Supplement dated September 15, 1997
to the Prospectus dated May 1, 1997 for Park Avenue Life
The following supplemental information should be read in conjunction with
the Prospectus dated May 1, 1997 for the Variable Whole Life Insurance Policy
with Modified Scheduled Premium issued by The Guardian Insurance & Annuity
Company, Inc. ("GIAC") through The Guardian Separate Account K and marketed
under the name "Park Avenue Life".
New Variable Investment Options
Two new investment options have been added to the Policies and are
available both for the allocation of premiums from new Policyowners and
transfers of account values by existing Policyowners. All references throughout
the Prospectus to the variable investment options available under the Policies
shall be modified to reflect the addition of these two new funds.
The Guardian Small Cap Stock Fund
The investment objective of The Guardian Small Cap Stock Fund ("Small Cap
Fund") is long-term growth of capital. The Small Cap Fund invests primarily in a
diversified portfolio of U.S. common stocks and convertible securities issued by
smaller companies. Smaller companies will be defined as companies whose total
market capitalization places them within the range of issuers included in the
Russell 2000 Index.
Guardian Investor Services Corporation, a wholly owned subsidiary of GIAC,
serves as investment adviser and principal underwriter of the Small Cap Fund.
Charles E. Albers, CFA, and Larry Luxenberg, CFA, share portfolio management
responsibility for the Small Cap Fund. The Small Cap Fund pays GISC an
investment management fee at an annual rate of 0.75% of its average daily net
assets.
The MFS Growth With Income Series
The investment objective of the MFS Growth With Income Series ("Growth
With Income Series") is reasonable current income and long-term growth of
capital and income. The Growth With Income Series invests primarily in a
diversified portfolio of equity securities of companies that are believed to
have long-term prospects for growth and income.
<PAGE>
The Growth With Income Series is advised by Massachusetts Financial Services
Company ("MFS"), 500 Boylston St., Boston, MA. MFS is registered as an
investment adviser under the Investment Advisers Act of 1940 (the "Advisers
Act") and is a subsidiary of Sun Life of Canada (U.S.), which is itself an
indirect wholly owned subsidiary of Sun Life Assurance Company of Canada. Kevin
R. Parke and John D. Laupheimer share portfolio management responsibility for
the Growth With Income Series. As compensation for its services to the Series,
MFS receives a fee, payable monthly, at an annual rate of .75% of the Series'
average daily net assets.
A more detailed description of the Small Cap Fund and the Growth With Income
Series, their investment objectives, policies, investment managers, asset
charges and the risks associated with investing in small cap, foreign and
emerging market securities may be found in the accompanying prospectuses. Read
the prospectuses carefully before investing.
These Funds may not be available in all states.
This Supplement should be retained with the Prospectus for future reference.
2
<PAGE>
The following information on pages A-1 - A-11 replaces Appendix A found on pages
A-1 to A-9 of the prospectus.
APPENDIX A
<PAGE>
APPENDIX A
ILLUSTRATIONS OF DEATH BENEFITS, POLICY ACCOUNT VALUES,
NET CASH SURRENDER VALUES AND ACCUMULATED POLICY PREMIUMS
The following tables illustrate how the Policies operate. Specifically,
they show how the death benefit, Net Cash Surrender Value and Policy Account
Value can vary over an extended period of time assuming hypothetical gross rates
of return (i.e., investment income and capital gains and losses, realized or
unrealized) for the Separate Account that are equal to constant after tax annual
rates of 0%, 6% and 12%. The tables are based on policies with Face Amounts of
$250,000 for male insureds at Ages 35 and 45. These insureds are assumed to be
in the nonsmoker preferred risk classification. Values are first given based on
current charges and then based on the policy's higher guaranteed charges. In
addition, each illustration is given first for a policy with an Option 1 death
benefit and then for a policy with an Option 2 death benefit. These
illustrations may assist in the comparison of death benefits, Net Cash Surrender
Values and Policy Account Values for Park Avenue Life policies with those under
other variable life insurance policies which may be issued by GIAC or other
companies. Prospective policyowners are advised, however, that it may not be
advantageous to replace existing life insurance coverage by purchasing a Park
Avenue Life policy, particularly if the decision to replace existing coverage is
based solely on a comparison of policy illustrations.
