<PAGE> 1
File No. 33-83240
File No. 811-8726
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
--------------------- [ ]
Post-Effective Amendment No. 1
--------------------- [x]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 4
--------------- [x]
(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)
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, Assistant Secretary and Jeffrey S. Puretz, Esq.
Vice President Dechert Price & Rhoads
First Security Benefit Life Insurance 1500 K Street, N.W.
Company of New York Washington, D.C. 20005
700 Harrison Street, Topeka, KS 66636-0001
(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 April 29, 1996, pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(i) of Rule 485
[ ] on April 29, 1996, pursuant to paragraph (a)(i) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(ii) of Rule 485
[ ] on April 29, 1996, 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.
----------
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> 2
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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<TABLE>
<CAPTION>
PART A
------
Item of Form N-4 Prospectus Caption
---------------- ------------------
<S> <C> <C>
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) Accumulated Unit Values . . . . . . . N/A
(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
Company 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
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
(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
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
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
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
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
</TABLE>
<PAGE> 5
PROSPECTUS
THE T. ROWE PRICE
No-Load Variable Annuity
Issued by
First Security
Benefit Life Insurance
and Annuity Company
of New York
[GRAPHIC]
May 1, 1996
<PAGE> 6
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
- --------------------------------------------
T. ROWE PRICE NO-LOAD VARIABLE ANNUITY
AN INDIVIDUAL FLEXIBLE PREMIUM
DEFERRED VARIABLE ANNUITY CONTRACT
MAY 1, 1996
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1
<PAGE> 7
T. Rowe Price Variable Annuity
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.
---------------------------------
T. Rowe Price New America 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 International Series, Inc.
----------------------------------------
T. Rowe Price International Stock Portfolio
- ---
2
<PAGE> 8
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 29. 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 May 1, 1996, 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: May 1, 1996
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3
<PAGE> 9
T. Rowe Price Variable Annuity
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
11 Contract Benefits
11 Free-Look Right
11 Charges and Deductions
11 Mortality and Expense Risk Charge
11 Premium Tax Charge
12 Other Expenses
12 Contacting the Company
12 EXPENSE TABLE
12 Contractual Expenses
12 Annual Separate Account Expenses
12 Annual Portfolio Expenses
13 Example
13 INFORMATION ABOUT THE COMPANY,
THE SEPARATE ACCOUNT, AND THE FUNDS
13 First Security Benefit Life Insurance and Annuity Company of New York
13 Published Ratings
14 Separate Account
15 The Funds
15 T. Rowe Price New America Growth Portfolio
15 T. Rowe Price International Stock Portfolio
16 T. Rowe Price Equity Income Portfolio
16 T. Rowe Price Personal Strategy Balanced Portfolio
16 T. Rowe Price Limited-Term Bond Portfolio
16 The Investment Advisers
- ---
4
<PAGE> 10
T. Rowe Price Variable Annuity
16 THE CONTRACT
16 General
17 Application for a Contract
17 Purchase Payments
18 Allocation of Purchase Payments
18 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
28 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
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5
<PAGE> 11
T. Rowe Price Variable Annuity
CONTENTS
29 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
34 FEDERAL TAX MATTERS
34 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 and 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
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6
<PAGE> 12
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
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7
<PAGE> 13
T. Rowe Price Variable Annuity
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.
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8
<PAGE> 14
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, five 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.
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 29 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 16.
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
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9
<PAGE> 15
T. Rowe Price Variable Annuity
individual retirement annuity ("IRA") qualified under Section
408 of the Internal Revenue Code of 1986, as amended ("Qualified Plan").
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 five 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 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 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
29.
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 17.
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10
<PAGE> 16
T. Rowe Price Variable Annuity
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 29.
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 29. See "Full
and Partial Withdrawals," page 22 and "Federal Tax Matters," page 34 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.
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11
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T. Rowe Price Variable Annuity
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.
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," 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," on page 26. For a more complete description of each Fund's costs
and expenses, see the Funds' Prospectus, which accompanies this Prospectus.
