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File No. 33-83240
File No. 811-8726
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. |_|
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Post-Effective Amendment No. 2 |X|
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |_|
Amendment No. 5 |X|
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(Check appropriate box or boxes)
T. ROWE PRICE VARIABLE ANNUITY ACCOUNT
OF FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
(Exact Name of Registrant)
First Security Benefit Life Insurance and Annuity Company of New York
(Name of Depositor)
70 West Red Oak Lane, 4th Floor, White Plains, New York 10604
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, Including Area Code:
(914) 697-4748
Copies to:
Roger K. Viola, Secretary and Vice President Jeffrey S. Puretz, Esq.
First Security Benefit Life Insurance and Annuity Dechert Price & Rhoads
Company of New York 1500 K Street, N.W.
700 Harrison Street, Topeka, KS 66636-0001 Washington, DC 20005
(Name and address of Agent for Service)
It is proposed that this filing will become effective:
|_| immediately upon filing pursuant to paragraph (b) of Rule 485
|X| on January 2, 1997, pursuant to paragraph (b) of Rule 485
|_| 60 days after filing pursuant to paragraph (a)(i) of Rule 485
|_| on January 2, 1997, pursuant to paragraph (a)(i) of Rule 485
|_| 75 days after filing pursuant to paragraph (a)(ii) of Rule 485
|_| on January 2, 1997, 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.
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Pursuant to Regulation 270.24f-2 of the Investment Company Act of 1940 the
Registrant has elected to register an indefinite number of securities. The
Registrant filed the Notice required by 24f-2 on February 28, 1996.
<PAGE>
Cross Reference Sheet
Pursuant to Rule 495(a)
Showing Location in Part A (Prospectus) and Part B
(Statement of Additional Information) of Registration
Statement of Information Required by Form N-4
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PART A
ITEM OF FORM N-4 PROSPECTUS CAPTION
1. Cover Page.................................... Cover Page
2. Definitions................................... Definitions
3. Synopsis...................................... Summary; Expense Table;
Contractual Expenses;
Annual Separate Account
Expenses; Annual
Portfolio Expenses
4. Condensed Financial Information
(a) Accumulation Unit Values.................. Condensed Financial
Information
(b) Performance Data.......................... Performance Information
(c) Additional Financial Information.......... Additional Information;
Financial Statements
5. General Description of Registrant, Depositor,
and Portfolio Companies
(a) Depositor................................. Information about the
Company, the Separate
Account, and the Funds;
First Security Benefit
Life Insurance and
Annuity Company of
New York
(b) Registrant................................ Separate Account;
Information about the
Company, the Separate
Account, and the Funds
(c) Portfolio Company......................... Information about the
Company, the Separate
Account, and the Funds;
The Funds; The Investment
Advisers
(d) Fund Prospectus........................... The Funds
<PAGE>
(e) Voting Rights............................. Voting of Fund Shares
(f) Administrators............................ First Security Benefit
Life Insurance and
Annuity Company of
New York
6. Deductions and Expenses
(a) General................................... Charges and Deductions;
Mortality and Expense
Risk Charge; Premium Tax
Charge; Other Charges;
Guarantee of Certain
Charges; Fund Expenses;
Contract Charges
(b) Sales Load %.............................. N/A
(c) Special Purchase Plan..................... N/A
(d) Commissions............................... N/A
(e) Fund Expenses............................. Fund Expenses
(f) Organization Expenses..................... N/A
<PAGE>
7. General Description of Contracts
(a) Persons with Rights....................... The Contract; More About
the Contract; Ownership;
Joint Owners; Contract
Benefits; Fixed Interest
Account; Reports to
Owners
(b) (i) Allocation of Purchase Payments..... Purchase Payments;
Allocation of Purchase
Payments
(ii) Transfers........................... Dollar Cost Averaging
Option; Asset Rebalancing
Option
(iii) Exchanges........................... Exchanges of Contract
Value; Exchanges and
Withdrawals
(c) Changes................................... Substitution of
Investments; Changes to
Comply with Law and
Amendments
(d) Inquiries................................. Contacting the Company
8. Annuity Period................................ Annuity Period; General;
Annuity Options;
Selection of an Option
<PAGE>
9. Death Benefit................................. Death Benefit
10. Purchases and Contract Value
(a) Purchases................................. The Contract; General;
Application for a
Contract; Purchase
Payments; Dollar Cost
Averaging Option; Asset
Rebalancing Option
(b) Valuation................................. Contract Value;
Determination of Contract
Value; Exchanges of
Contract Value; Interest
(c) Daily Calculation......................... Determination of Contract
Value
(d) Underwriter............................... Distribution of the
Contract
<PAGE>
11. Redemptions
(a) - By Owners............................... Full and Partial
Withdrawals; Systematic
Withdrawals; Payments
from the Separate
Account; Payments from
the Fixed Interest
Account
- By Annuitant............................ Annuity Options
(b) Texas ORP................................. N/A
(c) Check Delay............................... N/A
(d) Lapse..................................... Full and Partial
Withdrawals
(e) Free Look................................. Free-Look Right
12. Taxes......................................... Federal Tax Matters;
Introduction; Tax Status
of the Company and the
Separate Account; Income
Taxation of Annuities in
General -- Non-Qualified
Plans; Additional
Considerations;
Qualified Plans
13. Legal Proceedings............................. Legal Proceedings; Legal
Matters
14. Table of Contents for the Statement of
Additional Information........................ Statement of Additional
Information
<PAGE>
PART B
ITEM OF FORM N-4 STATEMENT OF ADDITIONAL
INFORMATION CAPTION
15. Cover Page.................................... Cover Page
16. Table of Contents............................. Table of Contents
17. General Information and History............... General Information and
History
18. Services
(a) Fees and Expenses of Registrant........... N/A
(b) Management Contracts...................... N/A
(c) Custodian................................. N/A
Independent Public Accountant............. Independent Auditors
(d) Assets of Registrant...................... N/A
(e) Affiliated Persons........................ N/A
(f) Principal Underwriter..................... N/A
19. Purchase of Securities Being Offered.......... Distribution of the
Contract; Limits on
Premiums Paid Under
Tax-Qualified
Retirement Plans
20. Underwriters.................................. Distribution of the
Contract
21. Calculation of Performance Data............... Performance Information
22. Annuity Payments.............................. N/A
23. Financial Statements.......................... Financial Statements
<PAGE>
PROSPECTUS
THE T. ROWE PRICE NO-LOAD VARIABLE ANNUITY
[T. ROWE PRICE LOGO]
ISSUED BY
FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
JANUARY 2, 1997
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T. Rowe Price Variable Annuity
ISSUED BY:
FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
70 West Red Oak Lane, 4th Floor
White Plains, New York 10604
1-914-697-4748
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T. ROWE PRICE NO-LOAD VARIABLE ANNUITY
An Individual Flexible Premium
Deferred Variable Annuity Contract
January 2, 1997
1
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T. Rowe Price Variable Annuity
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INTRODUCTION
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS IS ACCOMPANIED BY A CURRENT PROSPECTUS FOR THE T. ROWE PRICE
EQUITY SERIES, INC., THE T. ROWE PRICE FIXED INCOME SERIES, INC. AND THE T. ROWE
PRICE INTERNATIONAL SERIES, INC. THE PROSPECTUSES SHOULD BE READ CAREFULLY AND
RETAINED FOR FUTURE REFERENCE.
This Prospectus describes the T. Rowe Price No-Load Variable Annuity--an
individual flexible premium deferred variable annuity contract (the "Contract")
issued by FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
(the "Company"). The Contract is available for individuals as a non-tax
qualified retirement plan ("Non-Qualified Plan") or in connection with an
individual retirement annuity ("IRA") qualified under Section 408 of the
Internal Revenue Code ("Qualified Plan"). The Contract is designed to give
Contractowners flexibility in planning for retirement and other financial goals.
During the Accumulation Period, the Contract provides for the accumulation of a
Contractowner's value on either a variable basis, a fixed basis, or both. The
Contract also provides several options for annuity payments on either a variable
basis, a fixed basis, or both to begin on the Annuity Payout Date. The minimum
initial purchase payment is $10,000 ($5,000 if made pursuant to an Automatic
Investment Program) to purchase a Contract in connection with a Non-Qualified
Plan and $2,000 ($25 if made pursuant to an Automatic Investment Program) to
purchase a Contract in connection with a Qualified Plan. Subsequent purchase
payments are flexible, though they must be for at least $1,000 ($200 if made
pursuant to an Automatic Investment Program) for a Contract funding a
Non-Qualified Plan or $500 ($25 if made pursuant to an Automatic Investment
Program) for a Contract funding a Qualified Plan. Purchase payments may be
allocated at the Contractowner's discretion to one or more of the Subaccounts
that comprise a separate account of the Company called the T. Rowe Price
Variable Annuity Account of First Security Benefit Life Insurance and Annuity
Company of New York (the "Separate Account"), or to the Fixed Interest Account
of the Company. Each Subaccount of the Separate Account invests in a
corresponding portfolio ("Portfolio") of the T. Rowe Price Equity Series, Inc.,
the T. Rowe Price Fixed Income Series, Inc. or the T. Rowe Price International
Series, Inc. (the "Funds"). Each Portfolio is listed under its respective Fund
below.
T. ROWE PRICE EQUITY SERIES, INC.
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T. Rowe Price New America Growth Portfolio
T. Rowe Price Mid-Cap Growth Portfolio
T. Rowe Price Equity Income Portfolio
T. Rowe Price Personal Strategy Balanced Portfolio
T. ROWE PRICE FIXED INCOME SERIES, INC.
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T. Rowe Price Limited-Term Bond Portfolio
T. Rowe Price Prime Reserve Portfolio
T. ROWE PRICE INTERNATIONAL SERIES, INC.
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T. Rowe Price International Stock Portfolio
2
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T. Rowe Price Variable Annuity
Prospective purchasers should be aware that the investments made by the Funds at
any given time are not expected to be the same as the investments made by other
mutual funds T. Rowe Price sponsors, including other mutual funds with
investment objectives and policies similar to those of the Funds.
The Contract Value in the Fixed Interest Account will accrue interest at rates
that are paid by the Company as described in "The Fixed Interest Account" on
page 30. Contract Value in the Fixed Interest Account is guaranteed by the
Company.
The Contract Value in the Subaccounts under a Contract will vary based on
investment performance of the Subaccounts to which the Contract Value is
allocated. No minimum amount of Contract Value in the Subaccounts is guaranteed.
A Contract may be returned according to the terms of its Free-Look Right (see
"Free-Look Right," page 24).
This Prospectus concisely sets forth information about the Contract and the
Separate Account that a prospective investor should know before purchasing the
Contract. Certain additional information is contained in a "Statement of
Additional Information," dated January 2, 1997, which has been filed with the
Securities and Exchange Commission (the "SEC"). The Statement of Additional
Information, as it may be supplemented from time to time, is incorporated by
reference into this Prospectus and is available at no charge, by writing the
Company at 70 West Red Oak Lane, 4th Floor, White Plains, New York 10604. The
table of contents of the Statement of Additional Information is set forth on
page 45 of this Prospectus.
Date: January 2, 1997
3
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T. Rowe Price Variable Annuity
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CONTENTS
THE CONTRACT IS AVAILABLE ONLY IN NEW YORK. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT BE LAWFULLY MADE.
NO PERSON IS AUTHORIZED TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN AS CONTAINED IN THIS PROSPECTUS OR THE STATEMENT OF
ADDITIONAL INFORMATION, THE FUNDS' PROSPECTUS OR STATEMENT OF ADDITIONAL
INFORMATION, OR ANY SUPPLEMENT THERETO.
8 DEFINITIONS
9 SUMMARY
9 Purpose of the Contract
10 The Separate Account and the Funds
10 Fixed Interest Account
10 Purchase Payments
10 Contract Benefits
11 Free-Look Right
11 Charges and Deductions
11 Mortality and Expense Risk Charge
11 Premium Tax Charge
11 Other Expenses
12 Contacting the Company
12 EXPENSE TABLE
12 Contractual Expenses
12 Annual Separate Account Expenses
12 Annual Portfolio Expenses
12 Example
13 CONDENSED FINANCIAL INFORMATION
14 INFORMATION ABOUT THE COMPANY,
THE SEPARATE ACCOUNT, AND THE FUNDS
14 First Security Benefit Life Insurance and Annuity
Company of New York
14 Published Ratings
14 Separate Account
15 The Funds
16 T. Rowe Price New America Growth Portfolio
16 T. Rowe Price International Stock Portfolio
16 T. Rowe Price Mid-Cap Growth Portfolio
16 T. Rowe Price Equity Income Portfolio
16 T. Rowe Price Personal Strategy Balanced Portfolio
16 T. Rowe Price Limited-Term Bond Portfolio
17 T. Rowe Price Prime Reserve Portfolio
17 The Investment Advisers
4
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T. Rowe Price Variable Annuity
17 THE CONTRACT
17 General
17 Application for a Contract
18 Purchase Payments
19 Allocation of Purchase Payments
19 Dollar Cost Averaging Option
20 Asset Rebalancing Option
21 Exchanges of Contract Value
21 Contract Value
21 Determination of Contract Value
22 Full and Partial Withdrawals
23 Systematic Withdrawals
24 Free-Look Right
24 Death Benefit
25 Distribution Requirements
25 Death of the Annuitant
26 CHARGES AND DEDUCTIONS
26 Mortality and Expense Risk Charge
26 Premium Tax Charge
26 Other Charges
26 Guarantee of Certain Charges
27 Fund Expenses
27 ANNUITY PERIOD
27 General
28 Annuity Options
28 Option 1 - Life Income
28 Option 2 - Life Income with Guaranteed
Payments of 5, 10, 15 or 20 Years
28 Option 3 - Life with Installment
or Unit Refund Option
29 Option 4 - Joint and Last Survivor
29 Option 5 - Payments for Specified Period
29 Option 6 - Payments of a Specified Amount
29 Option 7 - Age Recalculation
29 Selection of an Option
5
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T. Rowe Price Variable Annuity
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CONTENTS
30 THE FIXED INTEREST ACCOUNT
30 Interest
31 Death Benefit
31 Contract Charges
31 Exchanges and Withdrawals
32 Payments from the Fixed Interest Account
32 MORE ABOUT THE CONTRACT
32 Ownership
33 Designation and Change of Beneficiary
33 Non-Participating
33 Payments from the Separate Account
33 Proof of Age and Survival
33 Misstatements
33 FEDERAL TAX MATTERS
33 Introduction
34 Tax Status of the Company and the Separate Account
34 General
34 Charge for the Company's Taxes
35 Diversification Standards
36 Income Taxation of Annuities in General -
Non-Qualified Plans
36 Surrenders or Withdrawals Prior
to the Annuity Payout Date
36 Surrenders or Withdrawals on or after
the Annuity Payout Date
37 Penalty Tax on Certain
Surrenders or Withdrawals
37 Additional Considerations
37 Distribution-at-Death Rules
38 Gift of Annuity Contracts
38 Contracts Owned by Non-Natural Persons
38 Multiple Contract Rule
38 Possible Tax Changes
39 Transfers, Assignments Or Exchanges Of A Contract
39 Qualified Plans
39 Section 408
40 Tax Penalties
41 Withholding
6
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T. Rowe Price Variable Annuity
41 OTHER INFORMATION
41 Voting of Fund Shares
42 Substitution of Investments
43 Changes to Comply with Law and Amendments
43 Reports to Owners
43 Distribution of the Contract
44 Legal Proceedings
44 Legal Matters
44 PERFORMANCE INFORMATION
44 ADDITIONAL INFORMATION
44 Registration Statement
45 Financial Statements
45 STATEMENT OF ADDITIONAL INFORMATION
46 ILLUSTRATIONS
7
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T. Rowe Price Variable Annuity
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DEFINITIONS
VARIOUS TERMS COMMONLY USED IN THIS PROSPECTUS ARE DEFINED AS FOLLOWS:
ACCUMULATION PERIOD The period commencing on the Contract Date and ending on the
Annuity Payout Date or, if earlier, when the Contract is terminated, either
through a full withdrawal, payment of charges, or payment of the death benefit
proceeds.
ACCUMULATION UNIT A unit of measure used to calculate the value of a
Contractowner's interest in a Subaccount during the Accumulation Period.
ANNUITANT The person or persons on whose life annuity payments depend. If Joint
Annuitants are named in the Contract, "Annuitant" means both Annuitants unless
otherwise stated.
ANNUITY A series of periodic income payments made by the Company to an
Annuitant, Joint Annuitant, or Beneficiary during the period specified in the
Annuity Option.
ANNUITY OPTIONS Options under the Contract that prescribe the provisions under
which a series of annuity payments are made.
ANNUITY PERIOD The period during which annuity payments are made.
ANNUITY PAYOUT DATE The date when annuity payments are scheduled to begin.
AUTOMATIC INVESTMENT PROGRAM A program pursuant to which purchase payments are
automatically paid from the owner's checking account on a specified day of the
month on a monthly, quarterly, semiannual or annual basis, or a salary reduction
arrangement.
CONTRACT DATE The date shown as the Contract Date in a Contract. Annual Contract
anniversaries are measured from the Contract Date. It is usually the date that
the initial purchase payment is credited to the Contract.
CONTRACTOWNER OR OWNER The person entitled to the ownership rights under the
Contract and in whose name the Contract is issued.
CONTRACT VALUE The total value of the amounts in a Contract allocated to the
Subaccounts of the Separate Account and the Fixed Interest Account as of any
Valuation Date.
CONTRACT YEAR Each twelve-month period measured from the Contract Date.
DESIGNATED BENEFICIARY The person having the right to the death benefit, if any,
payable upon the death of the Owner or the Joint Owner during the Accumulation
Period. The Designated Beneficiary is the first person on the following list who
is alive on the date of death of the Owner or the Joint Owner: the Owner; the
Joint Owner; the Primary Beneficiary; the Secondary Beneficiary; the Annuitant;
or if none of the above are alive, the Owner's Estate.
FIXED INTEREST ACCOUNT An account that is part of the Company's General Account
in which all or a portion of the Contract Value may be held for accumulation at
fixed rates of interest (which may not be less than 3%) declared by the Company
periodically at its discretion.
FUNDS T. Rowe Price Equity Series, Inc., T. Rowe Price Fixed Income Series, Inc.
and T. Rowe Price International Series, Inc. The Funds are diversified, open-end
management investment companies commonly referred to as mutual funds.
8
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T. Rowe Price Variable Annuity
GENERAL ACCOUNT All assets of the Company other than those allocated to the
Separate Account or to any other separate account of the Company.
PURCHASE PAYMENT The amounts paid to the Company as consideration for the
Contract.
SEPARATE ACCOUNT The T. Rowe Price Variable Annuity Account of First Security
Benefit Life Insurance and Annuity Company of New York is a separate account of
the Company. Contract Value under the Contract may be allocated to Subaccounts
of the Separate Account for variable accumulation.
SUBACCOUNT A division of the Separate Account of the Company which invests in a
separate Portfolio of one of the Funds. Currently, seven Subaccounts are
available under the Contract.
VALUATION DATE Each date on which the Separate Account is valued, which
currently includes each day that the Company and the New York Stock Exchange are
open for trading. The Company and the New York Stock Exchange are closed on
weekends and on the following holidays: New Year's Day, Presidents' Day, Good
Friday, Memorial Day, July Fourth, Labor Day, Thanksgiving Day, and Christmas
Day.
VALUATION PERIOD A period used in measuring the investment experience of each
Subaccount of the Separate Account. The Valuation Period begins at the close of
one Valuation Date and ends at the close of the next succeeding Valuation Date.
WITHDRAWAL VALUE The amount a Contractowner receives upon full withdrawal of the
Contract, which is equal to Contract Value less any premium taxes due and paid
by the Company.
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SUMMARY
This summary is intended to provide a brief overview of the more significant
aspects of the Contract. Further detail is provided in this Prospectus, the
Statement of Additional Information, and the Contract. Unless the context
indicates otherwise, the discussion in this summary and the remainder of the
Prospectus relates to the portion of the Contract involving the Separate
Account. The Fixed Interest Account is briefly described under "The Fixed
Interest Account" on page 30 and in the Contract.
PURPOSE OF THE CONTRACT
The individual flexible premium deferred variable annuity contract ("Contract")
described in this Prospectus is designed to give Contractowners flexibility in
planning for retirement and other financial goals. The Contract provides for the
accumulation of values on a variable basis, a fixed basis, or both, during the
Accumulation Period and provides several options for annuity payments on a
variable basis, a fixed basis, or both. During the Accumulation Period, an Owner
can pursue various allocation options by allocating purchase payments to the
Subaccounts of the Separate Account or to the Fixed Interest Account. See "The
Contract," page 17.
The Contract is eligible for purchase as a non-tax qualified retirement plan for
an individual ("Non-Qualified Plan"). The Contract is also eligible for purchase
as an individual retirement annuity ("IRA") qualified under Section 408 of the
Internal Revenue Code of 1986, as amended ("Qualified Plan").
9
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T. Rowe Price Variable Annuity
THE SEPARATE ACCOUNT AND THE FUNDS
Purchase payments designated to accumulate on a variable basis are allocated to
the Separate Account. See "Separate Account," page 14. The Separate Account is
currently divided into seven accounts referred to as Subaccounts. Each
Subaccount invests exclusively in shares of a specific Portfolio of one of the
Funds. Each of the Funds' Portfolios has a different investment objective or
objectives. Each Portfolio is listed under its respective Fund below.
T. ROWE PRICE EQUITY SERIES, INC.
- ---------------------------------
T. Rowe Price New America Growth Portfolio
T. Rowe Price Mid-Cap Growth Portfolio
T. Rowe Price Equity Income Portfolio
T. Rowe Price Personal Strategy Balanced Portfolio
T. ROWE PRICE FIXED INCOME SERIES, INC.
- ---------------------------------------
T. Rowe Price Limited-Term Bond Portfolio
T. Rowe Price Prime Reserve Portfolio
T. ROWE PRICE INTERNATIONAL SERIES, INC.
- ----------------------------------------
T. Rowe Price International Stock Portfolio
Amounts held in a Subaccount will increase or decrease in dollar value depending
on the investment performance of the corresponding Portfolio in which such
Subaccount invests. The Contractowner bears the investment risk for amounts
allocated to a Subaccount of the Separate Account.
FIXED INTEREST ACCOUNT
Purchase payments designated to accumulate on a fixed basis may be allocated to
the Fixed Interest Account, which is part of the Company's General Account.
Amounts allocated to the Fixed Interest Account earn interest at rates
determined at the discretion of the Company and that are guaranteed to be at
least an effective annual rate of 3%. See "The Fixed Interest Account" on
page 30.
PURCHASE PAYMENTS
The minimum initial purchase payment is $10,000 ($5,000 if made pursuant to an
Automatic Investment Program) for a Contract issued in connection with a
Non-Qualified Plan and $2,000 ($25 if made pursuant to an Automatic Investment
Program) for a Contract issued in connection with a Qualified Plan. Thereafter,
the Contractowner may choose the amount and frequency of purchase payments,
except that the minimum subsequent purchase payment is $1,000 ($200 if made
pursuant to an Automatic Investment Program) for a Contract funding a
Non-Qualified Plan or $500 ($25 if made pursuant to an Automatic Investment
Program) for a Contract funding a Qualified Plan. See "Purchase Payments" on
page 18.
CONTRACT BENEFITS
During the Accumulation Period, Contract Value may be exchanged by the
Contractowner among the Subaccounts of the Separate Account and to and from the
Fixed Interest Account, subject to certain restrictions as described in
"Exchanges of Contract Value' on page 21 and "The Fixed Interest Account" on
page 30.
10
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T. Rowe Price Variable Annuity
At any time before the Annuity Payout Date, a Contract may be surrendered for
its Withdrawal Value, and partial withdrawals, including systematic withdrawals,
may be taken from the Contract Value, subject to certain restrictions described
in "The Fixed Interest Account" on page 30. See "Full and Partial Withdrawals,"
page 22 and "Federal Tax Matters," page 33 for more information about
withdrawals, including the 10% penalty tax that may be imposed upon full and
partial withdrawals (including systematic withdrawals) made prior to the Owner
attaining age 59 1/2.
The Contract provides for a death benefit upon the death of the Owner during the
Accumulation Period. See "Death Benefit," page 24 for more information. The
Contract provides for several Annuity Options on either a variable basis, a
fixed basis, or both. Payments under the fixed Annuity Options will be
guaranteed by the Company. See "Annuity Period" on page 27.
FREE-LOOK RIGHT
An Owner may return a Contract within the Free-Look Period, which is a 30-day
period beginning when the Owner receives the Contract. In this event, the
Company will refund to the Owner purchase payments allocated to the Fixed
Interest Account plus the Contract Value in the Subaccounts increased by any
fees or other charges paid. The Company will refund purchase payments allocated
to the Subaccounts rather than the Contract Value in those circumstances in
which it is required to do so. See "Free Look Right" on page 24.
CHARGES AND DEDUCTIONS
The Company does not make any deductions for sales load from purchase payments.
Certain charges will be deducted in connection with the Contract as described
below.
MORTALITY AND EXPENSE RISK CHARGE
The Company deducts a daily charge from the assets of each Subaccount for
mortality and expense risks equal to an annual rate of .55% of each Subaccount's
average daily net assets. See "Mortality and Expense Risk Charge" on page 26.
PREMIUM TAX CHARGE
The Company assesses a premium tax charge to reimburse itself for any premium
taxes that it incurs with respect to this Contract. This charge will usually be
deducted on annuitization or upon full withdrawal if a premium tax was incurred
by the Company and is not refundable. Partial withdrawals, including systematic
withdrawals, may be subject to a premium tax charge if a premium tax is incurred
on the withdrawal by the Company and is not refundable. No premium tax is
currently imposed in the State of New York. However, the Company reserves the
right to deduct such taxes, if imposed, when due or anytime thereafter. See
"Premium Tax Charge" on page 26.
OTHER EXPENSES
The operating expenses of the Separate Account are paid by the Company.
Investment management fees and operating expenses of the Funds are paid by the
Funds and are reflected in the net asset value of Fund shares. For a description
of these charges and expenses, see the Prospectus for the Funds.
11
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T. Rowe Price Variable Annuity
CONTACTING THE COMPANY
All written requests, notices, and forms required by the Contract, and any
questions or inquiries should be directed to First Security Benefit Life
Insurance and Annuity Company of New York, 70 West Red Oak Lane, 4th Floor,
White Plains, New York 10604.
- --------------------------------------------------------------------------------
EXPENSE TABLE
The purpose of this table is to assist investors in understanding the various
costs and expenses borne directly and indirectly by Owners allocating Contract
Value to the Subaccounts. The table reflects any contractual charges, expenses
of the Separate Account, and charges and expenses of the Funds. The table does
not reflect premium taxes that may be imposed by various jurisdictions. See
"Premium Tax Charge," on page 26. The information contained in the table is not
applicable to amounts allocated to the Fixed Interest Account.
For a complete description of a Contract's costs and expenses, see "Charges and
Deductions," page 26. For a more complete description of each Fund's costs and
expenses, see the Fund Prospectus, which accompanies this Prospectus.
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CONTRACTUAL EXPENSES
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Sales load on purchase payments None
- --------------------------------------------------------------------------------
Annual Maintenance Fee None
================================================================================
ANNUAL SEPARATE ACCOUNT EXPENSES
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Annual Mortality and Expense Risk Charge
(as a percentage of each Subaccount's average daily net assets) 0.55%
- --------------------------------------------------------------------------------
Total Annual Separate Account Expenses 0.55%
================================================================================
ANNUAL PORTFOLIO EXPENSES (AS A PERCENTAGE OF EACH PORTFOLIO'S AVERAGE DAILY NET
ASSETS)
- --------------------------------------------------------------------------------
MANAGEMENT OTHER TOTAL
FEE* EXPENSES PORTFOLIO
EXPENSES
- --------------------------------------------------------------------------------
T. Rowe Price New America Growth Portfolio 0.85% 0% 0.85%
- --------------------------------------------------------------------------------
T. Rowe Price International Stock Portfolio 1.05% 0% 1.05%
- --------------------------------------------------------------------------------
T. Rowe Price Mid-Cap Growth Portfolio 0.85% 0% 0.85%
- --------------------------------------------------------------------------------
T. Rowe Price Equity Income Portfolio 0.85% 0% 0.85%
- --------------------------------------------------------------------------------
T. Rowe Price Personal Strategy Balanced Portfolio 0.90% 0% 0.90%
- --------------------------------------------------------------------------------
T. Rowe Price Limited-Term Bond Portfolio 0.70% 0% 0.70%
- --------------------------------------------------------------------------------
T. Rowe Price Prime Reserve Portfolio 0.55% 0% 0.55%
- --------------------------------------------------------------------------------
*The management fee includes the ordinary expenses of operating the Funds.
EXAMPLE
The example presented below shows expenses that a Contractowner would pay at the
end of one, three, five or ten years. The information presented applies if, at
the end of those time periods, the Contract is (1) surrendered, (2) annuitized,
or (3) not surrendered or annuitized. The example shows expenses based upon an
allocation of $1,000 to each of the Subaccounts.
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T. Rowe Price Variable Annuity
The example below should not be considered a representation of past or future
expenses. Actual expenses may be greater or lesser than those shown. The 5%
return assumed in the examples is hypothetical and should not be considered a
representation of past or future actual returns, which may be greater or lesser
than the assumed amount.
EXAMPLE The Owner would pay the expenses shown below on a $1,000 investment,
assuming 5% annual return on assets:
================================================================================
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
New America Growth Subaccount $14 $44 $77 $168
- --------------------------------------------------------------------------------
International Stock Subaccount $16 $50 $87 $190
- --------------------------------------------------------------------------------
Mid-Cap Growth Subaccount $14 $44 $77 $168
- --------------------------------------------------------------------------------
Equity Income Subaccount $14 $44 $77 $168
- --------------------------------------------------------------------------------
Personal Strategy Balanced Subaccount $15 $46 $79 $174
- --------------------------------------------------------------------------------
Limited-Term Bond Subaccount $13 $40 $69 $151
- --------------------------------------------------------------------------------
Prime Reserve Subaccount $11 $35 $61 $134
================================================================================
- --------------------------------------------------------------------------------
CONDENSED FINANCIAL INFORMATION
The following condensed financial information presents accumulation unit values
for the period January 1, 1996 (date of inception) through September 30, 1996,
as well as ending accumulation units outstanding under each Subaccount.
Condensed financial information is not yet available for the Mid-Cap Growth and
Prime Reserve Subaccounts.
================================================================================
1996
- --------------------------------------------------------------------------------
NEW AMERICA GROWTH SUBACCOUNT
- --------------------------------------------------------------------------------
Accumulation unit value:
Beginning of period $10.00
End of period $15.64
Accumulation units:
Outstanding at the end of period 107,762
- --------------------------------------------------------------------------------
INTERNATIONAL STOCK SUBACCOUNT
- --------------------------------------------------------------------------------
Accumulation unit value:
Beginning of period $10.00
End of period $12.21
Accumulation units:
Outstanding at the end of period 79,881
- --------------------------------------------------------------------------------
EQUITY INCOME SUBACCOUNT
- --------------------------------------------------------------------------------
Accumulation unit value:
Beginning of period $10.00
End of period $13.70
Accumulation units:
Outstanding at the end of period 145,322
- --------------------------------------------------------------------------------
PERSONAL STRATEGY BALANCED SUBACCOUNT
- --------------------------------------------------------------------------------
Accumulation unit value:
Beginning of period $10.00
End of period $12.74
Accumulation units:
Outstanding at the end of period 31,872
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T. Rowe Price Variable Annuity
- --------------------------------------------------------------------------------
LIMITED-TERM BOND SUBACCOUNT
- --------------------------------------------------------------------------------
Accumulation unit value:
Beginning of period $10.00
End of period $10.70
Accumulation units:
Outstanding at the end of period 17,904
================================================================================
- --------------------------------------------------------------------------------
INFORMATION ABOUT THE COMPANY,
THE SEPARATE ACCOUNT, AND THE FUNDS
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
The Company is a stock life insurance company organized under the laws of the
State of New York on November 8, 1994. On September 8, 1995, the Company merged
with and is the successor corporation of Pioneer National Life Insurance
Company, a stock life insurance company organized under the laws of the State of
Kansas. The Company is a wholly-owned subsidiary of Security Benefit Group,
Inc., a financial services holding company which is wholly owned by Security
Benefit Life Insurance Company, a mutual life insurance company organized under
the laws of the State of Kansas. The Company offers variable annuity contracts
in New York and is admitted to do business in that state.
PUBLISHED RATINGS
The Company may from time to time publish in advertisements, sales literature
and reports to Owners, the ratings and other information assigned to it by one
or more independent rating organizations such as A.M. Best Company and Standard
& Poor's. The purpose of the ratings is to reflect the financial strength and/or
claims-paying ability of the Company and should not be considered as bearing on
the investment performance of assets held in the Separate Account. Each year the
A.M. Best Company reviews the financial status of thousands of insurers,
culminating in the assignment of Best's Ratings. These ratings reflect their
current opinion of the relative financial strength and operating performance of
an insurance company in comparison to the norms of the life/health insurance
industry. In addition, the claims-paying ability of the Company as measured by
Standard & Poor's Insurance Ratings Services may be referred to in
advertisements or sales literature or in reports to Owners. These ratings are
opinions of an operating insurance company's financial capacity to meet the
obligations of its insurance and annuity policies in accordance with their
terms. Such ratings do not reflect the investment performance of the Separate
Account or the degree of risk associated with an investment in the Separate
Account.
SEPARATE ACCOUNT
T. ROWE PRICE VARIABLE ANNUITY ACCOUNT OF FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
The Separate Account was established by the Company as a separate account on
November 11, 1994, pursuant to the laws of the State of New York. The income,
gains and losses of the Separate Account, whether or not realized, are, in
accordance with the Contracts, credited or charged against the assets of the
Separate Account without regard to other income, gains, or losses of the
Company. The Company owns the assets in the
14
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T. Rowe Price Variable Annuity
Separate Account but they are held separately from the other assets of the
Company. Section 4240 of the New York Insurance Law provides that the assets of
a separate account are not chargeable with liabilities incurred in any other
business operation of the insurance company (except to the extent that assets in
the separate account exceed the reserves and other liabilities of the separate
account) if and to the extent the applicable agreements so provide, and the
Contract contains such a provision. The Company may transfer to its General
Account assets that exceed anticipated obligations of the Separate Account. All
obligations arising under the Contracts are general corporate obligations of the
Company. The Company may invest its own assets in the Separate Account for other
purposes but not to support contracts other than variable annuity contracts, and
may accumulate in the Separate Account proceeds from Contract charges and
investment results applicable to those assets.