Death benefits, Net Cash Surrender Values and Policy Account Values will
be different from the amounts shown if: (1) the actual gross rates of return
average 0%, 6% or 12%, but vary above and below the average over the period; and
(2) Policy Premiums are paid at other than annual intervals, or if unscheduled
payments are made. Benefits and values will also be affected by the
policyowner's allocation of the Unloaned Policy Account Value among the Variable
Investment Options and the fixed-rate option. If the actual gross rate of return
for all options averages 0%, 6% or 12%, but varies above or below that average
for individual options, allocation and transfer decisions can have a significant
impact on a policy's performance. Policy loans and other policy transactions,
such as skipping Policy Premiums and partial withdrawals, will also affect
results, as will the insured's sex, smoker status and premium class.
Death benefits, Net Cash Surrender Values and Policy Account Values shown
in the tables reflect the fact that: (1) deductions have been made from annual
Policy Premiums for Policy Premium Assessments, the state premium tax charge,
the DAC tax charge and the premium sales charge; and (2) Monthly Deductions are
deducted from the Policy Account
A-1
<PAGE>
Value on each Monthly Date. The Net Cash Surrender Values shown in the tables
reflect the fact that surrender charges (consisting of a deferred sales charge
and a deferred administrative charge) are deducted upon surrender, Face Amount
reduction or lapse during the first 12 policy years. The death benefits, Net
Cash Surrender Values and Policy Account Values also reflect a daily charge
assessed against the Separate Account for mortality and expense risks equivalent
to an annual charge of .60% (on a current basis) and .90% (on a guaranteed
basis) of the average daily value of the assets in the Separate Account
attributable to the policies. See "Deductions and Charges." The amounts shown in
the illustrations also reflect an average of the investment advisory fees and
operating expenses incurred by the mutual funds, at an annual rate of 0.76% of
the average daily net assets of such funds.
The average is based upon actual expenses incurred during 1996 for all
funds except The Guardian Small Cap Stock Fund's expenses have been estimated
since the Fund was not available before 1997. The MFS Growth With Income Series'
operating expenses for 1996 were capped at 0.25% of average daily net assets of
the series pursuant to agreement with the adviser. In the absence of this
agreement, operating expenses of the series, and the average investment advisory
fees and expenses used in the following illustrations would have been higher.
Taking account of the charges for mortality and expense risks in the
Separate Account and the average investment advisory fee and operating expenses
of the mutual funds, the gross annual rates of return of 0%, 6% and 12%
correspond to net investment experience at constant annual rates of -1.36%,
4.61% and 10.57%, respectively, based on GIAC's current charge for mortality
and expense risks, and -1.65%, 4.29% and 10.24%, respectively, based on GIAC's
guaranteed maximum charge for mortality and expense risks. See "Net Investment
Factor.".
The hypothetical rates of return shown in the tables do not reflect any
tax charges attributable to the Separate Account since no charges are currently
made. If any such charges are imposed in the future, the gross annual rate of
return would have to exceed the rates shown by an amount sufficient to cover the
tax charges, in order to produce the death benefits, Net Cash Surrender Values
and Policy Account Values illustrated. See "GIAC's Taxes."
The second column of each table shows the amount which would accumulate if
an amount equal to the annual Policy Premium was invested to earn interest,
after taxes, of 5% per year, compounded annually. There can be no assurance that
a prospective policyowner would be able to earn this return. During the
Guaranteed Premium Period, the annual Policy Premium is $2,225 for the first
policy illustrated and $3,515 for the second policy illustrated.
A-2
<PAGE>
GIAC will furnish upon request an illustration reflecting the proposed
insured's Age, sex, premium class and the Face Amount or Basic Scheduled Premium
requested, but a premium-based illustration must reflect GIAC's current minimum
Face Amount requirement for Park Avenue Life -- which is $100,000.
