Certain Certain
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
15 4.31 4.30 4.30 4.30 40 4.88 4.87 4.84 4.81
16 4.32 4.32 4.31 4.31 41 4.92 4.91 4.88 4.84
17 4.33 4.33 4.32 4.32 42 4.97 4.95 4.92 4.88
18 4.34 4.34 4.34 4.33 43 5.02 5.00 4.96 4.92
19 4.36 4.35 4.35 4.34 44 5.07 5.04 5.01 4.95
20 4.37 4.37 4.36 4.36 45 5.12 5.09 5.05 5.00
21 4.38 4.38 4.38 4.37 46 5.17 5.15 5.10 5.04
22 4.40 4.40 4.39 4.39 47 5.23 5.20 5.15 5.08
23 4.42 4.41 4.41 4.40 48 5.29 5.26 5.20 5.13
24 4.43 4.43 4.42 4.42 49 5.35 5.32 5.25 5.17
25 4.45 4.45 4.44 4.43 50 5.42 5.38 5.31 5.22
26 4.47 4.47 4.46 4.45 51 5.49 5.44 5.37 5.27
27 4.49 4.49 4.48 4.47 52 5.57 5.51 5.43 5.32
28 4.51 4.51 4.50 4.49 53 5.64 5.59 5.49 5.37
29 4.53 4.53 4.52 4.51 54 5.73 5.66 5.56 5.43
30 4.56 4.55 4.54 4.53 55 5.81 5.74 5.63 5.48
31 4.58 4.58 4.57 4.55 56 5.91 5.83 5.71 5.54
32 4.61 4.60 4.59 4.58 57 6.01 5.92 5.78 5.60
33 4.64 4.63 4.62 4.60 58 6.11 6.01 5.86 5.65
34 4.67 4.66 4.65 4.63 59 6.22 6.12 5.94 5.71
35 4.70 4.69 4.68 4.65 60 6.34 6.22 6.03 5.77
36 4.73 4.72 4.71 4.68 61 6.47 6.33 6.11 5.83
37 4.76 4.75 4.74 4.71 62 6.61 6.45 6.20 5.89
38 4.80 4.79 4.77 4.74 63 6.76 6.58 6.29 5.94
39 4.84 4.83 4.81 4.77 64 6.91 6.70 6.38 6.00
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Form 1194 (VA)
Page 34
<PAGE>
PAYOUT PERIOD OPTION TABLE II -- VARIABLE ANNUITY ONLY
(Benchmark Total Return is 5% -- Per $1,000 of Net Proceeds)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Age of Annuitant Age of Annuitant
Last Birthday When Last Birthday When
First Installment First Installment
is Payable Monthly Installment is Payable Monthly Installment
- ----------------------------------------------------------------------------------------------------------------------------------
5 Years 10 Years 15 Years 20 Years 5 Years 10 Years 15 Years 20 Years
Male Certain Certain Certain Certain Male Certain Certain Certain Certain
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
65 7.08 6.84 6.48 6.05 75 9.37 8.42 7.34 6.42
66 7.25 6.98 6.57 6.10 76 9.67 8.59 7.40 6.44
67 7.44 7.13 6.67 6.15 77 9.98 8.75 7.46 6.45
68 7.64 7.28 6.76 6.19 78 10.31 8.91 7.51 6.47
69 7.85 7.43 6.85 6.24 79 10.65 9.06 7.56 6.48
70 8.07 7.59 6.94 6.28 80 11.00 9.21 7.61 6.49
71 8.30 7.75 7.03 6.31 81 11.36 9.35 7.64 6.49
72 8.55 7.92 7.11 6.34 82 11.72 9.49 7.68 6.50
73 8.81 8.08 7.19 6.37 83 12.09 9.61 7.71 6.50
74 9.08 8.25 7.27 6.40 84 12.47 9.73 7.73 6.51
85 12.84 9.83 7.75 6.51
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Form 1194 (VA)
Page 35
<PAGE>
PAYOUT PERIOD OPTION TABLE II
(Benchmark Total Return is 3% -- Per $1,000 of Net Proceeds)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Age of Annuitant Age of Annuitant
Last Birthday When Last Birthday When
First Installment First Installment
is Payable Monthly Installment is Payable Monthly Installment
- ----------------------------------------------------------------------------------------------------------------------------------
5 Years 10 Years 15 Years 20 Years 5 Years 10 Years 15 Years 20 Years
Female Certain Certain Certain Certain Female Certain Certain Certain Certain
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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>
Form 1194 (VA)
Page 36
<PAGE>
PAYOUT PERIOD OPTION TABLE II
(Benchmark Total Return is 3% PER $1,000 OF NET PROCEEDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Age of Annuitant Age of Annuitant
Last Birthday When Last Birthday When
First Installment is First Installment is
Payable Monthly Installment Payable Monthly Installment
- ------------------------------------------------------------------------------------------------------------------------------------
5 Years 10 Years 15 Years 20 Years 5 Years 10 Years 15 Years 20 Years
Female Certain Certain Certain Certain Female Certain Certain Certain Certain
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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>
Form 1194 (VA)
Page 37
<PAGE>
PAYOUT PERIOD OPTION TABLE II VARIABLE ANNUITY ONLY
(Benchmark Total Return is 5% - PER $1,000 OF NET PROCEEDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Age of Annuitant Age of Annuitant
Last Birthday When Last Birthday When
First Installment is First Installment is
Payable Monthly Installment Payable Monthly Installment
- -----------------------------------------------------------------------------------------------------------------------------------
5 Years 10 Years 15 Years 20 Years 5 Years 10 Years 15 Years 20 Years
Female Certain Certain Certain Certain Female Certain Certain Certain Certain
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
15 4.24 4.24 4.24 4.24 40 4.67 4.66 4.65 4.64
16 4.25 4.25 4.25 4.24 41 4.70 4.69 4.68 4.66
17 4.26 4.26 4.26 4.25 42 4.73 4.73 4.71 4.69
18 4.27 4.27 4.26 4.26 43 4.77 4.76 4.75 4.73
19 4.28 4.28 4.27 4.27 44 4.81 4.80 4.78 4.76
20 4.29 4.29 4.28 4.28 45 4.85 4.84 4.82 4.79
21 4.30 4.30 4.30 4.29 46 4.89 4.88 4.86 4.83
22 4.31 4.31 4.31 4.30 47 4.93 4.92 4.90 4.87
23 4.32 4.32 4.32 4.32 48 4.98 4.97 4.94 4.90
24 4.34 4.34 4.33 4.33 49 5.03 5.01 4.99 4.95
25 4.35 4.35 4.35 4.34 50 5.08 5.06 5.03 4.99
26 4.37 4.36 4.36 4.35 51 5.14 5.12 5.08 5.03
27 4.38 4.38 4.37 4.37 52 5.20 5.17 5.13 5.08
28 4.40 4.39 4.39 4.38 53 5.26 5.23 5.19 5.13
29 4.41 4.41 4.41 4.40 54 5.32 5.30 5.25 5.18
30 4.43 4.43 4.42 4.42 55 5.39 5.36 5.31 5.23
31 4.45 4.45 4.44 4.43 56 5.47 5.43 5.37 5.28
32 4.47 4.46 4.46 4.45 57 5.55 5.51 5.44 5.34
33 4.49 4.49 4.48 4.47 58 5.63 5.58 5.51 5.40
34 4.51 4.51 4.50 4.49 59 5.72 5.67 5.58 5.46
35 4.53 4.53 4.52 4.51 60 5.81 5.76 5.66 5.52
36 4.56 4.55 4.55 4.54 61 5.92 5.85 5.74 5.58
37 4.58 4.58 4.57 4.56 62 6.02 5.95 5.82 5.64
38 4.61 4.60 4.60 4.58 63 6.14 6.05 5.91 5.71
39 4.64 4.63 4.62 4.61 64 6.26 6.16 6.00 5.77
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Form 1194 (VA)
Page 38
<PAGE>
PAYOUT PERIOD OPTION TABLE II VARIABLE ANNUITY ONLY
(Benchmark Total Return is 5% - PER $1,000 OF NET PROCEEDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Age of Annuitant Age of Annuitant
Last Birthday When Last Birthday When
First Installment is First Installment is
Payable Monthly Installment Payable Monthly Installment
- -----------------------------------------------------------------------------------------------------------------------------------
5 Years 10 Years 15 Years 20 Years 5 Years 10 Years 15 Years 20 Years
Female Certain Certain Certain Certain Female Certain Certain Certain Certain
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
65 6.39 6.28 6.09 5.84 75 8.35 7.83 7.10 6.35
66 6.53 6.40 6.19 5.90 76 8.63 8.02 7.19 6.38
67 6.68 6.53 6.29 5.96 77 8.92 8.21 7.28 6.41
68 6.84 6.67 6.39 6.02 78 9.24 8.40 7.36 6.43
69 7.01 6.81 6.49 6.08 79 9.58 8.59 7.43 6.45
70 7.20 6.97 6.60 6.14 80 9.93 8.78 7.49 6.46
71 7.40 7.13 6.70 6.19 81 10.30 8.96 7.55 6.48
72 7.61 7.29 6.81 6.24 82 10.69 9.14 7.60 6.49
73 7.84 7.47 6.91 6.28 83 11.10 9.31 7.64 6.49
74 8.08 7.65 7.01 6.32 84 11.52 9.46 7.68 6.50
85 11.95 9.60 7.71 6.50
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Form 1194 (VA)
Page 39
<PAGE>
PAYOUT PERIOD OPTION TABLE II
(Benchmark Total Return is 3% -- PER $1,000 OF NET PROCEEDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Age of Annuitant Age of Annuitant
Last Birthday When Last Birthday When
First Installment is First Installment is
Payable Monthly Installment Payable Monthly Installment
- -----------------------------------------------------------------------------------------------------------------------------------
5 Years 10 Years 15 Years 20 Years 5 Years 10 Years 15 Years 20 Years
Unisex Certain Certain Certain Certain Unisex Certain Certain Certain Certain
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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>
Form 1194 (VA)
Page 40
<PAGE>
PAYOUT PERIOD OPTION TABLE II
(Benchmark Total Return is 3% PER $1,000 OF NET PROCEEDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Age of Annuitant Age of Annuitant
Last Birthday When Last Birthday When
First Installment is First Installment is
Payable Monthly Installment Payable Monthly Installment
- -----------------------------------------------------------------------------------------------------------------------------------
5 Years 10 Years 15 Years 20 Years 5 Years 10 Years 15 Years 20 Years
Unisex Certain Certain Certain Certain Unisex Certain Certain Certain Certain
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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>
Form 1194 (VA)
Page 41
<PAGE>
PAYOUT PERIOD OPTION TABLE II VARIABLE ANNUITY ONLY
(Benchmark Total Return is 5% PER $1,000 OF NET PROCEEDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Age of Annuitant Age of Annuitant
Last Birthday When Last Birthday When
First Installment is First Installment is
Payable Monthly Installment Payable Monthly Installment
- -----------------------------------------------------------------------------------------------------------------------------------
5 Years 10 Years 15 Years 20 Years 5 Years 10 Years 15 Years 20 Years
Unisex Certain Certain Certain Certain Unisex Certain Certain Certain Certain
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 4.33 4.33 4.32 4.32 45 4.98 4.97 4.93 4.89
21 4.34 4.34 4.34 4.33 46 5.03 5.01 4.98 4.93
22 4.36 4.35 4.35 4.34 47 5.08 5.06 5.02 4.97
23 4.37 4.37 4.36 4.36 48 5.14 5.11 5.07 5.02
24 4.39 4.38 4.38 4.37 49 5.19 5.16 5.12 5.06
25 4.40 4.40 4.39 4.39 50 5.25 5.22 5.17 5.10
26 4.42 4.41 4.41 4.40 51 5.31 5.28 5.23 5.15
27 4.44 4.43 4.43 4.42 52 5.38 5.34 5.28 5.20
28 4.45 4.45 4.44 4.44 53 5.45 5.41 5.34 5.25
29 4.47 4.47 4.46 4.46 54 5.52 5.48 5.40 5.30
30 4.49 4.49 4.48 4.47 55 5.60 5.55 5.47 5.36
31 4.52 4.51 4.50 4.49 56 5.69 5.63 5.54 5.41
32 4.54 4.53 4.53 4.52 57 5.78 5.71 5.61 5.47
33 4.56 4.56 4.55 4.54 58 5.87 5.80 5.68 5.53
34 4.59 4.58 4.57 4.56 59 5.97 5.89 5.76 5.58
35 4.61 4.61 4.60 4.58 60 6.08 5.99 5.84 5.64
36 4.64 4.64 4.63 4.61 61 6.19 6.09 5.92 5.70
37 4.67 4.67 4.65 4.64 62 6.32 6.20 6.01 5.77
38 4.71 4.70 4.68 4.66 63 6.45 6.31 6.10 5.83
39 4.74 4.73 4.71 4.69 64 6.59 6.43 6.19 5.89
40 4.77 4.76 4.75 4.72 65 6.73 6.56 6.28 5.94
41 4.81 4.80 4.78 4.75 66 6.89 6.69 6.38 6.00
42 4.85 4.84 4.82 4.79 67 7.06 6.83 6.48 6.06
43 4.89 4.88 4.85 4.82 68 7.24 6.97 6.57 6.11
44 4.94 4.92 4.89 4.86 69 7.43 7.12 6.67 6.16
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Form 1194 (VA)
Page 42
<PAGE>
PAYOUT PERIOD OPTION TABLE II -- VARIABLE ANNUITY ONLY
(Benchmark Total Return is 5% -- PER $1,000 OF NET PROCEEDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Age of Annuitant Age of Annuitant
Last Birthday When Last Birthday When
First Installment is First Installment is
Payable Monthly Installment Payable Monthly Installment
- -----------------------------------------------------------------------------------------------------------------------------------
5 Years 10 Years 15 Years 20 Years 5 Years 10 Years 15 Years 20 Years
Unisex Certain Certain Certain Certain Unisex Certain Certain Certain Certain
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
70 7.63 7.28 6.77 6.21 80 10.47 9.00 7.55 6.47
71 7.85 7.44 6.86 6.25 81 10.83 9.16 7.60 6.48
72 8.08 7.60 6.96 6.29 82 11.21 9.31 7.64 6.49
73 8.32 7.78 7.05 6.33 83 11.60 9.46 7.67 6.50
74 8.58 7.95 7.14 6.36 84 11.99 9.59 7.70 6.50
75 8.86 8.13 7.22 6.39 85 12.39 9.72 7.73 6.51
76 9.15 8.30 7.30 6.41
77 9.45 8.48 7.37 6.43
78 9.78 8.66 7.44 6.45
79 10.11 8.83 7.50 6.46
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Form 1194 (CA)
Page 43
<PAGE>
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 IF THE ANNUAL
INVESTMENT EXPERIENCE IS GREATER THAN 6.4% OR 4.4%, AND WILL DECREASE IF THE
ANNUAL INVESTMENT EXPERIENCE IS LESS THAN 6.4% OR 4.4%, DEPENDING ON WHETHER THE
BENCHMARK TOTAL RETURN IS 5% OR 3%, RESPECTIVELY. 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]
Form 1194 (VA)(Cert.)