The Separate Account is currently divided into seven Subaccounts. Income, gains
and losses, whether or not realized, are, in accordance with the Contracts,
credited to, or charged against, the assets of each Subaccount without regard to
the income, gains or losses in the other Subaccounts. Each Subaccount invests
exclusively in shares of a specific Portfolio of one of the Funds. The Company
may in the future establish additional Subaccounts of the Separate Account,
which may invest in other Portfolios of the Funds or in other securities, mutual
funds, or investment vehicles. Under current contractual arrangements with the
distributor, T. Rowe Price Investment Services, Inc. ("Investment Services"),
the Company cannot add new Subaccounts, or substitute shares of another
portfolio, without the consent of Investment Services, unless such change is
necessary to comply with applicable laws, shares of any or all of the Portfolios
should no longer be available for investment or, if the Company receives an
opinion from counsel acceptable to Investment Services that the substitution is
in the best interests of contractowners and that further investment in shares of
the Portfolio(s) would cause undue risk to the Company. For more information
about the distributor, see "Distribution of the Contract," page 43.
The Separate Account is registered with the SEC as a unit investment trust under
the Investment Company Act of 1940 (the "1940 Act"). Registration with the SEC
does not involve supervision by the SEC of the administration or investment
practices of the Separate Account or of the Company.
THE FUNDS
The T. Rowe Price Equity Series, Inc., the T. Rowe Price Fixed Income Series,
Inc. and the T. Rowe Price International Series, Inc. (the "Funds") are
diversified, open-end management investment companies of the series type. The
Funds are registered with the SEC under the 1940 Act. Such registration does not
involve supervision by the SEC of the investments or investment policy of the
Funds. Together, the Funds currently have seven separate portfolios
("Portfolios"), each of which pursues different investment objectives and
policies.
In addition to the Separate Account, shares of the Funds are being sold to
variable life insurance and variable annuity separate accounts of other
insurance companies, including insurance companies affiliated with the Company.
In the future, it may be
15
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T. Rowe Price Variable Annuity
disadvantageous for variable annuity separate accounts of other life insurance
companies, or for both variable life insurance separate accounts and variable
annuity separate accounts, to invest simultaneously in the Funds, although
currently neither the Company nor the Funds foresees any such disadvantages to
either variable annuity owners or variable life insurance owners. The management
of the Funds intends to monitor events in order to identify any material
conflicts between or among variable annuity owners and variable life insurance
owners and to determine what action, if any, should be taken in response. In
addition, if the Company believes that any Fund's response to any of those
events or conflicts insufficiently protects Owners, it will take appropriate
action on its own. For more information see the Funds' prospectus.
A summary of the investment objective of each Portfolio of the Funds is
described below. There can be no assurance that any Portfolio will achieve its
objective. More detailed information is contained in the accompanying prospectus
of the Funds, including information on the risks associated with the investments
and investment techniques of each Portfolio.
THE FUNDS' PROSPECTUS ACCOMPANIES THIS PROSPECTUS AND SHOULD BE READ CAREFULLY
BEFORE INVESTING.
T. ROWE PRICE NEW AMERICA GROWTH PORTFOLIO
The investment objective of the New America Growth Portfolio is long-term growth
of capital by investing primarily in the common stocks of U.S. growth companies
which operate in service industries.
T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO
The investment objective of the International Stock Portfolio is to seek
long-term growth of capital by investing primarily in common stocks of
established, non-U.S. companies.
T. ROWE PRICE MID-CAP GROWTH PORTFOLIO
The investment objective of the Mid-Cap Growth Portfolio is to provide long-term
capital appreciation by investing primarily in companies that offer proven
products or services.
T. ROWE PRICE EQUITY INCOME PORTFOLIO
The investment objective of the Equity Income Portfolio is to provide
substantial dividend income and also capital appreciation by investing primarily
in dividend-paying common stocks of established companies.
T. ROWE PRICE PERSONAL STRATEGY BALANCED PORTFOLIO
The investment objective of the Personal Strategy Balanced Portfolio is to seek
the highest total return over time consistent with an emphasis on both capital
appreciation and income.
T. ROWE PRICE LIMITED-TERM BOND PORTFOLIO
The investment objective of the Limited-Term Bond Portfolio is to seek a high
level of income consistent with modest price fluctuation by investing primarily
in short- and intermediate-term investment grade debt securities.
16
<PAGE>
T. Rowe Price Variable Annuity
T. ROWE PRICE PRIME RESERVE PORTFOLIO
The investment objectives of the Prime Reserve Portfolio are preservation of
capital, liquidity, and, consistent with these, the highest possible current
income, by investing primarily in high-quality money market securities.
THE INVESTMENT ADVISERS
T. Rowe Price Associates, Inc. ("T. Rowe Price"), located at 100 East Pratt
Street, Baltimore, Maryland 21202, serves as Investment Adviser to each
Portfolio, except the T. Rowe Price International Stock Portfolio. Rowe
Price-Fleming International, Inc. ("Price-Fleming"), an affiliate of T. Rowe
Price, serves as Investment Adviser to the T. Rowe Price International Stock
Portfolio. Price-Fleming's U.S. office is located at 100 East Pratt Street,
Baltimore, Maryland 21202. As Investment Adviser to each of the Portfolios,
except the T. Rowe Price International Stock Portfolio, T. Rowe Price is
responsible for selection and management of their portfolio investments. As
Investment Adviser to the T. Rowe Price International Stock Portfolio,
Price-Fleming is responsible for selection and management of its portfolio
investments. Each of T. Rowe Price and Price-Fleming is registered with the SEC
as an investment adviser.
T. Rowe Price and Price-Fleming are not affiliated with the Company, and the
Company has no responsibility for the management or operations of the
Portfolios.
- --------------------------------------------------------------------------------
THE CONTRACT
GENERAL
The Contract offered by this Prospectus is an individual flexible premium
deferred variable annuity that is issued by the Company. To the extent that all
or a portion of purchase payments are allocated to the Subaccounts, the Contract
is significantly different from a fixed annuity contract in that it is the Owner
under a Contract who assumes the risk of investment gain or loss rather than the
Company. During the Accumulation Period, a Contractowner's value accumulates on
either a variable basis, a fixed basis, or both, depending on the Owner's
allocation of Contract value to the Subaccounts and the Fixed Interest Account.
The Contract also provides several Annuity Options under which the Company will
pay periodic annuity payments on a variable basis, a fixed basis or both,
beginning on the Annuity Payout Date. The amount that will be available for
annuity payments will depend on the investment performance of the Subaccounts to
which Contract Value has been allocated and the amount of interest credited on
Contract Value that has been allocated to the Fixed Interest Account.
The Contract is available for purchase as a non-tax qualified retirement plan
("Non-Qualified Plan") by an individual. The Contract is also eligible for
purchase as an individual retirement annuity ("IRA") qualified under Section 408
of the Internal Revenue Code ("Qualified Plan"). Joint Owners are permitted only
on a Contract issued pursuant to a Non-Qualified Plan.
APPLICATION FOR A CONTRACT
Any person wishing to purchase a Contract may submit an application and an
initial purchase payment to the Company, as well as any other form or
information that the Company may require. The initial purchase payment may be
made by check or, if an applicant owns shares of one or more mutual funds
distributed by Investment Services ("T. Rowe Price Funds"), by electing on the
application to redeem shares of that fund(s)
17
<PAGE>
T. Rowe Price Variable Annuity
and forward the redemption proceeds to the Company. Any such transaction shall
be effected by Investment Services, the distributor of the T. Rowe Price mutual
funds and the Contract. The redemption of fund shares is a sale of shares for
tax purposes, which may result in a taxable gain or loss. The application may be
obtained by contacting the Company. The Company reserves the right to reject an
application or purchase payment for any reason, subject to the Company's
underwriting standards and guidelines and any applicable state or federal law
relating to nondiscrimination.
The maximum age of an Owner or Annuitant for which a Contract will be issued is
85. If there are Joint Owners or Annuitants, the maximum issue age will be
determined by reference to the older Owner or Annuitant.
PURCHASE PAYMENTS
The minimum initial purchase payment for the purchase of a Contract is $10,000
($5,000 if made pursuant to an Automatic Investment Program) in connection with
a Non-Qualified Plan and $2,000 ($25 if made pursuant to an Automatic Investment
Program) in connection with a Qualified Plan. Thereafter, the Contractowner may
choose the amount and frequency of purchase payments, except that the minimum
subsequent purchase payment is $1,000 ($200 if made pursuant to an Automatic
Investment Program) for Non-Qualified Plans and $500 ($25 if made pursuant to an
Automatic Investment Program) for Qualified Plans. Cumulative purchase payments
exceeding $1 million will not be accepted under a Contract without prior
approval of the Company.
An initial purchase payment will be applied not later than the end of the second
Valuation Date after the Valuation Date it is received by the Company at P.O.
Box 2788, Topeka, Kansas 66601-9804 if the purchase payment is preceded or
accompanied by an application that contains sufficient information necessary to
establish an account and properly credit such purchase payment. If the Company
does not receive a complete application, the Company will notify the applicant
that it does not have the necessary information to issue a Contract. If the
necessary information is not provided to the Company within five Valuation Dates
after the Valuation Date on which the Company first receives the initial
purchase payment or if the Company determines it cannot otherwise issue the
Contract, the Company will return the initial purchase payment to the applicant
unless the applicant consents to the Company retaining the purchase payment
until the application is made complete.
Subsequent purchase payments will be credited as of the end of the Valuation
Period in which they are received by the Company. Purchase payments after the
initial purchase payment may be made at any time prior to the Annuity Payout
Date, so long as the Owner is living. Subsequent purchase payments under a
Qualified Plan may be limited by the terms of the plan and provisions of the
Internal Revenue Code. Subsequent purchase payments may be paid under an
Automatic Investment Program or, if an Owner owns shares of one or more T. Rowe
Price Funds, by directing Investment Services to redeem shares of that fund(s)
and forward the redemption proceeds to the Company as a subsequent purchase
payment. The minimum initial purchase payment required must be paid before the
Automatic Investment Program will be accepted by the Company. The redemption of
fund shares is a sale of shares for tax purposes which may result in a taxable
gain or loss.
18
<PAGE>
T. Rowe Price Variable Annuity
ALLOCATION OF PURCHASE PAYMENTS
In an application for a Contract, the Contractowner selects the Subaccounts or
the Fixed Interest Account to which purchase payments will be allocated.
Purchase payments will be allocated according to the Contractowner's
instructions contained in the application or more recent instructions received,
if any, except that no purchase payment allocation is permitted that would
result in less than $25 per payment being allocated to any one Subaccount or the
Fixed Interest Account. Available allocation alternatives include the seven
Subaccounts and the Fixed Interest Account.
A Contractowner may change the purchase payment allocation instructions by
submitting a proper written request to the Company. A proper change in
allocation instructions will be effective upon receipt by the Company and will
continue in effect until subsequently changed. Changes in the allocation of
future purchase payments have no effect on existing Contract Value. Such
Contract Value, however, may be exchanged among the Subaccounts of the Separate
Account or the Fixed Interest Account in the manner described in "Exchanges of
Contract Value," page 21.
DOLLAR COST AVERAGING OPTION
The Company currently offers an option under which Contractowners may dollar
cost average their allocations in the Subaccounts under the Contract by
authorizing the Company to make periodic allocations of Contract Value from any
one Subaccount to one or more of the other Subaccounts. Dollar cost averaging is
a systematic method of investing in which securities are purchased at regular
intervals in fixed dollar amounts so that the cost of the securities gets
averaged over time and possibly over various market cycles. The option will
result in the allocation of Contract Value to one or more Subaccounts, and these
amounts will be credited at the Accumulation Unit value as of the end of the
Valuation Dates on which the exchanges are effected. Since the value of
Accumulation Units will vary, the amounts allocated to a Subaccount will result
in the crediting of a greater number of units when the Accumulation Unit value
is low and a lesser number of units when the Accumulation Unit value is high.
Similarly, the amounts exchanged from a Subaccount will result in a debiting of
a greater number of units when the Subaccount's Accumulation Unit value is low
and a lesser number of units when the Accumulation Unit value is high. Dollar
cost averaging does not guarantee profits, nor does it assure that a
Contractowner will not have losses.
A Dollar Cost Averaging Request form is available from the Company upon request.
On the form, the Contractowner must designate whether Contract Value is to be
exchanged on the basis of a specific dollar amount, a fixed percentage or
earnings only, the Subaccount or Subaccounts to and from which the exchanges
will be made, the desired frequency of the exchanges, which may be on a monthly,
quarterly, semiannual, or annual basis, and the length of time during which the
exchanges shall continue or the total amount to be exchanged over time.
To elect the Dollar Cost Averaging Option, the Owner's Contract Value must be at
least $5,000 ($2,000 for a Contract funding a Qualified Plan), and a Dollar Cost
Averaging Request in proper form must be received by the Company. The Dollar
Cost Averaging Request form will not be considered complete until the
Contractowner's Contract Value is at least the required amount. A Contractowner
may not have in effect at the same time Dollar Cost Averaging and Asset
Rebalancing Options.
After the Company has received a Dollar Cost Averaging Request in proper form,
the
19
<PAGE>
T. Rowe Price Variable Annuity
Company will exchange Contract Value in amounts designated by the Contractowner
from the Subaccount from which exchanges are to be made to the Subaccount or
Subaccounts chosen by the Contractowner. The minimum amount that may be
exchanged is $200 and the minimum amount that may be allocated to any one
Subaccount is $25. Each exchange will be effected on the date specified by the
Owner or, if no date is specified, on the monthly, quarterly, semiannual, or
annual anniversary, whichever corresponds to the period selected by the
Contractowner, of the date of receipt at the Company of a Dollar Cost Averaging
Request in proper form. Exchanges will be made until the total amount elected
has been exchanged, until the time period chosen has expired, or until Contract
Value in the Subaccount from which exchanges are made has been depleted. Amounts
periodically exchanged under this option are not included in the six exchanges
per Contract Year that are allowed as discussed in "Exchanges of Contract Value"
on page 21.
A Contractowner may instruct the Company at any time to terminate the option by
written request to the Company. In that event, the Contract Value in the
Subaccount from which exchanges were being made that has not been exchanged will
remain in that Subaccount unless the Contractowner instructs otherwise. If a
Contractowner wishes to continue exchanging on a dollar cost averaging basis
after the expiration of the applicable period, the total amount elected has been
exchanged, or the Subaccount has been depleted, or after the Dollar Cost
Averaging Option has been canceled, a new Dollar Cost Averaging Request must be
completed and sent to the Company, and the Contract must meet the $5,000 ($2,000
for a Contract funding a Qualified Plan) minimum required amount of Contract
Value at that time.
Contract Value may also be dollar cost averaged to or from the Fixed Interest
Account, subject to certain restrictions described under "The Fixed Interest
Account," page 30.
ASSET REBALANCING OPTION
The Company currently offers an option under which Contractowners may authorize
the Company to automatically exchange Contract Value each quarter to maintain a
particular percentage allocation among the Subaccounts as selected by the
Contractowner. The Contract Value allocated to each Subaccount will grow or
decline in value at different rates during the quarter, and Asset Rebalancing
automatically reallocates the Contract Value in the Subaccounts each quarter to
the allocation selected by the Contractowner. Asset Rebalancing is intended to
exchange Contract Value from those Subaccounts that have increased in value to
those Subaccounts that have declined in value. Over time, this method of
investing may help a Contractowner buy low and sell high, although there can be
no assurance of this. This investment method does not guarantee profits, nor
does it assure that a Contractowner will not have losses.
To elect the Asset Rebalancing Option, the Contract Value in the Contract must
be at least $10,000 ($2,000 for a Contract funding a Qualified Plan) and an
Asset Rebalancing Request in proper form must be received by the Company. A
Contractowner may not have in effect at the same time Dollar Cost Averaging and
Asset Rebalancing Options. An Asset Rebalancing Request form is available upon
request. On the form, the Contractowner must indicate the applicable Subaccounts
and the percentage of Contract Value which should be allocated to each of the
applicable Subaccounts each quarter under the Asset Rebalancing Option. If the
Asset Rebalancing Option is elected, all Contract Value allocated to the
Subaccounts must be included in the Asset Rebalancing Option.
20
<PAGE>
T. Rowe Price Variable Annuity
This option will result in the exchange of Contract Value to one or more of the
Subaccounts on the date specified by the Contractowner or, if no date is
specified, on the date of the Company's receipt of the Asset Rebalancing Request
in proper form and on each quarterly anniversary of the applicable date
thereafter. The amounts exchanged will be credited at the Accumulation Unit
value as of the end of the Valuation Dates on which the exchanges are effected.
Amounts periodically exchanged under this option are not included in the six
exchanges per Contract Year that are allowed, nor are they subject to the
minimum exchange amount, discussed under "Exchanges of Contract Value" below.
A Contractowner may instruct the Company at any time to terminate this option by
written request to the Company. In that event, the Contract Value in the
Subaccounts that has not been exchanged will remain in those Subaccounts
regardless of the percentage allocation unless the Contractowner instructs
otherwise. If a Contractowner wishes to resume Asset Rebalancing after it has
been canceled, a new Asset Rebalancing Request form must be completed and sent
to the Company and the Contract Value at the time the request is made must be at
least $10,000 ($2,000 for a Contract funding a Qualified Plan).
Contract Value allocated to the Fixed Interest Account may be included in the
Asset Rebalancing Program, subject to certain restrictions described under "The
Fixed Interest Account," page 30.
EXCHANGES OF CONTRACT VALUE
During the Accumulation Period, Contract Value may be exchanged among the
Subaccounts by the Contractowner upon proper request to the Company. Up to six
exchanges are allowed in any Contract Year. The minimum exchange amount is $500
($200 under the Dollar Cost Averaging Option), or the amount remaining in a
given Subaccount.
Contract Value may also be exchanged between the Subaccounts and the Fixed
Interest Account; however, exchanges from the Fixed Interest Account to the
Subaccounts are restricted as described in "The Fixed Interest Account,"
page 30.
CONTRACT VALUE
The Contract Value is the sum of the amounts under the Contract held in each
Subaccount of the Separate Account and in the Fixed Interest Account as of any
Valuation Date.
On each Valuation Date, the portion of the Contract Value allocated to any
particular Subaccount will be adjusted to reflect the investment experience of
that Subaccount for that date. See "Determination of Contract Value," below. No
minimum amount of Contract Value is guaranteed. A Contractowner bears the entire
investment risk relating to the investment performance of Contract Value
allocated to the Subaccounts.
DETERMINATION OF CONTRACT VALUE
The Contract Value will vary to a degree that depends upon several factors,
including investment performance of the Subaccounts to which Contract Value has
been allocated, payment of subsequent purchase payments, partial withdrawals,
and the charges
21
<PAGE>
T. Rowe Price Variable Annuity
assessed in connection with the Contract. The amounts allocated to the
Subaccounts will be invested in shares of the corresponding Portfolios of the
Funds. The investment performance of the Subaccounts will reflect increases or
decreases in the net asset value per share of the corresponding Portfolios and
any dividends or distributions declared by the corresponding Portfolios. Any
dividends or distributions from any Portfolio of the Funds will be automatically
reinvested in shares of the same Portfolio, unless the Company, on behalf of the
Separate Account, elects otherwise.
Assets in the Subaccounts are divided into Accumulation Units, which are
accounting units of measure used to calculate the value of a Contractowner's
interest in a Subaccount. When a Contractowner allocates purchase payments to a
Subaccount, the Contract is credited with Accumulation Units. The number of
Accumulation Units to be credited is determined by dividing the dollar amount
allocated to the particular Subaccount by the Accumulation Unit value for the
particular Subaccount at the end of the Valuation Period in which the purchase
payment is credited. In addition, other transactions including full or partial
withdrawals, exchanges, and assessment of premium taxes against the Contract
affect the number of Accumulation Units credited to a Contract. The number of
units credited or debited in connection with any such transaction is determined
by dividing the dollar amount of such transaction by the unit value of the
affected Subaccount. The Accumulation Unit value of each Subaccount is
determined on each Valuation Date. The number of Accumulation Units credited to
a Contract will not be changed by any subsequent change in the value of an
Accumulation Unit, but the dollar value of an Accumulation Unit may vary from
Valuation Date to Valuation Date depending upon the investment experience of the
Subaccount and charges against the Subaccount.
The Accumulation Unit value of each Subaccount's units initially was $10. The
unit value of a Subaccount on any Valuation Date is calculated by dividing the
value of each Subaccount's net assets by the number of Accumulation Units
credited to the Subaccount on that date. Determination of the value of the net
assets of a Subaccount takes into account the following: (1) the investment
performance of the Subaccount, which is based upon the investment performance of
the corresponding Portfolio of the Funds, (2) any dividends or distributions
paid by the corresponding Portfolio, (3) the charges, if any, that may be
assessed by the Company for taxes attributable to the operation of the
Subaccount, and (4) the mortality and expense risk charge under the Contract.
FULL AND PARTIAL WITHDRAWALS
A Contractowner may obtain proceeds from a Contract by surrendering the Contract
for its Withdrawal Value or by making a partial withdrawal. A full or partial
withdrawal, including a systematic withdrawal, may be taken from the Contract
Value at any time while the Owner is living and before the Annuity Payout Date,
subject to restrictions on partial withdrawals of Contract Value from the Fixed
Interest Account and limitations under applicable law. A full or partial
withdrawal request will be effective as of the end of the Valuation Period that
a proper written request is received by the Company. A proper written request
must include the written consent of any effective assignee or irrevocable
Beneficiary, if applicable. A Contractowner may direct Investment Services to
apply the proceeds of a full or partial withdrawal to the purchase of shares of
one or more of the T. Rowe Price Funds by so indicating in their written
withdrawal request.
22
<PAGE>
T. Rowe Price Variable Annuity
The proceeds received upon a full withdrawal will be the Contract's Withdrawal
Value. The Withdrawal Value is equal to the Contract Value as of the end of the
Valuation Period during which a proper withdrawal request is received by the
Company, less any premium taxes due and paid by the Company. A partial
withdrawal may be requested for a specified percentage or dollar amount of
Contract Value. Each partial withdrawal must be for at least $500 except
systematic withdrawals discussed below. A request for a partial withdrawal will
result in a payment by the Company in accordance with the amount specified in
the partial withdrawal request. Upon payment, the Contract Value will be reduced
by an amount equal to the payment and any applicable premium tax. If a partial
withdrawal is requested that would leave the Withdrawal Value in the Contract
less than $2,000, then the Company reserves the right to treat the partial
withdrawal as a request for a full withdrawal.
The amount of a partial withdrawal will be deducted from the Contract Value in
the Subaccounts and the Fixed Interest Account, according to the Contractowner's
instructions to the Company, subject to the restrictions on partial withdrawals
from the Fixed Interest Account. See "The Fixed Interest Account" on page 30. If
a Contractowner does not specify the allocation, the Company will contact the
Contractowner for instructions, and the withdrawal will be effected as of the
end of the Valuation Period in which such instructions are obtained. A full or
partial withdrawal, including a systematic withdrawal, may be subject to a
premium tax charge to reimburse the Company for any tax on premiums on a
Contract that may be imposed by various states and municipalities. See "Premium
Tax Charge" on page 26.
A full or partial withdrawal, including a systematic withdrawal, may result in
receipt of taxable income to the Owner and, if made prior to the Owner attaining
age 59 1/2, may be subject to the 10% penalty tax. The tax consequences of a
withdrawal under the Contract should be carefully considered. See "Federal Tax
Matters" on page 33.
SYSTEMATIC WITHDRAWALS
The Company currently offers a feature under which systematic withdrawals may be
elected. Under this feature, a Contractowner may elect to receive systematic
withdrawals before the Annuity Payout Date by sending a properly completed
Systematic Withdrawal Request form to the Company. A Contractowner may direct
Investment Services to apply the proceeds of a systematic withdrawal to shares
of one or more of the T. Rowe Price Funds by so indicating on the Systematic
Withdrawal Request form. A proper request must include the written consent of
any effective assignee or irrevocable Beneficiary, if applicable. A
Contractowner may designate the systematic withdrawal amount as a percentage of
Contract Value allocated to the Subaccounts and/or Fixed Interest Account, as a
specified dollar amount, as all earnings in the Contract, or as based upon the
life expectancy of the Owner or the Owner and a Beneficiary, and the desired
frequency of the systematic withdrawals, which may be monthly, quarterly,
semiannually or annually. Systematic withdrawals may be stopped or modified upon
proper written request by the Contractowner received by the Company at least 30
days in advance of the requested date of termination or modification.
Each systematic withdrawal must be at least $100. Upon payment, the
Contractowner's Contract Value will be reduced by an amount equal to the payment
proceeds plus any applicable premium taxes. Any systematic withdrawal that
equals or exceeds the
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T. Rowe Price Variable Annuity
Withdrawal Value will be treated as a full withdrawal. In no event will payment
of a systematic withdrawal exceed the Withdrawal Value. The Contract will
automatically terminate if a systematic withdrawal causes the Contract's
Withdrawal Value to equal zero.
Each systematic withdrawal will be effected as of the end of the Valuation
Period during which the withdrawal is scheduled. The deduction caused by the
systematic withdrawal will be allocated to the Contractowner's Contract Value in
the Subaccounts and the Fixed Interest Account as directed by the Contractowner.
The Company may, at any time, discontinue, modify or suspend systematic
withdrawals, provided that, as required by its current contractual agreements
with Investment Services, the Company first obtains the consent of Investment
Services, which consent shall not be unreasonably withheld. Systematic
withdrawals from Contract Value allocated to the Fixed Interest Account must
provide for payments over a period of not less than 36 months as described under
"The Fixed Interest Account" on page 30. The tax consequences of a systematic
withdrawal including the 10% penalty tax imposed on withdrawals made prior to
the Owner attaining age 59 1/2, should be carefully considered. See "Federal Tax
Matters" on page 33.
FREE-LOOK RIGHT
An Owner may return a Contract within the Free-Look Period, which is a 30-day
period beginning when the Owner receives the Contract. The returned Contract
will then be deemed void and the Company will refund any purchase payments
allocated to the Fixed Interest Account plus any Contract Value in the
Subaccounts as of the end of the Valuation Period during which the returned
Contract is received by the Company and any fees or other charges deducted. The
Company will return purchase payments allocated to the Subaccounts rather than
Contract Value in those circumstances in which it is required to do so.
DEATH BENEFIT
If the Owner dies during the Accumulation Period, the Company will pay the death
benefit proceeds to the Designated Beneficiary upon receipt of due proof of
death and instructions regarding payment to the Designated Beneficiary. If there
are Joint Owners, the death benefit proceeds will be payable upon receipt of due
proof of death of either Owner during the Accumulation Period and instructions
regarding payment. If the surviving spouse of the deceased Owner is the sole
Designated Beneficiary, such spouse may elect to continue the Contract in force,
subject to certain limitations. See "Distribution Requirements" below. If the
Owner is not a natural person, the death benefit proceeds will be payable upon
receipt of due proof of death of the Annuitant during the Accumulation Period
and instructions regarding payment, and the amount of the death benefit is based
on the age of the oldest Annuitant on the date the Contract was issued. If the
death of an Owner occurs on or after the Annuity Payout Date, no death benefit
proceeds will be payable under the Contract, except that any guaranteed payments
remaining unpaid will continue to be paid to the Annuitant pursuant to the
Annuity Option in force at the date of death.
The death benefit proceeds will be the death benefit reduced by any premium
taxes due or paid by the Company. If an Owner dies during the Accumulation
Period and the age of each Owner was 75 or younger on the date the Contract was
issued, the amount of
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T. Rowe Price Variable Annuity
the death benefit will be the greatest of (1) the Contract Value as of the end
of the Valuation Period in which due proof of death and instructions regarding
payment are received by the Company, (2) the aggregate purchase payments
received less any reductions caused by previous withdrawals, or (3) the
stepped-up death benefit. The stepped-up death benefit is: (a) the highest death
benefit on any annual Contract anniversary that is both an exact multiple of
five and occurs prior to the oldest Owner attaining age 76, plus (b) any
purchase payments made since the applicable fifth annual Contract anniversary,
less (c) any withdrawals since the applicable anniversary.
If an Owner dies during the Accumulation Period and the Contract was issued to
the Owner after age 75, the amount of the death benefit will be the Contract
Value as of the end of the Valuation Period in which due proof of death and
instructions regarding payment are received by the Company.
The death benefit proceeds will be paid to the Designated Beneficiary in a
single sum or under one of the Annuity Options, as elected by the Designated
Beneficiary. If the Designated Beneficiary is to receive annuity payments under
an Annuity Option, there may be limits under applicable law on the amount and
duration of payments that the Beneficiary may receive, and requirements
respecting timing of payments. A tax adviser should be consulted in considering
Annuity Options. See "Federal Tax Matters," on page 33 for a discussion of the
tax consequences in the event of death.
DISTRIBUTION REQUIREMENTS
For Contracts issued in connection with Non-Qualified Plans, if the surviving
spouse of the deceased Owner is the sole Designated Beneficiary, such spouse may
elect to continue the Contract in force until the earlier of the surviving
spouse's death or the Annuity Payout Date or to receive the death benefit
proceeds. For any Designated Beneficiary other than a surviving spouse, only
those options may be chosen that provide for complete distribution of the
Owner's interest in the Contract within five years of the death of the Owner. If
the Designated Beneficiary is a natural person, that person alternatively can
elect to begin receiving annuity payments within one year of the Owner's death
over a period not extending beyond his or her life or life expectancy. If the
Owner of the Contract is not a natural person, these distribution rules are
applicable upon the death of or a change in the primary Annuitant.
For Contracts issued in connection with Qualified Plans, the terms of any
Qualified Plan and the Internal Revenue Code should be reviewed with respect to
limitations or restrictions on distributions following the death of the Owner or
Annuitant. Because the rules applicable to Qualified Plans are extremely
complex, a competent tax adviser should be consulted.
DEATH OF THE ANNUITANT
If the Annuitant dies prior to the Annuity Payout Date, and the Owner is a
natural person and is not the Annuitant, no death benefit proceeds will be
payable under the Contract. The Owner may name a new Annuitant within 30 days of
the Annuitant's death. If a new Annuitant is not named, the Company will
designate the Owner as Annuitant. On the death of the Annuitant after the
Annuity Payout Date, any guaranteed payments remaining unpaid will continue to
be paid to the Designated Beneficiary pursuant to the Annuity Option in force at
the date of death.
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T. Rowe Price Variable Annuity
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CHARGES AND DEDUCTIONS
MORTALITY AND EXPENSE RISK CHARGE
The Company deducts a daily charge from the assets of each Subaccount for
mortality and expense risks assumed by the Company under the Contracts. The
charge is equal to an annual rate of .55% of each Subaccount's average daily net
assets. This amount is intended to compensate the Company for certain mortality
and expense risks the Company assumes in offering and administering the
Contracts and in operating the Subaccounts.
The expense risk borne by the Company is the risk that the Company's actual
expenses in issuing and administering the Contracts and operating the
Subaccounts will be more than the charges assessed for such expenses. The
mortality risk borne by the Company is the risk that Annuitants, as a group,
will live longer than the Company's actuarial tables predict. In this event, the
Company guarantees that annuity payments will not be affected by a change in
mortality experience that results in the payment of greater annuity income than
assumed under the Annuity Options in the Contract. The Company also assumes a
mortality risk in connection with the death benefit under the Contract.
The Company may ultimately realize a profit from this charge to the extent it is
not needed to cover mortality and administrative expenses, but the Company may
realize a loss to the extent the charge is not sufficient. The Company may use
any profit derived from this charge for any lawful purpose, including any
promotional expenses.
PREMIUM TAX CHARGE
Various states and municipalities impose a tax on premiums on annuity contracts
received by insurance companies. Whether or not a premium tax is imposed will
depend upon, among other things, the Owner's state of residence, the Annuitant's
state of residence, and the insurance tax laws and the Company's status in a
particular state. The Company assesses a premium tax charge to reimburse itself
for premium taxes that it incurs in connection with a Contract. This charge will
be deducted upon annuitization, upon full or partial withdrawal, or upon payment
of the death benefit, if premium taxes are incurred at that time and are not
refundable. No premium tax is currently imposed in the State of New York.
However, the Company reserves the right to deduct premium taxes, if imposed,
when due or any time thereafter.
OTHER CHARGES
The Company may charge the Separate Account or the Subaccounts for the federal,
state, or local taxes incurred by the Company that are attributable to the
Separate Account or the Subaccounts, or to the operations of the Company with
respect to the Contracts, or that are attributable to payment of premiums or
acquisition costs under the Contracts. No such charge is currently assessed. See
"Tax Status of the Company and the Separate Account" and "Charge for the
Company's Taxes."
GUARANTEE OF CERTAIN CHARGES
The Company guarantees that the charge for mortality and expense risks will not
exceed an annual rate of .55% of each Subaccount's average daily net assets.
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T. Rowe Price Variable Annuity
FUND EXPENSES
Each Subaccount of the Separate Account purchases shares at the net asset value
of the corresponding Portfolio of the Funds. Each Portfolio's net asset value
reflects the investment management fee and any other expenses that are deducted
from the assets of the Fund. These fees and expenses are not deducted from the
Subaccount, but are paid from the assets of the corresponding Portfolio. As a
result, the Owner indirectly bears a pro rata portion of such fees and expenses.
The management fees and other expenses, if any, which are more fully described
in the Funds' prospectus, are not specified or fixed under the terms of the
Contract and the Company bears no responsibility for such fees and expenses.
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ANNUITY PERIOD
GENERAL
The Contractowner may select the Annuity Payout Date at the time of application.
The Annuity Payout Date may not be deferred beyond the Annuitant's 90th
birthday, although the terms of a Qualified Plan and the laws of certain states
may require annuitization at an earlier age. If the Contractowner does not
select an Annuity Payout Date, the Annuity Payout Date will be the later of the
Annuitant's 70th birthday or the fifth annual Contract Anniversary. See
"Selection of an Option," on page 29. If there are Joint Annuitants, the
birthdate of the older Annuitant will be used to determine the latest Annuity
Payout Date.
On the Annuity Payout Date, the proceeds under the Contract will be applied to
provide an annuity under one of the options described below. Each option is
available in two forms--either as a variable annuity supported by the
Subaccounts or as a fixed annuity supported by the Fixed Interest Account. A
combination variable and fixed annuity is also available. Variable annuity
payments will fluctuate with the investment performance of the applicable
Subaccounts while fixed annuity payments will not. Unless the Owner directs
otherwise, proceeds derived from Contract Value allocated to the Subaccounts
will be applied to purchase a variable annuity and proceeds derived from
Contract Value allocated to the Fixed Interest Account will be applied to
purchase a fixed annuity. The proceeds under the Contract will be equal to the
Contractowner's Contract Value in the Subaccounts and the Fixed Interest Account
as of the Annuity Payout Date, reduced by any applicable premium taxes.