<TABLE>
<S> <C>
============================================================================
CONTRACTUAL EXPENSES
- ---------------------------------------------------------------------------
Sales load on purchase payments None
- ---------------------------------------------------------------------------
Annual Maintenance Fee None
===========================================================================
ANNUAL SEPARATE ACCOUNT EXPENSES
- ---------------------------------------------------------------------------
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%
===========================================================================
</TABLE>
<TABLE>
<CAPTION>
ANNUAL PORTFOLIO EXPENSES (AS A PERCENTAGE OF EACH PORTFOLIO'S AVERAGE DAILY NET ASSETS)
- ----------------------------------------------------------------------------------------------
MANAGEMENT OTHER TOTAL
FEE* EXPENSES PORTFOLIO
EXPENSES
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
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 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%
- ----------------------------------------------------------------------------------------------
</TABLE>
*The management fee includes the ordinary expenses of operating the Funds.
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12
<PAGE> 18
T. Rowe Price Variable Annuity
EXAMPLE
The example presented below shows expenses that a Contractowner would pay at
the end of one or three 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.
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:
<TABLE>
<S> <C> <C>
======================================================
1 YEAR 3 YEARS
- ------------------------------------------------------
New America Growth Subaccount $14 $44
- ------------------------------------------------------
International Stock Subaccount $16 $50
- ------------------------------------------------------
Equity Income Subaccount $14 $44
- ------------------------------------------------------
Personal Strategy Balanced Subaccount $15 $46
- ------------------------------------------------------
Limited-Term Bond Subaccount $13 $40
======================================================
</TABLE>
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
- ---
13
<PAGE> 19
T. Rowe Price Variable Annuity
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 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 five 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.
- ---
14
<PAGE> 20
T. Rowe Price Variable Annuity
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 five 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 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 through investments 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 through investments primarily in common stocks of
established, non-U.S. companies.
- ---
15
<PAGE> 21
T. Rowe Price Variable Annuity
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.
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.
- ---
16
<PAGE> 22
T. Rowe Price Variable Annuity
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) 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
80. 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
- ---
17
<PAGE> 23
T. Rowe Price Variable Annuity
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.
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 five
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
- ---
18
<PAGE> 24
T. Rowe Price Variable Annuity
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 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 by 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.
- ---
19
<PAGE> 25
T. Rowe Price Variable Annuity
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 29.
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.
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 29.
- ---
20
<PAGE> 26
T. Rowe Price Variable Annuity
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
29.
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 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
- ---
21
<PAGE> 27
T. Rowe Price Variable Annuity
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. 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.
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 request 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
- ---
22
<PAGE> 28
T. Rowe Price Variable Annuity
Interest Account. See "The Fixed Interest Account" on page 29. 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 34.
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 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 arrangements
with Investment Services, the Company first obtains the consent of Investment
Services, which consent
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T. Rowe Price Variable Annuity
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 29. 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 34.
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 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.
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T. Rowe Price Variable Annuity
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 34 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
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.
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 85th 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.
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 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 to the third
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T. Rowe Price Variable Annuity
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
85th birthday.
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
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T. Rowe Price Variable Annuity
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 16.
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 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
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T. Rowe Price Variable Annuity
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 Contract-
owners 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 Option. Up to six
exchanges are allowed in any Contract Year and exchanges pursuant
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T. Rowe Price Variable Annuity
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 Contract-owner, 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.
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 34.
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T. Rowe Price Variable Annuity
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.
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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T. Rowe Price Variable Annuity
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 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.
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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.
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 includable 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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T. Rowe Price Variable Annuity
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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T. Rowe Price Variable Annuity
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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T. Rowe Price Variable Annuity
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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T. Rowe Price Variable Annuity
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 591/2 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.
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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.
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.
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
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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. 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 and 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 if, in its sole discretion, 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
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T. Rowe Price Variable Annuity
Subaccount of the Separate Account to another separate account or
Subaccount with the written consent of Investment Services.
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 quarterly.
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, D.C.
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
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T. Rowe Price Variable Annuity
Statement and exhibits for further information relating to the Company
and the 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 from February 9, 1995, through December
31, 1995, are contained in the Statement of Additional Information. Financial
statements of the Separate Account are not yet available.