Page 44
<PAGE>
FIRST ING LIFE
NEW YORK, NEW YORK
CONTRACT HOLDER: NORWEST BANK IOWA, TRUSTEE OWNER: JOHN DOE
CONTRACT DATE: FEBRUARY 28, 1996 CERTIFICATE DATE: July 1, 1995
CONTRACT NUMBER: 0001 CERTIFICATE NUMBER: 310000011
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 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.
/s/ Signature illegible /s/ Signature illegible
------------------------ ------------------------
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 if the annual
investment experience is greater than 6.4% or 4.4%, and will decrease if the
annual investment experience is less than 6.4% or 4.4%, depending on whether the
Benchmark Total Return is 5% or 3%, respectively. 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]
Form 1194 (VA)(Cert.)
<PAGE>
TABLE OF CONTENTS
This Certificate contains the provisions of the Certificate as they apply to
you. READ IT CAREFULLY.
GUIDE TO KEY PROVISIONS
<TABLE>
<S> <C>
CERTIFICATE SCHEDULE.................................................................... 5
CERTIFICATE EXPENSE PROVISIONS.......................................................... 6
BENEFIT PROVISIONS...................................................................... 7
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.............................................................13
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...................................15
</TABLE>
Form 1194(VA)(Cert.)
Page 2
<PAGE>
<TABLE>
<S> <C>
EXCESS TRANSFER CHARGE..................................................................15
DOLLAR COST AVERAGING TRANSFER OPTION...................................................15
AUTOMATIC REBALANCING...................................................................16
ACCUMULATION VALUE PROVISIONS...........................................................16
VALUATION DATE..........................................................................17
VALUATION PERIOD........................................................................17
ACCUMULATION UNIT VALUE.................................................................17
ACCUMULATION EXPERIENCE FACTOR..........................................................17
ACCUMULATION VALUE OF THE DIVISIONS OF THE VARIABLE ACCOUNT.............................18
ACCUMULATION VALUE OF THE GUARANTEED INTEREST DIVISION..................................19
PARTIAL WITHDRAWAL PROVISIONS...........................................................19
DEMAND WITHDRAWAL OPTION................................................................20
SYSTEMATIC INCOME PROGRAM...............................................................20
IRA INCOME PROGRAM......................................................................21
SURRENDER PROVISIONS....................................................................21
CASH SURRENDER VALUE....................................................................21
GENERAL CONTRACT PROVISIONS.............................................................22
THE CONTRACT............................................................................22
TERMINATION OF CONTRACT.................................................................22
AGE.....................................................................................22
PROCEDURES..............................................................................22
DEFERRAL OF PAYOUT......................................................................23
TAX QUALIFICATION.......................................................................23
CONTRACT CHANGES........................................................................23
COLLATERAL ASSIGNMENT...................................................................23
INCONTESTABILITY........................................................................24
MISSTATEMENT OF AGE OR SEX..............................................................24
PERIODIC REPORTS........................................................................24
BASIS OF COMPUTATIONS...................................................................24
TAXES...................................................................................24
NON PARTICIPATING.......................................................................24
CUSTOMER SERVICE CENTER.................................................................25
ANNUITY OPTION PROVISIONS...............................................................25
SUPPLEMENTARY CONTRACT..................................................................25
</TABLE>
Form 1194 (VA)(Cert.)
Page 3
<PAGE>
<TABLE>
<S> <C>
PAYOUT OPTIONS..........................................................................25
VARIABLE ANNUITY PAYOUT................................................................25
FIXED ANNUITY PAYOUT...................................................................27
COMBINATION ANNUITY PAYOUT.............................................................27
PAYOUT PERIOD OPTIONS...................................................................28
COMMUTING...............................................................................29
EXCESS INTEREST.........................................................................29
MINIMUM AMOUNTS.........................................................................29
INCOME PROTECTION.......................................................................29
PAYOUTS OTHER THAN MONTHLY..............................................................29
PAYOUT PERIOD OPTION TABLES.............................................................30
</TABLE>
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.
Form 1194 (VA)(Cert.)
Page 4
<PAGE>
CERTIFICATE SCHEDULE
Owner: JOHN DOE Age and Sex: 35, Male
Annuitant: JOHN DOE Age and Sex: 35, Male
Certificate Number: 310000011
Certificate Date: July 1, 1995
Annuity Date: July 1, 2055
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
Form 1194 (VA)(Cert.)
Page 5
<PAGE>
ALLOCATION OF INITIAL PURCHASE PAYMENTS AS SHOWN ON CERTIFICATE APPLICATION
[Value Division] 25 %
[Growth Division]] 0 %
[International Division] 0 %
[Global Strategic Income Division] 25 %
[Global Interactive/Telecomm Division] 25 %
Guaranteed Interest Division 0 %
All percentage allocations must be in whole numbers.
Form 1194 (VA)(Cert.)
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<PAGE>
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.
<TABLE>
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ANNIVERSARIES SINCE 0 1 2 3 4 5 6 and
PURCHASE PAYMENT WAS MADE: more
-----------------------------------------------------------------
PERCENTAGE: 7% 6% 5% 4% 3% 2% 0%
-----------------------------------------------------------------
</TABLE>
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: $30.00 per year
$100,000 or more: $0 per year
VARIABLE ACCOUNT ANNUAL EXPENSES (Based on the percentage of assets in each
Variable Account Division)
<TABLE>
<S> <C>
Mortality And Expense Risk Charge: 1.25%
Asset Based Administrative Charge: 0.15%
</TABLE>
GUARANTEED INTEREST RATE
The Guaranteed Interest Rate for the Guaranteed Interest Division is: 3.00%
per year
Form 1194 (VA)(Cert.)
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<PAGE>
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 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.
Form 1194 (VA)(Cert.)
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<PAGE>
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, 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.
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
Form 1194 (VA)(Cert.)
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<PAGE>
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 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.
Form 1194 (VA)(Cert.)
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<PAGE>
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 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.).
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
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.
Form 1194 (VA)(Cert.)
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<PAGE>
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.
Form 1194 (VA)(Cert.)
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<PAGE>
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
Form 1194 (VA)(Cert.)
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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.
Form 1194 (VA)(Cert.)
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The following table summarizes the number of transfers available and the
associated charges during any Certificate year:
<TABLE>
<CAPTION>
----------------------------------------------------------
ACCUMULATION PERIOD ANNUITY PERIOD
------------------------------------------------------------------------------------------------------
<S> <C> <C>
FREE TRANSFERS 12 4
TOTAL NUMBER OF TRANSFERS PERMITTED Unlimited 4
EXCESS TRANSFER CHARGE $25 for each transfer in excess of Not Applicable
12 during any Certificate Year
------------------------------------------------------------------------------------------------------
</TABLE>
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.
Form 1194 (VA)(Cert.)
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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.
Form 1194 (VA)(Cert.)
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<PAGE>
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 Certificate 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.
Form 1194 (VA)(Cert.)
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<PAGE>
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.
Form 1194 (VA)(Cert.)
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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.
Form 1194 (VA)(Cert.)
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<PAGE>
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.
Form 1194 (VA)(Cert.)
Page 20
<PAGE>
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.
Form 1194 (VA)(Cert.)
Page 21
<PAGE>
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.
Form 1194 (VA)(Cert.)
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<PAGE>
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.
Form 1194 (VA)(Cert.)
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<PAGE>
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.
Form 1194 (VA)(Cert.)
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<PAGE>
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
1. 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
Form 1194 (VA)(Cert.)
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<PAGE>
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
Form 1194 (VA)(Cert.)
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<PAGE>
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.
Form 1194 (VA)(Cert.)
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<PAGE>
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.
Form 1194 (VA)(Cert.)
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<PAGE>
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 11.839, 5.963, or 2.993 if the Benchmark
Total Return is 3%, and by 11.736, 5.939 or 2.988 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.
Form 1194 (VA)(Cert.)
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<PAGE>
PAYOUT PERIOD OPTION TABLES
PAYOUT PERIOD OPTION TABLE I
(Benchmark Total Return is 3% -- Per $1,000 of Net Proceeds)
<TABLE>
<CAPTION>
------------------------------------------------------------
No. of Years Monthly No. of Years Monthly
Payable Installments Payable Installment
------------------------------------------------------------
<S> <C> <C> <C>
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
------------------------------------------------------------
</TABLE>
Form 1194 (VA)(Cert.)
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<PAGE>
PAYOUT PERIOD OPTION TABLE I - VARIABLE ANNUITY ONLY
(Benchmark Total Return is 5% -- Per $1,000 of Net Proceeds)
<TABLE>
<CAPTION>
------------------------------------------------------------
No. of Years Monthly No. of Years Monthly
Payable Installments Payable Installment
------------------------------------------------------------
<S> <C> <C> <C>
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>
Form 1194 (VA)(Cert.)
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<PAGE>
PAYOUT PERIOD OPTION TABLE II
(Benchmark Total Return is 3% -- Per $1,000 of Net Proceeds)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Age of Annuitant Age of Annuitant
Last Birthday When Last Birthday When
First Installment is First Installment is
Payable Monthly Installment Payable Monthly Installment
- -----------------------------------------------------------------------------------------------------------------------------------
5 Years 10 Years 15 Years 20 Years 5 Years 10 Years 15 Years 20 Years
Male Certain Certain Certain Certain Male Certain Certain Certain Certain
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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>
Form 1194 (VA)(Cert.)
Page 32
<PAGE>
PAYOUT PERIOD OPTION TABLE II
(Benchmark Total Return is 3% -- Per $1,000 of Net Proceeds)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Age of Annuitant Age of Annuitant
Last Birthday When Last Birthday When
First Installment is First Installment is
Payable Monthly Installment Payable Monthly Installment
- ------------------------------------------------------------------------------------------------------------------------------------
5 Years 10 Years 15 Years 20 Years 5 Years 10 Years 15 Years 20 Years
Male Certain Certain Certain Certain Male Certain Certain Certain Certain
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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>
Form 1194 (VA)(Cert.)
Page 33
<PAGE>
PAYOUT PERIOD OPTION TABLE II -- VARIABLE ANNUITY ONLY
(Benchmark Total Return is 5% -- Per $1,000 of Net Proceeds)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Age of Annuitant Age of Annuitant
Last Birthday When Last Birthday When
First Installment is First Installment is
Payable Monthly Installment Payable Monthly Installment
- ------------------------------------------------------------------------------------------------------------------------------------
5 Years 10 Years 15 Years 20 Years 5 Years 10 Years 15 Years 20 Years
Male Certain Certain Certain Certain Male Certain Certain Certain Certain
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
15 4.31 4.30 4.30 4.30 40 4.88 4.87 4.84 4.81
16 4.32 4.32 4.31 4.31 41 4.92 4.91 4.88 4.84
17 4.33 4.33 4.32 4.32 42 4.97 4.95 4.92 4.88
18 4.34 4.34 4.34 4.33 43 5.02 5.00 4.96 4.92
19 4.36 4.35 4.35 4.34 44 5.07 5.04 5.01 4.95
20 4.37 4.37 4.36 4.36 45 5.12 5.09 5.05 5.00
21 4.38 4.38 4.38 4.37 46 5.17 5.15 5.10 5.04
22 4.40 4.40 4.39 4.39 47 5.23 5.20 5.15 5.08
23 4.42 4.41 4.41 4.40 48 5.29 5.26 5.20 5.13
24 4.43 4.43 4.42 4.42 49 5.35 5.32 5.25 5.17
25 4.45 4.45 4.44 4.43 50 5.42 5.38 5.31 5.22
26 4.47 4.47 4.46 4.45 51 5.49 5.44 5.37 5.27
27 4.49 4.49 4.48 4.47 52 5.57 5.51 5.43 5.32
28 4.51 4.51 4.50 4.49 53 5.64 5.59 5.49 5.37
29 4.53 4.53 4.52 4.51 54 5.73 5.66 5.56 5.43
30 4.56 4.55 4.54 4.53 55 5.81 5.74 5.63 5.48
31 4.58 4.58 4.57 4.55 56 5.91 5.83 5.71 5.54
32 4.61 4.60 4.59 4.58 57 6.01 5.92 5.78 5.60
33 4.64 4.63 4.62 4.60 58 6.11 6.01 5.86 5.65
34 4.67 4.66 4.65 4.63 59 6.22 6.12 5.94 5.71
35 4.70 4.69 4.68 4.65 60 6.34 6.22 6.03 5.77
36 4.73 4.72 4.71 4.68 61 6.47 6.33 6.11 5.83
37 4.76 4.75 4.74 4.71 62 6.61 6.45 6.20 5.89
38 4.80 4.79 4.77 4.74 63 6.76 6.58 6.29 5.94
39 4.84 4.83 4.81 4.77 64 6.91 6.70 6.38 6.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Form 1194 (VA)(Cert.)