A-3
<PAGE>
Male Issue Age 35, Non-Smoker, Preferred Underwriting Risk
$250,000 Face Amount
Death Benefit Option 1
These values reflect CURRENT cost of insurance and other charges
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Premium Net Cash Surrender Value Policy Account Value Death Benefit
End of Accumulated -------------------------------------------------------------------------------------
Policy at 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12% 0% 6% 12%
=================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,336 0 0 0 1,438 1,540 1,643 250,000 250,000 250,000
1 2,336 0 0 0 1,443 1,546 1,649 250,000 250,000 250,000
2 4,789 1,140 1,436 1,745 2,863 3,159 3,468 250,000 250,000 250,000
3 7,365 2,634 3,217 3,849 4,235 4,818 5,450 250,000 250,000 250,000
4 10,070 4,193 5,159 6,250 5,627 6,593 7,684 250,000 250,000 250,000
5 12,909 5,707 7,156 8,860 6,974 8,423 10,127 250,000 250,000 250,000
6 15,891 7,175 9,211 11,702 8,275 10,311 12,802 250,000 250,000 250,000
7 19,022 8,599 11,327 14,802 9,532 12,260 15,736 250,000 250,000 250,000
8 22,309 9,988 13,515 18,198 10,755 14,282 18,965 250,000 250,000 250,000
9 25,761 11,309 15,747 21,886 11,909 16,347 22,486 250,000 250,000 250,000
10 29,385 12,580 18,041 25,918 13,014 18,474 26,351 250,000 250,000 250,000
15 50,413 18,270 30,690 52,891 18,270 30,690 52,891 250,000 250,000 250,000
20 77,250 21,227 44,174 95,588 21,227 44,174 95,588 250,000 250,000 250,000
25 111,502 21,459 58,771 164,838 21,459 58,771 164,838 250,000 250,000 320,292
30 155,218 18,974 75,268 275,261 18,974 75,268 275,261 250,000 250,000 468,490
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL RESULTS MAY BE HIGHER OR
LOWER THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
ALLOCATIONS MADE BY A POLICYOWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A
POLICYOWNER, THE INVESTMENT EXPERIENCE OF THE POLICY'S VARIABLE INVESTMENT
OPTIONS, AND THE RATE OF INTEREST PAID IN AMOUNTS HELD IN THE FIXED-RATE OPTION.
THE DEATH BENEFIT, POLICY ACCOUNT VALUE AND NET CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS ANNUAL RATES OF
RETURN AVERAGED 0%, 6% and 12% OVER A PERIOD OF YEARS, BUT VARIED ABOVE OR BELOW
THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOANS
OR OTHER POLICY TRANSACTIONS WERE EFFECTED DURING THE PERIOD. NO REPRESENTATIONS
CAN BE MADE BY GIAC OR THE MUTUAL FUNDS THAT THE ILLUSTRATED HYPOTHETICAL RATES
OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
THE RECALCULATED BASIC SCHEDULED PREMIUM AT AGE 70 WOULD BE $17,490.00 ,
ASSUMING THE 0% RETURN; $6,521.10, ASSUMING THE 6% RETURN; AND $2,225.00,
ASSUMING THE 12% RETURN.
A-4
<PAGE>
Male Issue Age 35, Non-Smoker, Preferred Underwriting Risk
$250,000 Face Amount
Death Benefit Option 1
These values reflect GUARANTEED cost of insurance and other charges
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Premium Net Cash Surrender Value Policy Account Value Death Benefit
End of Accumulated -------------------------------------------------------------------------------------
Policy at 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12% 0% 6% 12%
=================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,336 0 0 0 1,438 1,540 1,643 250,000 250,000 250,000
2 4,789 970 1,259 1,561 2,693 2,982 3,284 250,000 250,000 250,000
3 7,365 2,301 2,860 3,469 3,902 4,461 5,069 250,000 250,000 250,000
4 10,070 3,655 4,567 5,601 5,089 6,001 7,035 250,000 250,000 250,000
5 12,909 4,959 6,311 7,906 6,226 7,578 9,173 250,000 250,000 250,000
6 15,891 6,209 8,087 10,395 7,309 9,187 11,496 250,000 250,000 250,000
7 19,022 7,401 9,892 13,084 8,334 10,826 14,017 250,000 250,000 250,000
8 22,309 8,535 11,728 15,992 9,302 12,495 16,759 250,000 250,000 250,000
9 25,761 9,607 13,591 19,140 10,208 14,191 19,741 250,000 250,000 250,000
10 29,385 10,616 15,480 22,551 11,050 15,914 22,984 250,000 250,000 250,000
15 50,413 14,554 25,228 44,573 14,554 25,228 44,573 250,000 250,000 250,000
20 77,250 15,812 34,823 78,407 15,812 34,823 78,407 250,000 250,000 250,000
25 111,502 12,839 42,729 131,701 12,839 42,729 131,701 250,000 250,000 255,904
30 155,218 2,771 45,958 213,679 2,771 45,958 213,679 250,000 250,000 363,679
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL RESULTS MAY BE HIGHER OR
LOWER THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
ALLOCATIONS MADE BY A POLICYOWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A
POLICYOWNER, THE INVESTMENT EXPERIENCE OF THE POLICY'S VARIABLE INVESTMENT
OPTIONS, AND THE RATE OF INTEREST PAID IN AMOUNTS HELD IN THE FIXED-RATE OPTION.