The Contract provides for seven Annuity Options. Other Annuity Options may be
available upon request at the discretion of the Company. Annuity payments under
Annuity Options 1 through 4 are based upon annuity rates that vary with the
Annuity Option selected. In the case of Options 1 through 4, the annuity rates
will vary based on the age and sex of the Annuitant, except that unisex rates
are used where required by law. The annuity rates are based upon an assumed
interest rate of 3.5 percent, compounded annually. In the case of Options 5, 6
and 7 as described below, annuity rates based on age and sex are not used to
calculate annuity payments. If no Annuity Option has been selected, annuity
payments will be made to the Annuitant under Option 2 which shall be an annuity
payable monthly during the lifetime of the Annuitant with payments guaranteed to
be made for 120 months.
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T. Rowe Price Variable Annuity
Annuity payments can be made on a monthly, quarterly, semiannual, or annual
basis, although no payments will be made for less than $20. A Contractowner may
direct Investment Services to apply the proceeds of an annuity payment to shares
of one or more of the T. Rowe Price Funds by submitting a written request to the
Company. If the frequency of payments selected would result in payments of less
than $20, the Company reserves the right to change the frequency.
An Owner may designate or change an Annuity Payout Date, Annuity Option, and
Annuitant, provided proper written notice is received by the Company at least 30
days prior to the Annuity Payout Date set forth in the Contract. The date
selected as the new Annuity Payout Date must be at least 30 days after the date
written notice requesting a change of Annuity Payout Date is received by the
Company.
During the Annuity Period, Contract Value may be exchanged among the Subaccounts
by the Contractowner upon proper written request to the T. Rowe Price Variable
Annuity Service Center. Up to six exchanges are allowed in any Contract Year.
Exchanges are not allowed within 30 days of the Annuity Payout Date. If one of
Annuity Options 5 through 7 is selected, Contract Value also may be exchanged
between the Subaccounts and the Fixed Interest Account, subject to the
restrictions on exchanges from the Fixed Interest Account described under "The
Fixed Interest Account," page 30. The minimum exchange amount is $500 or, if
less, the amount remaining in the Fixed Interest Account or Subaccount.
Once annuity payments have commenced under Annuity Options 1, 2, 3 or 4, an
Annuitant or Owner cannot change the Annuity Option and cannot surrender his or
her annuity and receive a lump-sum settlement in lieu thereof. The Contract
specifies annuity tables for Annuity Options 1 through 4 described below which
contain the guaranteed minimum dollar amount of periodic annuity payments for
each $1,000 applied to an Annuity Option for a fixed annuity.
ANNUITY OPTIONS
OPTION 1 - LIFE INCOME
Periodic annuity payments will be made during the lifetime of the Annuitant. It
is possible under this Option for any Annuitant to receive only one annuity
payment if the Annuitant's death occurred prior to the due date of the second
annuity payment, two if death occurred prior to the third annuity payment due
date, etc. THERE IS NO MINIMUM NUMBER OF PAYMENTS GUARANTEED UNDER THIS OPTION.
PAYMENTS CEASE UPON THE DEATH OF THE ANNUITANT, REGARDLESS OF THE NUMBER OF
PAYMENTS RECEIVED.
OPTION 2 - LIFE INCOME WITH GUARANTEED PAYMENTS OF 5, 10, 15 OR 20 YEARS
Periodic annuity payments will be made during the lifetime of the Annuitant with
the promise that if, at the death of the Annuitant, payments have been made for
less than a stated period, which may be five, ten, fifteen or twenty years, as
elected, annuity payments will be continued during the remainder of such period
to the Designated Beneficiary.
OPTION 3 - LIFE WITH INSTALLMENT OR UNIT REFUND OPTION
Periodic annuity payments will be made during the lifetime of the Annuitant with
the promise that, if at the death of the Annuitant, the number of payments that
has been
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T. Rowe Price Variable Annuity
made is less than the number determined by dividing the amount applied under
this Option by the amount of the first payment, annuity payments will be
continued to the Designated Beneficiary until that number of payments has been
made.
OPTION 4 - JOINT AND LAST SURVIVOR
Periodic annuity payments will be made during the lifetime of either Annuitant.
It is possible under this Option for only one annuity payment to be made if both
Annuitants died prior to the second annuity payment due date, two if both died
prior the third annuity payment due date, etc. AS IN THE CASE OF OPTION 1, THERE
IS NO MINIMUM NUMBER OF PAYMENTS GUARANTEED UNDER THIS OPTION. PAYMENTS CEASE
UPON THE DEATH OF THE LAST SURVIVING ANNUITANT, REGARDLESS OF THE NUMBER OF
PAYMENTS RECEIVED.
OPTION 5 - PAYMENTS FOR SPECIFIED PERIOD
Periodic annuity payments will be made for a fixed period, which may be from
five to twenty years, as elected, with the guarantee that, if, at the death of
all Annuitants, payments have been made for less than the selected fixed period,
the remaining unpaid payments will be paid to the Designated Beneficiary.
OPTION 6 - PAYMENTS OF A SPECIFIED AMOUNT
Periodic payments of the amount elected will be made until the amount applied
and interest thereon are exhausted, with the guarantee that, if, at the death of
all Annuitants, all guaranteed payments have not yet been made, the remaining
unpaid payments will be paid to the Designated Beneficiary.
OPTION 7 - AGE RECALCULATION
Periodic annuity payments will be made based upon the Annuitant's life
expectancy, or the joint life expectancies of the Annuitant and a beneficiary,
at the Annuitant's attained age (and the beneficiary's attained or adjusted age,
if applicable) each year. The payments are computed by reference to actuarial
tables prescribed by the Treasury Secretary, until the amount applied is
exhausted. This Option should be elected only under Contracts funding Qualified
Plans.
SELECTION OF AN OPTION
Contractowners should carefully review the Annuity Options with their financial
or tax advisers, and, for Contracts used in connection with a Qualified Plan,
reference should be made to the terms of the particular plan and the
requirements of the Internal Revenue Code for pertinent limitations respecting
annuity payments and other matters. For instance, Qualified Plans generally
require that annuity payments begin no later than April 1 of the calendar year
following the year in which the Annuitant reaches age 70 1/2. In addition, under
Qualified Plans, the period elected for receipt of annuity payments under
Annuity Options (other than life income) generally may be no longer than the
joint life expectancy of the Annuitant and Beneficiary in the year that the
Annuitant reaches age 70 1/2, and must be shorter than such joint life
expectancy if the Beneficiary is not the Annuitant's spouse and is more than ten
years younger than the Annuitant. For Non-Qualified Plans, the Company does not
allow annuity payments to be deferred beyond the Annuitant's 90th birthday.
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T. Rowe Price Variable Annuity
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THE FIXED INTEREST ACCOUNT
Contractowners may allocate all or a portion of their purchase payments and
exchange Contract Value to the Fixed Interest Account. Amounts allocated to the
Fixed Interest Account become part of the Company's General Account, which
supports the Company's insurance and annuity obligations. The Company's General
Account is subject to regulation and supervision by the New York Department of
Insurance. In reliance on certain exemptive and exclusionary provisions,
interests in the Fixed Interest Account have not been registered as securities
under the Securities Act of 1933 (the "1933 Act") and the Fixed Interest Account
has not been registered as an investment company under the Investment Company
Act of 1940 (the "1940 Act"). Accordingly, neither the Fixed Interest Account
nor any interests therein are generally subject to the provisions of the 1933
Act or the 1940 Act. The Company has been advised that the staff of the SEC has
not reviewed the disclosure in this Prospectus relating to the Fixed Interest
Account. This disclosure, however, may be subject to certain generally
applicable provisions of the federal securities laws relating to the accuracy
and completeness of statements made in the Prospectus. This Prospectus is
generally intended to serve as a disclosure document only for aspects of a
Contract involving the Separate Account and contains only selected information
regarding the Fixed Interest Account. For more information regarding the Fixed
Interest Account, see "The Contract" on page 17.
Amounts allocated to the Fixed Interest Account become part of the General
Account of the Company, which consists of all assets owned by the Company other
than those in the Separate Account and other separate accounts of the Company.
Subject to applicable law, the Company has sole discretion over the investment
of the assets of its General Account.
INTEREST
Amounts allocated to the Fixed Interest Account earn interest at a fixed rate or
rates that are paid by the Company. The Contract Value in the Fixed Interest
Account earns interest at an interest rate that is guaranteed to be at least an
annual effective rate of 3% which will accrue daily ("Guaranteed Rate"). Such
interest will be paid regardless of the actual investment experience of the
Company's General Account. In addition, the Company may in its discretion pay
interest at a rate ("Current Rate") that exceeds the Guaranteed Rate. The
Company will determine the Current Rate, if any, from time to time.
Contract Value allocated or exchanged to the Fixed Interest Account will earn
interest at the Current Rate, if any, in effect on the date such portion of
Contract Value is allocated or exchanged to the Fixed Interest Account. The
Current Rate paid on any such portion of Contract Value allocated or exchanged
to the Fixed Interest Account will be guaranteed for rolling one-year periods
(each a "Guarantee Period"). Upon expiration of any Guarantee Period, a new
Guarantee Period of the same duration begins with respect to that portion of
Contract Value, which will earn interest at the Current Rate, if any, in effect
on the first day of the new Guarantee Period.
Contract Value allocated or exchanged to the Fixed Interest Account at one point
in time may be credited with a different Current Rate than amounts allocated or
exchanged to the Fixed Interest Account at another point in time. For example,
amounts allocated to the Fixed Interest Account in June may be credited with a
different current rate than amounts allocated to the Fixed Interest Account in
July. Therefore, at any time, various portions of a Contractowner's Contract
Value in the Fixed Interest Account may be earning interest at different Current
Rates depending upon the point in time such portions
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T. Rowe Price Variable Annuity
were allocated or exchanged to the Fixed Interest Account. The Company bears the
investment risk for the Contract Value allocated to the Fixed Interest Account
and for paying interest at the Guaranteed Rate on amounts allocated to the Fixed
Interest Account.
For purposes of determining the interest rates to be credited on Contract Value
in the Fixed Interest Account, withdrawals or exchanges from the Fixed Interest
Account will be deemed to be taken first from any portion of Contract Value
allocated to the Fixed Interest Account for which the Guarantee Period expires
during the calendar month in which the withdrawal or exchange is effected, then
in the order beginning with that portion of such Contract Value which has the
longest amount of time remaining before the end of its Guarantee Period and
ending with that portion which has the least amount of time remaining before the
end of its Guarantee Period. For more information about exchanges and
withdrawals from the Fixed Interest Account, see "Exchanges and Withdrawals"
below.
DEATH BENEFIT
The death benefit under the Contract will be determined in the same fashion for
a Contract that has Contract Value in the Fixed Interest Account as for a
Contract that has Contract Value allocated to the Subaccounts. See "Death
Benefit," page 24.
CONTRACT CHARGES
Premium taxes will be the same for Contractowners who allocate purchase payments
or exchange Contract Value to the Fixed Interest Account as for those who
allocate purchase payments to the Subaccounts. The charge for mortality and
expense risks will not be assessed against the Fixed Interest Account, and any
amounts that the Company pays for income taxes allocable to the Subaccounts will
not be charged against the Fixed Interest Account. In addition, the investment
management fees and any other expenses paid by the Funds will not be paid
directly or indirectly by Contractowners to the extent the Contract Value is
allocated to the Fixed Interest Account; however, such Contractowners will not
participate in the investment experience of the Subaccounts.
EXCHANGES AND WITHDRAWALS
Amounts may be exchanged from the Subaccounts to the Fixed Interest Account and
from the Fixed Interest Account to the Subaccounts, subject to the following
limitations. Exchanges from the Fixed Interest Account are allowed only (1) from
Contract Value, the Guarantee Period of which expires during the calendar month
in which the exchange is effected, (2) pursuant to the Dollar Cost Averaging
Option, provided that such exchanges are scheduled to be made over a period of
not less than one year, and (3) pursuant to the Asset Rebalancing Option,
provided that upon receipt of the Asset Rebalancing Request Contract Value is
allocated among the Fixed Interest Account and the Subaccounts in the
percentages selected by the Contractowner without violating the restrictions on
exchanges from the Fixed Interest Account set forth in (1) above. Accordingly, a
Contractowner who desires to implement the Asset Rebalancing Option should do so
at a time when Contract Value may be exchanged from the Fixed Interest Account
to the Subaccounts in the percentages selected by the Contractowner without
violating the restrictions on exchanges from the Fixed Interest Account. Once an
Asset Rebalancing Option is implemented, the restrictions on exchanges will not
apply to exchanges made pursuant to the
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T. Rowe Price Variable Annuity
Option. Up to six exchanges are allowed in any Contract Year and exchanges
pursuant to the Dollar Cost Averaging and Asset Reallocation Options are not
included in the six exchanges allowed per Contract Year. The minimum exchange
amount is $500 ($200 under the Dollar Cost Averaging Option) or the amount
remaining in the Fixed Interest Account.
If Contract Value is being exchanged from the Fixed Interest Account pursuant to
the Dollar Cost Averaging or Asset Rebalancing Option or withdrawn from the
Fixed Interest Account pursuant to systematic withdrawals, any purchase payment
allocated to, or Contract Value exchanged to or from, the Fixed Interest Account
will automatically terminate such Dollar Cost Averaging or Asset Rebalancing
Option or systematic withdrawals, and any withdrawal from the Fixed Interest
Account or the Subaccounts will automatically terminate the Asset Rebalancing
Option. In the event of automatic termination of any of the foregoing options,
the Company shall so notify the Contractowner, and the Contractowner may
reestablish Dollar Cost Averaging, Asset Rebalancing or Systematic Withdrawals
by sending a written request to the Company, provided that the Owner's Contract
Value at that time meets any minimum amount required for the Dollar Cost
Averaging or Asset Rebalancing Option.
The Contractowner may also make full withdrawals to the same extent as a
Contractowner who has allocated Contract Value to the Subaccounts. A
Contractowner may make a partial withdrawal from the Fixed Interest Account only
(1) from Contract Value, the Guarantee Period of which expires during the
calendar month in which the partial withdrawal is effected, (2) pursuant to
Systematic Withdrawals, and (3) once per Contract Year in an amount up to the
greater of $5,000 or 10 percent of Contract Value at the time of the partial
withdrawal. Systematic Withdrawals from Contract Value allocated to the Fixed
Interest Account must provide for payments over a period of not less than 36
months. See "Full and Partial Withdrawals," page 22 and "Systematic
Withdrawals," page 23.
PAYMENTS FROM THE FIXED INTEREST ACCOUNT
The Company reserves the right to delay for up to six months after a written
request in proper form is received by the Company, full and partial withdrawals,
loans, and exchanges from the Fixed Interest Account. During the period of
deferral, interest at the applicable interest rate or rates will continue to be
credited to the amounts allocated to the Fixed Interest Account. The Company
does not expect to delay payments from the Fixed Interest Account and will
notify the Contractowner if there will be a delay.
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MORE ABOUT THE CONTRACT
OWNERSHIP
The Contractowner is the person named as such in the application or in any later
change shown in the Company's records. While living, the Contractowner alone has
the right to receive all benefits and exercise all rights that the Contract
grants or the Company allows. The Owner may be an entity that is not a living
person, such as a trust or corporation, referred to herein as "Nonnatural
Persons." See "Federal Tax Matters," page 33.
JOINT OWNERS. The Joint Owners will be joint tenants with rights of survivorship
and upon the death of an Owner, the surviving Owner shall be the sole Owner. Any
Contract transaction requires the signature of all persons named jointly.
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T. Rowe Price Variable Annuity
DESIGNATION AND CHANGE OF BENEFICIARY
The Beneficiary is the individual named as such in the application or any later
change shown in the Company's records. The Contractowner may change the
Beneficiary at any time while the Contract is in force by written request on a
form provided by the Company and received by the Company. The change will not be
binding on the Company until it is received and recorded by the Company. The
change will be effective as of the date this form is signed subject to any
payments made or other actions taken by the Company before the change is
received and recorded. A Secondary Beneficiary may be designated. The Owner may
designate a permanent Beneficiary whose rights under the Contract cannot be
changed without the Beneficiary's consent.
NON-PARTICIPATING
The Company is a stock life insurance company and, accordingly, no dividends are
paid by the Company on the Contract.
PAYMENTS FROM THE SEPARATE ACCOUNT
The Company will pay any full or partial withdrawal benefit or death benefit
proceeds from Contract Value allocated to the Subaccounts, and will effect an
exchange between Subaccounts or from a Subaccount to the Fixed Interest Account
within seven days from the Valuation Date a proper request is received by the
Company. However, the Company can postpone the calculation or payment of such a
payment or exchange of amounts from the Subaccounts to the extent permitted
under applicable law, for any period: (a) during which the New York Stock
Exchange is closed other than customary weekend and holiday closings, (b) during
which trading on the New York Stock Exchange is restricted as determined by the
SEC, or (c) during which an emergency, as determined by the SEC, exists as a
result of which (i) disposal of securities held by the Separate Account is not
reasonably practicable, or (ii) it is not reasonably practicable to determine
the value of the assets of the Separate Account.
PROOF OF AGE AND SURVIVAL
The Company may require proof of age or survival of any person on whose life
annuity payments depend.
MISSTATEMENTS
If the age or sex of an Annuitant or age of an Owner has been misstated, the
correct amount paid or payable by the Company under the Contract shall be such
as the Contract Value would have provided for the correct age or sex (unless
unisex rates apply).
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FEDERAL TAX MATTERS
INTRODUCTION
The Contract described in this Prospectus is designed for use by individuals in
retirement plans which may or may not be Qualified Plans under the provisions of
the Internal Revenue Code ("Code"). The ultimate effect of federal income taxes
on the amounts held under a Contract, on annuity payments, and on the economic
benefits to the Owner, the Annuitant, and the Beneficiary or other payee will
depend upon the type of retirement plan for which the Contract is purchased, the
tax and employment status
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of the individuals involved and a number of other factors. The discussion of the
federal income tax considerations relating to a Contract contained herein and in
the Statement of Additional Information is general in nature and is not intended
to be an exhaustive discussion of all questions that might arise in connection
with a Contract. It is based upon the Company's understanding of the present
federal income tax laws as currently interpreted by the Internal Revenue Service
("IRS"), and is not intended as tax advice. No representation is made regarding
the likelihood of continuation of the present federal income tax laws or of the
current interpretations by the IRS or the courts. Future legislation may affect
annuity contracts adversely. Moreover, no attempt has been made to consider any
applicable state or other laws. Because of the inherent complexity of the tax
laws and the fact that tax results will vary according to the particular
circumstances of the individual involved and, if applicable, the Qualified Plan,
a person should consult with a qualified tax adviser regarding the purchase of a
Contract, the selection of an Annuity Option under a Contract, the receipt of
annuity payments under a Contract or any other transaction involving a Contract
(including an exchange). THE COMPANY DOES NOT MAKE ANY GUARANTEE REGARDING THE
TAX STATUS OF, OR TAX CONSEQUENCES ARISING FROM, ANY CONTRACT OR ANY TRANSACTION
INVOLVING THE CONTRACT.
TAX STATUS OF THE COMPANY AND THE SEPARATE ACCOUNT
GENERAL
The Company intends to be taxed as a life insurance company under Part I,
Subchapter L of the Code. Because the operations of the Separate Account form a
part of the Company, the Company will be responsible for any federal income
taxes that become payable with respect to the income of the Separate Account and
its Subaccounts.
CHARGE FOR THE COMPANY'S TAXES
A charge may be made against the Separate Account for any federal taxes incurred
by the Company that are attributable to the Separate Account, the Subaccounts or
to the operations of the Company with respect to the Contracts or attributable
to payments, premiums, or acquisition costs under the Contracts. The Company
will review the question of a charge to the Separate Account, the Subaccounts or
the Contracts for the Company's federal taxes periodically. Charges may become
necessary if, among other reasons, the tax treatment of the Company or of income
and expenses under the Contracts is ultimately determined to be other than what
the Company currently believes it to be, if there are changes made in the
federal income tax treatment of variable annuities at the insurance company
level, or if there is a change in the Company's tax status.
Under current laws, the Company may incur state and local taxes (in addition to
premium taxes) in several states. At present, these taxes are not significant.
If there is a material change in applicable state or local tax laws, the Company
reserves the right to charge the Separate Account or the Subaccounts for such
taxes, if any, attributable to the Separate Account or Subaccounts.
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DIVERSIFICATION STANDARDS
Each of the Portfolios will be required to adhere to regulations adopted by the
Treasury Department pursuant to Section 817(h) of the Code prescribing asset
diversification requirements for investment companies whose shares are sold to
insurance company separate accounts funding variable contracts. Pursuant to
these regulations, on the last day of each calendar quarter (or on any day
within 30 days thereafter), no more than 55% of the total assets of a Portfolio
may be represented by any one investment, no more than 70% may be represented by
any two investments, no more than 80% may be represented by any three
investments, and no more than 90% may be represented by any four investments.
For purposes of Section 817(h), securities of a single issuer generally are
treated as one investment, but obligations of the U.S. Treasury and each U.S.
Governmental agency or instrumentality generally are treated as securities of
separate issuers. The Separate Account, through the Portfolios, intends to
comply with the diversification requirements of Section 817(h).
In certain circumstances, owners of variable annuity contracts may be considered
the owners, for federal income tax purposes, of the assets of the separate
account used to support their contracts. In those circumstances, income and
gains from the separate account assets would be includible in the variable
contractowner's gross income. The IRS has stated in published rulings that a
variable contractowner will be considered the owner of separate account assets
if the contractowner possesses incidents of ownership in those assets, such as
the ability to exercise investment control over the assets. The Treasury
Department also announced, in connection with the issuance of regulations
concerning diversification, that those regulations "do not provide guidance
concerning the circumstances in which investor control of the investments of a
segregated asset account may cause the investor (i.e., the policyowner), rather
than the insurance company, to be treated as the owner of the assets in the
account." This announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which policyholders may direct their
investments to particular subaccounts without being treated as owners of the
underlying assets." As of the date of this Prospectus, no such guidance has been
issued.
The ownership rights under the Contract are similar to, but different in certain
respects from, those described by the IRS in rulings in which it was determined
that policyowners were not owners of separate account assets. For example, the
Contractowner has additional flexibility in allocating purchase payments and
Contract Values. These differences could result in a Contractowner being treated
as the owner of a pro rata portion of the assets of the Separate Account. In
addition, the Company does not know what standards will be set forth, if any, in
the regulations or rulings which the Treasury Department has stated it expects
to issue. The Company therefore reserves the right to
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modify the Contract, as deemed appropriate by the Company, to attempt to prevent
a Contractowner from being considered the owner of a pro rata share of the
assets of the Separate Account. Moreover, in the event that regulations or
rulings are adopted, there can be no assurance that the Portfolios will be able
to operate as currently described in the Prospectus, or that the Funds will not
have to change any Portfolio's investment objective or investment policies.
INCOME TAXATION OF ANNUITIES IN GENERAL - NON-QUALIFIED PLANS
Section 72 of the Code governs the taxation of annuities. In general, a
contractowner is not taxed on increases in value under an annuity contract until
some form of distribution is made under the contract. However, the increase in
value may be subject to tax currently under certain circumstances. See
"Contracts Owned by Non-Natural Persons" on page 38 and "Diversification
Standards" on page 35. Withholding of federal income taxes on all distributions
may be required unless a recipient who is eligible elects not to have any
amounts withheld and properly notifies the Company of that election.
1. SURRENDERS OR WITHDRAWALS PRIOR TO THE ANNUITY PAYOUT DATE
Code Section 72 provides that amounts received upon a total or partial
withdrawal (including systematic withdrawals) from a Contract prior to the
Annuity Payout Date generally will be treated as gross income to the
extent that the cash value of the Contract (determined without regard to
any surrender charge in the case of a partial withdrawal) exceeds the
"investment in the contract." The "investment in the contract" is that
portion, if any, of purchase payments paid under a Contract less any
distributions received previously under the Contract that are excluded
from the recipient's gross income. The taxable portion is taxed at
ordinary income tax rates. For purposes of this rule, a pledge or
assignment of a Contract is treated as a payment received on account of a
partial withdrawal of a Contract. Similarly, loans under a Contract
generally are treated as distributions under the Contract.
2. SURRENDERS OR WITHDRAWALS ON OR AFTER THE ANNUITY PAYOUT DATE
Upon a complete surrender, the receipt is taxable to the extent that the
cash value of the Contract exceeds the investment in the Contract. The
taxable portion of such payments will be taxed at ordinary income tax
rates.
For fixed annuity payments, the taxable portion of each payment generally
is determined by using a formula known as the "exclusion ratio," which
establishes the ratio that the investment in the Contract bears to the
total expected amount of annuity payments for the term of the Contract.
That ratio is then applied to each payment to determine the non-taxable
portion of the payment. The remaining portion of each payment is taxed at
ordinary income rates. For variable annuity payments, the taxable portion
of each payment is determined by using a formula known as the "excludable
amount," which establishes the non-taxable portion of each payment. The
non-taxable portion is a fixed dollar amount for each payment, determined
by dividing the investment in the Contract by the number of payments to be
made. The remainder of each variable annuity payment is taxable. Once the
excludable portion of annuity payments to date equals the investment in
the Contract, the balance of the annuity payments will be fully taxable.
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3. PENALTY TAX ON CERTAIN SURRENDERS AND WITHDRAWALS
With respect to amounts withdrawn or distributed before the taxpayer
reaches age 59 1/2, a penalty tax is generally imposed equal to 10% of the
portion of such amount which is includable in gross income. However, the
penalty tax is not applicable to withdrawals: (i) made on or after the
death of the owner (or where the owner is not an individual, the death of
the "primary annuitant," who 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 Contract); (ii) attributable to the taxpayer's
becoming totally disabled within the meaning of Code Section 72(m)(7);
(iii) which are part of a series of substantially equal periodic payments
(not less frequently than annually) made for the life (or life expectancy)
of the taxpayer, or the joint lives (or joint life expectancies) of the
taxpayer and his or her beneficiary; (iv) from certain qualified plans;
(v) under a so-called qualified funding asset (as defined in Code Section
130(d)); (vi) under an immediate annuity contract; or (vii) 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.
If the penalty tax does not apply to a surrender or withdrawal as a result
of the application of item (iii) above, and the series of payments are
subsequently modified (other than by reason of death or disability), the
tax for the first year in which the modification occurs will be increased
by an amount (determined by the regulations) equal to the tax that would
have been imposed but for item (iii) above, plus interest for the deferral
period, if the modification takes place (a) before the close of the period
which is five years from the date of the first payment and after the
taxpayer attains age 59 1/2, or (b) before the taxpayer reaches age
59 1/2.
ADDITIONAL CONSIDERATIONS
1. DISTRIBUTION-AT-DEATH RULES
In order to be treated as an annuity contract, a Contract must provide the
following two distribution rules: (a) if any owner dies on or after the
Annuity Payout Date, and before the entire interest in the Contract has
been distributed, the remainder of the owner's interest will be
distributed at least as quickly as the method in effect on the owner's
death; and (b) if any owner dies before the Annuity Payout Date, the
entire interest in the Contract must generally be distributed within five
years after the date of death, or, if payable to a designated beneficiary,
must be annuitized over the life of that designated beneficiary or over a
period not extending beyond the life expectancy of that beneficiary,
commencing within one year after the date of death of the owner. If the
sole designated beneficiary is the spouse of the deceased owner, the
Contract (together with the deferral of tax on the accrued and future
income thereunder) may be continued in the name of the spouse as owner.
Generally, for purposes of determining when distributions must begin under
the foregoing rules, where an owner is not an individual, the primary
annuitant is considered the owner. In that case, a change in the primary
annuitant will be treated
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as the death of the owner. Finally, in the case of joint owners, the
distribution-at-death rules will be applied by treating the death of the
first owner as the one to be taken into account in determining generally
when distributions must commence, unless the sole Beneficiary is the
deceased owner's spouse.
2. GIFT OF ANNUITY CONTRACTS
Generally, gifts of Non-Qualified Plan Contracts prior to the Annuity
Payout Date will trigger tax on the gain on the Contract, with the donee
getting a stepped-up basis for the amount included in the donor's income.
The 10% penalty tax and gift tax also may be applicable. This provision
does not apply to transfers between spouses or incident to a divorce.
3. CONTRACTS OWNED BY NON-NATURAL PERSONS
If the Contract is held by a Non-Natural person (for example, a
corporation), the income on that Contract (generally the increase in net
surrender value less the purchase payments) is includable in taxable
income each year. The rule does not apply where the Contract is acquired
by the estate of a decedent, where the Contract is held by certain types
of retirement plans, where the Contract is a qualified funding asset for
structured settlements, where the Contract is purchased on behalf of an
employee upon termination of a qualified plan, and in the case of a
so-called immediate annuity. An annuity contract held by a trust or other
entity as agent for a natural person is considered held by a natural
person.
4. MULTIPLE CONTRACT RULE
For purposes of determining the amount of any distribution under Code
Section 72(e) (amounts not received as annuities) that is includable in
gross income, all Non-Qualified annuity contracts issued by the same
insurer to the same Contractowner during any calendar year are to be
aggregated and treated as one contract. Thus, any amount received under
any such contract prior to the contract's Annuity Payout 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 contracts.
In addition, the Treasury Department has broad regulatory authority in
applying this provision to prevent avoidance of the purposes of this rule.
It is possible that, under this authority, the Treasury Department may
apply this rule to amounts that are paid as annuities (on and after the
Annuity Payout Date) under annuity contracts issued by the same company to
the same owner during any calendar year. In this case, annuity payments
could be fully taxable (and possibly subject to the 10% penalty tax) to
the extent of the combined income in all such contracts and regardless of
whether any amount would otherwise have been excluded from income because
of the "exclusion ratio" under the contract.
5. POSSIBLE TAX CHANGES
In recent years, legislation has been proposed that would have adversely
modified the federal taxation of certain annuities. Although as of the
date of this Prospectus Congress is not considering any legislation
regarding the taxation of annuities, there is always the possibility that
the tax treatment of annuities could change by
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legislation or other means (such as IRS regulations, revenue rulings, and
judicial decisions). Moreover, although unlikely, it is also possible that
any legislative change could be retroactive (that is, effective prior to
the date of such change).
6. TRANSFERS, ASSIGNMENTS OR EXCHANGES OF A CONTRACT
A transfer of ownership of a Contract, the designation of an Annuitant,
Payee or other Beneficiary who is not also the Owner, the selection of
certain Annuity Payout Dates or the exchange of a Contract may result in
certain tax consequences to the Owner that are not discussed herein. An
Owner contemplating any such transfer, assignment, selection or exchange
should contact a competent tax adviser with respect to the potential
effects of such a transaction.
QUALIFIED PLANS
The Contract may be used as a Qualified Plan that meets the requirements of an
individual retirement annuity ("IRA") under Section 408 of the Code. No attempt
is made herein to provide more than general information about the use of the
Contract as a Qualified Plan. Contractowners, Annuitants, and Beneficiaries, are
cautioned that the rights of any person to any benefits under such Qualified
Plans may be limited by applicable law, regardless of the terms and conditions
of the Contract issued in connection therewith.
The amount that may be contributed to a Qualified Plan is subject to limitations
under the Code. In addition, early distributions from Qualified Plans may be
subject to penalty taxes. Furthermore, distributions from most Qualified Plans
are subject to certain minimum distribution rules. Failure to comply with these
rules could result in disqualification of the Plan or subject the Owner or
Annuitant to penalty taxes. As a result, the minimum distribution rules may
limit the availability of certain Annuity Options to certain Annuitants and
their beneficiaries. These rules and requirements may not be incorporated into
our Contract administration procedures. Therefore, Contractowners, Annuitants
and Beneficiaries are responsible for determining that contributions,
distributions and other transactions with respect to the Contracts comply with
applicable law.
The following is a brief description of Qualified Plans and the use of the
Contract therewith:
1. SECTION 408
Section 408 of the Code permits eligible individuals to establish
individual retirement programs through the purchase of Individual
Retirement Annuities ("IRAs"). The Contract may be purchased as an IRA.
IRAs are subject to limitations on the amount that may be contributed, the
persons who may be eligible and on the time when distributions must
commence. Depending upon the circumstances of the individual,
contributions to an IRA may be made on a deductible or non-deductible
basis. IRAs may not be transferred, sold, assigned, discounted or pledged
as collateral for a loan or other obligation. The annual premium for an
IRA may not be fixed and may not exceed $2,000. Any refund of premium must
be applied to the payment of future premiums or the purchase of additional
benefits.
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Sale of the Contracts for use with IRAs may be subject to special
requirements imposed by the Internal Revenue Service. Purchasers of the
Contracts for such purposes will be provided with such supplementary
information as may be required by the Internal Revenue Service.
An individual's interest in an IRA must generally be distributed or begin
to be distributed not later than April 1 of the calendar year following
the calendar year in which the individual reaches age 70 1/2 ("required
beginning date"). Periodic distributions must not extend beyond the life
of the individual or the lives of the individual and a designated
beneficiary (or over a period extending beyond the life expectancy of the
individual or the joint life expectancy of the individual and a designated
beneficiary).
If an individual dies before reaching his or her required beginning date,
the individual's entire interest must generally be distributed within five
years of the individual's death. However, the five-year rule will be
deemed satisfied, if distributions begin before the close of the calendar
year following the individual's death to a designated beneficiary and are
made over the life of the beneficiary (or over a period not extending
beyond the life expectancy of the beneficiary). If the designated
beneficiary is the individual's surviving spouse, distributions may be
delayed until the individual would have reached age 70 1/2.
If an individual dies after reaching his or her required beginning date,
the individual's interest must generally be distributed at least as
rapidly as under the method of distribution in effect at the time of the
individual's death.
Distributions from IRAs are generally taxed under Code Section 72. Under
these rules, a portion of each distribution may be excludable from income.
The amount excludable from the individual's income is the amount of the
distribution which bears the same ratio as the individual's nondeductible
contributions bears to the expected return under the IRA.
The Internal Revenue Service has not reviewed the Contract for
qualification as an IRA, and has not addressed in a ruling of general
applicability whether a death benefit provision such as the provision in
the Contract comports with IRA qualification requirements.