Page 34
<PAGE>
PAYOUT PERIOD OPTION TABLE II -- VARIABLE ANNUITY ONLY
(Benchmark Total Return is 5% -- Per $1,000 of Net Proceeds)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Age of Annuitant Age of Annuitant
Last Birthday When Last Birthday When
First Installment is First Installment is
Payable Monthly Installment Payable Monthly Installment
- ------------------------------------------------------------------------------------------------------------------------------------
5 Years 10 Years 15 Years 20 Years 5 Years 10 Years 15 Years 20 Years
Male Certain Certain Certain Certain Male Certain Certain Certain Certain
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
65 7.08 6.84 6.48 6.05 75 9.37 8.42 7.34 6.42
66 7.25 6.98 6.57 6.10 76 9.67 8.59 7.40 6.44
67 7.44 7.13 6.67 6.15 77 9.98 8.75 7.46 6.45
68 7.64 7.28 6.76 6.19 78 10.31 8.91 7.51 6.47
69 7.85 7.43 6.85 6.24 79 10.65 9.06 7.56 6.48
70 8.07 7.59 6.94 6.28 80 11.00 9.21 7.61 6.49
71 8.30 7.75 7.03 6.31 81 11.36 9.35 7.64 6.49
72 8.55 7.92 7.11 6.34 82 11.72 9.49 7.68 6.50
73 8.81 8.08 7.19 6.37 83 12.09 9.61 7.71 6.50
74 9.08 8.25 7.27 6.40 84 12.47 9.73 7.73 6.51
85 12.84 9.83 7.75 6.51
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Form 1194 (VA)(Cert.)
Page 35
<PAGE>
PAYOUT PERIOD OPTION TABLE II
(Benchmark Total Return is 3% -- Per $1,000 of Net Proceeds)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Age of Annuitant Age of Annuitant
Last Birthday When Last Birthday When
First Installment is First Installment is
Payable Monthly Installment Payable Monthly Installment
- -----------------------------------------------------------------------------------------------------------------------------------
5 Years 10 Years 15 Years 20 Years 5 Years 10 Years 15 Years 20 Years
Female Certain Certain Certain Certain Female Certain Certain Certain Certain
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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>
Form 1194 (VA)(Cert.)
Page 36
<PAGE>
PAYOUT PERIOD OPTION TABLE II
(Benchmark Total Return is 3% -- Per $1,000 of Net Proceeds)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Age of Annuitant Age of Annuitant
Last Birthday When Last Birthday When
First Installment is First Installment is
Payable Monthly Installment Payable Monthly Installment
- -----------------------------------------------------------------------------------------------------------------------------------
5 Years 10 Years 15 Years 20 Years 5 Years 10 Years 15 Years 20 Years
Female Certain Certain Certain Certain Female Certain Certain Certain Certain
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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>
Form 1194 (VA)(Cert.)
Page 37
<PAGE>
PAYOUT PERIOD OPTION TABLE II -- VARIABLE ANNUITY ONLY
(Benchmark Total Return is 5% -- Per $1,000 of Net Proceeds)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Age of Annuitant Age of Annuitant
Last Birthday When Last Birthday When
First Installment is First Installment is
Payable Monthly Installment Payable Monthly Installment
- -----------------------------------------------------------------------------------------------------------------------------------
5 Years 10 Years 15 Years 20 Years 5 Years 10 Years 15 Years 20 Years
Female Certain Certain Certain Certain Female Certain Certain Certain Certain
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
15 4.24 4.24 4.24 4.24 40 4.67 4.66 4.64
16 4.25 4.25 4.25 4.24 41 4.70 4.69 4.66
17 4.26 4.26 4.26 4.25 42 4.73 4.73 4.69
18 4.27 4.27 4.26 4.26 43 4.77 4.76 4.73
19 4.28 4.28 4.27 4.27 44 4.81 4.80 4.76
20 4.29 4.29 4.28 4.28 45 4.85 4.84 4.79
21 4.30 4.30 4.30 4.29 46 4.89 4.88 4.83
22 4.31 4.31 4.31 4.30 47 4.93 4.92 4.87
23 4.32 4.32 4.32 4.32 48 4.98 4.97 4.90
24 4.34 4.34 4.33 4.33 49 5.03 5.01 4.95
25 4.35 4.35 4.35 4.34 50 5.08 5.06 4.99
26 4.37 4.36 4.36 4.35 51 5.14 5.12 5.03
27 4.38 4.38 4.37 4.37 52 5.20 5.17 5.08
28 4.40 4.39 4.39 4.38 53 5.26 5.23 5.13
29 4.41 4.41 4.41 4.40 54 5.32 5.30 5.18
30 4.43 4.43 4.42 4.42 55 5.39 5.36 5.23
31 4.45 4.45 4.44 4.43 56 5.47 5.43 5.28
32 4.47 4.46 4.46 4.45 57 5.55 5.51 5.34
33 4.49 4.49 4.48 4.47 58 5.63 5.58 5.40
34 4.51 4.51 4.50 4.49 59 5.72 5.67 5.46
35 4.53 4.53 4.52 4.51 60 5.81 5.76 5.52
36 4.56 4.55 4.55 4.54 61 5.92 5.85 5.58
37 4.58 4.58 4.57 4.56 62 6.02 5.95 5.64
38 4.61 4.60 4.60 4.58 63 6.14 6.05 5.71
39 4.64 4.63 4.62 4.61 64 6.26 6.16 5.77
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Form 1194 (VA)(Cert.)
Page 38
<PAGE>
PAYOUT PERIOD OPTION TABLE II -- VARIABLE ANNUITY ONLY
(Benchmark Total Return is 5% -- Per $1,000 of Net Proceeds)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Age of Annuitant Age of Annuitant
Last Birthday When Last Birthday When
First Installment is First Installment is
Payable Monthly Installment Payable Monthly Installment
- -----------------------------------------------------------------------------------------------------------------------------------
5 Years 10 Years 15 Years 20 Years 5 Years 10 Years 15 Years 20 Years
Female Certain Certain Certain Certain Female Certain Certain Certain Certain
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
65 6.39 6.28 6.09 5.84 75 8.35 7.83 7.10 6.35
66 6.53 6.40 6.19 5.90 76 8.63 8.02 7.19 6.38
67 6.68 6.53 6.29 5.96 77 8.92 8.21 7.28 6.41
68 6.84 6.67 6.39 6.02 78 9.24 8.40 7.36 6.43
69 7.01 6.81 6.49 6.08 79 9.58 8.59 7.43 6.45
70 7.20 6.97 6.60 6.14 80 9.93 8.78 7.49 6.46
71 7.40 7.13 6.70 6.19 81 10.30 8.96 7.55 6.48
72 7.61 7.29 6.81 6.24 82 10.69 9.14 7.60 6.49
73 7.84 7.47 6.91 6.28 83 11.10 9.31 7.64 6.49
74 8.08 7.65 7.01 6.32 84 11.52 9.46 7.68 6.50
85 11.95 9.60 7.71 6.50
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Form 1194 (VA)(Cert.)
Page 39
<PAGE>
PAYOUT PERIOD OPTION TABLE II
(Benchmark Total Return is 3% -- Per $1,000 of Net Proceeds)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Age of Annuitant Age of Annuitant
Last Birthday When Last Birthday When
First Installment is First Installment is
Payable Monthly Installment Payable Monthly Installment
- -----------------------------------------------------------------------------------------------------------------------------------
5 Years 10 Years 15 Years 20 Years 5 Years 10 Years 15 Years 20 Years
Unisex Certain Certain Certain Certain Unisex Certain Certain Certain Certain
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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>
Form 1194(VA)(Cert.)
Page 40
<PAGE>
PAYOUT PERIOD OPTION TABLE II
(Benchmark Total Return is 3% -- Per $1,000 of Net Proceeds)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Age of Annuitant Age of Annuitant
Last Birthday When Last Birthday When
First Installment is First Installment is
Payable Monthly Installment Payable Monthly Installment
- -----------------------------------------------------------------------------------------------------------------------------------
5 Years 10 Years 15 Years 20 Years 5 Years 10 Years 15 Years 20 Years
Unisex Certain Certain Certain Certain Unisex Certain Certain Certain Certain
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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>
Form 1194 (VA)(Cert.)
Page 41
<PAGE>
PAYOUT PERIOD OPTION TABLE II -- VARIABLE ANNUITY ONLY
(Benchmark Total Return is 5% -- Per $1,000 of Net Proceeds)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Age of Annuitant Age of Annuitant
Last Birthday When Last Birthday When
First Installment is First Installment is
Payable Monthly Installment Payable Monthly Installment
- -----------------------------------------------------------------------------------------------------------------------------------
5 Years 10 Years 15 Years 20 Years 5 Years 10 Years 15 Years 20 Years
Unisex Certain Certain Certain Certain Unisex Certain Certain Certain Certain
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 4.33 4.33 4.32 4.32 45 4.98 4.97 4.93 4.89
21 4.34 4.34 4.34 4.33 46 5.03 5.01 4.98 4.93
22 4.36 4.35 4.35 4.34 47 5.08 5.06 5.02 4.97
23 4.37 4.37 4.36 4.36 48 5.14 5.11 5.07 5.02
24 4.39 4.38 4.38 4.37 49 5.19 5.16 5.12 5.06
25 4.40 4.40 4.39 4.39 50 5.25 5.22 5.17 5.10
26 4.42 4.41 4.41 4.40 51 5.31 5.28 5.23 5.15
27 4.44 4.43 4.43 4.42 52 5.38 5.34 5.28 5.20
28 4.45 4.45 4.44 4.44 53 5.45 5.41 5.34 5.25
29 4.47 4.47 4.46 4.46 54 5.52 5.48 5.40 5.30
30 4.49 4.49 4.48 4.47 55 5.60 5.55 5.47 5.36
31 4.52 4.51 4.50 4.49 56 5.69 5.63 5.54 5.41
32 4.54 4.53 4.53 4.52 57 5.78 5.71 5.61 5.47
33 4.56 4.56 4.55 4.54 58 5.87 5.80 5.68 5.53
34 4.59 4.58 4.57 4.56 59 5.97 5.89 5.76 5.58
35 4.61 4.61 4.60 4.58 60 6.08 5.99 5.84 5.64
36 4.64 4.64 4.63 4.61 61 6.19 6.09 5.92 5.70
37 4.67 4.67 4.65 4.64 62 6.32 6.20 6.01 5.77
38 4.71 4.70 4.68 4.66 63 6.45 6.31 6.10 5.83
39 4.74 4.73 4.71 4.69 64 6.59 6.43 6.19 5.89
40 4.77 4.76 4.75 4.72 65 6.73 6.56 6.28 5.94
41 4.81 4.80 4.78 4.75 66 6.89 6.69 6.38 6.00
42 4.85 4.84 4.82 4.79 67 7.06 6.83 6.48 6.06
43 4.89 4.88 4.85 4.82 68 7.24 6.97 6.57 6.11
44 4.94 4.92 4.89 4.86 69 7.43 7.12 6.67 6.16
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Form 1194 (VA)(Cert.)
Page 42
<PAGE>
PAYOUT PERIOD OPTION TABLE II -- VARIABLE ANNUITY ONLY
(Benchmark Total Return is 5% -- Per $1,000 of Net Proceeds)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Age of Annuitant Age of Annuitant
Last Birthday When Last Birthday When
First Installment is First Installment is
Payable Monthly Installment Payable Monthly Installment
- -----------------------------------------------------------------------------------------------------------------------------------
5 Years 10 Years 15 Years 20 Years 5 Years 10 Years 15 Years 20 Years
Unisex Certain Certain Certain Certain Unisex Certain Certain Certain Certain
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
70 7.63 7.28 6.77 6.21 80 10.47 9.00 7.55 6.47
71 7.85 7.44 6.86 6.25 81 10.83 9.16 7.60 6.48
72 8.08 7.60 6.96 6.29 82 11.21 9.31 7.64 6.49
73 8.32 7.78 7.05 6.33 83 11.60 9.46 7.67 6.50
74 8.58 7.95 7.14 6.36 84 11.99 9.59 7.70 6.50
75 8.86 8.13 7.22 6.39 85 12.39 9.72 7.73 6.51
76 9.15 8.30 7.30 6.41
77 9.45 8.48 7.37 6.43
78 9.78 8.66 7.44 6.45
79 10.11 8.83 7.50 6.46
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Form 1194 (VA)(Cert.)
Page 43
<PAGE>
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 IF THE ANNUAL
INVESTMENT EXPERIENCE IS GREATER THAN 6.4% OR 4.4%, AND WILL DECREASE IF THE
ANNUAL INVESTMENT EXPERIENCE IS LESS THAN 6.4% OR 4.4%, DEPENDING ON WHETHER THE
BENCHMARK TOTAL RETURN IS 5% OR 3%, RESPECTIVELY. 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]
Form 1194 (VA)(Cert.)
<PAGE>
[LETTERHEAD OF FIRST ING LIFE APPEARS HERE]
First ING Life Insurance Company of New York
1290 Broadway
Denver, CO 80203
APPLICATION FOR GROUP FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT
Name____________________________________________________________________________
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 Contact 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
By:__________________________________________________
Title:_______________________________________________
<PAGE>
The
Fulcrum
Fund(SM)
Annuity
Certificate
Application
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FIRST ING LIFE OF NEW YORK
[LOGO OF FIRST ING GROUP]
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THE FULCRUM FUND(SM) 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(sm) Annuity. The minimum initial amount is $25,000 ($1,000 for IRAs). Make
check(s) payable to: The Fulcrum Fund(sm) Annuity/First ING Life.
ANNUITY DATE
On the Annuity Date you select, The Fulcrum Fund(sm) 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 Averaging 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(sm) 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.