THE DEATH BENEFIT, POLICY ACCOUNT VALUE AND NET CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS ANNUAL RATES OF
RETURN AVERAGED 0%, 6% and 12% OVER A PERIOD OF YEARS, BUT VARIED ABOVE OR BELOW
THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOANS
OR OTHER POLICY TRANSACTIONS WERE EFFECTED DURING THE PERIOD. NO REPRESENTATIONS
CAN BE MADE BY GIAC OR THE MUTUAL FUNDS THAT THE ILLUSTRATED HYPOTHETICAL RATES
OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
THE RECALCULATED BASIC SCHEDULED PREMIUM AT AGE 70 WOULD BE $17,490.00 ,
ASSUMING THE 0% RETURN; $14,584.96, ASSUMING THE 6% RETURN; AND $2,225.00,
ASSUMING THE 12% RETURN.
A-5
<PAGE>
Male Issue Age 35, Non-Smoker, Preferred Underwriting Risk
$250,000 Face Amount
Death Benefit Option 2
These values reflect CURRENT cost of insurance and other charges
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Premium Net Cash Surrender Value Policy Account Value Death Benefit
End of Accumulated -------------------------------------------------------------------------------------
Policy at 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12% 0% 6% 12%
=================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,336 0 0 0 1,443 1,546 1,649 250,000 250,000 250,000
2 4,789 1,140 1,436 1,745 2,863 3,159 3,468 250,000 250,000 250,000
3 7,365 2,634 3,217 3,849 4,235 4,818 5,450 250,000 250,000 250,000
4 10,070 4,193 5,159 6,250 5,627 6,593 7,684 250,000 250,000 250,000
5 12,909 5,707 7,156 8,860 6,974 8,423 10,127 250,000 250,000 250,000
6 15,891 7,175 9,211 11,702 8,275 10,311 12,802 250,000 250,000 250,000
7 19,022 8,599 11,327 14,802 9,532 12,260 15,736 250,000 250,000 250,000
8 22,309 9,988 13,515 18,198 10,755 14,282 18,965 250,000 250,000 250,000
9 25,761 11,309 15,747 21,886 11,909 16,347 22,486 250,000 250,000 250,000
10 29,385 12,580 18,041 25,918 13,014 18,474 26,351 250,000 250,000 250,000
15 50,413 18,270 30,690 52,877 18,270 30,690 52,877 250,000 250,000 254,627
20 77,250 21,227 44,174 95,027 21,227 44,174 95,027 250,000 250,000 281,028
25 111,502 21,459 58,771 162,346 21,459 58,771 162,346 250,000 250,000 331,346
30 155,218 18,974 75,268 271,169 18,974 75,268 271,169 250,000 250,000 461,525
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL RESULTS MAY BE HIGHER OR
LOWER THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
ALLOCATIONS MADE BY A POLICYOWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A
POLICYOWNER, THE INVESTMENT EXPERIENCE OF THE POLICY'S VARIABLE INVESTMENT
OPTIONS, AND THE RATE OF INTEREST PAID IN AMOUNTS HELD IN THE FIXED-RATE OPTION.
THE DEATH BENEFIT, POLICY ACCOUNT VALUE AND NET CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS ANNUAL RATES OF
RETURN AVERAGED 0%, 6% and 12% OVER A PERIOD OF YEARS, BUT VARIED ABOVE OR BELOW
THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOANS
OR OTHER POLICY TRANSACTIONS WERE EFFECTED DURING THE PERIOD. NO REPRESENTATIONS
CAN BE MADE BY GIAC OR THE MUTUAL FUNDS THAT THE ILLUSTRATED HYPOTHETICAL RATES
OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
THE RECALCULATED BASIC SCHEDULED PREMIUM AT AGE 70 WOULD BE $17,490.00 ,
ASSUMING THE 0% RETURN; $6,521.10, ASSUMING THE 6% RETURN; AND $2,225.00,
ASSUMING THE 12% RETURN.