2. TAX PENALTIES
Premature Distribution Tax. Distributions from a Qualified Plan before the
owner reaches age 59 1/2 are generally subject to an additional tax equal
to 10 percent of the taxable portion of the distribution. The 10 percent
penalty tax does not apply to distributions: (i) made on or after the
death of the Owner; (ii) attributable to the Owner's disability; or (iii)
which are part of a series of substantially equal periodic payments made
(at least annually) for the life (or life expectancy) of the Owner or the
joint lives (or joint life expectancies) of the Owner and a designated
beneficiary and which begin after the Owner terminates employment.
Minimum Distribution Tax. If the amount distributed from a Qualified Plan
is less than the minimum required distribution for the year, the owner is
subject to a 50 percent tax on the amount that was not properly
distributed.
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Excess Distribution Tax. If the aggregate distributions from all IRAs and
certain other retirement plans with respect to an individual in a calendar
year exceed the greater of (i) $150,000, or (ii) $112,500, as indexed for
inflation ($155,000 for 1996), a penalty tax of 15 percent is generally
imposed (in addition to any ordinary income tax) on the excess portion of
the distribution.
3. WITHHOLDING
Periodic distributions (e.g., annuities and installment payments) from a
Qualified Plan that will last for a period of ten or more years are
generally subject to voluntary income tax withholding. The amount withheld
on such periodic distributions is determined at the rate applicable to
wages. The recipient of a periodic distribution may generally elect not to
have withholding apply.
Nonperiodic distributions (e.g., lump sums and annuities or installment
payments of less than 10 years) from an IRA are subject to income tax
withholding at a flat 10 percent rate. The recipient of such a
distribution may elect not to have withholding apply.
The above description of the federal income tax consequences applicable to
Qualified Plans which may be funded by the Contract offered by this Prospectus
is only a brief summary and is not intended as tax advice. The rules governing
the provisions of Qualified Plans are extremely complex and often difficult to
comprehend. Anything less than full compliance with the applicable rules, all of
which are subject to change, may have adverse tax consequences. A prospective
Contractowner considering adoption of a Qualified Plan and purchase of a
Contract in connection therewith should first consult a qualified and competent
tax adviser, with regard to the suitability of the Contract as an investment
vehicle for the Qualified Plan.
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OTHER INFORMATION
VOTING OF FUND SHARES
The Company is the legal owner of the shares of the Funds held by the
Subaccounts of the Separate Account. The Company will exercise voting rights
attributable to the shares of each Portfolio of the Funds held in the
Subaccounts at any regular and special meetings of the shareholders of the Funds
on matters requiring shareholder voting under the 1940 Act. In accordance with
its view of presently applicable law, the Company will exercise these voting
rights based on instructions received from persons having the voting interest in
corresponding Subaccounts of the Separate Account. However, if the 1940 Act or
any regulations thereunder should be amended, or if the present interpretation
thereof should change, and as a result the Company determines that it is
permitted to vote the shares of the Funds in its own right, it may elect to do
so.
The person having the voting interest under a Contract is the Owner. Unless
otherwise required by applicable law, the number of shares of a particular
Portfolio as to which voting instructions may be given to the Company is
determined by dividing a Contractowner's Contract Value in a Subaccount on a
particular date by the net asset value per share of that Portfolio as of the
same date. Fractional votes will be counted.
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The number of votes as to which voting instructions may be given will be
determined as of the date coincident with the date established by the Fund for
determining shareholders eligible to vote at the meeting of the Fund. If
required by the SEC, the Company reserves the right to determine in a different
fashion the voting rights attributable to the shares of the Funds. Voting
instructions may be cast in person or by proxy.
Voting rights attributable to the Contractowner's Contract Value in a Subaccount
for which no timely voting instructions are received will be voted by the
Company in the same proportion as the voting instructions that are received in a
timely manner for all Contracts participating in that Subaccount. The Company
will also exercise the voting rights from assets in each Subaccount that are not
otherwise attributable to Contractowners, if any, in the same proportion as the
voting instructions that are received in a timely manner for all Contracts
participating in that Subaccount.
SUBSTITUTION OF INVESTMENTS
The Company reserves the right, subject to compliance with the law as then in
effect, to make additions to, deletions from, substitutions for, or combinations
of the securities that are held by the Separate Account or any Subaccount or
that the Separate Account or any Subaccount may purchase. If shares of any or
all of the Portfolios of the Funds should no longer be available for investment,
or if the Company receives an opinion from counsel acceptable to Investment
Services that substitution is in the best interest of Contractowners and that
further investment in shares of the Portfolio(s) would cause undue risk to the
Company, the Company may substitute shares of another Portfolio of the Funds or
of a different fund for shares already purchased, or to be purchased in the
future under the Contract. The Company may also purchase, through the
Subaccount, other securities for other classes or contracts, or permit a
conversion between classes of contracts on the basis of requests made by Owners.
In connection with a substitution of any shares attributable to an Owner's
interest in a Subaccount or the Separate Account, the Company will, to the
extent required under applicable law, provide notice, seek Owner approval, seek
prior approval of the SEC, and comply with the filing or other procedures
established by applicable state insurance regulators.
The Company also reserves the right to establish additional Subaccounts of the
Separate Account that would invest in a new Portfolio of one of the Funds or in
shares of another investment company, a series thereof, or other suitable
investment vehicle. New Subaccounts may be established by the Company with the
written consent of Investment Services, and any new Subaccount will be made
available to existing Owners on a basis to be determined by the Company and
Investment Services. The Company may also eliminate or combine one or more
Subaccounts with the consent of Investment Services, if, marketing, tax, or
investment conditions so warrant.
Subject to compliance with applicable law, the Company may transfer assets to
the General Account with the written consent of Investment Services. The Company
also reserves the right, subject to any required regulatory approvals, to
transfer assets of any Subaccount of the Separate Account to another separate
account or Subaccount with the written consent of Investment Services.
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In the event of any such substitution or change, the Company may, by appropriate
endorsement, make such changes in these and other contracts as may be necessary
or appropriate to reflect such substitution or change. If deemed by the Company
to be in the best interests of persons having voting rights under the Contracts,
the Separate Account may be operated as a management investment company under
the 1940 Act or any other form permitted by law; it may be deregistered under
that Act in the event such registration is no longer required; or it may be
combined with other separate accounts of the Company or an affiliate thereof.
Subject to compliance with applicable law, the Company also may combine one or
more Subaccounts and may establish a committee, board, or other group to manage
one or more aspects of the operation of the Separate Account.
CHANGES TO COMPLY WITH LAW AND AMENDMENTS
The Company reserves the right, without the consent of Owners, to suspend sales
of the Contract as presently offered and to make any change to the provisions of
the Contracts to comply with, or give Owners the benefit of, any federal or
state statute, rule, or regulation, including but not limited to requirements
for annuity contracts and retirement plans under the Internal Revenue Code and
regulations thereunder or any state statute or regulation. The Company also
reserves the right to limit the amount and frequency of subsequent purchase
payments.
REPORTS TO OWNERS
A statement will be sent annually to each Contractowner setting forth a summary
of the transactions that occurred during the year, and indicating the Contract
Value as of the end of each year. In addition, the statement will indicate the
allocation of Contract Value among the Fixed Interest Account and the
Subaccounts and any other information required by law. Confirmations will also
be sent out upon purchase payments, exchanges, loans, loan repayments, and full
and partial withdrawals. Certain transactions will be confirmed each quarter.
These transactions include exchanges under the Dollar Cost Averaging and Asset
Rebalancing Options, purchase payments made under an Automatic Investment
Program, systematic withdrawals and annuity payments.
Each Contractowner will also receive an annual and semiannual report containing
financial statements for the Portfolios, which will include a list of the
portfolio securities of the Portfolios, as required by the 1940 Act, and/or such
other reports as may be required by federal securities laws.
DISTRIBUTION OF THE CONTRACT
T. Rowe Price Investment Services, Inc. ("Investment Services") is the
distributor of the Contracts. Investment Services also acts as the distributor
of certain other mutual funds advised by T. Rowe Price and Price-Fleming.
Investment Services is registered with the SEC as a broker-dealer under the
Securities Exchange Act of 1934, and in all 50 states, the District of Columbia
and Puerto Rico. Investment Services is a member of the National Association of
Securities Dealers, Inc. Investment Services is a wholly owned subsidiary of
T. Rowe Price and is an affiliate of the Funds.
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LEGAL PROCEEDINGS
There are no legal proceedings pending to which the Separate Account is a party,
or which would materially affect the Separate Account.
LEGAL MATTERS
Legal matters relating to New York law have been passed upon by LeBoeuf, Lamb,
Greene & MacRae, New York, New York.
Legal matters relating to the federal securities and federal income tax laws
have been passed upon by Dechert Price & Rhoads, Washington, DC.
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PERFORMANCE INFORMATION
Performance information for the Subaccounts of the Separate Account, including
the yield and total return of all Subaccounts may appear in advertisements,
reports, and promotional literature to current or prospective Owners.
For all Subaccounts, quotations of yield will be based on all investment income
per Accumulation Unit earned during a given 30-day period, less expenses accrued
during the period ("net investment income"), and will be computed by dividing
net investment income by the value of an Accumulation Unit on the last day of
the period. Quotations of average annual total return for any Subaccount will be
expressed in terms of the average annual compounded rate of return on a
hypothetical investment in a Contract over a period of one, five, and ten years
(or, if less, up to the life of the Subaccount), and will reflect the deduction
of the mortality and expense risk charge and may simultaneously be shown for
other periods. Where the Portfolio in which a Subaccount invests was established
prior to inception of the Subaccount, quotations of total return may include
quotations for periods beginning prior to the Subaccount's date of inception.
Such quotations of total return are based upon the performance of the
Subaccount's corresponding Portfolio adjusted to reflect deduction of the
mortality and expense risk charge.
Performance information for any Subaccount reflects only the performance of a
hypothetical Contract under which Contract Value is allocated to a Subaccount
during a particular time period on which the calculations are based. Performance
information should be considered in light of the investment objectives and
policies, characteristics, and quality of the Portfolios in which the Subaccount
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
Subaccounts and the usage of performance and other related information, see the
Statement of Additional Information.
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
REGISTRATION STATEMENT
A Registration Statement under the 1933 Act has been filed with the SEC relating
to the offering described in this Prospectus. This Prospectus has been filed as
a part of the Registration Statement and does not contain all of the information
set forth in the Registration Statement and exhibits thereto, and reference is
made to such Registration Statement and exhibits for further information
relating to the Company and the
44
<PAGE>
T. Rowe Price Variable Annuity
Contract. Statements contained in this Prospectus, as to the content of the
Contract and other legal instruments, are summaries. For a complete statement of
the terms thereof, reference is made to the instruments filed as exhibits to the
Registration Statement. The Registration Statement and the exhibits thereto may
be inspected and copied at the SEC's office, located at 450 Fifth Street, N.W.,
Washington, D.C.
FINANCIAL STATEMENTS
Financial statements of the Company at December 31, 1995 and February 8, 1995
and for the period of February 9, 1995 through December 31, 1995, are contained
in the Statement of Additional Information. Financial statements of the Separate
Account at September 30, 1996 and for the period of January 1, 1996 through
September 30, 1996, are also contained in the Statement of Additional
Information.
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information contains more specific information and
financial statements relating to the Company. The Table of Contents of the
Statement of Additional Information is set forth below:
TABLE OF CONTENTS
General Information and History ......................................... 1
Distribution of the Contract ............................................ 1
Limits on Premiums Paid Under Tax-Qualified Retirement Plans ............ 1
Independent Auditors .................................................... 2
Performance Information ................................................. 2
Financial Statements .................................................... 3
45
<PAGE>
T. Rowe Price Variable Annuity
ILLUSTRATIONS
The following tables illustrate how the Contract Values and Withdrawal Values of
a hypothetical Contract and systematic withdrawals and annuity payments from a
hypothetical Contract may vary over an extended period of time assuming
hypothetical rates of return equivalent to constant gross annual rates of return
of 0%, 6% and 12%. The values illustrated would be different from those shown if
the gross annual investment rates of return averaged 0%, 6% or 12% over a period
of years, but also fluctuated above or below those averages for individual
Contract Years.
The hypothetical illustrations assume purchase of a Contract with an initial
investment of $20,000 by a New York resident, age 50, whose income tax rate is
31% federal and 7.59% state and whose capital gains tax rate is 28% federal and
7.59% state. The illustrations further assume an Accumulation Period of 15 years
and distributions beginning upon the Owner's attained age 65 and continuing
until age 90. Two methods of distribution are illustrated: (1) systematic
withdrawals in equal amounts over a 25-year distribution period (assuming the
owner stops withdrawals after 25 years to begin annuity payments or take a
lump-sum withdrawal), and (2) life income with guaranteed payments of 10 years.
The amounts shown for Contract Value, Withdrawal Value, systematic withdrawals
and life income with 10 years certain annuity payments reflect the fact that the
net investment return on the Subaccounts is lower than the gross investment
return as a result of the mortality and expense risk charge levied against the
Subaccounts and the daily investment management fee deducted from the Portfolios
of the Funds. The management fee is assumed to be equal to 0.85% which is
representative of the average investment management fee applicable to the seven
Portfolios of the Funds. The management fee includes the ordinary expenses of
operating the Funds. For the year ended December 31, 1995, the total expenses of
each Portfolio of the Funds were the following percentages of the average daily
net assets of the Portfolios: .85% for New America Growth Portfolio; 1.05% for
International Stock Portfolio; .85% for Equity Income Portfolio; .90% for
Personal Strategy Balanced Portfolio; and .70% for Limited-Term Bond Portfolio.
After deduction of the mortality and expense risk charge and Portfolio expenses
described above, the illustrated gross annual investment rates of return of 0%,
6% and 12% correspond to approximate net annual rates of -1.4%, 4.6% and 10.6%.
The hypothetical values shown in the tables do not reflect any charges against
the Subaccounts for income taxes that may be attributable to the Subaccounts in
the future since the Company is not currently making these charges. Similarly,
the hypothetical values do not reflect deduction of a premium tax charge, as no
premium tax is currently imposed in the State of New York. In the event that
these charges were to be made, the gross annual investment rate would have to
exceed 0%, 6%, or 12% by an amount sufficient to cover the charges in order to
produce the values illustrated.
The Withdrawal Values, systematic withdrawals and life income with 10 years
certain annuity payments shown are net of the assumed tax rates set forth above.
All federal tax calculations assume that state taxes are allowed as a deduction
on the federal tax return. The illustrations further assume that any investment
losses may be applied in full against other ordinary income or capital gains as
applicable.
46
<PAGE>
T. Rowe Price Variable Annuity
================================================================================
ACCUMULATION (12.00% HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN)
- --------------------------------------------------------------------------------
WITHDRAWAL CONTRACT
END OF ANNUAL VALUE VALUE
POLICY YEAR AGE INVESTMENT (AFTER TAX) (BEFORE TAX)
- --------------------------------------------------------------------------------
1 50 $20,000.00 $21,122 $22,087
- --------------------------------------------------------------------------------
2 51 0 22,362 24,393
- --------------------------------------------------------------------------------
3 52 0 23,730 26,939
- --------------------------------------------------------------------------------
4 53 0 25,242 29,750
- --------------------------------------------------------------------------------
5 54 0 26,911 32,855
- --------------------------------------------------------------------------------
6 55 0 28,755 36,285
- --------------------------------------------------------------------------------
7 56 0 30,791 40,072
- --------------------------------------------------------------------------------
8 57 0 33,040 44,254
- --------------------------------------------------------------------------------
9 58 0 35,523 48,873
- --------------------------------------------------------------------------------
10 59 0 38,265 53,974
- --------------------------------------------------------------------------------
11 60 0 45,255 59,607
- --------------------------------------------------------------------------------
12 61 0 49,222 65,829
- --------------------------------------------------------------------------------
13 62 0 53,603 72,700
- --------------------------------------------------------------------------------
14 63 0 58,441 80,287
- --------------------------------------------------------------------------------
15 64 0 63,784 88,667
================================================================================
DISTRIBUTION (ANNUAL AFTER-TAX PAYMENTS)
- --------------------------------------------------------------------------------
BEGINNING SYSTEMATIC LIFE
OF ANNUAL WITHDRAWALS WITH 10
POLICY YEAR AGE INVESTMENT (AFTER TAX) (AFTER TAX)
- --------------------------------------------------------------------------------
16 65 0 $5,780.69 $3,885.34
- --------------------------------------------------------------------------------
17 66 0 5,780.69 4,123.49
- --------------------------------------------------------------------------------
18 67 0 5,780.69 4,377.59
- --------------------------------------------------------------------------------
19 68 0 5,780.69 4,648.73
- --------------------------------------------------------------------------------
20 69 0 5,780.69 4,938.05
- --------------------------------------------------------------------------------
21 70 0 5,780.69 5,246.75
- --------------------------------------------------------------------------------
22 71 0 5,780.69 5,576.15
- --------------------------------------------------------------------------------
23 72 0 5,780.69 5,927.62
- --------------------------------------------------------------------------------
24 73 0 5,780.69 6,302.66
- --------------------------------------------------------------------------------
25 74 0 5,780.69 6,702.83
- --------------------------------------------------------------------------------
26 75 0 5,780.69 7,129.82
- --------------------------------------------------------------------------------
27 76 0 5,780.69 7,585.43
- --------------------------------------------------------------------------------
28 77 0 5,780.69 8,071.58
- --------------------------------------------------------------------------------
29 78 0 5,780.69 8,590.32
- --------------------------------------------------------------------------------
30 79 0 5,780.69 9,143.82
- --------------------------------------------------------------------------------
31 80 0 5,780.69 9,734.43
- --------------------------------------------------------------------------------
32 81 0 5,780.69 10,364.62
- --------------------------------------------------------------------------------
33 82 0 5,780.69 11,037.05
- --------------------------------------------------------------------------------
34 83 0 5,780.69 11,754.54
- --------------------------------------------------------------------------------
35 84 0 5,780.69 12,520.14
- --------------------------------------------------------------------------------
36 85 0 5,780.69 13,337.04
- --------------------------------------------------------------------------------
37 86 0 5,780.69 14,145.07
- --------------------------------------------------------------------------------
38 87 0 5,780.69 14,806.47
- --------------------------------------------------------------------------------
39 88 0 7,359.76 15,798.89
- --------------------------------------------------------------------------------
40 89 0 8,474.30 16,857.83
- --------------------------------------------------------------------------------
41 90 0 8,755.44* 17,987.75**
*Systematic withdrawals must stop at age 90 at which time the Owner must begin
annuity payments or take a lump sum withdrawal.
**Life income annuity payments will continue for the life of the Annuitant or 10
years, whichever is longer. Accordingly, Annuitants cannot predict the period
of time such payments will be made as they will be made over the Annuitant's
lifetime (or a minimum period of 10 years).
Accumulated investment losses are assumed to be applied in full against ordinary
income or capital gains as applicable.
The hypothetical investment results above are illustrative only and should not
be deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown.
47
<PAGE>
T. Rowe Price Variable Annuity
================================================================================
ACCUMULATION (6.00% HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN)
- --------------------------------------------------------------------------------
END OF WITHDRAWAL CONTRACT
OF ANNUAL VALUE VALUE
POLICY YEAR AGE INVESTMENT (AFTER TAX) (BEFORE TAX)
- --------------------------------------------------------------------------------
1 50 $20,000.00 $20,486 $20,904
- --------------------------------------------------------------------------------
2 51 0 20,994 21,849
- --------------------------------------------------------------------------------
3 52 0 21,525 22,837
- --------------------------------------------------------------------------------
4 53 0 22,080 23,870
- --------------------------------------------------------------------------------
5 54 0 22,661 24,949
- --------------------------------------------------------------------------------
6 55 0 23,267 26,077
- --------------------------------------------------------------------------------
7 56 0 23,901 27,255
- --------------------------------------------------------------------------------
8 57 0 24,563 28,488
- --------------------------------------------------------------------------------
9 58 0 25,256 29,776
- --------------------------------------------------------------------------------
10 59 0 25,979 31,122
- --------------------------------------------------------------------------------
11 60 0 27,989 32,529
- --------------------------------------------------------------------------------
12 61 0 28,926 33,999
- --------------------------------------------------------------------------------
13 62 0 29,906 35,536
- --------------------------------------------------------------------------------
14 63 0 30,931 37,143
- --------------------------------------------------------------------------------
15 64 0 32,002 38,822
================================================================================
DISTRIBUTION (ANNUAL AFTER-TAX PAYMENTS)
- --------------------------------------------------------------------------------
BEGINNING SYSTEMATIC LIFE
OF ANNUAL WITHDRAWALS WITH 10
POLICY YEAR AGE INVESTMENT (AFTER TAX) (AFTER TAX)
- --------------------------------------------------------------------------------
16 65 0 $1,567.09 $1,887.98
- --------------------------------------------------------------------------------
17 66 0 1,567.09 1,903.33
- --------------------------------------------------------------------------------
18 67 0 1,567.09 1,918.82
- --------------------------------------------------------------------------------
19 68 0 1,567.09 1,934.47
- --------------------------------------------------------------------------------
20 69 0 1,567.09 1,950.28
- --------------------------------------------------------------------------------
21 70 0 1,567.09 1,966.24
- --------------------------------------------------------------------------------
22 71 0 1,567.09 1,982.36
- --------------------------------------------------------------------------------
23 72 0 1,567.09 1,998.63
- --------------------------------------------------------------------------------
24 73 0 1,567.09 2,015.07
- --------------------------------------------------------------------------------
25 74 0 1,567.09 2,031.67
- --------------------------------------------------------------------------------
26 75 0 1,567.09 2,048.43
- --------------------------------------------------------------------------------
27 76 0 1,567.09 2,065.36
- --------------------------------------------------------------------------------
28 77 0 1,567.09 2,082.45
- --------------------------------------------------------------------------------
29 78 0 1,567.09 2,099.72
- --------------------------------------------------------------------------------
30 79 0 1,567.09 2,117.15
- --------------------------------------------------------------------------------
31 80 0 1,774.75 2,134.76
- --------------------------------------------------------------------------------
32 81 0 2,139.42 2,152.54
- --------------------------------------------------------------------------------
33 82 0 2,165.29 2,170.49
- --------------------------------------------------------------------------------
34 83 0 2,192.34 2,188.63
- --------------------------------------------------------------------------------
35 84 0 2,220.60 2,206.94
- --------------------------------------------------------------------------------
36 85 0 2,250.15 2,225.43
- --------------------------------------------------------------------------------
37 86 0 2,281.03 2,180.47
- --------------------------------------------------------------------------------
38 87 0 2,313.31 1,930.64
- --------------------------------------------------------------------------------
39 88 0 2,347.04 1,949.69
- --------------------------------------------------------------------------------
40 89 0 2,382.31 1,968.92
- --------------------------------------------------------------------------------
41 90 0 2,419.16* 1,988.34**
- --------------------------------------------------------------------------------
*Systematic withdrawals must stop at age 90 at which time the Owner must begin
annuity payments or take a lump sum withdrawal.
**Life income annuity payments will continue for the life of the Annuitant or 10
years, whichever is longer. Accordingly, Annuitants cannot predict the period
of time such payments will be made as they will be made over the Annuitant's
lifetime (or a minimum period of 10 years).
The hypothetical investment results above are illustrative only and should not
be deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown.
48
<PAGE>
T. Rowe Price Variable Annuity
================================================================================
ACCUMULATION (0.00% HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN)
- --------------------------------------------------------------------------------
END OF WITHDRAWAL CONTRACT
OF ANNUAL VALUE VALUE
POLICY YEAR AGE INVESTMENT (AFTER TAX) (BEFORE TAX)
- --------------------------------------------------------------------------------
1 50 $20,000.00 $19,822 $19,721
- --------------------------------------------------------------------------------
2 51 0 19,647 19,446
- --------------------------------------------------------------------------------
3 52 0 19,474 19,174
- --------------------------------------------------------------------------------
4 53 0 19,303 18,907
- --------------------------------------------------------------------------------
5 54 0 19,135 18,643
- --------------------------------------------------------------------------------
6 55 0 18,969 18,383
- --------------------------------------------------------------------------------
7 56 0 18,805 18,126
- --------------------------------------------------------------------------------
8 57 0 18,644 17,874
- --------------------------------------------------------------------------------
9 58 0 18,485 17,624
- --------------------------------------------------------------------------------
10 59 0 18,328 17,378
- --------------------------------------------------------------------------------
11 60 0 18,174 17,136
- --------------------------------------------------------------------------------
12 61 0 18,021 16,897
- --------------------------------------------------------------------------------
13 62 0 17,871 16,661
- --------------------------------------------------------------------------------
14 63 0 17,723 16,428
- --------------------------------------------------------------------------------
15 64 0 17,576 16,199
================================================================================
DISTRIBUTION (ANNUAL AFTER-TAX PAYMENTS)
- --------------------------------------------------------------------------------
BEGINNING SYSTEMATIC LIFE
OF ANNUAL WITHDRAWALS WITH 10
POLICY YEAR AGE INVESTMENT (AFTER TAX) (AFTER TAX)
- --------------------------------------------------------------------------------
16 65 0 $519.79 $991.86
- --------------------------------------------------------------------------------
17 66 0 519.79 961.16
- --------------------------------------------------------------------------------
18 67 0 519.79 924.00
- --------------------------------------------------------------------------------
19 68 0 519.79 880.30
- --------------------------------------------------------------------------------
20 69 0 519.79 838.66
- --------------------------------------------------------------------------------
21 70 0 519.79 799.00
- --------------------------------------------------------------------------------
22 71 0 519.79 761.21
- --------------------------------------------------------------------------------
23 72 0 519.79 725.20
- --------------------------------------------------------------------------------
24 73 0 519.79 690.90
- --------------------------------------------------------------------------------
25 74 0 519.79 658.22
- --------------------------------------------------------------------------------
26 75 0 591.79 627.09
- --------------------------------------------------------------------------------
27 76 0 519.79 597.43
- --------------------------------------------------------------------------------
28 77 0 519.79 569.17
- --------------------------------------------------------------------------------
29 78 0 519.79 542.25
- --------------------------------------------------------------------------------
30 79 0 519.79 516.61
- --------------------------------------------------------------------------------
31 80 0 519.79 492.17
- --------------------------------------------------------------------------------
32 81 0 519.79 468.89
- --------------------------------------------------------------------------------
33 82 0 519.79 446.72
- --------------------------------------------------------------------------------
34 83 0 519.79 425.59
- --------------------------------------------------------------------------------
35 84 0 519.79 405.46
- --------------------------------------------------------------------------------
36 85 0 519.79 386.28
- --------------------------------------------------------------------------------
37 86 0 519.79 368.01
- --------------------------------------------------------------------------------
38 87 0 519.79 350.60
- --------------------------------------------------------------------------------
39 88 0 519.79 334.02
- --------------------------------------------------------------------------------
40 89 0 519.79 318.22
- --------------------------------------------------------------------------------
41 90 0 2,869.92* 1,998.77**
*Systematic withdrawals must stop at age 90 at which time the Owner must begin
annuity payments or take a lump sum withdrawal.
**Life income annuity payments will continue for the life of the Annuitant or 10
years, whichever is longer. Accordingly, Annuitants cannot predict the period
of time such payments will be made as they will be made over the Annuitant's
lifetime (or a minimum period of 10 years).
Accumulated investment losses are assumed to be applied in full against ordinary
income or capital gains as applicable.
The hypothetical investment results above are illustrative only and should not
be deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown.
49
<PAGE>
T. ROWE PRICE
VARIABLE ANNUITY SERVICE CENTER
P.O. BOX 2788
TOPEKA, KANSAS 66601-9804
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
FOR THE VARIABLE ANNUITY
THE T. ROWE PRICE NO-LOAD VARIABLE ANNUITY
[T. ROWE PRICE LOGO]
ISSUED BY FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
JANUARY 2, 1997
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
T. ROWE PRICE VARIABLE ANNUITY
STATEMENT OF ADDITIONAL INFORMATION
DATE: JANUARY 2, 1997
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT
- --------------------------------------------------------------------------------
ISSUED BY: MAILING ADDRESS:
First Security Benefit Life Insurance First Security Benefit Life Insurance
and Annuity Company of New York and Annuity Company of New York
70 West Red Oak Lane, 4th Floor c/o T. Rowe Price Variable Annuity
White Plains, New York 10604 Service Center
1-800-355-4570 P.O. Box 750106
Topeka, Kansas 66675-0106
1-800-469-6587
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the current Prospectus for the T. Rowe Price Variable
Annuity dated January 2, 1997. A copy of the Prospectus may be obtained from the
T. Rowe Price Variable Annuity Service Center by calling 1-800-469-6587 or by
writing P.O. Box 750106, Topeka, Kansas 66675-0106.
<PAGE>
Statement of Additional Information
- --------------------------------------------------------------------------------
CONTENTS
1 General Information and History
1 Distribution of the Contract
1 Limits on Premiums Paid Under Tax-Qualified Retirement Plans
2 Independent Auditors
2 Performance Information
4 Financial Statements
<PAGE>
Statement of Additional Information
- --------------------------------------------------------------------------------
GENERAL INFORMATION AND HISTORY
For a description of the Individual Flexible Premium Deferred Variable Annuity
Contract (the "Contract"), First Security Benefit Life Insurance and Annuity
Company of New York (the "Company"), and the T. Rowe Price Variable Annuity
Account of First Security Benefit Life Insurance and Annuity Company of New York
(the "Separate Account"), see the Prospectus. This Statement of Additional
Information contains information that supplements the information in the
Prospectus. Defined terms used in this Statement of Additional Information have
the same meaning as terms defined in the section entitled "Definitions" in the
Prospectus.
SAFEKEEPING OF ASSETS
The Company is responsible for the safekeeping of the assets of the Subaccounts.
These assets, which consist of shares of the Portfolios of the Funds in
non-certificated form, are held separate and apart from the assets of the
Company's General Account and its other separate accounts.
- --------------------------------------------------------------------------------
DISTRIBUTION OF THE CONTRACT
T. Rowe Price Investment Services, Inc. ("Investment Services"), a Maryland
corporation formed in 1980 as a wholly-owned subsidiary of T. Rowe Price
Associates, Inc., is Principal Underwriter of the Contract. Investment Services
is registered as a broker/dealer with the Securities and Exchange Commission
("SEC") under the Securities Exchange Act of 1934 and is a member of the
National Association of Securities Dealers, Inc. ("NASD"). The offering of the
Contracts is continuous.
Investment Services serves as Principal Underwriter under a Distribution
Agreement with the Company. Investment Services' registered representatives are
required to be authorized under applicable state regulations to make the
Contract available to its customers. Investment Services is not compensated
under its Distribution Agreement with the Company.
- --------------------------------------------------------------------------------
LIMITS ON PREMIUMS PAID UNDER TAX-QUALIFIED RETIREMENT PLANS
SECTION 408
Premiums paid under a Contract used in connection with an individual retirement
annuity (IRA) that is described in Section 408 of the Internal Revenue Code are
subject to the limits on contributions to IRA's under Section 219(b) of the
Internal Revenue Code. Under Section 219(b) of the Code, contributions to an IRA
are limited to the lesser of $2,000 per year or the Owner's annual compensation.
An additional $2,000 may be contributed if the Owner has a spouse with little or
no compensation for the year, provided distinct accounts are maintained for the
Owner and his or her spouse, and no more than $2,000 is contributed to either
account in any one year. The extent to which an Owner may deduct contributions
to an IRA depends on the modified adjusted gross income of the Owner and his or
her spouse for the year and whether either participates in another
employer-sponsored retirement plan.
Premiums under a Contract used in connection with a simplified employee pension
plan described in Section 408 of the Internal Revenue Code are subject to limits
under Section 402(h) of the Internal Revenue Code. Section 402(h) currently
limits employer contributions and salary reduction contributions (if permitted)
under a simplified
1
<PAGE>
Statement of Additional Information
employee pension plan to the lesser of (a) 15% of the compensation of the
participant in the Plan, or (b) $30,000. Salary reduction contributions, if any,
are subject to additional annual limits. Salary reduction simplified employee
pensions ("SARSEPs") have been repealed; however, SARSEPs established prior to
January 1, 1997 may continue to receive contributions.
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS
Ernst & Young LLP, independent auditors, perform certain accounting and auditing
services for the Company and the Separate Account. The financial statements of
the Company at December 31, 1995 and February 8, 1995 and for the period from
February 9, 1995 to December 31, 1995, included in this Statement of Additional
Information have been audited by Ernst & Young LLP as set forth in their report
thereon appearing on page 8 herein. The Financial Statements of the Separate
Account at September 30, 1996 and for the period January 1, 1996 to September
30, 1996, also included in this Statement of Additional Information, have not
been audited.
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
Performance information for the Subaccounts of the Separate Account, including
the yield and total return of all Subaccounts, may appear in advertisements,
reports, and promotional literature provided to current or prospective Owners.
Quotations of yield for the Prime Reserve Subaccount will be based on the change
in the value, exclusive of capital changes, of a hypothetical investment in a
Contract over a particular seven day period, less a hypothetical charge
reflecting deductions from the Contract during the period (the "base period")
and stated as a percentage of the investment at the start of the base period
(the "base period return"). The base period return is then annualized by
multiplying by 365/7, with the resulting yield figure carried to at least the
nearest one hundredth of one percent. Any quotations of effective yield for the
Prime Reserve subaccount assume that all dividends received during an annual
period have been reinvested. Calculation of "effective yield" begins with the
same "base period return" used in the yield calculation, which is then
annualized to reflect weekly compounding pursuant to the following formula:
Effective Yield = [ ( Base Period Return + 1 ) 365/7 ] - 1
A yield calculation is not yet available for the Prime Reserve Subaccount as it
did not begin operations until January 2, 1997.
Quotations of yield for the Subaccounts, other than the Prime Reserve
Subaccount, will be based on all investment income per Accumulation Unit earned
during a particular 30-day period, less expenses accrued during the period ("net
investment income"), and will be computed by dividing net investment income by
the value of the Accumulation Unit on the last day of the period, according to
the following formula:
YIELD = 2 [ ( a - b + 1)6 - 1]
cd
where a = net investment income earned during the period by the Portfolio
attributable to shares owned by the Subaccount,
b = expenses accrued for the period (net of any reimbursements),
2
<PAGE>
Statement of Additional Information
c = the average daily number of Accumulation Units outstanding during
the period that were entitled to receive dividends, and
d = the maximum offering price per Accumulation Unit on the last day of
the period.
For the 30-day period ended September 30, 1996, the yield of the Limited-Term
Bond Subaccount was 5.47%
Quotations of average annual total return for any Subaccount will be expressed
in terms of the average annual compounded rate of return of a hypothetical
investment in a Contract over a period of one, five, and ten years (or, if less,
up to the life of the Subaccount), calculated pursuant to the following formula:
P(1 + T)n = ERV (where P = a hypothetical initial payment of $1,000, T = the
average annual total return, n = the number of years, and ERV = the ending
redeemable value of a hypothetical $1,000 payment made at the beginning of the
period). All total return figures reflect the deduction of the mortality and
expense risk charge. Quotations of total return may simultaneously be shown for
other periods.