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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 [_] Accountant/Attorney
[_] Child/Children [_] Other ___________________________
[_] Parent _________________________________
OCCUPATION OF ANNUITANT
[_] Professional [_] Manager/Administrator
[_] Business Owner [_] Technical
[_] Retired
[_] Other ___________________________
MARITAL STATUS
[_] Single [_] Married [_] Divorced [_] Separated
[_] Widowed
WHO IS:
Annuitant Spouse Business Other (Specify)
Owner [_] [_] [_] [_]__________________
Beneficiary [_] [_] [_] [_]__________________
Premium Payor [_] [_] [_] [_]__________________
<PAGE>
[LETTERHEAD OF FIRST ING LIFE OF NEW YORK]
CERTIFICATE APPLICATION
THE FULCRUM FUND (SM) ANNUITY
GROUP DEFERRED COMBINATION FIXED AND VARIABLE ANNUITY
<TABLE>
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<S> <C> <C>
1 CERTIFICATE Name________________________________________ [_] Joint Owner
OWNER(S) Address_____________________________________ Name________________________________________
____________________________________________ Address_____________________________________
Telephone___________________________________ ____________________________________________
Social Security Number______________________ Social Security Number______________________
Date of Birth ____/____/____ Date of Birth ____/____/____
Sex [_] Male [_] Female Sex [_] Male [_] Female
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2 ANNUITANT Name________________________________________ [_] Joint or [_] Contingent Annuitant
(IF OTHER THAN OWNER) Address_____________________________________ Name________________________________________
____________________________________________ Address_____________________________________
Telephone___________________________________ ____________________________________________
Social Security Number______________________ Social Security Number______________________
Date of Birth ____/____/____ Date of Birth ____/____/____
Sex [_] Male [_] Female Sex [_] Male [_] Female
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3 BENEFICIARY(IES) PRIMARY BENEFICIARY(ies) CONTINGENT BENEFICIARY(ies)
Print Full Name % Relationship Print Full Name % Relationship
____________________________________________ ____________________________________________
____________________________________________ ____________________________________________
____________________________________________ ____________________________________________
____________________________________________ ____________________________________________
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4 INITIAL PURCHASE Initial Purchase Payment $__________________ Annuity Date _______________________________
PAYMENT/ (see instructions) (see instructions)
ANNUITY DATE
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5 INITIAL PURCHASE Allocate your Initial Purchase Payment among the Divisions listed below. Please use whole
PAYMENT ALLOCATION percentages. The total must equal 100%.
Value Division Gabelli Funds, Inc. __________________%
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 Funds, Inc. __________________%
Guaranteed Interest Division __________________%
TOTAL 100%
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6 DOLLAR COST Please transfer $_____________ (minimum $100) from my Global Strategic Income Division
AVERAGING into the Division(s) selected below. Please use whole percentages. The total must equal
(see instructions) 100%.
Value Division Gabelli Funds, Inc. __________________%
[_] Check if you wish Growth Division Stonehill Capital Management, Inc. __________________%
to select this Balanced Opportunity Division Maverick Capital, Ltd. __________________%
option. Global Interactive/telecomm Division Gabelli Funds, Inc. __________________%
TOTAL 100%
Please specify desired stop date and/or stop dollar amount _______________
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7 AUTOMATIC [_] Check if you wish to select this option
REBALANCING (see instructions)
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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 _______________________________
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
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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:
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10 SYSTEMATIC FREQUENCY (select one) INCOME DESIRED (select one)
INCOME PROGRAM [_] MOnthly [_] Quarterly [_] _____% of Accumulation Value;
(SEE INSTRUCTIONS) or [_] $__________
Payments to commence on _____ of _______________ [_] I do not want to have Federal income tax
Day Month withheld.
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11 AGREEMENTS AND By signing below, I/we acknowledge receipt of the Prospectus for the Fulcrum Fund(SM) Annuity
SIGNATURES dated _________________. I/We also acknowledge receipt of the Prospectuses for the Variable
Account Divisions of the Fulcrum Fund(SM) Annuity. I/WE UNDERSTAND THAT THIS CERTIFICATE'S CASH
Read the following SURRENDER VALUE MAY INCREASE OR DECREASE ON ANY DAY DEPENDING ON THE INVESTMENT RESULTS. No
statements carefully minimum cash surrender value is guaranteed. This Certificate is in accord with my/our
and sign below: anticipated financial needs.
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
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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
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Signature of Annuitant (if other than Owner)
Please make your check(s) payable to: The Fulcrum Fund(SM) Annuity/First ING Life.
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12 STATEMENT OF [_] I hereby request a Statement of Additional Information for the Fulcrum Fund(SM) Annuity.
ADDITIONAL
INFORMATION
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REPRESENTATIVE'S Do you have reason to believe that the Certificate applied for will replace any existing
REPORT annuity or life insurance? [_] Yes [_] No
X
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Representatives Signature Printed Name & Number of Representative
_____________________________________________________________________________________________
Name of Broker/Dealer/Branch Address Of Broker/Dealer/Branch
_______________________________________________________
Agent Number
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HOME OFFICE
CORRECTIONS
FOR HOME OFFICE USE ONLY
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</TABLE>
<PAGE>
AMENDED AND RESTATED CHARTER
OF
FIRST ING LIFE INSURANCE COMPANY OF NEW YORK
(Originally the Urbaine Insurance Company)
(Subsequently The Urbaine Life Reinsurance Company)
Charter:
Amended - June 21, 1977
Filed N.Y. State - June 27, 1977
Amended - May 21, 1993
Filed N.Y. State - May 21, 1993
Amended - February 22, 1994
<PAGE>
AMENDED AND RESTATED CHARTER
OF
(Formerly THE URBAINE LIFE REINSURANCE COMPANY
Under (S)805 and (S)807 of the Business Corporation Law
_________________
The undersigned, being the Executive Vice President and Secretary of the
Corporation, do hereby certify and set forth:
(1) The name of the Corporation is: First ING Life Insurance Company of
New York.
(2) The Charter of the Corporation was filed with the State of New York on
the 7th day of February, 1973 and subsequently amended on June 27, 1977.
(3) The Charter of the Corporation is hereby amended by striking Articles
1 through X in their entirety and substituting in lieu thereof the Articles set
forth herein below. The provisions set forth in this Amended and Restated
Charter supersede the original Charter and all amendments thereto. This Amended
and Restate Charter correctly sets forth the provisions of the Charter, as
amended, of the Corporation.
Article I. The name of this Corporation is: FIRST ING LIFE
INSURANCE COMPANY OF NEW YORK.
Article II. The principle office of the Corporation is to be located
in the County of New York, State of New York, and it shall have power to conduct
its business wherever authorized by law. The Corporation may establish other
offices, agencies or branches outside of the State of New York and in any part
of the world.
<PAGE>
Article III. The kinds of insurance to be transacted by the
Corporation, shall be those defined by Paragraphs 1, 2 and 3 of Subsection (a)
of Section 1113 of the Insurance Law of the State of New York, as follows:
1. "Life insurance," means every insurance upon the lives of human
beings and every insurance appertaining thereto, including the granting of
endowment benefits, additional benefits in the event of death by accident,
additional benefits to safeguard the contract from lapse, accelerated payments
or part or all of the death benefit or a special surrender value upon diagnosis
(A) of a terminal illness defined as life expectancy of 12 months or less, or
(B) of a medical condition requiring extraordinary medical care or treatment
regardless of life expectancy, or provide special surrender value upon total and
permanent disability of the insured, and optional modes of settlement of
proceeds. Amounts paid the insurer for life insurance and proceeds applied under
optional modes of settlement or under dividend options may be allocated by the
insurer to one or more separate accounts pursuant to section four thousand two
hundred forty of this chapter.
2. "Annuities," means all agreements to make periodical payments for
a period certain or where the making or continuance of all or of some of a
series of such payments, or the amount of any such payment, depends upon the
continuance of human life, except payments made under the authority of paragraph
one hereof. Amounts paid to the insurer to provide annuities and proceeds
applied under optional modes of settlement or under dividend options may be
allocated by the insurer to one or more separate accounts pursuant to section
four thousand two hundred forty of this chapter.
3. "Accident and health insurance," means (a) insurance against
death or personal injury by accident or by any specified kind or kinds of
accident and insurance against sickness, ailment or bodily injury, including
insurance providing disability benefits pursuant to article nine of the worker's
compensation law, except as specified in subparagraph (b) hereof; and (b)
non-cancelable disability insurance, meaning insurance against disability
resulting from sickness, ailment or bodily injury, (but excluding insurance
solely against accidental injury) under any contract which does not give the
insurer the option to cancel or otherwise terminate the contract at or after one
year from its effective date or renewal date.
and such other kind or kinds of insurance of other business or businesses as a
stock life insurance company now is or hereafter may be permitted to transact
under the Insurance Law of the State of New York.
Article IV. The Corporation may also engage in the reinsurance of the
kinds of insurance business it is authorized to do.
Article V. The Corporation shall have full power and authority to
cede reinsurance of any risks taken by it.
Article VI. The corporation powers of the Corporation shall be
exercised by a Board of Directors, a majority of whom shall be citizens and
residents of the United State and not less than three of whom shall be residents
of the State of New York. The number of Directors shall not be less than
thirteen (13) nor more than twenty-one (21). Not less than one-third of the
members of any committee of the Board of Directors shall be persons who are not
officers or employees of such company or of any entity controlling, controlled
by, or under common control with the Corporation and who are not beneficial
owners of a controlling interest in the voting stock of the Corporation or any
such entity.
The Directors shall not be required to hold any shares of stock in the
Corporation. Each Director shall be at least eighteen (18) years of age. The
Directors shall hold office until the next annual meeting following their
election and qualification, and until their successors shall be elected and
qualified. Any vacancy in the Board of Directors shall 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
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<PAGE>
present at any regular meeting of the Board or at a special meeting called for
that purpose.
Article VII. There shall be an annual meeting of the stockholders of
the Corporation on the third Wednesday in April of each year, or on such other
day as the Directors by resolution of the by-laws may prescribe. Should any
designated day fall upon a legal holiday, then the meeting shall be held on the
next business day immediately following. At such annual meeting there shall be
elected a full Board of Directors, consisting of not less than thirteen (13)
members, and additional Directors may be similarly elected until the Board
consists of the maximum of twenty-one (21) members. At each election each
stockholder shall have the right, either in person or by proxy, to cast one vote
for each share of stock held by him for at least ten (10) days immediately
preceding the election. The Directors shall be elected by a plurality of the
whole number of votes cast at such meeting. The Board of Directors shall have
power to make such by-laws, not inconsistent with the constitution or laws of
the State of New York or of the United States or with this Amended and Restated
Charter, as may be necessary for the management of the Corporation's property,
the government of its officers, the regulation and conduct of its affairs and
the transfer of its capital stock, and shall have power to alter, amend, suspend
and add to the same.
The officers of the Corporation shall be a chairman, a president, one
or more vice presidents, a treasurer and a secretary, who shall be elected at
the annual meeting of the Board of Directors held immediately after the annual
meeting of stockholders. The first officers of the Corporation shall be elected
at the organization meeting of the Board of Directors. Any vacancy may be filled
by the Board of Directors. The Corporation may provide in its by-laws for the
creation of other offices, the method of election of officers and the filling of
vacancies.
Article VIII. The capital stock of the Corporation shall be One
Million One Hundred Thousand ($1,100,000) Dollars consisting of Ten Thousand
(10,000) shares having a par value of One Hundred Ten ($110) Dollars each.
Article IX. 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; provided, however, that the foregoing provision shall not
eliminate or limit:
1. the liability of a Director if judgement 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 be reference, by 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; or
2. the liability of a Director for any act or omission prior to the
adoption of this Article by the stockholders of the Corporation.
Any repeal or modification of this Article IX by the stockholders of
the Corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a Director or the Corporation existing
at the time of such repeal or modification.
Article X. The duration of the Corporation shall be perpetual.
(4) By written a consent, unanimously executed by the Board of Directors
of the Corporation, pursuant to and in accordance with (s)708 of the New York
Business Corporation Law, the Board of Directors of the
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<PAGE>
Corporation duly advised the approval of the foregoing Amended and Restated
Charter, and by written consent unanimously executed by the stockholders of the
Corporation in accordance with (s)615 of the New York Business Corporation Law,
the stockholders of the Corporation duly approved said Amended and Restated
Charter. The effective date of the Directors' consent is February 22, 1994 and
the effective date of the stockholders' consent if February 22, 1994.
IN WITNESS WHEREOF, First ING Life Insurance Company of New York has
caused these presents to be signed in its name and on its behalf by its
President and its corporate seal to be hereunder affixed and attested by its
Secretary on this ______ day of _____ [and its Executive President acknowledges
that this Amended and Restate Charter is the act and deed of First ING Life
Insurance Company of New York and, under the penalties of perjury, that the
matters and facts set forth herein with respect to authorization and approval
are true in all material respects to the best of his/her knowledge, information
and belief.]
By:_________________________
V. Stanley Benfell
President
Sworn to before me this _________
day of __________, 19______
_________________________________
Notary Public
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<PAGE>
CORPORATE DATA SHEET
BACKGROUND INFORMATION
Company Name: _________________________________________________________________
(Full Legal Name)
(If the Company name changed within the last year, please provide
former name, and date of change:_________________________________
_____________________________________________)
Company Short Name: ___________________________________________________________
Address: _____________________________ _________________________________
_____________________________ _________________________________
_____________________________ _________________________________
(Statutory) (Mailing/Administrative)
NAIC Group Code: ____________________ NAIC Company Code:_______________
Employer Tax ID: ____________________ Fiscal Year End:_________________
Name & Address of Tax Year End:____________________
Registered Agent: _____________________
Duration:________________________
_____________________
State/County of
_____________________ Incorporation:___________________
Date of Incorporation:___________
Currency Used for Consolidation Purposes:_______________________________________
Date of Inclusion in the ING P & L:_____________________________________________
Jurisdictions of Operation: Check each state where licensed and indicate
registered agent for the Company in each state.