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>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
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. . . . . . . . . . . . . . . . . . . . 6
</TABLE>
- ---
45
<PAGE> 51
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 -6%, 0%, and 6%. The values illustrated would be different from
those shown if the gross annual investment rates of return averaged -6%, 0%, or
6% 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 attaining age 65 and
continuing until age 85 (the Owner's life expectancy at age 65). Two methods
of distribution are illustrated: (1) systematic withdrawals in equal amounts
over a 25-year distribution period (assuming the owner stops withdrawals after
20 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 five 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
- -6%, 0%, and 6% correspond to approximate net annual rates of -7.4%, -1.4%, and
4.6%. 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 -6%, 0%, or 6% 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> 52
T. Rowe Price Variable Annuity
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
ACCUMULATION (6.00% HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN)
-------------------------------------------------------------------------
END OF ANNUAL WITHDRAWAL CONTRACT
POLICY YEAR AGE INVESTMENT VALUE VALUE
(AFTER TAX) (BEFORE TAX)
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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
-------------------------------------------------------------------------
</TABLE>
<TABLE>
-------------------------------------------------------------------------
DISTRIBUTION (ANNUAL AFTER-TAX PAYMENTS)
-------------------------------------------------------------------------
BEGINNING ANNUAL SYSTEMATIC LIFE
OF AGE INVESTMENT WITHDRAWALS WITH 10
POLICY YEAR (AFTER TAX) (AFTER TAX)
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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 13,033.02* 2,225.43
-------------------------------------------------------------------------
37 86 0 2,180.47
-------------------------------------------------------------------------
38 87 0 1,930.64
-------------------------------------------------------------------------
39 88 0 1,949.69
-------------------------------------------------------------------------
40 89 0 1,968.92
-------------------------------------------------------------------------
41 90 0 1,988.34**
-------------------------------------------------------------------------
</TABLE>
*Systematic withdrawals must stop at age 85 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.
- ---
47
<PAGE> 53
T. Rowe Price Variable Annuity
<TABLE>
-------------------------------------------------------------------------
ACCUMULATION (0.00% HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN)
-------------------------------------------------------------------------
END OF ANNUAL WITHDRAWAL CONTRACT
POLICY YEAR AGE INVESTMENT VALUE VALUE
(AFTER TAX) (BEFORE TAX)
<S> <C> <C> <C> <C>
-------------------------------------------------------------------------
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
-------------------------------------------------------------------------
</TABLE>
<TABLE>
-------------------------------------------------------------------------
DISTRIBUTION (ANNUAL AFTER-TAX PAYMENTS)
-------------------------------------------------------------------------
BEGINNING ANNUAL SYSTEMATIC LIFE
OF AGE INVESTMENT WITHDRAWALS WITH 10
POLICY YEAR (AFTER TAX) (AFTER TAX)
<S> <C> <C> <C> <C>
-------------------------------------------------------------------------
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 0 519.79 627.09
-------------------------------------------------------------------------
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 5,540.57* 386.28
-------------------------------------------------------------------------
37 86 0 368.01
-------------------------------------------------------------------------
38 87 0 350.60
-------------------------------------------------------------------------
39 88 0 334.02
-------------------------------------------------------------------------
40 89 0 318.22
-------------------------------------------------------------------------
41 90 0 1,998.77**
</TABLE>
*Systematic withdrawals must stop at age 85 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.
- ---
48
<PAGE> 54
T. Rowe Price Variable Annuity
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
ACCUMULATION (-6.00% HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN)
-------------------------------------------------------------------------
END OF ANNUAL WITHDRAWAL CONTRACT
POLICY YEAR AGE INVESTMENT VALUE VALUE
(AFTER TAX) (BEFORE TAX)
<S> <C> <C> <C> <C>
-------------------------------------------------------------------------
1 50 $20,000.00 $19,068 $18,538
-------------------------------------------------------------------------
2 51 0 18,203 17,182
-------------------------------------------------------------------------
3 52 0 17,402 15,926
-------------------------------------------------------------------------
4 53 0 16,660 14,762
-------------------------------------------------------------------------
5 54 0 15,972 13,682
-------------------------------------------------------------------------
6 55 0 15,334 12,682
-------------------------------------------------------------------------
7 56 0 14,742 11,755
-------------------------------------------------------------------------
8 57 0 14,194 10,895
-------------------------------------------------------------------------
9 58 0 13,687 10,099
-------------------------------------------------------------------------
10 59 0 13,216 9,360
-------------------------------------------------------------------------
11 60 0 12,779 8,676
-------------------------------------------------------------------------