For the period of January 1, 1996 (date of inception) to September 30, 1996, the
average annual total return of New America Growth Subaccount, International
Stock Subaccount, Equity Income Subaccount, Personal Strategy Balanced
Subaccount, and Limited-Term Bond Subaccount was 23.11%, 11.39%, 13.84%, 9.15%,
and 1.0%, respectively. Total return information is not yet available for the
Mid-Cap Growth Subaccount as it did not begin operations until January 2, 1997.
Performance information for a Subaccount may be compared, in reports and
promotional literature, to: (i) the Standard & Poor's 500 Stock Index ("S&P
500"), Dow Jones Industrial Average ("DJIA"), Donoghue Money Market
Institutional Averages, the Lehman Brothers Government Corporate Index, the
Morgan Stanley Capital International's EAFE Index, or other indices that measure
performance of a pertinent group of securities so that investors may compare a
Subaccount's results with those of a group of securities widely regarded by
investors as representative of the securities markets in general or
representative of a particular type of security; (ii) other variable annuity
separate accounts, insurance product funds, or other investment products tracked
by Lipper Analytical Services, a widely used independent research firm which
ranks mutual funds and other investment companies by overall performance,
investment objectives, and assets, or tracked by The Variable Annuity Research
and Data Service ("VARDS"), an independent service which monitors and ranks the
performance of variable annuity issues by investment objectives on an
industry-wide basis or tracked by other services, companies, publications, or
persons who rank such investment companies on overall performance or other
criteria; and (iii) the Consumer Price Index (measure for inflation) to assess
the real rate of return from an investment in the Contract. Unmanaged indices
may assume the reinvestment of dividends but generally do not reflect deductions
for administrative and management costs and expenses.
Performance information for any Subaccount reflects only the performance of a
hypothetical Contract under which an Owner's Contract Value is allocated to a
Subaccount during a particular time period on which the calculations are based.
Performance information should be considered in light of the investment
objectives and policies, characteristics, and quality of the Portfolio of the
Funds in which the Subaccount 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.
3
<PAGE>
Reports and promotional literature may also contain other information including
(i) the ranking of any Subaccount derived from rankings of variable annuity
separate accounts, insurance product funds, or other investment products tracked
by Lipper Analytical Services or by other rating services, companies,
publications, or other persons who rank separate accounts or other investment
products on overall performance or other criteria, and (ii) the effect of a
tax-deferred compounding on a Subaccount's investment returns, or returns in
general, which may be illustrated by graphs, charts, or otherwise, and which may
include a comparison, at various points in time, of the return from an
investment in a Contract (or returns in general) on a tax-deferred basis
(assuming one or more tax rates) with the return on a taxable basis.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
The financial statements of the Company at February 8, 1995 and December 31,
1995, and for the period February 9, 1995 through December 31, 1995, and the
Financial Statements of the Separate Account at September 30, 1996 and for the
period January 1, 1996 to September 30, 1996, are set forth herein, starting on
page 5.
The financial statements of the Company, which are included in this Statement of
Additional Information, should be considered only as bearing on the ability of
the Company to meet its obligations under the Contracts. They should not be
considered as bearing on the investment performance of the assets held in the
Separate Account.
- --------------------------------------------------------------------------------
CONTENTS
Unaudited Financial Statements - Separate Account
5 Balance Sheet
6 Statement of Operations and Changes in Net Assets
4
<PAGE>
================================================================================
T. ROWE PRICE VARIABLE ANUITY
- --------------------------------------------------------------------------------
Balance Sheet (Unaudited)
- --------------------------------------------------------------------------------
September 30, 1996
- --------------------------------------------------------------------------------
Assets
Investments:
T. Rowe Price Portfolios:
New America Growth Portfolio - 96,958 shares at net
asset value of $17.38 per share (cost, $1,598,000) $1,685,000
International Stock Portfolio - 79,767 shares at net
asset value of $12.23 per share (cost, $942,000) 976,000
Equity Income Portfolio - 138,549 shares at net
asset value of $14.37 per share (cost, $1,930,000) 1,991,000
Personal Strategy Balanced Portfolio - 31,301 shares
at net asset value of $12.97 per share (cost, $396,000) 406,000
Limited-Term Bond Portfolio - 39,165 shares at net
asset value of $4.89 per share (cost, $192,000) 192,000
- --------------------------------------------------------------------------------
Total Assets $5,250,000
================================================================================
Net assets
Net assets are represented by:
Number Unit
of Units Value
- --------------------------------------------------------------------------------
New America Growth Subaccount:
Accumulation units 107,767 $15.64 $1,685,000
International Stock Subaccount:
Accumulation units 79,881 12.21 976,000
Equity Income Subaccount:
Accumulation units 145,322 13.70 1,991,000
Personal Strategy Balanced Subaccount:
Accumulation units 31,872 12.74 406,000
Limited-Term Bond Subaccount:
Accumulation units 17,904 10.70 192,000
- --------------------------------------------------------------------------------
Total net assets $5,250,000
================================================================================
5
<PAGE>
================================================================================
T. ROWE PRICE VARIABLE ANNUITY
- --------------------------------------------------------------------------------
Statement of Operations and Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Period from January 1, 1996 (inception) to September 30, 1996
- ----------------------------------------------------------------------------------------------
New Inter- Personal Limited-
America national Equity Strategy Term
Growth Stock Income Balanced Bond
Subaccount Subaccount Subaccount Subaccount Subaccount
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dividend distributions: $-- $-- $27,000 $6,000 $6,000
Expenses:
Mortality and expense
risk fee (3,000) (2,000) (4,000) 0 (1,000)
- ----------------------------------------------------------------------------------------------
Net investment income (loss) (3,000) (2,000) 23,000 6,000 5,000
Capital gains distributions 0 0 0 0 0
Realized gain (loss) on
investments 10,000 6,000 6,000 0 (2,000)
Unrealized appreciation
(depreciation) on
investments 87,000 34,000 61,000 10,000 0
- ----------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 97,000 38,000 67,000 10,000 (2,000)
- ----------------------------------------------------------------------------------------------
Net increase in net assets
resulting from operations 94,000 36,000 90,000 16,000 3,000
Net assets at beginning
of period 0 0 0 0 0
Variable annuity deposits 1,626,000 983,000 1,929,000 405,000 237,000
Terminations and withdrawals (35,000) (43,000) (28,000) (15,000) (48,000)
- ----------------------------------------------------------------------------------------------
Net assets at end of period $1,685,000 $976,000 $1,991,000 $406,000 $192,000
==============================================================================================
</TABLE>
6
<PAGE>
FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
FINANCIAL STATEMENTS
PERIOD FROM FEBRUARY 9, 1995 TO DECEMBER 31, 1995
- --------------------------------------------------------------------------------
CONTENTS
8 Report of Independent Auditors
Audited Financial Statements
9 Balance Sheets
10 Statement of Operations
11 Statement of Capital and Surplus
12 Statement of Cash Flows
13 Notes to Financial Statements
7
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
First Security Benefit Life Insurance
and Annuity Company of New York
We have audited the accompanying balance sheets of First Security Benefit Life
Insurance and Annuity Company of New York (the Company) as of December 31, 1995
and February 8, 1995, and the related statements of operations, capital and
surplus, and cash flows for the period from February 9, 1995 to 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 amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of First Security Benefit Life
Insurance and Annuity Company of New York at December 31, 1995 and February 8,
1995, and the results of its operations and its cash flows for the period from
February 9, 1995 to December 31, 1995, in conformity with generally accepted
accounting principles and with reporting practices prescribed or permitted by
the New York Insurance Department.
Ernst and Young LLP
Kansas City, Missouri
February 2, 1996
8
<PAGE>
================================================================================
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
- --------------------------------------------------------------------------------
Balance Sheets
- --------------------------------------------------------------------------------
December 31, 1995 February 8, 1995
Assets
Investments (NOTE 2):
Fixed maturities, at amortized cost
(fair value:
December 31, 1995 - $7,312,683;
February 8, 1995 - $4,629,320) $6,935,340 $4,629,320
Cash 538,501 1,298,590
Investment income due and accrued 102,226 72,090
- --------------------------------------------------------------------------------
$7,576,067 $6,000,000
Liabilities and capital and surplus
Annuity reserves (NOTE 5) 575,217 --
Other liabilities, including
income taxes of $21,794 531,594 --
Investment reserve 4,669
- --------------------------------------------------------------------------------
Total liabilities 1,111,480 --
Capital and surplus:
Common capital stock, par value
$10 per share; 200,000 shares
authorized, issued and outstanding 2,000,000 2,000,000
Paid-in surplus 4,600,000 4,000,000
Unassigned surplus (135,413) --
- --------------------------------------------------------------------------------
Total capital and surplus 6,464,587 6,000,000
- --------------------------------------------------------------------------------
$7,576,067 $6,000,000
================================================================================
SEE ACCOMPANYING NOTES.
9
<PAGE>
================================================================================
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
- --------------------------------------------------------------------------------
Statement of Operations
- --------------------------------------------------------------------------------
Period from February 9, 1995
to December 31, 1995
- --------------------------------------------------------------------------------
Revenues:
Premiums and annuity considerations (NOTE 4) $575,000
Net investment income (NOTE 2) 404,864
- --------------------------------------------------------------------------------
Total revenues 979,864
Benefits and expenses:
Increase in reserves 575,217
Insurance operating expenses 284,452
- --------------------------------------------------------------------------------
Total benefits and expenses 859,669
- --------------------------------------------------------------------------------
Gain from operations before federal income taxes 120,195
Federal income taxes (NOTE 3) 45,355
- --------------------------------------------------------------------------------
Net income $74,840
================================================================================
SEE ACCOMPANYING NOTES.
10
<PAGE>
================================================================================
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
- --------------------------------------------------------------------------------
Statement of Capital and Surplus
- --------------------------------------------------------------------------------
Period from February 9, 1995
to December 31, 1995
- --------------------------------------------------------------------------------
Balance at February 8, 1995 (inception) $6,000,000
Add (deduct):
Net income 74,840
Increase in investment reserves (4,669)
Net assets of Pioneer National Life Insurance Company
at merger 600,000
Increase in non-admitted assets (205,584)
- --------------------------------------------------------------------------------
Balance at December 31, 1995 $6,464,587
================================================================================
SEE ACCOMPANYING NOTES.
11
<PAGE>
================================================================================
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
- --------------------------------------------------------------------------------
Statement of Cash Flows
- --------------------------------------------------------------------------------
Period from February 9, 1995
to December 31, 1995
- --------------------------------------------------------------------------------
Operating activities
Net income $74,840
Adjustments to reconcile net income to net cash
provided by operating activities:
Increase in investment income due and accrued (30,136)
Increase in annuity reserves 575,217
Accretion of discount on investments (16,299)
Amortization of premium on investments 7,111
Increase in other liabilities 531,594
Increase in non-admitted assets (205,584)
- --------------------------------------------------------------------------------
Net cash provided by operating activities 936,743
Investing activities
Investments matured:
Fixed maturities 163,620
Short-term investments 400,000
- --------------------------------------------------------------------------------
563,620
Acquisition of investments:
Fixed maturities (2,460,452)
Short-term investments (400,000)
- --------------------------------------------------------------------------------
(2,860,452)
- --------------------------------------------------------------------------------
Net cash used in investing activities (2,296,832)
Financing Activities
Transfer of net assets in merger 600,000
- --------------------------------------------------------------------------------
Net cash provided by financing activities 600,000
- --------------------------------------------------------------------------------
Decrease in cash (760,089)
Cash at beginning of period 1,298,590
- --------------------------------------------------------------------------------
Cash at end of period $538,501
================================================================================
SEE ACCOMPANYING NOTES.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
First Security Benefit Life Insurance and Annuity Company of New York (the
Company) was organized as a New York company on February 8, 1995. The Company is
licensed to transact life insurance business in New York and Kansas and was
organized to offer insurance products in New York.
The Company is a wholly owned subsidiary of Security Benefit Group, Inc. (SBG),
a wholly owned subsidiary of Security Benefit Life Insurance Company (SBL), a
mutual life insurance company. During 1995, Pioneer National Life Insurance
Company (PNL), a wholly-owned subsidiary of SBG, was merged with the Company.
The net assets of PNL were transferred to the Company and are reflected as a
direct increase to capital and surplus in the financial statements.
BASIS OF PRESENTATION
The financial statements have been presented on the basis of accounting
practices prescribed or permitted by the National Association of Insurance
Commissioners (NAIC) and the New York Insurance Department. "Prescribed"
statutory accounting practices include state laws, regulations and general
administrative rules, as well as a variety of publications of the NAIC.
"Permitted" statutory accounting practices encompass all accounting practices
that are not prescribed; such practices may differ from state to state, may
differ from company to company within a state, and may change in the future. The
NAIC is currently in the process of recodifying 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 1997, will likely change, to some extent, prescribed statutory
accounting practices, and may result in changes to the accounting practices that
the Company uses to prepare its statutory financial statements. The current
statutory accounting practices presently are regarded as generally accepted
accounting principles for mutual life insurance companies and their stock life
insurance subsidiaries.
In April 1993, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 40, "Applicability of Generally Accepted Accounting
Principles to Mutual Life Insurance and Other Enterprises." Under this
Interpretation, financial statements of mutual life insurance companies prepared
on the basis of statutory accounting principles no longer will be considered to
be prepared in conformity with generally accepted accounting principles. In
January 1995, the FASB issued Statement of Financial Accounting Standards (SFAS)
No. 120, "Accounting and Reporting by Mutual Life Insurance Enterprises and by
Insurance Enterprises for Certain Long-Duration Participating Contracts," and
the American Institute of Certified Public Accountants issued its Statement of
Position No. 95-1, "Accounting for Certain Insurance Activities of Mutual Life
13
<PAGE>
Insurance Enterprises," which define generally accepted accounting principles
for mutual life insurance enterprises. Interpretation No. 40, SFAS No. 120, and
Statement of Position No. 95-1 are concurrently effective for fiscal years
beginning after December 15, 1995.
The Company has not yet determined whether it will continue to file statutory
financial statements with the Securities and Exchange Commission as currently
permitted by Regulation S-X, Rule 7-02(b) or file financial statements prepared
in accordance with all applicable authoritative accounting pronouncements that
define generally accepted accounting principles for all enterprises. The Company
has assessed the impact of FASB Interpretation No. 40, SFAS No. 120 and
Statement of Position No. 95-1 and estimates the adoption will not result in a
material change in surplus.
INVESTMENTS
Investments are valued as prescribed by the NAIC. Fixed maturities are reported
principally at cost, adjusted for amortization of discount or premium using the
effective interest method. For mortgage-backed fixed maturities, anticipated
prepayments are considered using market consensus prepayment speeds when
determining the amortization of discount or premium. Adjustments to discount or
premium resulting when actual prepayments differ substantially from estimates
are determined using the retrospective method.
Investment reserve represents the Asset Valuation Reserve (AVR). The AVR is
computed in accordance with the formula prescribed by the NAIC and represents a
provision for possible fluctuations in the value of bonds, equity securities,
mortgage loans, real estate and other invested assets. Changes to the AVR are
charged or credited directly to unassigned surplus.
RESERVES FOR ANNUITY POLICIES
The reserves for annuity policies are developed by actuarial methods. Annuity
reserves are computed using the 1983a mortality tables and an interest
assumption of 6%. These valuation methods provide, in the aggregate, reserves
that are greater than the minimum valuation required by law and greater than the
guaranteed policy cash values.
RECOGNITION OF PREMIUM REVENUES AND ACQUISITION COSTS
For life and annuity contracts premiums are recognized as revenues over the
premium paying period, whereas commissions and other costs applicable to the
acquisition of new business are charged to operations as incurred.
MINIMUM SURPLUS RESTRICTIONS
Under the laws of the state of New York, the Company is required to maintain
minimum capital and surplus of $6,000,000.
FAIR VALUES OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:
CASH AND CERTIFICATES OF DEPOSIT, SHORT-TERM INVESTMENTS: The carrying amounts
reported in the balance sheet for these instruments approximate their fair
value.
14
<PAGE>
INVESTMENT SECURITIES: The fair values for fixed maturity securities are based
on quoted market prices, where available. For fixed maturity securities not
actively traded, fair values are estimated using values obtained from
independent pricing services or estimated by discounting expected future cash
flows using a current market rate applicable to the yield, credit quality and
maturity of the investments. The fair values for equity securities are based on
quoted market prices.
INVESTMENT CONTRACTS: Fair values for the Company's liabilities under
investment-type insurance contracts are estimated using the assumption
reinsurance method, whereby the amount of statutory profit the assuming company
would realize from the business is calculated. Those amounts are then discounted
at a rate of return commensurate with the rate presently offered by the Company
on similar contracts.
USE OF ESTIMATES
The preparation of the financial statements requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
2. INVESTMENTS
Information as to the amortized cost, gross unrealized gains and losses, and
fair values of the Company's portfolio of fixed maturities at December 31, 1995
and February 8, 1995 is as follows:
================================================================================
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- --------------------------------------------------------------------------------
U.S. Treasury securities $4,396,710 $305,672 $-- $4,702,382
Mortgage-backed securities 2,328,140 64,424 -- 2,392,564
Other fixed maturities 210,490 7,247 -- 217,737
- --------------------------------------------------------------------------------
Totals $6,935,340 $377,343 $-- $7,312,683
================================================================================
FEBRUARY 8, 1995
- --------------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- --------------------------------------------------------------------------------
U.S. Treasury securities $3,712,828 $-- $-- $3,712,828
Mortgage-backed securities 916,492 -- -- 916,492
- --------------------------------------------------------------------------------
Totals $4,629,320 $-- $-- $4,629,320
================================================================================
15
<PAGE>
The amortized cost and fair value of fixed maturities at December 31, 1995, by
contractual maturity, are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.
================================================================================
Amortized Fair
Cost Value
- --------------------------------------------------------------------------------
Due after one year through five years $2,843,965 $2,982,837
Due after five years through 10 years 1,763,235 1,937,282
- --------------------------------------------------------------------------------
4,607,200 4,920,119
Mortgage-backed securities 2,328,140 2,392,564
- --------------------------------------------------------------------------------
Total $6,935,340 $7,312,683
================================================================================
There were no sales of fixed maturities and related realized gains and losses
for the period from February 9, 1995 to December 31, 1995.
At December 31, 1995, fixed maturities with a carrying amount of $480,000 were
held in joint custody with the New York Department of Insurance to comply with
statutory regulations.
Major categories of net investment income are summarized as follows:
================================================================================
1995
- --------------------------------------------------------------------------------
Interest on fixed maturities $418,084
Other 8,190
- --------------------------------------------------------------------------------
Total investment income 426,274
Investment expenses 21,410
- --------------------------------------------------------------------------------
Net investment income $404,864
================================================================================
3. FEDERAL INCOME TAXES
The Company files a life/nonlife consolidated federal tax return with its
parent. Income taxes are allocated to the Company on the basis of its filing a
separate return.
Prior to 1984, a portion of PNL's income was not taxed, but was accumulated in a
"policyholders' surplus account." In the event that those amounts are
distributed to shareholders, or the balance of the account exceeds certain
limitations under the Internal Revenue Code, the excess amounts would become
taxable at current rates. The policyholders' surplus account balance at December
31, 1995 was $272,935, and the related tax payable would be approximately
$95,000. Management does not intend to take actions, nor does management expect
any events to occur that would cause income taxes to become payable on that
amount.
16
<PAGE>
4. RELATED-PARTY TRANSACTIONS
SBG provides management and administrative services to the Company. The Company
paid SBG $132,000 during 1995 for such services.
The Company's annuity considerations result from an annuity contract issued to
its parent.
5. CONDENSED FAIR VALUE INFORMATION
SFAS No. 107, "Disclosures about Fair Values of Financial Instruments," requires
disclosures of fair value information about financial instruments, whether
recognized or not recognized in a company's balance sheet, for which it is
practicable to estimate that value. The methods and assumptions used by the
Company to estimate the following fair value disclosures for financial
instruments are set forth in Note 1.
SFAS No. 107 excludes certain insurance liabilities and other nonfinancial
instruments from its disclosure requirements. The fair value amounts presented
herein do not include an amount for the value associated with customer or agent
relationships, the expected interest margin (interest earnings over interest
credited) to be earned in the future on investment-type products, or other
intangible items. Accordingly, the aggregate fair value amounts presented herein
do not necessarily represent the underlying value of the Company; likewise, care
should be exercised in deriving conclusions about the Company's business or
financial condition based on the fair value information presented herein.
================================================================================
DECEMBER 31, 1995 FEBRUARY 8, 1995
- --------------------------------------------------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
- --------------------------------------------------------------------------------
(IN THOUSANDS)
- --------------------------------------------------------------------------------
Fixed maturities (NOTE 2) $6,935 $7,313 $4,629 $4,629
Cash 539 539 1,299 1,299
Investment income due and accrued 102 102 72 72
Investment-type insurance contracts 575 575 -- --
================================================================================
17
<PAGE>
T. ROWE PRICE
VARIABLE ANNUITY SERVICE CENTER
P.O. BOX 750106
TOPEKA, KANSAS 66675-0106
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------
(a) Financial Statements
All required financial statements are included in Part B of this
Registration Statement.
(b) Exhibits
(1) Certified Resolution of the Board of Directors of First
Security Benefit Life Insurance and Annuity Company of New
York authorizing establishment of the Separate Account(a)
(2) Not Applicable
(3) Not Applicable
(4) Sample Contract
(5) Form of Application
(6) (a) Articles of Incorporation of First Security Benefit
Life Insurance and Annuity Company of New York(a)
(b) Bylaws of First Security Benefit Life Insurance and
Annuity Company of New York(a)
(7) Not Applicable
(8) Not Applicable
(9) Not Applicable
(10) Consent of Independent Auditors
(11) Not Applicable
(12) Not Applicable
(13) Schedule of Computation of Performance
(14) Financial Data Schedules
(15) Powers of Attorney of Howard R. Fricke, Jane Boisseau, Roger
K. Viola, Donald J. Schepker, John E. Hayes, Jr., James R.
Schmank, Lee Laino and Katherine White.
(a) Incorporated herein by reference to the Exhibits filed with the
Registrant's Pre-Effective Amendment No. 2, File No. 33-83240 (March 21,
1995).
<PAGE>
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
NAME AND PRINCIPAL BUSINESS ADDRESS POSITIONS AND OFFICES WITH DEPOSITOR
- ----------------------------------- ------------------------------------
Howard R. Fricke* President, CEO and Director
Peggy S. Avey Assistant Secretary and Chief
70 West Red Oak Lane-4th Floor Administrative Officer
White Plains, New York 10604
Donald J. Schepker* Vice President and Director
James R. Schmank* Director, Vice President
and Treasurer
Roger K. Viola* Secretary, Vice President
and Director
Thomas Gerald Lee* Vice President and Director
Jane Boisseau Director
125 W. 55th Street
New York, NY 10019-5389
John E. Hayes, Jr. Director
P.O. Box 889
Topeka, KS 66601
Lee Laino Director
444 Madison Avenue
New York, NY 10022
Katherine White Director
32 Avenue of the Americas
125 W. 55th Street
New York, NY 10019-5389
Mark E. Young* Assistant Vice President
J. Timothy Gaule* Valuation Actuary
*Located at 700 Harrison Street, Topeka, Kansas 66636.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE
DEPOSITOR OR REGISTRANT
The Depositor, First Security Benefit Life Insurance and Annuity
Company of New York, is wholly owned by Security Benefit Group, Inc., which is
wholly owned by Security Benefit Life Insurance Company. No one person holds
more than approximately 0.0003% of the voting
<PAGE>
power of SBL. The Registrant is a segregated asset account of First Security
Benefit Life Insurance and Annuity Company of New York.
The following chart indicates the persons controlled by or under
common control with T. Rowe Price Variable Annuity Account of First Security
Benefit Life Insurance and Annuity Company of New York or First Security Benefit
Life Insurance and Annuity Company of New York:
JURISDICTION PERCENT OF VOTING
OF SECURITIES OWNED
NAME INCORPORATION BY SBL
- --------------------------------------------------------------------------------
Security Benefit Life Insurance Company Kansas ----
(Mutual Life Insurance Company)
Security Benefit Group, Inc. Kansas 100%
(Holding Company)
Security Management Company, LLC Kansas 100%
(Investment Adviser)
Security Distributors, Inc. Kansas 100%
(Broker/Dealer, Principal
Underwriter of Mutual Funds)
Security Benefit Academy, Inc. Kansas 100%
(Daycare Company)
Creative Impressions, Inc. Kansas 100%
(Advertising Agency)
Security Benefit Clinic and Hospital Kansas 100%
(Nonprofit provider of hospital
benevolences for fraternal
certificate holders)
First Advantage Insurance Agency, Inc. Kansas 100%
First Security Benefit Life Insurance and Annuity Company of New York
is also the depositor of the following separate accounts: None
<PAGE>
ITEM 27. NUMBER OF CONTRACT OWNERS
As of December 1, 1996, there were 213 owners of T. Rowe Price
Variable Annuity Account of First Security Benefit Life Insurance and Annuity
Company of New York Contracts.
ITEM 28. INDEMNIFICATION
The bylaws of First Security Benefit Life Insurance and Annuity
Company of New York include the following provision:
The Corporation may indemnify any person made, or threatened to be
made, a party to an action by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he or she, his or her testator
or intestate, is or was a director or officer of the Corporation, or is or was
serving at the request of the Corporation as a director or officer of any other
corporation of any type or kind, domestic or foreign, of any partnership, joint
venture, trust, employee benefit plan or any other enterprise, against amounts
paid in settlement and reasonable expenses, including attorneys' fees, actually
and necessarily incurred by him or her in connection with the defense or
settlement of such action, or in connection with an appeal therein, if such
director or officer acted, in good faith, for a purpose which he or she
reasonably believed to be in or in the case of service for other corporation or
any partnership, joint venture, trust, employee benefit plan or other
enterprise, not opposed to the best interests of the corporation, except that no
indemnification under this paragraph shall be made in respect of (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 shall have been
adjudged to be liable to the Corporation, unless and only to the extent that the
court in which the action was brought, or, if no action was brought, any court
of competent jurisdiction, determines upon application that, in view of all the
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such portion of the settlement and expenses as the court deems
proper.
Insofar as indemnification for a liability arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Depositor has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is,
<PAGE>
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Depositor will, unless in the opinion of its counsel the matter has been settled
by a controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
ITEM 29. PRINCIPAL UNDERWRITER
(a) T.Rowe Price Investment Services, Inc. ("Investment Services"), a Maryland
corporation formed in 1980 as a subsidiary of T. Rowe Price Associates, Inc.,
serves as distributor of the T. Rowe Price Variable Annuity Account of First
Security Benefit Life Insurance and Annuity Company of New York contracts.
Investment Services receives no compensation for distributing the Contracts.
Investment Services also serves as principal underwriter for the following
investment companies:
T. Rowe Price Growth Stock Fund, Inc.; T. Rowe Price New Horizons Fund, Inc.; T.
Rowe Price New Era Fund, Inc.; T. Rowe Price New Income Fund, Inc.; T. Rowe
Price Growth & Income Fund, Inc.; T. Rowe Price Prime Reserve Fund, Inc.; T.
Rowe Price Tax-Free Income Fund, Inc.; T. Rowe Price Tax-Exempt Money Fund,
Inc.; T. Rowe Price Short-Term Bond Fund, Inc.; T. Rowe Price Tax-Free Insured
Intermediate Bond Fund, Inc.; T. Rowe Price Tax-Free Short-Intermediate Fund,
Inc.; T. Rowe Price High Yield Fund, Inc.; T. Rowe Price Tax-Free High Yield
Fund, Inc.; T. Rowe Price GNMA Fund; T. Rowe Price Equity Income Fund; T. Rowe
Price New America Growth Fund; T. Rowe Price Capital Appreciation Fund; T. Rowe
Price Capital Opportunity Fund, Inc.; T. Rowe Price Science & Technology Fund,
Inc.; T. Rowe Price Health Services Fund, Inc. T. Rowe Price Small-Cap Value
Fund, Inc.; T. Rowe Price U.S. Treasury Funds, Inc. (which includes U.S.
Treasury Money Fund, U.S. Treasury Intermediate Fund and U.S. Treasury Long-Term
Fund); T. Rowe Price State Tax-Free Income Trust (which includes Maryland
Tax-Free Bond Fund, New York Tax-Free Bond Fund, New York Tax-Free
<PAGE>
Money Fund, Virginia Tax-Free Bond Fund, New Jersey Tax-Free Bond Fund, Georgia
Tax-Free Bond Fund, Florida Insured Intermediate Tax-Free Fund, and Maryland
Short-Term Tax-Free Bond Fund); T. Rowe Price California Tax-Free Income Trust
(which includes California Tax-Free Bond Fund and California Tax-Free Money
Fund); T. Rowe Price Index Trust, Inc. (which includes the T. Rowe Price Equity
Index Fund); T. Rowe Price Spectrum Fund, Inc. (which includes the Spectrum
Growth Fund and Spectrum Income Fund); T. Rowe Price Short-Term U.S. Government
Fund, Inc.; T. Rowe Price Value Fund, Inc.; T. Rowe Price Balanced Fund, Inc.;
T. Rowe Price Mid-Cap Growth Fund, Inc.; T. Rowe Price OTC Fund, Inc., (which
includes T. Rowe Price OTC Fund); T. Rowe Price Blue Chip Growth Fund, Inc.; T.
Rowe Price Dividend Growth Fund, Inc.; T. Rowe Price Summit Funds, Inc. (which
includes Summit Cash Reserves Fund, Summit Limited-Term Bond Fund and Summit
GNMA Fund); T. Rowe Price Summit Municipal Funds, Inc. (which includes Summit
Municipal Money Market Fund, Summit Municipal Intermediate Fund, Summit
Municipal Income Fund); T. Rowe Price Corporate Income Fund, Inc.; CUNA Mutual
Funds, Inc. (which includes CUNA Mutual tax-free Intermediate-Term Fund, CUNA
Mutual U.S. Government Income Fund and CUNA Mutual Cornerstone Fund); T. Rowe
Price Equity Series, Inc., (which includes T. Rowe Price Equity Income Portfolio
and T. Rowe Price New America Growth Portfolio and T. Rowe Price Personal
Strategy Balanced Portfolio); T. Rowe Price Fixed Income Series, Inc. (which
includes T. Rowe Price Limited-Term Bond Portfolio); T. Rowe Price International
Series, Inc. (which includes T. Rowe Price International Stock Portfolio);
Personal Strategy Funds, Inc. (which includes T. Rowe Price Personal Strategy
Income Fund, T. Rowe Price Personal Strategy Balanced Fund and Personal Strategy
Growth Fund); T. Rowe Price International Funds, Inc. (which includes the T.
Rowe Price International Stock Fund, T. Rowe Price International Bond Fund, T.
Rowe Price International Discovery Fund, T. Rowe Price European Stock Fund, T.
Rowe Price New Asia Fund, T. Rowe Price Global Government Bond Fund, T. Rowe
Price Japan Fund, T. Rowe Price Short-Term Global Fund, T. Rowe Price Latin
America Fund, T. Rowe Price Emerging Markets Stock Fund, T. Rowe Price Global
Stock Fund, and T. Rowe Price Emerging Markets Bond Fund); Frank
<PAGE>
Russell Investment Securities Fund; the RPF International Bond Fund; and the
Institutional International Funds, Inc. (which includes the Foreign Equity
Fund).
(b)
NAME AND PRINCIPAL POSITION AND OFFICES
BUSINESS ADDRESS* WITH UNDERWRITER
- --------------------------------------------------------------------------------
Mark E. Rayford Director
James S. Riepe President and Director
Patricia M. Archer Vice President
Edward C. Bernard Vice President
Joseph C. Bonasorte Vice President
Meredith C. Callanan Vice President
Laura H. Chasney Vice President
Victoria C. Collins Vice President
Christopher W. Dyer Vice President
Forrest R. Foss Vice President
James W. Graves Vice President
Andrea G. Griffin Vice President
David J. Healy Vice President
Joseph P. Healy Vice President
Walter J. Helmlinger Vice President
Eric G. Knauss Vice President
Henry H. Hopkins Vice President and Director
Douglas G. Kremer Vice President
Sharon R. Krieger Vice President
Keith Wayne Lewis Vice President
David L. Lyons Vice President
Sarah McCafferty Vice President
Maurice Albert Minerbi Vice President
Nancy M. Morris Vice President
George A. Murnaghan Vice President
Steven E. Norwitz Vice President
Kathleen M. O'Brien Vice President
Pamela D. Preston Vice President
Lucy Beth Robins Vice President
John Richard Rockwell Vice President
Monica R. Tucker Vice President
Charles E. Vieth Vice President and Director
William F. Wendler, II Vice President
Terrie L. Westren Vice President
Jane F. White Vice President
Thomas R. Woolley Vice President
Alvin M. Younger, Jr. Treasurer and Secretary
Mark S. Finn Controller
* Unless otherwise indicated, the business address of each of Investment
Services' officers and directors is 100 East Pratt Street, Baltimore,
Maryland 21202.
<PAGE>
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All accounts and records required to be maintained by Section 31(a) of the 1940
Act and the rules under it are maintained by First Security Benefit Life
Insurance and Annuity Company of New York at its administrative offices--70 West
Red Oak Lane, 4th Floor, White Plains, New York 10604.
ITEM 31. MANAGEMENT SERVICES
All management contracts are discussed in Part A or Part B.
ITEM 32. UNDERTAKINGS
(a) Registrant undertakes that it will file a post-effective amendment to this
Registration Statement as frequently as necessary to ensure that the audited
financial statements in the Registration Statement are never more than sixteen
(16) months old for so long as payments under the Variable Annuity contracts may
be accepted.
(b) Registrant undertakes that it will affix to or include a post card as part
of the T. Rowe Price Variable Annuity Account of First Security Benefit Life
Insurance and Annuity Company of New York Prospectus that an applicant can
remove to send for a Statement of Additional Information.
(c) Registrant undertakes to deliver any Statement of Additional Information
and any financial statements required to be made available under this Form
promptly upon written or oral request to First Security Benefit Life Insurance
and Annuity Company of New York at the address or phone number listed in the
prospectus.
(d) Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the Registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that Section.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant certifies that it
meets the requirements of Securities Act Rule 485 for effectiveness of this
Registration Statement and has caused this Registration Statement to be signed
on its behalf, in the City of Topeka, and State of Kansas, on this 16th day of
December, 1996.