<TABLE>
<CAPTION>
Prentice- Prentice-
Hall CT Commissioner Other Hall CT Commissioner Other
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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<PAGE>
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
Amended - March 7, 1994
Filed N.Y. State -
Amended -
Filed N.Y. State -
<PAGE>
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 Vice Chairman, or in both of their absences, 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, of not less than thirteen (13) members, 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 their
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 Vice
Chairman, or in the absence of both, by the President, and shall be called by
the Chairman of the Board, or the Vice Chairman, 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 Vice Chairman, or in
both of their absences, 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
<PAGE>
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 Vice Chairman, 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
2
<PAGE>
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 for 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.
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Section 8. Participation in Board of Directors 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 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, a Vice Chairman, a Chief Executive
Officer and a President. They shall also elect one or more Senior Vice
Presidents, Second Vice Presidents, Vice Presidents, a Treasurer, 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 operations 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 and the Vice
Chairman, the President shall have the powers and perform the duties of the
Chairman of the Board.
Section 4. The Senior Vice Presidents, Second Vice Presidents, and Vice
Presidents shall have such powers and duties as may be delegated to them from
time to time by the Chief Executive Officer, 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
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the President shall devolve upon and be exercised by the Senior 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. The Treasurer shall have charge of, and be responsible for, all
funds and securities of the corporation. The Treasurer shall, from time to
time, render a statement of the condition of the finances of the corporation at
the request of the Board of Directors.
The Treasurer shall receive, and give receipt for, monies due and payable to the
corporation from any source whatsoever, and, in general, perform all the duties
incident to the office of Treasurer and such other duties as, from time to time,
may be assigned to him by the Board of Directors, the Chairman of the Board, or
the President. The Treasurer may also be required to give a bond for the
faithful performance of his duties in such sum and with such surety as may be
determined by the Board of Directors.
Section 7. 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 8. 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 9. 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:
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1. The submission to stockholders of any action that needs stockholders'
approval under the law.
2. The filling of vacancies on the Board of Directors, or on 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, at least one of whom is
neither an officer nor salaried employee of the Company, 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
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recommending to the Board of Directors the selection and compensation of such
principal officers.
Section 3. The Board of Directors may 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. If such an Investment
Committee is constituted, then the The Chairman of the Investment Committee
would preside at all meetings of the Investment Committee at which he is
present. The Investment Committee would keep a record of its proceedings and
would adopt its own rules of procedure. The Investment Committee would 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. Non-Derivative Actions. The corporation shall indemnify any
----------------------
person who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action, suit or proceeding, whether civil,
criminal, administrative, or investigative (other than an action by or in the
right of the corporation), by reason of the fact that he is or was a director,
member of a committee appointed by the Board of Directors, officer, salaried
employee, special agent, or fiduciary of the corporation or is or was serving at
the request of the corporation (whether or not as a representative of the
corporation) as a director, officer, employee, special agent, or fiduciary (for
example, acting in a fiduciary capacity for welfare benefit plans) of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses (including attorney fees), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in the best interests of the corporation and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit, or proceeding by
judgement, order, settlement, or conviction or upon a plea of nolo contendere or
its equivalent shall not of itself create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in the
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best interests of the corporation and, with respect to any original criminal
action or proceeding, had reasonable cause to believe that his conduct was
unlawful.
Section 2. Derivative Actions. The corporation shall indemnify any person
------------------
who was or is a party or is threatened to be made a party to any threatened,
pending, or completed action or in suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or was a
director, member of a committee appointed by the Board of Directors, officer,
salaried employee, special agent, or fiduciary of the corporation or is or was
serving at the request of the corporation (whether or not as a representative of
the corporation) as a director, officer, employee, special agent, or fiduciary
(for example, acting in a fiduciary capacity for welfare benefit plans) of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorney fees) actually and reasonably incurred by
him in connection with the settlement or defense of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in the best
interests of the corporation; but no indemnification shall be made under this
paragraph with respect to (1) a threatened action, or a pending action which is
settled or otherwise disposed of, or (2) any claim, issue, or matter as to which
such person has been adjudged to be liable for the negligence or misconduct in
the performance of his duty to the corporation unless and only to the extent
that the court in which such action or suit was brought determines upon
application that, despite the adjudication of liability, but in view of all
circumstances of the case, such person is fairly and reasonably entitled to
indemnification for such expenses which such court deems proper.
Section 3. Expenses. To the extent that a director, member of a committee
--------
appointed by the Board of Directors, officer, salaried employee, special agent,
or fiduciary of the corporation shall be successful on the merits in defense of
any action, suit, or proceeding referred to in Section 1 or Section 2 of this
Article V or in defense of any claim, issue, or matter therein, he shall be
indemnified by the corporation against expenses (including attorney fees)
actually and reasonably incurred by him in connection therewith.
Section 4. Authorization. Any indemnification under Section 1 or Section
-------------
2 of this Article V (unless ordered by a court) shall be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, member of a committee appointed by the Board of
Directors, officer, salaried employee, special agent, or fiduciary is proper in
the circumstances because he has met the applicable standard of conduct set
forth in Section 1 or Section 2. Such determination shall be made by the Board
of Directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit, or proceeding, or, if such a quorum is not
obtainable or even if obtainable a quorum of disinterested directors so directs,
by independent legal counsel in a written opinion, or by the Stockholder.
Section 5. Advance Payment of Expenses. Expenses (including attorney
---------------------------
fees) incurred in defending a civil or criminal action, suit, or proceeding may
be paid by the corporation in advance of the final disposition of such action,
suit, or proceeding as authorized in Section 4 of this Article V upon receipt of
an undertaking by or on behalf of the director, member of a committee appointed
by the Board of Directors, officer, salaried employee, special agent, or
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fiduciary to repay such amount unless it is ultimately determined that he is
entitled to be indemnified by the corporation as authorized in this Article V.
Section 6. Non-Exclusivity and Continuance. The indemnification provided
-------------------------------
by this Article V shall not be deemed exclusive of any other rights to which any
person indemnified may be entitled under the Articles of Incorporation, any
agreement, insurance policy, vote of the Stockholder or disinterested directors,
or otherwise, and any procedure provided for by any of the foregoing, both as to
action in his official capacity and as to action in another capacity while
holding such office. 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 the law.
Furthermore, the Corporation 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. Any indemnity otherwise payable under this
Article V on account of any specific loss or expense shall be reduced by the
amount of any insurance proceeds paid or payable to the person to be indemnified
on account of the same loss or expense is such insurance is provided by the
corporation or any of its affiliates. The indemnification provided by this
Article V shall continue as to a person who has ceased to be a director, member
of a committee appointed by the Board of Directors, officer, salaried employee,
special agent, or fiduciary with regard to acts or omissions of such person
occurring or alleged to have occurred while the person was so engaged, and shall
inure to the benefit of heirs, executors, and administrators of such a person.
Section 7. Application of this Article. The provisions of this Article V
---------------------------
shall apply to all actions, suits or proceedings described in Section 1 or
Section 2 arising or alleged to arise out of any acts or omissions on the part
of any person referred to in Section 1 or Section 2 occurring or alleged to
occur prior to the adoption of this Article V or at any time while it remains in
force.
Section 8. Exclusions. No indemnification is provided under this Article
----------
V for unsalaried persons under contract with the corporation in sales capacities
such as General Agents, Agents and Brokers. Except as expressly provided in
this Article V, no indemnity is provided for persons performing services to the
corporation as independent contractors. However, any other persons (excluding
general agents, agents, brokers, and independent contractors as referenced
above) who have been authorized or employed by the directors to conduct a
particular transaction or perform a specific act for the corporation not
involving continuity of service, who are referred to in this Article V as
"special agents", are not excluded by this section and are entitled to
indemnification subject to the conditions of this Article V.
Section 9. Payment of Expenses. 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
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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.
Section 10. Notice. 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.
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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, and written payment orders for the internal and
external wire transfer of Company funds on deposit with the bank via EFT and
ACH, 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 contained in these By-laws shall prevent any
Director from serving the Company in any other capacity, or receiving
compensation therefor.
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 be 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 be operative unless notice of the proposed
action is incorporated in the notice of the meeting at which such proposal is to
be acted upon.
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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
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PARTICIPATION AGREEMENT
THIS AGREEMENT is made by and between The Palladian Trust ("TRUST"), a
Massachusetts business trust, Palladian Advisors, Inc. ("ADVISOR"), a Delaware
corporation, 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, ADVISOR is registered with the SEC as an investment adviser under
the Investment Advisers Act of 1940; and
WHEREAS, TRUST intends to select ADVISOR as overall investment manager of
the 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; and
WHEREAS, DISTRIBUTOR is registered with the SEC as a brokerdealer 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
<PAGE>
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,
ADVISOR, TRUST and DISTRIBUTOR agree as follows:
1. LIFE COMPANY and ADVISOR agree that prior to the effective date of
TRUST's registration statement under the Securities Act of 1933 (the "1933 Act")
LIFE COMPANY or one of its affiliates shall purchase $50,000 worth of TRUST
shares and ADVISOR or one of its affiliates shall purchase $50,000 of TRUST
shares (collectively, "the seed money shares"), subject to the understanding
that the purchasers of the seed money shares shall have no current intention (as
of the time of the purchase) to redeem or resell the seed money shares. Each
purchaser shall determine the Portfolio or Portfolios in which it will invest.
All redemptions of the seed money shares shall be effected in accordance with
applicable legal standards.
2. 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.
3. 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.
4. 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.
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<PAGE>
5. 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 (S) 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.
6. (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
6(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 6(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.
Any error in the calculation of net asset value of a Portfolio greater than or
equal to $0.01 per share shall be reported promptly upon discovery to LIFE
COMPANY, and LIFE COMPANY shall be entitled to an adjustment to the number of
shares purchased or redeemed to reflect the corrected share net asset value. Any
error of a lesser amount shall be corrected on a going-forward basis (i.e., the
----
error shall not be repeated in the net asset value calculation next made after
discovery of the error) and LIFE COMPANY shall not be entitled to an adjustment
to the number of shares purchased or redeemed prior to discovery of the error.
Any error in the calculation of a dividend or capital gain distribution of a
Portfolio greater than or equal to $0.01 per share shall be reported promptly
upon discovery to LIFE COMPANY, and LIFE COMPANY shall be entitled to an
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adjustment to the number of shares received to reflect the corrected dividend or
capital gains distribution.
(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.
7. (a) TRUST will provide, at its expense, LIFE COMPANY with the
following TRUST (or individual Portfolio) documents, and any supplements
thereto, with respect to prospective Contract owners of LIFE COMPANY:
(i) camera ready copy of the current prospectus for printing
by the LIFE COMPANY;
(ii) a copy of the statement of additional information suitable
for duplication by the LIFE COMPANY;
(iii) camera ready copy of proxy material suitable
for printing by the LIFE COMPANY; and
(iv) camera ready copy of the annual and semiannual reports for
printing by the LIFE COMPANY.
(b) Unless TRUST otherwise elects, LIFE COMPANY shall be responsible
for printing or duplicating the following TRUST (or individual Portfolio)
documents, and any supplements thereto, for existing Contract owners of LIFE
COMPANY whose Contract values are invested in TRUST and mailing the documents to
those Contract owners :
(i) prospectuses and statements of additional information;
(ii) annual and semi-annual reports; and
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(iii) proxy materials.
TRUST, however, will bear the printing, duplicating and incremental mailing
costs with respect to such documents. For purposes of this section, incremental
mailing costs means: (1) all costs attributable to any mailing which includes
only the documents listed in (i), (ii) and (iii) above; and (2) for mailings
including documents other than those listed in (i), (ii) and (iii) above, any
increase in cost due to the addition of the TRUST documents. LIFE COMPANY will
submit any bills for printing, duplicating and/or incremental mailing costs,
relating to the TRUST documents described above, to TRUST for reimbursement by
TRUST; provided, however, that TRUST need not actually reimburse LIFE COMPANY
until TRUST has at least S75 million in assets. LIFE COMPANY shall monitor such
costs and shall use its best efforts to control these costs. LIFE COMPANY will
provide TRUST on a semi-annual basis, or more frequently as reasonably requested
by TRUST, with a current tabulation of the number of existing Contract owners of
LIFE COMPANY whose Contract values are invested in TRUST. This tabulation will
be sent to TRUST in the form of a letter signed by a duly authorized officer of
LIFE COMPANY attesting to the accuracy of the--information contained in the
letter.
(c) LIFE COMPANY shall bear all costs (including printing,
duplicating and mailing) for the following TRUST documents it uses other than
those TRUST documents provided to current Contract owners:
(i) prospectuses and statements of additional information;
(ii) annual and semi-annual reports; and
(iii) proxy materials.
(d) LIFE COMPANY shall bear all costs relating to the Contract
documents, including the prospectus and statement of additional information for
the Contracts.
8. (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, ADVISOR, 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
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<PAGE>
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, ADVISOR, or
DISTRIBUTOR or concerning TRUST, ADVISOR, 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 fifteenday
notice requirement of this Section 8 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 or its affiliate purchased seed money
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<PAGE>
shares and information about those shares; and (4) basic information about LIFE
COMPANY such as its address and state of organization.
9. 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.
10. (a) Except as limited by and in accordance with the provisions of
Sections 10(b) and 10(c) hereof, LIFE COMPANY agrees to indemnify and hold
harmless TRUST, ADVISOR and DISTRIBUTOR and each trustee of the Board of TRUST
and each officer of TRUST and each director and officer of ADVISOR and each
director and officer of DISTRIBUTOR and each person, if any, who controls TRUST,
ADVISOR, or DISTRIBUTOR 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 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
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<PAGE>
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.
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<PAGE>
(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 hall 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.
11. (a) Except as limited by and in accordance with the provisions of
Sections ll(b) and ll(c), ADVISOR and DISTRIBUTOR agree 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 11)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of ADVISOR and DISTRIBUTOR) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, regulation, at common law ar 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
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<PAGE>
omission was made in reliance upon and in conformity with
information furnished to ADVISOR or DISTRIBUTOR or TRUST
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 ADVISOR
or DISTRIBUTOR or TRUST or persons under their control) or
wrongful conduct of TRUST or ADVISOR 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
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<PAGE>
arise out of or result from any other material breach of
this Agreement by DISTRIBUTOR.