12 61 0 12,375 8,041
-------------------------------------------------------------------------
13 62 0 12,000 7,453
-------------------------------------------------------------------------
14 63 0 11,652 6,909
-------------------------------------------------------------------------
15 64 0 11,330 6,403
</TABLE>
<TABLE>
--------------------------------------------------------------------
DISTRIBUTION (ANNUAL AFTER-TAX PAYMENTS)
--------------------------------------------------------------------
BEGINNING ANNUAL SYSTEMATIC LIFE
OF AGE INVESTMENT WITHDRAWALS WITH 10
POLICY YEAR (AFTER TAX) (AFTER TAX)
<S> <C> <C> <C> <C>
--------------------------------------------------------------------
16 65 0 $81.47 $402.42
--------------------------------------------------------------------
17 66 0 81.47 360.38
--------------------------------------------------------------------
18 67 0 81.47 322.74
---------------------------------------------------------------------
19 68 0 81.47 289.02
---------------------------------------------------------------------
20 69 0 81.47 258.83
---------------------------------------------------------------------
21 70 0 81.47 231.79
---------------------------------------------------------------------
22 71 0 81.47 207.58
---------------------------------------------------------------------
23 72 0 81.47 185.90
---------------------------------------------------------------------
24 73 0 81.47 166.48
---------------------------------------------------------------------
25 74 0 81.47 149.09
---------------------------------------------------------------------
26 75 0 81.47 133.51
---------------------------------------------------------------------
27 76 0 81.47 119.57
---------------------------------------------------------------------
28 77 0 81.47 107.08
---------------------------------------------------------------------
29 78 0 81.47 95.89
---------------------------------------------------------------------
30 79 0 81.47 85.88
---------------------------------------------------------------------
31 80 0 81.47 76.90
---------------------------------------------------------------------
32 81 0 81.47 68.87
---------------------------------------------------------------------
33 82 0 81.47 61.68
---------------------------------------------------------------------
34 83 0 81.47 55.23
---------------------------------------------------------------------
35 84 0 81.47 49.46
---------------------------------------------------------------------
36 85 0 7,036.99* 44.30
---------------------------------------------------------------------
37 86 0 39.67
---------------------------------------------------------------------
38 87 0 35.53
---------------------------------------------------------------------
39 88 0 31.82
---------------------------------------------------------------------
40 89 0 28.49
---------------------------------------------------------------------
41 90 0 5,956.22**
</TABLE>
*Systematic withdrawals must stop at age 85 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> 55
T. ROWE PRICE
Variable Annuity Service Center
P.O. Box 2788
Topeka, Kansas 66601-9804
- ----
50
<PAGE> 56
<TABLE>
<CAPTION>
PART B
------
Item of Form N-4 Statement of Additional Information Caption
---------------- -------------------------------------------
<S> <C>
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 Contract . . . . . . . . . . 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
</TABLE>
<PAGE> 57
T. ROWE PRICE VARIABLE ANNUITY
STATEMENT OF ADDITIONAL INFORMATION
DATE:MAY 1, 1996
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE
ANNUITY CONTRACT
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
1-800-355-4570
MAILING ADDRESS:
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
C/O T. ROWE PRICE VARIABLE ANNUITY SERVICE CENTER
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 May 1, 1996. 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> 58
TABLE OF CONTENTS
Page
----
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
i
<PAGE> 59
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 $250 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 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.
1
<PAGE> 60
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 6 herein.
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 Subaccounts 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)
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.
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.
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
2
<PAGE> 61
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.
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, are set forth herein, starting on page 4.
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.
3
<PAGE> 62
First Security Benefit Life Insurance
and Annuity Company of New York
Financial Statements
Period from February 9, 1995
TO December 31, 1995
CONTENTS
<TABLE>
<S> <C>
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Audited Financial Statements
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Statement of Capital and Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
<PAGE> 63
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 & YOUNG LLP
Kansas City, Missouri
February 2, 1996
<PAGE> 64
First Security Benefit Life Insurance
And Annuity Company of New York
Balance Sheets
<TABLE>
<CAPTION>
DECEMBER 31, FEBRUARY 8,
1995 1995
----------------------------
<S> <C> <C>
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
============================
</TABLE>
See accompanying notes.
<PAGE> 65
First Security Benefit Life Insurance
and Annuity Company of New York
Statement of Operations
Period From February 9, 1995
to December 31, 1995
<TABLE>
<CAPTION>
Revenues:
<S> <C>
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
=========
</TABLE>
See accompanying notes.