SIGNATURES AND TITLES
Howard R. Fricke FIRST SECURITY BENEFIT LIFE INSURANCE AND
President and Director ANNUITY COMPANY OF NEW YORK
(THE DEPOSITOR)
Peggy S. Avey By: ROGER K. VIOLA
Assistant Secretary and Chief ---------------------------------------
Administrative Officer Roger K. Viola, Secretary,
Vice President and Director as
Donald L. Schepker Attorney-in-Fact for the Officers
Vice President and Director and Directors Whose Names Appear Opposite
James R. Schmank T. ROWE PRICE VARIABLE ANNUITY ACCOUNT
Director OF FIRST SECURITY BENEFIT LIFE
INSURANCE AND ANNUITY COMPANY OF NEW YORK
Roger K. Viola (THE REGISTRANT)
Assistant Secretary, Vice
President and Director
By: FIRST SECURITY BENEFIT LIFE INSURANCE
John E. Hayes, Jr. AND ANNUITY COMPANY OF NEW
Director YORK (THE DEPOSITOR)
Jane Boisseau By: HOWARD R. FRICKE
Director ---------------------------------------
Howard R. Fricke, President and Director
Lee Laino
Director By: JAMES R. SCHMANK
---------------------------------------
Katherine White James R. Schmank, Vice President
Director and Treasurer
(ATTEST): ROGER K. VIOLA
---------------------------------
Roger K. Viola, Secretary,
Vice President and Director
Date: December 16, 1996
<PAGE>
EXHIBIT INDEX
(1) None
(2) None
(3) None
(4) Sample Contract
(5) Form of Application
(6) (a) None
(b) None
(7) None
(8) None
(9) None
(10) Consent of Independent Auditors
(11) None
(12) None
(13) Schedule of Computation of Performance
(14) Financial Data Schedules
(15) Powers of Attorney of Howard R. Fricke, Jane Boisseau, Roger K. Viola,
Donald J. Schepker, John E. Hayes, Jr., James R. Schmank, Lee Laino,
and Katherine White.
<PAGE>
FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT
THE COMPANY'S PROMISE
In consideration for the Purchase Payments and the attached application, First
Security Benefit Life Insurance and Annuity Company of New York (the "Company")
will pay the benefits of this Contract according to its provisions.
LEGAL CONTRACT
PLEASE READ YOUR CONTRACT CAREFULLY. It is a legal Contract between the Owner
and the Company. The Contract's table of contents is on page 2.
FREE LOOK PERIOD-RIGHT TO CANCEL
IF FOR ANY REASON THE OWNER IS NOT SATISFIED WITH THIS CONTRACT, HE OR SHE MAY
RETURN IT TO THE COMPANY WITHIN 30 DAYS FROM THE DATE OF RECEIPT. IT MAY BE
RETURNED BY DELIVERING OR MAILING IT TO THE COMPANY. IF RETURNED, THIS CONTRACT
SHALL BE DEEMED VOID FROM THE CONTRACT DATE. THE COMPANY WILL REFUND (I) ANY
PURCHASE PAYMENTS MADE AND ALLOCATED TO THE FIXED ACCOUNT; AND (II) SEPARATE
ACCOUNT CONTRACT VALUE AS OF THE DATE THE RETURNED POLICY IS POSTMARKED FOR
RETURN TO THE COMPANY, INCREASED BY ANY FEES OR OTHER CHARGES PAID.
Signed for First Security Benefit Life Insurance and Annuity Company of New York
on the Contract Date.
ROGER K. VIOLA HOWARD R. FRICKE
Secretary President
A BRIEF DESCRIPTION OF THIS CONTRACT
This is a FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT.
* Purchase Payments may be made until the earlier of the Annuity Payout Date or
termination of the Contract.
* A Death Benefit may be paid prior to the Annuity Payout Date according to the
Contract provisions.
* Annuity Payments begin on the Annuity Payout Date using the method specified
in this Contract.
* The smallest annual rate of investment return that would have to be earned on
the assets of the Separate Account so that the dollar amount of Variable
Annuity Payments will not decrease is 3 1/2%. A daily charge corresponding to
an annual charge of .55% is applied to the assets of the Separate Account by
the Company. Please refer to the "Contract Value and Expense Provisions"
beginning on page 10.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE INVESTMENT
EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND MAY INCREASE OR DECREASE IN
ACCORDANCE WITH THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT. THERE ARE NO
GUARANTEED MINIMUM PAYMENTS OR CASH VALUES. (SEE "CONTRACT VALUE AND EXPENSE
PROVISIONS" AND "ANNUITY PAYMENT PROVISIONS" FOR DETAILS.)
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
70 West Red Oak Lane, 4th Floor, White Plains, New York 10604
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
CONTRACT SPECIFICATIONS ............................................... 3
DEFINITIONS ........................................................... 4-6
GENERAL PROVISIONS .................................................... 7, 8
THE CONTRACT ....................................................... 7
COMPLIANCE ......................................................... 7
MISSTATEMENT OF AGE AND SEX ........................................ 7
EVIDENCE OF SURVIVAL ............................................... 7
INCONTESTABILITY ................................................... 7
ASSIGNMENT ......................................................... 7
EXCHANGES .......................................................... 8
CLAIMS OF CREDITORS ................................................ 8
NONFORFEITURE VALUES ............................................... 8
NON-PARTICIPATING .................................................. 8
STATEMENTS ......................................................... 8
OWNERSHIP, ANNUITANT AND
BENEFICIARY PROVISIONS ................................................ 9
OWNERSHIP .......................................................... 9
JOINT OWNERSHIP .................................................... 9
ANNUITANT .......................................................... 9
PRIMARY AND SECONDARY BENEFICIARIES ................................ 9
OWNERSHIP AND BENEFICIARY CHANGES .................................. 9
PURCHASE PAYMENT PROVISIONS ........................................... 10
FLEXIBLE PURCHASE PAYMENTS ......................................... 10
PURCHASE PAYMENT LIMITATIONS ....................................... 10
PURCHASE PAYMENT ALLOCATION ........................................ 10
PLACE OF PAYMENT ................................................... 10
CONTRACT VALUE AND EXPENSE PROVISIONS ................................. 10-12
CONTRACT VALUE ..................................................... 10
FIXED ACCOUNT CONTRACT VALUE ....................................... 10
FIXED ACCOUNT INTEREST CREDITING ................................... 11
SEPARATE ACCOUNT CONTRACT VALUE .................................... 11
ACCUMULATION UNIT VALUE ............................................ 11
DETERMINING ACCUMULATION UNITS ..................................... 11
MORTALITY AND EXPENSE RISK CHARGE .................................. 12
PREMIUM TAX EXPENSE ................................................ 12
MUTUAL FUND EXPENSES ............................................... 12
WITHDRAWAL PROVISIONS ................................................. 12, 13
WITHDRAWALS ........................................................ 12
WITHDRAWAL VALUE ................................................... 13
SYSTEMATIC WITHDRAWALS ............................................. 13
DATE OF REQUEST .................................................... 13
PAYMENT OF WITHDRAWAL BENEFITS ..................................... 13
DEATH BENEFIT PROVISIONS .............................................. 14, 15
DEATH BENEFIT ...................................................... 14
PROOF OF DEATH ..................................................... 14
DISTRIBUTION RULES ................................................. 14, 15
ANNUITY PAYMENT PROVISIONS ............................................ 15-19
ANNUITY PAYOUT DATE ................................................ 15
CHANGE OF ANNUITY PAYOUT DATE ...................................... 15
ANNUITY PAYOUT AMOUNT .............................................. 15
ANNUITY TABLES ..................................................... 16
ANNUITY PAYMENTS ................................................... 16
CHANGE OF ANNUITY OPTION ........................................... 16
FIXED ANNUITY PAYMENTS ............................................. 16
VARIABLE ANNUITY PAYMENTS .......................................... 16
ANNUITY UNITS ...................................................... 16, 17
NET INVESTMENT FACTOR .............................................. 17
ALTERNATE ANNUITY OPTION RATES ..................................... 17
ANNUITY OPTIONS .................................................... 18, 19
ANNUITY TABLES ........................................................ 20
AMENDMENTS OR ENDORSEMENTS, IF ANY
-2-
<PAGE>
- --------------------------------------------------------------------------------
CONTRACT SPECIFICATIONS
- --------------------------------------------------------------------------------
OWNER NAME: CONTRACT NUMBER:
OWNER DATE OF BIRTH: CONTRACT DATE:
JOINT OWNER NAME: ISSUE DATE:
JOINT OWNER DATE OF BIRTH: ANNUITY PAYOUT DATE:
ANNUITANT NAME: PLAN:
ANNUITANT DATE OF BIRTH: ASSIGNMENT:
ANNUITANT GENDER:
PRIMARY BENEFICIARY NAME: SECONDARY BENEFICIARY
NAME:
- --------------------------------------------------------------------------------
INITIAL PURCHASE PAYMENT ..............................
MINIMUM SUBSEQUENT PURCHASE PAYMENTS ..................
investment program
MINIMUM SYSTEMATIC WITHDRAWAL ......................... $100
MORTALITY AND EXPENSE RISK CHARGE ..................... .55% Annually
GUARANTEED RATE ....................................... 3%
ANNUITY OPTION ........................................
SUBACCOUNTS:
New America Growth Subaccount
International Stock Subaccount
Mid-Cap Growth Subaccount
Equity Income Subaccount
Personal Strategy Balanced Subaccount
Limited-Term Bond Subaccount
Prime Reserve Subaccount
METHOD FOR DEDUCTIONS:
Deductions for any Premium Taxes will be allocated proportionately to the
Owner's Contract Value in the Subaccounts and the Fixed Account.
* The Annuity Payout Date and Annuity Option may be changed by the Owner prior
to the Annuity Payout Date. See "Change of Annuity Payout Date" and "Change
of Annuity Option."
-3-
<PAGE>
- --------------------------------------------------------------------------------
DEFINITIONS
- --------------------------------------------------------------------------------
ACCOUNT
An Account is one of the Subaccounts or the Fixed Account.
ACCUMULATION UNIT
The Accumulation Unit is a unit of measure. It is used to
compute the Separate Account Contract Value prior to the
Annuity Payout Date. It is also used to compute the
Variable Annuity Payments for Annuity Options 5 through 7.
ANNUITANT
The Annuitant is the person named by the Owner on whose
life the Annuity Payments depend for Annuity Options 1
through 4. The Annuitant receives Annuity Payments under
this Contract. Please see "Annuitant" provisions on page 9.
ANNUITY OPTION
An Annuity Option is a set of provisions that form the
basis for making Annuity Payments. The Annuity Option is
set prior to the Annuity Payout Date. Please see "Annuity
Options" on pages 18 and 19.
ANNUITY PAYOUT DATE
The Annuity Payout Date is the date on which Annuity
Payments are scheduled to begin. This date may be changed
by the Owner. The Annuity Payout Date is shown on Page 3.
Please see "Annuity Payout Date" on page 15.
ANNUITY UNIT
The Annuity Unit is a unit of measure used to compute
Variable Annuity Payments for Annuity Options 1 through 4.
AUTOMATIC EXCHANGES
Automatic Exchanges are Exchanges among the Subaccounts and
the Fixed Account. Such exchanges are made automatically on
a periodic basis by the Company at the written request of
the Owner.
COMPANY
The Company is First Security Benefit Life Insurance and
Annuity Company of New York.
CONTRACT ANNIVERSARY
A Contract Anniversary is a 12-month anniversary of the
Contract Date.
CONTRACT DATE
The Contract Date is the date the Contract begins. The
Contract Date is shown on page 3.
CONTRACT YEAR
Contract Years are measured from the Contract Date.
CURRENT INTEREST
The Company may in its discretion pay Current Interest on
the Fixed Account at a rate that exceeds the Guaranteed
Rate shown on page 3. The Company will declare the rate of
Current Interest, if any, from time to time.
DESIGNATED BENEFICIARY
Upon the death of the Owner or Joint Owner, the Designated
Beneficiary will be the first person on the following list
who is alive on the date of death: 1. Owner; 2. Joint
Owner; 3. Primary Beneficiary; 4. Secondary Beneficiary; 5.
Annuitant; and 6. the Owner's estate if no one listed above
is alive.
-4-
<PAGE>
- --------------------------------------------------------------------------------
DEFINITIONS (CONTINUED)
- --------------------------------------------------------------------------------
DESIGNATED
BENEFICIARY (Cont'd)
The Designated Beneficiary receives a death benefit upon
the death of the Owner. Please see "Ownership, Annuitant,
and Beneficiary Provisions" on page 9 and "Death Benefit
Provisions" on pages 14 and 15.
FIXED ACCOUNT
The Fixed Account is part of the Company's general account.
The Company manages the general account and guarantees that
it will credit interest on Fixed Account Contract Value at
an annual rate at least equal to the Guaranteed Rate. This
Rate is shown on page 3.
GUARANTEE PERIOD
Current Interest, if declared, is fixed for rolling periods
of one year, referred to as Guarantee Periods. The
Guarantee Period that applies to any Fixed Account Contract
Value: (1) starts on the date that such Contract Value is
allocated to the Fixed Account pursuant to: (a) a Purchase
Payment Received by the Company; or (b) an Exchange to the
Fixed Account; and (2) ends on the last day of the same
month in the year in which the Guarantee Period expires.
When any Guarantee Period expires, a new Guarantee Period
shall start for such Contract Value on the date that
follows such expiration date. Such period shall end on the
immediately preceding date in the year in which the
Guarantee Period expires. For example, Contract Value
exchanged to the Fixed Account on June 1 would have a
Guarantee Period starting on that date and ending on June
30 of the following year. A new Guarantee Period for such
Contract Value would start on July 1 of that year and end
on June 30 of the following year.
HOME OFFICE
The address of the Company's Home Office is First Security
Benefit Life Insurance and Annuity Company of New York, 70
West Red Oak Lane, 4th Floor, White Plains, New York 10604.
ISSUE DATE
The Issue Date is the date the Company uses to determine
the date the Contract becomes incontestable. The Issue Date
is shown on Page 3. Please see "Incontestability" on page
7.
JOINT OWNER
The Joint Owner, if any, shares an undivided interest in
the entire Contract with the Owner. The Joint Owner, if
any, is named on page 3. Please see "Joint Ownership"
provisions on page 9.
NONNATURAL PERSON
Any group or entity that is not a living person, such as a
trust or corporation.
OWNER
The Owner is the person who has all rights under the
Contract. The Owner is named on page 3. Please see
"Ownership" provisions on page 9.
PREMIUM TAX
Any Premium Taxes levied by a state or other governmental
entity will be charged against this Contract. When Premium
Tax is assessed after the Purchase Payment is applied, it
will be deducted as described on page 3.
PURCHASE PAYMENT
A Purchase Payment is money Received by the Company and
applied to the Contract.
RECEIVED BY THE
COMPANY
The phrase "Received by the Company" means receipt by the
Company in good order at its Home Office at the address
indicated above or such other address designated in writing
by the Company.
-5-
<PAGE>
- --------------------------------------------------------------------------------
DEFINITIONS (CONTINUED)
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT
The T. Rowe Price Variable Annuity Account of First
Security Benefit Life Insurance and Annuity Company of New
York is a Separate Account established and maintained by
the Company under New York law. The Separate Account is
registered with the Securities and Exchange Commission
under the Investment Company Act of 1940 as a Unit
Investment Trust. It was established by the Company to
support variable annuity contracts. The Company owns the
assets of the Separate Account and maintains them apart
from the assets of its general account and its other
separate accounts. The assets held in the Separate Account
equal to the reserves and other Contract liabilities with
respect to the Separate Account shall not be chargeable
with liabilities arising out of any other business of the
Company.
Income and realized and unrealized gains and losses from
assets in the Separate Account are credited to, or charged
against, the Separate Account without regard to the income,
gains or losses from the Company's general account or its
other separate accounts. The Separate Account is divided
into Subaccounts shown on page 3. Income and realized and
unrealized gains and losses from assets in each Subaccount
are credited to, or charged against, the Subaccount without
regard to income, gains or losses in the other Subaccounts.
The Company has the right to transfer to its general
account any assets of the Separate Account that are in
excess of the reserves and other Contract liabilities with
respect to the Separate Account. The value of the assets
in the Separate Account on each Valuation Date is
determined at the end of each Valuation Date.
SUBACCOUNT NET
ASSET VALUE
The Subaccount Net Asset Value is equal to: (1) the net
asset value of all shares of the underlying mutual fund
held by the Subaccount; plus (2) any cash or other assets;
less (3) all liabilities of the Subaccount.
SUBACCOUNTS
The Separate Account is divided into Subaccounts which
invest in shares of open-end management investment
companies, commonly known as mutual funds. Each Subaccount
may invest its assets in a separate class or series of a
designated mutual fund or funds. The Subaccounts are shown
on page 3. Subject to the regulatory requirements then in
force, the Company reserves the right to:
1. change or add designated mutual funds or other
investment vehicles;
2. add, remove or combine Subaccounts;
3. add, delete or make substitutions for securities that
are held or purchased by the Separate Account or any
Subaccount;
4. operate the Separate Account as a management investment
company;
5. combine the assets of the Separate Account with other
Separate Accounts of the Company or an affiliate
thereof;
6. restrict or eliminate any voting rights of the Owner
with respect to the Separate Account or other persons
who have voting rights as to the Separate Account; and
7. terminate and liquidate any Subaccount.
If any of these changes result in a material change to the
Separate Account or a Subaccount, the Company will notify
the Owner of the change. The Company will not change the
investment policy of any Subaccount in any material respect
without complying with the filing and other procedures of
the insurance regulators of the state of issue.
VALUATION DATE
A Valuation Date is each day the New York Stock Exchange
and the Company are open for business.
VALUATION PERIOD
A Valuation Period is the interval of time from one
Valuation Date to the next Valuation Date.
-6-
<PAGE>
- --------------------------------------------------------------------------------
GENERAL PROVISIONS
- --------------------------------------------------------------------------------
THE CONTRACT
The entire Contract between the Owner and the Company
consists of this Contract, the attached Application, and
any Amendments, Endorsements or Riders to the Contract. All
statements made in the Application will, as ruled by a
court of competent jurisdiction, be deemed representations
and not warranties. The Company will use no statement made
by or on behalf of the Owner or the Annuitant to void this
Contract unless it is in the written Application. Any
change in the Contract can be made only with the written
consent of the President, a Vice President, or the
Secretary of the Company.
The Purchase Payment(s) and the Application must be
acceptable to the Company under its rules and practices. If
they are not, the Company's liability shall be limited to a
return of the Purchase Payment(s).
COMPLIANCE
The Company reserves the right to make any change to the
provisions of this Contract to comply with or give the
Owner the benefit of any federal or state statute, rule or
regulation. This includes, but is not limited to,
requirements for annuity contracts under the Internal
Revenue Code or the laws of any state. The Company will
provide the Owner with a copy of any such change and will
obtain approval for such a change with the insurance
regulatory officials of the state in which the Contract is
delivered.
MISSTATEMENT OF AGE
AND SEX
If the age or sex of the Annuitant has been misstated,
payments shall be adjusted, when allowed by law, to the
amount which would have been provided for the correct age
or sex. Proof of the age of an Annuitant may be required at
any time, in a form suitable to the Company. If payments
have already commenced and the misstatement has caused an
underpayment, the full amount due with interest at the rate
of 3% will be paid with the next scheduled payment. If the
misstatement has caused an overpayment, the amount due with
interest at the rate of 3% will be deducted from one or
more future payments.
EVIDENCE OF SURVIVAL
When any payments under this Contract depend on the payee
being alive on a given date, proof that the payee is living
may be required by the Company. Such proof must be in a
form accepted by the Company, and may be required prior to
making the payments.
INCONTESTABILITY
This Contract will not be contested after it has been in
force for two years from the Issue Date during the life of
the Owner.
ASSIGNMENT
Please refer to page 3 to see if this Contract may be
assigned. If it may be assigned, no Assignment under this
Contract is binding unless Received by the Company in
writing. The Company assumes no responsibility for the
validity, legality, or tax status of any Assignment. The
Assignment will be subject to any payment made or other
action taken by the Company before the Assignment is
Received by the Company. Once filed, the rights of the
Owner, Annuitant and Beneficiary are subject to the
Assignment. Any claim is subject to proof of interest of
the assignee.
-7-
<PAGE>
- --------------------------------------------------------------------------------
GENERAL PROVISIONS (CONTINUED)
- --------------------------------------------------------------------------------
EXCHANGES
The Owner may Exchange Contract Value among the Fixed
Account and Subaccounts subject to the following.
Exchanges are not allowed within 30 days of the Annuity
Payout Date. After the Annuity Payout Date, for Annuity
Options 1 through 4, the Owner may Exchange Contract Value
only among Subaccounts. The Company reserves the right to:
(1) prohibit exchanges that would reduce an account to less
than $500; (2) limit the number of Exchanges allowed each
Contract Year to six; and (3) subject to New York Insurance
Department approval, waive the limit on Exchanges allowed
each Contract Year. Exchanges must be at least $500 or, if
less, the remaining balance in the Fixed Account or a
Subaccount.
Contract Value may be exchanged from the Fixed Account
only: (1) during the calendar month in which the applicable
Guarantee Period expires; and (2) pursuant to an Automatic
Exchange. Exchanges of Fixed Account Contract Value will
be made: (1) first from Fixed Account Contract Value for
which the Guarantee Period expires during the calendar
month in which the Exchange is effected; (2) then in the
order that starts with Fixed Account Contract Value which
has the longest amount of time before its Guarantee Period
expires; and (3) ends with that which has the least amount
of time before its Guarantee Period expires.
The Company will effect an Exchange to or from a Subaccount
on the basis of Accumulation Unit Value (or, when
appropriate, Annuity Unit Value) determined at the end of
the Valuation Period in which the Exchange is effected. The
Company will effect an Exchange from the Fixed Account on
the basis of Fixed Account Contract Value at the end of the
Valuation Period in which the Exchange is effected.
The Company reserves the right to delay Exchanges from the
Fixed Account for up to 6 months. The Company will inform
you if there will be a delay.
CLAIMS OF CREDITORS
The Contract Value and other benefits under this Contract
are exempt from the claims of creditors of the Owner to the
extent allowed by law.
NONFORFEITURE
VALUES
The Death Benefits, Withdrawal Values and Annuity Payout
Values will at least equal the minimum required by law.
NON-PARTICIPATING
This Contract is not participating and will pay no
dividend.
STATEMENTS
At least once each Contract Year the Owner shall be sent a
statement including the current Contract Value and any
other information required by law. The Owner may send a
written request for a statement at other intervals. The
Company may charge a reasonable fee for such statements.
-8-
<PAGE>
- --------------------------------------------------------------------------------
OWNERSHIP, ANNUITANT AND BENEFICIARY PROVISIONS
- --------------------------------------------------------------------------------
OWNERSHIP
During the Owner's lifetime, all rights and privileges
under the Contract may be exercised only by the Owner. If
the purchaser names someone other than himself or herself
as Owner, the purchaser has no rights in the Contract. No
Owner may be older than age 85 on the Contract Date.
JOINT OWNERSHIP
If a Joint Owner is named in the application, then the
Owner and Joint Owner share an undivided interest in the
entire Contract as joint tenants with rights of
survivorship. When an Owner and Joint Owner have been
named, the Company will honor only requests for changes and
the exercise of other Ownership rights made by both the
Owner and Joint Owner. When a Joint Owner is named, all
references to "Owner" throughout this Contract should be
construed to mean both the Owner and Joint Owner, except
for the final sentence of the "Annuitant" provision below,
the "Statements" provision on page 8 and the "Death Benefit
Provisions" on pages 14 and 15.
ANNUITANT
The Annuitant is named on page 3. The Owner may change the
Annuitant prior to the Annuity Payout Date. The request for
this change must be made in writing and Received by the
Company at least 30 days prior to the Annuity Payout Date.
No Annuitant may be named who is more than 85 years old on
the Contract Date. When the Annuitant dies prior to the
Annuity Payout Date, the Owner must name a new Annuitant
within 30 days or, if sooner, by the Annuity Payout Date,
except where the Owner is a Nonnatural Person. If a new
Annuitant is not named, the Owner becomes the Annuitant.
PRIMARY AND
SECONDARY
BENEFICIARIES
The Primary Beneficiary and any Secondary Beneficiary are
named on page 3. The Owner may change any Beneficiary as
described in "Ownership and Beneficiary Changes" below. If
the Primary Beneficiary dies prior to the Owner, the
Secondary Beneficiary becomes the Primary Beneficiary.
Unless the Owner directs otherwise, when there are two or
more Primary Beneficiaries, they will receive equal shares.
OWNERSHIP AND
BENEFICIARY CHANGES
Subject to the terms of any existing Assignment, the Owner
may name a new Owner, a new Primary Beneficiary or a new
Secondary Beneficiary. Any new choice of Owner, Primary
Beneficiary or Secondary Beneficiary will revoke any prior
choice. Any change must be made in writing and recorded at
the Home Office. The change will become effective as of the
date the written request is signed, whether or not the
Owner is living at the time the change is recorded. A new
choice of Primary Beneficiary or Secondary Beneficiary will
not apply to any payment made or action taken by the
Company prior to the time it was recorded. The Company may
require the Contract be returned so these changes may be
made.
-9-
<PAGE>
- --------------------------------------------------------------------------------
PURCHASE PAYMENT PROVISIONS
- --------------------------------------------------------------------------------
FLEXIBLE PURCHASE
PAYMENTS
The Contract becomes in force when the initial Purchase
Payment is applied. The Owner is not required to continue
Purchase Payments in the amount or frequency originally
planned. The Owner may: (1) increase or decrease the amount
of Purchase Payments; or (2) change the frequency of
Purchase Payments. A change in frequency or amount of
Purchase Payments does not require a written request.
PURCHASE PAYMENT
LIMITATIONS
Total Purchase Payments to the Contract may not be greater
than $1,000,000 without prior approval by the Company. The
Minimum Subsequent Purchase Payment amount is shown on page
3.
PURCHASE PAYMENT
ALLOCATION
Purchase Payments may be allocated among the Fixed Account
and the Subaccounts. The allocations may be a whole dollar
amount or whole percentage. However, no less than $25 per
Purchase Payment may be allocated to any Account. The Owner
may change the allocations by written notice to the
Company.
PLACE OF PAYMENT
All Purchase Payments under this Contract are to be paid to
the Company. Purchase Payments after the first Purchase
Payment are applied as of the end of the Valuation Period
during which they are Received by the Company.
- --------------------------------------------------------------------------------
CONTRACT VALUE AND EXPENSE PROVISIONS
- --------------------------------------------------------------------------------
CONTRACT VALUE
On any Valuation Date, the Contract Value is the sum of:
(1) the Separate Account Contract Value; and (2) the Fixed
Account Contract Value. At any time after the first
Contract Year and before the Annuity Payout Date, the
Company reserves the right to pay to the Owner the Contract
Value as a lump sum if it is below $2,000 and no Purchase
Payments have been paid for three years.
FIXED ACCOUNT
CONTRACT VALUE
On any Valuation Date, the Fixed Account Contract Value is
equal to the first Purchase Payment allocated under the
Contract to the Fixed Account:
PLUS:
1. any other Purchase Payments allocated under the Contract
to the Fixed Account;
2. any Exchanges from the Separate Account to the Fixed
Account; and
3. any interest credited to the Fixed Account.
LESS:
1. any Withdrawals deducted from the Fixed Account;
2. any Exchanges from the Fixed Account to the Separate
Account;
3. any applicable Premium Taxes;
4. any Fixed Account Contract Value which is applied to any
of Annuity Options 1 through 4; and
5. any Annuity Payments made under Annuity Options 5
through 7.
-10-
<PAGE>
- --------------------------------------------------------------------------------
CONTRACT VALUE AND EXPENSE PROVISIONS (CONTINUED)
- --------------------------------------------------------------------------------
FIXED ACCOUNT
INTEREST CREDITING
The Company will credit interest on Fixed Account Contract
Value at an annual rate at least equal to the Guaranteed
Rate shown on page 3. Also, the Company may in its sole
judgment credit Current Interest at a rate in excess of the
Guaranteed Rate. The rate of Current Interest, if declared,
will be fixed during the Guarantee Period. Fixed Account
Contract Value will earn Current Interest during each
Guarantee Period at the rate, if any, declared by the
Company on the first day of the Guarantee Period.
The Company may credit Current Interest on Contract Value
that was allocated or exchanged to the Fixed Account during
one period at a different rate than amounts allocated or
exchanged to the Fixed Account in another period.
Therefore, at any time, portions of Fixed Account Contract
Value may be earning Current Interest at different rates
based upon the period during which such portions were
allocated or exchanged to the Fixed Account.
SEPARATE ACCOUNT
CONTRACT VALUE
On any Valuation Date, the Separate Account Contract Value
is the sum of the then current value of the Accumulation
Units allocated to each Subaccount for this Contract.
ACCUMULATION UNIT
VALUE
The initial Accumulation Unit Value for each Subaccount was
set at $10. Other Accumulation Unit Values are found on
each Valuation Date by dividing (1) by (2) where:
1. is equal to:
a. the Subaccount Net Asset Value determined at the end
of the current Valuation Period; plus
b. any dividends declared by the Subaccount's underlying
mutual fund that are not part of the Subaccount Net
Asset Value; less
c. the accrued Mortality and Expense Risk Charge; and
d. any taxes for which the Company has reserved which
the Company deems to have resulted from the operation
of the Subaccount.
2. is the number of Accumulation Units at the start of the
Valuation Period.
The Accumulation Unit Value may increase or decrease from
one Valuation Period to the next.
DETERMINING
ACCUMULATION
UNITS
The number of Accumulation Units allocated to a Subaccount
under this Contract is found by dividing: (1) the amount
allocated to the Subaccount; by (2) the Accumulation Unit
Value for the Subaccount at the end of the Valuation Period
during which the amount is applied under the Contract. The
number of Accumulation Units allocated to a Subaccount
under the Contract will not change as a result of
investment experience. Events that change the number of
Accumulation Units are:
1. Purchase Payments that are applied to the Subaccount;
2. Contract Value that is Exchanged into or out of the
Subaccount;
3. Withdrawals that are deducted from the Subaccount; and
4. Premium Taxes that are deducted from the Subaccount.
-11-
<PAGE>
- --------------------------------------------------------------------------------
CONTRACT VALUE AND EXPENSE PROVISIONS (CONTINUED)
- --------------------------------------------------------------------------------
MORTALITY AND
EXPENSE RISK
CHARGE
The Company will deduct the Mortality and Expense Risk
Charge shown on page 3. This charge will be computed and
deducted from each Subaccount on each Valuation Date. This
charge is factored into the Accumulation Unit and Annuity
Unit Values on each Valuation Date.
PREMIUM TAX EXPENSE
The Company reserves the right to deduct Premium Tax when
due or any time thereafter. Any applicable Premium Taxes
will be allocated as described on page 3.
MUTUAL FUND EXPENSES
Each Subaccount invests in shares of a mutual fund. The net
asset value per share of each underlying fund reflects the
deduction of any investment advisory and administration
fees and other expenses of the fund. These fees and
expenses are not deducted from the assets of a Subaccount,
but are paid by the underlying funds. The Owner indirectly
bears a pro rata share of such fees and expenses. An
underlying fund's fees and expenses are not specified or
fixed under the terms of this Contract.
- --------------------------------------------------------------------------------
WITHDRAWAL PROVISIONS
- --------------------------------------------------------------------------------
WITHDRAWALS
A full Withdrawal of the Contract Value or partial
Withdrawal of Separate Account Contract Value is allowed at
any time. Partial Withdrawals of Fixed Account Contract
Value are, however, restricted as described below. This
provision is subject to any federal or state Withdrawal
restrictions.
A partial Withdrawal of Fixed Account Contract Value may be
made only: (1) pursuant to Systematic Withdrawals; (2)
during the calendar month in which the applicable Guarantee
Period expires; and (3) once per Contract Year in an amount
up to the greater of $5,000 or 10 percent of the Fixed
Account Contract Value at the time of the partial
Withdrawal.
Upon the Owner's request for a full Withdrawal, the Company
will pay the Withdrawal Value in a lump sum.
All Withdrawals must meet the following conditions.
1. The request for Withdrawal must be Received by the
Company in writing or under other methods allowed by the
Company.
2. The Owner must apply: (a) while this Contract is in
force; and (b) prior to the Annuity Payout Date.
3. The amount Withdrawn must be at least $500.00 except for
Systematic Withdrawals, as discussed below, or when
terminating the Contract.
A partial Withdrawal request must state the allocations for
deducting the Withdrawal from each Account. If the Owner
does not specify the allocation, the Company will contact
the Owner for instructions. The Withdrawal will be effected
as of the end of the Valuation Period in which such
instructions are Received by the Company. Withdrawals of
Fixed Account Contract Value will be made: (1) first from
Fixed Account Contract Value for which the Guarantee Period
expires during the calendar month in which the Withdrawal
is effected; (2) then in the order that starts with Fixed
Account Contract Value which has the longest amount of time
before its Guarantee Period expires; and (3) ends with that
which has the least amount of time before its Guarantee
Period expires.
-12-
<PAGE>
- --------------------------------------------------------------------------------
WITHDRAWAL PROVISIONS (CONTINUED)
- --------------------------------------------------------------------------------
WITHDRAWAL VALUE
The Withdrawal Value at any time will be: (1) the Contract
Value; less (2) any Premium Taxes due or paid by the
Company.
SYSTEMATIC
WITHDRAWALS
Systematic Withdrawals are automatic periodic distributions
from the Contract in substantially equal amounts prior to
the Annuity Payout Date. In order to start Systematic
Withdrawals, the Owner must make the request in writing.
The Minimum Systematic Withdrawal is shown on page 3. The
Owner must choose the type of payment and its frequency.
The payment type may be: (1) a percentage of Contract
Value; (2) a specified dollar amount; (3) all earnings in
the Contract; or (4) based upon the life expectancy of the
Owner or the Owner and a Beneficiary. The payment frequency
may be: (1) monthly; (2) quarterly; (3) semiannually; or
(4) annually. Systematic Withdrawals of Fixed Account
Contract Value must provide for payments over a period of
not less than 36 months. Systematic Withdrawals may be
stopped by the Owner upon proper written request Received
by the Company at least 30 days in advance. The Company
reserves the right to stop, modify or suspend Systematic
Withdrawals.
Withdrawals, including systematic withdrawals, may: (1)
subject the Owner to a penalty tax if taken before age 59
1/2; and (2) may be restricted or limited if made from an
Individual Retirement Annuity qualified under Internal
Revenue code (IRC) Section 408 or a Tax Sheltered Annuity
qualified under IRC Section 403(b).