A-6
<PAGE>
Male Issue Age 35, Non-Smoker, Preferred Underwriting Risk
$250,000 Face Amount
Death Benefit Option 2
These values reflect GUARANTEED cost of insurance and other charges
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Premium Net Cash Surrender Value Policy Account Value Death Benefit
End of Accumulated -------------------------------------------------------------------------------------
Policy at 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12% 0% 6% 12%
=================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,336 0 0 0 1,438 1,540 1,643 250,000 250,000 250,000
2 4,789 970 1,259 1,561 2,693 2,982 3,284 250,000 250,000 250,000
3 7,365 2,301 2,860 3,469 3,902 4,461 5,069 250,000 250,000 250,000
4 10,070 3,655 4,567 5,601 5,089 6,001 7,035 250,000 250,000 250,000
5 12,909 4,959 6,311 7,906 6,226 7,578 9,173 250,000 250,000 250,000
6 15,891 6,209 8,087 10,395 7,309 9,187 11,496 250,000 250,000 250,000
7 19,022 7,401 9,892 13,084 8,334 10,826 14,017 250,000 250,000 250,000
8 22,309 8,535 11,728 15,992 9,302 12,495 16,759 250,000 250,000 250,000
9 25,761 9,607 13,591 19,140 10,208 14,191 19,741 250,000 250,000 250,000
10 29,385 10,616 15,480 22,551 11,050 15,914 22,984 250,000 250,000 250,000
15 50,413 14,554 25,228 44,573 14,554 25,228 44,573 250,000 250,000 250,000
20 77,250 15,812 34,823 78,205 15,812 34,823 78,205 250,000 250,000 264,206
25 111,502 12,839 42,729 129,476 12,839 42,729 129,476 250,000 250,000 298,477
30 155,218 2,771 45,958 207,928 2,771 45,958 207,928 250,000 250,000 357,429
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL RESULTS MAY BE HIGHER OR
LOWER THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
ALLOCATIONS MADE BY A POLICYOWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A
POLICYOWNER, THE INVESTMENT EXPERIENCE OF THE POLICY'S VARIABLE INVESTMENT
OPTIONS, AND THE RATE OF INTEREST PAID IN AMOUNTS HELD IN THE FIXED-RATE OPTION.
THE DEATH BENEFIT, POLICY ACCOUNT VALUE AND NET CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS ANNUAL RATES OF
RETURN AVERAGED 0%, 6% and 12% OVER A PERIOD OF YEARS, BUT VARIED ABOVE OR BELOW
THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOANS
OR OTHER POLICY TRANSACTIONS WERE EFFECTED DURING THE PERIOD. NO REPRESENTATIONS
CAN BE MADE BY GIAC OR THE MUTUAL FUNDS THAT THE ILLUSTRATED HYPOTHETICAL RATES
OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
THE RECALCULATED BASIC SCHEDULED PREMIUM AT AGE 70 WOULD BE $17,490.00 ,
ASSUMING THE 0% RETURN; $14,584.96, ASSUMING THE 6% RETURN; AND $2,225.00,
ASSUMING THE 12% RETURN.
A-7
<PAGE>
Male Issue Age 45, Non-Smoker, Preferred Underwriting Risk
$250,000 Face Amount
Death Benefit Option 1
These values reflect CURRENT cost of insurance and other charges
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Premium Net Cash Surrender Value Policy Account Value Death Benefit
End of Accumulated -------------------------------------------------------------------------------------
Policy at 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12% 0% 6% 12%
=================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 3,691 249 412 575 2,293 2,455 2,618 250,000 250,000 250,000
2 7,566 2,437 2,906 3,396 4,522 4,990 5,480 250,000 250,000 250,000
3 11,635 4,742 5,664 6,666 6,691 7,613 8,615 250,000 250,000 250,000
4 15,908 7,122 8,651 10,378 8,866 10,394 12,122 250,000 250,000 250,000
5 20,394 9,438 11,733 14,431 10,977 13,271 15,969 250,000 250,000 250,000
6 25,104 11,651 14,873 18,818 12,984 16,205 20,150 250,000 250,000 250,000
7 30,050 13,709 18,022 23,525 14,836 19,149 24,652 250,000 250,000 250,000
8 35,243 15,584 21,153 28,561 16,506 22,075 29,483 250,000 250,000 250,000
9 40,696 17,266 24,254 33,954 17,982 24,970 34,671 250,000 250,000 250,000
10 46,422 18,741 27,309 39,737 19,251 27,820 40,248 250,000 250,000 250,000
15 79,641 25,113 44,173 78,870 25,113 44,173 78,870 250,000 250,000 250,000
20 122,038 28,518 63,231 143,455 28,518 63,231 143,455 250,000 250,000 250,000
25 176,149 26,876 83,659 248,390 26,876 83,659 248,390 250,000 250,000 375,950
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL RESULTS MAY BE HIGHER OR
LOWER THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
ALLOCATIONS MADE BY A POLICYOWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A
POLICYOWNER, THE INVESTMENT EXPERIENCE OF THE POLICY'S VARIABLE INVESTMENT
OPTIONS, AND THE RATE OF INTEREST PAID IN AMOUNTS HELD IN THE FIXED-RATE OPTION.