<PAGE> 66
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
<TABLE>
<CAPTION>
<S> <C>
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
==========
</TABLE>
See accompanying notes.
<PAGE> 67
First Security Benefit Life Insurance
and Annuity Company of New York
Statement of Cash Flows
Period from February 9, 1995
to December 31, 1995
<TABLE>
<CAPTION>
<S> <C>
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
=============
</TABLE>
See accompanying notes.
<PAGE> 68
First Security Benefit Life Insurance
and Annuity Company of New York
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
<PAGE> 69
First Security Benefit Life Insurance
and Annuity Company of New York
Notes to Financial Statements (continued)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 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.
11
<PAGE> 70
First Security Benefit Life Insurance
and Annuity Company of New York
Notes to Financial Statements (continued)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
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.
12
<PAGE> 71
First Security Benefit Life Insurance
and Annuity Company of New York
Notes to Financial Statements (continued)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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:
<TABLE>
<CAPTION>
DECEMBER 31, 1995
--------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------------------------------------------------------------
<S> <C> <C> <C> <C>
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
===============================================================
</TABLE>
<TABLE>
<CAPTION>
FEBRUARY 8, 1995
----------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury securities $3,712,828 $ - $ - $3,712,828
Mortgage-backed securities 916,492 - - 916,492
----------------------------------------------------------------
Totals $4,629,320 $ - $ - $4,629,320
================================================================
</TABLE>
13
<PAGE> 72
First Security Benefit Life Insurance
and Annuity Company of New York
Notes to Financial Statements (continued)
2. INVESTMENTS (CONTINUED)
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.
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
----------------------------
<S> <C> <C>
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
============================
</TABLE>
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:
<TABLE>
<CAPTION>
1995
--------
<S> <C>
Interest on fixed maturities $418,084
Other 8,190
--------
Total investment income 426,274
Investment expenses 21,410
--------
Net investment income $404,864
========
</TABLE>
14
<PAGE> 73
First Security Benefit Life Insurance
and Annuity Company of New York
Notes to Financial Statements (continued)
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.
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.
15
<PAGE> 74
First Security Benefit Life Insurance
and Annuity Company of New York
Notes to Financial Statements (continued)
5. CONDENSED FAIR VALUE INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1995 FEBRUARY 8, 1995
-------------------------- -------------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
------------------------- ------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
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 - -
</TABLE>
16
<PAGE> 75
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
<TABLE>
<S> <C>
(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 Security Benefit Life Insurance Company
("SBL") authorizing establishment of the Separate Account(a)
(2) Not Applicable
(3) Distribution Agreement
(4) Sample Contract(c)
(5) Form of Application(a)
(6) (a) Articles of Incorporation of First Security Benefit Life Insurance
and Annuity Company(b)
(b) Bylaws of First Security Benefit Life Insurance and Annuity
Company of New York(b)
(7) Not Applicable
(8) Not Applicable
(9) Not Applicable
(10) Consent of Independent Auditors
(11) Not Applicable
(12) Not Applicable
(13) Not Applicable
(14) Not Applicable
(15) Powers of Attorneys of Howard R. Fricke, Jane Boisseau, Roger K. Viola,
Donald J. Schepker, John E. Hayes, Jr., James R. Schmank, Thomas
Gerald Lee, Lee Laino and Katherine White
</TABLE>
(a) Incorporated herein by reference to the Exhibits filed with the
Registrant's Initial Registration, File No. 33-83240 (August 24, 1994).
(b) Incorporated herein by reference to the Exhibits filed with the
Registrant's Pre-Effective Amendment No. 2, No. 33-83240
(March 21, 1995).
(c) Incorporated herein by reference to the Exhibits filed with the
Registrant's Pre-Effective Amendment No. 3 under the Securities
Act of 1933 and Amendment No. 3 under the Investment Company Act of 1940
to Registration No. 33-83240 (September 15, 1995).
<PAGE> 76
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
Anita F. Larson Secretary and Chief Administrative
70 West Red Oak Lane-4th Floor Officer
White Plains, New York 10604
Donald J. Schepker* Vice President and Director
James R. Schmank* Director
Roger K. Viola* Assistant 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 ("FSB"), 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 0.0005% of the voting
<PAGE> 77
power of FSB. The Registrant is a segregated asset account of FSB.