(b) Neither ADVISOR nor DISTRIBUTOR shall 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) Neither ADVISOR nor DISTRIBUTOR shall be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified ADVISOR and 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 ADVISOR
and DISTRIBUTOR of any such claim shall not relieve ADVISOR or 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, ADVISOR and
DISTRIBUTOR shall be entitled to participate at their own expense in the defense
thereof. ADVISOR and DISTRIBUTOR also shall be entitled to assume the defense
thereof, with counsel satisfactory to the party named in the action. After
notice from ADVISOR or DISTRIBUTOR to such party of ADVISOR's or 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 ADVISOR 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.
12. 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 shall notify LIFE COMPANY promptly
upon having a reasonable basis for believing that TRUST shares sold pursuant to
the Agreement are not registered under the 1933 Act, or are not duly authorized
for issuance, or are not issued in compliance in all material respects with
applicable law or that the TRUST is not registered under the 1940 Act. 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
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<PAGE>
maintain such qualification (under Subchapter M or any successor or similar
provisions), and that TRUST will notify LIFE COMPANY promptly 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.
13. 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.
14. 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.
15. 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.
16. 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
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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.
17. 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.
18. 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
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been declined by vote of a majority of the variable contract owners materially
and adversely affected by the material irreconcilable conflict.
19. 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.
20. 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.
21. 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.
22. 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.
23. 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.
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<PAGE>
24. (a) 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. TRUST hereby
agrees that, during the free look period applicable in any state where the
Contracts are sold, LIFE COMPANY has the right to invest any amount available
for investment under the Contracts in any money market fund or any similar
investment if, in the reasonable opinion of LIFE COMPANY, such investments are
prudent to protect against losses to LIFE COMPANY.
(b) Notwithstanding any provision in this Agreement, TRUST shall not
sell shares in the Portfolios listed in Schedule B hereto as of the date of this
Agreement (or any future Portfolios which are designed as investment options for
the Fulcrum Fund Variable Annuity) to any separate account funding variable
annuity contracts issued by a company other than either LIFE COMPANY or any ING
Group insurance company affiliate of LIFE COMPANY, including Security Life of
Denver Insurance Company ("Security Life") and Southland Life Insurance Company
(collectively, "LIFE COMPANY AFFILIATES"), unless Security Life consents. LIFE
COMPANY AFFILIATES shall have no exclusive rights with respect to the sale of
shares of the Portfolios on Schedule B hereto as of the date of this Agreement
(or any future Portfolios which are designed as investment options for the
Fulcrum Fund Variable Annuity) to insurance company separate accounts funding
variable life contracts or modified endowment contracts. LIFE COMPANY AFFILIATES
shall have no exclusive rights with respect to the sale of shares for the Fund
For Life Portfolio or the Fund For Life: Growth and Income Portfolio
(collectively, the "Fund For Life Portfolios") to separate accounts funding
variable annuity contracts, separate accounts funding variable life contracts,
or separate accounts funding modified endowment contracts. Prior to offering
shares of any Portfolio other than those listed on Schedule B hereto as of the
date of this Agreement, any future Portfolios which are designed as investment
options for the Fulcrum Fund Variable Annuity and the Fund For Life Portfolios,
TRUST or ADVISOR shall notify Security Life of the intention to create and offer
the Portfolio, its investment and other characteristics, and the market for
which it is designed. Security Life will be solely responsible for notifying any
other LIFE COMPANY AFFILIATE of such information, including LIFE COMPANY. If
LIFE COMPANY AFFILIATES fail to respond within one hundred twenty (120) days of
receipt of the notice, TRUST may offer shares of any such Portfolio to other
insurance companies and their separate accounts. If LIFE COMPANY AFFILIATES
decline to make such Portfolio available as an investment vehicle for a
particular category of contracts (i.e., variable life, variable annuity or
----
modified endowment, or any other category of insurance contract that may arise
in the future), shares of such Portfolio may be offered to other insurance
companies as an investment vehicle for that category of contracts. If a LIFE
COMPANY AFFILIATE notifies TRUST and ADVISOR within one hundred twenty (120)
days of receipt of the notice that it intends to make
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such Portfolio available as an investment option for a particular category of
contracts (i.e., variable life, variable annuity, or modified endowment, or any
----
other category of insurance contract that may arise in the future) (and such
LIFE COMPANY AFFILIATE does in fact make the Portfolio available), then TRUST
shall not sell shares of the Portfolio to separate accounts of other insurance
companies issuing contracts in that same category as long as LIFE COMPANY
AFFILIATE continues to make the Portfolio available. If a LIFE COMPANY AFFILIATE
declines to use a Portfolio or fails to respond to a notice, it may, at any time
thereafter, elect to participate in such Portfolio on a non-exclusive basis on
terms at least as favorable as any other insurance company participant in such
Portfolio.
25. (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 any party 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
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<PAGE>
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, ADVISOR 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
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<PAGE>
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;
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<PAGE>
(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 25(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.
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<PAGE>
(e) Notwithstanding any termination of this Agreement pursuant to
Section 25(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 25(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 25(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.
26. 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 ADVISOR:
Palladian Advisors, Inc.
4225 Executive Square
Suite 355
La Jolla, CA 92037
Attention: President
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<PAGE>
If to LIFE COMPANY:
Security Life of Denver Insurance Company
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
27. 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.
28. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Colorado.
29. This Agreement may be executed in two or more counterparts, each of
which taken together shall constitute one instrument.
30. 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 13 day of October, 1995.
---- -------
THE PALLADIAN TRUST
ATTEST: /s/ Richard Tassiello BY: [SIGNATURE NOT LEGIBLE]
--------------------- -----------------------
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<PAGE>
PALLADIAN ADVISORS, INC.
ATTEST: /s/ Richard Tassiello BY: [SIGNATURE NOT LEGIBLE]
--------------------- -----------------------
FIRST ING LIFE INSURANCE
COMPANY OF NEW YORK
ATTEST: [SIGNATURE NOT LEGIBLE] BY: [SIGNATURE NOT LEGIBLE]
----------------------- -----------------------
WESTERN CAPITAL FINANCIAL
GROUP, INC.
ATTEST: /s/ Richard Tassiello BY: [SIGNATURE NOT LEGIBLE]
--------------------- -----------------------
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<PAGE>
SCHEDULE A
First ING of New York Separate Account A1, established March 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
<PAGE>
ADMINISTRATION SERVICES AGREEMENT
between
First ING Life Insurance Company of New York
and
Financial Administrative Services Corporation
AGREEMENT made as of the 22nd day of February, 1996 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 ("Security Life"), 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
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
1
<PAGE>
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 Security Life 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 "the second additional affiliate of
Security Life," 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.
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
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<PAGE>
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.
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
3
<PAGE>
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
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
4
<PAGE>
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
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
5
<PAGE>
relative to this Agreement. Claim payments will be made by
FASCorp on drafts drawn on First ING's bank account.
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 funds collected by FASCorp on behalf of First ING will be
held in a fiduciary capacity. 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 established and maintained
by FASCorp or First ING in a federally or state insured
institution. Refunds shall be processed in a timely manner, and
thereafter immediately remitted to the person or persons entitled
to them. 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
payers 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
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
6
<PAGE>
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 accordance with prudent standards of
insurance record keeping and 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
must be maintained for the period required by Section 17 (a) of
the 1934 Act, five (5) years from the date of their creation, or
until an examination by the State of New York Insurance
Department of a particular exam period has been completed,
whichever is longer; that 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.
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
7
<PAGE>
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. FASCorp
will render at least a monthly accounting to First ING detailing
all transactions performed by FASCorp pertaining to the business
underwritten by First ING. Any file on record that would normally
be held by First ING as the insurance carrier absent This
agreement will be provided to First ING quarterly in copy form.
7.13 FASCorp shall furnish to First ING any information or reports in
connection with its services to First ING, which any 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.
7.14 All correspondence from FASCorp to insureds and claimants must
show the name, address and telephone number of First ING and
shall disclose the relationship between First ING and FASCorp.
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.
8.04 First ING shall promptly notify FASCorp of the completion of each
examination by the State of New York Insurance Department, and of
the time period covered by the examination.
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.
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
8
<PAGE>
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
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
9
<PAGE>
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
thirty ninety (390) days after such written notice is given, then
the party giving such written notice may terminate this Agreement
by giving thirtyninety (390) 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
Security LifeSLD, and will make its computer record formats and
other relevant systems information available to First ING and
Security Life 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. In the
event of a termination FASCorp hereby grants First ING, to the
extent permitted by applicable law, a perpetual right to all
software and programs used on First ING's behalf to administer
all obligations under the contracts, including FASCorp's computer
record formats and other relevant systems information, unless
such material is readily available from a third party.
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
10
<PAGE>
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
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
11
<PAGE>
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 First INGSLD if such
information were obtained by any competitor of First ING.
11.03 First ING shall maintain the confidentiality of all trade
secrets and other confidential information obtained from FASCorp.
First INGSLD will use all reasonable precautions and take all
necessary steps to prevent any information obtained by First
INGSLD provided to it hereunder from being acquired by any
unauthorized persons, including its parent company or any of its
affiliates other than Security LifeSLD or Southland. First INGSLD
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 canceledcancelled or the terms of the insurance are materially
altered. FASCorp shall give First ING written notice of any
change or cancellation of such insurance.
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
12
<PAGE>
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 and operations directly pertaining to the Contracts
serviced by FASCorp at FASCorp's facilities in accordance with
those established reasonable procedures and other written
guidelines of First ING, including policyholder services, claims
administration and customer complaints, and at mutually agreeable
dates and times, but at least twiceonce annually .with at least
one on-site annual review and audit. 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.
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
13
<PAGE>
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 FASCorp and First ING acknowledge that in using LifeCAD, FASCorp
may encounter routine difficulties caused by software failure.
FASCorp is authorized, without First ING's prior approval, to
contact Beacon and incur, on First ING's behalf and at First
ING's expense, any service costs that may be charged by Beacon to
correct such failures, up to $1000 per separate occurrence.
Except for the foregoing, FASCorp is not authorized to cause
First ING to incur any costs to make any changes or
customizations of LifeCAD without First ING's express written
consent.
14.08 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
/s/ Stephen M. Christopher
By:--------------------------
Stephen M. Christopher
Title: President
----------------------
Financial Administrative Services Corporation
By: /s/ Joan McCallen
-------------------------
Title: Joan McCallen
----------------------
President
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
14
<PAGE>
EXHIBIT A
- ---------
FEE SCHEDULE
- ------------
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") Insurance Company
("Security Life"), First ING's parent company, and one variable annuity
product and one variable life product for each of First ING and Southland
Life Insurance Company ("Southland"), an affiliate of First ING.
If one additional affiliate of Security LifeSLD contracts with FASCorp for
similar services, that affiliate shall pay FASCorp $45,000 as a one-time
set up charge, and FASCorp shall pay Security LifeSLD $25,000 to reimburse
Security LifeSLD for the affiliate's share of the one-time set up charge.
If two additional affiliates of Security LifeSLD 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 Security LifeSLD and the first
affiliate each $8,333 to reimburse Security LifeSLD and the first affiliate
for their respective shares of the one-time set up charge.
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
EXHIBIT A-FEE SCHEDULE PAGE 1
<PAGE>
EXHIBIT A
- ---------
FEE SCHEDULE
- ------------
B. Processing Charges
1. Policy Contract Processing Charges:
<TABLE>
<CAPTION>
Variable Monthly Service Fee
-------- -------------------
Contract Volume Per Contract
--------------- ------------
Variable Annuities
------------------
<S> <C>
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
</TABLE>
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 Security Life and any
subsidiary of Security Life contracting with FASCorp for similar services
is:
$70 per month for each daily unit value calculation, PER COMPANY, plus
1. For Security LifeSLD alone - the greater of (a) $10,000 per month or
(b) the actual Policy Contract Processing Charges plus the Unit Value
Processing Charges [(a) or (b)] + UVPC.
2. For Security LifeSLD and one affiliate - per company, the greater of
(a) $6,000 per month or (b) the companies' aggregate of the actual
Policy Contract Processing Charges; plus, the
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
EXHIBIT A-FEE SCHEDULE PAGE 2
<PAGE>
EXHIBIT A
- ---------
FEE SCHEDULE
- ------------
Unit Value Processing Charges, [(a) or(b)] + UVPC, 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.
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
EXHIBIT A-FEE SCHEDULE PAGE 3
<PAGE>
EXHIBIT A
- ---------
FEE SCHEDULE
- ------------
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 as 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.
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
EXHIBIT A-FEE SCHEDULE PAGE 4
<PAGE>
EXHIBIT B
- ---------
OPERATIONAL PLAN
- ----------------
SYSTEMS
A. LifeCAD system will
1. Produce the contract data page, standard policy pages, state variation
pages.
2. Calculate and process periodic charges as specified in product
prospectuses.
3. Calculate and process valuations as specified by product
prospectus(es).
4. Calculate and process withdrawals (partial, full, periodic) as
specified.
5. Calculate and process annuity payout amounts.
6. Calculate and process periodic transactions including free look
transfer, dollar cost averaging transfer, automatic rebalance transfer
as specified in the prospectus.
7. Produce reporting including confirmations, client statements, daily
transactions, notification of upcoming maturities, lapse notification,
billing notices, qualified plan reporting, COLI reporting.
8. Produce required extract files including accounting, tax reporting,
production, electronic funds transfer, check writing, reinsurance,
valuation, inforce illustration, First ING client alpha index, proxy
solicitation.
9. Produce reports required to transact daily business with the mutual
funds and for periodic reconciliations.
10. Accept import of unit values (accumulation, annuity) from FASCorp
system.
11. Calculate and process changes in death benefits.
12. Perform appropriate past due processing on life products. Allow for
reinstatements.