THE DEATH BENEFIT, POLICY ACCOUNT VALUE AND NET CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS ANNUAL RATES OF
RETURN AVERAGED 0%, 6% and 12% OVER A PERIOD OF YEARS, BUT VARIED ABOVE OR BELOW
THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOANS
OR OTHER POLICY TRANSACTIONS WERE EFFECTED DURING THE PERIOD. NO REPRESENTATIONS
CAN BE MADE BY GIAC OR THE MUTUAL FUNDS THAT THE ILLUSTRATED HYPOTHETICAL RATES
OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
THE RECALCULATED BASIC SCHEDULED PREMIUM AT AGE 70 WOULD BE $16,170.00 ,
ASSUMING THE 0% RETURN; $7,432.26, ASSUMING THE 6% RETURN; AND $3,515.00,
ASSUMING THE 12% RETURN.
A-8
<PAGE>
Male Issue Age 45, Non-Smoker, Preferred Underwriting Risk
$250,000 Face Amount
Death Benefit Option 1
These values reflect GUARANTEED cost of insurance and other charges
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Premium Net Cash Surrender Value Policy Account Value Death Benefit
End of Accumulated -------------------------------------------------------------------------------------
Policy at 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12% 0% 6% 12%
=================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 3,691 241 403 566 2,285 2,447 2,609 250,000 250,000 250,000
2 7,566 2,152 2,610 3,089 4,236 4,694 5,173 250,000 250,000 250,000
3 11,635 4,144 5,026 5,987 6,093 6,975 7,936 250,000 250,000 250,000
4 15,908 6,131 7,568 9,197 7,875 9,311 10,941 250,000 250,000 250,000
5 20,394 8,014 10,135 12,642 9,552 11,673 14,180 250,000 250,000 250,000
6 25,104 9,788 12,725 16,343 11,121 14,057 17,675 250,000 250,000 250,000
7 30,050 11,440 15,323 20,313 12,567 16,450 21,441 250,000 250,000 250,000
8 35,243 12,955 17,915 24,569 13,877 18,837 25,491 250,000 250,000 250,000
9 40,696 14,325 20,493 29,134 15,041 21,209 29,850 250,000 250,000 250,000
10 46,422 15,530 23,035 34,025 16,041 23,545 34,536 250,000 250,000 250,000
15 79,641 18,625 34,753 64,635 18,625 34,753 64,635 250,000 250,000 250,000
20 122,038 14,558 42,532 110,200 14,558 42,532 110,200 250,000 250,000 250,000
25 176,149 0 40,523 182,448 -2,102 40,523 182,448 250,000 250,000 276,144
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL RESULTS MAY BE HIGHER OR
LOWER THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
ALLOCATIONS MADE BY A POLICYOWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A
POLICYOWNER, THE INVESTMENT EXPERIENCE OF THE POLICY'S VARIABLE INVESTMENT
OPTIONS, AND THE RATE OF INTEREST PAID IN AMOUNTS HELD IN THE FIXED-RATE OPTION.
THE DEATH BENEFIT, POLICY ACCOUNT VALUE AND NET CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS ANNUAL RATES OF
RETURN AVERAGED 0%, 6% and 12% OVER A PERIOD OF YEARS, BUT VARIED ABOVE OR BELOW
THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOANS
OR OTHER POLICY TRANSACTIONS WERE EFFECTED DURING THE PERIOD. NO REPRESENTATIONS
CAN BE MADE BY GIAC OR THE MUTUAL FUNDS THAT THE ILLUSTRATED HYPOTHETICAL RATES
OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
THE RECALCULATED BASIC SCHEDULED PREMIUM AT AGE 70 WOULD BE $16,170.00, ASSUMING
THE 0% RETURN; $14,374.37, ASSUMING THE 6% RETURN; AND $3,515.00, ASSUMING THE
12% RETURN.