DATE OF
REQUEST
The Company will effect a Withdrawal of Separate Account
Contract Value on the basis of Accumulation Unit Value
determined at the end of the Valuation Period in which all
the required information is Received by the Company.
PAYMENT OF
WITHDRAWAL
BENEFITS
The Company reserves the right to suspend an Exchange or
delay payment of a Withdrawal from the Separate Account for
any period:
1. when the New York Stock Exchange is closed; or
2. when trading on the New York Stock Exchange is
restricted; or
3. when an emergency exists as a result of which: (a)
disposal of securities held in the Separate Account is
not reasonably practicable; or (b) it is not reasonably
practicable to fairly value the net assets of the
Separate Account.
Rules and regulations of the Securities and Exchange
Commission will govern as to whether the conditions set
forth above exist.
The Company further reserves the right to delay payment of
a Withdrawal from the Fixed Account for up to six months as
required by most states. The Company will notify you if
there will be a delay.
-13-
<PAGE>
- --------------------------------------------------------------------------------
DEATH BENEFIT PROVISIONS
- --------------------------------------------------------------------------------
DEATH BENEFIT
If any Owner dies prior to the Annuity Payout Date, a death
Benefit will be paid to the Designated Beneficiary when due
Proof of Death and instructions regarding payment are
Received by the Company. If an Owner is a Nonnatural
Person, then the Death Benefit will be paid in the event of
the death of the Annuitant or any joint Owner that is a
natural person prior to the Annuity Payout Date. Further,
if an Owner is a Nonnatural Person, the amount of the death
benefit is based on the age of the Annuitant or any joint
Owner that is a natural person on the Issue Date.
If the age of each Owner was 75 or younger on the Issue
Date, the Death Benefit will be the greatest of: (1) the
sum of all Purchase Payments, less any Premium Taxes due or
paid by the Company and less the sum of all partial
Withdrawals; (2) the Contract Value on the date due Proof
of Death and instructions regarding payment are Received by
the Company, less any Premium Taxes due or paid by the
Company; or (3) the Stepped-Up Death Benefit below.
The Stepped-Up Death Benefit is:
1. the largest Death Benefit on any Contract Anniversary
that is both an exact multiple of five and occurs prior
to the oldest Owner reaching age 76; plus
2. any Purchase Payments received since the applicable
fifth Contract Anniversary; less
3. any reductions caused by Withdrawals since the
applicable fifth Contract Anniversary; less
4. any Premium Taxes due or paid by the Company.
If the age of any Owner on the Issue Date was 76 or older,
the Death Benefit will be: (1) the Contract Value on the
date due Proof of Death and instructions regarding payment
are Received by the Company; less (2) any Premium Taxes due
or paid by the Company.
If a lump sum payment is requested, the payment will be
made in accordance with any laws and regulations that
govern the payment of Death Benefits.
The value of the Death Benefit is determined as of the date
that both Proof of Death and instructions regarding payment
are Received by the Company in good order.
PROOF OF
DEATH
Any of the following will serve as Proof of Death:
1. certified copy of the death certificate;
2. certified decree of a court of competent jurisdiction as
to the finding of death;
3. written statement by a medical doctor who attended the
deceased Owner; or
4. any proof accepted by the Company.
DISTRIBUTION
RULES
The entire Death Benefit with any interest shall be paid
within 5 years after the death of any Owner, except as
provided below. In the event that the Designated
Beneficiary elects an Annuity Option, the length of time
for the payment period may be longer than 5 years if: (1)
the Designated Beneficiary is a natural person; (2) the
Death Benefit is paid out under Annuity Options 1 through
7; (3) payments are made over a period that does not exceed
the life or life expectancy of the Designated Beneficiary;
and (4) Annuity Payments begin within one year of the death
of the Owner. If the deceased Owner's spouse is the sole
Designated Beneficiary, the spouse shall become the sole
Owner of the Contract. He or she may elect to: (1) keep the
Contract in force until the sooner of the spouse's death or
the Annuity Payout Date; or (2) receive the Death Benefit.
-14-
<PAGE>
- --------------------------------------------------------------------------------
DEATH BENEFIT PROVISIONS (CONTINUED)
- --------------------------------------------------------------------------------
DISTRIBUTION
RULES (cont'd)
If any Owner dies after the Annuity Payout Date, Annuity
Payments will continue to be paid at least as rapidly as
under the method of payment being used as of the date of
the Owner's death.
If the Owner is a Nonnatural Person, the distribution rules
set forth above apply in the event of the death of, or a
change in, the Annuitant. This Contract is deemed to
incorporate any provision of Section 72(s) of the Internal
Revenue Code of 1986, as amended (the "Code"), or any
successor provision. This Contract is also deemed to
incorporate any other provision of the Code deemed
necessary by the Company, in its sole judgment, to qualify
this Contract as an annuity. The application of the
distribution rules will be made in accordance with Code
section 72(s), or any successor provision, as interpreted
by the Company in its sole judgment.
The foregoing distribution rules do not apply to a Contract
which is: (1) provided under a plan described in Code
section 401(a); (2) described in Code section 403(b); (3)
an individual retirement annuity or provided under an
individual retirement account or annuity; or (4) otherwise
exempt from the Code section 72(s) distribution rules.
- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS
- --------------------------------------------------------------------------------
ANNUITY PAYOUT
DATE
The Owner may choose the Annuity Payout Date at the time of
application. If no Annuity Payout Date is chosen, the
Company will use the later of: (1) the oldest Annuitant's
seventieth birthday; or (2) the fifth Contract Anniversary.
The Annuity Payout Date must be prior to the oldest
Annuitant's ninetieth birthday.
The Annuity Payout Date is the date the first payment will
be made to the Annuitant under any of the Annuity Options.
CHANGE OF ANNUITY
PAYOUT DATE
The Owner may change the Annuity Payout Date. A request for
the change must be made in writing. The written request
must be Received by the Company at least 30 days prior to
the new Annuity Payout Date as well as 30 days prior to the
previous Annuity Payout Date.
ANNUITY PAYOUT
AMOUNT
The Annuity Payout Amount is applied to one or more of the
Annuity Options listed on pages 18 and 19. The Annuity
Payout Amount is: (1) the Contract Value on the Annuity
Payout Date; less (2) any Premium Taxes due or paid by the
Company. Unless otherwise directed by the Owner, Annuity
Payout Amount derived from Fixed Account Contract Value
will be applied to purchase a Fixed Annuity Option; that
derived from Separate Account Contract Value will be
applied to purchase a Variable Annuity Option.
-15-
<PAGE>
- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS (CONTINUED)
- --------------------------------------------------------------------------------
ANNUITY TABLES
The Annuity Tables show the guaranteed minimum amount of
monthly Annuity Payment that applies to the first payment
for Variable Annuity Payments and to each payment for Fixed
Annuity Payments for each $1,000 of Annuity Payout Amount
for each of Annuity Options 1 through 4. The amount of each
Annuity Payment for Annuity Options 1 through 4 will depend
on the Annuitant's sex and age on the Annuity Payout Date.
The Annuity Tables state values for the exact ages shown.
The values will be interpolated based on the Annuitant's
exact age on the Annuity Payout Date. On request the
Company will furnish the amount of monthly Annuity Payment
per $1,000 applied for any ages not shown.
The Company bases the Tables for Annuity Options 1 through
4 on: (1) the 1983 Table "A" Mortality Table projected for
mortality improvement for 45 years using Projection Scale
G; and (2) an interest rate of 3 1/2% a year.
For Annuity Options 5 through 7, age and sex are not
considered. Annuity Payments for these options are computed
without reference to the Annuity Tables.
ANNUITY PAYMENTS
The Annuity Option is shown on page 3. The Owner may choose
any form of Annuity Option that is allowed by the Company.
The Owner may choose an Annuity Option by written request.
This request must be Received by the Company at least 30
days prior to the Annuity Payout Date. Several Annuity
Options are listed on pages 18 and 19. No Annuity Option
can be selected that requires the Company to make periodic
payments of less than $20.00. If no Annuity Option is
chosen prior to the Annuity Payout Date, the Company will
use Life with 10-Year Fixed Period Option. Each Annuity
Option allows for making Annuity Payments annually,
semiannually, quarterly or monthly.
CHANGE OF ANNUITY
OPTION
Prior to the Annuity Payout Date, the Owner may change the
Annuity Option chosen. The Owner must request the change in
writing. This request must be Received by the Company at
least 30 days prior to the Annuity Payout Date.
FIXED ANNUITY
PAYMENTS
With respect to Fixed Annuity Payments, the amounts shown
on the Tables are the guaranteed minimum for each Annuity
Payment for Annuity Options 1 through 4.
VARIABLE ANNUITY
PAYMENTS
With respect to Variable Annuity Payments, the amounts
shown on the Tables are the first Annuity Payment, based on
the assumed interest rate of 3 1/2% for Annuity Options 1
through 4. The amount of each Annuity Payment after the
first for these options is computed by means of Annuity
Units. Neither expense actually incurred (other than tax on
investment return), nor mortality actually experienced,
shall adversely affect the dollar amount of annuity income
already commenced.
ANNUITY UNITS
The number of Annuity Units is found by dividing the first
Annuity Payment by the Annuity Unit Value for the selected
Subaccount on the Annuity Payout Date. The number of
Annuity Units for the Subaccount then remains constant,
unless an Exchange of Annuity Units is made. After the
first Annuity Payment, the dollar amount of each subsequent
Annuity Payment is equal to the number of Annuity Units
times the Annuity Unit Value for the Subaccount on the due
date of the Annuity Payment.
-16-
<PAGE>
- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS (CONTINUED)
- --------------------------------------------------------------------------------
ANNUITY UNITS (Cont'd)
The Annuity Unit Value for each Subaccount was first set at
$1.00. The Annuity Unit Value for any subsequent Valuation
Date is equal to (a) times (b) times (c), where:
(a) is the Annuity Unit Value on the immediately preceding
Valuation Date;
(b) is the Net Investment Factor for the Valuation Date;
(c) is a factor used to adjust for an assumed interest rate
of 3 1/2% per year used to determine the Annuity
Payment amounts. The assumed interest rate is reflected
in the Annuity Tables.
NET INVESTMENT
FACTOR
The Net Investment Factor for any Subaccount at the end of
any Valuation Period is found by dividing (1) by (2) and
subtracting (3) from the result, where:
1. is equal to:
a. the net asset value per share of the mutual fund
held in the Subaccount, found at the end of the
current Valuation Period; plus
b. the per share amount of any dividend or capital gain
distributions paid by the Subaccount's underlying
mutual fund that is not included in the net asset
value per share; plus or minus
c. a per share charge or credit for any taxes reserved
for, which the Company deems to have resulted from
the operation of the Subaccount.
2. is the net asset value per share of the Subaccount's
underlying mutual fund as found at the end of the prior
Valuation Period.
3. is a factor representing the Mortality and Expense Risk
Charge deducted from the Separate Account.
Underlying mutual funds may declare dividends on a daily
basis and pay such dividends once a month. The Net
Investment Factor allows for the monthly reinvestment of
these daily dividends. As described above, the gains and
losses from each Subaccount are credited or charged against
the Subaccount without regard to the gains or losses in the
Company or other Subaccounts.
ALTERNATE ANNUITY
OPTION RATES
The Company may, at the time of election of an Annuity
Option, offer more favorable rates in lieu of the
guaranteed rates shown in the Annuity Tables.
-17-
<PAGE>
- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS (CONTINUED)
- --------------------------------------------------------------------------------
ANNUITY OPTIONS
OPTION 1
LIFE OPTION: This option provides payments for the life of
the Annuitant. Table A shows some of the guaranteed rates
for this option.
OPTION 2
LIFE WITH FIXED PERIOD OPTION: This option provides
payments for the life of the Annuitant. A fixed period of
5, 10, 15 or 20 years may be chosen. Payments will be made
to the end of this period even if the Annuitant dies prior
to the end of the period. If the Annuitant dies before
receiving all the payments during the fixed period, the
remaining payments will be made to the Designated
Beneficiary. Table A shows some of the guaranteed rates for
this option.
OPTION 3
LIFE WITH INSTALLMENT OR UNIT REFUND OPTION: This option
provides payments for the life of the Annuitant, with a
period certain determined by dividing the Annuity Payout
Amount by the amount of the first payment. A fixed number
of payments will be made even if the Annuitant dies. If the
Annuitant dies before receiving the fixed number of
payments, any remaining payments will be made to the
Designated Beneficiary. Table A shows some of the
guaranteed rates for this option.
OPTION 4
JOINT AND LAST SURVIVOR OPTION: This option provides
payments for the life of the Annuitant and Joint Annuitant.
Payments will be made as long as either is living. Table B
shows some of the guaranteed rates for this option.
OPTION 5
FIXED PERIOD OPTION: This option provides payments for a
fixed number of years between 5 and 20. If the Contract
Value is held in the Fixed Account, then the amount of the
payments will vary as a result of the interest rate (as
adjusted periodically) credited on the Fixed Account. This
rate is guaranteed to be no less than the Guaranteed Rate
shown on page 3. If the Contract Value is held in the
Separate Account, then the amount of the payments will vary
as a result of the investment performance of the
Subaccounts chosen. If all the Annuitants die before
receiving the fixed number of payments, any remaining
payments will be made to the Designated Beneficiary.
OPTION 6
FIXED PAYMENT OPTION: This option provides a fixed payment
amount. This amount is paid until the amount applied,
including daily interest adjustments, is paid. If the
Contract Value is held in the Fixed Account, then the
number of payments will vary as a result of the interest
rate (as adjusted periodically) credited on the Fixed
Account. This rate is guaranteed to be no less than the
Guaranteed Rate shown on page 3. If the Contract Value is
held in the Separate Account, then the number of payments
will vary as a result of the investment performance of the
Subaccounts chosen. If all the Annuitants die before
receiving all the payments, any remaining payments will be
made to the Designated Beneficiary.
-18-
<PAGE>
- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS (CONTINUED)
- --------------------------------------------------------------------------------
ANNUITY OPTIONS (cont'd)
OPTION 7
AGE RECALCULATION OPTION: This option provides for payments
based upon the Annuitant's life expectancy, or the joint
life expectancies of the Annuitant and a beneficiary, at
the Annuitant's attained age (and the Annuitant's
beneficiary's attained or adjusted age, if applicable) each
year. The payments are computed by reference to actuarial
tables prescribed by the Treasury Secretary. Payments are
made until the amount applied is exhausted. If the Contract
Value is held in the Fixed Account, then the number of
payments will vary as a result of the interest rate (as
adjusted periodically) credited on the Fixed Account. This
rate is guaranteed to be not less than the Guaranteed Rate
shown on page 3. If the Contract Value is held in the
Separate Account, then the number of payments will vary as
a result of the investment performance of the Subaccounts
chosen. If all the Annuitants die before receiving the
remaining payments, such payments will be made to the
Designated Beneficiary.
-19-
<PAGE>
ANNUITY TABLES
- --------------------------------------------------------------------------------
Table A
Guaranteed Minimum Amount
of Monthly Payment for
each $1,000 applied
SINGLE LIFE ANNUITY
- --------------------------------------------------------------------------------
AGE OF MONTHLY PAYMENTS CERTAIN INSTALLMENT
PAYEE 0 60 120 180 240 REFUND
- --------------------------------------------------------------------------------
MALE
55 4.45 4.44 4.41 4.37 4.30 4.31
56 4.52 4.51 4.48 4.43 4.36 4.37
57 4.60 4.59 4.56 4.50 4.42 4.44
58 4.68 4.67 4.64 4.57 4.47 4.51
59 4.77 4.76 4.72 4.65 4.53 4.58
60 4.87 4.85 4.81 4.72 4.60 4.65
61 4.97 4.95 4.90 4.80 4.66 4.73
62 5.07 5.05 5.00 4.89 4.72 4.82
63 5.19 5.17 5.10 4.97 4.79 4.90
64 5.31 5.29 5.20 5.06 4.85 5.00
65 5.44 5.41 5.32 5.15 4.92 5.09
66 5.58 5.55 5.44 5.24 4.98 5.20
67 5.73 5.69 5.56 5.34 5.05 5.30
68 5.89 5.84 5.69 5.44 5.11 5.41
69 6.06 6.00 5.82 5.54 5.17 5.53
70 6.24 6.17 5.97 5.64 5.23 5.66
FEMALE
55 4.11 4.11 4.10 4.08 4.05 4.05
56 4.17 4.17 4.16 4.14 4.10 4.10
57 4.23 4.23 4.22 4.19 4.15 4.15
58 4.30 4.29 4.28 4.25 4.21 4.21
59 4.37 4.36 4.35 4.32 4.27 4.27
60 4.44 4.44 4.42 4.38 4.33 4.34
61 4.52 4.51 4.49 4.45 4.39 4.40
62 4.60 4.59 4.57 4.52 4.45 4.47
63 4.69 4.68 4.65 4.60 4.52 4.55
64 4.78 4.77 4.74 4.68 4.58 4.63
65 4.88 4.87 4.84 4.76 4.65 4.71
66 4.99 4.98 4.93 4.85 4.72 4.80
67 5.10 5.09 5.04 4.94 4.79 4.89
68 5.23 5.21 5.15 5.04 4.86 4.99
69 5.36 5.34 5.27 5.14 4.94 5.09
70 5.50 5.48 5.39 5.24 5.01 5.20
RATES NOT SHOWN WILL BE PROVIDED ON REQUEST. THE GUARANTEED MINIMUM MONTHLY
PAYMENTS SHOWN APPLY TO THE INITIAL PAYMENT FOR VARIABLE ANNUITY PAYMENTS AND TO
EACH PAYMENT FOR FIXED ANNUITY PAYMENTS.
- --------------------------------------------------------------------------------
JOINT & LAST |
SURVIVOR ANNUITY |
TABLE B - MONTHLY FEMALE | MALE AGE
INSTALLEMNTS AGE | 55 60 62 65 70
- --------------------------------|-----------------------------------------------
Until last Death 55 | 3.85 3.93 3.95 3.99 4.03
of Two Payees 60 | 3.98 4.10 4.15 4.21 4.29
per $1,000 of 62 | 4.03 4.18 4.23 4.30 4.40
benefit amount 65 | 4.11 4.28 4.35 4.45 4.59
70 | 4.21 4.45 4.54 4.69 4.92
ANNUAL, SEMIANNUAL, OR QUARTERLY PAYMENTS CAN BE DETERMINED FROM TABLE A OR B BY
MULTIPLYING THE MONTHLY PAYMENTS BY 11.812854, 5.9572233, AND 2.9914201,
RESPECTIVELY.
-20-
<PAGE>
A BRIEF DESCRIPTION OF THIS CONTRACT
This is a FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT.
* Purchase Payments may be made until the earlier of the Annuity Payout Date
or termination of the Contract.
* A Death Benefit may be paid prior to the Annuity Payout Date according to
the Contract provisions.
* Annuity Payments begin on the Annuity Payout Date using the method as
specified in this Contract.
* The smallest annual rate of investment return that would have to be earned
on the assets of the Separate Account so that the dollar amount of Variable
Annuity Payments will not decrease is 3 1/2%. A daily charge corresponding
to an annual charge of .55% is applied to the assets of the Separate Account
by the Company. Please refer to the "Contract Value and Expense Provisions"
beginning on page 10.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE INVESTMENT
EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND MAY INCREASE OR DECREASE IN
ACCORDANCE WITH THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT. THERE ARE NO
GUARANTEED MINIMUM PAYMENTS OR CASH VALUES. (SEE "CONTRACT VALUE AND EXPENSE
PROVISIONS" AND "ANNUITY PAYMENT PROVISIONS" FOR DETAILS.)
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
70 West Red Oak Lane, 4th Floor, White Plains, New York 10604
<PAGE>
FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT
THE COMPANY'S PROMISE
In consideration for the Purchase Payments and the attached application, First
Security Benefit Life Insurance and Annuity Company of New York (the "Company")
will pay the benefits of this Contract according to its provisions.
LEGAL CONTRACT
PLEASE READ YOUR CONTRACT CAREFULLY. It is a legal Contract between the Owner
and the Company. The Contract's table of contents is on page 2.
FREE LOOK PERIOD-RIGHT TO CANCEL
IF FOR ANY REASON THE OWNER IS NOT SATISFIED WITH THIS CONTRACT, HE OR SHE MAY
RETURN IT TO THE COMPANY WITHIN 30 DAYS FROM THE DATE OF RECEIPT. IT MAY BE
RETURNED BY DELIVERING OR MAILING IT TO THE COMPANY. IF RETURNED, THIS CONTRACT
SHALL BE DEEMED VOID FROM THE CONTRACT DATE. THE COMPANY WILL REFUND (I) ANY
PURCHASE PAYMENTS MADE AND ALLOCATED TO THE FIXED ACCOUNT; AND (II) SEPARATE
ACCOUNT CONTRACT VALUE AS OF THE DATE THE RETURNED POLICY IS POSTMARKED FOR
RETURN TO THE COMPANY, INCREASED BY ANY FEES OR OTHER CHARGES PAID.
Signed for First Security Benefit Life Insurance and Annuity Company of New York
on the Contract Date.
ROGER K. VIOLA HOWARD R. FRICKE
Secretary President
A BRIEF DESCRIPTION OF THIS CONTRACT
This is a FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT.
* Purchase Payments may be made until the earlier of the Annuity Payout Date
or termination of the Contract.
* A Death Benefit may be paid prior to the Annuity Payout Date according to
the Contract provisions.
* Annuity Payments begin on the Annuity Payout Date using the method specified
in this Contract.
* The smallest annual rate of investment return that would have to be earned
on the assets of the Separate Account so that the dollar amount of Variable
Annuity Payments will not decrease is 3 1/2% A daily charge corresponding to
an annual charge of .55% is applied to the assets of the Separate Account by
the Company. Please refer to the "Contract Value and Expense Provisions"
beginning on page 10.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE INVESTMENT
EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND MAY INCREASE OR DECREASE IN
ACCORDANCE WITH THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT. THERE ARE NO
GUARANTEED MINIMUM PAYMENTS OR CASH VALUES. (SEE "CONTRACT VALUE AND EXPENSE
PROVISIONS" AND "ANNUITY PAYMENT PROVISIONS" FOR DETAILS.)
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
70 West Red Oak Lane, 4th Floor, White Plains, New York 10604
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
CONTRACT SPECIFICATIONS ............................................... 3
DEFINITIONS ........................................................... 4-6
GENERAL PROVISIONS .................................................... 7, 8
THE CONTRACT ....................................................... 7
COMPLIANCE ......................................................... 7
MISSTATEMENT OF AGE ............................................... 7
EVIDENCE OF SURVIVAL ............................................... 7
INCONTESTABILITY ................................................... 7
ASSIGNMENT ......................................................... 7
EXCHANGES .......................................................... 8
CLAIMS OF CREDITORS ................................................ 8
NONFORFEITURE VALUES ............................................... 8
NON-PARTICIPATING .................................................. 8
STATEMENTS ......................................................... 8
OWNERSHIP, ANNUITANT AND
BENEFICIARY PROVISIONS ................................................ 9
OWNERSHIP .......................................................... 9
JOINT OWNERSHIP .................................................... 9
ANNUITANT .......................................................... 9
PRIMARY AND SECONDARY BENEFICIARIES ................................ 9
OWNERSHIP AND BENEFICIARY CHANGES .................................. 9
PURCHASE PAYMENT PROVISIONS ........................................... 10
FLEXIBLE PURCHASE PAYMENTS ......................................... 10
PURCHASE PAYMENT LIMITATIONS ....................................... 10
PURCHASE PAYMENT ALLOCATION ........................................ 10
PLACE OF PAYMENT ................................................... 10
CONTRACT VALUE AND EXPENSE PROVISIONS ................................. 10-12
CONTRACT VALUE ..................................................... 10
FIXED ACCOUNT CONTRACT VALUE ....................................... 10
FIXED ACCOUNT INTEREST CREDITING ................................... 11
SEPARATE ACCOUNT CONTRACT VALUE .................................... 11
ACCUMULATION UNIT VALUE ............................................ 11
DETERMINING ACCUMULATION UNITS ..................................... 11
MORTALITY AND EXPENSE RISK CHARGE .................................. 12
PREMIUM TAX EXPENSE ................................................ 12
MUTUAL FUND EXPENSES ............................................... 12
WITHDRAWAL PROVISIONS ................................................. 12, 13
WITHDRAWALS ........................................................ 12
WITHDRAWAL VALUE ................................................... 13
SYSTEMATIC WITHDRAWALS ............................................. 13
DATE OF REQUEST .................................................... 13
PAYMENT OF WITHDRAWAL BENEFITS ..................................... 13
DEATH BENEFIT PROVISIONS .............................................. 14, 15
DEATH BENEFIT ...................................................... 14
PROOF OF DEATH ..................................................... 14
DISTRIBUTION RULES ................................................. 14, 15
ANNUITY PAYMENT PROVISIONS ............................................ 15-19
ANNUITY PAYOUT DATE ................................................ 15
CHANGE OF ANNUITY PAYOUT DATE ...................................... 15
ANNUITY PAYOUT AMOUNT .............................................. 15
ANNUITY TABLES ..................................................... 16
ANNUITY PAYMENTS ................................................... 16
CHANGE OF ANNUITY OPTION ........................................... 16
FIXED ANNUITY PAYMENTS ............................................. 16
VARIABLE ANNUITY PAYMENTS .......................................... 16
ANNUITY UNITS ...................................................... 16, 17
NET INVESTMENT FACTOR .............................................. 17
ALTERNATE ANNUITY OPTION RATES ..................................... 17
ANNUITY OPTIONS .................................................... 18, 19
ANNUITY TABLES ........................................................ 20
AMENDMENTS OR ENDORSEMENTS, IF ANY
-2-
<PAGE>
- --------------------------------------------------------------------------------
DEFINITIONS (CONTINUED)
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT
The T. Rowe Price Variable Annuity Account of First
Security Benefit Life Insurance and Annuity Company of New
York is a Separate Account established and maintained by
the Company under New York law. The Separate Account is
registered with the Securities and Exchange Commission
under the Investment Company Act of 1940 as a Unit
Investment Trust. It was established by the Company to
support variable annuity contracts. The Company owns the
assets of the Separate Account and maintains them apart
from the assets of its general account and its other
separate accounts. The assets held in the Separate Account
equal to the reserves and other Contract liabilities with
respect to the Separate Account shall not be chargeable
with liabilities arising out of any other business of the
Company.
Income and realized and unrealized gains and losses from
assets in the Separate Account are credited to, or charged
against, the Separate Account without regard to the income,
gains or losses from the Company's general account or its
other separate accounts. The Separate Account is divided
into Subaccounts shown on page 3. Income and realized and
unrealized gains and losses from assets in each Subaccount
are credited to, or charged against, the Subaccount without
regard to income, gains or losses in the other Subaccounts.
The Company has the right to transfer to its general
account any assets of the Separate Account that are in
excess of the reserves and other Contract liabilities with
respect to the Separate Account. The value of the assets in
the Separate Account on each Valuation Date are determined
at the end of each Valuation Date.
SUBACCOUNT NET
ASSET VALUE
The Subaccount Net Asset Value is equal to: (1) the net
asset value of all shares of the underlying mutual fund
held by the Subaccount; plus (2) any cash or other assets;
less (3) all liabilities of the Subaccount.
SUBACCOUNTS
The Separate Account is divided into Subaccounts which
invest in shares of open-end management investment
companies, commonly known as mutual funds. Each Subaccount
may invest its assets in a separate class or series of a
designated mutual fund or funds. The Subaccounts are shown
on page 3. Subject to the regulatory requirements then in
force, the Company reserves the right to:
1. change or add designated mutual funds or other
investment vehicles;
2. add, remove or combine Subaccounts;
3. add, delete or make substitutions for securities that
are held or purchased by the Separate Account or any
Subaccount;
4. operate the Separate Account as a management investment
company;
5. combine the assets of the Separate Account with other
Separate Accounts of the Company or an affiliate
thereof;
6. restrict or eliminate any voting rights of the Owner
with respect to the Separate Account or other persons
who have voting rights as to the Separate Account; and
7. terminate and liquidate any Subaccount.
If any of these changes result in a material change to the
Separate Account or a Subaccount, the Company will notify
the Owner of the change. The Company will not change the
investment policy of any Subaccount in any material respect
without complying with the filing and other procedures of
the insurance regulators of the state of issue.
VALUATION DATE
A Valuation Date is each day the New York Stock Exchange
and the Company are open for business.
VALUATION PERIOD
A Valuation Period is the interval of time from one
Valuation Date to the next Valuation Date.
-6-
<PAGE>
- --------------------------------------------------------------------------------
GENERAL PROVISIONS
- --------------------------------------------------------------------------------
THE CONTRACT
The entire Contract between the Owner and the Company
consists of this Contract, the attached Application, and
any Amendments, Endorsements or Riders to the Contract. All
statements made in the Application will, as ruled by a
court of competent jurisdiction, be deemed representations
and not warranties. The Company will use no statement made
by or on behalf of the Owner or the Annuitant to void this
Contract unless it is in the written Application. Any
change in the Contract can be made only with the written
consent of the President, a Vice President, or the
Secretary of the Company.
The Purchase Payment(s) and the Application must be
acceptable to the Company under its rules and practices. If
they are not, the Company's liability shall be limited to a
return of the Purchase Payment(s).
COMPLIANCE
The Company reserves the right to make any change to the
provisions of this Contract to comply with or give the
Owner the benefit of any federal or state statute, rule or
regulation. This includes, but is not limited to,
requirements for annuity contracts under the Internal
Revenue Code or the laws of any state. The Company will
provide the Owner with a copy of any such change and will
obtain approval for such a change with the insurance
regulatory officials of the state in which the Contract is
delivered.
MISSTATEMENT OF AGE
If the age of the Annuitant has been misstated, payments
shall be adjusted, when allowed by law, to the amount which
would have been provided for the correct age. Proof of the
age of an Annuitant may be required at any time, in a form
suitable to the Company. If payments have already commenced
and the misstatement has caused an underpayment, the full
amount due with interest at the rate of 3% will be paid
with the next scheduled payment. If the misstatement has
caused an overpayment, the amount due with interest at the
rate of 3% will be deducted from one or more future
payments.
EVIDENCE OF SURVIVAL
When any payments under this Contract depend on the payee
being alive on a given date, proof that the payee is living
may be required by the Company. Such proof must be in a
form accepted by the Company, and may be required prior to
making the payments.
INCONTESTABILITY
This Contract will not be contested after it has been in
force for two years from the Issue Date during the life of
the Owner.
ASSIGNMENT
Please refer to page 3 to see if this Contract may be
assigned. If it may be assigned, no Assignment under this
Contract is binding unless Received by the Company in
writing. The Company assumes no responsibility for the
validity, legality, or tax status of any Assignment. The
Assignment will be subject to any payment made or other
action taken by the Company before the Assignment is
Received by the Company. Once filed, the rights of the
Owner, Annuitant and Beneficiary are subject to the
Assignment. Any claim is subject to proof of interest of
the assignee.
-7-
<PAGE>
- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS (CONTINUED)
- --------------------------------------------------------------------------------
ANNUITY TABLES
The Annuity Tables show the guaranteed minimum amount of
monthly Annuity Payment that applies to the first payment
for Variable Annuity Payments and to each payment for Fixed
Annuity Payments for each $1,000 of Annuity Payout Amount
for each of Annuity Options 1 through 4. The amount of each
Annuity Payment for Annuity Options 1 through 4 will depend
on the Annuitant's age on the Annuity Payout Date. The
Annuity Tables state values for the exact ages shown. The
values will be interpolated based on the Annuitant's exact
age on the Annuity Payout Date. On request the Company will
furnish the amount of monthly Annuity Payment per $1,000
applied for any ages not shown.
The Company bases the Tables for Annuity Options 1 through
4 on: (1) the 1983 Table "A" Mortality Table projected for
mortality improvement for 45 years using Projection Scale
G; and (2) an interest rate of 3 1/2% a year.
For Annuity Options 5 through 7, age is not considered.
Annuity Payments for these options are computed without
reference to the Annuity Tables.
ANNUITY PAYMENTS
The Annuity Option is shown on page 3. The Owner may choose
any form of Annuity Option that is allowed by the Company.
The Owner may choose an Annuity Option by written request.
This request must be Received by the Company at least 30
days prior to the Annuity Payout Date. Several Annuity
Options are listed on pages 18 and 19. No Annuity Option
can be selected that requires the Company to make periodic
payments of less than $20.00. If no Annuity Option is
chosen prior to the Annuity Payout Date, the Company will
use Life with 10-Year Fixed Period Option. Each Annuity
Option allows for making Annuity Payments annually,
semiannually, quarterly or monthly.
CHANGE OF ANNUITY
OPTION
Prior to the Annuity Payout Date, the Owner may change the
Annuity Option chosen. The Owner must request the change in
writing. This request must be Received by the Company at
least 30 days prior to the Annuity Payout Date.
FIXED ANNUITY
PAYMENTS
With respect to Fixed Annuity Payments, the amounts shown
on the Tables are the guaranteed minimum for each Annuity
Payment for Annuity Options 1 through 4.
VARIABLE ANNUITY
PAYMENTS
With respect to Variable Annuity Payments, the amounts
shown on the Tables are the first Annuity Payment, based on
the assumed interest rate of 3 1/2% for Annuity Options 1
through 4. The amount of each Annuity Payment after the
first for these options is computed by means of Annuity
Units. Neither expense actually incurred (other than tax on
investment return), nor mortality actually experienced,
shall adversely affect the dollar amount of annuity income
already commenced.
ANNUITY UNITS
The number of Annuity Units is found by dividing the first
Annuity Payment by the Annuity Unit Value for the selected
Subaccount on the Annuity Payout Date. The number of
Annuity Units for the Subaccount then remains constant,
unless an Exchange of Annuity Units is made. After the
first Annuity Payment, the dollar amount of each subsequent
Annuity Payment is equal to the number of Annuity Units
times the Annuity Unit Value for the Subaccount on the due
date of the Annuity Payment.
-16-
<PAGE>
- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS (CONTINUED)
- --------------------------------------------------------------------------------
ANNUITY UNITS (Cont'd)
The Annuity Unit Value for each Subaccount was first set at
$1.00. The Annuity Unit Value for any subsequent Valuation
Date is equal to (a) times (b) times (c), where:
(a) is the Annuity Unit Value on the immediately preceding
Valuation Date;
(b) is the Net Investment Factor for the Valuation Date;
(c) is a factor used to adjust for an assumed interest rate
of 3 1/2% per year used to determine the Annuity
Payment amounts. The assumed interest rate is reflected
in the Annuity Tables.