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 FSB:
Percent of Voting Securities
<TABLE>
<CAPTION>
Name Jurisdiction of Incorporation Owned by SBL
---- ----------------------------- -------------------------------
<S> <C> <C>
Security Benefit Life Insurance Kansas -----
Company (Mutual Life Insurance
Company)
Security Benefit Group, Inc. Kansas 100%
(Holding Company)
Security Management Company 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, Kansas 100%
Inc.
First Security Benefit Life New York 100%
Insurance and Annuity Company of New
York
</TABLE>
First Security Benefit Life Insurance and Annuity Company of New York is
also the depositior of the following separate accounts: None
<PAGE> 78
Item 27. Number of Contract Owners
- ------- --------------------------
As of March 1, 1996, there were 36 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 attorney's 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 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> 79
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 wholly-owned subsidiary of T. Rowe
Price Associates, Inc., serves as the distributor of the T. Rowe Price Variable
Annuity Account of FSB 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 Sciences 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> 80
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 Fund (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 Russell
<PAGE> 81
Investment Securities Fund; the RPF International Bond Fund; and the
Institutional International Funds, Inc. (which includes the Foreign Equity
Fund).
<TABLE>
<CAPTION>
(b)
Name and Principal Position and Offices
Business Address* with Underwriter
------------------ --------------------
<S> <C>
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
</TABLE>
*Unless otherwise indicated, the business address of each of Investment
Services' officers and directors is 100 East Pratt Street, Baltimore, Maryland
21202.
<PAGE> 82
(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 Companay of New York and 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 FSB 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> 83
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, The Registrant certifies that it meets the requirements of
Securities Act Rule 485 for effectiveness of the 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 25th day of April, 1996.
SIGNATURES AND TITLES
<TABLE>
<S> <C>
Howard R. Fricke FIRST SECURITY BENEFIT LIFE INSURANCE AND
Director, President and ANNUITY COMPANY OF NEW YORK
Chief Executive Officer (THE DEPOSITOR)
By: Roger K. Viola
-------------------------------------------------------------
Anita F. Larson Roger K. Viola, Vice President, Director and Assistant Secretary
Secretary and Chief as Attorney-In-Fact for the Officers and Directors Whose Names Appear
Administrative Officer Opposite
Donald J. Schepker
Vice President and Director T. ROWE PRICE VARIABLE ANNUITY ACCOUNT
OF FIRST SECURITY BENEFIT LIFE INSURANCE AND
James R. Schmank ANNUITY COMPANY OF NEW YORK (THE REGISTRANT)
Director
By: FIRST SECURITY BENEFIT LIFE INSURANCE
Thomas Gerald Lee AND ANNUITY COMPANY OF NEW YORK
Vice President and Director (THE DEPOSITOR)
Roger K. Viola
Assistant Secretary, By: Howard R. Fricke
Vice President and Director --------------------------------------------
Howard R. Fricke, President and Director
John E. Hayes, Jr.
Director
By: Jeffrey B. Pantages
Jane Boisseau --------------------------------------------
Director Jeffrey B. Pantages, Treasurer
Lee Laino (ATTEST): Roger K. Viola
Director -------------------------------------------
Roger K. Viola, Assistant Secretary, Vice
President and Director
Katherine White
Director Date: April 25, 1996
</TABLE>
<PAGE> 84
EXHIBIT INDEX
(1) None
(2) None
(3) None
(4) None
(5) None
(6) None
(7) None
(8) (a) None
(b) None
(9) None
(10) Consent of Independent Auditors
(11) None
(12) None
(13) Schedule of Computation of Performance
(15) Powers of Attorney of Howard R. Fricke, Jane Boisseau, Roger K. Viola
Donald J. Schepker, John E. Hayes, Jr., James R. Schmank, Thomas
Gerald Lee, Lee Laino, and Katherine White
<PAGE> 1
Exhibit 10
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
T. Rowe Price Variable Annuity of First Security Benefit Life Insurance and
Annuity Company of New York.
Ernst & Young LLP
Kansas City, Missouri
April 24, 1996
<PAGE> 1
Exhibit 15
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> 2
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> 3
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> 4
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> 5
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> 6
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> 7
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> 8
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
- ---------------------