A-9
<PAGE>
Male Issue Age 45, Non-Smoker, Preferred Underwriting Risk
$250,000 Face Amount
Death Benefit Option 2
These values reflect CURRENT cost of insurance and other charges
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Premium Net Cash Surrender Value Policy Account Value Death Benefit
End of Accumulated -------------------------------------------------------------------------------------
Policy at 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12% 0% 6% 12%
=================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 3,691 249 412 575 2,293 2,455 2,618 250,000 250,000 250,000
2 7,566 2,437 2,906 3,396 4,522 4,990 5,480 250,000 250,000 250,000
3 11,635 4,742 5,664 6,666 6,691 7,613 8,615 250,000 250,000 250,000
4 15,908 7,122 8,651 10,378 8,866 10,394 12,122 250,000 250,000 250,000
5 20,394 9,438 11,733 14,431 10,977 13,271 15,969 250,000 250,000 250,000
6 25,104 11,651 14,873 18,818 12,984 16,205 20,150 250,000 250,000 250,000
7 30,050 13,709 18,022 23,525 14,836 19,149 24,652 250,000 250,000 250,000
8 35,243 15,584 21,153 28,561 16,506 22,075 29,483 250,000 250,000 250,000
9 40,696 17,266 24,254 33,954 17,982 24,970 34,671 250,000 250,000 250,000
10 46,422 18,741 27,309 39,737 19,251 27,820 40,248 250,000 250,000 250,000
15 79,641 25,113 44,173 78,599 25,113 44,173 78,599 250,000 250,000 265,600
20 122,038 28,518 63,231 140,822 28,518 63,231 140,822 250,000 250,000 306,322
25 176,149 26,876 83,659 240,442 26,876 83,659 240,442 250,000 250,000 382,443
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL RESULTS MAY BE HIGHER OR
LOWER THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
ALLOCATIONS MADE BY A POLICYOWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A
POLICYOWNER, THE INVESTMENT EXPERIENCE OF THE POLICY'S VARIABLE INVESTMENT
OPTIONS, AND THE RATE OF INTEREST PAID IN AMOUNTS HELD IN THE FIXED-RATE OPTION.
THE DEATH BENEFIT, POLICY ACCOUNT VALUE AND NET CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS ANNUAL RATES OF
RETURN AVERAGED 0%, 6% and 12% OVER A PERIOD OF YEARS, BUT VARIED ABOVE OR BELOW
THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOANS
OR OTHER POLICY TRANSACTIONS WERE EFFECTED DURING THE PERIOD. NO REPRESENTATIONS
CAN BE MADE BY GIAC OR THE MUTUAL FUNDS THAT THE ILLUSTRATED HYPOTHETICAL RATES
OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
THE RECALCULATED BASIC SCHEDULED PREMIUM AT AGE 70 WOULD BE $16,170.00, ASSUMING
THE 0% RETURN; $7,432.26, ASSUMING THE 6% RETURN; AND $3,515.00, ASSUMING THE
12% RETURN.
A-10
<PAGE>
Male Issue Age 45, Non-Smoker, Preferred Underwriting Risk
$250,000 Face Amount
Death Benefit Option 2
These values reflect GUARANTEED cost of insurance and other charges
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Premium Net Cash Surrender Value Policy Account Value Death Benefit
End of Accumulated -------------------------------------------------------------------------------------
Policy at 5% Interest
Year Per Year 0% 6% 12% 0% 6% 12% 0% 6% 12%
=================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 3,691 241 403 566 2,285 2,447 2,609 250,000 250,000 250,000
2 7,566 2,152 2,610 3,089 4,236 4,694 5,173 250,000 250,000 250,000
3 11,635 4,144 5,026 5,987 6,093 6,975 7,936 250,000 250,000 250,000
4 15,908 6,131 7,568 9,197 7,875 9,311 10,941 250,000 250,000 250,000
5 20,394 8,014 10,135 12,642 9,552 11,673 14,180 250,000 250,000 250,000
6 25,104 9,788 12,725 16,343 11,121 14,057 17,675 250,000 250,000 250,000
7 30,050 11,440 15,323 20,313 12,567 16,450 21,441 250,000 250,000 250,000
8 35,243 12,955 17,915 24,569 13,877 18,837 25,491 250,000 250,000 250,000
9 40,696 14,325 20,493 29,134 15,041 21,209 29,850 250,000 250,000 250,000
10 46,422 15,530 23,035 34,025 16,041 23,545 34,536 250,000 250,000 250,000
15 79,641 18,625 34,753 64,614 18,625 34,753 64,614 250,000 250,000 251,615
20 122,038 14,558 42,532 108,789 14,558 42,532 108,789 250,000 250,000 274,290
25 176,149 0 40,523 172,680 -2,102 40,523 172,680 250,000 250,000 314,680
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL RESULTS MAY BE HIGHER OR
LOWER THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
ALLOCATIONS MADE BY A POLICYOWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A
POLICYOWNER, THE INVESTMENT EXPERIENCE OF THE POLICY'S VARIABLE INVESTMENT
OPTIONS, AND THE RATE OF INTEREST PAID IN AMOUNTS HELD IN THE FIXED-RATE OPTION.