13. Accommodate other product features described in prospectus including
persistency refunds, guaranteed death benefit provisions and riders.
14. Handle subsidiary/affiliate companies with products substantially
similar to those of First ING.
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
SYSTEMS PAGE 1
<PAGE>
EXHIBIT B
- ---------
OPERATIONAL PLAN
- ----------------
15. Track state approvals by product, by company. As First ING will do the
actual product filings information regarding approvals will be
provided to FASCorp.
16. Store and provide access to agent licensing information. As First ING
will do the actual agent appointments, information will be prov ided
to FASCorp via interface with First ING systems and LifeCAD.
17. Accommodate First ING and regulatory audit requirements.
18. Maintain client account history as required to process transactions
and administer contract provisions.
19. Systems will automatically interface with First ING and FASCorp
systems. A scheduled time for data transmission will be determined and
daily user involvement will not be required.
20. Interface LifeCAD with First ING to automatically feed to First ING
systems any necessary updates for other First ING policies.
21. Provide information necessary for proxy preparation and mailings.
B. Additional systems support is required to provide the following functions:
1. Automated voice response
a. Inquiry for unit values, account values
b. Transactions which update the account.
2. Interfaces, reporting requirements and other special requests from
outside broker/dealers.
3. Electronic funds transfer capabilities
a. Draw from accounts for premium payments
b. Deposit disbursements to accounts.
The functions described in this section B are considered essential by FASCorp.
Development and implementation of these functions will be mutually agreed upon
by First ING and FASCorp
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
SYSTEMS PAGE 2
<PAGE>
EXHIBIT B
- ---------
OPERATIONAL PLAN
- ----------------
Administrative Services
A. Contract Issue
1. Reviews application, applies issue criteria developed by First ING to
application for annuity contract. First ING to provide a written set
of issue criteria to FASCorp.
2. Verifies license status of brokers/agents based on information
supplied by First ING.
3. Prepares contract data page, issues contract for paid business and
mails to contract owners or agents. System will produce contract data
pages. Policy page production to be automated as agreed upon by First
ING and FASCorp.
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. Couriers the original policy issue documents to First ING. First ING
then copies such documents on microfilm and returns to FASCorp by
courier copies of the original documents. First ING shall be
responsible for sending the original documents to its New York Office.
8. Deposits monies received with application into depository account.
9. Maintains inventory of all issue-related forms, contracts and
endorsements based on updates provided by First ING. For purposes of
this Agreement, printing to be coordinated with First ING
10. For policies being exchanged from another company or IRA funds being
transferred, FASCorp will request the funds from the other insurance
company (or IRA custodian) using forms supplied by First ING. First
ING will establish signing authority for FASCorp personnel.
B. Policy Issue - Life
1. Upon receipt of a life application, FASCorp will check the binding
requirements. Return of money, if required, will be coordinated with
First ING.
2. Verifies license status of brokers/agents based on information
supplied by First ING.
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
ADMINISTRATIVE SERVICES PAGE 1
<PAGE>
EXHIBIT B
- ---------
OPERATIONAL PLAN
- ----------------
3. Upon completion of the underwriting and approval of the life
application by First ING, FASCorp will prepare policy data page and
issue policies for First ING approved applications and mail to
brokers/agents. Policy data pages to be produced by LifeCAD. Policy
page production to be automated as agreed upon by First ING and
FASCorp. If any outstanding requirements at issue, First ING will
inform FASCorp when to place policy into inforce status. Any required
amendments will be prepared by First ING.
4. Establishes and maintains all policyowner records, as applicable, on
computer and manual systems. First ING will be responsible for
establishing and maintaining underwriting records both manual and
system. Policy changes requiring underwriting will be coordinated with
First ING.
5. Deposits premiums received into depository account.
6. Prepares and mails "Notice of Withdrawal Right" to life policyowners.
7. For policies being exchanged from another company, First ING will
request the funds from the other insurance company.
8. Reissue and duplicate policy requests will be coordinated between
FASCorp and First ING
9. Maintains inventory of all issue-related forms, contracts and
endorsements based on updates provided by First ING. Printing to be
coordinated with First ING.
C. Collection procedures (after contract policy/contract is in force)
1. Receives from First ING 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 First ING bank account.
5. Transmits daily accounting and bank transfer authorization summaries
prepared for each valuation period.
6. Bills for planned premiums at appropriate frequencies for life
policies.
7. Notifies policyowner of approaching lapse. Administers grace period
provisions.
8. Prepares and mails refunds as appropriate (declines, free look).
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
ADMINISTRATIVE SERVICES PAGE 2
<PAGE>
EXHIBIT B
- ---------
OPERATIONAL PLAN
- ----------------
D. 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 First ING 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. LifeCAD will produce check production
extract file. Check production will be through a FASCorp's
checkwriting system.
7. LifeCAD will produce check production extract file for annuitants in
payout phase whose contracts are administered by LifeCAD. Supplemental
contract, if any administered by LifeCAD Supplemental Contract is the
contract issue when an annuity is in the payout phase. The actual form
of the contract is to be supplied by First ING. Check production will
be through a FASCorp checkwriting system.
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.
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
ADMINISTRATIVE SERVICES PAGE 3
<PAGE>
EXHIBIT B
- ---------
OPERATIONAL PLAN
- ----------------
10. Reprocess dishonored items. Reverses associated transactions, prepares
reports and communicates with policyowner. Reverses all ledger entries
associated with dishonored items. LifeCAD will reverse all ledger
entries associated with dishonored items.
11. LifeCAD will produce check production extract file for systematic
payouts. (IRA income, systematic income and other which may be
established). Check production will be through a FASCorp checkwriting
system.
E. Accounting/Auditing
1. Generates from the LifeCAD system daily accounting extracts for
policies maintained on the system.
2. Generates from the LifeCAD system 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 which have
been 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.
F. 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.
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
ADMINISTRATIVE SERVICES PAGE 4
<PAGE>
EXHIBIT B
- ---------
OPERATIONAL PLAN
- ----------------
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. LifeCAD
will be updated with the calculated unit values.
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
ADMINISTRATIVE SERVICES PAGE 5
<PAGE>
EXHIBIT B
- ---------
OPERATIONAL PLAN
- ----------------
G. Contract Owner Service/Record Maintenance
1. Receives and implements contract owner service requests. Maintains
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. LifeCAD will generate 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. An interface to First ING systems to coordinate
policy changes (name, address, beneficiary) will be developed.
5. Process reinstatements when approved by First ING.
6. Produces tax reporting based on extracts from LifeCAD.
H. Disbursement (Surrenders, Loans)
1. Processes all surrender and loan requests against the policyowner
files. Receives requests for systematic, partial and full surrenders
and loans from contract owners. Retains and accounts for any contract
administrative charges. Generates related separate account ledger
accounting.
2. Processes all surrender and loan requests against the policyowner
files. Generates related separate account ledger accounting.
3. LifeCAD will produce check production extract file for distributions,
surrenders and loans and FASCorp will forward the checks to contract
owner or designated entities on behalf of First ING in accordance with
applicable law. Check production will be through a FASCorp
checkwriting system.
4. Prepares and mails confirmation statements of disbursement
transactions to contract owners.
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
ADMINSTRATIVE SERVICES PAGE 6
<PAGE>
EXHIBIT B
- ---------
OPERATIONAL PLAN
- ----------------
5. LifeCAD will generate a report on surrenders and loans.
6. Reviews, causes to have printed, and maintains adequate supply of
checks.
7. Contacts policyowner regarding tax withholding procedures, if
required.
8. Backup withholding will be coordinated between FASCorp and First ING.
I. Claims
1. Receives Will immediately notify First ING of request for death claim
received from contract owners and beneficiaries. Immediately notifies
First ING. 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. LifeCAD will produce check production extract file for disbursements
as directed by First ING. Check production will be through a FASCorp
checkwriting system.
5. Make changes to owner and/or annuitant information on LifeCAD as
directed by First ING where no payout is required.
6. LifeCAD will generate reports on death claims, if required.
7. Claims examination will be done by First ING.
J. Commissions
1. Verifies license status of brokers/agents based on information
supplied by First ING.
2. LifeCAD will produce 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
LifeCAD will produce check production extract file for any required
checks. Check production will be through a FASCorp checkwriting
system.
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
ADMINISTRATIVE SERVICES PAGE 7
<PAGE>
EXHIBIT B
- ---------
OPERATIONAL PLAN
- ----------------
4. Creates tax reporting forms, if required based on extracts from
LifeCAD.
K. Annuity Benefit Processing
1. Notifies owner of approaching annuitization approximately 90 days
before annuitization date based on information generated by LifeCAD.
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 LifeCAD will produce
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; LifeCAD 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-.on annuitant
master files using LifeCAD. Inventory of fixed annuity units to be
maintained on LifeCAD(subject to system restraints).
9. LifeCAD will produce check production or electronic fund transfer
extract file for payment of amount due to annuitant in accordance with
applicable law. Check production will be through a FASCorp
checkwriting system.
10. Issues supplemental contract, if any, as defined in the variable
annuity contract. Actual form of contract to be supplied by First ING.
Contract filing to be done by First ING.
11. FASCorp will generate tax reporting data based on extracts form
LifeCAD. First ING will make all payments to the appropriate
regulatory agencies for any taxes withheld and will effect all
necessary associated reports.
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION PAGE 8
ADMINISTRATIVE SERVICES
<PAGE>
EXHIBIT B
- ---------
OPERATIONAL PLAN
- ----------------
L. 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. LifeCAD will provide all necessary information for preparation of
proxy cards, if applicable.
6. Tabulates returned proxy cards and transmits results to underlying
mutual funds.
M. Periodic Reports
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.
3. Prepares and maintains data and data access to different marketing
groups. First ING will be responsible for costs associated with the
provision of such data access, which costs are to be mutually agreed
upon by the parties.
N. 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.
O. Actuarial and Management Reports
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
ADMINISTRATIVE SERVICES PAGE 9
<PAGE>
EXHIBIT B
- ---------
OPERATIONAL PLAN
- ----------------
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
f. Claims Report
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
ADMINISTRATIVE SERVICES PAGE 10
<PAGE>
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 ______________________
Beth Kinvig ______________________
Debbie Bell ______________________
Kurt Bernlohr ______________________
Melodie Jones ______________________
Shirley Knarr ______________________
R.J. Schubert ______________________
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
<PAGE>
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.
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
<PAGE>
Exhibit E
Great-West Life & Annuity Insurance Company
Statement of Support
(See Attached)
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
<PAGE>
July ____, 1995
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
FINANCIAL ADMINISTRATIVE SERVICES CORPORATION
CONFIDENTIAL AND PROPRIETARY INFORMATION
<PAGE>
[LETTERHEAD OF GREAT-WEST]
February 22, 1996
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,
/s/ Dennis Low
Dennis Low
Executive Vice President
Financial Services
Great-West Life & Annuity
Insurance Company
<PAGE>
LICENSE AGREEMENT
THIS AGREEMENT, effective as of the 8th day of February, 1996, is made by
and between PALLADIAN ADVISORS, INC. (hereinafter "Palladian"), a corporation,
organized and existing under the laws of Delaware, located at La Jolla,
California, and FIRST ING LIFE INSURANCE COMPANY OF NEW YORK (hereinafter "First
ING Life"), an insurance company organized and existing under the laws of New
York, located at New York, New York.
WHEREAS, Palladian is the owner of the service mark THE FULCRUM FUND
(hereinafter "the Mark") and application for registration therof;
WHEREAS, it is expected that Palladian will serve as an investment advisor
to the Palladian Trust;
WHEREAS, First ING Life desires to use the Mark in connection with its
issuance of variable contracts for which The Palladian Trust will serve as the
underlying funding vehicle (the "Variable Contracts");
WHEREAS, Palladian, First ING Life, the Palladian Trust, and Western
Capital Financial Group, Inc. have entered into, or intend to enter into in the
near future, a Participation Agreement concerning the sale of shares of The
Palladian Trust to First ING Life (the "Participation Agreement");
NOW THEREFORE, in consideration of the foregoing and of the mutual promises
set forth below, the parties agree as follows:
I. GRANT OF LICENSE
----------------
In consideration for an annual royalty payment of one dollar and other good
and valuable consideration, Palladian grants to First ING Life a nonexclusive,
nontransferable license to use the Mark in connection with the Fulcrum Fund
Variable Annuity, and First ING Life accepts the license subject to the
following terms and conditions.
II. OWNERSHIP OF THE MARK
---------------------
First ING Life acknowledges Palladian's ownership of the Mark, agrees that
it will do nothing inconsistent with such ownership and agrees to provide
reasonable assistance to Palladian in recording this agreement with the
appropriate government authorities. First ING Life further agrees that nothing
in this License shall give First ING Life any right, title or interest in the
Mark other than the right to use the Mark in accordance with this License, and
First ING Life agrees that it will not attack Palladian's title to the Mark or
the validity of this License.
<PAGE>
III. Quality Standards
-----------------
A. First ING Life agrees that the nature and quality of all services
rendered by First ING Life in connection with the Mark shall conform
to the following standards set by, and under the control of,
Palladian:
1. issuance of annuity contracts backed by a financially strong and
stable insurance company; and
2. high quality administration of those annuity contracts and high
quality customer service.
B. For purposes of this Agreement, First ING Life shall be considered a
financially strong and stable insurance company for so long as it
maintains a rating of at least BBB according to the Standard & Poors
insurance company rating service and shall be considered to have high-
quality administration and high-quality customer service for so long
as First ING Life or its designee conducts such activities in
accordance with the terms of the Variable Contracts, the registration
statements for the Variable Contracts and in conformity with the
general practice within the insurance industry and with the rules and
regulations of state insurance departments, and other regulatory
bodies with jurisdiction over the Variable Contracts.
C. First ING Life agrees to provide copies of all sales literature or
other promotional materials bearing the Mark to Palladian for prior
review and approval in accordance with Section 8(a) of the
Participation Agreement. No such materials will be used by First ING
Life if Palladian objects in writing to their use within ten (10) days
after receipt of such materials. First ING Life shall comply with all
applicable laws and regulations and obtain any and all licenses or
other necessary permits pertaining to the distribution of such
materials.