NET INVESTMENT
FACTOR
The Net Investment Factor for any Subaccount at the end of
any Valuation Period is found by dividing (1) by (2) and
subtracting (3) from the result, where:
1. is equal to:
a. the net asset value per share of the mutual fund
held in the Subaccount, found at the end of the
current Valuation Period; plus
b. the per share amount of any dividend or capital gain
distributions paid by the Subaccount's underlying
mutual fund that is not included in the net asset
value per share; plus or minus
c. a per share charge or credit for any taxes reserved
for, which the Company deems to have resulted from
the operation of the Subaccount.
2. is the net asset value per share of the Subaccount's
underlying mutual fund as found at the end of the prior
Valuation Period.
3. is a factor representing the Mortality and Expense Risk
Charge deducted from the Separate Account.
Underlying mutual funds may declare dividends on a daily
basis and pay such dividends once a month. The Net
Investment Factor allows for the monthly reinvestment of
these daily dividends. As described above, the gains and
losses from each Subaccount are credited or charged against
the Subaccount without regard to the gains or losses in the
Company or other Subaccounts.
ALTERNATE ANNUITY
OPTION RATES
The Company may, at the time of election of an Annuity
Option, offer more favorable rates in lieu of the
guaranteed rates shown in the Annuity Tables.
-17-
<PAGE>
ANNUITY TABLES
- --------------------------------------------------------------------------------
Table A
Guaranteed Minimum Amount
of Monthly Payment for
each $1,000 applied
SINGLE LIFE ANNUITY
- --------------------------------------------------------------------------------
AGE OF MONTHLY PAYMENTS CERTAIN INSTALLMENT
PAYEE 0 60 120 180 240 REFUND
- --------------------------------------------------------------------------------
UNISEX
55 4.11 4.11 4.10 4.08 4.05 4.05
56 4.17 4.17 4.16 4.14 4.10 4.10
57 4.23 4.23 4.22 4.19 4.15 4.15
58 4.30 4.29 4.28 4.25 4.21 4.21
59 4.37 4.36 4.35 4.32 4.27 4.27
60 4.44 4.44 4.42 4.38 4.33 4.34
61 4.52 4.51 4.49 4.45 4.39 4.40
62 4.60 4.59 4.57 4.52 4.45 4.47
63 4.69 4.68 4.65 4.60 4.52 4.55
64 4.78 4.77 4.74 4.68 4.58 4.63
65 4.88 4.87 4.84 4.76 4.65 4.71
66 4.99 4.98 4.93 4.85 4.72 4.80
67 5.10 5.09 5.04 4.94 4.79 4.89
68 5.23 5.21 5.15 5.04 4.86 4.99
69 5.36 5.34 5.27 5.14 4.94 5.09
70 5.50 5.48 5.39 5.24 5.01 5.20
RATES NOT SHOWN WILL BE PROVIDED ON REQUEST. THE GUARANTEED MINIMUM MONTHLY
PAYMENTS SHOWN APPLY TO THE INITIAL PAYMENT FOR VARIABLE ANNUITY PAYMENTS AND TO
EACH PAYMENT FOR FIXED ANNUITY PAYMENTS.
- --------------------------------------------------------------------------------
JOINT & LAST |
SURVIVOR ANNUITY |
TABLE B - MONTHLY | AGE
INSTALLEMNTS AGE | 55 60 62 65 70
- --------------------------------|-----------------------------------------------
Until last Death 55 | 3.77 3.87 3.90 3.95 4.00
of Two Payees 60 | 3.87 4.01 4.06 4.13 4.24
per $1,000 of 62 | 3.90 4.06 4.12 4.21 4.34
benefit amount 65 | 3.95 4.13 4.21 4.32 4.49
70 | 4.00 4.24 4.34 4.49 4.75
ANNUAL, SEMIANNUAL, OR QUARTERLY PAYMENTS CAN BE DETERMINED FROM TABLE A OR B BY
MULTIPLYING THE MONTHLY PAYMENTS BY 11.812854, 5.9572233, AND 2.9914201,
RESPECTIVELY.
-20-
<PAGE>
ENDORSEMENT
- --------------------------------------------------------------------------------
TAX-SHELTERED ANNUITY PROVISIONS
- --------------------------------------------------------------------------------
TAX-SHELTERED
ANNUITY ENDORSEMENT
This Contract is established as a Tax-Sheltered Annuity
("TSA") under Section 403(b) of the Internal Revenue Code
of 1986, as amended (the "Code") or any successor
provision, pursuant to the Owner's request in the
Application. Accordingly, this endorsement is attached to
and made part of the Contract as of its Issue Date or, if
later, the date shown below.
RESTRICTIONS ON
TAX-SHELTERED
ANNUITY
To ensure treatment as a TSA, this Contract will be subject
to the requirements of Code Section 403(b), which are
briefly summarized below:
a) The Contract may not be transferred, sold, assigned,
discounted, or pledged as collateral for a loan or as
security for the performance of an obligation or for any
other purpose to any person other than as a surrender to
the Company.
b) Distributions must be in accordance with the minimum
distribution and incidental death benefit rules of
Section 403(b)(10) of the Code. Accordingly,
distributions must begin no later than April 1 following
the calendar year in which the Owner attains age 70 1/2
(the "required beginning date"). Prior to the required
beginning date, the Owner shall elect, in a manner
acceptable to the Company, to have the balance in the
Contract distributed in:
1) A single lump sum payment;
2) Equal or substantially equal monthly, quarterly, or
annual payments over the life of the Owner or over
the joint and last survivor lives of the Owner and
his or her Designated Beneficiary; or
3) Equal or substantially equal annual payments over a
specified period that may not be longer than the
Owner's life expectancy or the joint and last
survivor life expectancy of the Owner and his or her
Designated Beneficiary.
If the Owner dies before reaching his or her required
beginning date, the Owner's entire interest must generally
be distributed within five years of the Owner's death.
However, the five-year rule will be deemed satisfied if
distributions begin before the close of the calendar year
following the year of the Owner's death to a designated
beneficiary and are made over the life of the beneficiary
(or over a period not extending beyond the life expectancy
of the beneficiary). If the designated beneficiary is the
Owner's surviving spouse, the commencement of distributions
may be delayed until the Owner would have reached age
70 1/2.
<PAGE>
- --------------------------------------------------------------------------------
TAX-SHELTERED ANNUITY PROVISIONS (CONTINUED)
- --------------------------------------------------------------------------------
RESTRICTIONS ON
TAX-SHELTERED
ANNUITY (Cont'd)
c) Distributions attributable to Contributions made
pursuant to a salary reduction agreement or earnings
credited after December 31, 1988, may not be distributed
unless the Owner has satisfied one of the following:
(i) attained age 59 1/2;
(ii) separated from Service;
(iii) died;
(iv) become Disabled (as per Section 72(m)(7) of the
Code);
(v) incurred a Hardship (as per Section 403(b)(11) of the
Code); or
(vi) such other conditions as may be prescribed under
Section 403(b) of the Code.
The Company reserves the right to require written proof of
the events in items (i) through (vi). The proof must be
satisfactory to the Company before Distribution will be
made.
d) If a Distribution is made because of Hardship it will
not include income on Contributions made under a salary
reduction agreement.
e) The annual limit for elective deferrals under this
Contract cannot exceed the limits in Section
403(b)(1)(E) of the Code.
f) The Owner's rights under the contract are
nonforfeitable, except for failure to pay future
premiums.
g) If the contract is purchased under a "Plan" within the
meaning of Section 403(b) of the Code, the Plan meets
the nondiscrimination requirements of Section 403(b)(12)
of the Code.
TRANSFERS
At the election of the Owner, distributions that qualify as
"eligible rollover distributions" may be made in the form
of a direct trustee-to-trustee transfer in accordance with
Section 401(a)(31) of the Code.
TAX CONSEQUENCES
The Company will not incur any liability or be responsible
for: the timing, purpose or propriety of any contribution
or distribution; any tax or penalty imposed on account of
any such contribution or distribution; or any other
failure, in whole or in part, by the Owner or his or her
employer to comply with the provisions set forth in the
Code or any other law.
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
ROGER K. VIOLA HOWARD R. FRICKE
Secretary President
___________________________________________
Endorsement Effective Date
(If Other Than Issue Date)
<PAGE>
ENDORSEMENT
- --------------------------------------------------------------------------------
INDIVIDUAL RETIREMENT ANNUITY PROVISIONS
- --------------------------------------------------------------------------------
INDIVIDUAL RETIREMENT
ANNUITY ENDORSEMENT
This Contract is established as an Individual Retirement
Annuity ("IRA") as defined in Section 408(b) of the
Internal Revenue Code of 1986, as amended (the "Code") or
any successor provision pursuant to the Owner's request in
the Application. Accordingly, this endorsement is attached
to and made part of the Contract as of its Issue Date or,
if later, the date shown below.
RESTRICTIONS ON
INDIVIDUAL RETIREMENT
ANNUITY
To ensure treatment as an IRA, this Contract will be
subject to the requirements of Code Section 408(b), which
are briefly summarized below:
a) The Owner must be the Annuitant.
b) The Owner may not name a new Owner or a Contingent
Owner to this Contract.
c) Distributions must begin no later than April 1
following the calendar year in which the Annuitant
attains age 70 1/2 (the "required beginning date").
Prior to the required beginning date, the Owner shall
elect, in a manner acceptable to the Company, to have
the balance in the Contract distributed in:
1) A single lump sum payment;
2) Equal or substantially equal monthly, quarterly, or
annual payments over the life of the Owner or over
the joint and last survivor lives of the Owner and
his or her Designated Beneficiary; or
3) Equal or substantially equal annual payments over a
specified period that may not be longer than the
Owner's life expectancy or the joint and last
survivor life expectancy of the Owner and his or
her Designated Beneficiary.
d) An Annuity Option may not be elected with a Fixed
Period that will guarantee Annuity Payments beyond the
life expectancy of the Annuitant and Beneficiary and
Annuity Payments must be made at least annually and in
equal amounts.
e) The Contract may not be transferred, sold, assigned,
discounted, or pledged as collateral for a loan or as
security for the performance of an obligation or for
any other purpose to any person other than as a
surrender to the Company.
f) Contributions are not fixed and other than qualified
rollover contributions, are limited to the amount
allowed in Section 408(b) of the Code. The Owner has
the sole responsibility for determining whether the
Contribution is in accordance with applicable federal
tax requirements. Any refund of contributions will be
applied before the close of the calendar year following
the year of the refund toward the payment of future
premiums or the purchase of additional benefits.
<PAGE>
- --------------------------------------------------------------------------------
INDIVIDUAL RETIREMENT ANNUITY PROVISIONS (CONTINUED)
- --------------------------------------------------------------------------------
RESTRICTIONS ON
INDIVIDUAL RETIREMENT
ANNUITY (continued)
g) Distributions under this provision of the Contract must
satisfy the minimum distribution rules of Section
408(b)(3) of the Code, including the minimum incidental
death benefit requirement of Treasury Regulation
1.408-8. The Owner or Designated Beneficiary, as
applicable, has the sole responsibility to elect a
distribution that will satisfy these rules.
h) If the Owner dies before reaching his or her required
beginning date, the Owner's entire interest must
generally be distributed within five years of the
Owner's death. However, the five-year rule will be
deemed satisfied if distributions begin before the
close of the calendar year following the Owner's death
to a designated beneficiary and are made over the life
of the beneficiary (or over a period not extending
beyond the life expectancy of the beneficiary). If the
designated beneficiary is the Owner's surviving spouse,
the commencement of distributions may be delayed until
the Owner would have reached age 70 1/2.
Annuity Payments may not begin before the Annuitant attains
the age of 59 1/2 without incurring a penalty tax except in
the situations described in Section 72(t) of the Internal
Revenue Code.
Notwithstanding any other provision of this Contract, the
above restrictions will apply if this endorsement is
applicable.
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
ROGER K. VIOLA HOWARD R. FRICKE
Secretary President
___________________________________________
Endorsement Effective Date
(If Other Than Issue Date)
<PAGE>
A BRIEF DESCRIPTION OF THIS CONTRACT
This is a FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT.
* Purchase Payments may be made until the earlier of the Annuity Payout Date
or termination of the Contract.
* A Death Benefit may be paid prior to the Annuity Payout Date according to
the Contract provisions.
* Annuity Payments begin on the Annuity Payout Date using the method as
specified in this Contract.
* The smallest annual rate of investment return that would have to be earned
on the assets of the Separate Account so that the dollar amount of Variable
Annuity Payments will not decrease is 3 1/2%. A daily charge corresponding
to an annual charge of .55% is applied to the assets of the Separate Account
by the Company. Please refer to the "Contract Value and Expense Provisions"
beginning on page 10.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE INVESTMENT
EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND MAY INCREASE OR DECREASE IN
ACCORDANCE WITH THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT. THERE ARE NO
GUARANTEED MINIMUM PAYMENTS OR CASH VALUES. (SEE "CONTRACT VALUE AND EXPENSE
PROVISIONS" AND "ANNUITY PAYMENT PROVISIONS" FOR DETAILS.)
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
70 West Red Oak Lane, 4th Floor, White Plains, New York 10604
<PAGE>
Variable Annuity Application
APPLICATION TO FIRST SECURITY BENEFIT LIFE
INSURANCE AND ANNUITY COMPANY OF NEW YORK FOR
AN INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY
Complete this application and mail to:
First Security Benefit Life Insurance
and Annuity Company of New York
P.O. Box 2788
Topeka, KS 66601-9804
For help with this application, or for more information,
call us at 1-800-469-5304.
1 OWNER INFORMATION
[ ] Male
___________________________________________ [ ] Female
Name
_________________________________________________________
Street Address or P.O. Box
_________________________________________________________
City, State, ZIP Code
_________________________________________________________
Daytime Phone
_________________________________________________________
Evening Phone
_________________________________________________________
Date of Birth (Mo/Day/Yr)
_________________________________________________________
Social Security Number/Tax ID Number
2 JOINT OWNER INFORMATION
[ ] Male
___________________________________________ [ ] Female
Name
_________________________________________________________
Street Address or P.O. Box
_________________________________________________________
City, State, ZIP Code
_________________________________________________________
Daytime Phone
_________________________________________________________
Evening Phone
_________________________________________________________
Date of Birth (Mo/Day/Yr)
_________________________________________________________
Social Security Number/Tax ID Number
_________________________________________________________
Relationship to Owner
3 ANNUITANT INFORMATION
[ ] Same as Owner
[ ] Male
___________________________________________ [ ] Female
Name
_________________________________________________________
Street Address or P.O. Box
_________________________________________________________
City, State, ZIP Code
_________________________________________________________
Date of Birth (Mo/Day/Yr)
_________________________________________________________
Social Security Number/Tax ID Number
4 BENEFICIARIES
PRIMARY BENEFICIARIES
_________________________________________________________
Name
_________________________________________________________
Relationship to Owner
_________________________________________________________
Name
_________________________________________________________
Relationship to Owner
SECONDARY BENEFICIARIES
_________________________________________________________
Name
_________________________________________________________
Relationship to Owner
_________________________________________________________
Name
_________________________________________________________
Relationship to Owner
over, please
<PAGE>
5 ALLOCATION OF PURCHASE PAYMENTS
Allocation of purchase payments - USE WHOLE PERCENTAGES NO LESS THAN 5%.
ALLOCATIONS MUST TOTAL 100%.
[ ] [ ] [ ]% NEW AMERICA GROWTH PORTFOLIO
[ ] [ ] [ ]% INTERNATIONAL STOCK PORTFOLIO
[ ] [ ] [ ]% MID-CAP GROWTH PORTFOLIO
[ ] [ ] [ ]% EQUITY INCOME PORTFOLIO
[ ] [ ] [ ]% PERSONAL STRATEGY BALANCED PORTFOLIO
[ ] [ ] [ ]% LIMITED-TERM BOND PORTFOLIO
[ ] [ ] [ ]% PRIME RESERVE PORTFOLIO
[ ] [ ] [ ]% FIXED INTEREST ACCOUNT
- ------------
[1] [0] [0]% TOTAL
6 METHOD OF PURCHASE
A. [ ] BY CHECK
Made payable to First Security Benefit Life Insurance
and Annuity Company of New York.
Amount
$[ ],[ ][ ][ ],[ ][ ][ ].[ ][ ]
B. [ ] BY EXCHANGE
From T. Rowe Price mutual fund account.
Amount
$[ ],[ ][ ][ ],[ ][ ][ ].[ ][ ]
Name of Fund
[ ]
Account Number
[ ][ ][ ][ ][ ][ ][ ][ ][ ]-[ ]
If you are establishing your account by exchange and your mutual fund ownership
registration is not exactly the same as in Sections 1 and 2, please obtain a
signature guarantee so that we may complete the transaction for you. Sign this
form in the presence of an officer of a commercial bank (FDIC member), trust
company, a member firm of the domestic stock exchange, or any other eligible
guarantor institution as defined by the Securities Exchange Act of 1934. We
cannot accept guarantees from notaries or others who will not provide
reimbursement in case of fraud.
____________________________________________________________
Signature Guaranteed by:
____________________________________________________________
Name of Guaranteeing Institution
____________________________________________________________
Signature of Authorized Officer Date
C. [ ] BY REPLACEMENT
Will the annuity applied for here replace or change any life insurance or
annuity?
[ ] YES [ ] NO
If yes, please provide the information below and complete the Exchange Form:
____________________________________________________________
Company Name
____________________________________________________________
Policy Number
7 INDIVIDUAL RETIREMENT ANNUITIES
[ ] TRANSFER IRA [ ] ROLLOVER IRA
[ ] IRA CONTRIBUTORY - TAX YEAR ___________________________
8 SPECIAL INSTRUCTIONS
____________________________________________________________
____________________________________________________________
9 SIGNATURES
All statements made in this application are true to the best of my knowledge and
belief. I agree that this application shall be part of the Variable Annuity
Contract issued by First Security Benefit Life Insurance and Annuity Company of
New York. I UNDERSTAND THAT ALL PAYMENTS AND VALUES PROVIDED BY THE CONTRACT MAY
VARY AS TO DOLLAR AMOUNT TO THE EXTENT THEY ARE BASED ON THE INVESTMENT
EXPERIENCE OF THE SELECTED SUBACCOUNTS. I have received and reviewed the
prospectuses that describe the Contract and the underlying mutual funds. I
understand that the Annuity Payout Date will be the later of: (1) the oldest
Annuitant's seventieth birthday or (2) the fifth contract anniversary, unless
instructed otherwise in the "Special Instructions" section above. I believe that
this Contract will meet my financial objectives.
TAX IDENTIFICATION NUMBER CERTIFICATION*
Under penalties of perjury I certify that:
a) the number shown on this form is my correct taxpayer identification number;
and
b) I am not subject to backup withholding because:
1) I am exempt from backup withholding; or
2) I have not been notified by the Internal Revenue Service (IRS) that I am
subject to backup withholding as a result of a failure to report all
interest or dividends; or
3) the IRS has notified me that I am no longer subject to backup withholding.
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF
THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP
WITHHOLDING.
____________________________________________________________
Owner's Signature Date
____________________________________________________________
Location (City/State)
____________________________________________________________
Joint Owner's Signature Date
____________________________________________________________
Location (City/State)
*CERTIFICATION INSTRUCTIONS
You must strike out the language in Clause (b) above if the IRS has notified you
that you ARE subject to backup withholding and you have not since received
notice from the IRS that backup withholding has terminated.
First Security Benefit Life Insurance and Annuity Company of New York, 70 West
Red Oak Lane, 4th Floor, White Plains, NY 10604
<PAGE>
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Independent Auditors"
and to the use of our report dated February 2, 1996, with respect to the
financial statements of First Security Benefit Life Insurance and Annuity
Company of New York included in the Registration Statement on Form N-4 and the
related Statement of Additional Information accompanying the Prospectus of The
T. Rowe Price Variable Annuity of First Security Benefit Life Insurance and
Annuity Company of New York.
Ernst & Young LLP
Kansas City, Missouri
December 19, 1996
<PAGE>
Item 24.b Exhibit (13)
EQUITY INCOME
AVERAGE ANNUAL TOTAL RETURN AS OF SEPTEMBER 30, 1996
0.75 Year (From Date of Inception 1/1/96)
1000 (1+T) .75 = 1,102.17
((1+T) .75).75 = (1.1022).75
1+T = 1.1385
T = .1385
INTERNATIONAL STOCK
AVERAGE ANNUAL TOTAL RETURN AS OF SEPTEMBER 30, 1996
0.75 Year (From Date of Inception 1/1/96)
1000 (1+T) .75 = 1,084.37
((1+T) .75).75 = (1.0844).75
1+T = 1.1140
T = .1140
LIMITED-TERM BOND
AVERAGE ANNUAL TOTAL RETURN AS OF SEPTEMBER 30, 1996
0.75 Year (From Date of Inception 1/1/96)
1000 (1+T) .75 = 1,007.53
((1+T) .75).75 = (1.0075).75
1+T = 1.0101
T = .0101
NEW AMERICA GROWTH
AVERAGE ANNUAL TOTAL RETURN AS OF SEPTEMBER 30, 1996
0.75 Year (From Date of Inception 1/1/96)
1000 (1+T) .75 = 1,168.91
((1+T) .75).75 = (1.1689).75
1+T = 1.2313
T = .2313
<PAGE>
Item 24.b Exhibit (13)
PERSONAL STRATEGY BALANCED
AVERAGE ANNUAL TOTAL RETURN AS OF SEPTEMBER 30, 1996
0.75 Year (From Date of Inception 1/1/96)
1000 (1+T) .75 = 1,067.90
((1+T) .75).75 = (1.0679).75
1+T = 1.0915
T = .0915
LIMITED - TERM BOND
YIELD CALCULATION AS OF SEPTEMBER 30, 1996
[ [ (880.96 - 0) ]6 ]
2 [ [---------------------- + 1 ] ] - 1
[ [ 18,252.7843 X 10.70 ] ]
[ ( ( 880.96 ) )6 ]
2 [ ( (-------------------) + 1 ) ] - 1
[ ( ( 195,304.7920 ) ) ]
[ ( ( ) 6 ) ]
2 [ ( ( .004510693 + 1 ) ) - 1 ]
2 [ ( 1.027371195 ) - 1 ]
2 ( .027371195 )
= .05474239 or 5.47% September 30, 1996
---------
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<EXPENSES-NET> 4
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<NET-CHANGE-FROM-OPS> 90
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<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 161,426
<NUMBER-OF-SHARES-REDEEMED> 18,111
<SHARES-REINVESTED> 2,007
<NET-CHANGE-IN-ASSETS> 145,322
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<SERIES>
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<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
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<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 2
<NET-INVESTMENT-INCOME> (2)
<REALIZED-GAINS-CURRENT> 4
<APPREC-INCREASE-CURRENT> 34
<NET-CHANGE-FROM-OPS> 36
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 87,044
<NUMBER-OF-SHARES-REDEEMED> 7,188
<SHARES-REINVESTED> 25
<NET-CHANGE-IN-ASSETS> 79,881
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2
<AVERAGE-NET-ASSETS> 554
<PER-SHARE-NAV-BEGIN> 11.26
<PER-SHARE-NII> (.05)
<PER-SHARE-GAIN-APPREC> 1.00
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.21
<EXPENSE-RATIO> .36
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
POWER OF ATTORNEY
STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )
KNOW ALL MEN BY THESE PRESENTS:
THAT I, Roger K. Viola, being a Director of FIRST SECURITY BENEFIT LIFE
INSURANCE AND ANNUITY COMPANY OF NEW YORK, by these presents do make, constitute
and appoint Howard R. Fricke and James R. Schmank, and each of them, my true and
lawful attorneys, each with full power and authority for me and in my name and
behalf to sign Registration Statements, any amendments thereto and any
applications for exemptive relief filed pursuant to the Investment Company Act
of 1940 or the Securities Act of 1933, as amended, and any instrument or
document filed as part thereof, or in connection therewith or in any way related
thereto, in connection with Variable Annuity Contracts offered, issued or sold
by FIRST SECURITY BENEFIT LIFE INSURANCE COMPANY and any T. ROWE PRICE VARIABLE
ANNUITY ACCOUNT OF FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF
NEW YORK with like effect as though said Registration Statements and other
documents had been signed and filed personally by me in the capacity aforesaid.
Each of the aforesaid attorneys acting alone shall have all the powers of all of
said attorneys. I hereby ratify and confirm all that the said attorneys, or any
of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 26th day of March, 1996.
Roger K. Viola
---------------------------------------
Roger K. Viola
SUBSCRIBED AND SWORN to before me this 26th day of March, 1996.
Jana R. Selley
---------------------------------------
Notary Public
My Commission Expires:
June 14, 1996
- -------------------------------------
<PAGE>
POWER OF ATTORNEY
STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )
KNOW ALL MEN BY THESE PRESENTS:
THAT I, Howard R. Fricke, being a Director of FIRST SECURITY BENEFIT LIFE
INSURANCE AND ANNUITY COMPANY OF NEW YORK, by these presents do make, constitute
and appoint James R. Schmank and Roger K. Viola, and each of them, my true and
lawful attorneys, each with full power and authority for me and in my name and
behalf to sign Registration Statements, any amendments thereto and any
applications for exemptive relief filed pursuant to the Investment Company Act
of 1940 or the Securities Act of 1933, as amended, and any instrument or
document filed as part thereof, or in connection therewith or in any way related
thereto, in connection with Variable Annuity Contracts offered, issued or sold
by FIRST SECURITY BENEFIT LIFE INSURANCE COMPANY and any T. ROWE PRICE VARIABLE
ANNUITY ACCOUNT OF FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF
NEW YORK with like effect as though said Registration Statements and other
documents had been signed and filed personally by me in the capacity aforesaid.
Each of the aforesaid attorneys acting alone shall have all the powers of all of
said attorneys. I hereby ratify and confirm all that the said attorneys, or any
of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 26th day of March, 1996.
Howard R. Fricke
---------------------------------------
Howard R. Fricke
SUBSCRIBED AND SWORN to before me this 26th day of March, 1996.
Deborah D. Pryer
---------------------------------------
Notary Public
My Commission Expires:
April 11, 1999
- -------------------------------------
<PAGE>
POWER OF ATTORNEY
STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )
KNOW ALL MEN BY THESE PRESENTS:
THAT I, Donald W. Schepker, being a Director of FIRST SECURITY BENEFIT LIFE
INSURANCE AND ANNUITY COMPANY OF NEW YORK, by these presents do make, constitute
and appoint Howard R. Fricke, James R. Schmank and Roger K. Viola, and each of
them, my true and lawful attorneys, each with full power and authority for me
and in my name and behalf to sign Registration Statements, any amendments
thereto and any applications for exemptive relief filed pursuant to the
Investment Company Act of 1940 or the Securities Act of 1933, as amended, and
any instrument or document filed as part thereof, or in connection therewith or
in any way related thereto, in connection with Variable Annuity Contracts
offered, issued or sold by FIRST SECURITY BENEFIT LIFE INSURANCE COMPANY and any
T. ROWE PRICE VARIABLE ANNUITY ACCOUNT OF FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK with like effect as though said Registration
Statements and other documents had been signed and filed personally by me in the
capacity aforesaid. Each of the aforesaid attorneys acting alone shall have all
the powers of all of said attorneys. I hereby ratify and confirm all that the
said attorneys, or any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 27th day of March, 1996.
Donald W. Schepker
---------------------------------------
Donald W. Schepker
SUBSCRIBED AND SWORN to before me this 27th day of March, 1996.
Diana L. Feldhausen
---------------------------------------
Notary Public
My Commission Expires:
March 23, 1999
- -------------------------------------
<PAGE>
POWER OF ATTORNEY
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
KNOW ALL MEN BY THESE PRESENTS:
THAT I, Katherine White, being a Director of FIRST SECURITY BENEFIT LIFE
INSURANCE AND ANNUITY COMPANY OF NEW YORK, by these presents do make, constitute
and appoint Howard R. Fricke, James R. Schmank and Roger K. Viola, and each of
them, my true and lawful attorneys, each with full power and authority for me
and in my name and behalf to sign Registration Statements, any amendments
thereto and any applications for exemptive relief filed pursuant to the
Investment Company Act of 1940 or the Securities Act of 1933, as amended, and
any instrument or document filed as part thereof, or in connection therewith or
in any way related thereto, in connection with Variable Annuity Contracts
offered, issued or sold by FIRST SECURITY BENEFIT LIFE INSURANCE COMPANY and any
T. ROWE PRICE VARIABLE ANNUITY ACCOUNT OF FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK with like effect as though said Registration
Statements and other documents had been signed and filed personally by me in the
capacity aforesaid. Each of the aforesaid attorneys acting alone shall have all
the powers of all of said attorneys. I hereby ratify and confirm all that the
said attorneys, or any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 29th day of March, 1996.
Katherine White
---------------------------------------
Katherine White
SUBSCRIBED AND SWORN to before me this 29th day of March, 1996.
Patricia Dawson
---------------------------------------
Notary Public
My Commission Expires:
June 30, 1996
- -------------------------------------
<PAGE>
POWER OF ATTORNEY
STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )
KNOW ALL MEN BY THESE PRESENTS:
THAT I, John E. Hayes, Jr., being a Director of FIRST SECURITY BENEFIT LIFE
INSURANCE AND ANNUITY COMPANY OF NEW YORK, by these presents do make, constitute
and appoint Howard R. Fricke, James R. Schmank and Roger K. Viola, and each of
them, my true and lawful attorneys, each with full power and authority for me
and in my name and behalf to sign Registration Statements, any amendments
thereto and any applications for exemptive relief filed pursuant to the
Investment Company Act of 1940 or the Securities Act of 1933, as amended, and
any instrument or document filed as part thereof, or in connection therewith or
in any way related thereto, in connection with Variable Annuity Contracts
offered, issued or sold by FIRST SECURITY BENEFIT LIFE INSURANCE COMPANY and any
T. ROWE PRICE VARIABLE ANNUITY ACCOUNT OF FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK with like effect as though said Registration
Statements and other documents had been signed and filed personally by me in the
capacity aforesaid. Each of the aforesaid attorneys acting alone shall have all
the powers of all of said attorneys. I hereby ratify and confirm all that the
said attorneys, or any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 28th day of March, 1996.
John E. Hayes, Jr.
---------------------------------------
John E. Hayes, Jr.
SUBSCRIBED AND SWORN to before me this 28th day of March, 1996.
Linda A. Fricke
---------------------------------------
Notary Public
My Commission Expires:
December 28, 1999
- -------------------------------------
<PAGE>
POWER OF ATTORNEY
STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )
KNOW ALL MEN BY THESE PRESENTS:
THAT I, James R. Schmank, being a Director of FIRST SECURITY BENEFIT LIFE
INSURANCE AND ANNUITY COMPANY OF NEW YORK, by these presents do make, constitute
and appoint Howard R. Fricke, James R. Schmank and Roger K. Viola, and each of
them, my true and lawful attorneys, each with full power and authority for me
and in my name and behalf to sign Registration Statements, any amendments
thereto and any applications for exemptive relief filed pursuant to the
Investment Company Act of 1940 or the Securities Act of 1933, as amended, and
any instrument or document filed as part thereof, or in connection therewith or
in any way related thereto, in connection with Variable Annuity Contracts
offered, issued or sold by FIRST SECURITY BENEFIT LIFE INSURANCE COMPANY and any
T. ROWE PRICE VARIABLE ANNUITY ACCOUNT OF FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK with like effect as though said Registration
Statements and other documents had been signed and filed personally by me in the
capacity aforesaid. Each of the aforesaid attorneys acting alone shall have all
the powers of all of said attorneys. I hereby ratify and confirm all that the
said attorneys, or any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 1st day of April, 1996.
James R. Schmank
---------------------------------------
James R. Schmank
SUBSCRIBED AND SWORN to before me this 1st day of April, 1996.
Jana R. Selley
---------------------------------------
Notary Public
My Commission Expires:
June 14, 1996
- -------------------------------------
<PAGE>
POWER OF ATTORNEY
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
KNOW ALL MEN BY THESE PRESENTS:
THAT I, Lee Laino, being a Director of FIRST SECURITY BENEFIT LIFE INSURANCE AND
ANNUITY COMPANY OF NEW YORK, by these presents do make, constitute and appoint
Howard R. Fricke, James R. Schmank and Roger K. Viola, and each of them, my true
and lawful attorneys, each with full power and authority for me and in my name
and behalf to sign Registration Statements, any amendments thereto and any
applications for exemptive relief filed pursuant to the Investment Company Act
of 1940 or the Securities Act of 1933, as amended, and any instrument or
document filed as part thereof, or in connection therewith or in any way related
thereto, in connection with Variable Annuity Contracts offered, issued or sold
by FIRST SECURITY BENEFIT LIFE INSURANCE COMPANY and any T. ROWE PRICE VARIABLE
ANNUITY ACCOUNT OF FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF
NEW YORK with like effect as though said Registration Statements and other
documents had been signed and filed personally by me in the capacity aforesaid.
Each of the aforesaid attorneys acting alone shall have all the powers of all of
said attorneys. I hereby ratify and confirm all that the said attorneys, or any
of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 29th day of March, 1996.
Lee Laino
---------------------------------------
Lee Laino
SUBSCRIBED AND SWORN to before me this 29th day of March, 1996.
Robert J. Whittish
---------------------------------------
Notary Public
My Commission Expires:
December 31, 1996
- -------------------------------------
<PAGE>
POWER OF ATTORNEY
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
KNOW ALL MEN BY THESE PRESENTS:
THAT I, Jane Boisseau, being a Director of FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK, by these presents do make, constitute and
appoint Howard R. Fricke, James R. Schmank and Roger K. Viola, and each of them,
my true and lawful attorneys, each with full power and authority for me and in
my name and behalf to sign Registration Statements, any amendments thereto and
any applications for exemptive relief filed pursuant to the Investment Company
Act of 1940 or the Securities Act of 1933, as amended, and any instrument or
document filed as part thereof, or in connection therewith or in any way related
thereto, in connection with Variable Annuity Contracts offered, issued or sold
by FIRST SECURITY BENEFIT LIFE INSURANCE COMPANY and any T. ROWE PRICE VARIABLE
ANNUITY ACCOUNT OF FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF
NEW YORK with like effect as though said Registration Statements and other
documents had been signed and filed personally by me in the capacity aforesaid.
Each of the aforesaid attorneys acting alone shall have all the powers of all of
said attorneys. I hereby ratify and confirm all that the said attorneys, or any
of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 2nd day of April, 1996.
Jane Boisseau
---------------------------------------
Jane Boisseau
SUBSCRIBED AND SWORN to before me this 2nd day of April, 1996.
Carol O'Shaughnessy
---------------------------------------
Notary Public
My Commission Expires:
April, 1998
- -------------------------------------