THE DEATH BENEFIT, POLICY ACCOUNT VALUE AND NET CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS ANNUAL RATES OF
RETURN AVERAGED 0%, 6% and 12% OVER A PERIOD OF YEARS, BUT VARIED ABOVE OR BELOW
THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOANS
OR OTHER POLICY TRANSACTIONS WERE EFFECTED DURING THE PERIOD. NO REPRESENTATIONS
CAN BE MADE BY GIAC OR THE MUTUAL FUNDS THAT THE ILLUSTRATED HYPOTHETICAL RATES
OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
THE RECALCULATED BASIC SCHEDULED PREMIUM AT AGE 70 WOULD BE $16,170.00, ASSUMING
THE 0% RETURN; $14,374.37, ASSUMING THE 6% RETURN; AND $3,515.00, ASSUMING THE
12% RETURN.
A-11
<PAGE>
The following information supplements Appendix B found on pages B-1 to B-9 of
the prospectus.
The Appendix provides hypothetical illustrations of the Separate Accounts and
the policy's investment experience based on the historical investment experience
of the mutual funds. It does not represent what may happen in the future. GIAC
began to offer the policies and the Separate Account commenced its operations on
September 1, 1995. MFS Growth with Income Series commenced its operations on
October 9, 1995. The results for MFS Growth With Income Series reflect the
effects of expense reimbursements during the years ended December 31, 1995 and
1996. Without these expense reimbursements, the results for these funds would be
lower. The Guardian Small Cap Stock Fund has not been included since it began
operations in 1997.
Appendix B
<PAGE>
Male Issue Age 35, Non-Smoker, Preferred Underwriting Risk
$250,000 Face Amount
Death Benefit Option 1
MFS GROWTH WITH INCOME SERIES
Effective
Total Annual Net Cash Policy
Beginning Ending Premiums Net Rate Surrender Account Death
Date Date Paid of Return Value Value Benefit
- --------------------------------------------------------------------------------
10/09/95 12/31/95 $ 2,225 6.49% $ 265 $1,999 $250,000
01/01/96 12/31/96 $ 4,450 23.71% $2,251 $3,974 $250,000
Male Issue Age 35, Non-Smoker, Preferred Underwriting Risk
$250,000 Face Amount
Death Benefit Option 2
MFS GROWTH WITH INCOME SERIES
Effective
Total Annual Net Cash Policy
Beginning Ending Premiums Net Rate Surrender Account Death
Date Date Paid of Return Value Value Benefit
- --------------------------------------------------------------------------------
10/09/95 12/31/95 $ 2,225 6.49% $ 265 $1,999 $250,000
01/01/96 12/31/96 $ 4,450 23.71% $2,251 $3,974 $250,000
B-1
<PAGE>
Male Issue Age 45, Non-Smoker, Preferred Underwriting Risk
$250,000 Face Amount
Death Benefit Option 1
MFS GROWTH WITH INCOME SERIES
Effective
Total Annual Net Cash Policy
Beginning Ending Premiums Net Rate Surrender Account Death
Date Date Paid of Return Value Value Benefit
- --------------------------------------------------------------------------------
10/09/95 12/31/95 $ 3,515 6.49% $1,118 $3,162 $250,000
01/01/96 12/31/96 $ 7,030 23.71% $4,206 $6,290 $250,000
Male Issue Age 45, Non-Smoker, Preferred Underwriting Risk
$250,000 Face Amount
Death Benefit Option 2
MFS GROWTH WITH INCOME SERIES
Effective
Total Annual Net Cash Policy
Beginning Ending Premiums Net Rate Surrender Account Death
Date Date Paid of Return Value Value Benefit
- --------------------------------------------------------------------------------
10/09/95 12/31/95 $ 3,515 6.49% $1,118 $3,162 $250,000
01/01/96 12/31/96 $ 7,030 23.71% $4,206 $6,290 $250,000
B-2