IV. QUALITY MAINTENANCE
-------------------
First ING Life agrees to cooperate with Palladian in facilitating
Palladian's control of the nature and quality of the services rendered by First
ING Life by providing, upon request, annual financial statements of First ING
Life and reasonable information about First ING Life's administration of the
Fulcrum Fund Variable Annuity Contracts.
V. FORM OF USE
-----------
FIRST ING LIfe agrees to use the Mark only in the form and manner and with
appropriate legends as prescribed from time to time by Palladian, and further
agrees not to use any of the trade mark or service mark in combination with the
Mark without prior written approval of Palladian. Failure of Palladian to object
to any use of the Mark in
<PAGE>
sales literature or promotional materials as provided in Section 3(c) of this
Agreement shall constitute approval of all uses of the Mark therein within the
meaning of this Section.
VI. INFRINGEMENT PROCEEDINGS
------------------------
First ING Life agrees to notify Palladian of any unauthorized use of the
Mark by others immediately upon becoming aware of such unauthorized use.
Palladian shall have the sole right and discretion to bring infringement or
unfair competition proceedings involving the Mark.
VII. TERM
----
This agreement shall continue in force and effect for as long as the
Participation Agreement continues in force and effect, unless sooner terminated
as provided herein.
VIII. TERMINATION
-----------
A. Palladian shall have the right to terminate this license at its
discretion, (i) upon one hundred and eighty (180) days' advance
written notice or (ii) upon sixty (60) days' written notice if it
reasonably concludes that the quality of the services provided by
First ING Life in connection with the Mark falls short of the
standards of quality provided in Section 3 of this Agreement.
B. Palladian shall have the right to terminate this agreement upon thirty
(30) days' written notice should Palladian cease to serve as
investment advisor to The Palladian Trust.
C. Notwithstanding subsections (a) and (b) of this Section, the license
shall continue with respect to any Existing Contracts, as defined in
Section (25e) of the Participation Agreement, for so long as the
Participation Agreement remains effective with respect to such
contracts.
IX. EFFECT OF TERMINATION
---------------------
Upon termination of this agreement, First ING Life agrees to the extent
legally and reasonably practicable, immediately to discontinue all use of the
Mark and any term confusingly similar thereto and to destroy all printed
materials bearing the Mark in its possession; First ING Life further agrees to
cooperate with Palladian or its appointed agent to apply to the appropriate
authorities to cancel recording of this agreement from all government records,
and that all rights in the Mark and the goodwill connected therewith shall
remain the property of Palladian.
X. NOTICE
------
<PAGE>
Any notice shall be sufficiently given when sent by registered or certified
mail (return receipt requested) to the other party at the address of the 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 Palladian:
Palladian Advisors, Inc.
4225 Executive Square, Suite 355
La Jolla, California 92037
Attn: President
If to First ING Life:
First ING Life Insurance Company of New York
Security Life Center
1290 Broadway
Denver, Colorado 80203
Attn: Law Department
XI. INTERPRETATION OF AGREEMENT
---------------------------
This agreement is to be interpreted according to the laws of the State of
California.
XII. EXECUTION
---------
This agreement maybe executed in two or more counterparts, each of which
taken together shall constitute one instrument.
XIII. WHOLE AGREEMENT
---------------
This agreement constitutes the entire agreement between the parties
respecting the subject matter hereof. This agreement supersedes all previous
agreements, oral or written, expressed or implied, respecting its subject
matter. This agreement shall not be altered or modified in any way except by
mutual consent and in a manner clearly evidenced in writing and signed by an
authorized officer of the party against whom enforcement of such alteration or
modification is sought.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed as of the 8th day of February, 1996.
PALLADIAN ADVISORS, INC. FIRST ING LIFE INSURANCE COMPANY
OF NEW YORK
/s/: H. MICHAEL SCHWARTZ /s/: STEPHEN M. CHRISTOPHER
By:________________________________ By:___________________________________
Name: H. Michael Schwartz Name: Stephen M. Christopher
-------------------------- -----------------------------
Title: President Title: President
-------------------------- ------------------------------
<PAGE>
SERVICE AGREEMENT
This Agreement is made as of the 7th day of February, 1996, by and between
Security Life of Denver Insurance Company ("Security Life"), First ING Life
Insurance Company of New York ("First ING") (Security Life and First ING
collectively referred to herein as the "Insurers") and Palladian Advisors, Inc.,
a Delaware corporation ("Advisor"). The Insurers and Advisors shall be
collectively referred to herein as the "Parties".
WITNESSETH:
-----------
WHEREAS, the Advisors serves as the investment advisor of The Palladian
Trust, a Massachusetts business trust (the "Trust"), which currently consists of
six separate series (each, a "Portfolio"); and
WHEREAS, each Insurer has entered into a separate agreement dated October
13, 1995, with the Trust and Advisor (the "Participation Agreements"), pursuant
to which the Trust will make shares of each Portfolio listed from time to time
on Schedule B thereto available to certain variable life insurance and/or
variable annuity contracts (the "Contracts") offered by the Insurers through
certain separate accounts (the "Separate Accounts") at net asset value and with
no sale charges, subject to the terms of the Participation Agreements; and
WHEREAS, the Participation Agreements make no provision for which party
shall incur various administrative expenses in connection with the servicing of
Contract owners who have allocated Contract value to a Portfolio, including, but
not limited to, responding to various Contract owner inquiries regarding a
Portfolio; and
WHEREAS, the Parties hereto wish to allocate the expenses in a manner that
is fair, equitable and consistent with the best interest of Contract owners; and
WHEREAS, the Parties hereto which to establish a means for allocating the
expenses that does not entail the expense and inconvenience of separately
identifying and accounting for each item of expense;
NOW THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Parties hereto agree as follows:
I. Services Provided:
------------------
The Insurers agree to provide services to the Advisor including the
following:
a) providing daily and monthly data to wirehouses regarding current
Contract owner information;
<PAGE>
b) responding to inquiries from the Insurers' Contract owners using one
or more of the Portfolios as an investment vehicle regarding the
services performed by the Insurers as they relate to the Trust or its
Portfolios;
c) providing technical and other advice to the Advisor in connection
with the establishment of the Portfolios;
d) providing information to the Advisor and to Contract owners with
respect to shares attributable to Contract owner accounts;
e) printing and mailing of shareholder communications from the Trust as
may be required pursuant to Section 7 of the Participation
Agreements;
f) monitoring for and assisting in the resolution of any material
irreconcilable conflict pursuant to Sections 17 and 18 of the
Participation Agreements;
g) serving as the designee of Trust for the receipt of orders to
purchase and redeem shares of the Portfolios pursuant to Section 6 of
the Participation Agreements;
h) cooperating with Trust, the Advisor and governmental authorities in
connection with the regulation of the Trust and the sale of the
shares of the Portfolios pursuant to Section 15 of the Participation
Agreements;
i) providing data and materials to Trust as needed to maintain the
compliance of Trust with the securities laws pursuant to Section 23
of the Participation Agreements;
i) communicating directly with Contract owners concerning the Trust's
operations; and
k) providing such similar services as Advisor may reasonably request to
the extent permitted or required under applicable statutes, rules and
regulations.
II. Payment of Expenses:
--------------------
A. For the services rendered and expenses assumed by the Insurers
hereunder, and while this Agreement is in effect, the Advisor shall
pay to Security Life within ten (10) business days of the end of
each calendar quarter a fee equal to a percentage of the average
daily net assets of the Trust attributable to the Contracts (the
"Quarterly Fee"). Unless changed pursuant to Subsection c) hereof,
the Quarterly Fee shall accrue at the annual rate of 0.04% (4 basis
points) of the first $200 million of the average of the aggregate net
assets of the Trust determined as of the close
<PAGE>
of business on each day (and, in case of any day which is not a
business day, determined as of the close of business on the last
preceding business day) of all the issued and outstanding shares of
the Trust attributable to the Contracts during the quarter preceding
such payment, reduced to 0.03% (3 basis points) for the next $100
million of such aggregate net assets and further reduced to 0.01% (1
basis point) of such aggregate net assets in excess of $300 million.
For purposes of this Section 2. a), the term "business day" shall
mean any day on which the Trust calculates its net assets pursuant to
the rules of the SEC. The net assets shall be determined and computed
in accordance with the description of the method of determining the
net assets contained in the Trust's Prospectus. The payment of the
Quarterly Fee shall commence at the end of the first calendar quarter
in which Contract value has been allocated to the Trust.
B. The Parties acknowledge and agree that the Contracts will be
initially available through First ING only and that the Security Life
Contracts may not be available for several months after the execution
of this Agreement. Accordingly, until the date on which Contract
value has been allocated to a Portfolio through a Security Life
Contract (the "Security Life Attainment Date"), any Quarterly Fee
accrued shall be equal to three-eighths (3/8) of the fee as
calculated pursuant to Subsection a) above. This Subsection b) shall
become null and void on the Security Life Attainment Date and
thereafter any Quarterly Fee accrued hereunder will be calculated
solely as described in Subsection a) above, without the reduction
described in this Subsection b).
C. From time to time, the Parties hereto shall review the Quarterly Fee
to determine whether it reasonably approximates the incurred and
anticipated costs, over time, of the Insurers in connection with its
duties hereunder. The Parties agree to negotiate in good faith any
change to the Quarterly Fee proposed by a Party in good faith. The
Parties further agree to negotiate in good faith any proposed change
regarding when Quarterly Fee payments are to be made by Advisor.
D. The parties acknowledge and agree that any Quarterly Fee paid
pursuant to this Agreement is designed only to reimburse the Insurers
for their administrative expenses described in Section 1 and no
portion of such Quarterly Fee constitutes Trust distribution or
investment advisory expense.
E. The parties further acknowledge and agree that the total of any
Quarterly Fees accrued daily in any one calendar year shall not
exceed $250,000.
F. This Agreement shall not modify any of the provisions of paragraph 4
of the Participation Agreements, but shall supplement those
provisions.
<PAGE>
III. Term of Agreement:
------------------
Any Party may terminate this Agreement, without penalty, on 60 days'
written notice to the other parties. Unless so terminated, this Agreement
shall continue in effect for so long as the Advisor or its successor(s)
in interest, or any affiliate therof, continues to perform in a similar
capacity for the Trust, and for so long as any Contract value or any
monies attributable to the Insurers is allocated to a Portfolio.
IV. Indemnification:
----------------
A. The Insurers agree to indemnify and hold harmless the Advisor and
its officers and directors, from any and all loss, liability and
expense resulting from the gross negligence or willful wrongful act
of the Insurers under this Agreement, except to the extent such
loss, liability or expense is the result of the willful
misfeasance, bad faith or gross negligence of the Advisor in the
performance of its duties, or by reason of the reckless disregard
of its obligations and duties under this Agreement.
B. Advisors agrees to indemnify and hold harmless the Insurers and its
officers and directors, from any and all loss, liability and
expense resulting from the gross negligence or willful wrongful act
of Advisor under this Agreement, except to the extent such loss,
liability or expense is the result of the willful misfeasance, bad
faith or gross negligence of the Insurers in the performance of its
duties, or by reason of the reckless disregard of its obligations
and duties under this Agreement.
V. Notices:
--------
Notices and communications required or merited hereby will be given to
the following persons at the following addresses and facsimile numbers,
or such other persons, addresses or facsimile numbers as the Party
receiving such notices or communications may subsequently direct in
writing:
Advisor: The Insurers:
Palladian Advisors, Inc. Security Life of Denver Insurance Company
4225 Executive Square 1290 Broadway
Suite 355 Denver, Colorado 80203-5699
La Jolla, CA 92037 Attn: Legal Department
Attn: President Facsimile: (303) 860-2134
Facsimile: (619) 677-5922
<PAGE>
VI. Applicable Law:
---------------
Except insofar as the Investment Company Act of 1940 or other federal
laws and regulations may be controlling, this Agreement will be construed
and the provisions hereof interpreted under and in accordance with
Colorado law, without regard for that state's principles of conflict of
laws.
VII. 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.
VIII. Severability:
-------------
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement
will not be affected thereby.
IX. Rights Cumulative:
------------------
The rights, remedies and obligations continued in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, that the Parties are entitled to under
federal and state laws.
X. Headings:
---------
The headings used in this Agreement are for purposes of reference only
and shall not limit or define the meaning of the provision of this
Agreement.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized officers
signing below.
PALLADIAN ADVISORS, INC. SECURITY LIFE OF DENVER
INSURANCE COMPANY
/s/: H. MICHAEL SCHWARTZ /s/: STEPHEN M. CHRISTOPHER
By:_______________________________ By___________________________________
Name: H. Michael Schwartz Name: Stephen M. Christopher
Title: President Title: President
<PAGE>
FIRST ING LIFE INSURANCE COMPANY
OF NEW YORK.
/s/: STEPHEN M. CHRISTOPHER
By:_________________________________
Name: Stephen M. Christopher
Title: President
<PAGE>
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated April 5, 1996, with respect to the financial statements
if First ING Life Insurance Company of New York included in Post-Effective
Amendment No. 1 to the Registration Statement (Form N-4 No. 33-88794 and
811-8700) and related Prospectus of First ING of New York Separate Account A1
dated May 1, 1996.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Denver, Colorado
April 23, 1996
<PAGE>
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 Eugene L. Copeland, Edward K. Campbell, and Kurt W. Bernlohr, and each
of them, with full power of substitution as a 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 17 day of
April, 1996.
/s/: MICHAEL W. CUNNINGHAM
___________________________________
Michael W. Cunningham
In the Presence of:
/s/: KURT W. BERNLOHR
_________________________________
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FIRST
ING LIFE OF NEW YORK SEPARATE ACCOUNT A1 FINANCIAL STATEMENTS AT 12/31/95
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
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<SHARES-REINVESTED> 0
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<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
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<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
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<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
